Report of Foreign Issuer (6-k)

Date : 03/26/2019 @ 12:47PM
Source : Edgar (US Regulatory)
Stock : Ambev S.A. American Depositary Shares (Each Representing 1 Common Share) (ABEV)
Quote : 4.78  -0.05 (-1.04%) @ 11:30PM
Ambev share price Chart

Report of Foreign Issuer (6-k)


 
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 March, 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____


 

 

 

 

MANUAL FOR THE ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETINGS TO BE HELD ON APRIL 26, 2019

 

 

 

INDEX

 

 

1.       Message from the Co-Chairman of the Board of Directors

 

2.       General Information – Procedures and Deadlines

 

3.       Call Notice

 

4.       Information Regarding the Matters in the Agenda

 

4.1       Annual Shareholders’ Meeting

4.2       Extraordinary Shareholders’ Meeting

4.3       Documents Published to the Shareholders

 

5.       Exhibit - Management Proposal

 

 


 
 

1.                        MESSAGE FROM THE CO-CHAIRMAN OF THE BOARD OF DIRECTORS

 

 

Sao Paulo, March 26, 2019.

 

 

To the Shareholders,

 

 

We are delighted to invite you to read our Manual for the Annual and Extraordinary Shareholders’ Meetings.

 

The main matters in the agenda for the Shareholders’ Meetings are, in short: in the Annual Shareholders’ Meeting, (i) analysis of the management accounts, with examination, discussion and voting on the financial statements for the fiscal year ended December 31, 2018; (ii) allocation of the net profits for the year ended December 31, 2018; (iii) election of the members of the fiscal council and their respective alternates; (iv) establishment of the overall compensation of the management and the members of the fiscal council for year 2019; and, in the Extraordinary Shareholders’ Meeting, (v) amendment to the main provisions of articles 5 and 16 of the company’s By-laws. The Call Notice included in the item 3 of this Manual describes in detail the matters included in the agenda for the Shareholders’ Meetings. Additional Information may be found in the Management Proposal, an exhibit to this Manual.

 

We encourage the presence of all shareholders in our Annual and Extraordinary Shareholders’ Meetings to be held, cumulatively, on April 26, 2019, at 2pm at the Company’s headquarters.

 

 

 

 

Sincerely,

 

 

 

 

Victorio Carlos De Marchi

 

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2.                        GENERAL INFORMATION – PROCEDURES AND DEADLINES

 

The participation of the shareholders in the Shareholders’ Meetings of the Company is of great importance. The Annual Shareholders’ Meeting will be declared open upon a first call with the attendance of shareholders representing at least one fourth of the voting capital. The Extraordinary Shareholders’ Meeting, which will resolve upon the amendment to the Company’s by-laws, will be declared open upon a first call with the attendance of shareholders representing at least two thirds of the voting capital. We note that, should there not be sufficient quorum for declaring the Shareholders’ Meetings open, a new call will take place. Upon a second call, the Shareholders’ Meetings will be declared open with any number of shareholders.

 

The participation of the shareholders may be in person, by proxy or by distance voting.

 

2.1.                  IN PERSON

 

The shareholders willing to participate in person in the Shareholders’ Meetings shall be present at 2:00 pm on April 26, 2019, at the Company’s headquarters, located at Rua Dr. Renato Paes de Barros, 1,017, 4 th floor, Itaim Bibi, in the City and State of São Paulo, with the following documents:

 

2.1.1.            Individuals

 

• for individuals: identity document with photo of the shareholder (Identity Card (RG), Foreigner’s Identity Card (RNE), Driver’s License (CNH), passport or a document issued by a duly recognized professional association); e

 

• statement containing their respective stock ownership, issued by qualified entity, within forty-eight (48) hours prior to the Shareholders’ Meetings, for the shareholders taking part in the B3 S.A. – Brasil, Bolsa, Balcão Registered Stocks Fungible Custody.

 

2.1.2.            Legal Entities

 

(a) last consolidated by-laws or articles of association, as the case may be, (b) other documents that evidence the powers granted to the legal representative(s) of the shareholder, pursuant to its by-laws or articles of association, including, without limitation, minutes of election of directors, officers, powers of attorney, etc., and (c) identity document with photo of the legal representative(s); and

 

• statement containing their respective stock ownership, issued by qualified entity, within forty-eight (48) hours prior to the Shareholders’ Meetings, for the shareholders taking part in the B3 S.A. – Brasil, Bolsa, Balcão Registered Stocks Fungible Custody.

