Our purpose is:
Corporate Profile
07 We are Alsea
Segments
Leading Brands
Key Financial Results
Message from the Chairman of the
Board of Directors and the CEO
Sustainability
Growth
Development
Balance
10
12
16 ESG Model
Sustainability Management
Materiality
Stakeholders
24 Supply Chain
Food Quality and Safety
Responsible consumption
Omnichannel
43 The Alsea Team
Talent Development
Diversity and Inclusion
Occupational Health & Safety
Community Support
Actions in Mexico
Actions in Latin America
Actions in Europe
69 Global Environmental Policy
Energy Efficiency
Material Resources and the Circular
Economy
Water
Corporate Governance
About this Report
Indicators
Financial Information
77
87
88
89
Information for Investors 160
6
TABLE OF CONTENTSar alsea 2021 Corporate Profile / Leading Brands
GRI 2-1, 2-2,
We are the leading restaurant operator in Latin America and Europe, with globally
recognized brands within the Fast Food, Cafeteria, Casual Dining, Fast Casual Dining
and Family Restaurant segments.
We currently operate 4,262 units in Mexico, Spain, Argentina, Colombia, Chile,
France, Portugal, Belgium, Netherlands, Luxembourg and Uruguay. Our business
model includes support for all business units through a Shared Services Center,
providing support in Administrative, Development and Supply Chain processes.
4,262UNITS
9
8
2
3
,
S
T
I
N
U
E
T
A
R
O
P
R
O
C
3
7
9
S
E
S
I
H
C
N
A
R
F
MEXICO
2,174
1,789
385
URUGUAY
10
10
NETHERLANDS
90
16
74
COLOMBIA
207
165
42
SPAIN
1,072
770
302
BELGIUM
33
-
33
ARGENTINA
246
246
-
PORTUGAL
24
21
3
CHILE
201
201
-
FRANCE
201
71
130
LUXEMBOURG
4
-
4
10LOGISTICS
CENTERS
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7
ar alsea 2021
Corporate Profile / Leading Brands
GRI 2-1, 2-2
SEGMENTS
FAST FOOD
RESTAURANT
CAFETERIA
units
%
1,700
40%
1,552
36%
CASUAL
FOOD
602
14%
FAMILY
RESTAURANT
FAST-CASUAL
FOOD
364
9%
44
1%
8
ar alsea 2021 Corporate Profile / Leading Brands
GRI 2-6
We operate the most
prestigious and
renowned brands
in each of their
segments, in all the
countries where we
have a presence.
cafeterias
american
casual dining
pizzas
hamburgers
restaurant-sports
bar
international
casual dining
9
ar alsea 2021 Key financial results
GRI 2-1, 2-2, 2-7, 2-28, 203-1, 403-5, 404-1, 413-1
+70,000
employees
%
n
e
m
8
o
w
4
n
e
%m
2
5
9
+2.6
7
of training 3
s
r
u
o
h
.
e
g
a
r
e
v
a
million hours
e
e
y
o
l
p
m
e
r
e
p
11
countries
17
brands
4,262
units
s
t
i
n
u
e
t
a
r
o
p
r
o
c
%
7
7
%
3
2
s
e
s
i
h
c
n
a
r
f
764,000+
meals
served by “It’s on Me” (Va
por mi Cuenta) in Mexico
alignment with the
UN Global Compact
SDGs*
* Sustainable Development Goals
o
t
d
e
t
a
n
o
d
+
p
d
M
m
6
4
.
s
m
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r
g
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r
p
y
t
i
n
u
m
m
o
C
t
n
e
m
p
o
l
e
v
e
D
3.5M+
pesos allocated to
Education and
Employability
programs
alliance for Social
Responsibility
in Mexico
inclusion in the
S&P Dow Jones
Sustainability
Mila Index
10
ar alsea 2021
Key Financial Results
GRI 2-2, 2-7, 201-1
KEY
FINANCIAL RESULTS1
SALES
2021
53,379
2020
38,495
2019
58,155
OUTCOME
Net Sales
Gross Profit
Operating Profit
EBITDA2
Consolidated Net Income
BALANCE
Total Assets
Cash
Liability Costs
Majority Stockholders’ Equity
RENTABILIDAD
ROIC3
ROE4
STOCK MARKET
SHARE DATA
Price
Earnings per share
Dividend
Book Value per Share
Outstanding shares*
OPERATION
Total Number of Units
Employees
EBITDA
2021
12,311
2020
6,918
2019
12,618
CAGR
2016-2021
ANNUAL
GROWTH
2021
%
2020
%
100.0%
70.2%
(3.9%)
18.0%
(10.1%)
7.2%
7.8%
N.A.
19.0%
N.A.
5.9%
0.7%
38.7%
39.7%
N.A.
78.0%
N.A.
(0.6%)
75.3%
(3.5%)
21.2%
N.A.
N.A.
46.6%
N.A.
N.A.
13.6%
0.0%
1.6%
18.8%
53,379.5
37,788.2
4,132.9
12,311.3
784.5
82,977.6
6,893.4
55,492.4
7,639.2
6.5%
9.0%
37.95
1.00
-
10.34
838.6
4,262
70,827
100.0%
70.8%
7.7%
23.1%
1.5%
38,495.4
27,040.5
(1,517.5)
6,917.7
(3,895.5)
83,437.9
3,932.4
57,512.3
6,303.4
(3.3%)
(51.0%)
25.89
(3.86)
-
9.10
838.6
4,193
59,636
784.5
Net Income
9.0%
ROE4
30.7%
VMT
4,262
units
This outcome is the result of the
commitment and dedication of our
employees, responsible management
with a long-term vision, and the
implementation of a sustained growth
strategy that has allowed us to achieve
positive growth rates.
In 2021, we achieved a growth of 4% in net sales and 10% in EBITDA,
according to the Compound Annual Growth Rate from 2015 to 2020.
1 Figures in millions of nominal pesos under IFRS standards (including the IFRS 16 effect and the effect
referring to restatement due to hyperinflation in Argentina), except data per share, number of units
and employees.
2 EBITDA is defined as operating income before depreciation and amortization.
3 ROIC is defined as operating income after taxes divided by net operating investments (total as-
sets-cash and short-term investments-liabilities without cost).
4 ROE is defined as net income divided by stockholders’ equity.
5 CAGR Compound Annual Growth Rate from 2016 to 2021.
11
ar alsea 2021
Message from the Chairman of the Board of Directors and the CEO
GRI 2-1, 2-2, 2-6, 2-7, 2-9, 2-10, 2-11, 2-12, 2-14, 2-22, 2-28, 2-29, 201-1, 203-1, 301-2, 301-3, 405-1,
Dear
friends,
Alsea is the best example to show that
commitment, unity and the ability
to adapt without losing sight of the
objectives, are crucial factors in facing
challenges.
Thus, we are proud to present our 2021 Annual Report
that tells the story of a positive economic, environmental,
social, and corporate governance outcome.
The results we are sharing today were produced by a
team of employees who are passionate about providing
quality services, focused on our corporate purpose to de-
liver happiness and experiences full of flavor. That is the
essence of Alsea because everything our brands do is
aimed at guaranteeing happy moments through quality,
warmth and innovation.
We are very proud of our performance in 2021—a pivotal
year marked by sustained growth in net sales—which were
up 38.7% compared to 2020 to stand at MXN 53.379 billion,
combined with a positive EBITDA with 78% growth for a
total of MXN 12.311 billion. This increase was due prima-
rily to sales recovery and expense and cost efficiencies
managed with a price strategy and an enhanced mix of
products and promotions in response to rising pressure on
costs. At the end of 2021, we had 4,262 units, including
3,289 company units and 973 franchises, generating more
than 70,000 direct jobs.
12
MESSAGEar alsea 2021 Message from the Chairman of the Board of Directors and the CEO
We also invested in an additional stake in Alsea Europe
together with Bain Capital Credit. Alsea now owns 76.8%
of the Company’s operations in Europe, with Bain Capital
Credit holding a 10.5% stake and other minority share-
holders holding the rest.
Although restaurant traffic has gradually normalized, food
delivery sales totaling MXN 12.5 billion maintained their
position as a valuable sales channel for our customers,
with a 41.1% increase compared to 2020, representing a
23.4% share in the Company’s consolidated sales. These
results confirm that consumers will continue to opt for
home delivery services; therefore, our omnichannel stra-
tegy will remain a constant to ensure that we are always
where consumers want us to be when and where ever
they need us.
In Mexico, we launched Wow+ featuring delivery services,
a loyalty program and restaurant experiences for all of
our brands across the nation, with more than 1.3 million
active users registered at year-end.
We also launched the Starbucks Mobile Order and Pay
App in Mexico that consumers can use to read our menu,
order and pay from their mobile devices, reload and check
their balances, and enjoy access to personalized pro-
motions. In 2022, we plan to launch this initiative in the
other geographies where we have a presence.
In 2021, we renewed our sustainability model structured
around three pillars centered on Growth, Development
and Balance. We are committed to achieving our 2030
Goals for Environmental, Social and Corporate Gover-
nance (ESG) and working hard because we know that
market leaders have enormous responsibilities.
One example of this is that 63% of our units in Mexico use
clean energy. In Argentina, Chile, and Mexico, we collected
more than 1,000,000 liters of oil in our stores to recycle and
transform it into biodiesel, and at Burger King Argentina,
we replaced dessert containers with poly paper.
We are very proud of the award we received from the
Association of Food & Health Professionals (APSAL,
acronym in Spanish) in the “LATAM Corporate Social
Responsibility” category for our plan to ensure energy
efficiencies and recycle and reuse resources in both our
stores and the Alsea Southern Cone Support Centers.
This achievement resulted from our work to positively
impact the region by recycling materials and reducing
energy consumption.
Our social initiatives are centered on three priority as-
pects: fighting food poverty, generating education and
employment opportunities, and promoting community
development through various programs and the help pro-
vided by civil society organizations.
Thanks to this social support, we completed our ninth
annual fundraising campaign for the Va por mi Cuenta
(It’s on Me) Movement, raising MXN 33 million that will
be used to provide nutritious meals to the most vulnerable
populations in Mexico. In addition, in 2021, we served
more than 700,000 meals in our 14 soup kitchens to more
than 6,800 families and gave out more than 133 tons of
in-kind donations, producing a positive impact on more
than 260,000 individuals.
13
ar alsea 2021 Message from the Chairman of the Board of Directors and the CEO
We received a Corporate Social Responsibility award for
the tenth year running. Beginning in 2013, Alsea has been
listed on the IPC Sustainability Quotes Index of the Mexi-
can Stock Exchange. It has been part of the Dow Jones
Sustainability Index since 2018, where we improved our
overall score by ten points. Like every year since 2011, we
reaffirmed our pledge to the ten Sustainable Development
principles of the UN Global Compact and the Sustainable
Development Goals.
Good Corporate Governance is the cornerstone of our
organization; therefore, I am pleased to inform you that
Leticia Jáuregui joined our Board of Directors in 2021 as
an independent director who will contribute her knowledge
as an expert in innovation strategies and exponential te-
chnologies. We reaffirmed our dedication to consolidating
an inclusive community with greater representation of
women in key roles with this appointment.
In addition, Fernando González joined the Alsea team as
Deputy CEO in June 2021 and in January 2022, he became
global CEO. Fernando shares our vision and philosophy.
His experience contributes to helping us achieve the stra-
tegic objectives established by the Board of Directors and
to continue building a healthy future for our Company.
I am proud to belong to Alsea, the leading Company in
the restaurant sector in Latin America and Europe with
the most successful brands in its segments and a team
of employees fully committed to our customers, service
and the community.
These months serving as Deputy CEO were a discovery
phase that gave me an understanding of the business and
its details while also experiencing the Company’s culture
and verifying why Alsea has consistently consolidated a
history of achievements over the last 30 years.
We are the sum of unique experiences and happy spaces and
are devoted to our customers, our people and our community.
I am committed to taking Alsea into its next development
chapter as we focus on maintaining our good results and
increasing our Company’s success.
Today we are a more agile, efficient and competitive com-
pany, well-positioned to face the new macroeconomic
environment. We have a revitalized sense of commitment
to continue putting our hearts into everything we do and
delivering happiness and experiences full of flavor.
ALBERTO TORRADO
Chairman of the Alsea Board
of Directors
FERNANDO GONZÁLEZ
Alsea CEO
April 2022
14
ar alsea 2021 Sustainability / ESG Model
GRI 2-28, 2-22, 2-29
SUSTAINABILITY
AT ALSEA
Environmental, Social and Corporate Governance Model
Our reason for being is to deliver
experiences full of flavor to our
customers, creating a positive impact on
our employees, the environment and the
communities we serve.
At Alsea, we consistently strive for
economic prosperity that promotes human
well-being and social equity, significantly
reducing the environmental risks
generated by our operation.
Our strategy is based on three pillars
underpinned by our Corporate Governance
as a transversal focal point.
CORPORATE GOVERNANCE
It guides the Company’s course and strategic decisions,
ensures management’s transparency, drives the coexis-
tence of our values and guarantees our purpose.
GROWTH
It includes all aspects of our business operation with a
clear focus on our customers’ preferences and needs.
It promotes the transparency of our products through
responsible labeling and advertising practices inside and
outside our restaurants.
DEVELOPMENT
It combines the work we do for people: our team and the
community.
It promotes our employees’ comprehensive development,
improving conditions to guarantee a fair, inclusive, di-
verse, dignified and safe work environment so they can
harmonize their career and personal lives.
It seeks to ensure food security for vulnerable communities
and promotes human development through initiatives that
favor education and employability.
BALANCE
It drives and promotes care for the environment through
the efficient use of resources: energy, water, supplies
and waste.
15
SUSTAINABILITYar alsea 2021
Sustainability / Sustainability Management
GRI 2-12, 2-13, 2-14, 2-16, 2-22, 2-28, 2-29
SUSTAINABILITY
MANAGEMENT
We established three levels of operation to meet our sus-
tainability goals and create shared value:
1. GOVERNMENT LEVEL
It comprises the Company’s Board of Directors, in charge
of defining the sustainability strategy and supervising
compliance with the established activities and initiatives.
The Board delegates the responsibility of managing the
organization’s impacts on economic, environmental and
social issues to its management team, whose function
is to give an account of their actions at the quarterly
Regular General Meetings.
2. STRATEGIC LEVEL
It is responsible for identifying surrounding and stake-
holder needs and proposing initiatives that respond to
concerns related to social, economic, environmental, and
business ethics.
COMMISSIONS AND PRIORITY ISSUES
Responsible consumption
• Nutritional communication
• Food safety & health
• Sustainable consumption
Quality of life
• Job security
• Health and well-being to boost productivity
• Culture of diversity and inclusion in the workplace
• Financial well-being
Environment
• Energía
• Agua
• Insumos
• Residuos
Community development
• Fighting against hunger
• Education and employability
• Culture
3. OPERATIONAL LEVEL
It comprises four commissions created to support the exe-
cution of initiatives based on the priorities established.
This Model is managed locally and globally to align po-
licies and strategies with the requirements specific to
each region.
We also rely on international guidelines and standards to
promote initiatives that respond to the challenges of the
Global Sustainability Agenda:
• We received a Corporate Social Responsibility award
from the Mexican Center for Philanthropy (CEMEFI)
for the tenth year running.
• Since 2011, we have adhered to the ten principles of
the UN Global Compact to respond to the Sustainable
Development Goals.
• We have been listed on the Sustainable IPC of the
Mexican Stock Exchange since 2013.
• We have been listed on the Dow Jones Sustainability
Index since 2018.
OBJECTIVES
OF OUR SUSTAINABILITY
STRATEGY
1
Identify the risks and
opportunities inherent
to our operation.
2
Create initiatives that
contribute to generating
positive economic, social and
environmental impacts.
3
Measure and monitor
the progress of
established initiatives.
4
Provide clarity and
transparency in
sustainability processes.
16
ar alsea 2021 Sustainability / Materiality
GRI 2-29, 3-1, 3-2, 3-3
ALSEA
MATERIALITY
In 2020, we updated our materiality
analysis to generate a positive impact
in terms of sustainability, promoting
reflection and permeating corporate
responsibility, with special attention
to the needs of the groups with whom
we interact.
Integrating these expectations, demands and concerns
improves the quality of the information we use to make
better decisions. We updated the study under the fra-
mework of our four strategic commissions: Responsible
Consumption, Quality of Life, Environment and Com-
munity Development, integrated into the three pillars
of our renewed Sustainability Strategy.
Aspects such as our corporate philosophy, identification
of business risks and opportunities, strategic plan and
global challenges were evaluated in relation to our stake-
holders’ expectations, resulting in a list of material issues
that impact our performance as a Company.
)
S
R
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D
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K
A
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S
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22
5
INTERNAL PERSPECTIVE (ALSEA MANAGEMENT)
GROWTH
1. Business strategy
2. Preferences, Value and Brand Loyalty
3. Responsible Digitization
4. Responsible Sourcing
5. Food waste
6. Customer’s well-being
7. Food Quality & Safety
DEVELOPMENT
8. Talent Management
9. Equality, Diversity and Inclusion
10. Culture and Organizational Climate
11. Employee Training
12. Human Rights
13. Health & Security
14. Community and Philanthropy
15. Culture and Social Commitment
16. Local Impact of Operations
BALANCE
17. Water
18. Energy and Emissions
19. Waste and Pollution
20. Climate Strategy
CORPORATE
GOVERNANCE
21. Ethics and Compliance
22. Corporate Governance
23. Policies and Regulation
24. Risk Management and Social
Responsibility Management
25. Communication and Transparency
26. Stakeholder Relations
27. Information Security and Privacy
17
ar alsea 2021
Sustainability / Stakeholders
GRI 2-29, 207-3
OUR STAKEHOLDERS
At Alsea, we are fully transparent
with our stakeholders, providing clear
and timely information on Corporate
Governance, economic, social, and
environmental matters.
For Alsea, the most important thing is to deliver happiness
and experiences full of flavor. Hence, we have the best
talent who shares our vision and the pride of belonging
to this Company to achieve this goal.
We believe that a culture based on high ethical standards
allows us to build a healthy work environment.
EMPLOYEES
• Internal newsletters
• Communication boards
• Workplace
• Messages from the CEO
• Internal communication campaigns
• Screens
• Annual report
• Email and website
• Live and remote events and conventions
• Monthly newsletter
• Correct line
INVESTOR PARTNERS
• Shareholders’ meeting
• Results report
• Phone conversations
• Annual report
• Email and website
• Meetings
• Live and remote meetings
• Investor and Analysts Days
• Sending relevant communications
• Monthly newsletter
• Correct line
CUSTOMERS
• Communication in restaurants
• Social media
• Mass media
• Annual report
• Email and website
• Communication
campaigns
• Marketing campaigns
• Digital apps
• Loyalty programs
• Monthly newsletter
• Correct line
Clear and timely
communications reinforce
trust in the Company
GOVERNMENT
• Participation in events
• Reports
• Meetings
• Annual report
• Email and website
• Phone calls
• Official announcements
• Monthly newsletter
• Correct line
COMMUNITY
• Evaluation visits
• Participatory diagnoses
• Work meetings
• Control and reporting meetings
• Annual report
• Email and website
• Participation in forums
• Live and remote events
• Social media
• Monthly newsletter
• Correct line
SUPPLIERS
• Visits
• Annual report
• Email and website
• Monthly newsletter
• Phone calls
• Monthly newsletter
• Correct line
NGOs
• Evaluation visits
• Participatory diagnoses
• Work meetings
• Control and reporting meetings
• Annual report
• Email and website
• Participation in forums and events
• Monthly newsletter
• Correct line
MEDIA
• Social media
• Annual report
• Email and website
• Press releases
• Live and remote events and activations
• Shipping of special kits and product
• 1:1 meetings
• Interviews
• Monthly newsletter
• Correct line
18
ar alsea 2021
Growth
GROWTH
CREATING A BUSINESS MODEL
THAT CREATES VALUE
The strength of our customer-focused
business model, a philosophy with clear
values, a strong brand portfolio, and our
commitment to sustainable development
allow us to position ourselves as a
leading company in our sector.
19
GROWTHar alsea 2021 Growth / Supply Chain
GRI 2-6
SUPPLY
CHAIN
One of our primary commitments is to
offer products and services that exceed
customer expectations.
To achieve this, we maintain strict
control of our supply chain, from
strategic planning and supplier
selection to in-restaurant services and
home delivery.
This value chain managed internally in Mexico and externally
in South America and Europe, works in coordination with
a support department to optimize and ensure the sustaina-
bility of our processes. We promote initiatives in terms of
energy efficiency, actions against climate change, proper
management and efficient consumption of resources, as
well as responsible waste management.
Thus, our Code of Ethics and the Global Purchasing Policy
offer guidelines to minimize risk in each process. For this,
we establish solid relationships with our suppliers, based
on transparency and mutual trust, with alliances centered
on sustainable management.
20
ar alsea 2021 Growth / Supply Chain
GRI 2-6
QUALITY
Protects our customers’
health and our brand
image and value.
MANUFACTURE
Makes our products
(pizza dough, bread,
buns, soups, etc.)
LOGISTICS AND
DISTRIBUTION
Takes delivery, stocks and
transports orders to stores
HR, FINANCE AND
TECHNOLOGY
Provides full-time support
to our entire value chain
SECURITY
Identifies, controls and corrects
all aspects that could represent
operational or labor risks.
Seven synchronous
processes to bring the
necessary supplies to each
store on time
PROCUREMENT
Selects and develops
supply sources and
approves suppliers.
PLANNING AND
SUPPLY
Organizes the
phases of the chain,
guaranteeing its
effectiveness.
STRATEGIC
PILLARS
To be the best foodservice logistics
operator in Mexico.
To have a highly professional,
upright and committed team.
To exceed our customers’ and
investors’ expectations.
To care for the environment and
quality of life of our employees.
21
ar alsea 2021 Growth / Supply Chain
GRI 2-6
We use planning to
organize all phases of
the chain to ensure the
supply of products and
the fulfillment of each
process on time.
PLANNING
In 2021, despite global health restrictions, the work done
by our supply chain and proper decision-making allowed
us to achieve 99.1% of InStock: our best result in re-
cent years. We continue to consolidate our collaborative
processes with the brands, which led us to achieve a
forecast assertiveness of over 94%. We managed our
inventories by promoting “A” products and supplies with
a risk of shortages, thereby reducing inventory closing
by two days and increasing rotation compared to 2020.
We maintained our input purification process, reducing
our catalog of active codes by an average of 20% against
our prior year’s totals.
PURCHASING
This Department is responsible for ensuring the best
supply network for goods and services, generating sy-
nergies and critical mass between brands and countries.
During the last year, we focused on containing inflation
and guaranteeing supply through early negotiations with
suppliers, prioritizing local development and dual sourcing.
Our Global Purchasing Policy establishes the principles
that govern our business relations based on respect, pro-
fessionalism, and mutual benefit to guarantee the best
market conditions.
With this we seek to promote healthy competition with
equal opportunity for all.
22
ar alsea 2021 Growth / Supply Chain
GRI 2-6
Supplier Approval
Our supplier approval procedure considers supply and ser-
vice facilitators that influence our products’ quality and
food safety.
Supplier Audits
To strengthen compliance with the requirements established
in terms of health and food safety, we audit suppliers to
verify the quality management systems in their facilities
and processes.
The franchises also apply commercial criteria and ensu-
re adherence to the operating protocols established for
each brand.
In order to guarantee the quality and traceability of raw
materials throughout the value chain, as well as compliance
with our Quality and Food Safety Policy, we require that all
our suppliers have some type of certification recognized
by the Global Food Safety Initiative (GFSI).
For suppliers in the process of being certified, conditional
approval is granted as long as they comply with manu-
facturing good practices and have an Analysis of Critical
Control Points (APCC) system certified by a third party.
In 2021, due to the pandemic, our supplier activities conti-
nued to focus on auditing the most critical or new suppliers
and strictly monitoring the performance of current suppliers,
to prevent quality and food safety incidents.
Our Global Purchasing Policy, approval procedures, risk
management and supplier audits allow us to extend our
health and safety commitments to the entire supply chain.
Raw materials and key suppliers
Alsea Mexico has 3,304 suppliers representing more than
MXN 16 billion in spending; 83% are Mexican,1 and 17%
are international,2 while 12% are food and raw material
suppliers, with the remaining 88% providing other types of
supplies and services. In Spain, we have 3,515 suppliers
representing more than MXN 7 billion in spending; 77%
are of national origin3 and 23% are international.4
SUPPLIERS 2020
DOMESTIC
INTERNATIONAL
Mexico
Chile
Argentina and Uruguay
Spain
82.00%
93.00%
88.20%
96.00%
18.00%
7.00%
11.8%
4.00%
Foreign Trade
Ensures the proper operation of the export and import
of products, goods, raw materials, and finished products
according to each country’s regulations. Despite the global
supply chain crisis, we closed our import costs 2% below
the prior year.
1 Suppliers residing in Mexico
2 Suppliers outside of Mexico
3 Suppliers residing in Spain
4 Suppliers outside of Spain
23
ar alsea 2021 Growth / Supply Chain
GRI 2-6
We promote projects to
improve the efficiency
of production lines
with best practices and
execution criteria.
MANUFACTURE
Our Manufacturing Department is responsible for produ-
cing quality products that are the first purchase option
for Alsea brands and third parties in the following cate-
gories: fresh dough and par-bake for pizza, bread and
buns, pastries, sandwiches, soups, sauces, cooked dishes
and different cuts of meat. In 2021, we focused on ensu-
ring our Company’s profits and optimizing operations to
share best practices and standardize execution criteria.
We also continued to train and certify personnel in their
different activities.
This year, we added 31 new products to meet our cus-
tomers’ needs and exceed their expectations.
QUALITY
This Department is responsible for protecting the health
of our customers, with high standards of excellence for
our products, from their design to their consumption.
In 2021, we applied for Social Responsibility Certification
and continued our efforts to reduce safety risks, resulting
in a 12.6% decrease in consumer complaints vs. 2020
and 37% vs. 2019.
24
ar alsea 2021 Growth / Supply Chain
GRI 2-6
The Logistics and Distribution
Department is responsible for
receiving, supplying, shipping
and transporting brand orders
to restaurants to guarantee our
service and ensure an amazing
customer experience.
LOGISTICS AND DISTRIBUTION
One of the most relevant achievements in terms of dis-
tribution was the implementation of a program to reduce
our routes by 6%.
In Mexico, DIA (Distribuidora e Importadora Alsea) operates
a vehicle maintenance department in each distribution
center that services 213 units nationwide, providing an
average of 750 services per month. It provides preven-
tive and corrective maintenance, thermos and bodywork
repairs, and cleaning and sanitization services.
We have ten distribution centers in strategic areas to ensure
the supply and distribution of products to our establishments
in Mexico, Colombia, Argentina, Chile and Uruguay.
On the other hand, Alsea Europe operates a centralized
purchasing system for all its geographical points. Its supply
chain is managed by two logistics operators responsible
for everything from purchasing merchandise to distribution
in the centers. In order to guarantee compliance with the
required specifications, the process is verified by Alsea,
which also plays a mediating role between operators,
centers and departments in ensuring the efficient reso-
lution of incidents.
395
annual routes,
on average
3,400
supplier SKUs
delivered to the
Distribution
Centers
25
ar alsea 2021 Growth / Supply Chain
GRI 2-6
Alsea Operations Center
AOC
The Alsea Operations Center (AOC) integrates the su-
pply chain.
It makes dough, bread and buns, sandwiches, processed
foods and cuts of meat. It is designed to support our
growth plans, thanks to its state-of-the-art systems and
technology that ensure the timely delivery of weekly su-
pplies to more than 1,400 stores.
7
1
0
2
,
s
t
n
i
o
p
e
l
a
s
f
o
252cities
12.6M+
km traveled
733,971
395annual routes, on average
boxes delivered
3,753
deliveries
Mexico’s weekly distribution figures.
26
ar alsea 2021
Growth / Supply Chain
GRI 2-6
HUMAN RESOURCES,
FINANCE AND TECHNOLOGY
These are strategic departments that contribute by
providing support and ensuring the proper operation
of their activities.
Today, the focus on human capital at Alsea is one of
our top priorities since employees are the engine that
allows us to ensure compliance with the Company’s
long-term goals.
The Finance Department, for its part, is responsible for
ensuring the Company’s sound financial management.
Its main functions include the preparation of the annual
budget in line with the established growth targets and
implementing financing and investment strategies. It is
also in charge of our investor relations, responding to the
market’s concerns about business outlooks.
The Technology Department is responsible for imple-
menting innovative solutions that integrate all business
functions while also contributing to creating the best om-
nichannel experience for our customers.
SAFETY & SECURITY
We recognize the value of our employees and, therefore,
seek to provide them with a workplace that nurtures their
professional and human growth while offering them a
safe development environment.
We continued to work on the safety culture, reinforcing
training programs and analyzing risks in each of the
Supply Chain operations, which allowed us to identify
our potential dangers and implement the appropriate
mitigation measures.
As a result, we passed the inspections carried out in our
four Distribution Centers throughout the year.
This year, we obtained a re-certification from Wal-Mart
after our SEDEX Members Ethical Trade Audit (SMETA)
on safety and social responsibility.
0.99
LTIR (Lost Time
Injury Rate)
27
ar alsea 2021 Growth / Supply Chain
GRI 2-6
Our operation
by the numbers
s
r
o
t
a
c
i
d
n
I
e
c
i
v
r
e
S
e
v
i
t
a
l
u
m
u
C
t
e
g
r
a
t
%
8
9
%
0
1
9
9
k
c
o
t
S
n
I
.
.
s
v
%
2
8
6
9
t
e
g
r
a
t
e
m
i
T
%
6
n
9
O
.
s
v
.
%
)
l
l
u
F
n
5
i
e
m
9
i
t
n
o
(
5
F
I
9
T
O
.
t
e
g
r
a
t
%
1
3
9
.
.
s
v
-23%total complaints
from stores and
restaurants vs. 2020
-57%
waste
vs. 2020
213
leaders
trained
1,917
hours of training
by the Effective Impact
Leadership (LIE) program
28
ar alsea 2021
Growth / Supply Chain
GRI 2-6
FOOD QUALITY AND
SAFETY
We are delighted to be part of the lives
of our customers: in each dish we serve,
in each pizza delivered and in each cup
of coffee shared with friends. Therefore,
our commitment to food safety is a
fundamental aspect that encompasses
every process involved in our operation.
Alsea Mexico has the Alsea Comprehensive Safety and
Quality Management System (SIGICA) that establishes
the procedures to guarantee food safety and the best qua-
lity conditions for the food we serve in our restaurants.
Our Quality and Food Safety Policy reflects the com-
mitments made by all business units, brands, franchises
and suppliers.
We provide all employees with a food quality training plan
focused on food quality and safety and Official Mexican
Standard NOM 251 (hygiene practices for processing
food, beverages, or food supplements). This year we
trained 100% of the employees working for our brands
in Mexico.
The Supply Chain Operations Department controls each
of its links that comply with the set of food production
safety and quality standards recognized by the Global
Food Safety Initiative (GFSI). This year, all four Distribu-
tion Centers in Mexico obtained their second SQF (Safe
Quality Food) certification, level II, which confirms that
our SIGICA is at the level of the highest internationally
recognized qualifications.
How do we guarantee
food safety?
SUPPLIES
We follow rigorous procurement
and auditing processes to ensure
the selection of high-quality raw
materials.
CONSERVATION
We have traceability processes in our cold
chain to ensure that food is protected and
distributed at the ideal temperature to
preserve its flavor and nutritional values.
PREPARATION
Our dish manufacturing plants are
engineered under strict design and
construction guidelines and implement
cleaning and sanitation controls in each
phase of the process.
SERVICE
Our restaurant service protocols
follow the procedures to take delivery
and store supplies, food preparation,
personal hygiene, and facility
maintenance.
29
ar alsea 2021 Growth / Supply Chain
GRI 2-6
RESPONSIBLE CONSUMPTION
Committed to the health of our customers, we incorpo-
rate healthy alternatives in all our menus to satisfy our
consumers’ lifestyles and provide nutritional information
that allows them to make better choices based on their
preferences.
As a result, Alsea Cono Sur and Burger King Argentina
were recognized by APSAL, the Association of Health
and Food Professionals, in the LATAM Corporate Social
Responsibility and Healthy Menu categories, respectively.
This achievement that reflects the daily efforts made by
our employees fills us with pride and satisfaction.
30
ar alsea 2021 Growth / Supply Chain
GRI 2-6
HOW,
WHEN
AND WHERE
OUR CUSTOMERS WANT...
Customers are our reason for being, and
all our decisions are focused on them.
Therefore, we have pledged to listen
to them and meet their needs in order
to maintain their trust and continue
creating experiences full of flavor that
reaffirm our leadership position.
Thanks to the acceleration of technological advances and
the growing market demand to adopt new ways of inte-
racting with your favorite brands, digitization is present in
practically all of our processes.
Knowing our customers is accompanying their experience
through our brands and platforms to offer them the right
product in the right channel and at the right time.
31
ar alsea 2021 Growth / Supply Chain
GRI 2-6
DIGITAL
PLATFORMS
We have a User Experience Department (CX/UX/UI) cen-
tered on understanding our customers before and while
creating our digital strategies to learn about their needs and
expectations through processes such as design thinking.
This information obtained from our customers is proces-
sed by different artificial intelligence and machine learning
technology platforms that strictly adhere to current data
privacy and protection regulations.
Our goal is for digital platforms to become the Alsea lin-
chpin to a successful omnichannel transformation, where
customers can interact throughout the entire universe of
options providing a comprehensive digital experience.
MOBILE APPS
Omnichannel
AGGREGATORS
Sale and external logistics
E-COMMERCE
Online food ordering
and delivery website
platforms
INNOVATION
New channels
WhatsApp, Teams
LOYALTY
PROGRAMS
Single- and multi-brands
BACK-END
Entire ecosystem
interactions
32
ANALYTICS
Data ecosystem,
dashboard
ar alsea 2021 Growth / Supply Chain
GRI 2-6
DIGITAL
CHANNELS
OWN
CHANNELS
Wow+ App
• Check-In (offline)
• Delivery
• Take Out
• WOW Points
Starbucks
Rewards App
• Car Pick-up
• Pick-up
• Delivery
• In-App Payment
Vips
• Loyalty Card
(TDL)
Domino’s OLO
• Loyalty
• Delivery
• WOW+ mixed payment
Club Vips (Spain)
• Pay&Go
• Take Out
• Promotions
App Foster's
Hollywood
• Delivery
• Take Out
• Reservations
Ecommerce
(Multi-brand)
• Take Out
• Delivery
CallCenter
(Multi-brand)
• Take Out
• Delivery
3RD PARTY
Aggregators
(Multi-brand)
• Offer Integrations
• Orders
NEW
CHANNELS
WhatsApp
(Multi-brand)
• Delivery
Teams
(Multi-brand)
• Delivery
OTHER
INDUSTRIES
Alliances
Exclusive specials
33
ar alsea 2021 Growth / Supply Chain
GRI 2-6
LOYALTY
PROGRAMS
We seek to create a solid community
with our customers and permanently
promote our frequent user programs
and initiatives to maintain and
increase their loyalty.
MEXICO WOW+
This year, we relaunched Wow+ as an omnichannel loyal-
ty platform, evolving the technology and end-to-end user
experience. With this application, we promote loyalty with
the different brands through promotions, points earned for
redemption during visits to other Alsea Mexico stores, and
the integration of the different sales channels in the same
place. The application allows us to collect information about
the habits and preferences of our customers, to personalize
and encourage their consumption of all our brands.
Some significant achievements include:
• Unique customer creation
• Implementation of a new loyalty platform and CRM
• Implementation of Google Analytics 4
• Creation of the Data Strategy Department
The efforts made to improve this program continuously
have resulted in a considerable increase in customer loyalty
in the last year. We now have over 800,000 active users
and more than 2 million members, representing 6.7% of
total sales in Mexico.
2.5
million
members
ON OUR WOW+
OMNICHANNEL PLATFORM
34
ar alsea 2021 Growth / Supply Chain
GRI 2-6
STARBUCKS REWARDS
This initiative seeks to retain Starbucks customers by
earning stars they can exchange for rewards based on
their preferences and membership levels. With this, in
2021, we served more than 20 million orders with over
MXN 2 billion in sales.
We implemented Starbucks Rewards in Mexico, a 100%
omnichannel mobile app that allows users to consult the
menu, order through different channels (Delivery, Pick-
up & Car Pick-up), pay from a mobile device, reload,
check their balances, and enjoy access to personalized
promotions. In 2022, we plan to launch this initiative in
the other geographies where we have a presence.
OLO (ONLINE ORDERING)
AT DOMINO’S
This is Domino’s online shopping experience where cus-
tomers create their favorite pizza through a step-by-step
educational process beginning with choosing their product
through the delivery of the same. Thanks to our techno-
logical developments, Domino’s online orders have grown
by more than 32% compared to 2020, with more than 10
million orders placed through our App and website per year.
32%+
orders
vs. 2020
CLUB VIPS
We offer Club VIPS for the Gino’s, Starbucks, TGI Fridays
and Vips brands. It is a loyalty program that allows mem-
bers to register through the App or website to receive
promotions and earn Vips money.
In 2021, we improved corporate communication proces-
ses through this App that allows members to read about
different aspects of the brand and Company, such as its
purpose and values. The App also allows consumers to
read about allergens in brand products, place orders for
pick-up at restaurants and reserve a table. We currently
have close to 1.8 million members.
FOSTERIANS
Foster’s Hollywood features our online Fosterians Loyalty
app members can use to earn points during visits that they
can exchange for special promotions.
Customers can use this convenient App to identify them-
selves, redeem points for promotions, check the menu,
access information of interest about restaurants, place or-
ders online and check allergens. We have also integrated
an e-commerce function into the App. There are currently
2.6 million Fosterian members.
35
ar alsea 2021 Growth / Omnichannels
GRI 2-6, 201-1
o
c
i
x
e
M
n
i
y
r
e
v
i
l
e
D
11.9 M
orders
delivered
1.1orders
per second
l
e
n
n
a
h
c
i
n
m
O
n
o
i
t
a
v
o
n
n
I
d
n
a
+16 channels
for the sale of any brand
website, App, aggregators, marketplaces, etc.
12.7K
orders
processed
through WhatsApp
p Foster's Hollywood
a
Delivery
Take Out
Reservations
Vips (Spain)
Pay&Go
Promotions
10.5 M
orders
placed through
the App and website
42%
sales
through digital channels
MXN2.1
MM
sales
in App
7.1 k
transactions
daily on average
Car Pickup
Pickup
Delivery
2.5 Mregistered
customers
5.6
frequency
vs. 2021
64 k
check-ins
36
ar alsea 2021
Growth
GRI 2-6
We contribute to
generating a change in
favor of animal welfare
FREE-RANGE CHICKEN EGGS
At Alsea, we support the consumption of animal cruel-
ty-free products and local suppliers to promote the
growth and development of the communities where we
have a presence.
Thus, in 2021 we continued to promote our poultry farm
development project in the State of Veracruz, Mexico. We
conceive this commitment from a comprehensive pers-
pective that begins with providing training on cage-free
egg production, poultry management, financial educa-
tion, and health and safety at work while including the
responsibility of following up and monitoring to provide
feedback to the participating communities.
This initiative has benefited 99 families that are pro-
ducing cage-free chicken eggs for sale at the local and
regional levels. This is a promising project, as one farm
in Veracruz expects to produce approximately 4,000
eggs per month, which means more than 40,000 eggs
per year. This benefit extends to the entire community
since the consumption of this protein favors a varied
and adequate diet.
On the other hand, on the coast of Oaxaca, we began
with a similar model and thanks to the support and aid
received from ONG Fondo para la Paz I.A.P., the outlook
for the highest production season is around 2,200 eggs
per month.
We create practices
to improve positive
animal welfare
We promote family
microenterprises
We promote a healthy,
nutritious and adequate
diet in the communities
37
ar alsea 2021 DEVELOPMENT
WORKING TOGETHER
EFFORTS TO GENERATE WELL-BEING
At Alsea, we recognize the value of people, especially
our employees. We enjoy doing what we do best. We
have fun, we learn, overcome challenges and grow.
We are happy and convey that happiness. Therefore,
in addition to promoting their comprehensive
development through decent employment, we are
committed to guaranteeing a fair, inclusive, diverse
and safe work environment.
This vision constitutes a value that sets us apart as a
Company since we believe that having talented, trained,
and happy team members committed to the Company
and its values is the only way to offer our customers an
experience that exceeds their expectations.
