Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15b-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

August 2019

Date of Report (Date of Earliest Event Reported)

 

Embotelladora Andina S.A.

(Exact name of registrant as specified in its charter)

 

Andina Bottling Company, Inc.

(Translation of Registrant´s name into English)

 

Avda. Miraflores 9153

Renca

Santiago, Chile

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F x             Form 40-F o

 

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes o         No x

 

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes o          No x

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form 6-K is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934

 

Yes o         No x

 

 

 


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Consolidated Interim Financial Statements

 

EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Santiago, Chile

As of June 30, 2019, and December 31, 2018

 


Table of Contents

 

EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Financial Statements

 

As of June 30, 2019 (unaudited) and December 31, 2018

 


Table of Contents

 

Report of the Independent Auditor

(Translation of the report originally issued in Spanish)

 

To

Shareholders and Directors

Embotelladora Andina S.A.

 

We have reviewed the accompanying interim consolidated financial statements of Embotelladora Andina S.A. and Subsidiaries, which comprise the interim consolidated statement of financial position as of June 30, 2019, and the interim consolidated comprehensive income statement for the six and three month periods ended June 30, 2019 and 2018, the interim consolidated statements of changes in equity and cash flows for the six month periods then ended and the related notes to the interim consolidated financial statements.

 

Management’s Responsibility for the Interim Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of the interim consolidated financial statements in conformity with IAS 34 “Interim Financial Reporting” of the International Financial Reporting Standards (IFRS). This includes the design, implementation and maintainenance of sufficient internal control that provides the basis for the preparation and fair presentation of interim consolidated financial statements in accordance with the applicable financial reporting preparation and presentation framework.

 

Auditor’s Responsibility

 

Our responsibility is to perform a review in accordance with Generally Accepted Auditing Standards in Chile applicable to interim financial statement reviews. An interim financial statement review involves performing analytical procedures and making inquiries of the persons in charge of accounting and financial matters. The review is substantially less broad in scope than an audit to the financial statements in accordance with Generally Accepted Auditing Standards in Chile for the purpose of expressing an opinion on the financial statements. Therefore, we express no such opinion.

 

Conclusion

 

On the basis of our review, we are not aware of any material modifications that should be made to the interim consolidated financial statements referred to above for it to be in conformity with IAS 34 “Interim Financial Reporting” of the International Financial Reporting Standards (IFRS).

 


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Other matters

 

On February 28, 2019 we issued an unqualified opinion on the consolidated financial statements as of December 31, 2018 and 2017 of Embotelladora Andina S.A and Subsidiaries, which includes the statement of financial position as of December 31, 2018 as presented in the accompanying consolidated interim financial statements, and corresponding notes.

 

Tatiana Ramos S.

EY Audit SpA.

 

 

Santiago, July 30, 2019

 

 


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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Financial Statements

 

INDEX

 

Consolidated Interim Statements of Financial Position as of June 30, 2019 (unaudited) and December 31, 2018

1

 

 

Consolidated Interim Statements of Income by Function For the periods between January 1 and June 30, 2019 and 2018 (unaudited)

3

 

 

Consolidated Interim Statements of Comprehensive Income For the periods between January 1 and June 30, 2019 and 2018 (unaudited)

4

 

 

Consolidated Interim Statements of Changes in Equity For the periods between January 1 and June 30, 2019 and 2018 (unaudited)

5

 

 

Consolidated Interim Statements of Cash Flows For the periods between January 1 and June 30, 2019 and 2018 (unaudited)

6

 

 

Notes to the Consolidated Interim Financial Statements (unaudited)

7

 


Table of Contents

 

Consolidated Interim Statements

 

EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

As of June 30, 2019, and December 31, 2018

 


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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Statements of Financial Position

 

 

 

NOTE

 

06.30.2019

 

12.31.2018

 

 

 

 

 

(unaudited)
CLP (000’s)

 

CLP (000’s)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

4

 

117,450,341

 

137,538,613

 

Other financial assets

 

5

 

 

683,567

 

Other non-financial assets

 

6.1

 

16,904,319

 

5,948,923

 

Trade and other accounts receivable, net

 

7

 

122,174,667

 

174,113,323

 

Accounts receivable from related companies

 

12.1

 

7,240,512

 

9,450,263

 

Inventory

 

8

 

155,701,481

 

151,319,709

 

Current tax assets

 

9

 

5,858,023

 

2,532,056

 

Total Current Assets

 

 

 

425,329,343

 

481,586,454

 

 

 

 

 

 

 

 

 

Non-Current Assets:

 

 

 

 

 

 

 

Other financial assets

 

5

 

96,518,349

 

97,362,295

 

Other non-financial assets

 

6.2

 

33,350,240

 

34,977,264

 

Trade and other receivables

 

7

 

189,511

 

1,270,697

 

Accounts receivable from related parties

 

12.1

 

122,506

 

74,340

 

Investments accounted for under the equity method

 

14

 

101,187,696

 

102,410,945

 

Intangible assets other than goodwill

 

15

 

655,962,412

 

668,822,553

 

Goodwill

 

16

 

117,733,476

 

117,229,173

 

Property, plant and equipment

 

11.1

 

714,339,943

 

710,770,968

 

Deferred tax assets

 

10

 

1,618,274

 

 

Total Non-Current Assets

 

 

 

1,721,022,407

 

1,732,918,235

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

2,146,351,750

 

2,214,504,689

 

 

The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements

 

1


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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Statements of Financial Position

 

 

 

NOTE

 

06.30.2019

 

12.31.2018

 

 

 

 

 

(unaudited)
CLP (000’s)

 

CLP (000’s)

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Other financial liabilities

 

17

 

60,322,732

 

56,114,977

 

Trade and other accounts payable

 

18

 

173,269,063

 

238,109,847

 

Accounts payable to related parties

 

12.2

 

44,088,670

 

45,827,859

 

Provisions

 

19

 

2,033,033

 

3,485,613

 

Income taxes payable

 

9

 

2,078,402

 

9,338,612

 

Employee benefits current provisions

 

13

 

25,749,718

 

33,210,979

 

Other non-financial liabilities

 

20

 

31,643,175

 

33,774,214

 

Total Current Liabilities

 

 

 

339,184,793

 

419,862,101

 

 

 

 

 

 

 

 

 

Other financial liabilities

 

17

 

719,660,254

 

716,563,778

 

Trade and other payables

 

18

 

791,700

 

735,665

 

Provisions

 

19

 

51,881,214

 

58,966,913

 

Deferred income tax liabilities

 

10.2

 

147,528,637

 

145,245,948

 

Employee benefits non-current provisions

 

13

 

13,469,147

 

9,415,541

 

Other non-financial liabilities, non-current

 

 

 

167,682

 

 

Non-Current Liabilities:

 

 

 

933,498,634

 

930,927,845

 

 

 

 

 

 

 

 

 

Equity:

 

20

 

 

 

 

 

Issued capital

 

 

 

270,737,574

 

270,737,574

 

Retained earnings

 

 

 

509,581,413

 

462,221,463

 

Other reserves

 

 

 

73,896,103

 

110,854,089

 

Equity attributable to equity holders of the parent

 

 

 

854,215,090

 

843,813,126 

 

Non-controlling interests

 

 

 

19,453,233

 

19,901,617

 

Total Equity

 

 

 

873,668,323

 

863,714,743

 

Total Liabilities and Equity

 

 

 

2,146,351,750

 

2,214,504,689

 

 

The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements

 

2


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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Statements of Income by Function

For the periods ended June 30, 2019 and 2018

 

 

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

 

 

NOTE

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

 

 

(unaudited)
CLP (000’s)

 

(unaudited)
CLP (000’s)

 

(unaudited)
CLP (000’s)

 

(unaudited)
CLP (000’s)

 

Net sales

 

 

 

840,180,450

 

817,504,239

 

379,717,932

 

363,485,018

 

Cost of sales

 

25

 

(496,674,197

)

(471,433,525

)

(228,330,444

)

(215,499,328

)

Gross Profit

 

 

 

343,506,253

 

346,070,714

 

151,387,488

 

147,985,690

 

Other income

 

26

 

263,560

 

237,141

 

178,597

 

155,673

 

Distribution expenses

 

25

 

(80,186,199

)

(79,623,760

)

(36,613,404

)

(35,797,299

)

Administrative expenses

 

25

 

(158,566,505

)

(160,120,728

)

(79,625,359

)

(78,234,627

)

Other expenses

 

27

 

(1,975,892

)

(8,791,015

)

490,898

 

(3,388,562

)

Other (loss) gains

 

29

 

 

(1,693,257

)

 

(896,659

)

Financial income

 

28

 

2,910,856

 

2,119,138

 

1,489,405

 

1,107,834

 

Financial expenses

 

28

 

(22,319,856

)

(22,025,288

)

(11,046,152

)

(10,810,241

)

Share of profit (loss) of investments in associates and joint ventures accounted for using the equity method

 

14.3

 

7,885

 

783,534

 

(608,547

)

(163,135

)

Foreign exchange differences

 

 

 

(724,633

)

1,049,520

 

319,037

 

1,028,915

 

Income by indexation units

 

 

 

(3,183,062

)

(1,374,481

)

(3,110,161

)

(102,999

)

Net income before income taxes

 

 

 

79,732,407

 

76,631,518

 

22,861,802

 

20,884,590

 

Income tax expense

 

10.1

 

(17,750,421

)

(28,637,977

)

(7,829,534

)

(12,272,842

)

Net income

 

 

 

61,981,986

 

47,993,541

 

15,032,268

 

8,611,748

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to

 

 

 

 

 

 

 

 

 

 

 

Owners of the controller

 

 

 

61,618,029

 

47,561,768

 

15,199,739

 

8,786,505

 

Non-controlling interests

 

 

 

363,957

 

431,773

 

(167,471

)

(174,757

)

Net income

 

 

 

61,981,986

 

47,993,541

 

15,032,268

 

8,611,748

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share, basic and diluted

 

 

 

 

 

 

 

 

 

 

 

Earnings per Series A Share

 

21.5

 

62.0

 

47.85

 

15.98

 

6.51

 

Earnings per Series B Share

 

21.5

 

68.2

 

52.64

 

17.58

 

7.16

 

 

The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements

 

3


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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Statements of Comprehensive Income

For the periods ended June 30, 2019 and 2018

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

 

 

06.30.2019

 

30.06.2018

 

06.30.2019

 

06.30.2018

 

 

 

(unaudited) 

 

(unaudited) 

 

(unaudited) 

 

(unaudited) 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Income:

 

61,981,986

 

47,993,541

 

15,032,268

 

8,611,748

 

 

 

 

 

 

 

 

 

 

 

Components of other comprehensive income that will not be reclassified to net income for the period, before taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses from defined benefit plans

 

 

(37,314

)

 

(29,236

)

 

 

 

 

 

 

 

 

 

 

Components of other comprehensive income that will be reclassified to net income for the period, before taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (losses) from exchange rate translation differences

 

(48,822,177

)

(67,423,926

)

8,501,378

 

(29,448,317

)

 

 

 

 

 

 

 

 

 

 

Gain (losses) from cash flow hedges

 

1,134,306

 

(9,112,683

)

(620,728

)

6,666,012

 

 

 

 

 

 

 

 

 

 

 

Income tax related to components of other comprehensive income that will not be reclassified to net income for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit related to defined benefit plans

 

 

10,075

 

 

7,892

 

 

 

 

 

 

 

 

 

 

 

Income tax related to components of other comprehensive income that will be reclassified to net income for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax related to exchange rate translation differences

 

10,857,577

 

22,814,096

 

(479,310

)

1,879,018

 

 

 

 

 

 

 

 

 

 

 

Income tax related to cash flow hedges

 

(453,628

)

2,886,418

 

385,918

 

(2,225,128

)

Other comprehensive income, total

 

(37,283,922

)

(50,863,336

)

(7,787,258

)

(23,149,759

)

Total comprehensive income

 

24,698,064

)

(2,869,793

)

22,819,526

 

(14,538,011

)

 

 

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

25,024,000

 

(2,425,147

)

23,483,460

 

(14,585,770

)

Non-controlling interests

 

(325,936

)

(444,646

)

(663,934

)

47,759

 

Total comprehensive income

 

24,698,064

 

(2,869,793

)

22,819,526

 

(14,538,011

)

 

The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements

 

4


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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

Consolidated Interim Statements of Changes in Equity

As of June 30, 2019 and 2018 (unaudited)

 

 

 

 

 

Other reserves

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

Reserves for
exchange rate
differences

 

Cash flow hedge
reserve

 

Actuarial gains
or losses in
employee
benefits

 

Other
reserves

 

Total other
reserves

 

Retained
earnings

 

Controlling
Equity

 

Non-
Controlling
interests

 

Total Equity

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Opening balance as of 01/01/2019

 

270,737,574

 

(306,674,528

)

(13,668,932

)

(1,954,077

)

433,151,626

 

110,854,089

 

462,221,463

 

843,813,126

 

19,901,617

 

863,714,743

 

Changes in Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

 

 

 

 

 

 

61,618,029

 

61,618,029

 

363,957

 

61,981,986

 

Other comprehensive income

 

 

(37,632,712

)

674,726

 

 

 

(36,957,986

)

 

(36,957,986

)

(325,936

)

(37,283,922

)

Comprehensive income

 

 

(37,632,712

)

674,726

 

 

 

(36,957,986

)

61,618,029

 

24,660,043

 

38,021

 

24,698,064

 

Dividends

 

 

 

 

 

 

 

(42,737,646

)

(42,737,646

)

(486,405

)

(43,224,051

)

Increase (decrease) from other changes

 

 

 

 

 

 

 

28,479,567

 

28,479,567

 

 

28,479,567

 

Total changes in equity

 

 

(37,632,712

)

674,726

 

 

 

(36,957,986

)

47,359,950

 

10,401,964

 

(448,384

)

9,953,580

 

Ending balance as of 06/30/2019

 

270,737,574

 

(344,307,240

)

(12,994,206

)

(1,954,077

)

436,415,009

 

73,896,103

 

509,581,413

 

854,215,090

 

19,453,233

 

873,668,323

 

 

 

 

 

 

Other reserves

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

Reserves for
exchange rate
differences

 

Cash flow hedge
reserve

 

Actuarial gains
or losses in
employee
benefits

 

Other
reserves

 

Total other
reserves

 

Retained
earnings

 

Controlling
Equity

 

Non-
Controlling
interests

 

Total Equity

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Opening balance as of 01/01/2018

 

270,737,574

 

(237,077,572

)

(3,094,671

)

(1,915,587

)

427,137,058

 

185,049,228

 

335,523,254

 

791,310,056

 

21,923,293

 

813,233,349

 

Changes in accounting policies

 

 

 

 

 

 

 

 

 

 

 

 

 

79,499,736

 

79,499,736

 

 

 

79,499,736

 

Restated opening balance

 

270,737,574

 

(237,077,572

)

(3,094,671

)

(1,915,587

)

427,137,058

 

185,049,228

 

415,022,990

 

870,809,792

 

21,923,293

 

892,733,085

 

Changes in Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

 

 

 

 

 

 

47,561,768

 

47,561,768

 

431,773

 

47,993,541

 

Other comprehensive income

 

 

(44,219,851

)

(6,171,836

)

(27,001

)

 

(50,418,688

)

 

(50,418,688

)

(444,646

)

(50,863,334

)

Comprehensive income

 

 

(44,219,851

)

(6,171,836

)

(27,001

)

 

(50,418,688

)

47,561,768

 

(2,856,920

)

(12,873

)

(2,869,793

)

Dividends

 

 

 

 

 

 

 

(42,737,646

)

(42,737,646

)

(1,793,799

)

(44,531,445

)

Increase (decrease) from other changes

 

 

 

 

 

 

 

 

18,741,460

 

18,741,460

 

 

18,741,460

 

Total changes in equity

 

 

(44,219,851

)

(6,171,836

)

(27,001

)

 

(50,418,688

)

23,565,582

 

(26,853,106

)

(1,806,672

)

(28,659,778

)

Ending balance as of 06/30/2018

 

270,737,574

 

(281,297,423

)

(9,266,507

)

(1,942,588

)

427,137,058

 

134,630,540

 

438,588,572

 

843,956,686

 

20,116,621

 

864,073,307

 

 

The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements

 

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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Consolidated Interim Statements of Direct Cash Flows

As of June 30, 2019 and 2018

 

 

 

 

 

01.01.2019

 

01.01.2018

 

 

 

NOTE

 

06.30.2019

 

06.30.2018

 

 

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Cash flows provided by (used in) Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by Operating Activities

 

 

 

 

 

 

 

Receipts from the sale of goods and the rendering of services (including taxes)

 

 

 

1.271.549.665

 

1,048,352,436

 

Payments for Operating Activities

 

 

 

 

 

 

 

Payments to suppliers for goods and services (including taxes)

 

 

 

(883,431,125

)

(676,143,545

)

Payments to and on behalf of employees

 

 

 

(104,793,892

)

(103,180,143

)

Other payments for operating activities (value-added taxes on purchases, sales and others)

 

 

 

(153,423,164

)

(142,531,513

)

Interest payments

 

 

 

(20,797,233

)

(22,834,529

)

Interest received

 

 

 

1,496,854

 

1,847,083

 

Income tax payments

 

 

 

(19,838,714

)

(13,861,423

)

Other cash movements (tax on bank debits Argentina and others)

 

 

 

(2,028,355

)

(3,425,974

)

Cash flows provided by (used in) Operating Activities

 

 

 

88,734,036

 

88,222,392

 

 

 

 

 

 

 

 

 

Cash flows provided by (used in) Investing Activities

 

 

 

 

 

 

 

Contributions made in associates

 

14.2

 

 

(1,500,000

)

Dividends received

 

 

 

240,804

 

 

 

Proceeds from sale of Property, plant and equipment

 

 

 

1,989

 

147,031

 

Purchase of Property, plant and equipment

 

 

 

(57,250,050

)

(56,993,193

)

Purchase of intangible assets

 

 

 

(426,949

)

 

Proceeds from other long-term assets (redemption of term deposits over 90 days)

 

 

 

 

13,883,132

 

Payments on forward, term, option and financial exchange agreements

 

 

 

117,814

 

122,955

 

Net cash flows used in Investing Activities

 

 

 

(57,316,392

)

(44,339,175

)

 

 

 

 

 

 

 

 

Cash Flows generated from (used in) Financing Activities

 

 

 

 

 

 

 

Proceeds from short-term loans obtained

 

 

 

1,494,143

 

22,575,209

 

Loan payments

 

 

 

(1,093,885

)

(34,835,638

)

Lease liability payments

 

 

 

(1,228,976

)

(1,613,440

)

Dividend payments by the reporting entity

 

 

 

(42,737,646

)

(43,699,278

)

Other inflows (outflows) of cash (Placement and payment of public obligations)

 

 

 

(6,686,473

)

(6,339,409

)

Net cash flows (used in) generated by Financing Activities

 

 

 

(50,252,837

)

(63,912,556

)

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents before exchange differences

 

 

 

(18,835,193

)

(20,029,339

)

Effects of exchange differences on cash and cash equivalents

 

 

 

(136,948

)

(853,934

)

Effects of inflation on cash and cash equivalents

 

 

 

(1,116,131

)

(5,703,105

)

Net decrease in cash and cash equivalents

 

 

 

(20,088,272

)

(26,586,377

)

Cash and cash equivalents — beginning of period

 

 

 

137,538,613

 

136,242,116

 

Cash and cash equivalents - end of period

 

4

 

117,450,341

 

109,655,739

 

 

The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements

 

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EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES

 

Notes to the Interim Consolidated Financial Statements

 

1 - CORPORATE INFORMATION

 

Embotelladora Andina S.A. RUT (Chilean Tax Id. N°) 91.144.000-8 (hereinafter “Andina,” and together with its subsidiaries, the “Company”) is an open stock corporation, whose corporate address and principal offices are located at Miraflores 9153, borough of Renca, Santiago, Chile. The Company is registered under No. 00124 of the Securities Registry and is regulated by Chile’s Financial Market Commission (hereinafter “CMF”)  and pursuant to Chile’s Law 18,046 is subject to the supervision of this entity. It is also registered with the U.S. Securities and Exchange Commission (hereinafter “SEC”) and its stock is traded on the New York Stock Exchange since 1994.

 

The principal activities of Embotelladora Andina S.A. are to manufacture, bottle, commercialize and/or distribute Coca-Cola products and brands registered by The Coca-Cola Company (“TCCC”). The Company has operations and is licensed by The Coca-Cola Company in its territories Chile, Brazil, Argentina and Paraguay. In Chile, the geographic areas in which the Company has distribution franchises are the Metropolitan Region II Region of Antofagasta, III Region of Atacama, IV Region of Coquimbo, the Province of San Antonio, V Region of Valparaiso, the province of Cachapoal, VI Region del Libertador General Bernardo O’Higgins, XI Region de Aysén del General Carlos Ibáñez del Campo; and XII Region of Magallanes and Chilean Antartic.. In Brazil, its territories include the city of Rio de Janeiro and the central and northern parts of the state of Rio de Janeiro, the city of Vitória and the whole state of  Espirito Santo and the city of Ribeirão Preto and part of the state of Sao Paulo and Minas Gerais. In Argentina, the territories include Mendoza, Córdoba, San Luis, Entre Ríos, Santa Fe, Rosario, Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro, La Pampa and the western zone of the Province of Buenos Aires. In Paraguay, the franchised territory covers the whole country. While some of the licenses for the territories in Chile are in the renewal process, others expire in October 2023. In Argentina they expire in 2022; in Brazil they expire in 2022 and in Paraguay they expire in 2020.

 

Said licenses are renewable upon the request of the licensee and at the sole discretion of The Coca-Cola Company. The licenses currently in the renewal process are expected to be renewed under similar conditions on the date of expiration.

 

As of the date of these interim consolidated financial statements, regarding Andina’s principal shareholders, the Controlling Group holds 55.72% of the outstanding shares with voting rights, corresponding to the Series A shares. The Controlling Group is composed of the Chadwick Claro, Garcés Silva, Hurtado Berger, Said Handal and Said Somavía families, who control the Company in equal parts.

 

These Interim Financial Statements reflect the consolidated financial position of Embotelladora Andina S.A. and its subsidiaries, which were approved by the Board of Directors on July 30, 2019.

 

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2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND APPLICATION OF ACCOUNTING CRITERIA

 

2.1          Accounting principles and basis of preparation

 

The Company’s Consolidated Interim Financial Statements for the periods ended June 30, 2019and December 31, 2018, have been prepared in accordance with International Accounting Standard No. 34 (IAS 34) included in the International Financial Reporting Standards (hereinafter “IFRS”) issued by the International Accounting Standards Board (hereinafter “IASB”).

 

These consolidated interim financial statements have been prepared following the going concern principle by applying the historical cost method, with the exception, according to IFRS, of those assets and liabilities that are recorded at fair value.

 

These Interim Consolidated Statements reflect the consolidated financial position of Embotelladora Andina S.A. and its Subsidiaries as of June 30, 2019 and December 31, 2018 and the results of operations for the periods between January 1 and June 30, 2019 and 2018 and April 1 and June 30, 2019 and 2018, together with the statements of changes in equity and cash flows for the periods between January 1 and June 30, 2019 and 2018.

 

These Interim Consolidated Financial Statements have been prepared based on the accounting records maintained by the Parent Company and by the other entities that are part of the Company and are presented in thousands of Chilean pesos (unless expressly stated) as this is the functional and presentation currency of the Company. Foreign operations are included in accordance with the accounting policies established in Notes 2.5.

 

2.2          Subsidiaries and consolidation

 

Subsidiary entities are those companies directly or indirectly controlled by Embotelladora Andina. Control is obtained when the Company has power over the investee, when it has exposure or is entitled to variable returns from its involvement in the investee and when it has the ability to use its power to influence the amount of investor returns. They include assets and liabilities, results of operations, and cash flows for the periods reported. Income or losses from subsidiaries acquired or sold are included in the Consolidated Financial Statements from the effective date of acquisition through the effective date of disposal, as applicable.

 

The acquisition method is used to account for the acquisition of subsidiaries. The consideration transferred for the acquisition of the subsidiary is the fair value of assets transferred, equity securities issued, liabilities incurred or assumed on the date that control is obtained. Identifiable assets acquired, and identifiable liabilities and contingencies assumed in a business combination are accounted for initially at their fair values at the acquisition date. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

 

Intercompany transactions, balances and unrealized gains on transactions between Group entities are eliminated. Unrealized losses are also eliminated. When necessary, the accounting policies of the subsidiaries are modified to ensure uniformity with the policies adopted by the Group.

 

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The interest of non-controlling shareholders is presented in the consolidated statement of changes in equity and the consolidated statement of income by function under “Non-Controlling Interest” and “Earnings attributable to non-controlling interests”, respectively.

