UNITED BREWERIES CO INC | CIK:0000888746 |

Filed: 4/27/2018

Entity registrant name: UNITED BREWERIES CO INC (CIK: 0000888746)

Generator: DataTracks

SEC filing page: http://www.sec.gov/Archives/edgar/data/888746/000129281418001412/0001292814-18-001412-index.htm

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ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory

Note 6 Financial Information as per operating segments

The Company has defined three Operating segments, essentially defined with respect to its revenues in the geographic areas of commercial activity: 1. Chile, 2. International business and 3. Wine.

These Operating segments mentioned are consistent with the way the Company is managed and how results are reported by CCU. These segments reflect separate operating results which are regularly reviewed by the chief operating decision maker in order to make decisions about the resources to be allocated to the segment and assess its performance.

Operating segment	Products and services
Chile	Beers, non-alcoholic beverages, spirits and SSU.
International Business	Beers, cider, non-alcoholic beverages and spirits in Argentina, Uruguay and Paraguay.
Wines	Wines, mainly in export markets to more 80 countries.

Corporate revenues and expenses are presented separately within the Other, in addition in the other presents the elimination of transactions between segments.

The Company does not have any customers representing more than 10% of consolidated revenues.

The detail of the segments is presented in the following tables:

a)	Information as per operating segments for the years ended December 31, 2017 and 2016:

	Chile				International Business				Wines				Others				Total
	2017		2016		2017		2016		2017		2016		2017		2016		2017		2016
	ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$
Sales revenue external customers		1,020,763,055		973,220,715		457,178,413		366,778,056		200,455,713		195,322,270		-		-		1,678,397,181		1,535,321,041
Other income		14,667,777		15,630,481		2,740,533		2,783,615		3,105,064		5,851,015		(549,761)		(688,444)		19,963,613		23,576,667
Sales revenue between segments		11,688,658		8,524,493		398,100		546,972		893,005		228,767		(12,979,763)		(9,300,232)		-		-
Net sales		1,047,119,490		997,375,689		460,317,046		370,108,643		204,453,782		201,402,052		(13,529,524)		(9,988,676)		1,698,360,794		1,558,897,708
Change %		5.0		-		24.4		-		1.5		-		-		-		8.9		-
Cost of sales		(483,604,499)		(471,151,686)		(190,387,412)		(157,485,547)		(126,244,373)		(112,938,261)		1,497,629		(244,422)		(798,738,655)		(741,819,916)
% of Net sales		46.2		47.2		41.4		42.6		61.7		56.1		-		-		47.0		47.6
Gross margin		563,514,991		526,224,003		269,929,634		212,623,096		78,209,409		88,463,791		(12,031,895)		(10,233,098)		899,622,139		817,077,792
% of Net sales		53.8		52.8		58.6		57.4		38.3		43.9		-		-		53.0		52.4
MSD&A (1)		(383,169,121)		(373,407,847)		(225,341,789)		(191,413,501)		(53,941,735)		(52,007,092)		(6,330,835)		(2,714,311)		(668,783,480)		(619,542,751)
% of Net sales		36.6		37.4		49.0		51.7		26.4		25.8		-		-		39.4		39.7
Other operating income (expenses)		2,438,416		1,734,871		678,153		(394,820)		251,765		732,689		687,209		1,043,939		4,055,543		3,116,679
Adjusted operating result (2)		182,784,286		154,551,027		45,265,998		20,814,775		24,519,439		37,189,388		(17,675,521)		(11,903,470)		234,894,202		200,651,720
Change %		18.3		-		117.5		-		(34.1)		-		-		-		17.1		-
% of Net sales		17.5		15.5		9.8		5.6		12.0		18.5		-		-		13.8		12.9
Net financial expense		-		-		-		-		-		-		-		-		(19,115,361)		(14,627,170)
Equity and income of associates and joint ventures		-		-		-		-		-		-		-		-		(8,914,097)		(5,560,522)
Foreign currency exchange differences		-		-		-		-		-		-		-		-		(2,563,019)		456,995
Results as per adjustment units		-		-		-		-		-		-		-		-		(110,539)		(2,246,846)
Other gains (losses)		-		-		-		-		-		-		-		-		(7,716,791)		(8,345,907)
Income before taxes																		196,474,395		170,328,270
Tax income (expense)																		(48,365,976)		(30,246,383)
Net income for year																		148,108,419		140,081,887
Non-controlling interests																		18,501,066		21,624,399
Net income attributable to equity holders of the parent																		129,607,353		118,457,488
Depreciation and amortization		64,807,818		61,736,849		15,568,301		11,928,705		7,505,440		7,078,872		4,317,945		2,783,619		92,199,504		83,528,045
ORBDA (3)		247,592,104		216,287,876		60,834,299		32,743,480		32,024,879		44,268,260		(13,357,576)		(9,119,851)		327,093,706		284,179,765
Change %		14.5		-		85.8		-		(27.7)		-		-		-		15.1		-
% of Net sales		23.6		21.7		13.2		8.8		15.7		22.0		-		-		19.3		18.2

(1)	MSD&A, included Marketing, Selling, Distribution and Administrative expenses.

