1
ALSEA
MENU
ANNUAL REPORT 2014
ALSEA ANNUAL REPORT 2014 2
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GRI 2.1 | 2.2 | 2.3 | 2.5 | 2.7 | 3.6
Welcome to
ALSEA’S
MENU
Domino’s Pizza
All of Alsea’s ingredients are portrayed in it. 2014 was
a record year for the Company regarding growth,
due to the integration to the menu of Vips and El
Portón brands in Mexico. Likewise, Grupo Zena in
Spain, was incorporated.
Alsea’s Specials include the expansion in the
Colombian market with Starbucks and the entry to
the Brazilian one with P.F. Chang’s; the first opening
of The Cheesecake Factory in Mexico; as well as
the constant development of the organic growth
strategy.
Furthermore, it contains International Recipes,
Sustainable Recipes with Social and Environmental
Value and the Menu with Quality and Talent, as well
as our dishes to share.
Starbucks
ALSEA ANNUAL REPORT 2014
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Chili’s
California Pizza Kitchen
P.F. Chang’s
Italianni’s
The Cheesecake Factory
Vips
El Portón
Foster’s Hollywood
La Vaca Argentina
Alsea is the leading restaurant
operator in Latin America and
Spain of leading brands in the
Quick Service, Coffee Shop,
Casual Dining and Family Dining
segments.
Burger King
Cañas y Tapas
Its business model includes all units’ backup
through a Support and Shared Services Center,
providing aid in Management, Development and
Supply Chain processes.
ALSEA ANNUAL REPORT 2014
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GRI 2.7 | 2.8 | 2.9 | 3.6 | 3.8 | 3.11
Alsea’s Specialties
Highlights
Close of the acquisition and
incorporation process of Vips and
El Portón to Alsea’s business model:
• Acquisition of Grupo Zena in Spain:
• 6 brands, 442 units
• 259 units
• 85 units
Expansion in the casual dining
segment in Latin America,
through the entry to the Brazilian
market with the opening of two
P.F. Chang’s units
Expansion in the Colombian
market with the opening of the
first Starbucks in this country;
ending the year with six units
Opening of the first The
Cheesecake Factory in Mexico
Capital issuance 150.8 million
shares at 45.75 pesos per share
3
GRI 2.7 | 2.8 | 2.9 | EC1
2,784 Units
2,161 Corporate
623 Sub-franchises
15 brands in 6 countries
Growth of 49.5%
in number of units vs prior year
922 Net Openings
136 Organic
786 Acquisitions
Growth of 4.5% in Same-Store Sales
Mexico
(0.4%)
South America
20.0%
258 million customers served
Spain
6.5%
2014 Results
Net Sales
EBITDA
7
8
7
2
2
,
8
9
6
5
1
,
0
2
5
,
3
1
2
1
0
2
3
1
0
2
4
1
0
2
9
9
6
0
1
,
1
1
0
2
8
4
9
8
,
0
1
0
2
0
4
0
2
,
3
1
0
2
9
0
6
,
1
2
1
0
2
3
0
0
,
1
0
1
0
2
3
2
1
,
1
1
1
0
2
2
0
8
2
,
4
1
0
2
Figures in millions of nominal pesos
Figures in millions of nominal pesos
Annual Growth
CAGR*
45.2%
Annual Growth
26.3%
CAGR*
37.4%
29.3%
*Compound Annual Growth Rate 2010-2014
Consolidated Net Income
624 million pesos
CAPEX
(excluding acquisitions)
2.05 billion pesos
Capital issuance of
6.9 billion pesos
8.0%
ROIC
7.5%
ROE
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 4
4
Alsea’s Specialties
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GRI 2.8 | 2.10 | LA10
Share price performance
Social Responsibility Results
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
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Share price
year ended 2014
$40.77 pesos
Shares outstanding
837.6 million
Average Value Traded
107 million pesos
Debt Structure
Year
2015
2016
2017
2018
2019
2020
%
12%
16%
17%
36%
9%
10%
Expiration
$1,377
$1,750
$1,949
$4,055
$992
$1,117
Total Debt 11.2 billion pesos
$24,106,880
Fundraising by Fundación Alsea, A.C.
• 3rd consecutive
year with the
ESR Distinction
Fundraising composition
3%
14%
• 2nd consecutive year in
the Mexican Stock
Exchange Sustainability
Index
• 2nd consecutive year in
the GPTW ranking
27%
56%
• Caloric information diffusion through
the menu boards
“It’s on me” Campaign (customers)
Alsea’s profit*
Employees’ contribution
Founding Partners’ contribution
*According to the Board’s mandate, Alsea donates 1% of its
profits to the Foundation
• Energy savings 13,001 GJ
• Collection of 679,727 L of burned oil
• Two new children
dining rooms
• 815,340 Training hours
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
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GRI 2.5 | 2.8 | 3.6 | 3.9 | 3.11
Alsea’s Specialties
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GRI 2.2 | 2.3 | 2.7 | 3.8
Business Units and Segments Menu
Quick Service
Units
1,428
2,784
Units
799
246 sub-franchises
Sales per Segment
5%
629
221 sub-franchises
17%
35%
Alsea’s Presence
6 countries
Units per country
Employees per country
2
78
101
162
442
158
1,481
2,509
5,705
7,741
1,999
42,457
Mexico
Spain
Argentina
Chile
Colombia
Brazil
Employees
60,051
increase
85.6%
Coffee Shops
Casual Dining
18%
609
609
403
47
25%
Quick Service
Coffee Shop
Family Dining
Casual Dining
DIA (Distribution and Production)
*Including Vips, El Portón and all Grupo Zena’s brands
from the corresponding months of their incorporation
to the Company
Sales per brand
7%
5%
25%
5%
5%
22
2 sub-franchises
24
2
66
11 sub-franchises
1
198
120 sub-franchises
13
15%
20%
19
13 sub-franchises
11
6 sub-franchises
18%
Starbucks
Burger King
Vips
Domino’s
Italianni’s
Chili’s
DIA
Other
Family Dining
344
259
5 sub-franchises
85
* Vips information includes El Portón
** Other includes: P.F. Chang’s, Foster’s Hollywood,
California Pizza Kitchen, The Cheescake Factory,
Cañas y Tapas, La Vaca Argentina and Il Tempietto
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 8
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GRI EC1 | EC8 | EC9 | EN5 | EN26 | EN27 | EN30
Results Menu
Financial, Social and Environmental
Social and Environmental Value
Operating children dining rooms
Number of direct beneficiaries from the “It’s
on me” Movement
Number of indirect beneficiaries from the “It’s
on me” Movement
2013
3
777
2014
5
1,268
5,439
8,876
Number of nutritious meals served
113,092
203,350
Hours of the Human and Warmth Formation program
3,806
6,298
Dining rooms’ operation and construction expenses
$8,977,404
$12,663,102
Economic donations
In kind donations
Volunteered hours
Collection of burned oil
Energy savings
$11,730,345
$16,227,182
21,611 kg
96,000 kg
20,000
23,841
466,682 L
679,727 L
44,869 GJ
13,001 GJ
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GRI 2.8 | EC1
Financial Results
Financial Highlights (1)
CAGR(5)
Annual
Growth
2014
%
2013
%
Income Statement
Net Sales
Gross Profit
Operating Income
EBITDA(2)
26.3%
28.0%
45.5%
29.3%
45.2%
22,787.4
100.0%
15,697.7
100.0%
48.1%
15,515.1
68.1%
10,476.9
66.7%
31.2%
1,468.5
6.4%
1,119.6
7.1%
37.4%
2,801.8
12.3%
2,039.9
13.0%
Consolidated Net Profit
40.8%
-5.9%
624.1
2.7%
663.3
4.2%
Balance Sheet
Total Assets
Cash
135.9%
29,337.5
100.0%
12,435.6
100.0%
67.8%
1,112.9
3.8%
663.3
5.3%
Liabilities with Cost
122.8%
11,239.2
38.7%
5,043.6
40.6%
106.0%
8,800.1
30.3%
4,271.4
34.4%
Major Shareholders’
Equity
Profitability
ROIC(3)
ROE(4)
Stock
Information
Share Price
Earnings per Share
Dividend per Share
-32.2%
-48.6%
8.0%
7.5%
0.0%
40.77
-14.5%
0.85
NA
0
Book Value per Share
69.2%
10.51
Shares Outstanding
(millions)
Operation
21.9%
838.6
Number of Units
23.3%
49.5%
2,784
Employees
28.4%
85.6%
60,051
(1) Figures in millions of nominal pesos under IFRS standards, except data per share, number of units and employees.
(2)) EBITDA is defined as operating income before depreciation and amortization.
(3) ROIC is defined as operating income after taxes over net operating investment
(total assets - cash and cash equivalents - no-cost liabilities).
(4) ROE is defined as net profit over major shareholders’ equity.
(5) CAGR Compound Annual Growth Rate 2010-2014.
11.8%
14.6%
40.79
0.99
0.5
6.21
687.8
1,862
32,362
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 10
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GRI 1.1 | 1.2 | 4.4 | 4.17 | EC8
A la Carte Menu
Message from the Chief Executive Officer
To our shareholders,
Highlights of our menu
We share with pleasure our 2014 accomplish-
ments. This year we exceeded our expectations
and those of our stakeholders, with outstanding
results and increasing the Company’s diversifica-
tion and strength.
During this year, we concluded important acqui-
sitions, expanding further in Latin America and
branching out into the Spanish market, through
the procurement of the leading restaurant opera-
tor in the country. Likewise, we placed over 150
million shares, worth 6.9 billion pesos. Thus, for
the first time more than 50% of the Company’s
shares are in possession of the investor public.
We are confident in Alsea’s strength and our
business model, through which we will achieve
the successful growth of our most recent ac-
quisitions. In this manner we reiterate the Com-
pany’s commitment to its local and foreign
shareholders, consequently continuing to sur-
pass their expectations.
During 2014, we increased our units to 2,784 in
six countries, which implies a net growth of 922
units throughout the year; 750 of them are cor-
porate and 172, franchises.
In Mexico, we closed the acquisition process of
the restaurant chains Vips and El Portón; in the
future, this will represent around 20% of Alsea’s
total sales. Furthermore, we opened in Guadala-
jara the first unit of our brand The Cheesecake
Factory in Latin America, a brand with impres-
sive reputation in the Food Industry worldwide.
We settled the acquisition of 71.76% of Grupo
Zena, leading restaurant operator in Spain. This
transaction is an unequalled growth and consoli-
dation opportunity for our business model in a
new geographic zone.
