Unifin Financiera, SAPI de CV, Sociedad Financiera de Objeto

Transcription

You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering
memorandum (the “Offering Memorandum”) accessed from this page or otherwise received as a result of such access and
you are therefore advised to read this disclaimer page carefully before reading, accessing or making any other use of the
attached Offering Memorandum. In accessing the attached Offering Memorandum, you agree to be bound by the
following terms and conditions, including any modifications to them from time to time, each time you receive any
information from us as a result of such access.
THE FOLLOWING DOCUMENT MAY NOT BE FORWARDED OR DISTRIBUTED OTHER THAN AS PROVIDED
BELOWAND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. THIS DOCUMENT MAY ONLY BE
DISTRIBUTED IN “OFFSHORE TRANSACTIONS” AS DEFINED IN, AND AS PERMITTED BY, REGULATION S
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITHIN THE
UNITED STATES TO QIBs (AS DEFINED BELOW) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES
ACT (“RULE 144A”). ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN
WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A
VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN
ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL
NOT BE, REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR OTHER JURISDICTION, AND, SUBJECT TO CERTAIN EXCEPTIONS, THE SECURITIES MAY
NOT BE OFFERED OR SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH
RULE 144A TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”) OR (2) IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES.
CONFIRMATION OF YOUR REPRESENTATION: In order to be eligible to view this document or make an investment
decision with respect to the securities, you must be either: (a) a QIB that is acquiring the securities for its own account or
for the account of another QIB or (b) not a US person within the meaning of Regulation S under the Securities Act or have not
received delivery of this electronic mail in the United States of America, its territories and possessions, any state of the United
States and the District of Columbia; and “possessions” include Puerto Rico, the US Virgin Islands, Guam, American Samoa,
Wake Island and the Northern Mariana Islands. By accepting the email and accessing this document, you shall be deemed to
have represented to us that you are outside the United States or that you are a QIB and that you consent to delivery of such
document by electronic transmission. You are reminded that this document has been delivered to you on the basis that you are a
person into whose possession this document may be lawfully delivered in accordance with the laws of the jurisdiction in
which you are located and you may not, nor are you authorized to, deliver this document to any other person. The materials
relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where
offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or
dealer and the initial purchasers, as named in this document, or any affiliate of the initial purchasers is a licensed broker or
dealer in that jurisdiction, the offering shall be deemed to be made by the initial purchasers or such affiliate on behalf of
Unifin Financiera, S.A.B. de C.V., SOFOM, E.N.R. in such jurisdiction. Under no circumstances shall this document
constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful. Recipients of this document who intend to subscribe for or
purchase the securities are reminded that any subscription or purchase may only be made on the basis of the information
contained in the Offering Memorandum.
This Offering Memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via
this medium may be altered or changed during the process of transmission, and consequently, none of the initial
purchasers nor any person who controls any initial purchaser or any of their directors, officers, employees or agents, or
affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the
Offering Memorandum distributed to you in electronic format and the hard copy version available to you on request from the
initial purchasers.
OFFERING MEMORANDUM
CONFIDENTIAL
112,000,000 Common Shares
15JUL201418055399
Unifin Financiera, S.A.B. de C.V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada
(incorporated under the laws of Mexico)
We are offering 56,000,000 Series A shares of our common stock, no par value (the ‘‘Shares’’), and the selling shareholders
identified in this offering memorandum (the ‘‘Selling Shareholders’’) are offering 56,000,000 Shares in a global offering consisting of
(a) an international offering of 69,565,218 Shares in the United States to qualified institutional buyers as defined under Rule 144A
under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’), in transactions exempt from registration thereunder, and in
other countries outside of Mexico and the United States to certain non-U.S. persons in reliance on Regulation S under the Securities
Act (‘‘Regulation S’’) through the initial purchasers named elsewhere in this offering memorandum (the ‘‘International Offering’’) and
(b) a concurrent initial public offering in Mexico of 42,434,782 Shares conducted by the Mexican underwriters named elsewhere in this
offering memorandum (the ‘‘Mexican Offering’’), with the approval of the Mexican National Banking and Securities Commission
(Comisión Nacional Bancaria y de Valores, or ‘‘CNBV’’) and through the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de
C.V., or ‘‘BMV’’). The Shares being offered in the global offering may be reallocated between the International Offering and the
Mexican Offering prior to closing, depending upon demand. The closing of the International Offering and the Mexican Offering are
conditioned upon each other.
Investing in the Shares involves risks, see ‘‘Risk Factors’’ section beginning on page 22 of this offering
memorandum.
Offering Price: Ps. 28.00 per Share
We have granted the initial purchasers and the Mexican underwriters independent options, to be exercised within a period of
30 days counted from the date of this offering memorandum to purchase up to an additional 16,800,000 Shares at the offering price,
less the underwriting discount, to cover overallotments, if any. The overallotment options granted to the initial purchasers and the
Mexican underwriters may be exercised independently of each other, but are expected to be exercised on a coordinated basis, and may
be exercised in whole or in part (but not more than once) or not at all. See ‘‘Plan of Distribution.’’
This is our initial public offering and no public market currently exists for the Shares. We have applied to register the Shares in
Mexico with the National Securities Registry (Registro Nacional de Valores or ‘‘RNV’’) maintained by the CNBV and to list the Shares
for trading on the BMV under the ticker symbol ‘‘UNIFIN.’’ The registration of the Shares in the RNV is expected to be obtained on
or before the closing of the global offering as required under the Mexican Securities Market Law (Ley del Mercado de Valores). The
Shares have not been and will not be listed in any national securities exchange or quoted in any automated interdealer quotation system
in the United States or elsewhere outside Mexico. REGISTRATION OF THE SHARES WITH THE RNV DOES NOT IMPLY ANY
CERTIFICATION AS TO THE INVESTMENT QUALITY OF THE SHARES, OUR SOLVENCY OR THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED IN THIS OFFERING MEMORANDUM AND SUCH
REGISTRATION DOES NOT RATIFY OR VALIDATE ACTS OR OMISSIONS, IF ANY, UNDERTAKEN IN CONTRAVENTION
OF APPLICABLE LAW.
The Shares have not been and will not be registered under the Securities Act or under any U.S. securities laws. The Shares may
not be offered and sold within the United States or to U.S. persons outside the United States, except to qualified institutional buyers as
defined in and in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S.
persons in offshore transactions in reliance on Regulation S. You are hereby notified that sellers of the Shares may be relying on the
exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. See ‘‘Transfer Restrictions’’ for a description of
the restrictions regarding the purchase and transfer of the Shares.
None of the U.S. Securities and Exchange Commission (the ‘‘SEC’’), the CNBV or any state or foreign securities regulator has
approved or disapproved the International Offering or determined if this offering memorandum is truthful or complete. Any
representation to the contrary is a criminal offense.
We expect that delivery of the Shares will be made to investors on or about May 27, 2015, in book-entry form through the
facilities of the Mexican Depository Institution (S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V., or ‘‘Indeval’’) in Mexico
City, Mexico.
Global Coordinator and Joint Bookrunner
Credit Suisse
Joint Bookrunners
Citi
UBS Investment Bank
Co-Manager
Scotiabank
The date of this confidential offering memorandum is May 21, 2015
TABLE OF CONTENTS
Page
Notice to Investors ........................................................................................................................................................ i
Service of Process and Enforcement of Civil LiabilitIes ............................................................................................ iii
Additional Information ............................................................................................................................................... iv
Forward-Looking Statements ...................................................................................................................................... v
Presentation of Certain Financial and Other Information .......................................................................................... vii
Summary...................................................................................................................................................................... 1
The Offering .............................................................................................................................................................. 12
Summary Financial and Other Information ............................................................................................................... 16
Risk Factors ............................................................................................................................................................... 22
Use of Proceeds ......................................................................................................................................................... 41
Exchange Rates ......................................................................................................................................................... 42
Capitalization ............................................................................................................................................................. 43
Dilution ...................................................................................................................................................................... 44
Dividends and Dividend Policy ................................................................................................................................. 45
The Mexican Securities Market ................................................................................................................................. 46
Selected Financial and Other Information ................................................................................................................. 54
Management’s Discussion and Analysis of Financial Condition and Results of Operations .................................... 60
Business ..................................................................................................................................................................... 96
Management ............................................................................................................................................................ 121
Supervision and Regulation of the Mexican Financial Industry .............................................................................. 128
Principal and Selling Shareholders .......................................................................................................................... 134
Certain Relationships and Related Party Transactions ............................................................................................ 135
Description of our Capital Stock and By-laws ........................................................................................................ 136
Taxation ................................................................................................................................................................... 143
Plan of Distribution ................................................................................................................................................. 151
Transfer Restrictions................................................................................................................................................ 160
Validity of the Shares .............................................................................................................................................. 162
Independent Auditors .............................................................................................................................................. 163
Index to Financial Statements ................................................................................................................................... F-1
Annex A: Summary of Certain Significant Differences Between Sofom GAAP and U.S. GAAP .......................... A-1
_______________
In making your investment decision, you should rely only on the information contained in this
offering memorandum. Neither we, the Selling Shareholders nor the initial purchasers have authorized any
other person to provide you with different information, and neither we, the Selling Shareholders nor the
initial purchasers take any responsibility for any information that others may give to you. If anyone provides
you with different or additional information, you should not rely on it. You should assume that the
information appearing in this offering memorandum is accurate only as of the date on the front cover of this
offering memorandum. Our business, properties, results of operations or financial condition may have
changed since that date. Neither the delivery of this offering memorandum nor any sale made hereunder will
under any circumstances imply that the information herein is correct as of any date subsequent to the date on
the front cover of this offering memorandum. This document may only be used where it is legal to sell the
Shares. Neither we, the Selling Shareholders or any of the initial purchasers is making an offer to sell the
Shares in any jurisdiction where such an offer or sale is not permitted.
NOTICE TO INVESTORS
The Mexican Offering is being made in the United Mexican States pursuant to a prospectus in Spanish with
the same date as this offering memorandum that complies with the requirements of the Mexican Securities Market
Law and regulations thereunder. The Mexican prospectus, which has been filed with and reviewed by the CNBV
and this offering memorandum contain substantially similar information, except that the Mexican prospectus
includes other information, and information that is presented in a different manner from that in this offering
memorandum, as required by regulation in Mexico. The International Offering is being made in the United States
and elsewhere outside Mexico solely on the basis of the information contained herein.
Unless otherwise specified or the context requires, references in this offering memorandum to “the
Company,” “our Company,” “we,” “us” and “our” refer to Unifin Financiera, S.A.B. de C.V., Sociedad Financiera
de Objeto Múltiple, Entidad No Regulada and its subsidiaries, and references to “Unifin” or “the Issuer” refer to
Unifin Financiera, S.A.B. de C.V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada.
This offering memorandum is highly confidential and has been prepared by us solely for use in connection
with the proposed offering of the Shares described in this offering memorandum. This offering memorandum is
personal to each offeree and does not constitute an offer to any other person or the public generally to subscribe for
or otherwise acquire the Shares. Distribution of this offering memorandum to any person other than the offeree and
those persons, if any, retained to advise that offeree with respect thereto is unauthorized and any disclosure of any of
its contents without our prior written consent is prohibited. Each offeree, by accepting delivery of this offering
memorandum, agrees to the foregoing and agrees to make no copies of the offering memorandum.
Neither we, the Selling Shareholders nor the initial purchasers, are making an offer to sell the Shares or are
soliciting offers to buy the Shares in any jurisdiction except where such an offer or sale is permitted. You must
comply with all applicable laws and regulations in force in your jurisdiction and you must obtain any consent,
approval or permission required by you for the purchase, offer or sale of the Shares under the laws and regulations in
force in your jurisdiction to which you are subject or in which you make such purchase, offer or sale, and neither
we, the Selling Shareholders nor the initial purchasers will have any responsibility therefor.
We are relying upon an exemption from registration under the Securities Act for an offer and sale of
securities which do not involve a public offering. We have submitted this offering memorandum solely to a limited
number of qualified institutional buyers in the United States and to investors outside the United States and Mexico
so they can consider a purchase of the Shares. This offering memorandum may be used only for the purposes for
which it has been published. By accepting delivery of this offering memorandum, you acknowledge that the use of
the information in this offering memorandum for any purpose other than to consider a purchase of the Shares is
strictly prohibited. These undertakings and prohibitions are for our benefit, and we may enforce them. U.S. federal
securities laws restrict trading in our securities while in possession of material non-public information with respect
to us. By accepting delivery of this offering memorandum and by purchasing the Shares, you will be deemed to have
made certain acknowledgments, representations and agreements as set forth under “Transfer Restrictions” in this
offering memorandum. The Shares are subject to restrictions on transfer and resale and may not be transferred or
resold except as permitted under the Securities Act and applicable state securities laws pursuant to registration or
exemption therefrom. As a prospective purchaser of the Shares, you should be aware that you may be required to
bear the financial risks of this investment for an indefinite period of time.
This offering memorandum is based on information provided by us and other sources that we believe to be
reliable. Neither we, the Selling Shareholders nor the initial purchasers can assure you that this information is
accurate or complete. This offering memorandum summarizes certain documents and other information and we refer
you to them for a more complete understanding of what we discuss in this offering memorandum.
We are not making any representation to any purchaser regarding the legality of an investment in the
Shares by such purchaser under any legal investment or similar laws or regulations. You should not consider any
information in this offering memorandum to be legal, financial, business or tax advice. You should consult your own
counsel, accountant, business advisor and tax advisor for legal, accounting, business and tax advice regarding any
investment in the Shares.
i
We reserve the right to withdraw this offering of Shares at any time and we, the Selling Shareholders and
the initial purchasers reserve the right to reject any commitment to subscribe for the Shares in whole or in part and to
allot to any prospective investor less than the full amount of Shares sought by that investor. The initial purchasers
and certain related entities may acquire for their own account a portion of the Shares.
The initial purchasers make no representation or warranty, express or implied, as to the accuracy or
completeness of the information contained in this offering memorandum. Nothing contained in this offering
memorandum is, or shall be relied upon as, a promise or representation by the initial purchasers as to the past or
future.
None of the SEC, the CNBV or any state or foreign securities commission or any other regulatory authority
has approved or disapproved the offering of the Shares nor have any of the foregoing authorities passed upon or
endorsed the merits of this offering or the accuracy, adequacy or completeness of this offering memorandum. Any
representation to the contrary is a criminal offense.
In making an investment decision, prospective investors must rely on their own examination of the
Company and the terms of the offering, including the merits and risks involved. Prospective investors should not
construe anything in this offering memorandum as legal, business or tax advice. Each prospective investor should
consult its own advisors as needed to make its investment decision and to determine whether it is legally permitted
to purchase the Shares under applicable legal, investment or similar laws or regulations.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED
UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR
THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A
TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
ii
SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES
We are organized as a non-regulated multiple purpose financial company in the form of a publicly traded
company with variable capital stock (sociedad anónima bursátil de capital variable, sociedad financiera de objeto
múltiple, entidad no regulada) under the laws of Mexico. All of our directors, executive officers and controlling
persons named herein are non-residents of the United States and substantially all of the assets of such non-resident
persons and substantially all of our assets are located in Mexico or elsewhere outside the United States. As a result,
it may not be possible for investors to effect service of process within the United States upon such persons or us or
to enforce against them or us in courts of any jurisdiction outside Mexico, judgments predicated upon the laws of
any such jurisdiction, including any judgment predicated substantially upon the civil liability provisions of United
States federal and state securities laws.
No treaty exists between the United States and Mexico for the reciprocal enforcement of foreign
judgments. Generally, Mexican courts would enforce final judgments rendered in the United States if certain
requirements were met, including the review in Mexico of the U.S. judgment to ascertain compliance with certain
basic principles of due process and the non-violation of Mexican law or public policy, provided that U.S. courts
would grant reciprocal treatment to Mexican judgments. Additionally, there is doubt as to the enforceability, in
original actions in Mexican courts, of liabilities predicated, in whole or in part, on U.S. federal securities laws and as
to the enforceability in Mexican courts of judgments of U.S. courts obtained in actions predicated on the civil
liability provisions of U.S. federal securities laws.
iii
ADDITIONAL INFORMATION
We are not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). For so long as any of the Shares remain outstanding and are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, we agree to furnish upon the request of any shareholder, to the
holder or beneficial owner or to each prospective purchaser designated by any such shareholder or interests therein
who is a “qualified institutional buyer” within the meaning of Rule 144A(a)(l), information required by Rule
144A(d)(4) under the Securities Act, unless we either maintain the exemption from reporting under Rule 12g3-2(b)
of the Exchange Act or furnish the information to the SEC in accordance with Section 13 or 15 of the Exchange Act.
Any such request may be made to us in writing at our main offices located at Presidente Masaryk 111-5, Col.
Polanco, Del. Miguel Hidalgo, 11560, Distrito Federal, México. For so long as our Shares are registered with the
RNV and listed with the BMV, we will be required periodically to furnish certain information, including quarterly
and annual reports, to the CNBV and to the BMV, which will be available in Spanish for inspection on the BMV’s
website at www.bmv.com.mx and on the CNBV’s website at www.cnbv.gob.mx.
iv
FORWARD-LOOKING STATEMENTS
Certain statements contained in this offering memorandum relating to our plans, forecasts and expectations
regarding future events, strategies and projections are estimates. Examples of such forward-looking statements
include, but are not limited to: (i) statements regarding our results of operations and financial position; (ii)
statements of plans, objectives or goals, including those related to our operations; and (iii) statements of assumptions
underlying such statements. Words such as “may,” “might,” “will,” “would,” “shall,” “should,” “can,” “could,”
“believe,” “anticipate,” “continue,” “expect,” “estimate,” “plan,” “intend,” “foresee,” “seeks,” “predict,” “project,”
“potential,” or the negative of these terms, and other similar terms are used in this offering memorandum to identify
such forward-looking statements. Forward-looking statements included in this offering memorandum are based on
our current expectations and projections related to future events and trends which affect or would affect our
business.
Forward-looking statements include risks, uncertainties and assumptions, since these refer to future events
and, therefore, do not represent any guarantee of future results. Therefore, our financial condition, results of
operations, strategies, competitive position and market environment may significantly differ from our estimates, in
view of a number of factors, including, but not limited to:
•
changes in general economic, business or political or other conditions in Mexico, the United States or
elsewhere;
•
changes in capital markets in general that may affect policies or attitudes towards investing in Mexico or
securities issued by companies in Mexico;
•
the ability or willingness of our customers to meet their payment obligations;
•
the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (“Banco de
México”);
•
high levels of inflation or deflation;
•
movements in foreign exchange rates;
•
any increase in competition, including from new market entrants with substantial resources;
•
our ability to access sources of financing on attractive terms or at all;
•
any failure or weakness in our operating controls or procedures or in connection with our risk management
policies;
•
changes in, or failure to comply with, applicable laws and regulations, and the interpretation thereof, or
changes in taxes;
•
changes in regulations, or interpretations thereof, relating to maximum interest rates and to terms that may
be included in our standard agreements with customers;
•
any damage to the public’s perception of our brands;
•
changes in consumer spending and saving habits;
•
changes in the offer of and demand for our products;
•
any loss of significant customers;
v
•
our ability to implement our plans for growth or to conduct acquisitions or any consolidations;
•
our inability to hedge against certain market risks;
•
loss of any key personnel;
•
changes in labor relations, including any increases in labor costs or any labor strikes;
•
our ability to implement new technologies;
•
our ability to freely determine the interest rates and premiums that we charge to our customers in our
commercial loans;
•
our level of capitalization, reserves and charge-offs in respect of non-performing loans;
•
any adverse determinations in respect of the financial services industry or our lending business made by
antitrust or financial authorities;
•
any adverse administrative or legal proceedings against us;
•
possible disruptions to commercial activities due to natural and human-induced disasters, including health
epidemics, weather conditions, terrorist activities and armed conflicts;
•
other factors or trends affecting our financial condition and results of operation; and
•
the factors discussed under “Risk Factors” in this offering memorandum.
Therefore, our actual performance may be adversely affected and may significantly differ from the
expectations set forth in these forward-looking statements, which do not represent a guarantee of our future
performance. In view of these uncertainties, you must not rely on the estimates and forward-looking statements
included in this offering memorandum to make an investment decision.
Forward-looking statements included herein are made only as of the date of this offering memorandum.
Except as required by law, we do not undertake any obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events or
circumstances.
vi
PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION
Financial Information
This offering memorandum includes:
•
our audited consolidated financial statements as of and for the years ended December 31, 2014, 2013 and
2012, together with the notes thereto (the “Audited Financial Statements”). Our Audited Financial
Statements were audited by PricewaterhouseCoopers, S.C., independent auditors, as stated in their audit
report appearing herein; and
•
our unaudited condensed consolidated interim financial statements as of March 31, 2015 and for the threemonth periods ended March 31, 2015 and 2014, together with the notes thereto (the “Unaudited Interim
Financial Statements”).
Our Audited Financial Statements and our Unaudited Interim Financial Statements are stated in thousands
of Mexican pesos. Our Audited Financial Statements and our Unaudited Interim Financial Statements are
collectively referred to herein as our Financial Statements.
Accounting Principles
On January 10, 2014, a series of amendments to several financial laws (the “Financial Reforms”) were
published in the Mexican Federal Official Gazette (Diario Oficial de la Federación), the official Mexican
publication containing up-to-date information of the reforms and modifications to laws and regulations as well as the
publications of new laws and regulations, which comprised several amendments to, among others, the Mexican
Banking Law (Ley de Instituciones de Crédito), the Mexican Securities Market Law, the Mexican General Law of
Auxiliary Credit Organizations and Activities (Ley General de Organizaciones y Actividades Auxiliares del Crédito,
or “GLACOA”), the Mexican Law for the Protection and Defense of Financial Services Users (Ley de Protección y
Defensa al Usuario de Servicios Financieros), the Mexican Bankruptcy Law (Ley de Concursos Mercantiles) and
the Mexican Law for the Transparency and Ordering of Financial Services (Ley para la Transparencia y
Ordenamiento de los Servicios Financieros).
As a multiple purpose financial entity (Sofom) with shares registered with the RNV, we have prepared our
Financial Statements under the accounting criteria established by the CNBV (“Sofom GAAP”), which are in
accordance with Mexican Financial Reporting Standards established by the Mexican Board for Financial
Information Standards (Consejo Mexicano de Normas de Información Financiera, A.C. or “CINIF”), except where
based on the judgment of the CNBV it is necessary to apply a different accounting criteria. See Note 2 of the
Audited Financial Statements.
Sofom GAAP differs in certain significant respects from accounting principles generally accepted in the
United States (“U.S. GAAP”). See “Annex A—Summary of Certain Significant Differences Between Sofom GAAP
and U.S. GAAP” for a description of certain differences between Sofom GAAP and U.S. GAAP as they relate to us.
We are not providing any reconciliation to U.S. GAAP of the Financial Statements or other financial information in
this offering memorandum. We cannot assure you that such reconciliation would not identify material quantitative
differences between the Financial Statements or other financial information as prepared on the basis of Sofom
GAAP if such information were to be prepared on the basis of U.S. GAAP or any other accounting principles.
Non GAAP Measures
This offering memorandum contains financial measures that have not been calculated or recognized in
accordance with U.S. GAAP or Sofom GAAP and are referred to herein as adjusted earnings per share and adjusted
consolidated net income. Adjusted earnings per share represents the net consolidated result of the year divided by
the average number of outstanding common shares for the year, excluding any shares issued to represent increases in
the capital stock paid through the capitalization of retained earnings. Adjusted consolidated net income represents
net income determined in accordance with Sofom GAAP, adjusted for the following non-recurring items net after
vii
tax: the sale by us of 25% of the shares of the capital stock of Unifin, Agente de Seguros y Fianzas, S.A. de C.V. in
2014 (see “Business – Our Business Lines”), earning as a result of the repurchase of US$33.4 million of our
International Notes during the three-month period ended March 31, 2015 and the entering into derivative financial
instruments to hedge our exposure to risks associated with exchange rates.
Our management team uses these measures as indicators of our operating results and profitability.
However, you should not consider our adjusted earnings per share and our adjusted consolidated net income as
alternatives to earnings per share and consolidated net income as defined by Sofom GAAP, since, among other
things (i) our adjusted earnings per share does not reflect the capitalization of retained earnings during the current
and previous periods and (ii) our adjusted consolidated net income does not reflect our total profits and total
intermediation results.
Our management believes that our adjusted earnings per share and adjusted consolidated net income are
objective and comparable measures of our operation results, as these measures exclude items that may not provide
consistent information regarding our financial results. While our consolidated net income for the year increased
between 2012 and 2014, earnings per share calculated under Sofom GAAP decreased as a result of an increase in the
number of shares outstanding due to capital increases during such periods. In the case of the capital increase that
took place during 2014, it was derived partly by a capital contribution from our shareholders and partly by
capitalizing retained earnings. Further, consolidated net income was affected by non-recurring items such as the
sale by us of 25% of Unifin, Agente de Seguros y Fianzas, S.A. de C.V., the repurchase of US$33.4 million of our
International Notes and our entering into derivative financial instruments to hedge our exposure to risks associated
with exchange rates.
Although our calculations of adjusted earnings per share and adjusted consolidated net income may not be
comparable to calculations of similarly titled measures used by other companies, our management believes that
disclosure of these selected financial metrics can provide useful information to investors in their evaluation of our
operating performance, mainly because, in the case of earnings per share, if the effect of the issuance of new shares
as a result of those capital increases were not considered, our earnings per share would have increased during such
periods and in the case of our adjusted consolidated net income because it shows our results of operations without
the effect of the non-recurring items. See “Summary Financial and Other Information” and “Selected Financial and
Other Information”).
Currency Information
Unless otherwise specified, references to “US$,” “U.S. dollars” and “dollars” are to the lawful currency of
the United States. References to “Ps.,” “Mexican pesos” and “pesos” are to the lawful currency of Mexico.
This offering memorandum contains translations of various peso amounts into U.S. dollars at specified
rates solely for the convenience of the reader. These convenience translations should not be construed as
representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S.
dollars at the specified rate or at all. Unless otherwise indicated, U.S. dollar amounts provided in this offering
memorandum that have been translated from pesos have been so translated at an exchange rate of Ps. 15.2427 per
U.S. dollar, the exchange rate published by the Banco de México in the Mexican Federal Official Gazette on March
31, 2015.
Rounding Adjustments
We have made rounding adjustments to certain numbers presented in this offering memorandum. As a
result, numerical figures presented as totals may not always be the exact arithmetic results of their components, as
presented.
Certain Terms Related to our Loan Portfolio
In this offering memorandum, we make reference to the following terms:
viii
•
“net total loans” refers to total loans net of the allowances for loans losses;
•
“non-performing loans” is defined as past-due loans from our operating leases, financial factoring and auto
loans and other lending business lines for which collection became overdue, calculated from the thirty-first
day such loans become past-due in conformity with the accounting guidelines established by the CNBV.
For more information see Note 3(f), “Loans portfolio” to our Audited Financial Statements;
•
“off-balance sheet accounts” is defined as the unaudited memorandum accounts that appear in our
consolidated balance sheet and are comprised of accrued rent payments;
•
“performing loans” is defined as the total amount of operating leases, financial factoring and auto loans and
other loans that are not past due;
•
“total indebtedness” is defined as debt securities (long term and short term portions) and bank borrowings
and loans from other entities (long term and short term portions); and
•
“total loans” is defined as the performing loans and non-performing loans without the effect of the
allowance for loan losses.
Industry and Market Data
Market data and other statistical information (other than in respect of our financial results and performance)
used throughout this offering memorandum are based on independent industry publications, government
publications, reports by market research firms or other published independent sources, including the Mexican
Association of Leasing, Credit and Factoring Institutions (Asociación Mexicana de Sociedades Financieras de
Arrendamiento, Crédito y Factoraje, A.C.). Although we believe these sources are reliable, we have not
independently verified the information and cannot guarantee its accuracy or completeness. Some data is also based
on our estimates, which are derived from our review of internal surveys, as well as independent sources. You
should not place undue reliance on estimates as they are inherently uncertain.
ix
SUMMARY
This summary highlights information contained elsewhere in this offering memorandum. Because this is
only a summary of this offering memorandum, we urge you to read carefully this entire offering memorandum
before investing in the Shares, including “Risk Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our Financial Statements and related notes beginning on page F-1.
Overview
We are a non-regulated Mexican leasing company, operating as a non-banking financial services company,
specializing in three main business lines: operating leasing, financial factoring and auto loans and other lending.
Through our leasing business line, our core business line, we offer operating leases for all types of machinery and
equipment, transportation vehicles (including cars, trucks, helicopters, airplanes and other vessels) and other assets
used in a variety of industries. Through our factoring business line, we provide liquidity and financing solutions to
our customers by purchasing or discounting their accounts receivable and by providing vendor financing, as
described below. The auto loans portion of our auto loans and other lending business line is focused on financing
the acquisition of new and used vehicles, while the other lending portion of such business line includes financing
working capital needs and the acquisition of other capital assets.
We specialize in serving small and medium-sized enterprises (“SMEs”), which we believe are largely
underserved by banking institutions despite representing the majority of the economic activity in Mexico. We
believe the SME sector will continue expanding and providing an attractive opportunity for our growth.
The amount per transaction of our operating leases ranges from Ps. 100,000 to Ps. 150 million, with an
average balance of Ps. 1.5 million and with maturities between 12 to 48 months and 36 months on average. The
annual fixed interest rates that we charge for our operating lease products range from 16.0% to 23.0%. The amount
per transaction of our financial factoring products ranges from Ps. 500,000 to Ps. 150 million, with maturities
between eight to 180 days and 120 days on average, with annual interest rates at the Mexican interbank lending rate
(Tasa de Interés Interbancaria de Equilibrio, or “TIIE”) plus 12.5 to 19.0 percentage points. Our auto loans range
from Ps. 50,000 to up to 80.0% of the vehicle’s price, with maturities between 12 and 60 months and fixed interest
rates between 12.0% and 18.0%.
As of March 31, 2015, our operating leasing, financial factoring and auto loans and other lending business
lines represented 77.4%, 10.0% and 12.6%, respectively, of our portfolio (including our off-balance sheet accounts).
In recent years, we have experienced a significant level of growth combined with high rates of return and low rates
of non-performing loans. Between 2012 and 2014, our loan portfolio, including our off-balance sheet accounts,
grew at a compound annual growth rate (“CAGR”) of 37.0% and we had an average return on equity of 39.0%
during such period and we had a return on average equity of 38.8% in 2014. As of March 31, 2015, our net loan
portfolio increased by Ps. 1,322.8 million or 11.5% compared to December 31, 2014. The return on average equity
adjusted for non-recurring items was 43.9% for the three-month period ended March 31, 2015. Non-performing
loans represented 0.7% of our loan portfolio (including our off-balance sheet accounts) as of March 31, 2015. We
believe our growth is the result of various factors including our geographic coverage and wide distribution network
integrated through our headquarters in Mexico City and eight regional offices, our industry knowledge and knowhow, our focus on development and innovation to meet our customers’ needs, our customer loyalty resulting from
our personalized customer service and our effective origination and collections processes as well as risk mitigation.
1
The chart below shows our loan portfolio growth for each of the periods indicated:
We believe that our future growth will be supported by a strong loan portfolio pipeline and clearly
identified growth sources:
As of March 31, 2015, we had total assets of Ps. 18,236.1 million (US$1,196.4 million). For the years
ended December 31, 2012, 2013 and 2014 and the three-month period ended March 31, 2015, we had consolidated
net income of Ps. 243.4 million (US$16.0 million), Ps. 338.0 million (US$22.2 million), Ps. 482.4 million (US$31.6
million) and Ps. 357.9 million (US$23.5 million), respectively. For the years ended December 31, 2012, 2013 and
2014 and the three-month period ended March 31, 2015, we had operating results of Ps. 354.0 million (US$23.2
million), Ps. 417.2 million (US$27.4 million), Ps. 704.8 million (US$46.2 million) and Ps. 495.1 million (US$32.5
million), respectively. As of March 31, 2015, our total loan portfolio (including off-balance sheet accounts) had a
value of Ps. 12,811.1 million (US$840.5 million). As of March 31, 2015, we had total stockholders’ equity of
Ps. 1,793.2 million (US$117.6 million).
Industry Overview
We believe that the prospects of the Mexican economy represent an attractive opportunity for us to
continue to grow our business and to sustain our consistent past performance. We also believe that we are well
positioned to take advantage of these opportunities presented by the Mexican economy. Furthermore, the
fundamentally sound Mexican financial system, the recent Structural Reforms (as defined below) and the Mexican
government’s plan for infrastructure developments in the coming years each further enhance the outlook for our
operating leasing, financial factoring and auto loans and other lending business lines.
Strong Macroeconomic Environment. Mexico is the second largest market in Latin America in terms of
GDP and population. Mexico’s GDP is expected to grow 3.0% in 2015 and 3.5% in 2016 according to analyst
consensus published by Bloomberg, which compares favorably not only to the region but also relative to other
developed markets. This growth is underpinned by prudent monetary, fiscal and public-debt policies. Additionally,
according to such analysts, low inflation rates of 3.3% and 3.5% are expected in 2015 and 2016, respectively.
2
Structural Reforms. Between 2013 and 2014, Mexico approved a comprehensive package of structural
and regulatory reforms (the “Structural Reforms”). These reforms include the telecommunications, fiscal, financial,
energy, education and competition reforms, among others. In total, these reforms are estimated to have the potential
to enhance annual GDP growth by an additional 0.8% to 1.7% in the mid-term.
Ambitious Infrastructure Plan. Mexico’s National Infrastructure Program for the period from 2014 to
2018 (Programa Nacional de Infraestructura 2014-2018, or the “National Infrastructure Program”) seeks to
substantially increase government and private investment in infrastructure. The plan contemplates over 743 projects
with an estimated total investment of Ps. 7.7 trillion, of which 656 planned projects with an estimated total
investment of Ps. 5.8 trillion will be allocated to economic sectors such as communications and transportation,
electric energy, oil and gas, hydraulic energy and tourism, and with approximately 50.3% of the program’s budget
dedicated to the energy sector. It is expected that 37.0% of the funding for the program will be financed by the
private sector and 63.0% will be financed by public sources. In addition, it is expected that investments over the
five years of the program will in the aggregate represent approximately 2.0% of Mexico’s GDP. We believe this
increase in infrastructure investment will not only support future growth in the Mexican economy, but will also
create opportunities to provide financial services to contractors and subcontractors for these investment projects.
We expect to be involved in private sector financings of approximately up to 0.5% of the total investments under the
program during the next four years.
Low National Credit Penetration. Mexico’s capacity for the sustainable growth of the financial
services industry is enhanced by the low levels of credit penetration relative to other markets in the region.
According to the latest information available from regulatory agencies of each respective country, as of December
31, 2014, commercial loans represented 10.8% of Mexico’s GDP, relative to 47.8% in Chile, 26.9% in Brazil,
20.5% in Peru and 19.2% in Colombia. We believe this represents an important growth opportunity for us and the
institutions in the financial services industry.
In addition, in terms of operating lease product penetration, Mexico has one of the lowest levels as a
percentage of GDP relative to other markets in the region. According to the most recent information available from
the World Bank, as of December 31, 2013 operating lease products in Mexico represented only 0.8% of GDP,
relative to 6.8% in Chile, 4.1% in Colombia, 4.0% in Peru and 0.6% in Brazil. We believe this represents an
3
important opportunity to expand our offerings of operating lease products, which we believe will provide an
important additional financial product to our customers.
Developing SME Sector. Within Mexico’s overall market, SMEs represent a growing share in the market
but remain significantly underserved with respect to access to financial services relative to their scale. According to
the latest available information published by the Mexican Ministry of Economy (Secretaría de Economía), as of
December 31, 2012, SMEs represented 99.8% of all Mexican enterprises, and were responsible for 52.5% of
Mexico’s GDP for 2008. Furthermore, although SMEs employed approximately 74.0% of the Mexican labor force
in 2012, they only received 15.0% of the country’s financing during such period.
The concentration of these SMEs in selected Mexican states also represents an attractive opportunity to
serve these customers with a targeted approach. According to the Mexican Institute of Statistics and Geography
(Instituto Nacional de Estadística y Geografía or “INEGI”), 47.9% of the SMEs in Mexico are located in regions in
which we have a physical presence.
The Mexican Leasing Market
The Mexican operating lease industry is highly fragmented with only a few sizable players. Our main
competition is as follows:
•
international players including, among others, CHG-MERIDIAN, Deutsche Computer Leasing AG, CSI
Leasing Inc., and General Electric Company;
•
players related to diversified financial groups including, among others, Facileasing, S.A. de C.V. (part of
Banco Bilbao Vizcaya Argentaria), Arrendadora y Factor Banorte, S.A. de C.V., SOFOM, E.R., Grupo
Financiero Banorte, Arrendadora Actinver, S.A. de C.V., AF Banregio, S.A. de C.V., SOFOM, E.R.,
Banregio Grupo Financiero (which recently announced its acquisition of the Mexican leasing business of
CIT Group), Arrendadora Ve por Más, S.A. de C.V., SOFOM, E.R., Grupo Financiero Ve por Más and
Index Arrendadora, S.A. de C.V.;
•
players related to specific brands including, among others, Volkswagen Leasing, S.A. de C.V., Caterpillar
Crédito, S.A. de C.V., SOFOM, E.N.R., Hewlett Packard Operations México, S. de R.L. de C.V., GM
Financial de México, S.A. de C.V., SOFOM, E.N.R., Paccar Financial México, S.A. de C.V., SOFOM,
E.N.R., Navistar Financial, S.A. de C.V., SOFOM, E.N.R., Daimler Financial Services, S.A. de C.V.,
SOFOM, E.N.R. and NR Finance México, S.A. de C.V.; and
•
other independent players including, among others, ABC Leasing, S.A. de C.V., Magna Arrendadora, S.A.
de C.V., Arrendomóvil de México, S.A. de C.V., Docuformas, S.A.P.I. de C.V., Corporación Financiera
Atlas, S.A. de C.V., SOFOM, E.N.R., Financiera Bepensa, S.A. de C.V., SOFOM, E.N.R. and TIP de
México, S.A.P.I. de C.V.
Our Competitive Strengths
We believe that the following key strengths give us an advantage over our competitors and position us to
grow our market share in the Mexican operating leasing, financial factoring and auto loans and other lending
industries:
•
Leader in the Mexican Operating Leasing Industry. Since beginning operations in 1993, we have
experienced significant growth and have consolidated our position as a leader in the operating leasing
industry with an active participation in the Mexican financial industry. According to the latest report
published by The Alta Group in November 2014, we are the leading independent (non-banking) leasing
company in Latin America. We believe that our growth and market penetration are primarily a result of our
unique business model, which focuses primarily on the continuous development and innovation of our
products and financial solutions aimed at meeting our customers’ needs; our high quality personalized
customer service; our ability to generate demand for our products through our sales efforts supported by
4
our targeted distribution network and marketing efforts aimed at SME’s and individual business owners;
and our efficient processes for originating credit and managing risk supported by advanced information
technology systems. Based on this business model, from 2012 to 2014, we increased our revenue from our
operating leases, financial factoring and auto loans and other lending business lines at a CAGR of 31.1%,
8.6% and 62.0%, respectively. For the same period, we had an average return on equity of 39.0 %. In
addition, as shown in the charts below, we have consistently outperformed the Mexican banking sector in
terms of CAGR, performing loans, efficiency and profitability.
•
Strong Commercial Structure and an Expanding National Platform. We have a solid commercial structure
defined by a highly specialized and capable sales force and an extensive distribution network, comprised of
our main office in Mexico City and eight regional offices located throughout Mexico. Our regional offices
are located in the fastest growing geographical areas in Mexico, and our local presence in such markets
allows us to obtain detailed knowledge of the specific market needs in order to reach a large number of
potential customers. Furthermore, our efficient distribution network affords us a competitive advantage
over our competitors by lowering our cost of attracting new customers and improving our profitability
through the integration of our business offerings into a single platform. The Mexican states in which we
have a physical presence represented in the aggregate 53.8% of Mexico’s GDP as of December 31, 2013
according to INEGI, and this is expected to grow by 1.5% with the recent opening of the Mérida office and
by 5.3% with the upcoming office opening in Veracruz. We have also developed certain business
strategies (including advertising and marketing campaigns, market and industry analysis, historical
portfolio analysis and forming industry and product specific sales teams) in order to focus our sales efforts
on high potential customers and markets with attractive growth opportunities, as identified by these
business strategies. Despite the growth of our commercial structure and sales force, we have been able to
maintain high levels of operational efficiency and attractive margins, as shown in the charts below.
5
•
Streamlined Origination Process Supported by Comprehensive Risk Management Policies. Through our
extensive experience and expertise, we have expedited our credit approval process, while maintaining our
high credit standards, as is demonstrated by the quality of our portfolio. We have implemented
standardized administrative procedures that, together with our solid information technology platform,
optimize documentation requirements in connection with leasing and financing requests and renewals. Our
origination process is supported by three main pillars: (i) credit rating based on qualitative and quantitative
factors, (ii) credit and legal bureau research and (iii) banking and commercial references from our
customers. Under our strict credit origination process, a negative result in any of these three categories
results in an application’s rejection, leading to an average acceptance rate of approximately 40.0% for
2014. In addition, our origination process is supported by three specialized credit committees, whose
respective responsibilities are based on the amount of the credit analyzed, and who are focused on
maintaining credit quality while minimizing response times. We have also implemented a sound risk
management system with rigorous policies, processes and procedures, allowing us to efficiently assess
credit and operational risks associated with each of our business lines and to respond to potential problems
in a timely manner. This risk management system also allows us to comply with internal and legal
requirements related to anti-money laundering and personal data protection. In spite of our rapidly growing
portfolio and industry leading response times for our customers, our efficient and strict origination process
and policies have allowed us to maintain a consistently high quality portfolio with low levels of
delinquency. The graph below shows our estimated demand at the beginning of 2012, 2013, 2014 and
2015 comprised of (i) the amount of available but unused credit lines of our customers and (ii) expected
demand from potential customers we identified, as well as the percentage of the expected demand that was
actually originated:
_______________________
Source: Company’s Internal Estimates.
6
•
Effective Collection Process that Results in Low Default Rates. As of March 31, 2015, our non-performing
loans accounted for 0.7% of our total portfolio (including our off-balance sheet accounts comprised of
accrued rent payments) and, during the past five years, our average default rate has been lower than 1.0%
(excluding a Ps. 120 million financial factoring account in 2013, which was fully recovered in June 2014).
We have developed an efficient collection process that is comprised of both remote and in-person activities,
which includes support from an experienced team of collection agents and attorneys allowing us to
carefully monitor customer behavior and to take timely and appropriate preventative collection measures.
See “Bussiness – Collections” for a detailed description of our collection practices for our operating
leasing, financial factoring and auto loans and other lending business lines.
•
Diversified Customer Portfolio. We offer our products portfolio to a broad and diversified range of
customers that operate in different industries, which enables us to effectively manage our exposure to credit
risk and market volatility and maintain our rapid portfolio growth. As of March 31, 2015, our top 25
customers accounted for less than 30% of our total portfolio, none of which accounted for more than 2.5%
of our portfolio. Our portfolio is also geographically diversified throughout Mexico.
The following table sets forth the composition of our operating leasing portfolio by economic sector,
including off-balance sheet accounts:
As of December 31,
2013
2014
(in millions of Ps.)
2012
Economic activity sector
Commerce..............................................................
Construction...........................................................
Government ...........................................................
Transportation ........................................................
Services..................................................................
Other ......................................................................
Total.......................................................................
491.5
817.6
49.2
1,593.2
452.8
900.2
4,304.5
898.5
1,478.6
383.0
2,526.9
489.0
1,569.2
7,345.2
932.7
1,739.1
0.0
2,563.2
1,361.9
2,183.0
8,779.9
As of March 31,
2015
1,256.8
1,911.7
0.0
2,738.7
1,583.4
2,429.2
9,919.8
The following table sets forth the composition of our financial factoring portfolio by economic sector:
2012
Commerce....................................................................
Construction.................................................................
Government .................................................................
Services........................................................................
Transportation ..............................................................
Other ............................................................................
Total.............................................................................
•
468.9
303.3
40.8
260.3
12.3
111.7
1,197.3
As of December 31,
2013
2014
372.0
284.5
144.3
223.5
11.3
80.7
1,116.3
276.2
242.2
0.0
531.6
65.2
179.5
1,294.7
As of March 31,
2015
296.1
208.3
0.0
483.3
72.8
222.9
1,283.4
Access to Diversified Sources of Funding. We fund the growth of our operations through lines of credit
received from Mexican commercial banks and governmental development financial institutions, the
international and Mexican bond markets and asset-backed securities issued privately and through the BMV.
We believe we do not depend significantly on any single financial institution or financing source to fund
our operations. As of March 31, 2015, 85% of our total indebtedness consisted of long-term debt, of which
4.4% matures between one and three years and 80.6% has a maturity term between three and five years. As
of the same date, 18.7% of our total indebtedness was Mexican peso-denominated and 81.3% was U.S.
dollar-denominated. As a result of our recent international debt issuance of US$400.0 million, we attained
access to an additional source of long-term funding and increased the average maturity of our liabilities and
increased our liabilities denominated in U.S. dollars. We have entered into hedging transactions to mitigate
potential currency exchange risks in connection with our U.S. dollar-denominated liabilities.
7
•
Solid Capital Base to Promote Growth. As of March 31, 2015, our stockholders’ equity was Ps. 1,793.2
million (US$117.6 million), which represented 9.8% of our total assets. Following the consummation of
the global offering, based on the offer price of Ps. 28.00 per Share, our stockholders’ equity, assuming the
overallotment options are exercised in full, will be approximately Ps. 3,723.5 million, which will represent
18.5% of our total assets. We believe that these capitalization levels will allow us to achieve attractive
growth levels in the following years.
•
Market Knowledge, Experienced Management Team and Shareholder Support. We believe that our 22
years of experience in the leasing, financial factoring and lending industries, together with our
management’s experience in these sectors, provide us with extensive knowledge and understanding of the
products and services we offer, which has given us a competitive advantage over our competitors. Our
board of directors and management team have broad experience in the financial services industry, having
held former positions with banking institutions as well as with operating leasing, financial factoring,
insurance and other lending institutions. The continuing support of our shareholders has also been a
significant factor contributing to our sustained growth. Our controlling shareholder is committed to
maintaining a sound administration and has made capital contributions and reinvestments of net income to
maintain strong capitalization levels to support our continued growth. In June 2014, our shareholders
approved a capital contribution and reinvestment of net income in the aggregate amount of Ps. 600.0
million (US$39.4 million). We believe that our management team, board of directors and controlling
shareholder and their knowledge, experience and support are key differentiating advantages of our
Company. Upon completion of the global offering, our controlling shareholder will continue to hold more
than 60.0% of our capital stock.
•
Adherence to Strong Corporate Governance and Industry Best Practices. We have historically issued debt
securities through public offerings in Mexico under the supervision of the CNBV, and as a result of the
Mexican Offering we will continue to be subject to high standards of corporate governance, reporting and
other regulations as a publicly traded corporation (sociedad anónima bursátil). We believe that this
distinguishes us from other non-banking and privately held competitors and fosters a high degree of trust
among our customers and investors. Our board of directors is currently comprised of 56% of independent
directors, and we have established an audit committee, comprised entirely of independent members, and a
corporate practices committee, comprised of a majority of independent members. We also maintain credit
and risk committees that comply substantially with the standards of the financial industry in Mexico.
•
Operating Platform that Presents Significant Barriers to Entry for New Market Participants. We believe
our operating platform has created unique barriers to entry for potential competitors. These barriers
include: (i) experience and expertise – we have obtained a unique understanding of the leasing, financial
factoring and lending industries in Mexico and of our customers’ needs, which has allowed us to develop a
diverse portfolio of products; (ii) personalized customer service – we have created a culture of customer
excellence in terms of our service and the quality of our products, as demonstrated by our customers’
loyalty; (iii) capital, access to funding and profitability – in addition to the high capitalization requirements
necessary to provide leasing services, we have been successful in maintaining sufficient financing sources
and our profitability profile has allowed us to maintain sustained growth; and (iv) advanced technological
systems – we have developed and continue to develop advanced technology systems to support our growth
and improve our operational and risk management processes.
Our Business Strategy
Our business strategy is to leverage our competitive strengths and operating efficiency in order to maintain
our portfolio growth while increasing our profitability and our product market share. We plan to continue pursuing
our business strategy by doing the following:
•
Maintaining our Leading Position in the Operating Leasing Market and Increasing our Participation in the
Mexican Financing Market. We believe that the Mexican financial industry offers attractive growth
potential. According to the latest information available from regulatory agencies of each respective
country, as of December 31, 2014, commercial loans represented 10.8% of Mexico’s GDP, relative to 47.8
8
in Chile, 26.9% in Brazil, 20.5% in Peru and 19.2% in Colombia. Furthermore, according to the latest
available information published by the Mexican Ministry of Economy, as of December 31, 2012, SMEs in
Mexico generated approximately 74.0% of formal jobs in Mexico, while according to the Mexican Institute
of the Entrepreneur (Instituto Mexicano del Emprendedor) only 15.0% of SMEs had access to bank loans
during 2012. In light of the current state of the financial industry in Mexico, we will continue to capitalize
on our leading market position in the Mexican leasing sector and on our knowledge and experience in the
financial industry and our investments in the development of products and marketing strategies, in order to
grow our business. We plan to continue to expand our operating leasing business by increasing our
participation in the underserved SME segment by offering financial solutions specifically tailored for the
SME segment. In our financial factoring business line, we intend to increase our market share by
expanding our sales force specialized in factoring and by taking advantage of the expected growth of
certain economic sectors, such as infrastructure and energy, to provide factoring solutions to service
providers, contractors and other participants in such industries. We plan to continue capturing additional
market share in our auto loans and other lending business line by strengthening our existing strategic
alliances with car dealers and by increasing our sales and marketing efforts regionally through our local
offices. We also intend to support the growth of our three business lines by establishing and opening
additional regional offices.
•
Pursuing Cross-Selling Opportunities. We intend to increase our market share and profitability by crossselling our current products and services to existing and new customers. The loyalty of our customer base,
as a result of the quality of our services, as well as our constant monitoring of the financial condition and
business projections of our customers, represents an opportunity for us to offer our current customers
additional products based on their growth and capital needs. As of March 31, 2015, only 7.5% of our
customers had purchased two or more of our products, which we believe provides us with an opportunity to
grow through additional cross-selling of our products and services.
•
Focusing on Improving Operating Efficiencies. We are committed to maintaining our cost discipline and
improving our operating efficiency as we continue to expand our portfolio. We believe that an efficient
management of our administrative expenses will allow us to increase our competitiveness and profitability.
We continuously analyze and implement technological and business solutions to identify the most efficient
means of improving our credit and other internal processes, in order to increase our profitability. Through
these initiatives, we intend to continue to improve our operating efficiency and financial condition.
•
Identifying and Pursuing Business Opportunities in Economic Sectors with High Expected Growth. We
have invested significant resources in identifying potential clients and underserved markets and plan to
continue to invest in the future in order to focus our efforts on the economic sectors that are expected to
have significant levels of growth, such as medium-sized enterprises and other sectors expected to benefit
from the implementation of the Structural Reforms. We have established a division specializing in energy
and infrastructure to develop a business strategy targeting these sectors.
•
Maintaining Customer Loyalty and Developing New Customer Relationships. We are committed to
generating customer loyalty, maintaining high standards of service quality and offering our customers
financial solutions that meet their capital requirements. We intend to reach new customers through our
existing distribution network and through our expansion by opening new regional offices and strengthening
our sales efforts targeted at potential customers identified by analyzing economic and industry data.
•
Maintaining a Solid Balance between our Loan Portfolio and our Indebtedness. We intend to continue
maintaining a sound balance between the terms of our financial indebtedness, including interest rates,
currency and maturity, and those of our loan portfolio, thereby reducing credit risks. Our leases have an
average term of 36 months and our factoring operations have an average term of 120 days in comparison to
our principal financial liabilities for which the maturity ranges between three and five years with an
average term of 40 months. We strive to extend the average term of our financial obligations in order to
reduce credit risks. Additionally, we will continue to maintain diverse funding sources in order to avoid
risks associated with obtaining funding from a limited number of creditors. The chart below shows the
maturity profile of our outstanding debt for the periods shown.
9
_______________________
Our Lines of Business
The following chart summarizes our corporate structure as of the date of this offering memorandum,
including our principal subsidiaries and business lines.
Unifin Financiera
S.A.B. de C.V., SOFOM,
E.N.R.
99.99 %
99.99%
Unifin Credit,
S.A. de C.V., SOFOM, E.N.R.
Unifin Autos,
S.A. de C.V.
Operating
Leasing
Financial
Factoring
Auto
and
Other Lending
Asset
Sales
Asset
Purchases
Legislative Developments in Mexico
On January 10, 2014, the Financial Reforms were published in the Mexican Federal Official Gazette. The
Financial Reforms comprise several amendments to Mexican law, including, among others, the Mexican Banking
Law, the Mexican Securities Market Law, GLACOA, the Mexican Law for the Protection and Defense of Financial
Services Users, the Mexican Bankruptcy Law and the Law for the Transparency and Ordering of Financial Services.
The main purpose of the Financial Reforms is to promote and facilitate access to credit for certain sectors of the
population, protect financial services users (by allowing class actions), tighten regulatory oversight, increase
competition within the financial sector and maintain a sound and prudent financial system in Mexico.
10
The recent reforms to the GLACOA provide, among other things, that a Sofom that issues debt securities
registered with the RNV maintained by the CNBV will be considered a regulated Sofom, as well as those Sofomes
that voluntarily adopt the regulated regime. Regulated Sofomes will be subject to the general provisions issued by
the CNBV with respect to the following: (i) classification of the loan portfolio and establishing allowances for credit
losses; (ii) disclosure and presentation of financial information and external auditors; (iii) accounting; and (iv)
implementation of policies for the prevention of funding activities that may be related to illegal sources. In the past,
we have issued local bonds registered with the RNV under various programs authorized by the CNBV. As of the
date of this offering memorandum, we do not have securities registered with the RNV nor have we applied to
voluntarily adopt the form of a regulated multiple purpose financial company. However, in the event that in the
future we issue local debt securities registered with the RNV or we voluntarily elect to become a regulated entity,
we will become a regulated multiple purpose financial company in accordance with GLACOA and will be required
to adopt the necessary measures to adjust our operations and internal policies to comply with the legal requirements
applicable to regulated Sofomes. We do not expect these reforms to the GLACOA to have a material effect on our
operations or financial results.
Recent Developments
On April 13, 2015, the general extraordinary shareholders’ meeting of the Issuer approved the merger of
Unifin Capital S.A. de C.V. (“Unifin Capital”) our then-controlling shareholder, into the Issuer with the Issuer
continuing as the surviving entity. As a result of such merger, the shareholders of Unifin Capital received equity in
the Issuer originally owned by Unifin Capital. Furthermore, the shareholders of Unifin Capital subsequently
transferred all their shares representing the capital stock of the Issuer received in connection with the merger to
Trust Number 2452 held with Banco Invex, S.A., Institución de Banca Múltiple, Invex Grupo Financiero, Fiduciario
(the “Trust”). See “Principal and Selling Shareholders.”
Our Principal Offices
Our corporate offices are located at Presidente Masaryk 111-5, Col. Polanco, Del. Miguel Hidalgo, 11560,
Distrito Federal, México. Our web site address is www.unifin.com.mx. The information on our web site is not a
part of, and is not incorporated by reference into, this offering memorandum.
11
THE OFFERING
The following summary highlights selected information regarding the terms of this offering and is not
intended to be complete. It does not contain all the information that may be important to you. For a more complete
understanding of this offering, you should read the entire offering memorandum carefully, including “Description of
our Capital Stock and By-laws.”
Issuer .................................................................... Unifin Financiera, S.A.B. de C.V., Sociedad Financiera de Objeto
Múltiple, Entidad No Regulada.
Shares offered ....................................................... 112,000,000 Series A shares of common stock, no par value.
Offering price per share ........................................ Ps. 28.00 per Share.
The International Offering .................................... We and the Selling Shareholders are offering 69,565,218 Shares
through the initial purchasers in the United States to qualified
institutional buyers as defined in Rule 144A under the Securities
Act, in transactions exempt from registration thereunder, and in
other countries outside Mexico and the United States, to non-U.S.
persons in reliance on Regulation S under the Securities Act.
The Mexican Offering ........................................
Concurrently with the International Offering, we and the Selling
Shareholders are offering 42,434,782 Shares in an initial public
offering in Mexico authorized by the CNBV, conducted by the
Mexican underwriters pursuant to a Spanish-language prospectus
prepared in accordance with Mexican law that contains
substantially similar information to the information included in
this offering memorandum, except that the Mexican prospectus
includes other information, and information that is presented in a
different manner from that in this offering memorandum, as
required by applicable Mexican law.
Shares offered by the Issuer ................................
56,000,000 Series A shares of common stock, no par value.
Selling Shareholders .......................................
The following Selling Shareholders are offering the numbers of
Shares listed below:
Promecap, S.A. de C.V. ....................................... 28,000,000
Análisis y Ejecución de Proyectos San Luis,
S.A. de C.V. .................................................... 28,000,000
Total .................................................................... 56,000,000
For more information about the Selling Shareholders, see
“Principal and Selling Shareholders.”
The global offering .............................................
Together, the International Offering and the Mexican Offering
are sometimes referred to herein as the global offering. The
closings of the International Offering and the Mexican Offering
are conditioned upon each other.
Reallocations ......................................................
The Shares being offered in the global offering (including any
Shares to be sold pursuant to the overallotment options) may be
reallocated between the International Offering and the Mexican
Offering by the initial purchasers and the Mexican underwriters,
depending upon demand existing in the different markets where
the Shares are being placed. See “Plan of Distribution.”
12
Overallotment options ........................................
We have granted the initial purchasers and the Mexican
underwriters independent options, to be exercised from time to
time, in a coordinated but independent manner, within a period of
30 days counted from the date of this offering memorandum to
purchase up to an additional 10,434,782 Shares and 6,365,218
Shares, respectively, at the offering price, less the underwriting
discount, to cover overallotments, if any, in the global offering.
The overallotment options may be exercised in whole or in part
(but not more than once) or not at all.
Shares outstanding after the global offering .......
Immediately following the global offering, we will have an
aggregate of 336,000,000 Shares outstanding, assuming no
exercise by the initial purchasers or the Mexican underwriters of
the overallotment options granted by us to purchase additional
Shares in the global offering, and 352,800,000 Shares if the
overallotment options are exercised in full. The Shares being
sold by us in the global offering will represent approximately
33.33% of our outstanding shares, assuming no exercise of the
overallotment options, or 36.51% of our outstanding shares,
assuming the overallotment options are exercised in full,
immediately following the global offering.
Principal shareholders.........................................
After giving effect to the global offering, our principal
shareholder will beneficially own approximately 66.67% of our
outstanding voting stock, assuming no exercise of the
overallotment options, or approximately 63.49% of our
outstanding voting stock, assuming the overallotment options are
exercised in full. See “Principal and Selling Shareholders.”
Use of proceeds ..................................................
We estimate that the net proceeds to us from the sale of the
Shares being offered by us in the global offering, assuming no
exercise of the overallotment options granted by us to the initial
purchasers and the Mexican underwriters, will be approximately
Ps. 1,476.3 million after deducting discounts, commissions and
estimated offering expenses based on the offer price of Ps. 28.00
per Share.
We currently intend to use the net proceeds we receive from the
global offering to strengthen our capitalization, support future
growth and the reminder, if any, for general corporate purposes.
We will not receive any of the proceeds from the sale of Shares
by the Selling Shareholders.
See “Use of Proceeds.”
13
Listing .................................................................
An application has been filed to register the Shares with the RNV
maintained by the CNBV, and to list the Shares for quotation on
the BMV. We expect that simultaneously with the consummation
of the global offering, such registration and listing will have been
effected. Prior to the global offering, there has been no trading
market for the Shares in Mexico, the United States or elsewhere.
We cannot assure you that a trading market will develop or will
continue if developed.
BMV ticker symbol ............................................
“UNIFIN.”
Settlement and delivery ......................................
Settlement of the Shares will be made in book-entry form only
through the book-entry, settlement and custody system of
Indeval. Payment for the Shares must be made in pesos.
Voting rights .......................................................
All of our Shares have equal voting rights in our general
shareholders’ meetings and equal economic rights. Each Share
grants full and identical voting and economic rights to its holder.
See “Description of our Capital Stock and By-laws” for a
discussion of your voting rights.
Dividends............................................................
See “Dividends and Dividend Policy” for further information.
Taxation ..............................................................
Under Mexican law, dividends paid by us to holders of our
Shares who are not resident of Mexico for tax purposes are
subject to a withholding tax of 10.0% and may be subject to
corporate taxes, paid by us, to the extent dividends are not paid
from a net after-tax profits account. The aforementioned
withholding applies to dividends from profits earned after
January, 2014. Gains from the sale of our Shares by holders who
are non-residents of Mexico for tax purposes will be subject to a
withholding tax of 10.0%, if the transaction is carried out through
the BMV, to be withheld by the financial intermediaries through
which the sale is conducted. See “Taxation” for a discussion of
certain material U.S. federal income tax and Mexican tax
consequences of holding and disposing of our Shares.
Transfer restrictions ............................................
The International Offering is being made in accordance with Rule
144A and Regulation S under the Securities Act. The Shares
have not been and are not expected to be registered under the
Securities Act or with any securities regulatory authority of any
U.S. state or other jurisdiction and, accordingly, may not be
offered, sold, pledged or otherwise transferred or delivered within
the United States or to, or for the account or benefit of, U.S.
persons (as defined in Regulation S) except as set forth under
“Transfer Restrictions.” As a result of these restrictions,
investors are advised to consult legal counsel prior to making any
reoffering, resale, pledge or transfer of the Shares.
Lock-up agreements ...........................................
We, our controlling shareholder, the Selling Shareholders and
certain of our directors and executive officers will agree, subject
to certain customary exceptions, for a period of 180 days after the
date of this offering memorandum, without obtaining the prior
written consent of Credit Suisse Securities (USA) LLC and
14
Citigroup Global Markets Inc. not to directly or indirectly, (i)
offer, sell, issue, contract to sell, pledge or otherwise dispose of,
(ii) grant any option, right or warrant to purchase, (iii) enter into
any swap, hedge or any other agreement that transfers, in whole
or in part, the economic consequences of ownership, (iv)
establish or increase a put equivalent position or liquidate or
decrease a call equivalent position, or (v) file with the SEC a
registration statement under the Securities Act or a prospectus
with the CNBV, in each case in respect of any Shares of our
capital stock or any securities exchangeable for, or convertible
into, Shares of our capital stock. Credit Suisse Securities (USA)
LLC and Citigroup Global Markets Inc., in their sole discretion,
may release any of the securities subject to these agreements at
any time without notice. See “Plan of Distribution.”
Other restrictions on ownership and transfer ......
Subject to certain exceptions (including those applicable to
transfers or acquisitions or certain other transactions by or among
our current shareholders), our by-laws require the approval of our
board of directors (i) prior to any acquisition of shares resulting,
directly or indirectly, in beneficial ownership of shares
representing 10.0% or more, or multiples of 10.0%, of our
outstanding shares, or (ii) prior to any parties entering into
agreements resulting in the creation or adoption of mechanisms
or voting agreements relating to, or permitting the voting in
concert or in the aggregate of, a participation of 10.0% or more of
our capital stock. The approval of our board of directors must be
granted or denied within three months following receipt of the
corresponding request for approval, provided that the board of
directors has received all of the information required to consider
the transaction in accordance with our by-laws. If such
acquisition or voting agreement is approved and results in the
beneficial ownership by a shareholder or group of shareholders of
30.0% or more of our shares or a change of control affecting the
Issuer, the person acquiring the shares or executing the respective
voting agreement is required to make a tender offer for 100.0% of
our aggregate outstanding shares. See “Description of our
Capital Stock and By-laws—Anti-Takeover Protections.”
Risk factors .........................................................
Investing in our Shares involves risks. See “Risk Factors” and
the other information in this offering memorandum for a
discussion of factors you should carefully consider before
deciding to invest in the Shares.
15
SUMMARY FINANCIAL AND OTHER INFORMATION
The following tables present certain summary financial information and operating data as of the dates and
for each of the periods indicated. You should read the following summary financial data and other information
together with “Presentation of Financial and Other Information,” “Selected Financial and Other Information,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Financial
Statements and related notes included elsewhere in this offering memorandum.
The balance sheet data as of March 31, 2015, and the income statement data for the three-month periods
ended March 31, 2014 and 2015, are derived from our Unaudited Interim Financial Statements included elsewhere
in this offering memorandum. The balance sheet and income statement data as of and for the years ended
December 31, 2012, 2013 and 2014, are derived from our Audited Financial Statements included elsewhere in this
offering memorandum.
Our Financial Statements were prepared in accordance with Sofom GAAP. Sofom GAAP differs in certain
significant respects from U.S. GAAP. See “Annex A—Summary of Certain Significant Differences between Sofom
GAAP and U.S. GAAP” for a description of certain differences between Sofom GAAP and U.S. GAAP as they
relate to us. No reconciliation of any of our Financial Statements to U.S. GAAP has been performed.
For the Year Ended December 31,
2012
2013
2014
(in millions of Ps., except earnings
per Share and shares outstanding)
Income Statement
Data
Operating lease
income ....................... 1,842.7
Interest income .............
355.9
Other lease benefits.......
126.8
Depreciation of assets
under operating
lease ........................... (1,050.1)
Interest expense ............ (452.2)
Other lease expenses ..... (153.3)
Financial margin ...........
669.8
Allowance for loan
losses .........................
Financial margin
adjusted for credit
risk .............................
Commissions and fees
(net) ...........................
Other operating
income (net) ...............
Financial
intermediation
results ........................
Administrative and
promotional
expenses.....................
Operating income..........
2,591.7
367.7
194.3
3,648.6
1,146.9
383.2
(1,536.1)
(573.6)
(221.0)
823.0
(2,150.1)
(1,513.7)
(425.0)
1,089.9
For the Three-Month Period Ended March 31,
2014 (1)
(in millions
of US$,
except
earnings per
Share and
shares
outstanding)
2014
2015(1)
2015
(in millions of
US$, except
earnings per
Share and
shares
outstanding)
239.3
75.2
25.1
803.6
109.9
86.0
1,205.8
116.8
177.2
79.1
7.7
11.6
(141.0)
(99.3)
(27.8)
71.5
(483.5)
(185.0)
(96.1)
234.9
(655.7)
(276.7)
(183.8)
383.6
(43.0)
(18.2)
(12.1)
25.1
(14.4)
(63.8)
30.0
1.9
-
-
-
655.4
759.2
1,119.9
73.4
234.9
383.6
25.1
(0.6)
(7.3)
(6.2)
(0.4)
(6.1)
(10.2)
(10.0)
42.8
39.3
118.7
7.7
3.7
8.9
0.6
(10.1)
(8.3)
11.3
0.7
2.5
242.1
15.9
(328.0)
(301.4)
(362.8)
(342.0)
(535.1)
(415.1)
(35.1)
(27.2)
(100.4)
(101.5)
(133.3)
111.5
(8.7)
7.4
354.0
417.2
704.8
46.2
133.4
495.1
32.5
16
2012
2013
2014
Valuation of other
permanent
investments ................
Income before income
tax ..............................
Current income tax .......
Deferred income tax .....
Income tax expense.......
Consolidated net
income for the year ....
Earnings per share (2) ....
(11.3)
11.3
-
342.7
(178.8)
79.6
(99.2)
428.5
(291.8)
201.0
(90.8)
704.8
(456.5)
234.2
(222.3)
243.5
177.8
338.0
122.9
482.4
81.9
2014 (1)
2014
(in millions
of US$,
except
earnings per
Share and
shares
outstanding)
-
17
2015(1)
2015
(in millions of
US$, except
earnings per
Share and
shares
outstanding)
-
-
-
46.2
(29.9)
15.3
(14.5)
133.4
(62.8)
11.6
(51.2)
495.1
(179.0)
41.9
(137.1)
32.5
(11.7)
2.7
(9.0)
31.6
5.3
82.2
29.9
357.9
40.9
23.5
2.7
2012
Balance Sheet Data
Cash and cash equivalents ..........
Derivative financial instruments .
Performing loans portfolio:
Commercial loans ...................
Consumer loans ......................
Total performing loans
portfolio ..................................
Past due loans portfolio:
Total past due loans portfolio .....
Total loans portfolio ...................
Less:
Allowance for loan losses .......
Loans portfolio (net) ...................
Other accounts receivable ...........
Foreclosed assets (net) ................
Property, machinery and
equipment (net) .......................
Other permanent investments .....
Other assets:
Deferred charges and advanced
payments .............................
Deferred income tax................
Other long term assets.............
Total assets ................................
Liabilities:
Debt securities
Short-term ...............................
Long-term ...............................
Bank borrowings and loans from
other entities:
Short-term ...............................
Long-term ...............................
Other accounts payable:
Income tax payable .................
Sundry creditors and other
accounts payable .....................
Deferred credits and advanced
collections ...............................
Total liabilities...........................
Stockholders’ equity:
Contributed capital
Capital stock ...............................
Share premium ............................
As of December31,
2013
2014
2014(1)
(in millions
of US$)
As of March 31,
2015
2015(1)
(in millions
(in millions
of Ps.)
of US$)
206.5
21.0
1,009.7
42.2
573.7
856.4
37.6
56.1
1,449.5
1,138.3
95.1
74.7
1,852.6
81.1
1,982.8
178.6
2,767.6
236.7
181.5
15.5
3,068.8
256.7
201.3
16.8
1,933.7
2,161.4
3,004.3
197.0
3,325.5
218.1
20.8
20.8
1,954.5
178.4
178.4
2,339.8
70.2
70.2
3,074.5
4.6
4.6
201.7
84.9
84.9
3,410.4
5.6
5.6
223.7
(56.5)
1,898.0
101.4
13.0
(120.3)
2,219.5
188.3
12.7
(88.1)
2,986.4
211.9
130.6
(5.7)
195.9
13.9
8.5
(88.0)
3,322.4
232.1
158.6
(5.8)
218.0
15.2
10.4
4,249.0
3.3
6,689.0
14.9
9,610.7
14.9
630.5
0.9
10,808.8
14.9
709.1
1.0
381.2
110.7
10.9
6,995.0
267.7
311.7
3.0
10,758.7
406.0
545.8
11.6
15,348.0
26.6
35.8
0.76
1,006.9
512.0
587.8
11.7
18,236.1
33.6
38.6
0.8
1,196.4
1,019.1
3,602.7
4,621.8
1,016.1
5,672.7
6,688.8
166.6
9,975.8
10,142.4
10.9
654.4
665.3
79.6
11,588.0
11,667.6
5.1
760.4
765.5
897.6
149.1
1,046.7
1,735.6
590.9
2,326.5
2,061.7
392.8
2,454.5
135.2
26.0
161.0
2,083.5
638.3
2,721.8
136.7
41.9
178.6
36.5
83.5
100.2
6.5
97.5
6.4
546.5
583.0
611.0
694.5
982.3
1,082.5
64.44
71.0
1,799.6
1,897.1
118.1
124.5
68.6
6,320.1
95.9
9,805.7
133.3
13,812.7
8.7
906.1
156.4
16,442.9
10.3
1,078.8
275.0
125.0
400.0
275.0
125.0
400.0
875.0
125.0
1,000.0
57.4
8.2
65.6
875.0
125.0
1,000.0
57.4
8.2
65.6
18
As of December31,
2013
2014
2012
Earned capital:
Capital reserves...........................
Retained earnings........................
Consolidated net income for
the year ...................................
Total stockholders’ equity ........
Total liabilities and
stockholders’ equity ..............
Off-balance sheet items:
Contractual lease rentals to be
accrued held in trust ................
accrued ....................................
As of March 31,
2015
2015(1)
(in millions
(in millions
of Ps.)
of US$)
2014(1)
(in millions
of US$)
17.1
14.4
29.3
185.7
46.2
6.7
3.0
0.4
70.3
365.0
4.6
23.9
243.4
674.9
338.0
953.0
482.4
1,535.3
31.6
100.7
357.9
1,793.2
23.5
117.6
6,995.0
10,758.7
15,348.0
1,006.9
18,263.1
1,196.4
3,271.0
5,587.0
6,038.4
396.1
7,274.6
477.1
929.9
4,200.9
1,370.7
6,957.7
2,375.4
8,413.8
155.8
551.9
2,126.0
9,400.6
139.3
616.8
As of and for the Year Ended December 31,
2012
2013
2014
Selected Financial Metrics
Total leverage (3) ...........................
Financial leverage(4)
Ratio of non-performing loans(5) ...
Coverage ratio(6)............................
Efficiency ratio(7) ..........................
Operating margin(8) .......................
Net margin(9) .................................
Return on average equity(10) ..........
Return on average assets(11) ..........
Annualized return on average
equity(12) .....................................
assets(13) ......................................
Adjusted return on average
equity(14) .....................................
assets(1) .......................................
Total stockholders’ equity/total
assets ..........................................
Dividend payout ratio(16) ...............
5.5x
4.5x
0.3%
272.1%
49.4%
48.0%
36.4%
40.7%
4.2%
5.4x
4.5x
1.9% (18)
67.4% (18)
44.6%
46.9%
41.0%
41.5%
3.8%
As of and for the
Three-Month
Period Ended
March 31,
2015
6.3x
5.5x
0.6%
125.5%
49.6%
52.7%
44.3%
38.8%
3.7%
5.8x
4.7x
0.7%
103.7%
35.3%
63.6%
93.3%
21.5%
2.1%
86.0%
40.7%
41.5%
38.8%
4.2%
3.8%
3.7%
40.7%
41.5%
33.9%
4.2%
3.8%
3.2%
9.6%
8.9%
10.0%
9.8%
68.8%
24.6%
29.6%
20.7%
2012
As of December31,
2013
2014
2014(1)
(in
millions
of US$)
8.5%
46.8%
4.6%
As of March 31,
2014
2015
2015(1)
(in
millions
of US$)
Adjusted consolidated net
243.5
338.0
422.2
27.7
194.7
12.8
82.2
income(17) ......................................
____________________
(1) Translated into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps. 15.2427 per U.S. dollar,
the exchange rate published in the Mexican Federal Official Gazette on March 31, 2015. These convenience translations
should not be construed as representations that the peso amounts actually represent U.S. dollar amounts or could be
converted into U.S. dollars at the specified rate or at all. See “Exchange Rates.”
(2) While consolidated net income for the year increased between 2012 and 2014, earnings per share decreased as a result of an
increase in the number of shares outstanding due to capital increases during such periods that were funded by capitalizing
retained earnings and in the case of a capital increase in 2014, also partly through a capital contribution from our
shareholders. If the effect of the issuance of new shares as a result of these capital increases were not considered, our
earnings per share would have increased during such periods and would have been Ps. 194.7, Ps. 270.4, Ps. 210.0 and Ps.
19
110.1 per share in the years ended December 31, 2012, 2013 and 2014 and the three-month period ended March 31, 2015,
respectively. See “Presentation of Certain Financing and Other Information—Non GAAP Measures”.
During 2015, we recorded a correction of an error of the computation of the weighted average number of common shares to
determine our earnings per share determined under Sofom GAAP for the year ended 2012. This adjustment consisted in an
increase to earnings per share from Ps.88.5 to Ps.177.8. After evaluating the quantitative and qualitative aspects of this
adjustment, we concluded that the prior period financial statements were not materially misstated and, therefore, no
restatement was required.
The table below sets forth the calculation of earnings per share determined under Sofom GAAP and the adjusted earnings
per share. Both metrics are calculated from the consolidated net result of the period; however, adjusted earnings per share is
calculated without taking into account the number of common shares issued to represent increases in our capital stock paid
through the capitalization of retained earnings. Our management uses this measure as an indicator of our operating results
and profitability, and believes that disclosure of adjusted earnings per share can provide useful information to investors in
their evaluation of our operating performance, mainly because if the effect of the issuance of new shares as a result of these
capitalization of retained earnings was not considered, our earnings per share would have increased during such periods.
As of December31,
2012
2013
2014
(in millions of Ps., except EPS and
number of shares)
Earnings per
Share (EPS)
determined
under Sofom
GAAP
Consolidated net
result .....................
Weighted
average of shares...
EPS under Sofom
GAAP (in Ps.) ......
Adjusted
Earnings per
Share (Adjusted
EPS)
Consolidated net
result .....................
Number of
shares
outstanding
without
considering
capitalization of
retained earnings ...
Adjusted EPS (in
Ps.) ....................
