Press 2q ingles by Nueva Polar

Earnings Release 2nd Quarter

2014

Earnings Release 2Q 2014S

2Q 2014 Highlights

Recent Events

Consolidated Income Statements

Retail Business Indicators

Stores

Financial Business Indicators

EBITDA

Financial Statements La Polar S.A. - IFRS

Consolidated income statements by function

Consolidated Balance Sheet

Cash Flow

Debt Restructure Stages a. Debt Restructure b. Debt Restructure Essential Facts

10.

Annex

Notes:     

Quarters are named as: 1Q, 2Q, 3Q, 4Q accordingly Semesters are named as: 1H, 2H accordingly Calendar years are named LTM (Last twelve months) Currency symbols: CLP $ for Chilean Pesos, US $ U.S. Dollars, M Millions, B Billions Exchange rate used in this 2Q report: 1 US $ = CLP $ 552,72 Source: Internal Revenues Service ( Servicio de Impuestos Interno – SII – Chile)

Earnings Release 2Q 2014S

1. 2Q 2014 Highlights 

Total revenue for the second quarter reached CLP $ B 101, representing an increase of 3.1% compared to 2Q 2013.



SSS grew 1% in the second quarter of the year compared with the same period last year, obtaining a growth of 3.5%. The Soccer World Cup made the television and phones sales have a rise of 35%, the restrictions that came from the financial restructure in which the company was engaged since April, trigger the lack of a balanced stock of products from national suppliers, which impacted a decrease of 20% in the sale of such brands (excluding television and phones). Moreover, the sale of private labels grew by 5%, increasing its share in the retail sales to 34%.



Retail margin reached a 29.2%, which represents a slight decrease from the same period last year, even though the rise in the exchange rate affects approximately a 3 percentage points in the private labels margin and the greater participation in the electronics department previously mentioned pressured towards a decline.



In the second quarter, an increase in the SG&A is observed in comparison with the same period last year. This increase is due to: i. In the second half of 2013 there was an increase in the minimum wage. In the same period, collective agreements were reached (valid until 2016), resulting in an increase in salaries, which mainly affected the retail business. ii. In the second half of 2013 the financial area strengthened, allowing the structure to adapt to the new regulatory requirements imposed by the SBIF ( Superintendency of Banks and Financial Institutions) iii. In the second quarter of 2014, an overall restructure company plan began, which has meant a significant increase in settlement expenses. This process, which seeks greater efficiency, began in June with a management restructure , an significant reduction in marketing expenses, and also the back office restructure in stores, the closing of regional warehouses and the self – service implementation for retail and financial segment. The results of this process will be reflected from the second half of 2014.



The risk rate remained below 10%. At the end of the 2Q, the risk rate was 9.9%, compared with 10.8% from the same period last year. This is due to an improvement in the customer segmentation, allowing us to give better offers. ( For further details see page 9)

Earnings Release 2Q 2014S



On April 10th, the board of the company announced the decision to initiate the debt renegotiating process with various creditors. On September 1st, at the Creditors Meeting, it was approved with a 100% of the total eligible voters the agreement in the Shareholders Meeting on August 8th and Bondholders Meeting on August 27th. This means that there will be a 66.67% dilution of current shareholders. ( For further details see page 17) In this Financial Statements and with the agreement reached on August 27th, the company is in the process of standardization of supplier credit lines and have achieved short – term financing, thus ensuring shipments for the fourth quarter of 2014.



On June 2nd, the Board of the company agrees with CEO Mr. Patricio Lecaros, to initiate a process of replacement for him. On July 22nd, it was agreed to appoint Mr. Gino Manriquez as Interim CEO, who had worked to this date as Controller of the company.

2. Recent Events Closure of Stores Among the cost-cutting plans of the company, it became effective the decision taken by the Company Board to close the Panamericana Store on the 31st of August, and also the closure of the store in San Fernando on September 7th.

Change in Management As previously mentioned, on the 22nd of July, Mr. Gino Manriquez assumed as Interim CEO replacing Mr. Patricio Lecaros.

