ANNUAL REPORT OPPORTUNITIES FOR A SUSTAINABLE...

2017 ANNUAL REPORT

RA

SSINI 2017 A

NN

UA

L REPORT EXPANDING

OPPORTUNITIES FOR A SUSTAINABLE

FUTURE

EXPAN

DIN

G O

PPORTU

NITIES FO

R A SU

STAIN

ABLE FU

TURE

Expanding opportunities for a sustainable future

Company Profile

Financial Highlights

Report to the Board of Directors

Our Industry

Commercial Review

Operations Summary

Financial Performance

Technology Leadership and Customers' Recognition

Human Talent and Sustainability

Board of Directors

Financial Statements

Independent Auditors' Report

Audit Committee Report

Consolidated Financial Statements

Glossary

Information for Investors and Media

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TABLE OFCONTENTS

2017 R A SSINI Annual Repor t 1

EXPANDING OPPORTUNITIES

FOR A SUSTAINABLE

FUTURERassini S.A.B. de C.V. has a strong global presence as an im-portant producer of suspension components for light commer-cial vehicles and of fully integrated brake discs. Rassini is a leading supplier in the automotive industry, providing constant technological development in design, and innovative solutions for lightening materials, reducing components and improving production processes. Rassini products are used in a wide va-riety of electric motor and internal combustion vehicles in the automotive industry, including urban, family, off-road, sport, luxury and commercial.

We are dedicated to our high standard of excellence working as a team to uphold our exemplary “Can Do” attitude; constant-ly identifying ways for Rassini to drive value creation through innovation; developing technology as a competitive advantage; achieving operational excellence in everything we do; and, pru-dently leveraging our resources to drive profitable growth of the Company, while also benefiting the entire community.

The world is evolving constantly. The automotive industry is increasingly facing stricter environmental standards, new trends arising in reducing vehicular accidents and companies constantly aiming to innovate products that improve quality of life for their consumers. For this reason, in recent years Rassini has invested in cutting-edge technology, earning con-sumer confidence in the Company’s ability to design and pro-duce leaf springs of new materials.

2 2017 R A SSINI Annual Repor t

Furthermore, Rassini is dedicated to improving the per-formance of internal combustion vehicles, decreasing the emission of pollutants through weight-reduction in its products, and exploring a wide-range of possibilities to participate in the electric vehicle space, such as extending the autonomy of its batteries.

Rassini has also invested in high-tech tools to design and develop new products. During 2017, Rassini successfully started the seventh foundry line at the Brakes facility in Puebla, and installed a 3D printer to manufacture proto-types of calipers and masses, aiming to both expand prod-uct offerings and adjust designs of certain products to comply with European market tests, as well as to venture further into the segment of heavy trucks within the brake division.

Rassini supplies products to major original equipment manufacturers (OEMs) such as General Motors, Ford, Fiat Chrysler Automobiles, Toyota, Volkswagen, MAN, Daimler, Audi, Mercedes Benz, Nissan, Scania, Tesla and Mitsubishi, among others.

Rassini has eight production plants, five technology cen-ters strategically located in Mexico, the U.S. and Brazil, as well as engineering offices in Germany and Japan, employ-ing over 6,300 people around the world.

Innovation and technology are our targets

and are incorporated into all our

processes to ensure quality standards and excellence.


SALES BYCUSTOMER

Suspensions Division North AmericaBrakes Division North AmericaSuspensions Division Brazil

General MotorsFordFiat Chrysler AutomobilesToyota

Volkswagen/MAN/ScaniaNissanMercedes-BenzOther

39%

28%

10%

6%

8%

1%3%

5%

59%

31%

10%

SALES BY DIVISION

COMPANY PROFILE

08

09 10 11 12 13 14 15 16 17

EBITDA( Millions of Pesos ) (1)

434

503

1,0

58

1,17

8

1,20

3

1,34

3 1,56

8

2,14

1

3,19

0

3,36

6

08

09 10 11 12 13 14 15 16 17

NET SALES( Millions of Pesos )

6,95

8

5,45

9 7,62

1 9,35

3

9,39

2

10,3

62 11,9

00

12,8

97

16,3

40 18,1

04

2017 R A SSINI Annual Repor t4

2016 2017% Var.