2014
(in millions
of US$
except EPS
and
number of
shares)
As of March 31,
2014
2015
2015
(in millions of Ps., except
(in millions
EPS and number of
of US$
shares)
except EPS
and
number of
shares)
243.4
338.0
482.4
31.6
82.2
357.9
23.5
1,369,178
2,750,000
5,889,726
5,889,726
2,750,000
8,750,000
8,750,000
177.8
122.9
81.9
5.4
29.9
40.9
2.7
243.4
338.0
482.4
31.6
82.2
357.9
23.5
1,250,000
1,250,000
2,296,575
2,296,575
1,250,000
3,250,000
3,250,000
194.7
270.4
210.0
13.8
65.8
110.1
7.2
(3) Calculated as total liabilities (excluding securitizations) divided by total stockholders’ equity, as of the same date.
(4) Calculated as total financial debt (excluding securitizations) divided by total stockholders’ equity, as of the same date.
(5) Calculated as non-performing loan portfolio divided by total portfolio, including off-balance sheet items, as of the same
date.
(6) Calculated as allowance for loan losses divided by non-performing loan portfolio, as of the same date
(7) Calculated as operating expenses divided by the sum of the financial margin and net commissions.
(8) Calculated as operating income (excluding other operating income-net and financial intermediation results) divided by the
financial margin.
(9) Calculated as consolidated net income for the period divided by the financial margin.
20
(10) Calculated as consolidated net income for the period divided by the average total stockholders’ equity for the previous two
year period.
(11) Calculated as consolidated net income for the period divided by the average assets for the previous two year period.
(12) Calculated as consolidated net income (multiplied by four in a quarterly period) divided by the average total stockholder’s
equity for the previous two year period.
(13) Calculated as consolidated net income (multiplied by four in a quarterly period) divided by the average assets for the
previous two year period.
(14) Calculated as consolidated net income adjusted for non-recurring items (see note 2 below) divided by the average total
stockholders’ equity for the previous two year period.
(15) Calculated as consolidated net income for the period adjusted for non-recurring items (see note 2 below) divided by the
average assets for the previous two year period.
(16) Calculated as dividends paid in the current period divided by consolidated net income for the previous annual period.
(17) Adjusted consolidated net income determined in accordance with Sofom GAAP, adjusted for the following non-recurring
items net after tax: the sale by us of 25% of the shares of the capital stock of Unifin, Agente de Seguros y Fianzas, S.A. de
C.V. in 2014 for a total amount of Ps. 60.2 million (see “Business – Our Business Lines”), earning as a result of the
repurchase of US$33.4 million of our International Notes during the three-month period ended March 31, 2015 (see
“Business – Indebtedness – International Notes”) and the entering into derivative financial instruments to hedge our
exposure to risks associated with exchange rates for an amount of Ps. 105.7 million. The table below sets forth the
calculation of adjusted consolidated net income. Our management uses this measure as an indicator of our operating results
and profitability, and believes that disclosure of adjusted consolidated net income can provide useful information to
investors in their evaluation of our operating performance, mainly because it excludes the effect on non-recurring items.
2012
2013
2014
2014(1)
(in millions
of US$)
Consolidated Net Income
determined under Sofom
GAAP .........................................
243.4
338.0
For the Three-Month Period
Ended March 31,
2014
2015
2015
(in millions
of US$)
482.4
31.6
82.2
357.9
23.5
60.2
3.9
-
-
-
Adjusted for:
Sale of Unifin, Agente de
Seguros y Fianzas ........................
Earnings for the repurchase of
the International Notes ................
Valuation for the Derivative
Financial Instruments ..................
income ........................................
-
-
-
-
-
-
-
57.5
3.8
-
-
-
-
-
105.7
6.9
82.2
194.7
12.8
243.4
338.0
422.2
27.7
(18) Includes extraordinary reserves resulting from a Ps. 120.0 million financial factoring account, which was fully recovered in
June 2014.
21
RISK FACTORS
An investment in our Shares involves risk. You should carefully consider the risks and uncertainties
described below and the other information contained in this offering memorandum before making an investment in
the Shares. Our business, financial condition or results of operations could be materially and adversely affected by
any of these risks. In such case, the price of our Shares or the liquidity of our Shares could decline and you could
lose all or part of your investment. The risks described below are not the only ones facing Unifin or investments in
Mexico in general. Additional risks and uncertainties not currently known to us or that we currently deem nonmaterial may also impair our business.
Risks Related to Our Business
Our results of operations may be adversely affected by ongoing disruptions and volatility in the global
financial markets.
Beginning in 2008, the global economy began undergoing a financial crisis characterized by loss of
confidence in the financial sector, disruptions in the credit markets, reduced business activity, rising unemployment,
decline in interest rates and erosion of consumer confidence. While the global economic growth has maintained a
steady pace in the last years, the global economy continues to be affected by uncertainty regarding its recovery from
the recession. Sizable fiscal and current account imbalances, as well as significant indebtedness in several Euro
zone countries continues to hold back recovery in those economies, with potentially negative spillover effects for the
rest of Europe. Policymakers in many advanced economies have publicly acknowledged the need to urgently adopt
strategies to contain public debt and excessive fiscal deficits and later bring them down to more sustainable levels.
The implementation of these policies may restrict global economic recovery, with a corresponding negative impact
on the Mexican economy and on our business, financial condition and results of operations.
The global economic slowdown has had a negative impact on the Mexican economy and adversely affected
the Mexican financial services industry. Recently, the considerable decline in oil prices since the end of 2014,
caused by an excess supply, has significantly impacted the oil and gas industry as well as the global economy and
financial markets. A worsening of these conditions could have the following effects:
•
increased regulation of the financial industry, which may increase our costs of capital and limit our ability
to pursue business opportunities;
•
the inability to estimate losses inherent in credit exposure or to make difficult, subjective and complex
judgments, including forecasts of economic conditions and how these economic conditions might impair
the ability of our customers to pay their leases and loans; and
•
delayed recovery of the financial industry, which may impact our business, financial condition and results
of operations.
There is uncertainty about the future economic environment and we cannot be sure when the current
economic conditions will improve. Although recently some segments of the global economy have experienced a
moderate recovery, we believe that the prevailing adverse conditions in certain geographical regions and economic
sectors will continue to have a negative impact on our business, financial condition and results of operations. In the
event of an economic downturn or insufficient recovery, the negative effects that such economic and market
conditions have on us and other participants in the financial services industry could worsen.
The persistence or worsening of the distortion and volatility of global financial markets could adversely
affect us, including our ability to raise capital and liquidity on favorable terms or at all. The absence of sources of
financing through the capital markets or an excessive increase in the cost of such financing may have the effect of
increasing our cost of capital and force us to increase the rates we charge our customers. Any such increase in the
cost of financing could have a material adverse effect on our margins. In addition, our financial results are exposed
to market risks, including interest rate and exchange rate fluctuations, which can have a material adverse effect on
our financial condition and results of operations.
22
Changes in economic conditions in Mexico could materially and adversely affect demand for our financing
products and the financial condition of our existing and potential customers.
Demand for our financing products depends on economic conditions, including growth rates, inflation,
unemployment, the cost of energy and other necessities, the availability of consumer credit, interest rates, consumer
confidence, debt levels, retail trends and foreign currency exchange rates. These economic conditions are beyond
our control. In addition, our ability to receive payments on our leases and loans in full and on time is also heavily
dependent on the financial condition of our customers, which is in turn heavily dependent on economic conditions.
Worsening economic conditions in Mexico and globally could negatively impact the financial condition of existing
and potential customers, which could in turn increase the share of our existing non-performing leases and loans,
thereby reducing our financial margins.
In particular, certain industries in which our customers operate are strongly influenced by macroeconomic
conditions in Mexico. Economic contraction in such industries could significantly affect the performance of our
portfolio and, as a result, our business, financial condition and results of operations. While we have adopted policies
and proceedings to monitor the quality of our portfolio, such policies and proceedings may fail and some customers
may face liquidity issues that, in certain cases, may force them to enter into a bankruptcy proceeding, which in turn
could affect our financial condition. As a consequence, any consideration received or recovered by us from
transactions entered into with customers that are the subject of a bankruptcy petition within a statutory period of
time prior to the judgment declaring the insolvency may be the subject of challenges and may be declared null and
void. The results of such proceedings, if adverse to us, could have an adverse effect on our business, financial
condition and results of operation.
Competition from other financial institutions may adversely affect our profitability and financial condition.
We face competition from leasing institutions, independent financial institutions, credit providers and their
affiliates in each of our business lines. We expect competition will increase as we expand our operations in Mexico.
Changes in the financial sector, such as the creation of new multiple purpose financial companies, have led to
greater competition. Additionally, the establishment of new leasing companies or financial factoring by commercial
banks, financial groups or other financial entities could result in increased competition for us. Institutions with
which we may compete may have significantly greater assets and capital and other resources, and this increased
competition in our markets could adversely affect our business, financial condition and results of operations. We
may also face competition from entities that currently do not engage in leasing or factoring activities, including
those with the access to capital and necessary sources of funding, and that are attracted to the industry in light of its
growth potential and its prospects. In addition, future changes to the regulations governing financial institutions
may incentivize financial institutions to enter the operating leasing market, which would also increase the
competition we face.
We may not be able to effectively control the level of non-performing leases and loans and our allowances
for non-performing leases and loans may not be adequate to cover actual losses, which may adversely affect
our financial condition.
As a financial services provider, we face the risk of non-performing leases and loans. Whether as a result
of the growth of our leases and loan portfolio or other factors beyond our control (such as a weakening of the global
or Mexican economy, other macroeconomic and political events affecting Mexico, events affecting specific
industries or natural disasters), we may not be able to effectively control the level of non-performing leases and
loans in our total loan portfolio. In addition, in the case of any non-performing loans or leases, we may not be
successful in recovering the underlying assets that secure the leases.
In addition, our allowances for loan losses may not be adequate to cover an increase in the amount of nonperforming leases and loans or any future impairment in the overall credit quality of our leases and loan portfolio. If
the quality of our leases and loan portfolio deteriorates, we may be required to increase our allowances for loan
losses, which may adversely affect our financial condition and results of operations. Moreover, there is no precise
method for predicting credit losses, and we cannot assure you that our monitoring and risk management procedures
will efficiently predict such losses or that our allowances are sufficient to cover actual losses. Our methodology for
measuring credit risk and establishing allowances is based, in large part, on historical experience, and therefore these
23
methods may not be able to accurately estimate future risk exposures, which could be significantly greater than
indicated by measures based on historical data. If we are unable to control the level of our non-performing or poor
credit quality leases and loans or are unable to recover the assets securing such loans or leases, our business,
financial condition and results of operations could be materially and adversely affected.
We may not be able to obtain the capital we need to fund and expand our business.
We have been funding the growth of our business primarily through internally generated cash from our
operations, debt securities, including securitizations, bank borrowings and loans from other entities and capital
increases by our shareholders. Adverse financial conditions, including crises, could limit our access to new or
sustained funding. Any decrease in the availability of one or more of our funding sources, or the cancellation of our
current credit lines, could have an adverse effect on our business, financial condition and results of operations.
We may also require additional capital in the future in order to grow our operating lease, financial factoring
and auto and other loans portfolio, remain competitive or enter into new businesses. In addition, we may need to
raise additional capital to maintain or increase our equity base in the event that we experience large, unexpected
losses in our lease and loan portfolio. Our ability to obtain additional capital is subject to a variety of uncertainties,
including:
•
our financial condition, results of operations, and cash flows;
•
general market conditions for capital-raising activities by commercial banks and other financial institutions;
and
•
economic, political, and other conditions in Mexico and elsewhere.
We may not be able to obtain additional capital in a timely manner, on acceptable terms or at all, which
could have an adverse effect on our business, financial condition and results of operations. Our credit ratings are an
important component of our liquidity profile and downgrades in our credit ratings could increase the cost of future
borrowings, as well as negatively impact our ability to renew maturing debt. Our future ability to access financial
markets in order to obtain required funding on acceptable terms will also depend to a large degree on prevailing
capital and financial market conditions over which we have no control, and accordingly we cannot assure you that
we will be able to do so. Our failure to generate sufficient cash flows from operations or to obtain external
financing could have a material adverse effect on our business, financial condition and results of operations.
Most of our debt agreements contain restrictions that may limit flexibility in operating our business, and in
the event of a default, all of our borrowings may become immediately due and payable.
The terms of most of our credit and debt agreements impose, and the terms of our future financial
indebtedness may impose, operating and other restrictions on us. The agreements governing our credit facilities and
international and local bond issuances contain certain covenants restricting our and our subsidiaries’ ability to,
among other things incur additional debt, make certain dividend payments, redeem capital stock and make certain
investments, transfer and sell assets, engage in certain lease securitizations and receivables transactions, enter into
agreements that would limit the ability of subsidiaries to pay dividends or make distributions, create liens, effect a
consolidation, merger or sale of assets and enter into transactions with affiliates. Additionally, the agreements
governing our credit facilities and local bond issuances contain requirements that we comply with a number of
restrictive financial covenants, including maintaining certain ratios of interest coverage, total debt (excluding
securitizations) to stockholders’ equity, total assets to stockholders’ equity and total portfolio to stockholders’
equity, as well as the maintenance of minimum levels of non-performing loans. Our ability to comply with these
ratios may be affected by events beyond our control. These restrictions and financial ratios could limit our ability to
plan for or react to market conditions, otherwise restrict our activities or business plans and could adversely affect
our ability to finance ongoing operations or strategic investments or to engage in other business activities that would
be in our interest.
24
Certain of our financial indebtedness is also subject to cross default provisions. Our breach of any of these
restrictive covenants or our inability to comply with the financial maintenance ratios and other covenants would
result in a default under other applicable debt instruments. If any such default occurs, the lenders may elect to
declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable.
If we are unable to repay outstanding borrowings when due, the lenders will have the right to exercise their rights
and remedies against us, and we cannot assure you that our assets would be sufficient to repay in full our
obligations.
We have a significant amount of indebtedness, which may adversely affect our operating and financial
flexibility and could adversely affect your investment in the Shares and our business, financial condition and
results of operations.
As of March 31, 2015, we had total outstanding financial indebtedness (including accrued interest) of Ps.
14,389.5 million (US$944.0 million), of which Ps. 2,697.0 million (US$176.9 million) was denominated in Mexican
pesos and US$767.1 million was denominated in U.S. dollars. Of our total indebtedness as of March 31, 2015, Ps.
2,161.2 million (US$141.8 million), or 15.0%, consisted of indebtedness with maturities of one year or less or
indebtedness that otherwise becomes due within one year, which we classify as short-term indebtedness. The
remaining Ps. 12,228.1 million (US$802.2 million), or 85.0%, of our total outstanding indebtedness consisted of
indebtedness with maturities greater than one year that becomes due more than one year after March 31, 2015,
which we classify as long-term indebtedness. Accordingly, our capacity to continue funding our operations will
depend on the collection of our lease, factoring and loan portfolios. This capacity will also depend on our ability to
refinance or restructure our short-term and long-term indebtedness and the prevailing liquidity conditions of the
financial market. Our indebtedness could have important consequences, including the following:
•
it may increase our vulnerability to general adverse economic, competitive and industry conditions;
•
it may be difficult for us to satisfy our obligations under our existing credit facilities and other indebtedness
and commitments;
•
it may limit our ability, or increase the cost of, refinancing our indebtedness;
•
we may not have sufficient financial resources to repay our short-term and long-term indebtedness as it
becomes due or sufficient time to finance the repayment thereof;
•
we are required to use a portion of our cash flow from operations to pay interest on our current and future
indebtedness, which may require us to reduce funds available for other purposes;
•
we may have a limited ability to obtain additional financing, if needed, to fund additional projects, working
capital requirements, capital expenditures, debt service, general corporate or other obligations;
•
it may expose us to increased interest rates given that certain of our borrowings are at variable rates of
interest;
•
it may restrict us from making strategic acquisitions or cause us to make non-strategic divestitures;
•
it may limit our planning flexibility for, or ability to react to, changes in our business and the industries in
which we operate;
•
it may impose significant operational and financial restrictions on us, such as our capacity to (i) pay
dividends or buy back capital stock, (ii) make investments, (iii) create liens, (iv) enter into transactions with
affiliates, (v) sell assets and (vi) consolidate or merge;
•
it may limit our ability to enter into hedging transactions by reducing the number of willing counterparties
with whom we can enter into such transactions, as well as the volume of those transactions; and
25
•
we may be placed at a competitive disadvantage to our competitors.
If we are unable to comply with the provisions of our credit agreements and debt instruments and are
unable to obtain a waiver or amendment of the terms under such agreements and instruments, the indebtedness
outstanding under such debt instruments could be accelerated. Acceleration of these debt instruments would have a
material adverse effect on our business, financial condition and results of operations.
One of our main sources of financing is the securitization of collection rights of our lease portfolio through
the assignment of trust bonds to issuance trusts.
Since 2006, we have obtained financing through securitizations of our collection rights of our lease portfolio
through the assignment of such rights to issuance trusts by means of the BMV or private structures. Any collection
rights assigned to issuance trusts or other private trusts must comply with certain credit quality and diversification
requirements, among others. As of March 31, 2015, we have assigned a total of Ps. 7,274.6 million of collection
rights, which represents 56.8% of our total portfolio, including off-balance accounts. As a result, the collection
rights related to 56.8% of our total portfolio would not be available for the payment of other obligations, which
would be effectively subordinated to the collection rights under such securitizations. Any collection rights assigned
to the issuance trusts, for which we act as managers, are subject to the payment of loans executed by the trustees of
the respective issuance trust and may not be used by the Company for the payment of any other indebtedness or for
any other purpose.
We have granted security interests in certain of the property we provide leases on in the ordinary course of
business to certain lenders for which we have assigned the receivables as required by certain of our Trust
Certificates and other structured debt.
We have granted security interests on certain of the property we provide leases on in the ordinary course of
business in order to secure the obligations to certain of our lenders under the terms and conditions of certain of our
Trust Certificates and other structured debt. In the case of a failure of our customers to pay their obligations under
such leases secured by such collateral, our creditors could bring an enforcement proceeding with respect to such
security interest. If those creditors successfully bring enforcement proceedings on a substantial part of the pledged
assets, our financial condition could be adversely affected.
We have a significant amount of intercompany debt, which could adversely affect our position as a creditor,
if a bankruptcy is initiated against our subsidiaries.
As a consequence of the Financial Reforms, certain provisions of the Mexican Bankruptcy Law were
amended regarding the priority of creditors pertaining to the same corporate group, among others maters. Pursuant
to such amendments, among other things: (i) unsecured indebtedness of persons controlling the debtor will be
subordinated to the rights of other third-party creditors; (ii) if the rights of the controlling shareholders in respect of
the related party debt represent 25.0% or more of the total amount of indebtedness recognized in the bankruptcy
proceeding, such related party creditors would need the consent of at least 50.0% of the third-party creditors in order
to approve a reorganization agreement; and (iii) the controlling shareholders of the debtor are prohibited from voting
in favor of a bankruptcy trustee (síndico) that is unregistered in the Mexican Federal Institute of Insolvency
Specialists (Instituto Federal de Especialistas de Concursos Mercantiles). As a result, if a bankruptcy proceeding is
initiated against our subsidiaries, our creditor rights may be limited or impaired.
Reductions in our credit ratings would increase our cost of funding.
Our credit ratings are an important part of our liquidity profile and are based, among other factors, on the
financial strength, credit quality and diversification in our loan portfolio; the level and volatility of our earnings; our
capital adequacy; the quality of our management; the liquidity of our balance sheet and our ability to access a broad
array of funding sources. Adverse changes in our credit ratings could negatively impact our ability to obtain funding
at competitive rates, which may in turn have a material adverse effect on our business, financial condition and
results of operations.
26
Servicing our indebtedness will require a significant amount of cash. Our ability to generate cash depends
on a variety of factors, many of which are beyond our control.
Our ability to make payments on our indebtedness will depend on our ability to generate cash in the future.
This, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our
control. Our business may not be able to generate sufficient cash flow from operations and future borrowings may
not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity
needs. As a result, we may need to refinance all or a portion of our indebtedness at or before maturity, and we may
not be able to complete such refinancing on commercially reasonable terms or at all. We may also not have
sufficient resources to repay our indebtedness as it becomes due or sufficient time to finance the repayment thereof.
We are required to use a portion of our cash flow from operations to pay interest on our current and future
indebtedness, which may require us to reduce funds available for other purposes, including new loan origination. If
we are unable to generate cash to service, repay or refinance our indebtedness, our business, financial condition or
results of operations may be materially and adversely affected.
If we are unable to bring an enforcement action on the collateral securing our leases and financial contracts
or if the value of collateral under certain of our leases and other financing contracts is inadequate, our
results of operations and financial condition could be adversely affected.
We require a lien on assets securing our leases and other financing contracts exceeding five million pesos.
If we are unable to bring an enforcement action on collateral on a timely basis or at all, our results of operations and
financial condition may be adversely affected. Additionally, the value of such collateral may be adversely affected
by a number of conditions such as damage, loss, devaluation, oversupply or reduced demand for such asset. There
can be no assurance that the value of such collateral will not decline. There can also be no assurance that the
assumptions relied on by appraisers assessing the value of such collateral are accurate measures of the market and
thus the value of such collateral may be evaluated inaccurately. Consequently, the price at which we are able to sell
any collateral in the event of an attachment or foreclosure may be lower than the valuation of such collateral and this
may have a material adverse effect on our financial condition and results of operations.
Fluctuations in Mexican exchange rates and interest rates may adversely affect our business, financial
condition and results of operations.
We are exposed to exchange rate risk to the extent certain of our U.S. dollar-denominated liabilities are not
covered by currency financial derivative instruments and whenever we maintain open positions in currencies other
than the Mexican peso. We are exposed to interest rate risk whenever there is a mismatch in the revaluation of
interest rates or if interest on our leasing, financial factoring or auto loans and other lending portfolio is calculated
based on fixed interest rates. The exchange rates and interest rates in Mexico have been subject to significant
fluctuations in the past. Due to the historic volatility of the peso exchange rate and interest rates in Mexico,
exchange rate and interest rate risks may be greater in Mexico than in other countries. Exchange rates and interest
rates have experienced considerable volatility globally since October 2008 due to economic conditions. We cannot
assure you that we will not experience losses in the future due to exchange rate and interest rate fluctuations, which
could have a material adverse effect on our financial condition and results of operations. We estimate that an
increase of 50 basis points on the TIIE would have a negative impact of approximately Ps. 11.0 million on our net
income.
In recent years, interest rates in Mexico have remained at historically low levels; however, we cannot
assure you that interest rates will remain at such levels in the future. A sustained increase in interest rates would
increase our financing costs and may result in a decrease in demand for our financing products. In the event of an
increase in interest rates, we may also need to readjust our portfolio of assets and liabilities in order to minimize
risks and maintain our profitability. In addition, an increase in interest rates could negatively affect the Mexican
economy and the financial condition of our customers and their ability to repay their obligations to us, which could
result in a deterioration in the quality of our portfolio. Furthermore, volatility in exchange rates and interest rates
could also affect the ability of our customers to repay their obligations to us, which could result in an increase in
non-performing leases and loans, and therefore could have a material adverse effect on our business, financial
27
Our business is highly dependent on proper functioning and improvement of information technology
systems.
Our business is highly dependent on our ability to timely collect and process a large amount of information
related to the existing customer base, including transaction processes that may increase in complexity with
increasing volume in our business. The proper functioning of financial control, accounting or other data collection
and processing systems is critical to our businesses and to our ability to compete effectively. A partial or complete
failure of any of these primary systems or the inappropriate handling of the data stored therein could materially and
adversely affect our decision-making process, our risk management and internal control systems, as well as our
ability to respond on a timely basis to changing market conditions. Such failures could be caused by, among other
things, software bugs, computer virus attacks or conversion errors due to system upgrading. Any security breach
caused by unauthorized access to information or systems, intentional malfunctions or loss or corruption of data,
software, hardware or other computer equipment, could have a material adverse effect on our business, financial
condition and results of operations. In addition, we may experience difficulties in upgrading, developing and
expanding our information technology systems quickly enough to accommodate our growing customer base. Our
disaster recovery planning may also be insufficient to cover all eventualities, and we may have inadequate insurance
coverage or insurance limitations that could prevent us from being fully compensated for losses from a major
interruption or other damage to our systems. If we cannot maintain an effective data collection and management
system, or if we cannot upgrade that system as necessary to meet the changing circumstances of our business, then
our business, financial condition and results of operations could be materially adversely affected.
We may experience operational problems or errors.
We, like all financial institutions, are exposed to many types of operational risks, including the risk of fraud
by employees and outsiders, failure to obtain proper authorizations, failure to properly document transactions,
equipment failures and errors by employees. Although we maintain a system of operational controls, there can be
no assurances that operational problems or errors will not occur and that their occurrence will not have a material
adverse impact on our business, financial condition and results of operations.
Any failure to protect our registered trademarks and intellectual property may materially adversely affect us.
We believe that our commercial advertisements, trademarks and other intellectual property are fundamental
to our name recognition and the continued success of our business. Any infringement of our intellectual or
industrial property rights or any failure to register or maintain these rights in the jurisdictions in which we operate
may result in: (i) litigation, requiring that we dedicate substantial time and resources to defend our intellectual and
industrial property; and/or (ii) the potential loss of our ability to use our trademarks. The success of our business
depends in part upon our continued ability to use our trademarks to increase brand awareness and further develop
our brand in both the Mexican and international markets. We cannot assure you that all of the steps that we have
taken to protect our trademarks in Mexico and other countries will be adequate to prevent the infringement of our
trademarks by others. The unauthorized reproduction of our trademarks could diminish the value of our brand and
our market recognition, our competitive advantages or our goodwill, which could adversely affect our business,
results of operations, prospects and financial conditions.
We are dependent on key personnel, our ability to retain and hire additional key personnel and the
maintenance of good labor relations.
Our operation and growth depend significantly upon the efforts, relationships, reputation and experience of
our board of directors, senior management and other key personnel. The loss of their services, or our inability to
attract and retain qualified management personnel to replace them, could have a material adverse effect on our
business, financial condition and results of operations. In addition, in line with our planned expansion, our future
success also depends on our continuing ability to identify, hire, train and retain other qualified sales, marketing,
collections and managerial personnel. Competition for such qualified personnel is intense and we may be unable to
attract, integrate or retain qualified personnel at levels of experience or compensation that are necessary to maintain
our quality and reputation or to sustain or expand our operations.
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Our risk management systems and policies may not be effective in mitigating our risk exposure, and we may
be exposed to unidentified or unanticipated risks, which may materially and adversely affect our business,
financial condition and results of operations.
Our risk management systems, hedging strategies, policies and other risk management techniques may not
be effective in mitigating our risk exposure in all market environments or against all types of risk, including risks
that are unidentified or unanticipated. Some methods of managing risk are based upon historical market behavior or
past events. As a result, these methods may not be able to accurately estimate future risk exposures, which could be
significantly greater than indicated by measures based on historical data. Other risk management methods depend
upon an evaluation of information regarding markets, customers or other matters. This information in all cases may
not be accurate, complete, up-to-date or properly evaluated. Management of operational, legal or regulatory risk
requires, among other things, policies and procedures to record properly and verify a large number of transactions
and events. Such policies and procedures, including our origination and servicing polices, instituted by us or from
time to time modified to respond to changes in the market in which we operate, may not be fully effective. Any
failure of our risk management procedures or any failure to identify any applicable risks may have a material
adverse effect on our business, financial condition and results of operations.
Risks not contemplated in our insurance policies may affect the assets leased by us.
Although we take actions to ensure that our insurance policies cover most of the risks related with the
assets we lease, it is possible that the terms and conditions of the insurance policies we have will not cover a specific
event or incident. If any uninsured events occur with respect to a significant portion of our leased assets, such lack
of coverage could have a material adverse effect on our financial conditions and results of operations.
Our controls and procedures may fail or be circumvented.
Controls and procedures, particularly those relating to collections and cash management, are important for
finance companies. Any system of controls, however well-designed and operated, is based in part on certain
assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Any failure or circumvention of our controls and procedures, or failure to comply with regulations related to
controls and procedures, could have a material adverse effect on our business, financial condition and results of
operation.
We may not be successful in our plans for growth, development and diversification.
We may not be successful in our plans for growth and diversification of our business, or we may need to
incur additional costs in order to carry out these plans, which could have a material adverse effect on our business,
financial conditions and results of operations and prospects.
We may be subject to penalties due to our advertising.
Because we are active in financial advertising, we could be subject to penalties based on unfair competition
if such advertising includes incorrect or incomplete information, or if such information is considered misleading.
Furthermore, we may be subject to penalties if we advertise our products or services to those customers who have
expressly requested not to receive such advertising. Such events could adversely affect our business, financial
We may not be able to detect money laundering and other illegal or improper activities on a timely basis or at
all.
We are required to comply with applicable anti-money laundering, terrorism financing prevention and other
laws and regulations. These laws and regulations require us and our subsidiaries, among other things, to adopt and
enforce “know your costumer” policies and procedures and to report suspicious and large transactions to the
applicable authorities. Such regulations have become increasingly complex and detailed over time and require
effective control systems and highly qualified personnel for the supervision of and compliance with such rules. In
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addition, such regulation is subject to increased surveillance by governmental authorities. While we have adopted
policies and procedures aimed at detecting and preventing the use of our network for money laundering activities
and related activities, we cannot assure you that such policies and procedures will completely eliminate instances
where our accounts or technology may be used by other parties to engage in money laundering and other illegal or
improper activities. While we have not been subject to fines or other sanctions as a result of not complying with the
applicable regulations related to money laundering activities in the past, to the extent we may fail to fully comply
with applicable laws and regulations, the relevant governmental agencies to which we report have the power and
authority to impose fines and other penalties on us. Furthermore, although we have not suffered damages to our
business or our reputation as a result of money laundering activities in the past, our business and reputation could
suffer if customers use us for money laundering or illegal purposes.
We are subject to certain risks associated with derivative financial instruments that we have entered into
related to fluctuations in exchange rates and interest rates, which could adversely affect our financial
conditions and results of operations.
We are exposed to various risks related to fluctuations in interest rates, currencies and exchange rates. One
of the strategies we employ to mitigate the possible negative effects of these risks consists of entering into derivative
financial instruments to hedge our exposure to risks associated with our International Notes (as defined below) and
other debt instruments and lines of credit. The use of such derivative financial instruments could result in losses
related to the valuation of the hedging instruments as a result of fluctuations of the peso exchange rate and
fluctuations of interest rates in Mexico.
Our swaps are subject to periodic margin calls. We may be required to use a substantial part of our cash to
cover such margin calls, which may reduce the resources available for our business operations and capital
requirements. As a result, we may incur net losses from our currency swap transactions or may be unable to make
our margin calls, any of which could have a material adverse effect on our business, liquidity, financial condition
and results of operations.
Our operations are subject to various financial laws and regulations. Any failure by us to comply with the
applicable legal requirements could result in the imposition of sanctions or fines, which could result in
additional costs that could have a material adverse effect on our financial condition and results of
operations.
Our operations are subject to various financial laws and regulations. Any failure by us to comply with the
applicable legal requirements or our inability to adjust our processes and operations in accordance with any
amendments made to such laws and regulations could result in sanctions or fines or in our being required to
implement remedial programs, which could result in significant additional costs for us and which in turn could have
a material adverse effect on our financial condition and results of operations and could also disrupt our operations or
the implementation of projects or business plans. We cannot predict the effect that future financial laws and
regulations may have on our financial condition and results of operations.
Risks Related to Our Controlling Shareholder
Our controlling shareholder is able to exercise significant control over us which could result in conflicts of
interest.
We are currently controlled, and after completion of the global offering will continue to be controlled, by
the Trust, which after completion of the global offering will have a 63.5% ownership state in us, assuming the
overallotment options are not exercised by the initial purchasers and the Mexican Underwriters. Our controlling
shareholder, as instructed by the individual beneficiaries of the Trust, is in a position, and upon the completion of
this offering will continue to be in a position, with certain limited exceptions, to direct our management and to
determine the result of substantially all matters decided by a majority vote of our shareholders, including, among
others: (i) the election of a majority of the members of our board of directors and main executive officers, (ii) sales
and dispositions of our assets, the amount of debt financing that we incur and the granting of liens, except when
there is a conflict of interests, (iii) undertaking investments and acquisition of assets, (iv) commencement or
termination of significant legal proceedings, and (v) the determination of the amount of dividends to be distributed
30
by us. As a result, circumstances may occur in which our controlling shareholder’s interests could conflict with
your interests.
We often engage in a variety of transactions with related parties which may cause conflicts of interest.
We have engaged and will continue to engage in a variety of transactions with affiliates, such as services
and outsourcing agreements and factoring agreements. See “Related Party Transactions.” While we intend to
continue to transact business with related parties on an arm’s-length basis and in compliance with our corporate
governance practices, such transactions could be affected by conflicts of interest between such related parties and us.
We have agreed to terms governing certain of our indebtedness that limit our ability to engage in transactions with
our affiliates.
Risks Related to Mexico
Mexican governmental policies or regulations, including the imposition of an interest rate ceiling, may
adversely affect our business, financial condition and results of operations.
We are incorporated in Mexico, and substantially all of our assets and operations are located in Mexico. As
a result, we are subject to political, economic, legal and regulatory risks specific to Mexico. The Mexican federal
government has exercised, and continues to exercise, significant influence over the Mexican economy.
Accordingly, Mexican federal governmental actions and policies concerning the economy, state-owned enterprises
and state-controlled or state-funded financial institutions could have a significant impact on private-sector entities in
general and on us in particular, and on market conditions, including prices and returns on Mexican securities. Also,
the Mexican government may implement significant changes in laws, public policies and or regulations that could
affect political and economic conditions in Mexico, which could adversely affect our business.
Any legislative or regulatory actions and any required changes to our business operations resulting from
such legislation and regulations, including without limitation, those derived from the Financial Reform and related
legislation issued pursuant thereto, could result in a loss of revenue, limit our ability to pursue certain business
opportunities, increase the level of reserves that we are required to maintain, affect our capital adequacy
requirements, affect the value of assets that we hold, require us to increase our prices thereby reducing the demand
for our products, impose additional costs on us, require that our standard agreements include or exclude certain
provisions, or otherwise adversely affect our businesses. Changes in regulations may also cause us to face increased
compliance costs and limitations on our ability to pursue certain business opportunities and provide certain products
and services.
Although we are not subject to specific regulation with respect to capitalization ratios, financial structure or
otherwise, as other banking institutions are, Mexican law could change and future laws and regulations that regulate
operations of leasing and other financial companies, such as ours, could be enacted. If such laws or governmental
oversight or other changes in Mexican law were to occur, our business, financial condition and results of operations
could be materially and adversely affected. Accordingly, there can be no assurance that future changes in
regulations or in their interpretation or application will not adversely affect us.
Political, economic and social conditions in Mexico could materially and adversely affect Mexican economic
policy and, in turn, our operations.
Following Enrique Peña Nieto’s election as President of Mexico in 2012, the Congreso de la Unión de los
Estados Unidos Mexicanos (“Mexican Congress”) became politically divided, as his political party, the Partido
Revolucionario Institucional, does not have majority in the Mexican Congress. On June 7, 2015, Mexico will hold
Congressional elections and, in certain states and municipalities, elections for governor and mayor. The result of
these elections and the composition of the Mexican Congress is uncertain and could alter the current political
environment. The lack of alignment between the Mexican Congress and the President could result in deadlock and
prevent the timely implementation of political and economic reforms, which in turn could have a material adverse
effect on Mexican economic policy.
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We cannot predict the impact that political, economic and social conditions will have on the Mexican
economy. Furthermore, we cannot provide any assurances that political, economic or social developments in
Mexico, over which we have no control, will not have an adverse effect on our business, financial condition, results
of operations and prospects. Mexico has recently experienced periods of violence and crime due to the activities of
organized crime. In response, the Mexican government has implemented various measures to increase security and
has strengthened its police and military forces. Despite these efforts, organized crime (especially drug-related
crime) continues to exist and operate in Mexico. These activities, their possible escalation and the violence
associated with them may have a negative impact on the Mexican economy or on our operations in the future. The
social and political situation in Mexico could adversely affect the Mexican economy, which in turn could have a
material adverse effect on our business, financial condition, results of operations and prospects.
High inflation rates may adversely affect our financial condition and results of operations.
Mexico has a history of high levels of inflation and may experience high inflation in the future.
Historically, inflation in Mexico has led to higher interest rates, depreciation of the peso and the imposition of
substantial government controls over exchange rates and prices. The annual rate of inflation for the last three years,
as measured by changes in the Mexican National Consumer Price Index (Índice Nacional de Precios al
Consumidor), as provided by the INEGI and as published by the Banco de México, was 3.6% in 2012, 4.0% in 2013
and 4.1% in 2014. Although inflation is less of an issue today than in past years, we cannot assure you that Mexico
will not experience high inflation in the future.
In addition, increased inflation generally raises our cost of funding, which we may not be able to fully pass
on to our customers through higher interest rates without adversely affecting the volume of our loans. Our financial
condition and profitability may be adversely affected by the level of, and fluctuations in, interest rates, which affect
our ability to earn a spread between the interest received on our loans or the rentals and fees charged on our leases
and the cost of our funding. All of our loans have fixed interest rates, which may not reflect the real return we are
receiving in an inflationary environment and may not, as a result, fully compensate us for the risk we are bearing on
our loan portfolio. If the rate of inflation increases or becomes uncertain and unpredictable, our business, financial
condition and results of operations could be adversely affected.
Fluctuations of the peso relative to the U.S. dollar could result in an increase in our cost of financing and
limit our ability to make timely payments on foreign currency-denominated debt.
The peso has been subject to significant devaluations against the U.S. dollar and may be subject to
significant fluctuations in the future. In 2014, the peso devalued by 12.7% against the U.S. dollar. Because
substantially all of our revenues are, and are expected to continue to be, denominated in pesos, if the value of the
peso decreases against the U.S. dollar, as has been the case in the recent past, our cost of financing may increase for
U.S. dollar-denominated debt that we may incur or have outstanding, to the extent such obligations are not otherwise
hedged with financial instruments. Severe depreciation of the peso may also result in disruption of the international
foreign exchange markets. This may limit our ability to transfer or convert pesos into U.S. dollars and other
currencies for the purpose of making timely payments of interest and principal on our non - Mexican peso denominated securities and any U.S. dollar-denominated debt that we may incur, to the extent such obligations are
not otherwise hedged with financial instruments.
Currently, the peso-dollar exchange rate is determined on the basis of the free market float in accordance
with the policy set by the Banco de México. There is no guarantee that the Banco de México will maintain the
current exchange rate regime or that the Banco de México will not adopt a different monetary policy that may affect
the exchange rate itself, including imposing generalized exchange controls. Any change in the monetary policy, the
exchange rate regime or in the exchange rate itself, as a result of market conditions over which we have no control,
could have a considerable impact, either positive or negative, on our business, financial condition and results of
operations.
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Developments in other countries could adversely affect the Mexican economy and our business, financial
The Mexican economy may be, to varying degrees, affected by economic and market conditions in other
countries. Although economic conditions in other countries may differ significantly from economic conditions in
Mexico, investors’ reactions to adverse developments in other countries may have an adverse effect on the market
value of securities of Mexican issuers. In recent years, for example, the prices of both Mexican debt and equity
securities decreased substantially as a result of the prolonged decrease in the United States securities markets. Most
recently, credit issues in the United States related principally to the sale of sub-prime mortgages have resulted in
significant fluctuations in the financial markets.
In addition, in recent years economic conditions in Mexico have become increasingly correlated with
economic conditions in the United States as a result of the North American Free Trade Agreement (“NAFTA”), and
increased economic activity between the two countries. Therefore, adverse economic conditions in the United
States, the termination or re-negotiation of NAFTA or other related events could have a significant adverse effect on
the Mexican economy. We cannot assure you that events in other emerging market countries, in the United States or
elsewhere will not adversely affect our business, financial condition or results of operations.
Approved amendments to Mexican tax laws may adversely affect us.
On December 11, 2013, certain reforms to Mexican tax laws were published in the Mexican Federal
Official Gazette (the “Tax Reforms”), which became effective as of January 1, 2014. While the corporate income
tax rate, which had previously been scheduled for reduction, remained at 30%, the Tax Reforms (i) resulted in
several amendments to corporate tax deductions, among other things, by eliminating deductions that were previously
allowed for related-party payments to certain foreign entities and limiting tax deductions on salaries paid to
employees, (ii) amended the regime applicable to individual taxpayers in order to extend the tax base by restricting
deductions and increasing tax rates, (iii) imposed a 10.0% withholding income tax on dividends paid by the
corporation to individuals or foreign residents, (iv) standardized the value-added tax in all areas of Mexico,
(v) required the use of electronic invoices and new monthly tax reports to be provided to the tax authorities, and
(vi) imposed a 10.0% income tax payable by individuals on gains resulting from the sale of stock listed on the BMV.
The Tax Reforms also eliminated the flat tax (Impuesto Empresarial a Tasa Única, or “IETU”).
Our business, financial condition and results of operations may be adversely affected as a result of
increased taxes on salaries, elimination and limitations of certain deductions and increased costs due to the
additional compliance requirements.
We are subject to accounting standards that differ from those applicable to public companies in the United
States.
significant respects from U.S. GAAP. See “Annex A—Summary of Certain Significant Differences Between Sofom
relate to us. We are not providing any reconciliation to U.S. GAAP of the Financial Statements or other financial
information in this offering memorandum. We cannot be certain that a reconciliation would not identify material
quantitative or qualitative differences in our Financial Statements or other financial information as prepared on the
basis of Sofom GAAP if such information had been prepared on the basis of U.S. GAAP.
Mexican financial authorities have been given broad authority in certain areas, including in the area of class
action lawsuits, as a result of the Financial Reforms.
As part of the Financial Reforms, the Mexican Congress approved changes to the Mexican Law for the
Protection and Defense of Financial Services Users, which gives the Mexican National Commission for the Defense
of Financial Services Users (Comisión Nacional para la Defensa de los Usuarios de Servicios Financieros, or
“CONDUSEF”) broad authority to oversee financial institutions. Pursuant to such changes, among other things,
CONDUSEF: (i) is entitled to initiate class action lawsuits against Mexican financial institutions, like us, in
33
connection with events affecting groups of users of financial services; (ii) shall maintain a new Bureau of Financial
Entities (Buró de Entidades Financieras), which will set forth any and all information deemed material for users of
financial services; (iii) is empowered to order amendments to any of the standard forms of commercial
documentation (such as account and loan agreements as those used by us) used by financial institutions if it
considers provisions therein to be detrimental to users; (iv) is permitted to issue resolutions as part of arbitration
proceedings, for the benefit of customers, that would permit customers to attach assets of financial institutions prior
to the completion of arbitration proceedings; and (v) is given broader authority to fine a financial institution that
does not comply with an order issued by CONDUSEF. These new laws grant CONDUSEF, borrowers and other
market participants the right to initiate class action lawsuits against us, thereby increasing our exposure to liability.
Due to our lack of experience and the lack of judicial precedents regarding these laws, we cannot predict the
possible outcome of any class actions initiated under such laws, including the extent of any liability we may face.
The Mexican Supreme Court of Justice has ruled that Mexican judges are entitled to reduce interest rates
considered inequitable, at their sole discretion.
On February 19, 2014, the Mexican Supreme Court (Suprema Corte de Justicia de la Nación) ruled that the
prohibition on usury contained in article 21, paragraph 3, of the American Convention on Human Rights
(Convención Americana sobre Derechos Humanos) allows Mexican judges to reduce, at their sole discretion, any
interest rates considered excessive and abusive, even if it is not expressly requested by any of the parties involved in
the relevant proceeding.
The Mexican Supreme Court’s resolution provides for certain elements that must be analyzed by judges on
a case-by-case basis (such as the interest rates charged by banks in similar operations, among other things).
However, the ruling does not establish any clear restrictions on a judge’s authority to reduce interest rates. We
cannot assure you that we will not face any legal proceeding in the future in which a judge might exercise such
authority to reduce the interest rates that we charge to our customers in our financial factoring and other loans
business lines. Any such exercise of authority could adversely impact our business, financial condition and results
of operations.
Risks Related to the Shares and the Global Offering
Our Shares have never been publicly traded and a liquid market for our Shares may not develop.
Although we have applied to list the Shares for trading on the BMV in connection with this offering, and
expect the shares to be listed, we cannot assure you that a liquid trading market for the Shares will develop. Prior to
the application to list the Shares for trading on the BMV in connection with the global offering, there was no public
market for our Shares and there can be no assurances that an active market will develop or be sustained. The BMV
is substantially smaller, less liquid and generally more volatile than the major securities markets in the United States.
As a result of these factors, you may not be able to sell your Shares at the time or price you desire or at all.
The market price of our Shares may be volatile and you could lose all or part of your investment.
The trading price of our Shares following this offering may fluctuate substantially and may be higher or
lower than the initial offering price you pay, depending on many factors, some of which are beyond our control and
may not be related to our operating performance. The initial offering price of the Shares in the global offering may
not be indicative of the prevailing prices in the market after the completion of the global offering. These
fluctuations could cause you to lose part or all of your investment in our Shares. The factors that could cause
fluctuations include, but are not limited to, the following:
•
investors’ perceptions of our prospects and the prospects of the lines of business where we operate,
including the operating leasing, financial factoring and auto loans and other lending businesses;
•
differences between our actual financial and operating results and those expected by investors;
34
•
actions by our principal shareholder with respect to the disposition of the Shares it beneficially owns or the
perception that such actions might occur;
•
the decisions made by our principal shareholder regarding our activities and operations;
•
the operating performance of companies similar to us in Mexico and abroad;
•
an increase in our competition;
•
the market’s perception regarding our management’s performance;
•
announcements by us or our competitors of significant acquisitions, divestitures, strategic partnerships,
joint ventures or capital commitments;
•
changes to regulations applicable to us or new interpretations of current laws and regulations, in particular
those applicable to our capital requirements, reserves and interest rates we may charge;
•
general economic conditions in Mexico;
•
political and market conditions in Mexico, the United States and other countries;
•
significant volatility in the market price and trading volume of securities of companies in our sector;
•
fluctuations in the exchange rate between the peso and the U.S. dollar, particularly depreciations of the
peso;
•
additions or departures of key management personnel;
•
acquisitions completed by us and our ability to absorb them;
•
fluctuations in our earnings, including quarterly operating results; and
•
broad capital market fluctuations.
In addition, although there is no present intention to do so, in the future, we may issue additional equity
securities or our controlling shareholder may dispose of its interest in us. Any such issuances or sales or the
prospect of any such issuances or sales could result in a decrease in the market price of the Shares.
The relatively low liquidity and high volatility of the Mexican securities market may cause trading prices and
volumes of our Shares to fluctuate significantly.
The BMV is one of Latin America’s largest exchanges in terms of aggregate market capitalization of the
companies listed therein, but it remains relatively illiquid and volatile compared to other major foreign stock
markets. Although the public participates in the trading of securities on the BMV, a substantial portion of trading
activity on the BMV is conducted by or on behalf of large institutional investors. The trading volume for securities
issued by emerging market companies, as Mexican companies, tends to be lower than the trading volume of
securities issued by companies in more developed countries. These market characteristics may limit the ability of a
holder of our Shares to sell its Shares and may also adversely affect the market price of the Shares.
If securities or industry analysts do not publish research or reports about our business, or publish negative
reports about our business, our Share price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or
industry analysts publish about us or our business. If one or more of the analysts who cover us make public negative
35
information or inaccurate or unfavorable research about our business, our stock price would likely decline. If one or
more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our
stock could decrease, which might cause our stock price and trading volume to decline.
You will experience immediate and substantial dilution in the book value of the Shares you purchase in the
global offering.
The issuance of shares at a higher offering price than the prior book value per Share gives rise to an
immediate dilution in book value per share for new shareholders acquiring shares at the established offering price.
As a result of this dilution, investors subscribing for shares pursuant to an offering do not have a book value per
share equal to their initial contribution.
Because the offering price of our Shares being sold in the global offering will be substantially higher than
the book value per share, you will experience immediate and substantial dilution in the book value of these Shares.
Book value per Share represents our equity divided by our number of Shares. As a result, we currently expect that
you will incur immediate dilution of Ps. 17.45 per Share you purchase in the global offering, based on the offer price
of Ps. 28.00 per Share and assuming the exercise of the overallotment options. See “Dilution.”
Future issuances of shares or future sales of shares by our principal shareholder, or the perception that such
sales may occur, may result in a dilution of your ownership share or a decrease in the market price of our
Shares.
We may require additional capital in the future, and if we are unable to obtain financing through public or
private debt sources, or if it is so decided by our shareholders, we may issue additional shares. The issuance of
additional shares in order to raise capital may not be subject to a preemptive right for shareholders and may dilute
the percentage of participation of our investors, as well as result in lower share prices from those prices at which the
shares were acquired. In addition to resulting in a dilution of shareholders’ economic and voting rights, any such
issuances or any such sales by our principal shareholders or the prospect of any such issuances or sales could result
in a negative market perception and, potentially, in a lower market price of our Shares. See “Principal and Selling
Shareholders.”
The payment and the amount of dividends paid by us to our shareholders are subject to the determination of
our principal shareholder and to restrictions included in certain of our debt agreements.
The payment of dividends and the amounts of such dividend payments paid by us to our shareholders are
subject to the recommendation of our board of directors and approval by our shareholders. As long as our principal
shareholder continues to own the majority of our shares, it will have the ability to appoint the majority of the
members of the board of directors and to determine whether dividends are paid and the amount of such dividends. In
addition, the payment of dividends is subject to the existence of profits, the absorption or repayment of past losses
and the approval of our financial statements for the corresponding period by our shareholders’ meeting. Although
we have paid dividends in the past, there can be no assurance that we will be able to pay or maintain dividends, nor
can we assure that our shareholders will approve a dividend policy proposed by our board of directors or if our
board of directors will propose one, or what the terms of such dividend policy will be. See “Dividends and
Dividend Policy.”
Furthermore, our International Notes include certain limitations on restricted payments, including
dividends, and any future financial or other agreements we may enter into could impose restrictions on us regarding
such payments. For a description of the factors that can affect the availability and timing of cash dividends to our
shareholders, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Liquidity and Capital Resources – Indebtedness” and “Dividend Policy.”
Any dividend distributions to holders of our Shares will be made in pesos.
Any dividend distributions to our shareholders will be made in pesos. Any significant fluctuations in the
exchange rates between pesos and dollars or other currencies could have an adverse impact on the dollar or other
36
currency equivalent amounts shareholders may receive from the conversion. In addition, the amount paid by us in
pesos may not be readily convertible into dollars or other currencies. While the Mexican government does not
currently restrict the ability of Mexican or non-Mexican individuals or entities to convert pesos into dollars or other
currencies, the Mexican government could institute restrictive exchange control policies in the future as it has done
in the past. Future fluctuations in exchange rates and the effect of any exchange control measures adopted by the
Mexican government cannot be predicted.
Our by-laws, in compliance with Mexican law, restrict the ability of non-Mexican shareholders to invoke the
protection of their governments with respect to their rights as shareholders.
As required by Mexican law, our by-laws provide that non-Mexican shareholders are considered to be
Mexican with respect to their ownership interests in us and are deemed to have agreed not to invoke the protection
of their governments in certain circumstances. Under this provision, a non-Mexican shareholder is deemed to have
agreed not to invoke the protection of his own government by asking such government to interpose a diplomatic
claim against the Mexican government with respect to the shareholder’s rights as a shareholder, but is not deemed to
have waived any other rights it may have, including any rights under the U.S. securities laws, with respect to its
investment in us. If any non-Mexican investor invokes such governmental protection in violation of this agreement,
its Shares could be forfeited to the Mexican government.
Preemptive rights may be unavailable to non-Mexican shareholders and, as a result, such holders may suffer
dilution.
If we issue new shares of common stock for cash as part of a capital increase, we may grant our
shareholders the right to subscribe and pay for a sufficient number of shares to maintain their existing ownership
percentage in Unifin. Rights to subscribe and pay for newly issued shares in these circumstances are known as
preemptive rights. We may not be able to offer shares to non-Mexican shareholders pursuant to preemptive rights
granted to our shareholders in connection with any future issuance of shares, unless we comply with specified
requirements established by the law of the respective non-Mexican shareholders’ jurisdictions. In the case of the
United States, we may not be able to offer shares to U.S. shareholders pursuant to preemptive rights granted to our
shareholders in connection with any future issuance of shares, unless a registration statement under the Securities
Act is effective with respect to such rights and shares or an exemption from the registration requirements of the
Securities Act is available. We are not required to file any such registration statement. As a result, U.S. shareholders
may not be able to exercise their preemptive rights in connection with future issuances of our shares of capital stock.
In this event, the economic and voting interest of U.S. shareholders in our total equity may decrease and U.S.
shareholders would suffer dilution with respect to their holdings of our Shares.
The protections afforded to non-controlling shareholders and the remedies available to shareholders in
Mexico are different from those in the United States.
Under Mexican law, the protections afforded to non-controlling shareholders are different from, and may
be less than, those afforded to minority shareholders in other jurisdictions, including the United States. The
substantive law concerning fiduciary duties of directors has not been the subject of extensive judicial interpretation
in Mexico, unlike other jurisdictions including many states in the United States, where duties of care and loyalty
elaborated by judicial decisions help to shape the rights of minority shareholders. Shareholders cannot challenge
corporate action taken at a shareholders’ meeting unless they meet certain procedural requirements. There are
different procedural requirements for bringing shareholder lawsuits against directors for the benefit of companies. In
Mexico, only shareholder derivative actions, as opposed to direct actions, may be initiated for breach of fiduciary
duties. Also, although Mexican law currently permits the initiation of class actions, the relevant Mexican legislation
is recently enacted and its effects may be curtailed or influenced by court decisions. Therefore, it may be more
difficult for minority shareholders to enforce their rights against us, our directors or our controlling shareholder than
it would be for minority shareholders of companies incorporated in other jurisdictions, including the United States.
Mexican regulations provide remedies that may differ from those contemplated under the securities laws in other
jurisdictions including the United States. Therefore, shareholders may not be able to exercise the rights or file the
types of legal actions that they would normally pursue under the securities laws in other jurisdictions, including the
United States.
37
Corporate and financial disclosure in Mexico may differ from disclosure regularly published by or about
issuers of securities in other countries, including the United States.
A principal objective of the securities laws of Mexico is to promote full and fair disclosure of all material
corporate information, including accounting and financial information. However, we are not subject to most of the
U.S. securities regulations and securities regulations of other jurisdictions; therefore, our reported and disclosed
information may be different or not as complete or extensive as that of public companies in the United States and
other jurisdictions.
It may be difficult to enforce civil liabilities against us or our directors, executive officers and controlling
persons.
All of our directors, executive officers and controlling persons named herein are non-residents of the
United States and substantially all of the assets of such non-resident persons and substantially all of our assets are
located in Mexico or elsewhere outside the United States. As a result, it may not be possible for investors to effect
service of process within the United States, or in any other jurisdiction outside of Mexico, upon such persons or us,
or to enforce against them, or us in courts of any jurisdiction outside of Mexico, judgments predicated upon the laws
of any such jurisdiction, including any judgment predicated upon the civil liability provisions of the United States
federal and state securities laws. In addition, there is doubt as to the enforceability in original actions in Mexican
courts of liabilities predicated, in whole or in part, on U.S. federal securities laws and as to the enforceability in
Mexican courts of judgments of U.S. courts obtained in actions predicated on the civil liability provisions of U.S.
federal securities laws. No treaty exists between the United States and Mexico for the reciprocal enforcement of
foreign judgments.
The ownership and transfer of our Shares is subject to certain restrictions under our by-laws.
The ownership and transfer of our Shares is subject to certain requirements and restrictions under the
Mexican Securities Market Law and under our by-laws. Subject to certain exceptions (including those applicable to
transfers or acquisitions or certain other transactions by or among our current shareholders), our by-laws require the
approval of our board of directors (i) prior to any acquisition of shares resulting, directly or indirectly, in beneficial
ownership of shares representing 10.0% or more, or multiples of 10.0%, of our outstanding shares, or (ii) prior to
any parties entering into agreements resulting in the creation or adoption of mechanisms or voting agreements
relating to, or permitting the voting in concert or in the aggregate of, a participation of 10.0% or more of our capital
stock. The approval of our board of directors must be granted or denied within three months following receipt of the
corresponding request for approval, provided that the board of directors has received all of the information required
to consider the transaction in accordance with our by-laws. If such acquisition or voting agreement is approved and
results in the beneficial ownership by a shareholder or group of shareholders of 30.0% or more of our shares or a
change of control affecting the Company, the person acquiring the shares or executing the respective voting
agreement is required to make a tender offer for 100.0% of our aggregate outstanding shares. We will not permit the
exercise of any shareholder rights related to shares whose acquisition was not duly approved by our board of
directors in cases where it was required to be approved, although economic rights may be maintained. For more
information regarding these and other restrictions on the ownership and transfer of Shares, see “The Mexican
Securities Market—Insider Trading, Trading Restrictions, and Disclosure Requirements” and “Description of our
Share Capital and By-laws—Changes to Our Capital Stock.” These restrictions could impact the liquidity of our
shares or prevent a public offer to buy our stock or could negatively affect the price of our Shares as a result of the
limitations on a change of control.
Non-compliance with the requirements applicable to a company listed on the BMV may result in the delisting
of our shares and cancelation of our registration with the RNV.
As a public company, we will be subject to various compliance requirements such as providing periodic
information and maintaining a minimum number of Shares owned by the public to maintain our listing on the BMV.
In the event that we fail to meet these requirements, we may become subject to the cancelation of our RNV
registration and delisting of our Shares from the BMV, penalties, sanctions and other administrative or regulatory
actions. Delisting of our Shares could have a material adverse effect on the price and liquidity of our Shares.
38
The requirements of being a public company may strain our resources, divert management’s attention and
affect our ability to attract and retain qualified board members.
As a public company, we will incur significant legal, accounting and other expenses that we have not
incurred as a private company, including costs associated with public company reporting requirements. The
expenses incurred by public companies generally for reporting and corporate governance purposes have been
increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make
some activities more time-consuming and costly, although we are currently unable to estimate these costs with any
degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain
types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and
regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of
directors, our board committees or as our executive officers and may divert management’s attention. Furthermore, if
we are unable to satisfy our obligations as a public company, we could be subject to delisting of our shares, fines,
sanctions and other regulatory action and potentially civil litigation.
There is a strong likelihood that we will be classified as a passive foreign investment company, or PFIC,
which could result in adverse U.S. tax consequences to U.S. Holders of our Shares.
Based on the composition of our income and assets and our activities we believe there is a strong likelihood
that we will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes.
Such characterization could result in adverse U.S. federal income tax consequences to you if you are a U.S. Holder
(as defined in “Taxation – United States Federal Income Taxation”) of our Shares.
For example, if we are a PFIC, U.S. Holders of our Shares may become subject to increased tax liabilities
under U.S. federal income tax laws and regulations, and will become subject to burdensome reporting requirements.
Specifically, if a U.S. Holder does not make a mark-to-market election or a QEF election, such holder will be
subject to a special tax at ordinary income tax rates on “excess distributions” (generally, any distributions received
in a taxable year that are greater than 125% of the average annual distributions that such holder has received in the
preceding three taxable years, or its holding period, if shorter), as well as any gain recognized on the sale of our
Shares. The amount of income tax on any excess distributions or gain will be increased by an interest charge to
compensate for tax deferral, calculated as if the excess distributions or gain were earned ratably over the holding
period of the Shares. In addition, dividends paid by us would not be eligible for reduced rates of U.S. federal income
taxation currently applicable to U.S. Holders that are individuals.
Where a company that is a PFIC meets certain reporting requirements, a U.S. Holder could avoid certain
adverse PFIC consequences described above by making a “qualified electing fund,” or QEF, election to be taxed
currently on its proportionate share of the PFIC’s ordinary income and net capital gains. However, we do not intend
to comply with the necessary accounting and record keeping requirements that would allow a U.S. Holder to make a
QEF election with respect to us and any Subsidiary PFICs.
Assuming our Shares are considered regularly traded on a qualified exchange (as discussed below under
“Taxation –United States Federal Income Taxation”), a U.S. Holder may avoid the unfavorable rules described
above if it makes a “mark-to-market election” in respect of its Shares, in which case such holder will generally
recognize ordinary gain or loss at the end of each year equal to the difference between the fair market value of the
Shares and the holder’s tax basis therein. However, if we are a PFIC and we have any direct, and in certain
circumstances, indirect subsidiaries that are PFICs (each a “Subsidiary PFIC”), a U.S. Holder will be treated as
owning its pro rata share of the stock of each such Subsidiary PFIC and will be subject to the PFIC rules with
respect to each such Subsidiary PFIC. A U.S. Holder may not make a mark-to-market election with respect to the
shares of any Subsidiary PFIC. Therefore, the mark-to-market election is not available to mitigate the adverse tax
consequences attributable to any Subsidiary PFIC.
The determination of whether or not we are a PFIC is made on an annual basis and will depend on the
composition of our income and assets from time to time. Specifically, for any taxable year, we will be classified as a
PFIC for U.S. federal income tax purposes if either (i) 75% or more of our gross income in that taxable year is
passive income or (ii) the average percentage of our assets (which includes cash) by value that produce or are held
39
for the production of passive income is at least 50%. U.S. Holders are urged to read the section below under
“Taxation – United States Federal Income Taxation – Passive Foreign Investment Company Considerations” and
consult with their own tax advisors regarding the U.S. federal income tax considerations discussed above including
the desirability of making a mark-to-market election.
40
USE OF PROCEEDS
We estimate that the net proceeds to us from the sale of the Shares being offered by us in the global offering
(assuming no exercise of the overallotment options granted by us to the initial purchasers and the Mexican
underwriters) will be approximately Ps. 1,476.3 million after deducting discounts, commissions and estimated
offering expenses based on the offer price of Ps. 28.00 per Share and an assumed total of 56,000,000 Shares sold by
us.
We currently intend to use the net proceeds we receive from the global offering to strengthen our capitalization,
support future growth and the reminder, if any, for general corporate purposes.
We will not receive any proceeds from the sale of Shares by the Selling Shareholders, which are expected to be
approximately Ps. 1,513.1 million, based on the offer price of Ps. 28.00 per Share.
41
EXCHANGE RATES
Mexico has had a free market for foreign exchange since the end of 1994 and the Banco de México allows
the peso to float freely against the U.S. dollar and other foreign currencies. As a result, policy has evolved toward
an inflation targeting regime and the Banco de México intervenes directly in the foreign exchange market only to
reduce excessive short-term volatility. The Banco de México, as an autonomous authority, recognizes price stability
as its fundamental goal and implements monetary policy using a target for the overnight interest rate charged in the
interbank market. An interest rate regime became effective on January 21, 2008, and substituted the regime based
on daily balances known as the “corto.” As part of the interest rate target regime, open market operations (liquidity
auctions) aim to provide the incentives for commercial banks to keep their accounts at the Banco de México with a
balance of zero at the daily market closing, in an environment where the overnight rate equals the target rate. The
Banco de México provides or withdraws liquidity as needed to meet its target rate through these operations. Positive
balances in the accounts kept by the commercial banks at the Banco de México are not paid interest, while overdrafts
or negative balances are charged twice the overnight interest rate target. An increase in interest rates can make
domestic financial assets more attractive to investors than foreign financial assets, which could trigger an
appreciation of the nominal exchange rate and vice versa.
There can be no assurance that the Mexican government will maintain its current policies with respect to
the peso or that the peso will not depreciate significantly in the future. The Mexican economy has suffered balance
of payment deficits and shortages in foreign exchange reserves in the past. While the Mexican government, for
more than 15 years, has not restricted the ability of Mexican and foreign individuals or entities to convert pesos to
U.S. dollars, we cannot assure you that the Mexican government will not institute restrictive exchange control
policies in the future. To the extent that any such restrictive exchange control policies were to be instituted in the
future in the event of shortages of foreign currency, our ability to transfer or convert pesos into U.S. dollars and
other currencies to service our foreign currency obligations would be adversely affected and foreign currency may
not be available without substantial additional cost.
The following table sets forth, for the periods indicated, the low, high, average and period-end exchange
rates published by the Mexican Federal Official Gazette, all expressed in nominal pesos per U.S. dollar.
Year Ended December 31,
2010 ........................................................................................
2011 ........................................................................................
2012 ........................................................................................
2013 ........................................................................................
2014 ........................................................................................
Low
12.16
11.50
12.63
11.98
12.84
High
13.18
14.24
14.39
13.44
14.78
Average
12.63
12.42
13.17
12.77
13.29
Period
End
12.38
13.98
12.98
13.07
14.73
Month Ended
November 2014 ......................................................................
December 2014 .......................................................................
January 2015 ...........................................................................
February 2015 .........................................................................
March 2015 .............................................................................
April 2015...............................................................................
May (through May 21) ...........................................................
13.47
13.89
14.56
14.75
14.93
14.80
15.02
13.76
14.78
14.95
15.10
15.58
15.45
15.49
13.60
14.47
14.68
14.92
15.26
15.22
15.24
13.76
14.73
14.84
14.96
15.24
15.20
15.21
This offering memorandum contains translations of certain peso amounts into U.S. dollars at specified rates
solely for the convenience of the reader. The convenience translations should not be construed as a representation
that the peso amounts actually represent such U.S. dollar amounts or that they could be converted into U.S. dollars at
the specified rate or at all. Unless otherwise indicated, U.S. dollar amounts provided in this offering memorandum
that have been translated from pesos have been so translated at an exchange rate of Ps 15.2427 per U.S. dollar, the
exchange rate published by the Banco de México in the Mexican Federal Official Gazette on March 31, 2015.
The exchange rate published in the Mexican Federal Official Gazette by the Banco de México on May 21, 2015 was
Ps. 15.21 per U.S. dollar.
42
CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization:
•
on an actual basis as of March 31, 2015;
•
as adjusted to give effect to the merger of Unifin Capital into the Company, with the Company as the
surviving company as described under “Summary – Recent Developments”; and
•
as further adjusted to give effect to the issuance of the Shares and the application of the net proceeds
therefrom based on our initial offering price of Ps. 28.00 per Share and assuming the exercise of the
overallotment options.
You should read this table in conjunction with the sections entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” “Selected Financial and Other Information” and our
Financial Statements and the related notes included elsewhere in this offering memorandum.
As of March 31, 2015
As
As
Further
Further
As
As
Adjusted
Adjusted
(Global
(Global
Adjusted
Adjusted
Offering)
Offering)
Actual
(Merger)
Actual
(Merger)
(in millions of US$) (1)
Cash and cash equivalents ..........................
Short-term debt:
Bank borrowings and loans from other
entities.................................................
Senior Notes due 2019 ............................
Trust notes under a revolving
securitization program ........................
Private trust bonds ..................................
Total short-term debt ..............................
Long-term debt:
Bank borrowings and loans from other
entities.................................................
Trust notes under a revolving
securitization program ........................
Private trust bonds ..................................
Total long-term debt ...............................
Other Liabilities ........................................
Capital stock ...........................................
Share premium ........................................
Capital reserves.......................................
Retained earnings....................................
Net income for the year...........................
Total stockholders’ equity.......................
Total liabilities and stockholders’
equity ....................................................
1,449.5
1,449.5
3,379.8
95.1
95.1
221.7
2,083.5
-
2,083.5
-
2,083.5
-
136.7
-
136.7
-
136.7
-
66.6
13.0
2,163.1
66.6
13.0
2,163.1
66.6
13.0
2,163.1
4.4
0.9
141.9
4.4
0.9
141.9
4.4
0.9
141.9
638.3
638.3
638.3
41.9
41.9
41.9
5,588.0
6,000.0
12,226.3
2,053.5
5,588.0
6.000.0
12,226.3
2,053.5
5,588.0
6,000.0
12,226.3
2,053.5
366.6
393.6
802.1
134.7
366.6
393.6
802.1
134.7
366.6
393.6
802.1
134.7
875.0
125.0
70.3
365.0
357.9
1,793.2
875.0
125.0
70.3
365.0
357.9
1,793.2
1,102.5
1,827.8
70.3
365.0
357.9
3,723.5
57.4
8.2
4.6
23.9
23.5
117.6
57.4
8.2
4.6
23.9
23.5
117.6
72.3
119.9
4.6
23.9
23.5
244.3
18,236.1
18,236.1
20,166.4
1,196.4
1,196.4
1,323.0
____________________________
(1)
Mexican peso amounts have been translated solely for the convenience of the reader into U.S. dollars at an exchange rate of Ps. 15.2427 per
US$1.00, the exchange rate published in the Mexican Federal Official Gazette on March 31, 2015. These convenience translations should
not be construed as representations that the peso amounts actually represent U.S. dollar amounts or could be converted into U.S. dollars at
the specified rate or at all. See “Exchange Rates.”
43
DILUTION
As of March 31, 2015, after giving pro forma effect to our 32 to 1 share split approved at our general
ordinary and extraordinary shareholders’ meeting held on February 26, 2015, at our general ordinary and
extraordinary shareholders’ meeting held on April 13, 2015, and at our unanimous resolutions dated May 7, 2015
(the “Share Split”) that will be effective upon the consummation of the global offering, our book value will increase
Ps. 6.40 per Share. Book value per Share represents our equity divided by our number of Shares.
After giving effect to the Share Split and a base offering of 56,000,000 new Shares by us at the offering
price per Share of Ps. 28.00 and after deducting underwriting discounts and commissions and estimated offering
expenses to be owed and payable by us in connection with the global offering, our pro forma book value estimated
as of the date of this offering memorandum would have been approximately Ps. 10.55 per Share, assuming the
exercise of the overallotment options. This amount represents an immediate increase of Ps. 4.15, or 60.7%, in book
value per Share to our existing shareholders as set forth below and an immediate dilution of Ps. 17.45, or 160.5%, in
book value per Share to new investors purchasing at the offering price of Ps. 28.00 per Share, assuming no exercise
of the overallotment options granted by us to the initial purchasers and the Mexican underwriters. Dilution for this
purpose represents the difference between the price per Share paid by these purchasers and book value per Share
immediately after the completion of the offering.
The following table illustrates the dilution in book value to purchasers of Shares in this offering:
Offering price ..................................................................
Book value before the global offering .............................
Increase in book value attributable to the sale of
Shares ..........................................................................
Pro forma book value after the global offering ...............
Dilution in book value to purchasers ...............................
Ps. Per Share
28.00
6.40
4.15
10.55
17.45
Assuming a base offering of 56,000,000 new Shares by us and assuming no exercise of the overallotment
options granted by us to the initial purchasers and the Mexican underwriters, and after giving pro forma effect to our
Share Split, our earnings per share for the twelve-month period ended March 31, 2015 would have been Ps. 1.10,
and Ps. 1.00 assuming the exercise of the overallotment options. This represents a decrease of 15.4% in our
earnings per share for the twelve-month period ended March 31, 2015 (after giving pro forma effect to our Share
Split) and assuming no exercise of the overallotment options, and 23.1% assuming the exercise of the overallotment
options.
The issuance of new shares in the future or future sales of shares by our principal shareholders, or the
perception that such sales may occur, could result in the dilution of ownership for our shareholders or decrease the
market price of our Shares. See “Risk Factors—Risks Relating to the Shares and the Global Offering—Future
issuances of shares or future sales of shares by our principal shareholders, or the perception that such sales may
occur, may result in a dilution of your ownership share or a decrease in the market price of our Shares.”
44
DIVIDENDS AND DIVIDEND POLICY
The declaration and amount of any dividends are subject to the approval of our shareholders at a general
meeting. Under the Mexican General Corporations Law (Ley General de Sociedades Mercantiles), we may only
pay dividends from retained earnings included in financial statements that have been approved at a general
shareholders’ meeting, after all required allocations have been made to legal reserves and all losses from prior fiscal
years have been satisfied. In addition, the terms of our financial agreements, including those governing our
International Notes, impose certain restriction on us regarding the payment of dividends.
We do not currently have a dividend policy. If we adopt a dividend policy in the future, our dividend
policy will be based on our past dividend payment practices and will be subject to approval by our shareholders at a
general meeting. In addition, any future dividend policy will depend upon a variety of factors, including without
limitation, our operating results, financial condition, capital requirements, our future projects and financial
obligations, contractual restrictions in our debt instruments and any other factors deemed relevant by our board of
directors and shareholders. Such factors may limit or prevent the payment of any future dividends. We cannot
provide any assurances that we will pay dividends in the future or as to the amount of dividends, if any are paid.
In the last three years we declared and paid dividends on the following dates in the following amounts:
•
by approval of our shareholders at the general and extraordinary meeting held on May 9, 2012, we
paid our shareholders dividends in the total amount of Ps. 60 million, or Ps. 48 per share, from
retained earnings;
•
by approval of our shareholders at the general meeting and extraordinary held on November 6,
2012, we paid our shareholders dividends in the total amount of Ps. 30 million, or Ps. 24 per share,
from retained earnings;
•
by approval of our shareholders at the general and extraordinary meeting held on April 26, 2013,
we paid our shareholders dividends in the total amount of Ps. 60 million, or Ps. 48 per share, from
retained earnings;
•
by approval of our shareholders at the general and ordinary meeting held on October 17, 2014, we
paid our shareholders dividends in the total amount of Ps. 100 million, or Ps. 11.42 per share from
retained earnings; and
•
by approval of our shareholders at the general ordinary and extraordinary meeting held on
February 20, 2015, we paid our shareholders dividends in the total amount of Ps. 100 million, or
Ps. 11.42 per share from retained earnings.
45
THE MEXICAN SECURITIES MARKET
The information concerning the Mexican securities market set forth below has been prepared based on
materials obtained from public sources, including the CNBV, the BMV, the Banco de México and information made
public by market participants. The following summary does not purport to be a comprehensive description of all of
the material aspects related to the Mexican securities market.
Prior to the offering, there has been no trading market for any of our outstanding capital stock in Mexico,
the United States or elsewhere. Our Shares will be registered in the RNV, and we have applied for listing on the
BMV under the ticker symbol “UNIFIN.”
We cannot predict the extent to which a trading market in Mexico, the United States or elsewhere will
develop with respect to our Shares. We also cannot predict the liquidity of any trading market for our Shares,
should any develop. If the trading volume of our Shares on the BMV falls below certain levels, the price for our
Shares may be affected and our Shares may be delisted or deregistered in that market.
Trading on the BMV
The BMV, located in Mexico City, is the only stock exchange in Mexico. Operating continuously since
1907, the BMV is organized as a publicly traded company with variable capital stock, or sociedad anónima bursátil
de capital variable. Trading of securities on the BMV occurs each business day from 8:30 a.m. to 3:00 p.m.,
Mexico City time, subject to adjustments to operate uniformly with certain United States markets.
Since January 1999, all trading on the BMV has been electronic. The BMV may impose a number of
measures to promote an orderly and transparent trading price of securities, including the operation of a system of
automatic suspension of trading in shares of a particular issuer, when price fluctuations exceed certain limits.
Settlement on the BMV is effected three business days after a share transaction. Deferred settlement is not
permitted without the approval of the BMV, even where it is mutually agreed among the market participants. Most
securities traded on the BMV, including our Shares when traded, are on deposit with Indeval, a securities depositary
owned by the BMV and market participants that acts as a clearinghouse, depositary and custodian, as well as a
settlement, transfer and registration agent for BMV transactions, eliminating the need for physical transfer of
securities.
Transactions must be settled in pesos except under limited circumstances in which a settlement in foreign
currencies may be permitted. Although the Mexican Securities Market Law provides for the existence of an overthe-counter market, no such market for securities has been formally developed in Mexico.
The Mexican Securities Market Law provides that foreign-issued securities may be traded by brokerage
firms and lending institutions through the International Trading System (Sistema Internacional de Cotizaciones or
“SIC”). These securities may be listed through the SIC if (i) they are not already listed on the RNV, (ii) the market
of origin or the company issuing the shares has received, based on their characteristics, recognition from the CNBV,
(iii) the securities are listed on the applicable stock exchange and are publicly distributed in the applicable market
and (iv) assurances are given to the effect that periodic reports will be provided to the BMV.
In addition, the BMV and the CNBV operate a system which suspends trading of shares of a particular
issuer upon price or volume volatility or changes in the offer or demand for such shares that are not consistent with
the historic performance of the shares and cannot be explained solely through information made publicly available
pursuant to the CNBV’s general regulations.
Market Regulation and Registration Standards
In 1925, the Mexican Banking Commission (Comisión Nacional Bancaria) was established to regulate
banking activity, and in 1946, the Mexican Securities Commission (Comisión Nacional de Valores) was established
to regulate stock market activity. In 1995, these two entities were merged to form the CNBV.
