FINANCIAL HIGHLIGHTS GRUMA, S.A.B. DE C.V. AND SUBSIDIARIES (millions of pesos, except where indicated 1 )

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2 FINANCIAL HIGHLIGHTS GRUMA, S.A.B. DE C.V. AND SUBSIDIARIES (millions of pesos, except where indicated 1 ) Net Sales by Region 7% 2% 19% 43% 29% United States and Europe Mexico Venezuela Central America Asia and Oceania INCOME STATEMENT Var. Sales volume 2 4,287 4,243 1% Net sales 44,793 35,816 25% Operating income 3,267 1,874 74% Operating margin 7.3% 5.2% 206bp EBITDA 3 4,608 2,978 55% EBITDA margin 10.3% 8.3% 197bp Net (loss) income (11,818) 2,379 (597%) Majority net (loss) income (12,340) 2,233 (653%) Net Sales 2008: Ps billion Net Sales (millions of pesos) CAGR : 13% BALANCE SHEET Var. Cash and cash equivalents 1, % Total assets 44,435 33,911 31% Debt 4 14,147 7,854 80% Total liabilities 35,153 15, % Stockholders equity 9,282 18,577 (50%) Majority stockholders equity 5,639 15,695 (64%) 27,367 29,346 32,190 35,816 44, EBITDA (millions of pesos) CAGR 04-08: 9% 3,212 2,866 3,052 2,978 4,608 OTHER Var. Millions of common shares outstanding % Earnings (loss) per share 5 (21.85) 4.63 (572%) Book value per share (69%) Investments 2,697 2,223 21% All references herein to peso are to the Mexican peso. 2 Thousands of metric tons. 3 EBITDA = operating income + depreciation and amortization affecting operating income. 4 Measured in dollar terms, debt increased 42% to US$1,023 million. 5 Figures in pesos and based on weighted average of outstanding shares. 6 Figures in pesos and based on outstanding shares at year-end. 7 Compounded annual growth rate. Overcoming Challenges to Feed the World

3 The theme of GRUMA s 2008 annual report, Overcoming Challenges to Feed the World, conveys GRUMA s efforts to maintain strong, stable operations in the midst of global recessionary macroeconomic conditions and to bring its high-quality staple products and solid brands to its customers around the world. GRUMA s stable operating results in 2008 and its ongoing efforts to strengthen its business will enable the company to instill confidence in and deliver value to its key stakeholders: customers, consumers, employees, and shareholders. Table of Contents 2 Operations and major brands 4 Message to shareholders 8 Staple foods: dependable, defensive, diversified 11 Solid brands: at the heart of our success 14 Social and environmental responsibility 17 Management s discussion and analysis of results of operations 22 Report of corporate governance committee 23 Report of audit committee 26 Report of independent auditors 28 Consolidated financial statements 34 Notes to consolidated financial statements 66 Board of directors and management team Staple Foods + Solid Brands

4 Operations and Major Brands United States Europe Mexico Asia Central America Venezuela Oceania About GRUMA GRUMA, S.A.B. de C.V., is one of the world s leading tortilla and corn flour producers. Established in 1949, GRUMA is engaged primarily in the production, marketing, distribution, and sale of tortillas, corn flour, and wheat flour. With leading brands in most of its markets, GRUMA has operations in the United States, Mexico, Venezuela, Central America, Europe, Asia, and Oceania. GRUMA also exports to about 70 countries worldwide. GRUMA is headquartered in Monterrey, Mexico, and has 92 plants and approximately 20 thousand employees. In 2008, GRUMA had net sales of US$3.2 billion, of which 71% came from non-mexican operations.

5 MESSAGE to Shareholders My fellow shareholders: I am pleased to report that, in 2008, GRUMA achieved better operating results than in previous years, despite the fact that we were operating in an extremely challenging macroeconomic climate. The global economy slid from relative weakness into a deep recession the length of which remains unknowable. Consumer confidence and spending, as well as the availability of credit in general, plummeted during the year, the fourth quarter in particular. This affected nearly every region and business sector in the world, including the food industry. Roberto González Barrera Chairman of the Board and Chief Executive Officer Despite this exceedingly challenging economic environment, we succeeded in increasing net sales by 25 percent, to Ps.44,793 million. More importantly, we increased cash generation to Ps.4,609 million, 55 percent more than in GIMSA and Gruma Venezuela both reported excellent operating results. Molinera de México also performed well, increasing net sales and taking advantage of improvements in inventory management. Despite the severe economic conditions in the United States, Gruma Corporation succeeded by focusing its strategy on maintaining sales volume and reducing costs. Our consolidated 2008 performance reflects the strength of our overall operations. We are creating a sound platform for stronger growth when the global economy recovers by strengthening the base of our business: our staple products and leading brands. 4 Overcoming Challenges to Feed the World

