NOTE 21 — CONTINGENCIES AND COMMITMENTS
21.1Lawsuits and other legal actions:
In the opinion of the Company’s legal counsel, the Parent Company and its subsidiaries do not face judicial or extra-judicial contingencies that might result in material or significant losses or gains, except for the following:
|
1) |
Embotelladora del Atlántico S.A. faces labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling ThCh$1,340,027. 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 ThCh$663,274 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 ThCh$56,607,721. 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 judicial deposits and assets given in pledge to secure the compliance of certain processes, irrespective of whether these have been classified as a possible, probable or remote. The amounts deposited or pledged as legal guarantees as of December 31, 2017 and December 31, 2016, amounted to ThCh$31,953,725 and ThCh$103,351,097 respectively. |
To ensure fulfillment of the obligations arising from judicial proceedings faced in Brazil, Rio de Janeiro Refrescos Ltda., has taken guarantee insurance and guarantee letters amounting to R$682,849,162 with different financial institutions and insurance companies in Brazil, through which these entities after a 0.6% commission, become responsible of fulfilling obligations with the Brazilian tax authorities should any trial result against Rio de Janeiro Refrescos Ltda. Additionally, if the warranty and bail letters are executed, Rio de Janeiro Refrescos Ltda. promises to reimburse to the financial institutions and Insurance Companies any amounts disbursed by them to the Brazilian government.
Main contingencies faced by Rio de Janeiro Refrescos are as follows:
|
a) |
Tax contingencies resulting from credits on tax on industrialized products (IPI). |
Rio de Janeiro Refrescos is a party to a series of proceedings under way, in which the Brazilian federal tax authorities demand payment of value-added tax on industrialized products (Imposto sobre Produtos Industrializados, or IPI) allegedly owed by ex-Companhia de Bebidas Ipiranga. The initial amount demanded reached R$1,330,473,161 (historical amount without adjustments), corresponding to different trials related to the same cause. In September 2014, one of these trials for R$598,745,218, was settled in favor of the Company, and additionally during 2017 several trials were settled in favor of the Company in the amount for R$135,282,155 however, there are new lawsuits arising after the purchase of ex-Companhia de Bebidas Ipiranga (October 2013) that amount to R$331,045,690
The Company rejects the position of the Brazilian tax authority in these procedures and considers that Companhia de Bebidas Ipiranga was entitled to claim IPI tax credits in connection with purchases of certain exempt raw materials from suppliers located in the Manaus free trade zone.
Based on the opinion of its advisers, and judicial outcomes to date, Management estimates that these procedures do not represent probable losses and has not recorded a provision on these matters.
Notwithstanding the above, the IFRS related to business combination in terms of distribution of the purchase price establish that contingencies must be measured one by one according to their probability of occurrence and discounted at fair value from the date on which it is deemed the loss can be generated. According to this criterion, from a total of identified contingencies amounting R$1,082,396,664 (including readjustments of current lawsuits), the Company recorded a provision R$159,293,486 equivalent to ThCh$29,602,682.
|
b) |
Tax contingencies on ICMS and IPI causes. |
They refer mainly to tax settlements issued by advance appropriation of ICMS credits on fixed assets, payment of the replacement of ICMS tax to the operations, untimely IPI credits calculated on bonuses, among other claims.
The Company does not consider that these judgments will result in significant losses, given that their loss, according to its legal counsel, is considered unlikely. However, the accounting standards of financial information related to business combination in terms of distribution of the purchase price, establish contingencies must be valued one by one according to their probability of occurrence and discounted to fair value from the date on which it is deemed that the loss can be generated. According to this criterion, an initial provision has been made in the business combination accounting for an amount of R$37.2 million equivalent to ThCh$ 6,916,453.
