C.P.A. Rafael Moisés Kalach Mizrahi Chairman
Engr. Antonio Cosío Ariño
Lic. David Ibarra Muñoz
Annual Report
To the Board of Directors:
In my capacity as Chairman of the Auditing and Company Practices Committee of Grupo Carso, S.A.B. de C.V. (the “Committee”), I hereby submit the following annual report on the activities carried out during the fiscal year of 2021.
Functions of Company Practices and of Evaluation and Compensation
The director general of Grupo Carso, S.A.B. de C.V. (the “Company”) and the directors of the juridical persons controlled by the Company have satisfactorily complied with their responsibilities and carried out the objectives with which they were entrusted.
The operations with related parties that were submitted to the consideration of the Committee were approved. Among them were the following significant operations, each of which represents more than one percent of the Company’s consolidated assets, executed in a successive manner:
“Empresa de Servicios y Soporte Integral GC, S.A.P.I. de C.V., for the concept of fiber optics down-pipes (from the post to the well); installation of chambers (Ciudad Segura), external installation of fiber optics; engineering works (design of the telephony and internet network for Telmex companies); installation of engineering works (design of the telephony and internet connectivity network for Telmex companies); the Última Milla, S.A.P.I. de C.V. network; for the concept of high zero down pipes, maintenance and duct works; and (ii) Grupo Condumex, S.A. de C.V. (“Grupo Condumex”) and some of its subsidiaries: sale of cabinets for telecommunications; Aptiv Services US LLC and other Grupo Aptiv companies, for the sale of harnesses and cables and automotive engineering services".
All the operations with related parties were carried out at market prices and they were examined by the accounting firm Galaz, Yamazaki, Ruiz Urquiza, S.C. (the “Office”), the juridical person who carried out the audit of Grupo Carso, S.A.B. de C.V. and its subsidiaries to December 31 2021, as well as the audit of the majority of its subsidiaries, and a summary of those audits can be found in a note on the said financial statements.
The director general of the Company does not receive any remuneration for the performance of his functions as such. The Company does not have employees, and as for the integral remuneration of the directors of the companies controlled by the Company we have ascertained that they were in compliance with the policies that were approved by the Board of Directors in that respect.
The Company’s Board of Directors did not confer any dispensation that would allow a Director, officer or any other person with authority to take advantage, for himself or for any third party, of business opportunities pertaining to the Company or to the juridical persons that it controls or in which it has a significant influence. The Committee also, has not granted any dispensation for the transactions referred to in subparagraph c), fraction III of Article 28 of the Stock Market Law.
Auditing Functions
We proposed to the Board of Directors that they ratify the utilization of the accounting firm of Galaz, Yamazaki, Ruiz Urquiza, S.C. to carry out the external audit of the financial statements of Grupo Carso, S.A.B. de C.V. and of the majority of its subsidiaries to December 31 2021, as well as the ratification of the accounting firm’s fees for that service, having considered that the resources proposed by the accounting firm for the execution of the audit were reasonable, given the scope of the said audit, the nature and complexity of the Company’s activities and its structure. We also examined the terms of the audit.
We evaluated the compliance by the Office and by the Independent External Auditor with the personal, professional and independence requirements established in Article 6 of the general provisions applicable to the entities that have contracted external auditing services (the “External Auditors Circular”) and determined that they were in compliance with the said requirements.
We did not consider it necessary to implement any measure to ensure the Independence of the Office and of the Independent External Auditor or of the personnel who participated in the Audit.
We obtained from the Office a declaration in regard to their compliance with the quality control standard for the performance of the services corresponding to the Audit, as referred to in fraction II of Article 20 of the External Auditors Regulations.
We carefully followed the auditing activities realized by the Office, and kept the Board of Directors informed in that regard. We also monitored the activities of the Independent External Auditor, who kept us informed of the progress of the Audit.
After a review of the opinion on the financial statements of Grupo Carso, S.A.B. de C.V. and its subsidiaries up to 31 December 2021, there were no significant adjustments to the audited numbers or any changes to report in the said statements.
After a review of the observations by the Independent External Auditor, as established in fraction I of Article 15 of the External Auditors Circular (the “Observations Communiqué”) in regard to the substantive procedures, the evaluation of the internal control and the relevant matters that the independent External Auditor provided to the Company we found various observations in regard to the issuer and some of its subsidiaries. In that respect, the Company’s Administration informed us that a Plan of Action is being prepared for the purpose of addressing those observations, in conformance with the indications in the applicable legal provisions.
We were not advised of any important breach of operations policies or accounting regulations by the Company or by the juridical persons controlled by the Company and therefore no corrective or preventive measures were implemented in that respect.
The performance by the Office and by the Independent External Auditor was as expected, and the objectives that were established when they were contracted were achieved. The opinion of the financial statements of Grupo Carso, S.A.B. de C.V. and its subsidiaries up to December 31 2021 was also satisfactory.
The internal control and internal audit system of Grupo Carso, S.A.B. de C.V. and of the juridical persons it controls is satisfactory and meets the guidelines approved by the Board of Directors, as can be gathered from the information provided to the Committee by the Board and by the persons responsible for the internal audit of Grupo Carso, S.A.B. de C.V. as well as of Grupo Sanborns, S.A.B. de C.V. in respect to the activities they carried out in compliance with the internal audit plan and the follow-up of the principal findings that were discovered during the fiscal year of 2021 or that they had previously discovered prior to the external audit.
In conformance with the information provided to us by the Administration and the meetings we held with the external and internal auditors, without the presence of Company officers, and as far as we are aware, there were no relevant observations made by shareholders, Directors or employees or by any third party in general in regard to the accounting, the internal controls or matters related to the internal or external audit, nor any denunciation by the said persons in regard to irregularities carried out in the Company’s administration or by the juridical persons it controls.
During the reporting period, we ensured that the accords adopted by the shareholder assemblies and by the Board of Directors were duly complied with. Likewise, in accordance with the information provided to us by the Company’s administration, we verified that it has controls in place to ensure that it complies with the regulations applicable to the Company in regard to the stock market, that the legal department reviews the said compliance at least once a year, and that there have been no violations in that respect or any adverse change in the Company’s legal situation.
In regard to the financial information that the Company is preparing for submission to the Bolsa Mexicana de Valores, S.A.B. de C.V. (the Mexican Stock Market) and to the National Banking and Securities Commission, we have ensured that the said information is being elaborated under the same policies, criteria and accounting practices as will be used for the annual report.
Finances and Planning Functions
The Company and the juridical persons it controls have renewed their investments in the fiscal year of 2021, and we have ensured that the financing for those investments has been carried out in a manner that is in harmony with the Company’s medium- and long-term strategic plan. Additionally, we also periodically evaluate the Company’s strategic position to establish that it is in accordance with the said plan. We also reviewed and evaluated the budget for the fiscal year of 2022, as well as the financial projections that were taken into account for its elaboration, which included the Company’s principal investments and financial transactions, all of which we considered viable and in harmony with the Company’s investment and financing policies and with its strategic outlook.
For the elaboration of this report, the Auditing and Company Practices Committee utilized the information that was provided to it by the director general of the Company, by the Boards of Directors of the juridical persons controlled by the Company, and by the external auditor.
Mexico City, March 28, 2022
The Chairman,
C.P.A. Rafael Moisés Kalach Mizrahi
