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 May, 2019
Commission File Number 1565025
AMBEV S.A.
(Exact name of registrant as specified in its charter)
AMBEV S.A.
(Translation of Registrant's name into English)
Rua Dr. Renato Paes de Barros, 1017 - 3rd 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____
INTERIM CONSOLIDATED FINANCIAL STATEMENTS - AMBEV S.A.
Interim Consolidated Balance Sheets
As at March 31, 2019 and
December 31, 2018
(Expressed in thousands of Brazilian Reais)
Assets
|
Note
|
03/31/2019
|
12/31/2018
(i)
(restated)
|
01/01/2018
(i)
(restated)
|
|
|
|
|
|
Cash and cash equivalents
|
5
|
12,822,525
|
11,463,498
|
10,354,527
|
Investment securities
|
6
|
13,772
|
13,391
|
11,883
|
Derivative financial instruments
|
20
|
259,305
|
220,032
|
350,036
|
Trade receivable
|
|
3,980,360
|
4,879,256
|
4,944,831
|
Inventories
|
7
|
6,032,744
|
5,401,793
|
4,318,973
|
Income tax and social contributions recoverable
|
|
1,019,327
|
1,285,424
|
2,770,376
|
Other recoverable taxes
|
|
961,015
|
863,290
|
600,165
|
Other assets
|
|
1,105,090
|
1,202,921
|
1,367,282
|
Current assets
|
|
26,194,138
|
25,329,605
|
24,718,073
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
6
|
162,349
|
147,341
|
121,956
|
Derivative financial instruments
|
20
|
30,643
|
34,900
|
35,188
|
Income tax and social contributions recoverable
|
|
3,857,356
|
3,834,413
|
2,312,664
|
Other recoverable taxes
|
|
537,109
|
539,795
|
225,036
|
Deferred tax assets
|
8
|
2,599,205
|
2,064,742
|
2,310,906
|
Other assets
|
|
1,528,124
|
1,687,419
|
1,964,424
|
Employee benefits
|
|
64,975
|
64,285
|
58,443
|
Investments in joint ventures
|
|
256,573
|
257,135
|
237,961
|
Property, plant and equipment
|
9
|
21,431,950
|
21,638,008
|
20,705,145
|
Intangible
|
|
5,845,036
|
5,840,598
|
4,674,704
|
Goodwill
|
10
|
34,398,074
|
34,276,176
|
31,401,874
|
Non-current assets
|
|
70,711,394
|
70,384,812
|
64,048,301
|
|
|
|
|
|
Total assets
|
|
96,905,532
|
95,714,417
|
88,766,374
|
(i) 2018 restated to reflect the impact of adoption of IFRS 16 under the full retrospective application.
The accompanying notes are an integral part of these interim consolidated financial statements.
1
Interim Consolidated Balance Sheets
(continued)
As at March 31, 2019 and
December 31, 2018
(Expressed in thousands of Brazilian
Reais)
Equity and
liabilities
|
Note
|
03/31/2019
|
12/31/2018
(i)
(restated)
|
01/01/2018
(i)
(restated)
|
|
|
|
|
|
Trade payables
|
|
13,322,881
|
14,050,045
|
11,853,928
|
Derivative financial instruments
|
20
|
310,001
|
679,298
|
215,090
|
Interest-bearing loans and borrowings
|
11
|
2,657,486
|
1,941,221
|
1,699,358
|
Bank overdrafts
|
5
|
1
|
-
|
1,792
|
Wages and salaries
|
|
863,181
|
851,619
|
1,047,182
|
Dividends and interest on shareholders’ equity
payable
|
|
775,305
|
806,981
|
1,778,633
|
Income tax and social contribution
payable
|
|
1,516,532
|
1,558,589
|
1,668,407
|
Taxes and contributions payable
|
|
2,361,807
|
3,781,622
|
3,825,440
|
Put option granted on subsidiary and other
liabilities
|
|
1,300,694
|
1,366,589
|
6,807,925
|
Provisions
|
12
|
144,998
|
172,997
|
168,957
|
Current liabilities
|
|
23,252,886
|
25,208,961
|
29,066,712
|
|
|
|
|
|
Trade payables
|
|
84,817
|
126,142
|
175,054
|
Derivative financial instruments
|
20
|
852
|
2,450
|
2,434
|
Interest-bearing loans and borrowings
|
11
|
2,427,752
|
2,162,442
|
2,831,189
|
Deferred tax liabilities
|
8
|
2,394,771
|
2,424,567
|
2,329,229
|
Income tax and social contribution
payable
|
|
2,110,090
|
2,227,795
|
2,418,027
|
Taxes and contributions payable
|
|
669,593
|
675,564
|
771,619
|
Put option granted on subsidiary and other
liabilities
|
|
2,674,079
|
2,661,799
|
429,102
|
Provisions
|
12
|
453,503
|
426,227
|
512,580
|
Employee benefits
|
|
2,346,552
|
2,343,662
|
2,310,685
|
Non-current liabilities
|
|
13,162,009
|
13,050,648
|
11,779,919
|
|
|
|
|
|
Total liabilities
|
|
36,414,895
|
38,259,609
|
40,846,631
|
|
|
|
|
|
Equity
|
13
|
|
|
|
Issued capital
|
|
57,798,844
|
57,710,202
|
57,614,140
|
Reserves
|
|
70,081,754
|
70,122,561
|
63,298,135
|
Carrying value adjustments
|
|
(71,795,387)
|
(71,584,756)
|
(74,966,573)
|
Retained earnings
|
|
3,023,305
|
-
|
-
|
Equity attributable to equity holders of
Ambev
|
|
59,108,516
|
56,248,007
|
45,945,702
|
Non-controlling interests
|
|
1,382,121
|
1,206,801
|
1,974,041
|
Total Equity
|
|
60,490,637
|
57,454,808
|
47,919,743
|
|
|
|
|
|
Total equity and liabilities
|
|
96,905,532
|
95,714,417
|
88,766,374
|
(i) 2018 restated to reflect the impact
of adoption of IFRS 16 under the full retrospective application.
The accompanying notes are an integral
part of these interim consolidated financial statements.
2
Interim Consolidated Income
Statements
For the three-month period ended March
31, 2019 and 2018
(Expressed in thousands of Brazilian
Reais)
|
Note
|
03/31/2019
|
03/31/2018
(restated)
|
|
|
|
|
Net sales
|
15
|
12,640,126
|
11,640,219
|
Cost of sales
|
|
(5,107,701)
|
(4,455,934)
|
Gross profit
|
|
7,532,425
|
7,184,285
|
|
|
|
|
Distribution expenses
|
|
(1,626,722)
|
(1,596,123)
|
Sales and marketing expenses
|
|
(1,401,281)
|
(1,465,381)
|
Administrative expenses
|
|
(661,522)
|
(571,192)
|
Other operating income/(expenses),
net
|
16
|
231,253
|
257,560
|
Exceptional items
|
|
(18,420)
|
(8,432)
|
Income from operations
|
|
4,055,733
|
3,800,717
|
|
|
|
|
Finance cost
|
17
|
(959,761)
|
(974,763)
|
Finance income
|
17
|
287,693
|
375,541
|
Net finance cost
|
|
(672,068)
|
(599,222)
|
|
|
|
|
Share of result of joint ventures
|
|
(2,136)
|
617
|
Income before income tax
|
|
3,381,529
|
3,202,112
|
|
|
|
|
Income tax expense
|
18
|
(632,461)
|
(614,526)
|
Net income
|
|
2,749,068
|
2,587,586
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of Ambev
|
|
2,661,850
|
2,505,919
|
Non-controlling interests
|
|
87,218
|
81,667
|
|
|
|
|
Basic earnings per share – common -
R$
|
|
0.17
|
0.16
|
Diluted earnings per share – common -
R$
|
|
0.17
|
0.16
|
(i) 2018 restated to reflect the impact
of adoption of IFRS 16 under the full retrospective application.
The accompanying notes are an integral
part of these interim consolidated financial statements.
3
Interim Consolidated Statements of Comprehensive Income
For the three-month period ended March 31, 2019 and 2018
(Expressed in thousands of Brazilian Reais)
|
03/31/2019
|
03/31/2018
(restated)
|
|
|
|
Net income
|
2,749,068
|
2,587,586
|
|
|
|
Items that will not be recycled to profit or loss:
|
|
|
Full recognition of actuarial gains/(losses)
|
3,407
|
(3,189)
|
|
|
|
Items that may be recycled subsequently to profit or loss:
|
|
|
Exchange differences on translation of foreign operations (gains/(losses)
|
|
|
Investment hedge - put option granted on subsidiary
|
(5,681)
|
57,390
|
Gains/losses on translation of other foreign operations
|
(192,810)
|
(449,880)
|
Gains/losses on translation of foreign operations
|
(198,491)
|
(392,490)
|
|
|
|
Cash flow hedge - gains/(losses)
|
|
|
Recognized in Equity (Hedge reserve)
|
422,713
|
43,008
|
Removed from Equity (Hedge reserve) and included in profit or loss
|
(437,035)
|
(99,931)
|
Total cash flow hedge
|
(14,322)
|
(56,923)
|
|
|
|
Other comprehensive (loss)/income
|
(209,406)
|
(452,602)
|
|
|
|
Total comprehensive income
|
2,539,662
|
2,134,984
|
|
|
|
Attributable to:
|
|
|
Equity holders of Ambev
|
2,451,219
|
2,054,672
|
Non-controlling interest
|
88,443
|
80,312
|
(i) 2018 restated to reflect the impact of adoption of IFRS 16 under the full retrospective application.
The accompanying notes are an integral part of these interim consolidated financial statements. The consolidated statements of comprehensive income are presented net of income tax. The income tax effects of these items are disclosed in Note 8 -
Deferred income tax and social contribution.
4
Interim Consolidated Statements of Changes in Equity
For the three-month period ended March 31, 2019
(Expressed in thousands of Brazilian Reais)
|
Attributable to equity holders of Ambev
|
|
|
|
|
Capital
|
Capital reserves
|
Net income reserves
|
Retained earnings
|
Carrying value adjustments
|
Total
|
|
Non-controlling interests
|
Total equity
|
At December 31, 2018
|
57,710,202
|
54,781,194
|
15,434,093
|
-
|
(71,584,866)
|
56,340,623
|
|
1,206,801
|
57,547,424
|
Impact of the adoption of IFRS 16
(i)
|
-
|
-
|
(92,726)
|
-
|
110
|
(92,616)
|
|
-
|
(92,616)
|
At January 1, 2019
|
57,710,202
|
54,781,194
|
15,341,367
|
-
|
(71,584,756)
|
56,248,007
|
|
1,206,801
|
57,454,808
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
-
|
-
|
-
|
2,661,850
|
-
|
2,661,850
|
|
87,218
|
2,749,068
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on translation of foreign operations
|
-
|
-
|
-
|
-
|
(198,902)
|
(198,902)
|
|
411
|
(198,491)
|
Cash flow hedges
|
-
|
-
|
-
|
-
|
(14,824)
|
(14,824)
|
|
502
|
(14,322)
|
Actuarial gains/(losses)
|
-
|
-
|
-
|
-
|
3,095
|
3,095
|
|
312
|
3,407
|
Total comprehensive income
|
-
|
-
|
-
|
2,661,850
|
(210,631)
|
2,451,219
|
|
88,443
|
2,539,662
|
Capital increase
|
88,642
|
(86,118)
|
-
|
-
|
-
|
2,524
|
|
-
|
2,524
|
Effect of application of IAS 29 (hyperinflation)
(iii)
|
-
|
-
|
-
|
361,455
|
-
|
361,455
|
|
-
|
361,455
|
Gains/(losses) of controlling interest´s share
(ii)
|
-
|
-
|
-
|
-
|
-
|
-
|
|
107,030
|
107,030
|
Dividends distributed
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(20,153)
|
(20,153)
|
Purchase of shares and result on treasury shares
|
-
|
302
|
-
|
-
|
-
|
302
|
|
-
|
302
|
Share-based payments
|
-
|
45,009
|
-
|
-
|
-
|
45,009
|
|
-
|
45,009
|
At March 31, 2019
|
57,798,844
|
54,740,387
|
15,341,367
|
3,023,305
|
(71,795,387)
|
59,108,516
|
|
1,382,121
|
60,490,637
|
(i) As described in Note 3 -
Summary of significant account police.
(ii) As described in Note 1 (b)
Application of inflation accounting and Financial Reporting in Hyperinflationary Economies
.
The accompanying notes are an integral part of these interim consolidated financial statements.
5
Interim Consolidated Statements of Changes in Equity (continued)
For the three-month period ended March 31, 2018
(Expressed in thousands of Brazilian Reais)
|
Attributable to equity holders of Ambev
|
|
|
|
|
Capital
|
Capital
reserves
|
Net income
reserves
|
Retained
earnings
|
Carrying value adjustments
|
Total
|
|
Non-controlling interests
|
Total equity
|
At December 31, 2017
|
57,614,140
|
54,700,909
|
8,660,235
|
-
|
(74,966,470)
|
46,008,814
|
|
1,974,041
|
47,982,855
|
Impact of the adoption of IFRS 15
(i)
|
-
|
-
|
-
|
(355,383)
|
-
|
(355,383)
|
|
-
|
(355,383)
|
Impact of the adoption of IFRS 16
|
-
|
-
|
(63,009)
|
-
|
(103)
|
(63,112)
|
|
-
|
(63,112)
|
At January 1, 2018
|
57,614,140
|
54,700,909
|
8,597,226
|
(355,383)
|
(74,966,573)
|
45,590,319
|
|
1,974,041
|
47,564,360
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
-
|
-
|
-
|
2,505,919
|
-
|
2,505,919
|
|
81,667
|
2,587,586
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on translation of foreign operations
|
-
|
-
|
-
|
-
|
(392,913)
|
(392,913)
|
|
423
|
(392,490)
|
Cash flow hedges
|
-
|
-
|
-
|
-
|
(55,743)
|
(55,743)
|
|
(1,180)
|
(56,923)
|
Actuarial gain/(losses)
|
-
|
-
|
-
|
-
|
(2,591)
|
(2,591)
|
|
(598)
|
(3,189)
|
Total comprehensive income
|
-
|
-
|
-
|
2,505,919
|
(451,247)
|
2,054,672
|
|
80,312
|
2,134,984
|
Capital increase
|
96,062
|
(89,876)
|
-
|
-
|
-
|
6,186
|
|
-
|
6,186
|
Gains/(losses) of controlling interest´s share
|
-
|
-
|
-
|
-
|
1,068,695
|
1,068,695
|
|
(1,079,050)
|
(10,355)
|
Dividends distributed
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(30,876)
|
(30,876)
|
Acquired shares and result on treasury shares
|
-
|
(2,548)
|
-
|
-
|
-
|
(2,548)
|
|
-
|
(2,548)
|
Share-based payment
|
-
|
33,473
|
-
|
-
|
-
|
33,473
|
|
-
|
33,473
|
Prescribed dividends
|
-
|
-
|
-
|
(50)
|
-
|
(50)
|
|
-
|
(50)
|
At March 31, 2018
|
57,710,202
|
54,641,958
|
8,597,226
|
2,150,486
|
(74,349,125)
|
48,750,747
|
|
944,427
|
49,695,174
|
(i) As described in Note 3 -
Summary of significant account police.
(ii) 2018 restated to reflect the impact of adoption of IFRS 16 under the full retrospective application.
(iii) As described in Note 1 –
Corporate information.
The accompanying notes are an integral part of these interim consolidated financial statements.
6
Interim Consolidated Cash Flow Statements
For the three-month period ended March 31, 2019 and 2018
(Expressed in thousands of Brazilian Reais)
|
Note
|
03/31/2019
|
03/31/2018
(ii)
(restated)
|
|
|
|
|
Net income
|
|
2,749,068
|
2,587,586
|
Depreciation, amortization and impairment
|
|
1,046,498
|
977,780
|
Impairment losses on receivables and inventories
|
|
45,148
|
35,043
|
Additions/(reversals) in provisions and employee benefits
|
|
14,812
|
46,228
|
Net finance cost
|
17
|
672,068
|
599,222
|
Losses/(gain) on sale of property, plant and equipment and intangible assets
|
|
(11,800)
|
21,928
|
Equity-settled share-based payment expense
|
19
|
45,402
|
33,855
|
Income tax expense
|
18
|
632,461
|
614,526
|
Share of result of joint ventures
|
|
2,136
|
(617)
|
Other non-cash items included in the profit
|
|
(438,793)
|
(115,626)
|
Cash flow from operating activities before changes in working capital and use of provisions
|
|
4,757,000
|
4,799,925
|
|
|
|
|
(Increase)/decrease in trade and other receivables
|
|
687,221
|
865,500
|
(Increase)/decrease in inventories
|
|
(666,025)
|
(464,714)
|
Increase/(decrease) in trade and other payables
|
|
(1,222,901)
|
(2,509,576)
|
Cash generated from operations
|
|
3,555,295
|
2,691,135
|
|
|
|
|
Interest paid
|
|
(73,176)
|
(101,330)
|
Interest received
|
|
132,991
|
100,239
|
Dividends received
|
|
245
|
-
|
Income tax paid
|
|
(1,535,210)
|
(1,749,515)
|
Cash flow from operating activities
|
|
2,080,145
|
940,529
|
|
|
|
|
Proceeds from sale of property, plant and equipment and intangible assets
|
|
19,831
|
1,432
|
Acquisition of property, plant and equipment and intangible assets
|
|
(546,056)
|
(472,676)
|
Acquisition of subsidiaries, net of cash acquired
|
|
(44,562)
|
(3,074,047)
|
Acquisition of other investments
|
|
-
|
(5,000)
|
Investment in short term debt securities and net proceeds/(acquisition) of debt securities
|
|
(14,644)
|
(7,800)
|
Net proceeds/(acquisition) of other assets
|
|
202,296
|
(249)
|
Cash flow from investing activities
|
|
(383,135)
|
(3,558,340)
|
|
|
|
|
Capital increase
|
|
2,524
|
6,186
|
Proceeds/(repurchase) of treasury shares
|
|
(1,333)
|
(8,599)
|
Acquisition of non-controlling interest
|
|
(34)
|
-
|
Proceeds from borrowings
|
|
801,611
|
2,026,650
|
Repayment of borrowings
|
|
(92,395)
|
(93,437)
|
Cash net of finance costs other than interests
|
|
(886,701)
|
(307,307)
|
Payment of finance lease liabilities
|
|
-
|
-
|
Payment of lease liabilities
|
|
(154,496)
|
(150,448)
|
Dividends and Interest on shareholder´s equity paid
|
|
(53,007)
|
(1,099,721)
|
Cash flow from financing activities
|
|
(383,831)
|
373,324
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
1,313,179
|
(2,244,487)
|
Cash and cash equivalents less bank overdrafts at beginning of year
(i)
|
|
11,463,498
|
10,352,735
|
Effect of exchange rate fluctuations
|
|
45,847
|
(154,898)
|
Cash and cash equivalents less bank overdrafts at end of year
(i)
|
|
12,822,524
|
7,953,350
|
(i) Net of bank overdrafts.
