(BVC:NUTRESA) HOLD / COP 28,590 per share September 29, 2014

COVERAGE

GRUPO NUTRESA vs. COLCAP

Source: BloombergSerfinco

Financial information and multiples

Rafael Espaa Amador Consumer Services Analyst

re@serfinco.com.co (571) 6514646 Ext. 4228

Jose F. Restrepo, CFA

Equity Strategist jr@serfinco.com.co

(574) 3106510

Source: Bloomberg and Serfinco S.A.

GRUPO NUTRESA Consumer Goods / Holdings Food & Beverage

SURFING THE DEMOGRAPHIC WAVE

We are initiating Grupo Nutresa with a HOLD rating and a 2015YE target price of COP 28,590 per share equivalent to a 2.1% upside and a 4.2% total return. We can assure that Grupo Nutresa is a low risk company at the top line level and it has enough room for achieving both revenue and cost synergies arising from the Tresmontes-Lucchheti acquisition. However, its share price has already incorporated the positive scenarios of both demographic and consumption tendencies in the Pacific Alliance region and also the fact that Nutresas target consumers are relatively predictable and stable, so we believe that the stock is fully valued.

The company poses low top-line risks and its long run sales goal (called MEGA) will not require taking aggressive bets. 87% of Grupo Nutresas consolidated sales arise from investment-grade-rated countries and are generated in a market friendly region: the Pacific Alliance bloc trade and the United States. Considering only the Pacific Alliance, Grupo Nutresa will benefit from a 212 million population economy that enjoys the wining combination of low inflation and strong growth, making it one of the most stable markets in Latin America with an attractive opportunity for processed food industry due to its low per capita consumption of ready-made food.

Moreover, the fact that Grupo Nutresa does not need an aggressive business model for achieving its long run sales target supports our conclusion that the companys business risk is not high. For us, there will be room for free cash flow to be distributed to stockholders as we do not expect a strong need of either reinvestments in its own assets or acquisitions.

However, we see Grupo Nutresas stock as fully valued. Not only our price target found via a free cash flow to the firm valuation does not compel us to rate the stock as a buy as it points to a run-of-the-mill 4.2% total return upside, but in a relative basis Grupo Nutresa is trading at a rich 11.4x EV/ LTM EBITDA vs. the 10.4x at which the typical peer is trading (after adjusting for the US$2.2 billion investment portfolio). However, we understand that a trailing multiple may not incorporate the upside that synergies arising from the TresMontes Lucchetti acquisition (2013) may represent, so we can not say that the stock is expensive in anyway.

So we prefer to be cautious in our recommendation as catalysts for share price swings are also balanced towards the negative side. Short term risks such as (1) foreign exchange devaluation risks coming from Venezuela, (2) more news about taxes on high-calorie-value items in the Pacific Alliance countries (other than Mexico), and (3) a persistent negative momentum in earnings-per-share and its respective negative analyst revisions (ex Serfinco), refrain us for being bullish on Grupo Nutresas stock.

In addition, we tend to believe that unexpected adjustments when IFRS be adopted (2015) may concern the investment community if not handled carefully by the management teams of Colombian based companies. So we prefer to be cautious in our recommendation taking into account the current divergence in Grupo Nutresas accounting accruals vs. cash flows, even after excluding effects arising from the valuation of its investment portfolio.

An investor buying Grupo Nutresas shares will gain exposure to the Pacific Alliance consumers and its economies via a low-risk investment vehicle, however we urge for cautiousness as the stock is not trading at bargain prices.

Source: Serfinco S.A.

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COLCAP NUTRESA

2013 2014 E 2015 E 2016 E

Adj. Food's ROaE 8.5% 5.0% 6.3% 6.5%

Adj. Food's ROaA 6.2% 3.5% 4.4% 4.4%

Adj. Food's ROIC 11.1% 7.9% 8.3% 8.0%

EV / EBITDA 10.2x 9.8x 8.2x 8.1x

EV/ FCFF -12.2x 33.9x 17.9x 19.1x

P / Tangible BV 1.9x 2.4x 2.0x 1.8x

Yield 1.5% 1.5% 1.6% 1.7%

* All indicators are adjusted to exclude both Goodwill and the Invest-ment-Portfolio's effects

Ticker (BVC) NUTRESA

Closing Price 28,000

Expected Price Return 2.1%

Expected Total Return 4.2%

Outstanding shares (MM) 460

Adj. Beta vs Colcap 1.02

Free Float ex. pension funds 44%

Colcap Weight (Aug-Oct) 6.8%

Market Cap (US$ MM) 6,522

52wk Avg Daily T Value (US$ MM) 2.15

52 wk range [23,400 - 28,800]

2

Investment Positives

The Pacific Alliance trade bloc and the USA represent 87% of consolidated sales

Favorable demographics and Consumption Tendencies: More Food Being Consumed Ready-Made in Latin America

There is no need of risky strategies for achieving long terms sales target

TMLC offers a more favorable capital structure (more debt) that lead to a Return On average Equity (ROaE) improvements

Stable Cash from Investment Activities (dividends received)

Table 1. Income Statement Table 2. Balance Sheet

Investment Negatives

Commodities volatility may affect financial statements

Exposition to Venezuelas economy may continue hurting financial statements via foreign exchange translation

Increasing obesity rates in Latin America may lead to regulatory risks

High level of accruals in the balance sheet points to low persistence in the financial statements

The Investment Portfolio makes Grupo Nutresa look more like a conglomerate instead of a pure play food company

Source: Serfinco Estimates

Figure 1. Profitability Indicators Figure 2. Free Cash Flow to the Firm Breakdown

Figure 3. Solvency and Liquidity Table 3. Valuation Ratios

Source: Grupo Nutresa and Serfinco Estimates Source: Grupo Nutresa and Serfinco Estimates

Source: Grupo Nutresa and Serfinco Estimates

Source: Grupo Nutresa and Serfinco Estimates Source: Grupo Nutresa and Serfinco Estimates

COP billion 2012 2013 2014E 2015E 2016E

Sales 5,306 5,898 6,600 7,154 7,770

Cost of Goods -3,064 -3,261 -3,749 -4,026 -4,409

Gross profit 2,241 2,637 2,851 3,128 3,360

Administrative expenses -270 -348 -427 -444 -475

Sales expenses -1,327 -1,505 -1,697 -1,842 -2,005

Production expenses -123 -135 -131 -139 -147

Operating income 521 650 595 703 733

EBITDA 671 833 854 968 1,017

Non operating income, net -35 -95 -158 -161 -163

Taxes -138 -174 -140 -176 -185

Earnings before minority int 348 381 298 366 385

Minority Interest -2 0 0 -1 -1 Net Income 346 380 297 365 384

Operating margin 9.8% 11.0% 9.0% 9.8% 9.4%

EBITDA margin 12.6% 14.1% 12.9% 13.5% 13.1%

Non-Operating Burden 93.3% 85.4% 73.5% 77.0% 77.8%

Tax Burden 71.5% 68.6% 68.1% 67.6% 67.6% Net Margin 6.51% 6.45% 4.50% 5.11% 4.95%