 

The consolidated financial statements include all assets, liabilities, income, expenses, and cash flows of the Company and its subsidiaries after eliminating balances and transaction among the Group’s entities, the subsidiary companies included in the consolidation are the following:

 

 

 

 

 

Ownership interest

 

 

 

 

 

06.30.2019

 

12.31.2018

 

Taxpayer ID

 

Name of the Company

 

Direct

 

Indirect

 

Total

 

Direct

 

Indirect

 

Total

 

59.144.140-K

 

Abisa Corp S.A.

 

 

99.99

 

99.99

 

 

99.99

 

99.99

 

Foreign

 

Aconcagua Investing Ltda.

 

0.71

 

99.28

 

99.99

 

0.71

 

99.28

 

99.99

 

96.842.970-1

 

Andina Bottling Investments S.A.

 

99.90

 

0.09

 

99.99

 

99.90

 

0.09

 

99.99

 

96.972.760-9

 

Andina Bottling Investments Dos S.A.

 

99.90

 

0.09

 

99.99

 

99.90

 

0.09

 

99.99

 

Foreign

 

Andina Empaques Argentina S.A.

 

 

99.98

 

99.98

 

 

99.98

 

99.98

 

96.836.750-1

 

Andina Inversiones Societarias S.A.

 

99.98

 

0.01

 

99.99

 

99.98

 

0.01

 

99.99

 

76.070.406-7

 

Embotelladora Andina Chile S.A.

 

99.99

 

 

99.99

 

99.99

 

 

99.99

 

Foreign

 

Embotelladora del Atlántico S.A.

 

0.92

 

99.07

 

99.99

 

0.92

 

99.07

 

99.99

 

96.705.990-0

 

Envases Central S.A.

 

59.27

 

 

59.27

 

59.27

 

 

59.27

 

96.971.280-6

 

Inversiones Los Andes Ltda.

 

99.99

 

 

99.99

 

99.99

 

 

99.99

 

Foreign

 

Paraguay Refrescos S.A.

 

0.08

 

97.75

 

97.83

 

0.08

 

97.75

 

97.83

 

76.276.604-3

 

Red de Transportes Comerciales Ltda.

 

99.90

 

0.09

 

99.99

 

99.90

 

0.09

 

99.99

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

 

99.99

 

99.99

 

 

99.99

 

99.99

 

78.536.950-5

 

Servicios Multivending Ltda.

 

99.90

 

0.09

 

99.99

 

99.90

 

0.09

 

99.99

 

78.861.790-9

 

Transportes Andina Refrescos Ltda.

 

99.90

 

0.09

 

99.99

 

99.90

 

0.09

 

99.99

 

96.928.520-7

 

Transportes Polar S.A.

 

99.99

 

 

99.99

 

99.99

 

 

99.99

 

76.389.720-6

 

Vital Aguas S.A.

 

66.50

 

 

66.50

 

66.50

 

 

66.50

 

93.899.000-k

 

Vital Jugos S.A.

 

15.00

 

50.00

 

65.00

 

15.00

 

50.00

 

65.00

 

 

2.3          Investments in associates and joint ventures

 

Ownership interest held by the Group in joint ventures and associates are recorded following the equity method. According to the equity method, the investment in an associate or joint venture is initially recorded at cost. As of the date of acquisition, the investment in the statement of financial position is recorded by the proportion of its total assets, which represents the Group’s participation in its capital, once adjusted, where appropriate, the effect of the transactions made with the Group, plus capital gains that have been generated in the acquisition of the company.

 

Dividends received from these companies are recorded by reducing the value of the investment and the results obtained by them, which correspond to the Group according to its ownership, are recorded under the item “Participation in profit (loss) of associates accounted for by the equity method.”

 

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2.3.1       Investments in Associates

 

Associates are all entities over which the Group exercises significant influence but does not have control, significant influence is the power to intervene in the financial and operating policy decisions of the associate, without having control or joint control over it. The results of these associates are accounted for using the equity method. Accounting policies of the associates are changed, where necessary, to ensure conformity with the policies adopted by the Company and unrealized gains are eliminated.

 

2.3.2       Joint arrangements

 

Joint arrangements are those entities in which the Group exercises control through an agreement with other shareholders and jointly with them, that is, when decisions on their relevant activities require the unanimous consent of the parties that share control.

 

Depending on the rights and obligations of the parties, joint arrangements are classified as:

 

·                  Joint venture: agreement whereby the parties exercising joint control are entitled to the net assets of the entity. Joint ventures are integrated into the consolidated financial statements by the equity method, as described above.

 

·                  Joint operation: agreement whereby the parties exercising joint control are entitled to the assets and obligations with respect to the liabilities related to the agreement. Joint operations are consolidated by proportionally integrating the assets and liabilities affected by said operation.

 

To determine the type of joint agreement that derives from a contractual agreement, Group Management evaluates the structure and legal form of the agreement, the terms agreed by the parties, as well as other relevant factors and circumstances.

 

Embotelladora Andina does not have joint ventures that qualify as a joint operation business.

 

2.4           Financial reporting by operating segment

 

“IFRS 8 Operating Segments” requires that entities disclose information on the results of operating segments. In general, this is information that Management and the Board of Directors use internally to assess performance of segments and allocate resources to them. Therefore, the following operating segments have been determined based on geographic location:

 

·                 Operation in Chile

·                 Operation in Brazil

·                 Operation in Argentina

·                  Operation in Paraguay

 

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2.5             Functional currency and presentation currency

 

2.5.1       Functional currency

 

Items included in the financial statements of each of the entities in the Company are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The functional currency of each of the Operations is the following:

 

Company

 

Functional currency

 

 

 

Embotelladora del Atlántico

 

Argentine Peso (ARS)

Embotelladora Andina

 

Chilean Peso (CLP)

Paraguay Refrescos

 

Paraguayan Guaraní (PYG)

Rio de Janeiro Refrescos

 

Brazil Real (BRL)

 

Foreign currency transactions are translated into the functional currency using the foreign exchange rates prevailing on the dates of the transactions. Losses and gains in foreign currency resulting from the liquidation of these transactions and the translation at the closing exchange rate of monetary assets and liabilities denominated in foreign currency are recognized in the income statements under foreign exchange rate differences, except when they correspond to cash flow hedges; in which case they are presented in the statement of comprehensive income.

 

Functional currency in hyperinflationary economies

 

Beginning July 2018,  Argentina’s economy is considered as hyperinflationary, according to the criteria established in the International Accounting Standard No. 29 “Financial information in hyperinflationary economies” (IAS 29). This determination was carried out on the basis of a series of qualitative and quantitative criteria, including an accumulated inflation rate of more than 100% for three years. In accordance with IAS 29, the financial statements of companies in which Embotelladora Andina S.A. participates in Argentina have been retrospectively restated by applying a general price index to the historical cost, in order to reflect the changes in the purchasing power of the Argentine peso, as of the closing date of these financial statements.

 

Non-monetary assets and liabilities were restated since February 2003, the last date an inflation adjustment was applied for accounting purposes in Argentina. In this context, it should be mentioned that the Group made its transition to IFRS on January 1, 2004, applying the attributed cost exemption for Property, plant and equipment.

 

For consolidation purposes in Embotelladora Andina S.A. and as a result of the adoption of IAS 29, the results and financial situation of our subsidiaries in Argentina were converted to the closing exchange rate (ARS/CLP) as December 31, 2018, in accordance with IAS 21 “Effects of foreign currency exchange rate variations”, when dealing with a hyperinflationary economy. Previously, the results of the Argentinean subsidiaries were converted at the average exchange rate of the period, as is the case for the conversion of the results of the rest of the subsidiaries operating in other countries whose economies are not considered hyperinflationary.

 

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Whereas the functional and presentation currency of Embotelladora Andina S.A. does not correspond to that of a hyperinflationary economy, according to the guidelines set out in IAS 29, the re-expression of periods is not required in the consolidated financial statements of the Group.

 

Inflation for the periods January to June 2019 and January to December 2018 amounted to 12.2% and 47.6%, respectively. The first-time adoption of IAS 29 in 2018 resulted in a positive adjustment in the accumulated consolidated results of Embotelladora Andina S.A., for CLP 79,499,736 thousand (net of deferred taxes) as of January 1, 2018.

 

The Interim Consolidated Financial Statements as of June 30, 2018 have been restated for comparative purposes.

 

2.5.2       Presentation currency

 

The presentation currency is the Chilean peso, which is the functional currency of the parent company, for such purposes, the financial statements of subsidiaries are translated from the functional currency to the presentation currency as indicated below:

 

a.             Translation of financial statements whose functional currency does not correspond to hyperinflationary economies (Brazil and Paraguay)

 

Financial statements measured as indicated are translated to the presentation currency as follows:

 

·                  The statement of financial position is translated to the closing exchange rate at the financial statement date and the income statement is translated at the average monthly exchange rates, the differences that result are recognized in equity under other comprehensive income.

·                  Cash flow income statement are also translated at average exchange rates for each transaction.

·                  When an account receivable from related companies is designated as hedge investment, translation differences are recorded under comprehensive income, net of deferred taxes. On disposal of the investment, such translation differences are recognized in the income statement as part of the gain or loss on the disposal of the investment.

 

b.            Translation of financial statements whose functional currency corresponds to hyperinflationary economies (Argentina)

 

Financial statements measured in their functional currency, with inflation adjustments since they correspond to a hyperinflationary economy, are translated to the presentation currency as follows:

 

·                  The statement of financial position sheet is translated at the closing exchange rate at the financial statements date;

·                  The income statement is translated at the closing exchange rate at the financial statements date

·                  When an account receivable from related companies is designated as hedge investment, translation differences are recorded under comprehensive income, net of deferred taxes. On disposal of the investment, such translation differences are recognized in the income statement as part of the gain or loss on the disposal of the investment.

 

c.             Comparative figures

 

The financial information as of June 30 and December 31, 2018, related to entities in Argentina, were restated as of June 30, 2018 in order to present comparatively adjusted figures according to the criteria defined in IAS 29.

 

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2.5.3       Exchange rates and value of the Unidad de Fomento (UF)

 

Exchange rates and UF values in effect at the end of each period are as follows:

 

 

 

Exchange rate to the Chilean Peso

 

Date

 

USD

 

BRL

 

ARS

 

UF

 

PGY

 

EUR

 

06.30.2019

 

679.15

 

177.22

 

15.99

 

27,903.30

 

0.110

 

772.11

 

12.31.2018

 

694.77

 

179.30

 

18.43

 

27,565.79

 

0.117

 

794.75

 

30.06.2018

 

651.21

 

168.89

 

22.57

 

27,158.77

 

0.114

 

760.32

 

 

2.6          Property, plant, and equipment

 

The elements of Property, plant and equipment, are valued for their acquisition cost, net of their corresponding accumulated depreciation, and of the impairment losses they have experienced.

 

The cost of the items of Property, plant and equipment include in addition to the price paid for the acquisition: i) the financial expenses accrued during the construction period that are directly attributable to the acquisition, construction or production of qualified assets, which are those that require a substantial period of time before being ready for use, such as production facilities. The Group defines a substantial period as one that exceeds twelve months. The interest rate used is that corresponding to specific financing or, if it does not exist, the weighted average financing rate of the Company making the investment; and ii) personnel expenses directly related to the construction in progress.

 

Construction in progress is transferred to operating assets after the end of the trial period when they are available for use, from which moment depreciation begins.

 

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset only when it is probable that future economic benefits associated with the items of Property, plant and equipment will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. Repairs and maintenance are charged to the income statement in the reporting period in which they are incurred.

 

Land is not depreciated since it has an indefinite useful life. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives.

 

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Table of Contents

 

The estimated useful lives by asset category are:

 

Assets

 

Range in years

Buildings

 

30-50

Plant and equipment

 

10-20

Warehouse installations and accessories

 

10-30

Furniture and supplies

 

4-5

Motor vehicles

 

5-7

Other Property, plant and equipment

 

3-8

Bottles and containers

 

2-8

 

The residual value and useful lives of Property, plant and equipment are reviewed and adjusted at the end of each financial statement-reporting period, if appropriate.

 

When the value of an asset is greater than its estimated recoverable amount, the value is written down immediately to its recoverable amount.

 

Gains and losses on disposals of property, plant, and equipment are calculated by comparing the proceeds to the carrying amount and are charged to other expenses by function or other gains, as appropriate in the statement of comprehensive income.

 

If there are items available for sale and comply with the conditions of IFRS 5 “Non-current assets held for sale and discontinued operations” are separated from Property, plant and equipment and are presented within current assets at the lower value between the book value and its fair value less selling costs.

 

2.7          Intangible assets and Goodwill

 

2.7.1       Goodwill

 

Goodwill represents the excess of the consideration transferred over the Company’s interest in the net fair value of the net identifiable assets of the subsidiary and the fair value of the non-controlling interest in the subsidiary on the acquisition date. Since goodwill is an intangible asset with indefinite useful life, it is recognized separately and tested annually for impairment. Goodwill is carried at cost less accumulated impairment losses.

 

Gains and losses on the sale of an entity include the carrying amount of goodwill related to that entity.

 

Goodwill is assigned to each cash generating unit (CGU) or group of cash-generating units, from where it is expected to benefit from the synergies arising from the business combination. Such CGUs or groups of CGUs represent the lowest level in the organization at which goodwill is monitored for internal management purposes.

 

2.7.2       Distribution rights

 

Distribution rights are contractual rights to produce and/or distribute products under the Coca-Cola brand and other brands in certain territories in Argentina, Brazil, Chile and Paraguay that were acquired during Business Combination. Distribution rights are born from the process of valuation at fair value of the assets and liabilities of companies acquired in business combinations. Distribution rights have an indefinite useful life and are not amortized, (as they are permanently renewed by The Coca-Cola Company) and therefore are subject to impairment tests on an annual basis.

 

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Table of Contents

 

2.7.3                              Software

 

Carrying amounts correspond to internal and external software development costs, which are capitalized once the recognition criteria in IAS 38, Intangible Assets, have been met. Their accounting recognition is initially realized for their acquisition or production cost and, subsequently, they are valued at their net cost of their corresponding accumulated amortization and of the impairment losses that, if applicable, they have experienced. The aforementioned software is amortized within four years.

 

2.8          Impairment of non-financial assets

 

Assets that have an indefinite useful life, such as intangibles related to distribution rights and goodwill, are not amortized and are tested annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment. Assets that are subject to amortization are tested for impairment whenever there is an event or change in circumstances indicating that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying value of the asset exceeds its recoverable amount. The recoverable amount is the greater of an asset’s fair value less costs to sell or its value in use.

 

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units - CGU).

 

Regardless of what was stated in the previous paragraph, in the case of CGUs to which capital gains or intangible assets have been assigned with an indefinite useful life, the analysis of their recoverability is carried out systematically at the end of each fiscal year. These indications may include new legal provisions, change in the economic environment that affects business performance indicators, competition movements, or the disposal of an important part of a CGU.

 

Management reviews business performance based on geographic segments. Goodwill is monitored at the operating segment level that includes the different cash generating units in operations in Chile, Brazil, Argentina and Paraguay. The impairment of distribution rights is monitored geographically in the CGU or group of cash generating units, which correspond to specific territories for which Coca-Cola distribution rights have been acquired. These cash generating units or groups of cash generating units are composed of the following segments:

 

·                  Operation in Chile (excluding the Metropolitan Region, Rancagua Province and San Antonio Province);

·                  Operation in Argentina (North and South region);

·                  Operation in Brazil (State of Rio de Janeiro and Espirito Santo, Ipiranga territories, investment in the Sorocaba associate and investment in the Leão Alimentos S.A. associate);

·                  Operation in Paraguay

 

To check if goodwill has suffered a loss due to impairment of value, the Company compares the book value thereof with its recoverable value, and recognizes an impairment loss, for the excess of the asset’s carrying amount over its recoverable amount. To determine the recoverable values of the CGU, management considers the discounted cash flow method as the most appropriate.

 

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The main assumptions used in the annual test are:

 

a)             Discount rate

 

The discount rate applied in the annual test carried out in December 2018 was estimated using the CAPM (Capital Asset Pricing Model) methodology, which allows estimating a discount rate according to the level of risk of the CGU in the country where it operates. A nominal discount rate before tax is used according to the following table:

 

 

 

Discount rates 2018

 

Argentina

 

17.1

%

Chile

 

7.2

%

Brazil

 

9.6

%

Paraguay

 

9.1

%

 

Management carries out the process of annual goodwill impairment assessments as of December 31 of each year for each CGU.

 

No impairment indicators have been identified during the 2019 period.

 

b)             Other assumptions

 

The financial projections to determine the net present value of the future cash flows of the CGUs are modeled based on the main historical variables and the respective budgets approved by the CGU. In this regard, a conservative growth rate is used, which reaches 3% for the carbonated beverage category and up to 7% for less developed categories such as juices and waters. Beyond the fifth year of projection, growth perpetuity rates are established per operation ranging from 1% to 2.5% depending on the degree of maturity of the consumption of the products in each operation. In this sense, the variables with greatest sensitivity in these projections are the discount rates applied in the determination of the net present value of projected cash flows, growth perpetuities and EBITDA margins considered in each CGU.

 

In order to sensitize the impairment test, variations were made to the main variables used in the model. Ranges used for each of the modified variables are:

 

·                  Discount Rate: Increase / Decrease of up to 100 bps as a value in the rate at which future cash flows are discounted to bring them to present value

·                  Perpetuity: Increase / Decrease of up to 75 bps in the rate to calculate the perpetual growth of future cash flows

·                  EBITDA margin: Increase / Decrease of 100bps of EBITDA margin of operations, which is applied per year for the projected periods, that is, for the years 2020-2024

 

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2.9                              Financial assets

 

Pursuant to IFRS 9 “Financial Instruments”, except for certain trade accounts receivable, the Group initially measures a financial asset at its fair value plus transaction costs, in the case of a financial asset that is not at fair value, reflecting changes in P&L.

 

According to IFRS 9, financial assets are subsequently measured at (i) fair value with changes in P&L (FVPL), (ii) amortized cost or (iii) fair value through other comprehensive income (FVOCI). The classification is based on two criteria: (a) the Group’s business model for the purpose of managing financial assets to obtain contractual cash flows; and (b) if the contractual cash flows of financial instruments represent “solely payments of principal and interest” on the outstanding principal amount (the “SPPI criterion”).

 

The classification and measurement of the Group’s financial assets are as follows:

 

·                  Financial asset at amortized cost for financial instruments that are maintained within a business model with the objective of maintaining the financial assets to collect contractual cash flows that meet the SPPI criterion. This category includes the Group’s trade and other accounts receivable.

 

·                  Financial assets measured at fair value with changes in other comprehensive income (FVOCI), with gains or losses recognized in P&L at the time of liquidation. Financial assets in this category correspond to the Group’s instruments that meet the SPPI criterion and are kept within a business model both to collect cash flows and to sell.

 

Other financial assets are classified and subsequently measures as follows:

 

·                  Equity instruments at fair value with changes in other comprehensive income (FVOCI) without recognizing earnings or losses in P&L at the time of liquidation. This category only includes equity instruments that the Group intends to keep in the foreseeable future and that the Group has irrevocably chosen to classify in this category in the initial recognition or transition.

 

·                  Financial assets at fair value with changes in P&L (FVPL) include derivative instruments and equity instruments quoted that the Group had not irrevocably chosen to classify at FVOCI in the initial recognition or transition. This category also includes debt instruments whose cash flow characteristics do not comply with the SPPI criterion or are not kept within a business model whose objective is to recognize contractual cash flows or sale.

 

The Group’s financial liabilities accounting, to a large extent continues to be same as the one set forth in IAS 39. Similar to the requirements of IAS 39, IFRS 9 requires that assets for contingent services be treated as financial instruments measured at fair value, with changes in fair value recognized in P&L.

 

Pursuant to IFRS 9, implicit derivatives are no longer separated from a principal financial asset. Financial assets, however, are classified according to contractual terms and the Group’s business model.

 

2.10                                Derivatives financial instruments and hedging activities

 

The Company and its subsidiaries use derivative financial instruments to mitigate risks relating to changes in foreign currency and exchange rates associated with raw materials, and loan obligations.

 

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Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

 

2.10.1                       Derivative financial instruments designated as cash flow hedges

 

At the inception of the transaction, the group documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.

 

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated income statement within “other gains (losses)”.

 

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when foreign currency denominated financial liabilities are translated into their functional currencies). The gain or loss relating to the effective portion of cross currency swaps hedging the effects of changes in foreign exchange rates are recognized in the consolidated income statement within “foreign exchange differences.”  When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the consolidated income statement.

 

2.10.2             Derivative financial instruments not designated for hedging

 

The fair value of derivative financial instruments that do not qualify for hedge accounting pursuant to IFRS are immediately recognized in the consolidated income statement under “Other income and losses”.  The fair value of these derivatives is recorded under “other current financial assets” or “other current financial liabilities” in the statement of financial position.”

 

The Company does not use hedge accounting for its foreign investments.

 

The Company also evaluates the existence of derivatives implicitly in contracts and financial instruments as stipulated by IFRS 9 and classifies them pursuant to their contractual terms and the business model of the group. As of June 30, 2019 and December 31, 2018 , the Company had no implicit derivatives.

 

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Fair value hierarchy

 

The fair value of an asset or liability is defined as the price that would be received for selling an asset or paid to transfer a liability, in an orderly transaction between market participants on the measurement date.

 

The Company maintains assets related to foreign currency derivative contracts which were classified as Other current and non-current financial assets and Other current and non-current financial liabilities, respectively, and are accounted at fair value within the statement of financial position. The Company uses the following hierarchy to determine and disclose the fair value of financial instruments with assessment techniques:

 

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the assets and liabilities, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3:         Inputs for the assets or liabilities that are not based on observable market data information.

 

During the reporting periods there were no transfers of items between fair value measurement categories. All of which were valued during the period using Level 2.

 

2.11                                Inventories

 

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method. The cost of finished goods and work in progress includes raw materials, direct labor, other direct costs and manufacturing overhead (based on operating capacity) to bring the goods to marketable condition, but it excludes interest expense. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Spare parts and production materials are stated at the lower of cost or net realizable value.

 

Estimates are also made for obsolescence of raw materials and finished products based on turnover and age of the related goods.

 

2.12                                Trade receivables

 

Trade accounts receivables and other accounts receivable are recognized initially at fair value and subsequently measured at amortized cost less provision for impairment, given their short-term nature.

 

A provision for impairment is made  applying a value impairment model based on expected credit losses for the following 12 months. The Group applies a simplified focus for trade receivables, thereby impairment is always recorded referring to expected losses during the whole life of the asset

 

The carrying amount of the asset is reduced by the provision amount and the loss is recognized in administrative expenses in the consolidated income statement by function.

 

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2.13                                Cash and cash equivalents

 

Cash and cash equivalents include cash on hand, bank balances, time deposits and other short-term highly liquid and low risk of change in value investments and mutual funds with original short-term maturities equal to or less than three months.

 

2.14                                Other financial liabilities

 

Resources obtained from financial institutions as well as the issuance of debt securities are initially recognized at fair value, net of costs incurred during the transaction. Then, liabilities are valued by accruing interests in order to equal the current value with the future value of liabilities payable, using the effective interest rate method.

 

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualified assets, considered as those that require a substantial period of time in order to get ready for their forecasted use or sale, are added to the cost of those assets until the period in which the assets are substantially ready to be used or sold.

 

2.15                                Income tax

 

The Company and its subsidiaries in Chile account for income tax according to the net taxable income calculated based on the rules in the Income Tax Law. Subsidiaries in other countries account for income taxes according to the tax regulations of the country in which they operate.

 

Deferred income taxes are calculated using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements, using the tax rates that have been enacted or substantively enacted on the balance sheet date and are expected to apply when the deferred income tax asset is realized, or the deferred income tax liability is settled.

 

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.

 

The Company does not recognize deferred income taxes for temporary differences from investments in subsidiaries in which the Company can control the timing of the reversal of the temporary differences and it is probable that they will not be reversed in the near future.

 

2.16                                Employee benefits

 

The Company records a liability regarding indemnities for years of service that will be paid to employees in accordance with individual and collective agreements subscribed with employees, which is recorded at actuarial value in accordance with IAS 19 “Employee Benefits”.

 

Results from updated of actuarial variables are recorded within other comprehensive income in accordance with IAS 19.

 

Additionally, the Company has retention plans for some officers, which have a provision pursuant to the guidelines of each plan. These plans grant the right to certain officers to receive a cash payment on a certain date once they have fulfilled with the required years of service.