38
DEVELOPMENTar alsea 2021
Development / Alsea Team
GRI 2-7
THE ALSEA
TEAM
33,920
women
36,907
men
FULL-TIME
PART-TIME
49%
46%
51%
54%
indefinite duration
contract
98%
2%
seasonal
administrative
67,993operational
2,834
60,610
10,217
unionized
non-union
MEXICO
33,903
%
9
7
4
.
LATIN AMERICA
14,268
%
1
0
2
.
EUROPE
22,656
%
0
2
3
.
men
18,195
5,993
11,383
730
89
women
15,708
8,482
5,929
1,223
74
ages 18 to 29
ages 30 to 49
ages 50 to 59
over 60
men
6,414
5,398
958
53
5
women
7,854
6,478
1,323
40
13
men
12,298
women
10,358
4,120
6,284
552
1,342
5,654
3,916
673
115
Note: This includes the Alsea business units in Mexico, South America and Europe (Spain, Portugal, France
and the Netherlands) as the most relevant geographical locations with wholly-owned establishments.
39
ar alsea 2021 Development / Alsea Team
GRI 2-7
THE ALSEA
TEAM
33,903
3,345
3,021
7,755
147
21,254
304
932
166
M W
M W
M W M W M W
M W M W M W M W
operational % 51.4
44.7
55.4
33.3
37.0
57.0
39.0
55.3
43.0
51.0
51.8
42.8
39.0
52.0
45.0
48.0
33.0
63.0
administrative %
2.2
1.6
5.5
5.6
1.7
4.5
1.3
4.3
5.0
1.0
2.6
2.6
1.0
2.0
4.0
3.0
2.0
2.0
Contracts
ages 18 to 29
739 7,916 1,045
633 1,363 1,692
696
ages 30 to 49
212 2,237
267
133
ages 50 to 59
191
215
over 60
7
7
11
-
3
-
10
5
3
97
4
4
17
-
-
948
14
-
-
-
-
-
-
24 6,525
1
-
-
339
101
10
-
-
74
6
62
13
-
-
116
25
1
-
175
11
2
-
290
15
-
-
51
20
-
-
137
15
-
-
40
ar alsea 2021 Development / Talent Development
GRI 404-2
TALENT
DEVELOPMENT
In a business like ours,
happiness is part
of every detail.
Our talent, representing an
interdisciplinary and multicultural team,
is at the heart of everything we do. Alsea
has more than 70,000 employees working
in the 11 countries where we have a
presence, all committed to delivering
happiness and experiences full of flavor.
At Alsea, we have fully reactivated our operations at 100%
as the economic recovery has taken a good course. In
2021, upon reopening our operations, we resumed our
contracting rhythm, maintaining the COVID-19 protocols
and prevention measures. We continue to promote commu-
nication and awareness campaigns for the team members,
provide kits for our employees’ kids going back to school,
and aid through the emergency relief fund.
CONTRACTING
Our hiring processes and career plan are based on equal
opportunity. We promote the transversal growth of our
employees; that is, everyone has the opportunity to work
for any of our brands and locations. To facilitate this
practice, we offer a variety of training resources so all
employees can have access to them, develop their skills
and nurture their growth.
Once an employee joins the Alsea team,
we pledge to instill our philosophy,
values and policies and adhere to our
Code of Ethics.
A total of 98% of our employees worked under indefinite
duration contracts in 2021, as part of our policy to su-
pport quality employment based on respect, equality and
relationships of trust in response to each department’s
specific needs.
We continue to strengthen our “Join” program that uses
AI to manage our selection process in Mexico and Latin
America effectively.
This tool helped reduce job vacancy times because the
chatbot processes and filters our candidates’ information
before sending them to the corresponding managers.
50%
of managerial-
level vacancies
COVERED BY
INTERNAL TALENT
%
3
3
l
a
n
o
i
g
e
r
%
5
7
t
c
i
r
t
s
i
d
41
ar alsea 2021
Development / Talent Development
GRI 404-1, 404-2
TRAINING
We have a Corporate Training Strategy to work side-by-si-
de with our employees, beginning with their integration
process while improving their operational and managerial
skills, supporting their growth, fostering commitment and
a sense of belonging to the Alsea Culture and its brands.
The health crisis prompted us to accelerate certain digi-
tization plans, so today, we train our employees virtually,
with great advantages:
• The establishment of a single talent training and
management platform
• The creation of a standard training model, unifying
content and schedules
• Our adaptation to online training and content digitization
2,684,611
hours of global training
focused on leadership development,
business management and Alsea’s
seven competencies
ONBOARDING
Immersion in the work culture, values,
principles and policies. Mandatory tra-
ining for all professionals joining the
Company.
ALSEA MEXICO CORPORATE TRAINING
TRATEGY
CONTINUOUS TRAINING
Specific training activities by brand and
competence level. Our transversal pro-
grams allow employees to train in di-
fferent brands and activities, thereby
expanding their employment outlooks.
SUPPORT
Training offered to prepare our employees
in their promotion processes to different
levels of responsibility in the Company.
42
ar alsea 2021 Development / Talent Development
GRI 404-2
Focus on Leadership programs
Owner Manager, Top Gun Training:
Training Leaders for Domino’s,
Leader of Mexican Cuisine People,
PF Chang’s MIT Program.
At Burger King, we focused
our training on Food
Safety and Critical
Factors.
Grants for 83 employees,
at the undergraduate and high school
levels. This initiative allows us to impact
their development and the progress of their
teams directly.
We guarantee operation and
training continuity
based on career plans through the Train the Trainers
and KMIT programs at The Cheesecake Factory and
the Vips College programs.
Distrital Coach, taught by the ITESM, involves all
regional district brand leaders. In addition to the training
on leadership skills, we complemented the program
with a 360° assessment so participants could see their
performance from different perspectives to design more
effective development plans. Upon completion, they
received their certification and presented their challenges
to the management team.
training
PROGRAMS
Dialogue between Operations and the
Support Center, with programs such as The Manager’s
Voice, where the CEO, Support Center Directors and Store and
Restaurant Managers discuss the needs and possible solutions to the
problems presented. The Leader to Leader program included
the participation of Alsea managers in a virtual experience, sharing their
experience with employees in Mexico, Latin America and Spain.
Mentoring and Sponsorship, support
programs for our employees where the most
experienced and responsible leaders share the most
important lessons learned during their careers and best
practices, challenges, and achievements.
Alsea College, is an online platform
we use to reinforce the self-development of
all employees.
750+ e-Learning courses
and 600+ lectures available for
reading 24/7.
Standardization of restaurant processes across Mexico
through our manager certification program: Elevating My Approach at Starbucks
and Italiani’s La Grandezza Operativa, Cucina, Servizio y Gestione program
focused on PASTA, PIZZA AND WINE that laid the foundation to refresh the brand and
welcome the new work plan.
Alsea College
Operations,
is a virtual platform
specialized in content for
our employees working in the Operations
Center. This space gives them access to
management courses and skills specific to
their brands. As of June, all management
teams had access to more than 750 self-
learning courses focused on different skills
to complement their training.
These programs have been
vital to ensuring our teams’
development and growth,
enhancing their leadership
and talent and impacting
sales and service indicators.
43
ar alsea 2021 Development / Talent Development
GRI 404-2
Giving our best is part of our culture.
We have created a continuous and
progressive personal development model
to permeate this passion for service
across the team.
10% FORMAL TRAINING
Internal and external, face-to-face and
e-learning courses through a platform that
allows employees to learn at their own
pace, from anywhere and anytime, consid-
ering their Individual Development Plans.
ALSEA
DEVELOPMENT MODEL
70:20:10
This model facilitates a flexible self-learning and contin-
uous training culture employees can share. It is divided
into three segments that contemplate different forms
of learning.
It includes everyone, from analysts to managers and is
structured in three segments representing the training
mode percentage.
Employees have access to video lessons and virtual re-
ality, where they experience the typical operation of our
brands and case studies that promote critical thinking.
20% SHARED TRAINING
Learning occurs through collaborative work
with peers, leaders and mentors, either infor-
mally or through programs such as Mentoring,
Feedback or From Leader to Leader.
70
% EXPERIENCES
Because practice is the best teacher, the
employees use activities they carry out in
their positions to perfect their skills, sup-
ported by courses that add value to their
career plans.
44
ar alsea 2021 Development / Talent Development
GRI 404-2, 404-3
EVALUATION PROCESSES
At Alsea, we evaluate our entire team of employees to
obtain information in two ways:
a. Learn about their levels of satisfaction and commit-
ment to the Company.
b. Determine each employee’s professional potential.
ECO survey
This year we applied the Treatment and Leadership survey
to all of our Support and Operation Center employees with
more than three months of seniority in Mexico (except Star-
bucks), Southern Cone and Colombia.
We obtained favorable results with 90% of employees who
would recommend Alsea and its brands as a good place to
work.
COUNTRY
PARTICIPATION %
SCORE
Mexico
Colombia
Argentina
Chile
Uruguay
71
78
74
71
90
4.12
4.04
3.85
4.15
4.15
76.8%average
participation
4.06/5
score
Alsea Leadership Index
At Alsea, we promote leaders with human sense who en-
courage their teams to develop their potential and put people
first. This year, we applied the Alsea Leadership Index
evaluation to top-level managers who perform self-as-
sessments. The results were then compared to the direct
reports’ evaluations of their leaders.
The 13 human qualities evaluation assesses honesty and
coherence, prioritization, balanced management, assertive
communication, openness and respect, clarity and manage-
ment of resources, support and teaching, employee devel-
opment, independence and trust, life-work balance, humility
and accessibility, and feedback and recognition.
These metrics provide valuable information favoring de-
cision-making processes to improve our performance,
promote productivity and participation to achieve growth
goals, take advantage of development opportunities and,
above all, fulfilling our purpose of delivering happiness and
experiences full of flavor to our consumers.
The results obtained from these evaluations provide infor-
mation about:
• Individual traits, csuch as skills, values, personality,
knowledge, experience, and work styles;
• Group characteristics, such as leadership, commu-
nication, work styles, interaction networks, and
• Organizational characteristics include climate,
culture, change, satisfaction, performance, and
quality of life.
Some of the main advantages of talent evaluations
include helping employees improve their performance
through feedback, establishing compensation policies,
and determining training and development needs.
45
ar alsea 2021 6,067
cemployees evaluated
by objectives
in Chile, Colombia,
Argentina, Uruguay,
Spain and Mexico
0
3
1
3
7
3
9
2
n
e
m
o
w
n
e
m
,
,
Development / Talent Development
GRI 404-2, 404-3
Individual performance
evaluations
Performance evaluations were applied to store and sup-
port center managers in all the regions where we have
a presence, including all employees, at 100%, in some
businesses.
In 2021, we conducted 1,905 performance evaluations
among 11% of staff members, down from the 10,875 eval-
uations conducted in 2019.
We ultimately met our goal of conducting close to 6,000
evaluations with a 99% completion rate, including all
Starbucks and Burger King employees across Argenti-
na’s entire operation. In 2022, we expect to evaluate all
employees working in Chile’s Casual and Burger King
segments.
Strengths Program
At Alsea, we are driven by our new vision to develop our em-
ployees, focusing on their strengths instead of weaknesses.
We strive to nurture “our talent” to learn how to increase
their effectiveness and turn them into a powerhouse.
The process begins by identifying their capabilities with the
Gallup CliftonStrengths assessment, followed by a group
coaching session to explain the traits to improve their per-
sonal development and professional growth.
We began to implement the program with store managers
to make them aware of this new culture and learn to devel-
op their strengths, permeating the knowledge to their work
teams.
1,648
employees evaluated through
calibration sessions
in Spain and Mexico
n
e
m
4
8
8
4
6
7
n
e
m
o
w
Working and learning is
a unique experience that
transforms our passion
into excellence and makes
our customers happy.
46
ar alsea 2021 Development / Diversity & inclusion
GRI 405-1, 406-1
DIVERSITY
& INCLUSION
As part of our values at Alsea, we
promote a culture of equality, diversity
and inclusion in the workplace, with a
special focus on priority service groups.
In line with our Diversity & Inclusion
and Human Rights Policies, we promote
respect for people, non-discrimination
and equal opportunity for all. These
guidelines apply to every aspect of labor
relations, from hiring and established
conditions to professional development
and remuneration.
Some of the 2021 initiatives were:
• McKinsey Alsea Mexico and LATAM “Women Matter”
study completed; the results will be delivered in March
2022
• UN Women Diagnosis
• Distinctive Éntrale 2021, for the efforts promoted
by Alsea day by day for the inclusion of people with
disabilities
303EMPLOYEES
with disabilities in Chile, Uruguay,
Spain and Mexico
330EMPLOYEES
in Mexico identified themselves as
being part of sexual diversity
5,208
EMPLOYEES
of the elderly were incorporated into
our workforce
CONDUCT GUIDELINES
We promote respectful and polite
behavior in dealing with other
people and developing a culture that
promotes dignity for all.
GENDER EQUALITY
We promote gender equality
regarding access to employment,
training, professional promotion and
working conditions.
DIVERSITY ON THE
BOARD OF DIRECTORS
We know that gender diversity
in our highest Governing Body
enriches decision-making.
NON-DISCRIMINATION
We make the best team because
we know that the greatest wealth
comes from our differences,
regardless of gender, culture,
religion, ethnic origin, social status
or sexual orientation.
INCLUSION IN THE
WORKPLACE
We implement programs to
integrate people with disabilities,
older adults and people who come
from vulnerable situations into
working life.
FLEXIBLE QUALITY OF
LIFE PLANS
We work with various flexible work
plans in each country to reconcile
work, family and personal life
through a better distribution of
effective working time.
2
WOMEN
are on the Board of Directors
47
ar alsea 2021 Development / Diversity & inclusion
GRI 401-2, 401-3, 405-1
GENDER
EQUALITY
A diverse team enhances
ideas, fosters creativity
and creates improved
solutions to the
challenges we face daily.
At Alsea, growth is for everyone, prioritizing their commit-
ment, dedication, talent and passion for serving.
We also encourage workplace conditions to ensure a work-
life balance for our employees through the implementation
of different measures, such as:
• Our Compensation Policy guarantees that the same
remuneration corresponds to women and men alike,
tasked with equivalent functions and responsibilities.
• We promote career plans and access to positions of
greater responsibility for our employees based on
merit and the required professional capacity.
• Flexible hours, as long as the job position allows
them
• Schedules adapted to daycare centers for profes-
sionals under justifying circumstances
• Rest on weekends and holidays for professionals
• We create selection mechanisms and procedures to
with children under three
include both genders in the applicant list.
• The possibility of transferring to a work center close
• We look for balanced representation in the different
decision-making bodies and at the different levels,
guaranteeing that women are offered equal opportu-
nities to participate in the process.
to home
1,371
Parental Rights
beneficiaries
3
n
n
8
e
e
m
m
7
9
o
9
3
w
48
ar alsea 2021 Development / Occupational health & safety
GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8
OCCUPATIONAL
HEALTH
& SAFETY
Protecting the personal safety of all
our employees and everyone who has
a relationship with Alsea is and will
always be our priority.
On this basis, we assume the
commitment to implement good
protection workplace and occupational
risk prevention practices.
Our Occupational Risk Prevention Policy establishes the
guidelines to achieve our occupational health and safety
goals and the conditions to implement actions to prevent
and monitor the associated risks.
We continue to work on our health and safety development
and communication efforts centered on instructing, rais-
ing awareness and providing employees with the needed
skills to maintain well-being in the workplace.
As a result, we focus on the following strategies:
• Preventive training
• Communications about opportunities for improvement
• Accident investigation
• Consulting and engaging our professionals
• Controls and updates to ensure continuous improve-
ment of our management system
We use our preventive visits system to conduct inter-
nal and external audits to quantify results, evaluate our
occupational risk prevention actions, identify areas for
improvement and propose corrective measures.
PREVENTIVE VISITS IN ALSEA EUROPE
TYPE OF PREVENTIVE VISIT
Risk assessments
Initial evaluations (openings)
Updated evaluations
External audit
Drills (own)
2021
281
26
255
52
5
In order to ensure control and the prevention of occu-
pational accidents and diseases, we continuously and
thoroughly monitor these incidents to determine their
causes and take the relevant corrective measures.
In compliance with Official Mexican Standard NOM-035
on the prevention of occupational accidents and diseas-
es, in Mexico, we conduct staff surveys at the Support
and Operations Centers to identify latent risks on time
and address the needs of employees, providing a positive
workplace and relations, organizational environment and
leadership ratings.
In 2021, we conducted this evaluation with two question-
naires among 30,937 employees measuring psychosocial
risk factors and severe traumatic events.
1 Applies to Alsea Europe
49
ar alsea 2021 Development / Occupational health & safety
GRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8
PROMOTION OF HEALTHY
LIFESTYLES
We continue promoting initiatives to support the well-being
of our people, such as healthy habits to lead an active
and healthy social life. We also worked with Starbucks
International to create the Emergency Relief Fund for op-
erational employees working for Alsea Mexico and South
America, with favorable results.
ALSEA EMERGENCY
SERVICE CENTER
At Alsea Mexico, we maintain our efforts to ensure com-
prehensive safety and security, serving 1,561 quick-service
restaurants in situations that could put the operation’s
safety and security at risk, providing support through a
technological platform integrating analog systems, IP and
GPRS, CCTV, and fire and intrusion alarms.
SOS VIPS
Our psychological support hotline is open to assist our
Vipsters 24/7, with help from Fundación Origen.
The service assists employees and their family members
through WhatsApp and a toll-free hotline. If necessary,
patients are referred to specialized institutions for face-
to-face support.
In Spain and Portugal, we continued to promote the “Orien-
ta” program providing social care to employees to improve
their well-being in aspects related to health, the economy,
education and housing, among others.
This year, we addressed these incidents through three
communication channels:
• A dedicated toll-free hotline
• Panic button activation
• Mobile app
In 2021, we attended:
310 high-impact incidents
339 customer impact incidents
7,206 events asking local authorities for help
1.1M
invested
in supporting employees
in Mexico
1,119
employees
supported
* Figures corresponding to Alsea Mexico at December 23, 2021.
50
ar alsea 2021 Development / Occupational health & safety
GRI 401-2
At Alsea, we focus on being the
best-paying employer in the sector,
with a comprehensive approach to
remuneration that promotes punctual
attendance, commitment to execution
and a service attitude. This approach
aims to attract and retain the best
talent, comply with each store’s
operating standards, and positively
impact our customers’ experience.
TOTAL
REMUNERATION
MODEL
FIXED COMPENSATION
• Base salary based on market
standards
• Wage scale by brand
• Annual update differentiated by
geographical area
VARIABLE COMPENSATION
• Review of variable incentive
systems
• The eligibility of variable incentives
is extended to all of our employees
at 100%
BENEFITS (emotional salary)
• Employee meals
• SOS contact
• Inter-brand approval of services and benefits that pro-
vide liquidity and facilitate talent exchanges
• Discount agreements based on each employee’s needs
• Preferential prices to acquire dental and optical plans
• 40% discount off Alsea brands
• A+ Day / Holidays
51
ar alsea 2021 Development / Occupational health & safety
GRI 403-4, 408-1, 409-1
INTERNAL
COMMUNICATIONS MEDIA
In 2020, we implemented the Workplace digital collabo-
ration platform as a space to promote internal communi-
cations that facilitate teamwork, promote direct dialogue
and streamline information exchange processes between
all the countries in which we have a presence.
An example of this is the meetings scheduled between
local managers and our global managers, which, in addi-
tion to generating high engagement rates, have contrib-
uted to ensuring open and efficient communications in a
comfortable and friendly environment for all participants.
45,000
employees
registered in Workplace
in Mexico and LATAM
76%
with active accounts
FREEDOM TO ASSOCIATE
Subject to local law, we respect and promote freedom
to associate as everyone’s right to form or join an orga-
nization that represents their interests.
In 2021, in Europe, we continued to integrate our employees
into a single collective agreement as in Spain and France,
which have covered all of their employees under this type
of agreement.
To achieve this in the rest of the geographies, we maintain
a constant social dialogue with the Legal Representation
of workers through specific committees that support the
consultation and participation processes with all parties
involved.
CHILD LABOR
Alsea does not permit hiring minors in any of our oper-
ations.
We guarantee compliance with this rule by asking appli-
cants to provide official documents to confirm that their
age corresponds to the minimum hiring age permitted by
current legislation.
We have not received reports about the breach of this rule.
FORCED LABOR
At Alsea, all of our employees work under freely given
consent. They are informed of the working conditions and
their responsibilities, schedules, rest times, vacation rights,
and benefits from the moment they are hired. They also
have total freedom to resign from their jobs at any time.
Thus, we categorically reject any type of forced labor.
52
ar alsea 2021 Development / Community support
GRI 203-1, 203-2, 413-1, 413-2
COMMUNITY
COMMITMENT
At Alsea, we contribute to sustainable
development and the interests of
society by assuming responsibility
for the direct and indirect impacts
produced by our activities.
Over 30 years ago, we began to establish
close community ties and implement
programs to fight food poverty and
promote their development and programs
to support education and employability
in all the countries where we have a
presence.
764,000+
meals served
by “It’s On Me” (Va por mi Cuenta) in Mexico
of in-kind donations
+50
NGOs supported
Figures corresponding to Alsea Mexico at December 31, 2021.
ia alsea 2021
53
Development / Mexico actions
GRI 203-1, 203-2, 413-1, 413-2
MEXICO
THE ALSEA FOUNDATION
Fundación Alsea, A.C. is our link with the community by
which we carry out actions to support the development
and well-being of communities, implementing programs to
promote food security and engaging in volunteer activities,
as well as financial and in-kind donations under different
lines of action:
Meals
We join forces with our different stakeholders to combat
food poverty through the “It’s On Me” Movement with the
slogan “No One Else Goes Hungry.”
Community Development
We foster community growth with productive projects
promoting their sustainability.
Education and Employability
To provide education and employment opportunities to
young people who need it most, we promote their devel-
opment through the “Integra” program.
MXN$50,254,559
in donations from Fundación Alsea in 2021
Community Development
MXN $4,681,620
9.3%
Education and Employabilityd
MXN $3,533.002
7.0%
Other Civil Associations
MXN $1,422,154
2.8%
Meals
MXN $39,085,783
77.8%
54
ar alsea 2021 Development / Mexico actions
GRI 203-1, 203-2, 413-1, 413-2
IT’S ON ME MOVEMENT
IN MEXICO
In 2012, Alsea created the “It’s On Me” Movement as a
coordinated effort with its brands, consumers, employees,
suppliers, society and stakeholders to guarantee nutritious
meals for vulnerable people in Mexico. The efforts are
implemented through children’s kitchens managed by
strategic partners such as Comedor Santa María A.C.,
Fondo para la Paz I.A.P., SEDAC (Servicio Educación y
Desarrollo a la Comunidad I.A.P.), Save the Children, and
Restauración Salud y Prosperidad A.C.
In 2021, we opened the first Food Center in Cancun, Quin-
tana Roo, which serves more than 500 people per day.
The new Food Center reflects how Fundación Alsea A.C.
and the It’s On Me Movement have changed their food
delivery processes after the pandemic.
This center is operated by the civil association Huellas de
Pan A.C. It has a vegetable garden, multipurpose room,
nutrition consultation office, a kitchen and a dining room
to respond to the needs caused by the pandemic.
MXN 39M+
invested in 2021
It’s On Me Movement
3 million
nutritious meals
served since 2012
6,000+
boys and girls
have access to nutritious food
every day
2,000+
families
directly benefited
14
soup kitchens
in operation
6,883
beneficiaries
3
7
5
8
3
3
7
5
1
2
3
8
2
4
n
e
h
c
t
i
K
,
,
r
a
g
o
H
n
u
r
o
P
n
e
r
d
l
i
h
C
e
h
t
e
v
a
S
p
u
o
S
a
i
r
a
M
a
t
n
a
S
n
a
P
e
d
s
a
l
l
e
u
H
55
ar alsea 2021
Development / Mexico actions
GRI 203-1, 203-2, 413-1, 413-2
OUR
BENEFICIARIES
14
children’s
dining
rooms
earning less than
MXN 30
per day per family to
cover all their needs at 100%
75% severe
food insecurity
environments of
violence,
insecurity
and loneliness
State of Mexico
Metepec
Ecatepec
Ecatepec Embajadas
Valle de Chalco
Ixtapaluca
Mexico City
Iztapalapa
Santa Úrsula
Golondrinas
Oaxaca
Nuevo León
Saltillo
Cancún
%
3
3
e
v
a
h
y
l
n
o
m
o
m
a
m
e
h
t
t
r
o
p
p
u
s
o
t
65%
of the recommended
daily intake
received in the
dining rooms and
kitchens
56
ar alsea 2021
Development / Mexico actions
GRI 203-1, 203-2, 413-1, 413-2
Dining room and soup kitchen
models
URBAN MODEL
9 SOUP KITCHENS
COMMUNITY MODEL
9 SOUP KITCHENS
SCHOOL MODEL
1 DINING ROOM
Partner
Comedor Santa María, A.C.
Fondo para la Paz, I.A.P.
Comedor Santa María A.C. y SEDAC,
I.A.P.
Capacity
Features
Locations
300 to 500 boys and girls.
Between 150 to 200 boys and girls. 740 boys and girls.
Human education, talks for
parents, social community project.
State of Mexico (Metepec,
Ecatepec, Ecatepec Embajadas,
Valle de Chalco), Mexico City
(Iztapalapa, Santa Úrsula,
Golondrinas), Nuevo León (García),
Coahuila (Saltillo).
Comprehensive and sustainable
design with rainwater harvesting,
drainage, a water treatment plant, a
dual water fountain, patsari wood-
saving stoves, an orchard, and LED
lighting.
Oaxaca (Santa Rosa, El Corozal),
San Luis Potosí (La Concepción).
It operates in a school, directly
impacting the performance of
minors in basic education.
State of Mexico (Ixtapaluca).
In order to support the most vulnerable groups, we main-
tain our community contribution programs, such as our
annual fundraising campaign that exceeded its 2021 goal.
Seeing our results fills us with pride; however, beyond
this sense of satisfaction, they motivate us to continue
fighting child hunger through partnerships with social
organizations we can work with to create synergies to
benefit the most vulnerable sectors.
MXN 44.6 M
Funds raised for It’s On Me in 2021
MXN 17.6 M
It’s On Me campaign
MXN 14.3 M
Product with a cause
MXN 12.1 M
Other partners It’s On Me
MXN 0.4 M
Employees campaign
57
ar alsea 2021 Development / Mexico actions
GRI 203-1, 203-2, 413-1, 413-2
10k+employees
belong to the Alsea
donors network
in Mexico
n
a
P
e
d
s
a
l
l
e
u
H
5
4
2
7,
1
r
a
g
o
H
n
u
r
o
P
4
2
8
7,
2
d
e
v
r
e
s
s
l
a
e
m
,
2
n
e
h
9
c
t
i
K
1
p
u
o
0
S
a
8
i
r
a
M
6
a
t
n
a
S
6
7
3
9
3
n
e
r
d
l
i
h
C
e
h
t
e
v
a
S
,
58
ar alsea 2021
Development / Mexico actions
GRI 203-1, 203-2, 413-1, 413-2
Learning gives us an
optimistic outlook.
INTEGRA
Is an initiative that aims to provide educational and employ-
ability opportunities to talented vulnerable young people,
benefited by Fundación Alsea A.C. and the Starbucks
Foundation.
The program gave MXN 7.8M to 19 organizations in Mexico,
Colombia, Argentina, Chile and Spain, supporting 4,500
people in need who face barriers to access education
and job opportunities.
Close to
4,500
beneficiaries
M
8
7
N
X
M
s
n
o
i
t
u
t
i
t
s
n
i
d
e
t
r
o
p
p
u
s
d
e
t
s
e
v
n
i
9
1
.
59
ar alsea 2021
Development / Latin america actions
GRI 203-1, 203-2, 413-1, 413-2
LATIN AMERICA
The strong results obtained in Mexico encouraged us to
replicate actions in other parts of the continent, adapting
them to the specific needs of each region:
COLOMBIA
It’s On Me Movement
The movement began in 2016 by combining Alsea and its
brand efforts to help four institutions at the national level
through Fundación Éxito:
• Corporación Uno Más
• Hermanas Misioneras de Cristo Maestro
• Fundación Semilla y Fruto
• Fundación Créalo
Since its creation:
2,849 food supplement packages have been delivered
201,716 meals have been served
In 2021, recreational events were held for children and their
families, where they received personal hygiene and school
kits, t-shirts and toys, and food and beverages provided by
some of our brands.
220 children
benefited
61,740
meals served
1,440
food packages delivered
COP 149 M+
collected from employees
78%
of employees
engaged
4 visits
20
volunteer hours
60
ar alsea 2021 Development / Latin america actions
GRI 203-1, 203-2, 413-1, 413-2
SOUTHERN CONE
Donations
In 2021, we donated more than 5,000 kg of food to the
Food Network in Chile, the Food Bank in Argentina and
various health and vaccination centers in the region, ben-
efiting more than 10,000 people and over 85 foundations.
Breast cancer awareness campaign
We held a Workplace session with Josefa Cortés, creator
and founder of StartUp Palpa, the first device to help
identify breast cancer, in a joint effort with the Know your
Lemons Foundation that spoke about the importance of
self-examination and awareness of this disease.
Forge Foundation
An initiative in Argentina, Chile, and Uruguay moti-
vates low-income youth to find a way to improve their
quality of life through work, education, and social
commitment. Their efforts are focused on developing
socio-emotional and digital skills to adapt to the future
workplace.
This year more than 35 interviews were carried out.
Sustainability week
We organized a series of “Positive Impact” webinars
taught by renowned personalities from various sectors
who shared their knowledge on the following topics:
• The urgent need to change our habits
• The Alchemy Program
• Electromobility
• Carbon footprint reduction
• Innovation in the food industry
• Global impact trends
• The world after COVID
• Development opportunities in the SDGs
Figures in millions of pesos
61
ar alsea 2021 Development / Europe actions
GRI 203-1, 203-2, 413-1, 413-2
EUROPE
At Alsea Europe, we work on various initiatives that con-
tribute to training, job searches, environmental improve-
ments, and the integration of the most vulnerable groups.
Comprehensive volunteer model
We remain committed to supporting the needs of local
populations by making two volunteer programs available
to the professionals working for our brands in Spain:
The path to employment
An option to bring people at risk of social exclusion into
the labor market, especially young people, women, peo-
ple with disabilities and older workers. This initiative is
implemented through an agreement with the Incorpora
de La Caixa program that allows us to access multiple
social organizations across Spain.
• Social and environmental sensitization and awareness
awareness
raise
innovative and cleaning activities.
A
through
program
social
to
• Nurturing professionals and their work skills
Volunteers for young people at risk of social exclusion
focused on training to work in the hotel and catering
industries.
53
Collaborations to promote the closest surroundings
We create multiple strategic alliances to generate value
in the surroundings and respond to the needs of the ter-
ritories where we have a presence. The primary focus
behind the promotion of these alliances is collaboration
and dialogue with all the parties involved.
These partnerships involve associations and NGOs to
promote the development of our closest surroundings
and reinforce our commitment to collaboration. In 2021,
we donated more than MXN 1.2M, equal to EUR 59,000,
to non-profit organizations and associations.
people
have accessed
their first job
experience
Environmental Volunteer Project
We worked on raising awareness and providing training to
our employees on environmental issues through volunteer
actions such as replanting trees with Ecoherencia and
cleaning rivers, seas and mountains with Seo BirdLife, with
the participation of 62 and 22 volunteers, respectively.
Donations and aid projects
In 2021, we donated 3,085 kg of products to the Food
Bank to support the management of surplus food projects.
We also worked to reduce surpluses through efficient
control management projects.
Our brands in Portugal have contributed more than MXN
340,000, equal to EUR 15,800, to different associations
and institutions. In France and Benelux, donations to
different local development projects in collaboration with
social entities have exceeded MXN 570,000, equal to
EUR 26,500.
62
ar alsea 2021 Development / Europe actions
GRI 203-1, 203-2
Openings with a cause
At Domino’s Pizza, we reinforce our commitment to our
immediate environment through programs such as “Open-
ings with a Cause,” solidarity menus with the Red Cross
and financial contributions to social organizations through
marketing projects with a cause. These projects serve to
establish ties and partnerships with local NGOs.
In 2021, we developed a new “Openings with a Cause”
project to donate proceeds from our first-day sales. We
have applied this program to the last 21 store openings,
raising more than MXN 1.7M, equal to EUR 82,564, which
we have donated to the different partner associations.
21
Openings
with a Cause
with 21 associations
EUR 82,000
raised
Foster’s Hollywood has reinforced its commitment to social
development by launching a Corporate Social Responsibil-
ity plan centered on children, delivering Christmas dinners
and lunches to vulnerable families through programs such
as Tengo Hogar, Soñar Despierto, and Coordinadora In-
fantil y Juvenil de Vallecas, benefiting 93 people.
Starbucks again collaborated with Action Against Hunger
through the 1x2 program, which has raised more than
MXN 800,000, equal to EUR 37,000. This project aims
to reduce surplus food to the extent possible and collab-
orate with this social entity. During the last hour before
closing, the stores offer up to 50% off fresh products to
encourage purchasing. The proceeds from these sales
go to this international NGO.
Gino’s launched its commitment to the elderly with its
Solidarity Pizza Campaign in collaboration with the Adopt
a Grandfather Association. For each pizza sold, customers
can donate EUR 0.05, which the brand then matches. A
total of 1,989 pizzas were sold, collecting more than MXN
43,000, equal to EUR 2,000. The profits were used to
finance a phone line for the elderly with 52 volunteers.
Vips has maintained a relationship with the Red Cross
for more than ten years; therefore, as of 2021, all new
premises join the “Solidarity Openings” program to donate
100% of first-day sales to local projects of the territorial
delegations where the new store is opened. In 2021, two
new stores opened under this program, raising more
than MXN 190,000, equal to EUR 8,770.3, which were
donated to this institution.
63
ar alsea 2021 BALANCE
A POSITIVE IMPACT
ON OUR PLANET
In order to protect the environment, at
Alsea, we manage natural resources in
a responsible, efficient and innovative
manner, minimizing our impact under
the highest sustainability standards
to fight climate change with circular
economy solutions.
We promote the rational use of natural
resources and optimize our processes
by adopting initiatives that allow us to
strengthen the responsible management
of our value chain and continue moving
forward on what continues to be a long
journey towards sustainability.
64
BALANCEar alsea 2021 Balance / Global environmental policy
We want to positively
impact the environment
by ensuring the efficient
use of resources to
minimize the risks linked
to our operations.
GLOBAL ENVIRONMENTAL
POLICY
With this in mind, our Global Environmental Policy estab-
lishes the measures and guidelines to prevent, mitigate
and control the environmental impacts produced by our
activities. We strive to meet our goals through contin-
uous improvement initiatives that allow us to formalize
an Environmental Management System. The procedures
established in this policy are aligned with the ISO 14001
standard for environmental management systems based
on three core pillars:
Efficient energy consumption and
reduction of greenhouse gas
emissions.
Waste reduction.
Efficient water consumption.
65
ar alsea 2021 Balance / Global environmental policy
GRI 302-1, 302-4, 302-5
ENERGY
EFFICIENCY
The actions we have taken to fulfill our
commitment to combat climate change
include looking for ways to optimize fuel
and energy consumption—especially
electricity—and decarbonize our processes
by implementing different measures
related to lighting and air conditioning in
our facilities and the use of vehicles.
We rely on technological solutions to improve en-
ergy efficiencies and reduce our GHG (Greenhouse
Gas) emissions to meet these goals. We also seek
to raise awareness among our employees by en-
couraging them to adopt habits that contribute
to the reduction and responsible use of energy
resources.
Informational videos to raise
awareness and encourage
viewers to change their habits
Frequency inverters in
extractor hoods
Purchase and prioritization
of the use of clean energy
Installation of control and
automation equipment in
Vips stores
ACTIONS 2021
LED lighting systems
Installation of the enthalpy
efficiency heat exchangers
established by Thermal
Installations in Buildings
Regulations (RITE) for
premises with an average
seating capacity of more
than 62 people
Low-consumption
EC fans to ensure
compliance with RITE
Installation of
aerothermal water
heaters, where required
by urban planning
regulations
Light dimmer regulators
66
ar alsea 2021 Balance / Global environmental policy
GRI 302-1, 302-4, 302-5, 305-1, 305-4, 305-5,
In terms of mobility, we are committed to improving the
efficiency and sustainability of our vehicles. We do this
with our 417 electric motorcycles in Europe, representing
16% of all our mopeds on that continent.
In Mexico City, seven of our stores use close to 35 electric
bicycles as part of a pilot test for Domino’s Pizza deliveries.
ELECTRIC POWER CONSUMPTION (kWh)
Alsea Mexico
Alsea South America
Alsea Europe
Total
2021
238,369,880
40,429,000
131.581.791
2020
219,220,762
52,321,649
117,046,821
410,379,887
388,589,233
FUEL CONSUMPTION* (kWh)
Alsea Mexico
240,009,734
2021
Alsea South America
Alsea Europe
Total
30.037,00
64,739,25
2020
221,742,788
26,002,487
53,877,915
334,785,959
301,623,190
GREENHOUSE GAS EMISSIONS
(Tons of CO2 equivalent)
Alsea Mexico
Alsea South America
Alsea Europe
Total
2021
124,552
16,379
44.381
185,312
2020
107,324
106,269
38.619
170,853
Overall, these efforts have produced good results. Com-
pared to 2020, energy consumption was up 8% of the
total energy consumed as restrictions due to the health
crisis were lifted.
Gasoline and diesel consumption also increased due to
the increase in demand for delivery services, leading to
growth in the fleet of our delivery vehicles.
* Sum of gasoline, diesel and gas.
67
ar alsea 2021 Balance / Energy efficiency
GRI 302-1, 302-4, 302-5, 305-1, 305-4, 305-5,
energy efficiency
AND CLEAN ENERGY CONSUMPTION
At Alsea, we are focused
on evolving towards the
use of clean energy in all
our operations.
In Argentina, Burger King reduced
its electrical energy consumption by 24%
compared to 2019.
On the other hand, Starbucks reduced its
use of electrical energy by 13% compared to
2019. In 2021, approximately 12% of its energy
came from renewable sources provided by the
national generation matrix of Argentina.
24%-
reduction in the use
of electrical energy
in Argentina
In Uruguay, Starbucks rreduced its
use of electrical energy by 24% compared to
2019, and 98% of the energy used came from
renewable sources.
En México the clean energy purchase
mix (wind, cogeneration or hydraulic) went
from 62.37% in 2020 to 69% in 2021.
24%-
reduction in the use
of electrical energy
in Uruguay
98%
of the energy comes from
renewable sources
69%
clean energy
consumption
in México
68
ar alsea 2021 Balance / Material resources and the circular economy
GRI 301-3, 306-1, 306-2, 306-3, 306-4
MATERIAL RESOURCES
AND THE CIRCULAR ENERGY
The resources and materials identified
as relevant to our activities are water,
plastics, paper and cardboard.
Although we have measures to ensure proper manage-
ment and use of resources, we continue to implement a
more complete and formal measurement model. Hence,
our different brands increasingly use more recycled ma-
terials in the production of containers, bags and napkins,
with which we endorse our permanent commitment to
the environment.
This year, we are promoting
global initiatives to reduce
and reuse our waste:
1+ million
46 thousand liters of cooking oil
collected in 2021
99%+ vs. 2020
We promoted the consumption of
FSC-certified recycled paper
We eliminated the use of plastic
straws and Styrofoam in all
our brands
We changed plastic bags for
paper bags
We replaced plastic packaging
with biodegradable or compostable
materials
We promoted waste separation
We continue to collect used
cooking oil to transfer it to certified
sources for recycling, reuse, and
manufacturing other products or
fuels
69
ar alsea 2021
Balance /Material resources and the circular economy
GRI 306-1, 306-2, 306-3, 306-4
Starbucks Argentina
encourages sustainable practices through the
Grounds for your Garden Program, inviting
customers to help themselves free coffee
grounds to enrich their gardens and compost.
Archie’s, Domino’s,
Starbucks, P.F. Chang’s
and our Distribution Centers (CEDIS)
in Bogotá collected 47.51 tons of usable
materials and reused 14.55 tons of used
vegetable oil.
Archie’s and P.F. Chang’s
delivered 164,397 kg of waste to an
environmental manager to make compost and
organic fertilizers later used in gardens and
green areas.