Earnings Release 2Q 2014S

3. Consolidated Income Statements CLP $ B Revenues Cost of Sales Margin

2Q 14 100,7 (65,3) 35,3

% Income

SG&A (w/o depreciation) Operating Income EBITDA Depreciation Non - Operating Income Profit (Loss) Before Taxes Benefits ( Expenses) Income Tax Profit (Loss)

(37,9) (4,6) (1,3) (2,0) (6,2) (10,8) (1,0) (11,8)

-38%

-65% 35%

-5% -1%

-11%

CLP $ B Revenues Cost of Sales Margin

1H 14 192,6 (126,2) 66,4

% Income

SG&A (w/o depreciation) Operating Income EBITDA Depreciation Non - Operating Income Profit (Loss) Before Taxes Benefits ( Expenses) Income Tax Profit (Loss)

(72,0) (9,3) (3,1) (3,8) (11,6) (21,0) (0,4) (21,4)

-37%

-66% 34%

-5% -2%

-11%

2Q 13 98,0 (61,0) 37,0

% Income

(30,4) 3,5 7,2 (3,2) (3,1) 0,4 3,4 3,8

-31%

1H 13 181,4 (118,4) 63,0 0 (59,9) (0,9) 4,4 (3,9) (9,3) (10,2) 2,1 (8,1)

-62% 38%

4% 7%

% Income -65% 35%

-33% 0% 2%

-6%

Earnings Release 2Q 2014S

4. Retail Business Indicators 2Q´13

3Q´13

4Q´13

1Q´14

2Q´14

81.818

75.169

104.489

72.942

82.811

2Q´13

2Q´14

81.818

82.811

Retail Revenues (CLP $ M)

LTM 2Q13

LTM 2Q14

Retail Revenues (CLP $ M) 316.537

335.412

The revenues from the retail business in the second quarter of 2014 compared to the same period last year, increased by 1%, obtaining CLP $ B 83. In addition, a cumulative growth of 6% in the last twelve months was reached.

Retail Revenues LTM CLP $ B 0,3%

1,3% 1,8%

2,4%

330

334

335

1Q 14

2Q 14

Retail Revenues ( CLP $ B)

324 317

2Q 13

3Q 13

4Q 13

Earnings Release 2Q 2014S

Retail Margin % LTM

27%

4Q 13

1Q 14

2Q 14

26%

25%

2Q 13

3Q 13

The margin of the last twelve months has also grown, what has remained constant in recent quarters with 27%.

Sales UF/ SqmÂ˛ 1 1Q

2013

6,2

7,4

6,8

9,3

2014

6,4

7,2

Var %

-3%

During the second quarter of 2014 the UF/ sqmÂ˛ reaches 7.2, which means a decrease of 3% compared to the same period last year. This decrease was primarily due to the average increased of the 2Q 2013 UF and the 2Q 2014 UF.

5. Stores 2013

Number of Stores Sales Surface (Thousands sqm ) Revenues ( Th.$)/sqm)

2014

40 160.700 427

40 160.300 510

40 160.500 468

40 161.300 648

40 161.500 452

40 160.700 515

At the end of the second quarter of 2014, La Polar has 40 stores, although after June 2014, as previously mentioned, 2 stores have already closed, Panamericana y San Fernando.

UF/sqm2: (Retail revenues/UF monthly closing)/ Square meters (sales room, hallway, fitting room, storage). This is a monthly indicator, but reported on a quarterly basis.

Earnings Release 2Q 2014S

6. Financial Business Indicators 2Q´13

3Q´13

4Q´13

1Q´14

2Q´14

15.858

17.578

20.208

20.087

19.018

2Q´13

2Q´14

15.858

19.018

20%

Financial Revenues (CLP $ M)

LTM 2Q13

LTM 2Q14

Financial Revenues (CLP $ M) 56.276

76.891

37%

During the second quarter of 2014, the financial revenue was CLP $ M 19.018, while those in the same period of 2013 were CLP $ M 15.858, which represents an increase of 20%. Compared to the same period of the last 12 months, the growth was 37%. The main reason for this increase is the sustained raise that the portfolio experienced in the second half of 2013.

