SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of August, 2013
Commission File Number 1-15194
COMPANHIA DE BEBIDAS DAS AMÉRICAS-AMBEV
(Exact name of registrant as specified in its charter)
American Beverage Company-AMBEV
(Translation of Registrant's name into English)
Rua Dr. Renato Paes de Barros, 1017 - 4
th
Floor
04530-000 São Paulo, SP
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
Companhia de Bebidas das Américas - AmBev
Interim Consolidated Financial Statements as at June 30, 2012
and Report on Review of
Consolidated Interim
Accounting Informaiton
Report on Review of Consolidated Interim
Accounting Information
To the Board of Directors and Shareholders
Companhia de Bebidas das Américas – AmBev
Introduction
We have reviewed the accompanying consolidated interim accounting information of Companhia de Bebidas das Américas – AmBev, included in the Quarterly Information Form ( ITR) for the quarter ended June 30, 2013, comprising the interim consolidated balance sheet at that date and the interim consolidated income statements, interim consolidated statements of comprehensive income for the quarter and six-month periods then ended, and the interim consolidated statements of changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of the consolidated interim accounting information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC) and International Accounting Standard (IAS) 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on this consolidated interim accounting information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the
interim information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34, applicable to the preparation of the consolidated interim accounting information.
Other matters
Statement of value added
We have also reviewed the interim consolidated value added statements for the six-month period ended June 30, 2013, considered to be supplementary information under IFRS which does not require the presentation of the statement of value added. This statement has been submitted to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects, in a manner consistent with the consolidated interim accounting information taken as a whole.
São Paulo, July 30,
2013.
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Eduardo Rogatto Luque
Contador CRC 1SP166259/O-4
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Interim Consolidated Balance Sheets
As of June 30, 2013 and December 31, 2012
(Expressed in thousands of Brazilian Reais)
Assets
|
Note
|
06/30/2013
|
12/31/2012
|
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
4,435,765
|
8,926,165
|
Investment securities
|
4
|
486,133
|
476,607
|
Trade and other receivables
|
|
4,256,192
|
4,268,221
|
Inventories
|
5
|
2,726,250
|
2,466,341
|
Taxes receivable
|
|
109,998
|
114,502
|
Assets held for sale
|
|
-
|
4,086
|
|
|
12,014,338
|
16,255,922
|
|
|
|
|
Non-current assets
|
|
|
|
Investment securities
|
4
|
246,662
|
249,379
|
Trade and other receivables
|
|
1,930,007
|
1,855,013
|
Deferred tax assets
|
6
|
1,913,318
|
1,418,515
|
Taxes receivable
|
|
10,843
|
12,316
|
Employee benefits
|
|
25,480
|
25,480
|
Investments in associates
|
|
18,117
|
24,012
|
Property, plant and equipment
|
7
|
11,717,979
|
11,412,280
|
Intangible assets
|
|
3,139,819
|
2,935,396
|
Goodwill
|
8
|
19,966,183
|
19,971,456
|
|
|
38,968,408
|
37,903,847
|
|
|
|
|
Total assets
|
|
50,982,746
|
54,159,769
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Interim Consolidated Balance Sheets (continued)
As of June 30, 2013 and December 31, 2012
(Expressed in thousands of Brazilian Reais)
Equity and Liabilities
|
Note
|
06/30/2013
|
12/31/2012
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
8,282,429
|
13,570,776
|
Interest-bearing loans and borrowings
|
9
|
897,002
|
837,772
|
Bank overdrafts
|
|
-
|
123
|
Income tax and social contribution payable
|
|
736,860
|
972,556
|
Provisions
|
10
|
140,022
|
137,452
|
|
|
10,056,313
|
15,518,679
|
|
|
|
|
Non-current liabilities
|
|
|
|
Trade and other payables
|
|
3,280,231
|
3,063,989
|
Interest-bearing loans and borrowings
|
9
|
2,111,693
|
2,305,957
|
Deferred tax liabilities
|
6
|
1,138,266
|
1,048,343
|
Provisions
|
10
|
458,387
|
518,076
|
Employee benefits
|
|
1,834,645
|
1,780,908
|
|
|
8,823,222
|
8,717,273
|
|
|
|
|
Total liabilities
|
|
18,879,535
|
24,235,952
|
|
|
|
|
Equity
|
11
|
|
|
Share capital
|
|
12,742,017
|
12,187,349
|
Reserves
|
|
14,534,961
|
16,676,395
|
Retained earnings
|
|
3,711,327
|
-
|
Equity attributable to equity holders of Ambev
|
|
30,988,305
|
28,863,744
|
|
|
|
|
Non-controlling interests
|
|
1,114,906
|
1,060,073
|
|
|
|
|
Total equity and liabilities
|
|
50,982,746
|
54,159,769
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Interim Consolidated Income Statements
For the six and three-month period ended June 30, 2013 and 2012
(Expressed in thousands of Brazilian Reais)
|
|
Six-month period ended:
|
|
Three-month period ended:
|
|
Note
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Net sales
|
13
|
15,275,939
|
14,061,117
|
|
7,503,133
|
6,825,403
|
Cost of sales
|
|
(5,215,093)
|
(4,612,360)
|
|
(2,592,270)
|
(2,299,979)
|
Gross profit
|
|
10,060,846
|
9,448,757
|
|
4,910,863
|
4,525,424
|
|
|
|
|
|
|
|
Sales and marketing expenses
|
|
(4,073,523)
|
(3,553,091)
|
|
(2,084,616)
|
(1,804,658)
|
Administrative expenses
|
|
(748,180)
|
(674,139)
|
|
(396,440)
|
(356,893)
|
Other operating income/(expenses)
|
14
|
608,257
|
308,477
|
|
294,759
|
169,292
|
Income from operations before special items
|
|
5,847,400
|
5,530,004
|
|
2,724,566
|
2,533,165
|
|
|
|
|
|
|
|
Special items
|
|
(6,245)
|
(26,774)
|
|
(5,269)
|
(26,774)
|
Income from operations
|
|
5,841,155
|
5,503,230
|
|
2,719,297
|
2,506,391
|
|
|
|
|
|
|
|
Finance cost
|
16
|
(795,430)
|
(600,156)
|
|
(398,024)
|
(309,573)
|
Finance income
|
16
|
286,584
|
331,689
|
|
129,865
|
123,744
|
Net finance cost
|
|
(508,846)
|
(268,467)
|
|
(268,159)
|
(185,829)
|
|
|
|
|
|
|
|
Share of results of associates
|
|
1,785
|
59
|
|
97
|
(301)
|
Income before income tax
|
|
5,334,094
|
5,234,822
|
|
2,451,235
|
2,320,261
|
|
|
|
|
|
|
|
Income tax expense
|
17
|
(1,034,313)
|
(971,261)
|
|
(527,947)
|
(391,206)
|
Net income
|
|
4,299,781
|
4,263,561
|
|
1,923,288
|
1,929,055
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Equity holders of Ambev
|
|
4,225,971
|
4,218,112
|
|
1,882,440
|
1,903,839
|
Non-controlling interests
|
|
73,810
|
45,449
|
|
40,848
|
25,216
|
|
|
|
|
|
|
|
Basic earnings per share – preferred
|
|
1.42
|
1.43
|
|
0.63
|
0.64
|
Diluted earnings per share– preferred
|
|
1.42
|
1.42
|
|
0.63
|
0.64
|
Basic earnings per share – common
|
|
1.29
|
1.30
|
|
0.58
|
0.58
|
Diluted earnings per share– common
|
|
1.29
|
1.29
|
|
0.57
|
0.58
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Interim Consolidated Statements of Comprehensive Income
For the six and three-month period ended June 30, 2013 and 2012
(Expressed in thousands of Brazilian Reais)
|
Six-month period ended:
|
|
Three-month year ended:
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Net income
|
4,299,781
|
4,263,561
|
|
1,923,288
|
1,929,055
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations (gains/ (losses))
|
175,474
|
542,052
|
|
350,539
|
596,778
|
Actuarial gains and (losses)
|
7,326
|
(46,181)
|
|
6,528
|
(28,565)
|
Gains/losses of non-controlling interest´s share
|
-
|
866,606
|
|
-
|
866,606
|
Put option of a subsidiary interest
|
-
|
(1,958,262)
|
|
-
|
(1,958,262)
|
Change in adjustment international standards
|
-
|
60,718
|
|
-
|
-
|
Cash flow hedges - gains / (losses)
|
|
|
|
|
|
Recognized in Equity (cash flow hedge)
|
65,948
|
364,087
|
|
215,765
|
348,993
|
Removed from Equity and included in profit or loss
|
(72,945)
|
(211,541)
|
|
(20,535)
|
(121,927)
|
Deferred income tax variance in Equity and other changes
|
(2,302)
|
(85,570)
|
|
(60,340)
|
(122,840)
|
Total cash flow hedges
|
(9,299)
|
66,976
|
|
134,890
|
104,226
|
Net income (loss) recognized directly in Equity
|
173,501
|
(468,091)
|
|
491,957
|
(419,217)
|
|
|
|
|
|
|
Total comprehensive income
|
4,473,282
|
3,795,470
|
|
2,415,245
|
1,509,838
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
Equity holders of Ambev
|
4,366,709
|
2,877,001
|
|
2,308,528
|
638,813
|
Non-controlling interest
|
106,573
|
918,469
|
|
106,717
|
871,025
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Interim Consolidated Statements of Changes in Equity
(Expressed in thousands of Brazilian Reais)
|
Attributable to equity holders of Ambev
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
Capital reserves
|
Net income reserve
|
Retained earnings
|
Comprehensive Income
|
Total
|
Non-controlling interest
|
Total equity
|
At January 1, 2013
|
12,187,349
|
4,768,925
|
13,254,995
|
-
|
(1,347,525)
|
28,863,744
|
1,060,073
|
29,923,817
|
Effects of changes in accounting standards
|
-
|
-
|
-
|
(253,516)
|
253,516
|
-
|
-
|
-
|
At January 1, 2013 adjusted
|
12,187,349
|
4,768,925
|
13,254,995
|
(253,516)
|
(1,094,009)
|
28,863,744
|
1,060,073
|
29,923,817
|
|
|
|
|
|
|
|
|
|
Net income
|
-
|
-
|
-
|
4,225,971
|
-
|
4,225,971
|
73,810
|
4,299,781
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Translation reserves - gains / (losses)
|
-
|
-
|
-
|
-
|
144,283
|
144,283
|
31,191
|
175,474
|
Cash flow hedges - gains / (losses)
|
-
|
-
|
-
|
-
|
(10,855)
|
(10,855)
|
1,556
|
(9,299)
|
Actuarial gain / (losses)
|
-
|
-
|
-
|
-
|
7,310
|
7,310
|
16
|
7,326
|
Total Comprehensive income
|
-
|
-
|
-
|
4,225,971
|
140,738
|
4,366,709
|
106,573
|
4,473,282
|
Shares issued
|
554,668
|
(373,404)
|
-
|
-
|
-
|
181,264
|
-
|
181,264
|
Put option to acquire interest in a subsidiary
|
-
|
1,980,887
|
-
|
-
|
(2,024,066)
|
(43,179)
|
-
|
(43,179)
|
Gains/(losses) of non-controlling interest´s share
|
-
|
-
|
-
|
-
|
(311,822)
|
(311,822)
|
-
|
(311,822)
|
Dividends
|
-
|
-
|
(1,854,010)
|
-
|
-
|
(1,854,010)
|
(51,740)
|
(1,905,750)
|
Interest on shareholder's equity
|
-
|
-
|
-
|
(261,128)
|
-
|
(261,128)
|
-
|
(261,128)
|
Share-based payment
|
-
|
74,190
|
-
|
-
|
-
|
74,190
|
-
|
74,190
|
Treasury shares
|
-
|
(27,463)
|
-
|
-
|
-
|
(27,463)
|
-
|
(27,463)
|
At June 30, 2013
|
12,742,017
|
6,423,135
|
11,400,985
|
3,711,327
|
(3,289,159)
|
30,988,305
|
1,114,906
|
32,103,211
|
|
Attributable to equity holders of Ambev
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
Capital reserves
|
Net income reserve
|
Retained earnings
|
Comprehensive Income
|
Total
|
Non-controlling interest
|
Total equity
|
At January 1, 2012
|
8,303,936
|
7,030,058
|
12,581,184
|
-
|
(2,303,858)
|
25,611,320
|
217,525
|
25,828,845
|
|
|
|
|
|
|
|
|
|
Net income
|
-
|
-
|
-
|
4,218,112
|
-
|
4,218,112
|
45,449
|
4,263,561
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Change in adjustment international standards
|
-
|
-
|
-
|
-
|
60,718
|
60,718
|
-
|
60,718
|
Translation reserves - gains / (losses)
|
-
|
-
|
-
|
-
|
371,392
|
371,392
|
170,660
|
542,052
|
Cash flow hedges - gains / (losses)
|
-
|
-
|
-
|
-
|
67,407
|
67,407
|
(431)
|
66,976
|
Gains/(losses) of non-controlling interest´s share
|
-
|
-
|
-
|
-
|
163,919
|
163,918
|
702,688
|
866,606
|
Put option to acquire interest in a subsidiary
|
-
|
-
|
-
|
-
|
(1,958,262)
|
(1,958,262)
|
-
|
(1,958,262)
|
Actuarial gain / (losses)
|
-
|
-
|
-
|
-
|
(46,284)
|
(46,284)
|
103
|
(46,181)
|
Total Comprehensive income
|
-
|
-
|
-
|
4,218,112
|
(1,341,111)
|
2,877,001
|
918,469
|
3,795,470
|
Shares issued
|
3,439,122
|
(122,491)
|
(3,290,295)
|
-
|
-
|
26,336
|
-
|
26,336
|
Dividends
|
-
|
-
|
(681,355)
|
(177,681)
|
-
|
(859,036)
|
(30,670)
|
(889,706)
|
Share-based payment
|
-
|
54,032
|
-
|
-
|
-
|
54,032
|
-
|
54,032
|
Treasury shares
|
-
|
(20,230)
|
-
|
-
|
-
|
(20,230)
|
-
|
(20,230)
|
Others
|
-
|
-
|
-
|
14,757
|
-
|
14,757
|
-
|
14,757
|
At June 30, 2012
|
11,743,058
|
6,941,369
|
8,609,534
|
3,078,986
|
(3,644,969)
|
26,727,978
|
1,105,324
|
27,833,302
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Interim Consolidated Cash Flow Statements
For the six and three-month period ended June 30, 2013 and 2012
(Expressed in thousands of Brazilian Reais)
|
|
Six-month period ended:
|
|
Three-month period ended:
|
|
Note
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Net income
|
|
4,299,781
|
4,263,561
|
|
1,923,288
|
1,929,055
|
Depreciation, amortization and impairment
|
|
969,481
|
806,998
|
|
493,331
|
427,873
|
Impairment losses on receivables and inventories
|
|
72,653
|
68,484
|
|
32,306
|
35,848
|
Additions/(reversals) in provisions and employee benefits
|
|
74,378
|
105,933
|
|
25,799
|
58,184
|
Net finance cost
|
16
|
508,846
|
268,467
|
|
268,159
|
185,829
|
Loss/(gain) on sale of property, plant and equipment and intangible assets
|
|
(2,569)
|
3,578
|
|
(7,203)
|
873
|
Loss/(gain) on assets held for sale
|
|
-
|
3,676
|
|
-
|
3,251
|
Equity-settled share-based payment expense
|
18
|
80,763
|
63,162
|
|
37,837
|
30,033
|
Income tax expense
|
17
|
1,034,313
|
971,261
|
|
527,947
|
391,206
|
Share of result of associates
|
|
(1,785)
|
(59)
|
|
(97)
|
301
|
Other non-cash items included in results
|
|
(74,227)
|
(108,567)
|
|
(24,640)
|
(51,595)
|
Cash flow from operating activities before changes in working capital and use of provisions
|
|
6,961,634
|
6,446,494
|
|
3,276,727
|
3,010,858
|
|
|
|
|
|
|
|
Decrease/(increase) in trade and other receivables
|
|
(58,566)
|
161,097
|
|
(243,257)
|
196,765
|
Decrease/(increase) in inventories
|
|
(289,047)
|
(254,640)
|
|
164,972
|
(83,732)
|
Increase/(decrease) in trade and other payables
|
|
(2,313,640)
|
(2,345,780)
|
|
(627,813)
|
(374,903)
|
Cash generated from operations
|
|
4,300,381
|
4,007,171
|
|
2,570,629
|
2,748,988
|
|
|
|
|
|
|
|
Interest paid
|
|
(161,203)
|
(132,866)
|
|
(10,732)
|
(73,593)
|
Interest received
|
|
186,675
|
348,253
|
|
(27,821)
|
150,771
|
Income tax paid
|
|
(1,897,653)
|
(918,665)
|
|
(836,133)
|
(229,376)
|
Cash flow from operating activities
|
|
2,428,200
|
3,303,893
|
|
1,695,943
|
2,596,790
|
|
|
|
|
|
|
|
Proceeds from sale of property, plant and equipment and intangible assets
|
7
|
27,189
|
11,833
|
|
19,776
|
3,676
|
Acquisition of property, plant and equipment and intangible assets
|
7
|
(1,300,095)
|
(993,774)
|
|
(756,441)
|
(628,161)
|
Acquisition of subsidiaries, net of cash acquired
|
|
(169,436)
|
(2,453,302)
|
|
(106,806)
|
(2,453,302)
|
Investment in short term debt securities and net proceeds/(acquisition) of debt securities
|
|
(35,000)
|
(43,787)
|
|
(113,758)
|
1,226,756
|
Net proceeds/(acquisition) of other assets
|
|
(1)
|
(12,970)
|
|
-
|
(6,833)
|
Cash flow from investing activities
|
|
(1,477,343)
|
(3,492,000)
|
|
(957,229)
|
(1,857,864)
|
|
|
|
|
|
|
|
Capital increase
|
11
|
160,344
|
26,336
|
|
4,035
|
20,391
|
Advances for future capital increase
|
|
-
|
170,485
|
|
-
|
170,485
|
Proceeds/repurchase of treasury shares
|
|
(8,920)
|
(20,230)
|
|
(7,407)
|
(20,033)
|
Proceeds from borrowings
|
|
284,295
|
649,290
|
|
275,099
|
(57,466)
|
Repayment of borrowings
|
|
(649,850)
|
(1,318,675)
|
|
(343,534)
|
(335,795)
|
Cash net of finance costs other than interests
|
|
(260,546)
|
(143,270)
|
|
(52,345)
|
(160,191)
|
Payment of finance lease liabilities
|
|
(757)
|
(4,106)
|
|
(386)
|
(3,077)
|
Dividends (paid) / received
|
|
(4,976,017)
|
(2,531,260)
|
|
13,154
|
(2,465,758)
|
Cash flow from financing activities
|
|
(5,451,451)
|
(3,171,430)
|
|
(111,384)
|
(2,851,444)
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
(4,500,594)
|
(3,359,537)
|
|
627,330
|
(2,112,518)
|
Cash and cash equivalents less bank overdrafts at begin of period
|
|
8,926,042
|
8,063,935
|
|
3,665,299
|
6,706,551
|
Effect of exchange rate fluctuations
|
|
10,317
|
185,804
|
|
143,136
|
296,169
|
Cash and cash equivalents less bank overdrafts at end of period
|
|
4,435,765
|
4,890,202
|
|
4,435,765
|
4,890,202
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Interim Consolidated Value Added Statements
Six-month period ended June 30, 2013 and 2012
(Expressed in thousands of Brazilian Reais)
|
Six-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
|
|
Revenues
|
24,052,059
|
22,130,615
|
Sale of goods, products and services
|
23,777,651
|
21,972,979
|
Other operating income
|
301,268
|
209,601
|
Allowance for/reversal of doubful accounts
|
(26,860)
|
(51,965)
|
Input acquired from third parties
|
(8,798,433)
|
(7,712,855)
|
Costs of products, goods and services sold
|
(5,663,620)
|
(5,192,333)
|
Materials - energy - third party services - others
|
(3,103,004)
|
(2,489,417)
|
(Loss)/recovery of assets
|
(31,809)
|
(31,105)
|
Gross added value
|
15,253,626
|
14,417,760
|
Retention
|
(937,668)
|
(775,890)
|
Depreciation and amortization
|
(937,668)
|
(775,890)
|
Net added value produced
|
14,315,958
|
13,641,870
|
Value added received in transfer
|
208,417
|
250,549
|
Share of results of associates
|
1,785
|
59
|
Finance income
|
286,584
|
331,689
|
Others
|
(79,952)
|
(81,199)
|
Total added value to be distribute
|
14,524,375
|
13,892,419
|
Distribution of value added
|
14,524,375
|
13,892,419
|
Employees
|
1,420,213
|
1,429,904
|
Direct remuneration
|
1,130,659
|
1,140,752
|
Benefits
|
112,415
|
111,582
|
Government severance indemnity fund for employees
|
37,807
|
33,692
|
Others
|
139,332
|
143,878
|
Taxes, fees and contribution
|
7,973,358
|
7,550,030
|
Federal
|
4,229,715
|
3,276,911
|
State
|
3,734,995
|
4,264,238
|
Municipal
|
8,648
|
8,881
|
Remuneration of third party capital
|
831,023
|
648,924
|
Interest
|
742,461
|
564,531
|
Rent
|
88,562
|
84,393
|
Remuneration of own capital
|
4,299,781
|
4,263,561
|
Interest on shareholder's equity
|
261,128
|
976,309
|
Dividends
|
-
|
162,758
|
Retained earnings/losses for the period
|
3,964,843
|
3,079,045
|
Non-controlling interest
|
73,810
|
45,449
|
The accompanying notes are an integral part of the interim consolidated financial statements.