Alsea in Spain, recycled 474,475 liters of cooking
oil. Domino’s also optimized surplus food management
by working with Too Good to Go, a mobile app that
promotes the sale of products that will be discarded (due to
preparation errors or surplus, etc.) at a lower price. In 2021,
58 stores rescued 2,300 food packages,
equal to preventing 2.3 tons of food waste.
Also, in Argentina, 123 office
furniture units in
disuse were donated for use
by Fundación Vivienda Digna.
REDUCE
REUSE
RECYCLE
In Argentina, Burger King developed an
FSC®-certified container for its fries, guaranteeing
environmental protection and the responsible use
of natural resources. It also replaced all ice cream
containers with polypaper, avoiding the use of 7,000
kg of plastic per year.
In 2021, Starbucks
contributed to using organic waste
by delivering more than 4,453
bags of compost to its customers,
turning them into 15,585 kg of
compost for their gardens.
70
ar alsea 2021 Balance / Water
GRI 303-1, 303-2, 303-3, 303-4, 303-5
WATER
At Alsea, aware of the importance
of caring for water and avoiding
any waste, we have invested in
infrastructure to make its consumption
more efficient and raise awareness
among our employees of our
responsibility to conserve it.
We reduce our water footprint by promoting the responsible
use of water through awareness campaigns for employees,
along with other measures such as:
• Double discharge tanks
• Water-saving urinals
• Timed taps
• Water-saving aerators
• Water pressure regulators
Per local limitations, we provide and supply water, extrac-
ting it from public infrastructures.
WATER CONSUMPTION (m3)
Alsea Mexico
Alsea South America
Alsea Europe
Total
2021
1,698,000
140.313
1,069,862
2,908,175
2020
1,700,000
12,292
86,270
1,798,562
We are proud of the work
done by our dedicated
employees, who reaffirm
our commitment to
sustainable development
every day.
Acknowledgments and
Certifications
• Alsea Southern Cone received an award from
the Association of Food & Health Professionals
(APSAL, acronym in Spanish) in the LATAM Cor-
porate Social Responsibility category for our plan
to ensure energy efficiencies and recycle and
reuse resources in our stores and support cen-
ters. This achievement results from the work we
did to positively impact the region by recycling
materials and reducing energy consumption and
our commitment to nurturing healthy lifestyles.
• More than 20 Starbucks stores in Chile obtained
the LEED® (Leadership in Energy and Environ-
mental Design) certification that recognizes the
best sustainability standards for building designs,
construction, operation practices and strategies.
71
ar alsea 2021 CORPORATE
GOVERNANCE
At Alsea, delivering happiness and
moments full of flavor begins with
an ethical and transparent Corporate
Governance that guides our business
decisions, establishes our stakeholder
relations and ensures compliance with
our policies to lead us towards the
generation of value.
72
ar alsea 2021 Corporate governance / Alsea culture
GRI 2-6
ALSEA
CULTURE
At Alsea, we are committed to excellence and
dedication to fulfill our purpose:
To deliver happiness and experiences full of flavor.
This happens when our employees identify with our
company, believe that they belong to Alsea and are
proud to collaborate with us and take our culture to
each country where we have a presence.
Our culture, based on five values, ensures that our
customers enjoy an outstanding experience every
time they visit our restaurants.
We want to be multipliers of happiness and make
each occasion an unparalleled experience of
extraordinary flavors.
We strive, we dare, we
reinvent ourselves to
exceed expectations
We inspire by
example and
empower our people
We make each
moment unique to
offer unparalleled
experiences
We are stronger
when we work as a
team
We take care of
everything we do
because every detail
counts
73
ar alsea 2021 Corporate governance / Ethical and responsible management
GRI 2-6, 2-15, 2-16, 2-17, 2-23, 2-24, 2-27
ETHICAL
AND RESPONSIBLE MANAGEMENT
The Alsea Culture is the basis of our
responsible management model, which
governs us under the principles of
ethics, integrity and transparency,
seeking to incorporate sustainability
into all processes and levels of the
operation.
CODE OF ETHICS
It describes our values as a company and the regulatory
framework for ethical behavior providing conduct guide-
lines for employees, suppliers, and franchisees.
Our ethical guidelines direct our behavior and decisions in
the workplace. They also regulate our relationships with
colleagues, suppliers, customers and authorities.
Our commitment to these ideals
and the principles of good Corporate
Governance has driven us to instill
in each of our employees a sense of
belonging and a passion for serving,
which is the motor that drives us to
deliver happiness and experiences full
of flavor. Therefore, our Code of Ethics
and our Corporate Policies establish the
guidelines for our actions, which are
mandatory for all of us at Alsea.
The guiding principles of our Code of Ethics are as follows:
1. Compliance with the law, regulations and internal and
external standards
2. Customer service
3. Equal opportunity
4. Harassment-free workplace
5. Job security
6. Conflicts of interest
7. Acceptance of gifts
8. Transparent and bribery-free business practices
9. Taking care of our work tools
10. Matters related to fraud
11. Financial information
12. Taking care of our private and confidential information
13. The environment and our responsible use of resources
CORRECT LINE
We are aware of the need to identify behaviors or situ-
ations that put at risk the integrity of the company, the
relationship with our clients, collaborators and suppliers,
which is why in Alsea Mexico and Alsea South America
we have a reporting line called “Correct Line ”, this means
of reporting is confidential and is operated by an indepen-
dent third party that provides objectivity and transparency
in the process of attention and resolution of complaints.
At Alsea Europe, the management of the whistleblower
channel is dealt with internally and is carried out directly
and confidentially by a labor relations team, and is orga-
nized and managed in accordance with the provisions of
the Whistleblower Channel Operating Protocol.
In both cases, the reporting channel serves to identi-
fy, address and follow up on any breach, irregularity or
behavior contrary to our way of doing business and the
Code of Ethics. For more information about the Code of
Ethics, you can visit:
• http://www.alsea.net/relacion-con-inversionistas/
codigo-de-etica
In 2021, we received reports on 663 cases related to the
following offenses:
• Coercion
• Abuse of trust
• Conflicts of interest
• Fraud and theft
• Harassmen
Of these cases, 600 were treated satisfactorily, and 63
are still undergoing resolution.
To learn more about our Code of Ethics and public policy, go to Corporate Integrity at:
https://www.alsea.net/integridad-corporativa#messages
663
complaints
Mexico, LATAM and Europe
about employees
595
58about suppliers
10about clients
d
e
d
n
e
t
t
a
%
0
0
1
d
e
s
o
l
c
%
9
8
%
1
1
s
s
e
c
o
r
p
n
i
100
harassment cases
41
men
59
women
4
discrimination
cases
74
ar alsea 2021
TAX APPROACH
Alsea has a Tax Policy that establishes the principles for
making decisions with a direct or relevant tax impact, al-
ways following the regulations applicable to each country
where we have a presence.
Corporate governance / Ethical and responsible management
GRI 2-6, 2-15, 2-16, 2-17, 2-23, 2-24, 2-27, 205-1, 205-2, 207-1
CULTURE OF TRANSPARENCY
AND ANTI-CORRUPTION
Our way of doing business is based on integrity, transpar-
ency, honesty and high ethical standards, which is why we
have an Anti-Corruption Policy that promotes a culture of
zero tolerance when it comes to corruption and bribery,
for which we are committed to act in a professional and
ethical manner at all times, and to guarantee the necessary
reporting and investigation mechanisms and channels to
make our performance in this management transparent.
Our Policy establishes the mechanisms and guidelines to
guarantee compliance with the different legislation and
anti-corruption laws applicable in the different regions in
which Alsea operates, as well as the way of doing busi-
ness, rules and instructions so that all the activities and
relationships of our collaborators with clients, suppliers,
public administrations and other third parties, as well as
those carried out by third parties for or on behalf of Alsea,
are carried out in accordance with our anti-corruption
principles, it stipulates the prohibition of any type of po-
litical contributions, whether directly or indirect. We also
prohibit spending to encourage or discourage the election
of a candidate for political office, as well as corporate
contributions to any organization for political purposes.
To strengthen our culture of integrity, our collaborators
reiterate their commitment to the company by signing
acceptance and adherence to the Code of Ethics and
Anticorruption Policy, likewise, communications are sent
through internal means that reinforce Zero Tolerance for
corruption and bribery. What:
• Code of Ethics
• Business Rules Travel Expenses
• Business Rules Social Responsibility
• Conflict of Interest Policy
75
ar alsea 2021 Corporate governance / Ethical and responsible management
GRI 2-23, 418-1
HUMAN RIGHTS
Respect for Human Rights is a shared responsibility that
must be understood as an essential and priority principle.
To ensure compliance in search of a more responsible
society, we have a Human Rights Policy that binds us
to all functional areas, brands, and Alsea employees to
maintain relationships based on respect and dignity in
each of our daily actions.
Similarly, to guarantee a respectful work environment
favoring the protection of the Human Rights of employ-
ees, Alsea:
• Prohibits all forms of work that could be detrimental
to the health or safety of children.
• Strictly prohibits forced or compulsory labor for any
male or female employee.
• Respects the rights of employees of freedom to as-
sociate in collective negotiation processes. Promotes,
protects and helps ensure the full and equal enjoyment
of the Human Rights of each person.
DATA PROTECTION
We recognize the importance and confidentiality of the
personal data that we collect, as well as the responsibility
that its treatment implies. For this reason, the manage-
ment and protection of the personal data of our clients,
suppliers, legal representatives and collaborators is one
of the priorities to prevent the risk of violation of their
confidentiality, integrity and availability. In order to comply
with this responsibility, we have security protocols aligned
with the legislation in force in each region in which we
operate, which are supervised by those directly respon-
sible for the internal contact points.
Our principles for the Protection of Personal Data during
its collection and treatment are based on confidentiali-
ty, evaluation of necessity, accuracy and truthfulness.
For their part, the Personal Data Privacy departments of
the various countries comply with current legislation on
the matter and make available to customers, suppliers,
collaborators and other third parties, information on the
processing of their data and their rights as unique own-
ers/holders of these.
76
ar alsea 2021 Corporate governance / Ethical and responsible management
GRI 2-15
CONFLICTS OF INTEREST
A conflict of interest exists when personal, family, friends
or third-party interests put the responsibilities of the posi-
tion held and organizational processes at risk. Therefore,
all work-related decisions must focus on the company’s
greater good.
Alsea employees must avoid situations, conduct activities
or express opinions that could lead to a conflict between
personal interests and those of Alsea. They must refrain
from representing Alsea or Alsea companies and intervene
or influence decision-making in any situation involving a
direct or indirect conflict of interest.
Said situations must be reported to their immediate su-
pervisors and the Human Resources Department as soon
as they are perceived and before executing any action
that could be affected by them. Employees may engage in
other activities as long as they are not conducted during
working hours and do not affect Alsea’s interests.
Employees must fill out a new Conflicts of Interest Ques-
tionnaire at least once a year and submit it to the Human
Resources Department.
Any exception to these guidelines must be validated and
authorized by the country’s Human Resources manag-
er and the Alsea Human Resources Department with a
document describing the exception.
77
ar alsea 2021 Corporate governance / Corporate structure
GRI 2-9, 2-14
CORPORATE
STRUCTURE
At Alsea, 82% of our
board members are men,
and 18% are women.
BOARD OF
DIRECTORS
AUDIT
COMMITTEE
CHIEF
EXECUTIVE
OFFICER
CORPORATE
PRACTICES
COMMITTEE
Our Corporate Governance structure is the set of rules,
systems and processes that we apply to guide Alsea’s
stakeholder relations.
It is the highest governing body responsible for developing,
approving and updating the company’s essence (mission,
vision, values and purpose) and approving the corporate
policies affecting its management, including those related
to the Sustainability Strategy.
INTERNAL
AUDIT
ALSEA
MEXICO
ALSEA
INTERNATIONAL
ALSEA
EUROPE
Spain, Portugal,
France, the
Netherlands, Belgium
and Luxembourg.
ALSEA SOUTH
AMERICA
Argentina, Chile,
Colombia and
Uruguay.
78
ar alsea 2021 Corporate governance / Corporate structure
GRI 2-9, 2-10, 2-11, 2-13, 2-14, 2-15, 2-16, 2-17, 2-18,
BOARD OF DIRECTORS
RELATED ASSETS
Alberto Torrado Martínez
Chairman
Cosme Alberto Torrado Martínez
Member
Armando Torrado Martínez
Member
INDEPENDENT ASSETS
Federico Tejado Bárcena
Member
Fabián Gerardo Gosselín Castro
Member
INDEPENDENT
León Kraig Eskenazi
Member
Adriana María Noreña Sekulist
Member
Carlos Vicente Salazar Lomelín
Member
Alfredo Sánchez Torrado
Member
Luiz Carlos Ferezin
Member
Leticia Mariana Jáuregui Casanueva
TECHNICAL SECRETARY
Xavier Mangino Dueñas
Alsea’s management is entrusted to the Board of Directors,
made up of 11 members, two of which are women, three
are related asset members, two are independent asset
members, and six are independent, with a related asset
member as chairman.
To ensure an impartial vision for strategic planning, we
have incorporated the figure of independent members, who
today represent more than 50% of the total number of
board members, a percentage exceeding the 25% required
by the Securities Market Act.
Member selection and remuneration process
The Nominations and Compensation Committee is the
body in charge of the board’s selection, appointment and
renewal procedures. These must be aimed at achieving a
composition of the entity’s corporate bodies that enables
the proper exercise of the functions attributed to them
by law and the Corporate Bylaws and regulations in the
company’s best interest.
The proposals for the appointment or re-election of mem-
bers that the Board of Directors makes to the company’s
Regular General Assembly of Shareholders and the appoint-
ments that it makes directly to fill vacancies in the exercise
of its powers of co-optation are approved at the Commit-
tee’s proposal, in the case of independent members, and
following a report from this Committee, in the case of the
remaining members.
Proposals submitted for approval to the General Assembly
of Shareholders must be accompanied by a justifying report
from the Committee assessing the competence, experience
and merits of the candidate proposed. For these purpo-
ses, the balance of knowledge, skills and experience on
the Board of Directors will be evaluated, as well as the
conditions that the candidates must meet to fill the va-
cancies that arise, assessing the dedication of time that is
considered necessary for them to properly perform their
mission, based on the needs of the company’s governing
bodies at any given time.
The board members are individually elected and reelected
annually.
Aware of our responsibilities as a public company, we
have implemented a series of measures seeking institu-
tionalization through transparent practices, satisfactorily
fulfilling and exceeding the terms established in the Code
of Corporate Best Practices. On this basis, Alberto Torrado
Martínez left the position of Executive President to serve as
Chairman of the Board of Directors on January 24, 2022.
The Nominations and Compensation Committee is the body
authorized to propose to the Shareholders’ Meeting the
remuneration received by the board members. At Alsea,
we determine that board member compensation is a fixed
amount applicable according to their attendance at each
meeting and the committees they belong to. We have also
implemented clear and objective mechanisms to evaluate
the board’s management performance and, where appro-
priate, propose external training on relevant issues in the
development of the company’s business, which allows the
board members to participate in all discussions and deci-
sions effectively.
79
ar alsea 2021 Corporate governance / Corporate structure
GRI 2-9, 2-10, 2-11, 2-13, 2-14, 2-15, 2-16, 2-17, 2-18,
AUDIT COMMITTEE
According to the provisions established by the Securities Act and the Alsea bylaws,
the Audit Committee is made up as follows:
Alfredo Sánchez Torrado
CHAIRMAN
Luiz Carlos Ferezin
MEMBER
Federico Tejado Bárcena
MEMBER
Elizabeth Estrella Garrido López
SECRETARY (NON-MEMBER)
CORPORATE
GOVERNANCE
COMMITTEE
León Kraig Eskenazi
CHAIRMAN
Luiz Carlos Ferezin
MEMBER
Armando Torrado Martínez
MEMBER
Alejandro Arturo Kipper Lezama
MEMBER
Elizabeth Estrella Garrido López
SECRETARY (NON-MEMBER)
FUNCTIONS AND RESPONSIBILITIES
• Recommend to the Board of Directors the candidates for
external auditors of the company, the contracting terms and
the scope of professional work and supervise compliance
with them.
• Serve as the communication channel between the Board of
Directors and the external auditors and ensure the indepen-
dence and objectivity of the latter.
• Verify to ensure the observation of the mechanisms estab-
lished to control the company’s risks.
• Coordinate the work done by the internal auditor.
• Contribute to the establishment of policies for operations
with related parties.
• Analyze and evaluate operations with related parties to make
recommendations to the Board of Directors.
• Review the work program, the observation letters, and the
internal and external audit reports and report the results to
the Board of Directors.
• Decide on hiring third-party experts to issue their opinions
on operations with related parties or any other matter that
allows them to fulfill their duties.
• Periodically meet with the internal and external auditors,
without the presence of company officials, to hear their
comments and observations on the progress of their work.
• Give its opinion to the Board of Directors on the policies
and criteria used to prepare financial information and the
process for its issuance, ensuring its reliability, quality, and
transparency.
• Contribute to the definition of internal control and internal
audit guidelines and evaluate their effectiveness.
• Verify compliance with the Code of Ethics and the mechanism
for disclosing unlawful acts and protecting informants.
• Assist the Board of Directors in analyzing contingency plans
and information recovery.
• Verify the implementation of the mechanisms required to
ensure that the company complies with the applicable legal
provisions.
80
ar alsea 2021 Corporate governance / Corporate structure
GRI 2-9, 2-10, 2-11, 2-13, 2-14, 2-15, 2-16, 2-17, 2-18, 2-19
CORPORATE
PRACTICES
COMMITTEE
It is made up mostly of independent directors as follows:
León Kraig Eskenazi
CHAIRMAN
Cosme Alberto Torrado Martínez
MEMBER
Fabián Gerardo Gosselín Castro
MEMBER
Leticia Mariana Jauregui Casanueva
MEMBER
Elizabeth Estrella Garrido López
SECRETARY (NON-MEMBER)
FUNCTIONS AND RESPONSIBILITIES
• Suggest to the Board of Directors the criteria for appointing
or removing the CEO and C-Suite officers.
• Propose to the Board of Directors the evaluation and com-
pensation criteria for the CEO and C-Suite officers.
• Recommend to the Board of Directors the criteria to deter-
mine the payments for termination of the CEO and C-Suite
officers.
• Recommend the criteria for the compensation of the com-
pany’s board members.
• Analyze the proposal made by the CEO regarding the struc-
ture and criteria for staff compensation.
• Analyze and present to the Board of Directors for its ap-
proval the statement to consider the company as socially
responsible, the Code of Ethics, and the information system
to manage unlawful acts and the protection of informants.
• Analyze and propose to the Board of Directors the approval
of the formal system of succession of the CEO and C-Suite
officers and verify compliance with the same.
• Study and propose to the Board of Directors the strategic
vision for the company to ensure its stability and permanence
over time.
• Analyze the general guidelines presented by management
to determine the company’s strategic plan and follow up on
its implementation.
• Evaluate the company’s investment and financing policies
proposed by management and give its opinion to the Board
of Directors.
• Give an opinion on the premises of the annual budget pre-
sented by the BEO and follow up on its application and
control system.
• Evaluate the mechanisms presented by management to
identify, analyze, manage and corporate risks and give its
opinion to the Board of Directors.
• Evaluate the criteria presented by the General Director for
the disclosure of the risks to which the company is subject
and give its opinion to the Board of Directors.
81
ar alsea 2021 About this report
GRI 2-2, 2-3, 2-4, 2-5
ABOUT THIS
REPORT
The purpose of this report is to share with our stakeholders’
compliance with the Alsea, S.A.B. de C.V. operation through
our achievements and progress guided by our Business and
Sustainability Strategy.
This integrated annual report contains the global results of
Alsea in economic, social, environmental, corporate governance
and financial matters for the period beginning January 1 and
ending December 31, 2021. It has been prepared in accordance
with the GRI Standards for the preparation of Sustainability
reports in their “essential” version, with the information re-
quested by the Mexican Stock Exchange through S&P Global to
be part of the Sustainable Index and with information obtained
from the requests of our topics and material stakeholder. It
is aligned with the 10 principles of the Global Compact and
the 17 UN Sustainable Development Goals.
The last reported report was prepared for the same period
corresponding to 2020.
As part of our environmental care strategy, we have produced
the document in digital format. We report the results of the
activities conducted in Mexico, Latin America and Europe.
The information was obtained from the areas specialized in
the GRI indicators in the different geographies where we have
a presence. The financial information is subject to an external
audit process.
During this last period, there are no restatements of informa-
tion or significant changes concerning the previous periods
reported both in terms of materiality and coverage.
82
RE PORTar alsea 2021 15. CULTURE AND SOCIAL COMMITMENT
Practices and programs to encourage the participation of our
employees in corporate volunteering activities that promote a
culture of social support.
22. CORPORATE GOVERNANCE
Establishment of good governance practices to regulate the
structure and operation of the company’s governing bodies
and favor credibility, stability, growth and generation of long-
term value.
DETAIL OF MATERIAL ISSUES
GROWTH
DEVELOPMENT
1. BUSINESS STRATEGY
Financial results, resource management and strategic investment
plans; supply chain management and review of priority issues,
such as differentiation and competitiveness, innovation, oper-
ational efficiency, research and development of new products;
capacity building and entry into new markets.
8. TALENT MANAGEMENT
The promotion of policies, processes and procedures to attract,
hire and retain talent. Procurement of health, safety and the
well-being of employees; monitoring of accidents, illness and
absenteeism, and implementation of initiatives for the preven-
tion and management of accidents and work-related diseases.
2. PREFERENCES, VALUE AND BRAND LOYALTY
Strategies to improve the customer experience and maintain
their loyalty to the different brands, management of reputational
crises, monitoring the evolution of preferences and consumption
habits, and actions to preserve the brand’s value and customer
relations.
9. EQUALITY, DIVERSITY AND INCLUSION
The promotion of inclusive employment, equal pay, and equal
employment opportunities, without discrimination based on
gender, sexual orientation, race, age, disabilities, beliefs, or
any other reason.
3. RESPONSIBLE DIGITALIZATION
The implementation of recent technologies, and digitization of
operations or activities of the value chain, to benefit customer,
employee and supplier relations.
4. RESPONSIBLE SOURCING
The implementation of good supply and supplier selection
practices; sustainable sources of inputs for animal welfare
and biodiversity conservation; sustainable agriculture, and
community improvement.
5. FOOD WASTE
Actions to prevent food waste in its preparation and consump-
tion and surplus donations.
10. CULTURE AND ORGANIZATIONAL CLIMATE
Job offers in a safe, respectful, and pleasant environment,
allowing employees to experience the organization’s values
with fair remuneration and work-life balance.
11. EMPLOYEE TRAINING
Practices and programs aimed at the teams’ development of
skills and competencies that give them access to evaluations,
promotions and opportunities to create a career plan.
12. HUMAN RIGHTS
Ensure respect for the Human Rights of all the people with
whom we are linked, promoting fair economic, labor and com-
mercial relations, which put the dignity of the human being
above any unilateral benefit.
16. LOCAL IMPACT OF OPERATIONS
Projects and programs aimed at the communities on which
our operations have an impact, promoting job creation and
reducing our environmental footprint.
BALANCE
17. WATER
Measurement and monitoring of water consumption and dis-
charge through responsible use programs, identifying areas
of high water stress, reuse, treatment and recycling of water.
18. ENERGY AND EMISSIONS
Programs, policies and measures to encourage energy efficiency
and reduce consumption in our operations. Use of energy and
sustainable fuels, measurement and management of Green-
house Gas (GHG) emissions, and participation in initiatives to
reduce emissions.
19. WASTE AND POLLUTION
Promotion of adequate waste management, acquisition of
sustainable materials, installation of eco-friendly stores and
promotion of the circular economy to reduce, reuse, and recycle
post-consumer materials.
6. CUSTOMER’S WELL-BEING
The development of nutritious, balanced and sustainable dish-
es and the promotion of healthy habits; hygiene and safety in
consumption, transparency in communication with customers
and reduction of digital inequality in the shopping experience.
13. HEALTH & SAFETY
Procurement of customers’ hygiene, health, safety, and well-be-
ing at all levels of our value chain, from the acquisition of raw
materials to the consumption experience in our establishments
and products delivered to their homes.
20. CLIMATE STRATEGY
Definition of strategies to address the impacts of climate change
through programs established to prevent, reduce and mitigate
its effects.
7. FOOD QUALITY & SAFETY
Implementation of evaluation processes and food quality and
hygiene assurance. Promotion of the use of real ingredients,
best biotechnology and labeling practices, and food and feed
safety.
14. COMMUNITY AND PHILANTHROPY
The creation and implementation of community support pro-
grams, such as social investment, volunteering, donations,
financial or in-kind donations, and support in the event of natural
disasters. Promotion of initiatives such as the generation of
employment, promotion of family farming, food security, reduc-
tion of hunger, support for education, and rural employment.
CORPORATE GOVERNANCE
21. ETHICS AND COMPLIANCE
Promotion of ethical principles and values, adherence to the
legal frameworks of the geographies where we have a pres-
ence, promotion of healthy competition and adherence to our
conduct standards and corporate policies.
23. POLICIES AND REGULATION
Creation and adherence to compliance with economic, social,
environmental and operational regulations applicable to the
company and alignment with future regulations that arise in
response to global standards.
24. RISK ADMINISTRATION AND SOCIAL
RESPONSIBILITY MANAGEMENT
Activities to identify, prevent, and manage the risks inherent
to the operation; promotion of sustainability, partnerships to
achieve sustainable development goals, crisis management, and
strategies to mitigate risks that could affect business continuity.
25. COMMUNICATION AND TRANSPARENCY
Report and disclosure of our environmental, social and Cor-
porate Governance actions, with audited information to attest
to its reliability. Responsible marketing, clarity in the labeling
of products and our menus, transparent communication with
suppliers and customers, and transparency on tax issues.
26. STAKEHOLDER RELATIONS
Activities to encourage and strengthen trust and commitment
to stakeholders include dialogue with the government, partic-
ipation in industrial chambers or associations, alliances with
institutions and civil society organizations, and ongoing com-
munications to understand our stakeholders’ expectations and
concerns to update our material issues.
27. INFORMATION SECURITY AND PRIVACY
Protect the integrity of sensitive data through actions supported
by our system infrastructures to prevent cyber risks.
83
ar alsea 2021
INDICATORS
GRI
S TA N D A R D
TA B L E O F C O N T E N T S
G E N E R A L C O N T E N T
2-1
2-2
2-3
2-4
2-5
2-6
2-7
2-8
2-9
2-10
2-11
2-12
2-13
2-14
2-15
2-16
2-17
2-18
2-19
2-20
2-21
Organization details
Entities included in the sustainability report
Reporting period, frequency and point of contact
Restatements of information
External verification
Activities, value chain and other business relations
Employees
Workers who are not employees
Governance structure and composition
Nomination and selection of the highest governing body
President of the highest governing body
Role of the highest governing body in overseeing impact management
Delegation of responsibility for impact management
Role of the highest governing body in preparing sustainability reports
Conflicts of interest
Communication of critical concerns
Collective knowledge of the highest governing body
Evaluation of the performance of the highest governing body
Remuneration policies
Process to determine remuneration
Annual total compensation ratio
P A G E /
S TAT E M E N T
7, 8, 10, 11, 12
7, 8, 10, 12, 82
82, 182
82
82
9, 12, 20-37, 73-75
10, 11, 12, 39, 41
12, 77-81
12, 80, 81
12, 79-81
12, 16,
16, 79-81
12, 16, 78-81
74, 75, 8, 79-81
16, 74, 75, 79-81
74, 75, 79-81
79-81
81
S TA N D A R D
TA B L E O F C O N T E N T S
2-22
2-23
2-24
2-25
2-26
2-27
2-28
2-29
2-30
Statement on the company’s sustainable development
Compliance policy
Incorporation of the compliance policy
Processes to remedy negative impacts
Mechanisms to seek advice and raise concerns
Compliance with laws and regulations
Partnerships and associations
Approach to stakeholder participation
Collective bargaining agreements
M AT E R I A L I S S U E S
3-1
3-2
3-3
Process to determine material issues
List of material topics
Handling of material topics
E C O N O M I C P E R F O R M A N C E
P A G E /
S TAT E M E N T
12, 24, 16
74, 75, 76
74, 75
74, 75
10, 12, 15, 16,
12, 15, 16, 17, 18
17
17, 83
17, 83
201-1
201-2
201-3
201-4
Direct economic value generated and distributed
11, 12, 36
Financial implications and other risks and opportunities due to climate change
Defined benefit plan obligations and other retirement plans
Financial assistance received from government
M A R K E T P R E S E N C E
202-1
202-2
Ratio of the standard entry-level wage by gender compared to the local minimum wage
Proportion of senior executives hired from the local community
84
ar alsea 2021 S TA N D A R D
TA B L E O F C O N T E N T S
I N D I R E C T E C O N O M I C I M PA C T S
203-1
203-2
Investment in infrastructures and services supported
Significant indirect economic impacts
P R O C U R E M E N T P R A C T I C E S
204-1
Proportion of spending on local suppliers
A N T I - C O R R U P T I O N
205-1
205-2
205-3
Operations assessed for risks related to corruption
Communication and training on anti-corruption policies and procedures
Confirmed cases of corruption and measures taken
A N T I - C O M P E T I T I V E B E H AV I O R
206-1
Legal actions related to anti-competitive behavior, anti-trust, and monopoly practices
TA X AT I O N
207-1
207-2
207-3
207-4
Tax approach
Fiscal governance, control and risk management
Stakeholder engagement and management of concerns related to tax
Country-by-country reporting
M AT E R I A L S
301-1
301-2
301-3
E N E R G Y
302-1
302-2
302-3
302-4
302-5
Materials used by weight or volume
Recycled supplies
Reused products and packaging materials
Energy consumption within the organization
Energy consumption outside the organization
Energy intensity
Reduction of energy consumption
Reduction of energy requirements of products and services
P A G E /
S TAT E M E N T
10, 12, 53-63
53-63
75
75
75
69, 70
12, 66-68
12,
66-68
66-68
S TA N D A R D
TA B L E O F C O N T E N T S
W AT E R A N D E F F L U E N T S
303-1
303-2
303-3
303-4
303-5
Interaction with water as a shared resource
Management of impacts related to water discharges
Water extraction
Water discharge
Water consumption
B I O D I V E R S I T Y
Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of
high biodiversity value outside protected areas
Significant impacts of activities, products and services on biodiversity
Habitats protected or restored
IUCN Red List species and national conservation list species with habitats in areas affected
by operations
304-1
304-2
304-3
304-4
E M I S S I O N S
305-1
Direct GHG emissions (Scope 1- direct emissions produced by burning fuels)
305-2
305-3
305-4
305-5
305-6
305-7
Indirect GHG emissions when generating energy (Scope 2 - indirect emissions generated by
the electricity consumed and purchased)
Other indirect GHG emissions (Scope 3 - indirect produced by the emitter’s activity but
owned by a third party/supply chain)
GHG emissions intensity
Reduction of GHG emissions
Emission of ozone-depleting substances (ODS)
Emissions from human activities of sulphur oxides (SOX) and nitrogen oxides (NOX) and
other significant emissions
E F F L U E N T S A N D W A S T E
306-1
306-2
306-3
306-4
306-5
Waste generation and significant waste-related impacts
Management of significant waste-related impacts
Waste generated
Waste diverted from disposal
Waste for disposal
P A G E /
S TAT E M E N T
71
71
71
71
71
67, 68
67, 68
67, 68
67, 68
67, 68
69, 70
69, 70
69, 70
69, 70
85
ar alsea 2021 S TA N D A R D
TA B L E O F C O N T E N T S
E N V I R O N M E N TA L A S S E S S M E N T O F S U P P L I E R S
308-1
308-2
New suppliers that have passed evaluation and selection filters according to environmental
criteria
Negative environmental impacts in the supply chain and actions taken
E M P L O Y M E N T
P A G E /
S TAT E M E N T
S TA N D A R D
TA B L E O F C O N T E N T S
N O N - D I S C R I M I N AT I O N
P A G E /
S TAT E M E N T
406-1
Cases of discrimination and corrective actions taken
47
F R E E D O M T O A S S O C I AT E A N D C O L L E C T I V E B A R G A I N I N G
407-1
Operations and suppliers in which the right to freedom of association and collective
bargaining may be at risk
New employee hires and employee turnover
C H I L D L A B O R
Benefits provided to full-time employees that are not provided to temporary or part-time
employees
51
Parental leave
401-1
401-2
401-3
403-1
403-2
403-3
403-4
403-5
403-6
403-7
403-8
403-9
W O R K E R - C O M PA N Y R E L AT I O N S
402-1
Minimum notice periods regarding operational changes
O C C U PAT I O N A L H E A LT H A N D S A F E T Y
Occupational health and safety management system
Hazard identification, risk assessment and incident investigation
Occupational health services
49, 50
49, 50
49, 50
Worker participation, consultation, and communication on occupational health and safety
49, 50, 52
Training of workers on occupational health and safety
Promotion of workers’ health
Prevention and mitigation of occupational health and safety impacts directly linked by
business relationships
Workers covered by an occupational health and safety management system
Work-related injuries
403-10
Occupational ailments and diseases
T R A I N I N G A N D E D U C AT I O N
404-1
404-2
404-3
Average hours of training per year per employee
Programs for upgrading employee skills and transition assistance programs
Percentage of total employees by gender and by employee category who received a regular
performance and career development review
D I V E R S I T Y A N D E Q U A L O P P O R T U N I T Y
405-1
405-2
Diversity of governance bodies and employees
Ratio of the basic salary and remuneration of women to men
10, 49, 50
49, 50
49, 50
49, 50
10, 42, 48
41-46, 48
45, 46, 48
12, 47, 48
408-1
Operations and suppliers considered to have significant risk for incidents of child labor
52
F O R C E D A N D C O M P U L S O R Y L A B O R
409-1
Operations and suppliers considered to have a significant risk of forced or compulsory labor
52
S A F E T Y P R A C T I C E S
410-1
Security personnel trained in human rights policies or procedures
R I G H T S O F I N D I G E N O U S P E O P L E S
411-1
Incidents of violations involving the rights of Indigenous peoples
L O C A L C O M M U N I T I E S
413-1
Operations with implemented local community engagement, impact assessments, and/or
development programs
10, 53-63
413-2
Operations with significant actual and potential negative impacts on local communities
10, 53-63
S O C I A L E VA L U AT I O N O F S U P P L I E R S
414-1
414-2
New suppliers selected subject to due diligence processes for social impacts
Negative environmental impacts in the supply chain and actions taken
P U B L I C P O L I C Y
415-1
Contribution to political parties and/or their representatives
H E A LT H A N D S A F E T Y O F C U S T O M E R S
416-1
416-2
Product and service categories for which health and safety impacts are assessed
Incidents of non-compliance concerning the health and safety impacts of products and
services
M A R K E T I N G A N D L A B E L I N G
417-1
417-2
417-3
Requirements for product and service information and labeling
Incidents of non-compliance concerning product and service information and labeling
Incidents of non-compliance with marketing communications
C U S T O M E R P R I VA C Y
418-1
Substantiated complaints concerning breaches of customer privacy and losses of customer data 76
86
ar alsea 2021 ALSEA, S.A.B. DE C.V.
AND SUBSIDIARIES
Consolidated Financial Statements for the
Years Ended December 31, 2021, 2020 and 2019,
and Independent Auditors’ Report Dated
April 12, 2022
Annual Corporate Practices Committee Report
Audit Committee Annual Report
Independent Auditors' Report
Consolidated Statements of Financial Position
Consolidated Statements of Income
Consolidated Statements of Other Comprehensive Income
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
87
FINANCIAL INFORMATION88899296979899100101ar alsea 2021 Annual Corporate Practices
Committee Report
TO THE BOARD OF DIRECTORS OF ALSEA, S.A.B. DE C.V.:
Mexico City, February 28, 2022
In compliance with the terms established by Articles 42 and 43 of the Securities Market Act,
and on behalf of the Corporate Practices Committee, I present my report on the main activities
carried out during the year ended December 31, 2021. In developing our work, we have taken
into account the recommendations contained in the Code of Principles and Corporate Governance
Best Practices of the Mexican Business Coordinating Council (CCE).
In order to analyze the company’s results, the Committee met to ensure proper follow-up of the
agreements established in executing its duties, inviting the company officers deemed appropriate.
We carried out the following activities to fulfill our duties:
1. During this period, we did not receive any requests for exemptions in accordance with the
provisions established by Article 28, section III, subparagraph f) of the Securities Market
Act; hence, there is no need to make any recommendations in this regard.
2. We presented the quarterly and Accrued income of the 2021 Securitization Plan.
3. We received an update of the Shareholder Cost applicable at the end of each quarter of 2021,
using the methodology authorized by the Board of Directors.
4. We received quarterly reports summarizing the forward exchange rate (peso-dollar) risk
managed throughout the year.
5. With the management team, we reviewed the bank financing strategy, the corresponding
long-term credit coverage, and compliance with the Covenants.
6. The 2021 Budget forecast was presented to us, and we asked that certain changes be made
8. We supervised the relevant executives’ Compensation Plan addressed in Article 28, Section
III, subsection d) of the Securities Market Act and recommended presenting it to the Board
for approval.
9. We were informed of the main executives’ Succession and Talent Development Plans.
10. We were presented with the results of the Performance Evaluation of relevant management
team members for 2021, which this Committee used to verify the mechanism implemented
by the company to identify the performance of said directors, with no significant observations
to report in this regard.
11. The Corporate Human Resources Department presented the 2021 Executive Compensation
Strategy. This Committee recommended that the board approve the strategy.
12. Management informed us about the adjustments to be made to the company’s organizational
structure.
13. In every Board Meeting, the Corporate Practices Committee presented a report on its acti-
vities for the Board’s consideration, recommending that the Board ratify and/or approve it
as appropriate.
Lastly, I would like to mention that as part of our activities, which include preparing this report,
we always listened and took into account the viewpoints expressed by the relevant directors,
and have no significant observations to report in this regard.
to present it to the Board.
Corporate Practices Committee
7. During the period covered by this report, the Audit Committee analyzed the issuer’s rela-
ted-party transactions and their characteristics described therein, with no significant unusual
transactions to report.
León Kraig Eskenazi
Chairman
88
ar alsea 2021
Audit Committee
Annual Report
TO THE BOARD OF DIRECTORS OF ALSEA, S.A.B. DE C.V.:
Mexico City, February 28, 2022.
In compliance with the provisions established by Articles 42 and 43 of the Securities Market Act
and the Audit Committee’s Regulations, I hereby inform you of the activities we carried out du-
ring the year ended December 31, 2021. In developing our work, we have taken into account the
recommendations provided by the Code of Best Practice of Corporate Governance. In accordance
with the work program prepared according to the Committee’s Regulations, we meet at least once
every quarter to carry out the activities described as follows:
I. RISK EVALUATION
We reviewed with Management and the External and Internal Auditors the critical risk fac-
tors that could affect the company’s operations, determining that they have been properly
identified and managed.
II. INTERNAL CONTROL
We ensured that Management had established the appropriate processes and policies in
compliance with its responsibilities related to internal controls. In addition, we followed up
on the comments and observations that the External and Internal Auditors have made in this
regard in the performance of their duties.
III. EXTERNAL AUDIT
We recommended to the Board of Directors the external auditor’s appointment for the Group
and subsidiaries for FY 2021. To this end, we ensured their independence and compliance
with the requirements established by law. We analyzed their approach and work program
with them.
We maintained constant and direct communication with them to ask for status reports and
observations they might have and to take note of the comments on their annual financial
statements review. We were duly informed of their conclusions and reports on the annual
financial statements, including the communication referred to in Article 35 of the general
provisions applicable to entities and issuers supervised by the National Banking and Securities
Commission that hire external audit services for basic financial statements (Sole Circular
for External Auditors) and we followed up on the implementation of the observations and
recommendations they presented in the course of their work. We reviewed the reports issued
by the External Auditors referred to in the Single Circular for External Auditors.
We authorized the fees paid to the external auditors for their auditing services and other
permitted additional or complementary services, ensuring that they did not interfere with
their independence from the company. Considering the viewpoints expressed by management,
we evaluated the external auditor’s services corresponding to the prior year and began the
evaluation process corresponding to FY 2021.
IV. INTERNAL AUDIT
In order to maintain its independence and objectivity, the Internal Audit area functionally
reports to the Audit Committee.
We reviewed and approved its annual program of activities in due course. In order to
prepare its program, Internal Audit participated in the risk identification process, the
establishment of controls and their verification.
We received quarterly reports regarding the progress of the approved work program,
its variations, and the causes that originated them.
We followed up on the observations and suggestions they prepared and their timely
implementation.