 

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The Company and its subsidiaries have recorded a provision to account for the cost of vacations and other employee benefits on an accrual basis. These liabilities are recorded under current non-financial liabilities.

 

2.17                                Provisions

 

Provisions for litigation and other contingencies are recognized when the Company has a present legal or constructive obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

 

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

 

2.18                                 Leases

 

IFRS 16, “Leases” is effective for periods beginning on or after January 1, 2019, establishing a new recognition accounting model regarding leases. For first-adoption purposes and according to IFRS 16, the amended prospective method was chosen.

 

In accordance with IFRS 16 “Leases” Embotelladora Andina S.A. analyzes the economic background of the agreement, to determine if a contract is, or contains, a lease, evaluating whether the agreement transfers the right to control the use of an identified asset for a period of time in exchange for a consideration. Control is considered to exist if the client has i) the right to obtain substantially all the economic benefits from the use of an identified asset; and ii) the right to direct the use of the asset.

 

The Company when operating as a lessee, at the beginning of the lease (on the date the underlying asset is available for use) records an asset for the right-of-use in the statement of financial position (under Property, plant and equipment) and a lease liability (under Other financial liabilities). This asset is initially recognized at cost, which includes: i) value of the initial measurement of the lease liability; ii) lease payments made up to the start date less lease incentives received; iii) the initial direct costs incurred; and iv) the estimation of costs for dismantling or restoration. Subsequently, the right-of-use asset is measured at cost, adjusted by any new measurement of the lease liability, less accumulated depreciation and accumulated losses due to impairment of value. The right-of-use asset is depreciated in the same terms as the rest of similar depreciable assets, if there is reasonable certainty that the lessee will acquire ownership of the asset at the end of the lease. If such certainty does not exist, the asset depreciates at the shortest period between the useful life of the asset or the lease term.

 

On the other hand, the lease liability is initially measured at the present value of the lease payments, discounted at the incremental loan rate of the Company, if the interest rate implicit in the lease could not be easily determined. Lease payments included in the measurement of the liability include: i) fixed payments, less any lease incentive receivable; ii) variable lease payments; iii) residual value guarantees; iv) exercise price of a purchase option; and v) penalties for lease termination.

 

The lease liability is increased to reflect the accumulation of interest and is reduced by the lease payments made. In addition, the carrying amount of the liability is measured again if there is a modification in the terms of the lease (changes in the term, in the amount of payments or in the evaluation of an option to buy or change in the amounts to be paid). Interest expense is recognized as an expense and is distributed among the periods that constitute the lease period, so that a constant interest rate is obtained in each year on the outstanding balance of the lease liability.

 

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Short-term leases, equal to or less than one year, or lease of low-value assets are excepted from the application of the recognition criteria described above, recording the payments associated with the lease as an expense in a linear manner throughout the lease term. The Company does not act as lessor.

 

2.19                                Deposits for returnable containers

 

This liability comprises cash collateral, or deposit, received from customers for bottles and other returnable containers made available to them.

 

This liability pertains to the deposit amount that is reimbursed when the customer or distributor returns the bottles and containers in good condition, together with the original invoice. The liability is estimated based on the number of bottles given to clients and distributors, the estimated number of bottles in circulation, and a historical average weighted value per bottle or containers. Deposits for returnable containers are presented as a current liability in other financial liabilities because the Company does not have legal rights to defer settlement for a period in excess of one year. However, the Company does not anticipate any material cash settlements for such amounts during the upcoming year.

 

2.20                                Revenue recognition

 

The Company recognizes revenue when control over a good or service is transferred to the client. Control refers to the ability of the client to direct the use and obtain substantially all the benefits of the goods and services exchanged. Revenue is measured based on the consideration to which it is expected to be entitled for such transfer of control, excluding amounts collected on behalf of third parties.

 

Management has defined the following indicators for revenue recognition, applying the five-step model established by IFRS 15 “Revenue from contracts with customers”: 1) Identification of the contract with the customer; 2) Identification of performance obligations; 3) Determination of the transaction price; 4) Assignment of the transaction price; and 5) Recognition of revenue.

 

All the above conditions are met at the time the products are delivered to the customer. Net sales reflect the units delivered at list price, net of promotions, discounts and taxes.

 

The revenue recognition criteria of the good provided by Embotelladora Andina corresponds to a single performance obligation that transfers the product to be received to the customer.

 

2.21                       Contributions of The Coca-Cola Company

 

The Company receives certain discretionary contributions from The Coca-Cola Company (TCCC) mainly related to the financing of advertising and promotional programs for its products in the territories where the Company has distribution licenses. The contribution received from TCCC are recognized in net income after the conditions agreed with TCCC in order to become a creditor to such incentive have been fulfilled, they are recorded as a reduction in the marketing expenses included in the Administration Expenses account. Given its discretionary nature, the portion of contributions received in one period does not imply it will be repeated in the following period.

 

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2.22                                Dividend payments

 

Dividend distribution to Company shareholders is recorded as a liability in the Company’s Consolidated Financial Statements, considering the 30% minimum dividend of the period’s earnings established by Chilean Corporate Law, unless otherwise agreed in the respective meeting, by the unanimity of the issued shares.

 

Interim and final dividends are recorded at the time of their approval by the competent body, which in the first case is normally the Board of Directors of the Company, while in the second case it is the responsibility of General Shareholders’ Meeting.

 

2.23                                Critical accounting estimates and judgments

 

The Company makes estimates and judgments concerning the future. Actual results may differ from previously estimated amounts.

 

In preparing the consolidated financial statements, the Company has used certain judgments and estimates made to quantify some of the assets, liabilities, income, expenses and commitments.

 

Following is an explanation of the estimates and judgments that might have a material impact on future financial statements.

 

2.23.1                       Impairment of goodwill and intangible assets with indefinite useful lives

 

The Company tests annually whether goodwill and intangible assets with indefinite useful life (such as distribution rights) have suffered any impairment. The recoverable amounts of cash generating units are generating units are determined based on value in use calculations. The key variables used in the calculations include sales volumes and prices, discount rates, marketing expenses and other economic factors including inflation. The estimation of these variables requires a use of estimates and judgments as they are subject to inherent uncertainties; however, the assumptions are consistent with the Company’s internal planning end past results. Therefore, management evaluates, and updates estimates according to the conditions affecting the variables. If these assets are considered to have been impaired, they will be written off at their estimated fair value or future recovery value according to the discounted cash flows analysis. Discounted cash flows in the Company’s cash generating units in Chile, Brazil, Argentina and Paraguay generated a higher value than the carrying values of the respective net assets, including goodwill of the Brazilian, Argentinian and Paraguayan subsidiaries.

 

2.23.2                       Fair Value of Assets and Liabilities

 

IFRS requires in certain cases that assets and liabilities be recorded at their fair value. Fair value is the price that would be received for selling an asset or paid to transfer a liability in a transaction ordered between market participants at the date of measurement.

 

The basis for measuring assets and liabilities at fair value are their current prices in an active market. For those that are not traded in an active market, the Company determines fair value based on the best information available by using valuation techniques.

 

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Table of Contents

 

In the case of the valuation of intangibles recognized as a result of acquisitions from business combinations, the Company estimates the fair value based on the “multi-period excess earning method”, which involves the estimation of future cash flows generated by the intangible assets, adjusted by cash flows that do not come from these, but from other assets. The Company also applies estimations over the period during which the intangible assets will generate cash flows, cash flows from other assets, and a discount rate.

 

Other assets acquired, and liabilities assumed in a business combination are carried at fair value using valuation methods that are considered appropriate under the circumstances. Assumptions include the depreciated cost of recovery and recent transaction values for comparable assets, among others. These valuation techniques require certain inputs to be estimated, including the estimation of future cash flows.

 

2.23.3                      Allowances for doubtful accounts

 

The Company evaluates the collectability of trade receivables using several factors. When the Company becomes aware of a specific inability of a customer to fulfill its financial commitments, a specific provision for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the amount that the Company estimates to be able to collect. In addition to specific provisions, allowances for doubtful accounts are also determined based on the restated valued of expected credit losses pursuant to IFRS 9.

 

2.23.4                      Useful life, residual value and impairment of property, plant, and equipment

 

Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of those assets. Changes in circumstances, such as technological advances, changes to the Company’s business model, or changes in its capital strategy might modify the effective useful lives as compared to our estimates. Whenever the Company determines that the useful life of Property, plant and equipment might be shortened, it depreciates the excess between the net book value and the estimated recoverable amount according to the revised remaining useful life. Factors such as changes in the planned usage of manufacturing equipment, dispensers, transportation equipment and computer software could make the useful lives of assets shorter. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of any of those assets may not be recovered. The estimate of future cash flows is based, among other factors, on certain assumptions about the expected operating profits in the future. The Company’s estimation of discounted cash flows may differ from actual cash flows because of, among other reasons, technological changes, economic conditions, changes in the business model, or changes in operating profit. If the sum of the projected discounted cash flows (excluding interest) is less than the carrying amount of the asset, the asset shall be written-off to its estimated recoverable value.

 

2.23.5                      Liabilities for deposits of returnable container

 

The Company records a liability for deposits received in exchange for bottles and containers provided to its customers and distributors. This liability represents the amount of deposits that must be reimbursed if the customer or distributor returns the bottles and containers in good condition, together with the original invoice. This liability is estimated based on the number of bottles given on loan to customers and distributors, estimates of bottles in circulation and the weighted average historical cost per bottle or container. Management uses professional judgment in order to estimate this liability, including the number of bottles in circulation, the amount of deposit that must be reimbursed and the timing of disbursements.

 

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Table of Contents

 

2.24.1                       New Standards, Interpretations and Amendments for annual periods beginning on or after January 1, 2019.

 

Standards and interpretations, as well as the improvements and amendments to IFRS, which have been issued, effective at the date of these financial statements, are detailed below.

 

The Company has applied these rules concluding that they will not significantly affect the financial statements.

 

 

 

Standards, Interpretations, Amendments

 

Mandatory
application date

IFRS 16

 

Leases

 

January 1, 2019

IFRIC 23

 

Uncertainty over Income Tax Treatments

 

January 1, 2019

 

IFRS 16 “Leases”

 

IFRS 16 replaces IAS17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Lease”, SIC-15 “Operating Leases Incentives” and SIC-27 “ Evaluating the Substance of Transactions in the Legal Form of a Lease.” The standard establishes the principles for the recognition, measurement, presentation and disclosure of leases and requires that lessees consider most leases in a single balance sheet model.

 

The lessor’s accounting under IFRS 16 remains substantially unchanged from IAS 17. Lessors will continue to classify leases as operating or financial leases using principles similar to those in IAS 17.

 

IFRIC 23 “Uncertainty over Income Tax Treatments”

 

The Interpretation addresses the accounting of income taxes when tax treatments imply uncertainty that affects the application of IAS 12 “Income taxes”. It does not apply to taxes or encumbrances that are outside the scope of IAS 12, nor does it specifically include requirements related to interests and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:

 

·                  If an entity considers the treatment of uncertain tax positions separately

·                  The assumptions that an entity makes about the assessment of tax treatments by tax authorities

·                  How an entity determines fiscal gain (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

·                  How an entity considers changes in facts and circumstances.

 

This interpretation began its effective application as of January 1, 2019. The application of IFRIC 23 has not generated impacts on the consolidated financial statements of Embotelladora Andina and its subsidiaries.

 

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Table of Contents

 

Amendments to IFRS that have been issued effective as of the date of these financial statements, are detailed below.

 

 

 

Amendments

 

Application date

IFRS 3

 

Business combinations - interests previously held in a joint operation

 

January 1, 2019

IFRS 9

 

Financial instruments - payments with negative compensation

 

January 1, 2019

IFRS 11

 

Joint agreements - interests previously held in a joint operation

 

January 1, 2019

IAS 12

 

Income taxes - tax consequences of payments related to financial instruments classified as equity

 

January 1, 2019

IAS 23

 

Loan costs - eligible loan costs to be capitalized

 

January 1, 2019

IAS 28

 

Investments in associates - long-term investments in associates or joint ventures

 

January 1, 2019

IAS 19

 

Employee benefits - amendment, reduction or liquidation of the plan

 

January 1, 2019

 

Company Management will evaluate the impact of the amendments listed above, once such transactions are carried out.

 

2.24.2                       New Accounting Standards, Interpretations and Amendments with effective application for annual periods beginning on or after January 1, 2020.

 

Standards and interpretations, as well as IFRS amendments, which have been issued, but have still not become effective as of the date of these financial statements are set forth below. The Company has not made an early adoption of these standards.

 

 

 

Standards and Interpretations

 

Mandatory
application date

Conceptual Framework

 

Revised Conceptual Framework

 

January 1, 2020

IFRS 17

 

Insurance Contracts

 

January 1, 2021

 

Revised Conceptual Framework

 

The IASB issued a Revised Conceptual Framework in March 2018, incorporating some new concepts, providing updated definitions and recognition criterion for assets and liabilities and clarifying some important concepts. Changes in the Conceptual Framework may affect the application of IFRS when no standard applies to a given transaction or event. The Revised Conceptual Framework becomes effective for periods ending on or after January 1, 2020.

 

IFRS 17 Insurance Contracts

 

In May 2017, the IASB issued IFRS 17 Insurance Contracts, a new comprehensive accounting standard for insurance contracts that covers recognition, measurement, presentation and disclosure. The new rule applies to all types of insurance contracts, regardless of the type of entity that issues them, being effective for periods beginning on or after January 1, 2021, with required comparative figures, early application is allowed, provided that the entity also applies IFRS 9 and IFRS 15.

 

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3 - FINANCIAL REPORTING BY SEGMENT

 

The Company provides financial information by segments according to IFRS 8 “Operating Segments,” which establishes standards for reporting by operating segment and related disclosures for products and services, and geographic areas.

 

The Company’s Board of Directors and Management measures and assesses performance of operating segments based on the operating income of each of the countries where there are Coca-Cola franchises.

 

The operating segments are determined based on the presentation of internal reports to the Company´s chief strategic decision-maker. The chief operating decision-maker has been identified as the Company´s Board of Directors who makes the Company’s strategic decisions.

 

The following operating segments have been determined for strategic decision making based on geographic location:

 

·                 Operation in Chile

·                 Operation in Brazil

·                 Operation in Argentina

·                 Operation in Paraguay

 

The four operating segments conduct their businesses through the production and sale of soft drinks and other beverages, as well as packaging materials.

 

Expenses and revenue associated with the Corporate Officer were assigned to the operation in Chile in the soft drinks segment because Chile is the country that manages and pays the corporate expenses, which would also be substantially incurred, regardless of the existence of subsidiaries abroad.

 

Total revenues by segment include sales to unrelated customers and inter-segments, as indicated in the consolidated statement of income of the Company.

 

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Table of Contents

 

A summary of the Company’s operating segments in accordance to IFRS is as follows:

 

For the period ended June 30, 2019

 

Chile
Operation

 

Argentina
Operation

 

Brazil
Operation

 

Paraguay
Operation

 

Intercompany
Eliminations

 

Consolidated
total

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Net sales

 

289,633,297

 

193,174,594

 

286,698,840

 

71,895,957

 

(1,222,238

)

840,180,450

 

Cost of sales

 

(175,119,020

)

(104,786,160

)

(176,233,594

)

(41,757,661

)

1,222,238

 

(496,674,197

)

Distribution expenses

 

(29,077,603

)

(26,211,429

)

(20,816,556

)

(4,080,611

)

 

(80,186,199

)

Administrative expenses

 

(59,155,568

)

(42,672,920

)

(45,679,738

)

(11,058,279

)

 

(158,566,505

)

Finance income

 

793,006

 

587,921

 

1,398,903

 

131,026

 

 

2,910,856

 

Finance expense

 

(6,474,998

)

(120,040

)

(15,724,818

)

 

 

 

(22,319,856

)

Interest expense, net*

 

(5,681,992

)

467,881

 

(14,325,915

)

131,026

 

 

(19,409,000

)

Share of the entity in income of associates

 

(518,389

)

 

526,274

 

 

 

7,885

 

Income tax expense

 

(5,514,532

)

(1,418,417

)

(8,018,269

)

(2,799,203

)

 

(17,750,421

)

Other income (loss)

 

(4,816,832

)

(1,094,507

)

415,274

 

(123,962

)

 

(5,620,027

)

Net income of the segment reported

 

9,749,361

 

17,459,042

 

22,566,316

 

12,207,267

 

 

61,981,986

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

23,010,728

 

11,980,571

 

14,307,664

 

4,596,277

 

 

53,895,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

184,053,952

 

69,172,630

 

141,324,277

 

30,778,484

 

 

425,329,343

 

Non-current assets

 

657,776,765

 

169,111,054

 

663,545,990

 

230,588,598

 

 

1,721,022,407

 

Segment assets, total

 

840,212,443

 

238,283,684

 

804,870,267

 

261,367,082

 

 

2,144,733,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount in associates and joint ventures accounted for using the equity method, total

 

49,237,481

 

 

 

51,950,215

 

 

 

101,187,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

151,073,828

 

54,513,494

 

105,841,776

 

27,755,695

 

 

339,184,793

 

Non-current liabilities

 

487,601,264

 

15,703,003

 

414,967,231

 

15,227,136

 

 

933,498,634

 

Segment liabilities, total

 

638,675,092

 

70,216,497

 

520,809,007

 

42,982,831

 

 

1,272,683,427

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by in Operating Activities

 

42,910,504

 

14,380,529

 

26,701,745

 

5,741,258

 

 

88,734,036

 

Cash flows (used in) provided by Investing Activities

 

(30,432,470

)

(12,843,664

)

(8,031,659

)

(6,008,599

)

 

(57,316,392

)

Cash flows (used in) provided by Financing Activities

 

(45,522,143

)

(264,641

)

(4,338,417

)

(127,636

)

 

(50,253,550

)

 


(*) Financial expenses associated with external financing for the acquisition of companies, including capital contributions are presented in this item.

 

28


 

Table of Contents

 

For the period ended June 30, 2018

 

Chile
Operation

 

Argentina
Operation

 

Brazil
Operation

 

Paraguay
Operation

 

Intercompany
Eliminations

 

Consolidated total

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Net sales

 

273,939,944

 

203,690,122

 

267,958,454

 

72,684,876

 

(769,157

)

817,504,239

 

Cost of sales

 

(161,736,659

)

(106,018,242

)

(162,324,309

)

(42,123,473

)

769,157

 

(471,433,526

)

Distribution expenses

 

(26,738,727

)

(30,040,547

)

(19,035,746

)

(3,808,740

)

 

(79,623,760

)

Administrative expenses

 

(58,087,871

)

(45,261,036

)

(45,909,611

)

(10,862,210

)

 

(160,120,728

)

Finance income

 

1,233,837

 

(329,042

)

1,098,458

 

115,885

 

 

2,119,138

 

Finance expense*

 

(7,899,110

)

997,125

 

(15,123,303

)

0

 

 

(22,025,288

)

Interest expense, net

 

(6,665,273

)

668,083

 

(14,024,845

)

115,885

 

 

(19,906,150

)

Share of the entity in income of associates accounted for using the equity method

 

351,780

 

0

 

431,752

 

0

 

 

783,532

 

Income tax expense

 

(10,998,657

)

(10,316,610

)

(4,616,651

)

(2,706,059

)

 

(28,637,977

)

Other income (loss)

 

(5,144,042

)

330,515

 

(6,169,916

)

411,354

 

 

(10,572,089

)

Net income of the segment reported

 

4,920,495

 

13,052,285

 

16,309,128

 

13,711,633

 

 

47,993,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20,681,203

 

9,818,832

 

13,128,075

 

4,700,712

 

 

48,328,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

187,679,962

 

70,828,742

 

107,578,298

 

34,753,814

 

 

400,840,816

 

Non-current assets

 

631,764,648

 

148,515,647

 

627,219,623

 

240,470,431

 

 

1,647,970,349

 

Segment assets, total

 

819,444,610

 

219,344,389

 

734,797,921

 

275,224,245

 

 

2,048,811,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amount in associates and joint ventures accounted for using the equity method, total

 

35,940,672

 

 

48,641,932

 

 

 

84,582,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disbursements of non-monetary segment assets,

 

22,012,676

 

11,273,960

 

20,208,772

 

3,497,785

 

 

56,993,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

134,236,475

 

64,699,970

 

99,551,058

 

25,632,592

 

 

324,120,095

 

Non-current liabilities

 

466,183,096

 

15,055,022

 

393,100,377

 

15,586,339

 

 

889,924,834

 

Segment liabilities, total

 

600,419,571

 

79,754,992

 

492,651,435

 

41,218,931

 

 

1,214,044,929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by Operating Activities

 

27,249,052

 

14,424,612

 

27,075,891

 

19,472,837

 

 

88,222,392

 

Cash flows (used in) provided by Investing Activities

 

(7,859,719

)

(12,772,900

)

(20,208,771

)

(3,497,785

)

 

(44,339,175

)

Cash flows (used in) provided by Financing Activities

 

(51,136,632

)

(9,651,055

)

(3,000,015

)

(124,854

)

 

(63,912,556

)

 


(*) Financial expenses associated with external financing for the acquisition of companies, including capital contributions among others, are presented in this item.

 

29


 

Table of Contents

 

4 - CASH AND CASH EQUIVALENTS

 

Cash and cash equivalents as of June 30, 2019 and December 31, 2018 are detailed as follows:

 

By item

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Cash

 

349,184

 

2,907,276

 

Bank balances

 

34,818,774

 

46,425,927

 

Time deposits

 

2,014,239

 

1,500,315

 

Other fixed rate instruments

 

80,268,144

 

86,705,095

 

Total cash and cash equivalents

 

117,450,341

 

137,538,613

 

 

Time deposits expire in less than three months from their acquisition date and accrue market interest for this type of short-term investment. Other fixed-income instruments mainly correspond to purchase transactions with the resale of debt instruments with a maturity of less than 90 days, from the date of investment. There are no restrictions for significant amounts available to cash.

 

By currency

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

USD

 

14,174,350

 

5,917,041

 

EUR

 

9,622

 

51,401

 

ARS

 

10,777,198

 

6,726,906

 

CLP

 

50,195,498

 

86,121,695

 

PGY

 

 

10,680,600

 

BRL

 

42,293,673

 

28,040,970

 

Cash and cash equivalents

 

117,450,341

 

137,538,613

 

 

30


Table of Contents

 

5 - OTHER CURRENT AND NON-CURRENT FINANCIAL ASSETS

 

The composition of other financial assets as of June 30, 2019 and 2018, is as follows:

 

 

 

Balance

 

 

 

Current

 

Non-current

 

Other financial assets

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Financial assets measured at amortized cost (1)

 

 

 

14,040

 

 

 

Financial assets at fair value (2)

 

 

 

669,527

 

85,597,714

 

87,446,662

 

Financial assets measured at amortized cost (3)

 

 

 

11,232,553

 

13,475,279

 

Increase (decrease) in foreign currency exchange (4)

 

 

 

(311,919

)

(3,559,646

)

Total

 

 

683,567

 

96,518,349

 

97,362,295

 

 


(1) Financial instruments held by the Company other than cash and cash equivalents. They consist of time deposits with short-term maturities (more than 90 days), restricted mutual funds and derivative contracts.

 

(2) See detail in Note 22

 

(3) Correspond to the rights in the Argentinean company Alimentos de Soya S.A., which are framed in the purchase of the “Ades” brand managed by The Coca-Cola Company at the end of 2016.

