Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document And Entity Information [Abstract] | |
Entity Registrant Name | Betterware de Mexico, S.A.P.I. de C.V. |
Entity Central Index Key | 0001788257 |
Amendment Flag | false |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2019 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2019 |
Entity Emerging Growth Company | true |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | No |
Entity Filer Category | Non-accelerated Filer |
Entity Shell Company | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Ex Transition Period | false |
Entity File Number | 001-39251 |
Entity Interactive Data Current | Yes |
Entity Incorporation State Country Code | O5 |
Entity Common Stock, Shares Outstanding | 5,037,939 |
Combined Statements of Financia
Combined Statements of Financial Position - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 213,697 | $ 177,383 |
Trade accounts receivable, net | 247,087 | 198,776 |
Accounts receivable from related parties | 610 | |
Inventories | 345,554 | 302,206 |
Prepaid expenses | 53,184 | 42,283 |
Other assets | 20,574 | 9,202 |
Total current assets | 880,706 | 729,850 |
Non-current assets: | ||
Property, plant and equipment, net | 207,350 | 42,972 |
Right of use assets, net | 23,811 | |
Deferred income tax | 5,082 | |
Intangible assets, net | 310,965 | 312,099 |
Goodwill | 348,441 | 348,441 |
Other assets | 13,371 | 24,236 |
Total non-current assets | 909,020 | 727,748 |
Total assets | 1,789,726 | 1,457,598 |
Current liabilities: | ||
Borrowings | 148,070 | 90,691 |
Accounts payable to suppliers | 529,348 | 445,241 |
Accrued expenses | 54,456 | 36,706 |
Provisions | 46,689 | 38,986 |
Income tax payable | 34,709 | 29,016 |
Value added tax payable | 30,299 | 17,624 |
Dividends payable | 64,955 | |
Statutory employee profit sharing | 5,006 | 2,716 |
Lease liability | 14,226 | |
Derivative financial instruments | 15,555 | 8,509 |
Total current liabilities | 878,358 | 734,444 |
Non-current liabilities: | ||
Employee benefits | 1,630 | 1,355 |
Derivative financial instruments | 16,754 | 8,120 |
Deferred income tax | 78,501 | 70,627 |
Lease liability | 10,358 | |
Borrowings | 529,643 | 562,788 |
Total non-current liabilities | 636,886 | 642,890 |
Total liabilities | 1,515,244 | 1,377,334 |
Net Parent investment | 274,482 | 80,264 |
Contingencies | ||
Total liabilities and Net Parent investment | $ 1,789,726 | $ 1,457,598 |
Combined Statements of Profit o
Combined Statements of Profit or Loss and Other Comprehensive Income - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Profit or loss [abstract] | |||
Net revenue | $ 3,084,662 | $ 2,316,716 | $ 1,449,705 |
Cost of sales | 1,280,829 | 958,469 | 558,105 |
Gross profit | 1,803,833 | 1,358,247 | 891,600 |
Administrative expenses | 319,133 | 249,148 | 204,555 |
Selling expenses | 551,300 | 454,016 | 291,834 |
Distribution expenses | 121,155 | 103,336 | 64,349 |
Total operating expense | 991,588 | 806,500 | 560,738 |
Operating income | 812,245 | 551,747 | 330,862 |
Financing income (cost): | |||
Interest expense | (85,429) | (86,343) | (118,205) |
Interest income | 7,028 | 6,707 | 20,754 |
Unrealized loss in valuation of financial derivative instruments | (15,680) | (16,629) | |
Foreign exchange (loss) gain, net | (13,330) | (6,036) | 71,214 |
Total financing income (cost) | (107,411) | (102,301) | (26,237) |
Income before income taxes | 704,834 | 449,446 | 304,625 |
Income taxes: | |||
Current | 229,900 | 158,545 | 92,209 |
Deferred | 2,792 | (8,366) | 4,742 |
Total income taxes | 232,692 | 150,179 | 96,951 |
Net income for the year | 472,142 | 299,267 | 207,674 |
Items that will not be reclassified subsequently to profit or loss: | |||
Remeasurement of defined benefit obligation, net of taxes | 76 | 165 | (115) |
Total comprehensive income for the year | $ 472,218 | $ 299,432 | $ 207,559 |
Basic and diluted earnings per common share (pesos) | $ 15.63 | $ 9.91 | $ 6.88 |
Combined Statements of Equity C
Combined Statements of Equity Changes in Net Parent Investment $ in Thousands | MXN ($) |
Beginning balance at Dec. 31, 2016 | $ 58,702 |
Effects from the merger | (87,484) |
Total comprehensive income for the year | 207,559 |
Ending balance at Dec. 31, 2017 | 178,777 |
Capital stock reduction | (97,866) |
Dividends declared | (300,079) |
Total comprehensive income for the year | 299,432 |
Ending balance at Dec. 31, 2018 | 80,264 |
Dividends declared | (278,000) |
Total comprehensive income for the year | 472,218 |
Ending balance at Dec. 31, 2019 | $ 274,482 |
Combined Statements of Cash Flo
Combined Statements of Cash Flows - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | |||
Net income for the year | $ 472,142 | $ 299,267 | $ 207,674 |
Adjustments for: | |||
Income tax expense | 232,692 | 150,179 | 96,952 |
Depreciation and amortization of non-current assets and right of use assets | 38,394 | 25,962 | 24,209 |
Interest expense recognized in profit or loss | 85,429 | 86,343 | 118,205 |
Interest income recognized in profit or loss | (7,028) | (6,707) | (20,754) |
Gain on disposal of equipment | (11,970) | 1,807 | |
Unrealized foreign exchange gain | (57,626) | ||
Unrealized loss in valuation of financial derivative instruments | 15,680 | 16,629 | |
Total adjustments | 837,309 | 559,703 | 370,467 |
(Increase) decrease in: | |||
Trade accounts receivable | (48,311) | (50,843) | (28,761) |
Trade accounts receivable from related parties | (610) | 22 | 135 |
Inventory | (43,348) | (160,312) | (34,807) |
Prepaid expenses and other assets | (40,263) | (31,329) | (9,345) |
Increase (decrease) in: | |||
Accounts payable to suppliers and accrued expenses | 101,857 | 238,927 | 80,112 |
Provisions | 7,703 | (3,496) | (1,094) |
Value-added tax payable | 12,675 | (2,909) | 4,490 |
Statutory employee profit sharing | 2,290 | 1,470 | (282) |
Employee benefits | 351 | 308 | 184 |
Income taxes paid | (224,207) | (213,327) | (8,411) |
Net cash provided by operating activities | 605,446 | 338,214 | 372,688 |
Investing activities: | |||
Payments for property, plant and equipment | (182,625) | (21,268) | (33,668) |
Proceeds from disposal of property, plant and equipment | 28,110 | 368 | |
Interest received | 7,028 | 6,707 | 1,788 |
Net cash (used in) provided by investing activities | (175,597) | 13,549 | (31,512) |
Financing activities: | |||
Proceeds from long-term debt | 104,500 | 50,000 | 589,798 |
Payments of debt | (83,041) | (35,085) | (743,787) |
Interest paid | (82,654) | (85,159) | (142,431) |
Restricted cash | 22,940 | (2,001) | (20,087) |
Payments of leases | (12,325) | ||
Dividends paid | (342,955) | (235,124) | |
Payments made to shareholders | (97,866) | ||
Net cash used in financing activities | (393,535) | (405,235) | (316,507) |
Increase (decrease) in cash and cash equivalents | 36,314 | (53,472) | 24,669 |
Cash and cash equivalents at the beginning of year | 177,383 | 230,855 | 206,186 |
Cash and cash equivalents at the end of year | $ 213,697 | $ 177,383 | $ 230,855 |
Nature of Business and Signific
Nature of Business and Significant Events of 2019 | 12 Months Ended |
Dec. 31, 2019 | |
Nature of Business and Significant Events of 2019 (Abstract) | |
Nature of Business and Significant Events of 2019 | 1. Nature of business and significant events of 2019 Betterware de México, S.A.P.I. de C.V. (formerly Betterware de México, S.A. de C.V., see Note 28c) ("Betterware") is a direct-to-consumer selling company, focused on the home organization segment whose product portfolio includes home organization, kitchen preparation, food containers, among other categories ("Home Organization Products"). Betterware purchases these Home Organization Products and sells them through 9 (nine) catalogs issued throughout the year. BLSM Latino América Servicios, S.A. de C.V., ("BLSM") is a related party that provides administrative, technical and operating services to Betterware. Betterware and BLSM (together hereinafter the "Group") are companies incorporated in Mexico and carry out their operations in Mexico. The Group's address, both its registered office and principal place of business, is Luis Enrique Williams 549, Parque Industrial Belenes Norte, Zapopan, Jalisco, México, C.P. 45150. The ultimate parent company is Campalier, S.A. de C.V. ("Campalier"). Significant events – ● On August 5, 2019, Betterware and DD3 Acquisition Corp. ("DD3", a publicly listed entity in the US and whose shares traded on the Nasdaq Capital Market ("Nasdaq")), announced they had entered into a business combination agreement. As part of this transaction, DD3 would merge into Betterware through an exchange of shares with their respective shareholders and Betterware would survive as the acquiror. BLSM would become a wholly-owned subsidiary of Betterware. As the surviving entity and accounting acquiror, a selected number of shares of Betterware would become publicly listed on Nasdaq as a result of the transaction. The transaction closed on March 13, 2020 and Betterware issued shares to DD3's shareholders and obtained cash of US$22,767 (Ps. 498,445) through the acquisition of DD3 and concurrently settled liabilities owed by DD3 and related transaction costs on such date, for net cash proceeds of US$7,519 (Ps. 181,734). Immediately after the transaction closed, on the same day, 2,040,000 shares of Betterware offered for subscription and payment under its initial public offering on Nasdaq were subscribed and paid for by different investors (see Note 28c). ● During August 2019, the Group started building a distribution center which is estimated to be completed in the fourth quarter of 2020. As of December 31, 2019, payments related to this construction amounted to Ps. 165 million. The total investment is estimated to amount to Ps. 581 million. ● On July 28, 2017, the Extraordinary General Shareholders' Meeting agreed to merge Betterware, as a merging company, with Betterware Controladora, S.A. de C.V. and Strevo Holding, S.A. de C.V. (holding company and a related party, respectively), as merged companies. The merger was carried out based on the figures as of July 28, 2017, so as of that date, the merged entities ceased to exist. In accordance with the General Law of Commercial Companies, when the merger took effect, all of the assets, liabilities, rights, obligations, and liabilities of the merged companies were incorporated into the merging company, without reservations or limitations. As a result of this, Betterware's assets decreased by Ps. 16,513, liabilities increased by Ps. 60,144 and stockholders' equity decreased by Ps. 76,657 (see Note 21). The afore-mentioned transaction was accounted for as a pooling of interest between entities under common control, therefore, it was recognized by Betterware at the book value of the assets, liabilities and stockholders' equity of the merged entities at the date of the merger. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Significant accounting policies | 2. Significant accounting policies a. Basis of preparation The combined financial statements include the financial statements of Betterware and BLSM (the “combined financial statements”). The Group prepares combined financial statements for the above-referred companies because it provides more meaningful information to the reader as both entities are complementary to the same operation, they are under common control and operate under common management. These combined financial statements were prepared for purposes of including them in the filing to the US Securities and Exchange Commission as a result of the merger transaction of 2020 described in Note 1. Transactions among the combined companies and the balances and unrealized gains or losses arising from intra-group transactions have been eliminated in the preparation of the combined financial statements. b. Basis of accounting The combined financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. c. Basis of measurement The combined financial statements have been prepared on the historical cost basis except for certain financial instruments measured at fair value. Functional and presentation currency These combined financial statements are presented in Mexican pesos (“Ps.”), which is the Group’s functional currency. All financial information presented in Mexican pesos has been rounded to the nearest thousand (except where specified differently). When referring to U.S. dollars (“US$”), it is thousands of dollars of the United States of America. Combined statement of profit or loss and other comprehensive income The Group opted to present a single combined statement of profit or loss and comprehensive income, combining the presentation of profit and loss, including an operating profit line item, and comprehensive income in the same statement. Due to the commercial activities of the Group, costs and expenses presented in the combined statements of profit or loss and other comprehensive income were classified according to their function. Accordingly, cost of sales and operating expenses were presented separately. d. Cash and cash equivalents and restricted cash Cash and cash equivalents consist mainly of bank deposits and short-term investments in securities, highly liquid and easily convertible into cash in a period no longer than three months. Cash is stated at nominal value and cash equivalents are valued at fair value. Any cash or cash equivalent that cannot be disposed of in less than three months is classified as restricted cash. As of December 31 2018, restricted cash was classified within other non-current assets, which equaled one quarter of the interest accrued under the long term credit with MCRFP, S.A. de C.V. SOFOM, E.N.R. As of December 31, 2019, the Group does not maintain restricted cash (see Note 5) as the restriction was lifted during the year. e. Financial instruments Financial assets and financial liabilities are recognized in the Group’s combined statement of financial position when the Group becomes a party to the contractual provisions of the instrument. 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 the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. f. Financial assets 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 (“SPPI”) on the principal amount outstanding. 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 SPPI on the principal amount outstanding. By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset: ● the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met; and ● the Group 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. 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. 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 cumulative 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. 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. Impairment of financial assets The Group always recognizes lifetime expected credit losses (“ECL”) for trade receivables. The expected credit losses on these financial assets are estimated using the simplified approach by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. For all other financial instruments, the Group 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 Group 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 default 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. Write-off policy The Group 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 bankruptcy proceedings, or in the case of trade receivables, when the amounts are over one year past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in profit or loss. g. Financial liabilities All financial liabilities are measured subsequently at amortized cost using the effective interest method or at FVTPL. Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognized in profit or loss to the extent that they are not part of a designated hedging relationship. Financial liabilities and equity Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Financial liabilities measured subsequently at amortized cost Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial 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 amortized cost of a financial liability. Foreign exchange gains and losses For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments. These foreign exchange gains and losses are recognized in the ‘Foreign exchange (loss) gain, net’ line item in the Combined Statements of Profit or Loss and Other Comprehensive Income for financial liabilities that are not part of a designated hedging relationship. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss for financial liabilities that are not part of a designated hedging relationship. Derecognition of financial liabilities The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, canceled 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. When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification should be recognized in profit or loss as the modification gain or loss within other gains and losses. h. Derivative financial instruments The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in Note 18. Derivatives are recognized initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. Derivatives are not offset in the combined financial statements unless the Group has both legal right and intention to offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities. i. Inventories and cost of sales Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on weighted-average. The net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. j. Prepaid expenses Prepaid expenses are mainly comprised of advanced payments for printed catalogs, as well as, advanced payments for the purchase of inventories that are received after the date of the combined statement of financial position and during the normal course of business, and they are presented in current assets in accordance with the classification of the destination item. k. Other assets Other assets mainly include restricted cash (see Note 2d), inventory of rewards and rent security deposits. They are presented in current or non-current assets in accordance with the classification of the destination item. Under the reward program, the Group grants reward points to its distributors for the recruitment of associates, while associates receive such points for the referral of new associates within a catalogue. These points are exchangeable for products that Betterware acquires from other suppliers, which are not related to a revenue contract. The points expire based on commercial terms established by the Group that can be modified at management’s discretion. Inventory of rewards mainly consist of certain products and items (in the form of rewards) that Betterware acquires with the purpose to encourage sales among the distributors and associates. Such inventory is acquired once the distributors and associates redeem the reward points that are granted by the Group so that the balance of inventory at each reporting period only relates to items already redeemed but not delivered. Inventory of rewards are recognized at cost of acquisition. l. Property, plant and equipment, net Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. If significant parts of an item have different useful lives, then they are accounted for as separate items (major components). Depreciation is recognized using the straight-line method. The estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the calculation of depreciation: Molds 5 years Vehicles 4 years Computers and equipment 3 - 10 years Leasehold improvements 3 years Property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Borrowing costs directly attributable to the acquisition or construction of qualifying assets (designated asset), which are assets that necessarily take a substantial period of time before they are available for their intended use, are added to the cost of those assets, until such time as the assets are available for their intended use. If any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. m. Intangible assets ● Brand This is an intangible asset with an indefinite useful life and corresponds mainly to the value of the “Betterware” brand, which was transmitted to the Group through a merger with Strevo Holding, S.A. de C.V. (“Strevo”, an unrelated third party) on July 28, 2017. This intangible asset is subject to annual impairment testing, and whenever there is an indication that the asset may be impaired. Additionally, the Group has incurred expenditures related to registration of trademark rights, which have a finite life. Such expenditures are amortized on a straight-line basis over their estimated useful lives which range from 10 to 30 years. ● Relationship with customers This is an intangible asset with a definite useful life of ten years and is being amortized on a straight line basis and corresponds to the value of the relationships with customers. It was transmitted to the Group through a merger with Strevo on July 28, 2017. This intangible asset is subject to impairment testing whenever there is an indication that the asset may be impaired. ● 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. n. Impairment of tangible and intangible assets other than goodwill At the end of each reporting period, the Group 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 Group 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 post-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 is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Any impairment is recognized immediately in profit or loss. When an impairment loss subsequently reverses, the carrying amount of the asset 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 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. o. Goodwill Goodwill corresponds to the excess resulted between the consideration paid and the fair values of the net assets acquired at the date of acquisition paid by Betterware Latinoamérica Holding México, S.A. de C.V. (BLHM) and Strevo. Goodwill was generated by different legal entities and transmitted to the Group through the mergers carried out on November 30, 2002 and July 28, 2017, respectively (Note 11). As disclosed in Note 11, Goodwill was transferred to the Group through mergers carried out on November 30, 2002 and July 28, 2017 with BLHM and Strevo, respectively, which was generated through the acquisition of shares of the Group in November 2002 and March 2015, respectively. Goodwill is not amortized but is tested annually for impairment. Goodwill arising from a business combination is allocated to the cash generating unit (“CGU”) receiving a benefit from the synergies of the combination. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other long-lived assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. p. Leases Classification and valuation of leases under IAS 17, in effect through December 31, 2018 The Group as lessee For the year ended December 31, 2018, the classification of leases as finance or operating depended on the substance of the transaction rather than the form of the contract. Leases in which a significant portion of the risks and rewards relating to the leased property are retained by the lessor were classified as operating leases. Payments made under operating leases (net of incentives received by the lessor) were recognized in the combined statement of income based on the straight-line method over the lease period. Leases where the Group assumes substantially all the risks and rewards of ownership were classified as finance leases. Finance leases were capitalized at the beginning of the lease, at the lower of the fair value of the leased property and the present value of the future minimum lease payments. If its determination was practical, in order to discount the future minimum lease payments to present value, the interest rate implicit in the lease was used; otherwise, the incremental borrowing rate of the lessee was used. For the year ended December 31, 2018, the Group had only entered into operating leases. The Group as lessor As of and for the year ended December 31, 2018, the Group did not maintain any leases as lessor. Classification and valuation of leases under IFRS 16, in effect beginning January 1, 2019 (Note 3a) The Group as lessee The Group evaluates whether a contract is or contains a lease agreement at inception of a contract. A lease is defined as an agreement or part of an agreement that conveys the right to control the use of an identified asset for a period of time in exchange for a consideration. The Group recognizes an asset for right-of-use and the corresponding lease liability, for all lease agreements in which it acts as lessee, except in the following cases: short-term leases (defined as leases with a lease term of less than 12 months); leases of low-value assets (defined as leases of assets with an individual market value of less than US$5,000 (five thousand dollars)); and, lease agreements whose payments are variable (without any contractually defined fixed payment). For these agreements, which exempt the recognition of an asset for right-of-use and a lease liability, the Group recognizes the rent payments as an operating expense in a straight-line method over the lease period. The right-of-use asset comprises all lease payments discounted at present value; the direct costs to obtain a lease; the advance lease payments; and the obligations of dismantling or removal of assets. The Group depreciates the right-of-use asset over the shorter of the lease term or the useful life of the underlying asset; therefore, when the lessee will exercise a purchase option, the lessee shall depreciate the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Depreciation begins on the lease commencement date. The lease liability is initially measured at the present value of the future minimum lease payments that have not been paid at that date, using a discount rate that reflects the cost of obtaining funds for an amount similar to the value of the lease payments, for the acquisition of the underlying asset, in the same currency and for a similar period to the corresponding contract (incremental borrowing rate). To determine the lease term, the Group considers the non-cancellable period, including the probability to exercise any right to extend and/or terminate the agreement. Subsequently, the lease liability is measured increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and reducing the carrying amount to reflect the lease payments made. When there is a modification in future lease payments resulting from changes in an index or a rate used to determine those payments, the Group remeasures the lease liability when the adjustment to the lease payments takes effect, without reassessing the discount rate. However, if the modifications are related to the lease term or exercising a purchase option, the Group reassesses the discount rate during the liability’s remeasurement. Any increase or decrease in the value of the lease liability subsequent to this remeasurement is recognized as an adjustment to the right-of-use asset to the same extent. Finally, the lease liability is derecognized when the Group fulfills all lease payments. When the Group determines that it is probable that it will exercise an early termination of the contract that leads to a cash disbursement, such disbursement is accounted as part of the liability’s remeasurement mentioned in the previous paragraph; however, in cases in which the early termination does not involve a cash disbursement, the Group cancels the lease liability and the corresponding right-of-use asset, recognizing the difference immediately in the combined statement of profit or loss and other comprehensive income. The Group as lessor As of and for the year ended December 31, 2019, the Group does not maintain any leases as lessor. q. Foreign currency In preparing the combined financial statements, transactions in currencies other than the Mexican Peso, which is the functional currency of the combined entities are recognized at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of transaction. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise. r. Employee benefits Retirement benefits - Defined benefit obligations The Group’s defined benefit obligations cover seniority premiums which consist of a lump sum payment of 12 day’s wage for each year worked, calculated using the most recent salary, not to exceed twice the legal minimum wage established by law. The related liability and annual cost of such benefits are calculated with the assistance of an independent actuary on the basis of formulas defined in the plans using the projected unit credit method at the end of each annual reporting period. The Group’s net obligation with respect to the defined-benefit plan are calculated separately for each plan, estimating the amount of future benefit accrued by employees in return for their services in ongoing and past periods; that benefit is discounted to determine its present value, and the costs for the services that have not been recognized and the fair value of the plan assets are deducted. The discount rate is the yield at the reporting date of the government bonds that have maturity dates approximate to the maturities of the Group’s obligations which are denominated in the same currency in which benefits are expected to be paid (Mexican pesos). Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows: ● Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); ● Net interest expense or income; and ● Remeasurements. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if applicable), are recognized immediately in the liability against other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is never reclassified to profit or loss. Past service cost is recognized in profit or loss in the period in which a plan amendment or curtailment occurs, or when the Group recognizes the related restructuring costs or termination benefits, if earlier. Short-term and other long-term employee benefits and statutory employee profit sharing (“PTU”) 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 service. Likewise, a liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 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. Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. Statutory employee profit sharing (“PTU”) PTU is recorded in the results of the year in which it is incurred and is presented in operating expenses line item in the combined statement of profit or loss and other comprehensive income. As a result of the 2014 Income Tax Law, as of December 31, 2019 and 2018, PTU is determined based on taxable income, according to Section I of Article 9 of the that Law. Termination benefits Termination benefits are recognized as an expense when the Group’s commitment can be evidenced, without real possibility of reversing, with a detailed formal plan either to terminate employment before the normal retirement date, or else, to provide benefits for termination as a result of an offer that is made to encourage voluntary retirement. If the benefits are payable no later than 12 months after the reporting period, then they are discounted at present value. s. Income taxes Income tax expense represents the sum of the tax currently payable and deferred tax. ● Current tax Current income tax (“ISR”) is recognized |
Changes in Significant Accounti
Changes in Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure of Notes and Other Explanatory Information [Abstract] | |
Changes in significant accounting policies | 3. Changes in significant accounting policies a. Application of new and revised International Financing Reporting Standards (“IFRSs” or “IAS”) that are mandatorily effective for the current year In the current year, the Group has applied a number of new standards and amendments to IFRSs issued by the International Accounting Standards Board (“IASB”) that are mandatorily effective as of January 1, 2019. New and amended IFRS Standards that are effective for the current year IFRS 16 Leases IFRS 16, Leases Leases The application of IFRS 16 represents the following considerations on the combined statement of cash flows of the Group: a) short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of the lease liability are presented as part of operating activities; and b) cash paid for the interest portion of a lease liability is presented as financing activities, as well as cash payments for the principal portion for a lease liability. However, the adoption of IFRS 16 did not have any impacts on net cash flows. The Group took the required steps to implement the changes that the standard represents in terms of internal control, tax and systems affairs, from the adoption date. Additionally, the tables below show the amount of adjustment for each financial statement line item affected by the application of IFRS 16 for the current year. Impact on profit or loss December 31, Increase in depreciation of right-of-use asset Ps. 13,098 Increase in finance costs 3,765 Decrease in profit for the year Ps. (16,863 ) Impact on assets and liabilities January 1, Right-of-use assets Ps. 36,909 Lease liabilities 36,909 IFRIC 23 Uncertainty over Income Tax Treatments This interpretation clarifies how to apply the recognition and measurement requirements in IAS 12, Income taxes Other amendments to IFRS In the current year, the Group has also considered and applied a number of amendments to IFRS issued by the IASB that are not applicable or significant but that are effective for an annual period that begins on or after 1 January 2019. Their adoption did not have any material impacts in the combined financial statements for the following amendments and improvements: ● Amendments to IFRS 9 Prepayment Features with Negative Compensation ● Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures ● Annual Improvements to IFRS 2015–2017 Cycle Amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs ● Amendments to IAS 19 Employee Benefits Plan Amendment, Curtailment or Settlement New and revised IFRS Standards in issue but not yet effective At the date of authorization of these combined financial statements, the Group has not applied the following new and revised IFRS that have been issued but are not yet effective as of December 31, 2019; however, for the amendments effective from January 1, 2020 the Group already concluded on its adoption as follows: Amendments to IFRS 3 Definition of a business The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. Additional guidance is provided that helps to determine whether a substantive process has been acquired. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. The amendments are applied prospectively to all business combinations and asset acquisitions for which the acquisition date is on or after the first annual reporting period beginning on or after January 1, 2020, with early application permitted. The Group did not have any impacts in the combined financial statements from the adoption of these amendments. Amendments to IAS 1 and IAS 8 Definition of material The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS. The concept of ‘obscuring’ material information with immaterial information has been included as part of the new definition. The threshold for materiality influencing users has been changed from ‘could influence’ to ‘could reasonably be expected to influence’. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other standards and the conceptual framework that contain a definition of material or refer to the term ‘material’ to ensure consistency. The amendments are applied prospectively for annual periods beginning on or after January 1, 2020, with earlier application permitted. The Group did not have any impacts in the combined financial statements from the adoption of these amendments. Amendments to the conceptual framework in IFRS Together with the revised Conceptual Framework, which became effective upon publication on March 29, 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however, update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate that definitions in the standard have not been updated with the new definitions developed in the revised Conceptual Framework. The amendments that imply updates are effective for annual periods beginning on or after January 1, 2020, with early application permitted. The Group did not have any impacts in the combined financial statements from the adoption of these amendments. Amendments to IFRS 9, IAS 39 and IFRS 7 Interest rate benchmark reform The amendments in the Interest Rate Benchmark Reform deal with issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative interest rate and addresses the implications for specific hedge accounting requirements and disclosures in IFRS 9, IAS 39 and IFRS 7. The amendments also clarify that entities would continue to apply certain hedge accounting requirements assuming that the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of the interest rate benchmark reform. The amendments are effective for annual reporting periods beginning on or after January 1, 2020 and must be applied retrospectively, with earlier application permitted. The Group did not have any impacts in the combined financial statements from the adoption of these amendments. IFRS 17 Insurance Contracts IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4, Insurance Contracts The standard is effective for annual reporting periods beginning on or after 1 January 2021, with early application permitted. It is applied retrospectively unless impracticable, in which case the modified retrospective approach or the fair value approach is applied. Amendments to IFRS 17 addresses concerns and implementation challenges that were identified after IFRS 17 was published. One of the main changes proposed is the deferral of the date of initial application of IFRS 17 by one year to annual periods beginning on or after January 1, 2022. For the purpose of the transition requirements, the date of initial application is the start of the annual reporting period in which the entity first applies the standard, and the transition date is the beginning of the period immediately preceding the date of initial application. The Group is in the process of evaluating these requirements to conclude if it maintains any insurance contracts under the scope of the standard, that may represent an impact to its combined financial statements. |
Critical Accounting Judgments a
Critical Accounting Judgments and Key Sources of Estimation Uncertainty | 12 Months Ended |
Dec. 31, 2019 | |
Critical Accounting Judgments And Key Sources Of Estimation Uncertainty | |
Critical accounting judgments and key sources of estimation uncertainty | 4. Critical accounting judgments and key sources of estimation uncertainty In the application of the Group’s accounting policies, which are described in Note 2, management of the Group is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The judgments, estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Management has exercised the following critical judgments in the process of applying its accounting policies, which is considered to have the most significant effect on the amounts recognized in the combined financial statements: - Contingencies Management makes judgments and estimates in recording provisions for matters relating to claims and litigation. Actual costs may vary from estimates for several reasons, such as changes in cost estimates for resolution of complaints and disputes based on different interpretations of the law, opinions and evaluations concerning the amount of loss. Contingencies are recorded as provisions when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. It is not practical to estimate sensitivity to potential losses if other assumptions were used to record these provisions, due to the number of underlying assumptions and the range of possible reasonable outcomes regarding potential actions by third parties, such as regulators, both in terms of loss probability and estimates of such loss. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The significant estimates impacting the Group’s combined financial statements are as follows: - Key assumptions used in impairment testing The Group performs annual impairment testing on long-lived assets, for which key assumptions are used in the calculation of the recoverable amount (see Note 11). For impairment testing, goodwill is allocated to the cash-generating unit (“CGU”) from which the Group has considered that economic and operational synergies of business combinations are generated. The recoverable amounts of the CGU have been determined based on the calculations of their value in use, which require the use of estimates. The most significant of these estimates are as follows: ● Estimates of future gross and operating margins, according to the historical performance and industry expectations of the CGU. ● Discount rate based on the weighted average cost of capital (WACC) of the CGU. ● Long-term growth rates. - Loyalty program and provision for reward points The Group operates a loyalty program through which its distributors and associates accumulate points on sales of Betterware goods that entitle them to exchange the points for products the Group acquires from different suppliers. Since these points provide a benefit to distributors and associates that they would not receive without purchasing the Betterware products, this loyalty program represents a separate performance obligation. Therefore, the transaction price is allocated between the product and the points on a relative stand-alone selling price basis. The stand-alone selling price per point is estimated based on the fair value of the product to be given when the points are redeemed by the distributors and associates and the likelihood of redemption, as evidenced by the Group’s historical experience. Additionally, a contract liability is recognized for revenue relating to the loyalty points at the time of the initial sales transaction. Revenue from the loyalty points is recognized when the points are redeemed by the customer and exchanged for the related products. Revenue for points that are not expected to be redeemed is recognized in proportion to the pattern of rights exercised by customers. The Group also grants reward points to its distributors for the recruitment of associates, while associates receive such points for the referral of new associates within a catalogue. Since these points, which are exchangeable for products Betterware acquires from other suppliers are not related to a revenue contract, they are recognized in the statement of profit or loss within the selling expenses line item with the corresponding provision in the statement of financial position, when the distributor or associate earns them. The Group creates a provision for the rewards that are expected to be redeemed by its associates and distributors based on its experience and past history. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Cash and cash equivalents | 5. Cash and cash equivalents 2019 2018 Cash on hand in banks Ps. 96,008 46,445 Time deposits 117,689 130,938 Ps. 213,697 177,383 As of December 31, 2018, cash and cash equivalents balance excluded an amount of Ps. 22,088 of restricted cash derived from the credit with MCRF P, S.A. de C.V. SOFOM, E.N.R. The amount equaled one quarter of the interest accrued under the credit agreement (see Note 15) and was presented as non-current asset in the combined statement of financial position (see Note 9) and under financing activities in the combined statements of cash flows. As of December 31, 2019, there was no restricted cash as the bank waived the covenant for the remaining period of the loan. |
Trade Accounts Receivable
Trade Accounts Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Trade Accounts Receivable (Abstract) | |
Trade accounts receivable | 6. Trade accounts receivable 2019 2018 Trade account receivables Ps. 260,727 208,116 Expected credit loss (13,640 ) (9,340 ) Ps. 247,087 198,776 Trade accounts receivable from customers detailed above are measured at their amortized cost. The average related to the turnover of accounts receivable is 30 days. No interest is charged on outstanding trade receivables. The Group always measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. See Note 20 for information on exposure to credit and market risks. There has been no change in the estimation techniques or significant assumptions made during the current reporting period. The Group writes off a trade receivable 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 bankruptcy proceedings, or when the trade receivables are over one year past due, whichever occurs earlier. None of the trade receivables that have been written off is subject to enforcement activities. The following table details the risk profile of trade receivables based on the Group's provision matrix. As the Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Group's different customer base. Trade receivables – days past due December 31, 2019 Not past 14-21 21 – 28 >28 Total Expected credit loss rate 2 % 20 % 49 % 42 % Estimated total gross carrying amount at default Ps. 207,032 12,098 7,045 29,807 255,982 Expected credit loss Ps. 3,950 2,454 3,477 12,634 22,515 Trade receivables – days past due December 31, 2018 Not past due 14-21 21 – 28 >28 Total Expected credit loss rate 1 % 16 % 37 % 38 % Estimated total gross carrying amount at default Ps. 194,366 13,794 5,681 33,438 247,279 Expected credit loss Ps. 1,910 2,150 2,108 12,531 18,699 The following table shows the movement in lifetime ECL that has been recognized for trade and other receivables in accordance with the simplified approach set out in IFRS 9. Total Balance as at January 1, 2018 Ps. (4,333 ) Expected credit loss (18,699 ) Amounts written off 13,692 Balance as at 31 December 2018 (9,340 ) Expected credit loss (22,515 ) Amounts written off 18,215 Balance as at December 31, 2019 Ps. (13,640 ) |
Inventories and Cost of Sales
Inventories and Cost of Sales | 12 Months Ended |
Dec. 31, 2019 | |
Inventories and Cost of Sales [Abstract] | |
Inventories and cost of sales | 7. Inventories and cost of sales 2019 2018 Finished goods Ps. 224,025 215,812 Packing material 4,577 3,750 228,602 219,562 Merchandise-in-transit 116,952 82,644 Ps. 345,554 302,206 The cost of inventories recognized as an expense during the year in respect of continuing operations was Ps. 1,280,829, Ps. 958,469 and Ps. 558,105, for the years ended December 31, 2019, 2018 and 2017, respectively. The cost of inventories recognized as an expense includes Ps. 14,273, Ps. 7,084 and Ps. 6,214 during 2019, 2018, and 2017, respectively, in respect of write-downs of inventory to net realizable value. Such write-downs have been recognized to account for obsolete inventories. |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Prepaid Expenses [Abstract] | |
Prepaid expenses | 8. Prepaid expenses 2019 2018 Printed catalogs Ps. 21,692 19,406 Advances to suppliers 12,973 11,471 Premiums paid in advance for insurance 9,628 8,948 Other 8,891 2,458 Ps. 53,184 42,283 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets [Abstract] | |
Other assets | 9. Other assets 2019 2018 Inventory of rewards Ps. 13,315 8,667 Transaction costs of the merger 9,822 - Other receivables 7,259 535 Rent security deposit 3,549 2,148 Restricted cash - 22,088 33,945 33,438 Current 20,574 9,202 Non-current 13,371 24,236 Ps. 33,945 33,438 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment, Net [Abstract] | |
Property, plant and equipment, net | 10. Property, plant and equipment, net 2019 2018 Acquisition cost Ps. 305,874 123,249 Accumulated depreciation (98,524 ) (80,277 ) Ps. 207,350 42,972 Acquisition cost: January 1, Additions Disposals December 31, Molds Ps. 29,155 8,360 - 37,515 Vehicles 40,349 306 (39,053 ) 1,602 Computers and equipment 47,628 12,042 (30 ) 59,640 Leasehold improvements 23,932 560 - 24,492 Ps. 141,064 21,268 (39,083 ) 123,249 Accumulated depreciation: January 1, Depreciation Eliminated on December 31, Molds Ps. (21,119 ) (1,844 ) - (22,963 ) Vehicles (21,214 ) (3,162 ) 22,930 (1,446 ) Computers and equipment (26,499 ) (10,014 ) 13 (36,500 ) Leasehold improvements (15,070 ) (4,298 ) - (19,368 ) Ps. (83,902 ) (19,318 ) 22,943 (80,277 ) Acquisition cost: December 31, Additions Disposals December 31, Land Ps. - 47,124 - 47,124 Molds 37,515 3,754 - 41,269 Vehicles 1,602 - - 1,602 Computers and equipment 59,640 7,183 - 66,823 Leasehold improvements 24,492 5,390 - 29,882 Construction in progress - 119,174 - 119,174 Ps. 123,249 182,625 - 305,874 Accumulated depreciation: December 31, Depreciation Eliminated on December 31, Molds Ps. (22,963 ) (2,685 ) - (25,648 ) Vehicles (1,446 ) (59 ) - (1,505 ) Computers and equipment (36,500 ) (11,503 ) - (48,003 ) Leasehold improvements (19,368 ) (4,000 ) - (23,368 ) Ps. (80,277 ) (18,247 ) - (98,524 ) Depreciation expense is included in administrative expenses line in the combined statement of profit or loss and other comprehensive income. No impairment losses have been determined. In December 2018, the Group obtained a secured line of credit with Banco Nacional de México, S.A. (Banamex), for up to Ps. 400,000 to build the Group's new corporate headquarters and distribution center (Note 15). For the year ended December 31, 2019, the Group capitalized borrowing costs in the amount of Ps. 9,284 directly related to the distribution center. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill [Abstract] | |