2016-2017

Sales Mill. Pesos 16,340 18,104 11%

EBITDA (1) Mill. Pesos 3,190 3,366 6%

Net Operating Cash Flow (2) Mill. Pesos 2,404 2,825 17%

Average Used Capital Mill. Pesos 6,415 6,444 -

Operating Profitability % 49.7 52.2 -

Operating Turnover Times 2.5 2.8 8%

Net Debt Mill. Pesos 1,206 591 51%

Gross Debt Mill. Pesos 3,119 2,581 17%

Cash Mill. Pesos 1,913 1,991 4%

Gross Debt / EBITDA Times 1.0 0.7 22%

Net Debt / EBITDA Times 0.3 0.2 33%

EBITDA / Net Interest Times 10.2 11.1 9%

Net Income (3) Mill. Pesos 1,935 1,992 3%

Net Worth Mill. Pesos 5,523 6,025 9%

08

09

10

11

12

13

14

15

16

17

NET DEBT / EBITDA( Times )

9.88.8

4.02.7

2.21.7

1.20.7

0.3

08

09

10

11

12

13

14

15

16

17

NET DEBT( Millions of Pesos )

4,2374,414

4,2383,201

2,6272,241

2,1331,459

1,206

18

19

20

21

DEBT PROFILE( % ) (4)

4141

117

(1) EBITDA = Operating profit plus depreciation, amortization, other expenses, and income and workers' profit sharing (2) EBITDA ± Change in Working Capital minus taxes.(3) Income before taxes, minority interest and other non-recurring income.(4) Does not include working capital financing. Figures based on nominal value.

FINANCIAL HIGHLIGHTS

591 0.2


REPORT TO THE BOARD OF

DIRECTORSDear Shareholders,

I am pleased to announce the fiscal 2017 financial and operat-ing results for Rassini, S.A.B. de C.V. and subsidiaries (Rassini). We delivered outstanding financial performance in 2017 by in-creasing sales and profit before interest, depreciation and tax-es (EBITDA) for a record-breaking seventh consecutive year. As we embrace 2018, we remain focused on meeting the demands of our customers and strengthening our market leadership in quality and innovation.

2017 was a year of technological enhancement, operational modernization, product innovation and human capital develop-ment for Rassini. Our goal entering 2017 was to strengthen our industry leadership by capitalizing on every market opportunity. Our fiscal 2017 results speak for themselves:

• Sales growth increased by 11% year-over-year to $18,104 million pesos.

• EBITDA increased by 6% year-over-year to $3,366 million pesos.

• Net operating cash flow totaled $2,825 million pesos or 17% above previous year.

• Net income in 2017 reached $1,475 million pesos or $4.61 pesos per share.

• Net debt to EBITDA ratio as of December 31, 2017 was 0.2 times and the EBITDA to net interest ratio was 11.1 times.

Rassini continues to have solid financial indicators and main-tains an excellent generation of cash flow, which has allowed us to make prepayments for revolving credit in the Brakes Di-vision, as well as paying dividends in an amount superior to that of 2016.


During 2017, Rassini received the Cemefi Social Responsibility (ESR®) distinction for the fifth consecutive year. Rassini’s Brakes Division was also recognized by General Motors for its superior quality and operational excellence, receiving GM’s “Supplier Quality Excel-lence Award,” the highest recognition of quality for suppliers.

Similarly, Daimler Trucks North America (DTNA) awarded our Suspensions Division a “Masters of Quality Supplier Award” for the third consecutive year, the highest recogni-tion granted to its suppliers, supplying components for heavy truck brands Freightliner and Western Star.

Sales in North America in 2017 reached a total of $16,223 million pesos, an increase of 8% over the previous year. This is equivalent to a compound annual growth rate of 22% during the last five years, well-above the 5% industry growth rate due to new platform launches and greater market penetration achieved primarily in the brake business.

The Brazil Suspension Division greatly benefited from improvements in the macroeco-nomic indicators in the country, which led to an increase in its participation within the group because of the recovery in the economy and in the automotive industry. Sales for 2017 increased 44% in terms of Mexican pesos and 22% in volume compared to the same period last year; EBITDA reached $151 million pesos, representing an increase of 202% compared to 2016.

As a result of improvements in the management of working capital, net operating cash flow reached $2,825 million pesos, an increase of 17% compared to the previous year, representing an 84% conversion of EBITDA.

During 2017, Rassini paid a dividend of $640 million pesos, equating to $2.00 pesos per share, confirming our commitment to deliver value to our shareholders. Net debt de-creased 51% and ended the year with a balance of $30 million dollars, which is equivalent to $591 million pesos.

At the end of 2017, Rassini’s market capitalization reached $11,310 million pesos, a re-duction of 9% compared to 2016. This is primarily due to uncertainty generated around renegotiations of NAFTA; however, several analysts believe that Rassini has solid fun-damentals and suggest a positive future outlook that supports their purchase recom-mendations. During the first half of the year, NAU Securities, an international European firm, initiated coverage of Rassini with a "Buy" rating, becoming the tenth institution to follow our company.