(ii) 2018 restated to reflect the impact of adoption of IFRS 16 under the full retrospective application.
The accompanying notes are an integral part of these interim
consolidated financial statements
.
7
Notes to the interim consolidated
financial statements:
1.
|
Corporate
information
|
2.
|
Statement of
compliance
|
3.
|
Summary of significant accounting
policies
|
4.
|
Use of estimates and
judgments
|
5.
|
Cash and cash
equivalents
|
6.
|
Investment securities
|
7.
|
Inventories
|
8.
|
Deferred income tax and social
contribution
|
9.
|
Property, plant and
equipment
|
10.
|
Goodwill
|
11.
|
Interest-bearing loans and
borrowings
|
12.
|
Provisions
|
13.
|
Changes in equity
|
14.
|
Segment reporting
|
15.
|
Net sales
|
16.
|
Other operating
income/(expenses)
|
17.
|
Finance cost and
income
|
18.
|
Income tax and social contribution
|
19.
|
Share-based
payments
|
20.
|
Financial instruments and
risks
|
21.
|
Collateral and contractual
commitments with suppliers
, advances from customers and
other
|
22.
|
Contingent
liability
|
23.
|
Non-cash items
|
24.
|
Related parties
|
25.
|
Events after the reporting
period
|
8
1.
CORPORATE INFORMATION
(a)
Description of business
Ambev S.A. (
referred to as the “Company” or “Ambev”),
headquartered in São Paulo, Brazil, has purpose directly or through the participation in other companies, produces and sells beer, draft beer, soft drinks, other non-alcoholic beverages, malt and food in general, as well as the advertising of its and third party products, the sale of promotional and advertising materials and the direct or indirect exploitation of bars, restaurants, snack bars and the like, among others.
The Company’s shares and ADR’s (American Depositary Receipts) are listed on the
B3 S.A.- Brasil, Bolsa, Balcão
as “ABEV3” and on the New York Stock Exchange (NYSE) as “ABEV”.
The Company’s direct controlling shareholders are Interbrew International B.V. (“IIBV”), AmBrew S.A. (“Ambrew”), both subsidiaries of Anheuser-Busch InBev N.V. (“AB InBev”) and Fundação Antonio e Helena Zerrenner Instituição Nacional de Beneficência (“Fundação Zerrenner”).
The interim financial statements
were approved by the Board of Directors on May 6, 2019.
(b)
Major corporate events in 2019 and 2018:
Application of inflation accounting and financial reporting in hyperinflationary economies
In June 2018, the Argentinean peso underwent a severe devaluation resulting in the three-year cumulative inflation of Argentina to exceed 100%, thereby triggering the requirement to transition to hyperinflation accounting as prescribed by IAS 29 Financial Reporting in Hyperinflationary Economies as of 1 January 2018 (beginning of the reporting period in which it identifies the existence of hyperinflation).
Under IAS 29, the non-monetary assets and liabilities, the equity and the income statement of subsidiaries operating in hyperinflationary economies are restated for changes in the general purchasing power of the local currency applying a general price index.
The financial statements of an entity whose functional currency is the currency of a hyperinflationary economy, whether they are based on a historical cost approach or a current cost approach, shall be stated in terms of the measuring unit current at the end of the reporting period and conversion into Brazilian Real at the period closing exchange rate.
9
Consequently, the company has applied hyperinflation
accounting for its Argentinean subsidiaries in these consolidated interim
financial statements applying the IAS 29 rules as follows:
·
hyperinflation accounting was applied as of 1 January
2018 (under paragraph 4 of IAS 29, the standard applies to the financial
statements of any entity from the beginning of the reporting period in which it
identifies the existence of hyperinflation);
·
non-monetary assets and liabilities stated at historical
cost (e.g. property plant and equipment, intangible assets, goodwill, etc.) and
equity of Argentina were restated using an inflation index. The
hyperinflation impacts resulting from changes in the general purchasing power
until 31 December 2017 were reported in retained earnings and the impacts of
changes in the general purchasing power from 1 January 2018 are reported through
the income statement on a dedicated account for hyperinflation monetary
adjustments in the finance line (see also Note 17 - Finance cost and income).
Under paragraph 3 of IAS 29, there is no a general price index, but allow to be
executed judgement when restatement of financial statements becomes
necessary. That way, the index used was based in Resolution 539/18 issued by
Argentine Federation of Professional Boards on
Economic Sciences: i) from January 1st, 2017 onwards the national IPC
(national consumer price index) and; ii) to December 31,2016 the IPIM (wholesale
price index).
·
the income statement is adjusted at the end of each
reporting period using the change in the general price index and is
converted at the closing exchange rate of each period (rather than the year to
date average rate for non-hyperinflationary economies), thereby restating the
year to date income statement account both for inflation index and currency
conversion;
·
the prior year income statement and the first and second
quarter of 2018 and balance sheet of the Argentinean subsidiaries were not
restated. Under paragraph 42 (b) of IAS 21 when amounts are translated into the
currency of a non-hyperinflationary economy, comparative amounts shall be those
that were presented as current year amounts in the relevant prior year financial
statements (i.e. not adjusted for subsequent changes in the price level or
subsequent changes in exchange rates).
Exchange contracts for future financial
flows - Equity Swap
On December 21, 2017 Ambev's Board of
Directors approved the conclusion of new equity swap contracts, without
prejudice of the liquidation, within the regulatory term, of the contracts still
in force. The new contracts may cover the exposure in up to 44 million common
shares (of which all or part may be through ADR's), with a limit value of up to
R$820 million.
10
On May 15, 2018 Ambev’s Board of Directors approved the conclusion of new equity swap contracts, without prejudice of the liquidation, within the regulatory term, of the contracts still in force. The new contracts may cover the exposure in up to 80 million common shares (of which all or part may be through ADR's), with a limit value of up to R$1.8 billion.
On December 20, 2018, the Board of Directors of Ambev approved the conclusion of new equity swap contracts, without prejudice to the liquidation, within the regulatory term, of the equity swap contracts still in force. The settlement of the new approved equity swap contracts shall occur within a maximum period of 18 months from approval, and such contracts may result in exposure up to 80 million common shares (of which all or part may be through ADRs), with a limit value up to R$1.5 billion, in addition to contracts already executed in the context of the approvals of December 21, 2017 and May 15, 2018, and which have not yet been settled, may result in an exposure up to 137,394,353 common shares (all or part of which may be through ADR's).
Addendum to the Agreement with PepsiCo
The long-term agreement with PepsiCo, under which the Company has the exclusive right to bottle, sell and distribute certain brands on PepsiCo’s portfolio of soft drinks in Brazil, including Pepsi Cola, Gatorade, H2OH! and Lipton Ice Tea, was amendment in October 2018 to reflect certain changes in the trade agreement between the parties. The new terms of the agreement were approved by CADE in December 2018 and became effective as of January
1
st
,
2019. The agreement will be in force until December 31, 2027.
Sale of subsidiary
On June 8, 2018 the Company concluded the sale of all shares of the subsidiary, Barbados Bottling Co. Limited, active in the Soft drink segment, by the amount of US$53 million, corresponding to R$179 million. An result of this transaction the Company recorded a gain of US$22 million, corresponding to R$75 million on the transaction date and to R$79 million in December 31, 2018, in the income statement as Exceptional item.
Perpetual licensing agreement with Quilmes
In September 2017, Quilmes, a subsidiary of Ambev, entered into an agreement whereby AB InBev will grant a perpetual license to Quilmes in Argentina for Budweiser and other North American brands upon the recovery of the distribution rights by AB InBev from the Chilean company Compañia Cervecerías Unidas S.A. - CCU. The agreement also foreseed the transfer of the brewery of Cerveceria Argentina Sociedad Anonima Isenbeck by AB InBev to Quilmes and the transfer of some Argentinean brands (Norte, Iguana and Baltica) and related business assets along with US$50 million by Quilmes to CCU. The transaction was closed on May 2, 2018, following the approval, on April 27, 2018, by the Argentinean antitrust authority (Comisión Nacional de Defensa de la Competencia) of the main
transaction documents and verification of other usual conditions closing. The Company recorded a gain of 306 million of Argentinean pesos, corresponding to R$50 million on the transaction date and to R$30 million in December 31, 2018 in the income statement as a result of the application of the accounting practice for the exchange of assets involving transactions under common control as Exceptional item.
11
Renegotiation of shareholders agreement from Tenedora
On December 1st, 2017, Ambev informed its shareholders and the general market that the E. León Jimenes, S.A. (“ELJ”), partner of Ambev in Tenedora, S.A. (“Tenedora”), which holds almost all shares of Cervecería Nacional Dominicana, S.A (“CND”), would exercise partially, as provide for in shareholders’ agreement of Tenedora, ELJ put option with relation to approximately 30% of capital stock by Tenedora. Due the partial put exercise option, the Company will pay to ELJ the amount of USD 926.5 million and would be the holder of approximately 85% of Tenedora, and ELJ will remain with 15% interest of CND. Considering the strategic importance of alliance with the ELJ, the Board of Directors of Ambev approved this date the change of the call option term from 2019 to 2022. The transaction was subject to certain conditions precedent that was concluded on January 18, 2018.
2.
STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared using the accounting basis of going concern and are being presented 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, 2018. To avoid duplication of disclosures which are included in the annual financial statements, the following notes were not subject to full filling:
(a)
Summary of significant accounting policies (Note 3);
(b)
Exceptional items (Note 8);
(c)
Payroll and related benefits (Note 9);
(d)
Additional information on operating expenses by nature (Note 10);
(e)
Goodwill (Note 14);
(f)
Intangible (Note 15);
(g)
Investment securities (Note 16);
(h)
Trade receivables (Note 19);
(i)
Changes in equity (Note 21);
(j)
Interest-bearing loans and borrowings (Note 22);
12
(k)
Employee benefits (Note 23);
(l)
Trade payables (Note 25);
(m)
Contingent liabilities (Note 29);
(n)
Group Companies (Note 32);
(o)
Insurance (Note 33)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There were no significant changes in accounting policies and calculation methods used for the financial statements as of March 31, in relation to those presented in the financial statements for the years ended December 31, 2018, except for the policy described below:
IFRS 16 Leases
(effective from annual periods beginning on or after January
1
st
,
2019) replaces the current lease accounting requirements and introduces significant changes in the accounting, this change removes the distinction between operating and finance leases under IAS 17 Leases and related interpretations, and requires a lessee to be recognize as right-of-use asset and a liability according to which contract period.
The adoption of the standard as of January 1, 2019, the company have adopted the retrospectively presentation for the consolidated financial statements, demonstrated as restated, the impacted in the financial statements are demonstrated below:
- Recognition of right of use assets and lease liabilities in the balance sheet, initially measured at the present value of future lease payments;
- Recognition of depreciation expenses of right of use assets in the income statement;
- Recognition of interest expenses in the financial result on the lease liabilities in the income statement; and
- Segregation of the payment of the leases by a principal portion presented within the financing activities and an interest component presented within the operational activities in the cash flows.
The new lease definitions have been applied to all identified contracts in effect on the date of adoption of the standard. IFRS 16 determines that the contract contains a lease if it transmits to the lessee the right to control the use of the identified asset for a period of time by exchange of counter payments.
The Company carried out an inventory of the contracts, evaluating whether or not they contain a lease in accordance with IFRS 16. This analysis identified impacts mainly related to the leasing operations of real estate from third parties, trucks, cars, forklifts and servers.
13
Short-term (12 months or less) and low value (USD 5,000 or less) leases were not subject to this analysis, as permitted by the standard. For these contracts, the Company will continue to recognize a lease expense on a straight-line basis.
When measuring lease liabilities, the company discounted lease payments using incremental borrowing rates at January 1st, 2019. The weighted average rate applied is 12.6%.
The company have adopted the retrospectively presentation for the consolidated financial statements. The tables below summarize the impacts on the adoption of the standard in the balance sheet, income statement, statement of comprehensive income and statement of cash flows:
|
12/31/2018
|
|
01/01/2018
|
Consolidated Balance Sheets
|
Originally Submitted
|
IFRS 16
|
Restated
|
|
Originally Submitted
|
IFRS 16
|
Restated
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
25,329,605
|
-
|
25,329,605
|
|
24,718,073
|
-
|
24,718,073
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
2,017,475
|
47,267
|
2,064,742
|
|
2,279,339
|
31,567
|
2,310,906
|
Investments in joint ventures
|
257,135
|
-
|
257,135
|
|
237,961
|
-
|
237,961
|
Property, plant and equipment
|
20,096,996
|
1,541,012
|
21,638,008
|
|
18,822,327
|
1,882,818
|
20,705,145
|
Other non-current assets
|
46,424,927
|
-
|
46,424,927
|
|
40,794,289
|
-
|
40,794,289
|
Non-current assets
|
68,796,533
|
1,588,279
|
70,384,812
|
|
62,133,916
|
1,914,385
|
64,048,301
|
|
|
|
|
|
|
|
|
Total assets
|
94,126,138
|
1,588,279
|
95,714,417
|
|
86,851,989
|
1,914,385
|
88,766,374
|
|
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings
|
1,560,630
|
380,591
|
1,941,221
|
|
1,321,122
|
378,236
|
1,699,358
|
Other current liabilities
|
23,267,740
|
-
|
23,267,740
|
|
27,367,354
|
-
|
27,367,354
|
Current liabilities
|
24,828,370
|
380,591
|
25,208,961
|
|
28,688,476
|
378,236
|
29,066,712
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings
|
862,138
|
1,300,304
|
2,162,442
|
|
1,231,928
|
1,599,261
|
2,831,189
|
Other non-current liabilities
|
10,888,206
|
-
|
10,888,206
|
|
8,948,730
|
-
|
8,948,730
|
Non-current liabilities
|
11,750,344
|
1,300,304
|
13,050,648
|
|
10,180,658
|
1,599,261
|
11,779,919
|
|
|
|
|
|
|
|
|
Total liabilities
|
36,578,714
|
1,680,895
|
38,259,609
|
|
38,869,134
|
1,977,497
|
40,846,631
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital
|
57,710,202
|
-
|
57,710,202
|
|
57,614,140
|
-
|
57,614,140
|
Reserves
|
70,215,287
|
-92,726
|
70,122,561
|
|
63,361,144
|
-63,009
|
63,298,135
|
Carrying value adjustments
|
-71,584,866
|
110
|
-71,584,756
|
|
-74,966,470
|
-103
|
-74,966,573
|
Equity attributable to equity holders of Ambev
|
56,340,623
|
-92,616
|
56,248,007
|
|
46,008,814
|
-63,112
|
45,945,702
|
Non-controlling interests
|
1,206,801
|
-
|
1,206,801
|
|
1,974,041
|
-
|
1,974,041
|
Total Equity
|
57,547,424
|
-92,616
|
57,454,808
|
|
47,982,855
|
-63,112
|
47,919,743
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
94,126,138
|
1,588,279
|
95,714,417
|
|
86,851,989
|
1,914,385
|
88,766,374
|
14
|
03/31/2018
|
Consolidated Income Statements
|
Originally Submitted
|
IFRS16
|
Restated
|
|
|
|
|
Cost of sales
|
-4,460,748
|
4,814
|
-4,455,934
|
Gross profit
|
-4,460,748
|
4,814
|
-4,455,934
|
|
|
|
|
Distribution expenses
|
-1,623,818
|
27,695
|
-1,596,123
|
Sales and marketing expenses
|
-1,471,470
|
6,089
|
-1,465,381
|
Administrative expenses
|
-572,143
|
951
|
-571,192
|
Income from operations
|
-8,128,179
|
39,549
|
-8,088,630
|
|
|
|
|
Finance cost
|
-919,834
|
-54,929
|
-974,763
|
Net finance cost
|
-919,834
|
-54,929
|
-974,763
|
|
|
|
|
Share of result of joint ventures
|
617
|
-
|
617
|
Income before income tax
|
-9,047,396
|
-15,380
|
-9,062,776
|
|
|
|
|
Income tax expense
|
-619,863
|
5,337
|
-614,526
|
|
|
|
|
Net income
|
2,597,629
|
-10,043
|
2,587,586
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of Ambev
|
2,515,962
|
-10,043
|
2,505,919
|
Non-controlling interests
|
81,667
|
-
|
81,667
|
|
|
|
|
Basic earnings per share – common - R$
|
0.1601
|
-0.0006
|
0.1595
|
Diluted earnings per share – common - R$
|
0.1588
|
-0.0006
|
0.1582
|
|
03/31/2018
|
Consolidated Statements of Comprehensive Income
|
Originally Submitted
|
IFRS 16
|
Restated
|
|
|
|
|
|
|
|
|
Net income
|
2,597,629
|
-10,043
|
2,587,586
|
|
|
|
|
Total comprehensive income
|
2,145,027
|
-10,043
|
2,134,984
|
Attributable to:
|
|
|
|
Equity holders of Ambev
|
2,064,715
|
-10,043
|
2,054,672
|
Non-controlling interest
|
80,312
|
-
|
80,312
|
|
03/31/2018
|
Consolidated Cash Flow Statements
|
Originally Submitted
|
IFRS 16
|
Restated
|
|
|
|
|
Net income
|
2,597,629
|
-10,043
|
2,587,586
|
Depreciation, amortization and impairment
|
869,095
|
108,679
|
977,780
|
Net finance cost
|
544,293
|
54,929
|
599,222
|
Income tax expense
|
619,863
|
-5,337
|
614,526
|
Share of result of joint ventures
|
-617
|
-
|
-617
|
Cash flow from operating activities
|
4,630,263
|
148,228
|
4,778,497
|
|
|
|
|
Payment of lease liabilities
|
-2,214
|
-148,234
|
-150,448
|
Cash flow from financing activities
|
-2,214
|
-148,234
|
-150,448
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
-2,244,487
|
-
|
-2,244,487
|
15
(a)
Basis of preparation and measurement
The interim financial statements are presented in
thousands
of Brazilian Real (“R$”), unless otherwise indicated,
rounded to the nearest
thousand
indicated. Depending on the applicable IFRS requirement,
the measurement basis used in preparing the interim financial statements is
historical cost, net realizable value, fair value or recoverable
amount.
