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ANNUAL REPORT

2018

Annual Report 2018

TABLE OF CONTENTS

SECTION I - Introduction ..................................................................................... 3

Liability Statement .................................................................................... 4

Vision, Mission and Values ....................................................................... 5

Letter to Shareholders .............................................................................. 6

SECTION II - Business and Activities ................................................................. 7

General Data .............................................................................................. 8

Corporate Development ........................................................................ 29

SECTION III - Analysis and Discussion of the Management of the Result of Operations and the Economic and Financial Situation according to Individual Financial Information Audited as of 12.31.2018 .............................................. 37

Operational Results ................................................................................ 38

Investment Portfolio .............................................................................. 40

Analysis of the main variations of the Statements of Financial Situation ................................................................................................ 41

Information on the ................................................. 46

Annual Report 2018

SECTION I - Introduction Liability Statement Vision, Mission and Values Letter to Shareholders

Annual Report 2018

Liability Statement This document contains accurate and sufficient information regarding the business activities of DIVISO GRUPO FINANCIERO S.A. throughout the year 2018. Without prejudice to the , the subscribers are responsible for their content, in accordance with the applicable legal provisions.

LUIS BABA NAKAO Board Director Lima, March 2019

Annual Report 2018

Vision, Mission and Values

Vision "Be one of the main Financial Groups of Peru"

Mission "You grow, we grow"

Values Trust

Innovation

Teamwork

Passion

Annual Report 2018

Letter to Shareholders

Dear shareholders: This 2018 DIVISO Grupo Financiero completed 15 years of institutional history. This was celebrated with the publication of a special report, "15 años construyendo Altas Finanzas para Todos" (15 years building High Finances for all). It is available in printed and virtual format, and in Spanish and English video. This commemoration also served as a framework to prepare the Strategic Plan 2018-2020 aimed to support the development of the principles that will help us arrive at the bicentennial. The reinforced lines of action include brand positioning, which highlights annual events with our stakeholders, as well as our strengthened governance with the implementation of the Prevention Model. This last point, along with the continuity of our corporate social responsibility activities, boosts our sustainability. For this purpose, in addition to coherence with the permanent construction of our organizational culture, internal communication and activities that strengthen the sense of belonging to the group have been reinforced, as well as recognition events for high-performance personnel. On the other hand, regarding the lines of action developed, specifically in Credinka, the effort made to develop new products and channels, as well as for the incorporation of new technology, among which the applications are a highlight, as well as geo-referencing for portfolio management and the implementation activities of the new Topaz CORE. With all this, we will be at the top of the best banking and microfinance entities nationwide. Likewise, important milestones must be highlighted, as shown by the successful second public debt issuance by Credinka, structured by DIVISO Bolsa, which was achieved under better conditions than the first issuance. Along the same line, DIVISOFondos reached S/ 50 million managed in Mutual Funds. This reflects the dynamism of the joint commercial effort made by DIVISO Bolsa and Credinka in the placement of that product. Finally, I would like to thank your trust in our company. Our vision of becoming one of the leading financial groups nationwide keeps going thanks to your support and our teamefforts. Our shared purpose is to provide "High Finances for All" aiming all the new successful Peruvians and consolidated entrepreneurs that are part of the great foundations of the Peruvian pyramid. We help them enhance their personal, family and community growth while we work together for our country . Luis Baba Nakao Chairman

Annual Report 2018

SECTION II - Business and Activities General Data Description of Operations Corporate Development

Annual Report 2018

General Data

name DIVISO Grupo Financiero S.A.

BVL Code DIVIC1

Company type Corporation

20509845167

Address Av. Ricardo Rivera Navarrete 501, piso 19, San Isidro. Lima Perú

Phone number (51 1) 512-2460

Website www.diviso.pe

External Auditors Paredes, Burga & Asociados Sociedad Civil de Responsabilidad Limitada (member signature of Ernst & Young - EY)

Electronic entry N° of the Lima Corporate Registry

11708556

CIIU (Uniform International Industrial Classification)

7499

DIVISO Grupo Financiero S.A. is the holding company of DIVISO Grupo Financiero, which started in April 10, 2003. The Company is listed on the Lima Stock Exchange since September 17, 2007 under DIVIC1. As of December 31, 2018, it has 72 shareholders and its net assets are worth S/ 363 million. The Company has obtained the good governance award by the Lima Stock Exchange (BVL) in 2008, 2013, 2014, 2015 and 2016. Moreover, in 2011, it participated in the Corporate Governance Program developed by the BVL and the Development Bank of Latin America - CAF, whose culmination was specified in the book "Corporate Governance for Firms in the Peruvian Market: Cases of Good Practices". This work shows DIVISO , along with four other firms that were chosen out of seventeen program participants. Economic Group DIVISO Grupo Financiero S.A. The Economic Group is formed by the following subsidiary firms: 1. Financiera Credinka S.A. 2. DIVISO Fondos SAF S.A. 3. DIVISO Bolsa SAB S.A. 4. NCF Servicios Compartidos S.A. It also has shareholding in the following related investments: 1. Edpyme Alternativa. 2. Bolsa de Valores de Lima - BVL. 3. Bolsa de Productos de Chile - BPC.

http://www.diviso.pe/

Annual Report 2018

Incorporation DIVISO Grupo Financiero S.A. started its activities on April 10, 2003. Its term is indeterminate. Share capital The share capital of DIVISO Grupo Financiero S.A. is S/ 181'806,764.40 and is made up of 454,516,911 common shares with a par value of S/ 0.40. Shareholding structure As of December 31, 2018, the shareholding structure of DIVISO Grupo Financiero S.A. is as follows:

Holding N° of

shareholders

Shareholding

%

Up to 1.00% 67 3.21

From 1.01% to

5.00% 1 3.13

From 5.01% to

10.00% 2 15.81

Over 10.00% 2 77.86

Total 72 100.00%

Shareholders Nationality % of shareholders until

12/31/2018

Andean Equity Financial LTD

British Virgin

Islands

59.36%

Maj Invest Financial Inclusion Fund II K/S Denmark

18.50%

Blueslide Holdings S.A.C. Peru

9.31%

Cooperativa de Ahorro y Crédito Pacífico LTDA. Peru

6.50%

Annual Report 2018

Board

Luis Baba Nakao | Chairman Industrial Engineer graduated from the National University of Engineering - UNI. He has over 20 years of experience in the Peruvian financial system. He has worked as COFIDE Board Chairman, Inversiones COFIDE, Fondo Nacional de Medio Ambiente, the Lima Products Exchange, the Japanese Peruvian Society, among others. He has also been a member of the Board of Directors of CAF, Banco de la Nación, ALIDE, EXTEBANDES, Cementos Norte Pacasmayo. He currently participates in the Board of firms related to the automotive, supermarkets, financial and industrial sectors and is Board Chairman of DIVISO Grupo Financiero and member of the Board of Directors of Financiera Credinka.

José Fernando Romero Tapia | First Vice President

Master in Business Administration from the Adolfo Ibáñez University, Master in Business Administration from the Applied Sciences University - UPC and Master in Business Administration and Management from the Polytechnic University of Catalonia. Professional in Economics at the National University Federico Villarreal with extensive experience in Capital Markets. He has completed the International PhD in Business Administration and Management from the Applied Sciences University - UPC. He is the Director of the Stock Exchange of Lima, of CAVALI ICLV, Alternate Director of CONFIEP, of the Chilean Stock Exchange, of the Deposit Institution of Values of Bolivia (EDV), member of the Board of Directors of the Association Investing in Peru - inPERU. Board Chairman of Financiera Credinka, Director of Diviso Fondos SAF and Managing Director of DIVISO Grupo Financiero.

