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As filed with the Securities and Exchange Commission on March 27, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
Commission file number 001-13142
Embotelladora Andina S.A.
(Exact name of Registrant as specified in its charter)
Andina Bottling Company |
(Translation of Registrant’s name into English) |
Republic of Chile |
(Jurisdiction of incorporation or organization) |
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Miraflores 9153, 7th Floor |
(Address of principal executive offices) |
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Paula Vicuña, Tel. (56-2) 2338-0520 E-mail: paula.vicuna@koandina.com Miraflores 9153, 7th Floor- Renca - Santiago, Chile |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Series A Shares, Series B Shares of Registrant represented by American Depositary Shares |
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AKO.A |
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New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
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Series A Shares |
473,289,301 |
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Series B Shares |
473,281,303 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
⌧ Yes ◻ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
◻ Yes ⌧ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
⌧ Yes ◻ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
⌧ Yes ◻ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ⌧ |
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Accelerated filer ◻ |
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Non-accelerated filer ◻ |
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Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
⌧ Yes ◻ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
◻
Indicate by checkmark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant period pursuant to §240.10D-1(b).
◻
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ◻ |
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International Financial Reporting Standards as issued by the International Accounting Standards Board ⌧ |
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Other ◻ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
◻ Item 17 ◻ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
◻ Yes ⌧ No
TABLE OF CONTENTS
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UNRESOLVED SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS |
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
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PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
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DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
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INTRODUCTION
Certain Definitions
Unless the context otherwise requires, as used in this annual report the following terms have the meanings set forth below:
| ● | the “Company,” “we,” “our,” “Andina” and “Coca-Cola Andina” means Embotelladora Andina S.A. and its consolidated subsidiaries; |
| ● | “Andina Argentina” means our subsidiary, Embotelladora del Atlántico S.A., or EDASA; |
| ● | “Andina Brazil” means our subsidiary, Rio de Janeiro Refrescos Ltda. and its subsidiaries; |
| ● | “AEASA” means our subsidiary, Andina Empaques Argentina S.A.; |
| ● | “EDASA” means our subsidiary, Embotelladora del Atlántico S.A.; |
| ● | “PARESA” means our subsidiary, Paraguay Refrescos S.A.; |
| ● | “Envases CMF” means our affiliate, Envases CMF S.A.; |
| ● | “ECSA” means our subsidiary, Envases Central S.A.; |
| ● | “Re-Ciclar” means our subsidiary, Re-Ciclar S.A.; |
| ● | “Circular-Pet” means Circular-Pet S.A.; |
| ● | “Vital Jugos” means our subsidiary, VJ S.A., previously known as Vital S.A. and subsequently Vital Jugos S.A.; |
| ● | “VASA” means our subsidiary, Vital Aguas S.A.; |
| ● | “TAR” means our subsidiary, Transportes Andina Refrescos Ltda.; |
| ● | “The Coca-Cola Company” means The Coca-Cola Company and its subsidiaries, including without limitation Coca-Cola de Chile S.A. (“CC Chile”), which operates in Chile, Recofarma Indústrias do Amazonas Ltda. (“CC Brazil”), which operates in Brazil, and Servicios y Productos para Bebidas Refrescantes S.R.L. (“CC Argentina”), which operates in Argentina; |
| ● | the “Chilean territory” means the regions of Antofagasta, Atacama, Coquimbo, Metropolitan Region of Santiago, Aysén and Magallanes and the Chilean Antarctic and the provinces of Cachapoal and San Antonio; |
| ● | the “Brazilian territory” means the greater part of the State of Rio de Janeiro, the totality of the State of Espírito Santo and parts of the State of São Paulo and the State of Minas Gerais; |
| ● | the “Argentine territory” means the provinces of Córdoba, Mendoza, San Juan, San Luis, Santa Fe, Entre Ríos, La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz, Tierra del Fuego as well as the western part of the province of Buenos Aires; and |
| ● | the “Paraguayan territory” means the country of Paraguay. |
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Presentation of Financial and Certain Other Information
Unless otherwise specified, references herein to “dollars”, “U.S. dollars” or “US$” are to United States dollars; references to “pesos”, “Chilean pesos”, “Ch$” or “ThCh$” are to Chilean pesos; references to “Argentine pesos” or “AR$” are to Argentine pesos; references to “real”, “reais” or “R$” are to Brazilian reais; and references to “guaraníes”, “guaraní” or “G$” are to Paraguayan guaraníes. References to “UF” are to Unidades de Fomento. The UF is an inflation-indexed Chilean monetary unit with a value in Chilean pesos that is adjusted daily to reflect changes in the official consumer price index of the Instituto Nacional de Estadísticas (the “Chilean National Institute of Statistics”). The UF is adjusted in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean consumer price index during the prior calendar month. Certain percentages and amounts contained in this annual report have been rounded for ease of presentation.
The Company’s consolidated financial statements for the years ended December 31, 2021, 2022 and 2023 have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and the Interpretations issued by the International Financial Reporting Standards IFRS Interpretations Committee (IFRIC) applicable to companies reporting under IFRS.
Our consolidated financial statements are presented in Chilean pesos. Our consolidated financial statements reflect the results of our subsidiaries located in Brazil, Argentina and Paraguay, converted into Chilean pesos (our functional and presentation currency). IFRS requires assets and liabilities to be converted from the functional currency of our subsidiaries outside Chile to our reporting currency (Chilean peso) at the end of period exchange rates and income and expense accounts to be converted at the average monthly exchange rate for the month in which income or expense is recognized for subsidiaries that do not operate in hyperinflationary economies.
In the case of our Argentine subsidiaries, which have been operating in an environment that during 2021, 2022 and 2023 was classified as hyperinflationary, the conversion criteria from the functional currency of those subsidiaries to our presentation currency is the following:
| ● | Statement of financial position (balance sheet): Non-monetary items are expressed in the current currency at the balance sheet date and translated to the presentation currency of the closing exchange rate. Losses and gains are included in net earnings (fiscal year income). |
| ● | Income statement: Income statement items are expressed in the current currency unit at the end of the reporting period, using the variation of the general price index from the date on which the expenses and revenues were accrued, and translated to the presentation currency at closing exchange rate. |
| ● | Cash flow statement: Cash flow statement items are expressed in the current currency unit at the end of the reporting period and translated to the presentation currency at closing exchange rate. |
For more information on the effects of the hyperinflationary environment in Argentina see note 2.5 of our consolidated financial statements included herein.
Unless otherwise specified, our financial data is presented herein in Chilean pesos.
Forward-Looking Statements
This annual report includes forward looking statements, principally under the captions “Item 4. Information on the Company—Part B. Business Overview,” “Item 3. Key Information—Part D. Risk Factors,” and “Item 5. Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Examples of such forward-looking statements include:
| ● | statements of our plans, objectives or goals, including those related to anticipated trends, competition or regulation; |
| ● | statements about our future economic performance and that of Chile or other countries in which we operate; |
| ● | statements about our exposure to market risks, including interest rate risks, foreign exchange risk and equity price risk; and |
| ● | statements of assumptions underlying such statements. |
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Words such as “believes,” “expects,” “anticipates,” “projects,” “intends,” “should,” “could,” “may,” “seeks,” “aim,” “combined,” “estimates,” “probability,” “risk,” “target,” “goal,” “objective,” “future” or similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially and adversely from those described in such forward-looking statements included in this annual report as a result of various factors (including, without limitation, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates and operating and financial risks), many of which are beyond our control. The occurrence of any such factors not currently expected by us would significantly alter the results set forth in these statements.
You should understand that the following important factors, in addition to those discussed elsewhere in this annual report, could affect our future results and could cause those results or other outcomes to differ materially and adversely from those expressed in our forward-looking statements:
| ● | changes in general economic, business, political or other conditions in the regions where we operate; |
| ● | the impact of the occurrence or resurgence of global or regional health events, such as the COVID-19 pandemic, and government measures aimed at limiting the spread of pathogens; |
| ● | changes in the legal and regulatory framework of the beverage sector in the regions where we operate; |
| ● | the monetary and interest rate policies of the central banks of the countries in which we operate; |
| ● | unanticipated movements or volatility in interest rates, foreign exchange rates, inflation, equity prices or other rates or prices; |
| ● | changes in taxes; |
| ● | our inability to hedge certain risks economically; |
| ● | potential effects of weather conditions, earthquakes, tsunamis or other natural disasters; |
| ● | the outcome of litigation against us; |
| ● | the nature and extent of competition in the beverage industry in Latin America and the effect of competition on the prices we are able to charge for our products; |
| ● | volatility and fluctuations in demand for our products and the effect of such changes on the volume that we are able to sell and the price that we are able to charge for our products; |
| ● | capital and credit market conditions, including the availability of credit changes in interest rates; |
| ● | delays in the development of our projects, changes to our investment plans, due to changes in demand, authorizations, etc.; and |
| ● | the factors described under “Risk Factors.” |
The forward-looking statements contained in this document speak only as of the date of this annual report, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless required by law.
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Market Data
We have computed the information contained in this annual report regarding annual volume and per capita growth rates and levels, and market share, product segment, and population data in our bottling territories, based upon accumulated statistics developed by us. Market share information presented with respect to soft drinks, juices, waters and beer is based on data supplied by A.C. Nielsen Company. For market share information, corresponding to year 2021, note that A.C. Nielsen Company changed the methodology and sample in Argentina, Chile and Paraguay and figures for that period were obtained using such methodology, however, 2022 and 2023 figures presented herein were obtained from surveys carried out using the former methodology. Therefore, 2022 and 2023 figures pertaining to market share information in those countries may not be fully comparable to those of 2021. Furthermore, in 2023, A.C., Nielsen modified the calculation methodology in conjunction with a change in the information collection channels in Brazil; therefore, for the purpose of ensuring comparability, the figures for 2021 and 2022 in Brazil were recalculated.
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PART I
ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.KEY INFORMATION
A.[Reserved]
B.CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C.REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D.RISK FACTORS
Summary of Risk Factors
The following summarizes some, but not all, of the principal risks provided below. Please carefully consider all of the information discussed in this Item 3.D “Risk Factors” in this annual report on Form 20-F for a detailed description of these and other risks.
| ● | We rely heavily on our relationship with The Coca-Cola Company, which has substantial influence over our business and operations. Non-renewal of our authorization to produce and market its branded products, or other changes in our relationship, may adversely affect our business. |
| ● | The beverage business environment is changing rapidly, including as a result of increased health and environmental concerns, such as epidemic diseases, single use packaging, and plastic bottles pollution, and if we do not address evolving consumer product and shopping preferences, our business could suffer. |
| ● | Increased concern about the health effects of sugar and other sweeteners in beverages could result in changes to the beverage business that may adversely affect our financial results. |
| ● | Our business is highly competitive, including with respect to price competition, which may adversely affect our net profits and margins. |
| ● | If our raw material costs increase, including as a result of U.S. dollar/local currency exchange risk, price volatility and inflation, our profitability may be affected. |
| ● | Instability in the supply of utility services and oil prices may adversely impact our results of operations. |
| ● | Water scarcity, poor water quality and energy shortages could adversely impact our production costs and capacity. |
| ● | Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations. |
| ● | Our ability to achieve our environmental, social and governmental goals are subject to risks, many of which are outside of our control and our reputation and brands could be harmed if we fail to meet such goals. |
| ● | Significant additional labeling or warning requirements may inhibit sales of our products. |
| ● | Our business may be adversely affected if we are unable to maintain brand image and product quality. |
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| ● | Trademark infringement could adversely impact our beverage business. |
| ● | We may not be able to successfully implement our expansion strategies or achieve the expected operational efficiencies or synergies from potential acquisitions. |
| ● | Weather conditions or natural disasters may adversely affect our business. |
| ● | Our business is subject to risks arising from pandemics such as the COVID-19. |
| ● | Our insurance coverage may not adequately cover losses resulting from the risks for which we are insured. |
| ● | If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted. |
| ● | If we fail to comply with personal data protection and privacy laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which could negatively affect our business and operating results. |
| ● | Perception of risk in emerging economies may impede our access to international capital markets, hinder our ability to finance our operations and adversely affect our financial performance. |
| ● | Our business may be adversely affected if we fail to renew collective bargaining labor agreements on satisfactory terms or experience strikes or other labor unrest. |
| ● | Our business is subject to regulation, which is complex and subject to change. |
| ● | Our business is subject to increasing environmental regulation, which may result in increases in our operating costs or adverse changes in consumer demand. |
| ● | If we were to become subject to adverse judgments or determinations in legal proceedings to which we are, or may become, a party, our future profitability could suffer through significant liabilities, a reduction of sales, increased costs or damage to our reputation. |
| ● | Adverse judgments or determinations in tax proceedings to which we are, or may become, a party, may have a material adverse impact on our business and results of operations. |
| ● | The countries in which we operate may adopt new tax laws or modify existing laws or their interpretations, to increase taxes applicable to our business or reduce existing tax incentives. |
| ● | If we do not successfully comply with laws and regulations designed to combat corruption in countries in which we sell our products, we could become subject to fines, penalties or other regulatory sanctions, and our sales and profitability could suffer. |
| ● | We may not be able to recruit or retain key personnel. |
| ● | A devaluation of the currencies of the countries where we have our operations, with regard to the Chilean peso, can negatively affect the results reported by the Company in Chilean pesos. In addition, our financial condition and results of operations could also be adversely affected by changes over which we have no control. |
| ● | The imposition of exchange controls could restrict the entry and exit of funds to and from the countries in which we operate, which could significantly limit our financial capacity. |
| ● | Geopolitical and other challenges and uncertainties globally could have a material adverse effect on the global economy and our business. |
| ● | Negative information on social media and similar platforms could adversely affect our reputation. |
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You should carefully consider the following factors in addition to the other information set forth in this annual report on Form 20-F. Any of the following risks, if they materialize, could materially and adversely affect our business, results of operations, prospects and financial condition.
Risks Relating to our Company
We rely heavily on our relationship with The Coca-Cola Company, which has substantial influence over our business and operations; and changes in this relationship may adversely affect our business.
The Coca-Cola Company has substantial influence on the conduct of our business. The interests of The Coca-Cola Company may be different from the interests of our other shareholders. The largest part of our net sales for 2022 and 2023, respectively, were derived from the distribution of soft drinks and other beverages bearing trademarks owned by The Coca-Cola Company. In addition, The Coca-Cola Company currently owns, directly or through its subsidiaries, 14.65% of our Series A shares (representing 7.33% of our total shares) and benefits from certain rights under a shareholders’ agreement.
We produce, market and distribute Coca-Cola products through standard bottler agreements between our bottler subsidiaries and The Coca-Cola Company. Under these bottler agreements, we are prohibited from producing, bottling, distributing, or selling any products that could be substituted for, be confused with or be considered an imitation of soft drinks or other beverages and products under the trademarks of The Coca-Cola Company.
The Coca-Cola Company has the ability to exert a substantial influence on the business of the Company through its rights under the bottler agreements. The Coca-Cola Company also monitors our prices and has the right to review and approve our marketing, operating and advertising plans. These factors may have an impact on our profit margins, which could adversely affect our net income and results of operations.
Marketing campaigns for Coca-Cola products are designed and controlled by The Coca-Cola Company. The Coca-Cola Company also makes significant contributions to our marketing expenses, although it is not required to contribute a particular amount. Accordingly, The Coca-Cola Company may discontinue or reduce such contribution at any time.
We depend on The Coca-Cola Company to renew our bottler agreements, which are subject to termination by The Coca-Cola Company in the event we default or upon expiration of their respective terms. We currently are party to four bottler agreements: one agreement for Chile, which expires in December 2024, one agreement for Brazil, which expires in October 2027, one agreement for Argentina, which expires in September 2027, and one agreement for Paraguay, which expires in March 2028. We cannot provide any assurance that our bottler agreements will be maintained or renewed upon their termination. Even if they are renewed, we cannot provide any assurance that renewal will be granted on the same terms as those currently in effect. Termination, non-extension or non-renewal of any of our bottler agreements would prevent us from selling Coca-Cola trademark beverages in the affected territory, which would have a material adverse effect on our business, financial condition and results of operation.
In addition, any acquisition we make of bottlers of Coca-Cola products in other territories may require, among other things, the consent of The Coca-Cola Company under bottler agreements to which such other bottlers are subject. We cannot assure you that The Coca-Cola Company will consent to any future geographic expansion of our Coca-Cola beverage business.
We cannot assure you that our relationship with The Coca-Cola Company will not deteriorate or otherwise undergo significant changes in the future. If such changes do occur, our operations and financial results and condition could be materially affected.
The beverage business environment is changing rapidly, including as a result of increased health and environmental concerns, such as epidemic diseases, single use packaging, and plastic bottles pollution, and if we do not address evolving consumer product and shopping preferences, our business could suffer.
The beverage business environment in our territories is dynamic and constantly evolving rapidly as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations, epidemic diseases, single use packaging, and plastic bottles pollution. Changes in consumer lifestyles; concerns regarding location of origin or source of ingredients and raw materials, and the environmental and sustainability impact of the product manufacturing process; consumer shopping patterns; consumer emphasis on transparency related to our products and packaging; are affecting the beverages industry. If we are unable to successfully adapt in this new environment, our participation in the sales of beverages and financial results in general would be negatively affected.
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Increased concern about the health effects of sugar and other sweeteners in beverages could result in changes to the beverage business.
Consumers, public health officials and government agencies are increasingly concerned with public health consequences associated with obesity, particularly among young people. Additionally, some researchers, health advocates and dietary guidelines are encouraging consumers to reduce consumption of sugar-sweetened beverages and beverages sweetened with nutritive or alternative sweeteners. Increasing public concern about these issues, the possibility of taxes on sugar-sweetened beverages or other sweeteners, additional governmental regulations concerning the marketing, labeling, packaging or sale of our beverages and any negative publicity resulting from actual or threatened legal actions against beverage companies relating to the marketing, labeling or sale of beverages may reduce demand for our products or increase the cost, which could adversely affect our profitability.
Our business is highly competitive, including with respect to price competition, which may adversely affect our net profits and margins.
The beverage business is highly competitive in each of the territories in which we operate. We compete with bottlers of local and regional brands, including low cost beverages and Pepsi products. This competition in each of the regions where we operate is likely to continue, and we cannot assure you that it will not intensify in the future, which could materially and adversely affect our financial condition and results of operations. If we do not continuously strengthen our capabilities in marketing and innovation to maintain our brand loyalty and market share, our business and results of operations could be negatively affected.
If our raw material costs increase, including as a result of U.S. dollar/local currency exchange risk, price volatility and inflation, our profitability may be affected.
In addition to water, our most significant raw materials are (1) concentrate, which we acquire from affiliates of The Coca-Cola Company, (2) sweeteners and (3) packaging materials. Our most significant packaging raw material costs arise from the purchase of resin and plastic preforms to make plastic bottles and from the purchase of finished plastic bottles, the prices of which are related to crude oil prices and global resin supply. Prices for concentrate are determined by an agreement between the Company and The Coca-Cola Company. The prices for our remaining raw materials are driven by market prices and local availability, the imposition of import duties and restrictions, fluctuations in exchange rates and inflation. We may not be successful in negotiating or implementing measures to mitigate the negative effect that increased raw material costs may have in the pricing of our products or our results.
We purchase our raw materials from both domestic and international suppliers, some of which must be approved by The Coca-Cola Company, which may limit the number of suppliers available to us. Because the prices of our main raw materials –except for concentrate– are denominated in U.S. dollars, we are subject to local currency risk with respect to each of our operations. If any of the Chilean peso, Brazilian real, Argentine peso, or Paraguayan guaraní were to depreciate significantly against the U.S. dollar, the cost of certain raw materials in our respective territories could rise significantly, which could have an adverse effect on our financial condition and results of operations. We cannot assure you that these currencies will not lose value against the U.S. dollar in the future. Additionally, some raw material prices are subject to high volatility, which could also have a material adverse effect on our profitability. The supply or cost of specific raw materials could be adversely affected by domestic or global price changes, strikes, weather conditions, taxes, inflation, governmental controls, pandemics, or other factors. Any sustained interruption in the supply of these raw materials or any significant increase in their price could have a material adverse effect on our financial performance.
Instability in the supply of utility services and oil prices may adversely impact our results of operations.
Our operations depend on a stable supply of utilities and fuel in the countries where we operate. Electrical power outages could lead to increased energy prices and possible service interruptions. We cannot assure you that in the future we will not experience energy interruptions that could materially and adversely affect our business. In addition, a significant increase in energy prices would raise our costs, which could materially impact our results of operations. Fluctuations in oil prices have adversely affected our cost of energy and transportation in the regions where we operate, and we expect that they will continue to do so in the future. We cannot assure you that fuel prices will not increase in the future, and that such an increase would not have a significant effect on our financial performance.
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Water scarcity, poor water quality and energy shortages could adversely impact our production costs and capacity.
Water is the main ingredient in substantially all of our products. It is also a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, increasing demand for food and other consumer and industrial products whose manufacturing processes require water, increasing pollution and poor management, lack of physical or financial access to water, sociopolitical tensions due to lack of public infrastructure in certain areas of the world and the effects of climate change. As demand for water continues to increase around the world, and as the quality of available water deteriorates, we may incur increasing production costs or face capacity constraints and the possibility of reputational damage, which could adversely affect our profitability. We obtain water from various sources in our territories, including springs, wells, rivers and municipal and state water companies pursuant to concessions granted by governments in our various territories. Water scarcity or changes in governmental regulations aimed at rationing water in the regions where we operate could affect our water supply and therefore our business.
Some of the countries in which we operate have experienced prolonged periods of drought in the past. In the event that these drought periods occur and are prolonged over time, the costs of our operations could be significantly affected due to water scarcity and consequent power shortages. Similarly, in the event that a drought situation worsens, the authorities could be forced to issue new laws and regulations that could limit or restrict the sale of our products, which could adversely affect our financial results.
We also anticipate future discussions on new regulations in countries where we operate relating to future ownership and use of water resources, including possible nationalization, and stricter controls on water usage. In the event that these discussions lead to relevant changes in regulations regarding the ownership or use of water resources, the costs of our operation could be significantly affected.
We cannot assure you that water will be available in sufficient quantities and/or quality to meet our future production needs or will prove sufficient to meet our current water supply needs.
Climate change and legal or regulatory responses thereto may have an adverse impact on our business and results of operations.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere is causing significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters. Decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of key agricultural commodities, such as sugarcane, and corn which are important sources of ingredients for our products. Climate change may also exacerbate extreme weather, resulting in water scarcity or flooding, and cause a further deterioration of water quality in affected regions, which could limit water availability for our operations. Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain or impact demand for our products. Increasing concern over climate change also may result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment and/or may result in increased disclosure obligations. Among such increased disclosure obligations are the rules recently adopted by the SEC on March 6, 2024, which require registrants to disclose certain climate-related information, including greenhouse gas emissions. These rules are expected to become effective for our company for the fiscal year 2025. If these rules become effective, we would incur in additional compliance burdens. Increased energy or compliance costs and expenses due to increased legal or regulatory requirements may cause disruptions in, or an increase in the costs associated with, the manufacturing and distribution of our beverage products. The effects of climate change and legal or regulatory initiatives to address climate change could have an adverse impact on our business and results of operations.
Our ability to achieve our environmental, social and governance goals are subject to risks, many of which are outside of our control, and our reputation and brands could be harmed if we fail to meet such goals.
Companies across all industries are facing increasing scrutiny from stakeholders related to environmental, social and governance (“ESG”) matters, including practices and disclosures related to environmental stewardship; social responsibility; diversity, equity and inclusion; and workplace rights. Our ability to achieve our ESG goals and objectives and to report our progress accurately and transparently, presents numerous operational, financial, legal and other risks. If we are unable to meet our ESG goals or evolving stakeholder expectations and industry standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, our reputation, and therefore our ability to sell products, could be negatively impacted.
In addition, in recent years, investor advocacy groups and certain institutional investors have placed increasing importance on ESG matters. If, as a result of their assessment of our ESG practices, certain investors are unsatisfied with our actions or progress, they may reconsider their investment in our Company.
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Significant additional labeling or warning requirements may inhibit sales of our products.
The countries in which we operate may adopt significant advertising restrictions as well as additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain of our Coca-Cola products or other products. These requirements may adversely affect sales of our products and our results of operations. In addition, given the uncertainty surrounding the interpretation of these requirements, we may occasionally be subject to costs and penalties associated with non-compliance, which are difficult to predict.
Our business may be adversely affected if we are unable to maintain brand image and product quality.
Our beverage business is highly dependent on maintaining the reputation of our products in the countries where we operate. If we fail to maintain high standards for product quality, our reputation and ability to remain a distributor of The Coca-Cola Company beverages in the countries where we operate could be jeopardized. Negative publicity or incidents related to our products may reduce their demand and could have a material adverse effect on our financial performance. If any of our products is defective or found to contain contaminants, or causes injury or illness, we may be subject to legal claims filed by consumers, product recalls, business interruptions and/or other liabilities.
We take significant precautions in order to minimize any risk of defects or contamination in our products. These precautions include quality-control programs for raw materials, the production process and our final products. We have also established procedures to correct as soon as practicable any problems that are detected. However, the precautions and procedures we implement may not be sufficient to protect us from potential incidents.
Trademark infringement could adversely impact our beverage business.
A significant portion of our sales derives from sales of beverages branded with trademarks of The Coca-Cola Company, as well as other trademarks. If other parties attempt to misappropriate trademarks we use, we may be unable to protect these trademarks. The maintenance of the reputation of these brands is essential for the future success of our beverage business. Misappropriation of trademarks we use, or challenges thereto, could have a material adverse effect on our financial performance.
We may not be able to successfully implement our expansion strategies or achieve the expected operational efficiencies or synergies from potential acquisitions.
We have, and we may continue to, acquire businesses and pursue other strategic transactions as part of our expansion strategies. We cannot assure you that we will be successful in identifying opportunities and consummating acquisitions and other strategic transactions on favorable terms or at all. These types of transactions may involve additional risks to our Company, including operating in geographic regions or with beverage categories in which we have less or no operating history. Depending on the size and timing of an acquisition or transaction, we may be required to raise future financing to consummate the acquisition or transaction. Moreover, even if we are able to consummate a transaction, acquisitions and other strategic opportunities may involve significant risks and uncertainties.
Key elements to achieving the benefits and expected synergies of our acquisitions are the integration of acquired businesses’ operations into our own in a timely and effective manner and the retention of qualified and experienced key personnel. We may incur in unforeseen liabilities in connection with acquiring, taking control of, or managing beverage operations and other businesses and may encounter difficulties and unforeseen or additional costs in restructuring and integrating them into our operating structure. These difficulties include distraction of management from current operations, difficulties in integration with our existing business and technology, greater than expected liabilities and expenses, inadequate return on capital, and unidentified issues not discovered in our pre-acquisition investigations and evaluations of those strategies and acquisitions. We cannot assure you that these efforts will be successful or completed as expected by us, and our business, financial condition, and results of operations could be adversely affected if we are unable to do so.
In addition, mergers and acquisitions may require prior approval by local regulators. We cannot assure you that such regulators will grant their approval for all transactions involving Andina.
Weather conditions or natural disasters may adversely affect our business.
Lower temperatures and higher rainfall may negatively impact consumer patterns, which may result in lower per capita consumption of our beverages. Additionally, adverse weather conditions or natural disasters, such as earthquakes and floods, may affect road infrastructure in the countries in which we operate and limit our ability to sell and distribute our products.
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Our business is subject to risks arising from pandemics such as the COVID-19.
Pandemics poses the risk that we or our employees, contractors, suppliers and other partners may be limited or prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. Additionally, we may experience raw material supply disruptions.
Pandemics and related government measures could adversely affect our business and results of operations, potentially materially.
Our insurance coverage may not adequately cover losses resulting from the risks for which we are insured.
We maintain insurance for our principal facilities and other assets. Our insurance coverage protects us in the event we suffer certain losses resulting from fire, terrorism and natural disasters, such as earthquake and floods, or from business interruptions caused by such events. In addition, we maintain other insurance policies for general liability and product contamination. We cannot assure you that our insurance coverage will be sufficient or will provide adequate compensation for losses that we may incur.
If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.
We are increasingly dependent on information technology networks and systems, including over the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for digital marketing activities and electronic communications among us and our clients, suppliers and also among our subsidiaries and facilities. Security breaches or infrastructure flaws can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches or flaws, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information.
Cyber threats are rapidly evolving and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated. Coca-Cola Andina has recognized cyber risk as a threat to our business and to mitigate it, it has implemented a cybersecurity strategy which, through its regulations, processes and measures aims to increase the level of cyber resilience of the Company.
Despite the measures and systems that have been implemented by the Company, as cyber threats evolve, change and become more difficult to detect and successfully defend against, therefore one or more cyber-attacks might defeat our or a third-party service provider’s security measures in the future and obtain personal information of customers or employees. Employee error or other irregularities may also defeat of security measures and result in a breach of information systems. Because information systems are critical to many of the Company’s operating activities, our business may be impacted by system shutdowns, service disruptions or cybersecurity incidents. These incidents may be caused by failures during routine operations such as system upgrades or by user errors, as well as network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by hackers, criminal groups or nation-state organizations (which may include social engineering, business email compromise, cyber extortion, denial of service, or attempts to exploit vulnerabilities), geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. If our information systems or third-party information systems on which we rely suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience delays in reporting our results, and we may lose revenue and profits as a result of our inability to timely manufacture, distribute, invoice and collect payments for finished products.
Moreover, hardware, software or applications we use may have inherent defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. A security breach and loss of information may not be discovered for a significant period of time after it occurs. While we have no knowledge of a material security breach to date, any compromise of data security could result in a violation of applicable privacy and other laws or standards, the loss of valuable business data, or a disruption of our business. A security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive or confidential information could give rise to unwanted media attention, materially damage our customer relationships and reputation, and result in fines or liabilities, which may not be covered by our insurance policies.
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If we fail to comply with personal data protection and privacy laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which could negatively affect our business and operating results.
In the ordinary course of our business, we receive, process, transmit and store information relating to identifiable individuals (“personal data”), primarily employees, former employees, suppliers and consumers with whom we interact. As a result, we are subject to laws and regulations relating to personal data. These laws have been subject to frequent changes, and new legislation in this area may be enacted in any jurisdictions in which Andina operates and at any time. These laws impose operational requirements for companies receiving or processing personal data, and many provide for significant penalties for noncompliance. Also, new standards or regulations over data security or the handling of personal information, in the countries where we operate, may increase our costs in order to comply with those potential regulations and have required and may in the future require costly changes to our business practices and information security systems, policies, procedures and practices.
Perception of risk in emerging economies may impede our access to international capital markets, hinder our ability to finance our operations and adversely affect our financial performance.
International investors, as a general rule, consider the countries in which we operate to be emerging market economies. Consequently, economic conditions and the market for securities of emerging market countries influence investors’ perceptions of Chile, Brazil, Argentina and Paraguay and their evaluation of securities of companies located in these countries.
During periods of heightened investor concern regarding emerging market economies, in particular in recent years Argentina, the countries where we operate may experience significant outflows of U.S. dollars.
In addition, during these periods companies based in the countries where we operate have faced higher costs for raising funds, both domestically and abroad, as well as limited access to international capital markets, which have negatively affected the prices of the aforementioned countries’ securities. Although economic conditions are different in each of the emerging-market countries, investors’ reactions to developments in one of these countries may affect the securities of issuers in the others.
Our business may be adversely affected if we fail to renew collective bargaining labor agreements on satisfactory terms or experience strikes or other labor unrest.
A substantial portion of our employees is covered by several collective bargaining labor agreements. Some of these agreements expire every year. Our inability to renegotiate these agreements on satisfactory terms could cause work stoppages and interruptions, which may adversely impact our operations. Changes to the terms and conditions of existing agreements could also increase our costs or otherwise have an adverse effect on our operational efficiency. We experience periodic strikes and other forms of labor unrest through the ordinary course of business. We cannot assure you labor interruptions or other labor unrest will not occur in the future. If we experience strikes, work stoppages or other forms of labor unrest at any of our production facilities, our ability to supply beverages to customers could be impaired, which would reduce our net operating revenues and could expose us to customer claims.
Our business is subject to regulation, which is complex and subject to change.
We are subject to local regulations in each of the territories in which we operate. The main areas of regulation are water, environment, labor, taxation, health, consumer protection, advertising, social security, and antitrust. Regulation could affect our ability to set prices for our products. The adoption of new laws or regulations or a stricter interpretation or enforcement thereof in the countries in which we operate may increase our operating costs or impose restrictions on our operations which, in turn, may adversely affect our financial condition, business and results. Further changes in current regulations may result in increased compliance costs, which may have an adverse effect on our results or financial condition.
In the past, voluntary price restraints or statutory price controls have been imposed in several of the countries in which we operate. Currently, there are no restraints or price controls applicable to our products in any of the territories in which we operate. However, we cannot assure you that government authorities in any country in which we operate will not impose statutory price controls, or that we will not be requested to impose voluntary price restraints in the future. The potential imposition of restraints or price controls in the future may have an adverse effect on our results and financial condition. Additionally, increases in minimum wages, as well as changes in the interpretation of labor laws and regulations, may also have an adverse effect on our results and financial condition.
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Our business is subject to increasing environmental regulation, which may result in increases in our operating costs or adverse changes in consumer demand.
We are subject to various environmental laws and regulations in the countries where we operate, which apply to our products, containers and activities. If these environmental laws and regulations are strengthened or newly established in jurisdictions in which we conduct our businesses, we may be required to incur considerable expenses in order to comply with such laws and regulations. We are also subject to uncertainty regarding the interpretation of the environmental laws and regulations of the countries in which we operate, and any ambiguity or uncertainty regarding the interpretation or application of regulations can result in increased production costs or penalties for non-compliance, which are difficult to predict. Such increased expenses may have a material adverse effect on our results of operations and financial position. To the extent we determine that it is not financially sound for us to continue to comply with such laws and regulations, we may have to curtail or discontinue our activities in the affected business areas.
In addition, concerns over the environmental impact of plastic may reduce the consumption of our products sold in plastic bottles or result in additional taxes that could adversely affect consumer demand. Additionally, new laws and regulations on waste management and extended liability of the producer of plastic bottles may also have an adverse effect on our results and financial condition.
If we were to become subject to adverse judgments or determinations in legal proceedings to which we are, or may become, a party, our future profitability could suffer through significant liabilities, a reduction of sales, increased costs or damage to our reputation.
In the ordinary course of our business, we become involved in various claims, lawsuits, investigations and governmental and administrative proceedings, some of which are or may be significant. Adverse judgments or determinations in one or more of these proceedings could require us to change the way we do business or use substantial resources in adhering to the settlements. These could have a material adverse effect on our business, including, among other consequences, by significantly increasing the costs required to operate our business. Ineffective communications during or after these proceedings could amplify the negative effects, if any, of these proceedings on our reputation and may result in a negative market impact on the price of our securities. We evaluate these litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and/or disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our current assessments and estimates.
In addition, during recent years, the Company has been subject to judicial proceedings and administrative investigations associated with alleged monopolistic practices. Although these proceedings and investigations have not resulted in any convictions or penalties for the Company, we cannot assure that this will not occur in the future.
Antitrust complaints may be submitted in Chile without any prior admissibility test and, as a result, we cannot predict whether unsubstantiated claims against us will be filed. In addition, the Economic National Public Prosecutors’ Officer (Fiscalía Nacional Económica or FNE) may initiate ex officio investigations involving our business to identify potential risks of antitrust infringement. Possible sanctions in matters of competition could have an adverse effect on our business.
Adverse judgments or determinations in tax proceedings to which we are, or may become, a party, may have a material adverse impact on our business and results of operations.
For further information, see “Risks Relating to Brazil – Brazilian tax proceedings may result in a significant tax liability.”
The countries in which we operate may adopt new tax laws or modify existing laws or their interpretations, to increase taxes applicable to our business or reduce existing tax incentives.
We cannot assure you that any governmental authority in any country where we operate will not impose new taxes or increase the taxes on our products in the future. The imposition of new taxes, the increases in taxes or the reduction of tax incentives may have a material adverse effect on our business, financial condition and results.
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New income, sales, use, or other tax laws, statutes, rules, regulations, or ordinances could be enacted at any time in the jurisdictions in which we operate. Any new taxes could adversely affect our domestic and international business operations and our business and financial performance. Existing tax laws, statutes, rules, regulations, or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us to pay additional tax amounts on a prospective or retroactive basis. They could require us to pay fines and/or penalties and interest for past amounts deemed to be due. Additionally, new or modified tax laws could increase our compliance, operating and other costs, as well as the costs of our platform. Any or all of these events could adversely impact our business and financial performance.
For further information, see also “Risks Relating to Brazil – Changes in tax laws may increase our tax burden and reduce tax incentives and, as a result, negatively affect our profitability.”
If we do not successfully comply with laws and regulations designed to combat corruption in countries in which we sell our products, we could become subject to fines, penalties or other regulatory sanctions, and our sales and profitability could suffer.
Although we are committed to conducting business in a legal and ethical manner in compliance with local and international statutory requirements and standards applicable to our business, there is a risk that our employees or representatives may take actions that violate applicable laws and regulations that generally prohibit the making of improper payments to foreign government officials for the purpose of obtaining or keeping business, including laws relating to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or the U.S. Foreign Corrupt Practices Act.
We may not be able to recruit or retain key personnel.
The implementation of our strategic business plans could be undermined by a failure to recruit or retain key personnel or the unexpected loss of senior employees, including in acquired companies. We face various challenges inherent in the management of a large number of employees over diverse geographical regions. Key employees may choose to leave their employment for a variety of reasons, including reasons beyond our control. The impact of the departure of key employees cannot be determined and may depend on, among other things, our ability to recruit other individuals of similar experience and skill. It is not certain that we will be able to attract or retain key employees and successfully manage them, which could disrupt our business and have an unfavorable material effect on our financial position, income from operations and competitive position.
A devaluation of the currencies of the countries where we have our operations, with regard to the Chilean peso, can negatively affect the results reported by the Company in Chilean pesos.
The Company reports its results in Chilean pesos, while a large part of its revenues comes from countries that use other currencies. During 2022 and 2023, 24% and 28% of the Company’s net sales were generated in Brazil, 26% and 18% in Argentina, and 8% and 9% in Paraguay. If the currencies of these countries depreciate against the Chilean peso, this would have a negative effect on the results and financial condition of the Company, which are reported in Chilean pesos.
The imposition of exchange controls could restrict the entry and exit of funds to and from the countries in which we operate, which could significantly limit our financial capacity.
The imposition of exchange controls in the countries in which we operate could affect our ability to repatriate profits, which could significantly limit our ability to pay dividends to our shareholders. Additionally, it may limit the ability of our foreign subsidiaries to finance payments of U.S. dollar denominated liabilities required by foreign creditors and suppliers.
Geopolitical and other challenges and uncertainties globally could have a material adverse effect on the global economy and our business.
In addition to the significant macroeconomic challenges posed by health concerns, we could be exposed to experience negative impacts to our businesses, financial condition and results of operations as a result of geopolitical and other challenges and uncertainties globally, including inflation, increase in the interest rates, increased unemployment, foreign exchange rates and recession or economic slowdown, changing policy positions or priorities. Currently, the world economy is facing several exceptional challenges.
Geopolitical and economic risks have also increased over the past few years as a result of trade tensions between the United States and China, Brexit, and the rise of populism and tensions in South America and Middle East. Growing tensions may lead, among others, to a deglobalization of the world economy, an increase in protectionism or barriers to immigration, a general reduction of international trade in goods and services and a reduction in the integration of financial markets, any of which could materially and adversely affect our business, financial condition and results of operations.
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Negative information on social media and similar platforms could adversely affect our reputation.
Negative or inaccurate information concerning us or The Coca-Cola trademarks may be posted on social media and similar platforms of Internet-based communications at any time. This information may affect our reputation, and adversely impact our business and results of operations.
Risks Relating to Chile
Our growth and profitability depend significantly on economic conditions in Chile.
Our operations in Chile represented 44.1% and 46.4% of our assets as of December 31, 2022 and December 31, 2023, respectively, and 42.3% and 45.5% of our net sales for 2022 and 2023, respectively. Accordingly, our business, financial condition, and results of operations depend, to a considerable extent, upon economic conditions in Chile.
International and local economic conditions may adversely affect the Chilean economy, and unfavorable general economic conditions could negatively affect the affordability of and demand for some of our products in the country. In difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing purchases of our products or buying low cost brands offered by competitors. Any of these events could have an adverse effect on our business, financial condition and results of operations.
We cannot assure you that the future development of the Chilean economy will not impair our ability to successfully carry out our business plan or materially adversely affect our business, financial condition or results of operations.
Civil unrest in Chile, the process to draft a new constitution, and the health conditions resulting from COVID-19 have had and could have in the future a significant adverse effect on the general economic conditions in Chile and our business, results of operations and financial condition.
Currently, Chile is in a period of uncertainty generated by political and economic factors. Beginning in October 2019, widespread protests took place in Chile. Demonstrations spread across the country and resulted in violent and, sometimes, fatal acts, as well as significant damage to public and private property. While to date the riots and protests described above have ceased, they are not completely over.
The most recent plebiscite, which was held in December 2023 to vote on a new constitution, was rejected; as a result, the current constitution will remain in effect without a new defined process.
Any new constitution could alter the Chilean economy, political situation and therefore the business and outlook of the Company. In addition, a tax reform and a pension system reform are currently being discussed, adding to economic uncertainty.
We cannot predict the extent to which the economy of Chile will be affected by the political discussion regarding the new constitution and the tax and pension system reform, nor can we predict if government policies will have a negative impact on the Chilean economy. Changes in government policies may include higher tax rates and other changes in laws and policies that could result in a less favorable environment for private businesses. Thus, the long-term effects of the new constitution are hard to predict, but could include slower economic growth and higher taxes, which could adversely affect our business, financial condition and results of operation.
Political developments in Chile could result in instability.
We cannot assure that measures taken by the government impacting private investment, such as higher taxation, will not be implemented, and we cannot assure whether the Chilean government will continue to pursue business-friendly and open-market economic policies that stimulate economic growth and stability. Further, there can be no assurance that future developments in or affecting the Chilean political landscape, including economic, social or political instability in Chile, will not materially and adversely affect our business, financial condition or results of operations.
The Chilean peso is subject to depreciation and volatility, which could adversely affect our business.
The Chilean peso has been subject to large nominal devaluations in the past and may be subject to significant fluctuations in the future. The main drivers of exchange rate volatility in past years were the significant fluctuations of commodity prices, as well as general uncertainty and trade imbalances in the global markets. During 2023, the Chilean peso had an average value of 840 Ch$/US$, reaching an average of 926 Ch$/US$ during the month of October, and ending the year at 875 Ch$/US$.
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A significant part of the raw materials used by the Company are in U.S. dollars, therefore a devaluation of the Chilean peso against the U.S. dollar can affect our costs and margins in a significant way.
In addition, as we report our results of operations in Chilean pesos, fluctuations in the value of the Chilean peso versus the Brazilian real, the Argentine peso and the Paraguayan guaraní could also impact our reported performance in Chilean pesos.
Inflation in Chile and government measures to curb inflation may disrupt our business and have an adverse effect on our financial condition and results of operations.
During 2021 and 2022, inflation in Chile remained high with rates of 7.2% and 12.8%, respectively. The crisis caused by the COVID-19 pandemic and the economic relief packages enacted by the Chilean Congress were the primary reasons leading to this inflation. In order to control it, the Central Bank has made recurring increases in the monetary policy rate ranging from 0.5% in 2021, 11.25% during 2022 and 8.25% for 2023, in an effort to achieve a significant decrease in consumption. By 2023 inflation has been on a downward path, reaching 3.9% year-on-year in December 2023, approaching the level recorded prior to the COVID-19 pandemic (3.0%).
The measures taken by the Central Bank in the past to control inflation have often included maintaining a conservative monetary policy with high interest rates, thereby restricting the availability of credit and economic growth. Inflation, measures to combat inflation, and public speculation about possible additional actions by the government have also contributed in the past to economic uncertainty in Chile and to heightened volatility in its securities markets. Periods of higher inflation may also slow the growth rate of the Chilean economy, which could lead to reduced demand for our products and decreased sales. Inflation is also likely to increase some of our costs and expenses, given that the majority of our supply contracts in Chile are UF-denominated or are indexed to the Chilean consumer price index. We cannot assure that, under competitive pressure, we will be able to carry out price increases, which could adversely impact our operating margins and operating income. Additionally, an important part of our financial debt in Chile is UF-denominated, and therefore the value of the debt reflects any increase of the inflation in Chile.
A severe natural disaster, such as earthquake or tsunami or wildfires, in Chile could adversely affect the Chilean economy and our network infrastructure.
Chile lies on the Nazca tectonic plate, one of the world’s most seismically active regions. Chile has been adversely affected by powerful earthquakes in the past.
A severe earthquake, tsunami and/or wildfires which in Chile in the future could have an adverse impact on the Chilean economy and on our business, financial condition and results of operation, including our production and logistics network.
Risks Relating to Brazil
Our business operations in Brazil are dependent on economic conditions in Brazil.
Our operations in Brazil represented 31.5% and 31.8% of our assets as of December 31, 2022 and December 31, 2023, respectively, and 24.0% and 28.5% of our net sales for 2022 and 2023, respectively. Because demand for soft drinks and beverage products is usually correlated to economic conditions prevailing in the relevant local market, developments in economic conditions in Brazil, and measures taken by the Brazilian government, have had and are expected to continue to have an impact on our business, results of operations and financial condition.
The Brazilian economy has historically been characterized by unstable economic cycles and interventions by the Brazilian government. Brazilian GDP grew by 4.8% in 2021, grew 3.0% in 2022 and grew 2.9% in 2023 according to the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística or “IBGE”). The Brazilian government has often changed monetary, taxation and other policies to influence the course of Brazil’s economy. Our business, results of operations and financial condition may be adversely affected by, among others, the following factors:
| ● | expansion or contraction of the Brazilian economy; |
| ● | exchange rate fluctuations; |
| ● | high inflation rates; |
| ● | changes in fiscal or tax policies; |
| ● | changes in monetary policy, including an increase in interest rates; |
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| ● | exchange control policies and restrictions on remittances abroad; |
| ● | investment levels; |
| ● | liquidity of domestic capital and credit markets; |
| ● | employment levels and labor and social security regulations; |
| ● | energy or water shortages or rationalization; |
| ● | changes in environmental regulation; |
| ● | government restrictions in response to any pandemic and the capacity of authorities to keep the pandemic under control; |
| ● | social and political instability; |
| ● | uncertainty related to the government and the policies it may adopt; and |
| ● | other developments in or affecting Brazil. |
The Brazilian economy is also affected by international economic and market conditions in general, especially economic and market conditions in the United States, the European Union and China.
Historically volatile political, social and economic conditions in Brazil could adversely affect our business and results of operations.
Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration.
Luiz Inácio Lula da Silva, from the Workers’ Party (Partido dos Trabalhadores) was elected President of Brazil in October 2022 and took office in January 2023. A failure by the Brazilian government to implement necessary reforms may result in diminished confidence in the Brazilian government’s fiscal condition and budget, which could result in downgrades of Brazil’s sovereign foreign credit rating by credit rating agencies, negatively impact Brazil’s economy, lead to further depreciation of the real and an increase in inflation and interest rates, adversely affecting our business, financial condition and results of operations.
Inflation and the Brazilian government’s measures to curb inflation, including by increasing interest rates, may contribute to economic uncertainty in Brazil.
Brazil has historically experienced high rates of inflation, including periods of hyperinflation before 1995. Several measures have been implemented by the Brazilian government in an effort to curb rising inflation, but we cannot predict whether these policies will be effective. According to the National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo, or “IPCA”), published by the IBGE), Brazilian annual rates of inflation for consumer prices were 10.1% in 2021, 5.8% in 2022 and 4.6% in 2023.
Inflationary pressures may result in governmental interventions in the economy, including policies that could adversely affect the general performance of the Brazilian economy, which, in turn, could adversely affect our business operations in Brazil. Inflation may also increase our costs and expenses, and we may be unable to transfer such costs to our customers, reducing our profit margins and net income. In addition, inflation could also affect us indirectly, as our customers may also be affected and have their financial capacity reduced. Any decrease in our net sales or net income, as well as any reduction in our financial performance, may also result in a reduction in our net operating margin. Our customers and suppliers may be affected by high inflation rates and such effects on our customers and suppliers may adversely affect us.
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The Brazilian real is subject to depreciation and volatility, which could adversely affect our business, financial condition and results of operations.
The Brazilian currency has been subject to significant fluctuations over the past three decades. Throughout this period, the Brazilian government has implemented various economic plans and exchange rate policies, including sudden devaluations, periodic mini devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange market and floating exchange rate systems. Although long-term devaluation of the real is generally related to the rate of inflation in Brazil, the devaluation of the real over shorter periods has resulted in significant fluctuations in the exchange rate between the Brazilian currency, the U.S. dollar and other currencies. The Brazilian real depreciated 7% in 2021, appreciated 7% in 2022 and appreciated 8% in 2023 compared to the closing exchange rate as of the end of the prior period for the U.S. dollar in nominal terms.
A significant part of the raw materials we use in Brazil are priced in U.S. dollars, so a depreciation of the Brazilian real against the U.S. dollar has a significant adverse effect in our costs and margins.
Any depreciation of the real against the U.S. dollar could create additional inflationary pressure, which might result in the Brazilian government adopting restrictive policies to combat inflation. This could lead to increases in interest rates, which might negatively affect the Brazilian economy as a whole, as well as our results of operations, in addition to restricting our access to international financial markets. It also reduces the U.S. dollar value of our revenues. On the other hand, future appreciation of the real against the U.S. dollar might result in the deterioration of Brazil’s current and capital accounts, as well as a weakening of Brazilian GDP growth derived from exports. We cannot assure you that the real will not again fluctuate significantly against the U.S. dollar in the future and, as a result, have an adverse effect on our business, results of operations and financial condition.
Changes in tax laws may increase our tax burden and reduce tax incentives and, as a result, negatively affect our profitability.
The Brazilian government regularly implements changes to tax regimes that may increase our and our customers’ tax burdens. These changes include modifications in the tax rates and, on occasion, enactment of temporary taxes, the proceeds of which are earmarked for designated governmental purposes. In late 2023, the Brazilian government approved a tax reform whose prime objective is to simplify the taxes on goods and services, thus reducing distortions and enhancing transparency for businesses operating in Brazil. This tax reform will be highly relevant because the current tax system is considered one of the most complex in the world, with too many rules, numerous exceptions and high compliance costs. This tax reform substantially changes the way Brazil taxes goods and services, replacing several of the current “indirect taxes” (ICMS, IPI, ISS and PIS/Cofins) by basically three new ones: the Goods and Services Tax (IBS), the Contribution on Goods and Services (CBS) and the Excise Tax (IS). Additionally, there are plans to approve a second tax reform which, among other factors, would have an impact on the income tax paid by Andina on profits and dividends. The effects of the approved tax reform and any other changes that result from the enactment of additional tax reforms have not been, and cannot be, quantified. If the enacted measures result in increases in our overall tax burden, our overall financial performance will be negatively affected. In addition, the Brazilian beverage industry experiences unfair competition arising from tax evasion, which is primarily due to the high level of taxes on beverage products in Brazil. An increase in taxes may lead to an increase in tax evasion, which could result in unfair pricing practices in the industry.
Since 2018, the Brazilian government has gradually altered the value-added tax on industrialized products (Imposto sobre Produtos Industrializados or “IPI”) applicable to soft drinks concentrate. This measure has negatively affected our operations, since it significantly reduced the tax credit derived from the purchases of concentrate from the Manaus Free Trade Zone that currently benefits Rio de Janeiro Refrescos, and the soft drinks industry as a whole.
Any further reductions of the IPI may adversely affect our financial condition and results of operations.
Brazilian tax proceedings may result in a significant tax liability.
Our subsidiary Rio de Janeiro Refrescos Ltda. (“RJR”) is party in several tax proceedings in which the Brazilian federal tax authorities argue the alleged existence of liabilities associated with value added tax on industrialized products for an approximate total amount of R$3.44 billion (equivalent to approximately Ch$623,240 million). These proceedings are at different administrative as well as judicial procedural stages. We disagree with the Brazilian tax authorities’ position and believe that Rio de Janeiro Refrescos Ltda. is entitled to claim Imposto sobre Produtos Industrializados (IPI) tax credits in connection with its purchases of certain exempt raw materials from suppliers located in the Manaus Free Trade Zone. We believe that the Brazilian tax authorities’ claims are without merit. Our external Brazilian counsel has advised us that it believes that Rio de Janeiro Refrescos Ltda.’s likelihood of loss in most of these proceedings is classified as possible or remote. Despite the foregoing, the outcome of these claims is subject to uncertainty, and it is difficult to predict their final resolution or any other negative repercussions from this dispute with the Brazilian tax authorities to The Coca-Cola Company or its bottling companies in Brazil, including our Brazilian subsidiaries.
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RJR is party in tax proceedings in which the Brazilian federal tax authorities are charging Corporate Income Taxes (CIT), added by penalties and interest, involving an approximate total amount of R$960 million. These proceedings result from the disallowance of expenses from the tax deduction of (i) goodwill paid and registered by RJR, mainly upon the acquisition of the investment in Companhia de Bebidas Ipiranga (Ipiranga) in 2013, under the ground that the “real acquirer or investor” was a company located abroad (and not directly RJR); and (ii) interest expenses incurred by RJR under a loan agreement executed with Andina Bottling Investments to finance part of the purchase price paid to sellers of Ipiranga, arguing that such expenses were “unnecessary” to RJR. These proceedings are at different stages at the administrative level. We believe that the Brazilian tax authorities’ claims are without merit. Our external Brazilian counsel has advised us that it believes that the likelihood of loss in these proceedings is classified as possible, mainly under the grounds that (i) the acquisition of Ipiranga was carried out between independent parties in accordance with the applicable law; (ii) all legal requirements established by the regime of Law N. 9,532/97 were observed; (iii) the goodwill registered by RJR was fully based on the expected future profitability of the acquired investment, which was demonstrated through technical valuation reports; (iv) there is no legal basis to support allegations of “real acquirer or investor” or other related grounds; and (v) the interest expenses incurred by RJR are normal and necessary expenses to its business activities and, therefore, should be qualified as deductible for tax purposes.
Risks Relating to Argentina
Our business operations in Argentina are dependent on economic conditions in Argentina.
Our operations in Argentina represented 13.1% and 9.5% of our assets as of December 31, 2022 and December 31, 2023, respectively, and 25.9% and 17.6% of our net sales for 2022 and 2023, respectively. Developments in economic, political, regulatory and social conditions in Argentina, and measures taken by the Argentine government, have had and are expected to continue to have an impact on our business, results of operations and financial condition.
Historically, the Argentine economy has experienced periods of high levels of instability and volatility, low or negative economic growth and high and variable inflation and devaluation levels. According to the National Statistics and Census Institute (Instituto Nacional de Estadísticas y Censos, or “INDEC”), Argentine GDP in real terms grew 10.7% in 2021 and grew 5.0% in 2022, compared to the previous year according to the INDEC. GDP in 2023 is estimated to have contracted 1.6% according to the INDEC.
Argentine economic conditions are dependent on a variety of factors, including the following:
| ● | domestic production, international demand and prices for Argentina’s principal commodity exports; |
| ● | the competitiveness and efficiency of domestic industries and services; |
| ● | the stability and competitiveness of the Argentine peso against foreign currencies; |
| ● | the rate of inflation; |
| ● | the government’s fiscal deficits; |
| ● | the government’s public debt levels; |
| ● | government restrictions in response to any pandemic and the capacity of authorities to keep the pandemic under control; |
| ● | foreign and domestic investment and financing; and |
| ● | governmental policies and the legal and regulatory environment. |
Government policies and regulation—which at times have been implemented through informal measures and have been subject to radical shifts—that have had a significant impact on the Argentine economy in the past have included, among others: monetary policy, including exchange controls, capital controls, high interest rates and a variety of measures to curb inflation, restrictions on exports and imports, price controls, mandatory wage increases, taxation and government intervention in the private sector.
We cannot assure you that the future development of the Argentine economy will not impair our ability to successfully carry out our business plan or materially adversely affect our business, financial condition or results of operations.
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Political and economic instability in Argentina may recur, which could have a material adverse effect on our Argentine operations and on our financial condition and results of operations.
Argentina has a history of political and economic instability that often results in abrupt changes in government policies. Argentine governments have pursued different, and often contradictory, policies to those of preceding administrations. In recent decades, succeeding administrations have implemented interventionist policies, which included nationalization, debt renegotiation, price controls, and exchange restrictions, as well as market-friendly policies, such as export tax reductions, elimination of currency controls, deregulation of utility prices, negotiation of free trade agreements and implementation of pro-investor initiatives.
The last presidential election in Argentina was held between October (first round) and November 2023 (runoff). As a result of such election, President Javier Milei, the La Libertad Avanza party candidate, was elected president and took office on December 10, 2023. President Milei is trying to implement new monetary, fiscal, and exchange rate policies, which could have an impact on our business. We cannot provide assurance that the Argentine government will be able to implement business-friendly policies.
Inflation in Argentina may adversely affect our operations, which could adversely impact our financial condition and results of operations.
Argentina has experienced high levels of inflation in recent decades. Argentina’s historically high rates of inflation resulted mainly from its lack of control over fiscal policy and the money supply. Argentina continues to face high inflationary pressures. In 2021, INDEC recorded a consumer price index (índice de precios al consumidor or “CPI”) increase of 50.9%, while the wholesale price index WPI (índice de precios internos al por mayor or “WPI”) increased 51.3%. In 2022, INDEC recorded a CPI increase of 94.79% while WPI increased 94.78%. In 2023, INDEC recorded a CPI increase of 211.4% while WPI increased 276.3%.
During 2021, 2022 and 2023, Argentina met the criteria to be considered a hyperinflationary economy as provided by IAS 29 guidelines, which include, among other characteristics, a cumulative inflation rate over three years that approaches or exceeds 100%. Accordingly, IAS 29 must be applied for financial statements for fiscal years ending on or after July 1, 2018. IAS 29 requires non-monetary assets and liabilities, shareholders’ equity and comprehensive income to be restated in terms of a measuring unit current at the period end. IAS 29 also requires the use of a general price index to reflect changes in purchasing power. As a result, since July 2018, we began to apply IAS 29 in the preparation of our financial statements and report the results of our operations in Argentina as if this economy were hyperinflationary from January 1, 2018. In addition, by application of IAS 29, we had to translate figures in Argentine pesos to Chilean pesos using the period closing exchange rate (and not the average exchange rate), thus reducing our results of operations and net earnings. We cannot predict for how long Argentina will be considered a hyperinflationary economy and we will have to apply IAS 29 to the preparation of our financial statements.
In the past, inflation has materially undermined the Argentine economy and the government’s ability to generate conditions that foster economic growth. High inflation or a high level of price instability may materially and adversely affect the business volume of the financial system. This result, in turn, could adversely affect the level of economic activity and employment in the country.
High inflation would also undermine Argentina’s foreign competitiveness and adversely affect economic activity, employment, real salaries, consumption and interest rates, thereby materially and adversely affecting economic activity and consumers’ income and their purchasing power, all of which could have a material adverse effect on our financial condition and operating results.
Between 2007 and 2015, the INDEC, which is the only institution in Argentina with the statutory authority to produce official national statistics, experienced significant institutional and methodological changes that gave rise to controversy regarding the reliability of the information that it produces, including inflation, GDP and unemployment data, resulting in allegations that the inflation rate in Argentina and the other rates calculated by INDEC could be substantially different than as indicated in official reports. While previously the administration undertook reforms and the credibility of the national statistics systems has since been restored, we cannot assure you that the new or future administrations will not implement policies that may affect the national statistics system undermining consumer and investor confidence, which ultimately could affect our business, results of operations and financial condition.
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The Argentine peso is subject to depreciation and volatility, which could adversely affect our financial condition and results of operations.
Fluctuations in the value of the peso continue to affect the Argentine economy. Since January 2002, the peso has fluctuated significantly in value, often following periods of high inflation and currency controls that artificially appreciated the value of the currency. Frequent devaluations have had an adverse effect on the ability of the Argentine government and Argentine companies to make timely payments on their foreign currency denominated obligations, have significantly reduced wages in real terms, and have adversely impacted the stability of businesses whose success depends on the domestic market demand.
In an effort to reduce downward pressure on the value of the Argentine peso, the Argentine government has at times implemented policies aimed at maintaining the level of reserves of the Banco Central de la República Argentina (“BCRA”) that limit the purchase of foreign currency by private companies and individuals. Currently, access to the foreign exchange market is subject to several restrictions and governmental authorizations.
In 2021, 2022 and 2023, the Argentine peso depreciated 22%, 72% and 356%, respectively, compared to the closing exchange rate as of the end of the prior period for the U.S. dollar. A significant part of the raw materials used by the company in Argentina are in U.S. dollars, so a devaluation of the Argentine peso against the U.S. dollar can affect our costs and margins in a significant way.
The depreciation of the Argentine peso may have a negative impact on the ability of certain Argentine businesses to service their foreign currency denominated debt, significantly reduce real wages and jeopardize the stability of businesses which success depends on domestic market demand. It may also, adversely affect the Argentine government’s ability to honor its foreign debt obligations. A significant appreciation of the Argentine peso against the U.S. dollar also presents risks for the Argentine economy, including the possibility of a reduction in exports as a consequence of the loss of external competitiveness. Any such appreciation could also have a negative effect on economic growth and employment, and reduce tax revenues.
Given the economic and political conditions in Argentina, we cannot predict whether, and to what extent, the value of the Argentine peso may depreciate or appreciate against the U.S. dollar, the euro or other foreign currencies. We cannot predict how these conditions will affect the consumption of our products. Moreover, we cannot predict whether the new Argentine government of President Javier Milei, which took office on December 10, 2023, will be able to establish a new monetary, fiscal, and exchange rate policy and, if so, what impact any of these changes could have on the value of the Argentine peso and, accordingly, on our financial condition, results of operations and cash flows, and on our ability to convert and transfer funds abroad in order to comply with commercial or financial obligations.
The Argentine government has imposed, and may in the future impose further, restrictions on currency conversions and remittances abroad, which could affect the timing and amount of any dividends or other payment we receive from our Argentine subsidiary.
The Argentine government has imposed restrictions on currency conversions and remittances abroad. These controls have limited access to the foreign exchange market for Argentine residents, both companies and natural persons, including with respect to the payment of dividends in foreign currency abroad, as well as the payment of external financial debt and the payment of imports of goods and services, among others.
Under current Argentine law, and in spite of the new regulations issued by the current administration (Decree of Necessity and Urgency DNU-2023-70-APN-PTE, dated December 20, 2023, as well as other measures issued in the area of customs law and foreign trade), we continue to be restricted from accessing the official foreign exchange market to make dividend payments in U.S. dollar, euro or other foreign currencies to the Company from our Argentine subsidiaries without prior approval from the Argentine Central Bank. The current administration has indicated that it intends to provide more access to foreign currencies, but we cannot assure you that the implementation of these policies will be successful.
The significant restrictions on foreign exchange transactions imposed by the Argentine government have led to the existence of an informal foreign exchange market where foreign currencies quote at levels significantly higher than the official exchange rate. In the past, in some occasions, our Argentine subsidiary has only been able to purchase foreign currency at the informal exchange rate in order to remit dividends abroad. We cannot assure you that our Argentine subsidiary will not be required to access the informal foreign exchange market in order to purchase foreign currency in the future.
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The Argentine government’s ability to obtain financing from international capital markets may be limited or costly, which may impair its ability to implement reforms and foster economic growth.
While Argentina had regained access to the international capital markets, actions by the Argentine government, or investor perceptions of the country’s creditworthiness, could curtail access in the future or could significantly increase borrowing costs, limiting the government’s ability to foster economic growth. Limited or costly access to international financing for the private sector could also affect our business, financial condition and results of operations.
The government may enact wage increases for private sector employees, which could increase our operating costs and affect our results of operations.
The Argentine government has previously enacted laws, rules, and decrees compelling private sector businesses to pay their workers more and offer them particular benefits. Because inflation is always high, labor unions frequently demand large wage increases. Furthermore, the Argentine government has instituted multiple policies aimed at reducing the adverse effects of inflation and exchange rate swings on wages. Employers in the public and private sectors are under constant pressure to raise wages due to the high rates of inflation.
Labor relations in Argentina are governed by specific legislation, such as Labor Law No. 20,744 and Law No. 14,250 on Collective Bargaining Agreements, which, among other things, specify how salary negotiations and other labor negotiations should be conducted. The new government of President Javier Milei, through the enactment of a Decree of Necessity and Urgency DNU-2023-70-APN-PTE, dated December 20, 2023, provided for a labor reform that, among other issues, included significant changes to the aforementioned laws. The aforementioned DNU-2023-70-APN-PTE, regarding labor reform and its effectiveness, is currently on hold due to a judicial order.
Government measures to preempt or respond to social unrest may adversely affect the Argentine economy and our business.
In recent decades, Argentina has experienced significant social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Social and political tension and high levels of poverty and unemployment continue. Unions frequently stage nationwide strikes and protests, and riots and lootings of shops and supermarkets in cities around the country have taken place at times of social turmoil.
Future government policies to preempt, or in response to, social unrest may include forced renegotiation or modification of existing contracts, new taxation policies and changes in laws and policies favoring foreign trade and investment. Such policies could materially affect the Argentine economy, and thereby our business, results of operations and financial condition.
Price control policies of previous governments in Argentina, if reinstated in the future, may have a material and adverse effect on our results of operations in Argentina.
In the past the Argentine government has from time to time established price controls on consumer products. To the extent that the price of our products in Argentina is restricted by government imposed price controls the results of our Argentine operations may be materially affected.
We cannot assure that price controls in Argentina will not be reinstated in the future. Nor can we assure you the affect to which government imposed price control will affect the profitability of our Argentina operations.
Risks Relating to Paraguay
Our business operations in Paraguay are dependent on economic conditions in Paraguay.
Our operations in Paraguay represented 11.3% and 12.3% of our assets as of December 31, 2022 and December 31, 2023, respectively, and 8.0% and 8.5% of our net sales for 2022 and 2023, respectively. Because demand for soft drinks and beverage products is generally related to the economic conditions prevailing in the local market which, in turn, depend on the macroeconomic and political conditions of the country, our financial situation and our results of operations could be adversely affected by changes in these factors over which we have no control.
Paraguay has a history of economic and political stability, exchange controls, frequent changes in regulatory policies, corruption and weak judicial security. Paraguayan GDP grew 4% in 2021, grew 0.1% in 2022 and grew 4.5% in 2023, according to the Paraguayan Central Bank. Paraguayan GDP is closely tied to the performance of Paraguay’s agricultural sector, which can be volatile.
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The situation of the Paraguayan economy is also strongly influenced by the economic situation in Argentina and Brazil. A deterioration in the economic situation of these countries could adversely affect the Paraguayan economy and, in turn, our financial condition and operating results.
Inflation in Paraguay may adversely affect our financial condition and results of operations.
Although inflation in Paraguay has remained stable at around 4.7% over the last five years, we cannot assure that it will not increase significantly. An increase in inflation in Paraguay could decrease the purchasing power of our consumers in the country, which could adversely affect our volumes and impact our sales income.
The Paraguayan guaraní is subject to depreciation and volatility, which could adversely affect our financial condition and results of operations.
The exchange rate of Paraguay is free and floating and the Paraguay Central Bank, actively participates in the exchange market in order to reduce volatility. Since a relevant portion of our total costs in Paraguay for raw material and supplies are denominated in U.S. dollars, a significant depreciation of the local currency could adversely affect our financial situation and results.
The Paraguayan guaraní appreciated 0.2% in 2021, depreciated by 7% in 2022 and in 2023 it appreciated by 0.8%, in each case compared to the closing exchange rate as of the end of the prior period of the U.S. dollar.
The local currency follows regional and global trends. When the U.S. dollar’s value increases, and raw materials lose value in Paraguay, this directly impacts Paraguay’s generation of foreign exchange which occurs mainly through the export of raw materials. A deterioration in the economic growth of Paraguay as result of a significant depreciation of the Paraguayan guaraní could have an effect on our business, financial condition and results of operations.
Risk Factors Relating to the ADRs and Common Stock
Preemptive rights may be unavailable to ADR holders.
According to the Ley de Sociedades Anónimas No. 18,046 and the Reglamento de Sociedades Anónimas (collectively, the “Chilean Companies Law”), whenever we issue new shares for cash, we are required to grant preemptive rights to holders of our shares (including shares represented by ADRs), giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. However, we may not be able to offer shares to United States holders of ADRs pursuant to preemptive rights granted to our shareholders in connection with any future issuance of shares unless a registration statement under the U.S. Securities Act of 1933, as amended, is effective with respect to such rights and shares, or an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, is available.
Under the procedure established by the Central Bank of Chile, the foreign investment agreement of a Chilean company with an existing ADR program will become subject to an amendment (which will also be deemed to incorporate all laws and regulations applicable to international offerings in effect as of the date of the amendment) that will extend the benefits of such contract to new shares issued pursuant to a preemptive rights offering to existing ADR owners and to other persons residing and domiciled outside of Chile that exercise preemptive rights, upon request to the Central Bank of Chile. We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with any such registration statement as well as the indirect benefits to us of enabling United States ADR holders to exercise preemptive rights and any other factors that we consider appropriate at the time, and then make a decision as to whether to file such registration statement.
We cannot assure you that any registration statement would be filed. To the extent ADR holders are unable to exercise such rights because a registration statement has not been filed, the depositary will attempt to sell such holders’ preemptive rights and distribute the net proceeds thereof if a secondary market for such rights exists and a premium can be recognized over the cost of any such sale. If such rights cannot be sold, they will expire, and ADR holders will not realize any value from the grant of such preemptive rights. In any such case, such holder’s equity interest in the Company would be diluted proportionately.
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Shareholders’ rights are less well-defined in Chile than in other jurisdictions, including the United States.
Under the United States federal securities laws, as a foreign private issuer, we are exempt from certain rules that apply to domestic United States issuers with equity securities registered under the United States Securities Exchange Act of 1934, as amended, including the proxy solicitation rules, the rules requiring disclosure of share ownership by directors, officers and certain shareholders. We are also exempt from certain of the corporate governance requirements of the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange, Inc., including the requirements concerning independent directors.
Our corporate affairs are governed by the laws of Chile and our estatutos or bylaws. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction.
Pursuant to Law No. 19,705, enacted in December 2000, the controlling shareholders of an open stock corporation can only sell their controlling shares through a tender offer to all shareholders in which the bidder would have to buy all of the offered shares up to the percentage determined by it, where the price paid is substantially higher than the market price (i.e., when the price paid was higher than the average market price for a period starting 90 days before the proposed transaction and ending 30 days before such proposed transaction, plus 10%).
The market for our shares may be volatile and illiquid.
The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. The Bolsa de Comercio de Santiago (the “Santiago Stock Exchange”), which is Chile’s principal securities exchange, had a market capitalization of approximately US$178,803 million as of December 31, 2023 and an average monthly trading volume of approximately US$2,546 million for the year. The lack of liquidity is owed, in part, to the relatively small size of the Chilean securities markets and may have a material adverse effect on the trading prices of our shares. Because the market for our ADRs depends, in part, on investors’ perception of the value of our underlying shares, this lack of liquidity for our shares in Chile may have a significant effect on the trading prices of our ADRs.
ITEM 4.INFORMATION ON THE COMPANY
| A. | HISTORY AND DEVELOPMENT OF THE COMPANY |
Overview
Our legal name is Embotelladora Andina S.A., and our commercial name is Coca-Cola Andina. We were incorporated and organized under Chilean law as a sociedad anónima on February 7, 1946. An abstract of our bylaws is registered in the Registro de Comercio del Conservador de Bienes Raíces de Santiago (Public Registry of Commerce of the Real Estate Commission Administrator of the City of Santiago) under No. 581 of the year 1946. Pursuant to our bylaws, our term of duration is indefinite.
Our common shares are listed and traded on the Santiago Stock Exchange and on the Bolsa Electrónica de Chile (the Chilean Electronic Stock Exchange). Our Series A and Series B ADRs representing our Series A and Series B shares, respectively, are listed on the New York Stock Exchange.
Our principal executive offices are located at Avenida Miraflores 9153, Floor 7, Renca, Santiago, Chile. Our telephone number is +562-2338-0520 and our website is www.koandina.com.
Our depositary agent for the ADRs in the United States is The Bank of New York Mellon Corporation, located at 240 Greenwich Street, New York, New York 10286. Our depositary agent’s telephone number is +1 888 269 2377 (toll free number for U.S. calls) and +1 201 680 6825 (for international calls). Our authorized representative in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711-7144, United States, and its phone number is (302) 738-6680.
History
Chile
In 1941, The Coca-Cola Company licensed a private Chilean company to produce Coca-Cola soft drinks in Chile and production began in 1943. In 1946, the original licensee withdrew from the license arrangement and a group of U.S. and Chilean investors formed Andina, which became The Coca-Cola Company’s sole licensee in Chile.
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Between 1946 and the early 1980s, Andina developed the Chilean market for Coca-Cola soft drinks with a system of production and distribution facilities covering the central and southern regions of Chile. In the early 1980s, Andina sold its Coca-Cola licenses for most areas outside the Santiago metropolitan region and concentrated on the development of its soft drink business in the Santiago metropolitan area. Although we are no longer the sole Coca-Cola bottler in Chile, we have been the principal manufacturer of Coca-Cola products in Chile for an uninterrupted period since 1946.
In 1998, we purchased a 49% stake in Vital S.A. from The Coca-Cola Company. Concurrently, The Coca-Cola Company purchased Vital S.A. mineral water springs located in Chanqueahue, 80 miles south of Santiago. As part of the transaction, the Vital bottler agreement was replaced with a Minute Maid International Inc. juice bottler agreement and a new mineral water bottling agreement with The Coca-Cola Company.
The production and packaging business of water, juices and non-carbonated beverages licensed by The Coca-Cola Company in Chile was restructured in 2005. Vital Aguas S.A. (“VASA”) was created in 2005 in order to develop the processing, production and packaging of mineral water and other waters by Agua Mineral de Chanqueahue Vital. Andina and Embonor S.A. continued the development of juices and non-carbonated beverages through their ownership stakes in Vital S.A., holding 66.5% and 33.5%, respectively. In January 2011, the juice production business was restructured to incorporate other Coca-Cola bottlers in Chile as shareholders of Vital S.A., which changed its name initially to Vital Jugos S.A. and then to VJ S.A. in 2019. Andina and Embonor hold 65% and 35% stakes in VJ S.A., respectively.
In 2001, we entered into a joint venture with Cristalerías de Chile to produce PET bottles. On January 27, 2012, Coca-Cola Embonor through its subsidiary, Embonor Empaques S.A., acquired Cristalerías de Chile’s stake equivalent to a 50% ownership interest in Envases CMF.
In 2012, in order to reinforce our leadership position among Coca-Cola bottlers in South America, the Company completed its merger with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar was a Coca-Cola bottler with operations in Chile, where it serviced territories in the II, III, IV, XI and XII regions, as well as parts of Argentina, as described below, and all of Paraguay. The merger granted former shareholders of Polar a 19.68% ownership interest in the merged entity, however the Company controls its day to day operations. As a result of the transaction, we also acquired additional indirect ownership interests in Vital Jugos, Vital Aguas and ECSA.
In January 2016, the Company incorporated a closed joint-stock company called Coca-Cola Del Valle New Ventures S.A. (“Coca-Cola Del Valle”). Embotelladora Andina S.A. contributed 35% of the capital of Coca-Cola Del Valle, with Embonor S.A. and Coca-Cola de Chile S.A. contributing the remaining 15% and 50%, respectively. The main corporate purpose of Coca-Cola Del Valle is the development and production of juices, waters and non-carbonated beverages under brands owned by The Coca-Cola Company that Andina and Coca-Cola Embonor S.A. are authorized to commercialize and distribute in their respective franchise territories.
In August 2016, the Company signed an agreement with Monster Energy Company for the distribution of Monster Energy products in the Chilean territory covered by Andina, which we began distributing in September 2016.
In March 2017, The Coca-Cola Company, together with its bottlers in Latin America, announced the closing of the acquisition from Unilever of the AdeS vegetable protein-based beverage business. Andina began distributing AdeS products in Chile in July 2017.
In January 2018, the Company, Embonor S.A., Coca-Cola del Valle New Ventures S.A., and Coca-Cola de Chile S.A., as buyers, and Inversiones Siemel S.A. as seller, entered into a stock purchase agreement under which the parties agreed to transfer 100% ownership of the shares of Comercializadora Novaverde S.A. (“Novaverde”), a Chilean company dedicated to the production and distribution of juices, ice cream, and other food, mainly under the brand “Guallarauco”. The transaction did not include the acquisition of the avocado sales business line and the General Mills brand representation. In October 2018, the purchase of 100% of the shares of Novaverde was completed.
In May 2018, Diageo Chile Ltda., Embonor S.A. and Embotelladora Andina S.A. signed an agreement for the distribution in Chile of the brands belonging to Diageo, including Johnnie Walker, Baileys, Smirnoff, Guinness, Pampero, among others.
In October 2019, Cooperativa Agrícola Pisquera Elqui Ltda. (“Capel”), Embonor S.A. and Andina, signed an agreement for the distribution in Chile of products bearing the brands belonging to Capel, including Capel (brand), Alto del Carmen, Monte Fraile, Brujas de Salamanca, Artesanos del Cochiguaz, among others.
In August 2020, Cervecería Chile S.A. and Andina signed an agreement for the distribution in Chile of the brands belonging to AB InBev, including Corona, Becker, Báltica, Budweiser, Stella Artois, Cusqueña, among others.
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In August 2021, Viña Santa Rita and Andina signed an agreement for the distribution in Chile of wine products under the brands belonging to Santa Rita, including Doña Paula, 120 Tres Medallas, Casa Real, Medalla Real, Carmen, Santa Rita, among others.
In August 2021, Andina together with Embonor Empaques S.A. incorporated a company named Re-Ciclar S.A. The main purpose of this company is to produce recycled resin for the Coca-Cola system and third parties.
Brazil
Andina Brazil, our Brazilian subsidiary, began production and distribution of Coca-Cola soft drinks in Rio de Janeiro in 1942. In 1994, we acquired 100% of the capital stock of Andina Brazil. In 2000, we purchased a Coca-Cola franchise licensee NVG through Andina Brazil for a territory in Brazil comprising the State of Espírito Santo and part of the States of Rio de Janeiro and Minas Gerais.
In 2004, Andina Brazil entered into a franchise swap agreement with the Brazilian subsidiary of The Coca-Cola Company, Recofarma Indústrias do Amazonas Ltda., for an exchange of franchising rights, goods and other assets of Andina Brazil in the territory of Governador Valadares in the State of Minas Gerais, and other franchise rights of The Coca-Cola Company in the territories of Nova Iguaçu in the state of Rio de Janeiro, which were previously owned by Companhia Mineira de Refrescos S.A.
In 2007, The Coca-Cola Company along with the Coca-Cola bottlers in Brazil created a joint venture, Mais Indústria de Alimentos, in order to enhance the non-carbonated business for the entire system in that country, and in 2008 The Coca-Cola system acquired a second company that produces non-carbonated beverages called Sucos del Valle do Brasil Ltda. These two companies merged in 2011 and SABB (Sistema de Alimentos y Bebidas do Brasil) was created.
In 2010, The Coca-Cola Company along with its bottlers, acquired in a joint venture the company Leão Junior S.A. (currently Leão Alimentos e Bebidas Ltda.) with a consolidated presence and market share in Andina Brazil’s region in the category of iced tea. Leão Alimentos e Bebidas Ltda. commercializes the Matte Leão brand, among others. Andina Brazil held a 10.26% ownership interest in Leão Alimentos e Bebidas Ltda.
In 2012, Andina Brazil acquired a 40% stake in Sorocaba Refrescos S.A., a Coca-Cola bottler located in the state of São Paulo.
In 2013, Andina Brazil, acquired 100% of the capital stock of Companhia de Bebidas Ipiranga (“Ipiranga”) in an all-cash transaction. Ipiranga is also a Coca-Cola bottler with operations in part of the States of São Paulo and part of the State of Minas Gerais. This acquisition was previously arranged between the parties through an agreement signed on July 10, 2013.
During 2013, there was a restructuring of the juice and mate herb (“yerba mate”) business, pursuant to which the companies in which Andina Brazil held an interest were merged. As a result of the restructuring, Andina Brazil ended up with a 9.57% ownership interest in Leão Alimentos y Bebidas Ltda., the legal successor of these companies. This percentage increased to 10.87% as a result of our acquisition of, and subsequent merger with, Companhia de Bebidas Ipiranga that held an ownership interest in Leão Alimentos y Bebidas Ltda.
In 2016, Andina Brazil, along with Coca-Cola Brazil and the other bottlers in Brazil joined in Trop Frutas do Brasil Ltda., in which Andina Brazil holds a 7.52% of ownership.
During 2016, Andina Brazil, along with Coca-Cola Brazil and the other bottlers in Brazil, acquired Laticinios Verde Campo Ltda. The purchase was made through Trop Frutas do Brasil Ltda. Andina Brazil acquired 7.52% of Laticinios Verde Campo Ltda.
In 2016, Andina Brazil signed an agreement with Monster Energy Company for the distribution of Monster Energy products in Andina Brazil’s territory. These products began being distributed in November 2016.
In 2016, Andina Brazil closed its production facility in Cariacica, state of Espírito Santo, leaving only two production facilities, in the States of Rio de Janeiro and São Paulo.
In 2017, Andina Brazil bought, together with Coca-Cola Brazil and the other Coca-Cola bottlers in Brazil, the company UBI 3 Participações Ltda. The operation was carried out to make the distribution and marketing of AdeS products in Brazil viable. Andina Brazil acquired 8.50% of UBI 3 Participações Ltda. Andina Brazil began distributing AdeS products in June 2017.
In August 2017, Andina Brazil increased its ownership interest in Leão Alimentos e Bebidas Ltda. from 8.8% to 10.26%.
In March 2018, Andina Brazil started the production of soft drinks at the new Duque de Caxias plant in the state of Rio de Janeiro, and in January 2019, the production of mineral waters started in the same plant.
27
In October 2018, Trop Frutas do Brasil Ltda incorporated the company Laticínios Verde Campo Ltda., thereby acquiring ownership of the brand Laticínios Verde Campo.
In September 2021, the distribution agreement under which our subsidiary Rio de Janeiro Refrescos Ltda commercialized and distributed Heineken and Amstel branded beers in Brazil was terminated. On the same date, our subsidiary Rio de Janeiro Refrescos Ltda and Heineken agreed a new distribution agreement, pursuant to which Rio de Janeiro Refrescos Ltda began to market and distribute Eisenbahn and Tiger branded beers, and continued to market and distribute beers from the Sol Premium, Kaiser and Bavaria branded beers, within its franchise territories in Brazil.
In September 2021, Andina Brazil acquired 50% of the Therezópolis beer brands from the company Greenday Natural Products Gestão de Ativos Ltda., for R$35 million.
In September 2021, the Coca-Cola Brazil System, including Andina Brazil, signed a Master Agreement and Distribution Agreement with Estrella de Galicia Importação e Comercialização de Bebidas e Alimentos Ltda, with a term of 12 years, for the distribution of branded beers Estrella Galicia throughout the Brazilian territory with exclusivity.
In April 2022, the Coca-Cola Brazil System, including Andina Brazil, signed a Master Agreement and Distribution Agreement with Campari, with an expiration date of December 31, 2026, for the exclusive distribution of Campari-branded beverages throughout the Brazilian territory.
In November 2022, Andina Brazil, signed a Copacking Agreement with Monster, with a term of 10 years.
On August 9, 2023, Andina Brazil signed a Distribution Agreement with Perfetti Van Melle with an expiration date of August 9, 2028, authorized by the Master Agreement signed by the Coca-Cola Brazil system in July 2022, for the distribution of Perfetti Van Melle-branded portfolio throughout the Brazilian territory.
Argentina
Production of Coca-Cola soft drinks in Argentina began in 1943 with operations in the province of Córdoba, Argentina, through Inti S.A.I.C., (“INTI”). In 1995, we, through an investment company incorporated in Argentina called Inversiones del Atlántico S.A., (“IASA”), acquired a 59% interest in Embotelladoras del Atlántico S.A. (“EDASA”, the parent company of Rosario Refrescos S.A. and Mendoza Refrescos S.A.). These entities were subsequently merged to create Rosario Mendoza Refrescos S.A., (“ROMESA”). In 1996, we acquired an additional 35.9% interest in EDASA, an additional 78.7% interest in INTI, a 100% interest in CIPET (a PET plastic bottle and packaging business located in Buenos Aires) and a 15.2% interest in Cican S.A. During 1997, the operations of ROMESA were merged with INTI. In 1999, EDASA was merged into IASA. In 2000, IASA was merged into INTI, forming Embotelladora del Atlántico S.A. (“EDASA”). In 2002, CIPET merged into EDASA. During 2007, EDASA’s ownership interest in Cican S.A. was sold to FEMSA.
In 2011, EDASA’s shareholders resolved to form Andina Empaques Argentina S.A., through a spin-off of all of EDASA’s Packaging Division, including all tangible and intangible assets related thereto. Subsequently, EDASA absorbed Coca-Cola Polar Argentina S.A.
Additionally, as a result of the Company’s merger with Polar which was completed in October 2012, the Company gained territory serviced by Polar in Argentina, consisting of territories in Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro, La Pampa and the western part of the province of Buenos Aires.
In March 2017, EDASA acquired 13.0% of the shares of the company Alimentos de Soja S.A.U., dedicated to the production of vegetable protein-based beverages marketed under the brand “AdeS.” The sale of Alimentos de Soja S.A.U. shares was carried out within the framework of a global transaction under the terms of which The Coca-Cola Company and certain Coca-Cola bottlers acquired the “AdeS” liquid soy-based food business from the Unilever Group in Brazil, Mexico, Argentina, Colombia, Paraguay, Uruguay, Bolivia and Chile. EDASA began distributing AdeS products in July 2017. In 2018, EDASA acquired shares of Alimentos de Soja S.A.U. (currently Alimentos de Soja S.A.), increasing its ownership interest to 14.3%. As of the date of this annual report, EDASA’s interest in Alimentos de Soja S.A. is equivalent to 14.82%. The amount of shares transferred was sufficient to provide EDASA with a percentage of shares approximately proportional to its market share in the territory.
28
In December 2017, EDASA, together with Monster Energy Company, entered into an agreement in which Monster Energy Company named Embotelladora del Atlántico S.A. as distributor in the franchise territory of Andina Argentina of the products bearing the “Monster” brand for an initial period of 10 years. In February 2018, we began commercializing and distributing Monster products entering the category for energy drinks. Also, in April 2021 EDASA, together with Monster Energy Company, entered into an agreement whereby Monster Energy Company appointed Embotelladora del Atlántico S.A. as the manufacturer of products bearing the “Monster” brand for an initial term of 5 years.
In June 2022, Andina Argentina signed a distribution agreement with Grupo Peñaflor S.A. with an expiration date of June 2026, for the distribution of alcoholic beverages manufactured or imported by Grupo Peñaflor S.A. for the territory of the Provinces of Mendoza, San Juan and San Luis.
Paraguay
PARESA is the first authorized Coca-Cola Bottler Company in Paraguay, which started its operations in 1965. In 1967, Plant 1 was opened with a capacity of 400,000 annual unit cases. In 1980, the Barcequillo Plant - located on Km 3.5 Barcequillo of the Ñemby route, in the City of San Lorenzo- was opened, reaffirming and applying the concept of the highest end technology of bottling. Beginning in 2004, PARESA became property of the Grupo Polar from Chile, continuing its operations in the Paraguayan market. In 2012, PARESA became part of Grupo Coca-Cola Andina due to the merger of Embotelladoras Coca-Cola Polar S.A. into Embotelladora Andina S.A.
In March 2017, The Coca-Cola Company, together with its bottlers in Latin America, announced the closing of the acquisition from Unilever of the AdeS vegetable protein-based beverage business.
PARESA began distributing AdeS and Monster products in July 2017 and May 2019, respectively.
In February 2021, PARESA together with local partners incorporated a company named Circular-PET S.A. The main activity of this company is the manufacturing and commercialization of post-consumer recycled PET resins, coming from the transformation of PET flakes.
In October 2022 PARESA and Cervepar S.A. signed a Logistics and Sales Master Agreement valid for a period of 5 years, and in this context, from September 2023 PARESA began to distribute alcoholic beverages, mainly beers, in the departments of Caazapá and Concepción.
Capital Expenditures
The following table sets forth our capital expenditures by country for the 2021-2023 period:
|
|
Year ended December 31, |
||||
|
|
2021 |
|
2022 |
|
2023 |
|
|
(in millions of Ch$) |
||||
Chile |
|
57,245 |
|
70,395 |
|
107,314 |
Brazil |
|
30,882 |
|
44,611 |
|
54,082 |
Argentina |
|
31,723 |
|
37,757 |
|
44,729 |
Paraguay |
|
22,102 |
|
20,912 |
|
16,495 |
Total |
|
141,952 |
|
173,675 |
|
222,620 |
Our total capital expenditures were, Ch$141,952 million in 2021, Ch$173,675 million in 2022 and Ch$222,620 million in 2023. The increase in 2023 was mainly due to new projects.
In 2023, capital expenditures were principally related to the following:
Argentina
| ● | Returnable containers (glass and PET bottles) and cases for bottles; |
| ● | Coolers - Cold Equipment; |
| ● | Multi Serve Returnable Products Capacity Expansion Project (Mendoza Plant, stage 2023: civil works and facilities); |
29
| ● | Seed-based products production project (Monte Cristo Plant - start-up); |
| ● | Other sustainability projects (water treatment, recycling, effluent treatment, returnable labeling); |
| ● | Purchase of LGVs, forklifts and transpallets; and |
| ● | Hardware technology upgrade and software development for productivity and management improvement. |
Brazil
| ● | Beer production facility in Duque de Caxias plant; |
| ● | Production lines and equipment for the Andina’s plants; |
| ● | Returnable containers (Ref PET and glass bottles) and plastic bottle cases; |
| ● | Cold equipment and other equipment for the point of sale; |
| ● | Improvements in the management systems; |
| ● | Machinery to increase efficiency and productive capacity; and |
| ● | Renewal of part of the trucks and forklifts for industrial and logistics areas. |
Chile
| ● | Partial automation of the sorting process of returned containers in Renca to reduce the number of cases that operators must check, standardizing the sorting process; |
| ● | Start of construction of the new wastewater treatment plant capable of neutralizing and biologically treating the wastewater generated at the Renca plant, projecting flows for the year 2030; |
| ● | Construction of a new distribution center in Antofagasta to increase product storage capacity and truck dispatch flow; and |
| ● | Installation of a new OW bottling line for soft drinks, water and canned cold-fill products (line 12). |
Paraguay
| ● | Returnable glass bottle labeling; |
| ● | Returnable bottles and plastic cases; and |
| ● | Coolers - Cold equipment. |
We have budgeted approximately US$250 million for our capital expenditures in 2024, which is expected to be mainly destined to:
| ● | Machinery and infrastructure at the Duque de Caxias plant in Brazil and electrical substation for beer production; |
| ● | Machinery and infrastructure in the Cuyo region in Argentina, to expand the capacity of returnable beverages; |
| ● | Improve logistics capacity in Chile, specifically in central and northern Chile; |
| ● | Improve water use efficiency in Chile; |
| ● | Compliance with industrial water treatment regulations in Chile with a new effluent treatment plant and expansion of the existing plant in Argentina; |
| ● | Renewal of the truck and forklift fleet in Chile and Brazil, respectively; and |
30
| ● | Improve our information technologies in our relationship with clients, consumers and internal processes, accelerating digitization with the incorporation of more technological solutions, artificial intelligence and machine learning. |
For 2024, we estimate that internally generated funds will finance a large part of our budgeted capital expenditure. Our capital expenditure plan for 2024 may change based on market conditions and how the economy evolves in the countries where we operate.
| B. | BUSINESS OVERVIEW |
We are the third largest bottler of Coca-Cola trademark beverages in Latin America in terms of sales volume. We are the largest bottler of Coca-Cola trademark beverages in Chile and Argentina and the third largest in Brazil, in each case in terms of sales volume. We are also the only bottler of Coca-Cola trademark beverages in Paraguay.
In 2023, we had consolidated net sales of Ch$2,618,437 million and total sales volume of 882.6 million unit cases of beverages.
In addition to our soft drinks business, which accounted for 62.2% of our consolidated net sales during 2023, we also:
| ● | produce, sell and distribute fruit juices, other fruit-flavored beverages, sport drinks, mineral and purified water in Chile, Argentina, Brazil and Paraguay under trademarks owned by The Coca-Cola Company, and flavored waters in Chile, Argentina and Paraguay; |
| ● | produce, sell and distribute iced tea, mate beverages in Brazil; |
| ● | produce, sell and distribute seed-based beverages in Argentina under trademarks owned by The Coca-Cola Company, and sell and distribute these products in Brazil, Chile and Paraguay; |
| ● | produce, sell and distribute energy drinks in Argentina, Brazil and Chile under trademarks owned by Monster Energy Company, and sell and distribute these products in Paraguay; |
| ● | produce, sell and distribute pre-mixed cocktails in Argentina; |
| ● | manufacture polyethylene terephthalate (“PET”) bottles and preforms, returnable PET bottles, cases and plastic caps, primarily for our own use in the packaging of our beverages in Chile and Argentina; |
| ● | sell and distribute beer in Brazil under the brands Bavaria, Kaiser, Sol, Therezópolis, Tiger, Eisenbahn and Estrella Galicia; |
| ● | sell and distribute alcoholic beverages in Brazil under the group Campari SPA’s brands, such as Campari, Aperol, Skyy; |
| ● | produce, sell and distribute alcoholic drink ready-to-drink Jack & Coke, Schweppes with alcohol and Lemon-Dou in Brazil; |
| ● | sell and distribute beer, sparkling wine, spirits, wine, cider and other alcoholic products in Argentina; |
| ● | sell and distribute beer, spirits and wine in Chile; |
| ● | sell and distribute beer and other alcoholic beverages in Paraguay; |
| ● | sell and distribute confectionery in Brazil under the Perfetti Van Melle Brazil’s brands: Mentos and Frutalle; and |
| ● | distribute ice cream and other frozen products under the Guallarauco brand in Chile. |
31
Our Territories
The following map shows our territories, estimates of the population to which we offer products, the number of retailers of our beverages and the per capita consumption of our beverages as of December 31, 2023.
Per capita consumption data for a territory is determined by dividing total beverage sales volume, excluding the sales to other Coca-Cola bottlers within the territory by the estimated population within such territory, and is expressed on the basis of the number of eight-ounce servings of our products. One of the factors we use to evaluate the development of local volume sales in our territories and to determine product potential is the per capita consumption of our beverages.
Our Product Overview
We produce, market and distribute the following Coca-Cola trademark beverages and brands licensed from third parties throughout our franchise territories.
We produce, market and distribute Coca-Cola products in our franchise territories through standard bottler agreements between our bottler subsidiaries and the local subsidiary in each jurisdiction of The Coca-Cola Company. We consider our relationship with The Coca-Cola Company to be an integral part of our business strategy.
The following table sets forth the brands of the non-alcoholic beverages that we distribute by country as of December 31, 2023:
Argentina |
|
Brazil |
|
Chile |
|
Paraguay |
||
|---|---|---|---|---|---|---|---|---|
Soft drinks |
||||||||
Cantarina |
ü |
PR |
||||||
Coca-Cola |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Coca-Cola Light |
ü |
PR |
ü |
PR |
||||
Coca-Cola Plus Café |
ü |
PR |
ü |
PR |
ü |
PR |
||
Coca-Cola Zero/Sin azúcar |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Crush Light/Zero/Sin azúcar |
ü |
PR |
ü |
PR |
||||
Fanta |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Fanta Zero/Sin azúcar |
ü |
PR |
ü |
PR |
ü |
PR |
||
Inca Kola |
ü |
PR |
||||||
Inca Kola Zero |
ü |
PR |
||||||
Kuat |
ü |
PR |
||||||
Nordic |
ü |
PR |
||||||
Nordic Agua Tónica |
ü |
PR |
||||||
Nordic Zero |
ü |
PR |
||||||
Quatro Light/Liviana/Zero/Sin azúcar |
ü |
PR |
||||||
Schweppes |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Schweppes Light/Zero/Sin azúcar |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Schweppes Tónica |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Schweppes Tónica Light |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PU |
Sprite |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
32
Argentina |
|
Brazil |
|
Chile |
|
Paraguay |
||
|---|---|---|---|---|---|---|---|---|
Sprite Zero/ Sin azúcar |
ü |
PR |
ü |
PR |
ü |
PR |
ü |
PR |
Juices |
||||||||
Andina Del Valle |
ü |
PR |
ü |
PR |
||||
Andina Del Valle Fresh |
|
|
|
|
ü |
PR |
|
|
Andina Del Valle Light |
ü |
PR |
||||||
Cepita |
ü |
PR |
ü |
PR |
||||
Cepita Fresh |
ü |
PR |
||||||
Cepita Nutridefensas |
ü |
PR |
||||||
Del Valle 100% |
|
ü |
PU |
|||||
Del Valle Fresh |
ü |
PR |
ü |
PR |
ü |
PR |
||
Del Valle Frut |
ü |
PR |
ü |
PR |
||||
Del Valle Mais |
ü |
PU |
||||||
Del Valle Mais Light |
ü |
PU |
ü |
PR |
||||
Frugos Light/Sin azúcar/0% |
ü |
PR |
||||||
Guallarauco Aloe Vera |
ü |
PR |
||||||
Guallarauco Jugo |
ü |
PR |
||||||
Guallarauco Limonada |
ü |
PR |
||||||
Guallarauco Nectar |
ü |
PR |
||||||
Kapo |
ü |
PR |
ü |
PR |
ü |
PR |
||
Waters |
||||||||
Aquarius |
ü |
PR |
ü |
PR |
ü |
PR |
||
Aquarius Zero Gasificada |
|
|
ü |
PR |
||||
Benedictino |
ü |
PR |
ü |
PR |
ü |
PR |
||
Benedictino Sabores |
ü |
PR |
||||||
Bonaqua Con Gas |
ü |
PR |
||||||
Bonaqua Sin gas |
ü |
PR |
|
|
|
|
|
|
Crystal |
|
ü |
PR |
|||||
Dasani |
|
ü |
PR |
|||||
Glaceau Vitamin Water |
ü |
PR |
||||||
Guallarauco Agua de Fruta |
ü |
PR |
||||||
Vital |
ü |
PR |
||||||
Other non-alcoholic beverages |
||||||||
AdeS Frutales |
ü |
PR |
ü |
PU |
ü |
PU |
ü |
PU |
AdeS Leches |
ü |
PU |
ü |
PU |
ü |
PU |
ü |
PU |
Fastlyte |
|
|
ü |
PR |
||||
Guaraná Power |
|
ü |
PR |
|||||
I9 Isotónico |
|
ü |
PR |
|||||
Leão Ice Tea |
ü |
PR |
||||||
Leão Ice Tea Light/Zero/Sin azúcar |
ü |
PR |
||||||
Matte Leão |
ü |
PR |
||||||
Matte Leão Zero |
ü |
PR |
||||||
Monster |
ü |
PU |
ü |
PU |
ü |
PU |
ü |
PU |
Monster Zero/Light/Sin azúcar |
ü |
PU |
ü |
PU |
ü |
PU |
ü |
PU |
Powerade |
ü |
B |
ü |
PR |
ü |
PR |
ü |
PR |
Powerade Zero/Light/Sin azúcar |
|
ü |
PR |
|||||
Reign |
|
ü |
PU |
ü |
PU |
Symbology |
|
PR |
Produced |
PU |
Purchased |
B |
Both (Produced and Purchased) |
33
In addition to non-alcoholic beverages portfolio, we sell and distribute beer, spirits and wine in Chile, produce, sell and distribute alcoholic ready to drink in Brazil, sell and distribute beer and other alcoholic beverages in Brazil and sell and distribute confectionery in Brazil; produce, sell and distribute pre-mixed cocktails in Argentina and sell and distribute beer, wine and other alcoholic beverages in Argentina; sell and distribute beer and other alcoholic beverages in Paraguay.
In Argentina we distribute beer of the brand Antares; Wines and sparkling wines of the brands Alaris, Alma Mora, Colección Privada, Dadá, Dolores, Don David, El Bautismo, Elementos, Fair for Life, Finca Las Moras, Fond de Cave, Los Árboles, Los Intocables, Navarro Correas, Paz, San Telmo, Suter, Termidor, Trapiche, Blend de Extremos, El Esteco, El Que Ríe Último Ríe Mejor, Finca Notables, Iscay Syrah, La Mascota, Medalla, Origen, Unánime ; Liquors of the brands Baileys, Gin Tanqueray, Vodka Smirnoff, Whisky J&B, Whisky Johnnie Walker, Whisky Old Parr, Whisky Vat-69, Whisky White Horse, Legui, and other alcoholic beverages of the brands Schweppes, Frizze and Smirnoff ICE.
In Brazil we distribute beers of the brands Bavaria, Heineken, Kaiser, Sol, Therezópolis, Estrella Galicia, Eisenbahn, Tiger; Liquors of the brands Aperol, Bulldog, Campari, Cinzano, Cynar, Dreher, Drury'S, Old Eight, Sagatiba, Skyy, Bickens, Espolon, Frangelico, Wild Turkey; Wines and sparkling wines of the brand Liebfraulmilch, and other alcoholic beverages of the brands Schweppes, Jack Daniels & Coca-Cola, Lemon-Dou.
In Chile we distribute beers of the brands Budweiser, Corona/Coronita/Corona Light, Imperial, Stella Artois, Becker, Becks, Cusqueña, Báltica, Kilómetro 24.7, Quilmes, Bud light, Michelob Ultra, Modelo, Pilsen del Sur, Malta del Sur, Leffe, Goose Island, Hoegaarden, Baltica; we also distribute Baileys, Bourbon Bulleit, Gin Tanqueray, Ron Cacique, Ron Pampero, Ron Zacapa, Sheridan's, Tequila Don Julio, Vodka Ciroc, Vodka Smirnoff, Whisky Bell's, Whisky Buchanan's, Whisky J&B, Whisky Johnnie Walker, Whisky Old Parr, Whisky Sandy Mac, Whisky Singleton, Whisky Vat-69, Whisky White Horse, Pisco Monte Fraile, Pisco Hacienda La Torre, Pisco Alto del Carmen/Alto del Carmen Ice, Pisco Capel/Capel Ice, Pisco Brujas de Salamanca, Pisco Artesanos del Cochiguaz, Ron Maddero, Gin Gordon, Lepac, Estrella del Elqui. Additionally, we distribute Wines and sparkling wines of the brands Prologo Late Harvest, Vino Grosso, Espumante Francisco de Aguirre, Espumante Sensus, Espumante Myla, 120, Amaranta/Amaranta Spritz, Bodega Uno, Cabernario, Carmen, Casa Real, Cavanza, Doña Paula, Floresta, Hermanos Carrera, Heroes, Invictas, Los Cardos, Medalla Real, Rita, Sangria Guay, Santa Rita, Stellar-Ice, Terra Andina, Pkdor, Bougainville, Cigar Box, Pewen, Secret Reserve, Triple C, and other alcoholic beverages of the brands Sour Inca de Oro, Jack Daniels & Coca-Cola.
In Paraguay we distribute beers of the brands Budweiser, Corona/Coronita/Corona Light, Brahma, Ouro Fino, Patagonia Amber, Pilsen, SKOL. We also distribute other alcoholic products of the brand Mikes.
All the alcoholic products we commercialize are purchased from our commercial partners, except for some pre-mixed cocktails produced in Argentina and Brazil.
We seek to enhance our business throughout the franchise territories by developing existing markets, penetrating other soft drink, waters and juices markets, and also alcoholic beverages markets, forming strategic alliances with retailers to increase consumer demand for our products, increasing productivity, and by further internationalizing our operations.
Reporting Segments
The following discussion analyzes our product sales and customers by reporting segments.
Chile
In Chile, we produce, market and distribute our beverages under The Coca-Cola Company trademarks in the metropolitan region of Santiago and the provinces of Cachapoal and San Antonio, as well as the regions of Antofagasta, Atacama, Coquimbo, Aysén and Magallanes.
During 2023, Chile accounted for 35.1% and 45.5% of our volume and consolidated net sales, respectively.
34
Soft Drinks: Our Chilean soft drink operations accounted for net sales in 2023 of Ch$575,674 million. We measure sales volume in terms of unit cases (UCs). The following table highlights historical sales and volume of Coca-Cola soft drinks sold in Chile for the periods indicated:
|
|
Year ended December 31, |
||||||||||
|
|
2021 |
|
2022 |
|
2023 |
||||||
|
|
(in millions) |
||||||||||
|
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
Colas |
|
380,542 |
|
133.8 |
|
430,436 |
|
133.4 |
|
464,262 |
|
130.7 |
Flavored soft drinks |
|
99,616 |
|
34.8 |
|
108,898 |
|
32.8 |
|
111,412 |
|
30.2 |
Total |
|
480,158 |
|
168.6 |
|
539,334 |
|
166.1 |
|
575,674 |
|
160.8 |
As of December 31, 2023, we sold our products to approximately 68,000 customers in Chile. The following table highlights the type of customer in Chile for our products:
|
|
Year ended December 31, |
||||
|
|
2021 |
|
2022 |
|
2023 |
|
|
(%) |
||||
Mom & Pops (1) |
|
50 |
|
46 |
|
46 |
Supermarkets |
|
26 |
|
28 |
|
30 |
On premise |
|
10 |
|
13 |
|
13 |
Wholesale distributors |
|
14 |
|
13 |
|
11 |
Total |
|
100 |
|
100 |
|
100 |
| (1) | Mom & Pops are neighborhood stores (grocery stores, minimarkets, kiosks, liquor stores, bakeries, etc.) characterized by providing daily shopping needs, and differentiated because they are nearby, and products are available in smaller formats. |
Other Beverages: Coca-Cola Andina, through VJ S.A., produces and sells juices, fruit flavored beverages and sports drinks. Juices are manufactured and commercialized under the brands Andina del Valle (juices and fruit nectars), Kapo (juice drink), Glaceau Vitamin Water (water with added vitamins and minerals), Powerade (isotonic), Ades (soy juice), Guallarauco (fruit waters and nectars) and Fastlyte (electrolyte drink). Vital Aguas S.A. is in charge of bottling mineral and mineralized water under the brand Vital. Also, Andina (in Chile) produces purified water under the brand Benedictino.
In September 2016 and July 2017, the Company began the distribution in Chile of products under the trademarks of Monster and AdeS, respectively. In 2018, the Company began selling and distributing certain Guallarauco products and also spirits from the company Diageo, and in 2019 the Company began with the sale and distribution of liquors and wine of the company Capel.
In 2020, the Company began selling and distributing AB InBev beer in Chile, under the following brands: Corona, Becker, Báltica, Budweiser, Stella Artois, Cusqueña, among others.
In May 2020, the Company began the production of Monster in Chile, through Envases Central S.A.
In 2021 the Company began selling and distributing Viña Santa Rita wines under the following brands: Doña Paula, 120 Tres Medallas, Casa Real, Carmen, Santa Rita, among others.
In 2023, net sales of waters, juices, seed-based beverages, sports drinks and energy drinks in Chile were Ch$324,885 million, and net sales of beer and spirits were Ch$291,415 million.
Brazil
In Brazil, we produce, market and distribute our beverages under The Coca-Cola Company trademarks or brands authorized by The Coca-Cola Company in the majority of the State of Rio de Janeiro and the entirety of the State of Espírito Santo and since October 1, 2013 in part of the state of São Paulo and part of the state of Minas Gerais, as a consequence of the Ipiranga acquisition on October 1, 2013.
During 2023, Brazil accounted for 34.1% and 28.5% of our volume and consolidated net sales, respectively.
35
Soft Drinks: The Brazilian soft drink operations accounted for net sales of Ch$535,018 million. The following table highlights historical sales and volume of Coca-Cola soft drinks sold in Brazil for the periods indicated:
|
|
Year ended December 31, |
||||||||||
|
|
2021 |
|
2022 |
|
2023 |
||||||
|
|
(in millions) |
||||||||||
|
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
Colas |
|
260,157 |
|
163.1 |
|
395,211 |
|
181.3 |
|
448,129 |
|
192.3 |
Flavored soft drinks |
|
52,991 |
|
41.2 |
|
77,193 |
|
43.2 |
|
86,889 |
|
45.7 |
Total |
|
313,148 |
|
204.3 |
|
472,404 |
|
224.5 |
|
535,018 |
|
238.1 |
As of December 31, 2023, we sold our products to approximately 85,000 customers in Brazil. The following table highlights the type of customer in Brazil for our products:
|
|
Year ended December 31, |
||||
|
|
2021 |
|
2022 |
|
2023 |
|
|
(%) |
||||
Mom & Pops (1) |
|
33 |
|
33 |
|
32 |
Supermarkets |
|
33 |
|
33 |
|
33 |
On premise |
|
13 |
|
13 |
|
13 |
Wholesale distributors |
|
22 |
|
22 |
|
23 |
Total |
|
100 |
|
100 |
|
100 |
| (1) | Mom & Pops are neighborhood stores (grocery stores, minimarkets, kiosks, liquor stores, bakeries, etc.) characterized by providing daily shopping needs, and differentiated because they are nearby, and products are available in smaller formats. |
Other Beverages: from September 2021, we sell and distribute beer under the Therezópolis, Estrella Galicia, Eisenbahn, Tiger, Sol Premium, Kaiser and Bavária brands. We also produce, sell and distribute alcoholic drink ready-to-drink Jack & Coke, Schweppes with alcohol and Lemon-Dou. We sell and distribute water under the labels Crystal, ready-to-drink juices under the labels Del Valle Mais, Del Valle Fresh, Del Valle Frut, Del Valle 100% and Kapo, energy drinks under the brand names Monster and Reign, isotonic drinks under Powerade brand and Matte Leão, Leão Ice Tea and Guaraná Power ready-to-drink teas. We also sell and distribute seed-based beverages, AdeS Juice and AdeS Milk, under the brand name AdeS. From May 2022 we started to distribute alcoholic beverages from Campari´s portfolio under the brand names Campari, Aperol, Sagatiba, Dreher, Old Eight, Drury’S, Skyy, Bulldog, Cinzano, Cynar, Liebfraulmilch, Bickens, Espolon, Frangelico and Wild Turkey.
Confectionery: from September 2023, we started sell and distribute candy and gum from the Perfetti’s brands: Mentos and Fruittella.
In 2023, net sales of waters, juices, ready-to-drink teas, seed-based beverages, sports drinks and energy drinks in Brazil were Ch$167,900 million, and net sales of beer and other alcoholic products were Ch$42,464 million.
Argentina
In Argentina, we produce, market and distribute our beverages under The Coca-Cola Company trademarks in the entirety of the provinces of Córdoba, Mendoza, San Juan, San Luis, Entre Ríos, western part of the province of Buenos Aires and most of Santa Fe, as well as La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz, and Tierra del Fuego.
During 2023, Argentina accounted for 22.0% and 17.6% of our sales volume and consolidated net sales, respectively.
36
Soft Drinks: The Argentine soft drink operations accounted for net sales of Ch$344,434 million in 2023. The following table highlights historical sales and volume of Coca-Cola soft drinks sold in Argentina for the periods indicated:
|
|
Year ended December 31, |
||||||||||
|
|
2021 |
|
2022 |
|
2023 |
||||||
|
|
(in millions) |
||||||||||
|
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
Colas |
|
316,587 |
|
121.3 |
|
393,145 |
|
130.0 |
|
256,586 |
|
122.6 |
Flavored soft drinks |
|
103,137 |
|
36.1 |
|
130,763 |
|
39.8 |
|
87,848 |
|
39.7 |
Total |
|
419,724 |
|
157.4 |
|
523,908 |
|
169.8 |
|
344,434 |
|
162.3 |
As of December 31, 2023, we sold our products to approximately 66,000 clients in Argentina. The following table highlights the type of client in Argentina for our products:
|
|
Year ended December 31, |
||||
|
|
2021 |
|
2022 |
|
2023 |
|
|
(%) |
||||
Mom & Pops (1) |
|
34 |
|
35 |
|
33 |
Supermarkets |
|
27 |
|
26 |
|
32 |
On premise |
|
6 |
|
7 |
|
7 |
Wholesale distributors |
|
33 |
|
32 |
|
28 |
Total |
|
100 |
|
100 |
|
100 |
| (1) | Mom & Pops are neighborhood stores (grocery stores, minimarkets, kiosks, liquor stores, bakeries, etc.) characterized by providing daily shopping needs, and differentiated because they are nearby, and products are available in smaller formats. |
Other Beverages: in Argentina we produce, sell and distribute flavored waters under the brand name Aquarius, and mineral and drinking water under the brands Bonaqua and Benedictino. In addition, we produce, sell and distribute ready to drink juices under the Cepita and Cepita Fresh brand name, and fruit and vegetable seed based drinks under the brand name AdeS (which in 2017 was incorporated into the portfolio through a joint venture between The Coca-Cola Company and other Coca-Cola bottlers, including Andina). We also produce, sell and distribute sport drinks under the Powerade brand name, and produce, sell and distribute energy drinks under the Monster brand name (which was incorporated into the portfolio in 2018). We also produce, sell and distribute ARTD's (alcoholic ready-to-drink beverages) under the Schweppes brand. We distribute beers of the brand Antares; Wines and sparkling wines of the brands Alaris, Alma Mora, Colección Privada, Dadá, Dolores, Don David, El Bautismo, Elementos, Fair for Life, Finca Las Moras, Fond de Cave, Los Árboles, Los Intocables, Navarro Correas, Paz, San Telmo, Suter, Termidor, Trapiche, Blend de Extremos, El Esteco, El Que Ríe Último Ríe Mejor, Finca Notables, Iscay Syrah, La Mascota, Medalla, Origen, Unánime; spirits such as Baileys liqueurs, Tanqueray Gin, Smirnoff Vodka, J&B Whisky, Johnnie Walker Whisky, Old Parr Whisky, Vat-69 Whisky, White Horse Whisky and Legui; and other alcoholic beverages under the brands Frizze and Smirnoff ICE.
In 2023, net sales of juices, waters, seed-based beverages, sports, energy drinks and alcoholic beverages in Argentina were Ch$101,536 million. These values also consider the commission for distribution of alcoholic products.
Paraguay
In Paraguay, we produce, market and distribute our beverages under The Coca-Cola Company trademarks in the entire country.
During 2023, Paraguay accounted for 8.8% and 8.5% of our volume and consolidated net sales, respectively.
37
Soft Drinks: The Paraguayan soft drinks operations accounted for net sales of Ch$173,464 million. The following table highlights historical sales and volume of Coca-Cola soft drinks sold in Paraguay for the periods indicated:
|
|
Year ended December 31, |
||||||||||
|
|
2021 |
|
2022 |
|
2023 |
||||||
|
|
(in millions) |
||||||||||
|
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
|
Ch$ |
|
UCs |
Colas |
|
84,555 |
|
33.9 |
|
107,150 |
|
33.7 |
|
113,878 |
|
38.3 |
Flavored soft drinks |
|
49,729 |
|
23.6 |
|
59,339 |
|
26.2 |
|
59,587 |
|
23.9 |
Total |
|
134,284 |
|
57.6 |
|
166,489 |
|
59.9 |
|
173,464 |
|
62.2 |
As of December 31, 2023, we sold our products to approximately 53,000 customers in Paraguay. The following table highlights the type of customer in Paraguay for our products:
|
|
Year ended December 31, |
||||
|
|
2021 |
|
2022 |
|
2023 |
|
|
(%) |
||||
Mom & Pops (1) |
|
41 |
|
38 |
|
38 |
Supermarkets |
|
12 |
|
13 |
|
14 |
On premise |
|
11 |
|
12 |
|
13 |
Wholesale distributors |
|
37 |
|
36 |
|
36 |
Total |
|
100 |
|
100 |
|
100 |
| (1) | Mom & Pops are neighborhood stores (grocery stores, minimarkets, kiosks, liquor stores, bakeries, etc.) characterized by providing daily shopping needs, and differentiated because they are nearby, and products are available in smaller formats. |
Other Beverages: in Paraguay, we produce and distribute juices ready to drink under the trademark Del Valle and we import and distribute seed-based drinks under the AdeS trademark. We also manufacture and sell water under the trademarks Dasani (purified water), Aquarius (flavored water), Benedictino (mineral water) and Powerade (sports drinks). We also import and distribute energy drinks under the trademark Monster (since May 2019).
During September 2023 we began to distribute in Paraguay alcoholic beverages, mainly Beers, under the brands Brahma, Budweiser 66, Skol, among others.
In 2023, net sales of juices, waters, seed-based beverages, sports and energy drinks in Paraguay were Ch$49,130 million and net sales of beer and other alcoholic products were Ch$1,246 million.
Distribution
Chile
Soft Drinks, Juices, Waters and Other Beverages: In Chile, we distribute our products through a distribution system that includes: (i) trucks owned by third parties (495 trucks) which provide exclusive distribution service, and (ii) our own trucks (381 trucks). In 2023, 90% of our distribution was carried out by exclusive third-party trucking companies and 10% by Andina group companies. Distribution of all Andina beverages in Chile is carried out from distribution centers and production facilities. In most cases, the transportation company collects payment in cash or checks from the customer. In some cases, the driver also collects empty returnable glass containers or PET bottles of the same type and quantity as those delivered or collects cash deposits for net returnable bottles delivered. This task is particularly significant in the Chilean territory where returnable containers accounted for approximately 30.4% of the total volume sold of non-alcoholic beverages in 2023. Certain important customers (such as supermarkets) maintain accounts receivable with us, which are settled on average every 46.6 days after invoices are issued.
38
Beer and other Alcoholic Beverages: Andina in Chile uses its distribution system to distribute beer, and other alcoholic beverages in its franchise territories. Since 2018 it has developed a portfolio expansion strategy to become a total beverage company. To this end, the Company has entered into agreements with different strategic partners that have transformed its value proposition towards the customers of the different channels it serves in each category. Since 2018 it has been distributing Diageo’s complete distilled spirits portfolio, brands such as Johnnie Walker, Vat-69, Sandy Mac (whiskey), Cacique and Zacapa (rum), Smirnoff and Ciroc (vodka), Tanqueray and Gordon’s (gin), Bailey’s liqueur, among others, in the traditional channel, on-premise channel, convenience stores and B2C digital channel. In the third quarter of 2019, distribution of the complete product portfolio of the Capel Cooperative (Alto del Carmen and Capel piscos, among other brands, and wines from Viña Francisco de Aguirre) began in all channels in the territory. In 2020, a commercialization and distribution agreement was signed, with which most of the AB InBev brands in Chile were added to our portfolio, as part of the agreement, the products of said multinational are commercialized in the different channels in most of our territory. Finally, in 2021 a distribution agreement was signed with “Viña Santa Rita” to commercialize and distribute its main brands (as of November 2021) throughout Chile, such as wines, sparkling wines and cocktails. Andina in Chile buys the different alcoholic products from commercial partners (Diageo, Cooperativa Capel, AB InBev and Viña Santa Rita) at a price determined by those partners and sells them to its customers with a margin previously agreed by category and channel, to which different variables are added for the achievement of goals. The discount scheme is different in each category, but as a common rule the discounts approved by the commercial partners are paid by those partners and do not affect Andina’s margin in Chile.
Brazil
Soft Drinks, Juices, Waters, Other Non-alcoholic, Alcoholic Beverages and Confectionery: In Brazil, we generally distribute Coca-Cola products through a distribution system that includes: (i) own trucks, (ii) trucks operated by independent distributors pursuant to non-exclusive distribution arrangements, and (iii) trucks operated by independent transport companies on an exclusive basis with us. In 2023, 13.3% was distributed by exclusive distributors, 1.7% by independent transport companies and 85% by our own trucks. Distribution of all of Andina Brazil’s beverages takes place from distribution centers and production facilities.
Other Beverages: Andina Brazil uses its distribution system to distribute beer in the Brazilian territory. Andina Brazil started distributing beer in the 1980s as a result of the acquisition of Cervejarias Kaiser S.A. (“Kaiser”) by a consortium of Coca-Cola bottlers (including Andina Brazil) in Brazil. In March 2002, the Canadian brewing company Molson Inc. acquired Kaiser. In 2006, FEMSA acquired from Molson a controlling ownership interest in Kaiser and in 2010, Heineken acquired a controlling interest in FEMSA’s beer operation. Andina Brazil buys beer from Heineken at a price determined by Heineken and sells it to its customers with a fixed margin. In the case of certain discount sales that have been approved by Heineken, Heineken shares between 50% and 100% of the cost of such discounts.
In 2002, the Coca-Cola Company and the Brazilian Association of Coca-Cola Manufacturers entered into an agreement regarding the distribution through the Coca-Cola system of beer produced and imported by what is now Heineken. In July 2017 Heineken Brazil notified Andina Brazil of the termination of the agreement by virtue of which Andina Brazil commercialized and distributed Heineken-branded beers in Brazil, which was effective until March 2022. During 2020, the Coca-Cola system in Brazil and Heineken reached a new agreement to redesign their distribution partnership in Brazil. As per the agreement, which became effective as of September 2021 and has an initial five year term of duration, the Coca-Cola system in Brazil would discontinue the distribution of Heineken and Amstel brands but would continue to offer the Kaiser, Bavaria and Sol brands, and will complement this portfolio with the Eisenbahn and Tiger. Additionally, as part of the redesign of the distribution partnership, the agreement allows the Coca-Cola system bottlers in Brazil to distribute and produce other national or international brands, in certain percentages and under certain conditions.
In 2016, Andina Brazil signed an agreement with Monster Energy Company for the distribution of Monster Energy products in Andina Brazil's territory. These products began being distributed in November 2016.
In September 2021, the Coca-Cola Brazil System, including Andina Brazil, signed a Master Agreement and Distribution Agreement with Estrella de Galicia Importação e Comercialização de Bebidas e Alimentos Ltda, with a term of 12 years, for the distribution of branded beers Estrella Galicia throughout the Brazilian territory with exclusivity.
In April 2022, the Coca-Cola Brazil System, including Andina Brazil, signed a Master Agreement and Distribution Agreement with Campari, with an expiration date of December 31, 2026, for the exclusive distribution of Campari-branded beverages throughout the Brazilian territory.
In November 2022, Andina Brazil, signed a Copacking Agreement with Monster, with a term of 10 years.
39
Other Products: On August 9, 2023, Andina Brazil signed a Distribution Agreement with Perfetti Van Melle with an expiration date of August 9, 2028, authorized by the Master Agreement signed by the Coca-Cola Brazil system in July 2022, for the distribution of Perfetti Van Melle-branded portfolio throughout the Brazilian territory.
Argentina
Soft Drinks, Juices and Waters: in 2023, 72% of EDASA’s Coca-Cola NARTD volume were distributed by direct distribution and 28% by other distributors and wholesale distribution (indirect distribution). The direct distribution is done by a group of independent transport companies, on an exclusive basis.
Other Beverages: Until June 2023 Andina Argentina used its distribution system to distribute beer in the territory composed by the provinces of La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz, Tierra del Fuego and the following parts of the Province of Buenos Aires: Bahía Blanca, Tornquist, Coronel M.L.Rosales, Coronel Dorrego, Villarino, Daireaux, Guamini, Adolfo Alsina, Coronel Suarez, Coronel Pringles, Saavedra, Puán, Saliqueló, Municipio Urbano de Monte Hermoso, Benito Juárez, Gonzalez Chávez, Tres Arroyos, Carmen de Patagones, Olavarría, Azul, Tapalqué, Laprida, Lamadrid, Arrecifes, Chacabuco, Colón, Pergamino, Rojas, Salto, Bartolomé Mitre, Capitán Sarmiento, 9 de Julio, 25 de Mayo, General Alvear, Chivilcoy, Alberti, Bragado, Junín, Viamonte, Arenales, L.N.Alem, Lincoln, General Pinto, Ameghino, Tres Lomas, Pehuajó, Carlos Casares, Hipólito Yrigoyen, Bolívar, Carlos Pellegrini, Trenque Lauquen, Rivadavia, Carlos Tejedor, General Villegas. Andina Argentina had begun distributing beer in 2012 due to the merger with Coca-Cola Polar. Since mid-2019, wine and cider were added to the business. This distribution was carried out on behalf of and according to an order by CICSA (Compañía Industrial Cervecera S.A.) at a set price which is segmented for each of the regions where the contract operated, and for which Andina Argentina receives a commission. Currently, Andina Argentina sells and distributes products belonging to alcohol categories, which are purchased from Grupo Peñaflor S.A., as a result of a commercial purchase and sale agreement with such company as of September 2022. Under this agreement, Andina Argentina uses its distribution system to sell and distribute beer, sparkling wines, ARTD's (alcoholic beverages ready to drink), wines (from different segments such as table wines, young wines and aging wines), and spirits such as liqueurs, gin, vodka and whiskey in the territory comprised by the provinces of Mendoza, San Juan and San Luis.
In 2003, The Coca-Cola Company and two bottlers (ex-Coca-Cola Polar Argentina S.A., today Andina Argentina, and ex-Juan Bautista Guerrero S.A., today Salta Refrescos S.A. of the Arca group) executed a master agreement regarding the distribution of beer manufactured or imported by CICSA, through the Coca-Cola distribution system. The distribution master agreement was executed in 2003 for an initial period of five years, with successive extensions every three years, and the last one agreed in November 2017 for a new five-year term expiring on June 12, 2022. In 2019, an addendum to this agreement was signed to amend the commissions and included wine and cider within the scope of the distribution agreement. Also, on June 21, 2022, the parties agreed to extend the master distribution agreement for a one-year term until June 12, 2023, date on which the contractual relationship with CICSA was irrevocably terminated. Lastly, on June 28, 2022, Andina Argentina and Grupo Peñaflor S.A. entered into a distribution agreement for alcoholic beverages manufactured or imported by Grupo Peñaflor S.A. in the territory of the Provinces of Mendoza, San Juan and San Luis.
In addition, in December 2017, EDASA executed an agreement with Monster Energy Company for the distribution and commercialization of energy drinks of the “Monster” trademark for an initial period of 10 years in the territory within the franchise of Andina Argentina, with the consent of The Coca-Cola Company. Also, in April 2021 EDASA, together with Monster Energy Company, entered into an agreement whereby Monster Energy Company appointed Embotelladora del Atlántico S.A. as the manufacturer of products bearing the "Monster" brand for an initial term of 5 years.
Paraguay
Soft Drinks, Juices and Waters: In 2023, PARESA distributed 88.6% of its products through direct distribution (independent transport companies), and 11.4% through wholesale distributors.
40
Competition
We face intense competition throughout the franchise territories principally from bottlers of competing soft drink brands. See “Item 3. Key Information — Risk Factors — Risks Related to our Company—Our Business is highly competitive including with respect to price competition which may adversely affect our net profits and margins.” As a result of restrictions related to COVID-19, for 2021, A.C. Nielsen changed the methodology and sample in Argentina, Chile and Paraguay and figures for that period were obtained using such methodology, however, 2022 and 2023 figures presented herein were obtained from surveys carried out using the former methodology. Therefore, 2023 and 2022 figures in those countries may not be fully comparable to those of 2021. Additionally, in Brazil during 2023 A.C. Nielsen modified the calculation methodology with a change in the channels in which the information is collected, so the figures for 2021 and 2022 in Brazil were recalculated for comparability purposes.
The following table presents the market share of Coca-Cola and other soft drinks in Chile, Brazil, Argentina and Paraguay for the periods indicated:
|
|
2021 |
|
2022 |
|
2023 |
||||||||||||||||||
|
|
Chile |
|
Brazil |
|
Argentina |
|
Paraguay |
|
Chile |
|
Brazil |
|
Argentina |
|
Paraguay |
|
Chile |
|
Brazil |
|
Argentina |
|
Paraguay |
|
|
(%) |
||||||||||||||||||||||
Coca-Cola soft drinks |
|
64 |
|
61 |
|
59 |
|
76 |
|
64 |
|
62 |
|
59 |
|
75 |
|
65 |
|
63 |
|
60 |
|
75 |
Pepsi Bottler soft drinks |
|
33 |
|
18 |
|
15 |
|
7 |
|
32 |
|
19 |
|
15 |
|
6 |
|
31 |
|
19 |
|
14 |
|
6 |
Other soft drinks |
|
3 |
|
21 |
|
26 |
|
17 |
|
4 |
|
19 |
|
25 |
|
19 |
|
4 |
|
18 |
|
26 |
|
19 |
Total |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
|
100 |
Source: A.C. Nielsen. During 2022, in Argentina, Nielsen conducted a recalculation of data from 2020 and 2021. This reprocessing resulted from a quality review conducted jointly by Nielsen and The Coca-Cola Company teams, based on the detection of certain opportunities for improvement on the data collection that was carried out during 2020 and 2021 in times of the COVID-19 pandemic. This reprocessing was carried out at country level, so data from all bottlers in Argentina were recalculated. Additionally, in Brazil during 2023 A.C. Nielsen modified the calculation methodology with a change in the channels in which the information is collected, so the figures for 2021 and 2022 in Brazil were recalculated for comparability purposes.
Chile
Soft Drinks: the soft drink segment of the Chilean beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to deliver product in popular bottle sizes, distribution capacity, and the number of returnable bottles held by retailers or by consumers. Returnable bottles can be exchanged at the time of new purchases in lieu of paying a bottle deposit, thereby decreasing the purchase price. Our main competitor in the Chilean franchise territory is Embotelladora Chilenas Unidas (ECUSA), a subsidiary of Compañía Cervecerías Unidas S.A. (CCU), the largest brewer in Chile. ECUSA produces and distributes Pepsi-Cola products and its own soft drinks brands (e.g., Bilz and Pap). Based on reports by A.C. Nielsen, we estimate that in 2023, our average soft drink market share within our franchise territories was 64.7%.
Other beverages: our main competitor in the water market is CCU, which has its own brand (Cachantun y +Mas), where there is also competition from other low-priced brands ("B-Brands"). Our main competitors in the juice segment are the Watt's-CCU joint venture, Córpora Tres Montes and three of the main milk producers in Chile: Soprole S.A., Nestlé Chile S.A. and Loncoleche. The market for fruit-flavored beverages in Chile also includes lower-cost concentrates of lower quality and artificially flavored powdered soft drink mixes. We do not consider these products to compete with our water and juice business as we believe these products are of lower quality and value. Based on reports by A.C. Nielsen, we estimate that in 2023, our average market share within our Chilean franchise territories reached approximately 37.9% for juices and others segment and approximately 46.5% for waters.
In the different alcoholic categories, Andina’s main competitor in Chile is CCU, which through different business models distributes beers (its main brands are Escudo, Cristal, Royal and Heineken), spirits (brands from the Pernod Ricard portfolio), piscos (Control and Mistral brands, among others) and wines (Viña San Pedro brands such as Castillo de Molina, among others).
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Brazil
Soft Drinks: the soft drink segment of the Brazilian beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising and distribution capacity (including the number and location of sales outlets). According to A.C. Nielsen, our main soft drink competitor in the Brazilian territory is American Beverage Company or AmBev, the largest beer producer and distributor in Brazil and also produces soft drinks, including Pepsi-Cola products. Based on reports by A.C. Nielsen, we estimate that in 2023, our average soft drink market share within our Brazilian franchise territories was approximately 62.8%.
Other Beverages: in the beer sector, Andina Brazil’s main competitor is AmBev which during 2023 had a very dominant position in the Brazilian market. AmBev stands out in the advancement of digital platforms, both in B2B (Bees) and D2C (Zé Delivery). Based on reports by A.C. Nielsen, we estimate that in 2023, our average market share for waters reached 24.6%, where we distributed under the Crystal and Glaceau SmartWater brands. In the segment of juices and others, based on reports by A.C. Nielsen, we estimate that in 2023, our average market share was 41.8%.
Argentina
Soft Drinks: the soft drink segment of the Argentine beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular sizes and distribution capacity. Our greatest competitor in Argentina is Pepsi, commercialized by InBev. The most significant B-brands competitors are: Refres Now (Manaos), Pritty and Produnoa (Secco). Based on reports by A.C. Nielsen, we estimate that in 2023, our average soft drink market share within our Argentine franchise territories reached approximately 59.9%.
Other Beverages: we service the market of flavored and plain waters with the brands Aquarius, Bonaqua and Benedictino. Based on reports by A.C. Nielsen, we estimate that in 2023, our average market share was 15.4%. In addition, the juices and others market is serviced by the Cepita, Cepita Fresh, AdeS and Powerade brands. Based on reports by A.C. Nielsen, we estimate that in 2023, our average market share was 46.8%. Our biggest competitor in the water category is Danone, RPB (Baggio) in juices and InBev in sports drinks.
Paraguay
Soft Drinks: the soft drink segment of the Paraguayan beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular sizes and the number of returnable bottles held by retailers or by consumers.
Our greatest competitor, local brand “Niko/De La Costa,” is produced and bottled by Embotelladora Central S.A., which had a 10.1% market share in 2023. In 2023, Pepsi had a market share of 5.7%, and is produced and marketed by Vierci Group, a local franchisee. Based on reports by A.C. Nielsen, we estimate that in 2023, our average soft drinks market share within our Paraguayan franchise territories was approximately 75.1%.
Other Beverages: we are leaders in all non-carbonated categories. In waters, based on reports by A.C. Nielsen, we estimate that in 2023, our average market share was 56.6% with our Dasani, Aquarius, Tropical and Benedictino brands. The market for juices and others is serviced through the Del Valle and AdeS brands, Powerade in sport drinks, and Monster in energy drinks. Based on reports by A.C. Nielsen, we estimate that in 2023, our average market share was 61.1%.
Seasonality
Each of our lines of business are seasonal. Most of our beverage products have their highest sales volumes during the South American spring and summer (October through March), with the exception of nectar products, which have a slightly higher sales volume during the South American winter and autumn (April through September).
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Packaging
Overview
Through Envases CMF S.A. in Chile (50% owned by Andina and 50% owned by Embonor), and Andina Empaques Argentina S.A. (“AEASA”) in Argentina we produce PET bottles in both returnable and non-returnable formats, preforms and plastic caps. On average, returnable PET bottles can be used up to 12 times. Non-returnable PET bottles are produced in various sizes and are used by a variety of soft drink producers and, in Chile, also by producers of food, wine, home care and personal hygiene products.
Sales
In 2023, total sales of AEASA reached Ch$22,145 million, of which Ch$7,779 million corresponded to sales to EDASA, Ch$1,574 million corresponded to sales to other related companies of the group and Ch$12,792 million corresponded to sales to third parties.
Competition
AEASA is the supplier of returnable bottles, preforms, plastic caps and cases for Coca-Cola Bottlers in Argentina, also supplying some formats to Coca-Cola bottlers in Chile, Uruguay and Paraguay. In Argentina, we compete principally with Alpla S.A. and Amcor.
CMF and Syphon are the suppliers of PET resin raw materials, returnable and preform packaging, as well as a main supplier in caps, cases and other plastic resin inputs. There are few suppliers in Chile for these inputs; the other supplier with similar productive capacities is Plasco S.A., which manufactures mainly for ECUSA, Pepsi's bottling company in Chile.
Raw Materials and Supplies
The main raw materials used in the production of Coca-Cola soft drinks are concentrate, sweetener, water and carbon dioxide gas. Production also requires glass and plastic bottles, bottle caps and labels. Water used in soft drink production is treated for impurities and adjusted for taste reasons. All raw materials, especially water, are subjected to continuous quality control.
Chile
Soft Drinks: Main suppliers of raw materials for the production of soft drinks:
| ● | Concentrate: Coca-Cola de Chile S.A. |
| ● | Sweeteners (Sugar/Fructose): Iansa Ingredientes S.A., Sucden Chile S.A. and Comercializadora de Productos Panor Ltda. |
| ● | Preform plastic containers: Envases CMF S.A. |
| ● | Glass containers: Cristalerías de Chile S.A. and Cristalerías Toro S.P.A. |
| ● | Caps: Sinea S.A. |
| ● | Cardboard: Corrupac S.A. and Envases Impresos S.P.A. |
| ● | Carbon dioxide: Linde Gas Chile S.A. |
| ● | Thermo-contractible: Plásticos Arpoli S.P.A. |
In 2023, 88% of the variable cost of sales of soft drinks corresponded to the main raw materials and finished products purchased by Andina in Chile. The cost of each raw material within the total of main raw materials is the following: concentrate represents 70%, sweeteners 13%, non-returnable bottles 10%, bottle caps 2%, carbon dioxide 1% and other raw materials 3%. Water is not an important raw material cost. Additionally, the cost of finished products acquired from our subsidiaries, such as ECSA, is included in the cost of soft drink sales. These costs represent 16% of total soft drink cost of sales and correspond mainly to cans, PET bottles and sweeteners.
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Other Beverages: the main raw materials used by Vital Jugos in the production of juices and as a percentage of total raw material costs, are sweeteners 3.2%, fruit pulp and juices 13.1%, concentrate 26.2%, containers 18.4%, wrapping material 4.2%, caps 4.5%, and other raw material 2.5% all of which during 2023 accounted for 72.1% of total costs for sales of juice, including packaging. Additionally, AdeS finished product represented 2% of total costs for sales of juices.
The principal raw materials used by Vital Aguas in the production of still and sparkling mineral water and as a percentage of total raw material costs are: packaging 33.2%, concentrate 23.8%, caps 6.3%, wrapping material 6%, carbonation 1.2%, and other raw materials 1.9%, all of which during 2023 accounted for 72.5% of total costs for sales of water, including packaging.
Brazil
Soft Drinks: main suppliers of raw materials for the production of soft drinks:
| ● | Concentrate: Recofarma Industria do Amazonas Ltda. |
| ● | Sweeteners (Sugar/Fructose): Usina Alta Mogiana S.A. Açúcar e Alcool. |
| ● | Preform plastic containers: Valgroup Rj Industria De Embalagens Rigidas Ltda. |
| ● | Returnable plastic containers: RioPet Embalagens S.A. |
| ● | Cans: Crown Embalagens Metalicas Da Amazonia S.A. |
| ● | Caps: Valgroup Mg Industria De Embalagens Rigidas Ltda. |
| ● | Reels (tetrapak): Tetra Pak Ltda. |
| ● | Labels: Pp Print Embalagens S.A. |
| ● | Electricity/Gas: Ecogen Rio Soluções Energeticas S.A. |
| ● | Water: Igua Rio De Janeiro S.A. |
| ● | Thermo-contractible: Valgroup Mg Industria De Embalagens Flexiveis Ltda. |
In 2023, 75.7% of the variable cost of sales for soft drinks produced by Andina Brazil corresponded to main raw materials. The cost of each raw material within the total of main raw materials is the following: concentrate (including juice used for some flavors) represents 47.0%; sugar and artificial sweeteners 17.9%; non-returnable bottles 14.5%; cans 13.1%; bottle caps 2.8%; carbon dioxide 1.7% and other raw materials 2.9%.
Argentina
Soft Drinks: main suppliers of raw materials for the production of soft drinks:
| ● | Concentrate: Servicios y Productos para Bebidas Refrescantes S.R.L. |
| ● | Sweeteners (Sugar/Fructose): Ingrecor S.A. and Complejo Aliment. San Salvador S.A. |
| ● | Preform plastic containers: Andina Empaques Argentina S.A. |
| ● | Resin containers: Alpek Polyester Argentina S.A. and Circular-Pet S.A. |
| ● | Reels (tetrapak): Tetra Pak S.R.L. |
| ● | Glass containers: Cattorini Hnos. S.A.C.I.F.E I. |
| ● | Cans: Ball Beverage Can South America S.A. |
| ● | Cardboard / Pallet / Chapadur: Fiplasto S.A. |
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| ● | Caps: Priva S.A. |
| ● | Thermo-contractible: Rio Chico S.A. |
In 2023, 61.7% of the variable cost of sales for soft drinks produced by Andina Argentina corresponded to main raw materials. The cost of each raw material as a percentage of the total cost of raw materials is as follows: concentrate 60.8%, sugar and artificial sweeteners 16.2%, non-returnable bottles 12.4%, bottle caps 2.7%, carbon dioxide 0.7%, cans and caps 3.1%, and other raw materials 4.2%. Additionally, the cost of finished products purchased from third parties is included within the cost of sales of soft drinks. These costs represent 6.21% of the total costs of sales of soft drinks and correspond to can formats and other formats of soft drinks which are not produced by Andina Argentina during 2023.
PET Packaging: The principal raw material required for production of PET bottles is PET resin. During 2023, this raw material was mainly purchased from Alpek Polyester Argentina S.A., Ecopek S.A y Circular-Pet S.A. In the case of plastic caps and cases, the main raw material required for their production is HDPE resin (high density polyethylene), which during the year 2023 was bought mainly from PBB Polisur S.A., The Dow Chemical Co. and GC Marketing Solution CO.
In 2023, AEASA’s costs for PET resin accounted for 34% of the total variable cost of its sales.
Paraguay
Soft Drinks: main suppliers of raw materials for the production of soft drinks:
| ● | Concentrate: Recofarma Indústrias do Amazonas Ltda. and Servicios y Productos para Bebidas. |
| ● | Sweeteners (Sugar/Fructose): Inpasa del Paraguay S.A., Alcotec Sociedad Anónima, Ingrecor S.A. and Azucarera Paraguaya S.A. |
| ● | Preform plastic containers: Industrias PET S.A.E.C.A. |
| ● | Caps: Andina Empaques Argentina S.A. |
| ● | Reels (tetrapak): Tetra Pak Global Distribution S.A. |
| ● | Thermo-contractible: Petropack S.A. |
| ● | Cans: Embotelladora del Atlántico S.A. |
During 2023, 71% of the variable cost of sales for beverages produced by PARESA corresponded to our main raw materials. The composition of this raw material cost is as follows: concentrate represents 52%, sugar and artificial sweeteners 18%, non-returnable bottles 17%, bottle caps 4%, carbon dioxide 1% and other raw materials 8%. Additionally, AdeS finished products for the sale of juices and soft drink cans purchased from third parties represented 2.5% and 3.6% of total variable costs, respectively.
Marketing
We and The Coca-Cola Company jointly promote and market Coca-Cola products in our franchise territories, in accordance with the terms of our respective bottler agreements. We advertise in major communications media. We focus our advertising efforts on increasing brand recognition by consumers and improving our customer relations. National advertising campaigns are designed and proposed by The Coca-Cola Company’s local affiliates, with our input at the local or regional level.
Generally, we pay approximately 50% of the advertising and promotional expenses incurred by The Coca-Cola Company in our franchise territories. Nearly all media advertising and promotional materials for Coca-Cola soft drinks are produced and distributed by The Coca-Cola Company. See “Item 4. Information on the Company —Bottler Agreements.” Marketing and promotional programs, including television, radio and print advertising, point-of-sale advertising, sales promotions, social media and entertainment are developed by The Coca-Cola Company for all Vital Jugos’ and Vital Aguas’ products.
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Pursuant to the existing distribution agreements with Heineken, Estrella Galicia, Monster, Perfetti Van Melli and Campari, these companies are responsible for planning and managing advertising, marketing and promotional activities related to beer, energy drinks, alcoholic beverages, and confectionery, respectively. Andina Brazil, however, is free to undertake marketing or promotional activities with Heineken’s, Estrella Galicia, Monster’s, Perfetti’s and Campari´s prior approval. The parties have agreed to assume jointly the costs of certain promotional activities (radio or television) and for certain outdoor events which take place in the Rio de Janeiro, Espírito Santo and Ribeirão Preto regions.
In Argentina, in accordance with the existing distribution agreement with Grupo Peñaflor S.A., Grupo Peñaflor S.A. is responsible for planning and managing advertising, marketing and promotional activities related to beer, wine and cider. Andina Argentina, however, is free to undertake marketing or promotional activities with Grupo Peñaflor S.A.’s prior approval. The parties have agreed that Grupo Peñaflor S.A. will assume the costs of promotional activities (radio, television, outdoor advertising and media) in the region.
In Chile, pursuant to existing distribution agreements with Diageo, Cooperativa Capel, AB InBev and Viña Santa Rita, these companies are responsible for the planning and administration of advertising, commercialization and promotional activities related to their respective products. Coca-Cola Andina Chile may, however, engage in promotional or commercialization activities in the categories and channels in which it is authorized to operate with the prior approval of the company that owns the brand. In all cases the parties have agreed that the costs of advertising activities (including radio, television, street advertising and media in general) as well as the materials used in executing promotions in each channel will be borne by the companies that own the brands.
In Paraguay, in accordance with the existing distribution agreement with Cervepar S.A., Cervepar S.A.is responsible for planning and managing advertising, marketing and promotional activities related to beer.
In September 2016, November 2016, February 2018 and May 2019, Andina (Chile), Andina Brazil, Andina Argentina and Paraguay Refrescos, respectively, began to commercialize the Monster Energy energy drink. This brand is part of the collaboration agreement entered into during 2015 by The Coca-Cola Company and Monster Energy, which included the distribution of its products in the territories of the Coca-Cola System, such as Chile, Brazil, Argentina and Paraguay.
Channel Marketing
In order to provide more dynamic and specialized marketing of our products, our strategy is to divide our market into distribution channels. Our main channels are “mom and pops” which are small retailers, “on premise” consumption such as restaurants and bars, “supermarkets” and “wholesale distributors.” Presence in these channels entails a comprehensive and detailed analysis of the purchasing patterns and preferences of various groups of soft drinks and other beverages consumers in each type of location or distribution channel. In response to this analysis, we seek to tailor our product, price, packaging and distribution strategies to meet the particular needs of and exploit the potential of each channel.
We believe that the implementation of our channel marketing strategy also enables us to respond to competitive initiatives with channel-specific responses. This focused response capability isolates the effects of competitive pressure in a specific channel, thereby avoiding costlier market-wide responses. Our channel marketing activities are facilitated by our management information systems. We have invested significantly in creating such systems, including providing hand-held computer and data gathering equipment to support the gathering of product, consumer and delivery information, as well as applications that may be used on smartphones enabled to use these applications. All of which is required to implement our channel marketing strategies effectively for most of our sales routes in Chile, Brazil, Argentina and Paraguay. We will continue investing to increase pre-sale coverage in our territories.
Bottler Agreements
General
Our status as a The Coca-Cola Company franchisee is based on the bottler agreements that the Company has entered into with The Coca-Cola Company by which it has the license to produce and distribute Coca-Cola brand products within its operating franchise territories in Chile, Brazil, Argentina and Paraguay. The Company’s operations are highly dependent on maintaining and renewing the bottler agreements which provide for the production and distribution of Coca-Cola brand products under certain terms and provisions.
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The bottler agreements are international standard contracts. The Coca-Cola Company enters into with bottlers outside the United States for the sale of concentrates and beverage basis for certain Coca-Cola soft drinks and non-soft drink beverages. These are renewable upon request by the bottler and at the sole discretion of The Coca-Cola Company. We cannot assure you that the bottler agreements will be renewed upon their expiration or that they will be renewed upon the same or better terms.
Concentrates and beverage basis
The bottler agreements provide that we will purchase our entire requirement of concentrates and beverage basis for Coca-Cola soft drinks and other Coca-Cola beverages from The Coca-Cola Company and other authorized suppliers. Concentrate prices for Coca-Cola trademark beverages are a percentage of the weighted average retail price in local currency net of applicable taxes, and are determined by an agreement between the Company and The Coca-Cola Company. We set the price of products sold to retailers at our discretion, subject only to certain price restrictions.
As of the date of this annual report, we are the sole producer of Coca-Cola soft drinks and other Coca-Cola beverages in our franchise territories. Although this right is not exclusive, The Coca-Cola Company even though it has the ability to do so, has never authorized any other entity to produce or distribute Coca-Cola soft drinks or other Coca-Cola beverages in such territories, although we cannot assure you that in the future it will not do so. In the case of post-mix soft drinks, the bottler agreements explicitly establish such non-exclusive rights.
The bottler agreements include an acknowledgment by us that The Coca-Cola Company is the sole owner of the trademarks that identify the Coca-Cola soft drinks and other Coca-Cola beverages and of any secret formula used in concentrates.
Production and Distribution
All distribution must be in authorized containers. The Coca-Cola Company has the right to approve, at its sole discretion, any and all kinds of packages and containers for beverages, including their size, shape and any of their attributes. The Coca-Cola Company has the authority at its sole discretion to redesign or discontinue any package of any of the Coca-Cola products, subject to certain limitations, so long as Coca-Cola soft drinks and other Coca-Cola beverages are not all discontinued at the same time. We are prohibited from producing or handling any other beverage products, other than those of The Coca-Cola Company or other products or packages that would imitate, infringe or cause confusion with the products, trade dress, containers or trademarks of The Coca-Cola Company, or from acquiring or holding an interest in a party that engages in such activities. The bottler agreements also impose restrictions concerning the use of certain trademarks, authorized containers, packaging and labeling of The Coca-Cola Company and prohibit bottlers from distributing Coca-Cola soft drinks or other Coca-Cola beverages outside their designated territories.
The bottler agreements require us to maintain adequate production and distribution facilities; inventories of bottles, caps, boxes, cartons and other exterior packaging or materials; to undertake adequate quality control measures prescribed by The Coca-Cola Company; to develop, stimulate, and fully satisfy the demand for Coca-Cola soft drinks and other Coca-Cola beverages and that we use all approved means, and spend such funds on advertising and other forms of marketing, as may be reasonably required to meet that objective; and to maintain financial capacity as may be reasonably necessary to assure performance by us and our affiliates of our obligations before to The Coca-Cola Company. All bottler agreements require us to submit, on an annual basis, our business plans for such franchise territories to The Coca-Cola Company, including without limitation, marketing, management and promotional and advertising plans for the following year.
Advertising and marketing
The Coca-Cola Company has no obligation to contribute to our expenditures for advertising and marketing, but it may, at its discretion, contribute to such expenditures and perform independent advertising and marketing activities, as well as cooperative advertising and sales promotion that would require our cooperation and support. In each of the franchise territories, The Coca-Cola Company has been contributing approximately 50% of our advertising and marketing expenses, but no assurances can be given that equivalent contributions or any contributions at all will be made in the future.
Assignments and other provisions
Each bottler is prohibited from, directly or indirectly, assigning, transferring or pledging its bottler agreement, or any interest therein, whether voluntarily, involuntarily or by operation of law, without the prior consent of The Coca-Cola Company, and each bottler agreement is subject to termination by The Coca-Cola Company in the event of default by us. Moreover, no material change of ownership or control in the bottler may occur without the prior consent of The Coca-Cola Company.
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Termination
The Coca-Cola Company may terminate a bottler agreement immediately by written notice to the bottler in the event that, among other events, (i) the bottler suspends payments to creditors, declares bankruptcy, is declared bankrupt, is expropriated or nationalized, is liquidated, dissolved, changes its legal structure, or pledges or mortgages its assets; (ii) the bottler does not comply with instructions and standards established by The Coca-Cola Company relating to the production of its authorized soft drink products; (iii) the bottler ceases to be controlled by its controlling shareholders (without the prior consent of The Coca-Cola Company); or (iv) the terms of the bottler agreement become contrary to the applicable law.
Either party to any bottler agreement may, within 60 days’ notice thereof to the other party, terminate the bottler agreement in case of default of the other party, provided that such default is not remedied during such period.
In addition, if a bottler does not wish to pay the required price for concentrate for any Coca-Cola products, it must notify The Coca-Cola Company within 30 days of receipt of The Coca-Cola Company’s new prices. In the case of any Coca-Cola soft drink or other Coca-Cola beverages other than Coca-Cola concentrate, the franchise regarding such product shall be deemed automatically canceled three months after The Coca-Cola Company’s receipt of the bottler’s notice of refusal. In the case of Coca-Cola concentrate, the bottler agreements shall be deemed terminated three months after The Coca-Cola Company’s receipt of the bottler’s notice of refusal.
The Coca-Cola Company may also terminate the bottler agreements if the bottler or any individual or legal entity that controls it, engages in the production of any non-Coca-Cola beverage, whether through direct ownership of such operations or through control or administration thereof, provided that, upon request, the bottler shall be given six months to remedy such situation.
Chile
Our licenses for the territories in Chile expire in December 2024.
In 2019, VJ S.A. and The Coca-Cola Company entered into a Bottler's Agreement for beverage products whereby The Coca-Cola Company authorized VJ S.A. to produce, process and bottle, products under certain brands in containers previously approved by The Coca-Cola Company, Andina and Embonor hold the rights to acquire VJ S.A.'s products. This contract expires in December 2024.
In 2019, The Coca-Cola Company and Vital Aguas S.A. entered into a Water Production and Packaging Agreement to prepare and package different types of water. This contract expires in December 2024.
Brazil
Our licenses for the territories in Brazil expire in October 2027.
Argentina
Our licenses for the territories in Argentina expire in September 2027.
Paraguay
Our licenses for the territories in Paraguay expire in March 2028.
Regulation
General
We are subject to a full range of government regulations generally applicable to companies engaged in business in our franchise territories, including but not limited to labor, social security, public health, consumer protection, environmental, sanitation, employee safety, securities and anti-trust laws. As of December 31, 2023, we have no knowledge of any legal or administrative material pending proceedings are against us with respect to any regulatory matter in any of our franchise territories except those listed as such in “Item 8. Financial Information—Contingencies.”
We believe that, to the best of our knowledge, we are in compliance in all material respects with applicable statutory and administrative regulations relating to our business in each of our franchise territories.
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Chile: There are no special licenses or permits specifically required to manufacture and distribute soft drinks and juices in the Chilean territory. Food and beverage producers in Chile, however, must obtain authorization from, and are supervised by the Health Ministry’s respective regional offices (Secretaría Regional Ministerial de Salud), which inspects production facilities and takes liquid samples for analysis on a regular basis. Our main plant in Renca obtained its permit to operate on October 6, 2011 which has been granted for an indefinite period. Likewise, the permits we have to operate our other plants in Chile, have also been granted for an indefinite period. In addition, production and distribution of mineral water is subject to special regulations such that mineral water may be drawn only from sources designated for such purpose by supreme decree. Certification of compliance with such decree is provided by the National Health Service, the Undersecretary’s Office of the Ministry of Health (Servicio de Salud Metropolitano del Ambiente). Our mineral water production facilities have received the required certification.
With regard to the storage and distribution of alcoholic beverages, these activities are governed by the rules of Laws No. 18,455 and No. 19,925, which regulate the production, processing, commercialization, sale and consumption of alcoholic beverages.
Brazil: Labor laws, in addition to mandating employee benefits, include regulations to ensure sanitary and safe working conditions in our production facilities located in Brazil. Food and beverage producers in Brazil must register their products with and receive a ten-year permit from the Ministry of Agriculture and Provisioning and the Ministry of Health. Our permits from said Ministries are valid and in force for a term of ten years for each product we produce. Although we cannot assure you that they will be renewed, we have not experienced any material difficulties in renewing our permits in the past nor do we expect to experience any difficulties in the future. The Ministries do not regularly inspect facilities, but they do send inspectors to investigate any complaints they receive.
Argentina: While most laws applicable to EDASA are enforced at the federal level, some, such as sanitary and environmental regulations, are primarily enforced by provincial and municipal governments. Licenses or permits are required for the manufacture or distribution of beverages in the Argentine territory, which are evidenced through national records of food establishment and food products. Additionally, our production facilities are subject to registration with federal and provincial authorities and to supervision by municipal health agencies, which certify compliance with applicable laws.
Paraguay: PARESA is registered with the Ministry of Industry and Trade in Paraguay, which issues and renews the industrial registry. Food and beverage producers in Paraguay must register with the Ministry of Health, which performs inspections of plants and monitors products in the market. Industries must also have an environmental license issued by the Ministry of Environment and Sustainable Development, which is the main body responsible for monitoring compliance with environmental laws. In addition to establishing the mandatory employee benefits, include safe working and sanitary conditions at industrial installations within Paraguay. PARESA maintains all of its licenses, permits and registrations issued by these institutions and ensures compliance with the regulations and ordinances of the municipalities where its plant is located.
Environmental Matters
It is our policy to conduct environmentally sound operations on a basis consistent with applicable laws and within criteria established by The Coca-Cola Company. Although regulation of matters relating to the protection of the environment is not as well-developed in the franchise territories as in the United States and other industrialized countries, we expect that additional laws and regulations may be enacted in the future with respect to environmental matters that may impose additional restrictions on us which could materially or adversely affect our results of operations in the future. As of December 31, 2023, we have no knowledge of any material legal or administrative proceedings pending against us in any of the franchise territories with respect to environmental matters, and we believe that, to the best of our knowledge, we are in compliance in all material respects with all environmental regulations applicable to us.
Chile
The Chilean government has several regulations governing environmental matters relating to our operations.
Law N° 19,300 addressing general environmental concerns, passed in March 1994, regulates general environmental issues and fundamental aspects applicable to our activities and that could require the hiring of independent experts to conduct studies or environmental impact statements of any future project or activity that may be affected by the provisions of Law N° 19,300. In January 2010, the aforementioned law was amended by Law N° 20,417, which created a new environmental agency, the Environment Ministry, the Environmental Assessment Service and the Environment Superintendence. In January 2012, Law N° 20,600 was published which created the Environmental Tribunals (3), which came into operation on December 2012.
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Law N° 20,920 passed in June 2016, sets the framework for waste management, the extended liability of the producer and the promotion of recycling, which aims to reduce waste generation and encourage reuse, recycling and other types of valorization, in order to protect people’s health and the environment. Law 21,368 was published on August 13, 2021, which requires that the composition of disposable plastic bottles must contain a percentage of plastic that has been collected and recycled within the country.
Brazil
Our Brazilian operations are subject to several environmental laws, none of which currently impose substantial restrictions on us. The Brazilian Constitution establishes the broad guidelines for the new treatment of environmental concerns. Environmental issues are regulated at federal, state and municipal levels. The Brazilian Constitution empowers the public authorities to develop regulations designed to preserve and restore the environment and to control industrial processes that affect human life. Violations of these regulations are subject to criminal, civil and administrative penalties.
In addition, Law N° 6,938 of 1981, known as the Brazilian Environmental Policy, introduced an environmental regime under which no environmental damage is exempt from coverage. This legislation is based on the idea that even a polluting waste tolerated under the established standards could cause environmental damage, and therefore subjects the party causing such damage to the payment of an indemnity. Moreover, as mentioned above, activities damaging to the environment lead to criminal and administrative penalties, provided for in Law N° 9,605 of 1998 or the Environmental Crimes Act.
Numerous governmental bodies have jurisdiction over environmental matters. At the federal level, the Ministério do Meio Ambiente (Brazilian Ministry of Environment) and the Conselho Nacional do Meio-Ambiente or CONAMA dictate environmental policy, including, without limitation, initiating environmental improvement projects, establishing a system of fines and administrative penalties and reaching agreements on environmental matters with offending industries. The Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis or IBAMA, enforces environmental regulations set by CONAMA, through the development of several activities for the preservation and conservation of natural heritage and controlling and supervising the use of natural resources. In addition, various federal authorities have jurisdiction over specific industrial sectors, all aspects listed by these government bodies are fully met by Andina Brazil.
Finally, various state and local authorities regulate environmental matters in the Brazilian territory including the Instituto Estadual do Ambiente or INEA, the main environmental authority in Rio de Janeiro, the Instituto Estadual de Medio Ambiente e Recursos Hídricos (“IEMA”), the main authority on environmental issues in Espírito Santo, the Companhia de Tecnologia de Saneamento Ambiental - CETESB, the main environmental authority in São Paulo and the Secretaria de Estado de Meio Ambiente e Desenvolvimento Susutentável (SEMAD), the main environmental authority in Minas Gerais. INEA, IEMA, CETESB and SEMAD periodically inspect industrial sites. We believe that we are in compliance in all material respects with the standards established by all the governmental authorities applicable to our operations in Brazil. We cannot assure you, however, that additional regulations will not be enacted in the future, and that such restrictions would not have a material adverse effect on our results or operations. The operation in Brazil as that of Chile counts with all certifications mentioned in terms of Quality, Environment and Occupational Health and Safety and those associated with Food Safety and Best Practices in Food Processing.
Argentina
The Argentine Constitution, as amended in 1994, allows any individual who believes a third party may be damaging the environment to initiate an action against it. No action of this nature has been initiated against EDASA, but we cannot ensure that it will not be initiated in the future. Though provincial governments have primary regulatory authority over environmental matters, municipal and federal authorities also have authority competent to enact decrees and laws on environmental issues. Thus, municipalities can set policy on local environmental matters, such as waste management, while the federal government regulates inter-province environmental issues, such as transport of hazardous waste or environmental matters covered by international treaties.
In 2002, the National Congress approved federal Law N° 25,612, Comprehensive Management of Industrial Residues and Service Activities (Gestión Integral de Residuos Industriales y de Actividades de Servicios) and Law N° 25,675, General Environmental Law (Ley General del Ambiente) establishing minimum guidelines for the protection of the sustainable environmental management and the protection of biodiversity, applicable throughout Argentina. The law establishes the purposes, principles and instruments of the national environmental policy, the concept of “minimum guidelines,” the judicial purview and the rules governing environmental education and information, citizens’ participation and self-management, among other provisions.
50
Provincial governments within the Argentine territory have enacted laws establishing a framework for the preservation of the environment. Provincial laws that are applicable to industrial facilities at EDASA, among others are Law N° 7,343 of the Province of Córdoba and its supplemental N° 10,208 since 2014, Law N° 11,459 of the Province of Buenos Aires and Environmental Code N° 5,439 of the Chubut province. These laws contain principles on environmental policy and management, as well as rules on environmental impact assessment. They also give certain agencies jurisdiction over environmental issues.
Almost all provinces as well as many municipalities have established rules regarding the use of water, the sewage system and the disposal of liquids into underground flows of water or rivers. There are currently no claims pending against EDASA related to these rules, whose violation normally results in a fine.
Paraguay
The environmental framework comprises several national and local environmental regulations. The Paraguayan Constitution of 1992 states that everyone has the right to live in a healthy and ecologically balanced environment and has the obligation to preserve it. All damage caused to the environment will carry the obligation to repair and compensate.
Law 1561/00 chartered the three primary environmental agencies in Paraguay. These are: The Ministry of the Environment and Sustainable Development of Paraguay (Ministerio del Ambiente y Desarrollo Sostenible or “MADES”), National Environmental Council (Consejo Nacional del Ambiente or “CONAM”), and National Environmental System (Sistema Nacional del Ambiente or “SISNAM”). The Law establishes the authority and responsibility of these agencies to develop and oversee the national environmental policy.
The Ministry of the Environment and Sustainable Development is the main environmental body responsible for the development and implementation of national environmental laws and it is also the authority responsible for implementing most of the national environmental regulations and for monitoring their compliance. The CONAM is responsible for investigating and establishing the main goals in the environmental policies, which the MADES must then implement. The SISNAM is integrated by several bodies, including governmental and municipal agencies and private sector stakeholders, all interested in solving environmental issues. The SISNAM provides a discussion forum for the public and private sectors to work together collectively, developing ideas and plans to promote a sustainable development.
Environmental Impact: Law 294/93 states the rights and obligations that will be triggered by any damage caused to the environment and provides the obligation to restore the environment to its previous state or, if that is technically impossible, to make a payment or provide compensation.
Water Resources Act of Paraguay: Law 3239/07 on water resources establishes the sustainable management of all waters (superficial, ground, atmospheric) and the territories that generate such waters, regardless of their location, physical condition or natural occurrence within the Paraguayan territory, in order to make it socially, economically and environmentally sustainable for the people living in the territory of Paraguay. The supervising agency is the Ministry of Environment and Sustainable Development. Superficial and ground waters are property of the State’s public domain. The law establishes the following order of priority for the use of water: i) fulfillment of the needs of aquatic ecosystems; ii) social use within the home environment; iii) use and enjoyment for agricultural activities, including aquaculture; iv) use and utilization for power generation; v) use and enjoyment for other industrial activities and vi) use and enjoyment for other activities. The use of water for productive purposes is subject to the authorization granted by the State through a permit (for the use of small amounts of water) or through concessions (prior public bidding process), in both cases after the payment of applicable fees. Authorizations may be revoked based on the occurrence of situations contemplated under the law. Concessions may be expropriated for public benefit or be terminated in certain situations established by the law. In addition, a National Registry of Water Resources has been created to keep record of all individuals or legal entities that utilize water resources or engage in activities related to them.
51
| C. | ORGANIZATIONAL STRUCTURE |
The following chart presents a summary of our direct and indirect ownership interests in our subsidiaries and associated companies:
52
The following table presents information relating to the main activities of our subsidiaries and associated companies, as well as our direct and indirect ownership interests in them as of the date of this document:
Subsidiary |
|
Activity |
|
Country of |
|
Percentage |
|---|---|---|---|---|---|---|
Embotelladora Andina Chile S.A. |
|
Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. |
|
Chile |
|
100.0 |
VJ S.A. |
|
Manufacture, distribute, and commercialize all kinds of food products, juices, and beverages. |
|
Chile |
|
65.00 |
Vital Aguas S.A. |
|
Manufacture, distribute, and commercialize all kinds of waters and beverages in general. |
|
Chile |
|
66.50 |
Servicios Multivending Ltda. |
|
Commercialize products through equipment and vending machines. |
|
Chile |
|
100.0 |
Transportes Andina Refrescos Ltda. |
|
Provide administrative services and management of domestic and foreign ground transportation. |
|
Chile |
|
100.0 |
Transportes Polar S.A. |
|
Provide administrative services and management of domestic and foreign ground transportation. |
|
Chile |
|
100.0 |
Envases Central S.A. |
|
Manufacture and packaging of all kinds of beverages and commercialize all kinds of packaging. |
|
Chile |
|
59.27 |
Andina Bottling Investments S.A. |
|
Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. |
|
Chile |
|
100.0 |
Andina Bottling Investments Dos S.A (2) |
|
Carry out exclusively foreign permanent investments and lease all kinds of real estate. |
|
Chile |
|
100.0 |
Andina Inversiones Societarias SpA. |
|
Invest in all types of companies and commercialize food products in general. |
|
Chile |
|
100.0 |
Comercializadora Novaverde S.A |
|
Process and commercialize fruits, ice cream, vegetables and food in general, under the Guallarauco trademark. |
|
Chile |
|
35.00 |
Re-Ciclar S.A. (3). |
|
Produce recycled resin for the Coca-Cola system and third parties. |
|
Chile |
|
60.00 |
Rio de Janeiro Refrescos Ltda. |
|
Manufacture and commercialize beverages in general, powdered juices and other related semi-processed products. |
|
Brazil |
|
99.99 |
Embotelladora del Atlántico S.A. |
|
Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. |
|
Argentina |
|
100.0 |
Andina Empaques S.A. |
|
Design, produce, and commercialize plastic products mainly packaging. |
|
Argentina |
|
99.98 |
Alimentos de SOJA S.A. |
|
Manufacture, commercialize, import, export, transformation, fraction, package and distribute food products and beverages in general, and their raw materials and related products and by-products. |
|
Argentina |
|
14.82 |
Paraguay Refrescos S.A. |
|
Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. |
|
Paraguay |
|
97.83 |
Circular-Pet S.A. (4) |
|
Produce recycled resin for the Coca-Cola system and third parties. |
|
Paraguay |
|
33.33 |
Red de Transportes Comerciales Ltda. |
|
Provide administrative services and management of domestic and foreign ground transportation. |
|
Chile |
|
100.0 |
Envases CMF S.A. |
|
Manufacture, acquire and commercialize all types of containers and packaging; and provide bottling services. |
|
Chile |
|
50.00 |
Coca-Cola del Valle New Ventures S.A. |
|
Manufacture, distribute and commercialize all kinds of juices, waters and beverages in general. |
|
Chile |
|
35.00 |
Leão Alimentos e Bebidas Ltda. |
|
Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. |
|
Brazil |
|
10.26 |
Trop Frutas do Brasil Ltda. |
|
Manufacture, commercialize and export natural fruit pulp and coconut water. |
|
Brazil |
|
6.10 |
Sorocaba Refrescos S.A.(1) |
|
Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. |
|
Brazil |
|
40.00 |
SRSA Participações Ltda. |
|
Purchase and sale of real estate investments and property management. |
|
Brazil |
|
40.00 |
Kaik Participações Ltda. |
|
Invest in other companies with own resources. |
|
Brazil |
|
11.32 |
UBI 3 Participações Ltda |
|
Invest in other companies with own resources. Purchase and sale of real estate investments and property management. |
|
Brazil |
|
8.50 |
| (1) | In 2012, 40% of the Brazilian company Sociedad Brasilera Sorocaba Refrescos S.A. was acquired for a total price of R$146.9 million. |
| (2) | In November 2021, Abisa Corp and Aconcagua Investing Ltda. were merged into Andina Bottling Investments Dos S.A. (ABISA DOS) for corporate reorganization purposes. As a consequence of the merger, Abisa Corp and Aconcagua Investing Ltda. were absorbed by ABISA DOS, which became the owner of the shares issued by Andina Inversiones Societarias S.A, previously held by Aconcagua Investing Ltda. Abisa Corp had no investment in any entity. |
| (3) | During 2021, Embotelladora Andina S.A. held an interest in Re-Ciclar, a company whose purpose is to produce recycled resin for the Coca-Cola system and third parties. Non-controlling interest reaches 40.0%. |
53
| (4) | In February 2021, the subsidiary Paraguay Refrescos S.A. together with INPET S.A.E.C.A and CORESA incorporated and executed a shareholders’ agreement for a company named Circular-Pet. Each of these companies will own 33.3% Circular-Pet share capital. The main activity of Circular-Pet will be the manufacture and commercialization of post-consumer recycled PET resins, coming from the transformation of PET flakes. |
| D. | PROPERTY, PLANTS AND EQUIPMENT |
We own production plants in each of the principal population centers that comprise the franchise territories. In addition, we own distribution centers and administrative offices in each of the franchise territories. We also use (i) facilities owned by third parties through lease agreements and (ii) facilities owned by third parties through contracts other than lease agreements, such as distribution contracts. The following table sets forth our principal real property (in square meters) and other facilities that we use in each of the franchise territories:
|
MAIN USE |
|
Square |
|
Property |
|
|
|---|---|---|---|---|---|---|---|
ARGENTINA |
|
|
|
|
|||
Embotelladora del Atlántico S.A. |
|
|
|
|
|||
Azul |
|
Distribution Center / Warehouses |
|
600 |
|
Third Parties |
|
Bahía Blanca* |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
102,708 |
|
Own |
|
Bahía Blanca |
|
Commercial Office |
|
903 |
|
Leased |
|
Bahía Blanca* |
|
Real Estate (parking lot) |
|
73,150 |
|
Own |
|
Bahía Blanca |
|
Warehouses (M&F Palletizer -EDF deposit) |
|
1,400 |
|
Leased |
|
Bariloche |
|
Offices / Distribution Center / Warehouses |
|
2,495 |
|
Leased |
|
Bialet Masse (Córdoba)* |
|
Real Estate** |
|
880 |
|
Own |
|
Bragado |
|
Commercial Office |
|
38 |
|
Leased |
|
Carlos Paz (Córdoba) |
|
Commercial Office |
|
270 |
|
Leased |
|
Carmen de Patagones |
|
Commercial Office / Warehouses / Crossdocking |
|
1,600 |
|
Leased |
|
Chacabuco* |
|
Offices / Distribution Center / Warehouses |
|
25,798 |
|
Own |
|
Chivilcoy |
|
Distribution Center / Warehouses |
|
1,350 |
|
Third Parties |
|
Chivilcoy |
|
Commercial Office |
|
72 |
|
Leased |
|
Comodoro Rivadavia |
|
Offices / Distribution Center / Warehouses |
|
7,500 |
|
Leased |
|
Concepcion del Uruguay |
|
Commercial Office |
|
118 |
|
Leased |
|
Concordia |
|
Commercial Office / Third party Distribution Center / Warehouses |
|
1,214 |
|
Leased |
|
Córdoba* |
|
Offices /Production of soft drinks and other still beverages / Distribution Center / Warehouses / Real estate |
|
959,585 |
|
Own |
|
Córdoba (San Isidro)* |
|
Deposit / Offices / Cold equipment repair workshop |
|
8,808 |
|
Own |
|
Córdoba |
|
Deposit (Rigar) |
|
6,270 |
|
Leased |
|
Córdoba |
|
Marketing and Cooling Deposit (Ricardo Balbín) |
|
2,500 |
|
Leased |
|
Córdoba |
|
Galot and Lessen Deposit- Raw Materials - Finished product |
|
2,800 |
|
Leased |
|
Córdoba |
|
Galot and Lessen Deposit- Finished product |
|
8,400 |
|
Leased |
|
Córdoba |
|
Commercial offices (Dinosaurio Mall Alto Verde) |
|
357 |
|
Leased |
|
Córdoba |
|
Cold deposit (Granate SRL) |
|
1,500 |
|
Leased |
|
Córdoba |
|
Raw material deposit (Granate SRL) |
|
4,720 |
|
Leased |
|
Coronel Suarez |
|
Offices / Third party Distribution Center / Warehouses / Deposit |
|
1,000 |
|
Leased |
|
General Pico* |
|
Offices / Distribution Center / Warehouses |
|
15,525 |
|
Own |
|
General Roca |
|
Distribution Center / Warehouses |
|
2,800 |
|
Third Parties |
|
Gualeguaychu |
|
Commercial Office / Warehouses |
|
2,392 |
|
Leased |
|
Junin (Buenos Aires) |
|
Cross Docking |
|
995 |
|
Third Parties |
|
Junin (Buenos Aires) |
|
Commercial Office |
|
108 |
|
Leased |
|
Mendoza* |
|
Offices / Distribution Center / Warehouses |
|
36,452 |
|
Own |
|
Mendoza* |
|
Commercial Office |
|
520 |
|
Leased |
|
Mendoza* |
|
Cold deposit |
|
4,240 |
|
Leased |
|
Monte Hermoso* |
|
Real Estate** |
|
300 |
|
Own |
|
Neuquén* |
|
Offices / Distribution Center / Warehouses** |
|
10,157 |
|
Own |
|
Neuquén* |
|
Centenario Deposit / Offices |
|
48,188 |
|
Leased |
|
Neuquén* |
|
Commercial Office |
|
230 |
|
Leased |
|
Olavarria |
|
Offices / Distribution Center / Warehouses |
|
3,065 |
|
Leased |
|
Paraná |
|
Commercial Office |
|
318 |
|
Leased |
|
Pehuajo |
|
Offices / Distribution Center / Warehouses |
|
1,060 |
|
Leased |
|
Pergamino* |
|
Offices / Cross Docking |
|
15,700 |
|
Own |
|
Rio Gallegos |
|
Distribution Center / Warehouses |
|
937 |
|
Leased |
|
Rio Gallegos |
|
Distribution Center / Warehouses |
|
2,491 |
|
Leased |
|
Rio Grande |
|
Offices / Distribution Center / Warehouses |
|
2,460 |
|
Leased |
|
Río Cuarto (Córdoba)* |
|
Deposit / Distribution Center / Cross Docking |
|
7,482 |
|
Own |
|
Río Cuarto (Córdoba) |
|
Commercial Office |
|
93 |
|
Leased |
|
54
|
MAIN USE |
|
Square |
|
Property |
|
|
|---|---|---|---|---|---|---|---|
Rivadavia (Mendoza)* |
|
Deposit** |
|
800 |
|
Own |
|
Rosario* |
|
Offices / Distribution Center / Warehouses / Parking Lot / Real Estate |
|
27,814 |
|
Own |
|
Rosario (calle Casilda) |
|
Deposit / Parking / Truck parking lot |
|
20,152 |
|
Own |
|
Rosario (Comuna Alvear) |
|
Cold deposit (Distribuidora Raymundo SRL) |
|
2,165 |
|
Leased |
|
San Francisco (Córdoba) |
|
Commercial Office |
|
63 |
|
Leased |
|
San Juan* |
|
Offices / Distribution Center / Warehouses |
|
48,036 |
|
Own |
|
San Luis* |
|
Commercial Office / Distribution Center / Warehouses |
|
5,205 |
|
Own |
|
San Nicolas |
|
Commercial Office |
|
50 |
|
Leased |
|
San Rafael (Santa Fe) |
|
Commercial Office |
|
58 |
|
Leased |
|
Santa Fe (Casilda) |
|
Commercial Office |
|
40 |
|
Leased |
|
Santa Fe |
|
Commercial Office |
|
238 |
|
Leased |
|
Santa Rosa |
|
Distribution Center / Warehouses |
|
1,200 |
|
Third Parties |
|
Santo Tomé* |
|
Administrative Office / Distribution Center / Warehouses / Deposit |
|
75,000 |
|
Own |
|
Trelew* |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
51,000 |
|
Own |
|
Trelew |
|
Warehouses |
|
1,500 |
|
Leased |
|
Tres Arroyos |
|
Offices / Crossdocking / Warehouses |
|
1,548 |
|
Leased |
|
Ushuaia |
|
Offices / Distribution Center / Warehouses |
|
1,360 |
|
Leased |
|
Ushuaia |
|
Commercial Office |
|
94 |
|
Leased |
|
Venado Tuerto |
|
Commercial Office / Distribution Center / Warehouses |
|
2,449 |
|
Third Parties |
|
Villa Maria |
|
Commercial Office |
|
125 |
|
Leased |
|
Villa Mercedes |
|
Commercial Office |
|
70 |
|
Leased |
|
Andina Empaques Argentina S.A. |
|
|
|
|
|||
Buenos Aires* |
|
Production of bottles, PET Preforms, Plastic Caps and Cases |
|
27,520 |
|
Own |
|
Buenos Aires |
|
Deposit adjoining the production plant |
|
1,041 |
|
Leased |
|
Buenos Aires |
|
Deposit adjoining the production plant |
|
940 |
|
Leased |
|
BRAZIL |
|
|
|
|
|||
Rio de Janeiro Refrescos Ltda. |
|
|
|
|
|||
Jacarepaguá |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
249,470 |
|
Own |
|
Duque de Caxias* |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
2,243,953 |
|
Own |
|
Nova Iguaçu* |
|
Distribution Center / Warehouses |
|
82,618 |
|
Own |
|
Bangu* |
|
Distribution Center |
|
44,389 |
|
Own |
|
Campos dos Goytacazes* |
|
Distribution Center |
|
36,083 |
|
Own |
|
Cabo Frio* |
|
Distribution Center** |
|
1,985 |
|
Own |
|
São Pedro da Aldeia 1* |
|
Distribution Center |
|
10,139 |
|
Concession |
|
Itaperuna* |
|
Cross Docking |
|
2,500 |
|
Leased |
|
Caju 1* |
|
Distribution Center |
|
4,866 |
|
Own |
|
Caju 2* |
|
Distribution Center |
|
8,058 |
|
Own |
|
Caju 3* |
|
Parking Lot |
|
7,400 |
|
Leased |
|
Vitória (Cariacica)* |
|
Distribution Center |
|
93,320 |
|
Own |
|
Cachoeiro do Itapemirim* |
|
Cross Docking |
|
8,000 |
|
Leased |
|
Ribeirão Preto |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
238,096 |
|
Own |
|
Ribeirão Preto* |
|
Real Estate |
|
279,557 |
|
Own |
|
Franca* |
|
Distribution Center |
|
32,500 |
|
Own |
|
Mococa* |
|
Distribution Center |
|
33,669 |
|
Leased |
|
Araraquara* |
|
Distribution Center |
|
11,658 |
|
Own |
|
São Paulo* |
|
Apartment |
|
69 |
|
Own |
|
São Joao da Boa Vista* |
|
Cross Docking |
|
20,773 |
|
Own |
|
São Pedro da Aldeia 2* |
|
Parking Lot |
|
6,400 |
|
Concession |
|
Nova Friburgo* |
|
Commercial Office / Cross Docking |
|
350 |
|
Leased |
|
Guarapari* |
|
Commercial Office |
|
218 |
|
Leased |
|
Colatina* |
|
Commercial Office / Cross Docking |
|
3,840 |
|
Leased |
|
São Mateus* |
|
Commercial Office / Cross Docking |
|
2,007 |
|
Leased |
|
Rio das Ostras* |
|
Commercial Office |
|
527 |
|
Leased |
|
Passos* |
|
Distribution Center |
|
8,500 |
|
Leased |
|
Guarapari* |
|
Commercial Office |
|
218 |
|
Leased |
|
Xerém* |
|
Deposit |
|
10,000 |
|
Leased |
|
Anhanguera* |
|
Deposit |
|
57,162 |
|
Leased |
|
CHILE |
|
|
|
|
|||
Embotelladora Andina S.A. |
|
|
|
|
|||
Renca* |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
415,517 |
|
Own |
|
Renca* |
|
Warehouses |
|
55,562 |
|
Own |
|
Renca* |
|
Warehouses |
|
11,211 |
|
Own |
|
55
|
MAIN USE |
|
Square |
|
Property |
|
|
|---|---|---|---|---|---|---|---|
Renca* |
|
Warehouses |
|
46,965 |
|
Own |
|
Carlos Valdovinos* |
|
Distribution Center / Warehouses |
|
106,820 |
|
Own |
|
Puente Alto * |
|
Distribution Center / Warehouses |
|
68,682 |
|
Own |
|
Maipú* |
|
Distribution Center / Warehouses |
|
45,833 |
|
Own |
|
Bodega MCC |
|
Distribution Center / Warehouses |
|
9,280 |
|
Leased |
|
Colina |
|
Distribution Center / Warehouses |
|
6,550 |
|
Leased |
|
Chimba |
|
Distribution Center / Warehouses |
|
1,000 |
|
Leased |
|
Demetrop (Metropolitan Region) |
|
Warehouses |
|
n/a |
|
Leased |
|
Trailerlogistic (Metropolitan Region) |
|
Warehouses |
|
n/a |
|
Leased |
|
Monster (Metropolitan Region) |
|
Warehouses |
|
n/a |
|
Leased |
|
Rancagua* |
|
Distribution Center / Warehouses |
|
25,920 |
|
Own |
|
San Antonio* |
|
Distribution Center / Warehouses |
|
19,809 |
|
Own |
|
Antofagasta * |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
34,729 |
|
Own |
|
Antofagasta * |
|
Warehouses |
|
8,028 |
|
Own |
|
Calama* |
|
Distribution Center / Warehouses |
|
10,700 |
|
Own |
|
Tocopilla* |
|
Distribution Center / Warehouses |
|
562 |
|
Own |
|
Coquimbo* |
|
Offices / Distribution Center / Warehouses |
|
31,383 |
|
Own |
|
Copiapó* |
|
Distribution Center / Warehouses |
|
26,800 |
|
Own |
|
Ovalle* |
|
Distribution Center / Warehouses |
|
6,223 |
|
Own |
|
Vallenar* |
|
Distribution Center / Warehouses |
|
5,000 |
|
Own |
|
Illapel |
|
Distribution Center / Warehouses |
|
n/a |
|
Leased |
|
Punta Arenas* |
|
Offices / Production of Soft Drinks / Distribution Center / Warehouses |
|
109,517 |
|
Own |
|
Coyhaique* |
|
Distribution Center / Warehouses |
|
5,093 |
|
Own |
|
Puerto Natales |
|
Distribution Center / Warehouses |
|
850 |
|
Leased |
|
VJ S.A. |
|
|
|
|
|||
Renca* |
|
Offices / Production of Juices |
|
40,000 |
|
Own |
|
Vital Aguas S.A. |
|
|
|
|
|||
Rengo* |
|
Offices / Production of Waters |
|
346,532 |
|
Own |
|
Envases Central S.A. |
|
|
|
|
|||
Renca* |
|
Offices / Production of Soft Drinks |
|
51,907 |
|
Own |
|
Re-Ciclar S.A. |
|
|
|
|
|||
Lampa* |
|
Offices / RPET Resin production (under construction) |
|
7,500 |
|
Own |
|
PARAGUAY |
|
|
|
|
|||
Paraguay Refrescos S.A. |
|
|
|
|
|||
San Lorenzo* |
|
Offices / Production of Soft Drinks / Warehouses |
|
275,292 |
|
Own |
|
Coronel Oviedo* |
|
Offices / Warehouses |
|
32,911 |
|
Own |
|
Encarnación* |
|
Offices / Warehouses |
|
12,744 |
|
Own |
|
Ciudad del Este* |
|
Offices / Warehouses |
|
14,620 |
|
Own |
|
* |
Free of encumbrance properties. |
** |
Inactive: facilities that are not currently being used by the Company. |
Leased: facilities owned by third parties, used by the Company through a lease agreement.
Third Parties: facilities owned by third parties, used by the Company through contracts other than lease agreements, such as distribution contracts.
Own: facilities owned by the Company.
56
Capacity by Line of Business
Set forth below is certain information concerning the installed capacity and approximate average utilization of our production facilities, by line of business.
|
|
Year Ended December 31, |
||||||||||
|
|
2022 |
|
2023 |
||||||||
|
|
|
|
|
|
Capacity |
|
|
|
|
|
Capacity |
|
|
Annual |
|
Average |
|
Utilization |
|
Annual |
|
Average |
|
Utilization |
|
|
Total |
|
Capacity |
|
During |
|
Total |
|
Capacity |
|
During |
|
|
Installed |
|
Utilization |
|
Peak Month |
|
Installed |
|
Utilization |
|
Peak Month |
|
|
Capacity(1) |
|
(%) |
|
(%) |
|
Capacity(1) |
|
(%) |
|
(%) |
Soft drinks (millions of UCs): |
|
|
|
|
|
|
|
|
|
|
|
|
Andina Chile |
|
323 |
|
53 |
|
71 |
|
373 |
|
46 |
|
52 |
Andina Brazil |
|
403 |
|
64 |
|
69 |
|
388 |
|
68 |
|
71 |
Andina Argentina |
|
365 |
|
48 |
|
56 |
|
363 |
|
47 |
|
53 |
Paraguay Refrescos |
|
142 |
|
40 |
|
60 |
|
147 |
|
42 |
|
52 |
Other beverages (millions of UCs) |
|
|
|
|
|
|
|
|
|
|
|
|
Andina Chile |
|
23 |
|
51 |
|
74 |
|
23 |
|
63 |
|
70 |
Andina Brazil |
|
57 |
|
66 |
|
71 |
|
68 |
|
70 |
|
68 |
Andina Argentina |
|
123 |
|
22 |
|
30 |
|
118 |
|
27 |
|
33 |
Paraguay Refrescos |
|
48 |
|
28 |
|
37 |
|
48 |
|
30 |
|
21 |
ECSA/VJSA/VASA |
|
136 |
|
69 |
|
82 |
|
142 |
|
62 |
|
75 |
PET packaging (millions of bottles) (2) |
|
46 |
|
49 |
|
79 |
|
45 |
|
31 |
|
66 |
Preforms (millions of preforms) (2) |
|
900 |
|
88 |
|
99 |
|
1,050 |
|
84 |
|
96 |
Plastic caps (millions of caps) (2) |
|
1,000 |
|
53 |
|
76 |
|
1,426 |
|
36 |
|
76 |
Cases (millons of cases) (2) |
|
0.7 |
|
75 |
|
100 |
|
0.7 |
|
78 |
|
100 |
| (1) | Annual Total Installed Capacity assumes production of the mix of products and containers produced in 2022 and 2023. |
| (2) | Andina Empaques Argentina only. |
In 2023, we continued to modernize and renovate our production plants in order to maximize efficiency and productivity.
In Andina Chile, at the end of 2023 we started the most significant project to increase the capacity of the Renca Facility since its initial installation. This project included the construction of Production Line #12, which can fill up to 30,000 bottles per hour (our highest filling speed production line), allowing to increase the one way bottle (bottles that are not refillable) volume in 35%, which we believe will cover the estimated demand for the next 10 years. This project also included the construction of a product warehouse, adding more than 5,000 pallet positions to the facility (which represents 45% more in the storage capacity). Additionally, it included the syrup room, multiplying by six the current capacity of flavored water production. To achieve a vertical start up, we trained the operation team in a learning center in Brazil. We are enthusiastic with this new capacity of the Renca facility as we believe it will allow us to cover the demand increase in the long term and to be more productive in the short term.
Regarding our subsidiaries in Chile, in Vital Jugos, Vital Aguas and ECSA, during 2023 we have completed the modernization of our isotonics production line, allowing us to substantially reduce the weight of the bottles, reduce energy and water consumption, and increase production capacity. In addition, we stabilized the efficiency of a new high speed can production line implemented during the second quarter of 2022, increasing the local capacity of carbonated soft drinks and copacking of Monster Energy portfolio. Finally, by the end of 2023, we bottled Fastlyte, an RTD hydrating serum, being the second operation in the world of the Coca-Cola system to introduce the category in its portfolio.
In Brazil, 2023 consolidated Andina Brazil as the most relevant supplier for other KO franchises over a wide variety of categories, reaching above 18 MMUC shipped from one of our production facilities. Ribeirão Preto’s plant holds the lead with above 14 MMUC in SSDs, Energy, Sports Drinks, mineral water and ARTDs. Nonetheless, Jacarepagua plant serves as a relevant supplier for Tea beverages and SSDs having reached 2.4 MMUC last year, while Duque de Caxias mineral water sources were responsible for another 2.3 MMUC. Also important to mention, Andina’s initiatives on expanding Duque de Caxias plant into a multicategory plant are on the march and phase 1 of this project is estimated to be concluded by the first semester of 2025. In logistics, Andina Brazil has renewed its forklifts fleet with 18 new equipment’s, of which 4 are electric powered.
57
In Argentina, in 2023, we continued to invest in the purchase of equipment and bottle inventory adjustments required to have single returnable bottles in Ref PET 2.5 liters and 0.35 liters glass bottles, by replacing the ACL label (permanent) with the OW label, optimizing the number of bottles and allowing greater flexibility to change formulas, expand the flavor portfolio, and adapt to the new Labeling Law regulations. We continued with the purchase and installation of equipment, as well as the execution of adjustments and building works required for the full production of seed-based products for the entire Coca-Cola system in Argentina and supply to neighboring countries, using five validated Tetra Pak lines. Personnel for manufacturing, quality control, inventory management, and storage were educated and trained on the new capabilities required for these products. Suppliers and new alternatives were developed to alleviate the soybean shortage caused by the drought in the country. We began with civil works and the import of equipment for the start-up of a returnable products line at the Mendoza Plant, with the goal of supplying the second most important location in returnable product consumption. Because of the economic environment and consumer realities, this strategic investment also allows us to reduce logistics costs and improve our carbon footprint. Production is expected to begin the third quarter of 2024.
In Paraguay, in 2023, the launch of the labeling machine and label extraction in line 4 was carried out, which will allow us to use unique bottles in this line, also allowing us to expand the portfolio of flavors that are filled in this line. Additionally, given the uncertainty of the sugar market, we migrated our entire portfolio sweetened from simple syrup to fructose as the main sweetener, capitalizing the investment made in 2022.
As of December 31, 2023, we had total installed annual production capacity, including soft drinks, fruit juices, water and other beverages, of 1,671 million unit cases. Our primary facilities include:
| ● | through Coca-Cola Andina, in the Chilean territory, 3 soft drink and other beverages production facilities with 21 production lines, with total installed annual capacity of 396 million unit cases (23.7% of our total installed annual capacity); |
| ● | through Vital Jugos in the Chilean territory, one fruit juice production facility, with 12 production lines, with total installed annual capacity of 41.5 million unit cases (2.5% of our total installed annual capacity); |
| ● | through ECSA in the Chilean territory, one soft drink and other beverages production facility, with 3 production lines, with total installed annual capacity of 65 million unit cases (3.9% of our total installed annual capacity); |
| ● | through Vital Aguas in the Chilean territory, one mineral water production facility, with 2 production lines, with total installed annual capacity of 35.3 million unit cases (2.1% of our total installed annual capacity); |
| ● | through Rio de Janeiro Refrescos in the Brazilian territory, 3 soft drink and other beverages production facilities with 17 production lines for soft drinks with total installed annual capacity of 388 million unit cases (23.2% of our total installed annual capacity); and 17 production lines for juices, tea, water and other non-alcoholic beverages which satisfy the franchise’s needs and re-sales to other bottlers in Brazil, with total installed annual capacity of 68 million unit cases (4.1% of our total installed annual capacity); |
| ● | through Embotelladora del Atlántico in the Argentine territory, 3 soft drink and other beverages production facilities with 17 production lines for soft drinks with a total installed annual capacity of 363 million unit cases (21.7% of our total installed annual capacity); 7 production lines for juices that covers the needs of our franchise, and one production line for waters and sensitive products with a total installed annual capacity of 118 million unit cases (7.1% of our total installed annual capacity); |
| ● | through Andina Empaques Argentina S.A. in the Argentine territory, one production facility for bottles, preforms and plastic caps that covers the needs of the Coca-Cola system in that country. It has 13 preform injectors, 2 bottle blowers, 3 injectors for plastic caps and one production line for cases, with a total installed annual capacity of 2,522 million units considering PET bottles, preforms, plastic caps and cases; |
| ● | through PARESA in the Paraguayan territory, one production facility located in San Lorenzo, with 8 soft drink and other beverages production lines with a total installed annual capacity of 147 million unit cases (8.8% of our total installed annual capacity); and 3 tetra pack lines with a total installed annual capacity of 48 million unit cases (2.9% of our total installed annual capacity). |
58
ITEM 4A.UNRESOLVED SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS
Not applicable.
ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS
| A. | OPERATING RESULTS 2023 |
Results of operation
Set forth below is a discussion and analysis of our results of operation for the years ended December 31, 2023, 2022 and 2021.
Our consolidated financial results for the years ended December 31, 2023, 2022 and 2021 include the results of our subsidiaries in Chile, Brazil, Argentina and Paraguay. Our consolidated financial statements reflect the results of the subsidiaries outside Chile, converted into Chilean pesos (our functional and reporting currency).
IFRS requires that assets and liabilities of our subsidiaries outside of Chile be converted from the functional currency to the presentation currency (Chilean peso) at year-end exchange rates, and that income and expense accounts are converted at monthly average exchange rates for the month in which they are recognized for those subsidiaries that do not operate in hyperinflationary economies.
In the case of our Argentine subsidiaries, which have been operating in an environment that during 2021, 2022 and 2023 was classified as hyperinflationary, the conversion criteria from the functional currency of those subsidiaries to our presentation currency is the following:
| ● | First adoption of a hyperinflationary economy was in 2018: Losses and gains by correction of current non-monetary items the previous year are recorded in accumulated results as of January 1, 2018. |
| ● | The statement of financial position (balance sheet): Non-cash items are expressed in the current currency at the balance sheet date and translated to the presentation currency at the closing exchange rate. Losses and gains are included in net earnings (fiscal year income). |
| ● | The income statement: Income statement items are expressed in the current currency unit at the end of the reporting period, using the variation of the general price index from the date on which the expenses and revenues were accrued, and translated to the presentation currency at closing exchange rate. |
| ● | Cash flow statement: Cash flow statement items are expressed in the current currency unit at the end of the reporting period and translated to the presentation currency at closing exchange rate. |
For more information on the effects of the hyper-inflationary environment in Argentina, see note 2.5 of our consolidated financial statements included herein.
The Current Impact of the COVID-19 Pandemic
During 2023, the COVID-19 pandemic did not affect our operations in a significant manner, as the infection rate in the countries we operate decreased, and the measures taken by the governments to contain the spread of the pandemic were less restrictive. Our channel mix reached pre-pandemic levels, and we didn´t have any significant effects of the pandemic in our sales volume nor in our costs.
59
Summary of Results of Operations for the Years ended December 31, 2022 and 2023
The following tables set forth our sales volume, net sales and gross profit for the years ended December 31, 2022 and 2023:
|
|
Year ended December 31, |
||
|
|
2022 |
|
2023 |
|
|
(millions of unit cases (1)) |
||
Sales volume: |
|
|
|
|
Chile |
|
|
|
|
Soft drinks |
|
166.1 |
|
160.8 |
Mineral water |
|
57.4 |
|
59.1 |
Juices and other non-alcoholic |
|
54.5 |
|
49.4 |
Beer & Spirits |
|
41.7 |
|
40.5 |
Total |
|
319.8 |
|
309.9 |
|
|
|
|
|
Brazil |
|
|
|
|
Soft drinks |
|
224.5 |
|
238.1 |
Mineral water |
|
20.4 |
|
24.6 |
Juices and other non-alcoholic |
|
28.5 |
|
32.4 |
Beer & Spirits |
|
4.7 |
|
5.8 |
Total |
|
278.0 |
|
300.9 |
|
|
|
|
|
Argentina |
|
|
|
|
Soft drinks |
|
169.8 |
|
162.3 |
Mineral water |
|
16.4 |
|
16.8 |
Juices and other non-alcoholic |
|
15.1 |
|
14.9 |
Spirits(2) |
|
0.1 |
|
0.3 |
Total |
|
201.4 |
|
194.2 |
|
|
|
|
|
Paraguay |
|
|
|
|
Soft drinks |
|
59.9 |
|
62.2 |
Mineral water |
|
8.7 |
|
8.7 |
Juices and other non-alcoholic |
|
5.8 |
|
6.5 |
Beer |
|
|
|
0.2 |
Total |
|
74.4 |
|
77.6 |
| (1) | Unit cases refer to 192 ounces of finished beverage product (24 eight-ounce servings) or 5.68 liters. |
| (2) | In 2022 the Spirits category was included in the Juices and other non-alcoholic category; this year it is separated for better comparability. |
Note: Totals may not sum due to rounding.
|
|
Year ended December 31, |
||||||
|
|
2022 |
|
2023 |
||||
|
|
Ch$ millions |
|
% of Total |
|
Ch$ millions |
|
% of Total |
Net sales: |
|
|
|
|
|
|
|
|
Chile |
|
1,123,665 |
|
42.3 |
|
1,191,974 |
|
45.5 |
Brazil |
|
636,860 |
|
24.0 |
|
745,383 |
|
28.5 |
Argentina |
|
688,705 |
|
25.9 |
|
460,338 |
|
17.6 |
Paraguay |
|
212,339 |
|
8.0 |
|
223,841 |
|
8.5 |
Inter-country eliminations (1) |
|
(4,691) |
|
(0.2) |
|
(3,098) |
|
(0.1) |
Total net sales |
|
2,656,878 |
|
100.0 |
|
2,618,437 |
|
100.0 |
| (1) | Eliminations represent intercompany sales. |
Note: Totals may not sum due to rounding.
60
The following tables set forth our results of operations for the years ended December 31, 2022 and 2023.
|
|
Year ended December 31, |
||||||
|
|
2022 |
|
2023 |
||||
|
|
|
|
% of net |
|
|
|
% of net |
|
|
Ch$ millions |
|
sales |
|
Ch$ millions |
|
sales |
Net sales |
|
2,656,878 |
|
100.0 |
|
2,618,437 |
|
100.0 |
Cost of sales |
|
(1,628,702) |
|
(61.3) |
|
(1,601,997) |
|
(61.2) |
Gross profit |
|
1,028,177 |
|
38.7 |
|
1,016,440 |
|
38.8 |
Distribution and administrative expenses |
|
(683,032) |
|
(25.7) |
|
(659,103) |
|
(25.2) |
Other (expense) income, net (1) |
|
(112,341) |
|
(4.2) |
|
(96,831) |
|
(3.7) |
Income taxes |
|
(104,345) |
|
(3.9) |
|
(85,994) |
|
(3.3) |
Net income |
|
128,459 |
|
4.8 |
|
174,511 |
|
6.7 |
| (1) | Includes other income (expenses), financial income (expenses), share in profit of investees accounted for under the equity method, foreign exchange gains (losses), other (losses) gains and gains (losses) from indexed financial assets and liabilities. |
|
|
Chile |
|
Brazil |
|
Argentina |
|
Paraguay |
|
Eliminations |
|
Total (1) |
||||||||||||
Millons Ch$ |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
1,123,665 |
|
1,191,974 |
|
636,860 |
|
745,383 |
|
688,705 |
|
460,338 |
|
212,339 |
|
223,841 |
|
(4,691) |
|
(3,098) |
|
2,656,878 |
|
2,618,437 |
Cost of sales |
|
(743,227) |
|
(785,164) |
|
(403,696) |
|
(460,649) |
|
(367,880) |
|
(234,814) |
|
(118,591) |
|
(124,799) |
|
4,691 |
|
3,428 |
|
(1,628,702) |
|
(1,601,997) |
Gross profit |
|
380,439 |
|
406,810 |
|
233,164 |
|
284,734 |
|
320,825 |
|
225,524 |
|
93,748 |
|
99,042 |
|
— |
|
330 |
|
1,028,177 |
|
1,016,440 |
Distribution and administrative expenses |
|
(245,598) |
|
(267,291) |
|
(151,958) |
|
(176,029) |
|
(234,326) |
|
(162,564) |
|
(44,040) |
|
(44,320) |
|
— |
|
|
|
(675,922) |
|
(650,203) |
Corporate expenses |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7,110) |
|
(8,900) |
| (1) | Totals may not sum due to rounding. |
Net Sales
Our sales volume was 882.6 million unit cases during the year ended December 31, 2023, a 1.0% increase compared to 873.6 million unit cases in 2022, explained by the volume increase in our operations in Brazil and Paraguay, which was partially offset by the volume decrease in the Argentine and Chilean operations. Volume for soft drinks, waters and beer and spirits increased 0.5%, 6.2% and 0.7%, respectively, while volume for juices/other non-alcoholic beverages decreased 0.7%, in each case during the year ended December 31, 2023 compared to 2022. The decrease of sales volume of juices/other non-alcoholic beverages is mainly due to the reduction of the volume in the Chilean operation, which was partially offset by the growth of the volume in the Brazilian and Paraguayan operations.
Our net sales were Ch$2,618,437 million during the year ended December 31, 2023, a decrease of 1.4% compared to Ch$2,656,878 million during 2022. Our net sales decreased mainly as a result of a decrease in sales in Argentina, which was mainly explained by the negative effect of the translation of figures to the reporting currency, and to a lesser extent by the lower volume sold and the price controls applied during most of the year in this operation. Lower revenues in the Argentine operation were partially offset by higher revenues in the Brazilian, Chilean and Paraguayan operations.
Soft drinks represented 62.2% of net sales during the year ended December 31, 2023, compared to 64.0% during 2022.
Chile
Our sales volume in Chile was 309.9 million unit cases during the year ended December 31, 2023, a 3.1% decrease compared to 319.8 million unit cases during 2022. Volume for soft drinks, juices/other non-alcoholic beverages and beer and spirits in Chile decreased 3.2%, 9.4% and 2.9% respectively, while volume for waters increased 3.0% in each case during the year ended December 31, 2023, compared to 2022.
Our average market share for soft drinks in Chile during the year ended December 31, 2023, according to A.C. Nielsen Company, was 64.7% (in terms of volume), compared to 64.4% for 2022, and 67.7% in terms of average sales, compared to 67.4% for 2022.
Our net sales in Chile were Ch$1,191,974 million during the year ended December 31, 2023, a 6.1% increase compared to Ch$1,123,665 million during 2022, which is explained by a higher average price in the period, due to the price increases performed, partially offset by the aforementioned decrease in volume.
61
Our net sales of soft drinks in Chile were Ch$575,674 million during the year ended December 31, 2023, a 6.7% increase when compared to Ch$539,334 million in 2022, as a result of higher revenues per unit case, partially offset by the lower volume sold. Our net sales of water and juices/other non-alcoholic beverages in Chile were Ch$324,885 million during the year ended December 31, 2023, a 3.8% increase compared to Ch$313,074 million during 2022, primarily as a result of higher revenues per unit case, partially offset by the lower volume sold. Our net sales of beer and spirits in Chile were Ch$291,415 million during the year ended December 31, 2023, a 7.4% increase compared to Ch$271,257 million during 2022, mainly as a result of higher revenues per unit case, partially offset by the lower volume sold.
Brazil
Our sales volume in Brazil was 300.9 million unit cases during the year ended December 31, 2023, an 8.2% increase compared to 278.0 million unit cases during 2022. Volume for soft drinks, waters, juices/other non-alcoholic beverages and beer and spirits in Brazil increased 6.0%, 20.9%, 13.8% and 23.6%, respectively, in each case during the year ended December 31, 2023 compared to 2022.
Our average market share for soft drinks in Brazil, during the year ended December 31, 2023, according to A.C. Nielsen Company, was 62.8% (in terms of volume), compared to 62.3%1 for 2022, and 69.6% in terms of average sales, compared to 69.4%1 for 2022.
Our net sales in Brazil were Ch$745,383 million during the year ended December 31, 2023, a 17.0% increase compared to Ch$636,860 million during 2022.
Our net sales of soft drinks in Brazil were Ch$535,018 million during the year ended December 31, 2023, a 13.3% increase compared to Ch$472,404 million during 2022. In local currency, net sales of soft drinks increased 13.6%, primarily as a result of higher revenues per unit case and by the volume increase. Our net sales of water and juices/other non-alcoholic beverages in Brazil were Ch$167,900 million during the year ended December 31, 2023, a 26.1% increase compared to Ch$133,138 million during 2022. In local currency, net sales of water and juices/other non-alcoholic beverages increased 26.5%, primarily as a result of the volume increase and by higher revenues per unit case. Our net sales of beer and spirits in Brazil were Ch$42,464 million during the year ended December 31, 2023, a 35.6% increase compared to Ch$31,318 million during 2022. In local currency, net sales of beer and spirits increased 35.2%, mainly as a result of the volume increase and by higher revenues per unit case.
Argentina
Our sales volume in Argentina was 194.2 million unit cases during the year ended December 31, 2023, a 3.5% decrease compared to 201.4 million unit cases during 2022. Volume for soft drinks and juices/other non-alcoholic beverages in Argentina decreased 4.4% and 1.3%, respectively, while volume for waters and other alcoholic beverages increased 2.2% and 304.0%, respectively, in each case during the year ended December 31, 2023 compared to 2022.
Our average market share for soft drinks in Argentina during the year ended December 31, 2023, according to A.C. Nielsen Company, was 59.9% (in terms of volume), compared to 59.2% for 2022, and 70.3% in terms of average sales, compared to 69.8% for 2022.
Our net sales in Argentina were Ch$460,338 million during the year ended December 31, 2023, a 33.2% decrease compared to Ch$688,705 million during 2022. In local currency, net sales in Argentina decreased 4.0% in real terms, explained mainly by the decrease in volume.
Our net sales of soft drinks in Argentina were Ch$344,434 million during the year ended December 31, 2023, a 34.3% decrease compared to Ch$523,908 million during 2022. In local currency, net sales of soft drinks decreased 5.5% in real terms, as a result of the decrease in sales volume and by a lower average revenue per unit case sold. Our net sales of juices/other non-alcoholic beverages, waters and beer/spirits in Argentina were Ch$101,536 million during the year ended December 31, 2023, a 27.5% decrease compared to Ch$140,095 million during 2022. In local currency, net sales of juices/other non-alcoholic beverages, water and beer/spirits increased 11.2% in real terms, mainly due to higher revenues per unit case, and to lesser extent to the increase in sales volume.
1 In Brazil during 2023 A.C. Nielsen modified the calculation methodology with a change in the channels in which the information is collected, so the figures for 2021 and 2022 in Brazil were recalculated for comparability purposes..
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Paraguay
Our sales volume in Paraguay was 77.6 million unit cases during the year ended December 31, 2023, a 4.3% increase compared to 74.4 million unit cases during 2022. Volume for soft drinks, water and juices/other non-alcoholic beverages in Paraguay increased 3.8%, 0.4% and 12.3%, respectively, in each case during the year ended December 31, 2023, compared to 2022. In 2023, we began commercializing and distributing alcoholic beverages, and volume sold during 2023 was 0.2 million unit cases.
Our average market share for soft drinks in Paraguay during the year ended December 31, 2023, according to A.C. Nielsen Company, was 75.1% in terms of volume, compared to 75.3% for 2022, and 80.7% in terms of average sales, compared to 80.9% for 2022 according to the same source.
Our net sales in Paraguay were Ch$223,841 million during the year ended December 31, 2023, a 5.4% increase compared to Ch$212,339 million during 2022, mainly as a result of the volume increase.
Our net sales of soft drinks in Paraguay were Ch$173,464 million during the year ended December 31, 2023, a 4.2% increase compared to Ch$166,489 million during 2022. In local currency, our net sales of soft drinks increased 12.3%, due to higher revenues per unit case and by the volume increase. Our net sales of juices/other non-alcoholic beverages, waters and beer/spirits in Paraguay were Ch$50,376 million during the year ended December 31, 2023, a 9.9% increase compared to Ch$45,850 million during 2022. In local currency, net sales of juices/other non-alcoholic beverages, water and beer/spirits increased by 18.2%, primarily as a result of a higher average revenue per unit case sold and the increase in sales volume.
Cost of Sales
Our cost of sales was Ch$1,601,997 million during the year ended December 31, 2023, a 1.6% decrease, compared to Ch$1,628,702 million during 2022. This decrease is mainly explained by (i) the effect of translating figures from the local currencies of Argentina and Paraguay to the reporting currency, (ii) a lower cost of Pet resin in the four countries where we operate, and (iii) a lower cost of concentrate in Argentina. This was partially offset by (i) the higher cost of concentrate due to price increases in Chile and Paraguay, (ii) the higher volume sold in Brazil and Paraguay, (iii) the shift in the mix towards higher unit cost products in Brazil, Chile and Paraguay, and (iv) a higher cost of sugar in all four operations. The cost of sales per unit case decreased 2.6% in the same period. Our cost of sales represented 61.2% of net sales for the year ended December 31, 2023, compared to 61.3% for 2022.
Chile
Our cost of sales in Chile was Ch$785,164 million during the year ended December 31, 2023, a 5.6% increase compared to Ch$743,227 million during 2022. The increase in the cost of sales was mainly due to (i) a shift in the mix towards higher unit cost products, and (ii) a higher cost of concentrate due to the implementation of price increases. This was partially offset by a lower cost of raw materials, especially Pet resin. The cost of sales per unit case increased 9.0% in the same period. Our cost of sales in Chile represented 65.9% of net sales in Chile for the year ended December 31, 2023, compared to 66.1% for 2022.
Brazil
Our cost of sales in Brazil was Ch$460,649 million during the year ended December 31, 2023, a 14.1% increase compared to Ch$403,696 million during 2022. The cost of sales per unit case increased 5.4% in the same period. In local currency, total cost of sales increased 14.5%, mainly due to (i) the higher sales volume, (ii) the shift in the mix towards higher unit cost products, (iii) a higher sugar cost, and (iv) a higher labor cost. This was partially offset by a lower cost of raw materials, especially Pet resin. Our cost of sales in Brazil represented 61.8% of net sales in Brazil for the year ended December 31, 2023, compared to 63.4% for 2022.
Argentina
Our cost of sales in Argentina was Ch$234,814 million during the year ended December 31, 2023, a 36.2% decrease compared to Ch$367,880 million during 2022. The cost of sales per unit case decreased 33.8% in the same period. In local currency (in real terms, based on currency rates as of December 2023) cost of sales decreased 8.3% mainly due to (i) the reduction in volume sold, (ii) a lower cost of concentrate, and (iii) a lower cost of Pet resin. This was partially offset by higher labor costs. Our cost of sales in Argentina represented 51.0% of net sales in Argentina for the year ended December 31, 2023, compared to 53.4% for 2022.
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Paraguay
Our cost of sales in Paraguay was Ch$124,799 million during the year ended December 31, 2023, a 5.2% increase compared to Ch$118,591 million during 2022. Cost of sales per unit case increased 0.9% during the same period. In local currency, cost of sales increased 13.5%, mainly explained by (i) the higher sales volume, (ii) a higher cost of concentrate due to price increases, (iii) a change in the mix towards higher unit cost products, and (iv) a higher cost of sweeteners. This was partially offset by the lower cost of Pet resin. Our cost of sales in Paraguay represented 55.8% of net sales in Paraguay for the year ended December 31, 2023, same figure as 2022.
Gross Profit
Due to the factors described above, our gross profit was Ch$1,016,440 million during the year ended December 31, 2023, a 1.1% decrease compared to Ch$1,028,177 million during 2022. Our gross profit represented 38.8% of our net sales during the year ended December 31, 2023, compared to 38.7% of our net sales in 2022.
Distribution, administrative and sales expenses
We had distribution, administrative and sales expenses of Ch$659,103 million during the year ended December 31, 2023, a 3.5% decrease compared to Ch$683,032 million during 2022. This decrease is explained mainly by (i) the effect of translating figures from the local currencies of Argentina and Paraguay to the reporting currency, and (ii) lower freight expense in Argentina. This was partially offset by (i) higher distribution expenses in Brazil, Chile and Paraguay, (ii) higher labor costs, and (iii) higher marketing expenses in Argentina and Chile. Our distribution, administrative and sales expenses represented 25.2% of our net sales during the year ended December 31, 2023, compared to 25.7% for 2022.
Chile
In Chile, our distribution, administrative and sales expenses were Ch$267,291 million during the year ended December 31, 2023, an 8.8% increase compared to Ch$245,598 million during 2022. This was mainly due to (i) a higher cost of labor and services provided by third parties, (ii) higher distribution and transportation expenses, as a consequence of higher tariffs, and (iii) higher marketing expenses. Our distribution, administrative and sales expenses in Chile represented 22.4% of our net sales in Chile during the year ended December 31, 2023, compared to 21.9% for 2022.
Brazil
In Brazil, our distribution, administrative and sales expenses were Ch$176,029 million during the year ended December 31, 2023, a 15.8% increase compared to Ch$151,958 million during 2022. In local currency, they increased 16.3%, mainly explained by (i) higher labor costs, (ii) higher distribution and transportation expenses, and (iii) higher depreciation charges. Our distribution, administrative and sales expenses in Brazil represented 23.6% of our net sales in Brazil during the year ended December 31, 2023, compared to 23.9% for 2022.
Argentina
In Argentina, our distribution, administrative and sales expenses were Ch$162,564 million during the year ended December 31, 2023, a 30.6% decrease compared to Ch$234,326 million during 2022. In local currency (in real terms, based on currency rates as of December 2023), the distribution, administrative and sales expenses decreased 0.3%, which is mainly explained by a lower distribution cost due to lower sales volume. This was partially offset by (i) higher labor expenses, and (ii) higher advertising expenses. Our distribution, administrative and sales expenses in Argentina represented 35.3% of our net sales in Argentina during the year ended December 31, 2023, compared to 34.0% for 2022.
Paraguay
In Paraguay, our distribution, administrative and sales expenses were Ch$44,320 million during the year ended December 31, 2023, a 0.6% increase, compared to Ch$44,040 million during 2022. The distribution, administrative and sales expenses in local currency in Paraguay increased 9.1%, which is mainly explained by (i) higher distribution expenses, mainly due to higher tariffs, and (ii) higher labor and services provided by third parties. Our distribution, administrative and sales expenses in Paraguay represented 19.8% of our net sales in Paraguay during the year ended December 31, 2023, compared to 20.7% for 2022.
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Other Income (Expense), Net
The following table sets forth our other income (expense), net for the year ended December 31, 2022 and 2023:
|
|
Year Ended December 31, |
||
|
|
2022 |
|
2023 |
|
|
(in millions of Ch$) |
||
|
|
|
|
|
Other income (expense) |
|
(23,373) |
|
(41,040) |
Financial income |
|
39,722 |
|
31,396 |
Financial expenses |
|
(59,548) |
|
(65,288) |
Share of profit of investments in associates and joint ventures accounted for using the equity method |
|
1,409 |
|
2,716 |
Foreign exchange differences |
|
(11,608) |
|
(17,216) |
Income (loss) by indexation units |
|
(58,944) |
|
(7,399) |
Other income (expense), net |
|
(112,341) |
|
(96,831) |
We had other expenses, net, of Ch$96,831 million during the year ended December 31, 2023, a 13.8% decrease compared to Ch$112,341 million during 2022. The decrease in other expenses, net, is mainly explained by a decrease in losses from financial debt indexed to inflation in Chile, because of lower inflation compared to the previous period. The above is offset by an increase in Other expenses due to losses of Ch$25,530 million recorded due to the assignment of a loan owned by Embotelladora Andina S.A. to a financial institution with a discount. The receivable of Embotelladora Andina was originally generated as a result of dividends from subsidiaries declared in Argentinian pesos. In addition, we present a loss due to write-off of fixed assets in Chile and Paraguay. We also had a decrease in financial income mainly as a result of lower financial income from investments held in portfolio management.
Income Taxes
We had income taxes of Ch$85,994 million during the year ended December 31, 2023, a 17.6% decrease compared to Ch$104,345 million during 2022. This decrease is mainly explained by lower taxable profits from monetary correction due to the decrease in the inflation rate in Chile.
Net Income
Due to the factors described above, we had a net income of Ch$174,511 million during the year ended December 31, 2023, a 35.8% increase compared to Ch$128,459 million during 2022. Our net income represented 6.7% of our net sales during the year ended December 31, 2023, compared to 4.8% for 2022.
Summary of Results of Operations for the Years ended December 31, 2021 and 2022
For information regarding the results of operations for the years ended December 31, 2021 and December 31, 2022, See “Item 5. Operating and Financial Review and Prospects –A. Operating Results 2022 –Summary of Results of Operations for the years ended December 31, 2021 and 2022” in our Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022.
Basis of Presentation
The aforementioned discussion should be read in conjunction with and is qualified in its entirety by reference to the consolidated financial statements, including the notes thereto.
These consolidated financial statements have been prepared in accordance with IFRS issued by the IASB.
These financial statements reflect the consolidated financial position of Embotelladora Andina S.A. and its subsidiaries as of December 31, 2023 and 2022 as well as the operating results, changes in shareholders’ equity and cash flows for the years ended December 31, 2023, 2022 and 2021, all of which were approved by the board of directors on March 26, 2024.
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Our consolidated financial results include the results of our subsidiaries located in Chile, Brazil, Argentina and Paraguay. Our subsidiaries outside Chile prepare their financial statements in accordance with IFRS and to comply with local regulations in accordance with generally accepted accounting principles of the country in which they operate. The consolidated financial statements reflect the results of the subsidiaries outside of Chile, converted to Chilean pesos (functional and reporting currency of the parent company) and are presented in accordance with IFRS. The IFRS require that balances of subsidiaries be converted from their functional currency to the presentation currency (Chilean peso). The conversion for subsidiaries operating in non-hyperinflationary environments (Brazil and Paraguay) is performed by converting the assets and liabilities of subsidiaries at year-end exchange rates, and income and expense accounts must be converted at monthly average exchange rates of the month in which they are recognized. In the case of subsidiaries operating in hyperinflationary environments (Argentina), non-monetary assets and liabilities and income statements are restated by the inflation rate of the hyperinflationary economy, bringing its effects to the income statement. These restated balances are converted from the functional currency to the presentation currency at the closing exchange rate of each year.
Critical Accounting Estimates
Discussion of critical accounting estimates
In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of our results of operations and financial position in the preparation of financial statements in conformity with IFRS. We cannot assure you that actual results will not differ from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain. For a more detailed discussion of accounting policies significant to our operations, please see note 2.22 to our Consolidated Financial Statements.
| B. | LIQUIDITY AND CAPITAL RESOURCES |
Capital Resources, Treasury and Funding Policies
The products we sell are usually paid for in cash or short-term credit, and therefore our main source of financing comes from the cash flow of our operations. This cash flow has been generally sufficient to cover the investments necessary for the normal course of our business, as well as the distribution of dividends approved at our general shareholders’ meeting. Should additional funding be required for potential future investments in geographic expansion or other needs, our main sources of financing are expected to be: (i) debt offerings in the Chilean and international capital markets (ii) borrowings from commercial banks, both internationally and in the local markets where we have operations; and; (iii) public equity offerings.
Certain restrictions could exist to transfer funds from our operating subsidiaries to our parent company, however during 2023, we received dividends from subsidiaries in Argentina, Brazil and Paraguay. In July 2021, the Argentine government reinstated exchange restrictions. Aside from these restrictions that we will likely continue to face during 2024, we cannot assure you that we will not face restrictions in the future regarding the distribution of dividends from any other foreign subsidiaries.
Our management believes that we have access to financial resources to maintain our current operations and provide for our current capital expenditure and working capital requirements, scheduled debt payments, interest and income tax payments and dividend payments to shareholders.
The amount and frequency of future dividends to our shareholders will be determined at the general shareholders’ meeting upon the proposal of our board of directors in light of our earnings and financial condition at such time, and we cannot assure you that dividends will be declared in the future. However, it should be noted that Chilean Corporate Law requires us to distribute at least 30% of any profits generated each year.
Our board of directors has been empowered by our shareholders to define our financing and investment policies. Our bylaws do not define a strict financing structure, nor do they limit the types of investments we may make. Traditionally, we have preferred to use our own resources to finance our investments.
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Our financing policy contemplates that each subsidiary finances its own operations. From this perspective, each subsidiary’s management focuses on cash generation and should establish clear targets for operating income, capital expenditures and levels of working capital. These targets are reviewed on a monthly basis to ensure that their objectives are met. Should additional financing needs arise, either as a result of a cash deficit or to take advantage of market opportunities, our general policy is to prefer local financing to allow for natural hedging. If local financing conditions are not acceptable, because of costs or other constraints, Andina will provide financing, or our subsidiary could finance itself in a currency different than the local one and will use derivative instruments to hedge against the operation’s functional currency.
Our cash management policy contemplates that cash surpluses be invested in low risk securities that are mainly short-term and easily liquidated assets until such time that this surplus should be needed.
Derivative instruments are utilized only for business purposes, and not for speculative purposes. Pursuant to our currency hedge policy, forward currency contracts are used in some operations to cover the risk of local currency devaluation relative to the U.S. dollar in an amount not greater than the budgeted purchases of U.S. dollar-denominated raw materials. Depending on market conditions, instead of forward currency contracts, from time to time we prefer to utilize our cash surplus to purchase raw materials in advance to obtain better prices and a fixed exchange rate.
The Company believes its balances of cash and cash equivalents, which totaled Ch$303,684 million as of December 31, 2023, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements over the next twelve months and beyond.
The Company’s material cash requirements include the following contractual and other obligations.
Debt
As of December 31, 2023, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of Ch$906,223 million (collectively the “Notes”). Future interest payments associated with the Notes total Ch$484,582 million, with Ch$48,971 million payable within 12 months.
Leases
The Company has lease arrangements for certain equipment and facilities, including machinery and production lines, building and installations and technology equipment. As of December 31, 2023, the Company had fixed lease payment obligations of Ch$34,737 million, with Ch$9,926 million payable within 12 months.
Manufacturing Purchase Obligations
The Company has agreements with its collaborating entities for its operation, which are mainly related to contracts entered into to supply products and/or support services in purchase of supplies for production like sugar, beverage cans and payments to obtain rights over mineral spring waters, among others. As of December 31, 2023, the Company had manufacturing purchase obligations of Ch$158,285 million, with Ch$99,771 million payable within 12 months.
Other Purchase Obligations
The Company’s other purchase obligations primarily consist of contracts entered into to supply information technology services, company commitments with its franchisor to make investments or expenses related to the development of the franchise, staff support services, security services, maintenance services for fixed assets. As of December 31, 2023, the Company had other purchase obligations of Ch$31,540 million, with Ch$21,822 million payable within 12 months.
Cash Flows from Operating Activities 2023 vs. Cash Flows from Operating Activities 2022 and 2021
Cash flows from operating activities during 2023 amounted to Ch$366,830 million compared to Ch$397,452 million in 2022. The decrease in cash flow generation was mainly due higher payment to suppliers and employees.
For information regarding the cash flows from operating activities 2022 vs 2021, see “Item 5.Operating and Financial Review and Prospects –B. Liquidity and Capital Resources –Capital Resources, Treasury and Funding Policies,” in our Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022.
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Cash Flows from Investing Activities 2023 vs. Cash Flows from Investing Activities 2022 and 2021
Cash flows for investment activities (includes purchase and sale of property, plant and equipment; investments in associated companies; and financial investments) generated a negative cash flow of Ch$158,289 million in 2023 compared to a negative cash flow of Ch$85,168 million during 2022. The variation of Ch$73,120 million with respect to the previous year is mainly explained by the fact that in the current year net investments for an amount of Ch$32,000 million have been redeemed while in 2022 period investments for an amount of Ch$101,191 million have been redeemed, decreasing cash and cash equivalents. This is partially offset by an increase in Capex.
For information regarding the cash flows from investing activities 2022 vs 2021, see “Item 5.Operating and Financial Review and Prospects –B. Liquidity and Capital Resources –Capital Resources, Treasury and Funding Policies,” in our Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022.
Cash Flows from Financing Activities 2023 vs. Cash Flows from Financing Activities 2022 and 2021
Financing activities generated a negative cash flow of Ch$187,127 million in 2023, with a positive variation of Ch$99,837 million with respect to the previous year, which is mainly explained by a lower payment of dividends.
As of December 31, 2023, 20 short-term credit lines are available for an amount equivalent to Ch$115,016 million, of which all of them are unused lines of credit that remain available. In Argentina, we had the equivalent of Ch$30,173 million in credit available from nine lines of credit, which have not been used. In Brazil, we had the equivalent of Ch$64,949 million in credit available from nine lines of credit, which remained unused as of December 31, 2023. In Chile, we had the equivalent of Ch$7,000 million in credit available from one line of credit, which has not been used. In Paraguay, we had the equivalent of Ch$12,894 million in credit available from one line of credit, which have not been used.
For information regarding the cash flows from financing activities 2022 vs 2021, see “Item 5. Operating and Financial Review and Prospects –B. Liquidity and Capital Resources –Capital Resources, Treasury and Funding Policies,” in our Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022.
Liabilities
As of December 31, 2023, our total liabilities, excluding non-controlling interest, were Ch$2,000,535 million, representing a 6.0% decrease compared to December 31, 2022.
Current liabilities decreased by Ch$256,374 million, 27.0% compared to December 2022, mainly due to the decrease in Other current financial liabilities (-Ch$314,305 million) mainly explained by the payment on maturity of the 144A Bond. This decrease was partially offset by the increase in Trade and other current accounts payable (Ch$44,110 million), mainly explained by the reclassification of the account payable maintained with the former shareholders of Companhia de Bebidas Ipiranga related to a tax credit, from the caption "Other non-current non-financial liabilities", considering that it is a debt that will be paid in the short term.
Non-current liabilities increased by Ch$129,611 million, 11.0% compared to December 2022, mainly due to the increase in Other non-current financial liabilities (Ch$139,524 million), which is mainly explained by the placement of the Swiss Bond, which is partially offset by the decrease in the mark to market liability of the cross currency swap of the bond issued in the United States in 2020 (Senior Notes due 2050).
As of December 31, 2023, our bond obligation had a weighted average interest rate of 3.57% in UF, 3.95% in US$ and 2.71% in CHF, while our bank obligation had a weighted average interest rate of 4.64% for the debts in Chilean pesos.
The following table presents future expirations for additional long-term liabilities. These expirations have been estimated based on accounting estimates because the liabilities do not have specific dates of future payment, as allowance for severance indemnities, contingencies, and liabilities are included.
|
|
Maturity Years |
||||||
|
|
Total |
|
1-3 Years |
|
3-5 Years |
|
More than 5 Years |
|
|
(Millions Ch$2023) |
||||||
Provisions |
|
54,802 |
|
1,314 |
|
490 |
|
52,998 |
Other long-term liabilities |
|
18,474 |
|
455 |
|
573 |
|
17,446 |
Total long-term liabilities |
|
73,276 |
|
1,769 |
|
1,063 |
|
70,444 |
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Summary of Significant Debt Instruments
As of December 31, 2023, the Company is in compliance with all its debt covenants which are summarized below:
Series B Local Bonds (BANDI-B1; BANDI-B2)
During 2001, we issued in Chile Series B bonds. This issuance was structured into two series, one of which matured in 2008. As of December 31, 2023, Series B is the outstanding series with sub-series B1 and B2. During 2001, UF 3.7 million in bonds were issued with final maturity in 2026, bearing an annual interest rate of 6.5%. The Series B Local Bonds are subject to the following restrictive covenants:
| ● | In October 2020, the covenant of Consolidated Financial Liabilities / Consolidated Equity was amended as the following: Maintain an indebtedness level where Net Consolidated Financial Liabilities shall not exceed Consolidated Equity by 1.20 times. For these purposes Net Consolidated Financial Liabilities will be the result of: (i) Other Current Financial Liabilities, plus (ii) Other Non-Current Financial Liabilities, less (iii) the sum of Cash and Cash Equivalents; plus, Other Current Financial Assets; plus Other Non-Current Financial Assets (to the extent that they correspond to the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities). |
| ● | Maintain and not lose, sell, assign, or transfer to a third party the geographical area today called the “Metropolitan Region”, as franchised territory in Chile by The Coca-Cola Company, for the development, production, sale and distribution of products and brands of such licensor, in accordance with the respective bottling agreement or license, renewable from time to time. |
| ● | Not lose, sell, assign, or transfer to a third party any other territory of Argentina or Brazil, which to date is franchised to the Company by The Coca-Cola Company for the manufacture, production, sale and distribution of products and brands of such licensor; as long as these territories account for more than 40% of the Company’s Adjusted Consolidated Operating Flow. |
| ● | Maintain consolidated assets free of any pledge, mortgage or other lien by an amount, less than or equal to 1.3 times the Company’s unsecured consolidated current liabilities. |
Unsecured consolidated current liabilities are the Company’s total liabilities, obligations and debts that are not secured with real guarantees on goods and assets of the latter, made voluntarily or by agreement by the Company less the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities accounted for under Other Current Financial Assets and Other Non-current Financial Assets of the Company’s Consolidated Statement of Financial Position.
Consolidated Assets are assets free of any pledge, mortgage or other lien, as well as those assets that have real liens, mortgage or encumbrances that operate only by law, less the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities accounted for under Other Current Financial Assets and Other Non-current Financial Assets of the Company’s Consolidated Statement of Financial Position.
In July 2020, derivatives have been contracted (Cross Currency Swaps) that cover 100% of UF denominated financial obligations, redenominating them to Chilean pesos.
Series C Local Bonds (BEKOP-C)
As a consequence of our merger with Polar, we became an obligor under the following outstanding bonds issued by Polar in Chile in 2010.
| ● | Series C bonds due 2031, bearing interest at a fixed annual rate equal to 4.00%. |
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This series is subject to the following restrictions:
| ● | Maintain a level of Net Financial Indebtedness within its quarterly financial statements that may not exceed 1.5 times, measured by figures included in the Company Consolidated Statement of Financial Position. For these purposes, net financial indebtedness level is defined as the ratio of net financial debt to total equity of the Company (equity attributable to the owners of the controllers plus non-controlling interests). Net financial debt means the difference between the Company financial debt and cash. |
| ● | Maintain consolidated assets free of any pledge, mortgage or other encumbrances for an amount at least equal to 1.3 times of the Company unsecured consolidated liabilities. |
Unencumbered Assets are (a) assets that meet the following conditions: (i) they are the property of the Company, (ii) they are classified under Total Assets in the Company’s Financial Statement and, (iii) they are free of any pledge, mortgage or other levies constituted in favor of third parties, less (b) Other Current Financial Assets and Other Non-Current Financial Assets included in the Company’s Financial Statements (to the extent they correspond to the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities).
Unsecured Total Liabilities are (a) liabilities included under Total Current Liabilities and Total Non-Current Liabilities on the Company Financial Statements which do not benefit from preferences or privileges, less (b) Other Current Financial Assets and Other Non-Current Financial Assets of the Company’s Financial Statements (to the extent they correspond to the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities).
| ● | Not invest in instruments issued by related parties or carry out operations with related parties other than those related to the general purpose of the entities, in conditions that are less favorable to those of the Company in relation to those prevailing in the market. |
| ● | Maintain a Net Financial Coverage ratio greater than 3.0 times. Net financial coverage is the ratio between the Company’s EBITDA for the past 12 months and the Company’s Net Financial Expenses. Net financial Expenses is defined as the difference between the absolute value of the interest expenses associated with the issuer’s financial debt recorded in the “Financial Costs” account; and interest income associated with the issuer’s cash, recorded in the Financial Income account, for the past 12 months. However, this restriction will be considered breached when the mentioned net financial coverage ratio is lower than the ratio previously indicated during two consecutive quarters. |
In July 2020, derivatives have been contracted (Cross Currency Swaps) that cover 100% of UF denominated financial obligations, redenominating them to Chilean pesos.
Series D and E Local Bonds (BANDI-D; BANDI-E)
During 2013 and 2014, Andina placed local bonds in the Chilean market. The issuance was structured into three series, one of which matured in 2020.
| ● | UF 4.0 million of Series D Bonds due 2034 were issued in August 2013, bearing an annual interest rate of 3.8%; |
| ● | UF 3.0 million of Series E Bonds due 2035 were issued in March 2014, bearing an annual interest rate of 3.75%. |
The Series D and E local bonds are subject to the following restrictions:
| ● | Maintain an indebtedness level where Net Consolidated Financial Liabilities shall not exceed Consolidated Equity by 1.20 times. |
For these purposes Net Consolidated Financial Liabilities will be the result of: (i) Other Current Financial Liabilities, plus (ii) Other Non-Current Financial Liabilities, less (iii) the sum of Cash and Cash Equivalents; plus, Other Current Financial Assets; plus, Other Non-Current Financial Assets (to the extent that they correspond to the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities).
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Consolidated Equity is total equity including non-controlling interests.
| ● | Maintain Consolidated Assets free of any pledge, mortgage or other lien by an amount, at least equal to 1.3 times of the Issuer’s unsecured consolidated current liabilities. |
Unsecured Consolidated Current Liabilities are the Company’s total liabilities, obligations and debts that are not secured with real guarantees on goods and assets of the latter, made voluntarily or by agreement by the Company, less the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities accounted for under Other Current Financial Assets and Other Non-current Financial Assets of the Company’s Consolidated Statement of Financial Position.
For purposes of determining Consolidated Assets these will consider assets free of any pledge, mortgage or other lien, as well as those assets that have real liens, mortgage or encumbrances that operate only by law. Therefore, Consolidated Assets free of any lien, mortgage or other encumbrance are regarded as those assets for which no real lien, mortgage or other encumbrance has been made voluntarily or by agreement by the Company, less the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities accounted for under Other Current Financial Assets and Other Non-current Financial Assets of the Company’s Consolidated Statement of Financial Position.
| ● | Maintain and not lose, sell, assign, or transfer to a third party the Metropolitan Region, as franchised territory in Chile by The Coca-Cola Company for the production, sale and distribution of products and brands of the licensor. Losing said territory means the non-renewal, cancellation, early termination or annulment of the license agreement granted by The Coca-Cola Company for the Metropolitan Region. |
| ● | Not lose, sell, assign, or transfer to a third party any other territory of Argentina or Brazil, which as of the issuance date of the Series D and E local bonds were franchised to the Company by The Coca-Cola Company for the manufacture, production, sale and distribution of products and brands of The Coca-Cola Company; as long as these territories account for more than 40% of the Company’s Adjusted Consolidated Operating Flow of the audited fiscal year immediately prior to the moment when such loss, sale, assignment or transfer occurs. For these purposes Adjusted Consolidated Operating Flow is the addition of the following accounting items of the Issuer’s Consolidated Statement of Financial Position: (i) Gross Income, including revenue and cost of sales, less (ii) Distribution Costs, less (iii) Administrative Expenses, plus (iv) Participation in Earnings (Losses) of Associates and Joint Ventures accounted for using the Equity Method, plus (v) Depreciation, plus (vi) Amortization of Intangibles. |
In July 2020, derivatives have been contracted (Cross Currency Swaps) that cover 100% of UF denominated financial obligations, redenominating them to Chilean pesos.
Series F Local Bonds (BANDI-F)
During 2018, Andina undertook the partial repurchase (US$210 million) of the Senior Notes due 2023, which was refinanced with the placement of the Series F Local Bonds in the Chilean local market. These bonds were issued in October 2018, in the amount of UF 5.7 million, accruing an annual interest rate of 2.8% and with a maturity of 2039.
The Series F local bonds are subject to the following restrictions:
| ● | Maintain an indebtedness level where Net Consolidated Financial Liabilities shall not exceed Consolidated Equity by 1.20 times. |
For these purposes Net Consolidated Financial Liabilities will be the result of: (i) Other Current Financial Liabilities, plus (ii) Other Non-Current Financial Liabilities, less (iii) the sum of Cash and Cash Equivalents; plus, Other Current Financial Assets; plus, Other Non-Current Financial Assets (to the extent that they correspond to the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities).
Consolidated Equity is total equity including non-controlling interests.
| ● | Maintain Consolidated Assets free of any pledge, mortgage or other lien by an amount, at least equal to 1.3 times of the Issuer’s unsecured consolidated current liabilities. |
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Unsecured Consolidated Current Liabilities are the Company’s total liabilities, obligations and debts that are not secured with real guarantees on goods and assets of the latter, made voluntarily or by agreement by the Company, less the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities accounted for under Other Current Financial Assets and Other Non-current Financial Assets of the Company’s Consolidated Statement of Financial Position.
For purposes of determining Consolidated Assets these will consider assets free of any pledge, mortgage or other lien, as well as those assets that have real liens, mortgage or encumbrances that operate only by law. Therefore, Consolidated Assets free of any lien, mortgage or other encumbrance shall be regarded as those assets for which no real lien, mortgage or other encumbrance has been made voluntarily or by agreement by the Company, less the active balances of derivative financial instruments, taken to cover exchange rate risks or interest rate risks on financial liabilities accounted for under Other Current Financial Assets and Other Non-current Financial Assets of the Company’s Consolidated Statement of Financial Position.
| ● | Maintain and not lose, sell, assign, or transfer to a third party the Metropolitan Region, as franchised territory in Chile by The Coca-Cola Company for the production, sale and distribution of products and brands of the licensor. Losing said territory means the non-renewal, cancellation, early termination or annulment of the license agreement granted by The Coca-Cola Company for the Metropolitan Region. |
| ● | Not lose, sell, assign, or transfer to a third party any other territory of Argentina or Brazil, which as of the issuance date of the Series F local bonds, is franchised to the Company by The Coca-Cola Company for the manufacture, production, sale and distribution of products and brands of The Coca-Cola Company; as long as these territories account for more than 40% of the Company’s Adjusted Consolidated Operating Flow of the audited fiscal year immediately prior to the moment when said loss, sale, assignment or transfer occurs. For these purposes Adjusted Consolidated Operating Flow is the addition of the following accounting items of the Issuer’s Consolidated Statement of Financial Position: (i) Gross Income, including revenue and cost of sales, less (ii) Distribution Costs, less (iii) Administrative Expenses, plus (iv) Participation in Earnings (Losses) of Associates and Joint Ventures accounted for using the Equity Method, plus (v) Depreciation, plus (vi) Amortization of Intangibles. |
In addition, on November 11, 2021, bondholders’ meetings were held for the series C, D, E and F bonds issued in the Chilean local market under the lines registered in the Securities Registry of the CMF under No. 641 (Series C), No. 760 (Series D and E) and No. 912 (Series F), and for the series B bonds corresponding to the fixed amount issue registered in the Securities Registry of the CMF under No. 254. As a result of the aforementioned bondholders’ meetings, the issuance contracts of the aforementioned bond issues were amended. Furthermore, the issuance contracts of the bond lines registered in the Securities Registry of the CMF under No. 911, No. 971 and No. 972 were also amended, because there were no bonds outstanding. In this respect, the modifications were made to financial indebtedness covenants that existed in the aforementioned issuance contracts, to be substituted by a new indebtedness level obligation defined as follows:
Indebtedness Level: Maintain an indebtedness level, measured and calculated quarterly, presented in the manner and within the terms determined by the Financial Market Commission, no greater than 3.5 times.
The following terms shall be construed as:
| ● | “Indebtedness Level” the ratio between (a) the average of the Consolidated Net Financial Liabilities, calculated on the last four “Consolidated Financial Statements of Financial Position” contained in the Issuer’s Consolidated Financial Statements filed by the Issuer with the Financial Market Commission as of the calculation date; and (b) the accumulated EBITDA in the twelve consecutive month period ending at the close of the last of the “Consolidated Financial Statements of Results by Function” contained in the Consolidated Financial Statements that the Issuer has filed with the Financial Market Commission as of the calculation date; |
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| ● | “Consolidated Net Financial Liabilities” means the result of the following transactions on the accounting items of the “Consolidated Statements of Financial Position” contained in the Issuer’s Consolidated Financial Statements indicated below: (i) ”Other Financial Liabilities, Current”, which include short-term obligations with banks and financial institutions, bond liabilities at face rate, issuance costs and discounts associated with the placement and other minor items that in accordance with IFRS regulations must be included in this heading; plus (ii) ”Other Non-Current Financial Liabilities”, which include long-term obligations with banks and financial institutions, bond liabilities at face rate, issuance costs and discounts associated with the placement and other minor items that according to IFRS standards should be included in this heading; less (iii) the sum of “Cash and Cash Equivalents”; plus “Other Financial Assets, Current”; plus “Other Financial Assets, Non-Current” (to the extent that they correspond to asset balances for derivative financial instruments, taken to hedge exchange rate and/or interest rate risk of financial liabilities); |
| ● | “EBITDA” means the sum of the following accounts of the “Consolidated Statements of Income by Function” contained in the Issuer’s Consolidated Financial Statements: “Revenues from Ordinary Activities”, “Cost of Sales”, “Distribution Costs”, “Administrative Expenses” and “Other Expenses, by function”, deducting the value of “Depreciation” and “Amortization for the Fiscal Year” presented in the Notes to the Issuer’s Consolidated Financial Statements. |
Senior Notes due 2023
In October 2013, we issued US$575 million of Senior Notes in the U.S. market under 144A/Reg S regulations. These notes are unsecured obligations with the whole principal amount due in 2023. The proceeds from these notes were used to finance a portion of the purchase price for our acquisition of Ipiranga and for general corporate purposes.
In October 2018, as part of the Company’s debt reprofiling, Andina undertook a partial repurchase of the Senior Notes in the amount of US$210 million (which was refinanced with the placement of Series F Local Bonds in the Chilean local market), with a total remaining outstanding amount of Senior Notes of US$365 million.
In parallel, derivatives have been contracted (cross currency swaps) to partially redenominate US$360 million dollar-denominated financial obligations to Brazilian reais.
In September 2023, these Senior Unsecured bonds matured, being refinanced by a new corporate issuance in the Swiss Market.
Senior Notes due 2050
On January 21, 2020, the Company issued a US$300 million Senior Bond in the U.S. market under 144A/Reg S regulations. These notes are unsecured obligations with the whole principal amount due in 2050, with an annual coupon rate of 3.950%. The proceeds from these notes were used to finance general corporate purposes which could include an eventual payment of existing liabilities, financing of potential acquisitions and improvement of the company's liquidity position.
At the same time, derivative contracts (cross currency swaps) have been entered into to fully redenominate financial obligations denominated in U.S. dollars to UF.
Senior Notes due 2028
In September 2023, the Company issued a 5-year corporate bond for CHF$170 million in the Swiss market under local regulations. These notes are unsecured obligations with the whole principal amount due in 2028, with an annual fixed rate of 2.7175%. The proceeds from these notes were used mainly to refinance the Company’s 2023 Senior Unsecured Bond and to finance investments in Brazil.
In parallel, derivatives have been contracted (cross currency swaps) by Rio de Janeiro Refrescos Ltda., a subsidiary of Embotelladora Andina in Brazil, to effectively redenominate CHF$170 million Swiss francs to Brazilian reais.
| C. | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES |
Given the nature of the business and the support provided by The Coca-Cola Company as franchisor to its bottlers, the Company’s research and development expenses are not meaningful. For more information on patents and licenses, see “Item 4. Information on the Company – Bottler Agreements.”
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| D. | TREND INFORMATION |
Our results will likely continue to be influenced by changes in the level of consumer demand in the countries in which we operate, resulting from governmental economic measures that are or may be implemented in the future. Additionally, the main raw materials used in the production of soft drinks, such as sugar and resin, may experience price increases in the future. Such price increases may affect our results if we are unable to pass the cost increases on to the sales price of our products due to depressed consumer demand and/or heightened competition.
Increased competition from low-price brands is another factor that could limit our ability to grow, and thus negatively affect our results.
Additionally, exchange rate fluctuations, in particular the potential devaluations relative to the U.S. dollar of local currencies in the countries in which we operate, may adversely affect our results because of the impact on the cost of U.S. dollar-denominated raw materials and the conversion of monetary assets.
E.[Reserved]
F.[Reserved]
G.SAFE HARBOR
See “Introduction - Presentation of Financial and Certain Other Information—Forward-Looking Statements.”
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ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | DIRECTORS AND SENIOR MANAGEMENT |
Pursuant to Chilean law, we are managed by a group of executive officers under the supervision of our board of directors. The Company’s operations in Chile, Brazil, Argentina and Paraguay report to the corporate headquarters in Chile.
Board of Directors
In accordance with our current bylaws, the board of directors is comprised of fourteen (14) directors. The directors may or may not be shareholders and are elected at general shareholders’ meetings for a three-year term, with re-election permitted. Cumulative voting is permitted for the election of directors.
In the event of a vacancy, the board of directors may appoint a replacement to fill the vacancy, and the entire board of directors must be elected or re-elected at the next regularly scheduled general shareholders’ meeting.
The shareholders agreement regulates the election of directors of the Company by the controlling shareholders (See “Item 7. Major Shareholders and Transactions with Related Companies”). In addition, pursuant to the terms and conditions of the deposit agreement entered between The Company and the Bank of New York dated as of December 14, 2000, (the “Deposit Agreement”), if no instructions are received by The Bank of New York, as depositary (the “Depositary”), it shall give a discretionary proxy to a person designated by the chairman of our board of directors with respect to the shares or other deposited securities that represent the ADRs.
The following table sets forth information with respect to the current directors of the Company:
|
|
|
|
Date of expiration |
|
|
Name |
|
Age(3) |
|
current term |
|
Position |
Juan Claro |
|
73 |
|
April 25, 2024 |
|
Chairman |
Gonzalo Said(1) |
|
59 |
|
April 25, 2024 |
|
Vice Chairman |
Salvador Said(1) |
|
59 |
|
April 25, 2024 |
|
Director |
José Antonio Garcés |
|
57 |
|
April 25, 2024 |
|
Director |
Eduardo Chadwick |
|
64 |
|
April 25, 2024 |
|
Director |
Roberto Mercadé |
|
55 |
|
April 25, 2024 |
|
Director |
Gonzalo Parot(2) |
|
71 |
|
April 25, 2024 |
|
Director |
Georges de Bourguignon |
|
61 |
|
April 25, 2024 |
|
Director |
Domingo Cruzat(2) |
|
67 |
|
April 25, 2024 |
|
Director |
Rodrigo Vergara |
|
61 |
|
April 25, 2024 |
|
Director |
Felipe Joannon |
|
64 |
|
April 25, 2024 |
|
Director |
Luis Felipe Coelho Duprat Avellar |
|
57 |
|
April 25, 2024 |
|
Director |
Mariano Rossi |
|
58 |
|
April 25, 2024 |
|
Director |
Carmen Román |
|
56 |
|
April 25, 2024 |
|
Director |
| (1) | Salvador Said is first cousin of Gonzalo Said. |
| (2) | Independent from controlling shareholder pursuant to Article 50 bis, paragraph 6 of the Chilean Public Company Law N° 18,046. |
| (3) | Age at December 31, 2023. |
The following are brief biographies of each of the Company’s directors:
Juan Claro González
Appointment: He has been a member of the board of directors, and also the Chairman since 2004.
Experience: He has studies of civil engineering and theoretical physics at the Pontificia Universidad Católica de Chile. He has developed an outstanding business representation activity by chairing the Sociedad de Fomento Fabril (SOFOFA), between 2001 and 2005, the Confederación de la Producción y del Comercio (CPC), between 2002 and 2005, and the Chile-China Bilateral Business Council, between 2005 and 2007. He has served on the boards of Gasco S.A. (1991-2000), CMPC S.A. (2005-2011) and Entel S.A. (2005-2011). He was the founding Chairman of Metrogas S.A. (1994-2000) worked on the development of the trans-Andean gas interconnection and of the electric company Emel S.A. (2001-2007).
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Other positions: With more than 17 years of experience in the mass consumption and beverage industry, he is a director of Melón S.A., of Agrosuper S.A., where he is a member of the Risk Committee, and of Antofagasta PLC, where he is a member of the Sustainability and Stakeholders Committee. He is also an honorary member of the Centro de Estudios Públicos (CEP).
Gonzalo Said Handal
Appointment: He has been member of the board of directors of the Company since April 1993.
Experience: He holds a business administration degree from Universidad Gabriela Mistral, with specialization in finance, best practices and corporate governance. He is Vice-chairman of SOFOFA and director of Fundación Generación Empresarial, from where he promotes his vision on Corporate Governance and good business practices. With 30 years of experience in the beverage and mass consumption industry, he is a member of the Risk Committee of Scotiabank Chile and of the Ethics and Sustainability Committee of Coca-Cola Andina, contributing with his experience in Corporate Risk and ESG matters.
Other positions: He serves as director of Scotiabank Chile S.A. and of Holding de Empresas Said Handal.
Salvador Said Somavía
Appointment: He has been member of the board of directors of the Company since 1992.
Experience: He holds a business administration degree from Universidad Gabriela Mistral, with specialization in business management. He was a member of the board of Envases del Pacífico S.A. and Envases CMF S.A. He also participates in non-profit organizations oriented to entrepreneurship, such as Endeavor Chile, where he was the chairman for six years. He is advisor of the Centro de Estudios Públicos (CEP).
Other positions: Currently, he is the chairman of Scotiabank Chile S.A. and of Parque Arauco S.A., chief executive officer of Inversiones Caburga SpA and Inversiones Cabildo SpA, and director of several companies from diverse business sectors.
José Antonio Garcés Silva
Appointment: He has been a member of the board of directors of the Company since 1992.
Experience: He holds a business administration degree from the Universidad Gabriela Mistral with a specialization in Finance. He has an Executive MBA and PADE from the ESE of the Universidad de Los Andes and a master’s in philosophy and ethics from the Universidad Adolfo Ibáñez. He is Chairman of the Board of Banvida S.A., Past President of USEC and director of Fundación Paternitas, as well as General Manager of Inversiones San Andrés (family holding) and Advisor of SOFOFA. He has 25 years of experience in the beverage and mass consumption industry and a vast experience in risk and cybersecurity in the financial sector.
Other positions: He is also currently a director of Banco Consorcio, CN Life Compañía de Seguros, Consorcio Nacional de Seguros, Banvida S.A. and Andes Iron SpA. He is also a member of the Culture, Ethics and Sustainability Committee of Coca - Cola Andina.
Eduardo Chadwick Claro
Appointment: He has been member of the board of directors of the Company since June 2012.
Experience: He holds a civil industrial engineering degree with a major in Chemistry from the Pontificia Universidad Católica de Chile, Class of 1981, and was elected UC Engineer of the Year in 2017. He is a recognized entrepreneur in the agricultural sector, mainly in the wine and beverage industries, with more than 40 years of experience, both in Chile and abroad. He is considered as one of the main promoters and developers of the image of fine wines in Chile. He was Chairman of Cervecería Austral until 2007, Chairman of Viña Errázuriz and Coca-Cola Polar until 2012 and is currently a director and member of the executive committee of Coca-Cola Andina.
Other Positions: He is President of the holding company of the Chadwick Claro family, Founder and Director of Hatch Mansfield Co. in England and Maltexco S.A. He was Director of Sofofa until 2015, and also served as ABAC/APEC representative of the Government of Chile during the years 2018 to 2020. He was selected in 2021 as one of the 25 people chosen from Imagen de Chile to be part of the "Chilen@s Creando Futuro" Network. He successfully participated at the University of Oxford in The Oxford Strategic Leadership Programme in 2013 and later he was a Fellow of the Advance Leadership Initiative Program at Harvard University, which he attended during the year 2022.
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Roberto Mercadé
Appointment: He has been member of the board of directors of the Company since April 2019.
Experience: He holds an industrial engineering degree from the Georgia Institute of Technology, Atlanta (United States). Previously, he was member of the board of directors of ARCA-Lindley in Peru, Escuela Campo Alegre in Venezuela and American International School of Johannesburg in South Africa. He has 30 years of experience in the beverage and mass consumption industry. He was President of Coca-Cola de Mexico where he also led the Coca-Cola Foundation. He has developed his experience in the regions of Latin America, Africa and Asia- Pacific.
Other positions: He is currently Global President of The McDonald’s Division at The Coca-Cola Company.
Gonzalo Parot Palma
Appointment: He has been member of the board of directors of the Company since 2009.
Experience: He holds a civil industrial engineering degree from the Universidad de Chile, a master's in industrial engineering degree with a major in Economics from the Universidad de Chile and a master's in economics from the University of Chicago. His areas of specialization are Business Economics, Market Organization and Regulation, Public Finance and Corporate Finances. With 23 years of experience in the beverage and mass consumption industry, he has worked as Head of Studies at CCU S.A., Corporate Manager of Studies and Development at Empresas CMPC S.A., Executive President of Filiales Envases y Productos de Papel CMPC S.A., General Manager and Director of Celulosa del Pacífico, Corporate General Manager of CMPC Tissue S.A. and Director and Corporate General Manager of Copesa S.A. During his career he has stood out as Director, Chief Executive Officer and Advisor of the Corporación Municipal and Teatro Municipal de Santiago; Director of the National Press Association and of the Chilean-Argentine Chamber of Business, Professor and Director of the School of Economics and Business of the Universidad de Chile; Professor and Dean of Economics and Administration of the Universidad Gabriela Mistral.
Other positions: Currently serves as Director of AES Andes S.A.
Georges De Bourguignon Arndt
Appointment: He has been a member of the board of directors of the Company since April 2016.
Experience: He holds an economist degree from the Pontificia Universidad Católica de Chile and has an MBA from Harvard University. In the academic field, he has been a professor of Economics at the Universidad Católica de Chile, while in the business world, he is co-founder and currently President of Asset Chile S.A., a corporate finance consulting firm, and Asset AGF, an investment fund management company. He also serves as a Director in several companies, including Vivo Spa, where he has been Chairman since August 2022, and Tanica S.A., since May 2017. With more than 10 years of experience in mass consumption issues, he was a Director of Soquimich S.A. (2019 - April 2022), Empresas La Polar S.A. (2011-2015), Sal Lobos S.A. (2006-2018) and Chairman of the Directors’ Committee of Latam Airlines Group (2012-2019).
Domingo Cruzat Amunátegui
Appointment: He has been member of the board of directors of the Company since 2021.
Experience: He holds a civil industrial engineering degree from the Universidad de Chile and an MBA from The Wharton School of the University of Pennsylvania. With more than 12 years of experience in the beverage and mass consumption industry, he served as Commercial Manager at Pesquera Coloso-San José; CEO of Watt’s Alimentos; CEO of Loncoleche, CEO of Bellsouth Chile and Deputy General Manager of Compañía Sudamericana de Vapores. He is a university professor in the areas of marketing and sales at the ESE of Universidad de Los Andes. He has also served on the Boards of Conpax, Construmart, Copefrut, Essal, Principal Financial Group, Compañía Sudamericana de Vapores and Viña San Pedro de Tarapacá. In addition, he was Chairman of the Board of Correos de Chile and Chairman of the Sistema de Empresas Públicas (SEP).
Other positions: Currently, he is member of the board of directors of Enel Américas, IP Chile, SEP and Stars (Family Office). Additionally, he is founding partner of Fundación La Esperanza, a foundation dedicated to rehabilitating young drug addicts.
Rodrigo Vergara Montes
Appointment: He has been member of the board of directors of the Company since April 2018.
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Experience: He holds a business administration degree from the Pontificia Universidad Católica de Chile and a PhD in Economics from Harvard University. In the academic field, he is a professor at the Economics Institute of the Universidad Católica de Chile, while in his professional career he was President of the Central Bank of Chile (2011-2016) and advisor of the same entity (2009-2011). He was a director at Moneda S.A., Moneda AGF, Entel S.A. and Banco Internacional. Due to his experience in the Central Bank, he has extensive knowledge of Risk Management and Financial Matters, as well as Cybersecurity and Sustainability.
Other positions: He is a Director of Banco Santander Chile and Besalco S.A. He holds the position of Senior Economist at the Centro de Estudios Públicos (CEP) and Research Associate at the Mossavar- Rahmani Center at Harvard University’s School of Governance. He is also Director of the Fundación Nacional para la Superación de la Pobreza (National Foundation for Overcoming Poverty).
Felipe Joannon Vergara
Appointment: He has been member of the board of directors of the Company since April 2018.
Experience: He holds a business administration degree with a major in economics from the Pontificia Universidad Católica de Chile and an MBA from The Wharton School. Previously, he was member of the board of directors of the companies of Grupo Luksic, development manager of Quiñenco S.A., general manager of Viña Santa Rita and assistant general manager of Cristalerías de Chile S.A. In the academic field, he is a professor at the School of Administration and Economics of the Pontificia Universidad Católica de Chile.
Other positions: Currently, he is a member of the board of Forestal O'Higgins (parent company of the Matte Group), Quimetal Industrial S.A., Icom Gestión Inmobiliaria SpA, Altis S.A. AGF, Maquinarias y Construcciones Río Loa S.A., Almendral S.A., Constructora e Inmobiliaria EBCO S.A., Wenco S.A and VIVO S.A.
Luis Felipe Coelho Duprat Avellar
Appointment: He has been a member of the board of directors of the Company since 2023.
Experience: Since January 2023, he has served as President of Coca-Cola Mexico at The Coca-Cola Company. He joined Coca-Cola Brazil in 2002 in the Finance department, where he gained experience in several roles in Finance and Planning. He was also Director of Market Development for Coca-Cola FEMSA's territory in Brazil, and General Manager of Southern Brazil operations. He subsequently served as Vice President and General Manager of The Coca-Cola Company's South African franchise and led the Coca-Cola System in South Africa, Swaziland and Lesotho. From 2021-2022, he served as President of Southern Operations for The Coca-Cola Company. In this position, he was responsible for operations in 6 Latin American countries: Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay. Prior to joining the board of Coca-Cola Andina in 2023, he served on the boards of Arca Continental Bebidas in Mexico from 2021-2022, and MOVER (Movement for Racial Equity) in Brazil from its foundation until 2022. In addition, he was chairman of the board of directors of the Coca-Cola Brazil Institute between 2021-2022 and is currently chairman of the board of directors of the Coca-Cola Mexico Foundation.
Mariano Rossi
Appointment: He has been member of the board of directors of the Company since June 2012.
Experience: He holds a business administration degree from the School of Economics of the Universidad de Buenos Aires, specializing in Finance. He has participated in Executive Programs at the University of Michigan and IESE (Switzerland) as well as in Executive Development Programs at The Coca-Cola Company of Emory & Wharton Universities (USA). With 32 years of experience in the beverage and mass consumption industry, he has been Chief Financial Officer in Spain, Chief Financial Officer (CFO) in Latin America and General Manager in Argentina at The Coca-Cola Company. He has participated as Director in different bottlers of the Coca-Cola System: Chile (Embonor and Polar), Peru (JRL Lindley) and Uruguay (Monresa), between 1999 and 2008.
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Carmen Román Arancibia
Appointment: She has been member of the board of directors of the Company since 2021.
Experience: She holds a law degree from Universidad Gabriela Mistral. Former chief legal officer and head of corporate affairs of Walmart Chile. She has developed a solid experience in the retail industry, working for 11 years at Walmart, seven years at Cencosud and 4 years at Santa Isabel. She has knowledge and experience in risk management, due to her role as Director of Compliance and Ethics at Walmart. Due to her knowledge and experience in Corporate Governance, Sustainability and Shared Value, she was appointed Co-Chair of the Sustainability and Corporate Governance Committee of SOFOFA. In the area of diversity and inclusion, she has knowledge and experience as a mentor and trainer of women’s leadership programs.
Other positions: She is currently a member of the Legal Sustainability Council of the Universidad Católica, member of the Legal Circle of Icare, advisor in Comunidad Mujer and Director of Fundación Generación Empresarial. She is also a member of Coca-Cola Andina’s Culture, Ethics and Sustainability Committee.
Executive Officers
The following table includes information regarding our senior executives:
Name |
|
Age(1) |
|
Position |
Miguel Ángel Peirano |
|
64 |
|
Chief Executive Officer |
Andrés Wainer |
|
53 |
|
Chief Financial Officer |
Fernando Jaña |
|
46 |
|
Chief Strategic Planning Officer |
Jaime Cohen |
|
56 |
|
Chief Legal Officer |
Martín Idígoras |
|
48 |
|
Chief IT Officer |
Gonzalo Muñoz |
|
62 |
|
Chief Human Resources Officer |
Fabián Castelli |
|
58 |
|
General Manager of Embotelladora del Atlántico S.A. |
Renato Barbosa |
|
63 |
|
General Manager of Rio de Janeiro Refrescos Ltda. |
José Luis Solórzano |
|
53 |
|
General Manager of Embotelladora Andina S.A. |
Francisco Sanfurgo |
|
69 |
|
General Manager of Paraguay Refrescos S.A. |
| (1) | Age at December 31, 2023. |
Miguel Ángel Peirano
Chief Executive Officer
He holds an electronic engineering degree from the Instituto Tecnológico de Buenos Aires and has postgraduate studies at Harvard Business School and Stanford University. He joined the Company and became Executive Vice President in 2011. Previously, he was senior engagement manager at McKinsey & Company and was president of Coca-Cola Femsa Mercosur.
Andrés Wainer
Chief Financial Officer
He holds a business administration degree with a major in economics from the Pontificia Universidad Católica de Chile and a master’s degree in finance from the London Business School. He joined the Company in 1996 and since 2011 he has been Chief Financial Officer. Previously, he was development manager at Coca-Cola Andina Argentina, administration and finance manager at Coca-Cola Andina Chile and research and development corporate manager at the Corporate Office.
79
Fernando Jaña
Chief Strategic Planning Officer
He holds an industrial civil engineering degree from Universidad Adolfo Ibáñez and a master's degree in logistics and supply chain management from The University of Sydney, Australia. He joined the Company in 2014 and has held his current position since 2019. He was general manager of Coca-Cola del Valle, manager of innovation and projects in Coca-Cola Andina Chile, ecommerce manager at Cencosud Supermercados and logistics and distribution manager at CCU. He has also worked as a teacher and researcher at Universidad Adolfo Ibáñez.
Jaime Cohen
Chief Legal Officer
He holds a law degree from the Universidad de Chile and a master law degree from the University of Virginia, United States. He joined the Company in 2008. Previously, he was manager of legal affairs at Socovesa S.A. (2004-2008); corporate banking lawyer at Citibank N.A., Santiago de Chile (2000-2004); international associate at Milbank, Tweed, Hadley & McCloy, New York (2001-2002); associate lawyer at Cruzat, Ortúzar & Mackenna, Baker & McKenzie (1996-1999) and lawyer in the area of financial and real estate advisory at Banco Edwards (1993-1996).
Martín Idígoras
Chief Information Technology Officer
He holds a bachelor’s degree in systems from Universidad John F. Kennedy in Argentina, with a specialization in information technology. He joined the Company in 2018. Previously he worked for 18 years at Cencosud. During that time, he served as CIO for the home improvement division (2015-2018), regional manager of the SAP center of expertise (2014-2015) and regional CTO (2010- 2014). He also worked in different technology positions in different companies such as Correo Argentino and Arcor.
Gonzalo Muñoz
Chief Human Resources Officer
He holds an auditor accountant degree from Universidad de Chile. He joined the Company in 2015. Previously, he was director of finance, general manager and director of human resources in various Latin American countries in the British American Tobacco company. He has also served as a professor of marketing at Universidad de Chile.
Fabián Castelli
General Manager Coca-Cola Andina Argentina
He holds an industrial engineering degree from Universidad Nacional de Cuyo, with specialization in a management development program at IAE, Argentina and Donald R. Keough System Leadership Academy. He joined the Company in 1994 and since 2014 he has been general manager of Coca-Cola Andina Argentina. Previously he held the positions of head of the Mendoza sales department, business development and planning manager, marketing manager and commercial manager. He was also director of AdeS in Argentina, vice president of Asociación de Fabricantes Argentinos de Coca-Cola (AFAC) and Director of Cámara Argentina de Industria de Bebidas sin Alcohol (Argentine Chamber of Non-Alcoholic Beverages Industry).
Renato Barbosa
General Manager Coca-Cola Andina Brazil
He holds an economist degree from Universidade do Distrito Federal Brazil, with specialization in business and post-graduation studies in business from FGV Sao Paulo, Brazil and an MBA in marketing from the FGV Rio de Janeiro, Brazil. He joined the Company in 2012 as general manager of Coca-Cola Andina Brazil. Previously held the position of general manager of Brasal Refrigerantes (Coca-Cola bottler in the central-eastern region of Brazil).
80
Jose Luis Solórzano
General Manager Coca-Cola Andina Chile
He holds a business administration degree from Universidad Adolfo Ibáñez, with specialization in the areas of marketing and finance. He joined the Company in 2003 and since 2014 he has been general manager of Coca-Cola Andina Chile. He previously held the positions of general manager of Coca-Cola Andina Argentina and commercial manager of Coca-Cola Andina Chile. Prior to that, he was commercial manager of Coca-Cola Polar.
Francisco Sanfurgo
General Manager Coca-Cola Paresa
He holds a mechanical engineering degree from Universidad de Concepción and a specialization in project management from Universidad Adolfo Ibáñez. He joined the Company in 1988 and has been general manager of Coca-Cola Paresa since 2005. Previously, he was manager of Comercial Dimetral in Punta Arenas, branch manager of Citicorp Punta Arenas and general manager of Cervecería Austral in Punta Arenas.
| B. | COMPENSATION |
Compensation of Executive Officers
For our executive officers, the compensation plans are composed of a fixed compensation and a performance bonus, which are adapted to the reality and competitive conditions of each market, and whose amounts vary according to the position and/or responsibility exercised. The performance bonuses are payable only to the extent that the personal goals of each executive and the Company, previously defined, are met.
For the Company’s Chief Executive Officer, the main performance indicators that affect its performance bonus are consolidated EBITDA. For general managers of operations, the main performance indicators are EBITDA generated by their operation in local currency, consolidated EBITDA in Chilean pesos, market share, sustainability indicators (Water Use Ratio; % returnability and % resin recycled in bottles in the operations that applied), safety, talent and succession and certain individualized goals in the event that the Company’s Chief Executive Officer so determines.
For corporate officers, the main performance indicators are consolidated EBITDA in Chilean pesos and certain individualized goals in the event that the Company’s Chief Executive Officer so determines. Particularly, for those executive officers who, by the nature of their position, are directly related to the Company’s investors, there is a payment scheme for their performance bonus that is partly deferred over four years indexed to the Company’s share price. Additionally, within the compensation structure for certain executive officers, there are permanence bonuses, which are paid out upon completion of the agreed terms of service.
For 2023, the fixed remuneration paid to Coca-Cola Andina's executive officers amounted to Ch$6,846 million (Ch$5,406 million in 2022). Similarly, the remuneration paid for performance bonuses amounted to Ch$3,546 million (Ch$3,400 million in 2022). During 2023, there were no severance indemnities paid to the Company's executive officers. During 2022, there were no severance indemnities paid to the Company's executive officers.
We do not make available to the public information as to the compensation of our executive officers on an individual basis, as disclosure of such information is not required under Chilean law.
81
Compensation of Directors
Directors receive an annual fee for their services and participation as members of the board of directors and committees. The amounts paid to each director varies in accordance with the position held and the period of time during which such position is held. Total compensation paid to each director during 2023, which was approved by our shareholders, was as follows:
|
|
|
|
|
|
|
|
Culture, |
|
|
|
|
|
|
|
|
Directors’ |
|
Ethics & |
|
|
|
|
Directors’ |
|
Executive |
|
and Audit |
|
Sustainability |
|
|
|
|
Compensation |
|
Committee |
|
Committee |
|
Committee |
|
Total |
2023 |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Juan Claro González(1) |
|
156,000 |
|
|
|
|
|
|
|
156,000 |
Gonzalo Said Handal |
|
78,000 |
|
97,600 |
|
|
|
13,000 |
|
188,600 |
José Antonio Garcés Silva |
|
78,000 |
|
97,600 |
|
|
|
13,000 |
|
188,600 |
Salvador Said Somavía |
|
78,000 |
|
97,600 |
|
26,000 |
|
|
|
201,600 |
Eduardo Chadwick Claro |
|
78,000 |
|
97,600 |
|
|
|
13,000 |
|
188,600 |
Gonzalo Parot Palma(2) |
|
78,000 |
|
|
|
26,000 |
|
|
|
104,000 |
Georges de Bourguignon Arndt |
|
78,000 |
|
|
|
|
|
|
|
78,000 |
Rodrigo Vergara Montes |
|
78,000 |
|
|
|
|
|
|
|
78,000 |
Felipe Joannon Vergara |
|
78,000 |
|
|
|
|
|
|
|
78,000 |
Carmen Román |
|
78,000 |
|
|
|
|
|
13,000 |
|
91,000 |
Domingo Cruzat(2) |
|
78,000 |
|
|
|
26,000 |
|
|
|
104,000 |
Mariano Rossi |
|
78,000 |
|
|
|
|
|
|
|
78,000 |
Roberto Mercadé Rovira |
|
78,000 |
|
|
|
|
|
|
|
78,000 |
Marco Antonio Fernández De Araujo(4) |
|
30,750 |
|
|
|
|
|
|
|
30,750 |
Luis Felipe Coelho Avellar(3) |
|
47,250 |
|
|
|
|
|
|
|
47,250 |
Total Gross |
|
1,170,000 |
|
390,400 |
|
78,000 |
|
52,000 |
|
1,690,400 |
| (1) | Includes Ch$78 million additional as Chairman of the Board. |
| (2) | Independent from controlling shareholder pursuant to Article 50 bis, paragraph 6 of the Chilean Public Company Law N° 18,046. |
| (3) | Joined the Board in May 2023. |
| (4) | Left the Board in May 2023. |
For the year ended December 31, 2023, the aggregate amount of compensation we paid to all directors and executive officers as a group was Ch$12,082 million of which Ch$10,392 million was paid to our executive officers. We do not disclose to our shareholders or otherwise make available to the public information as to the compensation of our executive officers on an individual basis, as disclosure of such information is not required under Chilean law. We only maintain a retirement plan for our chief executive officer.
| C. | BOARD PRACTICES |
Our board of directors has regularly scheduled meetings at least once a month, and extraordinary meetings are convened when called by the chairman or when requested by one or more directors. The quorum for a meeting of the board of directors is established by the presence of an absolute majority of its directors. Directors serve terms of three years from the date they are elected. Resolutions are adopted by the affirmative vote of a majority of those directors present at the meeting, with the chairman determining the outcome of any tie vote.
Benefits upon Termination of Employment
There are no contracts providing benefits to directors upon termination of employment.
Executive Committee
Our board of directors is counseled by an Executive Committee that proposes Company policies and is currently comprised by the following Directors: Mr. Eduardo Chadwick Claro, Mr. José Antonio Garcés Silva (junior), Mr. Gonzalo Said Handal, and Mr. Salvador Said Somavía, who were elected during the ordinary Board Meeting held on April 27, 2021. The Executive Committee is also comprised by the Chairman of the Board, Mr. Juan Claro González and our chief executive officer. This committee meets permanently throughout the year and normally holds one or two monthly sessions.
82
Directors’ Committee
Pursuant to Article 50 bis of Chilean Company Law N°18,046 and in accordance with the dispositions of Circular N°1,956 of the Financial Market Commission (Comisión para el Mercado Financiero – “CMF”) a new Directors’ Committee was elected during the Board Meeting held on April 27, 2021, applying the same election criteria set forth by Circular N°1,956. The directors Mr. Domingo Cruzat Amunátegui and Mr. Gonzalo Parot Palma (both as Independent Directors), and Mr. Salvador Said Somavía comprised the Committee. Mr. Gonzalo Parot Palma is the Chairman of the Company’s Directors’ Committee.
The duties performed by this Committee during 2023, following the same categorization of faculties and responsibilities established by Article 50 bis of Law N°18,046, were the following:
| ● | Subject to the duties of the Audit Committee, examine the reports of external auditors, the balance sheets and other financial statements, presented by the administrators of the Company, and take a position on such reports before they were presented to the board of directors and shareholders for their approval. |
| ● | Subject to the duties of the Audit Committee, analyze and prepare proposal of external auditors and private rating agencies to the Board of Directors, which were suggested to the respective shareholders’ meeting. |
| ● | Examine background information regarding the operations referred to by Title XVI of Law N°18,046 (related parties’ transactions) and issue a report on those operations. |
| ● | Examine the salary systems and compensation plans of the Company’s managers, executive officers and employees. |
| ● | Review anonymous reports. |
| ● | Subject to the duties of the Audit Committee, review and approve the 20F and compliance with Section 404 of the Sarbanes-Oxley Act. |
| ● | Prepare the budget proposal for the Committee’s operation. |
| ● | Review internal audit reports. |
| ● | Subject to the duties of the Audit Committee, periodically interview the Company’s external auditors’ representatives. |
| ● | Review operating budget between related companies (production joint ventures). |
| ● | Review corporate insurances. |
| ● | Review and approve press releases that refer to the Company’s communications. |
| ● | Review the Company’s four operations’ internal control standards, including critical risks in accounting processes, compliance of corporate policies, tax contingencies and status of internal and external audit observations. |
| ● | Analyze risk management model. |
| ● | Review Crime Prevention Model. |
| ● | Review advances in Cybersecurity and IT. |
| ● | Review judicial procedures and contingency analysis. |
| ● | Review tax status. |
| ● | Authorization of non-prohibited services. |
| ● | Analysis of impairment test. |
| ● | Review of “Oficio CMF”. |
83
| ● | Prepare the Annual Management Report and Agenda. |
Audit Committee
In accordance with NYSE and SEC requirements, the Board of Directors established an Audit Committee on July 26, 2005. The current Audit Committee was elected during the Board Meeting held on April 27, 2021. The Committee is comprised by the directors Mr. Domingo Cruzat Amunátegui, Mr. Gonzalo Parot Palma, and Mr. Salvador Said Somavía, with the Board of Directors determining that Mr. Domingo Cruzat Amunátegui and Mr. Gonzalo Parot Palma fulfill the independence standards set forth in Rule 10A-3 of the U.S. Exchange Act and applicable NYSE rules. Mr. Salvador Said Somavía has non-voting observer status, as described in Item 16D. Also, Mr. Parot Palma was determined the Board of Directors to qualify as the audit committee financial expert in accordance with the definitions of the SEC.
The resolutions, agreements and organization of the Audit Committee are governed by the rules relating to Board Meetings and to the Company’s Directors’ Committee. Since its creation, the sessions of the Audit Committee have been held with the Directors’ Committee since some of the functions are very similar and the members of both of these Committees are the same.
The Audit Committee Charter, which is available on our website: www.koandina.com, defines the duties and responsibilities of this Committee. The Audit Committee is responsible for analyzing the Company’s financial statements; supporting the financial supervision and rendering of accounts; ensuring management’s development of reliable internal controls; ensuring compliance by the audit department and external auditors of their respective roles; and reviewing auditing practices.
Culture, Ethics & Sustainability Committee
The Culture, Ethics and Sustainability Committee was established during the Board Meeting held on January 28, 2014. This Committee is comprised by four directors, who are appointed by the Board of Directors and will occupy their posts until their successors are elected, or until resignation or dismissal. The current members of the Culture, Ethics and Sustainability Committee are Mr. José Antonio Garcés Silva, Mr. Eduardo Chadwick Claro, Mrs. Carmen Román Arancibia and Mr. Gonzalo Said Handal. In addition, the Chairman of the Board also participates in this Committee.
| D. | EMPLOYEES |
Overview
As of December 31, 2023, we had 19,667 employees (full time equivalent), including 5,284 in Chile (3,897 own and 1,387 outsourced), 8,390 in Brazil (8,056 own and 334 outsourced), 3,483 in Argentina (3,374 own y 109 outsourced) and 1,693 in Paraguay (1,182 own and 511 outsourced). From these employees, 1,057 were temporary employees in Chile, 600 were temporary employees in Argentina, 0 were temporary in Brazil and 110 were temporary employees in Paraguay. During the South American Summer, it is customary for us to increase the number of employees in order to meet peak demand. Additionally, in Vital Jugos, Vital Aguas, ECSA and Re-Ciclar we had 400, 84, 275 and 12 employees, respectively, for a total aggregate amount of 771 employees for those four companies. Additionally, the corporate office had 46 employees.
As of December 31, 2023, 2,174, 1,180, 2,301 and 368 of our employees in Chile2 , Brazil, Argentina and Paraguay, respectively, were members of unions. 396 of our employees in Vital Jugos, Vital Aguas and ECSA were members of unions.
Management believes that the Company has good relations with its employees.The following table represents a breakdown of our employees for the years ended December 31, 2022 and 2023:
|
|
2022 |
||||||||||||||||||||||
|
|
Chile(1) |
|
Brazil |
|
Argentina(2) |
|
Paraguay |
||||||||||||||||
|
|
Total |
|
Union |
|
Non-Union |
|
Total |
|
Union |
|
Non-Union |
|
Total |
|
Union |
|
Non-Union |
|
Total |
|
Union |
|
Non-Union |
Executives |
|
56 |
|
— |
|
56 |
|
7 |
|
— |
|
7 |
|
96 |
|
— |
|
96 |
|
42 |
|
— |
|
42 |
Technicians and professionals |
|
769 |
|
100 |
|
669 |
|
1,217 |
|
108 |
|
1,109 |
|
781 |
|
10 |
|
771 |
|
306 |
|
56 |
|
250 |
Workers |
|
3,356 |
|
1,985 |
|
1,371 |
|
7,026 |
|
1,039 |
|
5,987 |
|
1,940 |
|
1,825 |
|
115 |
|
1,173 |
|
296 |
|
877 |
Temporary workers |
|
1,106 |
|
— |
|
1,106 |
|
— |
|
— |
|
— |
|
582 |
|
466 |
|
116 |
|
130 |
|
— |
|
130 |
Total |
|
5,287 |
|
2,085 |
|
3,202 |
|
8,250 |
|
1,147 |
|
7,103 |
|
3,399 |
|
2,301 |
|
1,098 |
|
1,651 |
|
352 |
|
1,299 |
84
|
|
2023 |
||||||||||||||||||||||
|
|
Chile(1) |
|
Brazil |
|
Argentina(2) |
|
Paraguay |
||||||||||||||||
|
|
Total |
|
Union |
|
Non-Union |
|
Total |
|
Union |
|
Non-Union |
|
Total |
|
Union |
|
Non-Union |
|
Total |
|
Union |
|
Non-Union |
Executives |
|
50 |
|
— |
|
50 |
|
7 |
|
— |
|
7 |
|
98 |
|
— |
|
98 |
|
40 |
|
— |
|
40 |
Technicians and professionals |
|
688 |
|
60 |
|
628 |
|
1,288 |
|
116 |
|
1,172 |
|
835 |
|
10 |
|
825 |
|
323 |
|
57 |
|
266 |
Workers |
|
3,488 |
|
2,106 |
|
1,382 |
|
7,095 |
|
1,064 |
|
6,031 |
|
1,951 |
|
1,831 |
|
120 |
|
1,220 |
|
311 |
|
909 |
Temporary workers |
|
1,057 |
|
7 |
|
1,050 |
|
— |
|
— |
|
— |
|
599 |
|
460 |
|
139 |
|
110 |
|
— |
|
110 |
Total |
|
5,284 |
|
2,174 |
|
3,110 |
|
8,390 |
|
1,180 |
|
7,210 |
|
3,483 |
|
2,301 |
|
1,182 |
|
1,693 |
|
368 |
|
1,325 |
|
|
2022 |
||||
|
|
Vital Aguas/Vital Jugos/Envases Central |
||||
|
|
Total |
|
Union |
|
Non-Union |
Executives |
|
10 |
|
2 |
|
8 |
Technicians and professionals |
|
225 |
|
183 |
|
42 |
Workers |
|
266 |
|
252 |
|
14 |
Temporary workers |
|
144 |
|
— |
|
144 |
Total |
|
645 |
|
437 |
|
208 |
|
|
2023 |
||||
|
|
Vital Aguas/Vital Jugos/Envases Central |
||||
|
|
Total |
|
Union |
|
Non-Union |
Executives |
|
11 |
|
— |
|
11 |
Technicians and professionals |
|
225 |
|
140 |
|
85 |
Workers |
|
485 |
|
256 |
|
229 |
Temporary workers |
|
38 |
|
— |
|
38 |
Total |
|
759 |
|
396 |
|
363 |
| (1) | Information for Chile includes only Andina Chile. |
| (2) | Argentina includes AEASA. |
Note: The number of employees is calculated as equivalent to full time hours, which means that extraordinary hours are considered as additional employees. Totals may not sum due to rounding.
Chile
In Chile, we have continued with the severance indemnity provision that employees are entitled to according to collective bargaining agreements and current legislation, which grants all employees one month per year of service with certain limits. Additionally, we benefit our employees with a contribution to a supplementary health insurance system in addition to that paid by the worker, which contributes to reducing the health costs of their families. On the other hand, employees are required to contribute funds to finance their retirement pensions. These pension funds are mostly managed by private entities.
In Chile, 61.68% of employees with indefinite employment contracts are affiliated with a labor union organization, with a total of 12 labor unions organizations and a total of 17 collective bargaining agreements.
Brazil
In Brazil, 14.06% of our employees are members of labor unions. Collective bargaining agreements are negotiated on an industry-wide basis, although companies can negotiate special terms for their affiliates that apply to all employees in each jurisdiction where companies have a plant. Collective bargaining agreements are generally binding for one year.
With respect to Andina Brazil, there are 33 collective bargaining agreements in force as of December 31, 2023.
The agreements do not require us to increase wages on a collective basis. Selected increases were granted, however, according to inflation. We provide benefits to our employees according to the relevant legislation and to the collective bargaining agreements. Andina Brazil experienced its most recent work stoppages in December 2014, for three days organized by the drivers of internal buses in the Espírito Santo operation. However, as this operation no longer uses internal buses, such work stoppages are not expected to occur in the future.
85
Argentina
In Argentina, 66.1% of EDASA’s employees are parties to collective bargaining agreements and are represented by local workers’ unions associated with a national federation of unions. The Argentine Chamber of Non-Alcoholic Beverages of the Argentine Republic (Cámara Argentina de Industria de Bebidas sin Alcohol de la República Argentina) (the “Chamber”) and the Argentine Workers Federation of Carbonated Water (Federación Argentina de Trabajadores de Aguas Gaseosas) (the “Federation”) are parties to a collective bargaining agreement that began July 29, 2008. Historically, the Federation and the Chamber convened once a year to discuss salary conditions for the upcoming year. However, due to the current economic circumstances in Argentina (high inflation) three salary agreements were signed in 2023—the first for salaries through June 30, 2023, the second for salaries in September/October 2023, and the third for salaries as of November 2023—. It seems likely that as long as inflationary indices remain as high as they currently are, collective bargaining will continue to follow this new periodicity.
Argentine law requires severance payments upon dismissal without cause in an amount at least equal to an average of one-month’s wages for each year of employment or a fraction thereof if employed longer than three months. Severance payments are subject to maximum and minimum amounts fixed by legislations and jurisprudence of the Justice Supreme Court of Argentina.
On December 13, 2019, a public emergency in occupational matters was declared, which was in force throughout 2021. Consequently, during this period in the event of an employee’s dismissal without just cause, the employees shall be entitled to receive double the compensation referred to in the preceding paragraph. Along with this, on March 31, 2020, by means of a Decree of Need and Urgency, the national government banned dismissals without just cause and on the grounds of lack or decrease in labor and force majeure. This measure was originally valid for 90 days, but then had successive extensions, such that the measure was in force throughout 2021, however, neither in 2022 nor 2023.
All employee contributions are made to the state social security system. Most of the health system in the Argentine territory is run by the unions through contributions from employees within the Collective Work Agreements (CCT — Convenios Colectivos de Trabajo).
Paraguay
In Paraguay, 22% of PARESA’s employees are members of labor unions. Collective bargaining agreements are negotiated with the company (Coca-Cola Paresa Paraguay). Unions can negotiate special terms for their members, which are applicable to all employees. Collective bargaining agreements generally have a two year term of duration.
| E. | SHARE OWNERSHIP |
The following table sets forth the amount and percentage of our shares beneficially owned by our directors and executive officers as of December 31, 2023.
|
|
Series A |
|
Series B |
||||||||||||||||||||
|
|
Beneficial |
|
|
|
Direct |
|
|
|
Indirect |
|
|
|
Beneficial |
|
|
|
Direct |
|
|
|
Indirect |
|
|
|
|
Owner |
|
% Class |
|
Owner |
|
% Class |
|
Owner |
|
% Class |
|
Owner |
|
% Class |
|
Owner |
|
% Class |
|
Owner |
|
% Class |
Shareholder |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
José Antonio Garcés Silva |
|
— |
|
— |
|
— |
|
— |
|
65,487,786 |
|
13.84 |
|
— |
|
— |
|
49,600 |
|
0.01 |
|
12,978,583 |
|
2.75 |
Salvador Said Somavía |
|
— |
|
— |
|
— |
|
— |
|
65,487,786 |
|
13.84 |
|
— |
|
— |
|
— |
|
— |
|
36,950,863 |
|
7.81 |
Gonzalo Said Handal |
|
— |
|
— |
|
— |
|
— |
|
65,489,786 |
|
13.84 |
|
--- |
|
--- |
|
— |
|
— |
|
25,214,463 |
|
5.32 |
Eduardo Chadwick Claro |
|
— |
|
— |
|
— |
|
— |
|
65,963,601 |
|
13.93 |
|
— |
|
— |
|
— |
|
— |
|
33,935,325 |
|
7.76 |
| F. | DISCLOSURE OF REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION |
[RESERVED]
86
ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | MAJOR SHAREHOLDERS |
The following table sets forth certain information concerning beneficial ownership of our capital stock with respect to the principal shareholders known to us who maintain at least a 5% beneficial ownership in our shares and with respect to all of our directors and executive officers as a group as of December 31, 2023:
|
|
Series A |
|
Series B |
||||
Shareholder |
|
Shares |
|
% Class |
|
Shares |
|
% Class |
Controlling shareholders(1) |
|
262,428,986 |
|
55.45 |
|
109,128,834 |
|
23.06 |
The Bank of New York Mellon(2) |
|
3,537,846 |
|
0.75 |
|
23,980,704 |
|
5.07 |
The Coca-Cola Company, directly or through subsidiaries |
|
69,348,241 |
|
14.65 |
|
— |
|
— |
AFPs as a group (Chilean pension funds) |
|
30,249,610 |
|
6.39 |
|
23,971,723 |
|
5.07 |
International Shareholders |
|
15,295,280 |
|
3.23 |
|
126,874,413 |
|
26.81 |
Executive officers as a group |
|
— |
|
— |
|
— |
|
— |
Directors as a group(3) |
|
262,428,986 |
|
55.45 |
|
109,128,834 |
|
23.06 |
| (1) | For further information of our controlling shareholders, see below. |
| (2) | Acting as Depositary for ADRs. |
| (3) | Represents shares held directly and indirectly by Mr. Gonzalo Said Handal, Mr. José Antonio Garcés Silva (junior), Mr. Salvador Said Somavía and Mr. Eduardo Chadwick Claro. |
As of December 31, 2023, approximately 96.77% of our Series A shares and 73.19% of our Series B shares are held in Chile. It is not practicable for us to determine the number of record holders in Chile.
Our controlling shareholders are: Inversiones SH Seis Limitada (controlled by family Said Handal), Inversiones Cabildo SpA (controlled by the Said Somavía family), Inversiones Nueva Delta S.A. (controlled by the Garcés Silva family), Inversiones Nueva Delta Dos S.A. (controlled by the Garcés Silva family), Inversiones Don Alfonso Limitada (controlled by María de la Luz Chadwick Hurtado), Inversiones El Campanario Limitada (controlled by María Soledad Chadwick Claro), Inversiones Los Robles Limitada (controlled by María Carolina Chadwick Claro), Inversiones Las Niñas Dos SpA (controlled by Eduardo Chadwick Claro).
Below is a summary of the members of our controlling shareholders or their related persons and the number of shares and percentage they hold in Andina (including series A and series B shares):
Controlling Shareholder Entity |
|
Series A |
|
Series B |
|
Inversiones SH Seis Limitada(1) |
|
65,489,786 |
|
25,164,863 |
|
Estate of Mr. Jaime Said Demaría (1) |
|
— |
|
49,600 |
|
Total of shares percentage of Andina: |
|
13.8371 |
% |
5.3275 |
% |
Inversiones Cabildo SpA(2) |
|
65,487,786 |
|
36,950,863 |
|
Total of shares percentage of Andina: |
|
13.8367 |
% |
7.8178 |
% |
Inversiones Nueva Delta S.A.(3) |
|
58,927,056 |
|
— |
|
Inversiones Nueva Delta Dos S.A.(3) |
|
3,574,999 |
|
— |
|
Inversiones Nueva Sofía Limitada(3) |
|
2,985,731 |
|
12,978,583 |
|
José Antonio Garcés Silva(3) |
|
— |
|
49,600 |
|
Total of shares percentage of Andina: |
|
13.8367 |
% |
2.7527 |
% |
Inversiones El Campanario Limitada(4) |
|
16,475,069 |
|
10,174,594 |
|
Inversiones Los Robles Limitada(4) |
|
16,475,069 |
|
10,196,883 |
|
Inversiones Las Niñas Dos SpA(4) |
|
16,538,395 |
|
5,126,992 |
|
Inversiones Don Alfonso Limitada(4) |
|
16,475,068 |
|
3,975,928 |
|
Inversiones Las Niñas Limitada |
|
- |
|
4,460,928 |
|
Total of shares percentage of Andina: |
|
13.9372 |
% |
7.7557 |
% |
| (1) | Inversiones SH Seis Limitada is controlled by the Said Handal family. The family members are: Jaime, Gonzalo, Javier, Bárbara, Marisol and Cristina Said Handal. |
| (2) | Inversiones Cabildo SpA is controlled by the Said Somavía family. The family members are: Isabel Margarita Somavía Dittborn and Salvador, Isabel, Constanza and Loreto Said Somavía. |
87
| (3) | Inversiones Nueva Delta S.A., Inversiones Nueva Delta Dos S.A. and Inversiones Nueva Sofía Limitada are controlled by the Garcés Silva family. The family members are: José Antonio Garcés Silva (father), María Teresa Silva Silva and María Teresa, María Paz, José Antonio (Jr.), Matías Alberto and Andrés Sergio Garcés Silva. |
| (4) | Inversiones Don Alfonso Limitada is controlled by María de la Luz Chadwick Hurtado; Inversiones El Campanario Limitada is controlled by María Soledad Chadwick Hurtado; Inversiones Los Robles Limitada is controlled by María Carolina Chadwick Claro; and Inversiones Las Niñas Dos SpA is controlled by Inversiones Las Niñas Limitada, company owned by Eduardo Chadwick Claro. |
Our controlling shareholders act pursuant to a shareholders’ agreement that establishes that this group will exercise joint control in order to ensure a majority vote at shareholders’ meetings and board meetings. Our controlling shareholders pass resolutions with the simply majority approval except with respect to the following matters, which require a unanimous decision:
| ● | carrying out of new business activities different from our current line of business (unless related to “ready to drink products” or Coca-Cola products); |
| ● | amendment of the number of our directors; |
| ● | issuances of new shares; |
| ● | spin-offs or mergers; |
| ● | capital increases (subject to certain indebtedness thresholds); and |
| ● | the joint acquisition of our Series A shares. |
In connection with The Coca-Cola Company’s investment in us, The Coca-Cola Company and our controlling shareholders entered into a Shareholders’ Agreement dated September 5, 1996, as amended (the “Amended and Restated Shareholders Agreement or Shareholders’ Agreement”, included as exhibit to this annual report), providing for certain restrictions on the transfer of shares of our capital stock by the Coca-Cola Shareholders and our controlling shareholders. Specifically, our controlling shareholders are restricted from transferring their Series A shares without the prior authorization of The Coca-Cola Company. The Shareholders’ Agreement also provides for certain corporate governance matters, including the right of the Coca-Cola shareholders to elect two members of our board of directors as long as The Coca-Cola Company and its subsidiaries collectively own, in aggregate, a certain percentage of the Series A shares. In addition, in related agreements, our controlling shareholders granted The Coca-Cola Company an option, exercisable upon the occurrence of certain changes in the beneficial ownership of the controlling shareholders, to acquire 100% of the Series A shares held by our controlling shareholders at a price and in accordance with procedures established in such agreements.
| B. | RELATED PARTY TRANSACTIONS |
In the ordinary course of our business, we engage in a variety of transactions with certain of our affiliates and related parties. Financial information concerning these transactions is set forth in note 12.3 to our consolidated financial statements and were carried out under the following conditions: (i) they were previously approved by the Company’s Board of Directors, with the abstention of the director involved in the corresponding case; (ii) the purpose of these transactions was to contribute to the Company’s interest; and (iii) they were consistent with prevailing market price, terms and conditions at the time of their approval. Our Directors’ Committee is responsible for evaluating transactions with related parties and for reporting these transactions to the full board of directors. See “Item 6. Directors, Senior Management and Employees—Directors’ Committee.”
Our management believes, to the best of its knowledge, that it has complied in all material respects with the Chilean Public Company law regarding to the transactions with related parties in effect as of December 31, 2023. There can be no assurance, however, that these regulations will not be modified in the future.
| C. | INTERESTS OF EXPERTS AND COUNSEL |
Not applicable.
ITEM 8.FINANCIAL INFORMATION
| A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION |
See “Item 18 - Financial Statements” for our consolidated financial statements filed as part of this annual report.
88
Contingencies
We are party to certain legal proceedings that have arisen during the normal course of business, and we believe none of them are likely to have a material adverse effect on our financial condition. In accordance with accounting principles, the provisions regarding legal proceedings and other contingencies must be recorded if such procedures or contingencies are reasonably probable to be resolved against the Company and it is probable that an outflow of economic benefits will be required to settle the corresponding obligation, and a reliable estimate can be made of the amount of such obligation.
The following table represents accounting provisions made as of December 31, 2022 and 2023, for probable loss contingencies stemming from labor, tax, commercial and other litigation faced by our Company:
|
|
For the year ended December 31, |
||
|
|
2022 |
|
2023 |
|
|
Million Ch$ |
||
Chile |
|
1,552 |
|
1,267 |
Brazil |
|
45,707 |
|
52,998 |
Argentina |
|
1,397 |
|
490 |
Paraguay |
|
39 |
|
47 |
Total |
|
48,695 |
|
54,802 |
For more details, see note 23 of our consolidated financial statements included herein.
Dividend Policy
The declaration and payment of dividends are determined, subject to the limitations set forth below, by the affirmative vote of a majority of our shareholders at a general shareholders’ meeting, based upon the recommendation of our board of directors.
At our annual general shareholders’ meeting, our board of directors submits our annual financial statements for the preceding fiscal year together with reports prepared by our Audit Committee for approval by our shareholders. Once our shareholders have approved our annual financial statements, they determine the allocation of our net income, after provision for income taxes and legal reserves for the preceding year and considering the accumulation of losses from prior periods. All shares of our capital stock outstanding at the time a dividend or other distribution is declared are entitled to share equally in that dividend or other distribution, except that holders of our Series B shares are entitled to a dividend 10% greater than any dividend on Series A shares.
Pursuant to Chilean law, we must distribute cash dividends equal to at least 30% of our annual net income, calculated in accordance with IFRS. If we do not record any net income in a given year, we are not legally required to distribute dividends from accumulated earnings. At the general shareholders' meeting to be held on April 25, 2024, we expect our shareholders to approve a distribution of dividends.
During 2021, 2022 and 2023, our respective general shareholders’ meetings approved additional dividend payments to be paid from retained earnings, given our significant cash generation. These additional dividend payments for 2021, 2022 and 2023 are not indicative of whether or not additional dividend payments will be made in any future period.
89
The following table sets forth the amount in Chilean pesos of dividends declared and paid per share each year and the U.S. dollar amounts paid to shareholders (each ADR represents six shares), on each of the respective payment dates:
|
|
|
|
|
|
Aggregate Amount |
|
|
|
|
|
|
|
|
Dividend |
|
|
|
Fiscal year with |
|
of Dividends Declared |
|
|
|
|
|
|
|
|
Approval |
|
Dividend |
|
respect to which |
|
and Paid |
|
Series A |
|
Series B |
||||
Date |
|
payment Date |
|
dividend was declared |
|
(Ch$ millions) |
|
Ch$ per share |
|
US$ per share |
|
Ch$ per share |
|
US$ per share |
12-28-2023 |
|
01-25-2024 |
|
2023 |
|
31,805 |
|
32.00 |
|
0.03522 |
|
35.20 |
|
0.03874 |
09-27-2023 |
|
10-26-2023 |
|
2023 |
|
28,823 |
|
29.00 |
|
0.03091 |
|
31.90 |
|
0.03400 |
07-25-2023 |
|
08-25-2023 |
|
2023 |
|
28,823 |
|
29.00 |
|
0.03393 |
|
31.90 |
|
0.03732 |
04-20-2023 |
|
05-26-2023 |
|
Accumulated earnings |
|
49,695 |
|
50.00 |
|
0.06179 |
|
55.00 |
|
0.06797 |
04-20-2023 |
|
05-09-2023 |
|
2022 |
|
28,823 |
|
29.00 |
|
0.03655 |
|
31.90 |
|
0.04021 |
12-27-2022 |
|
01-27-2023 |
|
2022 |
|
28,823 |
|
29.00 |
|
0.03613 |
|
31.90 |
|
0.03975 |
09-27-2022 |
|
10-28-2022 |
|
2022 |
|
28,823 |
|
29.00 |
|
0.03068 |
|
31.90 |
|
0.03375 |
07-26-2022 |
|
08-26-2022 |
|
2022 |
|
28,823 |
|
29.00 |
|
0.03187 |
|
31.90 |
|
0.03505 |
04-13-2022 |
|
04-26-2022 |
|
Accumulated earnings |
|
187,847 |
|
189.00 |
|
0.22213 |
|
207.90 |
|
0.24434 |
12-21-2021 |
|
01-28-2022 |
|
2021 |
|
28,823 |
|
29.00 |
|
0.03629 |
|
31.90 |
|
0.03992 |
09-28-2021 |
|
10-29-2021 |
|
2021 |
|
28,823 |
|
29.00 |
|
0.03600 |
|
31.90 |
|
0.03960 |
04-15-2021 |
|
08-27-2021 |
|
Accumulated earnings |
|
25,841 |
|
26.00 |
|
0.03312 |
|
28.60 |
|
0.03643 |
04-15-2021 |
|
05-28-2021 |
|
2020 |
|
25,841 |
|
26.00 |
|
0.03560 |
|
28.60 |
|
0.03916 |
12-22-2020 |
|
01-29-2021 |
|
2020 |
|
25,841 |
|
26.00 |
|
0.03507 |
|
28.60 |
|
0.03858 |
| B. | SIGNIFICANT CHANGES |
We are not aware of any changes bearing upon our financial condition since the date of the financial statements included in this annual report.
ITEM 9.THE OFFER AND LISTING
| A. | OFFER AND LISTING DETAILS |
Our common shares are listed and traded on the Santiago Stock Exchange and on the Bolsa Electrónica de Chile (the Chilean Electronic Stock Exchange).
Also, our common shares have been traded in the United States on the New York Stock Exchange (“NYSE”) since July 14, 1994 in the form of ADRs, which represent six common shares each. The Depositary for the ADRs is The Bank of New York Mellon Corporation.
The total number of registered ADR holders we had at December 31, 2023 was 29 (22 in the Series A ADRs and 7 in the Series B ADRs). As of that date the ADRs represented 2.90% of the total number of our issued and outstanding shares. On December 31, 2023, the closing price for the Series A shares on the Santiago Stock Exchange was Ch$1,745.70 per share (US$ 11.99 per Series A ADR) and Ch$2,190.00 for the Series B shares (US$ 14.91 per Series B ADR). As of December 31, 2023, there were 589,641 Series A ADRs (equivalent to 3,537,846 Series A shares) and 3,996,784 Series B ADRs (equivalent to 23,980,704 Series B shares).
Trading activity on the Santiago Stock Exchange is on average substantially less than that on the principal national securities exchanges in the United States.
Other than as previously discussed in “Item 7 - Major Shareholders”, we are not aware of any other existing contracts or documents that impose material limitations or qualifications on the rights of shareholders of our listed securities.
| B. | PLAN OF DISTRIBUTION |
Not applicable.
| C. | MARKETS |
See “Item 9. The Offer and Listing—A. Offer and Listing Details.”
90
| D. | SELLING SHAREHOLDERS |
Not applicable.
| E. | DILUTION |
Not applicable.
ITEM 10.ADDITIONAL INFORMATION
| A. | SHARE CAPITAL |
Not applicable.
| B. | MEMORANDUM AND ARTICLES OF ASSOCIATION |
Our bylaws (“Estatutos”) are included as an exhibit to this annual report, and are also available on our website www.koandina.com, under Corporate Governance/Board of Directors/Deeds of Incorporation. The following is a summary of the material provisions of our bylaws. The last amendment of our bylaws was approved on July 12, 2012.
Organization
We are a publicly held company and were incorporated on February 7, 1946. Our legal domicile is the city of Santiago, Chile, notwithstanding the special domiciles of offices, agencies or branches that are established in the country as well as abroad. Our duration is indefinite.
Purposes
Our corporate purposes are to execute and develop the following:
| ● | Develop one or more industrial establishments dedicated to the business, operations and activities to manufacture, produce, transform, bottle, can, distribute, transport, import, export, purchase, sell and market in general, in any form and in any way, any type of food product and in particular any type of mineral water, juice, beverage and drink in general or other similar products, and raw materials or semi-finished materials used in such activities and/or products complementary or related to the preceding businesses and activities; |
| ● | Develop one or more agricultural or agro industrial establishments and farmland dedicated to the business, operations and development of agricultural activities and agro industry in general; |
| ● | Produce, transform, distribute, transport, import, export, purchase, sell and market in general, in any form and in any way, any type of agricultural products and/or agro industrial products and raw materials, or semi-finished materials used in such activities, and/or products complementary or related to the preceding activities; |
| ● | Manufacture, distribute, transport, import, export, purchase, sell and market in general, in any form and in any way, any type of container; and execute and develop any type of material recycling process and activity; |
| ● | Accept from and/or grant the representation of trademarks, products and/or licenses related to such businesses, activities, operations and products to national or foreign companies; |
| ● | Provide any type of service and/or technical assistance in any way related to the goods, products, businesses and activities referred to in the preceding letters; |
| ● | Invest cash surplus, even in the capital market; and |
| ● | In general, undertake all other businesses and activities supplementary or linked to the above mentioned operations. |
We may execute our objectives directly or by participating as a partner or shareholder in other companies or by acquiring rights or interests in any other type of association related to the aforementioned activities.
91
Voting Rights
Our capital equity is divided into Series A shares and Series B shares, both preferred and with no par value, whose features, rights and privileges are the following:
| ● | The preference of Series A shares consists solely of the right to elect twelve out of the fourteen board members of the Company. Series A shares are entitled to full voting rights without limitations. |
| ● | The preference of Series B shares consists solely of the right to receive all and any of the per share dividends we may distribute, whether temporary, definitive, minimum mandatory, additional, or eventual, increased by 10%. Series B shares are entitled to a limited voting right, voting only with respect to the election of two board members for the Company. |
| ● | The preferences of Series A and B shares will remain in effect through December 31, 2130. Once this period has expired, Series A and B will be eliminated and the shares which comprise them shall automatically become common shares without any preferences whatsoever, therefore eliminating the division of shares into series. |
Board of Directors and Shareholder Meetings
The members of the board of Directors are proposed and elected every three years during the general annual shareholders’ meeting. Separate voting of the Series A and Series B shareholder elect board members. As mentioned, Series A shares elect twelve directors, and Series B shares elect two Directors.
Board members are elected by separate voting at Series A and Series B shareholders’ meeting and will hold their offices for three years with the possibility to be re-elected for an indefinite number of periods. Even though we have not established a formal process that allows our shareholders to communicate with the directors, shareholders desiring to do so may share their opinions, considerations or recommendations before or during the corresponding shareholders’ meeting which will be heard and attended by the Chairman of the Board, or by the Chief Executive Officer, as the case may be, and any such recommendations will be submitted for resolution by the shareholders in attendance during the meeting.
Regular general shareholders’ meetings are held once a year within the first four months following the date of the annual balance sheet. We prepare a balance sheet annually on our operations as of December 31, which is presented together with the profit and loss statement, the report by the auditors and annual report to the respective shareholders’ meeting. The board sends a copy of the balance sheet, annual report, report by the auditors and respective notes to each of the shareholders registered in the registry no later than by the date the first summons is published. Special shareholders’ meetings may be held at any time according to corporate needs and to discuss and decide upon any matter within the competence thereof, provided it is indicated in the summons. Being a shareholder of the Company is the only condition for entry to a shareholder’s meeting.
| C. | MATERIAL CONTRACTS |
See “Item 4. Information on the Company - Bottler Agreements and Item 5. Operating and Financial Review and Prospects - Summary of Significant Debt Instruments”.
| D. | EXCHANGE CONTROLS |
Foreign Investment and Exchange Controls in Chile
The Central Bank is responsible, among other matters, for setting monetary policies and exchange controls in Chile. As of April 19, 2001, the Chilean Central Bank (“CCB”) eliminated prior foreign exchange controls, imposed certain reporting requirements and determined that certain operations be conducted through the Formal Exchange Market (“FEM”). The main purpose of these amendments, as declared by the Central Bank, is to facilitate the flow of capital into Chile and outside the country and to foster foreign investment.
Equity investments in Chile (including investments in stock) by non-resident persons or entities must comply with some existing exchange control restrictions.
Any foreign individual or legal entity, as well as Chileans with residence abroad, can invest in Chile through the New Direct Foreign Investment Statute or by Chapter XIV of the Foreign Exchange Regulations of the Central Bank.
92
Under the New Direct Foreign Investment Statute, any legal entity or individual that qualifies as foreign investor under the terms of the aforementioned Statute, may request a certificate to be issued by the Foreign Investment Promotion Agency, confirming its status as foreign investor, and enabling access to the new foreign investment regime.
During 2001, the CCB eliminated certain exchange controls. For instance, it revoked Chapter XXVI of the CFER, which regulated the issuance and placement of ADRs by Chilean corporations. Pursuant to the new rules, the Central Bank’s approval is no longer a pre-condition for ADR issuances. ADR issuances are now regarded as an ordinary foreign investment, and the only requirements are that the CCB be informed of the transaction, by fulfilling the rules of Chapter XIV of the CFER, that mainly establishes that the monies come in or leave the country exclusively through the Formal Exchange Market, if the recipient of the investment decides to enter the foreign currency to the country or if it carries out payments or remittances from Chile.
Notwithstanding these changes, exchange transactions authorized prior to April 19, 2001 remained subject to the rules in force as of the date of such transactions. The new exchange regime did not affect Chapter XXVI of the CFER and the Foreign Investment Contract (“FIC”) between Andina, the Central Bank and The Bank of New York Mellon (as Depositary of the shares represented by ADRs). Notwithstanding the previous, the parties to the FIC may choose to adopt the norms imposed by the CCB, resigning to those of the FIC, and which has been the option we have taken until this date. The FIC is the agreement by which access to the FEM is given to the Depositary and ADR holders. The FIC adopted the dispositions of Chapter XXVI and was celebrated pursuant to Article 47 of the Constitutional Organic Act of the CCB.
Under Chapter XXVI of the CFER, if the funds to purchase the common shares underlying the ADRs are brought into Chile, the Depositary must deliver, on behalf of foreign investors, an annex providing information on the transaction to the Formal Exchange Market entity involved, together with a letter instructing such entity to deliver the foreign currency or the equivalent amount in pesos, on or before the date the foreign currency is brought or is to be brought into Chile.
Repatriation of amounts received with respect to deposited common shares or common shares withdrawn from deposits on surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying common shares and any rights arising there from) need be made through the FEM. The FEM entity intervening in the repatriation must provide certain information to the CCB on the following banking business day.
Under Chapter XXVI and the FIC, the CCB agreed to grant to the Depositary, on behalf of ADR holders, and to any investor not residing nor domiciled in Chile who acquire shares or replace ADRs for common stock, which we refer to as “Withdrawn Shares”, FEM access to convert Chilean pesos into U.S. dollars and to remit those dollars outside Chile including amounts received as: (i) cash dividends; (ii) proceeds from the sale in Chile of Withdrawn Shares; (iii) proceeds from the sale in Chile of preemptive rights to subscribe for additional shares; (iv) proceeds from the liquidation, merger or consolidation of Andina; (v) proceeds resulting from capital decreases or earnings or liquidations; and (vi) other distributions, including those in respect of any re-capitalization resulting from holding shares, ADRs or by Withdrawn Shares.
The guarantee of FEM access under the FIC will extend to the participants of the ADR offering if the following requirements are met: (i) that the funds to purchase the shares underlying the ADRs are brought into Chile and converted into Chilean pesos through the FEM; (ii) that the purchase of the underlying shares is made on a Chilean stock exchange; and (iii) that within five business days from the conversion of the funds into Chilean pesos, the CCB is informed that the funds converted were used to purchase the underlying shares, if those funds are not invested in shares within that period, it can access the FEM to reacquire foreign currency, provided that the request is submitted to the CCB within seven banking business days of the initial conversion into pesos.
Chapter XXVI provides that FEM access in connection with dividend payments is conditioned to our certifying to the CCB that a dividend payment has been made and that any applicable tax has been withheld. Chapter XXVI also provides that FEM access in connection with the sale of Withdrawn Shares, or distribution thereon, is conditioned upon receipt by the CCB (i) a certificate by the Depositary or custodian, as the case may be, that the shares have been withdrawn in exchange for delivery of the appropriate ADRs; and (ii) a waiver of the benefits of the FIC with respect to ADRs (except in connection with the proposed sale of the shares) until the Withdrawn Shares are re-deposited.
FEM access under any of the circumstances described above is not automatic. Pursuant to Chapter XXVI, such access needs the CCB’s approval on a request submitted to that end through a banking institution established in Chile. The FIC provides that if the CCB has not acted upon the request within seven banking days, the request is deemed to have been granted.
93
Under current Chilean law, the CCB cannot unilaterally change the FIC. The Chilean Courts (although not binding on future judicial decisions) also have established that the FIC cannot be annulled by future legislative changes. No assurance can be given, however, that additional Chilean restrictions applicable to the holders of ADRs, to the disposition of underlying shares, or to the repatriation of proceeds from their disposition, will not be imposed in the future; nor can there be any assessment of the duration or impact of any restrictions that might be imposed. If for whatever reason, including changes in the FIC or Chilean law, the Depositary is prevented from converting Chilean pesos into U.S. dollars, the investors shall receive dividends or other payments in Chilean pesos, which shall subject the investors to exchange rate risks. It cannot be guaranteed that the CFER, as amended, or any other exchange regulation will not be amended in the future, or that if new regulations are enacted that they shall have no material bearing on Andina or the ADR holders.
No assurance can be given that Andina will be able to purchase U.S. dollars in the local exchange market at any time in the future, nor that any such purchase will be for the amounts necessary to pay any sum due under any of its capital or debt instruments. Likewise, it is not possible to guarantee that changes to the regulations of the CCB or other legislative changes relating to exchange controls will not restrict or impair Andina’s ability to purchase U.S. dollars in order to make payment on its debt instruments.
| E. | TAXATION |
Tax Considerations Relating to Equity Securities
Chilean Tax Considerations.
The following discussion summarizes the material Chilean income tax consequences of an investment in Andina’s stock or ADRs by an individual who is not domiciled or resident in Chile or a legal entity that is not organized under the laws of Chile and does not have a permanent establishment in Chile (“foreign holder”). This discussion is based upon Chilean income tax laws presently in force and administrative jurisprudence, including Ruling No. 324 of January 29, 1990 of the Servicio de Impuestos Internos (the Chilean Internal Revenue Service or “SII”), as well as the Treaty (as defined below) and other applicable regulations and rulings that are subject to change without notice. The discussion is not intended as tax advice to any particular investor, which can be rendered only in light of that investor’s particular tax situation. Each investor or potential investor is encouraged to seek independent tax advice with respect to consequences of investing in Andina’s stock or ADRs.
Dividends
Dividend distributions to investors who are juridical or natural persons residing or domiciled abroad, are affected by an additional tax (“withholding at the source”) at a rate of 35%, with the right to credit for corporate income tax (First Category Tax) paid by Andina (today a rate of 27%). However, distributions made to investors residing or domiciled in countries that do not have a treaty to avoid double taxation with Chile, are taxed by an additional withholding equivalent to 35% of the corporate income tax credit, thus limiting the credit for this tax at 65%. This additional withholding does not apply to distributions made to residents of countries that have a treaty in force with Chile, which may allocate 100% of the credit. Until December 31, 2026, this additional withholding also does not apply to distributions made to shareholders who are residents of countries that have signed a treaty to avoid double taxation but was not in force to the extent that it was signed prior to January 1, 2020.
Distributions made to investors residing or domiciled in Chile are taxed by personal taxes (“Supplementary Global Tax”) which have progressive rates ranging from 0% to 40%. The tax credit limitation also applies to these investors; thus, they are taxed with an additional tax (“debit”) equivalent to 35% of the corporate tax credit.
Capital Gains
Gains recognized from the sale or exchange of ADRs by a foreign holder outside of Chile are not subject to Chilean taxation. Capital gains generated from the sale of shares are subject to general taxation, unless they are shares that are sold on the stock exchange and that have been acquired on the stock exchange, or are shares of first issue, in which case gains are not affected by income taxation in Chile. Regarding this exception, a bill is currently being discussed that would derogate it.
94
The tax cost of common shares received in exchange for ADRs (“conversion”) is determined in accordance with the valuation procedure set out in the Deposit Agreement, which values common shares at the highest selling price according to transactions on the Santiago Stock Exchange on the date of withdrawal of common shares. Consequently, the conversion of ADRs into shares of common stock, and the immediate sale of the shares for the value established under the Deposit Agreement, will not generate a capital gain subject to taxation in Chile. However, in the case where the sale of the shares is made on a day that is different than the date in which the conversion is recorded, capital gain subject to taxation in Chile may be generated. In connection thereto, on October 1, 1999 the SII issued Ruling No. 3,708 whereby it allowed Chilean issuers of ADRs to amend the deposit agreements in order to include a clause that states that, in the case that the exchanged shares are sold by the ADRs’ holders on a Chilean stock exchange either on the same day in which the exchange is recorded or within the two business days prior to such date, the acquisition price of such exchanged shares shall be the price registered in the invoice issued by the stock broker that participated in the sale transaction. As this amendment has been included in the Deposit Agreement, the capital gain that may be generated if the date of conversion is different than the date of sale, would not be subject to taxation, to the extent that the SII’s criterion is maintained and the contributor in good faith adopts this criterion, which the contributor must certify to the satisfaction of the authority in case of observation.
The distribution and exercise of preemptive rights relating to the shares of common stock are not subject to taxation in Chile. Any capital gain from the sale or assignment of preemptive rights will be subject to general taxation.
Chile / United States Double Taxation Treaty
The current income tax treaty between Chile and the United States (the “Treaty”) entered into force in December 2023, and the following are among its tax effects:
| ● | The Treaty (art. 10) establishes maximum withholding rates on dividends paid between the contracting states (maximum rate of 5% if the beneficiary holds 10% or more of the voting shares of the company paying the dividend and 15% in all other cases). This treaty-established benefit of a lower dividend withholding tax rate will not be applicable as long as Chile maintains its integrated taxation system whereby the First Category Tax is fully creditable in computing any withholding at the source. |
| ● | The exemptions that benefit capital gains on the sale of ADRs remain unaffected by the entry into force of the Treaty. Regarding the sale of shares in a Chilean company by a U.S. resident, the Treaty establishes the right of exclusive taxation in the United States if certain requirements are satisfied, including that the shares are sold on a recognized stock exchange in Chile or in a public offer for the acquisition of shares regulated by law. Therefore, under the Treaty, any capital gain resulting from the sale of shares may be exempt from taxation in Chile. |
Other Chilean Taxes
The transfer of ADRs by a foreign holder is not subject to inheritance tax or donation tax. These taxes may only apply in case of donation or hereditary transfer of common shares.
The issuance, registration or transfer of ADRs or common shares is not taxed with Stamp and Seal Tax or any other similar tax.
Withholding Tax Certificates
Upon request, we will provide to foreign holders appropriate documentation evidencing the payment of Chilean withholding taxes applied in Chile on earnings distributed to foreign holders.
95
U.S. Federal Income Tax Considerations Relating to ADRs or Shares of Common Stock.
The following discussion summarizes certain U.S. federal income tax consequences of an investment in ADRs or shares of common stock. This discussion is based upon U.S. federal income tax laws presently in force. The discussion is not a full description of all tax considerations that may be relevant to a decision to purchase ADRs or shares of common stock. In particular, the discussion is directed only to U.S. holders (as defined below) that hold ADRs or shares of common stock as capital assets, and it does not address the tax treatment of holders that are subject to special tax rules under the Internal Revenue Code of 1986 as amended (the “Code”), such as financial institutions, regulated investment companies, real estate investment trusts, partnerships or other pass-through entities, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, insurance companies, tax-exempt entities, persons holding ADRs or shares of common stock as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, holders that own or are deemed to own 10% or more of our shares (by vote or value), persons required to accelerate the recognition of any item of gross income with respect to ADRs or shares of common stock as a result of such income being recognized on an applicable financial statement, persons liable for alternative minimum tax or persons whose “functional currency” is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code and regulations, rulings and judicial decisions thereunder as of the date hereof, as well as the Treaty, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. In addition, the discussion below assumes that the Deposit Agreement, and all other related agreements, will be performed in accordance with their terms. If a partnership holds ADRs or shares of common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners in a partnership holding ADRs or shares of common stock should consult their tax advisors. This summary does not contain a detailed description of all the U.S. federal income tax consequences to a holder in light of its particular circumstances and does not address the Medicare tax on net investment income, U.S. federal estate and gift taxes or the effects of any state, local or non-United States tax laws.
Prospective purchasers should consult their tax advisors about the federal, state, local and foreign tax consequences to them of the purchase, ownership and disposition of ADRs or shares of common stock.
As used herein, the term “U.S. holder” means a beneficial owner of ADRs or shares of common stock that is (i) an individual U.S. citizen or resident, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust that: (a) is subject to the primary supervision of a court within the United States and with respect to which one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
If the obligations contemplated by the Deposit Agreement are performed in accordance with its terms, ADR holders generally will be treated for U.S. federal income tax purposes as the owners of the shares of common stock represented by those ADRs. Deposits or withdrawals of shares of common stock by U.S. holders in exchange for ADRs will not result in the realization of gain or loss for U.S. federal income tax purposes.
Cash Dividends and Other Distributions
Cash distributions (including the amount of any Chilean taxes withheld) paid to U.S. holders with respect to the ADRs or shares of common stock generally will be treated as dividend income to such U.S. holders, to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such income will be includable in the gross income of a U.S. holder as ordinary income on the day received by the Depositary, in the case of ADRs, or by the U.S. holder, in the case of shares of common stock. The dividends will not be eligible for the dividends received deduction generally allowed to corporations under the Code.
96
Subject to applicable limitations (including a minimum holding period requirement), dividends received by non-corporate U.S. holders from a qualified foreign corporation may be treated as “qualified dividend income” that is subject to reduced rates of taxation. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the United States which the U.S. Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision. The U.S. Treasury Department has determined that the Treaty meets these requirements, and we believe we are eligible for the benefits of the Treaty. A foreign corporation is also treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADRs backed by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that our ADRs (which are listed on the New York Stock Exchange), but not our shares of common stock, are readily tradable on an established securities market in the United States. There also can be no assurance that our ADRs will be considered readily tradable on an established securities market in the United States in later years. Non-corporate U.S. holders should consult their own tax advisors regarding the application of these rules given their particular circumstances.
Dividends paid in Chilean pesos will be includable in income in a U.S. dollar amount based on the exchange rate in effect on the day of receipt by the Depositary, in the case of ADRs, or by the U.S. holder, in the case of shares of common stock, regardless of whether the Chilean pesos are converted into U.S. dollars. If the Chilean pesos received as dividends are not converted into U.S. dollars on the date of receipt, a U.S. holder will have a basis in the Chilean pesos equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Chilean pesos will be treated as U.S. source ordinary income or loss, regardless of whether the pesos are converted into U.S. dollars.
Subject to certain conditions and limitations, including a minimum holding period requirement, any Chilean withholding tax (net of any credit for the corporate income tax) paid by or for the account of any U.S. holder may be eligible for credit against the U.S. holder’s U.S. federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid with respect to the ADRs or shares of common stock will generally be foreign source income and will generally constitute passive category income. However, U.S. Treasury regulations addressing foreign tax credits (the “Foreign Tax Credit Regulations”) impose additional requirements for foreign taxes to be eligible for a foreign tax credit if the relevant taxpayer does not elect to apply the benefits of an applicable income tax treaty, and there can be no assurance that those requirements will be satisfied for a U.S. holder that does not elect to apply the benefits of the Treaty. The Treasury and the U.S. Internal Revenue Service (the “IRS”) are considering proposing amendments to the Foreign Tax Credit Regulations. In addition, recent notices from the IRS provide temporary relief by allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they previously existed (before the release of the current Foreign Tax Credit Regulations) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). Instead of claiming a foreign tax credit, a U.S. holder may be able to deduct any Chilean withholding tax in computing its taxable income, subject to generally applicable limitations under U.S. law (including that a U.S. holder is not eligible for a deduction for otherwise creditable foreign income taxes paid or accrued in a taxable year if such U.S. holder claims a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year). The rules governing the foreign tax credit and deductions for foreign taxes are complex. Investors are urged to consult their tax advisors regarding the Foreign Tax Credit Regulations (and the related temporary relief in the IRS notices) and the availability of the foreign tax credit or a deduction under their particular circumstances.
Distributions to U.S. holders of additional shares of common stock or preemptive rights with respect to shares of common stock that are made as part of a pro rata distribution to all shareholders of the Company generally should not be subject to U.S. federal income tax.
To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADRs or shares of common stock, and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, a U.S. holder should expect that a distribution will generally be reported and treated as a dividend (as discussed above).
Passive Foreign Investment Company
We do not believe that we are, for U.S. federal income tax purposes, a passive foreign investment company (a “PFIC”) and expect to continue our operations in such a manner that we will not be a PFIC. If, however, we are or become a PFIC, U.S. holders could be subject to additional U.S. federal income taxes on gain recognized with respect to the ADRs or shares of common stock and on certain distributions, plus an interest charge on certain taxes treated as having been deferred by the U.S. holder under the PFIC rules of the U.S. federal income tax laws.
97
Non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.
Capital Gains
U.S. holders that hold ADRs or shares of common stock as capital assets will recognize capital gain or loss for U.S. federal income tax purposes on the sale or other disposition of such ADRs or shares (or preemptive rights with respect to such shares) held by the U.S. holder or the Depositary. Capital gains of non-corporate U.S. holders (including individuals) derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. holder generally will be treated as U.S. source gain or loss. Consequently, in the case of a disposition of shares of common stock (which, unlike a disposition of ADRs, may be taxable in Chile), the U.S. holder may not be able to use a foreign tax credit for any Chilean tax imposed on the disposition unless such credit can be applied (subject to applicable limitations) against tax due on other income from foreign sources. However, pursuant to the Foreign Tax Credit Regulations, unless a U.S. holder elects to apply the benefits of the Treaty, any such Chilean tax would generally not be a foreign income tax eligible for a foreign tax credit (regardless of any other income that a U.S. holder may have that is from foreign sources). In such case, the non-creditable Chilean tax may reduce the amount realized on the disposition of the shares. As discussed above, however, recent notices from the IRS provide temporary relief by allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they previously existed (before the release of the current Foreign Tax Credit Regulations) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). If any Chilean tax is imposed upon the disposition of shares of common stock and a U.S. holder applies such temporary relief, such Chilean tax may be eligible for a foreign tax credit or deduction, subject to the applicable conditions and limitations. Investors are urged to consult their tax advisors regarding the Foreign Tax Credit Regulations (and the related temporary relief in the IRS notices) and the availability of the foreign tax credit or a deduction under their particular circumstances.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to dividends in respect of ADRs or shares of common stock or the proceeds received on the sale, exchange, or other disposition of ADRs or shares of common stock paid within the United States (and in certain cases, outside of the United States) to U.S. holders other than certain exempt recipients. Likewise, a backup withholding tax may apply to such payments if the U.S. holder fails to provide an accurate taxpayer identification number and a certification that it is not subject to backup withholding or fails to report interest and dividends required to be shown on its federal income tax returns. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.
| F. | DIVIDENDS AND PAYING AGENTS |
Not applicable.
| G. | STATEMENT BY EXPERTS |
Not applicable.
| H. | DOCUMENTS ON DISPLAY |
We are subject to the informational reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, which requires that we file periodic reports and other information with the SEC. As a foreign private issuer, we file annual reports on Form 20-F as opposed to Form 10-K. We do not file quarterly reports on Form 10-Q but furnish quarterly reports and reports in relation to material events on Form 6-K. As a foreign private issuer, we are exempt from the rules under the U.S. Securities Exchange Act of 1934, as amended, prescribing the furnishing and content of proxy statements and short-swing profit disclosure and liability.
You may read and copy all or any portion of the annual report or other information in our files in the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can also access to these documents through the SEC’s website at www.sec.gov, and access –and request– a hard copy of them through our corporate website www.koandina.com. You can also request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.
98
We also file reports with the Chilean Comisión para el Mercado Financiero (“CMF”). The documents referred to in this annual report can be inspected at Miraflores 9153, Piso 7, Renca, Santiago, Chile.
| I. | SUBSIDIARY INFORMATION |
Not applicable.
| J. | ANNUAL REPORT TO SECURITY HOLDERS |
Not applicable.
ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The main sources of systematic risks that the Company is exposed to are: changes in interest rates and changes in currency exchange rates.
Particularly, interest rates increase, and currency exchange rates depreciation may affect the Company financial strategy given the various currency denominated debt the Company currently holds. To protect the Company against market volatility, hedging policies have been set with the objective to regulate the use of financial derivatives by management. The use of these instruments had been strictly designed for hedging purposes, leaving out any speculation and trading use.
Interest Rate Risk
The Company’s debt is mainly denominated in UF (local inflation indexed Chilean currency), U.S. dollar fixed rate bond and CHF Swiss franc fixed rate bond. Bank debt represents a smaller proportion of the total debt and it’s denominated in various local currencies in either fixed or variable rates. Given that the main portion of the debt is in fixed rate, the main risk is the interest rate increase at the moment of refinancing mature debt.
On the other hand, our cash is invested in certain short-term securities mainly in fixed interest rate.
99
The following table provides information about the Company’s debt (bonds & bank debt) and short-term investments that have exposure to changes in interest rates as of December 31, 2023.
|
|
Expected Maturity Date |
|
Fair Value |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
2029 |
|
|
|
|
|
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
Onwards |
|
Total |
|
Total |
|
|
(in millions Ch$) |
||||||||||||||
Interest Earning Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term investments - Chile - CLP |
|
66,753 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
66,753 |
|
|
Interest rate (weighted average) |
|
8.83% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
8.83% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term investments - Chile - USD |
|
5,572 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
5,572 |
|
|
Interest rate (weighted average) |
|
6.89% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
6.89% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term investments - Brasil |
|
16,219 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
16,219 |
|
|
Interest rate (weighted average) |
|
67.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
67.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term investments - Argentina |
|
91,751 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
91,751 |
|
|
Interest rate (weighted average) |
|
13.04% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
13.04% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International bonds (144A/RegS) (1) |
|
4,474 |
|
— |
|
— |
|
— |
|
— |
|
257,797 |
|
262,270 |
|
206,123 |
Fixed Rate [US$] 144A Bonds |
|
3.95% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
2.72% |
|
2.72% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International bonds (Swiss bond) (1) |
|
853 |
|
0 |
|
0 |
|
0 |
|
0 |
|
175,762 |
|
176,616 |
|
184,802 |
Fixed Rate [CHF$] |
|
2.72% |
|
0.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
2.72% |
|
2.72% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local Chilean Bonds (1) |
|
22,152 |
|
17,292 |
|
11,521 |
|
5,096 |
|
5,024 |
|
481,169 |
|
542,254 |
|
538,868 |
Fixed Rate [UF] - Local Chilean Bonds (weighted average) |
|
5.19% |
|
5.76% |
|
5.39% |
|
4.00% |
|
4.00% |
|
3.36% |
|
3.57% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total public debt (Bonds) |
|
27,479 |
|
17,292 |
|
11,521 |
|
5,096 |
|
5,024 |
|
914,728 |
|
981,140 |
|
929,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank debt - Chile |
|
1,501 |
|
9,404 |
|
4,000 |
|
— |
|
— |
|
— |
|
14,905 |
|
|
Weighted average interest rate Ch$ |
|
1.50% |
|
6.27% |
|
2.00% |
|
0.00% |
|
0.00% |
|
0.00% |
|
4.64% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total bank debt |
|
1,501 |
|
9,404 |
|
4,000 |
|
— |
|
— |
|
— |
|
14,905 |
|
|
| (1) | Includes issuance deferred costs: |
International Bonds Issuance Costs: Current: Ch$604 million, Non-Current: Ch$7,152 million.
Local Chilean Bonds: Current: Ch$86 million, Non-Current: Ch$910 million.
Foreign Currency Risk
As of December 31, 2023, the only foreign currencies used by the Company to finance its operation is the U.S dollar and CHF Swiss franc, all the rest of the Company’s debt is denominated in local operation currencies (UF, Chilean peso, Argentinean peso, Brazilian real and Paraguayan guaraníes).
100
The following table summarizes the financial instruments held to December 31, 2023, denominated in U.S. dollars and CHF Swiss franc:
|
|
|
|
|
|
|
|
|
|
|
|
2029 |
|
|
|
Fair |
(Denominated in U.S. Dollars instruments) |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
Onwards |
|
Total |
|
Value |
|
|
(in millions Ch$) |
||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
9,463 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9,463 |
|
9,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds debt (1) |
|
4,474 |
|
— |
|
— |
|
— |
|
— |
|
257,797 |
|
262,270 |
|
206,123 |
Leasing debt |
|
1,312 |
|
1,062 |
|
448 |
|
803 |
|
401 |
|
1,334 |
|
5,360 |
|
5,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Denominated in CHF Swiss franc instruments) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds debt (1) |
|
853 |
|
0 |
|
0 |
|
0 |
|
0 |
|
175,762 |
|
176,616 |
|
184,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt |
|
16,102 |
|
1,062 |
|
448 |
|
803 |
|
401 |
|
434,893 |
|
453,709 |
|
405,747 |
| (1) | Includes issuance deferred costs: |
International Bonds Issuance Costs: Current: Ch$604 million, Non-Current: Ch$7,152 million.
In order to protect the Company from the effects on results due to the volatility of the Brazilian real against the CHF Swiss franc (CHF$170 million of Senior Notes in the Swiss market), we have entered into currency swaps that cover 100% of our Swiss franc-denominated financial obligations, thereby mitigating our exchange rate exposure. Additionally, to protect the Company from the effects on results due to the volatility of the Chilean peso against the U.S. dollar (bond due 2050), derivatives have been contracted (cross currency swaps) to fully redenominate the US dollar-denominated financial obligations to UF’s.
As of December 31, 2023, the Company’s net exposure to existing assets and liabilities in foreign currencies, discounting our derivatives contracts, was Ch$3,314 million.
ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| A. | DEBT SECURITIES |
Not applicable.
| B. | WARRANTS AND RIGHTS |
Not applicable.
| C. | OTHER SECURITIES |
Not applicable.
| D. | AMERICAN DEPOSITARY RECEIPTS |
Fees and Charges
The Bank of New York Mellon serves as the depositary for our ADRs. ADR holders are required to pay various fees to the depositary, and the depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.
ADR holders are required to pay the depositary amounts in respect of expenses incurred by the depositary or its agents on behalf of ADR holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, or conversion of foreign currency into U.S. dollars. The depositary may decide in its sole discretion to seek payment by either billing holders or by deducting the fee from one or more cash dividends or other cash distributions.
101
ADR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the table below.
Depositary service |
|
Fee payable by ADR holders |
Issuance and delivery of ADRs, including in connection with share distributions |
|
Up to US$5.00 per 100 ADSs (or portion thereof) |
Withdrawal of shares underlying ADRs |
|
Up to US$5.00 per 100 ADSs (or portion thereof) |
Registration for the transfer of shares |
|
Registration or transfer fees that may from time to time be in effect |
Cash distribution fees |
|
US$0.02 or less per ADS |
Transfers made pursuant to terms of Deposit Agreement |
|
Fee not in excess of US$1.50 for an ADR |
In addition, holders may be required to pay a fee for the distribution or sale of securities. Such fee (which may be deducted from such proceeds) would be for an amount equal to the lesser of (1) the fee for the issuance of ADRs that would be charged as if the securities were treated as deposited shares and (2) the amount of such proceeds.
Fees Incurred in Past Annual Period
From January 1, 2023 to December 31, 2023, we received US$20,008.73 from the depositary.
Fees to be Paid in the Future
The Bank of New York Mellon, as depositary, has agreed to reimburse us for expenses they incurred that are related to establishment and maintenance expenses of the ADR program. The depositary has agreed to reimburse us for continuing annual stock exchange listing fees. The depositary has also agreed to waive the standard out-of-pocket maintenance costs for the ADRs programs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse us annually for certain investor relationship programs or special investor relations promotional activities. In certain instances, the depositary has agreed to provide additional payments to us based on any applicable performance indicators relating to the ADR facility. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary collects from investors.
The depositary collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
102
PART II
ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
In 1996, our shareholders approved the reclassification of our common stock into two new series of shares. Pursuant to the reclassification, each outstanding share of our common stock was replaced by one newly issued Series A share and one newly issued Series B share.
The Series A and Series B shares are principally differentiated by their voting and economic rights. The modification of our bylaws as of June 25, 2012, increased the number of directors from 7 to 14. The holders of the Series A shares have full voting power and are entitled to elect 12 of 14 members of the board of directors, and the holders of the Series B shares have no voting rights but for the right to elect 2 members of the board of directors. In addition, holders of Series B shares are entitled to a dividend 10% greater than any dividend on Series A shares.
After the reclassification, the Superintendence of Pension Fund Managers (Superintendencia de Administradores de Fondos de Pensiones) decreed that Chilean pension funds would not be permitted to acquire Series B Shares due to their limited voting rights. In 2004, however, the Superintendence reversed, and approved Series B shares as investment instruments for Chilean Pension funds. Series A shares have always been eligible as investment instruments for Chilean pensions funds.
ITEM 15.CONTROLS AND DISCLOSURE PROCEDURES
Disclosure Controls and Procedures
We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of December 31, 2023. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a—15(f) and 15d—15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. Our internal control over financial reporting includes those policies and procedures that (i) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions or our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as issued by the IASB, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
103
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on our evaluation under the framework in Internal Controls—Integrated framework (2013) issued by the Committee of Sponsoring Organizations of the Tread way Commission, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by our registered independent accounting firm, which opinion is stated in their report, included on pages F-2 and F-3 herein.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required under Rules 13a-15 or 15d-15 that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16.[Reserved]
ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has designated Mr. Gonzalo Parot Palma as our Audit Committee Financial Expert, as defined in the instructions to Item 16A of Form 20-F. Our board of directors has also determined that Mr. Domingo Cruzat Amunátegui and Mr. Gonzalo Parot Palma fulfills the independence standards set forth in Rule 10A-3 of the U.S. Exchange Act and applicable NYSE rules.
ITEM 16B.CODE OF ETHICS
We have adopted a Code of Ethics that constitutes a code of ethics for our directors and employees. This Code applies to our Board of Directors, chief executive officer and all senior financial officers of our Company, including the chief financial officer, or any other persons performing similar functions, as well as to all other officers and employees of the Company. Our Code of Ethics is available on our website www.koandina.com. If we make any substantive amendment to the Code or grant any waivers, including any implicit waiver, from a provision of the Code, we will disclose the nature of such amendment or waiver on the above mentioned website. On April, 2021, we amended our Code of Ethics to incorporate provisions related to criminal liability of legal entities, in accordance with Chilean Law N° 20,393, Argentine Law N° 27,401, and other compliance and anti-bribery provisions, including the Sarbanes-Oxley Act and the U.S. Foreign Corrupt Practices Act (FCPA). Additionally, we incorporated other provisions, making explicit reference to the importance of equal treatment and respect for each individual, diversity and non-discrimination, a healthy working environment, protection of our natural resources, sustainability, among others.
ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees Paid to Independent Public Accountants
The following table sets forth, for each of the years indicated, the kinds of fees paid to our external auditors and the percentage of each of the fees out of the total amount paid to them.
|
|
Year ended December 31, |
|
||||||
|
|
2022 |
|
2023 |
|
||||
|
|
Fees millions |
|
% of |
|
Fees |
|
% of |
|
Services rendered |
|
Ch$ |
|
Total Fees |
|
millions Ch$ |
|
Total Fees |
|
Audit fees (1) |
|
929 |
|
100.0 |
% |
1,013 |
|
93.7 |
% |
Audit-related fees |
|
— |
|
— |
|
— |
|
— |
|
Tax fees (3) |
|
— |
|
— |
|
18 |
|
1.7 |
% |
All other fees (2) |
|
— |
|
— |
|
49 |
|
4.6 |
% |
Total |
|
929 |
|
100 |
% |
1,081 |
|
100 |
% |
| (1) | Fees for audit services and related expenses, including fees associated with the Company’s annual audit, including the integrated audit of internal control over financial reporting, the reviews of the Company’s quarterly reports required to be filed in Chile and annual statutory audits required in Chile and internationally. |
| (2) | Fees for all other services and related expenses not included above and related to the audit of the Company’s sustainability reports. |
104
| (3) | Tax fees correspond to the services and advice provided by the tax division to comply with tax requirements. |
Directors’ Committee and Audit Committee Pre-Approval Policies and Procedures
We have adopted pre-approval policies and procedures under which all non-audit services provided by our external auditors must be pre-approved by our Directors’ Committee. Once the proposed service is approved, our subsidiaries or we formalize the engagement of services. In addition, the members of our board of directors are briefed on matters discussed by the Directors’ Committee.
ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Our Audit Committee is comprised of Gonzalo Parot Palma, Salvador Said Somavía and Domingo Cruzat Amunátegui.
We disclose that, with respect to the current membership of Mr. Salvador Said Somavía on our Audit Committee, the Company has relied on the exemption from the independence requirements provided by Rule 10A-3(b)(1)(iv)(D) of the Securities and Exchange Act of 1934, as amended. Pursuant to said rule, a member of the Committee who is an affiliate of the foreign private issuer or a representative of such an affiliate that has only observer status on, and is not a voting member or the chair of, the audit committee, and neither the member nor the affiliate is an executive officer of the foreign private issuer, may be exempted from the independence requirement.
Mr. Salvador Said Somavía meets, for the duration of his membership, the requirements of Rule 10A-3(b)(1)(iv)(D) because he (i) is a representative of our controlling shareholder group; (ii) has an observer-only status on our Audit Committee; (iii) is not an officer of the Company or any of our subsidiaries; and (iv) does not receive, directly or indirectly, compensation from us or any of our subsidiaries other than in his capacity as member of our Audit Committee.
Our reliance on the exemption provided by Rule 10A-3 of the Exchange Act, with respect to Mr. Salvador Said Somavía, would not materially adversely affect the ability of our Audit Committee to act independently.
ITEM 16E.PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
During 2023, neither we nor any of our affiliated parties purchased any of our equity securities, either pursuant to publicly announced plans or programs or not.
ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
105
ITEM 16G.CORPORATE GOVERNANCE
NYSE and Chilean Corporate Governance Requirements
The following table sets forth significant differences between Chilean corporate governance practices and those corporate governance practices followed by domestic corporations under NYSE listing standards.
REQUIREMENT |
|
NYSE REQUIREMENTS FOR US LISTED COMPANIES |
|
CHILEAN LAW REQUIREMENTS AND COMPANY PRACTICE |
|
|---|---|---|---|---|---|
Independent Directors |
|
Under NYSE rules, the board of directors is required to have a majority of independent directors. However, “controlled companies,” as defined under NYSE rules, are exempt from this requirement. |
|
Under Chilean law, there is no legal obligation to have a Board of Directors composed of a majority of independent members. Our company does not have a majority independent board of directors, and as a “controlled company,” we would be exempt from NYSE’s requirement to do so. |
|
|
|
|
|
|
|
|
|
|
|
Article 50 bis of the Corporations Law requires appointing at least one independent director. Chilean Law considers independent such director that within the last 18 months is not involved in certain circumstances, such as: having an economic interest in the company or other group, having a relationship with such persons, be director of nonprofit organizations, among others, and comply with a declaration of independence. We have two of such directors. |
|
|
|
|
|
|
|
Executive Sessions |
|
Non-management directors must meet at regularly scheduled executive sessions without management. |
|
No similar legal obligation exists under Chilean law. Under Chilean law, the position of director of a corporation is incompatible with the position of manager, auditor, accountant or president of the company. The Non-Management Director does not exist under Chilean law. Directors, however, are required to convene in legally established meetings to resolve matters required by Chilean Corporation Law. Since Non-Management Director does not exist under Chilean law, it is not possible to comply with the Section 303A.03. |
|
|
|
|
|
|
|
Nominating/Corporate Governance Committee |
|
Listed companies must have a Nominating/Corporate Governance Committee composed entirely of independent directors. However, “controlled companies,” as defined under NYSE rules, are exempt from this requirement. |
|
There is no similar legal obligation under Chilean law. Andina has a Directors’ Committee whose functions are set by Chilean Corporation Law. Our Company does not have a Nominating/Corporate Governance Committee composed entirely of independent directors and as a “controlled company,” we would be exempt from NYSE’s requirement to do so. The functions of the Directors’ Committee are described under Item 6C. |
|
|
|
|
|
|
|
Compensation Committee |
|
Listed companies must have a Compensation Committee composed entirely of independent directors. However, “controlled companies,” as defined under NYSE rules, are exempt from this requirement. |
|
There is no similar legal obligation under Chilean law. In accordance with Chilean law, the above-mentioned Directors’ Committee is in charge of reviewing management compensation. Our Company does not have a Compensation Committee composed entirely of independent directors and as a “controlled company,” we would be exempt from NYSE’s requirement to do so. The functions of the Directors’ Committee are described under Item 6C. |
|
|
|
|
|
|
|
Audit Committee |
|
Must have an audit committee with the specific responsibilities and authority necessary to comply with SEC rules. Members must meet all of the independence requirements of the NYSE, as well as SEC Rule 10A-3 independence requirements (subject to any available exemptions). |
|
No similar legal obligation exists under Chilean law. However, in accordance with the Chilean Public Companies Law 18,046, public companies that have a net worth of more than 1.5 million UFs and/or at least a 12.5% of its issued shares with voting rights are held by individual shareholders who control or own less than 10% of such shares must have a Directors’ Committee, formed by three members who are in their majority independent of the controller. Andina designated an Audit Committee in accordance with SEC Rule 10A-3. As described in Item 6.C. “Board Practice –Audit Committee,” we rely on an exemption from the independence requirements of Rule 10A-3 with respect to one of our audit committee members. The functions of the audit committee are described under “Item 6C.”. |
|
|
|
|
|
|
|
106
REQUIREMENT |
|
NYSE REQUIREMENTS FOR US LISTED COMPANIES |
|
CHILEAN LAW REQUIREMENTS AND COMPANY PRACTICE |
|
|---|---|---|---|---|---|
Internal Audit Function |
|
Listed companies must maintain an Internal Audit Function to provide management and the Audit Committee with ongoing assessments of the company’s risk management processes and systems of internal control. A listed company may choose to outsource this function to a third party service provider other than its independent auditor. |
|
There is no similar obligation under Chilean law. Chilean law requires that companies must have account inspectors or external auditors. However, Andina has an Internal Auditor who reports to the Audit Committee. |
|
|
|
|
|
|
|
Shareholder Approval of Equity Compensation Plans and Certain Other Share Issuances |
|
Shareholders must approve all equity-compensation plans and material revisions thereto, with limited exemptions. Shareholder approval also required for certain other dilutive and related party equity issuances. |
|
There is no similar obligation under Chilean law, with the exception of Directors’ compensation which is annually approved during the general shareholders’ meeting. Other than the foregoing, we have not and do not intend to submit for shareholder approval any equity-compensation plans, or the other dilutive and related party equity issuances covered by NYSE rules. |
|
|
|
|
|
|
|
Corporate Governance Guidelines |
|
Listed companies must adopt and disclose Corporate Governance Guidelines. |
|
Chilean Law does not require the adoption of Corporate Governance Practices because Chilean Corporate Law have established them. However, the CMF in General Rule No. 461 requires publicly traded corporations to report on their corporate governance practices. Our Company has not adopted such Corporate Governance Guidelines. |
|
|
|
|
|
|
|
Code of Ethics and Business Conduct |
|
A company must adopt a Code of Business Conduct for its directors, officers and employees. Such company must disclose any waiver of its code of conduct that is granted to an officer or director. |
|
There is no legal obligation to adopt a Code of Business Conduct. Chilean law requires that a company have a set of internal regulations which regulate the company and its relations with personnel. Such regulations must contain, among other things, regulations related to ethics and good behavior. Notwithstanding the above, a company may create internal codes of conduct, provided they do not require or prohibit behavior that contravenes Chilean law. In 1996, Andina created a Code of Ethics and Business Conduct that applies to the entire Company, and that has been updated over the years. Andina has posted this information on its website at www.koandina.com. See Item 16B. “Code of Ethics.” |
|
ITEM 16H.MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J.INSIDER TRADING POLICIES
Not applicable.
ITEM 16K. CYBERSECURITY
Coca-Cola Andina recognizes information security and cyber-attacks as potential areas of business risk. Consequently, the Company has formulated and implemented a comprehensive strategy that enables us to (i) establish an organizational understanding for the purpose of overseeing cybersecurity risks related to its systems, people, assets, data and capabilities, (ii) safeguard systems and assets (including data), (iii) identify deviations from established protocols, (iv) react to cybersecurity incidents, and (v) restore business operations, if required.
We do not currently believe that risks from cybersecurity threats, including as a result of cybersecurity incidents, have materially affected the Company or our financial position, results of operations or cash flows. However, any compromise of data security could result in a violation of applicable privacy, laws or standards, the loss of valuable business data, or a disruption of our business. Coca-Cola Andina recognizes that a security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive or confidential information could give rise to unwanted media attention, materially damage our customer relationships and reputation, and result in fines or liabilities, which may not be covered by our insurance policies and therefore works with data security as an integral part of its risks. See “Item 3. Key Information — Risk Factors — Risks Related to our Company— If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.” for more information.
107
Information Security Management
The Audit Committee is represented by 3 independent directors, Chief Executive Officer, Chief Financial Officer, Chief Legal Officer and Chief Audit Officer and one of its responsibilities is to establish and oversee information security risk policies, guidelines, and strategies that comply with domestic and international standards. This Committee is responsible for evaluating the scope and effectiveness of the information security and cybersecurity systems implemented by management. At a minimum, once a year, the Chief Information Technology Officer and the Audit Committee meet to review and discuss cybersecurity risks, the status of the cybersecurity framework controls within the organization, ongoing cybersecurity initiatives, and future work plans.
Furthermore, to safeguard against and address cybersecurity incidents, a senior management committee known as the "Cybersecurity Committee" has been formed under the direction of the Chief Information Security Officer (CISO). When a material cybersecurity threat materializes, or at least once a year, the Cybersecurity Committee meets. The Cybersecurity Committee is tasked with the evaluation and control of cybersecurity risks, the approval of the organization's strategy and direction regarding cybersecurity and contingency matters as presented by the CISO, and the review of the implementation status of cybersecurity framework controls, progress in various cybersecurity projects, and future work plans. The committee is additionally provided with an overview of various security operational indicators.
The Cybersecurity Committee is comprised of the Company’s Chief Human Resources Officer, Chief Legal Officer, Chief Information Technology Officer, the Company’s Risk and Sustainability Corporate Manager, a Representative of the Corporate Internal Audit Area, and the Chief Information Security Officer (CISO).
The CISO of the Company is in charge of overseeing and managing cybersecurity issues and risks. This includes being in charge of creating, managing, and carrying out the company's cybersecurity plan for its networks, which are IT (information technology) and OT (operation technology). At the corporate and regional levels of the company, the Chief Information Security Officer (CISO) oversees the implementation of identified improvements, architectures, policies, and standards related to IT security. Additionally, the CISO manages the IT risk map (RIA TI) and related mitigation plans, making sure that necessary modifications are made. In order to maintain compliance with the Company's regulatory framework, it is the responsibility of the CISO to make sure that procedures and developments are framed in accordance with the Company's defined guidelines.
Currently, Eduardo Troncoso Meza serves as our CISO. Mr. Eduardo Troncoso Meza has more than fourteen years of experience in the fields of cybersecurity and information security management. Prior to his current position, Mr. Troncoso held the position of Cybersecurity Architect at Banco BCI. In order to determine the proper implementation of technological security controls, he was tasked with designing and proposing architecture models and solutions for identifying threats, vulnerabilities, and risks on the applications that provide services to the various platforms of the bank. Mr. Troncoso received his Engineering Sciences degree obtaining Computer Engineering degree from Universidad de Las Américas. Mr. Troncoso also holds a Diploma in Cybersecurity from Universidad de Chile, and has the following certifications:
| ● | Information Security Management Systems Auditor/Lead Auditor Training Course (BS ISO/IEC 27001:2013) – BSI; |
| ● | ISO/IEC 27001 Lead Implementer – PECB; and |
| ● | Cybersecurity for Managers Certificate: A Playbook from the Massachusetts Institute of Technology. |
Policy for Information Security
The Company’s information security policy is an ongoing process designed to protect information assets from threats that could compromise their availability, integrity, or confidentiality. The corporate information security policy was created and put into effect to strengthen this pillar. In addition to providing general guidelines on the access, handling, manipulation, processing, transmission, and storage of the Company's information assets, this policy seeks to establish general guidelines regarding the responsibility, protection, and management of information risks. The implementation of this policy involves the classification of information, the definition of responsibilities, and the use of digital solutions to strengthen its execution. Examples of these solutions include the unification of information storage and transfer mechanisms, the protection of information through Data Lost Prevention (DLP) practices, and the encryption of information stored on the Company's essential equipment. The CISO is in charge of the Company's information security strategy, policies, guidelines, and practices.
108
Information Security Measurements Systems Analysis (MSA)
Infrastructure and information security services are outsourced to one of the largest technology companies in Latin America. This company provides us with field support, users support center, networking support and cyber security monitoring. The IT outsourcing service is governed by a contractual agreement that specifies service levels and a Data Processing Agreement. An external auditor conducts an annual audit of the services to assess the adherence of the controls of the critical services rendered via ISAE 3402. All technology suppliers that offer on-premise SaaS or software are assessed throughout the selection procedure using an INCIBE-CERT-based cyber resilience framework (National Cybersecurity Institute of Spain).
Cybersecurity Framework
This system incorporates the highest industry standards and is continually tested for Business Continuity (BC) and Disaster Recovery (DR). It is managed with an integrated people, processes, and technology vision. In order to improve its cyber resilience, the Company has a cybersecurity strategy to which it adds new controls and systems, like those pertaining to business continuity, every year. This involves a risk management methodology based on a Business Impact Analysis (BIA) and Risk Impact Analysis Information Technology (RIA IT) model to unify risk and processes deemed critical to the organization, as well as regular and comprehensive testing of vulnerability mitigation measures found through Ethical Hacking and Pentesting assessments. Furthermore, a "Zero Trust" model for platform access has been implemented. Pentesting gives a clear picture of known vulnerabilities in the system so that they can be specifically fixed. But ethical hacking goes a step further and searches for undiscovered weaknesses, foreseeing future attacks and strengthening defenses.
Corporate Cybersecurity Policy
The Company’s Corporate Cybersecurity strategy provides a framework for effective security management processes pertaining to IT systems and the associated assets, and it establishes a control model for the protection of the confidentiality, integrity, and availability of information systems, in accordance with the applicable laws and regulations in the countries in which we operate.
Dissemination and Training
The Company provides continuous information about the measures taken to promote cybersecurity, ensuring that all employees are informed of and have received training on cybersecurity concepts and threats to information security and cybersecurity. Focusing on software and services based on the Company’s digital transformation, specialized areas in the Company’s IT and Human Resources departments coordinate specific training through various channels, using communications and e-mails delivering content that addresses information management and information security.
For instance, all employees of the company continued to receive cybersecurity and phishing exercise training in 2023. The technology team also received training on the various guidelines and protocols related to cybersecurity practices, including safeguarding digital assets, secure development, managing IT risks, and system modifications, among other topics.
109
PART III
ITEM 17.FINANCIAL STATEMENTS
Reference is made to Item 18 for a list of all financial statements filed as part of this annual report.
ITEM 18.FINANCIAL STATEMENTS
The following financial statements, together with the report of independent registered accounting firm, are filed as part of this annual report:
Index to Consolidated Financial Statements |
|
Page |
|
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1364) |
|
F-1 |
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1431) |
|
F-4 |
Consolidated Statements of Financial Position at December 31, 2023 and 2022 |
|
F-8 |
Consolidated Statements of Income by function for the years ended December 31, 2023, 2022 and 2021 |
|
F-10 |
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 |
|
F-11 |
Statements of Changes in Equity for the years ended December 31, 2023, 2022 and 2021 |
|
F-12 |
|
F-14 |
|
|
F-15 |
110
ITEM 19.EXHIBITS
The exhibits filed with or incorporated by reference in this annual report are listed in the exhibit index below.
EXHIBIT INDEX
Item |
|
Description |
|---|---|---|
1.1 |
|
|
|
|
|
2.1 |
|
|
|
|
|
2.2 |
|
|
|
|
|
2.3 |
|
|
|
|
|
2.4 |
|
|
|
|
|
4.1 |
|
|
|
|
|
4.2 |
|
|
|
|
|
4.3 |
|
|
|
|
|
4.4 |
|
|
|
|
|
4.5 |
|
|
|
|
|
4.6 |
|
|
|
|
|
4.7 |
|
|
|
|
|
111
Item |
|
Description |
|---|---|---|
4.8 |
|
|
|
|
|
4.9 |
|
|
|
|
|
4.10 |
|
|
|
|
|
8.1 |
|
|
|
|
|
12.1 |
|
|
|
|
|
12.2 |
|
|
|
|
|
13.1 |
|
|
|
|
|
13.2 |
|
|
|
|
|
97 |
|
|
|
Omitted from the exhibits filed with this annual report are certain instruments and agreements with respect to long-term debt of Embotelladora Andina S.A., none of which authorizes securities in a total amount that exceeds 10.0% of the total assets of Embotelladora Andina S.A. We hereby agree to furnish to the SEC copies of any such omitted instruments or agreements upon request by the SEC. | ||
101.INS |
|
Inline XBRL Instance Document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
|
112
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
|
|
Embotelladora Andina S.A. |
|
|
(Registrant) |
|
|
|
|
|
/s/ Miguel Ángel Peirano |
|
|
(Signature) |
|
|
|
|
|
|
|
|
/s/ Andrés Wainer |
|
|
(Signature) |
Date: March 27, 2024
Consolidated Financial Statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Santiago, Chile
December 31, 2023 and 2022
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors Embotelladora Andina S.A.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Embotelladora Andina S.A. and its subsidiaries (the “Company”) as of December 31, 2023, and 2022, and the related consolidated statements of income by function, comprehensive income, changes in equity and cash flows–direct method for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
F-1
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Intangible Assets with Indefinite Useful Life (Distribution rights) and Goodwill Impairment Assessment
As described in Notes 2.7.1, 2.7.2, 2.8, 2.22.1, 15 and 16 to the consolidated financial statements, the Company’s consolidated intangible assets with indefinite useful life (distribution rights) and goodwill balances, as of December 31, 2023, were ThCh$ 664,877,100 and ThCh$ 122,103,802 respectively. Management carries out an impairment test annually, or more frequently if events or changes in circumstances indicate a potential impairment. An impairment loss is recognized for the amount by which the carrying amount of the cash generating unit exceeds its recoverable amount. The recoverable amount of the cash generating unit is the higher of value in use and fair value less costs to sell. The value in use is determined by management using a discounted cash flow model. Management’s cash flow projections included significant judgments and assumptions relating to perpetual growth rates and discount rates.
The principal considerations for our determination that performing procedures relating to the intangible assets with indefinite useful life (distribution rights) and goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the value in use calculation of the cash generating units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s cash flow projections and significant assumptions related perpetual growth rates and discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
F-2
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s intangible assets with indefinite useful life (distribution rights) and goodwill impairment assessment, including controls over the valuation of the Company’s cash generating units. These procedures also included, among others (i) testing management’s process for developing the estimate; (ii) evaluating the appropriateness of the discounted cash flow model; (iii) testing the completeness and accuracy of underlying data used in the model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the perpetual growth rates and discount rates. Evaluating management’s assumptions related to the perpetual growth rates and discount rates involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of the cash generating units, (ii) the consistency with external market and industry data, and (iii) whether these significant assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the perpetual growth rates and discount rates assumptions.
/s/ PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada
Santiago, Chile
March 26, 2024
We have served as the Company’s auditor since 2022
F-3
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Embotelladora Andina S.A.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of income, comprehensive income, changes in equity and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”) of Embotelladora Andina S.A. and subsidiaries (the Company). In our opinion, the consolidated financial statements present fairly, in all material respects, the Company’s results of operations and cash flows for the year ended December 31, 2021, in conformity with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/s/ EY Audit Ltda.
We served as the Company's auditor from 2017 to 2022.
Santiago, Chile
April 26, 2022
F-4
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Financial Statements
at December 31, 2023 and 2022
F-5
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Financial Statements
F-8 |
||
F-10 |
||
F-11 |
||
F-12 |
||
F-14 |
||
F-15 |
||
|
|
|
F-15 |
||
Basis Of Preparation Of Consolidated Financial Statements And Application Of Accounting Criteria |
F-15 |
|
F-33 |
||
F-37 |
||
F-37 |
||
F-38 |
||
F-39 |
||
F-40 |
||
F-41 |
||
F-41 |
||
F-44 |
||
F-47 |
||
F-50 |
||
Investments In Associates Accounted For Using The Equity Method |
F-51 |
|
F-55 |
||
F-57 |
||
F-57 |
||
F-67 |
||
F-67 |
||
F-68 |
||
F-68 |
||
F-74 |
||
F-76 |
||
F-79 |
||
F-83 |
||
F-83 |
||
F-83 |
||
F-84 |
||
F-84 |
||
F-85 |
||
F-89 |
F-6
Consolidated Financial Statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
December 31, 2023 and 2022
F-7
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Financial Position
as of December 31, 2023 and 2022
ASSETS |
|
NOTE |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
ThCh$ |
|
ThCh$ |
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
4 |
|
303,683,683 |
|
291,681,987 |
Other financial assets |
|
5 |
|
67,285,793 |
|
263,044,869 |
Other non-financial assets |
|
6 |
|
19,311,851 |
|
26,957,000 |
Trade and other accounts receivable, net |
|
7 |
|
298,892,164 |
|
279,770,286 |
Accounts receivable from related companies |
|
12.1 |
|
16,161,318 |
|
15,062,167 |
Inventory |
|
8 |
|
233,053,160 |
|
245,886,656 |
Current tax assets |
|
9 |
|
43,383,058 |
|
39,326,427 |
Total Current Assets |
|
|
|
981,771,027 |
|
1,161,729,392 |
|
|
|
|
|
|
|
Non-Current Assets: |
|
|
|
|
|
|
Other financial assets |
|
5 |
|
93,316,339 |
|
94,852,711 |
Other non-financial assets |
|
6 |
|
59,412,482 |
|
59,672,266 |
Trade and other receivables |
|
7 |
|
371,401 |
|
539,920 |
Accounts receivable from related parties |
|
12.1 |
|
108,021 |
|
109,318 |
Investments accounted for under the equity method |
|
14 |
|
91,799,267 |
|
92,344,598 |
Intangible assets other than goodwill |
|
15 |
|
695,926,565 |
|
671,778,888 |
Goodwill |
|
16 |
|
122,103,802 |
|
129,023,922 |
Property, plant and equipment |
|
11 |
|
872,388,811 |
|
798,221,259 |
Deferred tax assets |
|
10.2 |
|
4,323,174 |
|
2,428,333 |
Total Non-Current Assets |
|
|
|
1,939,749,862 |
|
1,848,971,215 |
Total Assets |
|
|
|
2,921,520,889 |
|
3,010,700,607 |
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements
F-8
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Financial Position
as of December 31, 2023 and 2022
LIABILITIES AND EQUITY |
|
NOTE |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
ThCh$ |
|
ThCh$ |
LIABILITIES |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Other financial liabilities |
|
17 |
|
52,997,001 |
|
367,302,080 |
Trade and other accounts payable |
|
18 |
|
428,911,984 |
|
384,801,630 |
Accounts payable to related parties |
|
12.2 |
|
96,045,624 |
|
90,248,067 |
Other provisions |
|
19 |
|
1,314,106 |
|
1,591,644 |
Tax liabilities |
|
9 |
|
13,411,621 |
|
14,615,447 |
Employee benefits current provisions |
|
13 |
|
57,817,800 |
|
48,391,806 |
Other non-financial liabilities |
|
20 |
|
42,373,160 |
|
42,294,460 |
Total Current Liabilities |
|
|
|
692,871,296 |
|
949,245,134 |
|
|
|
|
|
|
|
Other financial liabilities |
|
17 |
|
1,044,325,833 |
|
904,802,058 |
Trade accounts and other accounts payable |
|
18 |
|
2,392,555 |
|
3,015,284 |
Accounts payable to related companies |
|
12.2 |
|
6,007,041 |
|
10,354,296 |
Other provisions |
|
19 |
|
53,487,790 |
|
47,103,783 |
Deferred tax liabilities |
|
10.2 |
|
180,470,219 |
|
165,778,556 |
Employee benefits non-current provisions |
|
13 |
|
18,473,946 |
|
17,409,793 |
Other non-financial liabilities |
|
20 |
|
2,506,795 |
|
29,589,051 |
Total Non-current liabilities |
|
|
|
1,307,664,179 |
|
1,178,052,821 |
|
|
|
|
|
|
|
EQUITY |
|
21 |
|
|
|
|
Issued capital |
|
|
|
270,737,574 |
|
270,737,574 |
Retained earnings |
|
|
|
769,311,795 |
|
716,975,127 |
Other reserves |
|
|
|
(153,758,842) |
|
(132,452,557) |
Equity attributable to owners of the parent |
|
|
|
886,290,527 |
|
855,260,144 |
Non-controlling interests |
|
|
|
34,694,887 |
|
28,142,508 |
Total Equity |
|
|
|
920,985,414 |
|
883,402,652 |
Total Liabilities and Equity |
|
|
|
2,921,520,889 |
|
3,010,700,607 |
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements.
F-9
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Income by Function
For the periods ended December 31, 2023, 2022 and 2021
|
|
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
|||
|
|
NOTE |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|||
|
|
|
|
|
ThCh$ |
|
|
ThCh$ |
|
|
ThCh$ |
Net sales |
|
|
|
|
2,618,437,052 |
|
|
2,656,878,395 |
|
|
2,216,732,593 |
Cost of sales |
|
8 - 25 |
|
|
(1,601,997,255) |
|
|
(1,628,701,823) |
|
|
(1,375,392,773) |
Gross Profit |
|
|
|
|
1,016,439,797 |
|
|
1,028,176,572 |
|
|
841,339,820 |
Other income |
|
26 |
|
|
1,310,489 |
|
|
2,497,520 |
|
|
1,337,878 |
Distribution expenses |
|
25 |
|
|
(227,807,179) |
|
|
(253,514,676) |
|
|
(199,952,373) |
Administrative expenses |
|
25 |
|
|
(431,295,515) |
|
|
(429,517,716) |
|
|
(348,949,863) |
Other expenses |
|
27 |
|
|
(26,441,583) |
|
|
(886,331) |
|
|
(15,211,790) |
Other (loss) gains |
|
29 |
|
|
(15,909,117) |
|
|
(24,983,899) |
|
|
— |
Financial income |
|
28 |
|
|
31,396,167 |
|
|
39,722,410 |
|
|
7,791,869 |
Financial expenses |
|
28 |
|
|
(65,288,352) |
|
|
(59,547,953) |
|
|
(52,992,456) |
Share of profit of investments in associates and joint ventures accounted for using the equity method |
|
14.3 |
|
|
2,716,169 |
|
|
1,409,069 |
|
|
3,093,102 |
Foreign exchange differences |
|
30 |
|
|
(17,216,130) |
|
|
(11,607,728) |
|
|
(5,508,311) |
Income by indexation units |
|
|
|
|
(7,398,952) |
|
|
(58,943,643) |
|
|
(27,738,888) |
Net income before income taxes |
|
|
|
|
260,505,794 |
|
|
232,803,625 |
|
|
203,208,988 |
Income tax expense |
|
10.1 |
|
|
(85,994,307) |
|
|
(104,344,638) |
|
|
(46,177,320) |
Net income |
|
|
|
|
174,511,487 |
|
|
128,458,987 |
|
|
157,031,668 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
Owners of the parent |
|
|
|
|
171,441,410 |
|
|
125,497,642 |
|
|
154,698,150 |
Non-controlling interests |
|
|
|
|
3,070,077 |
|
|
2,961,345 |
|
|
2,333,518 |
Net income |
|
|
|
|
174,511,487 |
|
|
128,458,987 |
|
|
157,031,668 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
Earnings per Series A Share |
|
21.5 |
|
$ |
172.49 |
|
$ |
126.27 |
|
$ |
155.65 |
Earnings per Series B Share |
|
21.5 |
|
|
189.74 |
|
|
138.89 |
|
|
171.21 |
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements
F-10
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the periods ended December 31, 2023, 2022 and 2021
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
|
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Other Comprehensive Income |
|
|
|
|
|
|
Net income |
|
174,511,487 |
|
128,458,987 |
|
157,031,668 |
|
|
|
|
|
|
|
Components of other comprehensive income that will not be reclassified to net income for the period, before taxes |
|
|
|
|
|
|
Actuarial Gains (losses) from defined benefit plans |
|
2,381,650 |
|
(3,960,084) |
|
(357,840) |
Components of other comprehensive income that will be reclassified to net income for the period, before taxes |
|
|
|
|
|
|
Gain (losses) from exchange rate translation differences |
|
(98,844,581) |
|
(78,009,918) |
|
98,973,862 |
Gain (losses) from cash flow hedges |
|
52,472,352 |
|
(155,206,655) |
|
104,232,055 |
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 |
|
(643,045) |
|
1,069,223 |
|
96,617 |
|
|
|
|
|
|
|
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 |
|
37,650,601 |
|
23,777,899 |
|
(22,103,267) |
Income tax related to cash flow hedges |
|
(14,183,004) |
|
42,276,806 |
|
(28,944,992) |
Other comprehensive income, total |
|
(21,166,027) |
|
(170,052,729) |
|
151,896,435 |
Total comprehensive income |
|
153,345,460 |
|
(41,593,742) |
|
308,928,103 |
Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the parent |
|
150,135,125 |
|
(44,244,225) |
|
305,715,046 |
Non-controlling interests |
|
3,210,335 |
|
2,650,483 |
|
3,213,057 |
Total comprehensive income |
|
153,345,460 |
|
(41,593,742) |
|
308,928,103 |
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements.
F-11
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the periods ended December 31, 2023, 2022 and 2021
|
|
|
|
Other reserves |
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
Reserves for |
|
|
|
Actuarial gains or |
|
|
|
|
|
|
|
Equity attributable |
|
|
|
|
|
|
|
|
exchange rate |
|
Cash flow hedge |
|
losses in employee |
|
|
|
Total other |
|
Retained |
|
to owners of |
|
Non-controlling |
|
|
|
|
Issued Capital |
|
differences |
|
reserve |
|
benefits |
|
Other reserves |
|
reserves |
|
earnings |
|
the parent |
|
interests |
|
Total equity |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance 01.01.2023 |
|
270,737,574 |
|
(495,483,366) |
|
(62,344,501) |
|
(7,776,316) |
|
433,151,626 |
|
(132,452,557) |
|
716,975,127 |
|
855,260,144 |
|
28,142,508 |
|
883,402,652 |
Changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
171,441,410 |
|
171,441,410 |
|
3,070,077 |
|
174,511,487 |
Other comprehensive income |
|
— |
|
(61,349,533) |
|
38,280,115 |
|
1,763,133 |
|
— |
|
(21,306,285) |
|
— |
|
(21,306,285) |
|
140,258 |
|
(21,166,027) |
Comprehensive income |
|
— |
|
(61,349,533) |
|
38,280,115 |
|
1,763,133 |
|
— |
|
(21,306,285) |
|
171,441,410 |
|
150,135,125 |
|
3,210,335 |
|
153,345,460 |
Dividends |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(167,968,886) |
|
(167,968,886) |
|
(777,956) |
|
(168,746,842) |
Increase (decrease) from other changes * |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
48,864,144 |
|
48,864,144 |
|
4,120,000 |
|
52,984,144 |
Total changes in equity |
|
— |
|
(61,349,533) |
|
38,280,115 |
|
1,763,133 |
|
— |
|
(21,306,285) |
|
52,336,668 |
|
31,030,383 |
|
6,552,379 |
|
37,582,762 |
Ending balance as of 12.31.2023 |
|
270,737,574 |
|
(556,832,899) |
|
(24,064,386) |
|
(6,013,183) |
|
433,151,626 |
|
(153,758,842) |
|
769,311,795 |
|
886,290,527 |
|
34,694,887 |
|
920,985,414 |
|
|
|
|
Other reserves |
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
Reserves for |
|
|
|
Actuarial gains or |
|
|
|
|
|
|
|
Equity attributable |
|
|
|
|
|
|
|
|
exchange rate |
|
Cash flow hedge |
|
losses in |
|
Other |
|
Total other |
|
|
|
to owners of |
|
Non-controlling |
|
|
|
|
Issued Capital |
|
differences |
|
reserve |
|
employee benefits |
|
reserves |
|
reserves |
|
Retained earnings |
|
the parent |
|
interests |
|
Total equity |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance 01.01.2022 |
|
270,737,574 |
|
(441,580,088) |
|
50,603,698 |
|
(4,885,926) |
|
433,151,626 |
|
37,289,310 |
|
768,116,920 |
|
1,076,143,804 |
|
25,269,755 |
|
1,101,413,559 |
Changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
125,497,642 |
|
125,497,642 |
|
2,961,345 |
|
128.458.987 |
Other comprehensive income |
|
— |
|
(53,903,278) |
|
(112,948,199) |
|
(2,890,390) |
|
— |
|
(169,741,867) |
|
— |
|
(169,741,867) |
|
(310,862) |
|
(170.052.729) |
Comprehensive income |
|
— |
|
(53,903,278) |
|
(112,948,199) |
|
(2,890,390) |
|
— |
|
(169,741,867) |
|
125,497,642 |
|
(44,244,225) |
|
2,650,483 |
|
(41.593.742) |
Dividends |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(274,316,049) |
|
(274,316,049) |
|
(1,057,730) |
|
(275,373,779) |
Increase (decrease) from other changes * |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
97,676,614 |
|
97,676,614 |
|
1,280,000 |
|
98,956,614 |
Total changes in equity |
|
— |
|
(53,903,278) |
|
(112,948,199) |
|
(2,890,390) |
|
— |
|
(169,741,867) |
|
(51,141,793) |
|
(220,883,660) |
|
2,872,753 |
|
(218,010,907) |
Ending balance as of 12.31.2022 |
|
270,737,574 |
|
(495,483,366) |
|
(62,344,501) |
|
(7,776,316) |
|
433,151,626 |
|
(132,452,557) |
|
716,975,127 |
|
855,260,144 |
|
28,142,508 |
|
883,402,652 |
*Corresponds mainly to inflation effects on the equity of our Subsidiaries in Argentina (see Note 2.5.1)
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements.
F-12
|
|
|
|
Other reserves |
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
Reserves for |
|
|
|
Actuarial gains or |
|
|
|
|
|
|
|
Equity attributable |
|
|
|
|
|
|
|
|
exchange rate |
|
Cash flow hedge |
|
losses in employee |
|
|
|
Total other |
|
Retained |
|
to owners of |
|
Non-controlling |
|
|
|
|
Issued Capital |
|
differences |
|
reserve |
|
benefits |
|
Other reserves |
|
reserves |
|
earnings |
|
the parent |
|
interests |
|
Total equity |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance as of 01.01.2021 |
|
270,737,574 |
|
(517,496,486) |
|
(24,719,533) |
|
(4,663,193) |
|
433,151,626 |
|
(113,727,586) |
|
654,171,126 |
|
811,181,114 |
|
20,379,477 |
|
831,560,591 |
Changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
154,698,150 |
|
154,698,150 |
|
2,333,518 |
|
157.031.668 |
Other comprehensive (loss) income |
|
— |
|
75,916,398 |
|
75,323,231 |
|
(222,733) |
|
— |
|
151,016,896 |
|
— |
|
151,016,896 |
|
879,539 |
|
151.896.435 |
Total comprehensive (loss) income |
|
— |
|
75,916,398 |
|
75,323,231 |
|
(222,733) |
|
— |
|
151,016,896 |
|
154,698,150 |
|
305,715,046 |
|
3,213,057 |
|
308.928.103 |
Dividends |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(109,328,860) |
|
(109,328,860) |
|
(1,386,857) |
|
(110,715,717) |
Increase (decrease) from other changes * |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
68,576,504 |
|
68,576,504 |
|
3,064,078 |
|
71,640,582 |
Total changes in equity |
|
— |
|
75,916,398 |
|
75,323,231 |
|
(222,733) |
|
— |
|
151,016,896 |
|
113,945,794 |
|
264,962,690 |
|
4,890,278 |
|
269,852,968 |
Ending balance as of 12.31.2021 |
|
270,737,574 |
|
(441,580,088) |
|
50,603,698 |
|
(4,885,926) |
|
433,151,626 |
|
37,289,310 |
|
768,116,920 |
|
1,076,143,804 |
|
25,269,755 |
|
1,101,413,559 |
*Corresponds mainly to inflation effects on the equity of our Subsidiaries in Argentina (see Note 2.5.1)
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements.
F-13
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Cash Flows – Direct Method
For the periods ended December 31, 2023, 2022 and 2021
|
|
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Cash flows provided by (used in) Operating Activities |
|
NOTE |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Cash flows provided by Operating Activities |
|
|
|
|
|
|
|
|
Receipts from the sale of goods and the rendering of services (including taxes) |
|
|
|
3,716,722,747 |
|
3,682,470,527 |
|
2,953,813,799 |
Payments for Operating Activities |
|
|
|
|
|
|
|
|
Payments to suppliers for goods and services (including taxes) |
|
|
|
(2,577,032,215) |
|
(2,551,652,407) |
|
(2,048,185,735) |
Payments to and on behalf of employees |
|
|
|
(260,336,901) |
|
(258,202,599) |
|
(216,192,088) |
Other payments for operating activities (value-added taxes on purchases, sales and others) |
|
|
|
(394,507,399) |
|
(363,740,268) |
|
(278,367,683) |
Dividends received |
|
|
|
8,013,426 |
|
4,079,309 |
|
1,441,355 |
Interest payments |
|
|
|
(67,010,058) |
|
(44,822,402) |
|
(55,497,167) |
Interest received |
|
|
|
14,354,013 |
|
24,649,593 |
|
5,373,494 |
Income tax payments |
|
|
|
(71,269,988) |
|
(87,757,706) |
|
(46,100,050) |
Other cash movements (tax on bank debits Argentina and others) |
|
|
|
(2,103,389) |
|
(7,571,623) |
|
(11,230,942) |
Cash flows provided by (used in) Operating Activities |
|
|
|
366,830,236 |
|
397,452,424 |
|
305,054,983 |
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in) Investing Activities |
|
|
|
|
|
|
|
|
Proceeds from sale of Property, plant and equipment |
|
|
|
142,208 |
|
92,253 |
|
39,919 |
Purchase of Property, plant and equipment |
|
|
|
(192,707,498) |
|
(186,702,179) |
|
(138,856,157) |
Purchase of intangible assets |
|
|
|
— |
|
— |
|
(5,171,139) |
Payment on forward, term option and financial exchange agreements |
|
|
|
— |
|
— |
|
(375,579) |
Collection on forward, term, option and financial exchange agreements |
|
|
|
156,738 |
|
146,070 |
|
678,274 |
Redemption (purchase) of other current financial assets |
|
|
|
32,000,000 |
|
101,191,506 |
|
(54,567,998) |
Other cash inflows (outflows) |
|
|
|
2,119,674 |
|
103,879 |
|
— |
Net cash flows used in Investing Activities |
|
|
|
(158,288,878) |
|
(85,168,471) |
|
(198,252,680) |
|
|
|
|
|
|
|
|
|
Cash Flows generated from (used in) Financing Activities |
|
|
|
|
|
|
|
|
Collection from changes in ownership interest in subsidiaries |
|
|
|
4,119,966 |
|
— |
|
3,000,000 |
Proceeds from short term loans |
|
|
|
31,850,233 |
|
23,625,853 |
|
— |
Loan payments |
|
|
|
(26,378,491) |
|
(13,934,477) |
|
(797,428) |
Lease liability payments |
|
|
|
(6,299,217) |
|
(5,385,167) |
|
(4,008,924) |
Dividend payments by the reporting entity |
|
|
|
(165,877,422) |
|
(274,316,050) |
|
(106,347,165) |
Placement of public debt |
|
|
|
167,739,096 |
|
— |
|
— |
Other cash outflows - Payment of public debt |
|
|
|
(330,996,600) |
|
(16,953,541) |
|
(7,165,997) |
Collection (payments) of derivative financial instruments related to public debt |
|
|
|
138,715,637 |
|
— |
|
— |
Net cash flows (used in) generated by Financing Activities |
|
|
|
(187,126,798) |
|
(286,963,382) |
|
(115,319,514) |
Net increase in cash and cash equivalents before exchange differences |
|
|
|
21,414,560 |
|
25,320,571 |
|
(8,517,211) |
Effects of exchange differences on cash and cash equivalents |
|
|
|
4,547,790 |
|
(21,352,255) |
|
9,501,803 |
Effects of inflation in cash and cash equivalents in Argentina |
|
|
|
(13,960,654) |
|
(16,598,349) |
|
(6,203,271) |
Net increase (decrease) in cash and cash equivalents |
|
|
|
12,001,696 |
|
(12,630,033) |
|
(5,218,679) |
Cash and cash equivalents - beginning of period |
|
4 |
|
291,681,987 |
|
304,312,020 |
|
309,530,699 |
Cash and cash equivalents - end of period |
|
4 |
|
303,683,683 |
|
291,681,987 |
|
304,312,020 |
The accompanying notes 1 to 32 form an integral part of these Consolidated Financial Statements
F-14
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
1 - CORPORATE INFORMATION
Embotelladora Andina S.A. RUT (Chilean Taxpayer 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 in the Securities Registry of the Chilean 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 activity of Embotelladora Andina S.A. is to produce, bottle, commercialize and distribute the products under registered trademarks of The Coca-Cola Company (TCCC), as well as commercialize and distribute some brands of other companies such as Monster, AB InBev, Diageo and Capel, among others. The Company maintains operations and is licensed to produce, commercialize and distribute such products in certain territories in Chile, Brazil, Argentina and Paraguay
In Chile, the territories in which it has such a franchise are the Metropolitan Region; the province of San Antonio, the V Region; the province of Cachapoal including the commune of San Vicente de Tagua-Tagua, the VI Region; the II Region of Antofagasta; the III Region of Atacama, the IV Region of Coquimbo XI Region de Aysén del General Carlos Ibáñez del Campo; XII Region of Magallanes and Chilean Antarctic. In Brazil, the aforementioned franchise covers much of the state of Rio de Janeiro, the entire state of Espirito Santo, and part of the states of São Paulo and Minas Gerais. In Argentina it includes the provinces of Córdoba, Mendoza, San Juan, San Luis, Entre Ríos, as well as part of the provinces of Santa Fe and Buenos Aires, Chubut, Santa Cruz, Neuquén, Río Negro, La Pampa, Tierra del Fuego, Antarctica and South Atlantic Islands. Finally, in Paraguay the territory comprises the whole country. The bottling agreement for the territories in Argentina expires in September 2027; for the territories in Brazil, it expires in October 2027; for the territories in Chile it expires in December 2023 and is currently under the process of renewal, and for the territory in Paraguay it expires on March 1, 2028. Said agreements are renewable upon the request of Embotelladora Andina S.A. and at the sole discretion of The Coca-Cola Company.
As of the date of these consolidated financial statements, regarding Andina’s principal shareholders, the Controlling Group holds 53.58% of the outstanding shares with voting rights, corresponding to the Series A shares. The Controlling Group is composed of the Chadwick Claro, Garcés Silva, Said Handal and Said Somavía families, who control the Company in equal parts.
These Consolidated Financial Statements reflect the consolidated financial position of Embotelladora Andina S.A. and its Subsidiaries, which were approved by the Board of Directors on March 26, 2024.
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 Financial Statements for the fiscal year ended December 31, 2023, 2022 and 2021, have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS" Accounting Standards) and the Interpretations issued by the International Financial Reporting Standards Interpretations Committee (IFRIC) applicable to companies reporting under IFRS.
These Consolidated 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 Consolidated Statements reflect the consolidated financial position of Embotelladora Andina S.A. and its Subsidiaries as of December 31, 2023 and 2022 and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the periods between January 1 and December 31, 2023, 2022 and 2021 and the related notes.
F-15
The Company’s 2023 local statutory consolidated financial statements in Spanish were approved by the Company’s Board of Directors on January 30, 2024, with subsequent events first being considered through that date. Those local statutory consolidated financial statements consisted of consolidated statement of financial position as of December 31, 2023 and 2022 along with consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated statement of cash flows (and related disclosures), each for the two years then ended.
Included in this 2023 consolidated financial statements are consolidated statement of financial position as of December 31, 2023 and 2022, along with consolidated income statement, consolidated statement of comprehensive (loss) income, consolidated statement of changes in equity and consolidated statement of cash flows (and the related disclosures) for each of the three years ended December 31, 2023, 2022 and 2021. This three-year presentation of operations, changes in equity and of cash flows is required by the rules of the United States Securities and Exchange Commission. The accompanying English language IFRS consolidated financial statements are consistent with the previously issued local statutory consolidated financial statements, except for the disaggregated disclosure of the line “Other cash inflows (outflows) (placement and payment of public debt)” within the cash flows from financing activities in the consolidated Statement of Cash Flows, as follows:
|
|
01.01.2023 |
|
01.01.2023 |
|
|
12.31.2023 |
|
12.31.2023 |
|
|
As reported |
|
As revised |
Placement of public debt |
|
— |
|
167,739,096 |
Collection (payments) of derivative financial instruments related to public debt |
|
— |
|
138,715,637 |
Other cash outflows - Payment of public debt |
|
(24,541,867) |
|
(330,996,600) |
Net cash flows (used in) generated by Financing Activities |
|
(187,126,798) |
|
(187,126,798) |
The Company has evaluated the effect of this modification, both qualitatively and quantitatively, and concluded that the correction did not have a material impact on, nor require amendment of, any previously filed financial statements.
This three-year English language IFRS consolidated financial statements were approved for issuances by the Board of Directors during a session held on March 26, 2024, with subsequent events considered through this later date.
These 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 statements of income by function 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.
F-16
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.
F-17
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:
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|
|
Ownership interest |
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|
|
12.31.2023 |
|
12.31.2022 |
||||||||
Taxpayer ID |
|
Company Name |
|
Direct |
|
Indirect |
|
Total |
|
Direct |
|
Indirect |
|
Total |
96.842.970-1 |
|
Andina Bottling Investments S.A. |
|
99.94 |
|
0.06 |
|
100.0 |
|
99.9 |
|
0.09 |
|
99.99 |
96.972.760-9 |
|
Andina Bottling Investments Dos S.A. |
|
64.42 |
|
35.58 |
|
100.0 |
|
99.9 |
|
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 SpA. |
|
100.0 |
|
— |
|
100.0 |
|
99.98 |
|
0.01 |
|
99.99 |
76.070.406-7 |
|
Embotelladora Andina Chile S.A. |
|
99.99 |
|
0.01 |
|
100.0 |
|
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 |
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. |
|
99.85 |
|
0.15 |
|
100.0 |
|
99.9 |
|
0.09 |
|
99.99 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
60.00 |
|
— |
|
60.00 |
|
60.00 |
|
— |
|
60.00 |
Foreign |
|
Rio de Janeiro Refrescos Ltda. |
|
— |
|
99.99 |
|
99.99 |
|
— |
|
99.99 |
|
99.99 |
78.536.950-5 |
|
Servicios Multivending Ltda. |
|
99.9 |
|
0.10 |
|
100.0 |
|
99.9 |
|
0.09 |
|
99.99 |
78.861.790-9 |
|
Transportes Andina Refrescos Ltda. |
|
99.9 |
|
0.01 |
|
100.0 |
|
99.9 |
|
0.09 |
|
99.99 |
96.928.520-7 |
|
Transportes Polar S.A. |
|
99.9 |
|
0.01 |
|
100.0 |
|
99.99 |
|
— |
|
99.99 |
76.389.720-6 |
|
Vital Aguas S.A. |
|
66.5 |
|
— |
|
66.5 |
|
66.50 |
|
— |
|
66.50 |
93.899.000-k |
|
VJ S.A. |
|
15.0 |
|
50.00 |
|
65.0 |
|
15.00 |
|
50.00 |
|
65.00 |
2.3 Investments in associates
Ownership interest held by the Group in associates are recorded following the equity method. According to the equity method, the investment in an associate 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.”
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.
For associates located in Brazil, the financial statements accounted for using the equity method have a one-month lag because their reporting dates are different from those of Embotelladora Andina.
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 |
F-18
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-denominated monetary assets and liabilities are converted to the functional currency at the observed exchange rate of each central bank, in effect on the closing date.
All differences arising from the liquidation or conversion of monetary items are recorded in the income statement, with the exception of the monetary items designated as part of the hedging of the Group’s net investment in a business abroad. These differences are recorded under other comprehensive income until the disposal of the net investment, at which point they are reclassified to the income statement. Tax adjustments attributable to exchange differences in these monetary items are also recognized under other comprehensive income.
Non-monetary items that are valued at historical cost in a foreign currency are converted using the exchange rate in effect at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are converted using the exchange rate in effect at the date on which fair value is determined. Losses or gains arising from the conversion of non-monetary items measured at fair value are recorded in accordance with the recognition of losses or gains arising from the change in the fair value of the respective item (e.g., exchange differences arising from items whose fair value gains or losses are recognized in another overall result or in results are also recognized under 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 based on 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 position of our Argentine subsidiaries were converted to the closing exchange rate (ARS/CLP) at the date of presentation of these financial statements, in accordance with IAS 21 “Effects of foreign currency exchange rate variations”, when dealing with a hyperinflationary economy.
The comparative amounts in the consolidated financial statements are those that were presented as current year amounts in the relevant financial statements of the previous year (i.e., not adjusted for subsequent changes in price level or exchange rates). This results in differences between the closing net equity of the previous year and the opening net equity of the current year and, as an accounting policy option, these changes are presented as follows: (a) the re-measurement of Opening balances under IAS 29 as an adjustment to equity and (b) subsequent effects, including re-expression under IAS 21 , as “Exchange rate differences in the conversion of foreign operations” under other comprehensive income.
F-19
The adjustment factor is derived from the National Consumer Price Index (CPI), which is published by the National Institute of Statistics and Census of the Argentine Republic (INDEC). Inflation for the periods January to December 2023 and 2022 amounted to 209.91% and 96.95%, respectively.
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. |
| ● | In the case of the disposal of an investment abroad, the component of other comprehensive income (OCI) relating to that investment is reclassified to the income statement. |
| b. | Translation of financial statements whose functional currency corresponds to hyperinflationary economies (Argentina) |
Financial statements of economies with a hyperinflationary economic environment, are recognized according to IAS 29 Financial Information in Hyperinflationary Economies, and subsequently converted to Chilean pesos 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. |
| ● | The statement of cash flows is converted to the closing exchange rate at the date of the financial statements. |
| ● | For the disposal of an investment abroad, the component of other comprehensive income (OCI) relating to that investment is reclassified to the income statement. |
In accordance with IAS 21 "Effects of Changes in Foreign Exchange Rates," we use the closing exchange rate to translate financial information into presentation currency. The official U.S. dollar whose value is determined by the Central Bank of Argentina (BCRA) is used to calculate the exchange rate for the presentation and preparation of the consolidated financial statements.
In the course of Argentine market transactions, there are a number of other types of U.S. dollar rates that may differ from the BCRA-calculated official rate. In the event that financial information is translated into the presentation currency using a non-official exchange rate, the consolidated figures of our Operation in Argentina may be affected.
2.5.3 Exchange rates
Exchange rates regarding the Chilean peso in effect at the end of each period are as follows:
Date |
|
USD |
|
BRL |
|
ARS |
|
PYG |
12.31.2023 |
|
877.12 |
|
181.17 |
|
1.08 |
|
0.120 |
12.31.2022 |
|
855.86 |
|
164.03 |
|
4.83 |
|
0.116 |
F-20
Exchange rates regarding the Chilean peso, calculated using average rates, used in the preparation of the Consolidated Financial Statements, are as follows:
Date |
|
USD |
|
BRL |
|
PYG |
12.31.2023 |
|
839.92 |
|
168.31 |
|
0.115 |
12.31.2022 |
|
873.28 |
|
169.16 |
|
0.125 |
For the translation of Argentine figures, closing rates (not average) are used, as described in Note 2.5.2 b.
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. Repairs and maintenance are charged to expense 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.
The estimated useful lives by asset category are:
Assets |
|
Range in years |
Buildings |
|
15-80 |
Plant and equipment |
|
5-20 |
Warehouse installations and accessories |
|
10-50 |
Furniture and supplies |
|
4-5 |
Motor vehicles |
|
4-10 |
IT equipment |
|
3-5 |
Other Property, plant and equipment |
|
3-10 |
Bottles and containers |
|
1-8 |
The residual value and useful lives of Property, plant and equipment are reviewed and adjusted at the end of each fiscal year, if appropriate.
The Company assesses on each reporting date if there is evidence that an asset may be impaired. The Group estimates the recoverable amount of the asset, if there is evidence, or when an annual impairment test is required for an asset.
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.
F-21
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 or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed. 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 Coca-Cola brand products and other brands in certain territories in Argentina, Brazil, Chile and Paraguay. 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 historically permanently renewed by The Coca-Cola Company) and therefore are subject to impairment tests on an annual basis.
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). Cash-generating unit’s recoverable amount has been determined on the basis of its value in use.
Regardless of what was stated in the previous paragraph, in the case of CGUs to which goodwill or intangible assets with an indefinite useful life have been assigned, 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.
F-22
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 distribution rights have been acquired for products owned by The Coca-Cola Company, as well as other minor investments.These cash generating units or groups of cash generating units are composed of the following segments:
| - | Operation in Chile; (North Zone Antofagasta, Atacama and Coquimbo, Metropolitan Area, Central Zone San Antonio and Cachapoal and Extreme South Zone of Aysen and Magallanes); |
| - | Operation in Argentina; (San Juan, Mendoza, San Luis, Córdoba, Santa Fé, Entre Ríos, La Pampa, Neuquén, Rio Negro, Chubut, Santa Cruz, Tierra del Fuego and western area of the Province of Buenos Aires); |
| - | Operation in Brazil (State of Rio de Janeiro and Espirito Santo, Ipiranga territories, investment in the Sorocaba associate and investment in the Leão Alimentos e Bebidas Ltda. 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.
The main assumptions used in the annual impairment test are:
| a) | Discount rate |
The discount rate applied in the annual impairment test carried out in 2023 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 in local currency before tax is used according to the following table:
|
|
2023 Discount |
|
2022 Discount |
|
|
|
rates |
|
rates |
|
Argentina |
|
38.7 |
% |
33.1 |
% |
Chile |
|
10.3 |
% |
9.3 |
% |
Brazil |
|
11.2 |
% |
10.5 |
% |
Paraguay |
|
12.0 |
% |
11.3 |
% |
| b) | Other assumptions |
The financial projections to determine the net present value of future cash flows of the CGUs are modeled based on the main historical variables and the respective approved budgets for each CGU. In this regard, a conservative growth rate is used, taking into account the differences that exist in categories with high growth such as carbonated beverages, categories with medium growth such as waters and juices, and categories that are less developed and have lower margins such as alcohols. Additionally, the valuation model considers projections over 5 years based on perpetuity growth rates per operation, which follow a real growth according to long-term population growth expectations. 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 200 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 25 bps in the rate to calculate the perpetual growth of future cash flows |
| - | EBITDA margin: Increase / Decrease of 150 bps of EBITDA margin of operations, which is applied per year for the projected periods, that is, for the years 2024-2028 |
F-23
After modeling and valuing the different CGUs as a result of the tests performed as of December 31, 2023, no impairment were identified in any of the CGUs listed above, assuming conservative projections aligned with the history of the current markets. Thus, despite the deterioration of the macroeconomic conditions experienced by the economic conditions of the countries in which we operate, the impairment test yielded recovery values higher than the book values of assets, including those for the sensitivity calculations in the stress test conducted on the model for the 3 previously mentioned variables.
The yearly review of other investments revealed that, for the AdeS brand, specifically in the Chilean operation, the recoverable value was CLP 1,627 million less than the book value recorded in the Financial Statements, which were reduced from their book value as of December 2023. This is noteworthy even though no impairment indicators were found for the CGUs mentioned above. The negative trend in the seeds segment's sales and the brand's overall decline in relevance in the local vegetable market are the primary causes of the lower valuation of AdeS in Chile.
In the 2021 annual review of other investments, it was identified that for the Verde Campo brand (producer of which is owned by Trop Frutas do Brasil Ltda.), the recoverable amount would be R$21.8 million, amount below the book value recorded in the financial statements of R$34.6 million in which Andina Brasil includes its participation proportionally. Given the difference, the losses of R$12.8 million were written down from their book value as of December 31, 2021, leaving a recoverable amount of R$21.8 million. The effects of impairment were included in the consolidated results under “Share of profit of investments in associates and joint ventures accounted for using the equity method”. The main reasons for the impairment are due to the lower cash flows expected for the dairy products segment for the local Brazilian market.
2.9 Financial instruments
A financial instrument is any contract that results in the recognition of a financial asset in one entity and a financial liability or equity instrument in another entity.
2.9.1 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.
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”). 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 subsequent 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. |
F-24
| - | 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. |
A financial asset (or, where applicable, a portion of a financial asset or a portion of a group of similar financial assets) is initially disposed (for example, canceled in the Group’s consolidated financial statements) when:
| - | The rights to receive cash flows from the asset have expired, |
| - | The Group has transferred the rights to receive the cash flows of the asset or has assumed the obligation to pay all cash flows received without delay to a third party under a transfer agreement; and the Group (a) has substantially transferred all risks and benefits of the asset, or (b) has not substantially transferred or retained all risks and benefits of the asset but has transferred control of the asset. |
2.9.2 Financial Liabilities
Financial liabilities are classified as a fair value financial liability at the date of their initial recognition, as appropriate, with changes in results, loans and credits, accounts payable or derivatives designated as hedging instruments in an effective coverage.
All financial liabilities are initially recognized at fair value and transaction costs directly attributable are netted from loans and credits and accounts payable.
The Group’s financial liabilities include trade and other accounts payable, loans and credits, including those discovered in current accounts, and derivative financial instruments.
The classification and subsequent measurement of the Group’s financial liabilities are as follows:
| - | Fair value financial liabilities with changes in results include financial liabilities held for trading and financial liabilities designated in their initial recognition at fair value with changes in results. The losses or gains of liabilities held for trading are recognized in the income statement. |
| - | Loans and credits are valued at cost or amortized using the effective interest rate method. Gains and losses are recognized in the income statement when liabilities are disposed, as well as interest accrued in accordance with the effective interest rate method. |
A financial liability is disposed of when the obligation is extinguished, cancelled or expires. Where an existing financial liability is replaced by another of the same lender under substantially different conditions, or where the conditions of an existing liability are substantially modified, such exchange or modification is treated as a disposal of the original liability and the recognition of the new obligation. The difference in the values in the respective books is recognized in the statement of income.
2.9.3 Offsetting financial instruments
Financial assets and financial liabilities are offset with the corresponding net amount presenting the corresponding net amount in the statement of financial position, if:
| - | There is currently a legally enforceable right to offset the amounts recognized, and |
| - | It is intended to liquidate them for the net amount or to realize the assets and liquidate the liabilities simultaneously. |
F-25
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. 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 at each closing date. Derivatives are accounted as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. 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 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 embedded derivatives 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 December 31, 2023 and 2022, the Company had no embedded derivatives.
2.10.3 Fair value hierarchy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the date of the transaction. Fair value is based on the presumption that the transaction to sell the asset or to transfer the liability takes place;
| - | In the asset or liability main market, or |
| - | In the absence of a main market, in the most advantageous market for the transaction of those assets or liabilities. |
F-26
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: Quote values (unadjusted) in active markets for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level variable used, which is significant for the calculation, is directly or indirectly observable
Level 3: Valuation techniques for which the lowest level variable used, which is significant for the calculation, is not observable.
During the reporting periods there were no transfers of items between fair value measurement categories. All of which were valued during the periods 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.
The initial cost of inventories includes the transfer of losses and gains from cash flow hedges, related to the purchase of raw materials.
Estimates are also made for obsolescence of raw materials and finished products based on turnover and age of the related goods.
2.12 Trade accounts receivable and other accounts receivable
Trade accounts receivable and other accounts receivable are measured and recognized at the transaction price at the time they are generated less the provision for expected credit losses, pursuant to the requirements of IFRS 15, since they do not have a significant financial component, less the provision of expected credit losses. The provision for expected credit losses 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 of expected credit losses, and the loss is recognized in administrative expenses in the consolidated income statement by function.
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.
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.
F-27
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.
The Group offsets deferred tax assets and liabilities if and only if it has legally recognized a right to offset against the tax authority the amounts recognized in those items; and intends to settle the resulting net debts, or to realize the assets and simultaneously settle the debts that have been offset by them.
2.16 Provisions
Provisions 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.
2.17 Leases
In accordance with IFRS 16 “Leases” Embotelladora Andina analyzes, at the beginning of the contract, the economic background of the agreement, to determine if the 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.
F-28
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.
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, nor does it have variable payments as lessee.
2.18 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 will be reimbursed when the customer or distributor returns the bottles and containers in good condition, together with the original invoice.
This liability is presented under Other current financial liabilities since 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.
2.19 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 goods provided by Embotelladora Andina corresponds to a single performance obligation that transfers the product to be received to the customer.
2.20 Contributions from 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.
2.21 Dividend distribution
The minimum mandatory dividend established by the Chilean Corporations Law is 30% of net income for the year, which must be ratified unanimously by the General Shareholders’ Meeting. Net income is determined as of December 31 of each year, at which time the liability is recognized in the Company’s consolidated financial statements.
F-29
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 the General Shareholders’ Meeting.
2.22 Critical accounting estimates and judgments
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.
2.22.1 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 determined based on value in use calculations. The significant judgments and assumptions used in the calculations include sales volumes and prices, discount rates, marketing expenses and other economic factors. 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 and 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 lowest discounted cash flows analysis. On an annual basis and close to each fiscal year end 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.
2.22.2 Fair Value of Assets and Liabilities
IFRS require 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.
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.
2.22.3 Allowances for doubtful accounts
The Group uses a provision matrix to calculate expected credit losses for trade receivables. Provisions are based on due days for various groups of customer segments that have similar loss patterns (i.e., by geography region, product type, customer type and rating, and credit letter coverage and other forms of credit insurance).
The provision matrix is initially based on the historically observed non-compliance rates for the Group. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For example, if expected economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year, which can lead to more non-compliances in the industry, historical default rates are adjusted. At each closing date, the observed historical default rates are updated and changes in prospective estimates are analyzed. The assessment of the correlation between observed historical default rates, expected economic conditions and expected credit losses are significant estimates.
F-30
2.22.4 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.
2.22.5 Contingent liabilities
Provisions for litigation and other contingencies are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the current obligation at the date of issuance of the financial statements, considering the risks and uncertainties surrounding the obligation. When a provision is measured using estimated cash flows to settle the current obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). The accrual of the discount is recognized as a finance cost. Incremental legal costs expected to be incurred in settling the legal claim are included in the measurement of the provision. If management is unable to reliably estimate the obligation or conclude no loss is probable but is reasonably possible that a loss may be incurred, no provision is recorded but contingency is disclosed in the notes to the consolidated financial statements.
Provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic benefits will be required to settle the obligation, the provision is reversed.
A contingent liability does not imply the recognition of a provision. Legal costs expected to be incurred in defending the legal claim are recognized in profit or loss when incurred.
2.22.6. 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”. At year-end there were no modifications to the agreements.
Results from updated 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 the required years of service.
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.
F-31
2.23 New Standards, Interpretations and Amendments to IFRS
2.23.1 New Standards, Interpretations and Amendments for annual periods beginning on January 1, 2023
IFRS 17 “Insurance Contracts”. Issued in May 2017, it replaces the current IFRS 4. IFRS 17 will primarily change the accounting for all entities that issue insurance contracts and investment contracts with discretionary participation features. The standard applies to annual periods beginning on or after January 1, 2023.
Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", issued in February 2021. The amendments are intended to improve disclosures of accounting policies and help users of financial statements to distinguish between changes in accounting estimates and changes in accounting policies. This standard should be applied to annual periods beginning on or after January 1, 2023.
Amendment to IAS 12 - Deferred Taxes Relating to Assets and Liabilities Arising from a Single Transaction. Issued in May 2021, this amendment requires companies to recognize deferred taxes on transactions that, on initial recognition, result in equal amounts of taxable and deductible temporary differences. This amendment should be applied to annual periods beginning on or after January 1, 2023.
Amendment to IAS 12 "Income taxes" on international tax reform - Pillar two model rules. Issued in May 2023, this amendment provides companies with a temporary exemption from accounting for deferred taxes arising from the international tax reform of the Organization for Economic Cooperation and Development (OECD). The amendments also introduce specific disclosure requirements for affected companies. This standard should be applied to annual periods beginning on or after January 1, 2023.
Amendment to IAS 1 "Presentation of Financial Statements" on classification of liabilities. This amendment clarifies that liabilities are classified as current or non-current depending on the rights that exist at the end of the reporting period. The classification is not affected by the entity's expectations or events after the reporting date (e.g., receipt of a waiver or covenant breach). The amendment also clarifies what IAS 1 means when it refers to the "settlement" of a liability. The amendment should be applied retrospectively in accordance with IAS 8. Effective date of initial application January 1, 2023.
Amendment to IFRS 17 - Initial Application of IFRS 17 and IFRS 9 Comparative Information. This amendment is an amendment of limited scope to the transition requirements of IFRS 17, Insurance Contracts, which provides insurers with an option aimed at improving the usefulness of the information for investors on the initial application of the new Standard. The amendment relates only to the transition of insurers to the new Standard, it does not affect any other requirements of IFRS 17.
The adoption of the standards, amendments and interpretations described above do not have a significant impact on the consolidated financial statements of the Company.
2.23.2 New Standards, Interpretations and Amendments for annual periods beginning on or after January 1, 2024
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:
Amendment to IAS 1 "Non-current liabilities with covenants". Issued in January 2022, the amendment aims to improve the information that an entity provides when the payment terms of its liabilities may be deferred depending on compliance with covenants within twelve months after the date of issuance of the financial statements.
Amendment to IFRS 16 "Leases" on sale and leaseback. Issued in September 2022, this amendment explains how an entity should recognize the rights to use the asset and how the gains or losses arising from the sale and leaseback should be recognized in the financial statements.
Amendments to IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial Instruments: Disclosures" on supplier financing arrangements. Published in May 2023, these amendments require disclosures to improve the transparency of supplier financing arrangements and their effects on a company's liabilities, cash flows and exposure to liquidity risk.
F-32
Amendments to IAS 21 - Lack of Exchangeability. Issued in August 2023, this amendment affects an entity that has a transaction or operation in a foreign currency that is not exchangeable into another currency for a specific purpose at the measurement date. A currency is exchangeable into another currency when it is possible to obtain the other currency (with a normal administrative delay), and the transaction is carried out through a market or exchange mechanism that creates enforceable rights and obligations. This amendment establishes the guidelines to be followed to determine the exchange rate to be used in situations of absence of exchangeability as mentioned above. Early adoption is allowed.
Management estimates that the amendments to IAS 1, IFRS 16, and IAS 7 will have no significant impact on the Group. Management has decided to apply the amendment to IAS 21 as of the date specified in the amendment, which is January 1, 2025. Given the volatility of Argentina's exchange markets and the announcements of amendments, it is currently impossible to estimate the impact of this amendment.
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.
F-33
A summary of the Company’s operations by segment according to IFRS is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation in |
|
Operation in |
|
Operation in |
|
Operation in |
|
Inter-country |
|
Consolidated, |
|
|
Chile |
|
Argentina |
|
Brazil |
|
Paraguay |
|
eliminations |
|
total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Net sales |
|
1,191,974,011 |
|
460,337,955 |
|
745,382,614 |
|
223,840,649 |
|
(3,098,177) |
|
2,618,437,052 |
Cost of sales |
|
(785,163,742) |
|
(234,814,106) |
|
(460,648,667) |
|
(124,798,917) |
|
3,428,177 |
|
(1,601,997,255) |
Distribution expenses |
|
(98,940,612) |
|
(60,925,828) |
|
(55,074,448) |
|
(12,866,291) |
|
— |
|
(227,807,179) |
Administrative expenses |
|
(185,062,364) |
|
(98,996,057) |
|
(116,836,812) |
|
(30,400,282) |
|
— |
|
(431,295,515) |
Financial income |
|
12,892,543 |
|
8,497,135 |
|
9,251,681 |
|
754,808 |
|
— |
|
31,396,167 |
Financial costs |
|
(31,413,255) |
|
(6,174,445) |
|
(27,700,652) |
|
— |
|
— |
|
(65,288,352) |
Share of entity in income of associates accounted for using the equity method, total |
|
320,225 |
|
— |
|
2,395,944 |
|
— |
|
— |
|
2,716,169 |
Income tax expense |
|
(27,867,269) |
|
(25,000,923) |
|
(27,122,886) |
|
(6,003,229) |
|
— |
|
(85,994,307) |
Oher income (expenses) |
|
(40,422,909) |
|
(20,238,217) |
|
(1,651,128) |
|
(3,343,039) |
|
— |
|
(65,655,293) |
Net income of the segment reported |
|
36,316,628 |
|
22,685,514 |
|
67,995,646 |
|
47,183,699 |
|
330,000 |
|
174,511,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
44,930,478 |
|
23,055,893 |
|
31,384,619 |
|
13,730,334 |
|
(330,000) |
|
112,771,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
537,875,316 |
|
86,006,922 |
|
276,111,516 |
|
81,777,273 |
|
— |
|
981,771,027 |
Non-current assets |
|
818,222,777 |
|
192,749,170 |
|
651,665,020 |
|
277,112,895 |
|
— |
|
1,939,749,862 |
Segment assets, total |
|
1,356,098,093 |
|
278,756,092 |
|
927,776,536 |
|
358,890,168 |
|
— |
|
2,921,520,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
|
49,790,788 |
|
— |
|
42,008,479 |
|
— |
|
— |
|
91,799,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment disbursements in non-monetary assets |
|
98,330,718 |
|
24,421,786 |
|
50,018,391 |
|
19,936,603 |
|
— |
|
192,707,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
256,032,001 |
|
107,654,447 |
|
284,887,152 |
|
44,297,696 |
|
— |
|
692,871,296 |
Non-current liabilities |
|
965,276,582 |
|
23,188,614 |
|
300,646,803 |
|
18,552,180 |
|
— |
|
1,307,664,179 |
Segment liabilities, total |
|
1,221,308,583 |
|
130,843,061 |
|
585,533,955 |
|
62,849,876 |
|
— |
|
2,000,535,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) provided by in Operating Activities |
|
196,897,114 |
|
32,330,115 |
|
118,389,616 |
|
19,213,391 |
|
— |
|
366,830,236 |
Cash flows (used in) provided by Investing Activities |
|
(224,464,143) |
|
(24,421,513) |
|
110,533,381 |
|
(19,936,603) |
|
— |
|
(158,288,878) |
Cash flows (used in) provided by Financing Activities |
|
19,739,413 |
|
3,911,735 |
|
(209,887,714) |
|
(890,232) |
|
— |
|
(187,126,798) |
F-34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation in |
|
Operation in |
|
Operation in |
|
Operation in |
|
Inter-country |
|
Consolidated, |
For the period ended December 31, 2022 |
|
Chile |
|
Argentina |
|
Brazil |
|
Paraguay |
|
eliminations |
|
total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
1,123,665,196 |
|
688,704,911 |
|
636,859,882 |
|
212,339,131 |
|
(4,690,725) |
|
2,656,878,395 |
Cost of sales |
|
(743,226,587) |
|
(367,879,756) |
|
(403,695,516) |
|
(118,590,689) |
|
4,690,725 |
|
(1,628,701,823) |
Distribution expenses |
|
(94,155,809) |
|
(98,238,512) |
|
(48,572,718) |
|
(12,547,637) |
|
— |
|
(253,514,676) |
Administrative expenses |
|
(165,139,607) |
|
(133,696,312) |
|
(100,060,355) |
|
(30,621,442) |
|
— |
|
(429,517,716) |
Financial income |
|
18,783,930 |
|
9,853,565 |
|
10,307,344 |
|
777,571 |
|
— |
|
39,722,410 |
Financial costs |
|
(28,065,600) |
|
(1,628,221) |
|
(29,854,132) |
|
— |
|
— |
|
(59,547,953) |
Share of entity in income of associates accounted for using the equity method, total |
|
1,743,656 |
|
— |
|
(334,587) |
|
— |
|
— |
|
1,409,069 |
Income tax expense |
|
(38,497,541) |
|
(38,651,371) |
|
(21,342,331) |
|
(5,853,395) |
|
— |
|
(104,344,638) |
Oher income (expenses) |
|
(83,536,145) |
|
(20,652,710) |
|
10,213,711 |
|
51,063 |
|
— |
|
(93,924,081) |
Net income of the segment reported |
|
(8,428,507) |
|
37,811,594 |
|
53,521,298 |
|
45,554,602 |
|
— |
|
128,458,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
40,714,017 |
|
33,442,921 |
|
31,888,435 |
|
13,320,058 |
|
— |
|
119,365,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
564,695,230 |
|
141,715,280 |
|
383,021,238 |
|
72,297,644 |
|
— |
|
1,161,729,392 |
Non-current assets |
|
762,292,569 |
|
251,248,261 |
|
566,116,288 |
|
269,314,097 |
|
— |
|
1,848,971,215 |
Segment assets, total |
|
1,326,987,799 |
|
392,963,541 |
|
949,137,526 |
|
341,611,741 |
|
— |
|
3,010,700,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
|
53,869,983 |
|
— |
|
38,474,615 |
|
— |
|
— |
|
92,344,598 |
|
|
|
|
|
|
|
|
|
|
— |
|
|
Segment disbursements of non-monetary assets |
|
85,998,605 |
|
40,479,269 |
|
42,173,211 |
|
18,051,094 |
|
— |
|
186,702,179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
629,575,497 |
|
138,572,190 |
|
140,642,493 |
|
40,454,954 |
|
— |
|
949,245,134 |
Non-current liabilities |
|
600,735,999 |
|
24,584,021 |
|
536,281,288 |
|
16,451,513 |
|
— |
|
1,178,052,821 |
Segment liabilities, total |
|
1,230,311,496 |
|
163,156,211 |
|
676,923,781 |
|
56,906,467 |
|
— |
|
2,127,297,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) provided by in Operating Activities |
|
255,357,664 |
|
59,379,474 |
|
58,391,224 |
|
24,324,062 |
|
— |
|
397,452,424 |
Cash flows (used in) provided by Investing Activities |
|
15,619,565 |
|
(40,479,269) |
|
(42,173,211) |
|
(18,135,556) |
|
— |
|
(85,168,471) |
Cash flows (used in) provided by Financing Activities |
|
(283,394,600) |
|
(41,768) |
|
(3,064,412) |
|
(462,602) |
|
— |
|
(286,963,382) |
F-35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation in |
|
Operation in |
|
Operation in |
|
Operation in |
|
Inter-country |
|
Consolidated, |
For the period ended December 31, 2021 |
|
Chile |
|
Argentina |
|
Brazil |
|
Paraguay |
|
eliminations |
|
total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue on ordinary activities |
|
975,296,052 |
|
536,955,468 |
|
539,257,423 |
|
169,216,180 |
|
(3,992,530) |
|
2,216,732,593 |
Cost of sales |
|
(630,862,197) |
|
(296,090,157) |
|
(361,323,450) |
|
(91,109,499) |
|
3,992,530 |
|
(1,375,392,773) |
Distribution expenses |
|
(78,995,679) |
|
(78,019,531) |
|
(33,458,924) |
|
(9,478,239) |
|
— |
|
(199,952,373) |
Administrative expenses |
|
(142,762,661) |
|
(110,329,089) |
|
(71,995,712) |
|
(23,862,401) |
|
— |
|
(348,949,863) |
Financial income |
|
(2,936,819) |
|
5,011,888 |
|
5,327,527 |
|
389,273 |
|
— |
|
7,791,869 |
Financial costs |
|
(27,669,541) |
|
(577,941) |
|
(24,744,974) |
|
— |
|
— |
|
(52,992,456) |
Share of entity in income of associates accounted for using the equity method, total |
|
2,799,437 |
|
— |
|
293,665 |
|
— |
|
— |
|
3,093,102 |
Income tax expense |
|
(15,756,620) |
|
(25,697,558) |
|
82,395 |
|
(4,805,537) |
|
— |
|
(46,177,320) |
Oher income (expenses) |
|
(29,072,689) |
|
(10,652,582) |
|
(7,834,863) |
|
439,023 |
|
— |
|
(47,121,111) |
Net income of the segment reported |
|
50,039,283 |
|
20,600,498 |
|
45,603,087 |
|
40,788,800 |
|
— |
|
157,031,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
38,189,190 |
|
32,863,821 |
|
23,647,789 |
|
10,074,503 |
|
— |
|
104,775,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
626,277,188 |
|
117,319,226 |
|
183,268,173 |
|
64,121,536 |
|
— |
|
990,986,123 |
Non-current assets |
|
739,113,114 |
|
216,757,538 |
|
720,101,674 |
|
279,148,198 |
|
— |
|
1,955,120,524 |
Segment assets, total |
|
1,365,390,302 |
|
334,076,764 |
|
903,369,847 |
|
343,269,734 |
|
— |
|
2,946,106,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
|
52,519,831 |
|
— |
|
38,969,363 |
|
— |
|
— |
|
91,489,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment disbursements of non-monetary assets |
|
18,636,178 |
|
33,789,235 |
|
30,171,387 |
|
21,381,700 |
|
— |
|
103,978,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
283,835,866 |
|
101,832,549 |
|
109,691,047 |
|
34,207,817 |
|
— |
|
529,567,279 |
Non-current liabilities |
|
743,108,008 |
|
20,388,886 |
|
534,386,761 |
|
17,242,154 |
|
— |
|
1,315,125,809 |
Segment liabilities, total |
|
1,026,943,874 |
|
122,221,435 |
|
644,077,808 |
|
51,449,971 |
|
— |
|
1,844,693,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) provided by in Operating Activities |
|
181,679,320 |
|
55,490,096 |
|
36,121,074 |
|
31,764,493 |
|
— |
|
305,054,983 |
Cash flows (used in) provided by Investing Activities |
|
(108,283,362) |
|
(33,789,408) |
|
(32,875,359) |
|
(23,304,551) |
|
— |
|
(198,252,680) |
Cash flows (used in) provided by Financing Activities |
|
(111,533,388) |
|
(940,318) |
|
(2,455,073) |
|
(390,735) |
|
— |
|
(115,319,514) |
F-36
4 – CASH AND CASH EQUIVALENTS
The composition of cash and cash equivalents is as follows:
By item |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Cash |
|
552,062 |
|
203,931 |
Bank balances |
|
119,335,228 |
|
108,486,568 |
Other fixed rate instruments |
|
183,796,393 |
|
182,991,488 |
Cash and cash equivalents |
|
303,683,683 |
|
291,681,987 |
Other fixed income instruments correspond primarily to investments in short-term instruments with good credit ratings, such as Time Deposits and Mutual Funds, which are highly liquid, with insignificant risk of change in value and easily converted into known amounts of cash. There are no restrictions for significant amounts available to cash.
By currency |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
USD |
|
9,462,829 |
|
14,266,343 |
EUR |
|
437,604 |
|
870,613 |
ARS |
|
18,340,987 |
|
29,215,288 |
CLP |
|
140,758,085 |
|
138,205,025 |
PYG |
|
38,469,449 |
|
39,201,097 |
BRL |
|
96,214,729 |
|
69,923,621 |
Cash and cash equivalents |
|
303,683,683 |
|
291,681,987 |
5 – OTHER CURRENT AND NON-CURRENT FINANCIAL ASSETS
The composition of other financial assets is as follows:
|
|
Balance |
||||||
|
|
Current |
|
Non-current |
||||
Other financial assets |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Financial assets measured at amortized cost (1) |
|
66,190,949 |
|
92,838,315 |
|
3,027,052 |
|
3,317,778 |
Financial assets at fair value (2) |
|
1,094,844 |
|
170,206,554 |
|
78,988,715 |
|
75,297,737 |
Other financial assets (3) |
|
— |
|
— |
|
11,300,572 |
|
16,237,196 |
Total |
|
67,285,793 |
|
263,044,869 |
|
93,316,339 |
|
94,852,711 |
| (1) | Financial instrument that does not meet the definition of cash equivalents pursuant to Note 2.13. |
| (2) | Market value of hedging instruments. See details in Note 22. |
| (3) | Correspond to the rights in the Argentinean company Alimentos de Soya S.A., manufacturing company of “AdeS” products, which are framed in the purchase of the “AdeS” brand managed by The Coca-Cola Company at the end of 2016. |
F-37
6 – OTHER CURRENT AND NON-CURRENT NON-FINANCIAL ASSETS
The composition of other non-financial assets is as follows:
|
|
Balance |
||||||
|
|
Current |
|
Non-current |
||||
Other non-financial assets |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Prepaid expenses |
|
11,435,334 |
|
6,059,201 |
|
1,700,462 |
|
1,074,940 |
Tax credit remainder (1) |
|
933,282 |
|
905,826 |
|
39,373,807 |
|
40,922,425 |
Judicial deposits |
|
— |
|
— |
|
14,649,339 |
|
15,723,829 |
Others (2) |
|
6,943,235 |
|
19,991,973 |
|
3,688,874 |
|
1,951,072 |
Total |
|
19,311,851 |
|
26,957,000 |
|
59,412,482 |
|
59,672,266 |
| (1) | In November 2006, Rio de Janeiro Refrescos Ltda. (“RJR”) filed a court order No. 0021799-23.2006.4.02.5101 seeking recognition of the right to exclude ICMS (Tax on Commerce and Services) from the PIS (Program of Social Integration) and COFINS (Contribution for the Financing of Social Security) calculation base, as well as recognition of the right to obtain reimbursement of amounts unduly collected since November 14, 2001, duly restated using the Selic interest rate. On May 20, 2019, the ruling favoring RJR became final, allowing the recovery of amounts overpaid from November 14, 2001 to August 2017. It is worth noting that in September 2017, RJR had already obtained a Security Mandate, which granted it the right to exclude, from that date, the ICMS from the PIS and COFINS calculation base. |
The company took steps to assess the total amount of the credit at issue for the period of unduly collection of taxes from November 2001 to August 2017, totaling approximately CLP 100,550 million (CLP 92,783 million at December 2021) (BRL 613 million, of which BRL 370 million corresponds to capital and BRL 243 million to interest and monetary restatement. These amounts were recorded as of December 31, 2019 and recovered as of December 31, 2021.
Companhia de Bebidas Ipiranga, acquired in September 2013, also filed a court order n. 0005018-15.2002.4.03.6110 to recognize the same issue as the one previously descibed for RJR. On September 12, 2019, the ruling favoring Ipiranga became final, allowing the recovery of the amounts overpaid from September 12, 1990 to December 12, 2013 (date on which Ipiranga was acquired by RJR). The Ipiranga credit will be generated in the name of RJR, however pursuant to a contractual clause (“Subscription Agreement for Shares and Exhibits”), which requireds RJR to transfer any gain resulting from this action to the former shareholders of Ipiranga. The Company performed procedures to assess the total amount of the credit in question for the tax period expired, totaling BRL 162,588, of which BRL 80,177 correspond to principal and BRL 82,411 correspond to interest and monetary restatement. These amounts were recorded in the year ended December 31, 2020. The payment of income tax is made at the time of liquidation of the credit, with which the respective deferred tax liability of BRL 55,280 was recorded. The value of PIS and Cofins recorded was BRL 7,623 thousand. At the closing of these financial statements the value to be transferred to the former shareholders of Ipiranga is CLP 30,830,785 or BRL 170,176 (CLP 27,309,519 at December 31, 2022 or BRL 166,491). The liability is recorded in other non-financial liabilities (Note 18).
| (2) | Other non-financial assets are mainly composed of advances to suppliers. |
F-38
7 – TRADE ACCOUNTS AND OTHER ACCOUNTS RECEIVABLE
The composition of trade and other receivables is as follows:
|
|
Current |
|
Non-current |
||||
Trade debtors and other accounts receivable, Net |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Trade debtors |
|
251,169,538 |
|
238,146,331 |
|
94,190 |
|
56,781 |
Other debtors |
|
41,973,516 |
|
39,798,245 |
|
277,077 |
|
483,139 |
Other accounts receivable |
|
5,749,110 |
|
1,825,710 |
|
134 |
|
— |
Total |
|
298,892,164 |
|
279,770,286 |
|
371,401 |
|
539,920 |
|
|
Current |
|
Non-current |
||||
Trade debtors and other accounts receivable, Gross |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Trade debtors |
|
255,616,735 |
|
242,638,974 |
|
94,190 |
|
56,781 |
Other debtors |
|
42,135,933 |
|
40,206,431 |
|
277,077 |
|
483,139 |
Other accounts receivable |
|
5,834,787 |
|
1,921,211 |
|
134 |
|
— |
Total |
|
303,587,455 |
|
284,766,616 |
|
371,401 |
|
539,920 |
The stratification of the portfolio for current and non-current trade accounts receivable, without impairment impact, is as follows:
|
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Less than one month |
|
239,907,074 |
|
229,587,868 |
Between one and three months |
|
7,467,587 |
|
4,577,833 |
Between three and six months |
|
1,276,211 |
|
2,418,252 |
Between six and eight months |
|
5,142,341 |
|
5,392,862 |
Older than eight months |
|
1,917,712 |
|
718,940 |
Total |
|
255,710,925 |
|
242,695,755 |
The Company has approximately 292,153 clients, which may have balances in the different sections of the stratification. The number of clients is distributed geographically with 70,000 in Chile, 84,153 in Brazil, 67,580 in Argentina and 70,420 in Paraguay.
The provision for expected credit losses associated with each tranche of the portfolio for current and non-current trade receivables is as follows:
|
|
12.31.2023 |
|||||
|
|
|
|
Impairment |
|
|
|
|
|
Credit amount |
|
provision |
|
Percentage |
|
|
|
ThCh$ |
|
ThCh$ |
|
% |
|
Less than one month |
|
239,907,074 |
|
(700,137) |
|
0.16 |
% |
Between one and three months |
|
7,467,587 |
|
(294,510) |
|
10.88 |
% |
Between three and six months |
|
1,276,211 |
|
(138,648) |
|
21.60 |
% |
Between six and eight months |
|
5,142,341 |
|
(2,397,365) |
|
68.09 |
% |
Older than eight months |
|
1,917,712 |
|
(916,537) |
|
40.99 |
% |
Total |
|
255,710,925 |
|
(4,447,197) |
|
|
|
F-39
|
|
12.31.2022 |
|
|
|
||
|
|
|
|
Impairment |
|
|
|
|
|
Credit amount |
|
provision |
|
Percentage |
|
|
|
ThCh$ |
|
ThCh$ |
|
% |
|
Less than one month |
|
229,587,868 |
|
(701,701) |
|
0.31 |
% |
Between one and three months |
|
4,577,833 |
|
(431,630) |
|
9.43 |
% |
Between three and six months |
|
2,418,252 |
|
(786,856) |
|
32.54 |
% |
Between six and eight months |
|
5,392,862 |
|
(2,402,146) |
|
44.54 |
% |
Older than eight months |
|
718,940 |
|
(170,310) |
|
23.69 |
% |
Total |
|
242,695,755 |
|
(4,492,643) |
|
|
|
The movement in the allowance for expected credit losses is presented below:
|
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance |
|
4,492,643 |
|
4,711,371 |
|
6,795,663 |
Increase (decrease) |
|
1,319,216 |
|
(150,671) |
|
1,697,887 |
Provision reversal |
|
(1,110,743) |
|
(654,381) |
|
(3,832,220) |
Increase (decrease) for changes of foreign currency |
|
(253,919) |
|
586,324 |
|
50,041 |
Sub – total movements |
|
(45,446) |
|
(218,728) |
|
(2,084,292) |
Ending balance |
|
4,447,197 |
|
4,492,643 |
|
4,711,371 |
The provision for expected credit losses is recorded as an administrative expense in the statements of income by function.
8 – INVENTORIES
The composition of inventories is detailed as follows:
Details |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Raw materials (1) |
|
90,992,931 |
|
104,833,902 |
Finished goods |
|
115,591,443 |
|
114,164,680 |
Spare parts and supplies |
|
26,527,656 |
|
27,109,494 |
Work in progress |
|
194,686 |
|
216,164 |
Other inventories |
|
6,012,077 |
|
4,020,372 |
Obsolescence provision (2) |
|
(6,265,633) |
|
(4,457,956) |
Total |
|
233,053,160 |
|
245,886,656 |
The cost of inventory recognized as cost of sales amounts to CLP 1,346,516,486 thousand and CLP 1,388,536,599 thousand as of December 31, 2023 and 2022, 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. |
F-40
9 – TAX ASSETS AND LIABILITIES
The composition of current tax accounts receivable is the following:
Tax assets |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Monthly provisional payments |
|
4,691,320 |
|
25,428,344 |
Tax credits |
|
32,125,597 |
|
6,640,888 |
Recoverable taxes from prior years |
|
27,247 |
|
473,424 |
Surplus Tax Credit |
|
6,265,971 |
|
6,387,530 |
Other Recoverable Taxes |
|
272,923 |
|
396,241 |
Total |
|
43,383,058 |
|
39,326,427 |
The composition of current tax accounts payable is the following:
|
|
Current |
||
Tax liabilities |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Income tax expense |
|
13,411,621 |
|
14,615,447 |
Tax credit |
|
— |
|
— |
Others |
|
— |
|
— |
Total |
|
13,411,621 |
|
14,615,447 |
10 – INCOME TAX EXPENSE AND DEFERRED TAXES
10.1 Income tax expense
The current and deferred income tax expenses are detailed as follows:
Details |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Current income tax expense |
|
(58,334,583) |
|
(63,245,293) |
|
(45,614,890) |
Current tax adjustment previous period |
|
(152,481) |
|
311,931 |
|
2,284,477 |
Foreign dividends tax withholding expense |
|
(11,803,842) |
|
(11,129,734) |
|
(2,877,817) |
Other current tax expense (income) |
|
(688,765) |
|
— |
|
114,130 |
Current income tax expense |
|
(70,979,671) |
|
(74,063,096) |
|
(46,094,100) |
Expense (income) for the creation and reversal of temporary differences of deferred tax and others |
|
(15,014,636) |
|
(30,281,542) |
|
(83,220) |
Expense (income) for deferred taxes |
|
(15,014,636) |
|
(30,281,542) |
|
(83,220) |
Total income tax expense |
|
(85,994,307) |
|
(104,344,638) |
|
(46,177,320) |
The distribution of national and foreign tax expenditure is as follows:
Income taxes |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Current taxes |
|
|
|
|
|
|
Foreign |
|
(44,507,433) |
|
(61,250,403) |
|
(37,363,624) |
National |
|
(26,472,238) |
|
(12,812,693) |
|
(8,730,476) |
Current tax expense |
|
(70,979,671) |
|
(74,063,096) |
|
(46,094,100) |
Deferred taxes |
|
|
|
|
|
|
Foreign |
|
(13,619,606) |
|
(4,596,695) |
|
6,942,925 |
National |
|
(1,395,030) |
|
(25,684,847) |
|
(7,026,145) |
Deferred tax expense |
|
(15,014,636) |
|
(30,281,542) |
|
(83,220) |
Income tax expense |
|
(85,994,307) |
|
(104,344,638) |
|
(46,177,320) |
F-41
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 |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
Net income before taxes |
|
260,505,794 |
|
232,803,625 |
|
203,208,988 |
|
Tax expense at legal rate (27.0%) |
|
(70,336,564) |
|
(62,856,979) |
|
(54,866,427) |
|
Effect of tax rate in other jurisdictions |
|
(854,686) |
|
(2,820,546) |
|
860,745 |
|
|
|
|
|
|
|
|
|
Permanent differences: |
|
|
|
|
|
|
|
Foreign dividend tax withholding expense and other non-taxable income |
|
(15,253,682) |
|
(11,536,654) |
|
(10,868,055) |
|
Non-deductible expenses |
|
(2,585,111) |
|
(3,622,958) |
|
(2,935,310) |
|
Tax effect on excess tax provision in previous periods |
|
(188,988) |
|
(81,258) |
|
13,250,594 |
|
Tax effect of price-level restatement for Chilean companies |
|
(9,929,818) |
|
(33,196,408) |
|
(15,794,098) |
|
Subsidiaries tax withholding expense and other legal tax debits and credits |
|
13,154,542 |
|
9,770,165 |
|
24,175,231 |
|
Adjustments to tax expense |
|
(14,803,057) |
|
(38,667,113) |
|
7,828,362 |
|
Tax expense at effective rate |
|
(85,994,307) |
|
(104,344,638) |
|
(46,177,320) |
|
Effective rate |
|
33.0 |
% |
44.8 |
% |
22.7 |
% |
The applicable income tax rates in each of the jurisdictions where the Company operates are the following:
|
|
Rates |
|
||||
Country |
|
2023 |
|
2022 |
|
2021 |
|
Chile |
|
27.00 |
% |
27.00 |
% |
27.00 |
% |
Brazil |
|
34.00 |
% |
34.00 |
% |
34.00 |
% |
Argentina |
|
35.00 |
% |
35.00 |
% |
35.00 |
% |
Paraguay |
|
10.00 |
% |
10.00 |
% |
10.00 |
% |
F-42
10.2 Deferred taxes
The net cumulative balances of temporary differences resulted in deferred tax assets and liabilities, which are detailed as follows:
|
|
12.31.2023 |
|
12.31.2022 |
||||
Temporary differences |
|
Assets |
|
Liabilities |
|
Assets |
|
Liabilities |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Property, plant and equipment |
|
5,970,424 |
|
(54,058,525) |
|
5,351,293 |
|
(58,230,728) |
Obsolescence provision |
|
2,231,501 |
|
— |
|
1,871,168 |
|
— |
ICMS exclusion credit |
|
3,241,530 |
|
— |
|
2,686,693 |
|
— |
Employee benefits |
|
8,212,311 |
|
(14,382) |
|
5,033,868 |
|
(3,348) |
Provision for severance indemnity |
|
2,546,033 |
|
(94,659) |
|
2,789,893 |
|
(42,264) |
Tax loss carry forwards (1) |
|
2,142,747 |
|
— |
|
5,569,124 |
|
— |
Tax goodwill Brazil (2) |
|
— |
|
(15,782,005) |
|
— |
|
(9,081,512) |
Contingency provision |
|
27,144,927 |
|
— |
|
27,145,591 |
|
— |
Foreign Exchange differences (3) |
|
4,640,723 |
|
— |
|
11,478,538 |
|
— |
Allowance for doubtful accounts |
|
799,274 |
|
— |
|
803,608 |
|
— |
Coca-Cola incentives (Argentina) |
|
— |
|
— |
|
633,919 |
|
— |
Assets and liabilities for placement of bonds |
|
— |
|
(561,994) |
|
— |
|
(610,594) |
Financial expense |
|
— |
|
(2,363,384) |
|
— |
|
(1,894,010) |
Lease liabilities |
|
3,665,695 |
|
— |
|
1,874,166 |
|
— |
Inventories |
|
1,706,518 |
|
— |
|
1,312,833 |
|
— |
Distribution rights (4) |
|
— |
|
(161,155,669) |
|
— |
|
(154,669,995) |
Prepaid income |
|
4,481,352 |
|
— |
|
5,339,265 |
|
(8,287) |
Spare parts |
|
— |
|
(4,816,189) |
|
— |
|
(4,142,782) |
Intangibles |
|
77,752 |
|
(5,497,812) |
|
69,395 |
|
(7,388,202) |
Others |
|
4,301,875 |
|
(2,965,088) |
|
5,282,818 |
|
(4,520,673) |
Subtotal |
|
71,162,662 |
|
(247,309,707) |
|
77,242,172 |
|
(240,592,395) |
Offsetting of deferred tax assets/(liabilities) |
|
(66,839,488) |
|
66,839,488 |
|
(74,813,839) |
|
74,813,839 |
Total assets and liabilities net |
|
4,323,174 |
|
(180,470,219) |
|
2,428,333 |
|
(165,778,556) |
| (1) | Tax losses mainly associated with entities in Chile. Tax losses have no expiration date in Chile. |
| (2) | Difference for tax amortization of Goodwill in Brazil. |
| (3) | Corresponds to deferred taxes for exchange rate differences generated on the translation of debts expressed in foreign currency in the subsidiary Rio de Janeiro Refrescos Ltda., that for tax purposes are recognized when paid. |
| (4) | Distribution rights arising from business combinations. See Note 15. |
Deferred tax account movements are as follows:
Movement |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Opening balance |
|
(163,350,223) |
|
(166,596,100) |
Increase (decrease) in deferred tax |
|
(31,400,047) |
|
8,090,171 |
Increase (decrease) due to foreign currency translation(*) |
|
18,603,225 |
|
(4,844,294) |
Total movements |
|
(12,796,822) |
|
3,245,877 |
Ending balance |
|
(176,147,045) |
|
(163,350,223) |
(*) Includes IAS 29 effects due to inflation in Argentina
F-43
11 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at the close of each period is detailed as follows:
Property, plant and equipment, gross |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Construction in progress |
|
96,126,388 |
|
49,169,567 |
Land |
|
115,737,432 |
|
104,906,878 |
Buildings |
|
356,340,587 |
|
337,689,681 |
Plant and equipment |
|
709,047,901 |
|
693,153,093 |
Information technology equipment |
|
35,069,078 |
|
34,992,575 |
Fixed installations and accessories |
|
43,914,423 |
|
69,798,556 |
Vehicles |
|
81,294,395 |
|
75,759,020 |
Leasehold improvements |
|
420,586 |
|
362,243 |
Rights of use |
|
100,265,151 |
|
73,946,435 |
Other properties, plant and equipment (1) |
|
425,204,655 |
|
448,561,681 |
Total Property, plant and equipment, gross |
|
1,963,420,596 |
|
1,888,339,729 |
Accumulated depreciation of Property, plant and equipment |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Buildings |
|
(130,708,389) |
|
(117,237,092) |
Plant and equipment |
|
(494,072,229) |
|
(499,070,234) |
Information technology equipment |
|
(25,646,570) |
|
(27,257,028) |
Fixed installations and accessories |
|
(28,383,356) |
|
(44,057,493) |
Vehicles |
|
(48,042,781) |
|
(44,600,066) |
Leasehold improvements |
|
(351,552) |
|
(282,057) |
Rights of use |
|
(66,973,796) |
|
(53,350,442) |
Other properties, plant and equipment (1) |
|
(296,853,112) |
|
(304,264,058) |
Total accumulated depreciation |
|
(1,091,031,785) |
|
(1,090,118,470) |
Total Property, plant and equipment, net |
|
872,388,811 |
|
798,221,259 |
| (1) | The net balance of each of these categories is presented below: |
Other Property, plant and equipment, net |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Bottles |
|
43,683,655 |
|
46,351,209 |
Marketing and promotional assets (market assets) |
|
72,164,433 |
|
70,149,875 |
Other Property, plant and equipment |
|
12,503,455 |
|
27,796,539 |
Total |
|
128,351,543 |
|
144,297,623 |
F-44
11.1 Movements
Movements in Property, plant and equipment are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
facilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT |
|
and |
|
|
|
Leasehold |
|
|
|
|
|
Property, plant |
|
|
Construction in |
|
|
|
|
|
Plant and |
|
equipment |
|
accessories, |
|
|
|
improvements, |
|
|
|
Rights-of-use, |
|
and equipment, |
|
|
progress |
|
Land |
|
Buildings, net |
|
equipment, net |
|
net |
|
net |
|
Vehicles, net |
|
net |
|
Others |
|
net (1) |
|
net |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance at 01.01.2023 |
|
49,169,567 |
|
104,906,878 |
|
220,452,589 |
|
194,082,859 |
|
7,735,547 |
|
25,741,063 |
|
31,158,954 |
|
80,186 |
|
144,297,623 |
|
20,595,993 |
|
798,221,259 |
Additions |
|
100,905,107 |
|
11,316,009 |
|
1,266,472 |
|
37,341,985 |
|
1,081,074 |
|
6,248 |
|
3,804,000 |
|
22,935 |
|
41,756,709 |
|
— |
|
197,500,539 |
Right-of use additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
25,119,021 |
|
25,119,021 |
Disposals |
|
— |
|
— |
|
(6,707) |
|
(292,766) |
|
(1,365) |
|
— |
|
(42,333) |
|
— |
|
(1,431,798) |
|
(174,444) |
|
(1,949,413) |
Transfers between items of Property, plant and equipment |
|
(57,285,699) |
|
— |
|
9,985,619 |
|
21,285,201 |
|
2,279,728 |
|
2,148,709 |
|
2,511,373 |
|
— |
|
18,399,131 |
|
675,938 |
|
— |
Right-of-use transfers |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Depreciation expense |
|
— |
|
— |
|
(9,175,999) |
|
(29,999,476) |
|
(3,048,237) |
|
(1,903,192) |
|
(5,692,021) |
|
(46,176) |
|
(46,855,960) |
|
— |
|
(96,721,061) |
Amortization |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(11,005,033) |
|
(11,005,033) |
Increase (decrease) due to foreign currency translation differences |
|
95,202 |
|
(485,959) |
|
(4,295,531) |
|
(2,173,388) |
|
311,883 |
|
(3,243,921) |
|
898,032 |
|
4,474 |
|
(16,326,501) |
|
56,926 |
|
(25,158,783) |
Other increase (decrease) (2) |
|
3,242,211 |
|
504 |
|
7,405,755 |
|
(5,268,743) |
|
1,063,878 |
|
(7,217,840) |
|
613,609 |
|
7,615 |
|
(11,487,661) |
|
(1,977,046) |
|
(13,617,718) |
Total movements |
|
46,956,821 |
|
10,830,554 |
|
5,179,609 |
|
20,892,813 |
|
1,686,961 |
|
(10,209,996) |
|
2,092,660 |
|
(11,152) |
|
(15,946,080) |
|
12,695,362 |
|
74,167,552 |
Ending balance al 12.31.2023 |
|
96,126,388 |
|
115,737,432 |
|
225,632,198 |
|
214,975,672 |
|
9,422,508 |
|
15,531,067 |
|
33,251,614 |
|
69,034 |
|
128,351,543 |
|
33,291,355 |
|
872,388,811 |
| (1) | Right of use assets is composed as follows: |
|
|
|
|
Accumulated |
|
|
Right-of-use |
|
Gross asset |
|
depreciation |
|
Net asset |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Constructions and buildings |
|
16,246,384 |
|
(6,883,481) |
|
9,362,903 |
Plant and Equipment |
|
52,431,352 |
|
(35,679,624) |
|
16,751,728 |
IT equipment |
|
1,155,261 |
|
(1,030,250) |
|
125,011 |
Motor vehicles |
|
22,051,973 |
|
(15,132,557) |
|
6,919,416 |
Others |
|
8,380,181 |
|
(8,247,884) |
|
132,297 |
Total |
|
100,265,151 |
|
(66,973,796) |
|
33,291,355 |
Lease liabilities interest expenses at the closing of the period reached ThCh$ 2,616,945
F-45
| (2) | Corresponds mainly to the effect of adopting IAS 29 in Argentina. |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and |
|
IT |
|
facilities and |
|
|
|
Leasehold |
|
|
|
|
|
Property, plant |
|
|
Construction |
|
|
|
|
|
equipment, |
|
equipment, |
|
accessories, |
|
|
|
improvements, |
|
|
|
Rights-of-use, |
|
and equipment, |
|
|
in progress |
|
Land |
|
Buildings, net |
|
net |
|
net |
|
net |
|
Vehicles, net |
|
net |
|
Others |
|
net (1) |
|
net |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance at 01.01.2022 |
|
56,280,594 |
|
101,286,107 |
|
203,343,125 |
|
169,651,555 |
|
5,613,217 |
|
23,099,121 |
|
19,184,600 |
|
113,289 |
|
114,153,544 |
|
23,653,975 |
|
716,379,127 |
Additions |
|
75,269,957 |
|
— |
|
867,990 |
|
21,280,010 |
|
922,233 |
|
74,995 |
|
636,420 |
|
10,275 |
|
68,730,337 |
|
— |
|
167,792,217 |
Right-of use additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
5,883,061 |
|
5,883,061 |
Disposals |
|
(32,456) |
|
— |
|
(16,174) |
|
(538,429) |
|
(15,105) |
|
— |
|
(4,522) |
|
— |
|
(2,249,837) |
|
(67,398) |
|
(2,923,921) |
Transfers between items of Property, plant and equipment |
|
(84,598,804) |
|
159,232 |
|
10,014,587 |
|
33,485,897 |
|
3,487,406 |
|
3,384,472 |
|
16,037,695 |
|
51,403 |
|
17,940,342 |
|
37,770 |
|
— |
Right-of-use transfers |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Depreciation expense |
|
— |
|
— |
|
(8,477,029) |
|
(35,372,214) |
|
(2,641,086) |
|
(3,365,827) |
|
(5,524,208) |
|
(68,741) |
|
(49,526,391) |
|
— |
|
(104,975,496) |
Amortization |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(9,993,249) |
|
(9,993,249) |
Increase (decrease) due to foreign currency translation differences |
|
4,263,117 |
|
3,461,539 |
|
11,105,445 |
|
7,324,221 |
|
43,790 |
|
1,282,713 |
|
852,241 |
|
10,324 |
|
6,450,271 |
|
1,235,657 |
|
36,029,318 |
Other increase (decrease) (2) |
|
(2,012,841) |
|
— |
|
3,614,645 |
|
(1,748,181) |
|
325,092 |
|
1,265,589 |
|
(23,272) |
|
(36,364) |
|
(11,200,643) |
|
(153,823) |
|
(9,969,798) |
Total movements |
|
(7,111,027) |
|
3,620,771 |
|
17,109,464 |
|
24,431,304 |
|
2,122,330 |
|
2,641,942 |
|
11,974,354 |
|
(33,103) |
|
30,144,079 |
|
(3,057,982) |
|
81,842,132 |
Ending balance al 12.31.2022 |
|
49,169,567 |
|
104,906,878 |
|
220,452,589 |
|
194,082,859 |
|
7,735,547 |
|
25,741,063 |
|
31,158,954 |
|
80,186 |
|
144,297,623 |
|
20,595,993 |
|
798,221,259 |
| (1) | Right of use assets is composed as follows: |
|
|
|
|
Accumulated |
|
|
Right-of-use |
|
Gross asset |
|
depreciation |
|
Net asset |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Constructions and buildings |
|
6,694,251 |
|
(3,452,700) |
|
3,241,551 |
Plant and Equipment |
|
47,377,683 |
|
(33,624,676) |
|
13,753,007 |
IT Equipment |
|
1,214,851 |
|
(1,081,741) |
|
133,110 |
Motor vehicles |
|
9,395,320 |
|
(6,066,615) |
|
3,328,705 |
Others |
|
9,264,330 |
|
(9,124,710) |
|
139,620 |
Total |
|
73,946,435 |
|
(53,350,442) |
|
20,595,993 |
Lease liabilities interest expenses at the closing of the period reached ThCh$ 2,092,868.
F-46
| (2) | Corresponds mainly to the effect of adopting IAS 29 in Argentina. |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed facilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and |
|
IT |
|
and |
|
|
|
Leasehold |
|
|
|
|
|
Property, plant |
|
|
Construction |
|
|
|
|
|
equipment, |
|
Equipment, |
|
accessories, |
|
|
|
improvements, |
|
|
|
Rights-of-use, |
|
and equipment, |
|
|
in progress |
|
Land |
|
Buildings, net |
|
net |
|
net |
|
net |
|
Vehicles, net |
|
net |
|
Other, |
|
net(1) |
|
net |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Opening balance at 01.01.2021 |
|
34,194,083 |
|
94,321,726 |
|
180,916,878 |
|
145,790,203 |
|
4,878,307 |
|
17,647,892 |
|
16,410,784 |
|
59,142 |
|
90,020,253 |
|
21,337,277 |
|
605,576,545 |
Additions |
|
61,100,226 |
|
— |
|
3,708,881 |
|
19,025,057 |
|
1,428,080 |
|
12,068 |
|
171,420 |
|
8,738 |
|
47,426,736 |
|
— |
|
132,881,206 |
Right-of use additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9,070,997 |
|
9,070,997 |
Disposals |
|
(74,476) |
|
— |
|
(276,312) |
|
(277,845) |
|
(3,896) |
|
(11) |
|
(9,573) |
|
— |
|
(3,156,795) |
|
— |
|
(3,798,908) |
Transfers between items of Property, plant and equipment |
|
(39,845,790) |
|
— |
|
4,370,826 |
|
21,182,049 |
|
751,603 |
|
606,279 |
|
4,771,885 |
|
88,345 |
|
8,074,803 |
|
— |
|
— |
Right-of-use transfers |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Depreciation expense |
|
— |
|
— |
|
(7,862,888) |
|
(32,058,439) |
|
(2,219,235) |
|
(3,700,948) |
|
(4,054,092) |
|
(51,774) |
|
(43,651,397) |
|
— |
|
(93,598,773) |
Amortization |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(8,386,063) |
|
(8,386,063) |
Increase (decrease) due to foreign currency translation differences |
|
6,513,216 |
|
6,964,382 |
|
21,941,520 |
|
23,364,406 |
|
658,167 |
|
3,080,061 |
|
2,264,353 |
|
8,840 |
|
16,399,966 |
|
1,759,346 |
|
82,954,257 |
Other increase (decrease) (2) |
|
(5,606,665) |
|
(1) |
|
544,220 |
|
(7,373,876) |
|
120,191 |
|
5,453,780 |
|
(370,177) |
|
(2) |
|
(960,022) |
|
(127,582) |
|
(8,320,134) |
Total movements |
|
22,086,511 |
|
6,964,381 |
|
22,426,247 |
|
23,861,352 |
|
734,910 |
|
5,451,229 |
|
2,773,816 |
|
54,147 |
|
24,133,291 |
|
2,316,698 |
|
110,802,582 |
Ending balance at 12.31. 2021 |
|
56,280,594 |
|
101,286,107 |
|
203,343,125 |
|
169,651,555 |
|
5,613,217 |
|
23,099,121 |
|
19,184,600 |
|
113,289 |
|
114,153,544 |
|
23,653,975 |
|
716,379,127 |
|
|
|
|
Accumulated |
|
|
Right-of-use |
|
Gross asset |
|
depreciation |
|
Net asset |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Constructions and buildings |
|
4,042,921 |
|
(2,140,590) |
|
1,902,331 |
Plant and Equipment |
|
43,450,544 |
|
(27,325,328) |
|
16,125,216 |
IT Equipment |
|
997,458 |
|
(750,993) |
|
246,465 |
Motor vehicles |
|
12,171,762 |
|
(7,065,299) |
|
5,106,463 |
Others |
|
8,954,143 |
|
(8,680,643) |
|
273,500 |
Total |
|
69,616,828 |
|
(45,962,853) |
|
23,653,975 |
Lease liabilities interest expense for the year ended December 31, 2021reached CLP 1,816,506 thousand.
12 – RELATED PARTIES
Balances and main transactions with related parties are detailed as follows:
12.1 Accounts receivable:
|
|
|
|
|
|
|
|
|
|
12.31.2023 |
|
12.31.2022 |
||||
Taxpayer ID |
|
Company |
|
Relationship |
|
Country |
|
Currency |
|
Current |
|
Non-current |
|
Current |
|
Non-current |
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
96.891.720-K |
|
Embonor S.A. |
|
Shareholder related |
|
Chile |
|
CLP |
|
7,371,731 |
|
— |
|
10,852,709 |
|
— |
77.526.480-2 |
|
Comercializadora Nova Verde |
|
Common shareholder |
|
Chile |
|
CLP |
|
5,071,655 |
|
— |
|
2,048,054 |
|
— |
Foreign |
|
Sorocaba Refrescos |
|
Shareholder related |
|
Brazil |
|
BRL |
|
1,223,699 |
|
— |
|
— |
|
— |
76.140.057-6 |
|
Monster |
|
Associate |
|
Chile |
|
CLP |
|
837,713 |
|
— |
|
86,492 |
|
— |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
CLP |
|
713,006 |
|
— |
|
925,189 |
|
— |
96.517.210-2 |
|
Embotelladora Iquique S.A. |
|
Shareholder related |
|
Chile |
|
CLP |
|
403,061 |
|
— |
|
745,048 |
|
— |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholder |
|
Chile |
|
CLP |
|
349,914 |
|
108,021 |
|
15,444 |
|
109,318 |
76.572.588-7 |
|
Coca Cola del Valle New Ventures S.A. |
|
Associate |
|
Chile |
|
CLP |
|
149,820 |
|
— |
|
143,002 |
|
— |
Foreign |
|
Embotelladoras Bolivianas Unidas S.A. |
|
Shareholder related |
|
Bolivia |
|
USD |
|
40,719 |
|
— |
|
— |
|
— |
Foreign |
|
Alimentos de Soja S.A.U. |
|
Shareholder related |
|
Argentina |
|
ARS |
|
— |
|
— |
|
237,439 |
|
— |
79.826.410-9 |
|
Guallarauco |
|
Associate |
|
Chile |
|
CLP |
|
— |
|
— |
|
8,790 |
|
— |
Total |
|
|
|
|
|
|
|
|
|
16,161,318 |
|
108,021 |
|
15,062,167 |
|
109,318 |
F-47
12.2 Accounts payable:
|
|
|
|
|
|
|
|
|
|
12.31.2023 |
|
12.31.2022 |
||||
Taxpayer ID |
|
Company |
|
Relationship |
|
Country |
|
Currency |
|
Current |
|
Non-current |
|
Current |
|
Non-current |
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Foreign |
|
Recofarma do Indústrias Amazonas Ltda. |
|
Shareholder related |
|
Brazil |
|
BRL |
|
40,159,177 |
|
6,007,041 |
|
30,998,682 |
|
10,354,296 |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholder |
|
Chile |
|
CLP |
|
25,770,189 |
|
— |
|
32,205,880 |
|
— |
Foreign |
|
Ser. y Prod. para Bebidas Refrescantes S.R.L. |
|
Shareholder |
|
Argentina |
|
ARS |
|
9,431,483 |
|
— |
|
8,587,487 |
|
— |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
CLP |
|
6,883,553 |
|
— |
|
8,186,248 |
|
— |
Foreign |
|
Coca-Cola Company |
|
Shareholder |
|
Paraguay |
|
PYG |
|
4,877,061 |
|
— |
|
1,690,858 |
|
— |
Foreign |
|
Monster Energy Company – EEUU |
|
Shareholder related |
|
Argentina |
|
PYG |
|
2,389,283 |
|
— |
|
28,910 |
|
— |
77.526.480-2 |
|
Comercializadora Nova Verde S.A. |
|
Common shareholder |
|
Chile |
|
CLP |
|
2,831,752 |
|
— |
|
2,198,317 |
|
— |
Foreign |
|
Monster Energy Brasil Com de Bebidas Ltda. |
|
Shareholder related |
|
Brazil |
|
BRL |
|
1,985,330 |
|
— |
|
3,811,908 |
|
— |
76.572.588-7 |
|
Coca-Cola del Valle New Ventures S.A. |
|
Associate |
|
Chile |
|
CLP |
|
602,113 |
|
— |
|
1,089,592 |
|
— |
96.891.720-K |
|
Embonor S.A. |
|
Shareholder related |
|
Chile |
|
CLP |
|
416,073 |
|
— |
|
589,127 |
|
— |
Foreign |
|
Leão Alimentos e Bebidas Ltda. |
|
Associate |
|
Brazil |
|
BRL |
|
307,967 |
|
— |
|
232,216 |
|
— |
Foreign |
|
The Coca-Cola Export Corporation |
|
Shareholder related |
|
Panama |
|
USD |
|
288,001 |
|
— |
|
— |
|
— |
Foreign |
|
Monster Energy Company – EEUU |
|
Shareholder related |
|
Argentina |
|
PYG |
|
61,155 |
|
— |
|
— |
|
— |
Foreign |
|
Alimentos de Soja S.A.U. |
|
Shareholder related |
|
Argentina |
|
ARS |
|
38,797 |
|
— |
|
628,842 |
|
— |
89.996.200-1 |
|
Envases del Pacifico S.A. |
|
Shareholder related |
|
Chile |
|
CLP |
|
3,690 |
|
— |
|
— |
|
— |
Total |
|
|
|
|
|
|
|
|
|
96,045,624 |
|
6,007,041 |
|
90,248,067 |
|
10,354,296 |
F-48
12.3 Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
Accumulated |
Taxpayer ID |
|
Company |
|
Relationship |
|
Country |
|
Transaction description |
|
Currency |
|
at 12.31.23 |
|
at 12.31.22 |
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholders |
|
Chile |
|
Purchase of concentrate |
|
CLP |
|
207,040,438 |
|
198,045,624 |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholders |
|
Chile |
|
Purchase of advertising services and others |
|
CLP |
|
9,057,004 |
|
7,241,918 |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholders |
|
Chile |
|
Lease of water source |
|
CLP |
|
6,424,479 |
|
5,958,076 |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholders |
|
Chile |
|
Sale of raw materials and others |
|
CLP |
|
1,025,290 |
|
2,738,472 |
96.714.870-9 |
|
Coca-Cola de Chile S.A. |
|
Shareholders |
|
Chile |
|
Minimum dividend |
|
CLP |
|
35,855 |
|
47,262 |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
Purchase of containers |
|
CLP |
|
21,103,185 |
|
24,441,192 |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
Purchase of raw materials |
|
CLP |
|
32,085,055 |
|
33,637,921 |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
Purchase of services and others |
|
CLP |
|
496,196 |
|
2,270,006 |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
Sale of services and others |
|
CLP |
|
- |
|
13,914 |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
Purchase of containers |
|
CLP |
|
10,830,682 |
|
9,391,000 |
86.881.400-4 |
|
Envases CMF S.A. |
|
Associate |
|
Chile |
|
Sale of containers/raw materials |
|
CLP |
|
10,981,598 |
|
13,360,534 |
93.281.000-K |
|
Coca-Cola Embonor S.A. |
|
Common shareholder |
|
Chile |
|
Sale of finished products |
|
CLP |
|
74,933,722 |
|
79,205,926 |
93.281.000-K |
|
Coca-Cola Embonor S.A. |
|
Common shareholder |
|
Chile |
|
Sale of services and others |
|
CLP |
|
360,722 |
|
585,448 |
93.281.000-K |
|
Coca-Cola Embonor S.A. |
|
Common shareholder |
|
Chile |
|
Sale of raw materials and inputs |
|
CLP |
|
261,983 |
|
956,036 |
96.891.720-K |
|
Embonor S.A. |
|
Shareholder related |
|
Chile |
|
Minimum dividend |
|
CLP |
|
416,073 |
|
589,127 |
96.517.310-2 |
|
Embotelladora Iquique S.A. |
|
Shareholder related |
|
Chile |
|
Sale of finished products |
|
CLP |
|
6,912,134 |
|
5,807,466 |
89.996.200-1 |
|
Envases del Pacífico S.A. |
|
Director related |
|
Chile |
|
Purchase of raw materials and inputs |
|
CLP |
|
3,690 |
|
204,933 |
94.627.000-8 |
|
Parque Arauco S.A |
|
Director related |
|
Chile |
|
Space lease |
|
CLP |
|
143,308 |
|
101,981 |
Foreign |
|
Recofarma do Indústrias Amazonas Ltda. |
|
Shareholder related |
|
Brazil |
|
Purchase of concentrate |
|
BRL |
|
125,212,630 |
|
100,199,500 |
Foreign |
|
Recofarma do Indústrias Amazonas Ltda. |
|
Shareholder related |
|
Brazil |
|
Sale of water source |
|
BRL |
|
9,750,769 |
|
- |
Foreign |
|
Recofarma do Indústrias Amazonas Ltda. |
|
Shareholder related |
|
Brazil |
|
Lease of water source |
|
BRL |
|
624,871 |
|
- |
Foreign |
|
Serv. y Prod. para Bebidas Refrescantes S.R.L. |
|
Shareholder related |
|
Argentina |
|
Purchase of concentrate |
|
ARS |
|
109,232,990 |
|
159,807,006 |
Foreign |
|
Serv. y Prod. para Bebidas Refrescantes S.R.L. |
|
Shareholder related |
|
Argentina |
|
Advertising rights awards and others |
|
ARS |
|
124,203 |
|
3,002,061 |
Foreign |
|
KAIK Participações |
|
Associate |
|
Brazil |
|
Reimbursement and other purchases |
|
BRL |
|
114,147 |
|
96,511 |
Foreign |
|
Leão Alimentos e Bebidas Ltda. |
|
Associate |
|
Brazil |
|
Purchase of products |
|
BRL |
|
130,042 |
|
636,938 |
Foreign |
|
Sorocaba Refrescos S.A. |
|
Associate |
|
Brazil |
|
Purchase of products |
|
BRL |
|
2,799,927 |
|
419,515 |
89.862.200-2 |
|
Latam Airlines Group S.A. |
|
Director related |
|
Chile |
|
Sale of products |
|
CLP |
|
- |
|
93,320 |
76.572.588-7 |
|
Coca-Cola Del Valle New Ventures SA |
|
Associate |
|
Chile |
|
Sale of services and others |
|
CLP |
|
555,666 |
|
288,264 |
76.572.588-7 |
|
Coca-Cola Del Valle New Ventures SA |
|
Associate |
|
Chile |
|
Purchase of services and others |
|
CLP |
|
4,296,982 |
|
4,306,419 |
Foreign |
|
Alimentos de Soja S.A.U. |
|
Shareholder related |
|
Argentina |
|
Payment of fees and services |
|
ARS |
|
565,355 |
|
4,128,865 |
Foreign |
|
Alimentos de Soja S.A.U. |
|
Shareholder related |
|
Argentina |
|
Purchase of products |
|
ARS |
|
674,311 |
|
2,107,354 |
Foreign |
|
Alimentos de Soja S.A.U. |
|
Shareholder related |
|
Argentina |
|
Marketing services |
|
ARS |
|
49,114 |
|
286,488 |
Foreign |
|
Trop Frutas do Brasil Ltda. |
|
Associate |
|
Brazil |
|
Purchase of products |
|
BRL |
|
190,060 |
|
368,127 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Sale of raw materials |
|
CLP |
|
61,184 |
|
781,901 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Sale of finished products |
|
CLP |
|
12,827,332 |
|
12,867,822 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Sale of services and others |
|
CLP |
|
1,689,356 |
|
4,512,714 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Purchase of finished products |
|
CLP |
|
21,192,591 |
|
25,440,668 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Advertising services and others |
|
CLP |
|
924,924 |
|
2,367,626 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Cold equipment maintenance |
|
CLP |
|
594,640 |
|
619,419 |
77526480-2 |
|
Comercializadora Novaverde S.A. |
|
Common shareholder |
|
Chile |
|
Purchase of raw materials |
|
CLP |
|
401,498 |
|
952,699 |
97.036.000-K |
|
Banco Santander Chile. |
|
Director/Manager/Executive |
|
Chile |
|
Purchase of services |
|
CLP |
|
4,396,965 |
|
6,776,225 |
Foreign |
|
Monster Energy Brasil Comercio de Bebidas Ltda. |
|
Equity investee |
|
Brazil |
|
Purchase of products |
|
BRL |
|
3,466,645 |
|
2,352,550 |
33-0520613 |
|
Monster Energy Company - USA |
|
Equity investee |
|
U.S.A. |
|
Purchase of advertising material |
|
CLP |
|
175,705 |
|
— |
76140057-6 |
|
Monster Energy Company - CHILE |
|
Subsidiary |
|
Chile |
|
Sale of advertising services and others |
|
CLP |
|
3,561,747 |
|
— |
76140057-6 |
|
Monster Energy Company - CHILE |
|
Subsidiary |
|
Chile |
|
Purchase of advertising services and others |
|
CLP |
|
439,520 |
|
— |
76140057-6 |
|
Monster Energy Company - CHILE |
|
Subsidiary |
|
Chile |
|
Purchase of finished products |
|
CLP |
|
35,904,599 |
|
— |
Foreign |
|
The Coca-Cola Export Corporation Panama |
|
Shareholder related |
|
Chile |
|
Purchase of products and others |
|
CLP |
|
230,619 |
|
— |
Foreign |
|
The Coca-Cola Export Corporation Atlanta |
|
Shareholder related |
|
Chile |
|
Purchase of products and others |
|
CLP |
|
361,873 |
|
— |
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 |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Executive wages, salaries and benefits |
|
10,036,315 |
|
8,536,107 |
|
7,253,863 |
Director allowances |
|
1,690,400 |
|
1,560,000 |
|
1,512,500 |
Benefits accrued in the last five years and payments during the fiscal year |
|
355,680 |
|
269,952 |
|
254,240 |
Total |
|
12,082,395 |
|
10,366,059 |
|
9,020,603 |
F-49
13 – CURRENT AND NON-CURRENT EMPLOYEE BENEFITS
Employee benefits are detailed as follows:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Accrued vacation |
|
23,546,649 |
|
25,773,244 |
Participation in profits and bonuses |
|
36,455,454 |
|
22,618,562 |
Severance indemnity |
|
16,289,643 |
|
17,409,793 |
Total |
|
76,291,746 |
|
65,801,599 |
|
|
ThCh$ |
|
ThCh$ |
Current |
|
57,817,800 |
|
48,391,806 |
Non-current |
|
18,473,946 |
|
17,409,793 |
Total |
|
76,291,746 |
|
65,801,599 |
13.1 Severance indemnities
The movements of employee benefits, valued pursuant to Note 2 are detailed as follows:
Movements |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Opening balance |
|
17,409,793 |
|
14,982,928 |
Service costs |
|
1,202,371 |
|
1,018,080 |
Interest costs |
|
1,000,018 |
|
737,566 |
Actuarial variations |
|
(1,678,013) |
|
2,905,020 |
Benefits paid |
|
(1,644,526) |
|
(2,233,801) |
Total |
|
16,289,643 |
|
17,409,793 |
13.1.1 Assumptions
The actuarial assumptions used are detailed as follows:
Assumptions |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
|
|
|
Discount rate |
|
2.26 |
% |
1.71 |
% |
Expected salary increase rate |
|
2.0 |
% |
2.0 |
% |
Turnover rate |
|
7.62 |
% |
7.68 |
% |
Mortality rate |
|
RV-2020 |
|
RV-2020 |
|
Retirement age of women |
|
60 years |
|
60 years |
|
Retirement age of men |
|
65 years |
|
65 years |
|
F-50
The result of the changes in the severance indemnities resulting from the sensitization of the actuarial assumptions at the valuation date is presented below:
Discount rate sensitivity |
|
ThCh$ |
|
|
|
Variation in the provision resulting from an increase of up to 100 basis points |
|
(869,321) |
Variation in the provision resulting from a decrease of up to 100 basis points |
|
990,697 |
|
|
|
Salary increase sensitivity |
|
ThCh$ |
|
|
|
Variation in the provision resulting from an increase of up to 100 basis points |
|
991,833 |
Variation in the provision resulting from a decrease of up to 100 basis points |
|
(878,906) |
13.2 Personnel expenses
Personnel expenses included in the consolidated statement of income are as follows:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Wages and salaries |
|
266,893,173 |
|
277,271,540 |
|
225,883,645 |
Employee benefits |
|
83,260,379 |
|
71,566,763 |
|
53,340,673 |
Severance benefits |
|
6,290,886 |
|
6,052,239 |
|
4,163,608 |
Other personnel expenses |
|
22,037,675 |
|
21,305,979 |
|
18,134,494 |
Total |
|
378,482,113 |
|
376,196,521 |
|
301,522,420 |
14 – INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
14.1Description
Investments in associates are accounted for using the equity method. Investments in associates are detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Ownership |
|
||
|
|
|
|
|
|
Functional |
|
Investment value |
|
interest |
|
||||
TAXPAYER ID |
|
Name |
|
Country |
|
currency |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
86.881.400-4 |
|
Envases CMF S.A. (1) |
|
Chile |
|
CLP |
|
21,025,975 |
|
23,519,277 |
|
50.00 |
% |
50.00 |
% |
Foreign |
|
Leão Alimentos e Bebidas Ltda. (2) |
|
Brazil |
|
BRL |
|
10,636,778 |
|
8,460,307 |
|
10.26 |
% |
10.26 |
% |
Foreign |
|
Kaik Participações Ltda. (2) |
|
Brazil |
|
BRL |
|
1,551,253 |
|
1,293,219 |
|
11.32 |
% |
11.32 |
% |
Foreign |
|
SRSA Participações Ltda. |
|
Brazil |
|
BRL |
|
59,875 |
|
55,072 |
|
40.00 |
% |
40.00 |
% |
Foreign |
|
Sorocaba Refrescos S.A. |
|
Brazil |
|
BRL |
|
28,875,351 |
|
26,694,836 |
|
40.00 |
% |
40.00 |
% |
Foreign |
|
Trop Frutas do Brasil Ltda. (2) |
|
Brazil |
|
BRL |
|
885,062 |
|
1,971,055 |
|
7.52 |
% |
7.52 |
% |
76.572.588.7 |
|
Coca-Cola del Valle New Ventures S.A. |
|
Chile |
|
CLP |
|
28,764,973 |
|
30,350,832 |
|
35.00 |
% |
35.00 |
% |
Total |
|
|
|
|
|
|
|
91,799,267 |
|
92,344,598 |
|
|
|
|
|
| (1) | In Envases CMF S.A., regardless of the 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 ownership interest, it has been defined that the Company has significant influence, given that it has the right to appoint directors. |
F-51
Envases CMF S.A.
Chilean entity whose corporate purpose is to manufacture and sell plastic material products and beverage bottling and packaging services. The business relationship is to supply plastic bottles, preforms and caps to Coca-Cola bottlers in Chile.
Leão Alimentos e Bebidas Ltda.
Brazilian entity whose corporate purpose is to manufacture and commercialize food, beverages in general and beverage concentrates. Invest in other companies. The business relationship is to produce non-carbonated products for Coca-Cola bottlers in Brazil.
Kaik Participações Ltda.
Brazilian entity whose corporate purpose is to invest in other companies with its own resources.
SRSA Participações Ltda.
Brazilian entity whose corporate purpose is the purchase and sale of real estate investments and property management, supporting the business of Rio De Janeiro Refrescos Ltda. (Andina Brazil).
Sorocaba Refrescos S.A.
Brazilian entity whose corporate purpose is to manufacture and commercialize food, beverages in general and beverage concentrates, in addition to investing in other companies. It has commercial relationship with Rio de Janeiro Refrescos Ltda. (Andina Brazil).
Trop Frutas do Brasil Ltda.
Brazilian entity whose corporate purpose is to manufacture, commercialize and export natural fruit pulp and coconut water. The business relationship is to produce products for Coca-Cola bottlers in Brazil.
Coca-Cola del Valle New Ventures S.A.
Chilean entity whose corporate purpose is to manufacture, distribute and commercialize all kinds of juices, waters and beverages in general. The business relationship is to produce waters and juices for Coca-Cola bottlers in Chile.
14.2 Movements
The movement of investments in other entities accounted for using the equity method is shown below:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Opening balance |
|
92,344,598 |
|
91,489,194 |
Dividends declared |
|
(6,232,958) |
|
(4,383,645) |
Share in operating income |
|
3,145,106 |
|
2,118,728 |
Other increase (decrease) in investments in associated companies (Impairment in Trop Frutas do Brasil Ltda.) |
|
(1,615,050) |
|
- |
Other increase (decrease) in investments in associates* |
|
4,157,571 |
|
3,120,321 |
Ending balance |
|
91,799,267 |
|
92,344,598 |
*Mainly due to foreign exchange rates
The main movement is explained by dividends declared in 2023 and 2022 corresponding to Envases CMF S.A. and Sorocaba Refrescos S.A.
F-52
14.3 Reconciliation of share of profit in investments in associates:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Share in operating income |
|
3,145,106 |
|
2,118,728 |
|
4,041,118 |
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) |
|
(428,937) |
|
(568,767) |
|
(512,131) |
Amortization goodwill in the sale of fixed assets of Envases CMF S.A. |
|
|
|
|
|
42,633 |
Amortization goodwill preferred rights CCDV S.A. |
|
- |
|
(140,892) |
|
(478,518) |
Income statement balance |
|
2,716,169 |
|
1,409,069 |
|
3,093,102 |
F-53
14.4 Summary financial information of associates:
The tables below reflect the amounts presented in the financial statements of the relevant associates and not the Company’s share of those amounts.
At December 31, 2023
|
|
Envases CMF |
|
Sorocaba Refrescos |
|
Kaik Participaçōes |
|
SRSA Participaçōes |
|
Leão Alimentos e |
|
Trop Frutas do Brasil |
|
Coca Cola del Valle New |
|
|
S.A. |
|
S.A. |
|
Ltda. |
|
Ltda. |
|
Bebidas Ltda. |
|
Ltda. |
|
Ventures S.A. |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Short term assets |
|
50,693,046 |
|
39,392,459 |
|
— |
|
24,715 |
|
92,747,488 |
|
21,186,620 |
|
24,548,167 |
Long term assets |
|
54,127,400 |
|
101,420,184 |
|
13,704,046 |
|
347,922 |
|
62,843,154 |
|
28,404,343 |
|
70,825,265 |
Total assets |
|
104,820,446 |
|
140,812,643 |
|
13,704,046 |
|
372,637 |
|
155,590,642 |
|
49,590,963 |
|
95,373,432 |
Short term liabilities |
|
35,045,849 |
|
22,951,428 |
|
— |
|
222,950 |
|
22,924,938 |
|
14,104,874 |
|
13,188,225 |
Long term liabilities |
|
27,722,647 |
|
46,453,440 |
|
34 |
|
— |
|
16,678,828 |
|
13,212,410 |
|
— |
Total liabilities |
|
62,768,496 |
|
69,404,868 |
|
34 |
|
222,950 |
|
39,603,766 |
|
27,317,284 |
|
13,188,225 |
Total Equity |
|
42,051,950 |
|
71,407,775 |
|
13,704,012 |
|
149,687 |
|
115,986,876 |
|
22,273,679 |
|
82,185,207 |
Total revenue from ordinary activities |
|
92,308,940 |
|
— |
|
983,452 |
|
146,063 |
|
84,624,940 |
|
55,434,136 |
|
29,385,365 |
Net income before taxes |
|
5,923,727 |
|
58,931,149 |
|
983,452 |
|
146,063 |
|
5,657,251 |
|
(2,548,671) |
|
(7,822,534) |
Net income after taxes |
|
4,755,373 |
|
(1,206,475) |
|
— |
|
146,063 |
|
2,529,341 |
|
(2,349,151) |
|
(5,101,497) |
Other comprehensive income |
|
29,516 |
|
9,690,233 |
|
— |
|
— |
|
(93,593,890) |
|
(58,242) |
|
— |
Total comprehensive income |
|
4,784,889 |
|
8,483,758 |
|
983,452 |
|
146,063 |
|
(91,064,549) |
|
(2,407,393) |
|
(5,101,497) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting date (See Note 2.3) |
|
12.31.2023 |
|
11.30.2023 |
|
11.30.2023 |
|
11.302023 |
|
11.30.2023 |
|
11.30.2023 |
|
11.30.2023 |
At December 31, 2022
|
|
Envases CMF |
|
Sorocaba Refrescos |
|
Kaik Participaçōes |
|
SRSA Participaçōes |
|
Leão Alimentos e |
|
Trop Frutas do Brasil |
|
Coca Cola del Valle New |
|
|
S.A. |
|
S.A. |
|
Ltda. |
|
Ltda. |
|
Bebidas Ltda. |
|
Ltda. |
|
Ventures S.A. |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Short term assets |
|
63,615,517 |
|
41,997,646 |
|
— |
|
22,376 |
|
77,547,906 |
|
22,235,713 |
|
26,927,496 |
Long term assets |
|
52,964,004 |
|
89,524,823 |
|
11,424,515 |
|
317,159 |
|
54,195,351 |
|
27,128,282 |
|
75,247,746 |
Total assets |
|
116,579,521 |
|
131,522,469 |
|
11,424,515 |
|
339,535 |
|
131,743,257 |
|
49,363,995 |
|
102,175,242 |
Short term liabilities |
|
45,222,022 |
|
21,366,336 |
|
— |
|
201,853 |
|
16,269,385 |
|
14,693,964 |
|
9,038,769 |
Long term liabilities |
|
24,318,944 |
|
45,013,681 |
|
31 |
|
— |
|
11,698,126 |
|
12,270,207 |
|
5,480,067 |
Total liabilities |
|
69,540,966 |
|
66,380,017 |
|
31 |
|
201,853 |
|
27,967,511 |
|
26,964,171 |
|
14,518,836 |
Total Equity |
|
47,038,555 |
|
65,142,452 |
|
11,424,484 |
|
137,682 |
|
103,775,746 |
|
22,399,824 |
|
87,656,406 |
Total revenue from ordinary activities |
|
97,834,148 |
|
(741) |
|
782,772 |
|
134,401 |
|
65,797,238 |
|
45,104,125 |
|
25,249,336 |
Net income before taxes |
|
6,640,224 |
|
478,458 |
|
782,772 |
|
134,401 |
|
3,804,172 |
|
(5,105,685) |
|
(896,914) |
Net income after taxes |
|
5,517,062 |
|
243,170 |
|
782,772 |
|
134,401 |
|
1,427,601 |
|
(5,067,707) |
|
163,561 |
Other comprehensive income |
|
— |
|
9,680,320 |
|
— |
|
— |
|
1,522 |
|
275,534 |
|
— |
Total comprehensive income |
|
5,517,062 |
|
9,923,490 |
|
782,772 |
|
134,401 |
|
1,429,123 |
|
(4,792,173) |
|
163,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting date (See Note 2.3) |
|
12.31.2022 |
|
11.30.2022 |
|
11.30.2022 |
|
11.30.2022 |
|
11.30.2022 |
|
11.30.2022 |
|
12.31.2022 |
F-54
15 – INTANGIBLE ASSETS OTHER THAN GOODWILL
Intangible assets other than goodwill are detailed as follows:
|
|
December 31, 2023 |
|
December 31, 2022 |
||||||||
|
|
|
|
Accumulated |
|
|
|
|
|
Accumulated |
|
|
|
|
Gross |
|
Amortization |
|
Net |
|
Gross |
|
Amortization |
|
Net |
Description |
|
value |
|
/Impairment |
|
value |
|
value |
|
/Impairment |
|
value |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Distribution rights (1) |
|
667,955,100 |
|
(3,078,000) |
|
664,877,100 |
|
645,684,416 |
|
(1,451,000) |
|
644,233,416 |
Software |
|
63,828,408 |
|
(40,121,558) |
|
23,706,850 |
|
56,968,738 |
|
(36,205,387) |
|
20,763,351 |
Water rights |
|
587,432 |
|
— |
|
587,432 |
|
479,825 |
|
(40,723) |
|
439,102 |
Trademarks indefinite useful life (2) |
|
6,341,107 |
|
— |
|
6,341,107 |
|
5,741,054 |
|
— |
|
5,741,054 |
Trademarks definite useful life (3) |
|
1,297,378 |
|
(891,277) |
|
406,101 |
|
1,297,378 |
|
(703,388) |
|
593,990 |
Others |
|
560,183 |
|
(552,208) |
|
7,975 |
|
507,928 |
|
(499,953) |
|
7,975 |
Total |
|
740,569,608 |
|
(44,643,043) |
|
695,926,565 |
|
710,679,339 |
|
(38,900,451) |
|
671,778,888 |
| (1) | Correspond to brands, water rights and distribution rights. Distribution rights are 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. |
Distribution rights together with the assets that are part of the cash-generating units, are annually subjected to the impairment test. Such distribution rights have an indefinite useful life, are not subject to amortization. Rights in Chile related to AdeS were provisioned for impairment pursuant to the annual tests performed. See Note 2.8.
| (2) | On September 21, 2021 Coca-Cola Andina together with Coca-Cola Femsa, acquired the Brazilian beer brand Therezópolis for BRL 70 million. Each bottler bought 50% of the brand. This transaction is part of the company’s long-term strategy to complement its beer portfolio in Brazil. The transaction was completed and approved by CADE (Brazilian Administrative Council of Economic Defense). In September of that same year, Andina recorded an intangible asset under the Therezópolis brand for BRL 35 million with an indefinite useful life. |
| (3) | Correspond to distribution rights that did not arise from business combinations. These rights are subject to amortization. |
F-55
Distribution rights |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Chile (excluding Metropolitan Region, Rancagua and San Antonio) |
|
301,187,149 |
|
302,814,149 |
Brazil (Rio de Janeiro, Espirito Santo, Ribeirão Preto and the investments in Sorocaba and Leão Alimentos y Bebidas Ltda.) |
|
182,986,222 |
|
165,670,430 |
Paraguay |
|
178,475,561 |
|
172,548,023 |
Argentina (North and South) |
|
2,228,168 |
|
3,200,814 |
Total |
|
664,877,100 |
|
644,233,416 |
The movement and balances of identifiable intangible assets are detailed as follows:
|
|
December 31, 2023 |
|||||||||||||
|
|
|
|
|
|
|
|
Trademarks |
|
Trademarks |
|
|
|
|
|
|
|
Distribution |
|
|
|
|
|
indefinite |
|
definite |
|
|
|
|
|
|
|
rights |
|
Software |
|
Water rights |
|
useful life |
|
useful life |
|
Others |
|
|
|
Description |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance |
|
644,233,416 |
|
20,763,351 |
|
439,102 |
|
5,741,054 |
|
593,990 |
|
7,975 |
|
671,778,888 |
|
Additions |
|
— |
|
8,984,225 |
|
148,330 |
|
— |
|
— |
|
— |
|
9,132,555 |
|
Amortization |
|
— |
|
(4,857,341) |
|
— |
|
— |
|
(187,889) |
|
— |
|
(5,045,230) |
|
Impairment (2) |
|
(1,627,000) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1,627,000) |
|
Other increases (decreases) (1) |
|
22,270,684 |
|
(1,183,385) |
|
— |
|
600,053 |
|
— |
|
— |
|
21,687,352 |
|
Ending balance |
|
664,877,100 |
|
23,706,850 |
|
587,432 |
|
6,341,107 |
|
406,101 |
|
7,975 |
|
695,926,565 |
|
|
|
December 31, 2022 |
||||||||||||
|
|
|
|
|
|
|
|
Trademarks |
|
Trademarks |
|
|
|
|
|
|
Distribution |
|
|
|
|
|
indefinite |
|
definite |
|
|
|
|
|
|
rights |
|
Software |
|
Water rights |
|
useful life |
|
useful life |
|
Others |
|
|
Description |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance |
|
640,056,747 |
|
13,064,962 |
|
422,221 |
|
5,297,760 |
|
781,878 |
|
7,975 |
|
659,631,543 |
Additions |
|
— |
|
12,020,412 |
|
16,881 |
|
— |
|
— |
|
— |
|
12,037,293 |
Amortization |
|
— |
|
(4,208,798) |
|
— |
|
— |
|
(187,888) |
|
— |
|
(4,396,686) |
Impairment |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Other increases (decreases) (1) |
|
4,176,669 |
|
(113,225) |
|
— |
|
443,294 |
|
— |
|
— |
|
4,506,738 |
Ending balance |
|
644,233,416 |
|
20,763,351 |
|
439,102 |
|
5,741,054 |
|
593,990 |
|
7,975 |
|
671,778,888 |
| (1) | Mainly corresponds to restatement due to the effects of translation of distribution rights of foreign subsidiaries. |
| (2) | The rights in Chile related to AdeS were provisioned for impairment according to the annual tests performed. See Note 2.8. |
F-56
16 – GOODWILL
Movement in Goodwill is detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
Cash Generating Unit |
|
01.01.2023 |
|
translation differences |
|
12.31.2023 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Chilean operation |
|
8,503,023 |
|
— |
|
8,503,023 |
Brazilian operation |
|
66,941,508 |
|
6,890,007 |
|
73,831,515 |
Argentine operation |
|
46,254,831 |
|
(14,061,746) |
|
32,193,085 |
Paraguayan operation |
|
7,324,560 |
|
251,619 |
|
7,576,179 |
Total |
|
129,023,922 |
|
(6,920,120) |
|
122,103,802 |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
Cash Generating Unit |
|
01.01.2022 |
|
translation differences |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Chilean operation |
|
8,503,023 |
|
— |
|
8,503,023 |
Brazilian operation |
|
61,851,449 |
|
5,090,059 |
|
66,941,508 |
Argentine operation |
|
39,976,392 |
|
6,278,439 |
|
46,254,831 |
Paraguayan operation |
|
7,712,036 |
|
(387,476) |
|
7,324,560 |
Total |
|
118,042,900 |
|
10,981,022 |
|
129,023,922 |
|
|
|
|
Foreign currency translation differences |
|
|
|
|
|
|
where functional currency is different from |
|
|
Cash Generating Unit |
|
01.01.2021 |
|
presentation currency |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Chilean operation |
|
8,503,023 |
|
— |
|
8,503,023 |
Brazilian operation |
|
56,001,413 |
|
5,850,036 |
|
61,851,449 |
Argentine operation |
|
27,343,642 |
|
12,632,750 |
|
39,976,392 |
Paraguayan operation |
|
6,477,515 |
|
1,234,521 |
|
7,712,036 |
Total |
|
98,325,593 |
|
19,717,307 |
|
118,042,900 |
17 – OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES
Liabilities are detailed as follows:
|
|
Balance |
||||||
|
|
Current |
|
Non-current |
||||
|
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Bank loans (Note 17.1.1 - 3) |
|
1,500,909 |
|
688,800 |
|
13,403,691 |
|
13,366,211 |
Bonds payable, net (1) (Note 17.2) |
|
27,479,415 |
|
340,767,980 |
|
953,660,440 |
|
763,368,160 |
Bottle guaranty deposits |
|
12,632,184 |
|
16,427,144 |
|
— |
|
— |
Derivative contract liabilities (Note 17.3) |
|
1,458,210 |
|
2,317,577 |
|
52,449,925 |
|
112,175,058 |
Lease liabilities (Note 17.4.1 - 2) |
|
9,926,283 |
|
7,100,579 |
|
24,811,777 |
|
15,892,629 |
Total |
|
52,997,001 |
|
367,302,080 |
|
1,044,325,833 |
|
904,802,058 |
(1) Amounts net of issuance expenses and discounts related to issuance.
F-57
The fair value of financial assets and liabilities is presented below:
|
|
Book value |
|
Fair value |
|
Book value |
|
Fair value |
Current |
|
12.31.2023 |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Cash and cash equivalent (2) |
|
303,683,683 |
|
303,683,683 |
|
291,681,987 |
|
291,681,987 |
Financial assets at fair value (1) |
|
842,906 |
|
842,906 |
|
170,206,554 |
|
170,206,554 |
Trade debtors and other accounts receivable (2) |
|
296,883,937 |
|
296,883,937 |
|
279,770,286 |
|
279,770,286 |
Accounts receivable related companies (2) |
|
13,192,740 |
|
13,192,740 |
|
15,062,167 |
|
15,062,167 |
Bank liabilities (2) |
|
1,500,909 |
|
1,465,732 |
|
688,800 |
|
767,468 |
Bonds payable (2) |
|
27,479,415 |
|
26,931,768 |
|
340,767,980 |
|
339,666,507 |
Bottle guaranty deposits (2) |
|
12,632,186 |
|
12,632,186 |
|
16,427,144 |
|
16,427,144 |
Forward contracts liabilities (see Note 22) (1) |
|
1,458,210 |
|
1,458,210 |
|
2,317,577 |
|
2,317,577 |
Leasing agreements (2) |
|
9,926,283 |
|
9,926,283 |
|
7,100,579 |
|
7,100,579 |
Accounts payable (2) |
|
428,911,984 |
|
428,911,984 |
|
384,801,630 |
|
384,801,630 |
Accounts payable related companies (2) |
|
94,821,925 |
|
94,821,925 |
|
90,248,067 |
|
90,248,067 |
|
|
Book value |
|
Fair value |
|
Book value |
|
Fair value |
Non-Current |
|
12.31.2023 |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Financial assets at fair value (1) |
|
78,988,714 |
|
78,988,714 |
|
75,297,737 |
|
75,297,737 |
Non-current accounts receivable (2) |
|
371,401 |
|
371,401 |
|
539,920 |
|
539,920 |
Accounts receivable related companies (2) |
|
108,021 |
|
108,021 |
|
109,318 |
|
109,318 |
Bank liabilities (2) |
|
13,403,691 |
|
13,403,691 |
|
13,366,211 |
|
13,921,569 |
Bonds payable (2) |
|
953,660,440 |
|
894,107,588 |
|
763,368,160 |
|
729,602,210 |
Leasing agreements (2) |
|
24,811,777 |
|
24,811,777 |
|
15,892,629 |
|
15,892,629 |
Non-current accounts payable (2) |
|
2,392,555 |
|
2,392,555 |
|
3,015,284 |
|
3,015,284 |
Derivative contracts liabilities (see Note 22) (1) |
|
52,449,925 |
|
52,449,925 |
|
112,175,058 |
|
112,175,058 |
Accounts payable related companies (2) |
|
6,007,041 |
|
6,007,041 |
|
10,354,296 |
|
10,354,296 |
| (1) | 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. |
| (2) | Financial instruments such as: Cash and Cash Equivalents, Trade debtors and Other Accounts Receivable, Accounts Receivable related companies, Bottle Guarantee Deposits Trade Accounts Payable, and Other Accounts Payable related companies present a fair value that approximates their carrying value, considering the nature and term of the obligation. The business model is to maintain the financial instrument in order to collect/pay contractual cash flows, in accordance with the terms of the contract, where cash flows are received/cancelled on specific dates that exclusively constitute payments of principal plus interest on that principal. These instruments are revalued at amortized cost. |
17.1 Bank liabilities
17.1.1 Bank liabilities, current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
Total |
||||
Indebted Entity |
|
Creditor Entity |
|
|
|
Type of |
|
Nominal |
|
Up to |
|
90 days to |
|
At |
|
At |
||||||||
Taxpayer ID |
|
Name |
|
Country |
|
Taxpayer ID |
|
Name |
|
Country |
|
Currency |
|
Amortization |
|
Rate |
|
90 days |
|
1 year |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
96.705.990-0 |
|
Envases Central S.A. |
|
Chile |
|
97.006.000-6 |
|
Banco Estado |
|
Chile |
|
CLP |
|
Semiannually |
|
2.00 |
% |
34,460 |
|
— |
|
34,460 |
|
28,683 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
Chile |
|
97.018.000-1 |
|
Scotiabank Chile S.A. |
|
Chile |
|
CLP |
|
Semiannually |
|
9.49 |
% |
— |
|
186,233 |
|
186,233 |
|
53,350 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
Chile |
|
97.018.000-1 |
|
Scotiabank Chile S.A. |
|
Chile |
|
UF |
|
Semiannually |
|
3.32 |
% |
— |
|
56,529 |
|
56,529 |
|
— |
91.144.000-8 |
|
Embotelladora Andina S.A. |
|
Chile |
|
97.023.000-9 |
|
Itaú Corpbanca |
|
Chile |
|
UF |
|
At maturity |
|
0.18 |
% |
657,036 |
|
— |
|
657,036 |
|
— |
91.144.000-8 |
|
Embotelladora Andina S.A. |
|
Chile |
|
97.023.000-9 |
|
Itaú Corpbanca |
|
Chile |
|
UF |
|
At maturity |
|
0.18 |
% |
535,951 |
|
— |
|
535,951 |
|
585,560 |
Foreign |
|
Embotelladora Andina S.A. |
|
Chile |
|
97.023.000-9 |
|
Itaú Corpbanca |
|
Chile |
|
USD |
|
At maturity |
|
0.18 |
% |
30,700 |
|
— |
|
30,700 |
|
21,207 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,909 |
|
688,800 |
F-58
17.1.2 Bank liabilities, non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
||||||||||||||
Indebted entity |
|
Creditor entity |
|
|
|
Type of |
|
Nominal |
|
1 year up to |
|
More than 2 |
|
More than 3 |
|
More than 4 |
|
More than 5 |
|
At |
||||||||
Taxpayer ID |
|
Name |
|
Country |
|
Taxpayer ID |
|
Name |
|
Country |
|
Currency |
|
Amortization |
|
Rate |
|
2 years |
|
Up to 3 years |
|
Up to 4 years |
|
Up to 5 years |
|
years |
|
12.31.2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
96.705.990-0 |
|
Envases Central S.A. |
|
Chile |
|
97.006.000-6 |
|
Banco Estado |
|
Chile |
|
CLP |
|
Semiannually |
|
2.00 |
% |
— |
|
— |
|
4,000,000 |
|
— |
|
— |
|
4,000,000 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
Chile |
|
97.018.000-1 |
|
Scotiabank Chile S.A. |
|
Chile |
|
CLP |
|
Semiannually |
|
9.49 |
% |
— |
|
4,500,000 |
|
— |
|
— |
|
— |
|
4,500,000 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
Chile |
|
97.018.000-1 |
|
Scotiabank Chile S.A. |
|
Chile |
|
UF |
|
Semiannually |
|
3.32 |
% |
— |
|
4,903,691 |
|
— |
|
— |
|
— |
|
4,903,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
13,403,691 |
17.1.3 Bank liabilities, non-current previous year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
||||||||||
Indebted entity |
|
Creditor entity |
|
|
|
Type of |
|
Nominal |
|
1 year up to |
|
More than 2 |
|
More than 3 |
|
More than 4 |
|
More than 5 |
|
At |
||||||||
Taxpayer ID |
|
Name |
|
Country |
|
Taxpayer ID |
|
Name |
|
Country |
|
Currency |
|
Amortization |
|
Rate |
|
2 years |
|
Up to 3 years |
|
Up to 4 years |
|
Up to 5 years |
|
years |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
96.705.990-0 |
|
Envases Central S.A. |
|
Chile |
|
97.006.000-6 |
|
Banco Estado |
|
Chile |
|
CLP |
|
Semiannually |
|
2.00 |
% |
— |
|
— |
|
4,000,000 |
|
— |
|
— |
|
4,000,000 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
Chile |
|
97.018.000-1 |
|
Scotiabank Chile S.A. |
|
Chile |
|
CLP |
|
Semiannually |
|
9.49 |
% |
— |
|
4,500,000 |
|
— |
|
— |
|
— |
|
4,500,000 |
77.427.659-9 |
|
Re-Ciclar S.A. |
|
Chile |
|
97.018.000-1 |
|
Scotiabank Chile S.A. |
|
Chile |
|
UF |
|
Semiannually |
|
3.32 |
% |
— |
|
4,866,211 |
|
— |
|
— |
|
— |
|
4,866,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
13,366,211 |
17.1.4 Current and non-current bank obligations “Restrictions”
Bank obligations are not subject to restrictions for the reported periods.
17.2 Bond obligations
On September 20, 2023, the Company issued corporate bonds in the Swiss public market for CHF 170 million. The bond consisted of a 5 - year issue with bullet structure and an annual coupon of 2.7175%. Simultaneously, derivatives (Cross Currency Swaps) have been contracted through our subsidiary in Brazil (Rio de Janeiro Refrescos) to hedge 100% of the financial obligations of the bond that are denominated in Swiss francs by redenominating such liabilities to Brazilian reais.
At the end of September 2023, Andina made the principal payment of US$365 million of Senior Notes format 144A/RegS, corresponding to 100% of the debt originally placed on January 1, 2013.
|
|
Current |
|
Non-current |
|
Total |
||||||
Composition of bonds payable |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Bonds face value1 |
|
28,170,013 |
|
341,478,129 |
|
961,723,115 |
|
769,765,783 |
|
989,893,128 |
|
1,111,243,912 |
1 Gross amounts do not include issuance expenses and discounts related to issuance.
F-59
17.2.1 Current and non-current balances
Bonds payable correspond to bonds in UF issued by the parent company on the Chilean market, bonds in U.S. dollars issued by the Parent Company on the U.S. market and the Swiss public market . A detail of these instruments is presented below:
|
|
|
|
Current nominal |
|
Adjustment |
|
Interest |
|
Final |
|
Interest |
|
Current |
|
Non-current |
||||
Bonds |
|
Series |
|
amount |
|
unit |
|
rate |
|
maturity |
|
payment |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
CMF Registration 254 06.13.2001 |
|
B |
|
969,219 |
|
UF |
|
6.50 |
% |
12.01.2026 |
|
Semiannually |
|
11,660,222 |
|
10,513,470 |
|
18,669,905 |
|
28,795,438 |
CMF Registration 641 08.23.2010 |
|
C |
|
1,090,909 |
|
UF |
|
4.00 |
% |
08.15.2031 |
|
Semiannually |
|
5,612,839 |
|
5,427,888 |
|
35,117,116 |
|
38,302,888 |
CMF Registration 760 08.20.2013 |
|
D |
|
4,000,000 |
|
UF |
|
3.80 |
% |
08.16.2034 |
|
Semiannually |
|
2,062,069 |
|
1,967,995 |
|
147,157,440 |
|
140,443,920 |
CMF Registration 760 04.02.2014 |
|
E |
|
3,000,000 |
|
UF |
|
3.75 |
% |
03.01.2035 |
|
Semiannually |
|
1,366,861 |
|
1,304,513 |
|
110,368,102 |
|
105,332,951 |
CMF Registration 912 10.10.2018 |
|
F |
|
5,700,000 |
|
UF |
|
2.83 |
% |
09.25.2039 |
|
Semiannually |
|
1,536,949 |
|
1,491,144 |
|
209,699,352 |
|
200,132,586 |
U.S. Bonds 2023 10.01.2013 |
|
— |
|
365,000,000 |
|
USD |
|
5.00 |
% |
10.01.2023 |
|
Semiannually |
|
— |
|
316,293,761 |
|
— |
|
— |
U.S. Bonds 2050 01.01.2020 |
|
— |
|
300,000,000 |
|
USD |
|
3.95 |
% |
01.21.2050 |
|
Semiannually |
|
4,590,627 |
|
4,479,358 |
|
263,136,000 |
|
256,758,000 |
Swiss Bond 2023 |
|
— |
|
170,000,000 |
|
CHF |
|
2.7175 |
% |
09.20.2028 |
|
Annual |
|
1,340,446 |
|
— |
|
177,575,200 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
28,170,013 |
|
341,478,129 |
|
961,723,115 |
|
769,765,783 |
17.2.2 Non-current maturities
|
|
|
|
Year of maturity |
|
Total Non- |
||||||
|
|
|
|
More than 1 |
|
More than 2 |
|
More than 3 |
|
|
|
current |
|
|
Series |
|
up to 2 |
|
up to 3 |
|
up to 4 |
|
More than 5 |
|
12.31.2023 |
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
CMF Registration 254 06.13.2001 |
|
B |
|
12,249,648 |
|
6,420,257 |
|
— |
|
— |
|
18,669,905 |
CMF Registration 641 08.23.2010 |
|
C |
|
5,016,730 |
|
5,016,731 |
|
5,016,731 |
|
20,066,924 |
|
35,117,116 |
CMF Registration 760 08.20.2013 |
|
D |
|
— |
|
— |
|
— |
|
147,157,440 |
|
147,157,440 |
CMF Registration 760 04.02.2014 |
|
E |
|
— |
|
— |
|
— |
|
110,368,102 |
|
110,368,102 |
CMF Registration 912 10.10.2018 |
|
F |
|
— |
|
— |
|
— |
|
209,699,352 |
|
209,699,352 |
U.S. Bonds 2050 01.21.2020 |
|
— |
|
— |
|
— |
|
— |
|
263,136,000 |
|
263,136,000 |
Swiss Bond 2023 09.20.2023 |
|
— |
|
— |
|
— |
|
— |
|
177,575,200 |
|
177,575,200 |
Total |
|
— |
|
17,266,378 |
|
11,436,988 |
|
5,016,731 |
|
928,003,018 |
|
961,723,115 |
17.2.3 Market rating
The bonds issued on the Chilean market had the following rating:
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 had the following rating:
BBB |
: |
S&P Global Ratings |
BBB+ |
: |
Fitch Ratings Inc. |
17.2.4 Restrictions
17.2.4.1 Restrictions regarding bonds placed abroad.
Obligations with bonds placed abroad are not affected by financial restrictions for the periods reported.
F-60
17.2.4.2 Restrictions regarding bonds placed in the local market.
The following financial information was used for calculating restrictions:
|
|
12.31.2023 |
|
|
ThCh$ |
Average net financial debt last 4 quarters |
|
671,538,372 |
Net financial debt |
|
647,364,644 |
Unencumbered assets |
|
2,813,063,535 |
Total unsecured liabilities |
|
1,920,451,919 |
EBITDA LTM |
|
443,666,843 |
Net financial expenses LTM |
|
34,513,707 |
Restrictions on the issuance of bonds for a fixed amount registered under number 254, series B1 and B2.
| ● | Maintain an Indebtedness Level not greater than three point five times the EBITDA. For these purposes, “Indebtedness Level” will be considered as the ratio between /a/ the average over the last four Quarters of the Consolidated Net Financial Liabilities, and /b/ the accumulated EBITDA in the period of twelve consecutive months ending at the closing of the latest “Consolidated Financial Statements of Income by Function”. “Consolidated Net Financial Liabilities” will be considered as the result of : /i/ “Other Financial Liabilities, Current”, plus /ii/ “Other Financial Liabilities, Non-Current”, minus /iii/ the sum of “Cash and Cash Equivalents”; plus “Other Financial Assets, Current”; plus “Other Financial Assets, Non-Current” (to the extent that they correspond to the balances of assets for derivative financial instruments, taken to hedge exchange rate and/or interest rate risk of financial liabilities); |
"EBITDA” will be considered as the addition of the following accounts of the “Consolidated Financial Statements of Income by Function” contained in the Issuer’s Consolidated Financial Statements: “Revenues from Ordinary Activities”, “Cost of Sales”, “Distribution Costs”, “Administrative Expenses” and “Other Expenses, by function”, discounting the value of “Depreciation” and “Amortization for the Year” presented in the Notes to the Issuer’s Consolidated Financial Statements.
As of December 31, 2023 , this ratio was 1.51 times.
| ● | 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.
F-61
As of December 31, 2023, this ratio was 1.46 times.
Restrictions to bond lines registered in the Securities Registered under number 641, series C
| ● | Maintain an Indebtedness Level not greater than three point five times the EBITDA. For these purposes, “Indebtedness Level” will be considered as the ratio between /a/ the average over the last four Quarters of the Consolidated Net Financial Liabilities, and /b/ the accumulated EBITDA in the period of twelve consecutive months ending at the closing of the latest “Consolidated Financial Statements of Income by Function”. |
“Consolidated Net Financial Liabilities” will be considered as the result of: /i/ “Other Financial Liabilities, Current”, plus /ii/ “Other Financial Liabilities, Non-Current”, minus /iii/ the sum of “Cash and Cash Equivalents”; plus “Other Financial Assets, Current”; plus “Other Financial Assets, Non-Current” (to the extent that they correspond to the balances of assets for derivative financial instruments, taken to hedge exchange rate and/or interest rate risk of financial liabilities);
“EBITDA” will be considered as the addition of the following accounts of the “Consolidated Financial Statements of Income by Function” contained in the Issuer’s Consolidated Financial Statements: “Revenues from Ordinary Activities”, “Cost of Sales”, “Distribution Costs”, “Administrative Expenses” and “Other Expenses, by function”, discounting the value of “Depreciation” and “Amortization for the Year” presented in the Notes to the Issuer’s Consolidated Financial Statements.
As of December 31, 2023, this ratio was 1.51 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).
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 December 31, 2023, this ratio was 1.46 times.
| ● | Maintain a level of “Net Financial Coverage” greater than 3 times in its quarterly financial statements. Net financial coverage means the ratio between the issuer’s EBITDA of the last 12 months and the issuer’s Net Financial Expenses in the last 12 months. Net Financial Expenses will be regarded as the difference between the absolute value of interest expense associated with the issuer’s financial debt account accounted for under “Financial Costs”; and interest income associated with the issuer’s cash accounted for under the Financial Income account. However, this restriction shall be deemed to have been breached where the mentioned level of net financial coverage is lower than the level previously indicated during two consecutive quarters. |
As of December 31, 2023, Net Financial Coverage was 12.85 times.
Restrictions to bond lines registered in the Securities Registrar under number 760, series D and E.
| ● | Maintain an Indebtedness Level not greater than three point five times the EBITDA. For these purposes, “Indebtedness Level” will be considered as the ratio between /a/ the average over the last four Quarters of the Consolidated Net Financial Liabilities, and /b/ the accumulated EBITDA in the period of twelve consecutive months ending at the closing of the latest “Consolidated Financial Statements of Results by Function”. |
F-62
"Consolidated Net Financial Liabilities” will be considered as the result of : /i/ “Other Financial Liabilities, Current”, plus /ii/ “Other Financial Liabilities, Non-Current”, minus /iii/ the sum of “Cash and Cash Equivalents”; plus “Other Financial Assets, Current”; plus “Other Financial Assets, Non-Current” (to the extent that they correspond to the balances of assets for derivative financial instruments, taken to hedge exchange rate and/or interest rate risk of financial liabilities);
"EBITDA” will be considered as the addition of the following accounts of the “Consolidated Financial Statements of Income by Function” contained in the Issuer’s Consolidated Financial Statements: “Revenues from Ordinary Activities”, “Cost of Sales”, “Distribution Costs”, “Administrative Expenses” and “Other Expenses, by function”, discounting the value of “Depreciation” and “Amortization for the Year” presented in the Notes to the Issuer’s Consolidated Financial Statements.
As of December 31, 2023, this ratio was 1.51 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.
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 December 31, 2023, this ratio was 1.46 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 that are accounted for using the equity method”; plus (v) ”Depreciation”; plus (vi) ”Intangibles Amortization”. |
F-63
Restrictions to bond lines registered in the Securities Registrar under number 912, series F.
| ● | Maintain an Indebtedness Level not greater than three point five times the EBITDA. For these purposes, “Indebtedness Level” will be considered as the ratio between /a/ the average over the last four Quarters of the Consolidated Net Financial Liabilities, and /b/ the accumulated EBITDA in the period of twelve consecutive months ending at the closing of the latest “Consolidated Financial Statements of Results by Function”. |
“Consolidated Net Financial Liabilities” will be considered as the result of : /i/ “Other Financial Liabilities, Current”, plus /ii/ “Other Financial Liabilities, Non-Current”, minus /iii/ the sum of “Cash and Cash Equivalents”; plus “Other Financial Assets, Current”; plus “Other Financial Assets, Non-Current” (to the extent that they correspond to the balances of assets for derivative financial instruments, taken to hedge exchange rate and/or interest rate risk of financial liabilities);
“EBITDA” will be considered as the sum of the following accounts of the “Consolidated Financial Statements of Income by Function” contained in the Issuer’s Consolidated Financial Statements: “Revenues from Ordinary Activities”, “Cost of Sales”, “Distribution Costs”, “Administrative Expenses” and “Other Expenses, by function”, discounting the value of “Depreciation” and “Amortization for the Year” presented in the Notes to the Issuer’s Consolidated Financial Statements.
As of December 31, 2023, this ratio was 1.51 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. 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 December 31, 2023, this ratio was 1.46 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 that are accounted for using the equity method”; plus (v) “Depreciation”; plus (vi) “Intangibles Amortization”. |
As of December 31, 2023, the Company complies with all financial covenants.
17.3 Derivative contract obligations
Please see details in Note 22.
F-64
17.4 Liabilities for leasing agreements
17.4.1 Current liabilities for leasing agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
Total |
||||
Indebted entity |
|
Creditor entity |
|
|
|
Type of |
|
Nominal |
|
Up to |
|
90 days and up to |
|
At |
|
At |
||||||
Name |
|
Country |
|
Taxpayer ID |
|
Name |
|
Country |
|
Currency |
|
Amortization |
|
Rate |
|
90 days |
|
1 year |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Cogeração - Light ESCO |
|
Brazil |
|
BRL |
|
Monthly |
|
12.28 |
% |
318,556 |
|
1,016,205 |
|
1,334,761 |
|
1,069,428 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Tetra Pack |
|
Brazil |
|
BRL |
|
Monthly |
|
7.39 |
% |
124,735 |
|
393,518 |
|
518,253 |
|
121,291 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Real Estate |
|
Brazil |
|
BRL |
|
Monthly |
|
8.10 |
% |
160,994 |
|
380,117 |
|
541,111 |
|
155,613 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Leão |
|
Brazil |
|
BRL |
|
Monthly |
|
3.50 |
% |
80,753 |
|
242,258 |
|
323,011 |
|
299,362 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
Foreign |
|
Tetra Pak SRL |
|
Argentina |
|
USD |
|
Monthly |
|
12.00 |
% |
88,718 |
|
266,155 |
|
354,873 |
|
497,308 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
Foreign |
|
Real Estate |
|
Argentina |
|
ARS |
|
Monthly |
|
50.00 |
% |
349,588 |
|
455,536 |
|
805,124 |
|
622,574 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
Foreign |
|
Systems |
|
Argentina |
|
USD |
|
Monthly |
|
12.00 |
% |
19,369 |
|
57,400 |
|
76,769 |
|
123,253 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
Foreign |
|
Real Estate |
|
Argentina |
|
ARS |
|
Monthly |
|
12.00 |
% |
78,364 |
|
175,671 |
|
254,035 |
|
— |
Vital Jugos S.A. |
|
Chile |
|
76.080.198-4 |
|
De Lage Landen Chile S.A |
|
Chile |
|
USD |
|
Monthly |
|
5.49 |
% |
155,549 |
|
471,198 |
|
626,747 |
|
588,820 |
Vital Jugos S.A. |
|
Chile |
|
77.951.700-4 |
|
Sig Combibloc Chile SPA. |
|
Chile |
|
EUR |
|
Monthly |
|
39.22 |
% |
32,709 |
|
90,988 |
|
123,697 |
|
— |
Vital Aguas S.A |
|
Chile |
|
76.572.588-7 |
|
Coca Cola del Valle New Ventures S.A |
|
Chile |
|
CLP |
|
Monthly |
|
7.50 |
% |
— |
|
— |
|
— |
|
998,501 |
Vital Aguas S.A |
|
Chile |
|
76.572.588-7 |
|
Coca Cola del Valle New Ventures S.A |
|
Chile |
|
CLP |
|
Monthly |
|
11.24 |
% |
262,042 |
|
736,459 |
|
998,501 |
|
— |
Envases Central S.A |
|
Chile |
|
76.572.588-7 |
|
Coca Cola del Valle New Ventures S.A |
|
Chile |
|
CLP |
|
Monthly |
|
3.86 |
% |
603,428 |
|
— |
|
603,428 |
|
— |
Envases Central S.A |
|
Chile |
|
76.572.588-7 |
|
Coca Cola del Valle New Ventures S.A |
|
Chile |
|
CLP |
|
Monthly |
|
5.56 |
% |
— |
|
— |
|
— |
|
602,887 |
Transportes Polar S.A. |
|
Chile |
|
76.413.243-2 |
|
Cons. Inmob. e Inversiones Limitada |
|
Chile |
|
UF |
|
Monthly |
|
2.89 |
% |
— |
|
128,214 |
|
128,214 |
|
118,883 |
Transportes Polar S.A. |
|
Chile |
|
76.536.499-K |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
4.11 |
% |
82,787 |
|
242,318 |
|
325,105 |
|
— |
Transportes Polar S.A. |
|
Chile |
|
93.075.000-k |
|
Importadora Técnica Vignola SAIC |
|
Chile |
|
UF |
|
Monthly |
|
3.67 |
% |
20,389 |
|
55,293 |
|
75,682 |
|
— |
Transporte Andina Refrescos Ltda |
|
Chile |
|
78.861.790-9 |
|
Comercializadora Novaverde Limitada |
|
Chile |
|
UF |
|
Monthly |
|
0.08 |
% |
— |
|
— |
|
— |
|
177,802 |
Transporte Andina Refrescos Ltda |
|
Chile |
|
78.861.790-9 |
|
Comercializadora Novaverde Limitada |
|
Chile |
|
UF |
|
Monthly |
|
0.45 |
% |
118,598 |
|
79,957 |
|
198,555 |
|
— |
Transporte Andina Refrescos Ltda |
|
Chile |
|
76.536.499-K |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.24 |
% |
248,800 |
|
757,225 |
|
1,006,025 |
|
932,903 |
Transporte Andina Refrescos Ltda |
|
Chile |
|
76.536.499-K |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.34 |
% |
187,889 |
|
575,368 |
|
763,257 |
|
— |
Transporte Andina Refrescos Ltda |
|
Chile |
|
85.275.700-0 |
|
Arrendamiento De Maquinaria SPA |
|
Chile |
|
UF |
|
Monthly |
|
1.00 |
% |
— |
|
- |
|
|
|
309,440 |
Transporte Andina Refrescos Ltda |
|
Chile |
|
85.275.700-0 |
|
Arrendamiento De Maquinaria SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.45 |
% |
85,954 |
|
264,920 |
|
350,874 |
|
— |
Red de Transportes Comerciales Ltda |
|
Chile |
|
76.930.501-7 |
|
Inmobiliaria Ilog Avanza Park |
|
Chile |
|
UF |
|
Monthly |
|
2.48 |
% |
125,260 |
|
393,001 |
|
518,261 |
|
— |
Red de Transportes Comerciales Ltda |
|
Chile |
|
76.930.501-7 |
|
Inmobiliaria Ilog Avanza Park |
|
Chile |
|
UF |
|
Monthly |
|
0.21 |
% |
— |
|
— |
|
— |
|
482,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
9,926,283 |
|
7,100,579 |
The Company maintains leases on forklifts, vehicles, real estate and machinery. These leases have an average lifespan of between one and eight years without including a renewal option in the contracts.
F-65
17.4.2 Non-current liabilities for leasing agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
||||||||||
Indebted entity |
|
|
|
Creditor entity |
|
|
|
Amortization |
|
Nominal |
|
1 year up to |
|
2 years up to |
|
3 years up to |
|
4 years up to |
|
More than |
|
At |
||||
Name |
|
Country |
|
Taxpayer ID |
|
Name |
|
Country |
|
Currency |
|
Type |
|
2 years |
|
2 years |
|
3 years |
|
4 years |
|
5 years |
|
5 years |
|
12.31.2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Cogeração - Light ESCO |
|
Brazil |
|
BRL |
|
Monthly |
|
12.28 |
% |
1,508,279 |
|
1,704,356 |
|
1,925,922 |
|
2,176,292 |
|
586,918 |
|
7,901,767 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Tetra Pack |
|
Brazil |
|
BRL |
|
Monthly |
|
7.39 |
% |
572,983 |
|
633,670 |
|
700,981 |
|
775,654 |
|
1,514,109 |
|
4,197,397 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Real Estate |
|
Brazil |
|
BRL |
|
Monthly |
|
8.10 |
% |
351,697 |
|
316,738 |
|
166,992 |
|
— |
|
— |
|
835,427 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Leão Alimentos e Bebidas Ltda. |
|
Brazil |
|
BRL |
|
Monthly |
|
3.50 |
% |
298,867 |
|
34,834 |
|
32,714 |
|
— |
|
— |
|
366,415 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
O-E |
|
Tetra Pak SRL |
|
Argentina |
|
USD |
|
Monthly |
|
12.00 |
% |
473,164 |
|
236,582 |
|
473,164 |
|
236,582 |
|
325,300 |
|
1,744,792 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
O-E |
|
Real Estate |
|
Argentina |
|
ARS |
|
Monthly |
|
50.00 |
% |
3,505 |
|
1,752 |
|
— |
|
— |
|
— |
|
5,257 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
O-E |
|
Real Estate |
|
Argentina |
|
USD |
|
Monthly |
|
12.00 |
% |
391,171 |
|
195,586 |
|
329,479 |
|
164,740 |
|
1,009,031 |
|
2,090,007 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
O-E |
|
Systems |
|
Argentina |
|
USD |
|
Monthly |
|
12.00 |
% |
30,877 |
|
15,438 |
|
— |
|
— |
|
— |
|
46,315 |
Vital Jugos S.A. |
|
Chile |
|
O-E |
|
De Lage Landen Chile S.A |
|
Chile |
|
USD |
|
Monthly |
|
5.49 |
% |
166,326 |
|
— |
|
— |
|
— |
|
— |
|
166,326 |
Vital Jugos S.A. |
|
Chile |
|
77.951.198-4 |
|
Sig Combibloc Chile SPA. |
|
Chile |
|
EUR |
|
Monthly |
|
39.22 |
% |
215,369 |
|
107,685 |
|
238,039 |
|
119,019 |
|
446,054 |
|
1,126,166 |
Transportes Andina Refrescos Ltda. |
|
Chile |
|
85.275.700-0 |
|
Arrendamiento De Maquinaria SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.45 |
% |
40,226 |
|
20,113 |
|
— |
|
— |
|
— |
|
60,339 |
Transportes Andina Refrescos Ltda. |
|
Chile |
|
76.536.499-k |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.24 |
% |
631,973 |
|
315,986 |
|
— |
|
— |
|
— |
|
947,959 |
Transportes Andina Refrescos Ltda. |
|
Chile |
|
76.536.499-k |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.34 |
% |
1,082,507 |
|
541,253 |
|
1,124,173 |
|
562,085 |
|
— |
|
3,310,018 |
Red de Transportes Comerciales Ltda. |
|
Chile |
|
76.930.501-7 |
|
Inmobiliaria Ilog Avanza Park |
|
Chile |
|
UF |
|
Monthly |
|
2.48 |
% |
235,140 |
|
117,569 |
|
— |
|
— |
|
— |
|
352,709 |
Transportes Polar S.A. |
|
Chile |
|
76.413.243-2 |
|
Cons. Inmob. e Inversiones Limitada |
|
Chile |
|
UF |
|
Monthly |
|
2.89 |
% |
51,013 |
|
25,506 |
|
— |
|
— |
|
— |
|
76,519 |
Transportes Polar S.A. |
|
Chile |
|
76.536.499-K |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
4.11 |
% |
484,434 |
|
242,217 |
|
495,328 |
|
247,664 |
|
— |
|
1,469,643 |
Transportes Polar S.A. |
|
Chile |
|
93.075.000-k |
|
Importadora Técnica Vignola SAIC |
|
Chile |
|
UF |
|
Monthly |
|
3.67 |
% |
76,480 |
|
38,241 |
|
— |
|
— |
|
— |
|
114,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
24,811,777 |
17.4.3 Non-current liabilities for leasing agreements (previous year)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
||||||||||
Indebted entity |
|
|
|
Creditor entity |
|
|
|
Type of |
|
Nominal |
|
1 year up to |
|
2 years up to |
|
3 years up to |
|
4 years up to |
|
More than |
|
at |
||||
Name |
|
Country |
|
Taxpayer ID |
|
Name |
|
Country |
|
Currency |
|
Amortization |
|
Rate |
|
2 years |
|
3 years |
|
4 years |
|
5 years |
|
5 years |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Cogeração - Light ESCO |
|
Brazil |
|
BRL |
|
Monthly |
|
12.28 |
% |
1,208,453 |
|
1,365,552 |
|
1,543,074 |
|
1,743,674 |
|
2,501,730 |
|
8,362,483 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Tetra Pack| |
|
Brazil |
|
BRL |
|
Monthly |
|
7.39 |
% |
130,569 |
|
140,558 |
|
151,311 |
|
162,886 |
|
409,959 |
|
995,283 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Real estate |
|
Brazil |
|
BRL |
|
Monthly |
|
8.10 |
% |
57,105 |
|
8,702 |
|
— |
|
— |
|
— |
|
65,807 |
Rio de Janeiro Refrescos Ltda. |
|
Brazil |
|
Foreign |
|
Leão Alimentos e Bebidas Ltda. |
|
Brazil |
|
BRL |
|
Monthly |
|
3.50 |
% |
292,445 |
|
270,586 |
|
31,538 |
|
29,618 |
|
— |
|
624,187 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
Foreign |
|
Tetra Pak SRL |
|
Argentina |
|
USD |
|
Monthly |
|
12.00 |
% |
— |
|
842,297 |
|
— |
|
513,737 |
|
335,293 |
|
1,691,327 |
Embotelladora del Atlántico S.A. |
|
Argentina |
|
Foreign |
|
Real estate |
|
Argentina |
|
ARS |
|
Monthly |
|
50.00 |
% |
— |
|
136,139 |
|
— |
|
— |
|
— |
|
136,139 |
VJ S.A. |
|
Chile |
|
Foreign |
|
De Lage Landen Chile S.A |
|
Chile |
|
USD |
|
Monthly |
|
12.16 |
% |
769,982 |
|
— |
|
— |
|
— |
|
— |
|
769,982 |
Transportes Andina Refrescos Ltda. |
|
Chile |
|
85.275.700-0 |
|
Arrendamiento De Maquinaria SPA |
|
Chile |
|
UF |
|
Monthly |
|
1.00 |
% |
— |
|
355,952 |
|
— |
|
— |
|
— |
|
355,952 |
Transportes Polar S.A. |
|
Chile |
|
76.413.243-2 |
|
Cons. Inmob. e Inversiones Limitada |
|
Chile |
|
UF |
|
Monthly |
|
2.89 |
% |
— |
|
195,393 |
|
— |
|
— |
|
— |
|
195,393 |
Red de Transportes Comerciales Ltda. |
|
Chile |
|
76.390.501-7 |
|
Inmobiliaria Ilog Avanza Park |
|
Chile |
|
UF |
|
Monthly |
|
0.21 |
% |
— |
|
831,235 |
|
— |
|
— |
|
— |
|
831,235 |
Transportes Andina Refrescos Ltda. |
|
Chile |
|
76.536.499-K |
|
Jungheinrich Rentalift SPA |
|
Chile |
|
UF |
|
Monthly |
|
0.24 |
% |
— |
|
1,864,841 |
|
— |
|
— |
|
— |
|
1,864,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
15,892,629 |
Leasing agreement obligations are not subject to financial restrictions for the reported periods.
F-66
18 – TRADE AND OTHER ACCOUNTS PAYABLE
Trade and other accounts payable are detailed as follows:
Classification |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Current |
|
428,911,984 |
|
384,801,630 |
Non-current |
|
2,392,555 |
|
3,015,284 |
Total |
|
431,304,539 |
|
387,816,914 |
|
|
|
|
|
Item |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Trade accounts payable |
|
296,701,188 |
|
298,298,731 |
Withholding tax |
|
74,435,775 |
|
60,738,656 |
Others (1) |
|
60,167,576 |
(1) |
28,779,527 |
Total |
|
431,304,539 |
|
387,816,914 |
(1) |
Other current considers the account payable to former shareholders of Companhia de Bebidas Ipiranga ("CBI"). See Note 6 for further information. |
19 – OTHER PROVISIONS, CURRENT AND NON-CURRENT
19.1 Balances
The composition of provisions is as follows:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Litigation (1) |
|
54,801,896 |
|
48,695,427 |
Total |
|
54,801,896 |
|
48,695,427 |
|
|
|
|
|
Current |
|
1,314,106 |
|
1,591,644 |
Non-current |
|
53,487,790 |
|
47,103,783 |
Total |
|
54,801,896 |
|
48,695,427 |
| (1) | Correspond to the provision made for the probable losses of tax, labor and commercial contingencies, according to the following detail: |
Description (see note 23.1) |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Tax contingencies |
|
29,637,064 |
|
27,339,444 |
Labor contingencies |
|
13,200,665 |
|
11,374,753 |
Civil contingencies |
|
11,964,167 |
|
9,981,230 |
Total |
|
54,801,896 |
|
48,695,427 |
F-67
19.2 Movements
The movement of principal provisions over litigation is detailed as follows:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Opening balance at January 1st |
|
48,695,427 |
|
57,412,406 |
Additional provisions |
|
— |
|
48,639 |
Increase (decrease) in existing provisions |
|
6,635,882 |
|
6,359,467 |
Used provision (payments made charged to the provision) |
|
(4,139,270) |
|
(3,108,988) |
Reversal of unused provision* |
|
— |
|
(15,654,522) |
Increase (decrease) due to foreign exchange rate differences |
|
3,609,857 |
|
3,638,425 |
Total |
|
54,801,896 |
|
48,695,427 |
(*) During 2022, the provision constituted by a defendant of the Government of the State of Rio de Janeiro related to the Advertising Contract was reversed. This is due to a review of the balances involved where the amounts claimed are reduced in favor of Rio de Janeiro Refrescos Ltda.
20 – OTHER NON-FINANCIAL LIABILITIES
Other current and non-current non-financial liabilities at each reporting period end are detailed as follows:
|
|
Current |
|
Non-current |
||||
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Dividends payable |
|
32,081,207 |
|
29,042,469 |
|
— |
|
— |
Other |
|
10,291,953 |
(1) |
13,251,991 |
|
2,506,795 |
|
29,589,051 |
Total |
|
42,373,160 |
|
42,294,460 |
|
2,506,795 |
|
29,589,051 |
| (1) | Corresponds to prepayment from Coca-Cola de Chile S.A. for a marketing co-participation plan for the penetration of market equipment, which will be developed in the short term. |
21 – EQUITY
21.1 Number of shares:
|
|
Number of subscribed, paid-in and voting shares |
||
Series |
|
2023 |
|
2022 |
A |
|
473,289,301 |
|
473,289,301 |
B |
|
473,281,303 |
|
473,281,303 |
21.1.1 Capital:
|
|
Paid-in and subscribed capital |
||
Series |
|
2023 |
|
2022 |
|
|
ThCh$ |
|
ThCh$ |
A |
|
135,379,504 |
|
135,379,504 |
B |
|
135,358,070 |
|
135,358,070 |
Total |
|
270,737,574 |
|
270,737,574 |
21.1.2 Rights of each series:
| ● | Series A: Elect 12 of the 14 Directors. |
| ● | Series B: Receive an additional 10% of dividends distributed to Series A and elects 2 of the 14 Directors. |
F-68
21.2 Dividend policy
Under Chilean law, we must distribute cash dividends equivalent to at least 30% of our annual net profit, barring a unanimous vote by shareholders to the contrary. If there is no net profit in a given year, the Company shall not be legally obligated to distribute dividends from accumulated earnings, unless approved by the General Shareholders Meeting. At the General Shareholders’ Meeting held in April 2023, shareholders agreed to pay out of the 2022 earnings a final dividend additional to the 30% required by Chile’s Law on Corporations and an eventual final dividend, which were paid on May 9, 2023 and May 26, 2023, respectively.
The dividends declared and/or paid per share are presented below:
|
|
|
|
|
|
|
|
|
|
|
Approval-Payment |
|
Dividend |
|
Profits imputable |
|
CLP |
|
CLP |
||
Periods |
|
type |
|
to dividends |
|
Series A |
|
Series B |
||
04.15.2021 |
|
05.28.2021 |
|
Final |
|
2020 Earnings |
|
26.00 |
|
28.60 |
04.15.2021 |
|
08.27.2021 |
|
Additional |
|
2020 Earnings |
|
26.00 |
|
28.60 |
09.28.2021 |
|
10.29.2021 |
|
Interim |
|
2021 Earnings |
|
29.00 |
|
31.90 |
12.21.2021 |
|
01.28.2022 |
|
Interim |
|
2021 Earnings |
|
29.00 |
|
31.90 |
04.13.2022 |
|
04.26.2022 |
|
Final |
|
Accumulated Earnings |
|
189.00 |
|
207.9 |
07.27.2022 |
|
08.26.2022 |
|
Interim |
|
2022 Earnings |
|
29.00 |
|
31.90 |
09.28.2022 |
|
10.28.2022 |
|
Interim |
|
2022 Earnings |
|
29.00 |
|
31.90 |
12.27.2022 |
|
01.27.2023 |
|
Interim |
|
2022 Earnings |
|
29.00 |
|
31.90 |
04.20.2023 |
|
05.09.2023 |
|
Final |
|
2022 Earnings |
|
29.00 |
|
31.90 |
04.20.2023 |
|
05.26.2023 |
|
Final |
|
Accumulated earnings |
|
50.00 |
|
55.00 |
07.25.2023 |
|
08.25.2023 |
|
Interim |
|
2023 Earnings |
|
29.00 |
|
31.90 |
09.27.2023 |
|
10.26.2023 |
|
Interim |
|
2023 Earnings |
|
29.00 |
|
31.90 |
12.28.2023 |
|
01.25.2024 |
|
Interim |
|
2023 Earnings |
|
32.00 |
|
35.20 |
21.3 Other reserves
The balance of other reserves includes the following:
Concept |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Polar acquisition |
|
421,701,520 |
|
421,701,520 |
|
421,701,520 |
Foreign currency translation reserves |
|
(556,832,899) |
|
(495,483,366) |
|
(441,580,088) |
Cash flow hedge reserve |
|
(24,064,386) |
|
(62,344,501) |
|
50,603,698 |
Reserve for employee benefit actuarial gains or losses |
|
(6,013,183) |
|
(7,776,316) |
|
(4,885,926) |
Legal and statutory reserves |
|
5,435,538 |
|
5,435,538 |
|
5,435,538 |
Other |
|
6,014,568 |
|
6,014,568 |
|
6,014,568 |
Total |
|
(153,758,842) |
|
(132,452,557) |
|
37,289,310 |
21.3.1 Polar acquisition
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).
F-69
21.3.3 Reserve for employee benefit actuarial gains or losses
Corresponds to the restatement effect of employee benefits actuarial gains or 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.
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 accounted for using the equity method, Translation reserves are detailed as follows:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Brazil |
|
(106,141,988) |
|
(140,762,397) |
|
(167,447,389) |
Argentina |
|
(464,946,783) |
|
(360,988,849) |
|
(294,696,228) |
Paraguay |
|
14,255,872 |
|
6,267,880 |
|
20,563,529 |
Total |
|
(556,832,899) |
|
(495,483,366) |
|
(441,580,088) |
The movement of this reserve for the periods ended on the dates indicated below, is detailed as follows:
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Brazil |
|
34,620,409 |
|
26,684,992 |
|
36,210,003 |
Argentina |
|
(103,957,934) |
|
(66,292,621) |
|
(3,363,826) |
Paraguay |
|
7,987,992 |
|
(14,295,649) |
|
43,070,221 |
Total |
|
(61,349,533) |
|
(53,903,278) |
|
75,916,398 |
21.3.6 Consolidated statements of comprehensive income
The detail of the comprehensive income and expense for the periods ended on the dates indicated below, is detailed as follows:
|
|
Gross |
|
|
|
|
Balance as of 2023 |
|
Balance |
|
Tax |
|
Net Balance |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Cash Flow for hedge (1) |
|
52,472,352 |
|
(14,183,004) |
|
38,289,348 |
Exchange rate translation differences (1) |
|
(98,844,581) |
|
37,650,601 |
|
(61,193,980) |
Benefit related to defined benefit plans |
|
2,381,650 |
|
(643,045) |
|
1,738,605 |
Total Comprehensive income as of December 31, 2022 |
|
(43,990,579) |
|
22,824,552 |
|
(21,166,027) |
F-70
|
|
Gross |
|
|
|
|
Balance as of 2022 |
|
Balance |
|
Tax |
|
Net Balance |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Cash Flow for hedge (1) |
|
(155,206,655) |
|
42,276,806 |
|
(112,929,849) |
Exchange rate translation differences (1) |
|
(78,009,918) |
|
23,777,899 |
|
(54,232,019) |
Benefit related to defined benefit plans |
|
(3,960,084) |
|
1,069,223 |
|
(2,890,861) |
Total Comprehensive income as of December 31, 2022 |
|
(237,176,657) |
|
67,123,928 |
|
(170,052,729) |
|
|
Gross |
|
|
|
|
Balance as of 2021 |
|
Balance |
|
Tax |
|
Net Balance |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Cash Flow for hedge (1) |
|
104,232,055 |
|
(28,944,992) |
|
75,287,063 |
Exchange rate translation differences (1) |
|
98,973,862 |
|
(22,103,267) |
|
76,870,595 |
Benefit related to defined benefit plans |
|
(357,840) |
|
96,617 |
|
(261,223) |
Total Comprehensive income as of December 31, 2021 |
|
202,848,077 |
|
(50,951,642) |
|
151,896,435 |
(1)These concepts will be reclassified to the statements of income when it is settled.
F-71
The movement of comprehensive income and expense is as follows:
|
|
|
|
|
|
Benefit related |
|
|
Cash Flow |
|
Exchange rate |
|
to defines |
As of December 31, 2023: |
|
Hedge |
|
Differences |
|
benefit plans |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Increase (decrease) |
|
52,393,210 |
|
(98,844,581) |
|
6,374,693 |
Deferred taxes |
|
(14,113,095) |
|
37,650,601 |
|
(1,721,167) |
Reclassification to the result by function |
|
9,233 |
|
— |
|
— |
Remeasurement of defined benefit plan |
|
— |
|
— |
|
(2,914,921) |
Total Changes in Equity |
|
38,289,348 |
|
(61,193,980) |
|
1,738,605 |
Equity attributable to owners of the parent |
|
38,280,115 |
|
(61,349,533) |
|
1,763,133 |
Non-Controlling interests |
|
9,233 |
|
155,553 |
|
(24,528) |
Total Changes in equity as of December 31, 2023 |
|
38,289,348 |
|
(61,193,980) |
|
1,738,605 |
|
|
|
|
|
|
Benefit related |
|
|
Cash Flow |
|
Exchange rate |
|
to defines |
As of December 31, 2022: |
|
Hedge |
|
Differences |
|
benefit plans |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Increase (decrease) |
|
(155,007,121) |
|
(78,009,918) |
|
(3,617,931) |
Deferred taxes |
|
43,070,637 |
|
23,777,899 |
|
976,841 |
Reclassification to the result by function |
|
(993,365) |
|
— |
|
— |
Remeasurement of defined benefit plan |
|
— |
|
— |
|
(249,771) |
Total Changes in Equity |
|
(112,929,849) |
|
(54,232,019) |
|
(2,890,861) |
Equity attributable to owners of the parent |
|
(112,948,199) |
|
(53,903,278) |
|
(2,890,390) |
Non-Controlling interests |
|
18,350 |
|
(328,741) |
|
(471) |
Total Changes in equity as of December 31, 2022 |
|
(112,929,849) |
|
(54,232,019) |
|
(2,890,861) |
|
|
|
|
|
|
Benefit related |
|
|
Cash Flow |
|
Exchange rate |
|
to defines |
As of December 31, 2021: |
|
Hedge |
|
Differences |
|
benefit plans |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Increase (decrease) |
|
102,529,128 |
|
98,973,862 |
|
3,026,996 |
Deferred taxes |
|
(28,469,748) |
|
(22,103,267) |
|
(817,289) |
Reclassification to the result by function |
|
1,227,683 |
|
— |
|
— |
Remeasurement of defined benefit plan |
|
— |
|
— |
|
(2,470,930) |
Total Changes in Equity |
|
75,287,063 |
|
76,870,595 |
|
(261,223) |
Equity attributable to owners of the parent |
|
75,323,231 |
|
75,916,398 |
|
(222,733) |
Non-Controlling interests |
|
(36,168) |
|
954,197 |
|
(38,490) |
Total Changes in equity as of December 31, 2021 |
|
75,287,063 |
|
76,870,595 |
|
(261,223) |
F-72
21.4 Non-controlling interests
This is the recognition of the portion of equity and income from subsidiaries owned by third parties. This account is detailed as follows:
|
|
Non-controlling Interests |
||||||||||||||||
|
|
Ownership % |
|
|
|
Shareholders’ Equity |
|
|
|
Income |
||||||||
|
|
|
|
|
|
|
|
December |
|
December |
|
December |
|
December |
|
December |
|
December |
Details |
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Embotelladora del Atlántico S.A. |
|
0.0171 |
|
0.0171 |
|
0.0171 |
|
23,516 |
|
36,451 |
|
33,794 |
|
4,067 |
|
6,410 |
|
3,463 |
Andina Empaques Argentina S.A. |
|
0.0209 |
|
0.0209 |
|
0.0209 |
|
2,735 |
|
4,346 |
|
3,761 |
|
(243) |
|
(5) |
|
326 |
Paraguay Refrescos S.A. |
|
2.1697 |
|
2.1697 |
|
2.1697 |
|
6,421,855 |
|
6,177,360 |
|
6,331,726 |
|
1,023,763 |
|
988,416 |
|
885,010 |
Vital S.A. |
|
35.0000 |
|
35.0000 |
|
35.0000 |
|
9,518,527 |
|
8,848,927 |
|
8,056,551 |
|
579,391 |
|
923,228 |
|
499,923 |
Vital Aguas S.A. |
|
33.5000 |
|
33.5000 |
|
33.5000 |
|
2,391,066 |
|
2,216,115 |
|
2,041,837 |
|
168,407 |
|
198,195 |
|
130,522 |
Envases Central S.A. |
|
40.7300 |
|
40.7300 |
|
40.7300 |
|
7,491,638 |
|
6,669,936 |
|
5,738,008 |
|
758,514 |
|
999,807 |
|
750,192 |
Re-Ciclar S.A.* |
|
40.0000 |
|
40.0000 |
|
40.0000 |
|
8,845,550 |
|
4,189,373 |
|
3,064,078 |
|
536,178 |
|
(154,706) |
|
64,082 |
Total |
|
|
|
|
|
|
|
34,694,887 |
|
28,142,508 |
|
25,269,755 |
|
3,070,077 |
|
2,961,345 |
|
2,333,518 |
The following tables presents summarized information regarding the Company´s subsidiaries that have non-controlling interest:
|
|
|
|
Andina |
|
|
|
|
|
|
|
|
|
|
|
|
Embotelladora |
|
Empaques |
|
Paraguay |
|
|
|
|
|
|
|
|
|
|
Del Atlantico |
|
Argentina |
|
Refrescos |
|
VJ |
|
Vital Aguas |
|
Envases |
|
Re-Ciclar |
|
|
S.A. |
|
S.A. |
|
S.A. |
|
S.A |
|
S.A. |
|
Central S.A. |
|
S.A. |
December 31,2023 |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Total current assets |
|
79,240,262 |
|
9,149,013 |
|
81,710,657 |
|
29,670,457 |
|
7,064,594 |
|
20,446,648 |
|
6,613,813 |
Total non-current assets |
|
186,371,255 |
|
9,397,856 |
|
277,112,895 |
|
19,914,658 |
|
5,272,662 |
|
21,015,727 |
|
26,500,107 |
Total current liabilities |
|
105,077,757 |
|
4,907,443 |
|
44,297,696 |
|
20,549,744 |
|
5,061,919 |
|
16,775,490 |
|
1,596,354 |
Total non-current liabilities |
|
22,626,937 |
|
561,677 |
|
18,552,180 |
|
1,839,580 |
|
137,827 |
|
6,293,557 |
|
9,403,691 |
Net sales |
|
445,970,004 |
|
22,146,635 |
|
223,840,648 |
|
80,683,367 |
|
22,338,380 |
|
92,778,313 |
|
— |
Net Income |
|
23,848,440 |
|
(1,388,032) |
|
47,183,699 |
|
1,655,403 |
|
502,706 |
|
1,862,293 |
|
1,340,445 |
|
|
|
|
Andina |
|
|
|
|
|
|
|
|
|
|
|
|
Embotelladora |
|
Empaques |
|
Paraguay |
|
|
|
|
|
|
|
|
|
|
Del Atlantico |
|
Argentina |
|
Refrescos |
|
VJ |
|
Vital Aguas |
|
Envases |
|
Re-Ciclar |
|
|
S.A. |
|
S.A. |
|
S.A. |
|
S.A |
|
S.A. |
|
Central S.A. |
|
S.A. |
December 31,2022 |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Total current assets |
|
132,214,927 |
|
16,481,794 |
|
72,297,644 |
|
27,190,771 |
|
7,326,742 |
|
22,918,372 |
|
14,595,558 |
Total non-current assets |
|
243,866,619 |
|
11,897,459 |
|
269,314,097 |
|
19,346,711 |
|
5,516,881 |
|
22,057,335 |
|
5,626,492 |
Total current liabilities |
|
138,653,369 |
|
6,679,478 |
|
40,454,954 |
|
20,026,609 |
|
6,073,685 |
|
21,712,326 |
|
382,408 |
Total non-current liabilities |
|
23,668,595 |
|
915,427 |
|
16,451,513 |
|
1,228,226 |
|
154,669 |
|
6,887,495 |
|
9,366,211 |
Net sales |
|
664,003,032 |
|
37,915,166 |
|
212,339,131 |
|
85,067,864 |
|
22,026,721 |
|
100,227,739 |
|
— |
Net Income |
|
37,589,788 |
|
(25,095) |
|
45,554,603 |
|
2,637,795 |
|
591,626 |
|
2,454,710 |
|
(386,764) |
|
|
|
|
Andina |
|
|
|
|
|
|
|
|
|
|
|
|
Embotelladora |
|
Empaques |
|
Paraguay |
|
|
|
|
|
|
|
|
|
|
Del Atlantico |
|
Argentina |
|
Refrescos |
|
VJ |
|
Vital Aguas |
|
Envases |
|
Re-Ciclar |
|
|
S.A. |
|
S.A. |
|
S.A. |
|
S.A |
|
S.A. |
|
Central S.A. |
|
S.A. |
December 31,2021 |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Total current assets |
|
107,589,399 |
|
13,197,912 |
|
64,121,536 |
|
25,441,586 |
|
5,575,990 |
|
17,976,170 |
|
4,135,677 |
Total non-current assets |
|
209,051,488 |
|
11,865,984 |
|
279,148,198 |
|
16,832,859 |
|
5,789,335 |
|
20,945,892 |
|
3,560,269 |
Total current liabilities |
|
98,942,717 |
|
6,210,788 |
|
34,207,817 |
|
17,498,997 |
|
4,934,841 |
|
20,091,524 |
|
35,751 |
Total non-current liabilities |
|
19,520,634 |
|
868,253 |
|
17,242,154 |
|
1,756,730 |
|
335,449 |
|
4,742,707 |
|
- |
Net sales |
|
517,466,510 |
|
30,750,914 |
|
169,216,180 |
|
64,513,412 |
|
16,005,176 |
|
77,475,816 |
|
- |
Net Income |
|
20,307,709 |
|
1,558,476 |
|
40,788,801 |
|
1,428,350 |
|
389,619 |
|
1,841,867 |
|
160,195 |
F-73
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 weighted 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 |
|
12.31.2023 |
||||
|
|
SERIES A |
|
SERIES B |
|
TOTAL |
Net income attributable to owners of the parent (CLP 000’s) |
|
81,639,457 |
|
89,801,954 |
|
171,441,410 |
Weighted average number of shares |
|
473,289,301 |
|
473,281,303 |
|
946,570,604 |
Earnings per basic and diluted share (CLP) |
|
172.49 |
|
189.74 |
|
181.12 |
Earnings per share |
|
12.31.2022 |
||||
|
|
SERIES A |
|
SERIES B |
|
TOTAL |
Net income attributable to owners of the parent (CLP 000’s) |
|
59,761,287 |
|
65,736,355 |
|
125,497,642 |
Weighted average number of shares |
|
473,289,301 |
|
473,281,303 |
|
946,570,604 |
Earnings per basic and diluted share (CLP) |
|
126.27 |
|
138.89 |
|
132.58 |
Earnings per share |
|
12.31.2021 |
|
|
||
|
|
SERIES A |
|
SERIES B |
|
TOTAL |
Net income attributable to owners of the parent (CLP 000’s) |
|
73,666,409 |
|
81,031,741 |
|
154,698,150 |
Weighted average number of shares |
|
473,289,301 |
|
473,281,303 |
|
946,570,604 |
Earnings per basic and diluted share (CLP) |
|
155.65 |
|
171.21 |
|
163.43 |
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 currencies and rates of the transaction.
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 December 31, 2023, the Company holds the following derivative instruments:
22.1Accounting recognition of cross currency and rate swaps
Cross Currency Swaps, associated with local Bonds (Chile)
As of December 31, 2023, the Company maintains derivative contracts to secure some of its bond debt issued in Unidades de Fomento totaling UF 8,911,035 (UF 9,340,963 as of December 31, 2022), to convert those obligations to CLP.
These contracts were valued at fair value, yielding a net asset as of December 31, 2023 of CLP 71,053,190 thousand (CLP 75,297,737 thousand as of December 31, 2022) which is presented in Other non-current financial assets. Maturity dates of derivative contracts are distributed throughout 2026, 2031, 2034 and 2035.
F-74
Cross Currency Swaps, associated with international Bonds (U.S.A. and Switzerland)
As of December 31, 2023, the Company has derivative contracts to secure obligations with the public issued in U.S. dollars for USD 300 million, to convert these obligations into Chilean pesos indexed by the Consumer Price Index (UF) maturing in 2050. Additionally, there are derivative contracts to secure obligations with the public issued in Swiss francs for an amount of CHF 170 million to convert this obligation into Brazilian reais maturing in 2028.
The valuation of the first contract at fair value results in a non-current liability of ThCh$ 52,449,925, as of December 31, 2023 (non-current liability of ThCh$ 112,175,058 as of December 31, 2022), while the valuation of the second contract at fair value results in a non-current asset of ThCh$ 7,935,525, as of the closing date of the financial statements.
In September, given that the international bond for USD 365 million matured, the corresponding derivatives used to redenominate the conditions from dollars to reais also matured and the contract was extinguished.
22.2 Forward currency transactions expected to be very likely
During 2023 and 2022, Embotelladora Andina entered into forward contracts to ensure the exchange rate on future commodity purchasing needs for its 4 operations, i.e., closing forward instruments in USD/ARS, USD/BRL, USD/CLP, EUR/CLP and USD/PYG. As of December 31, 2023, outstanding contracts amount to USD 87.4 million (USD 80.2 million as of December 31, 2022).
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 other comprehensive income.
22.3 Fair value hierarchy
As of December 31, 2023, the Company held assets for derivative contracts for CLP 80,083,558 thousand (CLP 245,504,291 thousand as of December 31, 2022) - the decrease is explained by the liquidation of the Cross Currency Swaps related to the international bond for USD 365 million that matured in September 2023 - and held liabilities for derivative contracts for CLP 53,908,135 thousand (CLP 114,492,635 thousand as of December 31, 2022).
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 current and non-current 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.
F-75
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.
|
|
Fair Value Measurement at December 31, 2023 |
|
|
||||
|
|
Quoted prices in |
|
|
|
|
|
|
|
|
active markets for |
|
|
|
|
|
|
|
|
identical assets or |
|
Observable |
|
Unobservable |
|
|
|
|
liabilities |
|
market data |
|
market data |
|
|
|
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
Total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Assets |
|
|
|
|
|
|
|
|
Other current financial assets |
|
— |
|
1,094,844 |
|
— |
|
1,094,844 |
Other non-current financial assets |
|
— |
|
78,988,714 |
|
— |
|
78,988,714 |
Total assets |
|
— |
|
80,083,558 |
|
— |
|
80,083,558 |
Liabilities |
|
|
|
|
|
|
|
|
Other current financial liabilities |
|
— |
|
1,458,210 |
|
— |
|
1,458,210 |
Other non-current financial liabilities |
|
— |
|
52,449,925 |
|
— |
|
52,449,925 |
Total Liabilities |
|
— |
|
53,908,135 |
|
— |
|
53,908,135 |
|
|
Fair Value Measurement at December 31, 2022 |
|
|
||||
|
|
Quoted prices in |
|
|
|
|
|
|
|
|
active markets for |
|
|
|
|
|
|
|
|
identical assets or |
|
Observable |
|
Unobservable |
|
|
|
|
liabilities |
|
market data |
|
market data |
|
|
|
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
Total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Assets |
|
|
|
|
|
|
|
|
Other current financial assets |
|
— |
|
170,206,554 |
|
— |
|
170,206,554 |
Other non-current financial assets |
|
— |
|
75,297,737 |
|
— |
|
75,297,737 |
Total assets |
|
— |
|
245,504,291 |
|
— |
|
245,504,291 |
Liabilities |
|
|
|
|
|
|
|
|
Other current financial liabilities |
|
— |
|
2,317,577 |
|
— |
|
2,317,577 |
Other non-current financial liabilities |
|
— |
|
112,175,058 |
|
— |
|
112,175,058 |
Total Liabilities |
|
— |
|
114,492,635 |
|
— |
|
114,492,635 |
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. and Andina Empaques Argentina S.A. 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 490,108 thousand (CLP 1,397,149 thousand as of December 31, 2022). 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 163,056 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 52,997,682 thousand (CLP 45,706,634 thousand as of December 31, 2022). 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 amounted to CLP 25,845,561 thousand (CLP 23,260,412 thousand as of December 31, 2022). |
F-76
Part of the assets held under warranty by Rio de Janeiro Refrescos Ltda. are in the process of being released and others have already been released in exchange for guarantee insurance and bond letters for BRL 1,935,447,459, with different Financial Institutions and Insurance Companies in Brazil, these entities receive an annual commission fee of 0.19%. and 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 bond 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) totaling BRL 3,445,482,207 as of December 31, 2023.
The Company does not share the position of the Brazilian tax authority in these procedures and considers that it 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. As a result of the acquisition of Companhia de Bebidas Ipiranga in 2013 and pursuant to this criterion and although there are contingencies listed only as possible for BRL 576,058,893 (amount includes adjustments for current lawsuits) a start provision has been generated in the accounting of the business combination for BRL 124,076,338.
| b) | Other tax contingencies. |
They refer to ICMS-SP tax administrative processes that challenge the credits derived from the acquisition of tax-exempt products acquired by the Company from a supplier located in the Manaus Free Zone. The total amount is BRL 539,864,314 being assessed by external attorneys as a remote loss, so it has no accounting provision.
The company was challenged by the federal tax authority for tax deductibility of a portion of goodwill in the 2014-2016 period arising from the acquisition of Companhia de Bebidas Ipiranga. The tax authority understands that the entity that acquired Companhia de Bebidas Ipiranga is Embotelladora Andina and not Rio de Janeiro Refrescos Ltda. In the view of external lawyers, such a statement is erroneous, classifying it as a possible loss. The value of this process is BRL 960,575,248, as of the date of these financial statements.
| 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 1,267,215 thousand (CLP 1,552,353 thousand as of December 31, 2022). 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 46,891 thousand (CLP 39,291, thousand as of December 31, 2022). Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors. |
F-77
23.2 Direct guarantees and restricted assets:
Guarantees and restricted assets are detailed as follows:
Guarantees that commit assets recognized in the financial statements:
|
|
|
|
|
|
Committed assets |
|
Accounting value |
||||
Guaranty creditor |
|
Debtor name |
|
Relationship |
|
Guaranty |
|
Type |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
Administradora Plaza Vespucio S.A. |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
169,150 |
|
98,170 |
Cooperativa Agrícola Pisquera Elqui Limitada |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Other non-current financial assets |
|
1,125,595 |
|
1,056,320 |
Mall Plaza |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
666,024 |
|
330,298 |
Metro S.A. |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
22,222 |
|
21,207 |
Parque Arauco S.A. |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
299,464 |
|
142,901 |
Lease agreement |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
96,299 |
|
103,711 |
Others |
|
Embotelladora Andina S.A. |
|
Parent company |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
59,468 |
|
14,183 |
Several retail |
|
Vending |
|
Subsidiary |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
— |
|
61,395 |
Several retail |
|
Transportes Refrescos |
|
Subsidiary |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
— |
|
693 |
Several retail |
|
Transportes Polar |
|
Subsidiary |
|
Guarantee receipt |
|
Trade accounts and other accounts receivable |
|
17,656 |
|
22,235 |
Workers’ claims |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
7,100,709 |
|
6,605,781 |
Civil and tax claims |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
7,485,574 |
|
6,457,702 |
Governmental entities |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Plant and equipment |
|
Property, plant & equipment |
|
11,259,278 |
|
10,196,929 |
Distribuidora Baraldo S.H. |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
22 |
|
97 |
Acuña Gomez |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
33 |
|
145 |
Nicanor López |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
23 |
|
104 |
Municipalidad Bariloche |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
434 |
|
2,428 |
Municipalidad San Antonio Oeste |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
2,395 |
|
10,664 |
Municipalidad Carlos Casares |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
97 |
|
431 |
Municipalidad Chivilcoy |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
14,979 |
|
66,697 |
Granada Maximiliano |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
195 |
|
870 |
Municipalidad de Junin |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
94 |
|
139 |
Almada Jorge |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
265 |
|
1,180 |
Farias Matias Luis |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
— |
|
541 |
Temas Industriales SA - Embargo General de Fondos |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
13,604 |
|
60,575 |
DBC SA C CERVECERIA ARGENTINA SA ISEMBECK |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
2,441 |
|
10,870 |
Coto Cicsa |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
1,139 |
|
1,932 |
Cencosud |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
271 |
|
1,208 |
Jose Luis Kreitzer, Alexis Beade Y Cesar Bechetti |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
25,920 |
|
4,784 |
Vicentin |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current non-financial assets |
|
1,074 |
|
125,683 |
Marcus A.Peña |
|
Paraguay Refrescos |
|
Subsidiary |
|
Real estate |
|
Property, plant & equipment |
|
5,332 |
|
4,965 |
Ana Maria Mazó |
|
Paraguay Refrescos |
|
Subsidiary |
|
Real estate |
|
Property, plant & equipment |
|
1,077 |
|
1,113 |
Stefano Szwao Giacomelli |
|
Paraguay Refrescos |
|
Subsidiary |
|
Real estate |
|
Property, plant & equipment |
|
2,892 |
|
— |
Guarantees that do not commit assets recognized in the Financial Statements:
|
|
|
|
Committed assets |
|
Amounts involved |
||||||
Guaranty creditor |
|
Debtor name |
|
Relationship |
|
Guaranty |
|
Type |
|
12.31.2023 |
|
12.31.2022 |
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
Labor procedures |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guaranty receipt |
|
Legal proceeding |
|
2,681,242 |
|
1,936,493 |
Administrative procedures |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guaranty receipt |
|
Legal proceeding |
|
11,245,798 |
|
7,616,498 |
Federal government |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guaranty receipt |
|
Legal proceeding |
|
223,415,663 |
|
186,607,491 |
State government |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guaranty receipt |
|
Legal proceeding |
|
108,317,724 |
|
117,027,313 |
Sorocaba Refrescos |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guaranty receipt |
|
Guarantor |
|
3,623,490 |
|
3,280,603 |
Others |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guaranty receipt |
|
Legal proceeding |
|
1,369,766 |
|
3,423,715 |
Aduana de EZEIZA |
|
Andina Empaques Argentina S.A. |
|
Subsidiary |
|
Surety insurance |
|
Faithful compliance of contract |
|
658,369 |
|
3,791 |
Aduana de EZEIZA |
|
Andina Empaques Argentina S.A. |
|
Subsidiary |
|
Surety insurance |
|
Faithful compliance of contract |
|
3,886 |
|
880,984 |
F-78
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 December 31, 2023, the Company maintains all of its debt obligations denominated in fixed rates in order to avoid fluctuations in financial expenses resulting from an increase in interest rates.
The Company's indebtedness corresponds to six bonds in the Chilean local market at fixed rates, which currently have an outstanding balance of UF14.61 million denominated in Unidades de Fomento ("UF"), a debt indexed to inflation in Chile (the Company's sales are correlated to the variation of the UF). Of the total bonds, five are redenominated through derivatives to Chilean Pesos (CLP) in their rate and notional value, maintaining the structure of the bond.
On the other hand, the Company has indebtedness in the international market through a USD 300 million fixed-rate 144A/RegS bond issued in the US, which has been redenominated through derivatives to Unidades de Fomento ("UF", Chilean pesos indexed to inflation) in its rate and nominal value, maintaining the structure of the bond. Additionally, in September 2023 a bond was issued in the Swiss market for an amount of CHF 170 million at a fixed rate [CHF], which has been redenominated, through derivatives, to Brazilian reais (BRL) in its rate and notional value, maintaining the structure of the bond.
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 283 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.
F-79
| 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 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.
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 investment.
The Company has a Policy that is applicable to all 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:
| i. | Time deposits: only in banks or financial institutions that have a risk rating equal to 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. |
| ii. | 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 a rating greater than or equal to AA+ (S&P) or equivalent. |
| iii. | Other investment alternatives must be evaluated and authorized by the office of the Chief Financial Officer. |
F-80
Exchange Rate Risk
The Company is exposed to three types of risk caused by exchange rate volatility in the countries where it operates:
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.
The Company evaluates the fluctuations of the currencies used in the Operations (local currencies) with respect to the presentation currency of the financial statements through a sensitivity analysis on total assets, total liabilities and net equity in local currency.
|
|
USD/CLP |
|
BRL/CLP |
|
ARS/CLP |
|
PGY/CLP |
|
Exchange rate variation at reporting date |
|
2.5% |
|
10.4% |
|
-77.5% |
|
3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil |
|
Argentina |
|
Paraguay |
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
Total assets |
|
|
|
927,776,536 |
|
278,756,092 |
|
358,890,168 |
|
Total liabilities |
|
|
|
585,533,955 |
|
130,843,061 |
|
62,849,876 |
|
Net investment |
|
|
|
342,242,581 |
|
147,913,031 |
|
296,040,292 |
|
Share on income |
|
|
|
28.5 |
% |
17.5 |
% |
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BRL/CLP |
|
ARS/CLP |
|
PGY/CLP |
|
-10% variation impact on currency translation |
|
|
|
-1.0% |
|
-79.6% |
|
-6.9% |
|
|
|
|
|
|
|
|
|
|
|
Variation impact on results |
|
|
|
(6,181,422) |
|
(716,469) |
|
(4,289,427) |
|
Variation impact on equity |
|
|
|
(35,380,729) |
|
(13,446,639) |
|
(29,690,059) |
|
The above scenario represents the exchange rate sensitivity of minus 10% over the actual exchange rates at the reporting date, impacting the translation of local currencies to the presentation currency of the Group's financial statements, and how it would impact the results and equity of the different Operations.
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.
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.
| b) | Exposure of assets purchased or indexed to foreign currency |
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.
F-81
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 up to 12-month forward horizon.
Commodities risk
The Company is subject to the risk of price fluctuations in the international markets mainly for sugar, PET resin and aluminum, which are inputs used to produce beverages and containers, which together account for 35% to 40% of operating costs. Procurement and anticipated purchase contracts are made frequently to minimize and/or stabilize this risk. 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:
As of December 31, 2023 |
|
Payments on the year of maturity |
||||||||
|
|
|
|
More than 1 |
|
More than 2 |
|
More than 3 |
|
|
Item |
|
1 year |
|
up to 2 |
|
up to 3 |
|
up to 4 |
|
More than 5 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Bank debt |
|
1,500,909 |
|
— |
|
13,485,024 |
|
— |
|
— |
Bonds payable |
|
50,498,809 |
|
50,300,105 |
|
43,475,786 |
|
36,651,452 |
|
1,348,382,985 |
Lease obligations |
|
9,322,855 |
|
4,988,159 |
|
4,759,010 |
|
2,689,598 |
|
6,891,131 |
Contractual obligations (1) |
|
37,520,505 |
|
112,608,432 |
|
18,110,929 |
|
18,094,401 |
|
3,491,360 |
Total |
|
98,843,078 |
|
167,896,696 |
|
79,830,749 |
|
57,435,451 |
|
1,358,765,476 |
As of December 31, 2022 |
|
Payments on the year of maturity |
||||||||
|
|
|
|
More than 1 |
|
More than 2 |
|
More than 3 |
|
|
Item |
|
1 year |
|
up to 2 |
|
up to 3 |
|
up to 4 |
|
More than 5 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Bank debt |
|
741,228 |
|
- |
|
4,081,333 |
|
- |
|
- |
Bonds payable |
|
340,767,980 |
|
15,765,142 |
|
16,478,664 |
|
10,915,215 |
|
720,209,139 |
Lease obligations |
|
7,100,579 |
|
2,854,106 |
|
5,615,704 |
|
6,887,353 |
|
535,465 |
Contractual obligations (1) |
|
127,611,501 |
|
39,242,308 |
|
5,973,129 |
|
5,339,005 |
|
4,950,895 |
Total |
|
476,221,288 |
|
57,861,556 |
|
32,148,830 |
|
23,141,573 |
|
725,695,499 |
(1) Agreements that the Andina Group has with collaborating entities for its operation, which are mainly related to contracts entered into to supply products and/or support services in information technology services, commitments of the company with its franchisor to make investments or expenses related to the development of the franchise, support services to personnel, security services, maintenance services of fixed assets, purchase of inputs for production, among others.
F-82
25 – EXPENSES BY NATURE
Other expenses by nature are:
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Direct production costs |
|
(1,346,516,486) |
|
(1,388,536,599) |
|
(1,192,363,804) |
Payroll and employee benefits |
|
(378,482,113) |
|
(376,196,521) |
|
(301,522,420) |
Transportation and distribution |
|
(211,998,332) |
|
(224,190,549) |
|
(174,253,526) |
Advertisement |
|
(35,831,757) |
|
(26,575,951) |
|
(28,475,957) |
Depreciation and amortization |
|
(112,771,324) |
|
(119,365,431) |
|
(104,775,303) |
Repairs and maintenance |
|
(46,021,127) |
|
(43,847,581) |
|
(38,631,914) |
Other expenses |
|
(129,478,810) |
|
(133,021,583) |
|
(84,272,085) |
Total (1) |
|
(2,261,099,949) |
|
(2,311,734,215) |
|
(1,924,295,009) |
| (1) | Corresponds to the addition of cost of sales, administrative expenses and distribution costs. |
26 – OTHER INCOME
Other income by function is detailed as follows:
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Gain due to disposal of Property, plant and equipment |
|
754,338 |
|
79,650 |
|
480,401 |
Credit recovery in Brazil (1) |
|
- |
|
1,856,762 |
|
- |
Others |
|
556,151 |
|
561,108 |
|
857,477 |
Total |
|
1,310,489 |
|
2,497,520 |
|
1,337,878 |
| (1) | Restitution of credits for the payment of coffee quota (cota café) |
27 – OTHER EXPENSES BY FUNCTION
Other expenses by function are detailed as follows:
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Contingencies and non-operating fees |
|
(11,145,708) |
|
6,316,102 |
(1) |
(7,950,093) |
Tax on bank debits |
|
(4,403,347) |
|
(7,150,739) |
|
(5,270,040) |
Write-offs, disposals and loss (gain) on sale of property, plant and equipment |
|
(8,072,422) |
(2) |
— |
|
(417,623) |
Others |
|
(2,820,106) |
(3) |
(51,694) |
|
(1,574,034) |
Total |
|
(26,441,583) |
|
(886,331) |
|
(15,211,790) |
(1) |
During 2022 the provision made by a claim of the Government of the State of Rio de Janeiro related to the Advertising Agreement was reversed. This is due to a review of the balances involved where the amounts claimed are reduced in favor of Rio de Janeiro Refrescos Ltda. |
(2) |
Expenses for the write-off of the container yard in Operation Paraguay and Operation Chile. |
(3) |
Mainly due to restructuring in Operations for the year 2023. |
F-83
28 – FINANCIAL INCOME AND EXPENSES
Financial income and costs are detailed as follows:
a) Financial income
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Interest income |
|
25,791,172 |
|
32,388,801 |
|
2,196,886 |
Ipiranga purchase warranty restatement |
|
47,032 |
|
39,509 |
|
11,290 |
From PIS credit and COFINS (1) |
|
— |
|
2,054,586 |
|
1,312,930 |
Other financial income |
|
5,557,963 |
|
5,239,514 |
|
4,270,763 |
Total |
|
31,396,167 |
|
39,722,410 |
|
7,791,869 |
| (1) | See Note 6 for more information on recovery. |
b) Financial expenses
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Bond interest |
|
(53,148,503) |
|
(51,863,601) |
|
(48,624,062) |
Bank loan interest |
|
(4,510,379) |
|
(1,782,972) |
|
(267,012) |
Lease interest |
|
(2,616,945) |
|
(2,092,868) |
|
(1,816,506) |
Other financial costs |
|
(5,012,525) |
|
(3,808,512) |
|
(2,284,876) |
Total |
|
(65,288,352) |
|
(59,547,953) |
|
(52,992,456) |
29 – OTHER (LOSSES) GAINS
Other (losses) gains are detailed as follows:
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Other gains and losses* |
|
(15,909,117) |
(1) |
(24,983,899) |
(2) |
— |
Total |
|
(15,909,117) |
|
(24,983,899) |
|
— |
(1) a) Losses for CLP 25,530,162 are recorded due to the assignment of a loan owned by Embotelladora Andina S.A. to a financial institution with a discount. The credit of Embotelladora Andina was originally generated as a result of dividends from subsidiaries declared in Argentine pesos. b) In addition to the foregoing, a water source in the Brazilian Operation has been disposed of, generating a gain in the amount of CLP 9,750,769.
(2) Losses for CLP 24,982,887 were recorded due to the assignment of a loan owned by Embotelladora Andina S.A. to a financial institution with a discount. The credit of Embotelladora Andina was originally generated as a result of dividends from subsidiaries declared in Argentine pesos.
F-84
30 – EXCHANGE DIFFERENCE
Exchange differences are detailed as follows:
|
|
01.01.2023 |
|
01.01.2022 |
|
01.01.2021 |
Description |
|
12.31.2023 |
|
12.31.2022 |
|
12.31.2021 |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Generated by suppliers |
|
(26,366,916) |
|
(11,285,363) |
|
(2,531,489) |
Generated by financial assets |
|
12,348,172 |
|
5,404,210 |
|
(2,083,399) |
Generated by financial liabilities |
|
(3,310,906) |
|
(5,132,722) |
|
(1,084,654) |
Other |
|
113,520 |
|
(593,853) |
|
191,231 |
Total |
|
(17,216,130) |
|
(11,607,728) |
|
(5,508,311) |
F-85
31 – LOCAL AND FOREIGN CURRENCY
Local and foreign currency balances are the following:
CURRENT ASSETS |
|
12.31.2023 |
|
12.31.2022 |
|
|
ThCh$ |
|
ThCh$ |
Cash and cash equivalent |
|
303,683,683 |
|
291,681,987 |
USD |
|
9,462,829 |
|
14,266,343 |
EUR |
|
437,604 |
|
870,613 |
CLP |
|
140,758,085 |
|
138,205,025 |
BRL |
|
96,214,729 |
|
69,923,621 |
ARS |
|
18,340,987 |
|
29,215,288 |
PGY |
|
38,469,449 |
|
39,201,097 |
|
|
|
|
|
Other current financial assets |
|
67,285,793 |
|
263,044,869 |
CLP |
|
66,587,339 |
|
92,826,375 |
BRL |
|
13,897 |
|
170,154,995 |
ARS |
|
684,557 |
|
— |
PGY |
|
— |
|
63,499 |
|
|
|
|
|
Other non-current financial assets |
|
19,311,851 |
|
26,957,000 |
USD |
|
174,579 |
|
847,149 |
EUR |
|
615,636 |
|
329,535 |
UF |
|
1,196,729 |
|
517,748 |
CLP |
|
6,353,138 |
|
12,478,839 |
BRL |
|
3,213,978 |
|
2,382,575 |
ARS |
|
3,531,840 |
|
8,596,540 |
PGY |
|
4,225,951 |
|
1,804,614 |
|
|
|
|
|
Trade debtors and other accounts payable |
|
298,892,164 |
|
279,770,286 |
USD |
|
3,511,802 |
|
1,467,851 |
EUR |
|
1,233 |
|
6,770 |
UF |
|
1,030,138 |
|
49,469 |
CLP |
|
182,395,110 |
|
155,443,395 |
BRL |
|
79,993,377 |
|
74,851,690 |
ARS |
|
23,712,111 |
|
39,795,968 |
PGY |
|
8,248,393 |
|
8,155,143 |
|
|
|
|
|
Accounts receivable related entities |
|
16,161,318 |
|
15,062,167 |
CLP |
|
14,736,546 |
|
14,738,236 |
BRL |
|
1,223,699 |
|
86,492 |
ARS |
|
— |
|
237,439 |
PGY |
|
201,073 |
|
|
|
|
|
|
|
Inventory |
|
233,053,160 |
|
245,886,656 |
CLP |
|
106,204,544 |
|
103,719,764 |
BRL |
|
64,808,180 |
|
60,074,387 |
ARS |
|
38,277,180 |
|
62,655,300 |
PGY |
|
23,763,256 |
|
19,437,205 |
|
|
|
|
|
Current tax assets |
|
43,383,058 |
|
39,326,427 |
USD |
|
6,253,451 |
|
|
CLP |
|
6,213,032 |
|
33,296,214 |
BRL |
|
30,643,656 |
|
5,633,971 |
ARS |
|
272,919 |
|
396,242 |
|
|
|
|
|
Total current assets |
|
981,771,027 |
|
1,161,729,392 |
USD |
|
19,402,661 |
|
16,581,343 |
EUR |
|
1,054,473 |
|
1,206,918 |
UF |
|
2,226,867 |
|
567,217 |
CLP |
|
523,247,794 |
|
550,707,848 |
BRL |
|
276,111,516 |
|
383,107,731 |
ARS |
|
84,819,594 |
|
140,896,777 |
PGY |
|
74,908,122 |
|
68,661,558 |
F-86
NON-CURRENT ASSETS |
|
12.31.2023 |
|
12.31.2022 |
|
|
CLP (000’s) |
|
ThCh$ |
Other non-current assets |
|
93,316,339 |
|
94,852,711 |
USD |
|
19,030,656 |
|
— |
UF |
|
1,216,865 |
|
75,297,737 |
CLP |
|
53,832,722 |
|
3,317,778 |
BRL |
|
7,935,524 |
|
|
ARS |
|
11,300,572 |
|
16,237,196 |
|
|
|
|
|
Other non-current, non-financial assets |
|
59,412,482 |
|
59,672,266 |
USD |
|
609,042 |
|
91,220 |
UF |
|
17,154 |
|
— |
CLP |
|
55,397 |
|
483,530 |
BRL |
|
55,660,553 |
|
55,060,849 |
ARS |
|
1,338,592 |
|
2,367,042 |
PGY |
|
1,731,744 |
|
1,669,625 |
|
|
|
|
|
Non-current accounts receivable |
|
371,401 |
|
539,920 |
UF |
|
225,323 |
|
249,366 |
CLP |
|
51,752 |
|
233,773 |
ARS |
|
136 |
|
56,781 |
PGY |
|
94,190 |
|
— |
|
|
|
|
|
Non-current accounts receivable related entities |
|
108,021 |
|
109,318 |
CLP |
|
108,021 |
|
109,318 |
|
|
|
|
|
Investments accounted for using the equity method |
|
91,799,267 |
|
92,344,598 |
CLP |
|
49,790,788 |
|
53,869,966 |
BRL |
|
42,008,479 |
|
38,474,632 |
|
|
|
|
|
Intangible assets other than goodwill |
|
695,926,565 |
|
671,778,888 |
USD |
|
3,959,421 |
|
— |
CLP |
|
312,908,478 |
|
312,981,971 |
BRL |
|
195,313,156 |
|
177,173,694 |
ARS |
|
5,269,949 |
|
9,075,200 |
PGY |
|
178,475,561 |
|
172,548,023 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
122,103,802 |
|
129,023,922 |
CLP |
|
9,523,767 |
|
9,523,768 |
BRL |
|
72,810,771 |
|
65,920,764 |
ARS |
|
32,193,085 |
|
46,254,831 |
PGY |
|
7,576,179 |
|
7,324,559 |
|
|
|
|
|
Property, plant and equipment |
|
872,388,811 |
|
798,221,259 |
EUR |
|
2,429,848 |
|
3,146 |
UF |
|
11,316,009 |
|
— |
CLP |
|
353,146,598 |
|
303,797,013 |
BRL |
|
277,936,537 |
|
229,486,365 |
ARS |
|
140,055,748 |
|
177,219,624 |
PGY |
|
87,504,071 |
|
87,715,111 |
|
|
|
|
|
Deferred tax assets |
|
4,323,174 |
|
2,428,333 |
CLP |
|
2,592,024 |
|
2,428,333 |
PGY |
|
1,731,150 |
|
— |
|
|
|
|
|
Total non-current assets |
|
1,939,749,862 |
|
1,848,971,215 |
USD |
|
23,599,119 |
|
91,220 |
EUR |
|
2,429,848 |
|
3,146 |
UF |
|
12,775,351 |
|
75,547,103 |
CLP |
|
782,009,547 |
|
686,745,450 |
BRL |
|
651,665,020 |
|
566,116,304 |
ARS |
|
190,158,082 |
|
251,153,893 |
PGY |
|
277,112,895 |
|
269,314,099 |
F-87
|
|
12.31.2023 |
|
12.31.2022 |
||||||||
CURRENT LIABILITIES |
|
Up to 90 days |
|
90 days to 1 year |
|
Total |
|
Up to 90 days |
|
90 days to 1 year |
|
Total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Other current financial liabilities |
|
16,062,851 |
|
36,934,150 |
|
52,997,001 |
|
13,431,339 |
|
353,870,741 |
|
367,302,080 |
USD |
|
342,000 |
|
5,444,143 |
|
5,786,143 |
|
249,660 |
|
321,143,849 |
|
321,393,509 |
EUR |
|
32,709 |
|
90,988 |
|
123,697 |
|
|
|
|
|
|
UF |
|
13,753,586 |
|
13,044,881 |
|
26,798,467 |
|
11,047,586 |
|
11,557,808 |
|
22,605,394 |
CLP |
|
899,930 |
|
11,384,709 |
|
12,284,639 |
|
893,612 |
|
14,216,358 |
|
15,109,970 |
BRL |
|
685,038 |
|
2,829,430 |
|
3,514,468 |
|
427,270 |
|
1,703,193 |
|
2,130,463 |
ARS |
|
349,588 |
|
1,804,522 |
|
2,154,110 |
|
813,211 |
|
3,910,926 |
|
4,724,137 |
PGY |
|
— |
|
1,482,060 |
|
1,482,060 |
|
— |
|
1,338,607 |
|
1,338,607 |
CHF |
|
— |
|
853,417 |
|
853,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable and other accounts payable, current |
|
404,557,957 |
|
24,354,027 |
|
428,911,984 |
|
369,548,991 |
|
15,252,639 |
|
384,801,630 |
USD |
|
37,085,189 |
|
2,156,901 |
|
39,242,090 |
|
34,223,389 |
|
33,046 |
|
34,256,435 |
EUR |
|
5,285,606 |
|
297,386 |
|
5,582,992 |
|
3,148,088 |
|
899,198 |
|
4,047,286 |
UF |
|
3,430,102 |
|
302,021 |
|
3,732,123 |
|
2,263,175 |
|
— |
|
2,263,175 |
CLP |
|
166,250,228 |
|
21,597,719 |
|
187,847,947 |
|
166,847,281 |
|
14,320,395 |
|
181,167,676 |
BRL |
|
129,596,874 |
|
— |
|
129,596,874 |
|
78,514,701 |
|
— |
|
78,514,701 |
ARS |
|
45,129,973 |
|
— |
|
45,129,973 |
|
69,945,679 |
|
— |
|
69,945,679 |
PGY |
|
17,779,985 |
|
— |
|
17,779,985 |
|
14,606,678 |
|
— |
|
14,606,678 |
Other currencies |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable to related companies, current |
|
96,045,624 |
|
— |
|
96,045,624 |
|
90,248,067 |
|
— |
|
90,248,067 |
CLP |
|
39,175,392 |
|
— |
|
39,175,392 |
|
44,298,074 |
|
— |
|
44,298,074 |
BRL |
|
40,225,863 |
|
— |
|
40,225,863 |
|
35,671,648 |
|
— |
|
35,671,648 |
ARS |
|
8,031,621 |
|
— |
|
8,031,621 |
|
8,587,487 |
|
— |
|
8,587,487 |
PGY |
|
8,612,748 |
|
— |
|
8,612,748 |
|
1,690,858 |
|
— |
|
1,690,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current provisions |
|
127,229 |
|
1,186,877 |
|
1,314,106 |
|
1,319,935 |
|
271,709 |
|
1,591,644 |
CLP |
|
127,229 |
|
1,139,985 |
|
1,267,214 |
|
1,319,935 |
|
232,418 |
|
1,552,353 |
PGY |
|
— |
|
46,892 |
|
46,892 |
|
— |
|
39,291 |
|
39,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax liabilities |
|
7,700,127 |
|
5,711,494 |
|
13,411,621 |
|
627,257 |
|
13,988,190 |
|
14,615,447 |
CLP |
|
2,440,280 |
|
23,458 |
|
2,463,738 |
|
627,257 |
|
7,301 |
|
634,558 |
BRL |
|
5,259,847 |
|
— |
|
5,259,847 |
|
— |
|
— |
|
— |
ARS |
|
— |
|
4,143,057 |
|
4,143,057 |
|
— |
|
13,479,571 |
|
13,479,571 |
PGY |
|
— |
|
1,544,979 |
|
1,544,979 |
|
— |
|
501,318 |
|
501,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current employee Benefit provisions |
|
47,674,090 |
|
10,143,710 |
|
57,817,800 |
|
45,482,776 |
|
2,909,030 |
|
48,391,806 |
CLP |
|
5,769,075 |
|
8,867,752 |
|
14,636,827 |
|
8,115,837 |
|
1,052,395 |
|
9,168,232 |
BRL |
|
28,791,559 |
|
— |
|
28,791,559 |
|
19,586,150 |
|
— |
|
19,586,150 |
ARS |
|
13,113,456 |
|
— |
|
13,113,456 |
|
17,780,789 |
|
— |
|
17,780,789 |
PGY |
|
— |
|
1,275,958 |
|
1,275,958 |
|
— |
|
1,856,635 |
|
1,856,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current non-financial liabilities |
|
2,364,699 |
|
40,008,461 |
|
42,373,160 |
|
1,054,187 |
|
41,240,273 |
|
42,294,460 |
CLP |
|
2,360,088 |
|
39,785,560 |
|
42,145,648 |
|
1,043,048 |
|
41,072,576 |
|
42,115,624 |
ARS |
|
4,611 |
|
— |
|
4,611 |
|
11,139 |
|
— |
|
11,139 |
PGY |
|
— |
|
222,901 |
|
222,901 |
|
— |
|
167,697 |
|
167,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
574,532,577 |
|
118,338,719 |
|
692,871,296 |
|
521,712,552 |
|
427,532,582 |
|
949,245,134 |
USD |
|
37,427,189 |
|
7,601,044 |
|
45,028,233 |
|
34,473,049 |
|
321,176,895 |
|
355,649,944 |
EUR |
|
5,318,315 |
|
388,374 |
|
5,706,689 |
|
3,148,088 |
|
899,198 |
|
4,047,286 |
UF |
|
17,183,688 |
|
13,346,902 |
|
30,530,590 |
|
13,310,761 |
|
11,557,808 |
|
24,868,569 |
CLP |
|
217,022,222 |
|
82,799,183 |
|
299,821,405 |
|
223,145,044 |
|
70,901,442 |
|
294,046,486 |
BRL |
|
204,559,181 |
|
2,829,430 |
|
207,388,611 |
|
134,199,769 |
|
1,703,193 |
|
135,902,962 |
ARS |
|
66,629,249 |
|
5,947,579 |
|
72,576,828 |
|
97,138,305 |
|
17,390,497 |
|
114,528,802 |
PGY |
|
26,392,733 |
|
4,572,790 |
|
30,965,523 |
|
16,297,536 |
|
3,903,548 |
|
20,201,084 |
CHF |
|
— |
|
853,417 |
|
853,417 |
|
— |
|
— |
|
— |
F-88
|
|
12.31.2023 |
|
12.31.2022 |
||||||||||||
|
|
More than 1 year |
|
More than 3 and |
|
|
|
|
|
More than 1 year |
|
More than 3 and |
|
More than |
|
|
NON-CURRENT LIABILITIES |
|
up to 3 |
|
up to 5 |
|
More than 5 years |
|
Total |
|
up to 3 |
|
up to 5 |
|
5 years |
|
Total |
|
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
|
ThCh$ |
Other non-current financial liabilities |
|
39,864,902 |
|
203,951,623 |
|
800,509,308 |
|
1,044,325,833 |
|
40,713,614 |
|
28,457,265 |
|
835,631,179 |
|
904,802,058 |
USD |
|
1,509,143 |
|
1,203,965 |
|
259,130,959 |
|
261,844,067 |
|
1,612,279 |
|
513,738 |
|
251,617,079 |
|
253,743,096 |
EUR |
|
323,054 |
|
357,058 |
|
446,054 |
|
1,126,166 |
|
|
|
|
|
|
|
|
UF |
|
32,606,024 |
|
12,349,672 |
|
486,381,343 |
|
531,337,039 |
|
35,491,226 |
|
15,781,426 |
|
468,927,353 |
|
520,200,005 |
CLP |
|
— |
|
8,500,000 |
|
52,449,925 |
|
60,949,925 |
|
— |
|
8,500,000 |
|
112,175,058 |
|
120,675,058 |
BRL |
|
5,421,424 |
|
5,778,555 |
|
2,101,027 |
|
13,301,006 |
|
3,473,970 |
|
3,662,101 |
|
2,911,689 |
|
10,047,760 |
ARS |
|
5,257 |
|
— |
|
— |
|
5,257 |
|
136,139 |
|
— |
|
— |
|
136,139 |
CHF |
|
— |
|
175,762,373 |
|
— |
|
175,762,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, non-current |
|
2,392,555 |
|
— |
|
— |
|
2,392,555 |
|
3,015,284 |
|
— |
|
— |
|
3,015,284 |
CLP |
|
2,392,555 |
|
— |
|
— |
|
2,392,555 |
|
3,015,284 |
|
— |
|
— |
|
3,015,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable related companies |
|
6,007,041 |
|
— |
|
— |
|
6,007,041 |
|
10,354,296 |
|
— |
|
— |
|
10,354,296 |
BRL |
|
6,007,041 |
|
— |
|
— |
|
6,007,041 |
|
10,354,296 |
|
— |
|
— |
|
10,354,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other provisions, non-current |
|
490,107 |
|
52,997,683 |
|
— |
|
53,487,790 |
|
1,397,148 |
|
45,706,635 |
|
— |
|
47,103,783 |
BRL |
|
— |
|
52,997,683 |
|
— |
|
52,997,683 |
|
— |
|
45,706,635 |
|
|
|
45,706,635 |
ARS |
|
490,107 |
|
— |
|
— |
|
490,107 |
|
1,397,148 |
|
— |
|
— |
|
1,397,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
113,608,651 |
|
47,772,196 |
|
19,089,372 |
|
180,470,219 |
|
26,966,210 |
|
34,088,989 |
|
104,723,357 |
|
165,778,556 |
CLP |
|
94,801,758 |
|
— |
|
1,231,565 |
|
96,033,323 |
|
5,617,287 |
|
38,945 |
|
88,895,598 |
|
94,551,830 |
BRL |
|
— |
|
47,772,196 |
|
— |
|
47,772,196 |
|
— |
|
34,050,044 |
|
— |
|
34,050,044 |
ARS |
|
18,806,893 |
|
— |
|
— |
|
18,806,893 |
|
21,348,923 |
|
— |
|
— |
|
21,348,923 |
PGY |
|
— |
|
— |
|
17,857,807 |
|
17,857,807 |
|
— |
|
— |
|
15,827,759 |
|
15,827,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current employee benefit provisions |
|
15.499.538 |
|
249,254 |
|
2,725,154 |
|
18,473,946 |
|
1,299,511 |
|
60,560 |
|
16,049,722 |
|
17,409,793 |
CLP |
|
14,799,923 |
|
249,254 |
|
2,725,154 |
|
17,774,331 |
|
665,274 |
|
60,560 |
|
16,049,722 |
|
16,775,556 |
ARS |
|
5,242 |
|
— |
|
— |
|
5,242 |
|
10,484 |
|
— |
|
— |
|
10,484 |
PGY |
|
694,373 |
|
— |
|
— |
|
694,373 |
|
623,753 |
|
— |
|
— |
|
623,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-financial liabilities |
|
— |
|
2,506,795 |
|
— |
|
2,506,795 |
|
— |
|
29,589,051 |
|
— |
|
29,589,051 |
BRL |
|
— |
|
2,506,795 |
|
— |
|
2,506,795 |
|
— |
|
29,589,051 |
|
— |
|
29,589,051 |
ARS |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
171,855,753 |
|
307,477,551 |
|
828,330,875 |
|
1,307,664,179 |
|
83,746,063 |
|
137,902,500 |
|
956,404,258 |
|
1,178,052,821 |
USD |
|
1,509,143 |
|
1,203,965 |
|
259,130,959 |
|
261,844,067 |
|
1,612,279 |
|
513,738 |
|
251,617,079 |
|
253,743,096 |
EUR |
|
323,054 |
|
357,058 |
|
446,054 |
|
1,126,166 |
|
|
|
|
|
|
|
|
UF |
|
32,606,024 |
|
12,349,672 |
|
486,381,343 |
|
531,337,039 |
|
35,491,226 |
|
15,781,426 |
|
468,927,353 |
|
520,200,005 |
CLP |
|
111,994,236 |
|
8,749,254 |
|
56,406,644 |
|
177,150,134 |
|
9,297,845 |
|
8,599,505 |
|
217,120,378 |
|
235,017,728 |
BRL |
|
11,428,465 |
|
109,055,229 |
|
2,101,027 |
|
122,584,721 |
|
13,828,266 |
|
113,007,831 |
|
2,911,689 |
|
129,747,786 |
ARS |
|
19,307,499 |
|
— |
|
— |
|
19,307,499 |
|
22,892,694 |
|
— |
|
— |
|
22,892,694 |
PGY |
|
694,373 |
|
— |
|
17,857,807 |
|
18,552,180 |
|
623,753 |
|
— |
|
15,827,759 |
|
16,451,512 |
CHF |
|
— |
|
175,762,373 |
|
— |
|
175,762,373 |
|
— |
|
— |
|
— |
|
— |
32 – SUBSEQUENT EVENTS
No events have occurred subsequent to December 31, 2023, that may significantly affect the Company’s consolidated financial position.
F-89
Exhibit 2.4
Appendix A (“Terms of the Bonds”) to the Bond Purchase and Paying Agency Agreement dated September 18, 2023 among Embotelladora Andina S.A. and UBS AG
The terms and conditions of the bonds (each a “Condition”, and together the “Terms of the Bonds”), issued by Embotelladora Andina S.A., are established pursuant to the Bond Purchase and Paying Agency Agreement. The Terms of the Bonds govern the rights and obligations of the Issuer and the Bondholders (as defined hereinafter) in relation to the Bonds (as defined hereinafter) and are as follows:
1. |
Form, Denomination, Certification, Printing and Delivery of the Bonds |
(a) |
The Bonds are issued in the initial aggregate principal amount of CHF 170,000,000 (one hundred and seventy million Swiss francs, the Aggregate Principal Amount) and are divided into Bonds with denominations of CHF 5,000 (five thousand Swiss francs) per Bond and integral multiples thereof (each, a “Bond”, together the “Bonds”). |
Embotelladora Andina S.A. (the “Issuer”) reserves the right to reopen this issue and increase the aggregate principal amount at any time and without prior consent of or permission of the Bondholders (as defined hereinafter) through the issue of further bonds which will be fungible with the Bonds (i.e. identical especially in respect of the Terms of the Bonds, security number, final maturity and interest rate) (the “Reopening”).
(a) |
The Bonds and all rights attached therewith are documented in the form of a Permanent Global Certificate (the “Permanent Global Certificate”) (Globalurkunde) which shall be deposited by UBS AG in its capacity as the principal paying agent (the “Principal Paying Agent”) with SIX SIS Ltd. in Olten, Switzerland or any other intermediary in Switzerland recognised for such purposes by SIX Swiss Exchange Ltd. (SIX SIS Ltd. or any such other intermediary, the “Intermediary”). Once the Permanent Global Certificate is deposited with the Intermediary and entered into the accounts of one or more participants of the Intermediary, the Bonds will constitute intermediated securities (Bucheffekten) (“Intermediated Securities”) in accordance with the provisions of the Swiss Federal Intermediated Securities Act (Bucheffektengesetz). |
(b) |
Each Holder (as defined hereinafter) shall have a quotal co-ownership interest (Miteigentumsanteil) in the Permanent Global Certificate to the extent of his claim against the Issuer, provided that for so long the Permanent Global Certificate remains deposited with the Intermediary the co-ownership interest shall be suspended and the Bonds may only be transferred or otherwise disposed of in accordance with the provisions of the Swiss Federal Intermediated Securities Act, i.e., by the entry of the transferred Bonds in a securities account (Effektenkonto) of the transferee. |
(c) |
Neither the Issuer nor the Holders shall at any time have the right to effect or demand the conversion of the Permanent Global Certificate into, or the delivery of, uncertificated securities (einfache Wertrechte) or individually certificated bonds (“Definitive Bonds”) (Wertpapiere). |
(d) |
The records of the Intermediary will determine the number of Bonds held through each participant in that Intermediary. In respect of the Bonds held in the form of Intermediated Securities, the Holders |
will be the persons holding the Bonds in a securities account (Effektenkonto) in their own name and for their own account.
(e) |
No physical delivery of the Bonds shall be made unless and until Definitive Bonds shall have been printed. Definitive Bonds may only be printed, in whole, but not in part, if the Principal Paying Agent determines, in its sole discretion, that the printing of the Definitive Bonds is necessary or useful. Should the Principal Paying Agent so determine, it shall provide for the printing of Definitive Bonds without cost to the Holders. If printed, the Definitive Bonds shall be executed by affixing thereon the facsimile signatures of two authorized officers of the Issuer. Upon delivery of the Definitive Bonds, the Permanent Global Certificate will immediately be caused to be cancelled by the Principal Paying Agent and the Definitive Bonds in the form of Intermediated Securities in the Holders’ securities accounts. |
(f) |
Definitive Bonds or coupons which are mutilated, lost or destroyed may be replaced, at any office of the Principal Paying Agent in Switzerland, on payment of such costs as may be incurred in connection therewith, and on such terms as to evidence and indemnity as the Issuer and the Principal Paying Agent may require and, in the case of mutilation, upon surrender of the Bond or coupons. |
2. |
Interest |
2.1 |
Interest Rate |
The Bonds bear interest from (but excluding) 20 September 2023 (the “Payment Date”) at the rate of 2.7175 per cent per annum of the principal amount thereof payable annually in arrears on 20 September of each year (the “Interest Payment Date”) commencing on 20 September 2024 and unless redeemed earlier, ending on (and including) 20 September 2028 (the “Maturity Date”).
The interest calculation is based on the nominal value and on a calendar year of 360 days at twelve (12) months of thirty (30) days each (30/360).
If an Interest Payment Date (other than the Maturity Date (as defined in Condition 2.1 above) falls on a day that is not a Business Day, such Interest Payment Date will be the next succeeding day that is a Business Day (modified business day convention). If the Maturity Date falls on a day that is not a Business Day, the payment of principal and interest will be made on the next Business Day, and no interest shall accrue for the period from and after the Maturity Date until such next Business Day (unadjusted).
“Business Day” means a day (other than Saturday or a Sunday) on which commercial banks are open for domestic business and foreign exchange (including dealings in Swiss Francs) in Zurich, Switzerland.
2.2 |
Accrual of Interest |
Each Bond will cease to bear interest where such Bond is to be redeemed or repaid pursuant to Condition 3 (Redemption and Purchase) or Condition 8 (Events of Default), from and including the due date for redemption or repayment unless, upon due presentation, payment of principal is improperly withheld or refused; in such event such Bond shall continue to bear interest at the aforesaid rate (both before and after judgment) until and including the day on which all sums due in respect of such Bond up to that day are received by the Principal Paying Agent on behalf of the Bondholders.
3. |
Redemption and Purchase |
3.1 |
Redemption at Maturity |
Unless previously purchased and cancelled or redeemed as herein provided, the Bonds will be redeemed by the Issuer at their principal amount (together with unpaid accrued interest to that date) on the Maturity Date.
3.2 |
Early Redemption at the Option of the Issuer |
(a) |
Subject to a period of not less than thirty (30) nor more than sixty (60) days’ prior notice to the Principal Paying Agent, the Issuer may redeem the Bonds at any time after the Payment Date and prior to the Maturity Date, in whole, but not in part only, at par of their aggregate principal outstanding amount plus accrued and unpaid interest, if any, on the date determined by the Issuer for early redemption, if eighty-five (85) per cent or more of the aggregate principal amount of the Bonds have been redeemed or purchased and cancelled at the time of such notice. |
(b) |
Subject to a period of not less than thirty (30) nor more than sixty (60) days’ prior notice to the Principal Paying Agent, the Issuer may redeem the Bonds at any time after the Payment Date and prior to the Maturity Date, in whole, but not in part only, at par of their aggregate principal outstanding amount plus accrued and unpaid interest, if any, on the date determined by the Issuer for early redemption, if as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of Chile or any change in the official application, administration or interpretation of such laws, regulations or rulings, the Issuer has or will become obligated to pay Additional Amounts (as defined in Condition 6 (Taxation)) in respect of interest received on the Notes at a rate of withholding or deduction in excess of 4.0% that is disclosed in the Prospectus under the heading “Taxation – Chilean Taxation – Main consequences under Chilean Tax Law”. |
3.3 |
Purchases |
The Issuer may at any time purchase Bonds in the open market or otherwise at any price and for any purposes (including for cancellation purposes). Any purchases shall be made in accordance with applicable laws or regulations, including applicable stock exchange regulations. Such Bonds may be held, resold or, at the option of the Issuer, surrendered to the Principal Paying Agent for cancellation as set out below.
If purchases are made by public tender, such tender must be available to all Bondholders alike.
3.4 |
Cancellation |
All Bonds which are redeemed or surrendered to the Principal Paying Agent shall immediately be cancelled. All Bonds so cancelled cannot be reissued or resold.
4. |
Status and Negative Pledge |
4.1 |
Unsubordinated debt securities |
The Bonds constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and rank and will rank pari passu without any preference among themselves and with all other present or future direct, unsecured and unsubordinated obligations of the Issuer, except for such preferences as are provided for by any mandatorily applicable provision of law.
4.2 |
Negative Pledge |
So long as any Bond remains outstanding, the Issuer shall not, and the Issuer will procure that its Material Subsidiary (as defined in Condition 8 (Events of Default)) will not create any guarantee, mortgage, lien, pledge, charge or other form of encumbrance or security interest upon the whole or any part of its present or future assets or revenues, to secure any Relevant Indebtedness (as defined hereinafter) of the Issuer or of any other person, unless, at the same time or prior thereto, the Issuer’s obligations under the Bonds (i) are secured equally and ratably therewith by such encumbrance or security interest or benefit from a guarantee or indemnity in substantially identical terms thereto, as the case may be, or (ii) have the benefit of such other security, guarantee, indemnity or other arrangement as shall be approved by the Bondholders’ Representative, provided that the foregoing restriction shall not apply to:
(1) |
any Lien on (x) any Property acquired, constructed, developed, extended, repaired or improved by the Issuer or any Subsidiary (individually or together with other Persons) or any property or assets incidental to the use or operation of such Property (including any real property where such Property is located), (y) any revenue or profit derived from such Property, or (z) any shares or other ownership interests in any Person which holds, owns or is entitled to such Property or the revenue or profit derived therefrom, in each of cases (x), (y) and (z) to the extent it is incurred contemporaneously with, or within 360 days after, such acquisition (or in the case of any such Property constructed, repaired or improved, contemporaneously with, or within 360 days after, the completion or commencement of commercial operation of such Property, whichever is later) to secure or provide for the payment of any part of the purchase price or other consideration of such Property, or the costs of such acquisition, construction, development, extension, repair or improvement (including costs such as escalation, interest during construction and financing and refinancing costs); |
(2) |
any Lien on any Property existing at the time of acquisition thereof or arising after such acquisition pursuant to contractual commitments entered into prior to such acquisition and, in either such case, which is not created in contemplation of such acquisition (unless such Lien was created to secure or provide for payment of any part of the purchase price of such Property and is otherwise permitted by paragraph (1) above); |
(3) |
any Lien on any Property of a Person which is merged or consolidated with or into the Issuer or a Subsidiary or any Lien existing on Property of a Person which existed at the time such Person becomes a Subsidiary or arose after such time under contractual commitments entered into prior to that event and, in all such cases, which is not created in contemplation of any such transaction (unless such Lien was created to secure or provide for the payment of any part of the purchase price of such Person and is otherwise permitted by paragraph (1) above); |
(4) |
any Lien existing on the date the Bonds are issued; |
(5) |
any Lien which secures Indebtedness owing by a Subsidiary to the Issuer or to one or more Subsidiaries; |
(6) |
any Lien resulting from the deposit of funds or evidences of Indebtedness in trust for the purpose of defeasing Indebtedness of the Issuer or any Subsidiary; |
(7) |
any Lien arising solely by operation of law; |
(8) |
any Lien created for the sole purpose of securing Indebtedness that, when incurred, will be applied to repay all (but not only part) of the Bonds and all other amounts payable under the Bonds; provided that the Bonds and all other such amounts are fully satisfied within 30 days after the incurrence of such Indebtedness; |
(9) |
any Lien for taxes, assessments and other governmental charges or levies if such taxes, assessments, governmental charges or levies are not at the time due and payable or are being contested in good faith, or for which such reserves or other appropriate provision, if any, as may be required by IFRS shall have been made; and |
(10) |
any extension, refinancing, renewal or replacement (or successive extensions, renewals, or replacements) in whole or in part, of any Lien referred to in the foregoing clauses; provided that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured at the time of such extension, refinancing, renewal or replacement (plus any premiums, fees and expenses), and that such extension, refinancing, renewal or replacement shall be limited to all or a part of the Property which secured the Lien so extended, refinanced, renewed or replaced (except for Property affixed or appurtenant thereto). |
The Issuer or any Material Subsidiary, however, may incur Indebtedness secured by a Lien which would otherwise be prohibited under the provisions of the Terms of the Bonds described in this Condition or enter into Sale and Leaseback Transactions that would otherwise be prohibited by the provisions of the Terms of the Bonds; provided that the aggregate amount of such Indebtedness of the Issuer and its Material Subsidiaries together with the aggregate Attributable Value of all Sale and Leaseback Transactions of the Issuer and its Material Subsidiaries outstanding at such time that were previously incurred pursuant to this paragraph shall not exceed 20% of Consolidated Assets at the time any such Indebtedness is incurred by the Issuer or any Material Subsidiary or at the time any such Sale and Leaseback Transaction is entered into.
Neither the Issuer nor any Material Subsidiary may enter into any Sale and Leaseback Transaction with respect to any of their Property, unless either (x) the Issuer or such Material Subsidiary would be entitled pursuant to the provisions of the Terms of the Bonds to issue, assume or guarantee Indebtedness (in an amount equal to the Attributable Value with respect to such Sale and Leaseback Transaction) secured by a Lien on such Property without equally and ratably securing the Bonds or (y) the Issuer or such Material Subsidiary shall apply or cause to be applied, in the case of a sale or transfer for cash, an amount equal to the net proceeds thereof and, in the case of a sale or transfer otherwise than for cash, an amount equal to the fair market value (as determined in good faith by the board of directors of the Issuer) of the Property so leased, (A) to the retirement, within 360 days after the effective date of such Sale and Leaseback Transaction, of (i) Indebtedness of the Issuer ranking at least on a parity with the Bonds or (ii) Indebtedness of any Subsidiary, in each case and owing to a Person other than the Issuer or any Affiliate of the Issuer or (B) to the acquisition, construction, development, extension or improvement of any property or assets used or to be used by or on behalf of the Issuer or any Subsidiary in the ordinary course of business or (z) the Issuer or such Material Subsidiary equally and ratably secures the Bonds. The restrictions described in the preceding sentence will not apply to (i) transactions providing for a lease for a term, including any renewal thereof, of not more than five years, (ii) transactions that were or will be sold by the Issuer or any Subsidiary to a lender or investor for a sale price equal to or less than USD 5,000,000 or its equivalent in other currencies and (iii) transactions between the Issuer and a Subsidiary or between Subsidiaries.
Notwithstanding the foregoing, the Issuer and/or any Subsidiary may enter into any Sale and Leaseback Transaction that solely refinances, extends, renews or refunds a Sale and Leaseback Transaction permitted under the preceding paragraph and the restrictions described in the preceding paragraph will not apply to such Sale and Leaseback Transaction.
In these Terms of the Bonds:
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
“Attributable Value” means, as to any particular lease under which the Issuer or any Subsidiary is at any time liable as lessee and any date as of which the amount thereof is to be determined, the lesser of (a) the fair market value of the asset subject to the lease and (b) the total net obligations of the lessee for rental payments during the remaining term of the lease (excluding amounts on account of maintenance and repairs, insurance, taxes, assessments and similar charges and contingent rents) discounted from the respective due dates thereof to such date at a rate per annum equivalent to the interest rate inherent in such lease (as determined in good faith by the Issuer).
“Consolidated Assets” means, as of any date of determination, the total of all assets appearing on a consolidated balance sheet of the Issuer and its Subsidiaries at the end of the fiscal quarter immediately preceding such date of determination, as determined in accordance with IFRS.
“IFRS” means international financial reporting standards or other accounting standards generally accepted in Chile, as required by Financial Market Commission (Comisión para el Mercado Financiero) for Chilean publicly held companies, in each case as in effect from time to time.
“Indebtedness” means, with respect to any Person (without duplication), (a) any liability of such Person (1) for borrowed money, (2) evidenced by a bond, note, debenture or similar instrument, other than, for the avoidance of doubt, account payables in the ordinary course of business, (3) under any reimbursement obligation relating to a letter of credit, other than letters of credit in the ordinary course of business, (4) for the payment of money relating to any obligations under any capital lease of real or personal property and (b) any liability of others described in the preceding clause (a) that the Person has guaranteed, to the extent such guarantee appears on the balance sheet of such Person prepared in accordance with IFRS. For the purpose of determining any particular amount of Indebtedness under this definition, guarantees of (or obligations with respect to letters of credit or financial bonds supporting) Indebtedness otherwise included in the determination of such amount shall not be included.
“Lien” means any mortgage, pledge, lien, security interest, charge or similar encumbrance.
“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.
“Property” means any asset, revenue or any other property, whether tangible or intangible, real or personal, including, without limitation, any right to receive income.
“Sale and Leaseback Transaction” means any transaction or series of related transactions pursuant to which the Issuer or any Subsidiary sells or transfers any Property to any Person with the intention of taking back a lease of such Property pursuant to which the rental payments are calculated to amortize the purchase price of such Property substantially over the useful life thereof, and such Property is in fact so leased.
“Relevant Indebtedness” means any present or future indebtedness of the Issuer or a Material Subsidiary represented or evidenced by notes, bonds, debentures, loan stock or other securities which for the time being are or are capable of being, quoted, listed or ordinarily dealt with on any stock exchange, over-the-counter market or other securities market.
5. |
Payment |
The principal outstanding amount of the Bonds and any other payments in cash to be made under these Conditions will be made when due in freely disposable Swiss francs, which will be deposited with the Principal Paying Agent in Switzerland. If the due date for any payment by the Issuer does not fall on a Business Day, the Issuer undertakes to effect payment for value the Business Day immediately following such due date and the Bondholders will not be entitled to any additional sum in relation thereto.
The receipt by the Principal Paying Agent of the funds in Swiss francs in Switzerland shall release the Issuer of its obligations under the Bonds to the extent of amounts paid by the Issuer. Upon receipt of the funds in Switzerland, the Principal Paying Agent will arrange for payment to the Bondholders.
The Issuer undertakes that payments to be made under these Conditions shall be made in freely disposable Swiss francs without collection cost to the Bondholders, and unless provided for by applicable law, without any restrictions, and whatever the circumstances may be, irrespective of nationality, residence or domicile of the Bondholders and without requiring any affidavit or the fulfilment of any other formality, at the counters of UBS (the “Principal Paying Agent”).
6. |
Taxation |
All payments in respect of the Bonds by or on behalf of the Issuer to the Principal Paying Agent pursuant to these Terms of the Bonds shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Chile or Switzerland, as the case may be, or any political sub-division thereof or any authority therein or thereof having power to tax (“Taxes”), unless such withholding or deduction is required by law or by the interpretation or administration thereof. In the event that any payments by or on behalf of the Issuer to the Principal Paying Agent shall be made subject to such withholding, deduction or payment for any such Taxes, such additional amounts (the “Additional Amounts”) shall be payable by the Issuer as may be necessary in order that the net amounts received by the Principal Paying Agent on behalf of the Holders after such withholding, deduction or payment shall equal the respective amounts which would otherwise have been received by the Principal Paying Agent in respect of the relevant Bonds in the absence of such withholding, deduction or payment. However, no such Additional Amounts shall be payable by the Issuer on account of any Taxes which:
(a)are payable by reason of a holder having, or having had, some personal or business connection with Chile or Switzerland other than the mere holding of the Bonds; or
(b)are required to be made pursuant to laws enacted by Switzerland providing for the taxation of payments according to principles similar to those laid down in the draft legislation proposed by the Swiss Federal Council on April 3, 2020, in particular the principle to have a person other than the Issuer or Guarantor withhold or deduct the tax, such as, without limitation, any paying agent; or
(c)are payable by or on behalf of a holder who would not be liable or subject to the withholding or deduction by making a declaration of non-residence or other similar claim for exemption to the relevant tax authority; or
(d)are payable by reason of a change in law that becomes effective more than thirty (30) days after the relevant payment becomes due, or is duly provided for and notice thereof is published in accordance with Condition 16 (Notices), whichever occurs later; or
(e)where such withholding or deduction is imposed on any payment by reason of FATCA; or
(f)are payable in respect of any estate, inheritance, gift, value added, sales, use, excise, transfer, personal property or similar taxes, duties, assessments or other governmental charges; or
(a)are payable in respect of any Taxes that are payable otherwise than by deduction or withholding from payments on the Bonds; or
(b)are payable in respect of any payment to a holder of a bond that is a fiduciary or partnership (including an entity treated as a partnership for tax purposes) or any Person other than the sole beneficial owner of such payment or bond, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such partnership or the beneficial owner of such payment or bond would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the actual holder of such bond.
7. |
Undertakings |
For as long as any Bond remains outstanding, the Issuer will inform the Principal Paying Agent of any event, circumstance or other matter that may be relevant for the Principal Paying Agent in connection with its functions set forth in these Conditions, and in particular of any event that constitutes an Event of Default.
8. |
Events of Default |
The Principal Paying Agent may, and if so directly requested by a resolution of a meeting of Bondholders shall, subject in each case to being indemnified to its satisfaction, give notice to the Issuer that the outstanding Bonds are immediately due and payable at their principal outstanding amount, together with accrued and unpaid interest and costs, in any of the following events (each an “Event of Default”) unless, prior to the time when the Issuer receives such notice, the relevant Event of Default shall have been cured, to the satisfaction of the Principal Paying Agent or otherwise made good; and except with respect to a reorganization of the Issuer, to the extent the application of this Condition 8 would adversely affect the ranking or priority in right of payment as a result of any insolvency financial protection (protección financiera concursal) set forth in the Chilean Bankruptcy Insolvency Law (Law No. 20,720):
(a) |
if default is made in the payment of any principal of or interest of the Bonds when due and payable, or any of them and such default continues for a period of thirty (30) days next; or |
(b) |
if the Issuer fails to perform or observe any of its obligations under or to procure the performance of any other provisions of the Bonds, not expressly included as an Event of Default, and such default continues for a period of ninety (90) calendar days following the service by the Principal Paying Agent on the Issuer of notice requiring such default to be remedied; or |
(c) |
if the Issuer or any Material Subsidiary (as defined hereinafter) is in default in the fulfilment of a payment obligation in respect of any indebtedness for borrowed money (unless the Bond Agent determines otherwise in good faith as advised by its legal counsels) provided that the aggregate outstanding principal amount in respect of which one or more such defaults occurs is in excess of USD 150,000,000 or its equivalent in other currencies and such default is not remedied within a period of ten (10) days next following such default or the period of grace, if any, applicable thereto and as a result such indebtedness shall have been declared due and payable; or |
(d) |
the Issuer or a Material Subsidiary is (or is deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops or suspends payment of all or a material part of its debts, makes a stay of execution, a postponement of payments (Stillhaltevereinbarung), a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any such debts or a moratorium or postponement of payments (Stillhaltevereinbarung) is agreed or declared in respect of or affecting all or a substantial part of (or a particular type of) the debts of the Issuer or a Material Subsidiary or a liquidator is appointed with respect to the Issuer or a Material Subsidiary; or |
(e) |
a dissolution, winding-up, liquidation or merger involving the Issuer as result of which the Issuer is not the surviving legal entity, unless the successor legal entity assumes all the Issuer’s liabilities of the Bonds. |
“Material Subsidiary” means any Subsidiary included in the Issuer’s consolidated financial statements the assets of which constitute more than 10 per cent of the Issuer’s consolidated assets, or the revenues, of which constitute more than 10 per cent of the Issuer’s consolidated revenues, as the case may be.
“Subsidiary” means any corporation or the business entity of which the Issuer owns or controls (either directly or through one or more Subsidiaries) more than 50% of the issued share capital or other ownership interests, in each case having ordinary voting power to elect or appoint directors, managers or trustees of such corporation or other business entity (whether or not capital stock or other ownership interests or any other class or classes have or might have voting power upon the occurrence of any contingency).
The Issuer undertakes to inform the Principal Paying Agent in its capacity as Bondholders’ representative (the “Bondholders’ Representative”) without delay if any event mentioned under letter (b) through (f) has occurred and to provide the Bondholders’ Representative with all necessary documents and information in connection therewith.
If an Event of Default occurs, the Bondholders’ Representative has the right but not the obligation to serve a written notice of default (“Default Notice”), such notice having the effect that the Bonds shall become immediately due and payable at par plus accrued and unpaid interest, if any, on the day the Default Notice is given. The Bondholders’ Representative is entitled to appoint one or more experts at the expenses of the Issuer for the assistance in making its assessments whether an Event of Default occurred or not.
9. |
Prescription |
Claims for payment of principal and interest cease to be enforceable by legal action in accordance with the applicable statute of limitations under Swiss law (presently after ten (10) years, in case of principal, and after five (5) years, in case of interest, from their relevant due dates).
10. |
Enforcement of Rights |
The Bondholders shall not be entitled to exercise any right or option, if these Conditions provide that such right or option shall be exercised by the Principal Paying Agent on behalf of the Bondholders.
11. |
Meetings of Bondholders; Modifications; Waivers |
a) |
The Bondholders’ Representative or the Issuer may at any time convene a meeting of the Bondholders (a Bondholders’ Meeting). |
If an Event of Default has occurred and is continuing and as long as the Bondholders’ Representative has not exercised its rights under Condition 7 (Undertakings) with respect thereto, the Bondholders who wish that a Bondholders’ Meeting should be convened and who represent at least ten (10) per cent of the aggregate principal amount then outstanding and who are entitled to participate and to vote in accordance with paragraphs f) and h) of this Condition may at any time require the Issuer to convene a Bondholders’ Meeting which shall convene such a meeting as soon as commercially possible upon receipt of such request.
b) |
The costs of such Bondholders’ Meeting shall be borne by the Issuer or, in the case the Issuer is prohibited by law to pay these costs, by the Bondholders convening such meeting (each of these Bondholders shall bear such costs in relation to its respective holding of Bonds at the time of such Bondholders’ request to the Issuer to convene a Bondholders’ Meeting). |
c) |
A Bondholders’ Meeting may consider any matter affecting the interests of the Bondholders (other than matters on which the Bondholders’ Representative has previously exercised its rights contained in |
Condition 8 (Events of Default) above and Condition 12 (Amendment to the Conditions) below), including any modification of, or arrangement in respect of the Terms of the Bonds.
d) |
Notice convening a Bondholders’ Meeting shall be given at least twenty (20) calendar days prior to the proposed date thereof. Such notice shall be given in accordance with Condition 16 (Notices), at the expense of the Issuer. It shall state generally the nature of the business to be transacted at such Bondholders’ Meeting. If an Extraordinary Resolution (as defined below) is being proposed, the wording of the proposed resolution or resolutions shall be indicated. The notice shall specify the day, hour and place of the Bondholders’ Meeting and also the formal requirements referred to in paragraph f) of this Condition. The Issuer (at its head office) and the Bondholders’ Representative (at the specified office) will make a copy of such notice available for inspection by the Bondholders during normal business hours at each of their respective offices. |
e) |
All Bondholders’ Meetings shall be held in Zurich, Switzerland. A chairman (the Chairman) shall be nominated by the Issuer after consultation of the Bondholders’ Representative in writing. If no person has been so nominated or if the nominated person is not present at the Bondholders’ Meeting within thirty (30) minutes after the time fixed for holding the Bondholders’ Meeting, the Bondholders present shall choose the Chairman instead. |
The Chairman shall lead and preside over the Bondholders’ Meeting. Among others, it shall be his duty to determine the presence of persons entitled to vote and to inquire if the necessary quorum (as set forth below) is present. He shall instruct the Bondholders as to the procedure of the Bondholders’ Meeting and the resolutions to be considered. He shall sign the minutes referred to in paragraph l) of this Condition.
In the case of any equality of votes, the Chairman shall have a casting vote.
A declaration by the Chairman that a resolution has been supported or supported by a particular majority in accordance with paragraphs g) and i) of this Condition or not supported or not supported by a particular majority in accordance with paragraphs g) and i) of this Condition shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
f) |
Each person who produces a certificate by a bank in respect of such Bond relating to that Bondholders’ Meeting is entitled to attend and to vote on the resolutions proposed at such Bondholders’ Meeting. Bank certificates shall be dated before the date of the Bondholders’ Meeting and confirm that the respective Bonds are deposited in a securities account (Effektenkonto) with that bank and will remain so deposited with such bank until and including the date of the Bondholders’ Meeting and that the Bank has not issued any other such certificate with respect to such Bonds. |
g) |
The presence quorum necessary in order to vote on resolutions proposed at a Bondholders’ Meeting shall be persons entitled under paragraphs f) and h) of this Condition holding or representing persons holding in the aggregate at least the following percentages of the Aggregate Principal Amount of all Bonds then outstanding: |
Each Ordinary Resolution: twenty-five (25) per cent.
Each Extraordinary Resolution: sixty-six (66) per cent.
The terms Ordinary Resolution and Extraordinary Resolution are defined below.
If within thirty (30) minutes after the time fixed for any Bondholders’ Meeting a sufficient quorum is not present, the Bondholders’ Meeting shall be dissolved.
h) |
Bondholders’ voting rights shall be determined according to the outstanding principal amount of the outstanding Bonds held. Each Bond in denomination of CHF 5’000 shall be entitled to one (1) vote. |
Bonds held by or on behalf of the Issuer or any other natural person or legal entity:
(i) |
which directly or indirectly owns or controls more than fifty (50) per cent. of the equity share capital of the Issuer; or |
(ii) |
of which, in the case of a legal entity, more than fifty (50) per cent. of the equity share capital is controlled by the Issuer directly or indirectly; or |
(iii) |
where the Issuer is in a position to exercise, directly or indirectly, a control over the decisions or actions of such natural person or legal entity or representative thereof, irrespective of whether or not the latter is affiliated to the Issuer, shall not be entitled to vote at a Bondholders’ Meeting. |
i) |
A resolution shall be validly passed if approved by at least of the following percentages of votes cast at a duly convened Bondholders’ Meeting held in accordance with this Condition: |
Each Ordinary Resolution: fifty-one (51) per cent.
Each Extraordinary Resolution: sixty-six (66) per cent.
Every proposal submitted to a Bondholders’ Meeting shall be decided upon a poll.
j) |
Any resolution which is not an Extraordinary Resolution in accordance with paragraph k) of this Condition shall be deemed to be an Ordinary Resolution. |
k) |
An Extraordinary Resolution shall be necessary to decide on the following matters at a Bondholders’ Meeting: |
(i)to postpone the maturity beyond the stated maturity of the principal of any Bonds;
(ii)to reduce the amount of principal payable on any Bonds; or
(iii)to change the date of interest payment on any Bonds; or
(iv) |
to decrease the rate of interest, or to change the method of computation of interest, on any Bonds; or |
(v) |
to change any provision for payment contained in the Terms of the Bonds or the place or the currency of repayment of the principal of any Bonds or interest on any Bonds; or |
(vi) |
to amend or modify or waive the whole or any parts of Condition G or paragraphs f), g), h), i) or k) of this Condition; or |
(vii) |
to create unequal treatment between Bondholders; or |
(viii) |
to convert the Bonds into equity; or |
(ix) |
to change the choice of law and the jurisdiction clause contained in Condition 17 (Governing Law and Jurisdiction). |
The above-mentioned list of issues for which an Extraordinary Resolution shall be necessary is exclusive.
l) |
Any resolution approved at a Bondholders’ Meeting held in accordance with this Condition shall be conclusive and binding on all present or future Bondholders, whether present or not at the Bondholders’ Meeting, regardless of whether such Bondholders have approved such resolution. The Bondholders shall not be entitled to any improvement of their position vis-à-vis the Issuer pursuant to resolution approved at a Bondholders’ Meeting without prior written approval of the Issuer. Any resolution approved at a Bondholders’ Meeting, which increased the obligations of the Issuer under the Terms of the Bonds shall become effective only after written approval of the Issuer. |
Minutes of all resolutions and proceeding at a Bondholders’ Meeting shall be made and signed by the Chairman pursuant to paragraph e) of this Condition.
Notice of any resolution passed at a Bondholders’ Meeting will be published by the Bondholders’ Representative on behalf and at the expense of the Issuer in compliance with Condition 16 (Notices) not less than ten (10) calendar days after the date of the Bondholders’ Meeting. Non-publication of such notice shall not invalidate such resolution.
m) |
If no Bondholder or an insufficient number of Bondholders attend a Bondholders’ Meeting, the right to decide on the redemption of the Bonds or any other measures to protect the interests of the Bondholders available to the Bondholders’ Representative according to the Terms of the Bonds shall revert to the absolute discretion of the Bondholders’ Representative. Any such decision of the Bondholders’ Representative shall be final and binding upon the Issuer and the Bondholders. Notice of any such decision shall be published in accordance with Condition 16 (Notices). |
12. |
Amendment to the Conditions |
The Principal Paying Agent may, without the consent of the Bondholders, agree to any modification or arrangement of the Terms of the Bonds which, in the opinion of the Principal Paying Agent, is of a formal, minor or technical nature or is made to correct a manifest error.
13. |
Substitution of the Issuer |
The Issuer may be replaced by another Issuer (the “New Issuer”) at a later date as the direct debtor of the Bonds, provided that the Issuer shall request prior approval from the Bondholders’ Representative on behalf of the Bondholders. Such approval shall not be unreasonably withheld if,
(a) |
in the sole opinion of the Bondholders’ Representative, (i) the interests of the Bondholders are satisfactorily protected, in particular with regard to their status under applicable tax law (ii) the New Issuer is able to fulfil all payment obligations arising from or in connection with the Bonds and coupons in Swiss Francs and to transfer without restriction all amounts required to be paid under the Bonds and Coupons to the Bondholders’ Representative; |
(b) |
the Issuer and the New Issuer have entered into such documents as are necessary to give effect to such substitution and provided copies of these documents to the Bondholders’ Representative; |
(c) |
the New Issuer has obtained any necessary governmental authorizations of the country of its domicile or its deemed residence; and |
(d) |
the Issuer has issued an irrevocable and unconditional guarantee as per article 111 of the Swiss Code of Obligations in respect to the obligations of the New Issuer under the Bonds in form and content satisfactory to the Bondholders’ Representative. |
The Bondholders’ Representative is entitled to appoint one or more experts at the expenses of the Issuer for the assistance of the Bondholders’ Representative in making its assessments.
Any substitution shall be published in accordance with Condition 16 (Notices). In the event of such substitution, any reference to the Issuer in these Conditions shall be deemed to refer to the New Issuer.
By subscribing to or otherwise acquiring, any of the Bonds or coupons, the Bondholders expressly consent to the Issuer substituting for itself as principal debtor under the Bonds or the coupons the New Issuer subject to the provisions of this Condition 13 (Substitution of the Issuer).
14. |
Listing |
The Issuer will use its reasonable efforts to procure that the Bonds are listed on SIX Swiss Exchange and to maintain such listing during the whole life of the Bonds.
15. |
Severability |
If at any time any or more of the provisions of the Conditions is or becomes unlawful, invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not be in any way affected or impaired thereby.
16. |
Notices |
All notices to Bondholders regarding the Bonds shall be published by the Principal Paying Agent in accordance with the applicable regulations of the SIX Swiss Exchange and the directions by or after consultation with and at the expense of the Issuer in due time and shall be valid as soon as published electronically on the internet website of SIX Swiss Exchange under the section headed “Official Notices” (https://www.six-group.com, where notices are currently published under the address “https://www.six-group.com/en/products-services/the-swiss-stock-exchange/market-data/news-tools/official-notices.html”).
17. |
Governing Law and Jurisdiction |
These Conditions, the Bonds and/or the coupons shall be subject to and governed by substantive Swiss law (i.e. without regard to the principles of conflict of laws).
Any dispute which might arise between Bondholders on the one hand and the Issuer on the other hand regarding these Conditions, the Bonds and/or the coupons shall be settled in accordance with Swiss law, the exclusive place of jurisdiction being Zurich 1, Switzerland, with the right of appeal to the Swiss Federal Court of Justice in Lausanne, when the law permits, the decision of which will be final.
Exhibit 4.7
COCA-COLA PLAZA
ATLANTA, GEORGIA
ADDRESS REPLY TO
P.O. BOX 1734
ATLANTA, GA 30301
404-676-2121
April 14, 2023
PARAGUAY REFRESCOS S.A.
Ruta a Ñemby Km. 3,5, Barcequillo, San Lorenzo
Asunción
Sudan
Greetings:
Reference is made to the Bottler’s Agreement effective September 1, 2015, by and between THE COCA-COLA COMPANY (hereinafter the “Company”) and PARAGUAY REFRESCOS S.A. (hereinafter the “Bottler”), authorizing the Bottler to prepare and package the Beverage COCA-COLA and any ancillary authorizations for other Company Beverages for sale and distribution under the Trade Marks in the specified Territory granted by the Company to the Bottler (hereinafter collectively referred to as the “Bottler’s Agreements”). The terms used herein have the same meaning assigned to them as in the Bottler’s Agreements unless otherwise specifically stated.
The terms of the Bottler’s Agreements are hereby extended from March 1, 2023, the date of expiration thereof, to
March 1, 2028
Except as herein modified, said Bottler's Agreements and all of its stipulations, covenants, agreements, terms, conditions and provisions, shall continue in full force and effect, provided they shall finally terminate on March 1, 2028, without the right of a tacit renewal being claimed by you.
Please indicate your agreement by signing and returning the enclosed two duplicates hereof.
Sincerely, |
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Accepted: |
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THE COCA-COLA COMPANY |
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PARAGUAY REFRESCOS S.A. |
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Authorized Representative |
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Authorized Representative |
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Classified – Confidential
Exhibit 4.10
COCA-COLA PLAZA
ATLANTA, GEORGIA
ADDRESS REPLY TO
P.O. BOX 1734
ATLANTA, GA 30301
404-676-2121
March 6, 2024
Embotelladora Andina S.A.
Av. Miraflores 9153 - Renca
Santiago
Chile
Greetings:
Reference is made to the Bottler’s Agreement effective January 1, 2018, by and between THE COCA-COLA COMPANY (hereinafter the “Company”) and EMBOTELLADORA ANDINA S.A. (hereinafter the “Bottler”), authorizing the Bottler to prepare and package the Beverage COCA-COLA and any ancillary authorizations for other Company Beverages for sale and distribution under the Trade Marks in the specified Territory granted by the Company to the Bottler (hereinafter collectively referred to as the “Bottler’s Agreements”). The terms used herein have the same meaning assigned to them as in the Bottler’s Agreements unless otherwise specifically stated.
The terms of the Bottler’s Agreements are hereby extended from December 31, 2023, the date of expiration thereof, to
December 31, 2024
Except as herein modified, said Bottler's Agreements and all of its stipulations, covenants, agreements, terms, conditions and provisions, shall continue in full force and effect, provided they shall finally terminate on December 31, 2024, without the right of a tacit renewal being claimed by you.
Please indicate your agreement by signing and returning the enclosed two duplicates hereof.
Sincerely, |
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Accepted: |
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THE COCA-COLA COMPANY |
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EMBOTELLADORA ANDINA S.A. |
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Authorized Representative |
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Authorized Representative |
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Classified - Confidential
EXHIBIT 12.1
CERTIFICATION
I, Miguel Ángel Peirano, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Embotelladora Andina S.A.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors: |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
March 27, 2024 |
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/s/ Miguel Ángel Peirano |
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Miguel Ángel Peirano |
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Chief Executive Officer |
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EXHIBIT 12.2
CERTIFICATION
I, Andrés Wainer, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Embotelladora Andina S.A.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors: |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
March 27, 2024 |
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/s/ Andrés Wainer |
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Andrés Wainer |
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Chief Financial Officer |
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EXHIBIT 13.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Embotelladora Andina S.A (the “Company”) on Form 20-F for the fiscal year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Miguel Ángel Peirano, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ MIGUEL ÁNGEL PEIRANO |
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Miguel Ángel Peirano |
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Chief Executive Officer |
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Embotelladora Andina S.A. |
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Dated: March 27, 2024 |
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A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 13.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Embotelladora Andina S.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Andrés Wainer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ ANDRÉS WAINER |
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Andrés Wainer |
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Chief Financial Officer |
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Embotelladora Andina S.A. |
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Dated: March 27, 2024 |
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A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 97
EMBOTELLADORA ANDINA S.A.
CLAWBACK POLICY
1. |
Purpose. The purpose of this Embotelladora Andina S.A. (“Andina”, and jointly with its subsidiaries, the “Company”) Clawback Policy (this “Policy”) is to enable the Company to recover Erroneously Awarded Compensation from Covered Executive Officers. |
2. |
Definitions. As used in this Policy, the following capitalized terms shall have the meanings set forth below. |
a. |
“Accounting Restatement” means an accounting restatement of the Company’s financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or to correct an error that is not material to the previously issued financial statements, but that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. |
b. |
“Accounting Restatement Date” means the earlier to occur of (i) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if the Board’s action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement and (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement. |
c. |
“Applicable Period” means, the three completed fiscal years immediately preceding the Accounting Restatement Date, as well as any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years (except that a transition period that comprises a period of at least nine months shall count as a completed fiscal year). |
d. |
“Board” means the board of directors of Embotelladora Andina S.A. |
e. |
“Covered Executive Officer” means an individual who is currently or previously served as the Company’s principal executive officer, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), vice president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), an officer who performs (or performed) a policy-making function, or any other person who performs (or performed) similar policy-making functions for the Company or is otherwise determined to be an executive officer of Embotelladora Andina S.A. or its subsidiaries. |
f. |
“Erroneously Awarded Compensation” means, the amount of Incentive-Based Compensation actually Received that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received had it been determined based on the restated amounts in such Accounting Restatement, and must be computed without regard to any taxes paid by the relevant Covered Executive |
Officer; provided, however, that for Incentive-Based Compensation based on stock price or total stockholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement: (i) the amount of Erroneously Awarded Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total stockholder return upon which the Incentive-Based Compensation was Received and (ii) the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the New York Stock Exchange (“NYSE”).
g. |
“Financial Reporting Measure” means any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements and any measure that is derived wholly or in part from such measure. |
h. |
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure. Incentive-Based Compensation is deemed “Received” for purposes of this Policy in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of such Incentive-Based Compensation occurs after the end of that period. Notwithstanding the foregoing, compensation amounts shall not be considered “Incentive-Based Compensation” for purposes of the Policy unless such compensation is Received (1) while the Company has a class of securities listed on a US securities exchange and (2) on or after October 2nd, 2023. |
3. |
Administration. This Policy shall be administered by the Audit/Directors Committee of the Board (the “Audit Committee”) or a special committee comprised of members of the Audit Committee. For purposes of this Policy, the body charged with administering this Policy shall be referred to herein as the “Administrator”. The Administrator is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate or advisable for the administration of this Policy. All determinations and decisions made by the Administrator pursuant to the provisions of this Policy shall be final, conclusive and binding on all persons, including the Company, its affiliates, its stockholders and Covered Executive Officers. In the administration of this Policy, the Administrator is authorized and directed to consult with the full Board or such other committees of the Board as may be necessary or appropriate as to matters within the scope of such other committee’s responsibility and authority. Subject to any limitation at applicable law, the Administrator may authorize and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this Policy involving such officer or employee). Any action or inaction by the Administrator with respect to a Covered Executive Officer under this Policy in no way limits the Administrator’s decision to act or not to act with respect to any other Covered Executive Officer under this Policy or under any similar policy, agreement or arrangement, nor shall any such action or inaction serve as a waiver of any rights the Company may have against any Covered Executive Officer other than as set forth in this Policy. |
4. |
Application of this Policy. The Policy applies to each current and former Covered Executive Officer of the Company who serves or served as an Covered Executive Officer at any time during a performance period in respect of which Incentive-Based Compensation is Received, to the extent that any portion of such Incentive Compensation is (a) Received by the Covered Executive Officer during the Applicable Period and (b) determined to have included Erroneously Awarded Compensation. |
5. |
Recovery Erroneously Awarded Compensation. If any Erroneously Awarded Compensation is Received by a Covered Executive Officer, the Company shall reasonably promptly take steps to recover such Erroneously Awarded Compensation, in amounts determined pursuant to this Policy. Recovery under this Policy with respect to a Covered Executive Officer shall not require the finding of any misconduct by such Covered Executive Officer or such Covered Executive Officer being found responsible for the accounting error leading to an Accounting Restatement. In the event of an Accounting Restatement, the method for recouping Erroneously Awarded Compensation shall be determined by the Administrator in its sole and absolute discretion. |
Recovery may include, without limitation, (i) reimbursement of all or a portion of any incentive compensation award, (ii) cancellation of incentive compensation awards and (iii) any other method authorized by applicable law or contract.
Notwithstanding anything in this Policy to the contrary, Erroneously Awarded Compensation need not be recovered pursuant to this Policy if the Administrator (or, if the Administrator is not composed solely of Independent Directors, a majority of the Independent Directors serving on the Board) has determined that recovery would be impracticable solely for the following limited reasons, and subject to the following procedural and disclosure requirements:
a. |
The direct expenses paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered. Before reaching such conclusion, the Administrator must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the NYSE; or |
b. |
Recovery would violate home country law where that law was adopted prior to November 28, 2022; provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to the NYSE, that recovery would result in such a violation, and must provide such opinion to the NYSE. |
6. |
Prohibition on Indemnification and Insurance Reimbursement. The Company is prohibited from indemnifying any Covered Executive Officer against the loss of any Erroneously Awarded Compensation. Further, the Company is prohibited from paying or reimbursing a Covered Executive Officer for the cost of purchasing insurance to cover any such loss. The |
Company is also prohibited from entering into any agreement or arrangement whereby this Policy would not apply or fail to be enforced against a Covered Executive Officer.
7. |
Amendment; Termination. The Board or its Audit/Directors Committee may amend this Policy from time to time in its sole and absolute discretion. The Board may terminate this Policy at any time; provided, that the termination of this Policy would not cause the Company to violate any applicable laws. |
8. |
Effective Date. This Policy shall be effective as of December 1st, 2023 (the “Effective Date”). |
9. |
Versions. In the event of any discrepancy between the English and Spanish versions of this Policy, the English version shall prevail. |
This Policy shall not limit the rights of the Company to take any other actions or pursue other remedies that the Company may deem appropriate under the circumstances and under applicable law.
This Policy is binding and enforceable against all Covered Executive Officers of the Company and their beneficiaries, heirs, executors, administrators or other legal representatives.
