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Note 21 - Changes in Equity
 12 Months Ended
Dec. 31, 2018
Statement Line Items [Line Items]  
Disclosure of changes in equity [text block]
21.
CHANGES IN EQUITY
 
(a) Capital stock
 
              2018               2017  
     
Million of
common shares
      
Million of
Real
      
Million of
common shares
      
Million of
Real
  
                                 
Beginning balance as per statutory books    
15,717.6
      
57,614.1
      
15,717.6
      
57,614.1
  
Share issued    
4.5
      
96.1
      
–
      
–
  
     
15,722.1
      
57,710.2
      
15,717.6
      
57,614.1
  
 
(b) Capital reserves
 
    Capital Reserves    
     
 Treasury shares  
      
 Share Premium  
      
 Others capital reserves  
      
  Share-based Payments  
      
  Total  
  
                                         
 At December 31, 2016    
(908.7
 )    
53,662.8
      
700.9
      
1,074.9
      
54,529.9
  
Purchase of shares and result on treasury shares    
13.7
      
–
      
–
      
–
      
13.7
  
Share-based payments    
–
      
–
      
–
      
157.4
      
157.4
  
 At December 31, 2017    
(895.0
 )    
53,662.8
      
700.9
      
1,232.3
      
54,701.0
  
Capital Increase    
–
      
–
      
–
      
(89.9
 )    
(89.9
 )
Effect of application of IAS 29 (hyperinflation)
(i)
    
–
      
–
      
–
      
(8.2
 )    
(8.2
 )
Purchase of shares and result on treasury shares    
12.3
      
–
      
–
      
–
      
12.3
  
Share-based payments    
–
      
–
      
–
      
166.1
      
166.1
  
 At December 31, 2018    
(882.7
 )    
53,662.8
      
700.9
      
1,300.3
      
54,781.3
  
 
(i) As described in Note
1
(b)
Application of inflation accounting and Financial Reporting in Hyperinflationary Economies
.
 
(
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:
 
     
Acquire /realization shares
      
Result on Treasure Shares
      
Total Treasure
Shares
  
     
Million shares
      
Million Brazilian Real
      
Million shares
      
Million Brazilian Real
  
At December 31, 2016    
16.6
      
(312.7
 )    
(596.0
 )    
(908.7
 )
Changes during the year    
(9.1
 )    
173.0
      
(159.3
 )    
13.7
  
At December 31, 2017    
7.5
      
(139.7
 )    
(755.3
 )    
(895.0
 )
Changes during the year    
(6.4
 )    
118.8
      
(106.5
 )    
12.3
  
At December 31, 2018    
1.1
      
(20.9
 )    
(861.8
 )    
(882.7
 )
 
(
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$161.0
in
December 31, 2018 (
R$209.3
and
R$170.3
in
December 31, 2017
and
2016,
respectively) (Note
24
–
Share-based payments
).
 
(c) Net income reserves
 
    Net income reserves
     
Investments
reserve
     
 Statutory
reserve
     
 Fiscal
incentive
     
Total
  
                                 
At December 31, 2016    
3,859.9
      
4.5
      
5,835.7
      
9,700.1
  
Interest on shareholder´s equity    
(3,770.1
 )    
–
      
–
      
(3,770.1
 )
Fiscal incentive reserve    
–
      
–
      
1,552.3
      
1,552.3
  
Investments reserve    
1,177.9
      
–
      
–
      
1,177.9
  
At December 31, 2017    
1,267.7
      
4.5
      
7,388.0
      
8,660.2
  
Interest on shareholder´s equity    
–
      
–
      
–
      
–
  
Fiscal incentive reserve    
–
      
–
      
1,331.5
      
1,331.5
  
Investments reserve    
5,442.3
      
–
      
–
      
5,442.3
  
At December 31, 2018    
6,710.0
      
4.5
      
8,719.5
      
15,434.0
  
 
 
(
c.1
) Investments reserve
 
From net income after deductions applicable, will be aimed
no
more than
60
%
(
sixty
per cent) of the adjusted net profit to investment reserve so that it can 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.
 
(
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.
 
Events during the year ended
2018:
 
Event    
Approval
     Type    
Date of payment
      
Year
      
Type of share
      
Amount per share
      
Total amount
  
Board of Directors Meeting    
05/15/2018
    
Dividends
    
07/30/2018
      
2018
      
ON
      
0.1600
      
2,515.1
  
Board of Directors Meeting    
12/03/2018
    
Interest on shareholder´s equity
    
12/28/2018
      
2018
      
ON
      
0.3200
      
5,030.5
  
     
 
    
 
    
 
      
 
      
 
      
 
      
7,545.6
  
 
 
 
Events during the year ended
2017:
 
Event    
Approval
     Type    
Date of payment
      
Year
      
Type of share
      
Amount per share
      
Total amount
  
Board of Directors Meeting    
05/16/2017
    
Dividends
    
07/17/2017
      
2017
      
ON
      
0.1600
      
2,513.1
 
Board of Directors Meeting    
12/01/2017
    
Interest on shareholder´s equity
    
12/28/2017
      
2017
      
ON
      
0.3100
      
4,869.7
(i)
Board of Directors Meeting    
12/21/2017
    
Dividends
    
02/22/2018
      
2017
      
ON
      
0.0700
      
1,099.7
 
     
 
    
 
    
 
      
 
      
 
      
 
      
8,482.5
 
 
(i)
R$3,770.1
of these interest on shareholder´s equity refer to the total amount approved for distribution in the period, and were accrued in investments reserves.
 