Richard Charles Webb Duarte | Second Vice President PhD in Economics from Harvard University and Master in Economics and Geography from St. Andrews University (United Kingdom). Former president of the Central Reserve Bank of Peru, advisor to the Superintendency of Banking, Insurance and AFP and consultant to the World Bank, the Inter-American Development Bank, USAID and the United Nations World Institute for Economic Research. Since 2004, he has been the Director of the Institute of Peru - San Martín de Porres University, is a member of the Board of Directors of DIVISO Grupo Financiero and Vice President of Financiera Credinka.

Francisco Javier Tovar Gil | Director Main Partner of the Echecopar study associated with Baker & McKenzie, he has been president of CONASEV (today SMV), of the Market Access Commission of INDECOPI and Procapitales. He has been part of boards at private and state firms and has conducted relevant transactions among them privatization processes in the telecommunications sector.

Annual Report 2018

Jorge Armando Ouchida Noda | Director

Bachelor of Business Administration from the Pontifical Catholic University of Peru, with a Post Graduate Degree in Economics from the Seinan Gakuin University in Fukuoka Japan, and a Specialization in Finance from the Pontifical Catholic University of Peru. He is currently General Director of the Pacific Savings and Credit Cooperative, Executive Director at Kyodai Japan - institution representing the Peruvian Japanese community and Director of the Latin Aid Fund in Japan.

Víctor Pinto | Director

International MBA from the University of York, in Toronto, Canada and Bachelor of Business Administration from the Catholic University of Santa Maria - Arequipa. 17 years of international experience in Micro and Small Business Banking, Mergers and Acquisitions of financial services firms, private equity investments and alternative investments for the Banco de Credito del Peru and for the Scotiabank Group, in Canada with Scotiabank and in Peru with Profuturo AFP. He is the Director of Maj Invest.

Piero Ghezzi | Director (until August 23, 2018) Ph.D. in Economics from the University of California at Berkeley and Economist from Universidad del Pacífico. He is a Founding Partner of GPD Partners, a consultant in economic development. He has been Minister of Production of Peru (2014-2016). He was Global Head of Economics and Emerging Market Research at Barclays Capital in London and Head of Research for Latin America at Deutsche Bank in New York.

Percentage of pay of directors and executives regarding the gross income level The percentage representing the total amount of the pay of the members of the Board of Directors and of the managerial staff, with respect to the level of gross income, according to the financial statements of the Company, is 4.94% for 2018.

Investment and Risks Board Committee Its main objective is to keep the Board of Directors informed of the investments and disinvestments that are strategic and stable to be carried out by the Company, as well as the financial viability of said investments and their adaptation to the budgets and strategic plans of the entity. Besides, the Board Committee is responsible for monitoring the Risk Management of the Subsidiary firms.

At the end of the 2018 fiscal year, the Investment Board Committee has the

following Directors: Chairman: Luis Baba Nakao Member: Jorge Armando Ouchida Noda Member: Piero Ghezzi (until August 23, 2018)

Annual Report 2018

Audit Board Committee

Its main objective is to support the Board in supervising the effectiveness of the Company's accounting and financial systems and to ensure that the internal control procedures adjust to their needs, objectives, goals and financial strategies. At the closing of fiscal year 2018, the Audit Board had the following Directors: President: Piero Ghezzi (until August 23, 2018) Member: Jorge Armando Ouchida Noda Member: David Paradiso

Good Corporate Governance and Pay Board Committee

Its main purpose is to recommend policies and principles of Good Corporate Governance to the Board, and to play a leading role in implementing Good Corporate Governance within the Company; as well as approve the pay and incentives system of Senior Management. At the closing of fiscal year 2018, the Corporate Governance Board had the following Directors: Chairman: Francisco Javier Tovar Gil Member: Víctor Pinto Member: Richard Charles Webb Duarte

Executive Officers as of December 31, 2018 José Fernando Romero Tapia | General Manager Master in Business Administration from the Adolfo Ibáñez University, Master in Business Administration from the Applied Sciences University - UPC and Master in Business Administration and Management from the Polytechnic University of Catalonia. Professional in Economics at the National University Federico Villarreal with extensive experience in Capital Markets. He has completed the International PhD in Business Administration and Management from the Applied Sciences University - UPC. He is the Director of the Stock Exchange of Lima, of CAVALI ICLV, Alternate Director of CONFIEP, of the Chilean Stock Exchange, of the Deposit Institution of Values of Bolivia (EDV), member of the Board of Directors of the Association Investing in Peru - inPERU. Board Chairman of Financiera Credinka, Director of DIVISO Fondos and Managing Director of DIVISO Grupo Financiero.

Annual Report 2018

Staff (as of December 31, 2018)

2017

2018

Officials

7

5

Employees

1

1

Total

8

6

Description of Operations Evolution of the Company's operations

Annual Report 2018

2003

On April 10, 2003 DIVISO Grupo Financiero was founded to provide financial and stock market advisory services under the Name NCF S.A.This name was renewed in 2013.

2007

The diversification of investments started with the first acquisition of shares of Crac Credinka S.A. and the consolidation of a significant shareholding in the firms Bolsa de Valores de Lima S.A. and CAVALI S.A. By the end of 2014, DIVISO Grupo Financiero had 10% in each, constituting itself as its main shareholder. On September 17, 2007, the Company registered its shares in the Public Registry of the Securities Market and started trading in the Stock Exchange with code NCFC1, currently known as DIVIC1. Crac Credinka receives the Business Creativity award in the category of "Decentralized Creativity" for the Crediwarmi product promoting micro-savings in indigenous communities.

2008

DIVISO Fondos SAF S.A. started operations on February 27, 2008, in order to manage investment funds, which were initially invested in junior mining firms, in private capital assets and on lands.

recognition for its Good Corporate Governance practices. DIVISO Grupo Financiero receives authorization from the SBS to take control of Crac Credinka.

2010

DIVISO Bolsa SAB S.A. started operations on February 9, 2010, in order to provide the services and integrate the group's stock exchange operations. DIVISO Grupo Financiero participates in the Corporate Governance Strengthening Program organized by the CAF and the BVL.

2011

The merger of NCF Inversiones S.A. and NCF Grupo S.A. was completed in order to consolidate its operations under the same holding company. In the General Shareholders' Meeting on February 14, 2011, the merger by absorption of NCF Grupo S.A. was agreed. This merger took effect as of July 27, 2011, date in which the total assets, liabilities and equity of NCF Grupo S.A. were integrated. On August 26, 2011 DIVISO Grupo Financiero made its first debt issuance and placement through Short-Term Instruments (ICP) placed on private offer. On June 30, 2011, the SMV authorized DIVISO Fondos SAF S.A. to additionally manage mutual funds.

Annual Report 2018

Crac Credinka receives the 3+ Social Classification granted by Planet Rating. Also, they granted senior and subordinated credit lines.

2012

DIVISO Fondos launches its first mutual fund "DIVISO Acciones FMIV" to the market; and subsequently mutual funds of debt instruments: "DIVISO Flexible Soles" and "DIVISO Extra Conservador Soles". Crac CREDINKA receives the B- Risk Classification, granted by Class & Asociados and PCR. DIVISO Grupo Financiero receives the AA- Risk Classification granted by PCR. On November 20, 2012, the SMV authorized DIVISO Bolsa to offer the Portfolio Management or Wealth Management service.

2013

DIVISO Bolsa starts offering the Wealth Management service to diversify the income sources and expand the service range. Crac Credinka starts placing Mutual Funds of DIVISO Fondos, based on the changed regulation authorizing the Savings Banks to be depositors of said products. Likewise, it improves its Risk Classification from B - to B +. DIVISO Grupo Financiero receives for the second time recognition for its Good Corporate Governance practices. DIVISO Grupo Financiero acquires 10% of the share capital of the Chilean Products Exchange and accesses a representation in its directory. The Danish Microfinance Partners K/S (DMP) investment fund, managed by Maj Invest Holding, acquires 10% of Crac CREDINKA's share capital. The company started a renewal process of its corporate identity involving the change of its NCF brand to DIVISO, in line with its strategy of focusing on the financial and capital markets, and its growth horizon proposed for the coming years.

