This excerpt taken from the HXM 6-K filed Jun 30, 2005.
Independent Auditors Report to the Board of Directors and Stockholders of
We have audited the accompanying consolidated balance sheets of Desarrolladora Homex, S.A. de C.V. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in stockholders equity and changes in financial position for the years then ended, all expressed in thousands of Mexican pesos of purchasing power of March 31, 2005. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and that they are prepared in accordance with accounting principles generally accepted in Mexico. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements (columns identified as base amounts) present fairly, in all material respects, the financial position of Desarrolladora Homex, S.A. de C.V. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations, changes in their stockholders equity and changes in their financial position for the years then ended, in conformity with accounting principles generally accepted in Mexico.
As described in Note 2, on May 16, 2004, Econoblock, S.A. de C.V. (affiliated company) merged with Desarrolladora de Casas del Noroeste, S.A. de C.V. (subsidiary company) with the latter assuming all the rights and obligations of the merged company. As the companies were under common control, the merger was recorded by recognizing the assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer, based on the guidance incorporated in Statement of Financial Accounting Standards No. 141, Business Combinations, issued by the Financial Accounting Standards Board, and in accordance with Bulletin A-8, Supplemental Application of International Accounting Standards issued by the Mexican Institute of Public Accountants. Therefore, the accompanying financial statements include those of the merged company as if the merger had taken place as of the beginning of the earliest period presented.
As described in Note 22, the financial statements reflected in the columns identified as pro forma amounts include the effect derived from the proposed business combination of Desarrolladora Homex, S.A. de C.V. and Casas Beta, S.A. de C.V. The financial statements of the latter, which were audited by us, were adjusted for inclusion as if the accounting policies of Desarrolladora Homex, S.A. de C.V. had been applied as of and for the years ended December 31, 2004 and 2003.
The objective of this pro forma financial information is to show what the significant effects on the historical information might have been had the proposed transaction occurred at an earlier date.
In our opinion, i) managements assumptions provide a reasonable basis for presenting the significant effects directly attributable to the above-mentioned business combination of Desarrolladora Homex, S.A. de C.V. and Casas Beta, S.A. de C.V., as described in Note 22, ii) the related pro forma adjustments give appropriate effect to those assumptions and iii) the pro forma column reflects the proper application of those adjustments to the base financial statements amounts in the consolidated pro forma balance sheets as of December 31, 2004 and 2003, and the related consolidated pro forma statements of income, changes in stockholders equity and changes in financial position for the years then ended.
The accompanying financial statements have been translated into English for the convenience of users.
Galaz, Yamazaki, Ruiz Urquiza, S.C.
C.P.C. Pedro Luis Castañeda Herrera