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Grupo Elektra Reports EBITDA of Ps.4,630 Million and Operating Profit of Ps.3,921 Million in 2Q18

July 25, 2018

—Solid performance in both commercial and financial businesses generates 11% increase in consolidated revenue to Ps.25,223 million—

—Firm increase of 11% in gross loan portfolio to Ps.94,503 million—

MEXICO CITY, July 24, 2018 (GLOBE NEWSWIRE) -- Grupo Elektra, S.A.B. de C.V. (BMV:ELEKTRA*) (Latibex:XEKT), Latin America’s leading specialty retailer and financial services company and the largest non-bank provider of cash advance services in the United States, reported today financial results for the second quarter of 2018.

Consolidated second quarter results

Consolidated revenue was Ps.25,223 million in the period, 11% above the Ps.22,794 million for the same quarter of the previous year. Costs and operating expenses were Ps.20,593 million, compared to Ps.18,301 million for the same period of 2017.

As a result, Grupo Elektra reported EBITDA of Ps.4,630 million, 3% higher than the Ps.4,493 million of the previous year’s quarter; EBITDA margin was 18% for the period.

Operating profit was of Ps.3,921 million this quarter, from Ps.3,895 million in the same period of 2017.

The company reported net income of Ps.3,678 million, compared to net income of Ps.7,137 million a year ago.

2Q 2017 2Q 2018 Change Ps. % -------------------- ------- ------- -------- ---- Consolidated revenue $22,794 $25,223 $2,428 11% EBITDA $4,493 $4,630 $137 3% Operating profit $3,895 $3,921 $25 1% Net result $7,137 $3,678 $(3,460) -48% Net result per share $30.78 $16.20 $(14.58) -48% -------------------- ------- ------- -------- ----

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of June 30, 2017, Elektra* outstanding shares were 231.9 million and as of June 30, 2018, were 227.1 million.

Revenue

Consolidated revenue increased 11%, as a result of 11% and 9% growth in both financial revenues and commercial sales, respectively.

The increase in commercial division sales —to Ps.9,394 million from Ps.8,597 million last year— results from strategies focused on effectively satisfying customer needs with world class merchandise, optimal customer service and the most competitive terms in the market.

In recent quarters, these strategies have an additional boost with the launch of a new, larger store format, which includes a greater selection of goods and services to satisfy a growing number of families. In October, Grupo Elektra also launched its omnichannel strategy, with its online store www.elektra.com.mx, through which thousands of products are sold, at unparalleled prices, from any device and at all times, which further strengthens the company’s business operations.

The increase in financial revenue —to Ps.15,829 million from Ps.14,197 million the previous year— reflects mainly revenue growth of 20% at Banco Azteca Mexico.

Costs and expenses

Consolidated costs for the quarter increased 12% to Ps.9,568 million, from Ps.8,563 million in the previous year, as a result of a 4% increase in commercial costs, and 27% growth in financial cost. The increase in the financial cost results from the creation of loan-loss provisions and higher interest payments, in line with higher market interest rates, as well as increased consolidated deposits.

Sales, administration and promotion expenses increased 13% to Ps.11,025 million, as a result of higher personnel and maintenance expenditures, in the context of growing operations in Grupo Elektra.

EBITDA and net result

EBITDA grew 3% to Ps.4,630 million this quarter. Operating income increased 1% to Ps.3,921 million, from Ps.3,895 million for the same quarter of 2017.

The most significant variation below EBITDA was a negative variation of Ps.5,997 million in other financial results —which reflects a 6% appreciation this quarter in the market value of the underlying assets of financial instruments held by the company, and does not imply cash flow— compared to a 72% increase a year ago.

Congruent with the negative variation of other financial results, a decrease of Ps.1,406 million in the provision of taxes was registered during the period.

Grupo Elektra reported net income of Ps.3,678 million, compared to a net profit of Ps.7,137 million a year ago.

Unconsolidated balance sheet

A proforma exercise of the balance sheet of Grupo Elektra is presented, which allows visualizing the non-consolidated financial situation, excluding the net assets of the financial business, whose investment is valued in this case under the equity method.

This presentation shows the debt of the company —without considering the immediate and term deposits of Banco Azteca, which do not constitute debt with cost for Grupo Elektra. The proforma balance sheet also does not include the bank’s gross loan portfolio.