Rassini’s strength in operations was clearly recognized by Standard & Poor's, Fitch Ratings and Moody's, which maintained Rassini's credit ratings in 2017 as "BB," "BB-" and "BA2" respectively, emphasizing our stable outlook in an environment of volatility and reflecting our excel-lent position for future growth.

While some uncertainties in 2018 still remain, experts indicate that the industry's outlook remains solid, as light vehicle production in North America is anticipat-ed to maintain at stable levels of annual production. In 2018, we will begin work on contracts awarded in pre-vious years, corresponding to platform replacements and new businesses in North America. These contracts reflect the determination of our team and consumer trust in our reputation for technological excellence, un-

paralleled product quality and impeccable service. With this, added to the impulse generated by the growth in our range of products and the use of new materials de-signed to improve the performance of automotive ve-hicles that open an infinity of opportunities within the expected trends, we are prepared to face any challenge that presents 2018 and we will spare no effort in gener-ating value for our community.

Sincerely,

EUGENIO MADEROCEO

Mexico City, April 19, 2018


It is estimated that 2018 will provide a

positive climate for the markets we serve,

an upward trend in economic growth

and solid indicators.

92017 R A SSINI Annual Repor t

OURINDUSTRY

After seven years of sustained growth, the automotive indus-try experienced a mild 4% drop during 2017, reaching annual production of 17.1 million light vehicles. Light trucks, the most representative segment for Rassini, which is made up of pick-up trucks, SUV’s, CUV’s and Van’s, (currently using Rassini’s suspension and brake components) reached 11.4 million units, representing growth of 3% compared to 2016. Light trucks represent the most lucrative segment for the OEM’s, which strategically plan to give greater dynamism and diversification to this range of products. It is estimated that this line of vehi-cles will continue to grow in the coming years, to such a degree that 2018 has been called “The Year of Pickups.”

+ 3%Light vehicles

produced in North America

2018Pickup s

year

17.3 millionvehicles sold

in USA

+ 25%growth in heavy trucks Brazilian

production


The sales of light vehicles in the U.S. closed with a total of 17.3 million vehicles in 2017. In the third quarter of the year, it reached 18.5 million light vehicles, which repre-sented the highest monthly level in the last 12 years.

In mid-2017, the Brazilian economy began showing signs of recovery, reaching a 25% growth in the production of heavy trucks, the main market for Rassini in the region.

The sale of vehicles in Brazil for 2017 was 2.0 million units, 12% higher than in 2016, and the total production of vehi-cles was 2.6 million units, representing an increase of 21%

compared to the previous year. Industry experts estimate that vehicle production in Brazil will show annual increas-es of around 5% until 2022 when it could reach 3.3 million units, a level very close to 2013, the highest year in auto-motive production.

Industry analysts estimate that production in North Amer-ica will remain at stable levels between 2018 and 2022, when it is forecasted to oscillate at levels slightly below the 18.0 million vehicles with marginal annual growth.


During 2017, the North American automotive

industry continued with a strong performance, reaching an annual

production of 17.1 million vehicles.


COMMERCIALREVIEW

Once again, Rassini achieved higher than industry average growth in its Suspension and Braking Divisions in North America, as a result of greater penetration in the markets in which it operates.

Over the last two years, the industry has been increasingly focused on greater efficiency, emission reduction, electrification, mobility and autonomous vehicles; all these trends have a common denominator – weight reduction.

We are pleased to say that our reduced weight products that incorporate new material technology open new business opportunities for Rassini. We are currently developing the next generation of leaf springs in order to offer a new line of products with different alternative materials that use steel and/or composite, with the capacity to offer a reduction in each part from 15% to 36% of the current total weight and up to 50% reduction by 2021.

During 2017, Rassini participated in multiple technology fairs, including the Innovation and Driving Technology Expo held in Lommel, Belgium.

The Brakes Division carried out the successful launch of key customer platforms, which represented 1.7 million units per year, equivalent to US$30 million in revenue.

As part of our efforts to strengthen the Company's organic growth, we reached an agreement with the first customer outside the group for bushing manufacturing in 2017, for an approximate amount of US$4.5 million per year.


Recently, we acquired one of the most cutting-edge 3D industrial printer in

North America, and we have surpassed over

150 robots, in all our facilities

thus encouraging digitalization in all our

business processes.