46
Among other things, the CNBV regulates the public offering and trading of securities and participants in
the Mexican securities market, regulates reporting and other information provided by market participants and
imposes sanctions for the illegal use of insider information and other violations of the Mexican Securities Market
Law. The CNBV regulates the Mexican securities market, the BMV, and brokerage firms through its staff and a
board of governors comprised of thirteen members.
Mexican Securities Market Law
On December 30, 2005, the current Mexican Securities Market Law was enacted and published in the
Official Gazette of the Federation, and became effective on June 28, 2006. The Mexican Securities Market Law
modified the Mexican securities’ regulatory regime in various material respects. The reforms introduced by this law
were intended to update the Mexican regulatory framework applicable to the securities market and publicly traded
companies, as compared to international standards. Publicly traded companies are regulated by the Mexican
Securities Market Law and, secondarily, by the Mexican General Corporations Law.
The Mexican Securities Market Law (i) establishes that public entities and the entities controlled by them
are considered a single economic unit (e.g., holding companies and wholly owned subsidiaries), (ii) clarifies the
rules for tender offers, dividing them into voluntary and mandatory categories, (iii) clarifies standards for disclosure
of holdings of shareholders of public companies, (iv) expands and strengthens the role of the board of directors of
public companies, (v) defines the standards applicable to the board of directors and the duties of the board, each
director, its secretary, the chief executive officer and other executive officers (introducing concepts such as the duty
of care, duty of loyalty and safe harbors), (vi) replaces the statutory auditor (comisario) and its duties with an audit
committee, a corporate practices committee and external auditors, (vii) defines the roles and responsibilities of
executive officers, (viii) improves the rights of minority shareholders relating to legal remedies, the exercise of
shareholder derivative actions and access to company information, (ix) introduces concepts such as consortiums,
groups of related persons or entities, control, related parties and decision-making power, (x) expands the definition
of applicable sanctions for violations of the Mexican Securities Market Law, including punitive damages and
criminal penalties, (xi) clarifies rules relating to types of equity securities that may be offered by public companies
and the availability of voting and non-voting shares, (xii) sets forth rules for share repurchases and (xiii) specifies
requirements for implementing anti-takeover measures in public companies’ by-laws.
Under the Mexican Securities Market Law, public companies must have a board of directors comprised of
no more than 21 members, of which at least 25.0% must be independent. Independent members must be selected at
the issuer’s general ordinary shareholders’ meeting based on their experience, ability and reputation, among other
factors. The conclusion as to whether a director is independent must be determined by the issuer’s shareholders, and
such determination may be challenged by the CNBV. Departing from legislative precedents, the Mexican Securities
Market Law permits then-acting members of the board of directors, under certain circumstances, to appoint, on a
temporary basis, new substitute members of the board of directors.
The board of directors of a public company is required to meet at least four times during each calendar
year. Its principal duties are (a) the determination of the issuer’s general business strategies, (b) the approval of
guidelines for the use of corporate assets, (c) the approval, on an individual basis, of transactions with related
parties, subject to certain limited exceptions, (d) the approval of unusual or nonrecurring transactions and any
transaction related to the acquisition or sale of assets with a value equal to or exceeding 5.0% of the issuer’s
consolidated assets, or the granting of collateral or guarantees, or the assumption of liabilities, equal to or exceeding
5.0% of the issuer’s consolidated assets, (e) the appointment or removal of the chief executive officer, (f) the
approval of accounting and internal control policies, and (g) the approval of policies for disclosure of information.
Directors are required to seek the best interests of the issuer, and may not favor any shareholder or group of
shareholders. The board of directors has the general obligation to act for the benefit of the issuer, without favoring a
certain shareholder or a group of shareholders.
The Mexican Securities Market Law requires the creation of one or more committees in charge of the audit
and corporate practices functions of an issuer. These committees must consist of at least three members appointed
by the board of directors, and each member must be independent (except for corporations controlled by a person or
group holding 50.0% or more of the outstanding capital stock, in which case only the majority of the members of the
committee in charge of the corporate practices functions must be independent). The supervisory activities of the
47
committees (coupled with certain obligations now entrusted to the board of directors) replace the statutory auditor
(comisario) that had been previously required by the Mexican General Corporations Law for public companies.
The committee entrusted with the audit function is responsible, among other things, for obtaining and
providing opinions to the board of directors with respect to internal control guidelines, accounting policies, financial
statements and the engagement of outside auditors; evaluating outside auditors and analyzing their reports;
analyzing and supervising the preparation of financial statements; informing the board regarding internal controls
and their adequacy; assisting the board in the preparation of annual reports and other reporting obligations;
investigating non-compliance with operating and accounting guidelines and policies or with the internal control
system; informing the board of any irregularities that it may encounter; calling shareholders’ meetings; supervising
compliance by the chief executive officer with shareholders’ and board of directors’ resolutions; and verifying the
implementation of internal control mechanisms.
The principal responsibilities of the committee in charge of the corporate practices function are obtaining
and providing opinions on related party transactions and other material transactions; obtaining opinions from third
party experts; calling shareholders’ meetings; assisting the board in the preparation of annual reports and other
reporting requirements; and making nominating and compensation proposals to the board.
The Mexican Securities Market Law imposes a duty of care and a duty of loyalty on directors. The duty of
care generally requires that directors obtain sufficient information and be sufficiently prepared to support their
decisions, and to act in the best interests of the issuer. The duty of care is principally discharged by a director by
requesting and obtaining from the issuer or officers of the issuer, as the case may be, all information that may be
necessary to participate in discussions requiring the presence of such director, by requesting and obtaining
information from third-party experts, by attending board meetings and by disclosing material information in
possession of such director. Failure of directors to act with due care makes the relevant directors jointly and
severally liable for damages and losses caused to the issuer and its subsidiaries. Liability for breach of the duty of
care may be limited by the company’s by-laws or by resolution of a shareholders’ meeting, except in the case of bad
faith, willful misconduct or illegal acts. Such liability may also be covered by indemnification provisions and
director and officer insurance policies.
The duty of loyalty primarily consists of maintaining the confidentiality of information received in
connection with the performance of the director’s duties and abstaining from discussing or voting on matters where
the director has a conflict of interest. This duty also requires that directors refrain from taking advantage of
corporate opportunities. In addition, the duty of loyalty is violated if a shareholder or group of shareholders is
knowingly favored or if, without the express approval of the board of directors, a director takes advantage of a
corporate opportunity. The violation of the duty of loyalty makes the relevant directors jointly and severally liable
for damages and losses caused to the issuer and its subsidiaries. This liability also arises if damages and losses are
sustained as a result of benefits wrongfully obtained by the director or directors or third parties as a result of
activities carried out by the breaching directors. Liability for breach of the duty of loyalty may not be limited by the
company’s by-laws, by resolution of a shareholders’ meeting or otherwise. The duty of loyalty is also breached if
the director uses corporate assets or approves the use of corporate assets, in violation of an issuer’s policies,
discloses false or misleading information, orders, or causes, an incorrect entry of any transaction in an issuer’s
records, that could affect its financial statements, or causes material information not to be disclosed or to be
modified.
The directors of the issuer may be subject to criminal penalties of up to 12 years imprisonment for certain
illegal acts involving willful misconduct that result in losses to the issuer. Such acts include the alteration of
financial statements and records.
Liability for breach of the duty of care or the duty of loyalty may be exercised solely for the benefit of the
issuer (as a derivative suit) and may only be exercised by the issuer or by shareholders representing at least 5.0% of
any outstanding shares in the aggregate. Criminal actions may be brought only by the Mexican Ministry of Finance
and Public Credit (Secretaría de Hacienda y Crédito Público, or “SHCP”), after consulting with the CNBV.
As a safe-harbor for directors, the liability discussed above does not arise if the director acted in good faith
and (i) complied with applicable law and the by-laws of the issuer, (ii) made the decision based upon information
48
provided by officers, external auditors or third-party experts, the capacity and credibility of which were not the
subject of reasonable doubt, (iii) selected the most appropriate alternative in good faith and any negative effects of
such decision were not reasonably foreseeable, and (iv) actions were taken in compliance with resolutions adopted at
the shareholders’ meeting.
The issuer’s principal executives are also required, under the Mexican Securities Market Law, to act for the
benefit of the issuer and not for the benefit of any shareholder or group of shareholders. These executives are
required to submit the major business strategies to the board of directors for approval, to submit proposals for
internal controls to the audit committee, to disclose all material information to the public, and to maintain adequate
accounting and registration systems and mechanisms for internal control.
The Mexican Securities Market Law also requires that any transaction or series of transactions that
represent 20.0% or more of the consolidated assets of a public issuer during any fiscal year, be approved at a
shareholders’ meeting.
In addition to the rights granted to minority shareholders representing 5.0% or more of the outstanding
shares of a public company, to initiate a shareholder derivative suit for the benefit of the issuer in an amount equal to
the damages or losses incurred by the issuer against directors for a breach of the duties of care or loyalty, the
Mexican Securities Market Law sets forth the right of shareholders representing 10.0% of the outstanding voting
shares to appoint a director, call a shareholders’ meeting, and request that the vote on resolutions in respect of which
they were not sufficiently informed be postponed. Also, holders of 20.0% of the outstanding voting shares may
judicially oppose resolutions that were passed by a shareholders’ meeting and file a petition for a court order to
suspend the resolution, if the claim is filed within 15 days following the adjournment of the meeting at which the
action was taken, provided that (i) the challenged resolution violates Mexican law or the company’s by-laws, (ii) the
opposing stockholders either did not attend the meeting or voted against the challenged resolution, and (iii) the
opposing stockholders deliver a bond to the court to secure payment of any damages that we may suffer as a result
of suspending the resolution in the event that the court ultimately rules against the opposing stockholder.
Limited or Non-voting Shares
The Mexican Securities Market Law does not permit issuers to implement mechanisms for common shares
and limited or non-voting shares to be bundled or jointly traded or offered to public investors, unless the limited or
non-voting shares are convertible into common shares within a term of up to five years, or when, as a result of the
nationality of the holder, the shares or the securities representing the shares limit the right to vote to comply with
foreign investment laws. In addition, the aggregate amount of the shares with limited or non-voting rights may not
exceed 25.0% of the aggregate amount of shares deemed as publicly held. The CNBV may increase this 25.0%
limit, provided that the limited or non-voting shares exceeding 25.0% of the aggregate amount of publicly held
shares are convertible into common shares within five years of their issuance.
Disclosure of Shareholders’ Agreements
Any shareholders’ agreements containing non-compete clauses, any agreements related to the sale, transfer
or exercise of preemptive rights (as set forth under article 132 of the Mexican General Corporations Law), any
agreements which allow for the sale and purchase of shares, voting rights, and sale of shares in a public offering,
must be notified to the issuer within five business days following their execution to allow the issuer to disclose such
agreements to the investors through the stock exchanges on which its securities are being traded and to be made
public in an annual report prepared by the issuer. These agreements (i) will be made available for the public to
review at the issuer’s offices, (ii) will not be enforceable against the issuer and a breach of such agreements will not
affect the validity of the vote at a shareholders’ meetings, and (iii) will only be effective between the parties once
they have been disclosed to the public.
Regulations Applicable to Issuers, Brokerage Firms and Other Market Participants
In March 2003, the CNBV issued certain general regulations applicable to issuers and other securities
market participants. The general regulations, which repealed several previously enacted CNBV regulations
49
(circulares), now provide a single set of rules governing issuers and issuer activity, among other things. In
September 2006, these general regulations were amended to give effect to the provisions of the then recently enacted
Mexican Securities Market Law.
In addition, in September 2004, the CNBV issued general rules applicable to brokerage firms or Rules for
Brokerage Firms (Disposiciones de Carácter General Aplicables a las Casas de Bolsa). The Rules for Brokerage
Firms now provide a single set of rules governing participation of Mexican underwriters in public offerings, among
other things.
Registration and Listing Standards
To offer securities to the public in Mexico, an issuer must meet specific qualitative and quantitative
requirements. In addition, only securities that have been registered with the RNV pursuant to the CNBV’s approval
may be listed on the BMV. Unregistered securities listed on the SIC may also be traded on the SIC parallel market
maintained by the BMV.
The regulations set forth that the BMV must adopt minimum requirements for issuers to list and to maintain
their securities in Mexico. These requirements relate to matters such as operating history, financial and capital
structure, minimum public floats, minimum number of holders and corporate governance among others. The CNBV
may waive some of these requirements in certain circumstances. In addition, some of the requirements are
applicable to each series of shares of the relevant issuer.
The CNBV’s approval for registration does not imply any kind of certification or assurance related to the
investment quality of the securities, the solvency of the issuer, or the accuracy or completeness of any information
delivered to the CNBV.
The BMV will review compliance with the foregoing requirements and other requirements on an annual,
semi-annual and quarterly basis, provided it may also review compliance at any other time.
The BMV must inform the CNBV of the results of its review and this information must, in turn, be
disclosed to investors. If an issuer fails to comply with any of the foregoing requirements, the BMV will request
that the issuer propose a plan to comply with such requirements. If the issuer fails to propose a plan, if the plan is
not satisfactory to the BMV or if an issuer does not make substantial progress with respect to the corrective
measures, trading of the relevant series of shares on the BMV may be temporarily suspended. In addition, if an
issuer fails to propose a plan or ceases to follow the plan once proposed, the CNBV may cancel the registration of
the shares, in which case the majority shareholder or any controlling group must carry out a tender offer to acquire
all of the outstanding shares of the issuer in accordance with the tender offer rules discussed below.
Reporting Obligations
Issuers of listed securities in Mexico are required to file unaudited quarterly financial statements and
audited annual financial statements, as well as various periodic reports with the CNBV and the BMV. Mexican
issuers of listed securities must file the following reports with the CNBV:
•
an annual report prepared in accordance with the CNBV’s general regulations by no later than April 30 of
each year;
•
quarterly reports, within 20 business days following the end of each of the first three quarters and 40
business days following the end of the fourth quarter;
•
reports disclosing material events promptly upon their occurrence;
•
reports regarding corporate restructurings such as mergers, acquisitions, splits or asset sales approved at
shareholders’ meetings or by the board of directors;
50
•
reports regarding the policies and guidelines with respect to the use of the company’s (or its subsidiaries)
assets by “related persons;” and
•
information regarding any shareholders’ agreements.
Pursuant to the CNBV’s general regulations, the internal rules of the BMV were amended to implement an
automated electronic information transfer system (Sistema Electrónico de Envío y Difusión de Información, or
“SEDI”), for information required to be filed with the BMV, Issuers of listed securities must prepare and disclose
their financial information via a BMV-approved electronic financial information system (Sistema de Information
Financiera y Contable de las Emisoras, or “SIFIC”). Immediately upon its receipt, the BMV makes the financial
information submitted via SIFIC available to the public.
The CNBV’s general regulations and the rules of the BMV require issuers of listed securities to file
information through SEDI that relates to any act, event or circumstance that could influence an issuer’s share price.
If listed securities experience unusual price volatility, the BMV will immediately request that the issuer inform the
public as to the causes of the volatility or, if the issuer is unaware of the causes, that the issuer make a statement to
that effect. In addition, the BMV may immediately request that the issuer disclose any information relating to
relevant material events, when it deems the information currently disclosed to be insufficient, as well as instruct the
issuer to clarify the information when necessary. The BMV may request that issuers confirm or deny any material
events that have been disclosed to the public by third parties when it deems that the material event may affect or
influence the securities being traded. The BMV must immediately inform the CNBV of any such requests.
In addition, the CNBV may also make any of these requests directly to issuers. An issuer may opt to defer
the disclosure of material events under some circumstances, as long as:
•
the issuer maintains adequate confidentiality measures (including maintaining records of persons or entities
in possession of material non-public information);
•
the information is related to unfinished transactions;
•
there is no misleading public information relating to the material event; and
•
no unusual price or volume fluctuation occurs.
Similarly, if an issuer’s securities are traded on both the BMV and a foreign securities exchange, the issuer
must simultaneously file the information that it is required to file pursuant to the laws and regulations of the foreign
jurisdiction with the CNBV and the BMV.
Suspension of Trading
Under its internal regulations, the BMV may suspend trading in the shares of a particular issuer as a result
of:
•
the disclosure of material events;
•
unusual price or volume fluctuations;
•
failure by the issuer to timely or adequately comply with its reporting obligations, including the obligation
to disclose material events; or
•
significant exceptions or comments contained in the auditors’ opinion of the issuer’s financial statements,
or determinations that such financial statements were not prepared in accordance with the applicable
accounting procedures and policies.
51
In cases where an issuer’s shares are traded simultaneously on other stock exchanges outside of Mexico,
the BMV may consider the measures adopted by such other stock exchanges in order to suspend and/or resume
trading in the issuer’s shares.
In addition to the authority of the BMV under its internal regulations as described above, pursuant to the
rules of the CNBV, the CNBV and the BMV may suspend trading of an issuer’s shares:
•
if the issuer does not disclose a material event; or
•
upon price or volume volatility or changes in the offer or demand for such shares that are not consistent
with their historic performance and cannot be explained solely through information made publicly available
pursuant to the CNBV’s general regulations.
The BMV must immediately inform the CNBV and the general public of any such suspension. An issuer
may request that the CNBV or the BMV resume trading, provided that the issuer demonstrates that the causes
triggering the suspension have been resolved and, if applicable, that it is in full compliance with the periodic
reporting requirements under applicable law. The BMV may reinstate trading in suspended shares when it deems
that the material events have been adequately disclosed to investors, when it deems that the issuer has adequately
explained the reasons for the changes in offer and demand, volume traded, or prevailing share price or when the
events affecting share prices have ceased to exist. If an issuer’s request has been granted, the BMV will determine
the appropriate mechanism to resume trading. If trading of an issuer’s securities is suspended for more than 20
business days and the issuer is authorized to resume trading without conducting a public offering, the issuer must
disclose via SEDI the causes that resulted in the suspension and reasons why it is now authorized to resume trading,
before trading may resume.
Insider Trading, Trading Restrictions and Disclosure Requirements
The Mexican Securities Market Law contains specific regulations regarding insider trading, including the
requirement that persons in possession of information deemed privileged abstain (i) from trading, directly or
indirectly, in any relevant issuer’s securities whose trading price could be affected by such information, (ii) from
making recommendations to third parties to trade in such securities (except for those entitled to such information
due to their role or employment position) and (iii) from trading in options and derivatives of the underlying security
issued by such issuer.
Pursuant to the Mexican Securities Market Law, the following persons must notify the CNBV of any
transactions undertaken as they relate to a listed issuer’s stock:
•
members of a listed issuer’s board of directors and officers;
•
shareholders controlling 10.0% or more of a listed issuer’s outstanding share capital; and
•
other insiders, including, but not limited to, relevant officers and agents with authority to act on behalf of
the issuer.
In addition, under the Mexican Securities Market Law insiders must abstain from purchasing or selling
securities of the issuer within 90 days from the last sale or purchase, respectively.
Subject to certain exceptions, any acquisition of a public company’s shares that results in the acquirer
owning 10.0% or more, but less than 30%, of an issuer’s outstanding share capital must be publicly disclosed to the
CNBV and the BMV by no later than one business day following the acquisition.
Any acquisition by an insider that results in the insider holding an additional 5.0% or more of a public
company’s outstanding share capital must also be publicly disclosed to the CNBV and the BMV no later than one
business day following the acquisition. Some insiders must also notify the CNBV of share purchases or sales that
occur within any three-month or five-day period and that exceed certain value thresholds. The Mexican Securities
52
Market Law requires that convertible securities, warrants and derivatives to be settled in kind, be taken into account
in the calculation of share ownership percentages.
Also, members of the board of directors and principal officers of a public company that hold 1.0% or more
of the capital stock of such company, and individuals and entities owning 5.0% or more of the capital stock of a
public company, must inform such company, annually, of their respective shareholdings (which must be timely
disclosed to the CNBV by such company).
Tender Offers
The Mexican Securities Market Law contains provisions relating to public tender offers in Mexico.
According to the Mexican Securities Market Law, tender offers may be voluntary or mandatory. Both are subject to
the prior approval of the CNBV and must comply with general legal and regulatory requirements. Any intended
acquisition of a public company’s shares that results in the buyer owning 30.0% or more, but less than a percentage
that would result in the buyer acquiring control of a company’s voting shares, requires the buyer to make a
mandatory tender offer for the greater of (a) the percentage of the share capital intended to be acquired or (b) 10.0%
of the company’s outstanding capital stock. Finally, any acquisition of a public company’s shares that is intended to
obtain voting control, requires the potential buyer to make a mandatory tender offer for 100.0% of the company’s
outstanding capital stock (however, under certain circumstances the CNBV may permit an offer for less than 100%).
Any tender offer must be made at the same price to all shareholders and classes of shares. The board of directors,
with the advice of the audit committee, must issue its opinion of any tender offer resulting in a change of control,
which opinion must take minority shareholder rights into account and which may be accompanied by an
independent fairness opinion.
Under the Mexican Securities Market Law, all tender offers must be open for at least 20 business days and
purchases thereunder are required to be made pro rata to all tendering shareholders. The Mexican Securities Market
Law also permits the payment of certain amounts to controlling shareholders over and above the offering price, if
these amounts are fully disclosed, approved by the board of directors and paid in connection with non-compete or
similar obligations of such controlling shareholders. The law also provides exceptions to the mandatory tender offer
requirements and specifically sets forth remedies for non-compliance with tender offer rules (e.g., suspension of
voting rights, possible annulment of purchases, among others) and other rights available to former shareholders of
the issuer.
The Mexican Securities Market Law also requires that convertible securities, warrants and derivatives that
can be settled in kind representing underlying securities be taken into account in the calculation of the individual or
group of individuals that, directly or indirectly, intends to acquire shares of a company.
Anti-Takeover Protections
The Mexican Securities Market Law provides that public companies may include anti-takeover provisions
in their by-laws if such provisions (i) are approved by a majority of the shareholders present at a general
extraordinary shareholders’ meeting, provided that no shareholder or group of shareholders representing 5.0% or
more of the capital stock present at the relevant meeting vote against such provision, (ii) do not exclude any
shareholders or group of shareholders, (iii) do not restrict, in an absolute manner, a change of control, and (iv) do
not contravene legal provisions related to tender offers or have the effect of disregarding the economic rights related
to the shares held by the acquiring party.
53
SELECTED FINANCIAL AND OTHER INFORMATION
The following tables present certain summary financial information and operating data as of the dates and
for each of the periods indicated. You should read the following selected financial information together with
“Presentation of Financial and Other Information,” “Summary Financial and other Information,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our Financial Statements and related
notes included elsewhere in this offering memorandum.
The balance sheet data as of March 31, 2015, and the income statement data for the three-month periods
ended March 31, 2014 and 2015, are derived from our Unaudited Interim Financial Statements included elsewhere
in this offering memorandum. The balance sheet and income statement data as of and for the years ended
December 31, 2012, 2013 and 2014, are derived from our Audited Financial Statements included elsewhere in this
offering memorandum.
significant respects from U.S. GAAP. See “Annex A—Summary of Certain Significant Differences between Sofom
relate to us. No reconciliation of any of our Financial Statements to U.S. GAAP has been performed.
2012
2013
2014
2014 (1)
Income Statement
Data
Operating lease
income ....................... 1,842.7
Interest income .............
355.9
Other lease benefits.......
126.8
Depreciation of assets
under operating
lease ........................... (1,050.1)
Interest expense ............ (452.2)
Other lease expenses ..... (153.3)
Financial margin ...........
669.8
Allowance for loan
losses .........................
Financial margin
adjusted for credit
risk .............................
Commissions and fees
(net) ...........................
Other operating
income (net) ...............
Financial
intermediation
results ........................
Administrative and
promotional
expenses.....................
Operating income..........
2,591.7
367.7
194.3
3,648.6
1,146.9
383.2
(1,536.1)
(573.6)
(221.0)
823.0
(2,150.1)
(1,513.7)
(425.0)
1,089.9
(in millions
of US$,
except
earnings per
Share and
shares
outstanding)
2014
2015
2015(1)
(in millions of
US$, except
earnings per
Share and
shares
outstanding)
239.3
75.2
25.1
803.6
109.9
86.0
1,205.8
116.8
177.2
79.1
7.7
11.6
(141.0)
(99.3)
(27.8)
71.5
(483.5)
(185.0)
(96.1)
234.9
(655.7)
(276.7)
(183.8)
383.6
(43.0)
(18.2)
(12.1)
25.1
(14.4)
(63.8)
30.0
1.9
-
-
-
655.4
759.2
1,119.9
73.4
234.9
383.6
25.1
(0.6)
(7.3)
(6.2)
(0.4)
(6.1)
(10.2)
(10.0)
42.8
39.3
118.7
7.7
3.7
8.9
0.6
(10.1)
(8.3)
11.3
0.7
2.5
242.1
15.9
(328.0)
(301.4)
(362.8)
(342.0)
(535.1)
(415.1)
(35.1)
(27.2)
(100.4)
(101.5)
(133.3)
111.5
(8.7)
7.4
354.0
417.2
704.8
46.2
133.4
495.1
32.5
54
2012
2013
2014
2014 (1)
Valuation of other
permanent
investments ................
Income before income
tax ..............................
Current income tax .......
Deferred income tax .....
Income tax expense.......
Consolidated net
income for the year ....
Earnings per share (2) ....
(11.3)
11.3
-
342.7
(178.8)
79.6
(99.2)
428.5
(291.8)
201.0
(90.8)
704.8
(456.5)
234.2
(222.3)
243.5
177.8
338.0
122.9
482.4
81.9
2014
2015
2015(1)
(in millions
of US$,
except
earnings per
Share and
shares
outstanding)
-
55
(in millions of
US$, except
earnings per
Share and
shares
outstanding)
-
-
-
46.2
(29.9)
15.3
(14.5)
133.4
(62.8)
11.6
(51.2)
495.1
(179.0)
41.9
(137.1)
32.5
(11.7)
2.7
(9.0)
31.6
5.3
82.2
29.9
357.9
40.9
23.5
2.7
2012
Balance Sheet Data
Cash and cash equivalents ..........
Derivative financial instruments .
Performing loans portfolio:
Consumer loans ......................
Total performing loans
portfolio ..................................
Past due loans portfolio:
Total past due loans portfolio .....
Total loans portfolio ...................
Less:
Allowance for loan losses .......
Loans portfolio (net) ...................
Other accounts receivable ...........
Foreclosed assets (net) ................
Property, machinery and
equipment (net) .......................
Other permanent investments .....
Other assets:
Deferred charges and advanced
payments .............................
Deferred income tax................
Other long term assets.............
Total assets ................................
Liabilities:
Debt securities
Short-term ...............................
Long-term ...............................
other entities:
Short-term ...............................
Long-term ...............................
Income tax payable .................
Sundry creditors and other
accounts payable .....................
Deferred credits and advanced
collections ...............................
Total liabilities...........................
Contributed capital
Capital stock ...............................
Share premium ............................
As of December31,
2013
2014
2014(1)
(in millions
of US$)
As of March 31,
2015
2015(1)
(in millions
(in millions
of Ps.)
of US$)
206.5
21.0
1,009.7
42.2
573.7
856.4
37.6
56.1
1,449.5
1,138.3
95.1
74.7
1,852.6
81.1
1,982.8
178.6
2,767.6
236.7
181.5
15.5
3,068.8
256.7
201.3
16.8
1,933.7
2,161.4
3,004.3
197.0
3,325.5
218.1
20.8
20.8
1,954.5
178.4
178.4
2,339.8
70.2
70.2
3,074.5
4.6
4.6
201.7
84.9
84.9
3,410.4
5.6
5.6
223.7
(56.5)
1,898.0
101.4
13.0
(120.3)
2,219.5
188.3
12.7
(88.1)
2,986.4
211.9
130.6
(5.7)
195.9
13.9
8.5
(88.0)
3,322.4
232.1
158.6
(5.8)
218.0
15.2
10.4
4,249.0
3.3
6,689.0
14.9
9,610.7
14.9
630.5
0.9
10,808.8
14.9
709.1
1.0
381.2
110.7
10.9
6,995.0
267.7
311.7
3.0
10,758.7
406.0
545.8
11.6
15,348.0
26.6
35.8
0.76
1,006.9
512.0
587.8
11.7
18,236.1
33.6
38.6
0.8
1,196.4
1,019.1
3,602.7
4,621.8
1,016.1
5,672.7
6,688.8
166.6
9,975.8
10,142.4
10.9
654.4
665.3
79.6
11,588.0
11,667.6
5.1
760.4
765.5
897.6
149.1
1,046.7
1,735.6
590.9
2,326.5
2,061.7
392.8
2,454.5
135.2
26.0
161.0
2,083.5
638.3
2,721.8
136.7
41.9
178.6
36.5
83.5
100.2
6.5
97.5
6.4
546.5
583.0
611.0
694.5
982.3
1,082.5
64.44
71.0
1,799.6
1,897.1
118.1
124.5
68.6
6,320.1
95.9
9,805.7
133.3
13,812.7
8.7
906.1
156.4
16,442.9
10.3
1,078.8
275.0
125.0
400.0
275.0
125.0
400.0
875.0
125.0
1,000.0
57.4
8.2
65.6
875.0
125.0
1,000.0
57.4
8.2
65.6
56
As of December31,
2013
2014
2012
Earned capital:
Capital reserves...........................
Retained earnings........................
Consolidated net income for
the year ...................................
Total stockholders’ equity ........
Total liabilities and
stockholders’ equity ..............
Off-balance sheet items:
accrued held in trust ................
accrued ....................................
As of March 31,
2015
2015(1)
(in millions
(in millions
of Ps.)
of US$)
2014(1)
(in millions
of US$)
17.1
14.4
29.3
185.7
46.2
6.7
3.0
0.4
70.3
365.0
4.6
23.9
243.4
674.9
338.0
953.0
482.4
1,535.3
31.6
100.7
357.9
1,793.2
23.5
117.6
6,995.0
10,758.7
15,348.0
1,006.9
18,263.1
1,196.4
3,271.0
5,587.0
6,038.4
396.1
7,274.6
477.1
929.9
4,200.9
1,370.7
6,957.7
2,375.4
8,413.8
155.8
551.9
2,126.0
9,400.6
139.3
616.8
As of and for the Year Ended December 31,
2012
2013
2014
Selected Financial Metrics
Total leverage (3) ...........................
Financial leverage(4)
Ratio of non-performing loans(5) ...
Coverage ratio(6)............................
Efficiency ratio(7) ..........................
Operating margin(8) .......................
Net margin(9) .................................
Return on average equity(10) ..........
Return on average assets(11) ..........
equity(12) .....................................
assets(13) ......................................
equity(14) .....................................
assets(1) .......................................
Total stockholders’ equity/total
assets ..........................................
Dividend payout ratio(16) ...............
5.5x
4.5x
0.3%
272.1%
49.4%
48.0%
36.4%
40.7%
4.2%
5.4x
4.5x
1.9% (18)
67.4% (18)
44.6%
46.9%
41.0%
41.5%
3.8%
As of and for the
Three-Month
Period Ended
March 31,
2015
6.3x
5.5x
0.6%
125.5%
49.6%
52.7%
44.3%
38.8%
3.7%
5.8x
4.7x
0.7%
103.7%
35.3%
63.6%
93.3%
21.5%
2.1%
86.0%
40.7%
41.5%
38.8%
4.2%
3.8%
3.7%
40.7%
41.5%
33.9%
4.2%
3.8%
3.2%
9.6%
8.9%
10.0%
9.8%
68.8%
24.6%
29.6%
20.7%
2012
As of December31,
2013
2014
2014(1)
(in
millions
of US$)
8.5%
46.8%
4.6%
As of March 31,
2014
2015
2015(1)
(in
millions
of US$)
243.5
338.0
422.2
27.7
82.2
194.7
12.8
income(17) ......................................
____________________
(1) Translated into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps. 15.2427 per U.S. dollar,
the exchange rate published in the Mexican Federal Official Gazette on March 31, 2015. These convenience translations
should not be construed as representations that the peso amounts actually represent U.S. dollar amounts or could be
converted into U.S. dollars at the specified rate or at all. See “Exchange Rates.”
(2) While consolidated net income for the year increased between 2012 and 2014, earnings per share decreased as a result of an
increase in the number of shares outstanding due to capital increases during such periods that were funded by capitalizing
retained earnings and in the case of a capital increase in 2014, also partly through a capital contribution from our
shareholders. If the effect of the issuance of new shares as a result of these capital increases were not considered, our
earnings per share would have increased during such periods and would have been Ps. 194.7, Ps. 270.4, Ps. 210.0 and Ps.
57
110.1 per share in the years ended December 31, 2012, 2013 and 2014 and the three-month period ended March 31, 2015,
respectively. See “Presentation of Certain Financing and Other Information—Non GAAP Measures”.
During 2015, we recorded a correction of an error of the computation of the weighted average number of common shares to
determine our earnings per share determined under Sofom GAAP for the year ended 2012. This adjustment consisted in an
increase to earnings per share from Ps.88.5 to Ps.177.8. After evaluating the quantitative and qualitative aspects of this
adjustment, we concluded that the prior period financial statements were not materially misstated and, therefore, no
restatement was required.
The table below sets forth the calculation of earnings per share determined under Sofom GAAP and the adjusted earnings
per share. Both metrics are calculated from the consolidated net result of the period; however, adjusted earnings per share is
calculated without taking into account the number of common shares issued to represent increases in our capital stock paid
through the capitalization of retained earnings. Our management uses this measure as an indicator of our operating results
and profitability, and believes that disclosure of adjusted earnings per share can provide useful information to investors in
their evaluation of our operating performance, mainly because if the effect of the issuance of new shares as a result of these
capitalization of retained earnings was not considered, our earnings per share would have increased during such periods.
As of December31,
2012
2013
2014
(in millions of Ps., except EPS and
number of shares)
Earnings per
Share (EPS)
determined
under Sofom
GAAP
Consolidated net
243.4
result .....................
Weighted
average of shares... 1,369,178
EPS under Sofom
GAAP (in Ps.) ......
177.8
Adjusted
Earnings per
Share (Adjusted
EPS)
Consolidated net
243.4
result .....................
Number of
shares
outstanding
without
considering
capitalization of
retained earnings ... 1,250,000
Adjusted EPS (in
Ps.) ....................
194.7
338.0
2,750,000
2014
(in millions
of US$
except EPS
and
number of
shares)
482.4
5,889,726
31.6
5,889,726
As of March 31,
2014
2015
2015
(in millions of Ps., except
(in millions
EPS and number of
of US$
shares)
except EPS
and
number of
shares)
82.2
2,750,000
357.9
8,750,000
23.5
8,750,000
122.9
81.9
5.4
29.9
40.9
2.7
338.0
482.4
31.6
82.2
357.9
23.5
1,250,000
270.4
2,296,575
2,296,575
210.0
13.8
1,250,000
65.8
3,250,000
110.1
3,250,000
7.2
(3) Calculated as total liabilities (excluding securitizations) divided by total stockholders’ equity, as of the same date.
(4) Calculated as total financial debt (excluding securitizations) divided by total stockholders’ equity, as of the same date.
(5) Calculated as non-performing loan portfolio divided by total portfolio, including off-balance sheet items, as of the same
date.
(6) Calculated as allowance for loan losses divided by non-performing loan portfolio, as of the same date
(7) Calculated as operating expenses divided by the sum of the financial margin and net commissions.
(8) Calculated as operating income (excluding other operating income-net and financial intermediation results) divided by the
financial margin.
(9) Calculated as consolidated net income for the period divided by the financial margin.
58
(10) Calculated as consolidated net income for the period divided by the average total stockholders’ equity for the previous two
year period.
(11) Calculated as consolidated net income for the period divided by the average assets for the previous two year period.
(12) Calculated as consolidated net income (multiplied by four in a quarterly period) divided by the average total stockholder’s
equity for the previous two year period.
(13) Calculated as consolidated net income (multiplied by four in a quarterly period) divided by the average assets for the
previous two year period.
(14) Calculated as consolidated net income adjusted for non-recurring items (see note 2 below) divided by the average total
stockholders’ equity for the previous two year period.
(15) Calculated as consolidated net income for the period adjusted for non-recurring items (see note 2 below) divided by the
average assets for the previous two year period.
(16) Calculated as dividends paid in the current period divided by consolidated net income for the previous annual period.
(17) Adjusted consolidated net income determined in accordance with Sofom GAAP, adjusted for the following non-recurring
items net after tax: the sale by us of 25% of the shares of the capital stock of Unifin, Agente de Seguros y Fianzas, S.A. de
C.V. in 2014 for a total amount of Ps. 60.2 million (see “Business – Our Business Lines”), earning as a result of the
repurchase of US$33.4 million of our International Notes during the three-month period ended March 31, 2015 (see
“Business – Indebtedness – International Notes”) and the entering into derivative financial instruments to hedge our
exposure to risks associated with exchange rates for an amount of Ps. 105.7 million. The table below sets forth the
calculation of adjusted consolidated net income. Our management uses this measure as an indicator of our operating results
and profitability, and believes that disclosure of adjusted consolidated net income can provide useful information to
investors in their evaluation of our operating performance, mainly because excludes the effect on non-recurring items.
2012
2013
2014
2014(1)
(in millions
of US$)
determined under Sofom
GAAP .........................................
243.4
338.0
For the Three-Month Period
Ended March 31,
2014
2015
2015
(in millions
of US$)
482.4
31.6
82.2
357.9
23.5
60.2
3.9
-
-
-
Adjusted for:
Sale of Unifin, Agente de
Seguros y Fianzas ........................
Earnings for the repurchase of
the International Notes ................
Valuation for the Derivative
Financial Instruments ..................
income ........................................
-
-
-
-
-
-
-
57.5
3.8
-
-
-
-
-
105.7
6.9
82.2
194.7
12.8
243.4
338.0
422.2
27.7
(18) Includes extraordinary reserves resulting from a Ps. 120.0 million financial factoring account, which was fully recovered in
June 2014.
59
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Financial Statements and the notes
thereto, and the other financial information included elsewhere in this offering memorandum. The financial data
presented herein as of March 31, 2015 and for the three-month periods ended March 31, 2014 and 2015 and as of
and for the years ended December 31, 2012, 2013 and 2014 is stated in Mexican pesos and has been prepared in
accordance with Sofom GAAP, which differs in certain respects from U.S. GAAP. See “Annex A—Summary of
Certain Significant Differences Between Sofom GAAP and U.S. GAAP” for a description of certain differences
between Sofom GAAP and U.S. GAAP as they relate to us. No reconciliation of any of our Financial Statements to
U.S. GAAP has been performed.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those discussed in the forward-looking statements as a result of various
factors, including, without limitation, those set forth in “Forward-Looking Statements” and “Risk Factors” and the
matters set forth in this offering memorandum.
Overview
We specialize in serving SMEs which we believe are largely underserved by banking institutions despite
representing the majority of the economic activity in Mexico. We believe the SME sector will continue expanding
and providing an attractive opportunity for our growth.
per transaction of our financial factoring products ranges from Ps. 500,000 to Ps. 150.0 million, with maturities
between eight to 180 days and 120 days on average, with annual interest rates at the TIIE plus 12.5 to 19.0
percentage points. Our auto loans range from Ps. 50,000 to up to 80.0% of the vehicle’s price, with maturities
between 12 and 60 months and fixed interest rates between 12.0% and 18.0%.
grew at a CAGR of 37.0% and we had an average return on equity of 39.0% during such period and we had a return
on average equity of 38.8% in 2014. As of March 31, 2015, our net loan portfolio increased by Ps. 1,322.8 million
or 11.5% compared to December 31, 2014. The return on average equity adjusted for non-recurring items was
43.9% for the three-month period ended March 31, 2015. Non-performing loans represented 0.7% of our loan
portfolio (including our off-balance sheet accounts) as of March 31, 2015. We believe our growth is the result of
various factors including our geographic coverage and wide distribution network integrated through our
headquarters in Mexico City and eight regional offices, our industry knowledge and know-how, our focus on
development and innovation to meet our customers’ needs, our customer loyalty resulting from our personalized
customer service and our effective origination and collections processes as well as risk mitigation.
60
ended December 31, 2012, 2013 and 2014 and the three-month period ended March 31, 2015, we had consolidated
net income of Ps. 243.4 million (US$16.0 million), Ps. 338.0 million (US$22.2 million), Ps. 482.4 million (US$31.6
2014 and the three-month period ended March 31, 2015, we had operating results of Ps. 354.0 million (US$23.2
million), Ps. 417.2 million (US$27.4 million), Ps. 704.8 million (US$46.2 million) and Ps. 495.1 million (US$32.5
million), respectively. As of March 31, 2015, our total loan portfolio (including off-balance sheet accounts) had a
value of Ps. 12,811.1 million (US$840.5 million). As of March 31, 2015, we had total stockholders’ equity of
Ps. 1,793.2 million (US$117.6 million).
Factors Affecting Our Results of Operations
Our results of operations have been influenced and will continue to be influenced by the following factors:
Mexican Economic Environment
Our business is closely tied to the general economic conditions in Mexico. As a result, our economic
performance and our ability to implement our business strategies may be affected by changes in national economic
conditions, including as a result of changes in the global economy and financial markets that impact Mexico.
In 2012, the global economy was affected by a recession in some regions of the Eurozone and the
uncertainty of the possible exit from the Eurozone of some of its members. The adjustment programs implemented
in countries like Greece, Italy and Spain affected the Eurozone. Emerging markets were affected by slower growth
rates in Brazil and China. In spite of this uncertain global economic performance, according to INEGI, Mexico’s
GDP grew by 3.8% in 2012, with particularly strong growth rates in agricultural and services sectors. In 2012,
headline inflation decreased to 3.6%.
61
While Mexico’s GDP growth decelerated to 1.1% in 2013, GDP growth accelerated to 2.6% in 2014,
according to SHCP, as a result of anticipated improvements in domestic and global economic conditions, including
the approval of the Structural Reforms by the Mexican government.
Effect of Tax Legislation
On December 11, 2013, the Tax Reforms were published in the Mexican Federal Official Gazette, which
became effective as of January 1, 2014. While the corporate income tax rate, which had previously been scheduled
for reduction, remained at 30.0%, the Tax Reforms: (i) resulted in several amendments to corporate tax deductions,
among other things, by eliminating deductions that were previously allowed for related-party payments to certain
foreign entities and limiting tax deductions on salaries paid to employees; (ii) amended the regime applicable to
individual taxpayers in order to extend the tax base by restricting deductions and increasing tax rates; (iii) imposed a
10.0% withholding income tax on dividends paid by the corporation to individuals or foreign residents;
(iv) standardized the value-added tax in all areas of Mexico; (v) required the use of electronic invoices and new
monthly tax reports to be provided to governmental tax authorities; and (vi) imposed a 10.0% income tax payable by
individuals on the sale of stock listed on the BMV. The Tax Reforms also abolished the IETU.
Under the Mexican Income Tax Law (Ley del Impuesto sobre la Renta), the effect of inflation on monetary
assets and liabilities are to be considered as a deduction, therefore decreasing the taxable income. The effect of
inflation on monetary assets and liabilities is estimated taking into account (i) the annual inflation rate recorded and
(ii) the excess of either monetary assets or liabilities. The effect of inflation results in a tax deduction when
monetary assets exceed monetary liabilities. Uncollectable accounts that have an unpaid balance of less than 30,000
UDIs and which have not received a payment within the last year are considered a deduction.
Interest Rate Fluctuations
Interest rate fluctuations in Mexico have a significant effect on our business, financial condition and results.
The following table provides the average interest rate charged by our operating leasing, financial factoring and auto
loans and other lending business lines for the periods indicated:
As of December 31,
2013
2012
Operating Leasing (1)..................................
Financial Factoring (2) ................................
Auto Loans and Other Lending (3) .............
18.25%
TIIE + 13.0%
13.50%
18.0%
TIIE + 12.5%
13.0%
2014
As of March 31,
2015
18.0%
TIIE + 12.5%
13.0%
18.0%
TIIE + 12.5
13.0%
____________________
(1) Interest rate for our operating leasing business line is calculated by subtracting commissions from the gross interest rate.
(2) Annual average interest rate for our financial factoring products.
(3) Annual average interest rate for our auto loans and other lending products.
Funding Sources
We seek to maintain adequate and diverse sources of funding that will secure funds for our operations. Our
sources of funding vary in term, currency and creditor. As of March 31, 2015, our principal sources of funding were
international bonds, securitizations and bank debt, which amounted to Ps. 5,654.6 million, Ps. 6,013.0 million and
Ps. 2,721.8 million (in each case including accrued interest), equivalent to 39.3%, 41.8% and 18.9% of our
indebtedness, respectively.
Lease and Loan Portfolio
Our operating income and profitability is largely dependent upon our lease portfolio size and the number of
transactions in which we enter. The growth of our total operating lease portfolio is a primary driver of the growth of
our net profit. Historically, our operating leasing operations have been the primary source of total loans.
62
As of December 31, 2012, 2013 and 2014 and as of March 31, 2015, our operating lease portfolio,
including our off-balance sheet accounts, represented 69.9%, 79.0%, 76.4% and 77.4%, respectively, of our total
portfolio. As of December 31, 2012, 2013 and 2014 and as of March 31, 2015, our financial factoring portfolio
comprised 19.6%, 12.1%, 11.3% and 10.1%, respectively, of our total portfolio, including our off-balance sheet
accounts. As of December 31, 2012, 2013 and 2014 and as of March 31, 2015, our auto loans and other lending
portfolio represented 9.4%, 8.9%, 12.3% and 12.5%, respectively of our total portfolio (including our off-balance
sheet accounts).
Loan Quality
We prepare our Financial Statements in accordance with Sofom GAAP and assess our past due accounts
receivable on an individual basis. Based on our assessment, we set aside provisions for both our performing and
non-performing loans. We monitor our non-performing loans closely and record an allowance for loan losses if we
determine there is little likelihood of continued payment. For more information on our policies on loan quality, see
“Critical Accounting Policies—Allowances” and “Business—Risk Management.”
The following table sets forth the allowances for our operating leasing, financial factoring and other
lending business lines for the periods indicated:
As of December 31,
2013
2014
(56.9)
(64.2)
(47.2)
(10.1)
(16.2)
(13.8)
(120.3)
(88.1)
2012
Operating Leasing ..................................................
Financial Factoring ................................................
Auto Loans and Other Lending..............................
Total.......................................................................
(56.5)
(56.5)
As of March 31,
2015
(64.1)
(10.1)
(13.8)
(88.0)
Collateral
Increases in the collateral value of assets underlying certain of our operating leases and our ability to
recover these underlying assets result in an increase in the underlying loan quality of our portfolio, as both factors
increase the probability that, in the event of default, most, if not all, of the asset’s market value can be recovered.
Critical Accounting Policies
A summary of our significant accounting policies is included in Note 3 to our Audited Financial Statements
included elsewhere in this offering memorandum. The following policies are the accounting policies that we believe
are the most important to the accurate portrayal of our financial condition and results of operations and that require
management’s most difficult, subjective or complex judgments.
Derivative financial instruments (DFI)
Derivative financial instruments are initially recognized at fair value in the balance sheet as assets and/or
liabilities on the date on which the derivative financial instrument agreement was entered into and are subsequently
re-measured at their fair value. The fair values of DFI are determined based on recognized market prices and when
not traded on a market, they are determined based on valuation techniques accepted in the financial sector.
The method for recognizing the profit or loss of changes in fair value of derivative financial instruments
depends on whether or not they are designated as cash flow hedge, and if so, on the nature of the item being hedged.
The Company’s DFI, although contracted for hedging purposed from an economical perspective, have been
designated as held for trading for accounting purposes since they do not comply with all conditions required by the
accounting criteria. See Note 6 of our Audited Financial Statements.
Valuation effects are recognized in the income statement in the line item “Financial intermediation results”,
except in cases where management designated the instruments as hedging. The “Financial intermediation results”
63
line item recognizes the result generated when a sale of a DFI occurs, impairment loss on financial assets, as well as
the effect of reversal, if any.
Currently the Company maintains the following FDI transactions:
Option contracts
Options are contracts whereby the purchaser acquires the right, but not the obligation, to buy or sell an
underlying asset at a given price on a set date or period. In option contracts involving two parties, the purchaser of
the option pays a premium for the acquisition of this right, and the party issuing or selling chooses who receives
such premium, and in turn acquires an obligation, not a right.
Swaps
Swaps are contracts between two parties, whereby the bilateral obligation to exchange a series of flows for
a given period and pre-established dates are set. Currently, the Company maintains interest rate swaps and foreign
exchange swaps.
Interest rate swaps are those that are intended to hedge or mitigate the company’s exposure to the potential
volatility on floating interest rates that may result from its contracted-for debt. Foreign exchange swaps are those
that are intended to hedge or mitigate the company’s exposure of a recognized asset or liability set in foreign
currency.
Loans portfolio
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. The revenues obtained under operating leases (net of any discounts) are recorded in
the statement of income based on the straight-line method over the lease term.
The lease loan portfolio corresponds to rental receivables in accordance in the terms of the agreements.
Lease rentals paid in advance by the borrower (lessee) are recorded in the line item “Deferred credits and
advanced collections” in the balance sheet and released to the statement of income as the monthly payments come
due.
Commissions collected for the initial granting of operating leases are recorded as a deferred credit, which is
recognized based on the accrual of lease payments against income for the year under the line item interest income.
Lease payments received from clients as guarantee deposits are recorded as accounts payable and returned
to clients upon maturity of the respective lease agreements.
As of January 1, 2014, the balances of the operating leases loan portfolio are recognized as past due at 31
calendar days of default by the outstanding amount to be received. As of December 31, 2013, the balances of the
operating leases loan portfolio were recognized as past due at 91 calendar days of default. As of December 31, 2014,
the operating leases loan portfolio balance that was more than 91 calendar days past due was Ps. 47.6 million.
When lease payments not collected exceed three lease payments as per the payment schedule, accrual of
lease payments past due not collected is suspended. As long as a rental is classified as part of the past due portfolio,
control over lease payments is kept in memorandum accounts.
The Company reclassifies to the performing loans portfolio any past due operating lease rentals balances for
which unpaid balances are fully recovered (principal and interest, among other payments), or when sustained
payments are made on restructured or renovated loan balances.
64
An operating lease loan is not considered to be restructured when the full amount of lease payments due has
been made at the realization date and where any of the following original rental conditions are modified:
i)
ii)
iii)
iv)
Guarantees: only when they are extended or replaced by others of better quality.
Interest rate: when the agreed interest rate is improved.
Currency: provided that the rate corresponding to the new currency is applied.
Date of payment: only when the change does not involve exceeding or modifying the periodicity of
payments. In no case the change in payment date allows parties to omit any payment in a given period.
Costs and expenses associated with the granting of an operating lease are recognized as a deferred charge
and are amortized over the lease term and must be recorded in the income statement as the lease income is
recognized.
Financial factoring
Financial factoring operations are recorded at nominal value: 90% of the account received as financial
factoring is paid in advance and the remaining 10% is considered an amount under guarantee. The maximum term of
an account received under financial factoring is 120 days.
The recognition of interest on financial factoring operations with a guarantee is determined based on the
value of the portfolio of accounts received less the guarantee, while interest on financial factoring operations with no
guarantees is recognized on the total value of the portfolio of accounts received. Such interest is recorded under the
line item interest income.
The unpaid balances of the financial factoring portfolio are recorded as a past due portfolio when there is
evidence that the borrower has filed for bankruptcy in accordance with the Mexican Bankruptcy Law, or when the
installments have not been covered in full at the originally agreed term.
The unpaid past due balance of the financial factoring portfolio for which unpaid balances are fully
recovered or where a restructured or renewed portfolio complies with sustained payments, is reclassified to the
performing loans portfolio.
Commissions collected on initial granting of factoring transactions and those recognized after a transaction
is made are recognized as interest income when they are incurred.
Costs and expenses associated with a financial factoring transaction are recognized as interest expenses in
the same accounting period in which the commission income is recognized.
Auto loans and other lending
Performing or renewed loans represent the amounts actually given to borrowers and the accrued interest, in
accordance with the respective loan payment schedule.
Loans are offered based on the analysis of the financial situation of the borrowers, the economic feasibility
of investment projects and other general features established in the Company's internal manuals and policies.
In accordance with the Mexican Bankruptcy Law, the unpaid balances of loans are recorded as a past due
portfolio when there is evidence that the borrower has filed for bankruptcy. Even if the borrower that has filed for
bankruptcy continues to make payments, amounts are considered past due if its installments have not been paid in
full pursuant to the original terms agreed to, taken into consideration the following:
i)
ii)
If the pending payments consist of loans whereby the principal and interest are payable in a lump sum
at maturity and 30 or more calendar days have elapsed from the payment date.
If the pending payments relate to loans whereby the principal is to be covered in a lump sum at
maturity and interest is payable periodically, and 90 or more calendar days have elapsed since the
65
iii)
respective interest payment have not been made, or the payment of principal is 30 calendar days or
more past due.
If pending payment relate to loans with periodic partial payments of principal and interest and those are
90 calendar days or more past due.
Overdue loans that are restructured or renewed remain in the past due portfolio as long as there is no
evidence of sustained payment as established in the accounting criteria. Additionally, loans that establish a single
payment of the principal at maturity and payment of interest in periodic installments, as well as loans that establish a
single payment of the principal and interest payable at maturity in a lump sum, that are restructured over the term of
the loan or that are renewed at any moment, are considered to be part of the past due portfolio.
Loans that are originated as revolving loans, that are restructured or renewed at any given time, are
considered to be performing only when the borrower has paid the entirety of interest accrued, the loan records show
no past due billing periods, and there are elements that justify the borrower’s solvency.
A loan is not considered to be restructured when the full amount of principal and interest payments due has
been made at the realization date and where only one or several of the following original loan conditions are
modified:
i)
ii)
iii)
iv)
Guarantees: only when they imply the extension or replacement for others of better quality.
Interest rate: when the agreed interest rate is improved.
Currency: provided that the rate corresponding to the new currency is applied.
Date of payment: only when the change does not imply exceeding or modifying the periodicity of
payments. In no case the change in payment date allows parties to omit payment in a given period.
When a loan is considered to be past due, it stops accruing interest, even in the case of loans which, for
contractual purposes, capitalize interest on the amount of the debt. As long as the loan is classified as part of the
past due portfolio, the records of interest accrued is kept in memorandum accounts. For interest accrued and not
collected on such loans, the Company sets up an allowance for an equivalent amount when the loans are transferred
to the past due portfolio. The allowance is canceled when there is evidence of sustained payment. If past due
interest is collected, it is recognized directly in the income statement of the year.
Past due portfolio balances where unpaid balances are fully recovered (principal and interest, among other
balances), or where sustained payments are made on restructured or renewed loan balances, are reclassified to the
performing portfolio in accordance with accounting criteria.
Commissions collected when a loan is initially granted are recorded as a deferred charge, and are amortized
against income for the year as interest income under the straight line method over the life of the loan, except for
commissions arising from revolving loans that must be amortized over a 12-month period. Commissions received
after a loan is granted are recognized in the statement of income.
Costs and expenses associated with granting loans are recognized as a deferred credit, which is amortized
against net income as an interest expense in the same accounting period in which commissions collected are
recognized.
Allowance for loan losses
The operating lease, financial factoring and commercial loan portfolio, excluding loans made to federal and
municipal entities, is rated based on a general methodology where risk levels are established for each type of loan
and applied to individual monthly debit balances, whose balance represents at least an amount equivalent to 4
million investment units (“UDI” by its acronym in Spanish) at the rating date. Loans with balances below that limit
at the rating date are allocated with default probabilities in a parametric way, based on the number of defaults
observed from the date of the first event of default and up to the rating date.
66
Commercial loans made to federal and municipal entities are rated applying the general methodology for
each type of loan based on an expected loss model, whereby losses for the following twelve months are based on the
best estimate of the credit information prepared by management, taking into consideration the likelihood of default
and the severity of loss. The portfolio is then classified into different groups and forecasts of different variables are
made in order to estimate the likelihood of default.
In order to rate its lease, factoring and straight loan portfolio below 4 million UDI, the Company rates and
tracks into its accounting records all preventive loan loss reserves with figures at the last day of each month, in order
to consider the probability of default.
The Company periodically evaluates whether a past due loan must remain in the balance sheet or be written
off instead. In this case, the balance is written off by canceling the unpaid balance of the loan against the allowance
for loan losses. In the event that the loan to be written off exceeds the amount of its allowance, the estimation for the
allowance must be increased up to the amount of the difference.
Amounts recovered associated with written-off loans or loans eliminated in the balance sheet are recorded
in the income statement the year.
Pardons, quitclaims, rebates and discounts, either partial or total, are recorded with a charge to the
allowance for loan losses. In case that the amount of those items exceeds the balance of the associated allowance,
the Company sets up an allowance for up to the amount of the difference.
The most recent credit portfolio rating was performed on December 31, 2014 and we consider that the
resulting allowance is sufficient to absorb portfolio loan risk losses.
Debt securities
The Company issued long-term debt instruments to generate working capital through Senior Notes and a
securitization vehicle that holds the collection rights of the corresponding operating lease loan portfolio, which can
be done directly or through a trust. All incurred issuance costs related to debt securities are recorded under the other
assets line item as deferred charges, and are recognized in the statement of income as interest expenses using the
straight-line method over the term of each instrument.
Securitization
Securitization refers to a transaction whereby certain assets are transferred to a vehicle created for that
purpose (usually a trust) to issue debt securities to be placed with public and private investors. The securitizations
made by the Company failed to meet the conditions set forth in the accounting criteria to qualify as a transfer of
ownership.
Under a financing securitization, the seller records the financing but not the outflow of assets from the
balance sheet. Yields generated by financial assets (collection rights) under securitization are recorded in the
statement of income.
Memorandum accounts (unaudited)
The Company maintains memorandum records of future collection rights off-balance sheet derived from
operating lease agreements, classified as lease rentals to be accrued in a trust (collection rights transferred to a trust)
and other rentals to be accrued (the Company’s own portfolio).
Operating Segments
Sofom GAAP requires an entity to report financial and descriptive information about its reportable
segments, which are its operating segments or certain aggregations of its operating segments that meet a specified
criteria.
67
For management and financial reporting purposes, as of and for each of the years ended December 31,
2012, 2013 and 2014 and as of March 31, 2015 and for each of the three-month periods ended March 31, 2014 and
2015, we were organized into the following three business segments:
•
operating leases;
•
financial factoring; and
•
other lending.
The following tables show the main revenue and expense items for each of our business segments for the
years ended December 31, 2012, 2013 and 2014 and the three-month period ended March 31, 2015:
Operating lease income ....................
Interest income .................................
Other lease benefits ..........................
Depreciation of assets under
operating lease ..............................
Interest expense ................................
Other lease expenses .........................
Allowance for loan losses .................
Commissions and fees paid - net ......
Other operating income ....................
Financial intermediation results ........
Interest income .................................
operating lease ..............................
Operating
Leasing
1,842.7
105.9
126.8
For the Year Ended December 31, 2012
Financial
Auto Loans and
Factoring
Other Lending
188.2
61.8
-
(1,050.1)
(267.9)
(153.3)
(2.7)
(7.0)
40.1
(10.1)
624.4
Operating
Leasing
2,591.7
85.0
194.3
(123.1)
(7.7)
57.4
Total
1,842.7
355.9
126.8
(61.2)
(4.0)
0.9
2.7
0.2
(1,050.1)
(452.2)
(153.3)
(14.4)
(6.1)
42.8
(10.1)
682.0
Financial
Auto Loans and
Factoring
Other Lending
182.2
100.5
-
Total
2,591.7
367.7
194.3
(1,536.1)
(385.0)
(221.0)
(25.4)
(12.0)
36.8
(8.3)
720.0
(104.5)
(30.2)
3.1
50.6
68
(84.1)
(8.2)
(1.3)
2.5
9.4
(1,536.1)
(573.6)
(221.0)
(63.8)
(10.2)
39.3
(8.3)
780.0
Interest income .................................
operating lease ..............................
Interest income .................................
operating lease ..............................
Operating
Leasing
3,648.6
643.0
383.2
Financial
Auto Loans and
Factoring
Other Lending
240.9
263.0
-
(2,150.1)
(1,055.2)
(425.0)
(10.0)
(30.0)
128.5
11.3
1,144.3
Operating
Leasing
1,205.8
41.9
177.2
(219.2)
40.0
61.7
(239.3)
20.0
(9.8)
33.9
For the Three Months Ended March 31, 2015
Financial
Auto Loans and
Factoring
Other Lending
46.9
28.0
-
Total
3,648.6
1,146.9
383.2
(2,150.1)
(1,513.7)
(425.0)
30.0
(10.0)
118.7
11.3
1,239.9
Total
1,205.8
116.8
177.2
(655.7)
(214.3)
(37.7)
(24.7)
(183.8)
(16.7)
10.5
7.3
1.6
242.1
603.8
9.2
15.4
For more information regarding the percentage that each of our business lines represents of our total
portfolio and revenue, see “Business – Our Business Lines.”
(655.7)
(276.7)
(183.8)
(6.2)
8.9
242.1
628.4
Results of Operations
The following is a brief description of our results of operation for the periods indicated.
Revenue. Our revenue includes:
•
revenue from operating leasing, which includes: (i) rentals, (ii) commissions earned from a fixed fee
charged to customers per transaction, (iii) other income from insurance covering our leasing
transactions and (iv) other leasing benefits;
•
revenue from financial factoring, which includes: (i) amounts earned by us resulting from the
difference between the face amount and the discount purchase price paid by us for the accounts
receivable that we purchase under our financial factoring segment (the price differential), (ii) interest
earned as a result of delayed payments by the accounts receivable debtor and (iii) other income from
the payment of provisioned loans and expenses incurred in financial factoring transactions which are
charged to the customer; and
•
revenue from auto loans and other lending, which includes: (i) interest earned, (ii) commissions earned
from a fixed fee charged to customers per transaction and (iii) other income from the payment of
provisioned loans and insurance covering our auto financing loans.
69
Financial margin, adjusted for credit risk. Our financial margin, adjusted for credit risk, includes:
•
financial margin, adjusted for credit risk, from leasing, which includes revenue from leasing less:
(i) depreciation, (ii) interest expense, (iii) allowances and (iv) other leasing expenses;
•
financial margin, adjusted for credit risk, from financial factoring, which includes revenue from
financial factoring less: (i) interest expense and (ii) allowances; and
•
financial margin, adjusted for credit risk, from auto loans and other lending, which includes revenue
from auto loans and other lending less: (i) interest expense and (ii) allowances.
Administrative and promotional expenses. Our administrative and promotional expenses are primarily
composed of staffing agency fees, third party advisor and consulting services, leases and insurance, overhead and
other expenses.
Commissions and fees paid, net. Our commissions and fees, net, include: (i) commissions earned from a
fixed fee charged to customers for each financial factoring transaction (including fees charged to open or renew an
existing financial factoring credit line) and (ii) commissions paid for bank and other types of loans.
The following financial information has been derived from our Unaudited Interim Financial Statements
included elsewhere in this offering memorandum.
For the Three-Month Period Ended
March 31,
Percentage Change
2014
2015
2015 vs. 2014
(in millions of Ps., except for percentages)
Operating lease income ...............................
Interest income ............................................
Other lease benefits .....................................
Depreciation of assets under operating
lease .........................................................
Interest expense ...........................................
Other lease expenses ....................................
Financial margin ..........................................
Allowance for loan losses ............................
Financial margin adjusted for credit risk .....
Commissions and fees paid - net .................
Other operating income - net .......................
Financial intermediation results ...................
Administrative and promotional expenses ...
Operating income ........................................
Income before income taxes ........................
Income tax expense .....................................
Consolidated net income .............................
803.6
109.9
86.0
1,205.8
116.8
177.2
50.0%
6.3%
106.1%
(483.5)
(185.0)
(96.1)
234.9
234.9
(7.3)
3.7
2.5
(100.4)
(101.5)
133.4
133.4
(51.2)
82.2
(655.7)
(276.7)
(183.8)
383.6
383.6
(6.2)
8.9
242.1
(133.3)
111.5
495.1
495.1
(137.1)
357.9
35.6%
49.6%
91.3%
63.3%
63.3%
(15.1)%
140.5%
9,584.0%
32.8%
(209.9)%
271.1%
271.1%
167.8%
335.6%
70
The following financial information has been derived from our Audited Financial Statements included
elsewhere in this offering memorandum.
Percentage Change
2013 vs.
2014 vs.
2013
2014
2012
2013
2012
Operating lease income ...............................
Interest income ............................................
Other lease benefits .....................................
Depreciation of assets under operating
lease .........................................................
Interest expense ...........................................
Other lease expenses ....................................
Financial margin ..........................................
Allowance for loan losses ............................
Financial margin adjusted for credit risk .....
Commissions and fees paid - net .................
Other operating income - net .......................
Financial intermediation results ...................
Administrative and promotional expenses ...
Operating income ........................................
Other permanent investments ......................
Income before income taxes ........................
Income tax expense .....................................
Consolidated net income for the year ..........
1,842.7
355.9
126.8
2,591.7
367.7
194.3
3,648.6
1,146.9
383.2
(1,050.1)
(452.2)
(153.3)
669.8
(14.4)
655.4
(6.1)
42.8
(10.1)
(328.0)
(301.4)
354.0
(11.3)
342.7
(99.2)
243.4
(1,536.1)
(573.6)
(221.0)
823.0
(63.8)
759.2
(10.2)
39.3
(8.3)
(362.8)
(342.0)
417.2
11.3
428.5
(90.8)
338.0
(2,150.1)
(1,513.7)
(425.0)
1,089.9
30.0
1,119.9
(10.0)
118.7
11.3
(535.1)
(415.1)
704.8
704.8
(222.3)
482.4
40.7%
3.3%
53.2%
40.8%
211.9%
97.2%
(46.3%)
(26.9%)
(44.2%)
22.9%
343.1%
15.9%
67.2%
(8.2%)
(17.8%)
10.6%
13.5%
17.9%
200.0%
25.0%
(8.5%)
38.7%
(40.0%)
(163.9%)
(92.3%)
32.4%
(147.0%)
47.5%
(2.0%)
202.0%
236.1%
47.5%
21.4%
68.9%
(100.0%)
64.5%
144.9%
42.9%
Three-Month Period Ended March 31, 2015 Compared to the Three-Month Period Ended March 31, 2014
Operating Lease Income
Operating lease income, which consists primarily of operating lease rent payments, increased by Ps. 402.2
million, or 50.0%, to Ps. 1,205.8 million for the three-month period ended March 31, 2015 from Ps. 803.6 million
for the same period in 2014. This increase was primarily due to the growth of our leasing portfolio as a result of
increased demand, organic growth and an increase in our distribution network and sales team.
Interest Income
Interest income increased by Ps. 6.9 million, or 6.3%, to Ps. 116.8 million for the three-month period ended
March 31, 2015 from Ps. 109.9 million for the same period in 2014. This increase was primarily due to growth in
our financial factoring business line.
The table below sets forth a breakdown of our interest income by segment for the periods indicated.
Three Months Ended March 31,
Percent of
Percent of
Interest Income
2015
Interest Income
2014
Operating Leasing..................................
Financial Factoring ................................
Other Lending ........................................
Total.......................................................
42.1
38.0
29.8
109.9
38.3%
34.6%
27.09%
100.0%
71
41.9
46.9
28.0
116.8
35.9%
40.1%
24.0%
100.0%
Other Lease Benefits
Other lease benefits, which consists primarily of the sale of fixed assets at the end of the lease period,
increased by Ps. 91.2 million, or 106.1%, to Ps. 177.2 million for the three-month period ended March 31, 2015
from Ps. 86.0 million for the same period in 2014. This increase was primarily due to termination of certain leasing
contracts in the ordinary course of business.
Depreciation of Assets under Operating Lease
Depreciation of assets under operating lease increased by Ps. 172.2 million, or 35.6%, to Ps. 655.7 million
for the three-month period ended March 31, 2015 from Ps. 483.5 million for the same period in 2014. This increase
was directly related to the growth of depreciable assets held as a result of the growth in our leasing operations as
discussed above.
Interest Expense
Interest expense increased by Ps. 91.7 million, or 49.6%, to Ps. 276.7 million for the three-month period
ended March 31, 2015 from Ps. 185.0 million for the same period in 2014. This increase was primarily due to the
derivative financial instruments that we entered into to hedge our International Notes in connection with the
issuance of such notes in July 2014.
The table below sets forth a breakdown of our interest expense by segment for the periods indicated.
Three Months Ended March 31,
Percent of
Interest Expense
2015
2014
Percent of
Interest Expense
Other Lending ........................................
Total.......................................................
141.8
22.1
21.1
185.0
76.6%
12.0%
11.4%
100.0%
214.3
37.7
24.7
276.7
77.5%
13.6%
8.9%
100.0%
Other Lease Expenses
Other lease expenses, which consist primarily of cost of sales of fixed assets, increased by Ps. 87.7 million,
or 91.3%, to Ps. 183.8 million for the three-month period ended March 31, 2015 from Ps. 96.1 million for the same
period in 2014. This increase was primarily due to the growth of our operations.
Financial Margin
Financial margin increased by Ps. 148.7 million, or 63.3%, to Ps. 383.6 million for the three-month period
ended March 31, 2015 from Ps. 234.9 million for the same period in 2014. This increase was primarily due to the
factors described above.
Financial Margin Adjusted for Credit Risk
Financial margin adjusted for credit risk increased by Ps. 148.7 million, or 63.3%, to Ps. 383.6 million for
the three-month period ended March 31, 2015 from Ps. 234.9 million for the same period in 2014. This increase
was primarily due to the factors described above.
Commissions and Fees Paid – Net
Commissions and fees paid – net decreased by Ps. 1.1 million, or 15.1%, to Ps. 6.1 million for the threemonth period ended March 31, 2015 from Ps. 7.3 million for the same period in 2014. This decrease was primarily
due to a decrease in commissions we pay in connection with the availability of our credit lines.
72
Other Operating Income – Net
Other operating income – net, which consists primarily of recovery of insurance expenses, property sales,
allowance for impairment value and other income, increased by Ps. 5.2 million, or 140.5%, to Ps. 8.9 million for the
three-month period ended March 31, 2015 from Ps. 3.7 million for the same period in 2014. This increase was
primarily due to commissions that we received from insurance companies due to the volume of insurance policies
we entered into in connection with insuring the assets underlying our operating leases.
Financial Intermediation Results
Financial intermediation results, which consist primarily of the mark-to-market valuation of our crosscurrency swaps and exchange rate valuations of such swaps, increased by Ps. 239.6 million, or 9,584.0%, to Ps.
242.1 million for the three-month period ended March 31, 2015 from Ps. 2.5 million for the same period in 2014.
This increase was primarily due to the derivative financial instruments that we entered into to hedge our
International Notes in connection with the issuance of such notes in July 2014.
Administrative and Promotional Expenses
Administrative and promotional expenses increased by Ps. 32.9 million, or 32.8%, to Ps. 133.3 million for
the three-month period ended March 31, 2015 from Ps. 100.4 million for the same period in 2014. This increase
was primarily due to the growth of our work force, the leasing of our new corporate offices and the opening of new
regional offices. However, as a percentage of revenue, administrative and promotional expenses decreased by
15.7% from 10.1% for the three-month period ended March 31, 2014 to 8.9% for the three-month period ended
March 31, 2015.
Operating Income
Operating income increased by Ps. 361.7 million, or 271.1%, to Ps. 495.1 million for the three-month
period ended March 31, 2015 from Ps. 133.4 million for the same period in 2014. This increase was primarily due
to the factors described above and as a result of extraordinary income of Ps. 82.2 million in connection with our
repurchase of the US$33.4 million International Notes.
Income Tax Expense
Income tax expense increased by Ps. 85.9 million, or 167.8%, to Ps. 137.1 million for the three-month
period ended March 31, 2015 from Ps. 51.2 million for the same period in 2014. This increase was primarily due to
(i) the growth of our operations, (ii) the effect of deffered taxes resulting mainly from the difference between our tax
depreciation rate of 10.0% and our accounting depreciation rate of 20.0% with respect to equipment and machinery,
(iii) the annual inflation adjustment and (iv) the extraordinary income resulting from our repurchase of the
International Notes mentioned above.
Consolidated net income increased by Ps. 275.8 million, or 335.6%, to Ps. 357.9 million for the threemonth period ended March 31, 2015 from Ps. 82.2 million for the same period in 2014. This increase was primarily
due to the factors described above.
Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013
Operating lease income, which consists primarily of operating lease rent payments, increased by Ps.
1,056.9 million, or 40.8%, to Ps. 3,648.6 million for the year ended December 31, 2014 from Ps. 2,591.7 million for
the year ended December 31, 2013. This increase was primarily due to the growth of our leasing portfolio as a result
of increased demand, our organic growth and an increase to our distribution network and sales team.
73
Interest Income
Interest income increased by Ps. 779.2 million, or 211.9%, to Ps. 1,146.9 million for the year ended
December 31, 2014 from Ps. 367.7 million for the year ended December 31, 2013. This increase was primarily due
to the growth of our portfolio, as well as the recognition of an exchange rate gain in connection with the issuance of
our International Notes and the execution of related financial derivative hedges with respect to our International
Notes.
The table below sets forth a breakdown of our interest income by segment for the years indicated.
Percent of
Percent of
Interest Income
2014
Interest Income
2013
Other Lending ........................................
Total.......................................................
85.0
182.2
100.5
367.7
23.1%
49.6%
27.3%
100.0%
643.0
240.9
263.0
1,146.9
56.1%
21.0%
22.9%
100.0%
Other lease benefits, which consists primarily of the sale of fixed assets at the end of the lease period,
increased by Ps. 188.9 million, or 97.2%, to Ps. 383.2 million for the year ended December 31, 2014 from Ps. 194.3
million for the year ended December 31, 2013. This increase was primarily due to the termination of certain leasing
contracts in the ordinary course of business and the sale of the underlying assets.
Depreciation of assets under operating lease increased by Ps. 614.0 million, or 40.0%, to Ps. 2,150.1
million for the year ended December 31, 2014 from Ps. 1,536.1 million for the year ended December 31, 2013. This
increase was directly related to the growth of depreciable assets held as a result of the growth in our leasing
operations as discussed above.
Interest Expense
Interest expense increased by Ps. 940.1 million, or 163.9%, to Ps. 1,513.7 million for the year ended
to the issuance of our International Notes and the increase in our indebtedness to support our growth, as well as the
exchange rate loss generated as a result of the issuance of our International Notes.
The table below sets forth a breakdown of our interest expense by segment for the years indicated.
Percent of
Interest Expense
2014
2013
Percent of
Interest Expense
Operating Lease .....................................
Auto Loans and Other Lending .............
Total.......................................................
385.0
104.5
84.1
573.6
67.1%
18.2%
14.7%
100.0%
74
1,055.2
219.2
239.3
1,513.7
69.7%
14.5%
15.8%
100.0%
Other lease expenses, which consist primarily of cost of sales of fixed assets, increased by Ps. 204.0
million, or 92.3%, to Ps. 425.0 million for the year ended December 31, 2014 from Ps. 221.0 million for the year
ended December 31, 2013. This increase was primarily due to the growth of our operations.
Financial Margin
Financial margin increased by Ps. 266.9 million, or 32.4%, to Ps. 1,089.9 million for the year ended
to the factors described above.
Allowance for Loan Losses
Allowance for loan losses for the year ended December 31, 2014 decreased by Ps. 30 million as a result of
the recovery of non-performing financial factoring portfolio accounts in 2014 and as a result of the portfolio
calculation carried out in terms of Sofom GAAP.
Financial margin adjusted for credit risk increased by Ps. 360.7 million, or 47.5%, to Ps. 1,119.9 million for
the year ended December 31, 2014 from Ps. 759.2 million for the year ended December 31, 2013. This increase was
primarily due to the factors described above.
Commissions and fees paid – net decreased by Ps. 0.2 million, or 2.0%, to Ps. 10.0 million for the year
ended December 31, 2014 from Ps. 10.2 million for the year ended December 31, 2013. This decrease was
primarily due to a decrease in the fees we pay in connection with the availability of our lines of credit.
allowance for impairment value and other income, increased by Ps. 79.4 million, or 202.0%, to Ps. 118.7 million for
primarily due to the sale of 25.0% of the capital stock of Unifin, Agente de Seguros y de Fianzas, S.A. de C.V. to an
unrelated third party for a total amount of Ps. 88.2 million of extraordinary income.
Financial intermediation results, which consist primarily of the mark-to-market valuation of our crosscurrency swaps and exchange rate valuations of such swaps, increased by Ps. 19.6 million, or 236.1%, to Ps. 11.3
million for the year ended December 31, 2014 from a loss of Ps. 8.3 million for the year ended December 31, 2013.
This increase was primarily due to an increase in the valuation at the end of the period of our interest swap
instruments used to hedge our International Notes and options.
primarily due to the growth of our labor force and the opening of new regional offices. However, as a percentage of
our revenue, our administrative and promotional expenses decreased by 0.19% from 11.50% for the year ended
December 31, 2013 to 11.31% for the year ended December 31, 2014.