Goodwill | 11. Goodwill January 1, Additions Disposals December 31, Cost Ps. 348,441 - - 348,441 December 31, Additions Disposals December 31, Cost Ps. 348,441 - - 348,441 Goodwill corresponds to the excess resulted between the consideration paid and the fair values of the net assets acquired at the date of acquisition paid by BLHM and Strevo as mentioned in Note 2o. Goodwill was generated by different legal entities and transmitted to the Group through the mergers carried out on November 30, 2002 and July 28, 2017, respectively. For the purposes of impairment testing, goodwill has been allocated to one CGU. The recoverable amount of the CGU was based on fair value less costs of disposal, estimated using discounted cash flows. The fair value measurement was categorized as a Level 3 fair value based on the inputs in the valuation technique used. The values assigned to the key assumptions represent management´s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources. At December 31, 2019 and 2018, the estimated recoverable amount of the CGU exceeded its carrying amount. The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent management’s assessment of future trends in the relevant industries and have been based on historical data from both internal and external sources. In percent 2019 2018 Discount rate 12.4 15.7 Terminal Value Growth Rate 3.0 3.0 Budgeted EBITDA Growth Rate 14.0 14.8 The discount rate was a post-tax measurement estimated based on the historical industry average, weighted-average cost of capital and a market interest rate of 7.2% as of December 31, 2019. The cash flow projections included specific estimates for 5 years and a terminal growth rate thereafter. The terminal growth rate was determined based on management’s estimate of the long-term compound annual EBITDA growth rate, consistent with the assumptions that a market participant would make. Budgeted EBITDA was estimated taking into account past experience and a revenue growth rate projected taking into account the average growth levels experienced over the past 5 years and the estimated sales volume and price growth for the next five years. It was assumed that the sales price would increase in line with forecast inflation over the next five years. |
Intangible Assets Net
Intangible Assets Net | 12 Months Ended |
Dec. 31, 2019 | |
Intangible assets, net [Abstract] | |
Intangible Assets Net | 12. Intangible assets, net Acquisition cost: January 1, Additions Disposals December 31, Brand Ps. 253,000 - - 253,000 Customer relationships 64,000 - - 64,000 Software - 17,135 - 17,135 Brands and logo rights 5,072 1,137 - 6,209 Ps. 322,072 18,272 - 340,344 Accumulated amortization: January 1, Depreciation Eliminated on December 31, Customer relationships Ps. (18,133 ) (6,400 ) - (24,533 ) Brands and logo rights (3,468 ) (244 ) - (3,712 ) Ps. (21,601 ) (6,644 ) - (28,245 ) Acquisition cost: December 31, Additions Disposals December 31, Brand Ps. 253,000 - - 253,000 Customer relationships 64,000 - - 64,000 Software 17,135 4,516 - 21,651 Brands and logo rights 6,209 1,399 - 7,608 Ps. 340,344 5,915 - 346,259 Accumulated amortization: December 31, Depreciation Eliminated on December 31, Customer relationships Ps. (24,533 ) (6,400 ) - (30,933 ) Software - (421 ) - (421 ) Brands and logo rights (3,712 ) (228 ) - (3,940 ) Ps. (28,245 ) (7,049 ) - (35,294 ) As of December 31, 2019 and 2018, a carrying amount of Ps. 253,000 for the value of “Betterware” brand is presented in the combined statements of financial position. Such brand was transmitted to the Group through a merger carried out on July 28, 2017 with Strevo (a related party, under common control). Strevo obtained such brand when acquiring the majority of the Group’s shares in March 2015. As of December 31, 2019 and 2018, a carrying amount of Ps. 33,067 and Ps. 39,467, respectively, for the value of the Group’s intangible asset comprised of relationships with customers, is presented in the combined statements of financial position. Such intangible asset was transmitted to the Group through the merger carried out on July 28, 2017 with Strevo as previously discussed. This intangible asset has a useful life of ten years and is being amortized on a straight line basis. Additionally, as of December 31, 2019 and 2018, the intangible asset line in the combined statement of financial position includes Ps. 3,668 and Ps. 2,497, respectively, corresponding to paid rights related to registration of brands and logos before the intellectual property authorities. Such rights are valid ranging a defined period from 10 to 30 years and therefore, are amortized over such useful lives. At each reporting date, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. As of December 31, 2019 and 2018, no indications of impairment have been identified. In relation to impairment of intangible assets with indefinite useful life (brand), the Group estimates the recoverable amount of the intangible asset which is based on fair value less costs of disposal, estimated using discounted cash flows. The fair value measurement was categorized as a Level 3 fair value based on the inputs in the valuation technique used. Key assumptions are the same as those used for estimating the recoverable amount for Goodwill. See Note 11. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | 13. Leases Right of use assets, net The Group leases a fleet of cars for its sales staff and qualified employees with different expiration dates, being the latest expiration date in April 2023. Those leases were recorded as right of use assets as follows: January 1, Additions Disposals December 31, Cost Ps. 36,909 - - 36,909 January 1, Additions Disposals December 31, Accumulated depreciation Ps. - (13,098 ) - (13,098 ) Rental expense for the year ended December 31, 2018 was Ps. 6,100. As of December 31, 2019, the Group has commitments derived from short-term lease contracts (Note 26). Lease liability The lease liabilities as of December 31, 2019 amounted $24,584. The maturity analysis of total future minimum lease payments, including non-accrued interest, is as follows: Year Amount 2020 Ps 15,463 2021 8,617 2022 3,310 2023 29 Ps 27,419 Interest expense generated from the lease liability amounted to Ps. 3,765 for the year ended December 31, 2019. |
Accounts Payable
Accounts Payable | 12 Months Ended |
Dec. 31, 2019 | |
Accounts Payable | |
Accounts payable to suppliers | 14. Accounts payable to suppliers Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average payment period is 4 months, with no interest charged. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2019 | |
Borrowings [abstract] | |
Borrowings | 15. Borrowings 2019 2018 Line of credit with MCRF P, S.A. de C.V. SOFOM, E.N.R. of Ps. 600,000, bearing interest at a fixed rate of 13.10%. This line of credit is payable on a quarterly basis starting May 15, 2019 through May 15, 2023. BLSM Latino América Servicios, S.A. de C.V., is a guarantor in this loan. Ps. 516,597 592,252 Secured line of credit with Banamex, for up to Ps. 400,000, bearing interest at the TIIE rate plus 317 basis point. Withdrawals from this line of credit can be made during a 10-month period starting December 15, 2018, and are payable on a quarterly basis from December 17, 2019 up to December 18, 2025. 135,209 50,000 Unsecured line of credit with Banamex, for up to Ps. 80,000, bearing interest at the TIIE rate plus 275 basis points (renewable on a yearly basis). 15,000 - Unsecured line of credit with Banamex, for up to US$ 1,800, bearing interest at LIBOR rate plus 300 basis point. Maturity was on March 31, 2018. - - Interest payable 10,907 11,227 Total debt 677,713 653,479 Less: Current portion 148,070 90,691 Long-term debt Ps. 529,643 562,788 As of December 31, 2019, the fair value of borrowings amounted Ps. 679,188. As of December 31, 2018, the fair value of borrowings is considered to be similar to the book value (at amortized cost) determined by using the effective interest method. Interest expense in connection with debt presented above is included in the interest expense line in the combined statement of profit or loss and other comprehensive income. Reconciliation of movements of liabilities to cash flows arising from financing activities The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s combined statement of cash flows as cash flows from financing activities. Long-term Interest Derivative Balances as of January 1, 2018 (1) Ps. 607,250 10,043 - Changes that represent cash flows - Loans obtained 50,667 - - Restricted cash (2,001 ) - - Payments (36,829 ) (85,159 ) - Commissions and debt issuance cost (667 ) - - Changes that do not represent cash flows - Interest expense - 86,343 - Valuation effects of derivative financial instruments - - 16,629 Amortization of commissions and debt issuance cost 1,744 - - Balances as of December 31, 2018 (1) Ps. 620,164 11,227 16,629 Changes that represent cash flows - Loans obtained 104,500 - - Restricted cash 22,940 - - Payments (82,996 ) (76,465 ) - Commissions and debt issuance cost - - Changes that do not represent cash flows - Interest expense - 85,429 - Borrowing costs capitalized on PP&E - (9,284 ) Valuation effects of derivative financial instruments - - 15,680 Amortization of commissions and debt issuance cost 2,198 - - Balances as of December 31, 2019 Ps. 666,806 10,907 32,309 (1) Balances in column “Long-term debt”, are presented net of restricted cash balances as of December 31, 2018. See Note 5 for details about restricted cash. The Group’s long-term debt maturities as of December 31, 2019, are as follows: Year Amount 2021 Ps. 185,447 2022 169,312 2023 245,343 2024 23,611 2025 54,000 Ps. 677,713 The loans with financial institutions referred to above contain restrictive covenants, which require the Group (i) to continue to perform the same type of activities and businesses, maintaining their legal existence, (ii) complying with all applicable laws, (ii) having its combined financial statements audited by internationally recognized auditors authorized by the financial institution, (iii) paying all applicable taxes, (iv) obtaining all licenses and permits required by government to operate, (v) keeping assets and businesses insured against loss or damage, (vi) not to obtain additional loans exceeding Ps. 100,000 or 60% of earnings before interest, taxes, depreciation and amortization (EBITDA) of the immediately preceding year, (vii) not to incur liens on the Group’s assets, (viii) not to give or sell any rights of financial documents and (ix) not to pay dividends in an amount greater than Ps. 200,000; except in 2019 when it was permitted to pay up to Ps. 350,000. It is important to mention that additional debt may be obtained, or dividends may be paid in amounts greater than those stipulated in the contract if prior consent from such financial institution is obtained. The line of credit agreement with MCRF P, S.A. de C.V. SOFOM, E.N.R. contains the following financial covenants: a) To maintain a leverage ratio equal to or lower than 3.0 during 2018; and 2.5 from January 1, 2019, until the contract expiration date. b) To maintain a coverage interest ratio equal to or greater than 2.5 during all term of the contract. c) Not to maintain the equity book value lower than Ps. 100,000. d) To maintain a minimum cash and cash equivalents balance of Ps. 40,000 The line of credit agreement with Banamex contains the following financial covenants: a) To maintain a short-term debt coverage ratio not lower than 1.5. b) To maintain a total debt coverage ratio not greater than 3.0. c) To maintain a leverage ratio not greater than 7.0. d) To maintain a minimum cash and cash equivalents balance of Ps. 40,000 The Group was in compliance with all covenants as of December, 31, 2019 and 2018. The Group obtained permission from Banamex prior to December 31, 2019 to consummate the merger disclosed in Notes 1 and 28c. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | 16. Income taxes The Group is subject to income taxes (“ISR”) in Mexico. Under the ISR Law, the rate for 2019, 2018 and 2017 was 30% and will continue as such in future periods. Income tax recognized in profit or loss for the years ended December 31 was comprised of the following: 2019 2018 2017 Current tax Ps. 229,900 158,545 92,209 Deferred tax (benefit) expense 2,792 (8,366 ) 4,742 Ps. 232,692 150,179 96,951 Income tax expense recognized at the effective ISR rate differs from income tax expense at the statutory tax rate. Reconciliation of income tax expense recognized from statutory to effective ISR rate is as follows: 2019 2018 2017 Profit before income tax Ps. 704,834 449,447 304,625 Tax rate 30 % 30 % 30 % Income tax expense calculated at 30% statutory tax rate 211,450 134,834 91,388 Inflation effects, net 6,278 6,408 4,832 Non-deductible expenses 3,202 3,217 2,340 Other items, net 11,762 5,720 (1,609 ) Ps. 232,692 150,179 96,951 Realization of deferred tax assets depends on the future generation of taxable income during the period in which the temporary differences will be deductible. Management considers the reversal of deferred tax liabilities and projections of future taxable income to make its assessment on the realization of deferred tax assets. Based on the results obtained in previous years and in future profit and tax projections, management has concluded that it is probable the deferred tax assets will be realized. As of December 31, 2019 and 2018, the Group had no tax loss carryforwards. Composition of deferred tax asset (liabilities) as well as the reconciliation of changes in deferred taxes balances as of December 31, 2019 and 2018 is presented below: Temporary differences January 1, Recognized Recognized Equity December 31, Deferred tax assets: Expected credit loss Ps. 2,499 303 - - 2,802 Accruals and provisions 19,865 6,838 (71 ) - 26,632 Derivative financial instruments - 4,989 - - 4,989 Property, plant and equipment 2,857 (2,783 ) - - 74 Deferred tax liabilities: Intangible assets (89,660 ) 1,920 - - (87,740 ) Inventories (4,189 ) (2,003 ) - - (6,192 ) Other assets and prepaid expenses (10,294 ) (898 ) - - (11,192 ) Net deferred tax liability Ps. (78,922 ) 8,366 (71 ) - (70,627 ) Temporary differences December 31, Recognized Recognized Equity December 31, Deferred tax assets: - Expected credit loss Ps. 2,802 2,415 - - 5,217 Accruals and provisions 26,632 (668 ) (26 ) - 25,938 Derivative financial instruments 4,989 (4,989 ) - - - Property, plant and equipment 74 4,505 - - 4,579 - Deferred tax liabilities: - Intangible assets (87,740 ) 1,920 - - (85,820 ) Inventories (6,192 ) (3,161 ) - - (9,353 ) Derivative financial instruments (89 ) - (89 ) Other assets and prepaid expenses (11,192 ) (2,699 ) - - (13,891 ) Net deferred tax liability Ps. (70,627 ) (2,766 ) (26 ) - (73,419 ) |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2019 | |
Provisions [Abstract] | |
Provisions | 17. Provisions Commissions, Bonuses and Professional Total As of January 1, 2018 Ps. 41,324 1,158 - 42,482 Increases 247,282 56,854 30,704 334,840 Payments (252,801 ) (56,054 ) (29,481 ) (338,336 ) As of December 31, 2018 Ps. 35,805 1,958 1,223 38,986 Increases 345,148 90,843 2,026 438,017 Payments (348,174 ) (79,445 ) (2,695 ) (430,314 ) As of December 31, 2019 Ps. 32,779 13,356 554 46,689 Commissions, promotions and other Commissions, promotions and other includes commissions payable to the sales force for the last week of the year, which are settled in the first week of the following year. Additionally, it includes the provision of reward points obtained by distributors and associates for the sale of products and for increasing the network of registered distributors and associates. Bonuses and other employee benefits Bonuses and other employee benefits include annual performance bonuses as well as vacation provisions, vacation premium, savings fund, among others. Professional services fees Professional services fees includes the fees for services such as external audit, legal, internal audit, among others. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Financial Instruments [Abstract] | |
Derivative financial instruments | 18. Derivative financial instruments In connection with the secured line of credit contracted with Banamex as described in Note 15, and to mitigate the risks of future increases in interest rates, the Group entered into a derivative contract with Banamex, consisting in an interest rate swap. By using this interest rate swap, the Group sets interest rates from variable rates to fixed rates. Additionally, in order to reduce the risks related to fluctuations in the exchange rate of US dollar, the Group uses derivative financial instruments such as forwards to adjust foreign currency exposures resulting from inventory purchases in US dollars. An analysis of the derivative financial instruments contracted by the Group as of December 31, 2019 and 2018, is as follows: December 31, 2019 Instrument Notional Fair Contract Maturity Rate received Rate Liabilities: Interest rate swap Ps. 50,000 Ps. 19,614 11/15/2018 12/15/2023 TIIE 28 days (1) 8.33 % Average Maturity date Forwards US Dollar-Mexican Peso US$ 47,690 Ps. 12,695 19.61 Weekly, through October 2020 Total Liabilities Ps. 32,309 Non-current liability Ps. 16,754 Total current liability Ps. 15,555 (1) As of December 31, 2019, the 28-day TIIE rate was 7.55%. December 31, 2018 Instrument Notional amount in Fair Contract Maturity Rate Rate Liabilities: Interest rate swap Ps. 50,000 Ps. 8,364 15/11/2018 15/12/2023 TIIE 28 days (1) 8.33 % Average Maturity date Forwards US Dollar-Mexican Peso US$ 24,414 Ps. 8,265 20.06 Weekly, through June 2019 Total Liabilities Ps. 16,629 Non-current liability Ps. 8,120 Total current liability Ps. 8,509 (1) As of December 31, 2018, the 28-day TIIE rate was 8.5956%. The impacts to profit and loss of the derivative financial instruments for the years ended December 31, 2019 and 2018 amounted to a loss of Ps. (15,680) and Ps. (16,629), respectively, which is included in the combined statements of comprehensive income in the line item of “Valuation of derivatives, interest cost and other financial items, net”. The maturities of the notional amount of the derivatives are as follows: Instrument Notional amount in thousands of 2020 2021 2022 2023 2024 and thereafter Liabilities: Interest rate swap Ps. 1,458 5,833 5,833 5,833 31,043 Forwards US Dollar-Mexican Peso US$ 12,695 - - - The Group does not apply hedge accounting and it recognizes the changes in fair value of financial derivative instruments in profit or loss. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2019 | |
Employee benefits [Abstract] | |
Employee benefits | 19. Employee benefits Post-employment benefits – The Group recognizes the liability and corresponding impacts to profit and loss as well as comprehensive income regarding to the seniority premiums to be paid to its employees. This benefit is determined considering the years of service and the compensation from the employees. The components of the defined benefit liability for the years ended at December 31, 2019, 2018 and 2017, are as follows: a) Movement in net defined liability – The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit liability and its components: 2019 2018 Balance at January 1 Ps. 1,355 1,283 Included in profit or loss: Current service cost 424 441 Interest cost 123 92 Net cost of the period 547 533 Included in OCI: Actuarial loss (gain) (102 ) (165 ) Income tax effect (26 ) (71 ) Other: Benefits paid (196 ) (225 ) Balance as of December 31 Ps. 1,630 1,355 b) Actuarial assumptions – The following were the principal actuarial assumptions at the reporting date (expressed as weighted averages): 2019 2018 2017 Financial: Future salary growth 6.6 % 4.8 % 4.5 % Discount rate 7.1 % 9.2 % 7.4 % Demographic: Number of employees 654 684 622 Age average 35 years 35 years 36 years Longevity average 3 years 2 years 2 years c) Sensitivity analysis – Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation considering a change of ±0.50% in the discount rate. Effects at December 31, 2019 Effects at December 31, 2018 Increase / decrease in the discount rate +0.50% Ps. (127 ) (93 ) -0.50% 115 103 |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Financial Instruments [Abstract] | |
