20-F 1 a17-11794_120f.htm 20-F

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 20-F

 

 

o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

OR

 

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2016

 

 

OR

 

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                       TO                        

 

 

OR

 

 

o

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

 

Commission file number: 001-35575

 

Cencosud S.A.

(Exact name of Registrant as specified in its charter)

 

N/A

(Translation of Registrant’s name into English)

 

Republic of Chile

(Jurisdiction of incorporation or organization)

 

Av. Kennedy 9001, Piso 6

Las Condes, Santiago, Chile

+56 (2) 2959-0545

(Address of principal executive offices)

 

Maria Soledad Fernández / Natalia Nacif

Av. Kennedy 9001 6th Floor

Email: IR@cencosud.cl / Mariasoledad.fernandez@cencosud.cl

Tel: +562 2959 0545 / +562 2959 0368

(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Name of Each Exchange on Which Registered

American Depositary Shares

 

New York Stock Exchange

Common Shares, no par value

 

New York Stock Exchange

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

 



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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

The number of outstanding shares of each of the issuer’s classes of capital stock as of December 31, 2016: 2,862,536,947 Common Shares, no par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

x Yes   o No

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

o Yes   x No

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

x Yes   o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes   o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

Non-accelerated filer o

 

Emerging growth company o

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

 

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

GAAP o

 

International Financial Reporting Standards as issued
by the International Accounting Standards Board
x

 

Other o

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow:

o Item 17   o Item 18

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

 



Table of Contents

 

TABLE OF CONTENTS

 

 

 

Page

Forward-Looking Statements

1

 

 

 

Presentation of Financial and Other Information

2

 

 

 

Item 1.

Identity of Directors, Senior Management and Advisers

6

Item 2.

Offer Statistics and Expected Timetable

6

Item 3.

Key Information

6

 

A. Selected financial data

6

 

B. Capitalization and indebtedness

14

 

C. Reasons for the offer and use of proceeds

14

 

D. Risk factors

14

Item 4.

Information on the Company

35

 

A. History and development of the company

35

 

B. Business overview

39

 

C. Organizational structure

78

 

D. Property, plants and equipment

79

Item 4A.

Unresolved Staff Comments

79

Item 5.

Operating and Financial Review and Prospects

79

 

A. Operating results

80

 

B. Liquidity and capital resources

100

 

C. Research and development, patents and licenses, etc.

107

 

D. Trend information

107

 

E. Off-balance sheet arrangements

107

 

F. Tabular disclosure of contractual obligations

107

 

G. Safe harbor

107

Item 6.

Directors, Senior Management and Employees

108

 

A. Directors and senior management

108

 

B. Compensation

110

 

C. Board practices

111

 

D. Employees

112

 

E. Share ownership

115

Item 7.

Major Shareholders and Related Party Transactions

115

 

A. Major shareholders

115

 

B. Related party transactions

117

 

C. Interests of experts and counsel

118

Item 8.

Financial Information

119

 

A. Consolidated statements and other financial information

119

 

B. Significant changes

119

Item 9.

The Offer and Listing

119

 

A. Offer and listing details

119

 

B. Plan of distribution

120

 

C. Markets

120

 

D. Selling shareholders

120

 

E. Dilution

120

 

F. Expenses of the issue

120

Item 10.

Additional Information

120

 

A. Share capital

120

 

B. Memorandum and articles of association

121

 

C. Material contracts

125

 

D. Exchange controls

126

 

E. Taxation

129

 

F. Dividends and paying agents

134

 

G. Statement by experts

134

 

H. Documents on display

134

 

I. Subsidiary information

134

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

134

Item 12.

Description of Securities Other than Equity Securities

137

 

A. Debt Securities

137

 

B. Warrants and Rights

137

 

C. Other Securities

137

 

D. American Depositary Shares

137

Item 13.

Defaults, Dividend Arrearages and Delinquencies

137

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

143

Item 15.

Controls and Procedures

143

 

A. Disclosure Controls and Procedures

143

 

B. Management’s Annual Report on Internal Control Over Financial Reporting

143

 

C. Attestation Report of the Registered Public Accounting Firm

143

 

D. Changes in Internal Control Over Financial Reporting

144

Item 16A.

Audit Committee Financial Expert

144

Item 16B.

Code of Ethics

144

Item 16C.

Principal Accountant Fees and Services

144

Item 16D.

Exemptions from the Listing Standards for Audit Committees

144

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

144

Item 16F.

Change in Registrant’s Certifying Accountant

145

Item 16G.

Corporate Governance

145

Item 16H.

Mine Safety Disclosure

146

Item 17.

Financial Statements

146

Item 18.

Financial Statements

146

Item 19.

Exhibits

167

 

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FORWARD-LOOKING STATEMENTS

 

This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions. The forward-looking statements included in this annual report relate to, among others:

 

·                           changes in general economic, business or political or other conditions in Chile, Argentina, Brazil, Peru, Colombia or elsewhere in Latin America or the global markets;

 

·                           changes in capital markets in general that may affect policies or attitudes towards investing in Chile, Argentina, Brazil, Peru, Colombia or securities issued by companies in such countries;

 

·                           the monetary and interest rate policies of the Central Banks of Chile, Argentina, Brazil, Peru and Colombia; or elsewhere in Latin American or global markets.

 

·                           high levels of inflation or deflation;

 

·                           unanticipated increases in financing and other costs or our inability to obtain additional debt or equity financing on attractive terms;

 

·                           movements in interest and/or foreign exchange rates, and movements in equity prices or other rates or prices;

 

·                           changes in, or failure to comply with, applicable regulations, or changes in taxes;

 

·                           loss of market share or changes in competition and pricing environments in the industries in which we operate;

 

·                           our inability to hedge certain risks economically;

 

·                           changes in consumer spending and saving habits;

 

·                           implementation of new technologies;

 

·                           limitations on our ability to open new stores and operate them profitably;

 

·                           difficulties in completing proposed store openings, expansions or remodeling;

 

·                           difficulties in acquiring and developing land in Chile, Argentina, Brazil, Peru or Colombia, and restrictions on opening new large stores in any such countries; and

 

·                           the factors discussed under the section entitled “Risk Factors” in this annual report as well as risks included in the Company’s other filings and submissions with the United States Securities and Exchange Commission.

 

These forward-looking statements involve various risks and uncertainties. Although we believe that the expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this annual report might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

 

The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

 

General

 

In this annual report, unless otherwise specified or if the context so requires:

 

·                           References to the terms “Cencosud S.A.,” “we,” “us,” “our,” and “our company” refer to the registrant, Cencosud S.A., a corporation organized under the form of a sociedad anónima under the laws of Chile, and its consolidated subsidiaries, unless otherwise indicated.

·                           References to “$,” “U.S.$,” “U.S. dollars,” “dollars” and “USD” are to U.S. dollars.