75
Operating Income
Operating income increased by Ps. 287.6 million, or 68.9%, to Ps. 704.8 million for the year ended
Valuation of other Permanent Investments
Valuation of other permanent investments decreased by Ps. 11.3 million, or 100.0%, to Ps. 0.0 for the year
ended December 31, 2014 from Ps. 11.3 million for the year ended December 31, 2013. This decrease was due to
the reversal of an impairment allowance in 2013 that did not occur in 2014.
Income Tax Expense
Income tax expense increased by Ps. 131.5 million, or 144.8%, to Ps. 222.3 million for the year ended
December 31, 2014 from Ps. 90.8 million for the year ended December 31, 2013. This increase was primarily due to
the growth of our operations and to the effect of deferred taxes resulting mainly from the difference between our tax
depreciation rate of 10.0% and our accounting depreciation rate of 20.0% with respect to equipment and machinery.
Our effective income tax rate increased from 21.2% in 2013 to 31.6% in 2014.
Consolidated Net Income for the Year
Consolidated net income for the year increased by Ps. 144.8 million, or 42.9%, to Ps. 482.4 million for the
year ended December 31, 2014 from Ps. 338.0 million for the year ended December 31, 2013. This increase was
Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012
Operating lease income, which consists primarily of operating lease rent payments, increased by Ps. 749.0
million, or 40.7%, to Ps. 2,591.7 million for the year ended December 31, 2013 from Ps. 1,842.7 million for the year
ended December 31, 2012. This increase was primarily due to the growth of our leasing portfolio as a result of the
opening of three new regional offices located in Guadalajara, Cancún and Puebla and the growth of our promotional
teams in the Mexico City area.
Interest Income
Interest income increased by Ps. 11.8 million, or 3.3%, to Ps. 367.7 million for the year ended
December 31, 2013 from Ps. 355.9 million for the year ended December 31, 2012. This change was due to the
growth of our financial factoring operations.
The table below sets forth a breakdown of our interest income by segment for the years indicated.
Percent of
Interest
Income
2013
2012
Other Lending ........................................
Total.......................................................
105.9
188.2
61.8
355.9
29.8%
52.9%
17.3%
100.0%
76
85.0
182.2
100.5
367.7
Percent of
Interest
Income
23.1%
49.6%
27.3%
100.0%
Other lease benefits, which consist primarily of the sale of fixed assets, increased by Ps. 67.5 million, or
53.2%, to Ps. 194.3 million for the year ended December 31, 2013 from Ps. 126.8 million for the year ended
December 31, 2012. This increase was primarily due to the termination of certain lease contracts in the ordinary
course of business.
Depreciation of assets under operating lease increased by Ps. 486.0 million, or 46.3%, to Ps. 1,536.1
million for the year ended December 31, 2013 from Ps. 1,050.1 million for the year ended December 31, 2012. This
increase is directly related to the growth of our depreciable assets held in conjunction with our growing leasing
portfolio, as described above.
Interest Expense
Interest expense increased by Ps. 121.4 million, or 26.9%, to Ps. 573.6 million for the year ended
to the increase of our financial liabilities as a result of the growth of our business.
The table below sets forth a breakdown of our interest expense by segment for the years indicated.
Percent of
Interest
Expense
2013
2012
Percent of
Interest
Expense
Operating Lease .....................................
Auto Loans and Other Lending .............
Total.......................................................
267.9
123.1
61.2
452.2
59.2%
27.2%
13.6%
100.0%
385.0
104.5
84.1
573.6
67.1%
18.2%
14.7%
100.0%
Other lease expenses, which consist primarily of cost of sales of fixed assets, increased by Ps. 67.7 million,
or 44.2%, to Ps. 221.0 million for the year ended December 31, 2013 from Ps. 153.3 million for the year ended
December 31, 2012. This increase was primarily due to the termination of certain lease contracts in the ordinary
course of business.
Financial Margin
Financial margin increased by Ps. 153.3 million, or 22.9%, to Ps. 823.0 million for the year ended
Allowance for loan losses increased by Ps. 49.4 million, or 343.1%, to Ps. 63.8 million for the year ended
December 31, 2013 from Ps. 14.4 million for the year ended December 31, 2012. This increase was primarily due to
a default by one of our financial factoring customers.
77
Financial margin adjusted for credit risk increased by Ps. 103.8 million, or 15.9%, to Ps. 759.2 million for
Commissions and fees paid – net increased by Ps. 4.1 million, or 67.2%, to Ps. 10.2 million for the year
ended December 31, 2013 from Ps. 6.1 million for the year ended December 31, 2012. This increase was primarily
due to the growth of our operations as described above.
allowance for impairment value and other income, decreased by Ps. 3.5 million, or 8.2%, to Ps. 39.3 million for the
year ended December 31, 2013 from Ps. 42.8 million for the year ended December 31, 2012. This decrease was
primarily due to gains in 2012 from the sale of certain of our assets not related to our business that did not occur in
2013.
Financial intermediation results increased by Ps. 1.8 million, or 17.8%, to a loss of Ps. 8.3 million for the
year ended December 31, 2014 from a loss of Ps. 10.1 million for the year ended December 31, 2012. This increase
was primarily due to the mark-to-market of the valuations of our interest rate caps used for hedging certain
securitizations.
primarily due to the growth of our work force and the opening of new regional offices. However, as a percentage of
our revenues, our administrative and promotional expenses decreased by 2.6% from 14.1% for the year ended
December 31, 2012 to 11.5% for the year ended December 31, 2013.
Operating Income
Operating income increased by Ps. 63.2 million, or 17.9%, to Ps. 417.2 million for the year ended
Valuation of Other Permanent Investments
Valuation of other permanent investments increased by Ps. 22.6 million, or 200.0%, to Ps. 11.3 million for
the year ended December 31, 2013 from a loss of Ps. 11.3 million for the year ended December 31, 2012. This
increase was due to the recovery of the value of an equity investment that we had in Cabos Marinos del Sureste,
S.A. de C.V. for which we had created an impairment allowance in the full amount of the investment in 2012.
However, in 2013 we reversed the impairment allowance as a result of an agreement entered into in 2013 under
which we will receive a payment of US$2.5 million.
Income Tax Expense
Income tax expense decreased by Ps. 8.4 million, or 8.5%, to Ps. 90.8 million for the year ended
December 31, 2013 from Ps. 99.2 million for the year ended December 31, 2012. This decrease was primarily due
78
to a decrease in the deferred tax provision in 2013. Our effective income tax rate decreased from 28.95% in 2012 to
21.17% in 2013.
Consolidated Net Income for the Year
Consolidated net income for the year increased by Ps. 94.2 million, or 38.7%, to Ps. 338.0 million for the
year ended December 31, 2013 from Ps. 243.5 million for the year ended December 31, 2012. This increase was
Liquidity and Capital Resources
General
Our treasury aims to provide the necessary resources to meet our working capital requirements. Our
principal sources of liquidity are:
•
operating cash flows (including operating lease income and interest income);
•
cash from securitizations of leases; and
•
cash from borrowings and financing arrangements including the issuance of bonds on the local and
international markets.
Our principal cash requirements or uses have historically been:
•
operating activities (or financing of our main business lines);
•
servicing our debt;
•
capital expenditures; and
•
payments of dividends.
The main policies of our treasury include (i) investing surpluses daily for maximum periods of one to seven
days; (ii) investing surpluses in government treasuries or fixed income funds at banking institutions; and (iii) paying
service providers and vendors on a weekly basis. The resources administered by our treasury are denominated in
pesos and U.S. dollars, which are recorded at the exchange rate on the date of the transaction and are updated at the
close of the relevant period.
Our cash from operations, current financing initiatives and cash and cash equivalents were sufficient to
satisfy our operating activities and debt service during the year ended December 31, 2014. We believe that our cash
from operations, current financing initiatives (including this offering) and cash and cash equivalents will be
sufficient to fund our operating activities and debt service obligations during 2015.
Loan and Leasing Portfolio
Total loan amounts set forth in this section include the total principal amount of performing and nonperforming loans outstanding at the dates presented.
As of March 31, 2015, our total portfolio, including off-balance sheet items, amounted to Ps. 12,811.1
million. This balance increased from December 31, 2014 primarily due to the growth of our leasing portfolio as a
result of increased demand, organic growth and an increase in our distribution network and sales team.
As of March 31, 2015, our total portfolio, excluding off-balance sheet items, amounted to Ps. 3,410.5
million. This balance increased from December 31, 2014 primarily due to the factors mentioned above.
79
As of December 31, 2012, 2013 and 2014, our total portfolio, including off-balance sheet items, amounted
to Ps. 6,155.4, Ps. 9,297.5 and Ps. 11,488.3 million, respectively. From 2012 to 2013, our total portfolio grew
51.0% due to the growth of our operating lease portfolio. From 2013 to 2014, our total portfolio grew by 23.6%,
primarily due to the growth of our operating lease portfolio.
As of December 31, 2012, 2013 and 2014, our total portfolio, excluding off-balance sheet items, amounted
to Ps. 1,954.5, Ps. 2,339.8 million and Ps. 3,074.5 million, respectively.
The following tables present the total loans, performing loans, non-performing loans, allowances for loan
losses and net loans for our leasing, financial factoring and auto loans and other lending business lines for the
periods indicated:
80
As of December 31, 2012
Total
loans
Performing
loans
Non-Performing
loans
Allowances
Net
loans
Operating Leasing.........................
Financial Factoring .......................
Auto Loans and Other Lending ....
Total..............................................
Off-balance sheet accounts ...........
103.6
1,197.3
653.6
1,954.5
4,200.9
82.8
1,197.3
653.6
1,933.7
20.8
20.8
56.6
56.5
47.1
1,197.3
653.6
1,898.0
Total
loans
Performing
loans
Non-Performing
loans
Allowances
Net
loans
Total..............................................
387.5
1,116.3
836.0
2,339.8
6,957.7
330.8
994.6
835.9
2,161.4
56.7
121.7
178.4
(56.9)
(47.2)
(16.2)
(120.3)
330.6
1,069.1
819.8
2,219.5
Total
loans
Performing
loans
Non-Performing
loans
Allowances
Net
loans
Total..............................................
366.1
1,294.7
1,413.7
3,074.5
8,413.8
295.4
1,294.7
1,413.7
3,004.3
70.2
70.2
(64.2)
(10.1)
(13.8)
(88.1)
301.9
1,284.6
1,399.9
2,986.4
Total
loans
Performing
loans
Non-Performing
loans
Allowances
Net
loans
Total..............................................
519.2
1,283.4
1,607.9
3,410.5
434.3
1,283.4
1,607.9
3,325.6
84.9
84.9
(64.1)
(10.1)
(13.8)
(88.0)
455.1
1,273.0
1,594.1
3,322.5
9,400.6
-
-
-
-
For additional information on our loan portfolio, see Note 7 to our Audited Financial Statements included
elsewhere in this offering memorandum.
Total Loans as of March 31, 2015 Compared to December 31, 2014
Total loans, excluding our off-balance sheet accounts, totaled Ps. 3,410.4 million as of March 31, 2015,
reflecting an increase of Ps. 336.0 million, or 10.9%, compared to December 31, 2014.
81
Total operating leases, excluding our off-balance sheet accounts, totalled Ps. 519.2 million as of March 31,
2015, reflecting a decrease of Ps. 153.1 million, or 41.8%, compared to December 31, 2014. Operating leases
outstanding as a percentage of our total loan portfolio, excluding our off-balance sheet accounts, were 15.2% as of
March 31, 2015 and 11.9% as of December 31, 2014.
Our total lease portfolio, including our off-balance sheet accounts, as of March 31, 2015 and December 31,
2014 amounted to Ps. 9,919.8 million and Ps. 8,779.8 million, respectively, or 77.4% and 76.4%, respectively, of
our total loan portfolio, including off-balance sheet accounts.
Financial factoring loans totaled Ps. 1,283.4 million as of March 31, 2015, reflecting a decrease of Ps. 11.3
million, or 0.9%, compared to December 31, 2014. Financial factoring loans outstanding as a percentage of our total
loan portfolio, excluding off-balance sheet accounts, were 37.6% as of March 31, 2015 and 42.1% as of
December 31, 2014. Financial factoring loans outstanding as a percentage of our total loan portfolio, including our
off-balance sheet accounts, were 10.0% as of March 31, 2015 and 11.2% as of December 31, 2014.
Auto loans and other lending totaled Ps. 1,607.9 million as of March 31, 2015, reflecting an increase of Ps.
194.2 million, or 13.7%, compared to December 31, 2014. Auto financing loans and other loans outstanding as a
percentage of our total loan portfolio, excluding off-balance sheet accounts, were 47.2% as of March 31, 2015 and
46.0% as of December 31, 2014. Auto loans and other lending outstanding as a percentage of our total loan
portfolio, including our off-balance sheet accounts, were 12.6% as of March 31, 2014 and 12.3% as of December
31, 2014.
Total Loans as of December 31, 2014 Compared to December 31, 2013
Total loans, excluding our off-balance sheet accounts, totaled Ps. 3,074.5 million as of December 31, 2014,
reflecting an increase of Ps. 734.7 million, or 31.4%, compared to December 31, 2013.
Total operating leases, excluding our off-balance sheet accounts, totaled Ps. 366.1 million as of
December 31, 2014, reflecting a decrease of Ps. 21.4 million, or 5.5%, compared to December 31, 2013. Operating
leases outstanding as a percentage of our total loan portfolio were 11.9% as of December 31, 2014 and 16.6% as of
December 31, 2013.
Our total lease portfolio, including our off-balance sheet accounts, as of December 31, 2014 and December
31, 2013 amounted to Ps. 8,779.8 million and Ps. 7,345.2 million, respectively, or 76.4% and 79.0%, respectively, of
Financial factoring loans totaled Ps. 1,294.7 million as of December 31, 2014, reflecting an increase of Ps.
178.4 million, or 15.98%, compared to December 31, 2013. Financial factoring loans outstanding as a percentage of
our total loan portfolio, excluding off-balance sheet accounts, were 42.1% as of December 31, 2014 and 47.7% as of
December 31, 2013. Financial factoring loans outstanding as a percentage of our total loan portfolio, including our
off-balance sheet accounts, were 11.3% as of December 31, 2014 and 12.0% as of December 31, 2013.
Auto loans and other lending totaled Ps. 1,413.7 million as of December 31, 2014, reflecting an increase of
Ps. 577.7 million, or 69.10%, compared to December 31, 2013. Auto financing loans and other loans outstanding as
a percentage of our total loan portfolio, excluding off-balance sheet accounts, were 46.0% as of December 31, 2014
and 35.7% as of December 31, 2013. Auto loans and other lending outstanding as a percentage of our total loan
portfolio, including our off-balance sheet accounts, were 12.3% as of December 31, 2014 and 9.0% as of December
31, 2013.
Total Loans as of December 31, 2013 Compared to December 31, 2012
Total loans, excluding our off-balance sheet accounts, totaled Ps. 2,339.8 million as of December 31, 2013,
reflecting an increase of Ps.385.3 million, or 19.7%, compared to December 31, 2012.
82
Total operating leases, excluding our off-balance sheet accounts, totaled Ps. 387.5 million as of
December 31, 2013, reflecting an increase of Ps. 283.9 million, or 274.0%, compared to December 31, 2012. Total
operating leases outstanding as a percentage of our total loan portfolio were 16.6% as of December 31, 2013 and
5.3% as of December 31, 2012.
Our total lease portfolio, including our off-balance sheet accounts, as of December 31, 2013 and December
31, 2012 amounted to Ps. 7,345.2 million and Ps. 4,304.5 million, respectively, or 79.0% and 69.9%, respectively, of
Financial factoring loans totaled Ps. 1,116.3 million as of December 31, 2013, reflecting a decrease of Ps.
81.0 million, or 6.8%, compared to December 31, 2012. Financial factoring loans as a percentage of our total loan
portfolio, excluding our off-balance sheet accounts, were 47.7% as of December 31, 2013 and 61.3% as of
December 31, 2012. Financial factoring loans as a percentage of our total loan portfolio, including our off-balance
sheet accounts, were 12.0% as of December 31, 2013 and 19.5% as of December 31, 2012.
Auto loans and other lending totaled Ps. 836.0 million as of December 31, 2013, reflecting an increase of
Ps. 258.3 million, or 44.7%, compared to December 31, 2012. Auto loans and other lending outstanding as a
percentage of our total loan portfolio were 35.7% as of December 31, 2013 and 29.6% as of December 31, 2012.
Auto loans and other lending outstanding as a percentage of our total loan portfolio, including our off-balance sheet
accounts, were 9.0% as of December 31, 2013 and 9.4% as of December 31, 2012.
Non-Performing Loan Portfolio as of March 31, 2015 Compared to December 31, 2014
Our total non-performing loans, including off-balance sheet accounts, as of March 31, 2015 and December
31, 2014 amounted to Ps. 84.9 million and Ps. 70.2 million, respectively, or 0.7% and 0.6%, respectively, of our
total loan portfolio, including off-balance sheet accounts. The total non-performing loans increased by Ps. 14.7
million or 20.9%, as of March 31, 2015.
Non-Performing Loan Portfolio as of December 31, 2014 Compared to December 31, 2013
Our total non-performing loans, including off-balance sheet accounts, as of December 31, 2014 and
December 31, 2013 amounted to Ps. 70.2 million and Ps. 178.4 million, respectively, or 0.6% and 1.9% (0.6% in
2013 excluding the extraordinary reserves resulting from a Ps. 120 million financial factoring account, which was
fully recovered in June 2014), respectively, of our total loan portfolio, including off-balance sheet accounts. This
decrease of Ps. 108.2 million, or 60.7%, was primarily due to the recovery of non-performing financial factoring
accounts.
Non-Performing Loan Portfolio as of December 31, 2013 Compared to December 31, 2012
Our total non-performing loans, including off-balance sheet accounts, as of December 31, 2013 and
December 31, 2012 amounted to Ps. 178.4 million and Ps. 20.8 million, respectively, or 1.9% (or 0.6% excluding
the extraordinary reserves resulting from a Ps. 120.0 million financial factoring account, which was fully recovered
in June 2014) and 0.3%, respectively, of our total loan portfolio, including off-balance sheet accounts. Our total
non-performing loans increased by Ps. 157.6 million, or 757.7%, during 2013. This increase was primarily due to
the default by one of our customers in our financial factoring business line.
83
The following table presents the past-due loan portfolios of our operating leasing, financial factoring and
auto loans and other lending business lines for the periods indicated:
Operating Leasing Past-due Installments
As of December 31,
2012
2013
20.8
56.7
Days
Past due.............
>91
Days
Past due.............
>31
Days
Past due.............
>31
________________________
2014
As of March 31,
2015
70.2(1)
84.9
Financial factoring Past-due Installments
As of December 31,
2012
2013
121.7
2014
As of March 31,
2015
-
0.0
Auto and Other Loans Past-due Installments
As of December 31,
2012
2013
-
2014
As of March 31,
2015
-
0.0
(1) As of December 31, 2014, our operating leases are considered past-due if outstanding for greater than 31 days.
Maturity Composition of the Loan and Leasing Portfolio
The following table sets forth the maturity profile of our loan portfolio, including off-balance sheet items.
As of December 31,
2013
2012
Loan and
Leasing
Amount
Due within
180 days ............
Between 181
and 365
days ...............
Over 365 days ...
Total
performing
loan
portfolio(1) .....
% of
Portfolio(2)
Loan and
Leasing
Amount
% of
Portfolio(2)
As of March 31,
2015
2014
Loan and
Leasing
Amount
% of
Portfolio(2)
Loan and
Leasing
Amount
2,637.1
20.6%
2,388.2
18.6%
46.3%
7,785.8
60.8%
100.0%
12,811.1
100.0%
1,455.1
23,6%
1,993.4
21.4%
4,291.6
37.4%
1,188.0
19.3%
1,784.2
19.2%
1,870.9
16.3%
3,512.3
57.1%
5,519.9
59.4%
5,325.8
6,155.4
100.0%
9,297.5
100.0%
11,488.3
___________________________________
(1) Maturity composition is based on the period remaining to the maturity of the loans.
(2) Percentage of portfolio equals the relevant loan amount by period divided by the sum of the total loans for each period.
84
% of
Portfolio(2)
Loan and Leasing Portfolio Breakdown by Customers
The following table sets forth the number of customers that have loans outstanding under our operating
leasing, financial factoring and auto loans and other lending business lines:
Operating Leasing(1)....................................
Financial Factoring .....................................
Auto Loans and Other Lending ..................
________________________
As of December 31,
2013
1,177
306
968
2012
1,044
212
361
As of March 31,
2015
1,714
311
1,279
2014
1,630
303
1,175
(1) Including off - balance sheet accounts.
The classification of the required allowance for loan losses is as follows:
Grade
A-1 .........
A-2 ..........
B-1 ..........
B-2 ..........
B-3 ..........
C-1 ..........
C-2 ..........
D .............
E..............
Total........
Provision (%)
0 to 0.50
0.51 to 0.99
1.00 to 4.99
5.00 to 9.99
10.00 to 19.99
20.00 to 39.99
40.00 to 59.99
60.00 to 89.99
90.00 to 100.00
2012
27.7
14.7
5.2
1.2
5.7
1.3
0.7
56.5
As of December 31,
2013
2014
18.9
14.1
6.0
10.6
4.4
36.7
1.7
11.5
3.6
107.5
85
As of March 31,
2015
54.8
13.5
0.6
1.3
2.4
72.6
72.7
0.2
0.9
1.7
3.8
0.1
0.2
79.6
The following table shows our allowances for non-performing loans for the periods presented.
As of and for
the three
months ended
March 31,
2015
As of and for the year ended December 31,
2012
2013
2014
Balance at beginning of year ...........................................
Additions to provisions ...................................................
Release of reserves ..........................................................
Decrease in provisions ....................................................
Balance at end of year .....................................................
47.8
14.4
(5.7)
56.5
56.5
63.8
120.3
120.2
10.0
(40.0)
(2.1)
88.1
88.1
(0.1)
88.0
Analysis of Cash Flows
The following table summarizes our generation and use of cash for the periods presented:
For the Three Months Ended March 31,
2012
2013
2014
2014
2015
Net cash provided by
operating activities ............................
Net cash used in investing activities.....
Net cash (used) provided by
financing activities ............................
2,361.0
(2,362.6)
5,063.0
(4,200.2)
4,562.6
(5,098.6)
(90.0)
(60.0)
100.0
696.2
(932.9)
12,829.5
(1,860.2)
0.0
(100.0)
Cash flows for the three months ended March 31, 2015 compared to the three months ended March 31, 2014
Taking into account our cash flows from operations, cash flows from financing activities and cash flows
from investing activities, we had a net cash inflow of Ps. 875.7 million for the three months ended March 31, 2015.
Operating Activities. Our net cash provided by operating activities increased to Ps. 2,829.5 million for the
three months ended March 31, 2015 from Ps. 696.2 million for the same period in 2014. This change was primarily
due to an increase in our operations.
Investing Activities. Our net cash used in investing activities increased for the three months ended
March 31, 2015 to Ps. (1,860.2) million from (932.9) million for the same period in 2014. This change was
primarily due to an increase of the acquisition of assets related to our operating leasing business.
Financing Activities. Our net cash used in financing activities increased for the three months ended
March 31, 2015 to Ps. 100.0 million from Ps. 0.0 million for the same period in 2014. This increase was primarily
due to the payment of dividends.
Cash flows for the year ended December 31, 2014 compared to the year ended December 31, 2013
from investing activities, we had a net cash outflow of Ps. 436.0 million for the year ended December 31, 2014,
compared to a net cash inflow of Ps. 803.2 million for the year ended December 31, 2013.
Operating Activities. Our net cash provided by operating activities decreased to Ps. 4,562.6 million for the
year ended December 31, 2014 from Ps. 5,063.4 million for the year ended December 31, 2013. This change was
primarily due to lower net income for the year resulting from the interest on our International Notes and the use of
financial derivative instruments for hedging purposes in 2014.
86
Investing Activities. Our net cash used in investing activities increased for the year ended December 31,
2014 to Ps. 5,098.7 million from Ps. 4,200.2 million for the year ended December 31, 2013. This change was
primarily due to an increase in the acquisition of assets related to operating leases.
Financing Activities. Our net cash provided by (used in) financing activities increased for the year ended
December 31, 2014 to Ps. 100.0 million from Ps. (60.0) million for the year ended December 31, 2013. This
increase was primarily due to capital contributions partially offset by the payment of dividends.
Cash flows for the year ended December 31, 2013 compared to the year ended December 31, 2012
from investing activities, we had a net cash inflow of Ps. 803.2 million for the year ended December 31, 2013,
compared to a net cash outflow of Ps. 91.6 million for the year ended December 31, 2012.
Operating Activities. Our net cash provided by operating activities increased to Ps. 5,063.4 million for the
year ended December 31, 2013 from Ps. 2,361.0 million for the year ended December 31, 2012. This change was
primarily due to an increase in our securitizations of leasing accounts receivable as a result of the growth of our
business compared to the prior year.
Investing Activities. Our net cash used in investing activities increased for the year ended December 31,
2013 to Ps. 4,200.2 million from Ps. 2,362.6 million for the year ended December 31, 2012. This change was
primarily the result of higher capital expenditures due to the growth of our business.
Financing Activities. Our net cash flows used in financing activities decreased for the year ended
December 31, 2013 to Ps. (60.0) million from Ps. (90.0) million for the year ended December 31, 2012. This change
was due to lower dividends paid in 2013.
Indebtedness
The following table summarizes our indebtedness for the periods presented:
2012
Short-term debt
International notes .............................
Unsecured notes program ..................
Securitizations program .....................
other entities ...................................
Long-term debt:
International notes .............................
Unsecured notes program ..................
Securitizations program .....................
other entities ...................................
Total ..................................................
As of December 31,
2013
2014
As of March 31,
2015
1,010.0
9.1
1,009.0
7.1
161.4
5.2
66.6
13.0
897.6
1,916.7
1,735.6
2,751.7
2,061.7
2,228.3
2,083.5
2,163.1
1,000.0
2,602.7
1,000.0
4,672.7
5,887.2
4,088.6
5,588.0
6,000.0
149.1
3,751.8
5,668.5
590.9
6,263.6
9,015.3
392.8
10,368.6
12,596.9
638.3
12,226.3
14,389.4
87
Our material indebtedness as of March 31, 2015 consisted of the following (excluding interest payable):
Unsecured Notes Programs
On November 19, 2013, May 2, 2012 and February 16, 2011, the CNBV authorized our revolving
unsecured programs (the “Unsecured Notes Programs”) in the amounts of up to Ps. 7,000 million, Ps. 5,000 million
and Ps. 3,500 million, respectively, under the tickers UNIFICB13, UNIFCB12 and UNIFCB11, respectively. We
have issued trust certificates under our Unsecured Notes Programs by entering into trust agreements in the capacity
of settlelor with Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex,
División Fiduciaria and HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, División
Fiduciaria, as trustees, and Monex Casa de Bolsa, S.A. de C.V., Monex Grupo Financiero, as common representative
and as trustees for first and second place holders of the trust certificates and the Company, respectively.
As of March 31, 2015, three issues were outstanding under our Unsecured Notes Programs for a total
principal amount of Ps. 4,000.0 million outstanding. The following table contains a summary of the current issues
outstanding as of March 31, 2015 under our Unsecured Notes Programs:
Ticker
UNFNCB13
UNIFCB12
UNFINCB15
Issuing
Trust
F/17293-4
F/306592
F/17598-4
Number of
Certificates
10,000,000
10,000.000
20,000,000
Maturity
11/22/18
05/04/17
02/09/20
Interest
Rate (%)
TIIE+1.60
TIIE+1.60
TIIE+1.60
Total
Amount
Issued (in
millions of
Ps.)
$1,000
1,000
2,000
S&P and HR Ratings
mxAAAS&P/HRAAA
mxAAAS&P/HRAAA
mxAAAS&P/HRAAA
Fiduciary
Banamex
HSBC
Banamex
Bank Debt
As of March 31, 2015, we had the following bank borrowings and loans from other entities:
Balance
(in millons
of pesos)
Short-term debt:
Nacional Financiera ..................
Scotiabank ................................
Banco Invex SA ........................
Banorte Ixe ...............................
Comerica...................................
CI Banco ...................................
Corporación Interamericana
de Inversiones .......................
Accrued interest payable...........
Total short-term debt ................
Long-term debt:
Scotiabank ................................
Bancomext ................................
Fideicomiso Fondo Minero.......
Eximbank(1)...............................
Total long-term debt .................
Total bank and other
financial institution debt........
___________________________
Maturity
Interest
Denomination
Date
Rate (%)
Type of
Collateral
1,500.0
2.3
113.9
200.0
155.4
100.0
Pesos
Pesos
Pesos
Pesos
Pesos
Pesos
07/28/15
11/30/15
03/19/16
02/28/15
10/13/15
08/20/15
TIIE+2.75
TIIE+2.75
TIIE+3.85
TIIE+3.50
LIBOR+3.50
TIIE+4.50
Unsecured
Lease portfolio
Unsecured
Lease portfolio
Unsecured
Unsecured
6.3
5.6
2,083.5
Pesos
Pesos
Pesos
05/15/15
TIIE+2.4
Unsecured
492.2
101.0
20.3
24.8
638.3
Pesos
Pesos
Pesos
USD
Pesos
11/30/19
03/12/19
02/23/17
06/25/16
TIIE+2.75
TIIE+2.75
TIIE+1.95
3.13%
Lease portfolio
Lease portfolio
Lease portfolio
Mortgage
2,721.8
88
(1)
Amount converted to pesos.
International Notes
On July 22, 2014, we issued US$400 million of 6.250% Senior Notes due 2019 in a Rule144A/Regulation
S offering, which are unconditionally guaranteed by Unifin Credit, S.A. de C.V., SOFOM, E.N.R. (“Unifin Credit”)
and Unifin Autos, S.A. de C.V. (the “International Notes”). In January 2015, we repurchased in the open market
US$33.4 million of our International Notes, equal to 8.35% of the outstanding principal amount. This repurchase of
the International Notes resulted in extraordinary income of Ps. 82.2 million, which was included in the financial
intermediation results in our Unaudited Interim Financial Statements. As a result of this repurchase, we were able to
fully hedge our exchange rate risk through the use of financial instruments.
The below charts summarize our indebtedness and our available funding in millions of pesos, respectively:
_______________________
Our subsidiaries do not have any restrictions on transferring funds to us.
Information regarding Issuance Trusts and Private Structured Trusts
We have obtained financing through the securitization of our collection rights of our leasing portfolio
through the assignment of such rights to issuance trusts by means of the BMV or private structures and which we do
not consolidate in our financial information. As of March 31, 2015, we had issued trust bonds under a diverse
number of issuance trusts and private structures for a total amount of Ps. 6,000 million. See “– Unsecured Notes
Programs” and “– Bank Debt.” As of December 31, 2012, 2013 and 2014 and for the three months ended March 31,
2015, we assigned, by means of these structures, a total of Ps. 1,000.0 million, Ps. 1,000.0 million, Ps. 2,000.0
million and Ps. 2,000.0 million of collection rights, respectively. As of March 31, 2015, our assigned collection
rights represented 62.8% of our total portfolio, including off-balance accounts.
89
The following table shows the main balance sheet items of all collection rights assigned to either issuance
trusts or private structures:
Accrued accounts in trust(1) ........................................
Long term debt securities ...........................................
___________________________
(1)
(millons of pesos)
$6,028.4
$9,975.8
(millions of pesos)
$7,274.6
$11,588.0
Off-Balance Accounts.
Our issuance trusts through which we have carried out securitizations of our collection rights have allowed
us to obtain financing by issuing and placing trust bonds registered with the RNV. Subsequent to each securitization
we receive an amount equal to the present value of the collection rights, minus any commissions and fees paid to the
trustee, as determined by the technical committee of each trust. The trustee of each issurance trust further pays the
trust bonds with amounts paid from the collection rights and according to the priority of payment established in the
respective trust agreement.
We also carry out private financing structures with Scotiabank Inverlat, S.A., Institución de Banca
Múltiple, Grupo Financiero Scotiabank Inverlat, which operate similar to a securitization program, except that the
source of our funding comes from a revolving credit line granted by a financial institution and not through the
issuance of trust bonds. Under this private structure, we assign the collection rights of our lease portfolio in favor of
the trustee of the respective private structure, which in turn will use the available funds of the credit line granted by
Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Institución de
Banca Múltiple, Grupo Financiero Scotiabank Inverlat to compensate us for the total outstanding amount for the
acquisition of such collection rights. Any amounts derived from our collection rights assigned to the trust will be
used to pay such credit facility.
Covenants
Our commercial paper, loan agreements and outstanding bonds contain a number of covenants requiring us
to comply with certain financial ratios and other tests. As of March 31, 2015, the main restrictive financial
covenants under these loan agreements and bonds require us to maintain the following ratios:
•
Interest Coverage Ratio (consolidated net income / interest expense): 2.50:1.00
•
Capitalization Ratio (total assets / total stockholders’ equity): ≥ 9.5%
•
Capitalization Ratio (total loan portfolio, including off-balance sheet loans / total stockholders’ equity): ≥
10.0%
•
Indebtedness Leverage Ratio (total financial liabilities, excluding securitizations / total stockholders’ equity):
≤ 7 times
•
Non-performing Loans (non-performing loans, plus future rentals / total loan portfolio, including offbalance sheet loans): ≤ 9%
In addition, the instruments governing our debt, including the indenture governing our International Notes,
contain covenants restricting our and our subsidiaries’ ability to, among other things incur additional debt, make
certain dividend payments, redeem capital stock and make certain investments, transfer and sell assets, engage in
certain lease securitizations and receivables transactions, enter into agreements that would limit the ability of
90
subsidiaries to pay dividends or make distributions, create liens, effect a consolidation, merger or sale of assets and
enter into transactions with affiliates. These debt instruments also contain customary events of default.
As of the date of this offering memorandum, we are in compliance with all of the covenants under our
loans, debt and commercial paper instruments.
Derivative Financial Instruments
We engage in derivative financial transactions for risk hedging reasons. As of December 31, 2012, 2013
and 2014 and March 31, 2015 we had outstanding derivative financial instruments amounting to Ps. 21.0 million, Ps.
42.2 million, Ps. 856.4 million, and Ps. 1,138.3 million respectively. See Note 6 to our Audited Financial
Statements.
Such derivative financial instruments consist mainly of cross-currency swaps to hedge against fluctuations
in the currency exchange of our U.S. dollar-denominated liabilities and “CAP” interest rate purchase options, used
to hedge against interest rates fluctuations.
The following is qualitative and quantitative information regarding our derivative financial instruments.
Qualitative and Quantitative Information
We use derivative financial instruments for hedging purposes and not for speculation purposes.
We have a designated department in charge of supervising that we maintain adequate coverage reserves for
all liabilities contracted by the issuing of stock certificates or through our securities portfolio, which allows us to
insure our financial margin. We enter into derivative financial transactions with duly accredited domestic and
foreign institution to hedge against interest rates fluctuations, which eliminates the inherent risks of interest rate
increases. This allows us to enter leases with our customers at fixed rates.
Based on the risk variable TIIE, and due to our consistent operating structure and the fact that 100.0% of
our contracts are in pesos, we have limited currency exchange risks. We hedge against the currency risk with
respect to our International Notes.
Derivative Financial Instruments Summary
As of March 31, 2015, the composition of our derivative financial instruments portfolio was as follows:
Cross-Currency Swaps
Hedged Liability
International Notes
International Notes
International Notes
International Notes
International Notes
International Notes
Contracting
Date
7/22/14
7/22/14
7/22/14
7/22/14
7/22/14
7/22/14
Maturity
Date
7/22/19
7/22/19
7/22/19
7/22/19
7/22/19
7/22/19
Term
(days)
1,826
1,826
1,826
1,826
1,826
1,826
91
Notional
Amount (in
millions of
Ps.)
1,102.5
194.2
1,297.2
431.4
1,297.2
431.4
4,753.9
Interest
Rate of
Debt (%)
6.25%
6.25%
6.25%
6.25%
6.25%
6.25%
Contractual
Interest Rate
(%)
TIIE+4.20
TIIE+4.19
TIIE+4.192
TIIE+4.19
TIIE+4.195
TIIE+4.185
Fair Value
(in millions
of Ps.)
246.5
44.1
284.9
96.1
287.7
97.3
1,056.5
Interest Rate CAPS Options
Hedged
Liability
UNIFCB11-2
UNIFCB12
UNFINCB13
Crédito F/1355
Crédito F/1355
Crédito F/1355
Crédito F/1355
Crédito F/1355
UNFINCB15
Contracting
Date
11/08/10
5/04/12
11/22/13
12/10/12
1/22/13
4/11/13
12/23/13
8/11/14
02/13/15
Maturity
Date
6/30/15
5/04/17
11/22/18
12/10/16
1/22/17
4/11/17
12/23/18
12/23/14
02/19/20
Term
(days)
1,827
1,826
1,826
1,461
1,461
1,461
1,826
1,515
1,822
Underlying
Asset
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
Exercise
Price (%)
9.00
9.00
7.00
7.00
7.00
7.00
7.00
7.00
7.00
Term
(days)
2,135
2,135
Notional
Amount (in
millions of
Ps.)
2,000.0
2,000.0
Interest
Rate of
Debt
TIIE 28
5.49
Notional
Prepaid
Amount (in Premium (in Fair Value
millions of
millions of
(in millions
Ps.)
Ps.)
of Ps.)
766.7
8.1
3.1
1,000.0
8.9
4.1
1,000.0
17.1
13.3
51.3
0.4
0.2
45.8
0.2
0.1
478.2
2.2
1.5
689.3
7.4
5.9
130.2
1.0
0.9
2,000.0
48.5
45.6
6,161.5
45.3
74.7
Interest Rate
Swaps
Hedged
Liability
Scotiabank
Scotiabank
Contracting
Date
03/18/15
03/18/15
Maturity
Date
02/21/21
02/21/21
Contracted
Interest Rate
5.24
TIIE 28
Fair Value
13,210.6
31,373.5
As of December 31, 2014, the composition of our derivative financial instruments portfolio was as follows:
Cross-Currency Swaps
Hedged Liability
International Notes
International Notes
International Notes
International Notes
International Notes
International Notes
Contracting
Date
7/22/14
7/22/14
7/22/14
7/22/14
7/22/14
7/22/14
Maturity
Date
7/22/19
7/22/19
7/22/19
7/22/19
7/22/19
7/22/19
Term
(days)
1,826
1,826
1,826
1,826
1,826
1,826
Notional
Amount (in
millions of
Ps.)
1,102.5
194.2
1,297.2
431.4
1,297.2
431.4
4,753.9
Interest
Rate of
Debt (%)
6.25%
6.25%
6.25%
6.25%
6.25%
6.25%
Contractual
Interest Rate
(%)
TIIE+4.20
TIIE+4.19
TIIE+4.192
TIIE+4.19
TIIE+4.195
TIIE+4.185
Fair Value
(in millions
of Ps.)
74.9
225.4
34.3
192.0
74.9
225.7
827.1
Interest Rate CAPS Options
Hedged
Liability
UNIFCB11-2
UNIFCB12
UNFINCB13
Crédito F/1355
Crédito F/1355
Crédito F/1355
Crédito F/1355
Crédito F/1355
Contracting
Date
11/08/10
5/04/12
11/22/13
12/10/12
1/22/13
4/11/13
12/23/13
8/11/14
Maturity
Date
6/30/15
5/04/17
11/22/18
12/10/16
1/22/17
4/11/17
12/23/18
12/23/14
Term
(days)
1,827
1,826
1,826
1,461
1,461
1,461
1,826
1,515
Underlying
Asset
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
92
Exercise
Price
(%)
9.00
9.00
7.00
7.00
7.00
7.00
7.00
7.00
Notional
Amount (in
millions of
Ps.)
766.7
1,000.0
1,000.0
51.3
45.8
478.2
689.3
130.2
4,161.5
Prepaid
Premium
(in millions
of Ps.)
8.1
8.9
17.1
0.4
0.2
2.2
7.4
1.0
45.3
Fair
Value (in
milions of
Ps.)
3.1
4.1
13.3
0.2
0.1
1.5
5.9
0.9
29.3
As of December 31, 2013, the composition of our derivative financial instruments portfolio was as follows:
Interest Rate Caps
Hedged Liability
UNIFCB11
UNIFCB11-2
UNIFCB12
UNIF 12
UNIFIN 13 and
13-2
UNFINCB 13
Loan F/1355
Loan F/1355
Loan F/1355
Loan F/1355
Contracting
Date
3/04/11
11/08/10
5/04/12
7/01/13
Maturity
Date
2/18/16
6/30/15
5/04/17
12/04/14
Term
(days)
1,812
1,827
1,826
521
Underlying
Asset
TIIE 28
TIIE 28
TIIE 28
TIIE 28
Exercise
Price
(%)
9.00
9.00
9.00
7.00
7/01/13
11/22/13
12/10/12
1/22/13
4/11/13
12/23/13
4/17/15
11/22/18
12/10/16
1/22/17
4/11/17
12/23/18
655
1,826
1,461
1,461
1,461
1,826
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
7.00
7.00
7.00
7.00
7.00
7.00
Notional
Amount (in
millions of
Ps.)
400.0
800.0
1,000.0
510.0
1,000.0
1,000.0
1,000
87.8
683.1
689.3
7,170.2
Premium
Paid (in
Fair Value
millions of (in millions
Ps.)
of Ps.)
6.9
3.0
8.1
4.7
8.9
6.0
0.5
0.4
2.1
17.1
0.4
0.3
2.2
7.4
53.9
1.6
16.8
0.3
0.2
1.9
7.4
42.3
The referenced amount (notional amount) related to the derivative financial instruments reflects the balance
of the financial instrument, but does not reflect the risks. The risk amounts are generally limited to profits or losses
not reflected by market valuation, which could vary depending on changes in the market value of the respective
asset, its volatility and the creditworthiness of the relevant counterparties.
Off-Balance Sheet Liabilities
As of March 31, 2015, we did not have any off-balance sheet liabilities.
Capital Expenditure
During the three-month periods ended March 31, 2015 and 2014 and the years ended December 31, 2012,
2013 and 2014, we invested Ps. 998.1 million, Ps. 3,676.0 million, Ps. 2,362.6 million, Ps. 854.4 million and Ps.
4,200.2 million, respectively, in capital expenditures mainly to support the growth of our operations as well as the
expansion of our regional offices and our move to our new office in Mexico City. We do not anticipate any material
capital expenditures in 2015.
Tabular Disclosure of Contractual Obligations
The table below is a summary of our contractual obligations and other commitments as of March 31, 2015:
Payments due in period
Less than
1 year
Obligation:
Long term debt obligations ....................
Short term debt obligations....................
Other liabilities(1) ...................................
Total(2)....................................................
1 to 3 years
3 to 5 years
2,163.1
2,053.5
4,216.6
638.3
638.3
11,588.0
11,588.0
Total
12,226.3
2,163.1
2,053.5
16,442.9
____________________
(1) Includes taxes payable, commercial paper, other accounts payable and allowances.
(2) Including accrued interest.
The amounts shown in the table above represent existing contractual obligations only. Our actual
expenditures for certain of the items and periods are likely to substantially exceed the amounts shown above.
93
Qualitative and Quantitative Disclosure about Market Risk
Market risk generally represents the risk that losses may occur in the values of financial instruments as a
result of movements in interest rates or foreign currency exchange rates. We are exposed to changes in financial
market conditions in the normal course of business due to our use of certain financial instruments as well as
transactions incurred in foreign currencies. We continually assess our exposure to market risk that arises in
connection with our operations and financial activities.
Credit Risk
Credit risk is the possibility of a loss arising from a credit event, such as deterioration in the financial
condition of a borrower, which causes an asset to lose value. The purpose of credit risk management is to mitigate
and optimize the risk, keeping credit risk exposure within a permissible level relative to capital, to maintain the
soundness of assets and to ensure returns commensurate with risk. Our current credit policy sets forth uniform and
basic operating concepts, code of conduct and standards for credit operations. By giving our employees extensive
credit training, we aim to achieve a high standard of credit risk management and to create a better credit
management culture within our Company.
We have developed and refined our own proprietary underwriting standards and credit review system. In
addition to relying on quantitative measures, we also rely on qualitative measures that allow us to make use of our
knowledge and experience in evaluating credit risk on a case-by-case basis. We believe our risk analysis systems
allow us to make better credit decisions when evaluating credit applications from customers with limited credit
histories or customers who work in the informal economy. We believe that our business model limits our credit
exposure to credit risk.
As part of our ongoing process to monitor risks, we monitor the credit collection process, which is the most
important element in our credit process. We analyze, evaluate and monitor every loan. Special attention is paid to
non-performing loans, and stricter measures are used to monitor these loans. See “—Policy for Allowances for
Loan Losses.”
Exchange Rate Risk
We are exposed to foreign currency exchange rate risk to the extent certain of our U.S. dollar-denominated
liabilities are not covered by currency financial derivative instruments and whenever we maintain open positions in
currencies other than the peso. We currently hedge against the currency risk with respect to our International Notes.
On July 22, 2014, we entered into currency swaps with Credit Suisse (México), S.A., Institución de Banca Múltiple,
Grupo Financiero Credit Suisse (México), Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo
Financiero Scotiabank Inverlat and Banco Nacional de México, S.A., Institución de Banca Múltiple, integrante del
Grupo Financiero Banamex. These swaps allow us to make the interest and principal payments on our International
Notes at fixed pre-determined exchange rates for the applicable dates. We entered into these swaps to ensure that
any future devaluation of the peso against the U.S. dollar during the life of our International Notes does not affect
our ability to meet our U.S. dollar–denominated liabilities given that all of our income is peso–denominated. Under
our swap agreements, we provide the counterparty with an agreed-upon amount of pesos at the beginning of the
swap term and receive from the counterparty a previously agreed-upon amount of U.S. dollars at the end of the swap
term. We pay the counterparty interest at variable rates denominated in pesos every 28 days, and the counterparties
deliver interest at fixed rates denominated in U.S. dollars every six months, which we us to cover the semiannual
interest payment to holders of our International Notes. As of March 31, 2015, 100.0% of our U.S. dollar–
denominated debt was covered by currency swaps. Pursuant to our risk management policies, we use derivative
financial instruments for hedging purposes and not for speculation purposes. See “—Derivative Financial
Instruments.”
As a result of the repurchase and cancellation of US$33.4 million of our International Notes, our
outstanding International Notes were fully hedged by our derivative financial instruments as of March 31, 2015. See
“—Liquidity and Capital Resources.”
94
Interest Rate Risk
We are exposed to interest rate risk since whenever there is a mismatch in the revaluation of interest rates
or if interest on our leasing, financial factoring or auto loans and other lending portfolio is calculated based on fixed
interest rates. A sustained increase in interest rates would increase our financing costs and may result in a decrease
in demand for our financing products. In the event of an increase in interest rates, we may also need to readjust our
portfolio of assets and liabilities in order to minimize the risk of a mismatch and to maintain our profitability. In
addition, an increase in interest rates could negatively affect the Mexican economy and the financial condition of our
customers and their ability to repay their obligations to us, which could result in a deterioration in the quality of our
portfolio. Furthermore, volatility in interest rates could also affect the ability of our customers to repay their
obligations to us, which could result in an increase in non-performing leases and loans, and therefore could have a
material adverse effect on our business, financial condition and results of operations.
Market Risk
We monitor exposure to market risk by analyzing the impact of potential interest rate and foreign exchange
rate changes on our financial performance. Our finance committee constantly monitors our exposure to market risk
and recommends necessary measures to be taken monthly in order to reduce any risk. We seek to adjust any
variation in our liabilities caused by potential interest rate and foreign exchange to be reflected in our assets. We
consider factors such as the economy, other business developments that could affect net income, management
actions that could affect net income or management actions that could be taken to change our risk profile.
Accordingly, we can give no assurance that actual results would not differ materially from the estimated outcomes
of any measures taken by our finance committee. Further, such measures do not represent our current view of
expected future interest rate movements.
Internal Control Policy
Our operations are supported and regulated by a management system (the “Enterprise Resource Planning”
or “ERP”), which monitors and registers our operating income. Our internal control system is based on the division
of responsibilities and its processes are in accordance with our internal policies, CNBV regulations and applicable
law. We have made significant investments in ERP to optimize its processes and guarantee the confidentiality of
our data.
In addition, we have developed controls and procedures for data disclosure to ensure that the data that we
disclose is obtained, processed, summarized and disclosed in a timely manner and in conformance with applicable
law. These controls and procedures include requirements that any data that must be disclosed is first reviewed and
approved by our board of directors, our audit committee and our corporate practices committee, as applicable.
Our audit committee is responsible for the approval, review and amendment of the general guidelines for
our internal controls and internal audit. Our management is responsible for implementing and monitoring our
standards of internal control to ensure the integrity, reliability and timeliness of our financial information.
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BUSINESS
Overview
We specialize in serving SMEs which we believe are largely underserved by banking institutions despite
representing the majority of the economic activity in Mexico. We believe the SME sector will continue expanding
and providing an attractive opportunity for our growth.
per transaction of our financial factoring products ranges from Ps. 500,000 to Ps. 150 million, with maturities
between eight to 180 days and 120 days on average, with annual interest rates at the TIIE plus 12.5 to 19.0
percentage points. Our auto loans range from Ps. 50,000 to up to 80.0% of the vehicle’s price, with maturities
between 12 and 60 months and fixed interest rates between 12.0% and 18.0%.
grew at a CAGR of 37.0% and we had an average return on equity of 39.0% during such period and we had a return
on average equity of 38.8% in 2014. As of March 31, 2015, our net loan portfolio increased by Ps. 1,322.8 million
or 11.5% compared to December 31, 2014. The return on average equity adjusted for non-recurring items was
43.9% for the three months ended March 31, 2015. Non-performing loans represented 0.7% of our loan portfolio
(including our off-balance sheet accounts) as of March 31, 2015. We believe our growth is the result of various
factors including our geographic coverage and wide distribution network integrated through our headquarters in
Mexico City and eight regional offices, our industry knowledge and know-how, our focus on development and
innovation to meet our customers’ needs, our customer loyalty resulting from our personalized customer service and
our effective origination and collections processes as well as risk mitigation.
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ended December 31, 2012, 2013 and 2014 and the three months ended March 31, 2015, we had consolidated net
income of Ps. 243.4 million (US$16.0 million), Ps. 338.0 million (US$22.2 million), Ps. 482.4 million (US$31.6
2014 and the three months ended March 31, 2015, we had operating results of Ps. 354.0 million (US$23.2 million),
Ps. 417.2 million (US$27.4 million), Ps. 704.8 million (US$46.2 million) and Ps. 495.1 million (US$32.5 million),
respectively. As of March 31, 2015, our total loan portfolio (including off-balance sheet accounts) had a value of
Ps. 12,811.1 million (US$840.5 million). As of March 31, 2015, we had total stockholders’ equity of Ps. 1,793.2
million (US$117.6 million).
Our Competitive Strengths
We believe that the following key strengths give us an advantage over our competitors and position us to
grow our market share in the Mexican operating leasing, financial factoring and auto loans and other lending
industries:
•
Leader in the Mexican Operating Leasing Industry. Since beginning operations in 1993, we have
experienced significant growth and have consolidated our position as a leader in the operating leasing
industry with an active participation in the Mexican financial industry. According to the latest report
published by The Alta Group in November 2014, we are the leading independent (non-banking)
leasing company in Latin America. We believe that our growth and market penetration are primarily a
result of our unique business model, which focuses primarily on the continuous development and
innovation of our products and financial solutions aimed at meeting our customers’ needs; our high
quality personalized customer service; our ability to generate demand for our products through our
sales efforts supported by our targeted distribution network and marketing efforts aimed at SME’s and
individual business owners; and our efficient processes for originating credit and managing risk
supported by advanced information technology systems. Based on this business model, from 2012 to
2014, we increased our revenue from our operating leases, financial factoring and auto loans and other
lending business lines at a CAGR of 31.1%, 8.6% and 62.0%, respectively. For the same period, we
had an average return on equity of 39.0%. In addition, as shown in the charts below, we have
consistently outperformed the Mexican banking sector in terms of CAGR, performing loans, efficiency
and profitability.
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•
Strong Commercial Structure and an Expanding National Platform. We have a solid commercial
structure defined by a highly specialized and capable sales force and an extensive distribution network,
comprised of our main office in Mexico City and eight regional offices located throughout Mexico.
Our regional offices are located in the fastest growing geographical areas in Mexico, and our local
presence in such markets allows us to obtain detailed knowledge of the specific market needs in order
to reach a large number of potential customers. Furthermore, our efficient distribution network affords
us a competitive advantage over our competitors by lowering our cost of attracting new customers and
improving our profitability through the integration of our business offerings into a single platform.
The Mexican states in which we have a physical presence represented in the aggregate 53.8% of
Mexico’s GDP as of December 31, 2013 according to INEGI and this is expected to grow by 1.5%
with the recent opening of the Mérida office and by 5.3% with the upcoming office opening in
Veracruz. We have also developed certain business strategies (including advertising and marketing
campaigns, market and industry analysis, historical portfolio analysis and forming industry and product
specific sales teams) in order to focus our sales efforts on high potential customers and markets with
attractive growth opportunities, as identified by these business strategies. Despite the growth of our
commercial structure and sales force, we have been able to maintain high levels of operational
efficiency and attractive margins, as shown in the charts below.
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•
Streamlined Origination Process Supported by Comprehensive Risk Management Policies. Through
our extensive experience and expertise, we have expedited our credit approval process, while
maintaining our high credit standards, as is demonstrated by the quality of our portfolio. We have
implemented standardized administrative procedures that, together with our solid information
technology platform, optimize documentation requirements in connection with leasing and financing
requests and renewals. Our origination process is supported by three main pillars: (i) credit rating
based on qualitative and quantitative factors, (ii) credit and legal bureau research and (iii) banking and
commercial references from our customers. Under our strict credit origination process, a negative
result in any of these three categories results in an application’s rejection, leading to an average
acceptance rate of approximately 40.0% for 2014. In addition, our origination process is supported by
three specialized credit committees, whose respective responsibilities are based on the amount of the
credit analyzed, and who are focused on maintaining credit quality while minimizing response times.
We have also implemented a sound risk management system with rigorous policies, processes and
procedures, allowing us to efficiently assess credit and operational risks associated with each of our
business lines and to respond to potential problems in a timely manner. This risk management system
also allows us to comply with internal and legal requirements related to anti-money laundering and
personal data protection. In spite of our rapidly growing portfolio and industry leading response times
for our customers, our efficient and strict origination process and policies have allowed us to maintain
a consistently high quality portfolio with low levels of delinquency. The graph below shows our
estimated demand at the beginning of 2012, 2013, 2014 and 2015 comprised of (i) the amount of
available but unused credit lines of our customers and (ii) expected demand from potential customers
we identified, as well as the percentage of the expected demand that was actually originated:
_______________________
•
Effective Collection Process that Results in Low Default Rates. As of March 31, 2015, our nonperforming loans accounted for 0.7% of our total portfolio (including our off-balance sheet accounts
comprised of accrued rent payments) and, during the past five years, our average default rate has been
lower than 1.0% (excluding a Ps. 120 million financial factoring account in 2013, which was fully
recovered in June 2014). We have developed an efficient collection process that is comprised of both
remote and in-person activities, which includes support from an experienced team of collection agents
and attorneys allowing us to carefully monitor customer behavior and to take timely and appropriate
preventative collection measures. See “Bussiness – Collections” for a detailed description of our
collection practices for our operating leasing, financial factoring and auto loans and other lending
business lines.
•
Diversified Customer Portfolio. We offer our products portfolio to a broad and diversified range of
customers that operate in different industries, which enables us to effectively manage our exposure to
credit risk and market volatility and maintain our rapid portfolio growth. As of March 31, 2015, our
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top 25 customers accounted for less than 30.0% of our total portfolio, none of which accounted for
more than 2.5% of our portfolio. Our portfolio is also geographically diversified throughout Mexico.
The following table sets forth the composition of our operating leasing portfolio by economic sector,
As of December 31,
2013
2014
2012
Commerce..............................................................
Construction...........................................................
Government ...........................................................
Services..................................................................
Transportation ........................................................
Other ......................................................................
Total.......................................................................
491.5
817.6
49.2
1,593.2
452.8
900.2
4,304.5
898.5
1,478.6
383.0
2,526.9
489.0
1,569.2
7,345.2
932.7
1,739.1
0.0
2,563.2
1,361.9
2,183.0
8,779.9
As of March 31,
2015
1,256.8
1,911.7
0.0
2,738.7
1,583.4
2,429.2
9,919.8
The following table sets forth the composition of our financial factoring portfolio by economic sector:
2012
Commerce....................................................................
Construction.................................................................
Government .................................................................
Services........................................................................
Transportation ..............................................................
Other ............................................................................
Total.............................................................................
468.9
303.3
40.8
260.3
12.3
111.7
1,197.3
As of December 31,
2013
2014
372.0
284.5
144.3
223.5
11.3
80.7
1,116.3
276.2
242.2
0.0
531.6
65.2
179.5
1,294.7
As of March 31,
2015
296.1
208.3
0.0
483.3
72.8
222.9
1,283.4
•
Access to Diversified Sources of Funding. We fund the growth of our operations through lines of
credit received from Mexican commercial banks and governmental development financial institutions,
the international and Mexican bond markets and asset-backed securities issued privately and through
the BMV. We believe we do not depend significantly on any single financial institution or financing
source to fund our operations. As of March 31, 2015, 85.0% of our total indebtedness consisted of
long-term debt, of which 4.4% matures between one and three years and 80.6% has a maturity term
between three and five years. As of the same date, 18.7% of our total indebtedness was Mexican pesodenominated and 81.3% was U.S. dollar-denominated. As a result of our recent international debt
issuance of US$400.0 million, we attained access to an additional source of long-term funding and
increased the average maturity of our liabilities and increased our liabilities denominated in U.S.
dollars. We have entered into hedging transactions to mitigate potential currency exchange risks in
connection with our U.S. dollar-denominated liabilities.
•
Solid Capital Base to Promote Growth. As of March 31, 2015, our stockholders’ equity was Ps.
1,793.2 million (US$117.6 million), which represented 9.8% of our total assets. Following the
consummation of the global offering, based on the offer price of Ps. 28.00 per Share, our stockholders’
equity, assuming the overallotment options are exercised in full, will be approximately Ps. 3,723.5
million, which will represent 18.5% of our total assets. We believe that these capitalization levels will
allow us to achieve attractive growth levels in the following years.
•
Market Knowledge, Experienced Management Team and Shareholder Support. We believe that our 22
years of experience in the leasing, financial factoring and lending industries, together with our
management’s experience in these sectors, provide us with extensive knowledge and understanding of
the products and services we offer, which has given us a competitive advantage over our competitors.
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Our board of directors and management team have broad experience in the financial services industry,
having held former positions with banking institutions as well as with operating leasing, financial
factoring, insurance and other lending institutions. The continuing support of our shareholders has also
been a significant factor contributing to our sustained growth. Our controlling shareholder is
committed to maintaining a sound administration and has made capital contributions and reinvestments
of net income to maintain strong capitalization levels to support our continued growth. In June 2014,
our shareholders approved a capital contribution and reinvestment of net income in the aggregate
amount of Ps. 600.0 million (US$39.4 million). We believe that our management team, board of
directors and controlling shareholder and their knowledge, experience and support are key
differentiating advantages of our Company. Upon completion of the global offering, our controlling
shareholder will continue to hold more than 60.0% of our capital stock.
•
Adherence to Strong Corporate Governance and Industry Best Practices. We have historically issued
debt securities through public offerings in Mexico under the supervision of the CNBV, and as a result
of the Mexican Offering we will continue to be subject to high standards of corporate governance,
reporting and other regulations as a publicly traded corporation (sociedad anónima bursátil). We
believe that this distinguishes us from other non-banking and privately held competitors and fosters a
high degree of trust among our customers and investors. Our board of directors is currently comprised
of 56.0% of independent directors, and we have established an audit committee, comprised entirely of
independent members, and a corporate practices committee, comprised of a majority of independent
members. We also maintain credit and risk committees that comply substantially with the standards of
the financial industry in Mexico.
•
Operating Platform that Presents Significant Barriers to Entry for New Market Participants. We
believe our operating platform has created unique barriers to entry for potential competitors. These
barriers include: (i) experience and expertise – we have obtained a unique understanding of the leasing,
financial factoring and lending industries in Mexico and of our customers’ needs, which has allowed us
to develop a diverse portfolio of products; (ii) personalized customer service – we have created a
culture of customer excellence in terms of our service and the quality of our products, as demonstrated
by our customers’ loyalty; (iii) capital, access to funding and profitability – in addition to the high
capitalization requirements necessary to provide leasing services, we have been successful in
maintaining sufficient financing sources and our profitability profile has allowed us to maintain
sustained growth; and (iv) advanced technological systems – we have developed and continue to
develop advanced technology systems to support our growth and improve our operational and risk
management processes.
Our Business Strategy
Our business strategy is to leverage our competitive strengths and operating efficiency in order to maintain
our portfolio growth while increasing our profitability and our product market share. We plan to continue pursuing
our business strategy by doing the following:
•
Maintaining our Leading Position in the Operating Leasing Market and Increasing our Participation in the
Mexican Financing Market. We believe that the Mexican financial industry offers attractive growth
potential. According to the latest information available from regulatory agencies of each respective
country, as of December 31, 2014, commercial loans represented 10.8% of Mexico’s GDP, relative to 47.8
in Chile, 26.9% in Brazil, 20.5% in Peru and 19.2% in Colombia. Furthermore, according to the latest
available information published by the Mexican Ministry of Economy, as of December 31, 2012, SMEs in
Mexico generated approximately 74.0% of formal jobs in Mexico, while according to the Mexican Institute
of the Entrepreneur (Instituto Mexicano del Emprendedor) only 15.0% of SMEs had access to bank loans
during 2012. In light of the current state of the financial industry in Mexico, we will continue to capitalize
on our leading market position in the Mexican leasing sector and on our knowledge and experience in the
financial industry and our investments in the development of products and marketing strategies, in order to
grow our business. We plan to continue to expand our operating leasing business by increasing our
participation in the underserved SME segment by offering financial solutions specifically tailored for the
SME segment. In our financial factoring business line, we intend to increase our market share by
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expanding our sales force specialized in factoring and by taking advantage of the expected growth of
certain economic sectors, such as infrastructure and energy, to provide factoring solutions to service
providers, contractors and other participants in such industries. We plan to continue capturing additional
market share in our auto loans and other lending business line by strengthening our existing strategic
alliances with car dealers and by increasing our sales and marketing efforts regionally through our local
offices. We also intend to support the growth of our three business lines by establishing and opening
additional regional offices.
•
Pursuing Cross-Selling Opportunities. We intend to increase our market share and profitability by crossselling our current products and services to existing and new customers. The loyalty of our customer base,
as a result of the quality of our services, as well as our constant monitoring of the financial condition and
business projections of our customers, represents an opportunity for us to offer our current customers
additional products based on their growth and capital needs. As of March 31, 2015, only 7.5% of our
customers had purchased two or more of our products, which we believe provides us with an opportunity to
grow through additional cross-selling of our products and services.
•
Focusing on Improving Operating Efficiencies. We are committed to maintaining our cost discipline and
improving our operating efficiency as we continue to expand our portfolio. We believe that an efficient
management of our administrative expenses will allow us to increase our competitiveness and profitability.
We continuously analyze and implement technological and business solutions to identify the most efficient
means of improving our credit and other internal processes, in order to increase our profitability. Through
these initiatives, we intend to continue to improve our operating efficiency and financial condition.
•
Identifying and Pursuing Business Opportunities in Economic Sectors with High Expected Growth. We
have invested significant resources in identifying potential clients and underserved markets and plan to
continue to invest in the future in order to focus our efforts on the economic sectors that are expected to
have significant levels of growth, such as medium-sized enterprises and other sectors expected to benefit
from the implementation of the Structural Reforms. We have established a division specializing in energy
and infrastructure to develop a business strategy targeting these sectors.
•
Maintaining Customer Loyalty and Developing New Customer Relationships. We are committed to
generating customer loyalty, maintaining high standards of service quality and offering our customers
financial solutions that meet their capital requirements. We intend to reach new customers through our
existing distribution network and through our expansion by opening new regional offices and strengthening
our sales efforts targeted at potential customers identified by analyzing economic and industry data.
•
Maintaining a Solid Balance between our Loan Portfolio and our Indebtedness. We intend to continue
maintaining a sound balance between the terms of our financial indebtedness, including interest rates,
currency and maturity, and those of our loan portfolio, thereby reducing credit risks. Our leases have an
average term of 36 months and our factoring operations have an average term of 120 days in comparison to
our principal financial liabilities for which the maturity ranges between three and five years with an
average term of 40 months. We strive to extend the average term of our financial obligations in order to
reduce credit risks. Additionally, we will continue to maintain diverse funding sources in order to avoid
risks associated with obtaining funding from a limited number of creditors. The chart below shows the
maturity profile of our outstanding debt for the periods shown.
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_______________________
Our History
múltiple, entidad no regulada) under the laws of Mexico. We were incorporated in 1993 under the corporate name
Arrendadora Axis, S.A. de C.V. In 1996, we changed our corporate name to Arrendadora Unifin, S.A. de C.V. By
resolution of our shareholders adopted on September 27, 2006, we amended our by-laws in order to become
organized as a Sofom Entidad No Regulada. In 2009, we changed our corporate name again to Unifin Financiera,
S.A. de C.V., Sociedad Financiera de Objecto Múltiple, Entidad No Regulada. By the unanimous resolutions of our
shareholders dated October 1, 2009, we became a sociedad anónima promotora de inversion, regulated by the
applicable provisions of the Mexican Securities Market Law, the Mexican General Corporations Law and the
GLACOA. In accordance with the resolutions adopted by our shareholders meetings dated February 26, 2015, April
13, 2015 and the unanimous resolutions adopted by our shareholders on May 7, 2015, we adopted the form of a
publicly traded variable capital stock corporation (sociedad anónima bursátil de capital variable), amended our bylaws and changed our name to the current name of Unifin Financiera, S.A.B. de C.V., Sociedad Financiera de
Objecto Múltiple, Entidad No Regulada.
In 2000, we initiated a process for the adoption of internal control, operations and corporate governance
standards which involved several changes within our Company, including hiring new personnel, changing external
auditors, making strong investments in information technology, improving internal processes and adding
independent directors with strong expertise in the financial industry to our board of directors. All of these changes
permitted us to access new sources of funding through the BMV by issuing debt and asset backed securities, as well
as other financings obtained from international and domestic financial institutions.
On October 3, 2008, we created Fundación Unifin, A.C. (“Fundación Unifin”). Through Fundación Unifin,
we donate a portion of our profits to various non-profit organizations in Mexico to support education, health, people
with physical and learning disabilities and organizations engaged in improving the Mexican community.
On October 22, 2009, we formed Unifin Factoring, S.A. de C.V., Sociedad Financiera de Objecto Múltiple,
Entidad No Regulada as a wholly owned subsidiary, which is engaged in the factoring and credit businesses.
Pursuant to resolutions approved during a shareholders’ meeting held on October 18, 2011, Unifin Factoring
changed its corporate name to Unifin Credit, S.A. de C.V., Sociedad Financiera de Objecto Múltiple, Entidad No
Regulada, its current corporate name.
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On November 3, 2009, we purchased 99.99% of the shares of Unifin Autos, S.A. de C.V., a company
incorporated on November 31, 2003, engaged in the purchase and sale of vehicles and other assets (“Unifin Autos”).
In 2009, Promecap, S.A. de C.V. and Análisis y Ejecución de Proyectos San Luis, S.A. de C.V. acquired
through share subscription 20.0% of our capital stock.
By means of the resolutons that took place in February, April and May 2015, our shareholders approved the
global offering, adopted our new entity regime to become a publicly traded corporation (sociedad anónima bursátil),
and modified our bylaws.
On April 13, 2015, the general extraordinary shareholders meeting of the Issuer approved the merger of
Unifin Capital, our controlling shareholder at the time, into the Issuer with the Issuer continuing as the surviving
entity. The merger became effective on April 30, 2015. As a result of this merger, the shareholders of Unifin
Capital received equity originally owned by Unifin Capital. Furthermore, the shareholders of Unifin Capital
subsequently transferred all their shares representing the capital stock of the Issuer received in connection with the
merger to the Trust. See “Principal and Selling Shareholders.”
Industry Overview
We believe that the prospects of the Mexican economy represent an attractive opportunity for us to
continue to grow our business and to sustain our consistent past performance. We also believe that we are well
positioned to take advantage of these opportunities presented by the Mexican economy. Furthermore, the
fundamentally sound Mexican financial system, the recent Structural Reforms and the Mexican government’s plan
for infrastructure developments in the coming years each further enhance the outlook for our operating leasing,
financial factoring and auto loans and other lending business lines.
Strong Macroeconomic Environment
Mexico, as the second largest market in Latin America, both in terms of GDP and population, is expected
to grow 3.0% in 2015 and 3.5% in 2016, according to analyst consensus published by Bloomberg, which compares
favorably not only to the region, but also relative to other developed markets. The chart below represents Mexico’s
estimated GDP growth and inflation for 2015 and 2016 as compared to Latin America generally, the United States
and the European Union, according to information published by Bloomberg.
Mexico
2015E
2016E
GDP Growth ....................
3.0%
3.5%
Inflation ...........................
3.3%
3.5%
_______________________
Source:
Latin America
2015E
2016E
0.8%
2.3%
10.3%
9.8%
United States
2015E
2016E
2.9%
2.9%
0.3%
2.2%
European Union
2015E
2016E
1.6%
1.8%
0.1%
1.3%
Bloomberg, as of April 17, 2015.
These growth estimates are underpinned by Mexico’s prudent monetary, fiscal and public-debt policies. As
of October 31, 2014, Mexico’s gross government debt represented 48.0% of GDP, relative to 39.9% across Latin
America, 84.8% for the Eurozone and 105.6% for the United States. Mexico has consistently grown its balance of
international reserves, which have increased from US$142 billion in 2011 to US$164 billion in 2012, US$177
billion in 2013 and US$193 billion in 2014. The growth observed in Mexico’s economy has been recognized by
credit rating agencies, with Moody’s Investors Service, Inc. increasing Mexico’s rating for long-term foreign
currency from Baa1 to A3 in February 2014. Fitch, Inc. and Standard & Poor’s had also increased Mexico’s longterm foreign currency rating to BBB+ from BBB in May 2013.
Outlook Enhanced by Recent Reforms
Mexico approved the Structural Reforms between 2013 and 2014. These include the telecommunications,
fiscal, financial, energy, education and competition reforms. According to market analysts, in total, these reforms
are estimated to have the potential to enhance Mexico’s annual GDP growth by an additional 0.8% to 1.7% from
2015 to 2018. This estimated increased GDP growth is attributed to each reform, with the Tax Reforms expected to
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contribute 0.2%, the labor reform expected to contribute up to 0.2%, the telecommunication reform expected to
contribute 0.2%, the Financial Reform expected to contribute 0.4% and the energy reform expected to contribute
0.7%.
Developing SME Sector
Mexico’s capacity for the sustainable growth of the financial services industry is enhanced by the low
levels of credit penetration relative to other markets in the region. According to the latest information available
from regulatory agencies of each county, as of December 31, 2014, commercial loans represented 10.8% of
Mexico’s GDP, relative to 47.8% in Chile, 26.9% in Brazil, 20.5% in Peru and 19.2% in Colombia. We believe this
represents an important growth opportunity for the institutions in the financial services industry, including us. In
addition, in terms of operating lease product penetration, Mexico has one of the lowest levels as a percentage of
GDP relative to other markets in the region. According to the World Bank, as of December 31, 2013, operating
lease products in Mexico represented only 0.8% of GDP, relative to 6.8% in Chile, 4.1% in Colombia, 4.0% in Peru
and 0.6% in Brazil. We believe this represents an important opportunity to expand our offerings of operating lease
products which we believe will provide additional benefits to our customers compared to other financial products.
Within Mexico’s overall market, SMEs are significantly underserved with respect to access to financial
markets, relative to their scale. As of December 31, 2012, SMEs represented 99.9% of all Mexican enterprises,
according to the latest available information published by the Mexican Ministry of Economy, and were responsible
for 52.5% of Mexico’s GDP for 2008. Furthermore, although SMEs employed approximately 74% of the Mexican
labor force in 2012, they only received 15.0% of the country’s financing during such period.
The concentration of these SMEs in selected Mexican states also represents an attractive opportunity to
serve these customers with a targeted approach. According to the INEGI, 47.9% of the SMEs in Mexico are located
in regions in which we have a physical presence.
Attractive Operating Leasing Market
The Mexican operating lease industry is highly fragmented with only a few sizable players. Our main
competition is as follows:
•
international players including, among others, CHG-MERIDIAN, Deutsche Computer Leasing AG, CSI
Leasing Inc. and General Electric Company;
•
players related to diversified financial groups including, among others, Facileasing, S.A. de C.V. (part of
Banco Bilbao Vizcaya Argentaria), Arrendadora y Factor Banorte, S.A. de C.V., SOFOM, E.R., Grupo
Financiero Banorte, Arrendadora Actinver, S.A. de C.V., AF Banregio, S.A. de C.V., SOFOM, E.R.,
Banregio Grupo Financerio (which recently announced its acquisition of the Mexican leasing business of
CIT Group), Arrendadora Ve por Más, S.A. de C.V., SOFOM, E.R., Grupo Financiero Ve por Más and
Invex Arrendadora, S.A. de C.V.;
105
•
players related to brands including, among others, Volkswagen Leasing S.A. de C.V., Caterpillar Crédito,
S.A. de C.V., SOFOM, E.N.R., Hewlett Packard Operations México, S. de R.L. de C.V., GM Financial de
México, S.A. de C.V., SOFOM, E.N.R., Paccar Financial México, S.A. de C.V., SOFOM, E.N.R., Navistar
Financial, S.A. de C.V., SOFOM, E.N.R., and Daimler Financial Services, S.A. de C.V., SOFOM, E.N.R.
and NR Finance México, S.A. de C.V.; and
•
independent players including ABC Leasing, S.A. de C.V., Magna Arrendadora, S.A. de C.V.,
Arrendomovil de México, S.A. de C.V., Docuformas, S.A.P.I. de C.V., Corporación Financiera Atlas, S.A.
de C.V., SOFOM, E.N.R., Financiera Bepensa, S.A. de C.V., SOFOM, E.N.R., and TIP de México,
S.A.P.I. de C.V.
We believe that we are the leading independent (non-bank) leasing company in Latin America. The
following table presents the market position of the top independent lease providers in Latin America, as published
by the last Alta LAR 100 report by The Alta Group in November 2014:
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Our Business Lines
We conduct our operating leasing, auto loans for individuals and other lending operations through Unifin.
Our financial factoring business and auto loans to legal entities and credit business are conducted through our
subsidiary, Unifin Credit. Unifin Autos retains our auto purchases and sales business.
The following chart summarizes our corporate structure as of the date of this offering memorandum,
including our principal subsidiaries and business lines:
Issuing entity
Unifin Financiera
S.A.B.
SOFOM,
SAPI de
de C.V.,
CV SOFOM
E.N.R
ENR
99.99%
Financial
Factoring
Unifin Credit
S.A. de C.V. SOFOM,
E.N.R.
99.99%
Unifin Autos,
S.A. de C.V.
Operating
Leasing
Auto
and
Other Leasing
Asset
Sales
Asset
Purchase
Unifin also has a majority stake in the following companies, which are not considered significant
subsidiaries: (i) Unifin Infraestructura, S.A. de C.V., a company that has no operations to date and which we expect
to use to generate business strategies aimed at the energy and infrastructure sector; (ii) Citation VII Leasing Corp.,
which has no operations to date; (iii) Inversiones Inmobiliarias Industriales, S.A.P.I. de C.V., the owner of certain
real estate assets leased to third parties; and (iv) Unifin, Agente de Seguros y de Fianzas, S.A. de C.V., which has no
operations to date. In November 2014, Unifin acquired 100% of Unifin, Agente de Seguros y de Fianzas, S.A. de
C.V. from Unifin Capital, its parent company at that time, at Unifin Capital’s nominal value. Since 2013,
Inteprotección has acted as the main insurance intermediary involved in our leasing transactions in the ordinary
course of our business. Also, through Unifin, Agente de Seguro y de Fianzas, S.A. de C.V., Unifin and
Interprotección plan to implement and carry out a business strategy to address insurance needs of our clients or third
parties referred by us. On December 23, 2014 Unifin sold 25% of the capital stock of Unifin, Agente de Seguros y
de Fianzas, S.A. de C.V. for a total amount of Ps. 88.2 million, which will be paid on June 30, 2015. See Note 1 of
the Audited Financial Statements and Note 12 of our Interim Financial Statements. The parties involved are
currently negotiating the purchase by Interprotección of up to 51% of the capital stock of Unifin, Agente de Seguros
y de Fianzas, S.A. de C.V.
