discussion and analysis of the administration on … · the results of operations and financial...

RESULTS Fourth Quarter Audited , 2013

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www.pinfra.com.mx (55) 2789 0200

DISCUSSION AND ANALYSIS OF THE ADMINISTRATION ON

THE RESULTS OF OPERATIONS AND FINANCIAL

CONDITION OF THE COMPANY

Promotora y Operadora de Infraestructura, S.A.B. de C.V., announces

non-audited financial results for the Fourth Quarter of 2013.

Pinfra’s solid business model, management and strategy achieve the

company’s best quarter historically. April 30, 2014. Promotora y Operadora de Infraestructura, S.A.B. de C.V. (BMV) a company dedicated to the promotion, development, construction, financing and operating infrastructure projects in Mexico, today announces its non-audited quarterly results for the Fourth quarter ending on December 31,

2013. Regarding this document, unless indicated otherwise, variations refer to changes between the fourth quarter of 2013 and the same period of 2012.

Overview (Millions of Pesos) 4Q 2012 4Q 2013 % Var

Net Income 1,237.6 1,681.1 35.8%

EBITDA 834.6 1,077.4 29.1%

EBITDA Margin 67.4% 64.1%

Operating Gain (Loss) 759.6 1,002.2 31.9%

Operating Marin 61.4% 59.6%

Net Earnings (Loss) 793.6 837.4 5.6%

Net Margin 64.1% 50.0%

Earnings (Loss) per share 2.09 2.20 5.0%

Fourth Quarter 2013

Leverage o During the quarter each of the coupons of the securitizations in the Santa Ana –

Altar, Tenango – Ixtapan de Sal, and Peñón – Texcoco. The company also pre-

paid $47.4 million pesos of the Peñón - Texcoco emission.

http://www.pinfra.com.mx/


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Analysis of the Creation of Value o The company increased its cash during the quarter by $32.4 million pesos. It

generated $493.4 million pesos from its operations. It invested $456.5 million pesos for the Marquesa – Lerma, Peñón – Pirámides, Tlaxcala – Puebla, Tenango – Ixtapan de la Sal and the Siglo XXI Highway.

o Key Financial Figures Sales of $1,681.1 million pesos, higher by 35.8% compared with the same

quarter of the previous year.

Concessions, the most important activity in the company representing

70.83% of revenues increased its sales year-over-year by 16.6%

amounting to $1,190.8 million pesos.

Operating profits of $1,002.2 million pesos, 31.9% more than in the fourth

quarter of 2012.

The company’s EBITDA was $1,077.4 million pesos, an increase of 29.1%

versus the same period of the previous year.

Net profits were $837.4 million pesos, 5.6% higher than the third quarter

of 2012.

Earnings per share of 2.20 pesos, a year-over-year increase of 5.0%.

Growth of New Assets

o On November 28, the company obtained the concession to the Siglo XXI Toll road, from “Jantetelco – El Higueron” with an approximate length of 61.8 kilometers. It has a 30-year term and an approximate investment of $2,885 million pesos with a $723 million pesos grant from FONADIN. Pinfra has a 51% ownership on the

project with GBM and Aldesa owning the rest. In the quarter, the company contributed $149 million pesos corresponding to its equity participation in the project.

o In the continuation of the Mexico – Marquesa toll road concession that will now

run up Lerma, the company invested $185 million pesos and now has obtained 44% of the land needed.

o The Tlaxcala – Puebla toll road had an economic advance of 48.0%.

o We continued liberating the right of way for the vía Peñón – Pirámides at the end of the quarter, 56.0% were obtained and we had substantial negations on course.

We invested $36.5 million pesos during the period.

Key Operating Figures o The average daily traffic in the highways operated or which Pinfra has participation

was 208,403 vehicles per day. Revenues for the toll roads that consolidate were

$11.2 million pesos per day, a year-over-year increase of 7.8%. It is important

to mention that total revenues of our consolidating toll roads grew by 17.6% with

revenues of $1,023.0 million pesos again due to the Puebla Package, which

operated for a complete quarter, and income of $105.4 million pesos.

o Infraestructura Portuaria Mexicana increased the cargo it managed by 8.0% in

containers, its most important and profitable activity, 14.9% in steel while there

was a decrease of 0.6% in general cargo and 12.2% in chasis. This brought an

EBITDA 11.4% higher than in the same quarter of the previous year amounting to

$60.5 million pesos.



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o The materials for construction sector had a 82.2% higher EBITDA than in the

fourth quarter of the previous year earning $45.3 million pesos.

o Grupo Corporativo Interestatal sold 152,662 tons of hot-mix asphalt, an increase

of 55.3% compared to the fourth quarter of 2012. It obtained an EBITDA 45.1%

more than in the same quarter of the previous year earning $62.0 million pesos.

o The construction sector grew its EBITDA year-over-year by 121.7% amounting to

$85.9 million pesos.

Consolidated Results

(Millions of Pesos) 4Q 2012 4Q 2013 % Var

Net Revenues 1,237.6 1,681.1 35.8%

Cost of Goods Sold 481.6 741.9 54.0%

Administrative Costs 6.4 9.8 52.0%

Other (Revenues) Costs, Net -10.0 -72.8 626.0%

Operating Profit (Loss) 759.6 1,002.2 31.9%

Interest Expense 236.5 302.2 27.8%

Taxes -273.3 -96.4 -64.7%

Discontinued Operations 0.5 1.3 225%

Share of Results of Associated Companies 2.5 -42.3 -1792.0%

Net Profit (Loss) 793.6 837.4 5.6%

Fourth Quarter 2013

Net Revenues they varied due to increase in the concession and construction segments. During the quarter, they amounted to $1681.1 million pesos, higher by 35.8% versus the same quarter of the previous year.

Cost of Goods Sold in the fourth quarter Pinfra spent in its operation $741.9 million pesos, 54.0% more compared to the same quarter of 2012. Administrative Costs the amounted to $9.8 million pesos, increasing by $3.3 million pesos versus the same quarter of the previous year and going from 0.5% of sales in the fourth quarter

of 2012 to 0.6% of sales in this quarter. Operating Profit was $1,002.2 million pesos, a growth of 31.9%, increasing the margin from 61.4% in the same quarter of 2012 to 59.6% of net revenues in this quarter due to an increase in the sales from all the segments.



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Integral Financing Cost was $302.2 million pesos, or 18% of total revenues, an increase of 27.8% compared with the integral financing cost for the same quarter of 2012 when it amounted to $236.5 million pesos, which represented 19.1% of total revenues in that period. This was due

to the slide in the UDI in the fourth quarter of 2013 as inflation was 1.81% versus 1.44% inflation in the same period of the prior year. Net Earnings they amounted to $837.4 million pesos, higher by $43.9 million pesos or 5.5% with a 49.8% net margin. Earnings per Share for the quarter the company earned $2.20 pesos per share, a year-over-

year increase of 0.05%.

EBITDA


Net Profit (Loss) 793.6 837.4 5.52%

Plus: Minority Interests, Associated Results 0.1 0.1 0%

Provisions for Taxes and others -273.4 -96.4 -64.7%

Discontinued Operations 0.4 1.3 237.57%

Share of Results of Associated Companies 2.5 -42.3 -1789.4

Plus: Integral Cost of Financing 236.5 302.2 27.8%

Plus: Depreciation and Amortization 74.9 75.2 .3%

EBITDA 834.6 1,077.4 29.1%

EBITDA was $1,077.4.5 million pesos, an increase of 29.1%. The EBITDA margin for the fourth quarter of 2013 was 64.1% compared to 67.4% for the fourth quarter of the previous year due to higher revenues in all of the segments.

General Considerations for the Quarter

Pinfra had revenues of $1,681.1 million pesos, higher by 35.8% compared to the fourth quarter of 2012. This was due to higher revenues in all the company’s sectors. Regarding costs, the

company spent $741.9 million pesos, 54.0% more than the same quarter of the previous year thus having a gross profit of $939.1 million pesos, an increase in gross profit of 24.2% versus the fourth quarter of 2012.

Administrative expenses amounted $9.8 million pesos, higher by $3.3 million pesos more than the same quarter of the previous year representing 0.6% of revenues. Operating Income increased by 31.9% versus the same period of the previous year earning $1,002.2 million pesos.

EBITDA increased by 29.1% compared with the fourth quarter of 2012 amounting to $1,077.4 million pesos with an EBITDA margin of 64.1% versus 67.4% in the same period of the previous year as all sectors increased their revenues.



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The integral cost of financing for the fourth quarter of 2013 was $302.2 million pesos, more than the $236.5 million pesos in the fourth quarter of 2012. This was due as explained before due to the inflation that directly affects the UDIS as the passed from inflation of 1.44% in the fourth quarter of 2012 to 1.81% in this quarter.

For the quarter, net earnings were $837.4 million pesos, 5.5% higher than the same period of 2012. Earnings per share of Pinfra for the quarter were 2.20 pesos a year-over-year increase of 5.0%.

Summary of Results by Segment


Concessions

Net Revenues

1,021.4

1,190.8 16.6%

Operating Profit (Loss)

703.4

874.3 24.3%

EBITDA

771.0 941.6 22.1%

Operating Margin 68.9% 73.4%


Materials for Construction

Net Revenues

103.8

167.0 60.8%


20.1

46.5 131.9%

EBITDA

24.8

52.5 111.4%



Construction

Net Revenues

112.4

323.2 187.7%


36.2

81.3 124.9%

EBITDA 38.7

83.3

115.2%



Consolidated

Net Revenues

1,237.6

1,681.0 35.8%


759.6

1,002.2 31.9%

EBITDA

834.6

1,077.4 29.1%





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Concessions Segment

For the quarter, revenues increased 16.6% versus the same quarter of the previous year, receiving $1,190.8 million pesos. Income without VAT for the fourth quarter were $405.3 million pesos in the México – Toluca, $116.7 million pesos in the Ecatepec – Pirámides, $100.2 million pesos in

the Armería – Manzanillo, $102.9 million pesos in the Peñón – Texcoco, $34.8 million pesos in the Tenango – Ixtapan de la Sal, $46.0 million pesos in the Atlixco – Jantetelco, $44.1 million pesos in the Santa Ana – Altar, $3.4 million pesos in the la San Luis Río Colorado, $39.6 million pesos in the San Martín Texmelucan, $9.7 million pesos in the Lengua de Vaca, Vía Atlixcáyotl $51.2 million pesos, Virreyes – Teziutlán $29.1 million pesos, Apizaco – Huauchinango $25.0 million pesos and $157.2 million pesos in the Altamira Port Terminal. As the Puebla Package became operational cost increased 31.0% compared to the same quarter of the previous year amounting

to $369.1 million pesos. The EBITDA for the quarter was $948.5 million pesos 23.0% higher than in the same quarter of 2012.

* The Puebla Toll Road Package started operating December 8, 2012, thus the periods are not comparable regarding average income or

traffic as the last few days of the December quarter have more traffic than those in a full quarter such as 2013. ** It is important to mention that the Michoacán Package does not consolidate in the company’s financial statements.

In the fourth quarter in all of the toll roads, which Pinfra has participation, average daily traffic was 208,403 vehicles, a year-over-year decrease of 2.8%. This is the result of not having a full quarter operation regarding the Puebla Package skewing the results of the ADI and ADT. The average EBITDA margin for the toll roads that consolidate in Pinfra’s financial statements was 82.9%.

Quarter Ended on December 31

4Q 2012 4Q 2013 % Var

Average Daily Income (thousands of pesos)

Toll Roads Operated for more than a year $ 10,490.6 $ 10,141.6 -3.3%

Puebla Toll Road Package* $ 1,156.5 $ 1,145.1 -1.0%

Michoacán Package**

$

1,566.7 $ 1,821.4 16.3%

Total Average Daily Income (thousands of pesos)

$12,057.4 $

13,108.1 8.7%

Average Daily Traffic

Toll Roads Operated for more than a year 144,962 146,322 0.9%

Puebla Toll Road Package* 30,949 25,640 -17.2%

Michoacán Package** 38,528 36,441 -5.4%



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Quarter Concluded on September 30

2013 2012

Average

Daily

Traffic

%of

change

compared

to the

previous period

Average

Daily Income

%of

change

compared

to the

previous period

Average

Toll

Rate

%of

change

compared

to the

previous period

Average

Daily

Traffic

Average

Daily Income

Average

Toll Rate

(thousands

of Pesos)

(thousands

of Pesos)

Toll Road

Concessions:

México-Toluca 59,032 3,788.8 64.18 64,497 9.3% 4,453.8 17.6% 69.06 7.6%

Peñón-Texcoco 32,203 980.4 30.45 30,203 -6.2% 1,130.3 15.3% 37.42 22.9%

Tenango-Ixtapan

de la Sal 5,433 388.2 71.44 5,191 -4.5% 382.7 -1.4% 73.72 3.2%

Atlixco-Jantetelco 3,664 546.9 149.28 3,723 1.6% 567.2 3.7% 152.34 2.0%

Santa Ana-Altar 4,065 488.3 120.11 3,925 -3.5% 493.2 1.0% 125.68 4.6%

Pirámides-Ecatepec-Peñón 21,056 1,296.4 61.57 20,377 -3.2% 1,291.8 -0.4% 63.39 3.0%

Armería-Manzanillo 5,694 1,083.2 190.23 5,433 -4.6% 1,113.6 2.8% 204.97 7.8%

Zitácuaro-Lengua de Vaca 3,442 106.4 30.92 3,367 -2.2% 106.9 0.4% 31.74 2.7%

San Luis Rio Colorado-Estación

Doctor 719 90.3 125.51 335 -53.4% 36.4 -59.7% 108.67 -13.4%

Tlaxcala – San

Martín Texmelucan 7,109 426.3 59.97 6,945 -2.3% 434.7 2.0% 62.60 4.4%

Carretera Apizaco-Huauchinango* 3,019 259.1 85.83 2,981 -1.2% 271.7 4.9% 91.15 6.2%

Carretera Vía

Atlixcáyotl* 20,821 575.7 27.65 19,000 -8.7% 556.8 -3.3% 29.30 6.0%

Carretera

Virreyes-Teziutlán* 3,952 321.7 81.4 3,659 -7.4% 316.6 -1.6% 86.54 6.3%

Total Toll Roads to Consolidate 170,210 10,351.8 60.82 169,636 -0.3% 11,156 7.8% 65.76 8.1%

Morelia-

Aeropuerto 2,544 138.8 54.57 2,326 -8.6% 131.0 -5.7% 56.29 3.2%

Paquete

Michoacán 38,528 1,566.7 41.07 36,441 -5.4% 1,821.4 16.3% 49.98 21.7%

Total Toll Roads

that to not Consolidate

41,072 1,705.6 41.53 38,768 -5.6% 1,952 14.5% 50.36 21.3%

Total Toll Roads 211,282 12,057.4 57.07 208,403 -1.4% 13,108 8.7% 62.90 10.2%

* The Puebla Toll Road Package started operating December 8, 2012, thus the periods are not comparable regarding average income or

traffic as the last few days of the December quarter have more traffic than those in a full quarter such as 2013.

Opervite, the toll road operating company of Pinfra, had revenues of $135.2 million pesos from the operation of roads and bridge, an increase of 25.3% over the same quarter of 2012. Costs for the quarter were $61.2 million pesos, 25.9% more than the same quarter of the previous year. The EBITDA for the fourth quarter of 2013 was $75.2 million pesos an increase of 25.4% over the same quarter of 2012. It important to consider that when we consolidate Pinfra’s financial

statements, Opervite’s revenues are eliminated as it charges each of the toll road concessionaries for its service. When each concessionary is seen individually, operating costs are reflected and each project will have a different effect.



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Opervite – Toll Road Operator

Net Revenues 107.9 135.2 25.3%

EBITDA 59.9 75.2 25.4%


Infraestructura Portuaria Mexicana had revenues of $149.6 million pesos, 11.6% higher than the

same quarter of 2012. Costs and expenses were $95.1 million pesos, 5.3% higher than the fourth quarter of 2012. IPM’s EBITDA for the quarter was $60.5 million pesos, 11.4% higher than the same quarter of the previous year.