 

(4) Includes the effects of adopting IAS 29

 

6 — OTHER CURRENT AND NON-CURRENT NON-FINANCIAL ASSETS

 

The composition of other non-financial assets as of June 30, 2019 and 2018, is as follows:

 

 

 

Balance

 

 

 

Current

 

Non-current

 

Other non-financial assets

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

Prepaid expenses

 

15,846,610

 

4,967,255

 

535,955

 

810,662

 

Tax credit remainder

 

146,659

 

18,022

 

223,142

 

13,322,720

 

Guaranty deposit (customs)

 

2,299

 

3,013

 

 

 

Deposit in courts

 

 

 

17,669,006

 

18,590,597

 

Others (1)

 

908,751

 

960,633

 

14,922,137

 

2,253,285

 

Total

 

16,904,319

 

5,948,923

 

33,350,240

 

34,977,264

 

 


(1) Other non-current non-financial assets are mainly composed of non-current tax credits

 

31


Table of Contents

 

7 — TRADE AND OTHER RECEIVABLES

 

The composition of trade and other receivables is detailed as follows:

 

 

 

Balance

 

 

 

Current

 

Non-current

 

Trade debtors and other accounts receivable, Gross

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

Trade debtors

 

101,137,126

 

150,933,965

 

54,401

 

66,510

 

Other debtors

 

24,390,713

 

19,552,539

 

133,804

 

1,204,187

 

Other accounts receivable

 

2,840,383

 

9,925,027

 

1,306

 

 

Total

 

128,368,222

 

180,411,531

 

189,511

 

1,270,697

 

 

 

 

Balance

 

 

 

Current

 

Non-current

 

Trade debtors and other accounts receivable, Net

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

Trade debtors

 

98,075,796

 

147,728,216

 

54,401

 

66,510

 

Other debtors

 

21,561,219

 

16,722,240

 

133,804

 

1,204,187

 

Other accounts receivable

 

2,537,652

 

9,662,867

 

1,306

 

 

Total

 

122,174,667

 

174,113,323

 

189,511

 

1,270,697

 

 

The stratification of the portfolio of current and non-current trade debtors is as follows:

 

 

 

Balance

 

Current trade debtors without impairment impact

 

06.30.2019
CLP (000’s)

 

12.31.2018
CLP (000’s)

 

Less than one month

 

94,263,552

 

144,172,500

 

Between one and three months

 

2,289,530

 

2,066,514

 

Between three and six months

 

1,049,136

 

601,042

 

Between six and eight months

 

666,245

 

851,009

 

Older than eight months

 

2,923,064

 

3,309,410

 

Total

 

101,191,527

 

151,000,475

 

 

32


Table of Contents

 

The Company has an approximate number of 276,000 clients, which may have balances in the different sections of the stratification. The number of clients is distributed geographically with 65,400 in Chile, 89,200 in Brazil, 64,400 in Argentina and 57,000 in Paraguay.

 

 

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Debtors for current credit operations

 

101,137,126

 

150,933,965

 

Non-current credit operations

 

54,401

 

66,510

 

Total

 

101,191,527

 

151,000,475

 

 

The movement in the allowance for doubtful accounts is presented below:

 

 

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Opening balance

 

6,298,208

 

6,494,113

 

Bad debt expense

 

353,571

 

1,629,761

 

Provision application

 

(332,468

)

(1,257,591

)

Change due to foreign exchange differences

 

(125,755

)

(568,075

)

Movement

 

(104,652

)

(195,905

)

Ending balance

 

6,193,556

 

6,298,208

 

 

8 — INVENTORIES

 

The composition of inventories is detailed as follows:

 

Details

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Raw materials (1)

 

98,737,597

 

86,102,495

 

Finished goods

 

34,510,312

 

37,213,848

 

Spare parts and supplies

 

20,262,391

 

28,777,180

 

Work in progress

 

514,633

 

780,324

 

Other inventories

 

4,538,942

 

1,049,165

 

Obsolescence provision (2)

 

(2,862,394

)

(2,603,303

)

Total

 

155,701,481

 

151,319,709

 

 

The cost of inventory recognized as cost of sales as of June 30, 2019 and 2018, is CLP 496,674,197 thousand and CLP 471,433,525 thousand, respectively

 


(1)             Approximately 80% is composed of concentrate and sweeteners used in the preparation of beverages, as well as caps and PET supplies used in the packaging of the product.

(2)             The obsolescence provision is related mainly with the obsolescence of spare parts classified as inventories and to a lesser extent to finished products and raw materials. The general standard is to provision all those multi-functional spare parts without utility in rotation in the last four years prior to the technical analysis technical to adjust the provision. In the case of raw materials and finished products, the obsolescence provision is determined according to maturity.

 

33


Table of Contents

 

9 - TAX ASSETS AND LIABILITIES

 

Current assets as of June 30, 2019 and December 31, 2018 are as follows:

 

Tax assets

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Tax credits (1)

 

5,858,023

 

2,532,056

 

Total

 

5,858,023

 

2,532,056

 

 


(1) Tax credits correspond to income tax credits on training expenses, purchase of Property, plant and equipment, and donations.

 

The composition of current tax payable as of June 30, 2019 and December 31, 2018, are detailed as follows:

 

Tax liabilities

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Income tax expense

 

2,078,402

 

9,338,612

 

Total

 

2,078,402

 

9,338,612

 

 

10 - INCOME TAX EXPENSE AND DEFERRED TAXES

 

10.1 Income tax expense

 

The current and deferred income tax expenses are detailed as follows:

 

Details

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Current income tax expense

 

17,402,081

 

26,246,772

 

Current tax adjustment previous period

 

195,747

 

286,066

 

Withholding tax expense foreign subsidiaries

 

1,661,607

 

1,773,175

 

Other current tax expense (income)

 

(209,530

)

38,235

 

Current income tax expense

 

19,049,905

 

28,344,248

 

Income (expense) for the creation and reversal of current tax difference

 

(1,299,484

)

293,729

 

Expense (income) for deferred taxes

 

(1,299,484

)

293,729

 

Total income tax expense

 

17,750,421

 

28,637,977

 

 

34


Table of Contents

 

The distribution of national and foreign tax expenditure is as follows:

 

Income taxes

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Current taxes

 

 

 

 

 

Foreign

 

(10,937,042

)

(18,085,103

)

National

 

(8,112,863

)

(10,259,145

)

Current tax expense

 

(19,049,905

)

(28,344,248

)

Deferred taxes

 

 

 

 

 

Foreign

 

(1,298,846

)

445,783

 

National

 

2,598,330

 

(739,512

)

Deferred tax expense

 

1,299,484

 

(293,729

)

Income tax expense

 

(17,750,421

)

(28,637,977

)

 

The reconciliation of the tax expense using the statutory rate with the tax expense using the effective rate is as follows:

 

Reconciliation of effective rate

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Net income before taxes

 

79,732,407

 

76,631,518

 

Tax expense at legal rate (27.0%)

 

(21,527,750

)

(20,690,510

)

Effect of a different tax rate in other jurisdictions

 

(233,863

)

789,353

 

Permanent differences:

 

 

 

 

 

Non-taxable revenues

 

4,042,581

 

4,641,825

 

Non-deductible expenses

 

(869,676

)

(4,559,816

)

Foreign subsidiaries tax withholding expense and other legal tax debits and credits

 

838,288

 

(8,818,829

)

Adjustments to tax expense

 

4,011,192

 

(8,736,820

)

Tax expense at effective rate

 

(17,750,421

)

(28,637,977

)

Effective rate

 

22.3

%

37.4

%

 

The applicable income tax rates in each of the jurisdictions where the Company operates are the following:

 

 

 

Rate

 

Country

 

2019

 

2018

 

Chile

 

27.0

%

27.0

%

Brazil

 

34.0

%

34.0

%

Argentina

 

30.0

%

30.0

%

Paraguay

 

10.0

%

10.0

%

 

35


Table of Contents

 

10.2        Deferred income taxes

 

The net cumulative balances of temporary differences that give rise to deferred tax assets and liabilities are detailed as follows:

 

 

 

06.30.2019

 

12.31.2018

 

Temporary differences

 

Assets

 

Liabilities

 

Assets

 

Liabilities

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

Property, plant and equipment

 

6,146,488

 

55,486,144

 

5,420,447

 

46,181,359

 

Obsolescence provision

 

1,803,699

 

 

910,076

 

112,359

 

Employee benefits

 

2,670,170

 

24,709

 

5,169,161

 

131,829

 

Post-employment benefits

 

63,280

 

758,735

 

90,941

 

1,014,354

 

Tax loss carried-forwards (1)

 

10,986,264

 

 

9,137,392

 

 

Tax Goodwill Brazil

 

14,208,001

 

 

18,836,838

 

 

Contingency provision

 

22,660,916

 

 

26,796,262

 

 

Foreign exchange differences (2)

 

 

 

13,083,953

 

 

Allowance for doubtful accounts

 

1,308,144

 

 

1,262,977

 

 

Coca-Cola incentives (Argentina)

 

20,235

 

 

352,061

 

 

Assets and liabilities for placement of bonds

 

 

1,251,673

 

 

1,327,727

 

Lease liabilities

 

2,436,080

 

0

 

1,328,320

 

 

Inventories

 

346,479

 

0

 

347,470

 

 

Distribution rights

 

 

159,098,626

 

 

173,273,994

 

Others

 

8,059,767

 

 

0

 

5,940,224

 

Subtotal

 

70,709,523

 

216,619,887

 

82,735,898

 

227,981,846

 

Total liabilities net

 

1,618,274

 

147,528,637

 

 

145,245,948

 

 


(1) Tax losses mainly associated with the subsidiary Embotelladora Andina Chile S.A. In Chile tax losses have no expiration date

(2) Corresponds to differed taxes for exchange rate differences generated on the translation of debt expressed in foreign currency in the subsidiary Rio de Janeiro Refrescos Ltda. and which for tax purposes are recognized in Brazil when incurred..

 

The movement in deferred income tax accounts is as follows:

 

Movement

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Opening Balance

 

145,245,948

 

121,991,585

 

Increase (decrease) in deferred tax

 

(415,875

)

11,303,016

 

Increase (decrease) due to foreign currency translation(*)

 

1,080,290

 

11,951,347

 

Total movements

 

664,415

 

23,254,363

 

Ending balance

 

145,910,363

 

145,245,948

 

 


(*) Includes IAS 29 effect, due to inflation in Argentina

 

36


Table of Contents

 

11 - PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment are detailed below at the end of each period:

 

Property, plant and equipment, gross

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Construction in progress

 

24,238,371

 

26,048,670

 

Land

 

100,177,443

 

100,479,196

 

Buildings

 

293,871,087

 

371,279,937

 

Plant and equipment

 

543,104,896

 

623,568,795

 

Information technology equipment

 

23,094,737

 

22,752,205

 

Fixed installations and accessories

 

45,639,151

 

43,717,907

 

Vehicles

 

46,884,153

 

53,682,179

 

Leasehold improvements

 

2,477,215

 

144,914

 

Rights of use (1)

 

38,227,208

 

 

Other properties, plant and equipment (2)

 

445,396,972

 

438,350,022

 

Total Property, plant and raw equipment, gross

 

1,563,111,233

 

1,680,023,825

 

 

Accumulated depreciation of
Property, plant and equipment

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Buildings

 

(82,558,635

)

(157,119,586

)

Plant and equipment

 

(363,730,721

)

(416,164,810

)

Information technology equipment

 

(17,931,663

)

(17,567,484

)

Fixed installations and accessories

 

(24,855,630

)

(22,660,738

)

Vehicles

 

(28,768,323

)

(31,883,578

)

Leasehold improvements

 

(688,605

)

(112,737

)

Rights of use

 

(4,138,740

)

 

Other properties, plant and equipment (2)

 

(326,098,973

)

(323,743,924

)

Total accumulated depreciation

 

(848,771,290

)

(969,252,857

)

 

 

 

 

 

 

Total Property, plant and raw equipment, net

 

714,339,943

 

710,770,968

 

 


(1) For adoption of IFRS 16. See details of underlying assets in Note 11.1

(2) The net balance of each of these categories is presented below:

 

Other Property, plant and equipment

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Bottles

 

50,205,132

 

51,522,834

 

Marketing and promotional assets

 

52,553,944

 

45,739,948

 

Other Property, plant and equipment

 

16,538,923

 

17,343,316

 

Total

 

119,297,999

 

114,606,098

 

 

37


Table of Contents

 

11.1        Movements

 

Movements in Property, plant and equipment as of June 30, 2019 and December 31, 2018 are detailed as follows:

 

 

 

Construction
in progress

 

Land

 

Buildings, net

 

Plant and
equipment,
net

 

IT
equipment
net

 

Fixed
facilities and
accessories,
net

 

Vehicles, net

 

Leasehold
improvements,
net

 

Others

 

Rights-of-use

 

Property, plant
& equipment,
net

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s) 

 

CLP (000’s)

 

Opening balance at January 1, 2019

 

26,048,670

 

100,479,196

 

214,160,351

 

207,403,985

 

5,184,721

 

21,057,169

 

21,798,601

 

32,177

 

114,606,098

 

 

710,770,968

 

Additions

 

14,699,680

 

 

148,339

 

4,804,013

 

395,328

 

 

179,024

 

1,309

 

20,856,853

 

 

41,084,546

 

Right-of use additions(3)

 

 

 

 

 

 

 

 

 

 

19,874,668

 

19,874,668

 

Disposals

 

 

 

(2,410

)

(163,597

)

(977

)

 

(52,095

)

(155

)

(623,540

)

 

(853,982

)

Transfers between items of Property, plant and equipment

 

(11,208

)

 

1,535,288

 

2,810,608

 

614,935

 

791,840

 

2,072,550

 

30,241

 

7,741,202

 

 

 

Right-of-use transfers

 

(15,596,664

)

 

(68,074

)

(14,011,365

)

(23,712

)

 

(1,181,465

)

 

(2,521,084

)

17,805,700

 

 

Depreciation expense

 

 

 

(3,806,726

)

(18,700,150

)

(945,200

)

(1,486,253

)

(2,661,809

)

(10,296

)

(21,095,043

)

 

(48,705,477

)

Amortization (2)

 

 

 

 

 

 

 

 

 

 

(4,138,740

)

(4,138,740

)

Increase (decrease) due to foreign currency translation differences

 

(1,168,312

)

(280,975

)

(183,875

)

(1,254,560

)

(81,461

)

420,766

 

(169,874

)

(11

)

(106,868

)

530,287

 

(2,294,883

)

Other increase (decrease) (1)

 

266,205

 

(20,778

)

(470,441

)

(1,514,759

)

19,440

 

(1

)

(1,869,102

)

1,735,345

 

440,381

 

16,553

 

(1,397,157

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total movements

 

(1,810,299

)

(301,753

)

(2,847,899

)

(28,029,810

)

(21,647

)

(273,648

)

(3,682,771

)

1,756,433

 

4,691,901

 

34,088,468

 

3,568,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance at June 30, 2019

 

24,238,371

 

100,177,443

 

211,312,452

 

179,374,175

 

5,163,074

 

20,783,521

 

18,115,830

 

1,788,610

 

119,297,999

 

34,088,468

 

714,339,943

 

 


(1)         Mainly correspond to effects of adopting IAS 29 in Argentina.

(2)         Of the total of CLP 4,138,740 thousand recorded as amortization for the current period, approximately CLP 2,949 million correspond to right-of-use amortization arising from the adoption of the IFRS, effective beginning on January 1, 2019. The remaining CLP 1,189 million correspond to depreciation (today amortization) of goods acquired under the financial lease method, which until December 31, 2018 were classified and valued pursuant to the accounting criteria of property, plant and equipment.

(3)         For IFRS 16 adoption

 

38


Table of Contents

 

 

 

Construction
in progress

 

Land

 

Buildings, net

 

Plant and
equipment,
net

 

IT
Equipment,
net

 

Fixed facilities
and
accessories, net

 

Vehicles, net

 

Leasehold
improvements,
net

 

Other,
net

 

Property, plant
and equipment, net

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Opening balance at January 1, 2018

 

84,118,716

 

96,990,155

 

162,385,848

 

155,833,080

 

4,627,325

 

19,589,877

 

29,263,265

 

7,415

 

106,934,818

 

659,750,499

 

Additions

 

65,284,334

 

 

504,675

 

17,924,606

 

783,299

 

165,226

 

1,451,462

 

1,430

 

42,793,277

 

128,908,309

 

Disposals

 

 

(5,465

)

(209,713

)

(1,002,133

)

 

 

(203,036

)

 

(1,588,050

)

(3,008,397

)

Transfers between items of Property, plant and equipment

 

(109,893,610

)

 

45,032,440

 

54,460,571

 

622,222

 

1,481,081

 

(2,218,354

)

22,000

 

10,493,650

 

 

Depreciation expense

 

 

 

(7,001,828

)

(39,182,401

)

(1,830,295

)

(2,668,535

)

(5,201,263

)

(11,112

)

(41,727,195

)

(97,622,630

)

Increase (decrease) due to foreign currency translation differences

 

(6,880,059

)

(4,615,830

)

(14,485,709

)

(17,048,903

)

(414,850

)

(4,048,135

)

(1,722,767

)

169

 

(16,954,922

)

(66,171,006

)

Other increase (decrease) (1)

 

(6,580,711

)

8,110,336

 

27,934,638

 

36,419,165

 

1,397,020

 

6,537,655

 

429,294

 

12,275

 

14,654,520

 

88,914,192

 

Total movements

 

(58,070,046

)

3,489,041

 

51,774,503

 

51,570,905

 

557,396

 

1,467,292

 

(7,464,664

)

24,762

 

7,671,280

 

51,020,469

 

Ending balance at December 31, 2018

 

26,048,670

 

100,479,196

 

214,160,351

 

207,403,985

 

5,184,721

 

21,057,169

 

21,798,601

 

32,177

 

114,606,098

 

710,770,968

 

 


(1)         Mainly correspond to property, plant & equipment write-offs.

 

Right-of-use is composed of as follows:

 

Rights of use

 

Gross asset

 

Depreciation

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Buildings

 

2,209,647

 

(461,331

)

Plant and equipment

 

30,855,364

 

(2,781,522

)

IT Equipment

 

17,392

 

(19,901

)

Motor vehicles

 

3,670,223

 

(777,829

)

Others

 

1,474,582

 

(98,157

)

Total

 

38,227,208

 

4,138,740

 

 

Interest expense for accumulated lease liabilities as of June 30, 2019 amounts to CLP 1,215,269 thousand.

 

39


Table of Contents

 

12 - RELATED PARTIES

 

Balances and main transactions with related parties are detailed as follows:

 

12.1                                Accounts receivable:

 

 

 

 

 

 

 

 

 

 

 

06.30.2019

 

12.31.2018

 

Taxpayer ID

 

Company

 

Relationship

 

Country

 

Currency

 

Current

 

Non-current

 

Current

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

96.891.720-K

 

Embonor S.A.

 

Shareholder related

 

Chile

 

CLP

 

3,241,279

 

 

4,344,082

 

 

96.714.870-9

 

Coca-Cola de Chile S.A.

 

Shareholder

 

Chile

 

CLP

 

17,579

 

122,506

 

2,175,934

 

74,340

 

Foreign

 

Coca-Cola de Argentina

 

Director related

 

Argentina

 

ARS

 

789,665

 

 

1,684,357

 

 

Foreign

 

UBI 3 (Ades)

 

Shareholder related

 

Argentina

 

ARS

 

 

 

455,823

 

 

Foreign

 

Alimentos de Soja S.A.U.

 

Shareholder related

 

Argentina

 

ARS

 

405,169

 

 

371,712

 

 

96.517.210-2

 

Embotelladora Iquique S.A.

 

Shareholder related

 

Chile

 

CLP

 

190,442

 

 

228,387

 

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

CLP

 

588,283

 

 

161,460

 

 

96.919.980-7

 

Cervecería Austral S.A.

 

Director related

 

Chile

 

USD

 

31,969

 

 

26,557

 

 

77.755.610-K

 

Comercial Patagona Ltda.

 

Director related

 

Chile

 

CLP

 

2,560

 

 

1,951

 

 

76.572.588-7

 

Coca-Cola del Valle New Ventures S.A.

 

Associate

 

Chile

 

CLP

 

1,973,566

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

7,240,512 

 

122,506

 

9,450,263

 

74,340

 

 

12.2                                Accounts payable:

 

 

 

 

 

 

 

 

 

 

 

06.30.2019

 

12.31.2018

 

Taxpayer ID

 

Company

 

Relationship

 

Country

 

Currency

 

Current

 

Non-current

 

Current

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

96.714.870-9

 

Coca-Cola de Chile S.A.

 

Shareholder

 

Chile

 

CLP

 

24,424,578

 

 

21,286,933

 

 

Foreign

 

Recofarma do Indústrias Amazonas Ltda.

 

Shareholder related

 

Brazil

 

BRL

 

7,146,089

 

 

8,681,099

 

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

CLP

 

3,779,116

 

 

5,702,194

 

 

Foreign

 

Ser. y Prod. para Bebidas Refrescantes S.R.L.

 

Shareholder

 

Argentina

 

ARS

 

5,111,140

 

 

5,479,714

 

 

Foreign

 

Leão Alimentos e Bebidas Ltda.

 

Associate

 

Brazil

 

BRL

 

1,510,745

 

 

3,132,515

 

 

Foreign

 

Monster

 

Shareholder related

 

Brazil

 

BRL

 

193,830

 

 

664,565

 

 

76.572.588-7

 

Coca-Cola del Valle New Ventures S.A.

 

Associate

 

Chile

 

CLP

 

858,610

 

 

649,046

 

 

89.996.200-1

 

Envases del Pacífico S.A.

 

Director related

 

Chile

 

CLP

 

10,481

 

 

139,468

 

 

96.891.720-K

 

Embonor S.A.

 

Shareholder related

 

Chile

 

CLP

 

 

 

92,325

 

 

Foreign

 

Alimentos de Soja S.A.U.

 

Shareholder related

 

Argentina

 

ARS

 

847,629

 

 

 

 

Foreign

 

Verde Campo

 

Shareholder related

 

Brazil

 

BRL

 

176,516

 

 

 

 

Foreign

 

Coca-Cola Panama

 

Shareholder related

 

Panamá

 

USD

 

29,936

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

44,088,670

 

 

45,827,859

 

 

 

40


Table of Contents

 

12.3                       Transactions:

 

Taxpayer ID

 

Company

 

Relationship

 

Country

 

Transaction description

 

Currency

 

Accumulated
06.30.2019

 

Accumulated
06.30.2018

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

96.714.870-9

 

Coca-Cola de Chile S.A.

 

Shareholders

 

Chile

 

Concentrate purchase

 

CLP

 

63,777,733

 

71,170,250

 

96.714.870-9

 

Coca-Cola de Chile S.A.

 

Shareholders

 

Chile

 

Purchase of advertising services

 

CLP

 

13,046,133

 

2,751,437

 

96.714.870-9

 

Coca-Cola de Chile S.A.

 

Shareholders

 

Chile

 

Water source lease

 

CLP

 

2,598,339

 

2,875,479

 

96.714.870-9

 

Coca-Cola de Chile S.A.

 

Shareholders

 

Chile

 

Sale of raw materials and others

 

CLP

 

780,489

 

392,989

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

Purchase of bottles

 

CLP

 

7,066,035

 

7,985,433

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

Purchase of raw materials

 

CLP

 

10,240,109

 

6,272,441

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

Purchase of caps

 

CLP

 

115,513

 

402,792

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

Purchase of services and others

 

CLP

 

212,615

 

325,351

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

Purchase of containers

 

CLP

 

2,790,017

 

1,700,598

 

86.881.400-4

 

Envases CMF S.A.

 

Associate

 

Chile

 

Sale of containers/raw materials

 

CLP

 

2,724,574

 

1,782,865

 

96.891.720-K

 

Embonor S.A.

 

Shareholder related

 

Chile

 

Sale of finished products

 

CLP

 

24,063,032

 

20,613,464

 

96.517.310-2

 

Embotelladora Iquique S.A.

 

Shareholder related

 

Chile

 

Sale of finished products

 

CLP

 

1,499,195

 

1,200,209

 

89.996.200-1

 

Envases del Pacífico S.A.

 

Director related

 

Chile

 

Purchase of raw materials and materials

 

CLP

 

 

759,871

 

94.627.000-8

 

Parque Arauco S.A

 

Director related

 

Chile

 

Space lease

 

CLP

 

 

91,685

 

Foreign

 

Recofarma do Indústrias Amazonas Ltda.

 

Shareholder related

 

Brazil

 

Concentrate purchase

 

BRL

 

53,023,837

 

47,794,249

 

Foreign

 

Recofarma do Indústrias Amazonas Ltda.

 

Shareholder related

 

Brazil

 

Reimbursement and other purchases

 

BRL

 

4,972,831

 

3,203,470

 

Foreign

 

Serv. y Prod. para Bebidas Refrescantes S.R.L.

 

Shareholder

 

Argentina

 

Concentrate purchase

 

ARS

 

44,254,659

 

52,708,057

 

Foreign

 

Serv. y Prod. para Bebidas Refrescantes S.R.L.

 

Shareholder

 

Argentina

 

Advertising participation

 

ARS

 

3,525,902

 

6,347,282

 

Foreign

 

Coca-Cola Peru

 

Shareholder related

 

Peru

 

Concentrate purchase and marketing recovery

 

USD

 

 

519,973

 

Foreign

 

Sorocaba Refrescos S.A.

 

Associate

 

Brazil

 

Purchase of products

 

BRL

 

490,101

 

367,747

 

Foreign

 

Leão Alimentos e Bebidas Ltda.

 

Associate

 

Brazil

 

Purchase of products

 

BRL

 

 

146,116

 

76.572.588-7

 

Coca-Cola Del Valle New Ventures SA

 

Shareholder in common

 

Chile

 

Sale of services and others

 

CLP

 

1,947,606

 

382,589

 

Foreign

 

Alimentos de Soja S.A.U.

 

Shareholder related

 

Argentina

 

Payment of commissions and services

 

ARS

 

698,713

 

101,490

 

Foreign

 

Alimentos de Soja S.A.U.

