ANNUAL REPORT 2015
BUSINESSES AND SUSTAINABILITY
2 CONT E N T S
CONTENTS
GIS PROFILE
3
LETTER TO SHAREHOLDERS
6
ECONOMIC PERFORMANCE
CIFUNSA
16
EVERCAST
18
GIS EDERLAN
20
ACE
22
VITROMEX
24
CALOREX
28
FLUIDA
32
CINSA
36
PIMCCI
40
FINANCIAL STATEMENTS
42
CORPORATE GOVERNANCE
118
AUDIT COMMITTEE REPORT
124
REPORT OF GOVERNANCE COMMITTEE
127
ENVIRONMENTAL PERFORMANCE
128
CIFUNSA
130
EVERCAST
132
ACE
133
VITROMEX
134
CALOREX
136
FLUIDA
138
CINSA
139
SOCIAL PERFORMANCE
140
OUR EMPLOYEES
142
OUR FAMILIES AND COMMUNITIES
150
OUR PRODUCTS
154
INTEGRITY PROCESS
158
CONTACTS
162
G IS PROFILE
W
e are a Mexican company founded in 1928
that designs, manufactures and markets
products for Auto-Parts, Construction and
Housewares Segments.
We sell a huge product portfolio for
transmission of water and gas in various
materials for plumbing and construction
industries.
With operations in Mexico and in three
European countries, we are oriented to
generate design solutions, comfort and safety
for our consumers in the world.
We also produce and markets kitchenware and
tableware made of different type of materials,
such as aluminum, enamel on steel or ceramic
with modern designs in the Mexican market.
We are leaders in Mexico and Europe in the
production of calipers for automotive brake
systems; In addition, we manufacture gray and
ductile iron parts for transmission, suspension
and engine systems for the automotive
industry.
Listed on the Mexican Stock Exchange since
1976, trading under the ticker GISSA, we
are celebrating our first 40 years as a public
company.
We design residential and commercial
environments through the production and
marketing of ceramic and porcelain tiles.
We offer solutions for water heating through
a wide variety of technologies, categories and
capabilities for commercial and residential
markets.
With a clear purpose of being a global and
leading company and over 7,500 employees,
GIS has a strong brand and products portfolio
to satisfy consumer needs and serve industrial
customers around the world.
3
4 GI S B U S IN E S S E
GIS BUSINESSES
PRODUCTS
BRANDS
PRODUCTIVE FACILITIES
Gray and ductile iron parts castings
for the Automotive industry, as well
as electrical appliances, agricultural
and railroad applications.
Cifunsa *
Tisa *
Estrella *
Saltillo, Coah.
Irapuato, Gto.
San Luis Potosí, S.L.P.
Castings and machining of nodular
iron parts for the Automotive
industry.
Evercast
Irapuato, Gto.
Machining of ductile and grey iron
parts for the Automotive industry.
GIS Ederlan *
San Luis Potosí, S.L.P.
Castings of ductile iron and
aluminum parts, as well
as machining of aluminum
components, for the Automotive
industry in Europe.
ACE **
Spain
Czech Republic
Poland
Research Center
Development Spain.
Ceramic and porcelain tiles in large
format for floors and walls.
Vitromex *
Arko *
Artemis *
Construpiso *
Saltillo, Coah.
San José Iturbide, Gto.
San Luis Potosí, S.L.P.
Chihuahua, Chih.
Water heaters for residential use:
solar, tank, tankless, electric and
instantaneous. Water heaters for
commercial use: electric, gas and
storage tanks.
Calorex *
Cinsa *
Optimus *
Hesa *
Cinsa Solei *
Ecosun *
American Standard ***
Saltillo, Coah.
** Trademark in the
European Economic
Community
** * U.S. License.
Connections, flanges and piping
for the construction and industrial
segment; in different materials
such as steel, plastic, copper and
malleable iron.
Conexiones Cifunsa *
Funcosa *
Fussion*
Tisa *
CHM *
Oficinas Comerciales:
Saltillo, Coah.
Toluca, Mex.
Enamel steel, stainless steel and
aluminum stick and non-stick pots,
pans and skillets.
Ceramic tableware for household
and institutional use.
Pressure cookers.
Blenders.
Irons.
Cinsa *
Tres *
Inter Cuisine *
Rustik *
Santa Anita *
Elegance *
Casual *
Saltillo, Coah.
* Trademarks
G IS C OMMAND M E NT S
GIS COMMANDMENTS
DIRECTION
FOUNDATIONS
CUSTOMER
FOCUS
CONSOLIDATE:
• Zero accidents
• Operational excellence
• Outstanding execution
• Financial health
MISSION:
• To create economic
value, generate progress
opportunities and
improve the well-being
of all the people and
institutions with whom
we interact.
VALUES
INTEGRITY AND
RESPONSIBILITY
INNOVATION
• Body, mind and spirit
• Talent
• Service and transcendence
• Retention and punctuality
VISIÓN:
• To be a global
organization that
generates value through
the development of
leading companies.
DEVELOP:
SUSTAINABLE
DEVELOPMENT
HUMAN
DEVELOPMENT
GROW:
• Continuous improvement
• Sales and profits
• Social Responsibility
• Image and positioning
INTEGRITY AND
RESPONSIBILITY
CUSTOMER
FOCUS
• I UNDERSTAND the needs and expectations of our customers.
• I FULFILL the conditions, specifications and service level
according to the client’s needs.
• I KNOW our products and their benefits.
• I ACT AND MAKE DECISIONS in order to satisfy our clients’
needs.
• I SPEAK truthfully.
• I ACT HONESTLY and with transparency.
• I AM IN AGREEMENT with the GIS values.
• I TAKE on the problem and the solution.
• I MAKE good use of the resources.
• I DEMAND the best from myself and I demand the fulfillment of
the commitments that we make.
HUMAN
DEVELOPMENT
SUSTAINABLE
DEVELOPMENT
• I CARE for the environment.
• I PROMOTE the best use of raw materials and other supplies.
• WE LOOK for the use of renewable energy.
• WE IMPROVE the quality of life.
• WE SATISFY the needs of our interest groups.
• I AM RESPONSIBLE for my personal development.
• I DEVELOP the leadership and skills of my employees.
• I PROMOTE the collaboration and team work.
• I CONTRIBUTE to build an environment where the employees
can reach their maximum potential and performance.
• I RESPECT human dignity.
INNOVATION
• I DO things differently, to get better results.
• I ENCOURAGE creativity.
• I AM OPEN to listen to and propel new ideas that will
generate business growth.
5
6 L E TTE R T O S H A R E HO L D ER S
LETTER TO
SHAREHOLDERS
“ 2015 WAS A YEAR OF SUCCESS
BECAUSE OF THE POSITIVE RESULTS
THAT WE ACHIEVED, BUT ABOVE ALL FOR
HAVING TAKEN A FIRST STEP TOWARDS
OUR VISION: THE GLOBALIZATION ”
LETTER TO S H AREHOLD E RS
Juan Carlos López Villarreal
Chairman of the Board of Directors
José Manuel Arana Escobar
CEO
7
8 L E TTE R T O S H A R E HO L D ER S
DEAR SHAREHOLDERS:
2015
was a year we can proudly remember
with joy because of the positive results
that we achieved, but, above all, for having taken a
first step towards our Vision: the globalization.
A clear Vision, an organization aligned to its
commandments, high operational efficiency and
business strategies focused on the approach to the
client, allowed successfully in all the Businesses to
overcome an environment of moderate economic
growth in Mexico and the uncertainty of exchange
rate volatility that we experienced during the second
half of the year.
Within this challenging scenario, we achieved a growth
in sales of 16% compared to 2014, which amounted to
11,275 million pesos; while the profit operation (EBIT)
stood at 929 million pesos, 43 percent above the
previous year.
In 2015, all Businesses exceeded their sales levels
compared to the previous year, and most of them
exceeded the level of EBIT as a result of the strategies
and the strengthening of commercial structures,
efficient plants administration and a greater proximity
to our customers.
One of the most important events of the year was
the acquisition of Automotive Components Europe
(ACE), one of the most important players in ductile
iron casting and foundry and machining of aluminum
parts of components for brake systems in Europe.
ACE has operations in three countries of Europe:
Spain, Czech Republic and Poland, the latter dedicated
to the foundry and machining of automotive parts in
aluminum, allowing us to diversify, entering this new
market with strength. Additionally, it has a Research
and Development Center in Spain which, along with
Cifunsa, will help us accelerate our technological
development.
“ IN 2015, ALL BUSINESSES
EXCEEDED THEIR SALES LEVELS
IN COMPARISON WITH THE PREVIOUS
YEAR, AND THE MAJORITY MANAGED
TO EXCEED THE LEVEL OF EBIT ”
LETTER TO S H AREHOLD E RS
ONE OF THE MOST RELEVANT EVENTS OF 2015 WAS THE ACQUISITION OF THE
AUTOMOTIVE COMPONENTS EUROPE COMPANY (ACE)
We closed this operation in December by
acquiring 100% of the shares of ACE with
an investment of 88 million dollars. At the
beginning of 2016, the company was delisted
from the Warsaw Stock Exchange in Poland.
This represents GIS’ first step towards
globalization. We believe that this acquisition
contributes significantly to the transition of
becoming a leading provider in automotive
safety parts.
For 2015, the Mexican automotive sector
remained in the path of growth, as well as
our Cifunsa Business, which continued to
consolidate the use of its installed capacity.
Example of the aforementioned is the start
of Evercast operations, joint venture with our
customer ZF-TRW, at the start of the third
quarter of last year. The plant, which is located
in Irapuato, Guanajuato, is dedicated to the
foundry and machining of parts for brake
systems, at which we participate in higher
value added processes.
In addition, in the beginning of 2015, we signed
an agreement with the European company
Fagor Ederlan to build a plant for the machining
of automotive parts with an investment of up
to $52 million. This company, which we have
called GIS Ederlan, will be located in San Luis
Potosí, to attract important clients in the
automotive sector projects, which will begin
operations in 2016.
The consumption and construction Businesses
also had a positive performance in sales. It is
worth to highlight the growth of Vitromex, our
ceramic and porcelain flooring Business, which
recorded a growth in sales of 20% compared
with 2014 as a result of the actions carried
out in the last year to improve operational
efficiency and strengthen the commercial
reorientation.
We are moving ahead in the technological
upgrade of our production facilities aiming on
digital printing integration in all our operations,
to more efficiently serve our customers and
consumers.
9
10 L E TTE R T O S H A R E HO L D ER S
In Calorex, our water heater Business, we are working
on the development of new technologies that have
become the main differentiator to our customers. In
2015, we received a prize from the Mexican Association
of Directors of Applied Research and Technological
Development (ADIAT) for the heater design of Paso
Sin Piloto (PSP), which generates a constant water
temperature and allows savings of up to 70% on gas
consumption.
To consolidate the leadership in the line of instant water
heaters, we started a second production line, being the
only manufacturers in Mexico. In addition, we increased
the production of heaters for the export market to the
United States of America as a result of a top-sale driven
by the strengthening and alignment of the commercial
structure to the strategy that we have defined for this
market.
The successful integration of Funcosa, which we acquired
in 2014 through Fluida, our Business of marketing of
connections and pipes for the conveyance of water and
gas, contributed to partially mitigate the negative effects
of the devaluation of the Mexican Peso that impacts us
in the importation of products. To address them, we
kept the discipline in the administration and developed
new suppliers.
The launch of new designs and colors that integrate
fashion trends allowed Cinsa, our kitchenware and
tableware Business, to take advantage of the improving
trust of consumers in Mexico. In addition to the sales
growth in the lines of ceramic tableware, enamel steel
and aluminum, the Business had a good performance in
non-recurring sales in the promotional channel.
LETTER TO S H AREHOLD E RS
“ VITROMEX,
OUR CERAMIC AND PORCELAIN
FLOORING BUSINESS
ACHIEVED A 20%
SALES INCREASE
COMPARED TO 2014 ”
11
12 L E TTE R T O S H A R E HO L D ER S
“ THE RESULTS ACHIEVED IN 2015
ARE AN INCENTIVE TO KEEP BUILDING A MORE DYNAMIC,
FOCUSED, AND EFFICIENT ORGANIZATION ”
The results achieved by 2015 are an incentive
for further strengthening a more dynamic,
focused and efficient organization.
We are building a new management culture
with which we seek to align our talent as a
cornerstone to innovate, develop and better
serve our customers.
At the beginning of 2016, we concentrated in
Parque Toreo in Mexico City the Commercial
and Management teams of GIS Consumption
Businesses, in order to be closer to our
customers, as well as increasing the agility and
response speed, and thus continue generating
new business opportunities.
This open, modern and collaborative space
reflects the inclusive and comprehensive
organization that we are creating.
Juan Carlos López Villarreal
Chairman of the Board of Directors
We thank our shareholders, employees,
customers and suppliers for their confidence
in GIS. We are taking firm and solid steps
towards our Vision, keeping the premise
of creating economic value, generating
opportunities of progress and well-being for
all persons and institutions with whom we
interact, as established by our mission.
Conscious of the fact that the growth required
investments in 2015, we will continue to work
to maintain discipline in costs and expenses
to the length and breadth of the organization,
with the support and participation of our
employees.
We are moving forward in the strategy,
cultivating our talent and securing results in
the growth path.
José Manuel Arana Escobar
CEO
LETTER TO S H AREHOLD E RS
“ WE ARE MOVING
FORWARD IN THE STRATEGY,
CULTIVATING OUR TALENT
AND ACHIEVING RESULTS
IN OUR GROWTH PATH ”
RELEVANT INFORMATION
EBIT
SALES
11,275
MILLION
PESOS
16 %
GROWTH
VS 2014
929
MILLION
PESOS
43 %
GROWTH
VS 2014
13
14 E CON OM IC PE R F OR MAN C E_ AU T O P AR T S
ECONOMIC PERFORMANCE
AUTO PARTS
EC ONOMIC PERFORMANC E_AUT O PA RT S
W
e are producing parts for brakes, engine,
transmission and suspension systems
for the automotive industry. We manufacture
and sell parts in grey and ductile iron and now
also in aluminum with the recent acquisition of
ACE.
It is important to note that in addition to
participating in the foundry process, during
2015 we took a very relevant step in this
business’ strategy to make inroads into higher
value added through machining processes.
We are leaders in the production of calipers in
Mexico and Europe. We operate four Business
units: Cifunsa, Evercast1, GIS Ederlan and
ACE, the latter in Europe.
In Mexico we have four production facilities of
Cifunsa dedicated to the foundry of automotive
parts, which are strategically located in
Saltillo, San Luis Potosí and Irapuato, close to
automotive clusters in the country.
Evercast is a joint venture with our customer
and partner ZF-TRW. Together we have a plant
in Irapuato, Guanajuato, dedicated to the
foundry and machining of automotive parts for
the brake systems.
GIS Ederlan will be oriented to the machining
of automotive parts for suspension systems,
direction, brakes and Powertrain, among
others. The joint venture with the Spanish
company Fagor Ederlan, will be located in San
Luis Potosí and will begin operations in 2016.
In Europe, through Automotive Components
Europe (ACE), we have two facilities for ductile
iron casting, one in Czech Republic and one in
Spain, in addition to a foundry and machining
of aluminum in Poland.
With the recent acquisition of ACE and the
start of operations of Evercast we reached
approximately 320,000 annual tons of iron
casting in all our operations, including those of
Mexico and Europe.
A strategic alliance between GIS and ZF-TRW, which in compliance with the International Financial
Reporting Standards, is not presented in the Consolidated Financial Statements.
1
15
16 E CON OM IC PE R F OR MAN C E_ C I F U N SA
GRAY AND DUCTILE IRON CASTING OF PARTS FOR
THE AUTOMOTIVE, COMMERCIAL VEHICLES AND
RAILROAD INDUSTRIES
4 PRODUCTION FACILITIES:
1_SALTILLO, COAH.
2_SAN LUIS POTOSÍ, S.L.P.
1_IRAPUATO, GTO.
UTILITY:
BREAKS
TRANSMISSION
MOTOR
SUSPENSION
EC ONOMIC PERFORMANC E_ CIFUNSA
“DRIVEN BY THE POSITIVE RESULTS
OF THE INDUSTRY IN NORTH AMERICA WE ACHIEVED
A GROWTH VS 2014”
CIFUNSA
M
exico continues to stand out as the main
country where new Automotive OEM’s in
North America are installed, allowing Cifunsa
to strengthen its competitive position through
the implementation of its strategy of profitable
growth.
Driven by the positive results of the industry
in North America, we achieved a growth vs
2014, and we dealt with the growing demand
for current and new products.
With some of our clients, we secure projects
by more than 40,000 tons per year, which
were assigned to the production unit in San
Luis Potosí. In this way, we capitalize on the
installed capacity in this location, where we
started operations in 2014. In addition, we
gained new Asian customers.
At the end of 2015, we reached the use of
75% of the installed capacity of our foundry
plants, maintaining high levels of quality
and productivity according to international
standards.
For 2016, we will continue working on the
efficiency of our operations, as well as
optimizing the use of our technical capabilities
and sharing best practices with our operations
in Europe.
17
18 E CON OM IC PE R F OR MAN C E_ EV ER C AST
CASTING AND MACHINING OF DUCTILE IRON PARTS
FOR THE AUTOMOTIVE INDUSTRY
1 PRODUCTIVE FACILITY:
IRAPUATO, GTO.
UTILITY:
BREAKS
EC ONOMIC PERFORMANC E_E VE RCA ST
“ THE START OF OPERATIONS WAS SUCCESSFUL
IN THE EXECUTION OF THE PROJECT
AND IN THE DEVELOPMENT
AND APPROVAL OF PRODUCTS ”
EVERCAST
O
n the third quarter of the year, we started
the operation of the Evercast unit, a joint
investment with our customer ZF-TRW in
which GIS has a majority holding. This new
production unit began operations a week
ahead of schedule, exceeding the expectations
of our client.
We achieved a high efficiency in the
development of the testing process, which
allowed the release of products by the areas
of casting and machining according to the
established plan.
In this new Business unit, we participate in
machining of iron parts, which is a process of
The new plant, which is dedicated to the greater added value.
foundry and machining of ductile iron auto
parts for the brake system, is located in We started the Lean Enterprise model
Irapuato, Guanajuato.
management in 2015, and at the end of the third
quarter of the year, we defined the integration
The start of operations was successful, both in of more than 20 Natural Work Teams, through
the execution of the project, which was fulfilled which we sought to increase operational
on time and budget, and in the development efficiency.
and approval of products by our client and
partner ZF-TRW.
19
20 E CON OM IC PE R F OR MAN C E_ G I S ED ER L AN
MACHINING OF GRAY AND DUCTILE IRON
AUTOMOTIVE PARTS
1 PRODUCTIVE FACILITY:
SAN LUIS POTOSÍ, S.L.P.
UTILITY:
SUSPENSION
DIRECTION
BREAKS
POWERTRAIN
EC ONOMIC PERFORMANC E_G IS E D E RLA N
“ THANKS TO THE TRUST THAT WE GENERATE
IN OUR CUSTOMERS, IN 2015, GIS EDERLAN
CAPTURED THEIR FIRST PROJECTS. ”
GIS EDERLAN
T
he technical and operational capacity
of GIS to meet the growing demand
of our customers, as well as the strategy
of profitable growth by incorporating new
processes in Mexico, led us to consolidate a
new project of alliance and joint investment
with the Spanish company Fagor Ederlan, in
which each partner participates with 50%. The
purpose is to establish a new plant specialized
in the machining of iron components for the
automotive sector of the North American
market.
The joint investment for the new company,
called GIS Ederlan, will be up to 52 million
dollars, to produce 5 million units machined
by the year 2020. Its portfolio will focus on
automotive components for suspension,
steering, brakes and Powertrain systems,
among others.
Thanks to the trust that we generate in our
customers, in 2015, GIS Ederlan captured their
first projects for clients such as BMW, Eaton
and Bendix, some of which will begin in 2016,
along with the start of operations of this plant.
21
22 E CON OM IC PE R F OR MAN C E_ AC E
CASTING OF DUCTILE IRON AND ALUMINUM
PARTS, AS WELL AS MACHINING IN ALUMINIUM
FOR THE AUTOMOTIVE INDUSTRY
4 PRODUCTIVE FACILITIES:
1_SPAIN
1_CZECH REPUBLIC
1_POLAND
1_RESEARCH AND DEVELOPMENT CENTER SPAIN
UTILITY:
BREAKS
EC ONOMIC PERFORMANCE _ A CE
“ AT THE END OF THE YEAR 2015
ACE GENERATED INCOME
EQUIVALENT TO
2,190 MILLION PESOS ”
ACE
M
otivated by the vision of GIS being a
global enterprise, and in line with the
strategic planning process, at the end of 2015
we gave the first step towards globalization
to realize, via public bidding, the acquisition
of all the shares of the company Automotive
Components Europe (ACE) on the European
continent. The investment was US $88 million.
ACE, a company dedicated to iron foundry
and casting and machining of aluminum for
automotive components, is a leader in Europe
in parts for brake systems in most of the
vehicle platforms.
This company gives us its technical and
engineering capacity because it has a Center of
Research and Development (ACE4C) in Spain,
that we will facilitate, along with Cifunsa, to
accelerate our technological development.
We ensured the permanence of the team of
ACE Management in order to preserve and
give priority to the continuity of operations.
With production units in Spain, Czech Republic
and Poland, ACE will contribute to the progress
of GIS in the establishment of a global platform
of components for brake systems, such as
brackets, in ductile iron. In addition, it will
allow us to enter with strength in the casting
of aluminum auto parts for brakes.
This company has a privileged geographical
position to serve the European market.
By delisting it from the Warsaw Stock
Exchange, in which it operated, we will focus
on consolidating its leadership and take
advantage of the experiences of Cifunsa and
ACE to diversify our technological and product
offer. At the end of 2015, ACE generated
income equivalent to 2,190 million pesos.
23
24 E CON OM IC PE R F OR MAN C E_ V I T R O MEX
EC ONOMIC PERFORMANC E_VIT ROM E X
VITROMEX
WE DESIGN, PRODUCE AND MARKET THE
WIDEST VARIETY OF FLOORING AND CERAMIC
AND PORCELAIN TILES.
5 PRODUCTION FACILITIES:
1_SALTILLO, COAH.
1_CHIHUAHUA,CHIH.
1_SAN LUIS POTOSÍ, S.L.P.
2_SAN JOSÉ DE ITURBIDE, GTO.
UTILITY:
RESIDENTIAL
INSTITUTIONAL
BRANDS:
“ WE CARRIED OUT A REVITALIZATION
OF OUR VITROMEX* BRAND AND WITH IT,
WE GAVE A COMMERCIAL BOOST ”
25
26 E CON OM IC PE R F OR MAN C E_ V I T R O MEX
VITROMEX
I
t is a company focused on the design of residential and
commercial environments through the production and
marketing of flooring and ceramic and porcelain tiles.
Its brands Vitromex*, Artemis*, Arko* and Construpiso*
are widely recognized for its variety of designs and
formats.
The ceramic coatings industry in North America showed
a positive dynamic in the market which was reflected in
approximate growth in volume of 9% for the domestic
market and 8% for the United States.
2015 was a period of growth for Vitromex. The actions
we undertook during the past two years to improve
operational efficiency and technological updating,
coupled with an efficient marketing strategy, allowed to
increase the sales by 20% with respect to 2014.
Taking advantage of the dynamism of the United States
construction industry, we continue to strengthen our
presence in that country, where our sales, measured in
pesos, rose by 25% compared with 2014.
In Mexico, we revitalized our Vitromex* brand, and
thereby achieved a commercial incentive which resulted
in renovations, upgrades and openings of new outlets
for our distributors, which enabled us to achieve a sales
growth of 17% compared to the prior year.
In 2015, we invested more than 77 million pesos in
update of technology to implement digital decoration,
which gives us a wide flexibility in the manufacturing
processes, and lets us be aligned with market demand
to offer a better service.
“ ACTIONS TO IMPROVE
OPERATIONAL EFFICIENCY AND
TECHNOLOGICAL UPDATING,
PLUS THE BUSINESS STRATEGY
ALLOWED A 20% INCREASE IN
SALES OVER THE PREVIOUS YEAR ”
EC ONOMIC PERFORMANC E_VIT ROM E X
We successfully launched the initiative S-Tile
Vitromex, to focus the efforts of the company
on the execution of specific projects in
diverse areas, such as a portfolio of products,
operational efficiency, supply chain, internal
processes and employees, all with the purpose
of meeting the needs of our customers.
As part of the S-Tile initiative, at the
production facility in San Luis Potosí, the
largest of Vitromex, we carried out a project
to increase operational efficiency with the
support of international consultants. The
results achieved in productivity and efficiency
have led us to replicate different actions in the
rest of the units of Vitromex in Mexico.
We achieved important progresses in
operational efficiency through technological
upgrade and commercial strategies, allowing
Vitromex to serve better and faster to its
clients and consumers.
In 2016, we will work together with our dealers
in regions with the greatest potential and
with institutional projects in the construction
market in Mexico. Also we will continue to
devote efforts to increase our participation in
the export markets.
During the current year, we plan to invest
more than 600 million pesos to align capacity
to demand, boost the technological updating,
increase productivity and improve information
systems.
27
28 E CON OM IC PE R F OR MAN C E_ C AL O R EX
EC ONOMIC PERFORMANC E_ CA LORE X
“ THE DEVELOPMENT OF NEW
TECHNOLOGIES
HAS BECOME THE
MAIN DIFFERENTIATOR
WITH OUR CUSTOMERS ”
CALOREX
WE DEVELOP, MANUFACTURE AND
MARKET SOLUTIONS OF WATER HEATING
FOR RESIDENTIAL AND COMMERCIAL USE.
1 PRODUCTIVE FACILITY:
SALTILLO, COAH.
UTILITY:
RESIDENTIAL
COMMERCIAL
BRANDS:
29
30 E CON OM IC PE R F OR MAN C E_ C AL O R EX
CAL0REX
T
he leading company in solutions for water
heating in Mexico. It offers a wide variety of
technologies, categories and capabilities that
meet the needs of residential and commercial
customers through lines of gas, electric and
solar energy.
“IN 2015 WE WORKED ON
STRENGTHENING OUR SALES TEAM
IN THE UNITED STATES MARKET”
Our brands Calorex*, Cinsa*, Hesa*, Heat
Master*, Optimus* and American Standard*
(the latter in the United States) have a solid
reputation, and they are a symbol of security,
efficiency and quality.
The launch of new products and advancements
in technology for water heating, coupled with
the fact that Calorex is the only manufacturer of
instant water heaters in Mexico, reinforced the
success of the Business in 2015.
During the second half of the year, the second
line of instantaneous water heaters started
operating, which allowed us to offer this product
within all of our brands and thereby achieve a
growth of 24% in units with respect to 2014. This
result was mainly driven by good performance
in the replacement segment.
With the advantage of being the sole producer
of instantaneous water heaters in Mexico, we
started manufacturing for private brands taking
advantage of the flexibility of our production
line.
Over the years we have worked on the
development of new technologies that have
become the main differentiator with our
customers.
In 2015, we launched to the market a line
of instantaneous water heaters with a new
technology that maintains a constant water
temperature, providing maximum comfort while
bathing. In addition, we are participating with
a line of instant electric “point of use” for low
demands on wash basins and sinks, innovation
that allows you to save energy and reduce
waiting times.
The success of the new pilot-less lines (PSP)
and programmable timer marked a new trend
that generated a growth of 4% in units of
tankless water heaters of high recovery and 5%
in deposit models.
We focus our business efforts to the
incorporation of new lines of products with our
distributors. The success in the implementation
of this strategy represented 13% of the units
sold during the year.
In the water heaters segment, based on solar
energy, we grew by 16% in units sold in relation
to 2014.
Coordinated work between departments
allowed us to offer a better service and rapid
response, which resulted in the development
of new customers in the traditional channel
with a growth of 9%, and in the modern canal,
the increase was 13%, both in relation to the
previous year.
Derived from the previous, Calorex achieved a
19% growth in sales in relation to 2014, despite
the moderate growth of the construction sector
in Mexico.
EC ONOMIC PERFORMANC E_ CA LORE X
At the start of 2015 we worked on strengthening
our sales team in the United States market,
where we participate with electrical products and
gas for residential and commercial applications
under the American Standard* brand.
This allowed us to enable a second shift at the
facility that produces this products. On the other
hand, we obtained the certification under the
regulated standard 10 CFR Parts 429, 430 and
431 (NAECA) by the Department of Energy of
the United States for tank water heaters, in gas
fueled and electric for the residential market in
that country.
To consolidate the growth of the Business,
we invested more than 45 million pesos in the
modernization of the die-cutting area and the
installation of two manufacturing cells with
welding robots. Because of this, we improved the
efficiency of operations, an advancement which
was reflected in a lower cost of production.
For 2016, we will seek to maintain the national
leadership by renewing our supply services
and generating greater value for our customers
and final consumers. The instantaneous water
heaters market will remain one of our supports
for growth.
Also we will invest in research to accelerate the
development of new products, automation and
technological updating of our operations and the
market of the United States.
* License USA
31
32 E CON OM IC PE R F OR MAN C E_ F L U I D A
EC ONOMIC PERFORMANC E _ FLUID A
FLUIDA
WE MARKET A WIDE VARIETY OF
PRODUCTS FOR THE HARDWARE AND
INDUSTRIAL BRANCH, CONNECTIONS AND
PIPES FOR WATER AND GAS IN MATERIALS
SUCH AS IRON, PVC, CPVC, MULTILAYER
SYSTEMS (PE-AL-PE) AND PPR.
2 SALES OFFICES:
1 _SALTILLO, COAH.
1 _TOLUCA, MEX.
