|
Series “A” Shares
|
Series “B” Shares
|
Series “D” Shares
|
Series “L” Shares
|
Shares Outstanding
|
CPOs Outstanding
|
As of January 1, 2018
|
116,787.7
|
53,935.8
|
85,806.8
|
85,806.8
|
342,337.1
|
2,451.6
|
Repurchased
(1)
|
(636.3)
|
(559.9)
|
(890.7)
|
(890.7)
|
(2,977.6)
|
(25.5)
|
Acquired
(2)
|
(1,074.2)
|
(945.3)
|
(1,503.8)
|
(1,503.8)
|
(5,027.1)
|
(42.9)
|
Released
(2)
|
1,130.0
|
685.5
|
1,090.6
|
1,090.6
|
3,996.7
|
31.2
|
As of December 31, 2018
|
116,207.2
|
53,116.1
|
84,502.9
|
84,502.9
|
338,329.1
|
2,414.4
|
|
Series “A” Shares
|
Series “B” Shares
|
Series “D” Shares
|
Series “L” Shares
|
Shares Outstanding
|
CPOs Outstanding
|
As of January 1, 2017
|
116,283.3
|
53,800.8
|
85,592.1
|
85,592.1
|
341,268.3
|
2,445.5
|
Repurchased
(1)
|
(135.3)
|
(119.1)
|
(189.6)
|
(189.6)
|
(633.6)
|
(5.4)
|
Acquired
(2)
|
(698.1)
|
(614.4)
|
(977.4)
|
(977.4)
|
(3,267.3)
|
(27.9)
|
Released
(2)
|
1,337.8
|
868.5
|
1,381.7
|
1,381.7
|
4,969.7
|
39.4
|
As of December 31, 2017
|
116,787.7
|
53,935.8
|
85,806.8
|
85,806.8
|
342,337.1
|
2,451.6
|
(1)
|
In connection with a share repurchase program.
|
(2)
|
By a Company’s trust in connection with the Company’s Long-Term Retention Plan.
|
Long-term Retention Plan
During the year ended December 31, 2018, the trust for the Long-term Retention Plan (i) acquired 5,027.1 million shares of the
Company in the form of 42.9 million CPOs, in the amount of Ps.2,784,505 and (ii) released 3,645.7 million shares in the form of 31.2 million CPOs, and 351 million Series “A” Shares, in the aggregate amount of Ps.2,032,634. During the years
ended December 31, 2018 and 2017, the Company made a funding for acquisition of shares in the aggregate amount of Ps.1,100,000 and Ps.2,500,000 respectively to the trust held for the Company’s Long-Term Retention Plan.
The Group accrued in equity attributable to stockholders of the Company a share-based compensation expense of Ps.1,305,999 and
Ps.1,468,337 for the years ended December 31, 2018 and 2017, respectively, which amount was reflected in consolidated operating income as administrative expense.
As of December 31, 2018 and 2017, the Company’s legal reserve amounted to Ps.2,139,007, and was classified into retained earnings
in equity attributable to stockholders of the Company.
In April 2017, the Company’s stockholders approved the payment of a dividend of Ps.0.35 per CPO and Ps.0.002991452991 per share of
Series “A”, “B”, “D” and “L” Shares, not in the form of a CPO, which was paid in cash in May 2017, in the aggregate amount of Ps.1,084,192.
In April 2018, the Company’s stockholders approved the payment of a dividend of Ps.0.35 per CPO and Ps.0.002991452991 per share
of Series “A”, “B”, “D” and “L” Shares, not in the form of a CPO, which was paid in cash in May 2018, in the aggregate amount of Ps.1,068,868.
|
12.
|
Transactions with Related Parties
|
The balances of receivables and payables between the Group and related parties as of December 31, 2018 and 2017, were as follows:
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
Current receivables:
|
|
|
|
|
|
|
UHI, including Univision
(1)
|
|
Ps.
|
954,754
|
|
|
Ps.
|
657,601
|
|
Operadora de Centros de Espectáculos, S.A de C.V.
|
|
|
35,590
|
|
|
|
41,080
|
|
Televisa CJ Grand, S.A. de C.V. (“Televisa CJ Grand”)
|
|
|
-
|
|
|
|
77,991
|
|
Editorial Clío, Libros y Videos, S.A. de C.V.
|
|
|
6,399
|
|
|
|
23,045
|
|
Other
|
|
|
81,584
|
|
|
|
60,503
|
|
|
|
Ps.
|
1,078,327
|
|
|
Ps.
|
860,220
|
|
Current payable:
|
|
|
|
|
|
|
|
|
UHI, including Univision
(1)
|
|
Ps.
|
614,388
|
|
|
Ps.
|
964,959
|
|
GTAC
|
|
|
28,488
|
|
|
|
17,754
|
|
DirecTV
|
|
|
70,187
|
|
|
|
6,713
|
|
Other
|
|
|
1,387
|
|
|
|
2,043
|
|
|
|
Ps.
|
714,450
|
|
|
Ps.
|
991,469
|
|
(1)
|
As of December 31, 2018 and 2017, the Group recognized a provision in the amount of Ps.614,388 and Ps.964,959, respectively, associated with a
consulting arrangement entered into by the Group, UHI and an entity controlled by the chairman of the Board of Directors of UHI, by which upon consummation of a qualified initial public offering of the shares of UHI or an alternative
exit plan for the main current investors in UHI, the Group would pay the entity a portion of a defined appreciation in excess of certain preferred returns and performance thresholds of UHI. As of December 31, 2018 and 2017,
receivables from UHI related primarily to the PLA amounted to Ps.954,754 and Ps.657,601, respectively.
|
In the year ended December 31, 2018 and 2017, royalty revenue from Univision amounted to Ps.7,383,540 and Ps.5,916,147,
respectively.
|
13.
|
Other Income or Expense, Net
|
Other income (expense) for the year ended December 31, 2018 and 2017 is analyzed as follows:
|
|
December 31, 2018
|
|
|
December 31, 2017
|
|
Gain on dispositions of investments
(1)
|
|
Ps.
|
3,553,463
|
|
|
Ps.
|
(295,194
|
)
|
Donations
|
|
|
(56,019
|
)
|
|
|
(159,605
|
)
|
Legal and financial advisory professional services
(2)
|
|
|
(212,527
|
)
|
|
|
(269,385
|
)
|
Loss on disposition of property and equipment
|
|
|
(268,532
|
)
|
|
|
(118,817
|
)
|
Deferred compensation
|
|
|
(251,787
|
)
|
|
|
(302,801
|
)
|
Dismissal severance expense
(3)
|
|
|
(530,560
|
)
|
|
|
(984,816
|
)
|
Impairment adjustment
(4)
|
|
|
(135,750
|
)
|
|
|
(89,597
|
)
|
Other taxes paid by Sky in Central America
|
|
|
(148,271
|
)
|
|
|
-
|
|
Other expense, net
(5)
|
|
|
(387,733
|
)
|
|
|
(233,357
|
)
|
|
|
Ps.
|
1,562,284
|
|
|
Ps.
|
(2,453,572
|
)
|
(1)
|
Includes in December 31, 2018, a gain of Ps.3,513,829 on disposition of a 19.9% equity in Imagina, and a gain of Ps.85,000 on disposition of a
50% equity in Televisa CJ Grand, a joint venture for a home shopping channel in Mexico (see Notes 3 and 5).
|
(2)
|
Includes primarily legal, financial advisory and professional services in connection with certain litigation and other matters.
|
(3)
|
Includes severance expense in connection with dismissals of personnel, as part of a cost reduction plan.
|
(4)
|
In 2018 and 2017, the Group recognized an impairment adjustment in connection with certain trademarks in its Publishing business.
|
(5)
|
Certain 2017 figures previously reported as part of operating results of the Group´s Other Businesses segment in the net amount of Ps.67,238
and related to a Publishing business in Argentina and an online lottery business in Mexico, were reclassified for comparison purposes to other expense, net, as the businesses were disposed by the Group in the fourth quarter of 2017
(see Note 17).
|
Finance (expense) income for the years ended December 31, 2018 and 2017, included:
|
|
December 31, 2018
|
|
|
December 31, 2017
(1)
|
|
Interest expense
|
|
Ps.
|
(9,707,324
|
)
|
|
Ps.
|
(9,245,671
|
)
|
Other finance expense, net
(3)
|
|
|
(859,642
|
)
|
|
|
-
|
|
Finance expense
|
|
|
(10,566,966
|
)
|
|
|
(9,245,671
|
)
|
Interest income
(4)
|
|
|
1,567,100
|
|
|
|
1,481,413
|
|
Foreign Exchange gain, net
(2)
|
|
|
220,149
|
|
|
|
768,923
|
|
Other finance income
|
|
|
-
|
|
|
|
903,204
|
|
Finance income
|
|
|
1,787,249
|
|
|
|
3,153,540
|
|
Finance expense, net
|
|
Ps.
|
(8,779,717
|
)
|
|
Ps.
|
(6,092,131
|
)
|
(1)
|
The Company restated, for comparison purposes, certain amounts previously reported as of December 31, 2017, in connection with the initial recognition of IFRS 9, as
if the accounting change had been applied beginning on January 1, 2017 (see Note 2).