6 Our staple and innovative products and leading brands GRUMA s core products tortillas, corn flour, and wheat flour are staples: they accompany most meals and are the foods that people rely on for daily nutrition. These products tend to fare well in difficult economic times and, as a result, help us to increase volumes even in a challenging economic environment. We have oriented our marketing strategy to deliver value to large segments of the population. In 2008, for example, we introduced to our US consumers Calidad, a national value brand of tortilla and related products aimed at capturing the most price-sensitive consumers. Given current economic conditions, we expect Calidad to generate robust sales even in difficult times. In addition, we have strengthened our brand equity over the years with a variety of value-added products that satisfy a broad range of tastes and preferences in both our home markets and the global markets that we have entered in the past several years. For example, our launch of Mission s Life Balance line of tortilla products in 2008 builds on the strength and popularity of the Mission brand while attracting a consumer base that is increasingly focused on healthful eating. In the United Kingdom, Mission is now the top wrap brand. And we continue to consolidate our presence in the attractive markets of Asia and Oceania. Strong operations Our extensive portfolio of staple foods, value-added products, and solid brands contributes significantly to our ability to achieve growth and maintain stable operational results even in challenging times. In addition, we have taken a number of steps to strengthen our operations in the face of the difficult economic and Staple Foods + Solid Brands 5

7 MEssage to Shareholders market environment that continues into To protect margins, we will continue to implement cost-cutting initiatives; these include using alternative raw materials that both improve quality and optimize costs and optimizing logistics, transportation, and distribution lines in some of our operations. In addition, we are better managing general administrative expenses and, as always, maintain strict criteria for capital expenditures. Part of our business strategy has always been to take advantage of opportunities that make sense for the strategic and profitable growth of our company. In 2008 we issued more than 82 million shares of GRUMA common stock, which increased our capital stock by approximately US$200 million. We used the proceeds of this offering to complete the construction of our Melbourne, Australia, and Panorama, California, plants, as well as the expansion of our plants in Mérida and Mexicali, Mexico, during the year. Financial challenge in 2008 Our strong operating performance in 2008 was overshadowed to a large degree by a significant challenge to our capital structure. Due to volatility in the financial markets and fluctuations in exchange rates, GRUMA experienced a loss in currency derivatives of approximately US$1 billion during We are certain that we will overcome this challenge and continue to deliver enduring value to our shareholders. People and planet In today s world, financial sustainability increasingly goes hand in hand with environmental and social responsibility. At GRUMA, we are committed to both. We undertook a number of initiatives in 2008 that improve our environmental performance and the well-being of the communities in which we operate. Gruma Corporation reduced energy use by installing energy-efficient lighting in several of its plants. We also undertook several initiatives to improve the health and well-being of people in our communities. For example, in the United States we implemented two programs to address obesity, and in Mexico we provided food assistance to low-income communities and victims of natural disasters. In addition, GIMSA, Molinera de México, and Prodisa the three companies that represent Gruma México achieved the Socially Responsible Company certification from the Mexican Center for Philanthropy (Centro Mexicano para la Filantropía). 6 Overcoming Challenges to Feed the World

8 Outlook for 2009 and beyond The global recession that began, by all accounts, in late 2007 is expected to continue in 2009 and possibly beyond. We believe, however, that GRUMA has a strong operational structure and competitive advantages that will enable it to emerge from the current economic environment stronger than ever. GRUMA s most valuable asset is its 60 years of experience: we have sustained our business through all kinds of situations, and each has helped us to strengthen our operations and constantly improve our business model. Throughout our evolution we have been supported by excellent human resources and state-of-the-art technology. As a result of our experiences, today we are better prepared to address challenging circumstances, continue our growth, and achieve renewed success. We are deeply grateful to our 20,000 dedicated employees and other stakeholders: our board of directors, the millions of people who enjoy our products, our customers, our executive team, and the communities in which we are privileged to live and work. Finally, I want to express my enduring gratitude to our shareholders. We are committed to working harder than ever throughout 2009 and beyond to earn your continuing confidence in GRUMA. Roberto González Barrera Chairman of the Board and Chief Executive Officer Staple Foods + Solid Brands 7

9 Staple foods: Dependable, Defensive, Diversified Most of GRUMA s products are staple foods that people rely on and enjoy every day. These products primarily tortillas, corn flour, and wheat flour represent familiarity and value to people all over the world. In Mexico and other Latin American countries, the tortilla is the single most important staple food. And as versatile platform foods, tortillas accommodate a broad range of toppings, preparations, and cultural and national tastes. What s more, GRUMA s extended family of staple foods, sold in Europe, the Middle East, Asia, and Oceania, is important to the company s ability to maintain volumes and stable operations in challenging economic times. STRENGTH in a diversifying market The market for staple foods is swiftly diversifying, and GRUMA is taking advantage of that diversity to move into new growth segments. For example, GRUMA launched its affordable Calidad brand in first quarter 2008 to US markets with large Hispanic populations and traditionally low-priced brands. Calidad offers high-quality products at prices that are attractive to cost-conscious families, a rapidly growing demographic in these challenging economic times. For a growing number of people, healthy foods are the new staples. The Mission Foods Life Balance product line, introduced in 2008, satisfies health-conscious people who seek nutrition, taste, and convenience. Carb Balance and 96% Fat Free Heart Healthy products allow them to reduce carbohydrate and fat intake. Each product is carefully differentiated and promoted through in-store displays, public relations initiatives, and online advertising on popular websites such as Oprah.com. Life Balance emerged from a productdevelopment process that we put in place during 2006 and Because the process has touched consumers at multiple points during product development, we know the product has broad appeal. Our research tells us that more than 80 percent of consumers would recommend Life Balance. Appealing taste and a perception that the products are good for them are the top reasons cited. 8 Overcoming Challenges to Feed the World

