Financial Instruments

12 Months Ended

Dec. 31, 2018

Disclosure of financial instruments [text block]

Note 7 Financial Instruments

Financial instruments categories

The carrying amounts of each financial instrument category as of each year-end are detailed as follows:

	As of December 31, 2018				As of December 31, 2017
	Current		Non current		Current		Non current
	ThCh$		ThCh$		ThCh$		ThCh$
Derivative financial instruments		11,522,482		-		3,158,391		-
Market securities and investments in other companies		11,010,433		-		7,565,805		-
Derivative hedge assets		212,554		3,325,079		-		1,918,191
Total other financial assets		22,745,469		3,325,079		10,724,196		1,918,191
Accounts receivable - trade and other receivable (net)		320,702,339		3,363,123		286,213,598		3,974,395
Accounts receivable from related parties		3,048,841		190,865		5,810,764		258,471
Total accounts receivables		323,751,180		3,553,988		292,024,362		4,232,866
Sub-Total financial assets		346,496,649		6,879,067		302,748,558		6,151,057
Cash and cash equivalents		319,014,050		-		170,044,602		-
Total financial assets		665,510,699		6,879,067		472,793,160		6,151,057
Bank borrowings		38,160,178		75,200,804		24,623,746		73,886,831
Bonds payable		4,081,175		135,281,303		3,306,135		69,476,612
Financial leases obligations		365,972		17,546,162		176,586		17,638,289
Deposits for return of bottles and containers		13,967,995		-		13,228,328		-
Total financial liabilities measured at amortized cost		56,575,320		228,028,269		41,334,795		161,001,732
Derivative financial instruments		4,997,124		-		10,416,675		-
Derivative hedge liabilities		1,194,502		157,028		1,840,188		-
Total financial derivative liabilities		6,191,626		157,028		12,256,863		-
Total other financial liabilities (*)		62,766,946		228,185,297		53,591,658		161,001,732
Account payable- trade and other payable		303,380,168		12,413		281,681,553		541,783
Accounts payable to related parties		6,936,910		-		10,069,043		-
Total commercial obligations and other accounts payable		310,317,078		12,413		291,750,596		541,783
Total financial liabilities		373,084,024		228,197,710		345,342,254		161,543,515

(*) See

Note 21 - Other financial liabilities

Fair value of Financial instrument

The following tables show fair values, based on financial instrument categories, compared to the carrying amount included in the Consolidated Statements of Financial Position:

a) Financial assets and liabilities are detailed as follows:

	As of December 31, 2018				As of December 31, 2017
	Book Value		Fair Value		Book Value		Fair Value
	ThCh$		ThCh$		ThCh$		ThCh$
Derivative financial instruments		11,522,482		11,522,482		3,158,391		3,158,391
Market securities and investments in other companies		11,010,433		11,010,433		7,565,805		7,565,805
Derivative hedge assets		3,537,633		3,537,633		1,918,191		1,918,191
Total other financial assets		26,070,548		26,070,548		12,642,387		12,642,387
Accounts receivable - trade and other receivable (net)		324,065,462		324,065,462		290,187,993		290,187,993
Accounts receivable from related parties		3,239,706		3,239,706		6,069,235		6,069,235
Total accounts receivables		327,305,168		327,305,168		296,257,228		296,257,228
Sub-Total financial assets		353,375,716		353,375,716		308,899,615		308,899,615
Cash and cash equivalents		319,014,050		319,014,050		170,044,602		170,044,602
Total financial assets		672,389,766		672,389,766		478,944,217		478,944,217
Bank borrowings		113,360,982		117,211,707		98,510,577		102,062,465
Bonds payable		139,362,478		187,276,391		72,782,747		79,559,896
Financial leases obligations		17,912,134		24,278,897		17,814,875		29,314,234
Deposits for return of bottles and containers		13,967,995		13,967,995		13,228,328		13,228,328
Total financial liabilities measured at amortized cost		284,603,589		342,734,990		202,336,527		224,164,923
Derivative financial instruments		4,997,124		4,997,124		10,416,675		10,416,675
Derivative hedge liabilities		1,351,530		1,351,530		1,840,188		1,840,188
Total financial derivative liabilities		6,348,654		6,348,654		12,256,863		12,256,863
Total other financial liabilities (*)		290,952,243		349,083,644		214,593,390		236,421,786
Account payable- trade and other payable		303,392,581		303,392,581		282,223,336		282,223,336
Accounts payable to related parties		6,936,910		6,936,910		10,069,043		10,069,043
Total commercial obligations and other accounts payable		310,329,491		310,329,491		292,292,379		292,292,379
Total financial liabilities		601,281,734		659,413,135		506,885,769		528,714,165

(*) See

Note 21 - Other financial liabilities

The carrying amount of current accounts receivable, cash and cash equivalents and other financial assets and liabilities approximate their fair value due to their short-term nature, and in the case of accounts receivable, due to the fact that any collection loss is already reflected in the impairment loss provision.

