#1^ Walmart México y Centroamérica @ 2013 FINANCIAL AND SOCIAL RESPONSIBILITY REPORT#22013 Financial and Social Responsibility Report content Message from the Chairman of the Board of Directors Message from the CEO 2013 Financial Results The Business The Customer Productivity 12 2472 16 25 Future Growth 30 Responsibility 35 Corporate Governance 55 Management's Discussion and Analysis of Results 58 Audit and Corporate Governance Committees Report 61 Glossary 63 Consolidated Financial Statements 64 GRI Guidelines 86 1#32013 Financial and Social Responsibility Report Message from the Chairman of the Board of Directors At Walmart de México y Centroamérica, our priority continues to be to improve the quality of life for the families in the region. In order to follow through on this promise in a year of great challenges, we rely on the talent of our associates, on our commercial strategy, and on our financial prudence. This year we witnessed the benefits of the integration of the region and, together with implementation of strategic changes, we continue investing in the growth of the Company, despite the difficulties faced. OUR OBJECTIVE is clear To contribute toward improving the quality of life of the Mexican and Central American families 2#4We continue to base our commercial strategy on Every Day Low Prices and a growing multi-format operation. These two factors enable us to consistently serve the changing needs of our customers while they save money and live better. After completing the unification of processes and systems, and the standardization of the formats, this year we were able to witness the benefits of regional integration. These benefits are reflected in the return to growth and profitability in Central America, producing a positive outlook for the future of the Company. Although our processes and operations are increasingly more productive, especially this year where we made considerable achievements, we still see great potential for improvement with greater efficiencies produced. To exceed the expectations of our customers, we conducted strategic changes and investments that will ensure compliance with our long-term vision: we maintained price leadership, we simplified the business with the purpose of achieving greater efficiency, and we made investments to guarantee the business today and in the future. Our consolidated revenues amounted to 425.2 billion pesos, a record figure despite the economic challenges faced. As a strategy to simplify the business, we decided to sell our restaurant division and focus on the retail business. In keeping with the strategy of investing in the future of the business, in June we successfully launched walmart.com.mx, which according to Comscore, is the eCommerce site with the greatest audience in all Mexico, within the retail category. Thanks to the soundness of our financial structure, represented in a robust balance sheet and the capacity we have to generate cash, we can repay our shareholders for the confidence they have in us through the payment of dividends and the repurchase of own shares. In 2013, the record figure of 19.4 billion pesos was earmarked for dividends and the repurchase of Company shares. The Board of Directors advised the Shareholders' Assembly to approve a payment of an ordinary dividend and an extraordinary one consisting of 0.92 pesos per share, representing 16.1 billion pesos; we also invested 3.3 billion pesos for the repurchase of 96 million shares. In addition, in 2013 we invested 14.0 billion pesos to modernize and expand our installed capacity, thereby confirming our confidence in the growth opportunities afforded us in the six countries where we operate. Our Company recognizes the talent and leadership of our management team and our associates; the commitment to our 226,289 associates remains unwavering: providing them with a challenging work environment day after day, equal opportunities, gender equality, and the chance to grow as professionals. In this manner we can retain and develop talent within the Company and have a solid, high-performing organization that supports our operations in the long term. We are fully aware that being a good corporate citizen reaffirms our commitment to the communities and the environment in the six countries where we operate. The Walmart de México Foundation celebrated its X anniversary as the Company conduit through which we support development programs favoring nutrition, productivity as a way of combating hunger, the participation of associates and customers in community activities, and assistance to victims of natural disasters. We have a clearly-defined sustainability strategy focused on reducing the use of water, energy, and reducing the production of wastes; with this strategy we want to ensure that our operations favor environmental conservation. In recognition of our performance in the field of corporate social responsibility and our leadership in economic, social and environmental issues, for the second consecutive year Walmart de México y Centroamérica has been included in the Dow Jones Sustainability Index for Emerging Markets; also, it is our third consecutive year in which we have been listed in the Mexican Stock Exchange Sustainable Index. I wish to underscore our ongoing commitment to performing all activities with the highest of ethical and legal standards and to generating value and certainty for all our different stakeholders. Dear shareholders, once again I thank you for the trust you have placed in the Board of Directors; my thanks as well to the perseverance and commitment of the Directors, the top management team, our suppliers and our associates. I am confident that together we will continue strengthening our Company and reinforcing our commitment to our customers so they can live better. 2013 Financial and Social Responsibility Report ག Eduardo Solórzano Chairman of the Board of Directors Wal-Mart de México S.A.B. de C.V. 3#5Message from the CEO In keeping with our vision of improving the quality of life of the families in the region, in 2013 we placed the customer at the center of our activities, we implemented strategies to simplify the business, we became more productive, and we invested in our future growth and in our Walmart way of working with responsibility. These decisions allowed us to respond to the needs of our customers while, at the same time, we were adjusting to a difficult economic environment. We are quite sure that our sound strategy, together with the commitment and dedication of each and every one of our associates, will contribute towards successfully facing the challenges of the future. 2013 Financial and Social Responsibility Report 4#6With the purpose of simplifying our commercial structure, our operation in Mexico was divided into two business units: self-service and specialty formats. Merchandising was centralized in self-service and Suburbia is now in charge of the apparel business for self-service. In addition, the administrative processes for Mexico and for Central America were centralized and are now conducted by Global Shared Services for Latin America -GSSLA- located in Costa Rica. In June, we launched our eCommerce portal, walmart.com.mx, thereby extending our communication and sales channels with our customers. Moreover, we made the important decision to sell our restaurant division and focus on our core business. By executing these strategies, our total consolidated income for the year was 425.2 billion pesos, whereas our EBITDA grew to 40.2 billion pesos, 9.5% of income. With these results, in a year full of challenges, we reiterate our commitment to continue leveraging the multiple growth opportunities offered by the six countries in which we operate. In Mexico we were able to continue growing, despite economic challenges: Total income amounted to 367.7 billion pesos, representing 3.4% growth over figures for 2012. • • • Our installed capacity grew 7.2% with the addition of 4.4 million square feet in sales floor as a result of the grand opening of 214 operating units, the majority of them during the fourth quarter of the year, we increased our presence in 29 new locations. Our constant search for operating improvements has allowed us to achieve 36.8 billion pesos in EBITDA, 10.0% of income. In Central America, we posted an improvement in sales and profitability growth, thanks to the successful integration of the region and the efforts conducted to become more productive and improve our value proposition for our customers: Total income amounted to 57.4 billion pesos, some 2.1% higher than in 2012, which is equivalent to 5.7% on a constant currency basis. Our EBITDA increased to 3.4 billion pesos, which is 24.3% as a result of the recovery achieved in profitability and operating efficiency, which is 6.0% of income. We have over 226,000 associates, who are our Company's greatest strength. As a result, over 26,200 associates were promoted throughout 2013, and we invested some 2.7 million man-hours in training. Our Company's commercial success is also the achievement of our suppliers. The products we sell are purchased from over 27,308 business partners. We continue offering training, consultancy, and access to financing to our suppliers; our aim is to further strengthen the value chain and generate savings for our customers. Our corporate leadership also extends to the field of corporate responsibility; in matters of sustainability we continue driving water and energy efficiency, as well as waste management. Our Walmart de México Foundation, through which we have achieved changes in the communities we serve, is now ten years old. An example of the work done by the Foundation in 2013 was the setting up of 887 collection centers, through which 1,888 tons of food were channeled to the Mexican Red Cross for the victims of hurricanes Ingrid and Manuel, benefiting over 170,000 families. I wish to thank our associates for their commitment and efforts, our business. partners for their continued support, our shareholders for their confidence, and our customers for their preference, which is our motivation to continue improving and thus be able to offer them the best value proposition at the lowest prices possible, so they may live better. 2013 Financial and Social Responsibility Report Scot Rank CEO Walmart de México y Centroamérica 5#7Walmart México y Centroamérica XXXX LEXE 2013 Financial and Social Responsibility Report One of the most important retailers of the region OUR VISION To contribute toward improving the quality of life of the Mexican and Central American families 2,861 UNITS in 6 countries Mexico Costa Rica Guatemala Honduras El Salvador Nicaragua 540 cities 200,000 20,000 6.000 200 12180 LLLL 9 226,289 ASSOCIATES 6#82013 Financial and Social Responsibility Report * Excluding Vips in 2012 & 2013 7.5 9.2 BILLION PESOS 13.1 10.7 270.5 total revenue* BILLION PESOS 335.9 '09 '10 '11 '12 '13 19.4 '09 '10 '11 '12 '13 '09 '10 '11 '12 '13 dividends & repurchase of shares total sales floor 7 SQ. FT. (MILLION) 44.5 54.7 378.9 412.1 2013 financial results KEY PERFORMANCE INDICATORS 425.2 THIS YEAR, WE WERE ABLE TO GROW OUR SALES AND EBITDA, DESPITE A COMPLEX ENVIRONMENT. WE EXPANDED OUR PRESENCE WITH NEW UNITS, INVESTED IN REMODELING AND MAINTAINING OUR STORE BASE, AND WE LAUNCHED NEW CHANNELS THAT WILL ALLOW US TO CONTINUE SERVING A GROWING NUMBER OF CUSTOMERS IN THE FUTURE. IN ADDITION, WE REPAID OUR SHAREHOLDERS WITH RECORD FIGURES IN DIVIDENDS AND THE REPURCHASE OF COMPANY SHARES. 61.7 66.5 26.9 '09 '10 '11 ebitda* 71.2 BILLION PESOS '12 '13 33.3 37.2 39.9 40.2#92013 Financial and Social Responsibility Report 1,466 2,279 UNITS 2,709 2,630 2,861 • • '09 '10 '11 '12 '13 total units* CONSOLIDATED RESULTS: Total income amounted to 425.2 billion pesos, an increase of 3.2% EBITDA grew to 40.2 billion pesos Cash generation totaled 40.0 billion pesos, allowing us to finance: Some 14.0 billion-peso investment in fixed assets, earmarked for the grand opening of 235 units; remodeling and maintenance of our installed capacity; and investing in our future: eCommerce. Record figure in the history of Walmex -totaling 19.4 billion pesos- in the payment of dividends and the repurchase of own shares, that is, 16.1 and 3.3 billion pesos, respectively. On a comparable basis, excluding the store lease expense, general expenses increased 5.2%, whereas the sales floor growth was 7.1%. • Our balance closed at 21.1 billion pesos in cash. * Excluding Vips in 2012 & 2013 '09 '10 '11 '12 '13 number of associates* In Mexico we continued growing despite challenging macroeconomics: • . • Total income totaled 367.7 billion pesos, representing 3.4% growth. EBITDA posted 36.8 billion pesos, which is 10.0% of income. Installed capacity increased 7.2% due to the opening of 214 new units. In Central America profitability recovered, as reflected in the benefits derived from integrating systems, processes and formats with those operating in Mexico: . Total income amounted to 57.4 billion pesos, increasing 2.1% and 5.7% on a constant currency basis. Gross margin grew 10.1%, representing 22.4% of income. • Operating income posted 45.0% a total of 2.1 billion pesos. • EBITDA generated 3.4 billion pesos, growing 24.3%. Installed capacity increased 6.1% due to the opening of 21 new units, allowing us to leverage our overhead, which grew 5.8%. The results achieved in 2013 are a direct reflection of important strategic adjustments made in light of a challenging economic situation. Said results confirm our financial soundness, allowing us to expand the business and repay the confidence and trust of our shareholders. 8 176,463 1.2 '09 '10 '11 '12 '13 customers served* ASSOCIATES 219,767 BILLION CUSTOMERS 1.6 264 cities w/walmex presence* 238,128 228,819 226,289 '09 10 '11 '12 '13 1.8 384 1.9 2.0 467 CITIES 504 540#102013 financial results INCOME STATEMENT & BALANCE SHEET CONSOLIDATED (Excluding Vips) 2013 2012 % INC. Total revenues (billion pesos) Gross margin 425.2 412.1 3.2 22.0 21.9 3.8 % of revenues General expenses 14.6 14.2 6.1 Operating income 7.4 7.6 0.3 EBITDA 9.5 9.7 0.9 Financial Information under International Financial Reporting Standards ASSETS Cash 21.1 Customers Banco Walmart 4.8 Inventories 43.8 LIABILITIES & EQUITY 47.6 Suppliers Fixed assets & others 160.6 4.8 Captation Banco Walmart 177.9 Equity & others 2013 Financial and Social Responsibility Report 230.3 (billion pesos) As of December 31, 2013 9#112013 financial results Million pesos *I FR S **M FRS 2013 (1) 2012 (1) 2011 2011 2010 2009 2008 2007 2006 2005 2004 Mexico GDP (Growth,%) 1.1 3.9 3.9 3.9 5.5 (6.1) 1.5 3.3 5.2 Mexico Annual Inflation (%) 4.0 3.6 3.8 3.8 4.4 3.6 6.5 3.8 4.1 Peso Appreciation (Devaluation) % 1.4 (7.9) 12.9 12.9 (5.6) (4.5) 25.5 0.8 1.7 Average Exchange Rate 12.8 13.1 12.5 12.5 12.6 13.4 11.2 10.9 10.9 Year-end Exchange Rate 13.0 12.9 14.0 14.0 12.4 13.1 13.7 10.9 10.8 Mexico Average Interest Rate (28 Day Cetes,%) 3.8 4.2 4.2 4.2 4.4 5.4 7.7 7.2 7.2 217982 3.2 4.1 3.3 5.2 (4.7) (1.2) 10.9 11.3 10.6 11.1 9.2 6.8 RESULTS NET SALES 420,577 407,843 375,280 379,021 334,511 269,397 244,029 219,714 193,969 161,423 % of growth total units 3 N/D 12 13 24 10 11 13 20 18 136,546 16 % of growth comp units (1) 4 4 4 3 3 5 6 10 10 9 OTHER INCOME % of growth TOTAL REVENUES % of growth 4,584 4,217 3,570 1,885 1,346 1,054 888 787 711 640 582 9 425,161 3 GROSS PROFIT 93,624 % of profit margin 22.0 GENERAL EXPENSES 62,102 N/D 412,060 N/D 90,228 21.9 58,541 N/D 378,850 N/D 85,109 40 380,906 13 83,698 28 19 13 11 11 10 117 22.5 22.0 55,574 53,619 % of total revenues 14.6 OPERATING INCOME % of total revenues 31,532 7.4 14.2 31,422 14.7 29,591 14.1 30,079 335,857 24 74,059 22.1 47,015 14.0 27,044 270,451 10 58,600 21.7 36,332 244,917 11 53,284 220,501 13 47,751 194,680 20 42,032 162,063 18 34,540 137,128 16 28,840 13.4 21.8 33,533 13.7 21.7 21.6 21.3 21.0 29,428 26,237 22,480 19,514 13.3 13.5 13.9 14.2 22,268 19,751 18,323 15,795 12,060 9,326 7.6 7.8 7.9 8.1 8.2 8.1 8.3 8.1 7.4 6.8 % of growth 0 N/D N/D 11 21 13 8 16 31 29 28 EBITDA 40,222 39,860 37,188 37,415 33,294 26,915 23,887 21,973 19,019 15,109 11,877 % of total revenues 9.5 9.7 9.8 9.8 9.9 10.0 9.8 10.0 9.8 9.3 8.7 FINANCIAL (EXPENSES) INCOME, NET (15) 401 189 191 460 662 474 1,468 1,378 1,369 998 INCOME BEFORE INCOME TAX 31,517 31,823 29,780 30,198 27,630 INCOME TAX 9,517 9,237 7,695 7,939 8,066 23,018 6,212 19,857 5,184 19,536 17,119 13,110 10,090 5,574 4,943 3,796 2,407 DISCONTINUED OPERATIONS (1) 713 683 CONSOLIDATED NET INCOME 22,717 23,275 22,080 22,254 19,550 16,806 14,673 13,962 12,176 9,314 7,683 ATTRIBUTABLE TO THE PARENT % of growth (2.4) 5.4 N/D 13.8 16.3 14.5 5.1 14.7 30.7 21.2 43.0 2013 Financial and Social Responsibility Report 10#1221,129 28,163 25,166 43,795 39,092 39,336 19,510 12,909 13,579 GOODWILL TOTAL ASSETS SUPPLIERS 121,083 117,377 111,372 24,745 24,745 29,768 230,262 222,286 219,221 *I FR S **M FRS 2013 (1) 2012 (1) 2011 2011 2010 2009 2008 2007 2006 2005 2004 FINANCIAL POSITION CASH INVENTORIES OTHER ASSETS FIXED ASSETS 25,166 24,661 19,483 11,350 8,984 14,985 14,161 11,846 40,163 29,023 22,507 22,794 20,865 18,045 14,084 11,955 13,249 9,056 6,256 5,034 5,373 4,383 3,138 2,308 29,768 225,026 116,680 102,300 29,768 194,808 133,139 84,893 79,286 71,522 61,449 53,396 45,762 118,464 106,744 98,862 84,779 71,871 47,609 44,770 50,854 50,854 38,000 30,378 27,005 25,381 25,864 20,429 16,017 OTHER LIABILITIES 39,702 37,679 39,184 40,894 33,948 19,613 17,183 15,179 13,502 12,549 8,906 EQUITY 142,931 139,701 NON-CONTROLLING INTERESTS 20 136 128,867 316 132,962 122,531 83,148 74,276 66,184 59,496 51,801 46,948 316 329 TOTAL LIABILITIES, EQUITY AND NON-CONTROLLING INTERESTS 230,262 222,286 219,221 225,026 194,808 133,139 118,464 106,744 98,862 84,779 71,871 NUMBER OF UNITS MEXICO Bodega Aurrera 1,589 1,423 1,204 1,204 899 684 442 313 258 203 162 Walmart 243 227 213 213 192 169 153 136 118 105 89 Sam's Club 156 142 124 124 108 98 91 83 77 69 61 Superama Suburbia 92 90 88 88 75 69 67 64 60 55 48 109 100 94 94 90 86 84 76 62 53 50 Medimart Pharmacies 10 6 Restaurants Vips 365 364 364 366 360 360 348 311 286 268 TOTAL 2,199 2,353 2,087 2,087 1,730 1,466 1,197 1,020 886 771 678 NUMBER OF UNITS CENTRAL AMERICA Discount Stores 466 459 453 453 401 377 Supermarkets 100 97 96 96 94 92 Bodegas 75 67 54 54 36 32 Walmart 20 17 17 17 16 16 Clubs 1 2 2 2 2 2 TOTAL 662 642 622 622 549 519 BANCO WALMART Bank branches OTHER INFORMATION AT THE END OF THE YEAR Number of Associates Share Price (2) (pesos) Number of Outstanding Shares (2) (millions) Market Value Earnings per Share (2) (pesos) Payment of Dividends Number of Shares Repurchased (2) (millions) 201 263 263 263 263 190 38 16 226,289(3) 34.26 17,627 603,901 1.284 16,056 248,246 42.33 17,722 750,172 1.312 9,612 238,128 238,128 38.23 38.23 17,747 678,471 1.240 17,747 678,471 1.250 219,767 35.44 17,848 632,533 1.105 176,463 29.35 16,752 170,014 18.50 16,870 157,432 18.85 141,704 23.78 124,295 14.76 109,057 9.58 16,946 17,144 17,292 17,480 491,671 312,095 319,347 407,684 255,143 167,371 0.999 0.866 0.817 0.705 0.532 0.434 9,659 9,659 5,743 5,040 4,902 4,313 3,223 2,708 1,917 96 27 103 103 112 117 152 288 307 409 426 3,328 1,088 3,455 3,455 3,472 2,509 2,869 6,065 4,842 4,663 3,824 Investment in Shares Repurchasing Operations 1 Vips is presented in discontinued operations 2 Adjusted according to split conducted in April 2010 3 Excluding Vips * IFRS = Financial information under International Financial Reporting Standards ** MFRS = Financial information under Mexican Financial Reporting Standards 2013 Financial and Social Responsibility Report 11#132013 Financial and Social Responsibility Report CETTO Samignon 2011 95.00 Syr EXANIC Syrah Syra Syrah Syra 400.00 the SIMPLIFYING. business The first step towards maintaining a leadership position within our sector is having a flexible business that is capable of rapidly responding and providing specific solutions for each type of customer and adapting to their changing needs. By having our customer at the heart of all our activities we can simplify our commercial structure and drive operating efficiencies. 12#14ALWAYS SEEKING TO IMPROVE OUR OPERATION IN BENEFIT OF OUR CUSTOMERS, IN 2013 WE MODIFIED THE COMMERCIAL AND OPERATING STRUCTURE OF THE COMPANY. THIS SIMPLIFICATION ENTAILED DIVIDING THE OPERATION IN MEXICO INTO TWO BUSINESS UNITS -SELF-SERVICE AND SPECIALTY FORMATS- EACH FOCUSED ON CONDUCTING CHANGES AND ADAPTING TO ECONOMIC AND SHOPPING TRENDS EXHIBITED THROUGHOUT THE YEAR. This new division, which includes Bodega, Walmart and Superama, has allowed for the alignment of self-service potential with the centralization of merchandising, which in the past was divided by operator. SELF-SERVICE Division The purpose of this centralization is having buyers who are specialized by area, with the tools needed to increase their efficiency through the integration of merchandising for the self-service formats, and differentiating the product offering of each one. Key to the success of their mission is the support provided by the recently created Customer and Market Intelligence unit, enabling the buyers to better build a distinct commercial proposition for each of our business formats. With this added insight into our customers and the creation of a unique planning process, the regional offering is reinforced. Our buyers now create an overall strategy by category, and they are responsible for the products, planning, modular design, and setting the right prices. By centralizing the merchandising function in Self-service, we are able to leverage our supplier relations, jointly designing with them the most efficient programs that in turn produce the greatest impact. An example of this is commercial planning through the scheduling of defined purchasing cycles, a process which is more proactive and efficient for the suppliers, as they can now program their production, deliveries and commercial initiatives, with sufficient lead time. The current structure has not only contributed greatly towards simplifying our operation, thanks to increased specialization and improved commercial alignment, but it has also produced positive results, especially as regards a commercial offering more focused on our customers and on better prices. The operating structure by format remains unchanged. Therefore, each business can focus on managing their units much as they had done prior to having merchandising centralized. 2013 Financial and Social Responsibility Report 13#15SPECIALTY FORMATS Division The Specialty Formats division includes Sam's Club and Suburbia, serving different needs due to the very nature of each one. The change in structure has proven quite positive for the businesses in this division; decision-making processes have become more agile thanks to the clearly-differentiated strategies and actions for each one, thus allowing us to provide specific solutions for each business and focus on each type of customer and member. Sam's Club, has refocused on the value proposition for our advantage and business members so as to meet their particular needs. With this strategy, our members can be convinced of the great value of their membership. We have reinforced our offering with basic merchandise at very competitive prices, and with highly differentiated products. Suburbia has been assigned the responsibility of the apparel division for Self-service, allowing us to align the processes for all the apparel division, thereby benefiting our self-service customers. Now, each format offers precisely what its specific customers want and need. Moreover, by aligning the processes for all our apparel divisions, we can generate considerable savings that are ultimately reflected in better prices. By reorganizing and aligning different areas, we are able to design increasingly efficient strategies with our suppliers, optimize raw material use, potentiate private labels, and work as a team of true merchants and offer our customers and members fashion items with the best prices, assortment, and quality. In addition, we made the important decision to sell our restaurant business -Vips, El Portón, and Ragazzi- with the purpose of concentrating our commercial efforts on the retail business. An agreement was reached for the sale price and now we await the final approval of the authorities to close the transaction. Its operation continuity is guaranteed through support agreements until completion of the final transfer of this division. CENTRAL AMERICA Simplification of the business in Central America followed several strategies. We implemented a tool known as "Sister Stores". This consists of selecting similar performing stores and standardizing inventory levels, making volume buys of merchandise, and pursuing operating efficiencies. Thanks to the enhanced management of associate work schedules in our stores, in a mere six months we have been able to achieve considerable savings. Another measure undertaken entailed efficiently scheduling work shifts in all stores to ensure operating discipline. In addition, automatic replenishment for general merchandise was implemented, and merchandising for general merchandise and textiles was concentrated into a single business unit serving the four formats. In this manner, synergies are achieved and sales and margins in these departments are boosted. 2013 Financial and Social Responsibility Report 14#16operation structure 2013 Financial and Social Responsibility Report CUSTOMER & MARKET INTELLIGENCE WALMART SELF-SERVICE SPECIALTY FORMATS BANCO WALMART MERCHANDISING OPERATIONS Bodega Aurrera Sb Suburbia SELF-SERVICE APPAREL DIVISION Walmart Ahorras Dimero. Vives Mejor Superama 110 Bodega Aurrera Walmart Ahorras Dinero Vives Mejor Superama 15#172013 Financial and Social Responsibility Report FOCUSING ON the customer Our customers have always been the reason for our Company's existence and this year, more than ever, we have placed our customers at the heart of everything we do, with the purpose of listening to them, becoming increasing more familiar with them, and developing product offerings that are in keeping with their changing need, thereby meeting their expectations and remaining as their preferred place to shop. 16#18KNOWING, UNDERSTANDING, AND SATISFYING OUR CUSTOMERS ARE THE FOUNDATIONS FOR PROVIDING THEM A UNIQUE SHOPPING EXPERIENCE. THIS YEAR WE CONDUCTED SEVERAL MEASURES TO MAKE THIS PROPOSITION A REALITY. $2 We created the Vice Presidency for Customer and Market Intelligence, whose purpose is to analyze every aspect involved in satisfying our customers and having on our shelves the products they want at prices in keeping with their needs and expectations. 食 Through research panels we received information on what they felt about our different business formats on a national and regional basis, and then used the opinions expressed to generate new commercial offerings and to help keep us as retail sector leaders. We reinforced our mystery shopper program so as to verify the shopping experience and be able to monitor performance standards at our points of sale, observe compliance with established service processes in all our stores, and advise operations teams on how to implement continuous improvement processes for customer service and product display. In order to have direct contact with the customers, we have a call center available to them that serves as a link; the purpose is to hear their comments and concerns, and provide the necessary solutions. 2013 Financial and Social Responsibility Report These measures have helped us to achieve much progress in understanding changes taking place in the market and the new shopping habits of our customers, in addition to enhancing our communication and interaction with them. Stemming from this, we have implemented a regionalization process with customer and market data for our regional suppliers; with this, our customers can now find in our stores the products that they used to have to purchase in traditional markets. What is more, in our formats we have underscored the differentiation that characterizes us; each format focuses on the unique needs of specific segments, all with their own value proposition. 17#19growth 2013 Financial and Social Responsibility Report 1,962 MILLION OF CUSTOMERS SERVED WE REACHED 36 NEW CITIES 540 CITIES WITH WALMART PRESENCE IN 2013 MEXICO AND CENTRAL AMERICA 2,861 UNITS IN OPERATION + SALES FLOOR INCREASE (sq. ft.) 7.1% + MEXICO AND CENTRAL AMERICA + 2,199 MEXICO 1,589 BODEGAS AURRERÁ 243 WALMARTS 156 SAM'S CLUBS 92 SUPERAMAS 109 SUBURBIAS 10 MEDIMART PHARMACIES 662 CENTRAL AMERICA 235 OPENINGS 214 MEXICO 21 CENTRAL AMERICA 18#20Bodegas & Discount Stores Through this format we continue offering staple merchandise, food, and household products at the lowest prices on the market. Jedo This year we simplified our Bodegas & Discount Stores item catalog, concentrating on what is most important to our customers. We increased the share of our private labels and reinforced our commercial strategy by broadening the price gap against our competition. In this way, we support our customers with low price-point programs and campaigns such as Bodega Prices and Fill Your Cupboard for a Few Coins, with which we sold about 80 million pieces, at 5, 10, 15 and 20 pesos each. During this year we opened 183 new stores. In August we opened unit 1,500, in the state of Michoacán, Mexico. Moreover, we created a structure dedicated to reinforcing the different value proposition of each of our three formats, with our product offerings and prices designed for specific shopping occasions and locations. All the above will enable us to accelerate the growth of our formats throughout 2014. VALUE PROPOSITION: price Bodega Aurrera mi Bodega Aurrera Bodega Aurrera 2013 Financial and Social Responsibility Report Customer target d.e Original 2,130 UNITS PALI DESPENSA FAMILIAR Maxi Despensa MaxiPalí 19#21Walmart With a value proposition in assortment and price, our Walmart Supercenters offerthe broadest merchandise variety: groceries, perishables, apparel, and general merchandise. ENCO ENCO 263 UNITS SIEMPRE encuentras TODO y pagas menos Walmart In addition, we continue improving the shopping experience of our customers, offering regional and seasonal items in 263 stores throughout the six countries. In keeping with our proposition of to helping our customers save money and live better, during the year we implemented several commercial strategies that we complemented with advertising campaigns. Through Save More at Walmart, we offered very attractive prices for food and consumables. With Fresh Fridays we added one more day to our traditional Tuesdays, with appealing price points for produce. You Always Find EVERYTHING and Pay Less, is a successful repositioning campaign aimed at highlighting our primary strength -assortment- where the star was "Carrito" (Spanish for shopping cart), an innovative and colorful character who guides our customers to the lowest prices for a broad range of products. Thanks to our well-implemented strategies, we noticed a favorable because we consistently review thousands of prices, as compared to those of our competitors, with the purpose of guaranteeing Every Day Low Prices for our customers. VALUE PROPOSITION: assortment & price Walmart Customer target b.c.d 2013 Financial and Social Responsibility Report 20#22Supermarkets With our fillrates and thinking how better to benefit our customers, Supermarkets are known for their broad range of staple and differentiated products. -Tequila -Tequila Tequila Therefore, this year different campaigns were launched seeking to continue exceeding our customers' expectations. Among others, highlighting the value of our produce and other perishables; the broad selection of wines and liquors; the extended assortment of prepared meals; and the specialization of our pharmacies. Thanks to the grand opening of five new units, there are now 192 units operating in 45 cities. So as to continue with our distinction as an innovator in customer service and taking into account the changing life styles of our customers, in Mexico, Superama has successfully developed new ways to continue offering our value proposition to all our customers. They can opt for home delivery by ordering on line with superama.com.mx, by telephone, and with Superama mobile apps for iOS, Android and Windows. VALUE PROPOSITION: quality, convenience & service Superama 2013 Financial and Social Responsibility Report 192 UNITS Superama a domicilio Masxmenos La Despensa de Don Juan La Unión 0000 Customer target a b c Superpaiz 21#23Sam's CLUBⓇ The year proved to be challenging for the format, with a posted contraction in results. With this in mind,Sam's Club concentrated on increasing the information available to our members so as to provide a value proposition in line with their expectations. Platest bouce de Ch Cisnart 157 UNITS SAM'S SAM'SMS CLUB T VALUE PROPOSITION: price leader, volume, new & unique merchandise Sam's CLUB Customer target a b c business Experience and satisfaction indicators were used to obtain feedback on general aspects, and their intention to recommend and/or renew their membership. The relationship with our members was reinforced through recovery strategies, thereby allowing us to recover members. Moreover, we implemented specific measures for each member segment. In the case of our Advantage Members, we launched Every Day Low Price programs for staple products; we reinforced our proposition with differentiated items from global suppliers; we improved our product catalog for household items; we made bulk purchases more affordable; and we launched new events with themes revolving around technology, beauty, and food. For our Business Members, we invested in price for items important to them; we guaranteed assortment in the top-selling merchandise; we improved our item offering for wholesalers; and we launched membership plans for potential members located near our clubs. Throughout 2013, we opened 14 new clubs in 11 states, extending our presence to 87 cities in Mexico and Central America, recognizing the commercial potential of warehouse membership clubs. 2013 Financial and Social Responsibility Report 22#24Sb Suburbia The value proposition for our apparel stores is fashion, with the best value-price-quality equation for the whole family. We opened 10 new stores throughout Mexico, offering Real life fashion to more Mexican families, at 109 units located in 42 cities, that is, in 29 states of Mexico. In addition to our presence in a greater number of communities, we have increased the efficiency and productivity of our sales floors. A decision was made this year to centralize the purchase of apparel for the self-service formats, in Suburbia. Now our team of apparel specialists leverage their negotiation skills with suppliers and at the same time achieve supply chain efficiencies. This helps to reduce costs that can be transferred to customers of all our formats, and consolidate our unique assortment and our Every Day Low Prices. VALUE PROPOSITION: fashion, value, price & quality Sb Suburbia 2013 Financial and Social Responsibility Report Customer Target c.d 109 UNITS 23#25MaxiPalí Central America An important achievement this year was having concluded the Standardization of processes, systems, formats, and equaling service protocols with those used in Mexico. With the purpose of better understanding the tastes, preferences and shopping habits of our customers, we adjusted our commercial plans, communication with the media, and those concerning points of sale. Greater attention was paid to improving our supply levels, especially with imported merchandise. We included products that in the past could only be found in traditional markets, and we guaranteed the best prices for items of greatest importance to our customers. Since we are committed to constantly improving our value proposition, we reinforced our strategy for Every Day Low Prices. This year the benefits of regional integration were specifically observed and they are reflected in our growth and recovered profitability in Central America. Although both factors were temporarily impacted by our decision of setting the foundations for the Company's long-term strategy, we know there is still considerable potential for creating more synergies and efficiencies. 