|
(2)
|
Foreign exchange gain or loss, net, included (i) foreign exchange gain or loss resulted primarily from the appreciation or depreciation of the Mexican peso against
the U.S. dollar on the Group’s U.S. dollar-denominated monetary liability position, excluding long-term debt designated as a hedging instrument of the Group’s investments in UHI and Open Ended Fund, during the years ended
December 31, 2018 and 2017; and (ii) foreign exchange gain or loss resulted primarily from the appreciation or depreciation of the Mexican peso against the U.S. dollar on the Group’s U.S. dollar-denominated monetary asset
position during the years ended December 31, 2018 and 2017 (see Note 8). The exchange rate of the Mexican peso against the U.S dollar was of Ps.19.6730 and Ps.19.7051 as of December 31, 2018 and 2017, respectively.
|
(3)
|
In 2018 and 2017, other finance income or expense, net, included gain or loss from derivative financial instruments.
|
(4)
|
In 2018 and 2017, this line item included primarily gains from cash equivalents.
|
The effective income tax rate for the years ended December 31, 2018 and 2017 was 37% and 39%, respectively.
|
16.
|
Earnings per CPO/Share
|
At December 31, 2018 and 2017 the weighted average of outstanding total shares, CPOs and Series “A”, Series “B”, Series “D” and
Series “L” Shares (not in the form of CPO units), was as follows (in thousands):
|
December 31, 2018
|
December 31, 2017
|
Total Shares
|
340,445,277
|
344,032,527
|
CPOs
|
2,433,270
|
2,466,848
|
Shares not in the form of CPO units:
|
|
|
Series “A” Shares
|
55,752,068
|
55,410,684
|
Series “B” Shares
|
187
|
187
|
Series “D” Shares
|
239
|
239
|
Series “L” Shares
|
239
|
239
|
Basic earnings per CPO and per each Series “A”, Series “B”, Series “D” and Series “L” Share (not in the form of a CPO unit) for
the year ended December 31, 2018 and 2017, are presented as follows:
|
|
2018
|
|
|
2017
|
|
|
|
Per CPO
|
|
|
Per Shares(*)
|
|
|
Per CPO
|
|
|
Per Shares(*)
|
|
Net income attributable to stockholders of the Company
|
|
Ps.
|
2.07
|
|
|
Ps.
|
.02
|
|
|
Ps.
|
1.36
|
|
|
Ps.
|
0.01
|
|
(*) Series “A”, “B”, “D” and “L” Shares not in the form of CPO units.
Diluted earnings per CPO and per Share attributable to stockholders of the Company:
|
December 31, 2018
|
December 31, 2017
|
Total Shares
|
358,998,776
|
362,373,163
|
CPOs
|
2,544,568
|
2,573,409
|
Shares not in the form of CPO units:
|
|
|
Series “A” Shares
|
58,926,613
|
58,926,613
|
Series “B” Shares
|
2,357,208
|
2,357,208
|
Series “D” Shares
|
239
|
239
|
Series “L” Shares
|
239
|
239
|
Diluted earnings per CPO and per each Series “A”, Series “B”, Series “D” and Series “L” Share (not in the form of a CPO unit) for
the year ended December 31, 2018 and 2017, are presented as follows:
|
|
2018
|
|
|
2017
|
|
|
|
Per CPO
|
|
|
Per Shares(*)
|
|
|
Per CPO
|
|
|
Per Shares(*)
|
|
Net income attributable to stockholders of the Company
|
|
Ps.
|
1.96
|
|
|
Ps.
|
.02
|
|
|
Ps.
|
1.29
|
|
|
Ps.
|
0.01
|
|
(*) Series “A”, “B”, “D” and “L” Shares not in the form of CPO units.
The table below presents information by segment and a reconciliation to consolidated total for the years ended December 31, 2018
and 2017:
|
|
Total Revenues
|
|
|
Intersegment Revenues
|
|
|
Consolidated Revenues
|
|
|
Segment Income
|
|
|
|
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Content
|
|
$
|
39,223,668
|
|
|
$
|
3,162,091
|
|
|
$
|
36,061,577
|
|
|
$
|
14,855,109
|
|
|
|
|
Sky
|
|
|
22,002,216
|
|
|
|
420,979
|
|
|
|
21,581,237
|
|
|
|
9,767,329
|
|
|
|
|
Cable
|
|
|
36,233,042
|
|
|
|
560,186
|
|
|
|
35,672,856
|
|
|
|
15,302,500
|
|
|
|
|
Other Businesses
|
|
|
8,635,498
|
|
|
|
668,835
|
|
|
|
7,966,663
|
|
|
|
754,285
|
|
|
|
|
Segment total
|
|
|
106,094,424
|
|
|
|
4,812,091
|
|
|
|
101,282,333
|
|
|
|
40,679,223
|
|
|
|
|
Reconciliation to consolidated amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations and corporate expenses
|
|
|
(4,812,091
|
)
|
|
|
(4,812,091
|
)
|
|
|
-
|
|
|
|
(2,154,747
|
)
|
|
|
|
Depreciation and amortization
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,834,202
|
)
|
|
|
|
Consolidated total before other expense
|
|
|
101,282,333
|
|
|
|
-
|
|
|
|
101,282,333
|
|
|
|
18,690,274
|
|
|
(1)
|
|
|
Other income, net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,562,284
|
|
|
|
|
|
Consolidated total
|
|
$
|
101,282,333
|
|
|
$
|
-
|
|
|
$
|
101,282,333
|
|
|
$
|
20,252,558
|
|
|
(2)
|
|
|
|
|
Total Revenues
|
|
|
Intersegment Revenues
|
|
|
Consolidated Revenues
|
|
|
Segment Income
|
|
|
|
|
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Content
|
|
$
|
33,997,220
|
|
|
$
|
2,445,233
|
|
|
$
|
31,551,987
|
|
|
$
|
12,825,259
|
|
|
|
|
Sky
|
|
|
22,196,629
|
|
|
|
127,129
|
|
|
|
22,069,500
|
|
|
|
10,106,623
|
|
|
|
|
Cable
|
|
|
33,048,310
|
|
|
|
225,755
|
|
|
|
32,822,555
|
|
|
|
14,034,796
|
|
|
|
|
Other Businesses
(3)
|
|
|
7,688,272
|
|
|
|
546,077
|
|
|
|
7,142,195
|
|
|
|
525,835
|
|
|
|
|
Segment total
|
|
|
96,930,431
|
|
|
|
3,344,194
|
|
|
|
93,586,237
|
|
|
|
37,492,513
|
|
|
|
|
Reconciliation to consolidated amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations and corporate expenses
|
|
|
(3,344,194
|
)
|
|
|
(3,344,194
|
)
|
|
|
-
|
|
|
|
(2,290,974
|
)
|
|
|
|
Depreciation and amortization
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,504,765
|
)
|
|
|
|
Consolidated total before other expense
|
|
|
93,586,237
|
|
|
|
-
|
|
|
|
93,586,237
|
|
|
|
16,696,774
|
|
|
(1)
|
|
|
Other expense, net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,453,572
|
)
|
|
|
|
|
Consolidated total
|
|
$
|
93,586,237
|
|
|
$
|
-
|
|
|
$
|
93,586,237
|
|
|
$
|
14,243,202
|
|
|
(2)
|
|
|
(1)
|
This amount represents operating income before other expense, net.
|
(2)
|
This amount represents consolidated operating income.
|
(3)
|
Certain 2017 figures for the year ended December 31, 2017, previously reported as part of operating results of the Group´s Other Businesses
segment in the net amount of Ps.67,238 and related to a Publishing business in Argentina and an online lottery business in Mexico, were reclassified for comparison purposes to other expense, net, as the businesses were disposed of or
suspended by the Group in the fourth quarter of 2017 (see Note 13).
|
Disaggregation of Total Revenues
The table below present total revenues for each reportable segment disaggregated by major service/product lines and primary
geographical market for the years ended December 31, 2018 and 2017:
|
|
Domestic
|
|
|
Export
|
|
|
Abroad
|
|
|
Total
|
|
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
Content:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
Ps.
|
20,932,533
|
|
|
Ps.
|
222,369
|
|
|
Ps.
|
-
|
|
|
Ps.