Events during the year ended
2016:
 
Event    
Approval
     Type    
Date of payment
      
Year
      
Type of share
      
Amount per share
      
Total amount
  
Board of Directors Meeting    
01/15/2016
    
Interest on shareholder´s equity
    
02/29/2016
      
2015
      
ON
      
0.1300
      
2,039.2
  
Board of Directors Meeting    
06/24/2016
    
Dividends
    
07/29/2016
      
2016
      
ON
      
0.1300
      
2,040.8
  
Board of Directors Meeting    
10/19/2016
    
Dividends
    
11/25/2016
      
2016
      
ON
      
0.1600
      
2,511.9
  
Board of Directors Meeting    
12/01/2016
    
Interest on shareholder´s equity
    
12/29/2016
      
2016
      
ON
      
0.2200
      
3,454.2
  
Board of Directors Meeting    
12/22/2016
    
Dividends
    
02/23/2017
      
2016
      
ON
      
0.0700
      
1,099.1
  
     
 
    
 
    
 
      
 
      
 
      
 
      
11,145.2
  
 
 
(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, 2016    
(289.5
 )    
(144.5
 )    
(1,262.2
 )    
(2,390.9
 )    
2,150.7
      
156.1
      
(75,238.8
 )    
(77,019.1
 )
Comprehensive income:                                                                
Gains/(losses) on translation of foreign operations    
1,928.6
      
–
      
–
      
–
      
–
      
–
      
–
      
1,928.6
  
Cash flow hedges    
–
      
513.4
      
–
      
–
      
–
      
–
      
–
      
513.4
  
Actuarial gains/(losses)    
–
      
–
      
117.7
      
–
      
–
      
–
      
–
      
117.7
  
Total Comprehensive income    
1,928.6
      
513.4
      
117.7
      
–
      
–
      
–
      
–
      
2,559.7
  
Options granted on subsidiary    
–
      
–
      
–
      
(380.4
 )    
–
      
–
      
–
      
(380.4
 )
Gains/(losses) of controlling interest´s share    
–
      
–
      
–
      
–
      
(12.1
 )    
–
      
–
      
(12.1
 )
Tax on fictitious dividends    
–
      
–
      
–
      
–
      
(38.7
 )    
–
      
–
      
(38.7
 )
Reversal effect revaluation of property, plant and equipment under the predecessor basis accounting    
–
      
–
      
–
      
–
      
–
      
–
      
(75.9
 )    
(75.9
 )
At December 31, 2017    
1,639.1
      
368.9
      
(1,144.5
 )    
(2,771.3
 )    
2,099.9
      
156.1
      
(75,314.7
 )    
(74,966.5
 )
Comprehensive income:                                                                
Gains/(losses) on translation of foreign operations    
1,643.5
      
–
      
–
      
–
      
–
      
–
      
–
      
1,643.5
  
Cash flow hedges    
–
      
495.9
      
–
      
–
      
–
      
–
      
–
      
495.9
  
Actuarial gains/(losses)    
–
      
–
      
24.8
      
–
      
–
      
–
      
–
      
24.8
  
Total Comprehensive income    
1,643.5
      
495.9
      
24.8
      
–
      
–
      
–
      
–
      
2,164.2
  
Effect of application of IAS 29 (hyperinflation)
(i)
    
346.4
      
(88.3
 )    
0.1
      
–
      
–
      
–
      
–
      
258.2
  
Gains/(losses) of controlling interest´s share
(ii)
    
460.1
      
0.8
      
3.4
      
2,651.1
      
(2,072.9
 )    
–
      
–
      
1,042.5
  
Tax on fictitious dividends    
–
      
–
      
–
      
–
      
(7.4
 )    
–
      
–
      
(7.4
 )
Reversal effect revaluation of property, plant and equipment under the predecessor basis accounting    
–
      
–
      
–
      
–
      
–
      
–
      
(75.9
 )    
(75.9
 )
At December 31, 2018    
4,089.1
      
777.3
      
(1,116.2
 )    
(120.2
 )    
19.6
      
156.1
      
(75,390.6
 )    
(71,584.9
 )
 
(i) As described in Note
1
(b)
Application of inflation accounting and Financial Reporting in Hyperinflationary Economies
.
 
(ii) Of these amount,
R$1,035.2
refers to renegotiation of shareholders agreement from Tenedora, as described in Note
1
(b)
.
 
