Post on 14-Oct-2020
2013 ANNUAL REPORT
FLEXIBILITY TO GENERATE VALUE
CONTENTSCORPORATE PROFILE
FINANCIAL HIGHLIGHTS
LETTER FROM THE CHAIRMAN OF THE BOARD AND THE CEO
BUSINESS MODEL
UNDERPINNING OUR OPERATIONS
GROWTH AND EXPANSION
DRIVING THE COMPREHENSIVE GROWTH OF OUR PEOPLE, COMMUNITY AND ENVIRONMENT
CORPORATE GOVERNANCE
MANAGEMENT’S ANALYSIS AND DISCUSSION OF THE OPERATING RESULTS AND
FINANCIAL POSITION OF GRUPO FAMSA
CONSOLIDATED FINANCIAL STATEMENTS
2
3
4
6
814
18
22
26
28
CORPORATE PROFILE
2013 ANNUAL REPORT 02
Grupo Famsa continues consolidating its market position and strengthening
its current business platform, which include retail sales and fi nancial services in Mexico.Grupo Famsa is continuously
evolving to satisfy the needs of
our customers and the changing
market trends through an innovative
product and service off ering.
Founded in the decade of the 70s, in Monterrey, Nuevo
León, Grupo Famsa has consolidated its position as a
publicly-traded company with a solid presence in the
retail sector, focusing its efforts on satisfying families’
diverse consumption, fi nancing and savings needs.
Throughout its 43-year history, Grupo Famsa has
developed an outstanding portfolio of complementary
businesses based on consumer credit and savings.
Famsa Mexico, Banco Famsa and Famsa USA, its
three business units, provide a comprehensive value
offer aimed at enhancing the quality of life of a market
segment that demands personalized service and credit
options that are not provided by the traditional banking
sector.
The synergies between Grupo Famsa’s three business
units drive the company’s performance. Banco Famsa’s
expanding portfolio of fi nancial products and services,
which in 2013 grew to include loans guaranteed by
personal property, enriches and complements the
services of Famsa Mexico’s stores. Meanwhile, Famsa
USA serves the Hispanic segment in the United States,
replicating the Famsa Mexico business model in two of
the states with the greatest concentration of Hispanics:
Texas and Illinois.
At yearend 2013, Grupo Famsa operated an extensive
network of 362 stores with 317 bank branches and 173
pawnbroking branches in 30 Mexican states, and 25
stores in the United States.
The collective potential and robustness of Grupo
Famsa’s business platform drive growth and generate
sustained value for the stockholders.
To consolidate our position as a
leading company in the marketing of
durable goods, products for personal
use and specialized fi nancial services
in Mexico and the target Hispanic
market of the United States.
VisionTo be the best option for our
customers, giving them access to
durable goods, products for personal
use and fi nancial services according
to their needs.
To assure that our stockholders
receive expected yields.
To provide our human capital with the
opportunity to develop professionally
in their work for their own benefi t and
that of their families.
MissionThe values that distinguish us in the
market and are an integral part of
our company’s activities are: quality,
commitment, trust, a customer focus,
simplicity and business sense.
Values
CAGR: 4.2%SALES
CAGR: 6.8%ACTIVE ACCOUNTS
CAGR: -1.8%STORES
CAGR: -4.3%RETAIL AREA
Millions of Mexican pesos Millions Thousands of square meters
13,866 14,123
15,048
201320122011
1.87 1.88
2.13
201320122011
401
380387
201320122011
540
488495
201320122011
FINANCIAL HIGHLIGHTS
2013 ANNUAL REPORT03
(a) Millions of Mexican pesos, except percentages.(b) Includes Banco Famsa.(c) Intercompany sales.(d) See Note 26.2 to the Consolidated Financial Statements.
2012Operating Figures
Total Stores Mexico United States
Banco Famsa Banking Branches Pawn Broking Branches
Credit Accounts (Millions)
Employees
387362
25
490317173
2.13
17,589
380355
25
304304
0
1.88
16,741
20112013
$15,048$13,301
$1,644$860
-$757
$6,904$1,706$2,405$1,420
$658
45.9%11.3%16.0%
4.4%
$14,123$12,353
$1,715$949
-$894
$6,587$1,789$2,379$1,475
$323
46.6%12.7%16.8%
2.3%
Net Sales Mexico (b)
United States Other Inter-segment (c)
Gross Profi tEBITDAAdjusted EBITDA (d)
Operating IncomeNet Income
Gross MarginEBITDA MarginAdjusted EBITDA Margin Net Margin
Financial Results (a)
$13,866$12,031
$1,731$1,030-$926
$6,295$1,429$1,955$1,078
$227
45.4%10.3%14.1%
1.6%
401352
49
288288
0
1.87
16,267
1.8%2.0%
-
61.2%4.3%
NA
13.3%
5.1%
6.5%7.7%
-4.2%-9.3%
-15.4%
4.8%-4.6%1.1%
-3.8%103.7%
$32,943$23,999
$8,944
$29,070$20,780
$8,290
AssetsLiabilitiesStockholders’ Equity
Balance Sheet Accounts (a)
$27,386$19,372
$8,014
13.3%15.5%
7.9%
Variation
CAGR: Compound Annual Growth Rate
LETTER FROM THE CHAIRMAN OF THE BOARD AND THE CEO
I am pleased to inform you that in 2013 we posted positive results in Net Sales and Net
Income because of the drive of our committed team of associates and a strategic focus
on value creation, despite an economic environment of low growth, reduced consumer
activity and adverse weather conditions.
In this context, Grupo Famsa’s 2013 consolidated Net Sales reached Ps$15,048
million, 6.5% more than in 2012 and in line with 2013 Guidance, while consolidated
Same Store Sales grew 5.6%.
As a result of this performance and our administrative discipline, consolidated Net
Income for the year grew 103.7%, to Ps$658 million.
Faced with an adverse economic panorama, we implemented a series of strategies
to stimulate demand for durable goods by promoting our credit offering, making
signifi cant progress in our Mexican operations.
In Mexico, Net Sales grew 7.7%, largely due to the outstanding fi rst semester results
that offset the decline in consumer confi dence and reduced traffi c through our stores
because of the heavy rains across the nation during the second half of the year.
In 2013, the effectiveness of product marketing initiatives, combined with the
productivity of its store network, allowed Famsa Mexico to post signifi cant
annual growth in core categories such as Cellular Telephones, which increased
36.8%; Household Appliances, which increased 23.6%; and Electronics, which
increased 13.3%.
In our banking segment, in October Banco Famsa began the integration of the 173
pawn broking branches acquired from Monte de México, S.A. de C.V., expanding
its branch network by 61.2% in 2013. The integration process involves the gradual
reconversion of the acquired units to the traditional Banco Famsa model and the
introduction of the bank’s complete portfolio of fi nancial products and services.
Additionally, Banco Famsa focused its efforts on expanding and diversifying the
fi nancing options it offers, launching consumer loans such as Credinero and
Prendinero, and credit solutions tailored to the specifi c business needs and profi les of
micro, small and medium-sized enterprises.
A key element of Banco Famsa’s growth strategy was without doubt the new corporate
building inaugurated in 2013, through which its nationwide banking operations
are now centralized.
To our stockholders:
04
22013 ANNUAL REPORT
05
2013Humberto Garza González
Chairman of the BoardHumberto Garza Valdéz
Chief Executive Offi cer
Famsa USA faced lower-than-expected economic activity and a severe winter season in its territories. As a result, it posted a 4.2%
decline in Net Sales in the United States which pressured consolidated results.
With regard to initiatives implemented to protect and develop our associates and anticipate the organization’s needs, we reinforced
our training programs in areas such as organizational culture, administration, customer service, new technologies and civil protection.
We also instituted diverse programs to guarantee the safety and integrity of our associates and our assets. Among the initiatives
introduced during the year, we rolled out a Risk Prevention Policy across all our stores and work centers, set up Risk Prevention
Committees for our different regions and made diagnoses of the safety of our facilities.
In accordance with our values, and supported by our customers’ preference, we continued to promote the comprehensive wellbeing
of our associates and communities through donations and concrete initiatives to help the needy.
Our efforts and results in 2013 refl ect once again the clear strategic focus on creating value of all of us who comprise this
organization, in compliance with our mission of meeting families’ diverse consumption, fi nancing and savings needs through an
innovative portfolio of products and services.
We are grateful for the efforts, enthusiasm and loyalty of all our employees. They have continuously proven their passion for their
work and their openness to innovation to fi nd new solutions, and have embraced the Company’s objectives as their own.
On behalf of all of us who are part of Grupo Famsa, we would also like to thank our Board of Directors for its guidance, support and
trust during this challenging year.
To our stockholders, we reiterate our determination to consolidate Grupo Famsa’s business model as an excellent vehicle of value
creation to enhance your investment and a way of driving the Company to the growth levels we all seek.
2013 ANNUAL REPORT
Our business modelhas its origins and focus on value creation through our customers’
total satisfaction.
We are dedicatedto providing a comprehensive
value off er in consumption,fi nancing and savings
needs through the closeinteraction and synergiesbetween Famsa Mexico,
Banco Famsa andFamsa USA.
BUSINESS MODEL
06
Wto p
2013 ANNUAL REPORT2013 ANNUAL REPORT
07 2013 ANNUAL REPORT
UNDERPINNING OUR OPERATIONS
Thanks to the competitiveness of our offer of products and services and
the efforts of our people, in 2013 Grupo Famsa was able to overcome
a challenging market economy and exceed industry averages with its
performance, strengthening its position and enhancing its capacity to
leverage growth opportunities.
As of the close of 2013, consolidated Net Sales grew 6.5% to
Ps$15,048 million due to an outstanding commercial execution,
especially during the fi rst half of the year. The expansion and
diversifi cation of our product portfolio, the renewal of displays and the
continuous improvement of our customer service also contributed to
this result.
These initiatives, supported by an effective management team, had
a positive impact on Grupo Famsa’s Net Income as of yearend 2013.
Consolidated Net Income reached Ps$658 million, 103.7% above that
of 2012.
Because of our strong commitment to value creation, focus on
profi table growth and successful launch of more than 1,500 promotions
to drive demand, operations in Mexico performed extremely well.
Net Sales in Mexico increased 7.7% in 2013, reaching Ps$13,301
million. Additionally, Same Store Sales (SSS) rose 7.2% year-over-
year, refl ecting organic growth and enhanced effectiveness on the
sales fl oor.
This sales result is particularly outstanding if we compare it to the
average of the sector in Mexico which, according to the Mexican
National Association of Self-Service Stores (Asociación Nacional
de Tiendas de Autoservicio, ANTAD), posted during 2013 a 5.1%
increase in Total Store Sales and a growth of only 0.1% in SSS,
compared to 2012.
09 2013 ANNUAL REPORT
CAGR: 5.1%SALES IN MEXICO
Millions of Mexican pesos
CAGR: Compound Annual Growth Rate
12,031 12,353
13,301
201320122011
Our banking business, Banco Ahorro Famsa, S.A., a multiple service
banking institution, changed its name to Banco Famsa during the
year, refl ecting its expanded offer of fi nancial products and services
for the consumer.
We have strengthened the position of Banco Famsa, which is now
one of Mexico´s 10 largest multiple banking institutions in terms of
the number of branches in operation and the balance of its consumer
portfolio, according to the Mexican National Banking and Securities
Commission, as of December 2013.
The robustness of our banking institution is also refl ected in its
Capitalization Index (ICAP), which maintained on average a level of
13.8% during the year.
UNDERPINNING OUR OPERATIONS
102013 ANNUAL REPORT
Our operations in the United States comprise
11% of the Company´s consolidated revenue.
Bank Deposits grew 16.1%, to a balance of Ps$13,930 million as of
yearend 2013. These funds are distributed in 1.17 million accounts,
with long-term deposits representing an increasing percentage
of the mix as a consequence of customers’ growing confi dence in
our services and our continuous innovation in developing savings
products. As of December 31, 2013, 89.1% of Bank Deposits
corresponded to time deposits, with an average cost of funding
of 5.17%.
In addition to the traditional line of consumer fi nancing products,
we continued to drive loans for production activities, consolidating
our position as an attractive option for micro, small and
medium-sized enterprises (MSMEs) that now represent 18.2% of our
Commercial Portfolio.
In the United States, the slow economic activity and weak jobs
growth among the Hispanic population, combined with an extreme
winter season that obliged the occasional closing of at least 15 of our
25 stores, resulted in a decline in our sales volume. Excluding the
foreign exchange effect, Famsa USA’s Net Sales fell 4.6% in 2013,
to Ps$1,644 million. This decline was offset by the business’s strict
control of expenses during the year.
2013 results underscored our focus on creating value for our
stockholders, consumers and associates, as well as our business
model’s agility and adaptability to respond to the challenges resulting
from factors external to our operations.
2013 ANNUAL REPORT11
10,436
11,999
13,930
BANK DEPOSITS
201320122011
CAGR: 15.5%
Millions of Mexican pesos
CAGR: Compound Annual Growth Rate
We created new credit off erings, such as
Prendinero and Credinero.
is being
We expanded our banking branch network in Mexico by
61.2%.
Grupo Famsa’s characteristic strength and vitality were
enhanced in 2013 through the continued opening of
stores and innovation in our commercial initiatives. As
a result, the Company posted an outstanding increase
in sales volume.
Grupo Famsa also made signifi cant progress with the
diversifi cation of the portfolio of fi nancial services offered
through Banco Famsa, entering the pawn broking business
with the acquisition of Monte de México S.A. de C.V.
(Montemex).
Meanwhile, we focused our operations in the United States
on maintaining our market position there and strengthening
our value proposal with a broader personal loan origination.
During 2013, Famsa Mexico reinforced its determination to
drive job creation and the socio-economic development of
Mexico, investing in the opening of seven complete-format
stores in different Mexican states despite the adverse
business environment and unfavorable macroeconomic
indicators in the country.
GROWTH AND EXPANSION
The Company reacted to the challenging conditions
for Mexican consumption by rolling out new models,
redesigning core-category display areas and
implementing innovative commercial strategies. As
a result, we posted double-digit rates in most of the
durable goods categories.
Part of this growth refl ected our fl exibility and agility
to drive consumption by leveraging opportunities
related to special festive days, notably Mother’s Day,
Father’s Day, “Buen Fin” (equivalent to Black Friday)
and Christmas.
We launched diverse advertising campaigns during
2013, such as “99 semanales o menos” (99 weekly
payments or less), which we ran throughout the year
for most categories; “Mamá siempre tiene la razón”
(Mum is always right) for Mother’s Day; and “Más
barato que en USA” (Cheaper than in the U.S.) for
Buen Fin. As a result of these attractive promotions,
we were able to drive demand for core categories.
We opened seven stores and 13 banking branches
in Mexico during 2013.
The most noteworthy commercial successes of 2013 included the
stimulation of demand for Household Appliances and Electronics.
Different promotions focused on driving credit sales resulted in an
accumulated growth of 23.6% and 13.3% in these two categories
respectively.
Also, with the rollout of our own brand, Univercel, intense
advertising campaigns launched during the year and our extensive
range of models and brands, sales volume for the Cellular
Telephones category grew 36.8%.
With regard to the Motorcycles category, we reached a new record
of 42,000 units of our own Kurazai brand sold during 2013, 23.5%
more than the previous year. We are expecting two new models
in the category in 2014, to give us a total of 14 different models
available for this dynamic market niche.
15 2013 ANNUAL REPORT
Furn
iture
25%
20%
15%
10%
5%
0%
Elec
tron
ics
Pers
onal
Loa
ns
Hou
seho
ld A
pplia
nces
Com
pute
rs
Cellu
lar T
elep
hone
s
+36.8% +40.0%
Mot
orcy
cles
SALES GROWTH BY PRODUCT CATEGORY IN MEXICO
(2013)
GROWTH AND EXPANSION
Banco Famsa increased its presence to cover almost the entire
Mexican nation, with the acquisition in October 2013 of 173
pawn broking branches, allowing the bank to penetrate new
territories, such as the states of Chiapas, Oaxaca and Tlaxcala.
The transaction, which involved an investment of approximately
Ps$400 million, grew Banco Famsa’s branch network by 61.2%,
from 304 to 490 units in Mexico.
This acquisition allowed us to offer a new line of fi nancial
products, in our search to be at the forefront of market trends
and to satisfy our customers’ needs with the opportunity to obtain
loans guaranteed by personal property. The new credit offering,
called Prendinero, comprises 30-day cash loans guaranteed by
gold assets with the option of unlimited loan renewal.
During the second half of the year, Banco Famsa launched
another banking product called Credinero, which enables the
bank to access a higher-end market. This credit offering is for
salaried employees and independent professionals, giving them
access to cash loans of up to Ps$60 thousand with a repayment
period that ranges from six to thirty-six months.
Banco Famsa acquired173 pawn broking branches,
penetrating new territories and diversifying its credit off ering.
162013 ANNUAL REPORT
In order to support Mexico’s economic development, at the end
of the year we launched a credit offering designed specifi cally
for companies and small businesses. This fi nancial solution
is tailored to the needs of customers who do not have the
characteristics required by the traditional banking sector,
offering fl exible payment conditions, personalized service and
exclusive benefi ts.
The expansion and diversifi cation of Grupo Famsa’s banking
business is supported by a high-tech risk management platform
with an international central banking system controlled from the
new corporate building we inaugurated in Monterrey, Nuevo
León, in October 2013. The new offi ces also house a Call
Center with the capacity to attend an average of three million
calls on a monthly basis.
Finally, in the United States we maintained our competitive
position in the Hispanic market due to the efforts of our
associates. In 2013, despite reduced economic activity, Famsa
USA grew its Household Appliances category by 12.2%
compared to last year. In addition, Personal Loans rose 62.8%
in the region, reaching a credit portfolio of US$10 million.
17 2013 ANNUAL REPORT
Other15.3%
Personal Loans 21.6%
Furniture
ElectronicsHousehold Appliances
Cellular Telephones
Computers
Motorcycles
16.9%
13.0%12.1%
9.2%
6.2%
5.7%
CONSOLIDATED PRODUCT MIX
DRIVING THE COMPREHENSIVE
GROWTH OF OUR PEOPLE,
COMMUNITY AND ENVIRONMENT
Grupo Famsa believes that, in conjunction with growing its
business and developing its human talent, the generation
of shared value is a way to produce the comprehensive,
sustainable wellbeing of the communities it serves.
We know the success of our business requires effective
talent management. Thus, in 2013, we implemented a series
of initiatives to align our organizational culture and manage
our personnel training processes in an innovative way. 328 thousandMore than
hours of training in 2013.
