2011
OBJECTIVES SHAPED INTO RESULTS
Annual Report
GRUPO MODELO, FOUNDED IN 1925, IS THE LEADER IN MEXICO IN BEER PRODUCTION, DISTRIBUTION AND MARKETING. IT HAS A TOTAL ANNUAL INSTALLED CAPACITY IN MEXICO OF 70 MILLION HECTOLITERS.
CURRENTLY, IT BREWS AND DISTRIBUTES 13 BRANDS, INCLUDING CORONA EXTRA, THE NUMBER ONE MEXICAN BEER SOLD IN THE WORLD, MODELO ESPECIAL, VICTORIA, PACÍFICO AND NEGRA MODELO. IT
EXPORTS SIX BRANDS AND IS PRESENT IN MORE THAN 180 COUNTRIES. IT IS THE IMPORTER OF ANHEUSER-BUSCH INBEV’S PRODUCTS IN MEXICO, INCLUDING BUDWEISER, BUD LIGHT AND O’DOUL’S. IT ALSO
IMPORTS THE CHINESE TSINGTAO BRAND AND THE DANISH BEER CARLSBERG. THROUGH A STRATEGIC ALLIANCE WITH NESTLÉ WATERS, IT PRODUCES AND DISTRIBUTES IN MEXICO THE BOTTLED WATER BRANDS
STA. MARÍA AND NESTLÉ PUREZA VITAL, AMONG OTHERS. GRUPO MODELO TRADES IN THE MEXICAN STOCK EXCHANGE SINCE 1994 WITH THE TICKER SYMBOL GMODELOC. IT ALSO QUOTES AS AN ADR UNDER THE
TICKER GPMCY IN THE OTC MARKETS AND IN LATIBEX IN SPAIN AS XGMD
AGENCIES AND DISTRIBUTORS
ASSOCIATES
BREWERIES
CANS AND CROWNS
COMMERCIAL
INTERNATIONAL
LOGISTICS
MACHINERY MANUFACTURER
MALTING FACILITIES
SERVICE
more than180 countries
Financial Highlights
I Financial Highlights
II Report from the Chief Executive Officer
2 Report from the Chief Executive Officer
III Objectives Shaped into Results
6 to create the moment...
12 to travel the world...
20 to grow every day...
26 to care for our planet...
IV Board of Directors and Executive Officers
32 Board of Directors
33 Executive Officers
V Financial Summaries
34Operations
36 Balance Sheet and Additional Information
38 Management’s Discussion and Analysis of Financial Results
VIReports
40
42
43
44
Opinion and Report of the Board of Directors
Audit Committee
Corporate Practices Committee
Finance Committee
VII Financial Information
Grupo Modelo, S.A.B. de C.V. and Subsidiaries
Figures in millions of constant Mexican pesos
(Except sales of beer, per share data and employees)
1 Financial Highlights
46
47
48
50
51
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Year ended December 31
Sales of beer -millions of hectolitersDomestic
Imports
Total domestic
Exports
Total volume
Net sales
Gross profit
Operating income
Net income of controlling sharing
Total assets
Total liabilities
Stockholders’ equity of controlling sharing
Funds provided by operating activities
EBITDA
Capital expenditures
Return on equity (controlling sharing)
Earnings per share
Dividend per common share
Closing share price
Number of employees and workers
2011
2010
Change
38.23
0.86
39.09
16.90
55.99
36.05
0.79
36.84
15.83
52.67
6.0%
8.4%
6.1%
6.8%
6.3%
91,203
49,427
23,842
11,945
85,019
45,552
21,694
9,943
7.3%
8.5%
9.9%
20.1%
129,105
22,506
81,831
122,516
21,990
77,167
5.4%
2.3%
6.0%
24,697
27,420
4,151
14.6%
17,522
24,933
3,969
12.9%
41.0%
10.0%
4.6%
3.69
2.23
88.49
3.08
2.06
76.44
19.8%
8.4%
15.8%
37,307
36,566
2.0%
3
GRUPO MODELO 2011
This year we successfully concluded several initiatives that
contributed to attaining excellent results. In Mexico, we achieved
the highest market share in our history, a trend we have upheld
for several consecutive years. In the international market, we
registered growth in almost every country in which we are
present. Further, Grupo Modelo’s portfolio in the United States,
comprised of six brands, registered the greatest volume in their
more than 30 years of history in that country.
In terms of our operation, we finished the second 5-million
hectoliter module of the Compañía Cervecera de Coahuila, our
brewery in the state of Coahuila, with which Grupo Modelo’s
installed capacity is now at 70 million hectoliters. During the
year we also finished implementing the first stage of our
business transformation model known as Modelo Empresarial
de Transformación Administrativa (META).
In recognition to our commitment to social responsibility,
environmental sustainability and corporate governance, Grupo
Modelo was included in the new Sustainability Index of the Mexican
Stock Exchange.
The key to our strategy resides in maintaining our long-term
vision and focusing on organic growth, the strength of our brands,
excellence in service, effective execution, and in transforming
every challenge into an opportunity.
Report from
the Chief
Executive Officer
Dear Shareholders:
At Grupo Modelo, during 2011
we reached our objectives with
outstanding results. It was a year
of intense work during which we
transformed challenges into
achievements, overcame obstacles
and took advantage of the
opportunities that the environment
offered us.
By centering on these principles, in 2011 our net sales reached
a historic record of 91,203 million pesos, which represents a
growth of 7.3% with respect to 2010, driven by the increase in
sales in the domestic and export markets.
The total beer volume sold in the domestic market grew 6.1%,
exceeding Mexico’s GDP growth rate. Further, since growing
profitably has been one of the Company’s priorities, we were
able to increase the price in real terms for the third consecutive
year. Based on this, beer revenues in Mexico had a 10.5%
growth with respect to the prior year.
Export volume, on the other hand, had a solid 6.8% increase.
The price in dollars had a slight growth, which translated into
sales growing to 2,873 million dollars, equivalent to an increase
of 7.0%. The 4.7% increase in sales in peso terms was more
moderate due to the impact of the strong peso with respect to
the dollar that we faced during the first eight months of the year.
Additionally, during the year we were able to increase the cost of
sales and the operating expenses below the growth in net sales,
and we made important progress in the Company’s profitability.
Thus, the EBITDA increased 10.0% to 27,420 million pesos,
and the margin showed an annual expansion of 80 basis points
to reach 30.1%. The net majority income was 11,945 million
pesos and it grew 20.1% with respect to 2010.
During the month of April 2011, Grupo Modelo paid a dividend
of 7,210 million pesos, equal to 2.23 pesos per share and to
72.5% of the prior year’s net majority income.
With respect to the initiatives implemented to serve our
domestic market, we worked with the conviction that the only
viable option for success is to offer all of our clients the best
service of the industry. Based on that principle, we continued
with the goal of becoming the best beer supplier in the traditional
channel and on offering world-class service, being a strategic
partner to our clients, and having an increasingly larger and
more efficient distribution network.
Consequently, we continued evolving several programs and
projects, including the commercial service model known as
Modelo de Atención Comercial (MAC), to offer better service to
our clients through focused portfolios and service evaluation
methods; the distribution planning system, Ruta Modelo, to
schedule visits and reduce trip times and distances; and the
sub-zero refrigerators that we install for our clients backed by
the concept of offering extra cold beer to our consumers.
In 2011, beer sales through Modeloramas grew at a good pace
as a result, in part, of the expansion in the number of points-ofsale and the improvements made in image, which allowed us to
take our products to different regions in the country. Further, at
our Extra convenience stores we concentrated on strengthening
processes and improving the buying experience through
differentiation, which meant offering new services and a
greater variety of products. By year-end we had 960 Extra
stores in the country.
In 2011 Corona Extra was once again the brand with the largest
incremental volume in our portfolio. Throughout the year we
implemented several ad campaigns that contributed to its
success, such as the ads showing the pride of Mexican people
for Corona Extra as a global brand, and the La pasión manda
campaign pertaining to Mexican soccer. We also strengthened
brand presence and recognition in boxing and wrestling through
the ¿Quién pinta para la Corona? project that backs young Mexican
people who want to become champions in these disciplines.
Additionally, we worked with Sony Music on the project known
as Corona Music, an innovative concept that has allowed us to
bring the brand closer to young consumers in order to maintain
its fresh and modern image, a goal verified by the success of
the program in digital media and the way in which Corona Extra
is directly identified with music.
5
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
For Modelo Especial we launched the ad campaign Con dedicación
especial, that looks to reinforce the values of dedication and
quality with which the consumer associates the brand, and we
continued the Joe Montana sponsorship for the second
consecutive year. For Negra Modelo we had the Sabor único
para tu paladar campaign to connect the brand with gastronomy.
Both had important interactions with their consumers through
social networks.
As part of our innovation initiatives for Mexico, this year we had
important product launches, including the Corona Light in the
iconic glass bottle, the new Modelo Light image, and Coronita
Extra in a small 7-oz can.
During 2011 we had an accumulated growth of 8.4% in the
portfolio of the five foreign brands we import, and we maintained
our position as the leader in the sector. Bud Light was once
again the number one import in Mexico and O’Doul’s continued
as the leader in the alcohol-free category. Further, Carlsberg
beer had the highest growth in our portfolio, largely because of
the increase in distribution.
The joint venture between Grupo Modelo and Nestlé Waters
in the bottled water sector is a growing and increasingly more
profitable business. Since it was first created five years ago, it
has tripled its sales volume and it is currently positioned as the
second largest supplier of bottled water, in formats of up to 6
liters, in the supermarket channel.
In the international market, we expanded the Grupo Modelo
footprint and are currently present in more than 180 countries,
offering our consumers anywhere in the world the same quality
in our brands and their character as an authentic Mexican
imported beer.
In the US, results this year were extraordinary and for the second
consecutive year, Crown Imports was the only one among the
four major suppliers to post positive growth, which is even
more remarkable if we consider that the US industry as a
whole posted a contraction.
These results were in great part due to the strategies implemented
to offer greater innovation and improved market execution,
and because of the efficient and committed support of our
wholesalers all over the country.
In terms of specific brand behavior, Corona Extra remained as
the leader by far in the category of premium imported brands
in the US and Modelo Especial once again ranked third—
establishing a new sales milestone—and it obtained the “Hot
Brands” prize given by Impact magazine. Corona Light holds first
place among the imported light beers ranking. Victoria, on the
other hand, has continued to show considerable acceptance
among consumers in the markets where it has been introduced
and Market Watch magazine gave it the “Leaders Choice Award”
as the best new product.
the world, to complete the production capacity to 10 million
hectoliters annually. Built mostly with proprietary technology, the
brewery is highly automated, extremely efficient, meets the
strictest environmental world standards and offers, among other
benefits, high density warehousing.
In response to the needs of consumers who are looking for
other ways to enjoy our products, we paid special attention
on the expansion of draft beer. Consequently, we are now
well-positioned in a greater number of points-of-sale and have
been able to increase brand recognition for our Modelo
Especial, Negra Modelo, Pacífico and Victoria brands that we
offer in this format which invites consumers to try them at
different consumption occasions.
Regarding the protection of the environment, we carried out
several important efforts. By year-end 2011, of the total fuels
used in our breweries, approximately 11% came from renewable
sources of energy, which makes Grupo Modelo one of the main
beer groups worldwide with the highest levels of use of alternative
sources of energy. Particularly notable is the increase in the
generation of biogas in the wastewater treatment plants to
be used as an alternative fuel in the boilers, and the innovative
program for using malt spent grain as a renewable fuel in the
Zacatecas brewery that continues to generate excellent
economic and environmental benefits.
Among the marketing and advertising strategies the summer
Corona Beach Getaway campaign is worth mentioning as the
most important in the history of Crown Imports, resulting in
more than 400 trips granted to visit Mexican beaches.
In the rest of the world we also had very good results, in
particular in Australia, which became the second largest export
market for Grupo Modelo this year. In that country, Corona Extra
is the best-selling premium imported beer, with growth above
10% and a market share of almost 38% among imports. At
year-end, we introduced our Pacífico and Negra Modelo brands,
with the expectation that they will be very well received by
consumers that value the high quality of the products that
Grupo Modelo has offered them for over twenty years.
In Europe, in spite of the difficult economic situation and the
decrease in the consumption of beer, the export volumes for
Grupo Modelo had a growth rate of more than 10%.
In Asia, we went through a transition period due to the change
of our importers in key markets, and our work was centered on
building inventories, expanding distribution, and strengthening
the brand, driven by the Republic of Corona campaign.
In the majority of the Latin America and Caribbean markets, we
continued to work on programs focused on increased distribution
and sales coverage, and we used different versions of the
Transforma tus momentos campaign, resulting in an increase
in volume of more than 35%. In Chile, one of the countries that
registered highest growth, the sponsorship of the ATP World
Tour and the launching of Corona Light, which included
initiatives in social networks, had excellent results.
We also had important accomplishments in operations. Particularly
noteworthy is the successful expansion of our brewery in the state
of Coahuila, our newest facility and the most modern brewery in
Throughout the year we continued with the initiative to convert
transportation modes to increase the share of rail for transporting
new bottles. For the fourth consecutive year, we had an increase
in the productivity of the fleet.
Regarding the investments and developments in processes and
technology, the conclusion of the first stage of the META program
means that the main subsidiaries relating to the core business are
currently operating under the SAP platform. Additionally, we made
considerable investments in other initiatives, including the
strengthening of the private telecommunications network,
new deployed functionalities of unified communications, and
the consolidation of the servers, as well as the technological
renovation of the installed computer base.
In social responsibility, Grupo Modelo promoted different initiatives
to benefit its employees in matters including safety and health in
the workplace, as well as training and development. Further, we
continued with social impact projects such as our science and
industry museum, Museo Modelo de Ciencias e Industria, the
sporting facility known as Territorio Santos Modelo, the virtual
business model, Beertual Challenge, and Explora Modelo, a
program for university students to foster their creativity concerning
social responsibility.
Key to our social responsibility initiatives is Consumidor Modelo,
our responsible drinking program that promotes moderate and
responsible consumption of alcoholic beverages. This year,
among other initiatives, we continued to work in close collaboration
with the Mexico City Department of Public Safety’s breathalyzer
program known as Conduce sin alcohol.
To our Shareholders and Members of the Board:
I appreciate your vote of confidence to carry out the work
needed to build such a successful present and an increasingly
more solid future for Grupo Modelo.
I reiterate my recognition to all our employees, whose work and
talent are the pillars on which the objectives we set several
years back have now been shaped into excellent results.
My appreciation also to our suppliers who cooperate with us to
offer the highest quality products; to our clients and consumers
that distinguish us with their preference, and to our third-party
distributors, wholesalers and importers who take the Grupo Modelo
brands and products to every corner in Mexico and the world.
We will continue to set ambitious goals to strengthen our position
in Mexico as the leading beer company; and in the world, as
one of the groups with the greatest presence and recognized
for the service we offer, our image, and the quality of our products.
We will not lose sight of the future and its potential challenges.
That will allow us to maintain our leadership, inspire pride,
passion and commitment in everything we do, and to keep in
mind that excellence in service is and will continue to be our
only option.
Sincerely,
Additionally, through programs backed by our foundation
Fundación Grupo Modelo, in collaboration with social institutions
and the government, we support different environmental,
educational and community development projects.
The work we have done for over ten years at the IztaccíhuatlPopocatépetl national park as part of the venture called Juntos
en la Conservación deserves special mention.
Carlos Fernández González
Chairman of the Board of Directors and CEO
Mexico City, April 2012
OBJECTIVES SHAPED INTO RESULTS
01
to create the moment...
7
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
We launched Corona
Light in a glass bottle
and Coronita Extra
in a 7-oz can
For the domestic market, at Grupo Modelo we worked hard to serve the needs of our
clients and to create ideal moments for enjoying our brands. The key goal was to continue
offering the best service in the beer industry and the highest quality products. In 2011,
that objective shaped into an increase in market share to record levels, and into a
growth in domestic sales of 10.5%, to 48,521 million pesos.