IPM Altamira

Net Revenues 134.0 149.6 11.6%

EBITDA 54.3 60.5 11.4%


Cargo Volumes

Containers (Units) 43,273 46,741 8.0%

Steel (Tons) 125,000 143,581 14.9%

Chassis (Units) 196 172 -12.2%

General Cargo (Tons) 3,820 3,798 -0.6%

Materials for Construction Segment

This sector is formed by Grupo Corporativo Interestal, Mexicana de Cales and Tribasa

Construcciones. Since most of its clients now need that we do not only supply the hot-asphalt mix but also perform the pavement works, the sector usually works with the construction for engineering sector to perform integral pavement projects. It is worth mentioning that these projects have been very profitable for the company and have increased the sale of aggregates, hot mix asphalt and help reduce collection time by using our normal clients as subcontractor for these projects.

Revenues for the sector were $167.0 million pesos, higher by 60.9% than the same period of 2012. Costs were $108 million pesos, 65.2% more than the fourth quarter of the previous year. This brought a gross profit of $58.2 million pesos, 34.8% higher than the same quarter of the prior year. EBITDA for the sector was $45.3 million pesos, 82.4% more than the same period of the previous year.

Construction Segment

Today Pinfra functions as a general coordinator of construction works it obtains and will then subcontract with diverse construction companies and experts the work. Revenues for the construction segment increased 107.5% versus the same quarter of 2012 amounting to $233.2

million pesos. This was due to the Acopilco, Santa Ana – Altar, Tlaxcala – Xoxtla and Tenango – Ixtapan, which are integral parts of a concession and will recognized in the title of each concession



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as new investments. Costs for the sector were 68.8% more than the same quarter of the previous year spending $160.5 million pesos thus having a gross profit in the sector of $72.7 million pesos, an increase of 31.2% pesos versus the same quarter of the previous year. The EBITDA for the sector was $85.9 million pesos, 121.7% higher than the fourth quarter of the previous year.

Balance Sheet


Cash and short term investments 2,891.4 3,083.9 6.7%

Contract Receivables 42.2 43.0 1.9%

Inventories 89.5 86.1 -3.8%

Other 499.2 594.9 19.2%

Total Current Assets 3,522.2 3,807.9 8.1%

Investments in Subsidiaries that do not consolidate and Associates

413.0 590.7 43.0%

Other Contract Receivables Associates 359.9 362.4 0.7%

Funds in Long Term Trust Funds 772.3 759.6 -1.6%

Plant, Property and Equipment, Net 578.9 577.3 -0.3%

Concessions Investments, Net 10,930.5 11,335.2 3.7%

Differed Income Tax 759.2 848.1 11.7%

Other 378.4 437.1 15.5%

Total Assets 17,714.4 18,718.3 5.7%

Accounts Payable 1,042.9 1,248.8 19.7%

Other 516.7 406.9 -27.3%

Current Liabilities 1,559.6 1,655.7 6.2%

Toll Road Securitizations 8,075.5 8,122 0.6%

Other 181.1 199.9 10.4%

Total Liabilities 9,816.3 9,977.6 1.6%

Total Stockholders’ Equity 7,898.2 8,740.8 10.7%

Assets they were $18,718.3 million pesos, 5.7% higher compared to the previous quarter due to a 43.0% increase in Investments in Subsidiaries that do not consolidate and Associates and 3.7%

in Concession Investments, net.

Current Liabilities $1,655.7 million pesos, an increase of 6.2%, primarily due an increase offset by interest payable of 6.2% and the short term portion of the toll road securitizations of 19.76% it increased. Toll Road Securitizations $8,122 million pesos, an increase of 0.6%. It is important to take into account that certain projects did not have scheduled coupons according to its programs and continued forming a reserve fund for its contractual payments such as the México – Toluca project

that will have payment scheduled in February.



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(Thousands of Pesos) 3Q 2013 Payments Pre-

payments 4Q 2013

Reserve Funds

Net Debt

México-Toluca 6,050,149 6,159,689 397,502 5,789,059

Peñón-Texcoco 1,216,414 49,890 47,353 1,119,172 187,117 1,107,205

Ixtapan de la Sal 812,323 22,691 803,950 53,595 775,083

Atlixco 301,509 306,968 17,960 330,884

Zonalta 1,696,551 1,742,277 22,765 1,673,067

Securitization Balance 10,076,947 72,581 47,353 10,132,056 678,939 9,675,299

Of the securitization debt, 88.9% is UDIS issued while 11.1% is in TIIE issued.

Total Liabilities they increased by $18.4 million pesos amounting to $9,977.6 million pesos or 1.6% more than in the previous quarter. This was due to the securitized debt, which did not have

a payment scheduled in the quarter. Total Stockholders’ Equity increased by $842.6 million pesos amounting to $8,740.8 million pesos, a quarter-over-quarter increase of 10.7%. The company’s stock buyback program purchased 350,000 stocks at an average price of $146.86 per share and sold 364,862 shares at

an average price of $157.04.

Subsecuent Event

On February 17, the Company issued securitized certificates for the Tenango – Ixtapan de

la Sal Toll Road in order to take advantage of favorable market conditions. Interest rates

for the issue were 5% versus the 6.75% the company was paying before. The certificates were rated by Fitch and HR AA+ and AAA respectively and allow the company a more efficient debt structure by not having a reserve fund.

Explanatory Notes

Company Policy: It is the management’s vision to sustain a low cost strategy and maintain itself

alert of the economic surroundings and Outlook in order to be able to take the necessary measures

towards future events. It is worth mentioning that the policy of creating value for the company,

as we have mentioned in the past looks at a clear yield through the following strategies:

The debt the company may incur must always be Project debt obtained through

securitizations which is the only source of payment it. The funds will only be the future

toll revenues of the project.

The company does not have any corporate debt or issues cross guarantees in the group.

All of the securitizations are in balance and we do not have any operations out of the

balance sheet of the company.

The construction sector does internal work or for the concessionaries which has a revenue,

cost and profit.

A fluctuation in exchange rate will not have effect on the company’s results as revenues from toll

roads, as well as its debt are denominated in UDIS.



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Fiscal Consolidation: The Company has no consolidated for fiscal terms since the year ending in 1999, thus the numbers presented in this report will not be affected concerning this with the new fiscal reform.

Non-Audited Financial Statements: The amounts in this letter have not been audited for the year 2013. Previous period: Unless stated previous period means the comparison of the financial and operating numbers versus the same quarter of the previous year.

Method of Expressing mounts: Unless noted differently all of the amounts in this release are in Mexican Pesos. This release may contain information and statements in the future tense. Future tense statements are not historical facts. These statements are only predictions based on our expectations and

projections regarding future events. Statements in the future tense can be identified with the words "consider" "expect", "anticipate", "handle", or similar expressions. While PINFRA

management believes that the expectations reflected in such statements in the future tense are reasonable, becomes knowledge of the investors that the information and statements in the future tense are subject to various risks and uncertain events, which are difficult to predict and are generally beyond the control of PINFRA, and they may cause actual results and performance to differ materially from those expressed uninvolved or designed by information and statements in the future tense. These risks and uncertain events include, without limitation, that included in...

PINFRA assumes no responsibility regarding the public update of their statements or information in future time, whether as a result of new information, future events or any other circumstance.



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INDEPENDENT ANALYST

Promotora y Operadora de Infraestructura, S.A.B. de C.V., advises that in order to comply with

provisions of regulation within the BMV in the 4.033.01 Article Fracc. VIII in respect of

maintenance requirements, declare that we do not require independent analyst, in virtue of

which follow us financial institutions below, and give coverage analysis to our action.

BBVA Bancomer

Lic. Francisco Chávez Martínez

Tel. 5621 9703 y 5621 9404

Mail: [email protected]

Credit Suisse Institución de Banca Múltiple

Lic. Eugenio Amador

Tel. 5283 89 69


JP Morgan

Sr. Fernando Abdalla

Tel. 00 (55 11) 4950 34 63


Grupo Financiero Interacciones

Sr. Heber Marvin Longhurst Leany

Tel. 5326-8600 ext. 6162


Ixe

Lic. Josè Espitia

Tel. 5004 51 44


Banco Ve por Más

Lic. Marco Mèdina Zaragoza

Tel. 5625 15 00 x 1453



mailto:[email protected]







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GBM Grupo Bursátil Mexicano

Lic. Javier Gayol

Tel. 5480 58 00 x 4563


Vector Casa de Bolsa

Lic. Hugo Mendoza

Tel. 5262 36 08 x 3255


Itaú BBA

Equity Research Transportation

Sr. Renato Salomone

Tel. 5262 0674







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FINANCIAL STATEMENT COMPLEMENTARY NOTES

Promotora y Operadora de Infraestructura, S. A. B. de C. V. and

Subsidiaries

Notes to Consolidated Financial Statements For the years ended December 31, 2013 and 2012

(In thousands of Mexican pesos)

1. Nature of business Promotora y Operadora de Infraestructura, S. A. B. de C. V. and Subsidiaries (collectively, the Company) are engaged in the use and operation of concessions, related to highways, ports and other types of concessions. The Company also obtains revenues from the sale of asphalt mix and aggregates (crushed basalt) mainly used for asphalt layers, and the construction of engineering works projects. The Company is incorporated in Mexico City and its address is Bosque de Ciruelos 130, Col. Bosques de las Lomas, 11700 México D. F.

2. Significant events The relevant events in the period are as follows:

a. Siglo XXI concession acquisition On November 28, 2013, the Company together with a consortium of investors, won a bid for the construction, operation and maintenance for 30 years of Jantetelco – El Higuerón highway (Siglo XXI) with a length of 61.8 kilometers and an investment of $2,885,000 and a grant from the National investment Fund (Fondo Nacional de Inversión, FONADIN) of approximately $723,000. The Company is a partner with 51% of Empresa Concesionaria de Autopistas de Morelos, S. A. de C. V., which is included in investment in shares of associated companies and joint ventures. On December 18, 2013, Empresa Concesionaria de Autopistas de Morelos, S. A. de C. V. obtained the concession and on the same date, the Company made a contribution to the joint venture of $135,424.

b. Paquete Michoacán Acquisition

On December 16, 2011, the Company, together with a consortium of investors, won a bid for the construction and operation, during 30 years, of the Morelia and



15


Uruapan beltways and the Pátzcuaro-Uruapan-Lázaro Cardenas highway (Paquete Michoacán). The Paquete Michoacán concession was executed on March 30, 2012. The Company is a partner in the consortium, owning 25.2% of Concesionaria de Autopistas de Michoacán, S. A. de C. V., Operadora de Autopistas de Michoacán. S. A. P. I. de C. V. and Constructora de Autopistas de Michoacán, S. A. de C. V. (collectively, Paquete Michoacán), such investment is accounted as an investment in associated companies. As part of its participation in the concession, the Company paid a guarantee deposit as of December 31, 2013 and 2012, through a letter of credit, for $243,703, which has been recognized within other assets line item in the balance sheet. The resources of this letter of credit will be released until the Company obtain the respective rights and start the construction.

c. Modification of concession contracts Peñón - Texcoco - On July 5, 2013, the Company obtained the 4th amendment to the concession of the Peñón - Texcoco road, whose concessionary is Concesionaria Pac, S. A. de C. V. (CPAC, subsidiary company), in order to authorize the Company's construction of improvements or interconnection on local or federal highways or other investments. The Company may obtain a compounded annual real rate of return of 10.47% on these investments from tolls, if they are funded from the surplus revenues of the Peñón – Texcoco highway. According to this amendment, the actual investment under this scheme by $115,000 have been approved for the repair of a damaged expansion subsection of highway Tenango - Ixtapan de la Sal, in the State of Mexico. Also, the concession title allows extending the concession maturity of Peñón - Texcoco up to 30 years more or that which is necessary, not exceeding the maximum term provided by law which is on March 18, 2053 for the concessionaire to recover the investment made along with the corresponding return. México-Toluca - On May 31, 2012, the Company was granted with the 7th amendment to the concession title held by Promotora y Administradora de Carreteras, S. A. de C. V. (PACSA, subsidiary company), which authorizes the Company to make improvements or provide for construction of interconnections on federal highways. The Company is entitled to an internal rate of return of 12% on these investments from tolls charged on the related infrastructure, provided that it does not affect other financial creditors and trustees of the issuing trust for the Mexico - Toluca highway. Based on the terms of this amendment, as of December 31, 2013 and 2012 the Company has been authorized investment under this scheme of $2,397,500 and $1,220,000, among which are the extension of the tollbooths of Reforma-Constituyentes-Lilas in Mexico City, upgrading of Chalco-Nepantla highway, among others. Also, on August 31, 2012, term was extended for the concession of the Mexico-Toluca up to July 4, 2030, which, as of that date it will have covered the financial obligations of the concession. On July 23, 2013, the Company was granted with the 9th amendment to the concession title for the Mexico-Toluca high way, held with Promotora y Administradora de Carreteras, S. A. de C. V. (PACSA, subsidiary company), which authorizes the Company investments for the construction of La Marquesa – Lerma de Villada road by around $3,500,000 appoximately. The Company may obtain a compounded annual real rate of return of 12% on these investments from



16


tolls, provided that the existing financial creditors are not affected highway Mexico - Toluca.

d. Prepayment of Security Certificates of Zonalta On June 11, 2012, in a General Assembly of Holders of the Securities, it was approved the partial prepayment of the Securities (ZonalCB 06U) of Concesionaria Zonalta, S. A. de C. V. (Zonalta) for $389,900 and $10,100 provided for major maintenance, with a remaining debt of $1,616,900. This aims to strengthen the debt profile. On June 19, 2012, the Technical Committee signed the Amended Trust No. F/1486 previously authorized by the Secretary of Communications and Transportation ("SCT"), in which the exchange took place of ZonalCB 06U Securities dividing the debt in three series with different characteristics. The redemption of the Securities was as follows:

1. A preferred series for an amount equivalent to 50% of the debt for

211,739,500 IDUs ("Preferred Series "), maturing on December 14, 2033 at a real interest rate of 5.40%, gradually incrementing to 5.60%, if they are not totally paid by December 14, 2031. Principal is payable at maturity but there is a semiannual prepayment option. Interest is paid semiannually.

2. A subordinated series ("Subordinated Series") for an amount equivalent to 20% of the debt for 84,695,800 IDUs at a real interest rate of 5.40% until December 14, 2031, after this date it will be gradually increased to 5.60% until the date of settlement of debt which matures on December 14, 2034. Once the Preferred Series has been fully paid and if there is a surplus of cash, the Subordinated series will be paid in advance, to the extent of the available resources. This series will be paid at maturity regardless the option of prepayment exists. Interests are paid semiannually, if there were sufficient resources.

3. A convertible series to Preferred Series ("Convertible Series ") for an amount equivalent to 30% of the debt which amounts to 127,043,700 UDIs at a real interest rate of 5.40% until December 4, 2031, after this date it will be gradually increased to 5.60% up to the date of settlement of the debt. Each time the

accumulated prepayments of the Preferred Series is up to 5% of the beginning balance of the debt, 8% of the Securities Series will be converted to Preferred Series.