UTILITIES:
INDUSTRIAL
CONSTRUCTION
“ WE HAD A SUCCESSFUL
INTEGRATION OF FUNCOSA,
MARKETER OF PRODUCTS FOR THE CONVEYANCE
OF FLUIDS AND WATER HEATING,
ACQUIRED BY THE END OF 2014 ”
BRANDS:
33
34 E CON OM IC PE R F OR MAN C E_ F L U I D A
FLUIDA
E
s It is a Business that operates in the hardware - plumber
channel. Dedicated to the marketing of different
lines of products and materials for the conveyance of
gas and water through brands with solid reputation,
such as Cifunsa Conexiones*, Tisa* and Funcosa*, in
addition to the Fusion* brand of instantaneous water
heaters and solar water heaters of the Funcosol* brand.
Through Fluida, we offer to hardware and industrial
branches a wide range of connections and pipes for
water and gas in iron, copper, PVC, CPVC, as well
as multilayer systems such as Pe-Al-Pe and PPR.
In 2015, we achieved the successful integration of Funcosa,
marketer of products for the transport of fluids and water
heating, which we acquired at the end of 2014, allowing us to
strengthen the business relationship with our distribution
channel and the unification of the operation processes.
This acquisition allowed the Business revenues
to grow by 35% compared to the prior year.
The domestic industry’s products for the transport
of fluids presented an even behavior in volume;
however, it was strongly affected by the devaluation
of the Mexican Peso against the US Dollar, impacting
the Business in the prices of products of import. It is
important to point out that the decrease in the price
of commodities such as copper and steel allowed to
mitigate the effect of the value of the peso devaluation.
We maintained the level of exports in traditional lines to
Central and South America and started successfully with
new plastic systems for the construction segment, mainly
in Ecuador and Panama. Our relationship with the United
States of America was reduced, largely by the drop in the
price of oil, which decreased the activity of this sector.
“ WE MAINTAINED A LEVEL OF
EXPORTS TO CENTRAL AND SOUTH
AMERICA IN OUR TRADITIONAL
LINES, AND WE MADE AN INCURSION
WITH NEW PLASTIC SYSTEMS FOR
CONSTRUCTION ”
EC ONOMIC PERFORMANC E _ FLUID A
The optimization in the portfolio management
and the pursuit of a greater financing through
our suppliers allowed us to meet the goal of
operating flow projected for 2015.
Aiming to differentiate ourselves in the market
through the improvement and strengthening
of service to our customers, Fluida joined the
Oracle R12 ERP. In this way, it will be possible to
standardize the administrative and operational
processes, establish mechanisms of control
of the information and obtain synergies with
other Businesses of GIS as well as improve the
customer service.
In 2015, Fluida received for the fifth time the
recognition of Great Place to Work, as one of the
100 best companies to work in Mexico.
During the year, we launched on the market the
solar water heater Funcosol* with 150 liters of
capacity, aimed for an entry level social housing
in the building sector. The use of this type of
environmentally friendly products is promoted
by the Infonavit through a “Green Mortgage
Program”.
2016 represents for Fluida a year of challenges,
particularly because of the high volatility of the
foreign exchange market. Therefore, we will
concentrate in seeking greater penetration in
the different distribution channels in Mexico, in
addition to developing new products, reducing
logistical and operational costs, and marketing
products for construction of residential housing
and luxury segment that show a higher growth.
We will continue with our expansion in the
export market to Central and South America
market and we will seek to venture into different
segments than oil in the United States, due to
the unattractive prospectives in this sector
according to the opinions of the analysts.
We will focus on the reduction of operating
costs, starting with a logistics restructuring
that will allow us to more efficiently serve our
distribution channel, in addition to systematize
the relationship with our customers, it will give
us flexibility to identify their needs with greater
opportunity and depth, so we can offer a better
value proposition.
35
36 E CON OM IC PE R F OR MAN C E_ C I NSA
EC ONOMIC PERFORMANCE _ CINSA
CINSA
WE DESIGN, PRODUCE AND MARKET A WIDE
RANGE OF KITCHENWARE PRODUCTS: PANS,
POTS, PRESSURE COOKERS, AMONG OTHERS, IN
ENAMEL STEEL, STICK AND NON-STICK STEEL, AND
ALUMINUM.
IN THE TABLEWARE SECTOR, WE DESIGN AND
PRODUCE CERAMIC PRODUCTS FOR HOUSEHOLD
AND INSTITUTIONAL USE, IN ADDITION TO
MARKETING ELECTRICAL APPLIANCES SUCH AS
BLENDERS AND IRONS..
4 PRODUCTIVE FACILITIES:
SALTILLO, COAH.
APLICACIÓN:
RESIDENTIAL
INSTITUTIONAL
BRANDS:
“IN 2015 LAUNCHED TO THE MARKET A
TABLEWARE MADE OF ENAMEL STEEL,
UNDER THE BRAND RUSTIK*.””
37
38 E CON OM IC PE R F OR MAN C E_ C I NSA
CINSA
C
insa* is a tradition brand in Mexico, its
kitchenware made of enamel steel and
aluminum, and its tableware of ceramic under
the brand Santa Anita*, have a solid prestige
which is supported by a continuous renewal of
their design and product lines. This Business,
founder of GIS, also has a line of pressure
cookers and appliances sold with the support
of its brand.
“THE DEVELOPMENT OF
NEW DECORATIONS AND COLORS
ALLOWED THE TABLEWARE CERAMIC
LINE AN 18% SALES GROWTH”
In 2015, the incipient recovery of consumer
trust generated an increase in consumption in
Mexico, which resulted in a greater dynamism
in the industry of kitchenware and tableware.
In order to take advantage of the trend of
the industry and drive sales, we carried out
a launch of products with attractive prices
to the final consumer, as well as actions to
strengthen the positioning of our main brands:
Cinsa* and Santa Anita*, through panoramic
advertising and at the sale spots.
In kitchenware, it is worth highlighting the
product line of enamel steel from the chef
Aquiles Chávez, as well as the Stone line with
non-stick rock type. In the tableware, we
launched the lines Pasteli and Intensa Alegra
of ceramic tableware, which boosted the sales
In & Out in retail.
In addition, and following the design trends,
in 2015, we introduced to the market dishes
in enamel steel under the brand Rustik* sold
at Cimaco and Palacio de Hierro department
stores.
At the end of the year, we achieved a growth
of 10% in sales compared with the previous
year, driven by a 26% increase in the catalog
channel, 15% in the institutional channel, 12%
in the wholesale channel, as well as 3% in retail
as a result of the development of new products
and concepts supported by the variety of
design strategy and price.
During 2015 we improved our service levels,
prompting us to strengthen presence in the
sale spots of our customers; In addition, we
carried out promotional sales in retail chains.
Thanks to the development of new decorations
and colors that integrate into the fashion
trends, the tableware ceramic line grew by 18%
in sales in relation to 2014. Also, the enamel
steel contributed with an increase of 13% and
the aluminum line with an increase of 6%.
In the import product line, a 55% increase in
sales of pressure cookers stands out, a result
arising from promotions at the point of sale.
EC ONOMIC PERFORMANCE _ CINSA
In order to increase our productivity in the
enamel steel plants, we took important steps
in process automation. The development of
a prototype of automation of edge wrapping
stands out, the introduction of automatic
enamel covering machines, allowing us to
offer a greater variety of products.
Without a doubt, one of the most important
steps was the implementation of the
permanent brand on our enamel steel products
to ensure identification and differentiation
with the printing of our logo. For more than
86 years we have produced these products
without a permanent logo, so this new process
is a breakthrough in the transcendence of the
Cinsa* brand.
In the facility of aluminum kitchenware, the
development of decoration supply was a key
aspect for the launch of a new line of pans. In
addition, we installed a line of non-stick for
special features and develop our brands using
laser printing technology.
In the production unit of ceramic tableware,
we introduced glazes in solid pastel colors
and bicolors; among them, red is emphasized.
We also apply the Santa Anita* brand in laser
printing and we offer a greater variety of
products for our customers.
One of the great challenges of the Business
was to counter the effects of the increase in
manufacturing costs, energy and raw materials
affected by the devaluation of the Mexican
Peso against foreign currencies. Despite the
challenging environment, we generated a
cashflow1 of 109 million pesos as a result of a
better working capital management.
In 2016 we expect to pursue investments
for approximately 100 million pesos, which
would mainly target: 1) a manufacturing line
of special ceramic products to increase the
level of service in the institutional line and
increase the capacity of domestic pieces; 2)
the automation of the processes in our enamel
steel facilities and 3) a new manufacturing line
of forged aluminum to expand our portfolio.
1
Measured as EBITDA +/- changes in working capital
39
40 E CON OM IC PE R F OR MAN C E_ P I MC C I
COMPREHENSIVE PROGRAM OF CONTINUOUS
IMPROVEMENT, QUALITY AND RESEARCH (PIMCCI)
EC ONOMIC PERFORMANC E _ PIM CCI
D
uring 2015, the Comprehensive Program
of Continuous Improvement, Quality
and Research (PIMCCI) strengthened the
operational development of our Businesses
through their processes of Planning,
Management System, Quality Assurance and
Control, as well as the Applied Research in the
processes of Innovation and Technological
Development.
The objective is to strengthen the development
of GIS Businesses as lean, world-class
companies through the management of
human, self-directed teams, focused on
the sustained improvement of operations,
processes, design of products and services.
Through PIMCCI, we followed-up the strategy
of promoting a work culture that allows
the sustainable generation of operational,
commercial and administrative initiatives to
increase the efficiency of the Businesses, and
thereby contribute to the growth of profitability
with a focus on safety, quality and productivity
improvement.
We managed the implementation of 2,696
ideas, generated through the Natural Work
Teams in all Businesses, which represented
a growth of 4.4% compared to the previous
year.
Using a Balanced Scorecard, follow the
financial, functional, operational, and business
indicators, key element of operations
management aligned with the strategic
objectives of the Group. Based on this, the
operational efficiency1 presented, by 2015,
an improvement of 13% within the group, and
the efficiency of the value chain escalated 8%
since 2014.
The execution of strategic projects of Lean Six
Sigma to optimize the use of installed capacity
and improve profitability through efficiency in
processes operating, program of competitive
supply and energy saving program, allowed us
to increase the generation of benefits in 7.7%
compared to the previous year.
1
Indicators generated for internal measurement..
41
42
ECO N OMIC PE RF ORMA NC E _FI NA NC I A L I NFO RMATION
FINANCIAL
STATEMENTS
ECON OM IC P ERF ORM AN C E_ F IN AN CIAL IN F OR MATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015 and 2014
(With Independent Auditors’ Report Thereon)
43
44
ECO N OMIC PE RF ORMA NC E _FI NA NC I A L I NFO RMATION
INDEPENDENT AUDITORS’ REPORT
T
o the Board of Directors and Stockholders of
Grupo Industrial Saltillo, S. A. B. de C. V.:
We have audited the accompanying consolidated financial statements of Grupo Industrial Saltillo, S.A.B. de
C.V. and subsidiaries (the Company), which comprise the consolidated statement of financial position as of
December 31, 2015 and 2014 and the consolidated statements of income, of other comprehensive income, of
changes in equity and cash flows for the years ended December 31, 2015 and 2014, and notes, comprising a
summary of significant 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 financial statements
in accordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on our judgment, including the assessment
of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair
presentation of the consolidated financial 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 accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
ECON OM IC P ERF ORM AN C E_ F IN AN CIAL IN F OR MATION
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
financial position of Grupo Industrial Saltillo, S.A.B. de C.V. and subsidiaries, as of December 31, 2015 and 2014,
and of its consolidated financial performance and its consolidated cash flows for the years ended December
31, 2015 and 2014, in accordance with International Financial Reporting Standards.
Emphasis of Matter
Without qualifying our opinion, we draw attention to the following:
a) As indicated in note 1a) to the accompanying consolidated financial statements, during the last week of
December 2015 the Company completed the acquisition of all the shares of Automotive Components
Europe, S.A. and subsidiaries (ACE).
b) As indicated in note 1b) to the accompanying consolidated financial statements, from December 28 to 31,
2015, GISSA contributed and sold to its related party ISLO Automotive, S.L. all the shares acquired from
ACE.
c) As indicated in note 1d) to the consolidated financial statements, on February 17, 2015, Grupo Industrial
Saltillo, S.A.B. de CV, through its subsidiary Industria Automotriz Cifunsa, S.A. de C.V. (IACSA) agreed a
partnership to establish a new company machining iron components in the auto parts sector. This alliance
was made with Fagor Ederlan, S. Coop (Ederlan) and Ederlan Subsidiaries, S. L. U. (Ederlan Subsidiaries)
and the new company was established as Gisederlan, S.A. de C.V.
d) d)As indicated in note 1e) to the consolidated financial statements, on December 1, 2014, Grupo Industrial
Saltillo, S.A.B. de C.V., announced the acquisition of the assets of Funcosa, S.A. de C.V. The amount of this
transaction amounted to $ 110.9 millions of pesos.
e) As indicated in note 1f) to the accompanying consolidated financial statements, on February 3, 2014 Grupo
Industrial Saltillo, S.A.B. de C.V. through its subsidiary Industria Automotriz Cifunsa, S.A. de C.V. (IACSA)
agreed a partnership to establish a new company of nodular iron foundry casting and machining parts to
manufacture brake systems. This alliance was made with Kelsey Hayes Company (KHC), a subsidiary of
TRW Automotive Holdings Corp. and the new company was established as Evercast, S.A. de C.V. (Evercast).
IACSA’s shareholding in Evercast is 70% and the remaining 30% was contributed by KHC.
KPMG CARDENAS DOSAL, S. C.
C. P. C. Rogelio Berlanga Coronado
Monterrey, Nuevo León, México
February 6, 2016
45
46
ECO N OMIC PE RF ORMA NC E _FI NA NC I A L I NFO RMATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2015 and 2014 (In thousands of pesos)
2015
Note
2014
Assets
Current assets
Cash and cash equivalents
Assets held for sale
Trades and other accounts receivable
Inventories
Prepaid expenses
7
10
8
9
$
Total current assets
Noncurrent assets
Long-term spares inventory
Property, machinery and equipment
Intangible assets
Other assets
Permanent investments
Derivative financial instruments
Deferred income taxes
9
11
12
13
18
17
Total noncurrent assets
Total assets
$
2,370,177
27,780
2,775,542
1,672,022
11,607
2,052,855
24,223
2,274,536
1,390,340
10,272
6,857,128
5,752,226
220,116
6,352,615
1,610,929
5,645
790,860
356
501,724
167,242
4,855,522
851,400
5,527
536,273
747,411
9,482,245
7,163,375
16,339,373
12,915,601
ECON OM IC P ERF ORM AN C E_ F IN AN CIAL IN F OR MATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2015 and 2014 (In thousands of pesos)
Note
Current liabilities
Current installment of long-term debt
Finance leases
Liability for tax consolidation
Trades and other accounts payable
Deferred income
Derivative financial instruments
Taxes payable
15
28
17
14
22
18
2015
$
2014
197,488
4,788
212,210
2,832,003
23,730
720
72,778
98,167
33,769
2,009,258
31,311
53,091
3,343,717
2,225,596
1,920,130
15,365
52,598
3,841
773,367
280,735
290,541
5,203
960,392
309,514
Total noncurrent liabilities
3,046,036
1,565,650
Total liabilities
6,389,753
3,791,246
3,343,895
236,350
492,757
824,084
22,116
404,189
(287,863)
4,876,734
3,343,895
236,350
500,000
335,087
2,303
204,045
(121,488)
4,588,172
9,912,262
37,358
9,088,364
35,991
9,949,620
9,124,355
16,339,373
12,915,601
Total current liabilities
Noncurrent liabilities
Loans
Finance leases
Other long-term liabilities
Derivative financial instruments
Long term liability for consolidation purposes
Employee benefits
Stockholders’ Equity
Capital stock
Additional paid-in capital
Allowance for repurchase of own shares
Allowance for cumulative translation effect
Allowance for benefit plan actuarial gains
Allowance for fixed asset revaluation surplus
Allowance for deferred income taxes
Retained earnings
15
28
18
17
16
19
$
Total stockholders’ equity – controlling interest
Non-controlling interest
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
The consolidated statements of financial position should be read along with the notes to the consolidated financial statements which are a part thereof.
47
48
ECO N OMIC PE RF ORMA NC E _FI NA NC I A L I NFO RMATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Note
Revenues
Cost of sales
22
$
Gross profit
Administration and selling expenses
Other expenses, net
Costs (income) operating financial
23
22, 25
25
25
16, 25
13
Income before taxes
Income taxes
17
Net consolidated income
Non-controlling interest
Net income from non-controlling interest
11,275,036
8,106,104
9,712,200
7,369,595
3,168,932
2,342,605
929,265
Net financial income
Share of profit of equity-accounted investees
2014
2,195,454
3,221
40,992
Total operating activities
Financial income
Financial costs
Exchange (profit) loss, net
Labor liability financial cost
2015
$
1,686,414
11,865
(3,861)
648,187
(43,772)
56,451
(145,287)
19,974
(71,018)
35,743
2,387
17,803
(112,634)
(15,085)
52,085
12,289
989,814
650,983
344,528
225,675
645,286
425,308
673
826
644,613
424,482
The consolidated statements of income should be read along with the notes to the consolidated financial statements which are a part thereof.
ECON OM IC P ERF ORM AN C E_ F IN AN CIAL IN F OR MATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Note
2015
2014
644,613
424,482
11
488,997
200,144
351,391
9,964
16
17
19,813
(166,375)
(19,592)
(64,912)
542,579
276,851
$
1,187,192
701,333
Income attributable to:
Company stockholders
Non-controlling interest
$
644,613
673
424,482
826
Net income
$
645,286
425,308
$
1,187,192
1,367
701,333
826
$
1,188,559
702,159
$
1.81
1.19
Net income
Comprehensive income account
Items that are reclassified to results
Foreign currency translation differences
Net change in fair value of property, machinery and equipment
Items not reclassified to income
Actuarial (losses) gains from defined benefit plans
Deferred income tax on the other comprehensive income
$
Other comprehensive income for the year, net of taxes
Total comprehensive income – Company shareholders
Total comprehensive income attributable to:
Company stockholders
Non-controlling interest
Total comprehensive income
Earnings per share
Basic earnings per share
21
The consolidated statements of comprehensive income should be read along with the notes to the consolidated financial statements which are a part thereof.
49
50
EC ON OMIC PE RF ORMA NC E _FI NA NC I A L I NFO RMATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Attributable to Company stockholders
Capital
capital
Note
Balance as of January 1, 2014
$
Net income
3,343,895
Additional
paid-in
capital
236,350
Allowance for
repurchase
of own
shares
Allowance for
cumulative
translation
effect
Allowance for
for benefit
plan actuarial
gains
Allowance for
fixed asset
revaluation
surplus
300,000
(16,304)
21,895
194,081
-
-
-
-
Foreign currency translation
differences
-
-
-
351,391
-
-
-
-
-
9,964
Allowance
for deferred
income
taxes
(56,576)
Retained
earnings
Noncontrolling
interest
Total
stockholders’
equity
8,387,031
35,165
8,422,196
424,482
424,482
826
425,308
(67,800)
-
283,591
-
283,591
(2,989)
-
6,975
-
6,975
5,877
-
(13,715)
-
(13,715)
(64,912)
-
276,851
-
276,851
-
4,363,690
Total
controlling
interest
Other comprehensive income
Fixed assets revaluation
-
-
-
-
Actuarial gains from defined benefit
plan
-
-
-
-
Total other comprehensive income
-
-
-
-
-
200,000
-
-
-
-
(200,000)
-
-
-
-
-
200,000
-
-
-
-
(200,000)
-
-
-
351,391
(19,592)
-
(19,592)
9,964
Transactions with stockholders of
the Company recognized directly in
capital stock
Change in allowance for
repurchase of shares
19 b
Total transactions with
stockholders of the Company
Balance as of December 31, 2014
$
3,343,895
236,350
500,000
335,087
2,303
204,045
(121,488)
4,588,172
9,088,364
35,991
9,124,355
ECONOMIC PER FOR MANCE_FINANCIAL INFOR MATION
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
ESTADOS CONSOLIDADOS DE VARIACIONES EN EL CAPITAL CONTABLE
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Capital
capital
Note
Balance as of January 1, 2015
$
Net income
3,343,895
Additional
paid-in
capital
236,350
Allowance for
repurchase
of own shares
Allowance for
cumulative
translation
effect
Allowance for
benefit plan
actuarial
gains
Allowance
for financial
instrument
valuation
effect
500,000
335,087
2,303
204,045
-
-
-
Foreign currency translation
differences
-
-
-
Fixed assets revaluation
-
-
-
Actuarial gains from defined
benefit plan
-
-
-
Total other comprehensive income
-
-
-
-
-
-
Allowance
for deferred
income
taxes
(121,488)
-
Retained
earnings
Total
controlling
interest
Noncontrolling
interest
Total
stockholders’
equity
4,588,172
9,088,364
35,991
9,124,355
644,613
644,613
673
645,286
Other comprehensive income
488,997
-
-
-
-
19,813
488,997
19,813
200,144
200,144
(100,388)
-
388,609
(60,043)
-
140,101
(5,944)
(166,375)
644,613
13,869
-
388,609
694
140,795
694
543,273
-
542,579
13,869
Transactions with stockholders,
of the Company recognized
directly in capital stock
Change in allowance for repurchase
of own shares
19 b
-
-
(7,243)
-
-
-
-
(7,243)
-
(7,243)
Dividends paid to shareholders
19 f
-
-
-
-
-
-
-
(356,051)
(356,051)
-
(356,051)
(7,243)
-
-
-
-
(356,051)
(363,294)
-
(363,294)
Total transactions with stockholders
of the Company
Balance as of December 31, 2015
$
3,343,895
236,350
492,757
824,084
22,116
404,189
(287,863)
The consolidated statements of changes in stockholders’ equity should be read along with the notes to the consolidated financial statements which are a part thereof.
-
4,876,734
9,912,262
37,358
9,949,620
51
52
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Note
2015
2014
Cash flows from operating activities
Net income
$
644,613
424,482
11,12
463,478
410,074
13
52,085
12,289
673
826
(20)
(210)
Adjustments for:
Depreciation and amortization
Share of profity of equity-accounted investees
Restoration of third party assets
Gain on sale of assets held for sale
10,20
Write off of fixed assets not used
23
469
5,743
Financial income, net
25
12,679
(35,275)
Employee Statutory Profit Sharing
18,558
14,229
Prepaid expenses
37,454
15,279
344,528
225,676
1,574,517
1,073,113
Change in inventories
(154,243)
(151,639)
Change in trades and other accounts receivable
(137,200)
(183,770)
(38,789)
(17,875)
454,699
433,598
(28,779)
52,605
1,670,205
1,206,032
Income tax expense
17
Cash flows provided by operating activities before changes in
working capital and accruals
Change in prepaid expenses
Change in trades and other accounts payable
Change in accruals and employee benefits
16
Cash flows provided by operating activities before income
taxes and interest paid
Income taxes paid
Net cash flows provided by operating activities
(266,072)
(37,012)
1,404,133
1,169,020
Cash flows from investment activities:
Business acquisition, net of cash received
20
(1,174,226)
(114,341)
Acquisitions of permanent investments
13
(224,216)
(514,842)
Repurchase of own shares
19
(7,243)
Resources from the sale of assets held for sale
10
350
1,350
Acquisition of property, machinery and equipment
11
(511,898)
(382,882)
Acquisition of intangible assets
12
(38,567)
(49,015)
18,833
58,680
(1,936,967)
(1,001,050)
1,296,897
-
(108,159)
(46,966)
(16,088)
(17,123)
Interest received
Net cash flows used in investment activities
-
Cash flows from financing activities
Loans obtained
15
Loans paid
Interest paid
Dividends paid
19
(355,899)
-
Net cash flows provided by (used in) financing activities
816,751
(64,089)
Net increase in cash and cash equivalents
283,917
103,881
2,052,855
1,911,156
33,405
37,818
2,370,177
2,052,855
Cash and cash equivalents at the beginning of the year
Exchange fluctuation effect on cash and cash equivalents
Cash and cash equivalents as of December 31
7
$
The consolidated statements of cash flows should be read along with the notes to the consolidated financial statements which are a part thereof.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
1
REPORTING ENTITY AND SIGNIFICANT TRANSACTIONS
Grupo Industrial Saltillo, S. A. B de C. V. (GISSA and/or the Company) was incorporated in Mexico as a
corporation whose shares are listed in the Mexican Stock Exchange. The address registered of the Company
is Isidro Lopez Zertuche No. 1495 Zona Centro C.P. 25000, in Saltillo, Coahuila.
The consolidated financial statements of the Company for the years ended December 31, 2015 and 2014
include those of the Company and its subsidiaries (overall the “Company” and individually “entities of the
Company”).
The Company through the subsidiary companies takes part in three business sectors: (i) Auto parts,
engaged mainly in manufacturing and selling auto parts in gray and nodular iron for the car industry, (ii)
Construction, engaged mainly in manufacturing and marketing ceramic and water heaters, and marketing
of lines of malleable iron and nipples and (iii) Home Products, engaged in manufacturing and marketing
enameled steel kitchen items and ceramic dinnerware for home and institutional use.
Sector: Auto parts
Cifunsa del Bajío, S.A. de C.V.
Industria Automotriz Cifunsa, S.A. de C.V.
Tisamatic, S. de R.L. de C.V.
Tisamatic de México, S.A. de C.V.**
ISLO Automotive, S.L.***
ACE Boroa, S.L.
ACE4C, A.I.E.
Fuchosa, S.L.U.
Europea Brakes and Chassis Components Poland,
S.P.ZO.O.
Feramo Metallum International, S.R.O.
Sector: Building Products
Dec-15 Dec-14
Main activity
100% 100% Production of gray, malleable and nodular iron components.
Majority shareholder in various subsidiaries of auto parts industry producing
components of gray and ductile iron for the automotive industry as well as
100% 100% pipe for sanitary facilities in general.
Manufacturing gray and ductile iron pieces for the car industry, as well as
100% 100% pipes for industrial sanitary facilities in general.
0%
100% Provision of property leasing services, mainly to related parties.
Majority shareholder of various subsidiaries of the auto parts sector
producing parts of gray and nodular iron and aluminum for the automotive
100%
0%
industry, based in Europe.
100%
0%
Provision of personnel, technical and administrative advice to related parties.
100%
0%
Provision of research and development for companies in the ACE group.
100%
0%
Production of nodular iron components for the automotive industry.
100%
100%
0%
0%
Dec-15 Dec-14
Manufacturas Vitromex, S.A. de C.V.
100%
100%
Calentadores de América, S.A. de C.V.
100%
100%
Fluida, S.A. de C.V.
100%
100%
Sector: Home Products
Dec-15 Dec-14
Cinsa, S.A. de C.V.
100%
100%
Cinsa y Santa Anita En Casa, S.A. de C.V.
100%
100%
Manufacture of iron calipers for braking systems for the automotive industry.
Production of parts of gray and nodular iron for the automotive industry.
Main activity
Majority stockholder of several subsidiaries of the building sector and
manufacturing and marketing ceramic coating.
Majority stockholder of several subsidiaries of the building sector and
manufacturing electric and gas water heaters.
Marketing malleable iron connection lines and steel nipples used in hydraulic
facilities in the building industry.
Main activity
Majority stockholder of several subsidiaries of the home product sector and
manufacturing and marketing kitchen items in enameled steel and ceramic
dinnerware.
Marketing items mainly for kitchens and tables in enameled steel, ceramic
dinnerware and home products.
53
54
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Other subsidiaries
Dec-15 Dec-14
Asesoría y Servicios GIS, S.A. de C.V.
100%
INGIS, S.A. de C.V.
100%
Operación y Fomento Industrial, S.A. de C.V.
100%
Futurum Inc. (formerly GIS Holding Co., Inc.)
100%
Azenti, S.A. de C.V. (formerly Cerámica Cersa,
S.A. de C.V.)
50%
Aximus, S.A. de C.V. (formerly Cifunsa, S.A. de C.V.) 100%
Non-controlling Participation
Aguas Industriales de Saltillo, S.A. de C.V.
Joint Venture
100%
100%
100%
100%
0
100%
Dec-15 Dec-14
70%
70%
Gisederlan, S.A. de C.V.****
50%
0
Fideicomiso AAA GISSA *
*
Staff services, technical and administrative advice to related parties
Staff services, technical and administrative advice to related parties
Main activity
Dec-15 Dec-14
35.2% 35.2% Recruitment, treaty, transmission and distribution of wastewater services.
Evercast, S.A. de C.V.
Specific purpose entities
Main activity
Provision of personnel, technical assistance, administrative and human
resources services mainly to related parties.
Provision of property leasing services, mainly to related parties.
Capture and manage financial resources, particularly related parties.
Majority stockholder of several subsidiaries, located abroad.
Dec-15 Dec-14
100%
100%
Main activity
Engaged mainly in manufacturing and selling auto parts in gray and nodular
iron for the car industry.
Engaged mainly in manufacturing and selling auto parts in gray and nodular
iron for the car industry.
Main activity
Contract signed with NAFIN cataloged as intermediary non-bank vehicle
granting financing to companies of which GIS is a supplier or client.
This specific purpose entity in which the Company has no direct share or a right to vote. However, this entity consolidates because the Company has the ability to direct its main
activities, and has the most significant exposure to the returns of the same, based on the terms of the contracts according to which this entity was established.
**
In June 2015it took place the merger of Tisamatic de México, S.A. de C.V. (merged) in Tisamatic, S. de R.L. de C.V. (merging).
***
In December 2015 Grupo Industrial Saltillo, S.A.B. de C.V. it carried out the acquisition of all the shares of Automotive Components Europe S.A. (ACE).
**** In February 2015 Grupo Industrial Saltillo, S.A.B. de C.V. through its subsidiary Automotive Cifunsa, S.A. de C.V. it agreed to form an alliance Gisederlan, S.A. de C.V. with a
shareholding of 50%.