We received and analyzed the annual report regarding existing related-party transactions to
confirm that they were carried out in accordance with existing policies and market values.
Therefore, the opinions were requested, and the corresponding valuations made.
89
ar alsea 2021 V. FINANCIAL INFORMATION, ACCOUNTING POLICIES AND RE-
PORTS TO THIRD PARTIES
We reviewed with the persons responsible for the process used to prepare the company’s quarterly
and annual financial statements and recommend its approval and authorization to be published
to the Board of Directors. As part of this process, we considered the opinion and observations
made by the external auditors and verified that the criteria, accounting and information policies
used by management to prepare the financial information were adequate and sufficient and were
consistently applied in the prior year. Consequently, the information presented by management
reasonably reflects the company’s financial position, the results of its operation and its cash flows
and the changes in financial position for the year ended December 31, 2021.
We also reviewed the quarterly reports by management to be presented to the shareholders
and the general public, verifying that they were prepared according to the International Financial
Reporting Standards (IFRS) and with the same accounting criteria used to prepare the annual
report. We verified the existence of a comprehensive process that provides reasonable assurance
about its content. In conclusion, we recommend that the Board authorize its publication.
We reviewed with the External Auditor and management the registration and disclosure of the
economic effects caused by COVID-19 and the actions taken to contain it.
We also accompanied and reviewed the restructuring of the long-term debt and the adequate
fulfillment of the contractual obligations acquired with the financial institutions, as well as the
issuance and placement of bonds to liquidate short-term obligations, reviewing with the external
auditor the new debt conditions, accounting treatment and disclosures about this transaction.
VI. COMPLIANCE WITH REGULATIONS, LEGAL ASPECTS AND CON-
TINGENCIES
We confirmed the existence and reliability of the controls established by the company to
ensure compliance with the different legal provisions to which it is subject, ensuring that
they were properly disclosed in the financial information.
We periodically reviewed the company’s fiscal, legal and labor contingencies and monitored
the effectiveness of the procedure established for their identification and monitoring, as well
as their proper disclosure and registration. The following tax issues stood out, some of which
began and were reported as early as 2014 and were promptly followed up on this year:
a)
In 2014, the Mexico City Secretariat of Finance informed Italcafé S.A. de C.V. (ITALCA-
FÉ) of its tax assessment for fiscal year 2010, ascertaining taxable income for deposits
made to its bank accounts derived from the transaction regarding various restaurants
owned by Grupo Amigos de San Ángel, S.A. de C.V. (GASA), even though said income
was accrued by the latter for all corresponding fiscal effects. On November 28, 2018,
the Mexico City Attorney General’s Office issued a partial favorable resolution of the
appeal of revocation filed against the assessment issued by the Secretary of Finance and
requested that the supervening evidence provided be considered and a new resolution
be issued. In January 2019, the company filed the corresponding means of defense
against the resolution issued by the Mexico City Attorney General’s Office. It is still a
pending matter.
b)
In March 2016, the Tax Administration Service (SAT) began the search of the Grupo
Amigos de San Ángel, S.A. de C.V. (GASA) and ITALCAFÉ S.A. de C.V. (ITALCAFÉ)
premises pursuant to a warrant for investigating compliance with tax laws in 2010 and
2011, respectively. In November, it issued the last partial certificates with its assessment
of the observations derived from unidentified deposits according to the authorities. In
December 2017, additional information was presented to clarify and refute said observa-
tions. Additionally, a request for a Conclusive Agreement was submitted to the Taxpayer
Defense Attorney (PRODECON). The instances filed with PRODECON were resolved in
January 2019, without reaching a consensus with the SAT, so the companies ultimately
filed the means of defense with the courts for GASA in August 2019 and ITALCAFÉ in
November of the same year. It is still a pending matter.
c)
In September 2017, the SAT began a review process for Operadora Alsea de Restaurantes
Mexicanos S.A. de C.V. (OARM) with respect to FY 2014. The foregoing derived from
the sequential review that began with the public accountant who audited the acquisition
of the Vips business for tax purposes that year.
In fiscal year 2018, the information requested by the tax authorities was presented,
which issued an audit report for OARM considering certain objections regarding the
acquisition of the Vips business. In October 2018, additional information was presented
to the tax authorities and a request for a conclusive agreement before PRODECON. On
July 30, 2019, PRODECON terminated the definitive agreement procedure due to a lack
of consensus with the SAT. Due to the foregoing, in February 2021, the SAT issued an
official letter requesting the liquidation of the MXN 99.9M tax credit. On March 23, 2021,
the company filed an Appeal of Revocation against said request for liquidation with the
tax authorities. The company and its external lawyers believe that there are sufficient
elements to demonstrate that the SAT’s request for liquidation is inadmissible and that
OARM met its tax obligations regarding the sale transaction mentioned above on time.
Hence, it has not created a provision in this regard. It is still a pending matter.
90
ar alsea 2021
d)
In the case of Alsea, S.A.B. de C.V. (ALSEA), the SAT began a review process in December
2017 and, in December 2018, issued an audit report with certain objections regarding
the acquisition of the Vips brand. In response, Alsea presented additional information to
refute the objections made and a request for a Conclusive Agreement with PRODECON.
On July 30, 2019, PRODECON terminated the Conclusive Agreement procedure due
to a lack of consensus with the SAT. Due to the foregoing, in February 2021, the SAT
issued an official letter requesting liquidation of the tax credit totaling MXN 3.781 billion.
On March 23, 2021, the company filed an Appeal of Revocation against the request for
liquidation with the tax authorities. The company and its external lawyers believe that
there are sufficient elements to demonstrate that the SAT’s request for liquidation is
inadmissible and that Alsea met its tax obligations regarding the transaction of the sale
mentioned above in a timely manner. Hence, it has not created a provision in this regard.
It is still a pending matter.
VII. CODE OF CONDUCT
With the support of Internal Audit, we ensured the staff’s compliance with the Alsea Code
of Business Conduct and the existence of adequate processes to update and disseminate it
among all staff members. We also ensured the application of the corresponding penalties to
the breaches identified.
The complaints received in the company’s System were reviewed with a follow-up on their
correct and timely resolution.
VIII. ADMINISTRATIVE MATTERS
We held regular meetings with management to stay informed about the progress made by
the company and relevant and unusual activities and events. We also met with the external
and internal auditors to discuss their work and the limitations they might have faced and to
facilitate any private communication they wished to have with the Committee.
When deemed appropriate, we asked independent experts for their support and opinions. We
did not learn of any potential significant breaches of the operating policies, internal control
system and accounting record policies.
We held executive meetings with the exclusive participation of the Committee members,
establishing agreements and recommendations for management at these meetings.
The Chairman of the Audit Committee submitted a quarterly report about our activities to
the Board of Directors.
The work we carried out was duly documented in the minutes prepared for each meeting,
which was reviewed and approved on time by the members of the Committee.
Sincerely yours,
CPA. Alfredo Sanchez Torrado
Chairman of the Audit Committee
91
ar alsea 2021
Independent Auditors'
Report
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF ALSEA, S.A.B. DE C.V.
OPINION
We have audited the accompanying consolidated financial statements of Alsea, S.A.B. de C.V. and
Subsidiaries (the Entity), which comprise the consolidated statements of financial position as of
December 31, 2021, 2020 and 2019, and the consolidated statements of income, consolidated
statements of other comprehensive income, consolidated statements of changes in stockholders’
equity and consolidated statements of cash flows for the years then ended, and notes to the con-
solidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of Alsea, S.A.B. de C.V. and subsidiaries as of Decem-
ber 31, 2021, 2020 and 2019, and their consolidated financial performance and their consolidated
cash flows for the years then ended in accordance with International Financial Reporting Standards
(IFRSs), issued by the International Accounting Standards Board.
EMPHASIS PARAGRAPH
As mentioned in Note 1e to the accompanying consolidated financial statements, the Entity’s ma-
nagement discloses the main actions related to its business plan to offset the effects derived from
the COVID-19 pandemic, which arose in 2020 and had a highly significant effect on the restaurant
industry and the Entity’s operations. These actions included the issuance and placement of senior
bonds in Mexico and Spain, thereby permitting the settlement of the Entity’s short-term obligations,
together with its long-term debt restructuring. These matters have not modified our audit opinion
detailed in the second paragraph of this report.
Furthermore, the Entity has implemented a series of internal measures to ensure the feasibility of
its operations, the success of which will depend on the duration of the pandemic and the measures
employed by different governments as regards restaurant operation, as well as Management’s ability
to generate revenues and liquidity. Our audit opinion has not been modified in relation to this matter.
BASIS FOR OPINION
We conducted our audits in accordance with International Standards on Auditing (ISA). Our res-
ponsibilities under those standards are further described in the Auditors’ Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Entity in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics
for Professional Accountants (IESBA Code) together with the Code of Ethics issued by the Mexican
Institute of Public Accountants (IMCP Code), and we have fulfilled our other ethical responsibilities
in accordance with the IESBA Code and with the IMCP Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those which, according to our professional judgment, have the greatest sig-
nificance for our audit of the consolidated financial statements of the current period. They have
been handled within the context of our audit of the consolidated financial statements taken as a
whole and the formation of our opinion in this regard. Accordingly, we do not express a separate
opinion on these matters. We have decided that the issues described below constitute the key audit
matters that must be included in our report.
IMPAIRMENT OF LONG-LIVED ASSETS
The Entity has determined that the smallest cash generating units are its stores. It has developed
financial and operating performance indicators for each of its stores and performs an annual
study to identify indications of impairment. If necessary, it also performs an impairment analysis
according to IAS 36, Impairment of Assets (“IAS 36”), in which discounted future cash flows are
calculated to ascertain whether the value of assets has become impaired. However, a risk exists
whereby the assumptions utilized by management to calculate future cash flows may not be fair
based on current conditions and those prevailing in the foreseeable future.
92
ar alsea 2021 The audit procedures we applied to cover the risk of the impairment of long-lived assets include
the following:
The application of internal control and substantive tests, in which we performed a detailed review
of projected income and expenses and, on this basis, discounted future cash flows. We also verified,
according to our knowledge of the business and historical audited information, the regularization of
any nonrecurring effect, so as to avoid considering these effects in the projections. We evaluated
the fairness of the discount rate utilized by management, for which purpose we requested support
from our firm’s experts. The results derived from the application of our audit tests were reasonable.
As discussed in Note 4o to the consolidated financial statements, the Entity has recorded an amount
of $184,430, $220,000 and $32,469 (thousands of Mexican pesos) for impairment as of December
31, 2021, 2020 and 2019, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS
Given the importance of the goodwill balance and continued economic uncertainty, when neces-
sary, it is important to ensure that goodwill is adequately reviewed to identify potential impairment.
The determination as to whether the book value of goodwill is recoverable requires the Entity’s
management to make significant estimates regarding future cash flows, discount rates and growth
based on its opinion regarding future business perspectives.
In our capacity as auditors, we have analyzed the assumptions utilized in the impairment model,
specifically including cash flow projections, discount rates and long-term rate growth. The key
assumptions used to estimate cash flows in the Entity’s impairment tests are those related to the
growth of revenues and the operating margin.
Our fair value valuation specialists assisted us by preparing an independent evaluation of the dis-
count rates and methodology used to prepare the impairment testing model; included in the Note
17 to the consolidated financial statement, together with the utilized market multiple estimates. We
also tested the completeness and accuracy of the impairment model.
The results of our audit tests were reasonable and we agree that the utilized assumptions, inclu-
ding the discount rate and the goodwill impairment amount recorded for the year, are appropriate.
ACQUISITION OF NON-CONTROLLING INTEREST
We assume the risk of material misstatement related to the recognition and valuation of call options
derived from the acquisitions made by Alsea and which give rise to these risks.
In October 2014, the Entity acquired Grupo Zena. Based on this transaction, Grupo Zena obtained
the right to sell its non-controlling interest, with a sale commitment date in October 2018, which
was terminated and formalized through a new agreement to perform the sale in April 2019 and,
subsequently, in June 2022.
In September 2021, the Entity, jointly with Alia Capital Partners and Bain Capital Credit agreed
to acquire the 21.1% related to the noncontrolling interest of Food Service Project, S.A. (Alsea
Europa). As a result of this investment, Alsea will hold the 76.8% of the total equity of Alsea Eu-
ropa (formerly 66.2%), whilst Alia Capital Partners and Bain Capital Credit will indirectly hold the
10.6%, with the remaining minority shareholders representing 12.7%. The Entity paid 55 million
euros (equal to $1,205,703), which represents 10.5% of the noncontrolling interest. Furthermo-
re, reimbursements of $92.4 million pesos were obtained. In conformity with IFRS 9, Financial
instruments, the present value of the estimated debt that will be settled when exercising the call
option according to the clauses of the new contract, shall be recorded.
In addition, as a result of the Acquisition of Sigla in 2018, the minority partners of Grupo Zena
obtained the right to sell their noncontrolling interest, with a final sale commitment date in 2025
and 2026, which will take place based on the delivery of a variable number of shares in Alsea. In
conformity with IFRS 9, Financial instruments, this transaction must be recorded as a derivative
financial instrument.
The audit procedures applied to the risk associated with the acquisition of the noncontrolling in-
terest included the following, among others:
Our internal specialists assisted us with the review of the new agreements executed between the
investors, which included examining acquisition support documentation; reviewing the transaction
cash flows; verifying the appropriate recording of the transaction to recognize the remeasurement of
the financial liability and derivative financial instrument, as well as the reviewing of the disclosures
included in Note 19 to the consolidated financial statements as regards the transactions arising
from these acquisitions. The results of our audit tests were reasonable.
DEBT RENEGOTIATION
Given the importance of the recognition and valuation of the renegotiations performed by Alsea, com-
pliance with its short-term obligations and the restructuring of its long-term debt must be ensured.
As explained in Notes 1a and 18 to the consolidated financial statements, on December 14, 2021,
the Entity concluded the issuance of a senior bond for the amount of US$500 million, with interest
payable semi-annually with the option of a partial or total settlement from December 14, 2023.
This placement allows the Entity the settlement of its short-term obligations, together with the
restructuring of its long-term debt.
93
ar alsea 2021 Furthermore, on January 21, 2022, the Entity placed a senior bond for the amount of €300 million,
with interest payable semi-annually, which was issued through its subsidiary Food Service Project,
S.A. and underwritten by Alsea with the option of partial or total settlement as of January 21, 2024.
The audit procedures applied to this key matter included the following, among others:
Obtain an understanding of the bank debt renegotiation process by reviewing contracts, legal and
other supporting documentation. Similarly, the new debt conditions were reviewed, as well as the
accounting treatment resulting from the renegotiation and the disclosures included in Note 19 to
the consolidated financial statements, and, finally the Entity’s compliance with its agreements as
of December 31, 2021.
We obtained confirmation replies from the financial institutions which confirm the outstanding
balances at year-end, the maturity date and interest rate. Likewise, we involved our specialists to
evaluate the Entity’s compliance with IFRS 9, Financial instruments. The results of our audit tests
were reasonable.
INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL
STATEMENTS AND INDEPENDENT AUDITORS’ REPORT
The Entity’s management is responsible for the other information presented. The other information
encompasses: the information included in: numeral i) of the Annual Report; ii) the information that
will be included in the Annual Report which the Entity must prepare according to the article 33,
section I, numeral b) of Title Fourth, Chapter First of the General Provisions Applicable to Issuers
and other Stock Market Participants in Mexico, and the Guidelines accompanying these provisions
(the “Provisions”).
The Annual Reports are expected to be available to our reading after the date of this audit report;
and iii) additional other information, which is not actually required by IFRS, but has been included to
provide an additional explanation to the Entity’s investors and the main readers of its consolidated
financial statements to enable them to evaluate the performance of each operating segment and
other indicators associated with the Entity’s ability to satisfy its obligations as regards Earnings
before Interest, Taxes, Depreciation and Amortization (adjusted “EBITDA”); this information is
presented in Note 31.
Our opinion on the consolidated financial statements will not be extended to the other information
and we do not express any opinion on this regard.
In relation to our audit of the consolidated financial statements, our responsibility will be to read
the other information when it becomes available and, when doing so, consider whether the other
information contained therein is materially inconsistent with the consolidated financial statements,
the knowledge we obtained during the audit or whether it appears to contain material misstate-
ment. If, based on our work performed, we conclude that the other information contains material
misstatement, we would have to report this situation. When reading the Annual Report, we will
issue a declaration on this regard, as required by Article 33 Section I, paragraph b) numeral 1.2. of
the Provisions. In addition, with regards to our audit of the consolidated financial statements, our
responsibility is to read and recalculate the other information which, in this case, is not required by
IFRS and, when doing so, consider whether the other information contained therein is materially
inconsistent with the consolidated financial statements, the knowledge we obtained during our
audit or whether it appears to contain material misstatement. If, based on the work performed,
we conclude that the other information contains material misstatement, we would have to report
this situation in our declaration related to the Annual Report required by the National Banking and
Securities Commission, and those charged with governance of the Entity. As of the date of this
report, we have nothing to report in this regard.
OTHER MATTER
As mentioned in Note 2 to the accompanying consolidated financial statements have been translated
into English for the convenience of readers.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH
GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the accompanying consoli-
dated financial statements in accordance with IFRSs, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s consolidated financial
reporting process.
AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDA-
TED FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial state-
ments as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these consolidated financial statements.
94
ar alsea 2021 As part of an audit in accordance with ISA’s, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
-
Evaluate the overall presentation, structure and content of the consolidated financial state-
ments, including the disclosures, and whether the consolidated financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
-
Identify and asses the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Entity’s internal control.
-
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accoun-
ting estimates and related disclosures made by management.
Conclude on the appropriateness of management´s use of the going concern basis of accoun-
ting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Entity’s ability to continue as
a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors’ report to the related disclosures in the consolidated financial sta-
tements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Entity to cease to continue as a going concern.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Entity to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provided the Entity’s corporate governance officers with a declaration to the effect that
we have fulfilled applicable ethical requirements regarding our independence and have reported
all the relations and other issues that could be reasonably be expected to affect our independence
and, when applicable, the respective safeguards.
The issues we have reported to the Entity’s governance officers include the matters that we con-
sider to have the greatest significance for the audit of the consolidated financial statements of
the current period and which, accordingly, are classified as key audit matters. We have described
these matters in this audit report, unless legal or regulatory provisions prevent them from being
disclosed or, under extremely infrequent circumstances, we conclude that a given matter should
be excluded from our report because we can fairly expect that the resulting adverse consequences
will exceed any possible benefits as regards the public interest.
Galaz, Yamazaki, Ruiz Urquiza, S.C.
Member of Deloitte Touche Tohmatsu Limited
C.P.C. Juan Carlos Reynoso Degollado
Mexico City, Mexico
April 12, 2022
95
ar alsea 2021 Notes
2021
2020
2019
Liabilities and stockholders’ equity
Notes
2021
2020
2019
ALSEA, S.A.B. DE C.V. AND SUBSIDIARIES
Consolidated statements
of financial position
At December 31, 2021, 2020 and 2019
(Figures in thousands of Mexican pesos)
Assets
Current assets:
Cash and cash equivalents
Customers, net
Value-added tax and other recoverable taxes
Other accounts receivable
Inventories
Non-current assets classified as held for sale
Advance payments
Total current assets
Long-term assets:
Guarantee deposits
Investment in shares of associated companies
Store equipment, leasehold improvements
and proprty, net
Right of use assets
6
7
8
9
15
12
10
$
6,893,433 $
3,932,409 $
2,568,771
Current maturities of long-term debt
Current liabilities:
1,070,153
355,293
681,374
2,009,258
-
641,421
11,650,932
890,484
1,274,055
730,291
1,617,570
764,902
Current obligation under finance leases
338,597
Debt instruments
682,319
Suppliers
1,779,646
Factoring of suppliers
-
52,546
Accounts payable to creditors
328,034
8,772,843
289,885
6,476,666
Accrued expenses and employee benefits
Option to sell the non-controlling interest
Total current liabilities
Long-term liabilities:
Long-term debt, not including current maturities
877,016
1,789,833
753,850
Obligation under finance leases
Debt instruments
131,867
90,110
85,471
Option to sell the non-controlling interest
15,277,931
15,879,778
16,692,801
22,274,256
23,423,275
21,192,657
Other liabilities
Deferred income taxes
Employee retirement benefits
Total long-term liabilities
Total liabilities
Stockholders’ equity:
Capital stock
Premium on share issue
Retained earnings
Intangible assets, net
13 and 17
27,796,564
28,816,687
27,375,209
Deferred income taxes
21
4,968,996
4,665,412
3,835,593
Total long-term assets
71,326,630
74,665,095
69,935,581
Total assets
$
82,977,562 $
83,437,938 $
76,412,247
Reserve for repurchase of shares
Reserve for obligation under put option
of non-controlling interest
Other comprehensive income items
Stockholders' equity attributable to the controlling interest
Non-controlling interest
Total stockholders’ equity
20 and 25
25
See accompanying notes to the consolidated financial statements.
96
Total liabilities and stockholders’ equity
$
82,977,562 $
83,437,938 $
76,412,247
18
11
19
20
18
11
19
20
20
21
24
$
1,638,000 $
24,233,053 $
4,415,950
1,000,000
2,971,439
1,007,798
4,446,604
4,160,150
-
4,207,633
7,979,149
2,949,829
654,115
2,834,150
4,279,180
2,701,407
305,668
3,915,338
-
2,327,048
889,046
2,234,461
3,278,798
2,304,864
19,639,941
49,838,516
15,255,223
12,012,739
19,347,324
17,078,340
1,272,474
894,135
3,710,272
348,250
54,663,534
74,303,475
478,749
8,676,827
(1,054,274)
660,000
(808,098)
(314,040)
7,639,164
1,034,923
8,674,087
-
21,092,417
-
-
265,050
4,364,054
244,056
25,965,577
75,804,093
478,749
8,676,827
(683,700)
660,000
17,102,448
19,542,694
7,973,765
-
416,663
4,365,095
213,797
49,614,462
64,869,685
478,749
8,670,873
2,551,874
660,000
(2,013,801)
(2,013,801)
(814,676)
6,303,399
1,330,446
7,633,845
(766,696)
9,580,999
1,961,563
11,542,562
ar alsea 2021 ALSEA, S.A.B. DE C.V. AND SUBSIDIARIES
Consolidated statements
of income
For the years ended December 31, 2021, 2020 and 2019
(Figures in thousands of Mexican pesos)
Notes
2021
2020
2019
Continuing operations
Net sales
Cost of sales
Cost of distribution
Depreciation and amortization
Employee benefits
Services
Advertising
Royalties
Repair and maintenance
Supplies
Distribution
Other operating expenses
Income (loss) operating
Comprehensive financing result:
Interest income
Interest expenses
Changes in the fair value of financial instruments
Exchange (gain) loss, net
Equity in results of associated companies
Income (loss) before income taxes
Income (profit) taxes
Consolidated net income (loss) from continuing operations
Net income (loss) for the year attributable to:
Controlling interest
Non-controlling interest
Earnings per share:
Basic and diluted net earnings per share from
continuing operations (cents per share)
$
53,379,469 $
38,495,420 $
27
28
10, 12 and 13
15,591,274
1,161,787
8,178,329
13,759,593
2,414,136
1,719,398
1,685,022
1,090,474
1,037,100
109,363
2,500,054
4,132,939
(141,707)
3,508,158
(120,340)
(110,747)
3,135,364
1,840
999,415
214,946
11,454,884
1,034,682
8,435,190
12,003,552
1,951,278
1,398,352
1,124,108
843,613
756,147
521,046
490,077
(1,517,509)
(118,987)
3,225,511
456,548
11,318
3,574,390
(2,647)
(5,094,546)
(1,199,088)
784,469 $
(3,895,458) $
835,129 $
(50,660) $
(3,235,574) $
(659,884) $
58,154,617
17,164,021
1,269,185
8,046,665
15,882,694
2,811,219
2,026,539
1,779,165
1,056,296
912,487
613,309
2,022,146
4,570,891
(101,168)
3,123,023
(201,142)
29,083
2,849,796
(942)
1,720,153
635,420
1,084,733
926,669
158,064
1.00 $
(3.86) $
1.11
29
20
15
21
26
$
$
$
$
See accompanying notes to the consolidated financial statements.
97
ar alsea 2021 ALSEA, S.A.B. DE C.V. AND SUBSIDIARIES
Consolidated statements of other
comprehensive income
For the years ended December 31, 2021, 2020 and 2019
(Figures in thousands of Mexican pesos)
Consolidated net income (loss)
$
784,469 $
(3,895,458) $
1,084,733
2021
2020
2019
Items that may be reclassified subsequently to income:
Valuation of financial instruments, net of income taxes
Remeasurement of defined benefit obligation, net of income taxes
Inflation effect, net of income taxes
Cumulative translation adjustment, net of income taxes
Total comprehensive income (loss), net of income taxes
Comprehensive income (loss) for the year attributable to:
Controlling interest
Non-controlling interest
41,560
3,044
620,457
(164,425)
500,636
(202,333)
21,894
263,736
(131,277)
(47,980)
12,686
(48,782)
313,132
(1,141,069)
(864,033)
1,285,105 $
(3,943,438) $
220,700
1,335,765 $
(3,283,554) $
62,636
(50,660) $
(659,884) $
158,064
$
$
$
See accompanying notes to the consolidated financial statements.
98
ar alsea 2021 ALSEA, S.A.B. DE C.V. AND SUBSIDIARIES
Consolidated statements of
changes in stockholders’ equity
For the years ended December 31, 2021, 2020 and 2019
(Figures in thousands of Mexican pesos)
Contributed capital
Retained earnings
Other comprehensive income items
Capital
stock
Premium
on issuance
of share
Reserve for
repurchase of
shares
Reserve for
obligation
under put
option of non-
controlling
interest
Legal
reserve
Retained
earnings
Inflation
effect
Valuation
of financial
instruments
Cumulative
translation
adjustment
Remeasurement
of defined
benefit
obligation
Total
controlling
interest
Non-
controlling
interest
Total
stockholders’
equity
Balances at January 1, 2019
$
478,749 $
8,444,420 $
660,000 $
(2,013,801) $
100,736 $
3,805,711 $
545,766 $
(62,657) $
(348,446) $
(37,326) $
11,573,152 $
1,878,742 $
13,451,894
Effect of change in accounting
policy for initial application of
IFRS 16
Sales of shares (Note 24a)
Other movements (Note 25)
Comprehensive income
-
-
-
-
-
226,453
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,281,242)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
926,669
313,132
12,686
(1,141,069)
(48,782)
(2,281,242)
226,453
-
62,636
-
-
(75,243)
158,064
(2,281,242)
226,453
(75,243)
220,700
Balances at December 31, 2019
478,749
8,670,873
660,000
(2,013,801)
100,736
2,451,138
858,898
(49,971)
(1,489,515)
(86,108)
9,580,999
1,961,563
11,542,562
Repurchase of shares
(Note 24a)
Other movements (Note 25)
Comprehensive income
-
-
-
5,954
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,954
-
-
28,767
5,954
28,767
(3,235,574)
263,736
(202,333)
(131,277)
21,894
(3,283,554)
(659,884)
(3,943,438)
Balances at December 31, 2020
478,749
8,676,827
660,000
(2,013,801)
100,736
(784,436)
1,122,634
(252,304)
(1,620,792)
(64,214)
6,303,399
1,330,446
7,633,845
Other movements (Note 25)
Comprehensive income
-
-
-
-
-
-
1,205,703
-
-
-
(1,205,703)
-
-
-
-
-
835,129
620,457
41,560
(164,425)
3,044
1,335,765
(244,863
(50,660)
(244,863)
1,285,105
Balances at December 31, 2021
$
478,749 $
8,676,827 $
660,000 $
(808,098) $
100,736 $
(1,155,010) $
1,743,091 $
(210,744) $
(1,785,217) $
(61,170) $
7,639,164 $
1,034,923 $
8,674,087
See accompanying notes to the consolidated financial statements.
99
ar alsea 2021 ALSEA, S.A.B. DE C.V. AND SUBSIDIARIES
Consolidated statements
of cash flows
For the years ended December 31, 2021, 2020 and 2019
(Figures in thousands of Mexican pesos)
Notes
2021
2020
2019
Notes
2021
2020
2019
Cash flows from operating activities:
Consolidated net income
Adjustment for:
Income taxes
Equity in results of associated companies
Interest expense
Interest income
Disposal of store equipment, leasehold improvements
and property
Impairment goodwill
Profit on sale of fixed assets
Changes in the fair value of financial instruments
Depreciation and amortization
13
10, 12
and 13
Changes in working capital:
Customers
Other accounts receivable
Inventories
Advance payments
Suppliers
Factoring of suppliers
Accrued expenses and employee benefits
Income taxes paid
Other liabilities
Labor obligations
Net cash flows used in investing activities
(3,750,553)
(1,839,137)
$
784,469 $
(3,895,458) $
1,084,733
Proceeds from equipment and property
Cash flows from investing activities:
214,946
(1,840)
3,508,158
(141,707)
(111,713)
184,430
70,986
(120,340)
Interest collected
(1,199,088)
635,420
Store equipment, leasehold improvements and
2,647
3,225,511
(118,987)
942
3,123,023
(101,168)
property
Intangible assets
Acquisition in investment in shares of associated
companies
324,877
1,362,947
Acquisitions of business, net of cash acquired
12
13
20
Non-controlling interest put option payments
1 and 20
220,000
(178,774)
456,548
32,469
10,994
(201,142)
8,178,329
8,212,474
8,046,665
Cash flows from financing activities:
Bank loans
Repayments of loans
12,565,718
7,049,750
13,994,883
Issuance of debt instruments
19
(252,500)
36,665
(461,157)
576,613
265,064
353,683
1,131,299
(101,859)
434,048
108,543
(125,582)
(47,972)
162,076
(1,074,132)
622,781
(234,931)
1,251,019
(546,667)
(326,440)
61,536
(4,299)
(261,948)
356,210
398,617
(645,479)
131,070
(1,209,205)
(588,322)
(482,203)
(7,880)
Payments for debt instruments
Interest paid
Cash received non-controlling stake
Payments for financial leasing
Repurchase of shares
Sales of shares
Net cash flows used in financing activities
Net increase (decrease) in cash and cash
equivalents
Exchange effects on value of cash
Cash and cash equivalents:
At the beginning of the year
At end of year
142,796
141,707
231,320
118,987
82,668
101,168
(2,740,920)
(1,778,242)
(3,087,269)
(140,968)
(403,916)
(425,573)
(39,917)
(7,286)
(72,117)
(1,113,251)
-
-
-
-
(1,109,933)
(4,511,056)
1,633,890
(2,797,076)
4,000,000
(3,000,000)
(3,123,023)
(75,243)
179,210
(10,161,796)
10,257,850
-
10,045,269
(4,703,310)
-
-
(2,457,826)
(3,225,511)
(244,863)
28,767
(5,738,455)
(4,186,643)
(4,139,136)
-
-
5,954
-
221,400
5,053
(8,165,880)
(2,035,474)
(7,274,135)
2,739,684
2,916,827
(103,747)
221,340
(1,553,189)
684,661
3,932,409
2,568,771
1,987,857
$
6,893,433 $
3,932,409 $
2,568,771
Net cash flows provided by operating activities
14,656,117
6,791,438
11,681,444
See accompanying notes to the consolidated financial statements.
100
ar alsea 2021 ALSEA, S.A.B. DE C.V. AND SUBSIDIARIES
Notes to the consolidated
financial statements
For the years ended December 31, 2021, 2020 and 2019
(Figures in thousands of Mexican pesos)
1. ACTIVITY, MAIN OPERATIONS AND SIGNIFICANT EVENTS
Operations
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 Av. Revolución
1267 Int. 20 and 21,
Col. Alpes, Alcaldía Álvaro Obregón, C.P. 01040, Mexico City, Mexico.
The Entity was incorporated for a period of 99 years, beginning on the date in which the
deed was signed, which was April 7, 1997.
For disclosure purposes in the notes to the consolidated financial statements, reference
made to pesos, "$" or MXP is for thousands of Mexican pesos, reference made to dollars is
for US dollars and reference made to euros is for of the European Union.
Alsea is mainly engaged in operating fast food restaurants "QSR" cafes and casual dining
"Casual Dining". The brands operated in Mexico are Domino’s Pizza, Starbucks, Burger King,
Chili’s Grill & Bar, P.F. Chang’s, Italianni’s, The Cheese Cake Factory, Vips, El Portón, Corazón
de Barro, La Casa del Comal and La Finca. In order to operate its multi-units, the Entity
has the support of its shared service center, which includes the supply chain through Dis-
tribuidora e Importadora Alsea, S.A. de C.V. (DIA), real property and development services,
as well as administrative services (financial, human resources and technology). The Entity
operates the Burger King, P.F. Chang’s, Chili’s Grill & Bar and Starbucks brands in Chile. In
Argentina, Alsea operates the Burger King, and Starbucks brands. In Colombia, Alsea oper-
ates the Domino's Pizza, Starbucks, Archie’s and until December 2021 P.F. Chang’s brands.
In Uruguay, it operates the Starbucks brand. In Spain, Alsea operates the brands Foster's
Hollywood, Burger King, Domino's Pizza, VIPS, VIPS Smart, Starbucks, Ginos, Fridays, Ole
Mole and until mid-2020 Wagamama and Cañas y Tapas, and from January and February
2020, Alsea operates the Starbucks brand in France, Netherlands, Belgium and Luxembourg.
Significant events
a. Alsea announces the successful pricing of senior bonds with maturity in 2026 for
the amount of US$ 500 million on international markets – On December 14, 2021,
the placement of senior bonds was concluded for the amount of US$ 500 million, with
an annual interest rate of 7.75% payable semi-annually and with the option of partial or
full settlement from December 14, 2023.
b. Alsea increased its equity in Alsea Europa, incorporating Bain Capital Credit as an
investor - In October 2021, the Entity, jointly with Alia Capital Partners and Bain Capital
Credit agreed to acquire the 21.1% of the noncontrolling interest of Food Service Project,
S.A. (Alsea Europa). As a result of this investment, Alsea holds the 76.8% of the Equity
of Alsea Europa (formerly 66.2%), while Alia Capital Partners and Bain Capital Credit
will indirectly hold equity of 10.6%, and the remaining minority shareholders represent
12.7%. The Entity paid 55 million euros (equal to $1,205,703). Similarly, reimbursements
of $92.4 million pesos were also obtained. Based on this agreement, the Entity renego-
tiated its PUT - CALL options in the following manner:
a) Deadline of December 31, 2026.
b) The Entity has an enforceable and optional “Call Option” as of the third year.
c) Half-yearly payment of a coupon with annual interest payable annually at the 4.6%
rate on principal of €55 million until the date on which the “Put Option” is exercised.
d) The Entity has the possibility of settling the obligation through the exchange of
shares or cash.
c. Development of the Domino’s Pizza brand in Uruguay - In December 2021, Alsea ex-
ecuted a contract for a 10-year period (with a conditional renewal right) with Domino’s
Pizza International Franchising Inc. to exclusively operate and develop the Domino’s
Pizza brand in Uruguay. This agreement represents the expansion of Alsea to a new
South American market with this brand, together with the plan of opening at least 24
units within the next 10 years.
d. Closure of stores pertaining to the PF Chang’s brand in Colombia - In December 2021,
Alsea ceased to exclusively operate and develop establishments under the PF Chang’s
brand in Colombia.
e.
Implications resulted from COVID-19 - Net sales in 2021 increase by 27.9% to $ 53,379
million pesos, compared to $38,495 million pesos the previous year. This increase is
mainly due to the recovery in the consumption trend.
As a result of the several initiatives that the Entity had been working on prior to the pan-
demic, they were able to count on the necessary processes, agreements and platforms
to achieve the highest possible sales through the new distance sales channels. In this
way, they achieved 15% growth in the home delivery segment compared to fiscal year
2020, which represents an amount greater than $78.3 million pesos.
101
ar alsea 2021 Profit before taxes plus/minus participation in the results of associated entities, interest,
exchange rate fluctuations, changes in the fair value of financial instruments, depreciation
and amortization (EBITDA) in 2021 increased 77.97% to reach $12,311 million pesos,
compared to the $6,918 million pesos of the previous year. The increase in EBITDA of
$5,394 million pesos was mainly due to related to the significant recovery in the con-
sumption trend. In all the geographies where Alsea has a presence reported positive
EBITDA at the end of the 2021 financial year.
f. Alsea receives liquidation letter - On February 14, 2020, Alsea informs that the Tax
Administration Service (SAT) carried out a review of the fiscal aspects related to the
purchase operation of the Vips restaurant division from Wal-Mart de México, S.A.B. de
C.V. “Walmex” carried out in 2014. The SAT issued a liquidation document in which
Alsea is required to pay taxes for alleged income from the acquisition of goods, which
amounts to $3,881 million. This amount includes upgrade, surcharges and penalty. As
of March 23, 2020, Alsea filed an Administrative Appeal with the tax authorities, which
is under review as of the date of issuance of these consolidated financial statements.
In addition, Alsea has assumed the following commitments during the aforementioned
period, which will be reviewed with the banks on a monthly basis:
• Maximum indebtedness:
- The debt that the company has in Mexican pesos should not exceed 19.4 billion
Mexican pesos or its equivalent in U.S. dollars or Chilean pesos.
- The debt that the company has in euros must not exceed 615 million euros or its
equivalent in U.S. dollars or Chilean pesos.
• Minimum liquidity:
- During this period, the company agrees to maintain a minimum liquidity level of
3 billion pesos.
• Minimum consolidated stockholders' equity:
- During this period, the company must maintain a minimum consolidated stock-
holders' equity of 6.9 billion pesos.
g. Alsea agrees to obtain a waiver in its credit agreements - On July 2, 2020, the Entity
has reached agreements with all the banks with which it has a relationship, to negotiate
various terms in their credit agreements, in order to suspend from June 29, 2020 to June
30, 2021, the commitments originally assumed with the banks that, due to the impacts
of the pandemic, have been affected (mainly those related to the gross leverage ratio
and the interest coverage index), thus achieving better conditions to face the situation
derived from COVID-19.
• Capital expenditure (Capex):
- The Company agrees not to exceed 800 million pesos in capital expenditure per
quarter during the established period.
The Entity's management is in the process of formalizing the contractual extension of
the term of its short-term loan contracts to renegotiate the maturities that it will have
during 2021, which will be formally approved during May 2021.
Derived from the agreements, the cost of interest and commissions will be temporarily
increased during the suspension period.
On December 14, 2021, the Entity refinanced its bank loans until 2026 with increasing
annual repayments. Leaving without effect the waiver that expired in June 2022.
Additionally, Alsea has agreed with the banks, taking care at all times of the Entity's
liquidity, to maintain a minimum level of Capex that allows ensuring the continuity of its
priority strategic projects and the operation of its restaurants in optimal conditions, as
well as achieving growth organic estimated between 80 and 90 corporate units by 2021.
In addition, Alsea will have the possibility of accessing additional debt, which will allow the
Entity to have the ability to respond to any liquidity need during this contingency period.
Similarly, focusing on the Company's liquidity, the existing short-term credit agreements
at the end of May 2020 have been refinanced, extending the payment commitments to
June 30, 2021.
On April 5, 2021, Alsea has negotiated with all its relationship banks to extend the sus-
pension of the computation of certain covenants in their credit contracts, (primarily those
related to the gross leverage ratio and the interest coverage ratio) effective from April
1, 2021 to June 30, 2022. This puts Alsea in a stronger position to continue facing the
impact of the COVID-19 pandemic and to ensure the continuity of its priority strategic
projects, the operation of its restaurants in optimal conditions, as well as the continued
organic growth of the Entity.
h. Development of the Starbucks brand in Netherlands, Belgium and Luxembourg – In
February 2019, Alsea executed a development contract with Starbucks Coffee Company
to obtain the full license and acquire Starbucks corporate store operations in Nether-
lands, Belgium and Luxembourg. This transaction resulted in the acquisition by Alsea of
13 corporate units in Netherlands, as well as the rights to provide services to licensed
operators in those countries (95 licensed stores in these territories), while operating
and generating expansion opportunities for Starbucks stores in those countries. Alsea
concluded the purchase process on February 25, 2019.
i. Transfer of operations and development rights of the California Pizza Kitchen
(CPK) brand – In May 2019, as follow-up on the portfolio restructuring strategy,
Alsea reached an agreement with CPK to divest the brand under an asset lease
scheme and transfer operating and development rights to Opcal, S.A. de C.V. as
of May 8, 2019, while also assuming the operation of the 13 corporate units, the
rights to 2 sub-franchises at airports, together with the rights to develop and build
the CPK brand in Mexico.
