2005 - Grupo Carso
Annual Report 2005
Vincent Van Gogh
(1853 - 1890)
Cottage with Peasant
Coming Home, 1885
oil on canvas
63.5 x 76 cm
Report of the Board of Directors
• Grupo Condumex
• Infrastructure and Construction
• Installation of Telecommunications
• Constructora de Infraestructura Latinoamericana
• Grupo PC Consultores
• Grupo Sanborns
• Sanborns and Sanborns Café
• Mix Up
Board of Directors
Report of the Auditing, Finance and
Report of the Evaluation and Compensation
Report of the Statutory Auditors
Consolidated Financial Statements
Thousands of pesos as of December 31, 2005, except for shares outstanding and earnings per share
Majority Net Income
Earnings per Share
* Outstanding shares were restructured, for the 2003 and 2004 years. (Note 10).
Increase in consolidated sales
(millions of pesos)
(millions of pesos)
(billions of pesos)
Grupo Carso plays an
important role in various
sectors of the domestic
economy. Although its
primary business divisions
are: Industrial, Construction
and Infrastructure, and
Commercial, Carso also
operates in other sectors
such as automotive and
· Grupo Condumex
SERVICES / PRODUCTS
· Copper telephone cable
· Electronic cable
· Coaxial cable
· Power cable
· Fiber optic cable
· Design and installation of
· Installation of mobile phone
· Construction cables
· Fixed and mobile phone
companies in Mexico
and Latin America
· Construction industry,
from housing to heavy
· Home Remodeling
· Energy Related
· Low and high end
· Copper products (strips, sheets,
coils, tubes, pipes, valves)
· Aluminum products (strips, coils,
extruded shapes, etc.)
· PVC (tubes, joints, water tanks, etc.)
· Magnet Wire
· Power Plants
· Ceramic tile
· GRUPO PORCELANITE
Infrastructure and construction
· Carso Infraestructura
· Grupo PC Constructores
· Constructora de
SERVICES / PRODUCTS
· Oil platform construction
· Shopping Center, Industrial
facilities, Corporate Buildings and
· Highway construction
· Water treatment plants
· Steel tubes
· Domestic oil related
· Retail and Industrial
· Middle and high end
· GRUPO SANBORNS
· Grupo Sanborns
· Sanborns Hermanos
· Sanborns Café
· Promotora Musical
SERVICES / PRODUCTS
· Department Stores
· Store and Restaurant
· Music Stores
Report of the Board
In 2005, the Gross Domestic Product reﬂected a 3.0% increase, to stand at
MX.PS.$8 trillion 347 million at year end. The GDP owed its improvement
mainly to the construction, communications and service sectors, which
reﬂected growth rates of 3.3% and 4.2%, respectively.
Mexico’s manufacturing sector was aﬀected by a slowdown of the US economy, which reﬂected a 3.5% increase in its GDP. Mexico’s manufacturing
industry reﬂected a real increase of only 1.2%.
The stronger economy allowed for the generation of new jobs; in 2005, the
total number of insured in the Mexican Social Security Institute increased
by close to 576 thousand. This growth compensated for the entry of new
potential workers in the labor market, which in turn reﬂected in a reduction
of the General Unemployment Rate from 3.9% in 2004 to 3.6% in 2006.
The exchange rate dropped by 4.6% during the year from a parity of 11.14
Pesos per Dollar at the close of 2004 to 10.63 Pesos at the close of 2005.
Direct foreign investment dropped by 2.4% percent in comparison with
2004 to US$17,804 million. Emigrants’ remittances in 2005 rose by 20.6%
over last year, reaching US$20 billion 35 million. The current account deﬁcit
stood at US$5 billion 708 million equivalent to .7% of the GDP.
The Commercial Balance registered a deﬁcit of US$7 billion 559 million,
14.2% lower than in 2004, mainly the result of a 34.8% increase of oil exports, compensated by a 24.3% increase in the import of consumer goods.