2013 Financial and Social Responsibility Report PHYT Paiz 5% DE AHORRO 24#262013 Financial and Social Responsibility Report DRIVING productivity A complex economic arena brings with it new challenges. In order to be successful in the face of them, in 2013 we set our minds to being a more efficient business by optimizing resources, reducing expenses, and extending our supplier base, which in turn has allowed us to keep our costs low. 602 25#27000 11 ㅇㅇㅇ OUR STRENGTH HAS HISTORICALLY BEEN BASED LARGELY ON HAVING AN EFFICIENT OPERATION. THIS PREMISE DEMANDS HAVING LOW COSTS IN ORDER TO BE ABLE TO OFFER THE RIGHT PRICES, WHICH IS ACCOMPLISHED BY CONTINUOUSLY IMPROVING OUR PROCESSES, WHICH IN TURN ENSURES EFFICIENT EXECUTION AND OPERATION. THEREFORE, IN 2013 WE CREATED AN AREA THAT FORMALLY OVERSEES EFFICIENCY-RELATED PROJECT MANAGEMENT AND COORDINATES PRODUCTIVITY INITIATIVES FOR ALL FORMATS AND AREAS THROUGHOUT THE SIX COUNTRIES, AND ALL IN A CENTRALIZED MANNER. PROGRESS IN PRODUCTIVITY, STORES, CLUBS AND DISTRIBUTION CENTERS The productivity of our associates in stores and clubs in Mexico posted a comp unit improvement of 3.0%. This was accomplished the sale of items per hour worked. Our logistics operation, which is an essential pillar in supporting the profitable growth of the business, consists of a broad distribution network with distribution centers throughout Mexico and Central America. With this infrastructure we are able to ensure efficient handling and timely delivery of the merchandise our customers want to find on the shelves of all our formats. Our distribution centers located in six cities in Mexico operate at a volume of over 1.8 billion cases, and we were able to improve our productivity by 12.2%, as compared to 2012. We traveled over 200 million kilometers and made almost 700,000 trips to deliver merchandise to our units and to other distribution centers. Our distribution centers located in Central America were fully integrated to Walmart systems, thereby improving inventory and data management and achieving greater productivity. Likewise, we enhanced the efficiency of merchandise handling, moving more cases per man-hour. 2013 Financial and Social Responsibility Report Our distribution centers located in six cities in Mexico operate at a volume of over 1.8 billion cases, and we were able to improve our productivity by 12.2%, as compared to 2012. 26#28Ogistica 11 PRODUCTIVITY IN ENERGY AND MERCHANDISING Another accomplishment in productivity in Mexico is the savings stemming from a reduction in energy use in our stores -some 3.3% less and 61 million kWh- which is equal to the annual energy used by 34,000 homes and 30,000 tons less of CO2 emitted into the atmosphere. Initiatives such as installing doors for refrigerated display cases in our stores, modernizing the lighting system with LED bulbs in our units, among others, helped us to achieve these savings. Thanks to the new commercial structure and centralized system we now have, productivity in our merchandising departments improved significantly. By focusing on areas of specialization, greater efficiency in merchandise processes, selection and segmentation has been possible. Closer attention is paid to suppliers as they now have a single contact point instead of a different buyer in each format. At a consolidated level, all these productivity initiatives and disciplined expense management has allowed us to post increases that are less than half the growth rate of our sales floor. On a comparable basis, excluding the store lease expense, general expenses increased 5.2%, whereas the average sales floor growth was 7.1%. MIGRATION OF ADMINISTRATIVE PROCESSES TO COSTA RICA The need for a flexible organization, ready to adapt to the ever changing needs of the customers, also necessitates having a high-performance administration. This has been accomplished with the creation of our Global Shared Services for Latin America (GSSLA), located in San José, Costa Rica. It is here where we have consolidated the processing of financial operations and transactions, not just for Mexico and Central America, but for the other Latin American countries where Walmart operates. GSSLA is a service-oriented organization that offers support to our internal customers by consolidating accounting processes, systems, and transactional operations. Among the more important operations that have migrated are: accounts payable and accounts receivable management; asset and master data management; central accounting; payroll processing; payment analysis; and supplier claims. The benefits of having centralized these activities are multiple, such as operational savings, process standardization, implementation of best practices, and leveraging costs and support services. Another accomplishment in productivity in Mexico is the savings stemming from a reduction in energy use in our stores -some 3.3% less and 61 million kWh- which is equal to the annual energy used by 34,000 homes and 30,000 tons less of CO₂ emitted into the atmosphere. 2013 Financial and Social Responsibility Report Warmart GSS Latin Amer 27#29ZONA A 21 11 OOO ZONA B 21 ㅇㅇㅇ STANDARDIZED PROCESSES THAT GENERATE PRODUCTIVITY: ISO 9001 SINCE 2008 At Walmart de México y Centroamérica we are always seeking ways to make our processes more efficient and maintain and increase the quality of all our operations, thereby benefiting our customers and associates. In recognition of our ongoing pursuit of efficiency and productivity, this year we were awarded the Certificate for Quality Management Systems -ISO 9001:2008-, by the Spanish Standardization and Certification Association (AENOR), for the recovery and saving process of tax documents such as invoices for the purchase of merchandise for sale in our self- service stores, restaurants and membership warehouse clubs; for internal supplies; and payments made to suppliers. With this certification we now have 14 ISO-certified processes in the areas of Logistics, Finance and Management, Accountability, Operating Finance, Tax Compliance and Payroll Tax. Other six ISO 9001:2008 certified processes have been transferred to the GSSLA. Walmart GSS Latin America SUPPLIER TRAINING AND ASSISTANCE Since we are aware of the fact that our suppliers are fundamental partners in conducting our business strategies, we seek to have mutually beneficial relationships with them, always favoring our customers. We work with micro, small, medium, and large-sized suppliers with whom we establish long-term strategic relations with the purpose of always obtaining top quality, well-priced products. At Walmart we are constantly extending our regional supplier base, as well as that of SME suppliers, providing them assistance with improvements and access to programs that increase their capacity. Throughout the year we offered training and assistance to 1,700 suppliers in Mexico so they could determine the commercial value of their products, and elements with which they could compete. We also offered over 800 man-hours of free commercial assistance through our website and we had presence in events to identify SMEs. In Central America we assisted 299 suppliers through 17 training sessions. Driving supplier growth also implies financial assistance. Therefore, we reduced our payment periods for more than 600 SME suppliers, thus improving their liquidity. With Banco Walmart's Credimpulsa program, we provided financing at competitive rates and quick authorization processes, based on the commercial relationship with any of our operating formats. 2013 Financial and Social Responsibility Report 28#30efficiency & productivity 2013 Financial and Social Responsibility Report MORE THAN 1.8 BILLION CASES OPERATED IN OUR DISTRIBUTION CENTERS LOCATED IN SIX CITIES IN MEXICO 食食 tt tt 食食 食食 食食 食食 食食 ㅇㅇㅇ CENTRAL AMERICAN DISTRIBUTION CENTERS WERE 100% INTEGRATED TO WALMART SYSTEMS SAVINGS FROM A REDUCTION IN ENERGY CONSUMPTION IN MEXICO -3.3% IN OUR STORES EQUAL TO: 61 MILLIONS OF KWh ⚫ ANNUAL ENERGY USED BY 34,000 HOMES • 30,000 TONS LESS OF CO, EMITTED INTO THE ATMOSPHERE 800 MAN-HOURS OFFERED OF FREE COMMERCIAL ASSISTANCE THROUGH OUR WEBSITE WE TRAVELED OVER 200 MILLION KILOMETERS AND MADE ALMOST 700.000 TRIPS TO DELIVER MERCHANDISE TO OUR UNITS AND TO OTHER DISTRIBUTION CENTERS WE OFFERED TRAINING AND ASSISTANCE TO 1,700 SUPPLIERS IN MEXICO * PRODUCTIVITY IN MEXICO +3.0% IN STORES & CLUBS UNITS PER LABOR HOUR +12.2% IN DISTRIBUTION CENTERS CASES PER LABOR HOUR 19 29#312013 Financial and Social Responsibility Report @ INVESTING IN OUR future growth One of our competitive advantages has been to constantly invest in our long-term growth. To build the business of the future, this year we conducted certain changes: integrating processes and systems in Central America, and standardizing their formats; migrating administrative processes through GSSLA; investing in our new units and in sustainable infrastructure; modernizing our distribution centers; and launching walmart.com.mx, through which we evolved and opened up new communication and sales channels for our customers. ewejedns 30#32@@日本黑@口@口@口@T SYSTEMS INTEGRATION IN CENTRAL AMERICA During 2013 we completed the integration of processes and systems in Central America and standardized the formats with those that exist in Mexico. Now we have greater visibility into operations and inventories, thereby producing better commercial results. In the future, the information generated by our systems in Central America will help us better understand the shopping habits of our customers, optimize the value proposition, manage prices with flexibility, and align our formats. Asolo 990 349034an A solo €3490 2490 5890 GLOBAL SHARED SERVICES FOR LATIN AMERICA (GSSLA) With the vision of continued growth and the optimization of our processes, we created the Global Shared Services Center for Latin America -GSSLA- located in San José, Costa Rica. It is here where we centralize administrative processes related to the Company's transactions, such as accounts payable and receivable; asset management, centralized accounting; payroll processing; payment analysis; and supplier claims. The GSSLA strategy, in line with the three strategic pillars of growth, leveraging, and return on investment, will create benefits for the region's countries, organizations, areas, and associates it serves. walmart GSS Latin Amer 2013 Financial and Social Responsibility Report 31#33BIENVENIDO A PATIO SANTA FE @@@@@@ @ @nieg INVESTING IN NEW UNITS With the confidence we have in the growth opportunities existing in the countries where we operate, we decided to continue extending our value proposition. During the year we invested 14.0 billion pesos in 235 new units from the different business formats, representing a 7.1% increase in installed capacity, as compared to the previous year. In this way we were able to take our value proposition to 36 new cities and now be present in a total of 540, with 2,861 units throughout Mexico and Central America and a total sales floor of 71.2 million square feet. INVESTING IN SUSTAINABLE INFRASTRUCTURE CENTERS INVESTING IN INFRASTRUCTURE FOR THE DISTRIBUTION CENTERS During 2013 we implemented multiple investment projects that helped make our logistics operation more efficient and increased our distribution capacity to our stores and clubs. We opened three new distribution centers in the metropolitan area of Mexico City, which serve over 100 clubs and optimize the receiving flow from suppliers and the transfer of merchandise among distribution centers. Programs were implemented to optimize the use of our trailer fleet without affecting our operations. Each of our units is equipped with GPS, thereby improving the traceability of the vehicles for better decision making. We have automated more processes, making it easier to increase our response capacity during periods of high volume and to ensure merchandise arrival, for more successful shopping seasons. If we are to continue growing sustainably without having our operation impact the environment, it is essential that our growth strategies consider reducing water and energy use, optimizing waste management, promoting environmental sustainability throughout the supply chain, and promoting care for biodiversity. With this in mind, in 2013 we invested in several activities in Mexico, such as increasing the number of water treatment plants to 642, producing 7.9% reduction in comp-store water use, as compared to 2012. Doors were installed on refrigeration display cases in our units in Mexico, and we modernized our lighting system by installing LED technology, reducing energy use by 61 million kWh, which represents a savings of 3.3% over 2012. A new wind energy plant began operations in Tehuantepec, with the capacity to provide energy for 886 units. We also promote the best sustainable practices of our suppliers that reduce the use of raw materials and increase the use of recycled and renewable ones. Strategies, policies and procedures guaranteeing biodiversity protection during construction stages and throughout the operating life of our units have been put into place. In 2013 we invested in several activities in Mexico, such as increasing the number of water treatment plants to 642, producing 7.9% reduction in comp-store water use, as compared to 2012. 2013 Financial and Social Responsibility Report 32#34Walmart BUSIN IDEA BOL @*@@■+☺B@]+@@@q+@Q@■*@B@ @口@@@ ECOMMERCE MEDIMART An ever increasing number of customers prefer the convenience of online shopping and therefore, in keeping with this reality concerning their shopping habits, in June we launched our eCommerce portal walmart.com.mx. In just seven months of operation, our site had more than 28 million hits. In fact, according to Comscore, walmart.com.mx is the eCommerce site with the largest audience in all of Mexico within the retail category. With over 60 eCommerce kiosks in certain units, our customers can interact with us, make their orders from the store, and pay at any of our many registers. The launching of walmart.com.mx was added to other eCommerce portals we already have in operation: sams.com.mx, superama.com.mx and vudu.mx. Improvements were made this year to superama.com.mx and we relaunched the Superama app for iOS, Android and Windows. What is more, with its portal, the telephone, and the smartphone app, Superama had 7.5 million customers. According to Euromonitor International, superama.com.mx has become a consolidated leader in grocery sales via a website. Vudu, our online movie site made progress over last year, with customer traffic of almost 5.2 million people. It should be noted that due to the sales volume achieved with these channels, Iwe now have an eCommerce-devoted distribution center. We have shown that we are working to become one of the best eCommerce companies in Mexico, with the best assortment, the best prices, the best shopping experience, and the best security for our customers. Medimart, our broad line of generic pharmaceutical products -launched in May 2007- is sold in all our formats and in a network of over 1,150 pharmacies from different companies throughout Mexico. With over 350 drugs for the most frequent illnesses in the country, such as diabetes, hypertension, obesity, depression, gastritis, respiratory ailments, and others, Medimart guarantees its customers at least 50% savings over market-leading brands. The drugs are made by 25 leading pharmaceutical companies who produce generic products and they are audited under the strictest quality standards before being sold by Walmart de México y Centroamérica. MEDI* MART Genéricos que dan confianza. Walmart.com.mx 2013 Financial and Social Responsibility Report Medimart is sold in all our formats and in a network of over 1,150 pharmacies from different companies throughout Mexico. With over 350 drugs made by 25 leading pharmaceutical companies 33#35growth & new channels 6666 + 7.1% MEXICO AND CENTRAL AMERICA SALES FLOOR INCREASE VUDU, OUR ONLINE MOVIE SITE RECEIVED ALMOST 5.2 MILLION VISITS WE INVESTED 14.0 BILLION PESOS IN 235 NEW UNITS 214 IN MEXICO 21 IN CENTRAL AMERICA WALMART PRESENCE WE REACHED 36 NEW CITIES 2013 540 CITIES 2012 71.2 MILLION SALES FLOOR SQ. FT. 504 CITIES 66.5 MILLION SALES FLOOR SQ. FT. SUPERAMA HAD 7.5 MILLION CUSTOMERS THROUGH ITS ECOMMERCE CHANNELS a IN JUST 7 MONTHS OF OPERATION, walmart.com.mx HAD MORE THAN 28 MILLION HITS Superama | 0 2013 Financial and Social Responsibility Report MEDIMART Genéricos que dan confianza. +350 DRUGS COMMERCIALIZED OVER 1,150 PHARMACIES FROM DIFFERENT COMPANIES IN MEXICO 34#362013 Financial and Social Responsibility Report OUR WAY OF WORKING WITH responsibility Respect for the individual, customer service, acting with integrity, and searching for excellence are the beliefs that comprise our Walmart way of working with responsibility. 35#37WE ARE A COMPANY WITH GREAT VALUE AND OUR ACTIONS IMPACT SOCIETY IN MANY WAYS... associates Not only do we generate jobs, but we drive the development of our associates to be committed talent, in addition to promoting the quality of life, both at work as well with their families. suppliers We provide our suppliers -especially the SMES, who are fundamental partners to executing our strategies- the tools needed to grow the business and be more competitive. community In conjunction with the community, we finance long-term projects that build 'production capacities that combat poverty, and with this in mind we provide our expertise, our people, and our infrastructure for their well-being. environment We reduce the impact to our environment by making responsible use of the resources need, by improving waste management, by promoting environmental sustainability, and by preserving biodiversity. 2013 Financial and Social Responsibility Report 36#382013 Financial and Social Responsibility Report our impact 7.9% LESS WATER USE REGARDING 2012, FOR COMP UNITS IN MEXICO 31% OF OUR EXECUTIVES ARE WOMEN IN MEXICO OUR "GREEN BAG" REDUCED THE USE OF PLASTIC BAGS BY 10.3% 139,045 VOLUNTEERS PARTICIPATING IN MORE THAN 3,700 ACTIVITIES 27,308 SUPPLIERS THROUGHOUT THE REGION 379 MP INVESTED IN ENERGY- SAVING INITIATIVES WE PROMOTE THE SUBSTITUTION TO RECYCLABLE MATERIALS 37 40#39OPERATIONS AND OUR associates WALMART DE MÉXICO Y CENTROAMÉRICA IS A LARGE EMPLOYER THAT OFFERS DEVELOPMENT OPPORTUNITIES TO ITS 226,289 ASSOCIATES. WE FOSTER A CULTURE OF INTEGRITY, RESPECT, SERVICE, AND EXCELLENCE, WITH EMPHASIS PLACED ON EQUALITY AND WORK-LIFE BALANCE FOR ALL OUR ASSOCIATES. PEOPLE, TALENT AND LEADERSHIP We nevertheless face the challenges stemming from growth, the incorporation of new generations into the labor force, and from belonging to a market that is constantly evolving. These challenges are attracting and retaining quality talent, developing competencies, and transforming our Company into a modern organization but without losing our essence and work ethic. In order to rise to the challenges, we have worked on: • Reinforcing the HR structure and management with a sounder and more strategic organization, in keeping with the needs of the business and with robust systems and policies; • Attracting and developing the best talent, fostering their capacities in the organization through people-based leadership, with a pronounced focus on integrity and business results; and • Reinforcing Walmart culture, driving commitment, and enhancing the work experience in the Company. STRUCTURE AND MANAGEMENT Headed by the Senior Vice President of Human Resources, the modality of business partner was created, whose role is to ensure that Human Resources' value proposition meets the requirements for each area and that the strategic priorities are executed. Moreover, HR areas devoted to the specific transversal knowledge of the organization were reinforced. These areas include Compensation and Benefits, and Talent and Organizational Development; the latter encompasses Work-Life Balance and Equality and Inclusion, which support and put into operations the initiatives designated by the Advisory Board on Equality and Inclusion who advises the CEO on related issues. The company has defined policies and procedures and the internal communication needed for optimum human resource management. It also relies on sufficient processes to review its execution and periodic updating as needed. 2013 Financial and Social Responsibility Report 38#40WORK STANDARDS In all the countries where we operate, the work standards outlined and governed by the company's policies and procedures are meant to ensure the following: • • • • • • • A working environment that follows the principles of integrity, respect, service and excellence. No discrimination of race, gender, disability, sexual preference, ideology, or religion, as stated in the policies and procedures for recruitment, training, development and compensation system. A total rejection of child or forced labor. A safe and hygienic workplace, with risk prevention measures in place. Compliance with the law and enforceable regulation in the countries where we operate. Wages above those set forth by current legislation. Respect for work hours and days off, and the proper payment of overtime, when incurred. Equal opportunities for the development of our associates. Internal open and confidential channels of communication on violations of any type to any of the points described hereinabove. TALENT DEVELOPMENT PLATFORM It is essential to have a constant flow of trained talent that sustains our growth plans. Therefore, in addition to the recruitment performed by each HR team leader in his/her corresponding unit and the centralized talent recruitment for staff areas and executive positions, the task of positioning within universities also takes place. Our talent development plans focus on the following: Training. Designed for field and staff associates of all levels; development of skills such as leadership, teamwork, negotiation, and technical competencies for different levels and duties throughout the organization. The Walmart Training Center is in charge of classroom training. We also have SIGA -the Interactive System for Learning Management, and Walmart TV, the internal television channel that covers all Operations. Scholarship programs for bachelor degrees that foster the development of our associates, leveraging their growth within the organization. Coaching, mentoring and visibility to drive the development of associates with potential, with the help of internal and/or external experts, through individual and group processes. CE 00 25 98 MP INVESTED IN TRAINING DURING THE YEAR 1.5 DAYS PER YEAR OF TRAINING 2013 Financial and Social Responsibility Report Sam's 39#412013 Financial and Social Responsibility Report Merchandising and Operations academies, both of which undergo constant review and enhancement. This mode of training reinforces the vision, competencies, and the way of establishing more productive commercial relations within the team of buyers and those who lead our stores. Compensation and performance evaluation system. Designed to stimulate and recognize the development of competencies that are critical to the business; position requirements; and a results-oriented mentality. The evaluation entails individual performance -by semester and annual- as well as multidimensional 360° assessments, and all supported by a calibration process for executives. This latter helps to identify talent, which then leads to the creation of specific development plans. WE PROMOTED MORE THAN 26,200 ASSOCIATES CULTURE, COMMITMENT, AND A MODERN WAY OF WORKING Our Walmart culture is the framework for reinforcing the commitment of all associates to the company. As a result, we reinforce the development of behaviors that are a reflection of our culture. We promote living by our culture through examples, recognition, training, and communication. The Culture Reinforcement Program includes diverse practices that lead to the recognition and reinforcement of behaviors aligned with our culture, including programs such as A+ in Culture, My Leader, and Cultural Transformation. Each year, through an independent survey, we measure the engagement of our associates with the company and the level at which our culture is being experienced through the ongoing process known as Cultivating our Commitment. In addition, we have a program of tools such as the blog Direct with Scot, through which the channel of direct communication is opened so as to drive commitment, a sense of belonging, and closer rapport between the associates and their CEO. et homa Aurrera Bodega La cam OPPORTUNITIES FOR EVERYONE AND DIVERSITY In addition to policies favoring the attraction of talent and development of our associates in an atmosphere of inclusion and respect for diversity, we have the Equity Advisory Board, whose members are Vice Presidents and Directors from different areas of the company. Inclusion of people with disabilities. Cultural Transformation, which focuses on building and reinforcing sensitivity and awareness of equality and inclusion. Training and Development with specific development programs in the field of gender equality. An outstanding example is the Special Certificate Program for Female Executives, offered by the PanAmerican University, in Mexico, with the 5th generation having completed their training in 2013; Taking the Stage training course, taught by women in executive positions; and Women in Retail, where 200 women over a period of three years to become store managers. Government and processes that review and implement policies and procedures that sustain and ensure a culture of equality: wages, recruitment processes, development, and equal opportunities. Flexibility, which reviews and makes proposals on new ways of working, both in the field and in our home offices. The company's Gender Equality Model has been evaluated since 2009 by INMUJERES, the National Women's Institute, and in 2013 certification was awarded once again. 40#42WORK-LIFE BALANCE, HEALTH AND SAFETY Programs on work-life balance and the implementation of new ways of working seek to achieve a modern organization that promotes equilibrium between the personal and working lives of our associates, in addition to a healthy life style. We have reinforced the following programs: • • Workday flexibility, for which we are implementing Habitat, a new concept in the work environment that drives the collaborative work of teams in open work schemes and by functions, producing a work ethic concentrated on improving the work atmosphere, productivity, and results. The Flex Week program was also implemented, with the participation of staff associates. It entails adjusting work hours during the week, in such a way that these associates have Friday afternoons off. Medical insurance coverage was extended to include childbirth expenses. Postnatal leave for mothers was implemented, allowing them to have the maternity leave awarded by law, with a progressive return to their fulltime schedule during the first 7 months of the child's birth. Postnatal leave for fathers has been added; they are able to work flex-time during the first month after their child's birth. Agreements with health agencies have been renewed, whereby they can visit all stores nationwide, with the purpose of ensuring the well-being of our associates through actions such as: testing for hypertension, glucose, and cholesterol; checking height and weight; vaccines; and family planning. Continuity was given to agreements that allow our associates to have access to discounts for labs, gyms, health and welfare services, entertainment, and schools. The accident prevention programs that are part of the overall safety measures are reinforced with a group of experts in safety and hygiene who constantly audit our units, with the purpose of creating action plans for any opportunities detected. We then document best practices and communicate them throughout the organization. Joyeria THE FLEX WEEK PROGRAM WAS ALSO IMPLEMENTED, WITH THE PARTICIPATION OF STAFF ASSOCIATES. IT ENTAILS ADJUSTING WORK HOURS DURING THE WEEK, IN SUCH A WAY THAT THESE ASSOCIATES HAVE FRIDAY AFTERNOONS OFF. 2013 Financial and Social Responsibility Report 41 41#43OPERATIONS AND OUR suppliers OUR CUSTOMERS ARE IN CONSTANT CONTACT WITH NEW TRENDS, REGIONAL TRADITIONS, AND EVERYDAY HABITS THAT INFLUENCE THEIR SHOPPING NEEDS. IT IS POSSIBLE TO SERVE THEM EFFICIENTLY BY ESTABLISHING STRATEGIC, LONG-TERM RELATIONS WITH OUR SUPPLIERS, DEVELOPING REGIONAL SUPPLIERS, AND OFFERING TOP QUALITY PRODUCTS AT EXCELLENT PRICES. STRUCTURE AND MANAGEMENT We have a VP for self-service merchandising; for perishable merchandising; and one for customer insight and supplier development. The research constantly conducted by Customer Insight provides greater understanding of our customers, their lifestyles, shopping habits, and how satisfied they are with the service they receive. Moreover, there is an area -Compliance and Corporate Quality- that oversees the quality of the products and supplier compliance. This structure and additional tools help us obtain insight into our customers, create strategic relations, maintain quality standards, and increase the productivity of our company and suppliers. Our suppliers have tools provided by the company such as Retail Link, which allows them to understand demand levels, measure product sell-thru and thereby improve strategies and response capacities. SUPPLIER STANDARDS The relationship with suppliers of services and of merchandise for sale in stores is covered under the agreement governing the commercial relationship, including clauses on ethical behavior, anticorruption, labor liabilities, and compliance with Supplier Standards, according to which the suppliers agree to the following: Full compliance with the law and regulations enforce, including those governing labor-related issues, immigration, health, hygiene, and the environment, among others. Ensure voluntary hiring. Labor relations between the supplier and its employees must be voluntary, thereby forbidding slave labor, child labor, forced labor, or indentured labor. Legal compliance regarding the number of hours per shift and days off for workers. Implementation of hiring and employment practices that verify employee data such as age and the right to work in the country, with a proper contract covering policies and practices for wages, dismissals, training, and working conditions, pursuant to law. Respecting the right of workers to peacefully and legally join the labor unions of their choice, and to collective bargaining. Ensure that all their practices comply with environmental legislation regarding water, air, and wastes; and that all raw materials come from legal sources. Accurate record keeping on all financial information related to commercial ties with Walmart. Providing all workers a safe and clean working environment and taking the preventive measures needed to mitigate accidents. Compliance with Walmart's right to audit and/or verify at any moment and without prior notice. 2013 Financial and Social Responsibility Report 22 42#44REGARDING CHALLENGES CONCERNING OUR SUPPLIERS We have worked on: 1. Maintaining constant and open dialogue with our suppliers, through different channels: a. The Supplier Advisory Board. Created in 2006, it consists of 14 countries in Mexico and Central America, and it is an opportunity to exchange ideas and foster best practices that increase the competitiveness of our companies. b. The Supplier Survey. This is an annual evaluation mechanism with representation from large, small and medium-sized companies. It evaluates the Walmart way of operating regarding its relations with suppliers, and allows for identification of key points when increasing efficiencies. The representation of SMEs this year was 27%. c. Supplier and Ethical hotlines. Run by independent merchandising areas, suppliers can communicate problems they are facing, make specific suggestions, or file complaints regarding non-compliance with the company's ethical standards. d. Dialogue with suppliers of perishable products. Sessions are held with 450 small, medium and large-sized suppliers to identify areas of opportunity and new ways of working. 2. Strengthening the structure of Merchandising. Centralized Negotiations for GM, groceries, consumables, and Apparel in Self-service, regional buyers, and buyers for perishable categories at the national level. This allows them to develop a more strategic vision, develop products and improve the capacity to respond to customer needs. The Merchant Academy strengthens their training and development. 3. Ensuring quality standards and compliance regarding the products we sell. This is done through a quality and compliance verification process that ensures food safety, the origin of raw materials, and compliance with applicable legislation. We verify that 100% of our private label suppliers have currently audits, in addition to the suppliers of raw materials for processing in our stores and production centers are audited regarding the following: Good Manufacturing Practices Quality Systems Process Control Training Pest Control Facilities Hazard Analysis and Control over Critical Points Said verification processes are based on the following criteria: Perishables. Statistically representative product-quality inspections were performed on deliveries of perishables in Distribution Centers, as per product features concerning weight, temperature, and overall specifications. The inspection sample is taken statistically and action plans are established with suppliers. In addition, in Mexico we purchase 100% top quality, TIF-certified meat. Food Products. In Mexico, 79% of private label suppliers and in Central America, 7% of suppliers who outsource finished product in the Agroindustrial Development plants are certified through the global Food Safety Initiative, which is fostered by the business sector to achieve ongoing improvement of food security management systems, increased consumer confidence, and a guarantee of the availability of safe food products. Walmart requests that its private label suppliers obtain certification from any of the systems recognized by this initiative (SQF, BRC, FSSC 22000, Global GAP, IFS, among others), once they have passed a Good Manufacturing Practices audit and prove the implementation of HACCP (Hazard Analysis and Critical Control Points). The number of certified suppliers varies each year in terms of the needs of the business and the company's commercial requirements. 2013 Financial and Social Responsibility Report 43 13#45Pharmaceuticals. The audit of Medimart drug suppliers verifies the degree of compliance with Mexican standard NOM-059-SSA1-1993: best manufacturing practices for chemical-pharmaceutical industry establishments devoted to making drugs. As of 2014, audits will be conducted under standard NOM-059-SSA1-2013. Textiles. Testing laboratories based on NOM-004-1995. Inspections in distribution centers according to CATMEX-established criteria: visual, packaging, labeling and sizing. Audits by Factory Capability and Capacity Audit which verifies the production processes under the international criteria of Walmart Stores: lab, sample/design room, material warehouse, cut and merge, production and inspection processes, ironing, finish and packaging. It should be noted that, should improvement opportunities be detected, an action plan is created or sanctions are applied to the type of opportunity in question, pursuant to established policies. PRIVATE LABELS: SUPPLIER AUDITS 4. Broadening supplier base of regional, small, and medium-sized companies. Choose, supervise, and develop suppliers within their categories, providing them with improvement opportunities and access to programs that increase their capacities. a. Training and consultancy for over 1,700 suppliers in Mexico, in terms of commercial value and competitive factors. We offered over 800 man-hours in free commercial consultancy through our website and presence in events such as National ANTAD Week and SME Week. In Central America we assist 299 suppliers in 17 sessions. b. Financing and payment terms; support for supplier growth and development. Through the Credimpulsa program, sponsored by Banco Walmart, financing is offered at very competitive rates. We improved the commercial conditions for more than 600 of our SME suppliers, permanently reducing the original payment terms, an average of 21 days, thus helping to boost their liquidity. c. Execution on the sales floor, through a shared promo program in more than 1500 stores, allowing small-sized businesses to efficiently raise their presence at the point of sale, and with highly competitive costs, as compared to the market in general. The Supplier Excellence Award is given out each year in Mexico and in Central America, whereby the results for principal indicators are evaluated on an annual basis: sales, profitability, inventories, and fill-rates. CENTRAL AMERICA Audits underway, for BMP and HACCP diagnostics 86 % Audits underway, for BMP and HACCP diagnostics for finished products* 98% Food 85% Agroindustrial Development 40% *Remaining % is certified or undergoing precertification process. BMP: Best Manufacturing Process HACPP: Hazard Analysis and Critical Control Points MEXICO Food General Merchandise Pharmaceutical products Textiles 2013 Financial and Social Responsibility Report 91 % 100 % 72 % 90 % Miércoles Frescos Tudi la calidad y fowa VERDURAS Mitesindey 50 5 50 ond 95 103 Micoles Frescos 44#465. Ensuring the purchase of agricultural, aquacultural, and fishery products in the proper volume, at the right price, and with optimum conditions of freshness and food safety so as to reduce the risk of physical, chemical, and microbiological contamination represents a major challenge in the way we: Purchase our merchandise: a. Creating a structure of experts who buy product families and categories, nationwide; who are fully aware of production seasons and cycles, and who serve the different businesses, with the purpose of creating a better value proposition for our customers, thanks to improved planning. b. Ensuring product quality through the use of standardized product cards adapted to seasonality, audits, and product-quality certification. The greatest challenges consist of food safety, the supply of quality water systems, supplier labor and working conditions, the logistics network, and collection centers. c. Extending the process used for direct purchases from national growers, thus obtaining lower prices and increased freshness. There is a sustainable agriculture program in both Mexico and throughout Central America that helps farmers increase their production capacity for direct delivery, and to verify practices and yields. Through this program, the farmers receive training in logistics and market-related matters. 