102
ar alsea 2021 j. Transfer of operations and development rights of the P.F. Chang’s brand in Brazil – In
June 2019, as follow-up on the portfolio restructuring strategy and to seek efficiencies,
Alsea executed an agreement with Banco de Franquicias for the incorporation of a joint
venture involving P.F. Chang’s in Brazil as of June 2019. As part of this agreement, Banco
de Franquicias will manage the operation of the P.F. Chang’s units in that country within
the joint venture, while also developing new units.
In November 2020, Alsea concluded an agreement for the sale of the P.F. Chang’s in
Brazil to Banco de Franquicias mentioned in the previous paragraph. As part of this
agreement, Alsea will cease to operate the brand in that Country. This operation is aligned
with the portfolio restructuring strategy and search for its efficiencies to increase the
profitability of the company.
k. Transfer of operations and development rights of the Burger King brand in Colombia
and the P.F. Chang’s brand in Argentina – In August 2019, Alsea executed an agreement
to sell the Burger King business in Colombia and the P.F. Chang’s business in Argentina.
As part of this agreement, Alsea will cease to operate its 16 Burger King units in Colom-
bia and 1 unit in Argentina. This transaction is aligned with the portfolio restructuring
strategy and to seek efficiencies to enhance the company’s profitability.
2. BASIS OF PRESENTATION
a. Explanation for translation into English
The accompanying consolidated financial statements have been translated from Spanish into
English for use outside of Mexico. These consolidated financial statements are presented
on the basis of International Financial Reporting Standards (IFRS). Certain accounting
practices applied by the Entity that conform to IFRS may not conform to accounting prin-
ciples generally accepted in the country of use.
3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS
a. Application of new and revised International Financing Reporting Standards (“IFRSs”
or “IAS”) and interpretations that are mandatorily effective for the current year
Impact of the initial application of Interest Rate Benchmark Reform amendments to
IFRS 9, IAS 39 and IFRS 7.
In September 2019, the IASB issued Interest Rate Benchmark Reform (Amendments to IFRS
9, IAS 39 and IFRS 7). These amendments modify specific hedge accounting requirements
to allow hedge accounting to continue for affected hedges during the period of uncertain-
ty before the hedged items or hedging instruments affected by the current interest rate
benchmarks are amended as a result of the on-going interest rate benchmark reforms.
These modifications have not implied changes for the Entity since it has no exposure to
IBOR reference interest rates.
The Entity implemented a series of new and modified IFRS, issued by the International
Accounting Standards Board (“IASB”) which are mandatory and came into force as of
fiscal years beginning on or after 1 January 2021.
Impact of the initial application of Covid-19-Related Rent Concessions Amendment to
IFRS 16 after June 30, 2021, amendment to IFRS 16
In the prior year, the Entity early adopted Rent Concessions under IFRS 16 due to issues
related to COVID-19 (amendment to IFRS 16) which provides practical expedients for the
accounting of concessions for lessees as a direct consequence of COVID-19, introducing
a practical expedient to IFRS 16.
In March 2021, the IASB issued Lease Concessions related to COVID-19 after June 30,
2021 (amendment to IFRS 16). When the IASB issued amendments to IFRS 16 in May
2020, the lessor was allowed to apply the practical expedient of the rent concession for
any reduction in lease payments affecting the original payments before or at June 30,
2021. Due to the nature of the COVID-19 pandemic, the amendment extended a practical
expedient to apply those original payments on or before June 30, 2022.
In the current financial year, the Entity has applied the amendment to IFRS 16 (as issued
by the IASB in May 2021) in advance of its effective date in the consolidated statement
of income under other operating expenses.
The practical expedient permits a lessee to elect not to assess whether a COVID-19
related rental is a lease modification. A lessee that makes this election must account for
any change in rental payments resulting from the COVID-19 related rental concession
by applying IFRS 16 as if the change were not a lease modification.
The practical expedient applies only to rental awards that occur as a direct consequence
related to COVID-19 and only if the following conditions are met:
a) The change in lease payments results in consideration that is substantially the same
as, or less than, the lease consideration immediately preceding the change.
b) Any reduction in lease payments only affects payments due on or before June 30,
2022 (a rental award meets this condition if it results in a reduction in payments
before June 30, 2022 or increases lease payments that extend beyond June 30,
2022); and
c) There is no substantive change in any other term or condition of the lease.
Impact on accounting for changes in lease payments applying the exemption
The Entity has applied the practical expedient retrospectively to all rent concessions that
meet the conditions in IFRS 16:46B, and has not restated prior period figures.
The Entity has benefited from reductions in the rental payment amounts for leases.
The waiver of lease payments of $840,873 and $1,596,496 has been accounted for as
a negative variable lease payment in profit or loss at December 31, 2021 and 2020,
respectively. The Entity has derecognized the part of the lease liability that has been
extinguished by the forgiveness of lease payments, consistent with the requirements
of IFRS 9:3.3.1.
103
ar alsea 2021 The Entity has negotiated with its lessors different discount percentages depending on the
impact on the flow of customers suffered by each brand operated. The discount percent-
ages are periodically reviewed and; in some cases, readjusted as a result of reductions in
operating hours, limited capacity and/or restrictions on the opening of restaurants in shop-
ping malls, mainly. The Entity continued to recognize interest expense on the lease liability.
whether the obligating event that gives rise to a liability to pay the levy has occurred
by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognise
contingent assets acquired in a business combination.
New and amended IFRS Standards that are not yet effective
Amendments to IAS 1
Amendments to IFRS 3
Amendments to IAS 16
Annual Improvements to IFRS Stan-
dards 2018-2020
Amendments to IAS 1 and to IFRS 2
practice statements
Amendments to IAS 8
Amendments to IAS 12
Classification of Liabilities as Current or
Non-current
Reference to the Conceptual Framework
Property, Plant and Equipment - before
being used
IFRS 9 Financial Instruments and
IFRS 16 Leases
Disclosure of accounting policies
Definition of accounting estimates
Deferred taxes related to assets and liabilities
arising from a single transaction
The directors do not expect that the adoption of the Standards listed above will have
a material impact on the financial statements of the Group in future periods, except as
noted below:
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or non-cur-
rent in the statement of financial position and not the amount or timing of recognition of
any asset, liability, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non-current
is based on rights that are in existence at the end of the reporting period, specify that
classification is unaffected by expectations about whether an entity will exercise its
right to defer settlement of a liability, explain that rights are in existence if covenants are
complied with at the end of the reporting period, and introduce a definition of ‘settlement’
to make clear that settlement refers to the transfer to the counterparty of cash, equity
instruments, other assets or services.
The amendments are effective for business combinations for which the date of acquisition
is on or after the beginning of the first annual period beginning on or after 1 January
2022. Early application is permitted if an entity also applies all other updated references
(published together with the updated Conceptual Framework) at the same time or earlier.
Amendments to IAS 16 - Property, Plant and Equipment - Before use
The amendments prohibit the deduction from the cost of an asset of property, plant or
equipment of any revenue from selling the asset after it is ready for use, for example,
revenue while the asset is being brought to the location and the necessary refurbish-
ment is being carried out to make it operable in the manner intended by management.
Accordingly, an entity should recognize such sales revenue and costs in profit or loss.
An entity measures the costs of these items in accordance with IAS 2 Inventories.
The amendments clarify the meaning of 'testing whether an asset is functioning prop-
erly'. IAS 16 now specifies this as an assessment of whether the physical and technical
performance of the asset is capable of being used in the production or supply of goods
or services, for rental or other or administrative purposes.
If not presented separately in the statement of comprehensive income, the financial
statements shall disclose the amounts of revenues and costs in profit or loss related to
items that are not an outflow from the entity's ordinary activities, in the line item(s) in
the statement of comprehensive income where revenues and costs are included.
The modifications are applied retrospectively, but only to items of property, plant and
equipment that are brought to the location and condition necessary for them to be capable
of operating as management intends on or after the beginning of the period in which the
entity's financial statements in which the modifications are first applied.
An entity shall recognize the cumulative effect of the initial application of the amendments
as an adjustment to the balance in retained earnings (or an appropriate component of
equity) at the beginning of the earliest period presented.
The amendments are effective for annual periods beginning on January 1, 2022 with
an option for earlier application.
The amendments are applied retrospectively for annual periods beginning on or after 1
January 2023, with early application permitted.
Annual Improvements to IFRS Standards 2018–2020
The Annual Improvements include amendments to four Standards.
Amendments to IFRS 3 – Reference to the Conceptual Framework
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework
instead of the 1989 Framework. They also add to IFRS 3 a requirement that, for obli-
gations within the scope of IAS 37, an acquirer applies IAS 37 to determine whether at
the acquisition date a present obligation exists as a result of past events. For a levy that
would be within the scope of IFRIC 21 Levies, the acquirer applies IFRIC 21 to determine
IFRS 9 Financial Instruments
The amendment clarifies that in applying the ‘10 per cent’ test to assess whether to
derecognize a financial liability, an entity includes only fees paid or received between
the entity (the borrower) and the lender, including fees paid or received by either the
entity or the lender on the other’s behalf.
104
ar alsea 2021 The amendment is applied prospectively to modifications and exchanges that occur on
or after the date, the entity first applies the amendment.
• A change in an accounting estimate is the result of new information or a new de-
velopment is not a correction of an error.
The amendment is effective for annual periods beginning on or after 1 January 2022,
with early application permitted.
IFRS 16 Leases
The amendments eliminate the reimbursement for leasehold improvements.
As the amendment to IFRS 16 only regards an illustrative example, no effective date
is stated.
The amendments are effective for annual periods beginning on or after January 1, 2022,
with an initial adoption option.
Amendments to IAS 1 and IFRS Practice Statements 2 Disclosure of Accounting Policies
The amendments change the requirements of IAS 1 with respect to the disclosure of
accounting policies. The amendment replaces the terms "significant accounting policies"
with "disclosures of material accounting policies". Accounting policy disclosures are
material when they are considered, in conjunction with other information included in an
entity's financial statements, to influence the decision-making of primary users of general
purpose financial statements and are made on the basis of those financial statements.
The supporting paragraphs in IAS 1 are amended to clarify the disclosure of account-
ing policies that relate to immaterial transactions, other events or conditions that are
themselves material.
•
The effects of a change in an input or a valuation technique used to develop an
accounting estimate are changes in accounting estimates if they do not result from
a correction of prior period errors.
The IASB added two examples (example 4-5) to the accompanying IAS 8 Implementation
Guide. The IASB has removed one example (example 3) as it could cause confusion
because of the amendments.
The amendments will be effective for annual periods beginning on January 1, 2023 for
changes in accounting policies and changes in accounting estimates that occur on or
after the beginning of that period with an option for early application.
Amendments to IAS 12 Deferred Taxes related to assets and liabilities arising from a
single transaction
The amendments introduced an additional exception other than the initial recognition
exemption. In the amendments, an entity does not apply the initial recognition exception
for transactions that give rise to taxable and deductible temporary differences.
Depending on the applicable tax law, taxable and deductible temporary differences may
arise on initial recognition of an asset and a liability in a transaction that is not a busi-
ness combination and does not affect accounting and taxable income. For example, it
may occur with a recognition of a lease liability and a corresponding right-of-use asset
applying IFRS 16 Leases at the inception date of a lease.
To support these amendments, the IASB has developed guidance and examples to explain
and demonstrate the application of the "4 steps of the materiality process" described in
IFRS Practice Statement 2.
Following the amendments to IAS 12, an entity is required to recognize deferred tax
assets and liabilities, with the recognition of any deferred tax asset being subject to the
recoverability criterion.
The amendments to IAS 1 will be effective for annual periods beginning on January 1,
2021, with an option for early application and are applied prospectively. The amendments
to IFRS Practice Statement 2 do not contain an effective date or transition requirements.
Amendments to IAS 8 Definition of accounting estimates.
The amendments replace the definition of a change in accounting estimates. Under the
new definition, accounting estimates are "monetary amounts in the financial statements
that are subject to measurable uncertainty".
The definition of a change in accounting estimates was eliminated. However, the IASB
retained the concept of changes in an accounting estimate in the standard with the
following clarifications:
The IASB also adds an illustrative example to IAS 12 that explains how the amendments
are applied.
The amendments apply to transactions occurring on or after the first comparative period
of the reporting period. Additionally, at the beginning of the first comparative period an
entity recognizes:
• A deferred tax asset (to the extent that it is probable that taxable income is avail-
able against the deductible temporary difference) and a deferred tax liability for all
taxable and temporary deductions associated with:
- Right-of-use assets and lease liabilities.
- Decommissioning restoration and similar liabilities corresponding to amounts
recognized as part of the asset-related costs.
105
ar alsea 2021 •
The cumulative effect at the beginning of the application of the amendments as an
adjustment to the opening balances of retained earnings (or some other component
of equity, as appropriate) as of the date.
The amendments will be effective for annual periods beginning on January 1, 2023,
with an option for earlier application.
4. SIGNIFICANT ACCOUNTING POLICIES
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with Interna-
tional Financial Reporting Standards released by IASB.
The entity's management has, at the time of approving the financial statements, a rea-
sonable expectation that the Entity has the necessary resources to continue operating in
the foreseeable future. Therefore, they continue to adopt the Going Concern accounting
basis when preparing the financial statements.
b. Basis of preparation
The consolidated financial statements have been prepared on the historical cost ba-
sis except for the revaluation of certain properties and financial instruments that are
measured at revalued amounts or fair values at the end of each reporting period, as
explained in the accounting policies below.
i. Historical cost
Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services.
ii. Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date, regardless of whether that price is directly observable or estimated using
another valuation technique.
In estimating the fair value of an asset or a liability, the Entity takes into account the
characteristics of the asset or liability if market participants would take those char-
acteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes in these consolidated fi-
nancial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of IFRS 2, leasing transactions that are within
the scope of IFRS 16, and measurements that have some similarities to fair value but
are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are catego-
rized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that
are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
iii. Re-expression of financial statements
As of July 1, 2018, accumulated inflation of the last three years in Argentina ex-
ceeded levels of 100%, for which reason the Argentine peso was classified as a
currency in a hyperinflationary economic environment.
As a result, the financial statements of the subsidiaries in that country, whose
functional currency is the Argentine peso, have been re-expressed to adopt the
requirements of International Accounting Standard 29, Financial Information in
Hyperinflationary Economies, (IAS 29) and have been consolidated in accordance
with the requirements of IAS 21, Effects of Variances in the Exchange Rates of the
Foreign Currency. The purpose of applying such requirements is to consider the
changes in the general purchasing power of the Argentine peso and thus present the
financial statements in the current measurement unit at the date of the statement
of financial position. Argentina, for purposes of its financial reporting, updated its
figures using the country’s inflation rate based on official indexes. The financial
statements before the re-expression were prepared using the historical costs method.
c. Basis of consolidation of financial statements
The consolidated financial statements incorporate the financial statements of Alsea,
S.A.B. de C.V. and entities controlled by the Entity. Control is obtained when the Entity:
• Has power over the investee;
•
Is exposed, or has rights, to variable returns from its involvement with the investee;
and
• Has the ability to use its power to affect its returns.
The Entity reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed
above.
When the Entity has less than a majority of the voting rights of an investee, it has power
over the investee when the voting rights are sufficient to give it the practical ability to
direct the relevant activities of the investee unilaterally. The Entity considers all relevant
facts and circumstances in assessing whether or not the Entity’s voting rights in an
investee are sufficient to give it power, including:
•
The size of the Entity’s holding of voting rights relative to the size and dispersion
of holdings of the other vote holders;
• Potential voting rights held by the Entity, other vote holders or other parties;
• Rights arising from other contractual arrangements; and
• Any additional facts and circumstances that indicate that the Entity has, or does not
have, the current ability to direct the relevant activities at the time that decisions
need to be made, including voting patterns at previous shareholders’ meetings.
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ar alsea 2021
Consolidation of a subsidiary begins when the Entity obtains control over the subsidiary
and ceases when the Entity loses control of the subsidiary. Specifically, income and
expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statements of income and other comprehensive income from the date the
Entity gains control until the date when the Entity ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the
owners of the Entity and to the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Entity and to the non-controlling interests
even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with the Entity’s accounting policies.
All assets, liabilities, equity, income, expenses and cash flows relating to transactions
between related parties have been fully eliminated in consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity
therein. Those interests of non-controlling shareholders that are present ownership
interests entitling their holders to a proportionate share of net assets upon liquidation
may initially be measured at fair value or at the non-controlling interests’ proportionate
share of the fair value of the acquiree’s identifiable net assets. The choice of measure-
ment is made on an acquisition-by-acquisition basis. Other non-controlling interests
are initially measured at fair value. Subsequent to acquisition, the carrying amount of
non-controlling interests is the amount of those interests at initial recognition plus the
non-controlling interests’ share of subsequent changes in equity. All intragroup assets
and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Entity are eliminated in full on consolidation. Total comprehensive income
of the subsidiaries is attributed to the owners of the Company and to the non-controlling
interests even if this results in the non-controlling interests having a deficit balance.
All intercompany balances, transactions and cash flows have been eliminated in con-
solidation.
Changes in the Entity’s ownership interests in existing subsidiaries
Changes in the Entity’s ownership interests in subsidiaries that do not result in the Entity
losing control over the subsidiaries are accounted for as equity transactions. The carrying
amounts of the Entity’s interests and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any difference between the amount
by which the non-controlling interests are adjusted and the fair value of the consideration
paid or received is recognized directly in equity and attributed to owners of the Entity.
When the Entity loses control of a subsidiary, a gain or loss is recognized in profit or
loss and is calculated as the difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill), and liabilities of the subsidiary and
any non-controlling interests.
All amounts previously recognized in other comprehensive income in relation to that
subsidiary are accounted for as if the Entity had directly disposed of the related assets
or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another
category of equity as specified/permitted by applicable IFRSs).
The fair value of any investment retained in the former subsidiary at the date when con-
trol is lost is regarded as the fair value on initial recognition for subsequent accounting
under IAS 39, when applicable, the cost on initial recognition of an investment in an
associate or a joint venture.
d.
Information by segment
The operating segments are reported consistently with the internal reports prepared to
provide information to the Audit Committee, which is responsible for assisting the Board
of Directors, which is why it is considered the body that makes strategic decisions for the
allocation of resources and the evaluation of the operating segments on the established
platform of Corporate Governance.
e. Liquidity - As disclosed in the financial statements as of December 31, 2021, 2020
and 2019, its current liabilities exceed its current assets by $9,817,002, $41,065,673
and $8,778,557, respectively. The accompanying consolidated financial statements do
not include those adjustments related to the valuation and classification of assets and
liabilities, which may be necessary in the event that the Entity is unable to continue
its operations.
f. Previous fiscal year reclassifications
The financial statements for the year ended December 31, 2020 and 2019 have been
reclassified in certain items for the adequate presentation of distribution costs and that
the information can be presented in a comparative way with that used in 2021.
Figures
previously
reported
Concept
2020 Reclassifications
Cost of distribution
$
-
$
1,034,682
$
Employee benefits
Services
Repair and maintenance
Supplies
Other costs and
operating expenses
12,138,673
2,004,405
866,926
765,373
1,303,972
(135,121)
(53,127)
(23,313)
(9,226)
(813,895)
Reclassified
balance
2020
1,034,682
12,003,552
1,951,278
843,613
756,147
490,077
107
ar alsea 2021 Figures
previously
reported
Concept
2019 Reclassifications
Cost of distribution
$
-
$
1,269,185
$
Employee benefits
Services
Repair and maintenance
Supplies
Other costs and
operating expenses
16,044,061
2,872,443
1,080,830
928,544
(161,367)
(61,224)
(24,534)
(16,057)
Reclassified
balance
2019
1,269,185
15,882,694
2,811,219
1,056,296
912,487
Debt instruments that meet the following conditions are measured subsequently at fair
value through other comprehensive income (FVTOCI):
•
•
The financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling the financial assets; and
The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through
profit or loss (FVTPL).
3,028,150
(1,006,003)
2,022,147
Despite the foregoing, the Entity may make the following irrevocable election / desig-
nation at initial recognition of a financial asset:
The balance of distribution costs was reclassified from other operating costs and ex-
penses to show the costs related to the distribution of merchandise as a line item in the
consolidated statement of income, such reclassification does not modify the consolidated
operating income.
g. Financial instruments
Financial assets and financial liabilities are recognized when the Entity becomes a party
to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit
or loss) are added to or deducted from the fair value of financial assets and financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to
the acquisition of financial assets and financial liabilities at fair value through profit or
loss are recognize immediately in profit or loss.
h. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized
on a trade date basis. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame established by regulation or
convention in the marketplace.
All recognized financial assets are measured subsequently in their entirety at either
amortized cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at
amortized cost:
•
•
The financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
•
•
The Entity may irrevocably elect to present subsequent changes in fair value of an
equity investment in other comprehensive income if certain criteria are met (see
(iii) below); and
The Entity may irrevocably designate a debt investment that meets the amortized
cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch (see (iv) below).
(i) Amortized cost and effective interest method
The effective interest method is a method of calculating the amortized cost of a
debt instrument and of allocating interest income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial
assets (i.e. assets that are credit-impaired on initial recognition), the effective interest
rate is the rate that exactly discounts estimated future cash receipts (including all
fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) excluding expected credit
losses, through the expected life of the debt instrument, or, where appropriate, a
shorter period, to the gross carrying amount of the debt instrument on initial recog-
nition. For purchased or originated credit-impaired financial assets, a credit-adjusted
effective interest rate is calculated by discounting the estimated future cash flows,
including expected credit losses, to the amortized cost of the debt instrument on
initial recognition.
The amortized cost of a financial asset is the amount at which the financial asset
is measured at initial recognition minus the principal repayments, plus the cumu-
lative amortization using the effective interest method of any difference between
that initial amount and the maturity amount, adjusted for any loss allowance. The
gross carrying amount of a financial asset is the amortized cost of a financial asset
before adjusting for any loss allowance.
Interest income is recognized using the effective interest method for debt instru-
ments measured subsequently at amortized cost and at FVTOCI.
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ar alsea 2021 For financial assets other than purchased or originated credit-impaired financial
assets, interest income is calculated by applying the effective interest rate to the
gross carrying amount of a financial asset, except for financial assets that have
subsequently become credit-impaired (see below). For financial assets that have
subsequently become credit-impaired, interest income is recognized by applying
the effective interest rate to the amortized cost of the financial asset.
If, in subsequent reporting periods, the credit risk on the credit-impaired financial
instrument improves so that the financial asset is no longer credit-impaired, interest
income is recognized by applying the effective interest rate to the gross carrying
amount of the financial asset.
For purchased or originated credit-impaired financial assets, the Entity recognizes
interest income by applying the credit-adjusted effective interest rate to the amor-
tized cost of the financial asset from initial recognition. The calculation does not
revert to the gross basis even if the credit risk of the financial asset subsequently
improves so that the financial asset is no longer credit-impaired.
Interest income is recognized in profit or loss and is included in the "finance income
- interest income" line item.
A financial asset is held for trading if:
• It has been obtained with the main objective of being sold in the short term; or
• On initial recognition, it is part of a portfolio of identified financial instruments that
the Entity manages together and has evidence of a recent pattern of obtaining
profits in the short term; or
• It is a derivative (except for derivatives that are contractual financial guarantees
or a designated and effective hedging instrument).
(ii) Debt instruments classified as at FVTOCI
The corporate bonds held by the Entity are classified as at FVTOCI. Fair value.
The corporate bonds are initially measured at fair value plus transaction costs.
Subsequently, changes in the carrying amount of these corporate bonds as a re-
sult of foreign exchange gains and losses (see below), impairment gains or losses
(see below), and interest income calculated using the effective interest method
(see (i) above) are recognized in profit or loss. The amounts that are recognized
in profit or loss are the same as the amounts that would have been recognized in
profit or loss if these corporate bonds had been measured at amortized cost. All
other changes in the carrying amount of these corporate bonds are recognized in
other comprehensive income and accumulated under the heading of investments
revaluation reserve.
When these corporate bonds are derecognized, the cumulative gains or losses pre-
viously recognized in other comprehensive income are reclassified to profit or loss.
(iii) Equity instruments designated as at FVTOCI
On initial recognition, the Entity may make an irrevocable election (on an instru-
ment-by-instrument basis) to designate investments in equity instruments as at
FVTOCI.
Designation at FVTOCI is not permitted if the equity investment is held for trading or
if it is contingent consideration recognized by an acquirer in a business combination.
A financial asset is held for trading if:
• It has been acquired principally for the purpose of selling it in the near term; or
• On initial recognition it is part of a portfolio of identified financial instruments
that the Entity manages together and has evidence of a recent actual pattern of
short-term profit-taking; or
• It is a derivative (except for a derivative that is a financial guarantee contract or
a designated and effective hedging instrument).
Investments in equity instruments at FVTOCI are initially measured at fair value
plus transaction costs. Subsequently, they are measured at fair value with gains
and losses arising from changes in fair value recognized in other comprehensive
income and accumulated in the investments revaluation reserve. The cumulative
gain or loss is not being reclassified to profit or loss on disposal of the equity in-
vestments; instead, it is transferred to retained earnings.
Dividends on these investments in equity instruments are recognized in profit or
loss in accordance with IFRS 9, unless the dividends clearly represent a recovery
of part of the cost of the investment. Dividends are included in the ‘finance income’
line item in profit or loss.
The Entity has designated all investments in equity instruments that are not held
for trading as at FVTOCI on initial application of IFRS 9.
(iv) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortized cost
or FVTOCI (see (i) to (iii) above) are measured at FVTPL. Specifically:
• Investments in equity instruments are classified as at FVTPL, unless the Entity
designates an equity investment that is neither held for trading nor a contingent
consideration arising from a business combination as at FVTOCI on initial rec-
ognition (see (iii) above).
• Debt instruments that do not meet the amortized cost criteria or the FVTOCI
criteria (see (i) and (ii) above) are classified as at FVTPL.
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ar alsea 2021
In addition, debt instruments that meet either the amortized cost criteria or
the FVTOCI criteria may be designated as at FVTPL upon initial recognition
if such designation eliminates or significantly reduces a measurement or
recognition inconsistency (so called ‘accounting mismatch’) that would arise
from measuring assets or liabilities or recognizing the gains and losses on
them on different bases. The Entity has not designated any debt instruments
as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each re-
porting period, with any fair value gains or losses recognized in profit or loss
to the extent they are not part of a designated hedging relationship (see hedge
accounting policy).
The net gain or loss recognized in profit or loss includes any dividend or interest
earned on the financial asset and is included in the ‘other gains and losses’.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is
determined in that foreign currency and translated at the spot rate at the end of each
reporting period. Specifically;
•
•
•
•
For financial assets measured at amortized cost that are not part of a designated
hedging relationship, exchange differences are recognized in profit or loss in the
‘other gains and losses’;
For debt instruments measured at FVTOCI that are not part of a designated hedging
relationship, exchange differences on the amortized cost of the debt instrument are
recognized in profit or loss in the ‘other gains and losses’. Other exchange differ-
ences are recognized in other comprehensive income in the investments revaluation
reserve;
For financial assets measured at FVTPL that are not part of a designated hedging
relationship, exchange differences are recognized in profit or loss in the ‘other gains
and losses’ line item; and
For equity instruments measured at FVTOCI, exchange differences are recognized
in other comprehensive income in the investments revaluation reserve.
See hedge accounting policy regarding the recognition of exchange differences where
the foreign currency risk component of a financial asset is designated as a hedging
instrument for a hedge of foreign currency risk.
Impairment of financial assets
The Entity recognizes a loss allowance for expected credit losses on investments in
debt instruments that are measured at amortized cost or at FVTOCI, lease receivables,
trade receivables and contract assets, as well as on financial guarantee contracts. The
amount of expected credit losses is updated at each reporting date to reflect changes
in credit risk since initial recognition of the respective financial instrument.
The Entity always recognizes lifetime ECL (credit losses) for trade receivables, contract
assets and lease receivables. The expected credit losses on these financial assets are
estimated using a provision matrix based on the Entity’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and
an assessment of both the current as well as the forecast direction of conditions at the
reporting date, including time value of money where appropriate.
For all other financial instruments, the Entity recognizes lifetime ECL when there has
been a significant increase in credit risk since initial recognition. However, if the credit
risk on the financial instrument has not increased significantly since initial recognition,
the Entity measures the loss allowance for that financial instrument at an amount equal
to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible de-
fault events over the expected life of a financial instrument. In contrast, 12-month ECL
represents the portion of lifetime ECL that is expected to result from default events on
a financial instrument that are possible within 12 months after the reporting date.
(i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased signifi-
cantly since initial recognition, the Entity compares the risk of a default occurring on
the financial instrument at the reporting date with the risk of a default occurring on
the financial instrument at the date of initial recognition. In making this assessment,
the Entity considers both quantitative and qualitative information that is reasonable
and supportable, including historical experience and forward-looking information
that is available without undue cost or effort.
Forward-looking information considered includes the future prospects of the in-
dustries in which the Entity’s debtors operate, obtained from economic expert re-
ports, financial analysts, governmental bodies, relevant think-tanks and other similar
organizations, as well as consideration of various external sources of actual and
forecast economic information that relate to the Entity’s core operations.
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ar alsea 2021 In particular, the following information is taken into account when assessing whether
credit risk has increased significantly since initial recognition.
• An actual or expected significant deterioration in the financial instrument’s ex-
ternal (if available) or internal credit rating;
• Significant deterioration in external market indicators of credit risk for a particular
financial instrument, e.g. a significant increase in the credit spread, the credit
default swap prices for the debtor, or the length of time or the extent to which
the fair value of a financial asset has been less than its amortized cost;
• Existing or forecast adverse changes in business, financial or economic conditions
that are expected to cause a significant decrease in the debtor’s ability to meet
its debt obligations;
For financial guarantee contracts, the date that the Entity becomes a party to the
irrevocable commitment is considered to be the date of initial recognition for the
purposes of assessing the financial instrument for impairment. In assessing whether
there has been a significant increase in the credit risk since initial recognition of a
financial guarantee contracts, the Entity considers the changes in the risk that the
specified debtor will default on the contract.
The Entity regularly monitors the effectiveness of the criteria used to identify
whether there has been a significant increase in credit risk and revises them as
appropriate to ensure that the criteria are capable of identifying significant increase
in credit risk before the amount becomes past due.
• An actual or expected significant deterioration in the operating results of the
(ii) Definition of default
debtor;
• Significant increases in credit risk on other financial instruments of the same
debtor;
• An actual or expected significant adverse change in the regulatory, economic,
or technological environment of the debtor that results in a significant decrease
in the debtor’s ability to meet its debt obligations.
Irrespective of the outcome of the above assessment, the Entity presumes that the
credit risk on a financial asset has increased significantly since initial recognition
when contractual payments are more than 30 days past due, unless the Entity has
reasonable and supportable information that demonstrates otherwise.
Despite the foregoing, the Entity assumes that the credit risk on a financial instrument
has not increased significantly since initial recognition if the financial instrument is
determined to have low credit risk at the reporting date. A financial instrument is
determined to have low credit risk if:
(1) The financial instrument has a low risk of default,
(2) The debtor has a strong capacity to meet its contractual cash flow obligations
in the near term, and
(3) Adverse changes in economic and business conditions in the longer term may,
but will not necessarily, reduce the ability of the borrower to fulfil its contractual
cash flow obligations.
The Entity considers a financial asset to have low credit risk when the asset has
external credit rating of ‘investment grade’ in accordance with the globally under-
stood definition or if an external rating is not available, the asset has an internal
rating of ‘performing’. Performing means that the counterparty has a strong financial
position and there are no past due amounts.
The Entity considers the following as constituting an event of default for internal
credit risk management purposes as historical experience indicates that financial
assets that meet either of the following criteria are generally not recoverable:
• When there is a breach of financial covenants by the debtor; or
• Information developed internally or obtained from external sources indicates
that the debtor is unlikely to pay its creditors, including the Entity, in full (without
taking into account any collateral held by the Entity).
Irrespective of the above analysis, the Entity considers that default has occurred
when a financial asset is more than 90 days past due unless the Entity has rea-
sonable and supportable information to demonstrate that a more lagging default
criterion is more appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental
impact on the estimated future cash flows of that financial asset have occurred.
Evidence that a financial asset is credit-impaired includes observable data about
the following events:
(a) Significant financial difficulty of the issuer or the borrower;
(b) A breach of contract, such as a default or past due event (see (ii) above);
(c) The lender(s) of the borrower, for economic or contractual reasons relating to
the borrower’s financial difficulty, having granted to the borrower a conces-
sion(s) that the lender(s) would not otherwise consider;
(d) It is becoming probable that the borrower will enter bankruptcy or other fi-
nancial reorganization; or
(e) The disappearance of an active market for that financial asset because of
financial difficulties.
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ar alsea 2021 (iv) Write-off policy
The Entity writes off a financial asset when there is information indicating that the
debtor is in severe financial difficulty and there is no realistic prospect of recovery,
e.g. when the debtor has been placed under liquidation or has entered into bank-
ruptcy proceedings, or in the case of trade receivables, when the amounts are over
two years past due, whichever occurs sooner.
Financial assets written off may still be subject to enforcement activities under the
Entity’s recovery procedures, taking into account legal advice where appropriate.
Any recoveries made are recognized in profit or loss.
(v) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of de-
fault, loss given default (i.e. the magnitude of the loss if there is a default) and the
exposure at default. The assessment of the probability of default and loss given
default is based on historical data adjusted by forward-looking information as de-
scribed above.
As for the exposure at default, for financial assets, this is represented by the
assets’ gross carrying amount at the reporting date; for financial guarantee con-
tracts, the exposure includes the amount drawn down as at the reporting date,
together with any additional amounts expected to be drawn down in the future
by default date determined based on historical trend, the Entity’s understanding
of the specific future financing needs of the debtors, and other relevant for-
ward-looking information.
For financial assets, the expected credit loss is estimated as the difference between
all contractual cash flows that are due to the Entity in accordance with the contract
and all the cash flows that the Entity expects to receive, discounted at the original
effective interest rate. For a lease receivable, the cash flows used for determining
the expected credit losses is consistent with the cash flows used in measuring the
lease receivable in accordance with IAS 16, Leases.
For a financial guarantee contract, as the Entity is required to make payments only
in the event of a default by the debtor in accordance with the terms of the instru-
ment that is guaranteed, the expected loss allowance is the expected payments to
reimburse the holder for a credit loss that it incurs less any amounts that the Entity
expects to receive from the holder, the debtor or any other party.
If the Entity has measured the loss allowance for a financial instrument at an
amount equal to lifetime ECL in the previous reporting period, but determines
at the current reporting date that the conditions for lifetime ECL are no longer
met, the Entity measures the loss allowance at an amount equal to 12-month
ECL at the current reporting date, except for assets for which simplified ap-
proach was used.
The Entity recognizes an impairment gain or loss in profit or loss for all financial
instruments with a corresponding adjustment to their carrying amount through a loss
allowance account, except for investments in debt instruments that are measured at
FVTOCI, for which the loss allowance is recognized in other comprehensive income
and accumulated in the investment revaluation reserve, and does not reduce the
carrying amount of the financial asset in the statement of financial position.
Derecognition of financial assets
The Entity derecognizes a financial asset only when the contractual rights to the cash
flows from the asset expire, or when it transfers the financial asset and substantially
all the risks and rewards of ownership of the asset to another entity. If the Entity
neither transfers nor retains substantially all the risks and rewards of ownership and
continues to control the transferred asset, the Entity recognizes its retained interest
in the asset and an associated liability for amounts it may have to pay.
If the Entity retains substantially all the risks and rewards of ownership of a trans-
ferred financial asset, the Entity continues to recognize the financial asset and also
recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset measured at amortized cost, the difference
between the asset’s carrying amount and the sum of the consideration received and
receivable is recognized in profit or loss.
In addition, on derecognition of an investment in a debt instrument classified as at
FVTOCI, the cumulative gain or loss previously accumulated in the investments re-
valuation reserve is reclassified to profit or loss. In contrast, on derecognition of an
investment in equity instrument which the Entity has elected on initial recognition
to measure at FVTOCI, the cumulative gain or loss previously accumulated in the
investments revaluation reserve is not reclassified to profit or loss, but is transferred
to retained earnings.
i. Financial liabilities and equity instruments
1. Classification as debt or equity
Debt and / or equity instruments are classified as financial liabilities or as capital
in accordance with the substance of the contractual agreement and the definitions
of liabilities and capital.
2. Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other
financial liabilities’.
3. Other financial liabilities
Other financial liabilities (including borrowings and trade and other payables) are
subsequently measured at amortized cost using the effective interest method.
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The effective interest method is a method of calculating the amortized cost of a finan-
cial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments (including
all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life
of the financial liability, or (where appropriate) a shorter period, to the net carrying
amount on initial recognition.
4. Derecognition of financial liabilities
The Entity derecognizes financial liabilities when, and only when, the Entity’s ob-
ligations are discharged, cancelled or have expired. The difference between the
carrying amount of the financial liability derecognized and the consideration paid
and payable is recognized in profit or loss.
j. 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 cash flows, which also helps to maintain a cost of debt strategy.
DFI's used are only held for economic hedge purposes, through which the Entity agrees
to the trade cash flows at future fixed dates, at the nominal or reference value, and they
are valued at fair value.
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 regula-
tions; if so, they are separated from the host contract and are valued at fair value. If an
embedded derivative is classified as trading instruments, changes in their fair value are
recognized in income for the period.
Changes in the fair value of embedded derivatives designated for hedging recognize in
based on the type of hedging: (1) when they relate to fair value hedges, fluctuations in
the embedded derivative and in the hedged item they are valued at fair value and are
recorded in income; (2) when they relate to cash flows hedges, the effective portion of
the embedded derivative is temporarily recorded under other comprehensive income,
and it is recycled to income when the hedged item affects results. The ineffective portion
is immediately recorded in income.
Strategy for contracting DFI's: 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 monthly re-
source requirements be operated, thus ensuring that operations are always carried out
for hedging and not for speculation purposes. Given the variety of derivative instruments
available to hedge risks, Management is empowered to define the operations for which
such instruments are to be contracted, provided they are held for hedging and not for
speculative purposes.
Processes and authorization levels: The Deputy Director of Corporate Treasury must
quantify and report to the Director of Administration and Finance the monthly require-
ments of operating resources. The Director of Administration and Finance may oper-
ate at his discretion up to 50% of the needs for the resources being hedged, and the
Administration and Financial Management may cover up to 75% of the exposure risk.
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 becomes necessary to sell positions for the purpose of
making a profit and/or incurring a "stop loss", the Administration and Finance Director
must first authorize the operation.
Internal control processes: With the assistance of the Deputy Director of Corporate
Treasury, the Director of Administration and Finance must issue a report the following
working day, specifying the Entity's resource requirements for the period and the per-
centage covered by the Administration and Financial Manager. Every month, the Cor-
porate Treasury Manager will provide the Accounting department with the necessary
documentation to properly record such operations.
The Administration and Finance Director will submit to the Corporate Practices Com-
mittee a quarterly report on the balance of positions taken.
The actions to be taken in the event that the identified risks associated with exchange
rate and interest rate fluctuations materialize, are to be carried out by the Internal Risk
Management and Investment Committee, of which the Alsea General Director and the
main Entity's directors form part.
Main terms and conditions of the agreements: Operations with DFI's 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.
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 value exceeds certain established credit limits.
The Entity has the policy of monitoring the volume of operations contracted with each
institution, in order to avoid as much as possible margin calls and diversify its coun-
terparty risks.
Identified risks are those related to variations in exchange rate and interest rate. Deriv-
ative instruments are contracted under the Entity's policies and no risks are expected
to occur that differ from the purpose for which those instruments are contracted.
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Markets and counterparties: Derivative financial instruments are contracted in the lo-
cal market under the over the counter (OTC) mode. Following are the financial entities
that are eligible to close operations in relation to the Entity's risk management: BBVA
Bancomer S.A., Banco Santander, S. A., Barclays Bank México S. A., UBS AG Actinver
Casa De Bolsa, Banorte-Ixe, BTG Pactual, Citi, Credit Suisse, Grupo Bursátil Mexicano
GBM Casa De Bolsa, HSBC Global Research, Interacciones Casa de Bolsa, Intercam
Casa de Bolsa, Invex, Itau BBA, Monex Casa de Bolsa, UBS Investment Research, Grupo
Financiero BX+, and Vector Casa de Bolsa.
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.