The average price of the Mexican Oil Mixture rose by 6.3%. in 2005; that is,
US$42.00 in 2005 compared with US$39.50 in 2004.
The Banco de Mexico met its inﬂation goal in 2005. The National Consumer’s
Price Index showed an increase of 3.33% in the year, lower than the 5.19%
in 2004. The continuation of the Banco de México’s restrictive monetary
policy compensated for the lack of price controls of government services.
The underlying inﬂation was 3.12% in the year, an increase of 3.8% over
The rate of 28-day CETES maintained an average level of 9.18% throughout the year. The 28-day CETES closed the year 2005 at an 8.02% rate,
mainly the result of end- of-the-year inﬂationary pressures.
Economically speaking, 2005 was a better year for Mexico. In the future,
the Country must consolidate the macroeconomic stability it has attained
and promote measures to obtain the economic, social and state reforms
needed to modernize the country and stimulate the internal market and
the generation of jobs.
For Grupo Carso, 2005 was another year of consolidation in the strategy to
conﬁrm our position as one of the most important Groups in the country. The
revenue mixture of Grupo Carso oﬀers our investors a sound diversiﬁcation
and exposure to highly dynamic economic sectors. Grupo Condumex, together with Porcelanite and Cigatam, conform the results of the manufacturing
companies; the commercial sector is attended by Grupo Sanborns; lastly, Carso Infraestructura y Construcción, which in 2005 completed its regrouping of
assets to become consolidated in the infrastructure sector.
The continued restructuring of the Carso assets portfolio, which in 2005 included inter-company purchases and sales, as well as the disposal of non-strategic assets, will give us more ﬂexibility in meeting proﬁtable growth goals.
In October, we completed the placement of Carso Infraestructura y Construcción (CICSA). 620 million company shares representing 25.93% of the capital
Relevant Economic Figures
* Annual average
stock were placed through a public oﬀer. Grupo Carso maintains the majority
ownership of CICSA but through the placement, we oﬀered the market the
possibility of investing directly in Carso’s Infrastructure sector. CICSA closes the
year with a sound ﬁnancial structure and with very interesting work contracts
related to the installation of telecommunications, manufacturing and services
for the chemical and petroleum industries, highway construction and water
treatment plants, as well as other civil construction projects.
The infrastructure division became consolidated as an important player at
the national level, both individually, particularly in the construction of oil
platforms, and in the installation of telecommunication networks, jointly
with IDEAL (Impulsora para el Desarrollo y el Empleo de América Latina),
which had been awarded signiﬁcant contracts and has granted CICSA works
contracts for various projects, among which is the construction of the Tepic
Villa Unión highway and the Northern Bypass in Mexico City.
In 2005, Grupo Carso completed the reﬁnancing of the Group’s liabilities through
a syndicated loan of US$700 million, in which 19 ﬁnancial institutions participated, and the Group obtained very favorable rate and term conditions. The Group’s
debt at year-end stood at MXPs$15 billion 206 million with a balance in cash
and securities of MXPs$8 billion 572 million, resulting in a net debt of MXPs$6
billion 634 million, that is, a 54% reduction in comparison with year-end of 2004.
We consider that the Group’s ﬁnancial structure is adequate and will allow us to
undertake expansion projects in the various subsidiaries.
On behalf of the Board of Directors, I wish to express my appreciation to the
staﬀ of directors of Grupo Carso for their vision and generous participation,
fundamental for maintaining the success of the Group; to all our oﬃcers and
employees for their commitment and eﬀorts in reaching our goals; and to our
shareholders, who year after year place their trust in us. We will make every
attempt in the future to hold our course and continue contributing to the
successful development of our country.