(b)
Recently issued IFRS
There were no new standards for the
period ended March 31, 2019, for the preparation of these interim financial
statements.
Other Standards, Interpretations and Amendments to
Standards
The other amendments to standards effective for annual
periods beginning after 1 January 2019, have not been listed previously
because of either their non-applicability to or their immateriality to Ambev’s
consolidated financial statements.
4.
USE OF ESTIMATES AND JUDGMENTS
The preparation of interim financial statements in
conformity with IFRS requires Management to make judgments, estimates and
assumptions that affect the application of accounting practices and the reported
amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on past experience and various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for decision making regarding the judgments about carrying
amounts of assets and liabilities that are not readily evident from other
sources. Actual results may differ from these estimates.
The estimates and assumptions are reviewed on a regular
basis. Changes in accounting estimates may affect the period in which they are
realized, or future periods.
Although each of its significant accounting policies
reflects judgments, assessments or estimates, the Company believes that the
following accounting practices reflect the most critical judgments, estimates
and assumptions that are important to its business operations and the
understanding of its results:
(i) predecessor accounting;
(ii) business combinations;
(iii) impairment;
(iv) provisions;
(v) share-based payments;
(vi) employee benefits;
(vii) current and deferred tax;
(viii) joint arrangements;
16
(ix) measurement of financial instruments, including
derivatives;
(x)
inflation accounting and financial reporting in
hyperinflationary economies; and
The fair values of acquired identifiable
intangibles of indefinite useful life are based on an assessment of future cash
flows. Impairment analyses of goodwill and indefinite-lived intangible assets
are performed at least annually and whenever a triggering event occurs, in order
to determine whether the carrying value exceeds the recoverable
amount.
The Company uses its judgment to select
a variety of methods including the net fair value of expenses approach and
option valuation models and makes assumptions about the fair value of financial
instruments that are mainly based on market conditions existing at each balance
sheet date.
Actuarial assumptions are established to
anticipate future events and are used in calculating pension and other long-term
employee benefit expense and liability. These factors include assumptions with
respect to interest rates, rates of increase in health care costs, rates of
future compensation increases, turnover rates, and life expectancy.
The company is subject to income
tax in numerous jurisdictions. Significant judgment is required in
determining the worldwide provision for income tax. There are some transactions
and calculations for which the ultimate tax determination is uncertain. Some
subsidiaries within the Company are involved in tax audits usually in relation
to prior years. These audits are ongoing in various jurisdictions at the balance
sheet date and, by their nature, these can take considerable time until its
conclusion.
As described in Note 1 (b)
Application of inflation accounting and
financial reporting in hyperinflationary economies
, under paragraph 3 of IAS 29, there are
no a general price index, but allow to be executed judgement when restatement of
financial statements becomes necessary. That way, the index used was based
in Resolution 539/18 issued by Argentine Federation of
Professional Boards on Economic Sciences: i) from January 1st,
2017 onwards the national IPC (national consumer price index); ii) to December
31,2016 the IPIM (wholesale price index).
17
5.
CASH AND CASH EQUIVALENTS
|
03/31/2019
|
12/31/2018
|
|
|
|
Cash
|
154,312
|
594,995
|
Current bank accounts
|
3,929,229
|
4,875,673
|
Short term bank deposits
(i)
|
8,738,984
|
5,992,830
|
Cash and cash equivalents
|
12,822,525
|
11,463,498
|
|
|
|
Bank overdrafts
|
(1)
|
-
|
Cash and cash equivalents less bank
overdraft
|
12,822,524
|
11,463,498
|
(i) The balance refers mostly to Bank
Deposit Certificates - CDB, high liquidity, which are readily convertible into
known amounts of cash and which are subject to an insignificant risk of change
in value.
Current account balances include
guarantee deposits in the amount of R$342 million as of March 31, 2019 (R$356
million on December 31, 2018) held by the subsidiary of Cuba, which are not
freely transferable to the parent company for reasons of exchange
restrictions.
6.
INVESTMENTS SECURITIES
|
03/31/2019
|
12/31/2018
|
|
|
|
Financial asset at fair value through profit or
loss-held for trading
|
13,772
|
13,391
|
Current investments securities
|
13,772
|
13,391
|
|
|
|
Debt held-to-maturity(i)
|
162,349
|
147,341
|
Non-current investments
securities
|
162,349
|
147,341
|
|
|
|
Total
|
176,121
|
160,732
|
(i) The balance refers substantially to Bank Deposit
Certificates - CDB linked to tax incentives
and don’t have
an immediate convertibility in a known
amount of cash.
7.
INVENTORIES
|
03/31/2019
|
12/31/2018
|
|
|
|
Finished goods
|
2,217,141
|
1,687,954
|
Work in progress
|
432,512
|
339,459
|
Raw material
|
2,549,233
|
2,517,305
|
Consumables
|
114,236
|
106,989
|
Spare parts and other
|
606,864
|
597,030
|
Prepayments
|
259,862
|
304,442
|
Impairment losses
|
(147,104)
|
(151,386)
|
|
6,032,744
|
5,401,793
|
Write-offs/losses on inventories
recognized in the income statement amounted to
R$31,081 in the period ended in March
31,
2019 (R$22,292
in the period ended in March 31,
2018).
18
8.
DEFERRED INCOME TAX AND SOCIAL
CONTRIBUTION
Deferred taxes
for income tax and social contribution taxes are calculated on temporary
differences between the tax bases of these taxes and the accounting calculation
of the Company, among which, tax losses. The rates of these taxes in Brazil,
which are expected at the realization of deferred taxes, are 25% for income tax
and 9% for social contribution. For the other regions, with operational
activity, expected rates, are as follow:
Central America and the Caribbean
|
from 23% to 31%
|
Latin America
(i)
|
from 14% to 30%
|
Canada
|
26%
|
(i) Amendments to Argentine tax
legislation approved on December 29, 2017 affected the Company beginning in
October 2018 and reduced the income tax rate in the first two years from 35% to
30% and, as a after, to 25%.
Deferred tax assets are recognized to
the extent that it is probable that future taxable profit is probable, which may
be offset against temporary differences recorded currently, with a special
emphasis on tax losses.
The amount of deferred income tax and
social contribution by type of temporary difference is detailed as
follows:
|
03/31/2019
|
|
12/31/2018
(restated)
|
|
Assets
|
Liabilities
|
Net
|
|
Assets
|
Liabilities
|
Net
|
Investment securities
|
9,968
|
-
|
9,968
|
|
10,010
|
-
|
10,010
|
Intangible
|
-
|
(1,032,419)
|
(1,032,419)
|
|
-
|
(1,031,160)
|
(1,031,160)
|
Employee benefits
|
632,022
|
-
|
632,022
|
|
614,842
|
-
|
614,842
|
Trade payables
|
1,967,987
|
(262,690)
|
1,705,297
|
|
1,807,744
|
(271,922)
|
1,535,822
|
Trade receivable
|
50,573
|
(579)
|
49,994
|
|
41,245
|
(2,274)
|
38,971
|
Derivatives
|
17,685
|
(303,656)
|
(285,971)
|
|
18,711
|
(304,178)
|
(285,467)
|
Interest-Bearing Loans and Borrowings
|
2,698
|
(84,976)
|
(82,278)
|
|
2,480
|
(78,480)
|
(76,000)
|
Inventories
|
238,249
|
(66,363)
|
171,886
|
|
266,732
|
(44,769)
|
221,963
|
Property, plant and equipment
|
119,362
|
(1,445,390)
|
(1,326,028)
|
|
109,643
|
(1,386,445)
|
(1,276,802)
|
Withholding tax over undistributed profits and
royalties
|
-
|
(815,629)
|
(815,629)
|
|
-
|
(863,832)
|
(863,832)
|
Investments in joint ventures
|
-
|
(421,589)
|
(421,589)
|
|
-
|
(421,589)
|
(421,589)
|
Interest on shareholders' equity
|
369,036
|
-
|
369,036
|
|
-
|
-
|
-
|
Loss carryforwards
|
792,574
|
-
|
792,574
|
|
791,001
|
-
|
791,001
|
Provisions
|
413,939
|
(10,650)
|
403,289
|
|
363,122
|
(23,981)
|
339,141
|
Complement of income tax of foreign subsidiaries
due in Brazil
|
-
|
(41,707)
|
(41,707)
|
|
-
|
-
|
-
|
Impact of the adoption of IFRS 16 (leasing
operations)
|
50,687
|
-
|
50,687
|
|
47,270
|
-
|
47,270
|
Other items
|
53,941
|
(28,639)
|
25,302
|
|
50,568
|
(54,560)
|
(3,992)
|
Gross deferred tax assets /
(liabilities)
|
4,718,721
|
(4,514,287)
|
204,434
|
|
4,123,368
|
(4,483,190)
|
(359,822)
|
Netting by taxable entity
|
(2,119,516)
|
2,119,516
|
-
|
|
(2,058,626)
|
2,058,623
|
(3)
|
Net deferred tax assets /
(liabilities)
|
2,599,205
|
(2,394,771)
|
204,434
|
|
2,064,742
|
(2,424,567)
|
(359,825)
|
The Company only offsets the balances of
deferred income tax and social contribution assets against liabilities when they
are within the same entity, same nature and are expected to be realized in the
same period.
19
At March 31, 2019 the assets and
liabilities deferred taxes related to combined tax losses has an expected
utilization/settlement by temporary differences as follows:
|
03/31/2019
|
Deferred taxes not related to tax
losses
|
to be realized until 12
months
|
to be realized after 12
months
|
Total
|
|
|
|
|
Investment securities
|
-
|
9,968
|
9,968
|
Intangible
|
(1,182)
|
(1,031,237)
|
(1,032,419)
|
Employee benefits
|
66,921
|
565,101
|
632,022
|
Trade payables
|
(204,164)
|
1,909,461
|
1,705,297
|
Trade receivable
|
45,390
|
4,604
|
49,994
|
Derivatives
|
(285,971)
|
-
|
(285,971)
|
Interest-bearing loans and borrowings
|
(66,543)
|
(15,735)
|
(82,278)
|
Inventories
|
183,742
|
(11,856)
|
171,886
|
Property, plant and equipment
|
(97,940)
|
(1,228,088)
|
(1,326,028)
|
Withholding tax over undistributed profits and
royalties
|
-
|
(815,629)
|
(815,629)
|
Investments in joint ventures
|
-
|
(421,589)
|
(421,589)
|
Interest on shareholders' equity
|
369,036
|
-
|
369,036
|
Provisions
|
199,183
|
204,106
|
403,289
|
Complement of income tax of foreign subsidiaries
due in Brazil
|
(41,707)
|
-
|
(41,707)
|
Impact of the adoption of IFRS 16 (leasing
operations)
|
-
|
50,687
|
50,687
|
Other items
|
2,566
|
22,736
|
25,302
|
Total
|
169,331
|
(757,471)
|
(588,140)
|
The majority of tax losses and negative social
contribution bases on which deferred income tax and social contribution were
calculated do not have a limitation period. Its use is based on the projection
of the future existence of taxable profits, according to the reality of the past
years and to the projections of the Company's business in the economies where it
is located, in compliance, therefore, with the applicable fiscal and accounting
rules.
Deferred tax related to tax
losses
|
03/31/2019
|
2019
|
269,855
|
2020
|
65,499
|
2021
|
49,544
|
2022
|
25,170
|
2023
|
39,834
|
2024 to 2026
|
264,659
|
2027 to 2029
(i)
|
78,013
|
Total
|
792,574
|
(i) There is no expectation of
realization that exceeds the term of 10 years.
At March 31, 2019, deferred tax assets
in the amount of R$611,934 (R$624,272 in December 31, 2018) related to tax
losses were not recorded as the realization is not probable.
Major part of the tax losses amount do
not have carryforward limit for utilization and the tax losses carried forward
in relation to the credit are equivalent to R$2,447,658 in March 31, 2019
(R$2,496,838 in December 31, 2018).
20
The net change in deferred income tax and social contribution is detailed as follows:
At December 31, 2018
|
(359,825)
|
Full recognition of actuarial gains/(losses)
|
2,721
|
Investment hedge - put option of a subsidiary interest
|
35,583
|
Cash flow hedge - gains/(losses)
|
15,740
|
Gains/(losses) on translation of other foreign operations
|
248,501
|
Recognized in other comprehensive income
|
302,545
|
Recognized in income statement
|
346,724
|
Changes directly in balance sheet
|
(85,010)
|
Recognized in deferred tax
|
(85,671)
|
Effect of application of IAS 29 (hyperinflation)
|
(85,671)
|
Recognized in other group of balance sheet
|
661
|
At March 31, 2019
|
204,434
|
9.
PROPERTY, PLANT AND EQUIPMENT
|
|
03/31/2019
|
|
12/31/2018
(restated)
|
|
Land and buildings
|
Plant and equipment
|
Fixtures and fittings
|
Under construction
|
Assets of right of use
|
Total
|
|
Total
|
Acquisition cost
|
|
|
|
|
|
|
|
|
Balance at end of previous year
|
10,375,533
|
28,075,659
|
5,690,374
|
1,422,048
|
2,394,070
|
47,957,684
|
|
42,144,416
|
Effect of movements in foreign exchange
|
(80,229)
|
(379,278)
|
(112,886)
|
(6,804)
|
4,546
|
(574,651)
|
|
(13,170)
|
Effect of application of IAS 29 (hyperinflation)
|
80,919
|
262,432
|
91,691
|
15,010
|
-
|
450,052
|
|
3,589,040
|
Impact of the adoption of IFRS 16 (leasing operations)
|
-
|
-
|
-
|
-
|
355,808
|
355,808
|
|
70,078
|
Acquisition through exchange transaction of shareholdings
|
-
|
-
|
-
|
-
|
-
|
-
|
|
218,411
|
Acquisition through business combinations
|
280
|
253
|
4,574
|
5,687
|
-
|
10,794
|
|
-
|
Acquisitions
|
1,360
|
127,714
|
14,924
|
398,992
|
-
|
542,990
|
|
3,520,513
|
Disposals and write-off
|
(383)
|
(116,767)
|
(17,465)
|
-
|
-
|
(134,615)
|
|
(1,416,610)
|
Transfer to other asset categories
|
91,402
|
244,788
|
102,009
|
(525,461)
|
16,106
|
(71,156)
|
|
(162,939)
|
Others
|
(1)
|
1
|
-
|
15
|
-
|
15
|
|
7,945
|
Balance at end
|
10,468,881
|
28,214,802
|
5,773,221
|
1,309,487
|
2,770,530
|
48,536,921
|
|
47,957,684
|
|
|
|
|
|
|
|
|
|
Depreciation and Impairment
|
|
|
|
|
|
|
|
|
Balance at end of previous year
|
(3,031,365)
|
(18,246,620)
|
(4,185,211)
|
-
|
(856,480)
|
(26,319,676)
|
|
(21,439,271)
|
Effect of movements in foreign exchange
|
10,695
|
215,271
|
87,246
|
-
|
(1,591)
|
311,621
|
|
(130,695)
|
Effect of application of IAS 29 (hyperinflation)
|
(12,987)
|
(143,879)
|
(73,355)
|
-
|
-
|
(230,221)
|
|
(1,908,732)
|
Acquisition through business combinations
|
(81)
|
(139)
|
(2,782)
|
-
|
-
|
(3,002)
|
|
-
|
Write-ff through exchange transaction of shareholdings
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(20,518)
|
Depreciation
|
(84,406)
|
(618,401)
|
(160,143)
|
-
|
(112,060)
|
(975,010)
|
|
(3,965,671)
|
Impairment losses
|
-
|
(17,200)
|
(34)
|
-
|
-
|
(17,234)
|
|
(179,982)
|
Disposals and write-off
|
32
|
110,471
|
16,292
|
-
|
-
|
126,795
|
|
1,351,814
|
Transfer to other asset categories
|
(764)
|
6,284
|
(159)
|
-
|
(5,330)
|
31
|
|
(30,670)
|
Others
|
-
|
1,725
|
-
|
-
|
-
|
1,725
|
|
4,049
|
Balance at end
|
(3,118,876)
|
(18,692,488)
|
(4,318,146)
|
-
|
(975,461)
|
(27,104,971)
|
|
(26,319,676)
|
Carrying amount:
|
|
|
|
|
|
|
|
|
December 31, 2018
|
7,344,168
|
9,829,039
|
1,505,163
|
1,422,048
|
1,537,590
|
21,638,008
|
|
21,638,008
|
March 31, 2019
|
7,350,005
|
9,522,314
|
1,455,075
|
1,309,487
|
1,795,069
|
21,431,950
|
|
|
21
Capitalized interests and fixed assets provided as
security are not material.