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The following table summarizes the main terms by which we operate our three business lines – operating
leasing, financial factoring and auto loans and other lending:
FINANCIAL
FACTORING
AUTO AND OTHER
LOANS
Individuals with business
activities and medium-sized
businesses
Individuals and legal entities
OPERATING LEASING
PROSPECTIVE
CUSTOMERS:
Individuals with business
activities and medium-sized
businesses
CREDIT
TYPES:
Operating leasing
-
Factoring with direct
collection
Factoring with assigned
collection
Vendor factoring
Primarily auto loans
USE OF
PROCEEDS:
Equipment, machinery,
transportation (including
automobiles, trucks,
helicopters, planes and ships)
and other assets in a variety
of industries
INTEREST
RATE:
Between 16.0% and 23.0%
fixed
Max: TIIE + 19.0%
AMOUNT:
Between Ps. 100,000 and
Ps. 150,000,000
Ps. 150,000,000
80.0% of the value of the
vehicle
PERIOD:
12 to 48 months
8 days to 180 days
12 to 60 months
COMMISSION:
Between 1.0% and 3.0% of
the loan
0.5%, up to 1.5% of the total
amount, per month term
12 to 48 month-loans: 2%
COLLATERAL:
Personal and corporate
guarantees. Upon credit
committee request, in
equipment and machinery
(except transport equipment)
transactions exceeding Ps. 5
million, collateral on real
property
Assignment of loan
documentation (invoices,
receipts, among others),
guarantees and, upon credit
committee request, collateral
on real property
Working capital
Vehicles
Min: TIIE + 12.5 %
Between 12.0% and 18.0%
fixed
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60 month-loans: 3%
Personal guarantees and
collateral
The following charts reflect the size of each of our business lines with respect to our total portfolio and as a
percentage of our income as of December 31, 2012, 2013 and 2014 and as of March 31 2015:
Operating Leasing(1) ..................
Financial Factoring ....................
Auto Loans and Other
Lending ..................................
Total ..........................................
________________________
Total Loan Portfolio
As of December 31,
As of December
2013
31, 2014
69.9%
7,345.2
79.0%
8,779.9
76.4%
19.5%
1,116.3
12.0%
1,294.7
11.3%
As of December 31,
2012
As of March 31,
2015
4,304.5
1,197.3
9,919.8
1,283.4
77.4%
10.0%
1,607.9
12,811.1
12.6%
100.0%
577.7
6,155.4
10.6%
100.00%
836.0
9,297.5
9.0%
100.0%
1,413.7
11,488.3
12.3%
100.0%
(1)
(1) Including off - balance sheet
accounts.
Total Loan Portfolio by Income
As of December 31,
As of December
2013
31, 2014
89.2% 2,871.1
91.0% 4,674.8
90.3%
8.1%
182.2
5.8%
240.9
4.7%
As of December 31,
2012
Operating Leasing ....................
Financial Factoring ..................
Auto Loans and Other
Lending .................................
Total .........................................
2,075.4
188.2
61.8
2,325.4
2.7%
100.0%
100.5
3,153.8
3.2%
100.0%
263.0
5,178.7
5.0%
100.0%
As of March 31,
2015
1,424.9
46.9
95.0%
3.1%
28.0
1,499.8
1.9%
100.0%
The charts below show the geographic distribution of our leasing and financial factoring businesses as of
March 31, 2015:
Operating Leasing
Financial Factoring
Leasing Business Overview
We are engaged in operating leasing where we, as lessor, allow the temporary use and enjoyment of
machinery, equipment, transportation vehicles (including automobiles, trucks, helicopters, planes and ships) and
other assets in a variety of industries to individuals and legal entities, as lessees, in return for, among other things,
rental payments, guarantee deposits and the lessees’ assumption of certain costs and obligations related with the
upkeep and maintenance of the leased asset such as insurance and tax payments. We recognize depreciation on the
109
asset and retain the risks of ownership, including obsolescence. In addition, we derive part of our income from lease
renewals and the sale of leased equipment at the end of the lease term.
Our customer base is comprised of individuals carrying out business activities in Mexico and medium-sized
companies. The term of our lease products ranges from 12 to 48 months with an average maturity of 36 months.
Our leasing business accounted for 76.4% of our total portfolio and 90.3% of our total revenues for the
three months ended March 31, 2015 and accounted for 75.6% of our total portfolio and 90.5% of our total revenues
for the year ended December 31, 2014.
Operating Leases by Industry
The following table sets forth the composition by industry of our leasing customers, including off-balance
sheet accounts:
As of December 31,
2013
2014
898.5
932.7
1,478.6
1,739.1
383.0
0.0
2,526.9
2,563.2
489.0
1,361.9
1,569.2
2,183.0
7,345.2
8,779.9
2012
Economic Sector:
Commerce................................................
Construction ............................................
Government .............................................
Services ...................................................
Transportation..........................................
Others ......................................................
Total.........................................................
491.5
817.6
49.2
1,593.2
452.8
900.2
4,304.5
As of March 31,
2015
1,256.8
1,911.7
0.0
2,738.7
1,583.4
2,429.2
9,919.8
Operating Leases Data
The following table sets forth the number of our operating lease customers, portfolio and average loans for
the periods indicated, including off-balance sheet accounts:
As of
Customers
(thousands)
1.0
1.2
1.6
1.7
December 31, 2012 ................................................
December 31, 2013 ................................................
December 31, 2014 ................................................
March 31, 2015 ......................................................
Portfolio
Average Loans
4,304.5
4.0
7,345.2
5.9
8,779.9
5.9
9,919.8
5.8
Operating Leases by Type of Asset
The following table sets forth our leasing products portfolio by type of asset, for the periods indicated,
2012
Boats ...................................................
IT equipment ......................................
Medical equipment .............................
Transportation.....................................
Machinery ...........................................
Others .................................................
Total....................................................
As of December 31,
2013
2014
322.2
63.4
34.2
1,696.8
1,631.1
556.8
4,304.5
110
491.3
57.0
75.0
2,972.9
2,806.9
942.1
7,345.2
319.2
206.8
72.4
2,445.4
3,602.6
2,133.4
8,779.9
As of March 31,
2015
208.1
226.1
77.2
2,641.4
4,175.9
2,591.1
9,919.8
The following chart represents the CAGR of our operating leasing business line originated from 2011 to
2014 and the first quarter of 2015, in millions of pesos:
Financial Factoring
Business Overview
Through our financial factoring business line, we acquire accounts receivables from individuals and legal
entities, at a discount to their face value. Within our financial factoring line, we offer three products: (i) factoring
with direct collection, where we collect the accounts receivables from the debtor; (ii) factoring with delegated
collection, where our customer is obligated to collect payments from the relevant debtor and has to further deliver
such amounts collected to us in a timely manner; and (iii) vendor factoring, in which we purchase from suppliers our
customers’ accounts receivable. All of our financial factoring transactions require our customers to remain jointly
and severally liable with respect to the debtor’s payment obligations. Our financial factoring business accounted for
3.7% of our revenues for the year ended December 31, 2014 and 3.1% for the three months ended March 31, 2015.
Financial Factoring Operations, Current and Non-Current
The following table sets forth our portfolio balance derived from our financial factoring activities:
2012
Financial factoring portfolio balance ..............................
Allowance for loan losses of factoring transactions .......
Financial factoring portfolio balance – net .....................
As of December 31,
2013
2014
1,197.3
1,197.3
1,116.4
(52.1)
1,064.2
1,294.7
(11.1)
1,284.6
As of March 31,
2015
1,283.4
1,283.4
Financial Factoring Loans Data
The following table sets forth our portfolio balance related to our financial factoring loans and the number
of financial factoring customers for the periods indicated:
As of
December 31, 2012 ...............................................................................
December 31, 2013 ...............................................................................
December 31, 2014 ...............................................................................
March 31, 2015 .....................................................................................
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Number of
Portfolio Balance
Customers
1,197.3
242
1,116.3
282
1,294.7
303
1,283.4
311
Financial Factoring Portfolio by Economic Activity
The following table presents the financial factoring portfolio broken out by economic sector showing our
concentration of credit risk:
As of December 31,
2013
2012
Economic sector
Commerce...................................................
Construction................................................
Government ................................................
Services.......................................................
Transport.....................................................
Other ...........................................................
Total ...........................................................
468.9
303.3
40.8
260.3
12.3
111.7
1,197.3
372.0
284.5
144.3
223.5
11.3
80.7
1,116.3
2014
276.2
242.2
0.0
531.6
65.2
179.5
1,294.7
As of March 31,
2015
296.1
208.3
0.0
483.3
72.8
222.9
1,283.4
The following chart represents the CAGR of our financial factoring business volume from 2011 to 2014
and the first quarter of 2015, for volume traded, in millions of pesos:
Auto Loans and Other Lending
Business Overview
Our auto and other loans business accounted for 5.0% of our total revenues for the year ended
December 31, 2014 and 1.9% for the three months ended March 31, 2015. We provide auto financing for up to
80.0% of the value of the vehicle for a term of 12 to 60 months. This product is targeted at purchasers of new or
used vehicles for personal or commercial use.
112
The following chart represents the CAGR of the amount of auto loans originated (excluding other lending)
from 2012 to 2014 and the first quarter of 2015, in millions of pesos:
Distribution Channels
Our main office is located in Mexico City and we currently have regional offices in Monterrey,
Guadalajara, Cancún, Chihuahua, Puebla, Hermosillo, Querétaro and Mérida. According to the INEGI, the regions
in which we have a physical presence represented 47.9% of the total number of SMEs in Mexico in 2013 and an
increase of 1.5% is expected with the opening of our new office in Mérida and a subsequent increase of 5.3% is
expected after the following office opening in Veracruz. In addition, we are currently in four out of five regions
with the greatest number of SMEs.
The following graphic illustrates our regional offices:
According to INEGI, the regions where we have a physical presence accounted for 53.7% of Mexico’s
GDP in 2013, and this is expected to grow by 1.5% with the recent opening of the Mérida office and by 5.3% with
the upcoming office opening in Veracruz.
113
We provide our leasing and financial factoring products through the following distribution channels:
(i) direct contact with potential and recurrent customers; (ii) customer referrals; and (iii) marketing efforts.
•
Direct Contact with Potential and Recurrent Customers: We identify potential customers from analyzing
economic industry or sector – specific information developed or obtained from various sources including
industry chambers, other organizations, data providers and networking events. Our sales representatives
contact such potential customers by various means, including in-person visits, telephone calls and direct
electronic mailing. Our sales team is also focused on maintaining constant contact with long-term
customers, aiming to preserve our business relationship with such customers.
•
Customer Referrals: We market our services to customers referenced directly by other customers, suppliers
or business partners.
•
Marketing Efforts: We have developed a strong and diversified marketing strategy, which allows us to
market our services to specific customers. Such strategy includes printed advertising (including magazines,
newspapers, brochures, fliers, etc.), billboards, radio advertising and trade shows and other events.
Our operating leasing and auto loans and other lending businesses are offered through dealers with whom
we maintain strategic business alliances. We currently maintain business relationships with more than 1,100 car
dealers, through which we offer our auto financing and leasing services to their respective customers.
Credit Application and Approval Processes
Our application and approval processes have been designed to minimize operating costs and time, as well
as to effectively manage risk. These processes leverage an advanced technology platform in which we constantly
make significant investments. The following graphic illustrates the efficient process that we use to analyze and
approve credit requests:
The application and approval processes for the products of our leasing and financial factoring business lines
are similar. Applications are evaluated by the credit risk office and, depending on the amount being financed the
application may be approved by one or more of our credit committee members through an electronic platform, by
our credit committee or by our corporate credit committee. Once financing is approved, our customers must sign a
master agreement with our general financing terms and conditions.
114
The following represents our authorization policy for our leasing and financial factoring business lines:
•
Loans of up to Ps. 5.0 million are authorized by one or more of our credit committee members through an
e-platform. Such authorizations are granted based on our internal policies on corporate signing and
delegation of authorities.
•
Loans ranging from Ps. 5.0 million to Ps. 150.0 million need to be authorized by a majority of our credit
committee, which meets two times per week.
•
Loans exceeding Ps. 150.0 million need to be approved by a majority of our corporate credit committee
with previous recommendation from the credit committee.
During the approval process, we employ a scoring system for leasing, financial factoring and credit
applications which is evaluated periodically against our credit policies and business objectives. The scoring
methodology assigns specific weights to key variables such as financial evaluation and customer productivity, and
then converts these variables into a rating, which allows us to approve or reject loan disbursement applications more
accurately. All documentation received from an applicant is digitalized and sent to our operations center for
uploading into our proprietary computing system. This allows our sales force to focus on their core objective, which
is to attract new customers, reducing the time to approve loan disbursement applications and minimizing errors in
data inputting.
The following chart summarizes our scoring process, comprised of three key elements: (i) credit scoring;
(ii) results of credit and legal bureaus; and (iii) bank and commercial references:
Credit & legal
bureau
Credit scoring


Financial ratios
Generated cash flow

Audited financial
information



Credit and legal
history
Credit experience

References
Qualitative
information

Default levels

NPL history


3 Banking
references
3 Commercial
references
Economic sector and
company’s activity
We believe that our origination process and credit policies and procedures have enabled us to maintain
historically low default rates on our portfolio.
Collections
We have a sophisticated web-based platform that allows us to constantly monitor our loan portfolio
performance both on an aggregate and individual level. We actively monitor performance trends to manage risk and
endeavor to take preemptive actions when required. See “—Information Technology.”
We have developed an advanced collection process comprised of both remote and in-person activities,
supported by an experienced team of collection agents and attorneys. We act promptly upon a customer default by
means of our call center and teams of collectors.
115
Leasing
The following is a description of our collection method for our operating leasing business:
•
We initiate our collecting process for our leases five business days prior to the payment date by sending an
automatic electronic reminder to our customers.
•
Next, we apply the funds received on the due date and the next business day as a result of the collection
process.
•
During a period of two to seven days following the maturity date of any lease payment, an initial collection
team engages in actions to collect payments, consisting primarily of electronic reminders.
•
During a period of eight to 30 days following the maturity date, a second team pursues collection efforts
through our call center and through electronic reminders, logging the results.
•
During the period of 31 to 60 days following the maturity date, a third team engages in actions to collect
payments, including visits to the customer and/or relevant debtor, delivering formal payment requests.
•
During the period of 61 to 90 days following the maturity date, a work-out team pursues intensive
collection efforts, which include preparing for a possible judicial proceeding. During this stage, the workout team delivers payment notices to the debtor, guarantor and/or joint obligor and depositary before a
Public Notary.
•
If the lease remains past due for more than 90 days, we begin judicial proceedings.
With respect to our leasing portfolio, our leasing contracts provide for the appointment of a depository who
is responsible for the delivery of the leased assets upon default, which has contributed to the timely collection of
accounts.
Allowances for losses are accrued based on the accounting criteria of the CNBV. See “—Allowance for
Loan Losses.”
Financial Factoring
We have similar collection processes for the different products offered under our financial factoring
business line. When we analyze potential factoring transactions, we compile a file for each customer and their
corresponding debtor.
The following is a description of our collection method for our financial factoring business:
•
On the first day of each month, we notify each customer via email specifying the accounts receivable that
will expire during the month.
•
One day before maturity customers receive a second notice regarding the amount due.
•
We initiate our collection process upon maturity of the invoices or receivables acquired on any factoring
transaction and for a period of 15 days by contacting our customers and/or the relevant debtors by mobile
phone text messages, telephone calls, regular mail, or email, and by in-person visits to their home or place
of employment.
•
In cases where accounts receivables are delinquent for more than 15 days, a second team initiates
extrajudicial collection processes, including visits to the customer and/or relevant debtor, delivering formal
payment requests.
116
•
If any invoices or receivables remain past due for more than 30 days, we deliver a notice of default, by
means of a Mexican notary public, to the customers and/or the relevant debtor, thereby formally requiring
payment.
•
If any invoices or receivables remain past due for more than 60 days, we may begin judicial proceedings.
Allowances for losses are accrued based on the accounting criteria of the CNBV. See “—Allowance for
Loan Losses.”
Loans
Substantially all of our loans are paid by means of direct debit. If we do not obtain payment by direct debit,
we initiate a collection process in the same manner as described for our leasing business.
Portfolio Performance
During the past five years, our average delinquency rate has been lower than 1.0%. As of December 31,
2012, 2013 and 2014, our non-performing loans accounted for 0.3%, 1.9% (0.6% in 2013 excluding the
extraordinary reserves resulting from a Ps. 120.0 million financial factoring account, which was fully recovered in
June 2014) and 0.61%, respectively, of our total loan portfolio, including off-balance sheet accounts. As of March
31, 2015, our non-performing loans accounted for 0.7% of our total loan portfolio, including off-balance accounts.
The following chart shows our historical non-performing loans ratio as compared to our total portfolio:
Collection History (as a percentage of the lease portfolio)
Non-Performing Loans (as a percentage of the total portfolio)
117
As shown in the charts above, our non-performing loan rate increased in 2013. This increase was a result
of a default by one of our customers, under its factoring and leasing obligations. The recovery in full of this account
took place in June 2014. See “Summary—Recent Developments.”
Risk Management
Credit Risk
Credit risk is the possibility of a loss arising from a credit event, such as deterioration in the financial
condition of a borrower, which causes an asset to lose value. The purpose of credit risk management is to mitigate
risk, keeping credit risk exposure within a permissible level relative to capital; to maintain the soundness of assets;
and to ensure returns commensurate with risk. Our current credit policy sets forth uniform and basic operating
concepts, code of conduct and standards for credit operations. By giving our employees extensive credit training,
we aim to achieve a high standard of credit risk management and to create a better credit management culture within
our Company.
We have developed and refined our own proprietary underwriting standards and credit review system. In
addition to relying on quantitative measures, we also rely on qualitative measures that allow us to make use of our
knowledge and experience in evaluating credit risk on a case-by-case basis. We believe our risk analysis systems
allow us to make better credit decisions when evaluating credit applications from customers with limited credit
histories or customers who work in the informal economy. We believe that our business model limits our credit
exposure to credit risk.
As part of our ongoing process to monitor risks, we monitor the credit collection process, which is the most
important element in our credit process. We analyze, evaluate and monitor every loan. Special attention is paid to
non-performing loans, and stricter measures are used to monitor these loans.
Operational Risk
Operational risk is defined as the possibility of loss caused by internal or external failures due to
insufficiencies in processes, people or systems. In order to address the risk type, as well as internal control, we have
an internal audit team, which has developed an operating risk management methodology and framework based on
Basel II, COSO II (Committee of Sponsoring Organizations of the Treadway Commission) and Enterprise Risk
Management (ERM), which allows us to identify, analyze, quantify and prioritize possible loss events. This also
allows us to establish the proper actions to mitigate, transfer or assume operating risks, and to monitor, control and
register risks in a standardized manner.
Employees and Labor Relations
All of our employees are hired though Unifin Servicios Administrativos, S.A. de C.V. and Unifin
Administración Corporativa, S.A. de C.V. with which we have entered into services agreements for such purposes.
The total number of employees of these service companies that provide us with services has increased according to
our needs and business strategies. As of March 31, 2015, we had 367 employees, all of whom were non-unionized.
The following charts show: (i) the growth of our work force; and (ii) the breakdown of our personnel by
activities, in each case as of the end of each of the periods shown:
118
As of March 31, 2015, our sales force, which accounted for 32.2% of our total work force, was subject to
variable compensation plans, based on sales and other financial benchmarks. We have established a variable
compensation policy for account executives, managers and directors. In the case of account executives, a budget is
set for each executive and a commission of 12.0% is paid when the amount of originated loans exceeds such budget.
With respect to managers, a variable compensation of 5.0% of the total amount originated by such manager and his
or her team is paid with respect to originated loans that exceed 80.0% of the total group budget. Directors receive a
commission of 0.1.0% for loans originated by their respective teams.
Information Technology
We have a unique business intelligence system which provides us online access to a wide range of financial
and operational information relating to our loans and our borrowers, including our customers’ credit records. This
information allows us to efficiently manage and monitor customer contact, payment information, the status of
collection processes and a variety of other key metrics and statistics about customers’ credit history with us. This
system has been developed for the administration and management of information and is used by our managers and
sub-managers.
We believe that our information technology system enables us to quickly and efficiently (i) make
adjustments to credit policies, (ii) track and analyze the credit behavior of our customers, (iii) make informed
decisions about new products to market and develop such products, (iv) optimize loan approval and collection,
(v) reduce the cost and time associated with loan approvals, monitoring and collection practices and (vi) identify
unusual transactions so that we can comply with our anti-money laundering law reporting obligations. For example,
one system that we have developed in the leasing and auto financing business allows us to receive internet loan
applications and approve or reject such applications within approximately 72 hours (except for loans exceeding Ps. 5
million). We believe that our operating efficiency, information management and technology systems are more
competitive that those found in traditional financial institutions and have differentiated us from our competitors.
Our technology equipment receives preventative maintenance approximately every six months and all
equipment that has been in service for more than three years is replaced by new equipment. During 2014, we
invested approximately Ps. 26.4 million in technology equipment upgrades.
We have an on-site information management center as well as an off-site data center. Our on-site
information management center processes everyday operations and our off-site data center works as a back-up
system in the event of a contingency. All of our systems are subject to security and quality control standards that are
in line with industry practices. As of the date of this offering memorandum, we have not encountered any
contingency.
Properties and Leases
We lease the premises where our executive offices and main operations center is located in Mexico City.
We also have eight regional offices located throughout Mexico, all of which we lease.
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Intellectual Property
We own certain classes of the trademark Unifin®. We also have rights to use the trademarks, service
marks and trade names owned by Unifin Capital, S.A. de C.V., in conjunction with the operation of our business.
Some of the more important trademarks that we have rights to use include: Unifin®, Unifin Financiera®,
Unileasing®, Unifinanciar®, Unifactoring®, Unifactoraje®, Unifin Credit®, Uniautos®,Unidos por un mismo fin®
and Soluciones Financieras a tu Medida®, each of which is registered in Mexico and may be registered in other
jurisdictions.
We believe that such trademarks, trade names and service marks are valuable assets to us which
successfully differentiate us from our competitors. We actively protect our intellectual property rights.
Insurance
We maintain insurance policies that are customary for companies operating in our industry. In addition to
civil liability insurance, we maintain insurance policies covering our fixed assets, equipment and leased assets that
protect us in the event of natural disasters or third party injury. We believe that our insurance policies are adequate
to meet our needs.
Legal Proceedings
We are from time to time involved in certain legal proceedings that are incidental to the normal course of
our business. As of the date of this offering memorandum, we do not believe that we are involved in any legal
proceedings the outcome of which, if decided adversely to us, would have a material adverse effect on our business,
financial condition, cash flows or results of operations.
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MANAGEMENT
Board of Directors
We are managed by our board of directors which, in accordance with our by-laws, may consist of up to 21
directors, of which at least 25.0% must be independent according to the Mexican Securities Markets Law. Each
director may have an alternate, and the alternate directors of independent directors also must be independent.
Currently, our board of directors consists of 9 directors and their respective alternates, elected or ratified by
our shareholders’ meeting on April 13, 2015, each of whose tenure is for one year but who will continue after that
period for up to 30 days in the absence of a designation of the individuals that would substitute them. The following
are the current members of the board of directors, their titles and their ages:
Name
Rodrigo Lebois Mateos
Luis Gerardo Barroso González
Rodrigo Balli Thiele
Almudena Lebois Ocejo
Federico Chávez Peón
José Luis Llamas Figueroa
José Luis Fernández Fernández
Juan Marco Gutiérrez Wanless
Enrique Luis Castillo Sánchez Mejorada
Juan José Trevilla Rivadeneyra
Fernando Manuel Rangel Zorrilla
___________________________________
Title
Chairman of the Board
Director
Director
Director
Director
Director(1)
Director(1)
Director(1)
Director(1)
Secretary
Undersecretary
Age
51
51
40
26
48
50
55
55
57
63
40
Year of
Appointment
1993
2001
2015
2015
2003
2007
2012
2015
2015
2012
2012
(1) Independent Director.
The following biographies provide certain information about the members of our board of directors:
Rodrigo Lebois Mateos. Mr. Lebois is the Chairman of our board of directors, the Chairman of the
Executive Committee and one of our principal shareholders. Prior to creating Unifin in 1993, he held several
positions with car dealer companies, including General Manager and member of the board of directors of Grupo
Ford Satélite. He also served as President of the National Association of Nissan Car Dealers (ANDANAC), and a
director of Sistema de Crédito Automotriz, S.A. de C.V. (SICREA) and Arrendadora Nimex. Mr. Lebois is currently
the President of Fundación Unifin, A.C. and Chairman of the board of Unifin Credit, Unifin Autos, Unifin, Agente
de Seguros y Fianzas, S.A. de C.V. and Aralpa Capital, S.A. de C.V. He also serves as a director of Maxcom
Telecomunicaciones, S.A.B. de C.V. Mr. Lebois completed studies in business administration from Universidad
Anahuac and has completed several executive programs.
Luis Gerardo Barroso González. Mr. Barroso is our Chief Executive Officer and has served on our board
of directors since 2001. Prior to joining us, Mr. Barroso held several positions in Arrendadora Somex, S.A. de C.V.
from 1984 through 1992, including Management and New Products Executive Director. In 1992, Mr. Barroso joined
Multivalores Arrendadora, S.A. de C.V. as Development Manager and, from 1995 through 2001, he was the Chief
Executive Officer of that leasing company and a director. He was also a member of the board of directors of the
Mexican Financial Leasing Companies Association (Asociación Mexicana de Arrendadoras Financieras, A.C.) and
Multicapitales. Currently he is a director of the following entities: Unifin Autos, Unifin Credit, Unifin, Agente de
Seguros y Fianzas, S.A. de C.V., Unifin Administración Corporativa, S.A. de C.V. and Unifin Servicios
Administrativos, S.A. de C.V. Mr. Barroso has a degree in Business Administration from Universidad Anáhuac and
has completed studies in Finance at the Instituto Mexicano de Valores.
Rodrigo Balli Thiele. Mr. Balli is our Chief Operations Officer since 2005. Prior to joining us, from 1995
to 1997 he held several positions in the administrative and sales areas of Bryco Control de Plagas, S.A. de C.V. In
1997 through 2000 he acted as the General Evaluation Director of Risk Projects in Home Care. From 2000 to 2003
he was the Derivative Deputy Director and Promoter of Debt Securities in Enlace Int. S.A. de C.V. and Prebon y
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Amane Inc. Starting on 2003 through 2005 he was collaborated with the Fairmont Hotels as project manager for the
development of a series of touristic projects. Mr. Balli holds a degree in Economics from the Instituto Tecnológico
Autónomo de México (ITAM).
Almudena Lebois Ocejo. Ms. Almudena Lebois Ocejo is the Director of Aralpa Capital, S.A. de C.V., a
private investment fund. Prior to joining Aralpa Capital, S.A. de C.V. she was our Deputy Credit Manager. In 2012
she worked as Treasury Analyst of Navix de México, S.A. de C.V., SOFOM E.N.R. and collaborated with Deloitte
in its consulting area. Ms.Lebois has a dual degree in Finance and Accounting from the Anahuac Universidad and
graduated with honors from the Banking and Financial Markets masters degree from the same university. She has a
variety of credit and risk analysis certifications offered by Moody’s Analytics New York.
Federico Chávez Peón Mijares. Mr. Chavez Peón Mijares has been a member of our board of directors
since 2003. Currently he is a Partner and the General Manager of Promecap, S.A. de C.V. He is or has been member
of the board of directors of several companies, including Carrix, Inc., Grupo Aeropuertario del Sureste, S.A.B. de
C.V., Inversiones y Técnicas Aeropuertarias, S.A.P.I. de C.V., Grupo Famsa, S.A.B. de C.V., Industrias Innopack,
S.A. de C.V., Maxcom Telecomunicaciones, S.A.B. de C.V. and Organización Cultiba, S.A.B. de C.V.
José Luis Llamas Figueroa. Mr. Llamas has been a member of our board of directors since 2007. Currently
he is the General Manager of Verax Wealth Management. From 2000 to 2013 he was Co-Head of Asset and Wealth
Management for Latin America at Deutsche Bank New York and a member of the Executive Committee of the
Americas in the same institution. Previously, he was a representative of Deutsche Bank AG Mexico. He was also a
founding partner of Fortum in Mexico City. At the beginning of his career he was a financial consultant at Andersen
Consulting and held several positions at the private banking division of Acciones y Valores Banamex, S.A. de C.V.
Mr. Llamas has a degree in business administration and an MBA from Universidad Anáhuac.
José Luis Fernández Fernández. Mr. Fernández has been a member of our board of directors since 2012.
Mr. Fernández has been a partner at the tax and accounting firm Chevez Ruiz Zamarripa, S.C. since 1989. He is a
member of the Colegio de Contadores Públicos de México, A.C., of the Instituto Mexicano de Contadores Públicos,
A.C. and the Instituto Mexicano de Ejecutivos de Finanzas. On several occasions he has spoken regarding tax
matters in national forums, organized by the accounting profession and by institutions of the private sector. He has
written several tax articles that have been published in the accounting publications. He participated in the “Director
Development Program” held by the Excellence Center of Corporate Government and the Mexican Stock Exchange,
and in the Introduction to the Stock Market Course held by the former institution. He also participated in the
program “Corporate Governance and Performance Program” held by Yale University. He participates as a director
and he is a member of the audit committees of several companies, including Grupo Televisa, S.A.B., Genomma Lab
Internacional, S.A.B. de C.V., Controladora Vuela Compañia de Aviación, S.A.B. de C.V. (Volaris), Mexichem,
S.A.B. de C.V., Sport City Universidad, S.A. de C.V. and Arca Continental, S.A.B. de C.V.
Juan Marco Gutiérrez Wanless. Mr. Gutiérrez is a member of our board of directors since 2015. Mr
Gutiérrez has held several executive positions including, General Manager of Grupo KUO, S.A.B. de C.V., Desc
Corporativo, S.A. de C.V. and Pegaso, S.A. de C.V. and Deputy General Manager of Promecap, S.A. de C.V and
Telefónica Móviles, S.A. de C.V. Currently he is a member of the board of directors of Quálitas Controladora,
S.A.B. de C.V. and of Quálitas Compañía de Seguros, S.A.B. de C.V., and is a member of the Investment
Committee of Quálitas, Compañía de Seguros, S.A.B. de C.V., as well as a member of the board of directors of
Office Depot de México, S.A. de C.V. and an advisor of the School of Engineering of Universidad Anáhuac. Mr.
Gutiérrez holds an industrial engineering degree from Universidad Anáhuac and an MBA.
Enrique Castillo Sánchez Mejorada. Mr. Castillo has been a member of our board of directors since 2015.
He holds a business administration degree from Universidad Anáhuac and has more than 34 years of experience in
the financial sector. He began his career at Banco Nacional de México, S.A. de C.V. He has been an Executive
Manager at Casa de Bolsa Inverlat and General Manager of Seguros América, General Manager of Grupo
Financiero InverMéxico; General Manager and Chairman of the board of directors of Ixe Grupo Financiero, S.A.B.
de C.V.; General Manager of Banca Mayorista de Banco Mercantil del Norte, S.A., Institución de Banca Múltiple,
Grupo Financiero Banorte; Vicepresident and President of the Mexican Bank Association. His international
experience includes the Managing position of the office of Credit Suisse First Boston Bank in Mexico from 1997 to
2000. He participates in different board of directors including: Grupo Casa Saba, S.A. de C.V., Grupo Aeropuertario
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del Pacífico, S.A.B. de C.V., Alfa, S.A.B. de C.V., Grupo Embotelladoras Unidas, S.A. de C.V., Grupo Herdez,
S.A.B. de C.V., Médica Sur, S.A.B. de C.V. and Southern Cooper Corporation.
Juan José Trevilla Rivadeneyra. Mr. Trevilla has been the Secretary non-member of our board of directors
since 2012. He is the Board’s Secretary of several public and private companies. He is an active founding member
of Larena, Trevilla, Fernández y Fábregas. He is a legal consultant for companies in the tourist industry,
construction, infrastructure development, service delivery, contractors and concessionaires of public services.
Mr. Trevilla holds a law degree from UNAM.
Fernando Manuel Rangel Zorrilla. Mr. Rangel is our General Counsel and has been the Alternate Secretary
non-member of our board of directors since 2012. Previously, he held management positions within the legal
division of Grupo Financiero Santander, S.A.B. de C.V. since 1998, with extensive experience in the field of
Corporate and Financial Affairs. He joined us as General Counsel in 2010. He holds a law degree from Universidad
Tecnológica de México.
Executive Officers
Our executive officers are appointed by our board of directors and hold office at the discretion of the board
of directors. The following are our current executive officers:
Years of
Years at
Name
Position
Age
Experience
Unifin
Luis Gerardo Barroso González
Chief Executive Officer
51
32
14
Gerardo Mier y Terán Suarez
Chief Financial Officer
63
44
4
José María Muñíz Liedo
Chief Institutional Relations Officer
64
45
10
Juan José Del Cueto Martínez
Chief Human Resources & IT Officer
54
30
5
Rodrigo Balli Thiele
Chief Operations Officer
40
17
9
Gerardo Tietzsch Rodríguez Peña
Chief Business Development Officer
38
16
Michael Salvador Goeters Arbide
Manager of Leasing
48
24
12
Eduardo Alejandro Castillo
Sánchez Mejorada
Regional Director
54
30
1
Diego Tomas Aspe Poniastowski
Manager of Factoring
56
30
8
María del Carmen Chavarín
Credit Manager
52
30
2
Mondragón
Fernando Manuel Rangel Zorrilla
General Counsel
40
16
5
Robert Nathan Amper Spitz
IT Director
57
30
0
Certain biographical information with respect to the members of our senior management that has not been
disclosed above in “Board of Directors” is set forth below:
Gerardo Mier y Terán Suárez. Mr. Mier y Terán is our Deputy General Manager of Administration and
Finance since 2011. He served as a member of our board of directors from 2011 to March 2015 and is currently a
member of the Credit Committee and the Corporate Credit Committee. Mr. Mier y Terán has held different
management and accounting positions in several companies and accounting firms, including Despacho Casas,
Alatriste y Asociados, S.C., Aurrera, S.A. de C.V., Industrias Aramil, S.A. de C.V., Corrugado y Fibra, S.A. de C.V.
and Abastecedora Lumen, S.A. de C.V. where he collaborated from 1980 to 1985 and from 1986 to 1999. He was
Chief Executive Officer and Chairman of the board of directors of Ortho-Médica, S.A. de C.V. From 1999 to 2011,
he formed part of Grupo Mexicano de Desarrollo, S.A.B., occupying several management positions, until he became
our Deputy General Manager and a member of our board of directors. Mr. Mier y Terán has an accounting degree
from Universidad La Salle.
José María Muñíz Liedo. Mr. Muñíz is our Deputy General Manager of Institutional Financial Relations
since 2001 and served on our board of directors from 2001 to March 2015. Prior to joining us, he held several
positions in Banco Nacional de México, S.A. since 1979, including the Direction of Corporate Banking from 1986
through 1989. From 1992 through 1997, he was the Executive Director of Metropolitan Banking in Grupo
Financiero Serfin, S.A. He joined Unifin in 2005 and has occupied several executive positions, being appointed as
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our Deputy General Manager of Institutional Financial Relations on 2009. He serves as Chairman of the board of
directors of Muñiz Hermanos, S.A. de C.V. and as a member of the board of directors of COFASE Seguro de
Crédito México, S.A. de C.V., and Unifin Capital, S.A. de C.V. Mr. Muñíz has a degree in Industrial Engineering
from Universidad Anáhuac and an MBA from San Diego State University (SDSU).
Juan José del Cueto Martínez. Mr. del Cueto is our Chief Human Resources and IT Officer. He has more
than 20 years of experience in management, development and implementation of new businesses, as well as
administrative and internal control processes. He was the founder and Chief Financial Officer of Grupo Barca S.A.
de C.V., where he actively participated in the development of several real estate projects such as Centro Comercial
del Puente, Centro Cuautitlán Periférico, Franccionamiento Club de Golf Malinalco and Corporativo Radio Mil. He
holds an economics degree from ITAM.
Gerardo Tietzsch Rodríguez Peña. Mr. Tietzsch is our Chief Business Development Officer. Prior to
joining us in 2015, he was the investment banking and capital markets Deputy Managing Director of Casa de Bolsa
Banorte Ixe, S.A. de C.V., Grupo Financiero Banorte. Before holding this position at Banorte Ixe, he was Director
of Corporate Finance and Investment Banking at Ixe Casa de Bolsa S.A.B. de C.V., Ixe Grupo Financiero. In
addition, prior to joining Ixe in 2000, he worked at Venture Capital Privado (Private Capital Fund). Mr. Tietzsch
holds an engineering degree from Universidad Iberoamericana and an MBA from ITAM.
Michael Salvador Goeters Arbide. Mr. Goeters is our Manager of Leasing. Prior to joining us, he was the
Regional Director of Leasing and Factoring and the Commercial Director of the Companies’ Sector at Banco
Santander Mexicano. Since 2003 he is a Deputy Manager of the Company. Mr. Goeters has a degree in Business
Administration from Universidad Intercontinental, and has completed graduate studies at the Escuela Bancaria y
Comercial, Wharton Business School and the BMV, among others.
Eduardo Alejandro Castillo Sánchez Mejorada. Mr. Castillo is our Regional Director. He has more than 30
years of experience in the financial industry. Before joining the Company in 2014, Mr. Castillo occupied several
executive positions from 1983 to 1991 including, Promotion Manager at Casa de Bolsa Inverlat. He was also a
founding partner of Impulsora Dinámica de Empresas, where he actively participated in the bank privatization
process. In 1992 he formed part of the purchasing group of Bursamex Casa de Bolsa and Grupo Financiero del
Suerte, of which he was a member of the board of directors and Deputy General Manager of Promotion until 1994.
He was a founding partner of Castillo Consultores e Interasesores, equity advisory firm. He holds a degree in
business administration from Universidad Anáhuac.
Diego Tomas Aspe Poniastowski. Mr. Aspe is our Manager of Factoring and serves as an alternate member
of our board of directors. Prior to joining us, he was the Chief Financial Officer of Mycros Electrónica, S.A. de
C.V., the Promotion Manager of Invex Grupo Financiero, S.A. de C.V., the Deputy Promotion Director of Scotia
Inverlat Casa de Bolsa, S.A. de C.V., a consultant at Vector Casa de Bolsa, S.A. de C.V., the General Manager of
Corporate Banking and Medium- and Small-Size Companies of Banco Santander Mexicano, S.A., the Factoring
Manager of InverMexico, S.A.de C.V. and the Chief Executive Officer of Factor Fin, S.A. de C.V. Mr. Aspe holds a
degree in hydrobiology from Universidad Autónoma Metropolitana.
María del Carmen Chavarín Mondragón. Mrs. Chavarín is our Credit Manager. She has more than 30
years of experience in the financial industry, occupying various directorships in the areas of administration and
finance, operations and risk management at institutions such as Banco Santander de México, S.A., Grupo Actinver,
S.A. de C.V. and some fund operators. Mrs. Chavarín also was our Credit Director from 2011 to this date. She holds
a degree in accounting from UNAM and an MBA from Educación Continua Santander.
Robert Nathan Amper Spitz. Mr. Amper has served as our IT Director since October 2014. He has more
than 25 years of experience in the financial sector in Mexico. From 1985 to 1992 he held several positions at
Citibank (Mexico) including Sub-manager of Finance Control. In 1992 and 1993 he worked at Bancomer, S.A. as
Regional Sub-manager of Institutional Conduct. In 1994 he joined the just formed Grupo Financiero Mifel, holding
the position of IT Manager, having as a major achievement the operation of the bank since its initial planning. He
held that position until 2002, and after until 2006 was the Deputy General Manager of Operations and IT. During
2006 he worked with Temenos Mexico as a Manager of Professional Services. From 2007 to 2014 he was the
founding partner and General Manager of his own company. Developing and implementing credit systems for the
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same financial sector, especially for SOFOMs and SOFIPOs. Mr. Amper holds an Electrical Engineering title from
Universidad Iberoamericana, as well as a Master of Applied Science by McGill University in Montreal, Canada.
Relationship between Directors and Executive Officers
Enrique Luis Castillo Sánchez Mejorada, a member of our board of directors, and Eduardo Alejandro
Castillo Sánchez Mejorada, our Regional Director, are brothers.
Audit and Corporate Practices Committee
We maintain an audit and corporate practices committee, which is comprised of three members (all
independent directors). Our audit and corporate practices committee meets once every quarter.
The responsibilities and duties of the audit and corporate practices committee are outlined in the Mexican
Securities Market Law and our by-laws. Our audit committee’s responsibilities include (i) appoint and remove our
external auditor, (ii) supervising our external auditors and analyzing their reports, (iii) analyzing and supervising the
preparation of our Financial Statements, (iv) informing our board of directors of our internal controls and their
adequacy, (v) requesting reports from our board of directors and executive officers whenever it deems appropriate,
(vi) informing our board of directors of any irregularities that it may encounter, (vii) investigating potential
irregularities with our operations, rules and policies, internal control systems and internal audit and accounting
practices; (viii) receiving and analyzing recommendations and observations made by our shareholders, members of
our board of directors, executive officers, our external auditors or any third party and taking the necessary actions,
(ix) calling shareholders’ meetings, (x) supervising the activities of our Chief Executive Officer, (xi) evaluating the
performance of and the documentation prepared by our external auditor, (xii) providing an annual report to the
board, (xiii) rendering its opinion to our board of directors in connection with the performance of our key officers,
(xiv) reviewing transactions with related parties, (xv) supporting our board of directors in assessing internal control,
which includes the supervision of related party transactions and compensation plans and the reports delivered by
both external and internal auditors and (xvi) receiving communications and recommendations from Mexican
regulatory entities and recommend measures to be taken by management in its response to such communications and
recommendations.
The audit and corporate practices committee is further responsible of providing its opinion to the board of
directors regarding the performance of our officers, the compensation of the chief financial officer and other relevant
officers and transactions with related parties. Also, the committee may obtain opinions from independent third party
experts, call shareholders’ meetings and assist the board of directors in the preparation of reports.
Under the Mexican Securities Market Law and to our by-laws, all the members of our audit committee
must be independent and at least one of them must qualify as a financial expert. Currently José Luis Llamas
Figueroa, who qualifies as a finance expert pursuant to Mexican securities law, is the Chairman and JosLuis and
Juan Marco Gutiérrez Wanless are members of our audit and corporate practices committee.
Executive Committee
Pursuant to our by-laws, we have formed an executive committee, which is responsible for evaluating
finance issues, general planning, strategic and organizational issues and any other issues related to the development
of our business and our operations. Rodrigo Lebois Mateos is the Chairman and Luis Gerardo Barroso González,
Rodrigo Balli Thiele, Gerardo Mier y Terán Suárez, José María Muiz Liedo and Gerardo Tietzsch Rodríguez Peña
are members of the executive committee.
Finance and Planning Committee
We maintain a finance and planning committee, which is comprised of six members. Our finance and
planning committee is in charge of our macroeconomic and our financial strategy and capital structure strategy. The
current members of the finance and planning committee are Luis Gerardo Barroso González, Juan José del Cueto
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Martínez, José María Muñíz Liedo, Gerardo Mier y Terán Suárez, Jose Luis Llamas Figueroa and Jorge Federico
Gil Bervera.
Credit Committee
We maintain a credit committee, which is comprised of nine members. Our credit committee reviews and
approves credit transactions between Ps. 5 million and Ps. 150 million. The current members of the credit
committee are Rodrigo Lebois Mateos, Luis Gerardo Barroso González, Juan José del Cueto Martínez, José María
Muñiz Liedo, Gerardo Mier y Terán Suárez, Rodrigo Balli Thiele, Eduardo Alejandro Castillo Sánchez Mejorada,
Michael Salvador Goeters Arbide, Diego Tomás Aspe Poniatowski and Fernando Manuel Rangel Zorrilla, with Mr.
Rangel acting as Secretary with no vote. The committee reviews and approves operating leasing, financial factoring
or auto loans and other lending transactions between Ps. 5.0 million and Ps. 150.0 million.
Corporate Credit Committee
We maintain a corporate credit committee, which is comprised of five members. Our corporate credit
committee reviews and approves credit transactions exceeding Ps. 150 million. The current members of the
corporate credit committee are Rodrigo Lebois Mateos, Luis Gerardo Barroso González, Rodrigo Balli Thiele,
Gerardo Mier y Terán Suárez and Fernando Manuel Rangel Zorrilla, with Mr. Rangel acting as Secretary with no
vote.
Information Technology Committee
We maintain an information technology committee, which is comprised of eight members. Our
information technology committee oversees our IT systems and continuously reviews new alternatives to update our
systems, equipment and platform. The current members of the information technology committee are Luis Gerardo
Barroso González, Juan José del Cueto Martínez, Joaquín Riba Fernández, Rodrigo Balli Thiele, Álvaro Héctor
Alonso Urroz, Jorge Brandt, Ricardo Legorreta and Orlando García. Jorge Brandt, Ricardo Legorreta and Orlando
García are independent members.
Communication and Control (Anti-Money Laundering) Committee
We, together with Unifin Credit, maintain a communication and control (anti-money laundering)
committee, which is comprised of eight members. Our communication and control (anti-money laundering)
committee assures compliance with our obligations in terms of anti-money laundering. The current members of the
communication and control (anti-money laundering) committee are Luis Gerardo Barroso González, Juan José del
Cueto Martínez, José María Muñiz Liedo (Compliance Officer), Gerardo Mier y Terán Suárez, Diego Tomás Aspe
Poniatowski, Michael Salvador Goeters Arbide, Rodrigo Balli Thiele and Eduardo Alejandro Castillo Sánchez
Mejorada. The members of the communication and control (anti-money laundering) committee of Unifin Credit are
Diego Tomás Aspe Poniatowski, Juan José del Cueto Martínez, María José Alonso Rodríguez, José María Muñíz
Liedo, Gerardo Mier y Terán Suarez, Michael Salvador Goeters Arbide and Rodrigo Balli Thiele.
Marketing Committee
We maintain a marketing committee, which is comprised of eight members. Our marketing committee
reviews our marketing and promotion strategies. The current members of the marketing committee are Rodrigo
Lebois Ocejo, Rodrigo Balli Thiele, Felipe Arana, Eduardo Villalobos and Yocelyn Terán. Felipe Arana and
Eduardo Villalobos are independent members.
Compensation
For the years ended December 31, 2013 and 2014, we paid wages and benefits to our executive officers
through outsourcing companies in the amount of Ps. 58.6 million and Ps. 96.0 million respectively, comprised of
fixed and variable compensation and any corresponding statutory labor costs. See “Business – Employees and
Labor Relations” for a description of our variable compensation.
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Our board of directors approves, based on the favorable opinion of our corporate practices committee, the
compensation of the Chief Executive Officer. Also, our corporate practices committee issues recommendations
regarding the compensation of the other relevant officers.
Our directors’ compensation for their services rendered in such capacity is determined by our shareholders.
The ordinary and extraordinary shareholders’ meetings held on February 26, 2015 and April 13, 2015 approved the
following directors’ compensation: (i) Ps. 30,000 to the independent directors and the secretary non-member of our
board for each meeting of the board that they attend; (ii) Ps. 50,000 to the Chairman of the audit and corporate
practices committee for each seesion of the committee that the Chairman attends; and (iii) Ps. 25,000 to the
members of these committees for each session of the committee that they attend.
Employee Stock Incentive Plan
The shareholders approved, in an ordinary and extraordinary shareholders’ meeting held on February 26,
2015, the implementation of an officers’ and employee incentive plan for an amount equal to 4.0% of our
outstanding share capital (the “Stock Incentive Plan”). The shareholders delegated authority to the board of
directors to structure, implement, administer and modify (with certain exceptions) our Stock Incentive Plan and
establish the criteria and policies applicable for the determination of the officers and employees that will participate
in this plan and the amount of the shares that they may receive or acquire under the same.
We created Administration Trust Number 2405 with Banco Invex, S.A., Institución de Banca Múltiple,
Invex Grupo Financiero, for purposes of the implementation and management of the Stock Incentive Plan (the
“Administration Trust”). The Administration Trust will hold shares of our capital stock to be sold to employees
pursuant to the terms and subject to the conditions of the Stock Incentive Plan. The Administration Trust will
participate in the global offering by purchasing Shares representative of 1.5% of the total outstanding capital stock
of the Company, assuming no exercise of the overallotment options, at the initial offering price net of any sales
commissions or discounts.
Duties of Directors and Executive Officers
Our directors and executive officers are subject to the duties of care and loyalty and other obligations
arising from their positions under the Mexican Securities Market Act, the Issuers Circular (Circular Única de
Emisoras) and other applicable regulations on insider trading and transactions in securities issued by us, among
others. See “The Mexican Securities Market.”
Share Ownership
See “Principal and Selling Shareholders” for a description of the current ownership of our common stock
by our directors.
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SUPERVISION AND REGULATION OF THE MEXICAN FINANCIAL INDUSTRY
General
Mexico’s financial industry is currently comprised of commercial banks, national development banks,
broker-dealers and other non-banking financial institutions, such as insurance and reinsurance companies, bonding
companies, credit unions, savings and loans companies, foreign exchange houses, factoring companies, bonded
warehouses, financial leasing companies, mutual fund companies, pension fund management companies and
Sofomes. On January 10, 2014, a new Financial Groups Law (Ley para Regular las Agrupaciones Financieras) was
published as part of the Financial Reforms. The new Financial Groups Law aims to improve the regulations and
controls applicable to financial services companies that operate under a single financial group holding company.
Most major Mexican financial institutions are members of financial groups.
The principal financial authorities that regulate financial institutions are the SHCP, the Banco de México,
the CNBV, the National Commission of the System for Retirement Savings (Comisión Nacional del Sistema de
Ahorro para el Retiro, or “CONSAR”), the National Insurance and Bonding Commission (Comisión Nacional de
Seguros y Fianzas, or “CNSF”), the Bank Savings Protection Institute (Instituto para la Protección al Ahorro
Bancario, or “IPAB”) and the CONDUSEF.
Our operations are primarily regulated by the General Law of Auxiliary Credit Organizations and Credit
Activities, certain regulations of the Banco de México, the Mexican Law for the Protection and Defense of Financial
Services Users, the Law for the Transparency and Ordering of Financial Services, the Law for the Identification and
Prevention of Transactions with Illegal Funds (Ley Federal para la Prevención e Identificación de Operaciones con
Recursos de Procedencia Ilícita, or the “Identification of Illegal Funds Law”), the Anti-Money Laundering
Provisions, its regulations and general rules, the regulations issued by CONDUSEF and Sofom GAAP, and other
regulations issued by the CNBV.
Under the provisions of GLACOA, Sofomes are entitled to conduct money lending transactions, engage in
financial leasing activities (arrendamiento financiero) and perform factoring (factoraje financiero) transactions.
Such activities do not require a license from any Mexican governmental authority. In order to operate as a Sofom,
all Sofomes, including non-regulated Sofomes, are required to register in a registry managed by CONDUSEF.
Sofomes are considered financial entities.
Under the provisions of the amended GLACOA, published as part of the Financial Reforms, Sofomes are
regulated and supervised by the CNBV if (i) they have a financial connection (vínculo patrimonial) with, among
other financial institutions, Mexican banks, (ii) they issue debt securities registered with the RNV or (iii) they
voluntarily adopt such regime.
Sofomes are deemed to have a financial connection (vínculo patrimonial) if (i) among other financial
institutions, a Mexican bank holds an interest equal to or greater than 20.0% of the capital stock or the Sofom holds
such interest in the Mexican bank, (ii) the holding company of a financial group, which includes a banking
institution, holds an interest of at least 51.0% in such Sofom, or (iii) the Sofom has common shareholders with,
among other financial institutions, a Mexican bank, pursuant to the terms more specifically described in the
GLACOA.
Regulated Sofomes, as a result of a financial connection (vínculo patrimonial) with, among other financial
institutions, Mexican banks, are also subject to several provisions of, among others, the Mexican Banking Law and
other rules and regulations applicable to financial institutions, which can include capital adequacy requirements,
grading of loan portfolio requirements, reserve requirements, requirements of creating provisions for loan losses,
related party transactions rules, complying with requirements related to money laundering, write-offs and
assignment provisions, as well as periodic reporting obligations.
Regulated Sofomes as a result of the issuance of debt securities registered with the RNV, as well as those
Sofomes that voluntarily adopt the regulated regime, will be subject to the general provisions issued by the CNBV
with respect to the following: (i) qualification of the loan portfolio and establishing allowances for credit losses; (ii)
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disclosure and presentation of financial information and external auditors; (iii) accounting; and (iv) prevention of
business with fund that may be from illegal sources. We are in the process of implementing required changes in
order to comply with applicable provisions of the amended GLACOA, which include, among other things,
adjustments to our corporate name and by-laws. Nonetheless, until the CNBV enacts the general provisions
applicable to a regulated Sofom as a result of the issuance of debt securities registered with the RNV, as is our case,
our rights and obligations will still be those of a non-regulated Sofom.
Any other Sofom is categorized as a non-regulated Sofom (sociedad financiera de objeto múltiple, entidad
no regulada) and is not subject to the supervision of the CNBV, except with respect to provisions related to money
laundering and other provisions described in this section.
Law for the Protection and Defense of Financial Services Users
The Mexican Law for the Protection and Defense of Financial Services Users became effective in
April 1999 and was modified pursuant to the Financial Reforms. The purpose of this law is to protect and defend
the rights and interests of users of financial services. This law created and now regulates the CONDUSEF, an
autonomous entity that protects the interests of users of financial services. CONDUSEF acts as an arbitrator with
respect to disputes submitted to its jurisdiction and seeks to promote better relationships among users of financial
services and the financial institutions. As a Sofom, we must submit to CONDUSEF’s jurisdiction in all customer
administrative proceedings and may choose to submit to CONDUSEF’s jurisdiction in all arbitration proceedings
that may be brought before it by customers. We may be required to provide reserves against contingencies which
could arise from proceedings pending before CONDUSEF. In case of a claim by a customer where the parties fail to
reach a settlement and there is no submission to arbitration, CONDUSEF is authorized to issue a resolution which
may result in the attachment of our assets for the benefit of our customers. We are also subject to certain required
amendments by the CONDUSEF regarding our standard agreements or information used to provide our services.
We may be subject to coercive measures or sanctions imposed by CONDUSEF.
The Law for the Protection and Defense of Financial Services Users requires Sofomes, such as us, to
maintain an internal unit (unidad especializada) designated to resolve any and all controversies submitted by our
customers. We maintain such a unit. CONDUSEF also maintains a Registry of Financial Services Providers
(Registro de Prestadores de Servicios Financieros), in which all providers of financial services must be registered,
that assists CONDUSEF in the performance of its activities. CONDUSEF is required to publicly disclose the
products and services offered by financial service providers, including interest rates. To satisfy this duty,
CONDUSEF has wide authority to request any and all necessary information from financial institutions. All
Sofomes, including non-regulated Sofomes, are required to register their standard form of agreements (contratos de
adhesión) in the Registry for Standard Form Agreements (Registro de Contratos de Adhesión), which is managed by
CONDUSEF, provided that the registration does not constitute a certification as to compliance of the laws and
regulations for protection and defense of financial users and therefore, CONDUSEF may, at any moment, order a
financial institution to modify its standard form of agreement for purposes of complying with the laws and
regulations for protection and defense of financial users. All of our standard form agreements have been registered
before CONDUSEF. Pursuant to the Financial Reforms, all Sofomes, including non-regulated Sofomes, are required
to register or renew their existing registration in a registry managed by CONDUSEF to operate as such. We
currently hold registration in the CONDUSEF as a Sociedad Financiera de Objeto Múltiple, Entidad No Regulada
and we are in the process of renovating our registration before the CONDUSEF pursuant to the General Provisions
for the Registry of Financial Services Providers (Disposiciones de Carácter General para el Registro de
Prestadores de Servicios Financieros) .
As a result of the Financial Reforms, CONDUSEF was recently empowered to initiate class action lawsuits
related to financial services institutions, including Sofomes.
Law for the Transparency and Ordering of Financial Services
The Law for the Transparency and Ordering of Financial Services became effective in June 2007 and was
recently modified pursuant to the Financial Reforms. In an effort to make financial services more transparent and to
protect the interests of the users of such services, the law regulates: (1) the fees charged to customers of financial
institutions for the use and/or acceptance of means of payment, as with debit cards, credit cards, checks and orders
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for the transfer of funds as means to ensure competition, free access, non-discrimination and the protection of
customer interests; (2) the fees that financial institutions charge to each other for the use of any payment system;
(3) the interest rates that may be charged to customers; and (4) other aspects related to financial services. This law
grants the Banco de México the authority to regulate these fees and establish general guidelines and requirements
relating to payment devices and credit card account statements and grants to CONDUSEF the authority to regulate
the requirements that need to be satisfied by the standard forms of agreement used by financial entities, the
statements of account that are delivered by financial entities to their customers and the advertisement conducted by
financial entities. Further, the Banco de México has the authority to specify the basis upon which financial
institutions must calculate their aggregate annual cost, which comprises interest rates and fees, on an aggregate
basis, charged in respect of loans and other services.
As part of the amendments to the Law for the Transparency and Ordering of Financial Services enacted in
connection with the Financial Reforms, the Banco de México may issue temporary regulations applicable to interest
rates and fees, if it or the Federal Competition Commission (Comisión Federal de Competencia Económica, or
“COFECE”) determine that no reasonable competitive conditions exist among financial institutions.
Rules on Interest Rates
The rules of the Law for the Transparency and Ordering of Financial Services issued by CONDUSEF
applicable to Sofomes provide that the standard form agreements are required to include provisions that provide that
(1) the applicable ordinary and default interest rates are expressed in annual terms and contain the applicable
methodology for purposes of calculating such interest rates; (2) if interest accrues based on a reference rate, the
standard form agreement must include at least one replacement reference rate, which will only be applicable if the
original reference rate is discontinued; and (3) interest may not be charged by financial entities in advance and may
only be charged after the corresponding interest period has elapsed.
Mexican law does not currently impose any limit on the interest rate or fees that a regulated Sofom, such as
us, may charge its customers. However, the possibility of imposing such limits has been and continues to be
debated by the Mexican Congress and Mexican regulation authorities.
The Law for the Transparency and Ordering of Financial Services grants the Banco de México the authority
to specify the basis upon which each financial institution must calculate its aggregate annual cost (costo anual total),
which comprises interest rates and fees, on an aggregate basis, charged in respect of loans and other services. The
aggregate annual cost must be publicly included by a Sofom in its standard form agreements and disclosed in their
statements of account and advertisements. We regularly publish our aggregate annual cost pursuant to this law.
Fees
Under Banco de México regulations, Mexican banks, and Sofomes may not, in respect of loans, deposits or
other forms of funding and services with their respective customers, (1) charge fees that are not included in their
respective, publicly disclosed, aggregate annual cost (costo anual total), (2) charge alternative fees, except if the fee
charged is the lower fee or (3) charge fees for the cancellation of credit cards issued. Additionally, the Law for the
Transparency and Ordering of Financial Services provides that, among other restrictions, Sofomes (1) may only
charge fees related to services provided to customers, (2) may not charge more than one fee for a single act or event,
(3) may not charge fees that are intended to prevent or hinder the mobility or migration of customers from one
financial institution to another and (4) may not charge fees for payments received from customers or users in
relation to loans granted by other financial entities.
The Banco de México, on its own initiative or as per request from CONDUSEF, banks, or Sofomes, may
assess whether reasonable competitive conditions exist in connection with fees charged by banks, or Sofomes in
performing financial operations. The Banco de México must obtain the COFECE’s opinion to carry out this
assessment. The Banco de México may take measures to address these issues.
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Law for the Protection of Personal Data
On July 5, 2010, the new Federal Law for Protection of Personal Data held by Private Persons (Ley Federal
de Protección de Datos Personales en Posesión de los Particulares, or “LFPDP”), was published in the Mexican
Federal Official Gazette and it became effective on the next day. The purpose of the LFPDP is to protect personal
data collected, held or provided by individuals, and to enforce controlled and informed processing of personal data
in order to ensure data subjects’ privacy and the right to consent with respect to the use or deletion of protected
information.
The LFPDP requires companies to inform data subjects about the information being collected, used,
disclosed or stored and the purpose of such collection, use, disclosure or storage via a privacy notice and provides
special requirements for processing sensitive personal data (which is defined as data relating to race, physical
condition, religious, moral or political affiliation, and sexual preferences). The LFPDP gives data subjects the right
to: (1) access their data; (2) have inaccuracies in their data corrected or completed; (3) deny transfers of their data;
and (4) oppose use of their data or have it deleted from a company’s system (other than in certain circumstances
expressly set forth in the LFPDP, such as the exercise of a right or holding information required under applicable
law). The LFPDP requires that, if disclosure of data is permitted, the transferee agrees to the same restrictions as
those set forth in the documentation permitting the original receipt and subsequent disclosure of information. The
LFPDP also provides that data may be disclosed without the consent of the data subject in certain limited
circumstances: (1) a law requires or permits disclosure; (2) disclosure is required in connection with medical
treatment; or (3) disclosure is required for public policy reasons or in connection with a legal action. The LFPDP
requires immediate notice to a data subject, of any security breach that significantly affects his/her property or moral
rights.
The newly-created Federal Institute of Access to Information and Data Protection (Instituto Federal de
Acseso a la Información, or “Institute”), will be authorized to monitor and enforce compliance with the LFPDP by
private entities processing personal data. Such entities will be held liable for interfering with a data subjects’
exercise of their rights under the LFPDP and for failing to safeguard their personal data. Data subjects who believe
that a company is not processing their personal data in accordance with the LFPDP may request an investigation by
the Institute. Following an investigation, the Institute may: (i) dismiss the data subject’s claim or (ii) affirm, reject,
or modify a company’s answer to a data subject’s claim. Penalties for violating the LFPDP’s provisions include a
fine up to the equivalent of Ps. 19.1 million (approximately US$1.5 million) a prison sentence of up to five years, or
double the applicable fine or sentence for violations related to sensitive personal data.
Anti-Money Laundering Provisions
On March 17, 2011, the General Provisions Applicable to Sofomes Relating to Money Laundering
(Disposiciones de Carácter General a que se refieren los artículos 115 de la Ley de Instituciones de Crédito, en
relación con el 87-D de la Ley General de Organizaciones y Actividades del Crédito 95-Bis de este último
ordenamiento, aplicables a las sociedades financieras de objeto múltiple, or “General Provisions”), issued by the
SHCP, were published in the Mexican Federal Official Gazette. On December 23, 2011, a series of amendments to
such General Provisions were also published on the Mexican Federal Official Gazette. The purposes of such
General Provisions, which have been published and become effective is to establish anti-money laundering rules and
guidelines.
The General Provisions require Sofomes to (1) establish identification (“know-your-customer”) policies and
guidelines similar to those imposed on Mexican banks and other regulated financial entities, subject to strict
identification methods and controls on customers and users of the Sofomes services; (2) recording and keeping
information on customers and on money transfer and exchange transaction; and (3) reporting to authorities on
relevant, unusual and suspicious transactions, among other obligations.
On July 17, 2013, the Identification of Illegal Funds Law became effective, after approval from the
Mexican Congress. Under the Identification of Illegal Funds Law, the SHCP is given broad authority to obtain
information about unlawful activities, coordinate activities with foreign authorities and present claims related to
unlawful activities. The Identification of Illegal Funds Law also grants authority to the Federal Attorney General of
the Republic (Procuraduría General de la República) to investigate and prosecute illegal activities, in coordination
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with the SHCP. To secure full effectiveness of the Identification of Illegal Funds Law, the Mexican President and
the Minister of Finance and Public Credit (Secretario de Hacienda y Crédito Público) issued regulations and general
rules on August 2013, which have become effective.
Pursuant to the Identification of Illegal Funds Law, we are required to establish procedures to monitor and
detect unlawful activities regulated by this law and to report any suspect activities to the SHCP.
Improvement of Creditors’ Rights and Remedies
Mexico has enacted legislation to improve creditors’ rights and remedies. These laws include collateral
pledge mechanisms and the promulgation of the Mexican Bankruptcy Law.
Collateral Mechanisms
Laws regarding the granting and enforcement of security interests contemplate pledging assets without
transferring possession (prenda sin transmission de posesión), as well as a security arrangement known in Mexico as
the security trust (fideicomiso de garantía). The purpose of these changes is to provide an improved legal
framework for secured lending and to encourage banks to increase their lending activities. The pledging of personal
property being used in a debtor’s main business activity by making only a generic description of such property is a
structure now frequently used. Provisions regulating security trusts are similar to those governing pledges of
personal property except they provide that title to the collateral must be held by the trustee. Security trusts permit
enforcement through an extra-judicial proceeding, which is an alternative that has enhanced lending activities and
expedited restructurings and foreclosures.
Bankruptcy Law
The Mexican Bankruptcy Law was enacted on May 12, 2000 and has been frequently used as a means to
conclude complex insolvency situations affecting Mexican companies, by providing expedited and clear procedures,
while at the same time granting creditors and other participants the certainty of an in-court solution. The Mexican
Bankruptcy Law provides for a single insolvency proceeding encompassing two successive phases: a conciliatory
phase of mediation between creditors and debtor and bankruptcy.
The Mexican Bankruptcy Law establishes precise rules that determine when a debtor is in general default
on its payment obligations. The principal indications are failure by a debtor to comply with its payment obligations
in respect of two or more creditors, and the existence of the following two conditions: (1) 35.0% or more of a
debtor’s outstanding liabilities are 30 days past-due; and (2) the debtor fails to have certain specifically defined
liquid assets and receivables to support at least 80.0% of its obligations which are due and payable. The Mexican
Bankruptcy Law was recently amended to include the ability of a debtor to request the initiation of insolvency
proceedings prior to being generally in default with respect to its payment obligations, when such situation is
expected to occur inevitably within the following 90 days. Furthermore, the Mexican Bankruptcy Law now allows
the consolidation of insolvency proceedings of companies that are part of the same corporate group.
The Mexican Bankruptcy Law provides for the use and training of experts in the field of insolvency and the
creation of an entity to coordinate their efforts. Such experts include the intervenor (interventor), conciliator
(conciliador) and receiver (síndico).
On the date that the insolvency judgment is entered, all peso-denominated obligations are converted into
UDIs, and foreign currency-denominated obligations are converted into pesos at the exchange rate for that date and
then converted into UDIs. Only creditors with a perfected security interest (i.e., mortgage, pledge or security trust)
continue to accrue interest on their loans. The Mexican Bankruptcy Law mandates the netting of derivative
transactions upon the declaration of insolvency.
The Mexican Bankruptcy Law provides for a general rule as to the period when transactions may be
scrutinized by the judge in order to determine if they were entered into for fraudulent purposes, which is set at 270
calendar days prior to the judgment declaring insolvency. This period is referred to as the retroactive period.
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Nevertheless, upon the reasoned request of the conciliator, the intervenors (who may be appointed by the creditors to
oversee the process) or any creditor, the judge may determine that a longer retroactive period may apply. As a result
of recent reforms, the retroactive period was lengthened to 540 calendar days with respect to transactions entered
into with inter-company creditors.
A restructuring agreement must be subscribed to by the debtor, as well as recognized creditors representing
more than 50.0% of (i) the sum of the total recognized amount corresponding to common creditors and (ii) the total
recognized amount corresponding to secured or privileged creditors subscribing to the agreement. Any such
agreement, when confirmed by the court, becomes binding on all creditors, and the insolvency proceeding is then
considered to be concluded. If an agreement is not reached, the debtor is declared bankrupt.
The Mexican Bankruptcy Law incorporates provisions relating to pre-agreed procedures, frequently used in
jurisdictions outside Mexico, that permit debtors and creditors to agree upon the terms of a restructuring and
thereafter file, as a means to obtain the judicial recognition of a restructuring reached on an out-of-court basis. This
also provides protection against dissident minority creditors.
The Mexican Bankruptcy Law was recently amended to expressly recognize subordinated creditors,
including inter-company creditors in accordance with certain rules, and sets forth that such inter-company creditors
will not be allowed to vote for the approval of the debt restructuring agreement when such inter-company creditors
represent 25.0% or more of the aggregate amount of recognized claims, unless such inter-company creditors consent
to the agreement adopted by the rest of the recognized creditors.
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PRINCIPAL AND SELLING SHAREHOLDERS
The table below sets forth certain information regarding the ownership of our capital structure as of March
31, 2015 and after giving effect to this global offering (in each case giving pro forma effect to our Share Split and
the merger of Unifin Capital into the Issuer).
Shareholder
Trust 2452 held with Banco Invex, S.A.,
Institución de Banca Múltiple, Invex Grupo
Financiero, Fiduciario. ..................................
Promecap, S.A. de C.V. ................................
Análisis y Ejecución de Proyectos San Luis,
S.A. de C.V....................................................
Public Float....................................................
Treasury Shares(1) ..........................................
Total...............................................................
Shares owned
prior to the
global offering
Number
%
Shares owned
after the global offering
Non-exercise of
Exercise of
overallotment
overallotment
options
options
Number
%
Number
%
224,000,000
28,000,000
80%
10%
224,000,000
—
66.67%
0.00%
224,000,000
—
63.49%
0.00%
28,000,000
—
72,800,000
280,000,000
10%
—
—
112,000,000
0.00%
33.33%
—
128,800,000
0.00%
36.51%
100%
336,000,000
100.00%
352,800,000
100.00%
_____________________
(1) These shares represent authorized capital stock issued in connection with this offering and not paid in capital.
The Trust is our controlling shareholder and, prior to the global offering, and subsequent to the global
offering, will own more than 60.0% of our Shares, even after taking into consideration the exercise of the
overallotment options. Mr. Rodrigo Lebois Mateos and Mr. Luis Gerardo Barroso González are the first
beneficiaries of the Trust and each one, individually and indirectly, owns more than 10.0% of our outstanding
capital stock. Mr. Rodrigo Lebois Mateos exercises indirect control over our capital stock. Pursuant to the Trust, all
Shares that have been transferred to the Trust will vote as a block and its beneficiaries have certain transfer and
encumbrance restrictions.
Promecap S.A. de C.V. is a Mexican corporation (sociedad anónima de capital variable) incorporated in
1997 that is engaged in, among other activities, providing consulting services to the Mexican financial industry. The
major shareholder of Promecap is Mr. Fernando Chico Pardo.
Análisis y Ejecuciόn de Proyectos San Luis S.A. de C.V. is a Mexican variable capital stock corporation
(sociedad anónima de capital variable) incorporated in 2008 that manages companies and invests in their capital
stock.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
From time to time, we may enter into transactions with parties that have relationships with us, our officers,
directors or entities in which we have an ownership interest. It is our policy to conduct all of these transactions on
an arm’s-length basis.
Amounts from transactions with related parties during the years ended December 31, 2012, 2013 and 2014
and the three months ended March 31, 2015, which were carried out at an arm’s-length basis, were as follows:
For the Three
Months ended
March 31,
2015
2012
2013
2014
Income
Interest income .......................................................
Auto rentals ............................................................
Other income..........................................................
Auto sales ...............................................................
Administrative services ..........................................
Expense
Administrative services ..........................................
Reimbursement of expenses ...................................
Donations or gift ....................................................
Other services.........................................................
20.1
5.8
5.1
5.2
-
5.3
6.1
5.1
2.7
0.1
0.1
4.1
3.9
1.1
0.5
-
158.1
1.3
3.2
218.5
5.3
2.5
-
299.3
2.0
-
90.1
0.6
-
As of December 31, 2012, 2013 and 2014 and March 31, 2015, the balances with related parties were as follows:
As of December 31,
2013
2012
As of March 31,
2015
2014
Receivables
Administradora Brios, S.A. de C.V.(1) .............
134.2
154.6
48.8
42.4
5.8
5.7
-
-
1.4
1.4
1.2
0.8
0.9
0.6
0.6
0.9
0.5
0.5
2.8
0.5
0.2
0.4
-
-
2.2
2.2
2.2
5.7
-
0.2
0.2
5.5
-
2.4
2.3
2.3
-
-
0.1
0.0
Cabos Marinos del Sureste, S.A. de C.V. ........
Administración de Flotillas, S.A. de C.V. .......
Aralpa Capital, S.A. de C.V. ...........................
The Company’s Officers .................................
Unifin Capital, S.A. de C.V. ...........................
Unifin Administración Corporativa,
S.A. de C.V. ................................................
Payables
Unifin Administración Corporativa,
S.A. de C.V. (2) .............................................
Unifin Servicios Administrativos,
S.A. de C.V. (3) .............................................
Aralpa, S.C. .....................................................
Administradora Brios, S.A. de C.V. ................
Unifin Capital, S.A. de C.V. (formerly
Unifin Corporativo, S.A. de C.V.) ..............
________________________________
(1) Related to credit agreements entered into between us as creditor and Administradora Brios, S.A. de C.V. as
debtor.
(2) Employee outsourcing agency.
(3) Employee outsourcing agency.
In November 2014, Unifin acquired 100% of Unifin, Agente de Seguros y de Fianzas, S.A. de C.V. from
Unifin Capital, its parent company at the time, at Unifin Capital’s nominal value.
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DESCRIPTION OF OUR CAPITAL STOCK AND BY-LAWS
A description of our capital stock and a brief summary of certain significant provisions of our by-laws is
set forth below. This description does not purport to be complete and is qualified in its entirety by reference to our
by-laws.
Overview
múltiple entidad no regulada) under the laws of Mexico. We were first incorporated in 1993 under the corporate
name Arrendadora Axis, S.A. de C.V. In 1996, we changed our corporate name to Arrendadora Unifin, S.A. de
C.V. By resolution of our shareholders adopted on September 27, 2006, we amended our by-laws to become
organized as a Sociedad Financiera de Objeto Múltiple, Entidad No Regulada. In 2009, we changed our corporate
name again to Unifin Financiera, S.A. de C.V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada. By
the unanimous resolutions of our shareholders dated October 1, 2009, we became a sociedad anónima promotora de
inversión, regulated by the applicable provisions of the Mexican Securities Market Law, the Mexican General
Corporations Law and the GLACOA. In accordance with the resolutions adopted by our shareholders on February
26, 2015, April 13, 2015 and the unanimous resolutions adopted by our shareholders dated May 7, 2015, we adopted
the form of a publicly traded variable capital stock corporation (sociedad anónima bursátil de capital variable),
amended our by-laws and changed our name to the current name of Unifin Financiera, S.A.B. de C.V., Sociedad
Financiera de Objeto Múltiple, Entidad No Regulada.
A copy of our by-laws, as amended, has been filed with, and can be examined at, the CNBV and the BMV
and is available for review at www.bmv.com.mx.
The duration of our corporate existence is indefinite. Our corporate domicile is Mexico City, and our
headquarters are located in Mexico City, Federal District.
Our corporate offices are located at Presidente Masaryk 111-5, Col. Polanco, Del. Miguel Hidalgo, 11560,
Distrito Federal, México, and our telephone number is +52 (55) 5249-5800.
Capital Stock
Because we are a variable capital stock company, our capital stock must have a fixed portion and may have
a variable portion. Based on our ordinary and extraordinary general shareholders’ meeting on February 26, 2013,
April 13, 2015 and the unanimous resolutions on May 7, 2015, and after giving effect to the Share Split, our issued
and outstanding share capital consists of 280,000,000 Shares, of which 320,000 shares represent fixed capital and
279,680,000 shares represent the variable capital.
In addition, at the shareholders meetings held on February 26, 2015, April 13, 2015 and pursuant to the
unanimous resolutions on May 7, 2015 we approved the issuance of up to 72,800,000 new Shares (including
16,800,000 Shares related to the grant of overallotment options) in connection with the global offering. After the
global offering takes places and assuming the allocation of all 72,800,000 Shares of the global offering, our issued
and outstanding share capital will increase to Ps. 1,102,500,000 and will consist of 352,800,000 issued and
outstanding Shares, of which 320,000 shares represent fixed capital and 352,480,000 shares represent the variable
capital.
Our shares may be issued to, paid for and held by either Mexican or non-Mexican investors.
Voting Rights and Shareholders’ Meetings
All of our Shares have full voting rights. Each Share entitles the holder to one vote at any general meeting
of our shareholders.