This provides greater clarity regarding the businesses that make up the company, and allows participants in financial markets to make estimates of the value of the company, considering only the relevant debt for such calculations.

Congruent with that, debt with cost was Ps.21,930 million as of June 30, 2018, compared to Ps.11,864 million for the previous year.

During the quarter, Certificados Bursátiles were issued for Ps.7,500 million for capital investments largely related to growth and improvement of the company’s distribution infrastructure.

The balance of cash and cash equivalents was Ps.24,917 million; as a result, the net cash balance excluding the amount of debt with cost as of June 30, 2018, was favorable at Ps.2,987 million.

The company’s equity increased 6% to Ps.70,496 million; while the ratio of stockholders’ equity to total liabilities is 1.6 times at the close of the quarter.

As of June As of June Change 30, 2017 30, 2018 Ps. % ----------------------------- ---------- ---------- -------- ---- Cash & marketable fin. instr. $12,193 $24,917 $12,724 104% Inventories $7,980 $10,462 $2,482 31% Other current assets $2,065 $2,084 $20 1% Financial instruments $16,202 $17,841 $1,639 10% Accounts receivable $25,844 $20,159 ($5,685) -22% Investment share $28,415 $31,847 $3,432 12% Fixed assets $4,104 $5,833 $1,729 42% Other assets $1,490 $1,471 ($19) -1% ----------------------------- ---------- ---------- -------- ---- Total assets $98,292 $114,615 $16,323 17% ----------------------------- ---------- ---------- -------- ---- Short-term debt $3,278 $8,908 $5,630 172% Other short-term liabilities $14,617 $17,057 $2,440 17% Long-term debt $8,406 $13,022 $4,616 55% Other long-term debt $5,351 $5,131 ($220) -4% ------------------------- ------ ------ ------- ---- Total liabilities $31,653 $44,119 $12,466 39% ------------------------- ------ ------ ------- ---- Stakeholders’ equity $66,639 $70,496 $3,857 6% ------------------------- ------ ------ ------- ---- Liabilities and equity $98,292 $114,615 $16,323 17% ----------------------------- ---------- ---------- -------- ----

Figures in millions of pesos

Consolidated balance sheet

Loan portfolio and deposits

Banco Azteca Mexico, Advance America and Banco Azteca Latin America’s consolidated gross portfolio as of June 30, 2018 grew 11% to Ps.94,503 million, from Ps.85,050 million for the previous year. The consolidated delinquency rate was 4.6% at the end of the period, compared to 3.1% in the previous year.

The gross portfolio of Banco Azteca Mexico grew 12% to Ps.77,931 million, from Ps.69,850 million a year ago.

The delinquency rate for the bank at the end of the quarter was 4.2%, from 2.5% for the previous year. The past-due loan portfolio is reserved 2.3 times, which reflects a past-due portfolio of Ps.3,296 million, in comparison to allowance for credit risks of Ps.7,447 million in balance, as of June 30, 2018.

The average term of the credit portfolio for principal credit lines —consumer, personal loans and Tarjeta Azteca— was 62 weeks at the end of the second quarter.

Grupo Elektra consolidated deposits were Ps.121,090 million, 17% higher than the Ps.103,896 million a year ago. Deposits of Banco Azteca Mexico were Ps.118,489 million, 16% higher than the Ps.102,538 million a year ago.

As of June 30, 2018, the estimated capitalization index of Banco Azteca Mexico was 17.97%.

Infrastructure

Grupo Elektra currently has 7,317 points of contact, compared to 7,181 units a year ago.

In the last twelve months, 52 new Elektra stores were opened at strategic points across Mexico, with greater exhibition area, which increases the offer of products and services, and thereby maximizes customer shopping experiences.

The company has 4,672 points of contact in Mexico, 2,018 in the United States, and 627 in Central and South America. The extensive distribution network allows the company to maintain close contact with clients, granting superior market positioning in the countries where it operates.

Six months consolidated results

Total consolidated revenue in the first six months of the year grew 10% to Ps.49,119 million, from Ps.44,801 million for the same period of 2017, boosted by 10% and 9% growth in both financial and commercial businesses, respectively.