Effective from annual periods beginning on or after
January
1
st
,
2019, IFRS 16 replaces the existing lease accounting
requirements and represents a significant change in the accounting and reporting
of leases that were previously classified as operating leases, with more assets
and liabilities to be reported on the balance sheet and a different recognition
of lease costs and related interpretations, and requires a lessee to recognize a
right-of-use asset and a lease liability at lease commencement date
Note 3.
10.
GOODWILL
|
03/31/2019
|
12/31/2018
|
|
|
|
Balance at end of previous year
|
34,276,176
|
31,401,874
|
Effect of movements in foreign
exchange
|
(52,970)
|
1,224,804
|
Effect of application of IAS 29
(hyperinflation)
|
174,868
|
1,686,487
|
Acquisition, (write-off) and disposal through
business combinations
(i)
|
-
|
(36,989)
|
Balance at the end of period
|
34,398,074
|
34,276,176
|
The carrying amount of goodwill was
allocated to the different cash-generating units as follows
:
|
Functional
currency
|
03/31/2019
|
12/31/2018
|
LAN:
|
|
|
|
Brazil
|
BRL
|
17,668,393
|
17,668,393
|
Goodwill
|
|
102,911,026
|
102,911,026
|
Non-controlling transactions
(i)
|
|
(85,242,633)
|
(85,242,633)
|
Dominican Republic
|
DOP
|
3,519,630
|
3,510,138
|
Cuba
(ii)
|
USD
|
1,964
|
1,952
|
Panama
|
PAB
|
1,353,895
|
1,346,288
|
|
|
|
|
LAS:
|
|
|
|
Argentina
(iii)
|
ARS
|
1,885,721
|
1,950,744
|
Bolivia
|
BOB
|
1,378,342
|
1,370,601
|
Chile
|
CLP
|
50,033
|
48,695
|
Paraguay
|
PYG
|
844,011
|
873,147
|
Uruguay
|
UYU
|
172,589
|
177,417
|
|
|
|
|
NA:
|
|
|
|
Canada
|
CAD
|
7,523,496
|
7,328,801
|
|
|
34,398,074
|
34,276,176
|
(i) It refers to the exchange of shareholdings operation
occurred in 2013 as a result of the adoption of the predecessor basis of
accounting.
(ii) The functional currency of Cuba, the Cuban
convertible peso (CUC), has fixed parity with the dollar (USD) at balance sheet
date.
(iii)This variation mainly refers to the Application of
inflation accounting and financial reporting in hyperinflationary economies, as
described in Note 1(b).
22
11.
INTEREST-BEARING LOANS AND BORROWINGS
|
03/31/2019
|
12/31/2018
(restated)
|
|
|
|
Secured bank loans
|
2,186,824
|
1,404,852
|
Unsecured bank loans
|
37,493
|
86,572
|
Other unsecured loans
|
39,119
|
39,163
|
Financial leasing
|
394,050
|
410,634
|
Current liabilities
|
2,657,486
|
1,941,221
|
|
|
|
Secured bank loans
|
412,669
|
434,709
|
Unsecured bank loans
|
217,076
|
212,283
|
Debentures and unsecured bond issues
|
105,159
|
104,675
|
Other unsecured loans
|
107,083
|
99,048
|
Financial leasing
|
1,585,765
|
1,311,727
|
Non-current liabilities
|
2,427,752
|
2,162,442
|
Additional information regarding the
exposure of the Company to the risks of interest rate and foreign currency are
disclosed on Note 20 –
Financial instruments and
risks
.
Contractual clauses
(covenants)
As at March 31, 2019, the Company's
loans had equal rights to payment without subordination clauses. Except for the
credit lines due to FINAME contracted by the Company with Banco Nacional de
Desenvolvimento Econômico e Social – BNDES (“BNDES”), where collateral were
provided on assets acquired with the credit granted which serve as collateral;
other loans and financing contracted by the Company predicted only guarantees as
personal collateral or are unsecured. The most loan contracts contained
financial covenants including: financial covenants, including limitation on new
indebtedness; going-concern; maintenance, in use or in good condition for the
business, of the Company's assets; restrictions on acquisitions, mergers, sale
or disposal of its assets; disclosure of financial statements under Brazilian
GAAP and IFRS; and/or no prohibition related to new real guarantees for loans
contracted, except if: (i) expressly authorized under the aforementioned loan
agreement, (ii) new loans contracted from financial institutions linked to the
Brazilian government - including the BNDES or foreign governments; - or foreign
governments, multilateral financial institutions (eg World Bank) or located in
jurisdictions in which the Company operates.
As at March 31, 2019, the Company was in
compliance with all its contractual obligations for its loans and
financings.
23
12.
PROVISIONS
(a) Provision changes
|
Balance as of
December 31, 2018
|
Effect of changes in
foreign exchange
rates
|
Additions
|
Provisions used
and reversed
|
Balance as of
March 31, 2019
|
|
|
|
|
|
|
Restructuring
|
8,728
|
283
|
-
|
1,338
|
10,349
|
|
|
|
|
|
|
Provision for disputes and litigations
|
|
|
|
|
|
Taxes on sales
|
137,841
|
1
|
2,643
|
(9,357)
|
131,128
|
Income tax
|
169,289
|
207
|
1,116
|
(1,042)
|
169,570
|
Labor
|
118,167
|
(1,310)
|
33,740
|
(27,550)
|
123,047
|
Civil
|
54,916
|
(335)
|
2,687
|
(2,974)
|
54,294
|
Others
|
110,283
|
(2,796)
|
4,431
|
(1,805)
|
110,113
|
Total of provision for disputes and litigations
|
590,496
|
(4,233)
|
44,617
|
(42,728)
|
588,152
|
|
|
|
|
|
|
Total provisions
|
599,224
|
(3,950)
|
44,617
|
(41,390)
|
598,501
|
(b)
Disbursement expectative
|
Balance as of March 31, 2019
|
1 year or less
|
1-2 years
|
2-5 years
|
Over 5 years
|
|
|
|
|
|
|
Restructuring
|
10,349
|
9,637
|
-
|
712
|
-
|
|
|
|
|
|
|
Provision for disputes and litigations
|
|
|
|
|
|
Taxes on sales
|
131,128
|
34,835
|
89,105
|
1,680
|
5,508
|
Income tax
|
169,570
|
35,480
|
109,429
|
24,661
|
-
|
Labor
|
123,047
|
31,990
|
40,224
|
29,069
|
21,764
|
Civil
|
54,294
|
12,407
|
34,076
|
4,065
|
3,746
|
Others
|
110,113
|
20,649
|
23,276
|
63,344
|
2,844
|
Total of provision for disputes and litigations
|
588,152
|
135,361
|
296,110
|
122,819
|
33,862
|
|
|
|
|
|
|
Total provisions
|
598,501
|
144,998
|
296,110
|
123,531
|
33,862
|
The expected settlement of provisions was based on management’s best estimate at the interim balance sheet date.
(c) Main lawsuits with probable likelihood of loss:
(c.1) Income and Sales taxes
In Brazil, the Company and its subsidiaries are involved in several administrative and judicial proceedings related to Income tax, ICMS, IPI, PIS and COFINS taxes. Such proceedings include, among others, tax offsets, credits and judicial injunctions exempting tax payment.
24
(c.2) Labor
The Company and its subsidiaries are involved in labor proceedings with former employees, including from service providers. The main issues involve overtime and related effects and respective charges.
(c.3) Civil
The Company is involved in civil lawsuits considered with probable likelihood of loss. The most relevant portion of these lawsuits refers to former distributors, mainly in Brazil, which are mostly claiming damages resulting from the termination of their contracts.
The processes with possible probabilities are disclosed in Note 22
-
Contingent liability
.
13.
CHANGES IN EQUITY
(a) Capital stock
|
|
03/31/2019
|
|
|
03/31/2018
|
|
Thousands of common shares
|
Thousands of Real
|
|
Thousands of common shares
|
Thousands of Real
|
Beginning balance as per statutory books
|
15,722,147
|
57,710,202
|
|
15,717,615
|
57,614,140
|
Share issued
|
4,695
|
88,642
|
|
4,532
|
96,062
|
|
15,726,842
|
57,798,844
|
|
15,722,147
|
57,710,202
|
(b)
Capital reserves
|
Capital Reserves
|
|
|
Treasury shares
|
Share Premium
|
Others capital reserves
|
Share-based Payments
|
Total
|
|
|
|
|
|
|
At December 31, 2018
|
(882,734)
|
53,662,811
|
700,898
|
1,300,219
|
54,781,194
|
Capital Increase
|
-
|
-
|
-
|
(86,118)
|
(86,118)
|
Purchase of shares and result on treasury shares
|
302
|
-
|
-
|
-
|
302
|
Share-based payments
|
-
|
-
|
-
|
45,009
|
45,009
|
At March 31, 2019
|
(882,432)
|
53,662,811
|
700,898
|
1,259,110
|
54,740,387
|
|
Capital Reserves
|
|
|
Treasury shares
|
Share Premium
|
Others capital reserves
|
Share-based Payments
|
Total
|
|
|
|
|
|
|
At December 31, 2017
|
(894,994)
|
53,662,811
|
700,898
|
1,232,194
|
54,700,909
|
Capital Increase
|
-
|
-
|
-
|
(89,876)
|
(89,876)
|
Purchase of shares and result on treasury shares
|
(2,548)
|
-
|
-
|
-
|
(2,548)
|
Share-based payments
|
-
|
-
|
-
|
33,473
|
33,473
|
At March 31, 2018
|
(897,542)
|
53,662,811
|
700,898
|
1,175,791
|
54,641,958
|
25
(b.1) Purchase of shares and result of treasury shares
The treasury shares comprise own issued shares reacquired by the Company and the result on treasury shares that refers to gains and losses related to share-based payments transactions and others.
Follows the changes of treasury shares:
|
Purchase /realization shares
|
|
Result on Treasure Shares
|
|
Total Treasure Shares
|
|
Thousands shares
|
|
Thousands Brazilian Real
|
|
Thousands shares
|
|
Thousands Brazilian Real
|
At December 31, 2018
|
1,028
|
|
(20,841)
|
|
(861,893)
|
|
(882,734)
|
Changes during the year
|
(682)
|
|
15,017
|
|
(14,715)
|
|
302
|
At March 31, 2019
|
346
|
|
(5,824)
|
|
(876,608)
|
|
(882,432)
|
|
Purchase /realization shares
|
|
Result on Treasure Shares
|
|
Total Treasure Shares
|
|
Thousands shares
|
|
Thousands Brazilian Real
|
|
Thousands shares
|
|
Thousands Brazilian Real
|
|
|
|
|
|
|
|
|
At December 31, 2017
|
7,394
|
|
(139,665)
|
|
(755,329)
|
|
(894,994)
|
Changes during the year
|
(2,596)
|
|
41,796
|
|
(44,344)
|
|
(2,548)
|
At March 31, 2018
|
4,798
|
|
(97,869)
|
|
(799,673)
|
|
(897,542)
|
(b.2) Share premium
The share premium refers to the difference between subscription price that the shareholders paid for the shares and theirs nominal value. Since this is a capital reserve, it can only be used to increase capital, offset losses, redemptions, reimbursement or repurchase shares.
(b.3) Share-based payment
Different share-based payment programs and stock purchase option plans allow the senior management from Ambev economic group acquire shares of the Company.
The share-based payment reserve recorded a charge of
R$45,402 at March 31, 2019
(
R$33,855 at March 31, 2018
) (Note 19 –
Share-based payments
).
(c)
Net income reserves
|
Net income reserves
|
|
Investments reserve
|
Statutory reserve
|
Fiscal incentive
|
Total
|
At December 31, 2018
|
6,710,053
|
4,456
|
8,719,584
|
15,434,093
|
Impact of the adoption of IFRS 16
|
(92,726)
|
-
|
-
|
(92,726)
|
At January 1, 2019
|
6,617,327
|
4,456
|
8,719,584
|
15,341,367
|
|
|
|
|
|
At March 31, 2019
|
6,617,327
|
4,456
|
8,719,584
|
15,341,367
|
26
|
Net income reserves
|
|
Investments reserve
|
Statutory reserve
|
Fiscal incentive
|
Total
|
At December 31, 2017
|
1,267,721
|
4,456
|
7,388,058
|
8,660,235
|
Impact of the adoption of IFRS 16
|
(63,009)
|
-
|
-
|
(63,009)
|
At January 1, 2018
|
1,204,712
|
4,456
|
7,388,058
|
8,597,226
|
|
|
|
|
|
At March 31, 2018
|
1,204,712
|
4,456
|
7,388,058
|
8,597,226
|
(c.1) Investments reserve
From net income after deductions applicable, will be aimed no more than 60% (sixty per cent) to investment reserve to support future investments.
(c.2) Statutory reserve
From net income, 5% will be applied before any other allocation, to the statutory reserve, which cannot 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.
(c.3) Tax incentives
The Company has tax incentives framed in certain state and federal industrial development programs in the form of financing, deferred payment of taxes or partial reductions of the amount due. These programs aim to promote the expansion of employment generation, regional decentralization, complement and diversify the industrial base of the States. In these states, the grace periods, enjoyment and reductions are permitted under the tax law.
The portion of income for the period related to tax incentives, which will be allocated to the profit reserve at the end of the fiscal year on December 31, 2019 and therefore not being used as a basis for dividend distribution, is composed of:
|
03/31/2019
|
03/31/2018
|
ICMS (Brazilian State value added)
|
487,186
|
413,734
|
Income tax
|
41,700
|
53,460
|
|
528,886
|
467,194
|
27
(c.4) 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, in
accordance with the applicable law and, when distributed, may be considered part
of the minimum mandatory dividends.
As determined by its By-laws, the
Company is required to distribute to its shareholders, as a minimum mandatory
dividend in respect of each fiscal year ending on December 31,an amount not less
than 40% 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
minimum mandatory dividend includes amounts paid as interest on shareholders’
equity.
There was no payment of dividends or
interest on shareholders' equity in the three-month periods ended March 31, 2018
and 2019.
28
(d)
Carrying value adjustments
|
Carrying value adjustments
|
|
|
Translation
reserves
|
Cash flow
hedge
|
Actuarial
gains/ (losses)
|
Options
granted on
subsidiary
|
Gains/(losses) of
non-controlling
interest´s share
|
Business
combination
|
Accounting
adjustments for transactions between shareholders
|
Total
|
At December 31, 2018
|
4,089,111
|
777,123
|
(1,116,114)
|
(120,083)
|
19,558
|
156,091
|
(75,390,552)
|
(71,584,866)
|
Impact of the adoption of IFRS 16
(i)
|
110
|
-
|
-
|
-
|
-
|
-
|
-
|
110
|
At January 1, 2019
|
4,089,221
|
777,123
|
(1,116,114)
|
(120,083)
|
19,558
|
156,091
|
(75,390,552)
|
(71,584,756)
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
Gains/(losses) on translation of foreign
operations
|
(198,902)
|
-
|
-
|
-
|
-
|
-
|
-
|
(198,902)
|
Cash flow hedges
|
-
|
(14,824)
|
-
|
-
|
-
|
-
|
-
|
(14,824)
|
Actuarial gains/(losses)
|
-
|
-
|
3,095
|
-
|
-
|
-
|
-
|
3,095
|
Total Comprehensive income
|
(198,902)
|
(14,824)
|
3,095
|
-
|
-
|
-
|
-
|
(210,631)
|
At March 31, 2019
|
3,890,319
|
762,299
|
(1,113,019)
|
(120,083)
|
19,558
|
156,091
|
(75,390,552)
|
(71,795,387)
|
|
Carrying value adjustments
|
|
|
Translation
reserves
|
Cash flow
hedge
|
Actuarial
gains/ (losses)
|
Options
granted on
subsidiary
|
Gains/(losses) of
non-controlling
interest´s share
|
Business
combination
|
Accounting
adjustments for transactions between shareholders
|
Total
|
At December 31, 2017
|
1,639,099
|
368,806
|
(1,144,468)
|
(2,771,248)
|
2,099,921
|
156,091
|
(75,314,671)
|
(74,966,470)
|
Impact of the adoption of IFRS 16
(i)
|
(103)
|
-
|
-
|
-
|
-
|
-
|
-
|
(103)
|
At January 1, 2018
(i)
|
1,638,996
|
368,806
|
(1,144,468)
|
(2,771,248)
|
2,099,921
|
156,091
|
(75,314,671)
|
(74,966,573)
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
Gains/(losses) on translation of foreign
operations
|
(392,913)
|
-
|
-
|
-
|
-
|
-
|
-
|
(392,913)
|
Cash flow hedges
|
-
|
(55,743)
|
-
|
-
|
-
|
-
|
-
|
(55,743)
|
Actuarial gains/(losses)
|
-
|
-
|
(2,591)
|
-
|
-
|
-
|
-
|
(2,591)
|
Total Comprehensive income
|
(392,913)
|
(55,743)
|
(2,591)
|
-
|
-
|
-
|
-
|
(451,247)
|
Gains/(losses) of controlling interest´s
share
(ii)
|
460,105
|
787
|
3,540
|
2,650,465
|
(2,046,202)
|
-
|
-
|
1,068,695
|
At March 31, 2018
(i)
|
1,706,188
|
313,850
|
(1,143,519)
|
(120,783)
|
53,719
|
156,091
|
(75,314,671)
|
(74,349,125)
|
(
i) Balances of 2018 restated to reflect the impact of
adopting IFRS 16 under full retrospective application.
(ii) Of this amount, R$1,035,218 refers
to renegotiation.
29
(d.1) Translation reserves
The translation reserves comprise all
foreign currency exchange differences arising from the translation of the
interim financial statements with functional currency different from the
Real.