1. EFFICIENT SUPPLY 2. IMPROVE INVENTORY TURNOVER 3. OFFER FRESH DAYS 4. SELL MORE TO OUR CUSTOMERS In order to help small suppliers who have low-income levels and live in remote areas of the country, we have developed differentiated commercial programs for payment terms, special conditions in distribution centers, and personalized assistance from Merchandising and subjects related to production processes, administration, and post-harvest management, thereby resulting in an independent organization and support from the Company through its areas of corporate responsibility in Central America and the Walmart de México Foundation. In Central America we purchased over 1.6 million pesos in products from these suppliers, representing 69% of the produce and grains sold in our stores. Move our merchandise: By reducing the days spent in the distribution centers, applying a flexible quality system, and limiting the sell-thru of overly mature products, we are able to increase the days of freshness for our customers. The incorporation of Food Banks in the network allows for full use of the merchandise. The company's logistics network is a key efficiency point for our business, and for the growers it means an increase in the shelf-life of their perishables. Sell our merchandise: By increasing freshness, ensuring supply and the best possible prices for our customers, we are able to have a positive impact on their shopping experience. THREE KEY PRIORITIES TO IMPROVE STORE-PROFIT CONTRIBUTION IN PERISHABLES TRUST 2 = ម REPUTATION + LOYALTY 3 1 2013 Financial and Social Responsibility Report SUPPLIER PURCHASE AND SUPPLY CHAIN THE CUSTOMER REPLENISHMENT AND LOGISTICS IN STORE SHOPPING EXPERIENCE 45 45#47OUR OPERATIONS AND THE community THE SOCIAL IMPACT OF EACH OF OUR UNITS IN THE COMMUNITIES WHERE WE OPERATE ENTAILS THE CREATION OF FORMAL EMPLOYMENT IN A COMPANY THAT OFFERS CONSTANT DEVELOPMENT OPPORTUNITIES, A WIDE RANGE OF PRODUCTS AT LOW PRODUCTS -THUS ALLOWING THEM TO SAVE MONEY- AND THE OPPORTUNITY FOR LOCAL SUPPLIERS TO GROW WITH US. THESE IMPACTS ARE ENRICHED THROUGH A COMMUNITY SUPPORT PROGRAM THAT IS ALIGNED WITH THE MISSION OF OUR COMPANY IN EACH COUNTRY WHERE WE ARE PRESENT, LETTING US DIRECT THE STRENGTHS OF THE BUSINESS IN FAVOR OF THESE COMMUNITIES AND AFFIRM THAT WE CONTRIBUTE TOWARDS IMPROVING THE QUALITY OF LIFE OF THE FAMILIES IN ALL THE COUNTRIES WHERE OUR COMPANY OPERATES. The community support program is based on defined criteria, in terms of the strategic alignment of the business and its capacity to generate value: a. Supporting nutrition through food banks. Given the fact that food items represent 60% of our company, it is fundamental for countries with high food poverty rates to make good use of any merchandise that is suitable for human consumption but not suitable for sale. Moreover, associates have priceless experience that serves to offer advice to food Banks in the efficient handling of food products. We have worked daily with more than 330 food banks and institutions that receive and distribute food products and general merchandise to those who most need, benefiting over 160,000 people. In collaboration with other companies in Central America, six food banks have been set up in Guatemala, Honduras, Nicaragua, Costa Rica and El Salvador. In Mexico we focused on reinforcing data management through a new system and processes on the social impact of donations we have given said institutions, thus enabling us to improve productivity and lend a hand towards achieving greater professionalization. 333 FOOD BANKS AND INSTITUTIONS 160,000 PEOPLE BENEFITED THROUGHOUT THE REGION Å Ì Ò Ì Ò ¡ Ø Å Ì Ò ï Ï 2013 Financial and Social Responsibility Report 46 46#48VOLUNTEERISM THOUSAND OF ASSOCIATES 13.9 1.2 32.3 127.4 139.0 132 63.1 92 '03 '05 '07 '09 '11 '13 DONATIONS CHANNELED MILLION PESOS 387 334 569 507 In Nicaragua, we promote the empowerment of female entrepreneurs with funds that will directly benefit 54 female banana growers and their families who are organized in two cooperatives. This program, jointly operated with other associations, foresees an increase in production numbers and in the quality of the bananas harvested by these women; an improvement in the manufacturing practices and the business skills of the cooperatives to which they belong; and a rise in crop profitability and the income produced, thanks to technical assistance and the transfer of technology. What is more, Walmart de México y Centroamérica will guarantee the purchase and marketing of Coopemad's production, all under the highest standards of quality, handling and processing. WE SOLD AGRICULTURAL AND ARTISANAL PRODUCTS FROM OVER 5,800 PRODUCERS IN THE REGION '03 '05 '07 '09 '11 '13 b. C. Developing farming capacities and the manufacturing of handicrafts in the poorest of communities in the countries where we operate. Since we are part of the retail sector, we have considerable experience with markets, commercial channels, product development and quality, and volunteerism. Our company's ability to develop the production skills low-income small farmers is our primary strength that falls naturally in alignment with the objective of this program. In countries coping with poverty, the creation of production capacities is one of the most important strategies towards increasing income, and with it, the standard of living. Empowering women. The majority of our customers are women and opportunities for them are limited in all the countries where we operate. This situation is even more serious where there is poverty because many of them have had scarce schooling, and many are heads of family. It is therefore fundamental for our company to especially focus on the empowerment of women in all the programs we develop. During the year, we conducted the following programs, among others: In Mexico, "Women Can Count on Us" is a program whose purpose is to finance training courses so women may start up a new business, or improve an existing one, as well as offering scholarships for those women who wish to conclude their high school education or attend a technological university. During the second year of this program, 25,456 women registered so they could participate; this figure, added to that of last year, totals over 60,000 who are actively part of our program. It should be noted that of the total number registered, 66% earn less than 5,000.00 pesos per month; 27% completed Junior High School; 41% are either single, widows or divorced. 2013 Financial and Social Responsibility Report 54,325 WOMEN DEVELOPED THEIR CAPACITIES AND WERE EMPOWERED 47 47#49d. Promoting volunteerism among our associates. In Mexico and Central America most of our associates are living in the same cities where they work. This represents an opportunity and a responsibility for the company of continuing its support for communities and, at the same time, influencing our associates to be better and more committed citizens through a volunteer program developed in each unit throughout the region. The program encompasses different activities. CUENTAS Fundación Walmart • • Conferences given to female entrepreneurs by Walmart VPS in Mexico; Consultancy services offered to small growers and manufacturers by associates from Merchandising; Assistance during natural disasters, such as merchandise drives, classification and packaging with the Mexican Red Cross and in Distribution Centers; • Maintenance activities for schools; • Cleanup and maintenance for green areas, beaches, rivers and lakes; and Reforestation. NOSOTROS 139,045 ASSOCIATES PARTICIPATED AS VOLUNTEERS THROUGHOUT THE REGION México Juntos apoyams e. Providing assistance in natural disasters. We operate in 541 cities, all of them potential sites for natural disasters. Therefore, in the case of an incident of this type, our first priority is the safety of our associates and our customers, reestablishing operations and with it the supply of products needed by all, and using our logistics network and the proximity with its customers to multiply help for disaster victims. During the disasters in Mexico caused by hurricanes Ingrid and Manuel, we set up 887 collection centers in our stores. With the Kilo by Kilo campaign, the Foundation matched the 944 tons of food items donated by our customers, thereby channeling 1,888 tons to the Mexican Red Cross. Our associates affected by the hurricanes received support from the company, others worked as volunteers with the Red Cross, and the use of the logistics network was fundamental to these relief efforts, in addition to the response capacity of the Center for Operations Continuity; with representatives from all areas of the company, this center operates continuously during a disaster, ensuring the supply of products to the stores in the disaster areas. CONTRIBUTION GUIDELINES The Walmart de México Foundation celebrates its 10th anniversary as a not-for-profit organization that channels community support from the company. The Foundation has a board of directors of 11 members, 6 of which are independent directors; the board meets at least 4 times a year. Its primary duty is to define the direction of the Foundation, goals and objectives, approve projects, and follow up on results. Board for the Walmart de México Foundation • Scot Rank (Chairman)** Mercedes Aragonés* Roberto Delgado Gallart* Jorge Familiar Haro* • Martha Smith* • Marinela Servitje* Karina Awad** • Rafael Matute** . Javier Soní* • José Luis Torres** 2013 Financial and Social Responsibility Report • Manuel Álvarez** Independent director ** Related director 48#50In Central America this is done through a Committee on Social Responsibility, consisting of seven key leaders for the business and who meet twice a year. Community support consists of contributing financial and in-kind resources and promoting volunteerism. The company has guidelines for granting support and transparency and anti-corruption mechanisms that ensure compliance with the purpose for which said support is granted. Donation policies and processes include the following: • • • • Open call on line, once a year for a defined period of time, with guidelines regarding the causes and the desired social impact, the type of not-for-profit and non-governmental organizations that are eligible and a defined period of time for receiving projects on line. Project evaluation by a pre-selection committee, consisting of members from academia, the business world and Walmart associates who do not work for the Foundation. Special compliance review concerning applicable laws. Review and selection by majority vote for projects deemed the best by the Pre-Selection Committee, and by the Board of Directors for the Walmart de México Foundation. Contract-writing processes, with clauses that include anti-corruption measures, references on the recipient to ensure authorization to receive donations, clauses on project development, compliance with objectives, and follow-up. Follow-up process for indicators through an electronic system, and visits in person. • In the case of in-kind donations, the selection of the recipient is based on the capacity to pick-up in-kind donations at assigned unit(s), as well as the capacity to generate a greater social impact as per programs and list of beneficiaries. Also covered are points regarding information, special reviews on compliance with any and all applicable legislation, contracts and clauses that include anti- corruption measures, and visits in person. The electronic control system for donations allows for obtaining information relative to the institution and the project, and the social impact indicators. There are restrictions for company users, which prohibit changing the data provided by the institution receiving the help, and also disallowing said institution to alter the information once the project has been approved, or from allowing it to change its own reports once they have been delivered, pursuant to contract clauses. In Central America, the process is overseen by Corporate Affairs department, as per the same anticorruption measures, contracts and project follow-up. Fundac 2013 Financial and Social Responsibility Report 49 49#51OUR OPERATIONS AND the environment REDUCING WATER AND ENERGY USE, IMPROVING WASTE MANAGEMENT, PROMOTING ENVIRONMENTAL SUSTAINABILITY IN THE SUPPLY CHAIN, AND CARING FOR THE EARTH'S BIODIVERSITY ARE ESSENTIAL FACTORS IN MITIGATING THE IMPACT OF OUR OPERATIONS ON THE ENVIRONMENT AND IN INCREASING OUR COMPANY'S PRODUCTIVITY. To meet this goal, the following is considered fundamental: 2013 RESULTS • Having environment-friendly operating standards for water, energy, waste management, products, packaging, and biodiversity. % VARIATION • Implementing and measuring initiatives that favor increasingly sustainable operations. • Adopting the best practices available. We have a strategy with clearly-defined short, medium and long term goals; a team of associates led by a Director in charge of the management; and policies and procedures that support it all. The objectives are part of those established by top management, and reports are made to the Board of Directors regarding progress and performance. The operating formats, in turn, share in the responsibility of the same. CO, / GEI Energy Water (total units) Plastic Bags Recycled wastes (Zero wastes, % sent to sanitary landfills) 2013 Financial and Social Responsibility Report 1.1 BILLION PESOS INVESTED IN SUSTAINABLE PROJECTS NA: NOT AVAILABLE N/A: NOT APPLICABLE Mexico Central America -2.0 -6.8 -3.3 -4.5 -7.3 NA -10.3 N/A 73 61 50#521.376 1.159 WATER We ensure water quality for processes related to human consumption, we ensure efficient use during our operations, and we improve the disposal of wastewater. In all areas related to human consumption, such as in preparing meals, we ensure quality through the use of filtration equipment and by disinfecting water from the public supply network. We continued with the implementation of water-efficient equipment. We extended the number of treatment plants to 642, with which more than 1,680 million cubic meters of wastewater were treated in Mexico, and 28% of them were reused in WCS and for irrigation purposes. In Mexico we reduced 7.9 % water use regarding 2012, for comp units. MEXICO WATER USE PER AREA UNIT (m³/m²) 1.046 '11 '12 '13 ENERGY Core factors in the reduction of carbon emissions, improvements in sustainability and positive impacts on the company's productivity are energy-efficient use of equipment for lighting and systems, the use of renewable sources, an increasing responsible culture, and having eco-efficient products. During 2013 the goal of achieving 3,000 GWh of renewable energy by 2020 was announced; all energy-saving initiatives that are implemented continue supporting energy efficiency for the company and we continue incorporating new technologies in openings and in remodeled units. A new wind energy plan began operations in Tehuantepec, Mexico, with the capacity to generate 85 MWh and feed 886 business units which, together with the 68 MWh generated by the Oaxaca | Lamatalaventosa wind farm since 2010, will enable us to generate 320 MWh of renewable energy for 1,233 operating units. Moreover, different initiatives were strengthened, such as LED lighting, doors installed for refrigeration cases, the use of capacitor Banks, internal energy- efficiency campaigns, and the monitoring of energy control systems. MEXICO & CENTRAL AMERICA TOTAL CO2 eq EMISSIONS (TON/MIL m²) 109 101 Scope 1 Scope 2 Scope 3 Total 236 203 193 98 98 makaka 21 80 26 68 27 OVER 81,900 TONS OF CO2eq NOT GENERATED DUE TO ENERGY SUPPLY FROM THE WIND FARM 2013 Financial and Social Responsibility Report I '11 '12 '13 51#53We encourage the efficient use of energy by our suppliers in their processes and the sale of eco-efficient products such as household appliances, low energy-using electronic devices and equipment, compact fluorescent bulbs and LED lighting. For the first time, our GEI inventory for 2012 was verified by an independent third party -SOLAL S.C. (SOLAL-ÓVVALO), which is in conformity with the requirements for GEI Corporate Standards for Accounting and Reporting (WBCSD and WRI, 2005) at a limited verification level. WASTES With the purpose of reducing, reusing and recycling wastes, in our stores we have programs to recover materials that can be recycled or reused from our operations and from products used by our customers. We also have programs for the safe disposal of organic wastes and expired pharmaceuticals. There are programs with 80% coverage in our stores in Mexico and 100% of those in Central America for the recovery of recyclable materials such as cardboard, flexible plastic, clothes hangers, paper, and multi-layer and PET containers. The "Green Bag" program in Mexico reduced the use of plastic bags by 10.3%, which is equivalent to 1.28 tons of plastic. We promote best practices with our suppliers so they can reduce the use of raw materials and use recyclable, renewable or recycled materials. Over 245,000 tons of wastes were recycled or transformed. The reduction of waste in food has been a priority for the company. Initiatives undertaken to impact the different life cycles perishable products have helped to reduce this type of waste by 25%, as compared to the baseline in 2011, thereby surpassing the goal of 15% reduction by 2015; and in Central America, food waste as compared to the baseline for 2010 dropped 27.4% %, thus exceeding the reduction goal of 5% for 2015. These achievements, together with the donation of food products and general merchandise items to food Banks -a total of 14,005 tons of food products- allows for a better use of these products. We continue with our programs aimed at recovering edible fat and oils so as to reuse them in the making of soap, candles, and pet and cattle feed. What is more, 166 stores are involved in the Mexican program for collecting expired medical products, operated jointly with the National Chamber of the Pharmaceutical Industry and National System for Drug Packaging Waste Management, so as to properly and safely dispose of them. In 2013, some 19.2 tons of medicines were collected. 2013 Financial and Social Responsibility Report MEXICO & CENTRAL AMERICA WASTE RECYCLING RATE 71 55 Mexico 69 Central America 55 73 61 '11 '12 '13 52#54TRANSPORTATION Having the best qualified operators, making efficient use of fuel, producing less wear and tear on tires, and reducing toxic emissions are crucial to maintaining the highest standards of transportation quality and engineering. From the beginnings of the Clean Transportation Program in Mexico, Walmart de México y Centroamérica has reduced CO2 emissions by 11,284 tons, which is equivalent to taking 2,000 vehicles off the road. The company has also saved 4.1 million liters of diesel, a savings equal to 50 million pesos. For the third year, we have received recognition from the Clean Transportation Program, sponsored by the Secretary of the Environment and Natural Resources, and the Secretary of Transportation. Trips have been reduced by 7.4 million kilometers, which is equal to making 580 trips around the world. In Central America, the "Backhauling" initiative, conducted with our suppliers, has saved 121,230 gallons of diesel and 1,235 tons CO2 emissions of GHG, which is the same as taking 247 vehicles off the road for a full year. 00 PRODUCTS Promoting more sustainable products entails having packaging that makes better use of materials, reducing environmental impact during product life cycles, marketing organic products, pesticide-free products and those with low-energy use, as well as encouraging the adoption of low environmental-impact farming practices. (See subchapter on suppliers). We drive the optimization of product packaging and containers. Preference has been given to substituting materials such as plastic for ones such as PET, which are easier to recycle, or with lighter packaging. We have discovered solutions with our suppliers such as loading more merchandise on the trucks and thereby reducing carbon emissions. We promote improvements to product life cycles so as to produce even greater reductions in environmental impact, regarding energy, materials and/or distribution. Moreover, we continue communicating newer and better ways to care for the environment to our customers. Our Walmart and Superama formats have an area set aside for organic products, including milk, cereals, sugar, and coffee, to name just a few. We also promote the sale of pesticide-free products. MEXICO NO. OF PRODUCTS WITH LOW ENVIRONMENTAL IMPACT 925 1,342 1,254 '11 '12 '13 2013 Financial and Social Responsibility Report 53#55BIODIVERSITY The company has a mid-range impact on biodiversity, primarily due to product distribution and the operation of our units, our respect for biodiversity during the construction and opening of new units, and the use of natural resources and CO₂ emissions from products sold in our stores. 1. Protecting biodiversity during the building of units. The Vice Presidency of Real Estate has strategies, policies, procedures and contractual clauses that are aimed at protecting the biodiversity as well as achieving sustainable use of natural resources, from the purchase of the property, unit construction by third parties, and unit design. a. Environmental assessment of the properties prior to purchase or sale, so as to verify the existence of protected flora and fauna, soil contamination, and bodies of water, to determine project viability and any required mitigation and compensation measures. b. Project design adapted to environmental regulations for Green areas, permeable areas, the use of renewable energy sources, and the handling of vegetation. c. Environmental measures and compensations during the construction process. Proper waste management, flora and fauna conservation, atmospheric emissions, noise pollution, and measures set for the by the environmental authorities. d. Joint responsibility with third parties. Contractual clauses and bidding processes for construction companies and suppliers to provide materials from authorized banks, waste management pursuant to applicable legislation, wastewater management, and compliance with their responsibility in these matters. 2. Preventing water pollution and soil degradation during farming practices, fishery activities and the overexploitation of forestry resources. Wood products such as pallets come from authorized sources, either local or from abroad. Pulp products use post-consumption recycled fiber and printer paper for internal supplies are Forest Stewardship Council (FSC) certified. We have an established policy for the use of certified palm oil in the products we sell under our private label by 2015. Our purpose is to prevent the deforestation of tropical zones. We make sure that 100% of imported aquaculture products have Best Aquaculture Practices (BAP) best practices certification. In 2014 this will be extended to include domestic aquaculture. BEST PRACTICES Exchanging best practices, driving innovation, and accessing more efficient technologies have a positive effect on environmental sustainability by raising both company and supply chain standards. With our suppliers we jointly develop projects aimed at having more efficient supply chains, both in economic and environmental terms, which in turn optimize packaging, recycling and overall energy efficiency, thus improving logistics and reducing wastes. We launched an Eco-efficient Chains portal (http://cadenasecoeficientes.net) to train micro and small companies in eco-efficiency and the exchange of best practices. Sustainability Forum 2013: United for a Better Planet. Consumer goods and green technology companies attended the forum to share initiatives and new technologies in the fields of energy efficiency, renewable energy, sustainable water management, integrated waste management, optimization of packaging, and carbon print measurements, with an audience of over 2,000 people. In Mexico, together with the IberoAmerican University, the first sustainable innovation award was given. This contest was open to all Mexican university students who presented business proposals in the fields of energy, water, and wastes. Over 180 proposals were sent in from 17 states nationwide. Two students from the Center for Industrial Design Research were judged the winners, and the top 30 projects were each presented with a recognition award. 2013 Financial and Social Responsibility Report 54#56CORPORATE GOVERNANCE Our Company is built on foundations of integrity and the highest of ethical standards, always ensuring strict adherence to applicable legislation. For many years we have worked on reinforcing our compliance program, and therefore we have recently decided to strengthen our organizational structure. Hence, we now have an Executive Vice President and Chief Officer for Legal and Government Affairs for Mexico and Central America, and a Senior Director for Compliance. We reiterate our ongoing commitment to have all our activities follow the highest of ethical standards and generate value for our stakeholders: customers, shareholders, associates, suppliers, communities, and the environment. The structure and responsibilities of the Board of Directors, our Code of Ethics and, in general, all the activities performed by our Company follow corporate governance best practices. • OTHER PRACTICES The duties of Chairman of the Board of Directors and of the CEO are kept separate. The Board evaluates the performance of each Director. Independent Directors have experience in the Company line of business. The Board has access to independent consultants. The Chairman of the Board is forbidden from acting as Secretary or presiding over Board committees. The Board of Directors has three committees, whose duties include detailed analysis of matters pertaining to its sphere of action and making suggestions to the Board so it may study the information and make the decision most suitable to creating the best possible value for all shareholders. Board of Directors as of December 31, 2013 BOARD OF DIRECTORS Our Board of Directors is charged with overseeing the management of the business. • . • • • MAKE-UP All the members are appointed on a yearly basis by the shareholders at the annual meeting. Independent Directors must comprise a minimum of 25% of the total number of Board Directors. Minority shareholders whose shares represent at least 10% of total owners' equity shall have the right to appoint a Director and the corresponding Alternate; neither may be removed until the other members of the Board of Directors are also removed. The Board meets a minimum of four times a year. PRIMARY RESPONSIBILITIES Choosing the Chief Executive Officer. Acting as consultant/counsel for Company top management. Working actively with the CEO to develop general corporate strategies for the Company and any organizations the Company controls. Overseeing the performance of key Company Officers. Approving all information policies and communication with shareholders and the market. Chairman Eduardo Solórzano Directors Adolfo Cerezo* Pedro Farah Rafael Matute Doug McMillon Kristin Oliver Enrique Ostalé Salvador Paiz* Scot Rank Cathy Smith Blanca Treviño* *Independent Director Alternate Directors Renzo Casillo Olga Gonzalez Farley Sequeira Ernesto Vega* Secretary Alberto Sepúlveda Assistant Secretary Antonio Pérez de la Riva 2013 Financial and Social Responsibility Report 55#57Note: Wal-Mart de México, S.A.B. de C.V. held its annual general ordinary shareholders' meeting on March 20, 2014 and the integration of the new Board of Directors was determined: Chairman Enrique Ostalé Directors Enrique Ostalé David Cheesewright Scot Rank Brett Biggs Rafael Matute Pedro Farah Carmen Bauza Adolfo Cerezo* Blanca Treviño* Salvador Paiz* Robert Newell* *Independent Director Board of Directors Alternate Directors Ernesto Cervera* Olga Gonzalez Renzo Casillo Farley Sequeira Secretary Alberto Sepúlveda Assistant Secretary Enrique Ponzanelli AUDIT AND CORPORATE PRACTICES COMMITTEES There are three Directors, all of them independent. • • • • • PRIMARY RESPONSIBILITIES Appointing the Independent Auditor for the Company; establishing fees. Overseeing internal controls and ensuring they meet all applicable legal and accounting regulations; and reviewing related-party transactions conducted by the Company. Reviewing Financial Statements to ensure they reflect and accurate and true overview of the Company's financial situation. These Committees have the necessary procedures to receive, safeguard and respond to all complaints regarding accounting practices and controls, and all audit-related matters. Also, the Committees have the necessary resources and are authorized to retain legal counsel and any other required outside consultancy so they can meet their obligations. Reducing the potential risk of conducting transactions that could compromise Company assets or that could favor a specific group of shareholders. Approving policies that govern the use and possession of Company assets. • . . • • • Authorizing related-party transactions, total compensation for the CEO, and all policies regarding total compensation for top management. Assisting the Board of Directors in its duty of producing reports on accounting practices. Holding private meetings and receiving periodic reports from Internal Audit, Legal and Compliance, and Ethical Behavior. Calling shareholder meetings and ensuring all pertinent matters are included in the order of business for the meeting. PRINCIPAL PRACTICES AND REQUIREMENTS All members are Independent Directors, with experience in finance. Independent auditors are not allowed to perform consultancy services for the Company. The partner from the Independent Audit firm who renders an opinion on Financial Statements for the Company must be periodically changed. MEMBERS OF THE AUDIT AND CORPORATE PRACTICES COMMITTEES: Adolfo Cerezo (Chairman) Blanca Treviño Ernesto Vega Note: Wal-Mart de México, S.A.B. de C.V. held its annual general ordinary shareholders' meeting on March 20, 2014 and the integration of the new Audit and Corporate Practices Committees was determined. All members are Independent Directors: Adolfo Cerezo (Chairman). Roberto Newell Blanca Treviño Ernesto Cervera (Alternate) 2013 Financial and Social Responsibility Report 56#58EXECUTIVE COMMITTEE There are three Directors. Among their duties is that of strategic planning for the Company. MEMBERS OF THE EXECUTIVE COMMITTEE: Doug McMillon (Chairman) Enrique Ostalé Scot Rank Note: Wal-Mart de México, S.A.B. de C.V. held its annual general ordinary shareholders' meeting on March 20, 2014 and the integration of the new Executive Committee was determined: Enrique Ostalé (Chairman) David Cheesewright Scot Rank CORPORATE RESPONSIBILITY Corporate responsibility is the company's commitment to doing what is right and managing government, social and environmental issues related to the business and its operation. Those in charge of Corporate Responsibility are the Executive Vice President and Chief Officer for Legal and Government Affairs for Mexico and Central America, the Senior Director for Compliance, and a specialized team. In turn, the strategy is reviewed in the Corporate Executive Committee, and developed in conjunction with the areas involved in each of the fields of endeavor; the Board of Directors is informed on these activities. It is fundamental to establish work plans, indicators, and policies and procedures so as to involve the organization in building a company with an increasingly robust Corporate Responsibility. SAID STRATEGY INVOLVES THE FOLLOWING PILLARS: Ethics and corporate governance • Associates • Suppliers • . Community Environment THE STRATEGY COVERS THE FOLLOWING POINTS: • • • • • . Risk analysis, impact and evaluation of primary stakeholders regarding the same, and associate opinion surveys on each subject. Strategic detection of points with the greatest impact. Development of Action Plans and appointment of those to be in charge within the organization. Design of indicators, and then include them in corporate plans; these indicators are linked to performance. Follow-up. Incorporating assessment results into improvement analyses and plans; assessment is performed by outside evaluators of Corporate Sustainability and Responsibility throughout the year. CORPORATE RESPONSIBILITY COMMITTEE • • PRIMARY DUTIES: Analyzing areas of opportunity and detecting areas for improvement through processes for risk detection, needs, and concerns of our stakeholders. Defining the strategy for corporate social responsibility, approving the action plan, and establishing measurement systems with indicators. Supervising and following up on performance in social corporate responsibility, complying with all corresponding legislation in force. MEMBERS OF THE CORPORATE RESPONSIBILITY COMMITTEE: Scot Rank Karina Awad Alberto Sepúlveda Rafael Matute Mónica Loaiza Simona Visztová Renzo Casillo CODE OF ETHICS For Walmart de México y Centroamérica, integrity is our non-negotiable core value, and we always ensure that it permeates and governs all our activities. The following are some of the primary points covered in our Code of Ethics: . Non-discrimination • Conflicts of interest • • • • No gifts and gratuities Privileged information Inappropriate behavior Harassment Appropriate use of Company assets • Sexual harassment • No repercussions • • • Fair trade practices Financial integrity Anticorruption Walmart de México y Centroamérica's Ethics and Compliance area, which reports to the Executive Vice President and Chief Officer for Legal and Government Affairs for Mexico and Central America, is in charge of promoting a culture of ethical commitment and strict adherence to the statutes governing our Company, as well as taking care of the ethical cases presented. The Audit Committee periodically receives reports from this area. 2013 Financial and Social Responsibility Report 57 57#59MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS REGARDING OPERATION RESULTS AND FINANCIAL STANDING OF THE COMPANY The Company announced on September 10, 2013 that it reached a definitive agreement with ALSEA, S.A.B. de C.V., under which ALSEA will acquire 100% of the restaurant division of Walmex. The closing of this transaction is still subject to the approval of regulatory authorities. Last October 17, 2013, the Company announced that we would now report results separating the restaurant division as discontinued operations, in conformity with the International Financial Reporting Standard Number 5. International Accounting Standards (IAS 17): For the fourth quarter, there is a one-time non-cash expense impacting results, which does not affect cash flow. Beginning in the year 2013, rent expenses under operating leases with third parties are being recognized on a straight-line basis over the term of the leases agreements, in conformity with International Accounting Standards (IAS 17), in which the commencement date of the lease agreement is generally considered the possession date of the leased property. As a result, the Company recorded a one-time catch-up expense of 464 million pesos (360 for Mexico and 104 for Central America) and 61 million pesos related to the current year straight-line method in Mexico. I. RESULTS MEXICO Total income amounted to 367.7 billion pesos, an increase of 3.4% over last year, and 86.5% of total consolidated income. We opened 214 units from different business formats, representing 7.2% increase in the sales floor in Mexico. Bodega Aurrerá Walmart % of total sales sq. ft. of sales floor 38.4 26,112,367 Openings 168 Units Cities 1,589 420 28.0 20,537,055 16 243 78 25.5 11,959,374 14 156 86 4.4 3.7 1,611,349 2 92 18 Medimart Pharmacy 4,663,686 28,686 10 109 42 4 10 1 201* 22 Sam's Club Superama Suburbia Banco *Branches 2013 Financial and Social Responsibility Report CENTRAL AMERICA Our income totaled 57.4 billion pesos, an increase of 2.1%, which is 5.7% on a constant currency basis. This income represents 13.5% of total consolidated income. We opened 21 units in the five countries of Central America, increasing our installed capacity by 6.1%. % of total sales Costa Rica 45.3 sq. ft. of sales floor 2,207,427 Openings Units Cities 9 214 14 Guatemala 26.9 2,111,393 4 209 34 Honduras 10.2 637,867 3 75 26 El Salvador 9.5 902,524 4 84 17 Nicaragua: 8.1 442,789 1 80 22 58#60CONSOLIDATED Total income amounted to 425.2 billion pesos, some 13.1 billion more than the previous year. This represented an increase of 3.2% over total income obtained in 2012. GROSS MARGIN Mexico's gross margin was 22.0%, some 10 basis points lower than that posted in 2012. The gross margin for Central America was 22.4%, that is, 170 basis points higher than the previous year, primarily due to the benefits of the integration with Mexico regarding systems, processes, and formats. Consolidated gross margin was 22.0%, some 10 basis points higher than that posted in 2012. GENERAL EXPENSES On a comparable basis, excluding the store lease expense, consolidated expenses increased 5.2%. In Mexico expenses grew 5.3% and 4.8% in Central America. CONSOLIDATED OPERATING MARGIN AND EBITDA Operating income totaled 31.5 billion pesos, which represents a growth of 2.0% over 2012, excluding the store lease expense effect. Moreover, EBITDA posted 40.2 billion pesos, an increase of 2.2%. NET INCOME AND EARNINGS PER SHARE Excluding the store lease expense effect, net income dropped 0.8% during the year. In 2013 we repurchased 96 million shares, 69 million more than the previous year. Earnings per share were 1.284 pesos. INCOME STATEMENT % of revenues Total revenues (billions of pesos) Mexico Central America % Increase % Increase % Increase ex one-time store lease expense ex one-time 2013 2012 % store lease expense 2013 2012 In pesos. Constant currency basis Constant In pesos currency basis 367.7 355.8 3.4 3.4 57.4 56.3 2.1 5.7 2.1 5.7 Gross margin 22.0 22.1 2.8 2.8 22.4 20.7 10.1 14.0 10.1 14.0 General expenses 14.0 13.6 6.1 5.3 18.6 18.0 5.8 9.6 4.8 8.5 Operating income 8.0 8.5 -3.0 -1.6 3.7 2.6 45.0 50.1 52.1 57.5 EBITDA 10.0 10.4 -0.8 0.3 6.0 4.9 24.3 28.7 28.0 32.6 Consolidated % Increase ex one-time 2013 2012 % store lease expense Total revenues (billions of pesos) 425.2 412.1 3.2 3.2 Gross margin 22.0 21.9 3.8 3.8 General expenses 14.6 14.2 6.1 5.2 Operating income 7.4 7.6 0.3 2.0 EBITDA 9.5 9.7 0.9 2.2 Financial information under International Financial Reporting Standards % of revenues 2013 Financial and Social Responsibility Report 59#61II. BALANCE CASH AND CASH EQUIVALENTS Our cash generation amounted to 40.0 billion pesos, allowing us to finance an investment of 14.0 billion pesos in fixed assets and repay our shareholders with 19.4 billion pesos, a record figure for Walmex. We repurchased 3.3 billion pesos worth of own shares and paid 16.1 billion pesos in dividends. Our cash position upon closing of 2012 amounted to 21.1 billion pesos, of which, 17.2 billion comes from Mexico, 2.6 billion from Central America, and 1.3 billion pesos from Banco Walmart. Cash is invested in short-term debt securities. The Company neither conducts transactions with derivatives, nor does it invest in the stock market. The Company has not conducted any transactions not recorded in the Financial Statements. Our cash generation and sound finances allowed us to invest in prices, open 235 new units, remodel existing stores, and also pay dividends and repurchase own shares. USES OF CASH . Investments in fixed assets: We continue reinvesting our earnings in projects that serve to modernize our operating structure, from information systems to logistics networks and the renovation of our stores and clubs, including the opening of new units. Dividends: The following chart shows the dividends paid during the last four years (with values adjusted due to the split conducted in 2010), with 2013 being a record year in dividend payments. • Year Dividend per share (pesos) % of earning for the previous year Cash spent (millions of pesos) 2010 2011 2012 2013 0.35 0.55 0.55 0.92 35% 50% 44% 69% 5,743 9,659 9,612 16,056 Repurchase of shares: The shareholders authorize the maximum amount available for the repurchase of shares. Shares repurchased are subtracted from shareholders' equity at the moment of repurchase and are formally cancelled each year during the Shareholders' Assembly. The following chart shows the investment in the repurchase of shares during the last four years (with values adjusted due to the split conducted in 2010). Programs 2010 2011 2012 2013 WORKING CAPITAL Repurchased shares (millions) Invested amount (millions of pesos) 112 3,472 103 3,455 27 1,088 96 3,328 In 2013, the Company continued operating with negative working capital requirements, which has historically allowed for the self-financing of growth and modernization. The inventory balance as of December 31, 2013 amounted to 43.8 billion pesos, which was financed by accounts payable to suppliers totaling 47.6 billion pesos. WALMEX SHARE We are the third most traded stock on the Mexican Stock Exchange -with a weight of 7.05%, where we have traded since 1977. For the second consecutive year we are included in the Dow Jones Sustainability Index for Emerging Markets, and for the third consecutive year we are included in the Mexican Stock Exchange Sustainable Index. 