2014

DIVISO Bolsa consolidated its position in the fixed-income trading market, achieving the 3rd position in the negotiated volume ranking of this type of instruments. For the third time, DIVISO Grupo Financiero receives s recognition for its Good Corporate Governance practices. DIVISO Grupo Financiero acquires 73.82% of the shares of Financiera Nueva Visión S.A.; a Public Takeover Offer (OPA) took place for the remaining shares, which was executed in the third quarter of 2014. The investment fund Accion Gateway Fund LLC acquires 10% of the capital stock of Crac CREDINKA.

Annual Report 2018

2015

2016

2017

Cooperativa de Ahorro y Crédito Pacífico becomes a new shareholder of DIVISO Grupo Financiero S.A. acquiring 5% of its capital. After the process started at the end of 2014, DIVISO Grupo Financiero completed the acquisition of a stake in Edpyme Alternativa S.A. achieving 25% of its share capital. DIVISO Grupo Financiero receives for the fourth time recognition for its Good Corporate Governance practices. On September 1, 2015, a company integration of Financiera Nueva Visión S.A. and Crac Credinka S.A. takes place, resulting in a single consolidated firm: Financiera Credinka S.A. The investment fund Maj Invest Financial Inclusion Fund II K/S acquires 4.14% of the shareholding of DIVISO Grupo Financiero S.A. DIVISO Grupo Financiero started the year by deploying the new brand strategies for DIVISO with the slogan "Altas Finanzas para Todos (High Finances for All) and for Credinka with the slogan "Puedes más You can do more), both with the aim of strengthening our positioning in the sectors in which we operate. In February 2016, Diviso Grupo Financiero acquires 83.52% of Caja Cajamarca, whose merger with Financiera Credinka is subsequently authorized by the SBS and becomes effective as of August 1, 2016. In July, DIVISO Grupo Financiero receives for the fifth time recognition for its Good Corporate Governance practices. Likewise, Financiera Credinka also receives said award for the first time. In September, the investment fund Maj Invest Financial Inclusion Fund II K/S increases its shareholding in the shareholding of DIVISO Grupo Financiero S.A reached 18.5%. DIVISO Grupo Financiero y Financiera Credinka carried out asset strengthening processes for S/. 50 million and S/. 53.5 million, respectively. DIVISO Grupo Financiero makes a capital contribution in Edpyme Alternativa S.A. increasing its shareholding from 25% to 26.61%. Financiera Credinka made its first public debt issuance. This achieved an overdemand of 1.8 times for an issue of S/. 10 million, in the framework of a program registered for up to S/. 100 million, where Negotiable Deposit Certificates were placed at 270 days and at an annual nominal rate of 6.5%. Credit Investment Funds, managed by Diviso Fondos, managed to achieve a joint managed equity of about S/. 70 million and renewed

Annual Report 2018

2018

the confidence of its shareholders, mostly institutional, to continue their operations for an additional year. DIVISO Bolsa positioned itself as an active player in the Alternative Securities Market - MAV, for its structuring and placement services to various issuing firms through its Corporate Finance unit. DIVISO Grupo Financiero subscribed a contract to acquire a majority stake in Edpyme Alternativa, which is subject to obtaining authorization from the SBS. DIVISO Grupo Financiero celebrates 15 years of institutional history by issuing a special report "15 años construyendo Altas Finanzas para Todos" (15 years building High Finances for All). It also serves as an occasion to elaborate the Strategic Plan 2018-2020 and implement the Prevention Model. Financiera Credinka made its second public debt issuance with a demand of 1.7 times and under better term and rate conditions than the first issuance made in September 2019. DIVISO Fondos reached S/. 50 million managed in Mutual Funds and, in its line of investment funds, the real estate investment fund "Desarrollo Ciudad Satélite La Castellana IDevelopment Development of La Castellana I), located in Piura completed transactions for a total value of US$ 2.6 million.

At the end of the 2018 fiscal year, DIVISO Grupo Financiero is formed as follows:

Annual Report 2018

Financiera Credinka specializes in microfinance focused on the granting of credits for micro and small businesses, allowing access to low-income people to the financial system. Credinka was created 25 years ago, specifically in 1994 as CRAC CREDINKA S.A. in the Cusco region. In 2015, with the authorization of the Superintendency of Banking, Insurance and Pension Funds (AFP), it was integrated into Financiera Nueva Visión S.A., leading to the creation of Financiera Credinka S.A., becoming one of the leading financial institutions nationwide. In this same line of consolidation and growth, in 2016, Financiera Credinka decided to absorb CRAC Cajamarca, expanding its operations to the north of the country in cities such as Trujillo, Chiclayo and Cajamarca. In 2017, Financiera Credinka managed to make its first public issuance of Negotiable Deposit Certificates debt for S/. 10 MM, due to the good acceptance of these financial instruments, in 2018, it was possible to make the second public debt issuance of Certificates of Negotiable Deposits for S/. 13.7 MM. In the same year, thanks to the support of our main shareholders and with the approval of the Superintendency of Banking, Insurance and Pension Funds (AFP), the Adequacy Plan for the years 2019, 2020, 2021 and 2022 was carried out. At the end of 2018, Financiera Credinka recorded assets for S/. 1,013.3 MM, with a loan portfolio of S/. 849 MM, 9.2% higher than that registered in 2017, allocating 71.4% of these loans for Micro and Small Business. In this same line, the quality of the portfolio places the delinquency and high risk indicators at 4.14% and 5.40% respectively. On the other hand, its equity strength reaches S/. 144 MM and shows a global capital ratio of 14.6%. A management highlight focuses on the efficiency ratios, obtaining a ratio of administrative expenses on financial income of 52.29%, 634 bps below the obteined in 2017, mainly due to the increase in financial income and the improvement in management of administrative expenses. On the other hand, the ratio of loans by number of employees experienced a growth of 13.9%, due to the improvement in the productivity of its commercial analysts, closing 2018 with S/. 854 MM. Its financial strength has been ratified by specialized risk rating agencies showing it as a solvent and stable company with the following ratings: "B-" by Class & Asociados and "B" by Pacific Credit Rating (PCR). On the other hand, they are members of the Deposit Insurance Fund (FSD) and the Association of Microfinance Institutions of Peru (ASOMIF). In this last year, Financiera Credinka opened 8 new branches in the departments of Arequipa, Moquegua, Ica, Huancavelica, Ayacucho and Tacna. So, it currently has 91 service points distributed in 15 regions across the country with a total of 1,126 employees and 155 M customers. Finally, in order to align with the best technological standards of the financial sector, the implementation of the TOPAZ Business Core started, a modular and comprehensive system designed for the administration of all business areas, online and in real time. On the other hand, the digital ecosystem was developed within the Credinka government through the use of cloud technology, chatbot, social networks, big data/analytics, launching the Heat Map and Geolocation Project, reflected in the creation of the tool: Digital Portfolio, used by commercial analysts.

Annual Report 2018

Shareholding structure, as of December 31, 2018 As of December 31, 2018, DIVISO Grupo Financiero S.A holds a direct stake of 82.34% in Financiera Credinka S.A.