Our inorganic growth amounted to 786 units,
259 are Vips, 85 El Portón and 442 units to
Grupo Zena in Spain, with Domino’s Pizza, Burg-
er King, Foster’s Hollywood, Cañas y Tapas, La
Vaca Argentina and Il Tempietto.
Sales
22.8
EBITDA
2.8
billion pesos
billion pesos
EBITDA
margin
12.3%
Units
2,784
11
CAPEX*
2.05
billion pesos
* Excluding acquisitions
We continue with our expansion strategy in the
casual dining segment in the South American
market. Therefore, this year we inaugurated two
P.F. Chang’s units in Brazil, one of Latin America’s
most important economies. With these openings
we reacted 24 units in Mexico, Argentina, Chile,
Colombia and Brazil.
Moreover, as part of the development and expan-
sion strategy in South America, in midyear we
opened the first Starbucks in Colombia. This is a
significant step for Alsea and our growth plans,
due to the high potential of the coffee market in
this country.
The aforementioned reflects the Company’s ca-
pacity to acquire and integrate new businesses,
reaffirming the geography and brand diversifi-
cation strategy, which combined with organic
growth, allowed us to maintain important growth
rates throughout our history.
Specialties
We exceeded widely our previous year’s
growth, with a 45.1% increase in sales, totaling
to 22.8 billion pesos. This is due mainly to our
brands’ great value and the Company’s suc-
cessful business model, which allows to incor-
porate new brands easily and develop the ones
we currently own.
Our gross profit closed at 15.51 billion pesos, with
a gross margin of 68.1%. EBITDA grew 37.4% to
2.8 billion pesos at the year’s end 2014.
Our Capex, excluding acquisitions, amounted to
2.05 billion pesos.
Extra ingredient
We are aware of the existing challenges in our
environment, therefore we know that now more
than ever we must be ready to face them with a
flexible and open attitude, able to respond to so-
ciety’s demands and always take one step further.
Diego Gaxiola
Administration and Finance
Federico Tejado
Alsea Mexico
José Luis Portela
Alsea Chile
Cory Guajardo
Human Resources
Fabián Gosselin
Chief Executive Officer
Pablo de los Heros
Alsea Argentina
Rodrigo Riveroll
Alsea Colombia
Miguel Ibarrola
Grupo Zena | Alsea Spain
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
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A la Carte Menu
13
Our achievements during 2014 regarding Cor-
porate Social Responsibility prove our actions’
strength, nonetheless we know there is always an
opportunity to do more. Consequently, the Social
Responsibility Committee and Commissions will
continue working systematically on the reinforce-
ment of the already implemented initiatives and
the development of new programs, which will al-
low us to improve our stakeholder engagement.
In 2014, we implemented the Social Responsibility
management model in Argentina; our challenge
now is conveying it to the rest of the countries
where we operate; thus, reaching our medium and
long term goals.
We are proud of the recognition and acknowledge-
ment of these actions. For second consecutive
year, we are listed in the Mexican Stock Exchange
Sustainability Index; and for the third consecutive
year we have obtained the Socially Responsible
Company (ESR, for its initials in Spanish) distinc-
tion. Furthermore, we continue to align our opera-
tions to the United Nations Global Compact.
2014 was a celebration year, since Fundación Al-
sea, A.C., our corporate foundation, commemo-
rated its 10th anniversary working to ensure food
security, human development and education in
vulnerable communities.
Likewise, the “It’s on me” Movement continues
progressing towards its purpose to contribute
with the eradication of children malnutrition in
Mexico. During this year, it opened two new chil-
dren’s dining rooms, which have the capacity to
serve daily 1,460 boys and girls in extreme poverty
daily, reaffirming our commitment with society
and the country.
Future Entrees
In 2015, we will focus our efforts on Alsea’s portfo-
lio growth and consolidation in all countries where
we operate, which will allow a solid and profitable
growth in the future. Moreover, due to our organ-
ic expansion plan, we will be able to increase our
market share.
We will continue to strengthen our business
model and support center to meet future growth,
maintaining a successful development plan which
will include openings objectives in every market
where we have presence, with leading brands and
innovative concepts.
plans, focusing on profitability and operational ef-
ficiency, supported by the effort and commitment
of all employees in Alsea.
As well, it will be a consolidation year; we will look
for higher efficiency and productivity levels, fo-
cused on each unit’s profitability.
Our commitment with our people’s development
places us once more among the top 15 in the Great
Place to Work ranking –based on the five dimen-
sion model: credibility, respect, fairness, pride
and camaraderie– a highly remarkable distinction
which we will strive to maintain every year.
I am completely confident that with the support
of all our employees, customers and shareholders,
Alsea will achieve the strength and development
of all its brands and plans, creating value and ob-
taining superior results year after year.
During 2015, aiming to support more children and
young adults in extreme poverty conditions, we
intend to improve our operating capacity in the
existing dining rooms and open two new children
dinning rooms.
This year we will be faced with several challenges,
but furthermore, with opportunities to secure our
leading position in the countries where we oper-
ate. We will continue our brands’ organic growth
Fabián Gosselin
Chief Executive Officer
April, 2015
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 14
GRI 4.8
14
Strategic Menu
Strategic Planning
Purpose
To be the best and largest restaurant
operator, assuring an outstanding
experience for each customer, with the best
brand portfolio and profitability.
Mission
To have a team that is committed to
exceeding our clients’ expectations.
“Touching people, enriching moments”
Culture
At Alsea we are dedicated to serve our
clients with passion and integrity, having
fun and innovating to assure a great
experience for each customer.
Hi demand and strong service vocation
team focused on achieving results.
Strategic Areas
Clients
Exceed our clients’ expectations with an
unequalled experience in product service
and image.
People
Encourage the personal and professional
development of our employees.
Synergy
Ensure synergy, maximizing critical mass in
collaboration with our strategic partners.
Results
Ensure the Company’s profitable and sus-
tained growth.
Social Responsibility
Be recognized by our clients and employees
as a socially responsible company.
15
GRI 2.3
Principles
The client comes first
To serve our clients with respect and with
passion to ensure a great experience and
excellent service.
Personal excellence and
commitment
Always act honestly, precisely and fairly, without
putting personal interests first.
Respect and loyalty
to our partners and
to the Company
Create a unified, respectful and unbiased
working environment that is closely tied to
the operation.
Focus on results
Always make strategic decisions that are for
the good of the Company in order to improve
results, and share them with our team, and to
look for opportunities and ideas that improve
the restaurants’ results.
Business Model
Clients
Brands
Operations
Marketing
Human Resources
Support areas
Finance
Information
Technology
Real Estate and
Development
Supply Chain
Human
Resources
Social
Responsibility
Strategic
Planning
Upper Management
Corporate Governance
Board of Directors
Audit
Committee
Corporate Practices
Committee
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 16
GRI 2.8 | 3.5
16
Strategic Menu
17
GRI 4.1 | 4.14 | 4.15 | 4.16
Board of Directors
Mission and Values - Code of Conduct
Social Responsibility
Committee
Strategic Objectives
Quality of
Life and
Business Ethics
Commission
Strive for Alsea’s
employees’
satisfaction and
pride in their work,
promoting their
comprehensive
development and
life balance
Responsible
Consumption
Commission
Contribute to
society’s well-being,
encouraging a
better nutrition and
balanced lifestyles
Environment
Commission
Promote the
Environment’s care
through sustainable
operations in
Alsea’s stores
Community
Support
Commission
Support the
growth and
well-being of
the communities
where Alsea
operates
Support Team
Social Responsibility Plan
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Social Responsibility Management
Social Responsibility at Alsea –strategic area
in the Company– is managed through the
following pillars’ work: Employees’ Quality of Life
and Business Ethics, Responsible Consumption,
Environment and Community Support; all of
them aimed to meet stakeholders’ needs and
exceed their expectations.
As management system and constant
improvement, the Social Responsibility
Committee and Commissions continue
working systematically on the reinforcement
of the already implemented initiatives and the
development of new programs, which will allow
the Company to reach short, medium and long
term goals.
Likewise, Alsea looks for more synergy from the
inside. Recent acquisitions force the Company
to become more efficient, to align all new
brands and drive Social Responsibility actions in
each region where it operates.
Stakeholder Engagement Mechanisms
• Shareholders’ Meeting / Annual
• Investor Relations / Permanent
• Internal communication media portfolio / Permanent
• Community engagement / Permanent
• Electronic media / Permanent
• Organizational environment survey / Annual
• Focus groups / Permanent
• The right way (a transparent complaint procedure) / Permanent
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
19
INTERNATIONAL
RECIPES
ALSEA ANNUAL REPORT 2014 International Recipes
21
GRI 2.8 | EC1
Sales
Adjusted EBITDA*
$20,655
$3,873
$14,681
$2,673
3
1
0
2
4
1
0
2
3
1
0
2
4
1
0
2
Variation 41%
$5.97 billion pesos
73%
of Alsea’s
consolidated sales
Variation 40%
$1.11 billion pesos
Adjusted EBITDA Margin*
18.8%
2013
2014
Variation
18.7%
(10) bps
*Adjusted EBITDA does not consider management
costs, therefore it represents the “store level EBITDA”
20
20
GRI 2.5 | 2.7 | 2.8 | 2.9
Mexico
Growth in a new segment
42,457
employees
1,999
units
vs
1,575 in 2013
Growth of
27%
• Acquisition and incorporation of Vips
and El Portón to the business model
• Increase of 404 corporate units of
all brands
• The Cheesecake Factory’s
operations startup in
Guadalajara, Jalisco
• Mexico represents 70% of Alsea’s
total served customers
Units
604
438
456
47
22
19
2
66
1
259
85
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 22
22
GRI 2.5 | 2.7 | 2.9
South America
Growth in the region
9,853
employees
343
corporate units
vs
287 in 2013
Growth of
20%
• Expansion in the casual dining
segment in South America, through
the entry to the Brazilian market
with the opening of two
P.F. Chang’s units
• Growth in the Colombian market with
the opening of the first Starbucks
in this country
• Operation of over 100 units in Chile
• Inauguration of the fresh
dough Distribution and
Production Center in
Colombia
• South America represents 26% of
Alsea’s total served customers
International Recipes
Chile
2,509
employees
101 units
Colombia
1,481
employees
78 units
Brazil
158
employees
2 units
Sales
$4,621
$4,219
3
1
0
2
4
1
0
2
23
GRI 2.8 | EC1
Units
66
34
1
Units
55
16
6
1
Units
2
Adjusted EBITDA*
$679
$583
3
1
0
2
4
1
0
2
Argentina
5,705
employees
162 units
Units
81
80
1
Variation 10%
$402 million pesos
Variation 17%
$96 million pesos
Adjusted EBITDA Margin*
20%
of Alsea’s
consolidated sales
2013
2014
Variation
13.8%
14.7%
90 bps
*Adjusted EBITDA does not consider management
costs, therefore it represents the “store level EBITDA”.
