In 2014, we executed efficiently and proactively commercial strategies and marketing initiatives adapted to the market conditions of each particular location and also implemented actions to underpin Banco FAMSA’s operations, primarily related to the credit origination and collection processes. As a result, we were able to enhance Grupo FAMSA’s market position and continue the path of growth we had planned over the past years.


Stockholders and investors reflected their trust in the company as a platform for creating value when, in the fourth quarter of the year, we grew the capital stock of Grupo FAMSA through a Ps$1,500 million share issue.


The consequent increase in capital improved Grupo FAMSA’s financial position, allowing us to extend our geographical expansion plans and capitalize Banco FAMSA in order to leverage short- and medium-term growth opportunities in Mexico. As a result, the bank’s Capitalization Index (ICAP) reached 12.9% as of December 31, 2014, reflecting two contributions in capital, of Ps$100 million and Ps$200 million in the months of August and December respectively.


The financial structure of our banking business will allow us to satisfy the enhanced demand for consumer credit resulting from the opening of new locations and to diversify our credit offering targeting the dynamic segment of Micro, Small and Medium-sized Enterprises (MSMEs) over the coming years.


Moreover, we allocated Ps$700 million to reduce the balance of outstanding debt during the months of November and December 2014, strengthening Grupo FAMSA’s financial position in order to drive expected future growth.


During the year, the professionalism of our great team of associates allowed us to continue with the annual sales-floor expansion plan for FAMSA Mexico and Banco FAMSA. Despite the challenging economic environment, we were able to reverse the negative trend in consolidated sales volume during the second half of the year.


Subsequently, as of yearend 2014 Grupo FAMSA’s consolidated Net Sales reached Ps$14,856 million, only 1.3% below those of 2013.


The successful execution of commercial strategies to stimulate demand for durable goods, such as special sales for Mother’s Day, Father’s Day, Buen Fin (a weekend similar to the Black Friday Weekend) and the winter holiday season, resulted in 2014 Net Sales for Famsa Mexico totaling Ps$13,008 million.


We continued with our territorial expansion during the year, adding eight new stores to our Mexican network, each with a bank branch inside. This expanded our total sales floor by 2.1% and grew the total number of stores in Mexico to 370 as of December 31, 2014. In parallel, Banco FAMSA concluded the conversion of 71 branches acquired in 2013 to the bank format, such that by 2014 we had 401 banking units, 26.5% more than the previous year. There are still 102 branches pending conversion to the Banco FAMSA image and business model.


In 2014, Banco FAMSA implemented strategies to improve collection and the identification of risk associated with new credit applicants. Consequently, the Non-performing Loans Ratio (IMOR) including collection rights fell by 340 basis points, from 17.5% in April 2014 to 14.2% in December 2014.


Bank Deposits grew at a sustained annual rate of 5.9%, to Ps$14,752 million as of December 31, 2014, and the average cost of funding fell to a record low of 4.7% during the fourth quarter of the year.


On account of Grupo FAMSA’s vision of contributing to Mexico’s entrepreneurial culture as a way to enhance economic activity, in 2014 Banco FAMSA expanded its granting of credit to MSMEs. By the end of the year, this sector represented 25.0% of the company’s commercial loans portfolio.


In the United States, the Furniture category, which represents a little over half of the company’s sales volume in that nation, rose 8.1% annually. Meanwhile, Famsa-to-Famsa sales, an offering which allows Hispanic customers to purchase in the United States and have the merchandise delivered to their families and friends in Mexico, and Personal Loans grew at a double-digit rate during 2014.


FAMSA USA posted 2014 Net Sales of Ps$1,749 million, 6.4% above those of 2013, and a 2.4% year-over-year increase in same store sales, excluding the foreign exchange effect, contributing positively to consolidated results.


This performance, combined with the capital increase to enhance Grupo FAMSA’s financial flexibility in order take advantage of expansion opportunities, has positioned the company to achieve its business objectives in the medium term.


In 2015, we will continue to grow our sales floor in Mexico and the United States, and to identify synergies with Banco FAMSA, continuing to support the economic wellbeing of our customers by offering forward-looking financial services.


Our recognition and appreciation goes to all our employees who demonstrated with passion and determination the capacity to develop innovative solutions to overcome the challenges we faced in 2014.


We would also like to express our gratitude to all the members of our Board of Directors for their guidance, leadership and support during the year.


Lastly, to our stockholders, thank you for your trust in the consolidation of this business as a platform for value creation. We reiterate our commitment to the perfected execution of the right strategies to respond to your support for the company with solid results and to raise Grupo FAMSA to the heights we all pursue.

Humberto Garza González                                                                        Humberto Garza ValdézChief Executive Officer

Chairman of the Board

Copyright ® Grupo Famsa 2014