OPERATIONSSUMMARY

In light of new standards aimed at improving vehicle performance for the benefit of the environment, as well as change in trends in the production of electric vehicles, Rassini defined the materials and processes for a new technology of leaf springs, including manufacturing parts of new materials for prototypes and mass production volumes. Furthermore, Rassini designed a plant to produce leaf springs with new materials, equipped with state-of-the-art technology, in anticipation of requirements that will apply in the new generations of light commercial vehicles with respect to weight reduction. We plan to invest approximately US$20 million over the next two years to complete this project.

During 2017, Rassini completed the installation of a new painting line at the Piedras Negras plant with a capacity of 5 million sheets per year, through which zinc flakes help reduce the effects of corrosion on our products, extending their lifetime to more than 15 years. In these same plants, the IBM ILOG system was implemented to optimize the pro-duction plan.

Rassini successfully started the seventh foundry line at the Brakes facility in Puebla within the pre-established schedule and at a lower cost than estimated.

It is important to mention that during 2017 Rassini posi-tioned itself to become an exponential organization through the implementation of the EXO Icon project initiatives; where more than thirty people from different areas of the company participated.

US$ 20 MMnew plant

investment

EXO IconExponential organization


FINANCIALPERFORMANCE

2017 was another record-breaking year for Rassini, continu-ing a trend of seven consecutive years of improvement in sales and profit before interest, depreciation and taxes (EBITDA). Looking forward to an environment of technological evolution, we remain focused on satisfying the demands of our custom-ers and aim to continue to be leaders in quality and innovation. Sales reached $18,104 million pesos and EBITDA $3,366 mil-lion pesos, an increase of 11% and 6%, respectively compared to the previous year.

Income before taxes, minority interest and other non-recur-ring income amounted $1,992 million pesos during 2017, 3% higher than 2016. Consolidated net income for 2017 amount-ed $1,475 million pesos, which is equivalent to $4.61 pesos per share, and represents an increase of 3% compared to the same period of 2016.

7 years of improvement in sales and EBITDA

$18,104 million pesos

in sales


Net operating cash flow reached $2,825 million pesos or an EBITDA conversion of 84% because of better operat-ing results. The consolidated cash balance reached $1,991 million pesos as of December 31, 2017. As a result of the Company's performance and in accordance with the objec-tive of generating value for its shareholders, Rassini paid a dividend of $640 million pesos during 2017.

Consolidated net debt decreased by 51% and closed the year at $591 million pesos or 0.2 times consolidated EBITDA. The interest coverage ratio at the end of the year was 11.1 times consolidated EBITDA to net interest.

At the end of 2017, Rassini’s market capitalization reached $11,310 million pesos, a decrease of 9% com-pared to 2016. This is primarily due to uncertainty gen-erated around renegotiations of NAFTA; however, several analysts believe that Rassini has solid fundamentals and

suggest a positive future outlook that supports their pur-chase recommendations. During the first half of the year, NAU Securities, an international European firm, initiated coverage of Rassini with a "Buy" rating, becoming the tenth institution to follow our company.

Rassini’s strength in operations were clearly recognized by Standard & Poor's, Fitch Ratings and Moody's, which maintained Rassini's credit ratings in 2017 as "BB," "BB-" and "BA2" respectively, highlighting a stable outlook in a quite volatile environment, which reflects the excellent position of the company with a view to a better future.

Rassini continues to have solid financial indicators and maintains an excellent generation of cash flow, which has allowed us to make prepayments to the revolving credit line in the Brakes Division, as well as paying dividends for an amount greater than the one made in 2016.

Rating agencies Standar &

Poor's

"BB"

FitchRatings

"BB-"

Moody's

"BA2"


TECHNOLOGY LEADERSHIP

AND CUSTOMERS' RECOGNITION

Throughout 2017, Rassini continued to look for opportunities around the world, focusing primarily on new technologies on products, processes, materials, software and robotics.

In the second half of 2018, North American Suspensions Division anticipates that its efforts will focus on research and development of new lightweight materials for the production of leaf springs, and will begin the delivery of its hybrid leaf springs for one of the best-selling light commercial vehicles in the world.

At our Bypasa facility in Queretaro, special emphasis has been given to the technological development of elastomers. In 2017, the following milestones were achieved:

a. Implementation of Finite Element Software (Endurica) was carried out for the purpose of predictability in fatigue. By the end of 2018, Bypasa will be one of the few companies in the world that will be able to predict with 90% assurance, the performance and life of a suspension bushing.

b. Inauguration of a new elastomer laboratory, one of the best-equipped in North America.

c. First double compound bushing was developed at the prototype level, which opens up important business opportunities.

d. A 3D carbon fiber printer was acquired.