COP billion 2012E 2013E 2014E 2015E 2016E

Cash 225 302 277 281 283

Receivables 658 830 814 863 916

Inventories 556 725 736 791 866

Permanent investments 330 358 399 417 436

PPE, net 1,136 1,456 1,533 1,519 1,513

Intagibles 1,025 2,038 2,056 2,059 2,062

Other Assets 5,022 4,871 5,881 6,447 7,015

Total Assets 8,952 10,580 11,696 12,377 13,092

Financial debt 690 1,997 2,008 2,088 2,165

Suppliers 171 299 285 306 335

Payables 259 340 353 368 391

Other liabilities 406 515 516 549 586

Total liabilities 1,526 3,150 3,162 3,311 3,477

Minority interest 16 19 16 17 18

Total Equity 7,409 7,411 8,518 9,049 9,596

Financial Leverage 1.21x 1.31x 1.40x 1.37x 1.36x

Asset Turnover ex. Goodwill & Portfolio

1.22x 1.20x 1.19x 1.23x 1.28x

ROaE 4.97% 5.12% 3.72% 4.15% 4.12% Adj. ROaE ex Goodwill & Portfolio 8.84% 8.45% 5.03% 6.34% 6.48%

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EBITDA MarginEBIT marginFood Business' ROaE ex Goodwill (right axis)

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Net Financial Debt (left axis)Net financial Debt / EBITDAInterest coverage ratio

CO

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2012 2013 2014E 2015E 2016E EPS 751 826 646 794 835

Book Value per share 16,102 16,106 18,512 19,666 20,856

Tangible Book Value per share 12,115 13,873 11,676 14,044 15,191

DPS (paid) 351 387 423 448 476

Payout Ratio 65.3% 52.7% 52.3% 70.3% 60.8%

Yield (last price) 1.4% 1.5% 1.5% 1.6% 1.7%

# shares (million) 460 460 460 460 460

Last Price 25,420 26,440 28,000

Target Price 28,590 31,820

Adj. Food's ROaE (ex Goodwill) 8.8% 8.5% 5.0% 6.3% 6.5%

Adj. Food's ROaA (ex Goodwill) 6.8% 6.2% 3.5% 4.4% 4.4%

Adj. Food's ROIC (ex. Goodwill) 14.0% 11.1% 7.9% 8.3% 8.0%

Last Traded P/ EPS 33.9x 32.0x 43.4x 35.3x 33.5x

Target Price / EPS 36.0x 38.1x

Last Traded P/ BV 1.6x 1.6x 1.5x 1.4x 1.3x

Target P/ BV 1.5x 1.5x

Last Traded P/Tangible BV 2.1x 1.9x 2.4x 2.0x 1.8x

Target P/Tangible BV 2.0x 2.1x

Last Traded adj. EV/EBITDA 11.5x 10.2x 9.8x 8.2x 8.1x

Target adj. EV/EBITDA 8.5x 9.1x

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(1) Operating taxes(2) Capital Investments Including Intangibles & Acquisitions(3) Wk Investments(4) EBITDAFCFF = (4)-(1)-(2)-(3)

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Table of Contents

1) Surfing the Demographic Wave.......(Page 4)

2) Investment Positives ........(Page 5)

i) The Pacific Alliance Trade Bloc and the USA Represent 87% of Consolidated Sales and the Consumption Level

of Its Consumers Is Sound and Stable...........(Page 5)

ii) Favorable Demographics and Consumption Tendencies in Emerging Markets: More Food Being Consumed

Ready-Made in Strong Growing Countries of Latin America.........(Page 6)

iii) Grupo Nutresa does not Risky Strategies for Achieving 2020s Sales Target ........(Page 6)

iv) There is Room for Achieving Revenue and Cost Synergies arising from the Tresmontes-Lucchetti

Acquisition...........(Page 7)

3) Invesment Negatives and Risks..........(Page 8)

i) Volatility in Commodities Markets may Affect Financial Statements....(Page 8)

ii) Exposition to Venezuelas Economy........(Page 8)

iii) Increasing Obesity Rates in Latin America may Lead to Regulatory Risks..(Page 9)

iv) The Balance Sheet is Composed of a High Accrual Component..(Page 9)

v) Net Asset Balance Sheet Exposure to The Central American Currencies and The USD May Hurt Balance Sheet

if COP Strengthens ......(Page 10)

vi) Investment Portfolio Makes Grupo Nutresa Look Like a Conglomerate Instead of a Pure Play Food

Company(Page 10)

4) Valuation...(Page 11)

i) Free Cash Flow to the Firm Valuation.....(Page 11)

ii) Sensitivity Analysis of Long Term Variables...(Page 11)

iii) Sensitivity Analysis of Investment Portfolio.......(Page 12)

iv) Cost of Capital and Capital Structure........(Page 12)

v) Comparable Companies Analysis .........(Page 13)

4) Company Description....(Page 15)

5) Financial Statements........(Page 16)

4

SURFING THE DEMOGRAPHIC WAVE

We are initiating coverage of Grupo Nutresa with a HOLD rating and a 2015YE target price of COP 28,590 per share equivalent to a 2.1% upside and a 4.2% total return. We can assure that Grupo Nutresa is a low risk company at the top line level and it has enough room for achieving both revenue and cost synergies arising from the Tresmontes-Lucchheti Acquisition. However, its share price has already incorporated the positive scenarios of both demographic and consumption tendencies in the vibrant Pacific Alliance region and also the fact that Nutresas target consumers are relatively predictable and stable. Still, potential taxes on high-calorie-value items and foreign exchange devaluation risks coming from Venezuela may negatively affect operating income and the balance sheet in the short run, refraining us from being bullish on its stock.

The Company Poses Low Top-Line Risks and its Long Run Sales Goal will not Require Taking Aggressive Bets

87% of Grupo Nutresas consolidated sales arise from investment-grade-rated countries and are generated in a market friendly region: the Pacific Alliance bloc trade and the United States. Considering only the Pacific Alliance, Grupo Nutresa will benefit from a 212 million population economy that enjoys the wining combination of low inflation and strong growth, making it one of the most stable markets in Latin America with an attractive opportunity for processed food companies due to its low per capita consumption of ready-made food.

Moreover, the fact that Grupo Nutresa does not need an aggressive business model for achieving its long term sales target supports our conclusion that the companys business risk is not high. For us, there will be room for free cash flow to be distributed to stockholders as we do not expect a strong need of either reinvestments in its own assets or acquisitions (the latter is a low-risk way of entering into a business but involve transaction premiums).

There is Room for Achieving Revenue and Cost Synergies Arising from the Tresmontes-Lucchetti Acquisition

Even though Tresmontes Lucchettis (TMLC) distribution channel is more balanced towards the wholesaler in a consolidated basis, in Mexico TMLC it is actually stronger in the traditional channel than Grupo Nutresa. The latter is a little dependent on the wholesaler channel in that country. So, the potential benefits for Grupo Nutresa could be reflected in sales increases and stable operating margins while entering to a unfamiliar market (i.e. selling Grupo Nutresas products in Mexico in mom-and-pop stores via the TMLCs distribution channel and vice versa). Also, there can be knowledge exchange in common businesses such as pasta, coffee and milk modifiers and due to the TMLCs powered soft drink expertise

However, We See Grupo Nutresas Stock as Fully Valued

Not only our price target found via a free cash flow to the firm valuation does not compel us to rate the stock as a buy as it points to a run-of-the-mill 4.2% total return upside, but in a relative valuation basis Grupo Nutresa is trading at a rich 11.4x EV/ LTM EBITDA vs. the 10.4x at which the typical peer is trading (after adjusting for the investment portfolio value). However, we understand that a trailing relative valuation may not incorporate the upside potential that synergies arising from the TresMontes Lucchetti acquisition (2013) may represent, so we can not say that the stock is expensive in anyway.