In 2011, the whole of our sales force worked under our commercial service program
known as Modelo de Atención Comercial (MAC), used to design new initiatives to help
fulfill the promise of excellence in service, and under the Ruta Modelo distribution
system, that currently operates almost 4,500 routes to serve more than a half-million
clients nationally. We also continued installing sub-zero refrigerators in the traditional
and modern channels, and Grupo Modelo serviced the equipment through its Modelo
Amigo call center.
To encourage a better consumption experience, this year we strengthened the concept
of offering extra cold beer not only with the sub-zero refrigerators but also with new
presentations such as Modelo Light and Pacífico Light in cans decorated with thermo-sensitive
ink that change color when the beer is at its ideal temperature.
Additionally, we launched Corona Light in a glass bottle, to strengthen a brand that has
been very well received by consumers who have developed a taste for low calorie
beverages, and Coronita Extra in a 7-oz can, which offers a new option to consumers
who like to consume less per occasion.
To further improve the consumption experience, we continued strengthening our draft
beer strategy, and had considerable growth as compared to 2010. In draft we
preponderantly offer the Modelo Especial and Negra Modelo brands under the concept
known as Modelo Chope, that is offered in consumption centers, at the specialized
Choperías and Terrazas Chope established in several states around the country.
On the other hand, we increased the availability of the Grupo Modelo products in more
points of purchase, including a larger number of Modeloramas, with which we contribute
to the growth in beer sales all over the country. At our Extra convenience stores, our
strategy centered on improving the purchasing experience through differentiation, which
meant offering new services, strengthening the coffee and fast-food program and training
our agents; thus, we were able to increase same-store sales and traffic.
In relation to the brands, Corona Extra maintained its position as the leading brand in Mexico
and all communication was focused on the international character of the brand—for which
we developed a new ad with Switzerland as its location and a campaign in print media,
among other activities—and on sports and music.
In terms of the relationship of Corona Extra with sports, promotions and sponsorships in
soccer, baseball, boxing and wrestling are particularly significant. This year we had two
noteworthy initiatives, the ¿Quién pinta para la Corona? project that, in collaboration with
the Mexican paint company Comex, is geared toward discovering and supporting new
talent in both Mexican boxing and wrestling, and the La Ola de la Alegría, through which
we organize events that join sports and the Mexican culture, in collaboration with four
other major Mexican companies.
The link between the brand and music was strengthened with the Corona Sony Music
platform, based on which we organized the traditional Corona Music Fest and Corona
Capital concerts in several cities around the country that registered record attendance.
9
GRUPO MODELO 2011
11
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
07
08
09
10
11
Domestic sales
Figures starting in 2008 in millions of constant Mexican pesos
Prior figures in millions of constant Mexican pesos as of December 31, 2007
Note: Domestic sales do not include other income
Sales
36,474
38,821
42,189
43,896
48,521
Change
3.2%
6.4%
8.7%
4.0%
10.5%
48,521
For Victoria we employed campaigns that reinforced the brand’s positioning as the beer
for gathering with friends and family, for celebrating any accomplishment and for enjoying
the most relevant holidays throughout the year, particularly the Mexican Independence
Day celebrations.
In the supermarket channel, Grupo Modelo consolidated its leadership and had
double-digit growth during the year. The support given to the brands in this channel was
characterized by the introduction of different presentations, including packages designed
for specific occasions, such as the Negra Modelo El arte de producir special edition,
launched during the latter part of the year and also promoted on the social networks.
In our imported beer business, we maintained market leadership and introduced media
campaigns for Bud Light and Carlsberg. During the year we launched collectible Bud
Light cans decorated with the logos of the US Major League Baseball teams.
In our bottled water business, we increased coverage by leveraging the Grupo Modelo sales
force and the extensive distribution network. We launched the new presentation of Nestlé
Pureza Vital in 600-ml bottle, and the 355-ml bottle of the Sta. María Gastronomía edition.
07
08
09
10
11
Total domestic volume
Millions of hectoliters
Note: Volume includes imported brand volume
Volume
35.61
36.28
37.25
36.84
39.09
Change
4.8%
1.9%
2.7%
-1.1%
6.1%
39.09
One of the priorities at Grupo Modelo is to maximize profitability in different distribution
channels. Consequently, discipline in handling market prices, and the solid growth in
volume resulted in an increase in beer sales in all regions in Mexico for a total volume
sold, including import brands, of 39.1 million hectoliters, a growth of 6.1% with respect
to the prior year. Further, the price per hectoliter rose 4.2%, making 2011 the third
consecutive year in which the Company grew in real terms.
We continued with
the goal of offering
world-class service,
being a strategic partner
to our clients, and
having an increasingly
larger and more efficient
distribution network
OBJECTIVES SHAPED INTO RESULTS
02
to travel the world...
13
GRUPO MODELO 2011
15
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
The Grupo Modelo
brands are among the
top imported premium
beer brands in the US:
Corona Extra is the
leading imported brand;
Modelo Especial
is third; and Corona
Light is first among
light imported beers
Grupo Modelo’s international strategy has centered on growing in the foreign market and
travelling the world with six export brands. This year we reached the goal of being present
in more than 180 countries with our flagship brand, Corona Extra, which places us among
the top companies in terms of the number of nations in which we are present. Further,
Negra Modelo is found in 34 countries, Modelo Especial in 23, Pacífico in 14, Corona
Light in 11 and Victoria was launched in the US market in 2010. Corona Extra maintains
its position as the fourth most profitable brand in the world and was included for the
second consecutive year in the Best Global Brands ranking published by the prestigious
brand valuation company, Interbrand. Because of the work carried out in the international
market, in 2011 the export volume grew 6.8%.
In the US, the behavior of Grupo Modelo’s portfolio imported through Crown Imports was
extraordinary: the six brands showed growth with respect to the prior year.
The Grupo Modelo brands are among the top imported premium beer brands in the US:
Corona Extra is the leading imported brand; Modelo Especial is third; and Corona Light is
first among light imported beers. Further, the strategy to increase the availability of the
brands through draft and to strengthen presence in the on-premise had very good results
and today Grupo Modelo offers four of its brands in this presentation.
The extraordinary performance in this country was fueled by innovative marketing and
advertising strategies. For Corona Extra, for example, we modified the concept of the
beach—which has distinguished the brand almost since it was first introduced in the US
market in the late seventies—to transform the physical place into a state of mind. With
this concept, we launched a new series of ads that show different opportunities to “find
your beach” in daily life situations.
Among sponsorships, the most outstanding this year were the tour of country music singer
Kenny Chesney, through which 1.1 million Corona Extra consumers were reached, and
the 12 ATP tournaments, which strengthens the bond of Corona Extra with the sport of
tennis, and increases its global presence.
World’s top 10
beer brands
Millions of barrels
Brand
2010
2009
Change
Budweiser
Snow
Skol
Tsingtao
75.7
71.7
31.5
29.7
75.9
61.7
31.2
25.2
-0.3%
16.1%
1.0%
17.6%
5 Corona Extra
6 Miller
7 Brahma
8 Heineken
9 Coors
10 Yanjing
27.7
26.9
26.0
24.5
22.3
20.0
356.1
27.6
28.0
25.3
22.2
22.3
18.3
339.6
0.5%
-4.5%
2.5%
2.5%
0.0%
9.5%
4.8%
1
2
3
4
Total
Note: 2010 data is the most recent available information as of the date of publication of this document
Volume includes light beers, other line extensions, exports and license volume
Figures may vary due to rounding
Source: Impact Databank
17
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
07
08
09
10
11
Export sales
Figures in millions of dollars
Note: The results for Crown Imports are consolidated as of 2007
07
08
09
10
11
Export volume
Millions of hectoliters
Sales
2,762
2,774
2,626
2,684
2,873
Change
85.0%
0.4%
-5.4%
2.2%
7.0%
2,873
Volume
15.94
16.03
15.27
15.83
16.90
Change
0.3%
0.6%
-4.8%
3.7%
6.8%
16.90
Several of the Grupo Modelo brands were awarded prizes this year in the US. Advertising Age,
for example, included Crown Imports in its “Marketers A-List” and Impact magazine awarded
Modelo Especial and Corona Light its “Blue Chip Brand” distinction. On the other hand, Cheers
gave Modelo Especial the “Established Growth Segment” award and catalogued Victoria as a
“Rising Star”. Additionally, the Association of Marketing & Communications Professionals gave
its platinum award to the Corona Extra/Corona Light family in the ads/point of purchase
category for the Corona Win a Beach Getaway campaign and an honorable mention to Pacífico
in the mobile app category.
In the rest of the world we had good results in practically every region. In Oceania we
continued implementing the successful From where you’d rather be campaign. In
Australia, the leading import brand, Corona Extra, maintained its market share at triple its
closest rival. In that country we sponsored the Quicksilver Pro world surfing tour, and we
continued sponsoring and promoting during the winter months, as part of our attempt to
make the brand relevant all year long. In New Zealand, Corona Extra was classified as the
“most adored” brand and we are preparing to launch Pacífico, which we expect will be
very well received by consumers who have developed a taste for Mexican beer.
In the EMEA region, the United Kingdom is particularly noteworthy because it became
the third export market for Grupo Modelo, and had double-digit growth. In Europe we
continued the social responsibility campaign, Corona Save The Beach, and the first hotel
made of trash picked up from different beaches was exhibited in the center of Madrid,
which generated important media coverage for the Coronita brand.
In Europe we continued
the social responsibility
campaign, Corona Save
The Beach, and the first
hotel made of trash
picked up from different
beaches was exhibited
in the center of Madrid
OBJECTIVES SHAPED INTO RESULTS
Corona Extra was
included for the second
consecutive year in the
Best Global Brands
ranking published
by Interbrand
Further, throughout the year Corona Extra opened its way into new markets, particularly
in Africa, where the brand went from 86 EMEA region countries in which it was present in
2010 to 100 in 2011. Corona Extra is currently the number one imported beer in 19 of
those countries and in another nine it is in second place.
In Asia, Corona Extra is present in 15 countries and it is the number one premium import in
five of those. The ATP sponsorship was very relevant in this area, with tournaments in Japan
and China.
In Latin America and the Caribbean, the markets with the highest growth were Chile—where
Corona Light was launched as the first light beer ever in that country—Argentina, Puerto
Rico, Colombia, Ecuador and the islands of the Caribbean, with double-digit increases.
As part of the growth strategy in the international market, our World Summit 2011 took
place in mid-year giving the Grupo Modelo importers all over the world a chance to meet.
This event presented us the opportunity to share experiences and initiatives that can be
adopted in many countries, and to review strategies and projects that will allow Grupo
Modelo to continue the successful expansion of its international footprint.
Grupo Modelo’s excellent results in the foreign market for 2011 are fueled by the work
carried out throughout the year based on strategic alliances established with beer groups
in different regions and in close collaboration with our importers and wholesalers all over
the world. Exports accounted for 30.2% of the total volume, at 16.9 million hectoliters.
The dollar revenue from exports grew 7.0% to reach 2,873 million dollars.
19
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
to grow every day...
03
21
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
The second phase of the
Compañía Cervecera de
Coahuila was finished
in late 2011 to
complete its production
capacity to 10 million
hectoliters annually
Grupo Modelo has eight breweries in Mexico and an installed capacity of 70 million
hectoliters annually, which means it is prepared to grow and satisfy the demand of the
domestic and foreign markets, which grows every day. This year we reached the goal of
building and operating the most modern brewery in the world: the Compañía Cervecera
de Coahuila, whose second phase was finished in late 2011 to complete its production
capacity to 10 million hectoliters annually.
The brewery in Coahuila is fundamentally focused on serving the export market. Because
of its location, scale and state-of-the-art technology, the brewery will contribute to improving
the efficiency and the average productivity of Grupo Modelo.
In terms of the other Grupo Modelo breweries, we continued upgrading projects and
optimizing processes and equipment.
The activities relating to the environment were key in the operation. Grupo Modelo
promotes sustainable growth and production with low carbon emissions, as well as
technological advances and the diversification of energy sources throughout the
production process.
We are fully aware that the generation and use of clean energy to mitigate greenhouse
effect gases represents at the same time a strong challenge and a great opportunity for
companies. Grupo Modelo has become one of the forerunners in the field of environmental
care and sustainable growth. Among the projects in this field, the most relevant are the use
of biogas in the wastewater treatment plants as an alternative fuel in the boilers, the use of
biomass as fuel, and planning for a future source of wind power. One of the most recent
initiatives is the first electric power photovoltaic solar project for energy supply in our
agency in Ciudad Obregón, in the state of Sonora. Further, Grupo Modelo is currently
among the world leaders in the efficient use of water per liter of beer produced.
In terms of logistics and transportation, this year we concluded with the certification
process of our transport companies by the Mexican authority and obtained the approval
by the Department of Transportation for complying with the official norm, all of which is
testament that our fleet meets the mechanical and safety conditions needed to operate
on all the roads on which our vehicles circulate.
Grupo Modelo is part of a voluntary clean transportation program promoted by the
departments of the Environment and of Transportation and by the Consejo Coordinador
Empresarial. Further, we strengthened protocols, with good results in terms of the safety
of our units.
In terms of investments and developments made in processes and technology, we worked
on the successful implementation of the first stage of the business transformation model
known as Modelo Empresarial de Transformación Administrativa (META). Pertaining to
this initiative, Grupo Modelo received an award as the best implementation project for
2010 in Mexico and Central America granted by the community of SAP platform users
and by the large firms on the SAP Social Consulting Board.
23
GRUPO MODELO 2011
25
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
07
08
09
10
11
Net sales
Figures starting in 2008 in millions of constant Mexican pesos
Prior figures in millions of constant Mexican pesos as of December 31, 2007
Note: The results for Crown Imports are consolidated as of 2007
Net sales
72,895
75,363
81,862
85,019
91,203
Change
23.6%
3.4%
8.6%
3.9%
7.3%
91,203
In addition to the META program, in 2011 we also made important investments in other
initiatives, tools and collaboration and productivity systems, among which the most relevant
were the private telecommunications network and the virtualization and consolidation of our
servers, with the corresponding savings in infrastructure for the next several years.
With investments for 4,151 million pesos of our own resources throughout the year, Grupo
Modelo continued with its strategy focused on increasing production capacity, upgrading
machinery and equipment, investing in state-of-the-art technologies, making processes
more efficient, protecting the environment and strengthening the distribution network.
During the year, besides increasing net sales by 7.3% to 91,203 million pesos, we had
important increases in profitability, which is a priority for the Company.
In spite of pressures resulting from the costs of certain raw materials, cost of sales grew at
a lesser rate than that of net sales, resulting in an increase in the gross profit of 8.5% and
an expansion in the margin of 60 basis points to 54.2%.
07
08
09
10
11
EBITDA
Figures starting in 2008 in millions of constant Mexican pesos
Prior figures in millions of constant Mexican pesos as of December 31, 2007
Note: The results for Crown Imports are consolidated as of 2007
ebitda
23,374
22,217
24,972
24,933
27,420
Change
21.4%
-4.9%
12.4%
-0.2%
10.0%
27,420
In terms of operating expenses, during the year we had incremental expenses in distribution
and information technologies. However, simultaneously we were able to contain the total
expenses, which grew slightly below sales, for an increase in the operating income of 9.9%
to 23,842 million pesos. Finally, EBITDA grew 10.0% and reached 27,420 million pesos.
The margin was 30.1%, an expansion of 80 basis points with respect to 2010.
We finished
implementing the first
stage of the META
program, which means
that the main subsidiaries
relating to the core
business are currently
operating under the
SAP platform
OBJECTIVES SHAPED INTO RESULTS
04
to care for our planet...
27
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
Grupo Modelo was
included in the new
Sustainability Index of
the Mexican Stock
Exchange, in recognition
for its commitment to
social responsibility,
environmental
sustainability and
corporate governance
Grupo Modelo proves its commitment to social responsibility through production
activities geared toward caring for our planet and, in particular, the communities
in which we operate. A great majority of the actions taken in this regard are
carried out through our foundation, Fundación Grupo Modelo, which promotes
different projects relating to the environment, education and society as a whole.
