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Equity Accounted Investees | 12 Months Ended
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Dec. 31, 2019
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Equity Accounted Investees | Note 10. Equity Accounted Investees As of December 31, 2019 and 2018, Company’s equity accounted investees are as follows:
|  |  |  |  |  | Ownership Percentage |  |  | Carrying Value |
Investee |  | Principal Activity |  | Place of Incorporation |  | December 31, 2019 |  |  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Heineken (1) (2) |  | Beverages |  | The Netherlands |  |  | 14.8 | % |  |  | 14.8 | % |  | Ps. | 83,789 |  |  | Ps. | 83,461 |
Coca-Cola FEMSA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Joint ventures: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compañía Panameña de Bebidas, S.A.P.I. de C.V. |  | Beverages |  | Mexico |  |  | 50.0 | % |  |  | 50.0 | % |  |  | 486 |  |  |  | 1,550 |
Dispensadoras de Café, S.A.P.I. de C.V. |  | Services |  | Mexico |  |  | 50.0 | % |  |  | 50.0 | % |  |  | 172 |  |  |  | 162 |
Fountain Agua Mineral, L.T.D.A. |  | Beverages |  | Brazil |  |  | 50.0 | % |  |  | 50.0 | % |  |  | 851 |  |  |  | 826 |
Associates : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Promotora Industrial Azucarera, S.A. de C.V. (“PIASA”) |  | Sugar production |  | Mexico |  |  | 36.4 | % |  |  | 36.4 | % |  |  | 3,274 |  |  |  | 3,120 |
Industria Envasadora de Querétaro, S.A. de C.V. (“IEQSA”) |  | Canned bottling |  | Mexico |  |  | 26.5 | % |  |  | 26.5 | % |  |  | 194 |  |  |  | 179 |
Industria Mexicana de Reciclaje, S.A. de C.V. (“IMER”) |  | Recycling |  | Mexico |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 121 |  |  |  | 129 |
Jugos del Valle, S.A.P.I. de C.V. |  | Beverages |  | Mexico |  |  | 28.8 | % |  |  | 26.3 | % |  |  | 1,929 |  |  |  | 1,571 |
Leao Alimentos e Bebidas, L.T.D.A. |  | Beverages |  | Brazil |  |  | 24.7 | % |  |  | 24.7 | % |  |  | 1,931 |  |  |  | 2,084 |
Other investments in Coca-Cola FEMSA’s companies |  | Various |  | Various |  |  | Various |  |  |  | Various |  |  |  | 793 |  |  |  | 897 |
FEMSA Comercio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Raizen Conveniências (4) |  | Proximity |  | Brazil |  |  | 50.0 | % |  |  | — |  |  |  | 3,410 |  |  |  | — |
Other investments (1) (3) |  | Various |  | Various |  |  | Various |  |  |  | Various |  |  |  | 520 |  |  |  | 336 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. | 97,470 |  |  | Ps. | 94,315 |
(1) | Associate.
(2) | As of December 31, 2019 and 2018 comprised of 8.63% of Heineken, N.V. and 12.26% of Heineken Holding, N.V., which represents an economic interest of 14.76% in Heineken Group. The Company has significant influence, mainly, due to the fact that it participates in the Board of Directors of Heineken Holding, N.V. and the Supervisory Board of Heineken N.V.; and for the material transactions between the Company and Heineken Group.
(3) | Joint ventures.
(4) | On November 1, 2019, FEMSA Comercio – Proximity Division closed the acquisition of a 50% interest of Raízen Conveniências. The consideration amounted to R$ 357 million paid in cash and R$367 through notes payable, and such amounts include FEMSA Comercio’s prorrata portion of the investment requirements for the initial period of operations of the joint venture. Raízen is a company formed in 2010 from Cosan and Royal Dutch Shell in Brazil. The Joint Venture between FEMSA Comercio – Proximity Division and Raízen is limited to the convenience and proximity store business and excludes any other Raízen operations.