Short Term Catalysts for Share Price Swings are Balanced Towards the Negative Side

Short term risks such as (1) more news about taxes on high-calorie-value items in the Pacific Alliance countries (other than Mexico), (2) foreign exchange devaluation risks coming from Venezuela and (3) a persistent negative momentum in earnings-per-share and its respective negative analyst revisions (ex Serfinco), refrain us for being bullish on Grupo Nutresas stock (at least in the short term).

In addition, we tend to believe that unexpected adjustments when IFRS be adopted (2015) may concern the investment community if not handled carefully by the management teams of Colombian based companies. Specifically, for Grupo Nutresa and other holdings, aggregate cash flow from operations and cash from investment activities are much lower than net income. So we prefer to be cautious in our recommendation taking into account the current divergence in Grupo Nutresas accounting accruals vs. cash flows, even excluding effects arising from the portfolio investment valuation. While the good news is that the increase in aggregate accruals tapered in 2013, the bad news is that current cash flow is considerable lower than net income.

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5

INVESTMENT POSITIVES

The Pacific Alliance Trade Bloc and the USA Represent 87% of Consolidated Sales and the Consumption Level of Its Consumers Is Sound and Stable

We see Grupo Nutresa as an investment vehicle for gaining exposure to sound and stable Latin Americans consumers. We support our view in the fact that 87% of Grupo Nutresas consolidated sales are made in investment grade rated countries in a market friendly region.

The Pacific Alliance (PA) is a regional integration initiative whose member states are Chile, Colombia, Mexico and Peru. According to figures of the WTO and the IMF (as of 2012), PA constitutes the eight largest economy, represents 36% of Latin Americas GDP, concentrates 50% of the total trade and attracts 41% of the FDI flows to the region. The four countries (Colombia, Chile, Mexico and Peru) have a 212 million population with an average GDP per capita of 10,000 dollars. In addition, PA claims to be open to free trade and its member states maintain a network of trading arrangements among themselves and with other developed economics of the world.

For us, Grupo Nutresas sales growth does not depend heavily on the uniqueness and competitiveness of its business model but on the region stability and the level of per capita consumption. We also believe that PA is a perfect platform for gaining exposure to consumer demand as the regional integration vows for free market and its objectives include:

(1) Building and area of deep economic integration and to move gradually toward the free circulation of goods, services, capital and persons,

(2) Promote the larger growth, development and competitiveness of the parties economies aiming at achieving greater welfare, overcoming socio-economic inequality and achieving greater social inclusion of their inhabitants and

(3) Become a platform for political articulation, and economic and trade integration, and project these strengths to the rest of the world, with a special emphasis on the Asia-Pacific region.

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Figure 4. Sales by RegionFocus on Upper Middle Income Countries

Source: Grupo Nutresa, as of 2Q14

Table 4. Diversified Business Among Investment Grade Rated Countries in Latin America and The United States

Source: Grupo NutresaSerfinco S.A.

Participation in 2Q14

Consolidated SalesCredit Default Swap Sovereign Credit Rating

Colombia 65.7% 140 Baa2 / BBB

Chile 8.3% 110 Aa3 / AA-

Mexico 3.7% 134 Aaa / AA-

Peru 1.6% 151 A3 / BBB+

SubTotal 79.3% 137.17Weighted Average = Worst = Colombia

United States 7.3% 0 Aaa / AA+

Total 86.6% 125.61Weighted Average = Worst = Colombia

6

Favorable Demographics and Consumption Tendencies in Emerging Markets: More Food Being Consumed Ready-Made in Strong-Growing Countries of Latin America

Urbanization, growing incomes and certain globalization of eating habits all contribute to more food being consumed ready-made and our argument is simple: Grupo Nutresa will benefit not only from faster growth rates in per capita consumption of both sugar and processed food in developing markets than in developed ones, but also because of stronger expectations of population growth in Latin America than in developed markets.

To have an estimation of the growth rate of per capita ready-made food consumption, we searched for the consumption of vegetable oils (which act as preservatives for processed food). According to Food and Agriculture Organization (FAO), the annual per capita food consumption of vegetable oils, in many developing economies is expected to have an annual growth of 1.3% over the next decade (almost a 14% in real terms for the 10y period).

On the other hand, according to information obtained from the World Data Bank, the compound annual growth rate of urban population in the countries that compose the Pacific Alliance is expected to be 1.2% until 2030.

So, real growth arising from both demographic factors and consumption tendencies in emerging markets will be close to 2.55% per annum. In nominal terms we estimate that such factor can easily explain a 5.49% growth rate in sales of Grupo Nutresa.

Grupo Nutresa Does Not Need an Aggressive Business Strategy for Achieving its Long Run Sales Target

Bearing in mind that Grupo Nutresas MEGA or BHAG (Big Hairy Audacious Goal) for 2020 consists of a twofold increase of 2013s consolidated sales. We estimate that more than half of Grupo Nutresas sales goal will be reached if both consumption tendencies and population growth in the Pacific Alliance bloc perform as expected by organizations such as World Bank and the FAO.

In fact, we estimate that a 61% of the total sales target (COP 7.2 trillion or US$ 3.5 billion) can be achieved if the company maintains its market share in the states members of the Pacific Alliance.

Other sources of sales growth depend on the companys particular initiatives and involve productivity improvements, reinvestment of capital, sales growth in other-than-Pacific-Alliance member countries, and inorganic acquisitions (see table 5) but it is a noteworthy fact that Grupo Nutresas sales risk is more balanced towards macroeconomic indicators of the Pacific Alliance member states rather than towards companys specific initiatives. Since Grupo Nutresas sales target depends more on stable macroeconomic factors instead on an aggressive business model, we consider that companys business risk is mitigated as a portion of free cash flow can be distributed to stockholders instead of needed to be directed to reinvestments or acquisitions (the latter is a low-risk way of growing but it is usually involves the payment of high premiums).

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Figure 5. Up to 60% of Grupo-Nutresa 2020s Sales Can Be Explained only with Demographics of the Pacific Trade Bloc

Sales Explained by Only Demographics of the Pacific Alliance Trade Bloc

Sales Explained by (1) Revenue Productivity (2) Capital Reinvestment (3) Sales in other-than-Pacific-Alliance countries (4) Inorganic acquisitions

Other Innitiatives= 40%

Consumption Tendencies in the Pacific Trade Bloc = 60%

Source: Serfinco S.A.

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Total Sales (Serfinco's Target)

Pacific Aliance Trade Block (Serfinco's Target)

Pacific Aliance Trade Block Demograhics (only)

Company's SalesTarget for 2020

7

There is Room for Achieving Revenue and Cost Synergies arising from the Tresmontes-Lucchetti Acquisition

Although Grupo Nutresas management does not give a quantified guidance of acquirable synergies (as some of them are claimed to be unquantifiable), the company intends to exploit the maximum of (1) revenue synergies created through the cross-selling of products, expanded market share and, in a less intensive way, (2) cost synergies achieved through economies of scale in research and development, procurement, manufacturing, sales and marketing, distribution and administration.

