Investor Presentaiton
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ANNUAL INTEGRATED REPORT 2021 | AXTEL
point in time. This performance obligation has a significant financial
component; therefore, revenues are recognized in accordance with
the effective interest rate method over the term of the agreement.
- Revenues from services are recognized as they are provided; i.e.
as the customer consumes them in relation to services of voice,
data and general telecommunications.
Dividend income from investments is recognized once the rights of
stockholders to receive this payment have been established (when
it is probable that the economic benefits will flow to the Company
and that the revenue can be reliably measured).
Interest income is recognized when it is likely that the economic
benefits will flow to the entity and the amount of revenue can be
reliably measured by applying the effective interest rate.
Costs of acquiring new contracts are recognized as contractual
assets and are amortized over the period of those contracts in
profit or loss, which is when they will generate economic benefits.
y. Advances from customers
data
Customer prepayments for cable, interconnection,
transmission, internet and local services are billed monthly and
applied to profit or loss as revenue for the period as the services
are provided. The Company's deferred income are recorded based
on the commitment to provide a service to the customers, and the
service is recognized in profit or loss as it is provided.
04
z. Earnings per share
Earnings per share are calculated by dividing the profit attributable
to the stockholders by the weighted average number of common
shares outstanding during the year.
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Company's activities expose it to various financial risks: market
risk (including exchange rate risks, interest rate risk on cash flows and
interest rate risk on fair values), credit risk and liquidity risk.
The Company has a general risk management program focused on
the unpredictability of financial markets and seeks to minimize the
potential adverse effects on its financial performance.
The objective of the risk management program is to protect the
financial health of the businesses, taking into account the volatility
associated with foreign exchange and interest rates. Sometimes,
regarding market risks, the Company uses derivative financial
instruments to hedge certain exposures to risks.
Alfa (holding company) has a Risk Management Committee (RMC),
comprised of the Board's Chairman, the Chief Executive Officer
("CEO"), Chief Financial Officer ("CFO") of Alfa and the Risk
Management Officer ("RMO") of Alfa acting as technical secretary.
The RMC reviews derivative transactions proposed by the subsidiaries
of Alfa, including Axtel, in which a potential loss analysis surpasses
US$1 million.
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