The issued series are Series 06U Series, Series 06-2U and Series 06-3U, respectively. The Company determined that the terms of the Securities were not substantially modified; and therefore, the change was not recognized as a settlement of debt. This update of the Securities did not generate nor required cash flows.

e. Construction of road sections on Sonora SCT authorized the Company an amount up to $400,000 for the work of the extension from two to four lanes of the "Altar-Pitiquito" road, which is



17


concessioned to the Company and the extension from two to four lanes of Pitiquito - Caborca road; both are located in the State of Sonora. The Company has incurred construction in progress of $382,130 and $8,500 as of December 31, 2013 and 2012, respectively.

f. Public offering of equity On October 4, 2012, the Company made a national and international public offering of its shares for $1,365,733 with a price of $63 Mexican pesos per share through the Mexican Stock Exchange. Therefore 21,678,314 shares, ordinary, nominative, without par value were subscribed, including 375,014 shares acquired by the Company under the repurchase of shares line item. This issuance was recorded as an increase in stockholders' equity, net of issuance expenses of $83,880. At the same time, there was a secondary offering of $3,068,995. The Company did not receive funds as a result of the secondary portion of the offer.

g. Acquisition of the “Paquete Puebla” concession On December 7, 2012, the Company, through its subsidiary PAPSA, obtained the concession to operate and maintain the roads "Via Atlixcáyotl", "Virreyes-Teziutlan" and "Apizaco-Huauchinango" with a total length of 142 km (collectively, the "Paquete Puebla"). The concession expiration is for 30 years. The initial consideration was $2,150,008 and a regular consideration consisting of a variable portion based on the fulfillment of certain appraisals and a fixed portion of the 1% of the toll fees, payable annually. In addition, expenses were spent on obtaining the concession totaling $290,600 that have been capitalized along with the value of the initial consideration. At the same time, three trusts were created to ensure the deposit of toll fees and to establish the priority of payments for the operation and maintenance of the concession.

h. Increased concession period in Port Concession On August 24, 2012, the Mexican subsidiary Infraestructura Portuaria Mexicana, S. A. de C. V. obtained an extension to the concession title for a period of 20 years effective June 20, 2016 (date of expiration of the original contract).

i. Reduction of common stock During the year ended December 31, 2012, nominal common stock was reduced by $3,442, through a redemption of 1,807,100 of the Company´s shares. These shares were previously repurchased shares, which had been held by the Company for over a year without having been offered again to public investors. The spread between the reacquisition value of the shares and their par value, of $84,460, was charged against the reserve for share acquisition, which is maintained for the repurchase and retirement of shares.



18


j. Current status of Mexicana de Gestión de Agua, S. A. de C. V. (MGA)

concession A contract, dated December 4, 1996, was executed between MGA, a subsidiary of the Company, and the Board of Directors of the Municipal Operating Agency for Potable Water, Drains and Sanitation of Navojoa, Sonora (the “Municipality”), whereby MGA was to provide operational, preservation and maintenance services related to drinking water as well as the sewage system and the sanitation system of Navojoa Sonora. During September 2005, the Municipality filed an administrative legal proceeding to rescind the aforementioned services contract upon claims of noncompliance. The outcome of the proceeding also required the immediate delivery of the physical and financial administration of the potable water public system to the Municipality, including the physical possession of all assets used to render the services and any accounting, monetary or other rights that form part of the administration of the potable water system. MGA filed protection (seeking court relief on constitutional grounds) against the ruling issued, which ultimately granted relief to MGA and requires the Municipality to provide immediate delivery of the water service operation. After various legal proceedings, the Municipality has returned wells, operating equipment and certain real estate subject of the original contract, but has not turned over the entire operation. However the constant requirements by MGA and juridical authority following the default of the file protection by the operator, seventh district Judge of Sonora state promoted an incident of non-compliance of the judgment. The handling of this incident is aimed to make the operator meets the purposes of the filled protection granted to MGA and return the operation of water supply systems and waste water. At the date of these consolidated financial statements, Navojoa municipality of Sonora state and the Company, are in the process of negotiating the value of assets to be returned.

3. Basis of presentation

a. Explanation for translation into English

The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico. These consolidated financial statements are presented on the basis of International Financial Reporting Standards (“IFRS”). Certain accounting practices applied by the Company that conform with IFRS may not conform with accounting principles generally accepted in the country of use.

b. New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements

In the current year, the Company has applied a number of new and revised IFRSs issued by the International Accounting Standards Board (IASB) that are



19


mandatorily effective for an accounting period that begins on or after January 1, 2013. Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities The Company has applied the amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement. The amendments to the IFRS 7, have been applied retrospectively. As the Company does not have any offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognized in the consolidated financial statements. New and revised Standards on consolidation, joint arrangements, associates and disclosures In May 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued comprising IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (as revised in 2011) Separate Financial Statements and IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures. Subsequent to the issue of these standards, amendments to IFRS 10, IFRS 11 and IFRS 12 were issued to clarify certain transitional guidance on the first-time application of the standards. In the current year, the Company has applied for the first time IFRS 10, IFRS 11, IFRS 12 and IAS 28 (as revised in 2011) together with the amendments to IFRS 10, IFRS 11 and IFRS 12 regarding the transitional guidance. IAS 27 (as revised in 2011) is not applicable to the Company as it deals only with separate financial statements. IFRS 10 IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements and SIC-12 Consolidation – Special Purpose Entities. IFRS 10 changes the definition of control such that an investor has control over an investee when a) it has power over the investee, b) it is exposed, or has rights, to variable returns from its involvement with the investee and c) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Additional guidance has been included in IFRS 10 to explain when an investor has control over an investee. Some guidance included in IFRS 10 that deals with whether or not an investor that owns less than 50% of the voting rights in an investee has control over the investee is relevant to the Company. IFRS 11 IFRS 11 replaces IAS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation, SIC-13 Jointly Controlled Entities – Non-Monetary



20


Contributions by Venturers, has been incorporated in IAS 28 (as revised in 2011). IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified and accounted for. Under IFRS 11, there are only two types of joint arrangements – joint operations and joint ventures. The classification of joint arrangements under IFRS 11 is determined based on the rights and obligations of parties to the joint arrangements by considering the structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement, and, when relevant, other facts and circumstances. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint ventures) have rights to the net assets of the arrangement. Previously, IAS 31 contemplated three types of joint arrangements – jointly controlled entities, jointly controlled operations and jointly controlled assets. The classification of joint arrangements under IAS 31 was primarily determined based on the legal form of the arrangement (e.g. a joint arrangement that was established through a separate entity was accounted for as a jointly controlled entity). The initial and subsequent accounting of joint ventures and joint operations is different. Investments in joint ventures are accounted for using the equity method (proportionate consolidation is no longer allowed). Investments in joint operations are accounted for such that each joint operator recognizes its assets (including its share of any assets jointly held), its liabilities (including its share of any liabilities incurred jointly), its revenue (including its share of revenue from the sale of the output by the joint operation) and its expenses (including its share of any expenses incurred jointly). Each joint operator accounts for the assets and liabilities, as well as revenues and expenses, relating to its interest in the joint operation in accordance with the applicable Standards. The Company’s management reviewed and assessed the classification of the Company's investments in joint arrangements in accordance with the requirements of IFRS 11. The Company’s management concluded that the Company’s investment in Proyecto Michoacán, Concesionaria Purépecha, S. A. de C. V., Purépecha, Posco Mesdc, S. A. de C. V. (Posco), y Construcciones y Drenajes Profundos, S. A. de C. V. (Drenajes Profundos), was classified as a joint venture under IFRS 11 and accounted for using the equity method. IFRS 12 IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the application of IFRS 12 has resulted in more extensive disclosures in the consolidated financial statements (please see notes 4d and 13 for details). IFRS 13 Fair Value Measurement The Company has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the



21


scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realizable value for the purposes of measuring inventories or value in use for impairment assessment purposes). IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements. IFRS 13 requires prospective application from January 1, 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. Amendments to IAS 1 Presentation of Items of Other Comprehensive Income The Company has applied the amendments to IAS 1 Presentation of Items of Other Comprehensive Income for the first time in the current year. The amendments introduce new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the ‘statement of comprehensive income’ is renamed as the ‘statement of profit or loss and other comprehensive income’ and the ‘income statement’ is renamed as the ‘statement of profit or loss’. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income. IAS 19 Employee Benefits (as revised in 2011) In the current year, the Company has applied IAS 19 Employee Benefits (as revised in 2011) and the related consequential amendments for the first time. IAS 19 (as revised in 2011) changes the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence eliminate the ‘corridor approach’ permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. All actuarial gains and losses are recognized immediately through other comprehensive income in order for the net pension asset or liability recognized in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a ‘net interest’ amount under IAS 19 (as revised in 2011), which is calculated by applying the discount rate to the net defined benefit liability or asset. These changes have had an impact on the amounts recognized in profit or loss and other comprehensive income in prior years (see the tables below for details). In



22


addition, IAS 19 (as revised in 2011) introduces certain changes in the presentation of the defined benefit cost including more extensive disclosures.

c. New and revised IFRSs in issue but not yet effective

The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRS 9 Financial Instruments3 Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and

Transition Disclosures² Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities¹ Amendments to IAS 32 Offsetting Financial Assets and Financial

Liabilities¹ ¹ Effective for annual periods beginning on or after January 1, 2014, with earlier application permitted. ² Effective for annual periods beginning on or after January 1, 2015, with earlier application permitted. 3 Effective for annual periods beginning on or after January 1, 2016, with earlier application permitted. IFRS 9 Financial Instruments IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial assets. IFRS 9 was amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition. Key requirements of IFRS 9: All recognized financial assets that are within the scope of IAS 39

Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and which have contractual cash flows that are solely payments of principal and interest on the principal outstanding balance is generally measured at amortized cost at the end of the subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in consolidated net income.

With regard to the measurement of financial liabilities designated as of fair

value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.



23


The Company’s management anticipate that the application of IFRS 9 in the future may have a significant impact on amounts reported in respect of the Company’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until a detailed review has been completed. Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to: Obtain funds from one or more investors for the purpose of providing them

with professional investment management services. Commit to its investor(s) that its business purpose is to invest funds solely

for returns from capital appreciation, investment income, or both. Measure and evaluate performance of substantially all of its investments

on a fair value basis. The Company’s management does not anticipate that the investment entities amendments will have any effect on the consolidated financial statements as the Company is not an investment entity. Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realization and settlement’. The Company’s management does not anticipate that the application of these amendments to IAS 32 will have a significant impact on the consolidated financial statements as the Company does not have any financial assets and financial liabilities that qualify for offset.

4. Summary of significant accounting policies

a. Statement of compliance The consolidated financial statements of the Company have been prepared in

accordance with International Financial Reporting Standards (IFRS, for its

acronym in English) and its adaptations and interpretations issued by the

International Accounting Standards Board (IASB, for its acronym in English), in

effect as of December 31, 2013. The accompanying consolidated financial

statements have been prepared in conformity with the IFRS issued by the IASB,

which require that management make certain estimates and use certain

assumptions that affect the amounts reported in the financial statements and their

related disclosures; however, actual results may differ from such estimates. The



24


Company’s management, upon applying professional judgment, considers that

estimates made and assumptions used were adequate under the circumstances.

The significant accounting policies of the Company are as follows:

b. Historical cost

The consolidated financial statements have been prepared on an historical cost

basis except for certain financial instruments, which are valued at fair value.

i. Historical cost

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

ii. Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for

identical assets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

c. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Promotora y Operadora de Infraestructura, S. A. B. de C. V. and its subsidiaries controlled by it. Control is achieved when the Company: Has power over the investee; Is exposed, or has rights, to variable returns from its involvement with the

investee; and Has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements



25


of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including: The size of the Company holding of voting rights relative to the size and

dispersion of holdings of the other vote holders; Potential voting rights held by the Company, other vote holders or other

parties; Rights arising from other contractual arrangements; and Any additional facts and circumstances that indicate that the Company has,

or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Net income and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Pinfra’s shareholding percentage in the capital stock of its main subsidiaries is shown below:

Ownership

percentage as

of

December 31, Activity

Construction sector: 2013 and 2012

Pinfra Sector Construcción,

S. A. de C. V. 100% Holding company

Experconstructores Zacatecana,


Adepay, S. A. de C. V. 100% Holding company

Concemex, S. A. de C. V. 100%

Construction, operation and

conservation of highways

Equivent, S. A. de C. V. 100% General construction

Materials sector:

Tribasa Sector Materiales e Insumos de la

Construcción, S. A. de C. V. (1) 100% Holding company

Grupo Corporativo Interestatal,

S. A. de C. V. 100% Production of asphalt mix

Tribasa Construcciones, S. A. de

C. V. 100% General construction

Concession sector:

Grupo Concesionario de México,




26


Ownership

percentage as

of

December 31, Activity

Promotora y Administradora de

Carreteras, S. A. de C. V. 100%



Promotora de Autopistas del Pacífico, S.

A. de C. V. 100%



Concesionaria Pac, S. A. de C. V. 100%



Autopista Tenango-Ixtapan de la Sal, S. A.

de C. V. 100%



Concesionaria Monarca, S. A. de

C. V. 100%



Opervite, S. A. de C. V. 100% Concessioned highways operator

Concesionaria Zonalta, S. A. de

C. V. 100%



Infraestructura Portuaria Mexicana, S.A.

de C. V. 100% Ports operator

Real property sector:

Tribasa Sector Inmobiliario,

S. A. de C. V. 100% Holding company and leasing property. (1) As of December 31, 2013 and 2012, Tribasa Sector Materiales e Insumos de la

Construcción, S. A. de C. V. owns 77.75% of the common stock of Mexicana de Cales, S. A. de C. V. Wich represent the noncontrolling interest on the Consolidated Statemts of Financial Position.

In addition to the above, the Company consolidates certain trusts over which it

has determined it controls.

Significant intercompany balances and transactions have been eliminated in these

consolidated financial statements.

Investment in associated companies is accounted for using the equity method.

The Company’s foreign subsidiaries comprise its investments in concessions in

Chile and Ecuador, which are in the process of liquidation and are presented as

discontinued operations.

1. Changes in the Company’s ownership interests in existing subsidiaries

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company. When the Company loses control of a subsidiary, a gain or loss is

recognized in profit or loss and is calculated as the difference between (i)



27


the aggregate of the fair value of the consideration received and the fair

value of any retained interest and (ii) the previous carrying amount of the

assets (including goodwill), and liabilities of the subsidiary and any non-

controlling interests. All amounts previously recognized in other

comprehensive income in relation to that subsidiary are accounted for as if

the Company had directly disposed of the related assets or liabilities of the

subsidiary (i.e. reclassified to profit or loss or transferred to another

category of equity as specified/permitted by applicable IFRSs). The fair

value of any investment retained in the former subsidiary at the date when

control is lost is regarded as the fair value on initial recognition for

subsequent accounting under IAS 39, when applicable, the cost on initial

recognition of an investment in an associate or a joint venture.

d. Investments in associates and joint ventures An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate or a joint venture is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Company’s share of losses of an associate or a joint venture exceeds the Company’s interest in that associate or joint venture, The Company discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Company’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired. The requirements of IAS 39 are applied to determine whether it is necessary to



28


recognize any impairment loss with respect to the Company’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. The Company discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When the Company retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Company measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to profit or loss when the equity method is discontinued.

The Company continues to use the equity method when an investment in an

associate becomes an investment in a joint venture or an investment in a joint

venture becomes an investment in an associate. There is no remeasurement to

fair value upon such changes in ownership interests.

