FORM 20-F Grupo Casa Saba, S.A.B. de C.V.

More documents

Recommendations

Info

Table of Contents Risk Factors Relating to Economic and Political Developments Economic and Political Developments in Mexico May Adversely Affect Our Business. We are a Mexican company and the vast majority of our business operations take place in Mexico. Approximately 78% of our consolidated net sales for the year ended December 31, 2011 derived from sales made in Mexico. Consequently, our business, financial condition and results of operations are affected by economic, political or social developments in Mexico, including, among others, any political or social instability, changes in the rate of economic growth or contraction, changes in the exchange rate between the Peso and the U.S. Dollar, an increase in Mexican inflation or interest rates, changes in Mexican taxation and any amendments to existing Mexican laws and regulations. Accordingly, Mexican governmental actions and policies concerning the economy in general and healthcare policy in particular could have a significant impact on us, as well as more generally on market conditions, prices and returns on Mexican equity securities. We cannot assure you that changes in governmental policies in Mexico will not adversely affect our business, results of operations, financial condition and prospects. Social and political instability in Mexico or other adverse social or political developments in or affecting the countries in which we have operations could adversely affect us and our ability to obtain financing. We cannot provide any assurance that the current political situation or any future developments in Mexico will not have a material adverse effect on our financial condition or results of operations. The presidential election in México will take place in July 2012, and the elected president will take office in December, 2012. In response to his or her election, diverse social and political changes could arise as consequence of the significant policy differences between the principal political parties in México, which could, in turn, have an adverse effect on our financial condition or our results of operation. Our business may be adversely affected by economic conditions in Mexico. Mexico has experienced both prolonged periods of weak economic conditions and deterioration in economic conditions that have had an adverse effect on our company. During 2011, Mexico’s gross domestic product, or GDP, grew by 3.9%. Mexico has also experienced high levels of inflation and high domestic interest rates in the past, which significantly lowered the purchasing power of consumers and businesses. The annual rate of inflation, as measured by changes in the NCPI, as published by the Banco de México, was 3.8% for 2011 and the average interest rate on 28-day Mexican government treasury securities, or “CETES”, averaged 4.2%. In addition, the Mexican government’s efforts to control inflation by tightening the monetary supply have historically resulted in higher financing costs, as real interest rates have increased. High inflation rates may also lead to Peso devaluations. Inflation itself, as well as governmental efforts to reduce inflation, has had significant negative effects on the Mexican economy in general and on Mexican companies, including ours. Such policies have had and could in the future have an adverse effect on us. Future economic slowdowns or developments in or affecting Mexico could adversely affect our business, results of operations, financial condition, prospects and ability to obtain financing. In addition, international events affecting Mexico may also have an adverse effect on our business. Mexico Has Experienced a Period of Increasing Criminal Activity and Such Activities Could Adversely Affect Our Financing Costs and Exposure to Our Customers and Counterparts. Recently, Mexico has experienced a period of increasing criminal activity and violence, primarily due to organized crime. These activities, their possible escalation and the violence associated with them may have an adverse effect on the business environment in which we operate and, therefore, on our financial condition and the results of operation. Devaluation of the Peso Against the U.S. Dollar Could Adversely Affect Our Financial Condition and Results of Operations. We are affected by fluctuations in the value of the Peso against the U.S. Dollar. In 2004, high oil prices, higher remittance levels and a recovery in the U.S. economy led to a slight appreciation of the Peso