Earnings Release 4Q16

Transcription

1 Monterrey, Mexico, May 4th, 2017 Grupo Famsa, S.A.B. de C.V. (BMV: GFAMSA), a leading Mexican commercial conglomerate in the retail, consumer credit and savings sectors, announced today its earnings results for the fourth quarter These audited financial statements have been prepared in accordance with IFRS and the interpretations in effect as of December 31, Figures are expressed in millions of current, nominal Mexican pesos, unless otherwise stated. Recent Developments On January 26, 2017, Grupo Famsa reported advances in the execution process of the guarantee granted by Mr. Humberto Garza Gonzalez and his real estate companies in December It is expected this process to be completed in April 2017 (prior to the originally established term), with the establishment of a guaranty trust and a management and payment source trust, thus enhancing the guarantee for the full amount of the accounts receivable. In addition, it was announced Grupo Famsa s management team and Mr. Garza have made advancements over the last few months in defining an action plan for monetizing the real estate properties to be incorporated in the guaranty trust. To this date, buy-sell transactions of 8 properties located in San Luis Potosi, Edo. Mexico, Tamaulipas, Chihuahua and Nuevo Leon are in process of titling, jointly amounting to Ps.570 million expected proceeds, which will be used to amortize liabilities with short-term maturity. Furthermore, there are 7 buy-sell transactions in final stage of negotiation, which jointly reach Ps.805 million. The execution of these transactions will be informed to the market in a timely manner. Financial Highlights Grupo Famsa Famsa Mexico Banco Famsa Famsa USA Grupo Famsa s Consolidated Net Sales grew by 11.3% YoY in 4Q16, contributing to the annual growth of 9.5% during Consolidated EBITDA accumulated as of December 31, 2016 was Ps.1,411 million due to the deferral recognition between expenses and income related to payroll credit origination and non-recurring severance expenses recognized in Consolidated participation of clients from the formal sector of the economy increased from 54.7% at the end of 2015 to 61.0% by December 31, Famsa Mexico s SSS rose 10.3% YoY in 4Q16 and 8.2% YoY in The contribution in sales of Personal Loans, Electronics and Mobile Phones stood out in the sales mix during The Non-Performing Loans ratio (NPL) was 8.5% in 4Q16, 30 bps. below than that of 3Q16 Bank Deposits as of December 31, 2016 were 14.7% above 2015, with 89.0% of term deposits, amounting to Ps.21,063 million. Famsa USA s Net Sales in USD decreased 7.5% YoY during 2016 derived from political uncertainty arising from the new federal administration in the U.S. Famsa USA s Net Sales in MXP rose 11.8% YoY in 2016, excluding exchange rate effects. Consolidated results 4T16 4T15 % % Net Sales 4,896 4, % 17,544 16, % Cost of Sales (2,926) (2,868) (2.0%) (9,724) (8,967) (8.4%) Gross Profit 1,970 1, % 7,819 7, % Operating Expenses (1,994) (1,962) 1.6% (7,051) (6,562) (7.4%) Other Income, net (80.9%) (64.3%) Operating Profit (40.6%) 994 1,124 (11.6%) EBITDA (48.1%) 1,411 1,670 (15.5%) Net (Loss) Income (99) (103) 4.1% % Gross Margin 40.2% 34.8% % 44.0% - EBITDA Margin 3.8% 8.0% - 8.0% 10.4% - Net Margin (2.0%) (2.3%) - 2.0% 0.9% - 1 / 15