|
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 ThCh$7,616,340. Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors. |
|
4) |
Paraguay Refrescos S.A. faces tax, trade, labor and other lawsuits. Accounting provisions have been made for the contingency of any loss because of these lawsuits amounting to ThCh60,078. Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors. |
21.2Direct guarantees and restricted assets:
Guarantees and restricted assets are detailed as follows:
Guarantees that compromise assets including in the financial statements:
|
|
|
Provided by |
|
Committed assets |
|
Balance pending payment on the closing date |
|
||||||
|
Guarantee in favor of |
|
Name |
|
Relationship |
|
Guarantee |
|
Type |
|
12.31.2017 |
|
12.31.2016 |
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
|
Industria Metalúrgica Inamar Ltda. |
|
Embotelladora Andina S.A. |
|
Parent Company |
|
Land |
|
Property, plant and equipment |
|
17,991,202 |
|
17,777,078 |
|
|
Gas Licuado Lipigas S.A |
|
Embotelladora Andina S.A. |
|
Parent Company |
|
Cash and cash equivalents |
|
Trade and other receivables |
|
1,140 |
|
1,140 |
|
|
Nazira Tala |
|
Embotelladora Andina S.A. |
|
Parent Company |
|
Cash and cash equivalents |
|
Trade and other receivables |
|
— |
|
6,924 |
|
|
Hospital Militar |
|
Servicios Multivending |
|
Subsidiary |
|
Cash and cash equivalents |
|
Trade and other receivables |
|
4,727 |
|
4,648 |
|
|
Parque Arauco |
|
Servicios Multivending |
|
Subsidiary |
|
Cash and cash equivalents |
|
Trade and other receivables |
|
5,345 |
|
— |
|
|
Aeropuerto Nuevo Pudahuel |
|
Servicios Multivending |
|
Subsidiary |
|
Cash and cash equivalents |
|
Other receivables |
|
10,129 |
|
— |
|
|
Hospital FACH |
|
Servicios Multivending |
|
Subsidiary |
|
Cash and cash equivalents |
|
Other receivables |
|
697 |
|
— |
|
|
Inmob. E Invers. Supetar Ltda |
|
Transportes Polar S.A. |
|
Subsidiary |
|
Cash and cash equivalents |
|
Other non-current, non-financial assets |
|
4,579 |
|
4,579 |
|
|
Bodegas San Francisco Ltda. |
|
Transportes Polar S.A. |
|
Subsidiary |
|
Cash and cash equivalents |
|
Other non-current, non-financial assets |
|
6,483 |
|
— |
|
|
Maria Lobos Jamet |
|
Transportes Polar S.A. |
|
Subsidiary |
|
Cash and cash equivalents |
|
Trade and other receivables |
|
2,565 |
|
2,565 |
|
|
Reclamaciones Trabajadores |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
4,626,086 |
|
3,833,788 |
|
|
Reclamaciones Civiles Y Tributarias |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
13,104,186 |
|
14,304,401 |
|
|
Instituciones Gubernamentales |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Property, plant and equipment |
|
Property, plant and equipment |
|
14,223,453 |
|
85,212,908 |
|
|
Distribuidora Baraldo S.H. |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
659 |
|
843 |
|
|
Acuña Gomez |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
989 |
|
1,264 |
|
|
Municipalidad San Martin Mza |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
— |
|
15,167 |
|
|
Nicanor López |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
707 |
|
904 |
|
|
Labarda |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
12 |
|
15 |
|
|
Municipalidad Bariloche |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
38,315 |
|
230,599 |
|
|
Municipalidad San Antonio Oeste |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
72,768 |
|
93,005 |
|
|
Municipalidad Carlos Casares |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
2,943 |
|
3,761 |
|
|
Municipalidad Chivilcoy |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
455,104 |
|
581,668 |
|
|
Otros |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
140 |
|
179 |
|
|
Granada Maximiliano |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
5,934 |
|
7,584 |
|
|
Cicsa |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other current, non-financial assets |
|
8,249 |
|
23,468 |
|
|
Locadores Varios |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other current, non-financial assets |
|
53,900 |
|
47,397 |
|
|
Aduana De EZEIZA |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other current, non-financial assets |
|