against the U.S. Dollar of 0.8%. During 2005, this trend continued in that the peso appreciated 4.7% against the U.S. Dollar. In 2006, however, the peso depreciated 1.6% with respect to the U.S. Dollar due to higher inflation levels in Mexico. The combination of more moderate GDP growth and a slightly lower level of inflation led to a 1.0% depreciation of the Peso against the U.S. Dollar in 2007. As a result of the global economic crisis that began in 2008 and has lead to a significant increase in inflation as well as slowdown in GDP growth, the Peso depreciated by 26.7% versus the U.S. Dollar in 2008. In 2009, the Peso appreciated 5.6% against the U.S. Dollar as a result of lower inflation levels and in 2010, the Peso appreciated an additional 5.2% against the U.S. Dollar, driven in large part by the increase in GDP as well as a relatively low inflation rate. During 2011, the pesos depreciated 12.7% against the U.S. Dollar primarily as a result of lower GDP growth brought on by a record drought that has fueled increases in farm prices as well as the failure of the U.S. and other major economies to fully recover from the economic crisis, and concerns regarding the potential for economic contagion stemming from the sovereign debt crisis and material weaknesses in several European countries. 13
Table of Contents Any future depreciation or devaluation of the Peso will most likely result in price increases from our suppliers. If this were to happen, it would, in turn, impact the purchasing capacity of the final consumers. This, in turn, would lead to a reduction in our sales. A severe devaluation or depreciation of the Peso may also disrupt international foreign exchange markets and, as such, may limit our ability to transfer or to convert Pesos into U.S. Dollars and other currencies for the purpose of obtaining imported goods. A devaluation or depreciation of the Peso against the U.S. Dollar may also adversely affect the U.S. Dollar prices of our securities on the Mexican Stock Exchange, including the Ordinary Shares and, as a result, will likely affect the market price of the ADSs. Such fluctuations would also impact the conversion value of any cash dividends paid on the Ordinary Shares in Pesos into U.S. Dollars in order to pay such dividend to the holders of our ADSs. High Levels of Inflation and High Interest Rates in Mexico Could Adversely Affect Our Financial Condition and Results of Operations. In recent years, Mexico has experienced high levels of inflation. The annual rate of inflation, as measured by changes in the NCPI, was, 3.8% for 2007, 6.5% for 2008, 3.6% in 2009, 4.4% in 2010 and 3.8% in 2011. High inflation rates can adversely affect our business and our results of operations in the following ways: ● ● inflation can adversely affect consumer purchasing power, thereby adversely affecting consumer demand for the products we sell and/or distribute; and to the extent that inflation exceeds price increases, our prices and revenues will be adversely affected in “real” terms. Mexico also has, and could continue to have, high nominal interest rates. The interest rates on 28-day CETES averaged approximately, 7.7% in 2008, 5.4% in 2009, 4.4% in 2010, 4.2% during 2011, and by March 2012 the CETE remained stable, averaging 4.2% for the quarter. Accordingly, we may be subject to high interest rates in the event we incur Peso-denominated debt in the future. If Foreign Currency Exchange Controls and Restrictions Are Imposed, Investors would be Exposed to Foreign Currency Exchange Rate Risk. In the past, the Mexican economy has experienced balance of payments deficits, shortages in foreign currency reserves and other issues that have affected the availability of foreign currencies in Mexico. The Mexican government does not currently restrict or regulate the ability of persons or entities to convert Pesos into U.S. Dollars. However, it has done so in the past and could do so again in the future. We cannot assure you that the Mexican government will not institute a restrictive foreign currency exchange control policy in the future. Any such restrictive foreign currency exchange control policy could (i) affect the ability of the depositary of our ADSs to convert dividends, which are payable in Pesos, into U.S. Dollars for purposes of making distributions to the holders of our ADSs, (ii) prevent or restrict access to U.S. Dollars, (iii) should we incur any U.S. Dollar-denominated debt in the future, affect our ability to service such debt and (iv) have an adverse effect