(2)	Adjusted operating result (for management purposes we have defined as Net income before other gains (losses), net financial expense, equity and income of joint venture, foreign currency exchange differences, result as per adjustment units and income taxes).

(3)	ORBDA (for management purpose we have defined as Adjusted Operating Result before Depreciation and Amortization).

b)	Information as per operating segments for the years ended December 31, 2016 and 2015:

	Chile				International Business				Wines				Others				Total
	2016		2015		2016		2015		2016		2015		2016		2015		2016		2015
	ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$
Sales revenue external customers		973,220,715		885,769,609		366,778,056		400,051,022		195,322,270		184,169,165		-		-		1,535,321,041		1,469,989,796
Other income		15,630,481		16,757,566		2,783,615		4,708,728		5,851,015		5,214,674		(688,444)		1,700,951		23,576,667		28,381,919
Sales revenue between segments		8,524,493		6,932,905		546,972		953,967		228,767		131,209		(9,300,232)		(8,018,081)		-		-
Net sales		997,375,689		909,460,080		370,108,643		405,713,717		201,402,052		189,515,048		(9,988,676)		(6,317,130)		1,558,897,708		1,498,371,715
Change %		9.7		-		(8.8)		-		6.3		-		-		-		4.0		-
Cost of sales		(471,151,686)		(411,375,380)		(157,485,547)		(162,665,341)		(112,938,261)		(105,956,281)		(244,422)		(5,078,249)		(741,819,916)		(685,075,251)
% of Net sales		47.2		45.2		42.6		40.1		56.1		55.9		-		-		47.6		45.7
Gross margin		526,224,003		498,084,700		212,623,096		243,048,376		88,463,791		83,558,767		(10,233,098)		(11,395,379)		817,077,792		813,296,464
% of Net sales		52.8		54.8		57.4		59.9		43.9		44.1		-		-		52.4		54.3
MSD&A (1)		(373,407,847)		(343,380,553)		(191,413,501)		(216,098,525)		(52,007,092)		(51,070,291)		(2,714,311)		(2,015,407)		(619,542,751)		(612,564,776)
% of Net sales		37.4		37.8		51.7		53.3		25.8		26.9		-		-		39.7		40.9
Other operating income (expenses)		1,734,871		626,889		(394,820)		3,315,892		732,689		44,823		1,043,939		217,706		3,116,679		4,205,310
Adjusted operating result (2)		154,551,027		155,331,036		20,814,775		30,265,743		37,189,388		32,533,299		(11,903,470)		(13,193,080)		200,651,720		204,936,998
Change %		(0.5)		-		(31.2)		-		14.3		-		-		-		(2.1)		-
% of Net sales		15.5		17.1		5.6		7.5		18.5		17.2		-		-		12.9		13.7
Net financial expense		-		-		-		-		-		-		-		-		(14,627,170)		(15,255,586)
Equity and income of associates and joint ventures		-		-		-		-		-		-		-		-		(5,560,522)		(5,228,135)
Foreign currency exchange differences		-		-		-		-		-		-		-		-		456,995		957,565
Results as per adjustment units		-		-		-		-		-		-		-		-		(2,246,846)		(3,282,736)
Other gains (losses)		-		-		-		-		-		-		-		-		(8,345,907)		8,512,000
Income before taxes																		170,328,270		190,640,106
Tax income (expense)																		(30,246,383)		(50,114,516)
Net income for year																		140,081,887		140,525,590
Non-controlling interests																		21,624,399		19,717,455
Net income attributable to equity holders of the parent																		118,457,488		120,808,135
Depreciation and amortization		61,736,849		56,698,871		11,928,705		14,334,415		7,078,872		7,568,991		2,783,619		2,964,525		83,528,045		81,566,802
ORBDA (3)		216,287,876		212,029,907		32,743,480		44,600,158		44,268,260		40,102,290		(9,119,851)		(10,228,555)		284,179,765		286,503,800
Change %		2.0		-		(26.6)		-		10.4		-		-		-		(0.8)		-
% of Net sales		21.7		23.3		8.8		11.0		22.0		21.2		-		-		18.2		19.1

(1)	MSD&A, included Marketing, Selling, Distribution and Administrative expenses.

(2)	Adjusted operating result (for management purposes we have defined as Net income before other gains (losses), net financial expense, equity and income of joint venture, foreign currency exchange differences, result as per adjustment units and income taxes).

(3)	ORBDA (for management purpose we have defined as Adjusted Operating Result before Depreciation and Amortization).