The most relevant is the Juntos en la Conservación program through which for
more than ten years we have carried out restoration, protection and conservation
works at the Iztaccíhuatl-Popocatépetl national park, and, among other objectives,
we have been able to capture an estimated average of 1,330 tons of carbon
dioxide annually.
Among the activities for protecting the environment that Fundación Grupo Modelo
carried out there is also the collaboration with the Fideicomiso ProBosque de
Chapultepec, with the conservation and restoration program in Coahuila, and with
the environmental education program at the Ajusco park.
Another project with a strong sustainability component is Re-vive, which was
developed in collaboration with the Pronatura NGO and the company CINIA, to
promote the re-use and recycling of residues generated by Grupo Modelo’s
activities to convert them into products for daily use.
In education, we worked on programs geared toward preventing child abuse and
offering sexual, environmental and values education. Further, we continued with
the Escuela Modelo program that caters to 13 thousand students in public schools
and their families. In collaboration with our Extra convenience stores, we developed a
round-off campaign to improve infrastructure of public schools located near the
stores, giving them paint and waterproofing materials, which benefited almost 16
thousand students in ten states.
In the social arena, we continued working on developing indigenous rural communities in
conditions of extreme poverty in collaboration with the Fondo para la Paz to promote
the collection of rain water and access to clean drinking water. We also collaborated
with other organizations to develop the abilities of micro-businessmen that are trying to
have a productive life and dignified means of support.
To support small and medium sized suppliers with high potential for growth,
innovation and social responsibility, we developed the Emprendedor Modelo
program in conjunction with the organization known as Endeavor.
29
GRUPO MODELO 2011
31
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
In terms of our activities focused on the Grupo Modelo employees, we placed
special emphasis on training and we developed different initiatives and programs
aimed at improving performance, increasing capacities and favoring opportunities
for growth. Additionally, the employee volunteer program was very relevant this
year, with the beginning of the pilot phase of the Banco de Tiempo database in
collaboration with ten civil organizations, aimed at promoting and measuring the
participation of volunteers to solve problems in the community.
Finally, through our responsible drinking program we reached more than 32 million
people throughout the year based on four strategies focused on consumers, driving
under the influence, vending establishments and parents. Further, Grupo Modelo is
one of the signatories of a national zero-tolerance pact to prevent selling and
providing alcohol to minors, promoted by the Convivencia sin violencia association.
The responsible drinking program has been able to communicate directly and
successfully with young people through its website and the social networks. An
innovative initiative this year was the first poster contest through the Facebook
page, in which more than 13 thousand followers spoke out about responsible
drinking through more than 110 poster entries.
Besides being included in the new Sustainability Index of the Mexican Stock Exchange,
Grupo Modelo obtained the distinction as a socially responsible company granted by
the Mexican Center for Philanthropy known as Cemefi for the eighth year in a row.
On the other hand, our strict control in processes is reflected in the ISO9001
certification for the quality management system which we have had since 1997; the
ISO14001 for the environmental management system, since 1999; the certification
as a clean industry since 1997, and for Environmental Excellence since 2007.
In response to the demands of society that companies don’t only generate profits for
their shareholders, but that they also create value for employees, suppliers and other
groups in society, the commitment to social responsibility, environmental sustainability
and corporate governance is a priority. Grupo Modelo has always worked based on
these fundamental values and will continue to do so in the future. In order to give
more detailed information on this effort, the Company published its Sustainability
Report for the fifth year in a row.
Through our responsible
drinking program we
reached more than 32
million people throughout
the year
33
GRUPO MODELO 2011
OBJECTIVES SHAPED INTO RESULTS
Board of Directors
HONORARY LIFE CHAIRMAN
Antonino Fernández Rodríguez
CHAIRMAN
Carlos Fernández González
VICE PRESIDENT
María Asunción Aramburuzabala Larregui
VICE PRESIDENT
Valentín Díez Morodo
DIRECTORS
Carlos Fernández González 1,2
María Asunción Aramburuzabala Larregui 2
Valentín Díez Morodo 2
Luis Fernando de la Calle Pardo 3
Emilio Carrillo Gamboa 3
Alfonso de Angoitia Noriega 3
Luis Javier González Cimadevilla 2
Jaime Serra Puche 3
Marcos Achar Levy 3
Alberto Mulás Alonso 3
Carlos Brito 1
Felipe Dutra 1
Sabine Chalmers 1
Gary Rutledge 1
Robert Golden 1
Juan Enrique Cintrón Patterson 3
Claus Werner von Wobeser Hoepfner 3
John Blood 1
José Antonio Cervantes Cuéllar 1
ALTERNATE DIRECTORS
Luis Miguel Álvarez Pérez
Rodrigo Besoy Sánchez
Alfonso Cervantes Riba
Mario Álvarez Yates
Joaquín Sordo Barba
Leticia Eugenia Lara Torres
Juan Sánchez-Navarro Redo
Fernando Ruíz Sahagún
Luis Manuel Sánchez Carlos
Alejandro Duclaud González de Castilla
Ian Stephens
Ricardo Rittes
Katie Barrett
María Fernanda Lima Da Rocha Barros
Ray Adams
María Cintrón Magennis
Luis Burgueño Colín
Jeffrey J. Comotto
David West
1. Related
2. Proprietary
3. Independent
SECRETARY
Margarita Hugues Vélez
AUDIT COMMITTEE
Emilio Carrillo Gamboa (C)
Claus Werner von Wobeser Hoepfner
Joaquín Sordo Barba
Fernando Ruíz Sahagún
CORPORATE PRACTICES COMMITTEE
Luis Fernando de la Calle Pardo (C)
Claus Werner von Wobeser Hoepfner
Leticia Eugenia Lara Torres
Jaime Serra Puche
FINANCE COMMITTEE
Alfonso de Angoitia Noriega (C)
Luis Fernando de la Calle Pardo
Claus Werner von Wobeser Hoepfner
Jaime Serra Puche
(C): Chairman
35
GRUPO MODELO 2011
Financial Summary / Operations
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
Figures starting in 2008 in millions of constant Mexican pesos
Prior figures in millions of constant Mexican pesos as of December 31, 2007
(Except per share data)
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
38.23
36.05
36.48
35.44
34.93
33.45
31.80
30.59
30.10
28.87
0.86
0.79
0.77
0.84
0.68
0.53
Total domestic
39.09
36.84
37.25
36.28
35.61
33.98
Exports
16.90
15.83
15.27
16.03
15.94
15.89
13.74
12.23
11.82
11.12
Total volume
55.99
52.67
52.52
52.31
51.55
49.87
45.54
42.82
41.92
39.98
91,203
85,019
81,862
75,363
72,895
58,964
53,497
49,996
47,474
45,170
41,777
39,467
37,834
35,561
32,591
26,602
24,589
21,836
21,004
20,353
49,427
45,552
44,028
39,802
40,304
32,362
28,908
28,160
26,470
24,817
25,584
23,858
22,298
20,518
19,716
15,501
14,039
13,489
13,719
13,316
Operating income
23,842
21,694
21,730
19,284
20,588
16,861
14,869
14,671
12,752
11,501
Operating income / Net sales
26.1%
25.5%
26.5%
25.6%
28.2%
28.6%
27.8%
29.3%
26.9%
25.5%
Comprehensive financing result
-1,753
-111
1,906
-1,573
-661
-445
-669
-108
-253
-141
Other expenses (income) - Net -
1,625
1,221
1,349
1,648
466
606
791
1,020
576
1,339
23,971
20,584
18,475
19,209
20,783
16,700
14,748
13,759
12,429
10,303
6,075
4,945
5,683
3,445
5,503
5,071
4,780
4,874
4,875
4,234
-545
17
-1,401
952
11
-108
-291
-160
120
-823
18,441
15,622
14,193
14,812
15,269
11,737
10,259
9,044
7,434
6,891
-
-
-
-
-
-
-
-
-
-
18,441
15,622
14,193
14,812
15,269
11,737
10,259
9,044
7,434
6,891
6,496
5,679
5,563
5,797
5,766
2,739
2,387
2,146
1,781
1,734
11,945
9,943
8,630
9,015
9,503
8,998
7,871
6,898
5,653
5,157
3.69
3.08
2.67
2.79
2.93
2.77
2.42
2.12
1.74
1.58
7,210
6,651
-
6,769
6,952
4,327
3,766
3,197
2,116
1,952
2.23
2.06
-
2.09
2.14
1.34
1.16
0.98
0.65
0.42
3,234
3,233
3,233
3,233
3,243
3,252
3,252
3,252
3,252
3,252
SUMMARY OF CONSOLIDATED OPERATIONS
Sales of beer -millions of hectolitersDomestic
Import
Net sales
Cost of sales
Gross profit
Operating expenses
Profit before taxes
Income tax, flat tax and assets tax incurred
Deferred income tax (income) expense
Profit after taxes
Equity in income of associates and non - consolidated subsidiaries
Cosolidated net profit
Net income of non-controlling sharing
Net income of controlling sharing
PER SHARE DATA
Net income of controlling sharing per share
Cash dividends paid:
Total dividend to stockholders of controlling sharing
Dividend per share
Number of outstanding shares (millions)
Common shares
Notes:
1.- As of January 2007, total volume sold in the domestic market includes the import brand portfolio. For comparison purposes, 2006
figures have been similarly reclassified.
2.- Starting in 2007 we reclassified employee’s profit sharing to Other expenses (income). In order to use comparable information,
amounts from prior years have been reclassified.
3.- As specified by the Mexican GAAP, recognizing the inflationary effect in financial information was suspended in 2008. Therefore,
starting in 2008 figures are expressed in nominal pesos and the prior years as of December 31, 2007, are stated in Mexican
pesos of purchasing power at that date.
4.- The flat tax (IETU) came into effect in 2008 and during the same year the assets tax (impac) was eliminated.
5.- In 2011, the number of outstanding shares increased by 0.61 million due to their reincorporation to the market. The number of
outstanding shares in 2008 was reduced by 9.76 million and in 2007 by 8.64 million as a result of repurchases.
37
GRUPO MODELO 2011
Financial Summary / Balance Sheet and Additional Information
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
Figures starting in 2008 in millions of constant Mexican pesos
Prior figures in millions of constant Mexican pesos as of December 31, 2007
(Except per share data)
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
43,148
37,742
34,384
29,180
30,604
29,391
26,142
23,344
18,860
17,335
4.7
4.5
4.1
4.1
5.0
5.6
6.3
5.9
5.0
4.5
55,319
56,404
57,614
55,349
52,311
51,045
49,447
47,740
45,022
43,536
129,105
122,516
117,362
105,690
99,724
94,157
86,675
81,961
75,170
70,931
8,770
9,032
8,742
9,236
8,366
8,364
8,204
8,662
7,824
7,727
Total liabilities
22,506
21,990
21,130
25,138
17,713
14,795
13,139
14,117
13,862
13,504
Total liabilities / Total assets
17.4%
18.0%
18.0%
23.8%
17.8%
15.7%
15.2%
17.2%
18.4%
19.0%
Stockholders’ equity of controlling sharing
81,831
77,167
73,854
61,821
63,061
60,997
56,536
52,129
46,604
43,443
Return on equity (controlling sharing)
14.6%
12.9%
11.7%
14.6%
15.1%
14.8%
13.9%
13.2%
12.1%
12.0%
25.3
23.9
22.8
19.1
19.4
18.8
17.4
16.1
14.3
13.2
Capital expenditures and equity investments
4,151
3,991
6,610
7,546
4,882
4,637
4,348
5,667
3,664
4,920
Depreciation and amortization
4,468
4,019
3,787
3,495
3,352
2,991
2,675
2,360
2,289
2,204
EBITDA
27,420
24,933
24,972
22,217
23,374
19,251
17,077
16,646
14,639
13,339
Effective tax rate
23.1%
24.1%
23.2%
22.9%
26.5%
29.7%
30.4%
34.3%
40.2%
33.1%
24.0
24.8
27.3
15.7
17.6
22.5
17.2
16.1
18.2
19.5
88.99/63.57
76.44/60.86
73.49/36.88
56.01/34.12
61.79/46.61
61.86/35.30
38.75/29.71
31.29/26.63
28.68/21.66
26.72/20.01
CONSOLIDATED BALANCE SHEET INFORMATION
Working capital (deficit)
Current ratio
Property, plant and equipment - Net Total assets
Deferred tax and employees' profit sharing
Book value per share
ADDITIONAL INFORMATION
Price to earnings per share
Market price per share at closing (high/low)
Notes:
1.-Capital expenditures include the equity investments of $22 in 2010, $106 in 2009, $617 in 2008, $496 in 2007, $870 in 2004, $215 in
2003 and $1,407 in 2002.
2.-Starting in 2007 we reclassified employees’ profit sharing to Other expenses (income), thus the effective tax rate does not include this
concept. In order to use comparable information, numbers of prior years have been reclassified.
3.-As specified by the Mexican GAAP, recognizing the inflationary effect in financial information was suspended in 2008. Therefore, starting
in 2008 figures are expressed in nominal pesos and the prior years as of December 31, 2007, are stated in Mexican pesos of purchasing
power at that date.
4.- In 2011, the number of outstanding shares increased by 0.61 million due to their reincorporation to the market. The number of outstanding
shares in 2008 was reduced by 9.76 million and in 2007 by 8.64 million as a result of repurchases.
Total Assets Breakdown
Total Assets = 100%
129,105
millions
Cash and marketable securities 25.0%
Clients5.0%
Inventories8.8%
Fixed assets - Net -
42.8%
Investment in associates
4.6%
Others13.8%
100.0%
Total Liabilities Breakdown
Total Liabilities = 100%
22,506
millions
Accrued taxes
10.2%
Other non-interest-bearing
long-term liabilities
48.8%
Suppliers22.0%
Other non-interest-bearing
current liabilities
19.0%
100.0%
39
GRUPO MODELO 2011
Management’s Discussion and Analysis of Financial Results
The following analysis should be read in conjunction with the consolidated financial statements of Grupo Modelo, S.A.B. de C.V. and
Subsidiaries (the Group), and with their accompanying notes.
The financial statements for the Company have been prepared in accordance with Mexican Financial Reporting Standards and they
are stated in historical Mexican pesos, as are the financial notes and the information included in this analysis.
Gross profit
Gross profit grew 8.5% to 49,427 million pesos. Gross margin stood at 54.2%, which represented an expansion of 60 basis
points in comparison to 2010.
Operating expenses
Operating expenses grew 7.2%, below the growth in net sales, as a result of incremental distribution and information technology expenses.
beer Volume
During 2011, total beer volume increased 6.3% with respect to the same period of the prior year, reaching 56.0 million hectoliters.
In Mexico, the domestic brands grew 6.0% with respect to 2010 as a result of a higher demand for our products over the year.
Imported brands rose 8.4% due to the recovery in consumption and a low comparison base mainly during the first semester of the
year. Thus, total volume sold in the domestic market reached 39.1 million hectoliters, a 6.1% increase versus 2010.
Operating income
Operating income totaled 23,842 million pesos, a 9.9% increase with respect to the previous year. Operating margin was 26.1%,
which represented an expansion of 60 basis points.
EBITDA
The export market grew 6.8% to 16.9 million hectoliters, fueled by a good performance especially in the United States, Latin
America, Europe and Oceania. The share of exports in the total volume was 30.2% compared with the 30.1% of 2010.
EBITDA (operating income + depreciation and amortization – equity income of associates) totaled 27,420 million pesos, which
is an increase of 10.0%. EBITDA margin stood at 30.1%, an expansion of 80 basis points over the prior year. Depreciation and
amortization grew 11.2% to 4,468 million pesos and represented 4.9% of net sales.