Specifically, we see an opportunity for Grupo Nutresa of exploiting synergies that may emerge from:

Tresmontes Lucchetti distribution channel in Mexico such as the introduction of new products from TMLC and Grupo Nutresa via the traditional channel (small stores) which TMLC already understand pretty well in Mexico and would complement the distribution that Nutresa has in the country, which is a little dependent on the wholesaler channel.

Knowledge exchange and product development of common businesses such as pasta, coffee and milk modifiers.

Knowledge transfer of the TMLC powered soft drink expertise to Grupo Nutresa.

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Table 5. Nominal Growth Rate of the Pacific Trade Bloc Sales = 5.5%

Source: OECD-FAO Agricultural Outlook, World Bank DataBank, BanRep, BanXico, BCRP and BCSerfinco S.A.

* We use growth of per capita food consumption of vegetable oils in developing countries expected by FAO as a proxy

Source: Grupo Nutresa, Bloomberg, Moodys and S&P

Table 6. Nominal Growth Rate of Grupo Nutresa Implicit in its 2020s Target Sales = 10.2%

We believe that other-than-demographics sales growth can be achieved through: (1) Growth in Revenue Productivity (2) Growth arising from Capital Reinvestment (i.e. CapEx/OpEx using own cash) (3) Sales growth in USA, Ecuador, Central America or other Markets (4) Inorganic acquisitions

Urban

Population

2014E (milliion)

Urban

Population

2030E (milliion)

Urban

Population

CAGR

Growth of Per Capita

Processed Food

Consumption*

Real

Growth

Rate

Central Bank

Inflation

Target

Nominal

Growth Rate in

Local Currency

Nominal

Growth Rate

in COP

Peru 24.1 30.1 1.40% 1.30% 2.72% 2.00% 4.78% 4.82%

Colombia 37.2 45.8 1.30% 1.30% 2.62% 3.00% 5.70% 5.70%

Mexico 97.7 118.8 1.23% 1.30% 2.54% 3.00% 5.62% 5.62%

Chile 16.0 18.2 0.82% 1.30% 2.13% 3.00% 5.19% 5.19%

Total 175.0 212.8 1.23% 1.30% 2.55% 2.86% 5.48% 5.49%

2020's target sales (million) COP 11.8

2014 sales (Expected) (million) COP 6.6

10.2%Implicit growth rate targeted by

the company

8

INVESTMENT NEGATIVES AND RISKS

Volatility in Commodities Markets may Affect Financial Statements

Grupo Nutresas cost of goods sold (and inventory levels) are dependent on commodities prices that are not fully hedgeable. While some of them are traded in major commodity markets (such as Coffee and Cacao), others are traded in local markets (pork or beef used in specific companys products) that sometimes do not offer the possibility of being hedged with futures or derivatives but with inventory accumulation/reduction.

This particularity makes it difficult to evaluate the current hedging strategy. It may be probable that financial statements change in difficult-to-predict ways even though some price changes be offset in reality. For example, changes in prices of some commodities could affect cost of goods sold (income statement), inventory value (assets), other comprehensive income (equity) and cash from operations (cash flow statement) generating the perception of improvement/deterioration in operating margin even though net cash flow of a particular commodity does not change at all.

As of 2Q14, Grupo Nutresas Commodities Index (a proxy of Grupo Nutresas costs of goods sold) has increased only 9.47% compared to the average level of 2013. But it is important to note that recent stability should not be used as a predictor for future as it has shown swings of more than 30% per year as it can be seen in the figure 6.

Exposition to Venezuelas Economy

Sales arising from the operations of Industrias Alimenticias Hermo de Venezuela (cold cuts), Cordialsa Noel de Venezuela S.A. (a marketing and distribution company) are not only a risk for financial statements but a business risk. Specifically, we consider that operating in a country with a 63.4% Y/Y inflation rate (as of August, 2014) is a risk for (1) financial statements via foreign exchange translation -as we do not buy the idea that current exchange rates are sustainable at all- and for (2) stability of operating margins as temporal mismatches of prices of its products vs. increases in the price of goods sold. In other words, we consider a high business risk the fact that inflation adjustments in production expenses, sales expenses, administrative expenses or COGS may or may not be in line with the prices at which Grupo Nutresas products are profitable.

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Source: Grupo Nutresa as of 2Q14

Figure 6. COGS Breakdown and Grupo Nutresas Commodity Index History (Dec 2012 = 100)

9

However, the companys management has argued against to a divesture from Venezuela using basically 5 arguments:

Some part of the population has a high purchasing power as a result of oil & gas rents (tied to USD)

The food industry is naturally hedged against inflation and its products are somewhat inelastic to prices

Volumes of products are not affected by price swings

There is no short-term intention of distributing cash from Venezuela to the parent company in Colombia

In the last couple of quarters, changes in prices affected revenues in the same fashion than costs

As those premises may be true, the indisputable fact is that 2Q14s consolidated revenues, EBITDA and net income fell 9%, 5%, and 2.5% respectively after consolidating operations at a 49.97 VEF/USD rate (denominated SICAD II) instead of what would have happened if the previous 6.3 VEF/USD rate (denominated Cencoex) was used. Still, we expect for further negative adjustments to financial statements coming in 2015 as some press releases have already pointed that Bolivars black market is trading at 90 VEF/USD rate in the Colombian/Venezuelan border.

Increasing Obesity Rates in Latin America may Lead to Regulatory Risks

Regulatory reforms have the potential of affecting Grupo Nutresas normal operations, inventory management systems and other business operations (such as product mix structures and marketing strategies) particularly in an environment in which bad feeding habits are affecting finances of countries in Latin America via increases in healthcare costs after obesity rates, ischemic heart diseases and diabetes mellitus cases skyrocketed.

For example, a new tax in Mexico on the production of high-calorie-value items (effective in January, 2014), made the company to sell its total inventory in order to avoid the tax through the 4Q13 and also forced the company to reformulate its recipes and its marketing strategy. As a result, revenues for the 1Q14 (January and February) where soft while the company adjusted for the new reality.

Regulatory is a risk that is practically unavoidable and it is also a reason why not all companies can be competitive in Latin America. According to Grupo Nutresas management, the company has been preparing for more than five years to adapt to new regulations (and even propose them in advance). It is worth noting that these kinds of risks can also be categorized as a barrier of entry to the industry and in turn be used as a competitive advantage.

Balance Sheet is Composed of a High Accrual Component

The high level of aggregate accruals reported in the balance sheet (goodwill, brands, other intangibles and the capitalization of PPE and inventories) may lead to a lower level of initial net income when IFRS be adopted as aggregate cash flow from operations and cash from investment activities are much lower than net income. While the good news is that the increase in aggregate accruals tapered in 2013 (Figure 7), the bad news is that current cash flow is considerable lower than net income (Figure 8). Current cash flow arising from both investment activities and operations should be a more reliable indicator than current level of net income as it is less affected by accruals estimations. So, the accounting may change but the cash flow will remain stable.

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(8,000)

(6,000)

(4,000)

(2,000)

-

2,000

4,000

6,000

8,000

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Net Income

Cash Flow From Operating Activities + Cash Flow From Investment Activities

-2,000

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6,000

8,000

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12,000

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10,000

20,000

30,000

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Net Operating Assets ex. Investment Portfolio (left)

Balance Sheet Aggregate Accruals ex. Inv. Portfolio

Figure 7. Balance Sheet Based Aggregate Accruals

Source: Grupo NutresaSerfinco S.A.