SHAREHOLDERS SHARES NOMINAL

VALUE CAPITAL HOLDING

DIVISO GRUPO FINANCIERO SA

125,583,641 S/ 1.00 S/ 125,583,641 82.34%

DANISH MICROFINANCE PARTNERS K/S

12,574,903 S/ 1.00 S/ 12,574,903 8.24%

ACCION Gateway Fund, LIC

12,574,903 S/ 1.00 S/ 12,574,903 8.24%

Others 1,784,710 S/ 1.00 S/ 1,784,710 1.17%

Total 152,518,157 S/ 1.00 S/ 152,518,157 100%

Main Financial Indicators

2017

2018

Shareholding percentage of DIVISO G. Financiero Net worth as of December 31 (in thousands of soles) - Total placements (in millions of soles) - Total deposits (in millions of soles) - NPL ratio - Default coverage

79.76%

S/. 159,022

S/. 777.5 S/. 578.4

3.73% 116.09%

82.34%

S/. 143,979

S/. 849.2 S/. 618.5

4.14% 105.4%

At the closing of December 2018, the Gross Loans reached S/. 849.2 MM, compared to the previous year, with this, the portfolio shows an expansion of S/. 71.7 MM (+ 9.2%). Loans to microenterprises remain the main components of the portfolio, since December 2018, they account for 49% of total loans. The amounts amount to S/. 416.5MM, higher by S/. 28.3MM (+ 7.3%) than the previous year. The Microenterprise sector participates with 22.3% of the total portfolio, with loans that reach S/. 189.7 MM, higher by S/. 12.1 MM (+ 6.8%) than the previous year. Consumer loans have the third place, since they concentrate 14.3% of the portfolio. In December was registered a portfolio of S/ 121.2MM , lower than the previous year by S/ 6.3 MM (-4.9%).

Annual Report 2018

The loans to Medium-sized enterprises registered a portfolio of S/ 69MM and represent 8.1% of total loans; an increase of S/ 37MM is observed (+ 115.8%) with respect to the close of the previous year. With a lower shareholding, Mortgage loans amount to S/ 36.4MM. Compared to last year, they decreased by S/ 3.4MM (-8.5%). Corporate loans account for 1.8% of the portfolio. In December was registered a portfolio of S/ 15.5MM, higher than the previous year by S/. 3.9MM (+ 33.6%). Finally, loans in the Large Business sector show a portfolio of S/ 1.0MM, remaining at that amount similar to the previous year.

Deposits in December 2018 reported a balance of S/ 618.5MM, having grown S/. 40.1MM (6.9%) in annual terms. Fixed-term deposits account for 74.3% of the total deposits. These are higher by S/ 39.9MM (+ 9.5%) compared to the previous year. The Ahorro (savings) product has a shareholding of 15.6% with a balance of S/ 96.7 MM, lower than last year only in S/. 2.3 MM (-2.3%). The deposits by CTS (severance compensation), reached S/ 59.8MM which represents 9.7% of the total deposits. Compared to the previous year it shows an expansion of S/. 3.2MM (+ 5.7%). Payment orders, product with lower shareholding (0.4%) shows a negative annual change of -24.8%.

Annual Report 2018

Main indicators are listed below: Solvency: The global capital ratio stood at 14.61% towards December 2018. This shows a reduction of 69 bps compared to the previous year. Also, the indicator is lower than e Financial companies in 250 bps and the CMACs in 22 bps.

* Information updated by the SBS as of 30/11/2018

Asset Quality: The delinquency ratio registered an indicator of 4.14%, which implies an increase of 41 bps from last year. The delinquency ratio of Financiera Credinka is lower than the average of CMACs in 218pbs and Financial companies in 117pbs.

Annual Report 2018

Profitability: At the end of December 2018, ROE was -11.05%, higher by 257bps at the end of the previous year. The annual evolution of the ROE also shows the previous years.

ROE Annual Evolution

Year ROE

2014

2015

2016

2017

2018

12.5%

-17.8%

4.7%

-13.6%

-11.1%

Annual Report 2018

DIVISO Fondos SAF S.A. is a fund management firm authorized by the Superintendency of Securities Market for the management of mutual funds for investment in securities, as well as public and private investment funds. The management firm was incorporated on December 13, 2007, and on February 27, 2008, through CONASEV Resolution No. 012-2008-EF/94.01.1, the Superintendency of Securities Market (SMV) granted authorization to manage investment funds, starting operations on March 2, 2008. On June 30, 2011, through CONASEV Resolution No. 054-2011-EF/94.01.1, the SMV authorized the company to additionally manage investment mutual funds in securities. DIVISO Fondos SAF S.A. manages the following investment funds as of December 31, 2018:

Private Real Estate Investment Funds During fiscal year 2018, DIVISO Fondos SAF S.A. has managed S/ 15,058 (in thousands) private real estate investment funds:

Name

Managed assets (In thousands of

S/.) as of Dec.31.2018

Main Assets/Projects Incorporated

on

Miraflores NCF Fondo de Inversión

9,294 Project Miraflores, Piura

(34.81 ha) 12/30/2010

Desarrollo Ciudad Satélite La Castellana (I to VII) Fondo de Inversión

5,763 Project Ciudad Satélite La

Castellana (I to VII), Piura (292.97 ha).

02/14/2011

Mainly real estate funds acquire land to conduct the corresponding legal sanitation and development processes of urban habilitation projects, for the subsequent sale in individual lots with direct financing or another sale type with a better return.

Annual Report 2018

Public Investment Funds

Name

Managed assets

(In thousands of S/.) as of Dec.31.2018

Main Assets/Projects Date of start of

operations

DIVISO Fondo de Inversión en Acreencias Fondo de Inversión1

8,506

Investment in the transfer of accounts receivable rights existing in the balance sheet of micro, small and medium enterprises, which in turn are represented in securities (receivables) such as bills of exchange, negotiable invoices and promissory notes.

11/10/2015

DIVISO Fondo de Inversión en Acreencias Dólares Fondo de Inversión en Liquidación2

2,8863

Investment in the transfer of accounts receivable rights existing in the balance sheet of micro, small and medium enterprises, which in turn are mainly represented in securities (receivables) such as bills of exchange, negotiable invoices and promissory notes.

11/21/2016

Mutual funds for security investments:

Furthermore, during the fiscal year 2018 DIVISO Fondos SAF S.A. has managed two mutual securities investment funds:

Name

Managed assets (In thousands of

S/.) as of Dec.31.2018

Assets Date of start of

operations

DIVISO Extra Conservador Soles FMIV

35,825

Very Short-term instruments representing debt or liabilities, in Nuevos Soles, and issued in the local market, with an average duration of up to (90) days. The maturity of each of the instruments should not exceed 360 days.

07/31/2013

DIVISO Conservador Dólares FMIV

8,6534

Short-term instruments representing debt or liabilities, in US dollars, whose average duration is greater than ninety (90) days and up to three hundred and sixty (360) days.

03/19/2015

1 Formerly known as DIVISO Fondo de Inversión en Acreencias Soles Investment Fund. 2 Formerly known as DIVISO Investment Fund in Credit Dollars Investment Fund. 3 Expressed in soles at the SBS exchange rate of December 31, 2018: S/. 3.369. 4 Expressed in soles at the BCR average exchange rate of December 31, 2018: S / 3.3755.