During the year, Grupo Famsa provided 328,467
man-hours of training, 10.0% more than in 2012.
The programs offered, both for the employees of
Famsa Mexico and those of Famsa USA, covered
a wide range of topics, including administrative
management, customer service, organizational
culture, new technologies and civil protection.
One of the most relevant areas of training
in 2013 was a seminar related to Grupo
Famsa’s Organizational Alignment Model,
seeking to standardize the essential
aspects of our organizational culture:
focus, specifi c elements, competencies
and engagement, across the Company’s
leadership and middle management. The
course, given for the fi rst time to the leaders
of the three business units, included innovative
practices that have generated excellent results.
Grupo Famsa is committed to the physical and personal
integrity of its people and its visitors, and reinforced the
implementation of its Risk Prevention Policy in 2013.
Workshops were held at all our stores and work centers,
and Risk Prevention Committees were set up for each
geographical area. In addition, we carried out diagnosis
of safety and facilities, designed action plans, trained
and developed support brigades, and held drills in order
to consolidate a safety culture across the Company.
Our team of 17,589 associates is Grupo Famsa’s key asset.
2,019
35.1%internal promotions,
more than in 2012.
As a result of the implementation of this policy, in
2013 we made 192 diagnosis and identifi ed 187
safety needs at the Company’s different work
centers, exceeding the goal set for the year. We also
revamped the 48 Risk Prevention Committees set
up in 2012 and created 188 more, for a total of 236
across our different distribution centers and branches.
During the year, we implemented initiatives to generate
a safety culture among our associates, giving diverse
courses with topics ranging from an introduction to risk
prevention to the training of Internal Support Brigades.
256 work centers were included and 180 drills were
held to test and improve emergency action plans.
19 2013 ANNUAL REPORT
467
12.
of
ed
e
l
s
e
rs
ve
lts.
With these and other initiatives focused on a proactive search
and joint responsibility for the comprehensive wellbeing of
our associates, Grupo Famsa is making ongoing progress
in constructing an increasingly attractive and satisfactory
workplace for all its people, providing them with the
opportunity to reach their full potential and making the
Company the best alternative for their growth
and development.
In parallel, we began a process to implement the
Talent Management Model across our operations.
This program involves continuous evaluation and
feedback from our leaders to their teams and vice versa,
enabling the most-effective design of personnel training,
retention and development programs, with the decisive
participation of middle and upper management. The
model includes industry-leading methodologies, such as
Performance Evaluation, 360 Evaluation and Talent Map.
With regard to initiatives to help the community, in 2013 Grupo
Famsa supported diverse charity organizations both in cash
and kind. The community-support programs we helped during
the year included Casa Hogar Agape Elim, the Municipality
of San Pedro Garza García, DIF, Fundación Tarahumara José Llaguno and Al Servicio de Mis Hermanos ABP.
It is important to note that we also supported the Grupo
Famsa people of Piedras Negras, Coahuila whose homes
were damaged in a storm in June 2013, giving them
domestic appliances to replace those lost in the event.
DRIVING THE COMPREHENSIVE GROWTH OF OUR PEOPLE, COMMUNITY AND ENVIRONMENT
202013 ANNUAL REPORT
Thanks to the generosity of our customers and the
fi nancial infrastructure of Banco Famsa’s branches, in
2013 we were able to increase the resources donated
to diverse charity and social support organizations. As
a result, underprivileged members of our communities
and people with special needs because of sickness or
some other particular situation continued to receive help.
During the year, in partnership with our customers, we
provided resources for institutions such as Club de Niños y Niñas de Nuevo León, which supports young people in
vulnerable circumstances, complementing their schooling
with formational academic, cultural and sports activities.
We also helped Hogar de la Misericordia, which provides
accommodation, food, rehabilitation and medical treatment
for sick people; Bécalos, a program run in partnership
with Asociación de Bancos de México and Fundación
Televisa, to provide scholarships for high school and
college students, as well as teacher training; and Cáritas Monterrey, which helps low-income families to improve
their standard of living.
As part of our business philosophy, and as we have
always done in the past, we will continue supporting our
communities through diverse initiatives, helping them
with our different capabilities and will to generate a
better world.
21 2013 ANNUAL REPORT
Grupo Famsa is committed to the growth of its employees
and the wellbeing of its communities.
CORPORATEGOVERNANCE
Humberto Garza ValdézChief Executive Offi cer
Oziel Mario Garza ValdézVice President of Clothing and Verochi
Luis Gerardo Villarreal RosalesChief Operating Offi cer
Abelardo García LozanoChief Financial Offi cer
Martín Urbina VillarrealVice President of Famsa Mexico
Angel Alfonso de Soto HernándezVice President of Banco Famsa
Ignacio Ortiz LambretónVice President of Famsa USA
Joaquín Aguirre CarreraVice President of Marketing
Héctor Padilla RamosVice President of Merchandise
Manuel Rodríguez GonzálezChief Information Offi cer
Héctor Hugo Hernández LeeVice President of Human Resources
Corporate Governance PracticesGrupo Famsa’s positive performance rests on sound
Corporate Governance practices in compliance with the
“Code of Best Corporate Practices” recommended by
the Mexican Stock Exchange and the National Banking
and Securities Commission.This has resulted in the
optimal functioning of the Company’s Board of Directors,
which, in coordination with the Audit Committee and the
Corporate Practices Committee, is responsible for
planning, approving and supervising all of the
Company’s operations.
Management TeamGrupo Famsa, S.A.B. de C.V.
23 2013 ANNUAL REPORT
CORPORATE GOVERNANCE
Don Humberto Garza González Director
Humberto Garza ValdézDirector
Hernán Javier Garza ValdézDirector
Oziel Mario Garza ValdézDirector
Bernardo Guerra TreviñoIndependent Director
Salvador Kalifa AssadIndependent Director
Jorge Luis Ramos SantosIndependent Director
Alejandro Sepúlveda GutiérrezIndependent Director
Offi cers of Grupo Famsa’sBoard of Directors:
Don Humberto Garza González Chairman
*Luis Gerardo Villarreal Rosales Secretary
*Ricardo Maldonado Yañez Alternate Secretary
* Offi cers who are not members of the Board of Directors
Audit Committee
Alejandro Sepúlveda GutiérrezChairman
Salvador Llarena ArriolaJorge Luis Ramos Santos
Corporate Practices Committee
Alejandro Sepúlveda GutiérrezChairman
Salvador Llarena ArriolaJorge Luis Ramos Santos
Board of DirectorsGrupo Famsa, S.A.B. de C.V.
Don Humberto Garza González is the founder and Chairman
of the Board of Grupo Famsa.
Humberto Garza Valdéz has been with the Company for the
past 28 years and is Don Humberto Garza González’ son.
He has been our Chief Executive Offi cer for the past 17
years, having previously served as Deputy CEO. He holds
a Bachelor’s degree in Business Administration from the
University of Monterrey (UDEM) and a Master’s in Executive
Business Administration from the Institute of Executive
Business Management (IPADE).
Hernán Javier Garza Valdéz has been with the Company for
the past 26 years and is Don Humberto Garza González’
son. He currently serves as Project Director. He holds a
Bachelor’s degree in Economics from Instituto Tecnológico
y de Estudios Superiores de Monterrey (ITESM), an M.B.A.
from the University of Notre Dame and a Master’s in
Information Systems from ITESM.
Oziel Mario Garza Valdéz has been with the Company for
the past 20 years and is Don Humberto Garza González’ son.
He has been our Vice President of Clothing and Verochi for
the past 15 years, having previously served as Commercial
Director for the Monterrey Region. He holds a Bachelor’s
degree in Business Administration from UDEM and a
Master’s in Executive Business Administration from IPADE.
Bernardo Guerra Treviño has been a member of Grupo
Famsa’s Board of Directors since 2011 and Banco
Ahorro Famsa since 2007. He is a founding member and
General Director of Morales y Guerra Capital Asesores
(MG Capital) and serves as an independent director
of Axtel, where he is also the President of the
Corporate Practices and Auditing committees.
He is also a member of the administrative committee and
President of the Corporate Practices and Auditing committees
of Promotora Ambiental. He holds an Industrial Engineering
degree from ITESM.
242013 ANNUAL REPORT
Hernán Javier Garza ValdézDirector
Oziel Mario Garza ValdézDirector
Luis Gerardo Villarreal RosalesDirector
Angel Alfonso de Soto HernándezDirector
Bernardo Guerra TreviñoIndependent Director
Salvador Kalifa AssadIndependent Director
Héctor Medina AguiarIndependent Director
Ernesto Ortiz LambretónIndependent Director
Offi cers ofBanco Ahorro Famsa´sBoard of Directors:
Luis Gerardo Villarreal Rosales Chairman
*Ricardo Maldonado Yañez Secretary
*Humberto Loza LópezAlternate Secretary
*Offi cers who are not members of the Board of Directors
Board of DirectorsBanco Ahorro Famsa, S.A.,Multiple Banking Institution
Salvador Kalifa Assad has been a member of Grupo
Famsa’s Board of Directors since 1997 and Banco Ahorro
Famsa’s Board of Directors since 2007. He currently
runs his own consulting fi rm, Consultores Económicos
Especializados, S.A. de C.V., and provides economic
analysis for several Mexican newspapers. He was Director
of Economic Studies at Grupo Alfa for seven years and
collaborated with Grupo Financiero GBM-Atlántico. He
has also been a member of the Boards of Directors of
Grupo IMSA, Verzatec and Banorte. He holds a Bachelor’s
degree in Economics from ITESM, as well as Master’s and
Doctoral degrees in Economics from Cornell University.
Jorge Luis Ramos Santos has been a member of Grupo
Famsa’s Board of Directors since 2006. He currently
represents Heineken Americas in its joint ventures and is a
strategic advisor to this company. He has served as Deputy
President of Heineken Americas, as CEO of Cervecería
Cuauhtémoc Moctezuma, and as Human Resources Vice
President and Chief Commercial Offi cer of Femsa Cerveza.
He currently sits on the boards of several companies in
Latin America, as well as of several business organizations
and universities in Mexico. He holds Bachelor’s degrees
in Accounting and Business Administration from Instituto
Tecnológico y de Estudios Superiores de Monterrey (ITESM)
and a Master’s in Business Administration from the Wharton
School of the University of Pennsylvania.
Alejandro Sepúlveda Gutiérrez has been a member of
Grupo Famsa’s Board of Directors since 2006 and Banco
Ahorro Famsa’s Board of Directors since 2007. He served
as Vice President of Financial Information at Alfa Corporativo
S.A. de C.V., for 25 years. He also served for 12 years at
Fundidora Monterrey, S.A., being Corporate Controller his
last position, and participated as a member of the Boards of
Directors of the main subsidiaries of Fundidora Monterrey.
He was President of the Committee on Financial Reporting
Practices of the Mexican Institute of Finance Executives
for two years. He holds a Bachelor’s degree in Accounting
from ITESM and, a Master’s in Business Administration
from Texas Christian University, and has completed a
seminar on executive business management at IPADE.
25 2013 ANNUAL REPORT
MANAGEMENT’S ANALYSIS AND DISCUSSION OF THE OPERATING
RESULTS AND FINANCIAL POSITION
Net SalesAs of yearend 2013, Grupo Famsa’s consolidated Net Sales
grew 6.5% compared to 2012, to Ps$15,048 million. Famsa
Mexico posted Net Sales of Ps$13,301 in 2013, 7.7% more
than the previous year, by focusing on stimulating demand
for durable goods categories through promotions designed
to boost credit sales. Net Sales in the Texas region fell 4.2%
to Ps$1,644 million.
Consolidated Same Store Sales, which comprise the sales
of stores with more than 12 months of operations and
exclude any peso-dollar foreign exchange effect, increased
5.6% compared to 2012. Famsa Mexico’s Same Store Sales
grew 7.2%, while Famsa USA’s Same Store Sales fell 4.6%
in 2013.
Cost of Sales and Gross Profi tAs part of the transition from Mexican Financial Reporting
Standards (MFRS) to International Financial Reporting
Standards (IFRS), certain items were reclassifi ed, including
interest expense on bank deposits to the Cost of Sales
heading. As of December 31, 2013, the accumulated
consolidated Cost of Sales was Ps$8,143 million, 8.1%
above that of the previous year. This increase largely refl ects
the 18.4% rise in interest expense on bank deposits, to
Ps$698 million, associated with a growth in the deposit base
compared to 2012.
Accumulated Gross Profi t for 2013 totaled Ps$6,904 million,
an increase of 4.8% year-over-year, with a slight contraction
in consolidated Gross Margin of 70 basis points compared
to 2012.
4.8%Gross Profi t grew
in 2013.
For the year ended December 31, 2013
262013 ANNUAL REPORT
Income Statement
Operating ExpensesConsolidated Operating Expenses, which comprises
selling and administrative expenses, grew 6.0% in 2013, to
Ps$5,493 million. The increase derived mainly to the
expansion of the stores network, the banking branches, and
increased administrative costs associate with the operation
of Banco Famsa.
Operating Profi tAs of December 31, 2013, consolidated Operating Profi t
was Ps$1,420 million, 3.8% below that of the previous year.
The consolidated Operating Margin contracted from 10.4%
in 2012 to 9.4% in 2013, largely due to the increase in
Operating Expenses related to the opening of new stores
and the acquisition of pawn broking branches.
Financing Expenses, NetAs part of the transition from MFRS to IFRS, certain
items were reclassifi ed. As a result, Financial Expenses
now comprise interest expense related to bank and stock
market debt, as well as factoring. Therefore, Grupo Famsa’s
Financing Expenses, Net as of yearend 2013 were Ps$985
million, 49.7% above that of 2012. This increase refl ects
a rise of 36.6% year-over-year in Financial Expenses, to
Ps$987 million. Most of the annual growth in Financial
Expenses resulted from the premium paid on the offer in
May 2013 to acquire and amortize senior notes maturing in
2015 and the premium paid on the capital remaining from
this offer during July 2013. This extraordinary, non-recurring
fi nancial expense represented approximately 17.9% of the
total Financial Expenses of 2013.
Net IncomeConsolidated Net Income as of December 31, 2013
was Ps$658 million, 103.7% above 2012. The growth in
consolidated Net Sales and increased deferred income
taxes compared to 2012 drove this result.
Trade Receivables, NetThe balance of Trade Receivables as of December 31, 2013, net of allowance for doubtful accounts, grew
15.4% year-over-year, to Ps$22,167 million. As part of the transition from MFRS to IFRS, the balance
of Trade Receivables was classifi ed according to the credit timeframe, so 97.6% of the total balance
corresponds to credits with a maturity of less than 12 months totaled Ps$21,641 million. The remainder
has been reclassifi ed as a non-current asset.
InventoriesThe balance of Inventories as of December 31, 2013 was Ps$2,174 million, 11.5% above that of 2012.
Net DebtThe balance of Net Debt was Ps$6,037 million as of yearend 2013, 30.7% above the balance as of
December 31, 2012. This increase largely refl ects the growth in gross debt resulting from a rise
in working capital.
Bank DepositsAs of December 31, 2013, Bank Deposits totaled Ps$13,930 million, a growth of 16.1% year-over-year.
The average rate on bank loans remained at 5.17% as of yearend 2013. Bank deposits continue to be
an optimum source of funding for the credits extended to our customers in Mexico. The diverse fi nancing
products that make up Banco Famsa’s deposit base mitigate the Company’s exposure to conventional
credit market volatility and have also contributed to signifi cantly decrease the consolidated cost of funding.
Stockholders’ EquityThe balance of Stockholders’ Equity grew 7.9%, reaching Ps$8,944 million as of December 31, 2013.
Balance Sheet
27 2013 ANNUAL REPORT
NET DEBT AND BANK DEPOSITS
Net Debt
Bank Deposits
2013
13,930
6,037
19,967
2012
11,999
4,619
16,618
Millions of Mexican pesos
TRADE RECEIVABLES
USA Consumer
Mexico Commercial
Mexico Consumer
2013
17,670
2,657
1,840
22,167
2012
14,948
2,332
1,936
19,215
Millions of Mexican pesos
+15.4%+20.2%
CONSOLIDATED FINANCIAL
STATEMENTSGRUPO FAMSA, S. A. B. DE C. V.
INDEPENDENT AUDITORS’ REPORT 30
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS:
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31
32
33
34
36
37
INDEPENDENT AUDITORS’ REPORT
We have audited the accompanying consolidated fi nancial statements of Grupo Famsa, S. A. B. de C. V., and
subsidiaries, which comprise the consolidated statement of fi nancial position as at December 31, 2013, and the
consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash fl ows for the
yearthen ended, and a summary of signifi cant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated fi nancial statements in
accordance with International Financial Reporting Standards, and for such internal control as management determines
is necessary to enable the preparation of consolidated fi nancial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks
of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated
fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the accompanying consolidated fi nancial statements present fairly, in all material respects, the
consolidated fi nancial position of Grupo Famsa, S. A. B. de C. V. and its subsidiaries as at December 31, 2013, and its
fi nancial performance and its cash fl ows for the year then ended, in accordance with International Financial Reporting
Standards.
PricewaterhouseCoopers, S. C.
Juan Gerardo Pérez Lara
Audit Partner
To the Stockholders’ Meeting of Grupo Famsa, S. A. B. de C. V.
Monterrey, N. L., April 23, 2014
302013 ANNUAL REPORT
watettteatatttttatt rhouseusususuuuuusussusuusuusuusssussus Coopers
Gerardo PéPéPéPéPPéPéPééPéPééPéPééPéééPPPéééPéééPéPééééérezzzzzzzz LaLLLLLLLLLLLLLLLLLL ra
Partner
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The accompanying notes are an integral part of these consolidated fi nancial statements.
