ANNUAL INTEGRATED REPORT 2021
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ANNUAL INTEGRATED REPORT 2021 | AXTEL
Financial
liabilities:
Fair value of financial assets and liabilities valued at amortized cost
The amount of cash and cash equivalents, trade and other accounts
receivable, other current assets, trade payables and other accounts
payable, current debt, current provisions and other current liabilities
approximate their fair value since their maturity date is less than twelve
months. The net carrying amount of these accounts represents the
expected cash flow at December 31, 2021, 2020 and 2019.
The carrying amount and estimated fair value of financial assets and
liabilities valued at amortized cost is presented below:
Debt "
Accounts
payable to
related parties
As of December 31,
2021
2020
2019
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
$ 12,842,055 $ 13,152,634 $14,655,875 $14,999,100 $ 14,006,129
$14,737,276
703,348
631,017
The carrying amount of debt, for purposes of calculating its fair
value, is presented gross of interest payable and issuance costs.
The estimated fair values as of December 31, 2021, 2020 and 2019 were
determined based on discounted cash flows, using rates that reflect
a similar credit risk depending on the currency, maturity period and
country where the debt was acquired, regarding financial liabilities
with financial institutions, finance leases, other liabilities and related
parties. The primary rates used are the Interbank Equilibrium Interest
Rate ("TIIE" for its acronym in Spanish) for instruments in Mexican
pesos and London Interbank Offer Rate ("LIBOR") for instruments
in U.S. dollars. In the case of Senior Notes issued in international
markets, the Company uses the market price of such Notes at the date
of the consolidated financial statements. For purposes of disclosure,
measurement at fair value of financial assets and liabilities valued
at amortized cost is deemed within Level 1 and 2 of the fair value
hierarchy.
Market risk
(I.)
Exchange rate risk
The Company is exposed to the exchange risk arising from exposure of
its currency, mainly with respect to the U.S. dollar. Axtel's indebtedness
and part of its accounts payable are stated in U.S. dollars, which means
that it is exposed to the risk of variations in the exchange rate.
The Company's interest expense on the dollar debt, stated in Mexican
pesos in the Axtel consolidated financial statements, varies with the
movements in the exchange rate. Depreciation of the peso gives rise
to increases in the interest expense recorded in pesos.
The Company records exchange gains or losses when the Mexican
peso appreciates or depreciates against the U.S. dollar. Due to the fact
that the Company's monetary liabilities denominated in dollars have
exceeded (and are expected to continue exceeding) Axtel's monetary
assets stated in that same currency, depreciation of the Mexican peso
to the U.S. dollar will give rise to exchange losses.
The Company has the following assets and liabilities in foreign currency
in relation to the functional currency of its subsidiaries, translated
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