·                           References to “Chilean pesos” or “Ch$” are to Chilean pesos, the official currency of Chile.

·                           References to “Argentine pesos” or “Ar$” are to Argentine pesos, the official currency of Argentina.

·                           References to “Brazilian Real,” “Real,” “Reais” or “R$” are to the Brazilian real, the official currency of Brazil.

·                           References to “Nuevo Sol,” “Nuevos Soles” or “S/.” are to Peruvian nuevos soles, the official currency of Peru.

·                           References to “Colombian pesos” or “Col$” are to Colombian pesos, the official currency of Colombia.

·                           References to “UF” are to Unidades de Fomento. The UF is an inflation-indexed Chilean monetary unit with a value in Chilean pesos that is adjusted daily to reflect changes in the official Consumer Price Index (“CPI”) of the Instituto Nacional de Estadísticas (the “Chilean National Institute of Statistics”). The UF is adjusted in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean consumer price index during the prior calendar month. As of December 31, 2016, UF1.00 was equivalent to U.S.$39.36 and Ch$26,347.98 , in each case based on the observed exchange rate reported by the Central Bank of Chile.

 

This annual report contains translations of certain Chilean peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the Chilean peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all. Unless otherwise indicated, the exchange rate used in converting Chilean pesos into U.S. dollars for amounts presented as of and for the year ended December 31, 2016 is based on the observed exchange rate (dólar observado) reported by the Central Bank of Chile (the “Chilean Central Bank”) for December 31, 2016, which was Ch$669.47 per U.S.$1.00. The rates reported by the Chilean Central Bank for December 31, 2016 are based upon the observed exchange rate published by the Chilean Central Bank on the first business day following the respective period. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos.

 

Financial Statements

 

The financial information contained in this annual report includes our audited consolidated financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 together with the notes thereto, prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”), which we refer to in this annual report as our “Audited Consolidated Financial Statements.

 

Our Audited Consolidated Financial Statements have been audited by PricewaterhouseCoopers Consultores, Auditores y Compañia Limitada, an independent registered public accounting firm, whose report on our Audited Consolidated Financial Statements appears elsewhere in this annual report.

 

Unless otherwise noted, the financial data presented herein as of and for each of the five years ended December 31, 2016 is stated in Chilean pesos, our functional and reporting currency.

 

Our audited consolidated financial statements have been prepared under the historic — cost basis, except for those items accounted for at fair value (for example, investment properties and certain financial assets, and derivative financial instruments), and include the accounts of the Company and its subsidiaries, including Banco Paris. All significant inter-company balances and transactions have been eliminated in consolidation.

 

On June 20, 2014, Cencosud, together with its subsidiaries Cencosud Retail S.A. and Easy S.A., entered into a framework agreement (the “Joint Venture Framework Agreement”) with The Bank of Nova Scotia (“BNS”) and its wholly owned subsidiary Scotiabank Chile, to further develop, on a joint basis, the retail finance business in Chile (hereinafter, the “Business”). During the second quarter of 2015, the Company completed the transaction with the Bank of Nova Scotia (Scotiabank) to form a joint venture to manage the financial services business in Chile. Under the terms of the agreement, the Company recognized a CLP 61,373 million (one-off effect non cash) profit under “Profit from Discontinued Operations”. The Joint Venture Framework Agreement provides that the Business is operating through (i) Cencosud Administradora de Tarjetas S.A. (“CAT”), a subsidiary of Cencosud that is in the business of issuing credit cards, and (ii) Cencosud Administradora de Procesos S.A., Cencosud Servicios Integrales S.A. and Cencosud Corredores de Seguros y Servicios Ltda., or other companies to be established by Cencosud for purposes of the Joint Venture Framework Agreement, to assist in developing the Business, including information processing and collection activities related thereto (together with CAT, hereinafter, the “Subject Companies”). As part of the agreement, Scotiabank Chile acquired a fifty-one percent (51%) controlling interest of each of the Subject Companies, with Cencosud retained the remaining forty-nine percent (49%) non-controlling interest of each of the Subject Companies. This framework agreement has a lifespan of 15 years.

 

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Special Note Regarding Non-IFRS Financial Measures

 

This annual report makes reference to certain non-IFRS measures, namely EBIT from continuing operations. These non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

 

EBIT represents net profit before discontinued operations, net interest expense and income taxes. We have included EBIT to provide investors with a supplemental measure of our operating performance.

 

We believe EBIT is an important supplemental measure of operating performance because it eliminates items that have less bearing on our operating performance and thus highlights trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures.

 

EBIT has important limitations as analytical tools. For example, EBIT does not reflect (a) our cash expenditures, or future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; and (d) tax payments or distributions to our parent to make payments with respect to taxes attributable to us that represent a reduction in cash available to us. Although we consider the items excluded in the calculation of non-IFRS measures to be less relevant to evaluate our performance, some of these items may continue to take place and accordingly may reduce the cash available to us.

 

We believe that the presentation of the non-IFRS measures described above is appropriate. However, these non-IFRS measures have important limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under IFRS. Because of these limitations, we primarily rely on our results as reported in accordance with IFRS and use EBIT only supplementally.

 

A reconciliation of our net profit (loss), the most directly comparable IFRS financial measure, to EBIT is set forth below:

 

 

 

Year ended December 31,

 

 

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

 

 

 

(in millions of U.S.$)

 

(in millions of Ch$)

 

Net Profit

 

579

 

387,797

 

231,985

 

164,146

 

249,764

 

252,810

 

Discontinued Operations

 

0

 

0

 

(70,617

)

(12,662

)

(8,356

)

(33,048

)

Profit from Continuing Operations

 

579

 

387,797

 

161,368

 

151,485

 

241,408

 

219,762

 

Financial expense (net)

 

(402

)

(268,970

)

(244,100

)

(173,548

)

(190,593

)

(165,044

)

Income tax charge

 

(287

)

(191,969

)

(58,540

)

(125,932

)

(94,068

)

(92,226

)

EBIT from Continuing Operations

 

1,268

 

848,736

 

464,008

 

450,965

 

526,069

 

477,032

 

 

A reconciliation of our profit (loss) attributable to controlling shareholders, the most directly comparable IFRS financial measure, to EBIT from continuing operations per business segment is included below:

 

Information by segment

 

Supermarkets

 

Shopping
centers

 

Home
improvement
stores

 

Department
stores

 

Financial
services

 

Other(1)

 

Consolidated
total

 

 

 

Year ended December 31, 2016 (in millions of Ch$)

 

Net Profit

 

282,106

 

467,702

 

123,824

 

24,954

 

76,111

 

(586,900

)

387,797

 

Discontinued Operations

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

Profit from Continuing Operations

 

282,106

 

467,702

 

123,824

 

24,954

 

76,111

 

(586,900

)

387,797

 

Financial expense (net)