 

Shareholder related

 

Argentina

 

Purchase of products

 

ARS

 

2,272,708

 

 

 

41


Table of Contents

 

12.4                                Salaries and benefits received by key management

 

Salaries and benefits paid to the Company’s key management personnel including directors and managers are detailed as follows:

 

Description

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Executive wages, salaries and benefits

 

3,626,378

 

3,635,369

 

Director allowances

 

748,000

 

739,123

 

Total

 

4,374,378

 

4,374,492

 

 

13 — CURRENT AND NON-CURRENT EMPLOYEE BENEFITS

 

Employee benefits are detailed as follows:

 

Description

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Accrued vacation

 

15,517,492

 

19,536,809

 

Participation in profits and bonuses

 

14,432,226

 

13,674,170

 

Indemnities for years of service

 

9,269,147

 

9,415,541

 

Total

 

39,218,865

 

42,626,520

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Current

 

25,749,718

 

33,210,979

 

Non-current

 

13,469,147

 

9,415,541

 

Total

 

39,218,865

 

42,626,520

 

 

13.1                       Indemnities for years of service

 

The movements of employee benefits, valued pursuant to Note 2 are detailed as follows:

 

Movements

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Opening balance

 

9,415,541

 

8,286,355

 

Service costs

 

556,793

 

957,593

 

Interest costs

 

148,504

 

565,167

 

Actuarial losses

 

7,932

 

271,045

 

Benefits paid

 

(859,623

)

(664,619

)

Total

 

9,269,147

 

9,415,541

 

 

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Table of Contents

 

13.1.1                       Assumptions

 

The actuarial assumptions used are detailed as follows:

 

Assumptions

 

06.30.2019

 

12.31.2018

 

 

 

 

 

 

 

Discount rate

 

2.7%

 

2.7%

 

Expected salary increase rate

 

2.0%

 

2.0%

 

Turnover rate

 

5.4%

 

5.4%

 

Mortality rate

 

RV-2014

 

RV-2009

 

Retirement age of women

 

60 years

 

60 years

 

Retirement age of men

 

65 years

 

65 years

 

 

13.2                                Personnel expenses

 

Personnel expenses included in the consolidated statement of income are as follows:

 

Description

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Wages and salaries

 

93,032,594

 

95,328,073

 

Employee benefits

 

25,943,028

 

23,022,830

 

Severance benefits

 

3,426,116

 

3,066,863

 

Other personnel expenses

 

7,478,967

 

7,150,386

 

Total

 

129,880,705

 

128,568,152

 

 

13.3                                Number of employees

 

Description

 

06.30.2019

 

06.30.2018

 

Number of employees

 

15,171

 

14,868

 

Average number of employees

 

15,475

 

15,110

 

 

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14 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD

 

Investments in associates using equity method of accounting are detailed as follows:

 

 

 

 

 

 

 

Functional

 

Investment value

 

Ownership interest

 

Taxpayer ID

 

Company

 

Country

 

Currency

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

 

 

 

 

86.881.400-4

 

Envases CMF S.A. (1)

 

Chile

 

CLP

 

18,071,310

 

18,743,604

 

50.00

%

50.00

%

Foreign

 

Leão Alimentos e Bebidas Ltda. (2)

 

Brazil

 

BRL

 

21,565,430

 

21,727,894

 

10.26

%

10.26

%

Foreign

 

Kaik Participações Ltda. (2)

 

Brazil

 

BRL

 

1,232,510

 

1,228,256

 

11.32

%

11.32

%

Foreign

 

SRSA Participações Ltda.

 

Brazil

 

BRL

 

62,787

 

94,706

 

40.00

%

40.00

%

Foreign

 

Sorocaba Refrescos S.A.

 

Brazil

 

BRL

 

22,955,838

 

22,979,029

 

40.00

%

40.00

%

Foreign

 

Trop Frutas do Brasil Ltda. (2)

 

Brazil

 

BRL

 

6,133,498

 

6,244,839

 

7.52

%

7.52

%

76.572.588.7

 

Coca-Cola del Valle New Ventures S.A.

 

Chile

 

CLP

 

31,166,323

 

31,392,617

 

35.00

%

35.00

%

Total

 

 

 

 

 

 

 

101,187,696

 

102,410,945

 

 

 

 

 

 


(1)             In Envases CMF S.A., regardless of the percentage of ownership interest, it was determined that no controlling interest was held, only a significant influence, given that there was not a majority vote of the Board of Directors to make strategic business decisions.

(2)             In these companies, regardless of the percentage of ownership interest held, the Company has significant influence, given that it has a representative on each entity’s Board of Directors.

 

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14.1              Movement

 

The movement of investments in other entities accounted for using the equity method is shown below:

 

Description

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Opening balance

 

102,410,945

 

86,809,069

 

Other investment increases in associates (Capital contributions to Leão Alimentos e Bebidas Ltda. and Coca-Cola del Valle New Ventures S.A.)

 

 

15,615,466

 

Dividends received

 

(630,885

)

(403,414

)

Share in operating income

 

484,321

 

2,194,144

 

Amortization unrealized income in associates

 

(476,518

)

85,268

 

Increase (decrease) in foreign currency translation, investments in associates

 

(600,167

)

(1,889,588

)

Ending balance

 

101,187,696

 

102,410,945

 

 

The main movements are explained below:

 

· During 2018, Embotelladora Andina S.A. made a capital contribution in Coca-Cola del Valle New Ventures S.A. for CLP 15,615,466 thousand.

 

· During fiscal year 2018 Envases CMF S.A. distributed dividends, while as of June 30, 2019, only Sorocaba Refrescos S.A. has distributed dividends.

 

14.2 Reconciliation of share of profit in investments in associates:

 

Description

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Equity value on income of associates

 

484,321

 

1,118,366

 

 

 

 

 

 

 

Unrealized earnings from product inventory acquired from associates and not sold at the end of the period, which is presented as a discount in the respective asset account (containers and / or inventory)

 

(519,069

)

(377,465

)

Amortization goodwill in the sale of fixed assets of Envases CMF S.A.

 

42,633

 

42,633

 

 

 

 

 

 

 

Income statement balance

 

7,885

 

783,534

 

 

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Table of Contents

 

14.3              Summary financial information of associates:

 

The following table presents summarized information regarding the Company´s equity investees as of June 30, 2019:

 

 

 

Envases
CMF S.A.

 

Sorocaba
Refrescos
S.A.

 

Kaik
Participações
Ltda.

 

SRSA
Participações
Ltda.

 

Leão Alimentos
e Bebidas
Ltda.

 

Trop Frutas do
Brasil Ltda.

 

Coca-Cola del Valle
New Ventures S.A.

 

 

 

CLP (000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Total assets

 

71,314,290

 

106,460,187

 

10,970,861

 

379,087

 

239,970,976

 

95,577,819

 

105,533,625

 

Total liabilities

 

33,792,306

 

47,849,221

 

33

 

220,311

 

39,705,070

 

20,906,601

 

19,974,502

 

Total revenue

 

27,654,284

 

30,339,013

 

110,666

 

155,195

 

64,078,835

 

20,049,468

 

14,701,402

 

Net income (loss) of associate

 

368,683

 

1,483,870

 

110,666

 

155,195

 

698,671

 

(896,172

)

762,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reporting date

 

06-30-2019

 

05-31-2019

 

05-31-2019

 

05-31-2019

 

05-31-2019

 

05-31-2019

 

05-31-2019

 

 

15 - INTANGIBLE ASSETS OTHER THAN GOODWILL

 

Intangible assets other than goodwill are detailed as follows:

 

 

 

June 30, 2019

 

December 31, 2018

 

 

 

Gross

 

Accumulated

 

Net

 

Gross

 

Accumulated

 

Net

 

Description

 

Value

 

Amortization

 

Value

 

Value

 

Amortization

 

Value

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Distribution rights (1)

 

649,157,032

 

(419,706

)

648,737,326

 

661,285,834

 

(259,434

)

661,026,400

 

Software

 

31,811,264

 

(25,016,374

)

6,794,890

 

31,526,159

 

(24,160,202

)

7,365,957

 

Others

 

724,287

 

(294,091

)

430,196

 

728,198

 

(298,002

)

430,196

 

Total

 

681,692,583

 

(25,730,171

)

655,962,412

 

639,540,191

 

24,717,638

 

668,822,553

 

 


(1)         Correspond to the contractual rights to produce and distribute Coca-Cola products in certain parts of Argentina, Brazil, Chile and Paraguay. Distribution rights result from the valuation process at fair value of the assets and liabilities of the companies acquired in business combinations. Production and distribution contracts are renewable for periods of 5 years with Coca-Cola. The nature of the business and renewals that Coca-Cola has permanently done on these rights, allow qualifying them as indefinite contracts. These production and distribution rights, and in conjunction with the assets that are part of the cash-generating units, are annually subjected to the impairment test. Such distribution rights are composed in the following manner and are not subject to amortization: except for the Monster rights that are amortized in the term of the agreement which is 4 years.

 

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Table of Contents

 

Distribution rights

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Chile (excluding Metropolitan Region, Rancagua and San Antonio)

 

305,276,325

 

304,888,183

 

Brazil (Rio de Janeiro, Espirito Santo, Ribeirão Preto and investments in Sorocaba y Leão Alimentos e Bebidas Ltda.)

 

178,994,181

 

181,583,404

 

Paraguay

 

162,383,556

 

172,594,328

 

Argentina (North and South)

 

2,083,264

 

1,960,485

 

Total

 

648,737,326

 

661,026,400

 

 

The movement and balances of identifiable intangible assets are detailed as follows:

 

 

 

01-01-2019 to 06-30-2019

 

01-01-2018 to 12-31-2018

 

 

 

Distribution

 

 

 

 

 

 

 

Distribution

 

 

 

 

 

 

 

Details

 

Rights

 

Others

 

Software

 

Total 

 

Rights

 

Others

 

Software

 

Total 

 

 

 

CLP (000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Opening balance

 

661,026,400

 

430,196

 

6,507,343

 

668,822,553

 

656,294,617

 

470,918

 

6,507,343

 

663,272,878

 

Additions 

 

 

 

468,054

 

468,054

 

 

 

3,718,038

 

3,718,038

 

Amortization

 

(65,329

)

 

(1,051,023

)

(1,116,352

)

(112,601

)

(40,722

)

(1,971,417

)

(2,124,740

)

Other increases (decreases) (1)

 

(12,223,745

)

 

(11,902

)

(12,211,843

)

4,844,384

 

 

(888,007

)

(30,595,028

)

Total

 

648,737,326

 

430,196

 

7,066,228

 

653,032,048

 

661,026,400

 

430,196

 

7,365,957

 

668,822,553

 

 


(1)                            Mainly corresponds to restatement due to the effects of translation of distribution rights of foreign subsidiaries.

 

47


 

Table of Contents

 

16 - GOODWILL

 

Movement in Goodwill as of June 30, 2019 and December 31, 2018 is detailed as follows:

 

Operating segment

 

01.01.2019

 

Additions/
Disposals

 

Foreign currency
translation differences
where functional currency
is different from
presentation currency and
hyperinflation

 

06.30.2019

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Chilean operation

 

8,503,023

 

 

 

8,503,023

 

Brazilian operation

 

73,080,100

 

 

(837,031

)

72,243,069

 

Argentine operation

 

28,318,129

 

 

1,772,118

 

30,090,247

 

Paraguayan operation

 

7,327,921

 

 

(430,784

)

6,897,137

 

Total

 

117,229,173

 

 

504,303

 

117,733,476

 

 

Operating segment

 

01.01.2018

 

Additions/
Disposals

 

Foreign currency
translation differences
where functional currency
is different from
presentation currency and
hyperinflation

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Chilean operation

 

8,503,023

 

 

 

8,503,023

 

Brazilian operation

 

73,509,080

 

 

(428,980

)

73,080,100

 

Argentine operation

 

4,672,971

 

 

23,645,158

 

28,318,129

 

Paraguayan operation

 

6,913,143

 

 

414,778

 

7,327,921

 

Total

 

93,598,217

 

 

23,630,956

 

117,229,173

 

 

17 - OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES

 

Liabilities are detailed as follows:

 

 

 

Balance

 

 

 

Current

 

Non-current

 

 

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

 

 

 

 

 

 

 

 

 

 

Bank loans

 

20,567,042

 

21,542,736

 

1,634,262

 

2,439,253

 

Bonds payable

 

21,009,301

 

20,664,481

 

693,712,809

 

700,327,057

 

Deposits in guarantee

 

12,340,826

 

12,242,464

 

 

 

Derivative contract obligations (see note 22)

 

474,319

 

130,829

 

 

 

Leasing agreements

 

5,931,244

 

1,534,467

 

24,313,183

 

13,797,468

 

Total

 

60,322,732

 

56,114,977

 

719,660,254

 

716,563,778

 

 

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Table of Contents

 

The fair value of financial assets(1) and liabilities as of June 30, 2019 and December 31, 2018 is presented below:

 

Current

 

Book Value
06.30.2019

 

Fair Value
06.30.2019

 

Book Value
12.31.2018

 

Fair Value
12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Other financial assets (2)

 

 

 

683,567

 

683,567

 

Bank loans (2)

 

20,567,042

 

19,386,766

 

21,542,736

 

20,298,761

 

Bonds payable (1)

 

21,099,301

 

24,779,282

 

20,664,481

 

22,318,939

 

Derivative contract obligations (2) (see note 22)

 

474,319

 

474,319

 

130,829

 

130,829

 

Leasing agreements (1)

 

5,931,244

 

5,931,244

 

1,534,467

 

1,534,467

 

 

Non-current

 

Book Value
06.30.2019

 

Fair Value
06.30.2019

 

Book Value
12.31.2018

 

Fair Value
12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Other financial assets (2)

 

96,518,349

 

96,518,349

 

97,362,295

 

97,362,295

 

Bank loans (2)

 

1,634,262

 

1,589,188

 

2,439,253

 

2,307,396

 

Bonds payable (1)

 

693,712,809

 

816,643,206

 

700,327,057

 

755,694,265

 

Leasing agreements (2)

 

24,313,183

 

13,797,468

 

13,797,468

 

13,797,468

 

 


(1) The fair value of bonds payable is classified as Level 2 of the fair value measurement hierarchies based on the prices quoted for the obligations of the Company.

 

(2) Fair values are based on discounted cash flows using market discount rates at the close of the six month and one year period and are classified as Level 2 of the fair value measurement hierarchies.

 


(1) Financial instruments such as: Cash and cash equivalents, Commercial debtors and other accounts receivable, Accounts receivable related entities, Deposits in Guarantee for packaging and Trade accounts payable and other accounts payable present a fair value that approximates their value in books, considering their nature and the duration of the obligation

 

49


Table of Contents

 

17.1.1 Bank obligations, current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Total

 

Indebted entity

 

Creditor entity

 

 

 

Type of

 

Effective

 

Nominal

 

Up to

 

90 days to

 

at

 

At

 

Tax ID

 

Name

 

Country

 

Tax ID

 

Name

 

Country

 

Currency

 

Amortization

 

Rate

 

Rate

 

90 days

 

1 year

 

06.30.2019

 

12.31.2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

96.705.990-0

 

Envases Central S.A.

 

Chile

 

97.006.000-6

 

Banco BCI

 

Chile

 

UF

 

Semi-annually

 

2.13

%

2.13

%

 

381,993

 

381,993

 

726,943

 

Foreign

 

Embotelladora del Atlántico S.A.

 

Argentina

 

Foreign

 

Banco de la Nación Argentina

 

Argentina

 

ARS

 

Monthly

 

20.00

%

20.00

%

 

 

 

1,071

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Itaú

 

Brazil

 

BRL

 

Monthly

 

6.63

%

6.63

%

11,119

 

31,927

 

43,046

 

171,415

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Santander

 

Brazil

 

BRL

 

Monthly

 

7.15

%

7.15

%

11,130

 

 

11,130

 

277,517

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Itaú

 

Brazil

 

BRL

 

Quarterly

 

4.50

%

4.50

%

607,877

 

1,211,607

 

1,819,484

 

2,455,578

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Santander

 

Brazil

 

BRL

 

Quarterly

 

6.24

%

6.24

%

10,336,401

 

7,974,988

 

18,311,389

 

17,910,212

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,567,042

 

21,542,736

 

 

17.1.2 Bank obligations, non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Indebted
Entity

 

Creditor Entity

 

 

 

Type

 

Effective

 

Nominal

 

1 year up to

 

More 2 years

 

More 3 years

 

More 4 years

 

More 5

 

at

 

Tax ID

 

Name

 

Country

 

Tax ID

 

Name

 

Country

 

Currency

 

Amortization

 

Rate

 

Rate

 

2 years

 

Up to 3 years

 

Up to 4 years

 

Up to 5 years

 

Years

 

06.30.2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

96.705.990-0

 

Envases Central S.A.

 

Chile

 

97.006.000-6

 

Banco BCI

 

Chile

 

UF

 

Semiannually

 

2.13

%

2.13

%

1,447,496

 

 

 

 

 

1,447,496

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Itaú

 

Brazil

 

BRL

 

Monthly

 

6.63

%

6.63

%

42,570

 

42,570

 

42,570

 

59,056

 

 

186,766

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,634,262

 

 

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Table of Contents

 

17.1.3 Bank obligations, non-current previous

 

Indebted Entity

 

Creditor Entity

 

 

 

Type

 

Effective

 

Nominal

 

1 year up
to

 

More 2
years
Up to 3

 

More 3 years

 

More 4 years

 

More 5

 

at

 

Tax ID

 

Name

 

Country

 

Tax ID

 

Name

 

Country

 

Currency

 

Amortization

 

Rate

 

Rate

 

2 years

 

years

 

Up to 4 years

 

Up to 5 years

 

Years

 

12.31.2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

96.705.990-0

 

Envases Central S.A.

 

Chile

 

97.006.000-6

 

Banco BCI

 

Chile

 

UF

 

Semiannually

 

2.1

%

2.1

%

1,434,786

 

 

 

 

 

1,434,786

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Itaú

 

Brazil

 

BRL

 

Monthly

 

6.6

%

6.6

%

72,439

 

43,033

 

43,033

 

81,225

 

 

239,730

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Santander

 

Brazil

 

BRL

 

Monthly

 

7.2

%

7.2

%

151,873

 

 

 

 

 

151,873

 

Foreign

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Itaú

 

Brazil

 

BRL

 

Quarterly

 

4.5

%

4.5

%

612,864

 

 

 

 

 

612,864

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,439,253

 

 

17.1.4 Current and non-current bank obligations “Restrictions”

 

Bank obligations are not subject to restrictions for the reported periods.

 

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Table of Contents

 

17.2.1        Bonds payable

 

During 2018, Andina carried out a debt restructuring process that consisted of a partial repurchase in the amount of USD 210 million of the 144A/RegS Senior Notes and refinancing it with the placement of Series F bonds in the local market in the amount of UF 5.7 million due 2039 and accruing an annual interest rate of 2.83%.

 

The costs corresponding to the repurchase of bonds, associated with premium payments, overpricing and proportional amortization of placement costs and discounts in bonds in original U.S. Dollars amounting to CLP (000’s)9,583,000, were recorded in results under the item financial costs.

 

 

 

Current

 

Non-current

 

Total

 

Composition of bonds payable

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Bonds (face value)

 

21,376,475

 

21,038,064

 

697,037,615

 

704,048,747

 

718,414,090

 

725,086,811

 

Expenses of bond issuance and discounts on placement

 

(367,174

)

(373,583

)

(3,324,806

)

(3,721,690

)

(3,691,980

)

(4,095,273

)

Net balance presented in statement of financial position

 

21,009,301

 

20,664,481

 

693,712,809

 

700,327,057

 

714,722,109

 

720,991,538

 

 

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Table of Contents

 

17.2.2    Current and non-current balances

 

Bonds payable correspond to bonds in UF issued by the parent company on the Chilean market and bonds in U.S. dollars issued by the Parent Company on the international market. A detail of these instruments is presented below:

 

 

 

 

 

Current Nominal

 

Adjustment

 

Interest

 

 

 

Interest

 

Current

 

Non-current

 

Bonds

 

Series

 

amount

 

Unit

 

Rate

 

Final Maturity

 

payment

 

06.30.2019

 

12.31.2018

 

06.30.2019

 

12.31.2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CMF Registration N°254 06.13.2001

 

B

 

2,007,079

 

UF

 

6.5

%

06-01-2026

 

Semi-annually

 

6,856,484

 

6,598,389

 

49,433,084

 

52,132,023

 

CMF Registration N°641 08.23.2010

 

C

 

1,500,000

 

UF

 

4.0

%

08-15-2031

 

Semi-annually

 

618,237

 

614,152

 

41,854,950

 

41,348,685

 

CMF Registration N°759 08.20.2013

 

C

 

375,000

 

UF

 

3.5

%

08-16-2020

 

Semi-annually

 

7,110,221

 

7,069,487

 

3,487,913

 

6,891,448

 

CMF Registration N°760 08.20.2013

 

D

 

4,000,000

 

UF

 

3.8

%

08-16-2034

 

Semi-annually

 

1,555,360

 

1,545,334

 

111,613,200

 

110,263,160

 

CMF Registration N°760 04.02.2014

 

E

 

3,000,000

 

UF

 

3.75

%

03-01-2035

 

Semi-annually

 

1,022,633

 

1,027,009

 

83,709,908

 

82,697,378

 

CMF Registration N°912 10.10.2018

 

F

 

5,700,000

 

UF

 

2.83

%

09-25-2039

 

Semi-annually

 

1,165,715

 

1,013,805

 

159,048,810

 

157,125,003

 

Bonds USA

 

 

575,000,000

 

USD

 

5.0

%

10-01-2023

 

Semi-annually

 

3,047,825

 

3,169,888

 

247,889,750

 

253,591,050

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

21,376,475

 

21,038,064

 

697,037,615

 

704,048,747

 

 

Accrued interest included in the current portion of bonds:

 

Interest

 

06.30.019

 

12.31.018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Accrued interest

 

8,036,200

 

7,856,274

 

 

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Table of Contents

 

17.2.3        Non-current maturities

 

 

 

 

 

Year of maturity

 

Total non- current

 

 

 

Series

 

more than 1
to 2

 

more than 2
to 3

 

more than
3 to 4

 

More than 5

 

06.30.2019

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CMF Registration N°254 06.13.2001

 

B

 

6,786,808

 

7,222,018

 

7,691,447

 

27,732,811

 

49,433,084

 

CMF Registration N°641 08.23.2010

 

C

 

 

1,902,447

 

3,804,894

 

36,147,609

 

41,854,950

 

CMF Registration N°759 08.20.2013

 

C

 

3,487,913

 

 

 

 

10,184,538

 

CMF Registration N°760 08.20.2013

 

D

 

 

 

 

 

111,613,200

 

111,613,200

 

CMF Registration N°760 04.02.2014

 

E

 

 

 

 

83,709,908

 

83,709,908

 

Bonds USA

 

 

 

 

 

159,048,810

 

159,048,810

 

Total

 

 

 

10,274,721

 

9,124,465

 

11,496,341

 

666,142,088

 

697,037,615

 

 

17.2.4             Market rating

 

The bonds issued on the Chilean market had the following rating as of June 30, 2019:

 

AA

:

ICR Compañía Clasificadora de Riesgo Ltda. rating

AA

:

Fitch Chile Clasificadora de Riesgo Limitada rating

 

The rating of bonds issued on the international market as of June 30, 2019, is the following:

 

BBB

:

Standard&Poors Global Ratings

BBB+

:

Fitch Ratings Inc.

 

17.2.5             Restrictions

 

17.2.5.1         Restrictions regarding bonds placed abroad.

 

Obligations with bonds placed abroad are not affected by financial restrictions for the periods reported

 

17.2.5.2         Restrictions regarding bonds placed in the local market.

 

For purposes of the calculation of the covenants, the amount of EBITDA that was agreed on each bond issue is included.

 

Restrictions on the issuance of bonds for a fixed amount registered under number 254.

 

·             Maintain an indebtedness level where Consolidated Financial Liabilities to Consolidated Equity does not exceed 1.20 times. For these purposes Consolidated Financial Liabilities shall be regarded as Liabilities Receivables accruing interest, namely: (i) other current financial liabilities, plus (ii) other non-current financial liabilities, less (iii) asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Financial Statements. Consolidated Equity will be regarded as total equity including non-controlling interest.

 

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Table of Contents

 

As of June 30, June 30, 2019, indebtedness level is 0.79 times of Consolidated Equity.