10 Also in the United States, Azteca Milling introduced in 2008 MASECA Amarilla, an authentic yellow corn flour made from the highest quality yellow corn kernels. Products such as this are helping Azteca Milling to maintain sales volumes in a challenging environment. GIMSA, GRUMA s corn flour subsidiary in Mexico, has thrived for 60 years because the corn tortilla, made from raw corn or corn flour, is the primary staple in Mexican cuisine. GIMSA provides corn flour for institutional and retail sale and leads the effort to convert makers of tortillas using the traditional raw-corn method of tortilla production to the corn-flour method. This conversion, together with the defensive nature of tortilla products, has enabled GIMSA to maintain stable sales in recent years despite economic volatility and recessionary conditions. Calidad, Mission Foods new national value brand, offers quality tortillas, tostadas, and chips at attractive prices for cost-conscious consumers. Staple products around the world As it has grown its operations globally, GRUMA has diversified its product offerings to include staple products in a variety of global markets. For example, Gruma Corporation produces polenta, a staple element in Italian cuisine and flatbreads such as pita bread, chapatti, and naan, which are core components of the diets of different cultures around the world. And we bring fresh tortilla products to the growing markets of Asia and Oceania through our tortilla plant in Shanghai, China, which opened in 2006; a plant in Malaysia, which we acquired in 2007; and a new plant in Australia that began operations in the fourth quarter of For our Oceania market, in 2008 we continued to improve the quality of our wraps by delivering a fresher, softer product. In addition, we developed more contemporary packaging and have placed recipes on the back of our packaging to provide new ideas for the preparation of, and to encourage new uses for, our products. Staple Foods + Solid Brands 9

11 Product innovations for today s busy lifestyles Nearly half of all people snack because they don t have time for a full meal. In fact, the average consumer eats 231 morning snacks, 283 afternoon snacks and 261 late-evening snacks in a given year. So for people on the go a growing and demanding consumer segment snacks and small-plate products have become staples that are attractive to foodservice operators. In response to this trend, Gruma Corporation developed its snacking initiative, providing its foodservice customers smaller versions of a number of its popular products, which enables them to take advantage of changing consumer lifestyles and attract new incremental business. These products include 10-inch wraps in multiple flavors; corn tortillas for tapas and small plates; and handheld tacos, appetizers, and portable snacks. This group of products should gain ground as people seek alternatives to full meals that suit their busy lifestyles. In yet another response to the needs of busy families, GRUMA expanded the appeal of its SELECTA wheat flour by introducing SELECTA Tortilla Mix, an instant mix that allows for quick preparation of homemade-style wheat flour tortillas. Gruma Corporation introduced three new Plus! products to expand its Mission brand offerings: Organic Stone Ground Tortilla Chips, Stone Ground Tortilla Strips, and Super Thin Tortilla Chips. 10 Overcoming Challenges to Feed the World

12 Solid brands: At the Heart of our Success GRUMA s products inspire comfort and confidence in customers and consumers in every demographic and country in which they are sold. Our strong global brand equity stems first from our high quality standards and increasing focus on healthful foods as well as from the broad variety of appealing products that we offer. Equally important is our focus on developing our brands to continually attract and retain new generations of loyal customers and families. GRUMA s solid brand equity, cultivated over decades through not only quality products but also a steady, comforting presence in our communities, continues to grow. The combination of GRUMA brands and quality staple products has established a defensive bulwark that has enabled GRUMA to improve its operating performance in 2008 and will serve as a platform for continuing growth long into the future. GRUMA s largest brand by sales, Mission, has been built and stewarded for approximately the past thirty years using a strategic toolbox of advertising, public relations, and promotional events. Today the Mission brand is both well-known and popular in the United States. The Mission brand encompasses a broad range of product lines that are woven into the lives of millions of Hispanics and, increasingly, non- Hispanics. Mission tortillas are highly visible on store shelves, from convenience stores to supermarkets. GRUMA has broadened the visibility and appeal of the Mission brand through a number of innovative programs, from its tortilla factory at Disneyland to television programs featuring its products. In 2008, for example, Mission Foods was featured as America s tortilla industry leader in an episode of Unwrapped, the top-rated program of the Food Network, which itself is the top-rated food channel in the United States. Host Marc Summers took viewers on a behind-thescenes tour of Mission Foods Dallas tortilla plant to demonstrate tortilla production. The show drew nearly 700 thousand viewers and aired in a number of major media markets. Staple Foods + Solid Brands 11

13 A Mission Foods initiative to provide busy families with quick and creative meal ideas was highlighted in Wrap It Up: Easy Meals That Go Anywhere, an article that featured photos of and recipes for a variety of meals. The article, published in September 2008, achieved a combined print and online circulation of 4.3 million. In addition, new Mission snacks from the Plus! products line were featured in the Houston Chronicle, Los Angeles Daily News, Miami Herald, and Snack Food & Wholesale Bakery Magazine. Maseca, GRUMA s second-largest brand by sales, is also the company s oldest brand. Generations of Mexicans have grown up with the Maseca brand, which offers more than 40 kinds of corn flour to appeal to every possible taste. Maseca is sold to institutional customers, including tortilla producers, supermarkets, distributors, and government agencies. Maseca brand corn flour is sold mainly in Mexico, the United States, and Central America. The quality, variety, and authentic flavor that Maseca offers consumers, and the superior service that Maseca offers customers, have enabled this brand to endure for sixty years. In Europe, we increased the visibility of our products with a retailer sampler roadshow, during which we distributed samples of our wraps, chapatti, and naan outside targeted stores. Store customers walked away with a clear understanding of our products and how they fit into their lifestyles. As a result of this and other initiatives, sales of our wrap product grew 76 percent in 2008, and penetration in the United Kingdom increased to 12 percent from 6 percent in Guerrero blends authenticity with a sense of community Mission Foods bestselling Guerrero brand is the tortilla brand favored by Hispanics in the United States. The Guerrero brand remains strong despite fierce competition in a very fragmented, local market because people prefer its taste and authentic Mexican flavor and trust the superior quality of Guerrero products. 12 Overcoming Challenges to Feed the World