 

0

 

0

 

0

 

0

 

0

 

(268,970

)

(268,970

)

Income tax charge

 

0

 

0

 

0

 

0

 

0

 

(191,969

)

(191,969

)

EBIT from Continuing Operations

 

282,106

 

467,702

 

123,824

 

24,954

 

76,111

 

(125,961

)

848,736

 

 

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Information by segment

 

Supermarkets

 

Shopping
centers

 

Home
improvement
stores

 

Department
stores

 

Financial
services

 

Other(1)

 

Consolidated
total

 

 

 

Year ended December 31, 2015 (in millions of Ch$)

 

Net Profit

 

315,951

 

395,717

 

146,845

 

22,772

 

85,156

 

(734,456

)

231,985

 

Discontinued Operations

 

0

 

0

 

0

 

0

 

(70,617

)

0

 

(70,617

)

Profit from Continuing Operations

 

315,951

 

395,717

 

146,845

 

22,772

 

14,539

 

(734,456

)

161,368

 

Financial expense (net)

 

0

 

0

 

0

 

0

 

0

 

(244,100

)

(244,100

)

Income tax charge

 

0

 

0

 

0

 

0

 

0

 

(58,540

)

(58,540

)

EBIT from Continuing Operations

 

315,951

 

395,717

 

146,845

 

22,772

 

14,539

 

(417,636

)

464,008

 

 

Information by segment

 

Supermarkets

 

Shopping
centers

 

Home
improvement
stores

 

Department
stores

 

Financial
services

 

Other(1)

 

Consolidated
total

 

 

 

Year ended December 31, 2014 (in millions of Ch$)

 

Net Profit

 

289,603

 

266,218

 

123,203

 

(4,575

)

51,616

 

(561,918

)

164,146

 

Discontinued Operations

 

0

 

0

 

0

 

0

 

(12,662

)

0

 

(12,662

)

Profit from Continuing Operations

 

289,603

 

266,218

 

123,203

 

(4,575

)

38,955

 

(561,918

)

151,485

 

Financial expense (net)

 

0

 

0

 

0

 

0

 

38,693

 

(212,241

)

(173,548

)

Income tax charge

 

0

 

0

 

0

 

0

 

0

 

(125,932

)

(125,932

)

EBIT from Continuing Operations

 

289,603

 

266,218

 

123,203

 

(4,575

)

262

 

(223,745

)

450,965

 

 

Information by segment

 

Supermarkets

 

Shopping
Centers

 

Home
improvement
stores

 

Department
stores

 

Financial
services

 

Other(1)

 

Consolidated
total

 

 

 

Year ended December 31, 2013 (in millions of Ch$)

 

Net Profit

 

304,654

 

247,586

 

80,042

 

24,754

 

40,046

 

(455,675

)

249,764

 

Discontinued Operations

 

0

 

0

 

0

 

0

 

(8,356

)

0

 

(8,356

)

Profit from Continuing Operations

 

304,654

 

247,586

 

80,042

 

24,754

 

40,046

 

(455,675

)

241,408

 

Financial expense (net)

 

0

 

0

 

0

 

0

 

0

 

(190,593

)

(190,593

)

Income tax charge

 

0

 

0

 

0

 

0

 

0

 

(94,068

)

(94,068

)

EBIT from Continuing Operations

 

304,654

 

247,586

 

80,042

 

24,754

 

40,046

 

(171,014

)

526,069

 

 

Information by segment

 

Supermarkets

 

Shopping
centers

 

Home
improvement
stores

 

Department
stores

 

Financial
services

 

Other(2)

 

Consolidated
total

 

 

 

Year ended December 31, 2012 (in millions of Ch$)

 

Net Profit

 

318,711

 

224,263

 

94,823

 

20,231

 

(6,960

)

(431,305

)

252,810

 

Discontinued Operations

 

0

 

0

 

0

 

0

 

(33,048

)

0

 

(33,048

)

Profit from Continuing Operations

 

318,711

 

224,263

 

94,823

 

20,231

 

(6,960

)

(431,305

)

219,762

 

Financial expense (net)

 

0

 

0

 

0

 

0

 

0

 

(165,044

)

(165,044

)

Income tax charge

 

0

 

0

 

0

 

0

 

0

 

(92,226

)

(92,226

)

EBIT from continuing operations

 

318,711

 

224,263

 

94,823

 

20,231

 

(6,960

)

(174,036

)

477,032

 

 


(1)  Includes support services, financing, corporate taxes, adjustments and others.

(2)  Includes support services, financing, corporate taxes, adjustments and others.

 

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Rounding

 

Certain figures included in this annual report and in our financial statements have been rounded for ease of presentation. Percentage figures included in this annual report have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this annual report may vary from those obtained by performing the same calculations using the figures in our financial statements. Certain other amounts that appear in this annual report may not sum due to rounding.

 

Operating Data

 

Calculations of revenues from ordinary activities for our shopping centers presented in this annual report exclude inter-company lease payments to our shopping centers from stores owned by us. Unless otherwise noted, calculations of gross leasable area for our shopping centers do not include the square meters occupied by our stores.

 

As used herein, the term “same-store sales” reflects the sales of our stores operating throughout the same months of both financial periods being compared. If a store did not operate for a full month of either of the financial periods being compared, we exclude its sales for such month from both financial periods. For example, if a new store was opened on July 1, 2015 and operated throughout the last six months of 2015, (i) our “same-store sales” data would include the sales of that store for the last six months of 2015 and the last six months of 2016 and (ii) we would account for the sales of the new store during the first six months of 2016 as sales from a newly opened store. Our calculations of same-store sales data may differ from same-store sales calculations of other retailers. Unless otherwise noted, we have presented calculations of same-store sales in nominal local currency.

 

Industry and Market Data

 

None of the Argentine, Brazilian, Chilean, Peruvian or Colombian governments publish definitive data regarding the supermarket, home improvement store, department store, shopping center or financial services industries.

 

General

 

This annual report contains data related to the economic conditions in the markets in which we operate. Unless otherwise indicated, information in this annual report concerning economic conditions is based on publicly available information from third-party sources which we believe to be reasonable. The economic conditions in the markets in which we operate may deteriorate, and those economies may not grow at the rates projected by market data, or at all. The deterioration of the economic conditions in the markets in which we operate may have a material adverse effect on our business, results of operations, financial condition and the market price of our shares of common stock and American Depositary Shares (“ADSs”).

 

Chile

 

Market data and other statistical information (other than with respect to our financial results and performance) used throughout this annual report are based on independent industry publications, government publications, reports by market research firms or other published independent sources, such as the Instituto Nacional de Estadísticas (the Chilean National Institute of Statistics, or “INE”), a governmental agency that publishes information based on its independent data, the Asociación Gremial de Supermercados de Chile (the Chilean Supermarkets Association, or “ASACH”), which publishes certain data with respect to supermarkets in Chile, and A.C. Nielsen Chile S.A., which publishes data with respect to the supermarket industry in Chile. Certain other shopping center statistics for Chile are published by the International Council for Shopping Centers.