Volume
Comprehensive financing result
Millions of hectoliters
Domestic
Imports
Total domestic
Exports
Total volume
2011
2010
Change
38.23
0.86
39.09
16.90
55.99
36.05
0.79
36.84
15.83
52.67
6.0%
8.4%
6.1%
6.8%
6.3%
The comprehensive financing result registered a gain of 1,753 million pesos above the 111 million pesos gain reported in 2010.
This figure is the result of the exchange gain due to the weakness in the currency, mainly during the last months of 2011.
Taxes
Taxes totaled 5,530 million pesos, which is an increase of 11.5%. The effective tax rate was 23.1% compared to the 24.1%
posted in 2010.
Net majority income
Net sales
Total net sales reached 91,203 million pesos, a growth of 7.3% with respect to 2010. Domestic net sales grew 10.5%, driven by
volume growth and the 4.2% increase in the price per hectoliter. Net sales in the export market grew 4.7%, since volume growth
offset the 1.9% decline in the price per hectoliter in pesos, which reflects the impact of the strong peso during the first eight
months of the year.
Net export revenues in dollars increased 7.0%, totaling 2,873 million dollars. The price per hectoliter was 170 dollars, a growth of
0.2% with respect to 2010.
Other income represented 7.8% of net sales and this item includes: i) royalties from other countries excluding the United States
and Europe; ii) sales of soft drinks, water, wine, liquor, food and other products sold mainly through the Extra convenience stores;
iii) the sale of by-products of the production process; iv) revenue generated by Company-owned sports teams; v) sales of Tsingtao
and St. Pauli Girl, which are part of the Crown Imports portfolio; and vi) the commission for the distribution of the Nestlé Waters
brands in Mexico.
Sales
Millions of pesos
2011
2010
Change
Domestic
Export
Other income
Total net sales
48,521
35,540
7,142
91,203
43,896
33,929
7,194
85,019
10.5%
4.7%
-0.7%
7.3%
Cost of sales
The cost of sales reached 41,777 million pesos, an increase of 5.9%, which is a lower rate compared to the recorded net sales
growth. Total cost per hectoliter declined 0.4% with respect to the previous year.
Net majority income was 11,945 million pesos, which represented a growth of 20.1% with respect to previous year due to
the increase in the operating profit and the gain recorded in the comprehensive financing result. Consequently, the net margin
expanded 140 basis points to 13.1%.
Financial position
As of this date, Grupo Modelo’s cash and marketable securities accounted for 25.0% of total assets. In the last twelve months
the total assets have increased 5.4%, reaching 129,105 million pesos. The Company’s financial position remained strong without
long-term interest bearing debt, and short-term operational liabilities totaling 11,531 million pesos. Total liabilities at year-end
represented 17.4% of total assets. Majority stockholders’ equity totaled 81,831 million pesos, representing a 6.0% increase
compared to 2010.
Capital expenditures
During 2011, Grupo Modelo invested 4,151 million pesos of its internally generated cash flow in different areas of the organization
as shown in the following table:
Investments
Millions of pesos
Cía. Cervecera de Coahuila
Breweries and other facilities
Sales
Total
2011
%
654
2,400
1,097
4,151
15.8%
57.8%
26.4%
100.0%
Dividends
On April 11, 2011, at the Annual Shareholders’ Meeting, a dividend of 7,210 million pesos was declared, which corresponds to
2.23 pesos per share for each of the 3,233 million outstanding shares. The dividend payout ratio totaled 72.5%. The dividend was
paid in full, in one single payment on April 20, 2011.
Anheuser-Busch International Holdings, Inc. received a dividend directly from Diblo for 2,184 million pesos as a result of its
23.25% stake in this company.
41
GRUPO MODELO 2011
Opinion and Report of the Board of Directors
to the Shareholders’ Meeting
OPINION ON THE CONTENTS OF THE CHIEF EXECUTIVE OFFICER’S REPORT FOR THE GENERAL
SHAREHOLDERS’ MEETING
In accordance with the provisions of Article 28, section IV, item c), of the Securities Market Law (the “Law”), the favorable opinion
of the Board of Directors on the report of the Chief Executive Officer of Grupo Modelo, S.A.B. de C.V. (the “Company”) referred to
in Article 44, section XI, of the Law, in connection with Article 172 of the General Law of Commercial Companies is submitted to
the current Shareholders’ Meeting. Once said report was reviewed, together with the necessary information and documentation,
based on, among others, the report by the external auditor and the opinion of the Audit Committee, the Board of Directors
considers that: (i) the accounting and disclosure policies and criteria followed by the Company are adequate and sufficient, taking
into consideration the Company’s particular circumstances; (ii) the accounting policies and criteria followed by the Company have
been consistently applied to the information submitted by the Chief Executive Officer; and (iii) the information submitted by the Chief
Executive Officer fairly reflects the financial condition and results of the Company.
9. Review and approval of the report by the Chief Executive Officer, submitted in accordance with the provisions of Article 44,
section XI, of the Law, in connection with Article 172 of the General Law of Commercial Companies and approval of the
issuance of a favorable opinion by said officer to the General Ordinary Shareholders’ Meeting.
As of January 1, 2012, for the preparation of its financial statements, the Company implemented the new accounting standard
established by the International Financial Reporting Standards (IFRS) in order to comply with the provisions established by the
National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) as well as the terms set forth in the INIF
19 “Changes derived from the adoption of the International Financial Reporting Standards.”
12.Following the recommendation of the Audit Committee, approval of the compensation of the external auditor for the auditing duties
performed during the fiscal year ended December 31, 2010, as well as any additional duties performed during said year.
BOARD OF DIRECTORS’ REPORT TO THE SHAREHOLDERS’ MEETING OF THE COMPANY
The main operations and activities in which the Board of Directors was involved during the fiscal year ended December 31, 2011
included, without limitation, the following:
1. Review and approval of the general strategy for the conduction of the business, including the 5-year plan.
2. Review of the quarterly reports submitted by the Group’s Departments and Vice-presidencies with respect to, among
others: (i) the economic situation; (ii) the distribution and sales operations; (iii) the activities of the convenience stores;
(iv) the status of the repurchase fund; and (v) the performance of Grupo Modelo stock in the Bolsa Mexicana de Valores,
S.A.B. de C.V. and other markets.
10.Approval, following a recommendation by the Corporate Practices Committee, of the execution of transactions with Related
Parties, in accordance with the provisions of Article 28, section III, item b), of the Law.
11.Approval of the appointments and/or ratifications, if any, of the members to the Audit Committee, the Corporate Practices
Committee and the Finance Committee of the Company.
13.Pursuant to the recommendations of the Corporate Practices Committee, approval to pay to the Executive Officers of the
Company short-term bonuses based on the EBITDA increase and in connection with the achievement of personal goals. Also,
approval to grant a long-term incentive, given that the EBITDA goals were achieved, all in compliance with the Policy for the
Appointment and Overall Compensation of the Executive Officers.
14.Approval, with the prior opinion of the Corporate Practices Committee, in accordance with the provisions of Article 28, section
III, item a) of the Law, to amend the Policy for the use of property of the Company’s estate by Related Parties, in order to
update the list of Executive Officers.
The foregoing in order to comply with requirements set forth in the Law and the duties of the Board of Directors.
3. Review and approval of the financial statements of the Company as of December 31, 2010.
4. Review and approval of the 2011 quarterly financial statements. Also, the Executive Committee reviewed and approved the
budget of the Company for 2012.
5. At the Board of Directors’ meeting held on February 22, 2012, review and approval of the financial statements of the
Company as of December 31, 2011 and the final budget for 2012.
6. Review of the stock repurchase activities of the Company, as well as the status of said fund.
Sincerely,
7. In accordance with the provisions of Article 43, sections I and II, of the Law, review and approval of the reports submitted by
the Chairman of the Corporate Practices Committee and the Chairman of the Audit Committee, respectively, with respect to the
activities conducted by such committees during the fiscal year ended December 31, 2011.
8. Review and approval of the report submitted by the Chairman of the Finance Committee with respect to the activities
conducted by such committee during the fiscal year ended December 31, 2011.
MR. CARLOS FERNÁNDEZ GONZÁLEZ
CHAIRMAN OF THE BOARD
43
GRUPO MODELO 2011
Audit Committee Report
Corporate Practices Committee Report
Pursuant to the provisions of Article 43, section II, of the Securities Market Law (the “Law”), in connection with Article 28, section IV,
item a), thereof, the Chairman of the Audit Committee shall prepare an annual report with respect to the activities to be conducted
by such committee and submit it to the Board of Directors to, if approved by the Board, be submitted to the Shareholders’ Meeting;
therefore, you are hereby informed on the activities conducted by the Audit Committee of Grupo Modelo, S.A.B. de C.V. (“Grupo
Modelo”, the “Group”, or the “Company”), during the fiscal year ended December 31, 2011.
Pursuant to the provisions of Article 43, section I of the Securities Market Law (the “Law”), in connection with Article 28, section IV
item a) thereof, the Chairman of the Corporate Practices Committee shall prepare an annual report with respect to the activities to be
conducted by such committee and submit it to the Board of Directors to, if approved by the Board, be submitted to the Shareholders’
Meeting; therefore, you are hereby informed on the activities conducted by the Corporate Practices Committee of Grupo Modelo, S.A.B.
de C.V. (“Grupo Modelo”, the “Group”, or the “Company”), during the fiscal year ended December 31, 2011.
In order to perform the duties inherent to the Company’s Audit Committee, during the 2011 fiscal year, the Audit Committee, which
members are Mr. Claus von Wobeser Hoepfner, Mr. Joaquín Sordo Barba, Mr. Fernando Ruíz Sahagún and the undersigned as
Chairman, met on Tuesday February 15, Monday April 11, Tuesday May 31 (together with the Finance Committee), Tuesday July
12, Tuesday August 23, Wednesday October 12 (without the attendance of Company’s officers) and Tuesday October 18. Also,
during 2012, the Committee met yesterday, Tuesday February 21.
In order to perform the duties inherent to the Company’s Corporate Practices Committee, during the 2011 fiscal year, the Corporate
Practices Committee, which members are Mr. Jaime Serra Puche, Mrs. Leticia Eugenia Lara Torres, Mr. Claus von Wobeser Hoepfner
and the undersigned as Chairman, met on Friday January 28, together with the Finance Committee, and on Tuesday February
15, Thursday March 3, Monday April 11, Tuesday July 12, Monday August 22 and Tuesday October 18. Also, during 2012, the
Committee met on Monday February 13.
In addition to the members of the Committee, the Chairman of the Board of Directors and Chief Executive Officer, the Secretary
of the Board, the External Auditor and, when deemed convenient, the Executive Officers of the Company, attended all the
meetings of the Audit Committee held during 2011, except for the one held on October 12, which meeting was held without
the attendance of the Executive Officers.
The Executive Officers of the Company, when deemed convenient, attended the meetings of the Corporate Practices Committee held
during 2011.
The most relevant matters which were reviewed at the meetings of the Audit Committee are the following:
1. Review, analysis and approval of the main accounting policies and criteria used by the Company, based on information received.
2. Review of the quarterly consolidated financial statements and the reporting guidelines to the Mexican Stock Exchange.
3. Review of the report submitted by the Chief Executive Officer of the Company with respect to the activities for the fiscal year
ended December 31, 2011, and submittal to the Board of Directors of our favorable opinion with respect to such report, for
further submittal to the General Ordinary Shareholders’ Meeting.
4. Receipt from the external auditor of a report with the results of the external audit as of December 31, 2011, with a clean
certificate, without observations, making emphasis on the participation of all the departments of the Company for the
completion of this task.
5. The Committee assessed the performance of both the company providing the external auditing services;
PricewaterhouseCoopers, S.C., and its fees, and of Mr. Julio Valdés, external auditor of the Company, and it deemed such
performance to be satisfactory. On the other hand, the external auditor confirmed his status as independent auditor.
6. The members of the Audit Committee, without the attendance of the officers of the Company, made a review, with the external
auditors, of the comments and observations on the draft of the audit work.
7. Review of the services, additional or complementary to the audit services provided by the external auditor and the
compensation for said services, for further approval by the Board of Directors of the Company.
8. Pursuant to the external audit report, we are of the opinion that the financial statements of the Company with figures as of
December 31, 2011, are adequate and sufficient and therefore, such financial statements accurately, fairly and sufficiently
present the financial condition of the Company. Thus, we hereby propose to you to approve them and later submit them to the
Shareholders’ Meeting for final approval.
9. Also, review of the status of the internal control and internal audit of the Company and the entities controlled by it, the main
characteristics of the assessments contained in their reports, the review schedule completed during the year and the results
thereof, which results were satisfactory.
10.Submittal by the Legal Vice-presidency of a report on the major matters under its purview during the 2011 fiscal year.
11.Submittal of the reports with respect to the progress of the conversion process for the financial statements under the IFRS to
comply with the requirements of the Mexican National Banking and Securities Commission.
12.Submittal by the external auditors of the recommendations included in their letter of comments with respect to the audit for 2011.
13.A plan was initiated for the continuance of the business and the recovery of the information in case of disaster, authorizing to
continue with the proposed stages until completion in April 2012.
1. Evaluation of the performance of the Executive Officers.
TO THE BOARD OF DIRECTORS OF GRUPO MODELO, S.A.B. DE C.V.
February 22, 2012
TO THE BOARD OF DIRECTORS OF GRUPO MODELO, S.A.B. DE C.V.
February 22, 2012
The main activities conducted by the Committee at the meetings were the following:
2. Review of the compensation package for the Chief Executive Officer and the Executive Officers of the Company.
3. It was recommended to pay to the Executive Officers, for the year ended December 31, 2010 and 2011, short-term bonuses
based on the EBITDA increase and long-term bonuses based on the achievement of EBITDA goals, pursuant to the provisions
of the Policy for the Appointment and Overall Compensation of Executive Officers and in connection with the achievement of
personal goals.
4. Review and submittal for the approval of the Board of Directors of the Related-Party transactions executed during the 2011
fiscal year, in compliance with the provisions of Article 28, section III, item b) of the Law.
5. Review of the rates charged by Aeromodelo, in order to comply with the Policy for the use and enjoyment of assets by Related Parties.
6. Review of the main activities conducted by the Social Responsibility department, including the Socially Responsible Company
award given to us for the eighth consecutive year. Also, it was informed of the main projects in which Fundación Modelo
currently participates and the main activities conducted with respect to Responsible Consumption and its benefits to the
community were reviewed.
7. It is stated that during the fiscal year ended December 31, 2011, the Committee granted no waiver in accordance with the
provisions of Article 28, section III, item f) of the Law.
For the preparation of this report we have taken into consideration the opinion of the Executive Officers of the Company, and there
is no difference of opinion. Also, when deemed convenient, we requested the opinion of independent experts.
The foregoing in order to comply with the requirements set forth in the Law and the duties of the Corporate Practices Committee,
taking into consideration the opinion of the Executive Officers of the Company.
For the preparation of this report we have taken into consideration the opinion of the Executive Officers of the Company, and there
is no difference of opinion.
The foregoing in order to comply with the requirements set forth in the Law, and the duties of the Audit Committee, taking into
consideration the opinion of the Executive Officers of the Company.
Sincerely,
Sincerely,
MR. EMILIO CARRILLO GAMBOA
CHAIRMAN OF THE AUDIT COMMITTEE
MR. LUIS FERNANDO DE LA CALLE PARDO
CHAIRMAN OF THE CORPORATE PRACTICES COMMITTEE
45
Finance Committee Report
TO THE BOARD OF DIRECTORS OF GRUPO MODELO, S.A.B. DE C.V.
February 22, 2012
A report on the activities conducted by the Company’s Finance Committee during the fiscal year ended December 31, 2011 to be,
if deemed convenient, submitted to the General Annual Ordinary Shareholders’ Meeting, is submitted to the Board of Directors of
Grupo Modelo, S.A.B. de C.V., (“Grupo Modelo”, the “Group”, or the “Company”).