2 MESSAGE FROM THE CEO Grupo Famsa steps into 2017 focused on achieving greater efficacy in its operating and business structure, seeking to boost its profitability and operating cash flow generation during the year amid a challenging environment. Among our most important initiatives are the following: i) higher payroll credit origination belonging to the formal economy aimed at strengthening the credit portfolio against adverse economic cycles and mitigating credit risk; and, ii) the execution of an operating expense reduction program in both Mexico and the U.S. which will generate estimated savings of Ps.240 million at year-end, allowing us to counteract inflationary pressures. Furthermore, we will pursue a more efficient network of stores by carrying out selective closings of retail stores and banking branches in Mexico as well as retail stores in the United States, coupled with the execution of a conservative CAPEX program oriented to maintenance-only purposes. No new store openings are considered for The strategy already implemented during January of this year is a continuation of Grupo Famsa s solid operating year in 2016, recording a 9.5% increase in Net Consolidated Sales during the year. This is a result of stronger brand loyalty and the successful execution of marketing campaigns that allowed us to capitalize on higher demand, particularly in Mexico. Regarding our operations in Mexico, we achieved an outstanding performance with Net Sales increasing by 9.2% during 2016, mainly driven by Personal Loans and the Mobile Phones, Electronics and Appliances categories, as well as by the commercialization of Seasonal Goods during the summer and Christmas seasons. Payroll credits origination also increased, representing 29.5% of Grupo Famsa s consolidated portfolio as of December 31, 2016 vs. 22.4% in On the other hand, bank deposits at year-end amounted to Ps.21,063 million, increasing by 14.7% when compared to last year with a funding cost of 4.5%. Separately, the NPL ratio reached 8.5% as of December 31, 2016, 130 bps. below 2015, reflecting the correct direction of our strategies aimed at increasing our credit portfolio profile. Finally, the dynamism of Famsa USA s Net Sales has been negatively impacted due to the uncertainty prevailing in the U.S. because of the new federal administration. During 2016 Famsa USA recorded a decrease in Net Sales of 7.5% YoY; excluding exchange rate effects, Net Sales rose 11.8% YoY. In summary, we are well prepared to face the current challenges through the strength of our business model and strategy. Additionally, we anticipate an improvement in our financial structure derived from the resources resulting from the monetization of the assets comprised in the guaranty trust. Humberto Garza Valdez, Chief Executive Officer 2 / 15

3 Business Segments Famsa Mexico During the fourth quarter, Net Sales and SSS rose on an annual basis by 11.1% and 10.3%, respectively for the operations in Mexico. The categories that recorded stronger growth during the period were: Personal Loans (+28.8 YoY) and Appliances (+6.3% YoY), due to focused marketing campaigns, where automatic washing machines were one of the products which saw the greatest demand during the period. Likewise Seasonal Goods (+13.5% YoY) and Mobile Phones (+10.8% YoY) stood out for taking advantage of the seasonal demand of El Buen Fin and the Christmas season in Mexico. Similarly, for the full-year 2016, Net Sales and SSS increased and annual 9.2% and 8.2%, respectively. Banco Famsa During 4Q16, the NPL ratio registered a decrease of 130 bps. and 30 bps. vs. 4Q15 and 3Q16, respectively, closing at 8.5%, after decreasing from a 9% level during the year. We have achieved an improvement in the risk profile of our credit portfolio, where the participation of clients belonging to the formal sector of the economy increased from 54.7% as of year-end 2015 to 61.0% as of December 31, Banco Famsa: Non-Performing Loans (NPL) Ratio 18.0% 16.0% 14.0% 12.0% 10.0% 14.5% 14.9% 13.3% 12.6% 12.6% 11.9% 11.0% 10.7%10.4%10.0% 9.9% 9.8% 9.8% 9.2% 9.3% 9.1% 8.7% 9.0% 8.6% 8.9% 8.8% 9.1% 9.0% 8.5% 8.0% Source: Banco Famsa We anticipate the average client risk profile will continue to improve, since we will be focused on generating operational efficiencies in our origination and collection processes through a more agile and productive operation in the field. As of December 31, 2016, Bank Deposits, distributed over 1.2 million accounts, totaled Ps.21,063 million, 14.7% YoY. It is important to note that as of year-end 2016 the average cost of funding closed at a level of 4.5%, increasing in a lower proportion than the TIIE (Spanish acronym for the Mexican Interbank Interest Rate) during The average duration of Bank Deposits as of year-end was 144 days. 3 / 15