 

Argentina

 

Market data and other statistical information (other than with respect to our financial results and performance) used throughout this annual report are based on independent industry publications, government publications, reports by market research firms or other published independent sources, such as the Instituto Nacional de Estadísticas y Censos (the Argentine National Institute of Statistics and Census, or “INDEC”), a governmental agency that publishes information based on its independent data, and A.C. Nielsen Argentina, which publishes market share data with respect to the supermarket industry in Argentina. In addition, the Camara Argentina de Shopping Centers (the Argentine Chamber of Shopping Centers, or “CASC”) currently publishes market share data with respect to shopping centers in Argentina. Certain other shopping center statistics for Argentina are published by the International Council for Shopping Centers.

 

Brazil

 

We have included certain information with respect to Brazil based on reports prepared by established public sources, such as the Central Bank of Brazil, the Instituto Brasileiro de Geografia e Estatística (the Brazilian Institute of Geography and Statistics, or “IBGE”), the Instituto de Pesquisa Econômica Aplicada (the Institute of Applied Economic Research, or “IPEA”), the Associação Brasileira de Supermercados (the Brazilian Association of Supermarkets, or “ABRAS”), and the Fundação Getúlio Vargas (the Getúlio Vargas Foundation). Unless otherwise indicated, all macroeconomic information relating to Brazil was obtained from the Central Bank of Brazil, IBGE and the Getúlio Vargas Foundation.

 

Peru

 

Macroeconomic data from Peru included in this annual report is derived from public entities, such as the Central Bank of Peru, the Instituto Nacional de Estadísitcas e Informática (the National Institute of Statistics and Computing, or “INEI”), Corporación de Compañías de Research

 

5



Table of Contents

 

(Research Companies Corporation, or “CCR”) or by Apoyo Consulting. Some data are also based on our estimates, which are derived from our review of internal surveys, as well as independent sources. Although we believe these sources are reliable, we have not independently verified the information provided by third parties. In addition, these sources may use different definitions of the relevant markets than those we present. Data regarding our industry are intended to provide general guidance but are inherently imprecise.

 

Colombia

 

Market and certain other data relating to Colombia used in this annual report was obtained from our own research, surveys or studies conducted by third parties and industry or general publications and other publicly available sources. Industry and general publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Certain data is based on published information made available by the Colombian government and its agencies, such as the Departamento Administrativo Nacional de Estadística (the National Administrative Department of Statistics, or “DANE”) and the Banco de la Republica (“Colombian Central Bank”). Although we believe these sources to be reliable, we do not guarantee the accuracy of the information.

 

Other Information

 

According to the ASACH, “hypermarkets” are defined as retail stores with more than 10,000 square meters of selling space, offering more than 25,000 products and having more than 40 cashiers. ASACH defines “supermarkets” as retail stores having up to 6,000 square meters of selling space, between 400 and 10,000 products and ten to 25 cashiers. We consolidate the results of our supermarkets and hypermarkets under our “supermarkets” segment. Therefore, unless otherwise noted, our discussions of “supermarkets” in this annual report include our Santa Isabel supermarkets, Jumbo hypermarkets and supermarkets in Chile, Disco and Vea supermarkets and Jumbo hypermarkets and supermarkets in Argentina, Bretas, GBarbosa, Mercantil Rodrigues, Perini and Prezunic supermarkets in Brazil, Jumbo and Metro supermarkets in Colombia and Wong and Metro supermarkets and hypermarkets in Peru. By “home improvement” stores we mean retail establishments that sell a wide assortment of building materials and home improvement and lawn and garden products and provide certain related services. Our “home improvement stores” refer to our home improvement stores operated under the Easy and Blaisten brand names, including our Easy stores in Chile, Argentina and Colombia. By “department stores” we mean retail establishments that market a varied assortment of apparel, electronic and household goods. These stores currently operate in Chile under our Paris and Johnson brands and in Peru under our Paris brand. References to “stores” refer collectively to our hypermarkets, supermarkets, department stores and home improvement stores.

 

One meter equals approximately 3.3 feet or 1.1 yards and one square meter equals approximately 10.8 square feet.

 

We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this annual report include: Jumbo®, Easy®, Santa Isabel®, Disco®, Vea®, Blaisten®, Johnson®, Paris®, Seguros Cencosud®, Wong®, Metro®, GBarbosa®, Perini®, Bretas®, Mercantil Rodrigues®, Tarjeta Cencosud®, Banco Cencosud®, Costaner Center®, Prezunic® and Unicenter® each of which may be registered or trademarked in any of Argentina, Brazil, Chile, Colombia, Peru or other jurisdictions. Solely for convenience, we may refer to our trademarks, service marks and trade names in this annual report without the ™ and ® symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights to our trademarks, service marks and trade names. Each trademark, trade name or service mark of any other company appearing in this annual report is, to our knowledge, owned by such other company

 

PART I

 

Item 1. Identity of Directors, Senior Management and Advisers

 

Not applicable.

 

Item 2. Offer Statistics and Expected Timetable

 

Not applicable.

 

Item 3. Key Information

 

A. SELECTED FINANCIAL DATA

 

Selected Financial and Operating Data

 

The following tables set forth our summary consolidated financial information under IFRS. You should read the information contained in these tables in conjunction with “Item 5. Operating and Financial Review and Prospects,” “Item 8. Financial Information,” “Item 18. Financial Statements.” and the consolidated financial statements and the accompanying notes included elsewhere in this annual report.

 

The financial information as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 has been derived from our Audited Consolidated Financial Statements included elsewhere in this annual report. The selected statement of operations data with respect to fiscal year ended December 31, 2013 and 2012 and the selected balance sheet data as of December 31, 2014, 2013 and 2012 have been derived from the Company’s accounting records. We maintain our books and records in Chilean pesos and prepare financial statements in accordance with IFRS. Our date of adoption of IFRS was January 1, 2010. The following financial and operating information should be read in conjunction with, and is qualified in its entirety by reference to, our Audited Consolidated Financial Statements included elsewhere in this annual report.

 

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Table of Contents

 

Unless otherwise noted, U.S. dollar amounts have been translated from Chilean pesos based on the dollar observed, or observed exchange rate of Ch$669.47 per U.S.$1.00 as of December 31, 2016, as reported by the Chilean Central Bank. We make no representation that the Chilean peso or the U.S. dollar amounts referred to herein actually represent, could have been or could be converted into U.S. dollars or Chilean pesos, as the case may be, at the rates indicated, at any particular rate or at all.

 

In our opinion, the summary consolidated financial data presented in the tables below includes all adjustments necessary to present fairly in all material respects our financial condition and results of operations at the dates and the periods presented. The results of operations presented below are not necessarily indicative of future performance.

