Reports by the Board of Directors of Grupo Carso, S.A.B. de C.V. on the principal accounting and information policies and criteria that were followed in the preparation of the Company’s financial statements and on the operations and activities in which it engaged, are in conformance with Article 28, Fraction IV, subparagraphs d) and e) of the Stock Market Law.
Main accounting and information policies and criteria followed in the preparation of the financial statements.
The Board of Directors reviewed and approved, with the prior favorable opinion of the Company Practices and Auditing Committee, the accounting and information policies and criteria utilized in the preparation of the consolidated financial statements of Grupo Carso, S.A.B. de C.V., and subsidiary companies up to December 31 of 2020, in which reference is made to the following aspects, among others:
1. Activities
2. Significant events
3. Combination of businesses
4. Consolidated subsidiaries
5. Cash and cash equivalents
6. Held-to-maturity securities
7. Accounts receivable
8. Recoverable taxes
9. Inventories
10. Rights of use assets
11. Lease liabilities
12. Administration of financial risks
13. Financial instrument
14. Derivative financial instruments
15. Real estate, machinery and equipment
16. Investment properties
17. Investments in shares of associated companies, joint ventures and other
18. Other assets
19. Intangible assets
20. Short- and long-term debt
21. Other accounts payable and accumulated liabilities
22. Provisions
23. Employee retirement benefits
24. Accounting capital
25. Balances and transactions with related parties
26. Revenue
27. Itemized costs/expenses
28. Other (income) expenses, Net
29. Tax on profits
30. Commitments
31. Contingencies
32. Segment Information
33. Adoption of the new and revised International Standards on Financial Information
34. Principal accounting policies
35. Critical accounting opinions and key sources of uncertainty in the estimates.
36. Transactions that did not produce cash flow
37. New and revised IFRS’s that were not in effect at the time
38. Events that occurred after the reporting date
39. Authorization for the issuance of the consolidated financial statements.
The details and scope of the accounting and information policies and criteria indicated above are found in Note No. 34, Principal accounting policies of the said financial statements, and their respective texts are considered to be reproduced here in an integral manner as if they had in fact been inserted to the letter.
Matters established in the Stock Market Law
During the fiscal year of 2020 and up to the present date, the Board of Directors of Grupo Carso, S.A.B. de C.V. held several meetings in which the information relative to the Company’s and its subsidiaries’ results and operations, as well as the Company’s consolidated and unconsolidated financial statements, were presented to the Board members. In the said meetings the Board members dealt with various matters, among them some of the provisions established in the Stock Market Law, and they approved, after the favorable opinion of the Company Practices and Auditing Committee, the following matters:
1) The operations with related parties successively carried out by some subsidiaries of Grupo Carso, S.A.B. de C.V., each of which represent more than one percent of the consolidated assets of the Company, in conformance with the following:
a) Transactions carried out in the amount of 5,675,434 thousand of pesos between Red Nacional Última Milla, S.A. P.I. de C.V. and (i) Carso Infraestructura y Construcción, S.A. de C.V. (“CICSA”) and some of its subsidiaries: down pipes, maintenance, and conduits; and (iii) Grupo Condumex, S.A. de C.V. (“Grupo Condumex”) and some of its subsidiaries: sale of cabinets for telecommunications.
b) Transactions carried out for 2,180,710 thousand of pesos between Aptiv Services US LLC and other companies of Grupo Aptiv and Grupo Condumex and some of its subsidiaries: sale of harnesses and cables, and automotive engineering services.
c) Transactions carried out for 1,894,917 thousand of pesos between Claro, S.A. and (i) CICSA and some of its subsidiaries: fabrication and installation of radio bases; installation of fiber optic cable and design of networks, including the sale of copper telephone and fiber optic cable; and (iii) Grupo Condumex and some of its subsidiaries: sale of wire and fiber optic cable.
d) Transactions carried out for 1,747,885 thousands of pesos between Teléfonos de México, S.A.B. de C.V. and (i) Grupo Condumex and some of its subsidiaries: sale of telephone cable and fiber optic cable, telephone installation services and the sale of telephony items; (ii) Cicsa and some of its subsidiaries: long-distance optic fiber loops and the customization of telephony sites; (iii) Grupo Sanborns, S.A.B. de C.V. and some of its subsidiaries: Dining hall services, and (iv) Carso Eficentrum, S.A. de C.V.: commissions from the sale of scrap metal and for the salvage and replacement of automobiles for fleets.
All the operations with related parties were reviewed by Galaz, Yamazaki, Ruiz Urquiza, S.C. and a summary of the said operations is found in Note 25 of the financial statements rendered by Grupo Carso, S.A.B. de C.V. and its subsidiaries up to December 31 of 2020.
2) The ratification by the accounting firm Galaz, Yamazaki, Ruiz Urquiza, S.C. to provide the external auditing services of the consolidated financial statements of Grupo Carso, S.A.B. de C.V. and of its subsidiaries up to December 31 of 2020, as well as the ratification of its fees.
3) The consolidated financial statement of Grupo Carso, S.A.B. de C.V. and its subsidiaries up to December 31 of 2020, to be submitted to the consideration of the annual ordinary general assembly of the Company’s shareholders.
Mexico City, on March 29 of 2021
Chairman of the Board of Directors
Mr. Carlos Slim Domit