 

·             Maintain, and in no manner lose, sell, assign or transfer to a third party, the geographical area currently denominated as the “Metropolitan Region” (Región Metropolitana) as a territory in Chile in which we have been authorized by The Coca-Cola Company for the development, production, sale and distribution of products and brands of the licensor, in accordance to the respective bottler or license agreement, renewable from time to time.

 

·             Not lose, sell, assign, or transfer to a third party any other territory of Argentina or Brazil, which as of this date is franchised by TCCC to the Company for the development, production, sale and distribution of products and brands of such licensor, as long as any of these territories account for more than 40% of the Issuer’s Adjusted Consolidated Operating Cash Flow.

 

·             Maintain consolidated assets free of any pledge, mortgage or other encumbrances for an amount at least equal to 1.3 times of the issuer’s unsecured consolidated liabilities.

 

Unsecured consolidated liabilities payable shall be regarded as the total liabilities, obligations and debts of the issuer that are not secured by real guarantees on goods and assets of the latter, voluntarily and conventionally constituted by the issuer less the asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Statement of Financial Position.

 

Consolidated Assets free of any pledge, mortgage or other lien will only be regarded as those assets free of any pledge, mortgage or other real lien voluntarily and conventionally constituted by the issuer less asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities and under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Statement of Financial Position.

 

As of June 30, 2019, this index is 1.71 times.

 

Restrictions to bond lines registered in the Securities Registered under number 641.

 

·             Maintain a level of “Net Financial Debt” within its quarterly financial statements that may not exceed 1.5 times, measured over figures included in its consolidated statement of financial position. To this end, net financial debt shall be defined as the ratio between net financial debt and total equity of the issuer (equity attributable to controlling owners plus non-controlling interest). On its part, net financial debt will be the difference between the Issuer’s financial debt and cash.

 

As of June 30, 2019, the level of Net Financial Debt was 0.66 times.

 

·             Maintain consolidated assets free of any pledge, mortgage or other encumbrances for an amount at least equal to 1.3 times of the issuer’s unsecured consolidated liabilities.

 

Unencumbered assets refer to the assets that are the property of the issuer; classified under Total Assets of the Issuer’s Financial Statements; and that are free of any pledge, mortgage or other liens constituted in favor of third parties, less “Other Current Financial Assets” and “Other Non-Current Financial Assets” of the Issuer’s Financial Statements (to the extent they correspond to asset balances of derivative financial instruments, taken to hedge exchange rate and interest rate risk of the financial liabilities).

 

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Table of Contents

 

Unsecured total liabilities correspond to: liabilities from Total Current Liabilities and Total Non-Current Liabilities of Issuer’s Financial Statement which do not benefit from preferences or privileges, less “Other Current Financial Assets” and “Other Non-Current Financial Assets” of the Issuer’s Financial Statements (to the extent they correspond to asset balances of derivative financial instruments, taken to hedge exchange rate and interest rate risk of the financial liabilities).

 

As of June 30, 2019, this index is 1.71 times.

 

·             Maintain a level of “Financial net coverage” in its quarterly financial statements of more than 3 times. Net financial coverage means the ratio between the Issuer’s Ebitda for the past 12 months and net financial expenses (financial income less financial expenses) of the issuer for the past 12 months. However, this restriction will be considered breached when the mentioned net financial coverage level is lower than the level previously indicated during two consecutive quarters.

 

As of June 30, 2019, Net Financial Coverage level is 6.32 times.

 

Restrictions to bond lines registered in the Securities Registrar under numbers 759 and 760 D-E.

 

·             Maintain an indebtedness level where Consolidated Financial Liabilities to Consolidated Equity does not exceed 1.20 times. For these purposes Consolidated Financial Liabilities shall be regarded as Liabilities Receivables accruing interest, namely: (i) other current financial liabilities, plus (ii) other non-current financial liabilities, less (iii) cash and cash equivalent and (iv) other current financial assets, and (v) other non-current financial assets (to the extent they are asset balances of derivative financial instruments, taken to hedge exchange rate or interest rate risks on financial liabilities). Consolidated Equity will be regarded as total equity including non-controlling interest.

 

As of June 30, 2019, Indebtedness Level is 0.66 times of Consolidated Equity.

 

·             Maintain consolidated assets free of any pledge, mortgage or other encumbrances for an amount at least equal to 1.3 times of the issuer’s unsecured consolidated liabilities payable.

 

Unsecured Consolidated Liabilities Payable shall be regarded as the total liabilities, obligations and debts of the issuer that are not secured by real guarantees on goods and assets of the latter, voluntarily and conventionally constituted by the issuer less the asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Statement of Financial Position.

 

The following will be considered in determining Consolidated Assets:  assets free of any pledge, mortgage or other lien, as well as those assets having a pledge, mortgage or real encumbrances that operate solely by law, less asset balances of derivative financial instruments, taken to hedge exchange rate or interest rate risks on financial liabilities under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Financial Statements. Therefore, Consolidated Assets free of any pledge, mortgage or other lien will only be regarded as those assets free of any pledge, mortgage or other real lien voluntarily and conventionally constituted by the issuer less asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities and under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Statement of Financial Position.

 

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Table of Contents

 

As of June 30, 2019, this index is 1.71 times.

 

·             Maintain, and in no manner, lose, sell, assign or transfer to a third party, the geographical area currently denominated as the “Metropolitan Region” as a territory franchised to the Issuer in Chile by The Coca-Cola Company, hereinafter also referred to as “TCCC” or the “Licensor” for the development, production, sale and distribution of products and brands of said licensor, in accordance to the respective bottler or license agreement, renewable from time to time. Losing said territory, means the non-renewal, early termination or cancellation of this license agreement by TCCC, for the geographical area today called “Metropolitan Region”. This reason shall not apply if, as a result of the loss, sale, transfer or disposition, of that licensed territory is purchased or acquired by a subsidiary or an entity that consolidates in terms of accounting with the Issuer.

 

·             Not lose, sell, assign, or transfer to a third party any other territory of Argentina or Brazil, which as of the issuance date of these instruments is franchised by TCCC to the Issuer for the development, production, sale and distribution of products and brands of such licensor, as long as any of these territories account for more than 40% of the Issuer’s Adjusted Consolidated Operating Cash Flow of the audited period immediately before the moment of loss, sale, assignment or transfer.  For these purposes, the term “Adjusted Consolidated Operating Cash Flow” shall mean the addition of the following accounting accounts of the Issuer’s Consolidated Statement of Financial Position: (i) “Gross Profit” which includes regular activities and cost of sales; less (ii) “Distribution Costs”; less (iii) “Administrative Expenses”; plus (iv) “Participation in profits (losses) of associates and joint ventures that are accounted for using the equity method”; plus (v) “Depreciation”; plus (vi) “Intangibles Amortization”.

 

Restrictions to bond lines registered in the Securities Registrar under number 912.

 

·             Maintain an indebtedness level where Consolidated Financial Liabilities to Consolidated Equity does not exceed 1.20 times.

 

For these purposes Consolidated Financial Liabilities shall be regarded as Liabilities Receivables accruing interest, namely: (i) other current financial liabilities, plus (ii) other non-current financial liabilities, less (iii) cash and cash equivalent and (iv) other current financial assets, and (v) other non-current financial assets (to the extent they are asset balances of derivative financial instruments, taken to hedge exchange rate or interest rate risks on financial liabilities). Consolidated Equity will be regarded as total equity including non-controlling interest.

 

As of June 30, 2019, this index equals 0.66 times.

 

·             Maintain consolidated assets free of any pledge, mortgage or other encumbrances for an amount at least equal to 1.3 times of the issuer’s unsecured consolidated liabilities payable.

 

Unsecured Consolidated Liabilities Payable shall be regarded as the total liabilities, obligations and debts of the issuer that are not secured by real guarantees on goods and assets of the latter, voluntarily and conventionally constituted by the issuer less the asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Statement of Financial Position.

 

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Table of Contents

 

The following will be considered in determining Consolidated Assets:  assets free of any pledge, mortgage or other lien, as well as those assets having a pledge, mortgage or real encumbrances that operate solely by law, less asset balances of derivative financial instruments, taken to hedge exchange rate or interest rate risks on financial liabilities under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Financial Statements. Therefore, Consolidated Assets free of any pledge, mortgage or other lien will only be regarded as those assets free of any pledge, mortgage or other real lien voluntarily and conventionally constituted by the issuer less asset balances of derivative financial instruments, taken to cover exchange rate or interest rate risks on financial liabilities and under “Other Current Financial Assets” and “Other non-current Financial Assets” of the Issuer’s Consolidated Statement of Financial Position.

 

As of June 30, 2019, this index equals 1.71 times.

 

·             Not lose, sell, assign, or transfer to a third party any other territory of Argentina or Brazil, which as of the issuance date of local bonds Series C, D and E is franchised by TCCC to the Issuer for the development, production, sale and distribution of products and brands of such licensor, as long as any of these territories account for more than 40% of the Issuer’s Adjusted Consolidated Operating Cash Flow of the audited period immediately before the moment of loss, sale, assignment or transfer.  For these purposes, the term “Adjusted Consolidated Operating Cash Flow” shall mean the addition of the following accounting accounts of the Issuer’s Consolidated Statement of Financial Position: (i) “Gross Profit” which includes regular activities and cost of sales; less (ii) “Distribution Costs”; less (iii) “Administrative Expenses”; plus (iv) “Participation in profits (losses) of associates and joint ventures that are accounted for using the equity method”; plus (v) “Depreciation”; plus (vi) “Intangibles Amortization”.

 

As of June 30, 2019, and December 31, 2018, the Company complies with all financial collaterals.

 

17.2.6                    Repurchased bonds

 

In addition to UF bonds, the Company holds bonds that it has repurchased in full through companies that are included in the consolidation:

 

The subsidiary Rio de Janeiro Refrescos Ltda. maintains a liability corresponding to a bond issuance for US $75 million due in December 2020 and semi-annual interest payments. As of December 2017 June 30, 2019, these issues are held by Andina. On January 1, 2013, Abisa Corp S.A. transferred the totality of this asset to Embotelladora are Andina S.A., the latter becoming the creditor of the above-mentioned Brazilian subsidiary. Consequently, the assets and liabilities related to the transaction have been eliminated from these Consolidated Financial Statements. In addition, the transaction has been treated as a net investment of the group in the Brazilian subsidiary; consequently, the effects of exchange rate differences between the dollar and the functional currency of each one has been recorded in other comprehensive income.

 

17.3           Derivative contract obligations

 

Please see details in Note 22

 

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Table of Contents

 

17.4.1                                      Current liabilities for leasing agreements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Total

 

Indebted Entity

 

Creditor Entity

 

 

 

Amortization

 

Effective

 

Nominal

 

Up to

 

90 days to

 

At

 

At

 

Name

 

Country

 

Tax ID

 

Name

 

Country

 

Currency

 

Type

 

Rate

 

Rate

 

90 days

 

1 year

 

06.30.2019

 

12.31.2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Banco Santander

 

Brazil

 

BRL

 

Monthly

 

9.65

%

9.47

%

 

 

 

11,996

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Citibank

 

Brazil

 

BRL

 

Monthly

 

8.54

%

8.52

%

 

 

 

75,260

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Cogeração - Light ESCO

 

Brazil

 

BRL

 

Monthly

 

13.00

%

12.28

%

179,785

 

573,520

 

753,305

 

109,573

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Tetra Pack

 

Brazil

 

BRL

 

Monthly

 

7.65

%

7.39

%

80,674

 

251,138

 

331,812

 

716,978

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Real estate

 

Brazil

 

BRL

 

Monthly

 

8.20

%

8.20

%

77,645

 

234,587

 

312,232

 

339,665

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Leão

 

Brazil

 

BRL

 

Monthly

 

6.56

%

6.56

%

224,329

 

545,221

 

769,550

 

280,995

 

Embotelladora del Atlántico S.A.

 

Argentina

 

Foreign

 

Tetra Pak SRL

 

Argentina

 

USD

 

Monthly

 

12.00

%

12.00

%

243,901

 

 

243,901

 

 

Embotelladora del Atlántico S.A.

 

Argentina

 

Foreign

 

Tetra Pak SRL

 

Argentina

 

USD

 

Monthly

 

12.00

%

12.00

%

20,755

 

62,264

 

83,019

 

 

Embotelladora del Atlántico S.A.

 

Argentina

 

Foreign

 

Banco Comafi

 

Argentina

 

USD

 

Monthly

 

12.00

%

12.00

%

31,208

 

93,623

 

124,831

 

 

Embotelladora del Atlántico S.A.

 

Argentina

 

Foreign

 

Real estate

 

Argentina

 

ARS

 

Monthly

 

50.00

%

50.00

%

63,201

 

189,602

 

252,803

 

 

Vital Aguas S.A

 

Chile

 

76.389.720-6

 

Coca-Cola del Valle New Ventures S.A

 

Chile

 

CLP

 

Lineal

 

6.20

%

6.20

%

271,625

 

814,875

 

1,086,500

 

 

Envases Central S.A

 

Chile

 

96.705.990-0

 

Coca-Cola del Valle New Ventures S.A

 

Chile

 

CLP

 

Lineal

 

6.20

%

6.20

%

493,323

 

1,479,967

 

1,973,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

5,931,244

 

1,534,467

 

 

The Company maintains lease agreements on forklifts, vehicles, real estate and machinery. These leases have an average life of between one and eight years without including a renewal option in the contracts.

 

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17.4.2                                      Non-current liabilities for leasing agreements, non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

More

 

 

 

Indebted entity

 

Creditor entity

 

 

 

Type of

 

Effective

 

Nominal

 

1 year to

 

2 years to

 

3 years to

 

4 years to

 

than

 

At

 

Name

 

Country

 

Tax ID

 

Name

 

Country

 

Currency

 

Amortization

 

Rate

 

Rate

 

2 years

 

3 years

 

4 years

 

5 years

 

5 years

 

06.30.2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Cogeração - Light ESCO

 

Brazil

 

BRL

 

Monthly

 

13.00

%

12.28

%

851,235

 

961,895

 

1,001,350

 

1,228,244

 

8,487,741

 

12,530,465

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Tetra Pack

 

Brazil

 

BRL

 

Monthly

 

7.65

%

7.39

%

339,351

 

151,630

 

49,026

 

 

 

540,007

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Real estate

 

Brazil

 

BRL

 

Monthly

 

8.20

%

8.20

%

186,008

 

23,125

 

2,968

 

 

 

212,101

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Leão Alimentos e Bebidas Ltda.

 

Brazil

 

BRL

 

Monthly

 

6.56

%

6.56

%

494,089

 

341,690

 

334,634

 

315,969

 

516,397

 

2,002,779

 

Embotelladora del Atlántico S.A.

 

Argentina

 

O-E

 

Tetra Pak SRL

 

Argentina

 

USD

 

Monthly

 

12.00

%

12.00

%

 

152,200

 

 

 

 

152,200

 

Embotelladora del Atlántico S.A.

 

Argentina

 

O-E

 

Banco Comafi

 

Argentina

 

USD

 

Monthly

 

12.00

%

12.00

%

 

249,662

 

 

249,662

 

260,064

 

759,388

 

Embotelladora del Atlántico S.A.

 

Argentina

 

O-E

 

Real estate

 

Argentina

 

ARS

 

Monthly

 

50.00

%

50.00

%

 

63,984

 

 

 

 

63,984

 

Vital Aguas S.A

 

Chile

 

76.572.588-7

 

Coca-Cola del Valle New Ventures S.A

 

Chile

 

CLP

 

Monthly

 

6.2

%

0.27

%

2,625,708

 

 

 

 

 

2,625,708

 

Envases Central S.A

 

Chile

 

76.572.588-7

 

Coca-Cola del Valle New Ventures S.A

 

Chile

 

CLP

 

Monthly

 

6.7

%

0.27

%

5,426,551

 

 

 

 

 

5,426,551

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,313,183

 

 

17.4.3 Non-current liabilities for leasing agreements (previous year)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

 

 

Indebted Entity

 

Creditor Entity

 

 

 

Amortization

 

Effective

 

Nominal

 

1 year to

 

2 years
to

 

3 years to

 

4 years to

 

More

 

at

 

Name

 

Country

 

Tax, ID

 

Name

 

Country

 

Currency

 

Type

 

rate

 

Rate

 

2 years

 

3 years

 

4 years

 

5 years

 

5 years

 

12.31.2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Cogeração Light Esco

 

Brazil

 

BRL

 

Monthly

 

13.00

%

12.28

%

810,185

 

915,509

 

1,034,525

 

1,169,014

 

9,466,995

 

13,396,228

 

Rio de Janeiro Refrescos Ltda.

 

Brazil

 

Foreign

 

Tetra Pack

 

Brazil

 

BRL

 

Monthly

 

7.65

%

7.39

%

401,240

 

 

 

 

 

401,240

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,797,468

 

 

Leasing agreement obligations are not subject to financial restrictions for the reported periods.

 

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18 - TRADE AND OTHER ACCOUNTS PAYABLE

 

Trade and other current accounts payable are detailed as follows:

 

Item

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Trade accounts payable

 

124,294,684

 

174,486,806

 

Withholding tax

 

25,181,473

 

47,693,379

 

Others

 

24,584,606

 

16,665,327

 

Total

 

174,060,763

 

238,845,512

 

 

 

 

 

 

 

Current

 

173,269,063

 

238,109,847

 

Non-current

 

791,700

 

735,665

 

Total

 

174,060,763

 

238,845,512

 

 

19 - OTHER PROVISIONS, CURRENT AND NON-CURRENT

 

19.1           Balances

 

The composition of provisions is as follows:

 

Detail

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Litigation (1)

 

53,914,247

 

62,452,526

 

Total

 

53,914,247

 

62,452,526

 

 

 

 

 

 

 

Current

 

2,033,033

 

3,485,613

 

Non-current

 

51,881,214

 

58,966,913

 

Total

 

53,914,247

 

62,452,526

 

 


(1)           Correspond to the provision made for the probable losses of fiscal, labor and commercial contingencies, based on the opinion of our legal advisors, according to the following detail:

 

Detail (see note 23.1)

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Tax contingencies

 

39,643,784

 

47,991,514

 

Labor contingencies

 

10,984,533

 

10,376,830

 

Civil contingencies

 

3,285,930

 

4,084,182

 

Total

 

53,914,247

 

62,452,526

 

 

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19.2           Movements

 

The movement of principal provisions over litigation is detailed as follows:

 

Description

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Opening Balance as of January 01

 

62,452,526

 

65,624,166

 

Additional provisions

 

76,657

 

46,657

 

Increase (decrease) in existing(*) provisions

 

(9,509,262

)

(4,998,530

)

 

 

 

 

 

 

Payments

 

5,524,094

 

6,139,963

 

 

 

 

 

 

 

Reversal of unused provision

 

(2,504,503

)

(2,157,152

)

Increase (decrease) due to foreign exchange differences

 

(2,125,265

)

(2,202,578

)

Total

 

53,914,247

 

62,452,526

 

 


(*)  During 2019 and 2018, provisions consisting of fines demanded by the Brazilian tax authority on the use of tax credits resulting from favorable sentencing to Rio de Janeiro Refrescos Ltda. have been reversed, for approximate values of CLP 3,700 million and CLP 2,150 million, respectively

 

20 —   OTHER  NON-FINANCIAL LIABILITIES

 

Other current and non-current liabilities at each reporting period end are detailed as follows:

 

Description

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Dividends payable

 

21,369,217

 

21,584,314

 

Other

 

10,273,958

 

12,189,900

 

Total

 

31,643,175

 

33,774,214

 

 

21 - EQUITY

 

21.1           Number of shares:

 

 

 

Number of shares
subscribed

 

Number of shares paid in

 

Number of voting shares

 

Series

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

A

 

473,289,301

 

473,289,301

 

473,289,301

 

473,289,301

 

473,289,301

 

473,289,301

 

B

 

473,281,303

 

473,281,303

 

473,281,303

 

473,281,303

 

473,281,303

 

473,281,303

 

 

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21.1.1        Equity:

 

 

 

Subscribed Capital

 

Paid-in capital

 

Series

 

2019

 

2018

 

2019

 

2018

 

 

 

CLP
(000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

A

 

135,379,504

 

135,379,504

 

135,379,504

 

135,379,504

 

B

 

135,358,070

 

135,358,070

 

135,358,070

 

135,358,070

 

Total

 

270,737,574

 

270,737,574

 

270,737,574

 

270,737,574

 

 

21.1.2        Rights of each series:

 

·                                                   Series A: Elects 12 of the 14 Directors

·                                                   Series B: Receives an additional 10% of dividends distributed to Series A and elects 2 of the 14 Directors.

 

21.2        Dividend policy

 

According to Chilean law, cash dividends must be paid equal to at least 30% of annual net profit, barring a unanimous vote by shareholders to the contrary. If there is no net profit in a given year, the Company will not be legally obligated to pay dividends from retained earnings. At the ordinary Shareholders’ Meeting held in April 2019, the shareholders agreed to pay out of the 2018 earnings a final dividend additional to the 30% required by Chile’s Law 18,046 which will be paid in May 2019, and an additional dividend that will be paid in August 2019.

 

Pursuant to Circular Letter N° 1,945 of the Chilean Financial Market Commission (CMF) dated September 29, 2009, the Company’s Board of Directors decided to maintain the initial adjustments from adopting IFRS as retained earnings for future distribution.

 

The dividends declared and paid per share are presented below:

 

Periods

 

Dividend
type

 

Profits imputable to
dividends

 

Ch$ per Series A
Share

 

Ch$ per Series B
Share

 

2018

 

January 

 

Interim

 

2017

 

21.50

 

23.65

 

2018

 

May

 

Final

 

2017

 

21.50

 

23.65

 

2018

 

August

 

Additional

 

Retained Earnings

 

21.50

 

23.65

 

2018

 

October

 

Interim

 

2018 Earnings

 

21.50

 

23.65

 

2019

 

January

 

Interim

 

2018 Earnings

 

21.50

 

23.65

 

 

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21.3           Other Reserves

 

The balance of other reserves includes the following:

 

Description

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Goodwill in share exchange reserve

 

421,701,520

 

421,701,520

 

Translation differences reserves

 

(344,307,255

)

(306,674,529

)

Cash flow hedge reserves

 

(12,994,206

)

(13,668,932

)

Reserve for employee benefits actuarial gains or losses

 

(1,954,077

)

(1,954,077

)

Legal and statutory reserves

 

5,435,538

 

5,435,538

 

Other

 

6,014,583

 

6,014,569

 

Total

 

73,896,103

 

110,854,089

 

 

21.3.1        Goodwill in share exchange reserve

 

This amount corresponds to the difference between the valuation at fair value of the issuance of shares of Embotelladora Andina S.A. and the book value of the paid capital of Embotelladoras Coca-Cola Polar S.A., which was finally the value of the capital increase notarized in legal terms.

 

21.3.2        Cash flow hedge reserve

 

They arise from the fair value of the existing derivative contracts that have been qualified for hedge accounting at the end of each financial period. When contracts are expired, these reserves are adjusted and recognized in the income statement in the corresponding period (see Note 22).

 

21.3.3        Reserve for employee benefit actuarial gains or losses

 

Corresponds to the restatement effect of employee benefits actuarial losses that according to IAS 19 amendments must be carried to other comprehensive income.

 

21.3.4        Legal and statutory reserves

 

In accordance with Official Circular N° 456 issued by the Chilean Financial Market Commission (CMF), the legally required price-level restatement of paid-in capital for 2009 is presented as part of other equity reserves and is accounted for as a capitalization from Other Reserves with no impact on net income or retained earnings under IFRS. This amount totaled CLP 5,435,538 thousand as of December 31, 2009.

 

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21.3.5        Foreign currency translation reserves

 

This corresponds to the conversion of the financial statements of foreign subsidiaries whose functional currency is different from the presentation currency of the Consolidated Financial Statements. Additionally, exchange differences between accounts receivable kept by the companies in Chile with foreign subsidiaries are presented in this account, which have been treated as investment equivalents accounted for using the equity method. Translation reserves are detailed as follows:

 

Details

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Brazil

 

(117,744,296

)

(114,180,197

)

Argentina

 

(220,444,428

)

(201,118,180

)

Paraguay

 

(6,118,516

)

8,623,849

 

Total

 

(334,307,240

)

(306,674,528

)

 

The movement of this reserve for the fiscal years ended June 30, 2019 and December 31, 2018, is detailed as follows:

 

Details

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Brazil

 

(3,564,099

)

(10,313,069

)

Argentina

 

(19,326,248

)

(72,770,068

)

Paraguay

 

(14,742,365

)

13,486,181

 

Total

 

(37,632,712

)

(69,596,956

)

 

21.4           Non-controlling interests

 

This is the recognition of the portion of equity and income from subsidiaries owned by third parties. As of June 30, 2019and December 31, 2018, this account is detailed as follows:

 

 

 

Non-controlling interests

 

 

 

Ownership interest %

 

Shareholders’ Equity

 

Income

 

 

 

 

 

 

 

June

 

December

 

June

 

December

 

 Details

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP
(000’s)

 

CLP
(000’s)

 

Embotelladora del Atlántico S.A.