 

 

 

Year ended December 31,

 

 

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

 

 

 

(in millions of
U.S.$, except
share and per
share amounts)

 

(in millions of Ch$, except share and per share amounts)

 

Revenues from ordinary activities, continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supermarkets

 

11,185

 

7,487,810

 

8,045,566

 

8,159,237

 

7,682,994

 

6,733,610

 

Shopping Centers

 

357

 

238,722

 

248,026

 

214,850

 

205,332

 

172,104

 

Home improvement

 

1,933

 

1,294,348

 

1,469,246

 

1,225,616

 

1,176,890

 

1,063,086

 

Department stores

 

1,683

 

1,126,931

 

1,051,642

 

991,442

 

970,360

 

886,075

 

Financial services

 

265

 

177,683

 

165,820

 

117,679

 

81,651

 

58,454

 

Other(3)

 

11

 

7,506

 

11,039

 

2,205

 

16,932

 

12,022

 

Total revenues from ordinary activities

 

15,435

 

10,333,001

 

10,991,338

 

10,711,029

 

10,134,158

 

8,925,351

 

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supermarkets

 

(8,366

)

(5,600,464

)

(6,014,367

)

(6,216,769

)

(5,782,590

)

(5,057,477

)

Shopping Centers

 

(46

)

(31,110

)

(33,984

)

(28,029

)

(23,341

)

(27,213

)

Home improvement

 

(1,269

)

(849,368

)

(962,485

)

(800,342

)

(787,402

)

(711,500

)

Department stores

 

(1,211

)

(810,967

)

(749,412

)

(741,279

)

(701,530

)

(644,668

)

Financial services

 

(89

)

(59,818

)

(49,276

)

(39,046

)

(25,938

)

(21,082

)

Other(4)

 

(7

)

(4,744

)

(3,702

)

(1,967

)

(3,451

)

(2,294

)

Total cost of sales

 

(10,989

)

(7,356,471

)

(7,813,226

)

(7,827,432

)

(7,324,252

)

(6,464,234

)

Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

Supermarkets

 

2,819

 

1,887,346

 

2,031,199

 

1,942,468

 

1,900,404

 

1,676,133

 

Shopping Centers

 

310

 

207,612

 

214,042

 

186,821

 

181,991

 

144,891

 

Home improvement

 

665

 

444,980

 

506,761

 

425,275

 

389,487

 

351,586

 

Department stores

 

472

 

315,965

 

302,229

 

250,163

 

268,830

 

241,407

 

Financial services

 

176

 

117,865

 

116,544

 

78,632

 

55,713

 

37,372

 

Other(5)

 

4

 

2,763

 

7,337

 

(1,197

)

13,481

 

9,728

 

Total Gross Profit

 

4,446

 

2,976,530

 

3,178,112

 

2,883,597

 

2,809,907

 

2,461,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses, distribution costs and other expenses

 

(3,769

)

(2,523,381

)

(2,675,486

)

(2,482,777

)

(2,357,582

)

(2,048,390

)

Other income

 

450

 

301,152

 

210,521

 

114,438

 

108,291

 

107,011

 

Participation in earnings of associates

 

18

 

11,896

 

14,067

 

6,208

 

10,289

 

5,642

 

Financial income

 

22

 

14,540

 

14,939

 

6,709

 

5,999

 

8,231

 

Financial expenses

 

(423

)

(283,511

)

(259,038

)

(180,258

)

(196,592

)

(173,276

)

Other gains (losses)(6)

 

89

 

59,564

 

(124,455

)

(6,515

)

(3,165

)

(11,711

 

Exchange differences

 

56

 

37,287

 

(116,743

)

(24,411

)

(22,787

)

(13,100

)

Losses from indexation

 

(21

)

(14,312

)

(22,009

)

(39,576

)

(18,885

)

(23,538

)

Income (loss) before taxes

 

866

 

579,766

 

219,908

 

277,416

 

335,476

 

311,988

 

Income tax charge

 

(287

)

(191,969

)

(58,540

)

(125,932

)

(94,068

)

(92,226

)

Profit from Continuing Operations

 

579

 

387,797

 

161,368

 

151,485

 

241,408

 

219,762

 

Profit from Discontinued Operations(7)

 

0

 

0

 

70,617

 

12,662

 

8,357

 

33,047

 

Net Income

 

579

 

387,797

 

231,985

 

164,146

 

249,765

 

252,809

 

Profit attributable to non-controlling shareholders

 

0.1

 

43

 

44

 

(748

)

(166

)

2,851

 

Profit attributable to controlling shareholders

 

579

 

387,755

 

231,941

 

164,895

 

249,930

 

249,959

 

Net earnings attributable to shareholders per share for continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic(8)

 

0.2

 

135

 

57

 

54

 

87

 

93

 

Diluted(8)

 

0.2

 

135

 

56

 

54

 

87

 

92

 

Net earnings attributable to shareholders per share for discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic(8)

 

0.0

 

0

 

25

 

4

 

3

 

14

 

Diluted(8)

 

0.0

 

0

 

25

 

4

 

3

 

14

 

Number of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

Total number of Shares

 

2,862,536,947

 

2,862,536,947

 

2,828,723,963

 

2,828,723,963

 

2,762,910,986

 

2,327,518,639

 

Dividends per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic(8)

 

0.2

 

135

 

82

 

58

 

90

 

107

 

Diluted(8)

 

0.2

 

135

 

81

 

58

 

90

 

106

 

 


(3)  Includes support services, financing, adjustments and others.

(4)  Includes support services, financing, adjustments and others.

(5)  Includes support services, financing, adjustments and others.

(6)  As of December 31, 2015 the Company has recorded a goodwill impairment in the amount of Ch$116,771 million (BRL$566 million).