Significant transactions
a) On October 27, 2015, the Company announced its intention to conclude an agreement to acquire
shares of a group based in Europe dedicated to the production of iron and aluminum components for
the automotive industry. On December 23, 2015 the Company acquires the 100% of the shares of
Automotive Components Europe, S.A. (ACE).
The acquisition of shares was made in stages, where 92.11% of shares were purchased in the tender
offer, the 4.65% of shares were purchased directly from ACE (treasury shares) and having acquired
a stake of 95% of shareholding the Company exercised its right to purchase the remaining shares
from its minority shareholders who were forced to sell (squeeze out). Total shares acquired stood at
21,230,515 shares.
The Company pays 16.20 zlotys for each of the shares of ACE, regardless of the stage in which they
were acquired. The total transaction amounted to $ 1,524,706, equivalent to approximately US $88
million. For this transaction the Company obtained financing from Banco Santander, S.A. (Mexico) for
US $ 76.5 million and the remaining was paid with its own resources.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
b) Between December 28 to 31, 2015, GISSA contributed and sold to its related party ISLO Automotive,
S.L. the shares acquired of ACE.
c) On April 22, 2015, the General Assembly of Shareholders resolved to pay dividends in the amount of
$ 356,051, which was payable as of April 30, 2015.
d) On February 17, 2015, Grupo Industrial Saltillo, S.A.B. de C.V, through its subsidiary Industria
Automotriz Cifunsa, S.A. de C.V. (IACSA) agreed a partnership to establish a new company machining
iron components in the auto parts sector. This alliance was made with Fagor Ederlan, S. Coop (Ederlan)
and Subsidiaries Ederlan, S. L. U. (Ederlan Subsidiaries) and the new company was established as
Gisederlan, S.A. of C.V.
The shareholding of Industria Automotriz Cifunsa, S. A. de C. V. in the new company will be 50% and
the remaining 50% belongs to Ederlan Subsidiaries, S. L. U. On May 28, 2015, the conditions were met
and the approval of the competent authorities was obtained to formalize the alliance.
In the note 13 of the consolidated financial statements is included condensed information of the joint
venture
e) On December 1, 2015, Grupo Industrial Saltillo, S.A.B. de C.V. announced and assets acquisition of
Funcosa, S.A. de C.V. (Funcosa), upon completion of the conditions of the agreement. This acquisition
which will strengthen GIS to its business fluid distribution.
Funcosa is a mexican company recognized as a leader in the marketing of copper fittings, plastic and
other materials used in piping systems for water and gas. As indicated in note 20b), the initial amount
of this transaction amounted to $114.3 million pesos as of December 31, 2014. During 2015 the
Company made payments to suppliers of the previous owner for $1.9 million pesos and subsequently
received an adjustment to purchase price for $5.3 million pesos, the final price agreed upon was
$110.9 million pesos.
f) On February 3, 2014, Grupo Industrial Saltillo, S. A. B. de C. V., trough of subsidiary Industria Automotriz
Cifunsa, S.A. de C.V. (IACSA), agreed a joint venture to establish a new company iron foundry to
manufacture brake systems parts. This agreement was signed with Kelsey Hayes Company (KHC) a
subsidiary of TRW Automotive Holdings Corp. and the new company was named Evercast S.A. de C.V.
(Evercast).
Ownership of GIS over Evercast represented 70% and the remaining 30% was contributed by KHC,
which has been a client of the auto parts division of the Company for over eight years. At June 10,
2014, were completed the conditions and the approval of the authorities to from this joint venture.
In note 13 of the consolidated financial statements is included condensed information of this joint
venture
2 BASIS OF PREPARATION
(a) Statement of compliance
The accompanying consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”), adopted by public entities in Mexico in
accordance with the amendments to the Rules for Public Companies and other Participants of the
Mexican Securities Market, set forth by the National Banking and Securities Commission.
55
56
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
On February 6, 2016, José Manuel Arana Escobar (Chief Executive Officer), Jorge Mario Guzmán
Guzmán (Finance and Administration Director) and Héctor Alfonso Gonzalez Guerra (Controllership
Director) authorized the issuance of the attached financial statements and the notes thereto.
In accordance with General Corporations Law and the Company’s by-laws, the stockholders are
empowered to modify the financial statements after its issuance. The accompanying financial
statements will be submitted for authorization from the next Stockholders Meeting for approval.
(b) Basis of measurement
•
The financial statements have been prepared on the historical cost basis except for the defined
benefit liability to employees is measured at present value and the following major items of statement
of financial position, which were measured at fair value:
Financial assets held for sale;
•
The assets of the defined benefit plan;
•
Land and buildings are measured at fair value;
•
Business acquisitions;
•
Derivative financial instruments.
(c) Presentation of consolidated statements of income
The Company presents costs and expenses in the consolidated statements of income according to
their function, as is the practice in the industry.
The Company presents operating income because it is considered a significant performance
measurement for the users of the financial information. Revenues and costs that are operating in
nature are presented herein.
(d) Presentation of consolidated statements of cash flows
The consolidated statements of cash flows of the Company are presented using the indirect method
(e) Functional and reporting currency
The accompanying financial statements are presented in Mexican pesos (“pesos” o “$”), domestic
currency of Mexico, which is the functional currency of most of the Company’s subsidiaries and the
reporting currency. However, they include translation effects because some of the subsidiaries have
identified the dollar as functional currency and have been translated according to the guidelines of
IAS 21 “Foreign Currency”. Unless otherwise indicated, all financial information presented in pesos
has been rounded up to the nearest thousand. In referring to “US $” or dollars, refers to amounts
expressed in thousands of dollars from the United States or USA, and referring to “EUROS €” or euros
regards amounts expressed in thousands of euros of the European Union.
(f) Use of estimates and judgments
The preparation of the financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates and assumptions.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.
The following notes to the consolidated financial statements include the information on critical
estimates and assumptions in the application of accounting policies that have significant effects on
the amounts recognized in the consolidated financial statements:
•
•
Determining whether goodwill or long-lived assets have been impaired, it involves calculating the
value in use of cash generating units to which has been assigned goodwill. The calculation of value
in use requires the Company to determine the future cash flows that should arise from the cashgenerating units and appropriate discount rate to calculate the present value.
The useful lives of long-lived assets are used to determine the depreciation of assets and are
defined according to the analysis of internal and external specialists. The useful lives are reviewed
periodically at least once a year and are based on the current conditions of the assets and the
estimated period during which continue to generate economic benefits to the Company. If there are
changes in the estimated useful lives of the related amortization expense prospectively it affects
the book value of assets, as well.
•
Note 14 – Trade and other payables;
•
The Company recognizes a provision for damage, and claims to certain components of products
that are manufactured in the segment of construction on the basis of 5 years which is the average
ranging guarantees given for each product sold.
Note 16 – Measurement of occupational defined benefit obligations;
The useful lives of assets property, plant and equipment, are used to determine the depreciation
of assets and are defined according to the analysis of internal and external specialists. The useful
lives are reviewed periodically at least once a year and are based on the current conditions of
the assets and the estimated period during which continue to generate economic benefits to
the Company. If there are changes in the estimated useful lives, the depreciation expense for
prospectively affect the book value of assets, as well.
Note 12 – Impairment of goodwill and long-lived assets;
Note 11– Useful lives of property, machinery and equipment;
•
The Company uses assumptions to determine the best estimate of retirement benefits granted to
its employees. The assumptions and estimates set out in conjunction with independent actuaries.
These assumptions include demographic assumptions, discount rates and expected increases in
salaries and future permanence, among others. Although it is estimated that the assumptions used
are appropriate, a change in them could affect the value of liabilities for employee benefits and
results of the period when it occurs.
Note 17 – Assessment to determine the recoverability of deferred tax assets.
The Company annually determined by projections if there will be enough taxable income based
on estimates of future operations, to conclude on the probability of recoverability of deferred tax
assets from deductible temporary differences and losses and other tax credits.
57
58
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The following notes to the consolidated financial statements about assumptions and uncertainty of
estimates that have probable risks arising from the normal course of business is expected to have a
major effect on its financial position and future operating results included.
• Note 8 – Allowance for impairment and discounts granted in accounts receivable;
•
The Company makes an allowance for doubtful accounts, considering its internal control process
and factors such as the financial and operational status of clients as well as economic conditions.
This estimate is reviewed periodically and the status of overdue accounts, is determined by
considering the timing and terms established in the contracts. In addition, recognizing a receivable,
the Company estimates the discounts that customers will become effective in accordance with the
terms set out in the purchase agreement.
Note 9 – Provisions for obsolete and slow moving inventory;
The Company makes an allowance for obsolete and / or slow-moving inventories, considering
the process of internal control and operational factors and market their products. This estimate
is reviewed periodically and is determined by considering the rotation and consumption of raw
materials, work in process and finished products, which are affected by changes in production
processes and changes in market conditions in which the Company operates.
•
Note 29 – Contingencies: key assumptions related to the probability and magnitude of an outflow of resources;
By their nature, contingencies will only be resolved when they occur or not occur one or more future events,
or one or more uncertain events not wholly within the control of the Company. The evaluation of these
contingencies requires the exercise of significant judgments and estimates about the possible outcome
of these future events. The Company evaluates the probability of loss of litigation and contingencies
according to estimates made by its legal counsel. These estimates are periodically reconsidered.
The following notes to the consolidated financial statements about the significant judgments that
management of the Company made in the normal course of business include:
•
Note 13 – Permanent investments;
•
Management uses professional judgment to determine the classification of joint arrangements
either as a joint operation or a joint venture. For this, the Company evaluates its rights and obligations
under the agreement.
Note 20 – Business acquisitions;
Management uses professional judgment to determine whether the acquisition of a group of assets
constitutes a business combination. For this, the Company assesses all the qualitative aspects of
the transaction.
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements and in the preparation of the consolidated statement of financial position
under IFRS.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(a) Principles of consolidation
(i)Subsidiaries
The subsidiary companies are entities controlled by the Company. The financial statements of
subsidiary companies are included in the consolidated financial statements of the Company
as of the date control begins and through the date such control ends. Accounting policies
of subsidiary companies have been modified as necessary to conform them to the policies
adopted by the Company.
(ii) Joint venture
A joint venture is a contractual arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the joint venture. Joint control is the
contractually agreed sharing of control in a business, which exists when decisions about the
relevant activities require the unanimous consent of the parties sharing control. The results
and assets and liabilities of the joint ventures are incorporated into the financial statements
using the equity method. When the Company carries out transactions with its joint venture,
the resulting gain or loss from such transactions are recognized in the consolidated financial
statements of the Company only to the extent of participation in the joint venture that relates
to GISSA.
(iii) Non-controlling interests
Non-controlling interests are measured at the proportionate share of the net identifiable
assets at the acquisition date.
Changes in the Company’s participation in an associate or joint venture that does not result
in a loss of control are record as equity transactions.
(iv) Special purpose entities
The Company has incorporated a special purpose entity (“SPE”) for operating purposes.
The Company has no direct or indirect shares in such entity. An SPE consolidated if, based
on the evaluation of the economic substance of the relationship with the Company and the
risks and benefits of the SPE, the Company concludes that it controls the SPE. The SPE
controlled by the Company was incorporated under terms that impose strict limitations on
the power of decision making of the management of SPE, resulting in the Company receiving
most of the benefits related to the operations and net assets of the SPE, and keeping most
of the residual or ownership risks related to the SPE or the assets.
(v) Transactions eliminated in consolidation
Significant balances and transactions between companies of the group, as well as unrealized
revenues and expenses have been eliminated in the preparation of the consolidated financial
statements. Unrealized income from transactions between entities of the group in which there
are investments accounted for under the equity method are eliminated to the investment to
the extent of the Company’s share in the subsidiary. Unrealized losses are eliminated as the
unrealized income but only to the extent that there is no evidence of impairment.
59
60
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(b) Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currency are translated to the respective functional currencies
of the company’s entities at the exchange rate on the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting
date are retranslated to the functional currency at the exchange rate at that date.
The foreign currency gain or loss from monetary items is the difference between
the amortized cost in the functional currency at the beginning of the period,
adjusted for payments and effective interest during the period, and the amortized cost in
foreign currency translated at the exchange rate at the end of the reporting period.
Non-monetary asset and liability transactions denominated in foreign currency and valued
at fair value are retranslated to the functional currency at the exchange rate on the dates
the fair value was determined. The differences arising from this translation are recognized in
income. The non-monetary items measured in terms of historical cost in a foreign currency
are translated using the exchange rate on the date of the transaction.
(ii) Translation of financial statements of subsidiaries in foreign currency
The financial statements of foreign operations to be consolidated are translated to the
reporting currency, initially identifying whether the functional currency and the recording
currency of the foreign operations are different:
If the functional and recording currency are the same but different from the reporting currency,
which is the case of United States of America entities, and the auto parts segment in México
and Europe, the conversion of its financial statements is performed using the following
exchange rates: 1) closing, for assets and liabilities and 2) historical for stockholders’ equity
and 3) that of the accrual date for revenues, costs and expenses. The translation effects are
recorded in stockholders’ equity.
If the functional and recording currency are different, which is the case for entities in the
auto parts segment, the recording currency is translated to functional, using the following
exchange rates: 1) closing, for assets and liabilities, 2) historical for nonmonetary assets,
nonmonetary liabilities and stockholders’ equity and 3) that of the accrual date for revenues,
costs and expenses, except those from nonmonetary items translated at the historical
exchange rate of the nonmonetary item. The translation effects are recorded in income.
(c) Financial instruments
(i)
Non-derivative financial instruments
Non-derivative financial instruments include: cash and cash equivalents, accounts receivable
and other accounts receivable, suppliers, loans and interest payable, customer advances,
other accounts payable and accrued liabilities.
The Company initially recognizes suppliers, loans and interest payable, customer advances,
other accounts payable and accrued liabilities issued on the date on which they originate.
All other financial liabilities (including liabilities designated at fair value through profit or
loss) are recognized initially on the trade date at which the Company becomes party to the
contractual provisions of the instrument.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The Company discontinues a financial asset when the contractual rights to the cash flows
coming from the assets expire, or the rights to receive the contractual cash flows from the
financial asset are transferred in a transaction where substantially all risks and benefits of
holding the financial asset are transferred. Any interest in transferred financial assets that
is created or retained by the Company is recognized as a separate asset or liability. The
Company removes a financial liability when satisfied or canceled, or expire their contractual
obligations.
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle them on a net basis or to realize the asset and settle the liability
simultaneously.
Non-derivate financial assets
Cash and cash equivalents include the cash balances and deposits on demand with original
maturities of less than three months.
Accounts receivable and loans are financial assets with fixed or determined payments that are
not listed in an active market. These assets are recognized initially at fair value plus the costs
directly attributable to the transaction. After initial recognition, the accounts receivable and
loans are measured at amortized cost using the effective interest method, less impairment
losses. Accounts receivable includes trades receivable and other accounts receivable.
Assets available for sale are initially recognized at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition they are recognized at fair value, and
changes other than impairment losses are recognized in the fair value reserve. When these
assets are derecognized, the cumulative gain or loss in equity is reclassified to income.
Non-derivative financial liabilities
These financial liabilities are initially recognized at fair value plus the costs directly attributable
to the transaction. After initial recognition, these financial liabilities are valued at amortized
cost using the effective interest method.
The Company removes a financial liability when they meet or canceled, or expire their
contractual obligations.
Financial assets and liabilities are offset and the net amount is presented in the statement
of financial position when, and only when, the Company has legal right to offset the amounts
and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
The Company has the following non-derivative financial liabilities: loans, interest payable,
customer advances, other accounts payable and accrued liabilities.
These financial liabilities are initially recognized at fair value plus the costs directly attributable
to the transaction. After initial recognition, these financial liabilities are valued at amortized
cost using the effective interest method.
61
62
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(ii) Derivative financial instruments
The Company contracts derivative financial instruments to hedge its exposure to risks
of exchange rates and interest rates arising from its operating, financing and investing.
According to its policy, the Company does not retain or issue derivative financial instruments
for trading purposes. However, if derivatives financial instruments do not qualify for hedge
accounting are accounted for as trading instruments.
Initial designation of the hedge, the Company formally documents all relationships between
hedging instruments and covered items, including the objectives and risk management
strategy for carrying out the hedge transaction and the methods used to evaluate the
effectiveness of the hedge. The Company performs an assessment at the beginning of the
operation of the hedge and ongoing basis, if it is expected that the hedging instruments are
“ highly effective “ in do offsetting changes in fair value or cash flows of the respective items
covered during the period for which the hedge is determined, and if the actual results of each
hedge are within a range of 80-125 percent.
In the case of cash flow hedge of a projected transaction, the transaction must be highly
probable to ocurr and present an exposure to variations in cash flows could affect the final
result reported.
Embedded derivatives are separated of main agreement and accounted separately, if the
economic characteristics and risks of main agreement and embedded derivative are not
closely related. A instrument separate with the same terms as the embedded derivative
meets the definition of a derivative, and the combined instrument is not measured at fair
value through income statements.
The derivatives instruments recognized at fair value; attributable cost are recognized in
income statements as incurred. Subsequent to initial recognition, the derivatives instruments
are measured at fair value and the changes on such value are accounted as described below:
Cash flow Hedge classified as Derivative Instruments
When a derivative is designed as a hedging instrument in the variability of cash flows
attributable to a particular risk related to a recognized assets or liability or a transaction
projected that could affect the final result, the effective portion of the changes in the fair value
of derivative are recognized in the other comprehensive income and presented in the hedging
reserve in stockholder´s equity. The amount recognized in the other comprehensive income
is removed and included in income in the same period in which the results are affected by
the cash flows covered under the same line of other comprehensive income. Any ineffective
portion of changes in the fair value of the derivative are recognized immediately in the profit
or loss of the period.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is
sold, terminated, exercised, or the designation is removed, then it discontinues the hedge
accounting prospectively. The cumulative gain or loss recognized in previously in other
comprehensive income and presented in the hedging reserve in stockholders’ equity remains
there until the forecast transaction affects the results. When the hedge item is a non-financial
asset, the amount recognized in other comprehensive income is transferred to the carrying
amount of the asset when it is recognized. If you no longer expects the projected transaction
will occur, then the balance of other comprehensive income is recognized immediately in
income. In other cases, the amount recognized in other comprehensive income is transferred
to income in the period in which the results are affected by the hedged item.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Separate Embedded Derivatives
The Company and its subsidiaries reviewed by procedure celebrating contracts with over 50
thousand dollars or more than 90 calendar days, in order to identify possible effective value
of embedded derivatives, and if so, proceed to applies whether or not segregating them from
the respective contracts hosts. If required the segregation of these embedded derivative
financial instruments the Company and its subsidiaries recognize them on the statement
of financial position at fair value and in the income statement the change in the fair value
thereof, in accordance with current regulations, and is at the discretion of the Company, the
possibility of designating these embedded derivatives under any of the accounting models
for acceptable coverage.
At year end 2015 and 2014 the Company and its subsidiaries do not have contracts that
qualify for segregating an embedded derivative features.
Although at year-end was not available existing positions of such derivatives, during 2015,
the Company and its subsidiaries hired instruments Capital Guaranteed Investment guy,
which are non-derivative financial instruments that do not meet the criteria on International
Financial Reporting Standards. These instruments are hybrid contracts containing two types
of contracts: 1) host contract, which is not a derivative, but a debt contract and corresponding
to the investment of a guaranteed principal, and their return to the due date and in which not
a fixed interest rate or variable pay to market conditions and 2) a contract called embedded
derivative. Such embedded derivative was linked to the behavior of the exchange rate, where
according to their performance behavior builds based on the amount of guaranteed capital.
For more information on these financial instruments, see section Investment with Guaranteed
Capital in note 18.
Other derivatives not keep trading
When a derivative financial instrument may not be retained for trading, and is not designated
in a hedging relationship qualify, all changes in fair value are recognized immediately in the
operation.
At December 31, 2015 and 2014, in compliance with its policies, the Company and its
subsidiaries had transactions in financial derivatives trading under the classification.
(iii) Capital stock
Common shares
Common shares are classified in stockholders’ equity. The incremental costs directly
attributable to the issue of common shares and options on shares are recognized as a
deduction of stockholders’ equity, net of tax effects.
Repurchase of shares
When capital stock recognized as equity is repurchased, the amount of the consideration paid,
which includes directly attributable costs, net of any tax effects, is recognized as a deduction
from equity. Repurchased shares are classified as treasury shares and are presented in the
reserve and are presented as a deduction from equity. When treasury shares are sold or
reissued subsequently, the amount received is recognized as an increase in equity, and the
resulting surplus or deficit on the transaction is transferred to retained earnings.
63
64
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(d) Property, machinery and equipment
(i)
Recognition and measurement
Land and buildings are measured at fair value every three years based on periodic appraisals
made by independent appraisers. The increase in book value of the assets as consequence
of the revaluation is recognized directly in revaluation surplus in the comprehensive income
account, unless a decrease previously recognized in the income and loss statement, in which
case the reversal amount is recognized directly in the mentioned statement. The decrease
in book value of the assets as a consequence of the revaluation is recognized directly in
income and loss statement when there is no previous revaluation; when there is a previous
revaluation, the decrease in fair value is recognized in revaluation surplus until depletion and
the remainder is recognized in income and loss statement. When a revalued asset is sold or
retired, the revaluation surplus amount of the asset is transferred to accumulated earnings.
Items of machinery and equipment, furniture and fixtures, transportation equipment and
computer equipment are valued at cost less accumulated depreciation and accumulated
impairment losses. The cost includes expenses directly attributable to the acquisition of the
asset. The computer programs acquired that are an integral part of the functionality of the
corresponding fixed assets are capitalized as part of this equipment. The depreciation of
these assets starts when the assets are in place and under the necessary conditions for
operation.
When the components of an item of property, machinery and equipment have different
useful lives, they are recorded as separate components (major components) of property,
machinery and equipment.
Gains and losses for the sale of an item of property, machinery and equipment are determined
by comparing the proceeds from the sale to the book value of property, machinery and
equipment and are recognized net within “other income” in the statement of income.
(ii) Subsequent costs
a.
Major maintenance
Expenditures for repairs and modifications or improvements that prolong the useful life
of the assets beyond the originally estimated, which allows the entity to obtain future
economic benefits that can be measured reliably, are capitalized as fixed assets.
b.
Spares
The key spares maintained as stock that qualify to be classified as fixed assets are
capitalized as part of the equipment for which they were acquired, once they are used.
The replacement cost of these items is recognized in the book value if it is likely that the
future economic benefits flow to the entity and the cost can be determined reliably. The
book value of the part replaced is retired. Expenditures for maintenance and ordinary
repairs that keep the assets in efficient working order, without increasing the useful
life, are not capitalized and are recognized in income as incurred.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(iii) Restoring costs
When the Company has a legal obligation, at the end of the use of assets, to restore the site
for those assets on which there is this obligation, the restoring cost is estimated and included
in the initial cost of the asset and this is the present value of future cash flows expected to
incur for such obligation. A liability for the obligation at present value is also recognized. At
December 31, 2015 and 2014 the provision for restoration costs represented $2.2 and $3.2
million, respectively.
(iv)Depreciation
Depreciation is calculated on the amount susceptible to depreciation, corresponding to the
cost of an asset, or another amount that replaces the cost, less the residual value.
The residual value of an asset is the estimated amount that an entity would currently obtain
from disposal of an item, after deducting the estimated costs of disposal, if the asset were
already of the age and condition expected at the end of his life useful. The Company’s practice
is to use its assets until its totally used.
Depreciation is recognized in the income and loss statement using the straight-line method
according to the estimated useful life of each component of an item of property, machinery
and equipment, since this better reflects the usage patter expected of the future economic
benefits included in the asset. Leased assets are depreciated for the duration of the lease or
the useful life of the assets, whichever is lower, unless there is reasonable certainty that the
Company will acquire ownership of the leased assets at the end of the lease.
The average estimated useful lives for the current periods are indicated below:
•
•
•
•
Buildings
50 years
Machinery and equipment 14 years
Furniture and equipment 10 years
Other components
3 years
The useful lives and residual values are reviewed at year-end and adjusted when necessary.
(e) Intangible assets
(i)Goodwill
This represents the excess from the purchase value of the companies over the identified
amount of tangible and intangible assets of these companies. These are considered to have
indefinite useful life because there are no legal, regulatory, contractual, competitive or
economic factors that limit the useful life and are subject to annual impairment tests and at
any time an impairment indication arises.
Subsequent valuation
Goodwill is valued at cost less cumulative impairment losses. Regarding the investment in
companies recorded under the equity method, the book value of goodwill is included in the
book value of the investment and no impairment losses from this investment are distributed
to any asset, including goodwill that is part of the book value of the investment recognized
under the equity method.
65
66
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(ii)
Development costs
Expenditures on research activities, undertaken with the objective of gaining new scientific
or technical knowledge and understanding, are recognized in the income and loss statement
as incurred.
Development activities involve a plan or design for the production of new or substantially
improved products and processes. Development expenditure is capitalized only if
development costs can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable, and the Company intends
to and has sufficient resources to complete development and to use or sell the asset. The
expenditure capitalized includes the cost of materials, direct labor, overhead costs that are
directly attributable to preparing the asset for its intended use, and capitalized borrowing
costs. Other development expenditure is recognized in income as incurred.
Capitalized development costs is measured at cost less accumulated amortization and any
accumulated impairment losses
(iii) Patents, brands and other intangible assets
Other intangible assets acquired by the Company, with defined useful lives, are recorded at
cost or fair value less accumulated amortization and accumulated impairment losses. The
intangible assets with indefinite useful lives are recorded at cost or fair value and are subject
to annual impairment tests, and at any time an indication of impairment arises.
(iv) Subsequent expenditures
Subsequent expenditures are capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including
expenditures on internally generated goodwill and brands, are recognized in income as
incurred.
(v)Amortization
The amortization is calculated on the cost of the asset or other amount that replaces cost,
less the residual value.
The amortization is recognized in the income and loss statement under the straight-line
method based on the estimated useful life of the intangible assets, other than goodwill, from
the date they are available for use, this reflects the expected usage pattern of the future
economic benefits included in the asset in the best way. The estimated useful lives for the
current and comparative periods are as follows:
•
•
•
•
•
Brands and patents
List of clients
Non –compete agreements Software for internal use
Development costs Indefinite
17 years
5 years
7 years
7 years
Amortization methods, useful lives and residual values are reviewed at each reporting date
and adjusted if appropriate.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(f)Inventories
Inventories are measured at the lower of cost and net realizable value, whichever is lower. Cost
is determined using the average cost method, and includes the expenditures incurred due to the
acquisition of inventory, production or transformation costs and other costs incurred to place
them in the current site and condition. The cost of finished goods and work in process inventories
includes a proper portion of the overall production expenses based on the normal operation
capacity.
The net realizable value is the estimated sales price in the normal course of operations, less the
estimated termination costs and selling expenses.
(g)Impairment
(i)
Financial assets
A financial asset not classified as at fair value through income is assessed at each reporting
date to determine whether there is objective evidence that it is impaired. A financial asset is
impaired if there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset, and that loss events had an impact on the
estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired includes
default or delinquency by a debtor, restructuring of an amount owed to the Company
in terms that the Company would not consider otherwise, indications that a debtor will
enter bankruptcy, the disappearance of an active market for a security. In addition, for an
investment in an equity security, a significant or prolonged decline in fair value below the
cost is objective evidence of impairment.
The Company considers evidence of impairment for accounts receivable and investments in
held-to-maturity titles at both a specific asset and collective level. All individually significant
accounts receivable and investments in held-to-maturity titles are assessed for specific
impairment. Those found not to be specifically impaired are then collectively assessed
for any impairment that has been incurred but not yet identified. Accounts receivable and
investments in held-to-maturity titles that are not individually significant are collectively
assessed for impairment by grouping together accounts receivable and investments in heldto-maturity titles with similar risk characteristics.
In assessing collective impairment, the Company uses historical trends of the probability of
default, the timing of recoveries and the amount of loss incurred, adjusted for management’s
judgment as to whether current economic and credit conditions are such that the actual
losses are likely to be greater or lesser than suggested by historical trends.
An impairment loss with respect to a financial asset measured at amortized cost is calculated
as the difference between the carrying amount and the present value of the estimated future
cash flows discounted at the asset’s original effective interest rate. Losses are recognized
in income and reflected in an allowance for receivables. Interest on the impaired asset
continues to be recognized through the discount effect for the passage of time. When an
event occurring after the impairment was recognized causes the amount of impairment loss
to decrease, the decrease in impairment loss is recognized in income statement.
67
68
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(ii)
Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than inventories and
deferred tax assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount
is estimated. The recovery value of goodwill and indefinite-lived intangible assets or not yet
available for use, is estimated each year on the same date.
The recoverable amount of an asset or cash-generating unit (CGU) is the greater of the value
in use and fair value less costs of sale. In assessing value in use, the estimated future cash flows
are discounted to present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For impairment
testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or
CGUs. For goodwill impairment test purposes, goodwill acquired in a business acquisition is
distributed to the group of CGUs expected to benefit from the synergies of the combination.
This distribution is subject to an operating segment limit test and reflects the lowest level at
which goodwill is monitored for internal reporting purposes.
The Company’s corporate assets do not generate separate cash inflows. If there is any
indication that an operating asset might be impaired, then the recovery value of the cashgenerating unit to which the corporate asset belongs is determined.
An impairment loss is recognized if the carrying amount of an asset or the cash-generating
unit is greater than recovery value. Impairment losses are recognized in the income and loss
statement, except for revalued assets. Impairment losses recorded in relation to the cashgenerating units are distributed first to reduce the carrying value of any goodwill distributed
to the units and then to reduce the carrying value of other assets in the unit (group of units)
on an apportionment basis.
No impairment losses with respect to goodwill are reversed. For other assets, impairment
losses recognized in previous periods are assessed as of the reporting date to identify
indications that the loss had been reduced or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recovery value.
An impairment loss is only reversed to the extent that the carrying amount of the asset is not
greater than the carrying amount that would have been determined net of depreciation or
amortization, had no impairment loss been previously recognized.