 

0.0171

 

0.0171

 

27,382

 

23,260

 

2,764

 

3,633

 

Andina Empaques Argentina S.A.

 

0.0209

 

0.0209

 

2,468

 

2,113

 

224

 

96

 

Paraguay Refrescos S.A.

 

2.1697

 

2.1697

 

4,738,367

 

5,378,074

 

264,866

 

556,112

 

Vital S.A.

 

35.0000

 

35.0000

 

7,657,221

 

7,674,785

 

(98,902

)

271,063

 

Vital Aguas S.A.

 

33.5000

 

33.5000

 

2,036,105

 

1,986,493

 

38,592

 

36,696

 

Envases Central S.A.

 

40.7300

 

40.7300

 

4,991,689

 

4,836,892

 

156,413

 

(20,225

)

Total

 

 

 

 

 

19,453,233

 

19,901,617

 

363,957

 

847,375

 

 

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21.5           Earnings per share

 

The basic earnings per share presented in the statement of comprehensive income is calculated as the quotient between income for the period and the average number of shares outstanding during the same period.

 

Earnings per share used to calculate basic and diluted earnings per share is detailed as follows:

 

Earnings per share

 

06.30.2019

 

 

 

SERIES A

 

SERIES B

 

TOTAL

 

Earnings attributable to shareholders (CLP 000’s)

 

29,342,166

 

32,275,863

 

61,618,029

 

Average weighted number of shares

 

473,289,301

 

473,281,303

 

946,570,604

 

Earnings per share (in CLP)

 

62.00

 

68.20

 

65.10

 

 

Earnings per share

 

06.30.2018

 

 

 

SERIES A

 

SERIES B

 

TOTAL

 

Earnings attributable to shareholders (CLP (000’s))

 

22,648,652

 

24,913,116

 

47,561,768

 

Average weighted number of shares

 

473,289,301

 

473,281,303

 

946,570,604

 

Earnings per share (in CLP)

 

47.85

 

52.64

 

50.25

 

 

22 - DERIVATIVE ASSETS AND LIABILITIES

 

Embotelladora Andina currently maintains “Cross Currency Swaps” and “Currency Forward” agreements as derivative financial instruments.

 

Cross Currency Swaps (“CCS”), also known as interest rate and currency swaps, are valued by the method of discounted future cash flows at a market rate corresponding to the risk of the operation. CCS are currently maintained to re-denominate debt incurred in currency and rate in USD to currency and rate in BRL. To discount future flows in BRL and USD, the Zero coupon curves of the BRL and the Zero coupon USD are used, respectively.

 

On the other hand, the fair value of forward currency contracts is calculated in reference to current forward exchange rates for contracts with similar maturity profiles.

 

As of the closing dates as of June 30, 2019 and December 31, 2018, the Company held the following derivative instruments:

 

22.1     Derivatives accounted for as cash flow hedges:

 

Cross Currency Swaps associated with US Bonds

 

At June 30, 2019, the Company entered into cross currency swap derivative contracts to convert US Dollar public bond obligations of USD 360 million into Real liabilities to hedge the Company’s exposure to variations in foreign exchange rates. Said contracts are valued at their value and the net value to be received as of June 30, 2019 amounted to CLP 85,597,714 thousand. These swap contracts have the same terms of the underlying bond obligation and expire in 2023.

 

The amount of exchange differences recognized in the statement of income related to financial liabilities in U.S. dollars and the identified effective portion that was absorbed by the amounts recognized under comprehensive income.

 

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22.2. Forward currency transactions expected to be very likely:

 

During 2019 and 2018, the Company entered into foreign currency forward contracts to hedge its exposure to expected future raw materials purchases in US Dollars during these years. The total amount of outstanding forward contracts was USD 54.7 million as of June 30, 2019 (USD 56.8 million as of December 31, 2018).

 

Futures contracts that ensure prices of future raw materials have not been designated as hedge agreements, since they do not fulfill IFRS documentation requirements, whereby its effects on variations in fair value are accounted for directly under statements of income in the “other gains and losses” account.

 

Fair value hierarchy

 

As of June 30, 2019, the Company held assets for derivative contracts for CLP 85,597,714 thousand  (CLP 88,116,189 thousand as of December 31, 2018) and liabilities for CLP 474,319 thousand as of June 30, 2019 (CLP 130,829 thousand as of December 31, 2018). Those contracts covering existing items have been classified in the same category of hedged, the net amount of derivative contracts by concepts covering forecasted items have been classified in financial assets and financial liabilities. All the derivative contracts are carried at fair value in the consolidated statement of financial position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

Level 1:  quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices included in level 1 that are observable for the assets and liabilities, either directly (that is, as prices) or indirectly (that is, derived from prices)

Level 3:             Inputs for assets and liabilities that are not based on observable market data.

 

During the reporting period, there were no transfers of items between fair value measurement categories; all of which were valued during the period using level 2.

 

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Fair Value Measurements at June 30, 2019

 

 

 

 

 

Quoted prices in active
markets
for identical assets or
liabilities

 

Observable
market data

 

Unobservable
market data

 

 

 

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Other current financial assets

 

 

 

 

 

 

 

 

 

Other current financial assets

 

 

 

 

 

Other non-current financial assets

 

 

85,597,714

 

 

85,597,714

 

Total assets

 

 

85,597,714

 

 

85,597,714

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Other current financial liabilities

 

 

474,319

 

 

474,319

 

Total liabilities

 

 

474,319

 

 

474,319

 

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

 

 

Quoted prices in active
markets
for identical assets or
liabilities

 

Observable
market data

 

Unobservable
market data

 

 

 

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Other current financial assets

 

 

669,527

 

 

 

669,527

 

Other non-current financial assets

 

 

87,446,662

 

 

87,446,662

 

Total assets

 

 

88,116,189

 

 

88,116,189

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Other current financial liabilities

 

 

130,829

 

 

130,829

 

Total liabilities

 

 

130,829

 

 

130,829

 

 

23 - LITIGATION AND CONTINGENCIES

 

23.1           Lawsuits and other legal actions:

 

In the opinion of the Company’s legal counsel, the Parent Company and its subsidiaries do not face legal or extrajudicial contingencies that might result in material or significant losses or gains, except for the following:

 

1)        Embotelladora del Atlántico S.A. faces labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling CLP  972,063 thousand. Management considers it unlikely that non-provisioned contingencies will affect the Company’s income and equity, based on the opinion of its legal counsel. Additionally, Embotelladora del Atlántico S.A. maintains time deposits for an amount of CLP 533,741 thousand to guaranty judicial liabilities

 

2)        Rio de Janeiro Refrescos Ltda. faces labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling CLP 50,873,392 thousand. Management considers it unlikely that non-provisioned contingencies will affect the Company’s income and equity, based on the opinion of its legal counsel. As it is customary in Brazil, Rio de Janeiro Refrescos Ltda. maintains Deposit in courts and assets given in pledge to secure the compliance of certain processes, irrespective of whether these have been classified as a possible, probable or remote. The amounts deposited or pledged as legal guarantees as of June 30, 2019 and December 31, 2018, amounted to CLP 17,135,265 thousand and CLP 29,197,711 thousand, respectively.

 

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To ensure fulfillment of the obligations arising from legal proceedings faced in Brazil, Rio de Janeiro Refrescos Ltda., has taken guarantee insurance and guarantee letters amounting to BRL 666,671,809  with different financial institutions and insurance companies in Brazil, through which these entities after a 0.34% annual commission, become responsible of fulfilling obligations with the Brazilian tax authorities should any trial result against Rio de Janeiro Refrescos Ltda. Additionally, if the warranty and bail letters are executed, Rio de Janeiro Refrescos Ltda. promises to reimburse to the financial institutions and Insurance Companies any amounts disbursed by them to the Brazilian government.

 

Main contingencies faced by Rio de Janeiro Refrescos are as follows:

 

a)      Tax contingencies resulting from credits on tax on industrialized products (IPI).

 

Rio de Janeiro Refrescos is a party to a series of proceedings under way, in which the Brazilian federal tax authorities demand payment of value-added tax on industrialized products (Imposto sobre Produtos Industrializados, or IPI) allegedly owed by ex-Companhia de Bebidas Ipiranga. The initial amount demanded reached BRL 1,330,473,161 (historical amount without adjustments), corresponding to different trials related to the same cause. In September 2014, one of these trials for BRL 598,745,218, was settled in favor of the Company, and additionally during 2017 several trials were settled in favor of the Company in the amount for BRL 135,282,155 however, there are new lawsuits arising after the purchase of ex-Companhia de Bebidas Ipiranga (October 2013) that amount to BRL 341,845,707.

 

The Company rejects the position of the Brazilian tax authority in these procedures and considers that Companhia de Bebidas Ipiranga was entitled to claim IPI tax credits in connection with purchases of certain exempt raw materials from suppliers located in the Manaus free trade zone.

 

Based on the opinion of its advisers, and legal outcomes to date, Management estimates that these procedures do not represent probable losses and has not recorded a provision on these matters.

 

Notwithstanding the above, the IFRS related to business combination in terms of distribution of the purchase price establish that contingencies must be measured one by one according to their probability of occurrence and discounted at fair value from the date on which it is deemed the loss can be generated. According to this criterion, from a total of identified contingencies amounting BRL 1,103,585,800 (including readjustments of current lawsuits), the Company recorded a provision for the beginning of business combination accounting in the amount BRL 142,907,0125 equivalent to CLP 24,135,711 thousand.

 

b)      Tax contingencies on ICMS and IPI causes.

 

They refer mainly to tax settlements issued by advance appropriation of ICMS credits on fixed assets, payment of the replacement of ICMS tax to the operations, untimely IPI credits calculated on bonuses, among other claims.

 

The Company does not consider that these judgments will result in significant losses, given that their loss, according to its legal counsel, is considered unlikely. However, the accounting standards of financial information related to business combination in terms of distribution of the purchase price, establish contingencies must be valued one by one according to their probability of occurrence and discounted to fair value from the date on which it is deemed that the loss can be generated. According to this criterion, an initial provision has been made in the business combination accounting for an amount of BRL 39,159,107 equivalent to CLP 6,939,853 thousand.

 

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3) Embotelladora Andina S.A. and its Chilean subsidiaries face labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling CLP 2,029,735 thousand. Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors.

 

4)        Paraguay Refrescos S.A. faces tax, trade, labor and other lawsuits. Accounting provisions have been made for the contingency of any loss because of these lawsuits amounting to CLP 3,298 thousand. Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors.

 

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23.2                                 Direct guarantees and restricted assets:

 

Guarantees and restricted assets are detailed as follows:

 

Guarantees that commit assets included in the financial statements:

 

 

 

 

 

 

 

Committed assets

 

Accounting value

 

Guaranty creditor

 

Debtor name

 

Relationship

 

Guaranty

 

Type

 

06-30-2019

 

12-31-2018

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Gas Licuado Lipigas S.A

 

Embotelladora Andina S.A.

 

Parent company

 

Cash

 

Trade debtors and other accounts receivable

 

 

1,140

 

Inmob. e invers. supetar Ltda.

 

Transportes Polar

 

Subsidiary

 

Cash

 

Other non-current non-financial assets

 

4,579

 

4,579

 

Maria Lobos Jamet

 

Transportes Polar

 

Subsidiary

 

Cash

 

Other non-current non-financial assets

 

2,565

 

2,565

 

Bodega San Francisco

 

Transportes Polar

 

Subsidiary

 

Cash

 

Other non-current non-financial assets

 

6,483

 

 

Employee claims

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

5,594,690

 

5,336,644

 

Civil and tax claims

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

11,540,575

 

12,597,136

 

Government entities

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Plant & equipment, net

 

Property, Plant & Equipment

 

12,768,048

 

13,209,635

 

Distribuidora Baraldo S.H.

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

320

 

369

 

Acuña Gomez

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

480

 

553

 

Nicanor López

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

343

 

395

 

Labarda

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

6

 

7

 

Municipalidad Bariloche

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

18,590

 

21,420

 

Municipalidad San Antonio Oeste

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

35,307

 

40,682

 

Municipalidad Carlos Casares

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

1,428

 

1,645

 

Municipalidad Chivilcoy

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

220,812

 

254,430

 

Others

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

68

 

78

 

Granada Maximiliano

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

2,879

 

3,317

 

Cicsa

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Cash deposit

 

Other current non-financial assets

 

4,002

 

4,612

 

Other lessors

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Cash deposit

 

Other current non-financial assets

 

26,652

 

46,169

 

Aduana de EZEIZA

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Cash deposit

 

Other current non-financial assets

 

2,299

 

3,013

 

Municipalidad de Junin

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

1,382

 

1,592

 

Almada Jorge

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

4,295

 

4,949

 

Municipalidad de Picun Leufu

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

62

 

72

 

Mirgoni Marano

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

97

 

112

 

Farias Matias Luis

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

268

 

309

 

Temas Industriales SA - Embargo General de Fondos

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

200,545

 

231,077

 

Gomez Alejandra Raquel

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

30

 

35

 

Lopez Gustavo Gerardo C/Inti Saic Y Otros

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Cash deposit

 

Other current financial assets

 

196

 

226

 

Tribunal Superior De Justicia De La Provincia De Córdoba

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

252

 

290

 

DBC SA C CERVECERIA ARGENTINA SA ISEMBECK

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

35,986

 

41,465

 

Coto Cicsa

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

6,398

 

 

Cencosud

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Deposit in court

 

Other non-current non-financial assets

 

3,998

 

0-

 

Marcus A.Peña

 

Paraguay Refrescos

 

Subsidiary

 

Real estate

 

Property, Plant & Equipment

 

4,093

 

4,164

 

Mauricio J Cordero C

 

Paraguay Refrescos

 

Subsidiary

 

Real estate

 

Property, Plant & Equipment

 

883

 

904

 

José Ruoti Maltese

 

Paraguay Refrescos

 

Subsidiary

 

Real estate

 

Property, Plant & Equipment

 

714

 

758

 

Alejandro Galeano

 

Paraguay Refrescos

 

Subsidiary

 

Real estate

 

Property, Plant & Equipment

 

1,221

 

1,251

 

Ana Maria Mazó

 

Paraguay Refrescos

 

Subsidiary

 

Real estate

 

Property, Plant & Equipment

 

1,163

 

1,191

 

Total

 

 

 

 

 

 

 

 

 

30,491,709

 

31,816,784

 

 

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Guarantees provided without obligation of assets included in the financial statements:

 

 

 

 

 

 

 

Committed assets

 

Amounts involved

 

Guaranty creditor

 

Debtor name

 

Relationship

 

Guaranty

 

Type

 

06-30-2019

 

12-31-2018

 

 

 

 

 

 

 

 

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Employee procedures

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Guaranty receipt

 

Legal proceeding

 

2,550,058

 

2,601,353

 

Administrative procedures

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Guaranty receipt

 

Legal proceeding

 

7,634,034

 

8,233,853

 

Federal Government

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Guaranty receipt

 

Legal proceeding

 

117,643,285

 

116,192,877

 

State Government

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Guaranty receipt

 

Legal proceeding

 

45,824,061

 

43,015,207

 

Sorocaba Refrescos

 

Rio de Janeiro Refrescos Ltda.

 

Associate

 

Loan

 

Guarantor

 

3,544,439

 

3,586,095

 

Others

 

Rio de Janeiro Refrescos Ltda.

 

Subsidiary

 

Guaranty receipt

 

Legal proceeding

 

2,846,548

 

3,236,092

 

Aduana de EZEIZA

 

Embotelladora del Atlántico S.A.

 

Subsidiary

 

Surety insurance

 

Faithful compliance of contract

 

611,224

 

699,502

 

Aduana de EZEIZA

 

Andina Empaques Argentina S.A.

 

Subsidiary

 

Surety insurance

 

Faithful compliance of contract

 

289,017

 

182,459

 

 

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24 — FINANCIAL RISK MANAGEMENT

 

The Company’s businesses are exposed to a variety of financial and market risks (including foreign exchange risk, interest rate risk and price risk). The Company’s global risk management program focuses on the uncertainty of financial markets and seeks to minimize potential adverse effects on the performance of the Company. The Company uses derivatives to hedge certain risks. A description of the primary policies established by the Company to manage financial risks are provided below:

 

Interest Rate Risk

 

As of June 30, 2019, the Company maintains all its debt liabilities at a fixed rate as to avoid fluctuations in financial expenses resulting from tax rate increases.

 

The Company’s greatest indebtedness corresponds to own issued Chilean local bonds at a fixed rate for UF 16,582 million denominated in UF (“UF”), a currency indexed to inflation in Chile (Company sales are correlated with the UF variation).

 

There is also the Company’s indebtedness on the international market through a 144A/RegS Bond at a fixed rate for USD 365 million (original amount issued USD 575 million and partial prepayment in October 2019 for USD 210 million), denominated in dollars, and practically 100% of which has been re-denominated to BRL through Cross Currency Swaps.

 

Credit risk

 

The credit risk to which the Company is exposed comes mainly from trade accounts receivable maintained with retailers, wholesalers and supermarket chains in domestic markets; and the financial investments held with banks and financial institutions, such as time deposits, mutual funds and derivative financial instruments.

 

a.              Trade accounts receivable and other current accounts receivable

 

Credit risk related to trade accounts receivable is managed and monitored by the area of Finance and Administration of each business unit. The Company has a wide base of more than 100 thousand clients implying a high level of atomization of accounts receivable, which are subject to policies, procedures and controls established by the Company. In accordance with such policies, credits must be based objectively, non-discretionary and uniformly granted to all clients of a same segment and channel, provided these will allow generating economic benefits to the Company. The credit limit is checked periodically considering payment behavior. Trade accounts receivable pending of payment are monitored on a monthly basis.

 

i.                                          Sale Interruption:

 

In accordance with Corporate Credit Policy, the interruption of sale must be within the following framework: when a customer has outstanding debts for an amount greater than USD  250,000, and over 60 days expired, sale is suspended. The General Manager in conjunction with the Finance and Administration Manager authorize exceptions to this rule, and if the outstanding debt should exceed USD 1,000,000, and in order to continue operating with that client, the authorization of the Chief Financial Officer is required. Notwithstanding the foregoing, each operation can define an amount lower than USD 250,000 according to the country’s reality.

 

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ii.                                       Impairment

 

The impairment recognition policy establishes the following criteria for provisions: 30% is provisioned for 31 to 60 days overdue, 60% between 60 and 91 days, 90% between 91 and 120 days overdue and 100% for more than 120 days. Exemption of the calculation of global impairment is given to credits whose delays in the payment correspond to accounts disputed with the customer whose nature is known and where all necessary documentation for collection is available, therefore, there is no uncertainty on recovering them. However, these accounts also have an impairment provision as follows: 40% for 91 to 120 days overdue, 80% between 120 and 170, and 100% for more than 170 days.

 

iii.                                    Prepayment to suppliers

 

The Policy establishes that USD 25,000 prepayments can only be granted to suppliers if its value is properly and fully provisioned. The Treasurer of each subsidiary must approve supplier warranties that the Company receives for prepayments before signing the respective service contract. In the case of domestic suppliers, a warranty ballot (or the instrument existing in the country) shall be required, in favor of Andina executable in the respective country, non-endorsable, payable on demand or upon presentation and its validity will depend on the term of the contract. In the case of foreign suppliers, a stand-by credit letter will be required which shall be issued by a first line bank; in the event that this document is not issued in the country where the transaction is done, a direct bank warranty will be required. Subsidiaries can define the best way of safeguarding the Company’s assets for prepayments under USD 25,000.

 

iv.                                   Guarantees

 

In the case of Chile, we have insurance with Compañía de Seguros de Crédito Continental S.A. (AA rating —according to Fitch Chile and Humphreys rating agencies) covering the credit risk regarding trade debtors in Chile for 92% both for the existing as well as the expired debt, total amount of the trade debtors in Chile reached CLP 62,105,536 thousand. A provision of CLP 1,544,050 thousand has been made for the portion of past due outstanding debt portfolio not covered by the insurance.

 

The rest of the operations do not have credit insurance, instead mortgage guarantees are required for volume operations of wholesalers and distributors in the case of trade accounts receivables. In the case of other debtors, different types of guarantees are required according to the nature of the credit granted.

 

Historically, uncollectible trade accounts have been lower than 0.5% of the Company’s total sales.

 

b.              Financial investments

 

The Company has a Policy that is applicable to all of the companies of the group in order to cover credit risks for financial investments, restricting both the types of instruments as well as the institutions and degree of concentration. The companies of the group can invest in:

 

a.              Time deposits: only in banks or financial institutions that have a risk rating equal or higher than Level 1  (Fitch) or equivalent for deposits of less than 1 year and rated A or higher (S&P) or equivalent for deposits of more than 1 year.

 

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b.              Mutual funds: investments with immediate liquidity and no risk of capital (funds composed of investments at a fixed-term, current account, fixed rate Tit BCRA, negotiable obligations, Over Night, etc.) in all those counter-parties that have a rating greater than or equal to AA-(S&P) or equivalent, Type 1 Pacts and Mutual Funds, with AA+ rating (S&P) or equivalent.

 

c.               Other investment alternatives must be evaluated and authorized by the office of the Chief Financial Officer.

 

Exchange Rate Risk

 

The company is exposed to three types of risk caused by exchange rate volatility:

 

a)        Exposure of foreign investment

 

This risk originates from the translation of net investment from the functional currency of each country (Brazilian Real, Paraguayan Guaraní, and Argentine Peso) to the Parent Company’s reporting currency (Chilean Peso). Appreciation or devaluation of the Chilean Peso with respect to the functional currencies of each country, originates decreases and increases in equity, respectively. The Company does not hedge this risk.

 

a.1 Investment in Argentina

 

As of June 30, 2019, the Company maintains a net investment of CLP 146,060,583 thousand. in Argentina, composed by the recognition of assets amounting to CLP 213,346,367 thousand and liabilities amounting to CLP 67,285,784. These investments accounted for 21.5% of the Company’s consolidated sales revenues

 

As of June 30, 2019, the Argentine peso devalued by 15.1% with respect to the Chilean peso.

 

If the exchange rate of the Argentine Peso depreciated an additional 5% with respect to the Chilean Peso, the Company would have lower income from the operation in Argentina of CLP 649,200 thousand and a decrease in equity of CLP 5,719,518 thousand, originated by lower asset recognition of CLP 9,767,224 thousand and by lower liabilities recognition of CLP 4,047,706 thousand.

 

a.2 Investment in Brazil

 

As of June 30, 2019, the Company maintains a net investment of CLP 271,365,967 thousand in Brazil, composed by the recognition of assets amounting to CLP 790,620,826 thousand and liabilities amounting to CLP 519,254,859 thousand. These investments accounted for 34.7% of the Company’s consolidated sales revenues.

 

As of June 30, 2019, the Brazilian Real devalued by 2.9% with respect to the Chilean peso.

 

If the exchange rate of the Brazilian Real depreciated an additional 5% with respect to the Chilean Peso, the Company would have lower income from the operation in Brazil of CLP 693,067 thousand and a decrease in equity of CLP 12,304,067 thousand, originated by lower asset recognition of CLP 37,663,596 thousand and by lower liabilities recognition of CLP 25,358,920 thousand.

 

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a.3 Investment in Paraguay

 

As of June 30, 2019, the Company maintains a net investment of CLP 241,432,644 thousand in Paraguay, composed by the recognition of assets amounting to CLP 272,963,528 thousand and liabilities amounting to CLP 31,530,885 thousand. These investments accounted for 8.7% of the Company’s consolidated sales revenues.

 

As of June 30, 2019, the Paraguayan Guarani appreciated by 5.8% with respect to the Chilean peso.

 

If the exchange rate of the Paraguayan Guaraní devalued by 5% with respect to the Chilean Peso, the Company would have lower income from the operations in Paraguay of CLP 379,610 thousand and a decrease in equity of CLP 11,115,499 thousand originated by lower asset recognition of CLP 12,828,296 thousand and lower liabilities recognition of CLP 1,712,797 thousand.

 

b)        Net exposure of assets and liabilities in foreign currency

 

This risk stems mostly from carrying liabilities in US dollar, so the volatility of the US dollar with respect to the functional currency of each country generates a variation in the valuation of these obligations, with consequent effect on results.

 

As of June 30, 2019, the Company maintains a net liability position totaling CLP 232,178,185 thousand, basically composed of bonds payable and leasing contracts for CLP 248,977,984 thousand partially offset by financial assets denominated in dollars for CLP 16,799,799 thousand.