 

7



Table of Contents

 

Balance sheet data:

 

 

 

As of December 31,

 

 

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

 

 

 

(in millions of
U.S.$)(9)

 

(in millions of Ch$)(10)

 

Total current assets

 

4,026

 

2,695,509

 

2,501,765

 

3,002,468

 

2,425,219

 

2,334,567

 

Property, plant, equipment and investment property net

 

3,852

 

2,578,794

 

2,711,491

 

3,009,728

 

3,101,884

 

2,977,838

 

Other assets

 

7,729

 

5,174,455

 

4,897,470

 

4,704,307

 

4,538,131

 

4,361,594

 

Total assets

 

15,608

 

10,448,757

 

10,110,725

 

10,716,503

 

10,065,234

 

9,674,000

 

Total current liabilities

 

3,867

 

2,589,088

 

2,426,085

 

3,138,770

 

2,951,699

 

3,329,041

 

Total non-current liabilities

 

5,640

 

3,775,618

 

3,713,828

 

3,286,247

 

2,852,168

 

2,946,747

 

Total liabilities

 

9,507

 

6,364,706

 

6,139,913

 

6,425,017

 

5,803,867

 

6,275,788

 

Paid-in capital

 

3,616

 

2,420,565

 

2,321,381

 

2,321,381

 

2,321,381

 

1,551,812

 

Non-controlling interest

 

(2

)

(1,208

)

(934

)

(832

)

100

 

678

 

Net equity attributable to controlling shareholders

 

6,102

 

4,085,260

 

3,971,746

 

4,292,318

 

4,261,267

 

3,397,534

 

Total net equity and liabilities

 

15,608

 

10,448,757

 

10,110,725

 

10,716,503

 

10,065,234

 

9,674,000

 

 

Other financial data:

 

 

 

Year ended December 31,

 

 

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

 

 

 

(in millions of
U.S.$)(11)

 

(in millions of Ch$)(12)

 

Cash Flow Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

604

 

404,067

 

636,151

 

389,483

 

364,782

 

718,715

 

Investing activities

 

(121

)

(81,100

)

31,046

 

(233,396

)

(320,507

)

(1,873,568

)

Financing activities

 

(459

)

(307,014

)

(638,609

)

(112,378

)

(107,029

)

1,246,077

)

Other Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(311

)

(208,173

)

(171,606

)

(227,423

)

(317,710

)

(573,650

)

Depreciation and amortization

 

(340

)

(227,713

)

(218,490

)

(200,043

)

(186,576

)

(138,941

)

Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin(13)

 

28.8

%

28.8

%

28.9

%

26.9

%

27.7

%

27.6

%

Net margin(14)

 

3.8

%

3.8

%

2.1

%

1.5

%

2.5

%

2.8

%

Working capital ratio(15)

 

1.04

 

1.04

 

1.03

 

0.96

 

0.82

 

0.70

 

 


(7)  As of December 31, 2015 the Company has recognized a gain of Ch$61,373 million within the consolidated statement of profit and loss by function, under the “Profit from discontinued operations” line. The generated profit includes Ch$30,144 million corresponding to the benefit related to the measurement at fair value of non-controlling interest in subsidiaries held after the sale.

(8)  In U.S. dollars and Chilean pesos.

(9)  Except financial ratios.

(10)  Except financial ratios.

(11)  Except financial ratios.

(12)  Except financial ratios.

(13)  Consolidated gross profit divided by consolidated revenues from ordinary activities.

 

8



Table of Contents

 

Comprehensive income:

 

 

 

Year ended December 31,

 

 

 

2016

 

2016

 

2015

 

2014

 

2013

 

2012

 

 

 

(in millions of
U.S.$)

 

(in millions of Ch$)

 

Comprehensive income attributable to controlling shareholders

 

449

 

300,906

 

(257,312

)

76,056

 

94,725

 

34,002

 

Comprehensive (loss) income attributable to non-controlling shareholders

 

(0.3

)

(222

)

(102

)

(881

)

(168

)

(5,354

)

Total comprehensive income

 

449

 

300,684

 

(257,414

)

75,175

 

94,557

 

28,648

 

 

Operating data:

 

 

 

Year ended December 31,

 

 

 

2016

 

2015

 

2014

 

2013

 

2012

 

Number of Stores

 

 

 

 

 

 

 

 

 

 

 

Supermarkets:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

245

 

245

 

238

 

224

 

214

 

Argentina

 

 

283

 

286

 

290

 

290

 

288

 

Brazil

 

211

 

222

 

219

 

221

 

204

 

Peru

 

91

 

90

 

87

 

87

 

86

 

Colombia

 

103

 

101

 

100

 

100

 

96

 

Supermarkets subtotal

 

 

933

 

944

 

934

 

922

 

888

 

Home Improvement Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

35

 

35

 

33

 

32

 

31

 

Argentina

 

51

 

50

 

50

 

48

 

47

 

Colombia

 

10

 

10

 

9

 

9

 

4

 

Home improvement stores subtotal

 

96

 

95

 

92

 

89

 

82

 

Department Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

79

 

79

 

79

 

77

 

78

 

Peru

 

10

 

9

 

9

 

6

 

0

 

Department stores subtotal

 

89

 

88

 

88

 

83

 

78

 

Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

25

 

25

 

25

 

25

 

9

 

Argentina

 

22

 

22

 

22

 

18

 

18

 

Peru

 

4

 

4

 

4

 

3

 

2

 

Colombia

 

2

 

2

 

2

 

2

 

0

 

Shopping centers subtotal

 

53

 

53

 

53

 

48

 

29

 

Total

 

1,171

 

1,180

 

1,167

 

1,123

 

1,076

 

 

 

 

(in square meters)

 

Total Selling Space(16)

 

 

 

 

 

 

 

 

 

 

 

Supermarkets:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

578,362

 

577,547

 

567,873

 

546,236

 

524,677

 

Argentina

 

524,821

 

526,475

 

529,428

 

519,171

 

522,270

 

Brazil

 

594,855

 

611,363

 

602,194

 

596,746

 

552,764

 

Peru

 

272,001

 

269,526

 

261,700

 

259,360

 

258,762

 

Colombia

 

431,232

 

426,393

 

425,196

 

428,469

 

416,699

 

Supermarkets subtotal

 

2,401,272

 

2,411,305

 

2,386,391

 

2,349,981

 

2,275,172

 

Home Improvement Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

325,315

 

325,315

 

307,853

 

307,853

 

299,806

 

Argentina

 

391,546

 

383,786

 

383,786

 

373,490

 

369,067

 

Colombia

 

82,320

 

82,320

 

75,733

 

75,732

 

37,060

 

Home improvement stores subtotal

 

799,181

 

791,421

 

767,372

 

757,074

 

705,933

 

Department Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

377,288

 

374,153

 

375,586

 

371,891

 

377,191

 

Peru

 

55,333

 

45,233

 

45,233

 

32,222

 

0

 

Department stores subtotal

 

432,621

 

419,386

 

420,819

 

404,113

 

377,191

 

Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

421,564

 

431,207

 

433,053

 

412,418

 

410,117

 

Argentina

 

277,203

 

277,203

 

281,515

 

241,410

 

241,410

 

Peru

 

71,191

 

71,191

 

71,191

 

58,388

 

41,303

 

Colombia

 

8,890

 

14,991

 

14,514

 

14,514

 

0

 

Shopping centers subtotal

 

778,848

 

794,592

 

800,272

 

756,264

 

692,830

 

Total

 

4,411,922

 

4,416,704

 

4,374,855

 

4,237,899

 

4,051,126

 

 


(14)  Consolidated net income divided by consolidated revenues from ordinary activities.

(15)  Consolidated current assets divided by consolidated current liabilities.

(16)  In square meters at period end.