Consolidated Group sales reached MXPs$78 billion, a 12% growth in real terms over last year. Operating proﬁt was MXPs$9 billion 268 million, while generation of operating ﬂow (EBITDA) was MXPs$11 billion 622 million. These
ﬁgures were 4.8% and 3.3%, respectively, higher than 2004 results which too
were sound. The 2005 ﬁgures reﬂect, on the one hand, a constant growth of
the commercial subsidiaries, which continued to consolidate formats, and the
incorporation of new formats with the acquisition of Dorian’s.
The manufacturing companies faced the year 2005 with signiﬁcant challenges, such as higher prices of raw materials, energy and fuel and strong
competition from domestic and foreign companies, which increased their
presence in the country due to the strength of the Peso against the principal
currencies. However, thanks to the recognition of our trademarks, Grupo Carso
was able to maintain its production volumes and in most cases, the market
participation of its principal products.
Very truly yours,
Carlos Slim Domit
Chairman of the Board of Directors
The industrial division
eﬃciency levels of its
Sales of this Division amounted to
The Grupo Carso industrial division is formed mainly by three subsidiaries:
Grupo Condumex, Porcelanite and Cigatam.
As part of the strategy to divest non-strategic businesses in order to concentrate on the Grupo Carso divisions, this year Grupo Condumex sold its
66.7% participation in the capital stock of Ferrosur to Infraestructura y
Transportes Ferroviarios (ITF), a subsidiary of Infraestructura y Transportes
México (ITM), which is a subsidiary of Grupo México. The sale price was
MXPs$2 billion173.4 million. Grupo Carso also subscribed a capital stock
increase of ITM, becoming the holder of 16.75% of its capital stock.
Grupo Condumex reported annual consolidated sales of MXPs$21 billion 951 million; in comparison with the MXPs$21 billion 253 million of last year, an increase
of 3.3%. The higher price of metals, partially transferred to the sales price, and the
good performance of the Mining Division oﬀset the lower volumes in most products lines. The operating margins and EBITDA, however, dropped approximately
one percentage point in comparison with 2004, due to highly competitive market
conditions during the year.
The Telecommunications Division reported lower volumes in copper cable but a
signiﬁcant growth in ﬁber optic cable. At the end of 2005, the Brazil plant initiated
production of cable for telecommunications .
The Construction and Energy division reﬂected lower volumes in energy cable, metals and transformers and integrated projects, in comparison with last year.
The Automotive Division reported reductions in volumes of autoparts, automotive
cable and harness lines as a result of a lower customer demand.
Nacobre reported sales in 2005 3.9% higher than 2004, and within an operating
margin of 6.3%, 256 basis points power than last year, while the EBITDA margin
diminished 320 basis points.
The copper and plastics division reﬂected a volume reduction of 3.4% and 7.6% in
2005, while the aluminum division reported a 2.7% increase in volume.
Milling volumes in the mining division rose 65.8% over 2004. Minera Tayahua continued its good performance, with higher production volumes and
better laws. Division sales rose by 60.3% during the year, while the operating margin rose by 23.9%, 1,410 basis points in comparison with 2004.
Increased volumes combined with higher prices of metals resulted in higher
sales and the improved operating results.
Capital investments in the year were approximately US$77 million, used mainly to
increase capacity in the mining sector and begin the production of cable for telecommunications in the Brazil plant.
In 2005, Porcelanite maintained its participation in the domestic market of above
40%, while strengthening its presence in the US market. During the year, 10.1%
of all sales were exports, mainly the result of the opening of a new plant in the
northwestern part of the country.
Sales of Porcelanite en 2005 were a stable MXPs$3 billion 649 million, in com-
ﬁgure obtained last year. These results were obtained by the implementation of
a growth of 3.2%, while the EBITDA margin was 28.8%, 95 basis points over the
comparison with 2004. Operating ﬂow (EBITDA) was MXPs$1 billion 51 million,
over the previous year due to an increase in the sales margin of 17 basis points in
parison with last year. Operating proﬁt was MXPs$691 million, a 0.7% increase
The line of adhesives produced by Solutec Soluciones Técnicas para la Construcción,
a subsidiary of Porcelanite Holding, continued projecting its image and increasing
its participation in the market. In 2005, Porcelanite made capital investments of
approximately US$7.8 million, used mainly to complement the equipping and reconversion of the plants.