The translation reserves also comprise
the portion of the gain or loss on the foreign currency liabilities and on the
derivative financial instruments determined to be effective net investment
hedges.
(d.2) Cash flow hedge 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 (For
additional information, see Note 20 –
Financial instruments and
risks)
.
(d.3) 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 timely basis
considering best estimate obtained by Management. Accordingly, the Company
recognizes on monthly basis the results of these estimated actuarial gains and
losses based on the expectations presented in the independent actuarial
report.
(d.4) Options
granted on
subsidiary
As part of the agreement to acquire the
shares of Tenedora, an option to sell (“put”) was issued by Ambev in favor of E.
León Jimenes, S.A. (“ELJ”) and an option to purchase (“call”) was issued from
ELJ in favor of Ambev, which may result in an acquisition by Ambev of the
remaining shares of Tenedora, for a value based on EBITDA, discounted of net
debt, from operations, being put exercisable at any time. As disclosed in Note 1
(b)
Renegotiation of shareholders agreement
from Tenedora
, on January 18, 2018, the ELJ
exercised partially its put option related to approximately 30% of capital stock
by Tenedora. Due to the partial exercise of put option, the Company became the
owner of approximately 85% of Tenedora. Additionally, was approved the change of
the call option term from 2019 to 2022.
On March 31, 2019 the put option held by
ELJ is valued at R$2,482,143 (R$2,449,334 on December 31, 2018) and the
liability categorized as “Level 3”, as the Note 20 (b) and in accordance with
the IFRS 3. No value has been assigned to the call option held by the Company.
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 the fair value is revaluated on an
annual basis.
30
As part of the agreement to acquire the
shares of Sucos do Bem, a put option and a call option on minority shareholders'
participation determined by gross revenue of its products and exercisable until
2020 has been granted, with a few exceptions. On March 31, 2019 the put option
is valued at R$140,087 (R$136,034 on December 31, 2018).
The reconciliation of changes in these
options is presented in Note 20
– Financial instruments and
risks
.
(d.5) Accounting for acquisition of
non-controlling interests
In transactions with non-controlling
interests of the same business, even when performed at arm's length terms, that
present valid economic grounds and reflect normal market conditions, will be
consolidated by the applicable accounting standards as occurred within the same
accounting entity.
As determined by IFRS 10, any difference
between the amount paid (fair value) for the acquisition of non-controlling
interests and are related to carrying amount of such non-controlling interest
shall be recognized directly in controlling shareholders’ equity. The
acquisition of non-controlling interest related to Old Ambev, the above
mentioned adjustment was recognized in the Carrying value adjustments when
applicable, due to the adoption of the predecessor basis of
accounting.
31
14.
SEGMENT REPORTING
(a)
Reportable segments – three-month period ended in:
|
Brazil
|
CAC
(i)
|
Latin America - South
(ii)
|
Canada
|
Consolidated
|
|
03/31/2019
|
03/31/2018
(restated)
|
03/31/2019
|
03/31/2018
(restated)
|
03/31/2019
|
03/31/2018
(restated)
|
03/31/2019
|
03/31/2018
(restated)
|
03/31/2019
|
03/31/2018
(restated)
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
7,214,372
|
6,180,432
|
1,462,125
|
1,149,722
|
2,670,164
|
3,091,535
|
1,293,465
|
1,218,530
|
12,640,126
|
11,640,219
|
Cost of sales
|
(3,057,584)
|
(2,346,879)
|
(643,329)
|
(488,170)
|
(953,610)
|
(1,167,241)
|
(453,178)
|
(453,644)
|
(5,107,701)
|
(4,455,934)
|
Gross profit
|
4,156,788
|
3,833,553
|
818,796
|
661,552
|
1,716,554
|
1,924,294
|
840,287
|
764,886
|
7,532,425
|
7,184,285
|
Distribution expenses
|
(947,643)
|
(917,929)
|
(147,877)
|
(130,561)
|
(272,826)
|
(298,937)
|
(258,376)
|
(248,696)
|
(1,626,722)
|
(1,596,123)
|
Sales and marketing expenses
|
(767,306)
|
(783,257)
|
(138,319)
|
(131,146)
|
(283,575)
|
(325,453)
|
(212,081)
|
(225,525)
|
(1,401,281)
|
(1,465,381)
|
Administrative expenses
|
(382,298)
|
(326,930)
|
(70,860)
|
(56,826)
|
(120,358)
|
(122,030)
|
(88,006)
|
(65,406)
|
(661,522)
|
(571,192)
|
Other operating income/(expenses)
|
233,390
|
273,185
|
4,700
|
4,224
|
38
|
(13,377)
|
(6,875)
|
(6,472)
|
231,253
|
257,560
|
Exceptional items
|
(7,423)
|
(1,678)
|
(2,610)
|
(605)
|
(8,387)
|
(6,149)
|
-
|
-
|
(18,420)
|
(8,432)
|
Income from operations (EBIT)
|
2,285,508
|
2,076,944
|
463,830
|
346,638
|
1,031,446
|
1,158,348
|
274,949
|
218,787
|
4,055,733
|
3,800,717
|
Net finance cost
|
(322,850)
|
(266,987)
|
(16,652)
|
(19,346)
|
(306,470)
|
(285,398)
|
(26,096)
|
(27,491)
|
(672,068)
|
(599,222)
|
Share of result of joint ventures
|
(934)
|
(1,617)
|
(1,490)
|
1,907
|
-
|
-
|
288
|
327
|
(2,136)
|
617
|
Income before income tax
|
1,961,724
|
1,808,340
|
445,688
|
329,199
|
724,976
|
872,950
|
249,141
|
191,623
|
3,381,529
|
3,202,112
|
Income tax expense
|
(69,801)
|
(149,415)
|
(164,804)
|
(89,540)
|
(282,972)
|
(285,769)
|
(114,884)
|
(89,802)
|
(632,461)
|
(614,526)
|
Net income
|
1,891,923
|
1,658,925
|
280,884
|
239,659
|
442,004
|
587,181
|
134,257
|
101,821
|
2,749,068
|
2,587,586
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA
(iii)
|
2,941,808
|
2,721,999
|
578,113
|
446,796
|
1,271,719
|
1,336,175
|
329,011
|
281,959
|
5,120,651
|
4,786,929
|
Exceptional items
|
(7,423)
|
(1,678)
|
(2,610)
|
(605)
|
(8,387)
|
(6,149)
|
-
|
-
|
(18,420)
|
(8,432)
|
Depreciation. amortization and impairment
|
(648,877)
|
(643,377)
|
(111,673)
|
(99,553)
|
(231,886)
|
(171,678)
|
(54,062)
|
(63,172)
|
(1,046,498)
|
(977,780)
|
Net finance costs
|
(322,850)
|
(266,987)
|
(16,652)
|
(19,346)
|
(306,470)
|
(285,398)
|
(26,096)
|
(27,491)
|
(672,068)
|
(599,222)
|
Share of result of joint ventures
|
(934)
|
(1,617)
|
(1,490)
|
1,907
|
-
|
-
|
288
|
327
|
(2,136)
|
617
|
Income tax expense
|
(69,801)
|
(149,415)
|
(164,804)
|
(89,540)
|
(282,972)
|
(285,769)
|
(114,884)
|
(89,802)
|
(632,461)
|
(614,526)
|
Net income
|
1,891,923
|
1,658,925
|
280,884
|
239,659
|
442,004
|
587,181
|
134,257
|
101,821
|
2,749,068
|
2,587,586
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
40.8%
|
44.0%
|
39.5%
|
38.9%
|
47.6%
|
43.2%
|
25.4%
|
23.1%
|
40.5%
|
41.1%
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
313,300
|
262,130
|
118,341
|
70,968
|
85,607
|
118,798
|
28,808
|
20,780
|
546,056
|
472,676
|
32
(continued)
|
Brazil
|
CAC
(i)
|
Latin America - South
(ii)
|
Canada
|
Consolidated
|
|
03/31/2019
|
12/31/2018
(restated)
|
03/31/2019
|
12/31/2018
(restated)
|
03/31/2019
|
12/31/2018
(restated)
|
03/31/2019
|
12/31/2018
(restated)
|
03/31/2019
|
12/31/2018
(restated)
|
Segment assets
|
40,235,463
|
41,478,586
|
11,152,589
|
11,270,219
|
14,018,990
|
14,472,056
|
11,651,134
|
11,065,962
|
77,058,176
|
78,286,823
|
Intersegment elimination
|
|
|
|
|
|
|
|
|
(1,494,080)
|
(2,246,449)
|
Non-segmented assets
|
|
|
|
|
|
|
|
|
21,341,436
|
19,674,043
|
Total assets
|
|
|
|
|
|
|
|
|
96,905,532
|
95,714,417
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
15,817,178
|
18,252,112
|
3,191,622
|
3,420,931
|
3,907,370
|
4,484,598
|
3,723,113
|
3,584,762
|
26,639,283
|
29,742,403
|
Intersegment elimination
|
|
|
|
|
|
|
|
|
(1,493,056)
|
(2,246,443)
|
Non-segmented liabilities
|
|
|
|
|
|
|
|
|
71,759,305
|
68,218,457
|
Total liabilities
|
|
|
|
|
|
|
|
|
96,905,532
|
95,714,417
|
(i) CAC: includes operations in El Salvador, Guatemala, Nicaragua, Dominican Republic, Saint Vincent, Dominica, Antigua, Cuba, Barbados, Panama, Puerto Rico and Costa Rica).
(ii) Latin America – South: includes operations in Argentina, Bolivia, Chile, Paraguay and Uruguay.
(iii) Normalized EBITDA is calculated excluding of the net income the following effects: (i) Income tax expense, (ii) Share of results of joint ventures (iii) Net finance result, (iv) Exceptional items, and (v) Depreciation, amortization and impairment of property, plant and equipment.
33
(b)
Additional information – by Business unit - three-month
period ended in:
|
Brazil
|
|
Beer
|
Soft drink and non-alcoholic and
non-carbonated
|
Total
|
|
03/31/2019
|
03/31/2018
(restated)
|
03/31/2019
|
03/31/2018
(restated)
|
03/31/2019
|
03/31/2018
(restated)
|
|
|
|
|
|
|
|
Net sales
|
6,132,821
|
5,315,588
|
1,081,551
|
864,844
|
7,214,372
|
6,180,432
|
Cost of sales
|
(2,498,233)
|
(1,880,559)
|
(559,351)
|
(466,320)
|
(3,057,584)
|
(2,346,879)
|
Gross profit
|
3,634,588
|
3,435,029
|
522,200
|
398,524
|
4,156,788
|
3,833,553
|
Distribution expenses
|
(778,128)
|
(749,118)
|
(169,515)
|
(168,811)
|
(947,643)
|
(917,929)
|
Sales and marketing expenses
|
(696,203)
|
(739,930)
|
(71,103)
|
(43,327)
|
(767,306)
|
(783,257)
|
Administrative expenses
|
(328,326)
|
(277,043)
|
(53,972)
|
(49,887)
|
(382,298)
|
(326,930)
|
Other operating income/(expenses)
|
175,564
|
216,639
|
57,826
|
56,546
|
233,390
|
273,185
|
Exceptional items
|
(6,289)
|
(1,381)
|
(1,134)
|
(297)
|
(7,423)
|
(1,678)
|
Income from operations (EBIT)
|
2,001,206
|
1,884,196
|
284,302
|
192,748
|
2,285,508
|
2,076,944
|
Net finance cost
|
(316,499)
|
(260,227)
|
(6,351)
|
(6,760)
|
(322,850)
|
(266,987)
|
Share of result of joint ventures
|
(934)
|
(1,617)
|
-
|
-
|
(934)
|
(1,617)
|
Income before income tax
|
1,683,773
|
1,622,352
|
277,951
|
185,988
|
1,961,724
|
1,808,340
|
Income tax expense
|
(69,801)
|
(149,415)
|
-
|
-
|
(69,801)
|
(149,415)
|
Net income
|
1,613,972
|
1,472,937
|
277,951
|
185,988
|
1,891,923
|
1,658,925
|
|
|
|
|
|
|
|
Normalized EBITDA
(i)
|
2,578,155
|
2,446,262
|
363,653
|
275,737
|
2,941,808
|
2,721,999
|
Exceptional items
|
(6,289)
|
(1,381)
|
(1,134)
|
(297)
|
(7,423)
|
(1,678)
|
Depreciation, amortization and
impairment
|
(570,660)
|
(560,685)
|
(78,217)
|
(82,692)
|
(648,877)
|
(643,377)
|
Net finance costs
|
(316,499)
|
(260,227)
|
(6,351)
|
(6,760)
|
(322,850)
|
(266,987)
|
Share of result of joint ventures
|
(934)
|
(1,617)
|
-
|
-
|
(934)
|
(1,617)
|
Income tax expense
|
(69,801)
|
(149,415)
|
-
|
-
|
(69,801)
|
(149,415)
|
Net income
|
1,613,972
|
1,472,937
|
277,951
|
185,988
|
1,891,923
|
1,658,925
|
|
|
|
|
|
|
|
Normalized EBITDA margin in %
|
42.0%
|
46.0%
|
33.6%
|
31.9%
|
40.8%
|
44.0%
|
(i) Normalized EBITDA is calculated
excluding of the net income the following effects: (i)
Income tax expense
, (ii)
Share of results of joint
ventures
, (iii)
Net finance result
, (iv) Exceptional items, and (v)
Depreciation, amortization and impairment of property, plant and
equipment.
15.
NET SALES
Reconciliation between gross sales and net
sales:
|
03/31/2019
|
03/31/2018
|
|
|
|
Gross sales and/or services
|
18,769,815
|
17,454,715
|
Excise duty
|
(4,097,407)
|
(3,732,465)
|
Discounts
|
(2,032,282)
|
(2,082,031)
|
|
12,640,126
|
11,640,219
|
Services provided by distributors, such
as the promotion of our brands and logistics services are considered as expense
when separately identifiable.
34
STF decision on ICMS on the calculation
basis of PIS and COFINS
Considering the judgment of (Extraordinary
Appeal) RE 574,706 by the Federal Supreme Court (STF) in March 2017 with binding
effects, which concluded for the possibility of excluding the ICMS from the
taxable basis of PIS and COFINS and also that the companies of the group have
favorable judicial decisions authorizing such exclusion, the Company recognized
in the income statement the amount of
R$168,470 on March 31, 2019 (R$ 155,136
on March 31, 2018).
16.
OTHER OPERATING INCOME / (EXPENSES)
|
03/31/2019
|
03/31/2018
|
Government grants/NPV of long term fiscal
incentives
|
204,097
|
194,809
|
(Additions)/Reversals to provisions
|
2,760
|
(6,640)
|
Gains/(losses) on disposal of property, plant and
equipment, intangible assets and operation in associates
|
2,668
|
(21,928)
|
Other operating income/(expenses),
net
|
21,728
|
91,319
|
|
231,253
|
257,560
|
Government grants are not recognized
until there is reasonable assurance that the Company will meet related
conditions and that the grants will be received. Government grants are
systematically recognized in income during the periods in which the Company
recognizes as expenses the related costs that the grants are intended to
offset.
17.
FINANCE COST AND INCOME
(a)
Finance costs
|
03/31/2019
|
03/31/2018
(restated)
|
Interest expense
|
(391,297)
|
(403,016)
|
Capitalized borrowings
|
-
|
20
|
Net Interest on pension plans
|
(25,092)
|
(24,482)
|
Losses on hedging instruments
|
(194,929)
|
(263,101)
|
Interest on provision for disputes and
litigations
|
(16,366)
|
(29,137)
|
Exchange variation
|
(125,560)
|
(96,162)
|
Financial instruments at fair value through profit
or loss
|
(21,684)
|
(9,346)
|
Tax on financial transactions
|
(53,933)
|
(91,176)
|
Bank guarantee expenses
|
(28,328)
|
(24,560)
|
Other financial results
|
(102,572)
|
(33,803)
|
|
(959,761)
|
(974,763)
|
Interest expenses are presented net of
the effect of interest rate derivative financial instruments which mitigate
Ambev interest rate risk (Note 20 –
Financial instruments and
risks
). The interest expense are as
follows:
|
03/31/2019
|
03/31/2018
(restated)
|
Financial instruments measured at amortized
cost
|
(127,193)
|
(144,437)
|
Financial instruments at fair value through profit
or loss
|
(264,104)
|
(258,579)
|
|
(391,297)
|
(403,016)
|
35
(b)
Finance income
|
03/31/2019
|
03/31/2018
|
Interest income
|
135,270
|
103,267
|
Gains on derivative
|
-
|
80,642
|
Financial instruments at fair value through profit
or loss
|
36,410
|
188,762
|
Other financial results
|
19,301
|
2,870
|
|
190,981
|
375,541
|
|
|
|
Effect of application of IAS 29
(hyperinflation)
|
96,712
|
-
|
|
287,693
|
375,541
|
Interest income arises from the
following financial assets:
|
03/31/2019
|
03/31/2018
|
Cash and cash equivalents
|
96,132
|
59,510
|
Investment securities held for
trading
|
4,133
|
4,255
|
Other receivables
|
35,005
|
39,502
|
|
135,270
|
103,267
|
18.