During 2019, Coca-Cola FEMSA received dividends from Promotora Mexicana de Embotelladores, S.A. de C.V. for the amount of Ps. 1 and during 2018, Coca-Cola FEMSA received dividends from Industria Envasadora de Querétaro, S.A. de C.V. for the amount of Ps. 8. During 2019 Coca-Cola FEMSA made capital contributions to Jugos del Valle, S.A.P.I. de C.V. and Promotora Industrial Azucarera, S.A. de C.V. in the amounts of Ps. 204 and Ps. 111, respectively, there were no changes in the ownership percentage of Promotora Industrial Azucarera, S.A. de C.V. as a result of capital contributions made by the other shareholders. During 2018 the Company made capital contributions to Jugos del Valle, S.A.P.I. de C.V. and Promotora Industrial Azucarera, S.A. de C.V. in the amounts of Ps. 73 and Ps. 146, respectively, there were no changes in the ownership percentage as a result of capital contributions made by the other shareholders. During 2018, there was a spin-off for our investment in UBI 3 resulted in a loss of Ps. 333 capitalized. As of December 31, 2019 and 2018, Coca-Cola FEMSA recognized an impairment, in their investment Compañía Panameña de Bebidas, S.A.P.I. de C.V., for an amount of Ps. 948 and Ps. 432 million charged as other expenses line, respectively. The Company will continue to monitor the results of this investment in conjunction with its partner The Coca-Cola Company, looking for alternatives to improve the business profitability in the near future. On April 30, 2010, the Company acquired an economic interest of 20% of Heineken Group. Heineken’s main activities are the production, distribution and marketing of beer worldwide. On September 18, 2017, the Company concluded the sale of a portion of its investment, representing 5.2% combined economic interest, consisting of 22,485,000 Heineken N.V. shares and 7,700,000 Heineken Holding N.V. shares at the price of €. 84.50 and €. 78.00 per share, respectively, see Note 4.2. The Company recognized an equity income of Ps. 6,428, Ps. 6,478 and Ps. 7,847 net of taxes based on its economic interest in Heineken Group for the years ended December 31, 2019, 2018 and 2017, respectively. The economic interest for the year 2019 and 2018 was 14.8%. The Company’s share of the net income attributable to equity holders of Heineken Group exclusive of amortization of adjustments amounted to Ps. 6,885 (€. 319 million), Ps. 6,320 (€. 281 million) and Ps. 7,656 (€. 357 million), for the years ended December 31, 2019, 2018 and 2017, respectively. Summarized financial information in respect of the associate Heineken Group accounted for under the equity method is set out below.
|  | December 31, 2019 |  |  | December 31, 2018 |
Amounts in millions |  | Peso |  |  | Euro |  |  | Peso |  |  | Euro |
Total current assets |  | Ps. | 177,829 |  |  | €. | 8,419 |  |  | Ps. | 205,662 |  |  | €. | 9,125 |
Total non-current assets |  |  | 804,443 |  |  |  | 38,085 |  |  |  | 744,350 |  |  |  | 33,026 |
Total current liabilities |  |  | 259,952 |  |  |  | 12,307 |  |  |  | 235,052 |  |  |  | 10,429 |
Total non-current liabilities |  |  | 356,671 |  |  |  | 16,886 |  |  |  | 360,928 |  |  |  | 16,014 |
Total equity |  |  | 365,648 |  |  |  | 17,311 |  |  |  | 354,032 |  |  |  | 15,708 |
Equity attributable to equity holders (1) |  |  | 341,062 |  |  |  | 16,147 |  |  |  | 327,369 |  |  |  | 14,525 |
Total revenue and other income |  | Ps. | 511,125 |  |  | €. | 24,064 |  |  | Ps. | 517,528 |  |  | €. | 22,564 |
Total cost and expenses |  |  | 433,959 |  |  |  | 20,431 |  |  |  | 445,945 |  |  |  | 19,443 |
Net income |  | Ps. | 50,424 |  |  | €. | 2,374 |  |  | Ps. | 48,280 |  |  | €. | 2,105 |
Net income attributable to equity holders |  |  | 46,006 |  |  |  | 2,166 |  |  |  | 43,877 |  |  |  | 1,913 |
Other comprehensive income |  |  | 3,951 |  |  |  | 186 |  |  |  | (1,170 | ) |  |  | (51 | )
Total comprehensive income |  | Ps. | 54,375 |  |  | €. | 2,560 |  |  | Ps. | 47,111 |  |  | €. | 2,054 |
Total comprehensive income attributable to equity holders |  |  | 49,447 |  |  |  | 2,328 |  |  |  | 42,615 |  |  |  | 1,858 |
(1) | Following the IFRS Interpretations Committee agenda decision in January 2019 regarding tax deposits (relating to taxes other than income tax), Heineken Group changed its accounting policy with regards to payments relating to contingent liabilities. This change in accounting policy has been recognised retrospectively in Heineken Financial Statements and increased equity as at 1 January 2018 by €.157 million. The impact on 2018 profit amounts to an increase of €.10 million. For further information please refer to Heineken’s Annual Report.