Figure 8. Cash Flow Based Aggregate Accruals

10

Net Asset Balance Sheet Exposure to The Central American Currencies and the USD May Hurt Balance Sheet if COP Strengthens

The internationalization of Grupo Nutresa had led to more assets and liabilities to be dependent on the level of foreign exchange rates against the Colombian Peso. Changes in the valuation of those assets may be recognized in the consolidated equity and had represented equity loses of nearly 2.3% of total equity (COP 173.5 billion or US$ 90 million as of December, 2013) as the Colombian Peso has strengthened. Particularly, a strengthening/weakening of the Colombian Peso (COP) against the Venezuelan Bolivar Fuerte (VEF) or the Costa Rican Colon (CRC) can explain up to 55% of the accumulated effect of the conversion of financial statements via equity (COP 86.75 billion or US$45 million) and, at some point in the future, it will affect income statement.

It is a fact that differences arising from foreign exchange translations will not affect the income statement in the short term, but the balance sheet should be observed with detail due to the increasing exposition to USD denominated debt acquired via TMLC and due to the swings in the value of assets tied to the VEF and the CRC.

The Investment Portfolio Makes Grupo Nutresa Look Like a Conglomerate Instead of a Pure Play Food Company

Even though operating activities can be easily separated by units, Grupo Nutresa has investments in other listed companies in Colombia that represent more than COP 4.4 trillion (US$2.2 billion). While we do not believe that this portfolio represent a risk for Grupo Nutresas management, we do believe that investors will be significantly exposed to risks different than consumption levels when investing in Grupo Nutresa (such as infrastructure and the financial services industry). Our estimations indicate that investments in Grupo de Inversiones Suramericana S.A. (BVC: GRUPOSURA) and Grupo Argos S.A. (BVC: GRUPOARG) constitute 37% of total assets and 57% of total equity.

WRAP-UP:

Grupo Nutresa is a company with direct exposition to consumers in stable economies of Latin America.

Most of the companys sales target can be achieved if Grupo Nutresa maintains its market share, as long as demographics in the Pacific Alliance (PA) do their job. PA is composed of investment grade rated countries.

Revenue synergies between Grupo Nutresa and Tresmontes Lucchetti will come from the distribution channel, knowledge exchange of both product development of common businesses and, from the powered soft drinks expertise that TMLC already has.

In the short run, the income statement can be affected by (1) volatility in commodities markets, (2) the worsening of Venezuelas economy and (3) negative adjustments to net income when adopting IFRS.

The balance sheet can be affected by a COP strengthening against Central American currencies in the short run (less than one year) and potentially the income statement can be affected by the same factors in the long run.

Grupo Nutresas assets are diversified among the following industries: financial services, infrastructure and food & beverage. As permanent investments in Grupo Argos and Grupo Sura represent more than 45% of Grupo Nutresas equity, the company is not a pure play food & beverages company.

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Investment Portfolio

COP trillion % Assets % Equity COP trillion % Assets % Equity

Grupo de Inversiones Suramericana S.A. 2.00 18.9% 27.0% 2.47 20.8% 33.4%

Grupo Argos S.A. 1.55 14.7% 20.9% 1.92 16.2% 25.9%

Total Assets 10.58 100.0% 11.86 100.0%

Total Equity 7.41 9.13

2014 E2013

45% - 60% of total equity is explained by the Investment Portfolio

Source: Grupo Nutresa, Serfinco

Table 7. Participation of the Investment Portfolio in Total Assets and Equity

11

VALUATION

Our 2015YE target price of COP 28,590 per share is supported by a 10-year discounted free cash flow to the firm model (FCFF) that rests in the following assumptions:

(1) Volumes sold by segment have 3 growth phases: The short term one in which volumes sold behave like its own historic CAGR, A converge phase The long term one in which volumes sold behave in tandem with real GDP growth

(2) Volumes sold via TMLC grow faster than other segments volumes as a result of revenue synergies obtained. In the long term phase, however, TMLC real growth will be lower than other segments as geographic upside is higher in Colombia than in Mexico and Chile (most of TMLCs operations are based in Chile and Mexico)

(3) Prices at which products are sold in Colombia and in other markets tend to converge in order to adjust to the power-purchase-parity theory, however they will not fully converge as there are differences arising from particular recipes, consumer tastes and branding power

(4) EBITDA margin will remain at the highest end of the managements target (12%-14%)

(5) Gross Reinvestment rate for CapEx and Intangibles converges to a 50% of NOPAT (close to 3% of sales)

(6) Terminal value arises from an H-model that goes gradually from a 6.3% growth of EBIT in 2024 to a 4.0% through 5 years. The result is similar to a 8.4x EV/EBITDA multiple (see tables 9 and 10)

(7) Debt/EBITDA remains in the 1x-2x interval

(8) A 9.0% CAGR expected increase in dividends arising from a Lintners model, calibrated with a 5 year adjustment factor and a target payout that ranges from 60% to 80%.

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Table 11. Sensitivity to WACC and Growth Rate

Figure 9. FCFF Breakdown

Source: Serfinco

Table 8. FCFF Valuation

Table 9. Sustainable Growth Rate of EBIT

Source: Serfinco Source: Serfinco

Table 10. Implicit Exit EBITDA Multiple

Source: Serfinco

G = [ 1+(A x B) ] x (1+C) 4.0%

(A) Long term total ROIC 15.1%

(B) Net Reinvestment Rate 6.7%

(C) Long term Inflation 3.0%

COP million 2015E Per Share Basis Weight

PV FCFF 4,180,874 9,090 27.4% PV Terminal Value 5,466,772 11,880 35.8%

Operating Value 9,647,646 20,970 63.2%

Cash & marketable sec. 707,032 1,540 4.6%

Long Term Investments 4,905,618 10,660 32.1%

Total non operating assets 5,612,651 12,200 36.8%

Enterprise Value 15,260,297 33,170 100.0%

Long term debt & notes 2,088,125 4,540 Total Liabilities 2,088,125 4,540 Minority Interest 19,209 40 Equity 13,152,963 28,590 Number of Shares 460,123,458 Stock Price Valuation. COP 28,590 28,590 Current Price (26/09/2014) 28,000 28,000 Upside potential 2.1% 2.1% Total Return 4.2% 4.2%

EXIT VALUE (EV / EBITDA) 8.4X

E [ EBITDA 2024 ] (COP million) 1,926,034

TERMINAL VALUE million (Cop million) 14,193,051

DEBT 2024 + Int Min - Cash 1,967,638

-800

-300

200

700

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1,700

2,200

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(1) Operating taxes(2) Capital Investments Including Intangibles & Acquisitions(3) Wk Investments(4) EBITDAFCFF = (4)-(1)-(2)-(3)

CO

P bill

ion

-75 bps -50 bps -25 bps 0 bps 25 bps 50 bps 75 bps

3.3% 3.54% 3.79% 4.0% 4.3% 4.5% 4.8%+149 bps 12.6% 24,330 24,530 24,730 24,950 25,180 25,420 25,680

+99 bps 12.1% 25,290 25,520 25,750 26,010 26,280 26,570 26,870+50 bps 11.6% 26,360 26,630 26,910 27,210 27,530 27,880 28,250

0 bps 11.1% 27,570 27,890 28,220 28,590 28,970 29,390 29,840

-50 bps 10.7% 28,950 29,330 29,730 30,170 30,640 31,150 31,700

-99 bps 10.2% 30,530 30,980 31,480 32,010 32,590 33,220 33,910

-169 bps 9.5% 33,190 33,800 34,460 35,180 35,980 36,850 37,810NO

MIN

AL

WA

CC

*

* Average WACC over the forecast horizon

Sustainable Growth of EBIT ( Nominal G)

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Investment Portfolio Sensitivity Analysis

A sensitivity analysis points to:

A 3.1% average change (or COP 890 per share) in Grupo Nutresas target price if both stock prices of Grupo Argos and Grupo Sura change by 10%.