INCOME TAX AND SOCIAL CONTRIBUTION
Income taxes reported in the income
statement are analyzed as follows:
|
03/31/2019
|
03/31/2018
(restated)
|
Income tax expense - current
|
(979,185)
|
(728,053)
|
|
|
|
Deferred tax expense on temporary
differences
|
345,151
|
173,417
|
Deferred tax over taxes losses carryforwards
movements in the current period
|
1,573
|
(59,890)
|
Total deferred tax
(expense)/income
|
346,724
|
113,527
|
|
|
|
Total income tax expenses
|
(632,461)
|
(614,526)
|
36
The reconciliation from the weighted
nominal to the effective tax rate is summarized as follows:
|
03/31/2019
|
03/31/2018
(restated)
|
Profit before tax
|
3,381,529
|
3,202,112
|
Adjustment on taxable basis
|
|
|
Others non-taxable income
|
(66,978)
|
(78,250)
|
Government grants related to sales taxes
|
(487,186)
|
(413,734)
|
Share of result of joint ventures
|
2,136
|
(617)
|
Non-deductible expenses
|
67,990
|
64,542
|
Complement of income tax of foreign subsidiaries
due in Brazil
|
122,668
|
27,852
|
Results of intercompany transactions
|
57,281
|
(116,245)
|
|
3,077,440
|
2,685,660
|
Aggregated weighted nominal tax rate
|
29.59%
|
30.31%
|
Taxes payable – nominal rate
|
(910,584)
|
(814,153)
|
Adjustment on tax expense
|
|
|
Income tax Incentives
|
41,700
|
53,460
|
Deductible interest on shareholders'
equity
|
369,036
|
299,655
|
Tax savings from goodwill
amortization
|
22,452
|
18,274
|
Withholding income tax
|
(65,109)
|
(52,960)
|
Recognition / write-off of deferred charges on tax
losses
|
(30,232)
|
(28,166)
|
Effect of application of IAS 29
(hyperinflation)
|
(18,246)
|
-
|
Others with reduced taxation
|
(41,478)
|
(90,636)
|
Income tax and social contribution
expense
|
(632,461)
|
(614,526)
|
Effective tax rate
|
18.70%
|
19.19%
|
The main events that impacted the
effective tax rate in the period were:
§
Government subsidy on sales taxes:
Related to regional incentives, related primarily to
local production, that, when reinvested, are not taxed for income tax and social
contribution purposes, which explains the impact in the effective tax
rate. The amount above is impacted by the fluctuation in volume, price and
eventual variation on State VAT (ICMS).
§
Complement of income tax of foreign subsidiaries due in
Brazil: shows the result of the calculation of universal taxation of profits,
according to the regulations of Law 12.973/14.
§
Results of intercompany transactions: reflects the
reality of the taxation in countries in which some subsidiaries – with whom
intercompany operations are made - are located.
§
Deductible interest on shareholders’ equity: under
Brazilian law, companies have an option to remunerate its shareholders’ through
payment of Interest on Capital (“IOC”), which is deductible for income tax
purposes.
37
19.
SHARE-BASED PAYMENTS
There are different stock option and
share-based payment programs which allow the employees and senior management
from the Company and its subsidiaries to acquire (through of exercise of the
stock option) or receive shares
of the Company
. For all stock option programs, the
fair value of the shares is estimated at the options grant date, using the “Hull
Binomial” pricing model, adjusted to reflect the IFRS 2 requirement that
assumptions about forfeiture before the end of the vesting period cannot impact
the fair value of the option.
This current model of
stock option, ruled by the Stock Option
Plan of the Company (
“
Stock
Option Plan”), includes two types of
grants: (I) Grant 1- the beneficiary, as the case, can be allocate 30%,
40%, 60%, 70% or 100% of the amount related to the profit share he received in
the year, to the immediate exercise of options, thus acquiring the corresponding
shares of the Company, which transfer to third parties or the Company will only
be allowed after the
five-year
period
counted
from the date of exercise of the
options; and (II) Grant 2 - the beneficiary may exercise the options after
a
five-year
grace period, for a period of five
years.
In addition, the Company has implemented
a
Share-Based Payment Plan
(“
Share-Based Plan”)
under which certain employees and
members of the management of the Company or its subsidiaries are eligible to
receive shares of the Company including in the form of ADR’s. The shares that
are subject to the
Share-Based
Plan are designated as "restricted
shares".
Additionally, as a mean of a creating a
long term incentive (wealth incentive) for certain senior employees and members
of management considered as having “high potential,” the Company grants, under
the
Share-Based
Plan,
shares to be delivered in the future
divided
in two separate lots – Lot A and Lot B,
which will be delivered to the participants of the
relevant
program, subject to maturation periods
of five and ten years, respectively.
The weighted average fair value of the
options and assumptions used in applying the Company’s option pricing model of
2019 and 2018 grants are as follows:
In R$, except when otherwise
indicated
|
03/31/2019
|
(i)
|
12/31/2018
|
(i)
|
|
|
|
|
|
Fair value of options granted
|
5.37
|
|
5.62
|
|
Share price
|
18.13
|
|
18.04
|
|
Period price
|
18.13
|
|
18.04
|
|
Expected volatility
|
26.1%
|
|
26.2%
|
|
Vesting year
|
5
|
|
5
|
|
Expected dividends
|
5%
|
|
5%
|
|
Risk-free interest rate
|
9.1%
|
(ii)
|
9.6%
|
(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 ADR’s during the period, in which the risk-free interest rate
of ADR’s are calculated in U.S. dollar.
38
The total number of outstanding options
developed as follows:
Thousand options
|
03/31/2019
|
|
12/31/2018
|
|
|
|
|
Options outstanding at January
1
st
|
141,328
|
|
135,221
|
Options issued during the period
|
1,096
|
|
19,899
|
Options exercised during the period
|
(706)
|
|
(9,988)
|
Options forfeited during the period
|
(2,937)
|
|
(3,804)
|
Options outstanding at ended
period
|
138,781
|
|
141,328
|
The range of exercise prices of the
outstanding options is between R$0.001 (R$0.001 on December 31, 2018) and
R$32.74
(R$27.43 on December 31, 2018) and the
weighted average remaining contractual life is approximately
6
years (6.27 years on December 31,
2018).
Of the 138,781 thousand outstanding
options (141,328 thousand on December 31, 2018), 48,678 thousand options are
vested on March 31, 2019 (55,538 thousands on December 31, 2018).
The weighted average exercise price of
the options is as follows:
In R$ per share
|
03/31/2019
|
|
12/31/2018
|
|
|
|
|
Options outstanding at January 1
st
|
16.16
|
|
15.27
|
Options issued during the period
|
18.13
|
|
18.04
|
Options forfeited during the period
|
18.26
|
|
18.55
|
Options exercised during the period
|
6.27
|
|
7.47
|
Options outstanding at ended period
|
18.18
|
|
16.16
|
Options exercisable at ended period
|
17.59
|
|
2.25
|
For the options exercised during the
period ended March 31, 2019, the weighted average share price on the exercise
date was R$16.88 (R$21.83 as of December 31, 2018).
To settle the exercised stock options, the Company may
use treasury shares. The current limit of authorized capital is considered
sufficient to meet all stock option plans if the issue of new shares is required
to meet the grants awarded in the Programs.
During the period, the Company did not granted deferred
stocks under the stock option plan (as of December 2018, 426 thousand deferred
stocks had been granted related to the exercise of stock options granted in the
previous years, and such shares were valued based on the share price of the
trading session immediately prior to the stock option grant, representing a fair
value of R$7,518).
During the period, the Company granted 3,821 thousand
(13,055 thousand as of December 31, 2018) restricted shares under the
Share-Based Plan, which are valued based on the share price of the trading
session immediately prior to the grant of shares, representing a fair value of
approximately R$64,311 on March 31, 2019 (R$239,109 as of
December 31, 2018). Such restricted shares units are subject to a grace period
of five years counted from the date of grant.
39
The total number of shares purchased or
granted,
as the case may be, under the
Stock Option Plan and Share-Based Plan by employees, the delivery of which
will be performed in the future under certain conditions (deferred stock and
restricted shares), is demonstrated below:
Thousand deferred shares
|
03/31/2019
|
|
12/31/2018
|
|
|
|
|
Deferred shares outstanding at January
1
st
|
12,308
|
|
16,300
|
New deferred shares during the period
|
-
|
|
426
|
Deferred shares granted during the
period
|
(4,177)
|
|
(3,429)
|
Deferred shares forfeited during the
period
|
(110)
|
|
(989)
|
Deferred shares outstanding at ended
period
|
8,021
|
|
12,308
|
Thousand restricted shares
|
03/31/2019
|
|
12/31/2018
|
|
|
|
|
Restricted shares outstanding at January
1st
|
12,656
|
|
-
|
New restricted shares during the
period
|
4,143
|
|
13,055
|
Restricted shares forfeited during the
period
|
(73)
|
|
(103)
|
Restricted shares outstanding at ended
period
|
16,726
|
|
12,656
|
Additionally, certain employees and
managers of the Company received options to acquire AB Inbev shares, the
compensation cost of which is recognized in the income statement against
equity
.
The transactions with share-based
payments described above generated an expense of R$50,266 (R$46,918 on March 31,
2018), recorded as administrative expenses.
20.
FINANCIAL INSTRUMENTS AND RISKS
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 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.
40
The policy establishes that all the
financial assets and liabilities in each country where Ambev operates must be
denominated in their respective local currencies. The policy also sets forth the
procedures and controls needed for identifying, 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 Ambev’s
revenues, costs and/or investment amounts. The policy states that all the known
risks (e.g. foreign currency and interest) shall be hedged by contracting
derivative financial instruments. Existing risks not yet recorded (e.g. future
contracts for the purchase of raw material or 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 ten to fourteen months, also
through the use of derivative financial instruments. Most of the translation
risks are not hedged. Any exception to the policy must be approved by the Board
of Directors.
Derivative financial
Instruments
Derivative financial instruments
authorized by the Financial Risk Management Policy are futures contracts traded
on exchanges, Full deliverable forwards, Non-deliverable forwards, Swaps and
Options. At March 31, 2019, the Company and its subsidiaries had no target
forward, swaps with currency verification or any other derivative operations
representing a risk level above the nominal value of their contracts. The
derivative operations are managed on a consolidated basis and are classified by
strategies according to their purposes, as follows:
i) Cash flow hedge derivative
instruments – The highly probable forecast transactions contracted in order to
minimize the Company's exposure to fluctuations of exchange rates and prices of
raw materials, investments, equipment and services to be procured, protected by
cash flow hedges that shall occur at various different dates during the next
fourteen months. Gains and losses classified as hedging reserve in equity are
recognized in the income statement in the period or periods when the forecast
and hedged transaction affects the income statement.
ii) Fair value hedge derivative
instruments – 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.
The results of these operations,
measured according to their fair value, are recognized in financial results.
iii) Net investment hedge derivative
instruments – transactions entered into in order to minimize exposure of the
exchange differences arising from conversion of net investment in the Company's
subsidiaries located abroad for translation account balance. The effective
portion of the hedge is allocated to equity and the ineffectiveness portion is recorded directly in financial results.
41
The following tables summarize the exposure of the Company that were identified and protected in accordance with the Company's Risk Policy. The following denominations have been applied:
Operational Hedge: Refers to the exposures arising from the core business of Ambev, such as: purchase of inputs, purchase of fixed assets and service contracts linked to foreign currency, which is protected through the use of derivatives.
Financial Hedge: Refers to the exposures arising from cash and financing activities, such as: foreign currency cash and foreign currency debt, which is protected through the use of derivatives.
Investment hedge abroad: Refers mainly to exposures arising from cash hold in foreign currency in foreign subsidiaries whose functional currency is different from the consolidation currency.
Investment hedge - Put option
granted on
subsidiary: As detailed in Note 13 (d.4) the Company constituted a liability related to acquisition of Non-controlling interest in the Dominican Republic operations. This financial instrument is denominated in Dominican Pesos and is recorded in a Company which functional currency is the Real. The Company assigned this financial instrument as a hedging instrument for part of its net assets located in the Dominican Republic, in such manner the hedge result can be recorded in other comprehensive income of the group, following the result of the hedged item.
42
Transactions protected by derivative financial instruments in accordance with the Financial Risk Management Policy
|
|
|
|
|
|
|
|
|
03/31/2019
|
|
|
|
|
|
|
|
Fair Value
|
|
Gain / (Losses)
|
Exposure
|
|
Risk
|
|
|
Notional
|
|
Assets
|
Liability
|
|
Finance Result
|
Operational Result
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
(11,324,392)
|
|
11,137,351
|
|
212,855
|
(149,840)
|
|
(187,460)
|
385,151
|
292,620
|
|
|
Commodity
|
(2,440,324)
|
|
2,253,283
|
|
6,259
|
(135,914)
|
|
(10,777)
|
(14,658)
|
58,675
|
|
|
American Dollar
|
(8,537,273)
|
|
8,537,273
|
|
169,838
|
(10,866)
|
|
(174,867)
|
418,580
|
257,970
|
|
|
Euro
|
(122,202)
|
|
122,202
|
|
-
|
(3,025)
|
|
(969)
|
(1,639)
|
(5,661)
|
|
|
Mexican Pesos
|
(224,593)
|
|
224,593
|
|
36,758
|
(35)
|
|
(847)
|
(17,132)
|
(18,364)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
(739,990)
|
|
739,990
|
|
32,564
|
(942)
|
|
(58,410)
|
52,516
|
74,779
|
|
|
American Dollar
|
(739,990)
|
|
739,990
|
|
32,564
|
(942)
|
|
(58,410)
|
52,516
|
74,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
(251,031)
|
|
251,031
|
|
13,148
|
(408)
|
|
(17,237)
|
1,125
|
21,964
|
|
|
American Dollar
|
(251,031)
|
|
251,031
|
|
13,148
|
(408)
|
|
(17,239)
|
1,283
|
22,070
|
|
|
Rupee
|
-
|
|
-
|
|
-
|
-
|
|
2
|
(158)
|
(106)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
(15,000)
|
|
15,000
|
|
95
|
-
|
|
(1)
|
-
|
-
|
|
|
Interest rate
|
(15,000)
|
|
15,000
|
|
95
|
-
|
|
(1)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debts
|
|
|
(964,779)
|
|
291,541
|
|
30,644
|
(852)
|
|
624
|
-
|
-
|
|
|
American Dollar
|
(673,238)
|
|
-
|
|
-
|
-
|
|
-
|
-
|
-
|
|
|
Interest rate
|
(291,541)
|
|
291,541
|
|
30,644
|
(852)
|
|
624
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Instrument
|
|
|
1,650,219
|
|
1,098,248
|
|
642
|
(158,811)
|
|
79,056
|
-
|
-
|
|
|
Stock exchange prices
|
1,650,219
|
|
1,098,248
|
|
642
|
(158,811)
|
|
79,056
|
-
|
-
|
March 31, 2019
|
|
|
(11,644,973)
|
|
13,533,161
|
|
289,948
|
(310,853)
|
|
(183,428)
|
438,792
|
389,363
|
43
|
|
|
12/31/2018
|
|
03/31/2018
|
|
|
|
|
|
|
|
Fair Value
|
|
Gain / (Losses)
|
Exposure
|
|
Risk
|
|
|
Notional
|
|
Assets
|
Liability
|
|
Finance Result
|
Operational Result
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
(11,793,199)
|
|
11,607,208
|
|
184,487
|
(394,167)
|
|
(267,540)
|
113,238
|
29,321
|
|
|
Commodity
|
(2,597,049)
|
|
2,411,058
|
|
14,900
|
(270,592)
|
|
(14,350)
|
18,689
|
(118,486)
|
|
|
American Dollar
|
(8,774,281)
|
|
8,774,281
|
|
128,429
|
(119,917)
|
|
(253,951)
|
80,337
|
147,333
|
|
|
Euro
|
(152,373)
|
|
152,373
|
|
2,234
|
(1,020)
|
|
(407)
|
1,382
|
4,896
|
|
|
Mexican Pesos
|
(269,496)
|
|
269,496
|
|
38,924
|
(2,638)
|
|
1,168
|
12,830
|
(4,422)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
(890,029)
|
|
890,029
|
|
23,701
|
(29,318)
|
|
(1,534)
|
-
|
-
|
|
|
American Dollar
|
(890,029)
|
|
890,029
|
|
23,701
|
(29,126)
|
|
(2,014)
|
-
|
-
|
|
|
Euro
|
-
|
|
-
|
|
-
|
(192)
|
|
480
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
(314,001)
|
|
314,001
|
|
11,403
|
(14,150)
|
|
(520)
|
2,388
|
164
|
|
|
American Dollar
|
(311,812)
|
|
311,812
|
|
11,362
|
(14,150)
|
|
(602)
|
2,555
|
166
|
|
|
Rupee
|
(2,189)
|
|
2,189
|
|
41
|
-
|
|
82
|
(167)
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
(15,000)
|
|
15,000
|
|
359
|
-
|
|
(24,888)
|
-
|
-
|
|
|
American Dollar
|
-
|
|
-
|
|
265
|
-
|
|
(24,888)
|
-
|
-
|
|
|
Interest rate
|
(15,000)
|
|
15,000
|
|
94
|
-
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debts
|
|
|
(1,010,581)
|
|
338,219
|
|
34,900
|
(1,127)
|
|
28,410
|
-
|
-
|
|
|
American Dollar
|
(672,362)
|
|
-
|
|
-
|
-
|
|
17,874
|
-
|
-
|
|
|
Interest rate
|
(338,219)
|
|
338,219
|
|
34,900
|
(1,127)
|
|
10,536
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Instrument
|
|
|
(1,535,355)
|
|
1,108,416
|
|
82
|
(242,986)
|
|
70,106
|
-
|
-
|
|
|
American Dollar
|
(1,535,355)
|
|
1,108,416
|
|
82
|
(242,986)
|
|
70,106
|
-
|
-
|
Total
|
|
|
(15,558,165)
|
|
14,272,873
|
|
254,932
|
(681,748)
|
|
(195,966)
|
115,626
|
29,485
|
44
I.
Market risk
a.1) Foreign currency
risk
The Company is exposed to foreign
currency risk on borrowings, investments, purchases, dividends and/or interest
expense/income whenever they are denominated in 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 deliverable forwards.
a.2) Commodity Risk
A significant portion of the Company
inputs comprises commodities, which historically have experienced substantial
price fluctuations. The Company therefore uses both fixed price purchasing
contracts and derivative financial instruments to minimize its exposure to
commodity price volatility. The Company has important exposures to the following
commodities: aluminum, sugar, wheat and corn. These derivative financial
instruments have been designated as cash flow hedges.
a.3) 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 the Company’s policy is to achieve
an optimal balance between cost of funding and volatility of financial results,
taking into account market conditions as well as the Company’s overall business
strategy and this strategy is reviewed periodically.