4 At year-end 2016, Bank Deposits represented 67.8% of Grupo Famsa's source of funding. Interest to bank depositors recorded in 4Q16 were Ps.238 million, 32.4% higher YoY, and for the year totaled Ps.844 million, 23.2% YoY given the higher balance of deposits received and the increase in the cost of funding. Banco Famsa: Bank Deposits 18,359 18,611 19,742 21,166 21, % 4.3% 4.1% 4.1% 4.1% 13,073 12,542 14,017 15,544 15,463 3,456 3,937 3,751 3,521 3,337 1,831 2,132 1,974 2,101 2,263 4Q15 1Q16 2Q16 3Q16 4Q16 Demand Deposits Time Deposits Time deposits with optional availability Avg. Cost of Funding Source: Banco Famsa Famsa USA During 4Q16, a drop of 4.1% YoY impacted Net Sales (USD). In contrast, Net Sales (MXP) rose an 11.8%, driven by a higher exchange rate that offset the effects of lower demand due to prevailing uncertainty in the United States regarding economic and political matters. Similarly, for fiscal year 2016, Net Sales recorded an annual decrease of 7.5% in (USD) and an increase of 11.8% in MXP. It is important to note our target market, represented by first generation of Hispanics in the United States, is delaying consumption to maintain as much liquidity as possible considering the situation that might confront due to the new administration's policies. To counteract the contraction in demand we have faced since mid-2016, the following initiatives have been adopted: i) targeting the supply to an expanded market, including second and third generation of Hispanics in the United States ; and, ii) adjustment of the costs structure and operational expenses to a lower level of sales. We estimate these actions will allow us to maintain the operational flow of Famsa USA and contribute to the consolidated results of Grupo Famsa during / 15

5 Business Units To ease the interpretation of Grupo Famsa s business unit results, the following breakdown of our network of stores and bank branches is presented. Retail Stores & Banking Business Units Floor Space (m 2 ) 4Q16 Openings Closures 3 3Q16 4Q15 % YoY 4Q16 4Q15 % YoY Total (3.6%) 566, , % Stores % 522, , % Famsa Mexico % 452, , % Famsa USA % 66,434 66, % PL USA Branches % 4,150 4, % Banking Branches¹ (0.2%) 40,285 40,791 (1.2%) To be Conv. Bches.² (39.8%) 3,645 6,133 (40.6%) (1) Most banking branches are located within Famsa Mexico stores (2) Acquisition of branches from Monte de México, S.A. de C.V. Following the downsizing of the overall structure of Grupo Famsa and a strictly conservative investment approach, at 4Q16 CAPEX of Grupo Famsa was directed to maintenance only. This approach will prevail during 2017, with no new openings of stores or banking branches in both Mexico and the Unites States. Consolidated Financial Results Net sales Segment Net Sales (1) Includes sales of non-retail businesses (2) Includes Banco Famsa (3) SSS calculated in U.S. dollars, excluding foreign-exchange rate effects Same Store Sales (SSS) 4Q16 4Q15 % % 4Q16 4Q Grupo Famsa¹ 4,896 4, % 17,544 16, % 8.6% 7.2% 6.2% 7.7% Famsa Mexico² 4,295 3, % 15,157 13, % 10.3% 8.2% 8.2% 8.5% Famsa USA % 2,265 2, % (4.1%) 1.3% (7.5%) 2.2% Otros % 1, % Intersegmento (259) (240) 7.8% (898) (830) 8.2% Consolidated Net Sales for 4Q16 totaled Ps.4,896 million, an increase of 11.3% YoY, mainly derived from the drive coming from Famsa Mexico. Similarly, SSS increased 8.6% YoY, in line with Consolidated Net Sales. For fiscal year 2016, Consolidated Net Sales totaled Ps.17,544 million, reaching a growth of 9.5% YoY. 5 / 15