Hedge accounting: DFI's are initially recorded at their fair value, which is represented by
the transaction cost. After initial recognition, DFI's are valued at each reporting period
at their fair value and changes in such value are recognized in the consolidated state-
ments of income, except if those derivative instruments have been formally designated
as and they meet the requirements to be considered hedge instruments associated to
a hedge relation.
Polices for designating calculation and valuation agents: The fair value of DFIs is
reviewed 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. Nevertheless, the Entity validates all calculations and valuations
received by each counterparty.
k. Cash and cash equivalents
They consist mainly of bank deposits in checking accounts and investments in short-term
securities, liquid, easily convertible into cash or with a maturity of up to three months
from the date of acquisition and subject to insignificant risks of changes in value.
Cash is presented at nominal value and equivalents are valued at fair value; fluctuations
in its value are recognized in income for the period.
Cash equivalents are represented by investments in money desks and mutual funds and
are recognized at fair value.
l.
Inventories and cost of sales
Inventories are valued at the lower of cost or net realizable value. Costs of inventories
are determined using the average cost method.
The Entity reviews the book value of inventories, in the presence of any indication of
impairment that would indicate that their book value may not be recoverable, estimat-
ing the net realizable value, the determination of which is based on the most reliable
evidence available, at the time the estimate of the amount in which they are expected
to be made is made.
Net realizable value represents the estimated selling price for inventories less all estimated
cost of completion and costs necessary to make the sale. Cost of sales represents the
cost of inventories at the time of sale, increased, when applicable, by reductions in the
value of inventory during the year to its net realizable value.
The Entity records the necessary estimations to recognize reductions in the value of
its inventories due to impairment, obsolescence, slow movement and other causes that
indicate that utilization or realization of the items comprising the inventories will be
below the recorded value.
m. Store equipment, leasehold improvements and property
Store equipment, leasehold improvements and property are recorded at acquisition cost.
Depreciation of 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 are as follows:
Buildings
Store equipment
Leasehold improvements
Transportation equipment
Computer equipment
Production equipment
Office furniture and equipment
Rates
5
5 to 30
7 to 20
25
20 to 30
10 to 20
10
Any significant components of store equipment, leasehold improvements and property
that must be replaced periodically are depreciated as separate components of the asset
and to the extent they are not fully depreciated at the time of their replacement, are
written off by the Entity and replaced by the new component, considering its respective
useful life and depreciation.
Likewise, when major maintenance is performed, the cost is recognized as a replacement
of a component provided that all recognition requirements are met. All other routine repair
and maintenance costs are recorded as an expense in the period as they are incurred.
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ar alsea 2021 Buildings, furniture and equipment held under finance leases are depreciated based on
their estimated useful life as own assets. However, when there is no reasonable certainty
that the property is obtained at the end of the lease term, the assets are depreciated
over the shorter of the lease life and life period.
n. Advance payments
Advance payments include advances for purchase of inventories, leasehold improve-
ments and services that are received in the twelve months subsequent to the date of the
consolidated statements of financial position and are incurred in the course of regular
operations.
o.
Intangible assets
1.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognized separately from
goodwill are initially recognized at their fair value at the acquisition date (which is
regarded as their cost). Subsequent to initial recognition, intangible assets acquired
in a business combination are reported at cost less accumulated amortization and
accumulated impairment losses, on the same basis as intangible assets that are
acquired separately.
Brands owned by Alsea included under intangibles assets are the following:
Brand
Archie’s
Vips
El Portón
La Finca
Casa de comal
Corazón de barro
Vips
Ginos
Ole Mole
Foster’s Hollywood
Country
Colombia
Mexico
Mexico
Mexico
Mexico
Mexico
Spain
Spain
Spain
Spain
Own brand
Own brand
Own brand
Own brand
Own brand
Own brand
Own brand
Own brand
Own brand
Own brand
At December 31, 2019, the Entity has identified impairment effects on its El Portón
brands for an amount of $32,469.
During 2020, the Entity has identified impairment effects on its El Portón, Starbucks
Coffee, Burger King, Italianni´s y Vips brands for an amount of $220,000.
During 2021, the Entity has identified impairment effects on its El Portón, Burger King
Argentina and Starbucks Coffee Argentina brands for an amount of $184,430.
2.
Intangible assets acquired separately
Other intangible assets represent payments made to third parties for the rights to use
the brands with 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 to
be certain, which are generally for 10 to 20 years. The terms of brand rights are
as follows:
Brands
Domino’s Pizza
Starbucks Coffee
Burger King
Chili’s Grill & Bar
P.F. Chang’s
America
Mexico Argentina
-
2025
Chile Colombia Uruguay
2031
2026
-
2037
2027
2027
2033
2026
Depending on
opening dates
2023
2029 (2)
-
-
-
-
-
-
2026
-
2021(2) 2021(2) (a)
-
-
-
-
-
-
-
-
The Cheesecake Factory Depending on
opening dates
Italianni’s
2031(1)
Europe
Brands
Spain Luxembourg
Portugal Andorra
France Netherlands Belgium
Domino’s Pizza
2029 (3)
Starbucks Coffee
Fridays
Burger King
2030
2030
Depending
on opening
dates (4)
-
2030
-
-
-
2030
2030
-
-
2030
-
-
-
-
-
2034
2034
2034
-
-
-
-
-
-
(1) The term for each store under this brand is 20 years as of the opening date, with
the right to a 10-year extension.
(2) The term for each store under this brand is 10 years as of the opening date, with
the right to a 10-year extension.
(3) Term of 10 years with the right to an extension, where Domino’s Pizza Spain re-
newed its contract in 2019. Burger King Spain is valid for 20 years.
(4) Term of 20 years with from the date of opening.
a. PF Chang's brand in Colombia operated until December 2021.
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The Entity has affirmative and negative covenants under the aforementioned agreements,
the most important of which are carrying out capital investments and opening establish-
ments. As of December 31, 2021 and 2020, derived from the Covid-19 pandemic, it was
business to limit the investment of new stores until the recovery of sales as normal. At
December 31, 2019, the Entity has fully complied with those obligations.
Amortization of intangible assets is included in the depreciation and amortization ac-
counts in the consolidated statements of income.
3. Derecognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits
are expected from use or disposal. Gains or losses arising from derecognition of
an intangible asset, measured as the difference between the net disposal proceeds
and the carrying amount of the asset are recognized in profit or loss when the
asset is derecognized.
p.
Impairment in the value of long-lived assets, equipment, leasehold improvements,
properties, and other intangible assets
At the end of each reporting period, the Entity reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss
(if any). When it is not possible to estimate the recoverable amount of an individual asset,
the Entity estimates the recoverable amount of the cash-generating unit to which the
asset belongs. When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a reasonable
and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for
use are tested for impairment at least annually, and whenever there is an indication that
the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less
than its carrying amount, the carrying amount of the asset (or cash-generating unit)
is reduced to its recoverable amount. An impairment loss is recognized immediately in
profit or loss, unless the relevant asset is carried at a revalued amount, in which case
the impairment loss is treated as a revaluation decrease.
The Entity performs impairment test annually to identify any indication. As of December
31, 2021, 2020 and 2019, the Entity recorded an amount of $184,430, $220,000 and
$32,469, respectively, for impairment of the values of its long-lived assets.
When an impairment loss subsequently reverses, the carrying amount of the asset
(or a cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized
for the asset (or cash generating unit) in prior years. A reversal of an impairment
loss is recognized immediately in profit or loss, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
q. Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The con-
sideration transferred in a business combination is measured at fair value, which is
calculated as the sum of the acquisition-date fair values of the assets transferred
by the Entity, liabilities incurred by the Entity to the former owners of the acquire
and the equity interests issued by the Entity in exchange for control of the acquire.
Acquisition-related costs are generally recognized in the consolidated statement of
income as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are
recognized at their fair value, except that:
- Deferred tax assets or liabilities, and assets or liabilities related to employee benefit
arrangements are recognized and measured in accordance with IAS 12 and IAS 19,
respectively;
Liabilities or equity instruments related to share-based payment arrangements of the
acquire or share-based payment arrangements of the Entity entered into to replace
share-based payment arrangements of the acquire are measured in accordance
with IFRS 2, Share-based Payments, at the acquisition date;
-
- Assets (or disposal groups) that are classified as held for sale in accordance with
IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, are mea-
sured in accordance with that standard.
Goodwill is measured as the excess of the sum of the consideration transferred,
the amount of any non-controlling interests in the acquire, and the fair value
of the acquirer’s previously held equity interest in the acquire (if any) over the
net of the acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed.
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If, after reassessment, the net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the consideration transferred, the
amount of any non-controlling interests in the acquire and the fair value of the acquirer’s
previously held interest in the acquire (if any), the excess is recognized immediately in
profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders
to a proportionate share of the entity’s net assets in the event of liquidation may be
initially measured either at fair value or at the non-controlling interests’ proportionate
share of the recognized amounts of the acquirer’s identifiable net assets. The choice
of measurement basis is made on a transaction-by-transaction basis. Other types of
non-controlling interests are measured at fair value or, when applicable, on the basis
specified in another IFRS.
When the consideration transferred by the Entity in a business combination includes
assets or liabilities resulting from a contingent consideration arrangement, the contingent
consideration is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination.
Changes in the fair value of the contingent consideration that qualify as measurement
period adjustments are adjusted retrospectively, with corresponding adjustments
against goodwill. Measurement period adjustments are adjustments that arise from
additional information obtained during the ‘measurement period’ (which cannot exceed
one year from the acquisition date) about facts and circumstances that existed at the
acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration
that do not qualify as measurement period adjustments depends on how the contingent
consideration is classified. Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent settlement is accounted
for within equity.
Contingent consideration that is 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, with the corresponding gain or loss
being recognized in profit or loss.
When a business combination is achieved in stages, the Entity’s previously held equity
interest in the acquire is remeasured to its acquisition-date fair value and the resulting
gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in
the acquire prior to the acquisition date that have previously been recognized in other
comprehensive income are reclassified to profit or loss where such treatment would
be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the re-
porting period in which the combination occurs, the Entity reports provisional amounts
for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognized, to reflect new information obtained about
facts and circumstances that existed at the acquisition date that, if known, would have
affected the amounts recognized at that date.
r. Goodwill
Goodwill arising from an acquisition of a business is carried at cost as established at
the date of acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Entity’s
cash-generating units that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment
annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than its carrying amount,
the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro rata based on the car-
rying amount of each asset in the unit. Any impairment loss for goodwill is recognized
directly in profit or loss.
An impairment loss recognized for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
s.
Investment in shares of associated companies and joint venture
An associate is an entity over which the Entity has significant influence. Significant
influence is the power to participate in the financial and operating policies decisions of
the investee, but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of
the arrangement have rights to the net assets of the joint arrangement. Joint control
is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require unanimous consent of the parties
sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in
these consolidated financial statements using the equity method of accounting, except
when the investment, or a portion thereof, is classified as held for sale, in which case
it is accounted for in accordance with IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations.
Under the equity method, an investment in an associate or a joint venture is initially
recognized in the consolidated statements of financial position at cost and adjusted
thereafter to recognize the Entity’s share of the profit or loss and other comprehensive
income of the associate or joint venture.
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When the Entity’s share of losses of an associate or a joint venture exceeds the
Entity’s interest in that associate or joint venture (which includes any long-term
interests that, in substance, form part of the Entity’s net investment in the associate
or joint venture), the Entity discontinues recognizing its share of further losses.
Additional losses are recognized only to the extent that the Entity has incurred
legal or constructive obligations or made payments on behalf of the associate or
joint venture.
An investment in an associate or a joint venture is accounted for using the equity meth-
od from the date on which the investee becomes an associate or a joint venture. On
acquisition of the investment in an associate or a joint venture, any excess of the cost
of the investment over the Entity’s share of the net fair value of the identifiable assets
and liabilities of the investee is recognized as goodwill, which is included within the
carrying amount of the investment.
Any excess of the Entity’s share of the net fair value of the identifiable assets and lia-
bilities over the cost of the investment, after reassessment, is recognized immediately
in profit or loss in the period in which the investment is acquired.
The requirements of IAS 36 are applied to determine whether it is necessary to rec-
ognize any impairment loss with respect to the Entity’s investment in an associate or a
joint venture. When necessary, the entire carrying amount of the investment (including
goodwill) is tested for impairment in accordance with IAS 36, Impairment of Assets,
as a single asset by comparing its recoverable amount (higher of value in use and fair
value less costs to sell) with its carrying amount. Any impairment loss recognized forms
part of the carrying amount of the investment.
Any reversal of that impairment loss is recognized in accordance with IAS 36 to the
extent that the recoverable amount of the investment subsequently increases.
The Entity discontinues the use of the equity method from the date when the investment
ceases to be an associate or a joint venture, or when the investment is classified as
held for sale.
When the Entity retains an interest in the former associate or joint venture and the
retained interest is a financial asset, the Entity measures the retained interest at fair
value at that date and the fair value is regarded as its fair value on initial recognition in
accordance with IFRS 9.
In addition, the Entity accounts for all amounts previously recognized in other com-
prehensive income in relation to that associate or joint venture on the same basis as
would be required if that associate or joint venture had directly disposed of the related
assets or liabilities. Therefore, if a gain or loss previously recognized in other com-
prehensive income by that associate or joint venture would be reclassified to profit or
loss on the disposal of the related assets or liabilities, the Entity reclassifies the gain
or loss from equity to profit or loss (as a reclassification adjustment) when the equity
method is discontinued.
The Entity continues to use the equity method when an investment in an associate be-
comes an investment in a joint venture or an investment in a joint venture becomes an
investment in an associate. There is no remeasurement to fair value upon such changes
in ownership interests.
When the Entity reduces its ownership interest in an associate or a joint venture but
the Entity continues to use the equity method, the Entity reclassifies to profit or loss
the proportion of the gain or loss that had previously been recognized in other com-
prehensive income relating to that reduction in ownership interest if that gain or loss
would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Entity, profits
and losses resulting from the transactions with the associate or joint venture are rec-
ognized in the Entity’s consolidated financial statements only to the extent of interests
in the associate or joint venture that are not related to the Entity.
t. Leasing
-
The Entity as lessor
The Entity executes lease contracts for certain investment properties as the lessor.
The Entity also rents the equipment needed by retailers for the presentation and
development of their activities and the equipment manufactured by the Entity.
The leases in which the Entity acts as lessor are classified as capital leases or
operating leases. When contractual terms substantially transfer all the risks and
rewards of ownership to the lessee, the contract is classified as a capital lease. All
other contracts are classified as operating contracts.
When the Entity acts as an intermediary lessor, it accounts for the main lease and
sublease as two separate contracts. The sublease is classified as a capital lease or
operating lease with regard to the right-of-use asset derived from the main lease.
The difference between the carrying amount of the associate or joint venture at the
date the equity method was discontinued, and the fair value of any retained interest
and any proceeds from disposing of a part interest in the associate or joint venture
is included in the determination of the gain or loss on disposal of the associate or
joint venture.
Rental revenue derived from operating leases is recognized according to the straight-
line method during the relevant lease period. The direct initial costs incurred for
the negotiation and arrangement of the operating lease are added to the book value
of the leased asset and are recognized in conformity with the straight-line method
throughout the lease period.
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ar alsea 2021 The outstanding amounts of finance leases are recognized as leases receivable
for the amount of the net investment in the leases. Income from finance leases is
allocated to accounting periods in such a way as to reflect a constant periodic rate
of return on the net unpaid investment in respect of the leases.
When a contract includes lease and non-lease components, the Entity applies IFRS
15 to assign the respective payment to each contractual component.
-
The Entity as lessee as of January 1, 2019
The Entity assesses whether a contract initially contains a lease.
The Entity recognizes a right-of-use asset and the respective lease liability
for all the lease contracts in which impacts it acts as lessee, albeit with the
exception of short-term leases (executed for periods of 12 months or less)
and those involving low-value assets (like electronic tablets, personal com-
puters and small items of office furniture and telephones). For these leases,
the Entity records rental payments as an operating expense according to the
straight-line method throughout the lease period, unless another method is
more representative of the time pattern in which economic gains result from
the consumption of the leased assets.
The lease liability is initially measured at the present value of the rental payments that
are not settled at the starting date, discounted according to the implied contractual
rate. If this rate cannot be easily determined, the Entity utilizes incremental rates.
The rental payments included in the lease liability measurement are composed by:
• Fixed rental payments (including substantially fixed payments), less any received
lease incentive;
• Variable rental payments that depend on an index or rate, which are initially
measured by utilizing the index or rate in effect at the starting date;
• The amount expected to be paid by the lessee under residual value guarantees;
• The purchase option exercise price, if it is reasonably certain that the lessee will
exercise these options; and
• Penalty payments resulting from the termination of the lease, if the lease period
reflects the exercise of a lease termination option.
The lease liability is presented as a separate item in the consolidated statement of
changes in financial position.
The lease liability is subsequently measured based on the book value increase to
reflect the interest accrued by the lease liability (using the effective interest method)
and reducing the book value to reflect the rental payments made.
The Entity revalues the lease liability (and makes the respective adjustments to the
related right-of-use asset) as long as:
• The lease period is modified or an event or significant change takes place with
regard to the circumstances of the lease, thereby resulting in a change to the
assessment of the purchase option exercise, in which case, the lease liability is
measured by discounting restated rental payments and utilizing a restated discount
rate.
• Rental payments are modified as a result of changes to indexes or rates, or a
change in the payment expected under a guaranteed residual value, in which
case, the lease liability is revalued by discounting restated rental payments by
using the same discount rate (unless the change in rental payments is due to a
change of variable interest rate, in which case a restated discount rate is used).
• A lease contract is amended and the lease amendment is not accounted for as
a separate lease, in which case the lease liability is revalued according to the
amended lease period by discounting restated rental payments using a discount
rate restated at the date on which the amendment took effect.
The Entity did not make any of these adjustments in the presented periods.
Right-of-use assets are composed by the initial measurement of the respective lease
liability, the rental payments made on or prior to the starting date, less any received
lease incentive and any initial direct costs. The subsequent valuation is the cost less
accumulated depreciation and impairment losses.
If the Entity assumes an obligation derived from the cost of dismantling and remov-
ing a leased asset, to restore the place where it is located or restore the underlying
asset to the condition required by lease terms and conditions, a provision measured
according to IAS 37 must be recognized. To the extent that costs are related to a
right-of-use asset, they are included in the related right-of-use asset unless they
are incurred to generate inventories.
Right-of-use assets are depreciated during the shorter of the lease period and the
useful life of the underlying asset. If a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset indicates that the Entity plans to exercise
the purchase option, the right-of-use asset is depreciated according to its useful life.
Depreciation begins at the lease starting date.
Right-of-use assets are presented as a separate item in the consolidated statement
of changes in financial position.
The Entity applies IAS 36 to determine whether a right-of-use asset is impaired and
to account for any identified impairment loss, as described in the ‘Property, plant
and equipment’ policy.
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ar alsea 2021
Variable leases that do not depend on index or rate are not included in the mea-
surement of the lease liability and right-of-use asset. The related payments are
recognized as an expense of the period in which the event or condition leading to
the payments arises and are included under the “Other expenses” heading in the
consolidated statement of income.
As a practical expedient, IFRS 16 offers the option of not separating non-lease
components and instead recording any lease and its associated non-lease com-
ponents as a single agreement. The Entity has not utilized this practical expedient.
For contracts containing lease components and one or more additional lease or
non-lease components, the Entity assigns the contractual payment to each lease
component according to the relative stand-alone selling price method for all non-
lease components.
v. Employee benefits
Retirement benefits costs from termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense
when employees have rendered service entitling them to the contributions.
The defined benefit plan includes retirement. The other benefits correspond to
the legal seniority premium in Mexico. Its cost is determined using the projected
unit credit method, with actuarial valuations that are made at the end of each
reporting period.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the
asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected
immediately in the statement of financial position with a charge or credit recognized in
other comprehensive income in the period in which they occur.
u. Foreign currency transactions
In order to consolidate the financial statements of foreign operations carried out inde-
pendently from the Entity (located in Latin America and Europe), which comprise 51%,
50% and 53% of consolidated net income and 40%, 39% and 36% of the total consol-
idated assets at December 31, 2021, 2020 and 2019, respectively, companies apply the
policies followed by the Entity.
Remeasurement recognized in other comprehensive income is reflected immediately
in retained earnings and will not be reclassified to profit or loss. Past service cost is
recognized in profit or loss in the period of a plan amendment. Net interest is calculated
by applying the discount rate at the beginning of the period to the net defined benefit
liability or asset.
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 is different, and subsequently converting the functional currency
to the reporting currency. The functional currency is equal to recording currency of
foreign operations, but different to the reporting currency.
In order to convert the financial statements of subsidiaries resident abroad from the
functional currency to the reporting currency 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 statements of
financial position.
-
Income, cost and expense items of the consolidated statements of income are con-
verted at the average exchange rates for the period, unless those exchange rates
will fluctuate significantly over the year, in which case operations are converted
at the exchange rates prevailing at the date on which the related operations were
carried out.
A liability for a termination benefit is recognized at the earlier of when the entity can
no longer withdraw the offer of the termination benefit and when the entity recognizes
any related restructuring costs.
Short-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and
salaries, annual leave and sick leave in the period the related service is rendered at
the undiscounted amount of the benefits expected to be paid in exchange for that ser-
vice. Liabilities recognized in respect of short-term employee benefits are measured
at the undiscounted amount of the benefits expected to be paid in exchange for the
related service.
Statutory employee profit sharing (PTU)
As result of the PTU is recorded in the results of the year in which it is incurred and is
presented in other expenses and other income.
As result of the 2014 Income Tax Law, as of December 31, 2021, 2020 and 2019,
PTU is determined based on taxable income, according to Section I of Article 9 of
the that Law.
-
Capital movements (contributions or reductions) are converted at the exchange rate
on the date these movements were carried out.
w. Income taxes
The income tax expense represents the sum of the tax currently payable and deferred tax.
- All conversion differences are recognized as a separate component under stock-
holders’ equity and form part of other comprehensive income items.
120
ar alsea 2021 1. Current tax
Current income tax (ISR) is recognized in the results of the year in which is incurred.
2. Deferred income tax
Deferred tax is recognized on temporary differences between the carrying amounts
of assets and liabilities in the consolidated financial statements and the correspond-
ing tax bases used in the computation of taxable profit. Deferred tax liabilities are
generally recognized for all taxable temporary differences. Deferred tax assets
are generally recognized for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against which those deductible
temporary differences can be utilized.
Such deferred tax assets and liabilities are not recognized if the temporary differ-
ence arises from the initial recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associ-
ated with investments in subsidiaries and associates, and interests in joint ven-
tures, except where the Entity is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets arising from deductible temporary differences associated
with such investments and interests are only recognized to the extent that it is
probable that there will be sufficient taxable profits against which to utilize the
benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
3. Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate
to items that are recognized in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also recognized in other compre-
hensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business combination.
x. 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 obli-
gation and it is possible to prepare a reliable estimation of the total amount.
The amount recognized as a provision is the best estimate of the consideration required
to settle the present obligation at the end of the reporting period, taking into account the
risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flow.
When some or all of the economic benefits required to settle a provision are expected
to be recovered by a third party, a receivable is recognized as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
measured reliably.
Provisions are classified as current or non-current based on the estimated period of
time estimated for settling the related obligations.
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
1. Contingent liabilities acquired as part of a business combination
Contingent liabilities acquired in a business combination are initially measured at
fair value at the acquisition date.
Deferred tax liabilities and assets are measured at the tax rates that are expected
to apply in the period in which the liability is settled or the asset realized, based
on tax rates (and tax laws) that have been enacted or substantively enacted by the
end of the reporting period.
At the end of subsequent reporting periods, such contingent liabilities are measured
at the higher of the amount that would be recognized in accordance with IAS 37
and the amount initially recognized less cumulative amortization recognized in
accordance with IFRS 15.
The measurement of deferred tax liabilities and assets reflects the tax conse-
quences that would follow from the manner in which the Entity expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets
and liabilities.
y. Revenue recognition
The Entity recognizes income from the following sources:
Sale of goods
Provision of services
Royalties
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ar alsea 2021 Sale of goods
Beverages and food sold by Alsea are transferred to the customer at the time they are
delivered and/or consumed by them. Mostly sales of goods, the payment method is cash
and is recorded at the time they are delivered to the customer.
Provision of services
The income is recognized according to the percentage of termination. Every month the
Entity receives from the clients a fixed agreed payment and the recording is made when
the services have been accrued and generally accepted in time.
Royalties
Revenue from royalties is based on a fixed percentage on sales of subfranchises. Alsea
has two revenues from the sale of the subfranchises. At the beginning of the contract,
the subfranchisee pays an amount depending on the franchise, which is recorded as
income in the period of the duration of the contract.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES FOR ES-
TIMATING UNCERTAINTIES
In the application of the Entity's accounting policies, which are described in Note 4, the Entity’s
management is required to make certain judgments, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and assumptions are based on historical experience and other factors that
are considered to be relevant. Actual results may differ from these 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.
a. Critical judgments for applying the accounting policies
There are critical judgments, apart from those involving estimations, that the Entity’s
management has made in the process of applying the Entity´s accounting policies and
that have the most significant effect on the amounts recognized in the consolidated
financial statements.
Control over Food Service Project, S.L. (Zena Group) and sale option of the non-con-
trolling interest
Note 20 mentions that Grupo Zena is a subsidiary of Alsea, over which it owns 76.8%.
Based on the contractual agreements between the Entity and other investors, Alsea has
the power to appoint and dismiss the majority of the members of the board of directors,
executive committee and management positions of Grupo Zena, which have the power
to direct the activities of the Zena Group.
Therefore, the Entity's management concluded that Alsea has the ability to direct the
relevant activities of Grupo Zena and therefore has control over that entity.
Similarly, Grupo Zena has the right to sell Alsea its uncontrolled participation (10.6%
put option). The sale option may be exercised no later than December 31, 2026. The
Entity has an enforceable and optional “Call Option” as of the third year, as well as the
payment of a coupon with annual interest payable annually at the 4.6% rate on principal
until the date on which the “Put Option” is exercised. The Entity has the possibility of
settling the obligation through the exchange of shares or cash.
Alsea’s management has calculated the financial liability derived from the contractual
requirements in effect at the purchase option date, as well as the current value of the
financial liability according to the requirements of IAS 32. Details of this liability can be
consulted in Note 20.
b. Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of
estimation uncertainty at the end of the reporting period, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year.
1.
Impairment of long-lived assets
The Entity annually evaluates whether or not there is indication of impairment
in long-lived assets and calculates the recoverable amount when indicators are
present. Impairment occurs when the net carrying value of a long-lived asset
exceeds its recoverable amount, which is the higher of the fair value of the asset
less costs to sell and the value in-use of the asset.
Calculation of the value in-use 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.
2. Right-of-use asset
The main aspects considered by the Entity for the implementation of IFRS 16 are:
a) assess, at the start of the contract, whether the right to control the use of an
identified asset for a given period of time is obtained; b) a change in the nature
of lease-related expenses by replacing the operating lease expense determined
according to IFRS 16 with the depreciation or amortization of right-of-use assets
(in operating costs) and an interest expense for lease liabilities in interest expens-
es; and c) the determination of lease payments because the Entity has variable
rental contracts.
The recoverable amount of right-of-use assets is sensitive to the uncertainty
inherent to the preparation of projections and the discount rate utilized in the
calculation.
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ar alsea 2021
3. Discount rate to determine lease payments
IFRS 16 requires the tenant to discount the lease liability using the interest rate
implied in the lease if that rate can be easily determined. If the interest rate implied
in the lease cannot be easily determined, then the tenant must use its incremental
indebtedness rate. The renter's incremental loan rate is the interest rate that the
tenant would have to pay to borrow for a similar term, with similar security and
the funds needed to obtain an asset of a value similar to the right-to-use asset
in a similar economic environment.
The valuation committee works closely with the qualified external appraiser to
establish the appropriate valuation techniques and inputs to the model. Every
three months, the Financial Director reports the findings of the valuation com-
mittee to the Entity's board of directors to explain the causes of fluctuations in
the fair value of assets and liabilities. Information about the valuation techniques
and inputs used in the determining the fair value of various assets and liabilities
are disclosed Note 23 i.
There are three steps to determining the incremental loan rate: (i) determining a
benchmark rate, (ii) determining the credit risk adjustment, and, (iii) determining
the specific adjustment of the lease.
Given their nature, contingencies are only resolved when one or more future events
occur or cease to occur. The evaluation of contingencies inherently includes the
use of significant judgment and estimations of the outcomes of future events.
6. Contingencies
4.
Income tax valuation
The Entity recognizes net future tax benefits associated with deferred income
tax assets based on the probability that future taxable income will be generated
against which the deferred income tax assets can be utilized.
Evaluating the recoverability of deferred income tax assets requires the Entity
to prepare significant estimates related to the possibility of generating 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, LATAM
and Spain.
The Entity's capacity to realize the net deferred tax assets recorded at any re-
porting 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.
5. Fair value measurements and valuation processes
Some of the Entity's assets and liabilities are measured at fair value for financial
reporting purposes. The Entity's Board of Directors has set up a valuation com-
mittee, which is headed up by the Entity's Financial Director, to determine the
appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of an asset or liability, the Entity uses market-observable
data to the extent it is available. When level 1 inputs are not available, the Entity
engages third party qualified appraisers to perform the valuation.
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, 2021, 2020 and 2019 is comprised
as follows:
2021
2020
2019
Cash
$
3,381,941 $
2,614,467 $
1,864,521
Investments with original maturities
of under three months
3,511,492
1,317,942
704,250
Total cash and cash equivalents
$
6,893,433 $
3,932,409 $
2,568,771
The Entity maintains its cash and cash equivalents with accepted financial entities and it has
not historically experienced losses due to credit risk concentration.
7. CUSTOMERS, NET
The accounts receivable from customers disclosed in the consolidated statements of finan-
cial position are classified as loans and accounts receivable and therefore they are valued
at their amortized cost.
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ar alsea 2021
At December 31, 2021, 2020 and 2019, the customer balance is comprised as follows:
Following is the aging of past due but unimpaired accounts receivable:
2021
2020
2019
Franchises
Other (1)
Expected credit losses
$
1,089,594 $
917,477 $
185,659
1,275,253
(205,100)
71,030
988,507
(98,023)
746,115
111,967
858,082
(93,180)
15-60 days
60-90 days
More than 90 days
Total
2021
2020
2019
$
$
115,789 $
59,245 $
72,109
273,148
47,268
171,351
125,380
32,360
71,312
461,046 $
277,864 $
229,052
$
1,070,153 $
890,484 $
764,902
Current balance
814,207
710,643
629,030
(1) In others there are concepts such as third parties, officials and employees and vouchers to be redeemed.
Accounts receivable
The average credit term for the sale of food, beverages, containers, packaging, royalties and
other items to owners of sub-franchises is from 8-30 days. Starting from the day next dates
of the contractual maturity are generated interests on the defeated balance at moment of
settlement. Until February 2020 rate was composed the Mexican Interbank Equilibrium Rate
(TIIE) plus 5 points and is multiplied by 2, as of March 2020 rate comprises the Mexican
Interbank Equilibrium Rate (TIIE) plus 7 points.
The reserve is then composed of the part of the general and significant customers, which
follows a procedure of credit losses expected according to the provisions of the standard.
Additionally, it incorporates a criterion to be followed, either quantitative or qualitative, to
consider a significant increase in the credit risk of the account receivable and follow up to
prepare the estimate of its reserves on a quarterly basis.
Before accepting any new client, the Entity uses an external credit rating system to evaluate
the credit quality of the potential client and defines the credit limits per client. As mentioned
in Note 5g, for the determination of the estimation of doubtful accounts, the Entity performs
an analysis of balances seniority per client and is assigned based on the experience an es-
timation percentage. This first analysis gives an indication of deterioration; subsequently, an
analysis of the financial situation of all the included clients is carried out to determine which
are the accounts that present an impairment according to the expected credit loss model
and on these the corresponding estimate is recorded.
Total account receivable
$
1,275,253 $
988,507 $
858,082
The concentration of credit risk is limited because the balance is composed of franchisees,
which are supported or controlled by a service contract and / or master franchise; likewise
consists of balances with from financial institutions cards, which are recovered within from
15 days.
8. INVENTORIES, NET
At December 31, 2021, 2020 and 2019, inventories are as follows:
2021
2020
2019
Food and beverages
$
1,978,553 $
1,599,260 $
1,747,219
Other, mainly containers and packaging
Obsolescence allowance
33,540
(2,835)
21,481
(3,171)
36,875
(4,448)
Total
$
2,009,258 $
1,617,570 $
1,779,646
(1) In others are concepts such as toys, uniforms, cleaning utensils, kitchen appliances and souvenirs.
Derived from the COVID-19 pandemic, the entity had to take the following actions to avoid
an increase in inventory obsolescence or the destruction of perishable foods:
124
ar alsea 2021 a) Sales of slow moving products were made to employees
b) Analysis of slow-moving products was carried out on a weekly basis with the admin-
istration of each brand for decision-making
c) Donations of slow-moving and / or near-expiring products were made
d) The safety stock was reduced with the intention of not increasing the days of inventory,
always monitoring the sale of the brands.
9. ADVANCE PAYMENTS
Advance payments were made for the acquisition of:
2021
2020
2019
Insurance and other services
Inventories
Lease of locales
Total
$
$
288,855 $
138,983 $
324,260
28,306
160,271
28,780
39,760
224,497
25,628
641,421 $
328,034 $
289,885
10. ENTITY AS LESSEE
Entity leases premises for its stores, office, including an industrial warehouse, furniture and
equipment. The average lease term is between 6 and 7 years for 2021, 2020 and 2019.
Right of use assets
Cost:
Balance at January 1, 2019
Additions and renovations
Balance as of December 31, 2019
Additions and renovations
Balance as of December 31, 2020
Additions and renovations
Balance as of December 31, 2021
Amount
$
18,493,689
6,709,656
25,203,345
6,535,160
31,738,505
3,522,783
$
35,261,288
Right of use assets
Depreciation:
Balance at January 1, 2019
Charge for depreciation for the year
Balance as of December 31, 2019
Charge for depreciation for the year
Balance as of December 31, 2020
Charge for depreciation for the year
Balance as of December 31, 2021
Net cost:
Balance as of December 31, 2019
Balance as of December 31, 2020
Balance as of December 31, 2021
Amount
$
-
(4,010,688)
(4,010,688)
(4,304,542)
(8,315,230)
(4,671,802)
$
(12,987,032)
$
$
$
21,192,657
23,423,275
22,274,256
Amounts recognized in the
consolidated statement
income
Depreciation expense of the asset for
use rights
Finance expense caused by lease
liabilities
Expense related to short-term leases
Expense related to leasing of low-value
assets
Expense related to variable lease
payments, not included in the
measurement of lease liabilities
Benefits obtained from negotiations
related to COVID-19
2021
2020
2019
$
4,671,802 $
4,304,542 $
4,010,688
1,050,332
131,992
1,034,284
199,669
1,081,791
216,883
44,322
36,847
42,045
553,419
316,173
101,069
(840,873)
(1,596,496)
-
125
ar alsea 2021 Some of the leases of properties in which the Entity participates as lessee contain variable
lease payment terms that are related to sales generated in the leased stores. Variable pay-
ment terms are used to link lease payments to store cash flows and reduce fixed cost. The
composition of the lease payments by the stores is detailed in the following table.
11. OBLIGATION UNDER FINANCE LEASES
2021
2020
2019
Fixed payments
Variable payments
Total lease payments
$
$
5,738,455 $
5,344,326 $
4,949,390
553,419
316,173
101,069
6,291,874 $
5,660,499 $
5,050,459
In general, variable payments constitute 9%, 6% and 2% at December 31, 2021, 2020 and
2019, respectively, of the Entity's total lease payments. The Entity expects this proportion to
remain constant in future years. Variable payments depend on sales and, consequently, on
economic development during the following years.
Considering into consideration the development of expected sales over the next 10 years, it
is expected that the expense for variable leases will continue to present a similar proportion
of store sales in the following years.
Due to the COVID-19 pandemic generated as of March 2020, the entity made different
agreements with the tenants of the premises to achieve a decrease in the payment of rent
or a grace period in those stores that had to be closed obligatorily by indications of the local
authorities. In May 2020, the IASB issued an amendment to IFRS 16 called “Lease Conces-
sions Related to Covid-19”, exempting lessees from having to consider leases individually to
determine whether the lease concessions to be produced as a direct consequence of the
Covid-19 pandemic are modifications to those contracts, and it allows tenants to account for
such concessions as if they were not modifications to the lease contracts.
Maturity analysis:
Year 1
Year 2
Year 3
Year 4
Year 5
Later
Less: Unearned interest
Analyzed:
Long term
Short term
2021
2020
2019
$
5,455,183 $
5,092,312 $
4,918,822
4,095,434
3,403,711
2,750,413
7,765,454
28,389,017
(4,625,743)
4,640,483
4,158,803
3,320,533
2,698,233
8,768,258
28,678,622
(3,378,572)
4,574,273
3,950,863
3,308,716
2,846,815
2,316,689
9,657,198
26,654,554
(3,196,522)
$
23,763,274 $
25,300,050 $
23,458,032
19,347,324
4,415,950
21,092,417
4,207,633
19,542,694
3,915,338
$
23,763,274 $
25,300,050 $
23,458,032
The Entity does not face a significant liquidity risk regarding its lease liabilities. Lease liabilities
are monitored through the Entity's Treasury.