In order to perform the duties inherent to the Company’s Finance Committee, during the 2011 fiscal year, the Finance
Committee, which members are Mr. Luis Fernando de la Calle Pardo, Mr. Claus von Wobeser Hoepfner, Mr. Jaime Serra Puche
and the undersigned as Chairman, met on Tuesday February 15, Monday April 11, Wednesday July 6 and Tuesday November
15. Similarly, it met together with other committees on Friday January 28, together with the Corporate Practices Committee
and on Tuesday May 31, together with the Audit Committee. Also, during 2012, the Committee met on Monday February 13.
When it was deemed convenient, the Executive Officers of the Company attended the meetings of the Finance Committee held
during the 2011 fiscal year.
The main activities conducted by the Committee at the meetings were the following:
1. The Committee examined in detail the financial results of the Company for the year ended December 31, 2010, and evaluated
the actual results against those of the budget for said fiscal year.
2. The Committee reviewed the adjustments made to the Company’s 2011 budget and recommended the approval of the Board
of Directors.
3. The Committee reviewed the stock repurchase actions of the Company during the fiscal years ended December 31, 2011.
4. The Committee reviewed the Company’s 5-year plan and a projection of the financial statements for the 2011-2015 period,
and recommended the approval of the Board of Directors.
5. At the meeting held on February 13, 2012, members reviewed the results of the budget of the fiscal year ended
December 31, 2011, as well as the adjustments to the Company’s budget for 2012, with final figures at the end of the
year, which was made considering, among others, the following aspects: (i) the current condition; (ii) the 2011 proforma;
(iii) the macroeconomic scenarios; (iv) the representative effects in the 2012 income statement and the balance sheet for
the adoption of the IFRS; (v) the estimated volume; (vi) the operating expenses; (vii) the financial statements; and (viii) the
CAPEX. To such respect, the approval of the Board of Directors is recommended.
Sincerely,
MR. ALFONSO DE ANGOITIA NORIEGA
CHAIRMAN OF THE FINANCE COMMITTEE
GRUPO MODELO 2011
47
Consolidated Balance Sheets
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
As of December 31, 2011 and 2010
(Amounts expressed in thousands of Mexican pesos, as explained in Note 2 and 3)
Assets
CURRENT:
Cash and cash equivalents (Note 5)
Accounts and notes receivable (Note 6)
Inventories (Note 7)
Advanced payments and others
Total current assets
Long-term accounts and notes receivable (Note 6)
Permanent share investments (Note 8)
PROPERTY, PLANT AND EQUIPMENT (Note 9)
Accumulated depreciation
Assets available for sale - Net
$
Advance payments for the acquisitions of fixed assets and others
Other assets (Notes 10 y 11)
Tax credit of controlled companies (Note 16)
Total Assets
Liabilities
CURRENT:
Suppliers
Accounts payable and other accrued expenses
Excise tax on production and services payable
Employees’ profit sharing
Liability valuation of derivative financial instruments (Note 20)
Income tax payable
Total current liabilities
Deferred tax and employees’ profit sharing (Note 16)
Liabilities due to non-controlling sharing in subsidiaries (Note 21)
Contingencies and commitments (Note 12)
Total liabilities
Stockholders’ Equity (Note 13)
Capital stock
Premium on share subscription
RETAINED EARNINGS (Note 14):
Legal reserve
Not yet applied
For the year, as per statement of income
Valuation of derivative financial instruments (Note 20)
Total stockholders’ equity of controlling sharing
non-controlling sharing:
Anheuser-Busch Companies, Inc.
Other investors
Total stockholders’ equity of non-controlling sharing
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
For the years ended on December 31, 2011 and 2010
(Amounts expressed in thousands of Mexican pesos, as explained in Notes 2 and 3)
2011
2010
32,271,175 $
8,225,426
11,357,586
2,824,462
54,678,649
953,574
6,155,929
88,469,506
(33,628,750)
478,042
55,318,798
2,552,404
7,951,556
1,494,465
129,105,375 $
23,813,706
8,486,165
12,711,629
3,634,477
48,645,977
1,274,630
5,695,130
87,296,435
(31,609,716)
716,907
56,403,626
1,495,066
7,816,621
1,185,031
122,516,081
5,400,616
3,150,078
1,619,247
1,153,955
111,419
95,826
11,531,141
8,770,049
2,204,535
22,505,725
$
5,313,264
2,952,754
1,554,188
1,083,369
10,903,575
9,031,675
2,055,232
21,990,482
16,363,111
1,090,698
16,377,411
1,090,698
3,275,483
49,254,071
11,945,005
64,474,559
(97,525)
81,830,843
3,275,483
46,545,992
9,943,309
59,764,784
(65,561)
77,167,332
24,764,743
4,064
24,768,807
106,599,650
129,105,375
23,357,803
464
23,358,267
100,525,599
122,516,081
$
The accompanying notes are an integral part of these consolidated financial statements, which were authorized for issuance on
February 22, 2012, by the undersigned officers.
Ing. Carlos Fernández González
Chief Executive Officer
GRUPO MODELO 2011
Consolidated Statements of Income
C.P. Emilio Fullaondo Botella
Vice President of Administration and Finance
NET BEER SALES
OTHER REGULAR INCOME
$
COST OF SALES
Gross profit
OPERATING EXPENSES:
Sales and distribution
Administrative
Operating profit
OTHER EXPENSES - Net (Note 15)
COMPREHENSIVE FINANCIAL RESULT:
Interest earned - Net
Foreign exchange rate gain (loss) - Net
Profit before provision for taxes to income
Provision for taxes to income (Note 16)
Consolidated net income for the year
Net income of controlling sharing
NON-CONTROLLING SHARING:
Anheuser-Busch Companies, Inc.
Other investors
Net income of non-controlling sharing
Earnings per share
(Amounts in Mexican pesos attributable to controlling sharing)
$
$
$
2011
84,060,966
7,142,124
91,203,090
41,776,586
49,426,504
$
19,214,274
6,369,811
25,584,085
23,842,419
(1,624,781)
18,418,794
5,438,806
23,857,600
21,694,218
(1,220,604)
949,457
803,524
1,752,981
23,970,619
5,530,089
18,440,530
11,945,005
650,731
(540,172)
110,559
20,584,173
4,961,739
15,622,434
9,943,309
$
$
$
$
3,600,678
2,894,847
6,495,525
$
2,994,305
2,684,820
5,679,125
$
3.6936
$
3.0752
The accompanying notes are an integral part of these consolidated financial statements, which were authorized for issuance on
February 22, 2012, by the undersigned officers.
Ing. Carlos Fernández González
Chief Executive Officer
2010
77,825,628
7,193,163
85,018,791
39,466,973
45,551,818
C.P. Emilio Fullaondo Botella
Vice President of Administration and Finance
49
GRUPO MODELO 2011
Consolidated Statements of Changes in Stockholders’ Equity
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
For the years ended December 31, 2011 and 2010
(Amounts expressed in thousands of Mexican pesos, as explained in Notes 2 y 3)
Retained Earnings
Premium
on share
subscription
Capital stock
Balances as of January 1, 2010
$
16,377,411
$
1,090,698
Legal reserve
$
3,275,483
Not yet applied
$
44,567,047
For the year
$
8,629,967
Valuation of
derivative financial
instruments
$
(86,481) $
Non- controlling
sharing
22,378,335
Total
$
96,232,460
Application of 2009 profit as agreed at the
General Ordinary Stockholders’ Meeting held
on April 19, 2010, as follows:
To retained earnings
8,629,967
Dividend payment at the rate of $2.057 pesos
per outstanding share
(6,651,022)
(8,629,967)
(6,651,022)
Dividend payment to non-controlling
stockholders
Comprehensive income (Note 14)
(2,014,806)
(2,014,806)
9,943,309
20,920
2,994,738
12,958,967
46,545,992
9,943,309
(65,561)
23,358,267
100,525,599
To retained earnings
9,943,309
(9,943,309)
Dividend payment at the rate of $2.230 pesos
per outstanding share
(7,210,394)
Balances as of December 31, 2010
16,377,411
1,090,698
3,275,483
Application of 2010 profit as agreed at the
General Ordinary Stockholders’ Meeting held
on April 11, 2011, as follows:
(7,210,394)
Dividend payment to non-controlling
stockholders
(2,184,211)
Net movement in shares repurchase
(14,300)
(24,836)
(39,136)
Comprehensive income (Note 14)
Balances as of December 31, 2011
11,945,005
$
16,363,111
$
1,090,698
$
The accompanying notes are an integral part of these consolidated financial statements, which were authorized for issuance on
February 22, 2012, by the undersigned officers.
Ing. Carlos Fernández González
Chief Executive Officer
(2,184,211)
C.P. Emilio Fullaondo Botella
Vice President of Administration and Finance
3,275,483
$
49,254,071
$
11,945,005
(31,964)
$
(97,525) $
3,594,751
24,768,807
15,507,792
$
106,599,650
51
Consolidated Statements of Cash Flows
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
For the years ended December 31, 2011 and 2010
(Amounts expressed in thousands of Mexican pesos, as explained in Notes 2 y 3)
Operating activities
Profit before provisions for income taxes
Depreciation and amortization for the year
Loss on sale of property, plant and equipment
Increase in allowance for doubtful accounts
Reserve for impairment of property, plant and equipment - Net
Net cost for the year of employee benefits
Equity method in associated companies
Decrease in allowance for obsolete and/or
slow-moving inventories
Decrease in inventories
Increase in accounts payable and other accrued expenses
Increase (decrease) in suppliers and other liabilities
Payment of taxes to income
Increase in advanced payments
Increase in accounts and notes receivable
Contributions to the pension plan trust
Net cash flows from operating activities
Investing activities
Dividends collected on permanent share investments
Collection on sale of property, plant and equipment
Acquisition of property, plant and equipment
Investment in other assets
Net movement in permanent share investments
Net cash flows used in investing activities
Cash flow available for financing activities
Financing activities
Dividend payment to controlling sharing
Dividend payment to non-controlling sharing,
net of contributions
Net cash flows used in financing activities
Increase in cash and cash equivalents
Balance at the beginning of the year
Balance at year-end
Grupo Modelo, S. A. B. de C. V. and Subsidiaries
December 31, 2011 and 2010
(Amounts expressed in thousands of Mexican pesos, as explained in Notes 2 and 3 except exchange rates)
2011
$
$
2010
23,970,619 $
4,467,936
818,831
506,281
300,992
276,353
(890,000)
20,584,173
4,019,293
625,711
387,413
179,119
(780,125)
(132,717)
29,318,295
1,113,478
339,145
87,350
(5,028,695)
(36,213)
(901,114)
(195,465)
24,696,781
(85,178)
24,930,406
170,682
322,532
(49,272)
(6,674,941)
(567,044)
(290,367)
(320,402)
17,521,594
440,868
297,964
(4,151,112)
(688,598)
37,096
(4,063,782)
20,632,999
360,237
320,957
(3,969,177)
(1,331,291)
(22,326)
(4,641,600)
12,879,994
(7,210,394)
(6,651,022)
(4,965,136)
(12,175,530)
8,457,469
23,813,706
32,271,175 $
The accompanying notes are an integral part of these consolidated financial statements, which were authorized for issuance on
February 22, 2012, by the undersigned officers.
Ing. Carlos Fernández González
Chief Executive Officer
GRUPO MODELO 2011
Notes to the Consolidated Financial Statements
C.P. Emilio Fullaondo Botella
Vice President of Administration and Finance
(4,070,295)
(10,721,317)
2,158,677
21,655,029
23,813,706
Note 1 – Incorporation and business purpose:
a. Grupo Modelo, S. A. B. de C. V. and subsidiaries (the Group) are mainly engaged in the production and sale of beer, which
began in 1925.
b. Grupo Modelo, S. A. B. de C. V. mainly holds 76.75% of the common stock of Diblo, S. A. de C. V., whose business purpose
is to invest in shares of subsidiaries mainly involved in the production, distribution and sale of beer in Mexico and abroad.
The most important subsidiaries based on stockholders’ equity are as follows:
Percentage of equity
in shares comprising the capital stock
Breweries:
Cervecería Modelo, S. A. de C. V.
Compañía Cervecera de Zacatecas, S. A. de C. V.
Compañía Cervecera del Trópico, S. A. de C. V.
Cervecería Modelo de Guadalajara, S. A. de C. V.
Cervecería Modelo del Noroeste, S. A. de C. V.
Cervecería Modelo de Torreón, S. A. de C. V.
Cervecería del Pacífico, S. A. de C. V.
Compañía Cervecera de Coahuila, S. A. de C. V.
Transformation of barely to malt:
Cebadas y Maltas, S. A. de C. V.
Extractos y Maltas, S. A. de C. V.
Integrow Malt, LLC.
Machinery manufacturer:
Inamex de Cerveza y Malta, S. A. de C. V.
Manufacturer of beer cans and crown tops:
Envases y Tapas Modelo, S. A. de C. V.
Distributors of beer and other products:
Las Cervezas Modelo del Occidente, S. A. de C. V.
Las Cervezas Modelo del Centro, S. A. de C. V.
Distribuidora de Cervezas Modelo en el Norte, S. A. de C. V.
Las Cervezas Modelo en el Pacífico, S. A. de C. V.
Las Cervezas Modelo del Noreste, S. A. de C. V.
Las Cervezas Modelo en Morelos, S. A. de C. V.
Las Cervezas Modelo en San Luis Potosí, S. A. de C. V.
Las Cervezas Modelo del Sureste, S. A. de C. V.
Distribuidora de Cervezas Modelo en Chihuahua, S. A. de C. V.
Las Cervezas Modelo del Estado de México, S. A. de C. V.
Las Cervezas Modelo del Altiplano, S. A. de C. V.
Las Cervezas Modelo en Campeche, S. A. de C. V.
Las Cervezas Modelo en la Zona Metropolitana, S. A. de C. V.
Las Cervezas Modelo en Zacatecas, S. A. de C. V.
Las Cervezas Modelo en Hidalgo, S. A. de C. V.
Las Cervezas Modelo en Nuevo León, S. A. de C. V.
Service entities:
Diblo Corporativo, S. A. de C. V.
Marketing Modelo, S. A. de C. V.
Distributors of beer and other products abroad:
GModelo Corporation, Inc. (holder of 50% of Crown Imports, LLC.)
GModelo Europa, S. A. U.
GModelo Canadá, Inc.
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
53
GRUPO MODELO 2011
Note 2 – Bases for preparation:
The accompanying consolidated financial statements as of December 31, 2011 and 2010 have been prepared to meet
the guidelines of the Mexican Financial Reporting Standards (MFRS) to show fair presentation of the Group’s consolidated
financial position.
Costs, expenses and additional line items presentation in the statement of income
For the purpose of the foregoing, the Group has prepared its statements of income classifying items by function, since grouping
its costs and expenses allows disclosing the different profit levels. Additionally, for a better analysis of the statement of income, the
Group has considered necessary to include the operating profit separately in the statement of income, since such presentation is a
common disclosure practice of the industry to which the Group belongs.
Inflation effects in financial information
According with the provisions in the MFRS B-10 “Effects of Inflation” in effect as of January 1, 2008, the Mexican economy
is not in an inflationary environment, since there has been cumulative inflation below 26% in the most recent three year
period (threshold to define that an economy should be considered inflationary). Therefore, as of January 1, 2008, the
Group suspended recognizing the inflationary effects on financial information. Consequently, the accompanying consolidated
financial statement figures as of December 31, 2011 and 2010 are stated in historical thousands of Mexican pesos,
modified by the cumulative inflationary effects on the financial information recognized as of December 31, 2007.
Inflation for 2011 is 3.8% (4.4% in 2010) and the accumulated inflation for the last three years is 12.2% (15.2% in 2010).
New accounting pronouncements and improvements to the MFRS in 2011
a. Starting January 1, 2011, the following MFRS and improvements to the MFRS, issued by the Mexican Financial Reporting
Standards Board (CINIF for its acronym in Spanish) became effective:
MFRS B-5 “Financial information by segments”.
MFRS C-4 “Inventory”.
MFRS C-5 “Advanced payments”.
MFRS C-6 “ Property, plant and equipment”.