6 It should be noted audited figures for Consolidated Net Sales for 2016 consider the incorporation of the sale of memberships called "Club Bienestar" in its product portfolio. Consequently, in order to present more adequately the revenue generated by the sales commission of this type of memberships, Grupo Famsa s Management has decided to record the net income from these transactions. As a result, for fiscal year 2016, Grupo Famsa reclassified Ps.495 million of Cost of Sales (cost of goods sold) to Net Sales. Likewise, and for comparison purposes, as of December 31, 2015, an amount of Ps. 355 million of Cost of Sales (cost of goods sold) was reclassified to Net Sales in order to record the net income from these transactions. The effect of the reclassification carried out for year 2015 is as follows: 2015 (Audited) Reclassifications 2015 (Reclassified) Product sales 11,556 (356) 11,201 Customer s interests gained 4, ,821 Total net sales 16,377 (356) 16,022 Cost of sales (9,322) 356 (8,967) Gross profit 7, ,055 Consolidated Product Mix $4,400 $4,896 $16,022 $17, % 0.8% 2.3% 2.4% 3.9% 3.8% 2.6% 2.6% 4.9% 4.3% 4.0% 3.4% 5.9% 5.1% 5.9% 5.4% 16.4% 13.9% 11.6% 12.2% 11.0% 10.3% 10.4% 11.1% 14.2% 13.4% 13.0% 13.9% 17.0% 16.8% 15.9% 18.3% 19.9% 23.4% 19.4% 25.8% 5.5% 4.1% 12.6% 11.9% 4T15 4T Seasonal Goods Clothing Computers Motorcycles Electronics Mobile Phones Appliances Furniture Personal Loans Others Cost of Sales For 4Q16, the Consolidated Cost of Sales totaled Ps.2,926 million, an increase of 2.0% compared to Ps.2,868 million in Even though Interest Expense on Bank Deposits grew by 32.4% YoY, the negative effect was mitigated with the cost of goods sold not rising parallel to sales as in previous quarters. As a result, the proportion of cost vs. sales for 4Q16 was 59.8% vs. 65.2% in 4Q15. For fiscal year 2016, Consolidated Cost of Sales reached Ps.9,724 million, representing a growth of 8.4% compared to its result of Ps.8,967 million in The variation against the previous year is due to the increase of 23.2% YoY in the Interest Expense on Bank Deposits derived from a larger deposit base as of 6 / 15

7 year-end, as well as the annual increase in cost of goods sold of 9.0%, in line with the sales volume expansion generated during Similarly, the allowance for doubtful accounts was adjusted during 4Q16 to reach Ps.1,692 million as of the close of 2016 since Grupo Famsa s Management carried out the evaluation of its consolidated loan portfolio for year-end And its corresponding allowance for doubtful accounts in conjunction with the auditor. As a result, considering the economic context of uncertainty and volatility prevailing today, the Company's Management made certain adjustments to its reserve estimation methodology, pursuing to be more conservative in its recovery criteria. As a result, the allowance for doubtful accounts represents 9.6% of the sales volume recorded by the Company for the year Finally, for fiscal year 2016, Grupo Famsa reclassified Ps.495 million from Cost of Sales (cost of goods sold) to Net Sales in order to record the net income corresponding to the sale of memberships of Club Bienestar. In addition, for comparison purposes, at December 31, 2015, an amount of Ps. 365 million of Cost of Sales (cost of goods sold) was reclassified to Net Sales to post net income from these transactions. (See Net Sales.) Gross Profit Consolidated Gross Profit for 2016 totaled Ps.7,819 million, an increase of 10.8% compared to fiscal year 2015, where the result was Ps.7,055 million. The variation against the previous period is a reflection of the increase in sales volume, particularly in Mexico. The consolidated Gross Margin for the year 2016 was 44.6% vs. 44.0% recorded in 2015, expanding 60 basis points. Operating Expenses It is important to mention during fiscal year 2015 a reimbursement was received for improvements to premises leased totaling Ps.570 million from related parties. In order to best present such income of reimbursements from affiliates, Grupo Famsa reclassified this amount from Operating Expenses (Selling Expenses) to Other Income (net) as of December 31, (Audited) Reclassifications 2015 (Reclassified) Operating expenses (5,991) (571) (6,562) Selling expenses (3,646) (571) (4,217) Administrative expenses (2,345) 0 (2,345) Other income (net) Operating expenses and other income (net) (5,930) 0 (5,930) As a result, Operating Expenses for the year 2015 closed at Ps.6,562 million, which are comparable to the Operating Expenses incurred during 2016, which closed at Ps. 7,051 million, representing an annual increase of 7.4%. 7 / 15