Cigatam, a subsidiary of which Grupo Carso owns 50.01%, is the cigarette manufacturer company that sells all its production to Philip Morris Mexico, an aﬃliate of
which Grupo Carso owns 49.99%, for further commercialization.
During 2005, Cigatam maintained its leadership position in the market, focused in
Grupo Carso consolidates Cigatam’s results at 100%.
the high price and low price segments. While market volumes decreased 1.5% during the year, Cigatam increased its estimated market share from 60.2% to 62.1%,
190 basis points higher than the previous year. Marlboro remained as the leading
brand of the Mexican market, with a 110 basis points market share increase re-
As of January 1, 2005, excise tax rates were increased from 100% to 110% for nonﬁlter cigarettes, while the excise tax rate for ﬁlter cigarettes remained in 110%.
aching over 46%.
The contribution to the Fund for Protection Against Catastrophic Expenditures remained in 2.5 cents per cigarette sold in Mexico.
Cigatam posted sales of $14,344 million pesos, a 11% increase when compared to
2004; operating margin was 5.5%, 110 basis points lower than the previous year,
a result of the higher excise tax rate for non-ﬁlter cigarettes and the annual impact
of the contribution to the Fund for Protection Against Catastrophic Expenditures.
During 2005, Cigatam’s fixed asset investments reached approximately
US$18.6 million dollars, basically from investment in machinery and equi-
pment, and building.
revenue obtained by
CICSA in 2005.
Growth in Operating Proﬁt in respect to 2004
On October 2005, Carso Infraestructura y Construcción (CICSA) made a
primary public oﬀer of shares through which it placed 620 million shares
in the Mexican Securities Exchange, obtaining MXPs$4 billion 712 million.
Prior to the public oﬀer, CICSA grouped its businesses into four sectors:
Installation of Telecommunications, Manufacturing and Services for the
Chemical and Oil Industries, through Swecomex, Infrastructure Projects, to
its subsidiary Constructora de Infraestructura Latinoamericana (CICSA) and
Civil Construction, through its subsidiary Grupo PC Constructores.
Carso Infraestructura y Construcción reported consolidated annual sales of
MXPs$10 billion 708 million, 20.7% above 2004 sales. Operating proﬁt
was MXPs$1 billion 342 million, a 29.1% growth during the year with a
sales margin of 12.5%, while the EBITDA margin stood at 14%.
CICSA used the funds obtained from its public oﬀer for working capital, to pay debt
and to construct a new steel pipe plant in Veracruz. At year-end, CICSA had a total
debt of MXPs$857 million, with an availability of MXPs$2 billion 719 million.
In 2005, CICSA made capital investments of approximately US$80 million, used
basically to purchase construction equipment.
INSTALLATION OF TELECOMMUNICATIONS
The installation of telecommunications sector reported sales of MXPs$5 billion 904
million during the year, 7.5% lower than 2004. Operating proﬁt was MXPs$656
million, 1.2% lower than last year, with a sales margin of 11.1%, 72 basis points
higher than 2004. Operating ﬂow diminished by 3.2% in comparison with 2004;
the EBITDA margin was 12.7%, 58 basis points above 2004.
At the close of 2005, this sector had contracts for works to be executed in 2006
amounting to MXPs$43 billion 400 million.
The Manufacturing and Services sector for the Chemical and Oil Industries reported
revenue of MXPs$3 billion 94 million, 81.1% higher than last year. The operating
proﬁt was MXPs$505 million, 77.8% above the 2004 period; on the other hand,
operating ﬂow was MXPs$533 million, 77.3% higher than 2004. Operating and
EBITDA margins of 16.3% and 17.2% respectively diminished 31 and 37 basis points in comparison with the 2004 ﬁscal year.