|
21,154,902
|
|
Network Subscription Revenue
|
|
|
3,500,375
|
|
|
|
1,313,907
|
|
|
|
-
|
|
|
|
4,814,282
|
|
Licensing and Syndication
|
|
|
1,437,081
|
|
|
|
11,817,403
|
|
|
|
-
|
|
|
|
13,254,484
|
|
Sky:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTH Broadcast Satellite TV
|
|
|
19,478,307
|
|
|
|
-
|
|
|
|
1,374,849
|
|
|
|
20,853,156
|
|
Advertising
|
|
|
968,853
|
|
|
|
-
|
|
|
|
-
|
|
|
|
968,853
|
|
Pay-Per-View
|
|
|
152,129
|
|
|
|
-
|
|
|
|
28,078
|
|
|
|
180,207
|
|
Cable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital TV Service
|
|
|
14,281,536
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,281,536
|
|
Advertising
|
|
|
1,260,117
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,260,117
|
|
Broadband Services
|
|
|
13,034,172
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,034,172
|
|
Telephony
|
|
|
2,588,767
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,588,767
|
|
Other Services
|
|
|
544,347
|
|
|
|
-
|
|
|
|
-
|
|
|
|
544,347
|
|
Enterprise Operations
|
|
|
4,361,586
|
|
|
|
-
|
|
|
|
162,517
|
|
|
|
4,524,103
|
|
Other Businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
|
2,676,384
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,676,384
|
|
Soccer, Sports and Show Business Promotion
|
|
|
1,639,073
|
|
|
|
145,462
|
|
|
|
-
|
|
|
|
1,784,535
|
|
Publishing - Magazines
|
|
|
550,777
|
|
|
|
-
|
|
|
|
104,281
|
|
|
|
655,058
|
|
Publishing - Advertising
|
|
|
482,943
|
|
|
|
-
|
|
|
|
181,514
|
|
|
|
664,457
|
|
Publishing Distribution
|
|
|
270,624
|
|
|
|
-
|
|
|
|
40,148
|
|
|
|
310,772
|
|
Radio - Advertising
|
|
|
920,009
|
|
|
|
-
|
|
|
|
-
|
|
|
|
920,009
|
|
Feature Film Production and Distribution
|
|
|
735,928
|
|
|
|
3,569
|
|
|
|
884,786
|
|
|
|
1,624,283
|
|
Segment total
|
|
|
89,815,541
|
|
|
|
13,502,710
|
|
|
|
2,776,173
|
|
|
|
106,094,424
|
|
Intersegment eliminations
|
|
|
(4,803,974
|
)
|
|
|
-
|
|
|
|
(8,117
|
)
|
|
|
(4,812,091
|
)
|
Consolidated total revenues
|
|
Ps.
|
85,011,567
|
|
|
Ps.
|
13,502,710
|
|
|
Ps.
|
2,768,056
|
|
|
Ps.
|
101,282,333
|
|
|
|
Domestic
|
|
|
Export
|
|
|
Abroad
|
|
|
Total
|
|
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Content:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
Ps.
|
20,366,184
|
|
|
Ps.
|
262,734
|
|
|
Ps.
|
90,164
|
|
|
Ps.
|
20,719,082
|
|
Network Subscription Revenue
|
|
|
2,704,998
|
|
|
|
1,353,090
|
|
|
|
-
|
|
|
|
4,058,088
|
|
Licensing and Syndication
|
|
|
949,440
|
|
|
|
8,270,610
|
|
|
|
-
|
|
|
|
9,220,050
|
|
Sky:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTH Broadcast Satellite TV
|
|
|
19,810,392
|
|
|
|
-
|
|
|
|
1,534,681
|
|
|
|
21,345,073
|
|
Advertising
|
|
|
651,689
|
|
|
|
-
|
|
|
|
-
|
|
|
|
651,689
|
|
Pay-Per-View
|
|
|
199,867
|
|
|
|
-
|
|
|
|
-
|
|
|
|
199,867
|
|
Cable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital TV Service
|
|
|
12,978,715
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,978,715
|
|
Advertising
|
|
|
817,330
|
|
|
|
-
|
|
|
|
-
|
|
|
|
817,330
|
|
Broadband Services
|
|
|
11,357,448
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,357,448
|
|
Telephony
|
|
|
2,944,263
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,944,263
|
|
Other Services
|
|
|
522,003
|
|
|
|
-
|
|
|
|
-
|
|
|
|
522,003
|
|
Enterprise Operations
|
|
|
4,173,146
|
|
|
|
-
|
|
|
|
255,405
|
|
|
|
4,428,551
|
|
Other Businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
|
2,532,001
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,532,001
|
|
Soccer, Sports and Show Business Promotion
|
|
|
1,447,731
|
|
|
|
118,424
|
|
|
|
-
|
|
|
|
1,566,155
|
|
Publishing - Magazines
|
|
|
460,045
|
|
|
|
-
|
|
|
|
163,732
|
|
|
|
623,777
|
|
Publishing - Advertising
|
|
|
614,478
|
|
|
|
-
|
|
|
|
291,052
|
|
|
|
905,530
|
|
Publishing Distribution
|
|
|
286,500
|
|
|
|
-
|
|
|
|
61,190
|
|
|
|
347,690
|
|
Radio - Advertising
|
|
|
851,140
|
|
|
|
-
|
|
|
|
-
|
|
|
|
851,140
|
|
Feature Film Production and Distribution
|
|
|
647,730
|
|
|
|
45,250
|
|
|
|
168,999
|
|
|
|
861,979
|
|
Segment total
|
|
|
84,315,100
|
|
|
|
10,050,108
|
|
|
|
2,565,223
|
|
|
|
96,930,431
|
|
Intersegment eliminations
|
|
|
(3,326,363
|
)
|
|
|
-
|
|
|
|
(17,831
|
)
|
|
|
(3,344,194
|
)
|
Consolidated total revenues
|
|
Ps.
|
80,988,737
|
|
|
Ps.
|
10,050,108
|
|
|
Ps.
|
2,547,392
|
|
|
Ps.
|
93,586,237
|
|
Seasonality of Operations
The Group’s results of operations are seasonal. The Group typically recognizes a large percentage of its consolidated net sales
(principally advertising) in the fourth quarter in connection with the holiday shopping season. In 2017 and 2016, the Group recognized 27.7% and 28.4%, respectively, of its annual consolidated net sales in the fourth quarter of the year. The
Group’s costs, in contrast to its revenues, are more evenly incurred throughout the year and generally do not correlate to the amount of advertising sales.
The consolidated net income attributable to stockholders of the Company for the four quarters in the year
ended December 31, 2018, is presented as follows:
Quarter
|
Quarterly
|
Accumulated
|
1st/18
|
677,558
|
677,558
|
2nd/18
|
4,297,372
|
4,974,930
|
3rd/18
|
978,011
|
5,952,941
|
4th/18
|
56,473
|
6,009,414
|
On March 28, 2018, the Company announced that it was notified by the IFT of a resolution by which this authority indicates that it
does not have elements to determine that the Company has substantial power in the market of restricted television and audio services. In compliance with the guidelines issued by the Mexican Supreme Court of Justice in a resolution dated
February 7, 2018, this new resolution leaves without effect IFT’s prior determination of substantial power of February 24, 2017. With this resolution, any proceeding initiated by IFT under this file, to impose asymmetric measures on the Company
and its subsidiaries related to the determination of substantial power is left without effect, and the measures directly provided for such purposes in current regulations are not to be applied.
There are several legal actions and claims pending against the Group, which are filed in the ordinary course of business. In the
opinion of the Company’s management, none of these actions and claims is expected to have a material adverse effect on the Group’s financial statements as a whole; however, the Company’s management is unable to predict the outcome of any of
these legal actions and claims.
- - - - - - - - -
Description of significant events and transactions
See Note 3 of the Disclosure of interim financial reporting.
Description of accounting policies and methods of computation followed in interim financial statements
Accounting Policies
The principal accounting policies followed by the Group and used in the preparation of its annual consolidated financial
statements as of December 31, 2017, and where applicable, of its interim condensed consolidated financial statements of 2018, are summarized below.
(a)
|
Basis of Presentation
|
The consolidated financial statements of the Group as of December 31, 2017 and 2016, and for the years ended December 31, 2017, 2016 and
2015, are presented in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”). IFRSs comprise: (i) International Financial Reporting Standards (“IFRS”); (ii)
International Accounting Standards (“IAS”); (iii) IFRS Interpretations Committee (“IFRIC”) Interpretations; and (iv) Standing Interpretations Committee (“SIC”) Interpretations.
The consolidated financial statements have been prepared on a historical cost basis, except for the measurement at fair value of
temporary investments, derivative financial instruments, available-for-sale financial assets, equity financial instruments, and share-based payments, as described below.
The preparation of consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. Changes in assumptions may have a significant impact on the consolidated financial statements in the period the assumptions
changed. Management believes that the underlying assumptions are appropriate. The areas involving a higher degree of judgment or complexity, or areas where estimates and assumptions are significant to the Group’s financial statements are
disclosed in Note 5 to these consolidated financial statements.
These consolidated financial statements were authorized for issuance on April 6, 2018, by the Group’s Principal Financial Officer.
The financial statements of the Group are prepared on a consolidated basis and include the assets, liabilities and results of
operations of all companies in which the Company has a controlling interest (subsidiaries). All intercompany balances and transactions have been eliminated from the consolidated financial statements.
Subsidiaries
Subsidiaries are all entities over which the Company has control. The Company controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effects of potential voting rights that are currently exercisable or convertible are
considered when assessing whether or not the Company controls another entity. The subsidiaries are consolidated from the date on which control is obtained by the Company and cease to consolidate from the date on which said control is lost.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition
of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The
Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of
non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in income or loss.