126
ar alsea 2021 12. STORE EQUIPMENT, LEASEHOLD IMPROVEMENTS AND PROPERTY, NET
Store equipment, leasehold improvements and properties are as follows:
Cost
Buildings
Store
equipment
Leasehold
improvements
Transportation
equipment
Computer
equipment
Production
equipment
Office
furniture
and
equipment
Construction
in processo
Total
Balance as of January 1, 2020
$
907,282 $
10,476,240 $
16,070,726 $
280,343 $
1,372,385 $
990,308 $
564,011 $
2,171,768 $
32,833,063
Acquisitions
Disposals
Restatement
Adjustment for currency conversion
54,590
(60,829)
-
77,554
668,875
(355,725)
233,034
552,760
844,503
(827,659)
349,978
2,002,050
25,946
(27,153)
1,078
22,026
99,727
(27,858)
15,286
84,588
24,733
(931)
-
-
59,868
(55,533)
4,980
262,901
-
1,778,242
(188,632)
(1,544,320)
39,398
4,869
643,754
3,006,748
Balance as of December 31, 2020
978,597
11,575,184
18,439,598
302,240
1,544,128
1,014,110
836,227
2,027,403
36,717,487
Acquisitions
Disposals
Restatement
Adjustment for currency conversion
-
(199,277)
-
(9,506)
672,788
(380,044)
379,676
(426,991)
794,503
(768,010)
557,217
(839,646)
41,750
(41,953)
1,637
(10,416)
124,033
(67,283)
24,852
(58,227)
312,665
(19,806)
-
(4,766)
71,094
(56,763)
7,961
(75,376)
724,087
(22,055)
64,316
(64,936)
2,740,920
(1,555,191)
1,035,659
(1,489,864)
Balance as of December 31, 2021
$
769,814 $
11,820,613 $
18,183,662 $
293,258 $
1,567,503 $
1,302,203 $
783,143 $
2,728,815 $
37,449,011
Depreciation
Buildings
Store
equipment
Leasehold
improvements
Transportation
equipment
Computer
equipment
Production
equipment
Office
furniture
and
equipment
Construction
in processo
Total
Balance as of January 1, 2020
$
116,667 $
5,731,846 $
8,532,482 $
152,118 $
947,188 $
533,490 $
126,471 $
- $
16,140,262
Charge for depreciation for the year
Disposals
Restatement
Adjustment for currency conversion
56,317
(2,238)
-
46,258
1,054,166
(293,138)
163,195
413,768
2,164,640
(603,537)
289,240
802,607
44,804
(20,477)
1,147
10,028
184,627
(26,471)
13,590
63,571
39,224
(917)
-
-
178,558
(39,286)
3,903
153,868
Balance as of December 31, 2020
217,004
7,069,837
11,185,432
187,620
1,182,505
571,797
423,514
Charge for depreciation for the year
Disposals
Restatement
Adjustment for currency conversion
3,304
(83,398)
-
(3,070)
919,414
(389,483)
252,275
(260,505)
1,738,620
(678,432)
424,338
(790,230)
36,184
(36,835)
1,682
(6,490)
157,585
(61,331)
22,858
(45,190)
70,426
(18,937)
-
(2,182)
161,691
-
(35,706)
5,730
(48,947)
-
-
-
-
-
-
-
-
3,722,336
(986,064)
471,075
1,490,100
20,837,709
3,087,224
(1,304,122)
706,883
(1,156,614)
Balance as of December 31, 2021
$
133,840 $
7,591,538 $
11,879,728 $
182,161 $
1,256,427 $
621,104 $
506,282 $
- $
22,171,080
127
ar alsea 2021 Net cost
Buildings
Store
equipment
Leasehold
improvements
Transportation
equipment
Computer
equipment
Production
equipment
Office
furniture
and
equipment
Construction
in processo
Total
Balance as of January 1, 2020
Balance as of December 31, 2020
Balance as of December 31, 2021
$
$
$
13. INTANGIBLE ASSETS, NET
Intangible assets are comprised as follows:
Cost
Balance as of January 1, 2020
Acquisitions
Adjustment for currency conversion
Disposals
Restatement
790,615 $
4,744,394 $
7,538,244 $
128,225 $
425,197 $
456,818 $
437,540 $
2,171,768 $
16,692,801
761,593 $
4,505,347 $
7,254,166 $
114,620 $
361,623 $
442,313 $
412,713 $
2,027,403 $
15,879,778
635,974 $
4,229,075 $
6,303,934 $
111,097 $
311,076 $
681,099 $
276,861 $
2,728,815 $
15,277,931
Brand
rights
Commissions
for store
opening
Franchise
and use of
locale rights
Licenses and
developments
Goodwill
Total
$
15,002,054 $
522,569 $
1,487,947 $
1,645,491 $
12,572,861 $
31,230,922
33,881
553,775
(93,080)
58,734
110
149,145
(3,689)
1,711
160,076
227,883
(25,128)
8,228
209,849
126,510
(3,787)
3,343
-
477,505
-
-
403,916
1,534,818
(125,684)
72,016
Balance as of December 31, 2020
15,555,364
669,846
1,859,006
1,981,406
13,050,366
33,115,988
Acquisitions
Adjustment for currency conversion
Disposals
Restatement
22,032
(450,831)
(49,591)
95,197
-
(19,304)
(14,610)
2,300
15,147
(37,863)
(3,785)
13,949
103,789
(67,245)
(4,099)
5,543
-
(274,435)
-
-
140,968
(849,678)
(72,085)
116,989
Balance as of December 31, 2021
$
15,172,171 $
638,232 $
1,846,454 $
2,019,394 $
12,775,931 $
32,452,182
128
ar alsea 2021 Amortization
Balance as of January 1, 2020
Amortization
Adjustment for currency conversion
Disposals
Restatement
Brand
rights
Commissions
for store
opening
Franchise
and use of
locale rights
Licenses and
developments
Goodwill
Total
$
1,368,912 $
438,183 $
713,281 $
1,318,384 $
16,953 $
143,572
57,383
(98,206)
(31,819)
91,748
39,046
(3,649)
(1,681)
72,698
1,011
(18,548)
(4,603)
100,294
118,490
(18,660)
(3,488)
-
-
-
-
3,855,713
408,312
215,930
(139,063)
(41,591)
Balance as of December 31, 2020
1,439,842
563,647
763,839
1,515,020
16,953
4,299,301
Amortization
Adjustment for currency conversion
Disposals
Restatement
Balance as of December 31, 2021
Net cost
Balance as of January 1, 2020
Balance as of December 31, 2020
Balance as of December 31, 2021
98,851
(94,489)
(17,211)
48,516
42,185
10,310
(14,359)
2,413
98,517
47,062
(1,428)
8,214
179,750
(53,768)
(3,657)
5,411
-
-
-
-
419,303
(90,885)
(36,655)
64,554
1,475,509 $
604,196 $
916,204 $
1,642,756 $
16,953 $
4,655,618
13,633,142 $
84,386 $
774,666 $
327,107 $
12,555,908 $
27,375,209
14,115,522 $
106,199 $
1,095,167 $
466,387 $
13,033,413 $
28,816,687
13,696,662 $
34,036 $
930,250 $
376,638 $
12,758,978 $
27,796,564
$
$
$
$
As of December 31, 2021, the entity recorded a loss in its brands El Portón, Starbucks Coffee Argentina and Burger King Argentina, for an amount of $184,430, affecting $21,534 to fixed
assets and $162,896 to intangible assets.
As of December 31, 2020, derived from the COVID-19 pandemic, the entity recorded a loss in its brands El Portón, Starbucks Coffee, Burger King, Italianni's and Vips, for an amount of
$220,000, affecting $58,163 to fixed assets and $161,837 to intangible assets.
129
ar alsea 2021 14. INVESTMENT IN SUBSIDIARIES
The Entity's shareholding in the capital stock of its main subsidiaries is as follows:
NAME OF SUBSIDIARY
PRINCIPAL ACTIVITY
2021
2020
2019
Café Sirena, S. de R.L. de C.V.
Operadora de Franquicias Alsea, S.A. de C.V. (1)
Operator of the Starbucks brand in Mexico
Operator of the Burger King brand in Mexico
Operadora y Procesadora de Productos de Panificación, S.A. de C.V.
Operator of the Domino's Pizza brand in Mexico
Gastrosur, S.A. de C.V.
Operator of the Chili’s Grill & Bar brand in Mexico
Panadería y Alimentos para Food Service, S.A. de C.V.
Distribution of Alsea brand foods
Servicios Múltiples Empresariales ACD, S.A.
de C.V. (antes SOFOM E.N.R.)
Grupo Calpik, S.A.P.I. de C.V.
Operator of Factoring and Financial Leasing in Mexico
Operator of the California Pizza Kitchen brand in Mexico
Especialista en Restaurantes de Comida Estilo Asiática, S.A. de C.V.
Operator of the P.F. Chang's brand in Mexico
Distribuidora e Importadora
Alsea, S.A. de C.V.
Italcafé, S.A. de C.V.
Grupo Amigos de San Ángel, S.A. de C.V.
Grupo Amigos de Torreón, S.A. de C.V.
Operadora Vips, S. de R.L. de C.V.
OPQR, S.A. de C.V.
Operadora GB Sur, S.A. de C.V.
Fast Food Chile, S.A.
Asian Food, Ltda.
Starbucks Coffee Chile, S.A.
Gastrococina Sur, S.P.A.
Fast Food Sudamericana, S.A.
Starbucks Coffee Argentina, S.R.L.
Asian Bistro Colombia, S.A.S.
Operadora Alsea en Colombia, S.A.
Estrella Andina, S.A.S.
Gastronomía Italiana en Colombia, S.A.S.
Café Sirena Uruguay, S.A.
Distributor of foods and production materials for the
Alsea and related brands
Operator of Italianni's brand
Operator of Italianni's brand
Operator of Italianni's brand
Operator of Vips brand
Operator Brand Cheesecake Factory in Mexico
Operator of the Burger King and Domino’s Pizza brand in Mexico
Operator of the Burger King brand in Chile
Operator of the P.F. Chang's brand in Chile
Operator of the Starbucks brand in Chile
Operator of Chili’s Grill & Bar in Chile
Operator of the Burger King brand in Argentina
Operator of the Starbucks brand in Argentina
Operator of the P.F. Chang's brand in Colombia
Operator of the Burger King brand in Colombia
Operator of the Starbucks brand in Colombia
Operator of Archie´s brand in Colombia
Operator of Starbucks brand in Uruguay
Food Service Project, S.L. (Grupo Zena)
Operator of Spain
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
95.03%
70.00%
97.60%
100.00%
76.77%
100.00%
80.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
70.90%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
95.03%
70.00%
97.60%
100.00%
66.24%
100.00%
80.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
70.90%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
95.03%
70.00%
97.60%
100.00%
66.24%
Sigla, S.A. (Grupo VIPS)
(see Note 2)
Operator of the VIPS, VIPS Smart, Starbucks, GINOS, Fridays and
Wagamama brands in Spain
100.00%
100.00%
100.00%
(1) Control over Operadora de Franquicias Alsea, S.A. de C.V. (OFA) - Based on the contractual agreements signed by the Entity and other investors, the Entity is empowered to appoint and remove most of the members of the board of directors of OFA, which has the power to control the relevant operations of OFA. Therefore, the Entity's management concluded
that the Entity has the capacity to unilaterally control the relevant activities of OFA and therefore it has control over OFA. On June 28, 2021, the entity purchase shares that represent 20% of the non- controlling interest of Operadora de Franquicias Alsea, S.A.P.I. de C.V., thereby increasing its participation in that entity to 100%.
130
ar alsea 2021 Certain significant decisions, including the following are subject to the unanimous consent of the two stockholders: 1) the approval or modification of the budget of the year, and 2) changes
to the development schedule, which do not modify the Entity’s control over the subsidiary.
15. INVESTMENT IN SHARES OF ASSOCIATED COMPANIES
At December 31, 2021, 2020 and 2019, the investment in shares of associated companies is comprised of the Entity's direct interest in the capital stock of the companies listed below:
(%)
2021
2020
2019
MAIN OPERATIONS
Operadora de Restaurantes AYB
Polanco, S.A. de C.V. (1)
30.00%
30.00%
30.00%
Operator of restaurants of the EF Entre
Fuegos brand and EF Entre Fuegos Elite
Steak House that operates in Mexico
Other investments
Total
(%)
2021
2020
2019
MAIN OPERATIONS
Operadora de Restaurantes AYB
Polanco, S.A. de C.V (1)
30.00%
30.00%
-
Operator of restaurants of the EF Entre
Fuegos brand and EF Entre Fuegos Elite
Steak House that operates in Mexico
Other investments
Total
Operadora de Restaurantes AYB Polanco, S.A. de C.V.
Total assets, liabilities, equity and profit and losses of the associated entity are as follows:
2021
2020
2019
Current assets
Non-current assets
Current liabilities
Income
Net profit for the period
$
$
$
$
$
17,517 $
40,362 $
9,427 $
39,789 $
6,133 $
15,410 $
38,160 $
11,268 $
19,379 $
(5,166) $
14,263
40,924
5,413
46,224
2,120
INTEREST IN ASSOCIATED COMPANY
31/12/2021
31/12/2020
31/12/2019
$
$
$
$
14,536 $
12,691 $
117,331
77,419
14,932
70,539
131,867 $
90,110 $
85,471
EQUITY IN RESULTS
31/12/2021
31/12/2020
31/12/2019
1,840 $
(1,550) $
-
(1,097)
636
(1,578)
1,840 $
(2,647) $
(942)
131
ar alsea 2021 16. BUSINESS COMBINATION
Subsidiaries acquired
Entity
name
Clover
Main activity
Operator of the Starbucks
brand in France, Holland,
Belgium and Luxembourg
Acquisition
date
February 25,
2019
Proportion
of shares
acquired (%)
Consideration
transferred
Concept
Current assets
100%
$
1,109,933
Cash and cash equivalents
The following transactions classify as a business combination and have been recognized by
utilizing the purchase method as of the acquisition date based on the following steps:
i. Recognize and value the assets, liabilities and non-controlling interest.
ii.
In a business combination performed by stages, the buyer revalues its equity in the
acquired entity prior to the acquisition date at face value to recognize the resulting profit
or loss, as the case may be in results.
Identify intangible assets and determine goodwill.
iii.
Acquisition of Clover
During the months of January and February 2019, the acquisition process was concluded
with Starbucks Coffee Company to obtain the full license and acquire the store operations of
the Starbucks companies in France, the Netherlands, Belgium and Luxembourg and which
together with its subsidiaries they are called Clover.
The consideration paid for the acquisition was €50 million after debt payable in cash
(equivalent to MX $1,109,933). The acquisition does not contemplate any contingent
consideration.
The following is an analysis of the preliminary allocation of the cost of acquisition over
the values of the net assets acquired and that are in the measurement stage according to
IFRS 3. Since it is in the measurement period, the preliminary amounts below are subject
to change:
Customers, net
Inventories, net
Advance payments
Long-term assets:
Store equipment, leasehold improvements
and property, net
Intangible assets, net
Guarantee deposits
Current liabilities:
Suppliers and other accounts payable
Long-term liabilities:
Deferred income taxes
Other liabilities
Fair value of net assets
Considerations paid in cash
Goodwill
Fair
value
188,675
199,078
15,648
110,237
477,359
936,600
55,927
21,287
(590,044)
(183,845)
(140,812)
1,090,110
1,109,933
19,823
$
$
132
ar alsea 2021 The goodwill that arises from the acquisition of Clover, derives from the paid consideration
that included amounts related to the benefits of operating more than 270 establishments
between corporate and franchisees, expecting a market growth with a development plan
for the next five years in the market, likewise the adjacent benefits mainly income growth,
synergies expected in the operation and in the purchase of inputs. These benefits are not
recognized separately from goodwill because they do not meet the recognition criteria for
identifiable intangible assets.
Net cash flows related to the acquisition of the subsidiary total $921,258, corresponding to
the consideration paid in cash of $1,109,933, less cash and cash and cash equivalent balances
acquired for $188,675.
If the acquisition had occurred at beginning of year, Alsea's consolidated net profit for the
period would have been $933,045 and revenues would have been $58,371,001. Acquisition
expenses related to this transaction amounted to $42,006, which is shown within other
expenses (income).
17. GOODWILL
Assignment of goodwill to cash generating units
In order to carry out impairment tests, goodwill was assigned to the following cash gener-
ating units:
Concept
Burger King
Domino’s Pizza
Chili’s
Italianni’s
Vips
Starbucks Coffee
Foster’s Hollywood
Grupo Vips Spain
Ginos
Starbucks Spain
Fridays
British Sandwich Factory
Clover
Cañas and Tapas
2021
2020
2019
$
1,336,967 $
1,336,967 $
1,078,622
1,078,622
26,614
785,816
26,614
785,816
1,336,967
1,078,622
26,614
785,816
3,058,697
3,058,697
3,058,697
368,513
198,598
3,496,696
1,171,185
878,060
5,746
334,498
18,966
-
368,513
198,598
3,662,326
1,224,095
917,727
6,006
349,609
19,823
-
368,513
198,598
3,374,722
1,127,665
845,431
5,534
322,068
19,823
6,838
$
12,758,978 $
13,033,413 $
12,555,908
As of December 31, 2021, 2020 and 2019, the studies carried out on the impairment tests
concluded that the goodwill has no impairment.
133
ar alsea 2021 CURRENCY
RATE
MATURITY
2021
2020
2019
18. LONG-TERM DEBT
Long-term debt at December 31, 2021, 2020 and 2019 is comprised of unsecured loans, as shown below:
BANK
Santander Totta
BBVA Bancomer, S.A.
BNP CIC
BBVA Icos
Banco Nacional de Comercio Exterior S.N.C.
(Bancomext)
Scotiabank Inverlat, S.A.
Banco de Chile
Sindicado
Sindicado
Sabadel Icos
Ibercaja Icos
Abanca Icos
Caja rural Icos
Banco Santander, S.A.
Banco Santander, S.A.
Clover ING
Clover Rabobank
Bankia Icos
TYPE OF
CREDIT
Simple credit
Bilateral
Simple credit
Simple credit
Euros
Euros
Euros
Euros
Euribor + 1.50%
3% (Fixed rate)
Euribor + 2%
Euribor + 2.75%
Simple credit
Mexican pesos
Variable rate TIIE +1%
Simple credit
Mexican pesos
Simple credit
Chilean pesos
Simple credit
Mexican pesos
Simple credit
Simple credit
Simple credit
Simple credit
Simple credit
Euros
Euros
Euros
Euros
Euros
Variable rate TIIE +2.15%
29% (Fixed rate)
Variable rate TIIE +1.85%
Variable rate Euribor+ 1.25%
Euribor + 2.20%
Euribor + 1.75%
Euribor + 1.75%
Euribor + 1.60%
Simple credit
Mexican pesos
Variable rate TIIE +1.85%
Simple credit
Simple credit
Simple credit
Simple credit
Euros
Euros
Euros
Euros
Euribor + 1.35%
Euribor + 1.95%
Euribor + 1.95%
Euribor + 1.85%
2026
2026
2025
2025
2025
2025
2024
2023
2023
2023
2023
2023
2023
2022
2022
2022
2022
2022
$
34,988 $
36,570 $
169,350
349,897
233,265
36,570
365,704
243,801
-
-
-
-
1,586,163
1,668,413
1,668,411
-
60,375
563,059
8,255,972
126,165
23,327
46,654
34,989
-
233,264
1,096,341
-
233,264
993,526
93,888
4,432,195
10,312,875
136,773
24,380
48,760
36,571
283,594
243,802
1,145,869
-
243,802
-
-
4,533,800
8,969,600
-
-
-
-
287,500
-
411,072
411,072
-
134
ar alsea 2021 BANK
Santander Icos
Sindicado
Sumitomo
Banco Santander, S.A.
Scotiabank Inverlat, S.A.
Santander Chile, S.A.
Scotiabank Inverlat, S.A.
Banca March
Santander Chile, S.A.
TYPE OF
CREDIT
CURRENCY
RATE
MATURITY
2021
2020
2019
Simple credit
Simple credit
Euros
Euros
Simple credit
Mexican pesos
Euribor + 2.10%
Euribor + 3.25%
Euribor + 1.60%
Simple credit
Mexican pesos
Variable rate TIIE +1.85%
Simple credit
Mexican pesos
Variable rate TIIE +1.1%
Simple credit
Chilean pesos
Variable rate TIIE +0.41%
Simple credit
Mexican pesos
Variable rate TIIE +0.45%
Simple credit
Euros
Simple credit
Chilean pesos
Euribor + 1.50%
3.6% (Fixed rate)
2022
2021
2021
2021
2021
2021
2020
2020
2020
326,569
-
-
-
-
43,834
-
233,265
-
341,323
2,500,000
599,223
155,000
-
83,182
-
243,802
-
Less - current portion
13,650,739
(1,638,000)
24,233,053
(24,233,053)
-
-
-
113,628
400,000
-
285,993
205,536
121,504
17,408,116
(305,668)
Long-term debt maturities
$
12,012,739 $
- $
17.102,448
Annual debt maturities at December 31, 2021 are as follows:
Year
2022
2023
2024
2025
2026
$
Amount
1,638,000
3,651,966
3,157,355
3,057,287
2,146,131
$
13,650,739
The Entity as of December 31, 2020, has lines of credit contracted for 68.2 million Euros.
Bank loans include certain affirmative and negative covenants, such as maintaining
certain financial ratios. At December 31, 2021, 2020 and 2019, all such obligations have
been duly met.
135
ar alsea 2021 The declaration of the COVID-19 pandemic that emerged in 2020 had a great impact on the
restaurant industry and on the Entity's operations, affecting the operation of restaurants.
The foregoing had effects on income, operating results, and cash generation, mainly. As of
December 31, 2020, the entity had to comply with certain covenants, as well as to maintain
certain financial ratios related to bank loans, which were met at year-end. However, there
are other covenants, as well as financial ratios for the twelve-month period ending Decem-
ber 31, 2021, from which only waivers were obtained by their bank creditors until June 30,
2021, and at year-end the Entity has no certainty they could be complied, as established by
IAS 1 Presentation of Financial Statements, indicating the long-term debt shall be classified
as current. The amount of this debt was reclassified in the short term in the consolidated
statement of financial position amounting to $19,394 million, causing short-term liabilities to
significantly exceed short-term assets at that date.
On April 5, 2021, the Entity formalized a new negotiation of the conditions of the credit, which
establish new debt obligations, which allows the Entity to have certainty about its fulfillment
for the twelve-months period ending December 31, 2021.
19. DEBT INSTRUMENTS
In December 2021, the Entity placed of the senior bonds with maturity in 2026 for the amount
of US$ 500 million on international markets with a term of five years from its issuance date
and maturity in December 2026. Those instruments will accrue interest at a fixed rate of
7.75%.
In May 2019, the Entity placed of debt instruments worth $1,350,000 over 5 years as from
the issuance date, maturing in May 2024. Those instruments will accrue interest at the
28-day TIIE rate plus 0.95 percentage points; and other debt instrument worth $2,650,000
over 7 years as from the issue date, maturing in May 2026. Those instruments will accrue
interest at a fixed rate of 10.01%.
In October 2017, the Entity placed of debt instruments worth $1,000,000 over 5 years as from
the issuance date, maturing in September 2022. Those instruments will accrue interest at the
28-day TIIE rate plus 0.90 percentage points; and other debt instrument worth $2,000,000
over 10 years as from the issue date, maturing in September 2027. Those instruments will
accrue interest at a fixed rate of 8.85%.
In March 2015, the Entity placed of debt instruments worth $3,000,000 over 5 years as from
the issuance date, maturing in March 2020. Those instruments will accrue interest at the
28-day TIIE rate plus 1.10 percentage points; and other debt instrument worth $1,000,000
over 10 years as from the issue date, maturing in March 2025. Those instruments will accrue
interest at a fixed rate of 8.07%.
The balance at December 31, 2021, 2020 and 2019 amounts to $18,078,340, $7,979,149 and
$7,973,765, respectively.
Year
2022
2024
2025
2026
2027
$
Amount
1,000,000
1,350,000
820,490
12,907,850
2,000,000
$
18,078,340
As of December 31, 2020, the entity had to comply with certain covenants, as well as to
maintain certain financial ratios related to bank loans, which were met at year-end. However,
there are other covenants, as well as financial ratios for the twelve-month period ending
December 31, 2020, from which only waivers were obtained by their bank creditors until
June 30, 2020, and at year-end the Entity has no certainty they could be complied, as es-
tablished by IAS 1 Presentation of Financial Statements, indicating the long-term debt shall
be classified as current. The amount of this debt was reclassified in the short term in the
consolidated statement of financial position amounting to $7,979 million, causing short-term
liabilities to significantly exceed short-term assets at that date.
On December 14, 2021, the Entity concluded the issuance and placement of a senior bond
for the amount of USD $500 million (five hundred million U.S. dollars), with interest pay-
able half-yearly and the option of partial or total settlement as of December 14, 2023. This
placement permitted the settlement of the Entity’s short-term obligations, together with the
restructuring of its long-term debt.
As mentioned in note 34 subsequent events, on January 21, 2022, the pricing of senior bonds
for the amount of €300 million (three hundred million euros) which were issued through
the Entity’s subsidiary Food Service Project, S.A. and guaranteed by Alsea, with the option
of partial or full settlement as of January 21, 2024.
Both bond placements, together with reductions in operating restrictions imposed by au-
thorities in each country to address the pandemic, have ensured continuity and a return to
their productivity to pre-pandemic levels in 2020.
136
ar alsea 2021 20. LONG-TERM LIABILITIES, OPTION TO SELL NONCONTROLLING
INTEREST
In October 2014, the Entity acquired Grupo Zena; as a result, it has the right to sell to Alsea
its noncontrolling interest for 28.24% in other investors, upon completion of the fourth year
after the acquisition (original agreement). In compliance with IFRS 9, Financial Instruments,
the present value of the estimated debt that will be liquidated at the time the sale option is
exercised should be recognized in accordance with the clauses of the contract. The initial
recognition of such debt is recognized as a supplemental equity account and every year its
revaluation affects the result for the year.
In September 2021, the Entity, Alia Capital Partners and Bain Capital Credit agreed to invest
in a noncontrolling interest of 21.1% in Food Service Project, S.A. (Alsea Europa). Following
this investment, Alsea holds equity of 76.8% (formerly 66.2%), while Alia Capital Partners and
Bain Capital Credit will indirectly hold equity of 10.6%, and the remaining minority shareholders
represent 12.7%. The Entity’s outlay was 55 million euros (equal to $1,205,703). Similarly,
reimbursements of $92.4 million pesos were also obtained. Based on this agreement, the
Entity renegotiated its PUT - CALL options in the following manner:
a) Deadline of December 31, 2026.
b) The Entity has an enforceable and optional “Call Option” as of the third year.
c) The weekly payment of a coupon (4.6% per year) payable until the date on which the
“Put Option” is exercised.
d) The Entity has the possibility of settling the obligation through the exchange of shares
or cash.
21. INCOME TAXES
In Mexico, the Entity is subject to ISR. Under the ISR Law the rate for 2021, 2020 and 2019
was 30% and will continue at 30% and thereafter. The Entity incurred ISR on a consolidat-
ed basis until 2013 with its Mexican subsidiaries. As a result of the 2014 Tax Law, the tax
consolidation regime was eliminated, and the Entity and its subsidiaries have the obligation
to pay the long-term income tax benefit calculated as of that date over a five-year period
beginning in 2014, as illustrated below.
In Chile, the Tax Modernization Law established the Tax Regimes in effect as of January 1,
2020, the companies of the Alsea Group in Chile were placed under the general semi-inte-
grated regime of Article 14 A), whose tax rate is 27%.
In Colombia, the applicable tax provisions stipulate that the rate applicable to income tax for
taxable years 2019 is 33%, 32% for 2020, 31% for 2021 and 35% from the 2022 taxable year.
In addition, tax losses determined from 2017 may be offset by liquid income earned within
twelve (12) years. The term for offsetting presumptive income excesses will remain five (5)
years. These tax credits cannot be tax reset.
In Argentina, i.- Income tax: On June 16, 2021, Law N° 27.630 was published to amend
income tax for fiscal years starting as of January 1, 2021 by establishing a tax payment
scale based on accrued taxable net profit: up to $5,000,000 (Argentinian pesos), tax must
be paid according to a 25% aliquot; from $5,000,000 (Argentinian pesos) to $50,000,000
(Argentinian pesos), tax of $1,250,000 (Argentinian pesos) must be paid, together with
30% of the amount exceeding $5,000,000 (Argentinian pesos); and, as of $50,000,000
(Argentinian pesos), tax of $14,750,000 (Argentinian pesos) must be paid, together with
35% of the amount exceeding $50,000,000 (Argentinian pesos). These amounts will be
adjustable as of January 1, 2022 according to the annual variation of the Consumer Price
Index (CPI).
In addition, the withholding rate for dividend payments is set at 7%.
As of December 31, 2021, the parameters established by the income tax law for the
inflationary tax adjustment are met, and the effects arising from the application of this
adjustment have been included in the recording of current and deferred income tax as
provided by law.
In Spain, tax reforms, which include the reduction of this tax rate 25% in 2021, 2020 and 2019,
and no modification is foreseen for the following fiscal years. Newly created companies will
pay tax at the 15% rate during the first tax period in which their tax basis is positive and in
the following period. As of 2021, the tax exemption on dividends and capital gains is limited
from 100% to 95%, so that 5% of income will be taxed in Spain without said adjustment
being eliminated in consolidation. Similarly, as part of these tax reforms, tax losses will be
applicable without a time limitation.
The tax rates established for the financial year 2021, in the rest of the countries in which
Alsea is present in Europe are as follows:
• Portugal: 21%
•
France: 28%
• Netherlands: First 200,000 euros at 16.5%, the rest at 25.00%.
• Belgium: 25%
•
Luxembourg: 16.05% plus solidarity and municipal surcharges (includes the solidarity
surcharge of 7% on the CIT amount).
137
ar alsea 2021 a.
Income taxes recognized in income
b. Deferred taxes in the statement of financial position
Following is an analysis of deferred tax assets shown in the consolidated statements
of financial position
Current
Deferred
2021
2020
2019
$
$
1,120,853 $
465,379 $
(905,907)
(1,664,467)
988,600
(353,180)
214,946 $
(1,199,088) $
635,420
The tax expense attributable to income before ISR differs from that arrived at by applying
the 30% statutory rate in 2021, 2020 and 2019 due to the following items:
Statutory income tax rate
Non-deductible expenses
Effects of inflation and others
Fixed asset update
Lease Effects under IFRS 16
Effect of tax loss carryforwards
not capitalized
Effect of changes in prior years'
taxes
Difference in tax rates
Others
Effective consolidated income tax
rate
2021
2020
2019
30%
20%
37%
(43%)
(17%)
(6%)
(2%)
3%
(1%)
(30)%
2%
3%
1%
(4%)
1%
-
2%
2%
30%
6%
9%
(3)%
(3%)
1%
-
(2%)
(1%)
21%
(23)%
37%
Deferred (assets) liabilities:
Estimation for doubtful accounts
and inventory obsolescence
Liability provisions
Advances from customers
Unamortized tax losses
Store equipment, leasehold
improvements and property
Temporally non-deductible interest
Advance payments
2021
2020
2019
$
(31,692) $
(29,897) $
(963,796)
(20,090)
(1,312,947)
982,118
(88,192)
175,875
(995,418)
(64,507)
(969,854)
-
162,095
$
(1,258,724) $
(301,358) $
(29,048)
(657,526)
(121,311)
(568,505)
-
156,988
529,502
1,596,223
1,748,904
c. Deferred tax in statement of financial position
The following is the analysis of deferred tax assets (liabilities) presented in the consol-
idated statements of financial position:
Deferred tax assets
Deferred tax liabilities
2021
2020
4,968,996 $
4,665,412 $
3,710,272
4,364,054
2019
3,835,593
4,365,095
(1,258,724) $
(301,358) $
529,502
$
$
138
ar alsea 2021 d. Deferred income tax balances
2021
Temporary differences:
Beginning
balance
Recognized
in profit or
loss
Recognized in
stockholders’
equity
Acquisitions
Ending
balance
Estimation for doubtful accounts and inventory obsolescence
$
(29,897) $
(1,795) $
Liability provisions
Advances from customers
Store equipment, leasehold improvements and property
Temporary non-deductible interest
Prepaid expenses
(995,417)
(64,507)
1,596,222
-
162,095
668,496
31,621
41,287
(559,215)
(88,192)
13,871
(562,423)
- $
-
3,130
(54,889)
-
(91)
(51,850)
Tax loss carryforwards and unused tax credits:
Tax loss carryforwards
(969,854)
(343,484)
391
- $
-
-
-
-
-
-
-
(31,692)
(963,796)
(20,090)
982,118
(88,192)
175,875
54,223
(1,312,947)
$
(301,358) $
(905,907) $
(51,459) $
- $
(1,258,724)
2020
Temporary differences:
Beginning
balance
Recognized
in profit or
loss
Recognized in
stockholders’
equity
Acquisitions
Ending
balance
Estimation for doubtful accounts and inventory obsolescence
$
(29,048) $
(849) $
- $
- $
Liability provisions
Advances from customers
Store equipment, leasehold improvements and property
Prepaid expenses
(657,526)
(121,311)
1,748,904
156,988
1,098,007
(250,628)
56,804
(1,073,552)
5,107
(1,263,118)
(87,263)
-
920,870
-
833,607
Tax loss carryforwards and unused tax credits:
Tax loss carryforwards
(568,505)
(401,349)
-
-
-
-
-
-
-
(29,897)
(995,417)
(64,507)
1,596,222
162,095
668,496
(969,854)
$
529,502 $
(1,664,467) $
833,607 $
- $
(301,358)
139
ar alsea 2021 2019
Temporary differences:
Beginning
balance
Recognized
in profit or
loss
Recognized in
stockholders’
equity
Acquisitions
Ending
balance
Estimation for doubtful accounts and inventory obsolescence
$
(28,802) $
(246) $
- $
- $
Liability provisions
Advances from customers
Store equipment, leasehold improvements and property
Prepaid expenses
Tax loss carryforwards and unused tax credits:
Tax loss carryforwards
(743,666)
(38,180)
2,228,491
73,293
1,491,136
177,382
(83,131)
(549,034)
83,695
(371,334)
5,437
-
156,613
-
162,050
(96,679)
-
(87,166)
-
(183,845)
(29,048)
(657,526)
(121,311)
1,748,904
156,988
1,098,007
(586,659)
18,154
-
-
(568,505)
$
904,477 $
(353,180) $
162,050 $
(183,845) $
529,502
The benefits of restated tax loss carryforwards for which the deferred ISR asset and
tax credit, respectively, have been (in such case partially) recognized, can be recovered
subject to certain conditions. Expiration dates and restated amounts as of December
31, 2021, are:
Year of maturity
Mexico
Europe
Chile
Argentina
Colombia
Total
Amortizable losses
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Losses of entities abroad
without expiration
$
- $
- $
- $
203 $
10,097
12,013
275,006
91,723
129,046
268,015
531,506
1,495,889
748,862
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,025,028
736,010
34,187
24,396
267,729
-
-
-
-
-
-
-
-
38,910 $
56,977
-
-
-
-
-
-
-
33,603
35,000
39,113
101,261
36,409
542,735
91,723
129,046
268,015
531,506
1,495,889
782,465
35,000
-
3,761,038
$
3,562,157 $
3,025,028 $
736,010 $
326,515 $
164,490 $
7,906,415
140
ar alsea 2021
22. EMPLOYEE RETIREMENT BENEFITS
- Net Debt to EBITDA = Net Debt / EBITDA ltm.
Defined contribution plans
Retirement plan is established with the objective of offering benefits in addition to and com-
plementary to
those provided by other public retirement plans.
The total revenue recognized in the consolidated statements of income and other compre-
hensive income is $(3,044), $(21,894) and $48,782 in 2021, 2020 and 2019, respectively.
As of December 31, 2021 and 2020, the company agreed, through a waiver, not
to measure the financial restriction established in the Entity's credit agreements
corresponding to the ratio of Total Debt to EBITDA in the last twelve months.
b. Financial instrument categories
The net cost for the period related to obligations derived from seniority premiums amounted
to $29,062, $23,838 and $1,669 in 2021, 2020 and 2019, respectively.
Financial assets
2021
2020
2019
23. FINANCIAL INSTRUMENTS
a. Capital risk management
The Entity manages its capital to ensure that the companies that it controls are able to
continue operating as a going concern while they maximize the yield for their share-
holders by streamlining the debt and equity balances. The Entity's general strategy has
not changed in relation to 2020 and 2019.
The Entity's capital structure consists of the net debt (the loans described in Note 18,
compensated by cash balances and banks) and the Entity's capital (made up of issued
capital stock, reserves and retained earnings, as shown in Note 24).
The Entity is not subject to external requirements to manage its capital.
The main purpose for managing the Entity's capital risk is to ensure that it maintains a
solid credit rating and sound equity ratios to support its business and maximize value
to its shareholders.
The Entity manages its capital structure and makes any necessary adjustments based
on changes in economic conditions. In order to maintain and adjust its capital structure,
the Entity can modify the dividend payments to the shareholders, reimburse capital to
them or issue new shares.
For the years ended December 31, 2021, 2020 and 2019, 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.
Cash and cash equivalents
$
6,893,433 $
3,932,409 $
2,568,771
Loans and accounts receivable at
amortized cost
Financial liabilities at
amortized cost
Suppliers
Factoring of suppliers
Accounts payable to creditors
Current maturities of long-term
debt
Current maturities of financial
lease liabilities
Debt instruments
Long-term debt, not including
current maturities
Obligation under finance leases
Option to sell the non-controlling
interest
Debt instruments
1,751,527
1,620,775
1,447,221
2,971,439
1,007,798
4,446,604
2,949,829
654,115
2,834,150
2,327,048
889,046
2,234,461
1,638,000
24,233,053
305,668
4,415,950
1,000,000
12,012,739
19,347,324
1,272,474
17,078,340
4,207,633
7,979,149
3,915,338
-
-
21,092,417
17,102,448
19,542,694
2,701,407
-
2,304,864
7,973,765
c. Objectives of managing financial risks
Among the main associated financial risks that the Entity has identified and to which it is
exposed are: (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
141
ar alsea 2021
Derivative instruments are only traded with well-established institutions and limits have
been set for each financial institution. The Entity has the policy of not carrying out op-
erations with derivative financial instruments for speculative purposes.
Given the variety of possible derivative financial instruments for hedging the risks
identified by the Entity, the Director of Corporate Finance is authorized to select such
instruments and determine how they are to be operated.
d. Market risk
e. Currency exchange risk management
The Entity is exposed to market risks resulting from changes in exchange and interest
rates. Variations in exchange and interest rates may arise as a result of changes in do-
mestic and international economic conditions, tax and monetary policies, market liquidity,
political events and natural catastrophes or disasters, among others.
Exchange fluctuations and devaluation or depreciation of the local currency in the coun-
tries in which Alsea participates could limit the Entity's capacity to convert local currency
to US dollars or to other foreign currency, thus affecting their operations, results of
operations and consolidated financial position. The Entity currently has a risk manage-
ment policy aimed at mitigating present and future risks involving those variables, which
arise mainly from purchases of inventories, payments in foreign currencies and public
debt contracted at a floating rate. The contracting of derivative financial instruments is
intended to cover or mitigate a primary position representing some type of identified
or associated risk for the Entity. Instruments used are merely for economic hedging
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 risk are as follows:
- USD/MXN exchange-rate forwards contracts
- USD/MXN exchange-rate options
-
-
Interest Rate Swaps and Swaptions
Cross Currency Swaps
The Entity carries out transactions in foreign currency and therefore it is exposed to
exchange rate fluctuations. Exposure to exchange rate fluctuations is managed within
the parameters of approved policies, using foreign currency forwards contracts. Note 34
shows foreign currency positions at December 31, 2021, 2020 and 2019. It also shows
the exchange rates in effect at those dates.
USD hedging and its requirements are determined based on the cash flow budgeted
by the Entity, and it is aligned to the current Risk Management Policy approved by the
Corporate Practices Committee, the General Director's office and the Administration
and Financial Director's office. The policy is overseen by the Internal Audit Department.
The exchange rate risk expressed in a foreign currency (USD) is internally monitored on
a weekly basis with the positions or hedges approximating maturity at market exchange
rates. The agent calculating or valuing the derivative financial instruments is in all cases
the counterparty designated under the master agreement.
The purpose of the internal review is to identify any significant changes in exchange rates
that could pose a risk or cause the Entity to incur in non-compliance with its obligations.
If a significant risk position is identified, the Corporate Treasury Manager informs the
Corporate Financial Director's office.
The following table shows a quantitative description of exposure to exchange risk based
on foreign currency forwards and options agreements contracted by the Entity in USD/
MXN, in effect as of December 31, 2021, 2020 and 2019.
Underlying / reference variable
Notional amount/
face value (thousands of USD)
Fair value
(thousands of USD)
Amounts of
maturities
Type of
derivative,
security or
contract
Forwards
Position
Long
Objective
of the
31/12/2019
hedging
previous
Economic 20.9100 USDMXN 21.0200 USDMXN 19.8727 USDMXN
331/12/2020
current
31/12/2021
current
31/12/2021
current
-
31/12/2020
current
78,100
31/12/2019
previous
31/12/2021
current
31/12/2020
current
28,350 $
- $
1,738 $
31/12/2019
previous
2,450
(thousands
of USD)
-
Options
Long
Economic 20.9100 USDMXN
20.9100 USDMXN 19.8727 USDMXN
16,675
11,200
31,250 $
277 $
2,697 $
267
24,500
142
ar alsea 2021
1. Foreign currency sensitivity analysis
At December 31, 2021, 2020 and 2019, the Entity has contracted hedging in order
to purchase US dollars for the next 12 months, a total of $24.5, $89.3 and $59 mil-
lion dollars, respectively, at the average exchange rate of $19.97, $21.69 and $19.45
pesos per US dollar, respectively the valuation is based on an average exchange
rate of $20.47, $19.94 and $19.00, pesos per US dollar, respectively, over the next
12 months as of December 31, 2021, 2020 and 2019. The initial price of currency
derivatives is $78.5, ($89.3) and $(3.9) million Mexican pesos, respectively, payable
to the Entity.
Given the values and amounts of exchange rate hedges, management does not
foresee a significant risk that could affect its results at the December 31, 2021
close or the obligations contracted under current operations that will expire during
the next 12 months. The Entity does not match its net asset position with financial
liabilities denominated in US dollars because it is not representative or material. The
analysis shows only the effect on hedging for purchases of US dollars contracted
and in effect at the December 31, 2021 closing.
Management considers that in the event of a stress scenario as the one described
above, the Entity's liquidity capacity would not be affected, there would be no negative
effects on its operations, nor would compliance with the commitments assumed in
relation to contracted derivative financial instruments be at risk.
2. Foreign currency forwards and options contracts
At December 31, 2021, 2020 and 2019, a total of 396, 539 and 603 derivative
financial instrument operations (forwards and options) were carried out, respec-
tively, for a total of 127.7, 240.3 and 329.7 million US dollars, respectively. The
absolute value of the fair value of the derivative financial instruments entered into
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.
At December 31, 2021, 2020 and 2019, Alsea has contracted DFI's to purchase
US dollars in the next twelve months for a total of approximately 24, 89 and 59
million USD, at the average exchange rate of $19.97, $20.69 and $19.45 pesos to
the dollar, respectively.
At December 31, 2021, 2020 and 2019, the Entity had contracted the financial
instruments shown in the table above.
f.