Annual Report 2018

Main indicators

2017

2018

Net worth as of December 31 (in thousands) Share of DIVISO G. Financiero Managed Funds Main figures (as of December 31): - Total Assets (in thousands) - Total liabilities (in thousands)

S/13,634

99.99%

6

S/ 14,464 S/ 830

S/ 14,296

99.99%

6

S/ 15,221 S/ 925

DIVISO Fondo closed the year 2018 with a profit in S/ 662.000 Annual evolution of ROE

Year ROE

2014 10.83%

2015 6.46%

2016 12.15%

2017 5.21%

2018 4.83%

Annual Report 2018

DIVISO Bolsa SAB S.A. is a stock exchange company authorized by the SMV to perform securities brokerage duties. The company was incorporated on January 28, 2009, and its operation was authorized through CONASEV Resolution No. 021-2010-EF/94.01.1 dated February 9, 2010, which also arranged its registration in the Public Registry of Securities Market. On November 20, 2012, by Resolution of the General Intendancy of Supervision of Entities No. 148-2012-SMV/10.2, the stockbroker was authorized to provide portfolio management services. DIVISO Bolsa SAB S.A. has platforms to conduct negotiations in the local and foreign market. It also offers its clients investment opportunities through equity instruments, fixed income, reporting operations, options and ETF. It also offers Wealth Management services, as well as Corporate Finance services for companies. As of December 31, 2018, it ranked 15th in the Variable Income Ranking, ranked 5th in the Debt Instruments Operations Ranking and 7th in the Report Operations ranking, having a market share of 3.62%. . In 2018, the stock exchange company had the following turnover:

Operations Turnover

(millions of S/)

Variable income 61

Debt 1,220

Reporting operations and others 180

Total 1,461

In addition to consolidating the operational and business structure, DIVISO Bolsa SAB S.A. has had an active shareholding in the Alternative Securities Market (MAV). It managed to place a total amount of S/. 1.5 million during 2018, according to the details below:

Public Issues through the Alternative Securities Market (MAV for its Spanish acronym)

Issuing entity Value Structured Amount

(Millions) Total Amount Issued

(Millions)

BPO CONSULTING S.A.C. Short-Term Instrument $ 1.00 S/. 1.50

Also, during the 2018 DIVISO Bolsa SAB S.A. has structured and issued Short-Term Instruments and Corporate Bonds through Private Offer. In this sense, a total of 10 firms were served for an amount of S/ 221.08 million. Regarding operations with unrelated firms, 5 firms were served with issues of US $ 9.12 million and S/ 37.25 million. The potential clients for 2018 are positive and it is expected to specify the broadening of the shareholding in the negotiation with a greater number of institutional clients, new structuring and emissions, as well as the distribution of more products, given its role as the commercial division.

Annual Report 2018

Main Indicators

2016 2017 2018

Net worth as of December 31 (in thousands) Share of DIVISO G. Financiero Assets in custody (in millions) Main figures (as of December 31): - Total Assets (in thousands) - Total liabilities (in thousands)

S/ 16,415

99.99%

US$ 447

S/ 18,285 S/ 1,870

S/ 16,586

99.99%

US$ 514

S/17,218 S/633

S/ 15,876

99.99%

US$ 497

S/16,476

S/600

DIVISO Bolsa closed the year 2018 with a profit of - S/ 587 thousand. Annual evolution of ROE

Year ROE

2013 -5.61%

2014 4.35%

2015 6.39%

2016 0.17%

2017 7.01%

2018 -3.70%

Annual Report 2018

NCF SERVICIOS COMPARTIDOS S.A.

NCF Shared Services S.A. was incorporated on June 12, 2014, as part of the corporate organization process, through which a patrimonial block of NCF Consultores S.A. was segregated in favor of this company. At the General Shareholders' Meeting on November 30, 2014, Diviso Grupo Financiero S.A. approved a capital contribution in cash for S/ 371,500. On September 1, 2015, as a result of the merger by absorption of a capital block of CRAC Credinka, the Company issued 2,095,108 common shares in favor of the shareholders of CRAC Credinka with a nominal value of one sol each fully subscribed and paid. As of December 31, 2018, it was approved to make a capital contribution for S/. 17,398,520.89. The main activity is to provide advisory and consulting services on tax, legal, administrative, accounting, valuation, commercial, collections, market matters, sales projections and business development services and others related to commercial activity. , industrial, financial and stock market. Currently, it provides services to firms that are part of DIVISO Grupo Financiero.

Main Indicators

2017 2018

Net worth as of December 31 (in thousands) Share of DIVISO G. Financiero Main figures (as of December 31): - Total assets (in thousands) - Total liabilities (in thousands)

S/ 1,715

99.30%

S/ 2,358 S/ 643

S/ 15,274

99.93%

S/ 15,832 S/ 558

Annual Report 2018

Corporate Development 2018 DIVISO celebrated 15 years of institutional life, and renewed its 2018-2020 Strategic Plan to strengthen us to welcome the Bicentennial. The top corporate milestones that defined these first 15 years of history include:

2007: Our listing on the Lima Stock Exchange.

2008: SBS for the takeover of Credinka in 2008 and DIVISO Fondos start of operations.

2010: The start of operations of DIVISO Bolsa.

2013: The investment fund Danish Microfinance Partners K/S - DMP, managed by Maj Invest Holding, acquires 10% of Credinka.

2014: DIVISO acquires 73.82% of the shares of Financiera Nueva Visión S.A. and the investment fund Accion Gateway Fund LLC, acquires 10% of Credinka.

2015: DIVISO completes the acquisition of shares in Edpyme Alternativa S.A. achieving 25% of its share capital; the same year Credinka and Nueva Visión merge, resulting in Financiera Credinka.

2016: DIVISO acquires 83.52% of Cajamarca Caja that merges with Financiera Credinka after authorization from the SBS, year when the investment fund Maj Invest Financial Inclusion Fund II K/S extends its shareholding in the shareholding of DIVISO reaching 18.5%.

2017: Financiera Credinka made its first public debt issuance. Credit Investment Funds (FIA), managed by Diviso Fondos, managed to achieve a joint managed equity of about S/. 70 million and Diviso Bolsa positioned itself as an active player in the Alternative Securities Market - MAV.

Finally, in 2018, Financiera Credinka made its second public debt issuance with a demand of 1.7 times and under better term and rate conditions than the first issuance made in September 2019. On the other hand, Diviso Fondos reached S/. 50 million managed in Mutual Funds, thanks to the synergy generated by the joint work with the commercial teams of Diviso Bolsa and Credinka. Likewise, in its line of investment funds, the sale of lots of land for a total value of US$ 2.6 million, belonging to the real estate investment fund, was completed: "Ciudad Castellana I Satellite Development", located in Piura.

Lines of action 2018 2018 is highlighted by the strengthening of activities in certain lines implemented in previous years: brand positioning, new technology implementation, corporate governance and social responsibility. Implementing the Prevention Model deserves special attention within our governance. On the other hand, lines such as internal communication and product development were developed in a more structured manner. Details on the unfolding of each one are as follows:

Development of products and channels Product Development was implemented at Credinka. This has developed and strengthened new products, services and channels such as:

Credit campaigns via call center: telemarketing management for pre-approved credit campaign was outsourced to Grupo Especializado de Asistencia.

FUVEX: Free availability consumption credit generated by outsourced sales team managed with a mobile device.

Annual Report 2018

SOAT Digital: Seguros Crecer distributors.

Sells More: Visanet Peru distributors for the sale of a POS targeting independent and microentrepreneurs so they can sell to card-paying customers. The amount is credited to Credinka. The client only needs an ID and bluetooth connection via cellphone.

Assistance Services (Entrepreneur and Medical): In partnership with the Specialized Assistance Group of Peru and Valle del Recuerdo, medical, nutritional, psychological, safe, academic and legal services are provided.

Kasnet Agents: Via the collection agreement with Globakas, Credinka customers can pay their credit instalments at over 6,000 KASNET branches nationwide.

Facebook Factory: Seasonal placement campaigns were made capturing potential clients via Facebook.