Grupo Famsa, S. A. B. de C. V. and subsidiariesAs of December 31, 2013 and 2012
Thousands of Mexican pesos
Humberto Garza ValdézChief Executive Offi cer
Abelardo García LozanoChief Financial Offi cer
December 31,
31 2013 ANNUAL REPORT
ASSETS NOTE 2013 2012
Current assets:Cash and cash equivalentsTrade receivables, netRecoverable taxesOther accounts receivableInventories
68
910
Ps. 1,509,09221,640,993
1,043,020690,376
2,174,473
Ps. 1,528,72718,546,393
1,135,713525,964
1,950,663
Total current assets 27,057,954 23,687,460
Non-current assets:Restricted cashTrade receivables, netProperty, leasehold improvements, andfurniture and equipment, net Goodwill and intangible assets, netGuarantee depositsOther assetsDeferred income tax
78
1112
1323
159,475526,227
2,568,243314,683140,411365,345
1,810,630
254,905669,065
2,370,018299,572
53,910186,963
1,548,033
Total non-current assets 5,885,014 5,382,466
Total assets Ps. 32,942,968 Ps. 29,069,926
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:Demand deposits and time depositsShort-term debtSuppliersAccounts payable and accrued expensesDeferred income from guarantee salesIncome tax payable
1415
16
Ps. 8,416,2084,309,6181,600,595
457,015234,038
20,512
Ps. 8,382,4972,583,8311,562,613
603,464239,245
26,556
Total current liabilities 15,037,986 13,398,206
Non-current liabilities:Time-depositsLong-term debtDeferred income from guarantee salesEmployee benefi ts
1415
18
5,513,8053,236,795
117,65293,043
3,616,7673,563,611
116,38785,240
Total non-current liabilities 8,961,295 7,382,005
Total liabilities 23,999,281 20,780,211
Stockholders’ equityCapital stockAdditional paid-in capitalRetained earningsReserve for repurchase of sharesForeign currency translation adjustment
19 1,458,2862,778,2264,498,510
130,00049,689
1,458,2862,778,2263,836,677
130,00060,395
Total stockholders’ equity attributable to shareholdersNon-controlling interest
8,914,71128,976
8,263,58426,131
Total stockholders’ equity 8,943,687 8,289,715
Total liabilities and stockholders’ equity Ps. 32,942,968 Ps . 29,069,926
CONSOLIDATED STATEMENTS OF INCOME
Grupo Famsa, S. A. B. de C. V. and subsidiariesFor the years ended December 31, 2013 and 2012Thousands of Mexican pesos
Humberto Garza ValdézChief Executive Offi cer
Abelardo García LozanoChief Financial Offi cer
The accompanying notes are an integral part of these consolidated fi nancial statements.
December 31,
322013 ANNUAL REPORT
NOTE 2013 2012
Net salesInterest earned from customers
2626
Ps. 10,642,9734,404,901
Ps. 10,446,466 3,677,062
Total revenuesCost of sales 20
15,047,874(8,143,382)
14,123,528(7,536,148)
Gross profi t 6,904,492 6,587,380
Selling expensesAdministrative expensesOther income, net
202021
(3,589,431)(1,903,912)
8,420
(3,226,968)(1,956,292)
70,980
(5,484,923) (5,112,280)
Operating profi t 1,419,569 1,475,100
Financial expensesFinancial income
2222
(986,923)1,515
(722,345)63,970
Financial expenses, net (985,408) (658,375)
Profi t before income taxIncome tax 23
434,161226,326
816,725107,332
Profi t before discontinued operationsDiscontinued operations
660,487-
924,057(598,458)
Consolidated net income Ps. 660,487 Ps. 325,599
Net income attributable to:Controlling interestNon-controlling interest
Ps. 657,6422,845
Ps. 322,8502,749
Consolidated net income Ps. 660,487 Ps. 325,599
Basic and diluted earnings per share attributable tocontrolling interest, in Mexican pesos:Continuing operations Ps. 1.50 Ps. 2.10
Discontinued operations Ps. - Ps. (1.36)
Net income Ps. 1.50 Ps. 0.74
Number of outstanding shares 19 439,188,294 439,188,294
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Grupo Famsa, S. A. B. de C. V. and subsidiariesFor the years ended December 31, 2013 and 2012
Thousands of Mexican pesos
December 31,
Humberto Garza ValdézChief Executive Offi cer
Abelardo García LozanoChief Financial Offi cer
33 2013 ANNUAL REPORT
NOTE 2013 2012
Consolidated net income
Other comprehensive income (loss), net of taxes:
Items that will not be reclassifi ed to profi t or loss:Actuarial gains and (losses)
Items that may be reclassifi ed to profi t or loss:Foreign currency translation adjustment
18
Ps. 660,487
4,191
(10,706)
Ps. 325,599
(2,185)
(48,215)
Consolidated comprehensive income Ps. 653,972 Ps. 275,199
Consolidated comprehensive income attributable to:Controlling interestNon-controlling interest
Ps. 651,1272,845
Ps. 272,4502,749
Ps. 653,972 Ps . 275,199
The accompanying notes are an integral part of these consolidated fi nancial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Grupo Famsa, S. A. B. de C. V. and subsidiariesAs of December 31, 2013 and 2012 Thousands of Mexican pesos
Humberto Garza ValdézChief Executive Offi cer
The accompanying notes are an integral part of these consolidated fi nancial statements.
342013 ANNUAL REPORT
NOTECAPITAL STOCK
ADDITIONAL PAID-IN CAPITAL
RETAINED EARNINGS
Balances as of January 1, 2012 Ps. 1,458,286 Ps. 2,778,226 Ps. 3,536,012
Transactions with owners of the Company:Increase in the reserve for repurchase of shares
Net incomeOther comprehensive income
19 -
--
-
--
(20,000)
322,850(2,185)
Total comprehensive income - - 320,665
Balances as of December 31, 2012 19 1,458,286 2,778,226 3,836,677
Net incomeOther comprehensive income
--
--
657,6424,191
Total comprehensive income - - 661,833
Balances as of December 31, 2013 19 Ps. 1,458,286 Ps. 2,778,226 Ps. 4,498,510
Abelardo García LozanoChief Financial Offi cer
35 2013 ANNUAL REPORT
RESERVE FORREPURCHASE
OF SHARES
EFFECTSOF FOREIGNCURRENCY
TRANSLATION
TOTAL STOCKHOLDERS
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
TOTALNON-CONTROLLING
INTEREST
TOTAL STOCKHOLDERS
EQUITY
Ps. 110,000 Ps. 108,610 Ps . 7,991,134 Ps. 23,382 Ps. 8,014,516
20,000
--
-
-(48,215)
-
322,850(50,400)
-
2,749-
-
325,599(50,400)
- (48,215) 272,450 2,749 275,199
130,000 60,395 8,263,584 26,131 8,289,715
--
-(10,706)
657,642(6,515)
2,845-
660,487(6,515)
- (10,706) 651,127 2,845 653,972
Ps. 130,000 Ps 49,689 Ps. 8,914,711 Ps. 28,976 Ps. 8,943,687
CONSOLIDATED STATEMENTS OF CASH FLOWS
Grupo Famsa, S. A. B. de C. V. and subsidiariesFor the years ended December 31, 2013 and 2012Thousands of Mexican pesos
Humberto Garza ValdézChief Executive Offi cer
Abelardo García LozanoChief Financial Offi cer
The accompanying notes are an integral part of these consolidated fi nancial statements.
December 31,
362013 ANNUAL REPORT
OPERATING ACTIVITIES: NOTE 2013 2012
Profi t before income taxDepreciation and amortizationAllowance for doubtful receivablesGain on sale of property, leasehold improvements, furniture and equipmentEstimated liabilities for labor benefi tsInterest incomeInterest expensesTrade receivablesInventoriesOther accounts receivable SuppliersAccounts payable and accrued expenses Interests to bank depositorsIncome tax paidDemand deposits and time deposits Exchange gain and losses, net
11,12, 2020
18
Ps. 434,161286,771
1,284,315(1,639)38,434(1,515)
1,630,185(4,236,077)
(223,810)(248,875)
27,656(49,020)
(690,523)(26,846)
1,922,98119,381
Ps. 816,725314,397
1,173,362(1,279)15,731(1,757)
1,312,145(2,476,844)
(308,934)(109,161)
87,437(647,281)(589,799)
(39,619)1,563,190(112,969)
Net cash fl ows from operating activities 165,579 995,344
INVESTING ACTIVITIES:
Acquisition of property, leasehold improvements, furniture and equipmentAcquisition of intangible assetsProceeds from sale of furniture and equipmentInterest received
(525,899)(34,987)
62,7461,515
(201,597)(19,777)
9,8291,757
Net cash fl ows used in investing activities (496,625) (209,788)
FINANCING ACTIVITIES:
Interest paidProceeds from current and non-current debt and bank loansPayments of current and non-current debt and bank loans
(1,048,565)4,586,356
(3,216,773)
(718,948)300,040
(103,585)
Net cash fl ow from (used in) fi nancing activities 321,018 (522,493)
(Decrease) increase in net cash and cash equivalentsAdjustments to cash fl ow as a result of changes in exchange ratesCash and cash equivalents at the beginning of the period 6
(10,028) (9,607)
1,528,727
263,063 4,210
1,261,454
Cash and cash equivalents at the end of the period 6 Ps. 1,509,092 Ps. 1,528,727
37 2013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37 INFORME ANUAL 2013
Grupo Famsa, S. A. B. de C. V. and subsidiariesAs of December 31, 2013 and 2012
Thousands of Mexican pesos
Note 1 - General information:
Grupo Famsa, S. A. B de C. V. and subsidiaries (hereinafter, “Famsa”, “Company” or “Grupo Famsa”) is a Mexican company and a leader in the
retail sector, satisfying families’ different purchasing, fi nancing and savings needs. The Company is controlled by a trust whose benefi ciaries
are the Garza Valdéz family. The address of the Company and its corporate offi ce is Ave. Pino Suárez No. 1202 Nte., Zona Centro, Monterrey,
Nuevo León, Mexico. Grupo Famsa started operations in 1970.
Grupo Famsa has developed a solid portfolio of complementary businesses based on consumer credit and savings, which supports a large part
of the fi nancing needs of its operations. As of December 31, 2013, Grupo Famsa operates a network of 362 stores with 317 bank branches,
173 pawn store branches, as well as 25 stores in two of the states with the largest Hispanic population in the United States of America (USA),
focused on selling all types of electronic appliances, furniture, clothing, household appliances, mobile phones, motorcycles and other consumer
durable goods. The sales operations are carried out in cash and by credit, wholesale and directly to the general public.
The Company is listed on the Mexican Stock Exchange, and in order to perform its fi nancial activities in Mexico it has obtained the authorization
of the Ministry of Finance and Public Credit to operate Banco Ahorro Famsa, S. A. Institución de Banca Múltiple as established by the Mexican
Law of Credit Institutions, under the supervision and surveillance of the National Banking and Securities Commission (the Commission) and
Banco de México (Banxico).
The consolidated fi nancial statements were authorized for issuance on April 22, 2014, by the Company’s offi cers who have signed the
consolidated fi nancial statements and the accompanying notes. They are subject to the approval of the ordinary shareholders’ meeting, which
is legally empowered to make such changes as it considers necessary.
Note 2 - Signifi cant events:
1. Discontinued operation:
The Company’s management redesigned its business strategy for Famsa, Inc. due to the ongoing economic problems in the Western USA
region affecting specially the Hispanic community. During 2012 the organized closing of the stores in the states of California, Arizona and
Nevada was concluded and simultaneously the US operations were concentrated in the stores located in the states of Texas and Illinois
(“Eastern USA” region).
The analysis of the results of the discontinued operation for the years ended December 31, 2012, is as follows:
The net cash fl ow from discontinued operations is attributable to operating activities.
2013 2012Net sales Ps. - Ps. 392,105
Operating expensesAllowance for doubtful receivablesCost of goods soldFinancing expensesFreightsOther expenses, net
------
(421,781)(368,704)(189,753)
(7,417)(2,828)
(80)
- (990,563)
Loss before tax from discontinued operations - (598,458)
Tax on discontinued operations - -
Loss after tax from discontinued operations Ps. - (Ps. 598,458)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Grupo Famsa, S. A. B. de C. V. and subsidiariesFor the years ended December 31, 2013 and 2012Thousands of Mexican pesos
Humberto Garza ValdézChief Executive Offi cer
Abelardo García LozanoChief Financial Offi cer
The accompanying notes are an integral part of these consolidated fi nancial statements.
December 31,
362013 ANNUAL REPORT
OPERATING ACTIVITIES: NOTA 2013 2012
Profi t before income taxDepreciation and amortizationAllowance for doubtful receivablesGain on sale of property, leasehold improvements, furniture and equipmentEstimated liabilities for labor benefi tsInterest incomeInterest expensesTrade receivablesInventoriesOther accounts receivable SuppliersAccounts payable and accrued expenses Interests to bank depositorsIncome tax paidDemand deposits and time deposits Exchange gain and losses, net
11,12, 2020
18
Ps. 434,161286,771
1,284,315(1,639)38,434(1,515)
1,630,185(4,236,077)
(223,810)(248,875)
27,656(49,020)
(690,523)(26,846)
1,922,98119,381
Ps. 816,725314,397
1,173,362(1,279)15,731(1,757)
1,312,145(2,476,844)
(308,934)(109,161)
87,437(647,281)(589,799)
(39,619)1,563,190(112,969)
Net cash fl ows from operating activities 165,579 995,344
INVESTING ACTIVITIES:
Acquisition of property, leasehold improvements, furniture and equipmentAcquisition of intangible assetsProceeds from sale of furniture and equipmentInterest received
525,899)(34,987)
62,7461,515
(201,597)(19,777)
9,8291,757
Net cash from used in investing activities (496,625) (209,788)
FINANCING ACTIVITIES:
Interest paidProceeds from current and non-current debt and bank loansPayments of current and non-current debt and bank loans
(1,048,565)4,586,356
(3,216,773)
(718,948)300,040
(103,585)
Net cash fl ow (used in) from fi nancing activities 321,018 (522,493)
Increase in net cash and cash equivalentsAdjustments to cash fl ow as a result of changes in exchange ratesCash and cash equivalents at the beginning of the year 6
(10,028) (9,607)
1,528,727
263,063 4,210
1,261,454
Cash and cash equivalents at the end of the year 6 Ps. 1,509,092 Ps. 1,528,727
37 2013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37 INFORME ANUAL 2013
Grupo Famsa, S. A. B. de C. V. and subsidiariesAs of December 31, 2013 and 2012
Thousands of Mexican pesos, except where otherwise indicated
Note 1 - General information:
Grupo Famsa, S. A. B de C. V. and subsidiaries (hereinafter, “Famsa”, “Company” or “Grupo Famsa”) is a Mexican company and a leader in the
retail sector, satisfying families’ different purchasing, fi nancing and savings needs. The Company is controlled by a trust whose benefi ciaries
are the Garza Valdéz family. The address of the Company and its corporate offi ce is Ave. Pino Suárez No. 1202 Nte., Zona Centro, Monterrey,
Nuevo León, Mexico. Grupo Famsa started operations in 1970.
Grupo Famsa has developed a solid portfolio of complementary businesses based on consumer credit and savings, which supports a large part
of the fi nancing needs of its operations. As of December 31, 2013, Grupo Famsa operates a network of 362 stores with 317 bank branches,
173 pawn store branches, as well as 25 stores in two of the states with the largest Hispanic population in the United States of America (USA),
focused on selling all types of electronic appliances, furniture, clothing, household appliances, mobile phones, motorcycles and other consumer
durable goods. The sales operations are carried out in cash and by credit, wholesale and directly to the general public.
The Company is listed on the Mexican Stock Exchange, and in order to perform its fi nancial activities in Mexico it has obtained the authorization
of the Ministry of Finance and Public Credit to operate Banco Ahorro Famsa, S. A. Institución de Banca Múltiple as established by the Mexican
Law of Credit Institutions, under the supervision and surveillance of the National Banking and Securities Commission (the Commission) and
Banco de México (Banxico).
The consolidated fi nancial statements were authorized for issuance on April 22, 2014, by the Company’s offi cers who have signed the
consolidated fi nancial statements and the accompanying notes. They are subject to the approval of the ordinary shareholders’ meeting, which
is legally empowered to make such changes as it considers necessary.
Note 2 - Signifi cant events:
1. Discontinued operation:
The Company’s management redesigned its business strategy for Famsa, Inc. due to the ongoing economic problems in the Western USA
region affecting specially the Hispanic community. During 2012 the organized closing of the stores in the states of California, Arizona and
Nevada was concluded and simultaneously the US operations were concentrated in the stores located in the states of Texas and Illinois
(“Eastern USA” region).
The analysis of the results of the discontinued operation for the years ended December 31, 2012, is as follows:
The net cash fl ow from discontinued operations is attributable to operating activities.
2013 2012Net sales Ps. - Ps. 392,105
Operating expensesAllowance for doubtful receivablesCost of goods soldFinancing expensesFreightsOther expenses, net
------
(421,781)(368,704)(189,753)
(7,417)(2,828)
(80)
- (990,563)
Loss before tax from discontinued operations - (598,458)
Tax on discontinued operations - -
Loss after tax from discontinued operations Ps. - (Ps. 598,458)
382013 ANNUAL REPORT
2. Refi nancing of debt:
As part of a debt-refi nancing program, Grupo Famsa undertook the following actions:
i. On February 4, 2013, the Company issued notes for US$50 million at a rate of 7.00%, under a euro commercial paper program established
in 2009 for a total of US$100 million. The net proceeds were used by the Company to refi nance the existing debt which matured on
February 4, 2014. The debt was paid off at the aforementioned date with the net proceeds obtained from the issuance of euro commercial
paper in the amount of US$60 million under the same program and maturing on January 28, 2015 at a rate of 6.125%.
ii. On May 15, 2013 the company announced an acquisition offer in cash to acquire each and every one of its senior notes 11.00% payable
in 2015, amounting to US$200 million. At the cut-off date of the early offer established at May 29, 2013, 80.07% or US$160.13 million
of the total outstanding bonds were amortized. At the date of maturity of the acquisition offer, established at June 12, 2013, 0.16% or
US$322 thousands of the total outstanding bonds were redeemed. The remaining amount, equal to US$39.55 million, was amortized by the
company on July 22, 2013. Additionally, on May 31, 2013 Grupo Famsa issued senior notes amounting to US$250 million, under rule 144A/
Reg. S, in the foreign market, at a 7.25% rate maturing on May 31, 2020. The bonds are guaranteed by retailers, transformation companies
and others. The bonds received a “B” rating by Standard & Poors and a “B+” rating by Fitch Ratings so that they cannot be offered or sold
in the United States of America.
3. Business acquisition
In order to continue strengthening the network expansion plan of banking branches in order to increase penetration in the country’s states
and offer its clients different credit alternatives, BAF conducted negotiations with the company Monte de México, S. A. de C. V. (Montemex) in
October 2013, in order to acquire a group of identifi able assets associated to the pledge activity of this company, mainly credit portfolio, furniture
and equipment and intangible assets (referring to Montemex brands, licenses and certain know-how, among others.) This acquisition qualifi es
as a business combination in accordance with IFRS 3.
At December 31, 2013, BAF is in the process of concluding the acquisition of assets linked to the pawn store business, to determine the fi nal
acquisition price and distribute it at the fair values of the acquired assets and consequently, determine goodwill. The negotiation process is
estimated to be concluded within a term of approximately twelve months as from the acquisition date.