When the asset or the cash-generating unit is updated through the revaluation model, the
reversal of the impairment loss determined is recorded in income for up to the amount
that had been previously recognized in the statement of comprehensive income; and the
difference, if any, is recorded in the revaluation surplus.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(h) Employee benefits
(i)
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution
plan. The Company’s net obligation with respect to defined benefit pension plans is calculated
separately for each plan by estimating the amount of future benefit that employees have
earned in return for their service in the current and prior periods. That benefit is discounted
to determine its present value. Any unrecognized past service costs and the fair value of any
plan assets are deducted. The discount rate is the yield at the reporting date on corporate
bonds that have maturity dates approximating the terms of the Company’s obligations and
that are denominated in the currency in which the benefits are expected to be paid. The
calculation is made annually by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit for the Company, the asset recognized is limited to
the total unrecognized prior service costs and the present value of the available economic
benefits, in the form of future plan reimbursements or future reductions to plan contributions.
To calculate the present value of the economic benefits, are considered the minimum funding
requirements that apply to any plan of the Company. An economic benefit is available for the
Company if it can be realized during the life of the plan, or upon settling the obligations of the
plan.
When the plan benefits are improved, the portion of improved benefits related to prior
services by the employees is recognized in the income and loss statement under the straightline method during the average period until the right to the benefits is acquired. To the extent
that the right to the benefits is immediately realized, the expense is recognized immediately
in the income and loss statement.
The Company recognizes actuarial gains and losses from defined benefit plans in the
comprehensive income account in the period they occur.
Additional pension plan granted by the Company in accordance with applicable law, the
Company grants seniority premiums in retirement or replacement retirement pension, which
represents the right of the employee to receive remuneration retirement corresponding to
a number of days’ wages (12) for each year of service, once certain conditions have been
fulfilled for their calculation and payment, specified in the Act or in accordance with the
terms of the benefit plan.
(ii)
Defined contribution benefit plans
The costs of these plans are recognized in operating results as incurred. The liabilities for
these plans are settled through contributions to the employees’ retirement accounts, and no
prospective obligations are generated.
(iii) Defined contribution benefit plans
Termination benefits are recognized as an expense when the Company is demonstrably
committed, without realistic possibility of withdrawal, to a formal detailed plan to either
terminate employment before the normal retirement date, or to provide termination benefits
as a result of an offer made to encourage voluntary redundancy. Termination benefits for
voluntary redundancies are recognized as an expense if: the Company has made an offer
of voluntary redundancy, it is probable that the offer will be accepted, and the number of
acceptances can be estimated reliably. If benefits are payable more than 12 months after the
reporting date, then they are discounted to their present value.
69
70
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(iv) Short-term benefits
The short-term employee benefit obligations are valued on a base with no discount and are
charged to income as the respective services are rendered.
A liability is recognized for the amount expected to be paid under the short-term cash bonus
plans, vacations, year-end bonus, employee participation in profits if the Company has a
legal or assumed obligation to pay these amounts as a result of prior services provided by
the employee, and the obligation can be reliably estimated.
(i)Provisions
A provision is recognized if, as a result of a past event the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
(i)Warranties
A provision for warranties is recognized when the underlying products or services are sold.
The provision is based on historical warranty data and a weighting of all possible outcomes
against their associated probabilities.
(j)Revenues
(i)
Products sold
Revenue from the sale of goods in the course of ordinary activities is measured at the fair
value of the consideration received or receivable, net of returns, trade discounts and volume
rebates. Revenue is recognized when significant risks and rewards of ownership have been
transferred to the customer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management
involvement with the goods, and the amount of revenue can be measured reliably. If it is
probable that discounts will be granted and the amount can be measured reliably, then the
discount is recognized as a reduction of revenue as the sales are recognized.
The timing of the transfer of risks and rewards varies depending on the individual terms of
the sales agreement.
(ii) Customer discounts
In the normal course of business, the Company provides, volume discounts, which are
obtained as a result of keeping certain sales levels which are based on a minimum guaranteed
amount and additional amounts obtained from certain sales levels. All discounts are
provisioned clients as they get. The discounts received as a result of taking certain sales
levels are accrued on sales estimates based on the periods previously agreed with the client.
(k) Government grants
The Company recognizes a government grant initially as deferred income at fair value when there
is reasonable assurance that they will be received and that the Company will comply with all the
conditions attached to the grant, and are systematically recorded in the income and loss statement
as other income during your lifetime.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(l) Financial income and costs and dividend income
Financial income includes interest income on funds invested, dividend revenues, gains on the sale
of financial assets available for sale and changes in the fair value of financial assets at fair value
through income or loss, and exchange gains. Interest income is recognized in the income and loss
statement as accrued, using the effective interest method. Dividend revenues are recognized in
the statement of income on the date the Company is entitled to receive the payment, which in the
case of titles listed in the market is the ex-dividend date.
Meanwhile, dividend income is recognized at the date that is established the right of the Company
to receive payment, which in the case of publicly traded securities is the ex-dividend date.
Financial costs include interest expenses on loans, discount effect due to the passage of time over
accruals, dividends of preferred shares classified as liabilities, exchange losses, changes in fair value
of assets at fair value through income or loss and impairment losses recognized in financial assets.
The loan costs that are not directly attributable to the acquisition, construction or production of a
qualifying asset are recognized in income using the effective interest method.
Exchange gains and losses are reported on a net base.
(m) Income tax (IT)
IT includes the tax incurred and deferred tax. The tax incurred and the deferred tax are recognized in
income except when related to a business combination or items recognized directly in stockholders’
equity or the comprehensive income account.
The IT incurred is the tax expected to pay or receive. IT for the period is calculated according to legal
and tax requirements for companies in Mexico, applying the tax rates enacted as of the reporting
date, and any adjustment to the tax payable regarding previous years.
Deferred IT are recorded according to the asset-liability method, which compares book and
tax values of the assets and liabilities of the Company and deferred taxes (assets or liabilities)
are recognized with respect to the temporary differences between such values. No taxes are
recognized for the following temporary differences: the initial recognition of assets and liabilities
in a transaction other than a business acquisition and that does not affect the accounting or tax
result, and differences related to investments in subsidiaries and joint ventures to the extent that it
is likely that they will not be reversed in the foreseeable future. Additionally, no deferred taxes are
recognized for taxable temporary differences derived from the initial recognition of goodwill. The
deferred taxes are calculated using the rates expected to apply to the temporary differences when
reversed, based on the enacted laws as of the reporting date. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset the tax assets and liabilities incurred, and
correspond to income tax by the same tax authority and to the same tax entity or over different tax
entities but intend to settle tax assets and liabilities incurred on net base or tax assets and liabilities
materialize simultaneously.
A deferred tax loss carry forward asset, tax credits and deductible temporary differences are
recognized to the extent that it is likely that taxable income may be available in the future against
which they can be applied. The deferred assets are reviewed as of the reporting date and are
reduced to the extent that the realization of the corresponding tax benefit is no longer probable.
71
72
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(n) Earnings per share
The Company presents information on basic earnings per share (EPS) corresponding to common
shares. Basic EPS is calculated by dividing net controlling income by the weighted average of
common shares in circulation during the year. The Company has no equity instruments that are
potentially dilutive.
(o) Segment information
The operating segments are defined as the components of a company, oriented to the production
and sale of goods and services, subject to risks and benefits other than those associated to other
business segments. The Company is involved mainly in three segments: auto parts, building
products and home products.
The subsidiaries of the Company are grouped according to the business sectors in which they
operate. For internal and organizational purposes, each business manages and supervises all
activities of the respective business, which refer to production, distribution and marketing of the
products. Consequently, Company management internally evaluates the results and performance
of each business for the decision-making process. Following this approach, in the day-to-day
operation, the economic resources are assigned based on the operation of each business.
Transactions between segments are determined based on prices comparable to those that would
be used with or between independent parties in comparable operations at market value.
(p) Policy of assets available for sale
Non-current assets or groups available for sale that include assets, which are expected to be
recovered mainly through their sale and not by their continuous use, are classified as available
for sale. Immediately prior to being classified as available for sale, the assets or components of a
group of assets available for sale are revalued according to the Company’s accounting policies.
Subsequently, the assets or group of assets available for sale are usually recorded at lower of carrying
value and fair value less costs of sale. Any impairment loss of a group of assets available for sale
is first distributed to goodwill and later to the remaining assets and liabilities on an apportionment
basis, except that no losses are distributed in inventories, financial assets, deferred tax assets,
employee benefit assets, investment properties, which are continued being valued according to
the Company’s accounting policies. The impairment losses in the initial classification of assets
available for sale and the subsequent revaluation gains or losses are recognized in the income and
loss statement. No gains that surpass any accumulated impairment loss are recognized.
(q) Arrendamientos capitalizables
Leases in terms of which the Company assumes substantially all the risks and rewards of ownership
are classified as capital leases. Upon initial recognition, the leased asset is determined considering
the amount lesser of fair value and the present value of the minimum lease payments. After initial
recognition, the amount of the asset is amended in accordance with the applicable accounting
policy at the same.
(r) New IFRS not yet adopted
There are different IFRS issued as of the date of these financial statements that have yet to be
adopted and they are described below. Except when mentioned otherwise, the Company considers
adopting these IFRS on the dates they are effective.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
IFRS 9, Financial instruments
On July 2014, IASB issued IFRS 9, Financial instruments: classification and measurement (“IFRS
9”), which replace IAS 39. This standard includes requirements for recognizing and measuring,
impairment, discharge and general hedging accounting. This version of the IFRS 9 replaces all
previous versions and is mandatorily effective for periods beginning on or after January 1, 2018,
with early application permitted. The IFRS 9 does not replace the requirements of the portfolio fair
value hedge accounting for interest rate risk.
IFRS 9 is a complete standard that includes previous requirements issued and the following
additional changes: the introduction of a new model of impairment of the expected loss, and limited
changes to the requirements for classification and measurement of financial assets. Specifically,
the new impairment model contracts is based on the expected credit losses instead of the losses
incurred, and shall apply to debt instruments measured at amortized cost or fair value through
other comprehensive income, to lease receivables, assets, certain written loan commitments
and financial guarantee contracts. As for the new category of measuring fair value through other
comprehensive income, shall apply to debt instruments that are within a business model whose
objectives are achieved by collecting contractual cash flows and financial asset sales.
IFRS 15, Revenue from contracts with customers
This standard was issued in May 2014 and it is effective for periods beginning on or after January
1, 2018, although early adoption is permitted. Under this standard, revenue recognition is based on
monitoring, i.e. uses the notion of control to determine when a good or service is transferred to the
customer.
The standard also introduces a single comprehensive model for the recognition of revenue from
contracts with customers and replaces the latest revenue recognition guide, including the targeting
of the industry. This integrated model introduces a five-step approach to revenue recognition: 1)
identification of the contract; 2) identify performance obligations in the contract; 3) determine the
transaction price; 4) allocate the transaction price to each performance obligation in the contract;
5) recognize the revenue when the entity satisfies a performance obligation. Furthermore, the
amount of required disclosures in both annual financial statements as intermediates increases.
IFRS 16, Leases
The standard was issued in January 2016 and the changes will be effective from January 1, 2019.
This standard raises fundamental changes to the accounting treatment of leases for tenants. IFRS
16 eliminates the current dual accounting model to establish a new accounting model which until
then leases that were recognized in the financial statements and operating leases were outside the
financial statement. For landlords no modifications.
For tenants, the lease will be the recognition of an asset (right to use), as well as a liability that will
generate interest expense, which also involves changes in the accounting recognition during the
life of the lease.
73
74
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(s) New IFRS adopted during reporting period
From 2015 the Company early adopted amendments to IAS 1, Disclosure Initiative, which include
changes to the issue of materiality, the amendments clarify that the information should not
be obscured by adding or provide information that is not material. In addition, the materiality
considerations apply to all parts of the financial statements and even if a rule requiring a specific
disclosure, materiality considerations apply. Regarding the statement of financial position and
statement of income and comprehensive income, the amendments introduced the clarification
that the items to be presented in the financial statements can be broken down and aggregated
according to their relevance. They also clarify that participation in other comprehensive income
of an associated company or joint venture that is accounted for by the equity method must be
presented in aggregate and individual items based on whether they will be reclassified to profit
or not. Similarly with regard to the notes to the financial statements, the amendments include
additional examples of possible ways to sort notes to clarify your understanding and comparability
should be considered when the order of the notes in the financial statements is determined.
The adoption of these amendment did not represent a significant impact on the financial statements
of the Company.
4 DETERMINATION OF FAIR VALUES
A number of the Company’s accounting policies and disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair values have been determined for measurement
and/or disclosure purposes based on the following methods. Where applicable, further information about
the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(a) Property, machinery and equipment
The fair value land and buildings recognized as a result of a business acquisition is based on market
values in the normal course of business and according to the accounting policies of the Company. The
market value of land and buildings is the estimated amount for which property could be exchanged
on the acquisition date between a willing buyer and a willing seller in an arm’s length transaction after
proper marketing wherein the parties had each acted knowledgeably.
(b) Intangible assets
The fair value of patents and trademarks acquired in a business acquisition is based on the discounted
estimated royalty payments that are expected to be avoided as a result of the patents or trademarks
being owned. The fair value of customer relationships acquired in a business combination is determined
using the multi-period excess earnings method, whereby the subject asset is valued after deducting a
fair return on all other assets that are part of creating the related cash flows.
The fair value of other intangible assets such as software is based on the discounted cash flows expected
to be derived from the use and eventual sale of the assets.
(c)Inventories
The fair value of inventories acquired in a business combination is determined based on the estimated
selling price in the ordinary course of business less the estimated costs of completion and sale, and a
reasonable profit margin based on the effort required to complete and sell the inventories.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(d) Non-derivative financial liabilities
The fair value determined for disclosure purposes is based on the present value of future principal and
interest cash flows, discounted at the market interest rate on the measurement rate. Regarding the
liability component of the convertible instruments, the market interest rate is determined with reference
to similar liabilities with no conversion option. The market interest rate of financial leases is determined
based on reference to similar leases.
(e) Derivative financial instruments
The fair value of the “forward” exchange contracts is determined based on their listed market price,
if you have. If not, then the fair value is estimated by discounting the difference between the contract
price and the current price of the “forward” for the remaining time to maturity of the contract using a
free interest rate risk.
The fair value of contracts on an exchange or “swap” interest rate is determined based on recognized
market prices and when not traded on a regulated market, this value is determined on technical grounds
and inputs in the valuation accepted financial sector. These quotes are tested for reasonableness by
discounting estimated future cash flows based on the terms and maturity of each contract and using
market interest rates for similar instruments at the measurement date.
The fair values of derivatives reflect the credit risk of the Company and the counterparty previously
taking account guarantees and collateral given or received.
5 FINANCIAL RISK MANAGEMENT
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet the contractual obligations, and arises mainly from the Company’s receivables from customers
and investment securities.
Trades and other accounts receivable
The Company’s exposure to credit risk is affected mainly by the individual characteristics of each client.
However, management also considers the demography of the client base of the Company, which includes
default risk of the industry and country in which the clients operate, since these factors can influence credit
risk, particularly under the current impaired economic circumstances. In 2015, the Company’s products
were marketed under a number of customers, with no significant concentration of a specific customer. In
2015 and 2014, the revenue from a customer of the auto parts segment represented approximately 11%
and 13% of total revenues of the Company, respectively.
Investments
The Company limits exposure to credit risk by investing only in liquid instruments and with counterparties
of good credit quality.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with
financial liabilities that are settled by delivering cash or other financial assets. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions without including unacceptable losses or
risking the Company’s reputation.
75
76
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
will affect the company’s income or the value of the financial instruments held. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while
optimizing the return.
Exchange rate risk
The Company is exposed to exchange rate risk from the operations and balances in currency other than
functional currency. The Company is exposed to exchange rate risk from the following currencies: Pesos,
Dollars, Euros and Zlotys.
Interest rate risk
Changes in interest rates impact mainly loans by changing either the fair value (fixed rate debt) or future
cash flows (variable rate debt). Management has a risk management committee which analyzes, among
other things, whether each one of the credits engaged for either working capital or to finance investment
projects, should be (according to market conditions and the functional currency of each Company) engaged
at a fixed or variable rate.
Capital management
Company management monitors the mixture of debt and capital instruments of the investment portfolio
based on market indices. Significant investments within are managed individually and all trading decisions
are approved by its Risk Management Committee.
The main goal of the investment strategy of the Company is to maximize the returns of the investment to
comply partly with the unfinanced defined benefit obligations of the Company. Management receives the
support of external advisors on this matter. According to this strategy, certain investments are designated
at fair value through profit or loss because the performance is monitored actively and managed based on
fair value.
The Company does not enter into contracts on basic products that are not to hedge the use provided for
and the sales requirements of the Company. These contracts are not settled in net terms.
6 OPERATING SEGMENTS
The Company has three operating reportable segments, which are the Company’s business units. The
strategic business units offer different products and services, and are managed separately because
they require different technology and marketing strategies. For each of the strategic business units, the
Company’s CEO (the chief operating decision maker) reviews internal management reports on a monthly
basis. The following summary describes the operations in each of the Company’s reportable segments:
•
•
•
Auto parts, manufactures and sells gray and ductile castings for the car industry;
Construction, manufactures and markets ceramic tiles and water heaters; and marketing of lines of
malleable iron and steel nipples.
Housewares, manufactures and sells kitchen and table steel items and ceramic dinnerware for domestic
and institutional use.
Information related to the profit or loss of each one of the operating segments is listed below. Performance
is measured based on the income of each segment before income tax, and included in the management
reports reviewed by the Company’s Chief Executive Officer. Each segment’s income is used to measure
performance since management considers this information is the most appropriate to evaluate the results
of certain segments as compared to other entities operating in the same line of business as the Company.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(a) Operating segment information
Cumulative as
of Dec-15
Building
products(1)
Auto parts
Export sales
Domestic sales
Net sales
Operating income
Net income
Total assets
Total liabilities
Depreciation and amortization
EBITDA (A)
$
$
$
$
$
$
$
$
Cumulative as
of Dec-15
3,962,812
3,962,812
698,235
285,010
6,712,672
1,970,503
250,299
948,534
Building
products(1)
Auto parts
Export sales
Domestic sales
Net sales
Operating income
Net income
Total assets
Total liabilities
Depreciation and amortization
EBITDA (A)
$
$
$
$
$
$
$
1,310,277
4,607,367
5,917,644
329,814
45,636
5,226,596
1,751,596
155,520
485,334
3,628,157
3,628,157
491,518
229,886
4,254,781
1,010,337
205,316
696,834
1,016,136
3,866,940
4,883,076
191,454
(3,433)
4,843,641
1,398,420
147,327
338,781
Home
products
Eliminations
126,329
1,207,491
1,333,820
62,932
1,200
915,753
228,852
38,091
101,023
Home
products
60,760
60,760
(161,716)
312,767
3,484,352
2,438,802
19,568
(142,148)
Eliminations
92,794
1,117,348
1,210,142
63,887
8,401
1,042,600
273,966
35,074
98,961
(9,175)
(9,175)
(98,672)
189,628
2,774,579
1,108,523
22,357
(76,315)
Consolidated
5,399,418
5,875,618
11,275,036
929,265
644,613
16,339,373
6,389,753
463,478
1,392,743
Consolidated
4,737,087
4,975,113
9,712,200
648,187
424,482
12,915,601
3,791,246
410,074
1,058,261
(A)Earnings before interest, taxes, depreciation and amortization.
(1 The building-products segment includes a sub-segment engaged in manufacturing and marketing water heaters which represents 17.1 % and 16.7% of net
consolidated sales, 12.3% and 12.8% of net consolidated income and 8.3% and 10.8% of total consolidated assets as of December 31, 2015 and 2014,
respectively.
Cumulative as of Dec-15
Net sales
Net income
Total assets
$
$
$
Heaters
1,931,109
78,973
1,364,707
%
per/Construction
32.6%
173.0%
26.2%
Cumulative as of Dec-14
Net sales
Net income
Total assets
$
$
$
1,623,658
54,213
1,414,860
33.3%
(1579.2%)
28.7%
%
per/consolidated
17.1%
12.3%
8.3%
16.7%
12.8%
10.8%
77
78
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(b) Main clients
In 2015 and 2014, revenue from a customer of the auto parts segment represented approximately 11%
and 13% of the total revenues of the Company, respectively.
7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents is as follows:
Bank balances
Investments at immediate realization value
Cash and cash equivalents in consolidated statements of financial
position and consolidated statements of cash flows
$
2015
701,414
1,668,763
2014
272,410
1,780,445
$
2,370,177
2,052,855
Note 18 disclose the Company’s exposure to interest rate risk and a sensitivity analysis for financial assets
and liabilities.
8 TRADES AND OTHER ACCOUNTS RECEIVABLE
Trades and other accounts receivable include the following:
Trades receivable
Other non-commercial accounts receivable
Refundable value added tax
Refundable income tax
$
Less:
Allowance for doubtful accounts
Allowance for discounts and rebates
Total trades and other accounts receivable
$
2015
2,790,476
62,577
52,436
27,456
2014
2,284,164
55,867
68,773
16,819
2,932,945
2,425,623
(86,508)
(70,895)
(157,403)
(67,587)
(83,500)
(151,087)
2,775,542
2,274,536
In the normal course of business, the Company provides discounts and rebates by volume to their customers,
which are provided as a result of the accomplishment of certain sales levels. The estimated discounts
are based on periods and agreements previously established with their customers through contractual
arrangements.
Note 18 disclose the Company’s exposure to credit and exchange risks and impairment losses related to
trades and other accounts receivable.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
9INVENTORIES
Inventories include the following:
Finished goods
Work in process
Raw material
Merchandise in transit
$
Less: allowance for obsolete and slow-moving inventory
Total
2014
907,328
155,311
324,292
82,730
1,469,661
(79,321)
1,672,022
1,390,340
As of December 31, 2015 and 2014, the raw material, supplies and changes in finished goods and work in
process recognized as part of cost of sales amounted to $7,309,933 and $6,755,593, respectively.
Assets available for sale (1)
$
2015
1,060,804
107,149
524,000
88,261
1,780,214
(108,192)
(1)
220,116
$
167,242
Includes mainly spares and safety parts of machinery and equipment of some subsidiary companies.
10 ASSETS AVAILABLE FOR SALE
Assets obtained in the recovery of unpaid trades receivable, such as houses, warehouses and land were
classified as available for sale considering an economic benefit is expected to obtain through the sale of
these assets and not by using them. The Company believes that these assets are ready to be sold in its
current condition and it is highly probable that the sale is carried out as it is committed to a sale plan and
have made the necessary efforts to find a buyer.
The assets have been measured at realizable value and impairment losses have not been determined as of
December 31, 2015 and 2014.
Assets available for sale
$
2015
27,780
2014
24,223
The Company recognized a gain on the sale of these assets during 2015 and 2014 for $ 20 and $ 210,
respectively, which was submitted within the other expenses, net.
79
80
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
11 PROPERTY, MACHINERY AND EQUIPMENT
Property, machinery and equipment have been revalued to determine their assumed cost as mentioned
below:
Land and
buildings
Cost
Balance as of January 1, 2014
Additions
Business acquisition
Transfers
Disposals
Write off of fixed assets not used
Revaluation
Effect of changes in
exchange rates
Balance as of December 31, 2014
$
$
Balance as of January 1, 2015
Additions
Business acquisition
Transfers
Disposal
Write off of fixed assets not used
Revaluation
Reclassification of assets
held for sale
Effect of changes in exchange rates
$
Balance as of December 31, 2015
$
Machinery and
equipment
Furniture and
equipment
Transportation
equipment
Computer
equipment
Investments in
process
Total
3,497,096
66,328
(9,268)
(1,553)
10,949
6,143,273
209,005
(61,619)
(1,139)
-
61,128
4,551
(699)
(3,051)
-
44,196
2,609
7,340
(6,123)
-
17,523
2,247
(160)
-
128,014
242,966
(289,471)
-
9,891,230
242,966
2,609
(77,869)
(5,743)
10,949
50,124
3,613,676
348,200
6,637,720
339
62,268
(2,019)
46,003
22,758
42,368
4,971
86,480
424,373
10,488,515
3,613,676
304,168
17,225
(2,808)
310,974
6,637,720
371,245
274,460
(58,654)
(28,264)
-
62,268
46,003
5,353
(683)
(1,267)
-
42,368
6,705
(204)
-
86,480
688,139
94,535
(305,644)
-
10,488,515
688,139
806,375
(63,102)
(29,531)
310,974
(5,137)
(9,449)
4,228,649
Land and
buildings
446,244
7,642,751
Machinery and
equipment
36,427
1,901
(753)
3,317
103,160
Furniture and
equipment
-
-
2,071
51,477
4,906
53,775
Transportation
equipment
-
Computer
equipment
15,260
578,770
Investments in
process
(5,137)
462,349
12,658,582
Total
Accumulated depreciation
and impairment
Balance as of January 1, 2014
$
1,267,084
3,782,219
52,114
25,800
10,260
Depreciation of the period
74,825
299,847
1,993
5,697
2,597
Disposals
(6,812)
(42,423)
(656)
(9,022)
(172)
-
(59,085)
9,483
159,259
220
178
502
-
169,642
Balance as of December 31, 2014
1,344,580
4,198,902
53,671
22,653
13,187
-
5,632,993
Balance as of January 1, 2015
1,344,580
4,198,902
53,671
22,653
13,187
-
5,632,993
76,944
345,391
2,476
7,410
2,813
(2,179)
(58,413)
(712)
(28)
(184)
Effect of changes in
exchange rates
Depreciation of the period
$
Disposals
Revaluation
$
110,830
-
-
-
-
(1,164)
-
5,137,477
384,959
435,034
-
(61,516)
110,830
Write off of fixed assets not used
-
Reclassification of assets
held for sale
(1,979)
Effect of changes in
exchange rates
(8,934)
222,054
923
1,144
4,480
-
219,667
1,519,262
4,680,036
56,358
30,015
20,296
-
6,305,967
As of December 31, 2014
2,269,096
2,438,818
8,597
23,350
29,181
86,480
4,855,522
As of December 31, 2015
2,709,387
2,962,715
46,802
21,462
33,479
578,770
6,352,615
Balance as of December 31, 2015
(27,898)
-
-
-
-
(29,062)
(1,979)
Book values
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
As of December 31, 2015 and 2014, the depreciation in profit or loss represented $435,034 and $384,959
respectively and was included on the cost of sales.
As of December 31, 2015 and 2014, there are no liens on the fixed assets.
(a) Revaluation of land and buildings
As described in note 3, the Company with the support of a independent third party specialist, review
the fair value of these assets every three years o when the economic situation or of market is justifiable
according with its policy to be measured at fair value. At December 31, 2015 it was determined that the
fair value was $2,753,193 with an impact on the surplus in stockholders’ equity of $ 200,144.
During the 2014, the Company obtained a favorable resolution in a litigious for the property of a land
which was revaluated. The effect of this revaluation represented $10,949.
(b) Investments in process
Investments in process include basically investments in different machinery focused on new production
projects. As of December 31, 2015 and 2014, investments in process represented $578,770 and
$86,480, respectively, and are related basically to investments made in the auto part segment.
12 INTANGIBLE ASSETS
Intangible assets are mentioned below:
Security deposits
Cost
Balance as of January 1, 2014
Other acquisitions – acquired separately
Other acquisitions –business acquisition
Capitalized costs
Refunds
Effect of changes in exchange rates
Balance as of December 31, 2014
Balance as of January 1, 2015
Other acquisitions – acquired separately
Other acquisitions –business acquisition
Capitalized costs
Refunds
Effect of changes in exchange rates
Balance as of December 31, 2015
$
$
$
$
6,320
3,844
Goodwill
Patents and
trademarks
Development
costs
Others
Total
10,164
543,062
28,377
571,439
106,360
14,934
121,294
141,806
3,153
42,018
(111)
1,756
188,622
79,974
79,974
877,522
6,997
14,934
42,018
(111)
30,133
971,493
10,164
(843)
9,321
571,439
695,017
44,587
1,311,043
121,294
1,915
123,209
188,622
36,652
4,122
229,396
79,974
8,794
88,768
971,493
38,567
703,811
(843)
48,709
1,761,737
81
82
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Amortization and impairment losses
Balance as of January 1, 2014
Amortization of the period
Effect of changes in exchange rates
Balance as of December 31, 2014
Balance as of January 1, 2015
Amortization of the period
Effect of changes in exchange rates
Balance as of December 31, 2015
Book values
As of December 31, 2014
As of December 31, 2015
$
$
$
$
$
$
-
-
-
(63,751)
(12,712)
(970)
(77,433)
(30,257)
(12,403)
(42,660)
(94,008)
(25,115)
(970)
(120,093)
-
-
-
(77,429)
(16,041)
(2,275)
(95,745)
(42,660)
(12,403)
(55,063)
(120,089)
(28,444)
(2,275)
(150,808)
111,189
133,651
37,314
33,705
851,400
1,610,929
10,164
9,321
571,439
1,311,043
121,294
123,209
(a) Impairment of development costs
The carrying value of development costs at December 31, 2015 includes $143,326 related to the
project accounting software update for the Company. These costs include both the value of licenses
for $27,275 and the costs of implementing this software for $116,051. The implementation will take
place at various stages during the years 2014 and 2015 and still awaiting completion of the last stage
for the financial year 2015. The estimated life of these costs is 7 years. Amortization for the years 2015
and 2014 are related to the licenses already in use.
(b) Impairment tests for cash-generating units that include goodwill, other intangibles assets, brands
and patents.