Financial instruments | 20. Financial instruments Below is the categorization of the financial instruments, excluding cash and cash equivalents, held by the Group as of December 31, 2019 and 2018, as well as the indication of fair value hierarchy level, when applicable: Accounting classification and fair values As of December 31, 2019 Receivables, Payables, and Loans Fair value through profit or loss Fair value hierarchy level Financial assets - Trade receivables Ps. 266,938 - Other receivables 5,867 - Total 272,805 - Financial liabilities - Debt 677,713 - Accounts payable 529,348 - Derivative financial instruments 32,309 32,309 2 Total 1,239,370 32,309 As of December 31, 2018 Receivables, Payables, and Loans Fair value through profit or loss Fair value hierarchy level Financial assets - Trade receivables Ps. 198,776 - Other receivables 536 - Total 199,312 - Financial liabilities - Debt 653,479 - Accounts payable 445,241 - Derivative financial instruments 16,629 16,629 2 Total 1,115,349 16,629 Measurements of fair values Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable: ● Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; ● Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and ● Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). As previously disclosed, some of the Group's financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial liabilities are determined (in particular, the valuation technique(s) and inputs used). Financial assets/ financial liabilities Valuation technique(s) and key input(s) Significant Relationship and sensitivity of unobservable inputs to fair value Foreign currency forward contracts and interest rate swaps (Note 18) Discounted cash flows. N/A N/A There were no transfers between Level 1 and 2 during the current or prior year. Fair value of debt that is not measured at fair value (but fair value disclosures are required) The fair value of debt, which is subsequently measured at amortized cost using the effective interest method, amounted Ps. 679,188 and was classified as Level 2. Fair value was calculated using the discounted cash flow method and the Mexican risk-free rate (TIIE), adjusted by credit risk, was used for discounting future cash flows. Financial risk management The Group's Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk, and price risk), credit risk, liquidity risk. The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge these risk exposures. The use of financial derivatives is governed by the Group's policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. Market risk The Group's activities expose it primarily to the financial risks of changes in exchange rates and interest rates (see below). The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency risk, including: ● In order to reduce the risks related to fluctuations in the exchange rate of foreign currency, the Group uses derivative financial instruments such as forwards to adjust exposures resulting from foreign exchange currency. ● Additionally, the Group occasionally uses interest rate swaps to adjust its exposure to the variability of the interest rates or to reduce their financing costs. The Group's practices vary from time to time depending on judgments about the level of risk, expectations of change in the movements of interest rates and the costs of using derivatives. See Note 18 for disclosure of the derivatives derivative financial instruments entered into as of and for the year ended December 31, 2019 and 2018. Exchange risk management The Group undertakes transactions denominated in foreign currencies, mainly U.S. dollars; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilizing forward foreign exchange contracts. The carrying amounts of the Group's U.S. dollars denominated financial assets and financial liabilities at the reporting date are as follows: 2019 2018 Assets US$ 1,331 1,294 Liabilities (16,095 ) (12,075 ) Net position US$ (14,764 ) (10,781 ) Closing exchange rate of the year 18.8452 19.6566 Exchange rate sensitivity analysis The Group is mainly exposed to variations in the Mexican Peso / the U.S. Dollar exchange rate. For sensitivity analysis purposes, the Group has determined a 10 percent increase and decrease in Ps. currency units against the U.S. dollar ("relevant currency"). 10 percent is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated financial assets/liabilities and adjusts their translation at the year-end for a 10 percent change in foreign currency rates. A positive number below indicates an increase in profit where currency units strengthen 10 percent against the relevant currency. For a 10 percent weakening of currency units against the relevant currency, there would be a comparable impact on the profit, and the balances below would be negative. 2019 Profit Ps. 27,823 Foreign exchange forward contracts It is the policy of the Group to enter into foreign exchange forward contracts to manage the foreign currency risk associated with anticipated purchase transactions up to 6 months. Basis adjustments are made to the initial carrying amounts of inventories when the anticipated purchases take place. See Note 18 with details on foreign currency forward contracts outstanding at the end of the reporting period. Foreign currency forward contract liabilities are presented in the line 'Derivative financial instruments' within the combined statement of financial position. The Group has entered into contracts to purchase raw materials from suppliers in China, with such purchases denominated in U.S. dollars. The Group has entered into foreign exchange forward contracts to hedge the exchange rate risk arising from these anticipated future purchases. Interest rate risk management The Group is exposed to interest rate risk because the Group borrows funds at variable interest rates. The risk is managed by the Group by maintaining an appropriate balance between fixed and variable rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring the most cost-effective hedging strategies are applied. The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. Interest rate sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding during the year. A one per cent increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates. If interest rates had been one per cent higher/lower and all other variables were held constant, the Group's profit for the year ended December 31, 2019 would decrease/increase by Ps. 1,352. This is attributable to the Group's exposure to interest rates on its variable rate borrowing as described in Note 15. Interest rate swap contracts Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and variable rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the cash flow exposures on the issued variable rate debt held. The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract, and is disclosed in Note 18. The average interest rate is based on the outstanding balances at the end of the financial year. Credit risk management The Group's exposure to credit risk is not significant as no customer represents more than 10% of combined sales and receivables. The concentration of credit risk is limited due to the fact that the customer base is large and unrelated, spread across diverse geographical areas. Credit policy has been implemented for each customer establishing purchase limits. Customers who do not satisfy the credit references set out by the Group, can only carry out transactions with the Group through prepayment. See Note 6 for further details on Trade Receivables and allowance for doubtful accounts. Collateral held as security and other credit enhancements The Group does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets. Overview of the Group's exposure to credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. As of 31 December 2019, the Group's maximum exposure to credit risk without taking into account any collateral held or other credit enhancements, which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group, arises from the carrying amount of the respective recognized financial assets as stated in the combined statement of financial position. For trade receivables, the Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the expected credit losses on these items by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status in terms of the provision matrix. Note 6, includes further details on the loss allowance for these assets respectively. Liquidity risk management The ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities, and reserve borrowing facilities, by continuously monitoring the forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk are set out below. Liquidity maturity analysis The Group manages its liquidity risk by maintaining adequate reserves of cash and bank credit lines available and consistently monitoring its projected and actual cash flows. The maturity analysis of lease liabilities is presented in Note 13 and long-term debt maturities are presented in Note 15. The Group has access to financing facilities as described below, of which Ps. 260,500 were unused at the reporting date. The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets. Bank credit lines December 31, 2019 December 31, 2018 Amount used Ps. 656,459 650,000 Amount not used 260,500 350,000 Total credit lines Ps. 916,959 1,000,000 The following tables detail the Group's remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. As of December 31, 2019 Less than 1 year Over 1 year and less than 5 years Over 5 years Total Accounts payable to suppliers Ps. 529,348 - - 529,348 Derivative financial instruments 15,555 16,754 - 32,309 Long-term debt 137,163 484,903 49,393 671,459 Ps. 682,066 501,657 49,393 1,233,116 As of December 31, 2018 Less than 1 year Over 1 year and less than 5 years Over 5 years Total Accounts payable to suppliers Ps. 445,241 - - 445,241 Derivative financial instruments 8,509 8,120 - 16,629 Long-term debt 78,750 536,073 25,208 640,031 Ps. 532,500 544,193 25,208 1,101,901 Capital risk management The Group manages its capital to ensure it will be able to continue as a going concern, while it maximizes returns for its shareholders through the optimization of its capital structure. The Group's management reviews the capital structure when presenting its financial projections to the Board of Directors and stockholders as part of the annual business plan. When performing its review, the Board of Directors considers the cost of equity and its associated risks. The capital structure of the Group consists of net debt (borrowings disclosed in Note 15 after deducting cash and bank balances) and net parent investment of the Group (comprising issued capital, other comprehensive income and retained earnings). |
Net Parent Investment
Net Parent Investment | 12 Months Ended |
Dec. 31, 2019 | |
Net Parent Investment [Abstract] | |
Net parent investment | 21. Net parent investment Net parent investment as of December 31, 2019 and 2018 is integrated as follows: Net parent investment 2019 2018 Capital stock Ps. 55,985 55,985 Retained earnings 218,376 24,234 Other comprehensive income 121 45 Ps. 274,482 80,264 Net parent investment as of December 31, by number of shares, is integrated as follows: Betterware de México, BLSM Latino América Servicios, S.A. de C.V. 2019 2018 2017 2019 2018 2017 Fixed capital 5,000 5,000 5,000 5,000 5,000 5,000 Variable capital 5,032,939 5,032,939 4,786,193 3,654,378 3,654,378 3,475,150 5,037,939 5,037,939 4,791,193 3,659,378 3,659,378 3,480,150 Common stock is represented by common shares, with a par value of Ps. 10 in regard to fixed capital and without par value in case of variable capital, fully subscribed and paid. Variable capital is unlimited. On February 13, 2018, the Ordinary General Shareholders’ Meeting of Betterware de México agreed to reduce the capital stock by Ps. 97,921. On December 5, 2018, as part of the unanimous resolutions adopted outside the Shareholders’ Meeting, it was agreed to increase capital stock by Ps. 20. On July 28, 2017, at an Extraordinary General Shareholders’ Meeting it was agreed to merge Betterware de México as the surviving entity with Betterware Controladora, S.A. de C.V. (“BWC”) and Strevo Holding, S.A. de C.V. (“SH”, controlling company of BWC and in turn, subsidiary of Campalier, S.A. de C.V.), as merged companies. The transaction was carried out as of July 28, 2017, so as of that date, the merged entities ceased to exist. Upon the merger becoming effective, all of the assets, liabilities, rights, and obligations of the merged companies were incorporated into the merging company, without reservations or limitations. As a result of the transaction, which was accounted for as a pooling of interest between entities under common control, the capital stock of Betterware increased by Ps. 87,317, retained earnings decreased by Ps. 174,801 and net stockholders’ equity decreased by Ps. 87,484. On December 4, 2017, the Ordinary General Shareholders’ Meeting of BLSM agreed to increase capital stock by Ps. 15. On December 5, 2018, as part of the unanimous resolutions adopted outside the Shareholders’ Meeting, it was agreed to increase capital stock by Ps. 20. Retained earnings On May 29, 2019, the Ordinary General Shareholders’ Meeting approved dividends payment from retained earnings for an amount of Ps. 128,000 which were paid in cash. Part of this amount (Ps. 78,151) was paid to Campalier based on its equity interest. On October 8, 2019, the Ordinary General Shareholders’ Meeting approved dividends payment from retained earnings for an amount of Ps. 150,000 which were paid in cash. Part of this amount (Ps. 91,583) was paid to Campalier based on its equity interest. On February 13, 2018, the Ordinary General Shareholders’ Meeting approved dividends payment from retained earnings for an amount of Ps. 79,080, which were paid in cash. Part of this amount (Ps. 46,696) was paid to Campalier based on its equity interest. On November 28, 2018, the Ordinary General Shareholders’ Meeting approved payment of dividends from profits generated in the year, for an amount of Ps. 111,000, which were paid in cash. Part of this amount (Ps. 65,545) was paid to Campalier based on its equity interest. On December 4, 2018, the Ordinary General Shareholders’ Meeting approved payment of dividends from profits generated in the year, in the amount of Ps. 110,000. From this amount, Ps. 45,045 was paid in cash; while the remaining for Ps. 64,955 was paid on March 31, 2019, hence it is included as a liability in the combined statement of financial position. Legal reserve Retained earnings include the statutory legal reserve. The Mexican General Corporate Law requires that at least 5% of net income of the year be transferred to the legal reserve until the reserve equals 20% of common stock at par value (historical pesos). The legal reserve may be capitalized but may not be distributed unless the Group is dissolved. The legal reserve must be replenished if it is reduced for any reason. As of December 31, 2019 and 2018, the legal reserve, in historical pesos, was Ps. 10,370 and Ps. 8,571, respectively, and it is included in retained earnings. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings per share [abstract] | |
Earnings per share | 22. Earnings per share The amount of basic earnings per share is calculated by dividing the net income for the year attributable to shareholders of the Group's ordinary shares by the weighted average of the ordinary shares outstanding during the year. The amount of diluted earnings per share is calculated by dividing the net profit attributable to shareholders of the parent's ordinary shares (after adjusting it due to interest on convertible preferred shares) by the weighted average of ordinary shares outstanding during the year plus the weighted average of common shares that would have been issued at the time of converting all diluted potential ordinary shares into ordinary shares. As of December 31, 2019, 2018 and 2017, the Group has no potentially dilutive shares. As a result of the transaction between Betterware and DD3 and the subscription and payment of 2,040,000 Betterware's shares in Nasdaq, which closed on March 13, 2020 (see Notes 1 and 28c), all Betterware shares issued and outstanding immediately prior to the closing date were canceled and new shares were issued. As of the closing date, BLSM is now a wholly-owned subsidiary of Betterware, who will begin to prepare consolidated financial statements as of such date. Betterware's original shareholders maintained an ownership of 87.7% of the total outstanding shares, DD3's shareholders obtained a 6.4% ownership interest and investors under the Nasdaq listing a 5.9% ownership interest. After the closing date, Betterware has 34,451,020 shares issued and outstanding. IFRS requires that the calculation of basic and diluted earnings per share ("EPS") for all periods presented be adjusted retrospectively when the number of ordinary or potential ordinary shares outstanding increases as a result of a capitalization, bonus issue, or share split, or decreases as a result of a reverse share split. If such changes occur after the statement of financial position date but before the financial statements are authorized for issue, the EPS calculations for those and any prior period financial statements presented are based on the new number of shares. As a result of the cancellation and issuance of new shares on March 13, 2020, the EPS in the combined financial statements has been adjusted for all periods presented to reflect the amount of shares attributable to the Betterware original shareholders resulting from the transaction described above as follows: 87.7% of the total outstanding shares of 34,451,020, which is equal to 30,199,945 shares without giving effect to the DD3 shareholders' capital contribution and the proceeds from the Nasdaq listing. The effects of the DD3 transaction, including the related share issuance that resulted in DD3's shareholders obtaining a 6.4% ownership interest and the net capital contribution of US$7,519 (Ps. 181,734), and the effects of the Nasdaq listing, have not been included in the calculation of EPS for the periods presented as they are considered to be non-adjusting subsequent events that will be reflected in Betterware's 2020 consolidated financial statements. The following table shows the income and share data used in the calculation of basic earnings per share for the years ended December 31, 2019, 2018 and 2017: 2019 2018 2017 Net income (in thousands of pesos) Attributable to shareholders Ps. 472,218 299,267 207,674 Shares (in thousands of shares) Weighted average of outstanding shares 30,200 30,200 30,200 Basic and diluted earnings per share (pesos per share) 15.63 9.91 6.88 |
Related Parties Balances and Tr
Related Parties Balances and Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure of Notes and Other Explanatory Information [Abstract] | |
Related parties balances and transactions | 23. Related parties balances and transactions Balances and transactions between Betterware and BLSM, which are related parties, have been eliminated on combination and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. Key management personnel compensation comprised short-term employee benefits by Ps. 34,540 and Ps. 34,500 as of December 31, 2019 and 2018, respectively. Compensation of the Group's key management personnel includes salaries and non-cash benefits. No long-term employee benefits were paid to key management personnel during 2019 and 2018. Additionally, the Group does not have any share-based payment scheme for employees. Transactions During 2017, the Group entered into the following transactions with related parties that are not members of the Group: 2017 Interest income Strevo Holding, S.A. de C.V.(i) Ps. 18,650 Betterware Controladora, S.A. de C.V.(i) 316 Total 18,966 (i) Merged with the Group on July 28, 2017 The following balances were outstanding as of December 31, 2019 and 2018: 2019 2018 Trade accounts receivable from related parties Fundación Betterware., A.C. Ps. 610 .- Ps. 610 - |
Revenue and Operating Expenses
Revenue and Operating Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Revenue and Operating Expenses [Abstract] | |
Revenue and operating expenses | 24. Revenue and operating expenses Revenue – Revenue recognized during 2019, 2018 and 2017 is generated in Mexico. A disaggregation per home product is as follows: 2019 2018 2017 Kitchen and food preservation Ps. 1,229,148 820,995 484,044 Home solutions 529,551 360,595 223,383 Bathroom 441,093 376,262 250,741 Laundry & Cleaning 318,782 308,359 186,708 Tech & mobility 290,366 196,439 105,957 Bedroom 275,722 254,066 198,872 Ps. 3,084,662 2,316,716 1,449,705 Contract balances As of December 31, 2019 and 2018, the Group did not identify significant costs to obtain/fulfill a contract that are required to be capitalized as an asset. Consequently, the Group did not perform any analysis in order to identify possible impairment losses. See Note 6 about the expected credit loss model applicable to all financial assets measured at amortized cost. Operating expenses – Operating expenses by nature, for the years ended December 31, 2019, 2018 and 2017 are as follows: 2019 2018 2017 Cost of personnel services and other employee benefits Ps. 423,956 332,878 227,597 Sales catalog 128,687 92,931 66,562 Distribution costs 121,155 102,397 63,283 Packing materials 58,361 46,976 27,258 Depreciation and amortization 38,394 25,960 24,209 Events, marketing and advertising 37,848 35,253 21,513 Promotions for the sales force 26,311 24,492 2,417 Impairment loss on trade accounts receivables 22,512 18,699 16,243 Travel expenses 18,835 17,254 14,974 Rent expense, operating leases 17,663 20,269 11,794 Bank fees 15,436 30,934 24,174 Commissions and professional fees 13,577 8,335 8,444 Other 68,853 50,122 52,270 Ps. 991,588 806,500 560,738 |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2019 | |
Segment [Abstract] | |
Segment information | 25. Segment information Information reported to the Chief Operating Decision Maker ("CODM"), for the purposes of resource allocation and assessment of business performance, focuses on the Group as a whole and with main strategies on a company-wide basis. As discussed in Note 1, the Group is focused on the home organization segment whose product portfolio includes home organization, kitchen preparation, food containers, and practical furniture, among other categories (see Note 24). The Group's products are offered through 9 catalogs in Mexico over the year. As such, no reporting on segment information is deemed necessary to assess the Group performance given its business model and current operations. In addition to the above, the Group obtains all its revenue from the Mexican market, therefore no geographic information is disclosed. Also, the Group considers that there are no major customers, and therefore, no concentration risks exist given the nature of the business and the sale of its products through a significant number of distributors. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2019 | |
Commitments [Abstract] | |
Commitments | 26. Commitments Lease arrangements The Group leases warehouses and an administrative office space that expire on December 31, 2020. Leases will not be renewed because the Group will move to the new distribution center when its construction is finalized (see Note 1). Rental expense for the years ended December 31, 2019, 2018 and 2017 was Ps. 11,605, Ps. 14,169 and Ps. 11,794, respectively. Borrowings The secured line of credit with Banamex, for up to Ps. 400,000 (Note 15) has a lien for the land acquired to build the Group's new corporate headquarters and distribution center (Note 10). |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Contingencies [Abstract] | |
Contingencies | 27. Contingencies The Group is a party to various legal actions in the normal course of its business. The Group is not involved in or threatened by proceedings for which the Group believes it is not adequately insured or indemnified or which, if determined adversely, would have a material adverse effect on its combined financial position, results of operations and cash flows. Additional taxes payable could arise in transactions with related parties if the tax authority, during a review, believes that prices and amounts used by the Group are not similar to those used with or between independent parties in comparable transactions. In accordance with the current tax legislation, the authorities have the power to review up to five fiscal years prior to the last income tax return filed. On August 12, 2014, the International Inspection Administration “4” (“AFI” for its acronym in Spanish), under the Central Administration of International Control, in relation to the General Administration of Large Taxpayers of the Tax Administration Service (“SAT” for its acronym in Spanish), requested information regarding the Group’s 2010 income tax filing, which was provided at that time. On February 20, 2017, the final agreement was signed with the Taxpayer Advocacy Office (“PRODECON”) regarding the SAT’s review. On March 2, 2017, the SAT notified the Group about certain issues on which an agreement was not reached. As a result, the Group filed a lawsuit for annulment before the SAT’s resolution, which is in progress as of the date of issuance of these combined financial statements. Based on the evaluation of the Group’s Management, tax liabilities are not expected to arise as a result of this matter. The maximum exposure of the contingent liability on this matter was estimated to amount Ps. 14,010. |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent events | 28. Subsequent events a) On January 10, 2020, the Ordinary General Shareholders' Meeting approved a dividends payment from retained earnings for an amount of Ps. 70,000 which were paid in cash. Part of this amount (Ps. 42,739) was paid to Campalier based on its equity interest. b) On January 30, 2020, the Group renegotiated the interest rate of the secured line of credit with Banamex, which changed from TIIE rate plus 317 basis points to TIIE rate plus 260 basis points. In addition, withdrawals from this line of credit were extended to August 2020, and are payable on a quarterly basis from September 2020 up to December 18, 2025 (see Note 15). The assessment required by IFRS 9 to conclude whether the renegotiation qualified as an extinguishment or modification of a financial liability (see note 2g) was performed and qualified as a modification of debt. c) As of March 10, 2020, Betterware's legal designation changed from Betterware, S.A. de C.V. to Betterware. S.A.P.I. de C.V. Additionally, the transaction with DD3 closed on March 13, 2020. All Betterware shares issued and outstanding immediately prior to the closing date were canceled and new shares were issued. Betterware issued shares to DD3's shareholders and obtained cash of US$22,767 (Ps. 498,445) through the acquisition of DD3 and concurrently settled liabilities owed by DD3 and related transaction costs on such date, for net cash proceeds of US$7,519 (Ps. 181,734) on such date. No other assets or liabilities were transferred as part of the transaction. On the same date, 2,040,000 shares of Betterware offered for subscription and payment under its initial public offering on Nasdaq were subscribed and paid for by different investors. As of the closing date, BLSM is now a wholly-owned subsidiary of Betterware. As a result of the transaction, Betterware's original shareholders maintained an ownership of 87.7% of the total outstanding shares, DD3's shareholders obtained a 6.4% ownership interest and investors under the Nasdaq listing a 5.9% ownership interest. After the closing date, Betterware has 34,451,020 shares issued and outstanding. d) On March 25, 2020, the Group withdrew Ps. 74,000 from its secured line of credit with Banamex (see Notes 15 and 28b). e) On March 27, 2020, the Group made a prepayment to the line of credit with MCRF P, S.A. de C.V. SOFOM, E.N.R of Ps. 258,750. In addition, on April 27, 2020, the Group paid the outstanding amount of the line of credit using corporate resources (see Note 15). f) On April 13, 2020, the Group withdrew Ps. 100,000 from its secured line of credit with Banamex (see Notes 15 and 28b). g) As a result of the outbreak of the Coronavirus (COVID-19) and its recent global expansion to a large number of countries, it has led to the viral outbreak being classified as a pandemic by the World Health Organization since March 11, 2020. Sanitary measures have been taken in Mexico to limit the spread of this virus, which include among others, social isolation and the closure of educational centers (schools and universities), commercial establishments and non-essential businesses. There is strong uncertainty about how this virus will evolve in Mexico, the time needed for precautionary and/or containment measures to take effect, and the outcome it will have on the national economy; therefore the economic impacts and consequences for the Company's operations are uncertain and will depend to a large extent on the evolution and spread of the pandemic in the coming months, as well as the reaction and adaptation capacity of all the economic agents impacted. The Company's operations have not been interrupted as a result of the COVID-19 pandemic as its product lines include hygiene and cleaning solutions, which qualify as an essential activity in Mexico. The supply chain has not been affected either, as the Company maintains sufficient inventory levels to supply sales for the subsequent 13 weeks, and its foreign suppliers restarted normal activities on March 1st of 2020. Net sales in 2020 from week one to sixteen increased with respect to the same period of the previous year. The Company's gross margin has been negatively affected by promotions aimed at gaining market share and the appreciation of the U.S. dollar compared to the Mexican peso's impact on inventory costs as it purchases most of its products in U.S. dollars. In order to mitigate this risk, the Company enters into forward contracts to fix the exchange rate for future purchases in dollars, which has allowed it to partially reduce the exchange rate effects of the COVID-19 pandemic. In addition, management is working on plans to increase the introduce products with higher profit margins and therefore reduce the negative effects that impact its profit margin. The Company maintains sufficient liquidity to meet its contractual obligations as a result of available sources of financing, in addition its customer's payment terms are maintained between 14 and 28 days, while its payment terms to its suppliers are 120 days. |