Positioning the Brand The brand concepts implemented in 2016: "Altas Finanzas para Todos High Finances for All) in the case of DIVISO and "Puedes más in the case of Credinka, were strengthened with: Report 15 años construyendo Altas Finanzas para Todos (15 years building High Finances for All) A special report was published digital version and a video in Spanish and English. These elements were distributed to our stakeholders physically and virtually. Investors Delegation In April, we were visited by the representatives and investors of Maj Invest, the management firm of DMP and MIFI, investment funds that are shareholders of Credinka and Diviso, respectively. The Maj Invest officers included Mr. Henrik Parkhøi, Managing Director and Kasper Svarrer, Managing Partner; as well as David Paradiso and Víctor Pinto, who are also our directors. The delegation was accompanied by 6 investment funds representatives and family offices investors. Mr. Luis Baba - Board Chairman, Fernando Romero - Managing Director and the General Managers of our subsidiaries also made an institutional presentation. Each visitor received a "Peru - Denmark" t-shirt, for the Peru-Denmark world cup soccer match. In addition, these t-shirts were distributed to staff who won a Maj Invest trivia "Rivals on the field, united in High Finances". In the following days, the delegation made a field visit to two of Credinka Cusco. Conferences for clients, potential clients and interest groups In August, we organized the traditional PERU Breakfast Conference, in the city of Lima and for the seventh consecutive year: Economic Perspectives 2018-2019. Mr. Hugo Santa María from Apoyo Consultoría was in charge of the main conference, and there was also a conference on Investment Opportunities. As in previous years, we had many more attendants than expected, and we received positive comments from our clients and stakeholders. Furthermore, for our main Cusco and Arequipa clients, the "Economic Perspectives 2018" conference was held by Mr. Luis Baba, DIVISO Board Chairman. This included a lunch event in August in Cusco and a dinner in October in Arequipa. In both cases, there was a conference on our investment products and services.

Annual Report 2018

Digital marketing The blog www.finanzasparatodos.pe was implemented. It has short articles written in non-technical language about financing and investment solutions. Its goal is to educate about the Diviso products and services. On the other hand, the website allows visitors to leave their contact info as potential clients. This is enhanced by Internet and network ads. Activities with institutional and high equity clients and potential clients The team of investment specialist managers of the Diviso firms jointly conducted visits to introduce our comprehensive product and service portfolio to about 20 Peruvian institutions, including: pension administrators, fund managers, banks, insurance companies, government organizations, savings and credit funds, cooperatives, universities and other specialized institutions such as CAVALI, FONAFE and the Deposit Insurance Fund. Besides, Credinka's senior management team visited about 30 institutions to introduce the characteristics of their certificates of deposit issues. On the other hand, commercial team held a lunch for high equity clients and potential clients in the city of Cajamarca to offer comprehensive Diviso product portfolio. Likewise, an adhoc training was held for Cooperativa San Pio X on capital markets. This reinforced trust and the long-term commercial relationship. Participation in relevant events in the financial and capital markets

Board Chairman and the General Manager represented us in FOROMIC 2018 in Barranquilla, Colombia. The Inter-American Forum of Microenterprises - Foromic, organized by the MIF and the IDB, is the main regional event on microfinance and financial inclusion. This event focused on innovation driven by digital transformation. On the other hand, for the first time DIVISO firms participated in the 29th ENTREPRENEURIAL Meeting of the North, an event organized by the Chamber of Commerce of La Libertad and CONFIEP. It was held in the city of Trujillo on October 18 and 19. There was an excellent attendance rate and publicity by the local media.

Strengthening Organizational Culture Internal communication has been reinforced with the following elements:

Bulletin Compartiendo: The layout and contents were updated in order to encourage reading.

"Compartiendo" e-mail for internal communications: The format was standardized and sent back to the Credinka staff via its own e-mail channel for dissemination to staff.

Dissemination of messages promoting Our Sustainability: It sends messages about productivity (optimal use of cell phones and social networks), coexistence (dress code, office and bathroom cleaning), risk management (information security) and gender empowerment for women.

Corporate induction talks: Done once a month for all the new Diviso staff. Credinka has its own program.

Annual Report 2018

Given Credinka , its Talent Management division has also implemented the following activities:

Decentralized meetings: The General Management disseminates the quarterly results report to the staff.

Breakfasts with General Management: In order to gather ideas and queries from the staff.

E-mail comuní[email protected]: Internal communication channel for staff to share ideas and queries.

"Nuestra Gente" Newsletter: Bimonthly newsletter with relevant information for the staff.

Decentralized boards: Sessions in a region other than Lima.

Fellowship dinner with branch managers: For the agency leaders with Directors, General Management and Business Management.

Implementation of the Comprehensive System for Branch Management: Web portal via the Google Sites platform for a better information flow among Management and branch staff.

Furthermore, relevant recognition activities this year include:

Credinka Pumas 2017: In February, 10 Business Officers were awarded a trip to Santa Marta, Colombia, to represent us in the First Meeting of Credit Advisors of the Action Network.

Halcones 2018 by Credinka: In September, the best performing branch managers were awarded a trip to Punta Cana to represent Credinka in the 1st Meeting of Branch Leaders organized by the Red Acción.

Campanazo DIVISO: To recognize team achievements, short ceremonies are held where staff are called by ringing a bell and inviting them to meet in the hall on the 19th floor. This year the achievement of the NCF Shared Services team was recognized as they delivered the Audited Financial Statements in advance. In the same manner, the Diviso Fondos team was congratulated for the sale of lots of one of its real estate funds.

Recognition for Innovators 2017: Every year employees are recognized for investing time to develop innovations. This year the following teams were congratulated:

o Product or Service: Vende Más (Sell More) - Wireless POS and Call Center

Campaigns. o Process, tool or strategy: Digital Portfolio and SIGA.

Finally, there were activities to strengthen team comradeship:

The fan challenge: In the context of the soccer world cup, we joined the business movement to support the Peruvian team, making a video of the staff encouraging our team both headquarters in Lima and in the various branches nationwide. This video was uploaded in our social networks: #RetoDelHincha

Peru-Denmark t-shirt contest: For the Peru-Denmark soccer world cup match, there was a match "Rivals on the field, together at the Altas Finanzas". The prizes were 5 special design "Peru-Denmark" t-shirts for employees who answered correctly 4 questions about the group and Maj Invest.

The Values Race: In December, 55 employees of the various firms in the group participated in the Values Race organized by El Dorado Investment.

Annual Report 2018

Incorporating new technologies Start of new core implementation in Financiera Credinka - TOPAZ In 2018, the areas have been working on the implementation to be completed in April 2019. This Financial Core will allow achieving greater efficiency by reducing costs and preparing for Credinka's digital transformation. Digital portfolio Geo-referencing in Financiera Credinka Commercial management mobile tool that allows the Commercial Analyst and the Collection Manager to access client portfolio, manage campaigns, find potential clients with geolocation, manage work routes and monitor goals. CORE Everest Diviso Fondos The platform was designed for Mutual Fund Promoters to have decentralized information in real time about their participants, and improve client management.

Strengthening Corporate Governance During 2018, DIVISO continued to implement measures to strengthen its governance: In terms of regulations on Comprehensive Risk Management for the firms Diviso Bolsa and Diviso Fondos, new manuals were prepared on Operational, Market and Liquidity, and Credit Risk. Likewise, modifications were made to the Limit in the Investment Policy - Portfolio and Access and Information Security Policy, according to employee profiles. We should mention the implementation of the Prevention Model approved by the Board this year and on which progress has been made in training and model development. Along the same line, the Ethics form was incorporated into the web this year, across the Diviso Grupo Financiero, Diviso Bolsa and Diviso Fondos, as a reporting channel additional to email and with the option to send it anonymously and on time. On the other hand, it is important to mention that this year the Methodological Guide was approved for the preparation, implementation, control and monitoring of Strategic Planning. This institutionalizes the good practice of strategic planning review conducted every year. In 2018, it was carried out at the end of April and the end of August. Likewise, our Strategic Planning was renewed for the 2018-2020 period. Finally, within the framework of good practices, an external board evaluation was conducted by EY. This assessment will contribute to the ongoing improvement of the work of the Board and its Members.