When the Company reduces its ownership interest in an associate or a joint

venture but the Company continues to use the equity method, the Company

reclassifies to profit or loss the proportion of the gain or loss that had previously

been recognized in other comprehensive income relating to that reduction in

ownership interest if that gain or loss would be reclassified to profit or loss on

the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the

Company, profits and losses resulting from the transactions with the associate or

joint venture are recognized in the Company’s consolidated financial statements

only to the extent of interests in the associate or joint venture that are not related

to the Company.

e. Classification of costs and expenses – Costs and expenses were classified

according to their function because this is the practice of the sector to which the

Company belongs



29


f. Recognition of the effects of inflation - Inflation is recognized only when

cumulative inflation rate for the past three fiscal years approaches or exceeds

100%, for example in hyperinflationary economies. The Mexican economy has

not been considered hyperinflationary since 1999.

g. Leasing- Leases are classified as finance leases whenever the terms of the lease

transfer substantially all the risks and rewards of ownership to the lessee. All

other leases are classified as operating leases.

i. The Company as lessor

Rental income from operating leases is recognized on a straight-line basis

over the term of the relevant lease. Initial direct costs incurred in

negotiating and arranging an operating lease are added to the carrying

amount of the leased asset and recognized on a straight-line basis over the

lease term.

ii. The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

h. Translation of financial statements of foreign subsidiaries - To consolidate

financial statements of foreign subsidiaries, they are modified using the currency

in which translations are recorder to appear under IFRSs the financial statements

are subsequently translated into Mexican pesos considering the following

methodology:

Foreign operations whose recording and functional currency is the same they

convert their financial statements using the following exchange rates: 1) the

closing date currency for assets and liabilities and 2) historical currency for

equity and 3) the rate on the date of accrual for revenues, costs and expenses. In

2013 and 2012, there were no significant effects of conversion.

i. Cash and cash equivalents - Cash consists mainly of bank deposits in checking

accounts. Cash equivalents are short-term investments, highly liquid and easily

convertible into cash, maturing within three months as of their acquisition date,

and which are subject to insignificant changes in value. Cash is stated at nominal

value and cash equivalents are valued at fair value.

j. Restricted Trust Funds - Represents reserve funds required to ensure coverage and

interest payments and capital expenditures assigned collection rights.



30


k. Financial assets - Financial assets are initially measured at fair value, plus

transaction costs, except for those financial assets classified as fair value through

profit or loss, which are initially valued at fair value. Subsequent valuation

depends on the category in which they are classified.

Note 16 describes the categories of financial assets the Company maintains.

i). Classification of financial assets

Financial assets are classified into the following specified categories:

financial assets ‘at fair value through profit or loss', ‘held-to-maturity'

investments, ‘available-for-sale' financial assets and ‘loans and

receivables'. The classification depends on the nature and purpose of the

financial assets and is determined at the time of initial recognition.

ii). At fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when

the financial asset is either held for trading or it is designated as at fair value

through profit or loss.

A financial asset is classified as held for trading if:

- It has been acquired principally for the purpose of selling it in the

near term; or

- on initial recognition it is part of a portfolio of identified financial

instruments that the Company manages together and has a recent

actual pattern of short-term profit-taking; or

- I

t is a derivative that is not designated and effective as a hedging

instrument.

The Company classifies instruments held for trading purposes as short-

term, except when there are restrictions on the use of the funds invested for

at least the 12 months following the date of the statement of financial

position.

The Company has not designated any financial assets as at fair value

through profit or loss

Financial assets at fair value through profit or loss are stated at fair value,

with any gains or losses arising on remeasurement recognized in profit or

loss. The net gain or loss recognized in profit or loss incorporates any

dividend or interest earned on the financial asset Fair value is determined

in the manner described in Note 16.



31


iii). Investments held-to-maturity Held-to-maturity investments are non-derivative financial assets with fixed

or determinable payments and fixed maturity dates that the Company has

the positive intent and ability to hold to maturity. Subsequent to initial

recognition, held-to-maturity investments are measured at amortized cost

using the effective interest method less any impairment.

iv). Loans and receivables Accounts receivable, loans and other accounts receivables with fixed or

determinable payments which are not traded in an active market, are

classified as loans and receivables. Loans and receivables are measured at

amortized cost using the effective interest method, less any impairment.

v). Derecognition of financial assets The Company derecognizes a financial asset only when the contractual

rights to the cash flows from the asset expire, or when it transfer the

financial asset and substantially all the risks and rewards inherent to the

ownership to another entity. If the Company neither transfers nor retains

substantially all the risks and rewards of ownership and continues to control

the transferred asset, it recognizes its retained interest in the asset and an

associated liability for amounts it may have to pay. If the Company retains

substantially all the risks and rewards of ownership of a transferred

financial asset, it continues to recognize the financial asset and also

recognizes a collateralized borrowing for the proceeds received.

vi). Effective interest method

The effective interest method is a method of calculating the amortized cost

of a financial asset and assigning interest income over the relevant period.

The effective interest rate calculated by the Company discounts the

financial asset over the expected life of the payment obligation which

causes it (or, when appropriate, over a shorter period) to the net carrying

value of the financial asset on its initial recognition.

vii). Compensation of financial assets and liabilities An asset and a financial liability are presented on a net basis in the statement of financial position only when the Company has: i) a legally enforceable right to offset the recognized amounts, and, ii) the intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

l. Inventories and cost of sales - Inventories are stated at the lower of their cost or

realizable value and are mainly basaltic concrete asphalt and aggregates such as

gravel, sand, seal, ballast hydraulic base, sub-base and tepetate.



32


m. Real estate held for future use -

i) During 2009, the Company paid an advance for the purchase of land where

real estate housing projects will be developed in the future, which has

been classified as long-term and valued at acquisition cost.

ii) Real estate participation certificates (CPIs) - These refer to long-term credit

instruments which entitle the Company to a fractional part of the

ownership of the territorial reserves contributed to a trust for purposes of

the respective sale. They are recorded at the lower of acquisition cost and

market value. Gains or losses arising from the sale of the CPIs are

recorded in income in the period of total or partial sale or transfer.

n. Investment in concessions - The Company recognizes its investment in

concessions based on Interpretation No.12 of the International Financial

Reporting Interpretations Committee (“IFRIC”), Service Concession

Arrangements for the initial recognition of construction, additions,

improvements and extensions to highways under a concession arrangement. This

interpretation provides guidance regarding accounting for service concessions by

private sector operators involved in supplying infrastructure assets and services

to the public sector. IFRIC 12 requires that a service concession be classified as

either an intangible asset, a financial asset or a combination of both.

A financial asset results when an operator constructs or makes improvements to

the infrastructure, in which the operator has an unconditional right to receive a

specific amount of cash or other financial asset during the contract term.

An intangible asset results when the operator constructs or makes improvements

and is allowed to operate the infrastructure for a fixed period after the

construction is terminated, in which the future cash flows of the operator have

not been specified, because they may vary depending on the use of the asset.

For both the financial asset and an intangible asset, revenue and costs related to

the construction or improvements are recognized in net income.

This IFRIC establishes that for both the financial asset and the intangible asset,

the revenues and costs related to the construction or the improvements are

recognized in revenues during the construction phase.

The rights paid to the SCT for the concession title is recognized as an intangible

asset.

The concession financial asset is classified within the category of loans and

accounts receivable.



33


The intangible asset recognized in the statement of financial position is amortized

over the concession period based on the traffic density. The estimated useful life

and depreciation method are reviewed at the end of each reporting period and the

effect of any change in estimate is recognized prospectively. Non-highway concessions are amortized on the straight-line method over the term of the concession.

o. Machinery and equipment - Machinery and equipment are recorded at

acquisition cost less any subsequent accumulated depreciation. Depreciation of

machinery and equipment is calculated according to the units produced in the

year with respect to the total estimated production of the assets during their useful

lives. For the remaining fixed assets, depreciations is calculated using the

straight-line method based on the component approach and the remaining useful

lives of the related assets, as follows:

Average years

Buildings 25-50

Construction machinery and equipment 5-10

Vehicles 3-10

Office furniture and equipment 4-6

The depreciation of plant and equipment is calculated according to the produced units during the year in relation to the total estimated asset during its useful life. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period. The gain or loss of a sale or retirement of an item of furniture and equipment is calculated as the difference between the proceeds received from sales and the carrying value of the asset and is recorded in results of the period.

p. Other assets- Other assets are comprised of guarantee long-term, mainly for

letters of credit, applied to the investment on Paquete Michoacán and Siglo XXI

mentioned in Note 2 above.

q. Borrowing costs- Borrowing costs mainly relate to security deposits and other

assets, which are expected to be recovered upon expiry of the commitments that

arise.

r. Impairment of intangible assets and real estate, machinery and equipment - At

the end of each period, the Company reviews the carrying values of its intangible

assets and real estate, machinery and equipment to determine whether there are

indicators that these assets have suffered a loss from impairment. If there is any

such indicator, the recoverable amount of the asset is calculated in order to

determine the amount of the loss from impairment (if any). When it is not



34


possible to estimate the recoverable amount of an individual asset, the Company

estimates the recoverable amount of the cash generating unit to which such asset

belongs. When a reasonable and consistent distribution base can be identified,

corporate assets are also assigned to the individual cash generating units, or

otherwise are assigned to the smallest group of cash generating units for which a

reasonable and consistent distribution base can be identified.

The recoverable amount is the higher of the fair value less cost of sales and the

value in use. When the value in use is used, the estimated future cash flows are

discounted at to present value, using a pre-tax discount rates which reflects the

current assessment of the market regarding the time-value of money over time

and the specific risk of the asset for which the estimates of future cash flows have

not been adjusted.

If it is estimated that the recoverable amount of an asset (or cash generating unit)

is lower than its carrying value, the carrying value of the asset (or cash generating

unit) is reduced to its recoverable value. Losses from impairment are recognized

immediately in the statement of profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset

(or a cash-generating unit) is increased to the revised estimate of its recoverable

amount, but so that the increased carrying amount does not exceed the carrying

amount that would have been determined had no impairment loss been

recognized for the asset (or cash-generating unit) in prior years. A reversal of an

impairment loss is recognized immediately in the net income.

s. Provisions - Provisions are recognized for current obligations (legal or

constructive) that arise from a past event, that are probable to result in the use of

economic resources, and that can be reasonably estimated.

The provision recognized is the best estimate of the disbursement required to

settle the present obligation at the end of the reporting period, taking into

consideration the risks and uncertainties inherent to the obligation. When the

provision is valued using the estimated cash flows necessary to settle the present

obligation, its carrying value represents the present value of such cash flows.

When some or all of the economic benefits required to settle a provision are

expected to be recovered from a third party, an account receivable is recognized

as an asset only if it is virtually certain that the reimbursement will be received

and the amount of the account receivable can be reliably valued.

t. Reserve for major maintenance - The Company creates a provision for major

maintenance of highway sections, based on the estimated cost of the next scheduled major maintenance, determined using studies prepared by independent experts. This is in accordance with the contractual obligation whereby at the end of the concession, the related assets will revert to the federal government and must be in optimal operating condition.



35


u. Financial liabilities

i). Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual agreements and the definitions of a financial liability and an equity instrument.

ii). Financial liabilities Financial liabilities are classified as either financial liabilities at ‘fair value through profit and loss’ or ‘other financial liabilities’.

iii). Financial liabilities at fair value through profit and loss Financial liabilities are classified as at fair value through profit or loss when the financial liability either is held for trading or is designated as at fair value through profit or loss: Financial liabilities are classified as "at fair value through profit or loss" or "other financial liabilities. The Company does not have financial liabilities designated as at fair value through profit and loss.

iv). Other financial liabilities

Other financial liabilities, including assigned collection rights, are initially valued at fair value, net of transaction costs. They are subsequently valued at amortized cost using the effective interest method, recognizing the interest expense on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

v). Derecognition of financial liabilities The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire.

v. Long term employee benefits from termination and retirement - The Company

provides a seniority premium to all its employees when they leave (either voluntarily or are dismissed) and have been employed at the Company at least 15 or when they are dismissed, regardless of their seniority in the Company. These benefits consist of a lump sum payment of 12 days’ wages for each year worked,



36


calculated using the most recent salary, not to exceed twice the minimum wage established by law.

People who are entitled to this in the calculation are those with 15 or more years

laboring and resign voluntarily or are fired.

The related liability and annual cost of such benefits are recorded as it is accrued

and are calculated by an independent actuary on the basis of formulas defined in

the plans using the projected unit credit method using nominal rates

w. Statutory employee profit sharing (PTU) - PTU is recorded in the results of the

year in which it is incurred and presented under operating expenses in the

accompanying consolidated statements of comprehensive income. x. Income taxes - Income tax expense represents the sum of the tax currently

payable and deferred tax. 1. Current tax

Current income taxes, calculated as the higher of the regular Mexican income tax (“ISR”) or the Business Flat Tax (“IETU”), are recorded in the results of the year in which they are incurred.

2. Deferred income tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill. As a consequence of the 2014 Tax Reform , as of December 31, 2013 deferred IETU is no longer recognized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.



37


The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3. Current and deferred tax for the year Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

4. Tax on assets The tax on assets (IMPAC) expected to be recoverable is recorded as a tax credit and is presented in the balance sheet in the deferred taxes line item.

y. Transactions in investment units - Transactions denominated in Investment

Units (UDIs) (account units stipulated in a Mexican decree which establishes that specific obligations which may be denominated in such units, published in the Federal Official Gazette on April 1, 1995), are recorded at the applicable exchange rate in effect on the date of the transaction; monetary assets and liabilities denominated in UDIs are translated into Mexico pesos at the exchange rate in effect at the balance sheet. Fluctuations in values are recorded in results as an exchange rate fluctuation within financing results, as part of the interest effective method.

z. Foreign currency transactions - The functional currency of the Company and its subsidiaries is the Mexican peso. Foreign currency transactions are recorded at the applicable exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated into Mexican pesos at the applicable exchange rate in effect at the balance sheet date. Exchange fluctuations are recorded in the consolidated statements of comprehensive income, except in cases where capitalization is appropriate.

aa. Revenue recognition – Toll revenues (concession revenues) are recognized when the service is rendered. Revenues for the sale of materials are recognized in the period in which the risks and rewards of ownership of the inventories of materials



38


are transferred to customers, which generally coincides with the delivery of materials to customers in satisfaction of orders. Revenues from long-term construction contracts are accounted for using the percentage-of-completion method; therefore, they are recognized in proportion to the costs incurred in related to total expected costs of the project. If total costs in the most recent cost estimate exceed total revenues according to the contract, the expected loss is recognized immediately within in current earnings.

bb. Earnings per share - Basic earnings per common share are calculated by dividing consolidated net income of controlling interests by the weighted average number of common shares outstanding during the year. The Company does not have any potentially dilutive securities, for which reason diluted earnings per share is the same as basic earnings per share.

cc. Statements of cash flows - The Company presents the consolidated statements

of cash flows using the indirect method. It classifies the concessioned infrastructure construction costs as an investing activity, because they represent the investment in a right to collect tolls from users. Interest received is presented within cash flows from operating activities while interest paid is presented within cash flows from financing activities.

5. Critical accounting judgments and key sources of estimation uncertainty

In the application of the Company's accounting policies, which are described in Note 4, the Company's management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgments, apart from those involving estimations which are described below, that the Management has made in the process of applying the Company's accounting policies and which have an important impact on the amounts recorded in the condensed consolidated interim financial statements:

- The Company has assigned collection rights in securitization schemes through

trusts and has determined that it controls and, therefore, consolidates such specific purpose entities. The principal elements considered by management in its determination of control over the trusts are that: the activities of the trusts are performed principally for the funding of the Company; the activities of the trust are limited and the Company participated in its establishment; also, the Company shares in the residuals as trustor. Consequently, the Company recognizes the revenues, costs and expenses of the highways and interest generated by the securitization certificates in its results as revenues from toll roads and operating costs and expenses and interest expense, respectively.



39


The sources of key uncertainty in the estimates made at the date of the statement of financial position, which have a significant risk of resulting in an adjustment in the carrying values of assets and liabilities during the following financial period, are as follows:

- The Company has accumulated recoverable tax losses, whose recoverability must evaluated before the recognition of a deferred income tax asset. Furthermore, for purposes of determining the deferred tax, the Company must make tax projections to determine whether it expects to incur IETU or ISR, and thus determine the base and rate of the reversals in order to calculate the deferred taxes based on the hybrid approach. These calculations have a particular impact on the determination of the portions of the tax loss carryforwards that are considered recoverable.

- The Company revises the estimate of the useful life and amortization method of

its intangible assets from concessions at the end of each reporting period and the effect of any change in the estimate is recorded prospectively. Furthermore, at the end of each period, the Company reviews the carrying values of its tangible and intangible assets in order to determine whether there is any indicator that they have suffered a loss from impairment.