Notes to the interim consolidated financial statements:
1.
|
Corporate information
|
2.
|
Statement of compliance
|
3.
|
Summary of significant accounting policies
|
4.
|
Investment securities
|
5.
|
Inventories
|
6.
|
Deferred income tax and social contribution
|
7.
|
Property, plant and equipment
|
8.
|
Goodwill
|
9.
|
Interest-bearing loans and borrowings
|
10.
|
Provisions
|
11.
|
Changes in equity
|
12.
|
Segment reporting
|
13.
|
Net Sales
|
14.
|
Other operating income/(expenses)
|
15.
|
Special items
|
16.
|
Finance cost and income
|
17.
|
Income tax and social contribution
|
18.
|
Share-based payments
|
19.
|
Financial instruments and risks
|
20.
|
Collateral and contractual commitments, advances from customers and other
|
21.
|
Contingencies
|
22.
|
Related parties
|
23.
|
Events after the balance sheet date
|
1. CORPORATE INFORMATION
Companhia de Bebidas das Américas - AmBev (referred to as the “Company” or “Ambev”), headquartered in São Paulo, Brazil; produces and sells beer, draft beer, soft drinks, other non-alcoholic beverages, malt and food in general, either directly or by participating in other Brazilian-domiciled companies and elsewhere in the Americas.
The Company has an agreement with PepsiCo International, Inc. (“PepsiCo”) to bottle, sell and distribute Pepsi products in Brazil and in other Latin American countries, including Pepsi Cola, 7Up, Lipton Ice Tea, Gatorade and H2OH!.
The Company has a licensing agreement with Anheuser-Busch, Inc., to produce, bottle, sell and distribute Budweiser products in Brazil, Canada, Ecuador, Guatemala, Dominican Republic and Paraguay. The Company produces and distributes Stella Artois products under license to Anheuser-Busch InBev S.A./N.V. (“AB InBev”) in Brazil, Canada, Argentina and other countries and, by means of a license granted to AB InBev, it also distributes Brahma’s product in parts of Europe, Asia and Africa.
The Company’s shares are traded on the Brazilian Stock Exchange – BM&FBOVESPA Bolsa de Valores S.A., Mercadorias e Futuros and on the New York Stock Exchange – NYSE, the latter in the form of American Depositary Receipts (“ADRs”).
Major corporate events in 2013:
In January 2013 the subsidiary CRBS S.A. (“CRBS”) acquired all the shares of Bemais Distribuidora de Bebidas Ltda., Laguna Distribuidora de Bebidas Ltda., Casa Pinto Ltda. and Poços Beer Distribuidora de Bebidas Ltda, located in the south of the state of Minas Gerais. The total amount paid for these companies was R$96,100 which generated goodwill of R$90,754. The Company is in the process of finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed in compliance with IFRS 3.
The Company announced to the market on December 7, 2012 its proposed corporate restructuring to transition the Company’s current dual stock capital structure (common shares and preferred shares) to a new, single stock capital structure comprised exclusively of voting Common shares. Ambev S.A. will hold all shares of Ambev (the “Stock Swap Merger”).
On May 10, 2013, the Fiscal Council approved the proposal of the Board of Directors and recommended that the corporate restructuring proposal be submitted for approval at the Extraordinary General Meeting (“EGM”).
On June 17, 2013, as a preliminary step to the corporate restructuring, the parent company AB InBev contributed, through its subsidiaries AmBrew S.A. (“AmBrew”) and Interbrew International BV (“IIBV”), all shares of Ambev to Ambev S.A. (“Contribution Shares”).
10
On June 28, 2013 Ambev announced that the EGM to be held on July 30, 2013 (Note 23 -
Events after the balance sheet date
), would submit the Stock Swap Merger for approval under the terms disclosed whereby each Common and Preferred shares of Ambev, not owned by Ambev S.A. will be exchanged for five new Common shares of Ambev S.A.
Major corporate events between January and June of 2012:
On April 13, 2012 the Company and E. León Jimenes S.A. (“ELJ”), which owns 83.5% of Cervecería Nacional Dominicana S.A. (“CND”), entered into an agreement to combine their businesses in the Caribbean area.
Upon closing of the transaction, Ambev Brasil Bebidas S.A. (“Ambev Brasil”), a closely-held subsidiary of the Company, became indirectly a shareholder, together with ELJ, of Tenedora CND S.A., a holding company which own the shares of CND and 100% of Ambev Dominicana S.A. (“Ambev Dominicana”), with Ambev Brasil owning an indirect interest in CND.
In March 2012, the subsidiary CRBS S.A. acquired Lugano Distribuidora de Bebidas Ltda. (formerly Lambert & Cia. Ltda.), located in the south of Brazil.
In January 2012, in connection with the operational and corporate restructuring of the Ambev Group , the following events occurred: (i) capital contribution with the distribution assets of Ambev in its subsidiary CRBS and (ii) the merger of Morena Distribuidora de Bebidas S.A. by CRBS.
In January 2012, Arosuco Aromas e Sucos Ltda. (“Arosuco”), which is responsible mainly for the production of concentrates needed in the production of soft drinks, teas and sports drinks, acquired all the shares of Lachaise Aromas e Participações Ltda. (“Lachaise”), whose main corporate purpose is the production of flavorings used in the production of concentrates, thus reducing the need for the Ambev Group to acquire the component from third parties. With the objective of streamlining and simplifying the corporate structure of the Ambev Group, Lachaise was merged into Arosuco.
The interim consolidated financial statements were approved by the Board of Directors on July 30, 2013.
2.
STATEMENT OF COMPLIANCE
The interim consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).
The information does not meet all disclosure requirements for the presentation of full annual financial statements and thus should be read in conjunction with the consolidated financial statements prepared in accordance with international financial reporting standards (“IFRS”) for the year ended December 31, 2012. To avoid duplication of disclosures which are included in the annual financial statements, the following notes have been omitted:
(a) Summary of significant accounting policies (Note 3);
(b) Acquisition and disposals of subsidiaries (Note 5);
(c) Payroll and related benefits (Note 9);
(d) Additional information on operating expenses by nature (Note 10);
(e) Intangible assets (Note 15);
(f) Trade and other receivables (Note 19);
(g) Cash and cash equivalents (Note 20);
(h) Interest-bearing loans and borrowings (Note 22);
(i) Employee benefits (Note 23);
(j) Trade and other payables (Note 25);
(k) Operating leases (Note 28);
(l) Contingencies (Note 30);
(m) Group Companies (Note 32);
(n) Insurance (Note 33).
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There were no significant changes in accounting policies for the interim financial statements as of June 30, 2013, in the calculation methods used in relation to those presented in the financial statements for the year ended December 31, 2012, except for the prospective change in the functional currency of certain non-significant malting operation, in accordance with paragraph 35 of IAS 21 – The Effects of Changes in Foreign Exchange Rates, and for the items described below.
Recently issued IFRS
IFRSs with effective application for annual periods beginning on January 1, 2013:
IFRS 10 Consolidated Financial Statements:
Provides a single consolidation model that identifies control as the basis for consolidation for all types of entities.
IFRS 11 Joint Arrangements:
Replaces the current proportionate consolidation method by the equity method in joint arrangements.
IFRS 12 Disclosure of Interests in Other Entities:
Combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities.
IFRS 13 Fair Value Measurement:
It does not establish new requirements for when fair value is required but provides a single source of guidance on how fair value is measured.
IAS 19 Employee Benefits (Revised 2011):
The amendments, due to the revision, that caused the most significant impacts in the Company’s financial statements include:
-
Expected returns on plan assets will no longer be recognized in profit or loss. Expected returns are replaced by recording interest income in profit or loss, which is calculated using the discount rate used to measure the pension obligation.
-
Unvested past service costs can no longer be deferred and recognized over the future vesting period. Instead, all past service costs will be recognized when the Company recognizes related restructuring or termination costs.
IAS 19 (Revised 2011) is effective for annual periods beginning on January 1, 2013 and requires retrospective application. Accordingly, the amounts presented in the consolidated financial statements for the year ended December 31, 2012 are restated below in accordance with IAS 19 (Revised 2011), for comparison purposes.
Similar to the 2012 version of IAS 19, IAS 19 (Revised 2011) does not specify where in profit of loss an entity should present the net interest on net defined benefit liabilities. As a consequence, the Company has determined that, upon initial application of IAS 19 (Revised 2011), the net interest component would be presented as part of the Company’s net finance cost. This change in presentation is consistent with IAS 1, which permits entities to provide disaggregated information in the performance statements.
Had IAS 19 (Revised 2011) been adopted in 2012, the adjusted total pre-tax pension expense would have been 139,489 higher than previously reported. The impact is mainly caused by the change in the calculation of returns on assets afore mentioned. Accordingly, if the Company had presented net interest on net defined benefit liabilities separately from net finance cost, income from operations before special items would be lower by R$57,480, and net finance costs would be higher by R$82,009.
The adjusted figures upon implementation of IAS 19 (Revised 2011) and the previously reported figures are demonstrated below:
Interim Consolidated Income Statements
For the six-month period and the year ended June 30, 2012 and December 31, 2012, respectively
(Expressed in thousands of Brazilian Reais)
|
06/30/2012
|
|
06/30/2012
|
|
12/31/2012
|
|
12/31/2012
|
|
Adjusted
|
|
Reported
|
|
Adjusted
|
|
Reported
|
|
|
|
|
|
|
|
|
Net sales
|
14,061,117
|
|
14,061,117
|
|
32,231,027
|
|
32,231,027
|
Cost of sales
|
(4,612,360)
|
|
(4,613,137)
|
|
(10,289,748)
|
|
(10,291,518)
|
Gross profit
|
9,448,757
|
|
9,447,980
|
|
21,941,279
|
|
21,939,509
|
|
|
|
|
|
|
|
|
Sales and marketing expenses
|
(3,553,091)
|
|
(3,550,916)
|
|
(7,346,589)
|
|
(7,346,589)
|
Administrative expenses
|
(674,139)
|
|
(646,618)
|
|
(1,605,785)
|
|
(1,546,535)
|
Other operating income/(expenses)
|
308,477
|
|
308,477
|
|
863,991
|
|
863,991
|
Income from operations before special items
|
5,530,004
|
|
5,558,923
|
|
13,852,896
|
|
13,910,376
|
|
|
|
|
|
|
|
|
Special items
|
(26,774)
|
|
(26,774)
|
|
(50,378)
|
|
(50,378)
|
Income from operations
|
5,503,230
|
|
5,532,149
|
|
13,802,518
|
|
13,859,998
|
|
|
|
|
|
|
|
|
Finance cost
|
(600,156)
|
|
(560,005)
|
|
(1,556,440)
|
|
(1,474,431)
|
Finance income
|
331,689
|
|
331,689
|
|
661,617
|
|
661,617
|
Net finance cost
|
(268,467)
|
|
(228,316)
|
|
(894,823)
|
|
(812,814)
|
|
|
|
|
|
|
|
|
Share of results of associates
|
59
|
|
59
|
|
481
|
|
481
|
Income before income tax
|
5,234,822
|
|
5,303,892
|
|
12,908,176
|
|
13,047,665
|
|
|
|
|
|
|
|
|
Income tax expense
|
(971,261)
|
|
(979,613)
|
|
(2,388,089)
|
|
(2,405,110)
|
Net income
|
4,263,561
|
|
4,324,279
|
|
10,520,087
|
|
10,642,555
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Equity holders of Ambev
|
4,218,112
|
|
4,278,830
|
|
10,385,598
|
|
10,508,066
|
Non-controlling interests
|
45,449
|
|
45,449
|
|
134,489
|
|
134,489
|
Interim Consolidated Balance Sheets
As of December 31, 2012
There
was
no impact on Equity and Non-Current liabilities.
Except for IAS 19 (Revised 2011), the standards above did not have a significant impact on Ambev’s consolidated financial statements upon initial application.
Other Standards, Interpretations and Amendments to Standards
The additional mandatory amendments with effective application for the financial year beginning on January 1, 2013 have not been listed because of either their non-applicability to or their immateriality to the Company.
4
. INVESTMENT SECURITIES
|
06/30/2013
|
12/31/2012
|
Current investments
|
|
|
Financial asset at fair value through profit or loss-held for trading
|
486,133
|
291,183
|
Equity securities available-for-sale
|
-
|
185,424
|
|
486,133
|
476,607
|
|
|
|
Non-current investments
|
|
|
Equity securities available-for-sale
|
172,004
|
187,943
|
Debt held-to-maturity
|
74,658
|
61,436
|
|
246,662
|
249,379
|
Financial asset
s
at fair value through profit or loss - held for trading
In general, investments in debt securities with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations of the Company.
Financial assets at fair value through profit or loss are presented in Investments activities as part of changes in working capital in the Cash flow statement. Changes in fair values of financial assets at fair value through profit or loss are recorded as net finance cost in the income statement (Note 16 -
Finance cost and income
)
.
Equity securities available-for-sale
Equity securities of R$172,004 (R$187,943 at December 31, 2012), classified as available-for-sale (non-current assets) in the financial statements as of June 30, 2013, refers to the operation on October 20, 2010 pursuant to which Ambev and Cervecería Regional S.A. (“Cervecería Regional”) combined their businesses in Venezuela, whereupon Cervecería Regional assumed an 85% interest and Ambev the remaining 15%, which was recorded at fair value on the purchase date and adjusted by exchange variation, net of reductions in the recoverable amount of the asset. As of June 30, the Company recorded in the income statement an impairment charge of R$29,070 against this investment, mainly as a result of the currency devaluation, registered as other financial cost (Note 16 -
Finance cost and income
)
.
5. INVENTORIES
|
06/30/2013
|
12/31/2012
|
|
|
|
Finished goods
|
1,047,559
|
697,966
|
Work in progress
|
240,246
|
204,455
|
Raw material
|
1,082,394
|
1,195,153
|
Consumables
|
41,327
|
59,470
|
Spare parts and other
|
213,782
|
248,660
|
Prepayments
|
128,101
|
88,346
|
Impairment losses
|
(27,159)
|
(27,709)
|
|
2,726,250
|
2,466,341
|
Losses on inventories recognized in the income statement amounted to
R$45,793
as of June 30, 2013 (R$43,280 in June 30, 2012).
6. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION
Deferred taxes for income tax and social contribution taxes are calculated on tax losses, the negative tax basis of social contributions and the temporary differences between the tax bases and the carrying amount in the financial statement of assets and liabilities. The current tax rates in Brazil, used for deferred taxes, are 25% for income tax and 9% for social contribution. For the other regions, the rates used, including the rates applicable to distribution of dividend, are as follows:
HILA-ex (Guatemala and
Dominican Republic)
|
from 23% to 31%
|
Latin America - South
|
from 14% to 35%
|
Canada Operational
|
26%
|
The deferred taxes by type of temporary difference is detailed as follows:
|
06/30/2013
|
|
12/31/2012
|
|
Assets
|
Liabilities
|
Net
|
|
Assets
|
Liabilities
|
Net
|
Trade and other receivables
|
50,308
|
-
|
50,308
|
|
37,733
|
-
|
37,733
|
Derivatives
|
374,688
|
(5,312)
|
369,376
|
|
294,775
|
(171)
|
294,604
|
Inventories
|
120,300
|
(5,390)
|
114,910
|
|
115,053
|
(609)
|
114,444
|
Loss carryforwards
|
538,548
|
-
|
538,548
|
|
332,633
|
-
|
332,633
|
Tax credits for corporate restructuring
|
54,306
|
-
|
54,306
|
|
229,807
|
-
|
229,807
|
Employee benefits
|
499,723
|
(479)
|
499,244
|
|
523,724
|
-
|
523,724
|
Property, plant and equipment
|
25,546
|
(344,660)
|
(319,114)
|
|
27,647
|
(288,249)
|
(260,602)
|
Intangible assets
|
5,924
|
(620,141)
|
(614,217)
|
|
5,753
|
(610,295)
|
(604,542)
|
Goodwill
|
29,200
|
-
|
29,200
|
|
29,200
|
-
|
29,200
|
Trade and other payables
|
-
|
(515,547)
|
(515,547)
|
|
-
|
(413,921)
|
(413,921)
|
Interest-bearing loans and borrowings
|
120,809
|
-
|
120,809
|
|
120,068
|
(4,419)
|
115,649
|
Provisions
|
266,137
|
(9,162)
|
256,975
|
|
287,908
|
(6,103)
|
281,805
|
Partnership profit
|
-
|
(14,738)
|
(14,738)
|
|
-
|
(291,165)
|
(291,165)
|
Other items
|
204,992
|
-
|
204,992
|
|
-
|
(19,197)
|
(19,197)
|
Gross deferred tax assets / (liabilities)
|
2,290,481
|
(1,515,429)
|
775,052
|
|
2,004,301
|
(1,634,129)
|
370,172
|
Netting by taxable entity
|
(377,163)
|
377,163
|
-
|
|
(585,786)
|
585,786
|
-
|
Net deferred tax assets / (liabilities)
|
1,913,318
|
(1,138,266)
|
775,052
|
|
1,418,515
|
(1,048,343)
|
370,172
|
The Company only offsets the balances of deferred income tax and social contribution assets against liabilities when they are within the same entity and jurisdiction and are expected to be realized in the same period.
Tax losses and negative basis of social contribution and temporary deductible differences in Brazil, on which the deferred income tax and social contribution were calculated, have no expiry date.
At June 30, 2013 the deferred tax assets related to consolidated tax losses has an expected utilization as follows:
|
06/30/2013
|
12/31/2012
|
2013
|
262,802
|
31,090
|
2014
|
61,697
|
79,858
|
2015
|
50,458
|
48,064
|
Beyond 2016 (i)
|
163,591
|
173,621
|
|
538,548
|
332,633
|
(i) There is no expected realization that exceed the period of 10 years.
Part of the tax benefit corresponding to the tax losses from previous periods and temporary differences of subsidiaries abroad was not recorded as an asset, as Management is unable to conclude with a sufficient degree of certainty that realization is probable.
The tax losses carried forward in relation to these unrecognized deferred tax assets are equivalent to approximately R$910,00
0
at June 30, 2013 (R$1.1 billion at December 31, 2012). The total unrecognized deferred tax assets related to tax losses carried forward for these subsidiaries amount to R$230,063 at June 30, 2013 (R$331,151 at December 31, 2012) and the expiry term is on average five years.
The change in net deferred taxes recorded in the consolidated statement of financial position is detailed as follows:
Balance at December 31, 2012
|
370,172
|
Recognized in Income statement
|
(1,034,313)
|
Recognized in Equity
|
1,439,193
|
Balance at June 30, 2013
|
775,052
|
7. PROPERTY, PLANT AND EQUIPMENT
|
06/30/2013
|
|
12/31/2012
|
|
Land and buildings
|
Plant and equipment
|
Fixtures and fittings
|
Under construction
|
Total
|
|
Total
|
Acquisition cost
|
|
|
|
|
|
|
|
Balance at end of previous year
|
4,488,978
|
14,139,613
|
2,825,966
|
1,601,521
|
23,056,078
|
|
19,818,381
|
Effect of movements in foreign exchange
|
45,834
|
153,451
|
20,541
|
3,239
|
223,065
|
|
582,016
|
Acquisitions through business combinations
|
-
|
-
|
-
|
2,590
|
2,590
|
|
721,862
|
Acquisitions
|
4,574
|
118,595
|
19,266
|
1,044,693
|
1,187,128
|
|
2,971,471
|
Disposals
|
(4,925)
|
(204,833)
|
(213,902)
|
-
|
(423,660)
|
|
(941,721)
|
Transfer to other asset categories
|
325,265
|
800,546
|
148,867
|
(1,297,982)
|
(23,304)
|
|
(97,831)
|
Others
|
252
|
495
|
(570)
|
-
|
177
|
|
1,900
|
Balance at end
|
4,859,978
|
15,007,867
|
2,800,168
|
1,354,061
|
24,022,074
|
|
23,056,078
|
|
|
|
|
|
|
|
|
Depreciation and Impairment
|
|
|
|
|
|
|
|
Balance at end of previous year
|
(1,489,346)
|
(8,169,640)
|
(1,984,812)
|
-
|
(11,643,798)
|
|
(10,553,171)
|
Effect of movements in foreign exchange
|
(13,934)
|
(100,992)
|
(13,689)
|
-
|
(128,615)
|
|
(378,608)
|
Depreciation
|
(73,376)
|
(617,998)
|
(159,298)
|
-
|
(850,672)
|
|
(1,560,812)
|
Impairment losses
|
-
|
(31,806)
|
-
|
-
|
(31,806)
|
|
(56,443)
|
Disposals
|
4,686
|
172,692
|
211,575
|
-
|
388,953
|
|
855,779
|
Transfer to other asset categories
|
(7,536)
|
(36,292)
|
4,819
|
-
|
(39,009)
|
|
46,144
|
Others
|
-
|
902
|
(50)
|
-
|
852
|
|
3,313
|
Balance at end
|
(1,579,506)
|
(8,783,134)
|
(1,941,455)
|
-
|
(12,304,095)
|
|
(11,643,798)
|
Carrying amount:
|
|
|
|
|
|
|
|
December 31, 2012
|
2,999,632
|
5,969,973
|
841,154
|
1,601,521
|
11,412,280
|
|
11,412,280
|
June 30, 2013
|
3,280,472
|
6,224,733
|
858,713
|
1,354,061
|
11,717,979
|
|
|
Acquisitions in the period refer substantially to modernization, refurbishment, extension of production lines and construction of new plants in order to increase capacity.
Capitalized interest on loans, which is directly attributable to the acquisition and construction of qualifying assets, is mainly recognized on investments in Brazil. The interest capitalization average rate used in 2013 was 6.36% per year.
The Company leases plant, equipment, fixtures and fittings, which are accounted for as financial leases. The carrying amount of the leased assets was R$21,812 as of June 30, 2013 (R$47,772 as of December 31, 2012).