Deployment of Corporate Social Responsibility Our main lines of action developed this year include:

Financial Education Financial Education in Rural Areas: Our rural facilitator team provides training to community women with limited access to financial services. They are trained on how to manage their money and the importance of savings. The materials have been reinforced with the methodology of the German Foundation. The training also prepares them to understand

Annual Report 2018

and obtain products such as Crediwarmi or Rural MicroSavings, which include free life insurance for women saving 50 soles and more. Credit with training: In agreement with the American firm Elevate Business, we provide our clients with loans of over S/ 5 thousand, and six months of training in business management (sales control, inventories, balance sheets, among others). This way, they can improve their business income level and have a better credit history increasing its indebtedness and growth capacity. Blog www.finanzasparatodos.pe: Provides information about financing and investment products and services to the general public. In addition to the commercial purpose, the website fulfils an education mission for users unaware of the benefits of the capital and financial market.

Support to the community Kusimayo - Campaña Casa caliente limpia (Clean and warm house Campaign) We supported NGO Kusimayo in its fundraising campaign to adapt 120 community houses in Puno with a solar system that raises its temperature by 10°C and reduces toxic gases in their kitchens. We managed to raise S/ 9 thousand for 2 houses thanks to a S/ 3,757 donation from the staff and S/ 5,243 from DIVISO.

Environmental Responsibility We continue with our permanent campaign among the staff on the rational use of energy and water. This is how we want to promote the saving of resources contributing to protect the environment. This campaign is reinforced by messages via internal email and Our Sustainability section in the Bulletin Compartiendo.

Empowerment for Women A total of 549 women work across the Group, representing 47% of the total staff.

Company Total staff Women (staff)

%

Credinka 1126 535 48%

Diviso Bolsa 20 7 35%

Diviso Fondos 14 7 50%

Total 1160 549 47%

Likewise, throughout the year we have sent messages regarding the subject of gender equality through the corporate newsletter, the internal communication email and the mural of the main office.

Annual Report 2018

Development of the financial and capital markets In order to help develop the markets where our firms operate, they are part of:

Institution Company

Asociación para la Promoción de la Inversión Responsable y Sostenible (Association for the Promotion of Responsible and Sustainable Investment)- PIR

Diviso Grupo Financiero

Procapitales

Diviso Bolsa

Cámara de Comercio de Lima (Lima Chamber of Commerce)- CCL

Diviso Fondos

ASOMIF - Asociación de Instituciones de Microfinanzas del Perú (Association of Microfinance Institutions of Peru)

Credinka

ASAB Perú - Asociación de Sociedades Agentes de Bolsa del Perú (Association of Brokerage Companies of Peru)

Diviso Bolsa

AAFM Asociación de Administradoras de Fondos Mutuos del Perú (Association of Mutual Fund Administrators of Peru)

Diviso Fondos

Annual Report 2018

SECTION III - Management Analysis and Discussion of the Result of Operations and the Economic and Financial Situation according to Individual Financial Information Audited as of 12.31.2018 Operational Results Investment Portfolio Analysis: main variations of the Financial Statements Information on the

Annual Report 2018

Operational Results This section and all data on financial information have been obtained from individual financial information as of December 31, 2017, of DIVISO Grupo Financiero S.A. Analysis of the Statement of Financial Position Asset As of December 31, 2018, Total Assets were S/ 431.6 million, higher by S/ 2.2 million compared to the end of 2017. Specifically, we see the following: Total Current Assets as of December 31, 2018, amounted to S/. 104.0 million, higher by S/ 50.4 million compared to the end of 2017. This is mainly due to an increase in the category of Fair Value Investments. As of December 31, 2018, total Non-current Assets were S/ 327.6 million, lower by S/. 48.2 million compared to the end of 2017 and due to the total reduction of the category of Investments available for sale. Liability At the end of December 31, 2018, Total Current Liabilities were S/ 51.5 million, higher by S/ 12.9 million compared to December 31, 2017, due to the increase in the Financial Obligations (S/ 15.3 million) and a decrease in accounts payable to third parties (-S/ 2.3 million). On the other hand, at the end of December 2018, Total Non-current Liabilities were S/ 21.3 million, higher by S/ 15.5 million compared to that observed as of December 31, 2017, due to the new issuances of outstanding long-term debt (+ S/ 15.5 million) in order to improve the structure of liabilities (both in instalments and in lower financial costs). Equity Total equity was S/ 358.8 million at the end of 2018, lower by S/ 26.2 million compared to the end of 2017, explained mainly by a decrease in Unrealized Results (-S/ 42.2 million), in contrast to the increase in Accumulated Results (S/ 15 million). When applying IFRS 9 as of fiscal year 2018, the effect of investments available for sale was reclassified from the Unrealized Results account to the Accumulated Results account (for the balances at the end of 2017 and beginning of 2018) and Results of the Fiscal Year. Analysis of the Results of the Fiscal Year Gross profit As of December 31, 2018, gross profit was - S/ 1.8 million, lower in S/ 1.9 million compared to that obtained in the same period of 2017. The results were of an ordinary nature. Operating Profit At the closing of the fourth quarter of the year, an Operating Loss of S/ 9.4 million was reached, lower by S/. 7.3 million compared to the same period of the previous year. These results are explained by the loss in Financial Assets at Fair Value (- S/ 3.6 million) and lower collection of Dividends (-S/ 2.3 million).

Annual Report 2018

Administrative and Sales Expenses Administrative and Sales Expenses amounted to S/ 4.2 million in the analysis period and less in S/ 645 thousand as compared to the closing of 2017. Results before Shareholding and Taxes Financial income was S/ 764 thousand, lower by S/ 1.2 million compared to the same period of 2017, due to lower Cash balances throughout the year. Financial Expenses amounted to S/. 4.5 million, lower in S/. 1.2 million compared to that made in the same period of 2017, explained by the cancellation of financial obligations throughout 2017. The depreciation of the Nuevo Sol against the US Dollar during the fourth quarter of 2018 led to a positive effect of the Exchange Difference at the end of the year in S/ 1.7 million (more assets than financial liabilities in foreign currency), compared to + S/ 406 thousand in 2017. Results of the Fiscal Year At the closing of 2018, there was an after-tax loss of S/ 10.2 million, higher by S/ 7.2 million as compared to the end of 2017.

Annual Report 2018

Investment Portfolio As of December 31, 2018, the Company's Investment Portfolio had the following assets:

As of 12.31.2018 As of 12.31.2017

S/.

(thousands) %

S/.

(thousands) %

Negotiable values

Financial investments in

subsidiaries and associates:

Financiera CREDINKA S.A.

DIVISO Fondos SAF S.A.

DIVISO Bolsa SAB S.A.

NCF Servicios Compartidos

S.A.

Bolsa de Productos de Chile

EDPYME Alternativa

Investments in investment funds

34,044

263,237

16,743

16,636

15,263

1,465

13,462

54,149

11.0%

61.5%

6.3%

4.8%

0.4%

0.4%

1.4%

14.2%

46,547

259,616

26,683

20,422

1,703

1,574

5,971

59,781

11.0%

61.5%

6.3%

4.8%

0.4%

0.4%

1.4%

14.2%

Total investment assets 414,999 422,297

Source: Audited Financial Statements at the end of 2018

Annual Report 2018

Analysis of the Main variations of the Statements of Financial Situation

Current Asset Current assets in thousands went from S/ 53,583 at the end of 2017 to S/ 104,008 at the end of 2018. This reflects a growth of 94.1%. The 89.5% variation in the Investments account at fair value with changes in results stands out in this increase. Fixed Asset This account decreased by 12.8% compared to the end of 2017, mainly due to the reduction of the account Investments available for sale (-100%), in contrast to the increase in the account Investments in subsidiaries and associates (3.4%). Despite having experienced a slight increase, its impact is greater due to its importance in the total of non-current assets.