EBITDA was Ps.9,028 million, 5% higher than the Ps.8,628 million for the same period a year ago; the EBITDA margin in the first six months of 2018 was 18%. Operating profit grew 2% to Ps.7,640 million during the period.

The company reported net income of Ps.2,386 million, compared to Ps.11,638 million a year ago, mainly due a depreciation this period in the market value of underlying financial instruments that the company holds, which doesn’t imply cash flow, compared to depreciation the prior year.

6M 2017 6M 2018 Change Ps. % -------------------- ------- ------- -------- ---- Consolidated revenue $44,801 $49,119 $4,318 10% EBITDA $8,628 $9,028 $400 5% Operating profit $7,483 $7,640 $158 2% Net result $11,638 $2,386 $(9,252) -79% Net result per share $50.19 $10.51 $39.68 -79% -------------------- ------- ------- -------- ----

Figures in millions of pesos EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. As of June 30, 2017, Elektra* outstanding shares were 231.9 million and as of June 30, 2018, were 227.1 million.

Company Profile:

Grupo Elektra is Latin America’s leading financial services company and specialty retailer and the largest non-bank provider of cash advance services in the United States. The group operates more than 7,000 points of contact in Mexico, the United States, Guatemala, Honduras, Peru, Panama and El Salvador.

Grupo Elektra is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating: economic value through market innovation and goods and services that improve standards of living; social value, to create social capabilities to improve the communities’ conditions; and environmental value, by reducing the negative impact related to its business activities. Created by Mexican entrepreneur Ricardo B. Salinas (www.ricardosalinas.com), Grupo Salinas operates as a management development and decision forum for the top leaders of member companies. These companies include: TV Azteca (www.TVazteca.com; www.irtvazteca.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Advance America (www.advanceamerica.net), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx), Punto Casa de Bolsa (www.puntocasadebolsa.mx), Totalplay (www.totalplay.com.mx) and Totalplay Empresarial (http://totalplayempresarial.com.mx). TV Azteca and Grupo Elektra trade shares on the Mexican Stock Market and in Spains’ Latibex market. Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders. Grupo Salinas has no equity holdings. The group of companies shares a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

Investor Relations:

Bruno Rangel Rolando Villarreal Grupo Salinas Grupo Elektra, S.A.B. de C.V. Tel. +52 (55) 1720-9167 Tel. +52 (55) 1720-9167 jrangelk@gruposalinas.com.mx rvillarreal@gruposalinas.com.mx

Press Relations

Luciano Pascoe Daniel McCosh Grupo Salinas Grupo Salinas Tel. +52 (55) 1720-1313 ext. 36553 Tel. +52 (55) 1720-0059 lpascoe@gruposalinas.com.mx dmccosh@gruposalinas.com.mx

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS MILLIONS OF MEXICAN PESOS 2Q17 2Q18 Change ------------- ------------ -------------- Financial income 14,197 62% 15,829 63% 1,632 11% Commercial income 8,597 38% 9,394 37% 797 9% ------- ---- ------- ---- ------- ---- Income 22,794 100% 25,223 100% 2,428 11% Financial cost 2,926 13% 3,707 15% 781 27% Commercial cost 5,637 25% 5,861 23% 224 4% ------- ---- ------- ---- ------- ---- Costs 8,563 38% 9,568 38% 1,005 12% Gross income 14,232 62% 15,655 62% 1,424 10% ------- ---- ------- ---- ------- ---- Sales, administration and promotion expenses 9,738 43% 11,025 44% 1,287 13% ------- ---- ------- ---- ------- ---- EBITDA 4,493 20% 4,630 18% 137 3% Depreciation and amortization 537 2% 713 3% 176 33% Other expense (income), net 61 0% (3) 0% (64) ---- Operating income 3,895 17% 3,921 16% 25 1% ------- ---- ------- ---- ------- ---- Comprehensive financial result: Interest income 135 1% 188 1% 53 40% Interest expense (327) -1% (491) -2% (164) -50% Foreign exchange (loss) gain, net (394) -2% 982 4% 1,377 ---- Other financial results, net 6,611 29% 614 2% (5,997) -91% ------- ---- ------- ---- ------- ---- 6,024 26% 1,294 5% (4,730) -79% Participation in the net income of CASA and other associated companies (8) 0% (218 -1% (210) ---- ---- Income before income tax 9,911 43% 4,996 20% (4,915) -50% ------- ---- ------- ---- ------- ---- Income tax (2,728) -12% (1,323) -5% 1,406 52% ---- Income before discontinued operations 7,183 32% 3,674 15% (3,509) -49% ------- ---- ------- ---- ------- ---- Result from discontinued operations (45) 0% 4 0% 50 ---- Impairment of intangible assets - 0% - 0% - ---- Consolidated net income 7,137 31% 3,678 15% (3,460) -48% ------- ---- ------- ---- ------- ----