In 2005, three oil rigs were timely completed and delivered and two production
platforms are being constructed and will be ﬁnished in 2006.
Among the works begun in 2006 is a telecommunications platform which is being
constructed in the yard of Pueblo Viejo, Veracruz, and a vacuum plant that is being
built at the PEMEX facilities in Dos Bocas, Tabasco.
In October 2005, an investment was approved of approximately US$40 million
to purchase machinery and equipment that will be used for the construction of a
structural piping plant for marine platforms and bridges, pressure piping for ducts
(poli-ducts and gas ducts). It is expected that this plant will start operating in the
ﬁrst half of 2007.
At year-end, the backlog in this sector is MXPs$3 billion 49 million.
CONSTRUCTORA DE INFRAESTRUCTURA LATINOAMERICANA
The CICSA infrastructure projects sector reported sales of MXPs$717 million during
the year, with an operating proﬁt of MXPs$47 million. The operating and EBITDA
margins were 6.5% and 6.6%, respectively.
The main projects in which this CICSA subsidiary is currently participating are the
construction of the Tepic – Villa Unión highway, the Northeastern Bypass of the
Metropolitan zone of Toluca, and the Northern Bypass of Mexico City, as well as the
construction of two water treatment plants in Saltillo, Coahuila.
At the close of 2005, this sector had an approximate backlog of MXPs$2 billion 600
million. In addition, in January 2006, a contract was signed for the construction of
the Mexico City Northern Bypass, for approximately MXPs$2 billion 700 million;
consequently, the projects pending at January 31, 2006 represent MXPs$5 billion
GRUPO PC CONSTRUCTORES
Grupo PC Constructores reported annual sales of MXPs$1 billion 201 million,
85.9% higher than last year. Operating proﬁt was MXPs$71 million, 66.8% higher than in 2004. Operating ﬂow rose by 67.4%, amounting to MXPs$71 million
during the year.
Among the works executed is a 90,000 square meter building located in downtown
Mexico City, which is the new headquarters of the Foreign Aﬀairs Ministry.
At year-end, Grupo PC Construcciones had a backlog of approximately MXPs$1 billion 274 million. Highlighted are the following: the construction of a sports complex in Ciudad Nezahualcoyotl, a new oﬃce area and parking lot at the National
Palace, and a Triara Data Center in the city of Querétaro.
reﬂected a continued
growth of its principal
Growth of consolidated Sales
The commercial division of Grupo Carso is formed by Grupo Sanborns and
its subsidiaries, which jointly operate almost 380 points of sale, with more
than 750,000 square meters of sales area.
In 2005, consumer activity was more dynamic than in 2004, due to a better
economy and despite the fact that unemployment levels remained high
and that interest rates tended to rise throughout the year.
solidation of Dorian’s. Operating ﬂow (EBITDA) was MXPs$4 billion 559 million, a
presenting a 19.0% increase over the previous year. Operating proﬁt was MXPs$3
reported as 14.1%, 65 basis points lower than 2004, resulting mainly from the con12.7% increase over 2004. The EBITDA margin was 16.7%, 94 basis points lower
than the EBITDA margin in 2004. Greater consumer activity contributed to higher
sales, although the consolidation of the Dorian’s Tijuana-owned formats resulted in
lower operating and EBITDA margins.
In 2005, Grupo Sanborns increased the rhythm of organic growth observed in recent years, with the expansion of its principal formats, emphasizing the location
of its new units. As part of the expansion plan, in 2005 Grupo Sanborns opened
its ﬁrst establishment outside of Mexico, consisting of a Sanborns store, a Dorian’s
During the year, Grupo Sanborns sold the chain of El Globo pastry shops to Grupo
department store and a Mix-up music store located in a new shopping mall in San
Salvador, El Salvador.