Goodwill has been determined in a preliminary way based on the information available as from the purchase date and up to the date of issuance
of this report. The total consideration paid by the Company at the date of issuance of this report was $396,997 in cash. The following table
shows recorded assets and assumed liabilities determined provisionally at the acquisition date. We estimate the valuation will be concluded
within the period of 12 months following the acquisition date.
(1) The information, classifi cation and percentage of amortization are part of the assets descried in Note 12.
(2) Provided that the acquisition process has not been concluded and due to its relative importance in the context of the consolidated fi nancial statements, goodwill
was not recorded at December 31, 2013.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ClientsProperty, leasehold improvements and Furniture and equipment, net Intangible assets (1)
Goodwill (2)
Ps. 135,148212,637
47,1342,078
Ps. 396,997
39 2013 ANNUAL REPORT
The value of acquired accounts receivable approximate their fair value due to their short term maturity. Acquired accounts receivable are
estimated to be recovered in the short term.
No contingent liability has arisen from this acquisition, which requires recording. Neither are there any contingent consideration agreements.
Costs related to the acquisition amount to $3,376 and were recorded in the statement of income within administrative expenses.
Contributed income due to the acquisition of Montemex included in the consolidated statement of income as from the acquisition date and up
to December 31, 2013 amount to $44,188.
At the date of issuance of these fi nancial statements, the Company was not able to obtain the audited fi nancial information before the
acquisition date in accordance with accounting standards followed by the Company for purposes of determining the amount of income and
annual net profi t as if the acquisition had taken place on January 1, 2013.
4. Merger from incorporation agreed by some subsidiaries
Considering the dynamics of Grupo Famsa, and in order to facilitate the operations and supervision of the trading companies through a single
entity, represented by Famsa México, S. A. de C. V., the four trading companies should be merged with Grupo Famsa. Among some of the
benefi ts of performing this corporate restructuring, are improving the monitoring of retail operations in Mexico and facilitating transactions
performed with Banco Ahorro Famsa.
In a General Extraordinary Meeting held on October 31, 2013, the stockholders approved the merger by incorporation of its subsidiaries
Fabricantes Muebleros, S. A. de C. V., Famsa del Centro, S. A. de C. V., Famsa del Pacífi co, S. A. de C. V. and Famsa Metropolitano, S. A. de
C. V., the companies merged into Grupo Famsa, S. A. B. de C. V., as the merging and surviving company.
The merger became effective between the parties as of October 31, 2013, in accordance with the approval of stockholders present or
represented in such General Extraordinary Meeting on October 31, 2013. Therefore, as of that date, the Company acquired the total assets
and assumed the total liabilities and stockholders’ equity of the merged companies, with the latter ceasing to exist as legal entities. In order to
account for this transaction, the predecessor method was used, as mentioned in Note 3.2. It is established that the balance sheets used as a
basis for the merger declared were those corresponding to October 31, 2013, approved by the General Extraordinary Stockholders’ Meeting.
The balances of merged assets, liabilities and capital are as follows:
At December 31, 2013, balances detailed above had already been incorporated in the consolidated fi nancial statements before the merger;
therefore, no additional effects were present in the consolidated fi nancial statement as a result of the merger.
ConceptFabricantesMuebleros
Famsa delCentro
Famsa delPacífi co
FamsaMetropolitano
Total
Current assets Ps. 149,969 Ps. 85,663 Ps. 122,882 Ps. 716,566 Ps. 1,075,080
Non-current assets 684,339 313,931 506,885 648,782 2,153,937
Ps. 834,308 Ps. 399,594 Ps. 629,767 Ps. 1,365,348 Ps. 3,229,017
Short-term liabilities Ps. 42,789 Ps. 156,284 Ps. 50,970 Ps. 158,290 Ps. 408,333
Stockholders’ equity 791,519 243,310 578,797 1,207,058 2,820,684
Ps. 834,308 Ps. 399,594 Ps. 629,767 Ps. 1,365,348 Ps. 3,229,017
402013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Summary of signifi cant accounting policies:
The most signifi cant accounting policies applied in the preparation of these consolidated fi nancial statements are summarized as follows. These
policies have been consistently applied in the reporting years, unless otherwise indicated.
3.1 Basis of preparation
The consolidated fi nancial statements of Grupo Famsa, S. A. B. de C. V. and subsidiaries have been prepared in accordance with the
International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). The IFRS include
all effective International Accounting Standards (“IAS”), and the related interpretations issued by the International Financial Reporting
Interpretations Committee (“IFRIC”), including those issued previously by the Standing Interpretations Committee (“SIC”).
In accordance with the amendments to the Rules for Public Companies and Other Participants in the Mexican Stock Exchange, issued by the
Mexican National Banking and Securities Commission on January 27, 2009, the Company is required to prepare its fi nancial statements under
IFRS starting in 2012.
The consolidated fi nancial statements have been prepared on a historical cost basis, except for cash equivalents recorded at fair value.
The preparation of the consolidated fi nancial statements in accordance with IFRS requires the use of certain critical accounting estimates.
Additionally, it requires the Company’s management to use judgment in the process of applying the accounting policies of the Company. The
areas involving a high degree of judgment or complexity and areas where judgments and estimates are signifi cant to the consolidated fi nancial
statements are disclosed in Note 5.
3.2 Basis for consolidation
a. Subsidiaries
The subsidiaries are all the entities over which the Company has the power to govern the fi nancial and operating policies of the entity. The
Company controls an entity when it is exposed, or has the right to variable returns from its interest in the entity and it is capable of affecting
the returns through its power over the entity. Where the Company’s interest in subsidiaries is less than 100%, the share attributed to outside
shareholders is presented as non-controlling interest.
Subsidiaries are consolidated in full from the date on which control is transferred to the Company and up to the date it loses that control.
The Company applies the acquisition method in accounting for business combinations, except in a jointly controlled entity. The Company
defi nes a business combination as a transaction in which it obtains control over the business, which is defi ned as a set of activities and assets
which are conducted and managed in order to provide benefi ts in the form of dividends, less costs or other economic benefi ts, directly to
investors.
The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity
interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifi able acquired assets and liabilities and contingent liabilities assumed in a business combination are initially
measured at their fair values at the acquisition date. The Company recognizes any non-controlling interest in the acquiree based on the share
of the non-controlling interest in the net identifi able assets of the acquired entity.
The acquisition-related costs are recognized as expenses when they are incurred.
Goodwill is initially measured as excess of the sum of the consideration transferred and the fair value of the non-controlling interest over the net
identifi able assets acquired. If the consideration transferred is less than the fair value of the net assets of the subsidiary acquired in the case of
a bargain purchase, the difference is recognized directly in the consolidated statement of income.
41 2013 ANNUAL REPORT
(1) Company merged with Grupo Famsa, S. A. B. de C. V. on October 31, 2013.
(2) Company established on December 21, 2012.
(3) Company established on April 29, 201|3.
(4) At December 31, 2013 no changes in the total (direct and indirect) equity percentages in subsidiaries were observed since the difference shown in the table
above with respect to December 31, 2013 corresponds to the indirect share ownership held through the subsidiaries that were merged.
As of December 31, 2013
As of December 31, 2012
Retail salesFabricantes Muebleros, S. A. de C. V. (1)
Famsa del Centro, S. A. de C. V. (1)Famsa del Pacífi co, S. A. de C. V. (1)
Famsa Metropolitano, S. A. de C. V. (1)
Famsa México, S. A. de C. V. (2) and (4)
Impulsora Promobien, S. A. de C. V.Famsa, Inc., headquartered in U.S.A. (Famsa USA)
----
99.9999.04
100.00
99.93100.00100.00
99.9499.3899.04
100.00
Administrative servicesCorporación de Servicios Ejecutivos Famsa, S. A. de C. V.Corporación de Servicios Ejecutivos, S. A. de C. V.Promotora Sultana, S. A. de C. V.Suministro Especial de Personal, S. A. de C. V.
100.0099.2199.9999.99
100.0099.2199.9999.99
Manufacturing and otherAuto Gran Crédito Famsa, S. A. de C. V.Expormuebles, S. A. de C. V.Mayoramsa, S. A. de C. V.Verochi, S. A. de C. V.Geografía Patrimonial, S. A. de C. V. (4)
Corporación de Servicios para la Administración de Valores, S. A. de C. V. (3)
99.9999.9099.8999.92
100.0099.80
99.9999.9099.8999.9253.75
-
Financial sectorBanco Ahorro Famsa, S. A., Institución de Banca Múltiple (BAF)(4) 99.82 99.79
% of ownership
When a jointly controlled entity is acquired, the Company accounts for business combinations using the predecessor method. The predecessor
method involves the incorporation of the carrying amounts of the acquired entity, which includes the goodwill recognized at the consolidated
level with respect to the acquiree. Any difference between the consideration transferred and the carrying amount of the net assets acquired at
the level of the subsidiary is recognized in stockholders’ equity.
Inter-company transactions and balances and unrealized gains between Famsa companies are eliminated in the preparation of the consolidated
fi nancial statements. Unrealized losses are eliminated unless the transaction provides evidence of impairment in the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.
As of December 31, 2013 and 2012, the shareholding ownership percentages are as follows:
422013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b. Absorption (dilution) of control in subsidiaries
The effect of absorption (dilution) of control in subsidiaries, i.e., an increase or decrease in the percentage of control, is recorded in stockholders’
equity, directly in retained earnings, in the period in which the transactions that cause such effects occur. The effect of absorption (dilution)
of control is determined by comparing the book value of the investment according to percentage of ownership before the event of dilution or
absorption against the book value with the new percentage of ownership after the relevant event. In the case of loss of control, the dilution
effect is recognized in income.
c. Disposal of subsidiaries
When the Company ceases to have control any retained interest in the entity is remeasured at its fair value at the date when control is lost,
with the change in carrying amount recognized in profi t or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or fi nancial asset. In addition, any amounts previously recognized in other
comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognized in other comprehensive income are reclassifi ed to profi t or loss.
d. Associates
Associates are all entities over which the Company has signifi cant infl uence but not control. Generally an investor must hold between 20%
and 50% of the voting rights in an investee for it to be an associate. Investments in associates are accounted for using the equity method and
are initially recognized at cost. The Company’s investment in associates includes goodwill identifi ed at acquisition, net of any accumulated
impairment loss. If the equity in an associate is reduced but signifi cant infl uence is maintained, only a portion of the amounts recognized in the
comprehensive income is reclassifi ed to income for the year, where appropriate.
The Company’s share of profi ts or losses of associates, post-acquisition, is recognized in the income statement and its share in the other
comprehensive income of associates is recognized as other comprehensive income. The cumulative movements after acquisition are
adjusted against the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its equity
in the associate, including unsecured receivables, the Company does not recognize further losses unless it has incurred obligations or made
payments on behalf of the associate.
The Company assesses at each reporting date whether there is objective evidence that the investment in the associate is impaired. If so, the
Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying amount and
recognizes it in “share of profi t/loss of associates” in the income statement.
Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s equity in such gains.
Unrealized losses are also eliminated unless the transaction provides evidence that the asset transferred is impaired. In order to ensure
consistency with the policies adopted by the Company, the accounting policies of associates have been modifi ed. When the Company ceases
to have signifi cant infl uence over an associate, any difference between the fair value of any retained interest plus any proceeds from disposing
part of the interest in the associate less the carrying amount of the investment at the date the equity method was discontinued is recognized
in the income statement.
3.3 Business segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The offi cer
responsible for allocating resources and assessing performance of the operating segments has been identifi ed as the Chief Executive Offi cer.
With respect to the years presented, December 31, 2013 and 2012, the Company has operated on the basis of business segments. These
segments have been determined considering the geographical areas. See Note 26.
The statement of comprehensive income shows the fi nancial information in the way that management analyzes, conducts and controls the
business.
43 2013 ANNUAL REPORT
3.4 Foreign currency translation
a. Functional and presentation currency
Items included in the fi nancial statements of each of the Company’s entities are measured using the currency of the primary economic environment
in which the entity operates (the functional currency).
The consolidated fi nancial statements are presented in Mexican pesos, which is the functional currency of the Company’s subsidiaries, except for
Famsa, Inc., whose functional currency is the US dollar.
b. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or
of valuation when the amounts are revalued. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of
comprehensive income.
c. Translation of entities with a functional currency different from the presentation currency
The results and fi nancial position of Famsa, Inc., which operates in the USA, are translated into the presentation currency as follows:
- Assets and liabilities for each statement of fi nancial position are translated at the closing rate at the date of such statement of fi nancial position;
- Income and expenses recognized in the statement of comprehensive income are translated at average exchange rates (unless this average is
not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the rates on the dates of the transaction), and;
- The capital stock recognized in the statement of fi nancial position is translated at historical exchange rates. All resulting exchange differences
are recognized in other comprehensive income.
3.5 Cash and cash equivalents
Cash and cash equivalents include cash balances, bank deposits and other highly liquid investments with original maturities of less than three
months with minor risk of changes in value. Cash is presented at nominal value and cash equivalents are measured at fair value; the changes in
value are recognized in profi t or loss of the period. Cash equivalents consist primarily of investments in government securities.
3.6 Restricted cash
Restricted cash represents limited cash in BAF and it comprises: a) deposits required by monetary regulations with Banco de México, which earn
a bank funding rate, b) inter-bank short-term loans whose term does not exceed three working days, and c) purchased foreign currency, whose
settlement date is agreed subsequently to the transaction date.
3.7 Financial instruments
3.7.1 Financial assets
The Company classifi es its fi nancial assets as loans and receivables. The classifi cation depends on the purpose for which the fi nancial assets
were acquired. Management determines the classifi cation of its fi nancial assets at the date of initial recognition.
442013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classifi ed as non-current
assets. The Company’s fi nancial assets comprise trade receivables, other accounts receivable, cash and cash equivalents, and restricted cash,
in the statement of fi nancial position.
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection
is expected in one year or less (or in the normal operating cycle of the business if longer), they are classifi ed as current assets. If not, they are
presented as non-current assets.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less
any impairment allowance. Acquisition costs are initially recorded at fair value plus origination charges and subsequently at their amortization
cost.
Financial assets are derecognized when the rights to receive cash fl ows from the investments have expired or have been transferred and the
Company has transferred substantially all risks and rewards of ownership. If the Company neither transfers nor retains substantially all the
risks and rewards of ownership and continues to retain control of the transferred asset, the Company recognizes its interest in the asset and
the associated liability for the amounts it would pay. If the Company retains substantially all the risks and rewards of ownership of a transferred
fi nancial asset, the Company continues to recognize the fi nancial asset and also recognizes a liability for the amounts received.
3.7.2 Accounts payables
Trade payables are obligations to pay for goods or services that have been acquired or received in the ordinary course of business from
suppliers. Loans are initially recognized at fair value, net of transaction costs incurred. Loans are subsequently recognized at amortized
cost, any difference between the amounts received (net of transaction costs) and the settlement value being recognized in the statement of
comprehensive income over the term of the loan using the effective interest method.
Financial liabilities are initially recognized at fair value and are subsequently measured at amortized cost using the effective interest method.
Liabilities in this category are classifi ed as current liabilities if they are expected to be settled within the next 12 months, otherwise they are
classifi ed as non-current.
Financial assets and liabilities are offset and the net amount reported in the statement of fi nancial position when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
3.7.3. Impairment of fi nancial assets
The Company assesses at the end of each reporting period whether there is objective evidence that a fi nancial asset or group of fi nancial assets
is impaired. A fi nancial asset or a group of fi nancial assets is impaired and impairment losses are incurred only if there is objective evidence
of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and if that loss event (or
events) has an impact on the estimated future cash fl ows of the fi nancial asset or group of fi nancial assets that can be reliably estimated.
For loans and receivables, if impairment exists, the amount of the loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash fl ows (excluding future credit losses that have not been incurred) discounted at the original effective
interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated income statement in the
administrative expenses line.
If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment
loss is recognized in the statement of comprehensive income.
3.8 Other accounts receivable
The Company classifi es as other receivables all credits or advances to employees and other persons or companies other than the general
public. If the receivables are expected to be collected within 12 months of the end of the fi nancial year, they are classifi ed as current, if not they
are classifi ed as non-current. See Note 3.7.1.
45 2013 ANNUAL REPORT
3.9 Advance payments
The Company classifi es as advance payments the payments for advertising in mass media, mainly television and press. These amounts are
recognized at the value of the related agreements and are charged to income as they are accrued. In no case do the contracted amounts exceed
one year.
3.10 Inventories
Inventories are stated at the lower of cost and net realizable value. The cost comprises the cost of goods plus import costs, freight, handling,
shipping and warehousing in customs and distribution centers, decreased by the value of respective returns. Net realizable value is the estimated
selling price in the ordinary course of business, less applicable variable selling expenses. The cost is determined using the average cost method.
3.11 Property, leasehold improvements, and furniture and equipment
Property, leasehold improvements, and furniture and equipment are recognized at cost less accumulated depreciation and any accumulated
impairment losses. The cost includes expenses directly attributable to the acquisition of the asset and all the costs associated with the placement
of the asset in its location and in the necessary conditions so that it can operate in the manner intended by the management. See Note 3.19.
Costs for extension, remodeling or improvements representing an increase in the capacity and therefore an extension of the useful life of the
assets are also capitalized. The expenses for maintenance and repairs are charged to the statement of comprehensive income in the period
they are incurred. The carrying amount of the replaced assets is derecognized when replaced, with all effects being taken to the statement of
comprehensive income.
Improvements in process represent stores under construction and include investments and all costs directly attributable to achieve operating
conditions. The reclassifi cation of these investments is made when the store opens and deprecation of the assets commences.
Depreciation on the assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful
lives, as follows:
Buildings and construction 33 years
Furniture and equipment 11 years
Transportation equipment 5 years
Data-processing equipment 4 years
Leasehold improvements Over the effective period of the leasing agreement
Residual values, useful lives and depreciation of assets are reviewed and adjusted, if necessary, at the date of each statement of fi nancial position.
The book value of an asset is written down to its recoverable amount if the asset’s carrying amount is higher than its estimated recoverable
amount. See Note 3.13.
Gains and losses on the sale of assets result from the difference between the proceeds from the transaction and the carrying value of the assets.
These are included in the statement of comprehensive income within other income (expenses), net.
3.12 Goodwill and intangible assets
a. Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the interest in the fair value of
the net identifi able assets, liabilities and contingent liabilities of the acquire and the fair value of the non-controlling interest in the acquire.