Sales information by geographic location

	For the years ended as of December 31,
Net sales per geographical location	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Chile (1)		1,226,668,091		1,176,972,109		1,081,835,420
Argentina (2)		413,466,737		329,585,488		366,886,701
Uruguay		16,402,136		15,204,331		14,432,950
Paraguay		41,823,830		37,135,780		35,216,644
Total		1,698,360,794		1,558,897,708		1,498,371,715

(1)

Includes net sales correspond to Corporate Support Unit and eliminations between geographical locations. Additionally, includes net sales made in Chile of the Wines Operating segment.

(2)

Includes net sales made by the subisiaries Finca La Celia S.A. and Los Huemules SRL., registered under the Wines Operating segment and Chile Operating segment, respectively.

Sales information by customer

	For the years ended as of December 31,
Net Sales	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Domestic sales		1,572,617,473		1,429,152,068		1,374,282,584
Exports sales		125,743,321		129,745,640		124,089,131
Total		1,698,360,794		1,558,897,708		1,498,371,715

Sales information by product category

	For the years ended as of December 31,
Sales information by product category	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Alcoholic business		1,158,451,078		1,041,923,724		1,040,145,164
Non-alcoholic business		519,946,103		493,397,317		429,844,632
Others (1)		19,963,613		23,576,667		28,381,919
Total		1,698,360,794		1,558,897,708		1,498,371,715

(1)

Others consist mainly of sales of by-products and packaging including bottles, pallets, and glasses.

Depreciation and amortization as per operating segments

	For the years ended as of December 31,
Depreciation and amortization	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Chile operating segment		64,807,818		61,736,849		56,698,871
International Business operating segment		15,568,301		11,928,705		14,334,415
Wines operating segment		7,505,440		7,078,872		7,568,991
Others (1)		4,317,945		2,783,619		2,964,525
Total		92,199,504		83,528,045		81,566,802

(1)	Includes depreciation and amortization corresponding to the Corporate Support Units.

Cash flows Operating Segments

	For the years ended as of December 31,
Cash flows Operating Segments	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Cash flows from (used in ) Operating activities		262,161,431		190,014,348		219,510,872
Chile operating segment		161,413,504		152,862,350		49,531,088
International business operating segment		58,773,027		13,065,093		31,975,494
Wines operating segment		16,167,068		32,949,789		30,926,463
Others (1)		25,807,832		(8,862,884)		107,077,827

Cash flows from (used in ) Investing Activities		(173,614,379)		(155,007,390)		(165,810,169)
Chile operating segment		(78,746,298)		(57,119,431)		(59,046,239)
International business operating segment		(32,312,751)		(40,032,866)		(26,457,885)
Wines operating segment		(10,870,574)		(13,499,538)		(9,807,177)
Others (1) (*)		(51,864,756)		(44,355,555)		(70,498,868)

Cash flows from (used in ) Financing Activities		(53,001,198)		(95,059,905)		(82,839,491)
Chile operating segment		(65,996,567)		(90,636,820)		21,923,989
International business operating segment		(8,217,846)		18,820,789		3,431,139
Wines operating segment		(15,171,642)		(18,841,106)		(19,061,949)
Others (1)		36,384,857		(4,402,768)		(89,132,670)

(1)

Others includes Corporate Support Units, due to cash flows are managed by CCU.

(*)

Includes contribution to joint ventures. See Note 8 - Cash and cash equivalents.

Capital expenditures as per operating segments

	For the years ended as of December 31,
Capital expenditures (property, plant and equipment and software additions)	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Chile operating segment		80,866,369		53,809,780		43,771,262
International Business operating segment		32,312,751		39,592,739		27,871,662
Wines operating segment		10,948,212		14,767,858		10,052,863
Others (1)		1,638,148		20,713,048		50,035,135
Total		125,765,480		128,883,425		131,730,922

(1)

Others includes the capital investments corresponding to the Corporate Support Units.

Assets as per operating segments

Assets as per Operating segment	As of December 31, 2017		As of December 31, 2016
	ThCh$		ThCh$
Chile operating segment		1,045,791,551		1,016,261,059
International Business operating segment		274,766,962		257,802,272
Wines operating segment		315,298,950		316,965,318
Others (1)		340,371,624		280,998,674
Total		1,976,229,087		1,872,027,323

(1)

Includes assets corresponding to the Corporate Support Units.

Assets per geographic location

Assets per geographical location	As of December 31, 2017		As of December 31, 2016
	ThCh$		ThCh$
Chile (1)		1,689,394,491		1,600,077,453
Argentina (2)		213,714,384		197,986,123
Uruguay		25,015,615		27,327,545
Paraguay		48,104,597		46,636,202
Total		1,976,229,087		1,872,027,323

(1)

Includes the assets corresponding to the Corporate Support Units and eliminations between geographic location and investments in associates and joint ventures. Additionally, includes part of Wines Operating segment and excludes its argentine subsidiary Finca La Celia S.A.