Interest rate risk management
The Entity faces certain exposure to the volatility of interest rates as a result of con-
tracting bank and public stock exchange debt at fixed and variable interest rates. The
respective risks are monitored and evaluated monthly on the basis of:
Cash flow requirements
-
- Budget reviews
- 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 prices and to deter-
mine the most advisable mix of fixed and variable rates.
The Corporate Treasury Manager is responsible for monitoring and reporting to the
Administration and Financial Director any events or contingencies of importance that
could affect the hedging, liquidity, maturities, etc. of DFI's. He in turn informs Alsea's
General Management of any identified risks that might materialize.
The type of derivative products utilized and the hedged amounts are in line with the
internal risk management policy 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.
At December 31, 2021, the Entity has a total debt of $31,746 million pesos, this debt was
contracted at a fixed rate and a variable rate; in addition to the above, it was decided
to apply a risk management strategy in order to you mitigate the fluctuations of the
interest rate staying in a mix of rates where 63% is fixed at a weighted rate of 8.29%,
and 37% at a variable rate, this strategy has generated a positive result for the Entity.
-
Interest rate swap contracts
According to contracts for swaps of interest (Interest Rate Swap - ISR), the Entity
agrees to exchange the difference between the amounts of the fixed and variable
rates calculated on the agreed notional amount.
Such contracts allow the Entity to mitigate interest rate change risks on the fair value of
the debt issued at a fixed interest rate and the exposure to cash flows on the debt issued
at a variable interest rate. The starting price of the swaps of interest at the end of the
period being reported is determined by discounting future cash flows using the curves
at the end of the period being reported and the credit risk inherent to the contract, as
described further on in these consolidated financial statements. The average interest
rate is based on current balances at the end of the period being reported.
143
ar alsea 2021 The following table shows a quantitative description of exposure to interest rate risk
based on interest rate forwards and options agreements contracted by the Entity, in
effect as of December 31, 2021, 2020 and 2019.
Underlying / reference variable
Notional amount/
face value (USD)
Fair value (USD)
Amounts of
expiration
Type of
derivative,
security or
contract
Objective
of the
hedging
Position
IRS Plain Vanilla
Long
Coverage
31/12/2021
current
5.7150% -
TIIE 28 d
31/12/2020
current
6.7376% -
TIIE 28 d
31/12/2019
previous
7.5002% -
TIIE 28 d
31/12/2021
current
31/12/2020
current
31/12/2019
previous
31/12/2021
current
31/12/2020
current
31/12/2019
previous
(thousands
of USD)
195,684
208,817
207,495 $
14,675 $
(1,302) $
11,565
195,684
IRS Plain Vanilla
Long
Economic
5.7150% -
TIIE 28 d
6.7376% -
TIIE 28 d
7.5002% -
TIIE 28 d
63,732
87,032
144,161 $
(238) $
(906) $
723
63,732
Capped IRS
Long
Economic
5.7150% -
TIIE 28 d
6.7376% -
TIIE 28 d
7.5002% -
TIIE 28 d
61,173
65,211
32,890 $
277 $
(766) $
89
61,173
The following table details quantitatively the instrument contracted for the senior bond
issued in dollars with a value of $500 million outstanding as of December 31, 2021:
Instrument
Fx Forward
Rate
Notional
(Thousands USD)
Notional
(Thousands MXP)
Closing
Date
Maturity
Date
7.1155%
239,000
4,955,474
17.dec.21
21.Jan.22
As mentioned in note 33 subsequent events, on January and February, 2022, the Entity
pricing of senior bonds for the amount of €300 million (three hundred million euros).
1. Analysis of interest rate sensitivity
The following sensitivity analysis has been determined on the basis of the exposure to
interest rates of derivative instruments and of non-derivative instruments at the end of
the period being reported. In the case of variable rate liabilities, an analysis is prepared
assuming that the amount of the liability held at the end of the period being reported
has been the amount of the liability throughout the year.
•
The first stress scenario considered by the Entity’s management is a 200 bps
increase in the 28-day TIIE reference rate while the rest of the variables remain
constant. With the mix in the hedging portfolio of plain vanilla interest rate swaps
and the swaptions contracted at the December 31, 2021 close, the increase in fi-
nancial costs is of approximately $299.41 million.
144
ar alsea 2021 • A 150 bps increase in the 28-day TIIE rate represents an increase in the
financial cost of approximately $224.5 million, which poses no risk to the En-
tity's liquidity nor gives rise to a negative effect on the business's operations
or in assuming commitments for contracting interest rate derivative financial
instruments.
In addition to the bilateral agreements signed further to the ISDA maser agreement,
known as Credit Support Annexes (CSA), the Entity monitors the favorable or negative
fair value on a monthly basis. Should the Entity incur a positive result, and that result
be considered material in light of the amount, a CDS could be contracted to reduce the
risk of breach by counterparties.
•
Lastly, the scenario with a 100 bps increase in the 28-day TIIE reference rate would
have a positive effect on the financial cost of approximately $149.7 million.
The previous scenarios were carried out on the bank and stock market debt contracted
in Mexican pesos with 28-day TIIE floating rate.
g. Credit risk management
Credit risk refers to the uncertainty of whether one or several of the counterparties will
comply with their contractual obligations, which would result in a financial loss for the
Entity. The Entity has adopted the policy of only operating with solvent institutions and
obtaining sufficient collateral, when deemed necessary, as a way to mitigate the risk of
financial loss caused by non-compliance.
The Entity has identified in its portfolio a credit risk among its derivative financial in-
struments designed as cash flow hedges, since are measured at fair value.
The Entity's exposure and the credit ratings of its counterparties are supervised on
a regular basis. The maximum credit exposure levels allowed are established in the
Entity's risk management internal policies. Credit risk over liquid funds and derivative
financial instruments is limited because the counterparties are banks with high credit
ratings issued by accepted rating agencies.
In order to reduce to a minimum, the credit risk associated to counterparties, the
Entity contracts its financial instruments with domestic and foreign institutions that
are duly authorized to engage in those operations and which form part of the Mexican
Financial System.
With respect to derivative financial instruments, the Entity signs a standard agree-
ment approved by the International Swaps and Derivatives Association Inc. with
each counterparty along with the standard confirmation forms for each operation.
Additionally, the Entity signs bilateral guarantee agreements with each counterpar-
ty that establish the margin, collateral and credit line policies to be followed. Such
agreements, commonly known as "Credit Support Annexes", establish the credit limits
offered by credit institutions that would apply in the event of negative scenarios or
fluctuations that might affect the fair value of open positions of derivative financial
instruments. Such agreements establish the margin calls for instances in which credit
facility limits are exceeded.
The methodologies and practices generally accepted in the market and which are
applied by the Entity to quantify the credit risk related to a given financial agent are
detailed below.
1. Credit Default Swap, the credit risk is quantified based on the quoted market price.
The CDS is the additional premium that an investor is willing to pay to cover a credit
position, meaning that the risk quantification is equal to this premium. This practice
is utilized as long as quoted CDS are available on the market.
2.
Issuance Credit Spread, if issuances are available for quotation on different financial
markets, the credit risk can be quantified as the difference between the internal
rate of return of the bonds and the risk-free rate.
3. Comparable items, if the risk cannot be quantified by using the above methodologies,
the use of comparable items is generally accepted; i.e., the use of entities or bonds
of the sector that the company wishes to analyze as a reference.
The Entity has the policy of monitoring the volume of operations contracted with each
institution, in order to avoid margin calls and mitigate credit risks with counterparties.
At the close of December 31, 2021 and 2020, the Entity has incurred in 13 and 28
margin calls just in 2021 and 2020, respectively. At December 31, 2019 has had no
margin calls.
At December 31, 2021, 2020 and 2019, the Entity has recorded no breaches to the
agreements signed with different financial entities for exchange rate hedging operations.
The Entity's maximum exposure to credit risk is represented by the carrying value of its
financial assets. At December 31, 2021, 2020 and 2019, that risk amounts to $1,956,627,
$1,718,798 and $1,540,401, respectively.
The credit risk generated by the management of the Entity’s temporary investments
reflects its current investment policy, which has the following objectives: I) enhance
resource efficiency, and II) mitigate the credit risk. In order to fulfill these objectives,
certain guidelines and maximum amounts were established for counterparties, instru-
ments and periods within the Entity’s policies.
145
ar alsea 2021
All transactions performed in Mexican pesos and foreign currency are supported by an
outline brokerage agreement duly executed by both parties with regulated institutions
belonging to the Mexican Financial System, which have the guarantees required by the
Entity and recognized credit ratings. The only instruments authorized for temporary
investments are those issued by the federal government, corporate and banking insti-
tutions under the repurchase modality.
h. Liquidity risk management
The ultimate responsibility for managing liquidity lies in the Financial Director, for which
purpose the Entity has established policies to control and follow up on working capi-
tal, thus making it possible to manage the Entity's short-term and long-term financing
requirements. In keeping this type of control, cash flows are prepared periodically to
manage risk and maintain proper reserves, credit lines are contracted and investments
are planned.
The Entity's main source of liquidity is the cash earned from its operations.
The following table describes the contractual maturities of the Entity's financial liabilities
considering agreed payment periods. The table has been designed based on undiscounted,
projected cash flows and financial liabilities considering the respective payment dates.
The table includes the projected interest rate flows and the capital disbursements made
towards the financial debt included in the consolidated statements of financial position. If
interest is agreed at variable rates, the undiscounted amount is calculated based on the
interest rate curves at the end of the period being reported. Contractual maturities are
based on the minimum date on which the Entity must make the respective payments.
As of December 31, 2021
Long-term debt
Debt instruments
Financial leasing
Derivatives
Suppliers
Factoring of suppliers (1)
Sale of non-controlling interest
Average
effective
interest rate
Up to 1
year
Up to 2
years
Up to 3
years
Up to 4
years
Up to 5
years or
more
6.48% $
1,638,000 $
3,651,966 $
3,157,355 $
3,057,287 $
2,146,131 $
8.13%
4.00%
1,000,000
4,415,950
4,897
2,971,439
1,007,798
-
-
3,564,491
1,350,000
3,326,858
820,490
2,851,593
14,907,850
9,604,382
-
-
-
-
-
-
-
1,272,474
-
-
-
-
-
-
-
-
Total
13,650,739
18,078,340
23,763,274
4,897
2,971,439
1,007,798
1,272,474
Total
$
11,038,084 $
7,216,457 $
9,106,687 $
6,729,370 $
26,658,363 $
60,748,961
146
ar alsea 2021 As of December 31, 2020
Long-term debt
Debt instruments
Financial leasing
Derivatives
Suppliers
Factoring of suppliers (1)
sale of non-controlling interest
Average
effective
interest rate
Up to 1
year
Up to 2
years
Up to 3
years
Up to 4
years
Up to 5
years or
more
6.48% $
24,233,053 $
8.13%
4.00%
7,979,149
4,207,744
89,839
2,949,829
654,115
2,701,407
- $
-
- $
-
- $
-
- $
-
3,946,443
3,638,393
2,936,185
10,571,285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
24,233,053
7,979,149
25,300,050
89,839
2,949,829
654,115
2,701,407
Total
$
42,815,136 $
3,946,443 $
3,638,393 $
2,936,185 $
10,571,285 $
63,907,442
As of December 31, 2019
Long-term debt
Debt instruments
Financial leasing
Derivatives
Suppliers
Factoring of suppliers (1)
sale of non-controlling interest
Average
effective
interest rate
Up to 1
year
Up to 2
years
Up to 3
years
Up to 4
years
Up to 5
years or
more
Total
8.76% $
1,093,453 $
1,558,759 $
2,394,325 $
13,906,439 $
1,139,110 $
20,092,086
9.03%
4.00%
735,841
4,574,273
3,904
2,327,048
889,046
2,304,864
735,841
3,950,863
1,715,588
3,308,716
648,077
2,846,815
8,554,678
11,077,714
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,390,025
25,758,381
3,904
2,327,048
889,046
2,304,864
Total
$
11,928,429 $
6,245,463 $
7,418,629 $
17,401,331 $
20,771,502 $
63,765,354
(1) The policy of payment to suppliers is 90 days, for which the Entity signed financial factoring contracts backed by credit lines with financial institutions, through
which a supplier can contact the financial institution to collect the any invoice in particular, previously approved by Alsea, before the payment date, which ends
the payment obligation of Alsea to the supplier; in turn, Alsea will settle the balance to the financial institution on the due date for the invoice, in accordance
with the terms previously agreed with the supplier. This transaction has no cost to Alsea, provided that the balances are liquidated in a timely manner, the
balances not settled in a timely manner will be subject to a default interest that will be determined by the financial institution; Additionally, Alsea receives a
commission for the balances discounted by the suppliers. These amounts have been classified as factoring of suppliers in the statement of financial position.
147
ar alsea 2021 i. Fair value of financial instruments
This notes provides information on the manner in which the Entity determines the fair
values of the different financial assets and liabilities.
Some of the Entity's financial assets and liabilities are valued at fair value at each re-
porting period. The following table contains information on the procedure for determin-
ing the fair values of financial assets and financial liabilities (specifically the valuation
technique(s) and input data used).
Financial assets/liabilities
Fair value (1)(2)
Figures in thousands of USD
Fair value
hierarchy
12/31/2021
12/31/2020
12/31/2019
1) Forwards and currency options
agreements
$
- $
(34,637) $
46,244
Nivel 2
Valuation technique(s) and main
input data
Plain vanilla forwards are calculated based on discounted
cash flows on forward exchange type bases. The main
input data are the Spot, the risk-free rates in MXN and
USD + a rate that reflects the credit risk of counterparties.
In the case of options, the methods used are Black and
Scholes and Montecarlo digital and/or binary algorithms.
2) Interest rate swaps
$
276 $
(53,771) $
5,041
Nivel 2
Valuation technique(s) and main input
data
Discounted cash flows are estimated based on forwards
interest rates (using the observable yield curves at the end
of the period being reported) and the contractual rates,
discounted at a rate that reflects the credit risk of the
counterparties.
During the period there were no transfers between level 1 and 3
(1) The fair value is presented from a bank's perspective, which means that a negative
amount represents a favorable result for the Entity.
(2) 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.
(3) Techniques and valuations applied are those generally used by financial entities,
with official price sources from banks such as Banxico for exchange rates, Prov-
eedor Integral de Precios (PIP) and Valmer for supply and databases of rate prices,
volatility, etc.
In order to reduce to a minimum, the credit risk associated with counterparties, the
Entity contracts its financial instruments with domestic and foreign institutions that are
duly authorized to engage in those operations.
In the case of derivative financial instruments, a standard contract approved by the
International Swaps and Derivatives Association Inc. (ISDA) is executed with each
counterparty; the standard confirmation forms required for each transaction are
also completed.
Likewise, bilateral guarantee agreements are executed with each counterparty to deter-
mine policies for the margins, collateral and credit lines to be granted.
This type of agreement is usually known as a “Credit Support Annex”; it establishes the
credit limits that financial institutions grant to the company and which are applicable
in the event of negative scenarios or fluctuations that affect the fair value of the open
positions of derivative financial instruments. These agreements establish the margin
calls to be implemented if credit line limits are exceeded.
Aside from the bilateral agreements attached to the ISDA outline agreement known as
the Credit Support Annex (CSA), the Entity monthly monitors the fair value of payable
or receivable amounts. If the result is positive for the Entity and is considered rele-
vant due to its amount, a CDS can be contracted to reduce the risk of counterparty
noncompliance.
The Entity has the policy of monitoring the number of operations contracted with
each of these institutions so as to avoid margin calls and mitigate the counterparty
credit risk.
At December 31, 2021, 2020 and 2019, the Entity has not received any margin calls
and does not have any securities given as a guarantee with counterparties as interest
rate hedges. Furthermore, it did not record any instances of noncompliance with the
contracts executed with different financial institutions for operations involving interest
rate hedges.
148
ar alsea 2021
j. Fair value of financial assets and liabilities that are not valued at fair value on a
recurring basis (but that require fair value disclosure)
Except for the matter described in the following table, Management considers that the
carrying values of financial assets and liabilities recognized at amortized cost in
the consolidated financial statements approximate their fair value:
Financial liabilities
Pasivos financieros mantenidos al costo amortizado:
Suppliers
Factoring of suppliers
Bank loans
Obligation under finance leases
Long-term bank loans
Non-current financial lease liabilities
Debt instruments
12/31/2021
12/31/2020
12/31/2019
Carrying
value
Fair
value
Carrying
value
Fair
value
Carrying
value
Fair
value
$
2,971,439 $
2,971,439 $
2,949,829 $
2,949,829 $
2,327,048 $
2,327,048
1,007,798
1,638,000
4,415,950
12,012,739
19,347,324
18,078,340
1,007,798
1,899,197
4,415,950
13,338,888
19,347,324
18,504,850
654,115
24,233,053
4,207,633
-
21,092,417
7,979,149
654,115
25,796,432
4,207,633
-
21,092,417
8,442,256
889,046
305,668
3,915,338
17,102,448
19,542,694
7,973,765
889,046
322,187
3,915,338
17,102,448
19,542,694
8,243,744
Total
$
59,471,590 $
61,485,446 $
61,116,196 $
63,142,682 $
52,056,007 $
52,342,505
Financial liabilities 2021
Financial liabilities maintained at amortized cost:
Current maturities of long-term debt
Current obligation under finance leases
Debt instruments
Long-term debt, not including current maturities
Obligation under finance leases
Option to sell the non-controlling interest
Debt instruments
Total
$
Level 2
1,638,000
4,415,950
1,000,000
12,012,739
19,347,324
1,272,474
17,078,340
$
56,764,827
Financial liabilities 2020
Financial liabilities maintained at amortized cost:
Current maturities of long-term debt
Current obligation under finance leases
Obligation under finance leases
Debt instruments
Total
Financial liabilities 2019
Financial liabilities maintained at amortized cost:
Current maturities of long-term debt
Current maturities of financial lease liabilities
Long-term bank loans
Non-current financial lease liabilities
Debt instruments
Level 2
$
24,233,053
$
$
`4,207,633
21,092,417
7,979,149
57,512,252
Level 2
305,668
3,915,338
17,102,448
19,542,694
7,973,765
Total
$
48,839,913
149
ar alsea 2021
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 fluctuations in exchange and interest rates. Those instru-
ments require the Entity to exchange cash flows at future fixed dates on the face value
or reference value and are valued at fair value.
b) Liquidity in derivative financial operations:
1. The resources used to meet the requirements related to financial instruments, will
come from the resources generated by Alsea.
2. External sources of liquidity: No external sources of financing will be used to ad-
dress requirements pertaining to derivative financial instruments.
The fixed minimum capital with no withdrawal rights is comprised of Class I shares, while
the variable portion is represented by Class II shares, and it must in no case exceed 10
times the value of the minimum capital with no withdrawal rights.
The National Banking and Securities Commission has established a mechanism that
allows the Entity to acquire its own shares in the market, for which purpose a reserve
for repurchase of shares must be created and charged to retained earnings.
Total repurchased shares must not exceed 5% of total issued shares; they must
be replaced in no more than one year, and they are not considered in the payment
of dividends.
The premium on the issuance of shares is the difference between the payment for sub-
scribed shares and the par value of those same shares, or their notional value (paid-in
capital stock divided by the number of outstanding shares) in the case of shares with
no par value, including inflation, at December 31, 2012.
24. STOCKHOLDERS’ EQUITY
Available repurchased shares are reclassified to contribute capital.
Following is a description of the principal features of the stockholders' equity accounts:
b. Stockholders’ equity restrictions
a. Capital stock structure
The movements in capital stock and premium on share issue are shown below:
Figures as of January 1, 2020
$
Number
of actions
838,578,725 $
Thousands
of pesos
social capital
478,749 $
Premium
in issuance
of shares
8,670,873
Placement of actions
-
-
5,954
Figures as of December 31, 2020
838,578,725
478,749
8,676,827
Placement of actions
-
-
-
Figures as of December 31, 2021
$
838,578,725 $
478,749 $
8,676,827
I.
5% of net earnings for the period must be set aside to create the legal reserve
until it reaches 20% of the capital stock. At December 31, 2021, 2020 and 2019,
the legal reserve amounted to $100,736, which amount does not reach the re-
quired 20%.
II. Dividends paid out of accumulated profits will be free of ISR if they come from the
CUFIN and for the surplus 30% will be paid on the result of multiplying the dividend
paid by the update factor. The tax arising from the payment of the dividend that
does not come from the CUFIN will be charged to the Entity and may be credited
against the corporate ISR for the following two years.
150
ar alsea 2021 25. NON-CONTROLLING INTEREST
a. Following is a detail of the non-controlling interest.
Ending balance at January 1, 2020
$
1,961,563
Amount
Equity in results for the year ended December 31, 2020
Other movements in capital
Ending balance at December 31, 2020
Equity in results for the year ended December 31, 2021
Other movements in capital
(659,884)
28,767
1,330,446
(50,660)
(244,863)
Ending balance at December 31, 2021
$
1,034,923
b. Following is the detail of the Non-Controlling interest of the main subsidiaries of the
Entity:
Subsidiary
Country
31/12/2021 31/12/2020 31/12/2019
31/12/2021
31/12/2020
31/12/2019
31/12/2021
31/12/2020
31/12/2019
Percentages of the non-
controlling interest
Income (loss) attributable
to the non-controlling interest
Accumulated non-controlling
interest
Food Service
Project, S.L.
(Grupo Zena) (2)
Operadora de
Franquicias Alsea,
S.A. de C.V. (1)
Estrella Andina,
S.A.S.
Spain
23.23%
33.76%
33.76% $
(51,276) $
(617,817) $
169,700 $
934,191 $
1,179,805 $ 1,797,622
Mexico
-
20.00%
20.00%
-
(35,908)
2,530
-
30,340
66,248
Colombia
30.00%
30.00%
30.00%
851
(10,757)
(12,404)
92,447
47,804
58,561
(1)
(2)
On June 28, 2021, the entity purchase shares that represent 20% of the non- controlling interest of Operadora de Franquicias Alsea, S.A.P.I. de C.V., thereby
increasing its participation in that entity to 100%. The amount of the transaction was for $30,254, which is equivalent to the book value, so a goodwill is not
generated.
In September 2021, the Entity, Alia Capital Partners and Bain Capital Credit agreed to invest in a noncontrolling interest of 21.1% in Food Service Project, S.A.
(Alsea Europa). Following this investment, Alsea holds equity of 76.8% (formerly 66.2%), while Alia Capital Partners and Bain Capital Credit will indirectly hold
equity of 10.6%, and the remaining minority shareholders represent 12.7%. The Entity’s outlay was 55 million euros (equal to $1,205,703), which represents
10.5% of the noncontrolling interest. Similarly, reimbursements of $92.4 million pesos were also obtained. Based on this agreement, the Entity renegotiated
its PUT - CALL options in the following manner:
a) Deadline of December 31, 2026.
b) The Entity has an enforceable and optional “Call Option” as of the third year.
c) The weekly payment of a coupon (4.6% per year) payable until the date on which
the “Put Option” is exercised.
d) The Entity has the possibility of settling the obligation through the exchange of
shares or cash.
151
ar alsea 2021
26. EARNINGS PER SHARE
27. REVENUES
Basic earnings per share is calculated by dividing the net profit for the period attributable
to the controlling interest holders of ordinary capital by the average weighted number of
ordinary shares outstanding during the period.
Diluted earnings per share is calculated by dividing the net profit attributable to controlling
interest holders of ordinary capital (after adjusting for interest on the convertible preferential
shares, if any) by the average weighted ordinary shares outstanding during the year plus
average weighted ordinary shares issued when converting all potentially ordinary diluted
shares to ordinary shares. For the years ended December 31, 2021, 2020 and 2019, the
Entity has no potentially dilutive shares, for which reason diluted earnings per share is equal
to basic earnings per share.
The following table contains data on income and shares used in calculating basic and diluted
earnings per share:
2021
2020
2019
Revenues from the sale of goods
$
52,009,161 $
37,403,800 $
56,594,841
Services
Royalties
Total
804,878
565,430
676,154
415,466
850,163
709,613
$
53,379,469 $
38,495,420 $
58,154,617
For the year ended December 31, 2021, operating income increased 28% compared to the
year ended December 31, 2020, primarily driven by the effects of the COVID-19 pandemic.
2021
2020
2019
28. COST OF SALES
Net profit (in thousands of Mexican
pesos):
Attributable to shareholders
$
835,129 $
(3,235,574) $
926,669
Shares (in thousands of shares):
Weighted average of shares outstanding
838,579
838,579
838,579
Basic and diluted net income per
share of continuous and discontinued
operations (cents per share)
Basic and diluted net income
per share of continuous operations
(cents per share)
$
$
1.00 $
(3.86) $
1.11
1.00 $
(3.86) $
1.11
The costs and expenses included in other operating costs and expenses in the consolidated
statements of income are as follows:
2021
2020
2019
Food and beverage of costs
$
14,985,941 $
10,873,059 $
16,457,416
Royalties of costs
Other costs
121,368
483,965
96,524
485,301
160,732
545,873
Total
$
15,591,274 $
11,454,884 $
17,164,021
152
ar alsea 2021
29. OTHER OPERATING EXPENSES
Other operating expenses included in the consolidated statements of income are as follows:
2021
2020
2019
Commission aggregators
$
566,550 $
397,682 $
Fees
Insurance
Taxes and rights
Occupancy expenses
Other expenses
212,240
120,617
196,234
164,654
230,679
122,785
150,325
133,452
148,315
222,015
99,817
206,255
240,890
1,239,759
(544,846)
1,104,855
Total
$
2,500,054 $
490,077 $
2,022,147
30. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Officer compensations and benefits
The total amount of compensation paid by the Entity to its main advisors and officers for the
period ended December 31, 2021, 2020 and 2019 was of approximately $127,716, $137,839
and $134,000, respectively.
This amount includes emoluments determined by the General Assembly of Shareholders of
the Entity for the performance of their positions during said fiscal year, as well as salaries
and salaries.
The Entity continuously reviews salaries, bonuses and other compensation plans in order to
ensure more competitive employee compensation conditions.
31. FINANCIAL INFORMATION BY SEGMENTS
The Entity is organized into three large operating divisions comprised of sales of food and
beverages in Mexico and South America (LATAM - Argentina, Chile, Colombia and Uruguay)
and Europe (Spain, Portugal, France, Netherlands, Belgic and Luxemburg) all headed by the
same management.
The accounting policies of the segments are the same as those of the Entity's described in
Note 4.
The Food and Beverages segments in which Alsea in Mexico, Europe and Latin America
(LATAM) participates are as follows:
Fast Food: This segment has the following features: i) fixed and restricted menus, ii) food
for immediate consumption, iii) strict control over individual portions of each ingredient and
finished product, and iv) Individual packages, among others. This type of segment can be
easily accessed and therefore penetration is feasible at any location.
Coffee (Coffee Shops): Specialized shops where coffee is the main item on the menu. The
distinguishing aspects are top quality services and competitive prices, and the image/am-
biance is aimed at attracting all types of customers.
Casual Dining: This segment comprises service restaurants where orders are taken from
customers and there are also to-go and home delivery services. The image/ambiance of
these restaurants is aimed at attracting all types of customers. This segment covers fast
food and gourmet restaurants.
The main features of casual dining stores are i) easy access, ii) informal dress code, iii)
casual atmosphere, iv) modern ambiance, v) simple decor, vi) top quality services, and vii)
reasonable prices. Alcoholic beverages are usually sold at those establishments.
Restaurant - cafeteria - (Vips): Is a familiar-type segment and its main characteristic is
the hospitality, and be close to the client. These restaurants have a wide variety of menus.
Fast Casual Dining: This is a combination of the fast food and casual dining segments.
The definition of the operating segments is based on the financial information provided by
General Management and it is reported on the same bases as those used internally by each
operating segment. Likewise, the performance evaluations of the operating segments are
periodically reviewed.
Information on the segments for the years ended December 31, 2021, 2020 and 2019 is as
follows: (figures in millions of pesos).
153
ar alsea 2021
Figures in millions of pesos as of December 31, division:
Food and beverages
Mexico
Food and beverages
LATAM
Food and beverages
Europe
Consolidated
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
Income
Costs
Operating costs
EBITDA store
Depreciation and amortization
Non-operating expenses
Utility operation
Interest paid
Earned interests
Other financial expenses
Participation in associates
Income taxes
Consolidated net income
for the year
Noncontrolling interest
Majority net income
$
26,015 $
19,067 $
27,217 $
8,950 $
5,568 $
9,732 $
18,414 $
13,861 $
21,206 $
53,379 $
38,496 $
9,160
8,723
8,132
3,395
1,911
2,826
6,018
7,750
5,299
3,616
1,333
350
8,398
10,066
8,753
3,921
1,617
3,215
3,033
3,800
2,117
1,157
373
587
1,954
2,749
865
1,015
283
(433)
3,190
4,710
1,832
907
664
261
4,560
7,947
5,907
3,627
1,561
719
3,483
6,830
3,548
3,804
1,178
(1,434)
5,576
9,834
5,796
3,219
1,482
1,095
16,753
20,511
16,115
8,179
3,804
4,132
3,508
(142)
(231)
3,135
2
215
784
(51)
11,455
17,329
9,712
8,435
2,724
(1,517)
3,226
(119)
468
3,575
(3)
(1,199)
(3,895)
(659)
$
835 $
(3,236) $
58,155
17,164
24,610
16,381
8,047
3,763
4,571
3,123
(101)
(172)
2,850
(1)
635
1,085
158
927
Assets
$
48,707 $
49,960 $
46,557 $
7,705 $
6,570 $
4,922 $
23,991 $
25,044 $
21,077 $
80,404 $
81,574 $
72,556
Food and beverages
Mexico
Food and beverages
LATAM
Food and beverages
Europe
Consolidated
2021
2020
2019
2021
2020
2019
2021
2020
2019
2021
2020
2019
Investment in productive assets
Investment in associates
Investment in Fixed Assets and
Intangible
Total assets
Total liability
$
$
(745)
1,425
(435)
747
85
1,718
877
192
525
243
-
649
-
825
-
784
-
132
1,404
2,442
90
1,774
85
3,771
49,387 $
50,272 $
48,360 $
8,774 $
7,338 $
5,571 $
24,816 $
25,828 $
22,481 $
82,978 $
83,438 $
76,412
46,512 $
48,203 $
39,818 $
4,682 $
3,792 $
2,466 $
23,110 $
23,809 $
22,586 $
74,303 $
75,804 $
64,870
154
ar alsea 2021 32. FOREIGN CURRENCY POSITION
Assets and liabilities expressed in US dollars, shown in the reporting currency at December
31, 2021, 2020 and 2019, are as follows
:
In converting the figures, the Entity used the following exchange rates:
Foreign transaction
Country
of origin
Currency
Recording Functional Presentation
Thousands of
Mexican pesos
2021
Thousands of
Mexican pesos
2020
Thousands of
Mexican pesos
2019
Assets
Liabilities
Net monetary liability position
$
$
5,566,171 $
4,028,843 $
(19,394,119)
(19,872,347)
(13,827,948) $
(15,843,504) $
3,238,135
(15,310,246)
(12,072,111)
The exchange rate to the US dollar at December 31, 2021, 2020 and 2019 was $20.51, $19.91
and $18.87, respectively. At April 12, 2022, date of issuance of the consolidated financial
statements, the exchange rate was $19.8407 to the US dollar.
The exchange rates used in the different conversions to the reporting currency at December
31, 2021, 2020 and 2019 and at the date of issuance of these consolidated financial state-
ments are shown below:
Fast Food Sudamericana,
Argentina
S.A.
Starbucks Coffee Argentina,
Argentina
S.R.L.
Fast Food Chile, S.A.
Asian Food Ltda,
Chile
Chile
Gastronomía Italiana en
Colombia
Colombia, S.A.S.
Operadora Alsea en
Colombia, S.A.
Colombia
Asian Bistro Colombia,
Colombia
S.A.S.
Food Service Project, S.L.
Spain
ARP
ARP
CLP
CLP
COP
COP
COP
EUR
ARP
ARP
CLP
CLP
COP
COP
COP
EUR
MXP
MXP
MXP
MXP
MXP
MXP
MXP
MXP
Country
of origin
2021
Argentina
Chile
Colombia
Spain
Country
of origin
2020
Argentina
Chile
Colombia
Spain
Country
of origin
2019
Argentina
Chile
Colombia
Spain
Currency
Closing exchange
rate
Issuance
April 12, 2022
Argentinian peso (ARP)
Chilean peso (CLP)
Colombian peso (COP)
Euro (EUR)
0.1997
0.0241
0.0050
23.3264
0.1800
0.024
0.0053
21.8341
Currency
Closing exchange
rate
Argentinian peso (ARP)
Chilean peso (CLP)
Colombian peso (COP)
Euro (EUR)
0.5192
0.0283
0.0061
22.5340
Currency
Closing exchange
rate
Argentinian peso (ARP)
Chilean peso (CLP)
Colombian peso (COP)
Euro (EUR)
0.5192
0.0283
0.0061
22.5340
155
ar alsea 2021 33. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments:
a) The Entity leases locales to house its stores and distribution centers, as well as
certain equipment further to the lease agreements entered into for defined periods
(see Note 20).
b) The Entity has acquired several commitments with respect to the arrangements estab-
lished in the agreements for purchase of the brands.
Alsea and its external attorneys consider that they have sufficient elements to show that
the payment requests issued by the tax authorities are unlawful, while demonstrating that
Alsea has fulfilled its tax obligations in time and form with regard to the aforementioned
purchase-sale transaction; for this reason, an Administrative Appeal was lodged with the
tax authorities on 23 March 2020, which is under review. A provision has not been created
for this purpose.
c)
In the normal course of operations, the Entity acquires commitments derived from supply
agreements, which in some cases establish contractual penalties in the event of breach
of such agreements.
Appeals for revocation have been filed with the tax authorities, which are still pending res-
olution, in order to make an adequate assessment of all the elements to be established to
establish the improperness of the aforementioned settlements.
Contingent liabilities:
a. In September 2014, the Finance Department of Mexico City determined taxable income
for the company denominated Italcafé, S.A. de C.V. (Italcafé) based on amounts deposited in
its bank accounts derived from different restaurants owned by Grupo Amigos de San Ángel,
S.A. de C.V. (GASA), however, that these revenues were accumulated by the latter company
giving it all the corresponding tax effects , that authority concluded that the observations were
partially called into effect, and in January 2019, Italcafé brought an action for invalidity against
the partial favourable decision, trial continues in legal process and in analysis by the Superior
Chamber of the First Section of the Tax Court who shall be appointed to issue the decision.
In March 2019, the Tax Administration Service (SAT) determined tax liabilities for GASA and
Italcafé derived from the review performed for 2010 and 2011, respectively, with regard to
the deposits made in their bank accounts. Accordingly, the companies filed a motion for re-
consideration and, in August and November 2019, filed a proceeding for annulment against
the rulings issued in the motions for reconsideration. The trial continues in its legal process.
Please note that the former owners of GASA and Italcafé will assume the economic effects
derived from the aforementioned tax liability due to the terms and conditions established in
the agreements executed by Alsea with these vendors.
The transaction was recorded for accounting purposes according to IFRS and, more specifi-
cally, International Accounting Standards (IAS) 27 and 28, Consolidated and separate financial
statements, and Investments in Associates and Joint Ventures, respectively. These standards
establish that, in a business combination, the surplus value forming part of the book value of
an investment in a subsidiary is not recognized separately; i.e., the surplus value generated
by the acquisition of Vips must be presented together with the investment in shares in the
separate financial statements of OARM because it does not fulfill the definition of a separate
asset in the individual financial statements.
In the separate financial statements of Alsea, the acquisition of the VIPS Brand is only re-
ferred to as the acquisition of the intellectual property of the VIPS brand.
Alsea applied the accounting or purchase method contained in IFRS 3, Business com-
bination, which is only applicable to the buyer in the Entity’s consolidated financial
statements. When applying this method, the assets and liabilities acquired through
the purchase of this business included the identified intangible assets of the acquired
company, the assets and liabilities covered by the previous terms are matched with the
amount paid and the difference between these values is recorded as surplus value at
the consolidated level.
The tax authorities conducted an inspection of Alsea and its subsidiary, Operadora Alsea de
Restaurantes Mexicanos, S.A., de C.V. (OARM) for 2014, which primarily focused on tax aspects
related to the transactions performed to acquire the Vips division from Wal-Mart de México,
S.A.B. de C.V. that year.
As discussed above, purchase accounting is a special accounting treatment; the respective
adjustments are only recognized in the consolidated financial statements, but are not recog-
nized in the financial statements of the acquired entity or in the separate financial statements
of the buyer.
The tax authorities issued payment requests, the most significant of which requests the pay-
ment of taxes for alleged income derived from the acquisition of goods from ALSEA for the
total amount of $3,881 million pesos, including restatement.
156
ar alsea 2021 34. SUBSEQUENT EVENTS
a. On January 21, 2022, the pricing of senior bonds for the amount of €300 million was
concluded, with an annual interest rate of 5.500%, the senior bonds were issued through
the Entity’s subsidiary Food Service Project, S.A. and underwritten by Alsea (the “Euro
Bonos 2027”), with the option of partial or full settlement from January 21, 2024.
The issuance of the Euro Bonos 2027 was in accordance to Rule 144A and Regulation
S of the US Securities Act. The Entity used the net resources to refinance its debt
through a transaction composed by the prepayment of a debt of Alsea and its subsid-
iaries, together with the payment of placement fees and related expenses.
During January and February 2022, the Entity contracted the following hedges for the senior
bond issued in US dollars with a value of US $ 500 million:
Instrument
Rate
Spread
Notional
(Thousands)
USD
Close
date Main equity
Coupon Only Swap
TIIE
0.85%
214,465
10.Jan.22
Principal Only
Swap
Call Spread
Principal Only
Swap
5.95%
0.00%
87,170
10.Jan.22
2.40%
5.43%
0.00%
0.00%
257,358
84,401
14.Jan.22
14.Feb.22
60.00%
19.70%
50% of the
coupons
20.30%
b. On March 8, 2022, Alsea announced that in relation to the 10,000,000 Securitization
Certificates issued by Alsea, S.A.B. de C.V. (the “Issuer” or “Alsea”), with ticker symbol
"ALSEA 17", on October 4, 2017 (the “Issuance”), in which Monex Casa de Bolsa, S.A.
de C.V., Monex Grupo Financiero, acted as the Common Representative of the Holders,
investors were informed that the Early Settlement of the Issuance the following amounts
were paid on March 16, 2022 due to:
1. The amount of interest accrued for the 28-day period from February 16, 2022
through March 16, 2022, at the gross annual rate of 7.13%, which was $5,546
(thousands of pesos).
2. The amount of the Early Settlement equal to $1,000,000 (thousands of pesos),
which was calculated in conformity with the section entitled “Early Settlement” of
the Title of the ALSEA 17 issuance.
c. Following the year-end close, the uncertainty derived from the conflict between Ukraine
and Russia has increased and may generate adverse economic effects, such as currency
and interest rate instability, together with liquidity pressures. Supply chain interactions
and the impairment of consumer confidence may also arise. All these events and the
associated uncertainty could have a significant impact on the operations and financial
position of Alsea, the effect of which is hard to predict.
35. AUTHORIZATION OF CONSOLIDATED FINANCIAL STATEMENT
The consolidated financial statements were authorized for issuance on April, 12, 2022 by
Mr. Rafael Contreras Grosskelwing, Administration and Financial Director, and therefore they
do not reflect any facts that might occur after that date and are subject to the approval of the
audit committee and the Entity's stockholders, who can decide to modify them in accordance
with the provisions of the Corporations Law.
157
ar alsea 2021
Information for
Investors
Dirección de Finanzas
Rafael Contreras
Director de Administración y Finanzas
+52(55) 7583-2000
Relación con Inversionistas
Salvador Villaseñor Barragán
ri@alsea.com.mx
+52(55) 7583-2000
Dirección de Asuntos Corporativos
Valeria Oslon Fernández
rp@alsea.com.mx
+52(55) 7583-2000
Auditores Externos
Deloitte
Galaz, Yamazaki, Ruiz Urquiza, S.C.
Av. Paseo de la Reforma #489 6º piso,
Col. Cuauhtémoc
C.P. 06500, Ciudad de México
+52(55) 5080-6000
Oficinas Corporativas
Alsea, S.A.B. de C.V.
Avenida Revolución N° 1267,
Torre Corporativa, Piso 21,
Colonia Los Alpes,
Delegación Álvaro Obregón,
Código Postal 01040
+52(55) 7583-2000
www.alsea.net
158
INFORMATIONar alsea 2021