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 24
24
GRI 2.5 | 2.7 | 2.9
Spain
International Recipes
25
GRI 2.8 | EC1
New own brands
Growth in a new market
7,741
employees
442
units
• Through Grupo Zena’s acquisition in Spain, the Company
branches out into the Spanish market with the leading
restaurant operator in this country
• Thus, soundly supplementing Alsea’s growth and
diversification strategy
• Spain represents 4% of Alsea’s total served customers
2014
6.5%
442
$1,468
$290
19.8%
Units
198
Same-store sales
Number of units
140
Sales
Adjusted EBITDA*
Adjusted EBITDA Margin*
*Adjusted EBITDA does not consider management costs,
therefore it represents the “store level EBITDA”
7%
of Alsea’s consolidated sales
61
19
13
11
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
26
26
Message form the Chairman
of the Board
Corporate Governance
27
GRI 4.1 | 4.2 | 4.3 | 4.10
To the Board of Directors
of Alsea, S.A.B. de C.V.
Dear Shareholders:
In 2014 Alsea celebrated 15 years of being a
public company, it was in 1999 when the Com-
pany and its shareholders decided to trade on
the Mexican Stock Exchange with the intention
of building a great company in the restaurant
industry. The capital for this purpose was ob-
tained, in order to create an institutional Alsea
that could be an example for Mexico and also
give its shareholders a good return for their in-
vestment with security and liquidity.
Today we can confirm that the goals have been
fulfilled; in these 15 years Alsea has achieved
a compound annual growth in its share price
of 20.4% compared to the initial public offe-
ring date, closing 2014 at a price of $ 40.77
pesos. Likewise two subsequent share offers
outstand, in November 2012 and June 2014,
reaching a total of 837.6 million outstanding
shares as of December 31, 2014, of which over
50% are held by the investing public. In addi-
tion to the Company´s organic and inorganic
growth throughout its history, it is noteworthy
that we have not set aside the retribution to
our shareholders through dividends, repre-
senting approximately $1.5 billion pesos in the
last ten years.
No doubt 2014 has been the most important
year for the Company, being the year with
the highest growth, reaching 2,784 units in six
countries and over 60,000 employees, achie-
ving sales of $22.7 billion, with an EBITDA of
$2.8 billion. Additionally the Company was able
to place 150 million shares in the amount of 6.9
billion pesos, with an oversubscription of more
than 6.5 times; this places Alsea as a fully ins-
titutional Company with the perfect combina-
tion for the founding shareholders to be able to
continue maintaining a profitable growth, and
ensure the best operation of the restaurants in
each opportunity to serve a customer.
in Latin America and entering the Spanish mar-
ket through the purchase of Grupo Zena, the
leading restaurant operator in that country.
With this, the Company reflects its capacity to
purchase and integrate new businesses, rea-
ffirming the brands and geography diversifi-
cation strategy and allowing Alsea to maintain
strong growth rates along its history.
The Board of Directors, its governing bodies
and management, continue working all together
in order to bring Alsea to achieve the growth
and profitability expected by the market, taking
care at all times of the inherent risks of a cha-
llenging management, even more now that the
Company has such a huge geographical cove-
rage, being aware of the task this implies.
With the aim of strengthening its commitment
to be a Company fully attached to the Code of
Best Business Practices; through its Board of
Directors, Alsea ensures the highest standards
of corporate governance; generating greater
security and confidence to its shareholders.
The Company has achieved outstanding re-
sults in terms of profitability and efficiency,
increasing its diversification and strength.
and
solid
The Company reaffirms its commitment to
society, environment, employees’ quality of
life and customer satisfaction, showing a
responsible
be-
havior, managing to be part of the Mexican
Stock Exchange Sustainability Index for the
second successive year, as well as obtaining the
Socially Responsible Distinctive for the third
year, generating value for the business, their
employees and shareholders.
business
Continuing with the long-term vision to ensure
profitable growth, during 2014 major acquisi-
tions were completed, expanding the brands
Alberto Torrado Martínez
Chairman of the Board
Corporate Governance
10 Board Members
5 Independent
Members
Chairman: Proprietary
Board Member
Corporate Practices
Committee
Audit Committee
The Board of Directors is comprised
by ten members, ratified or appointed
by the General and Extraordinary
Shareholders’ Meetings held on
March 14, 2014. The Board includes
five Independent Members and
one Proprietary Board Member as
Chairman.
Concerned about having an impartial
approach to strategic planning, Alsea
has appointed Independent Members
to the Board, which today represent
50% of the total Board Members,
exceeding the percentage of 25%
required by the Securities Exchange
Act. The Company does not have
Alternate Board Members, since it is
considered that a Proprietary Member
is failing his/her obligations towards
the rest of the Board Members by
his/her non-attendance. The Company
can convene a Shareholders’ Meeting
at the request of at least 25% of the
Board Members.
In compliance with the Securities
Exchange Act and seeking to assist
the Board of Directors, Alsea has
created two committees acting as
intermediary management bodies:
The Corporate Practices Committee
and the Audit Committee, which are
comprised exclusively by Independent
Board Members.
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 28
28
GRI 4.5 | 4.6 | 4.7 | 4.8 | 4.9 | 4.10 | 4.11 | HR5 | HR6 | HR7 | SO4
Corporate Governance
29
GRI 4.2
Corporate Practices
Committee
General occupations:
I. To present observations on the
performance of relevant directors.
II. To monitor and report operations
with related companies, detailing
the characteristics of significant
operations.
III. To establish and revise bonuses
or comprehensive remuneration
packages.
IV. To review and present the expenses
granted by the Board of Directors.
Audit Committee
General occupations:
I. To monitor and report the state of
the Company’s internal control system
and internal audit system, and the
companies that it controls, and where
applicable, a description of their
deficiencies and deviations, as well as
the aspects that require improvement.
For this, opinions, reports, press
releases and the external auditor’s
report will be considered, as well as
the reports issued by independent
experts who have provided their
services during the period covered by
the report.
II. . To review, report and follow up
on the preventive and corrective
measures implemented based on
the results from the investigations
performed regarding non-compliance
with guidelines and operating policies,
and accounting records; whether for
the Company itself or companies that
it controls.
III. To report and evaluate the
performance of the company that
provides external auditing services.
IV. To report the reviews’ main results
of the Company’s financial statements
and the companies that it controls.
V. To report the description and effects
of modifications to the approved
accounting policies.
VI. To report the measures adopted
pursuant to the observations made
by shareholders, Board Members,
relevant directives, employees and in
general any third party with respect
to accounting, internal controls and
matters related to the internal or
external audit or even matters arising
from complaints made regarding
events that are seen irregular in
management.
VII. To report and follow up on
the agreements reached at the
Shareholders’ meetings and the Board
of Directors.
Furthermore, striving to strengthen
Alsea’s positive reputation with a
high sense of Social Responsibility,
the Company has constituted a
Social Responsibility Committee with
four commissions: Quality of Life
and Business Ethics Commission,
Responsible Consumption
Commission, Environment Commission
and Community Support Commission.
Such Committee has representation in
the Board of Directors.
The compensation framework for
Alsea´s Board Members is fixed and
calculated based on attendance
to Shareholders´ meetings and
Committees to which each member
belongs, their participation in
discussions and the effectiveness of
strategic decisions made by them.
For more information please go to the
Corporate Governance and Reports
Center sections of the Alsea website.
For more information on Alsea’s Code
of Conduct, please visit: http://www.
alsea.net/relacion-con-inversionistas/
codigo-de-conducta
Board of Directors
Chairman
Alberto Torrado Martínez
Proprietary Members
Alberto Torrado Martínez
Chairman
Independent Board Members
Marcelo A. Rivero Garza
Chairman, Brain Strategic Insight
Cosme Torrado Martínez
Member
Julio Gutiérrez Mercadillo
Chairman, Grupo Metis
Armando Torrado Martínez
Member
Raúl Méndez Segura
Chairman, Grupo Green River
Fabián Gerardo Gosselin Castro
Chief Executive Officer
Iván Moguel Kuri
Partner of Chévez Ruiz Zamarripa y Cía., S.C.
Federico Tejado Bárcena
Alsea Mexico
León Kraig Eskenazi
Director and Partner of Ignia Partners, LLC
Secretary
Xavier Mangino Dueñas
Partner of Diaz Rivera y Mangino, S.C.
Audit Committee
Iván Moguel Kuri
Chairman
Corporate Practices Committee
Julio Gutiérrez Mercadillo
Chairman
Julio Gutiérrez Mercadillo
Member
Marcelo A. Rivero Garza
Member
Raúl Méndez Segura
Member
León Kraig Eskenazi
Member
Elizabeth Garrido López
Secretary
Elizabeth Garrido López
Secretary
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
EXTRA
INGREDIENT
31
ALSEA ANNUAL REPORT 2014 32
GRI PR3
32
Options that fit your lifestyle
Extra Ingredient
33
GRI PR1
Exceeding the customers’ expectations
Alsea, convinced that food and beverages
match perfectly with the pleasure of a healthy
responsible consumption, strives daily to
offer the best tasting and prime quality
products. The Company is committed to a
balanced lifestyle, so it promotes the sharing
experience, physical activity, hydration and a
moderate consumption.
For this purpose, Alsea carries out activities
such as: withdraw salt shakers form tables,
eliminate sweeteners from its lemonades and
orange juices and use low-fat milk in coffees,
besides manufacturing all products with
natural and fresh ingredients.
The Company has the responsibility to
provide its customers all the nutritional facts
they need of the food they ingest, as well as
how to combine them and in what proportion
and quantities they should be consumed. All
together with new options to satisfy all needs
and tastes.
2014 Actions
• Nutrition signal advance of all
Alsea’s brands
• Caloric information diffusion through
the menu boards
• Nutrition audits to all the Company’s
brands, as well as advances per
ingredient
The innocuousness and confidence of all the
products Alsea offers its customers is of the
upmost importance. Therefore, the Company
has several evaluation processes to measure
their quality and safety.