A 1.7% average change (or COP 490 per share) in Grupo Nutresas target price if only Grupo Sura change by 10%.

A 1.4% average change (or COP 390 per share) in Grupo Nutresas target price if only Grupo Argos change by 10%.

Cost of Capital

Discount rates used for the free cash flow to the firm model come from a rolling WACC structure that incorporates a weighted average country risk premium adjusted by the companys geographic sales breakdown.

As a matter of fact, the companys current Adjusted Return On Invested Capital (Adj. ROIC*) is lower than our WACC estimates, only after 2019 those numbers revert thanks to continuous improvements in OpEx, particularly from production costs and administrative expenses.

* We calculate adj. ROIC using after-tax NOPAT excluding goodwills amortization and the effects of the investment portfolio.

Table 13. WACC Assumptions vs. ROIC Outcome

Source: Serfinco

Variable 2012 2013 2014 E 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E 2024 E

E/E+D 91.5% 79% 81% 81% 82% 82% 83% 83% 84% 85%

D/E+D 8.5% 21% 19% 19% 18% 18% 17% 17% 16% 15%

D/E 9.3% 27% 24% 23% 23% 22% 21% 20% 19% 18%

Total Tax rate 28.5% 31% 32% 32% 32% 32% 33% 33% 33% 33%

Net Debt /Capital 5.1% 18% 15% 13% 12% 11% 11% 11% 11% 12%

Levered Beta 1.02 1.0x 1.1x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x

Unlevered Beta 0.96 0.9x 0.9x 0.9x 0.9x 0.9x 0.9x 0.9x 0.9x 0.9x

Risk Premium 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6%

Risk Free Rate 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7%

Country Risk 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4%

ke (USD) 8.8% 8.8% 9.0% 8.9% 8.9% 8.9% 8.9% 8.9% 8.8% 8.8%

Devaluation LT 3.3% 3.3% 3.3% 3.3% 3.3% 3.3% 3.3% 3.3% 3.3% 3.3%

Ke (COP) 12.4% 12.4% 12.5% 12.5% 12.5% 12.5% 12.5% 12.4% 12.4% 12.4%

Marginal Kd (COP) 8.7% 2.8% 6.6% 6.4% 7.5% 8.1% 7.8% 7.5% 7.2% 7.2%

WACC (COP) 11.8% 10.2% 11.0% 11.0% 11.1% 11.2% 11.2% 11.2% 11.2% 11.2%

Adj. ROIC (COP) 14.0% 11.1% 7.9% 8.3% 8.0% 8.9% 9.7% 10.5% 11.4% 15.1%

Table 12. Sensitivity to Grupo Argos and Grupo Suras Target Price

Source: Serfinco

Inversiones Argos' TP 2015

-15.0% -10.0% -5.0% 0.00% 5.0% 10.0% 15.0%

15.0% 53,360 28,750 28,940 29,140 29,330 29,530 29,730 29,930

10.0% 51,040 28,500 28,690 28,890 29,080 29,280 29,480 29,680

5.0% 48,720 28,250 28,440 28,640 28,830 29,030 29,230 29,430

0.00% 46,400 28,000 28,200 28,390 28,590 28,780 28,980 29,170

-5.0% 44,080 27,760 27,950 28,140 28,340 28,530 28,730 28,920

-10.0% 41,760 27,520 27,710 27,900 28,090 28,290 28,480 28,680

-15.0% 39,440 27,270 27,460 27,650 27,850 28,040 28,230 28,430

Gru

po

Su

ra's

TP

20

15

* Assumption: Grupo Sura's and Inversiones Argo's TP for 2015 = Bloomberg concensus for 2014 x (1+10%)

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Comparable Companies Analysis

In a relative basis Grupo Nutresa is trading at a rich 11.34x EV/ LTM EBITDA vs. the 10.41x at which the typical peer is trading. On a per share basis, it is equivalent to a 6.2% downside versus current trading prices. However, we understand that a trailing multiple may not incorporate the upside that synergies arising from the TresMontes Lucchetti acquisition (2013) may represent, so we can not conclude that the stock is expensive in anyway.

The following criteria were used for screening Grupo Nutresas peers:

Primary Industry Classification: Soft Drinks or Packaged Foods and Meats

Last Twelve Months EBITDA: Between US$200 million and US$1.5 billion

Geographic Region: Latin America and the Caribbean

*Some Comments on the Market Based Valuation:

Screened companies in the soft drinks industry included companies with operations in business such as soft drinks, juices, waters and others. We excluded only-bottlings

The COP 29,900 price per share was obtained after adjusting for 2015s cost of capital (increases it) and expected dividends (decreases it).

We do not include a conglomerate discount, this discount would decrease target price per share by about 8% (COP 2,400 per share)

COP million 2014E Per Share (1) Grupo Nutresa's LTM EBITDA 874,688 33.3 (2) Comparables EV/EBITDA multiple 10.41x 10.41x

Enterprise Value (food business) = (1)x(2) 9,102,968 19,790 - Long term debt and notes 1,780,313 3,870 + Cash & Equivalents 224,898 490 + Equity and LT Investments 4,538,046 9,870 - Minority Interest 19.512 10 Equity Value 12,085,580 26,270 # of shares 460 460 Price Per Share (implicit) 26,270 26,270 Current Price 28,000 28,000 Price Per Share (target 2015)* 29,900 29,900

Table 14. Comparable Companies

Source: Serfinco

Source: CalpitalIQ, Serfinco

Table 15. Market Based Valuation

Company Industry Clasification (ICB)

Revenue

US$

(million)

EV/EBITDA

(trailing)

Grupo Nutresa Packaged Foods and Meats 3282.4 16.53x

Grupo Nutresa (food) Packaged Foods and Meats 3282.4 11.34x

Bimbo BIMBOA Packaged Foods and Meats 13,799 12.14x

Marfrig Global Foods S.A. Packaged Foods and Meats 8,993 8.40x

Gruma GRUMAB Packaged Foods and Meats 4,184 10.15x

Grupo Lala S.A.B. de C.V. Packaged Foods and Meats 3,414 12.85x

Industrias Bachoco S.A.B. de C.V. Packaged Foods and Meats 3,040 6.08x

Alicorp ALICORC1 Packaged Foods and Meats 2,177 12.00x

M. Dias Branco MDIA3 Packaged Foods and Meats 2,035 16.10x

Grupo Herdez S.A.B. de C.V. Packaged Foods and Meats 1,051 12.07x

Acra Continental S.A.B. de C.V. Soft Drinks 4,664 12.48x

Embotelladora Andina S.A. Soft Drinks 2,991 8.78x

Organizacin Cultiba, S.A.B. de C.V. Soft Drinks 2,723 10.83x

Harmonic mean ex Grupo Nutresa 2,848 10.41x

Selected Industry Median 3,040 12.00x

Upside vs Harmonic Mean -8.2%

14

Recommendation

Figre 10. Grupo Nutresa Recommendation

Source: Serfinco S.A.