Reconciliation from the equity of the associate Heineken Group to the investment of the Company.
|  | December 31, 2019 |  |  | December 31, 2018 |
Amounts in millions |  | Peso |  |  | Euro |  |  | Peso |  |  | Euro |
Equity attributable to equity holders of Heineken (1) |  | Ps. | 341,062 |  |  | €. | 16,147 |  |  | Ps. | 323,608 |  |  | €. | 14,358 |
Economic ownership percentage |  |  | 14.76 | % |  |  | 14.76 | % |  |  | 14.76 | % |  |  | 14.76 | %
Investment in Heineken investment exclusive of goodwill and other adjustments |  | Ps. | 50,341 |  |  | €. | 2,383 |  |  | Ps. | 47,765 |  |  | €. | 2,119 |
Effects of fair value determined by purchase price allocation |  |  | 14,839 |  |  |  | 703 |  |  |  | 15,846 |  |  |  | 703 |
Goodwill |  |  | 18,609 |  |  |  | 881 |  |  |  | 19,850 |  |  |  | 881 |
Heineken investment |  | Ps. | 83,789 |  |  | €. | 3,967 |  |  | Ps. | 83,461 |  |  | €. | 3,703 |
(1) | Related to the change in Heineken’s accounting policy mentioned in the table above, the Company recognized the accumulated effects as of January 1, 2019.
As of December 31, 2019 and 2018, the fair value of Company’s investment in Heineken N.V. Holding and Heineken N.V. represented by shares equivalent to 14.8% of its outstanding shares amounted to Ps. 164,504 (€. 7,769 million) and Ps. 145,177(€. 6,441 million) based on quoted market prices of those dates. As of April 24 , 2020, fair value amounted to €. 6, 152 million. During the years ended December 31, 2019, 2018 and 2017, the Company received dividends distributions from Heineken Group, amounting to Ps. 3,031, Ps. 2,872 and Ps. 3,250, respectively. For the years ended December 31, 2019, 2018 and 2017 the equity earnings recognized for associates of Coca-Cola FEMSA was Ps. 84, Ps. 44 and Ps. 235, respectively. For the years ended December 31, 2019, 2018 and 2017 the equity (loss) earnings recognized for joint ventures of Coca-Cola FEMSA was a loss of Ps. 215, Ps. 270 and Ps. 175, respectively. For the year ended December 31, 2019, 2018 and 2017, the Company’s share of other comprehensive income from equity investees, net of taxes are as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Items that may be reclassified to consolidated net income: |  |  |  |  |  |  |  |  |  |  |  |
Valuation of the effective portion of derivative financial instruments |  | Ps. | — |  |  | Ps. | (355 | ) |  | Ps. | 252 |
Exchange differences on translating foreign operations |  |  | 1,058 |  |  |  | (5 | ) |  |  | (2,265 | )
Total |  | Ps. | 1,058 |  |  | Ps. | (360 | ) |  | Ps. | (2,013 | )
Items that may not be reclassified to consolidated net income in subsequent periods: |  |  |  |  |  |  |  |  |  |  |  |
Remeasurements of the net defined benefit liability |  | Ps. | (389 | ) |  | Ps. | 597 |  |  | Ps. | 69 |

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