Management discussion and analysis

3Q 2012
MANAGEMENT DISCUSSION AND ANALYSIS
OPERATIONAL RESULTS AND FINANCIAL SITUATION
AS OF SEPTEMBER 30TH 2012

The following table sets forth the main components of Maestros consolidated net
income for the periods ended September 30th 2012 and 2011.

NetSales
CostofSales
GrossProfit
SellingExpenses
AdminsitrativeExpenses
OtherIncome(Expense)Net
OperatingIncome
FinancialIncome
FinancialExpenses
Incomebeforetaxes
IncomeTaxes
NetIncome

FortheperiodendedSep30th
(Unauditaded,
%ofNetSales
inthousandsofPEN)
%Change
2012
2011
1211
2012
2011
880,354
732,285
20.2%
100.0%
100.0%
(645,047)
(529,370)
21.9%
(73.3%)
(72.3%)
235,307
202,915
16.0%
26.7%
27.7%
(135,741)
(112,461)
20.7%
(15.4%)
(15.4%)
(44,826)
(42,036)
6.6%
(5.1%)
(5.7%)
8,168
6,824
19.7%
0.9%
0.9%
62,908
55,242
13.9%
7.1%
7.5%
988
1,489
(33.6%)
0.1%
0.2%
(20,006)
(11,231)
78.1%
(2.3%)
(1.5%)
43,890
45,500
(3.5%)
5.0%
6.2%
(13,845)
(15,408)
(10.1%)
(1.6%)
(2.1%)
30,045
30,092
(0.2%)
3.4%
4.1%

Net Sales
Sales as of September 30th increased 20.2% to reach PEN 880.4 MM. This growth is
mainly the result of applied commercial strategies, the consolidation of our stores (5
stores were opened during 2011: Huancayo, Ica, Cuzco, the second in Arequipa and
one in the district of San Luis in Lima), and the opening of 4 new stores (one in the
district of Villa El Salvador in Lima, Tacna, Cajamarca and Sullana), as well as the
increasing internal demand for products related to the construction industry.
Cost of sales
The cost of sales as of September 30th 2012 was of PEN 645.0 MM, which represented
an increase of 21.9% against PY. The increase was mainly due to sales growth.
Gross Profit
The gross profit as of September 30th 2012 was of PEN 235.3 MM, which represented
an increase of 16.0% against PY. This increase is lower than that of sales due to a
lower gross margin, explained by a drop in the iron and copper international prices and
by an increase in logistic costs related to higher levels of inventory.
Selling Expenses
Selling expenses reached PEN 135.7 MM by the end of the period; which represented
an increase of 20.7% against PY. The increase is explained by the new store openings.
The selling expenses remained as 15.4% of net sales.

Management discussion and analysis

3Q 2012
Administrative Expenses
The administrative expenses, as of September 30th 2012, grew 6.6% reaching PEN
44.8 MM and represented 5.1% of net sales, in comparison to 5.7% in 2011. This
improvement is explained by a productivity improvement at the administrative office.
Operating Income
Operating Income reached PEN 62.9 MM, which represented a growth against PY of
13.9%. The operating margin went from 7.5% in 2011 to 7.1% in 2012.
Financial Expenses
The accumulated net financial expenses as of September 30th were of PEN 19.9 MM,
95.2% higher than those as of September 30th 2011. This is mainly explained by an
increase in long term debt, as well as to higher short term credit lines.
Income Before Taxes
Maestros income before taxes decreased by PEN 1.6 million, from PEN 45.5 MM for
the period ended September 30th 2011 to PEN 43.9 MM for the period ended
September 30th 2012.
Income Taxes
Income taxes decreased by PEN 1.6 MM, from PEN 15.4 MM in the period ended
September 30th 2011 to PEN 13.8 MM in the period ended September 30th 2012. This
decrease is mainly explained by the increase in financial expenses.
Net Income
Finally, after taxes, the net income for the period ended September 30th 2012 showed a
decrease of 0.2% from PEN 30.1 MM in the period ended September 30th 2011 to PEN
30.0 MM in the period ended September 30th 2012
Consolidation adjustments and other accounts for income and expenses
Consolidation adjustments and other accounts for income and expenses incurred at
Inmobiliaria Domel for land rented to Maestro Peru and at Industrias Delta for land
rented to Inmobiliaria Domel.

EBITDA
The following table sets forth Maestros EBITDA for the period ended September 30th
2012 and 2011.
FortheperiodendedSep30th
(Unauditaded,in
%ofNetSales
thousandsofPEN)
%Change
2012
2011
1211
2012
2011
NetIncome
FinancialExpenses,Net
DepreciationandAmortization
IncomeTaxes
EBITDA

30,045
19,018
10,884
13,845
73,792

30,092
9,742
8,760
15,408
64,002

(0.2%)
95.2%
24.2%
(10.1%)
15.3%

3.4%
2.2%
1.2%
1.6%
8.4%

4.1%
1.3%
1.2%
2.1%
8.7%

For the period ended September 30th 2012, Maestro showed an EBITDA of PEN
73.8MM, 15.3% higher than that of the period ended September 30th 2011.