 

2.1.3.            Investment Funds

 

(a) last consolidated regulations of the fund, (b) by-laws or articles of association of its administrator or manager, as the case may be, subject to the voting policy of the fund, (c) other documents that evidence the powers granted to the legal representative(s) of the manager or administrator of the fund, as the case may be, and (d) identity document with photo of the legal representative(s); and

3


 
 

 

• statement containing their respective stock ownership, issued by qualified entity, within forty-eight (48) hours prior to the Shareholders’ Meetings, for the shareholders taking part in the B3 S.A. – Brasil, Bolsa, Balcão Registered Stocks Fungible Custody.

 

2.2.                  PROXY

 

The shareholders may be represented at the Shareholders’ Meetings by a proxy designated within the previous year, pursuant to paragraph 1, article 126 of Law No. 6,404/76. To take part in the Shareholders’ Meetings, a shareholder representative must bear a document proving his respective powers to attend the Shareholders’ Meetings

 

The Company requires that the documents have its signatures certified by a notary public and by an embassy or consulate and are translated by a sworn translator, as the case may be. The company does not accept electronic proxies.

 

The Company requires that, if possible, the powers of attorney with special powers of representation in the general meeting are filed in the Company’s head-office within three (3) business days of the date of the Shareholders’ Meetings, to the attention of Mrs. Letícia Rudge Barbosa Kina.

 

2.3.                  DISTANCE VOTING

 

The shareholder that elects to exercise its distance voting right shall send the documents below directly to the Company at Rua Dr. Renato Paes de Barros, 1017, 4 th floor, ZIP Code 04530-001, São Paulo/SP, to the attention of the Investor Relations Department ( Departamento de Relações com Investidores ):

 

(i)             distance voting instrument concerning the general meeting, duly filled out, with all its pages initialed and signature certified by a notary;

(ii)           statement containing their respective stock ownership ; and

(iii)         certified copy of the following documents:

·       for individuals: identity document with photo of the shareholder;

·       for legal entities: (a) last consolidated by-laws or articles of association, as the case may be, (b) other documents that evidence the powers granted to the legal representative(s) of the shareholder, pursuant to its by-laws or articles of association, including, without limitation, minutes of election of directors, officers, powers of attorney, etc., and (c) identity document with photo of the legal representative(s);

·       for investment funds: (a) last consolidated regulations of the fund, (b) by-laws or articles of association of its administrator or manager, as the case may be, subject to the voting policy of the fund, (c) other documents that evidence the powers granted to the legal representative(s) of the manager or administrator of the fund, as the case may be, and (d) identity document with photo of the legal representative(s).

4


 
 

 

The following identity documents will be accepted, provided they have a photo of the bearer: Identity Card (RG), Foreigner’s Identity Card (RNE), Driver’s License (CNH), passport or a document issued by a duly recognized professional association.

 

In relation to the documents indicated in items (i) to (iii) above, the Company requires that the signatures are certified by a notary public and by an embassy or consulate and that the documents are translated by a sworn translator, as the case may be.

 

The distance voting instruments, along with their respective documentation, will only be considered if received by the Company, in good order and in compliance with the provisions above, within three (7) days of the date of the date of the Shareholders’ Meetings . Pursuant to Article 21-U of CVM Instruction No. 481/09, the Company will inform the shareholder whether the documents received are sufficient for the vote to be deemed valid or the procedures and terms for any rectification or for resending, if necessary.

 

In addition to the possibility of distance voting by sending the distance voting instrument directly to the Company, the shareholders can send the instructions for completion of the distance voting instrument to service providers which provide services of collection and transmission of instructions for completion of the distance voting instrument, such as:

 

(i) the shareholder’s custodian, if the shares are deposited in a central depository; or

 

(ii) Banco Bradesco S.A., as the financial institution hired by the Company to provide securities bookkeeping services, if the shares are not deposited in a central depository.

 

I f the shareholder wishes to include proposals for resolution or candidates to be members of the board of directors or the fiscal council in the distance voting instruments, it will be required to send such proposals by mail to Rua Dr. Renato Paes de Barros, 1017, 4 th floor, ZIP Code 04530-001, São Paulo/SP, to the attention of the Investor Relations Department ( Departamento de Relações com Investidores ), along with the documents concerning the proposal (including the information mentioned in Article 21-M of CVM Instruction 481/09) and the status and interest of the shareholder, within the terms and in the manner established in the applicable regulation.