(
d.1
) Translation reserves
 
The translation reserves comprise all foreign currency exchange differences arising from the translation of the 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
27
–
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.
 
The actuarial gain of
R$158.5
in
2017
arising from the surplus reverted to the Sponsor, originating from Ambev Private Pension Institute of the defined benefits plan was fully recorded under the heading of actuarial gains and losses in equity.
 
(
d.4
) Options granted on subsidiary
 
As part of the shareholders agreement between the Ambev and ELJ, 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 by 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
–
Corporate information
, 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
December 31, 2018
the put option held by ELJ is valued at
R$2,449.3
(
R$5,520.2
on
December 31, 2017)
and the liability categorized as “Level
3”,
as the Note
27
(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.
 
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 from
2020
has been granted, with a few exceptions. On
December 31, 2018
the put option is valued at
R$136.0
(
R$132.0
on
December 31, 2017).
 
The changes in these options is presented in Note
27
– 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.
 
(e) Earnings per share
 
Basic and diluted earnings per share of the stock option and deferred stock
 
The calculation of basic earnings per share is based on the net income attributable to equity holders of Ambev and the proportional weighted average number of shares outstanding during the year.
 
Diluted earnings per share of the stock option and deferred stock is based on the net income attributable to equity holders of Ambev and the adjusting the weighted average number of shares outstanding during the year to assume conversion of all potentially dilutive shares, as follows:
 
Million shares   2018   2017   2016
    Common   Common   Common
             
Issued shares at December 31, net of treasury shares
(i)
    
15,718.1
      
15,705.8
      
15,696.6
  
Effect of shares options    
138.1
      
132.2
      
126.5
  
Weighted average number of shares (diluted) at December 31    
15,856.2
      
15,838.0
      
15,823.1
  
 
(i)
Not
considered treasury shares.
 
The tables below present the calculation of earnings per share (“EPS”):
 
    2018   2017   2016
    Common   Common   Common
                         
 Income attributable to equity holders of Ambev    
11,024.7
      
7,332.0
      
12,546.6
  
 Weighted average number of shares (non diluted)    
15,718.1
      
15,705.8
      
15,696.6
  
 Basic EPS
(i)
    
0.7014
      
0.4668
      
0.7993
  
                         
                         
 Income attributable to equity holders of Ambev    
11,024.7
      
7,332.0
      
12,546.6
  
 Weighted average numbers of shares (diluted)    
15,856.2
      
15,838.1
      
15,823.2
  
 Diluted EPS
(i)
    
0.6953
      
0.4629
      
0.7929
  
 
(i) Expressed in Brazilian Reais.
 
(f) Destinations
 
At
December 31, 2018,
the Company has done the appropriations to retained earnings, in accordance with the Brazilian Corporate law and the Company’s bylaws. The dividends payments made until
December 2018
were approved at the Board of Directors’ Meeting.
 
Regarding the basis for dividends, the Company believes that the predecessor basis of accounting, as well as its presentation for comparative purposes, will
not
affect the determination of the minimum mandatory dividend. Therefore, the Company intends to adjust the calculation basis of the minimum mandatory dividend to delete any current and future impacts on net income resulting from the adoption of this accounting practice, related to the amortization/depreciation of surplus assets or even a possible impairment of goodwill, thus preserving the mandatory minimum dividends.
 
      2018       2017       2016  
Net income, attributable to equity holders of  Ambev    
11,024.7
      
7,332.0
      
12,546.6
  
Prescribed/(complement) dividends    
30.1
      
34.7
      
21.6
  
Reversal effect revaluation of property, plant and equipment under the predecessor basis accounting    
75.9
      
75.9
      
75.9
  
Impact of the adoption of IFRS 15
(i)
    
(355.4
 )    
–
      
–
  
Effect of application of IAS 29 (hyperinflation)
(ii)
    
3,544.1
      
–
      
–
  
Retained earnings basis for dividends and destinations to Net income reserves    
14,319.4
      
7,442.6
      
12,644.1
  
                         
Dividends and Interest on capital distributed and accrued to distribute based on net income for the year                        
Dividends and Interest on capital paid based on profit    
7,545.6
      
3,612.7
      
5,651.8
  
Dividends approved for distribution    
–
      
1,099.7
      
3,454.2
  
Total of dividends and Interest on capital    
7,545.6
      
4,712.4
      
9,106.0
  
Percentage of distributed profit    
53
 %    
63
 %    
72
 %
                         
Interest on capital distributed and accrued to distribute based on the investment reserve                        
Interest on capital paid based on the investment reserve    
–
      
3,770.1
      
–
  
Total of Interest on capital    
–
      
3,770.1
      
–
  
                         
Total of distributed and accrued to distribute    
7,545.6
      
8,482.5
      
9,106.0
  
Percentage of distributed profit    
53
 %    
114
 %    
72
 %
 
(i) As described in Note
3
-
Summary of significant account policies.
 
(ii) As described in Note
1
(b)
Application of inflation accounting and Financial Reporting in Hyperinflationary Economies
.