on our business and financial condition. Risks Related to Our Operations in Brazil May Adversely Affect Our Business. As a result of our acquisition of Drogasmil in May 2008, we are exposed to a variety of risks and uncertainties related to our operations in Brazil including political, economic or social upheaval, devaluations in the Real, high levels of inflation and interest rates, the introduction of import, investment or currency restrictions, including pricing regulation on pharmaceutical products, restrictions on the repatriation of earnings and capital, as well as tariffs and import quotas that may indirectly increase the cost of the products that we sell. These disruptions can affect our ability to sell products and to repatriate funds, affecting the levels of consumer demand, and therefore our levels of sales and profitability. The Brazilian monetary unit, the Real, has been devalued frequently over the past four decades. Throughout this period, the Brazilian government has implemented various economic plans and exchange rate policies, including sudden devaluations, exchange controls, dual exchange rate markets and a floating exchange rate system. From time to time, there have been significant fluctuations in the exchange rate between the Brazilian currency and the U.S. Dollar and other currencies. For example, the Real depreciated against the U.S. Dollar, on average, by 22.3% in 2001, 19.6% in 2002 and 4.8% in 2003. In 2004, 2005, 2006 and 2007 the Real appreciated 8.8%, 13.4%, 9.5% and 16.3%, respectively, against the U.S. Dollar. In 2008, the Real depreciated 31.9% against the U.S. Dollar, in 2009 the Real appreciated 24.7% against the U.S. Dollar and in 2010, the Real appreciated an additional 3.3% against the U.S. dollar. However, the Real depreciated 12.0% against the U.S. dollar in 2011. In general, devaluations decrease consumers’ purchasing power, which could have a negative effect on our business should a devaluation occur. 14
Page 1 and 2: UNITED STATES SECURITIES AND EXCHAN
Page 3 and 4: TABLE OF CONTENTS PART I Item 1. Id
Page 5 and 6: Table of Contents We caution you th
Page 7 and 8: Table of Contents Year ended Decemb
Page 9 and 10: Table of Contents To the extent tha
Page 11 and 12: Table of Contents We Provide Remote
Page 13 and 14: Table of Contents We Are a Holding
Page 15: Table of Contents Today, the market
Page 19 and 20: Table of Contents Risk Factors Rela
Page 21 and 22: Table of Contents In August 2009, A
Page 23 and 24: Table of Contents In April of 2008,
Page 25 and 26: Table of Contents The Acquisition h
Page 27 and 28: Table of Contents On September 19,
Page 29 and 30: Table of Contents On September 19,
Page 31 and 32: Table of Contents At our annual gen
Page 33 and 34: Table of Contents We distribute the
Page 35 and 36: Table of Contents In our stores, we
Page 37 and 38: Table of Contents Prior to 2008, th
Page 39 and 40: Table of Contents In 2011, we conti
Page 41 and 42: Table of Contents To better serve s
Page 43 and 44: Table of Contents ● Mexsana talcu
Page 45 and 46: Table of Contents Payments and Coll
Page 47 and 48: Table of Contents Information Techn
Page 49 and 50: Table of Contents In addition to th
Page 51 and 52: Table of Contents (3) In Mexico, ph
Page 53 and 54: Table of Contents (4) To calculate
Page 55 and 56: Table of Contents We also offer our
Page 57 and 58: Table of Contents The devaluation o
Page 59 and 60: Table of Contents (****) Associates
Page 61 and 62: Table of Contents In January 2009 w
Page 63 and 64: Table of Contents In our Retail Pha
Page 65 and 66: Table of Contents Inflation and Int
Page 67 and 68:
Table of Contents With the acquisit
Page 69 and 70:
Table of Contents Results of Operat
Page 71 and 72:
Table of Contents Net Income. The G
Page 73 and 74:
Table of Contents On March 25, 2010
Page 75 and 76:
Table of Contents Grupo Casa Saba i
Page 77 and 78:
Table of Contents In the event that
Page 79 and 80:
Table of Contents Grupo Casa Saba h
Page 81 and 82:
Table of Contents Prior to the noti
Page 83 and 84:
Property and equipment Our balance
Page 85 and 86:
Labor obligations Our labor liabili
Page 87 and 88:
Tax and legal contingencies We are
Page 89 and 90:
FRS C-4. “Inventories” (FRS C-4
Page 91 and 92:
Table of Contents As of the transit
Page 93 and 94:
Table of Contents Name and Date of
Page 95 and 96:
Table of Contents Employee Profit S
Page 97 and 98:
Table of Contents The Chairman of t
Page 99 and 100:
Table of Contents All related party
Page 101 and 102:
Table of Contents Significant Chang