MFRS C-18 “Obligations associated to withdrawal of property, plant and equipment”.
MFRS B-2 “Cash flow statement”.
Bulletin C-10 “Derivative financial instruments and hedging transactions”.
MFRS C-13 “Related parties”.
Bulletin D-5 “Leasing”.
b. The MFRS and improvements mentioned above, did not have a significant impact on the Group’s consolidated financial
information, except as mentioned in Note 3g, corresponding to MFRS C-5 “Advanced payments”.
Note 3 – Summary of significant accounting policies:
The most significant accounting policies are summarized as follows and have been consistently applied in the reporting years,
unless otherwise indicated. As of January 1, 2012, the Group adopted the International Financial Reporting Standards (IFRS or NIIF
for its acronym in Spanish). The main effects of the adoption are described in Note 4.
The MFRS require the use of certain accounting estimates in the preparation of the financial statements. Additionally, the Group’s
Management judgment is required in the process of defining the accounting policies.
a.Consolidation:
The Group prepares consolidated financial statements, which include the financial position and the results of the companies
in which Diblo, S. A. de C. V. has control. All significant balances and transactions between consolidating entities have been
eliminated for consolidation purposes.
b. Cash and cash equivalents:
The cash and cash equivalents includes cash balances, bank deposits and other highly liquid investments, with a minor risk for
changes in their value.
Cash equivalents are comprised mainly of financial instruments held for trade and are valued at fair value which is similar to
their market value. The fair value is the amount for which a financial asset may be exchanged or a financial liability could be
liquidated between interested and willing parties in an unrestricted transaction.
Cash equivalents are subject to different types of risks, the most important are related to the market in which they operate,
terms of duration for interest rates, exchange rates and the market’s inherent credit and liquidity risks.
The average term for the above mentioned investments in debt instruments with different classifications is mainly short-term.
c.Accounts and notes receivable:
The Group has implemented the practice of adjusting to present value, the balance of long-term accounts and notes receivable
(due dates over 12 months).
d. Permanent share investments in associates:
Permanent share investments in associates are valued through the equity method. Under this method, the acquisition cost
is modified by the proportional percentage of changes in the associated companies’ stockholders’ equity subsequent to the
acquisition date. Net income from participation in associated companies that manufacture materials used in the production of
beer is presented decreasing the cost of sales.
e.Derivative financial instruments:
Derivative financial instruments, contracted and identified, classified for trading or hedging due to market risks, are recognized in
the balance sheet as assets and/or liabilities at their fair value, which is determined based on recognized market prices; if they
are not quoted on a market, their fair value is determined based on valuation techniques accepted in the financial field.
The Group applies cash flow hedging accounting for those derivative instruments that are designated and qualify as hedging
transactions. To qualify as hedge accounting, the details of the hedge must be formally documented at the time that the
relationship of hedge is determined, including the objective of the risk to be covered, the hedging strategy, the hedging
instrument, the specific cash risks to be covered by the instrument, and the procedure to measure its effectiveness.
A derivative instrument must be highly effective to properly cover the changes in fair value and cash flow, in order to cover
the established risk. Effectiveness is tested at the beginning of the hedge relationship. During the term of the hedge, quarterly
effectiveness testing must be performed prospectively and retrospectively to determine the ineffective portion of the hedge. The
changes in fair value of such derivative financial instruments are recognized initially in stockholders’ equity, when those hedges
cover cash flows and they comply with all hedging requirements. Subsequently, the fair value of those instruments is recognized
once they compensate the exposure to be covered. Hedge ineffective portions are immediately taken into the statement of
income of the year within the comprehensive financing result (RIF for its acronym in Spanish).
When the Group has trading derivative instruments, their fair value valuation is recorded directly in the RIF for the period in
which they arise.
Embedded derivatives - Some contracts contain embedded derivatives that require separation from the host contract and
determination of their fair value based on market prices. If the economic features or the risks of the embedded derivatives are
not closely related to the resident contract, these derivatives, when applicable, are recognized as assets and/or liabilities, and
their gains or losses are recorded in the statement of income.
f.Inventories and cost of sales:
Inventories are expressed at historical cost determined through the average cost method. Inventory values determined under
this method do not exceed its net realizable value.
Additionally, the cost of sales is recognized at the historical cost of purchases or production cost of inventories manufactured
during the year.
The allowance for obsolete or/and slow-moving inventories is considered sufficient to absorb losses on those items, which is
determined by studies performed by the Group’s Management.
g.Advanced payments:
As of January 1, 2011, advanced payments represent those expenditures made by the Group where the risks and benefits
inherent to the goods to be acquired or services to be received have not been transferred. Advanced payments are recorded
at their cost and presented in the balance sheet as current or non-current assets, depending on the destination item. Once the
goods and/or services related to advanced payments are received, they should be recognized as an asset or as an expense
in the income statement. The financial statements of 2010 were reclassified in order to be comparable, according to the
provisions contained in the new NIF C-5.
h. Property, plant and equipment:
Property, plant and equipment are expressed as follows: i) acquisitions subsequent to January 1, 2008, at their acquisition cost,
and ii) acquisitions prior to December 31, 2007, at restated values determined by applying National Consumer Price Index
(NCPI) factors to their acquisition cost, from their acquisition date up to December 31, 2007. Consequently, property, plant and
equipment are expressed at their modified historical cost, net of accumulated depreciation, less any impairment losses.
55
GRUPO MODELO 2011
Depreciation is calculated by the straight-line method, based on the estimated useful life of assets, which is determined by the
Group’s technical department. Annual depreciation rates are shown in Note 9.
Actuarial gains (losses) not yet amortized and those generated due to termination benefits (legal indemnities and seniority
premium) are recognized immediately. Unamortized actuarial gains and losses arising from retirement benefits (pension plan
and seniority premium) will continue to be amortized over the employees’ average remaining working lives.
Assets available for sale are presented at their realizable value.
i. Construction in progress and advances to suppliers:
These items are recorded at the value of the related expenditures.
j.Intangible assets and unamortized expenses:
Intangible assets are recognized when they are acquired individually, through a business acquisition, or generated internally
through the normal course of the Group’s operation, only when they meet the following conditions: i) to be identifiable, ii) lack of
physical substance, iii) provide future economic benefits, and iv) there is control over such benefits.
Licenses and permits represent payments made for the sale of products, to exploit a patent or registration granted by the owner
of said items.
Intangible assets acquired or developed and licenses are expressed as follows: i) acquisitions or developments subsequent
to January 1, 2008, at historical cost, and ii) acquisitions or developments made up to December 31, 2007, at restated
value, which is determined by applying NCPI factors to their acquisition or development costs from their acquisition date up to
December 31, 2007. Consequently, intangible assets and unamortized expenses are expressed at their modified historical cost,
net of accumulated amortization.
Amortization is calculated by the straight-line method. The annual amortization rate used for accounting purposes (is between
5% and 10%) and it is determined based on the expected future economic benefits.
k.Goodwill:
Goodwill represents the excess in the cost paid for the shares of subsidiaries over the fair value of the net assets acquired. After
January 1, 2005, goodwill is considered to have an indefinite life and its value is subject to annual impairment assessment, as
described in the following item.
The goodwill balance is expressed as follows: i) recognized as of January 1, 2008, at its historical cost, and ii) recognized until
December 31, 2007, at its indexed net value determined through the application of NCPI factors to its acquisition cost until
December 31, 2007. Consequently, goodwill is expressed at its modified historical cost, less any impairment losses.
l.Long-lived assets:
Long-lived assets, tangible and intangible, are subject to annual impairment assessment. The Group’s Management has carried
out studies to determine the recovery value of long-lived assets, tangible and intangible, in order to determine whether there is
indication of significant impairment in such assets. As of December 31, 2011 and 2010, there were no significant adjustments
that have not been recorded for this item.
m.Provisions:
Liability provisions represent present obligations for past events whose settlement will probably require the use of economic
resources. These provisions have been recorded based on the Group’s Management best estimate.
n.Employee benefits:
Employee benefits offered by the Group to its employees are described as follows:
Direct benefits (salaries, overtime, vacations, performance bonuses, holidays, paid absences, etc.) are recognized in the
statement of income as they accrue, and their corresponding liabilities are expressed at their nominal value.
Termination benefits for reasons other than restructuring (dismissal, seniority premium, bonuses, special compensations, voluntary
separation, etc.) and retirement benefits (pension, seniority premium, indemnities, etc.) are recognized based on actuarial studies
carried out by independent experts through the projected unit-credit method. The Group makes periodic contributions to trust funds
established for this purpose. These contributions are determined according to the plans approved by the tax authorities.
The net cost for the period of each employee benefit plan is recognized as an operating costs and expense in the year it
accrues, which includes, among others, amortization of the labor cost of past services and actuarial gains (losses) of previous
years, current labor cost and financial costs.
Actuarial studies on employee benefits include the assumption on the wage career.
o.Deferred taxes to income:
In determining deferred taxes, the Group uses the comprehensive method of assets and liabilities, which consists of recognizing
deferred taxes on all temporary differences between the book and tax values of assets and liabilities expected to materialize in
the future at the rates set forth in the tax dispositions in effect on the date of the financial statements (See Note 16).
p.Deferred Employees’ Profit Sharing (PTU):
The Group recognizes this item for temporary differences that are estimated to materialize in the future. Current and deferred
PTU are shown in the statement of income within other expenses.
q.Stockholders’ equity:
Stockholders’ equity items are expressed as follows: i) movements made as of January 1, 2008, at historical cost, and
ii) movements made before January 1, 2008, at indexed values determined by applying NCPI factors to their originally
determined values up to December 31, 2007. Consequently, the different stockholders’ equity items are expressed at their
modified historical cost.
The premium on share subscription represents the difference between the excess payment for subscribed shares and their
nominal value.
r. Comprehensive income:
Comprehensive income comprises the net income and items required by specific MFRS to be included in the stockholders’
equity, and do not constitute capital contributions, reductions or distributions.
s.Earnings per share:
Earnings per share attributable to the controlling interest were calculated based on the average of common shares outstanding.
t.Revenue recognition:
Revenue from the sale of goods is recognized in the statement of income when all of the following requirements are met: i)
the risks and benefits of the goods are transferred to the purchaser and there is no significant control over any of them, ii)
the amount of revenue, costs incurred or costs to be incurred, are reliably determined, and iii) the Group is likely to receive
economical benefits associated to the sale.
Service revenue is recorded in the statement of income as services are rendered and when the following conditions are met:
i) the amount of revenue and costs incurred when service is provided is reliably determined; ii) the Group is likely to receive
economical benefits associated to the service provided.
Advanced payments from clients are classified as current liabilities and are applied to the statement of income for the year as
the products are delivered and the services are rendered to clients.
The allowance for doubtful accounts is recognized based on studies performed by the Group’s Management and it is
considered sufficient to absorb potential losses for lack of collection.
u.Exchange rate gains and losses:
Transactions in foreign currencies are initially recorded at the exchange rate in effect at the date of the transactions. Assets
and liabilities denominated in such currencies are translated at the exchange rate in effect at the consolidated balance sheet
date. Exchange gains or losses arising from fluctuations in the exchange rates between the transaction and settlement dates,
or the balance sheet date, are recognized in the statement of income as a component of the RIF, with the exception of those
exchange differences that are capitalized with other components of the RIF in the cost of eligible assets (See Note 18).
57
GRUPO MODELO 2011
v.Foreign currency translation:
The financial statements of foreign subsidiaries and associated companies, which maintain a recording currency different from the
Group’s functional currency, were translated for consolidation purposes to the functional currency (Mexican Peso) based on the
following procedure: i) monetary items at the exchange rate in effect as of the date of the consolidated financial statements which
was $13.9580 ($12.3621 in 2010) per U.S. dollar; ii) non-monetary items, at their historical exchange rates, iii) income-loss items
at the average exchange rate for each month of the year, and iv) the translation effect is recorded within the RIF.
w.Segment information:
MFRS B-5, “Financial Information by Segments”, requires the Group to analyze its organizational structure and its reporting
system in order to identify operating segments. The Group has identified two business segments: domestic and export. Note
19 shows income by segment resulting from the manner in which the Group’s Management analyzes, directs and controls
the business.
Note 4 – IFRS adoption:
As of January 1, 2012, the Group adopted IFRS as accounting framework for its financial statements with the purpose of
complying with the provisions established by the Mexican National Banking and Securities Commission. Also, to comply with the
Interpretation to MFRS 19 “Change arising from the adoption of the International Financial Reporting Standards”, the amounts of
the significant changes in the main financial statement line items at December 31, 2011, are shown below:
Item
Assets
Inventories
Property, plant and equipment
Other assets
Total assets
Liabilities
Employee benefits
Deferred tax
Liability due to non-controlling sharing in subsidiaries
Total liabilities
Stockholders’ equity
Capital stock
Retained earnings
Comprehensive income
Stockholders’ equity of controlling sharing
Non-controlling share other investors
Non-controlling share Anheuser-Busch Companies, Inc.
Total stockholders’ equity
Total liabilities and stockholders’ equity
Subsection
a
b
c
Change
$
$
d
$
e
f
e
$
(2,769,498)
3,701,114
(990,917)
(59,301)
686,258
(190,331)
(1,706,832)
(1,210,905)
(6,439,000)
6,250,018
(237,155)
(426,137)
1,706,832
(129,091)
1,151,604
(59,301)
Effective January 1, 2012, the Group will use the historical cost method for valuing property, plant and equipment, and only will
be restated through inflation in case there are hyperinflationary economies (greater than 100% in consecutive periods of three
years) wherever the Group has an investment.
c. Licenses.- Since it was determined that there is no recognized active market to value them, they should be recognized at their
historical cost, therefore the effects of restatement through inflation recognized up to December 31, 2007 were reversed. On
the other hand, such licenses are of indefinite life, therefore according to MFRS amortization was stopped on December 31,
2008. According to IFRS, this change occurred in previous years, therefore the Group cancelled the amortization occurred for
these differential in dates.
d. Employee benefits.- Under MFRS there is still a transition liability pending to be amortized while for IFRS said transition liability
was allowed to be amortized up to 2004, therefore the transition asset/liability existing under MFRS as of January 1, 2011 will
be reversed against retained earnings at the date of adoption.
The Group adopted the option of IFRS 1 to recognize unamortized actuarial gains or losses as of January 1, 2011 directly to
equity at the date of adoption to align the recognition with the requirements of the new standard IAS 19, which despite being
effective on January 1, 2013, its early adoption is allowed. The Group also recognized in equity the amendments to the plan.
The changes include the elimination of the corridor method, differences in the allocation of the pension costs for its presentation
in different line items. For example, the financial cost will be presented within financing costs, the portion of actuarial gains and
losses will be directly recognized in the comprehensive income rather than in the results.
Termination benefits recognized under MFRS are not allowed under IFRS unless the Group is demonstrably committed to: i)
terminate employment for an employee or a group of employees before the normal retirement date or, ii) whenever an employee
accepts voluntary redundancy in exchange for these. Therefore, the Group will only recognize this liability when a detailed formal
plan is in place for the employees affected. As consequence the amount recognized at January 1, 2011 will be eliminated.
e. Liability due to Crown Imports, LLC. - According with the presentation requirements under IFRS, this balance should be
presented within the non-controlling share in the stockholders’ equity.
f. Effects of inflation. - As described in Note 2, under MFRS B-10 to recognize a hyperinflationary economy in Mexico,
accumulated inflation for the last three years must equal or exceed 26%, therefore the Group suspended the recognition of
inflationary effects on it financial information as of January 1, 2008. Under IFRS to recognize these effects, cumulative inflation
over the last three years must be equal to or greater than 100%. In Mexico since January 1, 1998, there have been no such
inflation effects, therefore the Group will eliminate against retained earnings the inflation effects of those items in which there is
no option on IFRS 1 to continue recognizing the deemed cost.
g. PTU- The main change in terms of presentation refers to the current PTU, which has been presented in the income statement
within other expenses out of the operation, which will now be presented within operating costs and expenses.