It is Alsea’s responsibility to guarantee its
customers’ health and safety, so it carries out
constant improvement processes along its
products life cycles, including their packaging
manufacture, storage, distribution and supply.
Certification to a total of 93% of 275 national foods and direct
contact packaging materials’ suppliers
Vips Commissariat
Monthly annual production
750 Tonnes:
85% Processed, 15% Pastries
Monthly shifted volume:
130,000 boxes
70% of the production
capacity installed
Quality assurance
• TIF Plant Certification
• SQF Certification Level 1
• Internal Laboratory
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 34
GRI 2.8 | LA1
34
Extra Ingredient
35
GRI LA3 | LA4 | LA6 | LA10 | LA12 | LA14 | HR3 | HR5 | SO3
Menu with Quality and Talent
Equal Opportunities
Alsea’s Code of Conduct regulates the
guidelines for an ethic and responsible behavior
in the Company, ensuring equal opportunities,
no discrimination, diversity, anticorruption and
respect. Likewise, Alsea supports gender equity
and provides salaries based on employees
performance and responsibility level.
Salaries are market competitive in all regions
where the Company operates, according to the
employees’ assignments and knowledge.
Alsea strives constantly to improve the
employees’ quality of life, so it offers several
benefits and compensations; complying
with each country’s law, and in many cases,
surpassing it. Examples are the special licenses
for direct family member’s decease, as well as
the possibility of additional vacations based on
certain criteria.
The employees’ right and processes for
collective agreements are respected and
conducted conveniently, transparently and
upholding the law; as well as Freedom of
Association and Collective Negotiation always
observing each country’s regulation and within
a respectful and orderly frame.
Health and Safety
100%
of Alsea’s employees are represented
in the Joint Health and Safety
Commission
Training and Development
It is essential for Alsea that all its employees
have empowerment initiative and innovation,
individual talent and teamwork, all of which
allows the Company to achieve its objectives.
Training hours
815,340
Of which
467,368 men
347,972 women
Some of the benefits and compensations
offered all employees are the following:
Directors and Subdirectors:
6,948
• Life insurance
• Additional days off with pay
• Groceries coupons
• Discounts for all of Alsea’s brands
• Invalidity or disability coverage
• Maternity or paternity leave
Managers and middle management:
59,500
Coordinators, analysts and operative
personnel in stores:
748,892
All employees received training
in anticorruption, through the Code of
Conduct
100% of Alsea’s employees
received a performance review
(Mexico Staff)
41% women
59% men
Employees’ comprehensive development
Alsea holds the best employees to always offer
the highest quality in Alsea Menu’s service
and products. The Company strives for its
employees’ satisfaction and pride in their work,
promoting their comprehensive development
and life balance.
Alsea’s total employees:
60,051
2014 Achievements
regarding quality of life
• Launch of the Recognition Program
for the academic excellence of
the operative employees’ children
in Mexico. Distribution of school
supplies to 100% of the children with
9.5 or superior GPA
Increase of
85.6%
vs 2013
Approximately
6,000
promoted
employees in the year
• Implementation of tiered schedule
program in offices. 65% of
administrative employees were
benefited
28,618
Women
• Economic and in-kind support to
all employees affected by the Odile
hurricane
31,433
Men
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
36
36
GRI LA10 | LA12 | SO3
• Provide development opportunities
for employees.
• Strengthen a high performance
culture.
During 2014 the Alsea Leadership
Model (MLA, for its initials in Spanish)
was re-launched. Its objectives are the
following:
• Quality and transparency in
conversations on career projection
and employees’ promotions.
• Assure talent for the Company, which
is in constant growth.
• A deeper and wider talent pool,
which in addition is diverse in gender
and brands.
Extra Ingredient
37
GRI 3.10 | 3.11 | EN3 | EN4 | EN8
Sustainable Menu
For Alsea, the Environment’s care and commitment
with the efficient use of natural resources
represents an essential value to achieve solid
growth. Therefore, it promotes the sustainable
operation in its stores, procuring profitability
through innovation and leadership in its four action
lines: Energy, Water, Waste and Inputs.
As an awareness effort and to spread a
Sustainability culture among its employees,
during 2014 the Company developed a website
intended to create consciousness among society
on the importance of this subject.
http://www.tipsdesustentabilidad.com/
Water
Aligned to the 2018 strategic sustainability plan,
Alsea remains with the objective of optimizing
water consumption within its facilities. During
2014, the total water consumption was:
598,890 m3
of potable water from
municipal water supply and
supplier companies
January-December 2014, all brands included
*51% is estimated information
Energy
The use of best practices and technologies
allows a reduction of energy consumption in
Alsea’s processes. The improvement in energy
efficiency permits the equipment’s correct
operation and promotes the environment’s care
within and outside the facilities.
544,654 GJ
Indirect energy
consumption
* January-December 2014
2,050,378 GJ
Direct energy
consumption
* January-December 2014
* The direct energy consumption calculation includes LP Gas and
Natural Gas for Burger King, California Pizza Kitchen, Domino’s
Pizza, Italianni’s, The Cheesecake Factory, P.F. Chang’s, Pei Wei,
DIA and Chili´s
The first Alsea Talent Base was created,
according to the employees’ performance and
potential.
Reviewed audience:
455 employees,
distributed as follows:
142 women and 313 men
(31% and 69%, respectively)
High Potential:
101 employees were identified as high
potential, all of whom are ready to
assume superior responsibility levels.
During 2015, the MLA will be further
implemented for 100% of Mexico,
Argentina, Chile and Colombia’s staff;
even reaching store managers in Mexico.
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 38
38
GRI EN4 | EN5 | EN6 | EN16 | EN18 | EN30
Extra Ingredient
39
GRI EN2 | EN22 | EN26 | EN27
Renewable and non-renewable indirect sources:
2014
Consumption
Consumption
(GJ)
$5,237,605 pesos invested in
energy saving projects
Source
Electric
energy
LP Gas
151,292,872 kWh
544,654 GJ
44,137,620 Lt
1,575,713 GJ
Natural Gas
1,735,074 m3
65,495 GJ
*Estimated information: 50% LP Gas, 7% Natural Gas,
6% Electric energy
Alsea has accomplished savings and the
efficient use of electric energy through the
implementation of saving initiatives, such as:
• Change of lighting to LED type
• Installation of efficient lamps, which
reduce 70% of consumption and
increase 40% illumination, promoting
a more favorable work environment
• Installation of equipment that
examines energy consumption in
real time, allowing swift problem
identifications and avoiding
unnecessary energy consumption
Emissions
Starting in 2015, a record will be implemented for
the calculation of Greenhouse Gasses derived
from the refill of cooling gas in air conditioning
and refrigeration equipment.
During 2014 the CO2 emissions generated were:
Direct emissions:
132,414 CO2 tonnes
Indirect emissions:
75,631 CO2 tonnes
• Installation of control and automation
projects, achieving energy savings
*Source for CO2 equivalent factor:
Contributions to the “Cero waste to sanitary
landfill in main cities for 2018” goal:
Classification
4%
Savings
13,001 GJ
Alsea is currently evaluating the use of
biodiesel in the Supply Chain transportation
(DIA); during 2015 a pilot test will be
conducted in DIA trucks that will define the
use of such biofuel in Alsea’s facilities.
Likewise, the Company will commence using
Green Energy, once the current process of
“regulations’ changes” is completed.
http://www.geimexico.org/factor.html
http://www.semarnat.gob.mx/
http://www.inecc.gob.mx/descargas/cclimatico/elab_
inventarios.pdf
Inputs and Waste
Alsea has a Sustainable Inputs policy which
promotes the acquisition of materials and
products with sustainable characteristics, for
example: electric equipment of low-energy
consumption, local inputs that reduce the GHG
emissions involved in their transport, products
with post-consumption or post-industrial
materials, low VOC content, recyclable inputs
that reduce to a minimum the use of packaging
materials and furnishings with recycled materials,
among others. 2015’s goal is to integrate a
sustainable procurement indicator that considers
purchasing a higher percentage of sustainable
products.
• Pilot test in Starbucks Jalisco,
Mexico branches, implementing a
comprehensive and sustainable waste
management under the concept
“Single Stream” for recyclable
residues. These will be shipped to a
separation plant for their subsequent
recycling, compost for organic waste
and correct disposal in sanitary
landfill for non-recyclable residues in
an early phase.
37%
The results of this first stage show that waste in
the screened branches behaves as follows:
679,727 L of used oil collected
for its proper disposal, preventing
the pollution of 679 million
liters of water
59%
Recyclable
Non-Recyclable
Organic
The information contained in this section only considers Mexico, and does not include information of Vips, El Portón,
and Commissariat
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
40
GRI EC1 | EC8
40
Menu for Sharing
41
GRI 4.12 | EC1 | EC8 | EC9
Supporting vulnerable communities
Contributing to eradicate children malnourishment
Alsea supports the growth, development
and wellbeing of the communities where
it operates through:
• Volunteering
• In-kind donations
• Economic donations
10 years supporting vulnerable
communities in Mexico with over
$60,000,000 pesos
invested in social causes and over
450,000 beneficiaries
23,841
volunteered hours
Over
96 tonnes
of donated food
Alsea annually assigns 1% of all business units’
profits to the Foundation. Furthermore, it
carries out internal and external fundraising
campaigns to increase the resources used in
initiatives in favor of food security.
$24,106,880 pesos
collected during 2014
Fundación Alsea, A.C.
Through the Foundation’s efforts, Alsea
reaffirms its commitment to ensure food
security in vulnerable communities and
promote human development supporting
initiatives in favor of education.
“It’s on me” Movement
In 2014, Alsea fulfilled its commitment to
inaugurate the first “Our Dining Room” in
Mexico City and one more in Municipio de
García, in the State of Nuevo León, Mexico.
1,268 children
served daily
$12,663,102 pesos
donated to Comedor Santa María, A.C.,
for the operation of five children dining
rooms “Our Dining Room”
Education
Community Development
Support to Mano Amiga School,
in Chalco, State of Mexico,
providing scholarships to ensure
the education of young adults in
vulnerable conditions.