For impairment test purposes, goodwill, other intangibles assets, brands and patents are assigned to
the cash-generating units (CGU) of the Company that represent the lowest level therein at which are
monitored for internal purposes of management, which are not greater than the operating segments of
the Company reported in note 6. Heaters CGU is part of the construction segment and Tisamatic CGU
is part of the auto parts sector.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
83
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The total carrying amounts were assigned to each cash-generating unit as well as the related impairment
losses that were recognized as shown below:
December 31, 2015
ACE unit (1)
Heaters unit
Tisamatic unit (2)
Home unit
Goodwill
$
$
December 31, 2014
Heaters unit
Tisamatic unit (2)
Home unit
695,017
337,304
275,515
3,207
1,311,043
Goodwill
$
$
337,304
230,928
3,207
571,439
Brands and
patents
123,209
123,209
Brands and
patents
121,294
121,294
Other
intangibles
8,794
24,911
33,705
Other
intangibles
37,314
37,314
(1)
This goodwill was generated in December 2015, see note 20.
(2)
Includes translation effect in 2015 and 2014 for $44,587 and $28,377, respectively.
The impairment test of the cash-generating Heaters unit are based on the methodology of use value of
assets, discounting the future expected cash flows from continued use of the assets using the following
key assumptions:
•
•
•
•
•
•
•
•
The cash flows were projected based on past experiences, actual operating results and the five-year
business plan of the Company.
The investments in machinery and equipment are considered only to keep the current manufacturing
capacities which cover the amounts provided for in the 5-year projection.
Considering the current economic conditions sales prices to increase by 3% and production by 4% until
the year 2020, later that year production capacity is maintained and not expected to obtain variations
in the price.
The cost of domestic intermediate goods purchased in pesos is estimated to increase according to
domestic inflation. The cost of imported intermediate goods will be similar but according to the inflation
of the U.S.A. other costs are estimated to increase in proportion to inflation of the country.
Efficiencies of production costs are provided for.
A discount rate of 13.66% was applied to determine the recoverable amount of assets. The discount
rate was calculated based on the weighted average cost of capital for the heater industry, which was
based on a possible lever debt range of 33% at a market interest rate of 5.45% and capital of 67% with
a market cost of 17.7%.
The cash flows for 4 more years (2021 and 2024) were projected assuming the same operating flow as
the last previous year since the assets have the capacity of generating future benefits for more than 5
years.
A terminal value is obtained in 2024 considering the operating flow of that year and the discount rate
mentioned.
The values assigned to the key assumptions represent the management evaluation of future tendencies in
the business and are based on both external and internal sources.
84
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
If the discount rate used increases a percentage point (13.66 + 1.0), the value obtained as flow is sufficient
to cover even the assets analyzed.
The impairment test of the cash-generating Tisamatic unit are based on the methodology of use value of
assets, discounting the future expected cash flows from continued use of the assets using the following
key assumptions:
•
•
•
•
•
•
•
•
The cash flows were projected based on past experiences, actual operating results and the
Company’s seven year business plan.
The machinery and equipment investment is considered only in function to maintain the actual
capacities of manufacturing in which cover the related volumes in the projections to 5 years.
Considering the current economic conditions, is expected to increase by 16% on average of its
production capacity up to the year 2018, then it is estimated that production is maximized and is
maintained and is not expected to increase sales prices, it will apply the additional monthly fee (
“surcharge”) by the movement in the cost of purchase of the metal charge.
The cost of domestic intermediate goods purchased in pesos is estimated to increase according
to domestic inflation. The cost of imported intermediate goods will be similar but according to the
inflation of the U.S.A. other costs are estimated to increase in proportion to inflation of the country.
Efficiencies of production costs are provided for.
A discount rate of 11.18% was applied to determine the recoverable amount of the plants. The
discount rate was calculated based on the weighted average cost of the capital industry, which was
based on a possible debt leverage range of 33% at a market interest rate of 3.50% and capital of
67% with a market cost of 14.96%.
The cash flows for 10 more years (2021 and 2030) were projected assuming the same operating
cash flow as the last previous year since the assets have the capacity of generating future benefits
for more than 5 years.
A terminal value is obtained in 2030 considering the operating cash flow of this year and the discount
rate mentioned.
The values assigned to the key assumptions represent the evaluation of management of future
tendencies in the business and are based both on external and internal sources.
If the discount rate increases by one percentage point (11.18 + 1), the value obtained as cash flow is
sufficient to cover the value of the assets.
13 JOINT VENTURE
Evercast, S.A. de C.V., (Evercast) is a Company of nodular iron foundry to make parts of brake systems. The
ownership of GIS through its subsidiary Industria Automotriz Cifunsa, S.A. de C.V. (IACSA) in Evercast is
70% and the remaining 30% belongs to Kelsey Hayes Company, a subsidiary of TRW Automotive Holdings
Corp. which is client of auto parts segment of the Company.
Gisederlan, S.A. de C.V. (Gisederlan) is a new company machining iron components in the auto parts sector.
The shareholding of Automotive Cifunsa, S. A. de C. V. in the new company will be 50% and the remaining
50% is held by Ederlan Subsidiaries, S. L. U.
Both Evercast as Gisederlan has been structured through a separate vehicle, consequently as been
classified as a joint venture, that will be accounted as an investment using the equity method. The prior
mentioned based on the documentation established in the Shareholders’ Agreement, in which were
designated the relevant activities and were agreed the decision process for extraordinary issues that
affects the performance of companies.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The consolidated information at December 31, 2015 in NIIF:
2015
Revenues
Gross loss
Net financial income
Net Loss
$
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Total stockholders’ equity
$
Evercast
142,187
(86,002)
17,435
(72,703)
(24,471)
4,200
(17,093)
(2,679)
984
(2,386)
525,838
1,375,957
1,901,795
385,576
471,115
856,691
87,215
55,584
142,799
161,408
707,599
869,007
80,621
9,966
90,587
6,983
1,032,788
766,104
-
6,983
135,816
At December 31, 2015 the investment in shares valued with the equity method is as following:
%
Evercast, S.A. de C.V.
Gisederlan, S.A. de C.V.
Total
Evercast, S.A. de C.V.
Gisederlan, S.A. de C.V.
Total
2014
Gisederlan
2015
70
50
Investment
2015
Investment
2014
722,952
67,908
790,860
536,273
536,273
Share of profit
2015
%
Share of profit
2014
70
50
(50,892)
(1,193)
(52,085)
(12,289)
(12,289)
During year 2015, capital contributions were made to associated Evercast and Gisederlan for $158,374
and $65,842, respectively, and in 2014 capital contributions to the subsidiary for $514,842 Evercast
were performed. The aforementioned contributions were made proportionally by investors so that no
dilution for either party. The translation results recorded in 2015 and 2014 amounted to $ 82,456 and
$33,720, respectively.
85
86
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
14 TRADES AND OTHER ACCOUNTS PAYABLE
Trades and other accounts and short-term accumulated expenses payable include:
Trades payable
Accruals (5)
Nacional Financiera, SNC (1)
GE Capital Factoring (2)
Sundry creditors (3)
Advances from customers
Other accounts payable (4)
$
$
2015
2014
1,742,796
356,610
253,546
221,762
55,327
201,962
2,832,003
1,318,870
302,524
152,319
50,899
45,511
23,506
115,629
2,009,258
(1) Nacional Financiera, SNC
A line of credit was approved on August 23, 2012. This credit line was established to finance the
Company’s suppliers through electronic discounts and under the scheme of supply chains for an
amount of $300 million of pesos. At December 31, 2015 and 2014, an amount of $254 and $152 million
of pesos respectively, had been disposed, payables at 90 days, respectively.
(2) GE Capital Factoring
During 2012, it was celebrated a factoring agreement with GE Capital Factoring, which gave a credit
line of $100 millions pesos to 31 December 2014 with an outstanding balance at December 31, 2014 it
represented $51 million pesos held. At December 31, 2015 there are no outstanding contracts factoring..
(3) Other trades payables
Company provides various payment obligations related to investments in fixed assets.
(4)Other trades payables
Other accounts payable include, among others, VAT and IT withheld, outstanding payments to IMSS,
INFONAVIT, FONACOT and others.
The movement of provisions at December 31, 2015 and 2014 was as following:
Wages and other
payments to
personnel
122,830
302,403
255,010
-
Warranties
Balance as of January 1, 2014
Accruals created during the year
Accruals used during the year
Annual effect of present value
$
Annual effect of present value
$
170,223
9,642
Balance as of January 1, 2015
Accruals created during the year
Accruals used during the year
Annual effect of present value
$
170,223
439,750
409,329
-
9,642
98,880
99,889
Balance as of December 31, 2015
$
200,644
13,011
116,553
119,922
-
-
Provision
contingent
Total
54,496
66,301
793,220
791,492
134
256,638
1,212,176
1,166,424
134
54,496
68,163
302,524
54,496
68,163
511,995
487,270
190
302,524
1,050,625
996,729
190
93,078
356,610
-
241
-
8,633
Others
54,255
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
a. Wages and other payments to personnel
As of December 31, 2015 and 2015, there is a provision of $200,644 y $170,223, respectively related
to personnel services. This provision includes mainly accruable vacations, savings funds, productivity
bonus, year-end bonus, among others.
b.Warranties
As of December 31, 2015 and 2014, there was a provision of $8,633 and $9,642, respectively related
to the Construction segment. This provision is the best estimate related to possible malfunctions and
claims in certain components of the products produced by the segment over a 5 years base, which is
the average of the warranties granted for each product sold.
c. Contingencies provision
As of December 31, 2014 and 2013, there is a provision of $54,255 and $54,496, respectively, which is
generated by the contractual obligations assumed by the sale of a subsidiary Company during the year
2012.
d.Others
As of December 31, 2015 and 2014, there is a provision of $93,078 and $68,163, respectively that
includes mainly replacement of tools, energy, as well as for various professions related services and
obligations of strategic investment projects of the Company.
Note 18 disclose the Company’s exposure to exchange and liquidity risk related to trades and other
accounts payable and a sensitivity analysis for financial assets and liabilities.
87
88
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
15LOANS
a) Long-term debt
As of December 31, 2015 and 2014 bank loans include the following:
2015
Long term contract with Tisamatic, S. de R. L. de C.V.,
with Banco Santander, S.A. Institución de Banca Múltiple
Grupo Financiero Santander Mexico and Banco Nacional de
Comercio Exterior, SNC as creditors for up to US $ 30 million
and with an outstanding balance at December 31, 2014 and
2015 is US $ 26 million and $ 20 million respectively, payable
to 5.5 years from 2014 to 2018 with a grace period on principal
payments a year. Interest are paid quarterly in March, June,
September and December. The rate is variable based on
LIBOR plus a spread ranging from 3% to 4% depending on
the leverage ratio.
$
342,360
2014
388,708
Opening long-term credit of Grupo Industrial Saltillo contract S.A.B. de C.V. and credited with Banco Santander S.A.
Commercial bank Grupo Financiero Santander Mexico as
agent bank, Banco Nacional de Comercio Exterior, S.N.C.,
BBVA Bancomer, SA, Comerica Bank, HSBC Mexico, Scotiabank Inverlat, SA and Banco Santander México, S.A. as
financial creditors, up to US $ 76.5 million, payable within 5
years from 2015 through 2020 with a grace period on principal payments a year. Interest are paid quarterly in March,
June, September and December. The rate is variable based
on LIBOR plus a spread ranging from 2.25% to 3.50% depending on the leverage ratio. This contract is backed by
heaters America, S.A. de C.V., Cinsa, S.A. de C.V., Cifunsa
del Bajío, S.A. de C.V., Manufacturas Vitromex, S.A. de C.V.,
Fluida, S.A. de C.V. and Tisamatic, S. de RL de C.V. as joint
obligors.
1,304,767
-
Financing Fuchosa, S. L. U. and credited with the Center for
Industrial Technological Development, Public Entity Business, to develop various technological research and development, up to a set amount of US $2 million, at preferential
rates, with several capital payments, various deadlines
ranging from 2-11 years.
34,770
-
Financing Fuchosa, S. L. U. and credited with the Ministry of
Industry, Tourism and Trade, for technological development
project for up to US $1 million, at a preferential rate and for a
period of nine years.
13,713
-
Opening credit long-term contract Fuchosa, S.L.U. and
credited with Caixa Bank, S.A. as Creditor Bank up to US
$2 million. Redemptions are quarterly, with a fixed rate of
1.25% per annum, for a term of 5 years.
37,701
-
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Opening credit long-term contract Fuchosa, S.L.U. and
credited with Bankinter, SA as Creditor Bank up to US $2
million. Redemptions are quarterly, with a fixed rate of 1.30%
per annum, for a term of four years.
35,401
-
Subtotal passes the next sheet
$
1,768,712
388,708
Subtotal comes from the previous sheet
$
1,768,712
388,708
Opening credit long-term contract Feramo Metallum,
International S.R.O.. and credited with Banco Bilbao Vizcaya
Argentaria, S.A. as Creditor Bank up to US $3 million, with a
fixed rate of 1.50% per annum, for a term of 5 years. This credit
has the joint guarantee of ACE Boroa S.L.U. and Fuchosa,
S.L.U.
56,552
Credit line overdraft Feramo Metallum, International S.R.O.
and credited with Banco Popular Español, S.A. as Creditor
Bank up to US $2 million, with a fixed rate of 3.25% per annum.
This credit has the joint guarantee of ACE Boroa, S.L.U.
5,278
-
28,276
-
Opening credit long-term contract ACE Boroa, S.L. and
credited with CaixaBank, SA, Banco Santander, S.A., as
Lead funders and Bookrunners Banco Popular Español, SA,
Banco Bilbao Vizcaya Argentaria, SA, Bankinter, SA, as Lead
Funders CaixaBank, SA / Banco Santander, S.A., as Agent
and CaixaBank, SA, as the Security Agent, for up to US $15
million and an outstanding balance of US $12.5 million. It has a
variable rate of 6M Euribor plus a margin of 2.25%. This credit
has the joint guarantee of Fuchosa, S.L.U., European Brakes
and Chassis Components SP. Z.O.O., Feramo Metallum,
International S.R.O., Automotive Components Europe S.A.
and ACE 4 A.I.E
232,409
-
Opening credit long-term contract ACE Boroa, S.L. and
credited with CaixaBank, SA, Banco Santander, S.A., as
Lead funders and Bookrunners Banco Popular Español, SA,
Banco Bilbao Vizcaya Argentaria, SA, Bankinter, SA, as Lead
Funders CaixaBank, SA / Banco Santander, S.A., as Agent
and CaixaBank, SA, as the Security Agent, for up to US $5
million and an outstanding balance of US $1.4 million. It has a
variable rate of 6M Euribor plus a margin of 2.25%. This credit
has the joint guarantee of Fuchosa, S.L.U., European Brakes
and Chassis Components SP. Z.O.O., Feramo Metallum,
International S.R.O., Automotive Components Europe S.A.
and ACE 4 A.I.E
26,391
-
Revolving credit line of European Brakes and Chassis Components SP. Z.O.O. and credited with Bank Zachodni WBK
S.A. as Creditor Bank up to US $ 1.5 million, with a variable
rate of EURIBOR 1M + 1.6%. Maturing through 2017.
89
90
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Grand Total
2,117,618
388,708
Current portion of long-term debt
197,488
98,167
Long-term debt
1,920,130
290,541
Maturities of long-term debt are detailed as following:
2017
2018
2019
2020
2021 onwards
$
$
545,686
527,969
406,971
428,205
11,299
1,920,130
The outstanding loan balance of Tisamatic, S. de R.L. de C.V., is for $346.4 million pesos which are presented
net of $4.1 million pesos recruitment costs of such credit, that for purposes of presentation on the balance
sheet in compliance with the existing standards of financial reporting.
The outstanding loan balance of Grupo Industrial Saltillo, S.A.B. de C.V., is for $1,325.3 million pesos, which
are presented net of $20.6 million pesos recruitment costs of such credit, that for purposes of presentation
on the balance sheet in compliance with the existing standards of financial reporting.
The outstanding loan balance of ACE Boroa, S.L., is $235.6 million pesos of which are subtracted $3.2
million pesos recruitment costs of such credit.
The outstanding balance of loans granted to Fuchosa, S.L.U. by the Centre for the Development of
Industrial Technology and the Ministry of Industry, Tourism and Trade it is for $52.5 million pesos of which
is decreased by $ 4 million, by way of adjustment to actual market rate.
At December 31, 2015, the Company and its subsidiaries have fulfilled their obligations to do, to do and
financial obligations (if any), established in the various debt agreements above year-end 2015 or have
obtained the necessary waivers from its creditors for those matters that could represent a breach.
In note 18 of the Company’s exposure to interest rate risk, currency risk and liquidity and a sensitivity
analysis for financial assets and liabilities is disclosed
16 EMPLOYEE BENEFITS
a) Defined plan benefits
Present value of defined benefit obligations with no funding
Present value of defined benefit obligations with funding
Total present value of defined benefit obligations
Plan assets at fair value
Net projected liabilities in the statement of financial position
$
$
2015
(280,735)
(137,407)
(418,142)
137,407
(280,735)
2014
(309,514)
(104,739)
(414,253)
104,739
(309,514)
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The Company has a specific benefits pension plan for non-union employees. These benefits are based
on seniority and remuneration amount. Similarly, the obligations that arise from Legal Compensation
and Seniority Premiums that the Company should pay to employees and workers when they become
elderly are recognized.
The defined benefit plans in Mexico usually expose the Company to actuarial risks such as interest rate
risk, longevity and salary. However, none of these is considered to have had unusual behaviors during
periods reported.
During the period there were no amendments, curtailments and settlements in the plans of benefits
granted to employees.
(i)
Composition of plan assets
Equity securities
Share investment companies
Public debt securities
Private debt securities
$
$
(ii)
2015
19,661
9,859
101,595
6,292
137,407
2014
14,987
7,515
77,441
4,796
104,739
Changes in the present value of defined benefit obligations (DBO)
Defined benefit obligations as of January 1
Benefits paid by the plan
Labor cost of current service and financial cost
Actuarial remeasurements recognized in the
comprehensive income account
Defined benefit obligations as of December 31
$
2015
(414,253)
17,503
(48,711)
2014
(376,714)
18,252
(45,194)
27,319
(418,142)
(10,597)
(414,253)
2015
104,739
(13,914)
47,600
6,488
2014
119,805
(13,793)
7,722
(7,506)
137,407
(8,995)
104,739
(iii) Change in the present value of plan assets
Fair value of plan assets as of January 1
Benefits paid by the plan
Contributions made during the year
Expected return on plan assets
Actuarial losses recognized in the comprehensive
income account
Fair value of plan assets as of December 31
$
91
92
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(iv) Expense recognized in income
Change in the present value of plan assets
Labor cost of current service cost
Interest on obligation
Expected return on plan assets
2015
22,249
26,463
(6,489)
42,223
$
2014
19,669
25,525
(7,722)
37,472
The expense is recognized in the following line items of the statement of income:
Cost of sales
Financial cost
(v)
Actuarial gains and (losses) recognized in the comprehensive income account
$
2015
22,249
19,974
42,223
$
Accumulated amount as of January 1
Recognized during the year
Accumulated amount as of December 31
2014
19,669
17,803
37,472
$
2015
2,303
19,813
2014
21,895
(19,592)
$
22,116
2,303
(vi) Actuarial assumptions
The main actuarial assumptions as of the reporting date (expresses as weighted average):
Discount rate as of December 31
Expected return rate of the plan assets as of January 1
Rate of compensation increase
2015
6.75%
6.75%
4.00%
2014
6.50%
6.50%
4.00%
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Assumptions on future mortality are based on statistics published and mortality rates.
Currently the retirement age in Mexico is 65. Current longevities that underlie the values of
liabilities in the defined benefit plans are:
December
31, 2015
Longevity upon retirement of current pensioners:
Men
Women
Longevity upon retirement of current members whose age is:
Men
Women
December
31, 2014
22.18
24.90
22.13
24.87
23.38
25.95
23.34
25.70
Reasonably possible changes in the relevant actuarial assumptions presented at balance sheet
date, when the other assumptions remain constant, would have affected the defined benefit
obligation in the amounts included in the table below. (vii)
(vii) Sensitivity Analysis
The principal actuarial assumptions at the reporting date (expressed as weighted averages):
Defined obligation benefits
$
Increse
383,018
448,223
Decrease
459,444
395,354
Discount rate (change of 1%)
Future compensation increase (change of 1%)
Although the analysis does not consider the distribution of expected cash flows under the plan, if it provides an approximation of the sensitivity of the assumptions presented.
b) Defined Contribution Plan
The consolidated cost of defined contribution plans for the years ended December 31, 2015 and 2014
was approximately $5,057 and approximately $4,502. The Company periodically brings the amounts
offered in the plan to individual employee accounts exist no outstanding liabilities at the date of the
financial statements.
93
94
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
17 INCOME TAX (IT)
The Income Tax Law in force since 1 January 2014 establishes a statutory tax rate of 30% for 2014 and
beyond.
The Company determined until December 31, 2013 the income tax on a consolidated basis. From 1 January
2014 a new option scheme for groups of companies, same as was adopted by the Company and its
subsidiaries are established..
As of December 31, 2014 and 2013, the long-term income tax payable is $773,367 and $ 212,210 in the
short term and $ 960,392 to pay for long-term and $ 33,769 in the short term to December 31, 2014
corresponding to tax income has been deferred derivative data consolidation. According to the law in force
at December 31, 2013, the Company during 2015 and 2014 paid $ 33.769 and $ 24.489 as a result of
applying the 15% and 25% respectively to the elimination of the effects of fiscal consolidation in 19992004, 2005, 2006, 2007 and 2008. with regard to the effects of fiscal consolidation arising after 2004,
these should be considered in the sixth year after its occurrence, and to be paid over the next five years
in the same proportion (25% 25%, 20%, 15% and 15%). Taxes payable resulting from changes in the law
will increase inflation in terms of the Law on Income Tax. Also derived from the tax reforms effective from
1 January 2010 and 2014, the Company has evaluated each of the effects of the consolidation regime
and has determined that the impacts are properly recognized and disclosed in its financial statements
consolidated.
The tax expense for the years ended December 31, 2015 and 2014 includes the following:
2015
Current IT
$
Deferred income tax
Long term liability for consolidation purposes
Income tax on dividends received from subsidiaries abroad
Others
Total income tax
$
282,723
98,482
18,671
(52,801)
(2,547)
344,528
2014
-
287,652
(95,878)
33,901
225,675
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The tax expense attributable to income before income taxes differed from the amounts computed by
applying the Mexican income tax rates of 30% to income, as a result of the following:
2015
Net income
Income tax expense
Income before taxes
$
Expected expense
Increase (decrease) of:
Effect of inflation, net
Upgrade of consolidation liability
Insufficiency in accrual of long term liability
for consolidation purposes l
Changes in deferred tax allowance valuation
Share of profit of equity- accounted investees
Non deductible
Others, net
Income tax expense
2014
644,613
344,528
989,141
424,482
225,675
650,157
296,742
195,047
(14,776)
18,671
(32,791)
33,901
(5,075)
2,779
15,626
44,371
(13,810)
18,792
3,687
31,751
(24,712)
344,528
$
225,675
(a) Deferred tax assets and liabilities recognized
The deferred tax assets and liabilities derive from the following:
Assets
2015
Property, machinery and equipment
Intangible assets
Inventories
Accruals
Tax losses
Tax assets (liabilities), net
$
(396,710)
(540,580)
(937,290)
$
2014
2015
(334,115)
(703,348)
(1,037,463)
Liabilities
2014
316,337
119,229
435,566
175,316
114,248
488
290,052
Net
2015
2014
316,337
119,229
(396,710)
(540,580)
(501,724)
175,316
114,248
488
(334,115)
(703,348)
(747,411)
(b) Change in temporary differences during the period
January 1,
2015
Property, machinery and equipment
Intangible assets
Inventories
Accruals
Tax losses
Tax assets (liabilities), net
$
$
175,316
114,248
488
(334,115)
(703,348)
(747,411)
Recognized
in income
(34,053)
6,776
(488)
(59,182)
185,429
98,482
Other comprehensive
income
157,874
2,555
5,946
166,375
Business
acquisitions
17,200
(4,350)
(9,359)
(22,661)
(19,170)
December
31, 2015
316,337
119,229
(396,710)
(540,580)
(501,724)
95
96
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
January 1,
2014
Property, machinery and equipment
Intangible assets
Inventories
Accruals
Tax losses
Tax assets (liabilities), net
$
$
126,593
83,858
2,133
(269,444)
(659,585)
(716,445)
Recognized
in income
Other comprehensive
income
(23,237)
31,561
(1,645)
(58,794)
(43,763)
(95,878)
71,960
(1,171)
(5,877)
64,912
December
31, 2014
175,316
114,248
488
(334,115)
(703,348)
(747,411)
In assessing the recoverability of deferred assets, the Company’s management considers the probability
that they could not be recovered, in whole or in part. Final realization of deferred assets depends on
generating taxable income in the periods in which temporary differences are deductible.
As of December 31, 2015 and 2014, the Company has not recognized deferred tax assets of approximately
$286,483 and $283,704, respectively, related to tax losses which are estimated will not be used, which
can expire partially or fully between 2017 and 2025 (see table below).
As of December 31, 2015, the tax losses carryforward and the year in which the right to use them will
expire are as follows:
Year of origin
Expiration
year
2007
2008
2009
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
2021
2022
2023
2024
2025
Updated amount as
of December
31, 2015
$
215,326
21,355
15,474
1,680,862
49,680
329
279,489
285,218
133,614
$
(c) Long term liability for consolidation purposes
2,681,347
2015
Deferred liability for consolidation purposes
Income taxes expense –inflation
Accumulated payments of liability
Optional deferred tax regime for group companies
Total
Liabilities for short-term fiscal consolidation
Deferred Income for consolidation purposes
$
$
994,161
18,671
(33,769)
6,514
985,577
(212,210)
773,367
2014
991,584
33,901
(31,324)
994,161
(33,769)
960,392
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
18 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet the contractual obligations, and arises mainly from the Company’s trades receivables and
investment securities and derivative financial instruments.
Investments
The Company limits exposure to credit risk by investing only in liquid instruments and with counterparties
of good credit quality. Therefore management does not expect any of the counterparties to default on
obligations.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. Maximum credit risk
exposure as follows:
Book Value
2015
Cash and cash equivalents
Investments held to maturity
Financial assets available for sale
Accounts receivable
Prepaid Expenses
$
$
2014
701,414
1,668,763
27,780
2,790,476
11,607
5,200,040
272,410
1,780,445
24,223
2,284,164
10,272
4,371,514
The maximum credit risk exposure for trades receivable as of December 31, 2015 and 2014 by geographical
region is shown below:
Book Value
2015
Domestic
United States
Other Latin American countries
Euro Zone countries
Other regions
$
$
1,873,013
225,952
369,523
310,986
11,002
2,790,476
2014
1,752,434
492,869
31,347
7,514
2,284,164
97
98
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The maximum credit risk exposure for trades receivable as of December 31, 2014 and 2013 by type of
client is shown below:
2015
Wholesale customers
Retail customers
Self-service
Promotions
Catalog
Others
$
2014
2,593,008
22,791
82,983
18,695
22,822
50,177
2,790,476
$
2,051,580
52,425
99,629
29,636
7,011
43,883
2,284,164
The classification of trades receivable by status as of the date of the report is included below:
Gross
2015
Current
0 to 30 days overdue
31 to 120 days over due
Over 120 days overdue
$
$
Impairment
2015
2,659,275
44,693
18,217
68,291
2,790,476
(18,217)
(68,291)
(86,508)
Gross
2014
Impairment
2014
2,073,976
100,887
36,491
72,810
2,284,164
(7,902)
(59,685)
(67,587)
The change in allowance for doubtful accounts regarding trades receivable during the year was as follows:
Doubtful
Allowance
2015
2014
Beginning balance
Increase during the period
Amounts canceled to other trades
Receivable
Decrease due to reversal
Ending balance
$
$
Discounts
Allowance
2015
2014
Total
2015
2014
67,587
22,250
79,173
5,480
83,500
214,699
74,559
200,869
151,087
236,949
153,732
206,349
396
2,933
86,508
6,135
10,931
67,587
200,156
27,148
70,895
155,699
36,229
83,500
200,552
30,081
157,403
161,834
47,160
151,087
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with
financial liabilities that are settled by delivering cash or other financial assets. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or
risking the Company’s reputation.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The following are the contractual maturities of financial liabilities, including the estimated interest payments
and excluding the impact of the compensation agreements. The cash flows included in the maturity analysis
are not expected to be presented much before or for sensitively different amounts.
2015
Non-derivative financial liabilities
Trades and other accounts payable
Bank loans and interest
Finance leases
Derivative financial liabilities
Currency forwards
2014
Non-derivative financial liabilities
Trades and other accounts payable
Bank loans and interest
Finance leases
Derivative financial liabilities
Currency forwards
Book
value
$
6 - 12 months
(2,832,003)
(197,488)
(4,788)
(2,832,003)
(4,788)
(197,488)
-
(720)
(720)
(30)
(690)
Book
value
$
0-6 months
(2,832,003)
(197,488)
(4,788)
$
$
Contractual
cash flows
(2,009,258)
(98,167)
-
-
Contractual
cash flows
(2,009,258)
(98,167)
-
-
0-6 months
(2,009,258)
-
6 - 12 months
(98,167)
-
-
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
will affect the company’s income or the value of the financial instruments held. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while
optimizing the return.
The Company buys and sells derivatives, and also incurs financial liabilities, in order to manage market
risks. All these transactions are measured according to guidelines established by the Risk Management
Committee. Generally the Company seeks to apply hedge accounting in order to manage volatility in profit
or loss.
Exchange rate risk
The derivative financial instruments are recorded as hedging and therefore a hedging relationship is
established, the Company formally documents the goal of coverage, risk management strategy, the hedging
instrument, the item or the hedged transaction, the nature of the risk being hedged and methodology to
measure the effectiveness of coverage.
The Company tests for prospective and retrospective effectiveness at all times to monitor the hedging
relationships are highly effective in accordance with accounting standards. At the time the Company
recognizes ineffectiveness that results ineffective amount is detected.
At December 31, 2015, the fair value of the portfolio of derivative financial instruments amounted to $
(4,205) net.
