Fomento Económico Mexicano B de C : 2021 Financial Statements

CONSOLIDATED

FINANCIAL STATEMENTS 2021

• 2 Annual Report of the Audit Committee

• 5 Independent Auditors' Report

• 9 Consolidated Statements of Financial Position

• 10 Consolidated Income Statements

• 11 Consolidated Statements of Comprehensive Income

• 12 Consolidated Statements of Changes in Equity

• 14 Consolidated Statements of Cash Flows

• 16 Notes to the Consolidated Financial Statements

ANNUAL REPORT OF THE AUDIT COMMITTEE

To the Board of Directors Fomento Económico Mexicano, S.A.B. de C.V.

FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V. AND SUBSIDIARIES MONTERREY, N.L., MEXICO

In conformity with the provisions of the Securities Market Act, the corporate charter of this Company and the charter of the Audit Committee of Fomento Económico Mexicano, S.A.B. de C.V. (hereafter "the Committee and the Company"), I am pleased to present our Audit Committee Report for the year ended December 31, 2021. This report covered our work over the course of the year including some areas of particular focus. In carrying out our work, we abided by the regulations established by the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE) of the United States of America, the applicable provisions established by the National Banking and Securities Commission (CNBV) of Mexico, as well as the Code of Best Corporate Practices issued by the Business Coordinating Council of Mexico.

Based on the previously approved work program, the Committee convened formally four times on a quarterly basis and on additional occasions, as deemed necessary, to address a variety of standing matters that merited the participation of the Committee, to relieve the issues that by legal provision was bound. The most relevant activities carried out by the Committee are presented below:

Risk Assessment

Based on the information presented by Management and the External and Internal Auditors, the Committee evaluated the effectiveness of the risk management system established for the identification, assessment, and management of business risks of the Company, as well as for the implementation of measures to ensure its effective and efficient operation.

The Committee, in conjunction with Management and both, External and Internal Auditors, reviewed the critical risk factors which may affect the operations and assets of the Company, assessing whether they have been properly identified and managed.

Considering that the cybersecurity risk continues to be a significant risk area for the Company, throughout 2021 the Committee devoted special attention to monitor the progress of the main vulnerabilities identified during the corresponding cybersecurity assessments, as well as to review the proper implementation of the information technology initiatives that would guarantee the continuity of the operations, and the protection of the assets and equity of the Company.

Internal Control

The Committee oversaw that Management, in conformity with its responsibilities regarding internal control, had established the general guidelines and the necessary procedures for their appropriate application and compliance. This process included presentations to the Audit Committee by the responsible areas of the most important subsidiaries. Additionally, the Committee properly followed on the comments and remarks made in this regard by the

External and Internal Auditors, as a result of their findings.

The Committee observed the actions carried out by the Company in order to comply with section 404 of Sarbanes-Oxley Act and similar provisions issued by the CNBV, both related to the internal control system. During this process, the Committee carried out follow up reviews on implemented main preventive and corrective actions concerning internal control issues, as well as effectuated the presentation of the required information to the authorities.

External Audit

The Committee recommended to the Board of Directors the appointment of the External

Auditors of the Company for the fiscal year 2021. For this purpose, The Committee verified their independence, under the criteria and rules applicable and established by the

SEC and NYSE, as well as by the requirements established in the Law and in the general provisions applicable to entities and issuers supervised by the CNBV that engage in external audit services of financial statements, which entered into force on August 1st, 2019. The

Committee analyzed the approach and work program of the External Auditors, as well as their coordination with the Internal Audit area.

The Committee reviewed, and submitted for approval of the Board of Directors, the Audit Committee Charter, in order to comply with the new provisions and regulations contained in the Single Circular of External Auditors, issued by the CNBV. Also, the Committee verified the proper compliance with these provisions, particularly those related to the responsibilities of the Committee and the requirements currently applicable to external auditors.

The Committee kept frequent and direct communication with the External Auditors regarding the progress of their work and the observations they presented. The Committee was timely informed of the External Auditor conclusions and reports concerning the annual and quarterly financial statements, and it followed up on the implementation of the observations and recommendations they developed during their work.

The Committee authorized the fees paid to the External Auditors for audit services and other permitted services, ensuring that they do not interfere with their independence and that they comply with the provisions established in this regard by this Committee and by the Board of Directors.

The Committee carried out and reported to the Board of Directors the result of the annual evaluation of the external audit firm, including all the additional services provided.

Internal Audit

The Internal Audit area reports to the Audit Committee in order to maintain its independence and objectivity. Regarding the interaction of the Committee with Internal Auditors, the following can be pointed out:

The Committee reviewed and approved appropriately, the Internal Audit annual program and the budget for the fiscal year. For its preparation, Internal Audit participated in the risk assessment process and in the validation of the internal control system, to comply with the different applicable provisions.

The Committee received periodic reports regarding the progress of the approved work program, including the variations that may have existed, as well as the corresponding causes.

The Committee followed up on the observations and suggestions that Internal Auditors developed, as well as their timely correction.

The Committee oversaw that a good annual training plan for internal auditors had properly been carried out.