The fair value of non-derivative financial assets and liabilities that are not quoted in active markets are estimated through the use of discounted cash flows calculated on market variables observed as of the date of the financial statements. The fair value of derivative instruments is estimated through the discount of future cash flows, determined according to information observed in the market or to variables and prices obtained from third parties.

The fair value of bank borrowings and Bonds payable has hierarchy level 2 of fair value.

b) Financial instruments by category:

	Fair value with changes in income		Financial assets measured at amortized cost		Hedge derivatives		Total
As of December 31, 2018	ThCh$		ThCh$		ThCh$		ThCh$
Financial assets
Derivative financial instruments		11,522,482		-		-		11,522,482
Marketable securities and investments in other companies		11,010,433		-		-		11,010,433
Derivative hedge assets		-		-		3,537,633		3,537,633
Total other financial assets		22,532,915		-		3,537,633		26,070,548
Cash and cash equivalents		-		319,014,050		-		319,014,050
Trade and other receivable (net)		-		324,065,462		-		324,065,462
Accounts receivable from related parties		-		3,239,706		-		3,239,706
Total financial assets		22,532,915		646,319,218		3,537,633		672,389,766

As of December 31, 2018	Fair value with changes in income		Hedge derivatives		Financial liabilities measured at amortized cost		Total
	ThCh$		ThCh$		ThCh$		ThCh$
Financial liabilities
Bank borrowings		-		-		113,360,982		113,360,982
Bonds payable		-		-		139,362,478		139,362,478
Financial leases obligations		-		-		17,912,134		17,912,134
Deposits for return of bottles and containers		-		-		13,967,995		13,967,995
Derivative financial instruments		4,997,124		-		-		4,997,124
Derivative hedge liabilities		-		1,351,530		-		1,351,530
Total other financial liabilities		4,997,124		1,351,530		284,603,589		290,952,243
Account payable- trade and other payable		-		-		303,392,581		303,392,581
Accounts payable to related parties		-		-		6,936,910		6,936,910
Total financial liabilities		4,997,124		1,351,530		594,933,080		601,281,734

As of December 31, 2017	Fair value with changes in income		Financial assets measured at amortized cost		Hedge derivatives		Total
	ThCh$		ThCh$		ThCh$		ThCh$
Financial assets
Derivative financial instruments		3,158,391		-		-		3,158,391
Marketable securities and investments in other companies		7,565,805		-		-		7,565,805
Derivative hedge assets		-		-		1,918,191		1,918,191
Total other financial assets		10,724,196		-		1,918,191		12,642,387
Cash and cash equivalents		-		170,044,602		-		170,044,602
Trade and other receivable (net)		-		290,187,993		-		290,187,993
Accounts receivable from related parties		-		6,069,235		-		6,069,235
Total financial assets		10,724,196		466,301,830		1,918,191		478,944,217

As of December 31, 2017	Fair value with changes in income		Hedge derivatives		Financial liabilities measured at amortized cost		Total
	ThCh$		ThCh$		ThCh$		ThCh$
Financial liabilities
Bank borrowings		-		-		98,510,577		98,510,577
Bonds payable		-		-		72,782,747		72,782,747
Financial leases obligations		-		-		17,814,875		17,814,875
Deposits for return of bottles and containers		-		-		13,228,328		13,228,328
Derivative financial instruments		10,416,675		-		-		10,416,675
Derivative hedge liabilities		-		1,840,188		-		1,840,188
Total other financial liabilities		10,416,675		1,840,188		202,336,527		214,593,390
Account payable- trade and other payable		-		-		282,223,336		282,223,336
Accounts payable to related parties		-		-		10,069,043		10,069,043
Total financial liabilities		10,416,675		1,840,188		494,628,906		506,885,769

Derivative Instruments

The detail of maturities, number of derivative agreements, contracted nominal amounts, fair values and the classification of such derivative instruments by type of agreement at the closing of each year are detailed as follows:

	As of December 31, 2018								As of December 31, 2017
	Number agreegments		Nominal amounts thousand		Asset		Liability		Number agreegments		Nominal amounts thousand		Asset		Liability
					ThCh$		ThCh$						ThCh$		ThCh$
Cross currency interest rate swaps CLP/USD		1		2,000		3,325,079		1,194,502		1		2,000		1,918,191		1,484,538
Less than a year				-		-		1,194,502		-		-		-		1,484,538
Between 1 and 5 years				2,000		3,325,079		-				2,000		1,918,191		-
Cross currency interest rate swaps USD/EURO		1		11,600		212,554		157,028		1		7,872		-		355,650
Less than a year				-		212,554		-				7,872		-		355,650
Between 1 and 5 years		-		11,600		-		157,028		-		-		-		-
Total		2				3,537,633		1,351,530		2				1,918,191		1,840,188
Forwards USD		32		269,371		11,264,711		3,832,634		27		245,641		3,095,825		9,722,619
Less than a year				269,371		11,264,711		3,832,634				245,641		3,095,825		9,722,619
Forwards Euro		10		79,326		225,815		1,153,302		14		65,598		44,474		694,056
Less than a year				79,326		225,815		1,153,302				65,598		44,474		694,056
Forwards CAD		3		2,650		28,381		3,986		3		1,750		15,530		-
Less than a year				2,650		28,381		3,986				1,750		15,530		-
Forwards GBP		4		1,030		3,575		7,202		2		480		2,562		-
Less than a year		4		1,030		3,575		7,202				480		2,562		-
Total		49				11,522,482		4,997,124		46				3,158,391		10,416,675
Total instruments		51				15,060,115		6,348,654		48				5,076,582		12,256,863