2013 Financial and Social Responsibility Report 60#62AUDIT AND CORPORATE GOVERNANCE COMMITTEES REPORT WAL-MART DE MÉXICO, S.A.B. DE C.V. ANNUAL REPORT BOARD OF DIRECTORS OF WAL-MART DE MÉXICO, S.A.B. DE C.V. DEAR SIRS, In accordance with article 43 of the Securities Market Law ("LMV", as per its initials in Spanish) in effect and with the internal regulations approved by the Board of Directors of Wal-Mart de México, S.A.B. (the "Company"), we hereby inform you of the activities undertaken during fiscal year ended December 31, 2013. In the performance of our duties, we have maintained strict compliance not only with LMV, but we have also considered the recommendations contained in the Code of Corporate Best Practices issued by the Consejo Coordinador Empresarial, A.C. and the Company's Code of Ethics. In order to comply with our supervisory process, the Audit and Corporate Governance Committees have held quarterly meetings to examine a general overview of the company's most relevant accounting, legal, operating and ethical issues, supplemented by our involvement in the results analysis meetings, Ethics Committee and monthly meetings with the CEO and Legal areas, and an emphasis on the following: I. AS TO CORPORATE GOVERNANCE: a) We were informed by Management of the following: 1. Performance assessment processes for relevant executives and the authorized replacement plan, with no observations noted. 2. Processes followed along the year to conduct transactions with related parties and relevant transfer price study, concepts which are mentioned by management in Note 10 to the Financial Statements of the Company, with no observations noted. We were also informed of a sale transaction involving the restaurant division of Wal-Mart de México S.A.B. de C.V. mentioned in Note 1, Paragraph b), Number II, to the financial statements. 3. Processes to determine comprehensive compensation packages for the CEO and other relevant executives listed under Note 10 to the Financial Statements of the Company, with no observations noted. b) The Board of Directors did not grant any waivers to board members, relevant executives or any other person with any of the authorities specified under Article 28, Section III, Paragraph f) of the Securities Market Law. c) During 2013, the Company's Management have been continuously informing us on the progress of the investigations conducted by Walmart Stores, Inc.'s Audit Committee with support from independent lawyers and other advisors on corrupt practices and of all measures taken by the Company to reinforce internal organization by training managing executives and associates and strengthening processes to be leaders in compliance worldwide, as explained in detail in Note 1, Paragraph b, Number 1, to the Financial Statements of Wal-Mart de México, S.A.B. de C.V. and Subsidiaries as of December 31, 2013. Additionally, it is our knowledge that the Company shall willingly cooperate with such investigations. 2013 Financial and Social Responsibility Report 61#63II. AS TO AUDITING: a) We analyzed the status of the internal control system and were informed in detail of the Internal and Independent Audit programs and work development, as well as the main aspects requiring improvement and follow-up on preventive and corrective measures implemented by Management based on the results from investigations relating to compliances with the operating and accounting recording guidelines and policies of the Company and Subsidiaries. Therefore, it is our opinion that effectiveness requirements have been properly met for the Company to operate under a general control environment. b) We evaluated the performance of the independent auditors who are responsible for rendering an opinion on the reasonability of the Company's Financial Statements and their compliance with International Financial Reporting Standards. We consider that the partners at Mancera, S.C. (a member of Ernst & Young Global) meet the necessary requirements of professional qualifications and independence for intellectual and financial action and we, therefore, recommend their appointment to examine and issue a report on the financial statements of Wal-Mart de México, S. A. B. de C.V. and Subsidiaries as of December 31, 2013. No additional or supplementary services for this concept were provided during 2013. c) We attended several meetings to review the annual and quarterly financial statements of the Company and at that time, recommended releasing such financial information. d) We were informed of the accounting policies approved and followed during year 2013 and any amendments, and it is important to mention the policy on assets and liabilities for sale and discontinuous transactions which was included as a result of the Restaurant division sale transaction, whose effect is described on Note 7 to the Company's financial statements. e) We were informed of the progress on the investment plan and of any impacts on the results sent to the Mexican Stock Exchange based on the adjustments made to the store opening processes, with no observations noted. f) We followed up on relevant observations made by shareholders, directors, relevant executives, associates and, in general, any third party as to the accounting, internal controls and matters relating to internal and external audits. g) We followed up on the agreements reached at the Shareholders' and Board meetings of the Company, with no observations noted. Based on performed work and an opinion from the independent auditors, it is our conclusion that the accounting and reporting policies and criteria followed by the Company are adequate and sufficient, and have been consistently applied. As a result, the information submitted by the CEO reasonably reflects the Company's financial position and results. Therefore, we recommend that the Company's Board of Directors submit the Financial Statements of Wal-Mart de México, S.A.B. de C.V. and Subsidiaries for the year ended on December 31, 2013 for approval before the Shareholders' Meeting. Sincerely, всего Adolfo Cerezo, Eng. President Audit and Corporate Governance Committees Mexico City, February 17, 2014. 2013 Financial and Social Responsibility Report 62 62#64GLOSSARY ADR Apparel stores Associate Banco Walmart Bodegas & discount stores Clubs CO₂eq Distribution Center EBITDA Every Day Low Prices GDP GHG GRI ISR IVA MSE Net sales Restaurants Sales floor SMES Supermarkets Total revenues Walmart WALMEX American Depositary Receipt Offering the best in fashion for the whole family at the best possible price Employee who works at Walmart de México y Centroamérica Universal banking institution aimed at Walmart de México customers, with an initial offering of basic banking and financial products and services Austere stores offering basic merchandise, food and household items at the best prices Membership warehouse clubs focused on businesses and consumers who seek the best possible prices Carbon dioxide equivalent Location for the receipt of goods from suppliers and store distribution Earnings Before Interest, Taxes, Depreciation, and Amortization Permanent philosophy of Walmart de México y Centroamérica, in order to contribute towards improving the quality of life for the region Gross Domestic Product Greenhouse gas emissions Global Reporting Iniciative Income Tax Value Added Tax Mexican Stock Exchange Income from the goods sold in our stores Leading chain in the restaurant cafeteria segment Surface area set aside for merchandise retail Small and Medium-sized Businesses Self-service stores located in residential areas Net sales plus other income Self-service stores providing the widest assortment of goods from groceries and fresh, to apparel and general merchandise Stock Symbol for Wal-Mart de México S.A.B. de C.V. 2013 Financial and Social Responsibility Report 63 63#65REPORT OF INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF WAL-MART DE MÉXICO, S.A.B. DE C.V. We have audited the accompanying consolidated financial statements of Wal-Mart de México, S.A.B. de C.V. and subsidiaries, which comprise the consolidated statements of financial position at December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, as well as a summary of the significant accounting policies and other explanatory information. MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR'S RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's professional judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wal-Mart de México, S.A.B. de C.V. and subsidiaries at December 31, 2013 and 2012, and their consolidated financial performance and cash flows for the years then ended, in conformity with the International Financial Reporting Standards. Our audit opinion and the accompanying financial statements and footnotes have been translated from the original Spanish version to English for convenience purposes only. 2013 Financial and Social Responsibility Report Mancera, S.C. A Member Practice of Ernst & Young Global Enrique García Mexico City, February 4, 2014 64#66WAL-MART DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Notes 1 and 3) Amounts in thousands of Mexican pesos Assets Current assets: Cash and cash equivalents (Note 4) Accounts receivable, net (Note 5) Inventories (Note 6) Prepaid expenses and other assets Assets held for sale (Note 7) Total current assets Non-current assets: Property and equipment, net (Note 8) Intangible assets (Note 9) Other non-current assets Total assets Liabilities and equity Current liabilities: Accounts payable to suppliers (Note 10) Other accounts payable (Note 11) Taxes payable Liabilities relating to assets held for sale (Note 7) Total current liabilities Long-term liabilities: Other long-term liabilities (Note 12) Employee benefits (Note 14) Deferred tax (Note 13) Total liabilities Equity (Note 15): Capital stock Legal reserve Retained earnings Other comprehensive income items Premium on sale of shares Employee stock option plan fund Equity attributable to owners of the parent Non-controlling interests Total equity Total liabilities and equity The accompanying notes are an integral part of these financial statements. 2013 Financial and Social Responsibility Report December 31, 2013 December 31, 2012 PS. 21,129,491 12,778,413 Ps. 28,163,229 10,376,438 43,794,897 39,091,595 1,016,091 1,013,525 3,932,746 82,649,072 121,082,727 78,647,353 117,376,902 25,928,040 25,957,186 Ps. 573,148 230,262,133 Ps. 333,412 222,285,707 Ps. 47,609,438 Ps. 44,769,655 15,549,473 14,969,365 1,596,262 2,424,526 966,227 65,721,400 13,766,917 62,163,546 12,638,523 6,851,658 6,588,903 971,577 87,311,552 1,058,117 82,449,089 45,777,573 45,959,724 6,949,333 Ps. 92,551,723 397,799 2,314,940 ( 5,061,161) 142,930,207 20,374 142,950,581 230,262,133 PS. 5,785,575 90,370,930 162,781 2,067,980 ( 4,646,088) 139,700,902 135,716 139,836,618 222,285,707 65#67WAL-MART DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Notes 1 and 3) Amounts in thousands of Mexican pesos Net sales Other revenues (Note 16) Total revenues Cost of sales Gross profit General expenses Income before other income (expenses), net Other income (expenses), net Operating income Financial (expenses) income, net (Note 17) Income before taxes on profits Taxes on profits (Note 13) Net Income from continuing operations Ps. Year ended December 31 2013 2012 420,577,021 Ps. 4,584,420 425,161,441 ( 331,537,855) 93,623,586 ( 62,101,772) 31,521,814 9,833 31,531,647 14,642) 31,517,005 407,843,715 4,216,505 412,060,220 ( 321,832,560) 90,227,660 58,541,066) 31,686,594 264,892) 31,421,702 400,937 31,822,639 Net income from discontinued operations (Note 7) Consolidated net income Ps. ( 9,516,938) 9,236,797) 22,000,067 22,585,842 713,153 22,713,220 Ps. 682,821 23,268,663 Other comprehensive income items: Items that were not reclassified to profit and loss of the year: Actuarial gain (loss) on employee benefits Ps. 57,007 Ps. 217,680) Items that may be reclassified subsequently to profit and loss: Cumulative translation adjustment 178,011 1,259,101) Comprehensive income Ps. 235,018 22,948,238 1,476,781) Ps. 21,791,882 Net income attributable to: Owners of the parent Non-controlling interests Ps. 22,716,891 Ps. 23,275,163 3,671) Ps. 22,713,220 Ps. 6,500) 23,268,663 Comprehensive income attributable to: Owners of the parent Ps. Non-controlling interests Ps. 22,951,909 3,671) 22,948,238 Ps. Ps. 21,798,382 6,500) 21,791,882 Basic earnings per share from continuing operations attributable to owners of the parent (in pesos) Ps. 1.244 Ps. 1.273 Basic earnings per share attributable to owners of the parent (in pesos) Ps. 1.284 Ps. 1.312 The accompanying notes are an integral part of these financial statements. 2013 Financial and Social Responsibility Report 66 99#68WAL-MART DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 (Notes 1, 3 and 15) Amounts in thousands of Mexican pesos Employee Equity stock attributable option to owners Non-controlling Total plan fund of the parent interests equity 1,911,758 Ps. (4,190,174) Ps. 128,866,901 Ps. 316,176 Ps. 129,183,077 Other comprehensive Premium Capital stock Legal reserve Retained earnings income on sale items of shares Balance at January 1, 2012 Ps. 45,966,579 Ps. 4,672,883 Ps. 78,866,293 Ps. 1,639,562 Ps. Movements in employee stock option plan fund 156,222 Increase in legal reserve 1,112,692 (1,112,692) 70,234) ( 1,017,619) (9,611,672) Repurchase of shares Dividends paid Shares issued for the payment of the contingent liability 63,379 Purchase of shares of non-controlling interests Comprehensive income Balance at December 31, 2012 45,959,724 Movements in employee stock option plan fund Increase in legal reserve Repurchase of shares Dividends paid Shares issued for the payment of the contingent liability Purchase of shares of 5,785,575 455,914) ( 299,692) ( 1,087,853) (9,611,672) 63,379 299,692) (1,087,853) (9,611,672) 63,379 ( 28,543) ) 23,275,163 90,370,930 ( 1,476,781) 162,781 2,067,980 ( 4,646,088) 28,543) ( 173,960) 21,798,382 139,700,902 ( 6,500) 135,716 ( 202,503) 21,791,882 139,836,618 246,960 ( 415,073) ( 168,113) 168,113) 1,163,758 ( 1,163,758) 249,310) ( 3,079,173) (16,056,467) 67,159 ( 3,328,483) (16,056,467) ( 3,328,483) (16,056,467) 67,159 67,159 non-controlling interests Comprehensive income Balance at December 31, 2013 Ps. 45,777,573 Ps. ( 236,700) 22,716,891 6,949,333 Ps. 92,551,723 Ps. ( 235,018 236,700) 22,951,909 111,671) 348,371) ( 3,671) 22,948,238 397,799 Ps. 2,314,940 Ps. ( 5,061,161) Ps. 142,930,207 Ps. 20,374 Ps. 142,950,581 The accompanying notes are an integral part of these financial statements. 2013 Financial and Social Responsibility Report 67#69WAL-MART DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Notes 1 and 3) Amounts in thousands of Mexican pesos Operating activities Income before taxes on profits Items related to investing activities: Depreciation and amortization Loss from disposal of property and equipment Impairment in goodwill and contingent liability Stock option compensation expense Interest earned Items related to financing activities: Interest payable under finance leases Accrued interest on contingent liability Discontinued operations Cash flow from results of operations Variances in: Accounts receivable Inventories Prepaid expenses and other assets Accounts payable to suppliers Other accounts payable Taxes on profits Employee benefits Discontinued operations Net cash flow from operating activities Investing activities Purchase of property, equipment and software Employee stock option plan fund Interest collected Purchase of shares of non-controlling interests Proceeds from sale of property and equipment Discontinued operations Net cash flow used in investing activities Financing activities Dividends paid Repurchase of shares Payment of finance leases Discontinued operations Net cash flow used in financing activities Effect of changes in the value of cash Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The accompanying notes are an integral part of these financial statements. 2013 Financial and Social Responsibility Report Year ended December 31 2013 2012 Ps. 31,517,005 Ps. 31,822,639 8,689,694 8,393,098 187,803 46,928 121,911 351,898 342,957 ( 539,565) ( 673,161) 1,113,361 1,055,550 42,206 1,261,230 42,623,632 ( 2,169,222) ( 4,803,437) ) 273,549) 2,887,686 905,405 ( 9,997,166) 19,774) 450,736) 28,702,839 44,891 975,460 42,130,273 1,045,546 201,926) 33,870 ( 5,532,394) 810,628 ( 8,680,470) 35,436 29,640,963 (13,987,014) ( 14,659,555) 520,011) ( 642,649) 539,565 673,161 ( 348,371) 189,720) 182,212 157,272) 14,290,891) 514,554 ( 14,304,209) (16,056,467) ( 3,328,483) ( 1,352,533) 39,517) (20,777,000) 668,686) ( 1,292,407) (11,991,932) 347,979) 2,996,843 ( 9,611,672) ( 1,087,853) Ps. ( 7,033,738) 28,163,229 21,129,491 25,166,386 Ps. 28,163,229 68#70WAL-MART DE MÉXICO, S.A.B. DE C.V. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 AND 2012 Amounts in thousands of Mexican pesos, except where otherwise indicated 1.- DESCRIPTION OF THE BUSINESS AND RELEVANT EVENTS: a. Description of the business Wal-Mart de México, S.A.B. de C.V. (WALMEX or "the Company") is a Mexican company incorporated under the laws of Mexico and listed on the Mexican Stock Exchange, whose headquarters are located at Nextengo #78, Colonia Santa Cruz Acayucan, C.P. 02770, in Mexico City, Mexico. The principal shareholder of WALMEX is Wal-Mart Stores, Inc., a U.S. corporation, through Intersalt, S. de R.L. de C.V., a Mexican company. WALMEX holds 99.9% equity interest in the following groups of companies in Mexico and Central America: Group Nueva Walmart Suburbia Vips Importing companies Real estate Service companies Walmart Bank Walmart Central America Line of business Operation of 1,589 (1,423 in 2012) Bodega Aurrerá discount stores, 243 (227 in 2012) Walmart hypermarkets, 156 (142 in 2012) Sam's Club membership self-service wholesale stores, 92 (90 in 2012) Superama supermarkets and 10 (6 in 2012) Medimart pharmacies. Operation of 109 (100 in 2012) Suburbia stores specializing in apparel and accessories for the entire family. Operation of 262 (266 in 2012) Vips restaurants serving international cuisine, 92 (in both years) El Porton restaurants serving Mexican food and 6 (7 in 2012) Ragazzi restaurants specializing in Italian food. Import goods for sale. Property developments and management of real estate companies. Rendering of professional services to Group companies and not-for-profit services to the community at large, and shareholding. Operation of 201 (263 in 2012) bank branches. Operation of 466 (459 in 2012) discount stores (Despensa Familiar and Palí), 100 (97 in 2012) supermarkets (Paiz, La Despensa de Don Juan, La Unión and Más x Menos), 75 (67 in 2012) discount warehouse stores (Maxi Bodega and Maxi Palí), 20 (17 in 2012) Walmart hypermarkets and 1 (2 in 2012) ClubCo membership self-service wholesale stores. These stores are located in Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador. b) Relevant events 1. Legal proceedings Wal-Mart de México, S.A.B. de C.V. ("WALMEX") is a subsidiary of Wal-Mart Stores, Inc. ("WMT"). WMT owns approximately 70% of the shares and voting power in WALMEX and has the ability to designate at least a majority of the directors of WALMEX. The remaining shares of WALMEX are publicly traded on the Mexican Stock Exchange and, to the best of the knowledge of WALMEX, no shareholder other than WMT and its affiliates owns more than 2% of the outstanding shares of WALMEX. Currently, the Board of Directors of WALMEX is composed of 11 directors and 6 alternates. The Audit Committee and the Corporate Governance Committee of the Board of Directors are composed exclusively of independent directors (including alternate 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 limited to the U.S. Foreign Corrupt Practices Act (the "FCPA"). AS WALMEX publicly disclosed on April 23, 2012, WMT is the subject of an investigation under the FCPA by the U.S. Department of Justice and the U.S. Securities and Exchange Commission following 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, is conducting an internal investigation into, among other things, alleged violations of the FCPA and other alleged crimes or misconduct in connection with foreign subsidiaries, including WALMEX and whether prior allegations of such violations and/or misconduct were appropriately handled by WMT. The Audit Committee of WMT and WMT have engaged outside counsel from a number of law firms and other advisors who are assisting in the on-going investigation 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 strengthening its global anti-corruption compliance programs through appropriate remedial anti-corruption measures. WALMEX is taking part in such voluntary global review and strengthening of programs. Furthermore, lawsuits relating to the matters under investigation have been filed by several of WMT's shareholders against it, its current directors, certain of its former directors, certain of its current and former officers and certain of WALMEX's current and former officers. WALMEX is cooperating with WMT in the review of these matters and it intends to continue fully cooperating in such regard. 2013 Financial and Social Responsibility Report 69#71A number of federal and local government agencies in México have also recently initiated investigations of these matters. WALMEX is cooperating with the Mexican governmental agencies conducting these investigations. The Audit Committee and the Corporate Governance Committee of the Board of Directors of WALMEX, as well as the Board of Directors of WALMEX, have been informed about these matters and have determined, by a unanimous vote of the independent directors only, that it is in the best interests of WALMEX to continue to cooperate at this time with WMT and the U.S. and Mexican agencies conducting these investigations. 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 all of the ongoing government investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders or other relief, criminal convictions and/or penalties. The shareholder lawsuits may result in judgments against WMT and its current and former directors and current and former officers of WMT and WALMEX named in those proceedings. WALMEX cannot predict accurately at this time the outcome or impact of the government investigations, the shareholder lawsuits, the internal investigation and review. In addition, WALMEX expects to incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in connection with the government investigations, and it cannot predict at this time the ultimate amount of all such costs. These matters may require the involvement of certain members of WALMEX's senior management that could impinge on the time they have available to devote to other matters relating to the business. WALMEX may also see ongoing media and governmental interest in these matters that could impact the perception among certain audiences of its role as a corporate citizen. On June 20, 2012, WALMEX publicly disclosed a downward adjustment to its 2012 growth plan. WALMEX, its Board of Directors and its Audit Committee and Corporate Governance Committee will at all times ensure compliance with applicable Mexican law and ensure that they create value to WALMEX, acting diligently 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 advise of its external Mexican counsel, that these matters will have a material adverse effect on its business, given the inherent uncertainties in such situations, WALMEX can provide no assurance that these matters will not be material to its business in the future. II. Sale of the restaurant line of business On September 10, 2013, the Company reached a final agreement with ALSEA, S.A.B. de C.V. (ALSEA) for this company to acquire 100% of WALMEX' restaurant line of business, which includes the Vips, El Portón, Ragazzi and La Finca ("VIPS") restaurant chains. The closing of the transaction is subject to the approval of Mexico's Federal Economic Antitrust Commission (Note 7). 2.- NEW ACCOUNTING PRONOUNCEMENTS: In 2012, the International Accounting Standards Board (IASB) issued the following International Financial Reporting Standards (IFRS). a. IFRS 10, Consolidated Financial Statements - This standard establishes a single model of control that is applicable to any entity (including special purpose entities). IFRS 10 supersedes IAS 27, Consolidated and Separate Financial Statements, and SIC 12, Consolidation - Special Purpose Entities. - b. IFRS 11, Joint Arrangements This standard establishes the principles for financial reporting by parties to a joint arrangement. The option of applying the proportional consolidation method is eliminated for joint ventures (understood based on the new definition). This standard supersedes IAS 31, Interests in Joint Ventures, and SIC 13, Jointly Controlled Entities - Non-monetary Contributions by Venturers. c. IFRS 12, Disclosure of Interests in Other Entities - This standard brings all of the different disclosure requirements for subsidiaries, joint arrangements, associates and structured entities together in a single standard. d. IFRS13, Fair Value Measurement - This standard defines the concept of fair value and requires the disclosure of fair value measurements. These new standards became effective for fiscal years beginning on or after January 1, 2013. The adoption of these standards had no material effect on the Company's financial statements. 3.- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A summary of the significant accounting policies used in the preparation of the consolidated financial statements is described below. These policies have been applied consistently with those applied in the year ended December 31, 2012. 2013 Financial and Social Responsibility Report 70#72a. Basis of preparation The accompanying consolidated financial statements have been prepared in conformity with IFRS issued by the IASB, as well as all the interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC), including those issued by the former Standing Interpretations Committee (SIC). The consolidated statements of comprehensive income were prepared on a functional basis, which allows for the disclosure of cost of sales separately from other costs and expenses, in conformity with IAS 1, Presentation of Financial Statements. The consolidated statement of comprehensive income also includes a separate operating income line to provide a better understanding of the Company's business performance. The preparation of consolidated financial statements in conformity with IFRS requires the use of estimates and assumptions in some items. Walmart Bank's financial statements, which are included in the Company's consolidated financial statements, were prepared based on the accounting criteria established by the Mexican National Banking and Securities Commission (CNBV per its acronym in Spanish), as issued as part of the General Provisions for Credit Institutions. At date, there are no significant differences between these standards and IFRS. 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 income and the year- end exchange rate for the consolidated statement of financial position, in conformity with IAS 21, The Effects of Changes in Foreign Exchange Rates. The cumulative translation adjustment is the effect of translating the financial statements of the Company's foreign subsidiaries into Mexican pesos. This effect is recognized in equity. 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. The Mexican peso is the Company's functional currency and reporting currency. b. Risk factors 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, political or social in nature and some of the most important are described below: I. Employment and salary. Positive or negative changes in employment and/or real salary levels could affect Mexico's per capita income and, consequently, the Company's business performance. II. Changes in interest rates and exchange rates. Historically, Walmart has generated cash surpluses in Mexico and Central America on which it earns financial income. A reduction in interest rates could cause a decrease in the Company's financial income, which would affect its earnings growth. However, the Company believes that a reduction in interest rates would actually have a positive effect on its business in the medium and long-term, since it would help improve the purchasing power of its customers. On the other hand, exchange rate fluctuations tend to put upward pressure on inflation and reduce the population's purchasing power, which could ultimately hinder the Company's sales. In compliance with its corporate governance policies, the Company has no transactions with derivative financial instruments. III. Competition. The retail sector has become very competitive in recent years, which has led to the need for all the players in the market to constantly look for ways to set themselves apart from the competition. This puts the Company's market share at risk. Other factors affecting the Company's market share could be the business expansion of its competitors and the possible entrance of new competitors into the market. IV. Inflation. Over the last few years, the inflation rates in Mexico and Central America have remained at low levels. A significant increase in inflation rates could have a direct effect on the purchasing power of the Company's customers and the demand for its 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 payroll indirect taxes and changes in applicable rates. c. Consolidation The accompanying consolidated financial statements include the Financial Statements of WALMEX and those of its subsidiaries in Mexico and abroad, which are grouped as described in Note 1 paragraph a, and they are prepared for the same accounting period. All related party balances and transactions have been eliminated in the consolidation, in conformity with IFRS 10, Consolidated Financial Statements. Non-controlling interests represent the portion of equity interest in the net assets of a subsidiary not attributable to the controlling company. Non-controlling interests is presented as a separate component of equity. 