 

All U.S. Dollar liabilities amounting to CLP 248,977,984 thousand correspond to dollar liabilities of the Chilean, Argentinean and Brazilian operations and are, therefore, exposed to the volatility of the Chilean peso against the U.S. Dollar.

 

In order to protect the Company from the effects on income resulting from the volatility of the Brazilian Real and the Chilean Peso against the U.S. dollar, the Company maintains derivative contracts (cross currency swaps) to cover almost 100% of US dollar-denominated financial liabilities.

 

By designating such contracts as hedging derivatives, the effects on income for variations in the Chilean Peso and the Brazilian Real against the US dollar, are mitigated annulling its exposure to exchange rates.

 

The Company’s net exposure as of June 30, 2019, to foreign currency over existing assets and liabilities, discounting the derivatives contracts, is an asset position of CLP 12,092,615 thousand.

 

c) Assets purchased or indexed to foreign currency exposure

 

This risk originates from purchases of raw materials and investments in Property, plant and equipment, whose values are expressed in a currency other than the functional currency of the subsidiary. Changes in the value of costs or investments can be generated through time, depending on the volatility of the exchange rate.

 

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Annual purchases of raw materials denominated or indexed in U.S. dollars, amounts to 19% of our cost of sales or approximately USD 340 million.

 

In order to minimize this risk, the Company maintains a currency hedging policy stipulating that it is necessary to enter into foreign currency derivatives contracts to lessen the effect of the exchange rate over cash expenditures expressed in US dollars, corresponding mainly to payment to suppliers of raw materials in each of the operations. This policy stipulates a 12-month forward horizon. As of June 30, 2019, USD 54.7 million for future purchases have been hedged-for the following 12 months.

 

According to the percentage of purchases of raw materials which are carried out or indexed to U.S. dollars, a possible change in the value of the US dollar by 5% in the four countries where the Company operates, and excluding derivatives contracts taken to mitigate the effect of currency volatility, keeping everything constant, would lead to a lower accumulated result amounting to CLP 1,410,817 thousand as of June 30, 2019. Currently, the Company has contracts to hedge this effect in Chile, Argentina, Paraguay and Brazil.

 

Commodities risk

 

The Company is subject to a risk of price fluctuations in the international markets mainly for sugar, PET resin and aluminum, which are inputs used to produce beverages and, as a whole, account for 35% to 40% of operating costs. Procurement and anticipated purchase contracts are made frequently to minimize and/or stabilize this risk. The possible effects in these Consolidated Financial Statements, in case of a 5% increase in prices of its main raw materials, would be a reduction of CLP 2,260,300 thousand in earnings for the period ended June 30, 2019. To minimize this risk or stabilize often supply contracts and anticipated purchases are made when market conditions warrant.

 

Liquidity risk

 

The products we sell are mainly paid for in cash and short-term credit; therefore, the Company´s main source of financing comes from the cash flow of our operations. This cash flow has historically been sufficient to cover the investments necessary for the normal course of our business, as well as the distribution of dividends approved by the General Shareholders’ Meeting. Should additional funding be required for future geographic expansion or other needs, the main sources of financing to consider are: (i) debt offerings in the Chilean and foreign capital markets (ii) borrowings from commercial banks, both internationally and in the local markets where the Company operates; and (iii) public equity offerings

 

The following table presents an analysis of the Company’s committed maturities for liability payments throughout the coming years:

 

 

 

Maturity

 

Item

 

1 year

 

More than 1
year up to 2

 

More than 2
years up to
3

 

More than
3 up to 4

 

More than 4
years

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

Bank debt

 

31,279,930

 

23,886,037

 

23,167,171

 

22,438,190

 

271,085,057

 

Bond payable

 

43,115,677

 

41,288,217

 

39,189,702

 

39,040,815

 

830,195,114

 

Lease obligations

 

7,059,863

 

7,336,631

 

6,682,198

 

4,073,824

 

11,847,784

 

Contractual obligations

 

43,539,106

 

7,682,630

 

1,157,171

 

614,604

 

 

Total

 

124,994,576

 

80,193,515

 

70,196,242

 

66,167,433

 

1,113,127,955

 

 

77


Table of Contents

 

25 - EXPENSES BY NATURE

 

Other expenses by nature are:

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

Details

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Direct production costs

 

368,124,018

 

375,324,980

 

177,967,092

 

168,316,464

 

Employee expenses

 

129,880,705

 

128,568,152

 

64,667,555

 

52,769,568

 

Transportation and distribution

 

96,082,258

 

71,393,249

 

34,755,241

 

31,465,494

 

Advertising

 

10,210,043

 

15,759,035

 

7,549,418

 

6,469,787

 

Depreciation and amortization

 

53,895,240

 

48,328,822

 

27,275,029

 

24,622,762

 

Repairs and maintenance

 

11,871,990

 

6,817,551

 

6,831,892

 

398,512

 

Other expenses

 

65,362,647

 

64,986,224

 

25,522,980

 

45,488,666

 

Total (1)

 

735,426,901

 

711,178,013

 

344,569,207

 

329,531,254

 

 


(1) Corresponds to the addition of cost of sales, administration expenses and distribution cost.

 

26 - OTHER INCOME

 

Other income by function is detailed as follows:

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

Details

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Gain on disposal of Property, plant and equipment

 

94,644

 

118,219

 

81,462

 

88,576

 

Recovery PIS/CONFINS tax

 

 

55,180

 

 

55,180

 

Others

 

168,916

 

63,742

 

97,135

 

9,431

 

Total

 

263,560

 

237,141

 

178,597

 

153,187

 

 

27 — OTHER EXPENSES BY FUNCTION

 

Other expenses by function are detailed as follows:

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

Details

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Contingencies and non-operating fees

 

3,580,545

 

6,196,728

 

2,263,694

 

2,456,459

 

Reversal IPI Manaus processes

 

(3,770,309

)

 

(3,770,309

)

 

Tax on bank debits

 

2,187,617

 

2,243,222

 

910,299

 

598,417

 

Disposal and write-offs (earnings) of Property, plant and equipment

 

(37,653

)

75,098

 

(64,168

)

268,897

 

Others

 

15,692

 

275,967

 

169,586

 

64,788

 

Total

 

1,975,892

 

8,791,015

 

(490,898

)

3,388,562

 

 

78


Table of Contents

 

28 — FINANCIAL INCOME AND EXPENSES

 

Financial income and expenses are detailed as follows:

 

a)             Financial income

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

Detail

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP
(000’s)

 

CLP (000’s)

 

CLP (000’s)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,565,744

 

224,933

 

771,734

 

106,840

 

Guaranty restatement Ipiranga acquisition

 

16,802

 

215,562

 

6,598

 

215,562

 

Other financial income

 

1,328,310

 

1,678,643

 

711,073

 

819,766

 

Total

 

2,910,856

 

2,119,138

 

1,489,405

 

1,142,168

 

 

b)             Financial costs

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

Details

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Bond interest

 

18,967,900

 

19,354,730

 

9,399,971

 

10,049,366

 

Bank loan interest

 

855,626

 

1,347,677

 

386,817

 

833,221

 

Other financial costs

 

2,496,330

 

1,322,881

 

1,259,364

 

39,295

 

Total

 

22,319,856

 

22,025,288

 

11,046,152

 

10,921,882

 

 

29 — OTHER (LOSSES) GAINS

 

Other (losses) gains are detailed as follows:

 

 

 

01.01.2019

 

01.01.2018

 

04.01.2019

 

04.01.2018

 

Details

 

06.30.2019

 

06.30.2018

 

06.30.2019

 

06.30.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

(Losses) gains on ineffective portion of hedge derivatives

 

 

(1,693,349

)

 

(896,751

)

Other income and expenses

 

 

92

 

 

92

 

Total

 

 

(1,693,257

)

 

(896,659

)

 

79


Table of Contents

 

30 - LOCAL AND FOREIGN CURRENCY

 

Local and foreign currency balances as of June 30, 2019 and December 31, 2018, are the following:

 

CURRENT ASSETS

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Cash and cash equivalents

 

117,450,341

 

137,538,613

 

USD

 

14,168,805

 

5,917,041

 

EUR

 

9,622

 

51,401

 

CLP

 

50,201,043

 

86,121,695

 

BRL

 

42,293,673

 

28,040,970

 

ARS

 

10,777,198

 

6,726,906

 

PGY

 

 

10,680,600

 

 

 

 

 

 

 

Other financial assets, current

 

 

683,537

 

USD

 

 

 

UF

 

 

 

CLP

 

 

355,126

 

BRL

 

 

14,040

 

ARS

 

 

300,359

 

PGY

 

 

14,042

 

 

 

 

 

 

 

Other non-financial assets, current

 

16,904,319

 

5,948,923

 

USD

 

157,610

 

45,053

 

UF

 

365,849

 

78,623

 

CLP

 

10,095,058

 

3,589,253

 

BRL

 

1,718,225

 

1,275,073

 

ARS

 

4,567,577

 

460,125

 

PGY

 

 

500,796

 

 

 

 

 

 

 

Trade accounts and other accounts receivable

 

122,174,667

 

174,113,323

 

USD

 

1,740,350

 

863,794

 

EUR

 

747,643

 

52,332

 

UF

 

446,773

 

1,414,800

 

CLP

 

59,036,045

 

73,028,244

 

BRL

 

43,595,388

 

66,585,089

 

ARS

 

11,562,896

 

25,000,141

 

PGY

 

 

7,168,923

 

 

 

 

 

 

 

Accounts receivable related entities

 

7,240,512

 

9,450,263

 

USD

 

31,969

 

26,557

 

CLP

 

6,013,709

 

6,911,814

 

ARS

 

1,194,834

 

2,511,892

 

 

 

 

 

 

 

Inventory

 

155,701,481

 

151,319,709

 

USD

 

626,181

 

2,197,382

 

EUR

 

 

12,522

 

CLP

 

46,567,740

 

50,130,341

 

BRL

 

51,683,489

 

36,797,523

 

ARS

 

43,346,937

 

46,394,230

 

PGY

 

13,477,134

 

15,787,711

 

 

 

 

 

 

 

Current tax assets

 

5,858,023

 

2,532,056

 

CLP

 

3,824,521

 

 

BRL

 

2,033,502

 

2,532,056

 

 

 

 

 

 

 

Total current assets

 

425,329,343

 

481,586,454

 

USD

 

16,724,915

 

9,049,827

 

EUR

 

757,265

 

116,255

 

UF

 

812,622

 

1,493,423

 

CLP

 

175,738,116

 

220,136,473

 

BRL

 

141,324,277

 

135,244,751

 

ARS

 

71,449,442

 

81,393,653

 

PGY

 

18,522,706

 

34,152,072

 

 

80


Table of Contents

 

NON-CURRENT ASSETS

 

06.30.2019

 

12.31.2018

 

 

 

CLP (000’s)

 

CLP (000’s)

 

Other non-current financial assets

 

96,518,349

 

97,362,295

 

CLP

 

 

 

BRL

 

85,597,714

 

87,446,661

 

ARS

 

10,920,635

 

9,915,634

 

 

 

 

 

 

 

Other non-current, non-financial assets

 

33,350,240

 

34,977,264

 

USD

 

 

22,917

 

UF

 

308,853

 

314,283

 

CLP

 

61,668

 

47,532

 

BRL

 

30,466,286

 

32,070,120

 

ARS

 

2,354,501

 

2,315,682

 

PGY

 

158,932

 

206,730

 

 

 

 

 

 

 

Accounts receivable, non-current

 

189,511

 

1,270,697

 

UF

 

133,804

 

1,204,097

 

CLP

 

 

 

 

ARS

 

1,306

 

90

 

PGY

 

54,401

 

66,510

 

 

 

 

 

 

 

Accounts receivable related entities, non-current

 

122,506

 

74,340

 

CLP

 

122,506

 

74,340

 

 

 

 

 

 

 

Investments accounted for using the equity method

 

101,187,696

 

102,410,945

 

CLP

 

49,237,481

 

50,136,221

 

BRL

 

51,950,215

 

52,274,724

 

ARS

 

 

 

 

 

 

 

 

 

Intangible assets other than goodwill

 

655,962,412

 

668,822,553

 

USD

 

9,568,070

 

4,960,399

 

CLP

 

301,332,126

 

306,508,710

 

BRL

 

180,380,628

 

182,657,545

 

ARS

 

2,233,519

 

2,101,571

 

PGY

 

162,448,069

 

172,594,328

 

 

 

 

 

 

 

Goodwill

 

117,733,476

 

117,229,173

 

CLP

 

9,523,767

 

9,523,767

 

BRL

 

71,222,325

 

72,059,356

 

ARS

 

30,090,247

 

28,318,129

 

PGY

 

6,897,137

 

7,327,921

 

 

 

 

 

 

 

Property, plant & equipment

 

714,339,943

 

710,770,968

 

USD

 

 

 

Euros

 

 

381,732

 

CLP

 

285,870,214

 

271,625,978

 

BRL

 

243,928,822

 

252,674,783

 

ARS

 

123,510,846

 

117,532,176

 

PGY

 

61,030,061

 

68,556,299

 

 

 

 

 

 

 

Deferred tax assets

 

1,618,274

 

 

CLP

 

1,618,274

 

 

 

 

 

 

 

 

Total non-current assets

 

1,721,022,407

 

1,732,918,235

 

USD

 

9,568,070

 

4,983,316

 

Euros

 

 

381,732

 

UF

 

442,657

 

1,518,380

 

CLP

 

647,766,036

 

637,916,548

 

BRL

 

663,545,990

 

679,183,189

 

ARS

 

169,111,054

 

160,183,282

 

PGY

 

230,588,600

 

248,751,788

 

 

81


Table of Contents

 

 

 

06.30.2019

 

12.31.2018

 

CURRENT LIABILITIES

 

Up to 90 days

 

90 days up to 1 year

 

Total

 

Up to 90 days

 

90 days up to 1 year

 

Total

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Other financial liabilities, current

 

19,983,776

 

40,338,956

 

60,322,732

 

9,377,421

 

46,737,556

 

56,114,977

 

USD

 

295,864

 

3,179,134

 

3,474,998

 

130,829

 

3,304,011

 

3,434,840

 

UF

 

6,856,484

 

11,511,563

 

18,368,047

 

7,831,899

 

10,536,509

 

18,368,408

 

CLP

 

764,948

 

12,207,622

 

12,972,570

 

 

9,681,676

 

10,342,404

 

BRL

 

12,003,279

 

11,023,834

 

23,027,113

 

1,413,622

 

20,833,877

 

20,674,416

 

ARS

 

63,201

 

1,346,623

 

1,409,824

 

1,071

 

1,357,285

 

14,876,804

 

PGY

 

 

1,070,180

 

1,070,180

 

 

1,024,198

 

871,811

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts and other accounts payable

 

167,092,043

 

6,177,020

 

173,269,063

 

251,551,666

 

3,394,362

 

238,109,847

 

USD

 

17,783,460

 

3,688,042

 

21,471,502

 

11,716,262

 

 

14,514,082

 

EUR

 

1,738,571

 

267,990

 

2,006,561

 

2,202,581

 

59,951

 

4,371,675

 

UF

 

1,928,095

 

 

1,928,095

 

2,198,131

 

 

192,055

 

CLP

 

60,948,789

 

2,174,721

 

63,123,510

 

82,576,800

 

3,334,412

 

84,433,657

 

BRL

 

53,219,746

 

 

53,219,746

 

74,524,169

 

 

68,940,973

 

ARS

 

31,472,873

 

46,267

 

31,519,140

 

69,859,508

 

 

54,846,437

 

PGY

 

 

 

 

8,472,550

 

 

10,805,605

 

Other currencies

 

509

 

 

509

 

1,665

 

 

5,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable related entities, current

 

44,088,670

 

 

44,088,670

 

45,687,476

 

140,383

 

45,827,859

 

USD

 

 

 

 

 

 

 

 

CLP

 

29,102,721

 

 

29,102,721

 

27,729,582

 

140,383

 

27,869,965

 

BRL

 

9,874,809

 

 

9,874,809

 

12,478,179

 

 

12,478,179

 

ARS

 

5,111,140

 

 

5,111,140

 

5,479,714

 

 

5,479,714

 

PGY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oher current provisions

 

1,691,925

 

341,108

 

2,033,033

 

1,789,275

 

1,696,338

 

3,485,613

 

CLP

 

1,691,925

 

337,810

 

2,029,735

 

1,789,275

 

1,681,178

 

3,470,453

 

PGY

 

 

3,298

 

3,298

 

 

15,160

 

15,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax liabilities, current

 

 

2,078,402

 

2,078,402

 

4,302,370

 

5,036,242

 

9,338,612

 

CLP

 

 

 

 

 

 

 

4,302,370

 

1,184,842

 

5,487,212

 

BRL

 

 

 

 

 

 

 

 

 

 

ARS

 

 

1,237,694

 

1,237,694

 

 

2,980,634

 

2,980,634

 

PGY

 

 

840,708

 

840,708

 

 

870,766

 

870,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee benefits current provisions

 

16,830,149

 

8,919,569

 

25,749,718

 

10,189,264

 

23,021,715

 

33,210,979

 

CLP

 

3,979,555

 

709,051

 

4,688,606

 

1,177,114

 

4,854,163

 

6,031,277

 

BRL

 

12,682,285

 

1,163,833

 

13,846,118

 

 

17,180,455

 

17,180,455

 

ARS

 

168,309

 

6,251,751

 

6,420,060

 

9,012,150

 

 

9,012,150

 

PGY

 

 

794,934

 

794,934

 

 

987,097

 

987,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-financial current liabilities

 

660,294

 

30,982,881

 

31,643,175

 

1,346,839

 

32,427,375

 

33,774,214

 

UF

 

 

 

 

 

 

 

CLP

 

659,894

 

30,560,331

 

31,220,225

 

869,964

 

32,276,377

 

33,146,341

 

BRL

 

 

 

 

 

 

 

ARS

 

400

 

4,397

 

4,797

 

476,875

 

 

476,875

 

PGY

 

 

418,153

 

418,153

 

 

150,998

 

150,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

250,346,857

 

88,837,936

 

339,184,793

 

307,408,129

 

112,453,972

 

419,862,101

 

USD

 

18,079,324

 

6,867,176

 

24,946,500

 

14,644,911

 

3,304,011

 

17,948,922

 

EUR

 

1,738,571

 

267,990

 

2,006,561

 

4,311,724

 

59,951

 

4,371,675

 

UF

 

8,784,579

 

11,511,563

 

20,296,142

 

8,023,954

 

10,536,509

 

18,560,463

 

CLP

 

97,147,832

 

45,989,535

 

143,137,367

 

116,967,550

 

53,153,031

 

170,120,581

 

BRL

 

87,780,119

 

12,187,667

 

99,967,786

 

82,832,774

 

38,014,332

 

120,847,106

 

ARS

 

36,815,923

 

8,886,732

 

45,702,655

 

69,816,247

 

4,337,919

 

74,154,166

 

PGY

 

 

3,127,273

 

3,127,273

 

10,805,605

 

3,048,219

 

13,853,824

 

Other Currencies

 

509

 

 

509

 

5,362

 

 

5,362

 

 

82


Table of Contents

 

 

 

06.30.2019

 

12.31.2018

 

NON-CURRENT LIABILITIES

 

More than 1
year up to 3
years

 

More than 3
years and up to
5 years

 

More than 5
years

 

Total

 

More than 1 year
up to 3 years

 

More than 3
years and up
to 5 years

 

More than 5
years

 

Total

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Other non-current, financial liabilities

 

36,855,099

 

284,113,886

 

398,691,269

 

719,660,254

 

28,642,101

 

276,409,074

 

411,512,603

 

716,563,778

 

USD

 

401,862

 

257,117,580

 

260,064

 

257,779,507

 

 

250,976,154

 

 

250,976,154

 

UF

 

24,945,401

 

23,919,919

 

389,427,066

 

438,292,386

 

25,634,958

 

23,105,123

 

402,045,609

 

450,785,690

 

CLP

 

8,052,259

 

 

 

8,052,259

 

 

 

 

 

BRL

 

3,391,593

 

3,076,387

 

9,004,138

 

15,472,118

 

3,007,143

 

2,327,797

 

9,466,994

 

14,801,934

 

ARS

 

63,984

 

 

 

63,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable, non-current

 

791,700

 

 

 

791,700

 

735,665

 

 

 

735,665

 

USD

 

469,201

 

 

 

469,201

 

585,289

 

 

 

585,289

 

CLP

 

316,918

 

 

 

316,918

 

148,680

 

 

 

148,680

 

ARS

 

5,581

 

 

 

5,581

 

1,696

 

 

 

1,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other provisions, non-current

 

1,007,822

 

50,873,392

 

 

51,881,214

 

3,448,042

 

55,518,871

 

 

58,966,913

 

CLP

 

 

 

5,000,000

 

5,000,000

 

2,500,000

 

 

 

 

2,500,000

 

BRL

 

 

50,873,392

 

 

50,873,392

 

 

55,518,871

 

 

55,518,871

 

ARS

 

23,337

 

 

 

23,337

 

948,042

 

 

 

948,042

 

PGY

 

1,075,683

 

 

 

1,075,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax assets

 

13,546,346

 

109,315,838

 

24,666,453

 

147,528,637

 

16,607,605

 

101,512,040

 

27,126,303

 

145,245,948

 

UF

 

 

 

1,302,167

 

1,302,167

 

 

 

 

 

CLP

 

 

83,290,366

 

9,110,060

 

92,400,426

 

497,175

 

81,630,530

 

11,899,975

 

94,027,680

 

BRL

 

 

26,025,472

 

 

26,025,472

 

 

19,881,510

 

 

19,881,510

 

ARS

 

13,546,346

 

 

 

13,546,346

 

16,110,430

 

 

 

16,110,430

 

PGY

 

 

 

14,254,226

 

14,254,226

 

 

 

15,226,328

 

15,226,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee benefits non-current provisions

 

778,545

 

4,237,374

 

8,453,228

 

13,469,147

 

742,297

 

240,148

 

8,433,096

 

9,415,541

 

CLP

 

274,837

 

4,237,374

 

8,453,228

 

12,965,439

 

230,528

 

240,148

 

8,433,096

 

8,903,772

 

PGY

 

503,708

 

 

 

503,708

 

511,769

 

 

 

511,769

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-financial non-current liabilities

 

167,682

 

 

 

167,682

 

 

 

 

 

ARS

 

167,682

 

 

 

167,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

53,147,195

 

448,540,490

 

431,810,950

 

933,498,634

 

50,175,710

 

433,680,133

 

447,072,002

 

930,927,845

 

USD

 

871,063

 

257,117,580

 

260,064

 

258,248,708

 

585,289

 

250,976,154

 

 

251,561,443

 

UF

 

24,945,401

 

23,919,919

 

390,729,233

 

439,594,553

 

25,634,958

 

23,105,123

 

402,045,609

 

450,785,690

 

CLP

 

8,644,014

 

87,527,740

 

17,563,288

 

113,735,042

 

3,376,383

 

81,870,678

 

20,333,071

 

105,580,131

 

BRL

 

3,391,593

 

79,975,251

 

9,004,138

 

92,370,982

 

3,007,143

 

77,728,178

 

9,466,994

 

90,202,315

 

ARS

 

14,791,415

 

 

 

14,791,415

 

17,060,168

 

 

 

17,060,169

 

PGY

 

503,708

 

 

14,254,226

 

14,757,935

 

511,769

 

 

15,226,328

 

15,738,097

 

 

83


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31 - THE ENVIRONMENT  (unaudited)

 

The Company has made disbursements totaling CLP 1,487,495 thousand for improvements in industrial processes, equipment to measure industrial waste flows, laboratory analysis, consulting on environmental impacts and others,

 

These disbursements by country are detailed as follows:

 

 

 

2019 period

 

Future commitments

 

Country

 

Recorded as
expenses

 

Capitalized to
Property,
plant and
equipment

 

To be
recorded as
expenses

 

To be
capitalized to
Property,
plant and
equipment

 

 

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

CLP (000’s)

 

Chile

 

721,159

 

 

 

 

Argentina

 

155,207

 

 

14,326

 

 

Brazil

 

425,030

 

121,943

 

399,685

 

232,634

 

Paraguay

 

31,419

 

32,737

 

 

 

Total

 

1,332,815

 

154,680

 

414,011

 

232,634

 

 

32 - SUBSEQUENT EVENTS

 

There are no subsequent events that may significantly affect the Company’s consolidated financial position as of June 30, 2019.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile.

 

 

 

 

EMBOTELLADORA ANDINA S.A.

 

 

By:

/s/ Andrés Wainer

 

 

Name:

Andrés Wainer

 

 

Title:

Chief Financial Officer

 

 

Santiago, August 23, 2019