Changes in Ownership Interests in Subsidiaries Without Change of Control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that
is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the interest acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses
on disposals of non-controlling interests are also recorded in equity
Loss of Control of a Subsidiary
When the Company ceases to have control of a subsidiary, any retained interest in the entity is remeasured to its fair value at
the date when control is lost, with the change in carrying amount recognized in income or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture
or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This means that amounts
previously recognized in other comprehensive income are reclassified to income or loss.
At December 31, 2017, 2016 and 2015, the main direct and indirect subsidiaries of the Company were as follows:
Entity
|
Company’s
Ownership
Interest
(1)
|
Business
Segment
(2)
|
Grupo Telesistema, S.A. de C.V. and subsidiaries
|
100%
|
Content and Other Businesses
|
Televisa, S.A. de C.V. (“Televisa”)
(3)
|
100%
|
Content
|
G.Televisa-D, S.A. de C.V.
(3)
|
100%
|
Content
|
Multimedia Telecom, S.A. de C.V. (“Multimedia Telecom”) and subsidiary
(4)
|
100%
|
Content
|
Innova, S. de R.L. de C.V. (“Innova”) and subsidiaries (collectively, “Sky”)
(5)
|
58.7%
|
Sky
|
Corporativo Vasco de Quiroga, S.A. de C.V. (“CVQ”) and subsidiaries
(6)
|
100%
|
Cable and Sky
|
Empresas Cablevisión, S.A.B. de C.V. and subsidiaries (collectively, “Empresas Cablevisión”)
(7)
|
51%
|
Cable
|
Subsidiaries engaged in the Cablemás business (collectively, “Cablemás”)
(8)
|
100%
|
Cable
|
Televisión Internacional, S.A. de C.V. and subsidiaries (collectively, “TVI”)
(9)
|
100%
|
Cable
|
Cablestar, S.A. de C.V. and subsidiaries (collectively, “Bestel”)
(10)
|
66.1%
|
Cable
|
Arretis, S.A.P.I. de C.V. and subsidiaries (collectively, “Cablecom”)
(11)
|
100%
|
Cable
|
Subsidiaries engaged in the Telecable business (collectively, “Telecable”)
(12)
|
100%
|
Cable
|
Editorial Televisa, S.A. de C.V. and subsidiaries
|
100%
|
Other Businesses
|
Grupo Distribuidoras Intermex, S.A. de C.V. and subsidiaries
|
100%
|
Other Businesses
|
Sistema Radiópolis, S.A. de C.V. (“Radiópolis”) and subsidiaries
(13)
|
50%
|
Other Businesses
|
Televisa Juegos, S.A. de C.V. and subsidiaries
|
100%
|
Other Businesses
|
Villacezán, S.A. de C.V. (“Villacezán”) and subsidiaries
(14)
|
100%
|
Other Businesses
|
(1)
|
Percentage of equity interest directly or indirectly held by the Company.
|
(2)
|
See Note 25 for a description of each of the Group’s business segments.
|
(3)
|
Televisa and G.Televisa-D, S.A. de C.V. are direct subsidiaries of Grupo Telesistema, S.A. de C.V.
|
(4)
|
Multimedia Telecom and its direct subsidiary, Comunicaciones Tieren, S.A. de C.V. (“Tieren”), are wholly-owned
subsidiaries of the Company through which it owns shares of the capital stock of UHI and maintains an investment in Warrants that are exercisable for shares of common stock of UHI. As of December 31, 2017 and 2016, Multimedia Telecom
and Tieren have investments representing 95.3% and 4.7%, respectively, of the Group’s aggregate investment in shares of common stock and Warrants issued by UHI (see Notes 9, 10 and 19).
|
(5)
|
Innova is an indirect majority-owned subsidiary of the Company and a direct majority-owned subsidiary of Innova
Holdings, S. de R.L. de C.V. (“Innova Holdings”). Sky is a satellite television provider in Mexico, Central America and the Dominican Republic. Although the Company holds a majority of Innova’s equity and designates a majority of the
members of Innova’s Board of Directors, the non-controlling interest has certain governance and veto rights in Innova, including the right to block certain transactions between the companies in the Group and Sky. These veto rights are
protective in nature and do not affect decisions about relevant business activities of Innova.
|
(6)
|
CVQ is a direct subsidiary of the Company and the parent company of Empresas Cablevisión, Cablemás, TVI, Bestel,
Cablecom, Telecable and Innova. In September 2016, Factum Más Telecom, S.A. de C.V., a former direct subsidiary of the Company and the parent company of Innova Holdings and Innova was merged into CVQ. At the consolidated level, this
merger had no effect (see Note 3).
|
(7)
|
Empresas Cablevisión, S.A.B. de C.V. is a direct majority-owned subsidiary of CVQ. Through April 2015, Empresas
Cablevisión, S.A.B. de C.V. was directly owned by Editora Factum, S.A. de C.V., a direct subsidiary of the Company that was merged into CVQ in May 2015. At the consolidated level, the merger had no effect.
|
(8)
|
The Cablemás subsidiaries are directly and indirectly owned by CVQ. In January 2015, some Cablemás subsidiaries were
directly owned by the Company, and some other subsidiaries were directly owned by TTelecom H, S.A.P.I. de C.V. (“TTelecom”), a former direct subsidiary of the Company, which was merged into CVQ in July 2015. The Cablemás subsidiaries
directly owned by the Company were acquired by a direct subsidiary of CVQ in the second half of 2015. In June 2016, three former subsidiaries of Grupo Cable TV, S.A. de C.V. were merged into a Cablemás subsidiary. At the consolidated
level, the mergers had no effect.
|
(9)
|
Televisión Internacional, S.A. de C.V. is a direct subsidiary of CVQ. Through February 2016, the Company had a 50%
ownership interest in TVI, and consolidated this subsidiary because it appointed the majority of the members of the Board of Directors of TVI. In March 2016, the Company acquired the remaining 50% non-controlling interest in TVI (see
Note 3).
|
(10)
|
Cablestar, S.A. de C.V. is an indirect majority-owned subsidiary of CVQ and Empresas Cablevisión, S.A.B. de C.V.
|
(11)
|
Through the third quarter of 2016, Grupo Cable TV, S.A. de C.V. (“Grupo Cable TV”) was an indirect subsidiary of CVQ.
In June 2016, three former subsidiaries of Grupo Cable TV were merged into a Cablemás subsidiary. In the fourth quarter of 2016, Grupo Cable TV merged into Arretis, S.A.P.I. de C.V., a direct subsidiary of CVQ. At the consolidated
level, the mergers had no effect.
|
(12)
|
The Telecable subsidiaries are directly owned by CVQ as a result of the merger of TTelecom into CVQ in July 2015.
TTelecom was a wholly-owned subsidiary of the Company through which the Company acquired Telecable in January 2015 (see Note 3).
|
(13)
|
Radiópolis is a direct subsidiary of the Company. The Company controls Radiópolis as it has the right to appoint the
majority of the members of the Board of Directors of Radiópolis.
|
(14)
|
Villacezán is an indirect subsidiary of Grupo Telesistema, S.A. de C.V. Certain subsidiaries of the Company in the
Other Businesses segment, owned by TTelecom, were acquired by Villacezán in the third quarter of 2015, following the merger described above of TTelecom into CVQ.
|
The Group’s Content, Sky and Cable segments, as well as the Group’s Radio business, which is reported in the Other Businesses segment,
require governmental concessions and special authorizations for the provision of broadcasting and telecommunications services in Mexico. Such concessions are granted by the Mexican Institute of Telecommunications (Instituto Federal de
Telecomunicaciones or “IFT”) for a fixed term, subject to renewal in accordance with the Mexican Telecommunications and Broadcasting Law (“Ley Federal de Telecomunicaciones y Radiodifusión” or “LFTR”).
Renewal of concessions for the Content segment (Broadcasting) and the Radio business require, among others: (i) to request such renewal
to IFT prior to the last fifth period of the fixed term of the related concession; (ii) to be in compliance with the concession holder’s obligations under the LFTR, other applicable regulations, and the concession title; (iii) a declaration by
IFT that there is no public interest in recovering the spectrum granted under the related concession; and (iv) the acceptance by the concession holder of any new conditions for renewing the concession as set forth by IFT, including the payment
of a related fee. IFT shall resolve within the year following the presentation of the request, if there is public interest in recovering the spectrum granted under the related concession, in which case it will notify its determination and
proceed with the termination of the concession at the end of its fixed term. If IFT determines that there is no public interest in recovering the spectrum, it will grant the requested extension within 180 business days, provided that the
concessionaire accepts, in advance, the new conditions set by IFT, which will include the payment of the fee refered to above. Such fee will be determined by IFT for the relevant concessions, considering the following elements: (i) the
frequency band; (ii) the amount of spectrum; (iii) coverage of the frequency band; (iv) domestic and international benchmark regarding the market value of frequency bands; and (v) upon request of IFT, an opinion issued by the Ministry of
Finance and Public Credit of IFT´s proposal for calculation of fee.