14 Healthy Creations In response to the growing prevalence of obesity in adults and children, in January 2008 Mission Foods introduced Healthy Creations for its foodservice customers. Healthy Creations enables our foodservice clients to introduce healthy options to their customers. All Healthy Creations recipes adhere to the following product standards: Contain 8 grams of fat or less per serving Contain 500 calories or less per serving Made from whole grains Contain fresh, authentic ingredients Added sugars and sodium are kept to a minimum To prepare for the launch, our chefs developed 20 healthy, delicious recipes that use our products, are easy for restaurants to prepare, and create enticing menu items. These recipes can be found online at Through a focus on flavor and ethnic infusion, the Without Borders campaign, launched in 2008, aims to broaden the reach of Mission products for foodservice customers beyond Mexican cuisine. High quality standards take GRUMA to the Olympics GRUMA s adherence to strict quality standards makes it a supplier of choice to key customers around the world. For example, through its Asia and Oceania division, GRUMA supplied, to the official catering service provider for the 2008 Olympic Games in Beijing, more than 750 thousand tortillas, produced in our plant in Shanghai, China, for 50 thousand meals for the athletes competing in the Games. This division also supplied tortillas for the 2008 Paralympic Games, held in Beijing in August. Staple Foods + Solid Brands 13

15 Social and Environmental Responsibility As stakeholder expectations continue to rise, so does our understanding that our ability to grow profitably is inextricably linked to our efforts to be more socially and environmentally responsible. Accordingly, at GRUMA we are working to improve the environmental and social impacts of our operations. Below are several, but by no means all, of our initiatives to improve the social and environmental performance of our operations. ENVIRONMENTAL initiatives In 2008 Mission Foods launched an initiative to install energy-efficient lighting and equipment at its plants in Jefferson, Georgia, and McMinnville, Oregon. The program enabled the company to reduce energy use and achieve savings in energy costs. Mission plans to roll out similar lighting configurations in additional plants in Gruma México launched a number of important environmental initiatives in 2008, the most important being its Sustainable World Program, which encompasses reforestation, green awareness campaigns, and training, and focuses on reducing, reusing, and recycling materials. Also in 2008, six GIMSA plants in Mexico were recertified to the ISO14001:2004 standard. The wheat division of Molinera de México launched an energy-savings program in three of its nine plants that led to a one percent reduction in electricity consumed per ton of processed wheat. Molinera plans to extend this program to the rest of its plants in The subsidiary has also been able to reduce the amount of polypropylene used to manufacture the plastic bags used as packaging for the wheat flour it sells in bulk. In the fourth quarter of 2008, in which these new bags were introduced, GRUMA reduced polypropylene use at its Puebla plant by 7.5 percent. The new bags will be rolled out to the rest of the plants in Mexico during The three companies of Gruma México GIMSA, Molinera de México, and PRODISA received the Socially Responsible Company (Empresa Socialmente Responsable) recognition from the Mexican Center for Philanthropy (Centro Mexicano para la Filantropía). 14 Overcoming Challenges to Feed the World

16 SOCIAL initiatives Mission Foods has launched a number of initiatives to fight obesity and its effects. Mission focused its efforts on young people, partnering with Marvin Woods, Atlanta TV chef and cookbook author and with Sabrina Bryan, member of The Cheetah Girls and star of the Disney Channel, to communicate the importance of exercise and a healthy diet. Mission sponsored the Healthy Kids Challenge in Dance for Health!, a national fundraising event that promotes dance as a healthy family activity. In 2008, Dance for Health! events drew more than 50 thousand attendees at 129 schools nationwide. In addition, Mission launched a section on its website entitled Healthy Creations ( com/healthy_recipes), which provides food-servicefriendly recipes that are both appealing and nutritionally sound. In the United States, Gruma Corporation cosponsored, together with the City of Houston, the Feria de la Salud, an outdoor community outreach program for Hispanics held annually by the American Diabetes Association in Houston, Texas. The fair promotes healthy food choices and helps raise awareness of personal lifestyle choices and their impact on quality of life. The fair features live music and dancing, nutritional experts, information that promotes healthy lifestyles, and promotions of healthful foods such as Maseca corn flour. Gruma Corporation also supported a community-relations program by investing in 14 local nonprofit groups that help Hispanic communities, and by donating to the Institute of Mexicans Abroad Scholarship Fund. Staple Foods + Solid Brands 15