 

9



Table of Contents

 

 

 

(in millions of Ch$)

 

Average Sales per Store(17)

 

 

 

 

 

 

 

 

 

 

 

Supermarkets:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

10,678

 

10,223

 

9,894

 

9,943

 

9,617

 

Argentina

 

5,771

 

7,534

 

6,254

 

6,162

 

6,083

 

Brazil

 

7,517

 

7,556

 

9,837

 

9,067

 

10,270

 

Peru

 

9,216

 

9,639

 

9,617

 

8,569

 

8,360

 

Colombia

 

7,883

 

8,327

 

9,999

 

9,185

 

1,189

 

Supermarkets subtotal

 

8,026

 

8,523

 

8,736

 

8,228

 

8,356

 

Home Improvement Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

14,864

 

14,139

 

14,107

 

14,022

 

12,915

 

Argentina

 

13,929

 

18,218

 

13,859

 

14,209

 

13,191

 

Colombia

 

6,374

 

6,348

 

6,717

 

9,449

 

10,682

 

Home improvement stores subtotal

 

13,483

 

15,466

 

13,179

 

13,858

 

12,964

 

Department Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

13,403

 

12,566

 

12,053

 

12,413

 

11,360

 

Peru

 

6,809

 

6,550

 

4,360

 

2,430

 

 

 

Department stores subtotal

 

12,662

 

11,950

 

11,945

 

11,691

 

11,360

 

Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

5,861

 

5,361

 

11,284

 

11,284

 

9,309

 

Argentina

 

3,199

 

3,915

 

4,620

 

4,620

 

4,365

 

Peru

 

5,000

 

4,715

 

4,852

 

4,852

 

2,301

 

Colombia

 

4,472

 

4,503

 

8,642

 

8,642

 

N.A. 

 

Shopping centers subtotal

 

4,638

 

4,680

 

7,080

 

7,080

 

5,939

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(%)

 

Increase (Decrease) in Same-Store Sales(18)

 

 

 

 

 

 

 

 

 

 

 

Supermarkets:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

3.9

%

4.6

%

4.3

%

1.6

%

4.8

%

Argentina

 

17.3

%

16.8

%

29.0

%

17.3

%

18.5

%

Brazil

 

(2.4

)%

(6.3

)%

(0.6

)%

(0.5

)%

0.5

%

Peru

 

1.0

%

0.8

%

4.6

%

1.5

%

4.2

%

Colombia

 

5.0

%

1.4

%

(1.5

)%

(7.4

)%

N.A.

 

Home Improvement Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

3.3

%

3.1

%

2.7

%

6.1

%

6.3

%

Argentina

 

18.4

%

30.2

%

27.5

%

30.3

%

26.6

%

Colombia

 

8.8

%

4.2

%

(3.4

)%

0.3

%

4.1

%

Department Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

6.4

%

3.3

%

(0.5

)%

4.7

%

5.3

%

Peru

 

11.1

%

13.7

%

(0.1

)%

N.A.

 

N.A.

 

 

 

 

(in millions of Ch$)

 

Sales per Square Meter(19)

 

 

 

 

 

 

 

 

 

 

 

Supermarkets:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

4.52

 

4.37

 

4.15

 

4.08

 

3.92

 

Argentina

 

3.11

 

4.08

 

3.43

 

3.44

 

3.35

 

Brazil

 

2.67

 

2.74

 

3.58

 

3.36

 

3.79

 

Peru

 

3.08

 

3.27

 

3.20

 

2.87

 

2.78

 

Colombia

 

1.88

 

1.98

 

2.35

 

2.14

 

0.28

 

Supermarkets subtotal

 

3.12

 

3.35

 

3.42

 

3.52

 

3.56

 

Home Improvement Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

1.60

 

1.56

 

1.48

 

1.46

 

1.34

 

Argentina

 

1.81

 

2.37

 

1.81

 

1.83

 

1.68

 

Colombia

 

0.77

 

0.80

 

1.04

 

1.04

 

1.15

 

Home improvement stores subtotal

 

1.62

 

1.89

 

1.57

 

1.62

 

1.51

 

Department Stores:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

2.81

 

2.65

 

2.54

 

2.57

 

2.35

 

Peru

 

1.23

 

1.30

 

0.10

 

0.45

 

0

 

Department stores subtotal

 

2.60

 

2.50

 

2.36

 

2.57

 

2.35

 

Shopping Centers:

 

 

 

 

 

 

 

 

 

 

 

Chile

 

0.35

 

0.31

 

0.28

 

0.26

 

0.22

 

Argentina

 

0.25

 

0.31

 

0.24

 

0.29

 

0.28

 

Peru

 

0.28

 

0.26

 

0.24

 

0.24

 

0.14

 

Colombia

 

1.01

 

0.61

 

0.70

 

0.30

 

 0

 

Shopping centers subtotal

 

0.32

 

0.31

 

0.27

 

0.27

 

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

Total number of store employees(20)

 

138,160

 

140,474

 

153,234

 

154,603

 

146,424

 

 


(17)  Sales for the fiscal period divided by the number of stores or shopping centers, as applicable, at the end of the fiscal period.

(18)  Reflects the sales of our stores operating throughout the same months of both financial periods being compared. If a store did not operate for a full month of either of the financial periods being compared, we exclude its sales for such month from both financial periods. For example, if a new store was opened on July 1, 2015 and operated throughout the last six months of 2015, (i) “same-store sales” would include the sales of that store for the last six months of 2015 and the last six months of 2016 and (ii) we would consider the sales of the new store during the first six months of 2016 as sales from a newly opened store. Calculated in local currency.

(19)  Sales for the period divided by the square meters of selling space or leasable space, as applicable, at the end of each month during the period.

(20)  Number of full-time employee equivalents at period end.

 

10



Table of Contents

 

Exchange Rates

 

Chile

 

Chile has two currency markets, the Mercado Cambiario Formal (the “Formal Exchange Market”) and the Mercado Cambiario Informal (the “Informal Exchange Market”). The Formal Exchange Market is comprised of banks and other entities authorized by the Chilean Central Bank. The Informal Exchange Market is comprised of entities that are not expressly authorized to operate in the Formal Exchange Market, such as certain foreign exchange houses and travel agencies, among others. The Chilean Central Bank is empowered to require that certain purchases and sales of foreign currencies be carried out on the Formal Exchange Market. See also “Item 10. Additional Information—D. Exchange Controls—Foreign Exchange Controls—Chile.”

 

Both the Formal and Informal Exchange Markets are driven by free market forces. Current regulations require that the Chilean Central Bank be informed of certain transactions and that they are effected through the Formal Exchange Market.