Financial Revenues LTM CLP $ B 8,8%

2Q 13

3Q 13

4,2%

9,5%

12,1%

4Q 13

1Q 14

2Q 14

Earnings Release 2Q 2014S

Financial Margin % LTM

75% 2Q 13

78%

77%

3Q 13

75%

4Q 13

71%

1Q 14

2Q 14

Financial Indicators

CHILE Financial Business

1Q´13

2013 2Q´13 3Q´13

2014 4Q´13

1Q´14

2Q´14

Credit Card Loan Stock ( CLP $ B)

112

121

139

179

163

153

Provision for loan losses ( CLP $ B)

% Provision for loan losses

12,89%

10,83%

8,31%

7,91%

9,07%

9,94%

Net loan losses ( CLP $ B)

Open accounts w/ balance (Th.)

453

461

464

519

508

524

Average Debt ( CLP $ Th.)

247

263

299

344

322

292

% of sales with credit card

45%

50%

52%

51%

49%

56%

The percentage of the sale of the retail card increases from 50% in 2Q 2013 to 56% in 2Q 2014 as a result of promotions and coordination between sales areas, retail and the financial business in order to enhance the retail payment method. The risk rate at the end of the second semester is kept below 10%, which is considered an industry standard for the segment that the company serves. The risk rate at the end of 2Q 2014 was 9.9% versus 10.8% in 2Q 2013. Unlike the second quarter of last year, the portfolio decreases compared to the previous quarter, thus by having a lower amount of new portfolio in the current stage, it also makes the risk rate indicator have a raise.

Earnings Release 2Q 2014S

Credit Card Loans2 (CLP $ B)

Credit Card Loan Portfolio (CLP $ B)

Total Stock CLP $ B 153 Total Stock CLP $ B 121

27 19

2Q´ 2013

126

103

JUN´13

2014

Normal

JUN´14 Renegotiated

The financed sale was lower in the second quarter compared to the same period last year due to the contraction of the financial business; however, the participation of the card in the retail business increased by 6 percentage points. In the second quarter of 2014, the gross loans reached CLP $ B 153, which means an increase of 26% compared to the same period last year, highlighting an increase in the normal portfolio ( not renegotiated) by 22%

Risk Rate

26,2%

22,6%

19,1%

16,1%

12,4% 12,9% 10,8%

8,3%

7,9%

9,1%

9,9%

DEC´11 MAR´12 JUN´12 SEP´12 DEC´12 MAR´13 JUN´13 SEP´13 DEC´13 MAR´13 JUN´14

Credit card loans with credit card La Polar includes: Cash Advances, Super Advances, and use in Associated Business and finance in La Polar Retail stores. Includes VAT.

Earnings Release 2Q 2014S

Loan Portfolio Indicators – Gross Loans (%)

44%

56%

37%

63%

17%

15%

13%

14%

18%

29%

19%

12%

24%

83%

85%

87%

86%

82%

71%

81%

88%

76%

DEC´11 MAR´12 JUN´12 SEP´12 DEC´12 MAR´13 JUN´13 SEP´13 DEC´13 MAR´14 JUN´14 Normal

Renegotiated

I can be seen that there has been a slight increase in the 2Q 2014 Renegotiated portfolio compared to the 1Q 2014, which is mainly explained to the lower portfolio that has been seen in these periods, from a portfolio of CLP $ B 163 to CLP $ B 153. Loan Portfolio Indicators – Portfolio by aging segments 6% 6%

7% 7%

13%

10% 91 a 180 31 a 90

75%

01 a 30 Current

JUN´13

JUN´14

Comparing June 2013 with June 2014, a composition of sections similar behavior is observed.

Earnings Release 2Q 2014S

7. EBITDA 3 2Q 2014 EBITDA CLP $ B Revenues Costs Gross Margin % Revenues SG&A ( w/o depreciation) % Revenues EBITDA % Revenues

2Q 2014 82,8 (58,6) 24,2 29,2% (26,4) -31,9% (2,2) -2,7%

Retail Growth 1,2% -0,9% 24,1%

2Q 2013 81,8 (57,4) 24,4 29,8% (21,3) -26% 3,1 3,8%

2Q 2014 19,0 (6,6) 12,4 65,2% (11,5) -60,4% 0,9 4,8%

Financial Growth 2Q 2013 19,9% 15,9 (2,8) -5,3% 13,1 82,6% 26,8% (9,1) -57% 4,0 25,5%