2013 Financial and Social Responsibility Report 71 74#73d. Cash and cash equivalents Cash and cash equivalents principally consist of bank deposits and highly liquid investments with original maturities of less than 90 days. Such investments are stated at historical cost plus accrued interest, not in excess of their market value. Walmart Bank makes the monetary regulation deposits required by Banco de México (the Central Bank), the amounts of which are calculated based on traditional deposits in Mexican pesos. e. Financial instruments The Company has no transactions with derivative financial instruments. f. Accounts receivable and reserve for bad debts The balance of Walmart Bank's loan receivables portfolio is represented by outstanding loan balances, plus uncollected earned interest. The preventive allowance for credit risks is presented net of portfolio balances. WALMEX recognizes the reserve for bad debts at the time the legal collection process begins in conformity with its internal procedures. g. Inventories Inventories are valued using the retail method, except for merchandise for the Sam's Club, ClubCo and distribution centers, which are valued using the average-cost method, and Vips restaurant inventories, which are valued using the first-in, first-out method. These inventory valuation methods are the same as those applied in the prior year. Inventories, including obsolete, slow-moving and defective items or items in poor condition, are stated at amounts not in excess of their net realizable value. Inventory pertaining to the Agro-industrial Development of grains, edibles and meat is valued using the average-cost method. Buying allowances are recognized in the income statement based on the turnover of the inventories that gave rise to them. h. Prepaid expenses Prepaid expenses are recognized as current assets in the consolidated statement of financial position as of the date the prepayments are made. At the time the goods are received, prepaid expenses are charged to the income statement or capitalized in the corresponding asset line when there is certainty that the acquired goods will generate future economic benefits. i. Property and equipment Property and equipment are recorded at acquisition cost and presented net of accumulated depreciation. Depreciation of property and equipment is computed on a straight-line method at the following annual rates: j. Lease Buildings, facilities and leasehold improvements Furniture and equipment 2.5% 5.0% to 33.3% to 33.3% In conformity with IAS 17, Leases, the Company classifies its property lease agreements as either finance or operating leases. A lease is considered a finance lease if it transfers substantially all the risks and rewards incident to ownership of the underlying property to the lessee, considering the renewals established in each lease agreement. Rent is recognized in the income statement over the lease term as incurred. Lease agreements that do not qualify as finance leases are treated as operating leases. Fixed lease payments are recognized in the income statement on a straight-line method over the lease term. The commencement date of lease is considered the occupancy date of the leased property, including the lessee's rights 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. k. Impairment in the value of property and equipment Based on the guidelines of IAS 36, Impairment of Assets, the Company recognizes impairment in the value of property and equipment by applying the expected present value technique to determine value in use, considering each store or restaurant as the minimum cash generating unit. The present value technique requires detailed budget calculations, which are prepared separately for each cash-generating unit. These budgets generally cover five years and for those projected beyond five years, an expected growth percentage is applied. Impairment losses are recognized in the consolidated statement of comprehensive income in the other income (expenses), net line. 2013 Financial and Social Responsibility Report 22 72#741. Intangible assets Intangible assets are valued at the lower of either acquisition cost or their fair value at the acquisition date and are classified based on their useful lives, which may be definite or indefinite. Indefinite-lived assets are not amortized; however, they are tested annually for impairment, in conformity with IAS 36, Impairment of Assets. Definite-lived assets are amortized using the straight-line method. m. Assets and liabilities held for sale and discontinued operations In conformity with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, non-current assets and disposal groups are classified as held for sale if their carrying amount will 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 sell. Assets and liabilities that meet the criteria to be classified as held for sale are presented separately in the statement of financial position from the rest of the assets and liabilities. Income, expenses and costs related to this transaction are separately disclosed and recognized as part of the discontinued operations line in the consolidated statement of comprehensive income. n. Liabilities and provisions In conformity with IAS 37, Provisions, Contingent Liabilities and Contingent Assets, accrued liabilities are recognized whenever the Company has current obligations (legal or assumed) resulting from past events, that can be reasonably estimated and that will most likely give rise to a future cash disbursement for their settlement. Reimbursements are recognized net of the related obligation when it is certain that the reimbursement will be obtained. Provision expenses are presented in the consolidated statement of comprehensive income net of any corresponding reimbursements. Liabilities for traditional deposits of the Walmart Bank are comprised of demand deposits in debit card accounts and compulsory term deposits. These liabilities are recorded at deposit or placement cost, plus accrued interest. o. Contingent liabilities The contingent liability related to the acquisition of Walmart Central America is valued at present value at the date of the financial statements. The acquisition will require additional payments in shares and in cash provided Walmart Central America reaches a certain profitability level during a period of no longer than ten years after the agreement signing date. p. Taxes on profits Deferred taxes on profits are recognized using the asset and liability method, in conformity with IAS 12, Income Taxes. Under this method, deferred taxes are recognized on all temporary differences between the financial reporting and tax values of assets and liabilities, applying the enacted income tax rate, effective as of the date of the consolidated statement of financial position, or the enacted rate that will be in effect when the deferred tax assets and liabilities are expected to be recovered or settled. The Company periodically evaluates the possibility of recovering deferred tax assets. Current year taxes on profits are presented as a short-term liability or current asset, net of prepayments made during the year. q. Employee benefits In conformity with the laws of each country in which the Company operates, the termination benefits for retirement or death to which the Company's employees are entitled, are as follows: Mexico: Seniority premiums accruing to employees under the Mexican Labor Law are recognized as a cost of the years in which services are rendered, based on actuarial computations made by an independent expert, using the projected unit credit method, in conformity 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. Employee profit sharing is presented in operating results as part of the general expenses line and represents a liability due and payable in less than one year. All other payments accruing to employees or their beneficiaries in the event of involuntary retirement or death, in terms of the Mexican Labor Law, are expensed as incurred. Central America: Termination retirement benefits to which employees of the Walmart Central America companies are entitled under the labor laws of each country and are recorded as liabilities based on actuarial valuations carried out by independent experts. In Guatemala, employees are entitled to termination benefits after three years of service in the Company, except in the case of justified dismissals. In El Salvador and Honduras, employees are entitled to termination benefits after one year of service in the Company, except in the case of justified dismissals. 2013 Financial and Social Responsibility Report 73 23#75In Nicaragua, payouts for termination benefits vary from one to five months of salary for the period the services were provided. In Costa Rica, termination benefits are paid to employees based on current corporate policy and in conformity with the laws of such country. r. Equity Legal reserve: In conformity with the Mexican Corporations Act, the Company appropriates at least 5% of the net income of each year to increase the legal reserve. This practice must be continued each year until the legal reserve reaches 20% of the value of the Company's capital stock. Employee stock option plan fund: The employee stock option plan fund is comprised of WALMEX shares presented at acquisition cost. The plan is designed to grant stock options to executives of the companies in the Group, as approved by the CNBV. All employee stock options are granted to executives of subsidiary companies at a value that is no less than the market value on the grant date. In accordance with current corporate policy, WALMEX executives may exercise their option to acquire shares in equal parts over five years. The right to exercise an employee stock option expires after ten years as of the grant date or after sixty days following the date of the employee's termination. The compensation cost of stock option is calculated using the Black-Scholes financial valuation technique, in conformity with IFRS 2, Share-Based Payments. Premium on sale of shares: The premium on sale of shares represents the difference between the cost of shares granted under the stock option plan and the value at which such shares were sold to executives of companies in the Group, net of the corresponding income tax. s. Revenue recognition Revenue from merchandise sales is recognized in the consolidated statement of comprehensive income at the time ownership of the products sold is transferred to the customer and the services income at the time the service is provided, in conformity with IAS 18, Revenue. Sam's Club and ClubCo membership income is deferred over the twelve-month term of the membership and it is presented in the other revenues line in the consolidated statement of comprehensive income. Rental income is recognized as it accrues over the terms of the lease agreements entered into with third parties and it is presented in the other revenues line in the consolidated statement of comprehensive income. The Company recognizes the net amount of cell phone minutes revenues in the net sales line in its consolidated statement of comprehensive income at the time the service is provided. Walmart Bank's interest and fee revenues are recognized as they accrue in the other revenues line in the consolidated statement of comprehensive income. Revenues from the sale of waste, extended warranties and service commissions are recognized in the other revenues line in the consolidated statement of comprehensive income at the time ownership of the products sold is transferred to the customer or the service is provided. t. Basic earnings per share attributable to owners of the parent The basic earnings per share is the result of dividing the net income of the year attributable to owners of the parent by the weighted average number of outstanding shares, in conformity with the guidelines of IAS 33, Earnings per Share. Diluted earnings per share is the same as basic earnings per share since there is currently no potentially dilutive common stock. U. Operating segments Segment financial 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 Company operates, in conformity with IFRS 8, Operating Segments. v. Foreign currency transactions The Company's foreign currency denominated assets and liabilities are translated to Mexican pesos at the prevailing exchange rate at the date of the consolidated statement of financial position. Exchange differences are recognized in the consolidated statement of comprehensive income under the Financial (expenses) income, net line, in conformity with IAS 21, The Effects of Changes in Foreign Exchange Rates. 2013 Financial and Social Responsibility Report 74#764.- CASH AND CASH EQUIVALENTS: An analysis of cash and cash equivalents at December 31, 2013 and 2012, is as follows: December 31, 2013 Cash and cash in banks Highly marketable Ps. 7,826,506 Ps. December 31, 2012 8,318,695 investments 13,302,985 Ps. 21,129,491 Ps. 19,844,534 28,163,229 5.- ACCOUNTS RECEIVABLE, NET: An analysis of accounts receivable at December 31, 2013 and 2012, is as follows: 7.- ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS: As part of its business strategy, WALMEX reached a final agreement with ALSEA for this company to acquire 100% of WALMEX' restaurant line of business, which includes the Vips, El Portón, Ragazzi and La Finca ("VIPS") restaurant chains. The total sale price is Ps. 8,200 million. This deal is subject to the approval of Mexico's Federal Economic Antitrust Commission. Additionally, ALSEA shall pay WALMEX in the future rent for those restaurant units that are located where other WALMEX' stores are located. The Vips restaurant business consists of 360 restaurants of which 262 operate under the "Vips" brand name, 92 units operate under the "El Portón" brand name and 6 units operate under the "Ragazzi" brand name. Additionally, this transaction includes the transfer of intellectual property related to the four brands, menus, product development, and operating processes, among others. An analysis of assets and liabilities classified as held for sale at December 31, 2013, is as follows: December 31, 2013 December 31, 2012 Walmart Bank loan portfolio Ps. 5,307,153 PS. 4,035,917 Recoverable taxes 3,958,463 3,308,944 Trade receivables 3,549,235 Other accounts receivable 606,153 3,065,220 489,200 Walmart Bank allowance for credit risks ( 523,340) ( 364,063) Reserve for bad debts (trade receivables and others) Ps. ( 119,251) 12,778,413 Ps. ( 158,780) 10,376,438 Current assets Ps. Property and equipment, net Other assets Ps. December 31, 2013 794,106 3,116,581 22,059 3,932,746 Accounts payable to suppliers Ps. 180,996 Other liabilities 345,282 Current liabilities 526,278 Non-current liabilities. 439,949 Total liabilities Ps. 966,227 6.- INVENTORIES: An analysis of inventories at December 31, 2013 and 2012, is as follows: Main lines of the results from discontinued operations shown in the consolidated statement of comprehensive income for the years ended December 31, 2013 and 2012, are as follows: December 31, December 31, 2013 2012 Merchandise for sale Ps. Agro-industrial development 41,262,225 PS. 641,094 41,903,319 37,426,732 Total revenues Ps. December 31, 2013 5,987,465 Ps. December 31, 548,748 Costs, expenses and taxes ( 5,274,312) 2012 5,990,781 ( 5,307,960) 37,975,480 Merchandise in transit Ps. 1,891,578 43,794,897 Ps. 1,116,115 Net income from 39,091,595 discontinued operations Ps. 713,153 Ps. 682,821 2013 Financial and Social Responsibility Report 75#778.- PROPERTY AND EQUIPMENT, NET: An analysis of property and equipment at December 31, 2013 and 2012, is as follows: Property and equipment owned by the Company Translation December 31, January 1, 2012 Translation Additions Disposals Transfers effect 2012 Additions Disposals Transfers effect December 31, 2013 Land Buildings Ps. 27,295,427 Ps. 1,992,763 Ps. ( 270,023) Ps. 40,803,393 3,677,521 ( 222,732) 632,148 ( 12,437) Ps. ( 220,610) Ps. 28,785,120 Ps. ( 320,502) 942,375 Ps. ( 60,796) Ps. ( 186,479) Ps. 52,910 Ps. 29,533,130 44,569,828 2,627,787 ( 73,056) (2,802,621) 102,590 44,424,528 Facilities and leasehold improvements 33,835,629 2,929,457 Furniture and equipment 41,430,843 5,610,947 Total 143,365,292 14,210,688 Accumulated depreciation Work in process (46,489,962) (7,701,317) 3,591,072 ( 331,765) ( 889,283) (1,713,803) 1,074,595 62,117 ( 209,436) 36,286,002 3,403,164 271,306 ( 247,085 116,540 953,134 46,764) ( 820,162) ( 419,920) ( 1,170,468) 189,043 46,003,893 155,644,843 5,233,276 12,206,602 (105,131) 3,029,404 (52,974,405) (8,241,071) 1,677,410 ( 432,713) (2,325,188) (2,891,753) 2,549,535 579,073 36,634 39,872,160 (1,498,123) (3,908,150) 75,731 267,865 161,319,407 47,489,589 3,445,588 ( 42,463) (55,262,816) 5,965 (2,128,258) 27,417 2,611,938 Total owned property and equipment Ps. 100,466,402 Ps. 6,756,456 Ps. ( 522,668) Ps. 86,208 Ps. (1,086,556) Ps. 105,699,842 Ps. 5,642,941 Ps. ( 336,253) Ps. (2,590,820) Ps. 252,819 Ps. 108,668,529 Property Furniture and equipment Total Accumulated depreciation Total leased property and equipment Total Leased property and equipment Translation January 1, 2012 Additions Disposals Transfers effect December 31, 2012 Translation December 31, Additions Disposals Transfers effect 2013 Ps. 11,566,148 Ps. 1,145,128 Ps. ( 3,774) Ps. - Ps. (132,705) Ps. 12,574,797 Ps. 1,454,057 Ps. ( 145,643) Ps. ( 553,583) Ps. 30,658 Ps. 13,360,286 1,491,246 357,106 ( 13,057,394 1,502,234 ( 4,780) 8,554) ( 126,233) 1,717,339 420,528 4) (241,253) ( 126,233) (2,151,298) ( 509,467) 165 53,880 ( 132,705) ( 8,356) 14,292,136 1,874,585 ( 2,615,076) ( 566,847) ( 145,647) 54,967 ( 794,836) 324,569 30,658 40,311) 1,896,610 15,256,896 ( 2,842,698) Ps. 10,906,096 Ps. 992,767 Ps. ( 8,389) Ps. ( 72,353) Ps. ( 141,061) Ps. 11,677,060 Ps. 1,307,738 Ps. ( 90,680) Ps. ( 470,267) Ps. ( 9,653) Ps. 12,414,198 Ps. 111,372,498 Ps. 7,749,223 Ps. (531,057) Ps. 13,855 Ps. (1,227,617) Ps. 117,376,902 Ps. 6,950,679 Ps. ( 426,933) Ps. (3,061,087) Ps. 243,166 Ps. 121,082,727 Depreciation expense for the years ended December 31, 2013 and 2012, was Ps. 8,496,420 and Ps. 7,841,915, respectively. At December 31, 2013, the transfers column includes the reclassification of fixed assets held for sale in the amount of Ps. 3,116,581 pertaining to the restaurant line of business. Work in process mostly consists of Company's investments mainly for the construction of new stores. 2013 Financial and Social Responsibility Report 76#789.- INTANGIBLE ASSETS: An analysis of intangible assets at December 31, 2013 and 2012, is as follows: Goodwill December 31, 2013 Ps. 24,745,086 Ps. Trademarks 620,167 Licenses and software 445,893 102,484 43,556 25,957,186 Ps. Trade receivables Patents Ps. December 31, 2012 24,745,086 609,428 415,740 115,441 42,345 25,928,040 For the years ended December 31, 2013 and 2012, the Company acquired software in the amount of Ps. 288,454 and Ps. 201,783, respectively. Amortization expense for the years ended December 31, 2013 and 2012, was Ps. 193,274 and Ps. 221,358, respectively. Goodwill represents the excess of the purchase price over the fair value of the net assets of Walmart Central America at the acquisition date, plus the fair value of the non-controlling interests, computed in conformity with the guidelines in IFRS 3, Business Combinations. Goodwill was computed in conformity with IAS 38, Intangible Assets, applying the perpetuity value technique to determine the goodwill'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 engaged the services of an independent expert to test its goodwill for impairment. This evaluation was performed in conformity with IAS 36, Impairment of Assets, using the discounted cash flow technique (expected present value) to estimate the value in use of each cash generating unit based on the estimated revenues, costs, expenses, working capital requirements and fixed asset investments of each unit. This technique includes projection assumptions and value estimates and is consistent with the technique used to determine the purchase price of Walmart Central America at the time of the acquisition, which was the basis for estimating the goodwill to be allocated to each country. Recoverable goodwill was computed based on value in use, which was calculated using cash flow projections considering the five-year business plan that underlies the decision making of the Company's senior management, except for El Salvador and Nicaragua, where the business plan covers ten years. As a result of this study, at December 31, 2013, there were no indicators of impairment in the value of the Company's goodwill. At December 31, 2012, the Company recognized an impairment loss of Ps. 5,023,011 in the other income (expenses), net line. As a result of the above, the Company reassessed the contingent liability recognized in February 2010 as part of the acquisition of Walmart Central America. As a result of this analysis, no adjustment was made to the contingent liability at December 31, 2013. Conversely, at December 31, 2012, the Company cancelled Ps. 4,901,100 of the contingent liability, recognizing income of Ps. 4,649,277 in the other income (expense), net line, and a cancellation of interest in the amount of Ps. 251,823 that is presented in the financial (expense) income, net line. 10.- RELATED PARTIES: a) Related party balances At December 31, 2013 and 2012, the consolidated statement of financial position includes the following balances with related parties: Accounts payable to suppliers: C.M.A. U.S.A., L.L.C. (affiliate) Global George, LTD. (affiliate) December 31, 2013 December 31, 2012 Ps. 343,919 Ps. 34,451 615,185 17,109 Ps. 378,370 Ps. 632,294 Other accounts payable: Wal-Mart Stores, Inc. (holding company) Ps. 413,092 Ps. 377,254 At December 31, 2013 and 2012, balances receivable due from and payable due to related parties consist of current accounts that bear no interest, payable in cash and without guarantees. b) Related party transactions WALMEX has entered into the following open-ended agreements with related parties: - 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 assistance and services with Walmart Stores that are payable monthly. Agreement for royalties for trademark use with Walmart Stores, payable quarterly based on a percentage of sales of the retail businesses. 2013 Financial and Social Responsibility Report 77#79The Company had the following transactions with related parties during the years ended December 31, 2013 and 2012: 11. OTHER ACCOUNTS PAYABLE: An analysis of other accounts payable at December 31, 2013 and 2012, is as follows: December 31, December 31, 2013 2012 December 31, 2013 December 31, 2012 Import of merchandise for sale: Accrued liabilities and others Ps. Walmart Bank 8,830,905 Ps. 9,101,897 C.M.A. U.S.A., L.L.C. traditional deposits (affiliate) Ps. 3,131,719 Ps. 3,138,902 Provisions 4,807,951 606,153 4,249,943 597,918 Global George, LTD. (affiliate) 47,003 17,072 Finance lease Ps. 3,178,722 Ps. 3,155,974 (Note 12) Related parties 723,059 476,019 Technical assistance, services and royalties: Wal-Mart Stores, Inc. (holding company) Ps. 2,164,810 Ps. 2,146,203 c) Remuneration of principal officers An analysis of remuneration to the Company's principal officers for the years ended December 31, 2013 and 2012 is as follows: December 31, 2013 December 31, 2012 Short-term benefits Termination benefits Ps. Share-based payments 754,508 83,303 93,951 Ps. 695,027 64,477 53,906 Ps. 931,762 Ps. 813,410 (Note 10) Contingent liability (Note 12) Dividends Ps. 413,092 377,254 127,674 40,639 15,549,473 Ps. 131,685 34,649 14,969,365 At December 31, 2013, the Company has commitments totaling Ps. 10,150,325 (Ps. 9,003,254 in 2012) for the acquisition of inventories, property and equipment, as well as for maintenance services. 12.- OTHER LONG-TERM LIABILITIES: At December 31, 2013 and 2012, the other long-term liabilities line includes the Company's obligations beyond one year under its finance leases and contingent liability, as described below: a) Leases: In order to determine if the suppliers transfer the right to use an asset, WALMEX analyses the provision of services agreement that do not have the legal form of a lease but that involve the use of an asset. WALMEX does not have a provision of services agreement that must be classified as a lease, in conformity with IFRIC 4, Determining Whether an Arrangement Contains a Lease. The Company has entered into operating leases with third parties. Rental expense under these leases is recognized on a straight-line basis over the term of the lease agreements considering as the commencement date of the lease the occupancy date of the leased property and including the lessee's rights to renewal. The Company has entered into property lease agreements that qualify as finance leases. These agreements are recorded at the lower of either the present value of future minimum lease payments or at the market value of the property, and they are amortized over the term of the lease agreements, which includes the lessee's rights to renewal. 2013 Financial and Social Responsibility Report 78#80The Company has entered into property lease agreements with third parties for compulsory terms ranging from 2 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 range from 7 to 10 years. Future rental payments are as follows: 13.- TAXES ON PROFITS: Through December 31, 2013, the Company and its subsidiaries, except Walmart Bank and Walmart Central America, have been authorized by the Ministry of Finance and Public Credit to determine their tax results on a consolidated basis. Beginning January 1, 2014, each of the companies of WALMEX shall determine and pay income tax on an individual basis. An analysis of taxes on profits charged to the income statement for the years ended December 31, 2013 and 2012, is as follows: Operating leases Year (compulsory term) Finance leases (minimum payments) December 31, 2014 Ps. 2015 Ps. 321,429 Ps. 311,318 Ps. 723,059 2013 December 31, 2012 817,880 2016 Ps. 272,739 Ps. 915,406 2017 Ps. 193,867 Ps. 509,273 Current year tax Deferred tax Ps. 2018 PS. 130,490 Ps. 439,997 Total Ps. 9,165,940 350,998 9,516,938 Ps. Ps. 8,736,951 499,846 9,236,797 2019 and thereafter PS. 478,282 Ps. 9,622,614 At December 31, 2013, the liability derived from the use of the straight-line method under operating leases was Ps. 524,784, of which Ps. 25,085 is presented in the current liabilities line. Total rent under operating leases charged to the income statement during the years ended December 31, 2013 and 2012 was Ps. 4,551,209 and Ps. 3,614,455, respectively. b) Contingent liability At December 31, 2013 and 2012, the Company recognized a contingent liability for contingent compensation related to the acquisition of Walmart Central America of Ps. 1,069,197 and Ps. 1,190,933, respectively, including amounts payable in less than one year of Ps. 127,674 and Ps. 131,685, respectively. This contingent compensation represents future payments in shares and in cash. An analysis of the payments made by the Company in cash and shares in February of each year to cover the contingent liability payable as part of acquisition is as follows: 2013 2012 Payment in shares Ps. Payment in cash 67,159 Ps. 64,526 63,379 60,894 Total payment of contingent liability Ps. 131,685 Ps. 124,273 Number of Series An analysis of the effects of the temporary differences giving rise to deferred tax assets and liabilities at December 31, 2013 and 2012, is as follows: Property and equipment Inventories Repatriation of earnings of Walmart Central America Walmart Bank available tax loss carryforward Advance collections Other long-term liabilities Other items, net Total December 31, December 31, 2013 Ps. 9,133,637 Ps. ( 663,248) Ps. 1,238,918 2012 8,200,595 ( 787,232) 1,206,647 (1,039,272) ( 846,616) ( 191,539) ( 224,350) ( 239,131) ( 243,378) 1,387,707) 6,851,658 Ps. ( 716,763) 6,588,903 At December 31, 2013, the consolidated effective tax rate is 30.2% (29.0% in 2012). The difference between the statutory tax rate and the effective tax rate is due basically to the effects of annual inflation adjustment and other permanent items. "V" shares issued 2013 Financial and Social Responsibility Report 1,606,084 1,586,861 79#81In Mexico, the legal income tax rate is 30%. For the other countries, the legal income tax rates are as follows: Rate Costa Rica 30% Guatemala 31% Honduras 30% Nicaragua El Salvador 30% 30% 14.- EMPLOYEE BENEFITS: Mexico: The Company has set up a defined benefits trust fund to cover seniority premiums accruing to employees. Workers make no contributions to this fund. These obligations are estimated using the projected unit credit method. At December 31, 2013 and 2012, an analysis of the Company's assets and liabilities for seniority premiums and retirement benefits is as follows: Seniority premiums December 31, 2013 December 31, 2012 Retirement benefits December 31, December 31, 2013 2012 The goodwill resulting from the acquisition of Walmart Central America is not deductible under the Mexican Income Tax Law and thus, it has no effect on the Company's calculation of deferred taxes. The Company has tax losses from Walmart Bank that, in conformity with the current Mexican Income Tax Law, may be carried forward against the taxable income generated in future years. An analysis of the Company's available tax loss carryforward at December 31, 2013 is as follows: Defined benefit obligation Ps. 736,256 Ps. 786,744 Ps. 97,307 Ps. 103,353 Plan assets Net projected liability ( 612,821) 603,038) Ps. 123,435 Ps. 183,706 Ps. 97,307 Ps. 103,353 An analysis of the Company's obligations for seniority premiums and retirement benefits for the years ended December 31, 2013 and 2012 is as follows: 2013 Financial and Social Responsibility Report Year of expiration Amount 2017 Ps. 124,163 Seniority premiums December 31, 2018 683,098 2013 December 31, 2012 Retirement benefits December 31, 2013 December 31, 2012 2019 833,739 2020 811,847 Current-year service cost Ps. 107,431 Ps. 86,338 Ps. 6,303 Ps. 4,970 2021 633,663 2022 145,605 Net interest 11,342 6,892 6,522 5,930 Ps. 3,232,115 Cost of defined benefits Ps. 118,773 Ps. 93,230 Ps. 12,825 Ps. 10,900 Payouts for seniority premiums in Mexico for the year ended December 31, 2013 were Ps. 61,199 (Ps. 53,113 in 2012). At December 31, 2013, the plan assets have been invested through the trust as follows: 94% in money market instruments and 6% in mutual funds. 80#82Central America: For the years ended December 31, 2013 and 2012, an analysis of the liabilities associated with termination benefits in Central America is as follows: At December 31, 2013, the actuarial assumptions used in the actuarial study for each country are as follows: Country Defined benefit obligation December 31, December 31, 2013 2012 Costa Rica Ps. 73,892 Ps. 62,522 Guatemala 534,557 564,658 Honduras 80,526 77,342 Nicaragua El Salvador Total 11,781 12,798 50,079 53,738 Ps. 750,835 Ps. 771,058 Country Discount rate Salary increase rate Mexico 7.50% 5.25% Costa Rica 10.12% 5.50% Guatemala 8.50% 4.50% Honduras 13.29% 6.00% Nicaragua 12.99% 7.50% El Salvador 8.30% 3.10% For the years ended December 31, 2013 and 2012, an analysis of the cost of termination benefits in Central America is as follows: Country Current-year service cost December 31, December 31, 2013 2012 Net interest December 31, 2013 December 31, 2012 Costa Rica Ps. 13,328 Ps. 47,289 Ps. Guatemala 67,935 53,825 14,297 Ps. 39,712 Honduras 16,878 16,802 8,210 8,968 42,175 7,844 Nicaragua 4,069 4,489 1,483 1,639 El Salvador 10,898 Total Ps. 113,108 Ps. 11,076 133,481 Ps. 3,532 67,234 Ps. 5,146 65,772 Termination benefits paid out for the year ended December 31, 2013 were Ps. 161,318 (Ps. 147,720 in 2012). 15.- EQUITY: a. At ordinary and extraordinary meetings held on March 14, 2013, the shareholders adopted the following resolutions: 1. Approval of a cap of Ps. 5,000,000 on the amount the Company would use in 2013 to repurchase its own shares. 2. Cancellation of 24,917,540 series "V" shares resulting from the repurchase of shares. 3. Increase in the legal reserve of Ps. 1,163,758 to be charged to retained earnings. 4. A declared cash dividend of Ps. 0.46 pesos per share to be paid on April 23, 2013 and two extraordinary cash dividends of Ps. 0.29 pesos per share and Ps. 0.17 pesos per share to be paid on April 23 and on November 26, 2013, respectively. 5. Approval of the comprehensive amendment to the Company's bylaws. b. At ordinary and extraordinary meetings held on March 27, 2012, the shareholders adopted the following resolutions: 1. Approval of a cap of Ps. 5,000,000 on the amount the Company would use in 2012 to repurchase its own shares. 2. Cancellation of 100,997,000 series "V" shares resulting from the repurchase of shares. 3. Increase in the legal reserve of Ps. 1,112,692 to be charged to retained earnings. 4. A declared cash dividend of Ps. 0.44 pesos per share and an extraordinary cash dividend of Ps. 0.11 pesos per share. Both dividends were to be paid on April 30, 2012. 2013 Financial and Social Responsibility Report 81#83c. Capital stock is represented by registered shares with no par value. The Company's capital stock must be represented by a minimum of 3,000,000,000 shares and a maximum of 100,000,000,000 shares. At December 31, 2013 and 2012, an analysis of historical paid-in stock and the number of shares representing it is as follows: Changes in the stock option plan are as follows: December 31, December 31, Capital stock 2013 2012 Fixed minimum capital Ps. Variable capital 5,591,362 Ps. 37,215,773 5,591,362 37,381,747 Total Ps. 42,807,135 Ps. 42,973,109 Number of freely subscribed common shares: 17,627,200,951 17,721,594,867 Weighted average Number of shares price per share (pesos) Balance at January 1, 2012 Granted 261,291,765 19.27 37,202,679 39.79 Exercised ( 41,817,426) 14.82 Cancelled 6,031,950) 29.54 Balance at December 31, 2012 250,645,068 22.81 Granted 38,214,955 39.21 Exercised ( 55,080,437) 15.52 ( 9,002,077) 35.67 224,777,509 26.87 During the year ended December 31, 2013, WALMEX repurchased 96,000,000 (27,084,540 in 2012 of its own shares, of which 2,167,000 were cancelled as per the resolution adopted at the shareholders' meeting held on March 27, 2012). As a result of the share repurchases, the Company's historical capital stock was reduced by Ps. 233,133 (Ps. 65,670 in 2012). The difference between the theoretical value and the repurchase cost of the shares acquired was reflected against retained earnings. d. Distributed earnings and capital reductions that exceed the net taxed profits account (CUFIN per its acronym in Spanish) and restated contributed capital account (CUCA per its acronym in Spanish) balances are subject to income tax, in conformity with Articles 11 and 89 of the Mexican Income Tax Law. At December 31, 2013 and 2012, the total balance of these two tax accounts is Ps. 143,033,415 and Ps. 135,398,711, respectively. e. The employee stock option plan fund consists of 231,976,659 WALMEX shares, which have been placed in a trust created for the plan. The total compensation cost charged to operating results in the years ended December 31, 2013 and 2012 was Ps. 351,898 and Ps. 342,957, respectively, which represented no cash outlay for the Company. Cancelled Balance at December 31, 2013 Shares available for option grant: At December 31, 2013 7,199,150 1,962,028 At December 31, 2012 2013 Financial and Social Responsibility Report 82#84At December 31, 2013, an analysis of granted and exercisable shares under the stock option plan fund is as follows: 16.- OTHER REVENUES: For the years ended December 31, 2013 and 2012, an analysis of other revenues related to the Company's primary business activities is as follow: Number of Year Granted Average Weighted remaining average life price per shares (in years) share (pesos) Exercisable Weighted Range of price (pesos) Number average of price per shares share (pesos) December 31, 2013 December 31, 2012 Memberships PS. 1,212,672 Ps. 1,211,604 2004 8,157,071 0.2 8.47 8.45-9.09 8,157,071 8.47 Walmart Bank revenues 1,338,474 943,158 2005 14,306,364 1.2 9.90 9.90 14,306,364 9.90 Rental 839,743 789,967 2006 15,086,813 2.2 2007 13,563,239 3.2 14.40 14.40-15.02 21.54 21.54 15,086,813 14.40 Gasoline 306,159 337,154 13,563,239 21.54 Sale of waste 328,758 311,622 2008 20,966,495 4.2 19.35 19.35 20,966,495 19.35 Service commissions 272,387 259,318 2009 29,590,705 5.2 15.99 15.85-22.80 18,225,167 16.02 Parking 126,413 139,938 2010 25,955,056 6.2 29.70 29.69-31.05 11,624,761 29.69 Other 159,814 223,744 2011 28,698,940 7.2 2012 32,806,854 8.2 2013 35,645,972 9.2 33.75 33.70-33.75 39.77 34.74-40.05 39.20 39.17-41.89 6,894,443 33.75 Total Ps. 4,584,420 Ps. 4,216,505 4,178,833 39.64 Total 224,777,509 5.8 26.87 113,003,186 19.13 17.- FINANCIAL (EXPENSES) INCOME, NET: An analysis of financial (expenses) income, net for the years ended December 31, 2013 and 2012, is as follows: 2013 Financial and Social Responsibility Report December 31, 2013 December 31, 2012 Financial income Financial income Ps. Exchange gain 1,086,330 54,595 1,140,925 Ps. 1,211,522 9,368 1,220,890 Financial expenses Interest on finance leases Accrued interest on contingent liability Total 1,113,361 1,026,885 42,206 ( 206,932) 1,155,567 PS. 14,642) Ps. 819,953 400,937 83#85Financial income primarily consists of interest earned on investments and income earned on factoring transactions. Based on the analysis of the contingent liability, the Company cancelled accrued interest of Ps. 251,823 at December 31, 2012. 18.-SEGMENT FINANCIAL INFORMATION: Segment financial information is prepared based on the information used by the Company's senior management to make business decisions and on the criteria established in IFRS 8, Operating Segments. The Company operates in Mexico and Central America and sells to the general public, and it is primarily engaged in operating self-service stores. The Company has identified the following operating segments by geographical zone: Mexico: • Self-service: Operation of discount stores, hypermarkets, wholesale-price membership stores and supermarkets. • Financial services: Operation of bank branches to provide banking and credit services. • Other: Consists of department stores and real estate transactions with third parties. An analysis of financial information by operating segments and geographical zones is as follows: Year ended December 31, 2013 Total revenues Operating income Financial expenses, Income before taxes net on profits Segment Mexico: Self-service Financial services Other Ps. 352,606,541 Ps. 27,789,651 Ps. 1,338,474 Ps. ( 414,715) 13,786,148 2,040,758 Central America: Self-service Consolidated 2,115,953 57,430,278 Ps. 425,161,441 Ps. 31,531,647 Ps. ( 14,642) Ps. 31,517,005 Year ended December 31, 2012 Total revenues Operating income Financial income net Income before taxes on profits Central America: Operation of discount stores, supermarkets, hypermarkets, warehouse stores and wholesale- price membership stores in Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador. 2013 Financial and Social Responsibility Report Segment Mexico: Self-service Financial services Other Ps. 341,480,071 Ps. 28,612,287 Ps. 943,158 ( 569,744) 13,374,759 Ps. 2,293,166 Central America: Self-service Impairment of 56,262,232 1,459,727 goodwill and cancelation of contingent liability 373,734) Consolidated Ps. 412,060,220 Ps. 31,421,702 Ps. 400,937 Ps. 31,822,639 84#86Year ended December 31, 2013 Purchase of property and Depreciation and Segment equipment amortization Total assets Current liabilities Mexico: Self-service Ps. 10,843,668 Ps. 6,712,881 Ps. 148,930,714 Ps. 45,484,529 Financial services 73,334 20,367 6,350,972 Other 774,467 628,514 Unassignable items Held for sale 9,842,266 12,351,574 3,932,746 5,055,558 2,049,251 3,441,417 966,227 Central America: Self-service Goodwill and contingent liability 2,295,545 1,327,932 24,108,775 8,596,744 24,745,086 127,674 Consolidated Ps. 13,987,014 Ps. 8,689,694 Ps. 230,262,133 Ps. 65,721,400 Year ended December 31, 2012 Purchase of property and Depreciation and Segment equipment amortization Total assets Current liabilities Unassignable items refer primarily to reserve land, cash and cash equivalents of the parent and real estate companies, as well as income tax payable. Assets and liabilities held for sale refer to the restaurant line of service. 