- Management makes an estimate to determine and recognize the provision for

maintenance requirements and repair expenses of the concessioned highways, which affects the results of the periods from the time that the concessioned highways are available for use until the aforementioned maintenance and/or repair work is performed.

- Management recognizes a profit margin in the revenues and costs from construction, improvements and restoration work. The fair value of the services rendered to the concessionnaire is equivalent to the amount collected by the subcontractor from the Company, plus a profit margin.

6. Investments in securities

Unrestricted

funds

Unrestricted funds held in

trusts

Restricted funds held in

trusts

Balances as of December

31, 2013 Trading:

Commercial paper $ 44,739 $ - $ - $ 44,739 Capital market 134,338 - - 134,338 Money market 42,413 683,397 944,788 1,670,598

221,490 683,397 944,788 1,849,675 Held-to-maturity:

Money markets 1,124,104 - - 1,124,104 Current investments in securities 1,345,594 683,397 944,788 2,973,779 Trading:

Money market - - 759,634 759,634 Investments in securities long-term - - 759,634 759,634

Total $ 1,345,594 $ 683,397 $ 1,704,422 $ 3,733,413



40


Unrestricted

funds

Unrestricted funds held in

trusts

Restricted funds held in

trusts

Balances as of December

31, 2012

Trading:

Commercial paper $ 1,308 $ - $ - $ 1,308

Capital market 130,978 - - 130,978

Money market 49,388 111,847 929,501 1,090,736

181,674 111,847 929,501 1,223,022

Held-to-maturity:

Money markets 531,949 - - 531,949

Current investments in securities 713,623 111,847 929,501 1,754,971

Trading:

Money market - - 769,736 769,736

Investments in securities long-term - - 769,736 769,736

$ 713,623 $ 111,847 $ 1,699,237 $ 2,524,707

Trust funds are for the charges for toll revenue from concessions. The restricted trust

funds are used to pay the notes mentioned in Note 17, as well as interest and other

operating expenses of the concessions.

The unrestricted trust funds consist of the following: 2013 2012

Trust No. F/247006 of Concesionaria Monarca, S. A. de C. V. with Banco HSBC México, S. A. for the purpose of managing revenues generated by the use of the Zitácuaro-Lengua de Vaca concession. $ 26,207 $ 4,890

Trust number F/834 of Concesionaria Pac, S. A.

de C. V. executed with Banco Invex, S. A., for

the purpose of fulfilling the investment,

administration and source of payment related to

the resources from the exploitation of the San

Luis- Río Colorado concession in the State 29,952 4,092

Trust number F/689 of Promotora de Autopistas del

Pacífico, S. A. de C. V. (PAPSA) executed with

Banco Invex, S. A., for the purpose of fulfilling

the investment, administration and source of

payment related to the resources from the

operation of the San Martín Texmelucan -

Tlaxcala -El Molinito concession. 25,849 22,484

Trust number F/178 of PAPSA executed with

CIBanco, S. A., for the purpose of fulfilling the

investment, administration and source of payment 52,671 37,239



41


related to the resources from the operation of the

Ecatepec - Pirámides concession.

Trust number F/179 of PAPSA executed with

CIBanco, S. A., for the purpose of fulfilling the

investment, administration and source of payment

related to the resources from the operation of the

Armería - Manzanillo concession. 31,657 10,341

Fideicomiso F/436 de PAPSA con CIBanco, S.A., con el

objeto de cumplir con la inversión, administración y

fuente de pago, sobre los recursos derivados de la

explotación de la concesión de Apizaco Huauchinango. 126,679 7,214




explotación de la concesión de Vía Atlixcayotl. 247,035 16,027




explotación de la concesión de Virreyes Tezihuitlan. 142,742 8,955

Other trusts 605 605

$ 683,397 $ 111,847

Short and long-term restricted trust funds are integrated as follows:

2013 2012

Trust No. 10250 signed with NAFIN, S. A. by

Promotora y Administradora de Carreteras, S. A.

de C. V. (PACSA), established as part of the

issuance of preferred and subordinate security

certificates, Preferent and Subortinated, which holds

the collection rights of the Mexico-Toluca

concession. $ - $ 53,861

Trust No. 1344 with Banco Inbursa, S. A. Institución

de Banca Múltiple, signed with Concesionaria Pac, S. A. de C. V., established as part of the issuance of security certificates, which holds the collection rights related to the Peñón – Texcoco highway concession. 269,212 221,754

Irrevocable Administration Trust and Source of

Payment No. 11027448 of October 30, 2005 signed

by Autopista Tenango – Ixtapan de la Sal, S. A. de

C.V. and Pinfra Sector Construcción, S. A. de C. V.,

with Scotiabank Inverlat, S. A. (Scotiabank)

established as part of the issuance of security

certificates, which holds the collection rights of the

Tenango - Ixtapan de la Sal highway concession. 69,871 105,770



42


Trust 1486, signed with Banco Inbursa, S. A. de C. V.,

Institución de Banca Múltiple (INBURSA) signed

with Concesionaria Zonalta, S. A. de C.V.,


certificates, which holds the collection rights of

Santa Ana – Altar highway concession. 57,988 22,594

Trust 574 signed with Banco Invex, S.A. Institución de

Banca Múltiple (INVEX) signed with Concemex, S.

A. de C. V., established as part of the issuance of

security certificates, which holds the collection

rights of Atlixco – Jantetelco highway concession. 55,391 42,306

Irrevocable Administration Trust and Source of

Payment No. 10232 denominated in Mexican pesos

signed by denominated in Mexican pesos signed by

Experconstructores Zacatecana, S.A. de C.V.

(formerly Triturados Basálticos y Derivados, S. A.

de C. V.) with Banco Nacional de Comercio

Exterior, S.N.C. established for the purpose of

paying each recognized creditor as required by the

definitive judgment obtained in the Company’s

bankruptcy proceedings. 72,179 50,058

Trust 80481 of PACSA with Nacional Financiera, S.

N. C. Institución de Banca Múltiple (NAFIN),


certificates, which holds the collection rights of

Mexico – Toluca highway concession.

1,178,945

1,202,894

Other trusts 836 -

$ 1,704,422 $ 1,699,237

7. Accounts receivable

2013 2012 Trade accounts receivable $ 352,338 $ 227,040 Unbilled receivable 96,323 178,490

Progress work to be authorized - 28,751

Recoverable taxes 116,275 506,542

Sundry debtors 24,306 21,930

589,242 962,753

Allowance for doubtful accounts (53,333) (137,975) $ 535,909 $ 824,778

Accounts receivable include amounts that are past due at the end of the period, for which the Company has recognized an allowance for doubtful accounts, because there is a probability that the customer will not pay for any legal or financial contingency of the client or maturities greater than 90 days.



43


Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period for which the Company has not recognized an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable. The Company does not hold any collateral or other credit enhancements over these balances nor has the legal right to offset against any amount owed by the Company to the counterparty. Age of receivables that are past due but not impaired

2013 2012

More than 90 days $ 138,847 $ 88,084

Average age (days) 26 26 Movement in the allowance for doubtful accounts

2013 2012

Balance at beginning of the year $ (20,745) $ -

Impairment losses recognized on receivables (6,837) (20,745)

Balance at end of the year $ (27,582) $ (20,745) In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.

8. Inventories

2013 2012

Finished goods $ 29,745 $ 34,400

Production in-process 214 - Raw materials 6,957 8,054

Materials and replacement parts 46,277 42,964

Goods in transit 5,846 2,476

89,039 87,894

Allowance for obsolete inventories (2,965) (2,097)

$ 86,074 $ 85,797



44


9. Long-term notes receivable

Receivable notes are as follows:

2013 2012

Unrelated parties: Promoairtax, S.A. de C.V.(1) $ 80,894 $ 73,222 Related parties: Concesionaria Purépecha, S. A. de C. V. (2) 281,467 263,897 $ 362,361 $ 337,119

(1) Notes receivable $6,296 thousand US Dollars, bearing interest at a London Interbank

Offered Rate ("LIBOR") plus 200 points, payable annually, maturing on December 31,

2021. Ineterest rates as of December 31, 2013 and 2012 were 5.83% y 8.44%, respectively.

(2) Long-term notes receivable bearing interest at a 28-day TIIE rate plus three points (6.79%

and 7.79% as of December 31, 2013 and 2012, respectively) with maturity on January 31,

2017.

10. Real estate held for future use

2013 2012

Land $ 26,498 $ 18,137

Real estate participation certificates 77,870 77,870

$ 104,368 $ 96,007

During 2009, the Company acquired a land where real estate housing projects are

developed currently.

On December 2, 2007, Central de Abastos Naucalpan, S. A. de C. V. (CAN) paid, in-

kind, the debt it owed to Concemex, S. A. de C. V. (subsidiary company) at that date,

by assigning fiduciary rights to Irrevocable Trust No. 88 registered by public deed

number 16,319, executed on December 2, 2005, for the amount of 27,210,000 CPIs

equivalent to $52,862 shown in the statement of financial position, plus 7.86% of the

future rights of such certificates. The rights derived from the CPIs correspond to the

ownership of 604,810 square meters of real estate (trust instrument) located in the

municipality of Naucalpan in Mexico State.

On January 29, 2010, CAN executed a contract to assign an additional portion of its fiduciary rights to Tribasa Sector Inmobiliario, S. A. de C .V. (TSI), a subsidiary of the Company. In return, TSI paid $25,008 and received 11,112,115 CPIs representing the ownership of 246,994 square meters of land, located in the municipality of Naucalpan, Mexico State.



45


On that same date, TSI transferred the fiduciary rights of the 11,112,115 CPIs discussed in the preceding paragraph to Grupo Corporativo Interestatal, S. A. de C. V. (related party).

11. Machinery and equipment

2013 2012

Buildings $ 217,213 $ 218,962

Construction machinery and equipment 753,932 705,570

Vehicles 94,832 79,981 Office furniture and equipment 55,403 51,048

1,121,380 1,055,561

Accumulated depreciation (687,117) (604,570)

Land 143,073 143,073

$ 577,336 $ 594,064

Reconciliation of beginning and ending carrying values is as follows:

Balance as of

December 31,

2012 Additions Disposals

Balance at

December 31,

2013

Invetsment:

Buildings $ 218,962 $ 140 $ (1,889) $ 217,213

Construction

machinery and

equipment 705,570 50,120 (1,758) 753,932

Vehicles 79,981 16,293 (1,442) 94,832

Office furniture and

equipment 51,048 4,355 - 55,403

Total

investment 1,055,561 70,908 (5,089) 1,121,380

Accumulated

depreciation:

Buildings (92,317) (8,860) - (101,177)

Construction

machinery and

equipment (414,036) (62,557) 1,140 (475,453)

Vehicles (64,057) (8,340) 376 (72,021)


equipment (34,160) (4,306) - (38,466)



46


Total accumulated

depreciation (604,570) (84,063) 1,516 (687,117)

Land 143,073 - - 143,073

Net investment $ 594,064 $ (13,155) $ (3,573) $ 577,336

Balance as of

January 1, 2012 Additions Disposals

Balance at

December 31,

2012

Investment:

Buildings $ 223,752 $ 2,131 $ (6,921) $ 218,962

Construction

machinery and

Equipment 687,099 21,736 (3,265) 705,570

Vehicles 57,927 23,652 (1,598) 79,981


equipment 44,007 8,446 (1,405) 51,048

Total invesment 1,012,785 55,965 (13,189) 1,055,561

Balance as of

January 1, 2012 Additions Disposals

Balance at

December 31,

2012

Accumulated

depreciation:

Buildings (87,459) (10,083) 5,225 (92,317)

Construction

machinery and

equipment (378,373) (37,444) 1,781 (414,036)

Vehicles (42,924) (21,680) 547 (64,057)


equipment (32,621) (2,929)

1,390

(34,160)

Total accumulated

depreciation (541,377) (72,136) 8,943 (604,570)

Land 143,453 - (380) 143,073

Net investment $ 614,861 $ (16,171) $ (4,626) $ 594,064



47


12. Investments in concessions Investments in concessions represent rights, granted by federal and state governments, or another authority, for a determined period, to construct, establish, operate, and maintain transportation routes in good condition. The majority of the concessions are granted by the Mexican Federal Government through the SCT under the federal legislation and the Ministry of Public Works of Mexico or similar agencies of other countries. Governments of different states in Mexico also grant concessions under the local legislation for the construction and operation of roads and highways that are usually granted based on a similar model prepared by the SCT and the Ministry of Public Works of Mexico or similar agencies of other countries. Road concessions in México A road concessionaire constructs or improves roads in order to operate and maintain them in good, working condition. Concessionaires may transfer their rights and obligations but only with the approval of the government. Concession terms generally include terms related to the time of delivery, operation and maintenance works, standards under which the works will be performed, the terms of government supervision, reserve funds to be maintained for the upkeep, rights to be paid to the government and toll duties to be charged (including the inflation scope adjustments). The concessionaire shall repair roads any time it is necessary during the period of the concession. In exchange for constructing, operating and maintaining the roads in good condition, the concessionaire has the right to retain almost all the income resulting from the operation of roads during the term of the concession. At the end of the concession, the right to operate roads and receive income revert back to the government. The road and all repairs made during the term of the concession remain as property of the government. From December 1993, the maximum term of a road concession could not exceed 30 years however, based on the terms of the concession contracts, concessionaires will have the right to request an extension of the term similar to the original term if such extension is requested during the last fifth part of the original concession term. In this regard, terms of the concessions generally include the condition that if the traffic exceeded the volume estimated, the term of the concession would be reduced or the concessionaire would pay a part of profits resulting from the operation of the road to the government. The SCT has the right to terminate a concession without any compensation, before the end of the concession term when certain events occur. The government could also expropriate temporarily all assets related to the concession in case of war, significant public disturbances, threat to internal peace or for economic or public reasons. In the case of legal expropriation (except for an international war), the law requests the government to provide compensation to the concessionaire. Other infrastructure concessions in México The Company has investments in other infrastructure concessions which consist of construction, maintenance and operation of ports. These concessions are controlled by federal, municipal governments and other departments. Usually, concessions are



48


structured in such a way that the concessionaire can recover its investment by retaining the right to charge fees for periods established in the respective concession contracts. An analysis of the concession projects is as follows:

Concessionaire/

Concession

Expir

ation

of the

conce

ssion

Com

menc

e-

ment

date

Equity

percentag

e as of Investment balance as of

December

31,

December

31,

December

31,

2013 2013 2012

Securitized highway concessions:

Promotora y Administradora de

Carreteras, S. A. de C. V. (PACSA),

México - Toluca(1) 2030 1990 100% $ 999,879 $ 1,146,052

Reforma - Constituyentes - Lilas(1) 2030 1990 100% 596,579 -

Reforma – Chalco 2030 1990 100% 61,232 -

Acopilco 2030 1990 100% 133,194 -

Concesionaria PAC, S. A. de C. V.,

Peñón - Texcoco 2043 1994 100% 511,330 510,234

Autopista Tenango Ixtapan de la Sal,

S. A. de C. V. and Pinfra Sector

Construcción, S. A. de C. V.-

Ixtapan de la Sal, S. A. de C. V. 2036 1995 100% 475,534 427,713

Concemex, S. A. de C. V., Atlixco -

Jantetelco 2036 2006 100% 741,375 778,643

Concesionaria Zonalta, S. A. de C. V.,

Santa Ana – Altar 2035 2006 100% 998,257 1,008,867

4,517,380 3,871,509

Non-securitized highway

concessions:

Concesionaria Monarca, S. A. de C.