Consolidated 2Q 2014 Growth 2Q 2013 100,7 3,1% 97,7 (65,2) (60,2) 36,6 -2,4% 37,5 36,4% 38,4% (36,8) 21,1% (30,4) -36,5% -31,1% (1,3) 7,2 -1,3% 7,3%

While revenues for the quarter grew 3.1%, there was 2.4% gross margin which was lower due to a decrease in the financial margin because of less loans placements and write-offs from a larger portfolio scenario. Additionally, in the second quarter of 2013, a reversal of provisions in the financial business was made, which increases the comparison base of the previous period. Also there was an increase in the SG&A by 21.1% over the same period last year, because (as previously explained) to the financial restructuring of the Financial Business that was enhance due to the new regulations of the Superintendency of Banks and Financial Institutions (SBIF), it was also increased the minimum wage and a rise was made because of the collective agreements that were reached, that will be valid until 2016. Additionally in the second quarter of 2014, an overall restructuring plan was initiated which has meant a significant increase in the settlements expenses for approximately CLP $ B 2. This causes that the Consolidated EBITDA dropped to negative levels with an EBITDA margin of 1.3%. The restructuring plan that seeks greater efficiency began the second quarter with the restructuring of the management and a significant reduction in the marketing spending. The restructuring plan also considers the back office of the store, the closing of regional warehouses and the implementation of a new model of self-service for retail and financial segment. These results will be reflected in the second half of 2014.

See Annex on page 21 for information by operating segment

Earnings Release 2Q 2014S

1H 2014 EBITDA CLP $ B Revenues Costs Gross Margin % Revenues SG&A ( w/o depreciation) % Revenues EBITDA % Revenues

1H 2014 155,8 (113,5) 42,3 27,1% (48,5) -31,1% (6,2) -4,0%

Retail Growth 3,5% 1,3% 18,2%

1H 2013 150,5 (108,8) 41,7 27,7% (41,0) -27% 0,7 0,5%

1H 2014 39,1 (12,5) 26,6 68,1% (23,5) -60,1% 3,1 8,0%

Financial Growth 1H 2013 29,6% 30,2 (7,6) 17,9% 22,6 74,8% 24,2% (18,9) -63% 3,6 12,1%

Consolidated 1S 2014 Growth 1S 2013 194,9 7,9% 180,7 (125,9) (116,4) 68,9 7,2% 64,3 35,4% 35,6% (69,8) 16,4% (59,9) -35,8% -33,2% (3,1) 4,4 -1,6% 2,4%

EBITDA MARGIN LTM 1Q´13

2Q´13

3Q´13

0,9%

4Q´13

2,2%

1Q´14 2,4%

2Q´14 0,3%

-1,1% -3,7%

Earnings Release 2Q 2014S

8. Financial Statements of La Polar S.A. - IFRS Complete Financial Statements of Empresas La Polar S.A are available on the website of the Securities and Insurance Supervisor (www.svs.cl) and the website of Empresas La Polar, www.nuevapolar.cl a. Consolidated Income Statements4

Revenues

For the 6 Month Period

30-jun-14

30-jun-13

CLP $ M

192.637

181.377

Cost of Sales

(126.205)

(118.374)

Gross Profit

66.432

63.003

Distribution Costs Administrative Expenses

(986)

(755)

(72.561)

(62.376)

Other Profit ( Loss)

686

(220)

Financial Revenue

325

3.118

(13.766)

(13.518)

Financial Costs Foreign Currency Exchange Differences

(867)

548

Profit (Loss) From Inflation - Indexed Assets and Liabilities

(243)

(25)

Profit (Loss) Before Taxes

(20.980)

(10.224)

Profit ( Loss) Income Taxes

(418)

2.107

(21.398)

(8.117)

(21.398)

(11.781)

Profit ( Loss) After Taxes Profit (Loss) of the Discontinues Operations of the Period Profit (Loss)

(3.664)

In 2013 it was added the Profit (loss) from the discontinued operations of the period, referring to the decision by the Board to put on sale La Polar S.A.S.