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS MILLIONS OF MEXICAN PESOS 6M17 6M18 Change -------------- -------------- --------------- Financial income 28,566 64% 31,415 64% 2,849 10% Commercial income 16,234 36% 17,704 36% 1,469 9% ------- ---- ------- ---- -------- ---- Income 44,801 100% 49,119 100% 4,318 10% Financial cost 5,527 12% 7,069 14% 1,542 28% Commercial cost 10,794 24% 11,324 23% 530 5% ------- ---- ------- ---- -------- ---- Costs 16,321 36% 18,393 37% 2,072 13% Gross income 28,480 64% 30,726 63% 2,246 8% ------- ---- ------- ---- -------- ---- Sales, administration and promotion expenses 19,852 44% 21,699 44% 1,846 9% ------- ---- ------- ---- -------- ---- EBITDA 8,628 19% 9,028 18% 400 5% Depreciation and amortization 1,074 2% 1,380 3% 306 29% Other expense, net 71 0% 7 0% (64) -90% Operating Income 7,483 17% 7,640 16% 158 2% ------- ---- ------- ---- -------- ---- Comprehensive financial result: Interest income 276 1% 316 1% 40 14% Interest expense (796) -2% (837) -2% (41) -5% Foreign exchange (loss) gain, net (1,330) -3% 148 0% 1,478 ---- Other financial results, net 10,480 23% (3,743) -8% (14,223) ---- ------- ---- ------- ---- -------- ---- 8,630 19% (4,115) -8% (12,746) ---- Participation in the net income of CASA and other associated companies 57 0% (245) 0% (302) ---- ---- Income before income tax 16,170 36% 3,280 7% (12,890) -80% ------- ---- ------- ---- -------- ---- Income tax (4,489) -10% (893) -2% 3,595 80% ---- Income before discontinued operations 11,681 26% 2,387 5% (9,294) -80% ------- ---- ------- ---- -------- ---- Result from discontinued operations (43) 0% (1) 0% 43 98% Impairment of intangible assets - 0% - 0% - ---- Consolidated net income 11,638 26% 2,386 5% (9,252) -79% ------- ---- ------- ---- -------- ----