Note 5 – Cash and Cash Equivalents:
The cash and cash equivalents balance at December 31, is comprised mainly of cash funds, bank deposits, foreign currency
balances and highly liquid investments subject to unimportant risk of change in value.
The amounts shown above represent Management’s best estimates at the date of issuance of these financial statements; these
amounts could be modified according to circumstances.
The balance is made up of the following:
The main changes in the Group accounting policies are described below:
Item
a. Inventories.- The Group had the policy of reflecting returnable containers as an inventory, which were considered packaging
resources. Under IFRS inventories should be consumed or sold during the normal course of operations (one year), therefore the
Group reclassified these inventories as part of fixed assets, considering that they comply with the definition of IAS 16 “Property,
plant and equipment”: i) Assets that an entity has for use in the production or supply of goods and services; and ii) they are
expected to be used for more than one period.
The Group estimated a useful life of 5 years for these containers and, as the other fixed assets, depreciation will be calculated
by the straight-line method.
b. Property, plant and equipment.- The Group adopted the option of IFRS 1, which allows at the time of the initial valuation
of property, plant and equipment to be stated at their deemed cost (fair value or value recognized under MFRS at the date of
transition). In this case, the Group carried out appraisals of its most important property (land and buildings), through an
independent appraiser. For all other property, plant and equipment, the Group adopted the other option of IFRS 1, of recognizing
their value under MFRS at the date of transition represented by its historical cost plus its restated values for all the acquisitions
realized up to December 31, 2007, determined by applying NCPI factors to their acquisition cost, from their acquisition date up
to December 31, 2007.
Cash
Bank deposits
Highly liquid investments
2011
$
$
The average maturity of the portfolio is 35 days (60 days in 2010).
7,511
1,467,290
30,796,374
32,271,175
2010
$
$
6,677
901,928
22,905,101
23,813,706
59
GRUPO MODELO 2011
Note 8 – Permanent share investments:
Following is a summary of the main financial assets:
a. The balance of this account is made as follows:
2011
Type of instrument
Report contracts and cash
Debt instruments
Structured notes
Instrument
Note dual dollars
Maturity date
January 02, 2012
July 25, 2012
January 14, 2012
Rate
4.55% $
5.15%
1.80% Dollars
$
Market value
27,249,388
4,846,986
174,801
32,271,175
2010
Type of instrument
Report contracts and cash
Debt instruments
Structural notes
Instrument
Note dual dollars
Maturity date
January 02, 2011
August 06, 2011
January 09, 2011
Rate
4.77% $
5.06%
2.00% Dollars
$
Market value
18,014,335
5,675,793
123,578
23,813,706
a. The balance of this account is as follows:
Item
2011
$
Less- Allowance for doubtful accounts
Recoverable taxes (mainly ISR)
Non-consolidated related companies and
associates (See Note 17)
Officers and employees
Less- Accounts and notes receivable in short-term
Accounts and notes receivable in long-term
$
8,072,793 $
627,368
8,700,161
(1,008,412)
7,691,749
1,416,942
40,897
29,412
9,179,000
(8,225,426)
953,574 $
2010
7,614,019
470,848
8,084,867
(770,516)
7,314,351
2,345,294
77,427
23,723
9,760,795
(8,486,165)
1,274,630
b. Long-term accounts and notes receivable are shown discounted at their present value, using a discount rate of 5%, which is
equivalent to the Group’s yield rate. The discount amount was approximately $97,329 ($96,184 in 2010).
Note 7 - Inventories:
The balance of this account is made as follows:
Item
Containers and packaging
Finished goods and work in process
Raw materials
Accessories and spare parts
Wines, spirits and groceries
Goods in transit
Others
Companies
Dirección de Fábricas, S. A. de C. V.
(holder of glass – container
manufacturing companies)
Manantiales la Asunción, S. A. P. I. de C. V.
(60% economic and 49% voting shares)
Modelo Molson Imports, Ltd.
Other permanent investments
46 (41 in 2010)
2011
2010
$
5,014,138
$
4,511,534
$
611,487
277,203
272,678
6,175,506
(19,577)
6,155,929 $
606,036
264,958
333,468
5,715,996
(20,866)
5,695,130
60
50
Multiple
Less – Reserve for book value impairment
b. The amount of permanent share investments includes the participation in the net income of these entities by $890,000
($780,125 in 2010). Of this amount $693,053 ($630,295 in 2010) decreases the cost of sales in the income statement.
Note 6 – Accounts and notes receivable:
Clients
Sundry debtors
Percentage of equity
in shares comprising
the capital stock
2011
$
Less – Allowance for obsolete and/or slow-moving inventories
$
3,922,981 $
3,352,583
2,979,308
568,452
362,874
79,579
104,405
11,370,182
(12,596)
11,357,586 $
2010
4,534,386
3,377,918
3,607,789
641,059
353,560
183,814
158,416
12,856,942
(145,313)
12,711,629
c. The increase in the share percentage of Dirección de Fábricas, S.A. de C.V., was originated by the amortization of capital in said
company for other investors. This change in share percentage was accounted for based on the provisions of the MRFS C-7
“Investment in Associates and Other Equity Investments”.
Note 9 – Property, plant and equipment:
a. The balance of this account is made as follows:
Net Value
Item
Items not subject to depreciation:
Land
Construction in progress
Total items not subject to depreciation
Items subject to depreciation:
Machinery and equipment
Buildings and constructions
Furniture and other equipment
Transportation equipment
Antipollution equipment
Computer equipment
Total items subject to depreciation
Annual rate of
depreciation (%)
-
2011
$
5
2
7
12 - 25
5
25
Assets available for sale - Net
$
4,381,304
3,074,298
7,455,602
25,832,858
13,803,896
3,867,632
2,474,019
829,733
577,016
47,385,154
54,840,756
478,042
55,318,798
2010
$
$
4,414,334
2,789,758
7,204,092
26,727,483
14,075,780
3,627,395
2,635,002
848,961
568,006
48,482,627
55,686,719
716,907
56,403,626
Depreciation for the year amounted to $3,999,626 ($3,769,990 in 2010).
b. The movements of property, plant and equipment during the years presented, are as follows:
2011
Beginning balance
Acquisitions
Disposals - Net
Transfer of asset advances
Depreciation
Ending balance
$
$
56,403,626 $
4,151,112
(1,417,787)
181,473
59,318,424
(3,999,626)
55,318,798 $
2010
56,205,842
3,969,177
(946,668)
945,265
60,173,616
(3,769,990)
56,403,626
61
GRUPO MODELO 2011
c. The Group’s Management estimates that completion of the work in progress will require an additional investment of
approximately $2,477,673 ($4,066,057 in 2010), and will be applied for the construction of warehouses, offices and
acquisition and installation of new production lines, the work is expected to be finished through 2012.
The balance of this account is made as follows:
Item
2011
$
Indefinite life intangible assets and others:
Licenses and other assets with indefinite lives
Asset from employee benefits (See Note 11)
Goodwill
$
2010
5,467,825 $
(1,325,503)
4,142,322
4,970,849
(942,990)
4,027,859
1,672,257
1,233,473
903,504
1,562,068
1,314,362
912,332
7,951,556
$
7,816,621
Amortization for the year amounted to $468,310 ($249,303 in 2010).
Note 11 – Employee Benefits:
The Group has pension and seniority premium plan to cover the obligations established in its labor contracts and in the Mexican Federal
Labor Law. Those compensations are payable only after employees have worked a certain number of years.
Fixed rate (debt)
Actual rate
Subtotal fixed rates
Domestic variable rate
Private equity
Subtotal variable rates
Total portfolio
61.59%
15.55%
77.14%
18.08%
4.78%
22.86%
100.00%
2010
65.28%
14.43%
79.71%
17.69%
2.60%
20.29%
100.00%
The net cost for the year amounted to $276,353 ($179,119 in 2010) and was determined as the obligations defined benefit on a
nominal rate of 8.25% and estimated salary increase, according to the following scheme:
Salary increase rate
Up to 25 years:
6.20%
from 26 to 35 years:
5.70%
from 36 to 45 years:
5.20%
from 46 to 55 years:
4.70%
from 56 years or more:
4.10%
The net cost for the years ended December 31, is as follows:
The benefits granted by the Group to its employees are described below:
- Short-term benefits (salary, overtime, vacation, bonuses, etc.) are recognized as they are accrued and their corresponding
liabilities are expressed at their nominal value.
- Long-term direct benefits (pension, seniority premium, bonuses and other items payable over twelve months) are recognized
based on the Group’s policies and the related liabilities are stated at their discounted value.
- The Group pays compensated absences for legal or contractual items, such as vacations, holidays and paid-leave of absences,
which are recognized as they are accrued and are not cumulative.
- The Group has established a compensation plan for certain executives based on shares of the Group itself. The condition for
granting to eligible executives includes, among others, the achievement of EBITDA metrics and employment of executives in
the Group for cumulative periods of 3 years. The amount of the cost of the plan on the shares granted, measured based on
the best estimate of expected EBITDA levels during the period of 3 years, and is distributed throughout the period of service
required and as of the grant date. The compensation cost for this plan amounted to $59,340 in 2011 ($82,609 in 2010).
The seniority premium to which employees are entitled at termination of employment or retirement is considered in each benefit
plan at the end of employment or retirement in proportion to each plan.
At the date of the consolidated financial statements, the amount of (asset) net projected liability, of benefits to employees is
analyzed as follows:
Item
Obligations for defined benefits
Plan assets (trust fund)
Defined benefit obligation in excess over the plan assets
Items to be amortized over a period based on the estimated
remaining working lives:
For actuarial losses
For past services
Projected net asset (See Note 10)
% Total
2011
Asset
Note 10 – Other assets:
Assets with definite lives and others:
Unamortized expenses and other
Less- Accumulated amortization
Plan assets are comprised as follows:
2011
$
$
2010
7,899,760 $
(7,154,696)
745,064
7,469,204
(6,939,248)
529,956
(1,686,935)
(291,602)
(1,233,473) $
(1,558,858)
(285,460)
(1,314,362)
Contributions made in the year to the trust fund that manage plan assets amounted to $195,465 ($320,402 in 2010). Payments
made in the year by the trust to beneficiaries amounted to $386,816 ($395,905 in 2010).
2011
Labor cost
Interest cost
Expected return on plan assets
Labor cost of past services
Net actuarial losses
Early settlement
Total
$
$
247,209 $
564,161
(556,575)
(8,758)
40,788
(10,472)
276,353 $
2010
217,866
549,975
(585,108)
(12,261)
104,469
(95,822)
179,119
Severance payments of $164,705 ($151,018 in 2010) were made over the year.
Note 12 - Contingencies and commitments:
a. Several lawsuits are currently in progress for different reasons. In the opinion of the Group’s officers and lawyers, if the court
rules against the Group, these matters will not substantially affect the consolidated financial position or the consolidated results
of operation.
b. In June 2009, a former distributor in Italy filed a lawsuit against Eurocermex (an indirect subsidiary of the Group in Europe) for
payment of severance and damages, including the loss of its customers, based on the legal grounds that the Group unilaterally
and unjustifiably rescinded the distribution agreement. Said termination was duly notified on September 2007 and took effect
as from December 31, 2007. The former distributor is claiming approximately US dollars $100 million for compensation and
other damages.
On October 15, 2010, the Brussels Commercial Court issued to Eurocermex a favorable ruling, whereby it declared itself with no
competent authority to resolve the matter and it ordered to the plantive to pay judicial costs and expenses. However, on December
3, 2010, the former distributor appealed against such ruling issued by the Court. The appeal’s process instance will conclude on
February 24, 2012, having the Court to issue the related sentence within the next two months, counted as of set date.
According to the Group’s local external lawyers in Belgium, the Group continues to have strong legal grounds to obtain a favorable
ruling by the Appeals Court, and consequently no provision has been recorded in the consolidated financial statements.
c. As of the date of the consolidated financial statements, there are outstanding commitments for the purchase of inventories,
machinery and equipment of approximately 129,615 thousands of US dollars (184,283 thousands of US dollars in 2010).
63
GRUPO MODELO 2011
d. As of date of the consolidated financial statements, there are mandatory operating lease agreements for use of transportation
and computer equipment, which establish future payments totaling $1,220,182 and 10,212 thousands US dollars, with the
following annual payments:
2012
2013
2014
2015
Total
$
$
Pesos
Dollars
430,288
419,290
287,482
83,122
1,220,182
5,917
3,548
747
10,212
Comprehensive income of the Group is as follows:
Description
Net income of the controlling sharing
Net income from main non-controlling sharing
Valuation of derivative financial instruments
(including valuation of financial instruments in associates)
2011
$
$
11,945,005
3,594,751
2010
$
9,943,309
2,994,738
(31,964)
15,507,792 $
20,920
12,958,967
Note 15 – Other expenses:
Other (expenses) and income for the years ended December 31, are comprised as follows:
Note 13 – Stockholders’ Equity:
Stockholders’ Equity:
The capital stock as of December 31, is comprised of 3,233,971,839 (3,233,360,332 in 2010) shares, with no par value,
divided as follows:
Description
Fixed capital:
Series A Class I shares – With no withdrawal rights, comprised
of 1,459,389,728 common shares, fully subscribed and paid-in
common voting shares, which must always comprise 56.10%
of the total shares of the common stock with voting rights,
and they are not subject to ownership subscription limitations
(historical value).
Variable Capital:
Series B Class II shares – Comprised of 1,142,017,984 fully
subscribed and paid-in common voting shares, which in no case
may comprise more than 43.90% of the total voting shares and are
not subject to ownership subscription limitations (historical value).
Series C Class II shares – Comprised of 632,564,127
(631,952,620 in 2010) common shares, fully subscribed and
paid-in nonvoting shares, which in no case may comprise more
than 20% of the common stock (historical value).
Note 14 – Comprehensive income:
2011
2010
Description
Other expenses - Net
PTU current
PTU deferred
2011
$
$
(491,888) $
(1,146,371)
13,478
(1,624,781) $
2010
(160,977)
(1,075,215)
15,588
(1,220,604)
Employee’s Profit Sharing (PTU):
The Group is subject to payment of PTU, which is calculated by applying the rate of 10% to the base determinated in conformity
with the procedures established by the Income Tax Law.
$
785,996
$
785,996
Note 16 – income Taxes:
ISR:
a. The Group consolidated tax profit amounted to $15,204,788 ($11,978,251 in 2010). The tax result differs from accounting
result mainly due to items accumulated over time and are deducted differently for accounting and tax purposes, by the
recognition of the inflationary effects for tax purposes, as well as to items only affecting either the accounting or tax result.
1,085,855
1,085,855
Based on its financial and tax projections, the Group´s Management determined that the tax to be paid in the future will be the
income tax and therefore it has recognized deferred income tax.
Effect of restatement up to December 2007
$
953,501
2,825,352
13,537,759
16,363,111
$
967,801
2,839,652
13,537,759
16,377,411
In the event of a capital reduction, any excess of stockholders’ equity over the capital contributions accounts will receive the same
tax treatment as dividends, provided by the current tax provisions.
Retained earnings restrictions:
a. In the event of a distribution (in cash or goods), retained earnings are subject to income tax, which is payable by the Group and
is considered a final payment.
b. Dividends declared from the After-Tax Earnings Account (CUFIN for its Spanish acronym) are not subject to payment of income
tax. Any excess over the account is subject to the income tax rates in effect for the years in which dividends are declared. Said
tax paid may be credited against the corporate income tax in the same year or in the following two years.
c. The net income is subject to the statutory provision that requires at least 5% of the profit be set aside until it reaches an amount
equivalent to 20% of the capital stock. At the date of the accompanying financial statements, Grupo Modelo’s legal reserve
represents 20% of the capital stock.
d. At the Ordinary General Stockholders’ Meeting of Grupo Modelo, held on April 11, 2011, it was resolved that in accordance
with article 56 paragraph IV of the Market and Securities Law, it is established that the maximum amount of funds that may
be used for stock repurchases is $3,900,000 in the understanding that this amount may only be assigned for the acquisition
of Series “C” shares. At the date of issuance of these consolidated financial statements, the net amount of the purchase and
placement of shares in the Group was approximately 24 million pesos.