Through the alliance with
Fondo para la Paz, I.A.P., Alsea
Foundation battles extreme
poverty in 12 communities in the
State of Oaxaca, Mexico, with
initiatives such as:
Alsea Generation:
136 high school
students
with scholarships
• Access facility to basic services
• Development of social capital
• Women’s empowerment
• Reduction of children malnutrition
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 42
GRI EC8 | EC9
42
Menu for Sharing
GRI Index
GRI
Indicators
Level of
reporting
Strategy and Analysis
1.1
1.2
Fully
Fully
Organizational Profile
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Fully
Report Parameters
Report Profile
3.1
3.2
3.3
3.4
Fully
Fully
Fully
Fully
Report Scope and Boundary
3.5
3.6
3.7
3.8
3.9
3.10
3.11
Fully
Fully
Fully
Fully
Fully
Fully
Fully
GRI Content Index
3.12
Fully
Assurance
3.13
Fully
Global
Compact
Principles
Page
GRI
Indicators
Level of
reporting
Global
Compact
Principles
43
GRI 3.12
Page
40
43
Dust jacket
inside flap
19
19
19
12-15
12-15
2
2,9
2,9,17
Dust jacket
inside flap
2, 8, 22,
24, 26
Dust jacket
inside flap
2, 4, 5, 9, 22,
24, 26
4, 5, 7, 8, 11, 23 ,
25, 27, 32
4, 5, 22, 24, 26
7
Dust jacket
inside flap
Dust jacket
inside flap
Dust jacket
inside flap
Dust jacket
inside flap
18
4, 8,
Dust jacket
inside flap
8
4, 9
In prior years
results were
reported by
brand. Today
they’re reported
by region
35
4, 8, 35
45
Dust jacket
inside flap
Commitments to External Initiatives
4.11
4.12
4.13
Fully
Fully
Fully
7
1-10
1-10
Stakeholder Engagement
4.14
4.15
4.16
4.17
Fully
Partially
Partially
Partially
8
12-15
Economic Performance Indicators
Aspect: Economic Performance
EC1
Fully
EC4
Fully
Aspect: Indirect Economic Impacts
EC8
EC9
Fully
Fully
Environmental Performance Indicators
5, 10, 11, 23, 25,
27, 42, 43
Alsea does not
receive any
help from the
government
10, 12-15, 42, 44
10, 42-44
Aspect: Materials
EN2
Partially
Aspect: Energy
EN3
EN4
EN5
EN6
Partially
Fully
Fully
Fully
8
8
8-9
8-9
Aspect: Water
EN8
Partially
08-sep
Aspect: Emissions, Effluents and Waste
EN16
EN18
EN22
Fully
Partially
Partially
8
8
8
Aspect: Products and Services
EN26
EN27
Partially
Partially
8, 9
8, 9
Aspect: Overall
EN30
Fully
37
35
35, 36
10, 36
36
35
36
36
37
10, 37
10, 37
10, 36
Labor practices and decent work performance
indicators
Aspect: Employment
LA1
LA3
Partially
Fully
Aspect: Labor/Management Relations
LA4
Fully
6
LA5
Fully
32
33
33
There is no
minnimun
notice period
in collective
agreements
Todos Sembramos Café
This is an initiative created with the purpose
of supporting coffee producers from Chiapas,
Mexico, who lost their crops due to rust, causing
the loss of 70% of the expected production
volume for 2014.
Starbucks contributed by donating all profits
form the Mexico Shade Grown sale for the
acquisition of coffee plants that were delivered
to the affected producers.
2015 Social Responsibility Initiatives
180,000 coffee plants donated to
coffee producers in Chiapas
60 coffee producers benefited with
3,000 plants each
Responsible
Consumption
Environment
• Products’ KPIs to three years
• Follow up of the diffusion plan for
Caloric Menus in sale points
• Life in balance posture and plan
• Energy efficiency
• Water consumption efficiency
• Comprehensive Waste Management
Program
• Environmental Management System
Governance
Quality of Life and
Business Ethics
• Employees’ healthy diet program
• Measurement of the initiative One
weekend off for operative managers
• Additional benefits in compensations
and flexible work schemes
Community Support
• Extension of operational capacity in
the existing dining rooms and ope-
ning of two new “Our Dining Room”
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
Fully
Fully
Fully
Partially
Fully
Fully
Fully
Fully
Fully
Fully
1-10
1-10
1-10
1-10
1-10
1-10
1-10
1-10
1-10
1-10
19, 39
39, 41
39
12-15
40
40
40
16, 40
40
39, 40
Governance, Commitments and Engagement
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
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44
45
GRI
Indicators
Level of
reporting
Global
Compact
Principles
Page
GRI
Indicators
Level of
reporting
Global
Compact
Principles
Page
Aspect: Occupational health and safety
Aspect: Security practices
LA6
Fully
LA9
Fully
Aspect: Training and education
LA10
LA12
Fully
Fully
33
There are no
security and
health issues
covered
in formal
agreements
with unions
7, 33, 34
12, 33, 34
HR8
Fully
Aspect: Indigenous rights
HR9
Fully
Aspect: Assessment
Aspect: Equal remuneration for women and men
HR10
Fully
LA13
Partially
LA14
Partially
A woman is
part of The
Corporate
Practices
and Audit
Committees
33
Human Rights Performance Indicators
Aspect: Investment and procurement practices
HR1
Fully
HR3
Partially
Aspect: Non discrimination
HR4
Fully
Alsea holds
no invesment
agreements
with human
rights clauses
33
There are no
complaints for
discrimination
incidents.
Aspect: Freedom of association and collective
bargaining
HR5
Fully
33, 40
Aspect: Child labor
Aspect: Remediation
HR11
Fully
Society Performance Indicators
Aspect: Corruption
SO3
SO4
Fully
Fully
Aspect: Public policy
SO6
Fully
10
10
33, 34
40
Alsea does not
contribute to
any political
party
Product Responsibility Performance Indicators
Aspect: Customer health and safety
PR1
Fully
1
Aspect: Product and service labeling
PR3
Partially
HR6
Fully
1-6
Aspect: Forced and compulsory labor
HR7
Fully
1-6
40
Alsea supports
child labor
erradication
40
Alsea rejects
forced labor
PR4
Fully
PR5
Partially
Security is
outsourcing
personnel
There are
no incidents
regarding
indigenous
rights
Alsea does
not analyze
operations
regarding
human rights
No complains
regarding
human rights
were presented
31
30
There are
no non-
compliances
regarding this
subject
Alsea has
complaints
modules for
clients
Employee Turnover
Actives
average 12
months
Total leaves
12 months
December
Turnover
Total Alsea
46,806
29,714
63%
United Nations Global Compact
Principles
Human Rights
1. Businesses should support and respect the protection of internationally
proclaimed human rights.
2. Make sure that they are not complicit in human rights abuses.
Labor
3. Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining.
4. The elimination of all forms of forced and compulsory labor.
5. The effective abolition of child labor.
6. The elimination of discrimination in respect of employment and occupation.
Environment
7. Businesses should support a precautionary approach to environmental
challenges.
8. Undertake initiatives to promote greater environmental responsibility.
9. Encourage the development and diffusion of environmentally friendly
technologies.
Anti-Corruption
10. Businesses should work against corruption in all its forms, including
extortion and bribery.
Millennium Development Goals
The Company contributes to the compliance of the following objectives
through all its internally developed actions.
1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
7. Ensure environmental sustainability
8. Global partnership and development
Annexes
Commitments to External Initiatives
Participation in Chambers and Associations
GRI 4.13
• Consejo de la Comunicación, members of the
Board with active participation in campaigns
to generate social benefits.
• Participation in the Asociación Mexicana de
Comunicadores (AMCO).
• American Chamber of Commerce, as itine-
rant member in the Fiscal Committee and
the Real Estate Development Committee.
Labor practices and decent work
performance Indicators
Aspect: Employment
Total workforce by employment type, employment contract, and region.
GRI LA1
Employment type
Operative Staff
Administrative Staff
40974
5,448
2,342
1,369
50133
1483
257
167
112
2019
42457
5,705
2,509
1,481
52,152
Mexico
Argentina
Chile
Colombia
Alsea’s total employees
*Spain not included
Mexico
Argentina
Chile
Colombia
Alsea’s total employees
*Spain not included
Employment Contract
Unlimited time
42457
5705
2509
1481
52152
GRI LA2
GRI LA3
All administrative employees enjoy
additional benefits to those required
by law, which are the following:
• Savings fund
• Grocery coupons
• Savings account (Applicable for all
business units)
• Life insurance
• Mayor medical expenses insurance
(Applicable for managing team)
• Discounts for all of Alsea’s brands
Aspect: Training and Education
Training hours
Staff
Directors and Deputy
Directors
Managers or Middle
Management
Coordinators, analysts or
operative staff in store
GRI LA10
Training hours
1,288 hours
45,268 hours
587,802 hours
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
46
46
47
Academic support
Granting criteria:
GRI LA11
GRI LA12
The performance review process is executed in
three stages:
a) Goals setting: the employee meets with his
immediate supervisor to clarify which goals to
establish and determine the achievable targets.
Objectives must be specific, measurable, attai-
nable, result oriented and completed within a
certain time.
b) Six months review: during this stage, the pro-
gress of each objective is reviewed. The emplo-
yee meets with his immediate supervisor and
they outline strategies to ensure the planned
goal’s achievement.
c) Performance Review: during this stage, su-
pervisor and employee meet to register the
goal’s closure and determine if the defined tar-
gets were achieved or not. A feedback session
is held regarding the employee’s performance.
Strengths and opportunities are highlighted and
action plans are created to improve and drive
the employee’s development.
Environmental performance
Indicators - Mexico
Aspect: Materials
EN1, EN2
One of Alsea’s goals in the sustainable area is to
incorporate materials with features that help the
Environment’s protection. Therefore, the Com-
pany has a Sustainable Inputs policy which pro-
motes the acquisition of materials and products
with environmental friendly characteristics, such
as: electric equipment of low-energy consump-
tion, local inputs that reduce the GHG emis-
sions involved in their transport, products with
post-consumption or post-industrial materials,
low VOC content, recyclable inputs that reduce
to a minimum the use of packaging materials,
furnishings with recycled materials, low mercury
content lamps, among others. Furthermore, in
2015 Alsea will integrate a sustainable procure-
ment indicator that considers purchasing a hi-
gher percentage of sustainable products.
1. The employee’s need to take the elected study
program specifying its business application or
impact (specify a performance indicator).
2. Be identified as High Potential in the talent
Nine Box.
3. Have at least one year in the Company.
4. Have and meet the program’s cost, previously
considered in the UEN budget and/or soliciting
area, managed by Corporate HR.
5. Execute them with the suppliers or institu-
tions validated by Corporate HR.
There is also the possibility to study any langua-
ge, according to the corresponding policy.