V., Zitácuaro - Lengua de Vaca 2037 2007 100% 118,051 119,786

Promotora de Autopistas del Pacífico,

S. A. de C. V. (PAPSA),

Armería – Manzanillo 2050 1990 100% 1,117,274 1,161,295

Ecatepec – Pirámides 2051 1991 100% 869,380 895,938

San Martín Texmelucan - Tlaxcala - El

Molinito 2041 2010 100% 400,532 412,722

Vía Atlixcayotl 2042 2012 100% 1,579,521 1,517,672

Virreyes – Tezihutlán 2042 2012 100% 443,791 458,086

Apizaco - Huauchinango 2042 2012 100% 472,994 488,396

Concesionaria Pac, S. A. de C. V. San

Luis - Río Colorado 2039 2009 100% 561,867 564,376

5,563,410 5,618,271



49


Other concessions:

Infraestructura Portuaria Mexicana, S.

A. de C. V.,

Puerto de Altamira, Tamaulipas 2036 1996 % 86,661 110,141

Roads under construction:

Concemex, S. A. de C. V., Tlaxcala –

Xoxtla 2036 2006 100% 411,245 234,825

PACSA, Reforma - Constituyentes -

Lilas(1) 2049 1990 100% - 398,530

PACSA, Reforma - Caborca 2049 1990 100% 382,130 -

PACSA, Tramo 2 Lerma 2049 1990 100% 243,535 -

Concesionaria Pac, S. A. de C. V.

Tenango-Ixtapan de la Sal 2053 1994 100% 26,164 -

PAPSA, Ecatepec – Peñón(2) 2051 1991 100% 104,652 44,535

1,167,726 677,890

$ 11,335,177 $ 10,277,811

(1) Represents a financial asset that is being presented in this item with a guaranteed annual real rate

of 12%

(2) Represents a financial asset that is being presente in this item with a guaranteed annual real rate

of 10%

The investments the Company has made in concessions as of December 31, are as

follows:

2013 2012

Projects in operation and in process $ 10,167,451 $ 9,599,921

Projects under construction 1,167,726 677,890

$ 11,335,177 $ 10,277,811

The accrued cost and amortization of finished projects in operation are as follows:

2013 2012

Cost of finished projects in operation and

projects in-process $ 19,062,143 $ 18,234,511

Less:

Accumulated amortization (8,894,692) (8,634,590)

10,167,451 9,599,921

Projects under construction 1,167,726 677,890

$ 11,335,177 $ 10,277,811



50


Amortization charged to results amounted to $260,102 and $232,840 in 2013 and 2012,

respectively.

13. Investment in shares of associated companies and joint ventures

a. As of December 31, investments in joint ventures are as follows:

Equity

percentage

Company

as of

December 31,

2013 2013 2012

Concesionaria de Autopistas de

Michoacán,

S. A. de C. V. (“Paquete

Michoacán”) (2) 25.2% $ 365,943 $ 299,181

Concesionaria de Autopistas de

Morelos, S. A. de C. V. (1) 25.2% 135,414 -

Constructora de Autopistas de

Michoacán, S.A. de C.V. 25.2% 12,522 10

Operadora de Autopistas de

Michoacán, S.A. de C.V. 25.2% 2,346 (1,040)

Concesionaria Purépecha, S. A.

de C. V. “Purepecha” (3) 50% 40,403 48,545

Posco Mesdc, S. A. de C. V.

“Posco” 19% 27,471 27,962

Construcciones y Drenajes

Profundos, S. A. de C.V. (5) 30% 6,488 (8,500)

Opercarreteras,

Gpo.Conc.Metropolitano,

Tribasa Cap,Tribasa Colisa,

Tribasa Andina y (4) 50% (37,995) (39,220)

Others 111 (148)

552,703

326,790

Reserved investment (5) 37,995 47,720

$ 590,698 $ 374,510



51


(1) Concesionaria de Autopistas de Morelos, S.A. de C.V. holds a concession for

construction, operation and maintenance for 30 years of Jantetelco – El Higuerón

with a 61.8 kilometers lenght. Currently the consortium is in process of technical

studies and legal procedures to start the project. (2) Paquete Michoacán has a concession for construction and operation, during 30

years, of the Morelia and Uruapan beltways and the Pátzcuaro-Uruapan-Lázaro

Cardenas highway (Paquete Michoacán), the entities wich comprise Paquete

Michoacan are Concesionaria de Autopistas de Michoacán, S, A. de C. V.,

Operadora de Autopistas de Michoacán. S. A. P. I. de C. V. and Constructora de

Autopistas de Michoacán, S. A. de C. V. which support the concessionaire to its

operation and construction of the warrants included in the concession title, Note

2b. (3) The 50% investment in Concesionaria Purépecha, S. A. de C. V. holds the

concession to build, operate, use, and maintain the 22.60-kilometer stretch of road (which is of high specifications and state jurisdiction) located between the federal highway Morelia - Maravatío, vía Charo and the Autopista de Occidente. The concession contract includes the right to construct upon and use the road and any other assets that comprise it, as well as provide related auxiliary services.

The term of the concession is 30 years beginning February 13, 2007 and its operation began on June 26, 2008. As control of the entity is shared between the Company and other partners of this concession, the investment was recorded using the equity method.

(4) Also, the Company has a 50% investment in Grupo Concesionario

Metropolitano, S. A. de C. V., for the purpose of building and operating the

elevated Electric Train Line between Mexico City and the State of Mexico. The

term of the concession is to end in 2013. However, the construction of the

Electric Train Line has not begun yet for reasons beyond the control of the

Company. Given the uncertainty that this project will be completed, the

Company has recorded a reserve for the impairment of the investment

This joint venture is accounted for using the equity method in these consolidated

financial statements.

(5) Investments in which the Company is engaged in Construcciones y Drenajes

Profundos, S. A. de C. V. and Grupo Concesionario Metropolitano, S. A. de C.

V. are reserved in 2013 due to the unviability of the projects they were created

for.

b. A summary of information regarding the joint venture of the Company are detailed

below.

2013 2012

Concesionaria de Autopistas de Michoacán, S. A. de C. V.

Total assets $ 2,871,034 $ 1,216,153



52


Total liabilities $ 1,418,881 $ 28,925

2013 2012

Constructora de Autopistas de Michoacán, S. A. de C. V.

Total assets $ 662,682 $ 40

Total liabilities $ 612,990 $ -

2013 2012

Operadora de Autopistas de Michoacán, S. A. de C. V.

Total assets $ 104,149 $ 56,494

Total liabilities $ 94,838 $ 60,620

2013 2012

Concesionaria Purépecha, S. A. de C. V.

Total assets $ 688,919 $ 677,104


2013 2012

Posco Mesdc, S. A. de C. V.

Total assets $ 150,662 $ 155,858


2013 2012

Construcciones y Drenajes Profundos, S. A. de C. V.

Total assets $ 245,781 $ 148,892


14. Other assets 2013 2012

Deferred credits $ 5,391 $ 5,957

Guarantee deposits (1) 261,168 257,494

Prepayments 44,125 -

Other assets 1,726 3,665

$ 312,410 $ 267,116

(1) Includes $243,703 and $12,750 of the letter of creditfor the investment in Paquete

Michoacán and Siglo XXI, respectively. See Note 2.



53


15. Discontinued operations

During 2008, as a result of a restructuring process, the Company’s management decided to discontinue its operations in Chile and Ecuador, where it had acted as concessionaire. Consequently, the discontinued assets and liabilities are presented in separate headings in the consolidated financial statements for 2013 and 2012. Furthermore, as a result of the lawsuit which occurred in the prior years between the subsidiary MGA and the Board of Directors of the Municipal Operating Agency for Applicable Water, Drains and Sanitation of Navojoa, Sonora, the Company decided to present the assets and liabilities related to the water and drainage operation concession of that city as discontinued operations, given the Company’s intention to discontinue their operations. Below is the integration of discontinued operations as of and for the years ended

December 31, 2013 and 2012:

2013

MGA Chile Ecuador Total

Balance sheet:

Assets $ 29,969 $ 27,094 $ - $ 57,063

Liabilities (9,078) (27,657) - (36,735)

$ 20,891 $ (563) $ - $ 20,328

Statement of income:

Costs $ (1,453) $ - $ - $ (1,453)

2012

MGA Chile Ecuador Total

Balance sheet:

Assets $ 29,969 $ 27,094 $ - $ 57,063

Liabilities (7,625) (27,657)

-

(35,282)

$ 22,344 $ (563) $ - $ 21,781

Statement of income:

Costs $ (2,457) $ 716 $ - $ (1,741)



54


16. Financial instruments

a. Significant accounting policies

The details of the significant accounting policies and methods adopted (including the criteria for

recognition, valuation and bases for recognition of revenues and expenses) for each class of

financial asset, financial liability and equity instruments, are disclosed in Note 4.

b. Categories of financial instruments

The main categories of financial instruments are as follows:

2013 2012

Financial assets

Cash and cash equivalents $ 110,137 $ 64,978

Investments in securities:

Trading investments 2,609,309 1,992,758

Held-to-maturity investments 1,124,104 531,949

Accounts receivable 898,270 1,161,897

Financial liabilities

Amortized cost:

Trade accounts payable 70,675 60,403

Assigned collection rights 9,116,369 9,394,772

c. Objectives of financial risk management The Company's activities are exposed to different economic risks which include (i) market financial risks (interest rate, foreign currency and pricing), (ii) credit (or credit-related) risk, and (iii) liquidity risk. The Company seeks to minimize the potential negative effects of the aforementioned risks in its financial performance through different strategies. Firstly, the Company seeks to obtain natural hedges in its operations to cover such risks. When this is not possible or is not economically feasible, the Company evaluates whether to enter into derivative instruments, unless the risk is considered insignificant with respect to the Company's financial position, performance and cash flows. The Company's internal control policy establishes that entering into credit agreements and the risks involved in the projects carried out by the Company must be jointly analyzed by the representatives of the finance, legal, administrative and operations area, prior to their authorization. Such analysis also includes the use of derivative financial instruments to hedge financial risks. of the Company’s internal policy establishes that entering into derivative financial instrument contracts is the responsibility of the Company's finance and administrative areas, once the aforementioned analysis is concluded.



55


d. Market risk Market risk is the possibility that adverse changes in market rates and prices will give rise to losses. Management of risk of exposure to UDI Within the regular course of its operations, the Company is exposed to market risks which are mainly related to the possibility that changes in the conversion rate of UDIs to pesos will adversely affect the value of its financial assets and liabilities, its performance or its future cash flows. UDIs are a conversion factor, which takes into account the effects of inflation. As of December 31, 2013 and 2012, 89% and 88%, respectively, of the Company's debt obligations were denominated in UDI's. This risk is largely counteracted by the fact that the revenues generated from the concessions are subject to annual adjustments based on the inflation rate. The increase in the value of the UDI for the year ended December 31, 2013 and 2012 was 3.78% and 3.91%, respectively. If such increase had been 4.78% (i.e., 100 base points above its actual increase), it would have resulted in a decrease in results and in stockholders' equity of approximately $70,432 and $97,157 respectively. If the increase in the value of the UDI had been 2.78%, instead of 3.78% (i.e., 100 base points below its actual increase), it would have resulted in an increase in results and in stockholders' equity of approximately $70,432. The hypothetical increase or decrease in basis points represents a change which management considers reasonably possible and has been determined as the difference between the actual change in the value of the UDI and the inflation ceiling which would trigger a renegotiation of rates. The aforementioned sensitivity analysis includes the financial instruments outstanding as of December 31, 2013 and 2012 and may not be representative of the risk of change in UDI value during the period due to changes in the net position denominated in UDIs. Furthermore, as already noted, there is a natural hedge for this risk with the future revenues from the concessions, which, as they do not represent a financial instrument in the Company's statement of financial position, are not reflected in the sensitivity shown. Management of the interest rate risk

Furthermore, the Company is exposed to market risks related to fluctuations in interest rates as some of its issues of securitized certificates bear interest at variable rates linked to the TIIE. The increase in such rate would result in a postponement of the expected payment date. As of December 31, 2013 and 2012, the securitized certificates issued due to the securitization of one of the Company's highways which represented approximately 11% and 12% of it’s the Company’s outstanding debt, bore interest at rates linked to the TIIE. An increase (decrease) of 100 base points in the TIIE, which represents management's best estimate of a reasonably possible change in such interest rate, would result in a decrease (increase) in the Company's results and stockholders' equity of approximately $10,974 and $9,474, respectively. The sensitivity analysis includes the financial instruments outstanding as of December 31, 2013 and 2012, and may not be representative of the risk of change



56


during the period due to changes in the net position which bears interest based on the TIIE. Management of price risk The Company's financial instruments do not expose it to significant financial risks related to pricing. Furthermore, the tolls collected by the Company are regulated and adjusted based on the national consumer price index in Mexico. Management of exchange risk In relation to exchange risk, the Company believes that its exposure is immaterial due to the few transactions and balances denominated in foreign currency and which are listed in Note 21. The Company contracts its financing in the same currency as the source of its repayment. If the exposure to this risk were to become significant in a specific period, it would be managed within the parameters of established policies. Management of credit risk

Credit risk refers to the risk that the counterparties will default on their contractual obligations, resulting in a loss for the Company. The Company’s principal credit risk stems from cash and cash equivalents, investments in securities and accounts and notes receivable. The Company has a policy of maintaining cash and cash equivalents only with recognized, prestigious institutions with a high credit rating. Additionally, investments are limited to instruments with high credit quality. The Company’s principal investments are made through trusts that are consolidated in the financial statements, and which have strict investment policies that limit credit risk. In the case of accounts and notes receivable, the credit risk mainly stems from the ports operation and the asphalt plant, which require credit analyses before credit is granted, and involve transactions with companies of high repute; otherwise, the respective guarantees are obtained in accordance with established credit policies. Finally, the long-term note receivable is with a related party in which a 50% share is held in that entity’s equity, and is shown within the investment in associated companies line (see Notes 13 and 22). The other a long-term receivable account matures in 2021, is denominated in dollars and described in Note 9. The maximum exposure to credit risk at December 31, 2013 and 2012 is represented by the amounts shown in the consolidated statement of financial position. Management of liquidity risk Historically, the Company's main sources of liquidity have been (i) cash flows generated from the un-securitized highway operations, (ii) cash flows generated by the rest of the Company’s operations and (iii) resources derived from the securitization of the toll collection rights in the securitized highways. The terms of certain of the securitizations require that all the cash flows generated by the respective highway above the amount necessary to cover the payments of interest and principal must be applied to the early repayment of debt. Therefore, as long as any portion of the debt incurred under a securitized operation remains



57


unpaid, the Company will not receive revenues derived from the toll rates generated by the highway in question, and will only be entitled to the payment of the administration and operation fees agreed in the concession contract of such highway. Furthermore, as all the securitizations represent project risk, if the cash flows generated by such projects were insufficient to cover the respective debt servicing, there is no recourse against the Company or other assets different from the securitized ones. The following table shows the contractual expirations of the Company’s financial liabilities. The table was determined based on the non-discounted flows according to the first date on which payment may be required from the Company; however, it does not estimate early repayments due to excess cash flows from the highways. The table includes payment of principal and interest. Interested was estimated using the TIIE in effect as of December 31, 2013 and 2012, and the estimated value of the UDI at each payment period, using an annual inflation increase of 4%.

As of December 31, 2013 1 year 2 to 5

years

6 to 10

years

11 to 15

years

16 to 25

years Total

Assigned collection rights $1,072,758 $5,075,728 $7,158,030 $4,986,060 $3,987,703 $22,280,279

Trade accounts payable 70,675 - - - - 70,675

Total $1,143,433 $5,075,728 $7,158,030 $4,986,060 $3,987,703 $22,350,954

-

As of December 31, 2012 1 year 2 to 5

years

6 to 10

years

11 to 15

years

16 to 20

years Total

Assigned collection rights $1,008,547 $5,003,359 $7,358,725 $5,818,690 $4,704,797 $23,894,118

Trade accounts payable 60,403 - - - - 60,403

Total $1,068,950 $5,003,359 $7,358,725 $5,818,690 $4,704,797 $23,954,521

e. Fair value of financial instruments Fair value of financial instruments recorded at amortized cost Investments in securities held for trading are stated at fair value which is determined by recognized market prices and when the instruments are not traded in a market, is determined by technical valuation models recognized in the financial field and are classified as level 2 (see section fair value hierarchy, below). Additionally, the Company has investments in repurchase agreements in the money market which are classified as held to maturity. Although they are valued at amortized cost, given the short term nature and that pay yields generally represent market rates at the time of acquiring the instrument, management believes that their carrying amounts approximate their fair value. The carrying values of investments held to maturity are also disclosed in Note 6. Other financial instruments recognized in the financial statements which are not recognized at fair value include accounts and notes receivable, trade, accounts payable, assigned collection rights assigned and financial leasing obligations.