17 Gruma México provided much needed aid, in the form of tortilla donations, to the victims of flooding in Tampico and Veracruz through its mobile tortilla shops ( tortimóvil ). The GRUMA Foundation in 2008 made grants to several nonprofit organizations, including Hospital Infantil Federico Gómez, Cruz Roja Mexicana, and Sistema para el Desarrollo Integral de la Familia en Yucatán. The foundation also supported 2,500 people in low-income communities in Mexico City. In Venezuela, Costa Rica, and Guatemala, GRUMA provided training to farmers. In Honduras, we supported school remodeling and expansion efforts. In Honduras and El Salvador, we provided books and school supplies to children. GRUMA and its Maseca, Mission, and Guerrero brands made it possible for Mexico: Festival of Toys, the Mexican toy exhibit of the Papalote Museo del Niño, to travel from its Washington, D.C., home to New Orleans, Louisiana, and will sponsor its travel to cities across the United States during the next three years. The colorful exhibit celebrates play, the common language of children everywhere. For Hispanic children in particular, this celebration of life and regional culture links them across regions and languages. In Europe, Mission Foods provided fundraising and product support to multiple nonprofit groups that help those in need. These include Wear it Pink, Emergency Services Magazine, Pret Charity Run, and Children in Need, to which we donated Mission lunchboxes for schools. 16 Overcoming Challenges to Feed the World

18 Management Discussion and Analysis of Results of Operations CONSOLIDATED RESULTS GRUMA, S.A.B. DE C.V., SUBSIDIARIES 2008 vs GRUMA s sales volume increased by 1% to 4,287 thousand metric tons compared with 4,243 thousand metric tons in This increase was driven mainly by GIMSA and, to a lesser extent, Molinera de México. Net sales increased by 25% to Ps.44,793 million compared with Ps.35,816 million in The increase was due primarily to Gruma Venezuela, Gruma Corporation, and, to a lesser extent, Molinera de México and Gruma Centroamérica. Sales from non-mexican operations constituted 71% of consolidated net sales in Cost of sales increased by 25% to Ps.30,237 million compared with Ps.24,192 million in 2007, due primarily to Gruma Venezuela, Gruma Corporation, and, to a lesser extent, Molinera de México and Gruma Centroamérica. Cost of sales as a percentage of net sales remained flat at 67.5%. Selling, general, and administrative expenses (SG&A) increased by 16% to Ps.11,289 million compared with Ps.9,750 million in 2007, due primarily to Gruma Venezuela, Gruma Corporation, and, to a lesser extent, Gruma Centroamérica. SG&A as a percentage of net sales improved to 25.2% from 27.2% in 2007, driven mainly by Gruma Venezuela, Gruma Corporation, and Molinera de México. GRUMA s operating income increased by 74% to Ps.3,267 million compared with Ps.1,874 in Operating margin improved to 7.3% from 5.2% in 2007, due primarily to Gruma Venezuela, GIMSA, and, to a lesser extent, Molinera de México and Gruma Corporation. Other expense, net, was Ps.181 million compared with income of Ps.556 million in 2007, which resulted from a gain on the sale of Banorte shares during Net comprehensive financing cost was Ps.15,088 million compared with income of Ps.167 million in The cost resulted mainly from losses on currency derivative instruments of Ps.14,710 million. Out of this amount, Ps.3,480 million was paid during 2008, and Ps.11,230 million is the noncash loss that relates to the mark-to-market valuation of positions that are still open as of December 31, 2008, due in the years 2009, 2010 and GRUMA s equity in earnings of unconsolidated associated companies, net, primarily GFNorte, represented income of Ps.618 million compared with income of Ps.708 million in Taxes decreased 53% to Ps.435 million compared with Ps.926 million in This decrease was due primarily to the aforementioned losses on currency derivative instruments. Staple Foods + Solid Brands 17

19 GRUMA s net loss was Ps.11,818 million compared with income of Ps.2,379 million in Majority net loss was Ps.12,340 million compared with income of Ps.2,233 million in Both results came mainly from the aforementioned losses on currency derivative instruments. CONSOLIDATED FINANCIAL POSITION December 2008 vs. December 2007 Balance-sheet highlights Total assets as of December 31, 2008, were Ps.44,435 million, an increase of 31%, driven mainly by higher property, plant, and equipment, net, due to upgrades and capacity expansions, and also by higher inventories in connection with higher raw-material costs and higher inventory levels. Total liabilities as of December 31, 2008, were Ps.35,153 million, 129% higher than at the end of 2007, due mainly to increases in other accounts payable and debt in connection with obligations from the currency derivative instruments. In addition, the Mexican peso devaluation contributed to the increase in total liabilities. Stockholders equity as of December 31, 2008, totaled Ps.9,282 million, 50% lower than at the end of Capital expenditure program During 2008 GRUMA s investments totaled US$235 million, most of which was applied to Gruma Corporation. Major investments were applied to the construction of tortilla plants in California and Australia, capacity expansions and upgrades in Gruma Corporation. Debt profile GRUMA s total debt as of December 31, 2008, was US$1,023 million, 68% of which was dollar denominated. The following table illustrates GRUMA s debt amortization schedule as of year-end Schedule of Debt Amortizations (US$ millions) TOTAL 7.75% Perpetual Bonds MXN Pesos Facility Syndicated Loan Gruma Corp. s Revolving Facility Other TOTAL , Overcoming Challenges to Feed the World