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Under our current by-laws, we may hold two types of general shareholders’ meetings: ordinary and
extraordinary. Ordinary shareholders’ meetings are those called to discuss any issue not reserved for extraordinary
shareholders’ meetings. An annual ordinary shareholders’ meeting must be held at least once a year within the first
four months following the end of each fiscal year to discuss and approve, among other things, the annual reports
prepared by the chief executive officer and approved by the board of directors, the reports of the board of directors’
committees as well as the annual audited financial statements; the appointment of members of the board of directors
and the president of the audit and corporate practices committee; the determination of compensation for members of
the board of directors; the amounts that may be used for repurchase of our shares in the market; and the declaration
of dividends. Under the Mexican Securities Market Law, the ordinary shareholders’ meetings will have to approve
any transaction representing 20.0% or more of our total assets during any fiscal year.
Extraordinary shareholders’ meetings are those called to consider any of the following matters, among
other things:
•
an extension of our duration;
•
our voluntary dissolution;
•
an increase or decrease in our capital stock;
•
a change in our corporate purpose or nationality;
•
any transformation, merger or spin-off involving us;
•
the issuance of preferred stock;
•
any stock redemption by us payable with retained earnings;
•
the delisting of our Shares with the RNV or with any stock exchange;
•
any amendment to our by-laws; and
•
any other matters for which applicable Mexican law or the by-laws specifically require the resolution of an
extraordinary shareholders’ meeting.
Shareholders’ meetings must be held at our corporate domicile, which is Mexico City. Calls for
shareholders’ meetings may be made by the President of the board of directors, the chairman of the audit committee,
or the chairman of the corporate practices committee. In addition, any shareholder representing 10.0% of our
outstanding capital stock has the right to request that the board of directors, the audit committee or the corporate
practices committee call a shareholders’ meeting to discuss the matters indicated in the relevant request.
Calls for shareholders’ meetings must be published in one of the newspapers of national circulation in
Mexico at least 15 calendar days prior to the date of the meeting. Each call must set forth the place, time and agenda
for the meeting. From the date on which a call is published until the date of the corresponding meeting, all relevant
information must be made available to the shareholders.
To be admitted to any shareholders’ meeting, shareholders must present evidence of the deposit of their
certificates with a depository entity at least one day prior to the shareholders’ meeting. Shareholders may be
represented at a meeting by one or more attorneys-in-fact, pursuant to a general or special power of attorney or a
proxy granted by using the form distributed by us 15 days prior to the meeting.
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Board of Directors
Board members are appointed as follows:
(a)
every shareholder or group of shareholders with voting rights, who, individually or collectively
hold at least 10.0% of our capital stock, has the right to appoint a regular member, and its
respective alternate, during the general shareholders’ meeting; and
(b)
once these minority appointments have been made, the general shareholders’ meeting will
determine the total number of members who will make up the board of directors, and will appoint
the remaining members, who must receive a majority of the votes of shareholders with a right to
vote who are present at the meeting. Those votes corresponding to shareholders who made
minority appointments will not be counted.
The minority appointments referred to in paragraph (a) above may only be revoked by the rest of the
shareholders, and only when the appointments of all other board members are revoked. Those individuals who are
substituted may not be reappointed to the position within the 12 months following the termination of their
appointment.
Quorum
Ordinary shareholders’ meetings are considered as legally convened on a first call when at least 50.0% of
the shares representing our outstanding capital are present or duly represented. Resolutions at ordinary meetings of
shareholders pursuant to a first call are valid when approved by the shareholders’ majority of the shares represented
at such meeting. On second or subsequent calls, any number of shares represented at an ordinary meeting of
shareholders constitutes a quorum and resolutions are valid when approved by the holders of a majority of the shares
represented at the meeting.
Extraordinary shareholders’ meetings are legally convened on a first call when at least 75.0% of the shares
representing our outstanding capital are present or duly represented. Resolutions at an extraordinary meeting of
shareholders or special shareholders’ meetings held on a first call are valid when adopted by at least 50.0% of our
outstanding capital stock. On a second or subsequent call, extraordinary shareholders’ meetings are legally convened
when at least 50.0% of the shares representing our outstanding capital are represented. Resolutions at an
extraordinary meeting of shareholders held on a second or subsequent call are valid when approved by shares
representing at least 50.0% of our capital.
Dividends and Distributions
Typically, at an annual ordinary shareholders’ meeting, the board of directors submits our audited financial
statements for the previous fiscal year to the shareholders for approval. Once shareholders approve the financial
statements, they approve the allocation of our net profits for the preceding fiscal year. By law, prior to any
distribution of dividends, we must allocate 5.0% of our net profits to the legal reserve fund, until such legal reserve
fund equals 20.0% of our paid-in capital stock. Additional amounts may be allocated to other reserve funds as the
shareholders may determine (including a reserve for the repurchase of shares). The remaining balance, if any, may
be distributed as dividends, if losses for prior fiscal years have been absorbed or repaid.
All paid-in shares at the time a dividend or other distribution is declared are entitled to participate in such
dividend or other distribution. Eventually, we will distribute cash dividends through Indeval.
Changes to Our Capital Stock
The fixed portion of our capital stock may be increased or decreased by a resolution passed by our
shareholders at an extraordinary shareholders’ meeting, provided that our by-laws are concurrently amended to
reflect the increase or decrease in capital stock. The variable portion of our capital stock may be increased or
decreased by our shareholders at an ordinary shareholders’ meeting without amending of our by-laws.
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Increases or decreases in the fixed or variable portion of our capital stock must be recorded in our registry
of capital variations, which we are required to maintain under the Mexican General Corporations Law.
Shareholders’ meeting minutes by means of which our corporate fixed capital is increased or decreased, must be
notarized, and registered with the Public Registry of Commerce. New shares cannot be issued unless the issued and
outstanding shares at the time of the issuance have been paid in full.
Share Repurchases
We may decide to acquire our own shares through the Mexican Stock Exchange subject to the following
terms and conditions:
•
share repurchases must be carried out through the Mexican Stock Exchange;
•
share repurchases must be at market price, unless a public offer or auction has been authorized by the
CNBV;
•
share repurchases must be carried out against our stockholders’ equity without adopting a reduction in our
stockholders’ equity or against our capital stock, and the shares so acquired will be held as treasury stock
without any requirement to adopt a reduction in capital stock;
•
the amount and price paid in all share repurchases must be made public;
•
the annual ordinary shareholders meeting must determine the maximum amount of funds to be used in the
fiscal year for the repurchase of shares;
•
repurchased shares must be placed through the Mexican Stock Exchange at prevailing market prices;
•
we must not be in default on any outstanding debt instruments registered with the RNV; and
•
we must maintain a sufficient number of outstanding shares to meet the minimum trading volumes required
by the stock markets on which our shares are listed.
Repurchased shares are not entitled to economic and voting rights while we own such shares, and such
shares will not be considered for purposes of calculating any quorum or vote at any shareholders’ meeting during
such period.
Ownership of Capital Stock by Subsidiaries
Our subsidiaries may not, directly or indirectly, invest in our shares, except for shares acquired as part of an
employee stock option plan and in conformity with the Mexican Securities Market Law.
Redemption
Subject to a resolution of our shareholders at an extraordinary shareholders meeting, shares representing
our capital stock are subject to redemption in connection with either (i) a reduction of capital stock, or (ii)
redemption with payable retained earnings. In connection with a capital reduction, the redemption of shares shall be
made pro rata among the shareholders. In the case of a redemption with retained earnings, such redemption shall be
conducted (a) by means of a tender offer conducted on the BMV at prevailing market prices, in accordance with
Mexican law and our by-laws, (b) pro rata among the shareholders, or (c) if the redemption is not made at the
prevailing market price, shares to be redeemed shall be selected by lot.
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Dissolution or Liquidation
Upon dissolution of the issuer, one or more liquidators must be appointed at an extraordinary shareholders’
meeting to wind up the issuer’s affairs. All fully paid and outstanding shares of capital stock will be entitled to
participate equally in any liquidation proceeds.
Registration and Transfer
We have filed an application to have our Shares registered with the RNV, as required under the Mexican
Securities Market Law. Shares are evidenced by certificates issued in a registered form, which will be deposited
with Indeval. Our shareholders may only hold their shares in book-entry form, through participants that have
accounts with Indeval. Indeval is the holder of record in respect of all of our Shares. Accounts may be maintained at
Indeval by brokers, banks and other Mexican and non-Mexican financial institutions. In accordance with Mexican
law, only persons listed in our stock registry, and holders of certificates issued by Indeval coupled with certificates
issued by Indeval participants, will be recognized as our shareholders and will be entitled to exercise rights in
respect of those Shares, at meetings of shareholders or otherwise. Transfers of shares must be through book entries
that may be traced back to the records of Indeval.
No Preemptive Rights
In the event of a capital increase with new contributions in cash or property other than cash, under Article
132 of the General Corporations Law our shareholders shall not have the right of first refusal to subscribe for shares
issued to represent this increase, unless our shareholders approve the increase and decide to grant such preemptive
rights and determine the terms on which they will be awarded. In the event the shareholders decide to grant such
preemptive rights, and after the period to exercise such preemptive rights has expired, any shares that are not
outstanding may not be subject to a public offer and may not be offered by any underwriter. In case of capital
increases resulting from the capitalization of share premiums, retained earnings, reserves or other equity items, our
shareholders participate in that increase in proportion to their number of shares.
Certain Minority Protections
Pursuant to the Mexican Securities Market Law, our by-laws include a number of minority shareholder
protections:
•
shareholders representing 10.0% or more of our outstanding shares may:
o
request a call for a general shareholders’ meeting;
o
request that shareholders’ resolutions, with respect to any matter on which they were not sufficiently
informed, to be postponed; and
o
appoint or remove a director and its respective alternate director.
•
shareholders representing 20.0% or more of our outstanding share capital may oppose any resolution
passed at a shareholders’ meeting and file a petition for a court order to suspend the resolution provided
that (i) the claim is filed within 15 days following the adjournment of the meeting at which the action was
taken, (ii) the challenged resolution violates Mexican law or our by-laws, (iii) the opposing shareholders
either did not attend the meeting or voted against of the challenged resolution, and (iv) the opposing
shareholder post a bond to the court to secure payment of any damages that we may suffer as a result of
suspending the resolution in the event that the court ultimately rules against the opposing shareholder; and
•
shareholders representing 5.0% or more of our outstanding shares may initiate a shareholders derivative
action for our benefit against any of our directors, for violations of their duty of care or their duty of
loyalty, as applicable, in an amount equal to the damages or losses caused to us; any such actions have a
five-year statute of limitations.
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The protections afforded to minority shareholders under Mexican law are different from and may be less
than those afforded in the United States and other jurisdictions. The substantive law concerning fiduciary duties of
directors has not been the subject of extensive judicial interpretation in Mexico. Shareholders cannot challenge
corporate action taken at a shareholders’ meeting unless they meet certain procedural requirements.
As a result of these factors, in practice it may be more difficult for our minority shareholders to enforce
rights against us or our directors or controlling shareholders than it would be for shareholders of a U.S. company.
Anti-Takeover Protections
Our revised by-laws include provisions which establish that, subject to certain exceptions, previous
authorization from the board of directors and/or a shareholders’ meeting is required for any person to acquire, either
individually or jointly with one or more persons, through any title or process, shares or rights over shares, as a result
of which they would have a share ownership which either individually or jointly with other persons is equal to or
greater than 10.0% of our capital stock, whether this share acquisition occurs through a single transaction or through
a series of simultaneous or successive transactions, within or outside of the stock exchange, or through an agent or to
enter into agreements to vote 10.0% or more of our capital stock.
We will not allow the exercise of any corporate rights for shares acquired in violation of the
aforementioned provisions. For the purposes of these provisions, the term “shares” includes all shares which
represent our capital stock, regardless of their class or series, or any security or instrument offered based on these
shares, or which may be converted into these shares, or which establishes any rights over these shares.
In order to obtain the board of directors’ authorization, the potential buyer must submit an application to
the board with certain specific information, such as: (i) the identity, nationality and background of each potential
acquirer and the degree of consanguinity or affinity between them and, in the event of a legal entity, the identity of
the directly or indirectly controlling shareholders; (ii) the number and series of our shares owned by the person or
group of persons intending to carry out the acquisition or in respect of which they have any right, whether by
contract or otherwise, or express that is a third party who is not, at that time, our shareholder nor has any rights over
our shares; (iii) the number and series of shares it seeks to purchase and the legal nature of the acts or acts that are to
be performed in connection with such acquisition; (iv) a statement as to whether there is an intention to acquire a
“significant influence” or “control” of us, as such terms are defined in the Mexican Securities Market Law, or if it
plans to acquire any of our shares in the future in addition to those identified in the application; (v) a statement of
whether or not any prospective purchasers are our competitors or maintain any legal relationship or de facto
relationship with a competitor; (vi) the origin of the resources under which it seeks to make the purchase specifying
the identity and nationality of those who provide these resources and whether they are our competitors or related to
them and the conditions of funding or contribution including a description of the corresponding guarantees; (vii) a
statement of whether the identity of the third party is acting on its own or through third parties; and (vii) any other
information or additional documentation required by our board to adopt its resolution which may be requested
within thirty (30) days of the filing of the application.
The board of directors may, without incurring in any liability, submit the application to the general
extraordinary shareholders’ meeting in some cases. In its evaluation of the application, the board of directors or the
shareholder’s meeting, as the case may be, must take into consideration those factors which they deem relevant,
including, (i) financial, economic, market or business factors, (ii) any impact on our strategic vision, (iii) the nature
of the potential buyer or buyers, including whether or not they are a competitor and whether they are financially and
morally solvent, (iv) the source of the funds that the potential buyer plans to use in order to make the acquisition,
and (v) possible conflicts of interest. If the board of directors or the shareholders’ meeting, as the case may be,
decides to reject the application, the board or shareholders must justify their decision and specify the requirements
and/or basis on which their authorization may be granted.
The aforementioned provisions are not applicable to acquisitions or transfers of shares (i) by will or
testament, (ii) by persons who exercise control over us, (iii) by us or our subsidiaries, or by trusts established by us
and our subsidiaries, and (iv) by affiliates, including persons who exercise control over us, among others.
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Director Compensation Plans
Our by-laws include provisions which establish the board of directors’ authority to approve policies
regarding the appointment and compensation of relevant directors, including the establishment of long-term
incentive plans, as well as to make decisions regarding any other matter in which relevant officers, directors or
persons otherwise related to us may have a conflict of interest with us.
Delisting or Cancellation of Registration with the RNV and Repurchase Obligation
If we wish to cancel the registration of our shares with the RNV, or if it is cancelled by order of the CNBV,
we will be required to conduct a tender offer to purchase all outstanding shares held by non-controlling shareholders
prior to such cancellation. Shareholders deemed to have “control,” as defined in the relevant provisions, are those
that own a majority of our Shares, have the ability to control the outcome of decisions made at our shareholders’
meetings, or have the ability to appoint or revoke the appointment of a majority of the members of our board of
directors, managers or equivalent officers, or that may control directly or indirectly our management, strategy or
principal policies.
In accordance with applicable regulations and our by-laws, we will be required to create a trust for a period
of at least six months and contribute to it funds in an amount sufficient to purchase, at the same price offered
pursuant to the tender offer, all of the outstanding shares that remain held by the general public. Under the Mexican
Securities Market Law, the controlling shareholders will be secondarily liable for these obligations.
The offer price will be the higher of (i) the weighted average quotation price per share on the BMV for the
previous 30 days prior to the date on which the tender offer is made, or (ii) the book value of the shares in
accordance with the most recent quarterly report submitted to the CNBV and the BMV and disclosed to the public.
The voluntary cancellation of the registration requested by the issuer shall be subject to (i) the prior
authorization of the CNBV, and (ii) the authorization of not less than 95.0% of the holders of outstanding capital
stock in an extraordinary shareholders meeting.
Additional Matters
Forfeiture of Shares
As required by Mexican law, our by-laws provide that any non-Mexican shareholder shall be considered as
a Mexican citizen with respect to Shares held by them, property rights, concessions, participations and interests we
own and rights and obligations derived from any agreements we have with the Mexican government. Non-Mexican
shareholders shall be deemed to have agreed not to invoke the protection of their governments, under penalty, in
case of breach of such agreement, of forfeiture to the Mexican government of such interest or participation. Mexican
law requires that such a provision be included in our by-laws.
Conflict of Interest
Pursuant to the Mexican General Corporations Law, a shareholder that votes on a business transaction in
which its interest conflicts with ours must abstain from any discussion or voting on the applicable matter. A breach
by any shareholder of any such obligation may result in the shareholder being liable for damages, but only if the
transaction would have not been approved without this shareholders’ vote.
Appraisal Rights
Pursuant to the Mexican General Corporations Law, whenever the shareholders approve a change in our
corporate purposes, nationality or corporate form, any shareholder entitled to vote that voted against the approval of
such matter is entitled to withdraw its Shares at book value for its Shares, as set forth in the financial statements last
approved by our shareholders, provided it exercises its appraisal rights within 15 days following the adjournment of
the meeting at which the relevant change was approved.
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TAXATION
General
The following summary contains a description of the material U.S. and Mexican federal income tax
consequences of the purchase, ownership and disposition of the Shares, by holders that are non-residents of Mexico
for tax purposes.
This summary is based upon the federal tax laws of the United States and Mexico as in effect on the date of
this offering memorandum, including the provisions of the income tax treaty between the United States and Mexico,
which we refer to in this offering memorandum as the “Tax Treaty”, all of which are subject to change, including
retroactively. This summary does not purport to be a comprehensive description of all the U.S. or Mexican federal
tax considerations that may be relevant to a decision to purchase, hold or dispose of the Shares. The summary does
not address any tax consequences under the laws of any state, municipality or locality of Mexico or the United
States or the laws of any taxing jurisdiction other than the federal laws of Mexico and the United States.
Prospective investors should consult their own tax advisors as to the Mexican and U.S. tax consequences of
the purchase, ownership and disposition of Shares, including, in particular, the effect of any foreign (non-Mexican
and non-U.S.), state, municipal or local tax laws.
Mexico has also entered into or is negotiating several double taxation treaties with various countries that
may have an impact on the tax treatment of the purchase, ownership or disposition of Shares. Prospective
purchasers of Shares should consult their own tax advisors as to the tax consequences, if any, of the application of
any such treaties.
Certain Mexican Tax Considerations
General
The following summary contains a description of certain Mexican federal tax consequences, under the
Mexican Income Tax Law (Ley del Impuesto Sobre la Renta) and regulations thereunder, of the purchase, ownership
and disposition of our Shares by a beneficial owner of such Shares that is a non-Mexican holder (as described
below), and it does not purport to be a comprehensive description of all of the Mexican federal tax considerations
that may be relevant to a decision to purchase, hold or dispose of our Shares. In addition, this summary does not
address any non-Mexican or Mexican state or municipal tax considerations that may be relevant to any non-Mexican
holder of our Shares.
This summary is intended to be for general information purposes only, and is based upon the Mexican
Income Tax Law as in effect on the date of this offering memorandum, which is subject to change.
Prospective investors in the Shares should consult their own tax advisors as to the United States, Mexican
or other tax consequences of the purchase, ownership and disposition of the Shares including, in particular, the
effect of any foreign, state, municipal or local tax laws, and their entitlement to the benefits, if any, afforded by the
Tax Treaty and other tax treaties to which Mexico may be a party and which are in effect.
For purposes of this summary, the term “non-Mexican holder” shall mean a beneficial owner that is not a
resident of Mexico for tax purposes, and that will not hold the Shares, or a beneficial interest therein, in connection
with the conduct of a trade or business, through a permanent establishment for tax purposes in Mexico.
For purposes of Mexican taxation:
•
individuals are residents of Mexico for tax purposes, if any such individual has established his/her place of
residence in Mexico or, if any such individual has also established a place of residence outside Mexico, if
his or her core of vital interests (centro de intereses vitales) is located within Mexican territory. This will be
deemed to occur if (i) more than 50.0% of such individual’s aggregate annual income derives from
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Mexican sources, or (ii) the main center of such individual’s professional activities is located in Mexico.
Mexican individuals who filed a change of tax residence to a country or jurisdiction that does not have a
comprehensive exchange of information agreement with Mexico, in which their income is subject to a
preferred tax regime pursuant to the provisions of the Mexican Income Tax Law, will be considered
Mexican residents for tax purposes during the year of filing of the notice of such residence change and
during the following three years;
•
unless proven differently, a Mexican national individual is deemed a Mexican resident for tax purposes. An
individual will also be considered a resident of Mexico if such individual is a state employee, regardless of
the location of the individual’s core of vital interests; and
•
a legal entity is a resident of Mexico for tax purposes if it maintains the principal administration of its
business or the place of effective management, in Mexico.
Non-residents of Mexico who are deemed to have a permanent establishment in Mexico for tax purposes,
will be subject to Mexican tax laws, and all income attributable to such permanent establishment will be subject to
Mexican taxes in accordance with the Mexican Income Tax Law.
Taxation on Dividends
Pursuant to the Mexican Income Tax Law, dividends paid to non-Mexican holders, with respect to our
Shares, are subject to a 10.0% Mexican withholding tax. Pursuant to a provision of the Mexican Income Tax Law
having temporary effect, dividends paid to non-Mexican holders from profits generated by us prior to 2014 and
derived from our net after-tax profit account (“CUFIN,” per its acronym in Spanish) existing on December 31, 2013
will not be subject to the 10.0% withholding tax.
In addition to the aforementioned withholding tax, if dividends are not paid from our CUFIN balance, such
dividends will be subject to tax at the corporate level, payable by us. This corporate tax paid by us in respect of any
such dividend distribution is not final and may be credited by us against our corporate income tax liability during the
fiscal year in which the tax was paid and for the following two years. Dividends paid from our CUFIN account
balance are not subject to this corporate income tax
Taxation on Capital Gains
Gains on the sale of Shares by a non-Mexican holder are subject to a 10.0% Mexican withholding tax, if the
transaction is carried out through a recognized market (such as the BMV), to be withheld by the financial
intermediary through which the sale was effected. The Mexican Income Tax Law provides that no withholding tax
would be applicable, if the holder is a resident of a country with which Mexico has in force a treaty for the
avoidance of double taxation. For that purpose, the non-Mexican holder must provide a statement under oath to that
effect, to the financial intermediary, which needs to include the non-Mexican tax identification number of the nonMexican holder. Additionally, to be eligible for the 10.0% Mexican withholding tax or the exemption, the holder (i)
must have purchased and sold our Shares in a recognized market (such as the BMV), (ii) must not hold 10.0% or
more of our Shares nor transfer 10.0% or more of our Shares in one or several transactions within a 24-month
period, (iii) must not transfer control over us by transferring the Shares, and (iv) must not transfer the Shares in a
transaction that restricts the seller from accepting a more competitive offer.
If the non-Mexican holder would not be eligible for the 10.0% Mexican withholding tax on the gain or the
treaty exemption set forth in the Mexican Income Tax Law referred to in the prior paragraph (for instance, because
the transaction is not carried out through a recognized market such as the BMV), then any gain on the sale of our
Shares by the non-Mexican holder would be subject to the general 25.0% tax rate applicable to the gross sales price
or, alternatively, to a 35.0% tax rate applicable to the gain arising from the sale of our Shares, if certain requirements
set forth under applicable law are met (including appointing an agent in Mexico for tax purposes and filing an adhoc tax return).
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Under the Tax Treaty, a holder that is eligible to claim the benefits under such treaty, may be exempt from
Mexican taxes on gains realized from a sale or other disposition of our Shares, to the extent such holder did not own,
directly or indirectly, 25.0% or more of our outstanding Shares during the 12-month period preceding the date of the
sale or disposition, and provided that certain formal requirements set forth by the Mexican Income Tax Law are also
complied with.
Other Mexican Taxes
There is currently no Mexican estate, gift, inheritance or value-added tax applicable to the purchase,
ownership or disposition of our Shares by a non-Mexican holder, provided, however, that gratuitous transfers of our
Shares may, in certain circumstances, result in the imposition of Mexican federal income tax on the recipient.
There is currently no Mexican stamp, issue, registration or similar tax or duty payable by a non-resident
holder with respect to the purchase, ownership or disposition of our Shares.
United States Federal Income Taxation
The following is a description of certain U.S. federal income tax consequences to a U.S. Holder with
respect to the ownership and disposition of the Shares. This description addresses only the U.S. federal income tax
considerations of U.S. Holders that are initial purchasers of Shares pursuant to the global offering and that will hold
such Shares as capital assets. This description does not address all tax considerations that may be applicable to
holders that may be subject to special tax rules, including for example:
•
banks, financial institutions or insurance companies;
•
real estate investment trusts, regulated investment companies or grantor trusts;
•
dealers in securities or currencies or traders in securities or currencies electing to mark their positions to
market for tax purposes;
•
tax-exempt entities;
•
persons that received the Shares as compensation for the performance of services;
•
holders that will hold the Shares as part of a position in a straddle or as part of a hedging, conversion or
other risk reduction transaction for U.S. federal income tax purposes;
•
persons that have a functional currency other than the United States dollar;
•
holders that own or are deemed to own 10 percent or more, by voting power or value, of the Shares; or
•
certain former citizens or long-term residents of the United States.
Moreover, this description does not address U.S. federal estate and gift or alternative minimum tax
consequences or any state, local, or non-U.S. tax consequences relating to the ownership and disposition of the
Shares.
This summary is based on the Internal Revenue Code of 1986, as amended, final, temporary and proposed
U. S. Treasury regulations, judicial interpretations, administrative pronouncements, and the Convention between the
United States and Mexico for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income entered into force December 28, 1993, and any Protocols thereto, or the Treaty, all as of the date
hereof and all of which are subject to change, possibly with retroactive effect.
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For purposes of this description, a “U.S. Holder” is a beneficial owner of the Shares that, for U.S. federal
income tax purposes, is:
•
a citizen or individual resident of the United States;
•
a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or
organized in or under the laws of the United States or any state or political subdivision thereof;
•
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
•
a trust if such trust validly elects to be treated as a U.S. person for U.S. federal income tax purposes or if
(1) a court within the United States is able to exercise primary supervision over its administration and (2)
one or more U.S. persons have the authority to control all substantial decisions of such trust.
If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is a
beneficial owner of the Shares, the treatment of a partner in the partnership will generally depend on the status of the
partner and the activities of the partnership. If you are a partner in a partnership that holds the Shares, you should
consult your tax advisor.
You should consult your tax advisor with respect to the U.S. federal, state, local and foreign tax
consequences of acquiring, owning or disposing of the Shares.
Passive Foreign Investment Company Considerations
Based on certain estimates of our gross income and gross assets and the nature of our business, there is a
strong likelihood that we will be classified as a “passive foreign investment company,” or a PFIC, for the current
taxable year and for future taxable years.
In the event we are classified as a PFIC, this classification would, under certain circumstances, have
adverse tax consequences to you if you are a U.S. Holder, as described below.
A Non-U.S. corporation will be classified as a PFIC for U.S. federal income tax purposes in any taxable
year in which, after applying certain look-through rules discussed below, either
•
at least 75 percent of its gross income is “passive income”; or
•
at least 50 percent of the average value of its gross assets is attributable to assets that produce “passive
income” or are held for the production of “passive income.”
Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from
commodities and securities transactions. In determining whether a foreign corporation is a PFIC, a pro rata portion
of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25.0% interest (by
value) is taken into account.
Under the PFIC rules, if you are a U.S. Holder and we are a PFIC, unless you make the mark-to-market
election described below under the heading “Mark-to-Market Election” for the taxable year in which you acquire the
Shares, a special tax regime will apply to both (a) any “excess distribution” from us (generally, the portion of
distributions received by you in any year which is greater than 125.0% of the average annual distribution received
by you in the shorter of the three preceding years or your holding period) and (b) any gain realized on the sale or
other disposition of the Shares. Under this regime, any excess distribution and realized gain will be treated as
ordinary income and will be subject to tax as if (a) the excess distribution or gain had been realized ratably over your
holding period, (b) the amount deemed realized in each year had been subject to tax in such year of that holding
period at the highest marginal rate for such year (other than any such income that is allocated to the year in which
such gain is realized or such excess distribution is made), and (c) the interest charge generally applicable to
underpayments of tax had been imposed on the taxes deemed to have been payable in those years.
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Treatment of Certain Distributions with Respect to Shares
To the extent that a distribution paid on a Share to a U.S. Holder is not an excess distribution and is not
treated as a non-taxable distribution previously included in income by the U.S. Holder in respect of a distribution by,
or disposition of the stock of, a Subsidiary PFIC, as discussed below, such a distribution will be includible in your
income as dividend income to the extent such distribution is paid out of our current or accumulated earnings and
profits as determined under U.S. federal income tax principles. Dividends on the Shares will not be eligible for the
preferential tax rate generally applicable to certain dividends paid by a “qualified foreign corporation” to noncorporate U.S. Holders if we are a PFIC in the taxable year in which such dividends are paid or in the preceding
year. The dividends will be included in your gross income as ordinary income and will not be eligible for the
dividends received deduction generally allowed to corporate U.S. Holders. To the extent, if any, that the amount of
any distribution exceeds our current and accumulated earnings and profits as determined under U.S. federal income
tax principles, it will be treated as a tax-free return of capital to the extent of your adjusted tax basis in your Shares.
We do not maintain calculations of our earnings and profits under U.S. federal income tax principles, and, therefore,
U.S. Holders should expect that any distributions will be reported as dividends for U.S. federal income tax purposes.
Dividends paid in pesos will be included in the gross income of a U.S. Holder in an amount equal to the
U.S. dollar value of pesos calculated by reference to the prevailing spot market exchange rate in effect on the day it
is received by the U.S. Holder. Such a holder will have a tax basis for U.S. federal income tax purposes in the pesos
received equal to that U.S. dollar value. Generally, any gain or loss resulting from currency exchange fluctuations
during the period from the date you include the dividend payment in income to the date you actually convert the
payment into U.S. dollars will be treated as ordinary income or loss. The amount of any distribution of property
other than cash will be the fair market value of such property on the date of distribution.
Special rules apply to the amount of foreign tax credits that a U.S. Holder may claim on a distribution from
a PFIC, and in certain cases, on a disposition of stock of a PFIC. Prospective purchasers should consult their own tax
advisors regarding the application of such rules.
Sale, Exchange or Disposition of Shares
In general, a U.S. Holder of Shares will recognize gain or loss upon the sale or exchange of the Shares
equal to the difference between the amount realized and such holder’s adjusted tax basis in the Share, as determined
in U.S. dollars. Initially, the tax basis of a U.S. Holder should equal the amount paid for a Share, as determined in
U.S. dollars. Such basis will be adjusted, as described below, if a U.S. Holder makes a mark-to-market election with
respect to the Shares. Upon the disposition of Shares, any gain to a U.S. Holder will be taxable under the PFIC
regime as previously described. The deductibility of capital losses against ordinary income is subject to limitations.
Subsidiary PFICs
If we are a PFIC and we have any direct subsidiaries that are PFICs or any indirect subsidiaries that are
PFICs held by us only through other PFICs, (each, a “Subsidiary PFIC”), a U.S. Holder will be treated as owning its
pro rata share of the stock of each such Subsidiary PFIC and will be subject to the PFIC rules with respect to each
such Subsidiary PFIC. A U.S. Holder’s holding period for the stock of a Subsidiary PFIC generally will begin on the
first day that such holder is considered to own stock of the Subsidiary PFIC. U.S. Holders will be treated as actually
receiving their pro rata share of any distribution made by a Subsidiary PFIC (an “indirect distribution”) and such
holders will be subject to the rules generally applicable to shareholders of PFICs discussed above (even though such
holders may not have received the proceeds of such distribution). A U.S. Holder’s adjusted basis in the Shares will
be increased by the amount of the indirect distribution taxed to such holder. Any distribution by us to a U.S. Holder
in respect of Shares that is attributable to an indirect distribution will not be subject to further U.S. federal income
tax in the hands of the U.S. Holder, but the U.S. Holder’s adjusted basis in the Shares will be reduced by the amount
of such distribution. Upon a disposition of an interest in a Subsidiary PFIC (an “indirect disposition”), a U.S. Holder
will be treated as recognizing such holder’s pro rata share of the gain, if any, realized by the actual owner of such
Subsidiary PFIC’s stock or, in the case of an indirect disposition described in clause (ii) or (iii) below, the gain, if
any, that would have been realized by the actual owner of such Subsidiary PFIC’s stock on an actual disposition of
such stock. For this purpose, an indirect disposition includes (i) any disposition of stock of a Subsidiary PFIC by us
or another Subsidiary PFIC, (ii) any disposition of Shares, by a U.S. Holder, or (iii) any other transaction resulting in
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the reduction or termination of a U.S. Holder’s deemed interest in a Subsidiary PFIC. Any gain recognized by a U.S.
Holder upon an indirect disposition will be taxable under the PFIC regime as previously described. A U.S. Holder’s
adjusted basis in the Shares will be increased by any gain recognized by such holder as a result of the indirect
disposition. Any distribution by us to a U.S. Holder in respect of Shares that is attributable to an indirect disposition
will not be subject to further U.S. federal income tax in the hands of the U.S. Holder, but the U.S. Holder’s adjusted
basis in the Shares will be reduced by the amount of such distribution.
U.S. Holders should note that we do not intend to provide holders with information with respect to
indirect distributions or indirect dispositions.
Qualified Electing Fund Election
Where a company that is a PFIC meets certain reporting requirements, a U.S. Holder could avoid certain
adverse PFIC consequences described above by making a “qualified electing fund,” or QEF, election to be taxed
currently on its proportionate share of the PFIC’s ordinary income and net capital gains. However, we do not intend
to comply with the necessary accounting and record keeping requirements that would allow a U.S. Holder to make a
QEF election with respect to us and any Subsidiary PFICs.
Mark-to-Market Election
If the Shares are “regularly traded” on a “qualified exchange,” a U.S. Holder may make a mark-to-market
election with respect to the Shares (but not the shares of any Subsidiary PFIC), which may help to mitigate the
adverse tax consequences that would result if we were a PFIC, though not the adverse tax consequences attributable
to any Subsidiary PFICs. Generally, Shares will be treated as “regularly traded” in any calendar year in which more
than a de minimis quantity of Shares are traded on a qualified exchange on at least 15 days during each calendar
quarter. A “qualified exchange” includes a non-U.S. securities exchange that has the following characteristics: (i)
the exchange is regulated by a governmental authority in which the exchange is located; (ii) the volume, listing,
financial disclosure, surveillance and other requirements designed to prevent fraudulent and manipulative acts and
practices, to remove impediments to and perfect the mechanism of a free and open, fair and orderly, market and to
protect investors; and the laws of the country in which the exchange is located and the rules of the exchange ensure
that such requirements are actually enforced and (iii) the rules of the exchange effectively promote active trading of
listed stock. We believe that in the future the Shares will be listed on the Mexican Stock Exchange, and that the
Mexican Stock Exchange should be treated as a “qualified exchange.” However, because the Shares are not yet
listed on the Mexican Stock Exchange and the IRS has not yet identified specific foreign exchanges that are
“qualified” for this purpose, there can be no assurance that the mark-to-market election will be available.
If the mark-to-market election will be available and a U.S. Holder makes such an election, for each year in
which we are a PFIC, the holder will generally include as ordinary income the excess, if any, of the fair market
value of the Shares at the end of the taxable year over their adjusted tax basis, and will be permitted an ordinary loss
in respect of the excess, if any, of the adjusted tax basis of the Shares over their fair market value at the end of the
taxable year (but only to the extent of the net amount of previously included income as a result of the mark-tomarket election). A U.S. Holder’s tax basis in the Shares will be adjusted to reflect any such income or loss
amounts. Any gain from the sale, exchange or other disposition of the Shares will be treated as ordinary income (but
such gain will not be subject to the regular PFIC regime discussed above), and any loss from such sale, exchange or
other disposition will be treated as ordinary loss to the extent of any net mark-to-market gains previously included in
income, and generally as capital loss to the extent of any remaining loss.
Under the mark-to-market rules, all dividend distributions with respect to the Shares will be subject to the
U.S. federal income tax rules described above applicable to distributions that are not “excess distributions,” and will
not be subject to the regular PFIC rules.
A mark-to-market election will be effective for the taxable year for which the election is made and all
subsequent taxable years unless the Shares are no longer regularly traded on a qualified exchange or the IRS
consents to the revocation of the election. If a U.S. Holder does not make a mark-to-market election for the first year
in which it owns Shares in a PFIC, the interest charge will apply to any mark-to-market gain recognized in the later
taxable year that the election is first made. U.S. Holders should consult their own tax advisors regarding the
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availability and advisability of making a mark-to-market election in their particular circumstances. In particular,
U.S. Holders should carefully consider the impact of a mark-to-market election with respect to their Shares when we
have Subsidiary PFICs for which such election is not available.
PFIC Reporting Requirements
U.S. Holders of the Shares may be required to make an annual return on Internal Revenue Service Form
8621, reporting their ownership, distributions received and gains realized with respect to each PFIC (including
Subsidiary PFICs for which said information will not be provided by us) in which the U.S. Holder holds a direct or
indirect interest. A failure to file one or more of these forms as required may toll the running of the statute of
limitations in respect of each of the U.S. Holder’s taxable years for which such form is required to be filed. As a
result, the taxable years with respect to which the U.S. Holder fails to file the form may remain open to assessment
by the IRS indefinitely, until the form is filed. Prospective purchasers should consult their own tax advisors
regarding the potential application of the PFIC rules.
Foreign Tax Credit
Mexican taxes imposed on dividends paid by us or on gain from the sale of our Shares should generally be
creditable foreign income taxes for foreign tax credit purposes.
The actual use as a foreign tax credit of a creditable non-U.S. tax attributable to a PFIC is subject to
complex limitations. In particular, any gain recognized upon the disposition of our Shares or the annual mark-tomarket of our Shares will be U.S. source income for foreign tax credit purposes, which may limit your ability to
effectively use as a foreign tax credit the Mexican capital gains taxes that may be imposed on any gain you realize
on the disposition of the Shares unless you can apply the credit (subject to applicable limitations) against U.S.
federal income tax payable on other income from foreign sources or you are entitled to treat such gain as Mexican
source under the Treaty if you are considered a resident of the United States for purposes of, and otherwise meet the
requirements of, the Treaty.
On the other hand, dividends paid to you with respect to the Shares will be treated as foreign source
income. Subject to certain conditions and limitations, Mexican tax withheld on dividends at a rate not in excess of
the rate provided in the Treaty may be credited against your U.S. federal income tax liability.
As the foreign tax rules are complex, you should consult your tax advisor concerning the foreign tax credit
implications of an investment in our Shares and the advisability of electing to deduct rather than credit Mexican
taxes.
You are strongly encouraged to consult your tax advisors regarding our classification as a PFIC, the
potential tax consequences arising from the ownership and disposition (directly or indirectly) of shares in a
PFIC as well as the availability, advisability, timeliness and effectiveness of making a “mark-to-market”
election or any other election.
Net Investment Income Tax
Certain U.S. Holders who are individuals, estates and trusts will be subject to a 3.8% tax on some or all of
their “net investment income.” Net investment income generally includes gross income from dividends and gains
from the sale of property (unless such income is derived in the ordinary course of a trade or business other than a
trade or business that consists of certain passive or trading activities). U.S. Holders that are individuals, estates, or
trusts should consult their own tax advisors regarding the applicability of this additional tax.
Backup Withholding Tax and Information Reporting Requirements
United States backup withholding tax and information reporting requirements generally apply to certain
payments to certain non-corporate holders of stock. Information reporting generally will apply to payments of
dividends on Shares and to proceeds from the sale or redemption of Shares made within the United States or by a
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U.S. payor or U.S. middleman to a holder of Shares other than an exempt recipient, including a corporation, a payee
that is not a U.S. person that provides an appropriate certification and certain other persons. A payor will be required
to withhold backup withholding tax from any payments of dividends on Shares, and from the proceeds from the sale
or redemption of Shares within the United States or payments by a U.S. payor or U.S. middleman to a holder, other
than an exempt recipient, if such holder fails to furnish its correct taxpayer identification number or otherwise fails
to comply with, or establish an exemption from, such backup withholding tax requirements.
Transfer Reporting Requirements
A U.S. Holder that purchases our Shares for cash from us may be required to file IRS Form 926 if (i) such
person owned, directly, indirectly or by attribution, immediately after such purchase, at least 10.0% of our Shares
(by vote or value) or (ii) the purchase, when aggregated with all purchases of our Shares made by such person (or
any related person) within the preceding 12 month period, exceeds US$100,000. In the event a U.S. Holder fails to
file any such required form, the U.S. Holder could be required to pay a penalty equal to 10.0% of the gross amount
paid for such Shares (subject to a maximum penalty of US$100,000, except in cases involving intentional disregard).
Prospective U.S. Holders should consult their tax advisors with respect to this and other reporting requirements,
which may apply with respect to their acquisitions of our Shares.
THE ABOVE DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE SHARES. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE TAX
CONSEQUENCES OF YOUR PARTICULAR SITUATION.
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PLAN OF DISTRIBUTION
Credit Suisse Securities (USA) LLC is acting as global coordinator of the international offering.
Subject to the terms and conditions set forth in a purchase agreement dated the date of this offering
memorandum among us, the Selling Shareholders and the initial purchasers, each of the initial purchasers named
below has agreed to purchase, and we and the Selling Shareholders have agreed to sell, the number of Shares set
forth opposite the initial purchasers’ name.
Initial Purchasers
Credit Suisse Securities (USA) LLC ........................................................................................
Citigroup Global Markets Inc. ..................................................................................................
UBS Securities LLC .................................................................................................................
Total..........................................................................................................................................
Number of
Shares
39,531,526
26,568,266
3,465,426
69,565,218
In respect of the Mexican offering, subject to the terms and conditions set forth in the Mexican contrato de
colocación (underwriting agreement), dated the date of this offering memorandum, each Mexican underwriter
named below has severally agreed to purchase, and we and the Selling Shareholders have agreed to sell to that
Mexican underwriter, the number of Shares set forth opposite such Mexican underwriters’ name.
Mexican Underwriters
Casa de Bolsa Credit Suisse (México), S.A. de C.V., Grupo Financiero Credit Suisse
(México)................................................................................................................................
Acciones y Valores Banamex, S.A. de C.V., Casa de Bolsa, integrante del Grupo Financiero
Banamex ...............................................................................................................................
Casa de Bolsa Banorte Ixe, S.A. de C.V., Grupo Financiero Banorte ......................................
Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat ...............
Actinver Casa de Bolsa, S.A. de C.V., Grupo Financiero Actinver .........................................
UBS Casa de Bolsa, S.A. de C.V., UBS Grupo Financiero ......................................................
Total..........................................................................................................................................
Number of
Shares
10,105,888
13,047,246
9,329,500
3,937,500
5,139,648
875,000
42,434,782
The Administration Trust will participate in the global offering by purchasing 1.5% of the total outstanding
capital stock of the Company, assuming no exercise of the overallotment options, at the initial offering price net of
any sales commissions or discounts.
The purchase agreement and the Mexican underwriting agreement provide that the obligations of the initial
purchasers and the Mexican underwriters, respectively, to purchase the Shares are subject to certain conditions
precedent, including the absence of any material adverse change in our business and the approval of legal matters by
counsel. In addition, the closings of the international offering and the Mexican offering are conditioned upon each
other. The initial purchasers and the Mexican underwriters must purchase all the Shares (other than those covered
by the initial purchasers’ and the Mexican underwriters’ overallotment options described below) if they purchase
any of the Shares.
The initial purchasers and the Mexican underwriters propose to resell the Shares at the offering price set
forth on the cover page of this offering memorandum. The initial purchasers propose to sell such Shares within the
United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the
United States and Mexico in reliance on Regulation S. See “Transfer Restrictions.” The offering price for the
Shares may be changed at any time without notice.
The Shares have not been and will not be registered under the Securities Act or any state securities laws
and may not be offered or sold within the United States except in transactions exempt from, or not subject to, the
registration requirements of the Securities Act. See “Transfer Restrictions.”
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In addition, until 40 days after the commencement of this offering, an offer or sale of the Shares within the
United States by a dealer that is not participating in the offering may violate the registration requirements of the
Securities Act unless the dealer makes the offer or sale in compliance with Rule 144A or another exemption from
registration under the Securities Act. Each purchaser of the Shares will be deemed to have made acknowledgments,
representations and agreements as described under “Transfer Restrictions.”
We have granted the initial purchasers and the Mexican underwriters options, to be exercised from time to
time, for a period of 30 days from the date of this offering memorandum to purchase up to an additional 16,800,000
Shares (in the case of the initial purchasers up to 10,434,782 additional Shares and in the case of the Mexican
underwriters up to 6,365,218 additional Shares) at the offering price set forth on the cover of this offering
memorandum, less underwriting discounts and commissions, to cover overallotments, if any, in the global offering.
To the extent the options are exercised, each initial purchaser and Mexican underwriter must purchase an additional
number of Shares approximately proportionate to such person’s initial purchase commitment. The international and
Mexican overallotment options are expected to be exercised in a coordinated manner, but may be exercised
independently of each other in accordance with applicable law. Any Shares issued or sold under the overallotment
options will be issued and sold on the same terms and conditions as described in this offering memorandum.
Prior to this offering, there has been no public market for our Shares. Consequently, the offering price for
the Shares was determined by negotiations among us, the Selling Shareholders and the initial purchasers. Among
the factors considered in determining the offering price were our results of operations, our financial and operating
condition, the future prospects for the industry in which we compete, currently prevailing general conditions in the
Mexican and international equity securities markets and current market valuations of publicly traded companies
considered comparable to our Company.
The Shares will constitute a new class of securities with no established trading market. We have applied to
have the Shares listed on the BMV. However, we cannot assure you that the prices at which the Shares will sell in
the market after this offering will not be lower than the initial offering price or that an active trading market for the
Shares will develop and continue after this offering. We have been advised by the initial purchasers that they
presently intend to make a market in the Shares. However, they are under no obligation to do so and may
discontinue any market-making activities at their own discretion at any time without any notice. We cannot assure
you as to the liquidity of, or the trading market for, the Shares.
We, our controlling shareholder, the Selling Shareholders and certain of our directors and executive
officers will agree, subject to certain customary exceptions, for a period of 180 days after the date of this offering
memorandum, without obtaining the prior written consent of Credit Suisse Securities (USA) LLC and Citigroup
Global Markets Inc. not to directly or indirectly, (i) offer, sell, issue, contract to sell, pledge or otherwise dispose of,
(ii) grant any option, right or warrant to purchase, (iii) enter into any swap, hedge or any other agreement that
transfers, in whole or in part, the economic consequences of ownership, (iv) establish or increase a put equivalent
position or liquidate or decrease a call equivalent position, or (v) file with the SEC a registration statement under the
Securities Act or a prospectus with the CNBV, in each case in respect of any shares of our capital stock or any
securities exchangeable for, or convertible into, shares of our capital stock. Credit Suisse Securities (USA) LLC and
Citigroup Global Markets Inc., in their sole discretion, may release any of the securities subject to these agreements
at any time without notice.
In connection with the global offering, the initial purchasers and the Mexican underwriters may purchase
and sell shares in the open market. These transactions may include short sales and purchases on the open market to
cover positions created by short sales, which may include purchases pursuant to the initial purchasers’ and the
Mexican underwriters’ overallotment options and stabilizing purchases.
•
Short sales involve secondary market sales by the initial purchasers and the Mexican underwriters of a
greater number of shares than they are required to purchase in the offering.
-
“Covered” short sales are sales of shares in an amount up to the number of shares represented by the
initial purchasers’ and Mexican underwriters’ overallotment options.
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-
•
“Naked” short sales are sales of shares in an amount in excess of the number of shares represented by
the initial purchasers’ overallotment option. Mexican law does not permit naked short sales and, as a
result, the Mexican underwriters will not conduct any naked short sales.
Covering transactions involve purchases of shares either pursuant to the initial purchasers’ and the Mexican
underwriters’ overallotment options or in the open market after the distribution has been completed in order
to cover short positions.
-
To close out any covered short position, the initial purchasers and Mexican underwriters must purchase
shares in the open market after the distribution has been completed or must exercise their
overallotment options. In determining the source of shares to close the covered short position, the
initial purchasers and Mexican underwriters will consider, among other things, the price of shares
available for purchase in the open market as compared to the price at which they may purchase shares
by exercising their overallotment options.
-
Stabilizing transactions involve bids to purchase shares so long as the stabilizing bids do not exceed a
specified maximum.
Purchases to cover short positions and stabilizing purchases, as well as other purchases by the initial
purchasers and the Mexican underwriters for their own accounts, may have the effect of preventing or retarding a
decline in the market price of the Shares. They may also cause the price of the Shares to be higher than the price
that would otherwise exist in the open market in the absence of these transactions. The initial purchasers may
conduct these transactions in the over-the-counter market or otherwise. If the initial purchasers commence any of
these transactions, they may discontinue them at any time.
The initial purchasers and their affiliates have engaged in, and may in the future engage in, investment
banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have
received, or may in the future receive, customary fees and commissions for these transactions. In particular, the
initial purchasers or their affiliates are lenders under certain of our credit facilities, including bilateral credit facilities
and facilities through lease securitizations and receivables transactions, and may receive a portion of the net
proceeds from this offering. See “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources.” In addition, the initial purchasers or their affiliates are
counterparties to several of our derivative transactions.
In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may
make or hold a broad array of investments and actively trade debt and equity securities (or related derivative
securities) and financial instruments (including bank loans) for their own account and for the account of their
customers. Such investments and securities activities may involve securities and/or instruments of ours or our
affiliates. The initial purchasers and their affiliates have a lending relationship with us and routinely hedge their
credit exposure to us consistent with their customary risk management policies. Typically, the initial purchasers and
their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit
default swaps or the creation of short positions in our securities. The initial purchasers and their affiliates may also
make investment recommendations and/or publish or express independent research views in respect of such
securities or financial instruments and may hold, or recommend to customers that they acquire, long and/or short
positions in such securities and instruments.
The initial purchasers and the Mexican underwriters have entered into an intersyndicate agreement
providing for the coordination of their activities. Under the intersyndicate agreement, the Mexican underwriters
may offer and sell a portion of the Shares to be sold pursuant to the purchase agreement, the initial purchasers may
purchase a portion of the Shares to be sold pursuant to the Mexican underwriting agreement, and the initial
purchasers and the Mexican underwriters have agreed to coordinate their efforts to stabilize and exercise their
overallotment options, in each case, on the terms and subject to the conditions set forth in the intersyndicate
agreement and observing the applicable rules prescribed by the CNBV.
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We have agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the initial purchasers may be required to make because of any of
those liabilities.
Sales Outside of the United States
Other than with respect to the public offering of the Shares listed on the BMV, no action has been or will
be taken in the United States, the United Kingdom or any country or jurisdiction by us, the initial purchasers or the
Mexican underwriters that would permit a public offering of the Shares, or possession or distribution of any offering
material in relation thereto, in any country or jurisdiction where action for that purpose is required. Accordingly, the
Shares may not be offered or sold, directly or indirectly, and neither this offering memorandum nor any other
offering material or advertisements in connection with the Shares may be distributed, published, in or from any
country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or
jurisdiction. This offering memorandum does not constitute an offer to sell or a solicitation of an offer to purchase
in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this offering
memorandum comes are advised to inform themselves about and to observe any restrictions relating to the offering
of the Shares, the distribution of this offering memorandum and resale of the Shares. See “Transfer Restrictions.”
Notice to Prospective Investors in Argentina
We have not made, and will not make, any application to obtain an authorization from the National
Securities Exchange Commission (Comisión Nacional de Valores, or the “CNV”) for the public offering of the
Shares in Argentina. The CNV has not approved the Shares, the global offering nor any document relating to the
offering of the Shares. The Shares will not be offered or sold in Argentina, except in transactions that will not
constitute a public offering of securities within the meaning of Section 16 of the Argentine Public Offering Law N°
17,811, as amended. Argentine insurance companies may not purchase the Shares.
Notice to Prospective Investors in Australia
No prospectus, disclosure document, offering material or advertisement in relation to the Shares has been
lodged with the Australian Securities and Investments Commission or the Australian Stock Exchange Limited.
Accordingly, a person may not (a) make, offer or invite applications for the issue, sale or purchase of shares within,
to or from Australia (including an offer or invitation which is received by a person in Australia) or (b) distribute or
publish this offering memorandum or any other prospectus, disclosure document, offering material or advertisement
relating to the Shares in Australia, unless (i) the minimum aggregate consideration payable by each offeree is the
U.S. dollar equivalent of at least A$500,000 (disregarding moneys lent by the offeror or its associates) or the offer
otherwise does not require disclosure to investors in accordance with Part 6D.2 of the Corporations Act 2001
(CWLTH) of Australia; and (ii) such action complies with all applicable laws and regulations.
Notice to Prospective Investors in Brazil
The offer of securities described in this offering memorandum will not be carried out by any means that
would constitute a public offering in Brazil under Law No. 6,385, of December 7, 1976, as amended, and under
CVM Rule (Instrução) No. 400, of December 29, 2003, as amended. The offer and sale of the securities have not
been and will not be registered with the Comissão de Valores Mobiliários in Brazil. Any representation to the
contrary is untruthful and unlawful. Any public offering or distribution, as defined under Brazilian laws and
regulations, of the interests in Brazil is not legal without such prior registration. Documents relating to the offering
of the securities, as well as information contained therein, may not be supplied to the public in Brazil, as the offering
of the securities is not a public offering of securities in Brazil, nor may they be used in connection with any offer for
sale of the securities to the public in Brazil. This offering memorandum is addressed to you personally, upon your
request and for your sole benefit, and is not to be transmitted to anyone else, to be relied upon by anyone else or for
any other purpose either quoted or referred to in any other public or private document or to be filed with anyone
without our prior, express and written consent.
154
Notice to Prospective Investors in Chile
Pursuant to Law No. 18,045 of Chile (the securities market law of Chile) and Rule (Norma de Carácter
General) No. 336, dated June 27, 2012, issued by the Superintendency of Securities and Insurance of Chile
(Superintendencia de Valores y Seguros de Chile, or the “SVS”), the Shares may be privately offered in Chile to certain
“qualified investors” identified as such by Rule 336 (which in turn are further described in rule No. 216, dated June 12,
2008, of the SVS).
Rule 336 requires the following information to be provided to prospective investors in Chile:
(1) Date of commencement of the offer: May 11, 2015. The offer of the Shares is subject to Rule (Norma
de Carácter General) No. 336, dated June 27, 2012, issued by the SVS;
(2) The Shares and this offering memorandum are not registered with the Securities Registry (Registro de
Valores) of the SVS, nor with the foreign securities registry (Registro de Valores Extranjeros) of the
SVS and as such as not subject to the oversight of the SVS;
(3) Since the Shares are not registered in Chile, there is no obligation by the issuer to make publicly
available information about the Shares in Chile; and
(4) The Shares shall not be subject to a public offering in Chile unless registered with the relevant
Securities Registry of the SVS.
Notice to Prospective Investors in Colombia
The Shares have not been and will not be registered in the Colombian National Registry of Securities and
Issuers (Registro Nacional de Valores y Emisores) maintained by the Colombian Superintendency of Finance
(Superintendencia Financiera de Colombia) and may not be offered, sold or negotiated or otherwise be subject to
brokerage activities in Colombia, except under circumstances which do not constitute a public offering of securities
under applicable Colombian securities laws and regulations.
Notice to Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area, which has implemented the Prospectus
Directive, which we refer to as “Relevant Member States,” with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), an offer
to the public of any Shares which are the subject of the offering contemplated by this offering memorandum may not
be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any
Shares may be made at any time with effect from and including the Relevant Implementation date under the
following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member
State:
•
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
•
to fewer than 100 or, if the Relevant Member State has implemented the relevant provisions of the
2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined
in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior
consent of the relevant dealer or dealers nominated by us for any such offer; or
•
in any other circumstances falling within Article 3(2) of the Prospectus Directive;
provided that no such offer of Shares shall result in a requirement for the publication by us, or the initial purchasers
of a prospectus pursuant to Article 3 of the Prospectus Directive.
Any person making or intending to make any offer of shares within the European Economic Area should
only do so in circumstances in which no obligation arises for us or the initial purchasers to produce a prospectus for
155
such offer. Neither we nor the initial purchasers have authorized, nor do they authorize, the making of any offer of
shares through any financial intermediary, other than offers made by the initial purchasers which constitute the final
offering of Shares contemplated in this offering memorandum.
For the purposes of this provision, and your representation below, the expression an “offer to the public” in
relation to any shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to
purchase any shares, as the same may be varied in that Relevant Member State by any measure implementing the
Prospectus Directive in that Relevant Member State and the expression “Prospectus Directive” means Directive
2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the
Relevant Member State) and includes any relevant implementing measure in each Relevant Member State. The
expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Each person in a Relevant Member State who receives any communication in respect of, or who acquires
any Shares under, the offer of Shares contemplated by this offering memorandum will be deemed to have
represented, warranted and agreed to and with us and the initial purchasers that:
(1) it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
(2) in the case of any Shares acquired by it as a financial intermediary, as that term is used in Article
3(2) of the Prospectus Directive, (a) the Shares acquired by it in the offering have not been acquired on
behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant
Member State other than “qualified investors” (as defined in the Prospectus Directive), or in
circumstances in which the prior consent of the initial purchasers have been given to the offer or
resale; or (b) where Shares have been acquired by it on behalf of persons in any Relevant Member
State other than qualified investors, the offer of those Shares to it is not treated under the Prospectus
Directive as having been made to such persons.
Notice to Prospective Investors in France
No prospectus (including any amendment, supplement, or replacement thereto) has been prepared in
connection with the offering of our Shares that has been approved by the Autorité des marchés financiers or by the
competent authority of another Relevant Member State and notified to the Autorité des marchés financiers. No
Shares have been offered or sold and will be offered or sold, directly or indirectly, to the public in France except to
permitted investors (“Permitted Investors”) consisting of persons licensed to provide the investment service of
portfolio management for the account of third parties, qualified investors (investisseurs qualifiés) acting for their
own account and/or corporate investors meeting one of the four criteria provided in article D. 341-1 of the French
Code moniétaire et financier and belonging to a limited circle of investors (cercle restreint d’investisseurs) acting
for their own account, with “qualified investors” and “limited circle of investors” having the meaning ascribed to
them in Article L. 411-2, D. 411-1, D. 411-2, D. 734-1, D. 744-1, D. 754-1 and D. 764-1 of the French Code
moniétaire et financier; none of this offering memorandum nor any other materials related to the offer nor
information contained therein relating to the Shares has been released, issued or distributed to the public in France
except to Permitted Investors; and the direct or indirect resale to the public in France of any Shares acquired by any
Permitted Investors may be made only as provided by articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-83 of the French Code moniétaire et financier and applicable regulations thereunder.
Notice to Prospective Investors in Germany
The Shares will not be offered, sold or publicly promoted or advertised in the Federal Republic of Germany
other than in compliance with the German Securities Prospectus Act (Gesetz über die Erstellung, Billigung und
Veröffentlichung des Prospekts, der beim öffentlicken Angebot von Wertpapieren oder bei der Zulassung von
Wertpapieren zum Handel an einem organisierten Markt zu veröffenlichen ist—Wertpapierprospektgesetz) as of 22
June 2005, effective as of 1 July 2005, as amended, or any other laws and regulations applicable in the Federal
Republic of Germany governing the issue, offering and sale of securities. No selling prospectus (Verkaufsprospeckt)
156
within the meaning of the German Securities Selling Prospectus Act has been or will be registered within the
Financial Supervisory Authority of the Federal Republic of Germany or otherwise published in Germany.
Notice to Prospective Investors in Hong Kong
The Shares may not be offered or sold in Hong Kong by means of any document other than (i) in
circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.
32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures
Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do
not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of
Hong Kong), and no advertisement, invitation or document relating to the Shares may be issued or may be in the
possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if
permitted to do so under the laws of Hong Kong) other than with respect to Shares which are or are intended to be
disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to Prospective Investors in Italy
The offering of our Shares has not been cleared by the Italian Securities Exchange Commission
(Commissione Nazionale per le Societá e la Borsa, or the “CONSOB”) pursuant to Italian securities legislation and,
accordingly, our Shares may not and will not be offered, sold or delivered, nor may or will copies of this offering
memorandum or any other documents relating to our Shares or the offer be distributed in Italy other than to
professional investors (operatori qualificati), as defined in Article 31, paragraph 2 of CONSOB Regulation No.
11522 of July 1, 1998, as amended, or Regulation No. 11522, or in other circumstances where an exemption from
the rules governing solicitations to the public at large applies in accordance with Article 100 of Legislative Decree
No. 58 of February 24, 1998, as amended, or the Italian Financial Law, and Article 33 of CONSOB Regulation No.
11971 of May 14, 1999, as amended.
Any offer, sale or delivery of our Shares or distribution of copies of this offering memorandum or any other
document relating to our Shares or the offer in Italy may and will be effected in accordance with all Italian
securities, tax, exchange control, and other applicable laws and regulations, and in particular, will be:
•
made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in
accordance with the Legislative Decree No. 385 of September 1, 1993, as amended, or the Italian Banking
Law, the Italian Financial Law, Regulation No. 11522, and any other applicable laws and regulations;
•
in compliance with Article 129 of the Italian Banking Law and the implementing guidelines of the Bank of
Italy; and
•
in compliance with any other applicable notification requirement or limitation which may be imposed by
CONSOB or the Bank of Italy.
Any investor purchasing our Shares in the offer is solely responsible for ensuring that any offer or resale of
Shares it purchased in the offer occurs in compliance with applicable laws and regulations. This offering
memorandum and the information contained herein are intended only for the use of its recipient and are not to be
distributed to any third party residing in or located in Italy for any reason. No person residing in or located in Italy
other than the original recipients of this document may rely on it or its content.
In addition to the above (which shall continue to apply to the extent not inconsistent with the implementing
measures of the Prospective Directive in Italy), after the implementation of the Prospectus Directive in Italy, the
restrictions, warranties and representations set out under the heading “—Notice to Prospective Investors in the
European Economic Area” above shall apply to Italy.
157
Notice to Prospective Investors in Japan
The Shares offered in this offering memorandum have not been and will not be registered under the
Financial Instruments and Exchange Law of Japan. The Shares have not been offered or sold and will not be offered
or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (including any corporation or
other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration
requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable
requirements of Japanese law.
Where the Shares are subscribed or purchased under section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire
share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust
(where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an
accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’
rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired
the shares under section 275 except: (1) to an institutional investor under section 274 of the SFA or to a relevant
person, or any person pursuant to section 275(1a), and in accordance with the conditions, specified in section 275 of
the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
Notice to Prospective Investors in Peru
Neither the Shares nor this offering memorandum have or will be registered with or approved by the
Peruvian Capital Markets Superintendency (Superintendencia del Mercado de Valores). Accordingly, the Shares
cannot be offered or sold in Peru, except if such offering is considered a private offering under the securities laws
and regulations of Peru. The Peruvian securities market law establishes, among others, that any particular offer may
qualify as private if it is directed exclusively to institutional investors.
Notice to Prospective Investors in Singapore
This offering memorandum has not been registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this offering memorandum and any other document or material in connection with the
offer or sale, or invitation for subscription or purchase, of the Shares may not be circulated or distributed, nor may
they be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and
Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any
person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or
(iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in
each case subject to compliance with conditions set forth in the SFA.
Notice to Prospective Investors in Spain
Neither the Shares nor this offering memorandum have been approved or registered in the administrative
registries of the Spanish National Securities Exchange Commission (Comisión Nacional del Mercado de Valores).
Accordingly, the Shares may not be offered in Spain except in circumstances which do not constitute a public offer
of securities in Spain within the meaning of articles 30bis of the Spanish Securities Market Law of 28 July 1988
(Ley 24/1988, de 28 Julio, del Mercado de Valores), as amended and restated, and supplemental rules enacted
thereunder.
Notice to Prospective Investors in Switzerland
The Shares may not and will not be publicly offered, distributed or re-distributed on a professional basis in
or from Switzerland and neither this offering memorandum nor any other solicitation for investments in the Shares
may be communicated or distributed in Switzerland in any way that could constitute a public offering within the
meaning of Articles 1156 or 652a of the Swiss Code of Obligations or of Article 2 of the Federal Act on Investment
Funds of March 18, 1994. This offering memorandum may not be copied, reproduced, distributed or passed on to
158
others without the initial purchasers’ prior written consent. This offering memorandum is not a prospectus within the
meaning of Articles 1156 and 652a of the Swiss Code of Obligations or a listing prospectus according to article 32
of the Listing Rules of the Swiss exchange and may not comply with the information standards required thereunder.
We will not apply for a listing of our Shares on any Swiss stock exchange or other Swiss regulated market and this
offering memorandum may not comply with the information required under the relevant listing rules. The Shares
have not and will not be registered with the Swiss Federal Banking Commission and have not and will not be
authorized under the Federal Act on Investment Funds of March 18, 1994. The investor protection afforded to
acquirers of investment fund certificates by the Federal Act on Investment Funds of March 18, 1994, does not
extend to acquirers of the Shares.
Notice to Prospective Investors in The Netherlands
Our Shares may not be offered, sold, transferred or delivered, in or from the Netherlands, as part of the
initial distribution or as part of any reoffering, and neither this offering memorandum nor any other document in
respect of the offering may be distributed in or from the Netherlands, other than to individuals or legal entities which
trade or invest in securities in the conduct of their profession or trade (which includes banks, investment banks,
securities firms, insurance companies, pension funds, other institutional investors and treasury departments and
finance companies of large enterprises), in which case, it must be made clear upon making the offer and from any
documents or advertisements in which a forthcoming offering of Shares is publicly announced that the offer is
exclusively made to said individuals or legal entities.
Notice to Prospective Investors in the United Kingdom
The initial purchasers have represented, warranted and agreed that:
(a)
it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the United Kingdom Financial Services and Markets Act of 2000 (“FSMA”) received
by it in connection with the issue or sale of the securities in circumstances in which Section 21(1) of
the FSMA does not, or would not, apply to us; and
(b)
it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the securities in, from or otherwise involving the United Kingdom.
159
TRANSFER RESTRICTIONS
The international offering is being made in accordance with Rule 144A and Regulation S under the
Securities Act. Our Shares will be registered with the RNV and we have applied for listing on the BMV; however,
they have not been registered, and will not be registered, under the Securities Act or any state securities laws, and
the Shares may not be offered or sold except pursuant to an effective registration statement or pursuant to
transactions exempt from, or not subject to, registration under the Securities Act. Accordingly, the Shares are being
offered and sold only:
•
in the United States to qualified institutional buyers (as defined in Rule 144A) pursuant to Rule 144A under
the Securities Act; and
•
outside of the United States, to certain persons, other than U.S. persons, in offshore transactions meeting
the requirements of Rule 903 of Regulation S under the Securities Act.
Purchasers’ Representations and Restrictions on Resale and Transfer
Each purchaser of Shares (other than the initial purchasers in connection with the initial issuance and sale
of the Shares) and each owner of any beneficial interest therein will be deemed, by its acceptance or purchase
thereof, to have represented and agreed as follows:
(1)
the offering and sale of the Shares have not been registered under the Securities Act or with any
securities regulatory authority of any state or other jurisdiction except Mexico, and are intended to
be exempt from registration under the Securities Act pursuant to Section 4 thereof;
(2)
the purchaser is acquiring the Shares for its own account (or, if it is acquiring the Shares as a
fiduciary or agent for one or more investor accounts, the purchaser has the full power and authority
to make the representations, warranties and agreements herein on behalf of each such account);
(3)
the purchaser is not acquiring the Shares with a view to any distribution of the Shares within the
meaning of the Securities Act;
(4)
the purchaser is (or, if it is acquiring the Shares as a fiduciary or agent for one or more investor
accounts, each such account is) (i) a “qualified institutional buyer,” as such term is defined in Rule
144A or (ii) not a “U.S. person,” as such term is defined in Regulation S, and is purchasing the
Shares in an offshore transaction pursuant to Regulation S;
(5)
the purchaser has sufficient knowledge and experience in financial and business matters so as to be
capable of independently evaluating the merits and risks of an investment in the Shares, and the
purchaser is able to bear the economic risk of the investment. The purchaser has made its own
investment decision regarding the Shares based on its own knowledge;
(6)
the purchaser understands and agrees that the Shares may not be re-offered, resold, pledged or
otherwise transferred except (1)(A) to a person who it reasonably believes is a qualified institutional
buyer in a transaction exempt from registration under U.S. securities laws or (B) through the BMV
or any other stock exchange outside the United States on which the Shares or any beneficial interest
therein may be listed and traded in accordance with Regulation S or otherwise in an offshore
transaction complying with Rule 903 or Rule 904 of Regulation S and, in either case, (2) in
accordance with all applicable securities laws of the states of the United States;
(7)
except with respect to transactions through the BMV or as otherwise provided in paragraph (6)
above, the purchaser (1) will not transfer the Shares to any person or entity, unless such person or
entity could itself truthfully make each of the foregoing representations, warranties and covenants
and (2) will provide notice of the transfer restrictions applicable to the Shares to any subsequent
transferees;
160
(8)
the purchaser has had the opportunity to ask questions of, and receive answers from us, concerning
us, our business and financial condition and the Shares to be acquired by the purchaser and other
related matters. The purchaser further represents and warrants that we have made available to the
purchaser or its agents all documents and information requested by the purchaser or on its behalf
relating to an investment in the Shares, including this offering memorandum. In evaluating the
suitability of an investment in the Shares, the purchaser has not relied and will not rely on any other
representations or other information (whether oral or written) made by or on behalf of us (or any of
our agents, including, without limitation, the Mexican underwriters and the initial purchasers) other
than as contemplated by the two preceding sentences;
(9)
the purchaser agrees not to deposit the Shares into an unrestricted American or global depositary
facility, for so long as the Shares constitute restricted securities, as such term is defined in Rule 144
under the Securities Act; and
(10)
the purchaser acknowledges that us, the initial purchasers, the Mexican underwriters and others will
rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements.
161
VALIDITY OF THE SHARES
The validity of the Shares and certain other legal matters under Mexican law will be passed upon by Mancera,
S.C. (member of Ernst & Young Global Limited), Mexico City, Mexico, our Mexican counsel. Certain legal matters
in connection with the offering are being passed upon by Paul Hastings LLP, New York, New York, our U.S.
counsel. Certain legal matters in connection with the offering are being passed upon for the initial purchasers by
Ritch, Mueller, Heather y Nicolau, S.C., Mexico City, Mexico, Mexican counsel to the initial purchasers and Cleary
Gottlieb Steen & Hamilton LLP, New York, New York, U.S. counsel to the initial purchasers.
162
INDEPENDENT ACCOUNTANTS
The financial statements as of December 31, 2014, 2013 and 2012 and for each of the three years in the
period ended December 31, 2014 included in this offering memorandum, have been audited by
PricewaterhouseCoopers, S.C., independent accountants, as stated in their report appearing herein.
163
INDEX TO FINANCIAL STATEMENTS
Unifin Financiera, S.A.B. de C.V., SOFOM, E.N.R.
Page
Audited Consolidated Financial Statements as of and for the Years Ended December 31, 2014,
2013 and 2012
Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheets as of December 31, 2014, 2013 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Income for the years ended December 31, 2014, 2013 and 2012 . . . . . . . . . . . . .
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014, 2013
and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012 . . . . . . . . . .
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
.
.
F-3
F-5
F-6
.
.
.
F-7
F-8
F-9
Page
Unaudited Interim Financial Statements
Balance Sheet as of March 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Income for the three-month periods ended March 31, 2015 and 2014 . . . . . . . .
Statements of Changes in Stockholders’ Equity for the three-month periods ended March 31,
2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows for the three-month periods ended March 31, 2015 and 2014 . . . . .
Notes to the Unaudited Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
..
..
F-58
F-59
..
..
..
F-60
F-61
F-62
Unifin Financiera, S. A. P. I. de C. V., Sociedad
Financiera de Objeto Múltiple, Entidad No
Regulada and Subsidiaries
(a subsidiary of Unifin Corporativo, S. A. de C. V.)
Consolidated Financial Statements
As of December 31, 2014 and 2013 and for the three years in the
period ended December 31, 2014
F-2
Independent Auditors’ Report
To the Stockholders of
Unifin Financiera, S. A. P. I. de C. V., Sociedad Financiera
de Objeto Múltiple, Entidad no Regulada and Subsidiaries
(subsidiary of Unifin Corporativo, S. A. de C. V.)
We have audited the accompanying consolidated financial statements of Unifin Financiera, S. A. P. I. de
C. V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada and Subsidiaries (Company), which
comprise the consolidated balance sheets as of December, 31, 2014 and the consolidated statements of
income, of changes in stockholders’ equity and of cash flows for the period then ended, and a summary
of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
The management of the Company and subsidiaries is responsible for the preparation of these
consolidated financial statements in accordance with the Mexican accounting rules and practices
applicable to regulated multiple purpose financial entities issued by the National Banking and Securities
Commission, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit of 2014 in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risk of material misstatement of the consolidated financial statements
whether due to fraud or error. In making those risk assessment, the auditor considers internal control
relevant for the preparation of the Company’s consolidated financial statements, in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We
consider that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
F-3
Opinion
In our opinion the consolidated financial statements of Unifin Financiera, S. A. P. I. de C. V., Sociedad
Financiera de Objeto Múltiple, Entidad No Regulada and subsidiaries as of December 31, 2014 and for
the period then ended have been prepared, in all material respects, in accordance with the Mexican
accounting rules and practices applicable to regulated multiple purpose financial entities established by
the National Banking and Securities Commission.
PricewaterhouseCoopers, S. C.
Adriana F. Rubio Gutiérrez
Audit Partner
Mexico City, February 16, 2015
F-4
F-5
Total
Ps 6,994,968
502,750
110,680
381,167
10,903
3,290
4,249,024
12,996
101,353
Ps 6,957,698
Ps 8,413,812
2013
Ps 5,586,999
1,370,699
2014
Ps 6,038,447
2,375,365
Ps4,200,870
Ps3,270,980
929,890
2012
Total liabilities and stockholders’ equity
Ps15,348,104
1,535,361
COMMITMENTS - Note 12
SUBSEQUENT EVENTS - Note 22
Total stockholders’ equity
552,939
535,337
Ps10,758,721
952,953
952,939
14
29,317
185,665
337,957
1,535,337
24
400,000
46,215
6,724
482,398
275,000
125,000
9,805,768
95,887
694,680
83,548
611,132
2,326,430
1,000,000
875,000
125,000
13,812,743
133,347
1,082,541
100,223
982,318
2,454,498
1,735,551
590,879
6,688,771
10,142,357
2,061,730
392,768
Ps 1,016,072
5,672,699
2013
December 31,
166,591
9,975,766
Ps
2014
Controlling interest
Non-controlling interest
Earned capital:
Capital reserves
Retained earnings
Net income for the year
Stockholders’ equity (Note 15):
Contributed Capital
Capital stock
Share premium
Total liabilities
Deferred credits and advanced collections (Note 3f.)
Income tax payable (Note 16)
Sundry creditors and other accounts payable (Note 14)
Bank borrowings and loans from other entities (Note 13)
Short term
Long term
Short-term
Long-term
Liabilities:
Debt securities (Note 12)
Liabilities and Stockholders' Equity
Unaudited memorandum accounts (Note 3q)
Contractual lease rentals to be accrued held in trust
Contractual lease rentals to be accrued
Ps10,758,721
582,415
963,431
Ps15,348,104
311,691
267,731
2,993
14,944
6,688,993
545,842
405,999
11,590
14,944
9,610,677
12,704
188,164
1,898,063
(56,517)
2,219,544
(120,251)
20,849
1,933,731
1,852,636
81,095
20,979
206,513
1,954,580
Ps
2012
Thousands of Mexican pesos
2,339,795
178,415
2,161,380
1,982,829
178,551
42,210
Ps 1,009,747
2013
The accompanying twenty two notes are an integral part of these financial statements.