Renewal of concessions for the Sky and Cable segments require, among others: (i) to request its renewal to IFT prior to the last fifth
period of the fixed term of the related concession; (ii) to be in compliance with the concession holder’s obligations under the LFTR, other applicable regulations, and the concession title; and (iii) the acceptance by the concession holder of
any new conditions for renewing the concession as set forth by IFT. IFT shall resolve any request for renewal of the telecommunications concessions within 180 business days of its request. Failure to respond within such period of time shall be
interpreted as if the request for renewal has been granted.
The regulations of the broadcasting and the telecommunications concessions (including satellite pay TV) establish that at the end of the
concession, the frequency bands or spectrum attached to the services provided in the concessions shall return to the Mexican government. In addition, at the end of the concession, the Mexican government will have the preferential right to
acquire infrastructure, equipment and other goods directly used in the provision of the concession. If the Mexican government were to exercise its right to acquire infrastructure, equipment and other goods, it would be required to pay a price
that is equivalent to a formula that is similar to the fair value. To the knowledge of the Company’s management, no spectrum granted for broadcasting services in Mexico has been recovered by the Mexican government in at least the past three
decades for public interest reasons. However, the Company’s management is unable to predict the outcome of any action by IFT in this regard. In addition, these assets, by themselves, would not be enough to immediately begin broadcasting or
offering satellite pay TV services or telecommunications services, as no content producing assets or other equipment necessary to operate the business would be included.
Also, the Group’s Gaming business, which is reported in the Other Businesses segment, requires a permit granted by the Mexican Federal
Government for a fixed term, subject to renewal in accordance with Mexican law. Additionally, the Group’s Sky businesses in Central America and the Dominican Republic require concessions or permits granted by local regulatory authorities for a
fixed term, subject to renewal in accordance with local laws.
The accounting guidelines provided by IFRIC 12 Service Concession Arrangements are not applicable to the Group due primarily to the
following factors: (i) the Mexican government does not substantially control the Group’s infrastructure, what services are provided with the infrastructure and the price at which such services are offered; (ii) the Group’s broadcasting service
does not constitute a public service as per the definition in IFRIC 12; and (iii) the Group is unable to divide its infrastructure among the public (telephony and possibly Internet services) and non-public (pay TV) service components.
At December 31, 2017, the expiration dates of the Group’s concessions and permits were as follows:
Segments
|
Expiration Dates
|
|
|
Content (broadcasting concessions)
|
In 2021
|
Sky
|
Various from 2018 to 2027
|
Cable
|
Various from 2018 to 2046
|
Other Businesses:
|
|
Radio
(1)
|
Various from 2019 to 2037
|
Gaming
|
In 2030
|
(1)
|
Concessions for six Radio stations in the cities of San Luis Potosí, Guadalajara and Monterrey expired in 2015 and 2016, and
were renewed in 2017 by the IFT. Concessions for nine Radio stations in the cities of Mexico City, Guadalajara and Veracruz expired in 2016, and were renewed by the IFT that year. The costs paid by the Group for renewal of these
concessions in 2017 and 2016 amounted to an aggregate of Ps.37,848 and Ps.111,636, respectively. In addition, IFT granted in 2017 two new concessions to the Group in Ensenada and Puerto Vallarta. The cost paid by the Group for
obtaining these concessions amounted to an aggregate of Ps.85,486. The amounts for renewal and obtaining new concessions were recognized in consolidated other intangible assets, and will be amortized in a period of 20 years by using
the straight-line method (see Note 12).
|
The concessions or permits held by the Group are not subject to any significant pricing regulations in the ordinary course of business.
(c)
|
Investments in Associates and Joint Ventures
|
Associates are those entities over which the Group has significant influence but not control, generally those entities with a
shareholding of between 20% and 50% of the voting rights. Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Joint ventures are
those joint arrangements where the Group exercises joint control with other stockholder or more stockholders without exercising control individually, and have rights to the net assets of the joint arrangements. Investments in associates and
joint ventures are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the net
assets of the investee after the date of acquisition.
The Group’s investments in associates include an equity interest in UHI represented by approximately 10% of the outstanding total shares
of UHI as of December 31, 2017 and 2016 (see Notes 3, 9 and 10).
The Group recognizes its share of losses of an associate or a joint venture up to the amount of its initial investment, subsequent
capital contributions and long-term loans, or beyond that when guaranteed commitments have been made by the Group in respect of obligations incurred by investees, but not in excess of such guarantees. If an associate or a joint venture for
which the Group had recognized a share of losses up to the amount of its guarantees generates net income in the future, the Group would not recognize its share of this net income until the Group first recognizes its share of previously
unrecognized losses.
If the Group’s share of losses of an associate or a joint venture equals or exceeds its interest in the investee, the Group
discontinues recognizing its share of further losses. The interest in an associate or a joint venture is the carrying amount of the investment in the investee under the equity method together with any other long-term investment that, in
substance, form part of the Group’s net investment in the investee. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate or joint venture.
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s executive officers
(“chief operating decision makers”) who are responsible for allocating resources and assessing performance for each of the Group’s operating segments.
(e)
|
Foreign Currency Translation
|
Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“functional currency”). The presentation and functional currency of the Group’s consolidated financial statements is the Mexican peso, which is used for compliance with its legal and tax
obligations.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or measurement where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in the income statement as part of finance income or expense, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analyzed
between exchange differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortized cost are recognized in income or loss,
and other changes in carrying amount are recognized in other comprehensive income or loss.
Translation of Foreign Operations
The financial statements of the Group’s foreign entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows: (a) assets and liabilities are translated at the closing rate at the date of the statement of financial position; (b) income and expenses are translated at average exchange rates (unless
this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting
translation differences are recognized in other comprehensive income or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate. Translation differences arising are recognized in other comprehensive income or loss.
Assets and liabilities of non-Mexican subsidiaries that use the Mexican Peso as a functional currency are translated into Mexican Pesos
by utilizing the exchange rate of the statement of financial position date for monetary assets and liabilities, and historical exchange rates for non-monetary items, with the related adjustment included in the consolidated statement of income
as finance income or expense.
The Group has designated as an effective hedge of foreign exchange exposure, a portion of the outstanding principal amount of its U.S.
dollar denominated long-term debt in connection with its net investment in shares of common stock of UHI, which amounted to U.S.$413.3 million (Ps.8,144,843) and U.S.$350.7 million (Ps.7,236,587) as of December 31, 2017 and 2016, respectively.
Consequently, any foreign exchange gain or loss attributable to this designated hedging long-term debt is credited or charged directly to other comprehensive income or loss as a cumulative result from foreign currency translation (see Note 10).
The Group has designated a portion of its U.S. dollar denominated long-term debt as a fair value hedge of foreign exchange
exposure related to its investment in UHI Warrants and the initial investment in Open Ended Fund. A portion of the outstanding principal amount of its U.S. dollar denominated long-term debt (hedging instrument, disclosed in the line “Long-term
debt, net of current portion” of the consolidated statement of financial position) is hedging its investment in Warrants exercisable for common stock of UHI and the initial investment in Open Ended Fund (hedged items), which amounted to
Ps.36,395,183 (U.S.$1,847.0 million) and Ps.3,546,918 (U.S.$180.0 million) and Ps.38,298,606 (U.S.$1,855.9 million) and Ps.3,817,586 (U.S.$180.0 million) as of December 31, 2017 and 2016, respectively. The other changes in fair value of the
Warrants are recognized in other comprehensive income or loss. Consequently, any foreign currency gain or loss attributable to these designated hedged Warrants is recognized within foreign exchange gain or loss in the consolidated statement of
income, along with the recognition in the same line item of any foreign exchange gain or loss of the designated hedging instrument long-term debt (see Notes 9, 13 and 17).
(f)
|
Cash and Cash Equivalents and Temporary Investments
|
Cash and cash equivalents consist of cash on hand and all highly liquid investments with an original maturity of three months or less at
the date of acquisition. Cash is stated at nominal value and cash equivalents are measured at fair value, and the changes in the fair value are recognized in the income statement.
Temporary investments consist of short-term investments in securities, including without limitation debt with a maturity of over three
months and up to one year at the date of acquisition, stock and other financial instruments, or a combination thereof, as well as current maturities of noncurrent held-to-maturity securities. Temporary investments are measured at fair value
with changes in fair value recognized in finance income in the consolidated income statement, except the current maturities of non-current held-to-maturity securities which are measured at amortized cost.
As of December 31, 2017 and 2016, cash equivalents and temporary investments primarily consisted of fixed short-term deposits and
corporate fixed income securities denominated in U.S. dollars and Mexican pesos, with an average yield of approximately 0.87% for U.S. dollar deposits and 6.72% for Mexican peso deposits in 2017, and approximately 0.36% for U.S. dollar deposits
and 4.06% for Mexican peso deposits in 2016.
(g)
|
Transmission Rights and Programming
|
Programming is comprised of programs, literary works, production talent advances and films.
Transmission rights and literary works are valued at the lesser of acquisition cost and net realizable value. Programs and films are
valued at the lesser of production cost, which consists of direct production costs and production overhead, and net realizable value. Payments for production talent advances are initially capitalized and subsequently included as direct or
indirect costs of program production. Transmission rights are recognized from the point of which the legally enforceable license period begins. Until the license term commences and the programming rights are available, payments made are
recognized as prepayments.