20 RESULTS OF SUBSIDIARY OPERATIONS 2008 vs Gruma Corporation Sales volume decreased 1% to 1,321 thousand metric tons compared with 1,329 thousand metric tons in This reduction was due to (i) lower corn flour sales volume in the United States resulting from price increases implemented during the year, and (ii) lower tortilla sales volume in Europe, mainly within the food service segment, as a result of the economic downturn. Net sales increased by 11% to Ps.19,356 million compared with Ps.17,406 million in The increase was due to price increases implemented during 2007 in the US corn flour and tortilla businesses and in 2008 in the US corn flour business. Cost of sales increased by 14% to Ps.11,875 million compared with Ps.10,461 million in As a percentage of net sales, cost of sales increased to 61.4% from 60.1%. These increases were due to the higher cost of raw materials, in particular wheat flour, corn, oil, and shortening, and, to a lesser extent, higher utility and maintenance costs. SG&A increased by 8% to Ps.6,497 million compared with Ps.6,026 million in The increase was due to higher commissions paid to distributors in connection with higher prices, increased promotion and advertising expenses, additional distribution routes, and higher fuel prices. SG&A as a percentage of net sales improved to 33.6% from 34.6% in 2007 due to better expense absorption in connection with higher prices. Operating income increased by 7% to Ps.984 million, and operating margin decreased to 5.1% from 5.3% in GIMSA Sales volume increased by 4% to 1,818 thousand metric tons compared with 1,753 thousand metric tons in The increase in sales volume was a result of the conversion from the traditional method to the corn flour method, aided, in part, by several commercial initiatives, and increased bulk sales to supermarkets in connection with competitive tortilla prices at these stores in-store tortillerías. Net sales increased by 1% to Ps.9,142 million compared with Ps.9,012 million in The increase was due mainly to the application of the Financial Reporting Standard B-10 (FRS B-10), the result of which was that net sales for 2007 are restated to December 2007 pesos, making average prices for 2007 appear higher than in Cost of sales decreased by 7% to Ps.6,354 million compared with Ps.6,839 million in As a percentage of net sales, cost of sales improved to 69.5% from 75.9% due mainly to lower corn costs. SG&A increased by 6% to Ps.1,470 million compared with Ps.1,386 million in The increase was due mainly to higher commissions from higher sales volume, higher advertising expenses, and higher wages. SG&A as a percentage of net sales increased to 16.1% from 15.4% in 2007 due to the aforementioned Staple Foods + Solid Brands 19

21 expense increases and lower average prices. Operating income increased by 68% to Ps.1,318 million, and operating margin improved to 14.4% from 8.7%. Gruma Venezuela Sales volume decreased 3% to 464 thousand metric tons compared with 480 thousand metric tons in 2007 due mainly to lower sales volume in rice in connection with a shortage of raw material and oil due to a temporary shutdown of the business. Net sales increased by 126% to Ps.8,727 million compared with Ps.3,862 million in The increase was due mainly to higher prices implemented to compensate for higher raw-material costs and, the effect of inflation resulting from comparing constant currencies as of December 2008 versus constant currencies as of December 2007, and the devaluation of the Mexican peso. Cost of sales increased by 114% to Ps.6,424 million from Ps.3,007 million in This increase was due to the aforementioned higher raw-material costs, higher packaging costs, general salary increases, and the effect of inflation resulting from the comparison of constant currencies as of December 2008 versus constant currencies as of December 2007, together with the devaluation of the Mexican peso. As a percentage of net sales, cost of sales improved to 73.6% from 77.9% due to higher prices, which helped to offset higher rawmaterial costs and improve cost absorption. SG&A increased by 85% to Ps.1,474 million compared with Ps.797 million in The increase was due primarily to general salary increases, higher freight tariffs, higher advertising expenses, the devaluation of the Mexican peso, and the effect of inflation resulting from comparing constant currencies as of December 2008 versus constant currencies as of December SG&A as a percentage of net sales improved to 16.9% from 20.6% in 2007 due to better absorption. Operating income increased by 1,329% to Ps.830 million, and operating margin improved to 9.5% from 1.5%. Molinera de México Sales volume increased by 1% to 494 thousand metric tons compared with 488 thousand metric tons in This increase was driven by more competitive pricing and higher penetration in supermarket chains. Net sales increased by 34% to Ps.3,598 million compared with Ps.2,694 million in The increase was due mainly to price increases implemented to offset higher wheat costs. Cost of sales increased by 30% to Ps.2,840 million compared with Ps.2,180 million in 2007 in connection with higher wheat costs. As a percentage of net sales, cost of sales improved to 78.9% from 80.9% due mainly to higher prices, which more than offset the increase in wheat costs. SG&A increased by 7% to Ps.462 million compared with Ps.430 million in The increase was due to 20 Overcoming Challenges to Feed the World