19.-APPROVAL OF THE FINANCIAL STATEMENTS: The accompanying consolidated financial statements and its notes for the year ended December 31, 2013 and 2012 were approved for issue and public release by the Company's management on February 4, 2014. These financial statements were subsequently approved by the Company's Board of Directors in a meeting held on February 18, 2014. Mexico: Self-service Ps. 10,539,380 Ps. 6,126,671 Ps. 145,087,260 Ps. 42,562,503 Financial services 68,350 32,761 5,271,426 4,436,619 Other 894,838 592,148 16,827,486 3,549,776 Unassignable items 8,219,668 3,600,944 Central America: Self-service Goodwill and contingent liability 3,156,987 1,311,693 22,134,781 7,882,019 24,745,086 131,685 Consolidated Ps. 14,659,555 Ps. 8,063,273 Ps. 222,285,707 Ps. 62,163,546 2013 Financial and Social Responsibility Report 55 85#87GRI GUIDELINES 1. REPORT GUIDELINE The report has been structured in accordance with guidelines published by the Global Reporting Initiative (GRI), and at Walmart de México y Centroamérica we seek to provide continuity with the clear and honest publication of our performance. In this edition we have published under Guide 3.1, with an A GRI Checked application level. 2. REPORT SCOPE The report presents the multi-format performance by Walmart de México y Centroamérica in the six countries where we operate. This includes the operation of our units, distributions centers and home offices. 3. REPORTING PERIOD The information included in this report covers the period from January 1st to December 31, 2013. 4. STAKEHOLDERS We recognize the relationship between activities, products and services with the different groups, and in this way we conducted the following classification: Level A: Customers, associates, shareholders, suppliers, community and environment Level B: Social organizations, businesses, competitors, etc. We pursue inclusion in our participation processes with different stakeholders. In this manner and with transparent information practices, two way communication channels, advisory boards, among others, we hope to better understand their interests and expectations. Social Responsibility Report#88GRI Content* INDICATOR Strategy and Analysis Organizational Profile Report Parameters Report Scope DISCLOSURE Governance, commitments and engagement Economic performance EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. PAGE 2-5 6-11 86 86 55-62 90 EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change. 90 EC3 Coverage of the organization's defined benefit plan obligations. 90-92 EC4 Significant financial assistance received from government. 91 EC5 EC6 Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation. Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. 91-92 92-93 EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation. 94 EC8 EC9 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. Understanding and describing significant indirect economic impacts, including the extent of impacts. 94-95 95 Environmental performance EN1 EN2 EN3 EN4 EN5 EN6 EN7 EN8 EN9 Materials used by weight or volume. Percentage of materials used that are recycled input materials. Direct energy consumption by primary energy source. Indirect energy consumption by primary source. Energy saved due to conservation and efficiency improvements. Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives. Initiatives to reduce indirect energy consumption and reductions achieved. Total water withdrawal by source. Water sources significantly affected by withdrawal of water. EN10 Percentage and total volume of water recycled and reused. EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. EN12 EN13 EN14 EN15 EN16 EN17 EN18 EN19 EN20 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. Habitats protected or restored. Strategies, current actions, and future plans for managing impacts on biodiversity. Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk. Total direct and indirect greenhouse gas emissions by weight. Other relevant indirect greenhouse gas emissions by weight. Initiatives to reduce greenhouse gas emissions and reductions achieved. Emissions of ozone-depleting substances by weight. NOX, SOX, and other significant air emissions by type and weight. *This index is a simplified version, to find the full version click here 2013 Financial and Social Responsibility Report 96 96 96 96 97 97 97 97 97 98 98 98-99 99 100 101 101 101 101 102 102 87 87#89GRI Content INDICATOR EN21 EN22 EN23 EN24 EN25 EN26 EN27 DISCLOSURE Total water discharge by quality and destination. Total weight of waste by type and disposal method.. Total number and volume of significant spills. Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff. Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Percentage of products sold and their packaging materials that are reclaimed by category. EN28 EN29 EN30 OIEN Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations. Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce. Total environmental protection expenditures and investments by type. Other significant social responsibility and sustainability activities. LA1 Labor Practices and Work Ethics performance Total workforce by employment type, employment contract, and region, broken down by gender. LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region. LA3 LA4 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations. Percentage of employees covered by collective bargaining agreements. LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements. LA6 LA7 LA8 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs. Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender. Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases. Health and safety topics covered in formal agreements with trade unions. LA9 LA10 Average hours of training per year per employee by gender, and by employee category. LA11 LA12 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. Percentage of employees receiving regular performance and career development reviews, by gender. LA13 PAGE 102 102-103 103 104 104 104 104 104 105 105 106-107 108 108 109 109 109 110 110 111 111 112 112-113 113 113 LA14 LA15 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity. Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation. Return to work and retention rates after parental leave, by gender. Human Rights performance HR1 113 113 Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening. 114 HR2 HR3 HR4 2013 Financial and Social Responsibility Report Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken. Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained. Total number of incidents of discrimination and corrective actions taken. 114 114 114 88 88#90GRI Content INDICATOR HR5 DISCLOSURE Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights. HR6 Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor. HR7 HR8 HR9 HR10 HR11 Social performance Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor. Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations. Total number of incidents of violations involving rights of indigenous people and actions taken. Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments. "Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms." S01 S02 S03 S04 S05 Percentage of operations with implemented local community engagement, impact assessments, and development programs. Percentage and total number of business units analyzed for risks related to corruption. Percentage of employees trained in organization's anti-corruption policies and procedures. Actions taken in response to incidents of corruption. Public policy positions and participation in public policy development and lobbying. S06 S07 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country. Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes. S08 S09 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. Operations with significant potential or actual negative impacts on local communities. S010 Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities. Product Responsibility performance PR1 PR2 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.. Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes. PR3 PR4 PR5 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements. Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes. Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. PR6 PR7 PR8 PR9 OiPR Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes. Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services. Other significant social responsibility and sustainability activities. 2013 Financial and Social Responsibility Report PAGE 114 115 115 115 115 115 115 116-118 118 118 118 118 118 119 119 119 119 120-121 121 122 122 123-124 124 124 125 125 125-126 89#91economic INDICATOR EC1 Economic value. EC2 Financial consequences and other risks and opportunities on activities due to climate change. CONTENT Economic Value Generated (EVG) ■Total income (mp) Economic Value Distributed (EVD) Operational costs (mp) Community investments (mp) EC3 Coverage of the organization's defined Retirement Plans benefit plan obligations. 2012 MEXICO 355,798 277,235 581.6 2012 CAM 56,262 44,597 42.6 Walmart México y Centroamérica strategy, through corporate objectives and internal/external periodical communication, considers risks and opportunities evaluations, as well as initiatives for energy efficiency and reduction of Greenhouse Gas emissions. All initiatives undergo a strict review process to ensure alignment with Walmart's general business strategy before approval. Risks and opportunities are evaluated at company, market and asset level, considering the scope of their impact. Information is continuously gathered from all possible sources to identify risks or opportunities: corporate offices, sales floor associates, industry contacts, consulting firms, government and non-government entities, news agencies, professional organizations, legislators, investors and members of the financial community. Risks: • Increase in energy costs. • Greater impact and frequency of natural disasters affecting location of stores, and their operation. • Increase in the cost of raw materials and products due to limitations in availability of non-renewable resources such as water and agricultural inputs. •Legislation on climate change. • Taxes or regulation limits for greenhouse gas emissions. Opportunities: • Renewable energy supply. • Economic incentives to reduce greenhouse gas emissions. • Less dependency on water supply from the network and increase in water reuse percentage. • Optimization in use of raw material, specifically packaging. • Enhance Logistics network efficiency and trip reduction. • Less number of associate commuting via the use of teleconferences. Pension benefits granted according to law. Mexican Social Security Institute grants retirees old-age pension. Requirements: Being 60 or 65 years of age, and having worked at least 500 weeks under the registration of the Mexican Social Security Institute (by the 1973 law), or 1,250 weeks (by the 1997 law). The Company grants the extra benefit of a three-month payment for retirees, included in its Severance Policy. Pension Plan in line with current legislation in each country. 2013 MEXICO 367,731 286,946 464 2013 CAM 57,430 44,591 42.7 Walmart de México y Centroamérica strategy, through corporate objectives and internal/external periodical communication, considers risk and opportunity evaluations, as well as initiatives for energy efficiency and reduction of Greenhouse Gas emissions. All initiatives are subject to a strict review process to ensure alignment with Walmart's general business strategy before approval. Risks and opportunities are evaluated at company, market and asset level, considering the scope of their impact. Information is continuously gathered to identify risks or opportunities from all possible sources: Corporate Offices, sales floor associates, industry contacts, consulting firms, government and NGOs, news agencies, professional organizations, lawmakers, investors and members of the financial community. Risks: Increased energy costs.. • Greater impact and frequency of natural disasters affecting location of stores, and their operation. • Disruption of distribution routes due to Natural Disasters. • Increase in the cost of raw materials and products due to limitated availability of non-renewable resources such as water and agricultural inputs. • Changes on the Legislation on climate change, which can impact on raw material or operation costs. • Taxes or regulation limits on direct carbon emissions or the supply chain. Opportunities: • Renewable energy supply which offers greater stability in energy costs through time. • Economic incentives to reduce greenhouse gas emissions. • Less dependency on water supply from the network and increase in water reuse percentage. • Optimization in use of raw material, specifically packaging. • Enhance Logistics network efficiency and trip reduction. • Less number of associate commuting via the use of teleconferences. Pension benefits granted according to law. Mexican Social Security Institute grants retirees old-age pension. Requirements: Being 60 or 65 years of age, and having worked at least 500 weeks under the registration of the Mexican Social Security Institute (by the 1973 law), or 1,250 weeks (by the 1997 law). The Company grants the extra benefit of a three-month payment for retirees, included in its Severance Policy. Pension Plan in line with current legislation in each country. CAM: Central America NA: Not Available 013 Financial and Not Applicable Social Responsibility Report 90#92economic INDICATOR EC4 Government financial assistance. EC5 Wages for significant locations of operation. CONTENT Other programs • Benefited associates • Transfers / Relocations •Work/Life Balance Website (# hits) Victims of natural disasters and emergencies • Supported associates • Support amount Agreements to benefit associates • Benefited associates • Agreements to benefit associates • Savings from agreements to benefit associates Medical support (government-related) (comprehensive vaccination campaigns, identification campaign and guidance) ⚫ Benefited associates 2013 Financial and Social Responsibility Report Geographic Area "A" General tab Select tab Geographic Area "B" General tab 2012 MEXICO 2012 CAM %W %M 6,327 52 48 3,254 236,833 360 $46,269,447 2013 MEXICO %W %M %W %M 34.3 65.7 5,385 53 47 2,878 Not implemented in CAM 165,849 29 1,005 $239,123 $9,353,644 217,050 265 $36,634,580 2013 CAM %W %M 35 65 Not implemented in CAM 10 $89,398.75 Healthy cafeteria in Azcapotzalco home office: 47,973 NA + 1,200 associates benefited Nutritionist available in Toreo corporate office - Communication of healthy menus provided by Mexico's Social Security "My Sustainability Plan" (MSP) for staff associates to enhance habits and have a positive impact on quality of life and in benefit for the community - Development of the "Start Today, Live Healthy" program, focused on health, stress and nourishment of associates We do not receive financial assistance from any government The company complies with legally Every country in CAM has a established salaries. The company's general pay band is 17% and 27% over the minimum professional wages, depending on the geographical area. statutory minimum wage, the company complies with wages fixed by the authorities. Minimum wage in each country equals the minimum contractual point, both for men and women at the entry-level positions of the Company. 28,406 NA Healthy cafeteria in Azcapotzalco home office: + 1,200 associates benefited. Nutritionist available in Toreo corporate office. - Communication of healthy menus provided by Mexico's Social Security. -"My Sustainability Plan" (MSP) for staff associates to enhance habits and have a positive impact on quality of life and in benefit for the community. - Development of the "Start Today, Live Healthy" program, focused on health, stress and nourishment of associates. The company complies with and exceeds the minimum wage established by the authorities. Depending on the geograghic area, our general pay scale is between 24.6 % and 31.4% above the avarage minimum wage. Every country in CAM has a statutory minimum wage, the company complies with wages fixed by the authorities. Minimum wage in each country equals the minimum contractual point, both for men and women at the entry-level positions of the Company. Dif. $477.20 24.6% $887.20 45.7% $578.60 31.4% 91#932012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM $988.60 53.7% economic INDICATOR EC6 Policy, practices and ratio of spending on locally-based suppliers at significant locations. of operation. CONTENT Select tab Geographic Area "C" General tab Select tab General tab: no border and no major problems attracting candidates cities. * Average Salary Select Tab: border cities, beaches and problems attracting candidates. * Average Salary Ranked lowest rank in the company subject to basic salary only (no tips or commissions) and corresponding to auxiliary cleaning was considered. % of merchandise acquired in Mexico/ Central America Total suppliers ⚫% domestic suppliers Medi-Mart Domestic laboratories International laboratories The Federal District and the states of Guadalajara and Monterrey have the highest headcount. Wherever the Company has significant operations, wages are based on the minimum ones 2013 Financial and Social Responsibility Report 95 95.0 22,817 5,767 85 59 N/A N/A N/A N/A $2,976.75 53.2% N/A N/A The Federal District and the states of Guadalajara and Monterrey have the highest headcount. Wherever the Company has significant operations, wages are based on the minimum ones. 96.3 95.5 23,132 4,176 84.3 61 16 9 •Total active products 340 New product launches 40 •Medi-Mart: savings in medication (mp) 1,483 3 3 3 3 3 NA NA 16 NA 9 NA 369 25 NA 1,845 금금금금금 NA NA NA ΝΑ NA Private Label Products 1,685 1,167 1,915 1,144 Suppliers 236 189 268 182 ⚫% domestic/regional suppliers 77 84 76.1 87 % sale domestic/regional supplier 97 88 92.8 91 • % sales from Private Label 7.6 11 8.2 10 ⚫% import suppliers 23 16 23.9 13 Fruits and Vegetables ⚫% purchases from domestic/regional supplier 89.7 ⚫% purchases of domestic/regional produc 80.2 75 77 77 89.6 80 77 78.0 80 ⚫% purchases directly from local grower 67.0 58 69.2 69 (including "Fertile Soil") (including "Fertile Soil") % direct imports 10.3 17 13.0 92#94economic INDICATOR 2013 Financial and Social Responsibility Report CONTENT Meat ⚫% purchases from domestic/regional supplier 2012 MEXICO 88 2012 CAM 95 2013 MEXICO 94 2013 CAM ⚫% purchases of domestic/regional produc 91 95 85 91 % purchases directly from local grower 87.7 85 91 83 % direct import 8.9 15 6 57 Fish and Seafood ⚫% purchases from domestic/regional supplier 95 55 47 92 22 53 ⚫ % purchases of domestic/regional produc 37.7 50 36 50 % purchases directly from local grower 18.3 40 14 42 5.0 60 8 63 % direct imports Poultry - % Domestic suppliers - % Direct Buys from producer Definition of "local" Report if the organization has preferential policies or practices with local growers. Reasons that impact supplier selection, besides geographical location Factors influencing the selection of suppliers in addition to their geographical location. Local supplier: supplier providing a product or service within its own area of operation or State (ex., Veracruz suppliers provide for stores in Veracruz). There are no preferential conditions for local suppliers, although we do have programs to develop local suppliers and incorporate them in our portfolio (e.g. regional fairs, SME consultancy programs, and incorporation of local suppliers as 70-typed suppliers). There are programs in place, with the support of the Secretary of Economy, such as the installation of "SAP Business One". Business consultancy COMPITE". Local supplier is that which sells in the country; it may be manufacturer, distributor or importer. 95 50 There are no preferential conditions for local suppliers, although we do have programs to develop local suppliers and incorporate them in our portfolio: "One Hand to Grow" (manufacturing suppliers) and Fertile Soil (agricultural & industrial suppliers). Local supplier: supplier providing a product or service within its own area of operation or State (ex., Veracruz suppliers provide for stores in Veracruz). There are no preferential conditions for local suppliers, although we do have programs to develop local suppliers and incorporate them in our portfolio (e.g. regional fairs, SME consultancy programs, and incorporation of local suppliers as 70-typed suppliers), the Sustainable Agriculture program and the marketing program for low-income farmers. There are programs in place, with the support of the Secretary of Economy, such as the installation of "SAP Business One". Business consultancy COMPITE". Local supplier is that which sells in the country; it may be manufacturer, distributor or importer. 99 100 There are no preferential conditions for local suppliers, although we do have programs to develop local suppliers and incorporate them in our portfolio: "One Hand to Grow" (manufacturing suppliers) and Fertile Soil (agricultural & industrial suppliers). Innovation, competitive cost vs. market, delivery capability, compliance with legal, quality and sanitary standards required for the product, sustainable practices to contribute improve the environment and the community. 93#95economic INDICATOR EC7 Procedures for local hiring, and ratio of senior management hired from the local community in locations of significant operation. CONTENT 2012 MEXICO The company has a diversity policy, thus the hiring process is focused in finding the best candidate for the position, regardless of this candidate's residence Process: interviews, selection, psychometric evaluations, interview with the business unit committee, selection, financial offer, documents, file integration, entering, welcome and training 2012 CAM By law, local residents have preference to a job. This only applies domestically, not for the political division of the countries (provinces, departments, etc) 2013 MEXICO "The company has a diversity policy, thus the hiring process is focused in finding the best candidate for the position, regardless of this candidate's residence Process: interviews, selection, psychometric evaluations, interview with the business unit committee, selection, financial offer, documents, file development, entering, welcome and training" 2013 CAM In keeping with local legislation, local residents have preference to a job. 99.9% 0.02% 99.9% 0.1% EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial engagement. Nationality • Mexican / Central America Foreign Expat Definition of "senior management" Suppliers SME Supplier Development Program ⚫% SMEs in consultancy • Attending information sessions Attending seminars • In training. New SME suppliers • Sales from new suppliers (mp) • Walmart consultancy New suppliers Items from new suppliers 99.9% 0.1% 99.9% 0.1% Assistant Director, Director and Vice President are senior management positions 67 67 123 25.3 1,000 man-hours 73 565 51 70 1,000 people 489 participants in 20 sessions 395 805 man-hours 287 257 3,424 2013 Financial and Social Responsibility Report Regional Buyer Program - New Suppliers entered through Regional Suppliers - Sales generated in 2013 Regional Fairs • Fairs. • Participating store . • Participating suppliers • Items 4 5 business rounds 114 91 139 companies 349 29.5 ■ Sales from fairs (million pesos) CAT-MEX • Synergies with domestic suppliers. 72 ■New synergies Products developed 5 8,745 51 571 people 1,787 299 participants in 17 sessions 50 50 142 77 3 9,438 25 NA 5 business rounds 122 companies 94#96economic INDICATOR CONTENT •Inspected garment • Private labels supplied through CAT-MEX • Exported pieces to Central America EC9 Understanding and description of significant indirect economic impacts, including its scope. Improving the quality of life . Openings • New job opportunities 2013 Financial and Social Responsibility Report 2012 MEXICO 47.3 million 16 0 Fertile Soil Program -Small and Medium-sized 3,408 farmers supported -Benefited families. 7,338 -Purchases generated (mp) 986 One hand to grow - Suppliers 549 - Total sales (mp) 572.1 2012 CAM 2013 MEXICO 2013 CAM 58.2 million 19 115,674 Fertile Soil Program -Small and Medium-sized farmers supported 1,733 -Benefited families 5,051 -Purchases generated (mp) One hand to grow - Suppliers 289 Total sales (mp) 367.3 263 61,428 22 7,213 214 12,624 21 1,070 Customer satisfaction Supplier development - Availability of medications, products and services for low income level people, improving their quality of life and financial capability. Promoting social awareness in sustainability and community support. - Strengthening several areas, such as the textile industry. -Double Freshness Guarantee, program that guarantees our customers will get their money back and a new similar item in case the fresh item they bought does not meet their standards. - Customer Service Call Center (CAT) or call center for information, comments and suggestions (PR5). Customer Service Call Center (SAC) or call center started operating throughout the region in 2010 to answer customer questions, receive their suggestions and complaints (PR5). Strengthening several areas, such as the textile industry. -Double Freshness Guarantee, program that guarantees our customers will get their money. back and a new similar item in case the fresh item they bought does not meet their standards. - Customer Service Call Center (CAT) or call center for information, comments and suggestions (PR5). We work closely with suppliers of all sizes that star showing their product in several stores. If their product is profitable, it is distributed in all stores of that business format. Customer Service Call Center (SAC) or call center started operating throughout the region in 2010 to answer customer questions, receive their suggestions and complaints (PR5). SMES (many of them family-owned) have an increase in productivity, profitability, equipment and number of employees, among others. 95#97environment INDICATOR EN1 Materials used by weight or volume. CONTENT Materials used Non-renewable ⚫ Diesel • Natural Gas .L.P. Gast Direct Bond paper (prints, TAB) • Toilet paper ⚫ Cleaning supplies 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM 3,222,291 kg 27,096,857 kg 502,378 kg(1) 4,171,302 kg 718,643 kg 25,000,262 kg 45,942,077 kg 1,161,525 kg(1) 44,082,163 kg 1,107,766 kg 7,899,887 kg 237,600 kg(1) 93,000,000 kg 771,470 kg 97,862 kg(1) 805,624 kg 97,955 kg • Plastic (shrink-wrap and bags) 14,246,933 kg 262,922 kg • Wood 400,000 kg Volume or total weight of materials used 99,613,670 kg 2,360,242 kg 127,258 kg 4,458,446 kg 19,608,154 kg 17,500 kg 190,465,085 kg 354,433 kg 216,344 kg(2) NA 248,424 kg 2,645,610 kg Non-renewable • Fossil fuels EN2 Percentage of materials used that are recycled input materials. • Plastics Plastic • Plastic (bags with 30% recycled resin) • Shrink-wrap recovered for recycling Wood 76,261,225 kg 14,246,933 kg 1,663,903 kg 73,253,727 kg 262,922 kg 19,608,154 kg Material recycling % 4,086,749 kg 11,389,979 kg 741,598.20 kg. 30 4,119,907 kg 19,401,619 kg 1,826,409 kg 248,424 kg Material recycling % 0 •Repaired and reconditioned pallets (cubic meters) 904,755 pieces 1,085,706 (m³) Paper . Bond paper .Toilet paper EN3 Direct energy use broken down by Total direct energy use (GJ) primary energy source. Renewable sources Non renewable sources (GJ) - L.P. Gas EN4 Indirect energy use broken down by primary source. *CEPAL: Certifies - Natural gas Diesel Total indirect energy use (GJ) • Renewable sources (GJ) - Wind power (wind farm energy supply) 1,204,259 pieces (96 ha) 4,561,897 kg 771,470 kg 3,830,491 81,668 (1) 4,561,897 127,258 3,675,173 89,165 151,448 58,076 2,204,108 55,388(2) 2,297,104 1,275,013 1,381,940 23,612 196,051 6,903,487 974,224 (1) 8,003,182 33,776(2) 988,132(2) 916,719 0 598,638 that 63.3% of energy production in the region -Mix of Renewables * NA 604,993 0.621 comes from renewable sources National network electric power (GJ) 5,986,767 369,231 Semarnat: Secretary of the Environment and Natural Resources CEDIS: Distribution Center (1) Forecast at 2012 (2) Forecast at 2013 2013 Financial and Social Responsibility Report NA 612,642 0.621 7,404,544 375,490 96#98environment INDICATOR EN5 Total energy saved due to conservation and efficiency improvements. EN6 Initiatives to provide energy-efficient or renewable energy- based products and services, and energy use saved as a result of said initiatives. CONTENT Total energy savings Total energy savings (million kWh) Savings initiatives Energy management system • Conversion to T5 light . ⚫ Magnetic induction in parking lot • Remote metering syste • Optimization of control system . • ⚫ LED lighting • Door installation in open freezers 2025 goal: 100% powered by renewable energy • Implementation of renewable energy - Wind Farm - Federal/state electric power companies 2012 MEXICO 237,578 65.9 estimated savings % N/A 12 N/A 2.5 3 30 (applied in Suburbia) 12 2012 CAM - Changes in lightening - Energy control, low-energy use equipment, energy savings best practices in operating areas - Energy savings campaign with store best practices N/A 2013 MEXICO 220,155 61.1 estimated savings % 2 6.5 2.5 3 30 12 (applied in Suburbia) 2013 CAM 35,740 9.9 Changes in lightening - Energy control, low-energy use equipment, energy savings best practices in operating areas - Energy savings campaign with store best practices - Installation of LED lamps in parking lots and stores. Optimization of the energy management system. Installation of doors on open refrigerators. Best practices internal campaign to reduce energy use. Remote measuring system. 38 62.1 38 15 15 23 62.1 23 -Installation of LED lamps in parking lots. - Installation of LED lamps in parking lots and stores. - Optimization of the energy management system. - Installation of energy management devices. Installation of equipment to reduce relative humidity. - Low energy use refrigeration equipment and air conditioning. - Installation of doors on open refrigerators. - Best practices internal campaign to reduce energy use. - Remote measuring system. 0 0 -Installation of LED lamps in parking lots. - Installation of energy management devices. Installation of equipment to reduce relative humidity. - Low energy use refrigeration equipment and air conditioning. EN7** Initiatives to reduce indirect energy use and reductions achieved. (**) Indicator taken from comp store data for comp months. Reduction of indirect energy use • Use per area (kWh/m²) . Energy use (kWh) Include assumptions and methodology used to calculate energy use, as well as the source of the information EN8 Total water catchment by source. Total catchment (m³) Public network supply • Wells • Comp unit use (m³) • Use per (m³/m²) EN9 Water sources significantly affected by water catchment. 3.8% 260.55 1,662,990,932 Total sum of energy use based on year-end billing, compared to LY energy use (comp stores in the same billing months). 8,077,692 8,041,932 35,760 3,174,474 0.88 • Rainwater catchment (m³) 2,495 Regional use is not significant based on corresponding criteria. NA 218.47 270,617,722 (1) Total sum of energy use based on year-end billing, compared to LY energy use (comp stores in the same billing months). NA 3.3% 248.14 1,808,874,077 Total sum of energy use based on year-end billing, compared to LY energy use (comp stores in the same billing months). 7,680,392 7,646,391 34,001 3,186,298 (base 2012) 0.79 1,328 Regional use is not significant based on corresponding criteria. 4.4% 218.88 274,481,039 (2) Total sum of energy use based on year-end billing, compared to LY energy use (comp stores in the same billing months). NA 2013 Financial and Social Responsibility Report 97 40#99environment INDICATOR EN10 Percentage and total volume of water recycled and reused. EN11 Description of land in, or adjacent to, protected natural areas or unprotected biodiverse areas. CONTENT Water reused m³ % vs. total water use Water treatment plants EN12 Description of significant impacts of activities, products and services on biodiversity in protected or unprotected natural areas. 2013 Financial and Social Responsibility Report 2012 MEXICO 1,470,000 18.2% 580 Bodega Aurrerá Playa Maya (20,813 m²) The sites had forest vegetation and the corresponding authorizations to build were obtained in advance from Semarnat (Secretary of the Environment and Natural Resources). Sustainable agriculture: 20,157 farmers were trained, 8,992 women included Sustainable fishery: 2015 objective: 100% tilapia fish from China and basa fish from Vietnam will be certified by the Best Aquaculture Practices (BAP) organization. Result: 100% of purchases have BAP certification. Palm oil: 2015 objective: 100% of private label products with certified palm oil. Result: Private label products with palm oil were identified and the baseline for each was established (2010). Key buyers were trained in 2012, and the substitution plan was determined for 2015. Recycled fiber paper: Tabs distributed in stores are printed on recycled fiber paper. FSC-certified paper: Internal printing paper is certified by the Forest Stewardship Council (FSC). 2012 CAM NA NA 208 WMT Constitution (27,373 sqm) 1,516 trees planted in lands and 8,434 planted in "El Cedral" Natural Protected Area to offset emissions, construction of two surface run-off retaining structures, protection works in Quebrada Sur and Quebrada El Arenal, creation and stabilization of slopes, installation of fire fighting systems, emergency plan. Sustainable fishery: - Aquaculture: ES, 58%; CR, 72%; NC, 11%; HN, 70%, and GT, 59% (vs. total sales). CR: •La Sabana Metropolitan Park: Clean-up day in green areas, the railway and high-traffic areas, and planting of over 2,000 seeds of trees that are native to the zone as part of the first corporate volunteer program. ■ Playa Azul, Jacó: Clean-up day on the beach and nearby areas. Environment Day: Seedbed transplant into bags in San Sebastián, San José. Almost 300 species were transplanted, and later, 596 more. Garabito, Jacó: Clean-up activities on the boulevard and the broad avenue at the entrance of the community. These activities were carried out together with a group of neighbors in the area and store associates. • Concepción de Atenas School: Planting of trees at the School facilities, located in Concepción de Atenas, Alajuela, together with community members and associates of the Poultry Plant. Authorized wood: Wood pallets purchased by Walmart de México come from ⚫ ES: authorized sources El Playón natural protected area, Chanmico, in the Municipality of San Juan Opico, La Libertad Department. A total of 5,000 trees were planted over 12 ha. 2013 MEXICO 1,686,592 22.0% 642 Supercenter Polígono Sur. Cancún (22,465 m²) The site had forest vegetation hence Semarnat authorizations were to be obtained and Flora and Fauna rescue activities were carried out. In addition forest offset equivalent to the land area was put in place. Sustainable agriculture: 1,449 farmers were trained, 89 women included Sustainable fishery: 2015 objective: 100% tilapia fish from China and basa fish from Vietnam will be certified by the Best Aquaculture Practices (BAP) organization. Result: 100% of purchases have BAP certification. Palm oil: 2015 objective: 100% of private label products with certified palm oil. Result: Private label products with palm oil were identified and the baseline for each was established (2010). Key buyers were trained in 2012, and the substitution plan was determined for 2015. Recycled fiber paper: Tabs distributed in stores are printed on recycled fiber paper. FSC-certified paper: Internal printing paper is certified by the Forest Stewardship Council (FSC). Authorized wood: Wood pallets purchased by Walmart de México come from authorized sources. 2013 CAM NA NA 221 WMTt Constitution (27,373 sqm) 1,516 trees planted in lands and 8,434 planted in "El Cedral" Natural Protected Area to offset emissions, construction of two surface run-off retaining structures, protection works in Quebrada Sur and Quebrada El Arenal, creation and stabilization of slopes. Distribution Center Coyol - CR. Relocation of fill material within the same property (balancing sites) avoiding the transfer and disposal of the material (300,000 m³). Sustainable fishery: - Aquaculture: 64 % ES, 72% CR 9% NC, 84% HN and 55% GT (vs. total sales). • CR: • Carara National Park, Puntarenas Garabito. Cleaning Day in landscaping, beautification of the common areas and the universal path. Debris were collected. First Conference on Corporate Volunteering Okayama and San Francisco Sports Park. Cleaning green park areas, placement of nutrients to trees, waste collection and painting playgrounds. •Walmart Guadalupe: planting trees at Home Seniors Carlos Maria Ulloa. •Environment Day: Transfer to seedling bags, San Sebastian, San José. Transplanted almost 896 species. • NC: 200 associates worked at the National Zoo for improvements in Area Animal Rescue, planting host plants for butterflies, preparation of landfills with recyclable materials and general cleanliness of the area.. • ES: • The protected area Playon Chanmico in the municipality of San Juan Opico Dept. La Libertad takes planted a total of 5,700 trees on 14 ha. Compensation of 1,516. trees in the area of Walmart Constitution and compensation of 8,434 trees in Protected Natural Area Cedral. 