2020 Annual Report

2020 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS MEGACABLE. During 2020 and 2019, the Group's strategy was to maintain its leverage ratio within the range of 0 to 3.00. The credit rating regarding the Group's overall ability to meet financial obligations has been maintained throughout the period. The leverage ratio as at December 31, 2020 and 2019 is as follows: Specific valuation techniques for financial instruments include: Market listing prices or trading prices of similar instruments. Other techniques, such as discounted cash flow analysis, are used to determine the fair value of other financial instruments. Total liabilities Total equity Leverage ratio e) Fair value estimation $ 2020 2019 15,879,991 33,877,016 12,292,831 30,949,936 0.47 0.40 The book value of assets and liabilities measured at amortized cost as at December 31, 2020 and 2019 resembles the fair value, derived from the fact that their realization period is less than one year, except for those presented under the long-term that are described in Notes 13, 14, and 25. The book value of trade receivables, other accounts receivable, suppliers and other accounts payable is similar to fair value, since it would be the amount payable in the short term. (4) Critical accounting estimates and judgments- The different levels of financial instruments have been defined as follows: Unadjusted quoted prices in active markets for identical asset or liability (level 1). Assets and liabilities measured at fair value for disclosure purposes, within this hierarchy are related-party receivables and payables and bank loans (level 2). Information other than quoted prices included in level 1 that can be confirmed for the asset or liability, either directly (such as prices) or indirectly (that is, derived from prices) (level 2). Information about the asset or liability that is not based on data that can be confirmed in an active market (that is, unobservable data) (level 3). The fair value of financial instruments traded in an active market is based on the market prices at the date of the consolidated statement of financial position. A market is understood as an asset with quoted prices that are normally available in an exchange, among negotiators, brokers, industry group, price services or a regulatory agency, and those prices represent real and recurring transactions in the market on the basis of free competition. The market price used in the financial assets held by the Group is the current offer price. These instruments are included in level 1. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market information when it is available and place the least possible confidence in the entity's specific estimates. If all the relevant variables to establish the fair value of a financial instrument are observable, the instrument is included in level 2. If one or more relevant variables are not based on observable market information, the instrument is included in level 3. The estimates and judgments used are continuously evaluated and are based on historical experience and other factors, including the expectation of the occurrence of future events that are considered reasonable under current circumstances. a) Critical accounting estimates and judgments The Group makes estimates and judgments regarding the future. The resulting accounting estimates, by definition, will seldom equal the actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the book values of assets and liabilities during the following year are as follows: Accounting judgments: b) Concessions granted by the government The provision of the aforementioned services is carried out through concessions granted free of charge by the competent authority in the regions indicated in Note 28 c) for a period of 30 years, which at the end of their validity will be consolidated into a single concession. In January 2016, MEGA CABLE was granted a unique concession title for national coverage, with a 30-year validity, which allows the Group to provide any type of telecommunications services with the technical feasibility permitted by its infrastructure (limited only to having to request the radio spectrum required, as appropriate) anywhere in Mexico. Said model establishes the corresponding obligations such as, registering the services that it intends to provide; providing information on its passive and active infrastructure, rights of way and transmission media; coverage programs, and 51

View entire presentation