Page 103 and 104:
Table of Contents The table below s
Page 105 and 106:
Table of Contents ● ● ● ● a
Page 107 and 108:
Table of Contents ● ● ● ●
Page 109 and 110:
Table of Contents Directors Under t
Page 111 and 112:
Table of Contents Forfeiture of Sha
Page 113 and 114:
Table of Contents We are organized
Page 115 and 116:
Table of Contents Ownership by non-
Page 117 and 118:
Table of Contents ● Gain on sales
Page 119 and 120:
Table of Contents We anticipate tha
Page 121 and 122:
Table of Contents As a foreign priv
Page 123 and 124:
Table of Contents Item 12. Item 12A
Page 125 and 126:
Table of Contents During the review
Page 127 and 128:
Table of Contents Since we are Mexi
Page 129 and 130:
Table of Contents PART III Item 17.
Page 131 and 132:
Table of Contents INDEX TO CONSOLID
Page 133 and 134:
Table of Contents REPORT OF INDEPEN
Page 135 and 136:
Table of Contents ATTESTATION REPOR
Page 137 and 138:
Table of Contents Grupo Casa Saba,
Page 139 and 140:
Table of Contents Grupo Casa Saba,
Page 141 and 142:
Table of Contents NOTES TO THE CONS
Page 143 and 144:
Table of Contents a) Through an ass
Page 145 and 146:
Table of Contents Proforma condense
Page 147 and 148:
Table of Contents 3. Significant ac
Page 149 and 150:
Table of Contents The errors accoun
Page 151 and 152:
Table of Contents Investments in as
Page 153 and 154:
Table of Contents Effective 2011, t
Page 155 and 156:
Table of Contents The Company recog
Page 157 and 158:
Table of Contents The Group has cre
Page 159 and 160:
Table of Contents In addition, the
Page 161 and 162:
Table of Contents Foreign currency
Page 163 and 164:
Table of Contents 8. Derivative fin
Page 165 and 166:
Table of Contents 10. Goodwill, int
Page 167 and 168:
Table of Contents At December 31, 2
Page 169 and 170:
Table of Contents On January 25 and
Page 171 and 172:
Table of Contents 13. Other payable
Page 173 and 174:
Table of Contents 15. Foreign curre
Page 175 and 176:
Table of Contents On December 18, 2
Page 177 and 178:
Table of Contents c) Tax loss carry
Page 179 and 180:
Table of Contents All significant t
Page 181 and 182:
Table of Contents On December 7, 20
Page 183 and 184:
Table of Contents ● ● For real
Page 185 and 186:
Table of Contents 22. Differences b
Page 187 and 188:
Table of Contents ii) For Mexican F
Page 189 and 190:
Table of Contents At December 31, 2
Page 191 and 192:
Table of Contents 23. Reconciliatio
Page 193 and 194:
Table of Contents 24. Supplementary
Page 195 and 196:
Table of Contents g) Quantitative a
Page 197 and 198:
Table of Contents ● In October 20
Page 199 and 200:
Table of Contents Page Representati
Page 201 and 202:
CREDIT AGREEMENT (THIS “AGREEMENT
Page 203 and 204:
(k) To the best of its knowledge, F
Page 205 and 206:
(aa) Any and all funds used by it t
Page 207 and 208:
“Authorized Officer” shall mean
Page 209 and 210:
“Drawdown” shall mean each draw
Page 211 and 212:
“Interest Payment Date” has the
Page 213 and 214:
“Share Pledge Agreement” shall
Page 215 and 216:
(g) The Lenders shall credit the am
Page 217 and 218:
(e) If the Borrower defaults with a
Page 219 and 220:
(iii) concurrently with the deliver
Page 221 and 222:
(j) Maintenance of Property. The Bo
Page 223 and 224:
(ii) To the extent permitted by the
Page 225 and 226:
(ii) date thereof; Liens imposed by
Page 227 and 228:
ARTICLE THIRTEEN. Conditions Preced
Page 229 and 230:
(xxii) neither the execution of the
Page 231 and 232:
(i) Insolvency. (i) If the Borrower
Page 233 and 234:
(b) If as a result of the amendment
Page 235 and 236:
(B) The Chilean Collateral Agent. (
Page 237 and 238:
(iii) Neither the Chilean Collatera
Page 239 and 240:
(h) Effective Term. Unless revoked
Page 241 and 242:
(c) effective. Absent written notic
Page 243 and 244:
This Credit Agreement is executed i
Page 245 and 246:
The Chilean Collateral Agent: HSBC
Page 247 and 248:
(c) If the Central Bank of Mexico s
Page 249 and 250:
Joint and Several Obligations. (a)
Page 251 and 252:
(k) Material Adverse Effect. If the
Page 253 and 254:
Exhibit 4.3 SUMMARY OF THE IRREVOCA
Page 255 and 256:
(6) defend, at its own cost and exp
Page 257 and 258:
(5) the balance remaining after the
Page 259 and 260:
In addition, articles Three, Four a
Page 261 and 262:
(j) deliver, within five (5) days f
Page 263 and 264:
Governing Law and Jurisdiction. Thi
Page 265 and 266:
Servicios Corporativos Doctorgen, S
Page 267 and 268:
Exhibit 12.2 CERTIFICATION I, Juan
show all

FORM 20-F Grupo Casa Saba, S.A.B. de C.V.

Create successful ePaper yourself

Delete template?

Save as template?