Earnings Release 2Q 2014S

b. Consolidated Balance Sheet5 30-06-2014 CLP $ M

31-12-2013 CLP $ M

30-jun-13 CLP $ M

Current Assets Cash and cash equivalents Other current financial assets Other current non financial assets Current trade and accounts receivables Inventory Tax assets Total current assets

12.869 480 14.321 110.971 55.428 33.462 227.530

21.403 839 7.599 128.520 51.026 32.956 242.342

72.720 13.081 15.619 105.870 59.165 17.070 283.523

Non-Current Assets Fees Receivable Other non-current financial assets Intangible assets other than goodwill Properties, plant and equipment Deferred tax assets Total non-current assets

36.617 908 19.153 60.649 2.757 120.084

48.710 437 19.333 61.173 2.865 132.518

19.885 244 19.494 70.353 12.268 122.244

Non-Current Assets held for sale

20.146

Total Assets

347.614

395.007

405.767

Current Liabilities Other current financial liabilities Other trade and other accounts payable Other current provisions Current tax liabilities Employee benefits provisions Other current non-financial liabilities Total current liabilities

23.550 67.848 3.561 4.470 4.055 793 104.277

29.724 72.292 3.987 4.039 5.961 3.145 119.147

27.978 63.734 13.462 2.483 4.129 1.201 112.986

Non-current Liabilities Other non-current financial liabilities Other long term provisions Deferred tax liabilities Total non-current liabilities

188.677 2.284 43.229 234.189

177.260 3.059 44.941 225.261

173.500 1.630 38.533 213.663

Liabilities directly associated with noncurrent assets held for sale Total Liabilities Equity Issues capital Retained earnings Other reserves Equity attributable to: Owner of the parent company Non-controlling interest Total Equity Total Liabilities and Equity

20.631 338.466

365.039

326.649

302.678 (310.961) 17.432

302.678 (289.937) 17.227

302.678 (243.041) 19.482

9.148

29.967

9.148

29.967

79.118 0 79.118

347.614

395.007

405.767

For 2013 it is added Non-Current assets held for sale and liabilities directly associated with Non-Current assets held for sale, referring to the decision by the Board to put on sale La Polar S.A.S.

Earnings Release 2Q 2014S

Indicators

Indicators Current Ratio Acid Ratio

Unit Times Times

Jun´14 2,18 1,65

Mar´14 2,04 1,50

Dec´13 2,03 1,61

Sep´13 2,34 1,75

Jun´13 2,51 1,99

The current ratio decreases in June 2014 compared to June 2013 due to the decrease in cash and equivalents. As for the Acid ratio, it decreased mainly for the increased in the inventory by 4% compared to June 2013.

Indicators Inventory Turnover Inventory Turnover

Unit Times Days

Jun´14 4 86

Mar´14 4 97

Dec´13 5 78

Sep´13 4 88

Jun´13 5 84

Comparing 2Q 2014 with 2Q 2013, it is observed that the number of days of inventory increase 5 days. Indicators Average Payment Period

Unit Days

Jun´14 70

Mar´14 80

Dec´13 70

Sep´13 51

Jun´13 59

The increase in the average payment method compared to June 2013 days is due to an increase of the trade payables and other accounts payable.

Indicators Current Liabilities Non - Current Liabilities

Unit % %

Jun´14 31,1% 68,9%

Mar´14 32,5% 67,5%

Dec´13 32,6% 67,4%

Sep´13 30,4% 69,6%

Jun´13 33,1% 66,9%

Current liabilities, in June of 2014, represent 31.1% of total liabilities. DF / EBITDA Financial Debt to EBITDA

Indicators Average Collection Period

Unit Days

Jun´14 149,8

Mar´14 20,7

Dec´13 23,3

Sep´13 -22,9

Jun´13 -11,9

Jun´14 171

Mar´14 172

Dec´13 189

Sep´13 177

Jun´13 178

The average collection period decreased 7 days compared to June 2013, due to an increase in the sale of La Polar Card.