Authorization to issue the comb
Authorization to issue the combined financial statements | 12 Months Ended |
Dec. 31, 2019 | |
Authorization To Issue The Combined Financial Statements [Abstract] | |
Authorization to issue the combined financial statements | 29. Authorization to issue the combined financial statements On May 4, 2020, the issuance of the Group's combined financial statements was authorized by Andrés Campos, Chief Executive Officer, and Gustavo Rodarte de la Serna, Chief Financial Officer. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of preparation | a. Basis of preparation The combined financial statements include the financial statements of Betterware and BLSM (the “combined financial statements”). The Group prepares combined financial statements for the above-referred companies because it provides more meaningful information to the reader as both entities are complementary to the same operation, they are under common control and operate under common management. These combined financial statements were prepared for purposes of including them in the filing to the US Securities and Exchange Commission as a result of the merger transaction of 2020 described in Note 1. Transactions among the combined companies and the balances and unrealized gains or losses arising from intra-group transactions have been eliminated in the preparation of the combined financial statements. |
Basis of accounting | b. Basis of accounting The combined financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. |
Basis of measurement | c. Basis of measurement The combined financial statements have been prepared on the historical cost basis except for certain financial instruments measured at fair value. Functional and presentation currency These combined financial statements are presented in Mexican pesos ("Ps."), which is the Group's functional currency. All financial information presented in Mexican pesos has been rounded to the nearest thousand (except where specified differently). When referring to U.S. dollars ("US$"), it is thousands of dollars of the United States of America. Combined statement of profit or loss and other comprehensive income The Group opted to present a single combined statement of profit or loss and comprehensive income, combining the presentation of profit and loss, including an operating profit line item, and comprehensive income in the same statement. Due to the commercial activities of the Group, costs and expenses presented in the combined statements of profit or loss and other comprehensive income were classified according to their function. Accordingly, cost of sales and operating expenses were presented separately. |
Cash and cash equivalents and restricted cash | d. Cash and cash equivalents and restricted cash Cash and cash equivalents consist mainly of bank deposits and short-term investments in securities, highly liquid and easily convertible into cash in a period no longer than three months. Cash is stated at nominal value and cash equivalents are valued at fair value. Any cash or cash equivalent that cannot be disposed of in less than three months is classified as restricted cash. As of December 31 2018, restricted cash was classified within other non-current assets, which equaled one quarter of the interest accrued under the long term credit with MCRFP, S.A. de C.V. SOFOM, E.N.R. As of December 31, 2019, the Group does not maintain restricted cash (see Note 5) as the restriction was lifted during the year. |
Financial instruments | e. Financial instruments Financial assets and financial liabilities are recognized in the Group's combined statement of financial position when the Group becomes a party to the contractual provisions of the instrument. 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 the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. |
Financial assets | f. Financial assets 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 (“SPPI”) on the principal amount outstanding. 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 SPPI on the principal amount outstanding. By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset: ● the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met; and ● the Group 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. 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. 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 cumulative 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. 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. Impairment of financial assets The Group always recognizes lifetime expected credit losses (“ECL”) for trade receivables. The expected credit losses on these financial assets are estimated using the simplified approach by using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. For all other financial instruments, the Group 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 Group 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 default 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. Write-off policy The Group 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 bankruptcy proceedings, or in the case of trade receivables, when the amounts are over one year past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in profit or loss. |
Financial liabilities | g. Financial liabilities All financial liabilities are measured subsequently at amortized cost using the effective interest method or at FVTPL. Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognized in profit or loss to the extent that they are not part of a designated hedging relationship. Financial liabilities and equity Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Financial liabilities measured subsequently at amortized cost Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial 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 amortized cost of a financial liability. Foreign exchange gains and losses For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments. These foreign exchange gains and losses are recognized in the 'Foreign exchange (loss) gain, net' line item in the Combined Statements of Profit or Loss and Other Comprehensive Income for financial liabilities that are not part of a designated hedging relationship. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss for financial liabilities that are not part of a designated hedging relationship. Derecognition of financial liabilities The Group derecognizes financial liabilities when, and only when, the Group's obligations are discharged, canceled 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. When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification should be recognized in profit or loss as the modification gain or loss within other gains and losses. |
Derivative financial instruments | h. Derivative financial instruments The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in Note 18. Derivatives are recognized initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. Derivatives are not offset in the combined financial statements unless the Group has both legal right and intention to offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities. |
Inventories and cost of sales | i. Inventories and cost of sales Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on weighted-average. The net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. |
Prepaid expenses | j. Prepaid expenses Prepaid expenses are mainly comprised of advanced payments for printed catalogs, as well as, advanced payments for the purchase of inventories that are received after the date of the combined statement of financial position and during the normal course of business, and they are presented in current assets in accordance with the classification of the destination item. |
Other assets | k. Other assets Other assets mainly include restricted cash (see Note 2d), inventory of rewards and rent security deposits. They are presented in current or non-current assets in accordance with the classification of the destination item. Under the reward program, the Group grants reward points to its distributors for the recruitment of associates, while associates receive such points for the referral of new associates within a catalogue. These points are exchangeable for products that Betterware acquires from other suppliers, which are not related to a revenue contract. The points expire based on commercial terms established by the Group that can be modified at management's discretion. Inventory of rewards mainly consist of certain products and items (in the form of rewards) that Betterware acquires with the purpose to encourage sales among the distributors and associates. Such inventory is acquired once the distributors and associates redeem the reward points that are granted by the Group so that the balance of inventory at each reporting period only relates to items already redeemed but not delivered. Inventory of rewards are recognized at cost of acquisition. |
Property, plant and equipment, net | l. Property, plant and equipment, net Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. If significant parts of an item have different useful lives, then they are accounted for as separate items (major components). Depreciation is recognized using the straight-line method. The estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the calculation of depreciation: Molds 5 years Vehicles 4 years Computers and equipment 3 - 10 years Leasehold improvements 3 years Property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Borrowing costs directly attributable to the acquisition or construction of qualifying assets (designated asset), which are assets that necessarily take a substantial period of time before they are available for their intended use, are added to the cost of those assets, until such time as the assets are available for their intended use. If any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. |
Intangible assets | m. Intangible assets ● Brand This is an intangible asset with an indefinite useful life and corresponds mainly to the value of the "Betterware" brand, which was transmitted to the Group through a merger with Strevo Holding, S.A. de C.V. ("Strevo", an unrelated third party) on July 28, 2017. This intangible asset is subject to annual impairment testing, and whenever there is an indication that the asset may be impaired. Additionally, the Group has incurred expenditures related to registration of trademark rights, which have a finite life. Such expenditures are amortized on a straight-line basis over their estimated useful lives which range from 10 to 30 years. ● Relationship with customers This is an intangible asset with a definite useful life of ten years and is being amortized on a straight line basis and corresponds to the value of the relationships with customers. It was transmitted to the Group through a merger with Strevo on July 28, 2017. This intangible asset is subject to impairment testing whenever there is an indication that the asset may be impaired. ● 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. |
Impairment of tangible and intangible assets other than goodwill | n. Impairment of tangible and intangible assets other than goodwill At the end of each reporting period, the Group 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 Group 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 post-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 is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Any impairment is recognized immediately in profit or loss. When an impairment loss subsequently reverses, the carrying amount of the asset 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 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. |
Goodwill | o. Goodwill Goodwill corresponds to the excess resulted between the consideration paid and the fair values of the net assets acquired at the date of acquisition paid by Betterware Latinoamérica Holding México, S.A. de C.V. (BLHM) and Strevo. Goodwill was generated by different legal entities and transmitted to the Group through the mergers carried out on November 30, 2002 and July 28, 2017, respectively (Note 11). As disclosed in Note 11, Goodwill was transferred to the Group through mergers carried out on November 30, 2002 and July 28, 2017 with BLHM and Strevo, respectively, which was generated through the acquisition of shares of the Group in November 2002 and March 2015, respectively. Goodwill is not amortized but is tested annually for impairment. Goodwill arising from a business combination is allocated to the cash generating unit ("CGU") receiving a benefit from the synergies of the combination. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other long-lived assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. |
Leases | p. Leases Classification and valuation of leases under IAS 17, in effect through December 31, 2018 The Group as lessee For the year ended December 31, 2018, the classification of leases as finance or operating depended on the substance of the transaction rather than the form of the contract. Leases in which a significant portion of the risks and rewards relating to the leased property are retained by the lessor were classified as operating leases. Payments made under operating leases (net of incentives received by the lessor) were recognized in the combined statement of income based on the straight-line method over the lease period. Leases where the Group assumes substantially all the risks and rewards of ownership were classified as finance leases. Finance leases were capitalized at the beginning of the lease, at the lower of the fair value of the leased property and the present value of the future minimum lease payments. If its determination was practical, in order to discount the future minimum lease payments to present value, the interest rate implicit in the lease was used; otherwise, the incremental borrowing rate of the lessee was used. For the year ended December 31, 2018, the Group had only entered into operating leases. The Group as lessor As of and for the year ended December 31, 2018, the Group did not maintain any leases as lessor. Classification and valuation of leases under IFRS 16, in effect beginning January 1, 2019 (Note 3a) The Group as lessee The Group evaluates whether a contract is or contains a lease agreement at inception of a contract. A lease is defined as an agreement or part of an agreement that conveys the right to control the use of an identified asset for a period of time in exchange for a consideration. The Group recognizes an asset for right-of-use and the corresponding lease liability, for all lease agreements in which it acts as lessee, except in the following cases: short-term leases (defined as leases with a lease term of less than 12 months); leases of low-value assets (defined as leases of assets with an individual market value of less than US$5,000 (five thousand dollars)); and, lease agreements whose payments are variable (without any contractually defined fixed payment). For these agreements, which exempt the recognition of an asset for right-of-use and a lease liability, the Group recognizes the rent payments as an operating expense in a straight-line method over the lease period. The right-of-use asset comprises all lease payments discounted at present value; the direct costs to obtain a lease; the advance lease payments; and the obligations of dismantling or removal of assets. The Group depreciates the right-of-use asset over the shorter of the lease term or the useful life of the underlying asset; therefore, when the lessee will exercise a purchase option, the lessee shall depreciate the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Depreciation begins on the lease commencement date. The lease liability is initially measured at the present value of the future minimum lease payments that have not been paid at that date, using a discount rate that reflects the cost of obtaining funds for an amount similar to the value of the lease payments, for the acquisition of the underlying asset, in the same currency and for a similar period to the corresponding contract (incremental borrowing rate). To determine the lease term, the Group considers the non-cancellable period, including the probability to exercise any right to extend and/or terminate the agreement. Subsequently, the lease liability is measured increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and reducing the carrying amount to reflect the lease payments made. When there is a modification in future lease payments resulting from changes in an index or a rate used to determine those payments, the Group remeasures the lease liability when the adjustment to the lease payments takes effect, without reassessing the discount rate. However, if the modifications are related to the lease term or exercising a purchase option, the Group reassesses the discount rate during the liability's remeasurement. Any increase or decrease in the value of the lease liability subsequent to this remeasurement is recognized as an adjustment to the right-of-use asset to the same extent. Finally, the lease liability is derecognized when the Group fulfills all lease payments. When the Group determines that it is probable that it will exercise an early termination of the contract that leads to a cash disbursement, such disbursement is accounted as part of the liability's remeasurement mentioned in the previous paragraph; however, in cases in which the early termination does not involve a cash disbursement, the Group cancels the lease liability and the corresponding right-of-use asset, recognizing the difference immediately in the combined statement of profit or loss and other comprehensive income. The Group as lessor As of and for the year ended December 31, 2019, the Group does not maintain any leases as lessor. |
Foreign currency | q. Foreign currency In preparing the combined financial statements, transactions in currencies other than the Mexican Peso, which is the functional currency of the combined entities are recognized at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of transaction. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise. |
Employee benefits | r. Employee benefits Retirement benefits - Defined benefit obligations The Group's defined benefit obligations cover seniority premiums which consist of a lump sum payment of 12 day's wage for each year worked, calculated using the most recent salary, not to exceed twice the legal minimum wage established by law. The related liability and annual cost of such benefits are calculated with the assistance of an independent actuary on the basis of formulas defined in the plans using the projected unit credit method at the end of each annual reporting period. The Group's net obligation with respect to the defined-benefit plan are calculated separately for each plan, estimating the amount of future benefit accrued by employees in return for their services in ongoing and past periods; that benefit is discounted to determine its present value, and the costs for the services that have not been recognized and the fair value of the plan assets are deducted. The discount rate is the yield at the reporting date of the government bonds that have maturity dates approximate to the maturities of the Group's obligations which are denominated in the same currency in which benefits are expected to be paid (Mexican pesos). Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows: ● Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); ● Net interest expense or income; and ● Remeasurements. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if applicable), are recognized immediately in the liability against other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is never reclassified to profit or loss. Past service cost is recognized in profit or loss in the period in which a plan amendment or curtailment occurs, or when the Group recognizes the related restructuring costs or termination benefits, if earlier. Short-term and other long-term employee benefits and statutory employee profit sharing ("PTU") 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 service. Likewise, a liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 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. Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. Statutory employee profit sharing ("PTU") PTU is recorded in the results of the year in which it is incurred and is presented in operating expenses line item in the combined statement of profit or loss and other comprehensive income. As a result of the 2014 Income Tax Law, as of December 31, 2019 and 2018, PTU is determined based on taxable income, according to Section I of Article 9 of the that Law. Termination benefits Termination benefits are recognized as an expense when the Group's commitment can be evidenced, without real possibility of reversing, with a detailed formal plan either to terminate employment before the normal retirement date, or else, to provide benefits for termination as a result of an offer that is made to encourage voluntary retirement. If the benefits are payable no later than 12 months after the reporting period, then they are discounted at present value. |
