UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 20-F/A

(Amendment No. 2)

 

(Mark One)

 

o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

OR

 

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 2015

 

 

OR

 

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

OR

 

 

o

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

 

For the transition period from                       to                        

 

Commission file number 1-12610

 

Grupo Televisa, S.A.B.

(Exact name of Registrant as specified in its charter)

 

N/A

(Translation of Registrant’s name into English)

 

United Mexican States

(Jurisdiction of incorporation or organization)

 

Av. Vasco de Quiroga No. 2000

Colonia Santa Fe

01210 Mexico City
Mexico

(Address of principal executive offices)

 

Joaquín Balcárcel Santa Cruz

Grupo Televisa, S.A.B.

Av. Vasco de Quiroga No. 2000

Colonia Santa Fe

01210 Mexico City
Mexico

Telephone: (011-52) (55) 5261-2433

Facsimile: (011-52) (55) 5261-2465

E-mail: jbalcarcel@televisa.com.mx

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange on which registered

Series “A” Shares, without par value (“Series “A” Shares”)

 

New York Stock Exchange (for listing purposes only)

Series “B” Shares, without par value (“Series “B” Shares”)

 

New York Stock Exchange (for listing purposes only)

Series “L” Shares, without par value (“Series “L” Shares”)

 

New York Stock Exchange (for listing purposes only)

Dividend Preferred Shares, without par value (“Series “D” Shares”)
Global Depositary Shares (“GDSs”), each representing five
Ordinary Participation Certificates
(Certificados de Participación Ordinarios) (“CPOs”)

 

New York Stock Exchange (for listing purposes only)
New York Stock Exchange

CPOs, each representing twenty-five Series “A” Shares, twenty-two
Series “B” Shares, thirty-five Series “L” Shares and thirty-five Series “D” Shares

 

New York Stock Exchange (for listing purposes only)

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None.

 



 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.

 

The number of outstanding shares of each of the issuer’s classes of capital
or common stock as of December 31, 2015 was:

 

115,409,011,592 Series “A” Shares
53,340,312,255 Series “B” Shares
84,859,529,456 Series “L” Shares
84,859,529,456 Series “D” Shares

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes   o No

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes   x No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes   o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes   o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

Non-accelerated filer o

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP o

 

International Financial Reporting Standards as issued
by the International Accounting Standards Board
x

 

Other o

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17   o Item 18

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

 



 

Explanatory Note

 

At the time of the filing of the Grupo Televisa, S.A.B.’s (the “Company”) Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”) on April 29, 2016 (the “Original Filing”), there was a misunderstanding regarding whether PricewaterhouseCoopers, S.C. (“PWC”), the Company’s independent public accounting firm, had completed its audit procedures in light of an anonymous letter, dated April 20, 2016 (the “Letter”), received by the Company which contains certain accusations of wrongdoing against certain executive officers of the Company. Because PWC had not completed its audit procedures at the time of the Original Filing, the Company amended its Form 20-F on May 9, 2016 (“Amendment #1”) to remove the audit report, associated consent and the reference in Item 15 to the audit of the effectiveness of the internal control over financial reporting, to permit the Company to perform an investigation described below and so that PWC could complete its audit.

 

As a consequence of the Letter, the Board of Directors, through the Audit Committee, commenced an investigation of the content of the Letter. In this respect, the Company hired the law firm Wachtell, Lipton, Rosen & Katz (“Wachtell”) as its external legal advisors and the Audit Committee hired the law firm Kramer, Levin, Naftalis & Frankel (“Kramer”) as its independent external legal advisors (jointly Wachtell and Kramer, the “Lawyers”) in order to conduct the aforementioned investigation, being assisted by Alix Partners (a forensic accounting firm) and Nardello & Company (an independent investigation company). The investigation has concluded, and the Lawyers submitted their findings and conclusions to the Audit Committee and to the Board of Directors of the Company, finding the falsity of each and every of such allegations. As a result of the findings of the investigation and conclusions resulting therefrom, the Audit Committee and the Board of Directors of the Company, unanimously, approved the conclusions that found, among others, that there is significant evidence that refutes each and every allegation of wrongdoing.

 

The Company has been informed by PWC that it has completed its integrated audit of the Company’s consolidated financial statements for the year ended December 31, 2015 and of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 and has authorized the use of its name on the audit report dated July 7, 2016 (which is referenced in Item 15 of the Form 20-F) and the consent dated July 7, 2016 included in this amendment to the Company’s 20-F (“Amendment #2”).  This Amendment #2 amends the Original Filing and Amendment #1 to include an updated audit report, associated consent and reference in Item 15 to the audit of the effectiveness of the internal control over financial reporting.

 

No other changes have been made to the Original Filing. The consolidated financial statements and notes to the consolidated financial statements included herein in Item 18 remain the same as those filed in the Original Filing. This Amendment #2 reflects information as of the original filing date of the Original Filing, does not reflect events occurring after that date and does not modify or update in any way disclosures made in the Original Filing, except as specifically noted above. This Amendment #2 also includes currently dated certifications from each of the Company’s Chief Executive Officer and our Chief Financial Officer, as required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended.

 

1



 

Part I

 

Item 8. Financial Information

 

See “Financial Statements” and pages F-1 through F-76, which are incorporated in this Item 8 by reference.

 

Part III

 

Item 15. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Based on the evaluation as of December 31, 2015, the Chief Executive Officer and the Chief Financial Officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015. In making this assessment, management used the criteria established in Internal Control —Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2015.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

PricewaterhouseCoopers, S.C., an independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015, as stated in their report which is included herein.

 

Changes in Internal Control Over Financial Reporting

 

There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the year ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

Item 18. Financial Statements

 

See pages F-1 through F-76, which are incorporated in this Item 18 by reference.

 

Item 19. Exhibits

 

Documents filed as exhibits to this annual report appear on the following

 

(a) Exhibits.

 

2



 

EXHIBIT INDEX

 

Exhibit
Number

 

Description of Exhibits

1.1

 

— English translation of Amended and Restated Bylaws (Estatutos Sociales) of the Registrant, dated as of April 30, 2009 (previously filed with the Securities and Exchange Commission as Exhibit 1.1 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2008, and incorporated herein by reference).

2.1

 

— Indenture relating to Senior Debt Securities, dated as of August 8, 2000, between the Registrant, as Issuer, and The Bank of New York, as Trustee (previously filed with the Securities and Exchange Commission as Exhibit 4.1 to the Registrant’s Registration Statement on Form F-4 (File number 333-12738), as amended, and incorporated herein by reference).

2.2

 

— Fourth Supplemental Indenture relating to the 8.5% Senior Exchange Notes due 2032 between the Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg (previously filed with the Securities Exchange Commission as Exhibit 4.5 to the Registrant’s Registration Statement on Form F-4 (the “2002 Form F-4”) and incorporated herein by reference).

2.3

 

— Sixth Supplemental Indenture relating to the 8.5% Senior Notes due 2032 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2002 Form F-4 and incorporated herein by reference).

 

3



 

Exhibit
Number

 

Description of Exhibits

2.4

 

— Seventh Supplemental Indenture relating to the 6 5/8% Senior Notes due 2025 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg, dated March 18, 2005 (previously filed with the Securities and Exchange Commission as Exhibit 2.8 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2004 (the “2004 Form 20-F”) and incorporated herein by reference).

2.5

 

— Eighth Supplemental Indenture relating to the 6 5/8% Senior Notes due 2025 between Registrant, as Issuer, and The Bank of New York and Dexia Banque Internationale à Luxembourg, dated May 26, 2005 (previously filed with the Securities and Exchange Commission as Exhibit 2.9 to the 2004 Form 20-F and incorporated herein by reference).

2.6

 

— Ninth Supplemental Indenture relating to the 6 5/8% Senior Notes due 2025 between Registrant, as Issuer, The Bank of New York and Dexia Banque Internationale à Luxembourg, dated September 6, 2005 (previously filed with the Securities and Exchange Commission as Exhibit 2.8 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2005 (the “2005 Form 20-F”) and incorporated herein by reference).

2.7

 

— Tenth Supplemental Indenture related to the 8.49% Senior Notes due 2037 between Registrant, as Issuer, The Bank of New York and The Bank of New York (Luxembourg) S.A., dated as of May 9, 2007 (previously filed with the Securities and Exchange Commission as Exhibit 2.9 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2006, and incorporated herein by reference).

2.8

 

— Eleventh Supplemental Indenture relating to the 8.49% Senior Exchange Notes due 2037 between Registrant, as Issuer, The Bank of New York and The Bank of New York (Luxembourg) S.A., dated as August 24, 2007 (previously filed with the Securities and Exchange Commission as Exhibit 4.12 to the Registrant’s Registration Statement on Form F-4 (File number 333-144460), as amended, and incorporated herein by reference).

2.9

 

— Twelfth Supplemental Indenture related to the 6.0% Senior Notes due 2018 between Registrant, as Issuer, The Bank of New York and The Bank of New York (Luxembourg) S.A., dated as of May 12, 2008 (previously filed with the Securities and Exchange Commission as Exhibit 2.11 to the Form 20-F for the year ended December 31, 2007 (the “2007 Form 20-F”) and incorporated herein by reference).

2.10

 

— Form of Deposit Agreement between the Registrant, The Bank of New York, as depositary and all holders and beneficial owners of the Global Depositary Shares, evidenced by Global Depositary Receipts (previously filed with the Securities and Exchange Commission as an Exhibit to the Registrant’s Registration Statement on Form F-6 (File number 333-146130) and incorporated herein by reference).