Earnings Release 2Q 2014S

c. Cash Flow Statements

Cash Flow Statements

30-jun-14

30-jun-13

CLP $ M

258.682

202.230

Payment to suppliers for supplying goods and services

(203.520)

(174.259)

Payment to and account of employes

(30.098)

(25.492)

Other payments for operating activities

Cash flow from (used in) operating activities Proceeds from sales of goods providing services

(25.365)

(43.301)

Received Interest

1.308

6.833

Paid Interest

(489)

Income taxes refunded (paid)

(710)

1.617

Net cash flow from operating activities

(192)

(32.371)

Cash flow (used in) investing activities Cash flows used to obtain control of subsidaries or other business Loans to related entities Proceeds from disposal of property, plant and equipment Addittions to property, plant and equipment

(9.191)

73 (2.088)

Addittions to intangible assets

(82)

Other cash flow Net cash flow from investing activities

(3.736) (14.655)

(2.015)

(27.664)

(482)

(4.649)

Proceeds from financial lease liabilities

(1.015)

348

Paid Interests

(4.829)

Net cash flow from financing activities

(6.326)

(4.301)

Net decrease in cash and cash equivalents

(8.534)

(64.337)

Cash and cash equivalents at the beginning of the period

21.403

135.935

Cash and cash equivalents at the end of the period

12.869

71.598

Cash flow (used in) financing activities Proceeds from issuance of shares Proceeds from loans

Earnings Release 2Q 2014S

Operating activities generated a negative cash flow of CLP $ M 192 that was lower than the negative flow of the same period in 2013 for CLP $ M 32.371, this is due to less use of working capital in the portfolio decreased compared to December. Investing activities generated a negative cash flow of CLP $ M 2.015 which is inferior to CLP $ M 27.664 of last period. This was because of the closure of operations in Colombia, so there were no remittances to this subsidiary.

Financing activities generated a negative cash flow of CLP $ M 6.326. Large part of this amount is due to the interest payment of F Bond and capital of the G Bond.

9. Debt restructure stages

a. Debt Restructure On April 10th, the Board of La Polar announced the decision to initiate the process of renegotiating the debt with various creditors, which after several instances of negotiation (meetings of shareholders and bondholders), it was obtained the approval of the creditors meeting on September 1st, of the terms proposed in the shareholders meeting held on August 8th; being summarized in the following points:   

The issuance of a convertible bond into shares was approved in the amount CLP $ B 163.633 with a maturity year 2113 (payable in one payment at zero interest rate) and the issuance of 1,997,235,044 shares for payment, which implies a dilution of 66.67% from current shareholders. It was agreed to continue paying interest on the F Bond that currently accrue, until realization of the exchange. The contracts of F and G Bonds are modified to be prepaid through convertible bonds.

This process of debt restructuring will allow the company to have a great improvement in financial indicators, especially debt, as well as better financial position.

Earnings Release 2Q 2014S

You can see the bond modification in the next table:

Bond Modification F Series

G series

Par Value

CLP $ M 196.217

CLP $ M 197.669

Amortization

1 in 2113

N° of shares to convert

1.677.677.437

319.557.607

Prepaid Value

CLP $ M 137.452

CLP $ M 26.181

Interes Rate

There isn´t

Senior Debt

Changes in term and prepayment option

CLP $ B 196

F Bond and Modify Senior CLP $ B 59

1,677,677,437 Shares

Convertible Bond CLP $ B 137

(56%)

Issuance of the convertible bond Convertible Bond CLP $ B 26

Conversion Option for 3 years

66,6%

319,557,607 Shares (11%)

Junior Debt

CLP $ B 197

Changes in term and prepayment option

G Bond and Modify Junior CLP $ B 171

For both Bonds (F and G), there is an approval process in the Superintendency of Securities and Insurance, to review and approve: (i)The issuance of the convertible bond, (ii) a capital increase to support this bond (iii) Bonds F and G modifications. Once this process has ended, it will began a preferential option period (POP) of 30 days, in which current shareholders may subscribe at a price of CLP $ 81,929 per share for the convertible bond. Once the POP has ended, the company shall mandatorily prepay, with the money received and the available convertible bonds, the portion of the F and G Bonds equivalents to eh F Bond in CLP $ B 137 and the G Bond in CLP $ B 26.

Earnings Release 2Q 2014S

Essentials Facts of the debt restructure

Extraordinary Shareholders' Meeting On July 1st, it was held the Extraordinary Shareholders Meeting in which the most important points are the following:  An issue of convertible bonds into shares was approved for $ 81,816,733,577 without interest or amortization and one due in 2113. It was approved an exchange ratio of 12.20533 shares per $ 1,000 par value of each convertible bond.  Following the approval of the issuance of these convertible bonds, a capital increase by $ 81,816,733,577 and the issuance of 998,617,522 shares for payment were approved.  These agreements were subject to approval by the creditors of the company.