Bimbo. Grupo Sanborns received MXPs$1 billion 350 million which were used
mainly to reduce debt. In addition, Dorian’s Tijuana closed the sale of the 23 Solo
un Precio stores.
Grupo Sanborns strengthened its ﬁnancial structure during the year as a result of
its solid generation of cash, combined with the divestiture of assets. At year-end,
the company had a total debt of MXPs$3 billion 401 million, which was reduced
by MXPs$754 million during the year. The net debt was reduced by MXPs$1 billion
764 million, closing at MXPs$1,641 million at year-end.
During the year, Grupo Sanborns made capital investments of US$89 million, with
the opening of new points of sales.
(millions of pesos)
Annual sales of Grupo Sanborns of MXPs$27 billion 336 million were reported, rebillion 857 million, 13.8% higher than the previous year. The operating margin was
AND SANBORNS CAFÉ
Combined sales of Sanborns and Sanborns Café were MXPs$9 billion 16 million, 4.4% higher than last year. Same store sales rose by 1.3% during the year.
Operating proﬁt was MXPs$940 million, a 4.7% increase over 2004. Operating
margin remained stable in comparison with 2004. Operating ﬂow was MXPs$1
billion 181 million, 3.7% higher than in 2004, with a sales margin of 13.1%, a
crease of 15.8% in the number of active accounts during the year.
Growth trends of Sanborns continued on its cardholder base, reporting an in-
slight decrease compared with last year.
In 2005, seven Sanborn Hermanos stores were opened, to total 137 units at the
close of 2005, including the ﬁrst store outside Mexico, which was opened in San
Salvador, El Salvador. Likewise, 31 Sanborns Café’s were in operation at yearend; one was opened during the year while another unit was closed temporarily
following the hurricane Wilma.
Sears sales increased by 9.5% during the year, while same store sales increased by
7.6% over 2004. Operating margin rose by 16.1%, reaching MXPs$2 billion 32 million, while operating ﬂow, MXPs$2 billion 273 million, rose by 13.8%. Operating
and EBITDA margins increased by 94 and 70 basis points, respectively.
The Sears credit card held stable as a valuable sales instrument for this chain of
stores. At year-end, the number of active accounts was 1,386,061, a 25.6% increase over the previous year; the credit portfolio had a value at the close of 2005
of MXPs$6 billion 599 million, while the level of overdue portfolio remained low
and stable throughout the year, closing at 1.43%. In 2005, approximately 63.5% of
total sales of Sears were eﬀected with the Sears Credit Card.
Throughout the year, two new Sears stores opened their doors, located in Ecatepec,
Estado de México, and Monterrey, Nuevo León. At year-end, one store was temporarily closed as a result of the hurricane Wilma; consequently, at December 31,
2005, 50 stores and 1 Pier 1 Boutique were operating.
During the year, Dorian’s reported sales of MXPs$2 billion 997 million; operating
proﬁt was MXPs$79 million, with a margin on sales of 2.6%. Operating ﬂow was
MXPs$147 million, with an EBITDA margin of 5%.
At year-end, Dorian’s Tijuana operated 54 units under the Dorian’s, Dax and Más
formats, including one store in El Salvador.
In 2005, the music store division of Grupo Sanborns remained the distributor with
the greatest and most varied musical supply in the country, complemented by the
wide range of entertainment products, among which motion pictures and videogames are signiﬁcant.
Total sales of this division were MXPs$1 billion 815 million during the year, with a
the Mix-up, No Problem, Tower Records and Discolandia formats.