8 The annual variation reflects, in part, the non-recurring severance expenses disbursed in 2016 due to the reduction of positions in our labor force, which declined by 7.6% YoY % Employees 17,667 19,117 (7.6%) Famsa Mexico 17,039 18,396 (7.4%) Famsa USA Texas (12.9%) EBITDA Segment EBITDA % EBITDA 4Q16 4Q15 % % 4Q16 4Q Grupo Famsa¹ (48.0%) 1,411 1,670 (15.5%) 3.8% 8.0% 8.0% 10.4% Famsa Mexico² (40) 428 (109.3%) 1,062 1,643 (35.4%) (0.9%) 11.1% 7.0% 11.8% Famsa USA 170 (116) 246.6% 297 (15) >1,000.0% 30.1% (23.1%) 13.1% (0.7%) Other % % 18.2% 15.7% 5.1% 4.5% Intercompany % % 0% (1) Includes EBITDA from non-retail business (2) Includes Banco Famsa Consolidated EBITDA in 4Q16 closed at Ps.184 million compared to Ps.354 million in 4Q15, due to certain audit adjustments recorded during the period. Mainly, an additional allowance for doubtful accounts was recorded of Ps.332 million during 4Q16 since the Company's Management carried out certain adjustments to its reserve estimation methodology, seeking a more conservative approach in its recovery criteria, and determined for fiscal year 2016 an allowance for doubtful accounts of Ps.1,692 million vs. Ps.1,360 million initially reported in February 2016; thus, in order to consider the economic context of uncertainty and volatility that prevails today. In addition, during 4Q16, the deferral recognition between expenses and income related to payroll credit origination had a negative impact on Consolidated EBITDA. Moreover, the EBITDA is affected by nonrecurring expenses recognized with regard to severance expenses spent during the second and third quarter of The Consolidated EBITDA for 2016 totaled Ps.1,411 million, posting a decrease of 15.5% compared to Ps.1,670 million in 2015 due to the rationale described in previously. Financial Expenses, net 4Q16 4Q15 % % Interest income 93 2 >1,000.0% >1,000.0% Interest expenses (260) (214) (21.7%) (927) (755) (22.8%) Exchange gain & losses, net (195) (59) (232.8%) (548) (462) (18.6%) Total (362) (270) (33.9%) (1,095) (1,213) 9.7% 8 / 15

9 Consolidated Financial Expenses in 4Q16 increased 33.9% YoY due to the increase in Interest Expenses during the quarter by 21.7%, as well as to A greater exchange loss recognized in the period compared to 4Q15. Consolidated Financial Expenses as of December 31, 2016 of 2016 grew only 9.7% YoY, since there was a recognition of an interest earned for the year of Ps.380 million derived from the updating of the present value of the Collection Rights with related parties (recorded in December 2015). However, for fiscal year 2016, Interest Expenses increased 22.8% YoY, from Ps.755 million to Ps.927 million, in line with the depreciation of the peso and the increase of the reference rate (250 pbs.). Likewise, a net accumulated loss was recorded at a higher exchange rate of 18.6% YoY. Net Income Consolidated Net Income for fiscal year 2016 was Ps.346 million, compared to Ps.149 million during The variation against the previous year reflects an earned income during the year 2016 due to the updating in the present value of the collection rights with related parties (recorded in December 2015) and a higher deferred asset tax compared to year Financial Position Summary Key Items 4Q16 4Q15 % Trade Receivables, net 25,893 21, % Mexico Consumer 19,583 15, % Mexico Commercial 3,691 4,009 (7.9%) USA Consumer 2,619 2, % Collection Rights 2,554 2, % Trade Receivables As of December 31, 2016 the consolidated balance of Trade Receivables, net of allowances for doubtful receivables, was Ps.25,893 million, 18.3% above that of December Consumer portfolio in Mexico was the main driver of receivables growth, increasing 25.2% vs. 2015, reaching Ps.19,583 million, derived from progressive consumer loan origination, mostly under payroll credit terms. Meanwhile, the origination of the consolidated commercial portfolio in Mexico decreased by 7.9% as of December 31, 2016 vs. December 2015, due to our strategy oriented to stimulate payroll credits with higher profitability. 9 / 15