Management discussion and analysis

3Q 2012
Balance Sheet
As of September 30th 2012 compared to as of December 31st 2011
AsofSeptember AsofDecember
2012
2011
(unauditedinthousandsofPEN)
CurrentAssets
Cash
Tradeaccountsreceivable,net
Otheraccountsreceivable,net
Inventory,net
Prepaidexpenses
Totalcurrentassets

351,802
32,373
42,900
194,632
7,914
629,621

15,837
19,455
3,145
244,096
4,940
287,473

NonCurrentassets
Investments
Otheraccountsreceivable,net
Prepaidexpenses
Property,furnitureandequipment,net
Intangibleassets,net
TotalNonCurrentAssets

318
14,432
1,325
607,879
5,720
629,674

318
16,121
4,258
510,043
4,791
535,531

1,259,295

823,004

Currentliabilities
Tradeaccountspayable
Otheraccountspayable
DifferedIncome
Currentincometaxpayable
Currentfinancialdebt
Totalcurrentliabilities

185,947
26,988
848
0
44,910
258,693

208,984
20,554
848
5,516
124,577
360,479

NonCurrentliabilities
Otheraccountspayable
Noncurrentfinancialdebt
Deferredrevenue
Deferredtaxes
TotalnonCurrentliabilities

6,443
682,612
1,060
36,324
726,439

6,809
173,488
2,544
35,559
218,400

Totalliabilities

985,132

578,879

Shareholder'sequity
EquityCapital
Retainedearnings
Totalshareholder'sequity

71,497
202,666
274,163

71,497
172,628
244,125

1,259,295

823,004

TotalAssets

Totalliabilitiesandshareholder'sequity

Management discussion and analysis

3Q 2012
Current Assets
Maestros current assets increased by PEN 342.1 MM, from PEN 287.5 as of
December 31st 2011 to PEN 629.6 as of September 30th 2012. The main increase is in
cash; due to the issuing of a USD 200 MM bond. This cash will be used in the near
future to finance the companys Capex plans.
Inventory shows a decrease by PEN 49.5 MM essentially explained by a high level of
purchases of Chinese products due to the Chinese New Year as well as of iron bars.
These products have been sold throughout the year.
Accounts receivable shows an increase by PEN 12.9 MM due principally to bigger
corporate sales. These clients are given credit for 7-15 days.
Other accounts receivable increased by PEN 39.8 MM due to the advance payments to
the contractors in charge of building our new stores.
Non-current Assets
Non-currents assets grew by PEN 94.1 MM from PEN 535.5 MM as of December 31st
2011 to PEN 629.7 MM as of September 30th 2012.
The main increase is in property, furniture and equipment as a result of the acquisition
of land for future store openings and to the addition of buildings and equipment for new
stores.
Current Liabilities
Current liabilities showed a decrease by PEN 101.8 MM, from PEN 360.5 as of
December 31st 2011 to PEN 258.7 MM as of September 30th 2012 basically explained
by the payment of the outstanding short term debt. Also, the line trade accounts
payable showed a decrease by PEN 23.0 MM due to payments to international
suppliers.
Non-current Liabilities
Non-current liabilities grew by PEN 508.0 MM from PEN 218.4 MM as of December
31st 2011 to PEN 726.4 MM as of September 30th 2012. This increase is explained by
the issuing of a USD 200 MM bond.
Shareholders Equity
Shareholders equity grew by PEN 30.0 MM from PEN 244.1 as of December 31st
2011 to PEN 274.2 as of September 30th 2012. The increase is attributable to the net
income generated in the period.

Management discussion and analysis

3Q 2012
Cash Flow
As of September 30th, 2012 and as of September 30th 2011

FortheperiodendedSep30th
(unaudited,inthousandsofPEN)
2012
2011
OperatingActivity
Collection:
Sales
Othercollectionrelatedtotheactivity
MinusPayments
Goodsandservicessuppliers
Salariesandsocialbenefits
Taxes
Interest
Netcash(usedin)obtainedfromoperatingactivity

1,028,292

853,988

(902,026)
(88,730)
(21,379)

(753,840)
(75,222)
(14,226)

16,157

10,700

10,264

7,044

(108,964)
(1,853)
(100,553)

(72,917)
(874)
(318)
(67,065)

540,338
443,075

32,998
21,235

(563,052)
420,361

54,233

Netincrease(decrease)ofcashandcashequivalents

335,965

(2,132)

Cashandcashequivalentsatthebeginningoftheperiod
Cashandcashequivalentsattheendoftheperiod

15,837
351,802

15,702
13,570

InvestmentActivity
Collection:
Salesofproperty,furnitureandequipment
MinusPayments
Purchaseofproperty,furnitureandequipment
Purchaseanddevelopofintangibles
Investments
NetCashusedininvestmentactivity
FinancingActivity
Receipts
Issuinglongtermdebt
Issuingofshorttermdebt
MinusPayments
Amoritzationoffinancialobligations
Netcashobtainedfromfinancingactivity

Management discussion and analysis

3Q 2012
Appendix
Description of Main Accounts
The following is a brief description of the main lines shown in Maestros Consolidated
P&L:
Net Sales. Maestros net sales refer to the sales of products by its retail operations.
Cost of Sales. Maestros cost of sales include cost of goods sold, inventory shrinkage,
logistic costs, supplier discounts and rebates.
Selling Expenses. Selling expenses refer to those expenses at the stores: salaries,
property rentals to third parties, marketing expenses, depreciation, credit card
commissions, maintenance and other expenses related to running a store.
Administrative expenses. Administrative expenses refer to those expenses related to
the administrative office. These include mainly salaries, depreciation and amortization
of fixed assets and other expenses.
Financial income. Maestros financial income is mostly comprised of interests on
financing to third parties.
Financial expenses. Maestros financial expenses are mainly comprised of interest
expenses related to financing activities.