22 higher freight expenses, increased expenses related to the strengthening of our sales force, and higher advertising expenses. SG&A as a percentage of net sales improved to 12.8% from 16.0% in 2007 due to better expense absorption. Operating income increased by 254% to Ps.296 million, and operating margin improved to 8.2% from negative 3.1% in Gruma Centroamérica Sales volume decreased by 3% to 213 thousand metric tons compared with 220 thousand metric tons in The decrease was due to mainly to lower corn flour sales volume in connection with lower corn prices in the region, increased price aggressiveness from competitors, and changes in the distribution system towards company-owned routes, which should result in future benefits. Net sales increased by 42% to Ps.2,949 million from Ps.2,076 million in The increase was due to higher prices of corn flour, snacks, rice, and tortillas, which were implemented to compensate partially for higher raw-material costs. In addition, the effect of inflation resulting from comparing constant currencies as of December 2008 versus constant currencies as of December 2007, together with the devaluation of the Mexican peso, contributed to the increase. Cost of sales as a percentage of net sales increased to 72.4% from 71.5%, due to higher raw material costs, which were not fully absorbed through prices. Cost of sales increased by 44% to Ps.2,134 million compared with Ps.1,484 million in 2007, due to the aforementioned cost increases. SG&A increased by 51% to Ps.756 million compared with Ps.501 million in As a percentage of net sales, SG&A rose to 25.6% from 24.1% in The increase was due to extraordinary administrative expenses, higher commissions in connection with higher prices, the effect of inflation resulting from comparing constant currencies as of December 2008 versus constant currencies as of December 2007, and the devaluation of the Mexican peso. Operating income was Ps.59 million compared with Ps.91 million in 2007, and operating margin decreased to 2.0% from 4.4%. Other and Eliminations Operating loss was Ps.219 million compared with operating loss of Ps.65 million in Staple Foods + Solid Brands 21

23 REPORT of Corporate Governance Committee April 28, 2009 To the board of directors of GRUMA, S.A.B. de C.V.: In compliance with article 43 of the Ley de Mercado de Valores (Mexican Securities Law), as well as article Twenty-Sixth of the Corporate Bylaws, and in the name and on behalf of the corporate governance committee, I hereby inform you of the activities performed during the term from January 1 to December 31, The corporate governance committee is composed of three members, Messrs. Juan Diez Canedo, Héctor Rangel Domene, and Javier Vélez Bautista, all of them in their capacity as independent advisors in accordance with the independence criteria established by the Mexican Securities Market Law and in accordance with the independence rating given by the shareholders of the company during the meeting held on April 30, 2008, in compliance with article 26 of the Mexican Securities Law. 2. Performance of the senior officers of the company is assessed based upon the financial results and upon the accomplishment of individual goals established within their responsibilities to the company. Based upon the assessments conducted by the human resources area, in general terms, performance of the senior officers was satisfactory, and in light of this, they received a performance bonus (variable compensation) according to the policies established by the same company. 3. The committee has been informed by management and independent auditors about the relevant transactions with related parties, which have been reported in the notes to the financial statements of the company for the period being reported herein. 4. The compensation being paid to the chief executive officer and other senior officers of the company during the year 2008 is within market rates, in comparison to other companies, and said compensation is in accordance with the compensation policies established by the company. 5. During the period included in this report, no release was granted by the board of directors for any member, senior officer, director, or person otherwise with authority, to take any business opportunity for their own benefit or for the benefit of any third party that should accrue to the company or any of its subsidiaries. In the name and on behalf of the corporate governance committee, Javier Vélez Bautista President 22 Overcoming Challenges to Feed the World

24 REPORT of Audit Committee April 28, 2009 To the board of directors of GRUMA, S.A.B. de C.V. In compliance with article 43 of the Ley del Mercado de Valores (Mexican Securities Law), as well as article Twenty-Sixth of the Corporate Bylaws, and in the name and on behalf of the audit committee, I hereby inform you of the activities performed during the term from January 1 to December 31, Within the performance of our duty we have followed the provisions contained in the Código de Mejores Prácticas Corporativas (Code of Best Corporate Practices) and those contained in the laws and regulations applicable to the Company. The committee met six times in compliance with its work schedule and to conduct the following activities: 1. Internal Audit We revised the organizational structure, work plans, and quarterly reports of the internal audit area of the company. In the same manner, we were presented with the follow-up reports to the observations found therein, with no exceptional findings worth mentioning. 2. Ethics Code The committee supervised compliance with the ethics code governing the performance of its directors, officers, and employees and, as of this date, had no relevant cases to report regarding said matter. We continued to implement a direct communication channel between officers and employees and the audit committee. In the same manner, we periodically supervised compliance of management with all observations received. 3. Audit In order to comply with the requirements established by the Sarbanes-Oxley Act, we reviewed quarterly, along with the management of the company and independent auditors, advances to the certification project for the internal control system, which the company has now in progress. We evaluated a report regarding the legal situation of the company, which included matters such as corporate documents, governmental authorizations, litigation proceedings, environment, and control mechanisms implemented to fulfill all legal dispositions binding the subsidiaries. Based on the foregoing, as well as on the interviews with the independent auditors and with the management of the company, we consider that the internal control and internal audit system complies adequately with its fundamental objectives. Taking into account the best practices in said matter, we requested external audit work proposals, and once we analyzed the objectives, scope, and work plans, as well as the economic proposals, we recommended to the board of directors the ratification of the report of the external audit firm, PricewaterhouseCoopers. Staple Foods + Solid Brands 23