Bondholders' Meeting On July 21st, 2014 the Board of Bondholders was held for the F and G series where the following was reported:  The proposed amendment agreed at the Extraordinary Shareholders' Meeting held on July 1st was rejected.  Banco de Chile was empowered as the representative of the F and G Bondholders to present two new proposals to La Polar on the debt restructuring, which are summarized below: i. Counterproposal A: Issue of Convertible Bonds after its capital increase and the conversion exercise, the bondholders have at least 80% ownership of La Polar. ii. Counterproposal B: Pay interest and capital on the Bonds in accordance with the current development table, during the period of this table. If La Polar does not have sufficient funds, it, may be able to preferably offer to its shareholders a capital increase of an amount sufficient to do the payment. 

The suspension of the Creditors Meeting for july 23rd, which was approved.

Earnings Release 2Q 2014S

Extraordinary Shareholders' Meeting On August 8th, it was held again an extraordinary Shareholder´s meeting which includes the following:  G.

It was agreed to reject the counterproposals A and B submitted by the Banco de Chile for the Bonds F and

 An issue of convertible bonds which is a capital increase of $ 163.333 billion and the issuance of 1,997,235,044 shares for payment were approved. This issue of shares and capital increase involves a dilution of the existing shareholders of the company to 66.66%.

Shareholder´s Meeting On August 27th, the Bondholders meeting was held for the F and G Series where the following was reported:   

The issuance of a convertible bond into shares was approved in the amount of $ 163.633 billion with a maturity year 2113 (payable in one payment with zero interest rate) and the issuance of 1,997,235,044 shares for payment, which implies at a dilution of 66.67% from current shareholders. It was agreed to continue the payment of interest on the F series that currently accrue to the realization of the exchange. Contracts for F and G Bonds are modified to be prepaid through convertible bonds.

Creditors Meeting On September 1st, the Creditors Meeting was held where the following was communicated: 

I was approved all previously agreed in the Bondholders meeting that took place on August 27th.

Earnings Release 2Q 2014S

10. Annex: EBITDA Quarter Evolution CLP $ M

Retail Business Revenues Costs Gross Margin % Revenues

SG&A (w/o depreciation) EBITDA % Revenues

Financial Business Revenues Costs Gross Margin % Revenues

SG&A (w/o depreciation) EBITDA % Revenues

1Q 2013

2Q 2013

3Q 2013

4Q 2013

1Q 2014

2Q 2014

68.673 (51.361) 17.312

81.818 (57.406) 24.412

75.169 (56.428) 18.741

104.489 (75.849) 28.640

72.942 (54.865) 18.078

82.811 (58.607) 24.204

25,2%

29,8%

24,9%

27,4%

24,8%

29,2%

(19.704) (2.392)

(21.305) 3.107

(20.010) (1.269)

(27.507) 1.133

(22.045) (3.968)

(26.446) (2.241)

-3,5%

3,8%

-1,7%

1,1%

-5,4%

-2,7%

14.318 (5.639) 8.679

15.858 (3.258) 12.600

17.578 (2.545) 15.034

20.208 (6.417) 13.792

20.087 (5.849) 14.238

19.018 (6.619) 12.399

60,6%

79,5%

85,5%

68,2%

70,9%

65,2%

(9.880) (395)

(9.055) 4.044

(12.437) 3.101

(12.899) 1.533

(12.028) 2.210

(11.483) 917

-2,8%

25,5%

17,6%

7,6%

11,0%

4,8%

(1.055) 1.055

(1.167) 1.167

91.975 (60.714) 31.261

100.662 (65.226) 35.436

Consolidation Adjustments Revenues SG&A (w/o depreciation) Consolidated Revenues Costs Gross Margin

82.991 (57.000) 25.991 % Revenues

SG&A (w/o depreciation) EBITDA % Revenues

97.676 (60.664) 37.012

92.747 (58.973) 33.774

124.698 (82.266) 42.432

31,3%

37,9%

36,4%

34,0%

35,2%

(29.584) (2.787)

(30.360) 7.151

(32.447) 1.832

(40.406) 2.667

(33.018) (1.757)

(36.761) (1.325)

-3,4%

7,3%

2,0%

2,1%

-1,9%

-1,3%