The Committee reviewed and discussed with the Chief Audit Executive the results of the performance appraisal of the Internal Audit service, performed by the business units and by the Committee itself.

Financial Information, Accounting Policies and Reports to Third Parties

The Committee reviewed with the responsible officials the reasonableness and consistency of quarterly and annual financial statements of the Company and recommended to the

Board of Directors its approval and authorization for its publication. As part of this process, the Committee took into account the opinion and observations of the External Auditors, and validated that the criteria, accounting policies, and information used by Management to prepare the financial information for the fiscal year 2021 were adequate, sufficient, and that they had been applied consistently with respect to the previous year.

The review performed by the Committee also included the reports and any other financial information required by the Regulatory Bodies in Mexico and in the United States of America, which, based on the results, the Committee recommended to the Board of Directors for their approval and authorization for publication.

Compliance with Applicable Laws and Regulations, Legal Issues and Contingencies The Committee confirmed the existence and reliability of the controls implemented by the Company related to compliance with the different legal provisions to which it is obligated, assuring, when applicable, that appropriate disclosures were made in the financial statements.

The Committee periodically reviewed the existing fiscal, legal, and labor contingencies in the Company and its most important Subsidiaries, overseeing the effectiveness of the procedure implemented for its identification and monitoring, as well as its adequate disclosure and recording.

Management presented the main guidelines that govern the anti-corruption policy, as well as the dissemination and validation plan for compliance, which the Committee found adequate.

Code of Ethics

The Committee reviewed the updated version of the Company's Code of Ethics, which incorporates necessary changes by virtue of the social environment in which the Company operates, and the Committee also validated that the Code has provisions regarding compliance with the laws against money laundering and anti-corruption applicable in the countries where the Company operates. Subsequently, the Committee recommended the approval of the Company's Code of Ethics to the Board of Directors.

With the support of Internal Audit, the Committee verified the compliance of the Company

Code of Ethics by all employees and Board members as well as the existence of adequate processes to update and disseminate it among employees, including the application of sanctions in those cases where violations were detected.

The Committee reviewed the complaints received through the Company´s whistle-blowing system and followed up on their correct and timely attention.

Training

To comply with the training requirements of Committee´s charter, during the year, its members attended specific courses on relevant topics, such as internal controls, risk management, cybersecurity, regulatory compliance, financial information and auditing.

Administrative Activities

In addition to the formal sessions of the Audit Committee, its members held additional sessions with Management to stay informed of the Company's progress and the relevant and unusual activities and events. The Committee also met with both External and Internal

Auditors as a specific topic on the agenda, without the presence of Management, to discuss the progress of their work, limitations they could have had and to facilitate any private communication they wished to have with the Committee.

In this fiscal year, The Committee did not consider necessary to request the support and opinion of independent experts as the matters dealt in each session were duly supported by the information presented and therefore the conclusions reached were satisfactory for its members.

The Chairman of the Audit Committee reported quarterly to the Board of Directors the relevant issues arising from the work of the Committee.

The Committee verified the compliance with the requirements of education and experience by the financial expert of the Committee and the independence requirements for each member in accordance with the rules applicable in this matter.

The work carried out by the Committee was duly documented in the prepared minutes of each session, which were reviewed and approved in a timely manner by its members.

The Committee performed the annual self-assessment and delivered the results to the Chairman of the Board of Directors. The results of the self-assessment were very satisfactory.

Sincerely

_______________________________________________

Alberto Tiburcio Celorio

Chairman of the Audit Committee Fomento Económico Mexicano, S.A.B. de C.V.

March 03nd, 2022

INDEPENDENT AUDITOR'S REPORT

The Board of Directors and Shareholders of Fomento Económico Mexicano, S.A.B. de C.V.

FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V. AND SUBSIDIARIES MONTERREY, N.L., MEXICO

Opinion

We have audited the accompanying consolidated financial statements of Fomento Económico

Mexicano, S.A.B. de C.V. and subsidiaries (collectively the "Company"), which comprise the consolidated statement of financial position as at December 31, 2021 and 2020, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for each of the three years in the period ended as at December 31, 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2021 and 2020 and its financial performance and its cash flows for each of the three years in the period ended as at December 31, 2021, in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements" section of our report. We are independent of the Company in accordance with the "International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants" ("IESBA Code") together with the ethical requirements that are relevant to our audit of the consolidated financial statements in México according to the "Codigo de Etica Profesional del Instituto Mexicano de Contadores

Publicos" ("IMCP Code"), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the "Auditor's Responsibilities for the

Audit of the Consolidated Financial Statements" section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the accompanying consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Impairment testing of distribution rights, trademarks and goodwill

Description of the key audit matter

At December 31, 2021, the Company has distribution rights, trademarks and goodwill with an aggregate carrying value of approximately $ 140,820 million. As explained in Note 13 to the consolidated financial statements, distribution rights, trademarks and goodwill are tested for impairment annually at the cash generating unit level (CGUs). Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value-in-use. The Company has determined value in use, in some cases, and fair value less cost to sell in others, at the cash generating unit level to test for impairment.