At year-end, this division operated 71 units, including a store in El Salvador under
real terms during the year 2005.
son with 2004. Operating proﬁt rose by 5.7%, while EBITDA diminished slightly in
6.5% increase in real terms, while same store sales increased by 2.4% in compari-
CARLOS SLIM HELÚ
CARLOS SLIM DOMIT
RUBÉN AGUILAR MONTEVERDE
ANTONIO COSÍO ARIÑO
JAIME CHICO PARDO
ARTURO ELÍAS AYUB
CLAUDIO X. GONZALEZ LAPORTE
RAFAEL MOISÉS KALACH MIZRAHI
JOSÉ KURI HARFUSH
JUAN ANTONIO PÉREZ SIMÓN
AGUSTIN SANTAMARINA VÁZQUEZ
PATRICK SLIM DOMIT
FERNANDO SOLANA MORALES
ALTERNATE BOARD MEMBERS
MARCO ANTONIO SLIM DOMIT
DANIEL HAJJ ABOUMRAD
JULIO GUTIÉRREZ TRUJILLO
ANTONIO COSíO PANDO
FERNANDO G. CHICO PARDO
EDUARDO VALDES ACRA
DAVID IBARRA MUÑOZ
ALEJANDRO ABOUMRAD GABRIEL
IGNACIO COBO GONZÁLEZ
ANTONIO GÓMEZ GARCÍA
ALFONSO SALEM SLIM
CARLOS HAJJ ABOUMRAD
CARLOS FRÍAS LÓPEZ
COB Emeritus - Teléfonos de México
COB Emeritus - Carso Global Telecom
COB Emeritus- Grupo Financiero Inbursa
COB Emeritus - América Móvil
COB Emeritus - América Telecom
COB Emeritus - Grupo Carso
COB - Impulsora del Desarrollo y el Empleo
en América Latina
COB - Carso Infraestructura y Construcción
COB - Grupo Carso
COB - Grupo Sanborns
COB - U.S. Commercial Corp.
COB - Teléfonos de México
Vicechairman - América Telecom
Vicechairman - Carso Global Telecom
CEO - Sanborn Hermanos
Member of National Advisory Board - Banco
Nacional de México, S.A.
CEO - Cía. Industrial de Tepeji del Río
Vicechairman and CEO - Teléfonos de México
COB and CEO - Carso Global Telecom
Vicechairman - América Telecom
Director of Strategical Alliances, Communication
and Institucional Relations - Teléfonos de México
COB - Kimberly Clark de México
COB and CEO - Grupo Kaltex
COB - Janel
Vicechairman - Teléfonos de México
COB - Sanborn Hermanos
Board Member - Santamarina y Steta
COB - América Telecom
COB - Grupo Telvista
COB - América Móvil
Vicechairman - Grupo Carso
Director of Retail - Teléfonos de México
CEO - Solana y Asociados, S.C.
COB and CEO - Grupo Financiero Inbursa
COB - Inversora Bursátil
COB - Seguros Inbursa
CEO - América Móvil
CEO - América Telecom
General Manager - Cía. Industrial de Tepeji del Río
CEO - Promecap, S.C.
Vicechairman - Grupo Financiero Inbursa
COB - Banco Inbursa
CEO - Inversora Bursátil
CEO - Despacho David Ibarra Muñoz
COB - Porcelanite
COB - Grupo Calinda
CEO - Porcelanite
CEO - U.S. Commercial Corp.
CEO - Impulsora del Desarrollo y el Empleo
en América Latina
CEO - Grupo Carso
CEO - Carso Infraestructura y Construcción
COB and CEO - Grupo Condumex
CEO - Sears Roebuck de México
TYPE OF BOARD
CARLOS SERGIO CASAÑA ESPERÓN
Member - PricewaterhouseCoopers
Member - Colegio de Contadores Públicos de México, A.C.
Board Member - Patronato del Museo de la Ciudad de México
Member - PricewaterhouseCoopers
QUINTÍN HUMBERTO BOTAS HERNÁNDEZ
Comptroller - Grupo Condumex
SERGIO F. MEDINA NORIEGA
Legal Director - Teléfonos de México
ALEJANDRO ARCHUNDIA BECERRA
Legal General Manager - Grupo Condumex
* Years as board member are considered since 1990, year of inscription in the Bolsa Mexicana de Valores.