462013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units, or groups
of cash generating units, that is expected to benefi t from the synergies of the combination. Each unit or group of units to which the goodwill
is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is
monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment.
The carrying value of goodwill is compared to the recoverable amount, which is the higher of the value in use and the fair value less costs to
sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.
b. Systems development and computer software
Intangible assets associated with systems development and computer software programs involve the plan or design and the development of
a new or substantially improved software or computer systems. Development costs are capitalized only when the following criteria are met:
- It is technically feasible to complete the software product so that it will be available for use;
- Management intends to complete the software product and use or sell it;
- There is an ability to use the software product;
- It can be demonstrated how the software product will generate probable future economic benefi ts;
- Adequate technical, fi nancial and other resources to complete the development and to use or sell the software product are available; and
- The expenditure attributable to the software product during its development can be reliably measured.
Acquired licenses for the use of programs, software and other systems are capitalized at the value of costs incurred for the acquisition and
preparation for use. Other development costs that do not meet these criteria and research expenses, as well as maintenance, are recognized
in the statement of income within administrative expenses as incurred. Development costs previously recognized as an expense are not
recognized as an asset in subsequent periods.
These assets are amortized based on their estimated useful life, which is 6 years.
3.13 Impairment of non-fi nancial assets
Assets that have an indefi nite useful life, including goodwill, are not subject to amortization and are tested annually for impairment. Assets that
are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifi able cash fl ows (cash-generating units). Non-fi nancial assets other
than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
3.14 Demand deposits and time-deposits
The Company’s funding liabilities include interest-bearing demand deposits (savings deposits and checking accounts) as well as time-deposits
(certifi cates of deposits and promissory notes). These liabilities are recorded at the contracted transaction value plus accrued interest, determined
by the days elapsed at the end of each month, which is charged to income on an accrual basis and subsequently at their amortization cost using
the effective interest method.
47 2013 ANNUAL REPORT
3.15 Provisions
Provisions represent present obligations from past events where an outfl ow of economic resources is probable. These provisions have been
recognized under the best estimate made by Management.
3.16 Income tax
The deferred income taxes are determined in each subsidiary by the asset and liability method, applying the tax rate enacted or substantially
enacted at the statement of fi nancial position date. The tax rates are applied to the total of the temporary differences resulting from comparing the
accounting and tax bases of assets and liabilities in accordance with the years in which the deferred asset tax is realized or the deferred liability
tax is expected to be settled, considering, when applicable, any tax loss carry forwards expected to be recovered. The effect of a change in tax
rates is recognized in the income of the period in which the rate change is enacted.
Management periodically evaluates the positions taken in tax returns with respect to the situations in which the applicable law is subject to
interpretation. Provisions are recognized when appropriate, based on the amounts expected to be paid to tax authorities.
Deferred tax assets are recognized only when it is probable that future taxable profi ts will exist against which the deductions for temporary
differences can be taken.
The deferred income tax on temporary differences arising from investments in subsidiaries and associates is recognized, unless the period of
reversal of temporary differences is controlled by the Company and it is probable that the temporary differences will not reverse in the near future.
Deferred tax assets and liabilities are offset when legal enforceable rights exist, and when the taxes are levied by the same tax authority.
3.17 Employee benefi ts
a. Short-term benefi ts
The Company provides benefi ts to employees in the short term, which may include wages, salaries, annual compensation and bonuses payable
within 12 months.
b. Pensions and seniority premium
The Company has defi ned benefi t plans. A defi ned benefi t pension plan is a plan that defi nes the amount of pension benefi ts to be received by
an employee in his or her retirement, usually depending on one or more factors, such as the employee’s age, years of service and compensation.
The liability recognized in the statement of fi nancial position in respect of defi ned benefi t pension plans is the present value of the defi ned benefi t
obligation at the end of the reporting period, together with adjustments for unrecognized actuarial gains and losses and past-service costs. The
defi ned benefi t obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defi ned
benefi t obligation is determined by discounting the estimated future cash outfl ows using interest rates of government bonds that are denominated
in the currency in which the benefi ts will be paid, and that have terms to maturity approximating the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other
comprehensive income in the period in which they arise. See Note 3.24.
The Company has no plan assets.
c. Employee profi t sharing and bonuses
The Company recognizes a liability and an expense for bonuses and profi t-sharing, based on a formula that takes into consideration the taxable
income after certain adjustments. The Company recognizes a provision where contractually obligated or where there is a past practice that has
created a constructive obligation.
482013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d. Termination benefi ts for indemnities established in labor laws
Termination benefi ts are payable and recognized in the statement of comprehensive income of the period when employment is terminated
by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefi ts.
e. Other employee benefi ts
The Company grants benefi ts to its employees who terminate their employment after more than 15 years of service. According to IAS 19
(revised) this practice constitutes an assumed obligation by the Company with its employees which is recognized based on calculations
prepared by independent actuaries. See Note 3.24.
3.18 Stockholders’ equity
Common shares are classifi ed as equity.
The amounts of the capital stock, legal reserve, additional paid-in capital and retained earnings are presented at historical value, modifi ed
by the effects of infl ation on the fi nancial information recognized as of December 31, 1997. In accordance with the requirements of IAS 29
“Financial reporting under hyperinfl ationary economies”, the Mexican economy is currently in a non-hyperinfl ationary environment, maintaining
an accumulated infl ation for the last three years under 100% (threshold for considering an economy as hyperinfl ationary), therefore from
January 1, 1998 onwards the Company does not recognize the effects of infl ation on the fi nancial information.
Legal reserve and reinvestment reserve
The net income of the year is subject to the legal provision requiring the allocation of 5% of the income for each period to increase the legal
reserve until it reaches an amount equivalent to 20% of the capital stock. The reinvestment reserve is intended to be reinvested in the Company
under shareholders agreements; 10% of the profi t for the year is allocated to this reserve.
Reserve for repurchase of shares
The maximum limit for the acquisition of the Company’s own shares is determined based on stockholders’ resolutions. Shares acquired are held
in treasury and their acquisition cost is charged to stockholders’ equity at their purchase price as follows: a portion is charged to capital stock at
its modifi ed historical cost and the excess to the reserve for repurchase of shares. These amounts are stated at historical cost.
3.19 Borrowing costs
The Company capitalizes borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, as part
of the cost of such assets. It recognizes other borrowing costs as an expense in the period in which they are incurred.
As of December 31, 2013 and 2012, there were no fi nancial costs capitalized because during these periods there were no qualifying assets in
accordance with the Company’s policies. Leasehold improvements require construction periods of less than one year.
3.20 Revenue recognition
Revenue represents the fair value of the cash collected or receivable resulting from the sale of goods or services in the normal operating cycle
of the Company. Revenues are stated net of discounts and returns granted to customers.
The Company obtains revenues from retail operations primarily through the sale of products such as household appliances, furniture, clothing,
electronics and mobile phones, and other fi nancial services offered through BAF, such as the granting of personal loans.
49 2013 ANNUAL REPORT
The Company recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefi ts will
fl ow to the entity; and when specifi c criteria have been met for each of the Company’s activities, as described below.
Revenue from sales of goods is recognized when the customer takes possession of the goods in the stores or when the merchandise is delivered
to their domiciles. Approximately 81% of the sales are settled by customers with cards operated by the Company, and the rest is settled in cash
or through bank credit and debit cards.
In accordance with IAS 18 “Revenue recognition”; in merchandise sales in installments, the cash receivable is deferred over the time and therefore
its fair value may be less than the nominal amount of the sale. In these cases the Company determines the fair value of cash to be received,
discounting all future cash fl ows using an implied interest rate determined by reference to the prevailing market rate for a similar instrument.
The difference between the nominal value of the sale payable in installments and the discounted value according to the previous paragraph is
recognized as interest income.
The Company’s policy is to sell certain products with the right of return. Customer returns are normally because of some fault or imperfection
in the product. However, in cases where it is clear that the customers wish to return the product, the Company offers its customers the option to
credit their account if the purchase was made with a card operated by the Company or to credit their bank card if the purchase was made in cash
or with external cards.
Experience shows that returns on sales are not signifi cant in relation to total sales, and therefore the Company does not create an allowance for
returns.
Other revenues exist for commissions on the sale of life insurance policies which are recognized as income when the policies are sold. Revenues
from guarantees granted are recognized by the straight-line method over the period in which this service is offered.
Interest income resulting from sale of products and personal loans is recognized as accrued, using the effective interest rate method.
3.21 Leases
Leases are classifi ed as fi nance leases when the terms of the lease transfer to the lessee substantially all the risks and rewards of ownership.
All other leases are classifi ed as operating leases. Leasing expenses are recorded in the statement of income based on the straight-line method
during the term of the lease agreement. See Note 25.
3.22 Earnings per share
Basic earnings per share are calculated dividing the profi t attributable to shareholders of the Company by the weighted average number of
ordinary shares outstanding during the year. Diluted earnings per share is calculated by adjusting the attributable profi t and the weighted average
number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. Basic earnings per share is the same as
diluted earnings per share because there are no transactions that may potentially dilute the net income.
3.23 Discontinued operations
The Company considers as discontinued operations the operations and cash fl ows that can be clearly distinguished from the rest of the entity, that
either have been disposed of or are classifi ed as held for sale, and:
- Represent a line of business or geographical area of operations.
- Are part of a single coordinated plan to dispose of a line of business or geographical area of operations, or
- Is a subsidiary acquired exclusively with a view to resale.
502013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.24 New accounting standards
The accounting policies adopted are consistent with those of the previous fi nancial year except for the adoption of new standards effective at
January 1, 2013. The nature and impact of each new standard or modifi cation are described as follows:
• IAS 1 (amended) - “Presentation of Financial Statements” The amendment requires entities to separate the items presented in other
comprehensive income in two groups based on whether they can be recycled to the income statement in the future or not. Items that cannot be
recycled are presented separately from the items that may be recycled in the future. Entities that decide to present items of other comprehensive
income before taxes should show the taxes related to the two groups separately. For the Company, this amendment became effective on
January 1, 2013. The amendment affected the presentation only and had no effect on the Company’s fi nancial position or performance.
• IAS 19 (Revised) - “Employee benefi ts” There are a number of amendments that have been applied retrospectively; these eliminate the
option to defer the recognition of actuarial gains and losses in the defi ned benefi t post-employment plans, known as the “corridor method”.
The Company has not previously applied this option and has recognized the gains and losses in other comprehensive income. Therefore,
this change in the standard has no impact on the Company’s consolidated fi nancial statements. The expected returns on plan assets are no
longer recognized in the statement of income for the year, instead, there is a requirement to recognize net interest on the net defi ned benefi t
liability (asset) in the statement of income, calculated using the discount rate used to measure the defi ned benefi t obligation. This change had
no signifi cant impact on the consolidated fi nancial statements of the Company.
Past-service costs are recognized in the statement of income in the period of a plan amendment, instead of deferring the portion related to the
unvested benefi ts. IAS 19 (revised) was adopted in advance; therefore, the balances at December 31, 2012 already include the effects of this
standard.
• IFRS 10, “Consolidated fi nancial statements” –IFRS 10 was issued in May 2011 and replaces all the guidance on control and consolidation in
IAS 27, “Consolidated and separate fi nancial statements’, and SIC 12, “Consolidation - Special purpose entities’. Under IFRS 10, subsidiaries
are all entities (including the structured entities) over which the Company has control. The Company controls an entity when it has power over
an entity, is exposed to, or has rights to variable returns from its interest in the entity and has the ability to affect these returns through its power
over the entity. Subsidiaries are fully consolidated from the date when the control is transferred to the Company. They are deconsolidated from
the date control ceases. The Company has applied IFRS 10 retrospectively in conformity with transition provisions described in this standard.
The aforementioned had no impact on the consolidation of investments held by the Company.
• IFRS 11 “Joint arrangements” The standard focuses on the rights and obligations of the parties to determine whether there is a joint
arrangement, over other factors such as the legal form. There are two types of joint arrangements: Joint operations and joint ventures. Joint
operations occur when investors have rights to the assets and obligations for liabilities of an arrangement, a joint operator accounts for his
portion of assets, liabilities, revenues and expenses. A joint venture occurs when investors have rights over the net assets of the arrangement;
joint ventures are accounted using the equity method. Proportional consolidation is not allowed under this standard. This change had no effect
on the consolidated fi nancial statements of the Company.
• IFRS 12, “Disclosure of Interests in Other Entities” requires an entity to disclose information that enables users of fi nancial information to
evaluate the nature and risks associated with its interests in other entities, including joint arrangements, associates, special purpose entities
and other off balance sheet entities; in addition to the effects of these interests in its fi nancial position and performance, and its cash fl ows. This
change had no effect on the consolidated fi nancial statements of the Company.
• IFRS 13, “Fair Value Measurements”. The objective of IFRS 13 is to provide a precise defi nition of fair value and be a single source for the
measurement and disclosure requirements for fair value when it is required or permitted by other IFRS, except for transactions within the scope
of IFRS 2 “Share-based payments”, IAS 17 “Leases”, measurements that have similarities to fair value but not considered as such, and the net
realizable value under the scope of the IAS 2 “Inventories” or the value in use in IAS 36 “Impairment of long-lived assets”. The application of
IFRS 13 has not signifi cantly impacted the fair value measurements made by the Company.
51 2013 ANNUAL REPORT
• 2011 annual improvements include an improvement to IAS 16 “Property, plant and equipment” -clarifying that main spare parts and maintenance
equipment that comply with the defi nition of Property, plant and equipment, are not part of the inventory, and the improvement to IAS 32 “Financial
instruments presentation” clarifi es that income taxes derived from distributions to shareholders are accounted for in accordance with IAS 12
“Taxes on gains”. These improvements had no effect on the Company.
3.25 New accounting pronouncements not early adopted by the company
Following are the new pronouncements and amendments issued and effective for years subsequent to 2013 that have not been early adopted
by the Company.
• IFRS 9, “Financial Instruments”– IFRS 9 was issued in November 2009 and included requirements for classifi cation and measurement of
fi nancial assets. IFRS 9 maintains and simplifi es the two types of measurement models and establishes two main categories of fi nancial assets:
at amortized cost and fair value. The classifi cation basis depends on the business model of the Company and the characteristics of contractual
cash fl ows of fi nancial assets. Requirements for fi nancial liabilities were included as part of the IFRS 9 in October 2010. Most of the requirements
for fi nancial liabilities were taken from the IAS 39 without any changes. However, some amendments were realized on the fair value option
for fi nancial liabilities to include the credit risk. On December 2011, the IASB made amendments to IFRS 9 to require their application for
annual periods starting in or subsequent to January 1, 2015; however, in November 2013, amendments were issued that eliminate the effective
application date of January 1, 2015. The new effective application date will be determined once the classifi cation and measurement phases and
impairment of IFRS 9 are fi nished.
• IAS 32, “Financial instruments: presentation” - In December 2011, the IASB amended IAS 32. These amendments are in the application guide
and clarify some of the requirements for offsetting fi nancial assets and fi nancial liabilities in the statement of fi nancial position. For the Company,
this amendment is obligatory as from January 1, 2014.
• IAS 36, “Impairment of Assets”| - In May 2013, the IASB modifi ed IAS 36. This amendment indicates the disclosure of information over the
recoverable value of impaired assets if the amount is calculated based on the fair value method less the cost of sale. For the Company, this
amendment is obligatory as from Wednesday, January 1, 2014.
• IAS 39, “Financial Instruments”: Recognition and Measurement” - In June 2013, the IASB modifi ed IAS 39 to clarify that there is no need to
suspend hedge accounting when novation of a hedging instrument to a central counter party meets certain requirements. For the Company, this
amendment is applicable to annual periods starting on or subsequent to January 1, 2014.
At the date of the fi nancial statements, the Company’s management is in the process of quantifying the effects of adoption of the new standards
and amendments mentioned above.
There are no additional standards, amendments or interpretations issued but not effective that could have a signifi cant effect on the company.
Note 4 - Risk Management:
An integral risk management process refers to the set of objectives, policies, procedures and actions that are implemented to identify, measure,
monitor, limit, control, report and disclose the different types of risk to which the Company is exposed.
Those responsible for risk management and their functions are:
• The Board of Directors, whose responsibility is to approve the objectives, guidelines and policies for risk management.
• Internal Audit, which is responsible for carrying out all the activities necessary in order to comply with the policies defi ned by the Board of
Directors.
The Company has adopted as its main premise carrying out its operations in a conservative framework or profi le so as to optimize its resources
through the implementation of balanced operations between risk and performance.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The current strategy pursued by the Company is primarily focused on the granting of consumer loans, which will be supported by the funding
of resources that will be obtained through deposits, orienting them towards correct placement and profi tability, all of this under the operation
of BAF.
The criteria, policies and procedures adopted by the Company in terms of risk management are based on internal policies and applicable
standards.
The Company is exposed to several market and fi nancial risks.
a) Market Risk
Market risk is defi ned as the potential loss due to changes in the risk factors that affect the valuation or the expected results from lending/
borrowing operations, such as interest rates and exchange rates, among others.
I. Interest rate risk
The interest rate risk is defi ned as the risk that the fair value or future cash fl ows of a fi nancial instrument fl uctuate due to changes in market
interest rates. Loans and debt certifi cates with maturities in the short and long term are subject to both fi xed and variable interest rates and
expose the Company to the risk of variability in interest rates and therefore its cash fl ows.
Changes in interest rates on long-term debt at fi xed rates only affect the results if such debt is recognized at fair value. The Company initially
recognizes loans from fi nancial institutions and debt certifi cates at fair value and subsequently records them at amortized cost, whereby the
Company is subject to interest rate risk related to changes in fair value.
The Company’s exposure to changes in interest rates relates primarily to loans and debt certifi cates in the short and long-term with a
variable interest rate. As of December 31, 2013 and 2012, the Company was subject to the volatility of the variable interest rates, such that,
an increase in these rates would result in a higher fi nancial cost of the liability.
Based on the Company’s policies, it has not engaged in hedging activities through derivative instruments to hedge the interest rate risk for
the years ended December 31, 2013 and 2012.
As of December 31, 2013 and 2012, 14.4% and 14.9%, respectively, of the Company’s debt with fi nancial cost (including deposits) was
denominated at variable rates. If hypothetically interest rates on those dates had been increased / decreased 100 basis points and all other
variables remained constant, the fi nancial expense of the Company at the end of 2013 and 2012 would have increased / decreased by Ps.
22.6 million and Ps. 22 million, respectively.
II. Exchange rate risk
The Company’s exposure to exchange rate risk refers to risks associated with movements in the exchange rate of the Mexican peso against
the U.S. dollar, with the Mexican peso being the functional currency of the Company. In the past, the value of the Mexican peso has been
subject to signifi cant exchange fl uctuations against the U.S. dollar.