The Group’s policy is to capitalize the production costs of programs which benefit more than one annual period and amortize them over
the expected period of future program revenues based on the Company’s historical revenue patterns for similar productions.
Transmission rights, programs, literary works, production talent advances and films are recorded at acquisition or production cost. Cost
of sales is calculated for the month in which such transmission rights, programs, literary works, production talent advances and films are matched with related revenues.
Transmission rights are amortized over the lives of the contracts. Transmission rights in perpetuity are amortized on a
straight-line basis over the period of the expected benefit as determined by past experience, but not exceeding 25 years.
Inventories of paper, magazines, materials and supplies for maintenance of technical equipment are recorded at the lower of cost
or its net realization value. The net realization value is the estimated selling price in the normal course of business, less estimated costs to conduct the sale. Cost is determined using the average cost method.
The Group classifies its financial assets in the following categories: loans and receivables, held-to-maturity investments,
financial assets at fair value through income or loss and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial
assets at initial recognition.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Loans and receivables are initially recognized at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, with changes in carrying value recognized in the income statement in the
line which most appropriately reflects the nature of the item or transaction. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non- current assets.
The Group’s loans and receivables are presented as “trade notes and accounts receivable”, “other accounts and notes receivable” and “due from related parties” in the consolidated statement of financial position (see Note 7).
Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that
the Group’s management has the positive intention and ability to hold to maturity. After initial measurement, held-to-maturity investments are measured at amortized cost using the effective interest rate method, less impairment, if any. Any
gain or loss arising from these investments is included in finance income or loss in the consolidated statement of income. Held-to-maturity investments are included in investments in financial instruments, except for those with maturities less
than 12 months from the end of the reporting period, which are classified as temporary investments (see Note 9).
Available-for-sale Financial Assets
Available-for-sale financial assets are non-derivative financial assets that are not classified as loans and receivables,
held-to-maturity investments or financial assets at fair value through income or loss, and include debt securities and equity instruments. Debt securities in this category are those that are intended to be held for an indefinite period of time
and that may be sold in response to needs for liquidity or in response to changes in the market conditions. Equity instruments in this category are those of companies in which the Group does not exercise joint control nor significant influence,
but intent to hold for an indefinite term, and are neither classified as held for trading nor designated at fair value through income. After initial measurement, available-for-sale assets are measured at fair value with unrealized gains or
losses recognized as other comprehensive income or loss until the investment is derecognized or the investment is determined to be impaired, at which time the cumulative gain or loss is recognized in the consolidated statement of income either
in other finance income or expense (debt securities) or other income or expense (equity instruments). Interest earned whilst holding available-for-sale financial assets is reported as interest income using the effective interest rate method
(see Notes 9 and 14).
Financial Assets at Fair Value through Income
Financial assets at fair value through income are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled
within 12 months, otherwise they are classified as non-current.
Impairment of Financial Assets
The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective and other-than- temporary evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset. If it is determined that a financial asset or group of financial assets have sustained a decline other than temporary in their value a charge is recognized in income in the related period.
For financial assets classified as held-to-maturity the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.
Impairment of Financial Assets Recognized at Amortized Cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial
assets measured at amortized cost is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after
the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Offsetting of Financial Instruments
Financial assets are offset against financial liabilities and the net amount reported in the consolidated statement of financial
position if, and only when the Group: (i) currently has a legally enforceable right to set off the recognized amounts; and (ii) intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
(j)
|
Property, Plant and Equipment
|
Property, plant and equipment are recorded at acquisition cost.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to income
or loss during the financial period in which they are incurred.
Land is not depreciated. Depreciation of property, plant and equipment is based upon the carrying value of the assets in use and is
computed using the straight-line method over the estimated useful lives of the asset, as follows:
|
Estimated
Useful lives
|
|
|
Buildings
|
20-65 years
|
Building improvements
|
5-20 years
|
Technical equipment
|
3-30 years
|
Satellite transponders
|
15 years
|
Furniture and fixtures
|
3-15 years
|
Transportation equipment
|
4-8 years
|
Computer equipment
|
3-6 years
|
Leasehold improvements
|
5-30 years
|
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within other
income or expense in the consolidated income statement.
Intangible assets are recognized at acquisition cost. Intangible assets acquired through business combinations are recorded at
fair value at the date of acquisition. Intangible assets with indefinite useful lives, which include goodwill, trademarks and concessions, are not amortized, and subsequently recognized at cost less accumulated impairment losses. Intangible
assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, as follows:
|
Estimated
Useful lives
|
|
|
Trademarks
|
4 years
|
Licenses
|
3-14 years
|
Subscriber lists
|
4-10 years
|
Other intangible assets
|
3-20 years
|
Trademarks
The Group determines its trademarks to have an indefinite life when they are expected to generate net cash inflows for the Group
indefinitely. Additionally, the Group considers that there are no legal, regulatory or contractual provisions that limit the useful lives of trademarks.
In the third quarter of 2015, the Company’s management evaluated trademarks in its Cable segment to determine whether events and
circumstances continue to support an indefinite useful life for these intangible assets. As a result of such evaluation, the Company identified certain businesses and locations that began migrating from a current trademark to an internally
developed trademark between 2015 and 2016, in connection with enhanced service packages offered to current and new subscribers, and estimated that this migration process will take approximately four years. Accordingly, beginning in the third
quarter of 2015, the Group changed the useful life assessment from indefinite to finite for acquired trademarks in certain businesses and locations in its Cable segment, and began to amortize on a straight line basis the related carrying value
of these trademarks when the migration to the new trademark started using an estimated useful life of four years. The Group has not capitalized any amounts associated with internally developed trademarks.
Concessions
The Group defined concessions to have an indefinite life due to the fact that the Group has a history of renewing its concessions upon
expiration, has maintained the concessions granted by the Mexican government, and has no foreseeable limit to the period over which the assets are expected to generate net cash inflows. In addition, the Group is committed to continue to invest
for the long term to extend the period over which the broadcasting and telecommunications concessions are expected to continue to provide economic benefits.
Any fees paid by the Group to regulatory authorities for concessions acquired or renewed are determined to have finite useful lives and
are amortized on a straight-live basis over the fixed term of the related concession.
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest
in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units
(“CGUs”), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized as an expense and may be subsequently reversed under
certain circumstances.
(l)
|
Impairment of Long-lived Assets
|
The Group reviews for impairment the carrying amounts of its long-lived assets, tangible and intangible, including goodwill (see
Note 12), at least once a year, or whenever events or changes in business circumstances indicate that these carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. To determine whether an impairment exists, the carrying value of the reporting unit is compared with its recoverable
amount. Fair value estimates are based on quoted market values in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including discounted value of
estimated future cash flows, market multiples or third-party appraisal valuations.
(m)
|
Trade Accounts Payable and Accrued Expenses
|
Trade accounts payable and accrued expenses are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Trade accounts payable and accrued expenses are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade accounts payable and accrued expenses are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method.
Trade accounts payable and accrued expenses are presented as a single item of consolidated current liabilities in the
consolidated statements of financial position as of December 31, 2017 and 2016.
Debt is recognized initially at fair value, net of transaction costs incurred. Debt is subsequently carried at amortized cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the debt using the effective interest method.
Fees paid on the establishment of debt facilities are recognized as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as
a pre-payment for liquidity services and amortized over the period of the facility to which it relates.
Current portion of long-term debt and interest payable are presented as a single line item of consolidated current liabilities in the
consolidated statements of financial position as of December 31, 2017 and 2016.
Debt early redemption costs are recognized as finance expense in the consolidated statement of income.
(o)
|
Customer Deposits and Advances
|
Customer deposit and advance agreements for advertising services provide that customers receive prices that are fixed for the
contract period for advertising time in the Group’s platforms based on rates established by the Group. Such rates vary depending on when the advertisement is made, including the season, hour, day and type of programming.
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that
an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provisions due to passage of time is recognized as interest expense.
The capital stock and other equity accounts include the effect of restatement through December 31, 1997, determined by applying the
change in the Mexican National Consumer Price Index between the dates capital was contributed or net results were generated and December 31, 1997, the date through which the Mexican economy was considered hyperinflationary under the guidelines
of the IFRSs. The restatement represented the amount required to maintain the contributions and accumulated results in Mexican Pesos in purchasing power as of December 31, 1997.
Where any company in the Group purchases shares of the Company’s capital stock (shares repurchased), the consideration paid,
including any directly attributable incremental costs is deducted from equity attributable to stockholders of the Company until the shares are cancelled, reissued, or sold. Where such shares repurchased are subsequently reissued or sold, any
consideration received, net of any directly attributable incremental transaction costs, is included in equity attributable to stockholders of the Company.