On December 7, 2009, a decree was published whereby diverse provisions of the Income Tax Law are amended, added and
repealed for 2010. Said decree establishes, among other, that the income tax rate applicable from 2010 to 2012 will be 30%
for 2013 will be 29% and starting 2014 will be 28%.
b. The provisions of taxes to income as of December 31, are analyzed as follows:
Item
Income tax (ISR) current
Income tax (ISR) deferred
Flat tax deferred
2011
$
$
6,075,322 $
(541,952)
(3,281)
5,530,089 $
2010
4,944,636
95,079
(77,976)
4,961,739
65
GRUPO MODELO 2011
c. Deferred taxes and deferred employee profit sharing –The tax effect from the main temporary items, (assets) liabilities, that
originated the items under this concept as of the date of these consolidated financial statements are shown below:
Item
Property, plant and equipment
Prepaid expenses and other assets
Employee benefits’ assets
Inventories
Allowances and provisions
Others
Deferred income tax liability
PTU deferred
2011
$
Flat tax deferred
Liability for controlling company´s tax credits
Total liability for deferred taxes and employees profit sharing
$
2010
5,774,545 $
563,309
345,373
56,878
(877,130)
1,393,774
7,256,749
16,759
6,343,390
907,344
368,021
177,110
(952,858)
968,038
7,811,045
30,242
2,076
5,357
7,275,584
7,846,644
1,494,465
1,185,031
8,770,049
$
9,031,675
The controlled companies have created a deferred tax asset for tax credits arising from tax losses and book dividends of
approximately $1,166,770 ($1,337,829 in 2010).
d. The statutory rate for income tax is 30%, which differs from the effective rate, 23.1% (24.1% in 2010), as shown below:
2011
Income before provisions for taxes to income
Income tax at statutory rate by country of origin
Plus (less) income tax effect of the following items:
Other items - Net
Non deductible items
Tax relating to the non-controlling interest of partnership
agreements abroad
Disconnection of inflationary accounting effects
Inflationary adjustment deductible for tax purposes
Participation in associates
Translation effects of foreign subsidiaries
ISR recognized in the income statement
$
$
23,970,619
7,480,670
2010
$
20,584,173
6,443,734
76,942
66,750
172,259
81,618
(1,013,196)
(385,972)
(269,890)
(267,000)
(158,215)
5,530,089 $
(939,687)
(440,000)
(233,433)
(234,038)
111,286
4,961,739
Flat tax:
a. Flat tax for the period is calculated by applying the 17.5% to the profit determined based on the cash flows. Said profit is calculated
by deducting the authorized tax deductions paid from all income collected on taxable activities. From that result, flat tax credits are
deducted based on the procedures established in the current Law.
b. In complying with the MFRS, the Group’s Management recognized deferred taxes in certain subsidiaries corresponding to the
temporary differences generated on determination of the flat tax base, which are expected to materialize in future periods.
Consequently, the total deferred income tax asset was reserved in such subsidiaries, since the timing differences are not
expected to materialize in the future. The foregoing is based on the financial and tax projections for the following years, which
show that the tax that will be paid in the future is the flat tax. Therefore, at the date of the balance sheet, the Group has
recognized deferred flat tax in the amount of $2,076 ($5,357 in 2010).
Income tax - consolidation regime:
a. Grupo Modelo, S. A. B. de C. V., together with its direct and indirect subsidiaries in Mexico is authorized by the tax authorities by
official communication 325-A-IX-C-5787 dated December 22, 1995, to determine income tax on a consolidated basis as per
the Income Tax Law provisions. The main considerations of tax consolidation are as follows:
i) The consolidation percentage is the average shareholding, which is applied to each of the subsidiaries, and is 100%
for parent companies from 2005 onwards. Subsidiaries’ tax loss carry forwards included in the consolidated tax result
determination corresponding to years 1999 to 2004, and that will be amortized against tax profits generated in the year,
and will be considered at the consolidating percentage multiplied by the 0.60 factor.
ii) Companies, in which the direct or indirect interest percentage does not exceed 50%, must not be included in the tax
consolidation process.
iii)The tax losses of the parent or subsidiary companies generated individually, and that can not be amortized as per current tax
provisions must be added to the consolidated tax profit for the year in which their amortization right expires.
b. On December 7, 2009, a decree was published whereby diverse provisions of the Income Tax Law are amended, added or
repealed for 2010, the most important are:
It establishes that payment of income tax related to the tax consolidation benefits obtained as of 1999 must be made in
installments during the sixth to tenth year subsequent to the year in which those benefits were utilized. The tax consolidation
benefits mentioned include:
i) The tax losses of the controlled or controlling companies included in the determination of the consolidated tax result that
have not been individually amortized by the controlling or controlled companies.
ii) Special consolidation items derived from transactions carried out between the consolidating entities.
iii)Losses on the sale of shares not yet deducted individually by the controlled company that generated them.
iv)Dividends distributed by the controlled companies, which do not come from the CUFIN and the reinvested CUFIN.
The deferred income tax liability at year end, by the principles embodied in the tax reform under subparagraph b) above,
amounts to $1,166,770 ($1,337,829 in 2010) and will be paid according to the following:
Year
Amount
2012
2013
2014
2015
2016 to 2021
$
$
7,936
25,926
216,521
220,464
695,923
1,166,770
c. It is established in the amendments to the Income Tax Law that the differences between the consolidated CUFIN and the
reinvested CUFIN balances, and the balances of these accounts of the controlled and controlling company of the Group could
give rise to tax payments.
Note 17 – Transactions with non-consolidated related companies:
The main transactions carried out for years ended on December 31 with non-consolidated related companies, which were carried
out considering their market value, are described as follows:
Description
Purchase of:
Containers and packaging
Beer
Water
Freight
2011
$
$
Sales of:
Beer
Recyclable materials and others
$
$
2010
8,296,434
975,690
551,716
32,568
9,856,408
$
608,707
241,810
850,517
$
$
$
6,157,591
857,334
484,456
13,579
7,512,960
695,012
274,874
969,886
Note 18 – Foreign currency position and transactions:
a. At the date of the consolidated balance sheet, the Group held the following position in thousands of US dollars:
Description
Assets
Liabilities
Net long position
2011
2010
497,459
321,356
176,103
514,736
222,968
291,768
67
GRUPO MODELO 2011
b. Those amounts are valued at the following exchange rates:
As of December 31, 2011 and 2010, there are no open positions in derivative financial instruments to cover foreign currency
exchange risk.
Assets
2011:
Exchange rate $13.9580 pesos per US dollar for assets
and $14.0001 for liabilities.
2010:
Exchange rate $12.3621 pesos per US Dollar for assets
and $12.3746 for liabilities.
Liabilities
$
6,943,524
$
4,499,003
$
6,363,218
$
2,759,140
The exchange rate at the date of approval of the consolidated financial statements was approximately $12.88 ($12.06 in
2010) for assets and liabilities.
c. At the date of the consolidated financial statements, there were inventories worth approximately 82,136 thousand US dollars
(119,173 thousand US dollars in 2010) which for the most part can only be acquired abroad.
d. The following operations were carried out in the year in thousands of US dollars:
Description
Exports of finished goods
Exports of packaging and other
Collection of royalties
Total income
Freight, advertising, taxes and duties and other items
Purchase of inventories
Purchase of machinery and payment of other services
Purchase of spare parts
Total expenses
Net
2011
2010
2,872,632
104,506
7,036
2,984,174
807,553
309,934
101,469
17,255
1,236,211
1,747,963
2,684,373
78,614
7,031
2,770,018
625,355
265,427
131,891
15,941
1,038,614
1,731,404
Note 19 – Segment information:
Segment data is analyzed as follows:
$
$
2010:
Domestic
Exports
- Changes to the rising price of aluminum in regard to forecasted transactions of this commodity. Regarding the coverage of
this product this is done through monthly swaps with reference to the London futures market of this commodity.
During the month of September 2011, the Group entered into derivative financial instruments to hedge the purchase price of this
product, over a period of twelve months starting January 2012. The notional amount (volume) hedged through these instruments
amounted to 22,042 metric tons. At December 31, 2011 the fair value of these instruments amounted to 7,950 thousand US
dollars equivalent to $111,419 pesos.
Since all of the above operations were performed Over the Counter (OTC) and were no traded in an active market, the
Group valued the instruments through traditional accepted methods to determinate their estimated fair value, therefore
these results were reconciled and the reasonability of the received information from the contracting counterparties of every
financial instrument was evaluated.
During the month of December 2011, the last positions held in associated companies in the shared interest related to financial
instruments hedging natural gas expired, the fair values of said positions amounted to $65,561 in 2010.
c. Credit risk:
Financial instruments that are potentially subject to risk concentration consist primarily of accounts receivable and marketable
securities. The Group places its cash surplus within leading financial institutions. The concentration of credit risk with respect to
accounts receivable is limited due mainly to the large volume of customers and their geographic dispersion. The Group finds
that the allowance for doubtful accounts properly covers accounts that might pose a risk of recovery and continuously monitors
their behavior; and if necessary, adjusts its estimate.
d.Liquidity risk:
Prudent management of liquidity risks involves keeping enough cash and cash equivalents, the availability of financing through
proper credit lines and the capacity for closing market positions. Given the dynamic nature of the underlying business, the Group’s
liquidity risk is low.
Note 21 – Partnership agreements:
Consolidated net
income
Revenue
2011:
Domestic
Exports
b. Price risk:
The objective for this is the partial or total hedging of the main exposures generated by:
$
$
55,662,724
35,540,366
91,203,090
$
51,089,768
33,929,023
85,018,791
$
$
$
11,580,653
6,859,877
18,440,530
8,871,980
6,750,454
15,622,434
Note 20 – Financial risks and investments in derivative financial instruments:
Financial risks factors
The Group’s activities expose it to a number of market risks including exposure of cash flows to different currencies and the
fluctuation of prices of some production supplies, credit risk and liquidity risk, among others.
The Group has used derivative financial instruments in order to reduce the risk of variations in operating results arising from a
number of forecasted transactions related to variations in prices of some production supplies.
a.Exchange risk:
The main exposures generated for the risk are:
- The exchange fluctuation of the result of future weekly flows receivable and payable in US dollars (natural hedging), without
considering the cash position in US dollars.
- The exchange rate fluctuations resulting from cash flows in Euros.
a. On January 2, 2007, the Group and Barton Beers, Ltd. (Barton) signed a partnership agreement whereby they created Crown
Imports, LLC. (Crown) in order to import and sell the beer brand portfolio produced by the Group throughout the USA.
b. On April 14, 2010, the Group and Cargill Incorporated (Cargill) reached an agreement to create a strategic alliance for supply of
barley and malt; additionally, the Group sold to Cargill 49% of its participation interest in Integrow Malt, LLC (Integrow), formerly
GModelo Agriculture, which is basically involved in transforming barley into malt and is located in Idaho Falls, USA.
As part of the aforementioned partnership agreements, it is stipulated that in 2017 (in the case of the interest of Barton in
Crown), and from 2014 (for Cargill’s interest in Integrow), the Group may acquire those non-controlling interests.
Note 22 – New IFRS pronouncements:
As described in Note 4, as of January 1, 2012, the Group adopted IFRS as accounting framework for its financial statements.
Following is a list of the new IFRS pronouncements effective as of January 1, 2012 as well as the new pronouncements which will
be effective as of January 1, 2013 and thereafter. Group’s Management is in the process to evaluate the potential impact that said
pronouncements will have in the financial information to be presented:
Pronouncements effective as of January 1, 2012:
Amendment to IAS 12 Deferred taxes- This amendment introduces an exception to the existing principle for the measurement of
deferred tax assets or liabilities arising on investment property measured at fair value. The amendments also incorporate into IAS 12
the interpretation contained in SIC 21.
IFRS 12 Disclosure of interest in other entities- Includes the disclosure requirements for all forms of investment in other
entities, including the joint arrangements, associated, special purpose entities and other arrangements. Effective on January 1,
2013, with early application permitted.
Print: Earthcolor, Houston
IFRS 10 Consolidated financial statements- Replaces IAS 27 and SIC 12. Its objective is to establish principles for determining
when an entity should be consolidated without distinguishing between subsidiaries and special purpose entities. It is essential to
analyze the design and purpose of the entity, the relevant activities affecting the entity returns, and how they are managed. Effective
on January 1, 2013, with early application permitted.
Investor Contact
Begoña Orgambide García
Miriam Kai Martínez
Investor Relations
ir@gmodelo.com.mx
Media Contact
Jennifer Shelley Herrera
Media Relations
jennifer.shelley@gmodelo.com.mx
www.xdesign.com.mx
Pronouncements effective as of January 1, 2013 and subsequent:
InVESTOR INFORMATION
Headquarters
Javier Barros Sierra #555
Col. Zedec Santa Fe
C.P. 01210, México, D.F.
Tel. (52-55) 2266-0000
gmodelo.com
IFRS 13 Fair value measurement- It aims to improve consistency and reduce complexity by providing a precise definition of fair
value, as well as a single source of requirements for measurement and disclosure of fair value. The inclusion of credit risk for fair
value measurement of derivative financial instruments is mandatory. Effective on January 1, 2013, with early application permitted.
Design:
IFRS 9 Financial instruments- IFRS 9 retains but simplifies the measurement model and provides two main categories for
measurement of financial assets: Fair value and amortized cost. The basis for its classification is according to the business model.
Effective for periods that begin on or starting from January 1, 2015, with early application permitted.
Markets
Grupo Modelo trades in the Mexican
Stock Exchange with the ticker symbol
GMODELOC. It also quotes as an ADR
under the ticker GPMCY in the OTC
markets and in Latibex as XGMD
Depositary Bank in the US
Amendment to IAS 1 Presentation of other comprehensive income- Requires entities to split items presented in the
comprehensive result in two groups: If these are potentially reclassifiable to profit or loss in the future or not. Effective for annual
periods starting on July 1, 2012 (retrospective application), early application is accepted, if applied earlier should be disclosed.
BNY Mellon
Shareowner Services
Contact: Natalia Castillo
PO Box 358516
Pittsburgh, PA 15252-8516
Tel. 1-888-BNY-ADRS(269-2377)
1-201-680-6825
e-mail: shrrelations@bnymellon.com
IAS 28 (revised 2011)- Associates and joint ventures- Includes the requirements for joint ventures, as well as associates, to
be equity accounted following the issue of IFRS 11. Effective on January 1, 2013.
Listing Agent in Spain
Santander Investment, S.A.
Contact: Enrique Romero Serrano
Joaquín González-Tarrio Polo
Ciudad Grupo Santander
Avenida de Cantabria, s/n
Edificio Encinar, planta primera
28660 Boadilla del Monte - Madrid
Tel. 349-1289-3943
349-1289-3940
e-mail: eromero@gruposantander.com
jgonzaleztarrio@gruposantander.com
All efforts are important, and although the press run of this Annual Report is relatively small,
we reiterate our commitment to the environment by using environmentally-safe materials.
The following are savings resulting from the use of recycled fiber. We used 9,460 lb of
paper, which resulted in:
27 trees preserved
9,966 gallons of water saved
4,732 lb of greenhouse gases reduced and/or offset
19 million BTU’s energy not consumed
Ing. Carlos Fernández González
Chief Executive Officer
C.P. Emilio Fullaondo Botella
Vice President of Administration and Finance
This report was printed on Earthaware paper, FSC® certified,
elemental chlorine and acid-free
Please note that Grupo Modelo’s 2011 Annual Report may
include certain expectations regarding the financial and operating
performance of Grupo Modelo and its Subsidiaries. Such forwardlooking statements are based on management’s best estimates
using current and known information. However, such statements and
expectations may vary due to facts, circumstances and events beyond
the control of Grupo Modelo, S.A.B. de C.V. and its Subsidiaries
www.gmodelo.com