The Company operates internationally and is exposed to foreign exchange risk, primarily related to the Mexican peso and the US dollar.
The Company is exposed to foreign exchange risk arising from future commercial transactions in assets and liabilities in foreign currencies
and investments abroad.
522013 ANNUAL REPORT
The Company also has exposure to exchange rate risk for its debt denominated in U.S. dollars. As of December 31, 2013 and 2012, 53.1%
and 56.7% respectively, of the Company’s debt with fi nancial cost was denominated in U.S. dollars. Based on the Company policies it did not
engage in hedging activities through derivative instruments to hedge the exchange rate risk for the years ended December 31, 2013 and 2012.
As of December 31, 2013 and 2012, a variation of the Mexican peso against the US dollar of 50 cents, with all other variables remaining
constant, would impact the Company’s fi nancial expense by Ps. 19.3 million and Ps. 13.4 million, respectively. It is important to mention that
the impact of the fi nancial expense from exchange gain (loss) of the Mexican peso in relation to the US dollar is greater for fi scal year 2013,
since the Company incurred in a non-recurring fi nancial expense related to the redemption of the price paid corresponding to the offer for
acquisition and amortization of senior bonds maturing in 2015, during May 2013 and the premium paid corresponding to the remaining capital
of such offer during July 2013.
The Company has non-monetary assets denominated in U.S. Dollars which are part of the operating unit in the USA. There is no exchange
rate risk because the operations are performed only in the local currency.
b) Liquidity Risk
Liquidity risk is defi ned as the inability of the Company to have suffi cient funds available to meet its obligations. The Company´s Treasury
Department is responsible for ensuring liquidity and managing the working capital in order to guarantee payment to suppliers, service debt and
fund the costs and expenses of the operation. Furthermore, the Company has the alternative to obtain liquidity through loans drawn down from
credit lines, debt and equity issuances, and funds from the sale of assets.
The following table details the contractual maturities of the Company’s debt with fi nancial cost and its principal current liabilities without fi nancial
cost. The table has been drawn up based on undiscounted cash fl ows from the fi rst date on which the Company may be required to pay. The
table includes interest and principal cash fl ows.
53 2013 ANNUAL REPORT
Less than 6 monthsBetween 6 months
and 1 yearBetween 1 year
and 2 yearsBetween 2 years
and 3 yearsTotal
December 31, 2013
Demand deposits and time depositsShort and long-term debtSuppliers and accounts payable and accrued expenses
Ps. 5,997,6713,921,4882,209,663
Ps. 2,683,551708,293
-
Ps. 6,160,241253,074
-
Ps. -4,382,621
-
Ps. 14,841,4639,265,4762,209,663
Total Ps. 12,128,822 Ps. 3,391,844 Ps. 6,413,315 Ps. 4,382,621 Ps. 26,316,602
December 31, 2012
Demand deposits and time depositsShort and long-term debtSuppliers and accounts payable and accrued expenses
Ps. 5,344,1672,288,2982,166,077
Ps. 3,325,209739,322
-
Ps. 4,032,6231,321,842
-
Ps. - 2,710,010
-
Ps. 12,701,9997,059,4722,166,077
Total Ps. 9,798,542 Ps. 4,064,531 Ps. 5,354,465 $ 2,710,010 Ps. 21,927,548
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
542013 ANNUAL REPORT
c) Credit Risk
Credit risk refers to the potential loss from the inability of customers to make all required payments. The accounts receivable of the Company
represent amounts owed by customers and are generated by sales of goods or services in the normal course of its operations. Since the
Company’s sales are made mostly to the general public, there is no risk of concentration in a customer or group of customers.
The Company has a risk management system for the loan portfolio, whose main elements include: 1) the risk of default and loss, which
includes the processes of granting credit, authorization of purchase transactions and collections management; 2) operational risk, including
security of the information and technologic infrastructure and 3) the risk of fraud, comprising the steps of prevention, analysis, detection,
containment, recovery and solution.
The initial credit limits are calculated on an individual basis by the Company systems and are regularly monitored by the credit area to adjust
them based on customer history. The Company has processes for reviewing credit quality of its customers for the early identifi cation of
potential changes in the ability to pay, taking timely corrective actions and the determination of current and potential losses.
The Company continuously monitors its portfolio recovery considering several factors including historical trends in the aging of the portfolio,
history of cancellations and future performance expectations, including trends in the unemployment rates. In addition to this analysis, the
Company requires that loans be secured primarily by the goods sold or by a guarantor, principally.
To quantify the credit risk of the Mexico commercial portfolio, the Company uses CREDITRISK+, which considers both the creditworthiness
of counterparties and the exposure of each of the customers. CREDITRISK+ models the defaults themselves and is not intended to model or
identify any causes underlying the defaults.
To quantify the credit risk of the consumer portfolio, for Mexico as well as for the United States of America, the Company uses collective
assessment models that consider the risk level of debtors, considering their possibility of default and the severity of the associated losses.
The input data primarily considered are the probabilities of default, according to the credit quality of borrowers. See Note 8.3.
d) Capital Risk
The Company’s objective is to safeguard its ability to continue as a going concern, maintaining a fi nancial structure that maximizes the return
to shareholders. The capital structure of the Company comprises debt, which includes fi nancing contracted via bank loans and issuance of
debt certifi cates, cash and cash equivalents and stockholders’ equity. The Company does not have an established policy to declare dividends.
The Company’s management annually reviews its capital structure when presenting the budget to the Board of Directors, which reviews the
planned level of debt and ensures that it does not exceed the established limit.
The leverage ratio monitored by the Company is calculated by dividing debt with fi nancial cost (excluding demand deposits and time deposits)
by the net income (excluding interest, exchange gains and losses, depreciation, amortization and taxes). The maximum leverage ratio
established in the debt certifi cate contract is 3.50 and for the issuance of debt certifi cates in US dollar is 3.25, and the actual ratio as of
December 31, 2013 and 2012, was 3.15 and 2.58, respectively.
BAF capitalization index
The capitalization rules for fi nancial institutions establish requirements for specifi c levels of net equity, as a percentage of assets subject
to both market and credit risk. The capitalization index required for BAF is a minimum of 8%. As of the 2013 year end, BAF determined a
capitalization index of 13.6% (13.08% as of December 31, 2012), which results from dividing net equity by the assets at risk including credit,
market and operational risk.
55 2013 ANNUAL REPORT
Note 5 - Critical accounting estimates and judgments:
In the application of the Company’s accounting policies, which are described in Note 3, the Company’s management needs to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities. Estimates and assumptions are based on historical experience
and other factors considered as relevant. Actual results may differ from those estimates.
Estimates and underlying assumptions are continually reviewed. Adjustments to the accounting estimates are recognized in the period
evaluated and in future periods if the evaluation affects the current period and subsequent periods.
5.1. Critical accounting judgments
Below are the key judgments, apart from those involving estimates, made by management in the application of the Company’s accounting
policies and that have a signifi cant effect on the amounts recognized in the consolidated fi nancial statements.
5.1.1. Revenue recognition, installment sales
Note 3.20 describe the Company’s policy for the recognition of installment sales. This implies that the Company’s management applies its
judgment to identify the applicable discount rate to determine the present value of installment sales. To determine the discounted cash fl ows,
the Company uses an imputed interest rate, considering the rate that can be determined better from: i) the prevailing rate in the market for a
similar instrument available for the Company’s customers with a similar credit rating or ii) the interest rate that equals the nominal value of the
sale, properly discounted to the cash price of the goods sold.
When making its judgment, management considers the interest rates used by the principal fi nancial institutions in Mexico to fund programs of
installment sales. In the event the discount rate had a variation of 10% from that estimated by management, the effect on the present value of
installment sales would be Ps. 3,883, Ps. 8,573 as of December 31, 2013 and 2012, respectively.
5.2. Key sources of uncertainty in estimates
Following are the key sources of uncertainty in the estimates made at the date of the consolidated statement of fi nancial position, and that have
a signifi cant risk of resulting in an adjustment to the carrying amounts of assets and liabilities during the next fi nancial period:
5.2.1. Impairment provisions for loan and receivable portfolios
The methodology applied by the Company to determine the amount of this estimate is described in Note 3.7, see also Note 8.
In the event that the probability and the severity of noncompliance varies by 1% as compared to that estimated by management, the effect of
the impairment provision for the credit portfolio will vary by $111,698 and $104,841 at December 31, 2013 and 2012, respectively.
5.2.2. Estimates of useful lives and residual values of property, leasehold improvements, and furniture and equipment
As described in Note 3.11, the Company reviews the estimated useful lives and residual values of property, leasehold improvements and
furniture and equipment at the end of each annual period. At December 31, 2013 and 2012, it was determined that lives and residual values
need not be modifi ed since, in the assessment of management, the existing useful lives and residual values adequately refl ect the economic
conditions in the Company’s operating environment.
5.2.3. Employee Benefi ts
The cost of employee benefi ts that qualify as defi ned benefi t plans in accordance with IAS 19 (revised) “Employee Benefi ts” is determined using
actuarial valuations. The valuations involve actuarial assumptions about discount rates, future salary increases, employee turnover rates and
mortality rates, among other things. Any changes in these assumptions will impact the carrying value of the pension obligations. Due to the
long-term nature of these plans, such estimates are subject to a signifi cant amount of uncertainty.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
562013 ANNUAL REPORT
Note 6 - Cash and cash equivalents:
Cash and cash equivalents comprised the following:
Note 7 - Restricted cash:
Restricted cash represents limited cash in BAF of Ps. 159,475, Ps. 254,905 as of December 31, 2013 and 2012, respectively. The restricted
cash balance is classifi ed as a non-current asset in the statement of fi nancial position of the Company based on the expiration date of the
restriction.
Note 8 - Trade receivables:
8.1. Movements of the impairment allowance for doubtful accounts
2013 2012
Cash at bank and in handInvestments
Ps. 414,779 1,094,313
Ps. 461,3591,067,368
Total Ps. 1,509,092 Ps. 1,528,727
2013 2012
Trade receivables:Mexican consumerMexico commercial USA consumer
Ps. 18,606,8222,751,8682,105,334
Ps. 15,612,927 2,392,702
2,244,983
Less - allowance for doubtful accounts23,464,024
(1,296,804)20,250,612(1,035,154)
Total, net Ps. 22,167,220 Ps. 19,215,458
Current trade receivables Ps. 21,640,993 Ps. 18,546,393
Non-current trade receivables Ps. 526,227 Ps. 669,065
2013 2012
Opening balanceIncreasesRecoveries
(Ps. 1,035,154)(1,284,315)
1,022,665
(Ps. 966,391) (1,542,066)
1,473,303
Ending balance (Ps. 1,296,804) (Ps. 1,035,154)
December 31,
December 31,
December 31,
57 2013 ANNUAL REPORT
8.2. Past due receivables
Trade receivables at the end of the year include past due receivables of Ps. 2,206,326 and Ps. 2,086,294 as of December 31, 2013 and 2012,
respectively, whose maturity was as follows:
8.3 Credit quality of trade receivables
The credit quality of trade receivables is assessed based on the historical default rates of the counterparties and is analyzed as follows:
2013 2012
1 - 30 days31 - 60 days61 - 90 days 91 - 120 days120 days or more
Ps. 286,130113,642113,471102,419
1,590,644
Ps. 210,096144,501137,158132,408
1,462,131
Total past due receivable Ps. 2,206,326 Ps. 2,086,294
December 31,
Group 2013 2012
ABC
Ps. 17,724,5903,388,7822,350,652
Ps. 14,223,5913,621,8442,405,177
Ps. 23,464,024 Ps. 20,250,612
December 31,
Group A - very low risk customers who have regularly met their payment commitments.
Group B - low risk customers who have made their payments on dates after the payment deadline.
Group C - medium-high risk customers who made their payments inconsistently.
8.4 Fair value of trade receivables
As of December 31, 2013 and 2012, the fair values of the Company’s trade receivable approximated their carrying value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
582013 ANNUAL REPORT
2013 2012
Bonuses from suppliers (1)Employee debtors (2)Other debtors (3)
Ps. 312,73130,108
347,537
Ps. 265,25427,510
233,200
Total Ps. 690,376 Ps. 525,964
December 31,
(1) Bonuses negotiated with suppliers based on volume of sales in the normal course of operations, and promotions receivable.
(2) Consists primarily of accounts receivable for expenses pending to be checked.
(3) Includes primarily commissions receivable, other accounts receivable for money transfers and payments in advance to suppliers.
Note 10 - Inventories:
Note 9 - Other accounts receivable:
(*) Comprises all types of electronic products, household appliances, furniture, mobile phones, motorcycles and other consumer products.
2013 2012
Products (*)
Clothing, footwear and jewelryMerchandise in transit
Ps. 1,915,827237,799
20,847
Ps. 1,718,694201,571
30,398
Total Ps. 2,174,473 Ps. 1,950,663
December 31,
59 2013 ANNUAL REPORT
Note 11 - Property, leasehold improvements and furniture and equipment, net:
The depreciation expense is recognized in the income statement within administrative and selling expenses. At December 31, 2013 and 2012
there were no signs of impairment.
LandBuildings andconstruction
Furniture andequipment
Leaseholdimprovements
Transportationequipment
Data processingequipment
Improvementsin process
Total
At December 31, 2012Opening net book amount Exchange diff erences on cost AdditionsDisposalsCancelation of accumulated depreciationon the sale of fi xed assetsReclassifi cations
Exchange diff erences on accumulated depreciation Depreciation charge
Ps. 326,252-
26,192-
-1,277
--
Ps. 297,504(10,710)
25,933-
-(1,277)
937(7,414)
Ps. 446,932(18,196)
18,063(122,243)
114,301-
17,555(72,979)
Ps. 1,254,345(11,259)
25,362(220,949)
221,895-
11,257(179,488)
Ps. 17,866(4,803)24,837
(26,451)
20,297-
4,727(10,073)
Ps. 73,414(4,828)20,788
(45,637)
43,538-
4,667(27,493)
Ps. 69,973-
65,906-
--
--
Ps. 2,486,286(49,796)207,081
(415,280)
400,031-
39,143(297,447)
Closing net book amount 353,721 304,973 383,433 1,101,163 26,400 64,449 135,879 2,370,018
As of December 31, 2012CostAccumulated depreciation
353,721-
440,341(135,368)
1,084,084(700,651)
2,364,347(1,263,184)
255,783(229,383)
502,075(437,626)
135,879-
5,136,230(2,766,212)
Net book amount Ps. 353,721 Ps. 304,973 Ps. 383,433 Ps. 1,101,163 Ps. 26,400 Ps. 64,449 Ps. 135,879 Ps. 2,370,018
At December 31, 2013Opening net book amountExchange diff erences on costAdditionsDisposalsCancelation of accumulated depreciation on the sale of fi xed assets
Exchange diff erences on accumulated depreciationDepreciation charge
Ps. 353,721-
2,850(28,117)
-
--
Ps. 304,9731,293
64,706(113,451)
21,426
(121)(7,903)
Ps. 383,4331,148
246,990(265,566)
263,126
(1,136)(50,744)
Ps. 1,101,1631,201
120,242(3,609)
306
(1,701)(156,068)
Ps. 26,400539
47,525(88,491)
85,280
(537)(17,513)
Ps. 64,449234
40,879(10,986)
11,047
(224)(35,537)
Ps. 135,879-
71,137-
-
--
Ps. 2,370,0184,415
594,329(510,220)
381,185
(3,719)(267,765)
Closing net book amount 328,454 270,923 577,251 1,061,534 53,203 69,862 207,016 2,568,243
As of December 31, 2013CostAccumulated depreciation
328,454-
392,889(121,966)
1,066,656(489,405)
2,482,181(1,420,647)
215,356(162,153)
532,202(462,340)
207,016-
5,224,754(2,656,511)
Net book amount Ps. 328,454 Ps. 270,923 Ps. 577,251 Ps. 1,061,534 Ps. 53,203 Ps. 69,862 Ps. 207,016 Ps. 2,568,243
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 12 - Goodwill and intangible assets:
Goodwill Licenses and software Total
At December 31, 2012
Net book amount
AdditionsDisposalsAmortization
Ps. 241,096
---
Ps. 57,016
18,410-
(16,950)
Ps. 298,112
18,410-
(16,950)
Ending balance 241,096 58,476 299,572
At December 31, 2012CostAccumulated amortization
241,096-
302,361(243,885)
543,457(243,885)
Net book amount 241,096 58,476 299,572
At December 31, 2013AdditionsDisposalsAmortization
---
33,674-
(18,563)
33,674-
(18,563)
Ending balance 241,096 73,587 314,683
At December 31, 2013CostAccumulated amortization
241,096-
336,035(262,448)
577,131(262,448)
Net book amount Ps. 241,096 Ps. 73,587 Ps. 314,683
Goodwill is not subject to amortization and is tested annually for impairment.
The goodwill arising in business combinations was allocated at the date of acquisition in its entirety to the cash generating unit (CGU) of the
Mexico segment. This segment benefi ted from the synergies of the business combinations.
The recoverable amount of the operating segment has been determined based on value in use calculations. These calculations use pre-tax
cash fl ow projections based on fi nancial budgets approved by management covering a fi ve-year period.
The key assumptions used for value in use calculations as of December 31, 2013 and 2012, were as follows:
In connection with the determination of the value in use of the operating segments, the Company considers that a reasonably possible change
in the key assumptions used would not cause the carrying value of the operating segment to exceed its value in use.
2013 2012
Estimated gross marginGrowth rateDiscount rate
46.96%8.03%
11.68%
46.97%2.26%
11.68%
December 31,
602013 ANNUAL REPORT
Nota 13 - Other assets:
(1) Included mainly, prepaid advertising insurance and leasing.
Note 14 - Demand deposits and time-deposits:
As of December 31, 2013 and 2012, the Company’s deposits with third parties were as follows:
In accordance with the terms negotiated, the Company’s deposits as of December 31, 2013 and 2012, are presented as follows:
As of December 31, 2013 and 2012, the maturities of time-deposits from the general public were as follows:
Depending on the type of instrument and average balance in the investments, these liabilities bear interest at the variable average rates
indicated below:
At December 31, 2013 and 2012, the fair value of demand and term deposits approximate their accounting value.