6,608 |
|
11,226 |
|
|
Municipalidad De Junin |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
5,755 |
|
7,356 |
|
|
Almada Jorge |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
8,853 |
|
11,315 |
|
|
Municipalidad De Picun Leufu |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
128 |
|
163 |
|
|
Farias Matias Luis |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
1,226 |
|
20,367 |
|
|
Gomez Alejandra Raquel |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
62 |
|
79 |
|
|
Lopez Gustavo Gerardo C/Inti Saic Y Otros |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other non-current, non-financial assets |
|
403 |
|
516 |
|
|
Fondo Fima Ahorro Plus C |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Judicial deposit |
|
Other current, financial assets |
|
— |
|
588,485 |
|
|
Fondo Firma Ahorro Pesos C |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Cash and cash equivalents |
|
Other non-current, non-financial assets |
|
— |
|
588,299 |
|
|
Tribunal Superior De Justicia De La Provincia De Córdoba |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Cash and cash equivalents |
|
Other non-current, non-financial assets |
|
519 |
|
— |
|
|
Marcus A.Peña |
|
Paraguay Refrescos |
|
Subsidiary |
|
Building |
|
Property, plant and equipment |
|
3,782 |
|
4,017 |
|
|
Mauricio J Cordero C |
|
Paraguay Refrescos |
|
Subsidiary |
|
Building |
|
Property, plant and equipment |
|
800 |
|
871 |
|
|
José Ruoti Maltese |
|
Paraguay Refrescos |
|
Subsidiary |
|
Building |
|
Property, plant and equipment |
|
715 |
|
755 |
|
|
Alejandro Galeano |
|
Paraguay Refrescos |
|
Subsidiary |
|
Building |
|
Property, plant and equipment |
|
1,107 |
|
— |
|
|
Ana Maria Mazó |
|
Paraguay Refrescos |
|
Subsidiary |
|
Building |
|
Property, plant and equipment |
|
1,054 |
|
— |
|
|
Fondo Fuma Premium B |
|
Fondo Fuma Premium B |
|
Subsidiary |
|
Judicial deposit |
|
Other current, financial assets |
|
— |
|
407,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
50,651,324 |
|
123,795,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees provided without obligation of assets included in the financial statements:
|
|
|
Provided by |
|
Committed assets |
|
Amounts involved |
|
||||||
|
Warranty creditor |
|
Name |
|
Relationship |
|
Guarantee |
|
Type |
|
12.31.2017 |
|
12.31.2016 |
|
|
|
|
|
|
|
|
|
|
|
|
ThCh$ |
|
ThCh$ |
|
|
Importadora Casa y Regalos |
|
Trans-Heca S.A. |
|
Subsidiary |
|
Guarantee insurance |
|
Compliance lease contract |
|
2.050 |
|
2,050 |
|
|
Inmobiliaria e Inversiones Gestion Activa Ltda |
|
Trans-Heca S.A. |
|
Subsidiary |
|
Guarantee insurance |
|
Compliance lease contract |
|
4.585 |
|
4,585 |
|
|
Inmobiliaria Portofino |
|
Red de Transportes comerciales Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Guarantee bond |
|
900 |
|
900 |
|
|
Teléfonica Chile S.A. |
|
Red de Transportes comerciales Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Guarantee bond |
|
1.000 |
|
1,000 |
|
|
Inmobiliaria San Martin Logista S.A |
|
Red de Transportes comerciales Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Guarantee bond |
|
3.461 |
|
3,461 |
|
|
Procesos trabajadores |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Judicial action |
|
1.496.862 |
|
1,236,439 |
|
|
Procesos administrativos |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Judicial action |
|
7.185.511 |
|
4,885,075 |
|
|
Gobierno Federal |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Judicial action |
|
91.903.312 |
|
87,773,855 |
|
|
Gobierno Estadual |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Judicial action |
|
20.527.817 |
|
14,674,244 |
|
|
HSBC |
|
Sorocaba Refrescos S.A. |
|
Associate |
|
Loan |
|
co-signers |
|
3.716.747 |
|
4,108,312 |
|
|
Otros |
|
Rio de Janeiro Refrescos Ltda. |
|
Subsidiary |
|
Guarantee insurance |
|
Judicial action |
|
2.449.103 |
|
2,682,170 |
|
|
Aduana de Ezeiza |
|
Embotelladora del Atlántico S.A. |
|
Subsidiary |
|
Bond insurance |
|
Faithful fulfillment of contract |
|
63.777 |
|
1,142,642 |
|
|
Aduana de Ezeiza |
|
Andina Empaques S.A. |
|
Subsidiary |
|
Bond insurance |
|
Faithful fulfillment of contract |
|
347.990 |
|
369,963 |
|