In the Brakes Division in Puebla, the 3D printer was used to produce caliper prototypes, as well as mallets, and to extend our brake discs to the truck segment. With the use of the 3D printer, we also modified the geometry of AUDI discs so that the ventilation channels passed thermal fa-tigue tests for the European market.

Within the technology center at the Puebla facility and in collaboration with the strategic alliances established with several universities in Mexico, the U.S., Canada and Israel, advances were made in technologies focused on noise reduction or cancellation, corrosion protection and electronic brake systems.

We continue receiving consumer recognition for our su-perior quality and operational excellence. General Mo-tors awarded its “Supplier Quality Excellence Award” to our Brake Division plant in Flint, Michigan for the second consecutive year; in addition in our Suspensions Division, we were recognized by Daimler Trucks North America (DTNA) for the third year in a row, receiving the "Masters of Quality Supplier Award" by supplying the components for heavy truck brands Freightliner and Western Star.

The current climate in IoT, artificial

intelligence and autonomous cars

demands the rapid assimilation of

disruptive technology that

Rassini continues to develop.


HUMAN TALENT AND

SUSTAINABILITY Rassini is sustained by the work and commitment of more than 6,300 employees in Mexico, the U.S., Brazil, Germany and Japan. Undoubtedly, human capital represents the most valu-able asset for the Company, which is why our commitment is 100% directed towards the growth and development of our people. The quality of life, safety and health of our workforce is paramount in all business units.

We know that the integrity of an organization has a direct impact on its reputation and success. For this reason, we launched “Integrity” in 2017, a platform that works as a way to report violations of the Ethics and Conduct Code in a con-fidential, anonymous, safe and easy-to-use manner.

6,300employees

Complaintsviolations to the

Ethics and Conduct Code

43%reduction

accidents rate

100%committed to the development of

employees


Throughout the year, we continued training the leaders of tomorrow, establishing two-year programs focused on de-veloping the necessary capabilities to support the future of the Company in the North America Suspensions Divi-sion. The Brakes division continued with the diploma of Rassini Leader applied to middle managers and in addition, participated in special projects with practitioners from six different universities, resulting in the hiring of the most promising minds.

Rassini received the Cemefi Social Responsibility (ESR®) distinction for the fifth consecutive year. This award is given to companies that promote the quality of life of their employees, positively related with the society, care for the environment and manage their operations ethical-ly. Rassini was also recognized during 2017 as one of the most advanced companies in the implementation, moni-toring and continuous improvement of indicators related

environmental sustainability, social responsibility and corporate governance. According to analysis carried out by the Universidad Anáhuac del Sur, these efforts placed Rassini within the top 20 companies, thus entering into the Sustainable IPC index of the Mexican Stock Exchange.

The Brakes Division was awarded with a clean industry certification during 2017, and Rassini’s accident rate ratio was reduced by 43% compared to the previous year.

During the third quarter Rassini witnessed several natu-ral disasters that had negative consequences for people in the Americas (Texas, Florida, Puerto Rico and Mexico). Rassini supported the relief efforts by providing everyday essentials, electric generators, wheelbarrows, shovels, fuel, oil and safety equipment to affected communities in Puebla, Oaxaca, Chiapas, Mexico City in Mexico and the state of Texas in the U.S.


At Rassini, we are proud on continuing

to create day-to-day value for

our clients and communities.

27Inf orme Anual R A SSINI 2017 272017 R A SSINI Annual Repor t

DIRECTORS Antonio Madero Bracho

(Chairman)

Eugenio Madero Pinson (Vice President)

Carlos Autrey Maza Javier Bours Castelo Enrique Bours Muñoz Everardo Elizondo Almaguer James Robert Jones Shannon K. O’Neil Vicente Grau Alonso Antonio Madero Pinson Arturo Pérez Arredondo Javier Pérez Rocha Fernando Ruiz Sahagún Alberto Saavedra Olavarrieta Guillermo Francisco Vogel Hinojosa

ALTERNATE DIRECTORS

Fernando Del Castillo Elorza Alfredo Elías Ayub Juan Pablo Sánchez Kanter

SECRETARY OF THE BOARD

Juan Pablo Rosas Pérez

(I) Independent

(I)

(I)(I)(I)(I)

(I)(I)(I)(I)(I)

(I)(I)