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Grupo Nutresa Date Recommendation T.P. NUTRESA

29-Sep-14 HOLD 28,590

Dotted lines show a probable 1-standard deviation confidence interval if returns behave as a t-distribution assuming a log-lin model

26,620 26,840 27,060

29,710 29,960

30,210

28,590

19000

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COMPANY DESCRIPTION Grupo Nutresa is the leader in processed foods in Colombia and one of the most relevant players in Latin America, with consolidates sales of USD 3.4 billion in 7 business units: cold cuts, biscuits, chocolates coffee, ice cream, pastas and the new soft drinks business consolidated in Tres Montes Lucchetti (TMLUC).

Grupo Nutresa has a strategic statement known as a Big Hairy Audacious Goal (BHAG or MEGA in spanish) that aims to double their 2013 sales by 2020 with sustained profitability between 12% and 14% of EBITDA margin. To achieve this, Grupo Nutresa claims to offer to their customers foods and experiences of recognized and beloved brands; that nourish, generate wellness and pleasure, that are distinguished by the best price/value relation Most of its sales are done in Colombia and in the Pacific Alliance region (see page 5). Its products are sold via 17 brands using more than 911,000 points of sales of its extensive distribution network, which is balanced towards traditional mom-and-pop stores, only after an acquisition as big as TMLUC (US$758 million), the wholesaler channel increased its participation by 5%.

Grupo Nutresa shareholders structure is composed by a cross-holding with Grupo Sura, Grupo Argos and its subsidiaries. It operates similar to a Japanese Keiretsu, in which intercompany transactions are business as usual and some of those companies board members are seen also as board members of other companies. However, history has shown us that Grupo Nutresa has a sound corporate governance and, in fact, it is the only Latin American food company member of the Dow Jones Sustainability Index.

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Source: Grupo NutresaSerfinco S.A.

Figure 12. 2013s Revenue Mix by Channel

Figure 11. Proforma 2013s Sales Breakdown by Segment (USD million)

* Consolidating 12 months of TMLUCs sales Source: Grupo Nutresa

Shareholders Structure

Grupo Sura 35.1%

Grupo Argos 8.3% Proteccion (A Grupo Sura's Subsidiary) (Only the Moderate Fund)

4.4%

Other Mandatory Pension Funds 8.6%

Others 43.6%

Table 16. Shareholders Structure

Source: SuperIntendencia Financiera

16

Financial Statements

Table 16. Consolidated Income Statement

Source: Grupo Nutresa S.A. and Serfinco S.A.

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Table 17. Consolidated Balance Sheet

Income Statement (COP million) 2012 2013 2014 E 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E 2024 EOperating Revenue 5,305,782 5,898,466 6,599,686 7,154,403 7,769,568 8,424,293 9,124,726 9,880,906 10,714,445 14,426,647 Domestic Revenue 3,794,761 3,872,450 4,261,153 4,608,613 5,001,574 5,420,447 5,866,122 6,345,583 6,867,751 9,207,895 International Revenue 1,511,021 2,026,016 2,338,532 2,545,790 2,767,994 3,003,846 3,258,605 3,535,324 3,846,693 5,218,752 COGS (3,064,460) (3,260,968) (3,748,634) (4,026,247) (4,409,469) (4,758,255) (5,130,522) (5,549,374) (6,011,106) (8,067,641) Gross Profit 2,241,322 2,637,498 2,851,051 3,128,156 3,360,100 3,666,038 3,994,205 4,331,533 4,703,339 6,359,006 Operating expenses (1,720,210) (1,987,271) (2,255,837) (2,425,183) (2,627,502) (2,839,578) (3,071,862) (3,322,399) (3,600,191) (4,886,896) Administrative Expenses (270,303) (347,578) (427,351) (444,312) (475,174) (503,349) (536,111) (569,673) (606,651) (772,212) Sales Expenses (1,326,976) (1,505,166) (1,697,122) (1,842,212) (2,005,034) (2,178,530) (2,365,917) (2,569,054) (2,794,071) (3,828,536) Production (122,931) (134,527) (131,363) (138,659) (147,293) (157,699) (169,834) (183,672) (199,469) (286,149) EBIT 521,112 650,227 595,215 702,973 732,598 826,460 922,343 1,009,134 1,103,148 1,472,110 Total Dep & Amortization 153,238 182,599 258,757 264,890 284,101 298,706 317,930 336,710 357,667 453,924 EBITDA 671,095 832,827 853,971 967,863 1,016,698 1,125,165 1,240,273 1,345,844 1,460,814 1,926,034 Non operating income and Dividends and financial 96,140 81,465 95,553 114,169 132,405 147,048 155,053 156,611 158,969 183,096 Financial expenses (117,209) (121,689) (193,083) (184,103) (213,063) (233,887) (230,430) (227,149) (226,076) (265,866) Others, net (13,923) (54,865) (60,474) (91,433) (82,137) (96,117) (112,269) (129,523) (148,147) (219,699)

(34,992) (95,089) (158,004) (161,367) (162,796) (182,957) (187,646) (200,061) (215,253) (302,469) Income(loss) before income tax 486,120 555,138 437,211 541,606 569,801 643,503 734,697 809,074 887,895 1,169,640 Taxes Current (105,932) (124,231) (97,747) (121,086) (127,390) (143,867) (164,255) (180,884) (198,506) (261,495) Deferred (32,525) (14,687) (11,556) (14,315) (15,060) (17,008) (19,419) (21,385) (23,468) (30,915) CREE (35,569) (30,280) (40,319) (42,418) (47,964) (55,731) (61,659) (68,057) (91,385) Income(loss) before minority

interest 347,663 380,651 297,628 365,886 384,933 434,663 495,292 545,147 597,864 785,846 Minority Interest (2,156) (416) (465) (505) (548) (594) (644) (697) (756) (1,017) Net Profit 345,507 380,235 297,162 365,381 384,385 434,069 494,648 544,450 597,108 784,828

Balance Sheet (COP million) 2012 2013 2014 E 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E 2024 ECurrent Assets Cash & cash equivalents 224,731 302,451 276,846 280,514 283,347 284,144 282,770 279,133 302,680 407,548 Time deposits & marketable securities 67,081 113,027 273,102 426,518 546,319 655,389 680,811 609,023 525,071 307,380 Account receivables 657,872 829,822 814,195 863,029 915,950 970,054 1,025,710 1,083,641 1,175,055 1,582,173 Inventories 555,796 725,323 736,353 790,885 866,162 934,675 1,007,800 1,090,076 1,180,776 1,584,745 Deferred and other assets 32,215 47,694 44,704 48,462 52,629 57,064 61,808 66,930 72,577 97,722Total current assets 1,537,695 2,018,317 2,145,200 2,409,408 2,664,407 2,901,327 3,058,899 3,128,804 3,256,158 3,979,569