98#100environment INDICATOR CONTENT 2012 MEXICO EN13 Habitats protected Location and size of restores and/or or restored. protected habitats Third party collaborations on restoration and/or protection activities Reforestation 27 ha, Sierra de Guadalupe Park, Edo. de México. Reforestation 300 ha, Flor de Marqués Camp, Chiapas. In 2011 and 2012 we financed Organización Natura y Ecosistemas Mexicanos, A.C. to develop the "Eco-Tourism Camp Flor de Marqués" project in Chiapas and to preserve the remnants of the high tropical evergreen forest located in the communal land of Flor de Marqués, in addition to promoting a sustainable economic activity and strengthening an eco- tourism path regionally (in the Municipality of Marqués de Comillas). Afterwards, we made sure of the continuance of this project. • GT: 2012 CAM El Cedral. Reforestation of 11.43 ha. with 10,000 trees in "Comunidad El Cedral", in the Municipality of Nejapa, San Salvador Department, as part of the environmental offset program by Walmart project Constitución en la ciudad de Mejicanos. 1,000 trees were planted in the United Nations National Park in Amatitlan, a protected area of 373 ha. A wall surrounding the nursery garden was built with reused discarded materials such as bottles and other plastic waste collected by Company associates. In order to celebrate Water Day, educational talks and workshops on the proper use of water were delivered with the participation of 100 students of Tecún Umán School, 25 volunteer associates and executives from Fondo del Agua. • NC: • The surrounding area of the Tiscapa Lagoon Nature Reserve and its amphitheater were reforested and preserved; reusable bags were delivered to the community to avoid the polution of the lagoon with plastic waste and baskets were donated for garbage treatment. 2013 MEXICO Reforestation 47 ha, Sierra de Guadalupe Park, Edo. de México. 60,000 trees during the project (2011-2013). • GT: 2013 CAM • Project "Water Harvesting" in United Nations National Park, construction of rainwater collectors through PVC gutters on roofs of existing facilities to use it as irrigation water collected. A talk to motivate participants to develop uptake in their homes and assist with the reduction of water consumption occurred. "Rubbish? ... The decision is in your hands" Campaign - environmental education program on waste disposal and separation of the United Nations Visitor National Park in conjunction with Advocates Nature Foundation. .Reforestation in UN National Park, a protected area of the country, more than 2,000 trees were planted in 2013 through volunteer activities and have built more than 98 meters of linear walls with eco- bricks (over 12,000 bricks). In Totonicapán 980 trees (500 and 480 Pinos smooth stick) was planted. CR: Costa Rica ES: El Salvador GT: Guatemala HN: Honduras NC: Nicaragua 2013 Financial and Social Responsibility Report 99#101environment INDICATOR EN14 Strategies, actions and future plans for managing impacts on biodiversity. CONTENT Strategy of the organization. Project: Eco Tourism Camp Flor de Marqués Mentioning if a national norm is in effect. 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM -During the construction of new units, we include remediation plans, so that in case of impacting green areas, trees can be transplanted to nearby areas approved by environmental authorities. - Each new site has the corresponding authorizations from the Ministry of Environment and Natural Resources of Mexico, in keeping with Law. Environmental Services Payment program supported by the National Forest Commission -Each new site has the corresponding authorizations from the necessary authorities, in keeping with the Law in each country. - Each new site has the corresponding authorizations from the Ministry of Environment and Natural Resources of Mexico, in keeping with Law. Each new site has the corresponding authorizations from the necessary authorities, in keeping with the Law in each country. 2013 Financial and Social Responsibility Report Inclution of biodiversity considerations, such as enviromental impact assessments, in analytical tools. Participation with and commitment to relevant stakeholders. Follow up process. Walmart de México Foundation, together with Natura y Ecosistemas Mexicanos, A.C. carries out social- environmental appraisals in the region and proposes job-generating and income-increasing productive projects, while preserving biodiversity. Since the projects are being developed in a deforested area, no environmental impact assessment is needed, however the architectural design includes information on the functioning of the ecosystems that are being protected. A manual on operation and construction best practices has been produced to guarantee the preservation of biodiversity. The communal land administration, owner of the forest, is organized around this project, and decisions are made by the Assembly. Reports with compliance. indicators, verification visits. Public information. This project includes several spear-headed aspects, such as turning farmers into ecotourism entrepreneurs, preserving biodiversity through sustainability productive projects, organizing the operation of projects, issuing regulations to promote commitment towards preservation, among other mechanisms not frequently seen in ecotourism projects. This information should be systematized and published to influence in similar processes and replicate lessons learned. 100#102CONTENT 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM NA NA NA NA environment INDICATOR EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations broken down by level of extinction risk. Direct emissions (scope 1) EN16 Total direct and indirect greenhouse gas emissions, by weight. ■Total emissions EN17 Other relevant indirect greenhouse gas emissions, by weight. EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. • Total emissions related to the area built Indirect emissions (scope 2) • Total emissions ■Total emissions related to the area built Norm and methodology used related to data CO, emissions resulting from merchandise transportation (ton) Emissions resulting from personnel transportation (ton) Initiatives 2013 Financial and Social Responsibility Report 523,314 82 29,851 (1) 24.10(1) 725,339 27,303(2) 74 22(2) 886,873 138.95 65,553 (¹) 52.92 (1) 1,013,805 103.96 71,067(2) 56(2) Methodology established by WRI/WBCSD Protocol is used to calculate greenhouse gas emissions. Data is obtained from the amount of fuel, coolants and electricity acquired. Emissions are calculated using published emission factors. 199,417 3,454 26,133 206,864 3,040 28,316 Emissions NOT generated by wind farm energy supply (CO2)/mix of renewables 2012 goal: 20% reduction in Greenhouse Gas emissions • LOGISTICS INITIATIVES Trip reduction program for merchandise transportation •Crosby Bar - Suppliers are allowed to stow pallets on the trailer, thus reducing supplier fleet by half ⚫Bulk deliveries - Pallet-free deliveries, reducing transportation costs SUSTAINABILITY INITIATIVES Wind farm energy supply • Change in sales floor lighting (T5 lamps instead of T8) LED lighting in parking lots and stores Coolant leaks reduction program in refrigeration equipment •Implementation of energy savings operational campaign • Optimization of energy management system Trip reduction program for merchandise transportation Installation of doors on open refrigerators 135,802 - Change in sales floor lighting (T5 lamps instead of T8) Coolant leaks reduction program in refrigeration equipment - Implementation of energy savings operational campaign - Optimization of energy management system - The main emission reduction initiative is related to the control of coolant leaks in 2012, reduced by 35% vs. the previous year. • Wind farm energy supply • Change in sales floor lighting (T5 lamps instead of T8) ⚫LED lighting in parking lots and stores Coolant leaks reduction program in refrigeration equipment •Implementation of energy savings operational campaign Optimization of energy management system •Trip reduction program for merchandise transportation Installation of doors. on open refrigerators • Control system for cooling doors resistors. • electronic cooling system for the valves. 81,964 - Change in sales floor lighting (T5 lamps instead of T8). - Coolant leaks reduction program in refrigeration equipment. - Implementation of energy savings operational campaign. - Optimization of energy management system. -The main emission reduction initiative is related to the control of coolant leaks in 2013, reduced by 18.33% vs. the previous year. • Greenhouse Gas emissions (ton CO²) 1,008,349 48,640(¹) • Emission reduction of CO₂ compared to 2005 baseline 22.4% 16% (1) 30.1% 45,980(2) 22% (2) • Objective achieved of 2012 goal 112% 80% (1) 150% 110% (2) 101#103environment INDICATOR EN19 Emissions of ozone-depleting substances, by weight. EN20 NOX, SOX y otras emisiones significativas al aire por tipo y peso. CONTENT Refrigerante R-22 (kg) Emissions resulting from merchandise transportation/use of fossil fuels • NOx emissions (ton) 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM 36,125 7,078 29,193 2,365 (1) Total Fossil Transportation Use (2) Total Fossil use Transportation 210 29.28 5.97 23.31 4,976 30.83 5.57 25.26 • SOx emissions (ton) 10 175.54 10.05 165.49 335 193.7 14.38 179.32 ⚫PM particle emissions (particulate matter) (ton) 23 1.35 0.18 1.17 671 1.47 0.21 1.26 EN21 Total wastewater discharge, by nature and destination, and water savings and initiatives. ■ VOC emissions (volatile organic compounds) (ton) Total waste water discharged into municipal drainage systems (m³) •Treated wastewater ⚫% treated wastewater Goals 2025: Generate zero pollutant discharges •Water used relate to the area built (m³/ m²) • Drinking water saved (comp units) ⚫% achieved vs. annual goal % units with treatment plants Water savings initiatives EN22 Total weight of waste by type and treatment method. Total waste managed (ton) ⚫ % recycled wastes • Recycled wastes (ton) • Landfills and municipal dumps (ton) • Organic wastes (ton) 2013 Financial and Social Responsibility Report - Compost (ton) Inorganic wastes (ton) 20 6,607,692 1,470,000 28 Water treated complies with norms NOM 002 and 003, using biological systems 0.88 12.3 (baseline 2011) 123 29.8 0.70 0.17 0.53 672 32.3 5,993,800 1,686,592 28 Water treated complies with norms NOM 002 and 003, using biological systems 1.04 0.75 0.18 0.57 7.9% (baseline 2012) 112 31.3 33 Installation of 13 waste water treatment plants throughout the year in new stores to mitigate environmental impact; impact was not measured. Initiatives integrated into store specifications: • Water saving devices in sinks and wash basins. Dry urinals in new and remodeled units. • Water reuse for sanitation services and green areas. • Water treatment plants in applicable new units and remodels Installation of 20 waste water treatment plants throughout the year in new stores to mitigate environmental impact; impact I was not measured. Initiatives integrated into store specifications: Dry urinals in new and remodeled units.. • Water reuse for sanitation services and green areas. • Water treatment plants in applicable new units and remodels. Backwash water recovery filtration system. 303,077 37,191 313,537 38,176 69% 55% 73% 0.61 207,644 19,444 228,163 20,412 95,433 16,736 89,478 14,888 128,074 407 116,108 2,519 5,335 6,410 175,003 604 201,534 357 102#104environment INDICATOR EN23 Total number and volume of significant spills. 2013 Financial and Social Responsibility Report CONTENT - Units with recycling program(s) 2013 goal: 50% reduction in use of plastic bags [vs. 2007 baseline] • % reduction in use (vs. 2007 baseline) ⚫% savings compared to the previous year 2012 MEXICO 2012 CAM 2013 MEXICO 1,417 100% of stores, DCs, manufacturing plants and offices. 1,897 68 8 51 5 5 10.3 Plastic bag use per area (kg/m²) 2.12 2.0 2.03 ⚫% accomplishment vs. 2013 goal 136 101 103 2025 goal: Generate zero wastes 2012 goal: 75% recycling of wastes • Space released from landfills due to solid wastes recycling (m³) 1,206,828 125,346 (1) 1,294,986 % landfill not used by recycling and managing wastes 69 55 73 • Collection and recycling of cardboard (ton) 163,059 17,519 (1) 175,021 .Collection and recycling of cellulose materials from customers (ton) 41 41 2013 CAM 100% of stores, DCs, manufacturing plants and offices. 3 3 3 3 NA NA NA NA 130,309(2) 61 18,100 (2) . • Collection and recycling of plastic (ton) - Plastic hanger (ton) - Shrink wrap (ton) Treatment method determination 11,944 554 11,390 Treatment methods were determined based on the existing infrastructure of the country and value of wastes. Recovered valued wastes were sent to recycling. Compost was determined based on the infrastructure available. No significant spills occurred. 1,925 (1) 9 1,925 (1) Treatment methods were determined based on existing structure in the country. Valued wastes were sent to recycling. Fourteen chemical spills were reported: two minor coolant leaks, a 24-gallon spill in one of our service stations, and 11 LP-gas leaks, most of them caused by 25-lb cylinders with valve problems, for sale in CR. The most important leak happened when a Tomza gas truck was filling up a stationary tank in a Más x Menos unit in Santa Ana, CR and the supply hose broke, which caused the evacuation of neighbors. The gas leak volume could not be quantified. 25,890 6,488 19,402 Treatment methods were determined based on the existing infrastructure of the country and value of wastes. Recovered valued wastes were sent to recycling. Compost was determined based on the infrastructure available. No significant spills occurred. 2,311(2) 6.9 2,311(2) Treatment methods were determined based on existing structure in the country. Valued wastes were sent to recycling. 41 leakage events were reported chemicals, liquid chemicals of any importance in the operation. This was a result of problems in gas cylinders for sale, which hit the market in CR during the year, 32 events in stores gas leak occurred. Additionally, there were 3 events leakage of refrigerant gas leakage and waste water system overflow. 103#105environment INDICATOR EN24 Weight of transported, imported, CONTENT Total weight of transported hazardous wastes (ton) exported nor treated 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM 133.5 56.3 141.0 49.7 wastes deemed hazardous under the terms of the Basel Convention Annex I, II, III and VIII, and percentage of wastes transported internationally. EN25 Identification, size, protection and biodiversity value of water sources and related habitats significantly affected by discharges of water and runoff of the organization. EN26 Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation. EN27 Percentage of products sold and packaging materials that are reclaimed by category. EN28 Monetary value of significant fines and total number of non- monetary sanctions for non-compliance with environmental laws and regulations. Percentage vs total recycled materials • Collection and recycling of cardboard ⚫ Collection and recycling of cellulose materials from customers • Collection and recycling of plastic - Plastic hanger - Shrink wrap N/A 1,254 products with low environmental impact, such as: • 507 organic and hydroponic food items (128 fair-business certified) • 365 energy and water saving products •288 biodegradable and non- pollutant products • 67 products made of recycled material, 27 reusable .293 acoustic booths for emergency plants (24 new) .188 soundproof electric rooms (47 new) • Sustainable products developed by suppliers, but no commercial initiatives with suppliers for said type of products .61 acoustic booths for emergency power generation. • Disposal of electronic materials: 56,300 kg 79 90 0.02 0 635 0.3 10 1,342 products with low environmental impact, such as: ⚫543 organic and hydroponic food items (128 fair-business certified) .390 energy and water saving products .308 biodegradable and non- pollutant products ⚫72 products made of recycled material, 29 reusable .70 acoustic booths for emergency plants (24 new) ⚫54 soundproof electric rooms (47 new) 77 0.02 •Sustainable products developed by suppliers, but no commercial initiatives with suppliers for said type of products Disposal of electronic materials: 49,670 kg 89 0 12 11 0 2.5 0 5.5 10 8.5 11 There is no record of administrative penalties, significant fines or non- monetary penalties (considering significant those The Environment Office of the State of Veracruz imposed Bodega Las Trancas a fine for 1.2 mp. This fine has been paid. exceeding 1.2 mp). 2013 Financial and Social Responsibility Report 104#106environment INDICATOR EN29 Significant environmental impacts of transporting products and other goods and materials used for the organization's operations and transporting members of the workforce. CONTENT CO, emissions resulting from merchandise transportation (EN7) (ton) • Kilometers covered • Gallons Savings due to Logistics projects and initiatives (i.e. backhaul, optimization of freight volume, etc.) 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM 199,417 26,133 28,316 216,155,597 20,527,360 2,565,920 22,241,875 2,780,234 Total Backhaul Reverse Logistics Total Backhaul Reverse Logistics • Operational efficiencies (trips reduced) - Kilometers not covered CO₂ emissions reduced (ton) 24,548 - Gallons not used 157,400 157,400 23,335,000 3,783,000 5,531 63,000 63,000 94,400 19,552,000 - Collected cardboard nationwide 126,758 19,017 94,400 126,758 1,045 1,230,880 33,501,837 34,376 206,958 170,216 3,811,620 5,542 63,527 29,690,217 1,454,760 - Recycle shrink-wrap nationwide 10,574 10,574 11,497 28,834 143,431 170,216 11,497 1,235 - Saved gallons 414,548 102,573 564,684 EN30 Environmental investment. Environmental investment (mp) 150 243 (only energy efficiency) 121,230 487 341.8 (2) (only energy efficiency) 2013 Financial and Social Responsibility Report 105#107environment INDICATOR OIEN Other significant social responsibility and sustainability activities. CONTENT Significant company social responsibility and sustainability activities 2012 MEXICO Environmental leadership Eco-efficiencies free program to promote competitiveness throughout the value chain, developed by Walmart de México y Centroamérica together with Semarnat (Secretary of the Environment and Natural Resources). Results: 99 companies completed the course 150 people trained - $22.6 MP investment (ROI = 5 months) Savings: Water 234 million l/yr. Energy 3.9 million kWh/yr Greenhouse Gas Emissions = 6,143 CO2 tons/yr Recycling 3,603 tons/yr Pesos: 50 MP 2012 CAM 2013 MEXICO Training suppliers in eco-efficiency In a next step the Environmental Leadership for Competitiveness program, an agreement with the MIF of the IDB and Tec de Monterrey was established to develop a virtual training platform for SMEs covering eco-efficiency tools. The web portal was launched in October and courses will begin in the second quarter of 2014. Sustainable Packaging Scorecard The tool is integrated into the Sustainability Index system, so the tracking of new items will not be tracked. The Sustainability Index will be pilot in 2014.. Sustainability Forum 2013: Together for a better world In September 2013 was held the second edition of the Sustainability Forum with the participation of over two thousand attendees to the expo of sustainable services and technologies that were presented in 140 stands, as well as lectures and discussion panels where participants shared best practices on topics such as carbon footprint measurement, sustainable water management, energy efficiency, among others. Sixteen companies signed an agreement with seven commitments to drive sustainability in their businesses and supply chains, on issues such as reducing carbon emissions, water efficiency, waste reduction, drive products with lower environmental impacts, as well as a responsible communication on sustainability issues. 2013 CAM 2013 Financial and Social Responsibility Report 106#108environment INDICATOR CONTENT 2012 MEXICO Sustainable Packaging Scorecard Free tool to learn about the environmental impact of packaging The objective is to reduce wastes, increase efficiencies in the supply chain and drive innovation and sustainable practices Results: • 5,265 items entered ⚫ 185 participating suppliers 2013 Financial and Social Responsibility Report 2012 CAM 2013 MEXICO Sustainable Innovation Award Walmart + Ibero In collaboration with the Student Society of Chemical Engineering of the Universidad Iberoamericana was carried out the first edition of the Sustainable Innovation Award Walmart + Ibero, which consisted of an open call to all college students residing in the country to submit business proposals in the areas of energy, water and waste. More than 180 proposals from 17 states were received; the majority of projects were from public university students. The five finalists were presented at the International Conference on Sustainability, organized by the Universidad Iberoamericana where two students of the Research Center of Industrial Design at UNAM wan, with a hydroponic urban garden project. 30 projects were acknowledged and received $475 thousand pesos in prizes. Clean Transportation Program For the third year we received the recognition for participating in the Clean Transportation Program of the Ministry of Environment. We reduced 3,146 tons of CO2 due to efficiencies in the distribution of goods was obtained. Logistics: Collection of 71 tons in-kind donations by stores to NGOs. Collection of 944 tons of in-kind donations from customers for Ingrid and Manuel natural disasters. 2013 CAM 107#109labor practices and work ethics* INDICATOR LA1 Total workforce by employment type, by employment contract, and by region. CONTENT 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM % VS Associ- Total %W %M ates % VS Total Associ- %W %M % VS Associ- %W %M ates Total ates % VS Total Associ- ates %W %M Total number of associates: 100 217,450 52 48 100 30,796 40 60 100 212,541 53 • Management 1 2,561 1 328 34 66 1 2,672 31 69 • Non-management 99 214,889 99 30,468 41 59 99 209,869 53 464 47 100 31,312 1 349 47 99 30,963 Permanent associates: 94 204,887 52 48 98 30,104 41 59 96 203,892 53 47 98 30,541 41 59 • Full-time 84.4 183,613 89 27,455 39 61 83.3 176,956 52 48 89 27,755 • Part-time 9.8 21,274 9 2,649 57 43 12.7 26,936 56 44 9 2,786 Temporary associates: • Full-time • Part-time 4.5 5.8 12,563 9,802 49 51 22 692 38 506 32 68 1.3 2,761 1 186 55 6 12,063 о 122 46 2844 62 4.1 8,649 49 51 3.1 6,669 48 52 2 2 760 43 58 522 45 0.9 1,980 53 47 1 238 54 4 9,028 46 54 0 11 LA2 Total number of new hirees. •Temporary associates for Christmas season % VS Total Associ- ates %W %M % VS Total Associ- %W %M % VS Associ- %W %M % VS ates Total ates Total Associ- ates %W %M New associates 100 61,428 48 52 7,213 37 63 100 56,917 47 53 100 8,754 37 63 Age group: <25 59 36,092 41 59 57 26-30 15 9,188 51 49 31-35 9 5,818 60 40 36-40 7 4,417 63 37 >=41 10 5,913 60 40 52265 4,088 32 68 57 32,381 39 61 53 4,670 33 67 1,558 41 59 15 8,615 51 49 22 1,903 38 62 11 790 46 54 10 5,618 58 42 13 1,141 42 58 412 48 52 8 4,441 63 37 6 543 47 53 365 46 54 10 5,862 60 40 6 497 45 55% Associate turnover 100 107,305 44 56 10,332 34 66 100 110,567 44 56 100 8,754 49 85 Age group: <25 58 62,208 38 62 46 4,782 30 70 58 63,859 38 62 0 62 53 4,670 34 71 26-30 16 17,398 47 53 24 2,452 34 66 16 17,958 48 52 22 1,903 59 102 31-35 10 10,822 52 48 14 1,410 38 62 10 10,851 53 47 13 1,141 64 92 36-40 7 7,925 58 42 >=41 8 8,952 58 42 88 791 43 57 7 7,787 58 42 9 897 42 58 9 10,112 58 42 66 543 73 101 497 94 109 *Including Restaurants associates 2013 Financial and Social Responsibility Report 108#110labor practices and work ethics INDICATOR LA3 Benefits provided to full-time employees, which are not provided to temporary or part- time employees. LA4 Percentage of employees covered by collective bargaining agreements. CONTENT List extra benefits available for all associates Extra benefits standard for all full-time associates and part-time/temporary associates - Vacations for management - Vacations for non-management Holidays - Personal days for field assistant managers Special permits - Meals subsidy 2012 MEXICO All associates enjoy the same fringe benefits 2012 CAM 2013 MEXICO 2013 CAM Full-time associates Part-time/ temporary associates Full-time associates Part-time/ temporary associates Full-time associates Part-time/ temporary associates Full-time associates Part-time/ temporary associates C C C C A A A A A A A A с C B C C B B B B B B B В CBA BB C B - Electronic coupon - Discounts on purchases - Company car for management - Car allowance for management - Medical checkup for management - Life insurance - Hospital insurance - Health insurance - Subsidy in case of disability - Year end's celebration B B BC B CB BBB AB CB B B B BBBBBCB B B BB C B B CB A B B B BBBBBC C B Associates throughout the country are hired following provisions of the Mexican Labor Law 100% of those who, in keeping with the Federal Labor Law, are subject to this type of hiring Compliance with labor law of each country where we operate The law does not include this figure A B B В B B Associates throughout the country are hired following provisions of the Mexican Labor Law 100% of those who, in keeping with the Federal Labor Law, are subject to this type of hiring B Compliance with labor law of each country where we operate A B LA5 Minimum notice period(s) regarding operational changes, including notifications in collective bargaining agreements. A: By law. B: Not mandatory by law, but granted by the Company. C: By law and granted by the Company. 2013 Financial and Social Responsibility Report 109#111labor practices and work ethics INDICATOR LA6 Worker health and safety committees. CONTENT 2012 MEXICO Participation in Health and Safety Committees 19.5 100% of the associates are 2012 CAM represented by occupational health, hygiene and safety committees. Approximately 10% of them are active members of such committees. LA7 Rates of injury, lost days, occupational diseases, and absenteeism, and number of work-related fatalities. % associates Level of operation Associates trained 5-10 5-10 2013 MEXICO 18 2013 CAM 100% of the associates are represented by occupational health, hygiene and safety committees. Approximately 10% of them are active members of such committees. 5-10 from 4 to 10 associates depending on the size of the store Associates per business unit Workplace/corporate office Workplace/ Regional Workplace/corporate office 50,460 6,777 113,880 Mild incidents not requiring medical leave are excluded Days working days Mild incidents excluded Indicate if mild labor accidents are included or not (requiring first aid) Indicate if "days" mean "calendar days" or "work days" Accounting method for "lost days" Mild incidents excluded Days Calendar days As per Mexican Social Security method to score lost days as "work-related accidents" From the moment the treating physician issues the medical leave, which usually coincides with the date of the accident. Days Calendar days. As per Mexican Social Security method to score lost days as "work-related accidents" Workplace/ Regional 11,770 associates, 470 training courses Mild incidents not requiring medical leave are excluded Days working days From the moment the treating physician issues the medical leave, which usually coincides with the date of the accident. 2013 Financial and Social Responsibility Report Registered accidents ■Commute-related •Work-related risk 13,082 0 1,310 This indicator is not calculated, it is scored as accidents/one thousand associates = 4.06 13,436 0 1,248 This indicator is not calculated, it is scored as accidents/one thousand associates = 4.06 Leave of absence • Commute-related •Work-related risk Disabled associates Absolute number of work-related fatalities Rules and regulations to record and communicate accidents 316,541 27,441 249,447 ND This indicator is not calculated, it is scored as lost days due to accidents/one thousand associates= 84,98 ND ND This indicator is not calculated, it is scored as lost days due to illness/ one thousand associates= 192,79 ND 11,910 6,761 0 1 0 Accidents scored as work-related, based on Mexican Social Security rules and regulations. Mild incidents excluded. Accident report is done in keeping with Walmart de México y Centroamérica and Walmart International requirements. If local law requires a specific format, the corresponding report is presented. Mild incidents excluded. 25,998 This indicator is not calculated, it is scored as lost days due to accidents/ one thousand associates= 84,98 11,971 This indicator is not calculated, it is scored as lost days due to illness/one thousand associates= 192,79 7,295 0 Accidents scored as work-related, based on Mexican Social Security rules and regulations. Mild incidents excluded. Accident report is done in keeping with Walmart de México y Centroamérica and Walmart International requirements. If local law requires a specific format, the corresponding report is presented. Mild incidents excluded. 110#112labor practices and work ethics INDICATOR LA8 Education, training, counseling, prevention and risk-control programs in place for assisting workforce members, their families or community members regarding serious diseases. CONTENT Assistance in Loss Prevention Risk Control Workers in positions with high-risk disease index 2012 MEXICO There are different risk control programs, including specific courses for high-risk positions, monthly facility reviews, permanent communication campaigns to prevent unsafe conditions and actions, and others, to promote a safe environment for associates and customers. The Operations Continuity Center (OCC) and HR manage disaster relief assistance for associates. • Maintenance personnel First-aid brigade personnel who may be in contact with biological waste • Display personnel who may be affected by solvent exposure" 2012 CAM In order to comply with our vision of making Walmart the safest place to shop and work, we have developed some communication and training programs aimed at strengthening compliance with the Human Safety Manual guidelines, seeking to create safe, accident- free working and shopping environments. Our health-promoting efforts have been concentrated around our program called ""Mi Salud -Mi Vida" (""My health- My life""), which has contributed to articulate training and communication campaigns, medical clinics for employees and other instruments to raise awareness among associates regarding health care. Besides the support given by the Emergency and Crisis Response Committee, together with HR, we have disseminated information to contribute with associates, so that they and their families are prepared vis-à-vis emergency situations such as earthquakes and volcanic eruptions. Based on the risk mapping of different positions in the company, the possibility of contracting a specific disease as the sole result of the job is very low. Compliance with labor law in each country where we operate 2013 MEXICO There are different risk control programs, including specific courses for high-risk positions, monthly facility reviews, permanent communication campaigns to prevent unsafe conditions and actions, and others, to promote a safe environment for associates and customers. . The Operations Continuity Center (OCC) and HR manage disaster relief assistance for associates. Maintenance personnel First-aid brigade personnel who may be in contact with biological waste Display personnel who may be affected by solvent exposure Personnel in DCs exposed to hazardous fluids such as ammonia. 2013 CAM In order to comply with our vision of making Walmart the safest place to shop and work, we have developed some communication and training programs aimed at strengthening compliance with the Human Safety Manual guidelines, seeking to create safe, accident- free working and shopping environments. Our health-promoting efforts have been concentrated around our program called "Mi Salud -Mi Vida" ("My health- My life"), which has contributed to articulate training and communication campaigns, medical clinics for employees and other instruments to raise awareness among associates regarding health care. Besides the support given by the Emergency and Crisis Response Committee, together with HR, we have disseminated information to contribute with associates, so that they and their families are prepared vis-à-vis emergency situations such as earthquakes and volcanic eruptions. Based on the risk mapping of different positions in the company, the possibility of contracting a specific disease as the sole result of the job is very low. LA9 Health and safety topics covered in formal agreements with trade unions. 2013 Financial and Social Responsibility Report 111#113labor practices and work ethics INDICATOR LA10 Average hours of training per year per employee broken down by employee category and gender. CONTENT Training investment • Classroom •Distance learning Total trained associates (including associates not with the company) and unit openings 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM %W %M %W %M 91.3 Face-to-fa- 23,218 Man-hours 132,109 93.2 4.6 ce Partici- pation. 86.6 CBL parti- cipation 41,863 Man-hours 211,586 54.44 4.7 Total 65,081 343,695 38.81 Associ Participa- Hours ates tion Learning 310,757 Center 55 45 are included. 212,444 54 46 21,775 44,415 127,862 • Man-hours (million) Training 4.54 2.61 0.12 Man- Hours hours per associate Clasifica tion Participa- Hours tion per asso- ciate Man- Hours hours per Partici- Participa- Hours pants tion per asso- associate ciate •Senior management level 5,520 12.1 Opera- tional 45,557 40 4,084 29.5 28 59 539.0 •Management level 898,315 86.9 Non opera- tional 19,524 25 698,814 119.2 917 4,938 25,861.0 •Department management level •Hourly 841,020 26.2 2,793,294 17.3 409,183 1,496,216 13.1 1,809 7,307 29,960.0 8.7 16,379 32,111.0 71,502.0 LA11 Programs for Associa- %W %M Associa- %W %M skills management and tes tes Associ- ates %W %M Associ- %W %M ates continuous learning. Total number of permanent associates 204,887 52 48 30,104 41 59 203,892 53 Promotions 22,936 49 51 3,674 34 66 22,750 50 Universal Talent Base (BUT), non- management associates 17,883 53 47 ND ND ND 21,789 55 484 47 30,541 41 59 50 3,459 45 금업 67 33 NA • Promoted associates part of the Talent Base 3,487 48 62 52 ND ND ND 5,644 52 48 NA ⚫% vs. total Talent Base 19 % vs. total promotions 15 Top Talent 421 29 14 71 54 35 65 69 26 25 435 34 66 53 0 NA NA 8 66 (TT: accelerated development plans) ⚫TT associates promoted 49 30.6 69.4 % vs. total TT 12 36 % vs. total promotions 0.2 0.1 Top Talent women 122 66.6 33 43 28.6 71.4 6 1 50.0 10 11 0.2 vs. total 0.2 promo- vs. exe- cutive 25 tions CAM promo- tions: 19 149 18 2013 Financial and Social Responsibility Report 112#114labor practices and work ethics INDICATOR CONTENT Corporate training Courses taught • Trained associates LA12 Employees receiving regular performance reviews. . • Man-hours •Man-hours per associates Investment in training External Training ■ Associates in open education system (education government-authorities) Financing for external training of associates • Total amount financed (mp) • Associates Financing for external training of Top Talent •Total amount financed (mp) • Associates Annual evaluation for permanent associates who have been with the company for at least one year Evaluated associates 2012 MEXICO 2012 CAM %W %M 22,891 126 Participations 14,516 44,996 34.5 $202,000 2013 MEXICO N/A 1,064 1.48 N/A 8.6 N/A 1,596 2013 CAM Associates Participations 11,683 211,185 2,103,900 76 1,558 6,994 37,881 9.96 24 $22.42 $134,649 N/A N/A N/A N/A 7.1 N/A N/A 532 N/A %W %M 147,155 LA13 Composition of employees per category according to gender, age group, minorities, and other indicators of diversity. % of permanent associates from total headcount Total number of permanent associates • Women .Men 122,815 55 45 45 60% 2,401 36 64 10.5 120,760 82 7,327 Total %W %M Total %W %M Total %W %M Total %W %M 204,887 52 48 30,104 49 51 1 203,892 53 47 30,541 41 59 107,564 12,199 53 107,517 12,469 97,323 17,905 47 96,375 18,072 • Special abilities 623 39 61 188 27 73 169 28 72 Age groups 1 203,892 < 30 years 96,728 45 55 16,397 35 65 45 92,476 45 55 16,992 35 65 30 years 50 years 95,924 60 40 12,316 47 53 47 95,197 60 40 12,869 47 53 > 50 years 12,235 53 47 1,391 53 47 8 16,219 56 44 1,451 52 48 LA14 Ratio of average remuneration of men and women broken down by employee category. LA15 Return to work and retention rates after maternity/ paternity leave, by gender. . Number of employees with right to maternity/paternity leave • Number of employees returning of maternity paternity leave. 2013 Financial and Social Responsibility Report There are no salary differences based on gender, age, religion, sexual preference or political ideology. We have a salary pay band and differences may arise due to individual performance, which is evaluated annually based on success behaviors and seniority. 