25 In the interviews and meetings of the audit committee with the auditors, we made sure said auditors complied with the requirements of independence and rotation of their supervisory personnel. In addition, we reviewed with them and with the company s management all comments regarding the internal control arising from their works, as well as objectives, procedures, and the scope of the external audit for the years 2008 and In our opinion, external audit services duly comply with the established objectives and scope. We approved additional services provided by the external audit firm, including the certification work of the internal control system required by the Sarbanes-Oxley Act and the intercompany price transfer studies. In our opinion, the services approved by the committee do not affect the independence of the external audit firm. 4. Financial information We revised the quarterly financial reports of the company corresponding to the year 2008, on which we noticed no irregularities, and we agreed to submit said reports to the board of directors as well as the publication thereof. We collaborated with the board of directors in the preparation of the opinions and reports referred to in section IV, clauses c, d, and e of article 28, in respect to the company s fiscal year In addition, we made and presented to the board of directors and to the shareholders meeting the annual report of the activities developed by this committee in the 2007 fiscal year. We reviewed Form 20-F corresponding to year 2007, which document was completely and opportunely delivered to the Securities and Exchange Commission in the United States of America. We reviewed the audited financial statements of the company to December 31, 2008, the auditors report, and the accounting policies used to prepare the same. After revising the letter of the independent auditors addressed to management, we recommended its approval to the board of directors to be submitted for consideration of the shareholders meeting. We were informed that the company has been adopting the new Financial Reporting Standards issued by the Mexican Financial Reporting Standards Board. During the year new Financial Reporting Standards B-2, B-10, B-15, D-3, and D-4 were adopted; these amendments had not affected the financial information in a significant manner. 5. In support of the board of directors We rendered a report and opinion to the board of directors, regarding the operations performed by the company with derivative financial instruments (see section: operations with derivative products). We made sure that the resolutions taken by the shareholders meetings held on April 11 and 30, 2008, were fully complied with and duly formalized. 6. Transactions with derivative products During the year the company carried out transactions with foreign-exchange derivative products, which ended with material losses reflected in the financial statements. As of the moment we were informed of the existence of said transactions the company s audit committee was attentive to the evolution of said operations and opportunely informed and rendered its opinion to the board of directors. In addition, the 24 Overcoming Challenges to Feed the World

26 board of directors approved the following recommendations made by the audit committee: a) To keep the investor public informed of the magnitude and nature of such operations, and the probable impact under the regulations applicable to GRUMA, in Mexico as in the United States; b) To seek a definitive exit, preserving the company s viability; c) To take preventive and corrective measures to preserve the interests of the shareholders; and d) To avoid similar situations in the future. 7. Internal control system The internal and audit control system was reinforced regarding the transactions with derivative products entered into by GRUMA and its subsidiaries. In addition, the policies of the company related to the contracting of derivative financial instruments, including options and futures, are in review jointly by the management and the board committees, which will subsequently submit them for consideration by the board of directors. 8. Internal aspects In accordance to the best practices, both the corporate governance and the audit committees reviewed the internal bylaws of the audit committee of the company. According to best practice the committee carried out a self-evaluation and the results indicated that it basically complies with all its corresponding areas, and the following opportunity areas were found: to be the catalyst for the implementation of the integral risk-management process; to follow-up on the most relevant risks, and to inform the board of directors thereof. On behalf and in the name of the audit committee Javier Vélez Bautista President Staple Foods + Solid Brands 25

27 REPORT of Independent Auditors Report of Independent Auditors To the Stockholders of Gruma, S. A. B. de C. V. Monterrey, N. L., April 7, 2009 (amounts in thousands of Mexican pesos) We have audited the consolidated balance sheets of Gruma, S. A. B. de C. V. and subsidiaries at December 31, 2008 and 2007, and the related consolidated statements of income and of changes in stockholders equity for the years then ended; we have also audited the consolidated statements of cash flows and of changes in financial position for the years ended December 31, 2008 and 2007, respectively. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Grupo Financiero Banorte, S. A. B. de C. V. and subsidiaries (an associated company), the investment in whose shares represented 7% and 8% of consolidated total assets at December 31, 2008 and 2007, respectively; and equity in income represented (5%) and 32% of consolidated net (loss) income in 2008 and 2007, respectively, were audited by other independent auditors and our opinion, insofar as it relates to the investment in the aforementioned associated company, is based solely on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and that they were prepared in accordance with Mexican Financial Reporting Standards (MFRS). An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the financial reporting standards used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other independent auditors mentioned above provide a reasonable basis for our opinion. In 2008, the Company entered into exchange rate derivative financial instruments which resulted in losses of Ps.14,692,894, which were included in the statement of income under comprehensive financing result. Additionally, these transactions also gave rise to a liability of Ps.11,230,170 at end of the year. In 2008, the Company paid derivative positions in the amount of Ps.3,479,549, using a loan obtained from a financial institution in the amount of Ps.3,367,000. In 2008 and until entering into the preliminary agreements described hereinafter, the Company continued closing out its open exchange rate derivative positions. As described in Note 20 to the financial statements, at the date of issuance of this report the Company s management has made progress in renegotiating the aforementioned debt with the counterpart financial institutions. On March 23, 2009, it entered into preliminary agreements by which it closed out 87% of its open positions through a long-term loan to be obtained from these institutions in the amount of US$668.3 million, secured by shares of certain of its subsidiaries. This agreement stipulates that in a 120-day period: (a) Gruma and the creditors must formalize the agreements, and in the event of not reaching a final agreement, the Company must immediately pay the aforementioned amount to the creditors; (b) the Company must 26 Overcoming Challenges to Feed the World