Non Current Assets Permanent Investments 330,090 357,830 399,152 416,548 435,777 457,402 481,058 506,332 532,944 650,908 Long term debtors 23,988 27,477 30,650 31,986 33,462 35,123 36,939 38,880 40,924 49,982 Property, plant & Equipment 1,135,785 1,456,074 1,533,212 1,519,462 1,513,110 1,530,175 1,562,276 1,600,155 1,637,653 1,750,820 Intangibles assets 1,025,441 2,038,332 2,055,637 2,058,833 2,062,229 2,065,842 2,069,689 2,073,789 2,078,164 2,098,931 Long term prepaid and other assets 32,150 70,031 73,741 73,080 72,774 73,595 75,139 76,961 78,764 84,207 Total Appreciations 4,866,415 4,612,437 5,458,550 5,867,289 6,309,949 6,782,603 7,285,687 7,819,440 8,383,882 10,940,132Total long term assets 7,413,869 8,562,181 9,550,942 9,967,199 10,427,303 10,944,740 11,510,788 12,115,557 12,752,330 15,574,981

Total Assets 8,951,564 10,580,498 11,696,143 12,376,607 13,091,709 13,846,066 14,569,687 15,244,360 16,008,489 19,554,550

2012 2013 2014 E 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E 2024 ECurrent Liabilities Short term debt 96,662 407,588 409,905 426,243 441,901 454,128 465,260 467,855 475,182 542,021 Suppliers 170,648 299,136 284,826 305,920 335,038 361,539 389,824 421,649 456,732 612,991 Payable 259,456 339,570 352,915 368,020 390,967 408,856 440,844 476,834 516,508 693,218 Taxes payable 119,215 159,523 155,937 169,044 183,579 199,049 215,599 233,466 253,161 340,873 Salaries & benefits payable 102,371 131,144 134,218 144,158 157,879 170,367 183,696 198,693 215,225 288,858 Provisions & estimated liabilities 5,559 8,241 7,932 8,519 9,330 10,068 10,856 11,742 12,719 17,071 Deferred and other liabilities 3,761 3,159 3,977 4,272 4,679 5,049 5,444 5,888 6,378 8,560Total current liabilities 757,672 1,348,361 1,349,711 1,426,176 1,523,373 1,609,057 1,711,523 1,816,127 1,935,906 2,503,591

Non Current Liabilities Long term debt & notes 593,692 1,589,149 1,598,182 1,661,882 1,722,932 1,770,605 1,814,008 1,824,124 1,852,691 2,113,292 Payables 166 167 168 175 181 186 191 192 195 222 Labour obligations 7,598 7,234 7,275 7,565 7,843 8,060 8,258 8,304 8,434 9,620 Provisions & estimated liabilities 22,729 45,943 46,204 48,046 49,811 51,189 52,444 52,736 53,562 61,096 Deferred and other long term liabilities 144,455 159,573 160,480 166,876 173,007 177,794 182,152 183,168 186,036 212,204Total long-term liabilities 768,640 1,802,066 1,812,310 1,884,544 1,953,773 2,007,834 2,057,052 2,068,524 2,100,918 2,396,434Total Liabilities 1,526,312 3,150,427 3,162,021 3,310,720 3,477,146 3,616,890 3,768,575 3,884,651 4,036,823 4,900,025Minority Interes 16,294 19,209 16,301 17,250 18,247 19,298 20,306 21,247 22,312 27,254

Equity 2012 2013 2014 E 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E 2024 EPaid Capital 2,301 2,301 2,301 2,301 2,301 2,301 2,301 2,301 2,301 2,301Capital Surplus 546,831 546,831 546,831 546,831 546,831 546,831 546,831 546,831 546,831 546,831Stock placing bonus 0 0 0 0 0 0 0 0 0 0Reserves 1,029,856 1,282,573 1,624,740 1,678,599 1,764,614 1,855,838 1,863,103 1,837,205 1,830,996 1,764,942Mandatory 206,034 206,034 206,034 206,034 206,034 206,034 206,034 206,034 206,034 206,034 Occasional Reserves 823,822 1,076,539 1,418,706 1,472,565 1,558,580 1,649,804 1,657,069 1,631,171 1,624,962 1,558,908 Reevaluation of Equity 795,117 761,782 761,782 761,782 761,782 761,782 761,782 761,782 761,782 761,782Effect of conversion of FF.SS. -162,791 -173,546 -173,546 -173,546 -173,546 -173,546 -173,546 -173,546 -173,546 -173,546Profit of the fiscal period 345,507 380,235 297,162 365,381 384,385 434,069 494,648 544,450 597,108 784,828Surplus for Valuations 4,852,137 4,610,686 5,458,550 5,867,289 6,309,949 6,782,603 7,285,687 7,819,440 8,383,882 10,940,132Total Equity 7,408,958 7,410,862 8,517,820 9,048,637 9,596,316 10,209,878 10,780,805 11,338,463 11,949,353 14,627,270Total Liabilities & Equity 8,951,564 10,580,498 11,696,142 12,376,606 13,091,709 13,846,066 14,569,687 15,244,360 16,008,488 19,554,550

Source: Grupo Nutresa S.A. and Serfinco S.A.

17

Bogot Centro de Negocios Andino Carrera 11 No 8201. Piso 6 Tel: (571) 6514646

Medelln

San Fernando PlazaTorre 1 Carrera 43A No 1 50. Piso 10

Tel: (574) 4443522

Bucaramanga

Metropolitan Bussiness Park Carrera 29 # 45 - 45 of 910

Tel: (577) 6970367

Cartagena Torre Empresarial Proteccin Carrera 3 No 6A100 Of. 801 Tel: (575) 6930292

Barranquilla

Centro Empresarial Las Amricas Calle 77B No 57141.

Tel: (575) 3606030

Cali Carrera 100 No 5169 Torre Empresarial Oasis of 722 B Tel: (572) 4858585

The analyst certifies that the opinions expressed in this report accurately reflect his personal opinion about the company of concern. Also, the analyst certifies that he has not re-ceived, is not receiving and will not receive any direct or indirect payment in exchange for expressing a specific recommendation in this report.

Serfinco S.A. is committed to provide independent and objective research for all the companies in the coverage universe. During the normal course of business, Serfinco S.A. intends

to obtain revenue for banking investment services from all the companies in the coverage universe. The remuneration for the analyst is based, in part, on the profitability of the firm,

which includes investment banking and revenues from sales. The research analyst does not have a position in the fixed positions of this covered company and does not provide any

kind of services to the company. The research analyst has not taken part in any investment banking transaction of the company in concern. Serfinco S.A. was not making a market in

the titles of the company in concern when this report was published. In the last twelve months, Serfinco S.A. did not receive, nor it is authorized to receive, revenues for investment

banking services, services related to the title of non investment banking, or non title services rendered to the company in concern. that could affect the objectivity of this report.

Therefore, investors should consider this report only as a factor for their investment decision making. However, Serfinco S.A. intends to do business with the companies covered in

this report. Consequently, investors should be aware that the firm might have an interest conflict.

International Equity Trading Desk

Andrs Jimenez Juan P. Vieira Andrs Gmez

Head of Equity Head of Trading Head of Electronic Trading

aj@serfinco.com.co jv@serfinco.com.co ag@serfinco.com.co

(574) 3106553 (574) 3106515 (574) 3106544

Daniel Marn Andrs Upegui Jose F. Restrepo, CFA

Equity Trader FX Trader Equity Strategist

dm@serfinco.com.co au@serfinco.com.co jr@serfinco.com.co

(574) 3106518 (574) 3106587 (574) 3106510

Research Team

Alejandro Isaza Rafael Espaa

Cement and Construction

Consumer Services and Holdings

ai@serfinco.com.co re@serfinco.com.co

(574) 4443522 Ext. 6642 (571) 6514646 Ext. 4228