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services
provided. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities,
as described below. The Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
The Group derives the majority of its revenues from media and entertainment-related business activities both in Mexico and
internationally. Revenues are recognized when the service is provided and collection is probable. A summary of revenue recognition policies by significant activity is as follows:
•
|
Advertising revenues, including deposits and advances from customers for future advertising, are recognized at the time the
advertising services are rendered.
|
•
|
Revenues from program services for network subscription and licensed and syndicated television programs are recognized when
the programs are sold and become available for broadcast.
|
•
|
Sky program service revenues, including advances from customers for future direct-to-home (“DTH”) program services, are
recognized at the time the service is provided.
|
•
|
Cable television, internet and telephone subscription, and pay-per-view and installation fees are recognized in the period in
which the services are rendered.
|
•
|
Revenues from other telecommunications and data services are recognized in the period in which these services are provided.
Other telecommunications services include long distance and local telephony, as well as leasing and maintenance of telecommunications facilities.
|
•
|
Revenues from magazine subscriptions are initially deferred and recognized proportionately as products are delivered to
subscribers. Revenues from the sales of magazines are recognized on the date of circulation of delivered merchandise, net of a provision for estimated returns.
|
•
|
Revenues from publishing distribution are recognized upon distribution of the products.
|
•
|
Revenues from attendance to soccer games, including revenues from advance ticket sales for soccer games and other promotional
events, are recognized on the date of the relevant event.
|
•
|
Motion picture production and distribution revenues are recognized as the films are exhibited.
|
•
|
Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts
paid to winning patrons.
|
In respect to sales of multiple products or services, the Group evaluates whether it has fair value evidence for each deliverable
in the transaction. For example, the Group sells cable television, internet and telephone subscription to subscribers in a bundled package at a rate lower than if the subscriber purchases each product on an individual basis. Subscription
revenues received from such subscribers are allocated to each product in a pro-rata manner based on the fair value of each of the respective services.
Interest income is recognized using the effective interest method. When a loan and receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and
receivables is recognized using the original effective interest rate.
Pension and Seniority Premium Obligations
Plans exist for pensions and seniority premiums (post-employment benefits), for most of the Group’s employees funded through irrevocable
trusts. Increases or decreases in the consolidated liability or asset for post-employment benefits are based upon actuarial calculations. Contributions to the trusts are determined in accordance with actuarial estimates of funding requirements.
Payments of post-employment benefits are made by the trust administrators. The defined benefit obligation is calculated annually using the projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension
obligation.
Remeasurement of post-employment benefit obligations related to experience adjustments and changes in actuarial assumptions of post-
employment benefits are recognized in the period in which they are incurred as part of other comprehensive income or loss in consolidated equity.
Profit Sharing
The employees’ profit sharing required to be paid under certain circumstances in Mexico, is recognized as a direct benefit to
employees in the consolidated statements of income in the period in which it is incurred.
Termination Benefits
Termination benefits, which mainly represent severance payments by law, are recorded in the consolidated statement of income. The
Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that involves the payment of
termination benefits.
The income tax expense for the period comprises current and deferred income tax. Income tax is recognized in the consolidated statement
of income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the income tax is also recognized in other comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial
position date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns and establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable income or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax
liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against
which the temporary differences and tax loss carryforwards can be utilized. For this purpose, the Group takes into consideration all available positive and negative evidence, including factors such as market conditions, industry analysis,
projected taxable income, carryforward periods, current tax structure, potential changes or adjustments in tax structure, and future reversals of existing temporary differences.
Deferred income tax liabilities are provided on taxable temporary differences associated with investments in subsidiaries, joint
ventures and associates, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred income tax assets are provided on deductible temporary differences associated with investments in subsidiaries, joint ventures and associates, to the extent that it is probable that there will be sufficient taxable income
against which to utilize the benefit of the temporary difference and it is expected to reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention
to settle the balances on a net basis.
(v)
|
Derivative Financial Instruments
|
The Group recognizes derivative financial instruments as either assets or liabilities in the consolidated statements of financial
position and measures such instruments at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on the intended use of the derivative financial instrument and the resulting designation. For a
derivative financial instrument designated as a cash flow hedge, the effective portion of such derivative’s gain or loss is initially reported as a component of other comprehensive income or loss and subsequently reclassified into income when
the hedged exposure affects income. The ineffective portion of the gain or loss is reported in income immediately. For a derivative financial instrument designated as a fair value hedge, the gain or loss is recognized in income in the period of
change together with the offsetting loss or gain on the hedged item attributed to the risk being hedged. When a hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument that has been
recognized in other comprehensive income remains in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to
income or loss. For derivative financial instruments that are not designated as accounting hedges, changes in fair value are recognized in income in the period of change. During the years ended December 31, 2017, 2016 and 2015, certain
derivative financial instruments qualified for hedge accounting (see Note 14).
Comprehensive income for the period includes the net income for the period presented in the consolidated statement of income plus
other comprehensive income for the period reflected in the consolidated statement of comprehensive income.
(x)
|
Share-based Payment Agreements
|
Key officers and employees of certain subsidiaries of the Company have entered into agreements for the conditional sale of
Company’s shares under the Company’s Long-Term Retention Plan. The share-based compensation expense is measured at fair value at the date the equity benefits are conditionally sold to these officers and employees, and is recognized as a charge
to consolidated income (administrative expense) over the vesting period (see Note 16). The Group recognized a share-based compensation expense of Ps.1,489,884, Ps.1,410,492 and Ps.1,199,489 for the years ended December 31, 2017, 2016 and 2015,
respectively, of which Ps.1,468,337, Ps.1,392,534 and Ps.1,184,524 was credited in consolidated stockholders’ equity for those years, respectively.
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement conveys the right to use the asset.
Leases of property, plant and equipment other assets where the Group holds substantially all the risks and rewards of ownership are
classified as finance leases. Finance lease assets are capitalized at the commencement of the lease term at the lower of the present value of the minimum lease payments or the fair value of the lease asset. The obligations relating to finance
leases, net of finance charges in respect of future periods, are recognized as liabilities. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.
Leases where a significant portion of the risks and rewards are held by the lessor are classified as operating leases. Rentals are
charged to the income statement on a straight line basis over the period of the lease.
Leasehold improvements are depreciated at the lesser of its useful life or contract term.
(z)
|
New and Amended IFRSs
|
Below is a list of the new and amended standards that have been issued by the IASB and are effective for annual periods starting on or
after January 1, 2018. The Company’s management does not expect the pronouncements effective for annual periods beginning on January 1, 2018 to have a material impact on the Group’s consolidated financial statements (see Note 27). The Company’s
management is in the process of assessing the potential impact those pronouncements effective for annual periods beginning on or after January 1, 2019 will have on the Group’s consolidated financial statements. Some amendments and improvements
to certain IFRSs became effective on January 1, 2017, and they did not have any significant impact on the Group’s consolidated financial statements.
New or Amended Standard
|
Title of the Standard
|
Effective for Annual
Periods Beginning
On or After
|
Amendments to IFRS 10 and IAS 28
(1)
|
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
|
Postponed
|
IFRS 15
|
Revenue from Contracts with Customers
|
January 1, 2018
|
Amendments to IFRS 15
|
Effective Date of IFRS 15
|
January 1, 2018
|
Amendments to IFRS 15
|
Clarifications to IFRS 15 Revenue from Contracts with Customers
|
January 1, 2018
|
IFRS 9
|
Financial Instruments
|
January 1, 2018
|
Amendments to IAS 40
(2)
|
Transfers of Investment Property
|
January 1, 2018
|
IFRIC 22
(1)
|
Foreign Currency Transactions and Advance Consideration
|
January 1, 2018
|
Amendments to IFRS 2
(1)
|
Classification and Measurement of Share-based Payment Transactions
|
January 1, 2018
|
IFRS 16
|
Leases
|
January 1, 2019
|
Amendments to IFRS 4
(2)
|
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
|
No earlier than 2020
|
IFRS 17
(2)
|
Insurance Contracts
|
January 1, 2021
|
IFRIC 23
(1)
|
Uncertainty over Income Tax Treatments
|
January 1, 2019
|
Practice Statement 2
|
Making Materiality Judgements
|
September 14, 2017
|
Annual Improvements
(1)
|
Annual Improvements to IFRS Standards 2015-2017 Cycle
|
January 1, 2019
|
Amendments to IAS 28
(1)
|
Long-term Interests in Associates and Joint Ventures
|
January 1, 2019
|
Amendments to IFRS 9
(1)
|
Prepayment Features with Negative Compensation
|
January 1, 2019
|
Amendments to IAS 19
(1)
|
Plan Amendment, Curtailment or Settlement
|
January 1, 2019
|
(1)
This new or amended standard is not expected to have a significant impact on the Group’s consolidated financial
statements.
(2)
This new or amended standard is not expected to be applicable to the Group’s consolidated financial statements.
Amendments to IFRS 10 and IAS 28
Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture
were issued in September 2014 and address and acknowledge inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or
contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involved a business (whether it is housed in a subsidiary or
not). A partial gain or loss is recognized when a transaction involved assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015, the IASB postponed the effective date of these amendments
indefinitely pending the outcome of its research project on the equity method of accounting.
IFRS 15
Revenue from Contracts with Customers
(“IFRS 15”) was issued in May 2014, and amended in September 2015 and April 2016, and is effective for annual periods beginning on or after January 1, 2018. IFRS 15 provides a single, comprehensive revenue recognition model for all contracts
with customers to improve comparability within industries, across industries, and across capital markets. This standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized.