Total assets
Deferred income tax (Note 16)
Deferred charges and advanced payments
Other long-term assets
Other assets:
Other permanent investments (Note 11)
Property, machinery and equipment - Net (Note 10)
211,948
130,611
Foreclosed assets - Net (Note 9)
2,986,335
(88,122)
3,074,457
70,152
Other accounts receivable (Note 8)
Loans portfolio - Net
Less: Allowance for loan losses (Note 7)
Total loans portfolio
Past due loans portfolio (Note 7)
Commercial loans
3,004,305
Total performing loans portfolio
856,426
573,732
2,767,620
236,685
Ps
2014
Performing loans portfolio (Note 7)
Commercial loans
Consumer loans
Loan portfolio:
Derivatives with trading purposes (Note 6)
Cash and cash equivalents (Note 5)
Assets
December 31,
Consolidated Balance Sheets
(Notes 3 and 18)
As of December 31, 2014, 2013 and 2012
Ps 6,994,968
674,994
674,982
12
274,982
17,146
14,410
243,426
400,000
275,000
125,000
6,319,974
68,552
583,010
36,487
546,523
1,046,657
897,559
149,098
4,621,755
Ps 1,019,100
3,602,655
2012
Unifin Financiera, S. A. P. I. de C. V., Sociedad Financiera de Objeto Múltiple,
Entidad No Regulada and Subsidiaries
Financiera de Objeto Múltiple, Entidad No Regulada
and Subsidiaries
Consolidated Statements of Income
(Notes 3, 17, 18 and 19)
For the years ended December 31, 2014, 2013 and 2012
Thousands of Mexican pesos, except earnings per share
Operating lease income
Interest income
Other lease benefits
Depreciation of assets under operating lease (Note 10)
Interest expense
Other lease expenses
2014
2013
2012
Ps3,648,586
1,146,924
383,189
(2,150,092)
(1,513,690)
(424,978)
Ps2,591,738
367,681
194,345
(1,536,059)
(573,612)
(220,989)
Ps1,842,717
355,899
126,816
(1,050,104)
(452,234)
(153,318)
Financial margin
1,089,939
823,104
669,776
(63,758)
(14,416)
759,346
655,360
(10,019)
11,274
118,674
(535,095)
(10,158)
(8,284)
39,344
(362,810)
(6,128)
(10,123)
42,751
(327,953)
(415,166)
(341,908)
(301,453)
704,773
417,438
353,907
-
11,264
(11,264)
704,773
428,702
342,643
Current income tax (Note 16)
(456,515)
234,150
(291,754)
201,011
(178,764)
79,555
Income tax expense
(222,365)
(90,743)
(99,209)
Allowance for loan losses (Note 7)
30,000
Financial margin adjusted for credit risk
1,119,939
Commissions and fees (paid) - Net
Financial intermediation results
Other operating income - Net
Administrative and promotional expenses
Operating income
Valuation effects of other permanent investments (Note 11)
Income before income tax
Consolidated net income for the year
Ps 482,408
Ps 337,959
Ps 243,434
Consolidated net income for the year:
Ps 482,398
10
Ps 337,957
2
Ps 243,426
8
Ps 482,408
Ps 337,959
Ps 243,434
Earnings per share (pesos)
Ps
Ps
Ps
81.91
F-6
122.89
177.80
F-7
125,000
Balances at December 31, 2014
Ps 875,000
Ps 125,000
Ps
600,000
Changes arising from recognition of net income:
Ps 46,215
16,898
6,724
(178,941)
Ps 482,398
482,398
(337,957)
(337,957)
-
Total
(400,000)
337,957
(100,000)
(16,898}
600,000
16,898
Changes arising from decisions taken by stockholders:
Transfer of consolidated net income of the year to retained earnings
Dividend payments
Creation of reserves
Capitalization of retained earnings and cash contribution of capital stock (June 26,
2014)
185,665
337,957
29,317
337,957
125,000
(243,426)
275,000
171,255
(243,426)
12,171
Total
243,426
(60,000)
(12,171)
14,410
12,171
17,146
243,426
275,000
Dividend payments
(130,879)
(130,879)
Ps 130,879
Consolidated net
income for the year
243,426
(115,665)
130,879
(90,000)
(150,000)
(6,544)
Ps 130,075
Retained
earnings
Earned capital
150,000
6,544
Ps 10,602
6,544
Ps 125,000
Capital
reserves
Total
150,000
Ps 125,000
Share
premium
Dividend payments
Capitalization of retained earnings (December 3, 2012)
Capital
stock
Contributed capital
Thousands of Mexican pesos
Consolidated Statements of Changes in Stockholders' Equity
(Note 15)
Ps1,535,337
482,398
100,000
200,000
(100,000)
-
952,939
337,957
(60,000)
(60,000)
-
674,982
243,426
(90,000)
(90,000)
-
Ps 521,556
Total
controlling
interest
Ps 24
10
14
2
12
8
Ps 4
Noncontrolling
interest
Ps1,535,361
482,408
100,000
200,000
(100,000)
-
952,953
337,959
(60,000)
(60,000)
-
674,994
243,434
(90,000)
(90,000)
-
Ps_ 521,560
Total
stockholders’
equity
and Subsidiaries
Consolidated Statements of Cash Flows
Thousands of Mexican pesos (Note 2)
2014
Ps
Adjustments for items not involving cash flows:
Depreciation and amortization
Income tax (current and deferred)
Valuation effects of other permanent investments
482,408
2013
2012
Ps 337,959
Ps 243,434
(30,000)
2,176,972
(222,365)
-
63,758
1,557,447
90,743
(11,264)
14,416
1,065,170
99,209
11,264
2,407,015
2,038,643
1,433,493
Change in derivatives with trading purposes
Change in loans portfolio
Change in foreclosed assets
Change in other accounts receivable
Change in other operating assets
Change in debt securities
Change in bank borrowings and loans from other entities
Change in deferred credits and advanced collections
Change in other operating liabilities
(814,216)
(737,523)
(117,907)
(23,077)
(381,016)
3,453,586
128,068
37,460
610,251
(321,481)
292
(86,803)
(53,026)
2,067,016
1,279,773
27,335
111,668
(824,081)
1,444
(47,087)
(231,863)
1,760,899
239,145
11,591
17,430
Net cash flows provided by operating activities
4,562,641
5,063,417
2,360,971
Payment for acquisition of property, machinery and equipment
Payment for acquisition of permanent investments
(5,098,656)
(4,199,793)
(390)
(2,362,274)
(278)
Net cash flows used in investing activities
(5,098,656)
(4,200,183)
(2,362,552)
200,000
(100,000)
(60,000)
(90,000)
100,000
(60,000)
(90,000)
(436,015)
803,234
(91,581)
1,009,747
206,513
298,094
573,732
Ps1,009,747
Ps 206,513
Operating activities
Investing activities
Financing activities
Issuance of capital stock
Dividend payments
Net cash flows provided by (used in) financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Ps
F-8
de Objeto Múltiple, Entidad No Regulada and Subsidiaries
Notes to the Consolidated Financial Statements
As of December 31, 2014 and 2013 and for the three years in the period ended
December 31, 2014, 2013 and 2012
Thousands of Mexican pesos [Ps] (Note 2), except foreign currency,
exchange rates, nominal value, number of titles, number and price of share
Note 1 - Activity of the Company:
Unifin Financiera, S. A. P. I. de C. V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada
(Company), subsidiary of Unifin Corporativo, S. A. de C. V. (Unifin Corporativo), was incorporated on
February 3, 1993 in accordance with Mexican laws.
The predominant activity of the Company is to provide operating leases for automotive vehicles, machinery
and equipment, among other lease arrangements. The company also provides loans, performs financial
factoring operations, acts as administrator for trusts, obtains loans, guarantees obligations through different
means, and issues, subscribes, accepts, endorses sells, discounts and pledges all kind of credit.
The Company has no employees, and all legal, accounting and administrative services are provided by related
parties.
These consolidated financial statements include the figures of the Company and its subsidiaries as of
December 31, 2014, 2013 and 2012 on which the Company has control as mentioned below:
Ownership (%)
Entity
Activity
2014
2013
2012
Unifin Credit, S. A. de C. V. SOFOM,
E. N. R. (Unifin Credit)
Financial factoring
99.99
99.99
99.99
Unifin Autos, S. A. de C. V. (Unifin Autos)
Purchase and sale of cars
99.99
99.99
99.99
Citation VII Leasing Corp (Citation)
Aircraft leasing
100.00
100.00
100.00
Inversiones Inmobiliarias Industriales,
S. A. P. I. de C. V. (Inmobiliarias Industriales) 1
Promotion of real estate services
94.08
94.08
-
Unifin Agente de Seguros y Fianzas,
S. A. de C. V. (Unifin Agente) 2
Insurance services
75.00
-
-
1
At the November 25, 2013 Extraordinary General Stockholders’ Meeting of Inmobiliarias Industriales, it
was agreed to increase the Company’s variable capital stock by Ps170,000 through issuance of 170,000
Series "C" ordinary, nominal shares with no par value, fully subscribed and paid in by Unifin Credit,
through the capitalization of a straight loan contracted by Inmobiliarias Industriales with Unifin Credit. As
a result of the capital increase, Unifin Credit holds 94.08% of the capital stock of Inmobiliarias Industriales.
2
In November 2014, the Company acquired the 100% of the ownership of Unifin Agente at its nominal value
from its parent Company. Subsequently, on December 23, 2014, the Company sold to a third party the 25%
of its shareholding, equivalent to 12,500 shares, at a total price of Ps88,240, which was recognized in the
other operating income line item. The consideration is to be paid in the following 120 days and is presented
in the other accounts receivable line item.
F-9
December 31, 2014, 2013 and 2012
Note 2 - Basis for preparation of the financial information:
Preparation of the financial statements
In accordance with the provisions of the Sole Circular for Issuers of Securities issued by the Mexican National
Banking and Securities Commission (Commission), the multiple purpose financial entities whose debt
securities are listed in the Mexican Stock Exchange, must prepare its financial statements in compliance with
the rules and accounting practices established by the Commission in the "Accounting Criteria for Regulated
Multiple Purpose Financial Entities " contained in the "General Provisions applicable to Regulated Multiple
Purpose Financial Entities".
Based on the above and considering that the Company has issued and maintained debt securities in the BMV
(which last amortization was exercised on August 8, 2014), and that intends to continue in the future issuing
debt securities registered in the BMV, the Company has prepared its consolidated financial statements as of
December 31, 2014 and 2013 and for the three years then ended in accordance with the accounting criteria,
which are aligned with the Mexican Financial Reporting Standards (MFRS), except when the Commission
considers it is necessary to apply a specific accounting criteria. For the purpose of these financial statements,
the Company has prepared its consolidated statements of income in accordance with the presentation
requirements specified by the accounting criteria of the Commission, which require presenting information
about the operations performed by the Company and other economic events affecting the Company that do not
necessarily derived from the decisions or transactions of the owners of the Company as shareholders, in a
given period.
According to accounting criteria in the absence of a specific accounting rule issued by the Commission,
companies must apply supplementary criteria, as established in MFRS A-8 “Supplementary” in the following
order: MFRS, International Financial Reporting Standards, approved and issued by the International
Accounting Standards Board (IASB), Generally Accepted Accounting Principles applicable in the United
States, or otherwise, any accounting standard that forms part of a group of formal and accepted standards.
The Company raised debt through the issuance of a cross border Senior Notes offering in the United States
and other markets in 2014 (see Note 12). Certain reclassifications have been made and certain notes of the
2013 and 2012 figures have been modified from the previously issued financial statements for comparative
purposes to be consistent with what is customary for international offerings. These reclassifications and
additional disclosures do not have an impact on the financial position or results of operations of the Company.
During 2015, the Company recorded a correction of an error of the computation of the weighted average
number of common shares to determine its earnings per share determined in compliance with Accounting
Criteria for Regulated Multiple Purpose Financial Entities for the year ended 2012. This adjustment consisted
in increase the Earnings per Share from Ps 88.5 to Ps 177.8. After evaluating the quantitative and qualitative
aspects of this adjustment, we concluded that its prior period financial statements were not materially
misstated and, therefore, no restatement was required.
Accounting criteria effective in 2014
In 2014 the amendments to the accounting criteria issued by the Commission listed below became effective for
its prospective application from the publication date. During 2013 there were no amendments in the
accounting criteria applicable to the Company. The Company believes that these new accounting criteria had
no significant effects on the financial information presented by the Company.
B-6 "Loan Portfolio": specifies the cases where borrowers declared in bankruptcy can be considered as
performing loans provided that they continue making payments for any borrowing considered to be
F-10
December 31, 2014, 2013 and 2012
indispensable to maintain its normal operation and the required liquidity during the bankruptcy process, even
if the borrowing was contracted for this purpose, in the terms set forth in the Bankruptcy Act (LCM, by its
initials in Spanish).
x Temporary special accounting criteria applicable to credit institutions related of consumer, residential and
commercial loans for clients whose residence or source of payment is located in the affected zones of South
Baja California, considered as a natural disaster area by the effects of Hurricane Odile, which require that
the full or partial deferral of principal and interest payments for up to three months, in respect of the total
amount due. These balances will bear no interest or could be capitalized. The foregoing shall apply to loans
that are classified as performing loans as of the date of the sinister.
MFRS
As of January 1, 2014, the Company retrospectively adopted the following MFRS and Interpretations to MFRS
(IMFRS) issued by the Mexican Board of Financial Reporting Standards (CINIF, by its acronym in Spanish),
that became effective from the above dates. The Company believes that these new MFRS, improvements to
MFRS and Interpretations to MFRS had no significant effects on the financial information presented by the
Company.
New MFRS:
x MFRS C-11 "Stockholders' equity". Establishes the valuation, presentation and disclosure standards for
those items comprising stockholders' equity in the balance sheet of profit entities. The main changes consist
in the requirement to determine a price per share to be issued when having advances for future capital
increases in order to be recognized as capital stock, and establishes that these cannot be reimbursed before
capitalization to qualify as equity, and includes specific guidance for financial instruments that at initial
recognition are identified as equity.
x MFRS C-12 "Financial instruments with features of liability and equity". Establishes the standards for the
initial recognition of final instruments with features of liability and equity in the profit entities' financial
statements. The concept of subordination is incorporated.
Improvements to MFRS:
The requirement to present certain operations in the other income and expenses line item is removed from,
MFRS C-6 "Property, plant and equipment", and Bulletin C-9 "Liabilities, provisions, contingent assets and
liabilities and commitments", and instead, the presentation of items in this line item is left to the discretion of
the Company.
Interpretation to MFRS:
Interpretation to MFRS 20 "Accounting effects of the Tax Reform 2014". The Interpretation to MFRS 20 was
issued in response to how the accounting effects of the Tax Reform 2014 should be recognized in the financial
statements.
F-11
December 31, 2014, 2013 and 2012
Financial statements authorization
The accompanying consolidated financial statements and its notes as of December 31, 2014 and 2013 and for
the three years in the period ended December 31, 2014 were authorized for their issuance on February 16,
2015, by Mr. Luis G. Barroso González, Chief Executive Officer, Mr. Gerardo Mier y Terán Suárez, Chief
Financial Officer, and Mrs. Sandra Molina Hernández, General Accountant.
Note 3 - Summary of significant accounting policies:
The most significant accounting policies are summarized as follows, which have been consistently applied in
the reporting years, unless otherwise indicated.
The accounting criteria and the MFRS require the use of some critical accounting estimates in the preparation
of the financial statements. They also require Management’s judgment in the process of defining and applying
the Company’s accounting policies.
a. Consolidation
Subsidiaries
Subsidiaries are all entities over which the Company has control to direct its relevant activities, has the
right (and is exposed) to variable returns from its interest and have the ability to affect those returns
through its power. In assessing whether the Company controls an entity, the existence and effect of
potential voting rights that are currently exercisable or convertible were considered.
Subsidiaries are consolidated as from the date they are controlled by the Company and are no longer
consolidated when the control is lost.
Transactions, balances and unrealized gains or losses arising from transactions between the consolidated
companies have been eliminated. The accounting policies applied by the subsidiaries have been modified
to ensure consistency with the accounting policies adopted by the Company, when necessary.
The consolidation was performed based on the financial statements of the subsidiaries.
Other permanent investments
The other permanent investments are represented by investments in shares of other entities where the
Company has no control or the ability to have significant influence. The other permanent investments are
initially and subsequently measured at historical cost.
The Company determines at each reporting date whether there is any objective evidence that the other
permanent investments are impaired. If this is the case, the Company calculates the amount of impairment
as the difference between the recoverable amount of other permanent investment and its carrying value
and recognizes the amount of the impairment, or reversal to previous impairments, in the income
statement, in the valuation effects of other permanent investments line item.
F-12
December 31, 2014, 2013 and 2012
b.
Recording, functional and reporting currency
Items included in the financial statements of each of the Company’s entities are measured using the
currency of the primary economic environment in which the entity operates the “functional currency”.
The consolidated financial statements are presented in Mexican pesos, which is the Company´s reporting,
recording and functional currency.
According to the provisions of MFRS B-15, the Company has identified the following currencies:
Entity
Recording
Unifin Credit
Unifin Autos
Inmobiliarias Industriales
Unifin Agente
Citation
Peso
Peso
Peso
Peso
Dollar
Currency
Functional
Peso
Peso
Peso
Peso
Dollar
Reporting
Peso
Peso
Peso
Peso
Peso
There were no changes when identifying these currencies in the three periods presented.
c. Inflation effects in the financial information:
According to the MFRS B-10, “Inflation effects”, the Mexican economy is not in an inflationary
environment, since cumulative inflation for the last three years is below 26% (maximum limit for an
economy to be considered non-inflationary under MFRS), therefore, as of January 1, 2008, is when Mexico
stop being considered to be in an inflationary environment, it has been required to discontinue the
recognition of the effects of inflation on the financial information. Consequently, the figures at December
31, 2014, 2013 and 2012 shown in the accompanying financial statements are expressed in historical pesos
as modified, certain items, by the effects of inflation on the financial information which were recognized
before December 31, 2007.
Following are the percentages of inflation in Mexico:
December 31,
For the year
Cumulative in the last three years
2014
(%)
2013
(%)
2012
(%)
4.08
12.06
3.97
11.79
3.57
12.25
d. Cash and cash equivalents
Cash and cash equivalents are recorded at nominal value, and cash and cash equivalents in foreign
currencies are valued at the relevant exchange rate published by the Banco de México (Banxico), the
National Central Bank, at the date of the consolidated financial statements. Yields arising from cash and
cash equivalents are recorded in the income statement as they accrue. They consist mainly of bank
deposits in checking accounts and highly liquid short-term investments, readily convertible into cash.
F-13
December 31, 2014, 2013 and 2012
e. Derivative financial instruments (DFI)
Derivative financial instruments are initially recognized at fair value in the balance sheet as assets and/or
liabilities on the date on which the derivative financial instrument agreement was entered into and are
subsequently re-measured at their fair value. The fair values of DFI are determined based on recognized
market prices and when not traded on a market, they are determined based on valuation techniques
accepted in the financial sector.
The method for recognizing the profit or loss of changes in fair value of derivative financial instruments
depends on whether or not they are designated as cash flow hedge, and if so, on the nature of the item
being hedged. The Company’s DFI, although from an economical perspective are contracted for hedging
purposes, have been designated as held for trading for accounting purposes since they do not comply with
all conditions required by the accounting criteria. See Note 6.
Valuation effects are recognized in the income statement in the line item “Financial intermediation
results”, except in cases where Management designated the instruments as hedging. In the “Financial
intermediation results” is recognized the result generated when the sale of a DFI occurs, impairment loss
on financial assets, as well as the effect of reversal, if any.
Currently the Company maintains the following FDI transactions:
Option contracts
Options are contracts whereby the purchaser acquires the right, but not the obligation, to buy or sell an
underlying asset at a given price on a set date or period. In option contracts involve two parties, the
purchasing option is who pays a premium for the acquisition of this, and in turn obtains a right, but not an
obligation, and the party issuing or selling is choice who receives a premium for this, and in turn acquires
an obligation, not a right.
Swaps
Swaps are contracts between two parties, whereby the bilateral obligation to exchange a series of flows for
a given period and pre-established dates are set. Currently, the company maintains interest rate swaps
and foreign exchange swaps.
The interest rate swaps are those that seek to hedge or mitigate the company’s exposure to the potential
volatility on floating interest rates that may result from its contracted debt. The foreign exchange swaps
are those that seek to hedge or mitigate the company’s exposure of a recognized asset or liability set in
foreign currency.
f.
Loans portfolio
Operating leases
Leases in which a significant portion of the risks and rewards of owner ship are retained by the lessor are
classified as operating leases. The revenues obtained under operating leases (net of any incentives
received from the lessor) are recorded in the statement of income based on the straight-line method over
the lease term.
The lease loan portfolio corresponds to rental receivables in accordance in the terms of the agreements.
F-14
December 31, 2014, 2013 and 2012
Lease rentals paid in advance by the borrower (lessee) are recorded in the line item deferred credits and
advanced collections in the balance sheet and released to the statement of income as the monthly
payments come due.
Commissions collected for the initial granting of operating leases are recorded as a deferred credit, which
is recognized based on the accrual of lease payments against income for the year under the line item
interest income.
Lease payments received from clients as guarantee deposits are recorded as accounts payable and returned
to clients upon maturity of the respective lease agreements.
As of January 1, 2014, the balances of the operating leases loan portfolio are recognized as past due at 31
calendar days of default by the outstanding amount to be received. As of December 31, 2013, the balances
of the operating leases loan portfolio were recognized as past due at 91 calendar days of default. At
December 31, 2014, the operating leases loan portfolio with more than 91 calendar days of default that
would have been recognized as past due amounts to Ps 47,630.
When lease payments not collected exceed three lease payments as per the payment schedule, accrual of
lease payments past due not collected is suspended. As long as a rental is classified as part of the past due
portfolio, control over lease payments is kept in memorandum accounts.
The Company reclassifies to the performing loans portfolio any past due operating lease rentals balances
for which unpaid balances are fully recovered (principal and interest, among other payments), or when
sustained payments are made on restructured or renovated loan balances.
An operating lease loan is not considered to be restructured when the full amount of lease payments due
has been made at the realization date and where any of the following original rental conditions are
modified:
i.
Guarantees: only when they are extended or replaced by others of better quality.
ii. Interest rate: when the agreed interest rate is improved.
iii. Currency: provided that the rate corresponding to the new currency is applied.
iv. Date of payment: only when the change does not involve exceeding or modifying the periodicity of
payments. In no case the change in payment date allows parties to omit any payment in a given period.
Costs and expenses associated with granting an operating lease are recognized as a deferred charge and are
amortized over the lease term and must be recorded in the income statement as the lease income is
recognized.
Financial factoring
Factoring operations are recorded at nominal value: 90% of the account received as factoring is paid in
advance and the remaining 10% is considered an amount under guarantee. The maximum term of an
account received under factoring is 120 days.
The recognition of interest on factoring operations with a guarantee is determined based on the value of
the portfolio of accounts received less the guarantee, while interest on factoring operations with no
F-15
December 31, 2014, 2013 and 2012
guarantees is recognized on the total value of the portfolio of accounts received. Such interest is recorded
under the line item interest income.
The unpaid balances of the financial factoring portfolio are recorded as a past due portfolio when there is
evidence that the borrower has filed for bankruptcy in accordance with the Mexican Bankruptcy Law, or
when the installments have not been covered in full at the originally agreed term.
The unpaid past due balance of the financial factoring portfolio for which unpaid balances are fully
recovered or where a restructured or renewed portfolio complies with sustained payments, is reclassified
to the performing loans portfolio.
Commissions collected on initial granting of factoring transactions and those recognized after a
transaction is made are recognized as interest income when they are incurred.
Costs and expenses associated with the granting of a factoring transaction are recognized as interest
expenses in the same accounting period in which the commission income is recognized.
Other lending
Performing or renewed auto loans and other lending represent the amounts actually given to borrowers
and the accrued interest, in accordance with the respective loan payment schedule.
Loans are offered based on the analysis of the financial situation of the borrowers, the economic feasibility
of investment projects and other general features established in the Company's internal manuals and
policies.
The unpaid balances of loans are recorded as a past due portfolio when there is evidence that the borrower
has filed for bankruptcy, in accordance with the Mexican Bankruptcy Law, inclusive when the borrower in
bankruptcy continuing making payments but its installments have not been covered in full in the terms
originally agreed, for which purpose the following is taken into consideration:
x If the pending payments consist of loans whereby the principal and interest are payable in a lump sum at
maturity and 30 or more calendar days have elapsed from the payment date.
x If the pending payments relate to loans whereby the principal is to be covered in a lump sum at maturity
and interest is payable periodically, and 90 or more calendar days have elapsed since the respective
interest payment have not been made, or the payment of principal is 30 calendar days or more past due.
If pending payment relate to loans with periodic partial payments of principal and interest and those are
90 calendar days or more past due.
Overdue loans that are restructured or renewed remain in the past due portfolio as long as there is no
evidence of sustained payment as established in the accounting criteria. Additionally, loans that establish
a single payment of the principal at maturity and payment of interest in periodic installments, as well as
loans that establish a single payment of the principal and interest payable at maturity in a lump sum, that
are restructured over the term of the loan or that are renewed at any moment, are considered to be part of
the past due portfolio.
F-16
December 31, 2014, 2013 and 2012
Loans that are originated as revolving loans, that are restructured or renewed at any given time, are
considered to be performing only when the borrower has paid the entirety of interest accrued, the loan
records show no past due billing periods, and there are elements that justify the borrowers solvency, i.e.,
that there is a high probability that the borrower will make the respective payments.
A loan is not considered to be restructured when the full amount of principal and interest payments due
has been made at the realization date and where only one or several of the following original loan
conditions are modified:
i.
Guarantees: only when they imply the extension or replacement for others of better quality.
ii. Interest rate: when the agreed interest rate is improved.
iii. Currency: provided that the rate corresponding to the new currency is applied.
iv. Date of payment: only when the change does not imply exceeding or modifying the periodicity of
payments. In no case the change in payment date allows parties to omit payment in a given period.
When a loan is considered to be past due, it stops accruing interest, even in the case of loans which, for
contractual purposes, capitalize interest on the amount of the debt. As long as the loan is classified as part
of the past due portfolio, the records of interest accrued is kept in memorandum accounts. For interest
accrued and not collected on such loans, the Company sets up an allowance for an equivalent amount
when the loans are transferred to the past due portfolio. The allowance is canceled when there is evidence
of sustained payment. If past due interest is collected, it is recognized directly in the income statement of
the year.
Past due portfolio balances where unpaid balances are fully recovered (principal and interest, among other
balances), or where sustained payments are made on restructured or renewed loan balances, are
reclassified to the performing portfolio in accordance with accounting criteria.
Commissions collected when a loan is initially granted are recorded as a deferred charge, and are
amortized against income for the year as interest income under the straight line method over the life of the
loan, except for commissions arising from revolving loans that must be amortized over a 12-month period.
Commissions received after a loan is granted are recognized in the statement of income.
Costs and expenses associated with the granting of loans are recognized as a deferred credit, which is
amortized against net income as an interest expense in the same accounting period in which commissions
collected are recognized.
g. Allowance for loan losses
The operating lease, factoring and commercial loan portfolio, excluding loans made to federal and
municipal entities, is rated based on a general methodology where risk levels are established for each type
of loan and applied to individual monthly debit balances, whose balance represents at least an amount
equivalent to 4,000,000 investment unities (UDI by its initials in Spanish) at the rating date. Loans with
balances below that limit at the rating date are allocated with default probabilities in a parametric way,
based on the number of defaults observed from the date of the first event of default and up to the rating
date.
F-17
December 31, 2014, 2013 and 2012
Commercial loans made to federal and municipal entities are rated applying the general methodology for
each type of loan based on an expected loss model, whereby losses for the following 12 months are based
on the best estimate of the credit information prepared by the Management, taking into
consideration the likelihood of default and the severity of loss. Then, the portfolio is classified into
different groups and forecasts of different variables are made in order to estimate the likelihood of default.
In order to rate its lease, factoring and straight loan portfolio below 4,000,000 UDI, the Company rates
and tracks into its accounting records all preventive loan loss reserves with figures at the last day of each
month, in order to consider the probability of default.
The Company periodically evaluates whether a past due loan must remain in the balance sheet or be
written off instead. In this case, the balance is written off by canceling the unpaid balance of the loan
against the allowance for loan losses. In the event that the loan to be written off exceeds the amount of its
allowance, the estimation for the allowance must be increased up to the amount of the difference.
Amounts recovered associated with written off loans or loans eliminated in the balance sheet are recorded
in the income statement the year.
Pardons, quitclaims, rebates and discounts, either partial or total, are recorded with a charge to the
allowance for loan losses. In case that the amount of those items exceeds the balance of the associated
allowance, the Company sets up an allowance for up to the amount of the difference.
For the most recent credit portfolio rating for the December 31, 2014 balances Management considers that
the resulting allowance is sufficient to absorb portfolio loan risk losses.
h. Other accounts receivable
The other accounts receivable are comprised of, among other items, receivable tax balances and other
sundry debtors.
For other accounts receivable related to sundry identified debtors maturing after 90 calendar days, the
Company records an allowance that reflects the degree of non-recoverability. No allowance is set up for
tax credit balances.
The allowance for loan losses is calculated by preparing an analysis that serves as base to determine future
events that may affect collection of accounts receivable, by estimating the recovery value of these accounts.
For items, other than those specified above with, maturities over 90 calendar days for identified debtors
and 60 days for unidentified debtors, an allowance is determined and recorded for the total amount of the
debt.
At December 31, 2014, 2013 and 2012, Management considered it was not necessary to create an allowance
for loan losses for other accounts receivable, derived from its analysis.
i.
Foreclosed assets
Foreclosed assets are recorded at the date on which the approval of the auction resulting in the award of
assets enters into effect and assets received as a result of payment in kind are recorded at the date on
which the payment in kind is signed, or when transfer of ownership over the assets is formalized.
F-18
December 31, 2014, 2013 and 2012
The initial value at which the foreclosed assets are recorded is the lower of the cost or the net realization
value at the award date less the strictly indispensable costs and expenses incurred as a result of it. On the
date on which the foreclosed assets are recorded, the total value of the assets giving rise to the award, and
the allowance, if any, are removed from the balance sheet. Also, if the portion corresponding to payments
accrued or past due is only covered by a partial payment in kind, those are removed as well.
The amount of the allowance that recognizes potential value losses due to the aging of the foreclosed assets
is determined based on the court award assets value following the procedures established in the applicable
provisions.
Foreclosed assets are valued to recognize potential losses in accordance with the type of assets, and the
effect of the valuation is recorded in the income statement in other operating income (expenses) line item.
This valuation is determined by applying the following percentages to each foreclosed asset in accordance
with the applicable provision:
Time elapsed as from
the award is received (months)
Percentage
of reserve (%)
Up to 12
More than 12 and up to 24
More than 60
0
10
15
25
30
35
40
50
100
The amount of the estimate that recognizes the potential loss of value over time of foreclosed assets is
determined on the value of the award based on the procedures established by the applicable provisions.
At the time of sale, the difference between the sale price and the book value of the corresponding
foreclosed assets, net of allowance, is recognized in the income statement of the year in other operating
income (expenses).
j.
Property, machinery and equipment
Property, machinery and equipment for own use and for being assigned under operating lease are
expressed as follows: i) acquisitions made as from January 1, 2008 at historical cost, and
ii)acquisitions made until December 31, 2007, restated by applying National Consumer Price Index (NCPI)
to their acquisitions costs. Consequently, they are expressed at modified historical cost, less accumulated
depreciation and, when applicable, impairment loss.
The acquisition cost of property, machinery and equipment, is depreciated systematically using the
straight line method based on the estimated useful lives of components of property, machinery and
equipment.
Advance payments to suppliers are recognized as part of the fixed asset when the related risks and benefits
have been transferred to the Company.
F-19
December 31, 2014, 2013 and 2012
Property, machinery and equipment are subject to annual impairment tests only when there is indication
of impairment. At December 31, 2014, 2013 and 2012, there were no identified triggering events, and
accordingly no impairment tests were performed.
k. Advanced payments
Advanced payments represent expenditures made by the Company where the risks and benefits of 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. Advanced payments in foreign currencies are recognized at the exchange rate at the
date of the transaction, without modification by subsequent fluctuations between currencies. Once the
goods and/or services related to advanced payments are received, they must be recognized as an asset or
an expense in the income statement of the period, according to its respective nature.
l.
Debt securities
The Company issues long-term debt instruments to generate working capital through Senior Notes and a
securitization vehicle that hold the collection rights of the corresponding operating lease loan portfolio,
which can be done directly or through a trust.
All incurred issuance costs related to debt securities are recorded under the other assets line item as
deferred charges, and are recognized in the statement of income as interest expenses using the straightline method over the term of each instrument.
Securitization
Securitization refers to a transaction whereby certain assets are transferred to a vehicle created for that
purpose (usually a trust), in order for the latter to issue debt securities to be placed with public and private
investors. The securitizations made by the Company failed to meet the conditions set forth in the
accounting criteria to qualify as a transfer of ownership.
Under a financing securitization, the seller records the financing but not the outflow of assets from the
balance sheet. Yields generated by financial assets (collection rights) under securitization are recorded in
the statement of income.
m. Bank and loans from other entities
Bank and loans from other entities refer to credit lines and other loans obtained from financial institutions
are recorded at the contractual value of the obligation and recognizing interest expense in the income
statement as it accrues.
n. Accruals
Accruals represent current obligations for past events where outflow of economic resources is possible (it
is more likely than not). These accruals have been recorded based on management’s best estimation.
F-20
December 31, 2014, 2013 and 2012
o. Current and deferred income tax
Current and deferred income tax is recognized as an expense in the income statement of the period.
The deferred income tax is recorded based on the comprehensive asset-and-liability method, which
consists of recognizing deferred tax on all temporary differences between the accounting and tax values of
assets and liabilities that will be materialized in the future. Deferred income tax is determined using tax
rates that have been enacted by the reporting date of the financial statements.
The Company recognized deferred income tax whenever the financial and tax projections prepared by the
Company show that they will be required to pay income tax in the future.
p. Stockholders' equity
The capital stock, share premium, capital reserve and retained earnings are expressed as follows:
i) movements made after January 1, 2008 at historical cost, and ii) movements made before January 1,
2008 at restated values determined through the use of a factor from the NCPI up to their historical values.
Consequently, the different stockholders’ equity items are expressed at their modified historical cost.
The share premium represents the surplus between the payment for subscribed shares and their nominal
value.
q. Memorandum accounts (unaudited)
The Company maintains memorandum records of future collection rights off-balance sheet derived from
operating lease agreements, classified as lease rentals to be accrued held in trust (collection rights
transferred to a trust) and other rentals to be accrued (the Company’s own portfolio), despite of these are
qualified as part of the performing or non performing portfolio. Such amounts are unaudited and the
balances at the year-end are provided outside the information in the balance sheet.
r. Revenue recognition
Revenues from operating leases are recognized based on the straight-line method over the lease period.
Interest on the loans portfolio is recognized as it accrues, except for interest on the overdue portfolio,
which is recorded when the respective amounts are actually collected. Commissions collected on the initial
granting of operating leasing and loans are recorded as a deferred credit, which is amortized against
income for the year on a straight line basis over the life of the lease arrangements and loans.
Income arising from management of trusts and income arising from administration or custodial services is
recorded in income as it accrues.
Income from the sale of property, machinery and equipment is recorded in the income statement when all
of the following requirements are met: a) the risks and benefits associated with the goods are transferred
to the purchaser and no significant control over such property is kept by the seller; b) income and costs
incurred or to be incurred are determined reliably, and c) it is probable that the Company will receive the
economic benefits associated with the sale.
F-21
December 31, 2014, 2013 and 2012
s. Earnings per share
Basic earnings per share are calculated by dividing the net income of the year into the weighted average
number of ordinary shares issued during the year. See Note 15.
There are no potentially dilutive shares as of December 31, 2014, 2013 and 2012.
t.
Related parties
In the normal course of business, the Company carries out transactions with related parties. These are
parties with common economic interests maintaining debt, trading other deposit or loan credit, discount
grants, restructuring, renewal or modification to an existing loans with the Company.
u. Exchange differences
Transactions in foreign currencies are initially recorded at the exchange rates prevailing on the dates they
are entered into and/or settled. Assets and liabilities denominated in such currencies are translated at the
exchange rate prevailing at the balance sheet date. Exchange differences arising from fluctuations in the
exchange rates between the transactions and settlement dates, or the valuation at the closing date are
recognized in the income statement according to their respective nature as a component of the interest
income or expense. See Note 4.
v. Financial information by segment
The accounting criteria establish that in identifying the different operating segments, the Company must
segregate its activities based on its credit operations. Also, given the importance of this matter, the
Company may identify additional operating segments or sub segments in the future. See Note 17.
Note 4 - Foreign currency position:
At December 31, 2014 and 2013, the Company held the following US dollar (Dlls.) position:
2014
2013
Assets
Liabilities
Dlls. 367,354,796
(401,636,711)
Dlls.
Short position
(Dlls.
(Dlls. 2,178,021)
34,281,915)
549,831
(2,727,852)
2012
Dlls.
438,433
(3,820,912)
(Dlls. 3,382,479)
At December 31, 2014, 2013 and 2012, the exchange rates used by the Company to measure its assets and
liabilities in foreign currency were Ps14.718, Ps13.0652 and Ps12.988, per US dollar, respectively.
F-22
December 31, 2014, 2013 and 2012
Note 5 - Cash and cash equivalents:
Cash and cash equivalents are comprised as shown below:
Local currency
2014
Cash on hand
Local and foreign banks
Promissory notes with yields
payable at maturity
Federal government
development bonds
Ps
80
243,627
Foreign currency
2013
Ps
58
716,008
Ps
2012
2014
2013
37
77,703
Ps 10,596
Ps 7,187
December 31,
2012
Ps 5,613
2014
Ps
80
254,223
2013
Ps
58
723,195
2012
Ps
37
83,316
131,102
136,716
118,613
-
-
-
131,102
136,716
118,613
188,327
149,778
4,547
-
-
-
188,327
149,778
4,547
Ps563,136
Ps1,002,560 Ps200,900 Ps10,596
Ps 7,187
Ps5,613
Ps573,732 Ps1,009,747 Ps206,513
At December 31, 2014, 2013 and 2012, cash and cash equivalents include balances of Ps211,275, Ps698,787
and Ps43,362, respectively, which correspond to bank accounts where cash flow are intended for the
securitization trusts of the Company.
Promissory notes with yields payable at maturity (PRLV for its acronym in Spanish) and federal government
development bonds (Bondes in Spanish) accrue daily interest at a rate of 3.13% and 3.23% per annum (3.35
and 3.68% in 2013 and 4.32 and 3.45% in 2012, respectively), approximately. The weighted average terms are
of approximately 1.5 days in 2014 and 2013.
The balances in foreign currency correspond to Dlls. 719,900, Dlls. 549,831, and Dlls.438,433, converted at
the exchange rate of Ps 14.718 in 2014, Ps13.0652 in 2013 and Ps12,988 in 2012.
Note 6 - Operations with derivative financial instruments (DFI):
At December 31, 2014 the Company has contracted cross-currency swaps classified for trading, as follows:
Hedged
liability
Senior NotesA
Senior NotesA
Senior NotesA
Senior NotesA
Senior NotesA
Senior NotesA
Contracting
date
Maturity
date
Term
(days)
Notional
amount*
Agreed in
debt
22-jul-14
22-jul-14
22-jul-14
22-jul-14
22-jul-14
22-jul-14
22-jul-19
22-jul-19
22-jul-19
22-jul-19
22-jul-19
22-jul-19
1,826
1,826
1,826
1,826
1,826
1,826
Ps 1,102,450
194,160
1,297,200
431,467
1,297,200
431,383
6.25%
6.25%
6.25%
6.25%
6.25%
6.25%
Contracted
by IFD
TIIE+4.20%
TIIE+4.19%
TIIE+4.192%
TIIE+4.19%
TIIE+4.195%
TIIE+4.185%
Ps 4,753,860
Fair
value
Ps 74,920
225,360
34,272
191,999
74,869
225,682
Ps 827,102
At December 31, 2014 the Company has contracted options “CAP” classified for trading, as follows:
Hedged
liability
Contracting
date
Maturity
date
UNIFCB11-2
UNIFCB12
UNIFINCB13
Loan F/1355
Loan F/1355
Loan F/1355
Loan F/1355
Loan F/1355
8-Nov-10
4-May-12
22-Nov-13
10-Dec-12
22-Jan-13
11-Apr-13
23-Dec-13
11-Aug-14
30-Jun-15
4-May-17
22-Nov-18
10-Dec-16
22-Jan-17
11-Apr-17
23-Dec-18
23-Dec-14
Term
(days)
Underlying
asset
1,827
1,826
1,826
1,461
1,461
1,461
1,826
1,515
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 29
F-23
Exercise
price
(%)
9.00
9.00
7.00
7.00
7.00
7.00
7.00
7.00
Notional
amount*
Prepaid
premium
Fair
value
Ps 766,667
1,000,000
1,000,000
51,333
45,750
478,160
689,283
130,245
Ps 8,140
8,900
17,050
359
255
2,203
7,413
1,000
Ps 3,120
4,143
13,356
180
130
1,545
5,930
920
Ps4,161,438
Ps45,320
Ps29,324
December 31, 2014, 2013 and 2012
At December 31, 2013, the DFI “CAP” portfolio is shown as follows:
Hedged
liability
UNIFCB11
UNIFCB11-2
UNIFCB12
UNIFIN 12
UNIFIN 13 and 13-2
UNIFINCB13
Loan F/1355
Loan F/1355
Loan F/1355
Loan F/1355
Contracting
date
Maturity
date
4-Mar-11
8-Nov-10
4-May-12
1-Jul-13
1-Jul-13
22-Nov-13
10-Dec-12
22-Jan-13
11-Apr-13
23-Dec-13
18-Feb-16
30-Jun-15
4-May-17
4-Dec-14
17-Apr-15
22-Nov-18
10-Dec-16
22-Jan-17
11-Apr-17
23-Dec-18
Term
(days)
Underlying
asset
1,812
1,827
1,826
521
655
1,826
1,461
1,461
1,461
1,826
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
Exercise
price
(%)
9.00
9.00
9.00
7.00
7.00
7.00
7.00
7.00
7.00
7.00
Notional
amount*
Premium
paid
Fair
value
Ps 400,000
800,000
1,000,000
510,000
1,000,000
1,000,000
1,000,000
87,841
683,085
689,282
Ps
6,900
8,140
8,900
508
2,083
17,050
359
255
2,203
7,413
Ps 2,974
4,748
5,984
359
1,562
16,766
269
195
1,940
7,413
Ps 7,170,208
Ps 53,811
Ps 42,210
Notional
amount*
Premium
paid
Fair
value
At December 31, 2012, the DFI “CAP” portfolio is shown as follows:
Hedged
liability
Contracting
date
Maturity
date
UNIFCB09
UNIFCB10
UNIFCB11
UNIFCB11-2
UNIFCB12
UNIFIN 11
Loan F/1355
3-Jul-09
12-Jul-10
4-Mar-11
8-Nov-11
4-May-12
11-May-11
10-Dec-12
3-Jul-14
30-Jun-15
18-Feb-16
8-Nov-16
4-May-17
11-May-13
10-Dec-16
Term
(days)
Underlying
asset
1,826
1,827
1,812
1,827
1,826
731
1,461
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
TIIE 28
Exercise
price
(%)
9.00
9.00
9.00
9.00
9.00
9.00
7.00
Ps
350,000
300,000
400,000
800,000
1,000,000
1,000,000
1,000,000
Ps 7,875
2,750
6,900
8,140
8,900
2,858
359
Ps
1,421
4,402
6,376
7,826
595
359
Ps 4,850,000
Ps 37,782
Ps 20,979
* Notional amounts related to DFI reflect the reference volume contracted; however, they do not reflect the
amounts at risk as concerns future flows.
At December 31, 2012 net gains (losses) on financial assets and liabilities related to DFI for 2014, 2013 and
2012 are Ps11,274, (Ps8,284) and (Ps10,123), respectively.
Note 7 - Loan portfolio:
The classification of current and past due loans at December 31, 2014, 2013 and 2012 is shown as follows:
Performing portfolio
2014
Commercial loans:
Operating leases
Financial factoring*
Other lending*
Ps
Consumer loans:
Other lending
Car loans
F-24
2013
2012
295,870
1,294,737
1,177,013
Ps 330,820
994,639
657,370
Ps
82,827
1,197,302
572,507
2,767,620
1,982,829
1,852,636
3,914
232,771
3,894
174,657
4,172
76,923
236,685
178,551
81,095
3,004,305
2,161,380
1,933,731
December 31, 2014, 2013 and 2012
Past due portfolio
2014
Commercial loans:
Operating leases
Financial factoring
70,152
Total loan portfolio
*Include
2013
Ps
2012
56,671
121,744
20,849
.
70,152
178,415
20,849
Ps 3,074,457
Ps2,339,795
Ps 1,954,580
balances with related parties. See Note 18.
At December 31, 2014, 2013 and 2012, the maturity of the total past due portfolio is as shown below:
Type of portfolio
2014
2013
1 to 180 181 to 365
2012
1 to 180
1 to 180
181 to 365
Operating leases
Financial factoring
Ps33,605
-
Ps36,547 Ps 56,671 Ps15,643
121,744
-
Ps5,206
-
Total past due portfolio
Ps33,605
Ps36,547 Ps 178,415 Ps15,643
Ps5,206
Income from interest, rentals and commissions for the periods ended in 2014, 2013 and 2012, according to the
type of loan is as follows:
2014
Operating leases
Financial factoring
Other lending
Car loans
Interest
Ps 146,548
161,773
29,088
Ps 337,409
Rentals
Commissions
Ps 3,648,966
-
Ps
Total
65,437
44,438
850
2,997
Ps 3,714,403
190,986
162,623
32,085
Ps3,648,966 Ps 113,722
Ps4,100,097
2013
Operating leases
Financial factoring
Other lending
Car loans
Interest
Rentals
Commissions
Total
Ps 149,723
79,047
16,496
Ps 2,591,738
-
Ps
64,316
32,238
728
2,792
Ps 2,656,054
181,961
79,775
19,288
Ps 245,266
Ps 2,591,738
Ps 100,074
Ps2,937,078
F-25
December 31, 2014, 2013 and 2012
2012
Performing portfolio:
Interest
Operating leases
Financial factoring
Other lending
Car loans
Rentals
Ps
158,665
41,607
16,453
Ps
216,725
Commissions
Total
Ps
1,842,717
-
Ps
45,243
31,760
25,958
1,208
Ps
1,887,960
190,425
67,565
17,661
Ps
1,842,717
Ps
104,169
Ps
2,163,611
At December 31, 2014, 2013 and 2012, the portfolio rating for the determination of the allowance for loan
losses includes the contractual collection rights due in future periods recorded in memorandum accounts, as
follows:
Loan portfolio
%
Risk
2014
A-1
A-2
B-1
B-2
B-3
C-1
C-2
D
E
Global allowance for loan losses___
Amount
2013
82.53
16.90
0.13
0.20
0.11
0.13
16.53
5.06
8.27
14.53
6.04
26.47
2.29
15.83
4.98
100.00
100.00
2012
Amount
2014
2013
2012
Allowance (%)
2014
2013
2012
18.93 Ps 2,537,342 Ps1,538,630 Ps1,127,293 0 a 0.50
Ps 12,685 Ps 12,026 Ps 6,721
41.45
519,536
147,500
254,684 0.51 a 0.99
13,545
3,677
14,720
14.47
4,113
101,881
503,834 1.00 a 4.99
41
6,016
5,139
3.39
245,490
24,097 5.00 a 9.99
10,572
1,205
16.04
6,256
86,076
39,221 10.00 a 19.99
625
4,397
5,698
3.66
121,744
1,503 20.00 a 39.99
19,256
1,298
2.06
3,262
71,889
3,948 40.00 a 59.99
1,305
1,663
732
0.00
21,135
60.00 a 89.99
11,516
0.00
3,948
5,450
90.00 a 100.00
2,369
3,620
- .
100.00
Memorandum accounts
3,074,457
2,339,795
1,954,580
30,570
72,743
35,513
8,413,812
6,957,698
4,200,870
42,069
34,788
21,004
Ps 11,488,269 Ps9,297,493 Ps6,155,450
Ps 72,639 Ps107,531 Ps 56,517
The composition of the commercial loan portfolio classified by type of loan is shown below:
2013
December 31,
2012
Total
Total
Total
December 31, 2014
Grade
Operating
lease rentals
A-1
A-2
B-1
B-2
B-3
C-1
C-2
D
E
Ps 348,443
4,113
6,256
3,262
3,948
Ps 1,294,737
-
Ps
657,477
519,536
-
Ps 2,298,657
519,536
4,113
6,256
3,262
3,948
Ps 1,360,079
147,500
101,881
245,490
86,076
121,744
71,889
21,135
5,450
Ps 1,046,198
254,684
503,834
24,097
39,221
1,503
3,948
.
Ps 366,022
Ps 1,294,737
Ps 1,177,013
Ps 2,835,772
Ps 2,161,244
Ps 1,873,485
Total loan
Portfolio
Financial
factoring
Other loans
F-26
December 31, 2014, 2013 and 2012
The composition of the consumers loan portfolio classified by type of loan is comprised as shown below:
Grade
A-1
2014
2013
2012
Ps236,685
Ps178,551
Ps81,095
The composition of the allowance for loan losses by type of loan is comprised as shown below:
December 31,
2013
2012
December 31, 2014
Grade
Operating
leases
Financial
factoring Other lending Car loans
A-1
A-2
B-1
B-2
B-3
C-1
C-2
D
E
Ps43,810
41
625
1,305
2,368
Ps6,474
-
Ps 3,307
13,545
-
Total portfolio
Ps48,149
Ps6,474
Ps 16,852
Total
Total
Total
Ps1,164 Ps 54,755
13,545
41
625
1,305
2,368
Ps 18,984
14,113
6,016
10,572
4,397
36,650
1,663
11,516
3,620
Ps27,725
14,720
5,139
1,205
5,698
1,298
732
-
Ps1,164 Ps 72,639
Ps107,531
Ps56,517
The roll-forward of the allowance for loan losses roll-forward is as follows:
December 31,
2014
2013
2012
Balances at the beginning of the year
Write offs
Release
Increase of provision
Ps 120,251
(2,129)
(40,000)
10,000
Ps 56,517
(24)
63,758
Ps47,757
(5,656)
14,416
Balances at the end of the year
Ps
Ps120,251
Ps56,517
88,122
The behavior of the coverage of the allowance for loan losses in accordance with the Company’s best estimate
is shown as follows:
December 31,
2014
Allowances for loan losses recorded
Allowances for loan losses required
Excess over allowance for loan losses
Past due portfolio hedge
F-27
2013
Ps 88,122
72,639
Ps 120,251
107,531
15,483
12,720
125.61%
67.40%
2012
Ps 56,517
53,732
(
2,785)
271.08%
December 31, 2014, 2013 and 2012
As of December 31, 2014 the total of future minimum lease payments under non-cancellable operating leases,
is as follows:
Amount
Up to one year
Two years
Three years
Four years
Five years
Ps 3,619,629
2,539,828
1,602,214
632,431
19,710
Total
Ps 8,413,812
Terms and conditions of operating leases agreed by the Company at December 31, 2014 are as follows:
Terms
The parties agree to the Framework Agreement in order to establish the basis and general parameters that
apply to the legal relationship between the parties, noting that the Framework Agreement will govern multiple
relationships leases, same as documented by contracts
Leases to which they are referred to as "Contract Addendums" which shall contain the following information:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Description of Good: brand, type, serial number, engine number, etc.
Term lease.
Date of the first and second payment.
Initial payment date.
Where applicable, the customer will pay the first rent in advance.
Monthly rent.
Guarantee deposit.
Origination fee.
Moratorium interest rate.
On vehicles, the mileage authorized.
Rental type, fixed or variable.
Representative data.
In its case, hearing of the joint obligor and/or joint guarantor and/or guarantors, if any, is required.
Designation of the depositary of the leased goods.
Where appropriate, constitution of further guarantees or obligations.
Signatures of the parties.
Use of leased property
The lessee may only use (the) good(s) leased within the territory of Mexico and by people or employees at your
service or by persons authorized by the lessee own account and his sole responsibility.
The lessee may only use (the) good(s) leased for use in accordance with agreed or the nature and purpose
thereof.
F-28
December 31, 2014, 2013 and 2012
The lessee shall not sublet or grant in any way third party, use or enjoyment of (the) good(s) leased, or assign,
in whole or in part, the rights and obligations under the master agreement, without the prior written consent
of the lessor. Conversely, the lessor may assign, transfer or otherwise encumber all or part, its rights under the
master agreement and exhibits contract alone being sufficient to notify the lessee.
They will be the sole responsibility of the lessee all expenses directly or indirectly related to the conservation,
functionality, safety and maintenance of (the) good(s) leased.
Insurance
The lessor contract, the lessee under one or more insurance policies coverage with reputable insurers, which
cover (the) good(s) leased, the lessor shall designate as preferred beneficiary of any sums payable by insurers
under such policies in the event of any incident.
Cases of termination
Will be cause for termination or early termination of the framework agreement, without liability to the lessor,
among others, the following:
Any breach in relation to the principal and accessory obligations of the lessee or any of (the) joint obligor(s)
and/or (the) joint guarantor(s) under the master agreement, their contract addendums, or law.
a. If the lessee is it declared in bankruptcy or receivership, either voluntarily or at the request of any of its
creditors.
b. If (the) good(s) leased are subject to seizure, attachment, levy, limiting domain or any other similar charge
or similar to the above.
c. If the lessee being moral, commercial or civilian, is subject to dissolution and liquidation procedure by
agreement of partners or shareholders; by the authority or any third party.
d. If the lessee makes a transfer of property or rights to the detriment of its creditors.
e. If the shares or parts of the lessee are sold, foreclosed or in any way affected.
f. If the lessee being commercial entity, is fused and merged with another company or companies.
g. If the lessee, with civil or commercial moral person is subjected to processing procedures by their partners
or shareholders.
h. If someone of the joint obligor(s) and/or joint guarantor(s) dies, except when the lessor assigns a new
person as joint obligor(s) and/or joint guarantor(s).
i. If the designated depositary in all or any Contract including Annex fails to meet its obligations assumed or
presumed or the lessor is there any event that threatens the availability of the goods in their favor.
F-29
December 31, 2014, 2013 and 2012
j. If the lessee, in any form or transmitted alienates a substantial part of its property, assets or rights placed
in the temporary or permanent state of insolvency.
k. If the collateral or additional requirements that relate to the last paragraph of clause twenty of the
Framework Agreement are not.
l. If the lessee and/or any of (the) joint obligor(s) and/or joint guarantor(s), if they are a moral person, made
dividend payments, reduce its share capital or make payments for liabilities to related parties without the
prior written consent of the lessor.
In the event of any of the grounds for termination provided for a contractual penalty is set at the rate of seven
monthly rentals if the causal expiration takes place during the first year of the Framework Contract and five
rentals if the causal monthly expiration takes place during subsequent years of the Framework Agreement.
Notes
The lessee undertakes to subscribe, at the request of the lessor, one or more debt securities (notes) to
document the amounts of rents agreed monthly basis.
In any case, the credits must be signed as guarantor (s) by (the) joint obligor (s) and/or (the) joint guarantor
(s) of the lessee. The lessor reserves the right to request the establishment of the lessee additional collateral for
all obligations under the framework contract and their respective addendums or for a particular contract
without thereby decrease or release the obligations that the joint obligor(s) and/or (the) joint guarantor(s)
assume the framework agreement and its respective addendum agreements.
Policies for granting loans
a. The main policies and procedures in place to grant control and recover loans, as wells as those for
evaluation and follow up on credit risk are shown below:
Criteria for acceptance
Loan applicants must comply with the following requirements:
1. The entity must not be in a state of bankruptcy.
2. The amount of the funding must not be excessive in light of the level of sales and/of stockholders’
equity.
3. The (total liability/total stockholders’ equity) leveraging financial ratio must not be above 2.0,
depending on the entity's line of business.
4. The applicant’s entity must not be a newly created company, unless it is an investment project that can
attest to having a proper level of experience or that has successfully completed two projects similar to
the project in question.
5. It must not be or have been in a state of suspension of payments.
6. The rating of the requesting party’s payment history issued by other banks through the credit bureau
report must be A1, A2 or B at the lowest.
F-30
December 31, 2014, 2013 and 2012
7. It must not be involved in any type of lawsuits or have any preventive attachments.
8. It must not have reported losses in the most recent two-year period, unless the most recent financial
statements of the applicant can show that the loss trend has been reversed and that profits are being
generated.
b. Main loan management policies:
1. Creation and maintenance of a loan file for the purpose of following up on a borrower and on the loans
granted.
2. All documentation supporting loan transactions must be kept in the operations file, which must be safeguarded by the factoring operations deputy director's office.
3. Compulsory quarterly reviews of the rating issued for the total loan client portfolio.
4. Semiannually visual reviews and reports of such visits to the company or business.
5. The loan analysis deputy director's office must monitor client payment behavior through semiannually
consultations with the credit bureau, which will also issue a portfolio rating.
6. Recording of allowances derived from the loan rating process.
c. Collection policies
1. Management of a loan ends when the capital, interest and any surcharges are fully collected on each
factoring operation processed with a client.
2. Collection can be made in one of three forms:
a. Regular.
b. Administrative.
c. Through litigation or contentious procedures.
d. Policies for loan restructuring or loans under observation.
The heads of the collection and business departments are in charge of monitoring problem loans where the
probability of default is very high.
e. Policies and procedures in place to determine credit risk concentrations
These policies and procedures are included in the credit manual and they refer to the amounts that can be
granted to each of the main economic sectors and subsectors. The maximum amounts of loans are
determined based on a percentage of the equity of an entity (individual or business entities), and the
acceptable risk concentrations are established depending on the types of loan, loan terms and currency.
These procedures make it possible to identify and concentrate the effects of the respective loan rating, at
levels that require lower allowances for loan losses.
The portfolio concentration objectives established in the loan manual, as well as quarterly follow up, make
it possible for the Company to properly diversify its loan portfolio based on the Company's target market.
F-31
December 31, 2014, 2013 and 2012
Note 8 - Other accounts receivable:
Other accounts receivable are comprised as follows:
December 31,
2014
Value added tax receivable
Sundry debtors
Income tax receivable
Flat tax receivable
Tax on cash deposits
2013
2012
Ps 63,172
147,638
330
564
244
Ps 102,430
79,090
5,839
564
241
Ps69,000
28,994
1,493
1,706
160
Ps211,948
Ps 188,164
Ps101,353
Note 9 - Foreclosed assets:
At December 31, 2014, 2013 and 2012, foreclosed assets are comprised as follows:
2014
Foreclosed assets
Allowance for impairment
2013
2012
Ps 136,133
(5,522)
Ps 15,814
(3,110)
Ps 14,440
(1,444)
Ps 130,611
Ps 12,704
Ps 12,996
Note 10 - Property, machinery and equipment for own use and offered on lease:
At December 31, 2014, 2013 and 2012, property, machinery and equipment were comprised as follows:
Useful life
(years)
2014
Components subject to
depreciation or amortization
Building
Transportation equipment
Aircraft/Ships
Computer equipment
Machinery and equipment
Office furniture and equipment
Medical equipment
Satellite equipment
Luminaries
Telecommunication
Other
Less:
Accumulated depreciation
Own
Leased
Total
Ps200,385
69,869
20,259
107
25,455
10,848
Ps 3,268,968
924,652
246,350
7,100,675
118,817
16,976
226,967
62,296
386,747
529,323
Ps 200,385
3,338,837
924,652
266,609
7,100,782
144,272
16,976
226,967
62,296
386,747
540,171
326,923
12,881,771
13,208,694
(68,255)
(3,834,202)
(3,902,457)
258,668
9,047,569
9,306,237
F-32
20
5
10 and 20
3.3
5 and 10
10
20
20
20
20
10 and 20
December 31, 2014, 2013 and 2012
Useful life
(years)
2014
Installation expenses
Accumulated amortization
Total of components subject to
Own
Leased
Total
50,647
(12,788)
50,647
(12,788)
37,859
37,859
296,527
9,047,569
20
9,344,096
Components no subject to
Land
Total of property, machinery
and equipment
Building
Aircraft/Ships
Computer equipment
Medical equipment
Satelital equipment
Luminaires
Telecomunication equipment
Other
Less:
266,581
Ps563,108
266,581
Ps9,047,569
Ps9,610,677
Useful life
(years)
2013
Own
Leased
Total
Ps204,086
62,892
32,804
16,732
108
6,276
1,393
Ps 3,060,886
655,333
112,151
4,593,417
35,376
5,805
109,715
79,343
266,473
119,862
Ps 204,086
3,123,778
688,137
128,883
4,593,525
41,652
5,805
109,715
79,343
266,473
121,255
324,291
9,038,361
9,362,652
(67,702)
(2,632,343)
(2,700,045)
256,589
6,406,018
6,662,607
27,656
(10,748)
-
27,656
(10,748)
16,908
-
16,908
273,497
6,406,018
6,679,515
Components not subject to
Land
and equipment
9,478
Ps282,975
Ps6,406,018
F-33
9,478
Ps6,688,993
20
5
10 and 20
3.3
5 and 10
10
20
20
20
20
10 and 20
December 31, 2014, 2013 and 2012
Building
Aircraft/Ships
Computer equipment
Medical equipment
Satelital equipment
Luminaires
Telecomunication equipment
Other
Less:
Useful life
(Years)
2012
Own
Leased
Ps 34,086
Ps
25,237
32,804
15,605
110
24,577
-
34,161
Total
-
Ps
2,124,011
255,895
126,286
2,897,990
5,180
4,433
24,377
66,874
196,669
182,768
20
5
10 and 20
3.3
5 and 10
10
20
20
20
20
10 and 20
34,086
2,149,248
288,699
141,891
2,898,100
29,757
4,433
24,377
66,874
196,669
216,929
166,580
5,884,483
6,051,063
(47,388)
(1,782,386)
(1,829,774)
119,192
4,102,097
4,221,289
27,653
-
(9,396)
27,653
(9,396)
18,257
-
18,257
9,478
-
9,478
Components not subject to
Land
and equipment
Ps 146,927
Ps 4,102,097
Ps 4,249,024
Depreciation and amortization recorded in the income statement of 2014, 2013 and 2012 amounted to
Ps2,176,972 (Ps2,150,092 for operating leases), Ps1,557,447 (Ps1,536,059 for operating leases), and
Ps1,065,170 (Ps1,050,104 for operating leases), respectively.
At December 31, 2014, 2013 and 2012, the transportation equipment offered on lease and other leased assets
amounting to Ps5,769,375, 5,849,776 and Ps4,925,313, respectively, were pledged to guarantee the payment of
each collection rights under trusts. See Note 13.
Note 11 - Other permanent investments:
Other permanent investments at December 31, 2014, 2013 and 2012, over which there is no ability to have
significant influence, is comprised as follows:
Companies
Shareholding
(%)
Value at
December 31,
2014
2013
Valuation effects of other
permanent investments
2012
2014
2013
2012
Operadora de Arrendamiento Puro,
S. A. de C. V.*
.01
Bosque Real, S. A. de C. V.
.01
1,408
1,408
1,408
-
-
-
Club de Empresarios Bosques,
S. A. de C. V.
.01
305
305
305
-
-
-
Unión de Crédito para la Contaduría
Pública, S. A. de C. V.
.01
1,299
1,299
1,299
-
-
-
35.00
11,264
11,264
-
11,264
(11,264)
Ps 14,944
Ps 14,944
-
Ps 11,264
(Ps11,264)
Cabos Marinos del Sureste, S. A. de
C. V. y Hooven Alisson, L. L. C. (Cabos)**
Total
Ps
668
Ps
F-34
668
Ps
278
Ps
Ps 3,290
Ps
-
Ps
-
Ps
-
December 31, 2014, 2013 and 2012
*
**
On February 18, 2013, the Company purchased an additional 597 Series "A" shares of Operadora de Arrendamiento
Puro, S. A. de C. V. with a par value of Ps654.
At December 31, 2012, the Company decided to recognize an impairment allowance for the total value of its investment
in Cabos, since this entity lost its entire stockholders’ equity for book purposes. However, at December 31, 2013, the
Management decided to reverse the impairment allowance due to on November 21, 2013, the
Company received a letter from the Cabos legal representative stating that as a result of the purchase-sale agreements
signed between Cabos, Canada Cordage, Inc. and Orion Ropeworks, Inc., Cabos will receive a percentage of future sales
that will depend on the type of products and customers over a five-year period, of which the Company is entitled to
receive a preferential payment up to USD2,500,000. The Company has received Ps261 and Ps33 at December 31, 2014
and 2013, respectively.
Note 12- Debt securities:
Debt securities as of December 31, 2014 and 2013 are shown as follows:
2014
Short term:
Senior notes (accrued interest)
Unsecured notes under a revolving securitization program
(principal and interest)
Trust notes under a revolving securitization program
(accrued interest)
Private trust bonds (accrued interest)
Long term:
Senior notes
Private trust bonds
Ps
161,398
-
2013
Ps
-
2012
Ps
-
1,008,950
1,009,953
3,356
1,837
5,327
1,795
9,147
.
166,591
1,016,072
1,019,100
5,887,200
2,766,667
1,321,899
1,000,000
3,200,000
1,472,699
1,000,000
2,500,000
102,655
9,975,766
5,672,699
3,602,655
Ps 10,142,357
Ps 6,688,771
Ps4,621,755
Senior Notes
In July 2014, the Company issued Senior Notes through a private offering pursuant to Rule 144A and
Regulation S under the Securities Act 1933 of the United States and applicable regulations of the countries in
which such offer was made.
The main features of the Senior Notes issued are as follows:
a.
b.
c.
d.
e.
Amount issued: USDPs 400,000,000.
Annual agreed rate: 6.25%.
Payable at maturity: 5 years.
Interest payable semi-annually during the term of the Senior Notes.
Place of issuance of the bond listing: Luxemburg Stock Exchange.
F-35
December 31, 2014, 2013 and 2012
f. Granted Qualifications: BB- / BB- (Standard & Poor’s and Fitch Ratings).
g. Guarantors: Unifin Credit and Unifin Autos.
The resources obtained from this issuance were used to pay short-term and long-term financial liabilities as
follows:
Prepaid
amount
UNIFIN 12
UNIFIN 13
UNIFIN 13-2
UNIFCB11
Nacional Financiera, S. N. C. (Nafinsa)
Banorte Ixe, S. A., Institución de
Banca Múltiple (IXE)
BBVA Bancomer, S. A., Institución de
Banca Múltiple (Bancomer)
CIBanco, S. A., Institución de
Banca Múltiple (CIBanco)
Banco Multiva, S. A., Institución de
Banca Múltiple
Banco Interacciones, S. A., Institución de
Banca Múltiple
Unión de Crédito para la Contaduría Pública,
S. A. de C. V. (UniCon)
Banco Regional de Monterrey, S. A., Institución de
Banca Múltiple (Banregio)
Banco Invex, S. A., Institución de
Banca Múltiple (Invex)
Ps 1,000,000
250,000
750,000
330,000
1,500,000
Total
Ps 4,842,450
450,000
110,000
100,000
80,000
79,500
44,090
37,960
110,900
Commitments
The Senior Notes debt impose to the Company certain provisions that limit its ability to incur in additional
debt, create liens; pay dividends; make certain investments; reduce its share capital, among others. It also
establishes that the Company and its subsidiaries may partially or totally merge or dispose of their assets if the
respective transaction meets certain requirements; establishes minimum requirements for carrying out
portfolio securitizations and limit the ability of the Company to enter into transactions with related parties.
On October 1, 2009, the Commission issued rule number 153/79035/2009 whereby it authorized the
Company to issue long-term unsecured notes under a revolving securitization program for a total amount of
Ps1,000,000 or its equivalent in UDI.
F-36
December 31, 2014, 2013 and 2012
Subsequently, the Commission issued rule number 153/30611/2011 dated March 29, 2011 which authorized a
Ps1,000,000 expansion to the amount of the program mentioned above for a total amount up to Ps2,000,000
or its equivalent in UDIs. During the term of the program, the Company may issue debt as many times as it
deems fit up to Ps2,000,00. Also, these issuances can be made for terms lower than those established in the
authorized programs, i.e., from seven to 360 days.
On April 16 and March 11, 2013, November 6, 2012 and March 29, 2011, the Commission through rules
number 153/6632/2013, 153/6472/2013, 153/9207/2012 and 153/3061/2011, authorized the issuances of
unsecured notes under the ticker symbols UNIFIN 13-2, UNIFIN 13, UNIFIN 12 and 11, respectively.
As of December 31, 2014 all the outstanding amounts of unsecured notes were prepaid with the proceeds
obtained from the issuance of the Senior Notes.
Unsecured notes program as of December 31, 2013 are detailed below:
Ticker
symbol
Maturity
Rate
(%)
December 2014
TIIE + 2.75
March 2015
April 2015
TIIE + 2.00
TIIE + 2.00
Number of titles
Outstanding
amount*
Rating
S&P y Fitch
Short term
UNIFIN 12
10,000,000
Ps
1,000,000
mxA-S&P/HRA
250,000
750,000
mxA-S&P/HRA
mxA-S&P/HRA
Long term
UNIFIN 13
UNIFIN 13-2
2,500,000
7,500,000
2,000,000
Interest accrued payable in the short term
8,950
Ps
2,008,950
Unsecured notes program as of December 31, 2012 are detailed below:
Ticker
symbol
Number of titles
Rate
(%)
Maturity
Outstanding
amount*
Rating
S&P y Fitch
Short term
UNIFIN 11
10,000,000
March 2013
TIIE + 3.00
10,000,000
December 2015
TIIE + 2.75
Ps
1,000,000
mxA-S&P/HRA
1,000,000
mxA-S&P/HRA
Long term
UNIFIN 12
2,000,000
Interest accrued payable in the short term
9,953
Ps
* Unsecured notes with a par value of Ps100 each.
F-37
2,009,953
December 31, 2014, 2013 and 2012
In January, 2013, the Company prepaid in full the secured notes of UNIFIN 11 with the Company’s own
resources and resources raised from the UNIFIN 12.
The trust notes under a revolving securitization program are operations whereby the Company transfer the
collection rights over certain financial assets to a securitization vehicle created for that specific purpose
(usually a trust), in order for this vehicle to issue securities to be placed among the general investing public
and for the Company to diversify its funds and increase its operating capacity. The Company entered into an
administration, commercial commission and deposit agreement for management purposes of the collection
rights.
Additionally, a pledge agreement has been signed by the Company (collateral guarantor) and the trustee
(Pledgee). The Company pledges in first order of preference for payment, each of the leased assets from which
the aforementioned collection rights are derived on behalf of the Pledgee to guarantee timely and full payment
of all amounts payable by each of the Company's clients, in accordance with the lease agreements of which
these clients participate.
On November 19, 2013, May 2, 2012, February 16 and November 1, 2011, the Commission, through trades
number 153/7676/2013, 153/8359/2012, 153/30501/2011 and 153/31580/2011,respectively, authorized the
revolving trust bonds programs (Trustees programs), under the ticker symbols UNIFCB13, UNIFCB12,
UNIFCB11 and UNIFCB11-2, for an amount up to Ps7,000,000, Ps5,000,000 and Ps3,500,000, respectively.
The Company has conducted issuances under such Trust Programs, entering into contracts where the
Company acts as trustor of the Trust; as trustees, Banco Nacional de Mexico, S. A., Institución de Banca
Múltiple, Grupo Financiero Banamex División Fiduciaria (Banamex) and HSBC Mexico, S. A., Institución de
Banca Múltiple, Grupo Financiero HSBC, División Fiduciaria(HSBC), as common representative Monex Casa
de Bolsa, S. A. de C. V., Grupo Financiero Monex, and as constructive trustees in first and second place holders
of stock certificates and the Company, respectively.
According to the Trustees supplementary programs, the Company and the trustor have no responsibility to pay
amounts due under these certificates, as the holders of these notes will not be able to force either the trustee or
trustor to pay such amounts if the net assets of the trust are insufficient to fully pay the amounts owed under
the notes. In an extreme case of defaults of payment of the net assets of the trusts, the holders would be
entitled to receive the guaranteed assets related to the collection rights.
The secured notes programs as of December 31, 2014 are detailed below:
Ticker
symbol
UNIFCB11-2
UNIFCB12
UNIFINCB13
Issuing
trust
F/304743
F/306592
F/17293-4
Number of
titles*
766,667
10,000,000
10,000,000
Maturity
Rate
(%)
Nov 2016
May2017
Nov 2018
TIIE +1.65
TIIE +1.60
TIIE +1.60
Ps
Outstanding
amount
Rating
S&P
766,667
1,000,000
1,000,000
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
2,766,667
Interest accrued in the short term
3,356
Ps 2,770,023
F-38
Trustee
HSBC
HSBC
Banamex
December 31, 2014, 2013 and 2012
Ticker
symbol
UNIFCB11
UNIFCB11-2
UNIFCB12
UNIFINCB13
Issuing
trust
F/303240
F/304743
F/306592
F/17293-4
Number of
titles*
Rate
(%)
Maturity
4,000,000
8,000,000
10,000,000
10,000,000
Feb 2016
Nov 2016
May2017
Nov 2018
Outstanding
amount
TIIE + 1.60 Ps 400,000
TIIE + 1.65
800,000
TIIE + 1.60
1,000,000
TIIE + 1.60
1,000,000
Rating
S&P
Trustee
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
HSBC
HSBC
HSBC
Banamex
3,200,000
5,327
Ps3.205,327
Ticker
symbol
Issuing
trust
UNIFCB10
UNIFCB11
UNIFCB11-2
UNIFCB12
F/300233
F/303240
F/304743
F/306592
Number of
titles*
Rate
(%)
Maturity
3,000,000
4,000,000
8,000,000
10,000,000
Jun 2015
Feb 2016
Nov 2016
May 2017
Outstanding
amount
TIIE + 2.25 Ps 300,000
TIIE + 1.60 Ps 400,000
TIIE + 1.65
800,000
TIIE + 1.60
1,000,000
Rating
S&P
Trustee
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
HSBC
HSBC
HSBC
HSBC
2,500,000
9,147
Ps2,509,147
* Secured notes with a par value of Ps100 each.
In 2013 and 2012, the Company prepaid in full the secured notes of UNIFCB10 and UNIFCB09, which were
settled with the Company’s own resources and resources raised from the UNIFCB12 debt issuance.
At December 31, 2014, 2013 and 2012, income recognized relating to trust management services amount to
Ps51,401, Ps33,071 and Ps23,006, respectively.
At December 31, 2014, 2013 and 2012, issuance costs were as follows:
Issuance costs
Final
balance
2013
Charges
Credits
UNIFIN 11
Ps25,908 Ps 1,268 Ps21,636 Ps 5,540 Ps 2,546 Ps 8,086 Ps
UNIFIN 12
38,708
1,980
36,728
2,267
20,216
18,779
UNIFIN 13
7,413
2,912
4,501
UNIFIN 13-2
15,435
5,481
9,954
UNIFIN CB10
9,953
976
5,443
5,486
5,843
11,329
UNIFCB11
12,480
1,458
5,847
8,091
1,159
3,859
5,391
UNIFCB11-2
40,304
1,663
18,754
23,213
1,738
7,330
17,621
UNIFCB12
35,637
4,946
30,691
1,569
8,824
23,436
UNIFINCB13
30,624
1,336
29,288
Senior notes
-
Ps 6,800
3,226
9,249
5,478
1,727
1,199
3,553
179,084
Ps 25,579
7,727
19,203
10,869
6,898
7,588
9,324
12,256
Ps
Total
Ps210,316
Ps99,444
Ps 219,842
Ticker
symbol
Opening
balance
2012
Charges
Credits
Final
balance
2012
Charges
Ps88,645 Ps79,710 Ps58,606 Ps 109,749 Ps 68,594
Credits
Ps 69,373 Ps 108,970
F-39
Final
balance
2014
12,450
17,047
23,517
166,828
December 31, 2014, 2013 and 2012
Private trust bonds
On November 30, 2012, the Company in its capacity as Trustee and Second Trustor, entered into a contract to
transfer ownership of the Irrevocable Trust "F/1355" (Trust) to Banco Invex, S. A., Institución de Banca
Múltiple, Invex Grupo Financiero as Trustee (Invex) and Scotiabank Inverlat, S. A. , Institución de Banca
Múltiple, Grupo Financiero Scotiabank Inverlat (Scotiabank) as first Trustee, through the securitization of
receivables by the net assets of the Trust to secure the payment of cash withdrawals from the revolving credit
line of Ps1,500,000, which Invex obtained from Scotiabank on the same date. At December 31, 2014, 2013
and 2012, transfers of receivables amounted to Ps1,805,962, Ps1,526,271 and Ps141,879 with related costs
amounting to Ps9,163, Ps10,914 and Ps23,281, respectively.
Accordingly, the Company entered into a contract with Invex management, a commercial agent, to carry out
the administration of the receivables.
At December 31, 2014, 2013 and 2012 private trust bonds were as follows:
Outstanding amount
2014
Invex
Interest accrued
2013
2012
Currency
Maturity
Rate
Ps1,321,899
1,837
Ps1,472,699
1,795
Ps102,655
.