Income taxes | s. Income taxes Income tax expense represents the sum of the tax currently payable and deferred tax. ● Current tax Current income tax ("ISR") is recognized in the results of the year in which is incurred. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. A provision is recognized for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgment of tax professionals within the Group supported by previous experience in respect of such activities. ● Deferred income tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the combined financial statements and the corresponding 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 difference 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. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill. 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. 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 date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. ● 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 comprehensive income or directly in equity respectively. |
Provisions | t. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions mainly include incentives granted to distributors and associates in the form of reward points, discounts and others such as compensations to employees (bonuses) not paid at the reporting date, professional services fees, among others. 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 flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from 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. Warranties When the Group grants assurance-type warranties in contracts with customers, those rights to the customer are recognized in profit or loss in the cost of sales line item against a provision in the statement of financial position; however, when the Group provides its customers with service-type warranties, those are treated under the revenue recognition model as a performance obligation. For the years ended December 31, 2019 and 2018, the Group has not granted any service-type warranties to its customers. Reward Points Through its loyalty program (see note 2u), the Group also grants reward points to its distributors for the recruitment of associates, while associates receive such points for the referral of new associates within a catalogue. The loyalty program allows the Group's distributors and associates to accumulate sales points which are exchangeable for products that are purchased from other retailers. Since these type of points also provide a benefit to distributors and associates that they would not receive without purchasing the Group's products, this loyalty program represents a separate performance obligation, which is recognized as described in Note 2u. |
Revenue recognition | u. Revenue recognition Revenues comprise the fair value of the consideration received or to receive for the sale of goods and services in the ordinary course of the transactions, and are presented in the combined statement of profit or loss, net of the amount of variable considerations (discounts and product returns). To recognize revenues from contracts with its customers, the Group applies a comprehensive model, which is based on a five-step approach consisting of the following: (1) identify the contract (verbal or written); (2) identify performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when the Group satisfies a performance obligation. The Group recognizes revenue at a point in time, when it transfers control over a product to a customer, which occurs when the customers take delivery of the products and formally accepts them. The Group invoices its customers at the shipment date with payment terms between 15 and 30 days; customers are allowed to request for a product return only if the product has technical issues or physical damages. However, this right qualifies as an assurance-type warranty (and not a performance obligation) related to the functionality of the products sold, and therefore, it is recognized in accordance with the policy disclosed in Note 2t. Discounts to distributors and associates are included in the invoice price and are presented in the net sales line item from the moment in which the customer acquires control of the products sold; thus, management does not perform estimates over discounts to be taken by the customers. Loyalty program The Group operates a loyalty program through which its distributors and associates accumulate points on sales of Betterware goods that entitle them to exchange the points for products the Group acquires from different suppliers. Since these points provide a benefit to distributors and associates that they would not receive without purchasing the Betterware products, this loyalty program represents a separate performance obligation. Therefore, the transaction price is allocated between the product and the points on a relative stand-alone selling price basis. The stand-alone selling price per point is estimated based on the fair value of the product to be given when the points are redeemed by the distributors and associates and the likelihood of redemption, as evidenced by the Group’s historical experience. Additionally, a contract liability is recognized for revenue relating to the loyalty points at the time of the initial sales transaction, reducing the revenue recognized upon the initial sale of the goods. Revenue from the loyalty points is recognized when the points are redeemed by the customer and exchanged for the related products. Revenue for points that are not expected to be redeemed is recognized in proportion to the pattern of rights exercised by customers. Variable considerations The Group adjusts the transaction price according to the estimations that may result in a variable consideration. These estimates are determined according to the terms and conditions of the contracts with the customer, the history or the customer’s performance. Contract costs The Group capitalizes incremental costs to obtain a contract with a customer if it expects to recover those costs. However, the Group does not capitalize incremental costs if the amortization period for the asset is one year or less. For any other costs related to the fulfillment of a contract with a customer, that is not part of the revenue recognition, it is considered as an asset including all the costs incurred, only if such costs are directly related to an existing contract or specific anticipated contract and if those costs generate or enhance resources that will be used to satisfy performance obligations in the future and are expected to be recovered. The Group amortizes the asset recognized for the costs to obtain and/or fulfill a contract on a systematic basis, consistent with the pattern of transfer of the good to which the asset relates. |
Financing income and cost | v. Financing income and cost Financing income (cost) are comprised of interest income, interest expense, the foreign currency gain (loss) on financial assets and financial liabilities; and gain (loss) in valuation of financial derivative instruments. Those are recognized in the combined statement of profit or loss and other comprehensive income when accrued. |
Contingencies | w. Contingencies Significant obligations or losses related to contingencies are recognized when it is probable that their effects will materialize and there are reasonable elements for their quantification. If these reasonable elements do not exist, their disclosure is included qualitatively in the notes to the combined financial statements. Income, profits or contingent assets are recognized until such time as there is certainty of their realization. |
Common control transactions | x. Common control transactions The Group has established as its accounting policy choice to recognize transactions under common control at the book value of the assets and liabilities acquired or involved in the common control transaction (either acquisition or disposition). |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of useful lives are used in the calculation of depreciation | Molds 5 years Vehicles 4 years Computers and equipment 3 - 10 years Leasehold improvements 3 years |
Changes in Significant Accoun_2
Changes in Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure of Notes and Other Explanatory Information [Abstract] | |
Schedule of amount of adjustment for each financial statement line item affected by the application of IFRS 16 for the current year | Impact on profit or loss December 31, Increase in depreciation of right-of-use asset Ps. 13,098 Increase in finance costs 3,765 Decrease in profit for the year Ps. (16,863 ) Impact on assets and liabilities January 1, Right-of-use assets Ps. 36,909 Lease liabilities 36,909 |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash and cash equivalents | 2019 2018 Cash on hand in banks Ps. 96,008 46,445 Time deposits 117,689 130,938 Ps. 213,697 177,383 |
Trade Accounts Receivable (Tabl
Trade Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Trade Accounts Receivable Tables Abstract | |
Schedule of trade accounts receivable | 2019 2018 Trade account receivables Ps. 260,727 208,116 Expected credit loss (13,640 ) (9,340 ) Ps. 247,087 198,776 |
Schedule of trade accounts receivable past due | Trade receivables – days past due December 31, 2019 Not past 14-21 21 – 28 >28 Total Expected credit loss rate 2 % 20 % 49 % 42 % Estimated total gross carrying amount at default Ps. 207,032 12,098 7,045 29,807 255,982 Expected credit loss Ps. 3,950 2,454 3,477 12,634 22,515 Trade receivables – days past due December 31, 2018 Not past due 14-21 21 – 28 >28 Total Expected credit loss rate 1 % 16 % 37 % 38 % Estimated total gross carrying amount at default Ps. 194,366 13,794 5,681 33,438 247,279 Expected credit loss Ps. 1,910 2,150 2,108 12,531 18,699 |
Schedule of expected credit loss | Total Balance as at January 1, 2018 Ps. (4,333 ) Expected credit loss (18,699 ) Amounts written off 13,692 Balance as at 31 December 2018 (9,340 ) Expected credit loss (22,515 ) Amounts written off 18,215 Balance as at December 31, 2019 Ps. (13,640 ) |
Inventories and Cost of Sales (
Inventories and Cost of Sales (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventories and Cost of Sales [Abstract] | |
Schedule of inventories and cost of sales | 2019 2018 Finished goods Ps. 224,025 215,812 Packing material 4,577 3,750 228,602 219,562 Merchandise-in-transit 116,952 82,644 Ps. 345,554 302,206 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Prepaid Expenses [Abstract] | |
Schedule of Prepaid expenses | 2019 2018 Printed catalogs Ps. 21,692 19,406 Advances to suppliers 12,973 11,471 Premiums paid in advance for insurance 9,628 8,948 Other 8,891 2,458 Ps. 53,184 42,283 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets [Abstract] | |
Schedule of other assets | 2019 2018 Inventory of rewards Ps. 13,315 8,667 Transaction costs of the merger 9,822 - Other receivables 7,259 535 Rent security deposit 3,549 2,148 Restricted cash - 22,088 33,945 33,438 Current 20,574 9,202 Non-current 13,371 24,236 Ps. 33,945 33,438 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property, plant and equipment, net | 2019 2018 Acquisition cost Ps. 305,874 123,249 Accumulated depreciation (98,524 ) (80,277 ) Ps. 207,350 42,972 Acquisition cost: January 1, Additions Disposals December 31, Molds Ps. 29,155 8,360 - 37,515 Vehicles 40,349 306 (39,053 ) 1,602 Computers and equipment 47,628 12,042 (30 ) 59,640 Leasehold improvements 23,932 560 - 24,492 Ps. 141,064 21,268 (39,083 ) 123,249 Accumulated depreciation: January 1, Depreciation Eliminated on December 31, Molds Ps. (21,119 ) (1,844 ) - (22,963 ) Vehicles (21,214 ) (3,162 ) 22,930 (1,446 ) Computers and equipment (26,499 ) (10,014 ) 13 (36,500 ) Leasehold improvements (15,070 ) (4,298 ) - (19,368 ) Ps. (83,902 ) (19,318 ) 22,943 (80,277 ) Acquisition cost: December 31, Additions Disposals December 31, Land Ps. - 47,124 - 47,124 Molds 37,515 3,754 - 41,269 Vehicles 1,602 - - 1,602 Computers and equipment 59,640 7,183 - 66,823 Leasehold improvements 24,492 5,390 - 29,882 Construction in progress - 119,174 - 119,174 Ps. 123,249 182,625 - 305,874 Accumulated depreciation: December 31, Depreciation Eliminated on December 31, Molds Ps. (22,963 ) (2,685 ) - (25,648 ) Vehicles (1,446 ) (59 ) - (1,505 ) Computers and equipment (36,500 ) (11,503 ) - (48,003 ) Leasehold improvements (19,368 ) (4,000 ) - (23,368 ) Ps. (80,277 ) (18,247 ) - (98,524 ) |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill [Abstract] | |
Schedule of Goodwill | January 1, Additions Disposals December 31, Cost Ps. 348,441 - - 348,441 December 31, Additions Disposals December 31, Cost Ps. 348,441 - - 348,441 |
Schedule of values assigned to the key assumptions represent management’s assessment of future trends in the relevant industries and have been based on historical data from both internal and external sources | In percent 2019 2018 Discount rate 12.4 15.7 Terminal Value Growth Rate 3.0 3.0 Budgeted EBITDA Growth Rate 14.0 14.8 |
Intangible Assets Net (Tables)
Intangible Assets Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible assets, net [Abstract] | |
Schedule of intangible assets | Acquisition cost: January 1, Additions Disposals December 31, Brand Ps. 253,000 - - 253,000 Customer relationships 64,000 - - 64,000 Software - 17,135 - 17,135 Brands and logo rights 5,072 1,137 - 6,209 Ps. 322,072 18,272 - 340,344 Accumulated amortization: January 1, Depreciation Eliminated on December 31, Customer relationships Ps. (18,133 ) (6,400 ) - (24,533 ) Brands and logo rights (3,468 ) (244 ) - (3,712 ) Ps. (21,601 ) (6,644 ) - (28,245 ) Acquisition cost: December 31, Additions Disposals December 31, Brand Ps. 253,000 - - 253,000 Customer relationships 64,000 - - 64,000 Software 17,135 4,516 - 21,651 Brands and logo rights 6,209 1,399 - 7,608 Ps. 340,344 5,915 - 346,259 Accumulated amortization: December 31, Depreciation Eliminated on December 31, Customer relationships Ps. (24,533 ) (6,400 ) - (30,933 ) Software - (421 ) - (421 ) Brands and logo rights (3,712 ) (228 ) - (3,940 ) Ps. (28,245 ) (7,049 ) - (35,294 ) |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of right of use assets | January 1, Additions Disposals December 31, Cost Ps. 36,909 - - 36,909 January 1, Additions Disposals December 31, Accumulated depreciation Ps. - (13,098 ) - (13,098 ) |
Schedule of total future minimum lease payments | Year Amount 2020 Ps 15,463 2021 8,617 2022 3,310 2023 29 Ps 27,419 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Borrowings Tables Abstract | |
Schedule of long-term debt | 2019 2018 Line of credit with MCRF P, S.A. de C.V. SOFOM, E.N.R. of Ps. 600,000, bearing interest at a fixed rate of 13.10%. This line of credit is payable on a quarterly basis starting May 15, 2019 through May 15, 2023. BLSM Latino América Servicios, S.A. de C.V., is a guarantor in this loan. Ps. 516,597 592,252 Secured line of credit with Banamex, for up to Ps. 400,000, bearing interest at the TIIE rate plus 317 basis point. Withdrawals from this line of credit can be made during a 10-month period starting December 15, 2018, and are payable on a quarterly basis from December 17, 2019 up to December 18, 2025. 135,209 50,000 Unsecured line of credit with Banamex, for up to Ps. 80,000, bearing interest at the TIIE rate plus 275 basis points (renewable on a yearly basis). 15,000 - Unsecured line of credit with Banamex, for up to US$ 1,800, bearing interest at LIBOR rate plus 300 basis point. Maturity was on March 31, 2018. - - Interest payable 10,907 11,227 Total debt 677,713 653,479 Less: Current portion 148,070 90,691 Long-term debt Ps. 529,643 562,788 |
Schedule of cash flows arising from financing activities | Long-term Interest Derivative Balances as of January 1, 2018 (1) Ps. 607,250 10,043 - Changes that represent cash flows - Loans obtained 50,667 - - Restricted cash (2,001 ) - - Payments (36,829 ) (85,159 ) - Commissions and debt issuance cost (667 ) - - Changes that do not represent cash flows - Interest expense - 86,343 - Valuation effects of derivative financial instruments - - 16,629 Amortization of commissions and debt issuance cost 1,744 - - Balances as of December 31, 2018 (1) Ps. 620,164 11,227 16,629 Changes that represent cash flows - Loans obtained 104,500 - - Restricted cash 22,940 - - Payments (82,996 ) (76,465 ) - Commissions and debt issuance cost - - Changes that do not represent cash flows - Interest expense - 85,429 - Borrowing costs capitalized on PP&E - (9,284 ) Valuation effects of derivative financial instruments - - 15,680 Amortization of commissions and debt issuance cost 2,198 - - Balances as of December 31, 2019 Ps. 666,806 10,907 32,309 (1) Balances in column "Long-term debt", are presented net of restricted cash balances as of December 31, 2018. See Note 5 for details about restricted cash. |
Schedule of long-term debt maturities | Year Amount 2021 Ps. 185,447 2022 169,312 2023 245,343 2024 23,611 2025 54,000 Ps. 677,713 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes [Abstract] | |
Schedule of income tax recognized in profit or loss | 2019 2018 2017 Current tax Ps. 229,900 158,545 92,209 Deferred tax (benefit) expense 2,792 (8,366 ) 4,742 Ps. 232,692 150,179 96,951 |
Schedule of reconciliation of income tax expense recognized from statutory to effective ISR rate | 2019 2018 2017 Profit before income tax Ps. 704,834 449,447 304,625 Tax rate 30 % 30 % 30 % Income tax expense calculated at 30% statutory tax rate 211,450 134,834 91,388 Inflation effects, net 6,278 6,408 4,832 Non-deductible expenses 3,202 3,217 2,340 Other items, net 11,762 5,720 (1,609 ) Ps. 232,692 150,179 96,951 |
Schedule of deferred tax asset (liabilities) as well as the reconciliation of changes in deferred taxes balances | Temporary differences January 1, Recognized Recognized Equity December 31, Deferred tax assets: Expected credit loss Ps. 2,499 303 - - 2,802 Accruals and provisions 19,865 6,838 (71 ) - 26,632 Derivative financial instruments - 4,989 - - 4,989 Property, plant and equipment 2,857 (2,783 ) - - 74 Deferred tax liabilities: Intangible assets (89,660 ) 1,920 - - (87,740 ) Inventories (4,189 ) (2,003 ) - - (6,192 ) Other assets and prepaid expenses (10,294 ) (898 ) - - (11,192 ) Net deferred tax liability Ps. (78,922 ) 8,366 (71 ) - (70,627 ) Temporary differences December 31, Recognized Recognized Equity December 31, Deferred tax assets: - Expected credit loss Ps. 2,802 2,415 - - 5,217 Accruals and provisions 26,632 (668 ) (26 ) - 25,938 Derivative financial instruments 4,989 (4,989 ) - - - Property, plant and equipment 74 4,505 - - 4,579 - Deferred tax liabilities: - Intangible assets (87,740 ) 1,920 - - (85,820 ) Inventories (6,192 ) (3,161 ) - - (9,353 ) Derivative financial instruments (89 ) - (89 ) Other assets and prepaid expenses (11,192 ) (2,699 ) - - (13,891 ) Net deferred tax liability Ps. (70,627 ) (2,766 ) (26 ) - (73,419 ) |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Provisions [Abstract] | |
Schedule of provisions | Commissions, Bonuses and Professional Total As of January 1, 2018 Ps. 41,324 1,158 - 42,482 Increases 247,282 56,854 30,704 334,840 Payments (252,801 ) (56,054 ) (29,481 ) (338,336 ) As of December 31, 2018 Ps. 35,805 1,958 1,223 38,986 Increases 345,148 90,843 2,026 438,017 Payments (348,174 ) (79,445 ) (2,695 ) (430,314 ) As of December 31, 2019 Ps. 32,779 13,356 554 46,689 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Financial Instruments [Abstract] | |
Schedule of derivative financial instruments contracted by the group | December 31, 2019 Instrument Notional Fair Contract Maturity Rate received Rate Liabilities: Interest rate swap Ps. 50,000 Ps. 19,614 11/15/2018 12/15/2023 TIIE 28 days (1) 8.33 % Average Maturity date Forwards US Dollar-Mexican Peso US$ 47,690 Ps. 12,695 19.61 Weekly, through October 2020 Total Liabilities Ps. 32,309 Non-current liability Ps. 16,754 Total current liability Ps. 15,555 (1) As of December 31, 2019, the 28-day TIIE rate was 7.55%. December 31, 2018 Instrument Notional amount in Fair Contract Maturity Rate Rate Liabilities: Interest rate swap Ps. 50,000 Ps. 8,364 15/11/2018 15/12/2023 TIIE 28 days (1) 8.33 % Average Maturity date Forwards US Dollar-Mexican Peso US$ 24,414 Ps. 8,265 20.06 Weekly, through June 2019 Total Liabilities Ps. 16,629 Non-current liability Ps. 8,120 Total current liability Ps. 8,509 (1) As of December 31, 2018, the 28-day TIIE rate was 8.5956%. |
Schedule of maturities of the notional amount | Instrument Notional amount in thousands of 2020 2021 2022 2023 2024 and thereafter Liabilities: Interest rate swap Ps. 1,458 5,833 5,833 5,833 31,043 Forwards US Dollar-Mexican Peso US$ 12,695 - - - |
Employee Benefits (Tables)
Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits | |
Schedule of net defined benefit liability and its components | 2019 2018 Balance at January 1 Ps. 1,355 1,283 Included in profit or loss: Current service cost 424 441 Interest cost 123 92 Net cost of the period 547 533 Included in OCI: Actuarial loss (gain) (102 ) (165 ) Income tax effect (26 ) (71 ) Other: Benefits paid (196 ) (225 ) Balance as of December 31 Ps. 1,630 1,355 |
Schedule of principal actuarial assumptions | 2019 2018 2017 Financial: Future salary growth 6.6 % 4.8 % 4.5 % Discount rate 7.1 % 9.2 % 7.4 % Demographic: Number of employees 654 684 622 Age average 35 years 35 years 36 years Longevity average 3 years 2 years 2 years |
Schedule of sensitivity analysis | Effects at December 31, 2019 Effects at December 31, 2018 Increase / decrease in the discount rate +0.50% Ps. (127 ) (93 ) -0.50% 115 103 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Financial Instruments [Abstract] | |
Schedule of financial instruments | As of December 31, 2019 Receivables, Payables, and Loans Fair value through profit or loss Fair value hierarchy level Financial assets - Trade receivables Ps. 266,938 - Other receivables 5,867 - Total 272,805 - Financial liabilities - Debt 677,713 - Accounts payable 529,348 - Derivative financial instruments 32,309 32,309 2 Total 1,239,370 32,309 As of December 31, 2018 Receivables, Payables, and Loans Fair value through profit or loss Fair value hierarchy level Financial assets - Trade receivables Ps. 198,776 - Other receivables 536 - Total 199,312 - Financial liabilities - Debt 653,479 - Accounts payable 445,241 - Derivative financial instruments 16,629 16,629 2 Total 1,115,349 16,629 |
Schedule of financial assets and financial liabilities at the reporting date | 2019 2018 Assets US$ 1,331 1,294 Liabilities (16,095 ) (12,075 ) Net position US$ (14,764 ) (10,781 ) Closing exchange rate of the year 18.8452 19.6566 |
Schedule of exchange rate sensitivity analysis | 2019 Profit Ps. 27,823 |
Schedule of bank credit lines | Bank credit lines December 31, 2019 December 31, 2018 Amount used Ps. 656,459 650,000 Amount not used 260,500 350,000 Total credit lines Ps. 916,959 1,000,000 |
Schedule of undiscounted cash flows of financial liabilities | As of December 31, 2019 Less than 1 year Over 1 year and less than 5 years Over 5 years Total Accounts payable to suppliers Ps. 529,348 - - 529,348 Derivative financial instruments 15,555 16,754 - 32,309 Long-term debt 137,163 484,903 49,393 671,459 Ps. 682,066 501,657 49,393 1,233,116 As of December 31, 2018 Less than 1 year Over 1 year and less than 5 years Over 5 years Total Accounts payable to suppliers Ps. 445,241 - - 445,241 Derivative financial instruments 8,509 8,120 - 16,629 Long-term debt 78,750 536,073 25,208 640,031 Ps. 532,500 544,193 25,208 1,101,901 |
Net Parent Investment (Tables)
Net Parent Investment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Net Parent Investment | |
Schedule of net parent investment | Net parent investment 2019 2018 Capital stock Ps. 55,985 55,985 Retained earnings 218,376 24,234 Other comprehensive income 121 45 Ps. 274,482 80,264 |
Schedule of net parent investment number of shares integrated | Betterware de México, BLSM Latino América Servicios, S.A. de C.V. 2019 2018 2017 2019 2018 2017 Fixed capital 5,000 5,000 5,000 5,000 5,000 5,000 Variable capital 5,032,939 5,032,939 4,786,193 3,654,378 3,654,378 3,475,150 5,037,939 5,037,939 4,791,193 3,659,378 3,659,378 3,480,150 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings per share [abstract] | |