2.11

 

— Thirteenth Supplemental Indenture relating to the 6.0% Senior Exchange Notes due 2018 between Registrant, as Issuer, The Bank of New York Mellon and The Bank of New York (Luxembourg) S.A., dated as of August 21, 2008 (previously filed with the Securities and Exchange Commission as Exhibit 4.14 to the Registrant’s Registration Statement on Form F-4 (File number 333-144460), as amended, and incorporated herein by reference).

2.12

 

— Fourteenth Supplemental Indenture relating to the 6.625% Senior Notes due 2040 between Registrant, as Issuer, The Bank of New York Mellon and The Bank of New York (Luxembourg) S.A., dated as of November 30, 2009 (previously filed with the Securities and Exchange Commission as Exhibit 4.15 to the Registrant’s Registration Statement on Form F-4 (File number 333-164595), as amended, and incorporated herein by reference).

2.13

 

— Fifteenth Supplemental Indenture relating to the 6.625% Senior Exchange Notes due 2040 between Registrant, as Issuer, The Bank of New York Mellon and The Bank of New York (Luxembourg) S.A., dated as of March 22, 2010 (previously filed with the Securities and Exchange Commission as Exhibit 2.15 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2009 and incorporated herein by reference).

 

4



 

Exhibit
Number

 

Description of Exhibits

2.14

 

— Sixteenth Supplemental Indenture relating to the 7.25% Peso Denominated Senior Notes due 2043 among the Registrant, The Bank of New York Mellon, as Trustee, Registrar, Paying Agent and Transfer Agent, the Bank of New York Mellon, London Branch, as London Paying Agent and the Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Paying Agent and Transfer Agent, dated as of May 14, 2013 (previously filed with the Securities and Exchange Commission as Exhibit 4.1 to the Registrant’s Form 6-K filed on May 14, 2013 and incorporated herein by reference).

2.15

 

— Seventeenth Supplemental Indenture relating to the 5.000% Senior Notes due 2045 among the Registrant, The Bank of New York Mellon, as Trustee, Registrar, Paying Agent and Transfer Agent and the Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Paying Agent and Transfer Agent, dated as of May 13, 2014 (previously filed with the Securities and Exchange Commission as Exhibit 4.1 to the Registrant’s Form 6-K filed on May 13, 2014 and incorporated herein by reference).

2.16

 

— Eighteenth Supplemental Indenture relating to the 4.625% Senior Notes due 2026 among the Registrant, The Bank of New York Mellon, as Trustee, Registrar, Paying Agent and Transfer Agent and the Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Paying Agent and Transfer Agent, dated as of November 24, 2015 (previously filed with the Securities and Exchange Commission as Exhibit 4.1 to the Registrant’s Form 6-K filed on November 24, 2015 and incorporated herein by reference).

2.17

 

— Nineteenth Supplemental Indenture relating to the 6.125% Senior Notes due 2046 among the Registrant, The Bank of New York Mellon, as Trustee, Registrar, Paying Agent and Transfer Agent and the Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Paying Agent and Transfer Agent, dated as of November 24, 2015 (previously filed with the Securities and Exchange Commission as Exhibit 4.2 to the Registrant’s Form 6-K filed on November 24, 2015 and incorporated herein by reference).

4.1

 

— Form of Indemnity Agreement between the Registrant and its directors and executive officers (previously filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant’s Registration Statement on Form F-4 (File number 33-69636), as amended, and incorporated herein by reference).

4.2

 

— Amended and Restated Collateral Trust Agreement, dated as of June 13, 1997, as amended, among PanAmSat Corporation, Hughes Communications, Inc., Satellite Company, LLC, the Registrant and IBJ Schroder Bank and Trust Company (previously filed with the Securities and Exchange Commission as an Exhibit to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2001 and incorporated herein by reference).

4.3

 

— Amended and Restated Bylaws (Estatutos Sociales) of Innova, S. de R.L. de C.V. (“Innova”) dated as of December 22, 1998 (previously filed with the Securities and Exchange Commission as an Exhibit to Innova’s Annual Report on Form 20-F for the year ended December 31, 2004 and incorporated herein by reference).

4.4

 

— Administration Trust Agreement relating to Trust No. 80375, dated as of March 23, 2004, by and among Nacional Financiera, S.N.C., as trustee of Trust No. 80370, Banco Inbursa, S.A., as trustee of Trust No. F/0553, Banco Nacional de México, S.A., as trustee of Trust No. 14520-1, Nacional Financiera, S.N.C., as trustee of Trust No. 80375, Emilio Azcárraga Jean, Promotora Inbursa, S.A. de C.V., the Registrant and Grupo Televicentro, S.A. de C.V. (as previously filed with the Securities and Exchange Commission as an Exhibit to Schedules 13D or 13D/A in respect of various parties’ to the Trust Agreement (File number 005-60431) and incorporated herein by reference).

4.5

 

— English translation of Ps.2,100.0 million credit agreement, dated as of March 10, 2006, by and among Innova, the Registrant and Banamex (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2005 Form 20-F and incorporated herein by reference).

4.6

 

— English summary of Ps.1,400.0 million credit agreement, dated as of April 7, 2006, by and among Innova, the Registrant and Banco Santander Serfin, S.A. (the “April 2006 Credit Agreement”) and the April 2006 Credit Agreement (in Spanish) (previously filed with the Securities and Exchange Commission as Exhibit 4.7 to the 2005 Form 20-F and incorporated herein by reference).

 

5



 

Exhibit
Number

 

Description of Exhibits

4.7

 

— Third Amended and Restated Program License Agreement, dated as of January 22, 2009, by and between Televisa, S.A. de C.V., as successor in interest to Televisa Internacional, S.A. de C.V. and Univision Communications Inc. (previously filed with the Securities and Exchange Commission on February 2, 2009 (File number 001-12610) and incorporated herein by reference).

4.8

 

— Full-Time Transponder Service Agreement, dated as of November       , 2007, by and among Intelsat Corporation, Intelsat LLC, Corporación de Radio y Televisión del Norte de México, S. de R. L. de C.V. and SKY Brasil Serviços Ltda (previously filed with the Securities and Exchange Commission as Exhibit 4.16 to the 2007 Form 20-F and incorporated herein by reference).

4.9

 

— Investment Agreement, dated as of December 20, 2010 (the “Investment Agreement”), by and among the Registrant, Televisa, S.A. de C.V., Univision Communications Inc., Broadcasting Media Partners, Inc., and UCI’s direct and indirect licensee subsidiaries named therein (previously filed with the Securities and Exchange Commission as Exhibit 4.19 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.10

 

— Amendment, dated as of February 28, 2011, to the Investment Agreement, dated as of December 20, 2010, by and among Broadcasting Media Partners, Inc., BMPI Services II, LLC, Univision Communications Inc., the Registrant and Pay-TV Venture, Inc. (previously filed with the Securities and Exchange Commission as Exhibit 4.20 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.11

 

— $1,125 million aggregate principal amount of 1.5% Convertible Debentures due 2025 issued by Broadcasting Media Partners, Inc. pursuant to the Investment Agreement, dated as of December 20, 2010 (previously filed with the Securities and Exchange Commission as Exhibit 4.21 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.12

 

— Amended and Restated Certificate of Incorporation of Broadcasting Media Partners, Inc. (previously filed with the Securities and Exchange Commission as Exhibit 4.22 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.13

 

— Amended and Restated Bylaws of Broadcasting Media Partners, Inc. dated as of December 20, 2010 (previously filed with the Securities and Exchange Commission as Exhibit 4.23 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.14*

 

— Amended and Restated Stockholders Agreement, dated as of December 20, 2010, by and among Broadcasting Media Partners, Inc., Broadcast Media Partners Holdings, Inc., Univision Communications Inc., and certain stockholders of Broadcasting Media Partners, Inc. (previously filed with the Securities and Exchange Commission as Exhibit 4.24 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.15

 

— Amendment, dated as of February 28, 2011, to the Amended and Restated Stockholders Agreement, dated as of December 20, 2010, by and among Broadcasting Media Partners, Inc., Broadcast Media Partners Holdings, Inc., Univision Communications Inc., and certain stockholders of Broadcasting Media Partners, Inc. (previously filed with the Securities and Exchange Commission as Exhibit 4.25 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.16*

 

— Amended and Restated Principal Investor Agreement, dated as of December 20, 2010, by and among Broadcasting Media Partners, Inc., Broadcast Media Partners Holdings, Inc., Univision Communications Inc., the Registrant and certain investors (previously filed with the Securities and Exchange Commission as Exhibit 4.26 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

 

6



 

Exhibit
Number

 

Description of Exhibits

4.17*

 

— Amended and Restated 2011 Program License Agreement, dated as of February 28, 2011, by and among Televisa, S.A. de C.V. and Univision Communications Inc. (previously filed with the Securities and Exchange Commission as Exhibit 4.27 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.18*†

 

— Second Amended and Restated 2011 Program License Agreement, dated as of July 1, 2015, by and among Televisa, S.A. de C.V. and Univision Communications Inc.

4.19

 

— Amendment to International Program Rights Agreement, dated as of December 20, 2010, by and among Univision Communications Inc. and the Registrant (previously filed with the Securities and Exchange Commission as Exhibit 4.28 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.20*

 

— Amended and Restated 2011 Mexico License Agreement, dated as of February 28, 2011, by and among Univision Communications Inc. and Videoserpel, Ltd. (previously filed with the Securities and Exchange Commission as Exhibit 4.29 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.21*†

 

— Amendment to Amended and Restated 2011 Mexico License Agreement, dated as of July 1, 2015, by and among Univision Communications Inc. and Mountrigi Management Group Limited (f/k/a Videoserpel, Ltd.).