100% Out of 4,796 associates on maternity leave, 3,464 returned to work by December 31, 2012 100% 100% Out of 967 associates on maternity leave, 861 returned to work by December 31, 2012 Out of 7,734 associates on maternity leave, 5,913 returned to work by December 31, 2013. 100% 1,008 77% women 23% men 113#115human rights INDICATOR HR1 Percentage and number of significant investment agreements that include human rights clauses or that underwent human rights screening. HR2 Percentage of major suppliers and contractors that underwent screening on human rights and actions taken. HR3 Total hours of employee training on human rights policies and procedures, CONTENT . Total number of investment agreements • Percentage of contracts with clauses regarding human rights screening Contracts that were rejected, interrupted due to non-compliance 2012 MEXICO There are no investment agreements The Vendor Agreement signed with all suppliers establishes terms of supply and includes clauses regarding compliance with applicable legal provisions, depending on the activity performed by the supplier and based on their manufacturing, production or import description, including provisions pertaining to underage employment and payment of fringe benefits, included in Mexican Labor Law. 100% 2012 CAM There are no investment agreements The Vendor Agreement signed with all suppliers establishes terms of supply and includes clauses regarding compliance with applicable legal provisions, depending on the activity performed by the supplier and based on their manufacturing, production or import description, including provisions pertaining to underage employment and payment of fringe benefits, included in Labor Law. 100% 2013 MEXICO There are no investment agreements The Vendor Agreement signed with all suppliers establishes terms of supply and includes clauses regarding compliance with applicable legal provisions, depending on the activity performed by the supplier and based on their manufacturing, production or import description, including provisions pertaining to underage employment and payment of fringe benefits, included in Mexican Labor Law. 100% 2013 CAM There are no investment agreements The Vendor Agreement signed with all suppliers establishes terms of supply and includes clauses regarding compliance with applicable legal provisions, depending on the activity performed by the supplier and based on their manufacturing, production or import description, including provisions pertaining to underage employment and payment of fringe benefits, included in Labor Law. 100% NA NA NA NA including percentage of employees trained. HR4 Discrimination incidents and actions taken. Associate Hot Line (internal mechanism) Total number of incidents 1,559 590 Incidents with disciplinary actions 573 280 998 NA 316 taken, based on internal rules and regulations Incidents not proved 682 HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at risk and actions. taken to support these rights. 2013 Financial and Social Responsibility Report Other incidents •Incidents of clients/ associates Activities and suppliers that may be at risk related to employee rights 986 None, all in strict compliance with the Labor Law of each country. 310 1,523. Ethics incidents closed. 114#116human rights INDICATOR HR6 Operations identified as having significant risk of childhood exploitation and measures taken to contribute to their elimination. CONTENT 2012 MÉXICO Walmart de México y Centroamérica fully complies with Mexican Labor Law by only hiring people over 18 years of age. The Vendor Agreement and the Ethical Standards Program for suppliers includes labor liability clauses related to compliance with Labor Law and corresponding rules and regulations in Mexico. Corporate compliance 2012 CAM Walmart de México y Centroamérica fully complies with Labor Law in each country where we operate Terms and conditions of the business relationship must be set forth in order to be a supplier or service provider for the Company, including the obligation to comply with applicable legal provisions, related to not hiring underage people or foreigners without legal documentation, and payment of all fringe benefits established by labor law, among others. 2013 MÉXICO Walmart de México y Centroamérica fully complies with Mexican Labor Law by only hiring people over 18 years of age. The Vendor Agreement and the Ethical Standards Program for suppliers includes labor liability clauses related to compliance with Labor Law and corresponding rules and regulations in Mexico. 2013 CAM Walmart de México y Centroamérica fully complies with Labor Law in each country where we operate Terms and conditions of the business relationship must be set forth in order to be a supplier or service provider for the Company, including the obligation to comply with applicable legal provisions, related to not hiring underage people or foreigners without legal documentation, and payment of all fringe benefits established by labor law, among others. Walmart de México y Centroamérica complies with occupational safety standards and laws, established by official authorities, thereby guaranteeing that our corporate performance and behavior prevent said practices. HR7 Operations identified as having significant risk for incidents of forced or non-consensual labor and measures taken to contribute to their elimination. HR8 Percentage of security personnel educated on the organization's human rights policies and procedures. HR9 Total number of incidents regarding human rights violations of indigenous populations and measures taken. HR10 Percentage and total number of operations that have undergone human rights reviews and/or impact evaluations. HR11 Number of human rights complaints presented, investigated and solved via a formal complaint method. • Internal mechanisms for complaints - Open-door Policy - Ethics Helpline / Hotline Regulator y Compliance . Loss prevention personnel 100% • Subcontracted security personnel 100% ⚫ Number of incidents There are no incidents recorded There are no incidents recorded 2013 Financial and Social Responsibility Report 100% 100% 100% 100% 100% 100% Walmart de México y Centroamérica's main basic belief is Respect for the Individual. All company operations are carried out in strict compliance with the law and respect for human rights. 115#117social performance INDICATOR S01 Development programs, impact assessment and local community participation. CONTENT Philanthropy • Development programs • Impact assessments Participation with the community Total amount of resources channeled (million pesos) % from the company ⚫ % from partners, customers and suppliers • Beneficiaries Hunger 2012 MÉXICO 2012 CAM • Productive chains • Women • Volunteerism and disasters Impact measured through two indicators: benefited families' income increase and food availability Communities help improve public spaces through our volunteer program. They also help natural disaster victims with in-kind donations through our disaster program. 581.6 96 4 2,080,904 2013 Financial and Social Responsibility Report ⚫ States • Partner Institutions Development of productive capacities . Benefited Producers • Indirect Beneficiaries • States • % increase in beneficiariy income • Sales (mp) .Profit returned • Participating stores • Store Items Benefited Institutions Fight against hunger . Direct Beneficiaries 2013 MÉXICO 2013 CAM • Hunger • Productive chains • Women • Volunteerism and disasters Impact measured through two indicators: benefited families' income increase and food availability Communities help improve public spaces through our volunteer program. ES: Programs "Educating Children Consumers' Despensa of Don Juan" and workshop "Learn to Recycle" of Despensa Familiar. They also help natural disaster victims with in-kind donations through our disaster program. 42.61 464 82 18 94 5,91 42.7 99 1 1,320,607 825,831 ES: 17,413 786,818 378,345 NC: 24,574 / CR: HN: 39,914 / GT: Total: 1,247,064 In 31 states and Mexico City 5 countries In 31 states and Mexico City 5 countries 215 157 215 ES: 11 NC: 63/ CR: 78/ HN: 31/ GT: 42 Total: 225 2,403 7,237 Oaxaca, Puebla, Colima, Michoacán, Guerrero, Chihuahua, Estado de México, Yucatán, Zacatecas, Guanajuato, Hidalgo, Jalisco 38 6.5 $561,579 295 157 15 568,207 . Indirect Beneficiaries 69,970 3,837 20,750 Oaxaca, Puebla, Colima, Michoacán, Chiapas, Guerrero, Chihuahua, Nuevo León, Estado de México, Yucatán, Zacatecas, Guanajuato, Hidalgo 9.3 $1,001,253 302 127 Gourmet Coffee Cooperatives with 136 female growers in Guatemala with AGER (Trade Association of Rural Businessman) -Contribution $320,000. Sustainable Fishing and commercialization of fishery products in El Salvador with the USAID (United States Agency for the International Development) -Contribution $256,000. Installation of 250 ecological stoves in order to reduce lung diseases in 250 poor households in Honduras, together with. AHDESA (Honduran Association for Development) Contribution 14 $403,200. 53,020 35,584 Support to Food Banks in Costa Rica, Nicaragua, Honduras and Guatemala ES: 15,000/ NC: 6,400 / CR: 35,000/ HN: 10,579 / GT: 43,200 - Total: 110,179 Support to Food Banks in Costa Rica, Nicaragua, Honduras and Guatemala 52,655 116#118social performance INDICATOR CONTENT 2013 Financial and Social Responsibility Report • States • Benefited Institutions • Tons of Food Channeled • Children treated with malnutrition ⚫ % of children with normal nutrition status 2012 MÉXICO In 31 states and Mexico City 200 22,510 4,265 48 2012 CAM 2013 MÉXICO 2013 CAM In 31 states and Mexico City 194 777 12,071 NC: 335 ton/ ES: 10 ton/ CR: 1.397 ton / HN: 80 ton / GT: 112 ton Total: 1,934 5,357 42 42 . Backyards . Water systems • Eco-friendly toilets . Green stoves Women empowerment • Women registerd in the program "Woman, you can count on us" • Courses aimed at starting a new . • business or improving an existing one Maintenance grants for Senior High School and Technological University level Womwen supported by production and food programs 2,158 167 48 27 39,268 "Fortalecimiento Mujeres Emprendedoras de La Chureca"(Female Entrepreneur 38,706 Strengthening in La Chureca) in Nicaragua with the Manna Project International (MPI) -Donation $360,858.79 562 "Primer Diplomado de Mujeres" 12,381 (First Diploma course for women) in Honduras together with Vital Voices -Donation $328,340 "Mujeres a la Obra" (Women get down to work) in El Salvador together with the APA (Association of Agricultural Suppliers) -Donation $328,340 "Organika" and "Oxlajú" in Guatemala with the AGER (Trade Association of Rural Businesses) - Donation $407,141.6 "Mujeres con Futuro" (Women with Future) in Costa Rica, Nicaragua, Honduras and El Salvador together with ""Visión Mundial" Donation $2.9 mp 800 552 55 94 25,456 Entrepreneurial Development for 54 female banana -growers in Nicaragua with VECO Meso 25,152 America Contribution $135,897. 304 Commercial and Business Development of 22 craftswomen in Nicaragua with Manna Project International (MPI) Contribution 28,019 $126,720. Economic empowerment of 300 women in extreme poverty, that depend on the Food Bank in Costa Rica, together with the AED (Business Development Association) - Contribution $160,000. Strengthening of 100 female micro entrepreneurs in Honduras, together with the Chamber of Commerce and Industry in Tegucigalpa - Contribution $115,200. "Mujeres con Futuro" (Women with Future) in Costa Rica, Nicaragua, Honduras and El Salvador with World Vision - Contribution $3 mp Community support • Volunteers • Number of activities carried out (to improve community public spaces) Tons of help channeled in support of victims affected by natural disasters 130,996 3,211 131,055 3,493 274 1,888 (50% customers and 50% Walmart de México Foundation) NC: 850/CR: 2,540/ES: 1,191 /HN: 2,205 GT: 1,204 Total: 7,990 NC: 18/CR: 89/ES: 34 / HN: 66 GT: 19 Total: 226 NC: 5,155/CR: 9,836 / ES: 6,967 / HN: 8,256 GT: 7,991 - Total: 38,330 117#119social performance INDICATOR CONTENT 2012 MÉXICO . Support for Natural Disasters Programs with customers and suppliers ■ Beneficiaries of the Campaiagn "Do Magic" • Toys channeled • Winter Garments channeled • Social Assistance Cards (sales $) . Supplier Donations (million pesos) 2012 CAM Drought CR: Floods along the Atlantic coast and the earthquake, 7.6° on the Richter scale, in the Nicoya Peninsula. 2013 MÉXICO Hurricane Ingrid and Manuel 2013 CAM Not ocurred natural disasters 138,007 "Christmas Tour" in El Salvador, "Angel Tree" in home offices in all 5 countries; both with institutions 87,472 benefiting 84,349 159,923 113,432 46,491 $5,307,962 23,278,954 $3,149,940 27,423,951 The Statement of Ethics is the backbone of Walmart culture and guarantees our compliance with the law. SO2 Percentage and number of business units analyzed for risks related to corruption. S03 Employees trained in organization's anti- corruption policies and procedures. S04 Instances of corruption. Statement of Ethics and Anti-corruption training Incidents with suppliers and partners. . Measures taken in response to the incident. • Claims against the organization or its employees and the result As integral part of Walmart's Anticorruption Program, in 2012 several face-to-face courses and workshops were delivered to 7,765 associates from the areas that interact the most with such program, and to third- party agents. In adddition, a new course on the Anticorruption Program was developed on-line and will be launched in 2013. For further information on the actions taken in relation with the Anticorruption Program and the training to associates and third parties, visit: http://news.walmart.com/walmart-global-compliance-action-steps. As an integral part of Walmart Anti-corruption Program, during 2013, classroom training courses and workshops were delivered to 9,694 associates in areas of major interaction with the program and with third-party intermediaries. The on-line version of the anti-corruption training course was launched this year reaching 11,050 associates. For further details on anticorruption-related actions, including training for associates and third-parties visit: http://news.walmart.com/walmart-global-compliance-action-step Currently, Walmart is going through an investigation on alleged violations to the FCPA (Foreign Corrupt Practices Act). For further information visit the following sites: . http://www.walmartmexico.com.mx/descargas/walmex-2do-trim-2012-nota1.pdf http://news.walmart.com/news-archive/2013/01/10/walmart-statement-in-response-to-jan-10-letter-from-congressman-waxman-congressman- http://news.walmart.com/news-archive/2012/12/17/walmart-statement-in-response-to-new-york-times-article-about-allegations-of-corruption- cummings in-mexico • http://news.walmart.com/news-archive/2012/04/24/updated-walmart-statement-in-response-to-recent-new-york-times-article-about-compliance- with-the-us-foreign-corrupt-practices-act • http://news.walmart.com/news-archive/2012/04/21/walmart-statement-in-response-to-recent-new-york-times-article-about-compliance-with- the-us-foreign-corrupt- Public participation activities are carried out via different national and local Chambers of Commerce S05 Public policy positions and development and lobbying. S06 Total value of monetary and in kind donations to political parties or related institutions. No contributions to political parties or related institutions were reported. 2013 Financial and Social Responsibility Report 118#120social performance INDICATOR S07 Total number of legal actions for anti-competitive behavior, antitrust, and monopoly practices and their outcomes. S08 Monetary value of significant fines and penalties, and total number of non- monetary sanctions for non-compliance. S09 Operations with significant possible or real negative impacts on local communities. S010 Prevention and mitigation measures implemented by business formats with significant possible or real negative impacts on local communities. CONTENT 2012 MÉXICO 2012 CAM No anti-trust or unfair trade activities have been incurred. 2013 MÉXICO 2013 CAM There is no record of administrative penalties, significant fines or non-monetary penalties (Considering significant those exceeding 1.2 mp). In all locations we participate with the community striving to be a good neighbor, benefiting our community, caring for the environment and supporting the economy of families; thus, we do not represent a negative impact on communities. In the event of land with hydrocarbon soil and/or hazardous wastes, Walmart always dispose them in accordance with the law. All project designs are in strict compliance with environmental and urban development laws. The construction of our units is always in line with mitigation actions, such as waste management and flora and fauna rescue programs, among others. 2013 Financial and Social Responsibility Report 119#121product responsibility INDICATOR PR1 Products and services life cycle stages in which health and safety impacts are assessed for improvements, and percentage of products and services subject to said evaluation procedures. CONTENT Private Label • Concept development . • Research and Development (R&D) • Certification • Manufacturing and production • Marketing and promotion • Storage, transportation and supply Use and service • Disposal, reuse and recycling • Private Label products ⚫% products evaluated (Private Label) PROFECO: Consumer Protection Agency 2013 Financial and Social Responsibility Report 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No Yes Yes Yes Yes No Yes No Yes Yes No Yes No 1,685 1,167 1,915 1,144 85 100 90 100 Private Label suppliers: • 100% of ingredients and raw materials authorized by Mexican standards (Health Ministry, SAGARPA, Cofepris). • Children product development do not include sugar substitutes that may bring about allergic reactions or sensitivity. Product prototypes to be launched are evaluated for competitiveness vs. countertypes. • Private Label replenishable items are included in the annual analysis program to ensure compliance with applicable rules and regulations. All manufacturing facilities where Private Label items are manufactured are audited by authorized firms, verifying compliance with Manufacturing. Best Practices, Food Safety and Ethical Standards. Manufacturers assign life-cycles to the product based on product nature There is a strict control to avoid the selling of items with expired. life-cycles. Each business unit performs daily reviews. Ethical standards inspections were initiated to suppliers and printers. We continue to evaluate- our products based on quality annualized calendar. It already has 100% of system specifications and Have inspections served to all DCs. Manufacturers assign life-cycles to the product based on product nature There is a strict control to avoid the selling of items with expired life-cycles. Each business unit performs daily reviews. 120#122product responsibility INDICATOR CONTENT PR2 Number of incidents of non- compliance with regulations/codes concerning health and safety of products and services during their life cycle. Total health and safety incidents Fines or sanctions • Warnings Non-compliance of voluntary codes ■ Visits from sanitary authority (Federal Bureau of Consumer Interests - Profeco) 2012 MEXICO Products with lot number and best before date ensure optimum quality during the items' shelf life. Labels include legends and instructions to facilitate product management for the consumer; some of these legends are for conservation purposes. ⚫ There are supplier specifications sent to DCs for product inspection. Remaining suppliers: • Manufacturers assign lifecycles to the product based on product nature. There is a strict control to avoid the selling of items with expired life-cycles. Each business unit performs daily reviews. The Secretary of Health imposed 13 fines, and the Consumer Protection Agency, 130. The Secretary of Health issued two warnings. 0 Out of 3,095 visits, 1,933 were carried out by the Secretary of Health, and 1,162, by the Consumer Protection Agency. 2013 Financial and Social Responsibility Report Withdrawal orders ⚫ Expiration date withdrawal order 2012 CAM 2013 MEXICO 2013 CAM 10 NA 46 Ten, five of which were carried out by the Secretary of Health, and five, by the Consumer Protection Agency. 20 NA The Secretary of Health imposed 16 fines, and the Consumer Protection Agency, 151. The Secretary of Health issued 16 warnings. 0 Out of 3,345 visits, 2,239 were carried out by the Secretary of Health, and 1,106, by the Consumer Protection Agency. 58 of which 21 were ordered by Secretary of Health and 37 Profeco. 20, 6 of which were carried out by the Secretary of Health, and 14, by the Consumer Protection Agency. 121#123product responsibility INDICATOR PR3 Current procedures for product and services information and labeling, and percentage of products and services subject to said information requirements CONTENT Information and labeling requirements Origin of product components • Content of substances (especially those with environmental and social impact) • Safe use of product or service • Product disposal (environmental or social impact) % Private Label products Others 2012 MEXICO Private label domestic products labeling undergo a review and validation process by the Legal department. Throughout 2012, the Legal department analyzed 984 labels of private-labeled food, general merchandise and drugs. The Strategic Brand department had Bufete en Comercio Exterior y Normalización, S.A. de C.V. review 248 labels of various private label products. Commercial agreements with suppliers include obligations to comply with regulations. Corporate Quality performs random inspections of private label products located at DCs to validate labeling information. 100% of private label products labeling must be validated by internal areas of the company or credited verification units. 2012 CAM • Commercial agreements with suppliers include obligations to comply with regulations 2013 MEXICO Private label domestic products labeling undergo a review and validation process by the Legal department. Throughout 2012, the Legal department analyzed 984 labels of private-labeled food, general merchandise and drugs. The Strategic Brand department had Bufete en Comercio Exterior y Normalización, S.A. de C.V. review 248 labels of various private label products. Commercial agreements with suppliers include obligations to comply with regulations. Corporate Quality performs random inspections of private label products located at DCs to validate labeling information. 100% of private label products labeling must be validated by internal areas of the company or credited verification units. Total labeling/information instances 148 NA 153 • 2013 CAM Several product categories such as food, cosmetics, toys, pharmaceuticals, textiles and others require specific requirements of regional law or countries. • Compliance monitoring da / advice ongoing training to areas to achieve 100% compliance. We have developed several verification Guide to minimize default risk and labels ideal models oriented towards internal and external compliance. 100% Imported goods are supported to process. General and toys reviewing / validating gear labels to ensure full compliance. • Requirements not ask origin of the components of the product but in general. • Act as some countries call GT and CR declare content of substances such as lead and bisphenol and . even prohibit their use. Safe use of the product itself must be declared using instructions and hazard warnings on consumer products that require it. Method of disposal is not required as part of the labeling. . Other refers to specific performance requirements of law as product category.. • Strategic Brands products comply 100 %. 100 cases handled / resolved by CAM during 2013 Compliance. PR4 Number of incidents of non- compliance with regulations/codes concerning product and services information and labeling. • Fine or sanction • Warning . Non-compliance with voluntary codes • Non-compliance processes by the authorities • Private label cases 2013 Financial and Social Responsibility Report Total products Others 49 49 0 0 148 Four cases: three made it to court and one resulted in the immediate correction of the product label. 37 No significant fines were reported in the period (fines over $1.2 million pesos are considered significant). 0 0 153 0 0 30 In 2 cases Profeco put a freeze on merchandise in the store. Legal answered the authority, stating that the inspector's observations were incorrect as these were unique ingredients. 10 Corporate Quality performs random inspections of private label textile labels located at DCs. 664 products were rejected this year due to non- compliance with labeling NOM. Compliance guideline developed per each country law, as well as the new Central American labeling technical rules Corporate Quality performs random inspections of private label textile labels located at DCs. 315 products were rejected this year due to non- compliance with labeling NOM. Several within each catered event. 122#124product responsibility INDICATOR PR5 Practices regarding customer satisfaction, including results from customer satisfaction studies. CONTENT Customers 2012 MEXICO Customer Service Call Center (CAT). Call center for customer information, comments and suggestions. The complaint is channeled to the corresponding area. • Maximum response time: 48 hours. ⚫ The phone operator follows up until the instance is closed. Scaling system for specific situations. Customer satisfaction is measured randomly selecting 10% of all complaints to evaluate response level. 2012 CAM Customer Service Call Center (SAC) Call center for customer information, comments and suggestions. • Customer satisfaction is measured monthly via Store Track. Satisfaction Index for all Central America in 2012 was of 86%. 2013 MEXICO Customer Service Call Center (CAT) Call center for customer information, comments and suggestions. . • The complaint is channeled to the corresponding area. Maximum response time: 48 hours The phone operator follows up until the instance is closed Scaling system for specific situations. • Customer satisfaction is measured randomly selecting 10% of all complaints to evaluate response level. 2013 CAM Customer Service Call Center (SAC) . Call center for customer information, comments and suggestions • Customer satisfaction is measured monthly via Store Track. Satisfaction Index for all Central America in 2013 was of 84%. 2013 Financial and Social Responsibility Report CAT total calls • % answers • Total complaints ⚫ % complaints . % complaint response at or under 48 hours 315,261 211,091 89 NA 15,812 NA 5.0 4.2 7 84 NA 371,226 255,470 88 NA 17,579 17,093 4.7 6.70 77 NA • % response to complaints 100 100 100 100 Execution controls in-store: Rally's: Review of execution standards in-store through Execution controls in-store: Rally's: Review of execution standards in-store through Mystery Shoppers. Monthly indicator per unit and operator The study measures indicators such as fastness, kindness, cleanliness and safety. Variables measured: outstocks, correct pricing, lines at checkout, associates walking customers to needed products, and clean restrooms A comprehensive report is delivered with the main opportunities found at the Call Center and Rally's. Mystery Shoppers. • Monthly indicator per unit and operator. The study measures indicators such as fastness, kindness, cleanliness and safety. • Variables measured: outstocks, correct pricing, lines at checkout, associates walking customers to needed products, and clean restrooms. A comprehensive report is delivered with the main. opportunities found at the Call Center and Rally's. 123#125product responsibility INDICATOR CONTENT Suppliers 2012 MEXICO 2012 CAM 2013 MEXICO 2013 CAM Supplier satisfaction survey Third-party quantitative study measuring supplier performance and satisfaction level. Annual indicator ranking the business unit in the market. NA Supplier satisfaction survey Third-party quantitative study measuring supplier performance and satisfaction level. Annual indicator ranking the business unit in the market. NA PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications including advertising, other promotional activities and sponsorship. Rankings - Supplier chain - Business relations - Categories - Organitation - In-store performance • Benchmark versus market. Walmart Superama 4 Sam's Bodega 2 2 1 4 1 3 4 5 1 2 3 4 1 5 2 6 6 4 3 NA N 7 . Strict adherence to ethics and legality. Legal department analyzes the advertising campaigns and ads to ensure compliance with all applicable standards and laws. of the Consumer Protection Legislation, the Sanitary Regulation for Advertising, the Official Mexican Standards and all other applicable regulations. Marketing areas permanently send advertising campaigns, promotions, contests and other consumer benefit programs for consult and validation. Comparative Advertising Procedure for store associates to execute following ethics and legal standards. • Benchmark versus market. Bodega Walmart Superama 54 36 23 6. Sam's 3 2 8 1 3 6 5 3 1 6 2 10 2 NA 01 During 2013, Legal reviewed in-store advertising campaigns and materials, ensuring compliance with the Federal Consumer Protection Law, Helath regulations in terms of advertising, Mexican Offical Standards, and other appplicable standards. ⚫ Marketing Areas are permanently submitting advertising campaigns, promotions, contests and other programs benefiting consumers, to be checked and validated • Permanent communication is sent to stores to strengthen Comparative Advertising Procedures. PR7 Number of incidents Total marketing communication incidents of non-compliance with regulations concerning marketing communications including advertising, promotion, and sponsorship, by type of result obtained from said incidents. 2013 Financial and Social Responsibility Report • Fine or sanction . Warning Non-compliance with voluntary codes 22 out of the 25 procedures NA were caused by signing execution mistakes at stores under the comparative advertising procedure in force, and the remaining three, by lack of information on advertising material. They were corrected immediately. 19 fines imposed on comparative advertising. 1 0 25 procedures, of which 12 are errors in executing store signage according to current procedure and 13 competition arising from the lack of information in advertising materials, they were corrected immediately. 10 fines for comparative advertising and advertising in general 7. 0 0 NA 124#126product responsibility INDICATOR CONTENT 2012 MEXICO Irregularities causing the execution of the comparative procedure in force at units were correctly immediately, and the Consumer Protection Agency received the corresponding evidence. Legal department constantly reminds stores of comparative advertising guidelines. 2012 CAM 2013 MEXICO Irregularities causing the execution of the comparative procedure in force at units were correctly immediately, and the Consumer Protection Agency received the corresponding evidence. Legal department constantly reminds stores of comparative advertising guidelines. PR8 Number of substantiated complaints regarding breaches of customer privacy and loss of customer data. PR9 Value of significant fines for non-compliance with laws and regulations concerning supply and use of products. and services from the organization. OiPR Other significant social responsibility and sustainability activities. Privacy and data leaks complaints Legitimate . Illegitimate . . Third-parties, related to the organization From regulatory organisms Amount of significant fines. • Conflicts of interest NA NA NA No significant fines were reported in the period (fines over $1.2 million pesos are considered significant). All Walmart de México management annually report any situation that may generate a conflict of interest. We currently have 3,392 questionnaires. New management is being included every month. NA All Walmart de México management annually report any situation that may generate a conflict of interest. New management is being included every month. 2013 Financial and Social Responsibility Report NA NA 2013 CAM 125#127product responsibility INDICATOR CONTENT H Distinction 2013 Financial and Social Responsibility Report Private Label textile inspections • Domestic suppliers • Import suppliers Food Private Label in-bond industry inspections . Not approved • Global Food Safety Initiative Certification (GFSI) General Merchandise Private Label in- bond industry inspections . Not approved Medication Private Label in-bond industry inspections • Not approved PROFECO Complaints ⚫ Done • Pending DCs industry inspections 2012 MEXICO Currently, 308 business units hold the H Distinction awarded by the Secretary of Tourism to those who comply with best hygiene practices in food preparation and service. NA 2012 CAM 2013 MEXICO Currently, 178 business units hold the H Distinction awarded by the Secretary of Tourism to those who comply with best hygiene practices in food preparation and service NA 2013 CAM 50 700 150 196 261 46 185 90% of private label suppliers were audited. 213 94.5% 239 suppliers 17 66% did not approve audit diagnostics. 3 We have 8 level-3 certified suppliers (7%). Total food suppliers: 104. 79% 235 suppliers 139 Buyers are in the process of providing the list of suppliers to be 134 audited on Ethical Sourcing. 6 39 NA 5 NA 13 0 252,906 Unnanounced store inspections 24,810 7,500 0 972 608 364 352,465 Ethical Standards: import factories, 87.9% of factories in Green and Yellow. Ethical Standards: local or domestic factories, 77.0% of factories in Green and Yellow. GFSI: We audited 99% of Private Label suppliers. GFSI: 23% failed the diagnostic audit. 0% of providers certified, 4% in the certification process (audit and received Pre-certified tutors). Total: 102. 27,321 7,686 126#128GRI Application Level Check 2013 Financial and Social Responsibility Report Global Reporting Initiative™ Statement GRI Application Level Check GRI hereby states that Walmart de México y Centroamérica has presented its report "2013 Financial and Social Responsibility Report" to GRI's Report Services which have concluded that the report fulfills the requirement of Application Level A. GRI Application Levels communicate the extent to which the content of the G3.1 Guidelines has been used in the submitted sustainability reporting. The Check confirms that the required set and number of disclosures for that Application Level have been addressed in the reporting and that the GRI Content Index demonstrates a valid representation of the required disclosures, as described in the GRI G3.1 Guidelines. For methodology, see www.globalreporting.org/SiteCollection Documents/ALC- Methodology.pdf Application Levels do not provide an opinion on the sustainability performance of the reporter nor the quality of the information in the report. Amsterdam, 19 March 2014 Arth. Holtatter Ásthildur Hjaltadóttir Director Services Global Reporting Initiative 014-01 & A GRI REPORT GRI CHECKED The Global Reporting Initiative (GRI) is a network-based organization that has pioneered the development of the world's most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide. The GRI Guidelines set out the principles and indicators that organizations can use to measure and report their economic, environmental, and social performance. www.globalreporting.org Disclaimer: Where the relevant sustainability reporting includes external links, including to audio visual material, this statement only concerns material submitted to GRI of the time of the Check on 7 March 2014. GRI explicitly excludes the statement being applied to any later changes to such material. 127#129f LISTING Mexican Stock Exchange INVESTOR RELATIONS CONTACT Mariana Rodríguez [email protected] Telephone (52) 55 5283 0289 CORPORATE RESPONSIBILITY CONTACT María Gisela Noble [email protected] Telephone TICKER SYMBOL Bolsa Mexicana de Valores WALMEX V ADR SPONSORED PROGRAM WMMVY INTERNATIONAL OT CQX MARKET TIER WMMVY BLOOMBERG WALMEXV MM (52) 55 5283 0100, ext. 18106 WMMVY REUTERS WALMEXV.MX WMMVY.PK ADR SPONSORED PROGRAM The Bank of New York Investor Services P.O. Box 11258 Church Street Station New York, NY 10286-1258 1 888 218 4375 [email protected] www.stockbny.com HEADQUARTERS Blvd. M. Ávila Camacho 647 Colonia Periodista Delegación Miguel Hidalgo 11220 México, D.F. Phone: (52) 55 5283 0100 walmartmexicoycam.com walmex.mx WALMEX Empresa ADMINISTRACIÓN Y FINANZAS Sustentable ISO 9001:2008 ESR Walmart de México investor INFORMATION EMPRESA SOCIALMENTE RESPONSABLE Dow Jones Sustainability Indices In Collaboration with RobecoSAM ❤❤ @WalmartMXYCAM facebook.com/WalmartdeMexicoyCentroamerica This Report may contain certain references to the future performance of Walmart de México y Centroamérica and thus should be considered estimates made in good faith by the Company. Said references only reflect management's expectations and are based on assumptions and information available at that time. As such, everything shall always be dependent on future events, risks and matters that cannot be analyzed with precision and which could affect Company results.