10 Debt Debt Ratios 4Q16 4Q15 % Net Debt 8,497 6, % Gross Debt 10,001 9, % Interest Coverage Ratio Net Debt as of December 31, 2016 totaled Ps.8,497 million, above 23.0% YoY. This increase primarily reflects the effects of the devaluation of the MXP vs. USD, as well as a 31.5% decrease in cash and equivalents from Ps.2,194 million in 4Q15 to Ps.1,504 million in this quarter. The decrease in cash and equivalents was due to the increase in payroll credit origination. Similarly, the Gross Debt balance as of December 31, 2016, excluding Bank Deposits, grew by 9.9% vs. 4Q15. The continued devaluation of the MXP vs. USD was the main driver behind this increase. Debt Profile Debt Maturity Schedule 57% 56% 20% 25% 23% 20% 4Q15 4Q16 Debt Certificates Bank Loans Foreign Debt 370 1,690 5,187 1, > 2019 Debt Certificates Bank Loans Foreign Debt Funding Sources 8% 9% 25% 23% 67% 68% 4Q15 4Q16 Bank Deposits Debt Securities Bank Loans 10 / 15

11 Gross Debt as of December 31, 2016, was composed as follows: Debt Composition Short-term % Long-term % Total % Bank Loans 2, % % 2, % Debt Securities 1, % 5, % 7, % Total Gross Debt 4, % 5, % 10, % By Currency By Rate 44% 56% 45% 55% Shareholders Equity Shareholders Equity as of December 31, 2016 amounted to Ps.8,315 million, up by 8.9% vs It is important to note, during 2016 Grupo Famsa s Management carried out the evaluation of its consolidated loan portfolio, and its corresponding allowance for doubtful accounts. In addition, given the economic context of uncertainty and volatility prevailing today, the Company's Management applied certain adjustments to its reserve allowance methodology, pursuing to be more conservative in its recovery criteria. As a result, Grupo Famsa recorded a credit to the allowance for doubtful accounts as of December 31, 2016 for Ps.728 million against retained earnings of prior years, net of deferred taxes of Ps.218 million. The net effect on retained earnings for the year 2016 was Ps.509 million. If this amount is deducted from the minority interest, the amount totals Ps.508 million. This transaction is recorded under "Other movements, net of income taxes" described in the Consolidated Statement of Changes in Stockholders' Equity. ***************************** 11 / 15

