Fomento Económico Mexicano B de C : 2021 Financial Statements Proposal

CONSOLIDATED

FINANCIAL

STATEMENTS 2021

2 Annual Report of the Audit Committee

5 Independent Auditors' Report

1. Consolidated Statements of Financial Position
2. Consolidated Income Statements
3. Consolidated Statements of Comprehensive Income
4. Consolidated Statements of Changes in Equity

15 Consolidated Statements of Cash Flows

17 Notes to the Consolidated Financial Statements

Consolidated Financial Statements 2021 FEMSA

ANNUAL REPORT OF THE AUDIT COMMITTEE

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

2

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.

Consolidated Financial Statements 2021 FEMSA	3

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.

Consolidated Financial Statements 2021 FEMSA	4

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

March 03nd, 2022	Alberto Tiburcio Celorio
	Chairman of the Audit Committee
	Fomento Económico Mexicano, S.A.B. de C.V.

Consolidated Financial Statements 2021 FEMSA

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		NOTE		2021(1)		2021		2020
	ASSETS
CURRENT ASSETS
	Cash and cash equivalents	5	$	4,748	Ps.	97,407	Ps.	107,624
	Investments	6		1,190		24,415		662
	Trade accounts receivables, net	7		1,653		33,898		28,249
	Inventories	8		2,481		50,896		44,034
	Recoverable taxes	25		882		18,091		17,100
	Other current financial assets	9		121		2,480		681
	Other current assets	9		172		3,531		2,919
	Total current assets			11,247		230,718		201,269
	NON CURRENT ASSETS
	Equity method accounted investees	10		5,231		107,299		98,270
	Property, plant and equipment, net	11		5,613		115,147		113,106
	Right-of-use assets, net	12		2,778		56,994		54,747
	Intangible assets, net	13		7,709		158,138		155,501
	Deferred tax assets	25		1,011		20,733		22,043
	Other non-current financial assets	14		2,002		41,071		32,386
	Other non-current assets	14		360		7,400		7,526
	Total non-current assets			24,704		506,782		483,579
	TOTAL ASSETS		$	35,951	s.	737,500	Ps.	684,848
	LIABILITIES AND EQUITY
	CURRENT LIABILITIES
	Bank loans and notes payable	19	$	98	Ps.	2,003	Ps.	4,469
	Current portion of non-current debt	19		129		2,637		4,332
	Current portion of lease liabilities	12		356		7,306		6,772
	Interest payable			96		1,968		2,069
	Trade payable			3,227		66,203		53,018
	Accounts payable			1,323		27,149		22,150
	Taxes payable			793		16,260		12,578
	Other current financial liabilities	26		643		13,197		13,025
	Total current liabilities			6,665		136,723		118,413
	NON-CURRENT LIABILITIES
	Bank loans and notes payable	19		9,064		185,945		179,864
	Lease liabilities	12		2,683		55,049		51,536
	Post-employment benefits	17		370		7,600		7,253
	Deferred tax liabilities	25		295		6,042		6,033
	Other non-current financial liabilities	26		115		2,364		5,022
	Provisions and other non-current liabilities	26		423		8,660		9,540
	Total non-current liabilities			12,950		265,660		259,248
	TOTAL LIABILITIES			19,615		402,383		377,661
	EQUITY
	Controlling interest:
	Capital stock			163		3,348		3,348
	Additional paid-in capital			871		17,862		17,808
	Retained earnings			11,617		238,306		217,430
	Other comprehensive income			150		3,085		(843)
	Total controlling interest			12,801		262,601		237,743
	Non-controlling interest	22		3,535		72,516		69,444
	TOTAL EQUITY			16,336		335,117		307,187
	TOTAL LIABILITIES AND EQUITY		$	35,951	Ps.	737,500	Ps.	684,848

1 0

FOMENTO ECONÓMICO MEXICANO,

S.A.B. DE C.V. AND SUBSIDIARIES

MONTERREY, N.L., MEXICO

As of December 31, 2021 and 2020. In millions of U.S. dollars ($) and in millions of Mexican pesos (Ps.).

1. Convenience translation to U.S. dollars ($) - See Note 2.2.3

The accompanying notes are an integral part of these consolidated statements of financial position.