Financial Obligations As of December 31, 2018, the components of the financial obligations correspond to private

issues of Short-Term Instruments (ICP), Corporate Bonds and financial loans.

ICP52%

Corporate Bonds 24%

Financial loans 24%

DEBT STRUCTURE

Source: EEFF Individuales DIVISO Grupo Financiero as of December 31, 2018.

Annual Report 2018

The current ICP issues until December 31, 2018, expire between January and November 2019, at annual interest rates of 5.00% to 7.25%. In the first quarter of 2015, the First Corporate Bond Issuance Program of Diviso Grupo Financiero was approved for up to a maximum amount of S/ 80.0 million or its equivalent in foreign currency, through a private offer. As of December 31, 2018, seven issuances have been made within the framework of said program. Accounts payable to related parties Accounts payable to related parties at the end of 2017 were S/. 5.0 thousand. As of December 31, 2018, these accounts are S/. 55.0 thousand, representing 0.08% of the total current liabilities. Equity Share capital The Company's capital stock amounts to S/ 181,807 thousand which is represented by 454,516,911 common shares with a par value of S/ 0.40 each. Indirect Property Shares As of December 31, 2018, the Company has no shares of its own issuance. Other capital reserves The Peruvian Corporations Law requires establishing a legal reserve comprising not less than 10% of the annual net profit until it reaches the limit of 20% of the paid share capital. As of December 31, 2018, the Company`s Legal Reserve amounts to S/ 31,917 thousand. Unrealized results As of December 31, 2018, the unrealized results have decreased by 28.1% compared to the end of 2017. At the end of the fourth quarter of 2018, this account amounts to S/. 108,010 thousand.

PEN81%

USD19%

DEBT STRUCTURE

Source: EEFF Individuales DIVISO Grupo Financiero as of December 31, 2018.

Annual Report 2018

Accumulated results As of December 31, 2018, the accumulated results were S/ 8,260 thousand, a figure lower than that registered at the end of 2017, which amounted to S/ 7,725 thousand. Sale of negotiable securities and investments in subsidiaries The sale of negotiable securities and investments in subsidiaries in 2018 recorded S/ 23,374 thousand, while in 2017 it totalled S/ 47,020 thousand. Selling and administrative expenses Administrative expenses accumulated at the closing of the fourth quarter of 2018 amounted to S/ 4,212 comprised the following items:

Concept 2018

(thousands of S/.)

Personnel expenses 1,996

Services provided by third parties 1,501

Taxes 322

Miscellaneous management fees Depreciation and amortization

348 45

Total 4,212

Results of the Fiscal Year At the end of the fourth quarter of 2018, DIVISO Grupo Financiero S.A. accumulates a negative net result of S/. 10,195 thousand while in the fourth quarter of fiscal year 2017 there was a negative net result of S/ 2,946 thousand. Cash dividends received for investments held at the end of the fourth quarter of 2018 reached S/ 1,441 thousand (as of Q4 2017, they amounted to S/. 3,754 thousand). During 2017, the main source of income was the sale of negotiable securities for S/ 23.4 million. On the other hand, the net changes in the fair value of financial assets at fair value through profit or loss have a cumulative negative fluctuation of S/. 4,754 thousand at the end of the fourth quarter of 2018. However, in Q4 of 2017, there is a cumulative negative fluctuation of S/. 1,137 thousand.

Annual Report 2018

DIVISO GRUPO FINANCIERO S.A.

ANALYSIS OF INDIVIDUAL FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL SITUATION As of 12.31.2018 As of 12.31.2017 Variation

S/. (thousands)

% S/. (thousands) % %

Cash and cash equivalents 9,881 2.27% 2,309 0.5% 327.9%

Investments at fair value with

change in results 88,193

20.25%

46,547

10.8%

89.5%

Trade accounts receivable -

-

28

0.0%

-100%

Other accounts receivable 5,278 1.21% 3,695 0.9% 42.8%

Accounts receivable from related parties 2 0.00% 2 0.0% 0.0%

Taxes and expenses paid in advance 654 0.15% 1,002 0.2% -34.7%

Total current assets 104,008 23.88% 53,583 12.5% 94.1%

Investments available for sale - - 59,781 13.9% -100.00%

Investments in subsidiaries and associates

326,806 75.72% 315,969 73.6% 3.4%

Furniture and equipment, net 771 0.18% 5 0.0% 15,320.0%

Intangible assets, net 34 0.01% 35 0.0% -2.9%

Total fixed assets 327,611 75.90% 375,790 87.5% -12.8%

TOTAL ASSET 431,619 100.00% 429,373 100.00% 0.5%

Financial obligations 50,906 69.94% 35,638 8.3% 42.8%

Trade accounts payable 364 0.50% 2,652 0.6% -86.3%

Accounts payable to related parties 55 0.08% 5 0.0% 1000.0%

Other accounts payable 177 0.24% 288 0.1% -38.5%

Total current liabilities 51,502 70.76% 38,583 9.0% 33.5%

Financial obligations 15,484 21.27% 0 0.0% 100.0%

Deferred tax liability for income, net 5,798 7.97% 5,792 1.3% 0.1%

Total fixed liabilities 21,282 29.24% 5,792 1.3% 267.4%

TOTAL LIABILITY 72,784 100.00% 44,375 100.00% 64.0%

STATEMENT OF FINANCIAL SITUATION As of 12.31.2018 As of 12.31.2017 Variation

S/. (thousands)

% S/.

(thousands) %

S/. (thousands)

Annual Report 2018

Share capital 181,807 41.74% 181,807 42.3% 0.0%

Issuance premium 28,841 6.62% 28,841 6.7% 0.0%

Legal Reserve 31,917 7.33% 31,917 7.4% 0.0%

Unrealized results 108,010 24.79% 150,158 35.0% -28.1%

Accumulated results 8,260 1.90% -7,725 1.8% -206.9%

TOTAL EQUITY 358,835 83.14% 384,998 89.7% -6.8%

TOTAL LIABILITY AND EQUITY 431,619 100.00% 429,373 100.00% 0.5%

COMPREHENSIVE RESULTS As of 12.31.2018 As of 12.31.2017 Variation

S/. (thousands)

% S/.

(thousands) % %

Income from the sale of negotiable securities 23,374 100.0% 47,020 100.0% -50.3%

Cost of sale of Negotiable Securities -25,227 -107.9% -46,884 99.7% -46.2%

(LOSS) GROSS PROFIT -1,853 -7.9% 136 0.3% -1,462.5%

Dividends received 1,441 6.2% 3,754 8.0% -61.6%

Gains/losses due changes in the fair value of Negotiable Securities -4,754 -20.3% -1,137 -2.4% 318.1%

Management expenses -4,210 -18.0% -4,844 -10.3% -13.1%

Selling expenses -2 -0.0% -13 0.0% -84.6%

OPERATING PROFIT -9,378 -40.1% -2,104 -4.5% 345.7%

Financial income 764 3.3% 1,923 4.1% -60.3%

Financial expenses -4,538 -19.4% -5,367 -11.4% -15.4%

other income and expenses 33 0.1% 1 0.0% 3200.0%

Exchange difference, net 1,669 7.1% 406 0.9% 311.1%

PROFIT BEFORE TAX -11,450 -49.0% -5,141 -10.93% 122.7%

Profit tax 1,255 5.4% 2,195 4.67% -42.8%

INCOME OF THE YEAR -10,195 -43.6% -2,946 -6.3% 246.1%

Annual Report 2018

Information about the Stock indicators According to information provided by the BVL, the DIVIC1 shares have not registered any transactions through the Stock Exchange during 2018.

annual report 2018 - diviso grupo financiero · page 8 annual report 2018 general data name diviso...

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