GRUPO ELEKTRA, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MILLIONS OF MEXICAN PESOS Commercial Financial Grupo Commercial Financial Grupo Elektra Business Elektra Change Business Business Business ---------- --------- ------- ---------- --------- ------- ------------ At June 30, 2017 At June 30, 2018 Cash and cash equivalents 2,770 18,008 20,778 6,268 19,745 26,013 5,235 25% Marketable financial instruments 9,423 46,917 56,340 18,649 56,585 75,235 18,894 34% Performing loan portfolio - 56,515 56,515 - 61,210 61,210 4,695 8% Total past-due loans - 2,563 2,563 - 4,051 4,051 1,489 58% ---------- --------- ------- ---------- --------- ------- ------- ---- Gross loan portfolio - 59,077 59,077 - 65,261 65,261 6,184 10% Allowance for credit risks - 6,960 6,960 - 8,321 8,321 1,361 20% ---------- --------- ------- ---------- --------- ------- ------- ---- Loan portfolio, net - 52,117 52,117 - 56,940 56,940 4,822 9% Inventories 8,000 - 8,000 10,513 - 10,513 2,513 31% Other current assets 7,067 7,170 14,237 7,903 9,607 17,511 3,274 23% Total current assets 27,260 124,212 151,473 43,334 142,877 186,211 34,739 23% Financial instruments 16,202 291 16,493 17,841 316 18,157 1,665 10% Performing loan portfolio - 25,857 25,857 - 28,990 28,990 3,132 12% Total past-due loans - 116 116 - 253 253 137 118% ---------- --------- ------- ---------- --------- ------- ------- ---- Gross loan portfolio - 25,973 25,973 - 29,242 29,242 3,269 13% Allowance for credit risks - - - - 746 746 746 n.a. ---------- --------- ------- ---------- --------- ------- ------- ---- Loan portfolio - 25,973 25,973 - 28,496 28,496 2,523 10% Other non-current assets 7,200 672 7,872 1,693 648 2,342 (5,530) -70% Investment in shares 2,712 - 2,712 1,881 - 1,881 (831) -31% Property, furniture, equipment and investment in stores, net 4,104 2,744 6,848 5,833 3,675 9,508 2,660 39% Intangible assets 686 6,097 6,784 662 6,673 7,336 552 8% Other assets 804 405 1,210 809 331 1,141 (69) -6% TOTAL ASSETS 58,968 160,395 219,363 72,054 183,018 255,072 35,709 16% ---------- --------- ------- ---------- --------- ------- ------- ---- Demand and term deposits - 103,896 103,896 - 121,090 121,090 17,194 17% Creditors from repurchase agreements - 5,785 5,785 - 4,609 4,609 (1,176) -20% Short-term debt 3,278 971 4,249 8,908 528 9,436 5,187 122% ------- ---- Short-term liabilities with cost 3,278 110,652 113,930 8,908 126,227 135,136 21,206 19% Suppliers and other short-term 12,900 8,561 21,461 15,950 11,112 27,062 5,601 26% liabilities ---------- --------- ---------- --------- ------- ---- Short-term liabilities without cost 12,900 8,561 21,461 15,950 11,112 27,062 5,601 26% Total short-term liabilities 16,178 119,213 135,391 24,858 137,339 162,198 26,807 20% Long-term debt 7,776 910 8,686 12,434 1,865 14,299 5,613 65% ---------- --------- ------- ---------- --------- ------- ------- ---- Long-term liabilities with cost 7,776 910 8,686 12,434 1,865 14,299 5,613 65% ------- ---- Long-term liabilities without cost 5,351 3,296 8,647 5,132 2,948 8,079 (568) -7% Total long-term liabilities 13,127 4,206 17,333 17,566 4,812 22,378 5,045 29% TOTAL LIABILITIES 29,305 123,419 152,724 42,425 142,152 184,576 31,852 21% ---------- --------- ------- ---------- --------- ------- ------- ---- TOTAL STOCKHOLDERS’ EQUITY 29,663 36,976 66,639 29,629 40,866 70,496 3,857 6% ---------- --------- ------- ---------- --------- ------- ------- ---- LIABILITIES + EQUITY 58,968 160,395 219,363 72,054 183,018 255,072 35,709 16% ---------- --------- ------- ---------- --------- ------- ------- ----

INFRASTRUCTURE 2Q17 2Q18 Change ----------- ----------- ------ ---- Points of sale in Mexico Elektra 1,011 14% 1,063 15% 52 5% Salinas y Rocha 48 1% 46 1% (2) -4% Banco Azteca 1,251 17% 1,259 17% 8 1% Freestanding branches 2,113 29% 2,304 31% 191 9% ------ ---- ------ ---- ----- ---- Total 4,423 62% 4,672 64% 249 6% Points of sale in Central and South America Elektra 164 2% 165 2% 1 1% Banco Azteca 164 2% 165 2% 1 1% Freestanding branches 344 5% 297 4% (47) -14% ------ ---- ------ ---- ----- ---- Total 672 9% 627 9% (45) -7% Points of sale in North America Advance America 2,086 29% 2,018 28% (68) -3% ------ ---- ------ ---- ----- ---- Total 2,086 29% 2,018 28% (68) -3% ----- TOTAL 7,181 100% 7,317 100% 136 2% ------------------------------------------- ------ ---- ------ ---- ----- ---- Floor space (m²) 1,512 100% 1,614 100% 103 7% ------------------------------------------- ------ ---- ------ ---- ----- ---- Employees Mexico 50,881 78% 59,758 80% 8,877 17% Central and South America 8,730 13% 8,921 12% 191 2% North America 5,818 9% 5,659 8% (159) -3% ------ ---- ------ ---- ----- ---- Total employees 65,429 100% 74,338 100% 8,909 14%

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