2013 2012
Demand deposits:Savings deposits (interest bearing)Checking accounts (non-interest bearing)Time-deposits:From the general public
Ps. 2,640,232
371,360
10,918,421
Ps. 2,191,438314,092
9,493,734
Total demand deposits and time-deposits Ps. 13,930,013 Ps. 11,999,264
2013 2012
Prepaid expenses (1)
Other
Ps. 202,799
162,546Ps. 186,963
-
Total Ps. 365,345 Ps. 186,963
2013 2012
Short-term demand deposits and time-depositsLong-term demand deposits and time-deposits
Ps. 8,416,208
5,513,805
Ps. 8,382,4973,616,767
Total demand deposits and time-deposits Ps. 13,930,013 Ps. 11,999,264
2013 2012
From 1 to 179 daysFrom 6 to 12 monthsFrom 1 to 2 years
Ps. 2,870,256
2,534,3605,513,805
Ps. 2,731,4893,145,4783,616,767
Total Ps. 10,918,421 Ps. 9,493,734
2013 2012
Demand depositsTime-deposits
2.64%
5.86%
2.90%5.73%
December 31,
December 31,
December 31,
December 31,
December 31,
61 2013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
622013 ANNUAL REPORT
Note 15 - Short-term and long-term debt:
The total consolidated debt was as follows:
(*) Nominal rates (a) fi xed and (b) variable, as of December 31, 2013. Interest is accrued monthly.
At December31, 2013 and 2012, the fair value of short-term debt approximates their accounting value. The fair value of long-term debt is
disclosed in the following paragraphs.
2013 2012 Interestrate (*)
Grupo Famsa:Mexican pesos:Financial factoring: (1):Financiera Bajío, S. A. SOFOM, ER Banco Nacional de México, S. A.BBVA Bancomer, S. A.Arrendadora y Factor Banorte, S. A. de C. V. SOFOM, ERBanco Monex, S. A.
Ps. 76,100 99,09424,434
373,996183,886
Ps. 30,629 --
392,704124,845
7.06% (b) 6.53% (b)6.79% (b)8.34% (b)7.86% (b)
757,510 548,178
Amounts drawn down from short-term revolving credit lines:Banco del Bajío, S. A.Banorte, S. ABBVA Bancomer, S. A.CI Banco, S. A.Banamex, S.A.Banco Actinver, S.A.Banco Santander Serfi n, S. A.Issuance of debt certifi cates:Short-term Long-term (2)
100,000199,795150,000100,000100,000
35,000-
1,989,170-
-199,795
63,50050,000
--
100,000
1,000,0001,000,000
7.04% (b)7.37% (a)6.53% (a)6.54% (b)6.44% (b)7.29% (b)8.86% (b)
7.10% (b)7.65% (b)
2,673,965 2,413,295
Grupo Famsa:U.S. Dollars:Issuance of foreign debt:Senior notes 2020 (3)
Senior notes Rule 144A/Reg.S (4)
Euro–commercial paper (5)
3,176,924-
654,215
-2,554,036
518,632
7.25% (a)11.00% (a)
7.00% (a)
3,831,139 3,072,668
Banco Ahorro Famsa, S. A.Intitucion de Banca Múltiple:Mexican pesos:Banco del Bajío, S. A.Nacional Financiera, S.N.C. (NAFIN) (6)
80,000-
-9,575
3.45% (b)8.93% (b)
80,000 9,575
Famsa USA:U.S. Dollars:Business Property Lending, IncCapital One, National AssociationDeutsche Bank AG (7)
59,87139,254
104,674
--
103,726
6.07% (a)5.00% (b)
2.175% (a)
203,799 103,726
Total debtShort-term debt
7,546,413(4,309,618)
6,147,442(2,583,831)
Long-term debt Ps. 3,236,795 Ps. 3,563,611
December 31,
63 2013 ANNUAL REPORT
(1) The Company entered into factoring credit line contracts with suppliers. Interest is calculated applying to the discounted
amount the rates that fi nancial institutions apply for this type of operations, according to the discount period. These liabilities
are settled in an average period of 110 days. The relevant characteristics of each factoring credit line are presented below:
(2) In 2011, the Company entered into a debt certifi cate program for up to Ps. 2,000 million of a revolving nature for a fi ve-year term. On March
25, 2011, the Company issued certifi cates for an aggregate principal amount of Ps. 1,000 million pursuant to such unsecured commercial
paper program at a spread of 280 basis points over the TIIE interbank rate and maturing in 2014. The net proceeds of this issue were used to
refi nance debt maturing in 2011. This commercial paper is guaranteed by the retail, manufacturing and other subsidiaries. At December 31,
2013 this debt is included in the short-term and due on 2014.
The effective interest rate of this issuance as of December 31, 2012 was 8.28%.
As of December 31, 2013 and 2012, the fair value of the debt certifi cates was Ps.1,986,533 and Ps.1,997,570, respectively. The valuation
method is classifi ed in Level 2, as the fair value of fi nancial instruments that are not traded in an active market is determined by using valuation
techniques. These valuation techniques maximize the use of observable market data when available and rely as little as possible on estimates
specifi c to the Company. If all signifi cant inputs required to measure an instrument at fair value are observable, the instrument is classifi ed at
Level 2.
(3) On May 31, 2013, the Company issued senior notes for an amount of US$ 250 million, under Rule 144A/Reg. S, in the foreign market, at
a rate of 7.25%, maturing in May 31, 2020. The senior notes are guaranteed by the retail, manufacturing and other subsidiaries. The notes
were assigned “B” and “B+” ratings by Standard & Poor’s and Fitch Ratings, respectively. The notes may not be offered or sold within the
United States.
As of December 31, 2013, the fair value of the senior notes was Ps. 3,289,426. The valuation method is classifi ed in Level 1, as the fair value
of fi nancial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is considered active if
quoted prices are clearly and regularly available from a stock exchange, dealer, broker, industry group, pricing service or regulatory agency,
and those prices represent actual and regular market transactions at arm’s -length conditions. The trading price used for fi nancial assets held
by the Company is the current bid price.
(4) On July 2010, the Company issued senior notes for an amount of US$ 200 million, under Rule 144A/Reg. S, in the foreign market, at a rate
of 11%, maturing in July 2015. The senior notes are guaranteed by the retail, manufacturing and other subsidiaries. The notes were assigned
“B” and “B+” ratings by Standard & Poor’s and Fitch Ratings, respectively. The notes may not be offered or sold within the United States.
At the cut-off date for the early offering, established at May 29, 2013, 80.07% of the notes was amortized or US$160.13 million of the total
amount of outstanding bonds. Upon maturity of the acquisition offer, established at June 12, 2013, 0.16% of notes was redeemed or US$322
thousands of the total amount of outstanding bonds. The remaining amount, equal to US$39.55 million, was amortized by the company on
July 22, 2013.
Financial institutionRenewal date of the
credit lineCredit Limit Interest rate
Financiera Bajío, S. A. SOFOM, ER Banco Nacional de México, S. A. BBVA Bancomer, S. A.Arrendadora y Factor Banorte, S. A. de C. V.SOFOM, ERBanco Monex, S. A.
September, 2012August, 2013March, 2013
March, 2010October, 2012
Ps. 100,000Ps. 100,000Ps. 50,000
Ps. 400,000Ps. 125,000
TIIE+4.0 TIIE+2.8
TIIE+3.0
TIIE+3.5TIIE+3.0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
642013 ANNUAL REPORT
As of December 31, 2012, the fair value of the senior notes was Ps. 2,894,800. The effective interest rate of this issuance as of December
31, 2012 was 12.28%.
(5) On February 4, 2013, the Company issued notes for US$50 million at a rate of 7.00%, from a commercial euro paper program established
in 2009 for a total of US$100 million. The net proceeds were used by the Company to refi nance the existing debt and for working capital.
This program became due on February 4, 2014. The debt was paid at that date with the net proceeds obtained from the issuance of notes for
US$60 million from a commercial euro paper program maturing on January 28, 2015 at a rate of 6.125%.
(6) Loans contracted by BAF with NAFIN for a total amount of Ps. 9.6 million, with an interest rate of 8.93% and maximum maturities on
September 2014 and December 2015. These loans were paid during 2013.
(7) On October 16, 2013, the Company renewed its credit line for a maximum amount of US$6.6 million or its equivalent in US dollars. As of
December 31, 2013, the Company had drawn down a total of US$8 million; this borrowing bears interest at an annual rate of 2.17% maturing
on October 16, 2014.
At December 31, 2013 and 2012, the Company complied satisfactorily with all covenants and restrictions of the loans mentioned previously.
Note 16 - Accounts payable and accrued expenses:
Accounts payable and accrued expenses comprised the following:
(1) Liability for accrued interest on debt.
(2) Liability from operations with related parties. See Note 17.
(3) Liability for expenses for water service, electricity, telephone, fuel, maintenance and other.
(4) Includes liabilities for accrued salaries payable, commission to sales personnel, vacations, vacation premium, savings fund, medical expenses and other.
(5) Includes liabilities for accrued expenses for labor taxes and other.
(6) Includes self-fi nancing contributions from customers, vehicle insurance and other.
Note 17 - Related parties:
As of December 31, 2013 the Company has accounts payable to affi liates of Ps. 44,944 (Ps. 213,907 as of December 31, 2012), related
primarily to the following expenses:
Related party transactions were carried out at market value.
2013 2012
Rent and administrative expenses (Note 25) Ps. 101,068 Ps. 101,161
2013 2012
Interest payable (1)
Accounts payable to affi liated companies (2)
TaxesAccrued operating expenses (3)Short-term employee benefi ts (4)
Taxes related to employee payroll (5)
Other creditors (6)
Ps. 54,240-
112,68285,14534,884
124,75745,307
Ps. 171,568213,907
56,72146,28350,20953,77810,998
Total accounts payable and accrued expenses Ps. 457,015 Ps. 603,464
December 31,
December 31,
65 2013 ANNUAL REPORT
For the year ended December 31, 2013, salaries and benefi ts received by the principal executive offi cers of the Company amounted to Ps.
103,235 (Ps. 105,710 in 2012), consisting of base salary amounts and legal benefi ts, complemented by a variable compensation program that
is basically driven by the Company’s results.
On December 31, 2013 the Company entered into an agreement to transfer part of its portfolio with a nominal value of $200,000, without
reserves, resources, or any limitation over each and every one of the credits transferred to Desarrollos Inmobiliarios Garza Valdéz, S. A. de
C. V., related party. The Company has no rights or obligations with respect to the transferred portfolio; this transaction was settled offsetting
an account payable for the same amount, effective at that date, in favor of such related party.
Subsequent event
On April 10, 2014, the Company entered into a portfolio transfer agreement for $200,000 with conditions similar to those mentioned in the
paragraph above with the same related party. At the date of issuance of the audited fi nancial statements, this transaction had not been settled.
The Company and its subsidiaries declare they have no signifi cant transactions with related parties or confl icts of interest to disclose.
Note 18 - Employee benefi ts:
The amount of employee benefi t obligations as of December 31, 2013 and 2012 was Ps. 93,043 and
Ps. 85,240 respectively, and is analyzed as follows:
December 31,
The analysis of the net period cost for the years ended December 31, 2013 and 2012, is as follows:
2013 2012
Pension plansSeniority premiumOther employee benefi ts
Ps. 6,593
51,83834,612
Ps. 6,18548,12530,930
Ps. 93,043 Ps. 85,240
2013 2012
Pension plansSeniority premiumOther employee benefi ts
Ps. 699
11,2156,715
Ps. 74410,376
4,611
Ps. 18,629 Ps. 15,731
Pension plans
The amounts recognized in the consolidated statements of fi nancial position were determined as follows:
2013 2012
Defi ned benefi t obligationsFair value of plan assets
Ps. 6,593
-
Ps. 6,185-
Liability in the statement of fi nancial position Ps. 6,593 Ps. 6,185
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
662013 ANNUAL REPORT
The principal actuarial assumptions used, in nominal and real terms, were as follows:
The net period cost is analyzed as follows:
In the event of a hypothetical increase or decrease in the discount rate of 0.25% from that estimated by Management, the carrying amount of
labor obligations would increase by Ps. 176 and decrease by Ps. 189, respectively.
In the event of a hypothetical increase or decrease in the salary increase rate of 0.25% from that estimated by Management, the carrying
amount of labor obligations would decrease by Ps. 186 and increase by Ps. 200, respectively.
Seniority premium
The amounts recognized in the consolidated statements of fi nancial position were determined as follows:
2013 2012
Discount rateSalary increase rate
7.25%4.00%
6.25%4.00%
2013 2012
Service costs of the yearFinance cost, net
Ps. 332367
Ps. 337407
Net period cost Ps. 699 Ps. 744
December 31,
2013 2012
Defi ned benefi t obligationsFair value of plan assets
Ps. 51,838-
Ps. 48,125-
Liability in the statement of fi nancial position Ps. 51,838 Ps. 48,125
December 31,
The movement in the defi ned benefi t obligation is as follows:
2013 2012
Opening balance at January 1
Labor costFinance cost, netActuarial gains (losses)
Ps. 6,185
332367
(291)
Ps. 5,983
337407
(542)
Ending balance at December 31 Ps. 6,593 Ps. 6,185
67 2013 ANNUAL REPORT
The movement in the defi ned benefi t obligation was as follows:
2013 2012
Opening balance at January 1
Labor costFinance cost, netActuarial gains (losses)Benefi ts paid from the reserve
Ps. 48,125
8,480 2,735
(1,281)(6,221)
Ps. 41,539
7,6512,7252,024
(5,814)
Ending Balance at December 31 Ps. 51,838 Ps. 48,125
The net period cost is analyzed as follows:
2013 2012
Discount rateSalary increase rate
7.25%4.00%
6.25%4.00%
2013 2012
Service costs of the yearFinance cost, net
Ps. 8,4802,735
Ps. 7,6512,725
Net period cost Ps. 11,215 Ps. 10,376
December 31,
The principal actuarial assumptions used, in nominal and real terms, were as follows:
In the event of a hypothetical increase or decrease in the discount rate of 0.25% from that estimated by Management, the carrying amount of
labor obligations would increase by Ps. 648 and decrease by Ps. 668, respectively.
In the event of a hypothetical increase or decrease in the salary increase rate of 0.25% from that estimated by Management, the carrying
amount of labor obligations would decrease by Ps. 67 and increase by Ps. 66, respectively.
Other employee benefi ts
The amounts recognized in the consolidated statements of fi nancial position were determined as follows:
2013 2012
Defi ned benefi t obligationsFair value of plan assets
Ps. 34,612
-
Ps. 30,930-
Liability in the statement of fi nancial position Ps. 34,612 Ps. 30,930
December 31,
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
682013 ANNUAL REPORT
The principal actuarial assumptions used, in nominal and real terms, were as follows:
The net period cost is analyzed as follows:
2013 2012
Discount rateSalary increase rate
7.25%4.00%
6.25%4.00%
2013 2012
Service costs of the yearFinance cost, net
Ps. 3,7502,965
Ps. 2,5452,066
Net period cost Ps. 6,715 Ps. 4,611
December 31
In the event of a hypothetical increase or decrease in the discount rate of 0.25% from that estimated by Management, the carrying amount of
labor obligations would increase by Ps. 956 and decrease by Ps. 997, respectively.
In the event of a hypothetical increase or decrease in the salary increase rate of 0.25% from that estimated by Management, the carrying
amount of labor obligations would decrease by Ps. 988 and increase by Ps. 1,027, respectively.
Note 19 - Stockholders’ equity:
In the Ordinary General Meeting held on April 19, 2013, the stockholders agreed that the fund created for the purchase and sale of the
Company’s own shares will be up to a maximum amount of Ps. 130 million. As of December 31, 2013, the Company had 259,700 shares
(259,700 shares in 2012) held in treasury and the market value per share at that date was Ps. 23.61 (Ps. 16.10 in 2012).
The movement in the defi ned benefi t obligation was as follows:
2013 2012
At January 1
Labor costFinance cost, netActuarial gains (losses)Benefi ts paid from the reserve
Ps. 30,930
3,7502,965
(2,616)(417)
Ps. 27,167
2,5452,066
703(1,551)
At December 31 Ps. 34,612 Ps. 30,930
69 2013 ANNUAL REPORT
As of December 31, 2013 and 2012 the capital stock comprised the following:
Description Number of shares Amount
Fixed capital (minimum): Series “A”, Class “I”, common, nominative shares, without par value
Variable capital: Series “A”, Class “II”, common, nominative shares, without par value
Accumulated infl ation increase as of December 31, 1997
330,097,385
109,090,909
Ps. 660,195
218,182
579,909
Capital stock 439,188,294 Ps. 1,458,286
As of December 31, 2013 the retained earnings included Ps. 302,431 and Ps. 604,683, applicable to the legal reserve and to the reinvestment
reserve, respectively. The movements of the reserves were as follows:
Dividends paid are not subject to income tax if they are paid from after-tax earnings. Dividends paid in excess of after-tax earnings are subject
to a tax equivalent to 42.86% if paid in 2013. The tax is payable by the Company and may be credited against the normal income tax payable by
the Company in the year in which the dividends are paid or in the following two years or, if appropriate, against the fl at tax of the year. Dividends
which are paid from retained earnings previously taxed are not subject to any tax withholding or additional payment.
In the event of a capital reduction, any excess of stockholders’ equity over capital contributed, the latter restated in accordance with the provisions
of the Income Tax Law, is accorded the same tax treatment as dividends. At December 31, 2013 and 2012, the infl ation-adjusted contributed
capital amounted to Ps. 7,080,307 and Ps. 6,808,573, respectively.
Reserva legalReserva de reinversión
As of January 1, 2012
Changes in 2012:
IncreasesUtilization
Ps. 295,564
5,275-
Ps. 591,129
10,550-
As of December 31, 2012
Changes in 2013:
IncreasesUtilization
300,839
1,592-
601,679
3,184-
As of December 31, 2013 Ps. 302,431 Ps. 604,863
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
702013 ANNUAL REPORT
The salaries and employee benefi ts are analyzed as follows:
December 31,
2013 2012
Salaries and bonusesCommissions to sales personnelEmployee benefi tsOther remuneration
Ps. 1,814,734 129,660
38,434574,222
Ps. 1,814,30987,91015,731
422,543
Ps. 2,557,050 Ps. 2,340,493
Note 21 - Other income (expenses):
2013 2012
Other income:Recovery of taxes paid in excessGain on sale of fi xed assetsAdministrative servicesTrade receivables recoveredOther
Ps. 16,461 1,639
7,423 28,175
1,910
Ps. 109,8181,2797,551
-5,249
Total other income 55,608 123,897
Other expenses:Utilization of tax provisions Other
(41,861)(5,327)
(48,290)(4,627)
Total other expenses (47,188) (52,917)
Other income, net Ps. 8,420 Ps. 70,980
December 31,
Note 20 - Costs and expenses classifi ed by their nature:Cost of sales and administrative and selling expenses are analyzed as follows:
(1) Expenses, travel expenses and training.