99
100
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
The following details the portfolio in force at December 31, 2015 derivative financial instruments and their
fair value:
a) Forwards currency (FX Forward)
At 31 December 2015 had concluded several contracts are exchange foreign currency flows Forward
FX rate. Such transactions represent hedging mechanisms to minimize foreign exchange risks in future
currency flows are mainly used for the payment of expenses and Zlotys and according to Czech accounting
standards, crowns are considered hedge.
Then the position is given at December 31, 2015.
Derivatives
instruments
Position
Total notional
Fair Value in
thousands of
Pesos 2015
Basic
conditions
Currency
Due
date
Subsidiary
Long – Term Assets
Forward Plain
Purchase
Vanilla
PLN / Sale EUR
Forward Plain
Purchase
Vanilla
PLN / Sale EUR
15,000,000
21,000,000
Polish zlotys
Polish zlotys
Delivery Euros
$
471
May 31, 2017
European
and Receive
Brakes and Cha-
Zlotys to fixed
sis Components
exchange rate
SP. Z O.O.
Delivery Euros
$
(115)
and Receive
December 31,
European
2017
Brakes and Cha-
Zlotys to fixed
sis Components
exchange rate
Total
SP. Z O.O.
356
Short-term liabilities
Forward Plain
Purchase CZK /
Vanilla
Sale EUR
Forward Plain
Compra CZK /
Vanilla
Venta EUR
32,125,000
96,650,000
Czech crowns
Czech crowns
Delivery Get
$
(30)
Brakes and Cha-
Euros exchange
sis Components
rate future
SP. Z O.O.
Delivery Get
$
(690)
Crowns and
December 31,
European
2016
Brakes and Chasis Components
rate future
SP. Z O.O.
Total
European
Crowns and
Euros exchange
b)
May 31, 2016
(720)
Hedging Interest Rate (Interest Rate Swap)
At 31 December 2015 had concluded several contracts are exchange flows denominated interest rate
swaps. Such transactions represent hedging mechanisms to minimize the risks of increases in interest
rates in various credit agreements which companies may have made GIS. These transactions according to
accounting standards, are considered hedge.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Then the position is given at December 31, 2015.
Derivatives
instruments
Position
Total notional
Currency
Fair Value in
thousands of
Pesos
2015
Basic
conditions
Due
date
Subsidiary
Long-term Liabilities
Interest Rate
Swap
pay fixed /
receive
variable-rate
750,000 0
Euros
pay a fixed
EURIBOR
and receives
a floating
EURIBOR
$
(115)
December 31,
2017
European
Brakes
and Chasis
Components
SP. Z O.O.
Interest Rate
Swap
pay fixed /
receive variable-rate
3,125,000
Euros
pay a fixed
EURIBOR
and receives
a floating
EURIBOR
$
(1,897)
December 31,
2017
ACE Boroa,
S.L.U.
Interest Rate
Swap
pay fixed /
receive variable-ratee
3,125,000
Euros
pay a fixed
$
EURIBOR
and receives
a floating
EURIBOR
Total
Grand total
(1,829)
December 31,
2017
ACE Boroa,
S.L.U.
c)
(3,841)
(4,205)
Commodity Swaps
Some of the subsidiaries involved in the manufacture of products used in its basic processes direct and
indirect commodities such as natural gas (Commodities), whose price is based on the parameters of supply
and demand in major international markets.
To minimize the risk of fluctuations in international prices of commodities, the Company and certain of its
subsidiaries selectively use contracts called “Commodity Swap” which, through regular exchange of flows,
for transforming the variability of these prices, prices fixed during the term of the hedging relationship. For
the recruitment of these instruments, the Company established with the counterpart to consume volumes
and fixing prices, allowing you to cover risks in varying prices.
As of December 31, 2015 and 2014 it does not have current positions.
Derivative financial instruments classified as trading (not designated as hedges)
During 2015 and 2014, the Company and its subsidiaries held portfolios of derivative financial instruments
that did not qualify as hedges and therefore had to be qualified for trading.
Guaranteed Capital investments.
Grupo Industrial Saltillo, S.A.B. de C.V. (“GIS” o “The Company”), ein compliance with their policies,
conducts periodic investment with guaranteed capital.
101
102
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
During 2015, the Company and its subsidiaries hired instruments Capital Guaranteed Investment guy, which
do not qualify as financial instruments and derivatives that do not meet the characteristics described in
the International Financial Reporting Standards (IFRS). These instruments are hybrid contracts containing
two types of contracts: 1) host contract, which is not a derivative, but a debt contract and corresponding to
the investment of a guaranteed principal and its return to the due date and in which not necessarily a fixed
interest rate or variable is paid to market conditions and 2) a contract called embedded derivative. Such
embedded derivative was linked to the behavior of the exchange rate, where according to their performance
behavior builds based on the amount of guaranteed capital.
During 2015 the Company and its subsidiaries hired some investment of this type, which according to
their characteristics and completion dates, expired during the same. These positions had different terms
ranging up to 15 calendar days. Intermediaries of these positions were: UBS, A.G. y Monex Casa de Bolsa,
S.A. de C.V., Banco Santander (México), S.A.
These investments had guaranteed capital returns were linked to performance of the peso / dollar. These
positions were maturing naturally in accordance with the agreed conditions. At year-end 2015 and 2014
GISSA not have current positions.
The maximum value of the aforementioned investments for the year 2015 was $ 161.7 million and US $ 11.5
million.
1.
Recognition.
In the event that current positions are taken, it would proceed with the following recognition:
The host contract to be a debt contract is accordingly an asset, in this case, a non-derivative financial asset.
2.
Classification of financial assets.
This type of investment can not be measured at their amortized cost, because there is a possibility that no
cash flows received from interest.
Such investments from being unable to measure the cost of depreciation are then measured at fair value
through profit and loss.
3.
Measurement.
Certificates of deposit and investments with guaranteed capital are measured and recognized on the balance
sheet at fair value and subsequent changes in fair value must be recognized in the income statement as
gains or losses on market valuation.
For purposes of accounting records the figures reported in the statement issued by the counterparty are
used.
As of December 2015 and 2014 the company and its subsidiaries do not have current positions.
Foreign Currency risk
The Company is exposed to currency risk by conducting various sales, purchases and loans originating
from other than the functional currency. The Company is exposed to currency risk through the following
currencies: Pesos, Dollars, Euros and Zlotys.
Interest on loans are denominated in currencies that match the cash flows generated by the underlying
operations of each company, these can be in dollars, euros or pesos mainly according to the needs of the
investment project to be financed. This provides an economic hedge and no derivatives are held.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Following exposure to currency risk (values in thousands of pesos):
2015
USD
Cash
$
261,930
temporary investments
1,381,168
Accounts receivable
957,095
Bank loans
(1,647,127)
Providers
(1,384,388)
Net exposure
$
(431,322)
Zlotys
Euros
8,109
8,109
Pesos
369,370
324,788
(470,491)
(223,931)
(264)
USD
62,005
287,595
1,508,594
(1,223,984)
634,210
55,361
947,127
70,418
(388,708)
(503,256)
180,942
The following exchange rates applied during the year:
Average type
2015
2014
US (1)
EUR (2)
Zlotys (3)
17.32
18.85
4.41
Spot exchange rate at
the date of the report
14.72
17.85
17.37
20.57
4.67
-
American dollar
Euro
(3)
Polish Zloty
(1)
(2)
Sensitivity analysis of exchange.
Equity
Income
2015
US (10% de strengthening)
(42,943)
(42,943)
42,943
42,943
(26)
(26)
EUR (10% de weakening)
26
26
Zotlys (10% de strengthening)
811
811
(811)
(811)
US (10% de weakening)
EUR (10% de strengthening)
Zotlys (10% de weakening)
2014
Euros
(51,477)
(51,477)
Pesos
217,049
833,318
2,213,746
(1,454,525)
(1,809,588)
103
104
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
Interest rate risk
Fluctuations in interest rates impact primarily loans by changing either their fair value (fixed rate debt) or
their future cash flows (variable rate debt). The administration has a risk management committee which
discusses, among other things, whether each of the credits contracted either for working capital or to
finance investment projects should be (according to market conditions and the functional currency of the
Company) engaged in fixed or variable rate. See detail of loans in note 15.
Following exposure of the Company to bank loans subject to interest rate in thousands of pesos is presented,
based on notional amounts at December 31, 2015 and 2014:
Book Value
2015
Short term loans
long term loans
197,488
1,920,130
2,117,618
2014
98,167
290,541
388,708
Sensitivity analysis of exchange rate
Libor rate
Libor 3M
Libor 2.875M
Euribor 1M + 1.6%
Euribor 6M + 2.25%
0.61%
0.61%
-0.21%
-0.04%
Sensitivity analysis of exchange rate
Equity
Libor (Increase 50 BP)
Libor (Increase 20 BP)
Libor (Decrease 50 BP)
Libor (Decrease 20 BP)
(9,671)
(3,868)
9,671
3,868
Income
(9,671)
(3,868)
9,671
3,868
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
a)
Fair values vs. book values –
The fair values of financial assets and liabilities along with the carrying amounts shown in the statement
of financial position are presented below:
Book
Value
Fair
Value
Book
Value
Fair
Value
2015
2015
2015
2015
Assets recorded at fair value
Financial assets available for sale
$
27,780
27,780
356
356
$
28,136
28,136
24,223
24,223
$
2,790,476
2,790,476
2,284,164
2,284,164
1,668,763
1,668,763
1,780,445
1,780,445
701,414
701,414
272,410
272,410
$
5,160,653
5,160,653
4,337,019
4,337,019
$
(4,561)
(4,561)
$
(2,117,618)
(2,117,618)
(20,153)
(20,153)
(2,832,003)
(2,832,003)
(2,009,258)
(2,009,258)
(4,969,774)
(4,969,774)
(2,397,966)
(2,397,966)
Derivative financial instruments
24,223
-
24,223
-
Assets recorded at amortized cost
Accounts receivable
Investment value of immediate realization
Cash
Financial liabilities measured at fair value
Derivative financial instruments
-
-
Liabilities recorded at amortized Cost
Bank loans
Financial leasing
Trades and other accounts payable
$
(388,708)
-
(388,708)
-
105
106
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
(b)
Fair value hierarchy
The table below analyzes financial instruments carried at fair value by valuation method on the fair value
hierarchy.
The different levels are defined as follows:
• Level 1:
• Level 2:
• Level 3: quoted prices (unadjusted) in active markets for identical assets or liabilities.
inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (ie as prices) or indirectly (ie, derived from prices).
inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Level 1
Level 2
Level 3
Total
December, 31, 2015
Derivative financial assets
Derivative financial liabilities
$
$
356
(4,561)
-
-
-
December, 31, 2014
Derivative financial assets
Derivative financial liabilities
$
$
-
-
-
-
19 STOCKHOLDERS’ EQUITY AND ALLOWANCES
(a) Capital stock and additional paid-in capital
Authorized shares - nominal value
Ordinary shares
2015
2014
355,826
356,051
Series “A” will represent the total number of common shares that will have full voting rights and enjoy
all political and equity rights that law grants.
(b) Reserve for repurchase of own shares
In General Ordinary Shareholders’ Meeting held in September 2015, the repurchase of 225,391
ordinary shares of the “A” series in the amount of $7,243 was authorized. At December 31, 2015, the
balance of the reserve approved by the Assembly for the repurchase of shares amounted to $492.8
million pesos. With the aforementioned repurchase the balance of the shares outstanding at the end
of 2015 amounted to 355,826 shares.
At the Ordinary General Meeting of Shareholders on April 22, 2015, was authorized to allocate an
amount of 500 million pesos to repurchase and resale of own shares, also agreed that the proceeds of
the sales of these own shares if the Company made during this period will be added to the maximum
amount authorized for the above purposes.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
At the Ordinary Annual General Meeting of Shareholders on March 18, 2014, it was authorized to
allocate an amount of up to $200 million pesos to repurchase and resale of own shares, this move was
made by a contribution from retained earnings to this reserve.
(c) Allowance for cumulative translation effect
The allowance for translation includes all of the translate differences between the recording and
functional currency of auto parts segment, derived from the translation of foreign operation financial
statements, as well as the translation of liabilities that protect the net investment of the Company in a
foreign subsidiary..
(d) Allowance for actuarial gains from the benefit plan
Actuarial gains reserve includes changes in the obligations of deferred compensation plans and changes
in plan assets actuarial gains or losses.
(e) Allowance for fixed asset revaluation surplus
The allowance for revaluation includes the effect of the revaluation of land and buildings before the
reclassification as an investment property.
(f)Dividends
At the Ordinary General Meeting of Shareholders it on April 22, 2015, the proposal to pay a dividend
of $1 peso for each of the outstanding shares issued Series “A” in the amount of $ 356,051 which was
payable as of April 30, 2015 was approved. The total number of issued shares is 356,051. Dividends
paid amounted to $355,899.
As of December 31, 2015, there is a declared dividend not paid to the stockholders for $568 that
represent $152 declared during 2014, $266 declared during 2013 and $150 declared during 2012.
20ACQUISITION
a) Automotive Components Europe, S.A
As mentioned in note 1 (a) on October 27, 2015, the Company announced its intention to conclude an
agreement to purchase shares of a Europe-based and provides foundry services for the automotive
industry group. The December 23, 2015, it was materialized the acquisition of 100% of the shares of
Automotive Components Europe, S.A. (ACE).
The buying process aforementioned actions was given as follows: First shares acquired 92.11% of
the total shares of ACE through a public offering, contemporaneously with it acquired an additional
4.65% directly to ACE and that it held in its treasury. Therefore, derivative and had acquired a stake
of over 95% shareholding, GISSA exercised its right to purchase the remaining shares from minority
shareholders, who were forced to sell ( “Squeeze out”). Once carried out the above transactions, the
total shares acquired stood at 21,230,515 representing 100% of the share capital of ACE.
107
108
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
In this regard the Company pays 16.20 zlotys for each of the shares of ACE, regardless of the stage
in which they were obtained. The total purchase price of the shares of ACE amounted to $1,524,706
equivalent to approximately US $88 millions. To carry out the transaction, the Company obtained
financing from Banco Santander S.A. (Mexico) and several financial creditors for US $76.5 million
equivalent to $1,296,896 and the balance was settled with equity.
The transaction qualifies as a business combination in accordance with IFRS 3, and has been accounted
for as a single operation and it is determined that there is a correlation to run each of the acquisitions
of shares as specified by IFRS 10.
According to the above and derived to the business combination took close at year-end 2015, the
preliminary distribution of the fair values of assets acquired and liabilities assumed at the date of
acquisition liabilities are as follows.
Cash
Other accounts receivable
Inventories
Property, plant and equipment
Intangible assets
Deferred income taxes
Other assets
Total assets acquired
Loans
Trade and other payables
Finance leases
Financial instruments
Other liabilities
Total liabilities acquired
$
$
350,482
314,055
180,313
806,375
8,794
19,170
111
1,679,300
$
470,492
220,852
20,153
4,205
133,909
849,611
Derivative transaction the Company recognized goodwill of $695,017 on a preliminary basis, which will
be adjusted during the period defined by IFRS 3, once the Company during the year 2016, complete with
independent third party valuations of securities reasonable net assets acquired, including intangible
assets and the effects of deferred tax in accordance with the guidelines established in IFRS 3.
For the twelve months to December 31, 2015, ACE generated revenues of $2,189,613 and a profit of
$99,771, if the acquisition had occurred on January 1, 2015, management estimates that consolidated
revenue and consolidated net profit could be promoted to $ 13,464,649 and $ 744.384, respectively.
b) Funcosa, S.A. de C.V.
As mentioned in note 1 (e), the December 1, 2014 the Company announced the acquisition of a
business called Funcosa, S.A. de C.V. During year 2015, the Company estimates valuations prepared
by independent third parties in connection with the acquisition of businesses in accordance with the
guidelines established in IFRS 3.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
According to the above distribution of fair values of assets acquired and liabilities assumed at the date
of acquisition are as follows:
Accounts receivable
Inventories
Transportation equipment
Intangible assets- brands
Total acquired assets
$
29,194
59,132
3,026
19,545
110,897
$
The amount paid for the transaction was $ 114,341 at December 31, 2014, during 2015 the Company
made payments to suppliers of the previous owner for $1,917 and subsequently received an adjustment
to the purchase price was $5,361, so the final price amounted to $110,897.
At December 31, 2014 was recognized intangible assets for $18,934 based on information that was
available at that date.
21 EARNINGS PER SHARE
The basic earnings per share are calculated by dividing the income attributable to common and preferential
stockholders by the weighted average of common and preferential shares in circulation, respectively,
during the year. The Company has no common shares with potential dilutive effects.
A reconciliation of the weighted average number of shares is shown below:
In thousands of shares
Shares
Weighted-average of shares for the period ended December 31
$
2015
355,826
2014
356,051
22REVENUES
Revenues include the following:
2015
Sale of products
Financial income
Other gross income (note 23)
Total income
$
$
11,275,036
43,772
74
11,318,882
2014
9,712,200
71,018
14,963
9,798,181
As of December 31, 2015 and 2014 the Company has deferred income for $23,730 and $31,311, respectively,
representing the fair value of the portion of the consideration received or to be received regarding the
development of new products and technology derived from tax incentives with CONACYT and support
provided by the government for various expansions of production facilities.
As of December 31, 2015 and 2014, management estimates that the clients will return approximately 2.81%
and 1.54% of the products, respectively.
.
109
110
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
23 OTHER (INCOME) EXPENSES
Other income includes the following:
2015
Cost of disposal of fixed assets
Disposal of fixed assets
Write off of fixed assets not used
Cancelation of non-recovered VAT
Government support CONACYT
Other income
Gain on sale of assets available for sale
$
-
$
2014
1,586
18,784
(13,770)
5,743
2,301
(888)
(95)
(210)
11,865
469
1,240
(54)
(20)
3,221
24 PERSONNEL COSTS
Personnel costs include the following:
Note
Salaries and wages
Expenses related to defined benefit plans
Expenses related to long-term service benefit plans
16
16
2015
$
$
609,869
42,223
5,057
657,149
2014
519,650
37,472
4,502
561,624
25 FINANCIAL INCOME AND COSTS
Recognized in income
Interest income in investments held to maturity whose value
has not decreased
Exchange fluctuation
Financial income
Interest expenses
Exchange fluctuation
Labor liability financial cost
Financial costs
Net financial (income) costs recognized in income
2015
$
$
2014
43,772
317,293
361,065
71,018
74,214
145,232
56,451
172,006
19,974
248,431
112,634
35,743
76,601
17,803
130,147
15,085
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
26 RELATED PARTY TRANSACTIONS AND BALANCES:
a) Operations with management and close relatives:
The Company holds no material business operations with members of management and close relatives
outside operations at arm’s length and available to the general public.
b) Compensations:
For the years ended December 31, 2015 and 2014, total compensation for the services rendered by our
advisors and directors was approximately $92,228 and $86,214, respectively. This amount includes
fees, salaries, variable compensation, retirement gratification and retirement.
27COMMITMENTS
a) Grupo Industrial Saltillo, S.A.B. de C.V. as jointly liable in a credit line agreement for current account
factoring providers with Nacional Financiera, S.N.C, for up to $300 million, with an outstanding
balance at December 31, 2015 amounted to $254 million pesos.
b) Guarantee granted by Calentadores de América, S.A. de C.V., Cinsa, S.A. de C.V., Cifunsa del Bajío,
S.A. de C.V., Manufacturas Vitromex, S.A. de C.V., Fluida, S.A. de C.V., Tisamatic, S de R.L. de
C.V., in favor of Grupo Industrial Saltillo, S.A.B. de C.V. in a contract of long-term credit with Banco
Santander (Mexico) S.A. as agent bank, Banco Nacional de Comercio Exterior, S.N.C., BBVA
Bancomer, SA, Comerica Bank, HSBC Mexico, Scotiabank Inverlat, SA and Banco Santander
Mexico, S.A. as financial creditors, up to US $76.5 million.
c) Turn on the shares of Automotive Components Europe, S. A. as collateral for the long-term credit
of Grupo Industrial Saltillo, S.A.B. de C.V. Banco Santander (Mexico) S.A. as agent bank, Banco
Nacional de Comercio Exterior, S.N.C., BBVA Bancomer, SA, Comerica Bank, HSBC Mexico,
Scotiabank Inverlat, SA and Banco Santander Mexico, S.A. as financial creditors, up to US $76.5
million.
d) Grupo Industrial Saltillo, S.A.B. de C.V. as surety for Manufacturing Vitromex, S.A. de C.V. lease a
forklift for an amount of US $901 with an outstanding balance of US $547 at December 31, 2015.
e) Cifunsa del Bajío, S.A. de C.V., jointly and severally liable for Evercast, S.A. de C.V. a master lease
computer equipment Hewlett-Packard Operations Mexico, S. de RL de C.V. as tenant for a balance
of US $174.
f) Grupo Industrial Saltillo, S.A.B. de C.V. as jointly liable for Evercast, S.A. de C.V. in a credit agreement
with Comerica Bank for up to US $ 50 million, with an outstanding balance at December 31, 2015
amounted to US $40 million.
g) Grupo Industrial Saltillo, S.A.B. de C.V. as jointly liable for Evercast, S.A. de C.V., in a contract of
revolving credit with Comerica Bank for up to US $5 million, the balance at December 31, 2015 has
not been set.
h) Guarantee issued by ACE Boroa S.L.U., for Feramo Metallum, International S.R.O. an overdraft
agreement with Banco Popular Español, S.A. creditor up to EUR $ 2 million, with an outstanding
balance amounts to EUR $ 280 a December 31, 2015.
111
112
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
i) Guarantee issued by ACE Boroa S.L.U. and Fuchosa, S.L.U. Feramo for Metallum, International
S.R.O. for long-term credit with Banco Bilbao Vizcaya Argentaria, S.A. EUR creditor to $3 million.
j) Guarantee given by Fuchosa, S.L.U., European Brake and Chassis Components SP. Z O.O., Feramo
Metallum, International S.R.O., Automotive Components Europe SA and ACE 4 A.I.E. for ACE
Boroa S.L.U. in a contract of long-term credit with CaixaBank, S.A., Banco Santander, S.A., as Lead
funder Bookrunners Banco Popular Español, S.A., Banco Bilbao Vizcaya Argentaria, SA, Bankinter,
SA, as Lead Funders CaixaBank, SA / Banco Santander, S.A., as Agent and CaixaBank, SA, as the
Security Agent, up to US $15 million. with an outstanding balance amounts to EUR $12.5 million to
December 31, 2015.
k) Guarantee granted by Fuchosa, S.A., European Brakes and Chassis Components SP. Z O.O.,
Feramo Metallum, International S.R.O., Automotive Components Europe SA and ACE 4 A.I.E. for
ACE Boroa S.L.U. on a revolving credit line with long-term CaixaBank, SA, Banco Santander, S.A.,
as Lead funders Bookrunners Banco Popular Español, S.A., Banco Bilbao Vizcaya Argentaria, SA,
Bankinter, SA, as Lead Funders CaixaBank, SA / Banco Santander, S.A., as Agent and CaixaBank,
SA, as the Security Agent, up to US $5 million. with an outstanding balance amounts to EUR $1.4
million to December 31, 2015.
l) Pledge granted on shares of Fuchosa, S.L., European Brakes and Chassis Components SP. Z
O.O., Feramo Metallum, International S.R.O., ACE 4C A.I.E. and ACE Boroa S.L.U. to ensure longterm loan of ACE Boroa S.L.U. with CaixaBank, S.A., Banco Santander, S.A., as Lead funders
Bookrunners Banco Popular Español, S.A., Banco Bilbao Vizcaya Argentaria, S.A., Bankinter, S.A.,
as Lead Funders CaixaBank, S.A. / Banco Santander, S.A., as Agent and CaixaBank, S.A., as the
Security Agent, which amounts to US $15 million, with an outstanding balance is US $12.5 million
at December 31, 2015, so ensuring the revolving credit line up by US $5 million. with an outstanding
balance amounts to EUR $1.4 million to December 31, 2015.
m) Guarantee accounts receivable European Brakes and Chassis Components SP. Z O.O. on a revolving
credit line with Bank Zachodni WBK S.A. up to US $3.5 million outstanding balance of US $1.5
million at December 31, 2015.
n) Guarantee granted by Fuchosa, S.A., European Brake and Chassis Components SP. Z.O.O., Feramo
Metallum, International S.R.O., Automotive Components Europe SA and ACE 4 A.I.E. for ACE
Boroa S.L.U. a contract for derivative financial instruments with CaixaBank, S.A., up to a maximum
amount of coverage to US $3.1 million December 31, 2015.
o) Awarded by Fuchosa Guarantee, S.A., European Brake and Chassis Components SP. Z O.O.,
Feramo Metallum, International S.R.O., Automotive Components Europe SA and ACE 4 A.I.E.
for ACE Boroa S.L.U. a contract for derivative financial instruments with Bankinter, S.A., up to a
maximum amount of coverage to US $3.1 million December 31, 2015.
p) Grupo Industrial Saltillo, S.A.B. de C.V and its subsidiaries use various banking instruments for the
acquisition of raw materials, parts, equipment and finished products especially for importing them
mainly letters of credit; such letters of credit issued on behalf of several suppliers have an unpaid
balance as of December 31 2015 US $ 25.7 million, which have been issued with several national
banks
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
28 FINANCIAL LEASES
Certain subsidiaries of GISSA held leasing contracts for the purchase of various fixed assets, which have
the necessary characteristics according to the regulations in which are reported to be regarded as such.
According to the regulations mentioned these leases are considered as financial liabilities.
These leases are detailed below:
2015
Feramo Metallum, International S.R.O., has several leases for the acquisition
of fixed assets. At 31 December 2015, the unpaid balance of these instruments
is EUR $72..
$
1,357
European Brakes and Chassis Components SP. Z.O.O., has several leases for
the acquisition of fixed assets. At 31 December 2015, the unpaid balance of
these instruments is EUR $994.
18,796
Grand total
20,153
Current portion of finance leases
4,788
Long-term leases
$
15,365
Maturities of long-term leases are detailed below:
2017
$
2018
4,531
2019
3,902
2020
2,052
$
4,880
15,365
The Company and its subsidiaries held leasing contracts within their production processes, which have all
the necessary features in accordance with the regulations in which are reported to be regarded as such.
These leases are detailed below.
a) Heating of America, Inc. de CV, Cifunsa del Bajío, S.A. de C.V., Vitromex Manufacturing, Inc. de C.V.,
Tisamatic, S. de R.L. de C.V., have operating leases, primarily for forklift equipment. As of December
31, 2015 and 2014, the expenses for these leases were approximately $1,057 and $1,468 dollars,
respectively.
b) Asesoría y Servicios GIS, S.A. de C. V., Calentadores América, S. A. de CV, Cifunsa del Bajío, S.A. de
C.V., Cinsa, S.A. de C.V., Fluida, S.A. de C.V., Manufactureras Vitromex, S.A. de C.V., and Tisamatic, S.
de R. L. de C.V., have leasing contracts for computer equipment with defined lifetimes. As of December
31, 2015 and 2014 these leasing expenses were approximately $1,002 and $957 dollars, respectively.
113
114
EC ON OM IC PE RF O RM AN CE _ F IN ANC I A L I N FO R MA T I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
c) Asesoria y servicios GIS, S.A. de C.V., Aximus, S.A. de C.V., and Azenti, S.A. de CV, have leasing
contracts for cars with defined lifetimes. As of December 31, 2015 and 2014, leasing expenses were
approximately $17,561 and $15.365, respectively.
d) Tisamatic, S. de R.L. de C.V. and Cifunsa del Bajío, S.A. de C.V., have operating leasings, primarily
of compressors. At December 31, 2015 and 2014, the leasing expense was approximately US$201 y
US$343, respectively.
e) Asesoría y Servicios GIS, S.A. de C.V., Calentadores de América, S.A. de C.V., Cifunsa del Bajío, S.A. de
C.V., Cinsa, S.A. de C.V., Azenti, S.A. de C.V., Fluida, S.A. de C.V., Manufacturas Vitromex, S.A. de C.V.,
and Evercast, S.A. de C.V., have operating leasing contracts of real state with defined lifetimes. As of
December 31, 2015 and 2014, the expense for these leases was approximately $32,233 and $16,242,
respectively.
The future minimum annual payments for these operating leases by currency are as follows:
Year
Million
of dollars
2016
2017
2018
2019
2020
1,933
1,202
284
54
67,540
44,985
37,394
26,946
21,375
3,473
198,240
$
Million
of Pesos
29CONTINGENCIES
a.Litigations
The Company is involved in a number of lawsuits and claims, arising from its ordinary course of business;
those matters are not expected to have a significant impact on the Company’s future financial position
and results of operation.
In cases whose resolutions are considered likely and that will mean an outflow of cash or other resource
from the Company, accruals have been recorded that represent the best estimate of these likely
payments.
E C O N O MI C P E R FO R M ANC E_ FI NANC I AL I NFO RMAT I O N
Grupo Industrial Saltillo, S. A. B. de C. V. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2015 and 2014 (In thousands of pesos)
b. Tax contingencies
Under tax laws in force, the authorities are empowered to review up to five tax years prior to the most
recent income tax return filed.
According to the Income Tax Law, companies conducting operations with related parties are subject
to certain tax limitations and obligations as concerns the agreed pricing, which must be comparable to
the prices agreed by or between independent parties engaged in similar operations.
If the tax authorities review prices and disallow the amounts determined, they could demand payment
of fines on unpaid tax, which can be up to 100% of the restated amount of the unpaid tax, aside from
the tax itself and the respective ancillary charges (inflation adjustment and interest on unpaid taxes).
115
116 E CON OM IC PE R F OR MAN C E_ C O R P O R AT E G O V ERNANC E
CORPORATE GOVERNANCE
EC ONOMIC PERFORMANC E_C ORPORATE G OVE RNA NCE
C
orporate Governance is the mechanism regulating relationships among the company
shareholders, directors and administration, through definition of strategic, operational,
monitoring and management roles.