These derivative agreements have been entered into as a hedge of exchange rate risk exposure. In the case of forwards, the Company does not comply with the formal requirements for hedging designation; consequently their effects are recorded in Income, in Other gains (losses).

In the case of Cross Currency Interest Rate Swaps and the Cross Interest Rate Swaps, these qualify as cash flow hedges of the cash flows related to loans from Banco de Chile and Scotiabank Chile. See additional disclosures in

Note 21 – Other financial liabilities

As of December 31, 2018

Entity

Nature of risks covered

Rights

Obligations

Fair value of

net asset

(liabilities)

Currency

Amount

Currency

Amount

Maturity

ThCh$

Scotiabank Chile

Flow interest rate and exchange rate on bank bonds

USD

8,256,869

EUR

8,201,343

55,526

06-18-2021

Banco de Chile

Flow interest rate on bank bonds

60,388,039

CLP

58,257,462

2,130,577

09-15-2021

As of December 31, 2017

Entity

Nature of risks covered

Rights

Obligations

Fair value of

net asset

(liabilities)

Currency

Amount

Currency

Amount

Maturity

ThCh$

Scotiabank Chile

Flow interest rate and exchange rate on bank bonds

USD

4,860,845

EUR

5,216,495

(355,650

)

06-18-2018

Banco de Chile

Flow interest rate on bank bonds

60,640,827

CLP

60,207,174

433,653

09-15-2021

The Consolidated Statement of Other Comprehensive Income includes under the caption cash flow hedge, for the years ended December 31, 2018, a credit before income taxes of ThCh$ 63,008 (ThCh$ 5,661 and ThCh$ 84,962, in 2017 and 2016, respectively), related to the fair value of Cross Currency Interest Swap and Cross Interest Rate Swap derivatives instruments.

Fair value hierarchies

The financial instruments recorded at fair value in the Statement of Financial Position are classified as follows, depending on the method used to obtain their fair values:

Level 1

Fair values obtained through direct reference to quoted market prices, without any adjustment.

Level 2

Fair values obtained through the use of valuation models accepted in the market and based on prices other than those of Level 1, which may be directly or indirectly observed as of the measurement date (adjusted prices).

Level 3

Fair values obtained through internally developed models or methodologies that use information which may not be observed or which is illiquid.

The fair value of financial instruments recorded at fair value in the Consolidated Financial Statements, is detailed as follows:

As of December 31, 2018	Recorded fair value		Fair value hierarchy
			level 1		level 2		level 3
	ThCh$		ThCh$		ThCh$		ThCh$
Derivative financial instruments		11,522,482		-		11,522,482		-
Market securities and investments in other companies		11,010,433		11,010,433		-		-
Derivative hedge assets		3,537,633		-		3,537,633		-
Total other financial assets		26,070,548		11,010,433		15,060,115		-
Derivative financial instruments		4,997,124		-		4,997,124		-
Derivative hedge liabilities		1,351,530		-		1,351,530		-
Total financial derivative liabilities		6,348,654		-		6,348,654		-

As of December 31, 2017	Recorded fair value		Fair value hierarchy
			level 1		level 2		level 3
	ThCh$		ThCh$		ThCh$		ThCh$
Derivative financial instruments		3,158,391		-		3,158,391		-
Market securities and investments in other companies		7,565,805		7,565,805		-		-
Derivative hedge assets		1,918,191		-		1,918,191		-
Total other financial assets		12,642,387		7,565,805		5,076,582		-
Derivative financial instruments		10,416,675		-		10,416,675		-
Derivative hedge liabilities		1,840,188		-		1,840,188		-
Total financial derivative liabilities		12,256,863		-		12,256,863		-

During the year ended as of

December 31, 2018

, the Company has not made any significant instrument transfers between levels 1 and 2.

Credit quality of financial assets

The Company uses two credit assessment systems for its clients: a) Clients with loan insurance are assessed according to the external risk criteria (trade reports, non-compliance and protested documents that are available in the local market), payment capability and equity situation required by the insurance company to grant a loan coverage; b) All other the clients are assessed through an ABC risk model, which considers internal risk (non-compliance and protested documents), external risk (trade reports, non-compliance and protested documents that are available in the local market) and payment capacity and equity situation. The uncollectible rate during the last two years has not been significant.