EXECUTIVE COMMITTEE Antonio Madero Bracho President Javier Bours Castelo Eugenio Madero Pinson Fernando Ruiz Sahagún Javier Pérez Rocha ALTERNATES Antonio Madero Pinson Enrique Bours Muñoz Carlos Autrey Maza Alberto Saavedra Olavarrieta AUDIT COMMITTEE Fernando Ruiz Sahagún President Alberto Saavedra Olavarrieta Enrique Bours Muñoz CORPORATE PRACTICES COMMITTEE Javier Pérez Rocha President Javier Bours Castelo Everardo Elizondo Almaguer Antonio Madero Bracho Eugenio Madero Pinson Alberto Saavedra Olavarrieta SHARE REPURCHASE SUBCOMMITTEE Antonio Madero Bracho President Javier Bours Castelo Eugenio Madero Pinson Javier Pérez Rocha Alberto Saavedra Olavarrieta COMPENSATION SUBCOMMITTEE Javier Pérez Rocha President Javier Bours Castelo Everardo Elizondo Almaguer Antonio Madero Bracho

BOARD OFDIRECTORS

2017


CONSOLIDATEDFINANCIAL STATEMENTS 2017

Rassini, S.A.B. de C.V. and Subsidiaries

To the Stockholders' Meeting and Board of Directors ofRassini, S. A. B. de C. V. and subsidiaries

Opinion

We have audited the consolidated financial statements of Rassini, S. A. B. de C. V., and subsidiaries (“Company”) which comprise the consolidated statements of financial position as of December 31, 2017 and the related consolidated statements of comprehensive income, of changes in stockholders’ equity and of cash flows for the year then ended, and the notes to the consolidated financial state-ments, which include a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017 and its financial performance and its consolidated cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We have conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those stan-dards are further described in the Auditor’s responsibilities for the Audit of the consolidated financial statements section of our report. We are independent of the Company in accordance with the Ethic Standards of Mexican Institute of Public Accountants, A. C. together with other requirements applicable to our audit in Mexico. We have fulfilled our other ethical responsibilities in accordance with those requirements and standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these issues.

INDEPENDENT AUDITORS’ REPORT


KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Follow up on the recoverability of the book value of the long-lived assets of the Brazil Suspensions Division

As mentioned in Note 4.15 to the consolidated financial state-ments, the Company’s Management verifies the existence of impairment of long-lived assets when it identifies impairment indicators.

The economic conditions experienced in Brazil have favored the sales of the Company’s Brazil Suspensions Division, which re-sulted in an operating profit for that Division, even though the generation of actual cash flows was reduced in that period in re-lation to the expected net flow. This latter element has caused the Company to identify the existence of possible impairment indicators in that Cash Generating Unit (CGU).

We focused on the recoverability of the carrying value of the long-lived assets of the Brazil Suspensions Division, mainly due to the book value (Ps824,073 at December 31, 2017) and because the estimated recoverable value requires Management to apply significant judgement with regard to future business results.

In particular, we focused our audit efforts on the projections per-formed by the Company in relation to its business in Brazil and on the most significant assumptions, such as projected sales and operating expenses, capital expenditures, exchange rates, the discount rate used and sales prices.

We have obtained the analysis of the impairment indicators pre-pared by Management, which considered that the generation on cash flows was diminished in this year. We have evaluated and considered the projections of the future cash flows prepared by Management and the process for their determination, comparing sales amounts, operating expenses and capital expenditures with the most recent budgets approved by Management and with historical trends.

We have compared the actual results for the current year with the budget prepared in the previous year with projected figures for the current year, in order to consider whether any of the as-sumptions included in the projections may be considered very optimistic.

We have relied on valuation experts to assess the appropriate-ness of the key assumptions used by Management, including sell-ing prices, discount rates and exchange rates, comparing them with economic and industry forecasts for this business segment.

We have recalculated the discount rate, assessing the cost of capital of the Company and of comparable companies, and have considered factors specific to Brazil.

We have evaluated the sensitivity analysis of the key assump-tions considered, such as the discount rate used and the sales prices, and their relevance in the disclosures included in the Notes to the consolidated financial statements.

We discussed with Management the sensitivity calculations of the Brazil CGU and we assessed the degree to which the assump-tions would need to be modified for impairment to be required.


Additional Information

Management is responsible for the other information. The other information comprise the Annual Report presented to Comisión Nacional Bancaria y de Valores (CNBV) and the annual informa-tion presented to shareholders but does not include the consol-idated financial statements and our auditor’s report thereon, which is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial state-ments, our responsibility is to read the other information identi-fied above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge ob-tained in the audit, or otherwise appears to be materially mis-stated error for other circumstances. When we read the other information not yet received, we will issue the report required by the CNBV and if we conclude that there is a material mis-statement therein, we are required to communicate the matter to those charged with governance and, if required, describe the issue in our report.