58


Except for the following table, the Company's management believes that the carrying values of such financial assets and liabilities approximate fair value, given their nature and short maturity:

As of December, 2013

Book

value

Fair

value

Financial liability:

Assigned collection rights $ 10,131,789 $ 15,308,765

As of December, 2012

Book

value

Fair

value

Financial liability:

Assigned collection rights $ 10,611,718 $ 15,673,952 Valuation techniques and assumptions applied to determine fair value

The fair value of the financial assets and liabilities is determined as follows:

The fair value of the financial assets and liabilities with standard terms and

conditions, and negotiated in active liquid markets, are determined based on the prices quoted in the market.

The fair value of the other assets and liabilities is determined in accordance with generally accepted price determination models, which are based on the analysis of discounted cash flows.

In particular, the fair value of the collection rights assigned was determined through a market approach, using the listed prices of the Company's securitized certificates and adjusted, if applicable, for volume factors and level of activity when it is considered that the market is not active. This valuation is considered Level 3, due to the relevance of the adjustment factors, which are not observable.

Management of capital risk The Company manages its capital to ensure that it will continue as a going concern, while also maximizing the return to its shareholders through optimization of its capital structure. The Company's management reviews its capital structure when it presents its financial projections as part of the business plan to the Company's Board of Directors and shareholders. As part of this review, the Board of Directors considers the cost of capital and its associated risks. The Company analyzes the capital structure for each project independently, in order to minimize the risk for the Company and optimize shareholder returns.



59


The Company is incorporated as an S. A. B. de C. V. in accordance with the Mexican Securities Law and the General Companies Law; fixed minimum capital is $50.

17. Long-term assigned collection rights (securitizations) Assigned collection rights represent the issuance of security certificates, each of which is held in a specific trust that refers to a specific concession. The security certificates will be paid by the future transfer of amounts collected from the operation of related concession. The integration of the related trust is a follows:

2013 2012

Assigned collection rights $ 10,131,789 $ 10,611,718

Issuance costs of security certificates, net (831,679) (1,029,993)

9,300,110 9,581,725

Less- short-term assigned collection rights 994,434 933,206

Interest 183,741 186,953

Long-term assigned collection rights $ 8,121,935 $ 8,461,566 The integration of the related trusts as of December 31, 2013 is as follows:

Issuing trust Short-term Long-term Interest

Characteristics of the

Security Certificates

a) NAFIN 80481

México - Toluca

$ 535,250 $ 1,938,082 $ 157,525 Public offering of 11,137,473 security

certificates with a face value of one hundred

UDIs per certificate, with an expiration date

of February 15, 2028. Amounts are payable

semiannually, beginning April 7, 2006,

bearing interest at a 5% annual fixed rate.

b) NAFIN 80481

México - Toluca

50,038 1,705,711 - Public offering of 3,646,559 subordinated

security certificates with a face value of

109.502703 UDIs per certificate, with an

expiration date of February 15, 2030.

Amounts are payable semiannually

beginning April 7, 2006, bearing interest at

an 8.85% annual fixed rate.

c) NAFIN 80481

México - Toluca


securitized certificates, at face value of 100

UDIs each certificate, maturing on February

15, 2030, with semiannual payments as of

August 15, 2009 at a variable rate which is

7.94% and 7.92% as of December 31, 2013



60


and 2012, respectively.

d) INBURSA 1344

Peñón - Texcoco

215,848 831,536 3,987 Public offering of 18,500,000 security

certificates with a face value of one

hundred Mexican pesos per certificate,

payable in 33 semiannual payments,

expiring December 2, 2021 at a variable

rate which is 6.75% and 7.84% as of

December 31, 2013 and 2012,

respectively.

e) SCOTIABANK

11027448

Tenango – Ixtapan de

la Sal


certificates with a face value of 100 UDIs

per certificate, payable in 33 semiannual

payments beginning on the date the second

installment of interest is due; the

certificate expires on October 4, 2022. The

annual fixed interest rate is 6.75% on the

outstanding balance.

f)

INBURSA 1486

Santa Ana - Altar



per certificate, which expires on December

14, 2033 at an annual rate of 5.4%

incrementing to 5.6% under certain

circumstances.

g) INBURSA 1486

Santa Ana - Altar

1,122 344,086 - Public offering of 846,958 security

certificates with a face value of 100

UDIs per certificate, which expires on

December 14, 2034 at an annual rate of

5.4% incrementing to 5.6% under certain

circumstances.

h) INBURSA 1486

Santa Ana - Altar

- 561,810 - Public offering of 1,279,437 security


UDIs per certificate, which expires on

December 14, 2034 at an annual rate of

5.4% incrementing to 5.6%, under

certain circumstances, each time

prepayments of Preferred Series amounts

5% of the initial balance, the 8% of this

Series will become convertible to

Preferred Series.

i) INVEX 574

Atlixco – Jantetelco

Public offering of 1,438,418 security


UDIs per certificate which expires on

September 4, 2026 and accrues interest

at an annual fixed rate of 5.83%.

98,591 160,194 4,521

$ 994,434 $ 8,121,935 $ 183,741



61


The integration of the related trusts as of December 31, 2012 is as follows:




a) NAFIN 80481

México - Toluca

$ 515,344 $ 2,074,128 $ 159,074 Public offering of 11,137,473 security

certificates with a face value of one hundred

UDIs per certificate, with an expiration date

of February 15, 2028. Amounts are payable

semiannually, beginning April 7, 2006,

bearing interest at a 5% annual fixed rate.

b) NAFIN 80481

México - Toluca


security certificates with a face value of

109.502703 UDIs per certificate, with an

expiration date of February 15, 2030.

Amounts are payable semiannually

beginning April 7, 2006, bearing interest at

an 8.85% annual fixed rate.

c) NAFIN 80481

México - Toluca


securitized certificates, at face value of 100

UDIs each certificate, maturing on February

15, 2030, with semiannual payments as of

August 15, 2009 at a variable rate which is

7.94% and 7.92% as of December 31, 2013

and 2012, respectively..




d) INBURSA 1344

Peñón - Texcoco


certificates with a face value of one

hundred Mexican pesos per certificate,

payable in 33 semiannual payments,

expiring December 2, 2021 at a variable

rate which is 6.75% and 7.84% as of

December 31, 2013 and 2012,

respectively.

e) SCOTIABANK

11027448

Tenango – Ixtapan de

la Sal



per certificate, payable in 33 semiannual

payments beginning on the date the second

installment of interest is due; the

certificate expires on October 4, 2022. The

annual fixed interest rate is 6.75% on the

outstanding balance.

f) INBURSA 1486

Santa Ana - Altar






circumstances.



62


g) INBURSA 1486

Santa Ana - Altar

485 332,160 - Public offering of 846,958 security





circumstances.

h) INBURSA 1486

Santa Ana - Altar

- 512,898 - Public offering of 1,279,437 security




incrementing to 5.6%, under certain

circumstances, each time prepayments of

Preferred Series amounts 5% of the initial

balance, the 8% of this Series will become

convertible to Preferred Series.

i) INVEX 574

Atlixco – Jantetelco 85,482 292,201 5,641

Public offering of 1,438,418 security


per certificate which expires on September

4, 2026 and accrues interest at an annual

fixed rate of 5.83%.

$ 933,206 $ 8,461,566 $ 186,953

Expiration dates of long-term security certificates as of December 31, 2013, are as

follows:

2014 $ 994,434

2015 457,807

2016 520,511

2017 572,233

2018 and thereafter 7,586,804

$ 10,131,789

a. México - Toluca On September 19, 2003, the Irrevocable Trust Agreement No. F/10250, established for the issuance of preferred security certificates (CONSVEN 03-U) and subordinated security certificates (CONSVEN 03-2U) was signed by PACSA, holder of the concession rights of autopistas México-Toluca, as the trustor and BANCOMEXT as the trustee. Preferred security certificates are guaranteed with an insurance policy for each trust, granted by MBIA Insurance Corporation (“MBIA”), located in New York, United States of America. This insurance policy guarantees the certificate holder payment of capital and interest at each payment date. If the Company fails to pay and MBIA must exercise the policy to pay the certificate holder, MBIA is



63


guaranteed with the capital of the related trust, the shares which Grupo Concesionario de México,S. A. de C. V. holds in PACSA and PAPSA and residual rights of the related trusts. Except for these guarantees, the Company has no further responsibility. The subordinated security certificates are not guaranteed by any insurance policy and are only guaranteed with road tolls. Therefore, if for any reason this source of payment is not sufficient to permit the trustee to pay and comply with the obligations related to trusts, the trustees, Company, underwriters and the depositary will not be responsible for these payments. Nevertheless, the Company considers that road tolls will be sufficient to cover the capital and interest of the subordinated security certificates. Payments of capital and interest of subordinated security certificates any time before the expiration date of the insurance policy related to the preferred security certificates or amounts owed to the insurance company for these concepts, will be subject to the following conditions:

1. The trustee should have paid capital and interest of the preferred security certificates on the programmed date.

2. 100% of the required amount of the debt reserve fund should have been

established. 3. The issuer should have received a fulfillment notice related to the two

payment periods prior to the payment date.

4. Fund availability in the subordinated debt account.

On April 3, 2006, irrevocable trust contract number 80481 was executed unilaterally by NAFIN (“NAFIN Trust 80481”). The trust agreement was signed by PACSA as the trustor and NAFIN as the trustee. Trustees in the first place are holders of the preferred security certificates and, PACSA, in the fourth and fifth place. PACSA transferred to the NAFIN Trust 80481 all of its collection rights, including its collection rights subsequent to the termination of the concession agreement, compensation due from the Mexican Federal Government, as well as any other right or assets related to the México – Toluca highway.

The NAFIN Trust was constituted in order to issue preferred security certificates

and subordinated security certificates guaranteed by the income obtained from

future tolls of the Mexico – Toluca highway. The NAFIN Trust 80481 uses toll

fees, after the payment of value-added tax (VAT), IETU, ISR, operating expenses

and the maintenance costs related to the highway, to create a reserve account for

the benefit of the security certificate holders. After covering the obligations under

the security certificates, the Ministry of Finance and PACSA will have the right

to receive income from the highway tolls after the payment of VAT, IETU, ISR,

operating expenses and maintenance costs during the remaining term of the

concession up to fifteen working days before the termination of the concession,



64


in accordance with the percentage indicated by MBIA to the trustee. On the

fourteenth day before the termination of the concession, the income obtained

from tolls will be reverted in favor of PACSA.

On April 7, 2006, the liabilities related to the preferred subordinated security

certificates issued in 2003 through the Bancomext Trust F/10250 discussed above

were refinanced within the NAFIN Trust 80481, as discussed below, and the

Bancomext Trust ceded the Mexico – Toluca highway collection rights to

NAFIN Trust 80481 discussed above.

The NAFIN Trust 80481 issued preferred security certificates denominated in

UDIs up to an amount equivalent to $5,569,959. The new preferred security

certificates are guaranteed by an MBIA insurance policy, with terms similar to

those of the insurance policy guarantee over the original preferred security

certificates.

Resources derived from these new preferred security certificates were used to

pay the remaining balance of preferred security certificates issued by the

Bancomext Trust F/10250 and the corresponding issuing expenses. The new

subordinated security certificates replaced subordinated security certificates

issued through the original Bancomext Trust F/10250.

On March 19, 2009, a new issuance of series 2009 "Padeim 09-U" subordinated

securitized certificates was carried out by the Company for the Mexico City-

Toluca highway for an additional amount of 241,538,600 investment units

(UDIs), equivalent to $1,019,703 as of that date. This new issuance of securitized

debt was requested by the federal government through its decentralized agency

Banco Nacional de Obras y Servicios Públicos, S. N. C., (BANOBRAS), for the

purpose of: 1) repaying the subordinated securitized certificates that were

previously issued by Sistema de Administración y Enajenación de Bienes (SAE),

also a Mexican government agency, which represented 93.54% of the

subordinated securitized certificates issued by the Company and 2) obtaining

additional resources for new projects.

The following amounts were paid with the resources obtained: a) issuance costs

for $161,018, b) a premium to substitute the SAE debt for $377,492 and c) other

items, mainly value-added tax on certain issuance costs for $7,148. these amounts

were recorded in the income statement on the date that conducted the new debt

issue.

The remaining net proceeds were deposited within trust number 80481 held with

Nacional Financiera, S. N. C., (NAFIN); at the same time a new projects fund

was created for $474,045, which such funds will be used to expand and renovate

the Mexico City- Toluca highway. Furthermore, the Company will obtain a

release of funds from this trust every week until maturity of the issuance. The

obligation will be repaid with deposits made from toll collections from the



65


operation of the related highway. The release of funds to the Company will

depend on a series of variables, but the lower and upper limits of funds released

will be 1,489,697 UDIs and 2,340,953 UDIs, respectively. This new issuance

will be in effect until February 2030. The trust contract was executed by the

Company, acting as trustor, with NAFIN acting as trustee and BANOBRAS as

trustee.

The debt of these notes is guarantee by the future toll collection of the Mexico-

Toluca highway, operated by PACSA until the maturity of the concession, which

will be in February 2030.

b. Santa Ana – Altar

In 2006, the Company executed a construction, modernization, operation,

maintenance, and delivery agreement with the Government of Sonora, for the

construction and modernization of the Santa Ana-Altar toll highway and the

delivery of the section of the Altar-Pitiquito highway. Due to the above, the

Sonora government assigned the collection rights to the Trust 1486 with Banco

Inbursa, S. A. of Santa Ana- Altar road.

Based on the above, the security certificates were issued which purpose is the

construction of the road. Interests are paid semiannually and the security

certificates will expire in 2031, there are prepayments expected based on a

programmed curve.

On August 30, 2006, Concesionaria Zonalta, S.A. de C. V. held with Banco Inbursa, S. A., Institución de Banca Múltiple, Grupo Financiero Inbursa, División Fiduciaria, an irrevocable Trust contract of Management and Payment Source 1486 the transmission of the collection rights and all present and future fees that may be entitled to collect or receive in connection with the toll road, compensation rights, any rights to extend the concession maturity and the rights to receive any amount or asset by governmental authority, in order to make an issue of security certificates which main payment source are the collection rights of the road with no specific guarantee .

As mentioned in Note 2d, on June 11, 2012, the Company made a partial prepayment of $389,400. Therefore, in June 2012 was signed the Amended Trust No. F/1486, dividing the original issue in three series.

c. Atlixco - Jatetelco

On September 15, 2006, Concemex, S. A. de C. V. and Región Central de

Autopistas, S. A. de C. V. signed an Irrevocable Administration Trust and Source

of Payment No. 574 with Banco Invex, S. A. Institución de Banca Múltiple, Invex

Grupo Financiero, Trustee, to transfer to the trustee the collection rights as well

as all current and future toll fees related to the highway, indemnity rights, any

right to extend the concession and the right to receive any amount or assets from



66


the government authority, in order to issue security certificates, which will be

paid by rights and fees derived from toll collections.

d. Tenango - Ixtapan de la Sal

On October 3, 2005 Autopista Tenango-Ixtapan de la Sal, S. A. de C. V. and

Pinfra Sector Construcción, S. A. de C. V., signed a modification agreement to

the Original Trust Agreement 11027448 and an Administration Irrevocable

Administration Trust and Source of Payment with Scotiabank Inverlat, S. A.

Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, División

Fiduciaria, to transfer to the trustee the collection rights as well as all current and

future toll fees related to the highway, indemnity rights, any right to extend the

concession and all the remaining assets of the original trust, established to issue

security certificates.

The issuance of the security certificates requires the creation of a reserve fund

containing resources equivalent to one year’s debt service (principal and interest)

to ensure adequate control of the net worth held in the trust, which must remain

in effect for the duration of the trust.

Furthermore, the trust has an additional guarantee fund in UDIs, which can be

transferred to the reserve fund if such reserve fund does not have sufficient

resources.

e. Peñón - Texcoco

On December 17, 2004, Concesionaria Pac, S. A. de C. V., signed an Irrevocable

Administration Trust No. 1344 with Banco Inbursa, S. A., to transfer to the

trustee current and future collection rights from tolls from the Peñón – Texcoco

highway, indemnity rights and all the remaining assets of the original trust,

established to issue unsecured certificates. This trust was established for the

payment of ordinary trust certificates held in Trust 1008 signed with Banca

Interacciones that would expire in 2009 but would permit advanced payments on

the related security certificates.

The issuance of the unsecured certificates requires the creation of a reserve fund

containing resources equivalent to one year’s debt service (principal and interest)

to ensure adequate control of the net worth held in the trust, which must remain

in effect for the duration of the trust.

18. Employee benefits

a. As mentioned in Note 3, the Company is required to pay their employees a

seniority premium.



67


b. Net period cost for obligations resulting from the pension plan and seniority

premiums was $502 and $755 in 2013 and 2012, respectively. Other disclosures

required under financial reporting standards are not considered material.

19. Reserve for major maintenance

2013

Beginning

Provision Final

balance

Additions used balance

Reserve for major maintenance $ 111,065 $ 243,107 $ (161,296) $ 192,876

2012

Beginning

Provision Final

balance

Additions used balance

Reserve for major maintenance $ 101,990 $ 111,065 $ (101,990) $ 111,065

20. Stockholders’ equity

a. Common stock at par value as of December 31, is as follows:

Number of

shares

Amount

2013 2012 2013 2012

Fixed capital

Series A 380,123,523 380,123,523 $ 719,772 $ 719,772

Common stock consists of nominative shares without par value and free

subscription. Variable capital may be increased without limitation.



68


b. At a Stockholders’ Ordinary General Meeting held on April 30, 2013, the stockholders approved an increase in the reserve for the repurchase of stock of $1,076,080, to $2,000,000 which represents the maximum amount of resources available to the Company to repurchase shares representing its own capital.

c. On October 4, 2012, the Company made a national and international public

offering of its shares by $1,365,733 at a price of $63 per share, through the

“Mexican stock exchange”. Therefore there were subscribed 21,678,374 shares,

nominative and without par value, including 375,014 shares acquired by the

Company with the share repurchase reserve. This issuance was recorded as an

increase in stockholders' equity, net of issue expenses by $83,880.

d. Retained earnings include the statutory legal reserve. The General Corporate Law

requires that at least 5% of net income of the year be transferred to the legal

reserve until the reserve equals 20% of capital stock at par value (historical

pesos). The legal reserve may be capitalized but may not be distributed unless

the entity is dissolved. The legal reserve must be replenished if it is reduced for

any reason.

e. Stockholders’ equity, except for restated paid-in capital and tax retained earnings

will be subject to ISR payable by the Company at the rate in effect upon

distribution. Any tax paid on such distribution maybe credited against annual and

estimated ISR of the year in which the tax on dividends is paid and the following

two fiscal years.

Repurchase of shares - In accordance with the Mexican Securities Market Law

and the Singular Circular governing public companies listed on the Mexican

Securities Exchange, the Company may repurchase its own shares in the market,

debiting capital stock or other equity accounts.

As of December 31, 2013, total repurchased shares were 60,051. As of December

31, 2012 the Company had not repurchase shares.

21. Foreign currency balances and transactions

a. The foreign currency monetary position, subject to exchange rate risk, is:

2013 2012

Thousands of U.S. dollars:

Monetary assets 34,205 27,224

Monetary liabilities (935) (1,009)

Net monetary asset position 33,270 26,215

Equivalent in Mexican pesos $ 434,680 $ 340,481



69


b. Transactions denominated in foreign currency were as follows:

2013 2012

(In thousands of U.S. dollars)

Import purchases 1,305 1,896

c. Mexican peso to U.S. dollar exchange rates in effect at the dates of the

consolidated balance sheets and at the date of the related independent auditors’

report were as follows:

2013 2012

As of April

25, 2014

U.S. dollar $ 13.0652 $ 12.988 $ 13.1010

d. Mexican peso to UDI exchange rates in effect at the dates of the consolidated

balance sheets and at the date of the related independent auditors’ report were

as follows:

2013 2012

As of April

25, 2014

UDI $ 5.051105 $ 4.874624 $ 5.153234

22. Transactions with related parties

Transactions with related parties, carried out in the ordinary course of business, were as follows:

2013 2012

Income:

Interest income $ 15,679 $ 16,705

Operation and maintenance of roads 25,588 24,370

Administrative services 1,560 1,560

Costs and expenses:

Other service expenses $ 276 $ 282



70


23. Income taxes

The Company is subject to ISR and through December 31, 2012, to ISR and IETU.

ISR - The rate was 30% in 2013 and 2012 and as a result of the new 2014 ISR law

(2014Tax Law), the rate will continue at 30% in 2014 and thereafter.

IETU - IETU was eliminated as of 2014; therefore, up to December 31, 2013, this tax

was incurred both on revenues and deductions and certain tax credits based on cash

flows from each year. The respective rate was 17.5%.

The current income tax is the greater of ISR and IETU up to 2013.

Through 2012, based on its financial projections, the Company determined that it will

basically pay ISR. Therefore, it only recognizes deferred ISR. since 2013, only

deferred ISR is calculated due to the abrogation of the flat tax.

a. Income taxes expense are as follows:

2013 2012

ISR: Current tax $ 29,894 $ 202,398 Deferred tax 98,411 (275,061)

IETU: Current tax 182,648 89,914 $ 310,953 $ 17,251

b. The reconciliation of the statutory and effective ISR rates expressed as a

percentage of income before income taxes is as follows:

2013 2012

Statutory rate 30% 30%

Add the effect of permanent differences, mainly nondeductible expenses 2% 1%

Add (deduct) - effects of inflation (1%) (1%)

Effect of current IETU 7% 5%

Estimated valuation of recoverable

asset tax and tax loss carryforwards amortized (26%) (34%)

Effective rate 12% 1%



71


c. The main items originating a deferred ISR asset are:

2013 2012

Deferred ISR asset:

Effect of tax loss carryforwards $ 1,202,617 $ 1,836,190 Real estate, machinery and equipment 33,737 37,587

Advances from customers 17,239 14,678

Reserve for major maintenance 55,800 29,809

Other – Net 245,592 380,224

Deferred ISR asset 1,554,985 2,298,488

Deferred ISR liability:

Investment in concessions (518,949) (516,190)

Prepaid expenses (48,156) (74,283)

Deferred ISR liability (567,105) (590,473)

Recoverable tax on assets paid 39,800 61,381

Valuation allowance for tax loss carryforwards (179,585) (822,890)

(139,785) (761,509)

Net deferred ISR asset $ 848,095 $ 946,506

d. The benefits of restated tax loss carryforwards and recoverable IMPAC for which the deferred ISR asset has been partially recognized, can be recovered subject to certain conditions. In the case of the concessionaries, according to the Omnibus Tax Ruling in effect since 1994, these can be redeemed up until the end of the concession. Restated amounts as of December 31, 2013 and expiration dates are:

Year of Tax Loss Recoverable

Expiration carryforwar

ds IMPAC

2014 $ 1,701,155 $ 763 2015 111,851 1,916

2016 7,020 1,639

2017 - 1,957 2019 7,580 - 2020 5,548 - 2023 1,093 -

2050 2,174,477 33,525

$ 4,008,724 $ 39,800



72


24. Commitments

a. The Company is obligated to pay the Mexican Federal Government and state governments, as consideration for the use and operation of the concessioned highways, an amount equal to between 0.5% and 1.5% of the revenues that it earns annually.

b. The Company has a series of obligations derived from the concession titles for which, in the instance of noncompliance, the concession titles may be revoked by the authorities.

c. On March 31, 2009, the Company and the Mexican Federal Government, through SCT, executed a third amendment agreement to the Ecatepec – Pirámides concession, which grants the Company the right to construct, operate, use, conserve and maintain a new stretch of highway called Ecatepec - Peñón, as an extension to the stretch of highway Ecatepec – Pirámides that links with the Peñón – Texcoco highway, which is a concession granted to Concesionaria Pac, S. A. C. V., related party. The estimated investment for this section is $772,497 in accordance with the final design approved by the Mexican Federal Government, plus $278,000 for award costs incurred. The concession period is 30 years from January 25, 1991. Currently the Company is awaiting the release of the environmental impact assessment and of the rights-of-way to access the highway, which upon the completion of these activities, it will be able to begin construction of the highway.

d. As mentioned in Note 2, the Company is committed to realize several construction works under the 7th amendment of the concession of the Mexico-Toluca road and under the 4th amendment of the concession of Peñón - Texcoco.

25. Contingencies

a. The Company is engaged in certain lawsuits resulting from normal business activities for $50,437 and $40,676, as of December 31, 2013 and 2012, respectively. According to its legal advisors, Company management considers that these lawsuits will be resolved in favor of the Company and therefore will not have a material, adverse effect on the consolidated financial position of the Company or on the results of its operations. Consequently, the Company has recorded a liability of $7,046 and $8,874, respectively, which management considers sufficient to cover existing contingencies.

b. The Company carries out operations with related parties. Therefore, certain tax differences may arise if the tax authorities consider that the amounts used by the Company in such transactions are not similar to those used with or between independent parties in comparable transactions.

c. With respect to the lawsuit described on Note 2j between Mexicana de Gestión de Agua, S. A. de C. V. (MGA) and the Operating Board of the Municipal Agency for Potable Water, Drains and Sanitation of Navojoa, Sonora, management of the Company expects to receive $50,000 for damages and lost profits as a result of the time elapsed without having complied with the execution of the complaint appeal.



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d. Experconstructores Zacatecana, S. A. de C. V. (formerly Triturados Basálticos y

Derivados, S. A. de C. V.) is involved in an ordinary civil lawsuit filed by Proyectos y Cimentaciones Tacana, S. A. de C. V. (TACANA) before the First District Court for Civil Matters dated April 6, 2001, in which the contingency is approximately $62,112 and $63,625 as of December 31, 2013 and 2012, respectively. However, having entered into a commercial bankruptcy proceeding through a judgment issued on March 22, 2002, Experconstructores Zacatecana believes that the amounts owed to TACANA were generated prior to the bankruptcy proceeding. Accordingly, Experconstructores Zacatecana believes that payments of the amounts should be subject to the bankruptcy proceeding, and more specifically to the conciliation agreement entered into by Experconstructores Zacatecana with its creditors, in order to finalize its bankruptcy proceeding. The conciliation agreement was approved by the courts on December 18, 2003.

This agreement stipulated a bankruptcy payment of 5.41% for the total of all bankruptcy creditors (common creditors). Experconstructores Zacatecana does not believe that the claim filed by TACANA should contravene the conciliation agreement, which would ultimately be to the detriment of the total of all bankruptcy creditors. These arguments were made in the lawsuit and will be reviewed in terms of court relief (appeal) by the Appeals Court against the last enforcement order from any lawsuit which TACANA might bring in the future. This ruling was made by the Appeals Courts in the appeals lawsuits filed by TBD. In addition, as of December 31, 2013 and 2012, $51,163 and $50,023, respectively, is held in trust as restricted funds to cover this lawsuit.

26. Business segment information Operating segment information is presented based on the focus of management. Analytical information by operating segment:

2013 Concession Construction Plants Total

Consolidated net

revenues $ 4,394,076 $ 1,017,557 $ 410,515 $ 5,822,148 Gross profit $ 2,945,428 $ 242,841 $ 135,477 $ 3,323,746 Operating income $ 3,010,400 $ 257,008 $ 102,181 $ 3,369,589 Interest expense $ 1,085,143 $ 48,308 $ 93 $ 1,133,544 Interest income $ (165,041) $ (13,117) $ (4,031) $ (182,189) Income taxes $ 185,965 $ 92,757 $ 32,231 $ 310,953



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Discontinued operations $ (1,453) $ - $ - $ (1,453)

Total assets $ 16,256,695 $ 1,585,412 $ 876,240 $ 18,718,347 Acquisitions of fixed

assets $ 36,095 $ 33,365 $ 1,448 $ 70,908

Investment in associated companies

$ 590,250 $ - $ - $ 590,250

Depreciation and

amortization

$ 314,852 $ 6,521 $ 22,792 $ 344,165

Total liabilities

$ 8,954,614 $ 906,307 $ 116,664 $ 9,977,585

2012

Concession Construction Plants Total

Consolidated net

revenues $ 3,839,828 $ 370,154 $ 383,338 $ 4,593,320

Gross profit $ 2,599,519 $ 80,890 $ 111,634 $ 2,792,043

Operating income $ 2,598,655 $ 82,226 $ 95,940 $ 2,776,821

Interest expense $ 1,169,349 $ 48,706 $ 87 $ 1,218,142

Interest income $ (260,993) $ (9,875) $ (6,893) $ (277,761)

Income taxes $ 50,562 $ (53,877) $ 20,566 $ 17,251

Discontinued

operations $ (1,741) $ - $ - $ (1,741)

Total assets $ 13,877,728 $ 1,946,636 $ 774,129 $ 16,598,493



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Acquisitions of fixed

assets $ 21,554 $ 32,412 $ 1,999 $ 55,965

Investment in

associated

companies $ 374,510 $ - $ - $ 374,510

Depreciation and

amortization $ 278,730 $ 17,108 $ 9,138 $ 304,976

Total liabilities $ 9,169,139 $ 774,129 $ 100,468 $ 10,043,736

The basis of recognition of assets, liabilities and income allocated to each operating

segment is the same basis of the Company’s significant accounting policies as

described in Note 4 to the consolidated financial statements.

27. Subsequent events

On February 17, 2014, in a General Assembly of Holders of the Securities, it was

approved the issuance of Trust Certificates of Tenango – Ixtapan de la Sal highway of

Autopista Tenango Ixtapan de la Sal, S. A. de C. V. (Atisa) by $798,367 in order to

take advantage of favorable conditions in credit market. With this new issue previous

debt was paid in advance establishing a fixed annual interest rate of 5%.



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Derivative Financial instrument

Table 1

Summary of Derivative Financial Instrument

Figures in thousands pesos to December 30, 2013

Type of derivative, value or contract

(1)

Instru-ment

Coverage purposes or other

purposes, such as

negotiation

Notional amount /

nominal value

Value of the Underlying

Assets / reference variable

Reazzonable value

Amounts of

expirations per year

Collateral / credit lines / values

given in guarantee

4° Quarter

2013

3° Quarter

2013

4° Quarter

2013

3° Quarter

2013

0 0 0 0 0 0 0

Based on the request performed by the CNBV through the Document No. 151/76227/2009 dated

on January 21, 2008, we let you know the relating to the information requested to my client.

It is noteworthy that based on the established in such statement, my client let you know that

there are NOT amounts and instruments in which the operations during the indicated period were

carried out, just as it is shown in the attached tables.

In table 1, it can be observed that there are NOT instruments in derived products.

It is important to mention that the policy adopted by the Board of Directors, intends to making

investments in derivative instruments for trading purposes, however it states that they shall not

exceed the percentage of 10.0% mentioned above.

Company Board of Directors meets quarterly and, in such meetings, the compliance of investment

policies has been verified, likewise, they are aware of capital gains and losses on held investments.


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