MXN
06/11/12 to 21/11/18
Ps1,323,736
Ps1,474,494
Ps102,655
Guarantee
TIIE+1.60
Receivables
As of December 31, 2014, 2013 and 2012, the Company is in compliance with all of the restrictive financial
covenants.
Note 13 - Bank borrowings and loans from other entities:
At December 31, 2014, 2013 and 2012, the bank borrowings and loans from other entities were as follows:
2014
Outstanding
amount
Currency
Ps1,500,000
300,000
145,000
100,000
MXN
MXN
MXN
MXN
Sep/08/14 to Apr/23/15
Dic/11/14 to Feb/13/15
Nov/22/13 to Mar/10/15
Dic/09/14 to Mar/09/15
TIIE+2.75
Unsecured
TIIE+3.50
Unsecured
LIBOR+3.50 Unsecured
TIIE+4.50
Unsecured
MXN
May/28/13 to May/15/15
TIIE+2.4%
Maturity
Rate
Guarantee
Short term:
Nafinsa
Ixe
Comerica Bank
CIBanco
de Inversiones (CII)
12,500
2,057,500
Interest accrued payable
Total short term
4,230
2,061,730
F-40
Residual values
December 31, 2014, 2013 and 2012
2014
Outstanding
amount
Currency
Maturity
Rate
Guarantee
Long term:
Scotiabank
Banco Nacional de Comercio
Exterior, S. N. C.
Fondo de Fomento Minero (FIFOMI)
Eximbank
233,460
MXN
109,497
25,722
24,089
MXN Mar/19/14 to Apr/13/18
UDI Feb/02/13 to Feb/01/17
USD Jan/24/12 to Jun/25/16
Total long term
392,768
Total of bank borrowings and
loans from other entities
Jan/28/13 to Apr/17/17
TIIE+3.75
Leasing portfolio
TIIE+2.75
TIIE+1.95
3.13%
Unsecured
Leasing portfolio
Mortgage
Ps2,454,498
2013
Outstanding
Amount
Currency
Maturity
Rate
Guarantee
Short term:
Nafinsa
BBVA Bancomer, S. A., Institución de
Banca Múltiple (Bancomer)
Unión de Crédito para la Contaduría
Pública, S. A. de C. V. (UniCon)
Banco Regional de Monterrey, S. A.,
Institución Múltiple (Banregio)
UniCon
Ps 1,500,000
MXN
Sep/06/13 to Apr/04/14 TIIE+3.00
Unsecured
150,000
MXN
Nov/22/13 to Jun/04/14 TIIE+2.93
Unsecured
28,939
MXN
Oct/23/13 to Oct/23/14
Mortgage
22,533
17,222
11,111
MXN
MXN
MXN
Jun/25/12 to Dec/01/14 TIIE+3.00
Feb/18/13 to Feb/23/14 TIIE+4.00
Oct/17/12 to Apr/10/14 TIIE+4.00
TIIE+4.50
Pledged fixed assets
Pledged fixed assets Invex
Residual values
1,729,805
Total short term
5,746
1,735,551
Long term:
Scotiabank
Invex
Banregio
CII
Eximbank
FIFOMI
FIFOMI
367,637
51,400
48,816
37,500
35,671
26,160
23,695
Total long term
590,879
MXN
MXN
MXN
MXN
USD
UDI
UDI
Jan/28/13 to Dec/15/16
May/25/13 to May/15/15
Mar/20/13 to Jun/24/15
May/28/13 to May/15/15
Jan/24/12 to Jun/25/16
Feb/01/13 to Feb/01/17
Feb/05/13 to Dec/01/16
Ps 2,326,430
F-41
TIIE+3.60
TIIE+4.00
TIIE+3.00
TIIE+2.40
3.13
TIIE+1.95
TIIE+2.05
Leasing portfolio
Unsecured
Pledge on fixed assets
Residual values
Unsecured
Leasing portfolio
Leasing portfolio
December 31, 2014, 2013 and 2012
2012
Outstanding
Amount
Currency
Ps 750,000
80,000
39,278
25,000
MXN
MXN
MXN
MXN
Aug/31/12 to Mar/26/12
Dec/17/12 to Jul/13/13
Dec/13//11 to Dec/09/13
Dec/21/12 to Oct/23//13
TIIE+2.75
TIIE+2.93
TIIE+3.00
TIIE+4.50
Unsecured
Unsecured
Mortgage
Maturity
Rate
Guarantee
Short term:
Nafinsa
Bancomer
Banregio
UniCon
894,278
Total short term
3,281
897,559
Long term:
Banregio
54,969
MXN
Jun/26/12 al Dic/01/14
TIIE+2.93
Eximbank
Invex
49,685
44,444
USD
MXN
Ene/24/12 al Jun/25/16
Oct/17/12 al Abr/10/14
3.13
TIIE+4.00
Mortgage
Unsecured
Total long term
149,098
Ps 1,046,657
In relation to the lines of credit received by the Company, the unused amount is shown below:
2014
IXE
Banamex
Multiva
FIFOMI
Bancomext
BBVA Bancomer
Interacciones
Comérica Bank
CIBanco
Banregio
Invex
Eximbank
Invex
Scotiabank
Banco del Bajio, S. A.
CII
UniCon
Nafinsa
Ps
200,000
500,000
100,000
92,278
390,503
150,000
150,000
2,348
200,000
49,501
178,101
156,540
37,500
50,000
-
Ps 2,256,771
F-42
2013
Ps
2012
500,000
300,000
100,000
76,613
60,094
57,489
28,481
27,301
22,363
20,000
12,500
3,838
-
Ps
500,000
100,000
5,753
100,000
20,000
5,000
250,000
Ps 1,208,679
Ps
980,753
December 31, 2014, 2013 and 2012
As of December 31, 2014, 2013 and 2012, the Company is in compliance with all of the restrictive financial
covenants.
Note 14 - Accounts payable and other accrued expenses:
At December 31, 2014, 2013 and 2012, the accounts payable and other accrued expenses were as follows:
2014
Liabilities relating to acquisition of fixed assets
Rentals received in advanced
Sundry creditors
Withholding Income tax and VAT
Other provisions
Guarantee deposits
2013
2012
Ps 785,456
88,487
44,408
2,197
392
61,378
Ps 406,157
92,858
34,105
1,068
6,384
70,560
Ps 375,257
70,544
21,111
1,903
5,634
72,074
Ps 982,318
Ps 611,132
Ps546,523
Note 15 - Stockholders’ equity:
On June 23, 2014 the stockholders by unanimous resolution of stockholders agreed to increase the variable
portion of the capital stock by capitalizing Ps400,000 from retained earnings and by means of cash contributions
of Ps200,000, by issuing 6,000,000 common shares, Class II, Series “A”, nominative and representative of the
variable portion of the capital stock of the Company.
On December 3, 2012 Extraordinary General Stockholders’ Meeting, the stockholders agreed to capitalize
Ps150,000 from retained earnings by issuing 1,500,000 common shares, Class II, Series “A”, nominative and
representative of the variable portion of the capital stock of the Company.
After the previous increase, the capital stock at December 31, 2014, 2013 and 2012 is comprised as follows:
Shares (in numbers)
2014
10,000
2013
10,000
6,990,000 2,190,000
1,750,000
550,000
8,750,000 2,750,000
*
*
Description
Amount
2012
10,000
2,190,000
550,000
2,750,000
2014
2013
2012
1,000
Ps 1,000
Ps 1,000
Series “A” Class II: comprising the variable
portion of capital with withdrawal rights
699,000
219,000
219,000
Series “B”: comprising the variable portion of
capital with withdrawal rights
175,000
55,000
55,000
Series “A”: comprising the fixed portion of capital
with no withdrawal rights
Capital stock at December 31, 2014, 2013 and
2012
Ps
Ps 875,000
Ps275,000 Ps275,000
Common, nominal shares with a par value of Ps100 each, fully subscribed and paid in.
The profit for the year is subject to the legal provision requiring that at least 5% of the profit be set aside to
increase the legal reserve until it reaches an amount equivalent to one fifth of the capital stock.
F-43
December 31, 2014, 2013 and 2012
Dividends
In October 2013 the Chambers of Senators and Representatives approved the issuance of a new Law on
Income Tax (Income Tax Law) which came into force on January 1, 2014. Among other things, this Act sets a
tax of 10% by the profits generated as of 2014 to dividends paid to foreign residents and Mexican individuals,
it also states that for the years 2001 to 2013, the net taxable profit is determined in terms of the Income Tax
Law in force in the fiscal year concerned.
At an extraordinary Stockholders’ Meeting held on October 17, 2014, the stockholders agreed to pay dividends
of Ps100,000 from retained earnings.
At an Extraordinary General Shareholder’s Meeting held on, April 26, 2013, the stockholders agreed to pay a
dividend of Ps60,000 from retained earnings.
At the May 9 and November 6, 2012 Extraordinary General Stockholders’ Meeting, the stockholders agreed to
pay dividends of Ps60,000 and Ps30,000, respectively, from retained earnings.
Dividends paid are not subject to income tax if paid from the Net Tax Profit Account (CUFIN for its acronym
in Spanish) and, will be taxed at a rate that fluctuates between 4.62% and 7.69% if they are paid from the
Reinvested Net Tax Profit Account (CUFINRE by its Spanish acronym). Any dividends in excess of the CUFIN
are subject to tax at a rate of 42.86% if paid in 2015. Tax accrued is payable by the Company and may be
credited against income tax for the year or the two years that immediately follow or otherwise against the Flat
Tax (IETU by its in Spanish acronym) for the year. Dividends paid from previously taxed profits are not
subject to tax withholding or additional tax payments.
In the event of a capital reduction, the provisions of the Income Tax Law arrange any excess of stockholders’
equity over capital contributions, is accounted for with the same tax treatment as dividends.
Earnings per share
Earnings per share at December 31, 2014, 2013 and 2012 is as follows:
2014
2013
2012
Net profit
Weighted average of shares
Ps 482,408
5,889,726
Ps 337,959
2,750,000
Ps 243,434
1,369,178*
Basic profit per share (pesos)
Ps
Ps
Ps 177.80*
81.91
122.89
* The 2012 figures were revised by the Company in order to be comparative with those presented in 2013 and 2014.
F-44
December 31, 2014, 2013 and 2012
Note 16 - Income tax and flat tax:
Income Tax
Income tax is determined based on the individual tax results of the Company and its subsidiaries. At
December 31, 2014, 2013 and 2012, the Company determined it had a taxable profit of Ps1,408,067,
Ps897,839 and Ps512,497, respectively. The taxable result differs from the accounting result mainly due to
items accrued over time and deducted differently for accounting and tax purposes. On the basis of its financial
and tax projections, the Company has determined that it will pay income tax in the future, and therefore it has
recognized a deferred income tax.
New Income Tax Law
During October 2013 the Chamber of Senators and Representatives approved the issuance of a new Law on
Income Tax (new ITL) which came into force on January 1, 2014, repealing the Income Tax Law issued on
January 1 2002 (previous ITL). The new ITL captures the essence of the previous ITL; however, the new ITL
makes significant changes. Some of the highlights of the new ITL are:
i.
Limited deductions in contributions to pension funds, exempt wages, car lease, consumption in
restaurants and in social security contributions. It also eliminates the immediate deduction for fixed
assets.
ii. Amended certain mechanics to the income from repatriation and generalizes the method to determine the
gain on disposal of shares.
iii. Modifies the procedure for determining the tax base for the Employees' Statutory Profit Sharing (ESPS),
provides the mechanism to determine the opening balance of the Capital Account of Contributions (CUCA,
by its Spanish acronym) and CUFIN.
iv. Establishes an income tax rate for 2014 and the following years of 30%, in contrast to previous ITL
establishing a rate of 30, 29, and 28% for 2013, 2014 and 2015, respectively.
The Company reviewed and adjusted the deferred tax balance at December 31, 2013, which is considered in
determining the temporary differences to be applied to these new provisions. The effects on limiting
deductions and other deductions previously listed applied from 2014 onward and mainly affected the tax paid
from that year. These impacts are detailed in the reconciliation of the effective tax rate presented below.
The Income tax provision is shown as follows:
2014
2013
2012
Current income tax
Deferred income tax
(Ps 456,515)
234,150
(Ps 291,754)
201,011
(Ps 178,764)
79,555
Income tax expense
(Ps 222,365)
(Ps
(Ps 99,209)
F-45
90,743)
December 31, 2014, 2013 and 2012
The reconciliation between the statutory and effective income tax rates is shown below:
2014
2013
2012
Ps 704,773
30%
Ps 428,702
30%
Ps342,643
30%
Income tax at statutory rate
211,432
128,610
102,793
Plus (less) effect of the following permanent items on
the income tax:
Nondeductible expenses
Annual inflation adjustment
Fixed assets
Other permanent items
599
98,436
(84,172)
(3,930)
503
62,447
(94,877)
(5,940)
580
35,905
(39,364)
(705)
Income tax payable rate
Income tax expense in the statement of income
Ps 222,365
Ps 90,743
Ps 99,209
31.55%
21.17%
28.95%
Effective income tax rate
The main temporary differences on which deferred income tax is recognized are shown below:
December 31,
Own and leased machinery and equipment
Deferred commissions
Issuance costs
Provisions
Deferred charges
Other assets
Advanced payments
2014
2013
2012
Ps 1,726,357
133,346
88,122
15,448
2,231
(104,543)
(41,489)
-
Ps 988,731
95,887
68,191
12,505
7,140
(84,445)
(25,010)
(24,027)
Ps 379,027
68,552
18,223
9,117
311
(68,824)
(18,234)
(19,238)
1,819,472
1,038,972
368,934
Applicable income tax rate
30%
30%
30%
Deferred income tax asset
Ps 545,842
Ps 311,691
Ps 110,680
Flat tax
During October, 2013 the Chamber of Senators and Representatives approved the repeal of the Flat Tax Act
published on October 1, 2007. Therefore, after the Act was approved in October, 2013, the resolutions and
general administrative provisions were voided and the Act’s interpretations, authorizations or permits issued
to individual entities were repealed.
F-46
December 31, 2014, 2013 and 2012
The Company had not recognized any deferred tax as it was not required to pay a flat tax so that repeal had no
effect on the financial statements of the Company. Due to this change in the Flat Tax Act, the Company, as of
January 1, 2014 will have taxable income.
The flat tax for 2013 and 2012 was calculated using a 17.5% rate on the profit determined as per cash flows.
That profit is determined by reducing authorized deductions from total income earned on taxable activities.
The flat tax credits were deducted from the results, as it has been established in current legislation, and the
effect of rate changes on temporary differences has been recorded in prior years.
According to the tax law at December 31, 2013, the Company must pay an annual tax of whichever is greater
between the income tax and the flat tax. At December 31, 2013 and 2012 the Companies did not paid flat tax.
Note 17 - Financial information by segment:
The following show the main assets and liabilities of the Company’s segments:
December 31, 2014
Operating
leasing
Assets
Cash and cash equivalents*
DFI
Loan portfolio
Fixed assets
Foreclosed assets
Other assets
Ps
425,570
Financial
factoring
Ps
856,426
366,022
(64,249)
9,285,257
130,611
1,227,123
21,698
1,294,737
(10,070)
13,167
Other
lending
Ps
126,464
1,413,698
(13,803)
325,420
(49,967)
Total
Ps
573,732
856,426
3,074,457
(88,122)
9,610,677
130,611
1,190,323
Ps 11,927,654
Ps1,319,532
Ps 2,100,918
Ps 15,348,104
Ps 8,728,659
1,159,759
61,378
133,347
323,519
Ps
1,294,739
7,037
Ps 1,413,698
690,507
Ps 10,142,357
2,454,498
61,378
133,347
1,021,163
Ps 10,406,662
Ps 1,301,776
Ps 2,104,305
Ps 13,812,743
Liabilities
Debt securities
Bank and other entities loans
Guarantee deposits
Other liabilities
F-47
December 31, 2014, 2013 and 2012
December 31, 2013
Assets
DFI
Loan portfolio
Fixed assets
Foreclosed assets
Other assets
Operating
leasing
Financial
factoring
19,101
1,116,383
(47,188)
28,680
Other
lending
Ps
835,921
(16,174)
170,000
110,467
Total
Ps 990,646
42,210
387,491
(56,889)
6,518,993
12,704
646,376
Ps
Ps 1,009,747
42,210
2,339,795
(120,251)
6,688,993
12,704
785,523
Ps 8,541,531
Ps 1,116,976
Ps 1,100,214
Ps 10,758,721
Ps 5,292,768
1,840,885
70,560
95,887
566,113
Ps 734,020
255,300
9,341
Ps 661,983
230,245
48,666
Ps 6,688,771
2,326,430
70,560
95,887
624,120
Ps 7,866,213
Ps 998,661
Ps 940,894
Ps 9,805,768
Liabilities
Debt securities
Guarantee deposits
Other liabilities
December 31, 2012
Assets
Cash and cash equivalents (*)
DFI
Loan portfolio
Fixed assets
Foreclosed assets
Other assets
Operating
leasing
Financial
factoring
Ps 166,208
20,979
103,676
(23,252)
4,249,024
12,996
530,034
Ps
Ps 5,059,665
Ps 1,237,044
F-48
40,305
1,197,302
(14,298)
13,735
Other
lending
Ps
653,602
(18,967)
63,620
Ps 698,255
Total
Ps
206,513
20,979
1,954,580
(56,517)
4,249,024
12,996
607,389
Ps 6,994,964
December 31, 2014, 2013 and 2012
December 31, 2012
Liabilities
Debt securities
Guarantee deposits
Other liabilities
Operating
leasing
Financial
factoring
Other
lending
Ps 3,250,620
736,146
72,074
68,552
455,321
Ps 761,821
172,524
15,326
Ps 609,314
137,987
40,289
Ps 4,621,755
1,046,657
72,074
68,552
510,936
Ps 4,582,713
Ps 949,671
Ps 787,590
Ps 6,319,974
Total
*Cash and cash equivalents are not allocated by segments by the Company.
The following show the main income and expenses of the Company’s segments:
Year ended December 31, 2014
Operating
leasing
Interest income
Other leasing benefits
Depreciation
Interest expenses
Other leasing expenses
Commissions and fees (paid) collected
Other operating income
Financial
factoring
Ps3,648,966
642,669
383,189
(2,150,092)
(1,055,162)
(424,978)
(10,000)
(30,017)
11,274
(128,528)
Ps
Ps 887,321
Ps
240,872
(219,194)
40,000
-
61,678
Other
lending
Ps
263,003
(239,334)
-
9,854
Ps3,648,966
1,146,544
383,189
(2,150,092)
(1,513,690)
(424,978)
30,000
(10,019)
11,274
(118,674)
53,521
Ps1,002,520
19,998
Ps
Total
Operating
leasing
Interest income
Depreciation
Interest expenses
Financial
factoring
Ps2,591,738
84,961
194,345
(1,536,059)
(385,017)
(220,989)
(25,396)
(11,951)
(8,284)
36,880
Ps
Ps 720,228
Ps
F-49
182,223
(104,480)
(30,199)
3,077
Other
lending
Ps
50,621
Ps
100,497
(84,115)
(8,163)
(1,284)
2,464
9,399
Total
Ps2,591,738
367,681
194,345
(1,536,059)
(573,612)
(220,989)
(63,758)
(10,158)
(8,284)
39,344
Ps 780,248
December 31, 2014, 2013 and 2012
Operating
leasing
Interest income
Depreciation
Interest expenses
Financial
factoring
Ps1,842,717
105,896
126,816
(1,050,104)
(267,862)
(153,318)
(2,668)
(6,971)
(10,123)
40,058
Ps 188,173
(123,119)
(7,683)
(40)
13
Ps 624,441
Ps
57,344
Other
lending
Ps
61,830
(61,253)
(4,065)
883
2,680
Ps
75
Total
Ps1,842,717
355,899
126,816
(1,050,104)
(452,234)
(153,318)
(14,416)
(6,128)
(10,123)
42,751
Ps 681,860
For the years ended December 31, 2014, 2013 and 2012 the Company has not disclosed separately
administrative and promotion expenses, because it considers it’s not possible to identify the allocation per
segment of said information.
Note 18 - Related parties:
The Company is subsidiary of Unifin Corporativo, to which the Company provides administrative services. In
addition, during 2014 the Company acquired from Unifin Corporativo the complete ownership of a related
party, as described in Note 1.
Balances with related parties at December 31, 201, 2013 and 2012 are shown below:
Receivables:
2014
2013
Ps 154,587
5,750
2,838
2,240
886
782
522
-
2012
Administradora Brios, S. A. de C. V.
Cabos Marinos
Executives
Unifin Administración Corporativa, S. A. de C. V.
Aralpa Capital, S. A. de C. V.
Administración de Flotillas, S. A. de C. V.
Unifin Corporativo, S. A. de C. V.
Brios Sureste, S. A. de C. V.
Ps 48,800
2,200
578
587
158
20
Ps 134,209
5,754
1,184
1,421
1,443
522
.
Total
Ps 52,343
Ps167,605 Ps 144,533
Aralpa, S. C.
Unifin Servicios Administrativos, S. A. de C. V.
Unifin Corporativo
Ps 2,291
175
50
Ps 2,370 Ps
.
Total
Ps 2,516
Ps 2,370
Payables:
F-50
5,663
5,546
68
.
Ps 11,277
December 31, 2014, 2013 and 2012
During the years ended on December 31, 2014, 2013 and 2012, the following operations, in addition to the
related loans, were carried out with related parties:
Year ended
December 31,
Income
2014
Interest earned
Car leases
Other Income
Car sales
Administrative services
2013
2012
149
4,126
3,885
Ps 5,261
6,133
5,135
2,717
145
Ps 20,148
5,844
5,062
5,221
-
Ps 8,160
Ps 19,391
Ps 36,275
Ps 299,324
2,010
-
Ps 218,539
5,324
2,490
-
Ps 158,095
1,345
3,204
Ps 301,334
Ps 226,353
Ps162,644
Ps
Expenses
Reimbursement of expenses
Donations
Other services
Note 19 - Integration of the main items of the income statement:
The integration of the main items of the income statement for the years ended December 31, 2014, 2013 and
2012 is summarized as follows:
Financial margin
2014
2013
2012
a. Operating lease income
Operating lease rentals
Initial rentals
Returns and rebates
Ps 2,584,554
1,075,386
(11,354)
Ps 1,728,575
968,164
(105,001)
Ps 1,271,143
649,493
(77,919)
Total operating lease income
Ps 3,648,586
Ps 2,591,738
Ps 1,842,717
F-51
December 31, 2014, 2013 and 2012
2014
2013
2012
b. Interest income
Cash and cash equivalents
Loan portfolio
Commissions for initial granting of credit
Foreign exchange
Ps
21,648
337,409
113,722
674,145
Total interest income
Ps 1,146,924
Ps
17,316
245,266
100,073
5,026
Ps
Ps 367,681
12,957
242,683
78,211
22,048
355,899
c. Other lease benefits
2014
2013
2012
Gain on fixed assets sales
Ps
383,071
118
Ps 193,844
501
Ps 126,816
-
Total other lease benefits
Ps
383,189
Ps 194,345
Ps 126,816
Ps 2,150,092
Ps 1,536,059
Ps1,050,104
Debt securities
Issuance costs
Costs and expenses incurred in granting loans
Foreign exchange
Ps
383,991
105,694
210,778
72,413
740,814
Ps 223,933
113,543
189,832
41,112
5,192
Ps 205,589
98,918
97,516
33,507
16,704
Total interest expenses
Ps 1,513,690
Ps 573,612
Ps 452,234
Losses on fixed assets sales
Insurance of leased assets
Ps
383,071
41,907
Ps 193,844
27,145
Ps 126,816
26,502
Total other lease expenses
Ps
424,978
Ps 220,989
Ps 153,318
Commission for portfolio management
Commission for bank and other entities loans
Commissions for sale of insurance
Commissions for collection
Commissions for trusts management
(Ps
48,515)
(28,895)
15,810
180
51,401
(Ps
33,801)
(20,468)
10,743
297
33,071
(Ps
25,688)
(9,043)
5,465
132
23,006
Total commissions and rates - Net
(Ps
10,019)
(Ps
10,158)
(Ps
6,128)
d. Depreciation of assets under operating lease
Depreciation of assets under operating lease
e. Interest expense
f. Other lease expenses
Operating income
g. Commissions and rates charged and paid
F-52
December 31, 2014, 2013 and 2012
2014
2013
2012
h. Other income and expenses
Recovery of insurance expenses
Property sales
Allowance for impairment of foreclosed assets
Management fee
Income in sale of shares
Other income
Other expense
Ps
Total other income and expenses - Net
Ps
35,103
381
(5,522)
604
88,227
2,231
(2,350)
118,674
Ps
40,444
(1,666)
494
72
-
Ps
26,341
17,500
(1,444)
319
35
-
Ps
39,344
Ps
42,751
i. Administrative and promotion expenses
2014
2013
2012
Administrative personnel
Legal and administrative
Advertising expenses
Other administrative expenses
Communications
Travel expenses
Leasing
Maintenance
Insurance
Donations
Electrical energy
Subscriptions
Ps
195,270
177,108
51,963
26,880
38,191
3,497
7,222
17,650
7,428
7,712
1,313
861
Ps 151,113
107,924
32,294
19,851
16,617
7,703
7,417
4,611
3,169
7,350
2,490
1,503
768
Ps 123,959
121,748
27,799
21,629
9,803
7,089
3,680
2,985
2,399
2,384
2,715
1,173
590
Total administration and promotion expenses
Ps
535,095
Ps 362,810
Ps 327,953
Note 20 - Financial Reform:
On January 10, 2014 the Official Gazette published the "Decree amending, adding and repealing different
financial provisions and issuing the Law to regulate Financial Groups" known as the Financial Reform, which
became effective on the business day following its publication.
The Financial Reform passed by the Executive power amends 32 Laws, 2 Codes and adds 1 new Law through
13 Decrees, and it was mainly designed to:
a. Increase the powers of different financial authorities, provide flexibility to the portability of loan
transactions and guarantees and reformulate certain characteristics that must be met by Multiple Purpose
Financial Institutions.
b. Redefine the role of Development Banks by refocusing their mandates and providing a greater degree of
management autonomy with sufficient financial and operating flexibility.
F-53
December 31, 2014, 2013 and 2012
c. Improve the schemes for executing loan guarantees, and incentivize banks to favor placement of loans over
investments in government securities by proposing a mechanism to specifically evaluate those operations
through the Commission.
d. Strengthen prudential regulations by establishing laws for sound capital practices (Basel III), and
incorporate liquidity indexes and inhibit conducts that depart from sound practices. Additionally, facilitate
Bank Failure processes; safeguard the rights of savers and reducing the related tax costs.
e. Strengthen and improve financial regulation and supervision of intermediaries by backing up coordination
and cooperation mechanisms between the different financial authorities (Financial System Stability
Board), standardizing procedures to provide for more sound financial laws with a view to facilitating the
work of the authorities and implementing self-correction programs that will result in better legal
compliance by supervised entities.
As part of the implementation of the Financial Reform, a set of secondary laws is expected to be issued by the
financial authorities whose impact on the financial information is being evaluated by the Entity.
The Company is a non-regulated multiple purpose financial institution (sociedad financiera de objeto
múltiple, entidad no regulada, or “Sofom E. N. R.”) in accordance with Article 87-B of the Mexican General
Law of Auxiliary Credit Organizations and Credit in effect as of that time. Currently, we are in the process of
becoming a regulated Sofom, as required by the amendments to the Mexican General Law of Auxiliary Credit
Organizations and Credit Activities published as part of the Financial Reforms.
Note 21 - New accounting pronouncements:
Accounting criteria
During 2014 the Commission issued new Accounting Criteria applicable to credit institutions, which will
become effective as indicated below. In 2013 the Commission did not issue new Accounting Criteria applicable
to credit institutions. It is considered that the following Accounting Criteria will not have a significant effect on
the financial information presented by the Company:
Effective from January 1, 2016
x General Dispositions: A new method was established to determine the allowance for loan losses for
commercial loans with the exception of financial entities. The main difference is that it establishes the
method for estimating the expected loss which considers the probability of default, the severity of the loss
and the exposure to default, as well as the classification of loans made to business entities other than federal
and municipal entities. Further considerations are taken for projects with their own sources of payment,
trusts, structured loans and financial entities of different groups: i) clients with net income or annual net
sales below the equivalent in pesos of 14,000,000 investment units (UDI, for its acronym in Spanish)
identified in a subgroup called "Borrowers with Late Payments" or "Borrowers without Late Payments", and
ii) clients with net income or annual net sales above the equivalent in pesos of 14,000,000 UDI. The
Company considered with this new methodology its allowance for loan losses could be increased in
approximately Ps10,000, for the year ended December 31, 2014.
F-54
December 31, 2014, 2013 and 2012
x Criterion A-2 "Application of particular standards”: names are updated and MFRS that are applicable to the
Company are added. The accounting treatment for overdrafts on check accounts that do not have a credit
line is specified, as well as the consistent application of accounting criteria for credit institutions by
investment companies, to recognize the interests held in a joint operation, except for the restatement of
financial statements.
x Criterion B-6 "Loan Portfolio": certain concepts are described with more detail. It is specified also when the
"sustained credit payment" will be considered for restructurings of different types of loans; amendments to
the concepts of “restructuring” and “renewal” were made. It specifies the recognition in the income
statement of fees collected other than by the conceding of the loan, at the date they are incurred. It sets
various considerations for the transfer to non-performing loans in the case of loans conceded for the
remodel or improvement of housing, loans granted under a revolving credit line, as well as treatment in
restructurings and renewals in case the loans granted by the Company are consolidated. Requires additional
disclosures relating to housing loans supported by the housing subaccount; consolidated loans as a result of
a restructuring or renewal, and restructured loans that were not transferred to non-performing loans.
x Criterion C-2 "Securitization transactions": specifies that for the securitization vehicles made prior to
January 1, 2009, the reassessment of the transfer of financial assets recognized before such date will not be
necessary, and that in this regard the possible effects on the financial statements should be properly
disclosed.
x Criterion C-3 "Related parties": the concepts of "joint control arrangements", "control", "joint control",
"controlling entity", "significant influence" and "subsidiary" are amended to align the concepts with
applicable MFRS.
x Criterion D-1 "Balance Sheet": classifications to the category of "housing loans", "traditional capture", and
"memorandum accounts" are added.
MFRS
The CINIF issued the following MFRS and Improvements to the MFRS effective beginning January 1, 2018
and 2015, respectively as is indicated below. It is not expected that the following MFRS will have a significant
effect on the financial information presented by the Company.
x MFRS C-3 "Accounts receivable". Establishes the valuation, presentation and disclosure standards for the
initial and subsequent recognition of trade receivables and other receivables in the financial statements.
Specifies that the accounts receivable based on a contract represent a financial instrument.
x MFRS C-9 "Provisions, contingencies and commitments". Establishes standards for the accounting
recognition of provisions on the financial statements, and the rules for disclosure contingent assets,
contingent liabilities and commitments on the financial statements. Reduce scope to relocate the item on
the accounting treatment of financial liabilities in MFRS C-19 "Financial instruments payable". Additionally,
the terminology used throughout the regulatory approach is updated.
F-55
December 31, 2014, 2013 and 2012
Improvements to MFRS
x MFRS B-8 "Consolidated or combined financial statements". Guidance is included to identify investment
entities and guide them to understand their primary activity and its main characteristics, in order to support
the conclusion whether or not control in each specific situation, resulting in the need or otherwise for such
investment entities to consolidate its financial statements.
x Statement C-9 "Liabilities, provisions, contingent assets and liabilities and commitments". It is established
the accounting treatment of advances from customer’s liabilities for the sale of goods or services for which
recovery is denominated in foreign currency, requiring that the balance of the customer advances should be
no change to currency fluctuations between the functional currency and the currency payment. In this
manner consistent with the accounting treatment of prepayments in foreign currency is established.
x MFRS C-3 "Accounts receivable" and MFRS C-20 "Financial receivables financing". The effective dates were
modified for those MFRS. Instead those MFRS would be effective as of January 1, 2016 (early adoption
permitted as of January 1, 2015, only if both NIF jointly were adopted), the new effective date for both
MFRS is now as of January 1, 2018 (early adoption is permitted as of January 1, 2016, only if both NIF
jointly are adopted).
Note 22 - Subsequent events:
1. During January 2015, the Company repurchased 33,400 of its Senior Notes titles, equivalent to 8.35% of its
debt issuance of July 22, 2014, as explained in note 12. With this transaction, the Company has covered
100% of its exposure to foreign exchange rate risk related to these Senior Notes. This transaction was
carried out between the Company and a third party, based in the United States.
At the issuance of these financial statements, the Company is making the necessary procedures with the
corresponding instances in order to cancel the 8.35% of the related liability.
2. On February 9, 2015, the Company issued in the Mexican market its tenth securitization, which is
described as follows:
Ticker symbol:
Number of titles:
Total amount:
Currency:
Rate (%):
Term of issue:
Maturity:
Rating:
Trustee:
Trust state:
UNFINCB15
20,000,000
Ps2,000,000
MXN
TIIE 28 + 1.60
5 years, with revolving period of three years
February 2020
mxAAA S&P/HR AAA
Banamex
Receivables arising from leases of transportation equipment, industrial
equipment, construction machinery, medical equipment and computer
equipment.
The proceeds from this issuance were used mainly to prepay short-term and long-term financial liabilities by
an amount of Ps1,645,932.
F-56
Financiera de Objeto Múltiple, Entidad No
Regulada and Subsidiaries
(a subsidiary of Unifin Capital, S. A. de C. V.)
Unaudited Condensed Consolidated Interim Financial Statements
As of March 31, 2015 and for the three months period
ended March 31, 2015 and 2014
F-57
F-58
84,938
Past due loans portfolio (Note 3)
Commercial loans
(87,969)
158,643
Total
Total liabilities and stockholders’ equity
$ 8,413,812
$ 9,400,561
2014
$ 6,038,447
2,375,365
2015
$ 7,274,550
2,126,011
December 31,
March 31,
$ 18,236,161
1,793,274
COMMITMENTS - Note 5
SUBSEQUENT EVENTS - Note 11
Total stockholders’ equity
793,229
$ 15,348,104
1,535,361
1,535,337
24
535,337
46,215
6,724
482,398
1,000,000
1,000,000
70,335
365,002
357,912
875,000
125,000
13,812,743
875,000
125,000
16,442,887
133,347
1,082,541
1,897,168
156,375
100,223
982,318
97,526
1,799,642
2,454,498
2,721,760
10,142,357
166,591
9,975,766
2,061,730
392,768
$
2014
December 31,
2,083,465
638,295
11,667,584
79,610
11,587,974
1,793,249
25
$
2015
March 31,
Earned capital:
Capital reserve
Retained earnings
Net income for the year
Stockhold ers’ equity:
Contributed capital (Note 7):
Capital stock
Share premium
Total liabilities
Deferred credits and advanced collections
Other accounts payable
Income tax payable (Note 8)
Sundry creditors and other accounts payable
Bank borrowings and loans from other entities (Note 6)
Short term
Long term
Liability
Debt securities (Note 5)
Short-term
Long-term
Liabilities and Stockholders' Equity
Memorandum accounts
$ 15,348,104
Contractual lease rentals to be accrued held in trust
Contractual lease rentals to be accrued
$ 18,236,161
963,431
1,111,478
14,944
9,610,677
130,611
211,948
2,986,335
(88,122)
3,074,457
70,152
3,004,305
2,767,620
236,685
856,426
573,732
545,842
405,999
11,590
$
2014
December 31,
587,760
512,021
11,697
14,945
The accompanying twelve notes are an integral part of these financial statements.
Total assets
Deferred charges and advanced payments
Other long-term assets
Other assets:
Other permanent investments
10,808,755
Foreclosed assets - Net
Property, machinery and equipment - Net (Note 4)
232,096
3,322,492
Other accounts receivable
Loans portfolio - Net
Less Allowance for loan losses (Note 3)
3,410,461
3,325,523
Total performing loans portfolio
Total loans portfolio
3,068,789
256,734
1,138,301
Performing loans portfolio (Note 3)
Commercial loans
Consumer loans
Loan portfolio:
Derivatives with trading purposes
1,449,451
Cash and cash equivalents
$
2015
Asse ts
March 31,
Unaudited Condensed Consolidated Interim Balance Sheets
(Notes 1, 2 and 10)
As of March 31, 2015 and December 31, 2014
and Subsidiaries
Unaudited Condensed Consolidated Interim Statements of Income
(Notes 1, 2, 9 and 10)
For the three months period ended March 31, 2015 and 2014
Thousands of Mexican pesos, except for earnings per share (Note 2)
Interest income
Interest expense
Other lease expenses
2015
2014
$ 1,205,780
116,797
177,225
(655,709)
(276,735)
(183,798)
$ 803,624
109,945
86,003
(483,458)
(185,047)
(96,090)
Financial margin
383,560
Allowance for loan losses (Note 3)
234,977
-
-
.
Financial margin adjusted for credit risk
383,560
234,977
Commissions and fees (paid) - Net
Other operating income - Net
Administration and promotional expenses
(6,216)
242,146
8,902
(133,349)
(7,283)
2,454
3,716
(100,435)
111,483
(101,548)
495,043
133,429
Current income tax
Deferred income tax
179,049
(41,919)
62,824
(11,567)
Income tax expense (Note 8)
137,130
51,257
$
357,913
$
82,172
Consolidated net income for the year:
$
357,912
1
$
82,171
1
$
357,913
$
82,172
Earnings per share (pesos)
$
40.90
$
29.88
F-59
F-60
29,317
Balances at March 31, 2015
$ 70,335
$ 365,002
(482,398)
(482,398)
482,398
$ 357,912
357,912
358,278
482,398
(24,120)
(100,000)
6,724
Total
24,120
24,120
46,215
82,171
357,912
$ 125,000
125,000
523,662
Total
$ 875,000
875,000
Balances at January 1, 2015
Dividend payment
275,000
Balances at March 31, 2014
82,171
82,171
Total
(337,957)
(337,957)
$ 337,957
Consolidated net
net income
for the year
125,000
$ 185,665
337,957
$ 29,317
Retained
earnings
337,957
$ 125,000
Capital
reserves
Total
$ 275,000
Share
premium
Capital earned
Balances at January 1, 2014
Capital
stock
Contributed capital
357,912
357,912
(100,000)
(100,000)
1,535,337
1,035,110
82,171
82,171
952,939
$ 1,793,249
$
Total
controlling
interest
$ 25
1
1
24
1
1
1
(2)
(2)
$ 2
Noncontrolling
interest
357,913
357,913
(100,000)
(100,000)
1,535,361
1,135,111
82,172
82,172
(2)
(2)
952,941
$ 1,793,274
$
Total
stockholders’
equity
Unaudited Condensed Consolidated Interim Statements of Changes in Stockholders' Equity (Note 7)
For the three months period ended March 31, 2015 and 2014
and Subsidiaries
Unaudited Condensed Consolidated Interim Statements of Cash Flows
For the three month periods ended March 31, 2015 and 2014
2015
$ 357,913
Adjustments for items not involving cash flows:
Income taxes (current and deferred)
662,148
137,130
2014
$
82,172
489,212
51,257.
1,150,752
622,141
Change in derivatives with trading purposes
Change in loan portfolio
Change in foreclosed assets
Change in other accounts receivable
Change in other operating assets
Change in debt securities
Change in bank borrowings and loans from other entities
Change in deferred credits and advanced collections
Change in other operating liabilities
(281,875)
(336,157)
(28,033)
(20,148)
(148,047)
1,525,227
267,262
23,028
677,497
2,988
(97,122)
(65,887)
85,118
(63,304)
(97,118)
206,200
8,986
98,740
Net cash flows provided by operating activities
2,829,506
696,242
Payment for acquisition of property, machinery and equipment - Net
(1,860,226)
(932,864)
Net cash flows from investing activities
(1,860,226)
(932,864)
Operating activities
Investing activities
Financing activities
Dividend payments
(100,000)
-
.
Net cash flows used in financing activities
(100,000)
-
.
Net increase (decrease) in cash and cash equivalents
875,719
Cash and cash equivalents at beginning of the period
573,732
1,009,747
$1,449,451
$ 773,125
Cash and cash equivalents at end of the period
F-61
(236,622)
and Subsidiaries
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
As of March 31, 2015 and for the three months period ended
March 31, 2015 and 2014
Thousands of Mexican pesos (Note 2), except foreign currency,
exchange rates, nominal value, number and price of share
Note 1 - Activity of the Company:
Unifin Financiera, S. A. P. I. de C. V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada
(Company), subsidiary of Unifin Capital, S. A. de C. V. (“Unifin Capital”), (before Unifin Corporativo, S. A.
de C. V.) was incorporated on February 3, 1993 in accordance with Mexican laws.
The predominant activity of the Company is to provide operating leases for automotive vehicles, machinery
and equipment, among other lease arrangements. The Company also provides loans, performs financial
factoring operations, acts as administrator for trusts, obtains loans, guarantees obligations through
different means, and issues, subscribes, accepts, endorses sells, discounts and pledges all kind of credit.
The Company has no employees, and all legal, accounting and administrative services are provided by
related parties.
The enclosed unaudited condensed consolidated interim financial statements include the figures of the
Company and of its subsidiaries as of March 31, 2015 and December 31, 2014 on which the Company has
control as mentioned below:
Activity
% of
partnership
Functional
currency
Unifin Credit, S. A. de C. V. SOFOM,
E. N. R. (Unifin Credit)
Financial factoring
99.99
Mexican pesos
Unifin Autos, S. A. de C. V. (Unifin Autos)
Purchase-sale of cars
99.99
Mexican pesos
Citation VII Leasing Corp (Citation)
Aircraft leasing
Entity
Inversiones Inmobiliarias Industriales,
S. A. P. I. de C. V. (Inmobiliarias Industriales)
Unifin Agente de Seguros y de Fianzas,
S. A. de C. V. (Unifin Agente) 1
1
100.00
US dollars
Promotion of real estate
Services
94.08
Mexican pesos
Insurance services
75.00
Mexican pesos
In November 2014, the Company acquired 100% of the ownership of the Unifin Agente at its nominal
value from its parent Company. Subsequently, on December 23, 2014, the Company sold to a third party
25% of its shareholding, equivalent to 12,500 shares, at a total price of Ps88,240, which was recognized in
the other operating income line item. The consideration is to be paid within 120 days; is presented in the
other accounts receivable line item (See Note 12). As of the date of issuance of these unaudited
condensed consolidated interim financial statements, Unifin Agente has not started operations.
F-62
and Subsidiaries
March 31, 2015 and 2014
Note 2 - Basis for preparation of the financial information:
Preparation of Financial Statements
The accompanying unaudited condensed consolidated interim financial statements have been prepared in
accordance with the provisions of the Sole Circular for Issuers of Securities issued by the Mexican National
Banking and Securities Commission (Commission) for multiple purpose financial entities whose debt
securities are listed in the Mexican Stock Exchange, that must prepare its financial statements in
compliance with the rules and accounting practices established by the Commission in the "Accounting
Criteria for Regulated Multiple Purpose Financial Entities " contained in the "General Provisions applicable
to Regulated Multiple Purpose Financial Entities".
These condensed consolidated interim financial statements as of March 31, 2015 and for the three months
period ended March 31, 2015 and 2014 have not been audited. In the opinion of the Company’s
management, all adjustments (consisting mainly of ordinary, recurring adjustments) necessary for the
presentation of the accompanying unaudited condensed consolidated financial statements were included.
The results of the periods are not necessarily indicative of the results of the full year. These unaudited
condensed consolidated financial statements should be read in conjunction with the audited financial
statements of the Company and the respective notes for the year ended December 31, 2014.
The accounting policies adopted are consistent with those of the previous financial year except for taxes on
income in the interim periods which are accrued using the tax rate that would be applicable to expected
total annual net income or loss.
The unaudited consolidated financial statements are presented in Mexican pesos, which is the Company´s
reporting, recording and functional currency.
Financial statements authorization
The accompanying unaudited condensed consolidated interim financial statements as of March 31, 2015
and for the three-months period ended March 31, 2015 and 2014 and the notes thereto, were authorized for
their issuance on May 11, 2015 by Mr. Luis Gerardo Barroso, Chief Executive Officer, Mr. Gerardo Mier y
Terán, Chief Financial Officer and Ms. Sandra Molina Hernandez, General Accountant.
F-63
and Subsidiaries
March 31, 2015 and 2014
Note 3 - Loan portfolio:
The classification of performing and past due loans as of March 31, 2015 and December 31, 2014 is shown
as follows:
2015
Commercial loans:
Operating lease rentals
Financial factoring *
Other lending *
$
Consumer loans:
Car loans
Other lending
434,309
1,283,359
1,351,121
2014
$
295,870
1,294,737
1,177,013
3,068,789
2,767,620
256,077
657
232,771
3,914
256,734
236,685
3,325,523
3,004,305
84,938
-
70,152
-
84,938
70,152
$ 3,410,461
$ 3,074,457
Past due portfolio
Commercial loans:
Operating leases
Financial factoring
Total loan portfolio
*
Includes balances with related parties
As of March 31, 2015 and December 31, 2014 the maturity of the total past due portfolio is as shown below:
March 31, 2015
Past due portfolio maturity
Type of portfolio
1 to 180
181 to 365
Total
Operating leases
$ 43,476
$ 41,462
$ 84,938
F-64
and Subsidiaries
March 31, 2015 and 2014
December 31, 2014
Past due portfolio maturity
Type of portfolio
1 to 180
181 to 365
Total
Operating leases
$ 33,605
$ 36,547
$ 70,152
Income from interest, rentals and commissions for the three months ended March 31, 2015 and 2014,
according to the type of loan is as shown below:
March 31, 2015
Current portfolio:
Interests
Rentals
Commissions
Total
Operating leases
Financial factoring
Other lending
Car loans
$
46,834
4,417
1,818
$ 1,192,599
-
$ 22,260
11,362
584
$1,214,859
58,196
4,417
2,402
$ 53,069
$ 1,192,599
$ 34,206
$1,279,874
March 31, 2014
Current portfolio:
Interests
Operating leases
Financial factoring
Other lending
Car loans
$
Rentals
Commissions
Total
29,602
21,745
6,626
$ 803,624
-
$ 15,362
8,395
803
$ 818,986
37,997
21,745
7,429
$ 57,973
$ 803,624
$ 24,560
$ 886,157
F-65
and Subsidiaries
March 31, 2015 and 2014
As of March 31, 2015 and December 31, 2014, the portfolio rating and the allowance for loan losses includes
the contractual collection rights due in future periods recorded in memorandum accounts, as follows:
March 31, 2015
Loan portfolio
Global allowance for loan losses
Risk
%
A-1
A-2
B-1
B-2
B-3
C-1
C-2
D
E
80.19
1.06
4.34
7.63
4.81
0.75
1.22
-
$ 2,734,624
36,176
148,044
260,231
164,074
25,634
41,677
-
100.00
3,410,460
32,605
9,400,561
47,003
$ 12,811,021
$ 79,608
Memorandum accounts
Amount
Allowance (%)
0 a 0.50
0.51 a 0.99
1.00 a 4.99
5.00 a 9.99
10.00 a 19.99
20.00 a 39.99
40.00 a 59.99
60.00 a 89.99
90.00 a 100.00
Amount
$ 25,641
214
876
1,723
3,756
149
246
.
December 31, 2014
Loan portfolio
Global allowance for loan losses
Risk
%
A-1
A-2
B-1
B-2
B-3
C-1
C-2
D
E
82.53
16.90
0.13
0.20
0.11
0.13
$ 2,537,342
519,536
4,113
6,256
3,262
3,948
100.00
3,074,457
30,570
8,413,812
42,069
$ 11,488,269
$ 72,639
Memorandum accounts
Amount
Allowance (%)
F-66
0 a 0.50
0.51 a 0.99
1.00 a 4.99
5.00 a 9.99
10.00 a 19.99
20.00 a 39.99
40.00 a 59.99
60.00 a 89.99
90.00 a 100.00
Amount
$ 12,685
13,545
41
625
1,305
2,369
and Subsidiaries
March 31, 2015 and 2014
The roll-forward of the allowance for loan losses roll-forward is as follows:
March 31,
2015
2014
Balances at the beginning of the year
Write offs
$ 88,122
(153)
$ 120,251
(782)
Balances at March 31
$ 87,969
$ 119,469
As of March 31, 2015 and December 31, 2014, the behavior of the coverage of the allowance for loan losses
in accordance with the Company’s best estimate is shown as follows:
2015
2014
Allowances for loan losses recorded
Allowances for loan losses required
$ 87,969
79,608
$ 88,122
72,639
Excess over allowance for loan losses
$
8,361
$ 15,483
Past due portfolio hedge
103.57%
125.61%
As of March 31, 2015 the total of future minimum lease payments under non-cancellable operating leases,
is as follows:
Amount
Up to one year
Two years
Three years
Four years
5,913,997
2,200,551
1,133,732
152,281
Total
9,400,561
F-67
and Subsidiaries
March 31, 2015 and 2014
Note 4 - Property, machinery and equipment for own use and offered on lease:
As of March 31, 2015 and December 31, 2014, property, machinery and equipment were comprised as
follows:
Building (*)
Aircraft/Ships
Computer equipment
Medical equipment
Satellite equipment
Luminaries
Telecommunication
Other
Less:
Cumulative depreciation
Cumulative amortization
December 31,
2014
March 31, 2015
Own
$150,304
74,364
21,096
108
26,622
10,993
Leased
$
3,464,927
960,186
295,889
8,295,613
143,823
20,917
226,967
38,158
464,285
657,345
Total
$
150,304
3,539,291
960,186
316,985
8,295,721
170,445
20,917
226,957
38,158
464,285
668,340
Total
$
200,385
3,338,837
924,652
266,609
7,100,782
144,272
16,976
226,967
62,296
386,747
540,171
283,487
14,568,111
14,851,599
13,208,694
(73,633)
(4,326,969)
(4,400,602)
(3,902,457)
209,854
10,241,142
10,450,957
9,306,237
55,271
(13,454)
-
55,271
(13,454)
50,647
(12,788)
41,817
-
41,817
37,859
251,671
10,241,142
10,492,813
9,344,096
315,942
-
315,942
266,581
$10,808,755
$ 9,610,677
Useful life
(Years)
20
5
10 and 20
3.3
5 and 10
10
20
20
20
20
10 and 20
20
Components no subject to
Land
and equipment
$567,613
$10,241,142
Depreciation and amortization recorded in the income statement for the three months ended March 31,
2015 and 2014 amounted to $662,148 ($655,709 for assets under operating leases) and $489,212
($483,458 for operating leases), respectively.
As of March 31, 2015 and December 31, 2014, the transportation equipment offered on lease and other
leased assets amounting to $8,044,584 and $5,769,375, respectively, were pledged to guarantee the
payment of each collection rights under trusts.
F-68
and Subsidiaries
March 31, 2015 and 2014
Note 5 - Debt securities:
Debt securities as of March 31, 2015 and December 31, 2014 are as follows:
2015
Short term:
Senior notes (accrued interest)
Trust notes under a revolving securitization program (accrued interest)
Private trust bonds (accrued interest)
Long term:
Senior notes
Private trust bonds
$
66,652
11,097
1,861
2014
$
161,398
3,356
1,837
79,610
166,591
5,587,974
4,000,000
2,000,000
5,887,200
2,766,667
1,321,899
11,587,974
9,975,766
$ 11,667,584
$ 10,142,357
Senior Notes
In July 2014, the Company issued Senior Notes through a private offering pursuant to Rule 144A and
Regulation S under the Securities Act 1933 of the United States and applicable regulations of the countries
in which such offer was made for an amount of USD$ 400,000,000 at an annual agreed interest rate of
6.25%.
During January 2015, the Company repurchased 33,400 of its Senior Notes titles, equivalent to 8.35% of its
debt issuance of July 22, 2014, generating an additional income of $82,171 which was recognized in
financial intermediation results. With this transaction, the Company has covered 100% of its exposure to
foreign exchange rate risk related to these Senior Notes with derivative financial instruments. This
transaction was carried out between the Company and a third party, based in the United States.
Commitments
The Senior Notes debt impose on the Company certain provisions that limit its ability to incur additional
debt, create liens, pay dividends, make certain investments, reduce its share capital, among others. It also
establishes that the Company and its subsidiaries may partially or totally merge or dispose of their assets if
the respective transaction meets certain requirements; establishes minimum requirements for carrying out
portfolio securitizations and limit the ability of the Company to enter into transactions with related parties.
F-69
and Subsidiaries
March 31, 2015 and 2014
The secured notes programs as of March 31, 2015 are detailed below:
Ticker
symbol
UNIFCB12
UNIFINCB13
UNIFINCB15**
Issuing
trust
Number of
titles*
Maturity
Rate
(%)
F/306592
F/17293-4
F/17598-4
10,000,000
10,000,000
20,000,000
May 2017
Nov 2018
Feb 2020
TIIE +1.60
TIIE +1.60
TIIE +1.60
Outstanding
amount
$ 1,000,000
1,000,000
2,000,000
Rating
S&P
Trustee
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
HSBC
Banamex
Banamex
4,000,000
11,097
$ 4,011,097
*
Secured notes with a par value of $100 each.
**
On February 9, 2015, the Company issued in the Mexican market its tenth securitization, with a term of 5 years,
with revolving period of three years. The proceeds from this issuance were used mainly to prepay short-term and
long-term financial liabilities by an amount of Ps1,645,932.
Ticker
symbol
Issuing
trust
Number of
titles*
UNIFCB11-2
UNIFCB12
UNIFINCB13
F/304743
F/306592
F/17293-4
766,667
10,000,000
10,000,000
Maturity
Rate
(%)
Nov 2016
May 2017
Nov 2018
TIIE +1.65
TIIE +1.60
TIIE +1.60
$
Outstanding
amount
Rating
S&P
766,667
1,000,000
1,000,000
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
mxAAA S&P/HR AAA
Trustee
HSBC
HSBC
Banamex
2,766,667
3,356
$ 2,770,023
*
Secured notes with a par value of $100 each.
Private trust bonds
As of March 31, 2015 and December 31, 2014, private trust bond is detailed as follows:
Disposed amount
March 31,
2015
Invex
Interest accrued
in the short term
$
2,000,000
December, 31
2014
$
1,861
$
2,001,861
1,321,889
Currency
MXN
1,837
$
1,323,726
F-70
Maturity
Nov-06-12 to Nov-21-18
Rate
TIIE+1.60
Type of
guarantee
Receivables
and Subsidiaries
March 31, 2015 and 2014
As of March 31, 2015 and December 31, 2014, the Company is in compliance with all of the restrictive
financial covenants.
Note 6 - Bank borrowings and loans from other entities:
As of March 31, 2015 and December 31, 2014, bank borrowings and loans from other entities are comprised
as follows:
March 31, 2015
Short term:
Nafinsa
IXE
Banco Invex
Scotia Bank
Comerica Bank
CIBanco
Outstanding
amount
Currency
$ 1,500,000
200,000
113,941
2,259
155,400
100,000
MXN
MXN
MXN
MXN
MXN
MXN
Sep/08/14 to Apr/23/15
Feb/14/15 to Feb/14/16
Mar/19/15 to Mar/19/16
Jan/15/15 to Jan/15/16
Nov/22/13 to Mar/10/16
Dic/09/14 to Mar/09/16
6,250
MXN
May/28/13 to May/15/15 TIIE+2.4%
Residual values
Maturity
Rate
TIIE+2.75
TIIE+3.50
TIIE+3.75
TIIE+2.75
LIBOR+3.50
TIIE+4.50
Guarantee
Unsecured
Unsecured
Unsecured
Unsecured
Unsecured
Unsecured
2,077,850
Total short term
5,615
2,083,465
Long term:
Scotiabank
Exterior, S. N. C.
Eximbank
492,220
MXN
Jan/28/13 to Apr/17/17
TIIE+3.75
Leasing portfolio
101,003
20,269
24,803
MXN
UDI
USD
Mar/19/14 to Apr/13/18 TIIE+2.75
Feb/02/13 to Feb/01/17 TIIE+1.95
Jan/24/12 to Jun/25/16 3.13%
Unsecured
Leasing portfolio
Mortgage
Total long term
638,295
$ 2,721,760
F-71
and Subsidiaries
March 31, 2015 and 2014
2014
Short term:
Nafinsa
Ixe
Comerica Bank
CIBanco
Outstanding
amount
Currency
$ 1,500,000
300,000
145,000
100,000
MXN
MXN
MXN
MXN
Sep/08/14 to Apr/23/15
Dic/11/14 to Feb/13/15
Nov/22/13 to Mar/10/15
Dic/09/14 to Mar/09/15
TIIE+2.75
TIIE+3.50
LIBOR+3.50
TIIE+4.50
12,500
MXN
May/28/13 to May/15/15
TIIE+2.4%
Maturity
Rate
Guarantee
Unsecured
Unsecured
Unsecured
Unsecured
Residual values
2,057,500
4,230
Total short term
2,061,730
Long term:
Scotiabank
Exterior, S. N. C.
Eximbank
233,460
MXN
Jan/28/13 to Apr/17/17
TIIE+3.75
Leasing portfolio
109,497
25,722
24,089
MXN
UDI
USD
Mar/19/14 to Apr/13/18 TIIE+2.75
Feb/02/13 to Feb/01/17 TIIE+1.95
Jan/24/12 to Jun/25/16 3.13%
Unsecured
Leasing portfolio
Mortgage
Total long term
392,768
$ 2,454,498
As of March 31, 2015 and December 31, 2014, the Company is in compliance with all of the restrictive
financial covenants.
Note 7 - Stockholders’ equity:
The capital stock as of March 31, 2015 and December 31, 2014 is comprised as follows:
Shares*
10,000
*
Description
Series “A”: comprising the fixed portion of
capital with no withdrawal rights
Amount
$
1,000
6,990,000
Series “A” Class II: comprising the variable portion of capital
with withdrawal rights
699,000
1,750,000
Series “B”: comprising the variable portion of
of capital with withdrawal rights
175,000
8,750,000
Capital stock as of March 31, 2015 and December 31, 2014
$875,000
Common, nominal shares with a par value of Ps100 each, fully subscribed and paid in.
The profit for the year is subject to the legal provision requiring that at least 5% of the profit be set aside to
increase the legal reserve until it reaches an amount equivalent to one fifth of the capital stock.
F-72
and Subsidiaries
March 31, 2015 and 2014
Dividends
At an extraordinary Stockholders’ Meeting held on February 20, 2015, the stockholders agreed to pay
dividends of $100,000 from retained earnings.
Earnings per share
Earnings per share for the three months ended March 31, 2015 and 2014 are shown below:
2015
2014
Net profit
Outstanding number of ordinary shares
$
357,913
8,750,000
$
82,171
2,750,000
Basic profit per share (pesos)
$
40.90
$
29.88
Note 8 - Income Tax:
The Income tax provision for the three months ended March 31, 2015 and 2014 is as follows:
Current income tax
Deferred Income tax
2015
2014
$ 179,049
(41,919)
$ 62,824
(11,567)
$ 137,130
$ 51,257
27.70%
38.42%
Effective income tax rate
Note 9 - Financial information per segment:
Following are shown the main assets and liabilities per Company segments:
March 31, 2015
Assets
Cash and cash equivalents *
DFI
Loan portfolio
Fixed assets
Foreclosed assets
Other assets
Operating
lease
Financial
factoring
Other
loans
Total
$ 1,112,375
1,138,301
519,247
(64,095)
10,484,165
158,643
1,195,557
$ 145,200
1,283,359
(10,070)
12,113
$ 191,876
1,607,855
(13,804)
324,590
150,849
$ 1,449,451
1,138,301
3,410,461
(87,969)
10,808,755
158,643
1,358,519
$14,544,193
$1,430,602
$2,261,366
$18,236,161
F-73
and Subsidiaries
March 31, 2015 and 2014
March 31, 2015
Operating
lease
Financial
factoring
Other
loans
$10,123,049
481,443
61,114
156,375
581,687
$
2,240,317
12,652
$1,544,534
1,241,715
$11,667,584
2,721,760
61,114
156,375
1,836,054
$11,403,668
$2,252,969
$2,786,249
$16,442,887
Total
Liabilities
Debt securities
Guarantee deposits
Other liabilities
December 31, 2014
Operating
leasing
Financial
factoring
Other
lending
$
21,698
1,294,737
(10,070)
10,613
$ 126,464
1,413,698
(13,803)
325,420
132,173
$
$ 12,047,174
$1,316,978
$1,983,952
$15,348,104
$ 8,728,659
1,159,759
61,378
133,347
323,519
$
1,294,739
7,037
$1,413,698
690,607
$10,142,357
2,454,498
61,378
133,347
1,021,163
$ 10,406,662
$1,301,776
$2,104,305
$13,812,743
Assets
DFI
Loan portfolio
Fixed assets
Foreclosed assets
Other assets
$
425,570
856,426
366,022
(64,249)
9,285,257
130,611
1,047,537
Total
573,732
856,426
3,074,457
(88,122)
9,610,677
130,611
1,190,323
Liabilities
Debt securities
Guarantee deposits
Other liabilities
*
Cash and cash equivalents is not distributed by the Company in segments
F-74
and Subsidiaries
March 31, 2015 and 2014
Following are shown the main incomes and expenses per Company segments:
March 31, 2015
Operating
lease
Interest income
Interest expenses
Commissions and fees collected
Financial
factoring
$ 1,205,780
41,963
177,225
(655,709)
(214,252)
(183,798)
(16,749)
242,146
7,298
$
46,884
(37,747)
-
$
$
9,137
603,904
Other
loans
Total
$
27,950
(24,736)
10,533
1,604
$ 1,205,780
116,797
177,225
(655,709)
(276,735)
(183,798)
(6,216)
242,146
8,902
$ 15,351
$
628,392
March 31, 2014
Operating
lease
Interest income
Interest expenses
Commissions and fees collected
$
$
803,624
42,099
86,003
(483,458)
(141,856)
(96,090)
(7,575)
2,454
3,527
208,728
F-75
Financial
factoring
$
38,055
(22,095)
-
$ 15,960
Other
loans
$
29,791
(21,096)
292
Total
$
803,624
109,945
86,003
(483,458)
(185,047)
(96,090)
(7,283)
2,454
3,716
$
233,864
189
$ 9,176
and Subsidiaries
March 31, 2015 and 2014
Note 10 - Related parties:
The Company is subsidiary of Unifin Corporativo, who, besides buying shares described in Note 1, provides
administrative services.
Balances with related parties at March 31, 2015 and December 31, 2014 are shown below:
Receivables:
2015
2014
Cabos Marinos
Executives
Aralpa Capital, S. A. de C. V.
Administración de Flotillas, S. A. de C. V.
Unifin Capital
Brios Sureste, S. A. de C. V.
$ 42,395
$ 48,800
-
2,200
494
864
384
20
2,200
578
587
158
20
Total
$ 46,358
$ 52,343
Unifin Capital
$ 2,291
175
50
$ 2,291
175
50
Total
$ 2,516
$ 2,516
Payables:
During the three months period ended March 31, 2015 and 2014, the following operations, in addition to
the related loans, were carried out with related parties:
Income
2015
Interest earned
Car leases
Other Income
Car sales
$
2014
1,039
550
-
$ 33,142
138,600
770
.
$ 1,589
$172,512
$ 90,120
600
-
$ 53,314
300
350
$ 90,720
$ 53,964
Expenses
Reimbursement of expenses
Donations
Other services
F-76
and Subsidiaries
March 31, 2015 and 2014
See Note 1, Activity of the Company for information about transactions between the Company and its
parent entity.
Note 11 - New accounting pronouncements:
During 2014 the Commission issued the following new Accounting Criteria applicable to multiple purpose
financial entities, which became effective on January 1, 2015:
x Criterion A-2 "Application of particular standards”: names are updated and MFRS that are applicable to
the Company are added.
x Criterion B-6 "Loan Portfolio": certain concepts are described with more detail.
x Criterion C-2 "Securitization transactions": provides specifications for the securitization vehicles made
prior to January 1, 2009, and requires the possible effects should be properly disclosed.
x Criterion C-3 "Related parties": the concepts of "joint control arrangements", "control", "joint control",
"controlling entity", "significant influence" and "subsidiary" are amended to align the concepts with
applicable MFRS.
x Criterion D-1 "Balance Sheet": classifications to the category of "housing loans", "traditional capture",
and "memorandum accounts" are added.
The CINIF issued the following Improvements to the MFRS effective beginning January 1, 2015:
x MFRS B-8 "Consolidated or combined financial statements". Guidance included to identify investment
entities and guide them to understand their primary activity and its main characteristics.
x Statement C-9 "Liabilities, provisions, contingent assets and liabilities and commitments". Established
the accounting treatment of advances from customer’s liabilities for the sale of goods or services for
which recovery is denominated in foreign currency.
Additional Accounting Criteria, MFRS and Improvements to MFRS will become effective in the following
years; The Company considers that the above-mentioned Accounting Criteria and MFRS, and those
effective subsequently will not have significant effects on the financial information presented.
Note 12 - Subsequent events:
1. Regarding the transaction to sell 25% of the shareholding of Unifin Agente to a third party for an
amount of $88,240 (See Note 1), on April 2015, both parties have agreed to make an extension of 60
days to receive such payment, and accordingly, the corresponding payment will be made at the end of
June 2015.
2. In the Extraordinary Shareholders Meeting held on April 13, 2015, the merger of the Company with
Unifin Capital was approved. The Company subsisted as the merging entity; and therefore, pursuant to
the Mexican General Law of Corporations and to the terms and conditions set in the Merger Agreement
between the parties, the Company assumed all rights and obligations of Unifin Capital as of this date.
This merger took place based on unaudited financial information as of March 31, 2015 of the Company
and Unifin Capital.
Shares and nominal amount of the capital stock of the Company did not suffer any changes after the
merge.
F-77
ANNEX A:
SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN
SOFOM GAAP AND U.S. GAAP
Our Financial Statements are prepared and presented in accordance with Sofom GAAP as prescribed by the
CNBV. See Note 2 to our Financial Statements. Certain differences exist between Sofom GAAP and accounting
principles generally accepted in the United States of America, or U.S. GAAP, which would be material to the
financial information contained herein if reported under U.S. GAAP. The matters described below summarize those
differences. We have not prepared a reconciliation of our Financial Statements and related footnote disclosures,
appearing in the offering memorandum, from Sofom GAAP to U.S. GAAP and we have not quantified those
differences. Accordingly, no assurance is provided that the following summary of differences is complete. In
making an investment decision, investors must rely upon their own examination of us, the terms of the offering and
the financial information. Potential investors should consult their own professional advisors for an understanding of
the differences between Sofom GAAP and U.S. GAAP, and how those differences might affect the financial
information herein.
Accounting for the Inflation Effects
Mexico
Through December 31, 2007, Sofom GAAP required that the comprehensive effects of inflation be
recorded in the financial information and that such Financial Statements be restated to present constant pesos as of
the latest balance sheet date presented. Beginning January 1, 2008, Sofom GAAP modified the accounting for
inflationary effects and defines two economic environments: an “inflationary environment” and a “non-inflationary
environment.” An “inflationary environment” is one in which the cumulative inflation of the three preceding years
is 26.0% or more, in which case the comprehensive effects of inflation should be recognized in financial
information; a “non-inflationary environment” is one in which the cumulative inflation of the three preceding years
is less than 26%, in which case, no inflationary effects should be recognized in financial information. Since 2008,
Mexico is considered to be a non-inflationary economy.
United States
Under U.S. GAAP, companies are generally required to prepare financial statements on a historical cost
basis. Specific rules and regulations established by the SEC allow for companies to maintain the effects of inflations
in its reconciliation from local GAAP to U.S. GAAP for companies registering securities with the SEC for sale in
the United States, when, for local purposes, such company prepares comprehensive price-level adjusted financial
statements, as required or permitted by their home-country GAAP. This is because the SEC recognizes that
presentation of price-level adjusted financial information in inflationary economies is more meaningful than
historical-cost based financial reporting.
Preoperating Costs
Mexico
Through December 31, 2002, under Sofom GAAP, preoperating costs incurred were permitted to be
capitalized and amortized by us over the period of time estimated to generate the income necessary to recover such
costs. Beginning January 1, 2003, only preoperating costs incurred during the development stage are capitalized and
all other preoperating costs are expensed as incurred; previously capitalized amounts are permitted to continue to be
amortized through December 31, 2008. Beginning January 1, 2009, any remaining unamortized preoperating costs
must be written off against retained earnings.
United States
Under U.S. GAAP, preoperating costs should be treated as period expenses and are not capitalized.
A-1
Labor Obligations
Mexico
Under Sofom GAAP, with respect to recognition of liabilities for post-retirement benefits, entities are
permitted to defer the recognition of unrecognized items (such as variations in actuarial assumptions, prior service
costs and plan amendments and transition assets or liabilities) and amortize such amounts into the liability over a
specified period of time.
United States
Under U.S. GAAP, the accounting for defined benefit post-retirement benefit plans, which include seniority
premiums within Mexico, was amended in 2006 such that an employer is required to recognize the overfunded or
underfunded status of a defined benefit postretirement plan (other than a multi-employer plan). Accordingly, the
related asset or liability should be equal to the projected net liability less any plan assets, such that all unrecognized
items are recognized as part of the liability, with an offsetting charge or credit through other comprehensive income.
Deferred Income Tax and Statutory Employee Profit Sharing
Mexico
Sofom GAAP is similar to U.S. GAAP with respect to accounting for deferred income taxes in that an asset
and liability approach is required. Under Sofom GAAP, deferred tax assets must be reduced by a valuation
allowance if it is “highly probable” that all or a portion of the deferred tax assets will not be realized. The
determination of the need for a valuation allowance must consider future taxable income and the reversal of
temporary taxable differences. Net deferred income tax assets or liabilities are presented within long-term assets or
liabilities.
Through 2013, Mexican entities were subject to a dual tax system which included the regular income tax,
or ISR, and the Flat Tax. For Sofom GAAP purposes, companies must determine whether they are principally
subject to regular income tax or Flat Tax in the future and recognize deferred taxes accordingly. If a company
determines, based on of projections of future taxable income, that it will be both subject to Flat Tax and ISR in the
future, the company is required to schedule out the reversal of temporary differences under each tax regime and
record the amount that represents the larger liability or the smaller benefit. As a result of the repeal of the Flat Tax
tax enacted during 2013, companies are required to eliminate all existing Flat Tax deferred taxes and record deferred
taxes arising from ISR with the net effect recognized to earnings.
Under Sofom GAAP, through 2007, deferred employee profit sharing is recognized only for timing
differences arising from the reconciliation between accounting and taxable income for employee profit sharing
purposes, for which it may be reasonably estimated that a future liability or benefit will arise and there is no
indication that the liability will not be paid or the benefits will not be realized. Effective January 1, 2008, Sofom
GAAP was modified such that it now requires a balance sheet methodology for determining deferred employee
profit sharing, similar to that used for deferred income taxes.
Sofom GAAP allows the recognition of a net statutory employee profit sharing asset.
United States
Under U.S. GAAP, deferred income taxes are also accounted for using the asset and liability approach. A
valuation allowance is recognized to reduce the value of deferred tax assets to the amount that, based on the weight
of all positive and negative available evidence, is “more likely than not” to be realized. In order to make this
determination, entities must consider future reversals of taxable temporary differences, future taxable income,
taxable income in prior carryback years and tax planning strategies. Additionally, if a company has experienced
recurring losses, little weight, if any, may be placed on future taxable income as objective evidence to support the
A-2
recoverability of a deferred income tax asset. Deferred tax assets and liabilities must be classified as current or
long-term under U.S. GAAP depending on the classification of the asset or liability to which the deferred relates.
Under U.S. GAAP, through 2012, companies must determine whether they will be principally subject to
regular income tax or Flat Tax and recognize deferred taxes accordingly. However, companies that are unable to
conclude whether they will be principally subject to Flat Tax and ISR in the future may be required to apply a hybrid
approach in which deferred taxes arising from both regular income tax and Flat Tax are recognized. Similar to
Sofom GAAP, companies replaced all existing Flat Tax deferred taxes with ISR deferred taxes during 2013 in
connection with the repeal of the Flat Tax.
U.S. GAAP also requires the use of the balance sheet methodology when calculating deferred employee
profit and requires that a related liability be recorded for all temporary differences. U.S. GAAP does not allow the
recognition of net deferred employee profit sharing assets.
Impairment of Long-Lived Assets in Use
Mexico
Under Sofom GAAP, long-lived assets with definite lives, such as property, machinery and equipment, are
evaluated periodically in order to determine if a potential impairment indicator exists. The calculation of
impairment losses requires the determination of the recoverable value of the assets. Recoverable value is defined as
the greater of the net selling price of a cash generating unit and its value in use. Value in use is the present value of
discounted future net cash flows.
In addition, under certain limited circumstances, the reversal of previously recognized impairment losses is
permitted. Any recorded impairment losses are presented as non-ordinary expenses.
United States
U.S. GAAP requires that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of an
asset is not recoverable when the estimated future undiscounted cash flows expected to result from the use of the
asset are less than the carrying value of the asset. Impairment losses are measured as the difference between the
carrying value of the asset and its fair value. Any impairment loss recorded for an asset to be held and used
establishes a new cost basis and, therefore, cannot be reversed in the future. Impairment losses are classified within
operating expenses in the statement of income.
Fair Value of Financial Instruments
Mexico
Sofom GAAP defines fair value as the amount an interested and informed market participant would be
willing to exchange for the purchase or sale of an asset or to assume or settle a liability in a free market. This
definition can consider either an entry or an exit price.
United States
U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. This definition only
considers an exit price. Consideration must be given to the principal and most advantageous market and the highest
and best use of the asset.
Furthermore, U.S. GAAP establishes a three-level hierarchy to be used when measuring and disclosing fair
value in a company’s financial statements. Categorization within the fair value hierarchy is based on the lowest
level of significant input to its valuation. The following is a description of the three hierarchy levels:
A-3
•
Level 1 — Quoted prices for identical instruments in active markets.
•
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations in which all significant inputs and
significant value drivers are observable in active markets.
•
Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
Mexico
Sofom GAAP requires a specific methodology to determine the allowance for loan losses, which takes into
account specific criteria for the financial sector defined by the CNBV, that takes into consideration the value of the
loan, the credit rating of the borrower (including country, financial and industry risk and payment experience) and
any credit enhancements. Based on these factors, the CNBV prescribes a range of loss percentages that are to be
applied to the value of the loan in order to determine the amount of the loan loss to be provisioned. Loan loss
percentages are calculated by the CNBV based on either an expected loss model or an incurred loss model
depending on the classification of the loan.
United States
U.S. GAAP establishes that for larger, non-homogeneous loans, once an entity determines that a loan is
impaired (meaning that it is probable that the entity will be unable to collect all amounts due (both principal and
interest) according to the contractual terms of the loan agreement), the entity shall measure impairment based on the
present value of expected future cash flows discounted at the loan’s effective interest rate. The estimates
surrounding credit losses for U.S. GAAP purposes are based on an incurred loss model. For practical purposes,
entities may also measure impairment based on a loan’s observable market price, or the fair value of the collateral if
the loan is collateral dependent. Fair value of the collateral must be used when foreclosure is deemed probable.
For smaller-balance homogeneous loans, entities should collectively evaluate the loans for impairment,
using a formula based on various factors to estimate an allowance for loan losses, including past loss experience,
recent economic events and current conditions, geographical concentrations and portfolio delinquency rates.
A-4
ISSUER
Unifin Financiera, S.A.B. de C.V., Sociedad Financiera de Objeto Múltiple, Entidad No Regulada
Presidente Masaryk No. 111-5
Col. Polanco
11560, Distrito Federal
México
INDEPENDENT AUDITORS
PricewaterhouseCoopers, S.C.
Mariano Escobedo 573
Colonia Rincón del Bosque
11580 México, Distrito Federal
México
LEGAL ADVISORS TO THE ISSUER
As to U.S. Law
As to Mexican Law
Paul Hastings LLP
75 East 55th Street
New York, New York 10022
United States of America
Mancera, S.C.
Prol. Paseo de la Reforma 600-201
Colonia Santa Fe Peña Blanca
México
LEGAL ADVISORS TO THE INITIAL PURCHASERS
As to U.S. Law
As to Mexican Law
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
United States of America
Ritch, Mueller, Heather y Nicolau, S.C.
Blvd. M. Ávila Camacho No. 24, Piso 20
Colonia Lomas de Chapultepec
México
112,000,000 Common Shares
15JUL201418055399
Unifin Financiera, S.A.B. de C.V.,
Sociedad Financiera de Objeto Múltiple,
Entidad No Regulada
Global Coordinator and Joint Bookrunner
Credit Suisse
Joint Bookrunners
Citi
UBS Investment Bank
Co-Manager
Scotiabank

Unifin Financiera, SAPI de CV, Sociedad Financiera de Objeto

Transcription

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