** Based on Board Members Information.
Grupo Carso, S.A. de C.V. and Subsidiaries
Annual Report of the Auditing and Finance
and Planning Committee
March 15, 2006
To the Board of Directors:
In the terms of the Securities Market Law, general provisions applicable to issuers of securities and other participants in the securities market promulgated by the National Banking and Securities Commission, and the recommendations contained in the Code of
the Best Corporate Practices, we hereby inform the Board of our activities in the 2005 ﬁscal year.
In respect to our auditing functions, we reviewed the accounting policies, procedures and practices of the Company, as well as the
ﬁnancial information it prepared and ﬁled with the Bolsa Mexicana de Valores, S.A. de C.V. and the National Banking and Securities
Commission, supported in our review by Company administration and its internal auditing and external auditing departments. As a
result of this revision: (i) we have not considered it necessary to submit to the consideration of the Board any change in respect to
said accounting policies, except for the changes and additions to the policies adopted in the terms of various bulletins issued by the
Mexican Institute of Public Accountants; and (ii) we veriﬁed that the intermediate public ﬁnancial information is prepared by using
the same accounting principles, criteria and practices as those with which the annual information will be prepared.
In respect to external auditors, in addition to reviewing their performance, we veriﬁed that: a) the partner of the external auditing
ﬁrm that certiﬁed the results of the Company had been performing said function for less than six years; b) the person who signed
the certiﬁcation of the audited ﬁnancial statements of Grupo Carso, S.A. de C.V., was someone other than the Company Statutory
Auditor; and c) the external auditors’ fees were adequate and represent less than 20% of their total revenues.
As to internal control standards, the internal auditing areas of the Company are permanently in charge of verifying that they are
being satisﬁed and for this purpose, they review and in such case revise that any deviations detected and reported are corrected.
On the other hand, and as a result of the revision they effected in this respect, the external auditors presented to the Company a
report with certain recommendations, none of which was material. In view of the foregoing, we conclude that the internal control
system of Grupo Carso, S.A. de C.V. satisﬁes the principles of effectiveness for which it was created.
We further veriﬁed that the Company has controls that allow for determining that the applicable provisions of the securities market
are satisﬁed and that the internal auditors and the legal department conduct a review at least once a year to verify if the company
complies with them. In this respect, there were no comments and no adverse changes in its legal situation.
Lastly, we reviewed the ﬁnancial statements as of December 31, 2005 of Grupo Carso, S.A. de C.V. and subsidiaries and we agree
FINANCE AND PLANNING FUNCTIONS
As to our ﬁnance and planning functions, we mention that during the 2005 ﬁscal year, Grupo Carso, S.A. de C.V. and some of its
subsidiaries made signiﬁcant investments. We veriﬁed that the ﬁnancing of these investments was carried out consistently with the
medium and long term strategic plan of the Company. In addition, we evaluated from time to time that the strategic position of the
Company conformed to the premises of said plan.
We also revised and evaluated the budget for the 2005 ﬁscal year together with ﬁnancial projections that were taken into account for their preparation. The principal investments and ﬁnancing transactions of the Company were included in such budget
and we consider that they are viable and consistent with the investment and ﬁnance policies and with the strategic vision of
Lastly, we point out that for duly performing our activities, we used as a basis the information provided to us by the Grupo Carso,
S.A. de C.V. management and its external auditors.
José Kuri Harfush
Antonio Cosío Ariño
Claudio X. González Laporte
Rafael Moisés Kalach Mizrahi
Juan Antonio Pérez Simón
Jorge Serrano Esponda
Jesús Granillo Rodríguez
Design: Signi, S.C. • Printing: Artes Gráﬁcas Panorama
Change: 2 stocks: 1 ADR
CUSIP Number: 400485207
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