Grupo Industrial Saltillo, S.A.B. de C.V. supports its operation on Corporate Governance structure,
besides adhering to the Code of Best Corporate Governance Practices in force.
Our Corporate Governance includes:
• BOARD OF DIRECTORS
• AUDIT COMMITTEE
• COMMITTEE OF CORPORATE PRACTICES
• FINANCE COMMITTEE
• EXECUTIVE COMMITTEE
To define the constitution and roles of the Board of Directors and the above Committees, the
Company complies with provisions in the Securities Market Law, particularly in Sections 24, 25,
28, 41, 42 and 43.
The Board of Directors, as well as the Committees emanating from it, is made up of entrepreneurs
who contribute their knowledge and experience in favor of defining and following up the strategy
of GIS and related companies.
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118 E CON OM IC PE R F OR MAN C E_ C O R P O R AT E G O V ERNANC E
BOARD OF DIRECTORS
The Board of Directors is responsible for defining the corporate strategic vision, defining and
supervising the implementation of our Philosophy and Values, as well as for monitoring the
operations with related parties. It promotes the use of information quality assurance methods,
as well as systems for identification, analysis, administration, control and adequate disclosure of
risks. It likewise fosters establishing internal control mechanisms.
Every year, the CEO of GIS submits the investment budget to the Board; the budget details
purchases and improvement of productive equipment contributing to enrich the quality of life
of our employees at the workplace, the achievement of the strategic plans, development of
operative and commercial activities which will enhance advantages for our businesses, as well as
environmental preservation and improvement.
The Board of Directors is made up of ten full directors: five directors with an ownership stake and
five independent directors.
The Board of Directors monitors GIS integral performance and adherence to Corporate
Governance practices and policies, supported by the Audit, Corporate Practices and Finance
Committees.
The Board meets at least 6 times a year, within the pre-scheduled calendar and evaluates financial
results, as well as the achievement of strategic, social and environmental goals of the company,
within other activities that the different committees may be part of.
GOVERNANCE COMMITTEES
COMMITTEES
STATUS
LUIS ARIZPE JIMÉNEZ
Audit, Corporate Practices
Independent
FERNANDO CHICO PARDO
Finance
Independent
EUGENIO CLARIOND REYES-RETANA
Audit
Independent
ALEJANDRO DÁVILA LÓPEZ
Finance
Patrimonial
GUILLERMO ELIZONDO LÓPEZ
Finance
Patrimonial
FRANCISCO GARZA EGLOFF
Corporate Practices
Independent
CLAUDIO X. GONZÁLEZ LAPORTE
Corporate Practices
Independent
ALFREDO LIVAS CANTÚ
Audit
Independent
FERNANDO LÓPEZ ALANÍS
Finance
Patrimonial
ERNESTO LÓPEZ DE NIGRIS
Finance
Patrimonial
JUAN CARLOS LÓPEZ VILLARREAL
Finance
Patrimonial
MANUEL RIVERA GARZA
Finance
Independent
EC ONOMIC PERFORMANC E_C ORPORATE G OVE RNA NCE
Evaluate the company internal control systems and the Internal Audit management; identify and
respond to any major deficiency; follow up on corrective or preventive measures taken in the event
of noncompliance with the operating and accounting guidelines and operating policies; evaluate
the performance of the External Auditors; describe and evaluate the services provided by the
External Auditors but not related to the audit of the financial statements; review and propose to
the Board for approval, the Financial Statements of the Company; evaluate the effects resulting
from any change to the accounting policies approved during the fiscal year; monitor compliance
with the resolutions of the General Shareholders’ Meetings and the Board of Directors; ensure
compliance with the Code of Ethics and the operation of the Reporting System established
therein.
The Committee is made up of four independent directors. The Chairman is appointed by the
Shareholders’ Meeting; the other three members are appointed by the Board of Directors.
Independent Directors are selected by their capacity, experience and professional prestige who
may perform their activities free from conflicts of interest and not subject to personal, equity or
economic interests.
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120 E CON OM IC PE R F OR MAN C E_ C O R P O R AT E G O V ERNANC E
COMMITTEE OF CORPORATE PRACTICES
Evaluate performance of relevant executives and review their compensation; review policies and
guidelines for the use or enjoyment, by related persons, of property forming part of the assets
of the company and its controlled legal entities; support the Board of Directors in preparing the
Annual Report presented to shareholders and implement activities under the Securities Market
Law.
Pursuant to our Corporate Bylaws, the Committee of Corporate Practices is made up of six Board
members, three of them are Independent Directors. The Committee members are annually
appointed by the Board of Directors based on the proposal of the Chairman of the Board. The
Committee Chairman, who must be an Independent Director, is appointed by the Shareholders’
Meeting. The communication mechanism with the Board of Directors is through Board meetings
held following the pertinent call, at least six times a year. At the Board Meetings, financial results
are evaluated, as well as compliance with the company strategic, social and environmental goals.
This Committee communicates with the Board of Directors through their meetings, at least 2
times a year, previously scheduled.
FINANCE COMMITTEE
This Committee makes recommendations to the Board, on the analysis carried out of the
Businesses strategic plans, investments and acquisition and disinvestment proposals submitted
by the CEO. It issues their points of view on investment instruments and loans to finance the
Group expansions, and also about investment funds and policies. The Committee is made up of
nine members from the Board of Directors.
EC ONOMIC PERFORMANC E_C ORPORATE G OVE RNA NCE
EXECUTIVE COMMITTEE/LEADERSHIP TEAM
The Executive Committee is the group of CEOs
and Corporate Directors meeting with the CEO
on a monthly basis. The primary goal of this
Committee is to submit to the CEO the monthly and
accumulated results from businesses, as well as
strategies and tactics to be followed over the year
to achieve the goals set by the Board of Directors.
The Committee carries out long-term strategic
planning drills and defines its annual budget using
strategic metrics to be met in the business, and
these documents are authorized by the Board
of Directors. The Committee also adopts its own
policies for managing business and submits the
changes or adjustments to practices and policies
it is entitled to authorize to the Board, through the
CEO.
For each Business Unit, there is a CEO and
Executive Team replicating the role of GIS Executive
Committee as regards its competence level.
The Audit, Corporate Practices, Finance and
Executive Committees hold meeting several times a
year according to an agenda. The CEO submits the
recommendations proposed by such Committees
for Board of Directors’ approval.
GIS EXECUTIVE COMMITTEE
José Manuel Arana Escobar
CEO
Jorge Mario Guzmán Guzmán
Finance
Luis Fernando Saldamando Arvizu
Human Talent
Valente Garza Recio
Supply Service
José Manuel Garza Martínez
Cifunsa
Paolo Bortolan
Vitromex
César E. Cárdenas Rodríguez
Calorex
Javier Cantú Garza
Fluida
Ricardo Sandoval Garza
Cinsa
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122 E CON OM IC PE R F OR MAN C E_ C O R P O R AT E G O V ERNANC E
INFORME ANUAL DEL COMITÉ DE AUDITORÍA
TO THE BOARD OF DIRECTORS OF
GRUPO INDUSTRIAL SALTILLO, S.A.B. DE C.V.
Pursuant to the provisions set forth in Articles 42 and 43 of the Stock Market Law and the Audit
Committee Regulations, I hereby report to you the activities that we have carried out throughout
the year ended on December 31st, 2015. During the development of our work, we have kept in
mind the recommendations set forth in the Code of Best Corporate Governance Practices. We
have met at least quarterly and based on a work plan, we have carried out the activities described
below.
RISK ASSESSMENT
We have checked that the Administration, in compliance with its responsibilities, had carried out
the process for the identification and assessment of the main risks faced by business operations,
for the implementation of activities and controls to help mitigate them.
INTERNAL CONTROL
We have thoroughly monitored the advances in the implementation process and the improvement
on the internal control system delivered by the Administration through quarterly reports made
by the respective areas and, as a result, we have expressed our comments and remarks which
have been taken into account for its improvement.
EXTERNAL AUDIT
We recommended to the Board of Directors the hiring of external auditors for the Group and its
subsidiaries for the fiscal year 2015. For this purpose, we checked their independence and the
compliance with the requirements established in the Law. Together, we analyzed their approach
and work plan, as well as their coordination with the Internal Audit area.
We kept continuous and direct communication to learn about the progress of their work, their
possible remarks, and to take note of their comments on their revision of the quarterly and annual
financial statements. We had a timely learning of their conclusions and reports about the annual
statements and monitored the implementation of the remarks and recommendations which they
had developed in the course of their work.
We recommended the approval of the fees paid to the external auditors for their auditing services
and other services permitted, ensuring they would not interfere with their independence from the
company.
We began the process of assessment for their services concerning fiscal year 2015, which will be
reported in due time.
EC ONOMIC PERFORMANC E_C ORPORATE G OVE RNA NCE
INTERNAL AUDIT
With the purpose of keeping their independence and objectivity pursuant to the current applicable
regulation and, in accordance with the General Direction, we concluded that the Internal Audit
area shall report the Audit Committee about their functions.
In due time, we reviewed and approved the annual audit program, ensuring it had been planned
taking into account the operational and business risks in the various units within the Group.
Therefore, we also approved the annual budget and the organizational structure of the area.
We received regular reports concerning the progress of the approved work plan, its variations,
and the causes that created them.
We followed up on the remarks and suggestions they had developed and on their timely
implementation.
We ensured that an annual training plan for the personnel of the area was implemented.
We began a process of assessment for the Internal Audit services to be carried out by the officers
in charge of the business units and by the Committee itself.
FINANCIAL INFORMATION, ACCOUNTING POLICIES AND REPORTS TO THIRD PARTIES.
We reviewed together with the people in charge of their preparation, the quarterly and annual
financial statements of the Company, and we recommended to the Board of Directors their
approval and authorization to be published. As part of this process, we took into account the opinion
and comments by the external auditors and we ensured that the criteria and the information and
accounting policies used by the Administration to prepare the financial information are proper
and sufficient and that they had been applied consistently with the previous fiscal year. Therefore,
the information submitted by the Administration reflects in a reasonable way the Company’s
financial position, cash flows, and the results of the operation for the year ended on December
31st, 2015.
We also reviewed the quarterly reports prepared by the Administration to be submitted before
the Mexican Stock Exchange, shareholders and the general public, verifying that they were
prepared in accordance with the international regulations on financial information, using the
same accounting criteria used for preparing the annual information. Our revision included our
satisfaction, that there is a comprehensive process providing reasonable safety about its content.
As a conclusion, we recommended the Board to approve its publication every quarter.
We approved the inclusion to the Company accounting policies of the new accounting procedures
that came into force in 2014 as a result of the adoption of the international accounting regulations.
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124 E CON OM IC PE R F OR MAN C E_ C O R P O R AT E G O V ERNANC E
We approved the inclusion
accounting policies of the
procedures that came into
a result of the adoption of
accounting regulations.
to the Company
new accounting
force in 2014 as
the international
We reviewed, analyzed, gave our opinion and,
where appropriate, we reviewed the accounting
register of the following relevant operations:
•Joint Venture with Fagor Ederlan
S. Coop. Ltda
•Share acquisition of Automotive
Components Europe S.A.
(“ACE Group”) and the corresponding
credit for the operation.
REGULATION
COMPLIANCE,
ASPECTS AND CONTINGENCIES
LEGAL
We confirmed the existence and reliability of
the controls established within the Group to
ensure the compliance of the various legal
dispositions it is subjected to, ensuring that they
are adequately disclosed on the accounting
information.
We reviewed the various fiscal, legal and work
contingencies within the Group regularly,
monitoring the effectiveness of the procedure
established for their identification and follow
up, and their proper disclosure and register.
We checked the complaints received by the
System established by the Company for these
matters, monitoring their proper and timely
attention.
ADMINISTRATIVE ASPECTS
We carried out regular meetings between the
Committee and the Administration to keep
us informed about Company operations,
activities, relevant and extraordinary events.
We also met the external and internal auditors
to comment on the development of their work,
the limitations they may have encountered
to carry it out, and we sought to facilitate any
private communication that they may want to
establish with the Committee.
We held executive meetings with the
exclusive participation of the members of the
Committee, establishing therein agreements
and recommendations for the Administration.
The President of the Audit Committee reported,
on a quarterly basis, to the Board of Directors
the activities that were developed.
The work we did was duly documented on the
minutes of each meeting held, which were
reviewed and approved by us.
Sincerely,
CODE OF CONDUCT
We checked the existence of adequate
processes for the compliance with the Code
of Ethics, including its revelation to the
personnel, its update, and the implementation
of corresponding penalties in the cases where
violations were detected.
Mr. Luis Arizpe Jiménez
President of the Audit Committee
February 24th, 2016
EC ONOMIC PERFORMANC E_C ORPORATE G OVE RNA NCE
REPORT OF CORPORATE PRACTICES
FEBRUARY 25TH, 2016
TO THE BOARD OF DIRECTORS
GRUPO INDUSTRIAL SALTILLO, S.A.B. DE C.V. (THE “COMPANY”)
On behalf of the Corporate Practices Committee, I hereby submit before you the report regarding
the activities that the Committee itself carried out during the corporate fiscal year ended on
December 31st, 2015, in compliance with the provisions set forth in Article 43 of the Stock Market
Law and Article 40 of the Company’s bylaws.
During the corporate fiscal year, in the performance of its duties, the Committee gave their
recommendations on matters related to them, emphasizing:
1.
The performance of relevant Executives during year 2014, as well as the payment of
their corresponding fixed and variable compensation made during 2015. The revision
and approval of the objectives for the year 2015
2.
Metrics for wages and salaries, as well as compensation for Relevant Directors and
Chairman for 2015
3.
The process of succession of the Auto Part Business Director, which included: a)
definition of the position profile for the challenges of the Sector, b) evaluation of
candidates for the position
4.
The revision and approval of the objectives and metrics of the relevant Executives and
the short and long term Variable Compensation Plan for the year 2015
5.
The succession plans of the relevant Executives
6. The compensation plan for first level executives of Automotive Components Europe
7. The new position of Institutional Relations
8.
To date, this Committee is not aware that the Board of Directors, or any Director, or
relevant Executive is taking advantage of business opportunities for themselves or for a
third party, which belong to the Company or its subsidiaries; and that the Company had
made operations with third parties that are significant.
Mr. Francisco Garza Egloff
President of the Corporate Practices Committee
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126 E NVIR ON M E N T A L P ER F O R MAN C E_ C AL O R EX
ENVIRONMENTAL PERFORMANCE
ENVIRONMENTAL PERFORMANC E_CA LORE X
n the GIS Commandments, within our Mission, we
declare: To create economic value, generate progress
Iopportunities
and improve the well-being of all the
ELECTRICITY * kWh /millions of pesos
people and institutions with whom we interact.
2015
The interaction with the environment is also implicit
in our Commandments because we have defined
Sustainable Development as one of our Values.
2014
788,577.75
1,197,223.43
2013
1,390,332.98
Within this value, we assume the following commitments:
• Take care of the environment
• Well manage of raw materials and other supplies
• Promote the use of renewable energies
• Improve the quality of life
• Satisfy the needs of our interested parties
In each of our Businesses we carry out actions aligned
and focused on reducing the impact of the environmental
footprint of our operations with the aim of preserving the
environment in the communities where we participate.
NATURAL GAS * m3/millions of pesos
2015
2014
222,164.57
305,765.57
2013
393,070.09
One of the behaviors that we promote is the proper
utilization of energy resources, as well as the use of
clean and efficient technologies that allow us to -beyond
the savings - have environmentally friendly processes.
We have zero discharges of water facilities, which
implies that we reuse this vital liquid in the processes
and maximize its use, an example is the newly opened
production unit of Evercast in Irapuato, Guanajuato.
Since the last quarter of 2015, around 70% of the
electricity that we use in some of our operations is
generated in Cosoleacaque, Veracruz, under an efficient
cogeneration process, which is a cleaner process than
the carbon-based one.
We encourage the active and volunteer participation
of our employees and their families in environmental
activities, in order to build an awareness of environmental
responsibility.
During the year, we held events at the locations where we
operate. We carry out reforestations, cleaning of public
parks and refurbishment of schools, besides planting
trees in our own facilities.
LP GAS * m3/millions of pesos
2015
2014
713.66
2013
829.88
EMISSIONS OF CO2* tons of CO2 / millions of pesos
2015
2014
920.88
1,329.15
2013
With reference to our GIS Commandments, we
understand Sustainability as a relation between natural
resources, supplies and materials that we use or
generate in the manufacturing of our products, and the
profit or economic benefit that we get from selling them.
In the course of 2015, we generated a higher economic
value with a more efficient use of energy resources,
which reinforces the alignment with our mission to be a
company that creates value for all our stakeholders.
639.81
1,647.91
WATER * m3/millions of pesos
2015
2014
2013
1,923.84
2,543.85
3,328.29
* Consumption of facilities in Mexico, excluding joint ventures and ACE’s units Europe.
127
128 E NVIR ON M E N T A L P ER F O R MAN C E_ C I F U N SA
AUTO PARTS
ifunsa is a company dedicated to the
C
foundry and machining of automotive
parts in gray and ductile iron; It currently has
production plants in three cities in Mexico:
Saltillo, San Luis Potosí and Irapuato.
In this Business, we managed to achieve an
absolute reduction of more than 6.5% in the
generation of Non-hazardous Waste, as a
result of the strategies to decrease leaks in the
systems of sand, process control and reuse of
materials.
In Saltillo, as a request of our customer
Nissan, we participated successfully in the
“Carbon Disclosure Project” (CDP). Through
this evaluation project, we obtained a score
of 80 points in shared information and a letter
D in performance; both results are above the
average of the supply chain of our customer.
In addition to the carbon footprint, the CDP
measures the footprint related to water. In
this case, the Saltillo facility achieved a rating
of B-, which is positioned above the supply
chain’s average, so we assure our continuity
as suppliers of Nissan.
The same unit in Saltillo obtained the ISO
14001 certification in April, and the productive
units in San Luis Potosí and Irapuato kept their
certification in 2015. Aiming on continuous
improvement, we carried out audits with an
external provider, Eiffel Group, in the plants
in Saltillo and San Luis Potosí, the first one
managed to close 80% of their findings by the
end of 2015.
Altogether, the Cifunsa units used the electric
energy more efficiently in their processes,
which led us to improve the indicator by 5.5%
in relation to 2014. This advancement was
the result of efficiency achieved in the use of
furnaces and lines of molding, as well as the
replacement of lighting, implementation of an
automatic control of furnaces demand and
restructuring of exhaust systems.
The measures to reduce the consumption of
natural gas in the units of Irapuato and Saltillo,
such as the elimination program of obsolete
pipes and the improvements in the preheating
system of pots for the foundry process,
improved their indicator by more than 25%
ENVIRONMENTAL PERFORMANC E_CIFUNSA
THE REDUCTION IN 5.5% OF THE ELECTRIC CONSUMPTION PER TON RESULTED IN A
NET REDUCTION OF MORE THAN 13 MILLION KWH
POWER CONSUMPTION (kWh/ton produced)
compared to 2014. The increase in the use of the LP gas
core oven in the San Luis Potosí plant during the first
half of the year didn’t allow us to reduce the use of LP
gas, but in the second half we worked on a project to
install a new core process not requiring the use of this
resource. With this measure, we seek to move forward
in this indicator over the next years.
The changes implemented to use a greater amount of
recycled process water, and the efforts to maintain
the quality of the water in the cooling processes were
the reasons why it was not possible to lower water
consumption in the accumulated Cifunsa units. But
we remain aligned to our mission to use more recycled
water and promote the reuse of the same. Solely in the
San Luis Potosí plant, we achieved an improvement of
more than 8% in water consumption per ton produced
thanks to the efficiency achieved in the operation of the
cooling towers system.
2015
GOAL 2015
2014
2013
1,858
1,929
1,968
1,926
NATURAL GAS CONSUMPTION * (m3/ton produced)
2015
GOAL 2015
2014
2013
7.87
10.76
10.98
11.70
* Consumption only in the productive units in Saltillo,
Coahuila. and Irapuato, Gto.
During the year, we followed strictly the Mexican Official
Standards for Pollutant Emissions to the environment
thanks to the monitoring of 100% of the stacks in the
three locations.
LP GAS CONSUMPTION (m3/ton produced)
2015
GOAL 2015
2014
2013
1.89
1.66
1.68
1.75
EMISSIONS OF CO2 (tons CO2 /ton produced)
2015
0.95
GOAL 2015 N/A
2014
2013
1.02
1.00
TOTAL WATER CONSUMPTION (m3/ton produced)
2015
GOAL 2015
2014
2013
2.48
2.04
2.09
2.02
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130 E NVIR ON M E N T A L P ER F O R MAN C E_ EV ER C AST
I
n the plant of Evercast, derived from the installation of world class technology for casting that
was used since its design and installation, a consumption of 2,107 kWh/tonne produced was
reached, a value that reflects an excellent performance despite tests and intermittent starts
which are characteristic of any casting process start.
During the beginning, which was in June, despite the stabilization of the water system, they
managed a water consumption of 2.94 m3 /ton produced, which reflects the commitment of
correct use and reuse of the vital liquid.
Since its design, it was conceptualized as a plant of zero water discharge, which will ensure
the 100% reutilization of sanitary-use and production process-use water. Once the treatment
process stabilizes, the water will be reused in the process of sand and W.C., through a process
of treated water recirculation that meets the standards of quality required by the Mexican
Environmental Standards in force, ensuring a re-use and exploitation of the vital liquid.
Proof of this is the achievement, at the end of 2015, of a water consumption indicator of 2.94
m3/ton produced, better than the standard, which reflects the commitment for the proper
use and reuse of water, which will improve during 2016, since the process reaches its optimal
operation with a stable production.
ENVIRONMENTAL PERFORMA NCE _ A CE
T
he ACE facilities in Spain, Czech Republic and Poland have their existing ISO 14001 certificate.
In total, more than 220,000 Euros were invested in the improvement and optimization of
dust collection systems.
Demonstrating its commitment to the attention, protection and improvement of the
environment, plants of Spain and Czech Republic are certified with EMAS III, a leader in systems
of environmental management in Europe. In addition, the Spanish plant received the “Silver
Diploma” recognition for reaching 10 years of certification in this standard.
The production units of ACE continuously track indicators of resource consumption, and during
2015 invested more than 12,000 Euros to ensure the proper functioning of the water treatment
systems for operations in Spain and Czech Republic; the latter monitored throughout the year
in compliance with applicable legal requirements by the IPCC for its operation.
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132 E NVIR ON M E N T A L P ER F O R MAN C E_ V I T R O MEX
W
ith production units in Chihuahua, San Luis Potosí, San José Iturbide and Saltillo, the
Business produces ceramic and porcelain tiles for floor and wall covering.
During the year that ended, Vitromex carried out a program of environmental audits in all its
productive units through the specialized offices Group Eiffel, Zira consultants, Ramboll Environ
and SIESI.
Within the 5 units, include highlight the plant in Chihuahua, Chihuahua, which ended the year by
closing the 87.5% of the findings that were found.
Continuing the actions that Vitromex carried out since 2013 to help maintain biodiversity, more
than 1,800 species were rescued in our banks of materials and we initiated the production of
endemic species of the city of Chihuahua in a greenhouse that was built in that city.
ENVIRONMENTAL PERFORMANC E_VIT ROM E X
THE PRODUCTION OF MORE THAN 5,000 SPECIES OF ENDEMIC
PLANTS IN OUR GREENHOUSE ALLOW US TO CONTRIBUTE TO THE
MAINTENANCE OF BIODIVERSITY
In 2015, this Business unit produced more than 5,000
plants of different species: Acasia rigidula (chaparro
prieto), Dasilyrion texana (sotol), Celtis pallida
(granjero), Acasia farnesiana (huizache) y Prosopis
laevigata (mezquite).
Aligned with our Sustainable Development Value, 1,000
cedars and 500 broad-leaf privets were planted in the
mill that gives service to our plant located in Saltillo,
Coahuila.
In 2015 the plant of Vitromex operating in San Luis Potosí,
kept the certifications of Clean Industry, granted by the
PROFEPA, and Green Squared, delivered by the Ceramic
Council of North America. In relation to 2014, this plant
improved its individual indicators on consumption of
electricity, natural gas and water.
Vitromex continually renews its product portfolio
and improves their quality with the inclusion of new
digital printing equipment and processes of polish
and cut. This led to the increase in its consumption of
electricity, natural gas and water in comparison to 2014,
but contributed a significant added value to products,
allowing us to achieve customers’ satisfaction and offer
better solutions.
POWER CONSUMPTION (kWh/m2 produced)
2015
GOAL 2015
2014
2013
3.07
2.98
3.02
3.14
NATURAL GAS CONSUMPTION (m3/m2 produced)
2015
GOAL 2015
2014
2013
2.69
2.59
2.62
2.63
EMISSIONS OF CO2 (tons CO2/m2 produced)
2015
GOAL 2015 N/A
2014
2013
0.0078
0.0076
0.0078
TOTAL WATER CONSUMPTION (m3/m2 produced)
2015
GOAL 2015
2014
2013
0.0128
0.0122
0.0124
0.0130
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134 E NVIR ON M E N T A L P ER F O R MAN C E_ C AL O R EX
W
e produce and sell the largest range of water heaters through our production unit located
in Saltillo, Coahuila.
We concluded 75% of the findings detected during the external audit which Eiffel Group held
in 2015. With the actions implemented to reduce the metal scrap from cutting and diecutting
processes, the indicator of non-hazardous generation improved by more than 9%.
In the second half of the year, we started the second line of instantaneous water heaters and
we extended operations of the residential line. These advancements were the result of the
commercial strategies of the Business, allowing us to correctly use the resources and equipment
available.
ENVIRONMENTAL PERFORMANC E_CA LORE X
In electric consumption, we improved our performance
by more than 2% as a result of the technological update
and the use of more efficient and productive equipment.
The renovation of burning hooks ovens with more efficient
equipment, as well as a better production planning so
as to have a higher saturation of the ovens, were the
key to achieve the proposed objective and achieve an
advancement of more than 10% in the consumption of
natural gas in Calorex.
With the implementation of a water recovery system for
residential and commercial lines, we decreased more
than 15% the consumption of that resource.
During the year ended, in Calorex we carried out
investments for the renewal of shot blaster collection
systems, in order to maintain compliance with the
emissions to the atmosphere, as well as to improve
the working conditions and extend the useful life of the
equipment.
POWER CONSUMPTION (kWh/piece produced)
2015
GOAL 2015
2014
2013
7.52
7.582
7.697
7.907
NATURAL GAS CONSUMPTION (m3/piece produced)
2015
GOAL 2015
2014
2013
3.022
3.316
3.367
3.719
EMISSIONS OF CO2 (tons CO2/piece produced)
2015
GOAL 2015 N/A
2014
2013
0.0122
0.0131
0.0141
TOTAL WATER CONSUMPTION (m3/piece produced)
2015
GOAL 2015
2014
2013
0.045
0.052
0.053
0.069
WITH THE EFFICIENT USE AND REUSE OF
WATER, WE ACHIEVED A 15% REDUCTION
IN THE CONSUMPTION OF M3/PRODUCED PIECE
135
136 E NVIR ON M E N T A L P ER F O R MAN C E_ F L U I D A
I
n this Business we market products for the conveyance of water and gas in materials such as
iron and copper, as well as PVC, CPVC, Pe - to - Pe and PPR.
At the end of 2014, we completed the acquisition of Funcosa, marketer of connections and
pipes, as well as solutions for solar energy-based water heating.
Aligned with our Sustainable Development Value and taking advantage of the synergies between
the GIS Businesses, from 2015 we began to produce the solar water heater Funcosol in the
Calorex plant in Mexico.
We renewed the lighting system of our distribution center in the city of Toluca, with this we were
able to reduce by 36% the installed charge, which fell from 27,776 w to 17,912 w.
ENVIRONMENTAL PERFORMANCE _ CINSA
ne of the Businesses of greater tradition in GIS is Cinsa, a company dedicated to the
O
production of kitchenware and tableware. It has four production units in the city of Saltillo,
three dedicated to the manufacturing of pots, pans and kitchen batteries made of enamel steel
and aluminum, and a plant producing ceramic tableware.
In 2015, we invested $650,000 pesos in the purchase and installation of two collectors of dry
particles for the kitchenware plants in order to improve uptake of particles.
In line with the Sustainable Development Value, we planted more than 30 trees in the kitchenware
and tableware facilities to contribute to the improvement of the environment.
The productive units of kitchenware and tableware recorded an increase in energy consumption
per unit produced, reflecting the integration of the labeling equipment to ensure the positioning
of Cinsa and Santa Anita brands on their products. Seeking to mitigate this increase, a highwattage lighting replacement project began in kitchenware plants with technologies of lower
electricity demand.
Improving the quality of the kitchenware and tableware, we increased water consumption due
to processes of washing, in which we use a higher quantity of treated water than virgin well
water. In this way, we remain aligned to our Sustainable Development Value of recycling the
vital liquid.