(2)

Includes the assets of the subisiaries Finca La Celia S.A. and Los Huemules SRL., registered under the Wines Operating segment and Chile Operating segment, respectively.

Liabilites as per operating segments

Liabilities as per Operating segment	As of December 31, 2017		As of December 31, 2016
	ThCh$		ThCh$
Chile operating segment		388,121,093		407,091,622
International Business operating segment		119,351,344		99,700,218
Wines operating segment		95,094,080		104,147,109
Others (1)		146,833,962		60,432,656
Total		749,400,479		671,371,605

(1)

Others includes liabilites corresponding to the Corporate Support Units.

Operating Segment’s additional information

The Consolidated Statement of Income classified according to the Company’s operations management is as follows:

			For the years ended December 31,
CONSOLIDATED STATEMENT OF INCOME	Notes		2017		2016		2015
			ThCh$		ThCh$		ThCh$
Sales revenue external customers				1,678,397,181		1,535,321,041		1,469,989,796
Other income				19,963,613		23,576,667		28,381,919
Net sales				1,698,360,794		1,558,897,708		1,498,371,715
Change %				8.9		4.0		-
Cost of sales				(798,738,655)		(741,819,916)		(685,075,251)
% of Net sales				47.0		47.6		45.7
Gross margin				899,622,139		817,077,792		813,296,464
% of Net sales				53.0		52.4		54.3
MSD&A (1)				(668,783,480)		(619,542,751)		(612,564,776)
% of Net sales				39.4		39.7		40.9
Other operating income (expenses)				4,055,543		3,116,679		4,205,310
Adjusted operating result (2)				234,894,202		200,651,720		204,936,998
Change %				17.1		(2.1)		-
% of Net sales				13.8		12.9		13.7
Net financial expense		32		(19,115,361)		(14,627,170)		(15,255,586)
Equity and income of associates and joint ventures		16		(8,914,097)		(5,560,522)		(5,228,135)
Foreign currency exchange differences		32		(2,563,019)		456,995		957,565
Results as per adjustment units		32		(110,539)		(2,246,846)		(3,282,736)
Other gains (losses)		31		(7,716,791)		(8,345,907)		8,512,000
Income before taxes				196,474,395		170,328,270		190,640,106
Tax income (expense)		24		(48,365,976)		(30,246,383)		(50,114,516)
Net income for year				148,108,419		140,081,887		140,525,590
Non-controlling interests		28		(18,501,066)		(21,624,399)		(19,717,455)
Net income attributable to equity holders of the parent				129,607,353		118,457,488		120,808,135
Depreciation and amortization		29		92,199,504		83,528,045		81,566,802
ORBDA (3)				327,093,706		284,179,765		286,503,800
Change %				15.1		(0.8)		-
% of Net sales				19.3		18.2		19.1

See definition of (1), (2) and (3) in information as per Operating segment under this Note.

The following is a reconciliation of our Net income, the main comparable IFRS measure to Adjusted Operating Result for the years ended December 31, 2017, 2016 and 2015:

	For the years ended December 31,
	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Income from continuing activities		148,108,419		140,081,887		140,525,590
Add (Subtract):
Other gains (losses)		7,716,791		8,345,907		(8,512,000)
Finance income		(5,050,952)		(5,680,068)		(7,845,743)
Finance costs		24,166,313		20,307,238		23,101,329
Share of net loss of joint ventures and associates accounted for using the equity method		8,914,097		5,560,522		5,228,135
Foreign currency exchange differences		2,563,019		(456,995)		(957,565)
Result as per adjustment units		110,539		2,246,846		3,282,736
Tax income (expense)		48,365,976		30,246,383		50,114,516
Adjusted operating result		234,894,202		200,651,720		204,936,998
Depreciation and amortization		92,199,504		83,528,045		81,566,802
ORBDA		327,093,706		284,179,765		286,503,800

The following is a reconciliation of the consolidated amounts presented for MSD&A with the comparable amounts presented on the face of our consolidated statement of income:

	For the years ended December 31.
	2017		2016		2015
	ThCh$		ThCh$		ThCh$
Consolidated statement of income
Distribution costs		(290,227,129)		(270,835,822)		(277,599,722)
Administrative expenses		(142,514,649)		(155,322,295)		(128,135,799)
Other expenses by function		(238,704,061)		(195,412,109)		(209,201,189)
Other expenses included in ´Other expenses by function´		2,662,359		2,027,475		2,371,934
Total MSD&A		(668,783,480)		(619,542,751)		(612,564,776)

Segment information by joint ventures and associates

The Administration of the Company review the financial situation and result of the all of their joint ventures and associated that is described in Note 16.