The granting and support definition is
carried out considering the following
criteria:
1. The employee’s need for the chosen langua-
ge, specifying its business application or impact
(specify a performance indicator, for example,
telephone calls number, emails, conferences, tra-
vels, etc.).
2. Be identified as High Potential or Main Poten-
tial in the talent Nine Box. For high potentials
applies a 100% support and for main potential a
50% support.
The language program’s financing will be deter-
mined with an initial diagnosis to consider the
current state and plan a program, which will be
united to the participant’s follow-up file, kept by
the Training Coordinator. During the program’s
length, an audit on the language’s application on
the position will be carried out in order to verify
its application in regards to the indicator stipula-
ted at the beginning of the program.
Once the program is concluded, the employee
cannot request support for a second time until
the next calibration and confirming its position
on the Grid.
The participant will have to sign and comply
with the regulations.
Also, Alsea has early retirement planning pro-
grams for those employees thinking of retiring,
as well as severance payments for dismissal.
Besides, during 2015 Alsea will incorporate a re-
cycled materials record that indicates the type
and amount of recycled or reused materials; this
will contribute to the Cero waste to sanitary lan-
dfill for 2018 goal in Mexico’s main cities.
Aspect: Energy
EN3, EN4, EN5, EN6
The basic energy sources used within the organi-
zation are: Natural Gas, LP Gas and Electric Ener-
gy. The Company is working to consolidate the
information regarding gasoline and diesel con-
sumption. During 2014, several strategies were
implemented to reduce Electric Energy con-
sumption, achieving a 13,001 GJ savings. Such
initiatives consisted of change of conventional
lighting to LED technology, installation of equip-
ment that examines energy consumption in real
time, allowing swift problem identifications and
avoiding unnecessary energy consumption, and
installation of control and automation projects,
achieving energy savings. The amount invested
in energy saving programs was $5,237,605 pe-
sos.
Alsea’s purpose is to promote sustainable prac-
tices and processes within the organization, so
it will evaluate the use of biodiesel in the Supply
Chain transportation (DIA), besides green ener-
gy consumption (Photovoltaic, Wind and Coge-
neration energy) within its facilities. During 2015
the evaluation to use renewable energy will be
completed, however, it is noteworthy that such
process will be mainly influenced by the current
process of “regulations’ changes”.
Indirect and Direct energy consumption
2014
Non-renewable indirect and direct sources
Source
Consumption
Consumption
(GJ)
Electric Energy
151,292,872 kWh
544,654 GJ
LP Gas
9,388,373 m3
913,736 GJ
Natural Gas
1,722,912 m3
65,919 GJ
* Estimated information 50% LP Gas, 7% Natural Gas, 6% Electric energy
* Energy consumption corresponding to Alsea’s facilities located in Mexico
**Conversion factor
Units
Conversion factor Comments
GJ to KWH
KWH to GJ
1GJ = 277.778
kWh
1kWh = 0.0036
GJ
m3 to Kcal ( Gas
LP)
1m3 = 23,246 Kcal
m3 to GJ ( Gas
Natural)
1GJ = 26.137 m3
Environmental
conditions
Standard: 15°C,
101.325KPa
Direct energy consumption
Reported year: 2014
Reported unit: Mexico
2014 Gas Report
2014 Data
Base Line – Normalized by m3 of Gas
# Units
Natural Gas (m3)
LP Gas (m3)
CO2 ton
(Gas/ton)
CO2 (LP Gas)
CO2 ton /
# Units
Fast food
Coffee Shops
Casual
Dining
Total
595
387
109
1,091
810,011
7,068,040
-
13,548
912,901
2,306,785
1,523
-
1,716
10,814,101
20,728
3,529,380
18,178
54
32,395
1,722,912
9,388,373
3,239
14,364,210
12,657
Notes:
*The Portfolio increased against 2013: 24 - “Burger King”, 7 - “Chilis”, 6 – “CPK”, 214 “Dominos”, 8 – “Italiannis”, 7 – “PF Changs”, 53 – “Starbucks”.
* Regarding LP Gas, 50% of the information corresponds to billing data and the remaining 50% is estimated information; regarding Natural Gas, 93% is real
information and 7% is estimated.
* The displayed information corresponds to the January – December 2014 period.
*The previous data does not include plants nor 354 units belonging to Vips, Portón and La Finca
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 48
48
49
Fast Food
Coffee Shops
Casual Dining
Others
Total
Fast Food
Coffee Shops
Casual Dining
Others
Total
2013 Data
Base Line – Normalized by # of
units
#Units
Energy (kWh)
CO2 (ton)
kWh/# Units
595
387
108
19
1,109
58,055,952
41,970,165
30,569,677
13,476,153
144,071,947
29,022
20,981
15,282
6,737
72,022
108,201
108,450
278,593
1,483,991
494,809
CO2 ton/# Units
54
54
139
742
247
2013 Data
Base Line – Normalized by # of
units
#Units
Energy (kWh)
CO2 (ton)
kWh/# Units
613
430
132
21
1,196
57,072,907
44,249,430
36,213,332
13,757,203
151,292,872
28,531
22,120
18,103
6,877
75,631
101,911
102,906
274,343
1,491,476
492,659
CO2 ton/# Units
51
51
137
746
246
Energy Savings
2014 Goals Achievement (by units)
kWh/ # Units
ton CO2/#
Units
Fast Food Total
Coffee Shops Total
Casual Dining Total
Others
Total
-5.8%
-5.1%
-3.3%
0.5%
-0.4%
-5.8%
-5.1%
-3.3%
0.5%
-0.4%
Notes:
*The electricity emission factor value [tCO2e/MWh] corresponding to 2013 was
modified from 0.45483 to 0.4999.
* The Portfolio increased against 2013: 24 - “Burger King”, 7 - “Chilis”, 6 – “CPK”,
214 “Dominos”, 8 – “Italiannis”, 7 – “PF Changs”, 53 – “Starbucks”.
* 94% of all information is provided by the CFE and 6% is estimated.
Regarding clean technologies, Alsea considers
that such elements have allowed the transfor-
mation towards a low carbon consumption
and efficient use of resources economy. As this
transformation accelerates, Alsea is aware of the
impact of clean technologies within its facilities;
therefore, it is developing strategic planes to
adapt to this modification and fulfill its environ-
mental goals.
Aspect: Water
EN8
During 2014, potable water consumption co-
ming from municipal entities and/or water su-
pplier companies was of 598,890 m3. Such
amount considers the potable water consump-
tion in Burger King, Chili´s, California Pizza Kit-
chen, Domino´s, Italianni´s, P.F. Chang´s and Pei
Wei; located throughout Mexico.
Aspect: Emissions, Effluents and Waste
EN16, EN18, EN22
Starting in 2015, a record will be implemented
for the calculation of Greenhouse Gasses deri-
ved from the refill of cooling gas in air condi-
tioning and refrigeration equipment to reduce
atmospheric pollution. During 2014, the CO2
emissions generated were:
Indirect emissions:
75,631 CO2 ton
Direct emissions:
14,367,449 CO2 ton
*Source for CO2 equivalent factor:
http://www.geimexico.org/factor.html
http://www.semarnat.gob.mx/
http://www.inecc.gob.mx/descargas/cclimatico/elab_inventarios.pdf
**Conversion Factor
Units
Conversion
Factor
Comments
Society Performance
Indicators
Aspect: Public Policy
SO5
Alsea does not participate in any activity that
allows the Company to influence government
policies’ formulations.
Alsea contributes to the development of public
policies in certain issues that may affect ope-
rations, always within the law’s framework and
upholding the highest ethical standards in every
country where it has presence.
Aspect: Anti-competitive Behavior
SO7
The Company respects all regulations regarding
economic competition, monopoly practices and
free market participation, so it has never recei-
ved a sanction for acting against them.
The emission
factor value of
CO2 equivalent
derived from
electric energy
consumption was
considered from
the official source:
http://www.
geimexico.org/
factor.html
kWh to
TCO2equivalent
(Electric Energy)
1 MWh=
1000KWh
1MWh= 0.4999
TCO2e
m3 of Natural
Gas to
TCO2equivalent
m3 of LP Gas to
TCO2equivalent
1,880 g CO2 / m3
Natural Gas
1 m3 = 1000L
1L= 1,530 g CO2
0.001 Ton CO2 =
1000 g CO2
Aspect: Products and Services
EN26
Contributions to the “Cero waste to sa-
nitary landfill in main cities for 2018”
goal:
In order to understand the amount and kind of
waste generated in Starbucks Coffee Shops in
Mexico, a pilot test was carried out in Jalisco sta-
te. It included a Waste Audit with the purpose
of identifying volumes and types of generated
materials, among other aspects, to implement
improvements and projects which allow the re-
duction of waste sent to sanitary landfill.
The results of this first stage show that waste in
the screened branches behaves as follows:
4%
37%
59%
Recyclable
Non-Recyclable
Organic
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
50
50
51
Management Discussion
and Analysis
Consolidated results for
the full year 2014
The following table shows a condensed Income
Statement in millions of pesos (excluding EPS),
the margin of net sales that each item repre-
sents, as well as the percentage change for the
year ended on December 31, 2014, in comparison
with the same period of 2013. The information is
presented according to the International Financial
Reporting Standards (IFRS) and is presented in
nominal terms.
Net Sales
Gross
Income
EBITDA(1)
Operating
Income
Net Income
EPS (2)
2014
$22,787
15,515
2,802
1,469
$624
0.847
Margin %
100.0%
68.1%
12.3%
6.4%
2.7%
N.A.
2013
$15,698
10,477
2,040
1,120
$663
0.991
(1) EBITDA is defined as operating income before depreciation and amortization.
(2) EPS is earnings per share for the last 12 months
Margin %
Change %
100.0%
66.7%
13.0%
7.1%
4.2%
N.A.
45.2%
48.1%
37.4%
31.2%
(5.9)%
(14.5)%
Sales
Net sales increased 45.2% to 22.78 billion pesos
in 2014, compared to 15.69 billion pesos during the
prior year. This increase reflects the sales growth
in the Alsea Mexico, Alsea South America, and Al-
sea Spain segments, mainly due to the increase
in sales from the incorporation of Vips and the
brands of Grupo Zena in Spain, the expansion in
the number of units, and growth of 4.5% in same-
store sales during 2014; this was partially offset by
the impact of devaluation of the Argentine peso
and the effects of the tax reform in Mexico.