2013 2012
Cost of goods soldSalaries and employee benefi tsImpairment allowanceLeasing Interest expense on bank depositsAdvertisingEnergy, water and telephone servicesDepreciation and amortizationMaintenanceFreightsOther (1)
Ps. 6,110,698 2,557,050
1,284,315776,659698,291341,733310,042286,771174,139
50,0781,046,949
Ps. 5,727,6722,340,4931,173,362
763,195589,799334,125298,788314,397158,318
45,315973,944
Ps. 13,636,725 Ps. 12,719,408
December 31,
71 2013 ANNUAL REPORT
2013 2012
Financial expenses:
Interest expense on bank borrowingsInterest expense on debt certifi catesPremium (Senior notes Rule 144A prepayment)FactoringOther fi nancing expensesForeign exchange loss, net
(Ps. 145,428)(540,270)(176,784)
(46,946)(22,466)(55,029)
(Ps. 106,318)(553,578)
-(46,800)(15,649)
-
(Ps. 986,923) (Ps. 722,345)
Financial income:
Financial incomeForeign exchange gain, net
Ps. 1,515-
Ps. 1,75762,213
Ps. 1,515 Ps. 63,970
December 31,
Note 22 - Financial income (expenses):
Financial income and expenses are analyzed as follows:
Note 23 - Income tax expense:
New Income Tax Law
On December 11, 2013 the decree for the new Income Tax Law was published (new LISR) becoming effective on January 1, 2014, repealing
the LISR published as of January 1, 2002 (former LISR). The new LISR maintains the essence of the former LISR; however, it makes
signifi cant amendments among which the most important are:
i. Limiting deductions in contributions to pension and exempt salary funds, automobile leases, restaurant consumption and social security
fees; it also eliminates the immediate deduction in fi xed assets.
ii. Amending the mechanics to accumulate revenues derived from the term alienation and generalizing the procedure to determine the gain
in alienation of shares.
iii. Amending the procedure to determine the taxable basis for the Employees’ Profi t Sharing (PTU), establishing the mechanics to determine
the initial balance of the capital contribution account (CUCA) and the CUFIN and establishing new mechanics for the recovery of Asset Tax
(IA).
iv. Establishing an ISR rate applicable for 2014 and the following years of 30%. In contrast to the LISR above that established a 30%, 29%
and 28% rate for 2013, 2014 and 2015, respectively.
The Company has reviewed and adjusted the deferred tax balance at December 31, 2013, considering in the determination of temporary
differences, the application of these new provisions, the impacts of which are detailed in the reconciliation of the effective rate as follows.
However, the effects in deduction limitations and others indicated previously will be applied as from 2014 and will mainly affect the tax incurred
as of such year.
Grupo Famsa determines its taxable income (loss) and employees’ profi t sharing on an individual standalone company basis. The tax result
differs from the accounting result due to the temporary differences arising from comparing the book value and the tax value of each asset and
liability account in the balance sheet, as well as items affecting only the net income or the taxable income of the year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The deferred income tax is analyzed as follows:
(1) This balance corresponds to the liability recorded due to the 2014 fi scal reform, specifi cally due to the elimination of the tax incentive applicable to Real Estate
Property Companies.
2013 2012
Deferred tax assets:Tax loss carryforwardsPrepaid expenses and other provisions, netAllowance for doubtful receivablesInstallment sales receivableProperty, leasehold improvements and furniture and equipmentTax eff ect of installment salesProvision for labor obligationsEmployee profi t sharing payable
Ps. 821,777 338,454 471,063
109,919134,594
30,10432,328
1,613
Ps. 212,788553,859279,200226,424108,253
32,30625,127
1,140
1,939,852 1,439,097
Deferred tax liabilities:Prepaid expenses and other accrued expenses (1)
InventoriesEff ect on decrease in income tax rate
108,84611,600
8,776
-5,0337,535
129,222 12,568
Deferred income tax before asset tax recoverable 1,810,630 1,426,529
Asset tax recoverable - 121,504
Total deferred tax asset Ps. 1,810,630 Ps. 1,548,033
December 31,
December 31,
2013 2012
Current income taxesCurrent fl at rate business taxDeferred income taxes
(Ps. 13,195)
(12,136)
251,657
(Ps. 19,045)
(35,591)
161,968
Ps. 226,326 Ps. 107,332
Income taxes are analyzed as follows:
722013 ANNUAL REPORT
December 31,
2013 2012
Deferred tax assets:
Deferred tax asset to be paid within 12 monthsDeferred tax assets to be paid after more than 12 months
Ps. 1,805,258 134,594
Ps. 1,225,996 213,101
1,939,852 1,439,097
Deferred tax liabilities:
Deferred tax liability to be paid within 12 monthsDeferred tax liability to be paid after more than 12 months
-(120,446)
(1,462)(3,571)
(120,446) (5,033)
Asset tax recoverable after more than 12 months - 121,504
Eff ect of decrease in income tax rate (8,776) (7,535)
Deferred tax asset (net) Ps. 1,810,630 Ps. 1,548,033
The Company has tax projections that support the earning of future taxable profi t against which current tax losses will be applied and also
those which would arise resulting from the reversal of deductible temporary differences.
The analysis of deferred tax assets and deferred tax liabilities is as follows:
The movement in deferred income tax assets and liabilities during the year, excluding asset tax recoverable was as follows:
Tax loss
carryforwards
Allowance for
doubtful receivables
Property leasehold
improvements,
furniture and
equipment
Provision for labor
obligations
Tax eff ect of
installment
salesInventories Other Total
As of January 1, 2012Amount charged (credited) to the statement of incomeOther comprehensive income
Ps. 788,964
(576,176)
-
Ps. 254,200
25,000
-
Ps. 81,934
26,319
-
Ps. 22,407
2,720
-
Ps. 37,674
(5,368)
-
(Ps. 97,040)
92,007
-
Ps. 177,562
597,466
(1,140)
Ps. 1,265,701
161,968
(1,140)
As of December 31, 2012Amount charged (credited) tothe statement of incomeAsset tax recoverable cancelled Other comprehensive income
212,788
695,553
-
-
279,200
191,863
-
-
108,253
26,341
-
-
25,127
7,201
-
-
32,306
(2,202)
-
-
(5,033)
(6,567)
-
-
773,888
(660,532)
134,240
(1,796)
1,426,529
251,657
134,240
(1,796)
As of December 31, 2013 Ps. 908,341 Ps. 471,063 Ps. 134,594 Ps. 32,328 Ps. 30,104 (Ps. 11,600) Ps. 245,800 Ps. 1,810,630
73 2013 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
742013 ANNUAL REPORT
2013 2012
Statutory tax rateAdd/ (deduct) income tax eff ect of:Non-deductible permanent items (mainly non-deductible expenses)Infl ationDecrease in income tax rateOther permanent diff erences (tax eff ect of cost of sales and other)
30%
13%7%
2%
30%
8%
1%(26%)
Eff ective income tax rate 52% 13%
To determine the deferred income tax at December 31, 2013 and 2012, the Company applied to the temporary differences the applicable tax rates in accordance with their estimated reversal date.
The reconciliation between the statutory and effective income tax rates is as follows:
December 31,
In 2013 and 2012 certain subsidiaries of Famsa determined a fl at rate business tax of Ps. 12,136 and
Ps. 35,591 respectively, which exceeded their income tax liability and was therefore paid instead of income tax.
The tax charged related to the components of other comprehensive income for the years ended December 31, was as follows:
2013 2012
Before Tax Tax charged After tax Before Tax Tax charged After tax
Foreign currency translation eff ects
Actuarial gains (losses)
(Ps. 10,706)
5,987
Ps. -
(1,796)
(Ps. 10,706)
4,191
(Ps. 48,215)
(3,121)
Ps. -
936
(Ps. 48,215)
(2,185)
Other comprehensive income items
(Ps. 4,719) (Ps. 1,796) (Ps. 6,515) (Ps. 51,336) Ps. 936 (Ps. 50,400)
Deferred tax (Ps. 1,796) Ps. 936
As of December 31, 2013, the Company had tax loss carryforwards, which will be infl ation-indexed through the year in which they are applied,
as follows:
Year of expiration Tax loss carryforwards
2017201820192020202120222023
Ps. 42614,21159,473
147,62576,68413,002
2,427,836
Ps. 2,739,257
75 2013 ANNUAL REPORT
Note 24 - Contingencies:
In the normal course of operations the Company is involved in disputes and lawsuits. The Company believes there are no legal proceedings
or threatened claims against or affecting the Company which, in the event of an adverse resolution, could signifi cantly affect, individually or
taken together, the Company’s results of operations or fi nancial position.
Note 25 - Commitments:
The majority of the subsidiary companies have entered into long-term lease agreements (some with related parties) covering properties
occupied by their stores. Following is a description of the main agreements entered into with related parties:
As of December 31, 2013, the Company had 42 long-term lease agreements in place with the controlling shareholders and various entities
controlled by them, with regard to the retail space used by several stores. The terms of all such agreements are substantially identical and are
consistent with standard industry practices and real estate market prices.
The Company has entered into various asset management agreements with affi liates and other entities controlled by the principal
shareholders, covering account collection services and the management and investment of the proceeds of such collections, in exchange for
a commission payable on an annual basis.
Rentals payable under lease agreements are as follows:
Related parties Other Total
20142015 to 20192020 onwards
Ps. 709,3713,546,8546,384,336
Ps. 106,122 530,609
955,095
Ps. 815,4934,077,4637,339,431
Ps. 10,640,561 Ps. 1,591,826 Ps. 12,232,387
2013 2012
Related partiesOther
Ps. 101,068675,591
Ps. 101,161 662,034
Total Ps. 776,659 Ps. 763,195
In 2013 and 2012 total rental and administrative services expense is as follows:
Note 26 - Information by business segments:
26.1 Segment reporting
The Company manages and evaluates its continuing operations through three business segments: Mexico (national retail stores and fi nancial
sector), USA, (foreign retail stores) and other businesses in Mexico (wholesale, manufacturing of furniture and footwear, catalog business).
The Company controls and evaluates its continuing operations on a consolidated basis. Its activities are carried out through its subsidiary
companies.
The Company’s management uses operating income before depreciation and amortization as the measurement of segment performance as
well as to evaluate development, make general operating decisions and assign resources. The information by business segment is as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
762013 ANNUAL REPORT
2013
Mexico USA Other Subtotal Intersegment Consolidated
Net sales (1)
Interest earned from customers
Ps. 9,405,118
3,895,531
Ps. 1,164,510
478,991
Ps. 608,396
251,993
Ps. 11,178,024
4,626,515
(Ps. 535,051)
(221,614)
(Ps. 10,642,973
4,404,901
Total revenuesCost of sales
Ps. 13,300,649(7,255,758)
Ps. 1,643,501(962,670)
Ps. 860,389(735,399)
Ps. 15,804,539(8,953,827)
(Ps. 756,665)810,445
Ps. 15,047,874(8,143,382)
Gross profi tOperating expenses (2)
Other income, net
6,044,891(4,515,852)
91,550
680,831(622,648)
(2,686)
124,990(133,707)
39,092
6,850,712(5,272,207)
127,956
53,78065,635
(119,536)
6,904,492(5,206,572)
8,420
Operating profi t beforedepreciation and amortizationDepreciation and amortization
1,620,589(278,742)
55,497(3,210)
30,375(4,819)
1,706,461(286,771)
(121)-
1,706,340(286,771)
Operating profi t (loss) Ps. 1,341,847 Ps. 52,287 Ps. 25,556 Ps. 1,419,690 (Ps. 121) Ps. 1,419,569
Additional disclosures:Total assets Ps. 32,799,488 Ps. 2,380,962 Ps. 497,348 Ps. 35,678,098 (Ps. 2,735,130) Ps. 32,942,968
Total liabilities Ps. 23,707,029 Ps. 2,884,969 Ps. 142,413 Ps. 26,734,411 (Ps. 2,735,130) Ps. 23,999,281
Capital expenditure Ps. 521,012 Ps. 72,420 Ps. 897 Ps. 594,329 Ps. - Ps. 594,329
Adjusted EBITDA Ps. 2,318,880 Ps. 55,497 Ps. 30,375 Ps. 2,404,752 (Ps. 121) Ps. 2,404,631
2012
Mexico USA Other Subtotal Intersegment Consolidated
Net sales (1)
Interest earned from customers
Ps. 9,137,127
3,216,187
Ps. 1,268,662
446,558
Ps. 701,908
247,064
Ps. 11,107,697
3,909,809
(Ps. 661,231)
(232,747)
Ps. 10,446,466
3,677,062
Total revenuesCost of sales
Ps. 12,353,314(6,657,226)
Ps. 1,715,220(955,504)
Ps. 948,972(847,549)
Ps. 15,017,506(8,460,279)
(Ps. 893,978)924,131
Ps. 14,123,528(7,536,148)
Gross profi tOperating expenses (2)
Other income, net
5,696,088(4,163,573)
135,489
759,716(641,173)
3,146
101,423(124,884)
32,130
6,557,227(4,929,630)
170,765
30,15360,767
(99,785)
6,587,380(4,868,863)
70,980
Operating profi t beforedepreciation and amortizationDepreciation and amortization
1,668,004(306,171)
121,689(3,103)
8,669(5,123)
1,798,362(314,397)
(8,865)-
1,789,497(314,397)
Operating profi t (loss) Ps. 1,361,833 Ps. 118,586 Ps. 3,546 Ps. 1,483,965 (Ps. 8,865) Ps. 1,475,100
Additional disclosures:Total assets Ps. 28,762,550 Ps. 2,558,349 Ps. 412,056 Ps. 31,732,955 (Ps. 2,663,029) Ps. 29,069,926
Total liabilities Ps. 20,366,785 Ps. 2,927,370 Ps. 149,085 Ps. 23,443,240 (Ps. 2,663,029) Ps. 20,780,211
Capital expenditure Ps. 202,519 Ps. 2,677 Ps. 1,885 Ps. 207,081 Ps. - Ps. 207,081
Adjusted EBITDA Ps. 2,257,803 Ps. 121,689 Ps. 8,669 Ps. 2,388,161 (Ps. 8,865) Ps. 2,379,296
(1) Net sales realized in the respective countries shown above.
(2) Excluding depreciation and amortization.
77 2013 ANNUAL REPORT
26.2 Evaluation of operating performance
The Company evaluates operating performance based on a measure denominated “adjusted EBITDA”, which consists of adding to the opera-
ting profi t interest expense on bank deposits, depreciation and amortization. The adjusted EBITDA is not a measure of fi nancial performance
under IFRS and should not be considered as an alternative to net income as a measure of operating performance or cash fl ows as a measure
of liquidity.
The reconciliation between Adjusted EBITDA and operating profi t for the years ended December 31 is as follows:
26.3 Sales by product
Net sales by product for the year ended December 31 were as follows:
(1) Includes primarily revenues from guarantees granted and sales through the commercial program denominated “Famsa to Famsa”.
Note 27 - Subsequent events:
As at March 13, 2014, Grupo Famsa issued local bonds (GFAMSA14) for a principal amount of $1,000 million maturing as at March 10, 2016,
with an interest rate of 3.00% plus the 28-day Interbank Equilibrium Interest Rate (TIIE) under a bond program of $2,000 million. The net
proceeds obtained from the offering of local bonds were used to fully pay GFAMSA 11 bonds maturing as at March 21, 2014.
2013 2012
Interest earned from customersFurnitureElectronicsAppliancesMobile phonesComputer equipmentMotorcyclesClothing and footwearSeasonal articles (air conditioners, heaters, etc.)Income from commercial bankingSmall appliancesSport articles Children’s articles and accessoriesOther (1)
Ps. 4,404,9012,301,5111,765,4941,641,7501,249,643
843,927768,551521,232345,289191,060145,361134,968
47,634686,553
Ps. 3,677,0622,393,9081,690,1871,394,124
955,514831,890575,611540,764389,451175,357146,588177,849
63,9151,111,308
Ps. 15,047,874 Ps. 14,123,528
2013 2012
Operating profi tInterest expense on bank deposits Depreciation and amortization
Ps. 1,419,569698,291286,771
Ps. 1,475,100 589,799
314,397
Adjusted EBITDA Ps. 2,404,631 Ps. 2,379,296
Lic. Humberto Garza ValdézChief Executive Offi cer
C.P. Abelardo García LozanoChief Financial Offi cer
CONTACT INFORMATION FOR STOCKHOLDERS
Paloma E. Arellano BujandaInvestor Relations
paloma.arellano@famsa.comt. (0181) 8389 3405
Corporate Offi ces:Pino Suárez # 1202 nte. Zona Centro
C.P. 64000 Monterrey, N. L., Méxicot. (0181) 8389 9000
Stock Market and Ticker Symbol:Mexican Stock Exchange (BMV)
GFAMSA
www.grupofamsa.comwww.famsa.com
www.bafamsa.comwww.famsa.us
Grupo Famsa, S.A.B. de C.V.’s annual reports and other written materials may occasionally contain
forward-looking statements and disclosures, projected fi nancial results and expectations for
Grupo Famsa and its subsidiaries’ future performance which should be considered as estimates
made in good faith by Company Management. Investors are cautioned that, although based on
publicly available information, any such forward-looking statements and disclosures are subject
to inherent risks and uncertainties, as well as to factors that could cause the Company’s results,
plans, objectives, expectations, performance and achievements to be totally different at any given
time. Such risks and uncertainties include changes in general economic, political, government and/
or commercial conditions on a national and/or global level, as well as changes in interest rates,
infl ation, foreign exchange volatility, product prices, customer demand and competition, among
others. All disclosures made by Grupo Famsa should be assessed taking into account these
relevant risks and uncertainties. As a result of these risks and uncertainties (as well as those that
Grupo Famsa doesn’t acknowledge or currently considers of low relevance), real results may differ
substantially from the forward-looking statements and disclosures presented in this document.
Grupo Famsa does not assume any responsibility related to variations that these forward-looking
statements and disclosures may contain, nor for any other information coming from offi cial sources
or third parties.
Disclosures and forward-looking statements solely show Grupo Famsa’s outlook as of the date
these disclosures and forward-looking statements are made. Grupo Famsa does not assume any
obligation to publicly disclose any updates or changes to such disclosures and information, even if
those updates or changes are related to new information that was obtained, to future events or to
any other circumstance.
782013 ANNUAL REPORT
www.famsa.comwww.grupofamsa.com