Responsibilities of Management and those charged with Gov-ernance for the consolidated financial statements

Management is responsible for the preparation and fair presen-tation of the consolidated financial statements in accordance with IFRS and for such internal control as Management deter-mines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated fi-nancial statements

Our objectives are to obtain reasonable assurance about wheth-er the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reason-able assurance is a high level of assurance, but is not guarantee that an audit conducted in accordance with ISAs will always de-tect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reason-ably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As a part of an audit in accordance with ISA, we exercise profes-sional judgment and maintain professional skepticism through-out the audit. We also:

• Identify and assess the risks of material misstate-ment of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and ob-tain audit evidence that is sufficient and appropri-ate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control rele-vant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the ef-fectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting pol-icies used and the reasonableness of accounting estimates and related disclosures made by Man-agement.

• Conclude on the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or


conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclo-sures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activ-ities within the Company and subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Company and subsidiaries audit. We remain sole-ly responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethics requirements regarding independence, and to communicate all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the [consolidated] financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is stated below.

PricewaterhouseCoopers, S.C.

Juan Luis GarcíaAudit Partner

Mexico City, March 22, 2018


TO THE BOARD OF DIRECTORSRASSINI, S.A.B. DE C.V. and Subsidiaries


Mexico City, March 22, 2018

In compliance with the provisions of the New Mexican Securities and Exchange Law (Nueva Ley del Mercado de Valores) and in my capacity as President of the Audit Committee at Rassini, S.A.B. de C.V. (RASSINI), we hereby present this report in order that, in due course, it may be submitted to the General Ordinary Shareholders Meeting for consideration.

In order to analyze the operations of the 2017 fiscal peri-od, the Audit Committee held five meetings on the follow-ing dates: April 19th, July 19th, and October 18th, 2017, February 14th and March 22th, 2018. In addition to the committee members, these sessions were attended by the Chairman of the Board, the CEO, the external auditors, the CFO and the internal Audit Director, as well as the Rassini officers whose presence was required by the Committee. The activities and resolutions adopted were approved in the corresponding minutes.

The main issues raised in these meetings were as follows:

I. Internal Control System Assessment:

• This Committee, taking into consideration the re-

sult of the Internal Control System operational

assessments issued by the Internal Auditor, the

External Auditor and the Company s CEO, in com-

pliance with the applicable legal provisions, con-

cludes that Rassini s internal accounting control

system satisfies the Management’s control objec-

tives and offers reasonable security in all signifi-

cant aspects to prevent or detect error or irregular-ities in the normal course of operations.

II. Internal Audit Function Assessment:

• The Audit Committee has been aware of the Inter-

nal Audit area’s needs in order for this area to have

the human and material resources required to cor-

rectly perform its function. In this regard, work pro-

grams and activities during the 2017 fiscal period

were satisfactorily carried out. Furthermore, the

committee members have met with the Internal

Audit staff, in the absence of other corporate offi-

cers, to receive the information deemed necessary

for this assessment.

III. External Audit s Performance Assessment:

• The hiring terms for the external auditing services

to review the financial statements for the fiscal

year ended on December 31, 2017, were discussed,

and the fees were approved.

• The Audited Financial Statements as of December

31, 2017, were received from the External Auditor

with a clean opinion and no observations. Addi-

tionally, the work of the External Auditors, Pricewa-

terhouseCoopers S.C. and Mr. Luis García, C.P.A in

charge of said audit, were evaluated and deemed

satisfactory. Moreover, the External Auditors con-

firmed their independence.

• The Committee members have met with the ex-

ternal auditor in the absence of corporate officers,

having received their full collaboration to receive

additional information regarding pertinent issues,

when such it was requested.


IV. Financial Information:

• The company’s financial statements were dis-

cussed with the executives in charge of their

preparation and review. Additionally, we were in-

formed by the Internal Audit that there were no

observations or differences with respect to the fi-

nancial information corresponding to the quarters

ended in March, June, September and December

2017; which were approved by the Committee and

later delivered to the Mexican Stock Exchange.

• In order to prepare this report, we have listened

to the relevant corporate directors, and there has

been no difference of opinion among them.

V. CEO s report:

• The Report prepared by the CEO of the Company

on the activities for the 2017 fiscal year was re-

ceived and approved..

VI. Legal Report:

• The legal reports prepared by Rassini’s Legal De-

partment regarding the status of current matters

and litigation were received.