Alsea’s brands in South America grew in same-
store sales; due to the brands and geography’s
portfolio diversification, the Company achieved a
consolidated growth of 4.5%. Likewise, the recent
acquired brands in Spain showed positive re-
sults in the year’s last quarter, period in which for
the first time they merged with the Company’s
results, with a same-store sale growth of 8.9%
compared to the same period the previous year.
This is in consequence mainly to the commercial
strategies combined with the economic recuper-
ation environment the country is going through.
EBITDA
As a result of the 48.1% growth in gross income
and the 50.7% increase in operating expenses (ex-
cluding depreciation and amortization), EBITDA
grew 37.4% to 2.8 billion pesos at the end of
2014, compared to 2.04 billion pesos in the same
period of the previous year. The 762 million pe-
sos increase in EBITDA is mainly attributable to
the positive contribution from incorporating the
brands in Grupo Zena in Spain into the portfolio,
as well as Vips and El Portón brands in Mexico,
integrating Starbucks Chile and increasing the
number of units. EBITDA margin decreased 70 ba-
sis points as a percentage of sales, dropping from
13.0% in 2013, to 12.3% in 2014, mainly due to the
decrease in same-store sales in Mexico, especially
during the second half of the year, the impact of
the business start-ups on results, as well as the
transition, integration and extraordinary expenses
of Vips, the drop in consumption in Argentina, and
the increase in the cost of some of the main inputs,
particularly during the second quarter of 2014.
Operating Income
Net Income
Net income for the year decreased 39 million pe-
sos, closing at 624 million pesos, in comparison
with 663 million pesos from the prior year, mainly
due to an increase of 283 million pesos in the all-
in cost of financing, higher net interest expenses
and an increase of 80 million pesos in taxes. Those
variations offset the increase of 349 million pesos
in operating income.
Earnings per Share
Earnings per share (“EPS”) for the 12 months
ended December 31, 2014, decreased to 0.847
pesos, compared with 0.991 pesos for the 12
months ended December 31, 2013.
Results by Segments
Mexico
Alsea Mexico
Food and Beverages
Distribution and Production
Total
Same-
store sales
Number of
units
Sales
Adjusted
EBITDA*
Adjusted
EBITDA*
margin
2014
2013
Var. % Var.
2014
2013
Var. % Var.
2014
2013
Var. % Var.
(0.4)%
4.0%
(440)
bps
-
1,999
1,575
424
27%
-
-
-
-
-
-
-
-
(0.4)%
4.0%
(440)
bps
-
1,999
1,575
424
27%
15,591
10,351 $5,240
51%
5,064 4,330 $734
17% 20,655 14,681
5,974
41%
3,395
2,363 $1,032
44%
478
400
$78
20% 3,873
2,763
$1,110
40%
21.8% 22.8%
(100)
bps
-
9.4%
9.2%
20
bps
-
18.7% 18.8%
(10)
bps
-
*Adjusted EBITDA does not consider management costs, therefore it represents the “store level EBITDA”.
Sales at Alsea Mexico for the full year 2014 in-
creased 40.7% to 20.65 billion pesos, compared
to 14.68 billion pesos in the same period of 2013,
and represented 73% of Alsea’s consolidated
sales during the year. This favorable variation of
5.97 billion pesos is mainly attributable to the in-
corporation of the Vips brand into the portfolio,
the increase of 404 corporate units among the
different brands over the last 12 months and the
increase in sales to third parties in the Distribution
and Production segment, due to the growth in the
number of units served over the last 12 months. A
total of 2,028 units were being served at Decem-
ber 31, 2014, in comparison with 1,570 units in the
same period of the prior year, representing an in-
crease of 29.2%. This increase was partially offset
by the decrease in same-store sales in the Mexico
segment during the year.
Adjusted EBITDA increased 40.1% during the 12
months ended December 31, 2014, closing at 3.87
billion pesos, compared with 2.76 billion pesos re-
ported in the same period of the previous year.
This increase is attributable to the margin gener-
ated by the higher number of units in operation, in
addition to the business mix. This was partially
offset by the performance of Burger King Mexico,
which was impacted by the contraction in con-
sumption, the results related to the start of ope-
rations of The Cheesecake Factory and expenses
related to the integration of Vips. Furthermore,
EBITDA during 2014 was affected by the increase
in the cost of some of the main inputs, the divest-
ment of some units from the portfolio and the de-
valuation of the Mexican peso.
Spain
Alsea Spain
2014
2013
Same-store sales
Number of units
Sales
Adjusted EBITDA*
Adjusted EBITDA*
margin
6.5%
442
$1,468
$290
19.8%
-
-
-
-
-
*Adjusted EBITDA does not consider management costs,
therefore it represents the “store level EBITDA”.
Sales at Alsea Spain represented 6% of Alsea’s
consolidated sales during the year, and at the
end of 2014 included the operations of Foster’s
Hollywood, Domino’s Pizza, Burger King, La Vaca
Argentina, Cañas y Tapas and Il Tempietto. At the
end of the period there were a total of 302 corpo-
rate units and 140 sub-franchised units.
Adjusted EBITDA for Alsea Spain at the end of
full-year 2014, was 290 million pesos, which
represented a margin of 19.8%.
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014 52
52
South America
Alsea South America
2014
2013
Var.
% Var.
Same-store sales
Number of units
Sales
Adjusted EBITDA*
Adjusted EBITDA* margin
20.0%
343
$4,621
$679
14.7%
21.1%
287
$4,219
$583
13.8%
(110) bps
56
$402
$96
90 bps
-
20%
10%
17%
-
*Adjusted EBITDA does not consider management costs, therefore it represents the “store level EBITDA”.
Sales at Alsea South America represented 20%
of Alsea’s consolidated sales, and at the end of
2014 included Burger King operations in Argen-
tina, Chile and Colombia, Domino’s Pizza Colom-
bia, Starbucks Argentina, Chile and Colombia and
P.F. Chang’s in Chile, Argentina, Colombia and
Brazil. At December 31, 2014, there were a to-
tal of 327 corporate units and 16 sub-franchised
units. Sales in this segment increased 9.5% to 4.62
billion pesos, in comparison with 4.219 billion pe-
sos in 2013. This positive change of 402 million
pesos was mainly due to the addition of 44 cor-
porate units and 12 sub-franchised ones, and was
partially offset by the decrease in same-store sales
and to the impact from the 48.8% devaluation of
the Argentine peso compared to the end of 2013.
Adjusted EBITDA at Alsea South America for the
year ended 31 December 2014 increased 16.5%,
closing at 679 million pesos, in comparison with
583 million pesos in the same period in 2013.
EBITDA margin at the end of 2014 improved 90
basis points compared to the same period of the
previous year. This increase can be attributed in
part to the margin generated by the growth in
same-store sales and the economies of scale ari-
sing from the aforementioned increase in corpo-
rate units, as well as a better business mix derived
from the acquisition of Starbucks Chile. This was
partially offset by the pre-operating expenses
regarding Alsea’s entry into the Brazilian market
with the opening of P.F. Chang’s and the start of
operations of Starbucks in Colombia, as well as to
the impact of devaluation of the Argentine peso.
Non-operating results
During the 12 months ended December 31, 2014,
Alsea made capital
investments, excluding
acquisitions, of 2.05 billion pesos, of which 1.69
billion pesos –82.5% of total investments– were
earmarked for unit openings, equipment refur-
bishing and remodeling of existing stores for the
different brands that the Company operates. The
remaining 360 million pesos were destined for
other items, highlighting improvement and logis-
tics projects, as well as software licenses, among
other items.
Other Long-Term Liabilities
The other long-term liabilities account shows an
increase of 3.02 billion pesos, derived from the
recognition from liabilities related to the call and
put options that were agreed with Britania Invest-
ments, S.A.R.L. (“Alia”), the local partner of Grupo
Zena, for its entire stake in the company which
is 28.24%. These options have a four year term,
meaning they can be executed from October 2018,
and the price agreed for both options (call and put)
shall be determined by multiplying by 8.7 times
EBITDA for the last 12 months minus the net debt
at the end of such period.
Bank Debt and Fixed-Rate Bonds
At December 31, 2014, Alsea’s total bank debt in-
creased 6.19 billion pesos, closing at 11.23 billion
pesos, in comparison with 5.04 billion pesos on
the same date of the previous year. The Compa-
ny’s consolidated net debt in comparison with the
close of 2013 increased 5.74 billion pesos, closing
on December 31, 2014 at 10.12 billion pesos, in com-
parison with 4.38 billion pesos. At December 31,
2014, 87.7% of the debt was long term, and on that
date 81% of the debt was denominated in Mexican
pesos, 18.6% was in euros and the remaining 0.5%
was in Argentine pesos.
The following table shows the balance and
structure of total debt in millions of pesos at De-
cember 31, 2014.
53
Institution
Reference Rate
Spread
Due Date
Balance at Dec. 2014
Bancomer
Bancomer
Santander
Santander
Santander
Banamex
Banamex
Scotiabank
Banamex / BBVA / HSBC
TIIE 28 D
TIIE 28 D
TIIE 28 D
3.98%
3.98%
TIIE 28 D
TIIE 28 D
TIIE 28 D
TIIE 28 D
1.50%
1.50%
0.90%
April 6, 2018
July 10, 2018
May 6, 2018
N.A
January 12, 2015
N.A February 18, 2015
1.50%
1.50%
1.18%
July 12, 2018
July 11, 2018
July 8, 2019
604,662
588,034
205,721
82,000
300,000
89,338
705,485
1’013,775
1.75%
May 29, 2017
1’276,533
Banamex / BBVA / HSBC / Santander
TIIE 28 D
1.25%
September 26,
2019
1’741,580
CEBUR Alsea’13
Argentina
Spain
Total
TIIE 28 D
0.75%
June 14, 2018
2’491,356
22.14%
2.89%
52,362
2’088,333
11’239,180
Shares Repurchase Program
At year ended, Alsea closed with a balance of
856,201 shares in the repurchase fund. During the
12 months ended December 31, 2014, the Com-
pany conducted purchase and sale operations
amounting approximately to 34 million pesos.
Financial Ratios
At December 31, 2014, the financial restrictions
established in the Company’s credit contracts
were as follows: the ratio of: i) Total Debt to
EBITDA (pro-forma for the last 12 months) was
3.3x; ii) Net Debt to EBITDA (pro-forma for the
last 12 months) was 2.9x; and iii) EBITDA (pro-
forma for the last 12 months) to interest paid
over the last 12 months was 6.2x.
The Return on Invested Capital (“ROIC”) de-
creased from 11.7% to 8.0% during the 12 months
ended December 31, 2014. The Return on Equity
(“ROE”) for the 12 months ended December 31,
2014 was 7.5%, compared with 14.5% in the previ-
ous year.