The table below demonstrates the
Company’s exposure related to debts, before and after interest rates hedging
strategy.
|
03/31/2019
|
|
Pre - Hedge
|
|
Post - Hedge
|
|
Interest rate
|
Amount
|
|
Interest rate
|
Amount
|
Brazilian Real
|
9.9%
|
2,283,503
|
|
10.2%
|
2,013,464
|
Dominican Peso
|
9.4%
|
216,995
|
|
9.4%
|
216,995
|
American Dollar
|
4.4%
|
36,913
|
|
4.4%
|
36,913
|
Guatemala´s Quetzal
|
7.8%
|
11,639
|
|
7.8%
|
11,639
|
Canadian Dollar
|
3.5%
|
142,812
|
|
3.5%
|
142,812
|
Others
|
10.1%
|
28,645
|
|
10.1%
|
28,645
|
Interest rate pre-set
|
|
2,720,507
|
|
|
2,450,468
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian Real
|
9.2%
|
196,641
|
|
6.7%
|
466,680
|
American Dollar
|
3.6%
|
636,325
|
|
3.6%
|
636,325
|
Canadian Dollar
|
2.6%
|
1,531,766
|
|
2.6%
|
1,531,766
|
Interest rate post fixed
|
|
2,364,732
|
|
|
2,634,771
|
45
|
12/31/2018
(restated)
|
|
Pre - Hedge
|
|
Post - Hedge
|
|
Interest rate
|
Amount
|
|
Interest rate
|
Amount
|
Brazilian Real
|
9.7%
|
2,034,555
|
|
10.1%
|
1,756,179
|
Dominican Peso
|
9.4%
|
217,450
|
|
9.4%
|
217,450
|
American Dollar
|
4.4%
|
42,392
|
|
4.4%
|
42,392
|
Guatemala´s Quetzal
|
7.8%
|
11,460
|
|
7.8%
|
11,460
|
Canadian Dollar
|
3.5%
|
145,513
|
|
3.5%
|
145,513
|
Other Latin American Currencies
|
10.2%
|
32,092
|
|
10.2%
|
32,092
|
Interest rate pre-set
|
|
2,483,462
|
|
|
2,205,086
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian Real
|
9.1%
|
237,658
|
|
6.8%
|
516,034
|
American Dollar
|
3.6%
|
629,973
|
|
3.6%
|
629,973
|
Canadian Dollar
|
2.8%
|
752,570
|
|
2.8%
|
752,570
|
Interest rate post fixed
|
|
1,620,201
|
|
|
1,898,577
|
Sensitivity analysis
The Company mitigates risks arising from
non-derivative financial assets and liabilities substantially, through
derivative financial instruments. In this context, 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 the Company’s future results and/or cash flow, as described
below:
1 – Probable scenario: Management
expectations of deterioration in each transaction’s main risk factor. To measure
the possible effects on the results of derivative transactions, the Company uses
parametric Value at Risk – 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 after March 31, 2019 for the calculation, which are presented in the
module.
2 – Adverse scenario: 25% deterioration
in each transaction’s main risk factor as compared to the level observed on
March 31, 2019.
3 – Remote scenario: 50% deterioration
in each transaction’s main risk factor as compared to the level observed on
March 31, 2019.
46
Transaction
|
Risk
|
Fair Value
|
Probable scenario
|
Adverse scenario
|
Remote
scenario
|
|
|
|
|
|
|
Commodities hedge
|
Decrease on commodities price
|
(129,655)
|
(423,480)
|
(692,976)
|
(1,256,296)
|
Input purchase
|
129,655
|
446,932
|
739,736
|
1,349,817
|
Foreign exchange hedge
|
Foreign currency decrease
|
192,670
|
(575,599)
|
(2,028,347)
|
(4,249,364)
|
Input purchase
|
(192,670)
|
575,599
|
2,028,347
|
4,249,364
|
Costs effects
|
|
-
|
23,452
|
46,760
|
93,521
|
|
|
|
|
|
|
Foreign exchange hedge
|
Foreign currency decrease
|
31,622
|
11,760
|
(153,376)
|
(338,373)
|
Capex Purchase
|
(31,622)
|
(11,760)
|
153,376
|
338,373
|
Fixed assets effects
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Foreign exchange hedge
|
Foreign currency decrease
|
12,740
|
6,501
|
(50,018)
|
(112,775)
|
Expenses
|
(12,740)
|
(6,501)
|
50,018
|
112,775
|
Expenses effects
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Interest Hedge
|
Decrease in interest rate
|
95
|
92
|
(779)
|
(939)
|
Interest revenue
|
(95)
|
(92)
|
779
|
939
|
Cash effects
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Cash
|
Foreign currency decrease
|
-
|
104,608
|
168,310
|
336,619
|
Interest Hedge
|
Increase in interest rate
|
29,792
|
29,734
|
(75,604)
|
(89,391)
|
Interest expenses
|
(29,792)
|
(29,734)
|
75,604
|
89,391
|
Debt effects
|
|
-
|
104,608
|
168,310
|
336,619
|
|
|
|
|
|
|
Equity Instrument Hedge
|
Stock exchange price decrease
|
(158,169)
|
(191,232)
|
(432,731)
|
(707,293)
|
Expenses
|
158,169
|
111,960
|
(254,386)
|
(666,940)
|
Equity effects
|
|
-
|
(79,272)
|
(687,117)
|
(1,374,233)
|
|
|
-
|
48,788
|
(472,047)
|
(944,093)
|
As of March 31, 2019 the Notional and Fair Value amounts per instrument and maturity were as follows:
|
|
Notional Value
|
Exposure
|
Risk
|
2019
|
2020
|
2021
|
2022
|
>2022
|
Total
|
|
|
|
|
|
|
|
|
Cost
|
|
10,243,037
|
894,314
|
-
|
-
|
-
|
11,137,351
|
|
Commodity
|
1,866,354
|
386,929
|
-
|
-
|
-
|
2,253,283
|
|
American Dollar
|
8,073,565
|
463,708
|
-
|
-
|
-
|
8,537,273
|
|
Euro
|
112,589
|
9,613
|
-
|
-
|
-
|
122,202
|
|
Mexican Peso
|
190,529
|
34,064
|
-
|
-
|
-
|
224,593
|
|
|
|
|
|
|
|
|
Fixed asset
|
|
675,510
|
64,480
|
-
|
-
|
-
|
739,990
|
|
American Dollar
|
675,510
|
64,480
|
-
|
-
|
-
|
739,990
|
|
|
|
|
|
|
|
|
Expenses
|
|
241,149
|
9,882
|
-
|
-
|
-
|
251,031
|
|
American Dollar
|
241,149
|
9,882
|
-
|
-
|
-
|
251,031
|
|
|
|
|
|
|
|
|
Cash
|
|
15,000
|
-
|
-
|
-
|
-
|
15,000
|
|
Interest rate
|
15,000
|
-
|
-
|
-
|
-
|
15,000
|
|
|
|
|
|
|
|
|
Debt
|
|
-
|
-
|
110,000
|
-
|
181,541
|
291,541
|
|
Interest rate
|
-
|
-
|
110,000
|
-
|
181,541
|
291,541
|
|
|
|
|
|
|
|
|
Equity Instrument
|
|
1,040,344
|
57,904
|
-
|
-
|
-
|
1,098,248
|
|
Stock prices
|
1,040,344
|
57,904
|
-
|
-
|
-
|
1,098,248
|
|
|
12,215,040
|
1,026,580
|
110,000
|
-
|
181,541
|
13,533,161
|
47
|
|
Fair Value
|
Exposure
|
Risk
|
2019
|
2020
|
2021
|
2022
|
>2022
|
Total
|
|
|
|
|
|
|
|
|
Cost
|
|
56,074
|
6,941
|
-
|
-
|
-
|
63,015
|
|
Commodity
|
(132,554)
|
2,899
|
-
|
-
|
-
|
(129,655)
|
|
American Dollar
|
155,192
|
3,780
|
-
|
-
|
-
|
158,972
|
|
Euro
|
(2,917)
|
(108)
|
-
|
-
|
-
|
(3,025)
|
|
Mexican Peso
|
36,353
|
370
|
-
|
-
|
-
|
36,723
|
|
|
|
|
|
|
|
|
Fixed asset
|
|
30,930
|
692
|
-
|
-
|
-
|
31,622
|
|
American Dollar
|
30,930
|
692
|
-
|
-
|
-
|
31,622
|
|
|
|
|
|
|
|
|
Expenses
|
|
12,714
|
26
|
-
|
-
|
-
|
12,740
|
|
American Dollar
|
12,714
|
26
|
-
|
-
|
-
|
12,740
|
|
|
|
|
|
|
|
|
Cash
|
|
95
|
-
|
-
|
-
|
-
|
95
|
|
Interest rate
|
95
|
-
|
-
|
-
|
-
|
95
|
|
|
|
|
|
|
|
|
Debt
|
|
-
|
-
|
21,323
|
-
|
8,469
|
29,792
|
|
Interest rate
|
-
|
-
|
21,323
|
-
|
8,469
|
29,792
|
|
|
|
|
|
|
|
|
Equity Instrument
|
|
(154,507)
|
(3,662)
|
-
|
-
|
-
|
(158,169)
|
|
Stock prices
|
(154,507)
|
(3,662)
|
-
|
-
|
-
|
(158,169)
|
|
|
(54,694)
|
3,997
|
21,323
|
-
|
8,469
|
(20,905)
|
II.
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 counterparty is set forth in our Credit Risk Policy. This Credit Risk 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, where 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.
48
As of March 31, 2019, the Company held
its main short-term investments with the following financial institutions: Banco
do Brasil, Bradesco, Bank Mendes Gans, BNP Paribas, Caixa Econômica Federal,
Citibank, Itaú, JP Morgan Chase, Santander, ScotiaBank and Toronto Dominion
Bank. The Company had derivative agreements with the following financial
institutions: Banco Bisa, Banco Galícia, BBVA, Barclays, BNB, BNP Paribas,
Bradesco, Citibank, Deutsche Bank, Itaú, Goldman Sachs, JP Morgan Chase,
Macquarie, Merrill Lynch, Morgan Stanley, Santander, Standard Bank, ScotiaBank
and TD Securities.
The carrying amount of cash and cash
equivalents, investment securities, trade receivables excluding prepaid
expenses, recoverable taxes and derivative financial instruments are disclosed
net of provisions for impairment and represents the maximum exposure of credit
risks of March 31, 2019. There was no concentration of credit risk with any
counterparties as of March 31, 2019.
III.
Liquidity Risk
The Company believes that cash flows
from operating activities, cash and cash equivalents and short-term investments,
together with the derivative financial instruments and access to loan facilities
are sufficient to finance capital expenditures, financial liabilities and
dividend payments in the future.
IV.
Equity price risk
Through the equity swap transactions
approved on December 21
st
, 2017, May 15
th
, 2018 and
December 20
th
, 2018 by the Ambev’s Board of Directors
(see
Note 1 -
Corporate information
), the Company, or its subsidiaries,
will receive the price variation related to its shares traded on the stock
exchange or ADRs, neutralizing the possible effects of the stock prices’
oscillation in view of the share-based payment of the Company. As these
derivative instruments are not characterized as hedge accounting they were not
therefore designated to any hedge.
In March 31, 2019, an exposure
equivalent to R$1.65 billion (R$1.5 billion as of December 31, 2018) in AmBev’s
shares (or ADR’s) was partially hedged, resulting in a gain in income statement
of R$79,056 (R$70,106 as of March 31, 2018).
V.
Capital management
Ambev is continuously optimizing its
capital structure targeting to maximize shareholder value while keeping the
desired financial flexibility to execute the strategic projects. Besides the
statutory minimum equity funding requirements that apply to the Company’s
subsidiaries in the different countries, Ambev is not subject to any externally
imposed capital requirements. When analyzing its capital structure, the Company
uses the same debt ratings and capital classifications as applied in the
Company’s interim financial statements.
49
Financial instruments
(a) Financial instruments
categories
Management of the financial instruments
held by the Company is effected through operational strategies and internal
controls to assure liquidity, profitability and transaction security. Financial
instruments transactions are regularly reviewed for the effectiveness of the
risk exposure that management intends to cover (foreign exchange, interest rate,
etc.).
The table below shows all financial
instruments recognized in the interim financial statements, segregated by
category:
|
03/31/2019
|
|
Fair value through
other
comprehensive
income
|
Amortized
cost
|
Fair value through
profit or loss
|
Total
|
Financial assets
|
|
|
|
|
Cash and cash equivalents
|
5,313,674
|
7,508,851
|
-
|
12,822,525
|
Trade receivables excluding prepaid expenses
|
-
|
5,792,325
|
-
|
5,792,325
|
Investment securities
|
-
|
162,349
|
13,772
|
176,121
|
Financial instruments derivatives
|
-
|
-
|
31,381
|
31,381
|
Derivatives hedge
|
-
|
-
|
258,567
|
258,567
|
Total
|
5,313,674
|
13,463,525
|
303,720
|
19,080,919
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
Trade payables and put option granted on subsidiary
and other liabilities
|
-
|
14,694,335
|
2,688,136
|
17,382,471
|
Financial instruments derivatives
|
-
|
-
|
159,663
|
159,663
|
Derivatives hedge
|
-
|
-
|
151,190
|
151,190
|
Interest-bearning loans and
borrowings
|
-
|
5,085,238
|
-
|
5,085,238
|
Total
|
-
|
19,779,573
|
2,998,989
|
22,778,562
|
|
12/31/2018
(restated)
|
|
Fair value through
other
comprehensive
income
|
Amortized
cost
|
Fair value through
profit or loss
|
Total
|
Financial assets
|
|
|
|
|
Cash and cash equivalents
|
3,778,394
|
7,685,104
|
-
|
11,463,498
|
Trade receivables excluding prepaid expenses
|
-
|
6,874,253
|
-
|
6,874,253
|
Investment securities
|
-
|
147,341
|
13,391
|
160,732
|
Financial instruments derivatives
|
-
|
-
|
34,068
|
34,068
|
Derivatives hedge
|
-
|
-
|
220,864
|
220,864
|
Total
|
3,778,394
|
14,706,698
|
268,323
|
18,753,415
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
Trade payables and put option granted on subsidiary
and other liabilities
|
-
|
15,535,632
|
2,669,561
|
18,205,193
|
Financial instruments derivatives
|
-
|
-
|
243,359
|
243,359
|
Derivatives hedge
|
-
|
-
|
438,389
|
438,389
|
Interest-bearning loans and
borrowings
|
-
|
4,103,663
|
-
|
4,103,663
|
Total
|
-
|
19,639,295
|
3,351,309
|
22,990,604
|
50
(b) Classification of financial
instruments by type of fair value measurement
IFRS 13 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.
Also pursuant to IFRS 13, financial
instruments measured at fair value shall be classified within the following
categories
:
Level 1 – quoted prices (unadjusted) in
active markets for identical assets or liabilities that the entity can access at
the measurement date valuation;
Level 2 – inputs other than quoted
prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly; and
Level 3 – unobservable inputs for the
asset or liability.
|
03/31/2019
|
|
12/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Financial asset at fair value through other
comprehensive income
|
5,313,674
|
-
|
-
|
5,313,674
|
|
3,778,394
|
-
|
-
|
3,778,394
|
Financial asset at fair value through profit or
loss
|
13,772
|
-
|
-
|
13,772
|
|
13,391
|
-
|
-
|
13,391
|
Derivatives assets at fair value through profit or
loss
|
96
|
31,285
|
-
|
31,381
|
|
95
|
33,973
|
-
|
34,068
|
Derivatives - operational hedge
|
10,955
|
247,612
|
-
|
258,567
|
|
1,622
|
219,242
|
-
|
220,864
|
|
5,338,497
|
278,897
|
-
|
5,617,394
|
|
3,793,502
|
253,215
|
-
|
4,046,717
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit
and loss
(i)
|
-
|
-
|
2,688,136
|
2,688,136
|
|
-
|
-
|
2,669,561
|
2,669,561
|
Derivatives liabilities at fair value through
profit or loss
|
-
|
159,663
|
-
|
159,663
|
|
511
|
242,848
|
-
|
243,359
|
Derivatives - operational hedge
|
7,399
|
143,791
|
-
|
151,190
|
|
36,583
|
401,806
|
-
|
438,389
|
|
7,399
|
303,454
|
2,688,136
|
2,998,989
|
|
37,094
|
644,654
|
2,669,561
|
3,351,309
|
(i) Refers to the put option granted on
subsidiary as described in Note 13 d(4).
Reconciliation of changes in the
categorization of Level 3
Financial liabilities at December 31,
2018
|
2,669,561
|
Acquisition of investments
|
(23,769)
|
Total gains and losses in the period
|
42,344
|
Losses/(gains) recognized in net
income
|
28,255
|
Losses/(gains) recognized in equity
|
14,089
|
Financial liabilities at March 31, 2019
(i)
|
2,688,136
|
(i) The liability was recorded under
“Trade payables and put option granted on subsidiary and other liabilities” on
the balance sheet.
51
(c) Fair value of financial liabilities
measured at amortized cost
The Company’s liabilities,
interest-bearing loans and borrowings, trade payables excluding tax payables,
are recorded at amortized cost according to the effective rate method, plus
indexation and foreign exchange gains/losses, based on closing indices for each
exercise.
The financial instruments recorded at
amortized cost are similar to the fair value and are not material for
disclosure.
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, where the difference between the result of the
asset and liability amount generates the swaps market value. For the 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 financial instruments, as of March 31, 2019 the
Company held R$710,747 in highly liquid financial investments or in cash,
classified as cash and cash equivalents and investment securities (R$653,751 on
December 31, 2018).