 

 

5


 
 

3.                        CALL NOTICE

 

The shareholders of Ambev S.A. (“ Company ”) are invited to attend the Ordinary and Extraordinary General Meetings (“ AGOE ”) to be held on April 26, 2019, at 2:00 p.m., at the Company’s headquarters, located at Rua Dr. Renato Paes de Barros, 1,017, 4 th floor, Itaim Bibi, in the City and State of São Paulo, to resolve on the following agenda:

 

(a)                

Ordinary General Meeting :

 

(i)                             

analysis of the management accounts, with examination, discussion and voting on the financial statements related to the fiscal year ended December 31, 2018;

 

(ii)                           

allocation of the net profits for the fiscal year ended December 31, 2018 and ratification of the payment of interest on own capital and dividends related to the fiscal year ended on December 31, 2018, approved by the Board of Directors at meetings held on May 15 th , 2018 and December 3 rd , 2018;

 

(iii)                         

election of the members of the Company’s Fiscal Council and their respective alternates for a term in office until the Ordinary General Meeting to be held in 2020; and

 

(iv)                         

establishing the overall compensation of the management and of the members of the Fiscal Council for the fiscal year of 2019.

 

(b)               

Extraordinary General Meeting :

 

(i)                               

approve the amendment of the Company's bylaws to:

 

(a)                              

to amend the heading of article 5 th , in order to reflect the capital increases approved by the Board of Directors up to the date of the AGOE, within the authorized capital limit; and

 

(b)                             

to amend the heading of article 16, in order to reduce the maximum number of effective members of the Board of Directors and their respective alternates from 15 (fifteen) to 11 (eleven), in order to reflect the reality of the composition of the Company's Board of Directors in recent years, to ensure the quality of discussions within the said body is maintained and to facilitate effective and timely decision-making; and

 

(c)                              

to consolidate the Company's by-laws.

 

 

General Information:

 

-        On February 28 th , 2019 the following documents were published on the newspapers “Diário Oficial do Estado de São Paulo” and “Valor Econômico”: (i) the annual management report; (ii) the financial statements regarding the fiscal year ended on December 31, 2018; (iii) the report of the independent accountant’s opinion; and (iv) the Fiscal Council’s opinion.

 

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-        The documents and information referred to above and those listed in CVM Ruling No. 481/09 were presented to the Comissão de Valores Mobiliários – CVM by means of its information system Empresas.Net , in accordance with Article 6 th of such Ruling, and are available to the shareholders at the Company’s headquarters, on its Investor Relations website ( ri.ambev.com.br ), and on the websites of B3 S.A. – Brasil, Bolsa Balcão ( www.b3.com.br ) and CVM ( www.cvm.gov.br ).

 

-        The shareholder or its legal agent must present valid identification in order to vote at the AGOE. Proxies containing special powers for representation in the general meeting shall be deposited at the Company’s headquarters (att. Mrs. Letícia Rudge Barbosa Kina, Chief Legal Officer), at least three (3) business days prior to the date scheduled for the meetings.

 

-        Shareholders taking part in the B3 S.A. – Brasil, Bolsa Balcão Registered Stocks Fungible Custody that plan on attending the AGOE shall submit a statement containing their respective stock ownership, issued by qualified entity, within forty-eight (48) hours prior to the meetings.

 

 

7


 
 

4.                        INFORMATION REGARDING THE MATTERS IN THE AGENDA

 

4.1.                  Annual Shareholders’ Meeting

 

(i)                              analysis of the management accounts, with examination, discussion and voting on the financial statements for the fiscal year ended December 31, 2018;

 

The annual management report and the financial statements for the fiscal year ended December 31, 2018, together with the report of the independent accountant’s opinion and the Fiscal Council’s opinion were published on February 28, 2019 on the Valor Econômico newspaper and the Official Gazette of the State of São Paulo.

 

The documents below are available to the shareholders on the Company’s headquarters, on the Company’s website (www.ri.ambev.com.br) and on websites of the Brazilian Securities Commission (“ CVM ”) (www.cvm.gov.br) and the B3 S.A. -Brasil, Bolsa, Balcão through the Periodical Information System (www.b3.com.br):

 

•   Annual Management Report;

•   Financial Statements;

•   Management comments about the financial situation of the Company, pursuant to item 10 of the Formulário de Referência and under CVM Instruction No. 481/09, which are also included in the Management Proposal (Exhibit to this Manual); e

•   Report of the Independent Accountant’s Opinion.

 

(ii)                            allocation of the net profits for the year ended December 31, 2018, and ratification of the payments of dividends and interest on own capital for the year ended December 31, 2018, approved by the Board of Directors at meetings held on May 15, 2018 and December 3, 2018;

 

The net profits of the Company for the year ended December 31, 2018 was R$11,024,678,005.26. The management of the company proposes that the net profits for the Fiscal Year ended December 31, 2018 be allocated as indicated below and as defined in detail in the Management Proposal (Exhibit to this Manual)

 

It is further proposed by the Company’s management to ratify the payments of dividends and interest on own capital for the year ended December 31, 2018, approved by the Board of Directors at meetings held May 15, 2018 and December 3, 2018.