Stock Market Indicators
4T14
4T13
Variation
Book value per Share
EPS (12 months)(1)
Shares in circulation at the close of the period
(millions)
Price per share at close
(1) EPS is earnings per share for the last 12 months.
$10.51
$0.847
837.6
$40.77
$6.21
0.991
687.8
$40.79
69.2%
(14.5)%
21.8%
-
Hedge Profile
The Finance Direction, joint with the Treasury
Management, shall manage risks seeking to:
mitigate present and future risks; not deviate re-
sources from the operation and the expansion
plan and hold the certainty of the Company’s
future flows, along with a strategy regarding the
debt’s cost. All instruments will only be used for
hedging purposes.
During 2014, hedge derivatives in foreign exchange
matured for $82.5 million dollars, at an average ex-
change rate of 12.91 pesos per dollar. This hedging
resulted in an exchange rate profit of $20.8 mil-
lion Mexican pesos. At December 31, 2014 Alsea
holds hedges to purchase US dollars in the next 12
months for an approximate amount of $8 million
US dollars, at an average exchange rate of 13.80
pesos per dollar. The foregoing is estimated at an
average exchange rate of 14.50 pesos per dollar.
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
54
Management Discussion and Analysis
54
55
Mexico City, February 25, 2015
Audit Committee’s Annual Report
to the Board of Directors of Alsea, S.A.B. de C.V.
In compliance with the provisions of Sections 42
and 43 of the Securities Exchange Act and the
Rules of the Audit Committee, I hereby inform
you about our activities during the year end-
ing on December 31, 2014. During the perfor-
mance of our work, we have taken into account
the recommendations set out in the Code of
Best Practices on Corporate Governance and, in
accordance with a work program developed
from the Committee Rules, we met at least once
every quarter to perform the following activities:
I. Risk assessment
We reviewed, jointly with the Administration and
External and Internal Auditors, critical risk fac-
tors that could affect the Company’s operations,
and determined that they have been adequately
identified and managed.
II. Internal control
We ensured that the Administration, in fulfillment
of its responsibilities regarding internal control,
had established adequate policies and proce-
sses. In addition, we followed up on the comments
and observations in this respect made by the
External and Internal Auditors in the perfor-
mance of their work.
III. External audit
We recommended that the Board of Directors
hire the external auditors for the Group and sub-
sidiaries for the fiscal year 2014. To this end, we
made sure of their independence and compliance
with the requirements established by law. We
jointly analyze their approach and work program.
We maintained ongoing and direct communica-
tion to stay informed on the progress of their
work, and take note of their comments on their
review and the annual financial statement. We
were promptly informed of their conclusions and
reports on the annual financial statement and
implemented their observations and recommen-
dations resulting from their work.
AWe authorized the fees paid to external audi-
tors for auditing services and other authorized
services, making sure that these would not inter-
fere with their independence from the company.
Taking into account the Administration’s point of
view, we evaluated its services for the previous
year and stated an evaluation process for the
year 2014.
IV. Internal audit
In order to maintain its independence and ob-
jectivity, the Internal Audit area reports func-
tionally to the Audit Committee.
In due course, we reviewed and approved its
annual program of activities. To that end, Internal
Audit participated in the process of identifying
risks, determining controls and verifying them.
We received periodic reports regarding the
progress of the approved work program, chan-
ges that might have occurred and the reasons
that caused them.
We followed up on the observations and su-
ggestions made by this area and implemented
them appropriately.
V. Financial information,
accounting policies and third
party reports
We reviewed together with the people respon-
sible, the process of preparation of quarterly
and annual financial statements for the Com-
pany and recommended the Board of Directors
approving and authorizing their dissemination.
As part of this process we took into consider-
ation external auditors’ opinions and observa-
tions and made sure that the criteria, accounting
and information policies used by the Adminis-
tration to prepare the financial information were
adequate and sufficient and had been applied
consistently with those for the previous year. As
a consequence, the information presented by
the Administration reasonably reflects Alsea’s
financial situation, operating results and chan-
ges in its financial status for the year that ended
on December 31, 2014.
We also reviewed the quarterly reports pre-
pared by the Administration to be presented to
the shareholders and the general public, veri-
fying that they were prepared using the same
accounting criteria used to prepare the annual
information. We verified that there is a compre-
hensive process that provides reasonable confi-
dence as to its contents. In conclusion, we rec-
ommend that the Board authorize its publication.
de R.L. de C.V., through which it had authorized
the application of 0% VAT rate on sandwiches
(during the years 2010, 2011, 2012 and 2013);
such procedures are currently under review by
the authorities.
Our review also included reports and any other
financial information required by Mexican Regu-
latory Bodies.
We reviewed and confirmed that during the year
2014 Alsea continued using and implementing
the International Financial Reporting Standards
(IFRS) issued by the International Accounting
Standards Board (IASB) to prepare its Financial
Statements.
VI. Compliance with
regulations, legal aspects
and contingencies
We confirm the existence and reliability of the
controls established by the Company, to ensure
compliance with any various mandatory legal
provisions, making sure that they were properly
disclosed in the financial information.
We periodically reviewed the various tax, legal
and labor contingencies faced by the company,
monitoring the efficiency of the identification
and follow-up procedure, as well as their proper
disclosure and recording. There were two tax
issues in the year to highlight:
a) The Ministry of Finance of Mexico City de-
termined to the society Italcafé S.A. de C.V. tax-
able income over deposits made to their bank
accounts derived from the operation of several
restaurants owned by Grupo Amigos de San
Angel, S.A. de C.V., nonetheless, such revenues
were accumulated by the latter company, giv-
ing it all related tax effects. If such determination
proceeds, the responsibility of payment of the
aforementioned tax credit, although charged to
Itlacafe SA de CV, will have to be paid by the
former owners of the society.
b) The “Servicio de Administración Tributaria”
(SAT) initiated two legal procedures in order to
cancel the trades in favor of Distribuidora e Im-
portadora Alsea, S.A. de C.V. and Café Sirena, S.
VII. Administrative aspects
We held regular meetings with the Administra-
tion, to keep informed about the operations of
the Company, its relevant and unusual activities
and events. We also met with internal and ex-
ternal auditors to discuss their progress of their
work and any constrains they might have en-
countered, and to facilitate any private communi-
cations they wished to have with the Committee.
Whenever we deemed it advisable, we reques-
ted independent experts to provide support and
opinions. Similarly, we had no knowledge of any
significant lack of compliance with the operating
policies, internal control systems, and accounting
records policies.
We held executive meetings with the exclusive
participation of Committee Members, during
which we reached agreements with and made
recommendations to the Administration.
The Chairman of the Audit Committee report-
ed our activities to the Board of Directors on a
quarterly basis.
Our work was duly documented in records and
prepared for each meeting, which were appro-
priately reviewed and approved by Committee
Members.
Sincerely,
C.P. Iván Moguel Kuri
Chairman of the Audit Committee
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014
56
56
57
Corporate Practices Committee’s Annual Report to the Board of
Directors of Alsea, S.A.B. de C.V.
Mexico City, February 25, 2015
In compliance with Sections 42 and 43 of the
Securities Exchange Act and in the name of the
Corporate Practices Committee, I present to
you our report on the activities we carried out
during the year ended December 31, 2014. In
the development of our work, we observed the
recommendations contained in the Code of Best
Practices on Corporate Governance.
7. This committee presented and approved the
proposal to issue stock certificates, which we
recommended to be presented to the Board of
Directors for its ratification.
8. We presented quarterly and accrued results
of the Stock Exchange Plan for the year 2014.
To analyze the relevant results of the Compa-
ny, the Committee held meetings to ensure the
adequate follow-up on the agreements reached
during the performance of their duties, inviting
any company officers deemed advisable.
To comply with the responsibilities of this com-
mittee, we carried out the following activities:
1. During this period we did not receive any re-
quest for dispensation according to Section 28,
subsection III, paragraph f) of the Securities Ex-
change Act; hence, it was not necessary to make
any recommendation in this regard.
2. This committee presented and approved the
Strategic Plan of The Cheesecake Factory, which
we recommended to be presented to the Board
of Directors for its ratification.
3. This committee presented and reviewed the
report about Grupo Zena’s acquisition, which we
recommended to be presented to the Board of
Directors for its ratification.
4. This committee presented and approved the
Strategic Plan of Starbucks Colombia, which we
recommended to be presented to the Board of
Directors for its ratification.
5. This committee presented and approved the
Strategic Plan of P.F. Chang’s Brazil, which we
recommended to be presented to the Board of
Directors for its ratification.
6. This committee presented and approved
the divestiture proposal of Pei Wei, which we
recommended to be presented to the Board of
Directors for its ratification.
9. We were presented with the update of the
shareholder cost applicable at the end of each
quarter of 2014, according to methodology
authorized by the Board of Directors.
10. We were presented on a quarterly basis
with a summary of the risk management opera-
tions through “forwards of the exchange rate”
(Peso-Dollar) conducted over the year. These
operations were executed as authorized; that is,
in compliance with the objective of covering the
exchange rate risk of the operation based on the
authorized budget.
11. We were presented with the Strategic Plan
2015 - 2019, which we recommended to be pre-
sented to the Board of Directors for its approval.
12. We were presented the 2015 Budget, which
we recommended to be presented to the Board
of Directors for its approval.
13. We were presented with the Compensation
Plan for the CEO’s Reporting Line, which we
recommended to be presented to the Board of
Directors for its approval.
14. We were presented with the Succession and
Talent Development Plans, which we reviewed.
15. We were presented with the results of the
evaluation of relevant executives in 2014.
16. The Corporate Division of Human Resources
presented the Compensation Strategy for rele-
vant executives for the year 2015. This Committee
recommended the approval of the strategy.
17. We were presented with the organizational
structure of Alsea 2015, which we recommended
to be presented to the Board of Directors for its
approval.
18. In each and every meeting of the Board of
Directors, we presented a report of the activi-
ties of the Corporate Practices Committee for its
consideration and recommended its ratification
and/or approval.
Finally, I would like to mention that as part of
our activities, including the preparation of this
report, we have always listened to and taken
into account the viewpoint of relevant execu-
tives, without identifying any notable difference
of opinion.
Sincerely,
Corporate Practices Committee
Julio Gutiérrez Mercadillo
Chairman
ALSEA ANNUAL REPORT 2014ALSEA ANNUAL REPORT 2014