Offsetting of financial assets and
liabilities
For financial assets and liabilities
subject to settlement agreements by the net or similar agreements, each
agreement between the Company and the counterparty allows this type of
settlement when both parties make this option. In the absence of such election,
the assets and liabilities will be settled by their amounts, but each party
shall have the option to settle on net, in case of default by the
counterparty.
21.
COLLATERAL AND CONTRACTUAL COMMITMENTS WITH SUPLLIERS,
ADVANCES FROM CUSTOMERS AND OTHER
|
03/31/2019
|
12/31/2018
|
|
|
|
Collateral given for own liabilities
|
710,747
|
653,751
|
Other commitments
|
1,168,210
|
1,338,866
|
|
1,878,957
|
1,992,617
|
|
|
|
Commitments with suppliers
|
15,645,163
|
12,078,641
|
|
15,645,163
|
12,078,641
|
52
The collateral provided for liabilities
totaled approximately R$1,878,957 on March 31, 2019 (R$1,992,617 on December 31,
2018), including R$588,002 (R$574,726 on December 31, 2018) of cash guarantees.
The deposits in cash used as guarantees are presented as part of other assets.
To meet the guarantees required by derivative exchanges and/or counterparties
contracted in certain derivative financial instrument transactions, Ambev
maintained on March 31, 2019, R$710,747 (R$653,751 on December 31, 2018) in
highly liquid financial investments or in cash, classified as cash and cash
equivalents and investment securities (Note 20 –
Financial instruments and
risks
).
Most of the balance relates to
commitments with suppliers of packaging.
Future contractual commitments on
March 31, 2019
a
nd
December 31, 2018 are as
follows:
|
03/31/2019
|
12/31/2018
|
|
|
|
Less than 1 year
|
5,752,131
|
4,826,987
|
Between 1 and 2 years
|
3,632,438
|
2,932,420
|
More than 2 years
|
6,260,594
|
4,319,234
|
|
15,645,163
|
12,078,641
|
22.
CONTINGENT LIABILITY
The Company has
contingent liabilities related to lawsuits arising from its normal course of
business.
Due to their nature, such legal
proceedings involve certain uncertainties including, but not limited to, court
and tribunals rulings, negotiations between affected parties and governmental
actions, and as a consequence the Company’s management cannot estimate the
likely timing of resolution of these matters at this stage.
Contingent
liabilities probable are fully recorded as liabilities (Note 12 –
Provisions
).
Additionally, the Company has lawsuits
related to tax, civil and labor for which the likelihood of loss is classified
as possible by management, and for which there are no provisions, as the
composition and estimates of amounts as follows:
|
03/31/2019
|
12/31/2018
|
|
|
|
IRPJ and CSLL
|
38,303,592
|
37,867,374
|
ICMS and IPI
|
21,719,450
|
23,891,369
|
PIS and COFINS
|
4,467,782
|
4,386,342
|
Labor
|
388,025
|
353,425
|
Civil
|
4,504,019
|
4,385,657
|
Others
|
1,243,928
|
1,171,252
|
|
70,626,796
|
72,055,419
|
Principal lawsuits with a likelihood of possible
loss:
Except for monetary inflation and the cases described
below, there was no relevant changes in the main cases with possible chances of
loss when compared to the period ending in 31st December 2018.
53
Brazilian Federal Taxes
Profits earned abroad
During 2005, certain subsidiaries of Ambev received assessments from the Brazilian Federal Tax Authorities relating to profits of its foreign subsidiaries. In December 2008, the Administrative Court rendered a partially favorable decision to Ambev, and in connection with the remaining part, Ambev filed an appeal to the Upper House of the Administrative Court, which was denied in full in March 2017. In September 2017, Ambev filed a judicial proceeding for this tax assessment and requested a motion of injunction, which was granted to Ambev.
In 2013, 2016, 2017 and 2018, Ambev received other tax assessments related to profits of its foreign subsidiaries.
In July and September 2018, with respect to two tax assessmentes, the Upper House of the Administrative Court rendered unfavorable decisions to Ambev. In one such case, the Company filed a judicial proceeding and requested an injunction, which was granted to the company. In the other case, the Company filed a judicial proceeding to discuss the case.
In July and October 2018, the Lower Administrative Court rendered a partially favorable decision to Ambev in another of the ongoing tax assessments. The Company is waiting to be formally notified of such decisions to analyze possible appeals. In addition, in July 2018, the Administrative Upper House rendered a partially favorable decision to Ambev in one of the assessments, and, Ambev is waiting to be formally notified of such decisions to analyze the possible appeals. With respect to another case, in November 2018, the Administrative Upper House rendered a partial favorable decision to Ambev and filled a judicial proceeding to discuss the remaining amounts and requested an injunction, which was granted to Ambev.
In March 2019, the first administrative court rendered a partially favorable decision to Ambev and, regarding two other cases, the first administrative court rendered unfavorable decisions. The Company will file appeal to the Lower administrative Court.
In March 2019, Ambev management estimates the exposure of approximately R$7.3 billion (R$7.7 billion at December 31, 2018) and to probable losses to be R$46.2 million as of that date, for which we have recorded a provision in the corresponding amount (R$45.8 million at December 31, 2018).
Deemed Taxable Income
In April 2016, Arosuco (subsidiary of Ambev) received a tax assessment regarding the use of the “Presumed Profit” Method for the calculation of income tax and the social contribution on net profit method instead of Real Profit method. In September, 2017, Arosuco was notified of the unfavorable first level administrative decision and filed Voluntary Appeal. In January 2019, the case was judged by the Lower Administrative Court, which ruled favorably to the Company by majority of votes. The tax authorities filed a Special Appeal to the Administrative Upper House and Ambev filed a motion for Clarification and
counterarguments of the Special Appeal
of the Tax authorities. In March 2019, Ambev received a new tax assessment
regarding the same subject and will file defense.
54
Arosuco management estimates the amount
of possible losses in relation to this assessment in in March 2019 are
approximately R$1.1 billion (R$645.1 million as of December 31,
2018).
PIS/COFINS over bonus
products
Since 2015, Ambev has been receiving tax assessments
issued by the Brazilian federal tax authorities, relating to amounts allegedly
due under Integration Programme/Social Security Financing Levy (PIS/COFINS) over
bonus products granted to its customers. These cases are now being discussed at
the relevant judicial and administrative Courts. According to Note 36 -
Subsequent Events, in January 2019, three cases were judged by the Lower
Administrative Court, which ruled favorably to the Company by majority of votes
in all three cases. Ambev is waiting to be notified of such decisions to analyze
the applicable appeals. Ambev management estimates the possible losses related
to these assessments to be approximately
R$ 4.1 billion (R $ 4.0 billion as of December 31, 2018),
classified as a possible loss.
Contingent assets
In accordance with IAS 37 -
Provisions, Contingent Liabilities and
Contingent Assets
, the contingent assets not be recognized in
consolidated financial statements, except when realization of income is
virtually certain.
The Company and its subsidiaries are demanding the refund
of the PIS and COFINS paid including the ICMS and/or ICMS-ST in their taxable
basis for the period from 1990 onwards. For the period until 2009, as well as
for the period in which the special regime for cold drinks was in place – i.e.
from January 2009 to April 2015 (article 58-J of Law 10,833, of 2003, also known
as REFRI), the amounts involved in the refund requests are still being
calculated. For the period after the termination of the special regime for cold
drinks and the introduction of Law 13,097, of 2015, the Company estimates that
the contingent asset related to the matter is R$ 2 billion.
55
23.
NON-CASH ITEMS
|
03/31/2019
|
12/31/2018
|
Cash financing cost other than
interests
|
(2,027)
|
(74,009)
|
Fair value of options granted on
subsidiary
|
36,033
|
129,405
|
Effect of application of IAS 29
(hyperinflation)
|
45,621
|
-
|
Acquisition of investment payable
|
20,000
|
-
|
Others
|
-
|
114
|
24.
RELATED PARTIES
Policies and practices regarding the
realization of transactions with related parties
The Company adopts corporate governance
practices recommended and/or required by the applicable law.
Under the Company’s by laws the Board of
Directors is responsible for approving any transaction or agreements between the
Company and/or any of its subsidiaries (except those fully subsidiaries),
directors and/or shareholders (including shareholders, direct or indirect
shareholders of the Company). The Antitrust Compliance and Related Parties
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 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
formalized in written contracts.
Transactions with management
members:
In addition to short-term benefits
(primarily salaries), the management members are entitled to participate in
Stock Option Plan (Note 19 –
Share-based payments
).
Total expenses related to the Company’s
management members are as follows:
|
03/31/2019
|
03/31/2018
|
|
|
|
Short-term benefits
(i)
|
5,739
|
5,119
|
Share-based payments
(ii)
|
9,519
|
9,871
|
Total key management remuneration
|
15,258
|
14,990
|
(i) These correspond substantially to
management’s salaries and profit sharing (including performance
bonuses
).
(ii) These correspond to the
compensation cost of stock options and restricted stocks granted to
management. These amounts exclude remuneration paid to members of the Fiscal
Council
.
56
Excluding the above mentioned plan (Note
19 –
Share-based payments
), the Company 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 Antonio e Helena Zerrenner
Instituição Nacional de Beneficiência (“Fundação Zerrenner) is one of Ambev’s
shareholders, and at March 31, 2019 held 10.2% of its total share capital.
Fundação Zerrenner is also an 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 March 31, 2019 and December 31, 2018,
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 these dates. Ambev recognizes the
assets (prepaid expenses) of this plan to the extent of amounts from economic
benefit available to the Company, arising from reimbursements or future
contributions reduction.
The expenses incurred by Fundação
Zerrenner in providing these benefits totaled
R$69,114
(R$76,351 on March 31, 2018), of which
R$60,993
and
R$8,121
related to active employees and
retirees
respectively
(R$66,174 and R$10,177 on March 31, 2018
related to active employees and retirees
respectively).
b) Leasing
The Ambev, through its subsidiary BSA
(labeling), has an asset leasing agreement with Fundação Zerrenner, for R$85,028
maturing on May 31, 2020 that can be extended for a
further year.
c) Leasing – Ambev head
office
Ambev has a leasing agreement of two
commercial sets with Fundação Zerrenner in the annual amount of R$3,255,
maturing on January, 2020.
d) Licensing agreement
The Company maintains a licensing
agreement with Anheuser-Busch, Inc., to produce, bottle, sell and distribute
Budweiser products in Brazil, Canada and Argentina, and sales and distribution
agreements of Budweiser products in Guatemala, in Dominican Republic, in
Paraguay, in El Salvador, in Nicaragua, in Uruguay, in Chile, in Panama, in
Costa Rica e in Puerto Rico. In addition, the Company produces and distributes
Stella Artois products under license to ABI in Brazil and Canada and, by means
of a license granted to ABI, it also distributes Brahma’s product in the United
States and several countries such as the United Kingdom, Spain, Sweden, Finland
and Greece. The amount recorded was R$408 (R$341 on
March 31, 2018) and R$92,088 (R$82,174 on March 31, 2018) as licensing income and expense, respectively.
57
Ambev has licensing agreements with the Group Modelo, subsidiaries of ABI, for to import, promote and sell products Corona (
Corona Extra, Corona Light, Coronita, Pacifico and Negra Modelo
) in countries of the Latin America and the Canada.
Transactions with related parties
|
|
|
|
03/31/2019
|
Current
|
Trade receivables
(i)
|
Other Trade receivables
(i)
|
Trade payables
(i)
|
Other Trade payables
(i)
|
AB InBev
|
14,575
|
552
|
(47,278)
|
-
|
AB Services
|
48,945
|
-
|
(82)
|
-
|
AB USA
|
38,087
|
3,882
|
(233,053)
|
-
|
Bavaria
|
90,778
|
-
|
(41,468)
|
-
|
Cervecería Modelo
|
140,756
|
737
|
(694,500)
|
-
|
Inbev
|
689
|
50,665
|
(38,370)
|
-
|
ITW International
|
-
|
-
|
(216,295)
|
(85,900)
|
Panamá Holding
|
41,320
|
-
|
(15,910)
|
-
|
Others
|
38,596
|
3,980
|
(124,729)
|
-
|
|
413,746
|
59,816
|
(1,411,685)
|
(85,900)
|
(i) The amount represents the marketing operations (purchase and sale) and the reimbursement between the companies of the group.
|
|
|
|
12/31/2018
|
Current
|
Trade receivables
(i)
|
Other Trade receivables
(i)
|
Trade payables
(i)
|
Other Trade payables
(i)
|
AB InBev
|
16,381
|
-
|
(19,670)
|
-
|
AB Procurement
|
1,071
|
-
|
(28)
|
-
|
AB Services
|
43,728
|
-
|
(1,687)
|
-
|
AB USA
|
27,827
|
3,847
|
(265,206)
|
-
|
Cervecería Modelo
|
135,111
|
-
|
(583,806)
|
-
|
Inbev
|
601
|
45,575
|
(14,280)
|
-
|
ITW International
|
-
|
-
|
(248,942)
|
(66,452)
|
Panamá Holding
|
41,085
|
-
|
(15,821)
|
-
|
Others
|
28,645
|
538
|
(126,443)
|
-
|
|
294,449
|
49,960
|
(1,275,883)
|
(66,452)
|
(i) The amount represents the marketing operations (purchase and sale) and the reimbursement between the companies of the group.
The tables below represent the transactions with related parties, recognized in the income statement:
|
|
03/31/2019
|
Company
|
Buying / Service fees / Rentals
|
Sales
|
Royalties
|
Net Finance Cost
|
AB USA
|
(112,745)
|
7,704
|
(74,425)
|
-
|
AB Package
|
(15,466)
|
-
|
-
|
-
|
Cervecería Modelo
|
(286,170)
|
115
|
(9,392)
|
-
|
Inbev
|
(23,422)
|
-
|
-
|
-
|
Others
|
(44,240)
|
110
|
(7,863)
|
(21,684)
|
|
(482,043)
|
7,929
|
(91,680)
|
(21,684)
|
58
|
|
03/31/2018
|
Company
|
Buying / Service fees / Rentals
|
Sales
|
Royalties
|
Net Finance Cost
|
AB Procurement
|
-
|
4,409
|
-
|
-
|
AB USA
|
(48,386)
|
10,638
|
(62,043)
|
-
|
Ambev Peru
|
-
|
5
|
-
|
-
|
Cervecería Modelo
|
(171,573)
|
22
|
(7,030)
|
-
|
Inbev
|
(19,178)
|
-
|
-
|
-
|
Others
|
(20,482)
|
2,057
|
(12,760)
|
(9,346)
|
|
(259,619)
|
17,131
|
(81,833)
|
(9,346)
|
Denomination used in the tables above
:
AB InBev Procurement GmbH ("AB Procurement")
|
Ambev Luxembourg S.A.R.L. ("Ambev Luxemburgo")
|
Ambrew S.A. ("Ambrew")
|
Anheuser-Busch InBev N.V. (“AB InBev”)
|
Anheuser-Busch Inbev Services LLC (“AB Services”)
|
Anheuser-Busch Inbev USA LLC (“AB USA”)
|
Arosuco Aromas e Sucos Ltda. (“Arosuco”)
|
Bavaria S.A. ("Bavaria")
|
Cervecería Modelo de Mexico S. de R.L. de C.V. ("Cervecería Modelo")
|
Cerveceria Nacional - Panamá ("Panamá Holding")
|
Cervecería Nacional Dominicana, S.A. (“CND”)
|
Cervecería y Maltería Payssandú S.A. (“Cympay”)
|
Cerveceria y Malteria Quilmes ("CMQ")
|
Compañia Cervecera Ambev Peru S.A.C. (“Ambev Peru”)
|
CRBS S.A. (“CRBS”)
|
Dunvegan S.A. (“Dunvegan”)
|
Inbev Belgium N.V. ("Inbev")
|
Incrível Comércio de Bebidas e Alimentos S.A. ("Incrível")
|
Interbrew International B.V. (“ITW International”)
|
Labatt Breweries of Canada LP (“Labatt Breweries”)
|
Latin America South Investment S.L. ("LASI")
|
Lizar Administradora de Carteira de Valores Mobiliários Ltda. (“Lizar”)
|
Maltería Pampa S.A. (“Maltería Pampa”)
|
Maltería Uruguay S.A. (“Maltería Uruguay”)
|
Monthiers S.A. (“Monthiers”)
|
NCAQ Sociedad Colectiva (“NCAQ”)
|
59
25.
EVENTS AFTER THE REPORTING PERIOD
Goods manufactured within the Manaus Free Trade Zone for remittance elsewhere in Brazil are exempt from IPI excise Tax (“IPI”). There is discussion on whether the acquisition of such benefited goods gives rise to the right of IPI excise tax credits by the relevant acquirers. Ambev's subsidiaries have been registering IPI excise tax presumed credits upon acquisition of exempted goods manufactured therein. Since 2009, Ambev has been receiving a number of tax assessments. In addition, the Company has also received tax assessments from the Brazilian Federal Tax Authorities charging federal taxes allegedly unduly offset with the disallowed presumed IPI excise tax credits which are under discussion in the mentioned proceedings.
On April 25th, 2019, the Federal Supreme Court ("STF") concluded the judgment of Extraordinary Appeal No. 592.891/SP, with binding effects, deciding on the right of taxpayers registering IPI excise tax presumed credits on acquisitions of raw materials and exempted inputs originated from the Manaus Free Trade Zone. As a result of such decision, the Company estimates the reclassification of part of the amounts related to the cases mentioned above to remote loss, maintaining as a possible loss, in March 2019, the approximate amount of R$2.6 billion (R$4.9 billion on December 31st, 2018), in view of other additional discussions not submitted to the judgment by the STF.
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: May 22, 2019
|
|
|
|
AMBEV S.A.
|
|
|
|
|
By:
|
/s/
Fernando Mommensohn Tennenbaum
|
|
Fernando Mommensohn Tennenbaum
Chief Financial and Investor Relations Officer
|
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