12 Recent Developments On January 20, 2017, Grupo Famsa announced the termination of the "Market-Maker" service contract provided by Casa de Bolsa Credit Suisse (Mexico), S.A. de C.V., Grupo Financiero Credit Suisse (Mexico), and as a result is currently performing a thorough evaluation process of another financial institution to provide the service, aiming to boost the liquidity of its stock in the Mexican secondary market. Forward-looking statements This report contains, or may be deemed to contain, forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of Grupo Famsa, S.A.B. de C.V. and its subsidiaries may differ from the results expressed in, or implied by, the forward-looking statements set out herein, possibly to a material degree. Analyst coverage Since Grupo Famsa, S.A.B. de C.V. ( Famsa ) securities are subject to the rules and regulations included in the Reglamento Interior de la Bolsa Mexicana de Valores (Interior Rules and Regulations of the Mexican Stock Market), the Company would like to inform that, in compliance with that stated in Disposition of said Rules and Regulations, the following financial institutions provide formal coverage over its stock: BBVA Bancomer, GBM and Vector. For further information on institutional coverage, please visit. Technical Notes and Bases for Consolidation and Presentation Non-performing Loans Ratio (IMOR): The calculation of IMOR in this Quarterly Report includes Collection Rights in Banco Famsa s total Credit Portfolio. These rights correspond to loans that are discounted via payroll. Due to an accounting reclassification that came into effect in July 2013, they are excluded from the Credit Portfolio used for the calculation of the IMOR indicator for the Mexican National Banking and Securities Commission (CNBV). Credit Portfolio: Banco Famsa s business model focuses largely on Consumer Credit, therefore the weight of such credits in the bank s portfolio mix differs from that of standard financial institutions in the Mexican-banking sector. Consequently, Banco Famsa s results and figures are not directly comparable with those of the aforementioned. Net Financial Expenses: They are primarily comprised of the Financial Expenses corresponding to financing instruments and foreign exchange rate effect. Percentage rates of change: Percentage rates of change presented in this Report are calculated according to the consolidated financial statements contained herein. 12 / 15

13 Consolidated Financial Statements Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statements of financial position Thousands of Mexican Pesos 31-dic dic-15 $ % Assets CURRENT ASSETS: Cash and equivalents $1,503,578 $2,194,323 ($690,745) (31.5%) Trade receivables, net 22,773,269 20,163,093 2,610, % Rights to collect from related parties 800, , % Recoverable taxes 602, ,790 (351,463) (36.8%) Other accounts receivable 1,770,899 1,845,058 (74,159) (4.0%) Inventories 2,553,842 2,452, , % Total current assets $ 30,003,915 $ 27,608,821 $ 2,395, % NON-CURRENT ASSETS: Restricted cash 311, , % Trade receivables, net 3,119,608 1,715,737 1,403, % Rights to collect from related parties 4,105,381 4,533,475 (428,094) (9.4%) Property, leasehold improvements, and furniture & equipment net 1,880,989 2,065,452 (184,463) (8.9%) Goodwill and intangible assets, net 251, ,933 (25,112) (9.1%) Guarantee deposits 127, ,558 8, % Other assets 993, , , % Deferred income tax 1,695,040 1,061, , % Total non-current assets $ 12,485,863 $ 10,751,744 $ 1,734, % Total assets $ 42,489,778 $ 38,360,565 $ 4, % Liabilities and Stockholders equity CURRENT LIABILITIES: Demand deposits $17,274,090 $14,478,945 $2,795, % Short-term debt 4,026,018 4,190, , % Suppliers 1,373,372 1,627,793 (254,421) (15.6%) Accounts payable and accrued expenses 1,238,526 1,152,717 85, % Deferred income from guarantee sales 222, ,888 15, % Income tax payable 36,912 55,922 (19,010) (34.0%) Total current liabilities $ 24,171,764 $ 21,712,427 $ 2,459, % NON-CURRENT LIABILITIES: Time-deposits 3,788,816 3,879,884 (91,068) (2.3%) Long-term debt 5,974,656 4,910,533 1,064, % Deferred income from guarantee sales 120, ,672 17, % Employee benefits 119, ,135 (3,012) (2.5%) Total non-current liabilities $ 10,002,770 $ 9,015,224 $ 987, % Total liabilities $ 34,174,534 $ 30,727,651 $ 3,446, % Stockholders equity: Capital stock 1,703,847 1,704,085 (238) 0.0% Additional paid-in capital 3,810,052 3,812,903 (2,851) (0.1%) Retained earnings 1,631,283 1,463, , % Net income 343, , , % Reserve for repurchase of shares 234, ,130 1, % Foreign currency translation adjustment 558, , , % Total stockholders equity attributable to shareholders $ 8,281,659 $ 7,601,456 $ 680, % Non-controlling interest 33,585 31,458 2, % Total stockholders equity $ 8,315,244 $ 7,632,914 $ 682, % Stockholders equity: $ 42,489,778 $ 38,360,565 $ 4,129, % 13 / 15