4.22

 

— Letter Agreement, dated as of February 28, 2011, by and among Televisa, S.A. de C.V., the Registrant and Univision Communications Inc. (previously filed with the Securities and Exchange Commission as Exhibit 4.30 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.23*

 

— Purchase and Assignment and Assumption Agreement, dated as of December 20, 2010, by and among Pay-TV Venture, Inc., TuTv LLC and Univision Communications Inc., solely for purposes of Section 1.4, Televisa, S.A. de C.V., as successor to Visat, S.A. de C.V. and Televisa Internacional, S.A. de C.V., and, solely for purposes of Section 1.5, the Registrant (previously filed with the Securities and Exchange Commission as Exhibit 4.31 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.24

 

— English summary of Shareholders’ and Share Purchase Agreement, dated as of December 16, 2010 (and amended on April 7, 2011), by and among Grupo Salinas Telecom, S.A. de C.V., Mexico Media Investments, S.L., Sociedad Unipersonal, GSF Telecom Holdings, S.A.P.I. de C.V., Orilizo Holding B.V. and Grupo Iusacell, S.A. de C.V. and Assignment Agreement with respect to the Shareholders’ and Share Purchase Agreement, dated as of April 7, 2011, by and among Mexico Media Investments S.L., Sociedad Unipersonal, as assignor and Corporativo Vasco de Quiroga, S.A. de C.V., as assignee, with the consent of Grupo Salinas Telecom, S.A. de C.V., GSF Telecom Holdings, S.A.P.I. de C.V., Orilizo Holding B.V. and Grupo Iusacell, S.A. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.32 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.25

 

— English summary of Irrevocable Guaranty Trust Agreement, dated as of December 16, 2010 (and amended on December 16, 2010 and April 7, 2011), by and among Grupo Salinas Telecom, S.A. de C.V., México Media Investments, S.L., GSF Telecom Holdings, S.A.P.I. de C.V. and Banco Invex, S.A., Institución de Banca Múltiple, Invex Grupo Financiero and Assignment Agreement with respect to the Irrevocable Guaranty Trust Agreement, dated as of April 7, 2011, by and among Mexico Media Investments S.L., Sociedad Unipersonal, as assignor and Corporativo Vasco de Quiroga, S.A. de C.V., as assignee, with the consent of Grupo Salinas Telecom, S.A. de C.V., GSF Telecom Holdings, S.A.P.I. de C.V. and Banco Invex, S.A., Institución de Banca Múltiple, Invex Grupo Financiero (previously filed with the Securities and Exchange Commission as Exhibit 4.33 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

 

7



 

Exhibit
Number

 

Description of Exhibits

4.26

 

— English summary of Amendment and Restatement of the Indenture, dated April 7, 2011, relating to the issuance of the Series 1 and Series 2 Debentures by GSF Telecom Holdings, Sociedad Anónima Promotora de Inversión de Capital Variable with the consent of Deutsche Bank México, Sociedad Anónima, Institución de Banca Múltiple, División Fiduciaria and Assignment Agreement with respect to the Series 1 and Series 2 Debentures, dated April 7, 2011, by and among Mexico Media Investments S.L., Sociedad Unipersonal, as assignor and Corporativo Vasco de Quiroga, S.A. de C.V., as assignee, with the consent of GSF Telecom Holdings, S.A.P.I. de C.V. and Deutsche Bank México, S.A., Institución de Banca Múltiple, División Fiduciaria (previously filed with the Securities and Exchange Commission as Exhibit 4.34 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.27

 

— English summary of Ps.400 million credit agreement, dated as of March 23, 2011, between the Registrant and Banco Nacional de Mexico, S.A. integrante del Grupo Financiero Banamex (previously filed with the Securities and Exchange Commission as Exhibit 4.35 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.28

 

— English summary of Ps.800 million credit agreement, dated as of March 23, 2011, between the Registrant and Banco Nacional de Mexico, S.A. integrante del Grupo Financiero Banamex (previously filed with the Securities and Exchange Commission as Exhibit 4.36 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.29

 

— English summary of Ps.400 million credit agreement, dated as of March 23, 2011, between the Registrant and Banco Nacional de Mexico, S.A. integrante del Grupo Financiero Banamex (previously filed with the Securities and Exchange Commission as Exhibit 4.37 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.30

 

— English summary of Ps.2,500 million credit agreement, dated as of March 30, 2011, between the Registrant and BBVA Bancomer, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer (previously filed with the Securities and Exchange Commission as Exhibit 4.38 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.31

 

— English summary of Ps.2,500 million credit agreement, dated as of March 28, 2011, between the Registrant and HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC (previously filed with the Securities and Exchange Commission as Exhibit 4.39 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.32

 

— English summary of Ps.2,000 million credit agreement, dated as of March 30, 2011, between the Registrant and Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander (previously filed with the Securities and Exchange Commission as Exhibit 4.40 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference).

4.33

 

— English summary of indenture, dated July 31, 2013, related to the issuance of Ps.7,000 million convertible debentures, by Tenedora Ares, S.A.P.I de C.V., together with Banco Invex, Sociedad Anónima, Institución de Banca Múltiple, Invex Grupo Financiero, Fiduciario, in its capacity as common representative for the holders of the debentures (previously filed with the Securities and Exchange Commission as Exhibit 4.30 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2013 and incorporated herein by reference).

4.34

 

— English summary of call and put option agreement, dated July 31, 2013, by and among Tenedora Ares, S.A.P.I. de C.V., Thomas Stanley Heather Rodríguez, Vamole Inversiones 2013, S.L. Sociedad Unipersonal and Arretis, S.A.P.I. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.32 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2013 and incorporated herein by reference).

 

8



 

Exhibit
Number

 

Description of Exhibits

4.35

 

— English summary of conversion of debentures, dated August 13, 2014, by and between Arretis, S.A.P.I. de C.V and Tenedora Ares, S.A.P.I. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.33 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2014 and incorporated herein by reference).

4.36

 

— English summary of share purchase agreement, dated August 13, 2014, by and among Vamole Inversiones 2013, S.L., Sociedad Unipersonal, Thomas Stanley Heather Rodriguez, Arretis, S.A.P.I. de C.V. and San Ángel Telecom, S.A. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.34 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2014 and incorporated herein by reference).

4.37

 

— English summary of share purchase agreement, dated August 13, 2014, by and among Dafel Investments B.V., Mexico Media Investments, S.L., Sociedad Unipersonal, Cable TV Investments, S.L., Sociedad Unipersonal, Tenedora Ares, S.A.P.I. de C.V. and San Ángel Telecom, S.A. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.35 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2014 and incorporated herein by reference).

4.38

 

— English summary of share purchase agreement, dated July 9, 2014, by and among Invex Grupo Financiero, as trustee of Trust F/1017 and Grupo Salinas Telecom, S.A. de C.V., with the acknowledgement of GSF Telecom Holdings, S.A.P.I. de C.V. and Corporativo Vasco de Quiroga, S.A. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.36 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2014 and incorporated herein by reference).

4.39

 

— English summary of merger agreement, dated January 8, 2015, by and among Consorcio Nekeas, S.A. de C.V., Galavisión DTH, S. de R.L. de C.V. and Inmobiliaria Hevi, S.A. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.37 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2014 and incorporated herein by reference).

4.40

 

— English summary of stock purchase agreement, dated January 8, 2015, by and among Mara del Carmen Ordóñez Valverde, Axel Eduardo Vielma Ordóñez, Héctor Vielma Ordóñez, José Francisco Vielma Ordóñez, Luis Edmundo Vielma Ordóñez and Corporativo Vasco de Quiroga, S.A. de C.V. (previously filed with the Securities and Exchange Commission as Exhibit 4.38 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2014 and incorporated herein by reference).

4.41†

 

English summary of merger agreement, dated March 4, 2016, by and among Corporativo Vasco de Quiroga, S.A. de C.V. and Grupo TVI Telecom, S.A. de C.V.

8.1†

 

— List of Subsidiaries of Registrant.

12.1

 

— CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 7, 2016.

12.2

 

— CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 7, 2016.

13.1

 

— CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 7, 2016.

13.2

 

— CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 7, 2016.

23.1

 

— Consent of PricewaterhouseCoopers, S.C.

 


*                       Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

                       Previously filed

 

Instruments defining the rights of holders of certain issues of long-term debt of the Registrant and its consolidated subsidiaries have not been filed as exhibits to this Form 20-F because the authorized principal amount of any one of such issues does not exceed 10% of the total assets of the Registrant and its subsidiaries on a

 

9



 

consolidated basis. The Registrant agrees to furnish a copy of each such instrument to the Securities and Exchange Commission upon request.

 

(b)   Financial Statement Schedules

 

All financial statement schedules relating to the Registrant are omitted because they are not required or because the required information, if material, is contained in the audited year-end financial statements or notes thereto.

 

10



 

SIGNATURE

 

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 

 

GRUPO TELEVISA, S.A.B.

 

 

 

 

By:

/s/Salvi Rafael Folch Viadero

 

 

Name: Salvi Rafael Folch Viadero

 

 

Title: Chief Financial Officer

 

 

 

 

By:

/s/Jorge Agustín Lutteroth Echegoyen

 

 

Name: Jorge Agustín Lutteroth Echegoyen

 

 

Title:  Vice President — Corporate Controller

 

Date: July 7, 2016

 



 

GRUPO TELEVISA, S. A. B. AND SUBSIDIARIES

 

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF

 

DECEMBER 31, 2015 AND 2014

 

 

Page

 

 

Report of Independent Registered Public Accounting Firm

F-2

Consolidated Statements of Financial Position as of December 31, 2015 and 2014

F-3

Consolidated Statements of Income for the Years Ended December 31, 2015, 2014 and 2013

F-5

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2014 and 2013

F-6

Consolidated Statements of Changes in Equity for the Years Ended December 31, 2015, 2014 and 2013

F-7

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013

F-8

Notes to Consolidated Financial Statements for the Years Ended December 31, 2015, 2014 and 2013

F-10

 

F-1


 


 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of Grupo Televisa, S. A. B.:

 

In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of income, comprehensive income, changes in equity and cash flows present fairly, in all material respects, the financial position of Grupo Televisa, S.A.B. (the “Company”) and its subsidiaries at December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in “Management’s Annual Report on Internal Control Over Financial Reporting” appearing in Item 15.  Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and International Standards on Auditing.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

PricewaterhouseCoopers, S.C.

 

 

/s/ C.P.C. José Miguel Arrieta Méndez

 

Audit Partner

 

Mexico City

 

July 7, 2016

 

 

F-2


 


 

GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

As of December 31, 2015 and 2014
(In thousands of Mexican Pesos)
(Notes 1, 2 and 3)

 

 

 

Notes

 

2015

 

2014

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

6

 

Ps.

49,397,126

 

Ps.

29,729,350

 

Temporary investments

 

6

 

5,330,448

 

4,788,585

 

Trade notes and accounts receivable, net

 

7

 

21,702,128

 

21,087,163

 

Other accounts and notes receivable, net

 

 

 

4,296,068

 

2,724,692

 

Account receivable related to former investment in GSF

 

3

 

 

10,583,852

 

Derivative financial instruments

 

14

 

 

2,894

 

Due from related parties

 

19

 

98,388

 

903,252

 

Transmission rights and programming

 

8

 

5,389,133

 

4,851,722

 

Inventories

 

 

 

1,628,276

 

3,336,667

 

Other current assets

 

 

 

2,096,509

 

1,793,999

 

Total current assets

 

 

 

89,938,076

 

79,802,176

 

Non-current assets:

 

 

 

 

 

 

 

Transmission rights and programming

 

8

 

9,139,149

 

8,994,398

 

Investments in financial instruments

 

9

 

41,081,474

 

34,709,872

 

Investments in associates and joint ventures

 

10

 

9,271,901

 

5,032,447

 

Property, plant and equipment, net

 

11

 

76,089,277

 

62,009,508

 

Intangible assets, net

 

12

 

38,106,325

 

28,778,414

 

Deferred income tax assets

 

23

 

17,665,086

 

16,080,292

 

Other assets

 

 

 

182,466

 

144,834

 

Total non-current assets

 

 

 

191,535,678

 

155,749,765

 

Total assets

 

 

 

Ps.

281,473,754

 

Ps.

235,551,941

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3



 

GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

As of December 31, 2015 and 2014
(In thousands of Mexican Pesos)
(Notes 1, 2 and 3)

 

 

 

Notes

 

2015

 

2014

 

LIABILITIES

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt and interest payable

 

13

 

Ps.

4,164,068

 

Ps.

1,312,052

 

Current portion of finance lease obligations

 

13

 

511,556

 

502,166

 

Derivative financial instruments

 

14

 

1,402

 

 

Trade accounts payable and accrued expenses

 

 

 

17,361,484

 

17,142,044

 

Customer deposits and advances

 

 

 

20,470,380

 

20,150,744

 

Income taxes payable

 

 

 

1,632,795

 

1,389,321

 

Other taxes payable

 

 

 

1,246,041

 

1,108,376

 

Employee benefits

 

 

 

1,034,446

 

1,005,255

 

Due to related parties

 

19

 

443,035

 

8,564

 

Other current liabilities

 

 

 

2,112,843

 

1,751,600

 

Total current liabilities

 

 

 

48,978,050

 

44,370,122

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

13

 

107,430,764

 

80,660,503

 

Finance lease obligations, net of current portion

 

13

 

5,293,559

 

4,807,379

 

Derivative financial instruments

 

14

 

225,660

 

335,102

 

Customer deposits and advances

 

 

 

514,531

 

284,000

 

Income taxes payable

 

23

 

6,338,078

 

6,628,125

 

Deferred income tax liabilities

 

23

 

10,000,048

 

7,763,024

 

Post-employment benefits

 

15

 

407,179

 

287,159

 

Other long-term liabilities

 

 

 

2,764,108

 

2,501,446

 

Total non-current liabilities

 

 

 

132,973,927

 

103,266,738

 

Total liabilities

 

 

 

181,951,977

 

147,636,860

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

Capital stock

 

16

 

4,978,126

 

4,978,126

 

Additional paid-in-capital

 

 

 

15,889,819

 

15,889,819

 

Retained earnings

 

17

 

73,139,684

 

62,905,444

 

Accumulated other comprehensive income, net

 

17

 

5,257,554

 

5,679,063

 

Shares repurchased

 

16

 

(11,882,248

)

(12,647,475

)

Equity attributable to stockholders of the Company

 

 

 

87,382,935

 

76,804,977

 

Non-controlling interests

 

18

 

12,138,842

 

11,110,104

 

Total equity

 

 

 

99,521,777

 

87,915,081

 

Total liabilities and equity

 

 

 

Ps.

281,473,754

 

Ps.

235,551,941

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4



 

GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME

 

For the Years Ended December 31, 2015, 2014 and 2013
(In thousands of Mexican Pesos, except per CPO amounts)
(Notes 1, 2 and 3)

 

 

 

Notes

 

2015

 

2014

 

2013

 

Net sales

 

25

 

Ps.

88,051,829

 

Ps.

80,118,352

 

Ps.

73,790,711

 

Cost of sales

 

20

 

47,226,544

 

42,908,647

 

39,602,423

 

Selling expenses

 

20

 

9,716,244

 

8,561,911

 

7,280,649

 

Administrative expenses

 

20

 

12,035,439

 

9,409,697

 

8,086,154

 

Income before other expense

 

25

 

19,073,602

 

19,238,097

 

18,821,485

 

Other expense, net

 

21

 

328,477

 

5,281,690

 

83,150

 

Operating income

 

 

 

18,745,125

 

13,956,407

 

18,738,335

 

Finance expense

 

22

 

(8,665,398

)

(6,942,630

)

(5,086,972

)

Finance income

 

22

 

8,542,542

 

2,613,705

 

5,971,689

 

Finance (expense) income, net

 

 

 

(122,856

)

(4,328,925

)

884,717

 

Share of income (loss) of associates and joint ventures, net

 

10

 

35,399

 

13,173

 

(5,659,963

)

Income before income taxes

 

 

 

18,657,668

 

9,640,655

 

13,963,089

 

Income taxes

 

23

 

6,332,218

 

2,980,883

 

3,728,962

 

Net income

 

 

 

Ps.

12,325,450

 

Ps.

6,659,772

 

Ps.

10,234,127

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to:

 

 

 

 

 

 

 

 

 

Stockholders of the Company

 

 

 

Ps.

10,899,135

 

Ps.

5,386,905

 

Ps.

7,748,279

 

Non-controlling interests

 

18

 

1,426,315

 

1,272,867

 

2,485,848

 

Net income

 

 

 

Ps.

12,325,450

 

Ps.

6,659,772

 

Ps.

10,234,127

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per CPO attributable to stockholders of the Company

 

24

 

Ps.

3.77

 

Ps.

1.87

 

Ps.

2.71

 

Diluted earnings per CPO attributable to stockholders of the Company

 

24

 

Ps.

3.52

 

Ps.

1.74

 

Ps.

2.50

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5



 

GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

For the Years Ended December 31, 2015, 2014 and 2013
(In thousands of Mexican Pesos)
(Notes 1, 2 and 3)

 

 

 

Notes

 

2015

 

2014

 

2013

 

Net income

 

 

 

Ps.

12,325,450

 

Ps.

6,659,772

 

Ps.

10,234,127

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Items that will not be reclassified to income:

 

 

 

 

 

 

 

 

 

Remeasurement of post-employment benefit obligations

 

15

 

(166,044

)

(27,811

)

133,863

 

Items that may be subsequently reclassified to income:

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

 

498,954

 

221,260

 

64,591

 

Equity instruments issued by Imagina:

 

 

 

 

 

 

 

 

 

Changes in fair value

 

9

 

405,132

 

(328,340

)

254,662

 

Reclassification to other finance income

 

9

 

(544,402

)

 

 

Cash flow hedges

 

 

 

25,838

 

(43,439

)

17,025

 

Convertible debentures due 2025 issued by UHI:

 

 

 

 

 

 

 

 

 

Changes in fair value

 

9

 

319,307

 

2,058,432

 

592,810

 

Reclassification to other finance income

 

9

 

(4,718,175

)

 

 

Warrants issued by UHI

 

9

 

3,303,182

 

 

 

Debt instruments issued by Ares:

 

 

 

 

 

 

 

 

 

Convertible debt instruments

 

9

 

 

670,375

 

100,333

 

Long-term debt instrument

 

9

 

 

54,417

 

(54,184

)

Reclassification to other finance income

 

22

 

 

(770,941

)

 

Available-for-sale investments

 

9

 

(80,371

)

1,193,130

 

987,671

 

Share of other comprehensive income of associates and joint ventures

 

10

 

19,705

 

25,664

 

105,259

 

Other comprehensive (loss) income before income taxes

 

 

 

(936,874

)

3,052,747

 

2,202,030

 

Income taxes

 

23

 

593,337

 

(730,444

)

(602,684

)

Other comprehensive (loss) income

 

 

 

(343,537

)

2,322,303

 

1,599,346

 

Total comprehensive income

 

 

 

Ps.

11,981,913

 

Ps.

8,982,075

 

Ps.

11,833,473

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

 

 

 

 

Stockholders of the Company

 

 

 

Ps.

10,477,626

 

Ps.

7,671,917

 

Ps.

9,336,446

 

Non-controlling interests

 

18

 

1,504,287

 

1,310,158

 

2,497,027

 

Total comprehensive income

 

 

 

Ps.

11,981,913

 

Ps.

8,982,075

 

Ps.

11,833,473

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6


 


 

GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

For the Years Ended December 31, 2015, 2014 and 2013
(In thousands of Mexican Pesos)
(Notes 1, 2 and 3)

 

 

 

Capital Stock
Issued
(Note 16)

 

Additional
Paid-in Capital

 

Retained
Earnings
(Note 17)

 

Accumulated
Other
Comprehensive
Income
(Note 17)

 

Shares
Repurchased
(Note 16)

 

Equity
Attributable to
Stockholders of
the Company

 

Non-
controlling
Interests
(Note 18)

 

Total Equity

 

Balance at January 1, 2013

 

Ps.

4,978,126

 

Ps.

15,889,819

 

Ps.

51,073,399

 

Ps.

1,805,884

 

Ps.

 (13,103,223)

 

Ps.

60,644,005

 

Ps.

7,890,598

 

Ps.

68,534,603

 

Dividends

 

 

 

(2,168,384

)

 

 

(2,168,384

)

(118,238

)

(2,286,622

)

Adjustment for adoption of IAS 19, as amended (Note 2 (t))

 

 

 

(101,814

)

 

 

(101,814

)

(1,088

)

(102,902

)

Shares repurchased

 

 

 

 

 

(1,057,083

)

(1,057,083

)

 

(1,057,083

)

Sale of shares

 

 

 

(254,775

)

 

1,311,858

 

1,057,083

 

 

1,057,083

 

Share-based compensation

 

 

 

601,181

 

 

 

601,181

 

 

601,181

 

Other adjustments to non-controlling interests

 

 

 

 

 

 

 

(300

)

(300

)

Comprehensive income

 

 

 

7,748,279

 

1,588,167

 

 

9,336,446

 

2,497,027

 

11,833,473

 

Balance at December 31, 2013

 

4,978,126

 

15,889,819

 

56,897,886

 

3,394,051

 

(12,848,448

)

68,311,434

 

10,267,999

 

78,579,433

 

Dividends

 

 

 

 

 

 

 

(468,248

)

(468,248

)

Shares repurchased

 

 

 

 

 

(1,064,602

)

(1,064,602

)

 

(1,064,602

)

Sale of shares

 

 

 

(200,973

)

 

1,265,575

 

1,064,602

 

 

1,064,602

 

Share-based compensation

 

 

 

821,626

 

 

 

821,626

 

 

821,626

 

Other adjustments to non-controlling interests

 

 

 

 

 

 

 

195

 

195

 

Comprehensive income

 

 

 

5,386,905

 

2,285,012

 

 

7,671,917

 

1,310,158

 

8,982,075

 

Balance at December 31, 2014

 

4,978,126

 

15,889,819

 

62,905,444

 

5,679,063

 

(12,647,475

)

76,804,977

 

11,110,104

 

87,915,081

 

Reduction of capital of non-controlling interests

 

 

 

 

 

 

 

(95,500

)

(95,500

)

Dividends

 

 

 

(1,084,192

)

 

 

(1,084,192

)

(379,639

)

(1,463,831

)

Shares repurchased

 

 

 

 

 

(733,831

)

(733,831

)

 

(733,831

)

Sale of shares

 

 

 

(765,227

)

 

1,499,058

 

733,831

 

 

733,831

 

Share-based compensation

 

 

 

1,184,524

 

 

 

1,184,524

 

 

1,184,524

 

Other adjustments to non-controlling interests

 

 

 

 

 

 

 

(410

)

(410

)

Comprehensive income

 

 

 

10,899,135

 

(421,509

)

 

10,477,626

 

1,504,287

 

11,981,913

 

Balance at December 31, 2015

 

Ps.

4,978,126

 

Ps.

15,889,819

 

Ps.

73,139,684

 

Ps.

5,257,554

 

Ps.

(11,882,248)

 

Ps.

87,382,935

 

Ps.

12,138,842

 

Ps.

99,521,777

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-7



 

GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

For the Years Ended December 31, 2015, 2014 and 2013
(In thousands of Mexican Pesos)
(Notes 1, 2 and 3)

 

 

 

2015

 

2014

 

2013

 

Operating Activities:

 

 

 

 

 

 

 

Income before income taxes

 

Ps.

18,657,668

 

Ps.

9,640,655

 

Ps.

13,963,089

 

Adjustments to reconcile income before income taxes to net cash provided by operating activities:

 

 

 

 

 

 

 

Share of (income) loss of associates and joint ventures

 

(35,399

)

(13,173

)

5,659,963

 

Depreciation and amortization

 

14,660,929

 

11,563,085

 

9,846,366

 

Write-off and other amortization of assets

 

304,860

 

213,216

 

185,080

 

Impairment of long-lived assets

 

131,065

 

253,279

 

59,648

 

Disposition of property and equipment

 

688,706

 

715,786

 

236,667

 

Provision for doubtful accounts and write-off receivables

 

1,644,904

 

1,040,954

 

873,097

 

Post-employment benefits

 

38,334

 

157,511

 

143,133

 

Interest income

 

(378,736

)

(417,777

)

(192,712

)

Income from UHI

 

(2,194,981

)

 

 

Share-based compensation expense

 

1,199,489

 

844,788

 

601,181

 

Reclassifications from accumulated other comprehensive income

 

(5,262,577

)

 

 

Provisions for related party transactions

 

1,024,484

 

 

 

Other finance income, net

 

(917,682

)

(1,286,014

)

(4,841,734

)

(Gain) loss on disposition of investments

 

(76,296

)

4,168,468

 

 

Interest expense

 

6,239,387

 

5,551,461

 

4,803,151

 

Unrealized foreign exchange loss, net

 

4,032,871

 

2,133,505

 

128,619

 

 

 

39,757,026

 

34,565,744

 

31,465,548

 

Increase in trade notes and accounts receivable

 

(2,120,569

)

(1,213,774

)

(2,604,151

)

(Increase) decrease in transmission rights and programming

 

(535,487

)

250,554

 

(3,133,650

)

Decrease in due from related parties, net

 

527,515

 

387,812

 

154,301

 

Decrease (increase) in inventories

 

1,705,238

 

(1,495,275

)

(238,760

)

Increase in other accounts and notes receivable and other current assets

 

(877,316

)

(612,564

)

(2,290,656

)

Increase in trade accounts payable and accrued expenses

 

63,873

 

4,795,769

 

2,384,536

 

Increase (decrease) in customer deposits and advances

 

459,215

 

(2,112,156

)

448,725

 

Increase (decrease) in other liabilities, taxes payable and deferred taxes

 

192,113

 

(2,086,330

)

2,414,601

 

(Decrease) increase in post-employment benefits

 

(62,373

)

100,516

 

404

 

Income taxes paid

 

(7,823,659

)

(4,117,357

)

(4,794,693

)

 

 

(8,471,450

)

(6,102,805

)

(7,659,343

)

Net cash provided by operating activities

 

31,285,576

 

28,462,939

 

23,806,205

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

Temporary investments

 

16,083

 

(74,977

)

1,604,322

 

Income from UHI

 

2,194,981

 

 

 

Due from or to related parties

 

 

 

9,882

 

Held-to-maturity and available-for-sale investments

 

(89,552

)

(372,140

)

(517,199

)

Disposition of held-to-maturity and available-for-sale investments

 

362,416

 

513,134

 

263,737

 

Investments in financial instruments

 

 

 

(9,492,744

)

Acquisition of Cablecom, net of acquired cash and cash equivalents

 

 

(5,536,649

)

 

Acquisition of Telecable, net of acquired cash and cash equivalents

 

(9,731,391

)

 

 

Investment in associates and other investments

 

(92,141

)

49,356

 

(1,588,925

)

Disposition of investment

 

76,335

 

 

 

Additional investment in Imagina

 

(341,710

)

 

 

Disposition of investment in GSF

 

10,335,813

 

 

 

Investments in property, plant and equipment

 

(25,524,145

)

(17,004,358

)

(14,870,672

)

Disposition of property, plant and equipment

 

565,552

 

480,601

 

169,218

 

Investments in intangible assets

 

(1,553,801

)

(794,476

)

(824,072

)

Net cash used in investing activities

 

(23,781,560

)

(22,739,509

)

(25,246,453

)

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

Long-term Mexican banks

 

2,487,936

 

2,078,433

 

493,383

 

Issuance of Senior Notes due 2043

 

 

 

6,437,204

 

Issuance of Notes due 2021

 

 

5,988,651

 

 

Issuance of Notes due 2022

 

4,988,747

 

 

 

Issuance of Senior Notes due 2045

 

 

12,400,063

 

 

Issuance of Senior Notes due 2026

 

4,903,744

 

 

 

Issuance of Senior Notes due 2046

 

14,716,640

 

 

 

Repayment of Mexican peso debt

 

(883,340

)

(313,793

)

(375,000

)

Prepayment of Mexican peso debt

 

(5,905,601

)

(6,522,250

)

 

Capital lease payments

 

(405,151

)

(446,944

)

(376,159

)

Interest paid

 

(5,938,679

)

(5,200,696

)

(4,681,676

)

Repurchase of capital stock

 

(733,831

)

(1,064,602

)

(1,057,083

)

Sale of capital stock

 

733,831

 

1,064,602

 

1,057,083

 

Dividends paid

 

(1,084,192

)

 

(2,168,384

)

Dividends to non-controlling interests

 

(475,139

)

(468,248

)

(112,651

)

Derivative financial instruments

 

(372,040

)

(284,367

)

(140,534

)

Net cash provided by (used in) financing activities

 

12,032,925

 

7,230,849

 

(923,817

)

Effect of exchange rate changes on cash and cash equivalents

 

130,835

 

83,038

 

(7,227

)

Net increase (decrease) in cash and cash equivalents

 

19,667,776

 

13,037,317

 

(2,371,292

)

Cash and cash equivalents at beginning of year

 

29,729,350

 

16,692,033

 

19,063,325

 

Cash and cash equivalents at end of year

 

Ps.

49,397,126

 

Ps.

29,729,350

 

Ps.

16,692,033

 

 

F-8



 

Non-cash transactions:

 

The principal non-cash transactions in 2015 included a cumulative gain from changes in fair value, which was reclassified from accumulated other comprehensive income in consolidated equity to other finance income, net, in connection with the exchange of Convertible Debentures issued by UHI for Warrants that are exercisable for shares of common stock of UHI (see Note 22), and impairment adjustments related to the Group’s Publishing business (see Note 12). The principal non-cash transactions in 2014 included the loss on disposition of the Group’s joint venture investment in GSF (see Note 3); a favorable change in fair value in the Group’s embedded derivative in Convertible Debentures issued by UHI (see Note 9); and an impairment adjustment related to the Group’s publishing business (see Note 12). The principal non-cash transactions in 2013 included an impairment adjustment to the Group’s joint venture investment in GSF (see Note 3); a favorable change in fair value in the Group’s embedded derivative in Convertible Debentures issued by UHI (see Note 9); and the acquisition of assets under lease agreements recognized as finance leases (see Notes 13 and 19).

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-9


 


 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

For the Years Ended December 31, 2015, 2014 and 2013
(In thousands of Mexican Pesos, except per CPO, per share and exchange rate amounts)

 

1.                                      Corporate Information

 

Grupo Televisa, S.A.B. (the “Company”) is a limited liability public stock corporation (“Sociedad Anónima Bursátil” or “S.A.B.”), incorporated under the laws of Mexico. Pursuant to the terms of the Company’s bylaws (“Estatutos Sociales”) its corporate existence continues through 2106. The shares of the Company are listed and traded in the form of “Certificados de Participación Ordinarios” or “CPOs” on the Mexican Stock Exchange (“Bolsa Mexicana de Valores”) under the ticker symbol TLEVISA CPO, and in the form of Global Depositary Shares or GDSs, on the New York Stock Exchange, or NYSE, under the ticker symbol TV. The Company’s principal executive offices are located at Avenida Vasco de Quiroga 2000, Colonia Santa Fe, 01210 Ciudad de México, México.

 

Grupo Televisa, S.A.B., together with its subsidiaries (collectively, the “Group”), is a leading media company in the Spanish-speaking world, an important cable operator in Mexico, and an operator of a leading direct-to-home satellite pay television system in Mexico. The Group distributes the content it produces through several broadcast channels in Mexico and in over 50 other countries through 26 pay-tv brands, and television networks, cable operators and over the top or “OTT” services.  In the United States, the Group´s audiovisual content is distributed through Univision Communications Inc. (“Univision”) the leading media company serving the Hispanic market. Univision broadcasts the Group’s audiovisual content through multiple platforms, in exchange the Group receives a royalty payment. In addition, the Group has equity and Warrants which upon their exercise and subject to any necessary approval from the Federal Communications Commission of the United States would represent approximately 36% on a fully-diluted, as-converted basis of the equity capital in Univision Holdings, Inc. or “UHI” (formerly Broadcasting Media Partners, Inc.), the controlling company of Univision. The Group’s cable business offers integrated services, including video, high-speed data and voice services to residential and commercial customers as well as managed services to domestic and international carriers through five cable multiple system operators in Mexico.  The Group owns a majority interest in Sky, the leading direct-to-home satellite pay television system in Mexico, operating also in the Dominican Republic and Central America. The Group also has interests in magazine publishing and distribution, radio production and broadcasting, professional sports and live entertainment, feature-film production and distribution, and gaming.

 

2.                                      Accounting Policies

 

The principal accounting policies followed by the Group and used in the preparation of these consolidated financial statements are summarized below.

 

(a)                                 Basis of Presentation

 

The consolidated financial statements of the Group as of December 31, 2015 and 2014, and for the years ended December 31, 2015, 2014 and 2013, 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 8, 2016, by the Group’s Chief Financial Officer.

 

F-10



 

(b)                                 Consolidation

 

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 relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

 

Disposal of subsidiaries

 

When the Company ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit 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, 2015, 2014 and 2013, the main 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

 

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

 

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)

 

50

%

Cable

 

 

F-11



 

Entity

 

Company’s
Ownership
Interest (1)

 

Business
Segment (2)

 

Cablestar, S.A. de C.V. and subsidiaries (collectively, “Bestel”) (10)

 

66.1

%

Cable

 

Grupo Cable TV, S.A. 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. and subsidiaries (13)

 

50

%

Other Businesses

 

Televisa Juegos, S.A. de C.V. and subsidiaries

 

100

%

Other Businesses

 

Villacezán, S.A. de C.V. (“Villacezan”) 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, 2015, Multimedia Telecom and Tieren have investments representing 95.2% and 4.8%, 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. 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 the relevant activities.

(6)

CVQ is a direct subsidiary of the Company and the parent company of Empresas Cablevisión, Cablemás, TVI, Bestel, Cablecom and Telecable. Through September 2014, CVQ maintained an investment in GSF Telecom Holdings, S.A.P.I. de C.V. (“GSF”), whose disposition was completed in January 2015 (see Note 3).

(7)

Empresas Cablevisión, S.A.B. de C.V. is a direct majority-owned subsidiary of CVQ. As of December 31, 2014, 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. As of December 31, 2014, some Cablemás subsidiaries were directly owned by the Company, and some other were directly owned by Consorcio Nekeas, S.A. de C.V. (“Nekeas”), a former wholly-owned direct subsidiary of the Company. In January 2015, Nekeas was merged into TTelecom H, S.A.P.I. de C.V. (“TTelecom”), a former direct subsidiary of the Company, and in July 2015, TTelecom was merged into CVQ. The Cablemás subsidiaries directly owned by the Company were acquired by a direct subsidiary of CVQ in the second half of 2015. At the consolidated level, the mergers had no effect.

(9)

Televisión Internacional, S.A. de C.V. is an indirect subsidiary of CVQ. Through February 2016, the Company consolidated TVI because it appointed the majority of the members of the Board of Directors of TVI (see Note 27).

(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)

Grupo Cable TV, S.A. de C.V. is an indirect subsidiary of CVQ and was acquired by the Group in 2014 (see Note 3).

(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)

Sistema Radiópolis, S.A. de C.V. (“Radiópolis”) is an indirect 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)

Certain subsidiaries of the Company in the Other Businesses segment, owned by Nekeas as of December 31, 2014, were acquired by Villacezan in the third quarter of 2015, following the mergers described above of Nekeas into TTelecom and 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 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 the Mexican Institute of Telecommunications (“Instituto Federal de Telecomunicaciones” or “IFT”) within the year 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.  Renewal of concessions for the Sky and Cable segments require, among others: (i) to request its renewal to IFT in the year 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

 

F-12



 

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 the 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, the 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, 2015, the expiration dates of the Group’s concessions and permits were as follows:

 

Segments

 

Expiration Dates

Content (broadcasting concessions)

 

In 2021

Sky

 

Various from 2016 to 2027

Cable

 

Various from 2016 to 2045

Other Businesses:

 

 

Radio

 

Various from 2015 to 2020 (1)

Gaming

 

In 2030

 


(1)    Concessions for three Radio stations in San Luis Potosí and Guadalajara expired in 2015. Renewal applications were timely filed, but are still pending as certain related matters of the applicable regulations are being reviewed by the IFT. The Group’s management expects that concessions for these three stations will be renewed or granted by the IFT.

 

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 has investments in associates, including a 10% and 7.8% equity interest in UHI as of December 31, 2015 and 2014, respectively (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

 

F-13



 

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.

 

(d)                                 Segment Reporting

 

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 re-measured. 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 Non-Mexican subsidiaries’ financial statements

 

The financial statements of all the Group 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.

 

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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.$330.5 million (Ps.5,685,748) and U.S.$237.6 million (Ps.3,507,390) as of December 31, 2015 and 2014, 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).

 

Beginning in the third quarter of 2015, 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. 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 (hedged item), which amounted to U.S.$2,035.5 million (Ps.35,042,577) as of December 31, 2015. 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, 2015 and 2014, 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 0.15% for U.S. dollar deposits and 3.09% for Mexican peso deposits in 2015, and approximately 0.10% for U.S. dollar deposits and 3.29% for Mexican peso deposits in 2014.

 

(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.

 

F-15



 

(h)                                 Inventories

 

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.

 

(i)                                    Financial Assets

 

The Group classifies its financial assets in the following categories: loans and receivables, held-to-maturity investments, 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

 

F-16



 

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

 

3-25 years

Satellite transponders

 

15 years

Furniture and fixtures

 

3-11 years

Transportation equipment

 

4-8 years

Computer equipment

 

3-5 years

Leasehold improvements

 

5-20 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.

 

F-17


 


 

(k)                                 Intangible Assets

 

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

 

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.

 

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

 

F-18



 

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, 2015 and 2014.

 

(n)                                 Debt

 

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, 2015 and 2014.

 

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 television advertising services provide that customers receive preferential prices that are fixed for the contract period for television broadcast advertising time based on rates established by the Group. Such rates vary depending on when the advertisement is aired, including the season, hour, day and type of programming.

 

(p)                                 Provisions

 

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.

 

(q)                                 Equity

 

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

 

F-19



 

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.

 

(r)                                   Revenue Recognition

 

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.

 

·                                          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.

 

·                                          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 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

 

F-20



 

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.

 

(s)                                   Interest Income

 

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.

 

(t)                                    Employee Benefits

 

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.

 

In the first quarter of 2013, the Group adopted the provisions of IAS 19, Employee Benefits, as amended, which became effective on January 1, 2013. The amended IAS 19 eliminated the corridor approach for the recognition of remeasurement of post-employment benefit obligations, and requires the calculation of finance costs on a net funding basis. Also, the amended IAS 19 requires the recognition of past service cost as an expense at the earlier of the following dates: (i) when the plan amendment or curtailment occurs; and (ii) when the entity recognizes related restructuring costs or termination benefits. As a result of the adoption of the amended IAS 19, the Group adjusted a consolidated unamortized past service cost balance and consolidated retained earnings as of January 1, 2013 in the aggregate amount of Ps.102,902 (see Note 15).

 

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.

 

(u)                                 Income Taxes

 

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 with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

 

F-21



 

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. In the last quarter of 2013, the Mexican Congress enacted a new Tax Reform (the “2014 Tax Reform”), which became effective as of January 1, 2014. Among the tax reforms approved by the Mexican Congress, one of the most relevant changes was the elimination of the tax consolidation regime allowed for Mexican controlling companies through December 31, 2013 (see Note 23).

 

Beginning on January 1, 2014, as a result of the 2014 Tax Reform, the Company is no longer allowed to consolidate income or loss of its Mexican subsidiaries for income tax purposes. Accordingly, current income tax assets and current income tax liabilities, and deferred income tax assets and deferred income tax liabilities, of Mexican companies in the Group as of December 31, 2014, are not offset as they relate to income taxes levied by the taxation authority on each separate taxable entity (see Note 23).

 

(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 accumulated other comprehensive income 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. 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, 2015 and 2014, certain derivative financial instruments qualified for hedge accounting (see Note 14).

 

(w)                               Comprehensive Income

 

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

 

F-22



 

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.1,199,489, Ps.844,788 and Ps.605,067 for the years ended December 31, 2015, 2014 and 2013, respectively, of which Ps.1,184,524, Ps.821,626 and Ps.601,181 was credited in consolidated stockholders’ equity for those years, respectively.

 

(y)                                  Leases

 

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, 2016. Management is in the process of assessing the potential impact of these pronouncements on the Group’s consolidated financial statements.

 

New or Amended Standard

 

Title of the Standard

 

Effective for
Annual Periods
Beginning
On or After

Annual Improvements

 

Annual Improvements to IFRSs 2012-2014 Cycle

 

January 1, 2016

Amendments to IFRS 11

 

Accounting for Acquisitions of Interests in Joint Operations

 

January 1, 2016

Amendments to IAS 16 and IAS 38

 

Clarification of Acceptable Methods of Depreciation and Amortization

 

January 1, 2016

Amendments to IAS 27

 

Equity Method in Separate Financial Statements

 

January 1, 2016

Amendments to IFRS 10 and IAS 28

 

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

 

Postponed

Amendments to IFRS 10, IFRS 12 and IAS 28

 

Investment Entities: Applying the Consolidation Exception

 

January 1, 2016

Amendments to IAS 1

 

Disclosure Initiative

 

January 1, 2016

Amendments to IAS 7

 

Disclosure Initiative

 

January 1, 2017

Amendments to IAS 12

 

Recognition of Deferred Tax Assets for Unrealized Losses

 

January 1, 2017

IFRS 15

 

Revenue from Contracts with Customers

 

January 1, 2018

IFRS 9

 

Financial Instruments

 

January 1, 2018

IFRS 16

 

Leases

 

January 1, 2019

 

Annual Improvements to IFRSs 2012-2014 Cycle were published in September 2014 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:

 

Annual Improvements 2012-2014 Cycle

 

Subject of Amendment

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

 

Changes in methods of disposal

IFRS 7 Financial Instruments: Disclosures

 

Servicing contracts and applicability of the amendments to IFRS 7 to condensed interim financial statements

IAS 19 Employee Benefits

 

Discount rate: regional market issue

IAS 34 Interim Financial Reporting

 

Disclosure of information ‘elsewhere in the interim financial report’

 

F-23



 

Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Ventures were issued in May 2014 and add new guidance on how to account for the acquisition of an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3 Business Combinations. Under these amendments, the acquirer of a joint operation that constitutes a business shall apply all of the principles on business combinations accounting in IFRS 3, and other IFRSs, that do not conflict with the guidance in this IFRS and disclose the information that is required in those IFRSs in relation to business combinations.

 

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortization were issued in May 2014 and clarify that the use of revenue-based methods to calculate depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the assets. These amendments also clarify that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset.

 

Amendments to IAS 27 Equity Method in Separate Financial Statements were issued in August 2014 and will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in the separate 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 acknowledged 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 involve 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.

 

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception were issued in December 2014, and introduce clarifications to the requirements when accounting for investment entities. These amendments clarify which subsidiaries of an investment entity are consolidated in accordance with IFRS 10 Consolidated Financial Statements, instead of being measured at fair value through income.

 

Amendments to IAS 1 Disclosure Initiative were issued in December 2014 and clarify that companies should use professional judgment in determining what information to disclose in the financial statements, and where and in what order information is presented in the financial disclosures.

 

Amendments to IAS 7 Disclosure Initiative were issued in January 2016 and clarify that companies should provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

 

Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses were issued in January 2016 and clarify the requirements on recognition of deferred tax assets for unrealized losses, to address diversity in practice. Earlier application is permitted.

 

IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) was issued in May 2014. 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. IFRS 15 is effective on January 1, 2018, with early adoption permitted. The Group is expected to be impacted to some extent by the significant increase in required disclosures. The Company’s management is currently in the process of assessing the changes that are beyond disclosures, and the effect of the adoption of this standard regarding technology systems, processes, and internal controls to capture new data and address changes in financial reporting.

 

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. 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

 

F-24



 

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. Some amendments to IFRS 9 and IFRS 7 Financial Instruments: Disclosures (“IFRS 7”) were issued in December 2011. These amendments to IFRS 9 modify the mandatory effective date of this standard and the relief from restating prior periods, and also add transition disclosures to IFRS 7 that are required to be applied when IFRS 9 is first applied. The Company’s management is currently evaluating the impact IFRS 9 will have on its consolidated financial statements and disclosures.

 

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 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 Company’s management is currently evaluating the impact IFRS 16 will have on its consolidated financial statements and disclosures.

 

3.                                      Acquisitions, Investments and Dispositions

 

In July 2013, the Group made an investment in the amount of Ps.7,000,000 in convertible debt instruments to acquire, subject to regulatory approvals, 95% of the equity interest of Tenedora Ares, S.A.P.I. de C.V. (“Ares”), owner of 51% of the equity interest of Cablecom, a telecommunications company that offers video, telephony, data and other telecom services in Mexico. In addition, Ares had an option to acquire in the future, subject to regulatory approvals, the remaining 49% of the equity interest of Cablecom. As part of this transaction, the Group also invested in a long-term debt instrument issued by Ares in the amount of U.S.$195 million (Ps.2,549,625). In August 2014, the Group acquired, pursuant to applicable regulations, all of the equity interest of Cablecom through the conversion of the debt instruments issued by Ares in the amount of Ps.7,297,292, including accrued interest at the acquisition date, and an additional consideration of Ps.8,550,369, comprised of (i) the capitalization of an outstanding long-term debt issued by Ares in the amount of U.S.$200.2 million (Ps.2,642,367), including accrued interest at the acquisition date; and (ii) cash in the amount of Ps.5,908,002. The total fair value consideration for this acquisition amounted to Ps.15,847,661, and the Group recognized goodwill, other intangible assets and related deferred income tax liability based on a final purchase price allocation at the acquisition date. The Group began to consolidate the net assets of Cablecom in its consolidated statement of financial position as of August 31, 2014, and therefore, the Group’s consolidated statement of income for the year ended December 31, 2014, included results of operations of Cablecom for the four months ended on that date. Through the acquisition of Cablecom, the Group increased its presence in the telecommunications Mexican market, not only by maintaining customers of Cablecom at the date of the acquisition, but also by increasing the number of users of Cablecom services in connection with new market strategies (see Note 25). The following table summarizes the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date. The excess of the purchase price over those fair values and the related deferred income tax liability was allocated to goodwill in the Cable segment.

 

 

 

August 31, 2014

 

Cash and cash equivalents

 

Ps.

 371,353

 

Trade and other receivables

 

269,868

 

Other current assets

 

169,841

 

Total current assets

 

811,062

 

Property, plant and equipment, net

 

2,762,363

 

Goodwill

 

6,913,684

 

Concessions

 

7,650,430

 

Other intangible assets, net

 

3,635,767

 

Other non-current assets

 

161,169

 

Total assets

 

21,934,475

 

Trade and other payables

 

528,177

 

Short-term debt and current portion of long-term debt

 

443,475

 

 

F-25



 

 

 

August 31, 2014

 

Other current liabilities

 

94,309

 

Total current liabilities

 

1,065,961

 

Long-term debt

 

1,454,046

 

Post-employment benefits

 

61,823

 

Deferred income tax liabilities

 

3,491,066

 

Other non-current liabilities

 

13,918

 

Total non-current liabilities

 

5,020,853

 

Total liabilities

 

6,086,814

 

Total net assets

 

Ps.

15,847,661

 

 

During 2013, the Group made capital contributions in connection with its former 50% interest in GSF in the aggregate amount of Ps.1,587,500. In September 2014, the Group’s partner in GSF agreed to purchase the Group’s 50% equity participation in the Iusacell telecom business at a cash price of U.S.$717 million (Ps.9,461,532). As a result of this transaction, which was subject to customary closing conditions and required regulatory approvals, the Group discontinued recognizing its share of income or loss of GSF, and recognized a non-cash loss of Ps.4,168,468 in consolidated other expense and an account receivable for the agreed sale amount. As of December 31, 2014, the related account receivable amounted to U.S.$717 million (Ps.10,583,852). In December 2014, the required regulatory approvals for this transaction were obtained. In January 2015, the Group received proceeds in the aggregate amount of U.S.$717 million (Ps.10,632,393) in connection with the disposal in 2014 of its investment in GSF, of which U.S.$697 million (Ps.10,335,813) were in cash and U.S.$20 million (Ps.296,580) were held in escrow for certain contingent litigation costs. As of December 31, 2015, the amount held in escrow was U.S.$11.9 million (Ps.204,954)  (see Notes 10, 14, 21 and 22).

 

In January 2015, the Group acquired, through a series of transactions, all of the equity interest of Telecable for an aggregate cash consideration of Ps.10,001,838. Telecable is a cable business that provides video, data and telephone services in Mexico, primarily in the states of Guanajuato, Jalisco, Aguascalientes, Querétaro, Tamaulipas and Colima. The Group began to consolidate the net assets and results of operations of Telecable in its consolidated financial statements in the first quarter of 2015. The Group completed a final purchase price allocation for this transaction in the fourth quarter of 2015. Through the acquisition of Telecable, the Group continues with its strategy to establish a cable company with national coverage that delivers more and better services through state of the art technology and internationally competitive prices for the benefit of end users. The following table summarizes the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date. The excess of the purchase price over those fair values and the related deferred income tax liability was allocated to goodwill in the Cable segment.

 

 

 

January 1, 2015

 

Cash and cash equivalents

 

Ps.

270,447

 

Trade and other receivables

 

57,687

 

Other current assets

 

34,118

 

Total current assets

 

362,252

 

Property, plant and equipment, net

 

1,724,757

 

Goodwill

 

4,885,331

 

Concessions

 

4,373,855

 

List of subscribers

 

1,233,808

 

Trademarks

 

218,578

 

Other intangible assets

 

16,240

 

Other non-current assets

 

4,582

 

Total assets

 

12,819,403

 

Trade and other payables

 

135,920

 

Other current liabilities

 

78,753

 

Total current liabilities

 

214,673

 

Long-term debt

 

505,425

 

Deferred income tax liability

 

2,090,269

 

Other non-current liabilities

 

7,198

 

 

F-26



 

 

 

January 1, 2015

 

Total non-current liabilities

 

2,602,892

 

Total liabilities

 

2,817,565

 

Total net assets

 

Ps.

10,001,838

 

 

In July 2015, UHI, the controlling company of Univision, and the Company announced that together with major shareholders of UHI, they had entered into a Memorandum of Understanding (“MOU”) and that certain subsidiaries of UHI and the Company entered into an agreement to amend their existing Program Licensing Agreement (the “PLA”). Under the PLA amendment, the terms of the existing strategic relationship between UHI and the Group have been amended among other things, (i) to extend the term of the PLA from its current expiration date of at least 2025 to at least 2030 upon consummation of a qualified public equity offering of UHI; and (ii) to adjust the royalty computation of the PLA by making certain additional revenue subject to royalties in exchange for certain adjustments to the royalty rate. Under the terms of the MOU, UHI, the Group and the major shareholders of UHI agreed to (i) upon a qualifying initial public offering of UHI, an equity capitalization of UHI by which, among other considerations, the Group will hold common stock with approximately 22% of the voting rights of UHI common stock, and the right for the Group to designate a minimum number of directors to UHI’s Board of Directors; and (ii) the exchange of U.S.$1,125 million (Ps.17,634,375) principal amount of Convertible Debentures issued by UHI for Warrants that are exercisable for UHI’s common stock, and a cash payment by UHI in the amount of U.S.$135.1 million (Ps.2,194,981) for such exchange. In July 2015, the Group exercised a portion of these Warrants to increase its equity stake in UHI from 7.8% to 10% (see Notes 9, 10, 14, 19 and 22).

 

In July 2015, the Company acquired additional shares of Imagina Media Audiovisual, S.L. (together with its subsidiaries, “Imagina”) in the aggregate cash amount of €19.2 million (Ps.341,710) in connection with a reorganization of stockholders of this investee by which the Company increased its equity stake in Imagina from 14.5% to 19.9% (see Notes 9 and 10).

 

4.                                      Financial Risk Management

 

(a)                                 Market Risk

 

Market risk is the exposure to an adverse change in the value of financial instruments caused by market factors including changes in equity prices, interest rates, foreign currency exchange rates, commodity prices and inflation rates.

 

The Group is exposed to market risks arising from changes in equity prices, interest rates, foreign currency exchange rates and inflation rates, in both the Mexican and U.S. markets. Risk management activities are monitored by the Risk Management Committee on a quarterly basis and reported to the Executive Committee.

 

(i)                                     Foreign Exchange Risk

 

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. dollar and the Mexican peso. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

 

Foreign currency exchange risk is monitored by assessing the net monetary liability position in U.S. dollars and the forecasted cash flow needs for anticipated U.S. dollar investments and servicing the Group’s U.S. dollar denominated debt.

 

Management has set up a policy to require Group companies to manage their foreign exchange risk against their functional currency. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use forward contracts. In compliance with the procedures and controls established by the Risk Management Committee, in 2015 and 2014, the Group entered into certain derivative transactions with certain financial institutions in order to manage its exposure to market risks resulting from changes in interest rates and foreign currency exchange rates. The objective in managing foreign currency fluctuations is to reduce earnings and cash flow volatility.

 

Foreign Currency Position

 

The foreign currency position of monetary items of the Group at December 31, 2015, was as follows:

 

F-27



 

 

 

Foreign 
Currency 
Amounts
(Thousands)

 

Year-End 
Exchange Rate

 

Mexican Pesos

 

Assets:

 

 

 

 

 

 

 

U.S. Dollars

 

2,641,885

 

Ps.

17.2160

 

Ps.

45,482,692

 

Euros

 

21,027

 

18.7258

 

393,747

 

Argentinean Pesos

 

245,087

 

1.3259

 

324,961

 

Chilean Pesos

 

3,619,630

 

0.0243

 

87,957

 

Colombian Pesos

 

14,734,815

 

0.0054

 

79,568

 

Other currencies

 

 

 

122,270

 

Liabilities:

 

 

 

 

 

 

 

U.S. Dollars

 

4,966,594

 

Ps.

17.2160

 

Ps.

85,504,882

 

Euros

 

1,331

 

18.7258

 

24,924

 

Argentinean Pesos

 

171,019

 

1.3259

 

226,754

 

Chilean Pesos

 

1,388,950

 

0.0243

 

33,751

 

Colombian Pesos

 

14,683,704

 

0.0054

 

79,292

 

Other currencies

 

 

 

150,867

 

 

As of April 8, 2016, the exchange rate was Ps.17.8030 per U.S. dollar, which represents the interbank free market exchange rate on that date as reported by Banco Nacional de México, S.A.

 

The foreign currency position of monetary items of the Group at December 31, 2014, was as follows:

 

 

 

Foreign 
Currency 
Amounts
(Thousands)

 

Year-End 
Exchange Rate

 

Mexican Pesos

 

Assets:

 

 

 

 

 

 

 

U.S. Dollars

 

2,739,794

 

Ps.

14.7613

 

Ps.

40,442,921

 

Euros

 

65,962

 

17.8641

 

1,178,352

 

Argentinean Pesos

 

218,131

 

1.7263

 

376,559

 

Chilean Pesos

 

3,743,582

 

0.0243

 

90,969

 

Colombian Pesos

 

16,753,058

 

0.0062

 

103,869

 

Other currencies

 

 

 

592,235

 

Liabilities:

 

 

 

 

 

 

 

U.S. Dollars

 

3,987,204

 

Ps.

14.7613

 

Ps.

58,856,314

 

Euros

 

1,112

 

17.8641

 

19,865

 

Argentinean Pesos

 

240,330

 

1.7263

 

414,882

 

Chilean Pesos

 

968,319

 

0.0243

 

23,530

 

Colombian Pesos

 

17,565,639

 

0.0062

 

108,907

 

Other currencies

 

 

 

169,420

 

 

The Group is subject to the risk of foreign currency exchange rate fluctuations, resulting primarily from the net monetary position in U.S. dollars of the Group’s Mexican operations, as follows (in millions of U.S. dollars):

 

 

 

December 31,

 

 

 

2015

 

2014

 

U.S. dollar-denominated monetary assets, primarily cash and cash equivalents, held-to-maturity investments, non-current investments, and Convertible Debentures (1)

 

U.S.$

2,606.3

 

U.S.$