VII. PROPOSAL

• Based on the work performed, we hereby recom-

mend that the Board of Directors submits the Fi-

nancial Statements of Rassini for the fiscal year

ended on December 31, 2017, to the Shareholders’

Meeting for approval.

Finally, I hereby certify that during the above-mentioned period none of the operations mentioned in article 28, sec-tion III, subsections (a), (b) and (c) of the New Mexican Se-curities and Exchange Law took place.

Sincerely,

Fernando Ruiz Sahagún

CONSOLIDATEDFINANCIAL STATEMENTS 2017

Rassini, S.A.B. de C.V. and Subsidiaries

The digital version of Rassini S.A.B. de C.V. Annual Report 2017,

as well as the consolidated financial statements with their respective

notes are available in the following addresses:

2017 Annual Report (pdf)http://www.rassini.com/pdf/2017_annual_report.pdf

Consolidated Financial Statements 2017 (pdf)http://www.rassini.com/pdf/2017_Consolidated_Financial_Statements.pdf


GLOSSARY1. Aftermarket: Service part components for the resale

market.

2. Asian and European: Common auto industry nomen-clature regarding the combined brands of Toyota, Nis-san, Honda, BMW, Renault, Mercedes-Benz, and Volk-swagen, mainly.

3. Coil springs: A steel rod wound in a spiral pattern or shape. It cushions and absorbs the shock and bumps and provides easier control as the vehicle is driven.

4. CUVs (Crossover Utility Vehicle): Compact and mid-sized vehicles built on a “unibody” platform with a passenger car’s drive train and suspension but higher ground clearance.

5. Detroit Three: Common auto industry nomenclature for Fiat Chrysler Automobiles, Ford and General Mo-tors.

6. Drums: Cast iron housing bolted to the wheel that ro-tates around the brake shoes. When the shoes are ex-panded, they rub against the machined inner surface of the brake drum and exert a braking effect upon the wheel to slow or stop the vehicle.

7. Ductile Iron: This iron is obtained by adding magne-sium to melted iron, carbon deposits as spheroids graphite and is more ductile, resistant and elastic than gray iron.

8. Elastomers: Rubber components or subcomponents used to reduce noise and vibration.

9. Foundry: Chemical process through which scrap steel and ferroalloys are casted to obtain a piece of iron cast.

10. Gray iron: Ferrous material with carbon in flake graph-ite which foster hardness properties to resist high wear and vibration damping. Ideal for the friction area of a rotor.

11. Leaf spring: A suspension system component de-signed to cushion and absorb shocks and bumps and to keep a vehicle level on turns. There are two main types of leaf springs:

a. Multi-leaf spring: Two or more flat spring steel plates bent in an arch, usually with curled ends to allow mounting to the frame. These springs are normally used in cargo truck suspensions and pickups because they have the unique capability of being designed to change rate as a function of suspension travel.

b. Parabolic leaf spring: They get their name from the mid span change in thickness which is built into each plate. This changing cross section al-lows the material to maintain constant strength which is not possible in a flat plate multileaf de-sign. The result is that a parabolic spring may be up to 30% lighter than an equivalent flat-plate leaf spring design.

12. Light Trucks: Automotive segment made up of SUVs, CUVs, vans and pick-ups.

13. Light Vehicles: Automotive segment that includes cars and light trucks.

14. Machining: The piece of grey iron cast is physically treated and refined.

15. Platform: Primary technical components (suspension, transmission, brake system) shared by a family of mo-tor vehicles.

16. Rotor: A cast grey iron brake system component that operates in conjunction with the wheels. When the brake is applied, the caliper is actuated forcing the friction material against the spinning disc imparting a braking force.

17. SUV (Sport Utility Vehicle): A recreational vehicle, such as an all-terrain 4x4.

18. Van: Light vehicle with rear-end leaf springs or coil springs for transporting cargo or passengers.


INFORMATION FORINVESTORS AND MEDIA

HEADQUARTERS Av. Pedregal 24 - 7th Floor

Molino del Rey, 11040 Mexico City, Mexico

T.: 52 (55) 5229-5800

STOCK: Bolsa Mexicana de Valores (BMV)

Ticker RASSINI

SHARES ISSUEDRASSINI A 178,175,772

RASSINI CPO 70,983,776 * * Each CPO represents one B share and one C share

AUDITORS

PricewaterhouseCoopers Mariano Escobedo 573

Rincón del Bosque 11580 Mexico City

T.: 52 (55) 5263-6047 F: 52 (55) 5263-6010

LEGAL DEPARTMENT

Juan Pablo Rosas Pérez T.: 52 (55) 5229-5885 [email protected]


2017 ANNUAL REPORT

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