14 Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statements of income Thousands of Mexican Pesos 4T16 4T15 % Acum'16 Acum'15 % Total revenues $4,896,454 $4,399, % $17,543,730 $16,021, % Cost of sales (2,926,193) (2,867,612) (2.0%) (9,724,395) (8,966,897) (8.4%) Gross profit $ 1,970,261 $ 1,532, % $ 7,819,335 $ 7,054, % Selling & administrative expenses (1,993,914) (1,962,436) (1.6%) (7,050,616) (6,561,923) (7.4%) Other Income, net 110, ,573 (80.9%) 225, ,669 (64.3%) Operating profit $ 86,481 $ 145,507 (40.6%) $ 994,239 $ 1,124,429 (11.6%) Financial income 93,320 2,096 >1,000.0% 379,615 3,995 >1,000.0% Financial expenses (260,166) (213,752) (21.7%) (926,800) (754,848) (22.8%) FX gain & losses, net (195,038) (58,612) (232.8%) (547,689) (461,798) (18.6%) Financial expenses, net (361,884) (270,268) (33.9%) (1,094,874) (1,212,651) 9.7% Losses before income tax ($ 275,403) ($ 124,761) (120.7%) ($ 100,635) ($ 88,222) (14.1%) Income tax 176,350 21, % 446, , % Consolidated net income (loss) ($ 99,053) ($ 103,284) 4.1% $ 346,067 $ 149, % Controlling interest (97,782) (102,404) 4.5% 343, , % Non-controlling interest (1,271) (880) (44.4%) 2,127 2,248 (5.4%) Consolidated net income (loss) ($ 99,054) ($ 103,285) 4.1% $ 346,067 $ 149, % 14 / 15

15 Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statement of cash flows Thousands of Mexican Pesos 4T16 4T15 Operating activities Profit before income tax ($100,627) ($88,226) Depreciation and amortization 416, ,551 Allowance for doubtful receivables 1,692,509 1,689,702 Loss on sale of property, leasehold improvements, furniture & equipment (22,131) (53,446) Estimated liabilities for labor benefits 23,686 19,932 Interest income (7,711) (3,995) Accrued interests over rights to collect from related parties (371,906) 0 Interest expenses 926, ,846 Interest income from bank deposits 844, ,063 Exchange gain and losses, net 1,056, ,630 Net cash flow from operating activities before changes in working capital $ 4,458,669 $ 4,325,057 Trade receivables (5,707,475) (5,581,389) Inventories (101,285) (331,244) Other accounts receivable 124,552 (1,241,882) Suppliers (271,628) 331,491 Accounts payable and accrued expenses 117, ,339 Interest to bank depositors (825,094) (678,651) Income taxes paid (59,860) (44,294) Demand and time deposits 2,684,987 3,600,874 Net cash flows from operating activities $ 420,367 $ 511,301 Investing activities Acquisition of property, leasehold improvements, furniture and equipment (150,313) (255,844) Acquisition of intangible assets (19,522) (8,710) Proceeds from sale of furniture and equipment 27, ,890 Interest received 7,711 3,995 Net cash flow used in investing activities ($ 135,033) $ 45,331 Financing activities Interest paid (932,620) (734,299) Proceeds from current and non-current debt and bank loans 1,756,275 1,212,865 Payments of current and non-current debt and bank loans (1,819,162) (674,917) Share repurchase, net (1,748) (25,442) Net cash flow from financing activities ($ 997,255) ($ 221,793) Decrease in net cash and cash equivalents (711,921) 334,839 Adjustments to cash flow as a result of changes in exchange rates 21,176 1,213 Cash and cash equivalents at the beginning of the period $ 2,194,323 $ 1,858,271 Cash and cash equivalents at the end of the period $ 1,503,578 $ 2,194,323 Notes to the Financial Statements: For a greater depth of analysis, in addition to the contents of this report, we recommend consult the opinion of the consolidated financial statements of Grupo Famsa S.A.B. Of C.V. of the fiscal year 2016 at. 15 / 15