KITCHENWARE PRODUCTS
TABLEWARE PRODUCTS
POWER CONSUMPTION (kWh/piece produced)
2015
GOAL 2015
2014
2013
POWER CONSUMPTION (kWh/piece produced)
742
2015
GOAL 2015
2014
2013
720
728
709
NATURAL GAS CONSUMPTION (mm3/piece produced)
2015
GOAL 2015
2014
2013
O.59
0.50
0.51
0.49
2015
GOAL 2015
2014
2013
TOTAL WATER CONSUMPTION (m3/ton produced)
2015
GOAL 2015
2014
2013
5.24
4.18
4.20
7.64
0.000283
0.000272
0.000274
0.000277
EMISSIONS OF CO2 (tons CO2/ton produced)
1.94
1.75
1.75
0.341
NATURAL GAS CONSUMPTION (mm3/piece produced)
EMISSIONS OF CO2 (tons CO2/ton produced)
2015
GOAL 2015 N/A
2014
2013
0.321
0.318
0.319
WE INVESTED $650,000 PESOS
TO IMPROVE THE SYSTEMS
IN PRODUCTION AREAS
AND REDUCING EMISSIONS
TO THE ENVIRONMENT
2015
GOAL 2015 N/A
2014
2013
0.00089
0.00087
0.00088
TOTAL WATER CONSUMPTION (m3/ton produced)
2015
GOAL 2015
2014
2013
0.00374
0.00354
0.00358
0.00387
137
138 S OCIA L PE R F OR M A N C E_ G I S
SOCIAL PERFORMANCE
S OC IAL PERFORMANCE _ GIS
TO PROMOTE THE COMPREHENSIVE GROWTH OF THE EMPLOYEES,
GIS INVESTS SIGNIFICANT RESOURCES IN ORDER
TO EXPERIENCETHE VALUE OF HUMAN DEVELOPMENT.
I
n GIS we are corporate citizens, and as members of the community, we interact with institutions,
associations and the environment.
In the beginning of 2015, we presented the GIS Commandments to our team members, a
document that integrates our organizational philosophy: Mission and Vision, our values and
pillars on which we are building the growth of the group.
During the year we carry out various events and actions to the length and breadth of the
organization to promote the experience of the GIS Values and align our employees towards the
achievement of the objectives.
Having the Commandments as our basis, we build relationships with customers, consumers,
employees, suppliers, shareholders, organizations of civil society and Government institutions
in each of the communities where we have operations.
In particular, at GIS we strengthen our relationship with more than 7,500 employees that are
part of the Businesses in Mexico and now in the world.
GIS destines significant resources to live the Value of Human Development, promoting the
comprehensive growth of the employees and their families, seeking, in addition, the generation
of opportunities of progress and well-being of the communities in which it participates.
139
140 S OCIA L PE R F OR M A N C E_ O U R EMP L O YEES
OUR EMPLOYEES
T
hrough the talent of GIS, the leadership of
its brands is strengthened every day thanks
to the quality and efficiency of its products,
that continually venture into new markets as a
result of innovation.
In order to cope with the growth of GIS towards
globalization, in 2015 we started a new
management culture that seeks to develop the
talent that will guide the organization towards
its Vision.
To achieve this purpose, we carried out actions
aimed for improving the working conditions
and working environment aligning objectives
by means of communication from senior
management and recognition to its partners.
During 2015, in Mexico, GIS invested more
than 27 million pesos in development, training,
and specializing of our entire workforce, which
represents the 2.52% of the payroll, being this
the reference indicator in the industries where
we participate.
In Mexico, we continue providing a GIS
Leadership Program, which is based on the
growth of its employees as honest, responsible,
and self-conscious people, conscious of
managing their emotions and how these
impact the people with who they coexist and
interact day by day. Through this program,
they develop skills of communication,
responsibility, and team work to satisfy our
customers.
Using different tools, participants analyze,
reflect and discuss their life experiences and
the different roles that play in their work and
family in learning communities. During 2015,
1,927 employees took part in the Leadership
Program, including the so-called “Star Points”,
who are leading contributors to the operation
of their Businesses.
TRAINING INVESTMENT
(MILLIONS OF PESOS)
PAYROLL COST IN BASE SALARY (%)
S OC IAL PERFORMANC E_OUR EM PLOYE E S
The agenda for GIS’s development includes, in addition to training, two formal sessions of
dialogue between managers and employees, which are documented by the “Success Factors”
Talent Management System. These meetings allow to monitor advancements in the performance
objectives and the results of its 360-degree evaluations.
ACE, in Europe, has a development program of management skills, training and human
development for managers and middle range administrators, being ”Lighthouse” and “Arts”
the most representative programs.
In ACE operations, 5,142 hours of training were given in the plant of Poland and over 29 thousand
Euros were invested in these training and staff development activities.
In order to have a robust succession process at all levels of the organization and to offer
employees a career plan that strengthens their permanence in GIS, the Talent Succession
Process is documented annually, and in it the employees record the names of possible
candidates to succeed them, as well as their career aspirations.
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142 S OCIA L PE R F OR M A N C E_ O U R EMP L O YEES
In 2015, for the sixth consecutive year in
our plants in Mexico, we carried out the
implementation of the anonymous survey
of organizational environment through the
Institute Great Place to Work. As a result, we
were able to increase the average score to 67%,
putting us just 3 points ahead of obtaining the
certification awarded by this institute.
This qualification is the highest achieved in an
integrated manner by GIS since 2010, when we
began our evaluation in the index, Great Place
to Work. In the year, two of our Business units
Vitromex and Fluida, as well as the corporate
services unit called “Asesoría y Servicios GIS”,
achieved a score equal to or greater than 70%,
which puts us in a position of certification.
For its part, the Fluida Business was recognized
in 2015 as one of the 100 best companies
to work in the category of high potential,
according to the results of 2014 from the
Institute Great Place to Work.
During
2015,
working
environment
evaluations took place through the “Trust
Index Assessment” in ACE’s Spain and Poland
plants, allowing it to define strategies which
will focus its efforts towards the creation of a
better place to work.
We continue working to improve the climate
and the work culture, and as part of this
strategy, we carry out actions in all Business
units. An example of this is the creation of the
Life Quality Committees that promote aspects
of productivity and flexibility.
These Committees are being formed in all the
locations of GIS, so as to establish an open
channel for dialogue between employees and
the senior management of the business.
The Life Quality Committees are integrated by
volunteer members who agree to be the link of
the opinions and suggestions from their peers,
in order to create better working conditions in
their localities.
In this way, we opened a channel for dialogue
between employees, the management of the
business and the General Management of GIS.
The objective is to generate a better working
environment.
In Spain, the ACE plant has a program whose
purpose is to promote the balance between
family and work, aiming to ensure the life
quality of its employees.
S OC IAL PERFORMANC E_OUR EM PLOYE E S
“A NEW CULTURE OF MANAGEMENT,
COLLABORATIVE OFFICES THAT
INTEGRATE EMPLOYEES OF ALL GIS
BUSINESSES IN THE CITY OF MEXICO”
In reference to internal communications, we launched the bimonthly magazine Vive GIS,
through which we maintain our employees informed about the most relevant events that take
place in different localities; this new communication medium is delivered directly at the homes
of employees so that their families are part of what happens in GIS.
In addition to face to face meetings that are conducted in production units with the Management
of the business, a new channel of communication via electronic news and boards was created
to inform all employees in a timely manner about the quarterly results reported by GIS at the
Mexican Stock Exchange.
The collaborative office spaces in Monterrey and Guadalajara reflect the New Culture of
Management in GIS. And in January 2016, new facilities were opened in the City of Mexico,
where different staff of GIS Businesses work in a space open to dialogue and communication,
resulting in a better service to the customer.
In Saltillo, starting from the second half of the year, personnel transportation is provided to and
from the production units for the employees operating in the different Businesses located in
this city, so as to ensure a safe and efficient transfer. Additionally, during the first quarter was
concluded the renovation of the dining service in the production units of Cinsa, Calorex and
Vitromex in Saltillo, which allows to offer our employees a higher quality provider and a daily
grant of 50% in their food consumption.
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144 S OCIA L PE R F OR M A N C E_ O U R EMP L O YEES
The commitment and loyalty of employees
of GIS have promoted the growth and
development of the organization, so that it
becomes a global company. For this reason,
the trajectory and permanence from 5 to 40
years is recognized annually.
In 2015, more than 560 employees were
honored in different events, including the socalled Forgers of our History, in which those
who reached 25 and 40 years of work were
recognized. A total of 69 employees received a
present and attended a dinner accompanied by
their spouses. In addition, a commemorative
book was published and a travelling
photographic exhibition was organized which
toured the different headquarters of GIS.
Recognition of achievements and results
motivates people to strengthen their
commitment, give the best of themselves and
maintain good behaviors and positive attitudes
that facilitate collaboration and teamwork. In
2015, the GIS Recognition Program was aligned
to our Commandments that we published in
January.
We have a new approach aimed to recognize
the results of the employees and teams which
manage to meet and, in some cases, exceed
their goals while maintaining a behavior of
integrity, according to the three Pillars of GIS:
Realize, Cultivate and Grow. The employees
are nominated by their co-workers and their
results are evaluated by the Management
Team.
In addition, the GIS Award was made official,
an honor awarded by the General Management
of GIS to the employee who during his career
has achieved extraordinary results, or, has
carried out some action of high impact for the
company.
“ THE COMMITMENT AND LOYALTY
OF THE EMPLOYEES OF GIS
DRIVE THE GROWTH AND DEVELOPMENT,
AND FOR THIS REASON WE RECOGNIZE THEM. ”
S OC IAL PERFORMANC E_OUR EM PLOYE E S
In Europe, ACE promotes recognition to employees that meet their standards of productivity,
assistance and objectives. One of the incentives is providing training and development to staff
with high potential.
Industrial, occupational and environmental safety, is a priority that we are tracking at monthly
results meetings headed by GIS CEO.
In 2015, we carried out restructuring and modernization of our SOS-GIS security operating
system, which is based on the methodology of Dupont. As a result of the foregoing, we trained
more than 600 employees for the deployment of the new model. In addition, we encourage
communication through different means in order to reinforce the concepts with practical
examples of application. All of the above helped us achieve a 4% reduction in the IFT (Índice de
Frecuencia Total de Accidentes [Total Accident-Frequency Rate]) and 30% in the IFI (Índice de
Frecuencia de Accidentes Incapacitantes [Lost workday Frecuency Rate]) against 2014 results.
Security is a commitment of GIS and its employees, therefore we grant the Isidro López Zertuche
Recognition to the Security at the production units that reach 365 days without accidents. In
2015, the Cinsa kitchenware aluminum plant received this recognition.
Because we believe that team work is the ideal method for the achievement of results, in all
Businesses we have Natural Work Teams that promote innovation and continuous improvement.
Periodically, the Directors of the Businesses recognize the results of these teams at each of its
plants. Top teams participate in the annual event of innovation and continuous improvement,
which includes projects that achieve the highest results based on Lean Manufacturing.
At this meeting, the Natural Work Teams of all Businesses and localities, present their projects
to the CEO of GIS, and are recognized for their achievement of improvements in production
processes and for increasing productivity.
145
146 S OCIA L PE R F OR M A N C E_ O U R EMP L O YEES
In addition, the management teams and middle managers are distinguished by the
implementation of innovative ideas to strengthen our competitive position in the market.
In 2015, through the Natural Work Teams, 2,696 ideas were put into practice, 4.4% more than
the previous year. In total, more than 400 proposals had an approach to improve safety at work
aspects.
GIS and all of its Businesses were recognized in 2015 with the distinction of a Socially Responsible
Company, for four years in a row, granted by the Mexican Center for Philanthropy and the
Alliance for the Corporate Social Responsibility, for taking the commitment in a voluntary and
public way, to work with a socially responsible and continuous improvement management, as
part of their culture and business strategy.
To ensure transparent staffing and selection processes, the members of the Integrity Committees
S OC IAL PERFORMANC E_OUR EM PLOYE E S
of each Business, participate in the follow-up processes of promotion and acquisition of talent
through the Opportunities Website.
With attention and in compliance to our employment policies, which privilege the respect
for human rights, the diversity of gender, beliefs, social classes, and political affiliations, as
well as the inclusion of people with disabilities, the operations of GIS in Mexico reached a
total of 6,851 employees in 2015, of which 23% were women and 77% men, representing an
increase close to 2% with respect to the number of women who worked in the organization in
2014. Net job creation grew up by 8.87% as compared to the workforce of the previous year.
We comply with applicable labor regulations, our employees join us with permanent
contracts and they are listed with social security services, competitive wages, a
savings fund, life insurance and social security benefits. 98% of the staff form
part of the variable compensation schemes linked to the results of the Businesses,
which is a reference percentage in the industries where we participate in Mexico.
The growth of cities where our production units are installed, added to the increase in the labor
supply in the States of Coahuila, Guanajuato and San Luis Potosí, prompted an increase in the level of
voluntary rotation. To counter it, we monitored our work environment, increased our communication
with staff and gave them a voice through the survey, Great Place to Work and quality of life committees.
OUR TEAM MEXICO 1
2013
2014
2015
ORGANIZATION
5,802
6,293
6,851
NON OPERATORS
1,449
1,516
1,686
OPERATORS
4,353
4,777
5,165
3%
2.5%
2.2%
GENERAL ACCIDENT
RATE
1
Including Corporate Staff.
147
148 S OCIA L PE R F OR M A N C E_ O U R F AMI L I ES AND C O MMUNITIES
OUR FAMILIES AND COMMUNITIES
T
he active participation of GIS in the communities where it operates, encourages and feeds
the enthusiasm of its employees, who voluntarily participate in activities of support to civil
organizations, caring for the environment and social welfare.
Through various events that are held in the year, hundreds of people and communities with
limited resources or in emergency situation, were benefitted.
Highlighting support such as that provided by GIS to survivors in the city of Acuña, in Coahuila,
who suffered the effects of a tornado in May 2015. More than 700 families benefited from a
set of kitchen and tableware utensils, in addition to the economic support that the employees
brought together and that GIS doubled, peso by peso.
We also supported tens of low-income communities through orphanages, asylums, centers for
migrants and underserved public schools. We have the support of employees and their families
in the events of social responsibility that we carry out in Mexico City, Saltillo, Irapuato, San José
Iturbide, Chihuahua and San Luis Potosí.
We support 700 families left homeless by the tornado’s
that struck Ciudad Acuna in Coahuila .
AThrough the Christmas for All activity, we bring gifts and smiles to
children in Saltillo, Irapuato and the House Home Bethesda BC in San
Luis Potosí with the participation of our employees .
S OC IAL PERFORMANC E_OUR FAMILIES AND C OMM UNIT IE S
For GIS, the integral development of its employees includes their families, and for this
reason it encourages their integration through recreational, social and sport events.
Each year, in its different Business units, we perform activities to commemorate the
Three Kings Day, Children’s’ Day, Mother’s Day, Father’s Day as well as traditional
Christmas rituals.
Similarly, football and softball sports tournaments are held in locations where GIS has
operations, and Open House events are promoted so that employees and their families
know production processes and at the same time participate in activities of healthy
coexistence.
In order to strengthen the actions of social responsibility and develop sustainable
projects, as well as to promote a culture of participation, GIS is actively involved in the
SumaRSE Coahuila NETWORK, which was formed in collaboration with 30 companies
and institutions in the region. Through this organization, we seek to build synergies and
maintain a close relationship with the community.
Through our executives, we are part of intermediate institutions such as Coparmex and
Canacintra, through which we promote the development of the national industry.
In all our plants we carry out targeted
events to promote family integration.
In 2015, we continue working with the National Association Pro Personal Realization,
A.C. (ANSPAC), enabling us to promote the development of our collaborators and
wives of employees of GIS.
With ANSPAC, we managed to increase the enrollment of participants in the Women
Program by over 10%, which provides tools and advice to mothers for their personal
growth and comprehensive improvement of their families through weekly sessions.
149
150 S OCIA L PE R F OR M A N C E_ O U R F AMI L I ES AND C O MMUNITIES
In Spain, we participated in the culture of
inclusion of vulnerable members of their
community. In that country, ACE has a
collaboration program with URBEGI to employ
limited hearing people in some activities of the
finish area.
facilities, during the last two years of their fulltime preparation, to take classes and training
on site, in addition to developing a project with
the support of a tutor, a volunteer employee of
GIS, who shares his experience and knowledge
with the students.
GIS is a pioneer in the development of the
Mexican model of Dual training (MMFD)
in Coahuila. With this system, in 2015, 22
students of Conalep in Saltillo, concluded their
studies, for a total of 53 participants in three
generations.
ACE’s Plants in Spain and Poland have a
robust program of linking with universities to
carry out within their facilities, projects and
internships, with undergraduate and graduate
students.
Through MMFD, technical students attend GIS
S OC IAL PERFORMANC E_OUR FAMILIES AND C OMM UNIT IE S
GIS is a sport promoter in Saltillo. In 2015, its career, San Isidro 15K, completed 40 years of
existence, making it the formal sports event of its kind with the greater tradition in the city.
About 3,000 runners participated in the last edition. GIS also supported the Desert tracks and
de La Salle University in Saltillo, in which around 2,000 people participated.
Through economic donations and in-kind, GIS delivered during the year more than 2 and a half
million pesos to public and private social welfare, educational and religious institutions. The
Mexican Red Cross, the patronage of the House of children, A.C., Saltillense Youth Institute,
and the Association of friends of the Coahuila desert are emphasized.
In line with our focus on generating value and development opportunities in the communities
where we operate, ACE, through its operation in Poland, supported people of scarce resources
in the surrounding area of its productive unit, promoted coexistence with preschoolers and
sponsored sports events that involved the support of more than 4,000 Euros.
At the end of the year, we granted through Calorex a donation in kind exceeding the $900,000
pesos to Phoneeton. We deliver products of high technology and latest generation for water
heating to the center of children rehabilitation Phoneethon in the city of Tijuana, Baja California.
These products guarantee constant hot water temperature for therapies of children who come
to this institution.
GIS San Isidro Race 15K, the event of greater tradition in Saltillo, Coahuila
in its 40th edition had a participation of close to 3,000 runners.
Through Calorex, we gave Phoneethon an in-kind
donation with a value of more than 900,000 pesos. We
deliver high-tech water heaters for the CRIT of Tijuana.
151
152 S OCIA L PE R F OR M A N C E_ O U R P R O D U C T S
OUR PRODUCTS
G
IS is a company focused on the design and
development of solutions for our clients
and end consumers through our different
Business units.
Taking as a basis the Mission of our
Commandments, which has an orientation to
the generation of opportunities of progress
and well-being, and with a base on our Values
of Customer Service and Innovation, we work
continuously on the development of new
products, which are more comfortable, safe
and friendly for the environment.
Through Cifunsa, Evercast and the recently
integrated ACE in Europe, we provide security
to drivers of vehicles.
In our production units, we manufacture parts
for high complexity automobiles in gray and
ductile iron for brake systems, transmission
and powertrain with a great quality, allowing
us to reach final consumers through the
platforms of the leading producers of cars in
Mexico and Europe.
Our products are key and reliable parts in the
light vehicle brake systems, but are invisible
to the eyes of families who daily travel in
automobiles that have any of our parts.
We manufacture great strength and
durability parts, which are subjected to high
temperatures and mechanical strength
demanded by the engines and transmissions
of vehicles for its movement, acceleration
and braking.
S OC IAL PERFORMANC E_OUR PROD UCT S
Our Vitromex Business is aimed to create
pleasant environments to view, transmit
emotions and allow our consumers to
express themselves through design and style
solutions.
With a wide variety of designs and formats for
floor and wall covering, we offer to families,
businesses and institutions, a vast world of
possibilities to customize their living and
work spaces.
The digital printing system, with which we
manufacture the ceramic and porcelain
floors, allows us to provide a wide range of
models with textures that evoke elements of
nature and woods.
Thanks to its glazed covering, our coatings
are an easy cleaning option for our customers.
Through Calorex, we offer our consumers
comfort solutions at the time of opening a
key and obtaining hot water for bathing or for
their daily activities.
In this Business, we are continuously working
on the development of innovations that allow
the maximum comfort with the lowest energy
consumption. Therefore, we developed the
water heater’s tank with a timer, which can be
programmed to automatically turn on when
required.
Last year we received the Mexican Association
of Applied Research and Technological
Development Management (ADIAT) prize for
the design of the pilot-less water heater (PSP),
a system that reduces the consumption of
gas up to 70% at the same time allowing the
continuous flow of hot water.
The ongoing search for environmentally
friendly solutions led us to create a power
system of low water consumption ideal for
toilets and sinks. Due to its proximity to the
source of water, it reduces the waiting time to
obtain hot water, whereupon we contribute to
reduce the waste of the vital liquid.
These innovations are added to over 17,000
units of water heating solar based solutions
sold in 2015 and contribute to reducing the
environmental footprint of human beings
without sacrificing comfort.
153
154 S OCIA L PE R F OR M A N C E_ O U R P R O D U C T S
Fluida offers our customers comprehensive solutions for conduction of water and gas through
different plastic materials, iron and copper, as well as solar water heaters.
The vast variety of connections and pipes for domestic and industrial installations on which we
rely, provide safety, thanks to the high quality of the materials for the potable water and gas
conduction.
There is no better way to bring together the family than by sharing their food; therefore, for
more than 80 years we have been producing kitchen and tableware products.
Cinsa is a company focused on the design that continually renews the image of its products to
offer useful, hygienic and stylish items to housewives to prepare and serve the table.
The enamel steel in our pots and pans is a hygienic and healthy alternative for cooking, therefore
we launched to the market the line Healthy Cooking.
In order to provide a comprehensive solution in design and style to serve the food, we developed
a wide range of ceramic tableware with colors and formats that allow the customer to harmonize
the family dining room furniture with the food.
S OC IAL PERFORMANC E_OUR PROD UCT S
CERTIFICATIONS
BUSSINESS
CIFUNSA
CERTIFICATION
DESCRIPTION
TS 16949
ISO/TS 9000
Estándar internacional de sistemas de gestión de
calidad de la industria automotriz
ISO 14000
APQP
VDA de VW
ISO 9000:2008
ONNCCE
VITROMEX
PTCA
Green Squared
Industria Limpia
ESR
ISO 9000:2008
NOM
ANCE
ONNCCE
EMA
NBIB
UL
CSA
CALOREX
ETL
ASME
SENER
CONUEE
ICONTEC
CASCEM
C-TPAT
NOM
FLUIDA
UL
FM
NOM
CINSA
ANCE
Estándar internacional de sistemas de gestión
ambiental
Planeación avanzada de la calidad del producto
Estándar de Auditorías de Proceso
Estándar internacional de sistemas de gestión de
calidad
Certificación de documentos técnicos de
productos
Estándar de los recubrimientos porcelánicos
Certificación de acreditación como
recubrimientos sustentables
Certificación Ambiental Nacional
Empresa Socialmente Responsable
Estándar internacional de sistemas de gestión de
calidad
Regulación oficial sobre diseño y características
de productos y procesos
Certificación para la comercialización del
producto
Certificación del documento técnico de los
calentadores solares
Certificación de gestión de pruebas de laboratorio
Certificación de condiciones de seguridad de
calderas y recipientes sujetos a presión
Certificación de productos
Certificación de productos
Certificación de tecnologías ahorradoras de
energía dentro del programa de incentivos
fiscales
Certificación de construcción de recipientes
sujetos a presión
Aprobación para la realización de pruebas de
consumo energético
Certificación de eficiencia y aprovechamiento
energético de productos
Organismo Internacional de Normalización de
Productos y Servicios
Mejor práctica para certificación de C-TPAT
Certificación para la seguridad en la cadena de
suministro y fronteras de EUA
Regulación oficial sobre diseño y características
de productos y procesos
Certificación de productos
Organismo privado para la certificación de
productos
Regulación oficial sobre diseño y características
de productos y procesos
Certificación del proceso de diseño y resultados
de desempeño
GRANTED:
Organismo Internacional de Estándares ISO
Volkswagen AG
Organismo Internacional de Estándares ISO
Organismo Nacional de Normalización y
Certificación de la Construcción y Edificación
Agencia de Certificación de Recubrimientos
Porcelanizados
Consejo Cerámico de Norteamérica
PROFEPA
CEMEFI
Organismo Internacional de Estándares ISO
Diario Oficial de la Federación
Asociación de Normalización y Certificación, A.C.
Organismo Nacional de Normalización y
Certificación de la Construcción y Edificación
Entidad Mexicana de Acreditación
Junta Nacional de Inspectores de Calderas y
Recipientes Sujetos a Presión
Laboratorios Underwriters
Asociación Canadiense de Estándares
Departamento de Energía y Cambio Climático del
Reino Unido
Sociedad Estadounidense de Ingenieros
Mecánicos
Secretaría de Energía
Comisión Nacional para el Uso Eficiente de la
Energía
Instituto Colombiano de Normas Técnicas y
Certificación
Consejo Mexicano de Comercio Exterior
Oficina de Aduanas y Protección Fronteriza
Diario Oficial de la Federación
Laboratorios Underwriters
Laboratorios Factory Mutual
Diario Oficial de la Federación
Asociación de Normalización y Certificación, A.C.
155
156 S OCIA L PE R F OR M A N C E_ I N T EG R I T Y P R O C ESS
INTEGRITY PROCESS
S OC IAL PERFORMANC E_INTEG RITY P ROCE SS
O
ne of GIS’s values is Integrity and Responsibility; therefore, ensuring the ethical performance
is one of our priorities.
As an organization, we have always been distinguished by promoting honest and transparent
interaction of individuals, businesses, and institutions with which we interact.
Since 2002, we develop the process of integrity with the aim of providing a framework of action
and behavior to those who are part of GIS through four components:
• CONTINUOUS DIFFUSION OF VALUES
• CODE OF ETHICS
• INTEGRITY COMMITTEES
• PROCESS FOR ADDRESSING NON-COMPLIANCES WITH THE CODE OF ETHICS.
The professionalism that we have achieved over the years has allowed us to create a favorable
environment for the development of our talent, in addition to achieve recognition as a case
study by Deloitte, a business consulting firm.
“ THE GIS INTEGRITY PROCESS’S GOAL IS TO PROVIDE
A GUIDE OF REFERENCE, ACTING AND BEHAVIOR
FOR EVERY MEMBER OF THE ORGANIZATION ”
157
158 S OCIA L PE R F OR M A N C E_ I N T EG R I T Y P R O C ESS
The training of supervisors so that they changes included in the new edition of the
experience and help their co-workers Code of Ethics.
experience the values, has been a key to
advance on the path of the integrity process.
Similarly, efforts continued to promote the
construction of an ethical environment in GIS
After a process of updating and renovation through a communication campaign which
of our code of ethics, during 2015 we carried used different media: flyers, posters and
out communication and distribution of the comic books at all plants, as well as briefings
new edition to the length and breadth of the with employees, customers and suppliers.
organization, as well as our customers and
suppliers.
Additionally, the Integrity Committees of each
of the GIS Businesses continued working on
Through events headed by the Business a regular basis, responding to concerns and
Managers, the new edition of the document complaints which arose, and promoting the
was delivered to all employees. All the events Integrity Process among employees.
were supported by GIS’s Integrity Process in a
standardized presentation, which also serves The Integrity Committees are the groups in
for the induction process of the newly arrived charge of making the Code of Ethics a rule of
employees.
life, in addition to addressing and responding
to the complaints that arise; they are
The Code of Ethics, which is based on the GIS composed of employees of proven honesty
Values, is a document that guides the correct and responsibility.
performance of our employees and the people
related to the organization, in accordance with These groups of volunteers are trained by
the company policies, standards of conduct the Examiners Association of Certified Fraud
and the GIS Commandments.
(ACFE) Mexico. Through a workshop, the
integrity committee members participate
The update of this document integrates, in practices related to investigations and
among other things, the 10 principles of the UN interviews to be carried out to address the
Global Compact related to human rights, labor complaints that arise.
and environment. It also includes the topic of
corruption and emphasizes the importance of
not giving contributions to political parties.
Through an e-learning tool and a monitoring
process in each of the GIS companies, the
employees were motivated to learn the
INTEGRITY PROCESS
2013
2014
2015
Number of Complaints/Total number of Employees
2.4%
2.1%
2.1%
Not admitted
20%
37%
27%
Explanation of facts
16%
18%
27%
Warning
23%
24%
19%
Suspension or Contract Termination
18%
8%
10%
Process for Addressing Non-compliances
23%
13%
17%
S OC IAL PERFORMANC E_INTEG RITY P ROCE SS
In 2015, 147 complaints were received: 39 did not proceed, in 40 cases requested a clarification
of facts, 28 recommended a wake-up call and 15 recommended a suspension or termination of
contract. At the end of the year, 25 cases were in process of attending.
PROCESS FOR ADDRESSING NONCOMPLIANCES
Complaints related to the code of ethics failures are addressed through the process of integrity.
Complaints can be filed either personal or anonymous using the following means:
Phoneephone Line 01 800 00 37 447 in Mexico and 1 888 309 1498 in United States.
E-mail: reportalogis@tipsanonimos.com and comite.auditoria@gis.com.mx
Mexican web page https://www.tipsanonimos.com/reportalogis
and in the United States https://gis.alertline.com
Through a third party, a registration of complaints is carried out and phoneephone cases are
addressed from the attention center, which allows data to be handled by non-GIS collaborators.
• Mailboxes. Complaints are deposited in the mailboxes located in the company and in the
locations of lower influx of personnel in order to preserve the anonymity for those who so wish
it.
• Personalized service by the integrity committees that operate in each of the companies in
GIS.
•
•
•
•
159
160 CONT A C T S
CONTACTS
FINANCIAL COMMUNITY
ING. JORGE MARIO GUZMÁN GUZMÁN
Chief Financial Officer
PHONE (844) 411 1031
FAX (844) 411 1029
mario.guzman@gis.com.mx
ING. PATRICIO GONZÁLEZ CHAVARRÍA
Treasury Corporate Officer
PHONE (844) 411 1041
FAX (844) 411 1029
patricio.gonzalez@gis.com.mx
LIC. SAÚL CASTAÑEDA DE HOYOS
Investors Relations Officer
PHONE. (844) 411 1050
FAX (844) 411 1029
saul.castaneda@gis.com.mx
LEGAL COMMUNITY
LIC. EUGENIO MARTÍNEZ REYES
Legal Officer
PHONE (844) 411 1074
FAX (844) 411 1029
eugenio.martinez@gis.com.mx
COMMUNICATION CHANNELS
ING. RICARDO SANDOVAL GARZA
Institutional Relations Officer
PHONE (844) 411 1095
FAX (844) 411 1029
ricardo.sandoval@gis.com.mx
l @GIS_MX
f Grupo Industrial Saltillo
i GIS Grupo Industrial Saltillo
WWW.GIS.COM.MX
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