 

The U.S. dollar observed exchange rate (dólar observado), which is reported by the Chilean Central Bank and published daily in the Official Gazette (Diario Oficial), is the weighted average exchange rate of the previous business day’s transactions in the Formal Exchange Market. The Chilean Central Bank has the power to intervene by buying or selling foreign currency on the Formal Exchange Market to attempt to maintain the observed exchange rate within a desired range. During the past few years the Chilean Central Bank has attempted to keep the observed exchange rate within a certain range only under special circumstances. Although the Chilean Central Bank is not required to purchase or sell dollars at any specific exchange rate, it generally uses spot rates for its transactions. Other banks generally carry out authorized transactions at spot rates as well.

 

The Informal Exchange Market reflects transactions carried out at an informal exchange rate (the “informal exchange rate”). There are no limits imposed on the extent to which the rate of exchange in the Informal Exchange Market can fluctuate above or below the observed exchange rate. In recent years, the variation between the observed exchange rate and the informal exchange rate has not been significant.

 

The following table sets forth the annual low, high, average and period end observed exchange rate for U.S. dollars for the periods presented, as reported by the Chilean Central Bank. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos.

 

 

 

Daily observed exchange rate Ch$ per U.S.$(21)

 

 

 

High(22)

 

Low(23)

 

Average(24)

 

Period end(25)

 

Year ended December 31,

 

 

 

 

 

 

 

 

 

2012

 

519.69

 

469.65

 

486.59

 

479.96

 

2013

 

533.95

 

466.50

 

495.18

 

524.61

 

2014

 

621.41

 

527.53

 

570.34

 

606.75

 

2015

 

715.66

 

597.10

 

654.66

 

710.16

 

2016

 

730.31

 

645.22

 

676.67

 

685.98

 

Month end

 

 

 

 

 

 

 

 

 

October 31, 2016

 

670.88

 

651.18

 

663.56

 

651.18

 

November 30, 2016

 

679.24

 

650.72

 

667.18

 

673.54

 

December 31, 2016

 

677.11

 

649.40

 

666.97

 

669.47

 

January 31, 2017

 

673.36

 

646.19

 

660.08

 

646.19

 

February 28, 2017

 

648.88

 

638.35

 

643.34

 

648.88

 

March 31, 2017

 

669.52

 

650.98

 

661.86

 

663.97

 

April 2017 (through April 24, 2017)

 

661.42

 

647.47

 

653.54

 

650.65

 

 


(21)  Source: Chilean Central Bank.

(22)  Exchange rates are the actual low and high, on a daily basis for each period.

(23)  Exchange rates are the actual low and high, on a daily basis for each period.

(24)  The yearly average rate is calculated as the average of the exchange rates on the last day of each month during the period.

(25)  Each year period ends on December 31, and the respective period-end exchange rate is published by the Chilean Central Bank on the first business day of the following year. Each month period ends on the last calendar day of such month, and the respective period end exchange rate is published by the Chilean Central Bank on the first business day of the following month.

 

11



Table of Contents

 

Argentina

 

From April 1, 1991 until the end of 2001, the Convertibility Law No. 23,928 and Regulatory Decree No. 529/91 (together, the “Convertibility Law”) established a fixed exchange rate under which the Central Bank of Argentina was obliged to sell U.S. dollars at a fixed rate of one Argentine peso per U.S. dollar. On January 6, 2002, the Argentine Congress enacted the Public Emergency Law, which suspended certain provisions of the Convertibility Law, including the fixed exchange rate of Ar$1.00 to U.S.$1.00, and granted the executive branch of the Argentine government the power to set the exchange rate between the Argentine peso and foreign currencies and to issue regulations related to the foreign exchange market. Following a brief period during which the Argentine government established a temporary dual exchange rate system, pursuant to the Public Emergency Law, the Argentine peso has been allowed to float freely against other currencies since February 2002. For the last few years the Argentine government has maintained a policy of intervention in foreign exchange markets, conducting periodic transactions for the sale and purchase of U.S. dollars. There is no way to foresee whether this could continue in the future. See also “Item 10. Additional Information—D. Exchange Controls—Foreign Exchange Controls—Argentina.”

 

The following table sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in Argentine pesos per U.S. dollar and not adjusted for inflation as reported by the Central Bank of Argentina. The Federal Reserve Bank of New York does not report a noon buying rate for Argentine pesos.

 

 

 

Daily observed exchange rate Ar$ per U.S.$

 

 

 

High

 

Low

 

Average(26)

 

Period end

 

Year ended December 31,

 

 

 

 

 

 

 

 

 

2012

 

4.917

 

4.304

 

4.552

 

4.917

 

2013

 

6.518

 

4.923

 

5.479

 

6.518

 

2014

 

8.556

 

6.543

 

8.119

 

8.552

 

2015

 

13.763

 

8.554

 

9.269

 

13.005

 

2016

 

16.039

 

13.069

 

14.779

 

15.850

 

Month end

 

 

 

 

 

 

 

 

 

October 31, 2016

 

15.225

 

15.115

 

15.181

 

15.175

 

November 30, 2016

 

15.844

 

15.018

 

15.340

 

15.844

 

December 31, 2016

 

16.039

 

15.523

 

15.830

 

15.850

 

January 31, 2017

 

16.503

 

15.808

 

15.907

 

15.912

 

February 28, 2017

 

15.835

 

15.368

 

15.598

 

15.455

 

March 31, 2017

 

15.669

 

15.382

 

15.524

 

15.382

 

April 2017 (through April 21, 2017)

 

15.418

 

15.174

 

15.333

 

15.393

 

 

Brazil

 

The Central Bank of Brazil allows the Real/U.S. dollar exchange rate to float freely and has intervened occasionally to control unstable fluctuations in foreign exchange rates. We cannot predict whether the Central Bank of Brazil or the Brazilian government will continue to let the real float freely or will intervene in the exchange rate market through a currency band system or otherwise. The Brazilian real may depreciate or appreciate substantially against the U.S. dollar in the future. Exchange rate fluctuations may adversely affect our financial condition. See also “Item 10. Additional Information—D. Exchange Controls—Foreign Exchange Controls—Brazil.”

 

Prior to March 14, 2005, under Brazilian regulations, foreign exchange transactions were carried out on either the commercial rate exchange market or the floating rate exchange market. Rates in the two markets were generally the same. On March 14, 2005, the National Monetary Council of Brazil (Conselho Monetário Nacional) unified the two markets.

 

The following table sets forth the exchange selling rates expressed in Brazilian reais per U.S. dollar for the periods indicated, as reported by the Central Bank of Brazil through the Central Bank System (Sistema do Banco Central) using PTAX 800, option 5.

 

 

 

Daily observed exchange rate R$ per U.S.$

 

 

 

High

 

Low

 

Average(27)

 

Period end

 

Year ended December 31,

 

 

 

 

 

 

 

 

 

2012

 

2.1121

 

1.7024

 

1.9550

 

2.0435

 

2013

 

2.4457

 

1.9528

 

2.1605

 

2.3426

 

2014

 

2.7403

 

2.1974

 

2.3547

 

2.6562

 

2015

 

4.1949

 

2.5754