Contractual commitments to purchase property, plant and equipment amounted to R$199,090 as of June 30, 2013 (R$212,668 as of December 31, 2012).
8. GOODWILL
|
06/30/2013
|
12/31/2012
|
|
|
|
|
|
Balance at the end of previous period
|
19,971,456
|
17,454,019
|
|
Movements in the period
|
(5,273)
|
2,517,437
|
(i)
|
Balance at the end of period
|
19,9
66
,183
|
19,971,456
|
|
|
(i) In 2012, the
change
refers mainly to the acquisition of CND as already presented in the annual financial statement.
The carrying amount of goodwill was allocated to the different cash generating units as follows
:
|
Functional Currency
|
06/30/2013
|
12/31/2012
|
LAN:
|
|
|
|
Brazil
|
BRL
|
685,093
|
594,262
|
Ecuador
|
USD
|
770
|
770
|
Dominican Republic
|
DOP
|
2,
337
,295
|
2,484,679
|
Peru
|
PEN
|
44,468
|
44,479
|
|
|
|
|
LAS:
|
|
|
|
Argentina
|
ARS
|
1,221,852
|
1,227,366
|
Bolivia
|
BOB
|
437,850
|
403,839
|
Paraguay
|
PYG
|
351,495
|
342,207
|
Uruguay
|
UYU
|
86,299
|
83,917
|
|
|
|
|
NA:
|
|
|
|
Canada Holding
|
BRL (i)
|
14,414,448
|
14,414,448
|
Canada Operational
|
CAD
|
386,613
|
375,489
|
|
|
19,966,183
|
19,971,456
|
(i) For acquisitions occurred prior to January 1, 2005, the goodwill was recorded in accordance with the accounting practices adopted in Brazil at that time.
Annual impairment testing
The cash-generating unit to which the goodwill based on expected future profitability was allocated, is tested annually for impairment, or whenever there is an indication that the cash-generating unit is undervalued, comparing its carrying amount (including goodwill based on expected futures profitability) with the recoverable amount of the unit. As of June 30, 2013 the Company had not observed any indication that a cash-generating unit could be undervalued. The impairment test will be performed during the last quarter of the current year.
9. INTEREST-BEARING LOANS AND BORROWINGS
This note provides information about contractual information on the position of loans and financing of the Company. Note 19 -
Financial instruments and risks
discloses additional information with respect to exposure risks of interest rate and currency.
|
06/30/2013
|
12/31/2012
|
|
|
|
Current liabilities
|
|
|
Secured bank loans
|
63,713
|
65,170
|
Unsecured bank loans
|
808,900
|
753,819
|
Other unsecured loans
|
23,320
|
17,200
|
Financial leasing
|
1,069
|
1,583
|
|
897,002
|
837,772
|
|
|
|
Non-current liabilities
|
|
|
Secured bank loans
|
183,546
|
243,833
|
Unsecured bank loans
|
1,365,505
|
1,462,331
|
Debentures and unsecured bond issues
|
410,141
|
429,745
|
Other unsecured loans
|
132,757
|
151,493
|
Financial leasing
|
19,744
|
18,555
|
|
2,111,693
|
2,305,957
|
Contract clauses (covenants)
During the period there were no significant changes in contract clauses of loans and borrowings contracted by the Company.
As of June 30, 2013 the Company was in compliance with all its contractual obligations for its loans and financings.
10. PROVISIONS
|
Balance as of December 31, 2012
|
Effect of changes in foreign exchange rates
|
Provisions made
|
Provisions used and reversed
|
Balance as of June 30, 2013
|
|
|
|
|
|
|
Restructuring
|
|
|
|
|
|
Non-current restructuring
|
4,382
|
130
|
-
|
(3,581)
|
931
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
Civil
|
30,531
|
(799)
|
9,837
|
(10,450)
|
29,119
|
Taxes on sales
|
183,643
|
-
|
49,779
|
(93,666)
|
139,756
|
Income tax
|
150,868
|
728
|
3,155
|
(6,178)
|
148,573
|
Labor
|
180,133
|
271
|
114,694
|
(122,525)
|
172,573
|
Others
|
105,971
|
2,788
|
8,519
|
(9,821)
|
107,457
|
Total
|
651,146
|
2,988
|
185,984
|
(242,640)
|
597,478
|
|
|
|
|
|
|
Total provisions
|
655,528
|
3,118
|
185,984
|
(246,221)
|
598,409
|
|
Total
|
1 year or less
|
1-2 years
|
2-5 years
|
Over 5 years
|
|
|
|
|
|
|
Restructuring
|
|
|
|
|
|
Non-current restructuring
|
931
|
839
|
92
|
-
|
-
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
Civil
|
29,119
|
7,182
|
6,884
|
14,027
|
1,026
|
Taxes on sales
|
139,756
|
41,449
|
30,850
|
62,858
|
4,599
|
Income tax
|
148,573
|
29,103
|
37,491
|
76,390
|
5,589
|
Labor
|
172,573
|
48,935
|
38,799
|
79,055
|
5,784
|
Others
|
107,457
|
12,514
|
29,794
|
60,707
|
4,442
|
Total
|
597,478
|
139,183
|
143,818
|
293,037
|
21,440
|
|
|
|
|
|
|
Total provisions
|
598,409
|
140,022
|
143,910
|
293,037
|
21,440
|
The expected settlement was based on management´s best estimate at the balance sheet date.
Main lawsuits with probable likelihood of loss:
ICMS, IPI, PIS and COFINS (Taxes on sales)
In Brazil, the Company and its subsidiaries are involved in several administrative and judicial proceedings related to ICMS, IPI, PIS and COFINS taxes. Such proceedings include, among others, tax offsets, credits and judicial injunctions exempting tax payment. The provisions for these taxes as of June 30, 2013 are R$139,756 (R$183,643 as of December 31, 2012).
Labor
The Company and its subsidiaries are involved in 4,240 thousand labor proceedings, with probable likelihood of loss, with former employees or former employees of service providers. The main issues involve overtime and related effects and respective charges. The provisions for labor contingencies as of June 30, 2013 was R$172,573 (R$180,133 as of December 31, 2012).
Other lawsuits
The Company is involved in several lawsuits brought by former distributors mainly in Brazil, which are mainly claiming damages resulting from the termination of their contracts.
The lawsuits with possible likelihood of loss are disclosed in Note 21.
11. CHANGES IN EQUITY
(a) Capital stock
Outstanding shares
|
|
|
|
|
|
(in thousand of shares)
|
|
|
06/30/2013
|
|
12/31/2012
|
|
|
|
|
|
|
|
Preferred
|
Common
|
Total
|
|
Total
|
At the end of the previous year
|
1,372,093
|
1,755,466
|
3,127,559
|
|
3,117,797
|
Changes during the year
|
2,858
|
2,520
|
5,378
|
|
9,762
|
|
1,374,951
|
1,757,986
|
3,132,937
|
|
3,127,559
|
Treasury shares
|
|
|
|
|
|
(in thousand of shares)
|
|
|
06/30/2013
|
|
12/31/2012
|
|
Preferred
|
Common
|
Total
|
|
Total
|
At the end of the previous year
|
166
|
484
|
650
|
|
608
|
Changes during the year
|
(4)
|
4
|
-
|
|
42
|
|
162
|
488
|
650
|
|
650
|
Our Common shares grant the right to vote at shareholder meetings. Our Preferred shares are non-voting (except when established in law), but have priority in the return of capital in the event of liquidation and are entitled to a dividend premium of 10% over the amount paid to the Common shareholders. As determined by its By-laws, the Company is required to distribute to its shareholders, as a mandatory dividend in respect of each fiscal year ending on December 31, an amount not less than 35% of its net income determined under Brazilian law, as adjusted in accordance with applicable law, unless payment of such amount would be incompatible with Ambev’s financial situation. The mandatory dividend includes amounts paid as interest on shareholder’s equity.
Changes in equity during the period of 2013:
The Board of Directors meeting held on May 10, 2013 approved, within the limit of the authorized capital of the Company in accordance with article 9 of its By-laws, as well as article 168 of Law No. 6,404/76, as amended, a capital increase of R$11,484, upon issuance of 511 thousand Preferred shares without preemptive rights, pursuant to paragraph 3 of article 171 of Law No. 6,404/76 and the rules established under the Stock Option Plan applicable.
The Board of Directors meeting held on March 27, 2013 approved, within the limit of the authorized capital of the Company in accordance with article 9 of its By-laws, as well as article 168 of Law No. 6,404/76, as amended, a capital increase of R$25,613, upon issuance of 377 thousand Preferred shares without preemptive rights, pursuant to paragraph 3 of article 171 of Law No. 6,404/76 and the rules established under the Stock Option Plan applicable.
Thus, after verification of the subscription and payment by the shareholders of the Company of 2,520 thousand new Common shares and 1,970 thousand Preferred shares were issued as deliberated by the Board of Directors at a meeting held on January 31 and February 1, 2013, increasing capital by R$410,101, of which R$250,764 refers to the capitalization of 70% of the tax benefit earned by the Company upon the partial amortization of the special reserve of goodwill in fiscal year 2012, which was proposed in the Board of Directors held on January 31 and February 1, 2013.
The Board of Directors meeting held on January 31 and February 1, 2013, approved a capital increase of R$107,470, corresponding to the capitalization of 30% of the tax benefit earned by the Company upon the partial amortization of the special reserve of goodwill in fiscal year 2012, without issuing new shares.
After the changes described above, the Company's capital stock was R$12,742,017 as of June 30, 2013, divided into 3,132,937 thousand shares, consisting of 1,757,986 thousand Common shares and 1,374,951 thousand Preferred shares.
Changes in equity during the period of 2012:
The Board of Directors at a meeting held on May 30, 2012, approved and ratified, within the Company’s limit of authorized capital, in accordance with article 9 of its By-laws, as well as article 168 of Law n. 6,404/76, as amended, a capital increase of R$20,391, upon issuance of 1,034 thousand new Preferred shares, with an average issuance price of R$ 19,71 per share, without preemptive rights, pursuant to paragraph 3 of article 171 of Law n. 6,404/76 and the rules established under the Stock Option Plan applicable. Thus, the Company’s capital stock increased from R$ 11,722,667 to R$ 11,743,057, divided into 3,119,162 shares, of which 1,751,135 are Common shares and 1,368,027 are Preferred shares, without par value.
The Extraordinary General Meeting held on April 27, 2012, approved the following destinations to the Company’s capital stock:
i) Capital increase of R$110,964, without issuance of new shares, corresponding to the capitalization of 30% of the tax benefit earned by the Company upon the partial amortization of the Special reserve of goodwill in fiscal year 2011.
ii) Capital increase of R$3,290,295, without issuance of new shares, through the partial capitalization of the Investments Reserve balance on the Equity of the Company.
The
same Extraordinary General Meeting held on April 27, 2012 approved a c
apital increase of a minimum amount of R$258,918 and maximum of R$432,285 through the issuance of: (a) at least 3,157 thousand and a maximum of 4,264 thousand Common shares, without par value, (b) at least 1,506 thousand and a maximum of 3,328 thousand Preferred shares without par value, still subject to approval. After the expiry date for exercising the subscription rights by the shareholders, the Board of Directors will allocate any surplus and, as appropriate, fully or partially approve this capital increase, as it reaches the value minimum threshold.
The Board of Directors at a meeting held on March 22, 2012, approved and ratified, within the Company’s limit of authorized capital, in accordance with article 9 of its By-laws, as well as article 168 of Law No. 6,404/76, as amended, a capital increase of R$17,472, upon issuance of 330 thousand new Preferred shares, without preemptive rights, pursuant to paragraph 3 of article 171 of Law No. 6,404/76 and the rules established under the Stock Option Plan currently in force, fully subscribed by the beneficiaries of the options granted in connection with the Company’s Stock Option Program for 2012. Thus, the Company’s capital stock increased from
R$8,303,936 to R$8,321,408, divided into 3,118,128 shares, of which 1,751,135 are Common shares and 1,366,992 are Preferred shares, without par value.
(b) Authorized capital
The Company is authorized to increase its capital stock up to 3,500,000 thousand shares, without need of by-law amendment, upon the Board of Directors’ resolution, which may resolve on the payment terms and conditions, characteristics of shares to be issued and issuance price, and also establish whether the capital stock shall be increased by means of public or private subscription.
(c) Interest on shareholders’ equity / Dividends
Brazilian companies are permitted to distribute interest attributed to shareholders’ equity calculated based on the long-term interest rate (TJLP), such interest being tax-deductible and, when distributed, may be considered part of the mandatory dividends.
Events during the period of 2013:
Event
|
|
Approval
|
|
Type
|
|
Date of payment
|
|
Type of share
|
|
Ammount per share
|
Total amount
|
|
Board of Directors Meeting
|
|
02/25/2013
|
|
Dividends
|
|
03/28/2013
|
|
Common
|
|
0.5680
|
996,830
|
(i)
|
Board of Directors Meeting
|
|
02/25/2013
|
|
Dividends
|
|
03/28/2013
|
|
Preferred
|
|
0.6248
|
857,180
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
1,854,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board of Directors Meeting
|
|
02/25/2013
|
|
Interest on shareholder's equity
|
|
03/28/2013
|
|
Common
|
|
0.0800
|
140,398
|
|
Board of Directors Meeting
|
|
02/25/2013
|
|
Interest on shareholder's equity
|
|
03/28/2013
|
|
Preferred
|
|
0.0880
|
120,730
|
|
|
|
|
|
|
|
|
|
|
|
|
261,128
|
|
(i) These dividends refer to the total amount approved for distribution in the period, and were accrued in fiscal year of 2012.
Events during the period of 2012:
Event
|
|
Approval
|
|
Type
|
|
Date of payment
|
|
Type of share
|
|
Ammount per share
|
Total amount
|
|
Board of Directors Meeting
|
|
02/17/2012
|
|
Dividends
|
|
04/10/2012
|
|
Common
|
|
0.6000
|
1,050,375
|
(i)
|
Board of Directors Meeting
|
|
02/17/2012
|
|
Dividends
|
|
04/10/2012
|
|
Preferred
|
|
0.6600
|
901,928
|
(i)
|
Board of Directors Meeting
|
|
05/30/2012
|
|
Dividends
|
|
07/27/2012
|
|
Common
|
|
0.2140
|
374,634
|
|
Board of Directors Meeting
|
|
05/30/2012
|
|
Dividends
|
|
07/27/2012
|
|
Preferred
|
|
0.2354
|
321,689
|
|
Board of Directors Meeting
|
|
05/30/2012
|
|
Dividends
|
|
07/27/2012
|
|
Common
|
|
0.0500
|
87,532
|
|
Board of Directors Meeting
|
|
05/30/2012
|
|
Dividends
|
|
07/27/2012
|
|
Preferred
|
|
0.0550
|
75,226
|
|
|
|
|
|
|
|
|
|
|
|
|
2,811,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board of Directors Meeting
|
|
02/17/2012
|
|
Interest on shareholder's equity
|
|
04/10/2012
|
|
Common
|
|
0.1800
|
315,113
|
|
Board of Directors Meeting
|
|
02/17/2012
|
|
Interest on shareholder's equity
|
|
04/10/2012
|
|
Preferred
|
|
0.1980
|
270,578
|
|
Board of Directors Meeting
|
|
05/30/2012
|
|
Interest on shareholder's equity
|
|
07/27/2012
|
|
Common
|
|
0.1200
|
210,077
|
|
Board of Directors Meeting
|
|
05/30/2012
|
|
Interest on shareholder's equity
|
|
07/27/2012
|
|
Preferred
|
|
0.1320
|
180,434
|
|
|
|
|
|
|
|
|
|
|
|
|
976,202
|
|
(i) These dividends refer to the total amount approved for distribution in the period, and were accrued in fiscal year of 2011.
Net income reserve
(d) Statutory Reserve
From net income, 5% will be applied before any other allocation, to the statutory reserve, which shall not exceed 20% of capital stock. The Company is not required to supplement the statutory reserve in the year when the balance of this reserve, plus the amount of capital reserves, exceeds 30% of the capital stock.
The statutory reserve is to preserve capital resources and can only be used to offset losses or increase capital.
(e) Investments reserve
The investment reserve refers to the allocation of profits in order to meet the project business growth, set out in the investment plan of the Company.
(f) Proposed dividends and additional dividends
The reserves for proposed dividends and additional dividends proposed aim to segregate the dividends to be distributed during the following fiscal year.
(g) Hedging reserves
The hedging reserves comprise the effective portion of the cumulative net change in the fair value of cash flow hedges to the extent the hedged risk has not yet impacted profit or loss (Note 19).
(h) Translation reserves
The translation reserves comprise all foreign currency exchange differences arising from the translation of the financial statements with a functional currency different from the Real.
(i) Actuarial gains and losses
The actuarial gains and losses include expectations with regards to the future pension plans obligations . Consequently, the results of actuarial gains and losses are recognized on a timely basis considering best estimate obtained by Management. Accordingly, the Company recognizes on a quarterly basis the results of these estimated actuarial gains and losses according to the expectations presented based on an independent actuarial report.
(j) Share-based payment
Different share-based payment programs and stock option plans allow the Company’s senior management and members of the Board of Directors to receive or acquire shares of the Company.
The share-based payment reserve recorded a charge of
R$82,134
at June 30, 2013 (
R$63,162
at June 30, 2012) (Note 18).
(k)Treasury shares
The treasury shares comprise own issued shares reacquired by the Company. The gains and losses related to share-based payments transactions and resale of treasury shares are recorded in the Result on Treasury Shares reserve.
Change in treasury shares in thousand of Brazilian Reais, for the years ended
|
06/30/2013
|
06/30/2012
|
|
|
|
At the begining of the year
|
(3,875)
|
2,750
|
Shares reacquired in accordance with the stock option plan
|
(8,920)
|
(20,230)
|
Shared-based payments - transfer
|
8,270
|
4,318
|
Shares plans
|
-
|
1,061
|
At the end of the year
|
(4,525)
|
(12,101)
|
(l) Tax incentives
The Company participates in ICMS (VAT) tax benefit programs offered by various States in order to attract investments to their region, in the form of financing, VAT deferral or partial reductions of amounts due. These State programs aim to promote employment, regional decentralization, complementation and diversification of the State’s industrial framework. In these States, the grace and enjoyment periods, reductions and other conditions are provided by the tax legislation.
Some States and Public Prosecutors have filed Direct Actions of Unconstitutionality (ADIs) in the Supreme Court to challenge the constitutionality of certain State laws imposing tax incentive
programs unilaterally, without the prior approval of CONFAZ (the Council formed by all the 27 Treasury Secretaries).
The portion of the expected income for the period relating to tax incentives, which will be used for the net income reserve at the close of the period ended December 31, 2013, and are therefore not available as a basis for distribution of dividends, is composed of:
(Expressed in thousand of Brazilian Reais)
|
|
|
|
06/30/2013
|
06/30/2012
|
|
|
|
ICMS (Brazilian State value added)
|
340,901
|
195,912
|
Income tax
|
21,693
|
43,316
|
|
362,594
|
239,228
|
(m) Other Reserves
|
Attributable to equity holders of Ambev
|
|
Capital reserves
|
|
Net income reserve
|
|
Comprehensive Income
|
|
|
Treasury shares
|
Share Premium
|
Gain on shares issued
|
Others capital reserve
|
Share-based payments
|
Results on treasury shares
|
Capital reserves
|
Investments reserve
|
Statutory reserve
|
Fiscal incentive
|
Additional dividends
|
Net income reserve
|
Translation reserves
|
Cash flow
hedge
|
Gains/losses of non-controlling interest´s share
|
Business combination
|
Put option to acquire interest in a subsidiary
|
Actuarial gains/ losses
|
Comprehensive Income
|
At January 1, 2013
|
(3,875)
|
8,335
|
4,983,374
|
(609,813)
|
554,048
|
(163,144)
|
4,768,925
|
9,748,260
|
208,832
|
1,427,308
|
1,870,595
|
13,254,995
|
(119,788)
|
86,936
|
(5,213)
|
156,091
|
-
|
(1,465,551)
|
(1,347,525)
|
Effects of changes in accounting standards
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
253,516
|
253,516
|
At January 1, 2013 adjusted
|
(3,875)
|
8,335
|
4,983,374
|
(609,813)
|
554,048
|
(163,144)
|
4,768,925
|
9,748,260
|
208,832
|
1,427,308
|
1,870,595
|
13,254,995
|
(119,788)
|
86,936
|
(5,213)
|
156,091
|
-
|
(1,212,035)
|
(1,094,009)
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation reserves - gains / (losses)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
144,283
|
-
|
-
|
-
|
-
|
-
|
144,283
|
Cash flow hedges - gains / (losses)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,855)
|
-
|
-
|
-
|
-
|
(10,855)
|
Actuarial gain / (losses)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
7,310
|
7,310
|
Total Comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
144,283
|
(10,855)
|
-
|
-
|
-
|
7,310
|
140,738
|
Shares issued
|
-
|
-
|
-
|
(358,235)
|
(15,169)
|
-
|
(373,404)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Put option to acquire interest in a subsidiary
|
-
|
-
|
-
|
1,980,887
|
-
|
-
|
1,980,887
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,024,066)
|
-
|
(2,024,066)
|
Gains/(losses) of non-controlling interest´s share
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(311,822)
|
-
|
-
|
-
|
(311,822)
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,854,010)
|
(1,854,010)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Share-based payment
|
-
|
-
|
-
|
-
|
74,190
|
-
|
74,190
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Treasury shares
|
(650)
|
-
|
-
|
-
|
-
|
(26,813)
|
(27,463)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
At June 30, 2013
|
(4,525)
|
8,335
|
4,983,374
|
1,012,839
|
613,069
|
(189,957)
|
6,423,135
|
9,748,260
|
208,832
|
1,427,308
|
16,585
|
11,400,985
|
24,495
|
76,081
|
(317,035)
|
156,091
|
(2,024,066)
|
(1,204,725)
|
(3,289,159)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity holders of Ambev
|
|
Capital reserves
|
|
Net income reserve
|
|
Comprehensive Income
|
|
|
Treasury shares
|
Share Premium
|
Gain on shares issued
|
Others capital reserve
|
Share-based payments
|
Results on treasury shares
|
Capital reserves
|
Investments reserve
|
Statutory reserve
|
Fiscal incentive
|
Additional dividends
|
Net income reserve
|
Translation reserves
|
Cash flow
hedge
|
Gains/losses of non-controlling interest´s share
|
Business combination
|
Put option to acquire interest in a subsidiary
|
Actuarial gains/ losses
|
Comprehensive Income
|
At January 1, 2012
|
2,750
|
8,335
|
4,983,056
|
1,740,957
|
435,075
|
(140,115)
|
7,030,058
|
10,643,510
|
208,832
|
1,030,977
|
697,865
|
12,581,184
|
(997,025)
|
46,304
|
1,473
|
-
|
-
|
(1,354,610)
|
(2,303,858)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in adjustment international standards
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
60,718
|
60,718
|
Translation reserves - gains / (losses)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
371,392
|
-
|
-
|
-
|
-
|
-
|
371,392
|
Cash flow hedges - gains / (losses)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
67,407
|
-
|
-
|
-
|
-
|
67,407
|
Gains/(losses) of non-controlling interest´s share
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,685)
|
170,604
|
-
|
-
|
163,919
|
Put option to acquire interest in a subsidiary
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,958,262)
|
-
|
(1,958,262)
|
Actuarial gain / (losses)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(46,284)
|
(46,284)
|
Total Comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
371,392
|
67,407
|
(6,685)
|
170,604
|
(1,958,262)
|
14,434
|
(1,341,110)
|
Share-based payment
|
-
|
-
|
-
|
(110,964)
|
(11,527)
|
-
|
(122,491)
|
(3,290,295)
|
-
|
-
|
-
|
(3,290,295)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(681,355)
|
(681,355)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Share-based payment
|
-
|
-
|
-
|
-
|
54,032
|
-
|
54,032
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Treasury shares
|
(14,851)
|
-
|
-
|
-
|
-
|
(5,379)
|
(20,230)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
At June 30, 2012
|
(12,101)
|
8,335
|
4,983,056
|
1,629,993
|
477,580
|
(145,494)
|
6,941,369
|
7,353,215
|
208,832
|
1,427,308
|
16,510
|
9,005,865
|
(625,633)
|
113,711
|
(5,212)
|
170,604
|
(1,958,262)
|
(1,340,176)
|
(3,644,969)
|
12. SEGMENT REPORTING
Segment information is presented in geographical areas, since the risks and return rates are affected predominantly by the fact that the Company operates in different regions. The Company's management structure and the information reported to the main decision maker are structured in a similar way. Ambev operates its business through three areas identified as reportable segments (Latin America - North, Latin America - South and Canada). The performance information by business units (Beer and Carbonated soft drinks – “CSD”), is also used by the decision maker for the Company and is presented as additional information, even though it does not qualify as a reportable segment. Internally, the Company’s management uses performance indicators, such as normalized earnings before interest and taxes (normalized EBIT) and normalized earnings before interest, taxes, depreciation and amortization (normalized EBITDA) as measures of segment performance to make decisions about resource allocation and performance analysis. These indicators are reconciled to the profit of the segment in the tables below. Whenever used in this document, the term “normalized” refers to performance measures (EBITDA, EBIT, Profit, EPS) before exceptional item adjustments.
The information is presented in thousands of Brazilian Reais, except for volumes, which are presented in thousands of hectoliters.
As from January 1, 2013, the Company transferred management responsibility for Ecuador and Peru to the Latin America South Zone. These countries were previously reported within the Latin America North Zone. The 2012 Latin America South and Latin America North information have been adjusted for comparative purposes.
(a) Reportable segments - For the six-month periods ended:
|
Latin America - north (i)
|
Latin America - south
|
Canada
|
Consolidated
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
|
|
Volume
|
55,191
|
56,546
|
17,373
|
18,557
|
4,350
|
4,507
|
76,914
|
79,610
|
|
|
|
|
|
|
|
|
|
Net sales
|
10,258,302
|
9,525,833
|
3,082,748
|
2,705,995
|
1,934,889
|
1,829,289
|
15,275,939
|
14,061,117
|
Cost of sales
|
(3,429,931)
|
(2,990,503)
|
(1,221,302)
|
(1,111,061)
|
(563,860)
|
(510,796)
|
(5,215,093)
|
(4,612,360)
|
Gross profit
|
6,828,371
|
6,535,330
|
1,861,446
|
1,594,934
|
1,371,029
|
1,318,493
|
10,060,846
|
9,448,757
|
Sales and marketing expenses
|
(2,779,311)
|
(2,375,507)
|
(671,083)
|
(564,532)
|
(623,129)
|
(613,052)
|
(4,073,523)
|
(3,553,091)
|
Administrative expenses
|
(544,482)
|
(505,351)
|
(119,701)
|
(95,978)
|
(83,998)
|
(72,810)
|
(748,181)
|
(674,139)
|
Other operating income/(expenses)
|
628,477
|
316,828
|
(20,065)
|
(12,913)
|
(155)
|
4,562
|
608,257
|
308,477
|
Normalized income from operations (normalized EBIT)
|
4,133,055
|
3,971,300
|
1,050,597
|
921,511
|
663,747
|
637,193
|
5,847,399
|
5,530,004
|
Special items
|
(2,163)
|
(26,774)
|
(4,082)
|
-
|
-
|
-
|
(6,245)
|
(26,774)
|
Income from operations (EBIT)
|
4,130,892
|
3,944,526
|
1,046,515
|
921,511
|
663,747
|
637,193
|
5,841,154
|
5,503,230
|
Net finance cost
|
(489,359)
|
(244,154)
|
(29,084)
|
5,964
|
9,597
|
(30,279)
|
(508,846)
|
(268,469)
|
Share of result of associates
|
968
|
(1)
|
-
|
-
|
817
|
60
|
1,785
|
59
|
Income before income tax
|
3,642,501
|
3,700,371
|
1,017,431
|
927,475
|
674,161
|
606,974
|
5,334,093
|
5,234,820
|
Income tax expense
|
(517,071)
|
(499,879)
|
(330,969)
|
(257,653)
|
(186,273)
|
(213,729)
|
(1,034,313)
|
(971,261)
|
Net income
|
3,125,430
|
3,200,492
|
686,462
|
669,822
|
487,888
|
393,245
|
4,299,780
|
4,263,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
4,841,759
|
4,545,441
|
1,241,534
|
1,093,312
|
733,583
|
698,244
|
6,816,876
|
6,336,997
|
Special items
|
(2,163)
|
(26,774)
|
(4,082)
|
-
|
-
|
-
|
(6,245)
|
(26,774)
|
Depreciation, amortization and impairment
|
(708,704)
|
(574,141)
|
(190,937)
|
(171,801)
|
(69,836)
|
(61,051)
|
(969,477)
|
(806,993)
|
Net finance costs
|
(489,359)
|
(244,154)
|
(29,084)
|
5,964
|
9,597
|
(30,279)
|
(508,846)
|
(268,469)
|
Share of results of associates
|
968
|
(1)
|
-
|
-
|
817
|
60
|
1,785
|
59
|
Income tax expense
|
(517,071)
|
(499,879)
|
(330,969)
|
(257,653)
|
(186,273)
|
(213,729)
|
(1,034,313)
|
(971,261)
|
Net income
|
3,125,430
|
3,200,492
|
686,462
|
669,822
|
487,888
|
393,245
|
4,299,780
|
4,263,559
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
47.2%
|
47.7%
|
40.3%
|
40.4%
|
37.9%
|
38.2%
|
44.6%
|
45.1%
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
1,060,930
|
816,726
|
185,846
|
175,133
|
84,774
|
43,241
|
1,331,550
|
1,035,100
|
Additions to / (reversals of) provisions
|
110,089
|
114,959
|
1,508
|
1,848
|
-
|
11,702
|
111,597
|
128,509
|
Full time employee - Average
|
35,370
|
36,237
|
9,881
|
9,736
|
4,868
|
4,797
|
50,119
|
50,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/30/2013
|
12/31/2012
|
06/30/2013
|
12/31/2012
|
06/30/2013
|
12/31/2012
|
06/30/2013
|
12/31/2012
|
|
|
|
|
|
|
|
|
|
Segment assets
|
19,680,158
|
19,159,354
|
7,746,555
|
7,609,711
|
17,638,606
|
17,301,943
|
45,065,319
|
44,071,008
|
Intersegment elimination
|
|
|
|
|
|
|
(2,163,778)
|
(1,884,566)
|
Non-segmented assets
|
|
|
|
|
|
|
8,079,169
|
11,973,327
|
Total assets
|
|
|
|
|
|
|
50,982,746
|
54,159,769
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
9,929,124
|
14,651,098
|
3,141,233
|
3,642,076
|
2,884,119
|
2,490,474
|
15,954,476
|
20,783,648
|
Intersegment elimination
|
|
|
|
|
|
|
(2,163,778)
|
(1,884,566)
|
Non-segmented liabilities
|
|
|
|
|
|
|
37,190,012
|
35,260,687
|
Total liabilities
|
|
|
|
|
|
|
50,982,746
|
54,159,769
|
(i) Latin America – North: includes operations in Brazil and HILA-ex: Guatemala and Dominican Republic.
(ii) Latin America – South: includes operations in Argentina, Bolivia, Chile, Ecuador, Paraguay , Peru and Uruguay.
(b) Additional information – by Business unit - For the six-month periods ended:
|
Latin America - north
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
40,729
|
41,768
|
14,462
|
14,778
|
55,191
|
56,546
|
|
|
|
|
|
|
|
Net sales
|
8,512,510
|
7,950,838
|
1,745,793
|
1,574,995
|
10,258,303
|
9,525,833
|
Cost of sales
|
(2,558,575)
|
(2,281,269)
|
(871,356)
|
(709,234)
|
(3,429,931)
|
(2,990,503)
|
Gross profit
|
5,953,935
|
5,669,569
|
874,437
|
865,761
|
6,828,372
|
6,535,330
|
Sales and marketing expenses
|
(2,362,599)
|
(2,037,283)
|
(416,712)
|
(338,224)
|
(2,779,311)
|
(2,375,507)
|
Administrative expenses
|
(492,588)
|
(454,624)
|
(51,894)
|
(50,727)
|
(544,482)
|
(505,351)
|
Other operating income/(expenses)
|
505,105
|
242,611
|
123,372
|
74,217
|
628,477
|
316,828
|
Normalized income from operations (normalized EBIT)
|
3,603,853
|
3,420,273
|
529,203
|
551,027
|
4,133,056
|
3,971,300
|
Special items
|
(1,603)
|
(26,270)
|
(560)
|
(504)
|
(2,163)
|
(26,774)
|
Income from operations (EBIT)
|
3,602,250
|
3,394,003
|
528,643
|
550,523
|
4,130,893
|
3,944,526
|
Net finance cost
|
(489,359)
|
(244,154)
|
-
|
-
|
(489,359)
|
(244,154)
|
Share of result of associates
|
968
|
(1)
|
-
|
-
|
968
|
(1)
|
Income before income tax
|
3,113,859
|
3,149,848
|
528,643
|
550,523
|
3,642,502
|
3,700,371
|
Income tax expense
|
(517,071)
|
(499,879)
|
-
|
-
|
(517,071)
|
(499,879)
|
Net income
|
2,596,788
|
2,649,969
|
528,643
|
550,523
|
3,125,431
|
3,200,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
4,172,311
|
3,872,442
|
669,449
|
673,001
|
4,841,760
|
4,545,443
|
Special items
|
(1,603)
|
(26,270)
|
(560)
|
(504)
|
(2,163)
|
(26,774)
|
Depreciation, amortization and impairment
|
(568,458)
|
(452,169)
|
(140,246)
|
(121,974)
|
(708,704)
|
(574,143)
|
Net finance costs
|
(489,359)
|
(244,154)
|
-
|
-
|
(489,359)
|
(244,154)
|
Share of results of associates
|
968
|
(1)
|
-
|
-
|
968
|
(1)
|
Income tax expense
|
(517,071)
|
(499,879)
|
-
|
-
|
(517,071)
|
(499,879)
|
Net income
|
2,596,788
|
2,649,969
|
528,643
|
550,523
|
3,125,431
|
3,200,492
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
49.0%
|
48.7%
|
38.3%
|
42.7%
|
47.2%
|
47.7%
|
|
Brazil
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
38,693
|
40,531
|
13,882
|
14,250
|
52,574
|
54,781
|
|
|
|
|
|
|
|
Net sales
|
8,063,547
|
7,728,069
|
1,606,763
|
1,519,171
|
9,670,310
|
9,247,240
|
Cost of sales
|
(2,396,740)
|
(2,166,605)
|
(756,869)
|
(668,510)
|
(3,153,609)
|
(2,835,115)
|
Gross profit
|
5,666,807
|
5,561,464
|
849,894
|
850,661
|
6,516,701
|
6,412,125
|
Sales and marketing expenses
|
(2,233,037)
|
(1,958,057)
|
(376,735)
|
(309,397)
|
(2,609,772)
|
(2,267,454)
|
Administrative expenses
|
(458,838)
|
(437,816)
|
(39,989)
|
(41,203)
|
(498,827)
|
(479,019)
|
Other operating income/(expenses)
|
513,428
|
241,318
|
117,338
|
74,127
|
630,766
|
315,445
|
Normalized income from operations (normalized EBIT)
|
3,488,360
|
3,406,909
|
550,508
|
574,188
|
4,038,868
|
3,981,097
|
Special items
|
-
|
(19,079)
|
-
|
-
|
-
|
(19,079)
|
Income from operations (EBIT)
|
3,488,360
|
3,387,830
|
550,508
|
574,188
|
4,038,868
|
3,962,018
|
Net finance cost
|
(478,111)
|
(226,949)
|
-
|
-
|
(478,111)
|
(226,949)
|
Share of result of associates
|
968
|
(1)
|
-
|
-
|
968
|
(1)
|
Income before income tax
|
3,011,217
|
3,160,880
|
550,508
|
574,188
|
3,561,725
|
3,735,068
|
Income tax expense
|
(486,376)
|
(498,100)
|
-
|
-
|
(486,376)
|
(498,100)
|
Net income
|
2,524,841
|
2,662,780
|
550,508
|
574,188
|
3,075,349
|
3,236,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
4,006,296
|
3,836,014
|
673,699
|
685,972
|
4,679,995
|
4,521,986
|
Special items
|
-
|
(19,079)
|
-
|
-
|
-
|
(19,079)
|
Depreciation, amortization and impairment
|
(517,936)
|
(429,105)
|
(123,191)
|
(111,784)
|
(641,127)
|
(540,889)
|
Net finance costs
|
(478,111)
|
(226,949)
|
-
|
-
|
(478,111)
|
(226,949)
|
Share of results of associates
|
968
|
(1)
|
-
|
-
|
968
|
(1)
|
Income tax expense
|
(486,376)
|
(498,100)
|
-
|
-
|
(486,376)
|
(498,100)
|
Net income
|
2,524,841
|
2,662,780
|
550,508
|
574,188
|
3,075,349
|
3,236,968
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
49.7%
|
49.6%
|
41.9%
|
45.2%
|
48.4%
|
48.9%
|
|
HILA-ex
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
2,036
|
1,237
|
581
|
528
|
2,617
|
1,765
|
|
|
|
|
|
|
|
Net sales
|
448,963
|
222,769
|
139,030
|
55,824
|
587,992
|
278,593
|
Cost of sales
|
(161,835)
|
(114,664)
|
(114,487)
|
(40,724)
|
(276,322)
|
(155,388)
|
Gross profit
|
287,128
|
108,105
|
24,542
|
15,100
|
311,670
|
123,205
|
Sales and marketing expenses
|
(129,562)
|
(79,226)
|
(39,977)
|
(28,827)
|
(169,539)
|
(108,053)
|
Administrative expenses
|
(33,750)
|
(16,808)
|
(11,905)
|
(9,524)
|
(45,655)
|
(26,332)
|
Other operating income/(expenses)
|
(8,323)
|
1,293
|
6,034
|
90
|
(2,289)
|
1,383
|
Normalized income from operations (normalized EBIT)
|
115,493
|
13,364
|
(21,306)
|
(23,161)
|
94,187
|
(9,797)
|
Special items
|
(1,603)
|
(7,191)
|
(560)
|
(504)
|
(2,163)
|
(7,695)
|
Income from operations (EBIT)
|
113,890
|
6,173
|
(21,866)
|
(23,665)
|
92,024
|
(17,492)
|
Net finance cost
|
(11,248)
|
(17,205)
|
-
|
-
|
(11,248)
|
(17,205)
|
Income before income tax
|
102,642
|
(11,032)
|
(21,866)
|
(23,665)
|
80,776
|
(34,697)
|
Income tax expense
|
(30,695)
|
(1,779)
|
-
|
-
|
(30,695)
|
(1,779)
|
Net income
|
71,947
|
(12,811)
|
(21,866)
|
(23,665)
|
50,081
|
(36,476)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
166,015
|
36,428
|
(4,251)
|
(12,971)
|
161,764
|
23,457
|
Special items
|
(1,603)
|
(7,191)
|
(560)
|
(504)
|
(2,163)
|
(7,695)
|
Depreciation, amortization and impairment
|
(50,522)
|
(23,064)
|
(17,055)
|
(10,190)
|
(67,577)
|
(33,254)
|
Net finance costs
|
(11,248)
|
(17,205)
|
-
|
-
|
(11,248)
|
(17,205)
|
Income tax expense
|
(30,695)
|
(1,779)
|
-
|
-
|
(30,695)
|
(1,779)
|
Net income
|
71,947
|
(12,811)
|
(21,866)
|
(23,665)
|
50,081
|
(36,476)
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
37.0%
|
16.4%
|
-3.1%
|
-23.2%
|
27.5%
|
8.4%
|
|
Latin America - south
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
10,262
|
10,842
|
7,111
|
7,715
|
17,373
|
18,557
|
|
|
|
|
|
|
|
Net sales
|
2,221,311
|
1,889,923
|
861,437
|
816,072
|
3,082,748
|
2,705,995
|
Cost of sales
|
(698,813)
|
(599,447)
|
(522,489)
|
(511,614)
|
(1,221,302)
|
(1,111,061)
|
Gross profit
|
1,522,498
|
1,290,476
|
338,948
|
304,458
|
1,861,446
|
1,594,934
|
Sales and marketing expenses
|
(440,933)
|
(364,669)
|
(230,150)
|
(199,863)
|
(671,083)
|
(564,532)
|
Administrative expenses
|
(88,943)
|
(73,411)
|
(30,758)
|
(22,567)
|
(119,701)
|
(95,978)
|
Other operating income/(expenses)
|
(16,902)
|
(14,564)
|
(3,163)
|
1,651
|
(20,065)
|
(12,913)
|
Normalized income from operations (normalized EBIT)
|
975,720
|
837,832
|
74,877
|
83,679
|
1,050,597
|
921,511
|
Special items
|
(4,082)
|
-
|
-
|
-
|
(4,082)
|
-
|
Income from operations (EBIT)
|
971,638
|
837,832
|
74,877
|
83,679
|
1,046,515
|
921,511
|
Net finance cost
|
(21,232)
|
5,327
|
(7,852)
|
637
|
(29,084)
|
5,964
|
Income before income tax
|
950,406
|
843,159
|
67,025
|
84,316
|
1,017,431
|
927,475
|
Income tax expense
|
(329,969)
|
(256,694)
|
(1,000)
|
(959)
|
(330,969)
|
(257,653)
|
Net income
|
620,437
|
586,465
|
66,025
|
83,357
|
686,462
|
669,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
1,123,139
|
968,375
|
118,395
|
124,937
|
1,241,534
|
1,093,312
|
Special items
|
(4,082)
|
-
|
-
|
-
|
(4,082)
|
-
|
Depreciation, amortization and impairment
|
(147,419)
|
(130,543)
|
(43,518)
|
(41,258)
|
(190,937)
|
(171,801)
|
Net finance costs
|
(21,232)
|
5,327
|
(7,852)
|
637
|
(29,084)
|
5,964
|
Income tax expense
|
(329,969)
|
(256,694)
|
(1,000)
|
(959)
|
(330,969)
|
(257,653)
|
Net income
|
620,437
|
586,465
|
66,025
|
83,357
|
686,462
|
669,822
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
50.6%
|
51.2%
|
13.7%
|
15.3%
|
40.3%
|
40.4%
|
|
Canada
|
|
06/30/2013
|
|
06/30/2012
|
(Expressed in thousand of Brazilian Reais)
|
Beer
|
|
Total
|
|
Beer
|
|
Total
|
|
|
|
|
|
|
|
|
Volume
|
4,350
|
|
4,350
|
|
4,507
|
|
4,507
|
|
|
|
|
|
|
|
|
Net sales
|
1,934,889
|
|
1,934,889
|
|
1,829,289
|
|
1,829,289
|
Cost of sales
|
(563,860)
|
|
(563,860)
|
|
(510,796)
|
|
(510,796)
|
Gross profit
|
1,371,029
|
|
1,371,029
|
|
1,318,493
|
|
1,318,493
|
Sales and marketing expenses
|
(623,129)
|
|
(623,129)
|
|
(613,052)
|
|
(613,052)
|
Administrative expenses
|
(83,9
97
)
|
|
(83,997)
|
|
(72,810)
|
|
(72,810)
|
Other operating income/(expenses)
|
(155)
|
|
(155)
|
|
4,562
|
|
4,562
|
Normalized income from operations (normalized EBIT)
|
663,748
|
|
663,748
|
|
637,193
|
|
637,193
|
Income from operations (EBIT)
|
663,748
|
|
663,748
|
|
637,193
|
|
637,193
|
Net finance cost
|
9,597
|
|
9,597
|
|
(30,277)
|
|
(30,277)
|
Share of result of associates
|
817
|
|
817
|
|
60
|
|
60
|
Income before income tax
|
674,162
|
|
674,162
|
|
606,976
|
|
606,976
|
Income tax expense
|
(186,273)
|
|
(186,273)
|
|
(213,729)
|
|
(213,729)
|
Net income
|
487,889
|
|
487,889
|
|
393,247
|
|
393,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
733,584
|
|
733,584
|
|
698,244
|
|
698,244
|
Depreciation, amortization and impairment
|
(69,836)
|
|
(69,836)
|
|
(61,051)
|
|
(61,051)
|
Net finance costs
|
9,597
|
|
9,597
|
|
(30,277)
|
|
(30,277)
|
Share of results of associates
|
817
|
|
817
|
|
60
|
|
60
|
Income tax expense
|
(186,273)
|
|
(186,273)
|
|
(213,729)
|
|
(213,729)
|
Net income
|
487,889
|
|
487,889
|
|
393,247
|
|
393,247
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
37.9%
|
|
37.9%
|
|
38.2%
|
|
38.2%
|
(c) Reportable segments - Three-month period ended:
|
Latin America - north (i)
|
Latin America - south
|
Canada
|
Consolidated
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
|
|
Volume
|
26,906
|
27,135
|
7,547
|
7,611
|
2,531
|
2,632
|
36,985
|
37,379
|
|
|
|
|
|
|
|
|
|
Net sales
|
5,032,977
|
4,559,956
|
1,337,482
|
1,165,150
|
1,132,674
|
1,100,297
|
7,503,133
|
6,825,403
|
Cost of sales
|
(1,680,680)
|
(1,475,733)
|
(585,327)
|
(520,387)
|
(326,263)
|
(303,859)
|
(2,592,270)
|
(2,299,979)
|
Gross profit
|
3,352,297
|
3,084,223
|
752,155
|
644,763
|
806,411
|
796,438
|
4,910,863
|
4,525,424
|
Sales and marketing expenses
|
(1,453,545)
|
(1,190,019)
|
(312,523)
|
(271,033)
|
(318,548)
|
(343,606)
|
(2,084,616)
|
(1,804,658)
|
Administrative expenses
|
(289,599)
|
(266,869)
|
(69,946)
|
(49,729)
|
(36,895)
|
(40,295)
|
(396,440)
|
(356,893)
|
Other operating income/(expenses)
|
306,724
|
169,809
|
(11,463)
|
(4,909)
|
(502)
|
4,392
|
294,759
|
169,292
|
Normalized income from operations (normalized EBIT)
|
1,915,877
|
1,797,144
|
358,223
|
319,092
|
450,466
|
416,929
|
2,724,566
|
2,533,165
|
Special items
|
(1,187)
|
(26,774)
|
(4,082)
|
-
|
-
|
-
|
(5,269)
|
(26,774)
|
Income from operations (EBIT)
|
1,914,690
|
1,770,370
|
354,141
|
319,092
|
450,466
|
416,929
|
2,719,297
|
2,506,391
|
Net finance cost
|
(301,925)
|
(186,850)
|
12,129
|
8,957
|
21,637
|
(7,936)
|
(268,159)
|
(185,829)
|
Share of result of associates
|
(325)
|
(1)
|
-
|
-
|
422
|
(300)
|
97
|
(301)
|
Income before income tax
|
1,612,440
|
1,583,519
|
366,270
|
328,049
|
472,525
|
408,693
|
2,451,235
|
2,320,261
|
Income tax expense
|
(249,048)
|
(157,966)
|
(120,503)
|
(79,654)
|
(158,396)
|
(153,586)
|
(527,947)
|
(391,206)
|
Net income
|
1,363,392
|
1,425,553
|
245,767
|
248,395
|
314,129
|
255,107
|
1,923,288
|
1,929,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
2,274,051
|
2,101,807
|
456,606
|
408,667
|
487,240
|
450,563
|
3,217,897
|
2,961,037
|
Special items
|
(1,187)
|
(26,774)
|
(4,082)
|
-
|
-
|
-
|
(5,269)
|
(26,774)
|
Depreciation, amortization and impairment
|
(358,174)
|
(304,664)
|
(98,383)
|
(89,575)
|
(36,774)
|
(33,634)
|
(493,331)
|
(427,873)
|
Net finance costs
|
(301,925)
|
(186,850)
|
12,129
|
8,957
|
21,637
|
(7,936)
|
(268,159)
|
(185,829)
|
Share of results of associates
|
(325)
|
(1)
|
-
|
-
|
422
|
(300)
|
97
|
(301)
|
Income tax expense
|
(249,048)
|
(157,966)
|
(120,503)
|
(79,654)
|
(158,396)
|
(153,586)
|
(527,947)
|
(391,206)
|
Net income
|
1,363,392
|
1,425,553
|
245,767
|
248,395
|
314,129
|
255,107
|
1,923,288
|
1,929,054
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
45.2%
|
46.1%
|
34.1%
|
35.1%
|
43.0%
|
40.9%
|
42.9%
|
43.4%
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
592,786
|
518,410
|
114,029
|
95,733
|
62,259
|
27,041
|
769,074
|
641,184
|
Additions to / (reversals of) provisions
|
60,451
|
78,458
|
1,106
|
598
|
-
|
2,506
|
61,557
|
81,562
|
Full time employee
|
35,370
|
36,237
|
9,881
|
9,736
|
4,868
|
4,797
|
50,119
|
50,769
|
(d) Additional information – by business unit – Three-month period ended:
|
Latin America - north
|
(Expressed in thousand of Brazilian Reais)
|
Beer
|
Soft drink
|
Total
|
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
19,943
|
19,860
|
6,963
|
7,275
|
26,906
|
27,135
|
|
|
|
|
|
|
|
Net sales
|
4,178,339
|
3,780,627
|
854,638
|
779,329
|
5,032,977
|
4,559,956
|
Cost of sales
|
(1,262,130)
|
(1,136,311)
|
(418,550)
|
(339,422)
|
(1,680,680)
|
(1,475,733)
|
Gross profit
|
2,916,209
|
2,644,316
|
436,088
|
439,907
|
3,352,297
|
3,084,223
|
Sales and marketing expenses
|
(1,227,822)
|
(1,025,651)
|
(225,723)
|
(164,368)
|
(1,453,545)
|
(1,190,019)
|
Administrative expenses
|
(263,250)
|
(238,828)
|
(26,349)
|
(28,041)
|
(289,599)
|
(266,869)
|
Other operating income/(expenses)
|
240,047
|
126,563
|
66,677
|
43,245
|
306,724
|
169,809
|
Normalized income from operations (normalized EBIT)
|
1,665,184
|
1,506,400
|
250,693
|
290,743
|
1,915,877
|
1,797,143
|
Special items
|
(876)
|
(26,270)
|
(311)
|
(504)
|
(1,187)
|
(26,774)
|
Income from operations (EBIT)
|
1,664,308
|
1,480,130
|
250,382
|
290,239
|
1,914,690
|
1,770,369
|
Net finance cost
|
(301,925)
|
(186,850)
|
-
|
-
|
(301,925)
|
(186,850)
|
Share of result of associates
|
(325)
|
(1)
|
-
|
-
|
(325)
|
(1)
|
Income before income tax
|
1,362,058
|
1,293,279
|
250,382
|
290,239
|
1,612,440
|
1,583,518
|
Income tax expense
|
(249,048)
|
(157,966)
|
-
|
-
|
(249,048)
|
(157,966)
|
Net income
|
1,113,010
|
1,135,313
|
250,382
|
290,239
|
1,363,392
|
1,425,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
1,953,438
|
1,748,130
|
320,613
|
353,677
|
2,274,051
|
2,101,808
|
Special items
|
(876)
|
(26,270)
|
(311)
|
(504)
|
(1,187)
|
(26,774)
|
Depreciation, amortization and impairment
|
(288,254)
|
(241,730)
|
(69,920)
|
(62,934)
|
(358,174)
|
(304,664)
|
Net finance costs
|
(301,925)
|
(186,850)
|
-
|
-
|
(301,925)
|
(186,850)
|
Share of results of associates
|
(325)
|
(1)
|
-
|
-
|
(325)
|
(1)
|
Income tax expense
|
(249,048)
|
(157,966)
|
-
|
-
|
(249,048)
|
(157,966)
|
Net income
|
1,113,010
|
1,135,313
|
250,382
|
290,239
|
1,363,392
|
1,425,552
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
46.8%
|
46.2%
|
37.5%
|
45.4%
|
45.2%
|
46.1%
|
|
Brazil
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
18,875
|
18,946
|
6,660
|
6,990
|
25,535
|
25,936
|
|
|
|
|
|
|
|
Net sales
|
3,940,412
|
3,594,429
|
784,081
|
746,466
|
4,724,493
|
4,340,895
|
Cost of sales
|
(1,177,323)
|
(1,042,659)
|
(359,226)
|
(314,845)
|
(1,536,549)
|
(1,357,504)
|
Gross profit
|
2,763,089
|
2,551,770
|
424,855
|
431,621
|
3,187,944
|
2,983,391
|
Sales and marketing expenses
|
(1,164,245)
|
(972,181)
|
(206,631)
|
(149,097)
|
(1,370,876)
|
(1,121,278)
|
Administrative expenses
|
(243,654)
|
(226,393)
|
(20,119)
|
(21,640)
|
(263,773)
|
(248,033)
|
Other operating income/(expenses)
|
240,967
|
124,328
|
62,785
|
43,164
|
303,752
|
167,492
|
Normalized income from operations (normalized EBIT)
|
1,596,157
|
1,477,524
|
260,890
|
304,048
|
1,857,047
|
1,781,572
|
Special items
|
-
|
(19,079)
|
-
|
-
|
-
|
(19,079)
|
Income from operations (EBIT)
|
1,596,157
|
1,458,445
|
260,890
|
304,048
|
1,857,047
|
1,762,493
|
Net finance cost
|
(300,997)
|
(178,537)
|
-
|
-
|
(300,997)
|
(178,537)
|
Share of result of associates
|
(325)
|
(1)
|
-
|
-
|
(325)
|
(1)
|
Income before income tax
|
1,294,835
|
1,279,907
|
260,890
|
304,048
|
1,555,725
|
1,583,955
|
Income tax expense
|
(226,282)
|
(156,606)
|
-
|
-
|
(226,282)
|
(156,606)
|
Net income
|
1,068,553
|
1,123,301
|
260,890
|
304,048
|
1,329,443
|
1,427,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
1,857,761
|
1,700,426
|
322,339
|
361,041
|
2,180,100
|
2,061,467
|
Special items
|
-
|
(19,079)
|
-
|
-
|
-
|
(19,079)
|
Depreciation, amortization and impairment
|
(261,604)
|
(222,902)
|
(61,449)
|
(56,993)
|
(323,053)
|
(279,895)
|
Net finance costs
|
(300,997)
|
(178,537)
|
-
|
-
|
(300,997)
|
(178,537)
|
Share of results of associates
|
(325)
|
(1)
|
-
|
-
|
(325)
|
(1)
|
Income tax expense
|
(226,282)
|
(156,606)
|
-
|
-
|
(226,282)
|
(156,606)
|
Net income
|
1,068,553
|
1,123,301
|
260,890
|
304,048
|
1,329,443
|
1,427,349
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
47.1%
|
47.3%
|
41.1%
|
48.4%
|
46.1%
|
47.5%
|
|
HILA-ex
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
1,067
|
914
|
303
|
285
|
1,370
|
1,199
|
|
|
|
|
|
|
|
Net sales
|
237,927
|
186,198
|
70,557
|
32,863
|
308,484
|
219,061
|
Cost of sales
|
(84,807)
|
(93,652)
|
(59,324)
|
(24,577)
|
(144,131)
|
(118,229)
|
Gross profit
|
153,120
|
92,546
|
11,233
|
8,286
|
164,353
|
100,832
|
Sales and marketing expenses
|
(63,577)
|
(53,470)
|
(19,092)
|
(15,271)
|
(82,669)
|
(68,741)
|
Administrative expenses
|
(19,596)
|
(12,435)
|
(6,230)
|
(6,401)
|
(25,826)
|
(18,836)
|
Other operating income/(expenses)
|
(920)
|
2,236
|
3,892
|
82
|
2,972
|
2,318
|
Normalized income from operations (normalized EBIT)
|
69,027
|
28,877
|
(10,197)
|
(13,304)
|
58,830
|
15,573
|
Special items
|
(876)
|
(7,191)
|
(311)
|
(504)
|
(1,187)
|
(7,695)
|
Income from operations (EBIT)
|
68,151
|
21,686
|
(10,508)
|
(13,808)
|
57,643
|
7,878
|
Net finance cost
|
(928)
|
(8,313)
|
-
|
-
|
(928)
|
(8,313)
|
Income before income tax
|
67,223
|
13,373
|
(10,508)
|
(13,808)
|
56,715
|
(435)
|
Income tax expense
|
(22,766)
|
(1,360)
|
-
|
-
|
(22,766)
|
(1,360)
|
Net income
|
44,457
|
12,013
|
(10,508)
|
(13,808)
|
33,949
|
(1,795)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
95,677
|
47,705
|
(1,726)
|
(7,363)
|
93,951
|
40,342
|
Special items
|
(876)
|
(7,191)
|
(311)
|
(504)
|
(1,187)
|
(7,695)
|
Depreciation, amortization and impairment
|
(26,650)
|
(18,828)
|
(8,471)
|
(5,941)
|
(35,121)
|
(24,769)
|
Net finance costs
|
(928)
|
(8,313)
|
-
|
-
|
(928)
|
(8,313)
|
Income tax expense
|
(22,766)
|
(1,360)
|
-
|
-
|
(22,766)
|
(1,360)
|
Net income
|
44,457
|
12,013
|
(10,508)
|
(13,808)
|
33,949
|
(1,795)
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
40.2%
|
25.6%
|
-2.4%
|
-22.4%
|
30.5%
|
18.4%
|
|
Latin America - south
|
|
Beer
|
Soft drink
|
Total
|
(Expressed in thousand of Brazilian Reais)
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
Volume
|
4,371
|
4,368
|
3,176
|
3,243
|
7,547
|
7,611
|
|
|
|
|
|
|
|
Net sales
|
958,913
|
810,630
|
378,569
|
354,520
|
1,337,482
|
1,165,150
|
Cost of sales
|
(346,884)
|
(287,879)
|
(238,443)
|
(232,508)
|
(585,327)
|
(520,387)
|
Gross profit
|
612,029
|
522,751
|
140,126
|
122,012
|
752,155
|
644,763
|
Sales and marketing expenses
|
(208,336)
|
(176,573)
|
(104,187)
|
(94,460)
|
(312,523)
|
(271,033)
|
Administrative expenses
|
(53,694)
|
(36,518)
|
(16,252)
|
(13,211)
|
(69,946)
|
(49,729)
|
Other operating income/(expenses)
|
(10,130)
|
(6,910)
|
(1,333)
|
2,001
|
(11,463)
|
(4,909)
|
Normalized income from operations (normalized EBIT)
|
339,869
|
302,750
|
18,354
|
16,342
|
358,223
|
319,092
|
Special items
|
(4,082)
|
-
|
-
|
-
|
(4,082)
|
-
|
Income from operations (EBIT)
|
335,787
|
302,750
|
18,354
|
16,342
|
354,141
|
319,092
|
Net finance cost
|
19,480
|
9,306
|
(7,351)
|
(349)
|
12,129
|
8,957
|
Income before income tax
|
355,267
|
312,056
|
11,003
|
15,993
|
366,270
|
328,049
|
Income tax expense
|
(120,017)
|
(79,165)
|
(486)
|
(489)
|
(120,503)
|
(79,654)
|
Net income
|
235,250
|
232,891
|
10,517
|
15,504
|
245,767
|
248,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
416,490
|
371,193
|
40,116
|
37,474
|
456,606
|
408,667
|
Special items
|
(4,082)
|
-
|
-
|
-
|
(4,082)
|
-
|
Depreciation, amortization and impairment
|
(76,621)
|
(68,443)
|
(21,762)
|
(21,132)
|
(98,383)
|
(89,575)
|
Net finance costs
|
19,480
|
9,306
|
(7,351)
|
(349)
|
12,129
|
8,957
|
Income tax expense
|
(120,017)
|
(79,165)
|
(486)
|
(489)
|
(120,503)
|
(79,654)
|
Net income
|
235,250
|
232,891
|
10,517
|
15,504
|
245,767
|
248,395
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
43.4%
|
45.8%
|
10.6%
|
10.6%
|
34.1%
|
35.1%
|
|
Canada
|
|
06/30/2013
|
|
06/30/2012
|
(Expressed in thousand of Brazilian Reais)
|
Beer
|
|
Total
|
|
Beer
|
|
Total
|
|
|
|
|
|
|
|
|
Volume
|
2,531
|
|
2,531
|
|
2,632
|
|
2,632
|
|
|
|
|
|
|
|
|
Net sales
|
1,132,674
|
|
1,132,674
|
|
1,100,297
|
|
1,100,297
|
Cost of sales
|
(326,263)
|
|
(326,263)
|
|
(303,859)
|
|
(303,859)
|
Gross profit
|
806,411
|
|
806,411
|
|
796,438
|
|
796,438
|
Sales and marketing expenses
|
(318,548)
|
|
(318,548)
|
|
(343,606)
|
|
(343,606)
|
Administrative expenses
|
(36,895)
|
|
(36,895)
|
|
(40,295)
|
|
(40,295)
|
Other operating income/(expenses)
|
(502)
|
|
(502)
|
|
4,392
|
|
4,392
|
Normalized income from operations (normalized EBIT)
|
450,466
|
|
450,466
|
|
416,929
|
|
416,929
|
Income from operations (EBIT)
|
450,466
|
|
450,466
|
|
416,929
|
|
416,929
|
Net finance cost
|
21,637
|
|
21,637
|
|
(7,936)
|
|
(7,936)
|
Share of result of associates
|
422
|
|
422
|
|
(300)
|
|
(300)
|
Income before income tax
|
472,525
|
|
472,525
|
|
408,693
|
|
408,693
|
Income tax expense
|
(158,396)
|
|
(158,396)
|
|
(153,586)
|
|
(153,586)
|
Net income
|
314,129
|
|
314,129
|
|
255,107
|
|
255,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
|
487,240
|
|
487,240
|
|
450,563
|
|
450,563
|
Depreciation, amortization and impairment
|
(36,774)
|
|
(36,774)
|
|
(33,634)
|
|
(33,634)
|
Net finance costs
|
21,637
|
|
21,637
|
|
(7,936)
|
|
(7,936)
|
Share of results of associates
|
422
|
|
422
|
|
(300)
|
|
(300)
|
Income tax expense
|
(158,396)
|
|
(158,396)
|
|
(153,586)
|
|
(153,586)
|
Net income
|
314,129
|
|
314,129
|
|
255,107
|
|
255,107
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
43.0%
|
|
43.0%
|
|
40.9%
|
|
40.9%
|
13. NET SALES
The reconciliation of gross sales to net sales is as follows:
|
Six-month period ended:
|
|
Three-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
Gross sales
|
30,226,531
|
27,835,286
|
|
14,875,468
|
13,394,070
|
Deductions from gross revenue
|
(14,950,592)
|
(13,774,169)
|
|
(7,372,335)
|
(6,568,667)
|
|
15,275,939
|
14,061,117
|
|
7,503,133
|
6,825,403
|
The deductions of the gross revenue are represented by the taxes and rebates. Services provided by distributors, such as the promotion of our brands, logistics services and strategic location in stores are not considered as reduction in revenue when separately identifiable.
14.
OTHER OPERATING INCOME / (EXPENSES)
|
Six-month period ended:
|
|
Three-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
Government grants/NPV of long term fiscal incentives
|
553,787
|
266,675
|
|
228,850
|
138,127
|
(Additions to )/reversal of provisions
|
(1,310)
|
(11,791)
|
|
(1,275)
|
(11,063)
|
Net gain on disposal of property, plant and equipment and intangible assets
|
2,569
|
(4,004)
|
|
7,203
|
(874)
|
Net rental income
|
1,801
|
1,211
|
|
694
|
621
|
Net other operating income
|
51,410
|
56,386
|
|
59,287
|
42,481
|
|
608,257
|
308,477
|
|
294,759
|
169,292
|
Government grants are related to ICMS (Brazilian State value added) tax incentives.
During the first six-month period of 2013 the Company reassessed the discount rate used to measure the financial subsidy in government loans in accordance with their cost of external funding.
15. SPECIAL ITEMS
Special items are those that in Management’s judgment need to be disclosed by virtue of their size or nature. In determining whether an event or transaction classifies as special, Management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence, and the potential impact of profit or loss variation. These items are disclosed on the face of the consolidated income statement or separately disclosed in the notes to the financial statements. Transactions which may give rise to special items are principally restructuring activities, impairments, and gains or losses on disposal of assets and investments. The Company considers these items to be significant and accordingly, has excluded them from the measurement of segment performance (Note 12).
Special items disclosed on the face of the consolidated income statement are detailed below:
|
Six-month period ended:
|
|
Three-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
Restructuring
|
(6,245)
|
(7,695)
|
|
(5,269)
|
(7,695)
|
Acquisition of subsidiaries
|
-
|
(15,829)
|
|
-
|
(15,829)
|
Others
|
-
|
(3,250)
|
|
-
|
(3,250)
|
|
(6,245)
|
(26,774)
|
|
(5,269)
|
(26,774)
|
The restructuring expenses relate to the realignment of the structure and processes in geographical segment of Latin America - South. In 2012 acquisition of subsidiaries expenses relate to the acquisition of CND.
16. FINANCE COST AND INCOME
|
Six-month period ended:
|
|
Three-month period ended:
|
Finance costs
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Interest expense
|
(280,732)
|
(198,997)
|
|
(143,818)
|
(116,157)
|
Capitalized borrowings
|
31,249
|
41,348
|
|
12,426
|
13,043
|
Net Interest on Pension Plans
|
(42,815)
|
(40,151)
|
|
(21,306)
|
(17,510)
|
Losses on derivatives not considered as hedge accounting
|
(232,592)
|
(169,510)
|
|
(144,304)
|
(37,167)
|
Hedge ineffectiveness losses
|
(9,625)
|
-
|
|
(4,206)
|
-
|
Interest on tax contingencies
|
(56,133)
|
(45,144)
|
|
(38,375)
|
(38,481)
|
Interest and foreign exchange rate on loans
|
-
|
-
|
|
-
|
(200)
|
Exchange variation
|
(57,848)
|
(58,522)
|
|
-
|
(49,187)
|
Tax on financial transactions
|
(42,416)
|
(75,050)
|
|
(15,007)
|
(35,577)
|
Bank guarantee expenses
|
(38,188)
|
(34,936)
|
|
(18,907)
|
(19,884)
|
Other financial costs, including bank fees
|
(66,330)
|
(19,194)
|
|
(24,527)
|
(8,453)
|
|
(795,430)
|
(600,156)
|
|
(398,024)
|
(309,573)
|
Other financial costs increase mainly relates to an impairment recognized by Ambev on its investment in Venezuela followed the devaluation of the country’s currency in the amount of R$ 29,070.
Interest expenses are presented net of the effect of derivative instruments which mitigate Ambev’s interest rate risk (Note
19
)
.
The interest expense recognized on hedged or not financial liabilities and the net interest expense from the related hedging derivative instruments are as follows:
|
Six-month period ended:
|
|
Three-month period ended:
|
Interest expense
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Financial liabilities measured at amortized cost
|
(138,914)
|
(196,251)
|
|
(69,422)
|
(111,082)
|
Financial liabilities at fair value through profit or loss
|
(130,330)
|
(19,635)
|
|
(68,174)
|
(19,635)
|
Fair value hedge - hedged items
|
10,558
|
(1,390)
|
|
7,512
|
(2,015)
|
Fair value hedge - hedging instruments
|
(22,046)
|
21,140
|
|
(13,734)
|
16,664
|
Cash flow hedges - hedged items
|
-
|
(5,547)
|
|
-
|
(177)
|
Cash flow hedges - hedging instruments (reclassified from equity)
|
-
|
2,686
|
|
-
|
88
|
|
(280,732)
|
(198,997)
|
|
(143,818)
|
(116,157)
|
Foreign exchange gains and losses are presented net of the effect of foreign exchange derivative instruments designated as hedges.
|
Six-month period ended:
|
|
Three-month period ended:
|
Finance income
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Interest income
|
140,324
|
144,726
|
|
61,608
|
71,093
|
Net gains on hedging instruments that are not part of a hedge accounting relationship
|
88,501
|
135,725
|
|
31,583
|
32,867
|
Hedge ineffectiveness gains
|
-
|
1,771
|
|
-
|
530
|
Gains on no derivative instrument at fair (value through profit or loss)
|
44,353
|
37,424
|
|
22,745
|
10,205
|
Interest and foreign exchange rate on loans
|
-
|
411
|
|
-
|
211
|
Exchange rate
|
-
|
-
|
|
3,968
|
-
|
Others
|
13,406
|
11,632
|
|
9,961
|
8,838
|
|
286,584
|
331,689
|
|
129,865
|
123,744
|
Interest income arises from the following financial assets:
|
Six-month period ended:
|
|
Three-month period ended:
|
Interest income
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Cash and cash equivalents
|
105,950
|
117,113
|
|
44,043
|
46,905
|
Investment securities held for trading
|
34,374
|
27,613
|
|
17,565
|
24,188
|
|
140,324
|
144,726
|
|
61,608
|
71,093
|
The net result of the operational hedge, of the net investment hedge and of the fiscal hedge recognized directly in other comprehensive income is presented below:
|
Six-month period ended:
|
|
Three-month period ended:
|
Hedging reserve
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
Recognized in Equity (cash flow hedge)
|
65,948
|
364,087
|
|
215,765
|
348,993
|
Removed from Equity and included in profit or loss
|
(72,945)
|
(211,541)
|
|
(20,535)
|
(121,927)
|
Deferred income tax variance in Equity and other changes
|
(2,302)
|
(85,570)
|
|
(60,340)
|
(122,840)
|
|
(9,299)
|
66,976
|
|
134,890
|
104,226
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations (gains/ (losses))
|
|
|
|
|
|
Effective portion of changes in fair value of net investment hedges
|
(187,843)
|
(225,353)
|
|
(242,206)
|
(274,651)
|
17. INCOME TAX AND SOCIAL CONTRIBUTION
Income taxes reported in the income statement are analyzed as follows:
|
Six-month period ended:
|
|
Three-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Income tax expense - current
|
(1,410,729)
|
(1,345,479)
|
|
(642,361)
|
(566,839)
|
|
|
|
|
|
|
Deferred tax (expense)/income on temporary differences
|
171,318
|
156,298
|
|
30,443
|
65,215
|
Deferred tax on taxes losses
|
205,098
|
217,920
|
|
83,971
|
110,418
|
Total deferred tax (expense)/income
|
376,416
|
374,218
|
|
114,414
|
175,633
|
|
|
|
|
|
|
Total income and expenses
|
(1,034,313)
|
(971,261)
|
|
(527,947)
|
(391,206)
|
The reconciliation from the weighted nominal to the effective tax rate is summarized as follows:
|
Six-month period ended:
|
|
Three-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
Profit before tax
|
5,334,094
|
5,234,822
|
|
2,451,235
|
2,320,261
|
Adjustment on taxable basis
|
|
|
|
|
|
Non-taxable income
|
(185,837)
|
(233,834)
|
|
(85,974)
|
(139,301)
|
Government grants related to sales taxes
|
(340,901)
|
(195,912)
|
|
(184,421)
|
(106,170)
|
Share of results of associates
|
(1,785)
|
(59)
|
|
(97)
|
301
|
Expenses not deductible for tax purposes
|
138,021
|
48,312
|
|
118,057
|
31,819
|
|
4,943,592
|
4,853,329
|
|
2,298,800
|
2,106,910
|
Aggregated weighted nominal tax rate
|
32.32%
|
32.32%
|
|
31.77%
|
31.89%
|
Taxes – nominal rate
|
(1,597,660)
|
(1,568,596)
|
|
(730,388)
|
(682,127)
|
Adjustment on tax expense
|
|
|
|
|
|
Regional incentives - income taxes
|
21,693
|
44,891
|
|
(10,357)
|
17,501
|
Deductible interest attributed to shareholders
|
124,612
|
272,945
|
|
-
|
135,604
|
Tax savings from goodwill amortization on tax books
|
125,215
|
60,376
|
|
62,608
|
30,188
|
Withholding tax and other income
|
(51,444)
|
(29,610)
|
|
(38,348)
|
(17,246)
|
Other tax adjustments
|
343,271
|
248,733
|
|
188,538
|
124,874
|
Income tax and social contribution expense
|
(1,034,313)
|
(971,261)
|
|
(527,947)
|
(391,206)
|
Effective tax rate
|
19.39%
|
18.55%
|
|
21.54%
|
16.86%
|
|
|
|
|
|
|
The main events occurred in the period that impacted the effective tax rate were:
(a) Tax benefit related to the amortization of goodwill arising from the acquisition of CND; (b) higher income from companies with an average tax rate of less than 34%, which were partially offset by the reduction in regional income tax incentives; (c) decrease in interest on shareholder’s equity expense.
The Company has been granted with income tax incentives by the Brazilian Federal Government to promote economic and social development in certain areas of the North and Northeast. These incentives are recorded in income on an accrual basis and allocated at year-end on tax incentive reserve account.
18. SHARE-BASED PAYMENTS
Different share-based payment programs and stock option plans allow the company’s senior management and members of the Board of Directors to receive or acquire shares of the Company. For all option plans, the fair value of share-based payment compensation is estimated at grant date, using the Hull binomial pricing model.
This current model of share based payment includes two types of grants: (i) on the first type of grant, the Beneficiary may choose to allocate 30%, 40%, 60%, 70% or 100% of the amount related to the profit share he received in the year, at the immediate exercise of options, thus acquiring the corresponding Preferred shares of the Company, and the delivery of a substantial part of the acquired shares is conditioned to the permanency in the Company for a period of five-years from the date of exercise (“Grant 1”) and; (ii) on the second type of grant, the Beneficiary may exercise the options after a period of five years (“Grant 2”). In this new model, the exercise of options is not subject to the fulfillment of performance goals of the Company.
The 2010.2 Program included two types of grants described above (Grant 1 and 2), the 2011.1 program included only Grant 1 and 2010.3 and 2011.2 Programs contemplated only Grant 2.
Additionally, to encourage managers to be mobile, some options granted in previous years were modified, where the dividend protection features of such options were canceled in exchange for issuing 26 thousand options in 2013 (69 thousand options in 2012), representing the economic value of the dividend protection feature eliminated. As there was no change in the fair value of the original award immediately prior to the modification and the fair value of the modified award immediately after the change, no additional expense was recorded as a result of this change.
The weighted average fair value of the options and assumptions used in applying the Ambev option pricing model for the 2013 and 2012 grants are as follows:
In R$, except when mentioned
|
06/30/2013
(i)
|
|
12/31/2012
(i)
|
|
|
|
|
|
|
Fair value of options granted
|
32.36
|
|
27.88
|
|
Share price
|
94.43
|
|
85.26
|
|
Exercise price
|
94.43
|
|
85.26
|
|
Expected volatility
|
35.4%
|
|
33.0%
|
|
Vesting year
|
5
|
|
4
|
|
Expected dividends
|
de 0% a 5%
|
|
de 0% a 5%
|
|
Risk-free interest rate
|
1,9% à 9,8%
|
(ii)
|
2.1% à 11.2%
|
(ii)
|
|
|
|
|
|
(i)
Information based on weighted average plans granted, except for the expected dividends and risk-free interest rate.
(ii)
The
percentages
include
the
grants
of
stock options
and
ADRs
during the period, for which the risk-free interest rate of ADRs is calculated in U.S. dollar
.
The total number of outstanding
Ambev
options are as follows:
Thousand options
|
06/30/2013
|
|
12/31/2012
|
|
|
|
|
Options outstanding at January 1
|
28,783
|
|
29,562
|
Options issued during the period
|
26
|
|
3,103
|
Options exercised during the period
|
(726)
|
|
(2,500)
|
Options forfeited during the period
|
(367)
|
|
(1,382)
|
Options outstanding at ended year
|
27,716
|
|
28,783
|
The range of exercise prices of the outstanding options is between R$9.79 (R$11.52 as of December 31, 2012) and R$89.20 ( R$89.20 as of December 31, 2012) and the weighted average remaining contractual life is approximately 7.92 years (8.15 years as of December 31, 2012).
Of the 27,716 thousand outstanding options (28,783 thousand as of December 31, 2012), 7,512 thousand options are vested as of June 30, 2013 (5,042 thousand as of December 31, 2012).
The weighted average exercise price of the
Ambev
options is as follows:
In R$ per share
|
06/30/2013
|
|
12/31/2012
|
Options outstanding at January 1
|
36.16
|
|
29.87
|
Options issued during the period
|
88.41
|
|
85.73
|
Options forfeited during the period
|
36.32
|
|
13.93
|
Options exercised during the period
|
21.67
|
|
14.12
|
Options outstanding at ended period
|
35.57
|
|
36.16
|
Options exercisable at ended period
|
17.95
|
|
18.96
|
For the options exercised during 2013, the weighted average share price at the date of exercise was R$85.25.
To settle stock options, the Company may use treasury shares. The current limit of authorized capital is considered sufficient to meet all stock option plans, if necessary the issuance of new shares to meet the programs grants.
In 2013, Ambev issued 831 thousand (967 thousand in 2012) deferred stock units related to exercise of the options in the model “Grant 1”. These deferred stock units are valued at the share price of the day of grant, representing a fair value of approximately R$74,465 (R$47,549 in 2012), and have vesting period of five years.
The total number of shares purchased under the plan of shares by employees, which delivery is deferred to a future time under certain conditions (deferred stock), is shown below:
Thousand deferred shares
|
06/30/2013
|
|
12/31/2012
|
|
|
|
|
Deferred shares outstanding at January 1
|
2,306
|
|
1,392
|
New deferred shares during the period
|
831
|
|
967
|
Deferred shares forfeited during the period
|
(30)
|
|
(53)
|
Deferred shares outstanding at ended year
|
3,107
|
|
2,306
|
Additionally, certain employees and directors of Ambev received options to acquire AB InBev shares, the compensation cost of which is recognized in the income statement against equity in the Company’s interim consolidated financial statements as of June 30, 2013
.
These share-based payments transactions mentioned above generated an expense of R$
82,134
in the period ended June 30, 2013 (R$
63,162
for the six-month period ended June 30, 2012), recorded as administrative expenses.
19. FINANCIAL INSTRUMENTS AND RISKS
1) Risk factors
The Company is exposed to foreign currency, interest rate, commodity price, liquidity and credit risk in the ordinary course of business. The Company analyzes each of these risks both individually and as a whole to define strategies to manage the economic impact on the Company's performance consistent with its Financial Risk Management Policy.
The Company’s use of derivatives strictly follows its Financial Risk Management Policy approved by the Board of Directors. The purpose of the policy is to provide guidelines for the management of financial risks inherent to the capital markets in which Ambev carries out its operations. The policy comprises four main aspects: (i) capital structure, financing and liquidity, (ii) transactional risks related to the business, (iii) financial statements translation risks and (iv) credit risks of financial counterparties.
The policy establishes that all the financial assets and liabilities in each country where the Company operates must be denominated in their respective local currencies. The policy also sets forth the procedures and controls needed for identifying, whenever possible, measuring and minimizing market risks, such as variations in foreign exchange rates, interest rates and commodities (mainly aluminum, wheat, corn and sugar) that may affect the Company’s revenues, costs and/or investment amounts. The policy states that all the currently known risks (e.g. foreign currency and interest) shall be mitigated by contracting derivative instruments. Existing risks not yet evident (e.g. future contracts for the purchase of raw material and property, plant and equipment) shall be mitigated using projections for the period necessary for the Company to adapt to the new costs scenario that may vary from 10 to 14 months, also through the use of derivative instruments. Not all financial statements translations risks are mitigated. Any exception to the policy must be approved by the Board of Directors.
The
Company's operations are subject to the risk factors described below:
1.1) Foreign currency risk
Ambev incurs foreign currency risk on borrowings, investments, purchases, dividends and interest expense/income whenever they are denominated in a currency other than the functional currency of the subsidiary. The main derivatives financial instruments used to manage foreign currency risk are futures contracts, swaps, options, non deliverable forwards and full deliverables forwards.
Foreign currency risk on operational activities
As far as foreign currency risk on firm commitments and forecasted transactions is concerned, Ambev’s policy is to hedge operational transactions which are reasonably expected to occur. The table below shows the main net foreign currency positions on June 30, 2013, and the exposure
may vary from 10 to 14 months, according to the Company’s Financial Risk Management Policy. Positive values
??
indicate that the Company is long (net future cash inflows) in the first currency of the currency pairs, while negative values indicate that the Company is short (net future cash outflows) in the first currency of the currency pairs. The second currency of the currency pairs listed is the functional currency of the related subsidiary.
|
06/30/2013
|
|
12/31/2012
|
|
Total exposed
|
Derivatives total
|
Open position
|
|
Total exposed
|
Derivatives total
|
Open position
|
Dollar / Canadian Dollar
|
(360,261)
|
360,261
|
-
|
|
(378,573)
|
378,573
|
-
|
Dollar / Paraguayan Guarani
|
(93,337)
|
93,337
|
-
|
|
(129,607)
|
129,607
|
-
|
Dollar / Argentinean Peso
|
(565,047)
|
565,047
|
-
|
|
(612,969)
|
612,969
|
-
|
Dollar / Bolivian Peso
|
(150,234)
|
150,234
|
-
|
|
(142,170)
|
142,170
|
-
|
Dollar / Chilean Peso
|
(99,718)
|
99,718
|
-
|
|
(90,948)
|
90,948
|
-
|
Dollar / Dominican Peso
|
-
|
-
|
-
|
|
(30,653)
|
30,653
|
-
|
Dollar / Uruguayan Peso
|
(58,414)
|
58,414
|
-
|
|
(62,368)
|
62,368
|
-
|
Dollar / Real
|
(3,355,526)
|
3,355,526
|
-
|
|
(3,141,779)
|
3,141,779
|
-
|
Dollar / Peruvian Sol
|
(117,727)
|
117,727
|
-
|
|
(157,193)
|
157,193
|
-
|
Euro / Canadian Dollars
|
(74,956)
|
74,956
|
-
|
|
(62,622)
|
62,622
|
-
|
Euro / Real
|
(231,338)
|
231,338
|
-
|
|
(132,317)
|
132,317
|
-
|
Pound Sterling / Canadian Dollars
|
(12,114)
|
12,114
|
-
|
|
(22,104)
|
22,104
|
-
|
|
(5,118,672)
|
5,118,672
|
-
|
|
(4,963,303)
|
4,963,303
|
-
|
In conformity with IAS 39, these instruments denominated in foreign currency are designated as cash flow hedges.
Foreign currency on operating activities sensitivity analysis
Net positions in foreign currencies are converted into the functional currency through the use of derivatives. Ambev's strategy is to minimize open positions to the market, thereby reducing operational exposure to foreign currency fluctuations.
Foreign currency risk on net investments in foreign operations
Ambev enters into hedging activities to mitigate exposures related to part of its investments in foreign operations. These derivatives have been appropriately classified as net investment hedges and recorded on the statements of comprehensive income as gains and (losses) on translation of foreign operations (gains/losses).
1.2) Interest rate risk
The Company applies a dynamic interest rate hedging approach whereby the target mix between fixed and floating rate debt is reviewed periodically. The purpose of Ambev’s policy is to achieve an optimal balance between cost of funding and profitability of financial results, while taking into account market conditions as well as Ambev’s overall business strategy.
Bond Hedges (interest rate risk on borrowings in Brazilian Real)
In July 2007, Ambev International Finance Co. issued a Brazilian Real bond (Bond 2017), of R$300,000, which bears interest at 9.5% and is repayable semi-annually with final maturity in July 2017.
Ambev entered into a swap transaction to hedge the interest rate risk on the Bond 2017. These derivative instruments have been designated as fair value hedge.
Debt Securities Hedge (interest rate on debt securities in Brazilian Real)
During the period, Ambev invested in government (fixed income) bonds. These instruments are categorized as held for trading. The Company also purchased interest rate futures contracts to compensate the exposure to real interest rate on the government bonds. Although both instruments are measured at fair value, with the changes recorded in the income statement, there is no hedge accounting structure.
Interest rate sensitivity analysis
The table below shows the debt structure, before and after hedging, segregated by currency in which the debt is designated, as the interest rates of the respective transactions.
|
06/30/2013
|
|
12/31/2012
|
|
Pre - Hedge
|
|
Post - Hedge
|
|
Pre - Hedge
|
|
Post - Hedge
|
|
Interest rate
|
Amount
|
|
Interest rate
|
Amount
|
|
Interest rate
|
Amount
|
|
Interest rate
|
Amount
|
Brazilian Real
|
7.2%
|
1,449,301
|
|
7.4%
|
2,258,115
|
|
6.8%
|
1,527,230
|
|
6.9%
|
2,211,292
|
American Dollar
|
2.0%
|
814,601
|
|
3.4%
|
294,021
|
|
2.5%
|
650,056
|
|
3.4%
|
279,989
|
Dominican Peso
|
9.7%
|
80,145
|
|
9.7%
|
80,145
|
|
10.6%
|
189,004
|
|
10.6%
|
189,004
|
Argentinean Peso
|
15.0%
|
2,035
|
|
15.0%
|
2,035
|
|
0.0%
|
-
|
|
0.0%
|
-
|
Interest rate postfixed
|
|
2,346,082
|
|
|
2,634,316
|
|
|
2,366,290
|
|
|
2,680,285
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian Real
|
6.8%
|
574,703
|
|
4.0%
|
286,469
|
|
6.6%
|
695,151
|
|
5.3%
|
381,156
|
Argentinean Peso
|
17.4%
|
121
|
|
17.4%
|
121
|
|
0.0%
|
-
|
|
0.0%
|
-
|
Dominican Peso
|
12.0%
|
15,203
|
|
12.0%
|
15,203
|
|
17.0%
|
206
|
|
17.0%
|
206
|
American Dollar
|
6.0%
|
72,586
|
|
6.0%
|
72,586
|
|
12.0%
|
33,110
|
|
12.0%
|
33,110
|
Guatemala´s Quetzal
|
0.0%
|
-
|
|
0.0%
|
-
|
|
0.0%
|
-
|
|
0.0%
|
-
|
Peruvian Sol
|
0.0%
|
-
|
|
0.0%
|
-
|
|
5.7%
|
49,095
|
|
5.7%
|
49,095
|
Interest rate pre-set
|
|
662,613
|
|
|
374,379
|
|
|
777,562
|
|
|
463,567
|
To perform the sensitivity analysis, the Company took into account that the greatest possible impact on income / interest expense in the case of a short position in an interest rate future contract is when the Referential Rate (“TR”) rises. Ambev estimated the possible loss, considering a scenario of variable interest rates.
Applying the sensitivity analysis where the interest rate rises, and all other variables remain constant, showed a fluctuation of 25% (adverse scenario) in the interest rate up to June 30, 2013 would produce an increase of approximately
R$
23 million in interest expense and approximately
R$
46 million in interest income from cash investments, while a fluctuation of 50% (remote scenario) would present an increase of approximately
R$
70 million in expense and
R$
140 million in income.
1.3) Commodity Risk
A significant portion of Ambev’s inputs comprises commodities, which historically have experienced substantial price fluctuations. Ambev therefore uses both fixed price purchasing contracts and commodity derivatives to minimize exposure to commodity price volatility. The Company has important exposures to the following commodities: aluminum, sugar, wheat and corn. These derivative instruments have been designated as cash flow hedges.
|
06/30/2013
|
|
12/31/2012
|
|
Total Exposure
|
Total of Derivatives
|
Open Position
|
|
Total Exposure
|
Total of Derivatives
|
Open Position
|
Aluminum
|
(1,040,840)
|
1,040,840
|
-
|
|
(667,598)
|
667,598
|
-
|
Sugar
|
(384,841)
|
384,841
|
-
|
|
(334,755)
|
334,755
|
-
|
Wheat
|
(362,096)
|
362,096
|
-
|
|
(249,943)
|
249,943
|
-
|
Heating oil
|
(36,300)
|
36,300
|
-
|
|
(29,682)
|
29,682
|
-
|
Crude oil
|
(23,937)
|
23,937
|
-
|
|
(20,377)
|
20,377
|
-
|
Natural Gas
|
(5,859)
|
5,859
|
-
|
|
(6,805)
|
6,805
|
-
|
Paraxylene
|
(80,626)
|
80,626
|
-
|
|
-
|
-
|
-
|
Corn
|
(265,092)
|
265,092
|
-
|
|
(319,901)
|
319,901
|
-
|
Total
|
(2,199,591)
|
2,199,591
|
-
|
|
(1,629,061)
|
1,629,061
|
-
|
Commodity sensitivity analysis
Due to the volatility of commodities prices, Ambev uses fixed price future contracts and derivatives instruments to minimize exposure to market movements that could affect income.
The table below shows the estimated impact on Equity from fluctuations in commodities prices. Hedge operations for transactions which may impact Equity will generate results inversely proportional to the impact on the acquisition cost of commodities.
|
Impact on Equity
|
|
06/30/2013
|
|
12/31/2012
|
|
Adverse scenario 25%
|
Remote scenario 50%
|
|
Adverse scenario 25%
|
Remote scenario 50%
|
|
|
|
|
|
|
Aluminum
|
(260,211)
|
(520,420)
|
|
(165,146)
|
(330,291)
|
Sugar
|
(96,210)
|
(192,420)
|
|
(83,689)
|
(167,378)
|
Wheat
|
(90,524)
|
(181,048)
|
|
(62,486)
|
(124,971)
|
Heating oil
|
(9,075)
|
(18,150)
|
|
(7,249)
|
(14,499)
|
Crude oil
|
(5,984)
|
(11,969)
|
|
(5,094)
|
(10,189)
|
Natural Gas
|
(1,465)
|
(2,930)
|
|
(1,584)
|
(3,167)
|
Paraxylene
|
(20,156)
|
(40,313)
|
|
-
|
-
|
Corn
|
(66,273)
|
(132,546)
|
|
(79,975)
|
(159,951)
|
Total
|
(549,898)
|
(1,099,796)
|
|
(405,223)
|
(810,446)
|
1.4) Credit Risk
Concentration of credit risk on trade receivables
A substantial part of the Company’s sales is made to distributors, supermarkets and retailers, within a broad distribution network. Credit risk is reduced because of the widespread number of customers and control procedures used to monitor risk. Historically, the Company has not experienced significant losses on receivables from customers.
Concentration of credit risk on counterpart
In order to minimize the credit risk of its investments, the Company has adopted procedures for the allocation of cash and investments, taking into consideration limits and credit analysis of financial institutions, avoiding credit concentration, i.e., the credit risk is monitored and minimized to the extent that negotiations are carried out only with a select group of highly rated counterparties.
The selection process of financial institutions authorized to operate as the Company’s counterparties is set forth in our Credit Risk Policy. This policy establishes maximum limits of exposure to each counterparty based on the risk rating and on each counterparty's capitalization.
In order to minimize the risk of credit with its counterparties on significant derivative transactions, the Company has adopted bilateral “trigger” clauses. According to these clauses, when the fair value of an operation exceeds a percentage of its notional value (generally between 10% and 15%), the debtor settles the difference in favor of the creditor.
As of June, 2013, the Company held its main short-term investments with the following financial institutions: Banco do Brasil, Caixa Econômica Federal, BNP Paribas, Bradesco, Merrill Lynch, Morgan Stanley, Deutsche Bank, Itaú-Unibanco, Citibank, Toronto Dominion Bank, ING, JP
Morgan Chase, Patagonia, Santander, Barclays and HSBC. The Company contracted derivative instruments with the following financial institutions: Barclays, Citibank, Merrill Lynch, Morgan Stanley, Deutsche Bank, Itaú-Unibanco, JP Morgan Chase, Santander, ScotiaBank, Sociète Generale, Banco Bisa, Banco de Crédito do Peru, BNB, BNP Paribas, Macquarie and TD Securities.
The carrying amount of financial assets represents the maximum exposure to credit risk. The carrying amount
of cash and cash equivalents, investment securities, trade and other receivables excluding prepaid expenses, taxes receivable and derivative financial instruments are disclosed net of provisions for impairment and represents the maximum exposure of credit risk as of June 30, 2013. There was no concentration of credit risk with any counterparty as of June 30, 2013.
1.5) Liquidity risk
The Company believes that cash flows from operating activities, cash and cash equivalents and short-term investments, together with the derivative instruments and access to loan facilities are sufficient to finance capital expenditures, financial liabilities and dividend payments in the future.
2) Financial instruments:
Management of these instruments is effected through operational strategies and internal controls to assure liquidity, profitability and transaction security. Financial instruments transactions contracted with hedge objectives are regularly reviewed for the effectiveness of the risk exposure that management intends to cover (foreign exchange, interest rate etc.).
Transactions involving financial instruments, segregated by category, are recognized in the financial statements, as below:
|
Loans and receivables
|
Financial asset at fair value through profit or loss
|
Derivatives
hedge
|
Held to maturity
|
Avaiable for sale
|
Total
|
June 30, 2013
|
|
|
|
|
|
|
Assets due to Balance sheet
|
|
|
|
|
|
|
Cash and cash equivalents
|
4,435,765
|
-
|
-
|
-
|
-
|
4,435,765
|
Investment securities
|
-
|
486,133
|
-
|
74,658
|
172,004
|
732,795
|
Trade and other receivables excluding prepaid expenses and taxes receivable
|
3,895,023
|
-
|
-
|
-
|
-
|
3,895,023
|
Financial instruments derivatives
|
-
|
189,555
|
316,653
|
-
|
-
|
506,208
|
Total
|
8,330,788
|
675,688
|
316,653
|
74,658
|
172,004
|
9,569,791
|
|
Loans and receivables
|
Financial asset at fair value through profit or loss
|
Derivatives
hedge
|
Held to maturity
|
Avaiable for sale
|
Total
|
December 31, 2012
|
|
|
|
|
|
|
Assets due to Balance sheet
|
|
|
|
|
|
|
Cash and cash equivalents
|
8,926,165
|
-
|
-
|
-
|
-
|
8,926,165
|
Investment securities
|
-
|
291,183
|
-
|
61,436
|
373,367
|
725,986
|
Trade and other receivables excluding prepaid expenses and taxes receivable
|
4,037,097
|
-
|
-
|
-
|
-
|
4,037,097
|
Financial instruments derivatives
|
-
|
200,106
|
171,015
|
-
|
-
|
371,121
|
Total
|
12,963,262
|
491,289
|
171,015
|
61,436
|
373,367
|
14,060,369
|
|
|
Financial liabilities through amortized cost
|
Financial liabilities at fair value through profit and loss
|
Derivatives
hedge
|
Total
|
June 30, 2013
|
|
|
|
|
|
Liabilities due to Balance sheet
|
|
|
|
|
|
Trade and other payables excluding tax payables
|
|
6,467,850
|
2,383,620
|
-
|
8,851,470
|
Financial instruments derivatives
|
|
-
|
616,401
|
449,549
|
1,065,950
|
Interest-bearning loans and borrowings
|
|
3,008,695
|
-
|
-
|
3,008,695
|
Total
|
|
9,476,545
|
3,000,021
|
449,549
|
12,926,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities through amortized cost
|
Financial liabilities at fair value through profit and loss
|
Derivatives
hedge
|
Total
|
December 31, 2012
|
|
|
|
|
|
Liabilities due to Balance sheet
|
|
|
|
|
|
Trade and other payables excluding tax payables
|
|
11,155,875
|
2,125,754
|
-
|
13,281,629
|
Financial intruments derivatives
|
|
-
|
686,738
|
369,093
|
1,055,831
|
Interest-bearning loans and borrowings
|
|
3,143,729
|
-
|
-
|
3,143,729
|
Total
|
|
14,299,604
|
2,812,492
|
369,093
|
17,481,189
|
Classification of financial instruments by type of fair value measurement
Pursuant to IFRS 7,
the classification of financial instruments measured at fair value as of June 30, 2013 is shown below:
Level 1 – valuation at quoted prices (unadjusted) in active markets;
Level 2 – other data besides those quoted in an active market (Level 1) that may price the obligations and rights directly (e.g., active market prices) or indirectly (e.g., valuation techniques that use data derived from active markets); and,
Level 3 – valuation inputs that are not based on observable market data (unobservable inputs).
|
06/30/2013
|
|
12/31/2012
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Financial asset at fair value through profit or loss
|
646,229
|
29,458
|
-
|
675,687
|
|
325,108
|
166,181
|
-
|
491,289
|
Derivatives - cash flow hedge
|
197,113
|
54,217
|
-
|
251,330
|
|
32,815
|
67,225
|
-
|
100,040
|
Derivatives - fair value hedge
|
-
|
-
|
-
|
-
|
|
-
|
20,827
|
-
|
20,827
|
Derivatives - investment hedge
|
29,329
|
35,994
|
-
|
65,323
|
|
31,562
|
18,586
|
-
|
50,148
|
|
872,671
|
119,669
|
-
|
992,340
|
|
389,485
|
272,819
|
-
|
662,304
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit and loss (i)
|
139,632
|
476,769
|
2,383,620
|
3,000,021
|
|
40,006
|
646,732
|
2,125,754
|
2,812,492
|
Derivatives - cash flow hedge
|
182,734
|
177,307
|
-
|
360,041
|
|
87,746
|
156,728
|
-
|
244,474
|
Derivatives - fair value hedge
|
-
|
4,791
|
-
|
4,791
|
|
-
|
-
|
-
|
-
|
Derivatives - investment hedge
|
84,717
|
-
|
-
|
84,717
|
|
23,509
|
101,110
|
-
|
124,619
|
|
407,083
|
658,867
|
2,383,620
|
3,449,570
|
|
151,261
|
904,570
|
2,125,754
|
3,181,585
|
(i) As part of the shareholders agreement between the Ambev and ELJ, an option to sell (“put”) and to purchase (“call”) was issued, which may result in an acquisition by Ambev of the remaining shares of CND, for a value based on EBITDA multiples and exercisable annually until 2019. On June 30, 2013 the put option held by ELJ is valued at approximately R$2.4 billion and the liability was recorded against equity in accordance with the IFRS 3 and categorized as “Level 3”. No value has been assigned to the call option held by Ambev. The fair value of this consideration deferred was calculated by using standard valuation techniques (present value of the principal amount and future interest rates, discounted by the market rate). The criteria used are based on market information and from reliable sources and they are revaluated on an annual basis at the same moment that the Company applies the impairment test. The changes in Level 3 are presented as follows:
Reconciliation of changes in the categorization of Level 3
Balance of financial liabilities at December 31, 2012
|
2,125,754
|
Total gains and losses in the period
|
257,866
|
Expense recognized in the income
|
214,687
|
Expense recognized in equity
|
43,179
|
Balance of financial liabilities at June 30, 2013
|
2,383,620
|
2.1) Derivative instruments
To meet its objectives, the Company and its subsidiaries use currency, interest, and commodity derivative instruments. Derivative instruments authorized by the
Financial Risk Management Policy
are futures contracts traded on exchanges, deliverable forwards, non-deliverable forwards, swaps and options. At June 30, 2013, the Company and its subsidiaries had no target forward operations, swaps with currency verification or any other derivative operations representing a risk level above the nominal value of the contracts. The derivative operations are classified by strategy according to their purpose, as follows:
i)
Operational hedge
– operations contracted with the purpose of reducing the Company’s exposure, net of taxes, to the volatility of foreign exchange rates and raw material prices, commitments for investments, equipment and services to be acquired. All such derivatives are classified as Cash Flow Hedge instruments. Thus, the net results of such operations calculated at fair value, are recorded in equity accounts until recognition of the hedged item, when the accumulated results are recycled to the appropriate income statement account.
ii)
Financial hedge
-
operations contracted with the purpose of mitigating the Company’s net indebtedness against foreign exchange and interest rate risk. Cash net positions and foreign currency debts are continually assessed for identification of new exposures. Derivative used to protect the risks related to Bond 2017 was designated as Fair Value Hedge instrument. Thus, their results, measured according to their fair value, are recognized in each year in financial results.
iii)
Fiscal hedge
-
operations contracted with the purpose of minimizing the Brazilian fiscal impact related to the foreign exchange gains/losses on transactions in U.S. dollars, between the Company and its subsidiaries abroad. Such contracts are represented by long-term borrowings, duly recorded at Brazilian Central Bank, adjusted for foreign exchange variation plus market interest rate.
In order to offset the tax effect on unmatched exposures, the Company contracted derivative instruments, the results of which are measured at fair value and recognized on an accrual basis within income tax expense of each period.
iv)
Net investment hedge
-
transactions entered into in order to minimize exposure of the exchange differences arising from translation of net investment in the Company's subsidiaries located abroad for translation account balance. All derivatives allocated to this type of transaction are classified as Net Investment Hedge instruments.
The effective part of the hedge is allocated to equity and the ineffectiveness part is recorded directly in financial results.
As of June 30, 2013 and December 31, 2012, the contracted amounts of these instruments and their respective fair values, as well as the cumulative effects in each period, are detailed in the table below:
Purpose / Risk / Instruments
|
Notional (i)
|
|
Fair value
|
|
|
|
06/30/2013
|
12/31/2012
|
|
06/30/2013
|
12/31/2012
|
|
|
|
|
|
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
|
Foreign currency
|
Future contracts (ii)
|
2,667,390
|
3,274,096
|
|
78,611
|
(27,519)
|
4,363
|
(16,440)
|
|
Foreign currency
|
Option to acquire
|
919,474
|
-
|
|
99,767
|
-
|
-
|
-
|
|
Foreign currency
|
Non Deliverable Forwards
|
1,084,476
|
1,225,907
|
|
16,541
|
(25,982)
|
10,547
|
(51,434)
|
|
Foreign currency
|
Deliverable Forwards
|
447,331
|
463,299
|
|
17,182
|
(55)
|
-
|
(4,105)
|
|
Commodity
|
Future contracts (ii)
|
1,122,451
|
933,770
|
|
27,152
|
(166,034)
|
76,928
|
(107,886)
|
|
Commodity
|
Swaps
|
1,077,139
|
695,291
|
|
27,267
|
(152,771)
|
41,049
|
(92,211)
|
Operational hedge
|
|
7,318,261
|
6,592,363
|
|
266,520
|
(372,361)
|
132,887
|
(272,076)
|
|
Foreign currency
|
Future contracts (ii)
|
1,857,448
|
(664,240)
|
|
112,776
|
(76,886)
|
13,989
|
(14,670)
|
|
Foreign currency
|
Swaps
|
255,860
|
239,101
|
|
1,062
|
(220,628)
|
21,699
|
(180,696)
|
|
Foreign currency
|
Non Deliverable Forwards
|
-
|
1,351,282
|
|
-
|
-
|
19,803
|
(10,533)
|
|
Interest rates
|
Future contracts (ii)
|
(250,000)
|
(400,000)
|
|
2,926
|
(2,428)
|
219
|
(356)
|
|
Interest rates
|
Swaps
|
300,000
|
300,000
|
|
-
|
(4,791)
|
20,827
|
-
|
Financial hedge
|
|
2,163,308
|
826,143
|
|
116,764
|
(304,733)
|
76,537
|
(206,255)
|
|
Foreign currency
|
Future contracts (ii)
|
(925,869)
|
(3,985)
|
|
36,427
|
(54,253)
|
6,037
|
(6,003)
|
|
Foreign currency
|
Swaps / Non Deliverable Forwards
|
(1,823,439)
|
(2,182,458)
|
|
21,173
|
(249,886)
|
105,512
|
(446,878)
|
Fiscal hedge
|
|
(2,749,308)
|
(2,186,443)
|
|
57,600
|
(304,139)
|
111,549
|
(452,881)
|
|
Foreign currency
|
Future contracts (ii)
|
(2,866,543)
|
(2,462,826)
|
|
29,329
|
(84,717)
|
31,562
|
(23,509)
|
|
Foreign currency
|
Non Deliverable Forwards
|
886,240
|
-
|
|
35,994
|
-
|
18,586
|
(101,110)
|
Investment hedge
|
|
(1,980,303)
|
(2,462,826)
|
|
65,323
|
(84,717)
|
50,148
|
(124,619)
|
Total Derivatives
|
|
4,751,958
|
2,769,237
|
|
506,207
|
(1,065,950)
|
371,121
|
(1,055,831)
|
|
|
|
|
|
|
|
|
|
(i) The negative positions refer to long positions and the positive positions refer to short positions.
(ii) The future contracts are traded on organized futures exchanges, while other derivative financial instruments are negotiated directly with financial institutions.
The Company recorded gains and losses on derivative financial instruments in the period ended June 30, 2013 and 2012 as below:
|
|
|
Result (iii)
|
|
|
|
Six-month period ended:
|
|
Three-month period ended:
|
Purpose / Risk / Instruments
|
|
06/30/2013
|
06/30/2012
|
|
06/30/2013
|
06/30/2012
|
|
|
|
|
|
|
|
|
|
Foreign currency
|
Future contracts
|
120,715
|
352,436
|
|
170,471
|
333,107
|
|
Foreign currency
|
Option to acquire
|
42,842
|
-
|
|
42,842
|
-
|
|
Foreign currency
|
Non Deliverable Forwards
|
148,203
|
25,957
|
|
112,442
|
79,512
|
|
Foreign currency
|
Deliverable Forwards
|
7,744
|
11,726
|
|
8,062
|
2,127
|
|
Commodity
|
Future contracts
|
(140,628)
|
11,435
|
|
(61,995)
|
6,496
|
|
Commodity
|
Swaps
|
(112,928)
|
(37,467)
|
|
(56,057)
|
(72,249)
|
Operational hedge
|
|
|
65,948
|
364,087
|
|
215,765
|
348,993
|
|
Foreign currency
|
Future contracts
|
90,799
|
111,275
|
|
106,874
|
95,547
|
|
Foreign currency
|
Option to acquire
|
(7,601)
|
(937)
|
|
(7,601)
|
(937)
|
|
Foreign currency
|
Swaps
|
(6,385)
|
(9,861)
|
|
(2,706)
|
(4,505)
|
|
Foreign currency
|
Non Deliverable Forwards
|
(37,326)
|
(8,869)
|
|
(27,522)
|
10,291
|
|
Foreign currency
|
Deliverable Forwards
|
(10,703)
|
-
|
|
(10,703)
|
-
|
|
Interest rates
|
Future contracts
|
(5,761)
|
10,998
|
|
8,328
|
4,914
|
|
Interest rates
|
Swaps
|
(22,046)
|
21,599
|
|
(13,734)
|
17,012
|
Financial hedge
|
|
|
977
|
124,205
|
|
52,936
|
122,322
|
|
Foreign currency
|
Future contracts
|
(41,582)
|
(3,899)
|
|
(73,766)
|
(40,063)
|
|
Foreign currency
|
Swaps / Non Deliverable Forwards
|
(103,260)
|
(103,270)
|
|
(40,474)
|
(112,859)
|
Fiscal hedge
|
|
|
(144,842)
|
(107,169)
|
|
(114,240)
|
(152,922)
|
|
Foreign currency
|
Future contracts
|
(154,899)
|
(127,292)
|
|
(209,262)
|
(172,339)
|
|
Foreign currency
|
Non Deliverable Forwards
|
(32,944)
|
(98,061)
|
|
(32,944)
|
(102,312)
|
Investment hedge
|
|
|
(187,843)
|
(225,353)
|
|
(242,206)
|
(274,651)
|
Total Derivatives
|
|
|
(265,760)
|
155,770
|
|
(87,745)
|
43,742
|
(iii) The result of R$
65,948
related to hedge operations was recognized in equity (Hedge reserves) as well as the result of net investment hedge in an amount of R$(187,843) which was allocated as income (losses) on translation of subsidiaries operations as presented in Other comprehensive income.
The result of the financial hedging of R$977
was fully recorded in the financial results.
The effect of R$(
144,842
) related to derivatives designated as Fiscal hedges, was recognized in the income tax and social contribution.
As of June 30, 2013, the Notional and Fair Value amounts per instrument/ maturity were as follows:
Purpose / Risk / Instruments
|
Notional
|
|
|
|
2013
|
2014
|
2015
|
2016
|
>2016
|
Total
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
|
Future contracts (i)
|
2,667,390
|
-
|
-
|
-
|
-
|
2,667,390
|
|
Foreign currency
|
Option to acquire
|
-
|
919,474
|
-
|
-
|
-
|
919,474
|
|
Foreign currency
|
Non Deliverable Forwards
|
826,693
|
257,783
|
-
|
-
|
-
|
1,084,476
|
|
Foreign currency
|
Deliverable Forwards
|
261,656
|
185,675
|
-
|
-
|
-
|
447,331
|
|
Commodity
|
Future contracts (i)
|
555,386
|
567,065
|
-
|
-
|
-
|
1,122,451
|
|
Commodity
|
Swaps
|
379,832
|
692,113
|
5,194
|
-
|
-
|
1,077,139
|
Operational hedge
|
|
4,690,957
|
2,622,110
|
5,194
|
-
|
-
|
7,318,261
|
|
Foreign currency
|
Future contracts (i)
|
1,857,448
|
-
|
-
|
-
|
-
|
1,857,448
|
|
Foreign currency
|
Swaps
|
3,874
|
-
|
251,986
|
-
|
-
|
255,860
|
|
Interest rates
|
Future contracts (i)
|
-
|
-
|
(220,000)
|
(30,000)
|
-
|
(250,000)
|
|
Interest rates
|
Swaps
|
-
|
-
|
-
|
-
|
300,000
|
300,000
|
Financial hedge
|
|
1,861,322
|
-
|
31,986
|
(30,000)
|
300,000
|
2,163,308
|
|
Foreign currency
|
Future contracts (i)
|
(925,869)
|
-
|
-
|
-
|
-
|
(925,869)
|
|
Foreign currency
|
Swaps / Non Deliverable Forwards
|
(1,823,439)
|
-
|
-
|
-
|
-
|
(1,823,439)
|
Fiscal hedge
|
|
(2,749,308)
|
-
|
-
|
-
|
-
|
(2,749,308)
|
|
Foreign currency
|
Future contracts (i)
|
(2,866,543)
|
-
|
-
|
-
|
-
|
(2,866,543)
|
|
Foreign currency
|
Non Deliverable Forwards
|
886,240
|
-
|
-
|
-
|
-
|
886,240
|
Investment hedge
|
|
(1,980,303)
|
-
|
-
|
-
|
-
|
(1,980,303)
|
Total Derivatives
|
|
1,822,668
|
2,622,110
|
37,180
|
(30,000)
|
300,000
|
4,751,958
|
Purpose / Risk / Instruments
|
Fair Value
|
|
|
|
2013
|
2014
|
2015
|
2016
|
>2016
|
Total
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
|
Future contracts (i)
|
51,092
|
-
|
-
|
-
|
-
|
51,092
|
|
Foreign currency
|
Option to acquire
|
-
|
99,767
|
-
|
-
|
-
|
99,767
|
|
Foreign currency
|
Non Deliverable Forwards
|
(15,133)
|
5,692
|
-
|
-
|
-
|
(9,441)
|
|
Foreign currency
|
Deliverable Forwards
|
10,998
|
6,129
|
-
|
-
|
-
|
17,127
|
|
Commodity
|
Future contracts (i)
|
(93,142)
|
(45,740)
|
-
|
-
|
-
|
(138,882)
|
|
Commodity
|
Swaps
|
(84,739)
|
(40,683)
|
(82)
|
-
|
-
|
(125,504)
|
Operational hedge
|
|
(130,924)
|
25,165
|
(82)
|
-
|
-
|
(105,841)
|
|
Foreign currency
|
Future contracts (i)
|
35,890
|
-
|
-
|
-
|
-
|
35,890
|
|
Foreign currency
|
Swaps
|
(205,871)
|
-
|
(13,695)
|
-
|
-
|
(219,566)
|
|
Interest rates
|
Future contracts (i)
|
-
|
-
|
384
|
114
|
-
|
498
|
|
Interest rates
|
Swaps
|
-
|
-
|
-
|
-
|
(4,791)
|
(4,791)
|
Financial hedge
|
|
(169,981)
|
-
|
(13,311)
|
114
|
(4,791)
|
(187,969)
|
|
Foreign currency
|
Future contracts (i)
|
(17,826)
|
-
|
-
|
-
|
-
|
(17,826)
|
|
Foreign currency
|
Swaps / Non Deliverable Forwards
|
(228,713)
|
-
|
-
|
-
|
-
|
(228,713)
|
Fiscal hedge
|
|
(246,539)
|
-
|
-
|
-
|
-
|
(246,539)
|
|
Foreign currency
|
Future contracts (i)
|
(55,388)
|
-
|
-
|
-
|
-
|
(55,388)
|
|
Foreign currency
|
Non Deliverable Forwards
|
35,994
|
-
|
-
|
-
|
-
|
35,994
|
Investment hedge
|
|
(19,394)
|
-
|
-
|
-
|
-
|
(19,394)
|
Total Derivatives
|
|
(566,838)
|
25,165
|
(13,393)
|
114
|
(4,791)
|
(559,743)
|
Sensitivity analysis
The Company mitigates risks arising from non-derivative financial assets and liabilities substantially, through derivative instruments. The Company has identified the main risk factors that may generate losses from these derivative financial instruments and has developed a sensitivity analysis based on three scenarios, which may impact future results and /or cash flows, as described below:
1 – Base scenario: stable foreign exchange rate, interest rates and commodity prices at the same levels observed on June 30, 2013.
2 – Adverse scenario: 25% deterioration in each transaction’s main risk factor as compared to the level observed on June 30, 2013.
3 – Remote scenario: 50% deterioration in each transaction’s main risk factor as compared to the level observed on June 30, 2013.
In addition to the scenarios described above, the Company uses Value at Risk – VaR to measure the possible effects on the results of derivative transactions. VaR is a statistical measure developed through estimates of standard deviation and correlation between the returns of several risk factors. This model results in the loss limit expected for an asset over a certain time period and confidence interval. Under this methodology, we used the potential exposure of each financial instrument, a range of 95% and horizon of 21 days for the calculation, which are presented in module, as the following tables on June 30, 2013:
|
Risk factor
|
Financial instruments
|
Risk
|
Base scenario
|
Adverse scenario
|
Remote
scenario
|
VaR (R$)
|
|
Foreign currency
|
Future contracts
|
Dollar decrease
|
51,092
|
(615,755)
|
(1,282,603)
|
138,249
|
|
Foreign currency
|
Option to acquire
|
Dollar decrease
|
99,767
|
-
|
-
|
99,767
|
|
Foreign currency
|
Non Deliverable Forwards
|
Dollar and Euro decrease
|
(9,441)
|
(280,560)
|
(551,679)
|
24,320
|
|
Foreign currency
|
Deliverable Forwards
|
Dollar and Euro decrease
|
17,127
|
(94,706)
|
(206,539)
|
15,293
|
|
Commodity
|
Future contracts
|
Commodity decrease
|
(138,882)
|
(419,495)
|
(700,108)
|
139,206
|
|
Commodity
|
Swaps
|
Commodity decrease
|
(125,504)
|
(394,789)
|
(664,074)
|
123,120
|
Operational hedge
|
|
|
|
|
|
|
|
Foreign currency
|
Future contracts
|
Dollar decrease
|
35,890
|
(428,472)
|
(892,834)
|
96,270
|
|
Foreign currency
|
Swaps
|
Increase in tax interest
|
(230,294)
|
(294,259)
|
(358,224)
|
190
|
|
Foreign currency
|
Swaps
|
Dollar decrease
|
10,728
|
10,728
|
10,728
|
12,547
|
|
Interest rates
|
Future contracts
|
Increase in tax interest
|
498
|
416
|
341
|
-
|
|
Interest rates
|
Swaps
|
Increase in tax interest
|
(4,791)
|
(184,726)
|
(168,305)
|
14,711
|
Financial hedge
|
|
|
|
|
|
|
|
Foreign currency
|
Future contracts
|
Dollar incrase
|
(17,826)
|
(213,641)
|
(480,761)
|
47,987
|
|
Foreign currency
|
Swaps / Non Deliverable Forwards
|
Dollar incrase
|
(228,713)
|
(456,212)
|
(1,183,483)
|
98,338
|
Fiscal hedge
|
|
|
|
|
|
|
|
Foreign currency
|
Future contracts
|
Dollar incrase
|
(55,388)
|
(661,248)
|
(1,488,659)
|
148,571
|
|
Foreign currency
|
Non Deliverable Forwards
|
Dollar incrase
|
35,994
|
(185,566)
|
(407,126)
|
28,895
|
In addition to presenting the possible effects on individual results of derivative operations, we also show the effects of derivative operations contracted for asset protection along with each transaction´s hedged items.
Transaction
|
Risk
|
Base scenario
|
Adverse scenario
|
Remote
scenario
|
Foreign exchange hedge
|
Dollar and Euro decrease
|
32,342
|
(1,292,904)
|
(2,518,383)
|
Input purchase
|
|
(32,342)
|
1,292,904
|
2,518,383
|
Commodities hedge
|
Decrease on commodities price
|
(138,882)
|
(419,495)
|
(700,108)
|
Input purchase
|
|
138,882
|
419,495
|
700,108
|
Foreign exchange hedge
|
Dollar and Euro decrease
|
699
|
(92,907)
|
(186,512)
|
Capex purchase
|
|
(699)
|
92,907
|
186,512
|
Operational hedge
|
|
(105,841)
|
(1,805,306)
|
(3,405,003)
|
Operational purchase
|
|
105,841
|
1,805,306
|
3,405,003
|
Net effect
|
|
-
|
-
|
-
|
|
|
|
|
|
Foreign exchange hedge
|
Foreign currency increase
|
46,618
|
(428,056)
|
(892,493)
|
Net debt
|
|
(46,618)
|
(11,856)
|
12,670
|
Interest rate hedge
|
Increase in tax interest
|
(234,587)
|
(478,985)
|
(526,529)
|
Interest expense
|
|
234,587
|
478,985
|
526,529
|
Financial hedge
|
|
(187,969)
|
(907,041)
|
(1,419,022)
|
Net debt and interest
|
|
187,969
|
467,129
|
539,199
|
Net effect
|
|
-
|
(439,912)
|
(879,823)
|
|
|
|
|
|
Foreign exchange hedge
|
Dollar increase
|
(246,539)
|
(669,853)
|
(1,664,244)
|
Fiscal expense
|
|
246,539
|
669,853
|
1,664,244
|
Fiscal hedge
|
|
(246,539)
|
(669,853)
|
(1,664,244)
|
Fiscal expense
|
|
246,539
|
669,853
|
1,664,244
|
Net effect
|
|
-
|
-
|
-
|
|
|
|
|
|
Investment hedge
|
Dollar increase
|
(19,394)
|
(846,815)
|
(1,895,786)
|
Fiscal expense
|
|
19,394
|
846,815
|
1,895,786
|
Investment hedge
(i)
|
|
(19,394)
|
(846,815)
|
(1,895,786)
|
Fiscal expense
|
|
19,394
|
846,815
|
1,895,786
|
Net effect
|
|
-
|
-
|
-
|
(i) It refers to operations of hedge of cash in functional currency different from Real in subsidiaries in which the Company applies Net Investment Hedge.
Calculation of fair value of derivatives
The Company measures derivative financial instruments by calculating their present value, through the use of market curves that impact the instrument on the computation dates. In the case of swaps, both the asset and the liability positions are estimated independently and brought to present value and the difference between the result of the asset and liability amount generates the swaps market value. For the exchange-traded derivative financial instruments, the fair value is calculated according to the adjusted exchange-listed price.
Margins given in guarantee
In order to comply with the guarantee requirements of the derivative exchanges and/or counterparties in certain operations with derivative instruments, as of June 30, 2013 the Company held R$672,403 in investments securities or cash investments available on demand, classified as cash and cash equivalents (R$626,428 on December 31, 2012).
2.2) Debt instruments
The Company’s financial liabilities, mainly represented by debt securities are recorded at amortized cost according to the effective rate method, plus indexation and foreign exchange gains/losses, based on closing indices for each period. The Bond 2017 is designated as a fair value hedge item, with changes in fair value of the hedged risk factors recognized in the income statement against the respective loans.
Had the Company recognized its financial liabilities at market value, it would have recorded an additional loss, before income tax and social contribution, of R$(13,998) on June 30, 2013 (R$28,622 on December, 31 2012), as presented below:
|
06/30/2013
|
|
12/31/2012
|
Financial liabilities
|
Book
|
Market
|
Difference
|
|
Book
|
Market
|
Difference
|
International financing (other currencies)
|
596,469
|
596,469
|
-
|
|
531,143
|
531,143
|
-
|
BNDES - National Currency
|
1,579,693
|
1,579,693
|
-
|
|
1,730,837
|
1,730,837
|
-
|
BNDES - International Currency
|
367,409
|
367,409
|
-
|
|
378,925
|
378,925
|
-
|
Bond 2017
|
288,234
|
302,232
|
(13,998)
|
|
313,993
|
342,615
|
(28,622)
|
Fiscal incentives
|
156,077
|
156,077
|
-
|
|
168,693
|
168,693
|
-
|
Finance leasing - International Currency
|
20,813
|
20,813
|
-
|
|
20,138
|
20,138
|
-
|
|
3,008,695
|
3,022,693
|
(13,998)
|
|
3,143,729
|
3,172,351
|
(28,622)
|
The criterion used to determine the market value of the debt securities was based on quotations of investment brokers, on quotations of banks which provide services to Ambev and on the secondary market value of bonds as of June 30, 2013, being approximately 100.74% for Bond 2017 (114.21% as of December 31, 2012).
Capital management
Ambev is constantly optimizing its capital structure to maximize the value of shareholders' investments, while retaining the desired financial flexibility to execute strategic projects. In addition to the minimum legal requirements for equity financing that apply to subsidiaries in various countries, Ambev is not subject to any external capital requirements. When analyzing the capital structure of the Company, Ambev uses the same ratio of debt and equity ratings applied to the Company’s financial statements.
20. COLLATERAL AND CONTRACTUAL COMMITMENTS, ADVANCES FROM CUSTOMERS AND OTHER
|
06/30/2013
|
12/31/2012
|
Collateral given for own liabilities
|
1,238,919
|
1,178,904
|
Other commitments
|
304,910
|
282,049
|
|
1,543,829
|
1,460,953
|
|
|
|
Commitments with suppliers
|
15,010,795
|
14,968,554
|
Commitments - Bond 17
|
300,000
|
300,000
|
|
15,310,795
|
15,268,554
|
Collateral
given for own liabilities and other commitments totaled approximately R$
1.5 billion
as of June 30, 2013 including R$
566,515
of
cash guarantees
. Cash deposits for guarantees are presented as trade receivables. Additionally, to meet the guarantees required by derivative exchanges and/or counterparties contracted in certain derivative financial instrument transactions, the Company maintained as of June 30, 2013
, R$672,403
in highly liquid financial investments or in cash (Note 19
).
Most
of
the balance
amounts
relates
to
commitments
with
suppliers of packaging.
The Company is guarantor of the Bond issued by Ambev International Finance Co. Ltd. (wholly-owned) valued at R$300 million to 9.5% per year, maturing in 2017.
Future contractual commitments as of
June 30, 2013
and December 31, 2012 are as follows:
|
06/30/2013
|
12/31/2012
|
Less than 1 year
|
3,712,746
|
2,893,104
|
Between 1 and 2 years
|
2,398,987
|
2,304,955
|
More than 2 years
|
9,199,062
|
10,070,495
|
|
15,310,795
|
15,268,554
|
21. CONTINGENCIES
The Company has contingent liabilities arising from lawsuits in the normal course of its business.
Contingent liabilities with a probable likelihood of loss are fully recorded as liabilities (Note 10).
The Company also has lawsuits related to tax, civil and labor, for which the likelihood of loss is classified by management as possible, based on advice of legal counsel, and for which there are no provisions. Estimates of amounts of possible loss are as follows:
|
06/30/2013
|
12/31/2012
|
|
|
|
PIS and COFINS
|
333,685
|
306,817
|
ICMS and IPI
|
3,242,987
|
2,927,650
|
IRPJ and CSLL
|
7,698,302
|
7,583,005
|
Labor
|
140,714
|
146,730
|
Civil
|
170,595
|
174,206
|
Others
|
1,268,681
|
774,330
|
|
12,854,964
|
11,912,738
|
Lawsuits with possible likelihood of loss:
There were no changes in the other main processes with
possible likelihood of loss
classification as of June 30, 2013, compared to those presented in the financial statements as of December 31, 2012.
Contingent assets
As of June 30, 2013, the Company had no contingent assets, for which the probability of success is probable.
22. RELATED PARTIES
Policies and practices regarding the realization of transactions with related parties
The Company adopts corporate governance practices and those recommended and/or required by the applicable law.
Under the Company’s bylaws the Board of Directors is responsible for approving any transaction or agreements between the Company and/or any of its subsidiaries, directors and/or shareholders (including direct or indirect partners of the Company’s shareholders). The Compliance Committee of the Company is required to advise the Board of Directors of the Company in matters related to transactions with related parties.
Management is prohibited from interfering in any transaction in which conflict exists, even in theory, with the Company´s interests. It is also not permitted to interfere in decisions of any other management member, requiring documentation in the Minutes of Meeting of the Board any decision to abstain from the specific deliberation.
The Company's guidelines with related parties follow reasonable or commutative terms, similar to those prevailing in the market or under which the Company would contract similar transactions with third parties. These are clearly disclosed in the financial statements as reflected in written contracts.
Transactions with Management members:
In addition to short-term benefits, Management members are entitled to post-employment benefits, such as retirement benefits and health and dental care. Moreover, Management members are entitled to participate in Stock Option Plan (Note 18).
Total expenses related to Management members in key functions are as follows:
|
Six-month period ended:
|
|
06/30/2013
|
06/30/2012
|
|
|
|
Short-term benefits (i)
|
9,546
|
5,778
|
Share-based payments (ii)
|
19,615
|
8,983
|
Total key management remuneration
|
29,161
|
14,761
|
(i) These correspond substantially to salaries and profit sharing (including performance bonuses).
(ii) These correspond to the compensation cost of stock options granted to Management. These amounts exclude remuneration paid to members of the Fiscal Council.
Excluding the above mentioned remuneration and the stock options plans (Note 18), Ambev no longer has any type of transaction with the management members or pending balances receivable or payable in its balance sheet.
Transactions with the Company's shareholders:
a) Medical, dental and other benefits
The Fundação Zerrenner is one of the Company’s shareholders, and at June 30, 2013 held 17.08% of the voting rights and 9.59% of total share capital. Fundação Zerrenner is also a independent legal entity whose main goal is to provide Ambev’s employees, both active and retirees, with health care and dental assistance, technical and superior education courses, facilities for assisting elderly people, through direct initiatives or through financial assistance agreements with other entities. On June 30, 2013 and 2012, actuarial responsibilities related to the benefits provided directly by Fundação Zerrenner are fully funded by plan assets, held for that purpose, which significantly exceeds the liabilities at that date. The Company recognizes the assets (prepaid expenses) of this plan to the extent of amounts from economic benefits available to the Company, arising from reimbursements or future contributions reduction.
The expenses incurred by Fundação Zerrenner, in Brazil, in providing the benefits mentioned above totaled R$ 83,189 in the six-month period ended June 30, 2013 (R$73,500 in the six-month period ended June 30, 2012),
of which R$73,900 (R$
65,360
-
June 30, 2012
) related to active employees and R$ 9,399 (R$ 8,140 -
June 30, 2012
) related to retirees.
b)
Special Goodwill Reserve
As a result of the merger of InBev Holding Brazil S.A. by the Company in 2005, the Company benefits, each year, from the amortization of tax deductible goodwill pursuant to CVM Instruction 319/99. The balance of the special goodwill reserve as of
June 30, 2013
was R$
313,872
(R$672,107 as of December 31, 2012) which may be used for future capital increases.
c) Leasing
The Company, through its subsidiary BSA Bebidas Ltda. (labeling), has an asset leasing agreement with Fundação Zerrenner, for R$
63,328,
for ten years, maturing on March 31, 2018.
d) Leasing – Ambev head office
The Fundação Zerrenner and Ambev have a leasing agreement of two commercial sets maturing on January 31, 2018 which the amount to pay of R$ 2,080 until January 2014, when the new amount will be renegotiated by the end the contract.
e) Licensing agreement
The Company maintains a licensing agreement with Anheuser-Busch, Inc., to produce, bottle, sell and distribute Budweiser products in Brazil, Canada, Ecuador, Guatemala, Dominican Republic and Paraguay. In addition, the Company produces and distributes Stella Artois products under license to AB InBev in Brazil, Canada, Argentina, and other countries and, by means of a license granted to AB InBev, it also distributes Brahma’s product in parts of Europe, Asia and Africa.. The amount recorded was R$7,304 (R$1,793 as of June 30, 2012) and R$112,104 (R$102,195 as of June 30, 2012) as licensing income and expense, respectively.
23. EVENTS AFTER THE BALANCE SHEET DATE
The Extraordinary General Meeting held on July 30, 2013, approved the following items with regards to the Stock Swap Merger:
(i) the Protocol and Justification, dated May 10, 2013, in connection with the Stock Swap Merger;
(ii) the Stock Swap Merger, in accordance with the Protocol and Justification, based on the economic value of the Company’s shares, calculated pursuant to their stock exchange trading price on April 26, 2013, it being noted that, as a result of the Stock Swap Merger, the Company’s shareholders will receive five Ambev S.A. Common shares for each Company Common or Preferred share exchanged, and holders of ADRs representing Common or Preferred shares of the Company, will receive five Ambev S.A. ADRs for each Company ADR exchanged; and
(iii) the authorization for the subscription, by Management, of the shares to be issued by Ambev S.A. as a result of the Stock Swap Merger, as well as the execution of all other requirements necessary to implement the Stock Swap Merger.
60
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 20, 2013
|
|
|
|
COMPANHIA DE BEBIDAS DAS AMERICAS-AMBEV
|
|
|
|
|
By:
|
/s/
Nelson Jose Jamel
|
|
Nelson Jose Jamel
Chief Financial and Investor Relations Officer
|
Comp DE Bebi AM (NYSE:ABV.C)
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