Schedule of income and share data used in calculation of basic earnings per share | 2019 2018 2017 Net income (in thousands of pesos) Attributable to shareholders Ps. 472,218 299,267 207,674 Shares (in thousands of shares) Weighted average of outstanding shares 30,200 30,200 30,200 Basic and diluted earnings per share (pesos per share) 15.63 9.91 6.88 |
Related Parties Balances and _2
Related Parties Balances and Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure of Notes and Other Explanatory Information [Abstract] | |
Schedule of related parties transactions not members of the group | 2017 Interest income Strevo Holding, S.A. de C.V.(i) Ps. 18,650 Betterware Controladora, S.A. de C.V.(i) 316 Total 18,966 (i) Merged with the Group on July 28, 2017 |
Schedule of related parties outstanding | 2019 2018 Trade accounts receivable from related parties Fundación Betterware., A.C. Ps. 610 .- Ps. 610 - |
Revenue and Operating Expenses
Revenue and Operating Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue And Operating Expenses Tables Abstract | |
Schedule of revenue and operating expenses | 2019 2018 2017 Kitchen and food preservation Ps. 1,229,148 820,995 484,044 Home solutions 529,551 360,595 223,383 Bathroom 441,093 376,262 250,741 Laundry & Cleaning 318,782 308,359 186,708 Tech & mobility 290,366 196,439 105,957 Bedroom 275,722 254,066 198,872 Ps. 3,084,662 2,316,716 1,449,705 |
Schedule of operating expenses by nature | 2019 2018 2017 Cost of personnel services and other employee benefits Ps. 423,956 332,878 227,597 Sales catalog 128,687 92,931 66,562 Distribution costs 121,155 102,397 63,283 Packing materials 58,361 46,976 27,258 Depreciation and amortization 38,394 25,960 24,209 Events, marketing and advertising 37,848 35,253 21,513 Promotions for the sales force 26,311 24,492 2,417 Impairment loss on trade accounts receivables 22,512 18,699 16,243 Travel expenses 18,835 17,254 14,974 Rent expense, operating leases 17,663 20,269 11,794 Bank fees 15,436 30,934 24,174 Commissions and professional fees 13,577 8,335 8,444 Other 68,853 50,122 52,270 Ps. 991,588 806,500 560,738 |
Nature of Business and Signif_2
Nature of Business and Significant Events of 2019 (Details) $ in Thousands, $ in Thousands | Mar. 13, 2020MXN ($)shares | Mar. 13, 2020USD ($)shares | Dec. 31, 2019MXN ($) | Mar. 13, 2020USD ($) | Jul. 28, 2017MXN ($) |
Statement Line Items [Line Items] | |||||
Payments related to construction | $ 16,500 | ||||
Total investment | $ 581,000 | ||||
Decreased assets | $ 16,513 | ||||
Increased in liability | 60,144 | ||||
Stockholders equity decreased | $ 76,657 | ||||
Non-adjusting events after reporting period [Member] | |||||
Statement Line Items [Line Items] | |||||
Cash obtained | $ 498,445 | ||||
Shares offered for subscription and payment | shares | 2,040 | 2,040 | |||
Net cash proceeds | $ 181,734 | ||||
Non-adjusting events after reporting period [Member] | US [Member] | |||||
Statement Line Items [Line Items] | |||||
Cash obtained | $ 22,767 | ||||
Net cash proceeds | $ 7,519 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Molds [Member] | |
Statement Line Items [Line Items] | |
Estimated useful lives and depreciation method | 5 years |
Vehicles [Member] | |
Statement Line Items [Line Items] | |
Estimated useful lives and depreciation method | 4 years |
Leasehold improvements [Member] | |
Statement Line Items [Line Items] | |
Estimated useful lives and depreciation method | 3 years |
Computers and equipment [Member] | Top of range [member] | |
Statement Line Items [Line Items] | |
Estimated useful lives and depreciation method | 10 years |
Computers and equipment [Member] | Top of range [member] | |
Statement Line Items [Line Items] | |
Estimated useful lives and depreciation method | 3 years |
Significant Accounting Polici_5
Significant Accounting Policies (Details Textual) | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies (Textual) | |
Percentage of original effective rate | 10.00% |
Intangible asset with a definite useful life | 10 years |
Description of lease agreement | The Group recognizes an asset for right-of-use and the corresponding lease liability, for all lease agreements in which it acts as lessee, except in the following cases: short-term leases (defined as leases with a lease term of less than 12 months); leases of low-value assets (defined as leases of assets with an individual market value of less than US$5,000 (five thousand dollars)); and, lease agreements whose payments are variable (without any contractually defined fixed payment). |
Customers shipment date with payment terms | Between 15 and 30 days. |
Top of range [member] | |
Significant Accounting Policies (Textual) | |
Expenditures are amortized on a straight-line basis over their estimated useful lives | 10 Years |
Bottom of range [member] | |
Significant Accounting Policies (Textual) | |
Expenditures are amortized on a straight-line basis over their estimated useful lives | 3 Years |
Changes in Significant Accoun_3
Changes in Significant Accounting Policies (Details) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure of Notes and Other Explanatory Information [Abstract] | ||
Increase in depreciation of right-of-use asset | $ 13,098 | |
Increase in finance costs | 3,765 | |
Decrease in profit for the year | (16,863) | |
Right-of-use assets | 23,811 | |
Lease liabilities | $ 24,584 |
Changes in Significant Accoun_4
Changes in Significant Accounting Policies (Details Textual) $ in Thousands | 12 Months Ended |
Dec. 31, 2019MXN ($) | |
Changes in Significant Accounting Policies (Textual) | |
Right-of-use asset and a lease liability | $ 22,393 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Statement Line Items [Line Items] | ||||
Cash and cash equivalents | $ 213,697 | $ 177,383 | $ 230,855 | $ 206,186 |
Cash on hand in banks [Member] | ||||
Statement Line Items [Line Items] | ||||
Cash and cash equivalents | 96,008 | 46,445 | ||
Time deposits [Member] | ||||
Statement Line Items [Line Items] | ||||
Cash and cash equivalents | $ 117,689 | $ 130,938 |
Cash and Cash Equivalents (De_2
Cash and Cash Equivalents (Details Textual) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Cash and Cash Equivalents (Textual) | ||
Restricted cash | $ 22,088 |
Trade Accounts Receivable (Deta
Trade Accounts Receivable (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Trade Accounts Receivable [Abstract] | ||
Trade account receivables | $ 247,087 | $ 198,776 |
Expected credit loss | (13,640) | (9,340) |
Trade receivables | $ 247,087 | $ 198,776 |
Trade Accounts Receivable (De_2
Trade Accounts Receivable (Details 1) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Line Items [Line Items] | ||
Estimated total gross carrying amount at default | $ 255,982 | $ 247,279 |
Expected credit loss | $ 22,515 | $ 18,699 |
Not past due [Member] | ||
Statement Line Items [Line Items] | ||
Expected credit loss rate | 2.00% | 1.00% |
Estimated total gross carrying amount at default | $ 207,032 | $ 194,366 |
Expected credit loss | $ 3,950 | $ 1,910 |
14-21 [Member] | ||
Statement Line Items [Line Items] | ||
Expected credit loss rate | 20.00% | 16.00% |
Estimated total gross carrying amount at default | $ 12,098 | $ 13,794 |
Expected credit loss | $ 2,454 | $ 2,150 |
21 – 28 [Member] | ||
Statement Line Items [Line Items] | ||
Expected credit loss rate | 49.00% | 37.00% |
Estimated total gross carrying amount at default | $ 7,045 | $ 5,681 |
Expected credit loss | $ 3,477 | $ 2,108 |
>28 [Member] | ||
Statement Line Items [Line Items] | ||
Expected credit loss rate | 42.00% | 38.00% |
Estimated total gross carrying amount at default | $ 29,807 | $ 33,438 |
Expected credit loss | $ 12,634 | $ 12,531 |
Trade Accounts Receivable (De_3
Trade Accounts Receivable (Details 2) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Trade accounts receivable [Abstract] | ||
Balance | $ (9,340) | $ (4,333) |
Expected credit loss | (22,515) | (18,699) |
Amounts written off | 18,215 | 13,692 |
Balance | $ (13,640) | $ (9,340) |
Inventories and Cost of Sales_2
Inventories and Cost of Sales (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventories and Cost of Sales [Abstract] | ||
Finished goods | $ 224,025 | $ 215,812 |
Packing material | 4,577 | 3,750 |
Cost of inventories | 228,602 | 219,562 |
Merchandise-in-transit | 116,952 | 82,644 |
Inventories | $ 345,554 | $ 302,206 |
Inventories and Cost of Sales_3
Inventories and Cost of Sales (Details Textual) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Inventories and Cost of Sales (Textual) | |||
Cost of inventories recognized as an expense | $ 1,280,829 | $ 958,469 | $ 558,105 |
Write-downs of inventory | $ 14,273 | $ 7,084 | $ 6,214 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses [Abstract] | ||
Printed catalogs | $ 21,692 | $ 19,406 |
Advances to suppliers | 12,973 | 11,471 |
Premiums paid in advance for insurance | 9,628 | 8,948 |
Other | 8,891 | 2,458 |
Total prepaid expenses | $ 53,184 | $ 42,283 |
Other Assets (Details)
Other Assets (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other Assets [Abstract] | ||
Inventory of rewards | $ 13,315 | $ 8,667 |
Transaction costs of the merger | 9,822 | |
Other receivables | 7,259 | 535 |
Rent security deposit | 3,549 | 2,148 |
Restricted cash | 22,088 | |
Total other assets | 33,945 | 33,438 |
Current | 20,574 | 9,202 |
Non-current | 13,371 | 24,236 |
Total other assets | $ 33,945 | $ 33,438 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment, Net [Abstract] | |||
Acquisition cost | $ 305,874 | $ 123,249 | $ 141,064 |
Accumulated depreciation | (98,524) | (80,277) | $ (83,902) |
Total property, plant and equipment, net | $ 207,350 | $ 42,972 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details 1) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | $ 123,249 | $ 141,064 |
Acquisition cost, Additions | 182,625 | 21,268 |
Acquisition cost, Disposals | (39,083) | |
Acquisition cost, Ending balance | 305,874 | 123,249 |
Land [Member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | ||
Acquisition cost, Additions | 47,124 | |
Acquisition cost, Disposals | ||
Acquisition cost, Ending balance | 47,124 | |
Molds [Member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | 37,515 | 29,155 |
Acquisition cost, Additions | 3,754 | 8,360 |
Acquisition cost, Disposals | ||
Acquisition cost, Ending balance | 41,269 | 37,515 |
Vehicles [Member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | 1,602 | 40,349 |
Acquisition cost, Additions | 306 | |
Acquisition cost, Disposals | (39,053) | |
Acquisition cost, Ending balance | 1,602 | 1,602 |
Computers and equipment [member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | 59,640 | 47,628 |
Acquisition cost, Additions | 7,183 | 12,042 |
Acquisition cost, Disposals | (30) | |
Acquisition cost, Ending balance | 66,823 | 59,640 |
Leasehold improvements [Member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | 24,492 | 23,932 |
Acquisition cost, Additions | 5,390 | 560 |
Acquisition cost, Disposals | ||
Acquisition cost, Ending balance | 29,882 | 24,492 |
Construction in progress [member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, Beginning balance | ||
Acquisition cost, Additions | 119,174 | |
Acquisition cost, Disposals | ||
Acquisition cost, Ending balance | $ 119,174 |
Property, Plant and Equipment_5
Property, Plant and Equipment, Net (Details 2) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement Line Items [Line Items] | ||
Accumulated depreciation, Beginning balance | $ (80,277) | $ (83,902) |
Accumulated depreciation, Depreciation expense | (18,247) | (19,318) |
Accumulated depreciation, Eliminated on disposals | 22,943 | |
Accumulated depreciation, Ending balance | (98,524) | (80,277) |
Molds [Member] | ||
Statement Line Items [Line Items] | ||
Accumulated depreciation, Beginning balance | (22,963) | (21,119) |
Accumulated depreciation, Depreciation expense | (2,685) | (1,844) |
Accumulated depreciation, Eliminated on disposals | ||
Accumulated depreciation, Ending balance | (25,648) | (22,963) |
Vehicles [Member] | ||
Statement Line Items [Line Items] | ||
Accumulated depreciation, Beginning balance | (1,446) | (21,214) |
Accumulated depreciation, Depreciation expense | (59) | (3,162) |
Accumulated depreciation, Eliminated on disposals | 22,930 | |
Accumulated depreciation, Ending balance | (1,505) | (1,446) |
Computers and equipment [Member] | ||
Statement Line Items [Line Items] | ||
Accumulated depreciation, Beginning balance | (36,500) | (26,499) |
Accumulated depreciation, Depreciation expense | (11,503) | (10,014) |
Accumulated depreciation, Eliminated on disposals | 13 | |
Accumulated depreciation, Ending balance | (48,003) | (36,500) |
Leasehold improvements [Member] | ||
Statement Line Items [Line Items] | ||
Accumulated depreciation, Beginning balance | (19,368) | (15,070) |
Accumulated depreciation, Depreciation expense | (4,000) | (4,298) |
Accumulated depreciation, Eliminated on disposals | ||
Accumulated depreciation, Ending balance | $ (23,368) | $ (19,368) |
Property, Plant and Equipment_6
Property, Plant and Equipment, Net (Details Textual) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment, Net (Textual) | ||
Capitalized borrowing costs | $ 9,284 | |
Banco Nacional de Mexico, S.A. [Member] | ||
Property, Plant and Equipment, Net (Textual) | ||
Secured line of credit | $ 400,000 |
Goodwill (Details)
Goodwill (Details) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Abstract] | ||
Goodwill cost, Beginning | $ 348,441 | $ 348,441 |
Goodwill additions | ||
Goodwill disposals | ||
Goodwill cost, Ending | $ 348,441 | $ 348,441 |
Goodwill (Details 1)
Goodwill (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Abstract] | ||
Discount rate | 12.40% | 15.70% |
Terminal Value Growth Rate | 3.00% | 3.00% |
Budgeted EBITDA Growth Rate | 14.00% | 14.80% |
Goodwill (Details Textual)
Goodwill (Details Textual) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill (Textual) | |
Weighted-average cost of capital and a market interest rate | 7.20% |
Description of budgeted EBITDA growth rate | Budgeted EBITDA was estimated taking into account past experience and a revenue growth rate projected taking into account the average growth levels experienced over the past 5 years and the estimated sales volume and price growth for the next five years. It was assumed that the sales price would increase in line with forecast inflation over the next five years. |
Estimates terminal growth, Period | 5 years |
Intangible Assets Net (Details)
Intangible Assets Net (Details) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement Line Items [Line Items] | ||
Acquisition cost, beginning balance | $ 312,099 | $ 322,072 |
Additions | 5,915 | 18,272 |
Disposals | ||
Acquisition cost, ending period | 310,965 | 312,099 |
Accumulated amortization, beginning balance | (28,245) | (21,601) |
Depreciation expense | (7,049) | (6,644) |
Eliminated disposals | ||
Accumulated amortization, ending period | (35,294) | (28,245) |
Brand names [Member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, beginning balance | 253,000 | 253,000 |
Additions | ||
Disposals | ||
Acquisition cost, ending period | 253,000 | 253,000 |
Customer relationships [Member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, beginning balance | 64,000 | 64,000 |
Additions | ||
Disposals | ||
Acquisition cost, ending period | 64,000 | 64,000 |
Accumulated amortization, beginning balance | (24,533) | (18,133) |
Depreciation expense | (6,400) | (6,400) |
Eliminated disposals | ||
Accumulated amortization, ending period | (30,933) | (24,533) |
Computer software [member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, beginning balance | 17,135 | |
Additions | 4,516 | 17,135 |
Disposals | ||
Acquisition cost, ending period | 21,651 | 17,135 |
Accumulated amortization, beginning balance | ||
Depreciation expense | (421) | |
Eliminated disposals | ||
Accumulated amortization, ending period | (421) | |
Brands and logo righs [member] | ||
Statement Line Items [Line Items] | ||
Acquisition cost, beginning balance | 6,209 | 5,072 |
Additions | 1,399 | 1,137 |
Disposals | ||
Acquisition cost, ending period | 7,608 | 6,209 |
Accumulated amortization, beginning balance | (3,712) | (3,468) |
Depreciation expense | (228) | (244) |
Eliminated disposals | ||
Accumulated amortization, ending period | $ (3,940) | $ (3,712) |
Intangible Assets Net (Details
Intangible Assets Net (Details Textual) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets Net (Textual) | |||
Carrying amount of intangible assets | $ 310,965 | $ 312,099 | $ 322,072 |
Top of range [member] | |||
Intangible Assets Net (Textual) | |||
Amortized useful lives | 30 Years | ||
Top of range [member] | |||
Intangible Assets Net (Textual) | |||
Amortized useful lives | 10 Years | ||
Brand [Member] | |||
Intangible Assets Net (Textual) | |||
Carrying amount of intangible assets | $ 253,000 | 253,000 | |
Customer relationships [Member] | |||
Intangible Assets Net (Textual) | |||
Carrying amount of intangible assets | 33,067 | 39,467 | |
Brands and logos [Member] | |||
Intangible Assets Net (Textual) | |||
Carrying amount of intangible assets | $ 3,668 | $ 2,497 |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019MXN ($) | |
Leases [Abstract] | |
Cost, beginning | |
Additions | |
Disposals | |
Cost, ending | 23,811 |
Accumulated depreciation, beginning | |
Additions | (13,098) |
Disposals | |
Accumulated depreciation, ending | $ (13,098) |
Leases (Details 1)
Leases (Details 1) $ in Thousands | Dec. 31, 2019MXN ($) |
Statement Line Items [Line Items] | |
Total future minimum lease payments | $ 27,419 |
2020 [Member] | |
Statement Line Items [Line Items] | |
Total future minimum lease payments | 15,463 |
2021 [Member] | |
Statement Line Items [Line Items] | |
Total future minimum lease payments | 8,617 |
2022 [Member] | |
Statement Line Items [Line Items] | |
Total future minimum lease payments | 3,310 |
2023 [Member] | |
Statement Line Items [Line Items] | |
Total future minimum lease payments | $ 29 |
Leases (Details Textual)
Leases (Details Textual) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Leases (Textual) | |||
Rental expense | $ 11,605 | $ 6,100 | $ 11,794 |
Lease liabilities | 24,584 | ||
Interest expense generated from the lease liability | $ 3,765 | ||
Qualified employees expiration dates | Apr. 30, 2023 |
Borrowings (Details)
Borrowings (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Borrowings [Abstract] | ||
Line of credit with MCRF P, S.A. de C.V. SOFOM, E.N.R. of Ps. 600,000, bearing interest at a fixed rate of 13.10%. This line of credit is payable on a quarterly basis starting May 15, 2019 through May 15, 2023. BLSM Latino América Servicios, S.A. de C.V., is a guarantor in this loan. | $ 516,597 | $ 592,252 |
Secured line of credit with Banamex, for up to Ps. 400,000, bearing interest at the TIIE rate plus 317 basis point. Withdrawals from this line of credit can be made during a 10-month period starting December 15, 2018, and are payable on a quarterly basis from December 17, 2019 up to December 18, 2025. | 135,209 | 50,000 |
Unsecured line of credit with Banamex, for up to Ps. 80,000, bearing interest at the TIIE rate plus 275 basis points (renewable on a yearly basis). | 15,000 | |
Unsecured line of credit with Banamex, for up to US$ 1,800, bearing interest at LIBOR rate plus 300 basis point. Maturity was on March 31, 2018. | ||
Interest payable | 10,907 | 11,227 |
Total debt | 148,070 | 90,691 |
Less: Current portion | 148,070 | 90,691 |
Long-term debt | $ 529,643 | $ 562,788 |
Borrowings (Details 1)
Borrowings (Details 1) - MXN ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||||
Changes that do not represent cash flows | |||||||
Interest expense | $ 85,429 | $ 86,343 | $ 118,205 | ||||
Derivative financial instruments [Member] | |||||||
Statement Line Items [Line Items] | |||||||
Balance | 16,629 | [1] | |||||
Changes that represent cash flows | |||||||
Loans obtained | |||||||
Restricted cash | |||||||
Payments | |||||||
Commissions and debt issuance cost | |||||||
Changes that do not represent cash flows | |||||||
Interest expense | |||||||
Valuation effects of derivative financial instruments | 15,680 | 16,629 | |||||
Amortization of commissions and debt issuance cost | |||||||
Balance | 32,309 | 16,629 | [1] | ||||
Long-term debt [member] | |||||||
Statement Line Items [Line Items] | |||||||
Balance | [1] | 620,164 | 607,250 | ||||
Changes that represent cash flows | |||||||
Loans obtained | 104,500 | 50,667 | |||||
Restricted cash | 22,940 | (2,001) | |||||
Payments | (82,996) | (36,829) | |||||
Commissions and debt issuance cost | (667) | ||||||
Changes that do not represent cash flows | |||||||
Interest expense | |||||||
Valuation effects of derivative financial instruments | |||||||
Borrowing costs capitalized on PP&E | |||||||
Amortization of commissions and debt issuance cost | 2,198 | 1,744 | |||||
Balance | 666,806 | 620,164 | [1] | 607,250 | [1] | ||
Interest payable [member] | |||||||
Statement Line Items [Line Items] | |||||||
Balance | [1] | 11,227 | 10,043 | ||||
Changes that represent cash flows | |||||||
Loans obtained | |||||||
Restricted cash | |||||||
Payments | (76,465) | (85,159) | |||||
Commissions and debt issuance cost | |||||||
Changes that do not represent cash flows | |||||||
Interest expense | 85,429 | 86,343 | |||||
Valuation effects of derivative financial instruments | (9,284) | ||||||
Borrowing costs capitalized on PP&E | |||||||
Amortization of commissions and debt issuance cost | |||||||
Balance | $ 10,907 | $ 11,227 | [1] | $ 10,043 | [1] | ||
[1] | Balances in column "Long-term debt", are presented net of restricted cash balances as of December 31, 2018. See Note 5 for details about restricted cash. |
Borrowings (Details 2)
Borrowings (Details 2) $ in Thousands | 12 Months Ended |
Dec. 31, 2019MXN ($) | |
Borrowings [Abstract] | |
2021 | $ 185,447 |
2022 | 169,312 |
2023 | 245,343 |
2024 | 23,611 |
2025 | 54,000 |
Total | $ 677,713 |
Borrowings (Details Textual)
Borrowings (Details Textual) $ in Thousands | 12 Months Ended |
Dec. 31, 2019MXN ($) | |
Borrowings (Textual) | |
Fair value of borrowings | $ 679,188 |
Description of loans | The loans with financial institutions referred to above contain restrictive covenants, which require the Group (i) to continue to perform the same type of activities and businesses, maintaining their legal existence, (ii) complying with all applicable laws, (ii) having its combined financial statements audited by internationally recognized auditors authorized by the financial institution, (iii) paying all applicable taxes, (iv) obtaining all licenses and permits required by government to operate, (v) keeping assets and businesses insured against loss or damage, (vi) not to obtain additional loans exceeding Ps. 100,000 or 60% of earnings before interest, taxes, depreciation and amortization (EBITDA) of the immediately preceding year, (vii) not to incur liens on the Group's assets, (viii) not to give or sell any rights of financial documents and (ix) not to pay dividends in an amount greater than Ps. 200,000; except in 2019 when it was permited to pay up to Ps. 350,000. It is important to mention that additional debt may be obtained, or dividends may be paid in amounts greater than those stipulated in the contract if prior consent from such financial institution is obtained. |
Line of credit agreement, description | The line of credit agreement with MCRF P, S.A. de C.V. SOFOM, E.N.R. contains the following financial covenants: a) To maintain a leverage ratio equal to or lower than 3.0 during 2018; and 2.5 from January 1, 2019, until the contract expiration date. b) To maintain a coverage interest ratio equal to or greater than 2.5 during all term of the contract. c) Not to maintain the equity book value lower than Ps. 100,000. d) To maintain a minimum cash and cash equivalents balance of Ps. 40,000 The line of credit agreement with Banamex contains the following financial covenants: a) To maintain a short-term debt coverage ratio not lower than 1.5. b) To maintain a total debt coverage ratio not greater than 3.0. c) To maintain a leverage ratio not greater than 7.0. d) To maintain a minimum cash and cash equivalents balance of Ps. 40,000 |