The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. Upon adoption, IFRS 15
can be applied either on a fully retrospective basis, requiring the restatement of the comparative periods presented in the consolidated financial statements, or with the cumulative retrospective impact of IFRS 15 applied as an adjustment to
equity on the date of adoption; when the latter approach is applied it is necessary to disclose the impact of IFRS 15 on each line item in the consolidated financial statements in the reporting period. See Note 27 for a discussion of the impact
of adopting IFRS 15 in the Group’s consolidated financial statements as of January 1, 2018.
Amendments to IFRS 15
Clarifications to IFRS 15
Revenue from Contracts with Customers
were issued in April 2016. These amendments clarify how to: (i) identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; (ii) determine whether a
company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and (iii) determine whether the revenue from granting a license should be recognized at a point in time
or over time. In addition to the clarifications, these amendments include two additional reliefs to reduce cost and complexity for a company when it first applies IFRS 15. The amendments have the same effective date as IFRS 15.
IFRS 9
Financial Instruments
(“IFRS 9”)
addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010 with some amendments issued in 2011. It replaces the parts of IAS 39
Financial Instruments: Recognition and Measurement
(“IAS 39”) that relate to the classification and measurement of financial instruments. IFRS 9 requires
financial assets to be classified into two measurement categories: those measured at amortized cost and those measured at fair value. The determination is made at initial recognition. The basis of classification depends on the entity’s business
model for managing its financial instruments and the contractual cash flow characteristics of the financial asset. The guidance in IAS 39 on impairment of financial assets and hedge accounting continues to apply. For financial liabilities, this
standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other
comprehensive income rather than the income statement, unless this creates an accounting mismatch. See Note 27 for a discussion of the impact of adopting IFRS 9 on the Group’s consolidated financial statements as of January 1, 2018.
Amendments to IAS 40
Investment Property
were
issued in December 2016 and clarify the requirements on transfers to, or from, investment property.
IFRIC 22
Foreign Currency Transactions and Advance
Consideration
was issued in December 2016 and addresses the exchange rate to use in transactions that involve advance consideration paid or received in a foreign currency.
Amendments to IFRS 2
Classification and Measurement
of Share-based Payment Transactions
were issued in June 2016 and clarify how to account for certain types of share-based payment transactions.
IFRS 16
Leases
(“IFRS 16”) was issued in
January 2016 and replaces IAS 17
Leases
. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. The
major change introduced by IFRS 16 is that leases will be brought onto the companies’ statements of financial position, increasing the visibility of their assets and liabilities. IFRS 16 removes the classification of leases as either operating
leases or finance leases for the lessee, treating all long-term leases as finance leases. Short-term leases (less than 12 months) and leases of low-value assets are exempt from the requirements. Early application of IFRS 16 is permitted as long
as the IFRS 15
Revenue from Contracts with Customers
is also applied. The Group will adopt IFRS 16 in the first quarter of 2019. The Company’s management
continues to evaluate the impact that IFRS 16 will have on the Group’s consolidated financial statements and disclosures. While the Company’s management is not yet in a position to assess the full impact of the application of the new standard,
the Group expects that the impact of recording lease liabilities and the corresponding right-to-use assets will increase the Group’s consolidated total assets and liabilities primarily in connection with its non-cancellable lease and payment
commitments for the use of real estate property and satellite transponders (see Note 26), with a minimal effect on its consolidated equity. The Company’s management has already started with the analysis and assessment of any changes to be made
in the Group’s accounting policies for long-term lease agreements as a lessee, as well as the design and implementation of effective controls over financial reporting in the different business segments of the Group, in connection with the
measurement and disclosures required by IFRS 16.
Amendments to IFRS 4
Applying IFRS 9 Financial
Instruments with IFRS 4 Insurance Contracts
were issued in September 2016 and address concerns arising from implementing the new financial instruments Standard, IFRS 9, before implementing the replacement Standard that the Board is
developing for IFRS 4. These concerns include temporary volatility in reported results.
IFRS 17
Insurance Contracts
(“IFRS 17”) was
issued in May 2017 and supersedes IFRS 4
Insurance Contracts
(“IFRS 4”), which has given companies dispensation to carry on accounting for insurance
contracts using national accounting standards, resulting in a multitude of different approaches. IFRS 17 establishes principles for the recognition, measurement, presentation and disclosures of insurance contracts issued. It also requires
similar principles to be applied to reinsurance contracts with discretionary participation features issued. IFRS 17 solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent
manner. Under the provisions of IFRS 17, insurance obligations will be accounted for using current values instead of historical cost. IFRS 17 is effective on January 1, 2021, and earlier application is permitted.
IFRIC 23
Uncertainty over Income Tax Treatments
(“IFRIC 23”) clarifies how to apply the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. When there is uncertainty over income tax treatments, IFRIC 23 addresses: (a) whether
an entity considers uncertain tax treatments separately; (b) the assumptions an entity makes about the examination of tax treatments; (c) how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and
tax rates, including an entity’s consideration of whether it is probable that a taxation authority will accept an uncertain tax treatment; and (d) how an entity considers changes in facts and circumstances.
Practice Statement IFRS 2
Making Materiality
Judgements
was issued in September 2017. This Practice Statement provides guidance on how to use judgement when selecting information to provide in financial statements prepared applying IFRSs. It is a non-mandatory standard companies
are permitted to apply to financial statements prepared any time after September 14, 2017.
Annual Improvements to IFRSs 2015-2017 Cycle
were published in December 2017 and set out amendments to certain IFRSs. These amendments result from proposals made during the IASB’s Annual Improvements process, which provides a vehicle for making non-urgent but necessary amendments to
IFRSs. The IFRSs amended and the topics addressed by these amendments are as follows:
Standard
|
Subject of Amendment
|
|
|
IFRS 3
Business
Combinations
|
Previously held interest in a joint operation.
|
IFRS 11
Joint
Arrangements
|
Previously held interest in a joint operation.
|
IAS 12
Income Taxes
|
Income tax consequences of payments on financial instruments classified as equity.
|
IAS 23
Borrowing Costs
|
Borrowing costs eligible for capitalization.
|
Amendments to IAS 28
Long-term Interests in
Associates and Joint Ventures
were issued in October 2017. The amendments clarify that a company applies IFRS 9
Financial Instruments
to
long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture. An entity shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1,
2019, with certain exceptions. Earlier application is permitted.
Amendments to IFRS 9
Prepayment Features with
Negative Compensation
were issued in October 2017. These amendments enable entities to measure at amortized cost some prepayable financial assets with so-called negative compensation. An entity shall apply these amendments
retrospectively for annual reporting periods beginning on or after January 1, 2019, with certain exceptions. Earlier application is permitted.
Amendments to IAS 19
Employee Benefits
(“IAS 19”) were issued in February 2018. When a change to a defined benefit plan (amendment, curtailment or settlement) takes place, IAS 19 requires a company to remeasure its net defined benefit liability or asset. These amendments require a
company to use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the change to the plan. Until now, IAS 19 did not specify how to determine these
expenses for the period after the change to the plan. By requiring the use of updated assumptions, the amendments are expected to provide useful information to users of financial statements. An entity shall apply these amendments to plan
amendments, curtailments or settlements occurring on or after the beginning of the first annual reporting period that begins on or after January 1, 2019. Earlier application is permitted.
Dividends paid, ordinary shares:
|
[8]
1,068,868,000
|
Dividends paid, other shares:
|
0
|
Dividends paid, ordinary shares per share:
|
[9]
0.002991453
|
Dividends paid, other shares per share:
|
0
|
[1] ↑
Current assets – Other current non-financial assets: As of December 31, 2018 and 2017, includes transmission rights and programming for
Ps.7,785,723 thousands and Ps.5,890,866 thousands, respectively.
[2] ↑
Non-current assets – Other non-current non-financial assets: As of December 31, 2018 and 2017, includes transmission rights and programming
for Ps.9,229,815 thousands and Ps.8,158,521 thousands, respectively.
[3] ↑
Total basic earnings (loss) per share: This information is related to earnings per CPO. The CPO are the securities traded in the Mexican
Stock Exchange.
[4] ↑
Total diluted earnings (loss) per share: This information is related to earnings per diluted CPO.
[5] ↑
Breakdown of credits:
The Notes due 2021 and 2022 were contracted at a variable rate and the Notes due 2020 and 2027 were contracted at a fixed rate.
The "Senior Notes" due in 2037, 2043, 2025, 2032, 2040, 2045, 2026 and 2046 were contracted at a fixed rate.
The exchange rates for the credits denominated in foreign currency were as follows:
Ps. 19.6730 pesos per US dollar
Bank loans and senior notes are presented net of unamortized finance costs in the aggregate amount of Ps.1,152,661thousands.
For more information on debt; see Note 8 Notes to the Unaudited Condensed Consolidated Financial Statements.
[6] ↑
Included Notes payable transferred to BBVA Bancomer by original creditor
.
[7] ↑
Monetary foreign currency position:
The exchange rates used for translation were as follows: