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In augmentation
Annual Report 2012
www.alsea.com.mxGrowthStrengtheningResultsSustainability
INVESTOR INFORMATION
INVESTOR RELATIONS
INFORMATION ON ALSEA´S STOCK
The single series shares of Alsea S.A.B. de C.V. have
been traded on the Mexican Stock Exchange (Bolsa
Mexicana de Valores or BMV) since June 25, 1999.
Ticker Symbol: BMV ALSEA*
Alsea’s 2012 Annual Report may include certain
expectations regarding the results of Alsea, S.A.B.
de C.V. and its subsidiaries. All such projections,
which depend on the judgment of the Company’s
Management, are based on currently known
information; however, expectations may vary as a
result of facts, circumstances and events beyond
the control of Alsea and its subsidiaries.
ABOuT ThIS REpORT
Alsea presents its first 2012 comprehensive report,
which reflects both the financial results as well
as the actions taken during 2012 with respect to
sustainability issues.
For the second consecutive year we are presenting
this report based on guidelines provided by the
Global Reporting Initiative (GRI) methodology. It
is a self-declared level B report, without external
verification.
Also, we are committed to ensuring that our
operations and strategies are aligned with the
United Nations’ Millennium Development Goals
and the Principles of the Global Contract. This
is why we are also presenting initiatives for
supporting its 10 principles in this report.
Enrique González Casillas
Investor Relations
ri@alsea.com.mx
Phone: +52 (55) 5241-7035
Diego Gaxiola Cuevas
CFO
ri@alsea.com.mx
Phone: +52 (55) 5241-7151
HEADQUARTERS
Alsea S.A.B. de C.V.
Av. Paseo de la Reforma #222, 3th. Floor
Tower 1 Corporate Building
Col. Juárez, Del. Cuauhtémoc
ZIP Code 06600, México D.F
Phone: +52 (55) 5241-7100
INDEPENDENT AUDITORS
DELOITTE
Galaz, Yamazaki, Ruiz Urquiza, S.C.
Av. Paseo de la Reforma #489, 6th. Floor
Col. Cuauhtémoc, Del. Cuauhtémoc
ZIP Code 06500, México D.F.
Phone: +52 (55) 5080-6000
SOCIAL RESPONSIBILITY:
Ivonne Madrid Canudas
responsabilidad-social@alsea.com.mx
Phone: 52 41 71 00 ext. 7335
This Report is available in:
www.alsea2012.com or in
our App “Alsea 2012”
(Downloadable in Itunes’s App Store).
Our previous reports can be consulted in:
www.alsea.com.mx
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1
2
3
4
5
6
7
Shareholders
letter
Growth in
augmentation
Strengthening in
augmentation
Results in
augmentation
Shared value in
augmentation
MD&A and committee´s
letters
Financial
statements
6
11
17
27
33
57
69
1
Letter to shareholders Alsea (BMV: ALSEA*) is the leading
restaurant operator in Latin America. The
company has a portfolio of leading global
brands in the Quick Service, Coffee Shop,
and Casual Dining segments, including:
Domino’s, Starbucks, Burger King, Chili’s,
California Pizza Kitchen, P.F. Chang’s,
Pei Wei and Italianni’s. At the end of 2012,
the portfolio added up to a total of 1,421
units, with a presence in Mexico, Argentina,
Chile, and Colombia. Its Business Model
includes their Support Areas and supply
chain. It has more than 27,600 employees.
What do we want to be?
“To be the best operator with leading
brands in the segments and countries that
we participate in”
Mission
To have a team that is committed to
exceeding our clients expectations.
“Touching people, enriching moments”
Principles
• The customer comes first
To serve our customers with respect and a
passion for excellence in service.
• Respect and loyalty to our coworkers
and the company
To create a work atmosphere with a
feeling of unity, tightness with the
operation, that is respectful and without
favoritism.
• Personal excellence and commitment
To always act in a way that is honest,
simple, and fair, without putting personal
interests first.
• Results oriented
To make decisions that are always
oriented around the good of the company
in order to improve results.
613
Mexico 584
Colombia 29
221
Mexico 107
Argentina 65
Chile 34
Colombia 15
472
Mexico 367
Argentina 64
Chile 41
36
Mexico 36
13
Mexico 13
Subfranchises 205
Associated 41
Subfranchises 2
834 Units
QSR
472 Units
Coffee Shops
2
ALSeA oPeRATeS
ThE LARgEST
MULTI-BRAnD
PoRTfoLio
of restaurants
In LATIn AMeRICA
MoRe ThAn
MILLIon
CUSToMeRS
SeRveD
A SUCCeSSFUL
BuSinESS
MoDEL
SUPPoRTS
oUR oPeRATIon
8
Brands
1,161
Corporate
Units
260
Sub-franchise
and Associated
Units
27,619
employees
Mexico
Chile
1,172
Units
76
Units
Colombia
Argentina
44
Units
129
Units
9
Distribution Centers
Distribution to more than
1,474 points of sale
Structure of
Support Areas
The Business Model includes:
•Support Areas: Finance, Technology and
Systems, human Resources, and Real estate
Development.
•Supply Chain: Purchasing, Production, and
Distribution.
Strategic areas
• Clients to exceed our customers’
expectations, through an unbeatable
experience of our products, services,
and image.
• People to promote the personal and
professional development of our
coworkers.
• Synergy to guarantee synergy by
maximizing our critical mass and
via collaboration with our strategic
partners.
• Results to ensure the profitable
growth and sustainability of the
company.
• Social Responsibility to be
recognized by customers and
coworkers as a socially responsible
company.
11
Mexico 10
Chile 1
2
Mexico 2
53
Mexico 53
Coming soon 2013
Brand:
Subfranchises 12
115 Units
Casual Dining
Market:
Brasil
3
income statement
net Sales
Gross Profit
operating Income
eBITDA (2)
Consolidated net Profit
Balance sheet
Total Assets
Cash
Liabilities with Cost
Major Shareholder´s equity
Profitability metrics
RoIC(3)
Roe(4)
Stock information
Share Price
earnings per Share
Dividend per Share
Book value per Share
Shares outstanding (millions)
operation
number of Units
employees
CAgR(5)
10 years
Annual
growth %
2012
%
2011
%
18.4
20.2
13.2
15.8
13.6
10.9
15.9
26.7
27.1
76.0
43.2
69.7
4.2
26.1
(18.2)
51.0
13,519.5
100.0
10,668.8
100.0
8,747.8
797.3
1,608.6
401.8
64.7
5.9
11.9
3.0
6,881.2
453.1
1,123.1
236.8
64.5
4.2
10.5
2.2
9,771.2
100.0
9,374.2
100.0
932.6
3,317.2
4,520.6
9.5
33.9
46.3
739.4
4,056.5
2,993.9
7.9
43.3
31.9
220 bps
310 bps
8.6%
10.5%
83.1
66.5
nA
32.5
13.5
10.8
19.0
25.78
0.57
0.50
6.57
687.8
1,421
27,619
6.4%
7.4%
14.08
0.34
0.20
4.96
606.0
1,283
23,212
(1) Figures in millions of pesos and in IFRS, expressed in nominal pesos, except per share data, number of stores and employees.
(2) eBITDA operating income before depreciation and amortization.
(3) RoIC is defined as the operating income after taxes divided by the invested capital - net (total assets - cash and cash equivalents - liabilities
without cost).
(4) Roe is defined as net profit divided by major shareholder´s equity.
(5)CAGR is defined as Compound Annual Growth Rate from 2003 to 2012.
4
Qsr
Casual Dining
SALES BY
BRAnD
20%
26%
28%
Coffee shops
net Sales
*million pesos
EBiTDA(2)
*million pesos
6%
2%
3%
5%
Distribution and Production
10%
9
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6
,
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2
5
3
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03
04
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08
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11
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03
04
05
06
07
08
09
10
11
12
5
once again I am quite honored to present
you with our financial results and Alsea’s
principal successes during the year, which
continue in AugMEnTATion, since the
established goals for growth have been
exceeded and consolidated. however, before
presenting the scenario for the year and
explaining its reach, I would particularly like
to thank each one of our employees, clients,
strategic partners and investors, who again
provided us with the support and trust
necessary to continue creating greater value
for our shareholders.
environment,
Without a doubt, one important factor in
obtaining these results was the country’s
macroeconomic
which,
throughout 2012, was propitious for the
in consumption.
sustained
Added to this favorable environment, our
efficient business model and the strength of
each of our brands, as well as the different
strategies implemented, were determining
factors in reaching our goals.
improvement
13,519 Mxnm in
Sales
10.5%
growth in
Same
Store
Sales
43.2% increase
in EBiTDA
11.9% EBiTDA
margin
138 net
openings
next I would like to share with you the goals
and achievements in AugMEnTATion that
Alsea reported during 2012:
83.1%
Share
price
growth
2nd
Year in the
iPC index
6
• We added a ninth brand to our portfolio,
with an agreement to develop and
operate The Cheesecake Factory in Latin
America. This brand, which is the global
industry leader, without a doubt will be a
new project that will bring innovation and
synergy to our Business Model.
ExPAnSion AnD
STREngThEning
•We strengthened our portfolio by adding
in the Italianni’s brand, which is the
absolute leader in Mexico in the Italian
food segment. This acquisition will allow
Alsea to increase its total market share by
entering into this important segment.
•We acquired the exclusive rights to
operate the Master Franchise of Burger
King in Mexico, in a strategic partnership
with BKW. This operation, which includes
the acquisition of 97 restaurants, will
provide major synergies that will benefit
the brand’s profitability.
•We consolidated our operations in South
America with the start-up of P.F. Chang’s
operations in Chile, and the signature of
an exclusivity agreement for the brand
in Brazil, which will be the fifth country
in which we operate and a fundamental
part of our expansion strategy. We will
also open units of this brand in Argentina
and Colombia during 2013, which will
enable our pace of growth in the region to
continue in AugMEnTATion.
fabián gosselin Castro
Chief executive officer
7
Letter to shareholders finAnCiAL RESuLTS
•Total sales were 13.5 billion pesos, which
translates into growth of 27% over 2011.
This growth was mainly due to the 10.5%
increase in same-store sales, and to the
expansion during the year of 138 units in
our portfolio.
• The Company’s eBITDA margin rose 140
basis points, for an increase of 43% it
closed at 1.6 billion pesos, which is a record
in our history. This major achievement was
due to efficient management that focused
on generating higher profitability in the
portfolio, added to continuous growth
in the operation of our most successful
brands.
• Another favorable result during the year
was the generation of net income of 402
million pesos a year-over-year increase of
70% , which clearly reflects the Company’s
commitment to each of our shareholders.
•Due to the early debt payments during the
year and higher cash flow generation, we
closed the year with one of the lowest debt
levels in the history of the Company: a net
Debt/eBITDA ratio of 0.96x. Thanks to this
solid financial position, we will be able to
face the challenges and projects outlined
for Alsea in 2013.
• I want to finish this section on our results
talking about our share price, which,
during 2012 recorded an annual increase
of more than 83%, closing at $25.78;
this places us as one of the most highly
profitable issuers in the Mexican market.
This achievement was possible thanks to
the market’s ongoing interest in us, backed
by our solid results and growth. In addition
to the foregoing, in 2012 our shareholders
received a dividend equal to one share
for every 37.52 shares in control. Also in
relation to our shares, I want to thank all of
you for the trust and interest in the follow-
on offering that we carried out at the end
of the year; the demand for this placement
exceeded the total value of the transaction
by five times.
8
SuSTAinABiLiTY
•At Alsea, we have worked over the years
to position Social Responsability as a
strategic part of the business.
•In 2012, Alsea was awarded the Socially
Responsible Company badge by
the
Mexican Philantropic Center (CeMeFI A.C.).
We also reaffirmed our commitment to
the principles of the United nations Global
Compact, and for the first time we present
that addresses
report
an
the creation of financial value for our
shareholders, as well as our social and
environmental performance.
integrated
•As we are concerned with child malnutrition
in our country, we support the initiative “It’s
on me”, a social movement that contributes
with Mexican children in food poverty
situation to have access to an adequate
balanced diet, through the construction
and operation of dinning rooms
for
children, called “nuestro Comedor”. In 2012
we started up 2 dining rooms in estado de
México, which serve 400 children daily.
I would like to thank all of our employees,
clients, strategic partners and shareholders for
yet another year of trust and interest in our
company, and invite you to join us in continuing
in AugMEnTATion our successes during this
year 2013, since ThE BEST iS YET To CoME.
Respectfully,
• our main challenges will be to continue
aligning our efforts and processes for the
development of the communities where
we operate, encourage better quality of
life for our employees, protection of the
environment through our energy efficiency
continue
likewise
program and
to
promoting Responsible Consumption.
fabián gosselin Castro
Chief executive officer
9
Letter to shareholders 10
GRoWTh
In AUGMenTATIon
11
Letter to shareholders integration of
italianni’s
During 2012, we acquired
and added the operation
of Italianni’s in Mexico.
The efficiency and
strength of our Business
Model allowed us to
successfully integrate the
brand into our portfolio.
12
unIts,
In tHe CasuaL
DInInG seGMent
i
S
T
n
u
5
1
1
I
s
t
n
u
5
5
I
s
t
n
u
4
4
I
s
t
n
u
7
3
I
s
t
n
u
1
3
08
09
10
11
12
CAGR= 38.8%
*CAGR = Compound Annual Growth Rate
(2008-2012).
8th brand in
operation
13
Growth in augmentation
Acquisition of 97 units
inclusion of 206 subfranchises
tHe sIsteM
In MeXICo
Has a totaL of
unIts
8 oPeRAToRS
Joint
Venture
having the exclusive
rights to operate and
develop the brand in
Mexico allows us to
achieve greater market
penetration, reaching the
leadership position that
characterizes the brand.
14
M A S TER
20 YEARS
An C h i S E
R
f
15
Growth in augmentation 16
STRenGThenInG
In AUGMenTATIon
17
Letter to shareholders eXPAnSIon
STRATeGY
for CasuaL
DInInG In
SouTh AMERiCA
18
MarKet
WITh oveR
PeoPLe
exclusivity for:
P.f. Chang´s in the
region
In July 2012, we opened
the first P.F. Chang’s unit in
South America. Taking
advantage of synergies and
leverage from our business
model, we also signed
the exclusivity rights for
P.F. Chang´s in Brazil, an
important market for the
growth strategy in
the region.
19
Strengthening in augmentation new
Brand
The Cheesecake
factory in LatAm
In February 2013, we signed
the master franchise
agreements for Mexico and
Chile with a commitment
of 12 openings in the next
8 years. Additionally, there
is the option of signing
exclusive contracts with
Argentina, Brazil, Colombia,
and Peru.
20
exclusivity option:
21
Strengthening in augmentation new image
During 2012 the brand
consolidated its different
communication and product
strategies, achieving
DoUBLe-DIGIT growth in
same-store sales.
During 2013, the store’s
new image will be
implemented for our
operation in Mexico and
Colombia, which will allow
us to build a closer
relationship with our
consumers.
More tHan
PiZZAS
soLD In 2012
22
GeneRATeD
28% oF
aLsea saLes
472 units
Starbucks
10 Years
We are celebrating the
10th Anniversary of the
brand in Mexico, which
has become the brand
with the biggest share
of Alsea’s total sale.
At the end of 2012,
Starbucks operated in
more than 49 cities in
Mexico.
10 years
enriching
moments
23
Strengthening in augmentation Chili´s 20 years
Chili’s has been in Mexico
for 20 years, and under
Alsea’s operation for 7
years. With Chili’s, we
entered the Casual Dining
segment for the first
time. Under Alsea, the
brand served more than
4 MiLLion
ConSUMeRS
during 2012, achieving the
most significant growth in
Same Store Sales for our
operations in Mexico.
20 years
Sharing
Moments
24
WE SERVED
More tHan
SATiSfiED
CLIenTS
At CPK we seek the
extraordinary
At California Pizza Kitchen,
2012 was a year for seeking
the extraordinary and
achieving operational
successes that generated
greater investment value.
During the year, total sales
for the brand achieved a
growth of over 9%, driven
mainly by growth in the
average ticket, as a result of
the acceptance that the
different product platforms
presented during the year.
25
Strengthening in augmentation 26
ReSULTS
In AUGMenTATIon
27
Letter to shareholders Capex
MILLIon PeSoS
units and acquisitions
We acquired the operation of Italianni’s in
Mexico and invested in new units.
28
Technology
and systems
We improved oracle
eRP system and
made them more
efficient.
Distribution
and logistics
Warehouse Managment
System (WMS) and
Transportation
Management System
(TMS).
Maintenance
During the year
we invested more than
154 million pesos in
maintenance capex for
our stores.
our organizational structure
During 2012 we focused
on consolidating our
organizational structure,
developing new
capabilities, and making
changes aligned with
sustainable growth.
Integration of the operation for all
countries under Ceo management.
Reorganization for all support areas, with
the result of synergies and critical mass.
evolution of our Supply Chain, by
integrating all of its areas.
AnnUAL GRoWTh
UnITS
27 units
in QSR
49 units in
Coffee Shops
62 units in
Casual Dining
our business mix for 2012
10
16
%
46
28
QSR
Coffee Shops
Casual Dining
Distribution
and Production
29
Results in augmentation (Margin Expansion)
Results
SALeS
$13,519.5
million pesos
annual growth
SAMe-SToRe
SALeS
full-year
(84 Corporate)
Units
eBITDA
$1,608.6
million pesos
Growth
43.2% Margin
+
140 bps
vs
prior year
neT
InCoMe
$401.8
million pesos
annual growt h
Profitability
STRenGThenInG
our ProfItaBILItY
MetrICs
30
RoIC Roe
sHare PrICe
$25.78
83.1%
annuaL GroWtH
$14.08
ALSEA*
2nd ConseCutIve
Year In tHe
IPC InDeX
$25.78
AVER AgE
D A I LY
oPeRATIon
Dec. 31, 2011
Dec. 31, 2012
follow-on transaction
Share
Price
$21.50
53.49
million
Common
shares
issued
Amount of the transaction
$1.15 billion pesos
With the proceeds, we prepaid debt which added to the cash flow
generation reached during the year, we were able to reached a ratio of:
31
Results in augmentation 32
ShAReD vALUe
In AUGMenTATIon
33
Letter to shareholders Board of Directors 2012
Chairman
Alberto Torrado Martínez
Shareholder Board
Alberto Torrado Martínez
Chairman
Cosme Torrado Martínez
shareholder
Armando Torrado Martínez
shareholder
Fabián Gerardo Gosselin Castro
Chief executive officer
Federico Tejado Bárcena
Ceo starbucks Mexico
Secretary
Xavier Mangino Dueñas
Partner Díaz de rivera y Mangino s.C.
Audit Committee
Iván Moguel Kuri
Chairman
Julio Gutiérrez Mercadillo
Member
Raúl Méndez Segura
Memeber
elizabeth Garrido López
secretary
independent Board
Marcelo A. Rivero Garza
Chairman, Brain strategic Insight
Julio Gutiérrez Mercadillo
Chairman, Grupo Metis
Raúl Méndez Segura
Chairman, Grupo Green river
Iván Moguel Kuri
Partner Chevez, ruiz, Zamarripa y Cia, s.C.
León Kraig eskenazi
Director & Partner de IGnIa Partners, LLC.
Corporate governance Committee
Julio Gutiérrez Mercadillo
Chairman
Marcelo A. Rivero Garza
Member
León Kraig eskenazi
Member
elizabeth Garrido López
secretary
Alsea’s solid structure for corporate governance contributes to
our development and long-term viability.
We comply with laws and regulations regarding anticompetitive
behavior, antitrust or monopolistic practices, therefore we
have never been sanctioned.
via the Committees, we are able to identify and manage
possible economic, labor, environmental, and community risks
that we are exposed to on a daily basis in our operations.
Alsea participates in:
The compensation framework for members of Alsea’s board is
fixed, and is calculated as a function of attendance at Board
meetings and the meetings of the Committees that each
advisor belongs to, their participation in deliberations, and the
effectiveness of the strategic decisions they make.
Participation in organizations and Associations:
At Alsea, we contribute to the development of public policies
on issues that could have an effect on our operations, always
within the framework of the law and adhering to the highest
ethical standards.
•Consejo de la Comunicación, as members of the board we
actively participate in campaigns that promote social benefits.
•CAnIRAC [Cámara nacional de la Industria de Restaurantes y
Alimentos Condimentados], whose goal is to provide a scope for
the Mexican restaurant industry’s potential, as well as helping it
build processes with intelligence, care, and proper management
in order to maximize its opportunities in the Mexican economy.
•The American Chamber of Commerce, as a guest member of the
Tax Committee and the Real estate Development Committee.
34
To Alsea S.A.B. de C.V. general Shareholders’ Meeting
Dear Shareholders:
Since the IPo, Alsea, like other companies in the national business community, has considered the implementation
of best practices in matters of corporate governance as one of its most important goals. Is not just talking about
its obligation to comply with applicable laws on the matter, but rather of building greater safety and trust among
its shareholders, which in turn generates greater efficiency in its operations and decision making, and that makes
it more competitive.
Public companies directed by someone other than the person presiding over the Board of Administration are
becoming more and more frequent. This shows great progress in institutionalization, as well as a commitment to
form and adopt better practices for the benefit of all shareholders.
At Alsea, our Board of Members has the invaluable support of various Committees, which are solely made up of
independent advisors. This ensures that its composition is optimally balanced, and this has been reflected in its
high level of professionalism, efficiency, and neutrality, which each day brings greater benefits to society and
consequently to its shareholders.
Alsea has a methodology for selecting and evaluating independent Members, with orientation procedures and
formulas for renewing positions that are in accordance with the highest international standards of corporate
governance. Through this, we seek at all times to comply with the company’s own goals, and carry them out with
great efficiency, and achieve the highest professionalism and institutionalization in making the decisions that the
greatest administration board of the Company is in charge of making, meaning the Board of Directors.
Current markets and shareholders, meaning all of you, seek greater efficiency in asset management, but you also
want to contribute to a healthy market development and its long-term sustainability. Therefore, you seek public
companies to invest in that not only fulfill your economic expectations, but above all, that contribute to the
elevation of social, community, and cultural values, with a genuine concern for protecting the environment. This
can only be achieved through a clear strategy like the one Alsea has, which includes developing and maintaining
high levels of responsibility and good practices of corporate governance.
Sincerely,
Alberto Torrado Martínez
Chairman of the Board
35
For us, Social Responsibility is an attitude
that is incorporated in all aspects of our
business planning and operation. It is what
guarantees that we will generate not only
favorable economic results, but also comply
with and exceed the expectations of all of
our stakeholders, as well as carrying out our
operations in a way that does not have a
negative impact on the environment.
In order to ensure this, we work through
four commissions that have representatives
from all of our business units, which
meet bimonthly.
Additionally, the actions generated in these
commissions are supervised and approved
by the Social Responsibility Committee,
which is constituted by the President of the
Board of Administration and the highest
ranking officials of all of Alsea’s business
units. The committee meets quarterly to
define our Social Responsibility strategy.
This process ensures that the ideas and
proposals that the commissions work on,
get to the highest decision-making levels
of our company.
Committee of Social Responsibility
Responsible Consumption
employees
36
r
u m e
s
n
ployees C o
m
E
investors S
h
a
r
e
Responsible
Consumption
h
o
l
d
e
r
s
Quality
of Life
Committee of
Social
Responsibility
Community
Support
s
r
e
d
i
v
o
r
P
y
c
n
g
o
v
e
r
n
m
e
n
t
n
go´
Co
s
e
t
e
Environment
p
m
o
ies Media C
m
mu
ni
t
Mission and values
Code of Conduct
Sustainability Plan
Support Team
Communication and Dialogue
At Alsea we promote openness and
transparency with all of our stakeholders.
The information and feedback that we
receive from them allows us to detect
new areas of opportunity for improving
our performance. In order to facilitate
this communication, we offer the follow-
ing channels:
*Phone line for complaints and transparency
37
Social Responsibility
As part of the human Capital Model, we
promote a culture based on ethical principles
and standards, and through our Code of
Conduct and our policy for health and safety
at work, we ensure the integrity and safety
of all of our coworkers.
We promote a culture of equity and diversity,
and any act of discrimination for reasons
of age, color, disability, marital status, race,
religion, sex, and sexual orientation are
sanctioned by our Code of Conduct.
The Correct Line is our open line of
communication, through which collaborators
can express their complaints and comments.
All the information that comes in is
processed and responded to promptly.
DIfferentLY
aBLeD PeoPLe
WorK for aLsea
averaGe Hours
of traInInG Per WorKer
of WorKers
Have HaD PerforManCe
evaLuatIons
of our WorKers
are unIonIZeD In
a LaBor orGanIZatIon
GroWtH In
eMPLoYee CreatIon
over tHe PrevIous Year
38
Hours of
traInInG ProvIDeD
for tHe Year
Years oLD Is tHe averaGe
aGe of our WorKers
of tHe aDMInIstratIve
eMPLoYees
traIneD
In aCCountInG
anD antICorruPtIon
PoLICIes anD ProCeDures
39
Social Responsibility At Alsea we want to reward our workers fairly,
by providing wages and benefits that go
beyond legal requirements, such as additional
vacation days, support for external training,
flexible policies for mothers, savings fund,
savings account, coupon books, life insurance
and major medical expenses, and ideal
workplaces that promote an atmosphere of
credibility, respect, impartiality, and pride.
We promote the health of our people
through our program “Ciudad Salud”; a
health promotion marketplace, which offers
discounts on vaccines, discussions on health,
and checkups for our workers and their family
members.
40
Total no. of
employees
(Mexico and
Latin America)
Men
57.3%
Women 42.7%
% of men and
women who
hold Executive
positions at
Alsea
(Board President,
Ceo, vPs,
executives and
Assistant Directors)
Men 87.5%
Women 12.5%
Employees with a
permanent contract
(full and part time)
By age:
Under age 30: 76%
From 30 to 50: 23%
over age 50: 1%
We promote practices that generate a
positive impact and mitigate negative
impacts throughout our value chain, such
as our equality in employment Program
that seeks out and eradicates
gender-based wage differences, which
immediately reduced worker turnover rates .
41
Social Responsibility
We are committed to balanced lifestyles,
therefore we seek to offer options and
information to our customers about
responsible decision making for their
wellness.
•Selecting the best ingredients, guaranteeing
the quality and safety standards for our
processes, and ensuring that the social,
environmental, and economic life cycle
implications are positive.
We achieve this through:
•Providing nutrition facts information for our
main food and beverage products.
•Promoting recreational activities and physical
activity within the family. The Starbucks race
was carried out for the second consecutive
year, with 6,000
people registering.
SUPPLIeRS
hAve SIGneD The SoCIAL
ReSPonSIBILITY LeTTeR,
In WhICh TheY
ProMIse to resPeCt:
HuMan rIGHts
WorKers’ rIGHts, safetY
anD HeaLtH
CIvIL ProteCtIon LaW
feDeraL envIronMentaL reGuLatIons
antICorruPtIon
42
SUPPLIeS
CoMe FRoM
PRovIDeRS
All our brands have a program that
measures our customers’ level of
satisfaction. We listen and offer solutions
that are immediate, consistent and
appropriate adhering to a process for
attending to, and resolving complaints
established by the company for all
its brands.
no incidents involving the failure to comply
with regulations in marketing materials,
including advertising, promotion,
and sponsorship.
no complaints with respect to improper
management of the privacy of our
consumers’ personal data.
43
Social Responsibility
We obtained the
In tHe
natIonaL aWarDs
for enerGY savInGs
BY tHe enerGY
savInG trust
Achieving greater efficiency and
reducing our energy consumption
continues to be the main objective
of our environmental policy.
in 2012 we achieved:
•720 establishments where we replaced
lighting with high-efficiency lighting
equipment.
•500 establishments where we installed
equipment for monitoring and
automating energy use.
•Results: 6,600 ton reduction in Co2 for
the year.1
•9.1% reduction in energy consumption.
Total MJ consumption:
375,974,298*
Yearly MJ savings:
34,180,315
1 The methodology used to calculate this savings was from the ePA, the
environmental Protection Agency. www. epa.gov/cleanenergy
* The total energy consumption considers the incorporation of 40
Italianni’s establishments, which during 2012 began adapting to our
environmental policy requirements.
44
In order to strengthen our environmental
policy, we included dry urinals to save
water in our establishments, as well as
high-efficiency lights and automation
equipment.
Total water consumption 1,268,419 cubic
meters. Water savings from urinals in new
stores: total cubic meters per year 3,800.
All of Alsea’s water consumption comes
from the public water system.
In order to mitigate our environmental
impact, in 2012 we identified the kind of
wastes that our operation generates.
PaPer
CarDBoarD
GLass
aLuMInuM
LaMInate
PLastIC
Pet
DIsHes
trasH
orGanIC Waste
0.33%
13.33%
2.79%
0.64%
0.76%
0.63%
1.11%
0.12%
50.76%
29.52%
During 2013 we will focus our efforts on
recovering this waste and generating
alliances that allow us to recycle them or
reuse them in the best way possible.
We promote the use of recyclable materials in
all of our brands, using tablecloths, napkins,
carry-out bags, pizza boxes, and cup holders
made from recyclable materials.
Domino’s napkins are made from 100%
recyclable materials and the plastic bags used
for deliveries are Biodegradable.
We ProMote tHe
ProPer seParatIon
anD reCYCLInG of
Waste aMonG our
ConsuMers
anD CoWorKers
In 2012, we extended our used vegetable
oil collection program for the oil that
we produce. This oil will be used for the
generation of Biodiesel.
During 2013 we will continue valuing
initiatives that seek to reduce our
ecological footprint, which is why we are
evaluating various practices such as:
Totals
47,617
Cubic meters of
oil 47.6
Truckloads of oil
4.8
•Renewable energy sources.
•Waste reduction and recycling programs.
•The use of more efficient solar and gas heaters.
•The inclusion of green vehicles in our fleets.
45
Social Responsibility We are PEoPLE
46
Fundación Alsea A.C. reaffirms its
commitment to ensuring food security in
vulnerable communities and the promotion
of human development through education.
In 2012 we supported the initiative “va por
mi cuenta”, a movement that through Alsea’s
participation, as well as its brands and all the
people willing to contribute toward ending
child malnutrition in our country.
This goal, in the first phase, will be achieved
through the construction and operation of
child dining rooms which we call
“nuestro Comedor” and which are managed
by our operating partner Comedor Santa
María, A.C., guaranteeing a positive
nutritional impact on vulnerable child
populations.
Additionally, with the movement we seek
to raise consciousness about the serious
problem of malnutrition due to the lack of
access to adequate, varied, sufficient, and
uncontaminated food.
The FoLLoWInG WAS AChIeveD BY The enD oF 2012:
ThE oPERATion of TW o Dining RooMS
LoCateD In tHe CHaLCo anD
MetePeC In tHe estaDo De MÉXICo
ThE DELiVERY of 18,615
nUTRITIoUS MeALS, BeneFITInG
totaL raIseD $5,786,200.45 Pesos
In 2013 We eXPeCT To ConSTRUCT
3 Dining RooMS
CHILDren Per DaY
47
Social Responsibility In DonatIons
In KInD
oF GRAInS
CoLLeCteD
WItH tHe CaMPaIGn
“SEMiLLAS QuE
L L EnAn V iDA S ”
In FInAnCIAL
DonatIons
Through Fundación Alsea A. C. and our
business units’ various community support
programs, we achieved the following:
voLunteereD,
303% MoRe T hAn
tHe PrevIous Year
MoRe ThAn 100,000
PeoPLe
BenefIteD
48
For the 9th consecutive year
Fundación Alsea supports
Mano Amiga Chalco, located
in one of the communities
that lags behind the most in
education in the estado de
México. Providing education to:
fIrst Year MIDDLe
sCHooL stuDents
seConD Year
MIDDLe sCHooL stuDents
“voCatIonaL
testIMonIes II”
WAS heLD, WITh
500 STuDEnTS
froM MIDDLe anD
HIGH sCHooLs
The alliance with Fondo para
la Paz has been strengthened
in order to combat extreme
poverty in 12 communities in
the state of oaxaca by:
offerInG aCCess
to BasIC serv ICes
CarInG for
anD PreservInG
tHe envIronMent
DeveLoPMent of
soCIaL CaPItaL
eMPoWerInG
WoMen
reDuCInG CHILD
MaLnutrItIon
49
Social Responsibility Disclosure Description
Strategy and Analysis
Page
1.1
statement from the most senior decision maker of the organization about the relevance of
sustainability to the organization and its strategy
6-9 and 35
organizational Profile
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
name of the organization
Primary brands, products, and/or services
operational structure of the organization
Location of organization’s headquarters
number of countries where the organization operates, and names of countries with
either major operations or that are specifically relevant to the sustainability issues
covered in the report
nature of ownership and legal form
Markets served.
scale of the reporting organization
2
2 and 3
2-3 and 29
Inside backpage
2 and 3
Inside backpage
2 and 3
2 and 5
significant changes during the reporting period regarding size, structure, or ownership
3, 7, 12-14, 20-21, 29
2.10
awards received in the reporting period
9 and 44
Report Parameters
3.1
3.2
3.3
3.4
3.6
3.7
3.8
3.9
reporting period
Date of most recent previous report
reporting cycle
Contact point for questions regarding the report or its contents
Boundary of the report
state any specific limitations on the scope or boundary of the report
Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations,
and other entities that can significantly affect comparability from period to period and/or
between organizations
Inside backpage
Inside backpage
Inside backpage
Inside backpage
2 and 3
2 and 3
In 2012, Alsea
operated the brand
Starbucks in Mexico,
Argentina and Chile,
under a joint venture
agreement.
Data measurement techniques and the bases of calculations, including assumptions and
techniques underlying estimations applied to the compilation of the indicators and other
information in the report
44
3.10
explanation of the effect of any re-statements of information provided in earlier reports, and
the reasons for such re-statement
There are no
re-statements of the
information provided
in earlier reports
50
Disclosure Description
3.11
significant changes from previous reporting periods in the scope, boundary, or measurement
methods applied in the report
Page
There are no
significant changes
from previous
reporting periods
3.12
table identifying the location of the standard Disclosures in the report
50-54
governance, Commintments and Engagement
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.12
4.13
4.14
4.16
Governance structure of the organization
Indicate whether the Chair of the highest governance body is also an executive officer
for organizations that have a unitary board structure, state the number of members of the
highest governance body that are independent and/or non-executive members
29 and 34
35
34
Mechanisms for shareholders and employees to provide recommendations or direction to the
highest governance body
36 and 37
Linkage between compensation for members of the highest governance body, senior
managers, and executives (including departure arrangements), and the organization's
performance (including social and environmental performance)
35
Processes in place for the highest governance body to ensure conflicts of interest are avoided
35
Process for determining the qualifications and expertise of the members of the highest
governance body for guiding the organization's strategy on economic, environmental, and
social topics
35
Internally developed statements of mission or values, codes of conduct, and principles relevant
to economic, environmental, and social performance and the status of their implementation
2 and 3
Procedures of the highest governance body for overseeing the organization's identification
and management of economic, environmental, and social performance, including relevant risks
and opportunities, and adherence or compliance with internationally agreed standards, codes
of conduct, and principles.
35-37
Processes for evaluating the highest governance body's own performance, particularly with
respect to economic, environmental, and social performance
34
externally developed economic, environmental, and social charters, principles, or other
initiatives to which the organization subscribes or endorses
9 and inside
backpage
Memberships in associations (such as industry associations) and/or national/international
advocacy organizations in which the organization: * Has positions in governance bodies; *
Participates in projects or committees; * Provides substantive funding beyond routine
membership dues; or * views membership as strategic
List of stakeholder groups engaged by the organization.
approaches to stakeholder engagement, including frequency of engagement by type and by
stakeholder group
34
37
37
Economic Performance indicators
EC6
EC8
Policy, practices, and proportion of spending on locally-based suppliers at significant locations
of operation
43
Development and impact of infrastructure investments and services provided primarily for
public benefit through commercial, in-kind, or pro bono engagement.
47-48
51
GRI index
Disclosure
Description
Page
global Compact Principles
Environmental Performance indicators
En3
En5
En6
En8
En16
Direct energy consumption by primary energy source
44
energy saved due to conservation and efficiency
improvements
44
Initiatives to provide energy-efficient or renewable
energy based products and services, and reductions
in energy requirements as a result of these initiatives
44-45
total water withdrawal by source
total direct and indirect greenhouse gas emissions
by weight
44
44
En22
total weight of waste by type and disposal method
45
En26
Initiatives to mitigate environmental impacts
of products and services, and extent of impact
mitigation
44-45
Social: Labor Practices and Decent Work Performance indicators
total workforce by employment type, employment
contract, and region
Benefits provided to full-time employees that are not
provided to temporary or part-time employees, by
major operations
education, training, counseling, prevention, and
risk-control programs in place to assist workforce
members, their families, or community members
regarding serious diseases
average hours of training per year per employee by
employee category
Percentage of employees receiving regular
performance and career development reviews
Composition of governance bodies and breakdown
of employees per category according to gender,
age group, minority group membership, and other
indicators of diversity
41
40
40
38
38
41
LA1
LA3
LA8
LA10
LA12
LA13
52
Principle 7: support a
precautionary approach to
environmental challenges.
Principle 8: undertake initiatives
to promote environmental
responsibility.
Principle 9: encourage the
development and diffusion
of environmentally friendly
technologies.
Principle 1: support and respect
the protection of internationally
proclaimed human rights.
Principle 2: Make sure
that they are not complicit
in human rights abuses.
Principle 6: uphold the elimination
of discrimination in employment
and occupation.
Disclosure
Description
Page
global Compact Principles
Social: human Rights Performance indicators
hR4
hR6
hR7
total number of incidents of discrimination and
actions taken
38
operations identified as having significant risk for
incidents of child labor, and measures taken to
contribute to the elimination of child labor
operations identified as having significant risk
for incidents of forced or compulsory labor, and
measures to contribute to the elimination of forced
or compulsory labor
hR9
total number of incidents of violations involving
rights of indigenous people and actions taken
Principle 1: support and respect
the protection of internationally
proclaimed human rights.
Principle 2: Make sure
that they are not complicit
in human rights abuses.
Principle 4: uphold the
elimination of all forms of
forced and compulsory labour.
Principle 5: uphold the effective
abolition of child labour.
Principle 6: uphold the elimination
of discrimination in employment
and occupation.
alsea has no risk
for incidents of
child labor since it
complies with the
labor legislation of
all the countries
where it operates
alsea avoids any
activity that poses
any risk for incidents
of forced or
compulsory labor
alsea does not
report any incidents
of violation involving
rights of indigenous
people
Social: Society Performance indicators
So2
So3
So7
Percentage and total number of business units
analyzed for risks related to corruption
66-67
Percentage of employees trained in organization's
anti-corruption policies and procedures
total number of legal actions for anti-competitive
behavior, anti-trust, and monopoly practices and
their outcomes
39
34
Principle 10: Businesses should
work against corruption in all its
forms, including extortion and
bribery.
53
GRI index
Disclosure
Description
Page
global Compact Principles
Social: Product Responsibility Performance indicators
total number of incidents of non-compliance with
regulations and voluntary codes concerning health
and safety impacts of products and services during
their life cycle, by type of outcomes
Alsea has
no incidents
concerning health
and safety impacts
of our products
and services
type of product and service information required by
procedures, and percentage of significant products
and services subject to such information requirements
42
total number of incidents of non-compliance with
regulations and voluntary codes concerning product
and service information and labeling, by type of
outcomes
Alsea has no
incidents regarding
information and
labeling of our
products and
services
Principle 1: support and respect
the protection of internationally
proclaimed human rights.
total number of incidents of non-compliance
with regulations and voluntary codes concerning
marketing communications, including advertising,
promotion, and sponsorship by type of outcomes
43
total number of substantiated complaints regarding
breaches of customer privacy and losses of
customer data
43
PR2
PR3
PR4
PR7
PR8
With our actions and performance Alsea contributes to the fulfillment of the following Millenium goals:
ThE MiLLEnniuM DEVELoPMEnT goALS
goal 1
eradicating extreme poverty and hunger
goal 2
achieving universal primary education
goal 3
Promoting gender equality and empowering women
goal 7
ensuring environmental sustainability
goal 8
Developing a global partnership for development
54
Human Rights
Principle 1: Businesses should support and
respect the protection of internationally
proclaimed human rights.
Principle 2: Make sure that they are not
complicit in human rights abuses.
Labour
Principle 3: Businesses should uphold the
freedom of association and the effective
recognition of the right to collective
bargaining.
Principle 4: The elimination of all forms of
forced and compulsory labour.
Principle 5: The effective abolition of child
labour.
Principle 6: The elimination of
discrimination in respect of employment
and occupation.
Environment
Principle 7: Businesses should support a
precautionary approach to environmental
challenges.
Principle 8: Undertake initiatives
to promote greater environmental
responsibility.
Principle 9: Encourage the development
and diffusion of environmentally friendly
technologies.
Anti-Corruption
Principle 10: Businesses should work
against corruption in all its forms, including
extortion and bribery.
55
56
MD&A AnD
CoMMITTee´S LeTTeRS
57
Financial statements ConSoLiDATED RESuLTS foR ThE fuLL YEAR 2012
The following table shows a condensed Income Statement in millions of pesos
(except ePS). The margin for each item represents net sales, as well as the
percentage change in the year ended December 31, 2012, in comparison with the
same period of 2011. This information is presented according to the International
Financial Reporting Standards (IFRS), and is presented in nominal terms.
2012
Margin%
2011
Margin% Change%
net sales
$13,519.5
100.0% $10,668.8
100.0%
26.7%
Gross Income
8,747.8
64.7%
6,881.2
64.5%
27.1%
eBITDA(1)
1,608.6
11.9%
1,123.1
10.5%
43.2%
operating income
net Income
ePS(2)
797.3
$401.8
0.5726
5.9%
3.0%
453.1
$236.8
n.A.
0.3440
4.2%
2.2%
n.A.
76.0%
69.7%
66.5%
(1) eBItDa is defined as operating income before depreciation and amortization.
(2) ePs is earnings per share for the last 12 months.
SALES
net sales increased 26.7% to 13,519.5 million pesos during the full year 2012, in
comparison with 10,668.8 million pesos in the same quarter of the prior year.
This increase of 2,850.7 million pesos reflects the growth in sales of the food
and beverage segments in Mexico and South America, mainly due to the 10.5%
growth in same-store sales, to the increase in the number of units and to a
lesser extent, to the growth in the distributor’s revenues from third parties.
Growth in brand sales was due to the increase in same-store sales for the
operations in Mexico and South America, as a result of additional orders served
and a higher average ticket, because of the commercial and communication
strategies implemented by each brand, as well as the fact that there was a
net increase of 84 corporate stores in the last twelve months and sustained
improvement in consumer behavior.
gRoSS PRofiT
During the full-year 2012, gross income increased 1,866.6 million pesos to
8,747.8 million pesos, with a gross margin of 64.7%, compared with 64.5%
recorded in 2011. The improvement of 0.2 percentage points in the gross margin
is mainly attributed to the appreciation of the peso against the dollar over the
last twelve months, as well as to the positive effect from the businesses mix in
which the business units with the highest sales growth are those that generate
lower costs as a percentage of sales. This effect was partially offset by the
increased cost of some inputs, and to a lesser extent, to the discount strategies
implemented among some brands.
increase of
2,851 million
pesos
gross margin of
64.7 %
58
oPERATing ExPEnSES
operating expenses (excluding depreciation and amortization) decreased 1.1%
as a percentage of sales, dropping from 54.0% during the full-year 2011, to
52.9% in the same period of 2012. That improvement can be attributed mainly
to the margin from growth in same-store sales, to the increase in the number of
units, and to a lesser extent, to operating efficiencies achieved during the period.
These effects were partially offset by the aforementioned business mix in which
the units with larger sales growth are those that generate higher expenses as
a percentage of sales.
EBiTDA
eBITDA increased 43.2%, to 1,608.6 million pesos for the full year 2012, in
comparison with the 1,123.1 million pesos in full-year 2011. eBITDA margin
presented an expansion of 1.4 percentage points, rising from 10.5% in full-year
2011, to 11.9% in 2012. This increase was mainly due to the margin from the
growth in same-store sales for the Company’s different brands, and to a lesser
extent as a consequence of the business mix, in which the units with the highest
growth are those that have a higher eBITDA margin as a percentage of sales. In
addition to the above, margin expansion is a result of the improvement in the
cost resulting from the initiatives and business strategies handled from brands
and to a less extent, to the operating efficiencies achieved during the year as a
result of improvements in the operating model.
oPERATing inCoME
For the full-year 2012, operating income showed an increase of 76.0%,
equivalent to 344.2 million pesos, closing at 797.3 million pesos, in comparison
with the 453.1 million pesos in the same period of 2011. The foregoing was
mainly due to the increase of 485.5 million pesos in eBITDA, which was offset
by the 133.1 million pesos increase in depreciation and amortization due to the
Company’s expansion plan over the last twelve months. The operating margin
increased 170 basis points versus the same period of the previous year, mainly
as a consequence of the eBITDA margin expansion previously mentioned.
nET inCoME
net consolidated income rose 69.7%, increasing from 23.8 million pesos in full-
year 2011, to 401.8 million pesos for full-year 2012. The 165.0 million pesos
increase was mainly due to the increase of 344.2 million pesos in operating
income and to the increase of 4.2 million pesos in the participation the results
of associated companies. Those variations were partially offset by the increase
of 112.1 million pesos in tax on earnings, and to the 71.3 million pesos increase
in the all-in result of financing.
EARningS PER ShARE
earnings per share “ePS”(2) for the twelve months ended December 31, 2012,
increased to 0.5726 pesos, in comparison with 0.3440 pesos for the twelve
months ended December 31, 2011.
Decrease of
110 bps
in Margin
1,609
of EBiTDA
million
pesos
Margin of
11.9 %
69.7 %
vs. 2011
earnings per share
0.21
0.17
0.25
0.33
08
09
10
11
12
0.57
59
MD&A RESuLTS BY SEgMEnT
earnings per share “ePS”(2) for the twelve months ended December 31, 2012,
increased to 0.5726 pesos, in comparison with 0.3440 pesos for the twelve
months ended December 31, 2011.
net sales by segment
net Sales by Segment
2012
% Cont.
2011
% Cont.
% Var.
Food and Beverages – Mexico
$8,752.2
64.7% $7,083.8
66.4%
23.6%
Food and Beverages–
South America
3,416.3
25.3%
2,401.7
22.5%
42.2%
Distribution and Production
4,032.4
29.8%
3,395.6
31.8%
18.8%
Intercompany operations (3)
(2,681.4)
(19.8)% (2,212.3)
(20.7)%
21.2%
Consolidated net Sales
13,519.5
100.0% 10,668.8
100.0%
26.7%
Food and Beverages Mexico
Food and Beverages
South America
Distribution and Production
65%
25%
10%
eBItDa by segment
eBITDA by Segment
2012 % Cont. Margin
2011 % Cont. Margin % Var.
Food and Beverages – Mexico
$1,307.3
81.3% 14.9% $840.1
74.8% 11.9% 55.6%
Food and Beverages –
South America
214.3
13.3% 6.3% 198.7
17.7% 8.3% 7.8%
Distribution and Production
78.4
4.9% 1.9% 39.6
3.5% 1.2% 97.9%
others(3)
8.7
0.0
n.A.
44.7
0.0
n.A. (80.5)%
Consolidated EBiTDA
1,608.6
100% 11.9% 1,123.1
100% 10.5% 43.2%
(3) for the purpose of information by segment, these operations were included in each respective segment.
food and Beverages – Mexico
Sales for the full-year 2012 increased 23.6% to 8,752.2 million pesos, in comparison
with 7,083.8 million pesos in the same period of 2011. This positive variation of 1,668.4
million pesos is mainly attributable to the growth in same-store sales for the segment
in Mexico and to the net opening of 48 corporate units from its various brands over
the last twelve months.
eBITDA increased 55.6% during the full-year 2012 to 1,307.3 million pesos, compared
with the 840.1 million pesos reported in the same period of the prior year. That increase
is attributed to the margin generated by the increase in same-store sales, by the
cost improvement resulting from the initiatives and business strategies implemented
in different brands and to a lesser extent, to the effect due to the aforementioned
business mix.
food and Beverages – South America
At the end of 2012, the Food and Beverages–South America division represented
25.6% of Alsea’s consolidated sales and was comprised of Burger King operations
in Argentina, Chile and Colombia, as well as Domino’s Pizza Colombia, Starbucks
Coffee Argentina and PF Chang´s Chile with a total of 208 units. This division
saw a 42.2% increase in sales, totaling 3,416.3 million pesos, in comparison with
2,401.7 million pesos during 2011. This increase of 1,014.6 million pesos was
Food and Beverages Mexico
Food and Beverages
South America
Distribution and Production
81%
14%
5%
1,668
growth
million
pesos
14.9 %
EBiTDA margin
1,015
growth
million
pesos
60
mainly due to the increase in same-store sales in the South America division
and to the net opening of 36 corporate units over the last twelve months.
For the full-year 2012, eBITDA for the Food and Beverages – South America
division increased 7.8% to 214.3 million pesos, in comparison with 198.7 million
pesos in the same period of the prior year. This positive variation was mainly
attributable to growth in the number of units in operation and to a lesser extent
by the reduction in the effect of new business as a result of the consolidation
of the brands in the region. These effects were partially offset by the creation
of a tax provision due to a difference in tax rates and a liability to pay labor,
conducted in the fourth quarter of 2012.
Distribution and Production
net sales during the full-year 2012 increased 18.8% to 4,032.4 million pesos, in
comparison with 3,395.6 million pesos in the same period of 2011. The foregoing
is due to the growth in same-store sales of the brands in Mexico and to the
increase in the number of units served over the last twelve months, supplying a
total of 1,474 units as of December 31, 2012, in comparison with 1,367 units during
the same period of the prior year, which was an increase of 7.8%. Sales to third
parties increased 14.3% to 1,331.8 million pesos, mainly driven to the increase
in same-store sales of Burger King and Domino’s Pizza System in Mexico, and
to the additional units attended, due to the integration of Italianni´s brand in to
Alsea´s Business Model.
eBITDA increased 97.9% during the full-year 2012, ending with 78.4 million pesos,
in comparison with 39.6 million pesos in the same period of the prior year. This
increase of 38.8 million pesos is attributed primarily to growth in same-store
sales, the increase in the number of units in operation and the reduction of the
effect of new business. The eBITDA margin presented an expansion of 70 base
points, mainly due to lower costs as a result of the business mix and efficiencies
and operating leverage achieved during the year.
non-oPERATing RESuLTS
All-in Cost of financing
The all-in cost of financing for the full-year 2012 increased to 189.3 million
pesos, in comparison with 118.1 million pesos during the same period of the prior
year. This increase of 71.2 million pesos can be mainly attributed to the increase
of 67.0 million pesos in net interest paid as a result of the loans acquired for the
acquisition of Italianni’s, and to a lesser extent to the decreased of 4.2 million
pesos in exchange rate result.
Tax on Earnings
Taxes on earnings of 219.1 million pesos increased 112.1 million pesos in
comparison with the full-year 2011, which is a result of the 277.2 million pesos
increase in earnings before taxes at the close of 2012 and to a lesser extent to
the effect caused by South American operations, as some countries have higher
tax rates than Mexico.
BALAnCE ShEET
Store Equipment, improvements to Leased Locations and Properties, Brand
use Rights, goodwill and Pre-operations
The increase of 1,965.6 million pesos in this line was mainly due to the acquisition
of the Italianni’s operation in Mexico and to a lesser extent, to the acquisition
of assets and opening of new stores as a part of the expansion program over
the last twelve months. This was partially offset by the amortization and
depreciation of assets in accordance with accounting policies and to a lesser
extent, to the write-off of assets due to unit closures.
EBiTDA of
214
million
pesos
1,474
units attended
Effective tax rate of
35.3 %
61
MD&A During the twelve months ended December 31, 2012, Alsea made capital
investments of 2,751.0 million pesos. From the 95.0% of total investments,
equal to 2,614.9 million pesos, 1,765.0 million pesos were earmarked for the
Italianni’s acquisition and 849.9 million pesos for unit openings, equipment
refurbishing, and remodeling existing stores for the different brands that the
Company operates. The remaining 136.1 million pesos were earmarked for other
items, notably logistics improvement projects, as well as software licenses,
among other items.
inventories
Inventory increased from 403.1 million pesos at December 31, 2011, to 550.4
million pesos at December 31, 2012. This increase of 147.3 million pesos is mainly
attributable to the increase in some inputs due to a price opportunity that arose,
allowing those inputs to be acquired in advance, to Alsea’s consolidation of
Italianni’s inventory as a consequence of the acquisition and, to the inventory
in advance strategy generated for the operations in Argentina as a result of the
import problems presented in this country. Inventory also increased because of
the increase of units in operation.
other Current Assets
The decrease in the other Current Assets account of 2,184.2 million pesos at
December 31, 2012, is mainly due to the fact that at the end of 2011 there
was a deposit made to an escrow as part of the process for the acquisition of
Italianni’s, completed in February 2012.
Taxes Payable – net
The increase in the account Taxes Payable– net of Taxes Recoverable, of 89.5
million pesos at December 31, 2012, can be attributed mainly to the increase in
income tax payable, partially offset by a higher vAT recoverable.
Deferred income Tax
Deferred income tax increased from 692.4 million pesos at December 31, 2011,
to 778.8 million pesos at December 31, 2012. This increase of 86.4 million pesos
occurred mainly as a consequence of the effect of the differences in financial
depreciation rates and tax rates, and to recognition of tax losses.
Suppliers
Suppliers increased from 1,021.4 million pesos at December 31, 2011, to 1,129.6
million pesos at December 31, 2012. This variation of 108.2 million pesos was
created principally as a consequence of better negotiating conditions, which
translates into an increase of 2 payable days, which rose from 43 to 45 days
over the last twelve months and to a lesser extent, by a larger number of units
in operation.
2,751
of Capex during 2012
million
pesos
2 days
of suppliers
62
Bank Debt and Local Bonds
At December 31, 2012, Alsea’s total debt had decreased by 1,582.0 million pesos,
closing at 2,474.5 million pesos, in comparison with 4,056.5 million pesos on the
same date of the previous year. The Company’s net consolidated debt compared
with the fourth quarter of 2011 decreased 1,775.3 million pesos, closing at 1,541.9
million pesos on December 31, 2012, compared with the 3,317.2 million pesos in
the same quarter of the previous year. This decrease is mainly attributable to
prepayment of ALSeA11 local bond with the proceeds of the equity placement
made, and to the cash flow generated by the Company over the last twelve
months.
At December 31, 2012, 84.0% of the debt was long term, and on that same date
98.0% of the debt was denominated in Mexican pesos and 2.0% in Argentinean
pesos.
The following table shows the amount of total debt in millions of pesos at
December 31, 2012, as well as the maturity dates by year:
Debt structure
Short term
Long term
16%
84%
Debt Structure
Maturities by Credit
Maturities per Year
Bank
Loan
Spread
Balance
4T-12
2013
2014
2015
2016
Banamex
$600
1.40% $588
60
53
8
$525
1.20% $525
$300
1.50% $99
$737
1.40% $737
147
BBvA
hSBC
hSBC
Santander
$533
1.25% $488
91
BBvA
Francés
RC
18.75% $35
35
Citibank Chile
RC
0,74% $3
3
162
105
8
147
91
-
-
162
158
82
184
91
-
-
204
210
-
258
216
-
-
Maturities by year
$2,475 $397 16% $513 21% $677 27% $888 36%
figures in Mexican million pesos
Considers a tIIe of 4.84 %
rC= revolving Credit
Share Repurchase Program
At December 31, 2012, the Company had a cero balance in the repurchase fund.
During the twelve months ended December 31, 2012, the Company had purchase
and sale operations totaling 13.3 shares, for an approximate amount of 212.6
million pesos.
financial Ratios
At December 31, 2012, the covenants established in the Company’s credit
contracts were as follows: the net debt to eBITDA ratio for the last twelve
months was slightly below 1.0x and the twelve-month eBITDA to twelve-month
interest paid ratio was 6.6x.
8
8
8
7
7
6
3
1
5
7
9
3
13
14
15
16
WACD * = 6.17 %
*TiiE = 4.84%
net Debt / EBiTDA
0.96 x
63
MD&A
RoiC = 8.6 %
RoE = 10.5 %
The net Return on Invested Capital (“RoIC”)(4) increased from 6.4% to 8.6%
over the twelve months ended December 31, 2012. The Return on equity (“Roe”)
(5) for the twelve months ended December 31, 2012, was 10.5% in comparison
with 7.4% for the same period in the prior year.
Average trading per day of
1.3 million shares
Stock Market indicators
ALSeA* at December 31, 2012 closed with 687.8 million shares in circulation
at a price of 25.78 pesos per share, which is a 83.1% increase over the share
price at the end of 2011, and with a free float of 47.3%. The ev/eBITDA for the
last twelve months was 12.2x. The average daily trading during 2012 was of 1.3
million shares.
hedge Profile
The Chief Financial officer, in conjunction Treasury Manager, manages risk as
a function of mitigation of present and future risk, no diverting resources from
operation, and the expansion plan, and having certain future cash flows with
which a strategy can be formed regarding the cost of debt. The instruments will
only be used for hedging purposes.
70 % of the
Company´s needs in
uS dollars were hedged
During 2012, hedge derivatives in US dollars matured for 103.3 million dollars,
at an average rate of 12.97 pesos per dollar. As a result of this coverage, there
was an exchange rate profit of 19.1 million pesos. For 2013 Alsea has hedges
to purchase dollars for approximately 44.7 million US dollars, with an average
exchange rate of 12.84 pesos per dollar.
64
Corporate governance Committee´s Annual Report
To the Board of Directors of Alsea, S.A.B. de C.V.:
February 18, 2013
In compliance with articles 42 and 43 of the Security Market Law and in the name of the Corporate Governance
Committee, I present to you our report on the activities we carried out during the year ended December 31, 2012.
In the development of our work, we kept present the recommendations contained in the Corporate Best Practice
Code.
To comply with the responsibilities of this committee, we carried out the following activities:
1. During this period we did not receive any request for dispensation according to article 28, section III, paragraph
f) of the Securities Market Law so that it was not necessary to make any recommendation in this sense.
2. This committee presented and approved the Strategic Plan of Distribuidora e Importadora Alsea, S.A. de C.v.
(DIA).
3. This Committee presented and approved the Investment Plan for Brazil.
4. The quarterly and accrued results of the 2012 Stock exchange Plan were presented. An authorization to improve
the float of Alsea was requested from the General Management, therefore guaranteeing the permanence in
the IPC. Furthermore, it was requested to present the proposal of key strategies to increase the price of the
share.
5. We were presented with the update of the shareholder cost applicable at the end of each quarter of 2012
using the methodology authorized by the Board of Directors and it is approved to continue using the rate of
16.0%. The delegated director of Latin America was asked to present to this committee a clear strategy to
minimize the impact of a negative change in the Argentinean macroeconomic situation.
6. We were presented quarterly with the summary of risk management operations through “forwards of the
exchange rate” (peso-dollar) done during the year. Said operations have been executed as authorized, in other
words complying with the objective of covering the exchange risk of the operation based on the authorized
budget.
7. The results of the evaluation of relevant executives of 2012 were presented. This committee requested a
document containing the itemization of the results of the relevant executives, as well as the amount to be
disbursed for them.
8. The results of the inquiry of organizational Climate of Alsea 2012 with the Great Place to Work methodology
were presented.
9. A synthesis of the work plan for the development of the replacement tables of the General Management was
presented. This Committee asked human Resources that, at the end of the evaluations of the candidates
selected, they be sent for evaluation.
10. The Corporate Department of human Resources presented the strategy for the Compensation 2013 for
managerial levels; this committee recommended the approval of said strategy.
11. The organizational structure of Alsea 2013 was presented, which will be communicated at the beginning of
March to be implemented as of April 1. It was recommended to take it to the Board of Directors for approval;
Lastly, I would like to mention as part of our activities, including the preparation of this report, the fact that at
all times we have listened and taken into account the viewpoint of the relevant executives, without any notable
difference of opinion.
Sincerely,
Chairman of the Corporate Governance Committee
Julio gutierrez Mercadillo
65
Audit Committee´s Annual Report
To the Board of Directors of Alsea, S.A.B. de C.V:
February 18, 2013
In fulfillment of the provisions of Articles 42 and 43 of the Stock Market Law and the Rules of the Audit Committee,
I hereby inform you of our activities during the year ending December 31, 2012. During the performance of our work,
we kept in mind the recommendations set out in the Code of Best Corporate Practices and, in accordance with a work
program developed from the Committee Rules, we met at least once every quarter to perform the following activities:
I. RISK ASSeSSMenT We reviewed, with the Administration and the external and Internal Auditors, the critical risk
factors that could affect Company operations, and determined that they had been appropriately identified and
managed.
II.
InTeRnAL ConTRoL We ensured that the Administration, in fulfillment of its responsibilities regarding internal
control, had established the appropriate policies and procedures. In addition, we followed up on the comments
and observations in this respect developed by the external and Internal Auditors in the performance of their work.
III. eXTeRnAL AUDIT We recommended that the Board of Directors hire some external auditors for the Group and
subsidiaries for fiscal year 2012. To this end, we made sure of their independence and compliance with the
requirements of the law. Together with them we analyzed their approach and work program.
We maintained constant and direct communication with them to stay informed on the progress of their work,
their observations, and to take note of their comments on the review of the annual financial statement. We were
promptly informed of their conclusions and reports on the annual financial statement and followed up on the
implementation of the observations and recommendations that arose from their work.
We authorized the fees paid to the external auditors for auditing services and other permitted services, ensuring
that this would not interfere with their independence from the company. Taking account of the Administration’s
point of view, we performed the evaluation of its services for the previous year, and began the process of
evaluation for the year 2012.
Iv. InTeRnAL AUDIT To maintain its independence and objectivity, the Internal Audit area reports functionally to
the Audit Committee.
In due course, we revised and approved its annual program of activities. To produce this, Internal Auditing
participated in the risk identification process, the establishment of controls, and their verification.
We received periodic reports regarding the progress of the approved work program, changes that might have
occurred, and the reasons for the same.
We followed up on the observations and suggestions that arose and their appropriate implementation.
v. FInAnCIAL InFoRMATIon, ACCoUnTInG PoLICIeS, AnD ThIRD PARTY RePoRTS We reviewed, together with the
persons responsible, the process of preparation of the quarterly and annual financial statements for the Company,
and recommended to the Board of Directors that it approve and authorize them for publication. As part of this
process, we took into consideration the opinion and observations of the external auditors and ensured that the
criteria, accounting policies, and information used by the Administration to prepare the financial information were
adequate and sufficient and had been applied consistently with those for the previous year. As a consequence, the
information presented by the Administration reasonably reflects the Company’s financial situation, operational
results, and changes in financial situation for the year ending December 31, 2012.
We also revised the quarterly reports prepared by the Administration to be presented to the shareholders and
the general public, verifying that they were prepared using the same accounting criteria used to prepare the
annual information. We verified that there was a comprehensive process that provides reasonable security for its
contents. In conclusion, we recommend that the Board authorize its publication.
66
our review also includes the reports and any other financial information required by the Mexican Regulatory
Bodies.
We reviewed and confirmed that the Company, starting from 2012, adopted and implemented for the preparation
of its Financial Statements the accounting framework set out in the International Financial Reporting Standards
issued by the International Accounting Standards Board (IFRS and IASB, respectively), considering as part of this
process the opinion and observations of the external auditors. Therefore we conclude from the foregoing that
the Company has fulfilled the requirements set out by the Mexican national Banking and Securities Commission.
vI. CoMPLIAnCe WITh ReGULATIonS, LeGAL ASPeCTS, AnD ConTInGenCIeS We confirmed the existence and
reliability of the controls established by the company to ensure compliance with the various legal requirements
to which it is subject, ensuring that they were properly disclosed in the financial information.
We periodically reviewed the various legal, fiscal, and labor contingencies existent within the company,
monitoring the efficacy of the procedure established for their identification and tracking, as well as their proper
disclosure and recording.
vII. ADMInISTRATIve ASPeCTS We held regular meetings with the Administration to keep ourselves informed on
the functioning of the Company and relevant or unusual activities or events. We also met with the external and
internal auditors to discuss the progress of their work and any constraints they might have encountered, and
to facilitate any private communication they wished to have with the Committee.
In cases where we deemed it appropriate, we sought the support and opinion of independent experts. Similarly,
we had no knowledge of any significant non-compliances in operational policies, internal control systems, or
accounting records policies.
We held executive meetings with the exclusive participation of Committee members, during which we
established agreements and recommendations for the Administration.
The President of the Audit Committee reported our activities to the Board of Directors on a quarterly basis.
our work was duly documented in records prepared for each meeting, which were appropriately reviewed and
approved by the members of the Committee.
Sincerely,
Chairman of the Audit Committee
ivan Moguel Kuri
67
68
FInAnCIAL
STATeMenTS
ALSEA, S.A.B. DE C.V. AnD SuBSiDiARiES
Consolidated financial statements
for the years ended December 31, 2012 and 2011, and
Independent auditors’ report Dated March 29, 2013
Independent auditor´s report
Consolidated financial statements of financial position
Consolidated statements of Income
Consolidated statements of comprehensive income
Consolidated statements of changes in stockholders´equity
Consolidated statements of cash flows
notes to the consolidated financial statements
70
72
74
75
76
78
80
69
Letter to shareholders To the Board of Directors and Stockholders
Alsea, S. A. B. de C. V.
(Thousands of Mexican pesos)
We have audited the accompanying consolidated financial statements of alsea, s. a. B. de C. v. and subsidiaries (the Group), which
comprise the consolidated statements of financial position as at December, 2011, the consolidated statements of income, changes in
stockholders’ equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and
other explanatory information.
Management’s Responsibility for the consolidated financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International financial reporting standards (Ifrs), and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in ac-
cordance with International standards on auditing. those standards require that we comply with ethical requirements and plan and per-
form the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. the procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant
to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of alsea, s.
a. B. de C. v. and subsidiaries as at December 31, 2011, and the consolidated results of their operations and the consolidated cash flows
for the year then ended, in accordance with International financial reporting standards.
Emphasis of Matter
Without qualifying our opinion, we draw attention to the following:
as described in note 1(e) and as a result of court rulings issued in December 2009; november 2010, and at December 31, 2011, alsea has
established the necessary arrangements to finalize the acquisition of Italcafé, s. a. C. v., thus ending the legal disputes faced in previous
years with no detriment to the parties involved. on the other hand, in february 2012, the acquisition was finalized amounting $1,765,000
plus other additional costs, which means that as of that date control over the assets and liabilities acquired was duly transferred to the
Group.
as mentioned in note 1(b), in May 2011, alsea finalized the placement of debt stock in the amount of $1,000,000 on the Mexican market.
In December, 2012, alsea amortized in advance the total amount of said debt instrument through the resources obtained from the issued
stock by alsea in December, 2012, amounting $1,150,000.
KPMG CarDenas DosaL, s. C.
Jaime sánchez Mejorada
March 29, 2013
70
independent auditors’ report to the Board of Directors
and Shareholders of Alsea, S.A.B. de C.V.
We have audited the enclosed consolidated financial statements of alsea, s.a.B. de C.v. and subsidiaries (the entity), which include the
consolidated statements of financial position at December 31, 2012 and the consolidated statements of comprehensive income and other
comprehensive income, of changes in stockholders’ equity and of cash flows for the year ended on that date, as well as a summary of the
significant accounting policies and other explanatory notes.
Management responsibility for the consolidated financial statements
the entity’s Management is responsible for preparing and providing a fair presentation of the accompanying consolidated financial sta-
tements in accordance with the International financial reporting standards issued by the International accounting standards, and the
internal control considered necessary by the entity to prepare consolidated financial statements that are free of material misstatement
due to fraud or error.
Responsibility of the independent auditors
our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits
in accordance with International auditing standards. those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
an audit involves performing procedures to obtain evidence supporting the amounts and disclosures in the financial statements. the
procedures selected depend on the auditor’s judgment, including the assessment of the risk of material misstatement of the consolidated
financial statements due to fraud or error. In making those risk assessment, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates prepared by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.
opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of alsea, s. a.B. de C. v.
and subsidiaries as of December 31, 2012, and its financial performance and its cash flows for the year ended on that date, in accordance
with International financial reporting standards issued by the International accounting standards.
other matters
the financial statements of alsea, s.a.B. de C.v. and subsidiaries for the year ended on December 31, 2011 and January 1, 2011 were audited
by other auditors that expressed an unqualified opinion on said consolidated financial statements on March 29, 2013.
Galaz, Yamazaki, ruiz urquiza, s. C.
Member of Deloitte touche tohmatsu Limited
C. P. C. francisco torres uruchurtu
March 29, 2013
71
alsea, s.a.B. de C.v. and subsidiaries
Consolidated statements of financial position
at December 31, 2012 and 2011 and January 1, 2011 (date of transition)
(figures in thousands of Mexican pesos)
Assets
notes
2012
2011
Date of
transition
$
Current assets
Cash and cash equivalents
Customers, net
value added tax and other recoverable taxes
other accounts receivable
Inventories, net
advance payments
Guarantee deposits
total current assets
6
7
8
9
10
932,594 $
339,481
272,254
196,450
550,394
184,201
-
2,475,374
739,379 $
219,350
243,736
166,228
403,130
128,631
2,262,800
4,163,254
640,203
207,224
218,037
39,482
352,325
95,233
-
1,552,504
Long term assets
Guarantee deposits
10
110,020
86,991
78,168
Investment in shares of associated company
11
40,296
30,394
20,783
store equipment, leasehold improvements
and property, net
Intangible assets, net
12
12
3,924,108
3,472,420
2,994,123
2,418,830
928,695
914,626
Deferred income taxes
23b
828,965
692,420
544,474
total long-term assets
7,322,219
5,210,920
4,552,174
Total assets
$
9,797,593 $
9,374,174 $
6,104,678
see accompanying notes to the consolidated financial statements.
fabián gosselin Castro
Chief executive officer
Diego gaxiola Cuevas
Chief financial officer
Alejandro Villarruel Morales
Corporate Controller
72
Liabilities and stockholders’ equity
notes
2012
2011
Date of
transition
Current liabilities
Current maturities of long-term debts
suppliers
accounts payable and accumulated
liabilities
Provisions
Income taxes
taxes arising from tax consolidation
total current assets
Long-term liabilities
Long-term debts, not including
current maturities
Debt instruments
other liabilities
taxes arising from tax consolidation
employee retirement benefits
total long-term liabilities
Total liabilities
Stockholders’ equity
Capital stock
Premium on share issue
retained earnings
reserve for repurchase of shares
other comprehensive income items
stockholders’ equity attributable to
the controlling interest
non-controlling interest
Total stockholders’ equity
15
$
396,647 $
1,129,612
185,333 $
1,021,424
229,524
710,548
18
15
16
22
24
209,669
661,735
189,749
6,885
2,594,297
2,077,833
-
58,787
186,569
51,210
2,374,399
117,633
571,730
87,638
7,089
1,990,847
2,877,667
993,531
24,924
162,724
31,750
4,090,596
120,092
364,592
37,032
2,606
1,464,394
668,000
694,834
37,962
127,720
22,498
1,551,014
4,968,696
6,081,443
3,015,408
$
403,339 $
362,461 $
2,466,822
1,173,693
564,201
(87,347)
4,520,708
308,189
4,828,897
1,092,047
1,118,767
383,903
36,750
2,993,928
298,803
3,292,731
362,080
1,086,415
1,031,772
363,833
-
2,844,100
245,170
3,089,270
Total liabilities and stockholders’ equity
$
9,797,593 $
9,374,174 $
6,104,678
73
alsea, s.a.B. de C.v. and subsidiaries
Consolidated Statements of income
for the years ended on December 31, 2012 and 2011
(figures in thousands of Mexican pesos)
net sales
$
13,519,506 $
10,668,771
notes
2012
2011
Cost of sales
Leases
Depreciation and amortization
operating costs and expenses
other expenses (income) - net
Interest income
exchange gain - net
Interest expenses
equity in results of associated company
Income before income taxes
Income taxes
Consolidated net income
Comprehensive income for the year attributable to:
non-controlling interest
Controlling interest
21
11
23
net basic gain per share (cents per share)
25
see accompanying notes to the consolidated financial statements.
4,771,721
1,066,583
794,867
6,098,830
9,804
(47,043)
(8,719)
245,104
607,967
3,787,599
827,370
661,780
4,846,801
(92,154)
(20,687)
(12,911)
151,692
334,973
12,978
8,805
620,945
343,778
219,147
107,017
401,798 $
236,761
36,880 $
27,118
364,918 $
209,643
0.57 $
0.34
$
$
$
$
fabián gosselin Castro
Chief executive officer
Diego gaxiola Cuevas
Chief financial officer
Alejandro Villarruel Morales
Corporate Controller
74
alsea, s.a.B. de C.v. and subsidiaries
Consolidated statements of comprehensive income
for the years ended on December 31, 2012 and 2011
(figures in thousands of Mexican pesos)
2012
2011
Consolidated net income
$
401,798 $
236,761
other comprehensive items:
financial instrument valuation
Conversion of foreign operations
total comprehensive income for the period, net of income taxes
Comprehensive income for the year attributable to:
net income of controlling interest
non-controlling interest
see accompanying notes to the consolidated financial statements.
(9,963)
9,166
(114,134)
277,701
27,584
273,511
$
$
240,821 $
246,393
36,880 $
27,118
fabián gosselin Castro
Chief executive officer
Diego gaxiola Cuevas
Chief financial officer
Alejandro Villarruel Morales
Corporate Controller
75
alsea, s.a.B. de C.v. and subsidiaries
Consolidated statements of changes
in stockholders’ equity
for the years ended on December 31, 2012 and 2011
(figures in thousands of Mexican pesos)
Contributed capital
Retained
earnings
other comprehensive
income items
Effect of
Capital
Stock
Premium on
issuance of
shares
Repurchased
shares
Reserve for
repurchase
Legal
Retained
financial
of foreign
controlling non-controlling stockholders’
Valuation of
conversion
Total
Total
of shares
reserve
earnings
instruments
operations
interest
interest
equity
Balances at the start of 2011 (transition date)
$
368,362
$
1,086,415
$
(6,282)
$
363,833 $
86,051 $
945,721 $
- $
- $
2,844,100 $
245,170 $ 3,089,270
Increase in non-controlling interest
repurchased shares, net (note 24)
Premium on share subscription (note 24)
transfer of legal reserve
Cash dividends (note 24)
Comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,515
26,515
-
5,632
381
-
20,070
-
-
-
-
20,451
-
-
-
-
-
5,632
-
-
20,451
5,632
-
-
-
7,560
(7,560)
-
-
-
-
-
-
-
-
(122,648)
-
(122,648)
-
(122,648)
-
-
-
-
209,643
9,166
27,584
246,393
27,118
273,511
Balances at December 31, 2011
$
368,362
$
1,092,047
$
(5,901)
$
383,903 $
93,611 $
1,025,156 $
9,166 $
27,584 $
2,993,928 $
298,803 $
3,292,731
1,090
5,901
180,298
-
(1,090)
-
186,199
-
186,199
-
-
-
7,125
(7,125)
-
-
-
-
-
-
-
-
repurchased shares, net (note 24)
transfer of legal reserve (note 24)
Business acquisition and purchase of
non-controlling interest (note 1d and 14)
-
-
-
share dividends (note 24)
8,233
300,669
(15,262)
-
-
-
-
-
-
-
(15,262)
(494)
(15,756)
-
-
(308,902)
-
-
-
-
-
Cash dividends declared by a subsidiary (note 24)
-
-
-
-
-
-
-
-
-
(27,000)
(27,000)
Placement of shares (note 1d)
26,744
1,088,278
-
-
-
-
-
-
1,115,022
-
1,115,022
Comprehensive income
-
-
-
-
-
364,918
(9,963)
(114,134)
240,821
36,880
277,701
Balances at December 31, 2012
$
403,339
$
2,466,822
$
-
$
564,201 $
100,736 $
1,072,957 $
(797) $
(86,550) $
4,520,708 $
308,189 $
4,828,897
see accompanying notes to the consolidated financial statements.
76
Contributed capital
Retained
earnings
other comprehensive
income items
Premium on
Capital
Stock
issuance of
Repurchased
shares
shares
Reserve for
repurchase
of shares
Legal
reserve
Retained
earnings
Valuation of
financial
instruments
Effect of
conversion
of foreign
operations
Total
Total
controlling non-controlling stockholders’
interest
interest
equity
Balances at the start of 2011 (transition date)
$
368,362
$
1,086,415
$
(6,282)
$
363,833 $
86,051 $
945,721 $
- $
- $
2,844,100 $
245,170 $ 3,089,270
Increase in non-controlling interest
-
-
-
-
-
-
-
-
26,515
26,515
repurchased shares, net (note 24)
Premium on share subscription (note 24)
transfer of legal reserve
Cash dividends (note 24)
Comprehensive income
repurchased shares, net (note 24)
transfer of legal reserve (note 24)
Business acquisition and purchase of
non-controlling interest (note 1d and 14)
-
5,632
381
-
20,070
-
-
-
-
20,451
-
-
-
-
-
5,632
-
-
20,451
5,632
-
-
-
7,560
(7,560)
-
-
-
-
(122,648)
-
-
-
-
-
-
-
(122,648)
-
(122,648)
-
-
-
-
209,643
9,166
27,584
246,393
27,118
273,511
Balances at December 31, 2011
$
368,362
$
1,092,047
$
(5,901)
$
383,903 $
93,611 $
1,025,156 $
9,166 $
27,584 $
2,993,928 $
298,803 $
3,292,731
1,090
5,901
180,298
-
(1,090)
-
-
-
7,125
(7,125)
-
-
-
186,199
-
186,199
-
-
-
-
(15,262)
-
-
-
-
-
(15,262)
(494)
(15,756)
share dividends (note 24)
8,233
300,669
-
-
(308,902)
-
-
-
-
-
Cash dividends declared by a subsidiary (note 24)
-
-
-
-
-
-
-
-
(27,000)
(27,000)
Placement of shares (note 1d)
26,744
1,088,278
-
-
-
-
-
1,115,022
-
1,115,022
Comprehensive income
-
-
-
-
364,918
(9,963)
(114,134)
240,821
36,880
277,701
Balances at December 31, 2012
$
403,339
$
2,466,822
$
-
$
564,201 $
100,736 $
1,072,957 $
(797) $
(86,550) $
4,520,708 $
308,189 $
4,828,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
fabián gosselin Castro
Chief executive officer
Diego gaxiola Cuevas
Chief financial officer
Alejandro Villarruel Morales
Corporate Controller
77
alsea, s.a.B. de C.v. and subsidiaries
Consolidated statements of cash flows
for the years ended on December 31, 2012 and 2011
(figures in thousands of Mexican pesos)
Cash flows from operating activities
Consolidated net income
adjustment for:
Income taxes
equity in results of associated company
financial costs
Investment income
Cancellation of store equipment and property
estimations for the period
Long-term depreciation and amortization
Cost of purchase of non-controlling interest
effect of valuation of financial instruments
Changes in working capital
Customers
recoverable taxes
other accounts receivable
Inventories
advance payments
Guarantee deposits
suppliers
taxes payable
other liabilities
Labor obligations
notes
2012
2011
$
401,798 $
236,761
19
219,147
(12,978)
245,104
(47,043)
64,200
90,005
811,298
(11,748)
(9,963)
1,749,820
(79,917)
(758)
(23,263)
(100,418)
(38,332)
(23,029)
80,640
(220,337)
85,066
19,460
107,017
(8,805)
151,692
(20,687)
34,099
207,138
670,000
-
9,166
1,386,381
(10,809)
(25,699)
(126,745)
(49,480)
(8,823)
(37,622)
272,415
(167,200)
17,514
9,253
net cash flows provided by operating activities
1,448,932
1,259,186
Cash flows from investing activities
Interest collected
store equipment, leasehold improvements and property
Intangible assets.
Guarantee deposits
reimbursement of guaranty deposit
Purchase of non-controlling interest
10
10
net cash flows arising from business acquisitions
net cash flows used in investing activities
1e and 14
47,043
(921,123)
(220,542)
-
2,262,800
(15,262)
(1,765,000)
(612,084)
20,687
(939,845)
(235,904)
(2,262,800)
-
-
-
(3,417,862)
(Continued)
78
Cash flows from financing activities
Bank loans
amortization of bank financing
Issue of debt instruments
amortization of debt instrument
Increase in capital stock, net of premium and
expenses incurred for share issue
Interest paid
Dividends paid
other items
repurchase of shares, net
notes
2012
2011
15
1b and 16
24
75,092
(750,168)
-
(1,000,000)
1,115,022
(245,104)
-
(27,000)
186,199
2,706,233
(537,317)
1,000,000
(700,000)
-
(151,692)
(122,648)
26,515
26,083
net cash flows (used in) provided by financing activities
(645,959)
2,247,174
net increase in cash and cash equivalents
190,889
88,498
Cash and cash equivalents at beginning of year
739,379
640,203
exchange effects on value of cash
2,326
10,678
Cash and cash equivalents at end of year
$
932,594 $
739,379
see accompanying notes to the consolidated financial statements.
(Continued)
fabián gosselin Castro
Chief executive officer
Diego gaxiola Cuevas
Chief financial officer
Alejandro Villarruel Morales
Corporate Controller
79
alsea, s.a.B. de C.v. and subsidiaries
notes to the consolidated financial statements
for the years ended on December 31, 2012 and 2011 and January 1st., 2011 (transition date)
(figures in thousands of pesos)
1. Activity, main operations and significant subsequent events -
alsea, s.a.B. de C.v. and subsidiaries (alsea or the entity) was incorporated as a variable income stock company on May 16, 1997
in Mexico. the entity’s domicile is Paseo de la reforma no. 222, tercer piso, Col. Juárez, Delegación Cuauhtémoc C.P. 06600,
México, D.f.
for disclosure purposes in the notes to the consolidated financial statements, reference made to pesos, “$” or MXP is for thousands
of Mexican pesos and reference made to dollars is for us dollars.
operations
alsea is mainly engaged in operating fast food restaurants “Qsr”, cafeteria and casual dining units “Casual Dining”. In Mexico, the
entity operates the brands Domino’s Pizza, starbucks, Burger King, Chili’s Grill & Bar, California Pizza Kitchen, P.f Chang’s China Bistro
and Pei Wei asian Diner, and began operating the Italianni’s brand in March 2012. In order to operate its multi-units, the entity has
the support of its shared service center, which includes the supply chain through Distribuidora e Importadora alsea, s.a. de C.v. (DIa),
real property and development services, as well as administrative services (financial, human resources and technology). In Chile
and argentina, it operates the Burger King brand and beginning in 2007 it began operating starbucks in association with starbucks
International. In Colombia, it has operated the Domino’s Pizza and Burger King brands since 2008. In May 2011, alsea signed an
agreement with PfCCB International, Inc. for the exclusive development and operation of P.f. Chang’s China bistro in argentina,
Colombia and Chile, the latter country in which it opened its first P.f. Chang’s unit in 2012.
Main operations
a.
Agreement to purchase the Burger King master franchise in Mexico.- In December 2012, alsea signed a strategic as-
sociation agreement with Burger King Worldwide, Inc. (“BKW”) to acquire the master franchise of the BurGer KInG® brand in
Mexico for a 20-year exclusivity. under the strategic association agreement signed by alsea and BKW, the BKW subsidiary will
merge with operadora de franquicias alsea s.a. de C.v. (“ofa”), a subsidiary of alsea, with the latter as the surviving company
and operator of 203 BurGer KInG® restaurants in Mexico. once the merger goes into effect, BKW will sell the ofa shares
to alsea, which means that after the transactions in question are finalized, alsea will retain 80% of ofa and BKW will retain
the remaining 20%. this merger is subject to the approval of the federal Competition Commission (CfC). the most important
rights and responsibilities acquired by alsea through ofa are: i.- operating control over the BurGer KInG® brand throughout
Mexico, ii.- the acquisition of 97 BurGer KInG® restaurants for operation of a total of 203 units, iii.- exclusivity in Mexico
for a 20-year period, iv.- Collection of royalties from its sub-franchisees; and v.- a development plan that contemplates new
BurGer KInG® corporate stores and sub-franchisees for the following 20 years.
b.
Early amortization of the total “ALSEA 11” debt instrument.- In May 2011, alsea finished placing debt instruments for a
total of $1,000 million pesos in the Mexican market. the resources obtained from that issuance were used mainly to prepay
the debt instruments issued in December 2009 and March 2010 for $300 and $400 million pesos, respectively.
In December 2012, alsea amortized in advance the total amount of said debt instrument “aLsea11”. the payment was for
approximately $1,004.7 million pesos, which included interest accrued. said issue was settled with part of the resources
obtained from the capital issue performed by the entity, which helped to improve the cost of the debt and the maturity
profile. (note 16)
80
c.
Capital issue.- In December 2012, alsea issued stock worth 1,150 million pesos, which included the over-allotment option.
the issue was carried out in the Mexican market through the Mexican stock exchange (BMv for its initials in spanish) and the
foreign market through a private offer in accordance with regulation “s” of the us securities act of 1933. the final placement
price according to the books was 21.50 pesos per share, which resulted in the placement of approximately 53.49 million shares.
as a result of the issue and the exercise of the over-allotment option, alsea’s subscribed and paid in capital will be comprised
of 687’759,054 (six hundred and eighty seven million , seven hundred and fifty nine thousand, fifty four) Class I, sole series,
common shares, with no par value. the entity used the resources derived from this issue to prepay the debt instrument with
ticker code aLsea’11, which matures in 2014, as a result of which the leverage level for this transaction decreases (net Debt to
eBItDa) from 1.9x to 1.2x with figures at september 2012. (note 24)
d. Acquisition of 35% of grupo Calpik, S.A.P.i. de C.V. and 10.64 % of Panadería y Alimentos para food Service,
S.A de C.V..- In June 2012, the entity finalized the acquisition of the remaining 35% shares of Grupo Calpik, a company that
holds the exclusive rights to develop and operate California Pizza Kitchen restaurants in Mexico. the book entry for that acqui-
sition gave rise to a charge to stockholders’ equity of $15,262. additionally, in october 2012, the entity acquired the remaining
10.64% shares of Panadería y alimentos para food service, a company that distributes food brands mainly to Café sirena, s
de r.L. de C.v. , which operates starbucks in Mexico. the book entry for said acquisitions gave rise to a decrease in the entity’s
non-controlling interest of $15,172 and $11,748, respectively. (note 24)
e. Agreement to acquire italianni’s restaurants and the exclusive rights to develop and operate that brand of
restaurants in Mexico.- the process for the Italianni’s acquisition concluded in february 2012 at a final price of $1,765
million pesos.
Italianni’s is a leading Italian food chain in Mexico with more than 52 units in over 20 states. the brand is known for offering
top quality products and services thanks to its experienced operating team and a philosophy based on high service values.
(note 14)
f.
Acquisition of the master license and exclusive development rights for operating the Pei Wei Asian Dinner
(Pei Wei) brand in Mexico.- as part of its expansion plan, in october 2011, alsea signed an exclusive development and
master license agreement to operate the Pei Wei brand in the entire Mexican territory. the agreement stipulates the obligation
to open three units in the first 18 months and the right to a 10-year exclusivity agreement, with a commitment to open 50
units and the right to extend the term. the first restaurant commenced operations in December 2011.
the concept behind the brand is an asian food menu operating in Mexico under a business model of sit-down, to go and home
delivery service, thus adding value to the brand.
Pei Wei is the leading asian food brand in the us under the “fast Casual” category, which means that by signing the agree-
ment, alsea becomes the pioneer in Mexico operating under this concept.
g. new agreements signed with Starbucks Coffee international (SCi) for Mexico, Argentina and Chile.- In october
2011, alsea established new accords with sCI to develop the brand. alsea currently holds 82% shareholding over the starbucks
Mexico and starbucks argentina subsidiaries and sCI holds the remaining 18%. shareholding over the subsidiary in Chile is
82% for sCI and 18% for alsea.
81
under the initial agreements, sCI has the option to increase its shareholding in the Mexico and argentina subsidiaries by up
to 50% and for the Chilean subsidiary alsea has the option to increase its shareholding by up to 49%.
In light of the new agreements signed with sCI to develop the brand, alsea has committed to develop more than 300 new
units for the Mexico and argentina markets in the next five years. If the proposed openings plan is achieved and all the agreed
terms are met, sCI will waive its right to increase its shareholding in the Mexico and argentina subsidiaries.
the agreements also include an extension of alsea’s rights to develop the brand in Mexico for an additional five years, which
means that they could extend to february 2027.
h. Agreement for development and exclusive operation of the brand P.f. Chang’s China Bistro in Argentina, Chile
and Colombia - In May 2011, alsea signed the exclusive development agreement and it bought a franchise to operate and
develop P.f. Chang’s brand restaurants in argentina, Chile and Colombia. as part of the agreement, alsea will open 7 restaurants
in argentina and 5 in Chile and Colombia over the next ten years.
i.
incorporation of Panadería y Alimentos para food Service, S. A. de C. V.- Panadería y alimentos para food service, s. a.
de C. v. was incorporated in november 2010 and started operating in september 2011 to continue the vertical development of
the entity. alsea invested in the incorporation and development of a new plant that produces sandwiches and bread that is
supplied to starbucks and the other alsea brands. the business model contemplates the central plant located in Lerma, state
of Mexico, where 100% of Pastry and Bakery goods are to be produced and 65% of sandwiches will be assembled. In addition
to that plant, there are three regional assembly centers located in the DIa Monterrey, Cancun and Hermosillo facilities for as-
sembly of the regional sandwiches.
Significant subsequent events
Acquisition of the exclusive rights to develop the P.F. Chang’s China Bistro brand in Brazil. -
In January 2013, the entity signed a Development and operation agreement for the exclusive development of the P.f. Chang’s China
Bistro brand in Brazil. the agreements contemplate the opening of 30 units in the next 10 years. P.f. Chang’s is the leading brand
in the Casual asian food segment in the us with more than 225 operating units. It currently has points of sale in Mexico, Puerto
rico, Canada, Kuwait, Beirut, Chile, Hawaii, the Philippines and the united arab emirates. In order to introduce P.f. Chang’s into the
Brazilian market, a development and expansion strategy was designed based on the successful business model used to operate the
brand portfolio in south america. that model has made it possible to position alsea as the leading Casual and fast-food operator
in Latin america. With Brazil operations as the new path for growth, the entity will work towards generating greater diversification
and profitability of its portfolio.
Alsea signs the rights to the exclusive development and operation of The Cheesecake Factory® restaurants in Mexico.
alsea signed an agreement to be the exclusive developer and operator of the Cheesecake factory® restaurants in Mexico and Chile,
which also contemplates the option for argentina, Brazil, Colombia and Peru, thus becoming the strategic partner of the prestigious
brand in the entire region.
the agreement initially contemplates the development of 12 openings between Mexico and Chile in the following eight years with
10-year agreements per restaurant, and a right to extend that period to an additional 10 years.
the Cheesecake factory® chain is considered the best seller per unit in its category. the brand focuses on providing customers
with top quality products and services. Its operations include 162 restaurants under the the Cheesecake factory® brand in over
35 states of the united states of america operating under a franchise license.
82
2. Bases for presentation
a.
Adoption of international financial Reporting Standards.
as of January 1, 2012, the entity adopted the International financial reporting standards (Ifrs) and the amendments and inter-
pretations thereto issued by the International accounting standards Board (IasB) in effect as of December 31, 2012. therefore, it
applied Ifrs 1, first-time adoption of International financial reporting standards. these consolidated financial statements have
been prepared in accordance with the standards and interpretations issued and enacted at the date of their issuance.
- Transition to IFRS
the consolidated financial statements at December 31, 2011 were the last statements prepared in accordance with Mexi-
can financial reporting standards (Mfrs). those reports differ in certain areas in relation to the Ifrs. In preparing the
consolidated financial statements at December 31, 2012 and 2011 and for the years ended on those dates, the entity’s
Management has changed certain methods of accounting presentation and valuation applied under the Mfrs accounting
standards to comply with the Ifrs. the comparative figures at December 31, 2011 and for the year ended on that date
were modified to reflect adoption of said standards. the entity’s date of transition, which is defined as the beginning of
the earliest period for which the entity is presenting comparative information, is January 1, 2011. (“date of transition”)
the reconciliations and descriptions of the effects of transition from Mfrs to Ifrs on the statements of financial position,
of income and of other comprehensive income are explained in note 32.
b.
Bases for presentation
the entity’s consolidated financial statements have been prepared on the historical cost basis, except for certain financial instru-
ments that are valued at fair value, as explained in further detail in the section on accounting policies.
i. historical cost
the historical cost is generally based on the fair value of the consideration paid in exchange for assets.
ii. Fair value
the fair value is defined as the price to be received from the sale of an asset, or to be paid on the transfer of a liability in
an orderly transaction between participants of the market at valuation date.
83
c.
Bases for consolidation of the financial statements
the consolidated financial statements include those of the entity and the subsidiaries over which it holds control. Control is
obtained when the entity has the power to govern the financial and operating policies of an entity in order to benefit from its
operations. the shareholding in its capital stock is as follows:
Subsidiary and/or associate
operations
2012
2011
Date of
transition
Shareholding percentage (%)
Panadería y alimentos para food service
Distribution of alsea brand foods
Café sirena, s. de r.L de C.v.
operadora de franquicias alsea,
s.a. de C.v.
operadora y Procesadora de Productos
de Panificación s.a. de C.v.
Gastrosur, s.a. de C.v.
fast food sudamericana, s.a.
fast food Chile, s.a.
starbucks Coffee argentina, s.r.L
Dominalco, s.a.
servicios Múltiples empresariales aCD
s.a. de C.v. sofoM e.n.r
asian Bistro Colombia, s.a.s
asian Bistro argentina s.r.L.
operadora alsea en Colombia, s.a.
asian food Ltda.
Grupo Calpik, s.a.P.I. de C.v.
especialista en restaurantes de Comida
estilo asiática, s.a. de C.v.
Distribuidora e Importadora alsea,
s.a. de C.v.
Italcafe, s.a. de C.v.
operator of the starbucks brand
in Mexico
operator of the Burger King brand
in Mexico
operator of the Domino’s Pizza brand
in Mexico
operator of the Chili’s Grill & Bar brand
in Mexico
operator of the Burger King brand
in argentina
operator of the Burger King brand
in Chile
operator of the starbucks brand
in argentina
operator of the Domino’s Pizza brand
in Colombia
operator of factoring and financial
Leasing in Mexico
operator of the P.f. Chang’s brand
in Colombia
operator of the P.f. Chang’s brand
in argentina
operator of the Burger King brand
in Colombia
operator of the P.f. Chang’s brand
in Chile
operator of the California Pizza Kitchen
brand in Mexico
operator of the P.f. Chang’s and Pei Wei
brands in Mexico
Distributor of foods and production
materials for the alsea and related brands
operator of Italianni’s brand
Grupo amigos de san Ángel, s.a. de C.v.
operator of Italianni’s brand
Grupo amigos de torreón, s.a. de C.v.
operator of Italianni’s brand
Grupo amigos de Perisur, s.a. de C.v.
operator of Italianni’s brand
associate:
100.00%
82.00%
89.36%
82.00%
89.36%
82.00%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
82.00%
82.00%
82.00%
95.00%
95.00%
95.00%
99.99%
99.99%
99.99%
100.00%
100.00%
100.00%
100.00%
-
-
95.00%
95.00%
95.00%
100.00%
100.00%
-
99.99%
65.00%
65.00%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
100.00%
89.77%
93.86%
94.88%
-
-
-
-
-
-
-
-
starbucks Coffee Chile, s.a. (1)
operator of the starbucks brand in Chile
18.00%
18.00%
18.00%
(1) the investment in shares of associate company was valued through the equity method (see note 11).
84
the balances and transactions between the consolidated entities have been eliminated.
the results of subsidiaries acquired in the year are included in the consolidated statements of comprehensive income and
other comprehensive income as of the date of acquisition.
the non-controlling interest in subsidiaries is identified separately from the entity’s investments in them. the non-controlling
interests may be initially value either at their fair value or at the proportional equity of non-controlling interests on the fair
value of the identifiable net assets of an acquired entity. the selection of the valuation base is done individually for each op-
eration. after the acquisition takes place, the book value of the controlling interests represents the amount of those interests
upon initial recognition, plus the portion of subsequent non-controlling interests of the statement of changes in stockholders’
equity. the comprehensive income is attributable to non-controlling interests, even if it results in a deficit.
i. Subsidiaries - subsidiaries are all entities (including special purpose entities sPes) over which the entity has the power
to govern the operating and financial policies, generally as a result of holding more than half of their voting rights. the
existence and effects of potential voting rights that can be presently exercised or are convertible, are considered when
evaluating whether or not the entity controls the other entity. the subsidiaries consolidate as from the date on which
control thereof is transferred to the entity, and they stop consolidating as from the date on which said control is lost. In
accordance with the previous standards Interpretations Committee (sIC) sIC 12, sPes are deemed to consolidate when the
substance of the relationship between the entity and the sPes indicate that they are controlled by the entity.
the accounting policies of the subsidiaries have been modified to the extent necessary to ensure consistency with the
policies adopted by the entity.
ii. Associates - associates are all entities over which the entity exercises significant influence but not control. Generally
speaking, those are entities over which shareholding is between 20% and 50% of the voting rights. Investments in as-
sociates are initially recorded at historical cost and subsequently through the equity method. the entity’s investment in
associates includes goodwill (net of accrued impairment loss, if any) identified at the time of acquisition.
Changes in the Entity’s equity in existing subsidiaries
the changes in investments in the entity’s subsidiaries that do not give rise to loss of control are recorded as stockholders’ equity
transactions. the book value of the entity’s investments and non-controlling interests is adjusted to reflect the changes in invest-
ments in subsidiaries. any differences between the amount for which non-controlling interests are adjusted and the fair value of
the consideration paid or received are recorded directly in capital and are attributed to the entity’s owners.
When the entity losses control over a subsidiary, the related gain or loss on disposal is calculated as the difference between (i) the
sum of the fair value of the consideration received and the fair value of any interest retained and (ii) the prior book value of assets
(including goodwill) and the subsidiary’s liabilities and any non-controlling interest. amounts previously recorded under other
comprehensive income related to the subsidiary are recorded in the same manner as disposals of relevant assets and liabilities (i.e.
they are reclassified to income or are directly transferred to retained earnings). the fair value of any investments retained in the
former subsidiary at the date of control loss is considered the fair value of initial recognition for subsequent accounting treatment,
as established in Ias 39, Financial Instruments: Recognition and Measurement, or, when applicable, the cost of initial recognition
of an investment in an associate or an entity under joint control.
85
3. Summary of the main accounting policies
the enclosed accompanying consolidated financial statements comply with the Ifrs issued by the IasB. Preparation of these
consolidated financial statements requires the entity’s Management to prepare certain estimates and use certain assumptions to
value different consolidated financial statement line items and to make the necessary disclosures. However, actual results could
differ from those estimates. after applying its professional judgment, the entity’s Management considers that the estimates and
assumptions used were appropriate under the circumstances (see note 4). the main accounting policies followed by the entity are
described below:
a.
Reclassifications
the consolidated financial statements for the year ended on December 31, 2011 have been reclassified under certain captions
to adjust their presentation to that for 2012.
b.
financial instruments
i) financial assets
Initial recognition
the financial assets covered by Ias 39 are classified as financial assets at fair value with changes in income, loans and
accounts receivable, investments held to maturity, financial investments available for sale, or as derivative instruments
designated as hedging instruments in an effective hedge, as the case may be. the entity determines the classification of
financial assets at the time of their initial recognition.
all financial assets are initially recognized at their fair value plus, in the case of financial assets not accounted for at fair
value with changes in income, the transaction costs that are directly attributable.
fixed asset purchases or sales that require delivering the related assets in a period of time specified by a standard or
market convention (conventional purchases-sales or regular way trades) are recognized at the date of the purchase-sale,
i.e., the date on which the entity agrees to purchase or sell the asset.
after their initial recognition, financial assets or liabilities are valued at each balance sheet date according to their clas-
sification, either as assets measured at fair value or at amortized cost.
Subsequent measurement
Loans and accounts receivable are non-derivative financial assets with fixed or determinable payments that are not
quoted on an active market. after their initial recognition, those financial assets are measured at amortized cost using
the effective interest method, less any impairment in value.
the amortized cost is calculated considering any discounts or premiums on acquisition, and any commissions or costs
that are an integral part of the effective interest rate. amortization of the effective interest rate is recognized in the
consolidated statements of income as financial income. any losses resulting from impairment in value are recognized in
the consolidated statements of income as part of the financial cost.
Cancellation of accounts
a financial asset (or, if applicable, part of a financial asset or part of a group of similar financial assets) is canceled from
the accounts when:
a)
the contractual rights to receive cash flows generated by the asset have expired;
86
b) the contractual rights over cash flows generated by the asset have been transferred, or an obligation to pay a third party
the entirety of such cash flows without a significant delay through a pass through arrangement has been assumed, and
i. all risks and benefits inherent to ownership of the asset have been substantially transferred; or
ii. all risks and benefits inherent to ownership of the assets have not been transferred or retained substantially, but
control thereof has been transferred.
When the contractual rights to receive cash flows generated by an asset have been transferred, or a transfer agreement has
been signed, but not all risks and benefits inherent to ownership of the asset have been substantially transferred or retained,
nor has control thereof been transferred, the asset must continue to be recognized to the degree of the continued involvement
of the entity in regard to the asset. In that case, the entity must also recognize the related liability. the transferred asset and
related liability must be measured in a way that reflects the rights and responsibilities retained by the entity.
Continuous involvement that takes on the form of a guaranty over the transferred asset must be measured at the lower of the
original book value of the asset and the maximum amount of the consideration that the entity is required to return.
impairment in the value of financial assets
at the close of each period being reported, the entity evaluates whether or not there is objective evidence that the value of
a financial asset or a group of financial assets has deteriorated. the value of a financial asset or group of financial assets is
considered to have been impaired if, and only if, there is objective evidence of impairment in said value resulting from one
or more events occurring after initial recognition of said assets (an “event that causes an impairment loss”), and when the
impairment causing event has an effect on estimated future cash flows arising from the financial asset or group thereof and
said effect can be reasonably estimated. evidence of impairment in value could include, among others, signs such as debtors
or a group of debtors experiencing significant financial difficulties, default or late payment of amounts owed on the capital
or interest, the probability of entities filing for bankruptcy or adopting another form of financial reorganization, or observable
data indicating a measurable decrease in expected future cash flows, as well as adverse changes in the status of late pay-
ments, or in economic conditions correlated to default.
In the case of financial assets accounted for at amortized cost, the entity first evaluates whether or not there is objective evi-
dence of impairment in their value, individually for financial assets that are individually significant, or collectively for financial
assets that are not individually significant. If the entity determines that there is no objective evidence of impairment in the
value of a financial asset evaluated individually, irrespective of its materiality, it includes said asset in a group of financial as-
sets with similar credit risk features, and it evaluates them collectively to determine the existence of impairment in their value.
assets that are evaluated individually to determine the existence of impairment in their value, and for which an impairment
loss has been or continues to be recognized, are not included in the evaluation of impairment in value collectively.
If there is objective evidence that there has been a loss due to impairment in value, the amount of the loss is measured as the
difference between the book value of the asset and the present value of estimated future cash flows (not including expected
future loan losses that have not yet been incurred). the present value of estimated future cash flows is discounted at the
original effective interest rate of the financial assets. If a loan is subject to a variable interest rate, the discount rate used to
measure impairment losses is the present effective interest rate.
the book value of the asset is reduced through a provision account and the amount of the loss is recognized in income for
the period. Interest earned continues to accrue on the reduced book value of the asset, using the interest rate for discounting
future cash flows from the result of measuring the impairment loss in value. Interest earned is recorded as financial income in
income for the year. the loans and the respective provision are canceled when there are no realistic expectations of recover-
ing the amount in the future and all existing guarantees have been exercised or transferred to the entity. If in a subsequent
year the estimated amount of the impairment loss increases or decreases due to an event occurring after the impairment is
87
recognized, the loss for impairment in value recognized previously is increased or reduced adjusting the reserve account. If an
item attributed to the loss is recovered subsequently, the recovery is credited in the account in which the reserve was recorded
under operating expenses for the period. (note 17)
ii) financial liabilities
Initial recognition and measurement
the financial liabilities covered by Ias 39 are classified as financial liabilities at fair value with changes in income, loans
and accounts payable, or as derivative instruments designated as hedging instruments in an effective hedge, as the case
may be. the entity determines the classification of financial liabilities at the time of their initial recognition.
all financial liabilities are initially recognized at their fair value plus, in the case of loans and accounts payable accounted
for at amortized cost, the transaction costs that are directly attributable.
the entity’s financial liabilities include accounts payable to suppliers, other accounts payable, and short and long-term
debts, and they are accounted for as financial liabilities measured at their amortized cost.
Subsequent measurement
after their initial recognition, accounts payable and debts are measured at amortized cost using the effective interest
method. Gains and losses are recognized in income for the period when liabilities are canceled by the amortization
process, using the effective interest method. the amortized cost is calculated considering any discounts or premiums
on acquisition and any commissions or costs that are an integral part of the effective interest rate. amortization of the
effective interest rate is recognized in the consolidated statements of income as financial cost.
Cancellation of accounts
a financial liability is canceled when an obligation specified in the respective agreement has been paid or canceled, or
when it is due.
When an existing financial liability is replaced by another liability from the same lender under substantially different
conditions, or if the conditions of an existing liability change substantially, said change is treated as a cancellation of the
original liability and a new liability is recognized, and the difference in the respective book values is recognized in the
consolidated statements of income.
iii) financial instrument compensation
financial assets and financial liabilities are compensated by reporting the net amount in the consolidated statements of
financial position, only if there is a legal right of offset the amounts recognized and if there is an intention to settle the
net amount or to realize said assets and cancel the liabilities simultaneously.
b. Derivative financial instruments
alsea uses derivative financial instruments (DfI) known as forwards or swaps, in order to a) mitigate present and future risks
of adverse fluctuations in exchange and interest rates, b) avoid distracting resources from its operations and the expansion
plan, and c) have certainty over its future flows, which also helps to maintain a cost of debt strategy. DfIs used are only held
for economic hedge purposes, through which the entity agrees to trade cash flows at future fixed dates, at the nominal or
reference value, and they are valued at fair value.
88
entity must define monthly the price levels at which the Corporate treasury must operate the different derivative financial
instruments. under no circumstances should amounts above the monthly resource requirements be operated, thus ensuring
that there is always a position at risk to hedge and that the derivative instruments are not held for speculation. Given the
variety of derivative instruments available to cover risks, Management is empowered to define the operations for which said
instruments are contracted, provided they are held for economic hedging and not for speculative purposes.
operations with DfI are carried out under a master agreement on an IsDa (International swap Dealers association) form,
which must be standardized and duly formalized by the legal representatives of the entity and the financial institutions.
In certain cases, the entity and the financial institutions have signed an agreement enclosed to the IsDa master agreement,
which stipulates conditions that require them to offer guarantees for margin calls in the event that the mark-to-market ex-
ceeds certain established credit limits.
the entity has the policy of monitoring the volume of operations contracted with each institution, in order to avoid margin
calls as much as possible and diversify the risk for the counterparty.
Derivative financial instruments are contracted in the local market under the over the counter (otC) mode. following are the
financial entities that are eligible to close operations related to the entity’s risk management: BBva Bancomer s.a., Banco
nacional de México, s. a., Banco santander, s. a., Barclays Bank México s. a., Deutsche Bank aG, Goldman, sachs Paris Inc.
etcie., HsBC México s. a., Merril Lynch Capital services Inc., Morgan stanley Capital services Inc., and uBs aG. the entity may
choose other entities, provided that they are regulated and authorized to carry out that type of operations.
Valuation -
DfIs are initially recorded at fair value, which is represented by the transaction cost. after their initial recognition, DfIs are
valued at market value at each balance sheet date and any changes in value are recognized in the statement of income, except
when said derivatives have been formally designated and they meet the requirements to be considered as hedging instru-
ments associated to a hedge.
In the case of cash flow hedges, the effective portion of gains or losses of the hedging instrument are recognized under other
items of comprehensive gain or loss, and they are reclassified to income in the same period or periods in which the projected
hedged transaction affects them. the ineffective portions and any exclusion are immediately recorded in income for the year.
Identified risks are those related to variations in exchange rate and interest rate. Derivative instruments are contracted under
entity policies and no risks are expected to occur that differ from the purpose for which those instruments are contracted.
c.
Embedded derivatives
the entity reviews all signed contracts to identify the existence of embedded derivatives. Identified embedded derivatives are
subject to evaluation to determine whether or not they comply with the provisions of the applicable regulations; if so, they are
separated from the host contract and are valued at fair value. If an embedded derivative is classified for trade, the apprecia-
tion or depreciation of fair value is recognized in income for the period.
Implicit derivatives designated for hedging are recorded in changes in valuation based on the type of hedging: (1) when they
relate to fair value, fluctuations in the embedded derivative and in the hedged item are valued at fair value and are recorded
in income; (2) when they relate to cash flow, the effective portion of the embedded derivative is temporarily recorded under
comprehensive income, and it is recycled to income when the hedged item affects them. the ineffective portion is immediately
recorded in income.
89
d.
inventories and cost of sales
Inventories are valued at cost or at net realizable value, the lower of the two. Costs, including a portion of fixed and variable
indirect costs, are assigned to inventories through the most appropriate method for the specific type of inventory. In assigning
the unit cost of inventories, the entity uses the average cost method (aC).
the sales cost represents the cost of inventories at the time of sale, increased, when applicable, by reductions in the net
realization value of inventories during the year.
the entity records the necessary estimations to recognize reductions in the value of its inventories due to impairment, obso-
lescence, slow movement and other causes that indicate that utilization or realization of the items comprising the inventories
will be below the recorded value. (note 8)
e.
Business combinations
Business acquisitions are accounted using the purchase method. the consideration transferred in a business combination
is measured at fair value, which is calculated as the sum of fair values of the assets transferred by the entity, less liabilities
incurred by the entity with the former owners of the purchased company and the interests in capital issued by the entity in
exchange for control over the acquired company at acquisition date. Costs related to an acquisition are generally recorded in
the consolidated statements of income as they are incurred.
at the date of acquisition, identifiable assets acquired and assumed liabilities are recognized at fair value, with the
exception of:
- Deferred tax assets or liabilities and assets and liabilities related to employee benefits recognized and measured in ac-
cordance with Ias 12, Income Taxes, and Ias 19, employee Benefits, respectively.
-
Liabilities or equity securities related to payment agreements based on shares of the purchased company or payment
agreements based on shares of the entity entered into to replace payment agreements based on shares of the acquired
company are measured in accordance with Ifrs 2, Share Based Payments, at the date of acquisition; and
- assets (or a group of assets for disposal) classified as held for sale in accordance with Ifrs 5, non-current Assets held
for Sale and Discontinued operations, that are measured in accordance with that standard.
Goodwill is measured as the surplus of the amount of the transferred consideration, the amount of any non-controlling inter-
est of the acquired company, and the fair value of previous shareholding of the purchaser in the acquired company (if any)
over the net amount of identifiable acquired assets and assumed liabilities at the date of acquisition. If after a revaluation,
the net amount of identifiable acquired assets and assumed liabilities at the date of acquisition exceeds the consideration
transferred, the amount of any non-controlling interest in the acquired company and the fair value of previous shareholding
of the purchaser in the acquired company (if any), the surplus is recognized immediately in the consolidated statements of
income as a gain on a good purchase opportunity.
non-controlling interests that represent current shareholdings and that offer their holders a proportional interest in the net
assets of the entity in the event of liquidation can be initially measured either at fair value or at the value of the proportional
interest of the non-controlling interest in the amounts recognized for net identifiable assets of the acquired company. the
measurement option is based on each transaction. other types of non-controlling interests are measured at fair value, or,
when applicable, based on the provisions of another Ifrs.
When the consideration transferred by the entity in a business combination includes assets or liabilities resulting from a
contingent consideration agreement, the contingent consideration is measured at fair value at the date of acquisition and it
is included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent
consideration qualifying as adjustments for the measurement period are retrospectively adjusted along with the respective
adjustments vs. goodwill. adjustments in measurement period are adjustments that arise from the additional information
90
obtained in the measurement period (which cannot exceed one year as from the acquisition date) in relation to existing facts
and circumstances at acquisition date.
the accounting treatment for changes in fair value of the contingent consideration that do not qualify as adjustments of the
measurement period depend on the manner in which the contingent consideration is classified. the contingent consider-
ation classified as capital is not remeasured at subsequent reporting dates and its subsequent liquidation is accounted for
under capital. a contingent consideration classified as an asset or a liability is remeasured at subsequent reporting dates in
accordance with Ias 39 or Ias 37, Provisions, Contingent Liabilities and Contingent Assets, as appropriate, recognizing the
respective gain or loss in the consolidated statements of income.
When a business combination is developed in stages, the entity’s previous shareholding in the acquired company is remea-
sured at fair value at acquisition date (i.e., the date on which the entity obtains control), and the resulting gain or loss, if any,
is recognized in the consolidated statements of income. amounts resulting from equity in the acquired company prior to the
date of acquisition, which have been previously recognized in other comprehensive income, are reclassified to the consolidated
statements of income.
If the initial accounting treatment of a business combination is incomplete at the end of the reporting period in which the
combination takes place, the entity reports the provisional amounts of the items for which book recording is incomplete.
those provisional amounts are adjusted in the measurement period (see above), or instead additional assets or liabilities are
recognized to reflect new information obtained on the existing facts and circumstances at the acquisition date and which, had
it been known, would have affected the amounts recognized at that date.
f.
Store equipment, leasehold improvements and property
store equipment, leasehold improvements and property are recorded at acquisition cost.
Depreciation in store equipment, leasehold improvements and property is calculated by the straight line method, based on the
useful lives estimated by the entity’s Management. annual depreciation rates of the main groups of assets is as follows:
store equipment
transportation equipment
Production equipment
Buildings
Leasehold improvements
Computer equipment
office furniture and equipment
Rates
5% to 30%
25%
10% to 20%
5%
7% to 20%
30%
10%
any significant components of store equipment, leasehold improvements and property that must be replaced periodically are
canceled by the entity and the new component is recognized with its respective useful life and depreciation. Likewise, when
major maintenance is performed, the cost is recognized as a replacement of a component to the extent that all recognition
requirements are met. all other routine repair and maintenance costs are recorded as an expense in income for the period as
they are incurred.
91
financing costs directly attributable to the acquisition, construction or production of an asset that necessarily requires a sub-
stantial period of time to be in use condition or ready for sale are capitalized as part of the cost of the respective asset. all
other financing costs are accounted for as expenses for the period in which they are incurred. financing costs include interest
and other costs incurred in relation to loan agreements signed by the entity.
the entity does not have the policy of selling fixed assets at the end of their useful lives, since in order to protect its image
and the alsea brands, they are destructed an in some cases sold as waste. use or lease of equipment outside the provisions
of franchise agreements is subject to sanctions. additionally, given the high costs of maintenance or storage required, those
assets are not used as spare parts for other brand stores.
for the years ended December 31, 2012 and 2011, the entity has not capitalized financing costs under the value of assets, since
its lacks ratable assets or financing for purchase of construction of assets.
g.
intangible assets.
Goodwill represents future economic benefits arising from business acquisitions that are not individually identifiable or rec-
ognized separately Goodwill is subject to impairment tests at least once a year.
In order to test impairment, goodwill is assigned to each of the entity’s cash generating units (or groups of cash generating
units) expected to benefit from the synergies of the combination.
other intangible assets represent payments made to third parties for rights to use brands through which the entity operates
its establishments under the respective franchise or association agreements. amortization is calculated by the straight line
method based on the use period of each brand, including renewals considered certain for the next 10 to 20 years. the terms
of brand rights are as follows:
Brands
Domino’s Pizza
starbucks Coffee
Burger King
Chili’s Grill & Bar
California Pizza Kitchen
P.f. Chang’s China Bistro
Pei Wei
Italianni´s
Country
Mexico
Colombia
Mexico (1)
argentina
Mexico, argentina,
Chile and Colombia
Mexico
Mexico
Mexico,
argentina, Chile and
Colombia (3)
Mexico (4)
Mexico (2)
Year of expiration
2025
2016
2027
2027
Depending on
opening dates
2015
2017
2019
2021
2021
2031
(1)
(2)
(3)
(4)
Contemplates a five-year extension to the rights for developing the brand resulting from the agreements signed in 2011.
the term for each store under this brand is 20 years as of the opening date, with the right to a 10 year extension (note 1e).
the term for each store under this brand is 10 years as of the opening date, with the right to an additional 10 year extension.
term of 10 years with the right to an extension.
92
the entity has obligations to do and refrain from doing under the aforementioned agreements, the most important of which
are carrying out capital investments and opening establishments. at December 31, 2012 and 2011, and at January 1, 2011,
those obligations have been met.
amortization of intangible assets is included in the depreciation and amortization accounts in the consolidated statements
of income.
h.
Leases
Determination of whether an agreement constitutes or includes a lease is based on the essence of the agreement at the date
on which it is signed, if compliance of said agreement depends on the use of one or more specific assets, or if the agreement
awards the right to use said assets, even when said right is not explicitly specified in the agreement.
financial leases whereby substantially all risks and benefits inherent to ownership of the leased good are transferred to the
entity are capitalized at the start of the lease period, either on the fair value of the leased property, or on the present value of
the minimum lease payments, the lower of the two. Lease payments are distributed between the financial charges and the
reduction of debt so that a constant ratio of interest over left-over debt balance can be determined. financial charges are
recognized as financial costs in the consolidated statements of income.
Leased assets are depreciated over their useful lives. However, if there is no reasonable certainty that the entity will obtain
ownership at the end of the lease term, the asset is depreciated over its estimated useful life or over the lease term, the lower
of the two.
operating lease payments are recognized as operating expenses using the straight line method over the lease term, except
when another systematic apportionment base is more appropriate for showing the pattern of lease benefits for the user.
Contingent leases are recognized as expenses in the periods in which they are incurred. (note 13)
i.
Advance payments
advance payments include advances for purchase of inventories, property, store equipment, leasehold improvements and
services that are received in the twelve months after the date of the statement on financial position and over the course of
regular operations.
j.
impairment in the recovery value of long-lived assets, equipment, leasehold improvements, properties, goodwill
and other intangible assets
at the end of the year being reported, the entity periodically evaluates the book values of its long-lived assets, store equip-
ment, leasehold improvements, properties, goodwill and other intangible assets to determine whether or not those values
exceed their recoverable value.
the recoverable value represents the value of potential net income that is reasonably expected to be incurred as a result of
using or selling said assets. If it is determined that the book values exceed the recoverable value, the entity records the
necessary allowances to reduce them to their recoverable value. When assets qualify as held for sale, they are shown in the
consolidated financial statements at their book value or fair value less selling expenses, the lower of the two. assets and
liabilities of a group classified as held for sale are shown separately in the consolidated statements of financial position.
k.
Provisions
Provisions are recorded when the entity has a present obligation (be it legal or assumed) as a result of a past event, and it is
probable that the entity will have to settle the obligation and it is possible to prepare a reliable estimation of the total amount.
93
the amount recorded as a provision is the best estimation of the amount required to settle the present obligation at the end of
the period being reported, considering the risks and uncertainties surrounding the obligation. When a provision is valued using
the cash flows estimated to settle the present obligation, the book value is shown at the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered by a third party, an ac-
count receivable is recorded as an asset provided that it is virtually certain that the payment will be received and the amount
of the account receivable can be reliably valued.
Provisions are classified as current or non-current based on the estimated period of time estimated for addressing the obliga-
tions covered.
l.
Employee benefits
Direct employee benefits are valued in proportion to the services rendered, considering current salaries, and they are recog-
nized under liabilities as they accrue. this item includes mainly esPs payable, paid absences, such as vacations and vacation
premium, and incentives.
seniority premiums to which employees are entitled are recognized in income for each year based on actuarial calculations
prepared under the projected unit credit method, considering projected balances or the projected cost of benefits.
the actuarial gain or losses are recognized directly in income for the year as they are incurred.
other compensation to which personnel is entitled is recognized in income for the year in which it accrues.
esPs is recorded in income for the year in which it accrues and it is shown under other income and expenses in the consoli-
dated statements of income.
esPs is determined based on the tax profit in accordance with section I of article 10 of the Income tax Law.
m.
income taxes.-
the expense for income taxes represents the sum of income taxes incurred and deferred income taxes.
-
Incurred income taxes
In Mexico, income tax (It) and flat tax (Ietu) are recorded in income in the years in which they are incurred.
In Chile, in april 2010, the Chilean government announced the 2010-2013 financing plan for the reconstruction of Chile
after the february 2010 earthquake. said financing plan includes a temporary increase in the first Category Interest rate
of the historical rate of 17% to 20% in 2011, 18.5% in 2012 and reduces it back to 17% in 2013. the change in the first
Category tax was pronounced in July 2010.
In Colombia, income tax is determined on the basis of tax income. the percentage for determining presumptive income is
3% of the liquid equity of the preceding year.
In argentina, i.- Income taxes, the entity applies the deferred tax method to recognize the accounting effect of taxes
on profits . ii.- taxes on minimum presumptive income (tMPI), the entity determines tMPI applying the current 1% rate
to computable assets at each year end closing. iii.- tax on personal goods belonging to individuals or business entities
resident abroad, it is determined applying the 0.5% factor to the proportional equity value at the yearend closing and its
considered a lump sum payment.
94
- Deferred income taxes
In recognizing deferred taxes, the entity determines whether or not, based on its financial projections, it will incur It or flat
tax and it recognizes deferred tax on the tax payable in the future. Deferred income taxes are recorded based on tem-
porary differences between the book value of assets and liabilities included in the consolidated financial statements and
the respective tax bases used to determine the tax result, applying the respective rates to said differences and including
any benefits from unamortized tax losses and tax credits. a deferred taxes on profits liability is recognized usually for all
tax temporary differences . a deferred tax asset is recognized for all deductible temporary differences to the extent that
it is probable that the entity will accrue future tax profits against which to apply those deductible temporary differences .
those assets and liabilities are not recognized if the temporary differences arise from the goodwill or from initial recogni-
tion (other than that of the business combination) of other assets and liabilities in an operation not affecting the book
or tax result.
a deferred tax liability is recognized for taxable temporary differences associated to investments in subsidiaries and
associates, and interests in joint businesses, except when the entity is capable of controlling reversal of the temporary
differences and it is probable that the timing difference will not be reversed in a foreseeable future. Deferred tax assets
arising from temporary differences associated to said investments and interests are recognized only to the extent that
it is probable for sufficient future tax profits to arise against which to offset those temporary differences and they are
expected be reversed in the near future.
the book value of a deferred tax asset must undergo a review at the end of each period being reported and it must be
reduced in proportion to the likelihood of an insufficiency in taxable income with which to recover all or part of the asset.
Deferred tax assets and liabilities are valued using the tax rates expected to be applied in the period in which the liability is
settled or the asset is sold, based on the rates (and tax laws) approved or substantially approved at the end of the period
being reported. valuation of deferred tax assets and liabilities reflects the tax consequences that would derive from the
manner in which the entity expects to recover or settle the book value of its assets and liabilities at the end of the period
being reported.
Deferred tax assets and deferred tax liabilities are compensated when there is a legal right to offset short-term assets vs.
short-term liabilities and when they relate to the same taxes on profits and the entity has the intention of liquidating
its assets and liabilities on net bases.
-
Incurred and deferred taxes
taxes incurred and deferred are recorded in income as income or expenses, except when they relate to items that are
recorded in a caption other than income, either under other comprehensive income or directly under stockholders’ equity,
in which case the tax is also recognized in a caption other than income; or when they arise from initial recognition of a
business combination. In the case of a business combination, the tax effect is included in the recognition of the business
combination.
n.
Revenue recognition
Income generated from common operations is recorded to the extent that future economic benefits are likely to flow into
the entity and income can be measured reliably, irrespective of the moment in which payment is made. Income is measured
based on the fair value of the consideration received or receivable, bearing in mind the payment conditions specified in the
respective agreement, without including taxes or tariffs.
Sale of goods
Income from the sale of goods and beverages is recognized when they are delivered to and/or consumed by customers.
95
Provision of services
Income is recorded based on the percentage of completion. Percentage of completion is determined when the services have
been rendered and accepted by customers.
interest earned
for all financial instruments measured at amortized cost, interest earned or paid is recorded using the effective interest
method, which is the interest rate used to discount future payment or collection flows in cash over the expected life of the
financial instrument, or a lesser period, as the case may be, with respect to the net book amount of the financial asset or
liability. Interest earned is included in the interest income line in the consolidated statements of income.
Dividends
Income is recognized when the entity’s right to collect dividends materializes.
Royalties
royalty income is recorded as it is incurred, based on a fixed percentage of sub-franchise sales.
o.
foreign currency transactions.
In order to consolidate the financial statements of foreign operations carried out independently from the entity (located in
argentina, Chile and Colombia) and that comprise 25% and 23% of consolidated net income and 16% and 17% of the total
consolidated assets at December 31, 2012 and 2011, respectively, companies apply the policies followed by the entity. the
financial statements of consolidating foreign operations are converted to the reporting currency by initially identifying whether
or not the functional and recording currency of foreign operations are different, and subsequently converting the functional
currency to the reporting currency.
In order to convert the financial statements of subsidiaries resident abroad from the functional currency to the reporting cur-
rency at the reporting date, the following steps are carried out:
- assets and liabilities, both monetary and non-monetary, are converted at the closing exchange rates in effect at the
reporting date of each consolidated statement of financial position.
-
-
Income, cost and expense items of the consolidated statements of income are converted at the average exchange rates
for the period, unless those exchange rates will fluctuate significantly over the year, in which case operations are con-
verted at the exchange rates prevailing at the date on which the related operations were carried out.
stockholders’ equity is converted at historical exchange rates, i.e., at the rates in effect on the date on which capital
contributions were made or earnings were incurred.
- all conversion differences are recognized as a separate component under stockholders’ equity and form part of other
comprehensive income items.
4. Critical accounting judgments and key sources for estimating uncertainties
In applying the entity’s accounting policies, which are described in note 3, Management is required to make certain judgments,
estimates and assumptions on the amounts of the book value of assets and liabilities included in the consolidated financial state-
ments. the related estimates and assumptions are based on experience and other factors considered to be relevant. actual results
could differ materially from those estimates.
estimations and assumptions are reviewed on a regular basis. Changes to the accounting estimations are recognized in the period
in which changes are made, or in future periods if the changes affect the current period and other subsequent periods.
96
following is an analysis of the basic assumptions regarding the future and other key sources of uncertainty contemplated in the
year-end estimations for the period being reported, which involve a significant risk of giving rise to important adjustments in the
book value of assets and liabilities for the following year.
impairment of long-lived assets
the entity annually evaluates whether or not there is indication of impairment in long-lived assets and it calculates the recoverable
amount when said indication is present. Impairment occurs when the net book value of a long-lived asset exceeds its recoverable
amount, which is the higher of the fair value of the asset less selling costs and the in-use book value. Calculation of the in-use
value is based on the discounted cash flow model, using the entity’s projections of its operating results for the near future. the
recoverable amount of long-lived assets is subject to uncertainties inherent to the preparation of projections and the discount rate
used for the calculation.
useful life of store equipment, leasehold improvements and properties
fixed assets acquired separately are recognized at cost less accrued amortization and accrued losses for impairment. Depreciation
is calculated based the straight-line method over the estimated useful life of assets. the estimated useful life and the depreciation
method are reviewed at each year-end closing, and the effect of any changes in the estimation recorded is recognized prospectively.
income tax valuation
the entity recognizes the net future tax benefit related to deferred income tax assets depending on the likelihood of temporary
differences reversing in the foreseeable future. evaluating the recoverability of deferred income tax assets requires the entity to
prepare significant estimates related to the possibility of incurring future taxable income. future taxable income estimates are
based on projected cash flows from the entity’s operations and the application of the existing tax laws in Mexico. the entity’s
capacity to realize the net deferred tax assets recorded at reporting date could be negatively affected to the extent that future cash
flows and taxable income differ significantly from the entity’s estimates.
additionally, future changes in Mexico’s tax laws could limit the capacity to obtain tax deductions in future periods.
intangible assets
the period and amortization method of an intangible asset with a defined life is reviewed at least at the date of the consolidated
statements of financial position. Changes to the expected useful life or the expected pattern of consumption of future economic
benefits are made changing the period or amortization method, as the case may be, and are treated as changes in the accounting
estimations. amortization expenses of an intangible asset with a defined useful life are recorded in income under the expense
caption in accordance with the function of the intangible asset.
Contingencies
Given their nature, contingencies are only resolved when one or more future events occur or stop occurring. the evaluation of
contingencies inherently includes the use of significant criteria and estimations of the result of future events.
5. non-monetary transactions
In the year, the entity carried out the following financial activities and non-monetary investments that are not shown in the con-
solidated statements of cash flows:
as mentioned in note 24, in april 2012, alsea declared share dividends of $308,902 through the capitalization of that amount in
the after-tax earnings account.
97
6. Cash and cash equivalents
for the purpose of the consolidated statements of cash flows, the cash and cash equivalents caption includes cash, banks and
investments in money market instruments. the cash and cash equivalents balance included in the consolidated statements of
financial position and the consolidated statements of cash flows at December 31, 2012 and 2011, and at January 1, 2011 is com-
prised as follows:
2012
2011
Date of transition
Cash
Investments payable on demand with
original maturities of under three months
total cash and cash equivalents
$
$
329,841 $
316,938
$
602,753
422,441
932,594 $
739,379
$
284,306
355,897
640,203
the entity keeps its cash and cash equivalents with accepted financial entities and it has historically experienced no losses due to
credit risk concentration.
7. Customers
the accounts receivable from customers disclosed in the consolidated statements of financial position are classified as loans and
accounts receivable and therefore they are valued at their amortized cost.
at December 31, 2012 and 2011, and at January 1, 2011, the customer balance is comprised as follows:
franchises
Credit card
other
Total portfolio
2012
2011
2010
164,053
101,310
100,442
365,805
116,460
48,800
63,359
228,619
106,939
20,229
83,861
211,029
the average credit term for the sale of foods, beverages, containers, packagings, royalties and other items to owners of sub-fran-
chises is from eight to 14 days. no interest charges are made on accounts receivable to customers in the first 14 days after billing
is issued. after that date, the entity charges the tIIe rate+5 points x2 % a year on unpaid balances. the entity has generally not
recognized an estimation for doubtful accounts because customers are governed by master franchise agreements whereby they are
required to follow the conditions stipulated in those agreements in relation to services and supply of production materials.
following is the seniority of accounts receivable outstanding but no deemed irrecoverable:
2012
2011
Date of transition
60-90 days
More than 90-120 days
total
$
$
7,118 $
18,484
$
55,844
49,410
62,962 $
67,894
$
average seniority (days)
93
51
43,301
42,765
86,066
67
98
the estimates shown in the consolidated statements of financial position refer to possible differences between income and accounts
receivable from the general public in the regular course of operations of the different brands. estimates recorded mainly for this item
total $26,324 in 2012, and $9,269 and $3,805 at December 31 and January 1, 2011, respectively.
Credit risk concentration is limited because the customer base is large and independent, and the risk of customers in relation to
services and supply of foods is controlled and supported by a service and/or master franchise agreement.
8.
inventories
at December 31, 2012 and 2011, and at January 1, 2011, inventories are as follows:
foods and beverages
Containers and packagings
other
obsolescence allowance
total
9. Advance payments
2012
2011
Date of transition
$
$
455,960 $
336,517
$
46,265
56,251
(8,082)
39,280
36,203
(8,870)
550,394 $
403,130
$
230,983
98,854
30,808
(8,320)
352,325
advance payments were made for the acquisition of:
2012
2011
Date of transition
Insurance and other services
Inventories
Lease of locales
total
$
$
50,990 $
54,044
$
102,821
30,390
49,826
24,761
184,201 $
128,631
$
38,008
31,702
25,523
95,233
10. Current and non-current guarantee deposits
Guarantee deposits are comprised as follows:
2012
2011
Date of transition
Guarantee deposit acquisition of Italcafé
$
- $
2,262,800
$
Guarantee deposits for non-current
leased properties
110,020
86,991
-
78,168
99
11.
investment in shares of associated company
at December 31, 2012 and 2011, and at January 1, 2011, the investment in shares of associated company is comprised of the
entity’s direct equity in the capital stock, as described below:
Shareholding
(%)
Main operations
2012
2011
Date of
transition
interest in stockholders’ equity
starbucks Coffee Chile, s.a.
18%
operator of the starbucks
brand in Chile
$
40,296
$
30,394
$
20,783
Equity in
results for
the year
2012
2011
starbucks Coffee Chile, s.a.
18%
operator of the starbucks
brand in Chile
$
12,978 $
8,805
the entity’s interest in assets and liabilities at December 31, 2012 and 2011, and at January 1, 2011, as well as in income and
expenses related to the years ended on December 31, 2012 and 2011 is 18%. total assets, liabilities and stockholders’ equity
of the associated company are as shown below:
Current assets
non-current assets
Current liabilities
non-current liabilities
stockholders’ equity
Income
Costs
2012
2011
Date of transition
$
207,660 $
139,152
$
136,399
99,908
20,287
223,864
94,203
48,014
16,487
168,854
86,442
78,852
34,887
14,945
115,462
2012
2011
$
536,655 $
464,555
371,641
322,722
net profit for the year from continued
operations
72,100
48,919
100
12. Store equipment, leasehold improvements, property and intangible assets-
store equipment, leasehold improvements, property and intangible assets are as follows:
Cost
Buildings
Store
equipment
Leasehold
improvements
Transportation
equipment
Computer
equipment
Production
equipment
office
furniture and
equipment
investments
Total
Balance at January 1, 2011
$ 195,270 $ 1,877,882 $
2,500,621 $
124,599 $
271,668 $
212,559 $
99,132 $
271,164 $ 5,552,895
acquisitions
Disposals
11,167
284,870
-
(289,272)
467,808
(42,117)
21,362
43,492
361,707
8,289
140,002
1,338,697
(31,338)
(11,470)
(5,616)
(36,218)
-
(416,031)
Balance at December 31, 2011
206,437
1,873,480
2,926,312
114,623
303,690
568,650
acquisitions
Business acquisition
Disposals
6,956
328,707
-
164,741
(553)
(91,043)
adjustment for conversion
15
(43,907)
351,879
162,073
(80,501)
(99,489)
15,119
2,178
74,444
15,357
(32,361)
(20,306)
(880)
(8,436)
20,726
-
(912)
-
71,203
14,726
302
(1,751)
(1,667)
411,166
6,475,561
108,565
-
-
921,123
344,651
(227,428)
(12,897)
(167,261)
Balance at December 31, 2012 $
212,855 $ 2,231,978 $
3,260,274 $
98,679 $
364,749 $
588,464 $
82,813 $ 506,834 $ 7,346,646
Amortization
Balance at January 1, 2011
$
54,639 $
886,662 $
1,140,413 $
85,759 $
179,742 $
140,048 $
71,509 $
- $ 2,558,772
Charge for depreciation
5,404
178,443
257,216
14,073
42,522
299,978
4,592
-
802,228
for the year
Disposals
Balance at December 31, 2011
Charge for depreciation
for the year
Business acquisition
adjustment for conversion
(16)
(272,586)
(7,291)
(26,923)
(9,655)
(5,202)
(36,186)
60,027
10,038
792,519
1,390,338
72,909
212,609
434,824
227,427
212,405
15,913
39,546
19,603
-
3
53,142
(10,852)
57,350
(31,410)
1,636
(484)
7,631
(5,789)
-
-
39,915
9,449
1,018
(1,371)
-
-
-
-
-
(357,859)
3,003,141
534,381
120,777
(49,903)
Disposals
(325)
(79,006)
(54,789)
(26,542)
(18,496)
(1,119)
(5,581)
-
(185,858)
Balance at December 31, 2012 $
69,743 $
983,230 $
1,573,894 $
63,432 $
235,501 $
453,308 $
43,430 $
- $ 3,422,539
net cost
Date of transition
$
140,631 $
991,221 $
1,360,207 $
38,840 $
91,926 $
72,511 $
27,623 $
271,164 $ 2,994,123
Balance at December 31, 2011 $
146,410 $ 1,080,961 $
1,535,974 $
41,714 $
91,081 $
133,826 $
31,288 $
411,166 $ 3,472,420
Balance at December 31, 2012 $
143,112 $ 1,248,748 $
1,686,380 $
35,247 $
129,248 $
135,156 $
39,383 $ 506,834 $ 3,924,108
Cost
Brands
Commissions
for store
opening
franchise
and use of
locales rights
Licenses and
developments
goodwill
Total
Balance at January 1, 2011
acquisitions
Disposals
Balance at December 31, 2011
acquisitions
Business acquisition
adjustment for conversion
Disposals
$
$
671,614 $ 328,164 $ 272,000 $
239,174 $ 206,932 $ 1,717,884
45,859
-
84,753
(2,403)
49,542
(3,114)
62,169
(15,623)
-
-
242,323
(21,140)
717,473 $
410,514 $
318,428 $
285,720 $ 206,932 $ 1,939,067
67,839
8,330
77,133
67,239
-
220,541
803,447
-
(12,725)
(12,011)
(9,506)
(20,090)
-
(1,376)
(6,565)
-
89
(4,676)
785,816
1,589,263
-
-
(26,023)
(40,837)
Balance at December 31, 2012
$
1,566,528 $ 386,743 $
387,620 $
348,372 $ 992,748 $ 3,682,011
101
Cost
Brands
expenses
locale rights
developments
goodwill
Total
franchise
other opening
and use of
Licenses and
Amortization
Balance at January 1, 2011
amortization (asset registrations)
Disposals
$ 255,586 $
247,438 $
117,669 $
165,612 $
16,953 $
803,258
46,587
(191)
93,606
(1,698)
23,226
(691)
48,026
(1,751)
-
-
211,445
(4,331)
Balance at December 31, 2011
$ 301,982 $
339,346 $ 140,204 $
211,887 $
16,953 $ 1,010,372
amortization (asset registrations)
Business acquisition
adjustment for conversion
Disposals
136,488
8,500
(2,414)
(5,608)
46,321
41,928
52,180
-
(11,436)
(7,703)
-
(573)
(3,144)
-
22
(1,752)
-
-
-
-
276,917
8,500
(14,401)
(18,207)
Balance at December 31, 2012
$ 438,948 $
366,528 $
178,415 $
262,337 $
16,953 $ 1,263,181
net cost
Date of transition
Balance at December 31, 2011
$
$
416,028 $
80,726 $
154,331 $
73,562 $
189,979 $
914,626
415,491 $
71,168 $
178,224 $
73,833 $
189,979 $
928,695
Balance at December 31, 2012
$ 1,127,580 $
20,215 $ 209,205 $
86,035 $ 975,795 $ 2,418,830
13. Leases
the locales housing the stores of alsea are leased from third parties. In general terms, lease agreements entered into to operate the
entity’s establishments are for a term of five to ten years, with fixed payments set in pesos. Lease payments are generally revised
annually and they increase on the basis of inflation. as an exception, lease payments for certain establishments are agreed in us
dollars, and in some cases, they may include a variable component, which is determined on the basis of net sales of the respective
establishment. alsea considers that it depends on no specific lessor and there are no restrictions for the entity as a result of having
signed said agreements.
some of the entity’s subsidiaries have signed operating leases for utilitarian cars and sundry computer equipment.
In the event of breach of any of the straight-lease agreements, the entity is required to settle in advance all its obligations, includ-
ing payments and penalties for early termination, and it must immediately return all vehicles to a location specified by the lessor.
amounts of lease payments derived from operating lease agreements related to the locales housing the stores of the different alsea
brands are as follows:
Year
2011
2012
14. Business combinations
Amount
$
827,370
1,066,583
the process for the acquisition of Italianni’s concluded in february 2012. the final price was $1,765 million pesos.
alsea acquired, 8,168,161 shares comprising 100% of the capital stock of Italcafé, s.a. de C.v., which owns: i.- eight Italianni’s units,
as well as the exclusive rights to develop, expand and sub-franchise the Italianni’s brand throughout Mexico, and ii.- 89.7682% of
the capital stock of Grupo amigos de san Ángel s.a. de C.v. (“Gasa”), a company that owns 34 Italianni’s units. the purpose of the
acquisition is to consolidate the plans for expansion of the Casual Dinning segment.
102
franchise license agreements, other rights and assets assigned to third parties as a result of the transition were paid to the holders
of those rights and goods.
additionally, the final agreement contemplates the following, among other matters:
a)
the exclusive operation of the Italianni’s brand restaurants in Mexico for a maximum term of 30 years.
b)
alsea will pay no royalties, opening fees or commissions for the use of brand or the franchise model.
c)
there is no obligation to comply with an openings plan.
d)
the assignment of franchise agreements to existing third parties.
e)
the power to award new franchises to third parties.
f)
the rights to distribute all raw materials to the brand’s restaurants.
the period for measuring the acquisition concluded in february 2013. following is an analysis of the preliminary assignment of the
acquisition cost of fixed assets expressed at fair value at the date of acquisition.
item
Current assets:
store equipment and properties, net
Intangible assets, net
short-term and long-term debts
fair value of acquired net assets
amount paid
non-controlling interest
Goodwill
february 2012
173,961
242,241
740,619
(204,063)
952,758
1,765,000
(26,426)
785,816
$
$
as from the acquisition date, Italinanni’s has contributed $742,466 in income and $43,622 in pretax profit for the period to the
entity’s earnings. If the combination had occurred at the start of 2012, the consolidated net gain for the period would have been
$413,001 and the income from continuous operations would have been $13,652,912.
transition costs of $3,234 were recognized in income for the period and are part of cash flows arising from operations recorded in
the consolidated statements of cash flows.
103
15. Long-term debts
the long-term debt at December 31, 2012 and 2011, and at January 1, 2011 is comprised of two unsecured loans, as shown below:
Maturities
Average annual
interest rate
2012
2011
Date of
transition
straight loans
2013-2016
4.50% -
6.50%
Less current maturities
$
2,474,480
$
3,063,000
$
396,647
185,333
897,524
229,524
Long-term maturities
$
2,077,833 $
2,877,667 $
668,000
annual long-term debt maturities at December 31, 2012 are as follows:
Year
2013
2014
2015
2016
Amount
$
396,647
513,242
676,757
887,834
Bank loans include certain obligations to do and refrain from doing, such as keeping certain financial ratios. at December 31, 2012
and 2011, and at January 1, 2011, all such obligations have been met.
16. Debt instruments
Based on the debt instrument program established by alsea, in May 2011, the entity concluded the placement of debt instruments
for a total of $1,000 million pesos on the Mexican market (alsea11). the intermediaries that participated in placing the offer were
HsBC Casa de Bolsa, s. a. de C. v., Grupo financiero HsBC, actinver Casa de Bolsa, s. a. de C. v. and Grupo financiero actinver.
the debt instruments in question are for a term of three years as from their issue date, they mature in May 2014 and are subject to
the 28-day tIIe (average Interbank Interest rate) rate plus 1.30 percentage points.
In December 2012, the entity decided to amortize in advance the entirety of the debt instrument with ticker code alsea11. therefore,
at December 31, 2012, the entity has no debt instruments. at December 2012, the balance of expenses related to said issue, such as
legal fees, issue costs, and printing and placement expenses, were recognized in consolidated income statement for the year after
the early amortization of the debt instrument.
17. Derivative financial instruments
at December 31, 2012 and 2011, a total of 387 and 288 derivative financial instrument operations (forwards and options) were carried
out, respectively, for a total of 103.4 and 86.2 million us dollars, respectively. the absolute value of the fair value of the derivative
financial instruments used per quarter over the year does not comprise more than 5% of assets, liabilities or total consolidated
capital, or otherwise 3% of the total consolidated sales for the last quarter. therefore, the risk for the entity of exchange rate
fluctuations will have no negative effects, nor will it affect its capacity to carry out derivative financial instrument operations.
104
at December 31, 2012 and 2011, and at January 1, 2011, alsea has contracted DfIs for the purchase of dollars in 2013 of approximately
45, 6.3 and 51.5 million usD at the average exchange rate of $12.84, $12.46 and $12.14 peso to the dollar, respectively.
at December 31, 2012, the entity’s debt instruments include a variable/fixed interest rate swap for a total of $400 million pesos,
which amount covers payment of 28-day coupons maturing in May 2014. the entity signed two interest rate options known as
“Knock out swap” and “Limited swap”, each for a notional $150 million Mexican pesos, both related to a bank loan maturing in
December 2016.
at January 1, 2011, the entity has acquired a variable rate/ fixed rate swap for economic interest rate hedging purposes. that strat-
egy has been applied to a loan contracted by alsea (balance to date is $56.3 million pesos) of which only 20% is under a 7.98%
fixed interest rate swap, plus a 10 bps spread. the loan is payable monthly and matures in June 2011.
the type of derivative products and the hedged amounts are in line with the internal policy for risk management defined by the
entity’s Corporate Practices Committee, which contemplates an approach to cover foreign currency needs without the possibility to
carry out speculative operations.
Despite the fact that the entity does not operated DfIs for speculation purposes, those instruments have not been formally des-
ignated as accounting hedging instruments, and therefore the effects are recognized in income for the period under the expense
accounts and interest income accounts.
at December 31, 2012 and 2011, and at January 1, 2011, the entity had contracted the following financial instruments:
institution
Banamex
Barclays
Deutsche Bank
HsBC
santander
uBs
institution
Deutsche Bank
Banamex
2012
Thousands of dollars
(notional)
Average payment
exchange rate
Maturity
13,750
8,500
10,250
6,250
5,500
500
12.88
13.05
12.73
12.61
12.89
13.29
Thousands of dollars
2011
Average payment
exchange rate
Maturity
3,250
3,000
12.33
12.59
2013
2013
2013
2013
2013
2013
2012
2012
105
institution
Banamex
Barclays
Deutsche Bank
Morgan stanley
santander
uBs
Thousands of dollars
Date of transition
Average payment
exchange rate
Maturity
6,350
1,000
27,150
2,750
6,750
7,500
12.13
12.78
12.24
11.79
11.92
11.98
2011
2011
2011
2011
2011
2011
the following interest rate financial instruments had been contracted at December 31, 2012 and 2011:
institution
santander
Banamex
HsBC
Banamex
Banamex
institution
santander
Banamex
HsBC
2012
instrument
notional thousands
of MxP
Maturity
Plain vanilla swap
200,000
Plain vanilla swap
Plain vanilla swap
Knock out swap
Limited swap
100,000
100,000
150,000
150,000
2011
2014
2014
2014
2016
2016
instrument
notional thousands
of MxP
Maturity
Plain vanilla swap
Plain vanilla swap
Plain vanilla swap
200,000
100,000
100,000
2014
2014
2014
at January 1, 2011, the entity had not contracted financial instruments for interest rate hedging.
following is a detailed list of the fair value of derivative financial instruments held in the entity’s portfolio, which receive the
accounting treatment of instruments held for economic hedging or trade purposes:
106
Interest rate swap
forwards and options
Total
fair values*
2012
2011
Date of transition
$
$
$
442 $
(569) $
(127) $
447
(8,811)
(8,365)
$
$
$
130
1,380
1,510
* fair value from the viewpoint of banks, a negative amount represents an amount in favor to alsea.
at December 31, 2011, the entity had contracted DfIs to purchase us dollars in 2012 for a total $6.2 million dollars at the $12.46
exchange rate. at that same date, the fair value receivable by the entity is $8.3 million pesos.
In order to quantitatively measure the credit risk of the counterparties, following is the Credit Default swap (CDs) for the interna-
tional counterparty and the notional amount to be covered.
Counterparty
Deutsche Bank aG London
CDS
notional
(thousands of uSD)
199
3,250
risk measurement of the local counterparty that lacks a CDs is done in relation to its counterparty risk spread for the same period,
plus the 28-day tIIe reference rate.
Counterparty
Banamex sa
Spread
(thousands of uSD)
0.0%
3,000
In the preceding case, only the tIIe rate is considered to be the cost of credit risk contracted with Banco nacional de México.
exposure to other counterparties is not material. the amount disclosed comprises 85% of exposure.
the entity monitors the counterparty’s exposure to credit risk through a CDs, which makes it possible for hedging to exist in the
event of default when a counterparty is at risk of liability exposure by the entity.
at December 31, 2012 and 2011, and at January 1, 2011, the entity has had no margin calls and it has not breached the agreements
signed with the different financial entities.
Strategy for contracting DFIs: every month, the Corporate finance Director’s office must define the price levels at which the
Corporate treasury must operate the different derivative instruments. under no circumstances should amounts above the monthly
resource requirements be operated, thus ensuring that there is always a position to be hedged and that DfI are not held for specu-
lation purposes.
Processes and authorization levels: the Corporate treasury Manager must quantify and report to the financial Director the monthly
requirements of operating resources. the Corporate financial Director may operate at his discretion up to 50% of the resource
requirements being covered, and the administration and finance Director’s office may hedge up to 75% of the related exposure.
under no circumstances may amounts above the limits authorized by the entity’s General Management be operated, in order to
ensure that operations are always for hedging and not for speculation purposes. the foregoing is applicable to interest rates with
respect to the amount of debt contracted at variable rates and the exchange rate with respect to currency requirements. If it be-
comes necessary to sell positions for the purpose of making a profit and/or incurring a “stop loss”, the administration and finance
Director must authorize the operation.
107
Internal control processes: With the assistance of the Corporate treasury Manager, the Corporate finance Director must issue a
report the following working day, specifying the entity’s resource requirements for the period and the percentage covered by the ad-
ministration and finance Manager. every month, the Corporate treasury Manager will provide the accounting department with the
necessary documentation to properly record said operations. the administration and finance Director will submit to the Corporate
Practices Committee a quarterly report on the balance of positions taken.
the actions to be taken in the event that the identified risks associated to exchange rate and interest rate fluctuations materialize
are carried out by the Internal risk Management and Investment Committee, of which the alsea General Director and the main
entity’s directors form part.
Markets and counterparties Derivative financial instruments are contracted in the local market under the over the counter (otC)
mode. following are the financial entities that are eligible to close operations with regard to the entity’s risk management: Banco
nacional de México s.a., Banco santander s.a., Barclays Bank México s.a., Deutsche Bank México s.a., Goldman sachs Paris Inc. et
Cie., HsBC México s.a., Morgan stanley Capital services InC., and uBs Bank México.
the Corporate financial Director is empowered to select other participants, provided that they are regulated institutions authorized
to carry out this type of operations, and that they can offer the guarantees required by the entity.
Main terms and conditions of the agreements
all operations with DfIs are carried out under a master agreement through an IsDa form (International swap Dealers association),
which must be standardized and duly formalized by the legal representatives of the entity and the financial institutions.
Polices for designating calculation and valuation agents
the fair value of DfIs is revised monthly. the calculation or valuation agent used is the same counterparty or financial entity
with whom the instrument is contracted, who is asked to issue the respective reports at the month-end closing dates specified
by the entity.
Likewise, as established in the master agreements (IsDa) that cover derivative financial operations, the respective calculations and
valuations are presented in the quarterly report. the designated calculation agents are the corresponding counterparties. never-
theless, the entity validates all calculations and valuations received by each counterparty.
Margins, collateral and credit line policies
In certain cases, the entity and the financial institutions have signed an agreement enclosed to the IsDa master agreement, which
stipulates conditions that require them to offer guarantees for margin calls in the event that the mark-to-market exceeds certain
established credit limits.
the entity has the policy of monitoring the volume of operations contracted with each institution, in order to avoid margin calls.
Valuation
a) Description of valuation techniques, policies and frequency:
the derivative financial instruments used by alsea (forwards and swaps) are contracted to reduce the risk of adverse fluctua-
tions in exchange and interest rates. those instruments require the entity to trade cash flows at future fixed dates on the face
value or reference value and are valued at fair value.
108
b) Method for measuring the effectiveness of hedges:
In the case of cash flow hedges, the effective portion of gains or losses generated by the hedging instrument are recognized
under comprehensive gain or loss in stockholders’ equity, and they are reclassified to income in the same period or periods in
which the projected transaction affects them. the ineffective portion is immediately recorded in income for the year.
the valuation of the effective and ineffective portion generated from the aforementioned instruments is recorded monthly in
the entity’s consolidated financial statements.
a valuation analysis was performed to determine the result of the instruments in question, that valuation meets the objective
of mitigating the risk and therefore the hedge is effective.
c)
Liquidity in Derivative financial operations:
1.
Internal sources of liquidity: every month, the Corporate finance Director’s office must define the price levels at which
the Corporate treasury must operate the different hedging instruments. under no circumstances should amounts above
the requirements be operated, thus ensuring that operations are always for hedging and not for speculation purposes.
the resources used to address financial instrument requirements will derive from the resources generated by the issuer.
2. external sources of liquidity: no external sources of financing will be used to address requirements pertaining to deriva-
tive financial instruments.
18. Provisions
Provisions at December 31, 2012 and 2011, and at January 1, 2011 are as follows:
Date of transition
Increases charged to income
Payments and cancellations
December 31, 2011
Increases charged to income
Payments and cancellations
Compensation other
personnel payments
Supplies and others
Total
$
76,580 $
288,012
$
398,165
(371,114)
103,631
434,582
(400,509)
577,051
(396,964)
468,099
728,559
(672,627)
364,592
975,216
(768,078)
571,730
1,163,141
(1,073,136)
December 31, 2012
$
137,704 $
524,031
$
661,735
109
19. Depreciation and amortization included in the consolidated statements of income
Included in the cost of sales:
Depreciation
amortization
subtotal
Included in operating expenses:
Depreciation
amortization
subtotal
total
20. Expenses for employee benefits
2012
2011
$
$
$
12,019
4,412
16,431
522,362
272,505
794,867
811,298
$
6,946
1,274
8,220
446,134
215,646
661,780
670,000
following are the expenses for employee benefits included under operating costs and expenses in the consolidated statements
of income.
Wages and salaries
social security costs
retirement benefits
total
21. other (expenses) income
In 2012 and 2011, this caption is comprised as follows:
Legal expenses
Loss on fixed assets disposals, net
esPs on tax base
restatement and interest on tax refund
other income (expenses), net
total
22. Employee retirement benefits
2012
2011
2,552,834
$
309,891
21,923
2,884,648
$
2012
2011
(1,425)
$
(5,346)
(4,782)
2,220
19,137
9,804
$
2,032,522
277,740
4,050
2,314,312
(41,123)
(33,855)
(5,038)
929
(13,067)
(92,154)
$
$
$
$
at December 31, 2012 and 2011, and at January 1, 2011, the two seniority premiums and indemnities at the end of the labor relation-
ship for causes other than restructuring to which employees are entitled by law are recognized in income for each year in which the
services are rendered based on actuarial calculations.
110
the entity has not established a trust to cover those benefits. following is a summary of the actuarial calculations.
2012
Benefits
2011
Date of transition
Seniority
premium
Retirement
Seniority
premium
Retirement
Seniority
premium
Retirement
obligation for defined
benefits
$
11,754 $
48,335 $
8,224 $
34,331 $
6,209 $
unamortized items
-
(8,879)
-
(10,805)
-
28,391
(12,102)
Current net liability
$
11,754 $
39,456 $
8,224 $
23,526 $
6,209 $
16,289
the net cost for the period included in operating expenses is comprised as shown below:
Benefits
2012
2011
Seniority
premium
Retirement
Seniority
premium
Retirement
$
$
1,804 $
5,716 $
1,264 $
689
1,166
2,660
5,067
457
2,178
4,634
2,115
2,523
3,659 $
13,443 $
3,899 $
9,272
Labor cost
financial cost
amortization of pending items
net cost for the period:
following is the reconciliation of the main components of obligation for defined benefits (oDB) at December 31, 2012 and 2011, and
at January 1, 2011:
Benefits
2012
2011
Seniority
premium
Retirement
Seniority
premium
Retirement
$
8,224 $
34,331 $
6,209 $
28,391
2,215
724
1,489
(898)
5,792
2,687
5,534
(9)
1,299
472
383
(139)
4,651
2,123
(834)
-
Initial balance of oDB
Labor cost of current services
financial cost
actuarial gains and losses for the period
employee benefits payments
ending balance of oDB
$
11,754 $
48,335 $
8,224 $
34,331
the most significant assumptions used in determining the net cost for the period of the plans are as follows:
the interest rates and assumptions used to show the present value of obligations and the expected asset yields are in line with the
economic environment in which the entity operates. reference for establishing the parameters used to determine interest rates
are taken from long-term, low risk financial instruments that are representative of the market, using a long-term interest curve and
considering the bond rate issued by the federal government.
111
2012
7%
5.8%
5.3
Benefits
2011
Date of transition
7%
5.7%
5.3
8%
5.9%
5.3
Discount rate
salary increase rate
average expected labor life (years)
* Includes the expected career salary increase assumption
23. income taxes
the entity is subject to income tax and flat tax.
income taxes (iT) - the rate is 30% for 2013, 2012 and 2011, and will be 29% for 2014 and 28% subsequent years. the entity
consolidates with its subsidiaries for It purposes.
the amendments to the Income tax Law applicable as from 2010 were published on December 7, 2009, and establish that: It pay-
ment pertaining to the tax consolidation benefits arising from 1999 to 2004 must be made in installments from 2010 to 2014 and
b) It payment pertaining to the tax consolidation benefits arising in 2005 and subsequent years must be paid from the sixth to
the 10th year following that in which the benefit arises. tax payment on tax consolidation benefits arising from 1982 (year of tax
consolidation startup) to 1998 may be demanded in certain cases specified in the tax provisions.
flat tax (iETu) - Income, deductions and certain tax debts are determined on the basis of cash flows for each period. the rate is
17.5% as from 2010. the asset tax Law was annulled when the flat tax Law came into effect, which allows, under certain circum-
stances, recovery of that tax paid in the 10 years immediately preceding that in which It is first paid, in the terms of the tax provi-
sions. furthermore, unlike It, Ietu is incurred individually by the controlling company and its subsidiaries.
the tax on profits is the higher of It and Ietu.
on the basis of financial projections, the entity has determined that it will essentially be paying It; therefore, the entity recognizes
deferred It.
a.
income taxes
It (tax basis)
Deferred It
2012
2011
$
$
326,795
$
(107,648)
219,147
$
275,064
(168,047)
107,017
112
the tax expense attributable to income before It was different from that arrived at by applying the 30% rate in 2012 and 2011, as
a result of the following items:
expected It rate
nondeductible expenses, effects of inflation and others
Change in the reserve for valuation of tax losses
effective consolidated It rate
b. Deferred taxes – balance sheet
2012
30%
10%
(5%)
35%
2011
30%
4%
(3%)
31%
following is an analysis of deferred tax (assets) liabilities shown in the consolidated statements of financial position:
2012
2011
Transition Date
Deferred (assets) liabilities:
estimation for doubtful accounts and
inventory obsolescence
$
Liability provisions
advances from customers
unamortized tax losses, net of
the valuation reserve
recoverable asset tax
store equipment, leasehold improvements
and property
other assets
advance payments
(5,997)
(220,682)
(30,072)
(201,465)
(12,269)
(380,473)
807
21,186
(5,351)
$
(151,786)
(29,756)
(170,115)
(22,802)
(327,214)
(41)
14,645
Temporary differences
Beginning balance
recognized in income
Procurement
recognized directly in capital
$
$
(828,965)
(692,420)
$
2012
2011
(692,420)
$
(107,648)
(24,628)
(4,269)
(544,474)
(168,047)
-
20,101
$
(828,965)
$
(692,420)
(2,164)
(93,795)
(10,945)
(172,426)
(22,802)
(255,020)
(1,277)
13,955
(544,474)
Deferred assets not recognized at December 31, 2012 and 2011 and at January 1, 2011 totaled $159,594, $190,220 and $200,245,
respectively. the net change in deferred assets not recognized at December 31, 2012 and 2011 and at January 1, 2011 was a decrease
of $30,626 and $10,025 and an increase of $21,603, respectively, arising mainly from accrued tax losses.
113
at December 31, 2012, unamortized tax losses expire as shown below
Year of maturity
Amortizable losses
2014
2016
2017
2018
2019
2020
2021
2022
$
29,187
62,843
44,825
169,980
102,740
68,368
41,962
43,615
the entity has recognized no liability for deferred taxes on the undistributed earnings of its subsidiaries arising in 2012 and pre-
ceding years, as it currently does not expect those undistributed profits to be reversed or become taxable in the near future. that
deferred liability will be recognized when the entity expects to receive those undistributed profits and they become taxable, such as
in the case of sales or the disposal of investments in shares.
at December 31, 2012 and 2011 and at January 1, 2011, It balances related to the entity’s consolidated tax regime before and after
the 2009 tax amendments came into effect correspond to unamortized tax losses arising under consolidation at the controlling and
the controlled companies amounting to $193,454, $169,813 and $130,326 respectively.
following is the yearly schedule of payments contemplated by the entity to cover income tax liabilities arising under tax consolida-
tion resulting from the 2009 tax amendments:
Year of maturity
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
114
Payment
$
6,885
11,407
22,976
27,912
32,926
33,501
27,132
16,194
9,965
4,556
$
193,454
24. Stockholders’ equity
following is a description of the principal features of the stockholders’ equity accounts:
a.
Capital stock structure
following are the movements in the capital stock and the premium on the issuance of shares:
Thousands of
pesos
Capital stock
number of
shares
605,240,724 $
362,080 $
761,200
-
606,001,924
11,802,800
16,465,957
-
-
53,488,373
687,759,054
381
-
362,461
5,901
8,233
-
-
26,744
403,339
Premium on
the issuance of shares
1,086,415
-
5,632
1,092,047
-
300,669
1,090
(15,262)
1,088,278
2,466,822
figures at January 1, 2011
repurchased shares
Premium on share subscription
figures at December 31, 2011
repurchased shares
Dividends declared in shares
repurchased shares, net
Purchase of the non-controlling portion
Placement of shares
figures at December 31, 2012
In December 2012, alsea issued 46,511,628 shares with an overallotment of 6,976,745 shares, which was exercised at an offering
price of 21.50 (twenty one pesos and fifty centavos) per share. the issue was recorded net of placement expenses. (note 1d)
In april 2012, alsea declared dividends of $308,902 by capitalizing that amount from the after-tax earnings account in order to
cover the subscription value of 16,465,957 shares issued and used as payment of the declared dividend at a rate of $37.52 pesos per
share. authorization was issued for the factor used in determining the number of shares necessary to cover the dividend declared
to be the closing quotation price for the date of the stockholders’ meeting, that is to say, $18.76 (eighteen pesos and 76 centavos), of
which $0.50 (zero pesos fifty centavos) corresponds to the theoretical value, and the remainder to a premium on share subscription.
In april 2011, cash dividends were declared in the amount of $122,648.
the fixed minimum capital with no withdrawal rights is represented by Class I shares, while the variable portion is represented by
Class II shares, and must in no case exceed 10 times the value of the minimum capital with no withdrawal rights.
at December 31, 2012 and 2011, and at January 1, 2011, the fixed and variable subscribed capital stock is represented by 687,759,054,
606,001,924 and 605,240,724 common nominative shares, respectively, with no par value, as shown below:
115
Description
number of shares
Amount
fixed portion of the capital stock at December 31, 2012
fixed capital stock
variable capital stock
repurchased shares (par value)
Capital stock at December 31, 2011
fixed capital stock
variable capital stock
repurchased shares (par value)
Capital stock at January 1, 2011
$
$
$
$
687,759,054
489,157,480
128,647,244
(11,802,800)
606,001,924
489,157,480
128,647,244
(12,564,000)
605,240,724
$
403,339
304,038
64,324
(5,901)
362,461
304,038
64,324
(6,282)
362,080
the national Banking and securities Commission has established a procedure that allows the entity to acquire its own shares on
the market, for which purpose, a reserve for repurchase of own shares must be created and charged to retained earnings. alsea has
applied that procedure at December 31, 2012.
total repurchased shares must not exceed 5% of total released shares; they must be re-placed in no more than one year, and are
not considered in the payment of dividends.
the premium on the issuance of shares is the difference between the payment for subscribed shares and the par value of those
same shares, or their theoretical value (paid-in capital stock divided by the number of outstanding shares) in the case of shares
with no par value, plus restatement at December 31, 2012. repurchased own shares available are reclassified to contributed capital.
In January 2012, Café sirena, s. de r.L. de C.v. declared a cash dividend of $150,000, calculated on the value of each of the equity
units into which the company’s capital stock is divided. the amount corresponding to the uncontrolled portion was $27,000.
In august 2012, it was agreed to convert the variable capital stock to fixed minimum capital stock, with the resulting reduction in
the variable portion of the capital stock and an increase in the minimum fixed portion, which was effected by converting 145,113,201
Class II shares currently representing the variable portion of the capital stock for the same number of shares, while Class I shares
remained unchanged, representing the minimum fixed portion, after which, the shareholders continue to hold the same number
of shares.
(a) Executives stock option plan
alsea has established a stock option plan for its executives. the plan was set up in 2005 and concluded on December 31,
2009. It consisted of providing the executives the right to receive the surplus (difference) on certain shares determined be-
tween the price of the shares at the outset of the plan and the exercise price of the option (market value) payable in cash.
the assignment of 5,886,524 shares for this plan was approved at a stockholders’ meeting and those shares were adminis-
tered by a trust.
at the close of the 2006 period, the executives exercised 20% of the rights acquired so far, and the remaining 80% was
exercised in the 2009 period, for which a payment of a $14,306 premium on share subscription was recognized.
at December 31, 2011, institution administering the trust authorized its total termination.
116
(b) Stockholders’ equity restrictions
i. five percent of net earnings for the period must be set aside for the legal reserve until it reaches 20 percent of the capital
stock. at December 31, 2012, the legal reserve amounted to $100,735, which has not yet reached the required 20%.
ii. Dividends paid from retained earnings are not subject to It if paid from the after-tax earnings account (CufIn), and 30%
must be paid on the excess, i.e., the result arrived at by multiplying the dividend paid by a factor of 1.4286. the tax on
the dividend payment not arising from the CufIn must be paid by the entity and may be credited against corporate It in
the following years.
25. Profit per share
the basic profit per share is calculated by dividing the net profit for the period attributable to the holders of the ordinary capital of
the controlling company by the average weighted number of ordinary shares outstanding during the period.
the amount of diluted profits per share is calculated by dividing the net profit attributable to the holders of the ordinary capital of
the controlling company (after adjusting for interest on the convertible preferential shares) by average weighted ordinary shares
outstanding during the period plus average weighted ordinary shares issued when converting all potential ordinary diluted shares
to ordinary shares. at December 31, 2012 and 2011, the entity has no diluted profits per share.
the following table shows information on income and shares used in calculating basic and diluted profits per share.
net profit (in thousands of pesos)
attributable to the stockholders
shares (in thousands of shares):
average weighted outstanding shares
Basic profit per share
26. Related party balances and transactions
other compensation and benefits
2012
2011
$
$
364,918 $
209,643
637,329
0.57 $
609,342
0.34
total compensation paid by the entity to directors and the principal officers for the period ended on December 31, 2012 and 2011
was approximately $109 and $108 million pesos, respectively. that includes compensation determined at a stockholders’ meeting
for discharging their duties in that period, as well as salaries and wages.
the entity constantly reviews salaries, bonuses and other compensation plans so as to offer its personnel competitive remu-
neration conditions.
117
Compensation plans for retaining executive talent
Deferred compensation programs were implemented in 2003 in order to bring the interests of the Issuing entity’s executives in line
with those of the stockholders and make it more likely that they will remain with the entity. Bond plans were implemented in 2003
and 2004, which have now been settled. subsequently, a stock option plan was established in 2005, which concluded on December
31, 2009. It consisted of providing the executives the right to receive the surplus (difference) on certain shares determined between
the price of the shares at the outset of the plan and the exercise price of the option (market value) payable in cash (note 24 a).
27. Commitments and contingent liabilities
Commitments:
a)
the entity rents certain equipment and the facilities housing its stores and distribution centers under leasing agreements for
specific periods (see note 13).
the estimation for future minimum operating lease payments for the facilities housing the different alsea trademarks is
shown below:
Year
2013
2014
2015
2016
2017
Amount
1,049,809
983,604
921,575
863,458
809,006
$
$
b.
the entity has a number of commitments pertaining to the agreements established in the contracts for trademarks acquired.
c.
During the normal course of operations, the entity acquires commitments under production material supply contracts which
in certain cases establish conventional penalties in the event of noncompliance.
Contingent liabilities:
at the date of the financial statement, alsea is involved in no judicial, administrative or arbitration procedures that could affect the
entity or its subsidiaries.
28. financial information per segment
the entity is divided into three large operating divisions, i.e., food and beverages in Mexico, food and beverages in LataM and dis-
tribution services, all run by the same management.
The Food and Beverage segments in which we participate in Mexico and Latin America (LATAM) are defined as follows:
fast food: the features of this segment are as follows: i) fixed and restricted menu, ii) food for immediate consumption, iii) strict
control of individual portions for each ingredient and finished product, iv) individual wrapping, among others. this type of segment
has easy access and can therefore penetrate any location.
118
Coffee shops: specialized outlets principally selling coffee. the principal difference is the quality service together with a competitive
price; the image/environment is focused on attracting all types of customers.
Casual dining: this is a segment of service restaurants at which an order is taken, aside from take-out service and home delivery
service, offering quality service together with a competitive price; the image/environment is focused on attracting all types of
customers. this segment includes fast food establishments and gourmet restaurants. the principal features of casual dining res-
taurants are i) easy access, ii) informal dress code, iii) casual environment, iv) modernity, v) simple décor, vi) high-quality service and
vii) accessible prices. alcoholic beverages are generally sold at those establishments.
fast casual dining: this is a combination of the fast food and casual dining segments:
The distribution and production segment is defined as follows:
Distribuidora e Importadora alsea, s.a. de C.v (DIa). specializes in the purchase, importation, transportation, storage and distribution
throughout Mexico of frozen, refrigerated and try food products to supply all Domino’s Pizza, Burger King, starbucks, Chilis Grill &
Bar and P.f. Chang’s China Bistro, Pei Wei e Italianni´s establishments in Mexico.
additionally, DIa handles the preparation and distribution of pizza dough for the entire Domino’s Pizza system in Mexico.
Panadería y alimentos para food service, s.a. de C.v. produces sandwiches and bread to supply starbucks and other alsea trade-
marks. the business model contemplates the central plant located in Lerma, where pastries, bread and sandwiches are prepared.
the definition of the operating segments is based on the financial information provided to the General Management, and is reported
on the same basis used internally by each operating segment. Performance at the different operating segments is evaluated on
the same basis.
the information pertaining to segments for the year ended on December 31, 2012 and 2011 is as follows: (figures in millions of pesos)
119
figures in millions of pesos at December 31, 2012
food and
Beverage
Division
LATAM
Division
Distribution and
Production
Division
Eliminations
Consolidated
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
Income
from third parties
$ 8,752 $ 7,084 $ 3,416 $ 2,402 $ 1,332 $ 1,166 $
19 $
18 $ 13,519 $ 10,669
Intersegment
-
-
-
-
2,701
2,230
(2,701)
(2,230)
-
-
Income
Costs
8,752
7,084
3,416
2,402
4,033
3,396
(2,682)
(2,212)
13,519
10,669
2,957
2,372
1,129
809
3,383
2,824
(2,697)
(2,217)
4,772
3,788
operating costs and expenses
4,488
3,872
2,074
1,394
588
541
(40)
7,157
5,766
168
130
Depreciation and amortization
Interest paid
Interest earned
other financial expenses
equity in associates
Income taxes
segment income
558
122
(76)
13
59
-
182
508
478
72
(49)
(19)
4
-
79
279
28
(6)
2
24
13
49
(15)
22
12
(1)
26
37
-
(9)
(19)
35
9
-
34
43
-
(8)
(8)
-
17
(3)
-
14
9
31
33
-
other components of income
-
-
-
-
-
-
7
33
85
36
31
51
33
(58)
(20)
63
-
(4)
64
-
6
(84)
(56)
794
244
(46)
(9)
189
13
219
-
37
661
152
(20)
(13)
119
9
107
-
27
Majority net profit
$
364
210
assets:
$ 8,496 $ 7,332 $
1,274 $
1,148 $ 1,533 $ 1,347 $ (2,538) $ (1,679) $ 8,765 $
8,148
Investment in productive assets
(Investment in associates)
-
-
(Investment in fixed and
608
568
intangible assets)
40
277
30
428
-
34
-
203
-
47
-
(3)
40
30
966
1,196
total assets
$
9,104 $ 7,900 $
1,591 $ 1,606 $ 1,567 $ 1,550 $ (2,491) $ (1,682) $ 9,771 $
9,374
total liabilities
$ 5,070 $ 3,481 $
1,137 $
1,138 $
960 $
891 $ (2,198) $
571 $ 4,969 $
6,081
120
29. foreign currency position
following are monetary assets and liabilities denominated in us dollars (dollars) shown in the reporting currency at December 31,
2012 and 2011 and January 1, 2011:
assets
Liabilities
asset (liability) position, net
Thousands of pesos
2012
2011
Transition date
484,233
(390,432)
93,802
582,388
(514,458)
67,930
266,257
(320,540)
(54,283)
the dollar exchange rate at December 31, 2012 and 2011 and January 1, 2011 was $13.01, $13.98 and $12.38, respectively. at March
29, 2013, date of issuance of the consolidated financial statements, the rate of exchange was $12.3438 per us dollar.
following are the exchange rates used in the different conversion processes in relation to the reporting currency at December 31,
2012 and 2011 and January 1, 2011, and at the date of issuance of the consolidated financial statements:
Country of origin
Currency
Closing
Exchange-rate
issuance
March 29, 2013
2012
argentina
Chile
Colombia
argentinian Peso (arP)
Chilean Peso (CLP)
Colombian Peso (CoP)
2.6486
0.0271
0.0074
2.4088
0.0261
0.0067
Country of origin
Currency
Closing
Exchange-rate
issuance
March 29, 2013
2011
argentina
Chile
Colombia
argentinian Peso (arP)
Chilean Peso (CLP)
Colombian Peso (CoP)
3.2485
0.0269
0.0072
2.4088
0.0261
0.0067
Country of origin
Currency
Closing
Exchange-rate
issuance
Transition date
January 1, 2011
argentina
Chile
Colombia
argentinian Peso (arP)
Chilean Peso (CLP)
Colombian Peso (CoP)
3.1142
0.0264
0.0064
2.4088
0.0261
0.0067
121
the following currencies were used for conversion purposes:
foreign operations
fast food sudamericana, s. a.
starbucks Coffee argentina, s. r. L.
asian Bistro argentina, s.r.L.
fast food Chile, s. a.
asian food Ltda,
Dominalco, s. a.
operadora alsea en Colombia, s. a.
asian Bistro Colombia, s.a.s
Country of
origin
argentina
argentina
argentina
Chile
Chile
Colombia
Colombia
Colombia
Currency of
Recording
functional
Reporting
arP
arP
arP
CLP
CLP
CoP
CoP
CoP
arP
arP
arP
CLP
CLP
CoP
CoP
CoP
MXP
MXP
MXP
MXP
MXP
MXP
MXP
MXP
30. fair value of financial assets and liabilities
• Fair value of financial instruments recorded at amortized cost
the entity’s principal financial instruments are valued at amortized cost, as they generally consist of accounts receivable and
liabilities at amortized cost. With the exception of debt and debt instruments, the entity’s management considers that the book
value of said financial assets and liabilities approximates their fair value, given their nature and the fact that they are short term.
the fair value of the debt at December 31, 2012 is estimated to be approximately $2,753 million pesos.
the fair value of the debt and debt instruments at December 31, 2011 is estimated to be approximately $3,591 and $1,147 million
pesos, respectively.
• valuation techniques and assumptions applied in determining fair value
the fair value of financial assets and liabilities is determined as follows:
• the fair value of financial assets and liabilities with standard terms and conditions and negotiated in liquid asset markets is
determined on the basis of prices quoted in the market.
• the fair value of other assets and liabilities is determined as per models for the determination of generally accepted prices,
which are based on the analysis of discounted cash flow.
Fair value hierarchy:
the entity classifies valuations at fair value recognized in the consolidated statements of financial position on three levels of
hierarchy, in accordance with the data used for the valuation. When a valuation uses data from different levels, the overall valu-
ation is classified on the lowest level for classification of any relevant figure.
• Level I fair value valuations are those derived from prices quoted (unadjusted) in active markets for identical assets or li-
abilities.
• Level 2 fair value valuations are those derived from indicators other than quoted prices included in Level 1, which are ob-
servable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and
122
• Level 3 fair value valuations are those derived from valuation techniques that include indicators for assets and liabilities not
based on observable market information (non-observable indicators).
the following analysis shows fair value measured as per a valuation methodology considered to qualify as Level 2::
December 31, 2012
forwards and options
swaps
total
December 31, 2011
forwards and options
swaps
total
January 1, 2011
forwards and options
swaps
total
Level 2
Level 2
(569)
442
(127)
(8,811)
447
(8,364)
Level 2
1,380
130
1,510
$
$
$
$
$
$
123
31. financial risk policies and management-
Significant accounting policies
the details of significant accounting policies and methods adopted (including recognition criteria, bases for valuation and bases for
recognition of income and disbursements) for each type of financial asset, financial liability and capital instrument are disclosed
in note 3.
Categories of financial instruments
the principal categories of financial instruments are:
financial assets
Cash and cash equivalents
Accounts and other receivables:
Customers – less estimation for doubtful accounts
value added tax and other recoverable taxes
other accounts receivable
short-term guarantee deposits
Long-term guarantee deposits
financial liabilities
at amortized cost:
Long-term debt
Debt instruments
accounts payable to suppliers
other accounts payable
for negotiation
Derivative financial instruments
2012
2011
Transition
date
$
932,594 $
739,379 $
640,203
339,481
272,254
196,450
219,350
243,736
166,228
-
2,262,800
110,020
86,991
207,224
218,037
39,482
-
78,168
2012
2011
Transition
date
2,474,480
3,063,000
-
1,129,612
175,637
993,531
1,021,424
67,068
897,524
694,834
710,548
25,042
-
8,365
(3,391)
The objectives of financial risk management
alsea is principally exposed to the following financial risks: (i) market (foreign currency and interest rate), (ii) credit and (iii) liquidity.
the entity seeks to minimize the potential negative effects of the aforementioned risks on its financial performance by applying
different strategies. the first involves securing risk coverage through derivative financial instruments.
Derivative financial instruments are negotiated only with entities with recognized solvency, and limits have been established for
each entity. It is the policy of the entity not to conduct operations with derivative financial instruments for speculative purposes.
124
Market risk
the entity is exposed to market risks arising from variations in exchange and interest rates. variations in exchange and interest
rates may arise as a result of changes in domestic and international economic conditions, tax and monetary policies, market liquid-
ity, political events and natural catastrophes and disasters, among others.
exchange fluctuations and the devaluation or depreciation of local currency in the countries in which alsea participates could limit
the entity’s capacity to convert local currency to dollars or other foreign currency, thus affecting its operations, operating results
and financial position.
the entity currently has a risk management policy aimed at mitigating present and future risks involving those variables, which
arise mainly from the purchase of inventories, payments in foreign currency and the bank and stock exchange debt contracted at
a floating rate. the contracting of derivative financial instruments is intended to cover or mitigate a primary position represent-
ing some type of identified or associated risk for the entity. Instruments used are merely for economic coverage purposes, not for
speculation or negotiation.
the types of derivative financial instruments approved by the entity for the purpose of mitigating exchange fluctuation and interest
rate risks are as follows:
-
-
-
-
usD/MXn exchange-rate forwards contracts
usD/MXn exchange-rate options
Interest rate swaps
Cross-Currency swaps
Given the variety of possible derivative financial instruments for covering the risks identified by the entity, the Director of Corporate
finance is authorized to select said instruments and determine how they are to be operated.
Exchange risk management
usD coverage and the respective requirements are determined on the basis of cash flow budgeted by the entity, and are in line
with the current risk management policy approved by the Business Practices Committee, General Management and the Director of
administration and finance. the policy is monitored by the Director of Internal audit.
the exchange risk denominated in foreign currency (usD) is monitored internally on a weekly basis based on unexpired positions or
coverage at the market exchange rate. In all cases, the table for calculation or valuation of derivative financial instruments is the
table specified in the master contract. the internal review is intended to spot significant variations in exchange rates that could give
rise to a risk or result in some type of noncompliance by the entity. In the event that a significant and representative risk position
is encountered, it is reported to the Director of Corporate finances by the Corporate treasury Manager.
the following table contains quantitative details of the exchange risk exposure based on usD/MXn foreign currency forwards and
options contracts entered into by the entity and in effect at December 31, 2012.
125
Type of
derivative,
security or
contract
Purpose
of the
coverage
Position
forwards
Long
economic
options
Long
economic
Value of the underlying
asset/reference
variable
notional amount/
nominal amount
(uSD)
fair value
(uSD)
Current
quarter
Previous
quarter
Current
quarter
Previous
quarter
Current
quarter
Previous
quarter
Maturities
(uSD)
13.1
usD/MXn
12.85
usD/MXn
13.1
usD/MXn
12.85
usD/MXn
18,250
18,500
$
19
$
251
$
18,250
26,500
43,500
$
(63)
$
332
$
26,500
note 29 shows foreign currency positions at December 31, 2012 and 2011 and January 1, 2011. It also shows the exchange rates in
effect on those dates and transactions for the year ended on December 31, 2011.
as concerns the sensitivity analysis, because the fair value of the derivative financial instrument (DfI) position at December 31,
2012 and 2011 is not material, any change in the risk factors pertaining to the interest rate or the peso/dollar exchange rate would
not significantly impact their fair value. on that basis, entity management concluded that the payment capacity and liquidity for
handling obligations contracted are not affected and show no significant impact. Likewise, as mentioned, DfIs used by the entity
are intended to mitigate usD interest rate and exchange rate risks.
any devaluation/revaluation of the peso against the dollar, which represents management’s evaluation of a possible reasonable
change in the parity of those currencies, would result in an increase/decrease in income and stockholders’ equity of approximately
$55 and $25 million pesos for the years ended on December 31, 2012 and 2011, considering that not all foreign currency financial
instruments are covered by derivative financial instruments.
the sensitivity analysis is determined on the basis of the us dollar financial instrument position at December 31, 2012 and 2011 and
may not be representative of the exchange risk during the period due to variations in the net position in that currency.
interest rate risk management
the entity faces certain exposure to the volatility of interest rates as a result of contracting bank and stock exchange debt at fixed
and variable interest rates. the respective risks are monitored and evaluated monthly on the basis of:
- Cash flow requirements
- a budget review
- observation of the market and interest rate trends in the local market and in the countries in which alsea operates (Mexico,
argentina, Chile and Colombia).
- Differences between negative and positive market rates
the aforementioned evaluation is intended to mitigate the entity’s risk concerning debt subject to floating rates or indicators, to
streamline the respective price and to determine the most advisable mix of fixed and variable rates.
at the date of the consolidated financial statements, the entity has an interest rate swap at variable and fixed interest rates
amounting to a total of $400 million pesos, maturing in May 2014. In addition to the plain vanilla It, two interest rate options have
been contracted, known as a knockout swap and a limited swap, each for a notional amount of $150 million pesos, both applied to
a bank loan expiring in 2016.
126
according to the swap contract, the entity agrees to exchange the difference between the fixed and floating interest rates calculated
on the agreed notional amounts of capital, which makes it possible to reduce, mitigate and control the exchange risk on interest
rates on the fair value of debt issued at a fixed interest rate and exposures to the risk of cash flow on debt issued at a variable
interest rate.
the following table contains quantitative details of the exchange risk exposure based on forwards and options contracts entered
into by the entity and in effect at December 31, 2012.
Type of
derivative,
security or
contract
Purpose
of the
coverage
Position
Value of the
underlying asset
reference variable
notional amount
nominal amount (uSD)
fair value
(uSD)
Current
quarter
Previous
quarter
Current
quarter
TPrevious
quarter
Current
quarter
TPrevious
quarter
Maturities
(uSD)
Interest
rate
swap
Knock out
swap
Limited
swap
Long
economic
Long
economic
Long
economic
4.84 -
tIIe 28 d
4.84 -
tIIe 28 d
4.84 -
tIIe 28 d
4.81 -
tIIe d
4.81 -
tIIe d
4.81 -
tIIe d
30,888
31,008
$
151
$
167
30,888
11,583
11,628
$
(48)
$ (173)
11,583
11,583
11,628
$
(70)
$
150
11,583
the Corporate treasury Manager is responsible for monitoring and reporting to the Director of administration and finance any
significant event or contingency that could affect the coverage, liquidity, maturities, etc. of the DfIs. the Director of administration
and finance reports any such situation to the alsea General Director if the identified risks could materialize.
note 15 and 16 contain details of loans from financial institutions and the issuance of debt instruments, respectively, at December
31, 2012 and 2011 and January 1, 2011.
Credit risk management
In order to minimize the credit risk associated with the counterparty, entity contracts its financial instruments with institutions both
in Mexico and abroad authorized to engage in that type of operation.
as concerns derivative financial instruments, a standard contract approved by the International swaps and Derivatives association
Inc. is signed, as well as standard confirmation forms for each operation.
Bilateral guarantee contracts are also signed with the counterparty, which specify policies on margins, collateral and the credit lines
to be granted. those contracts, usually known as Credit support annexes, establish the credit limits granted to the entity by financial
institutions, which apply in the event of negative scenarios or fluctuations that affect the fair value of the open positions in deriva-
tive financial instruments. those contracts establish margin calls in the event that credit line limits are exceeded.
In addition to the Credit support annexes (Csa) attached to the master contract, the entity monitors the positive or negative fair
value on a monthly basis. If a significant positive result arises, a credit default swap (CDs) can be contracted to lower the risk of
noncompliance by any of the counterparties.
It is the policy of the entity to monitor the volume of operations contracted with each of those institutions in order to avoid margin
calls and mitigate the credit risk with counterparties.
127
the entity’s maximum credit risk arises from the book value of financial assets, which amount to $1,845,897 at December 31, 2012.
Liquidity risk
the entity’s principal source of liquidity is cash generated by operations.
the Director of finance holds final responsibility for liquidity management, for which purpose, policies have been established for
control of and follow-up on working capital, which makes it possible to manage short, medium and long-term financing require-
ments. Periodic cash flow projections are prepared in order to manage the risk and ensure adequate reserves, credit lines are
contracted and investments are planned.
notes 15, 16 and 17 provide the details of the financing contracted by the entity and the respective maturities. the following table
shows contractual maturities of the entity’s financial liabilities. the table is based on undiscounted flows based on the first date on
which payment can be demanded of the entity, and includes payments of principal and interest.
December 31, 2012
Less than
a year
over 1 year and
less than 3
over 3 years
and less than 5
Total
Loans from financial institutions
$
496,553
$
1,395,753
$
860,763
$
2,753,069
accounts payable to suppliers
other accounts payable
1,129,612
175,637
-
-
-
-
1,129,612
175,637
total
$
1,801,802
$
1,395,753
$
860,763
$
4,058,318
December 31, 2012
Less than
a year
over 1 year and
less than 3
over 3 years
and less than 5
Total
Loans from financial institutions
$
510,113
$
1,346,175
$
1,735,168
$
3,591,456
Debt instruments
accounts payable to suppliers
other accounts payable
61,592
1,085,400
1,021,424
67,068
-
-
-
-
-
1,146,992
1,021,424
67,068
total
$
1,660,197
$
2,431,575
$
1,735,168
$
5,826,940
January 1, 2011
Less than
a year
over 1 year and
less than 3
over 3 years
and less than 5
Total
Loans from financial institutions
$
284,993
$
336,243
$
442,993
$
1,064,229
Debt instruments
accounts payable to suppliers
other accounts payable
50,535
710,548
25,042
757,199
-
-
-
-
-
-
807,734
710,548
25,042
total
$
1,071,118
$
1,093,442
$
442,993
$
2,607,553
128
Management of capital
the main purpose of managing capital is to ensure that the entity maintains strong credit ratings and healthy capital ratios in sup-
port of its business and to ensure maximum value for the stockholders.
the entity manages is capital structure and makes any necessary adjustments required by changes in economic conditions. With
a view to maintaining and adjusting its capital structure, the entity may modify dividend payments, reimburse capital or issue new
shares.
In the periods ended on December 31, 2012 and 2011, there were no modifications to the objectives, policies or processes pertaining
to capital management.
the following ratio is used by the entity and by different rating agencies and banks to measure credit risk.
-
net debt to eBItDa = net debt/eBItDa Itm
at December 31, 2012 and 2011, and at January 1, 2011, the financial restrictions established in the entity’s loan agreements are as
follows: the net debt to eBItDa ratio for the last twelve months was slightly under 1.0 times, 2.6 times and 0.96 times.
32. Explanation of the transition to ifRS
In January 2009, the national Banking and securities Commission (nBsC) amended the respective regulations to require certain
entities disclosing financial information to the public through the Mexican stock exchange (BMv) (including the entity) to prepare
and disclose their financial information on the basis of the Ifrs issued by the International accounting standards Board (IasB).
on that basis, on January 1, 2012, the entity adopted the accounting framework established in the Ifrs for preparing its consolidated
financial statements in order to comply with the provisions of the nBsC. following is a description of the principal changes in ac-
counting policies resulting from the initial adoption of the Ifrs.
the entity’s consolidated financial statements at December 31, 2012 and for the year ended on that date will be the first annual
consolidated financial statements that comply with Ifrs. the period ended on December 31, 2011 is the comparative period, and
the transition date was January 1, 2011. the entity applied the significant obligatory exemptions and certain optional exemptions
for retrospective application of the Ifrs.
the following reconciliations show quantification of the effects of transition and the impact on stockholders’ equity at the transition
date (January 1, 2011) and at December 31, 2011 and on the comprehensive net profit for the transition period (January 1, 2011) and
at December 31, 2011:
129
i)
Equity
a) Reconciliation of stockholders’ equity at January 1, 2011 (date of transition to the IFRS)
Equity
nota
figures under MfRS
at January 1, 2011
Adjustments and
reclassifications
figures per ifRS
Capital stock
$
527,657
$
(165,577)
$
Premium on share subscription
Legal reserve
retained earnings
effects of conversion
reserve for repurchase of shares
total capital attributable
to the owners of the controlling
company
i
i
ii, iii
v
i
1,241,208
92,108
636,262
(23,340)
391,433
(154,793)
(6,057)
309,459
23,340
(27,600)
362,080
1,086,415
86,051
945,721
-
363,833
2,865,328
(21,228)
2,844,100
non-controlling interest
245,641
(471)
245,170
total stockholders’ equity
$
3,110,969
$
(21,699)
$
3,089,270
reconciliation of stockholders’ equity at December 31, 2011
Equity
figures under MfRS
at January 1, 2011
Adjustments and
reclassifications
(note 32(iii))
figures per ifRS
Capital stock
$
528,038
$
(165,577)
$
Premium on share subscription
Legal reserve
financial instrument valuation
retained earnings
effects of conversion
reserve for repurchase of shares
total capital attributable to the owners
of the controlling company
1,246,840
99,667
9,166
712,460
4,244
411,503
3,011,918
(154,793)
(6,056)
-
312,696
23,340
(27,600)
(17,990)
362,461
1,092,047
93,611
9,166
1,025,156
27,584
383,903
2,993,928
non-controlling interest
299,274
(471)
298,803
total stockholders’ equity
$
3,311,192
$
(18,461)
$
3,292,731
130
ii)
Comprehensive income
reconciliation of net income for the year ended December 31, 2011
net consolidated income per Mfrs
financial instrument valuation
Conversion of foreign operations
Comprehensive consolidated income per Mfrs
Cancellation of the liability at the end of the period
Comprehensive income under Ifrs at December 31, 2011
$
$
233,523
9,166
27,584
270,273
3,238
273,511
iii The different items included in the aforementioned reconciliations are explained below:
i) Capital stock
under Mfrs, capital stock accounts, the premium on share subscription, the legal reserve, the reserve for the repurchase
of shares and retained earnings were restated up to December 31, 2007 on the basis of national Consumer Price Index
(nCPI) factors.
under the Ifrs, the effects of inflation are recognized only in hyperinflationary economies, that is to say, when the infla-
tion rate accrued over a three-year period approximate or exceeds 100%. the most recent three-year period in which
Mexico showed those figures was from 1996 to 1998. therefore, the effects of inflation recognized after that date under
capital stock, the capital reserve, the reserve for the repurchase of own shares and retained earnings were eliminated; the
net effect was $533,768.
ii) Deferred taxes
the adjustment corresponds to the recalculation of deferred taxes, principally the adjustments resulting from adoption of
Ifrs, which affected the book value of assets and liabilities.
the overall net effect on deferred taxes was $9,299 and $6,436 at the transition date and at December 31, 2011, respec-
tively.
iii) employee benefits
the differences in labor obligations between Mfrs and the Ifrs arise principally as concerns the valuation for adjust-
ments in actuarial assumptions. under Ifrs, the benefits from termination of employment are recognized only if the
company can demonstrate its commitment to terminate employment by means of a detailed dismissal plan as per nIC 19
employee Benefits. therefore, the termination liability recognized on the basis of Mfrs was eliminated for Ifrs purposes
at the transition date. the amount eliminated was $9,686.
iv) Reclassification of debt instrument issuance expenses
the cost of issuing debt instruments was reclassified to the respective long-term debt.
adjustments at the transition date and at December 31, 2011 totaled $9,685 and $14,311, respectively.
v) effects of conversion
under Ifrs, an entity adopting Ifrs for the first time is not required to comply with the requirements concerning ac-
crued conversion differences existing at the transition date. However, when applying that exemption, the entity must not
consider the accumulated conversion differences recognized under Mfrs and may not consider those differences when
131
determining the gain or loss on the subsequent disposal of any business abroad. at the transition date, the accumulated
result of converting foreign currency was ($24,757), which was canceled against retained earnings.
the entity considers that it has no material adjustments in the consolidated statements of cash flows, which is why no
such reconciliation is presented.
Exceptions and exemptions in adopting ifRS
Ifrs 1 now in force, provides certain exceptions and exemptions from the general requirement to apply Ifrs retrospectively to the
transition date. Ifrs 1 establishes four obligatory exceptions and fourteen optional exemptions for not applying Ifrs retrospectively
in the consolidated statements of financial position at the transition date.
alsea is applying the obligatory exceptions pertaining to 1) determination of estimations at the transition date, 2) prospective
application, as from that date, of the regulatory requirements of International accounting standards (Ias) 27, Consolidated and
Individual Financial Statements, applicable to the non-controlling interest, 3) an entity need not provide a list of coverages of a
type that does not comply with the coverage conditions specified in Ias 39 and 4) prospective application of the disposal in books
of financial assets and liabilities.
optional exemptions applicable to Alsea are:
fair value or revaluation-
under Ifrs 1, on the transition date, the entity may opt to measure property, plant and equipment at fair value, and use that fair
value as the attributed cost at that date.
an entity adopting Ifrs for the first time may opt to use the revaluation method as per its previous accounting principles for store
equipment, leasehold improvements, real property and intangibles, either at the transition date or some previous date, as the at-
tributed cost at the revaluation date, if it was substantially comparable at that date.
• at fair value, or
• at cost or at depreciated cost as per Ifrs, adjusted to reflect, for example, changes in the general or specific price index.
alsea has decided that its attributed cost at the date of transition is to be the revalued depreciated cost of its store equipment,
leasehold improvements and real property, determined as per Mfrs at December 31, 2010 (which includes the effects of inflation
up to December 31, 2007 and current pesos for movements as from that date).
Business combinations-
an entity adopting Ifrs for the first time may opt not to apply Ifrs 3, Business Combinations, retroactively to business combina-
tions carried out in the past (prior to the transition date to Ifrs).
alsea has decided that their consolidated financial statements will show business combinations up to the transition date as they
were recognized under Mfrs, i.e., by the purchase method, including acquisitions in stages.
all acquisitions made as from the transition date, which is January 1, 2011, are recognized in accordance with Ifrs 3, which among
other things, makes it necessary to:
•
•
•
•
•
•
specify that the item acquired qualifies as a business
specify the acquiring party
Determine the acquisition date
recognize identifiable assets acquired, liabilities assumed and the non-controlled interest in the wired entity.
value the price
recognize goodwill acquired or a profit on the purchase, after certain considerations.
132
Accumulated conversion effects of foreign entities -
Ias 21, effects of variations in Foreign Currency exchange Rates, requires the entity to:
•
•
recognize certain differences of the effects of conversion in comprehensive income and include them in a separate stockhol
ders’ equity component and
reclassify the accumulated conversion difference arising from the disposal of a business abroad (including, if applicable, the
results of the respective coverage) from stockholders’ equity to income as part of the profit or loss arising from the disposal.
However, an entity adopting Ifrs for the first time need not comply with this requirement as concerns accumulated conversion dif-
ferences existing at the transition date. If an entity adopting Ifrs for the first time makes use of this exemption:
•
•
accumulated conversion differences for all businesses located abroad are considered to be nil on the transition date and
the profit or loss on the subsequent disposal of any business abroad must exclude any conversion differences arising prior
to the transition to Ifrs and must include conversion differences arising subsequent to that date.
alsea applied that exemption in their consolidated financial statements at the transition date, and therefore reclassified the ac-
cumulated effect of conversion of foreign entities as per Mfrs to retained earnings. as from January 1, 2011, alsea determined the
effects of conversion in accordance with Ias 21.
33. new accounting standards
the entity has not applied the following new and revised Ifrs, which have been analyzed but not yet implemented:
IFRS 9, financial Instruments3
IFRS 10, Consolidated Financial Statements 1
IFRS 11, Joint Agreements 1
IFRS 12, Information to be disclosed concerning equity in other entities 1
IFRS 13, Measurement of Fair value 1
Modifications to IFRS 7, Disclosures– Compensation for financial assets and liabilities 1
Modifications to IFRS 9 and IFRS 7, effective date for Ifrs 9 and transition Disclosures3
Modifications to IFRS 10, IFRS 11 and IFRS 12, Consolidated financial statements, Joint Agreements and Disclosures Concerning
equity in other entities: Transition guidelines
IAS 19 (revised in 2011), employee benefits 1
IAS 27 (revised in 2011), Individual Financial Statements 1
IAS 28 (revised in 2011), Investments in Associates and Joint Agreements 1
Modifications to IAS 32, Disclosures - Compensation for Financial Assets and Liabilities 2
Modifications to IFRS, Annual improvements to IFRS 2009-2011 cycle, except for modifications to IAS 1
1 effective for annual periods beginning as from January 1, 2013.
2 effective for annual periods beginning as from January 1, 2014.
3 effective for annual periods beginning as from January 1, 2015.
34. Authorization of the consolidated financial statements
the accompanying consolidated financial statements were authorized for issuance on March 29, 2013 by Diego Gaxiola Cuevas,
Chief executive offcer, and therefore do not reflect events occurred subsequent to that date; they are subject to approval by the
stockholders and audit committee, who may modify them as provided in the Corporations Law.
fabián gosselin Castro
Chief executive officer
Diego gaxiola Cuevas
Chief financial officer
Alejandro Villarruel Morales
Corporate Controller
133
The best is yet to come...
134
INVESTOR INFORMATION
INVESTOR RELATIONS
INFORMATION ON ALSEA´S STOCK
The single series shares of Alsea S.A.B. de C.V. have
been traded on the Mexican Stock Exchange (Bolsa
Mexicana de Valores or BMV) since June 25, 1999.
Ticker Symbol: BMV ALSEA*
Alsea’s 2012 Annual Report may include certain
expectations regarding the results of Alsea, S.A.B.
de C.V. and its subsidiaries. All such projections,
which depend on the judgment of the Company’s
Management, are based on currently known
information; however, expectations may vary as a
result of facts, circumstances and events beyond
the control of Alsea and its subsidiaries.
ABOuT ThIS REpORT
Alsea presents its first 2012 comprehensive report,
which reflects both the financial results as well
as the actions taken during 2012 with respect to
sustainability issues.
For the second consecutive year we are presenting
this report based on guidelines provided by the
Global Reporting Initiative (GRI) methodology. It
is a self-declared level B report, without external
verification.
Also, we are committed to ensuring that our
operations and strategies are aligned with the
United Nations’ Millennium Development Goals
and the Principles of the Global Contract. This
is why we are also presenting initiatives for
supporting its 10 principles in this report.
Enrique González Casillas
Investor Relations
ri@alsea.com.mx
Phone: +52 (55) 5241-7035
Diego Gaxiola Cuevas
CFO
ri@alsea.com.mx
Phone: +52 (55) 5241-7151
HEADQUARTERS
Alsea S.A.B. de C.V.
Av. Paseo de la Reforma #222, 3th. Floor
Tower 1 Corporate Building
Col. Juárez, Del. Cuauhtémoc
ZIP Code 06600, México D.F
Phone: +52 (55) 5241-7100
INDEPENDENT AUDITORS
DELOITTE
Galaz, Yamazaki, Ruiz Urquiza, S.C.
Av. Paseo de la Reforma #489, 6th. Floor
Col. Cuauhtémoc, Del. Cuauhtémoc
ZIP Code 06500, México D.F.
Phone: +52 (55) 5080-6000
SOCIAL RESPONSIBILITY:
Ivonne Madrid Canudas
responsabilidad-social@alsea.com.mx
Phone: 52 41 71 00 ext. 7335
This Report is available in:
www.alsea2012.com or in
our App “Alsea 2012”
(Downloadable in Itunes’s App Store).
Our previous reports can be consulted in:
www.alsea.com.mx
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In augmentation
Annual Report 2012
www.alsea.com.mxGrowthStrengtheningResultsSustainability