MCRF P, S.A. de C.V. SOFOM, E.N.R. [Member] | |
Borrowings (Textual) | |
Credit amount | $ 600,000 |
Interest rate | 13.10% |
Banamex [Member] | |
Borrowings (Textual) | |
Credit amount | $ 400,000 |
Unsecured line of credit with Banamex [Member] | |
Borrowings (Textual) | |
Credit amount | 80,000 |
Unsecured line of credit with Banamex one [Member] | |
Borrowings (Textual) | |
Credit amount | $ 1,800 |
Income Taxes (Details)
Income Taxes (Details) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Abstract] | |||
Current tax | $ 229,900 | $ 158,545 | $ 92,209 |
Deferred tax (benefit) expense | 2,792 | (8,366) | 4,742 |
Income tax recognized in profit or loss | $ 232,692 | $ 150,179 | $ 96,951 |
Income Taxes (Details 1)
Income Taxes (Details 1) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Abstract] | |||
Profit before income tax | $ 704,834 | $ 449,446 | $ 304,625 |
Tax rate | 30.00% | 30.00% | 30.00% |
Income tax expense calculated at 30% statutory tax rate | $ 211,450 | $ 134,834 | $ 91,388 |
Inflation effects, net | 6,278 | 6,408 | 4,832 |
Non-deductible expenses | 3,202 | 3,217 | 2,340 |
Other items, net | 11,762 | 5,720 | (1,609) |
Total income tax expense | $ 232,692 | $ 150,179 | $ 96,951 |
Income Taxes (Details 2)
Income Taxes (Details 2) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Expected credit loss [Member] | ||
Deferred tax assets: | ||
Balance | $ 2,802 | $ 2,499 |
Recognized in profit or loss | 2,415 | 303 |
Recognized in OCI | ||
Equity | ||
Balance | 5,217 | 2,802 |
Accruals and provisions [Member] | ||
Deferred tax assets: | ||
Balance | 26,632 | 19,865 |
Recognized in profit or loss | (668) | 6,838 |
Recognized in OCI | (26) | (71) |
Equity | ||
Balance | 25,938 | 26,632 |
Derivative financial instruments [Member] | ||
Deferred tax assets: | ||
Balance | 4,989 | |
Recognized in profit or loss | (4,989) | 4,989 |
Recognized in OCI | ||
Equity | ||
Balance | 4,989 | |
Property, Plant and equipment [Member] | ||
Deferred tax assets: | ||
Balance | 74 | 2,857 |
Recognized in profit or loss | 4,505 | (2,783) |
Recognized in OCI | ||
Equity | ||
Balance | 4,579 | 74 |
Intangible assets [Member] | ||
Deferred tax liabilities: | ||
Balance | (87,740) | (89,660) |
Recognized in profit or loss | 1,920 | 1,920 |
Recognized in OCI | ||
Equity | ||
Balance | (85,820) | (87,740) |
Inventories [Member] | ||
Deferred tax liabilities: | ||
Balance | (6,192) | (4,189) |
Recognized in profit or loss | (3,161) | (2,003) |
Recognized in OCI | ||
Equity | ||
Balance | (9,353) | (6,192) |
Derivative financial instruments [Member] | ||
Deferred tax liabilities: | ||
Balance | ||
Recognized in profit or loss | (89) | |
Recognized in OCI | ||
Equity | ||
Balance | (89) | |
Other assets and prepaid expenses [Member] | ||
Deferred tax liabilities: | ||
Balance | (11,192) | (10,294) |
Recognized in profit or loss | (2,699) | (898) |
Recognized in OCI | ||
Equity | ||
Balance | (13,891) | (11,192) |
Net deferred tax liability [Member] | ||
Deferred tax liabilities: | ||
Balance | (70,627) | (78,922) |
Recognized in profit or loss | (2,766) | 8,366 |
Recognized in OCI | (26) | (71) |
Equity | ||
Balance | $ (73,419) | $ (70,627) |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | |||
Tax rate | 30.00% | 30.00% | 30.00% |
Provisions (Details)
Provisions (Details) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement Line Items [Line Items] | ||
Beginning balance | $ 38,986 | $ 42,482 |
Increases | 438,017 | 334,840 |
Payments | (430,314) | (338,336) |
Ending balance | 46,689 | 38,986 |
Commissions, promotions and other [Member] | ||
Statement Line Items [Line Items] | ||
Beginning balance | 35,805 | 41,324 |
Increases | 345,148 | 247,282 |
Payments | (348,174) | (252,801) |
Ending balance | 32,779 | 35,805 |
Bonuses and other employee benefits [Member] | ||
Statement Line Items [Line Items] | ||
Beginning balance | 1,958 | 1,158 |
Increases | 90,843 | 56,854 |
Payments | (79,445) | (56,054) |
Ending balance | 13,356 | 1,958 |
Professional services fees [Member] | ||
Statement Line Items [Line Items] | ||
Beginning balance | 1,223 | |
Increases | 2,026 | 30,704 |
Payments | (2,695) | (29,481) |
Ending balance | $ 554 | $ 1,223 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - MXN ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Statement Line Items [Line Items] | |||
Total Liabilities | $ 32,309 | $ 16,629 | |
Non-current liability | 16,754 | 8,120 | |
Total current liability | 15,555 | 8,509 | |
Interest rate swap [Member] | |||
Statement Line Items [Line Items] | |||
Notional amount | 50,000 | 50,000 | |
Fair Value | $ 19,614 | $ 8,364 | |
Contract date | Nov. 15, 2018 | Nov. 15, 2018 | |
Maturity date | 12/15/2023 | 12/15/2023 | |
Rate received | [1] | TIIE 28 days | TIIE 28 days |
Rate paid | 8.33% | 8.33% | |
Forwards US Dollar-Mexican Peso [Member] | |||
Statement Line Items [Line Items] | |||
Maturity date | Weekly, through October 2020 | Weekly, through June 2019 | |
Forwards US Dollar-Mexican Peso [Member] | USD [Member] | |||
Statement Line Items [Line Items] | |||
Notional amount | $ 47,690 | $ 24,414 | |
Fair Value | $ 12,695 | $ 8,265 | |
Average Strike | $ 19.61 | $ 20.06 | |
[1] | As of December 31, 2018, the 28-day TIIE rate was 8.5956%. |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details 1) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Interest rate swap contract [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | $ 50,000 | $ 50,000 |
Interest rate swap contract [Member] | Not later than one year [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 1,458 | |
Interest rate swap contract [Member] | Later than one year and not later than two years [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 5,833 | |
Interest rate swap contract [Member] | Later than two years and not later than three years [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 5,833 | |
Interest rate swap contract [Member] | Later than three years and not later than four years [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 5,833 | |
Interest rate swap contract [Member] | 2024 and thereafter [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 31,043 | |
Currency swap contract [Member] | USD [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 47,690 | $ 24,414 |
Currency swap contract [Member] | Not later than one year [Member] | USD [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | 12,695 | |
Currency swap contract [Member] | Later than one year and not later than two years [Member] | USD [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | ||
Currency swap contract [Member] | Later than two years and not later than three years [Member] | USD [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | ||
Currency swap contract [Member] | Later than three years and not later than four years [Member] | USD [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount | ||
Currency swap contract [Member] | 2024 and thereafter [Member] | USD [Member] | ||
Statement Line Items [Line Items] | ||
Notional amount |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details Textual) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Financial Instruments (Textual) | ||
TIIE rate | 7.55% | 8.5956% |
Loss of derivative financial instruments | $ (15,680) | $ (16,629) |
Employee Benefits (Details)
Employee Benefits (Details) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Employee Benefits Details Abstract | ||
Balance | $ 1,355 | $ 1,283 |
Included in profit or loss: | ||
Current service cost | 424 | 441 |
Interest cost | 123 | 92 |
Net cost of the period | 547 | 533 |
Included in OCI | ||
Actuarial loss (gain) | (102) | (165) |
Income tax effect | (26) | (71) |
Other | ||
Benefits paid | (196) | (225) |
Balance | $ 1,630 | $ 1,355 |
Employee Benefits (Details 1)
Employee Benefits (Details 1) - Employees / Interger | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Financial: | |||
Future salary growth | 6.60% | 4.80% | 4.50% |
Discount rate | 7.10% | 9.20% | 7.40% |
Demographic: | |||
Number of employees | 654 | 684 | 622 |
Age average | 35 years | 35 years | 36 years |
Longevity average | 3 years | 3 years | 2 years |
Employee Benefits (Details 2)
Employee Benefits (Details 2) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Employee Benefits Detail 2Abstract | ||
+0.50% | $ (127) | $ (93) |
-0.50% | $ 115 | $ 103 |
Financial Instruments (Details)
Financial Instruments (Details) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial assets | ||
Trade receivables | $ 247,087 | $ 198,776 |
Receivables, Payables, and Loans [member] | ||
Financial assets | ||
Trade receivables | 266,938 | 198,776 |
Other receivables | 5,867 | 536 |
Total | 272,805 | 199,312 |
Financial liabilities | ||
Debt | 677,713 | 653,479 |
Accounts payable | 529,348 | 445,241 |
Derivative financial instruments | 32,309 | 16,629 |
Total | 1,239,370 | 1,115,349 |
Fair value through profit or loss [member] | ||
Financial assets | ||
Trade receivables | ||
Other receivables | ||
Total | ||
Financial liabilities | ||
Debt | ||
Accounts payable | ||
Derivative financial instruments | 32,309 | 16,629 |
Total | 32,309 | 16,629 |
Fair value hierarchy level [member] | ||
Financial assets | ||
Trade receivables | ||
Other receivables | ||
Total | ||
Financial liabilities | ||
Debt | ||
Accounts payable | ||
Derivative financial instruments | 2 | 2 |
Total |
Financial Instruments (Details
Financial Instruments (Details 1) - MXN ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Line Items [Line Items] | |||
Assets | $ 1,789,726 | $ 1,457,598 | |
Liabilities | (1,515,244) | (1,377,334) | |
Net position | 472,142 | 299,267 | $ 207,674 |
US [Member] | |||
Statement Line Items [Line Items] | |||
Assets | 1,331 | 1,294 | |
Liabilities | (16,095) | (12,075) | |
Net position | $ (14,764) | $ (10,781) | |
Closing exchange rate of the year | $ 18.8452 | $ 19.6566 |
Financial Instruments (Detail_2
Financial Instruments (Details 2) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Line Items [Line Items] | |||
Profit | $ 472,142 | $ 299,267 | $ 207,674 |
Exchange rate sensitivity analysis [member] | |||
Statement Line Items [Line Items] | |||
Profit | $ 27,823 |
Financial Instruments (Detail_3
Financial Instruments (Details 3) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Instruments [Abstract] | ||
Amount used | $ 656,459 | $ 650,000 |
Amount not used | 260,500 | 350,000 |
Total credit lines | $ 916,959 | $ 1,000,000 |
Financial Instruments (Detail_4
Financial Instruments (Details 4) - MXN ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Line Items [Line Items] | ||
Accounts payable to suppliers | $ 12,973 | $ 11,471 |
Group [member] | ||
Statement Line Items [Line Items] | ||
Accounts payable to suppliers | 529,348 | 445,241 |
Derivative financial instruments | 32,309 | 16,629 |
Long-term debt | 671,459 | 640,031 |
Total undiscounted cash flows | 1,233,116 | 1,101,901 |
Group [member] | Less than 1 year [member] | ||
Statement Line Items [Line Items] | ||
Accounts payable to suppliers | 529,348 | 445,241 |
Derivative financial instruments | 15,555 | 8,509 |
Long-term debt | 137,163 | 78,750 |
Total undiscounted cash flows | 682,066 | 532,500 |
Group [member] | less than 5 years [member] | ||
Statement Line Items [Line Items] | ||
Accounts payable to suppliers | ||
Derivative financial instruments | 16,754 | 8,120 |
Long-term debt | 484,903 | 536,073 |
Total undiscounted cash flows | 501,657 | 544,193 |
Group [member] | Over 5 years [mermber] | ||
Statement Line Items [Line Items] | ||
Accounts payable to suppliers | ||
Derivative financial instruments | ||
Long-term debt | 49,393 | 25,208 |
Total undiscounted cash flows | $ 49,393 | $ 25,208 |
Financial Instruments (Detail_5
Financial Instruments (Details Textual) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Financial Instruments [Abstract] | ||
Effective interest method | $ 679,188 | |
Exchange rate sensitivity analysis, description | The Group is mainly exposed to variations in the Mexican Peso / the U.S. Dollar exchange rate. For sensitivity analysis purposes, the Group has determined a 10 percent increase and decrease in Ps. currency units against the U.S. dollar ("relevant currency"). 10 percent is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated financial assets/liabilities and adjusts their translation at the year-end for a 10 percent change in foreign currency rates. A positive number below indicates an increase in profit where currency units strengthen 10 percent against the relevant currency. For a 10 percent weakening of currency units against the relevant currency, there would be a comparable impact on the profit, and the balances below would be negative. | |
Changes in interest rate sensitivity analysis | $ 1,352 | |
Credit risk management, percent | 10.00% | |
Amount not used | $ 260,500 | $ 350,000 |
Net Parent Investment (Details)
Net Parent Investment (Details) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net Parent Investment Details Abstract | ||
Capital stock | $ 55,985 | $ 55,985 |
Retained earnings | 218,376 | 24,234 |
Other comprehensive income | 121 | 45 |
Total | $ 274,482 | $ 80,264 |
Net Parent Investment (Details
Net Parent Investment (Details 1) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Betterware de MexicoS.A. de C.V. [Member] | |||
Statement Line Items [Line Items] | |||
Number of shares of parent investment | 5,037,939 | 5,037,939 | 4,791,193 |
Betterware de MexicoS.A. de C.V. [Member] | Fixed Capital [Member] | |||
Statement Line Items [Line Items] | |||
Number of shares of parent investment | 5,000 | 5,000 | 5,000 |
Betterware de MexicoS.A. de C.V. [Member] | Variable Capital [Member] | |||
Statement Line Items [Line Items] | |||
Number of shares of parent investment | 5,032,939 | 5,032,939 | 4,786,193 |
Betterware de America S.A. de C.V.[Member] | |||
Statement Line Items [Line Items] | |||
Number of shares of parent investment | 3,659,378 | 3,659,378 | 3,480,150 |
Betterware de America S.A. de C.V.[Member] | Fixed Capital [Member] | |||
Statement Line Items [Line Items] | |||
Number of shares of parent investment | 5,000 | 5,000 | 5,000 |
Betterware de America S.A. de C.V.[Member] | Variable Capital [Member] | |||
Statement Line Items [Line Items] | |||
Number of shares of parent investment | 3,654,378 | 3,654,378 | 3,475,150 |
Net Parent Investment (Detail_2
Net Parent Investment (Details Textual) - MXN ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||||
Dec. 05, 2018 | Feb. 13, 2018 | Dec. 04, 2017 | Jul. 28, 2017 | Dec. 31, 2019 | Oct. 08, 2019 | May 29, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 04, 2018 | Nov. 28, 2018 | |
Statement Line Items [Line Items] | |||||||||||
legal reserve | $ 10,370 | $ 8,571 | |||||||||
Statutory legal reserve, description | The Mexican General Corporate Law requires that at least 5% of net income of the year be transferred to the legal reserve until the reserve equals 20% of common stock at par value (historical pesos). | ||||||||||
Ordinary General Shareholders' Meeting [Member] | Capital stock [Member] | Betterware de MexicoS.A. de C.V. [Member] | |||||||||||
Statement Line Items [Line Items] | |||||||||||
Reduced capital stock | $ 97,921 | ||||||||||
Increased decrease in stock | $ 20 | ||||||||||
Ordinary General Shareholders' Meeting [Member] | Capital stock [Member] | BLSM [Member] | |||||||||||
Statement Line Items [Line Items] | |||||||||||
Increased decrease in stock | $ 20 | $ 15 | |||||||||
Ordinary General Shareholders' Meeting [Member] | Retained earnings [member] | |||||||||||
Statement Line Items [Line Items] | |||||||||||
Divident payment | 79,080 | $ 150,000 | $ 128,000 | $ 110,000 | $ 111,000 | ||||||
Paid equity interest | $ 46,696 | $ 91,583 | $ 78,151 | $ 64,955 | $ 45,045 | $ 65,545 | |||||
Extraordinary General Shareholder' Meeting [Member] | Capital stock [Member] | Betterware de MexicoS.A. de C.V. [Member] | |||||||||||
Statement Line Items [Line Items] | |||||||||||
Increased decrease in stock | $ 87,317 | ||||||||||
Extraordinary General Shareholder' Meeting [Member] | Retained earnings [member] | Betterware de MexicoS.A. de C.V. [Member] | |||||||||||
Statement Line Items [Line Items] | |||||||||||
Increased decrease in stock | 174,801 | ||||||||||
Extraordinary General Shareholder' Meeting [Member] | Stockholders' equity [member] | Betterware de MexicoS.A. de C.V. [Member] | |||||||||||
Statement Line Items [Line Items] | |||||||||||
Increased decrease in stock | $ 87,484 |
Earnings Per Share (Details)
Earnings Per Share (Details) - MXN ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net income (in thousands of pesos) | |||
Attributable to shareholders | $ 472,218 | $ 299,267 | $ 207,674 |
Shares (in thousands of shares) | |||
Weighted average of outstanding shares | 30,200 | 30,200 | 30,200 |
Basic and diluted earnings per share (pesos per share) | $ 15.63 | $ 9.91 | $ 6.88 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share (Textual) | |
Transaction, description | As a result of the transaction between Betterware and DD3 and the subscription and payment of 2,040,000 Betterware's shares in Nasdaq, which closed on March 13, 2020. |
Subsidiary, description | As of the closing date, BLSM is now a wholly-owned subsidiary of Betterware, who will begin to prepare consolidated financial statements as of such date. Betterware's original shareholders maintained an ownership of 87.7% of the total outstanding shares, DD3's shareholders obtained a 6.4% ownership interest and investors under the Nasdaq listing a 5.9% ownership interest. After the closing date, Betterware has 34,451,020 shares issued and outstanding. |
Shares attributable to original shareholders, description | 87.7% of the total outstanding shares of 34,451,020, which is equal to 30,199,945 shares without giving effect to the DD3 shareholders' capital contribution and the proceeds from the Nasdaq listing. The effects of the DD3 transaction, including the related share issuance that resulted in DD3's shareholders obtaining a 6.4% ownership interest and the capital contribution of US$7,519 (Ps. 181,734) |
Related Parties Balances and _3
Related Parties Balances and Transactions (Details) - MXN ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Statement Line Items [Line Items] | ||||
Interest income | $ 7,028 | $ 6,707 | $ 20,754 | |
Strevo Holding, S.A. de C.V [Member] | ||||
Statement Line Items [Line Items] | ||||
Interest income | [1] | 18,650 | ||
Betterware Controladora, S.A. de C.V [Member] | ||||
Statement Line Items [Line Items] | ||||
Interest income | [1] | $ 18,966 | ||
[1] | Merged with the Group on July 28, 2017 |
Related Parties Balances and _4
Related Parties Balances and Transactions (Details 1) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Line Items [Line Items] | |||
Trade accounts receivable from related parties | $ (610) | $ 22 | $ 135 |
Fundacion Betterware., A.C. [Member] | |||
Statement Line Items [Line Items] | |||
Trade accounts receivable from related parties | $ 610 |
Related Parties Balances and _5
Related Parties Balances and Transactions (Details Textual) - MXN ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Related Parties Balances and Transactions (Textual) | ||
Short-term employee benefits | $ 34,540 | $ 34,500 |
Long-term employee benefits |
Revenue and Operating Expense_2
Revenue and Operating Expenses (Details) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | $ 3,084,662 | $ 2,316,716 | $ 1,449,705 |
Kitchen and food preservation [Member] | |||
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | 1,229,148 | 820,995 | 484,044 |
Home solutions [Member] | |||
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | 529,551 | 360,595 | 223,383 |
Bathroom [Member] | |||
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | 441,093 | 376,262 | 250,741 |
Laundry & Cleaning [Member] | |||
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | 318,782 | 308,359 | 186,708 |
Tech & mobility [Member] | |||
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | 290,366 | 196,439 | 105,957 |
Bedroom [Member] | |||
Statement Line Items [Line Items] | |||
Revenue recognized perr home product | $ 275,722 | $ 254,066 | $ 198,872 |
Revenue and Operating Expense_3
Revenue and Operating Expenses (Details 1) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Line Items [Line Items] | |||
Operating expenses by nature | $ 991,588 | $ 20,269 | $ 560,738 |
Cost of personnel services [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 423,956 | 332,878 | 92,931 |
Sales catalog [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 128,687 | 102,397 | 46,976 |
Distribution costs [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 121,155 | 25,960 | 35,253 |
Packing materials [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 58,361 | 24,492 | 18,699 |
Depreciation and amortization [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 38,394 | 17,254 | 30,934 |
Events, marketing and advertising [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 37,848 | 8,335 | 50,122 |
Promotions for the sales force [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 26,311 | 806,500 | 227,597 |
Impairment loss on trade accounts receivables [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 22,512 | 66,562 | 63,283 |
Travel expenses [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 18,835 | 27,258 | 24,209 |
Rent expense, operating leases [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 17,663 | 21,513 | 2,417 |
Bank fees [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 15,436 | 16,243 | 14,974 |
Commissions and professional fees [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | 13,577 | 11,794 | 24,174 |
Other [Member] | |||
Statement Line Items [Line Items] | |||
Operating expenses by nature | $ 68,853 | $ 8,444 | $ 52,270 |
Commitments (Details)
Commitments (Details) - MXN ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments (Textual) | |||
Rental expense | $ 11,605 | $ 6,100 | $ 11,794 |
Secured line of credit | (135,209) | $ (50,000) | |
Banamex [member] | |||
Commitments (Textual) | |||
Secured line of credit | $ 400 |
Contingencies (Details)
Contingencies (Details) $ in Thousands | May 02, 2017MXN ($) |
Employee benefits [Abstract] | |
Contingent liability | $ 14,010 |
Subsequent events (Details)
Subsequent events (Details) $ in Thousands, $ in Thousands | Mar. 13, 2020MXN ($) | Mar. 13, 2020USD ($) | Mar. 10, 2020shares | Jan. 30, 2020 | Apr. 13, 2020MXN ($) | Mar. 27, 2020MXN ($) | Mar. 25, 2020MXN ($) | Mar. 13, 2020USD ($) | Jan. 10, 2020MXN ($) | Dec. 31, 2019shares |
Subsequent events (Textual) | ||||||||||
Stock issued | shares | 34,451,020 | |||||||||
Stock outstanding | shares | 34,451,020 | |||||||||
Non-adjusting events after reporting period [Member] | ||||||||||
Subsequent events (Textual) | ||||||||||
Dividends payment from retained earnings | $ 70,000 | |||||||||
Equity interest | $ 42,739 | |||||||||
Interest rate of the secured line of credit related, description | The Group renegotiated the interest rate of the secured line of credit with Banamex, which changed from TIIE rate plus 317 basis points to TIIE rate plus 260 basis points. In addition, withdrawals from this line of credit were extended to August 2020, and are payable on a quarterly basis from September 2020 up to December 18, 2025. | |||||||||
Issuance of shares under initial public offering | shares | 2,040,000 | |||||||||
Ownership interest percentage, description | Betterware's original shareholders maintained an ownership of 87.7% of the total outstanding shares, DD3's shareholders obtained a 6.4% ownership interest and investors under the Nasdaq listing a 5.9% ownership interest. | |||||||||
Withdrawal of secured line of credit | $ 100,000 | $ 74,000 | ||||||||
Prepayment to line of credit | $ 258,750 | |||||||||
Cash obtained | $ 498,445 | |||||||||
Net cash proceeds | $ 181,734 | |||||||||
Non-adjusting events after reporting period [Member] | USD [Member] | ||||||||||
Subsequent events (Textual) | ||||||||||
Cash obtained | $ 22,767 | |||||||||
Net cash proceeds | $ 7,519 |