 

Net Profits

R$ 11,024,678,005.26

Amount allocated to the Tax Incentives Reserve

R$ 1,331,526,295.24

Amount allocated to payment of dividends and / or interest on own capital (gross), declared based on the net profit relating to the fiscal year ended December 31, 2018

R$ 7,545,608,313.44

 

 

Amount allocated to the Investments Reserve (1)

R$ 5,442,332,002.26

(1) Including values relating to (i) reversion of effects of the revaluation of fixed assets in the amount of R$75,880,674.41; (ii) impact of the adoption of IFRS 15 in the amount of R$ (355,382,291.78); (iii) effect of application of IAS 29/CPC 42 (hyperinflation) in the amount of R$ 3,544,180,000.00; (iv) tax incentive reserve in the amount of R$ (1,331,526,295.24), and (v) expired dividends in the amount of R$30,110,223.05, as detailed in the Management Proposal (Exhibit to this Manual).

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(iii)                          election of the members of the Fiscal Council and their respective alternates for a term of office ending at the Annual Shareholders’ Meeting to be held in 2020, pursuant to the Company's by-laws;

 

The controlling shareholders appoint as members of the Fiscal Council the individuals qualified below, who will compose the “Controlling Company Slate”:

 

(i) election of Elidie Palma Bifano , Brazilian, married, lawyer, bearer of Identity Card RG No. 3.076.167SSP/SP, enrolled with the CPF/ME under No. 395.907.558-87, resident and domiciled in the City of São Paulo, State of São Paulo, to take office as a regular member of the Fiscal Council of the Company, to take office as a regular member of the Fiscal Council of the Company; (ii) by reelection, José Ronaldo Vilela Rezende , Brazilian, married, accountant, bearer of Identity Card RG No. M-2.399.128 SSP/MG, enrolled with the CPF/MF under No. 501.889.846-15, resident and domiciled in the City of São Paulo, State of São Paulo, to take office as a regular member of the Fiscal Council of the Company; (iii) by reelection, Emanuel Sotelino Schifferle , Brazilian, married, engineer, bearer of Identity Card RG No. 01.433.665-5 IFP/RJ, enrolled with the CPF/MF under No. 009.251.367-00, resident and domiciled in the City of Rio de Janeiro, State of Rio de Janeiro, to take office as an alternate member of the Fiscal Council of the Company; (iv) by reelection, Ary Waddington , Brazilian, married, economist, bearer of Identity Card No. 01.139.7777-5 IFP/RJ, enrolled with the CPF/MF under No. 004.469.397-49, resident and domiciled in the City of Armação dos Búzios, State of Rio de Janeiro, to take office as an alternate member of the Fiscal Council of the Company;

 

Additionally, Caixa de Previdência dos Funcionários do Banco do Brasil – PREVI, pursuant to article 161, paragraph 4, item “a”, of Law No. 6404/76 informed the Company's management that it will appoint for the position of members of the Fiscal Council, (i) by reelection, Mr. Aldo Luiz Mendes , Brazilian citizen, divorced, bank employee and economist, bearer of Identity Card RG No. 468.756 SSP/DF, enrolled with the CPF/MF under No. 210.530.301-34, resident and domiciled in the City of Brasília, in the Federal District, to take office as a regular member of the Company's Fiscal Council; and (ii) by reelection, Mr. Vinicius Balbino Bouhid , Brazilian citizen, single, bank employee and economist, bearer of Identity Card No. 029.562.824 - DETRAN/RJ, enrolled with the CPF/MF under No. 667.460.867/04, resident and domiciled in the City of Rio de Janeiro, State of Rio de Janeiro, to take office as an alternate member of the Company's Fiscal Council.

 

The information on the candidates nominated as Members of the Fiscal Council Member of the Company listed above is presented in detail in the Management Proposal (Exhibit to this Manual).

 

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(iv)                           Establishment of the overall Compensation of the Management and the members of the Fiscal Council for year 2019

 

The management proposes that the overall compensation for the year 2019 (that is, between January 1 st , 2019 and December 31, 2019) be established in the global amount of up to R$101,728,287.00.

 

As far as the overall compensation of the Fiscal Council is concerned, for the year 2019 (that is, between January 1 st , 2019 and December 31, 2019), we propose that the establishment the global amount of up to R$2,146,762.00, with the compensation of the alternate members corresponding to half of the amount received by the sitting members, which is in compliance with Law No. 6404/76.

 

The information required for the necessary analysis of the Proposal presented on the compensation of the Management and the Fiscal Council is set forth in the Management Proposal (Exhibit to this Manual).

 

4.2.                  Extraordinary Shareholders’ Meeting

 

(v)                             Amendment of the By-laws of the Company to:

 

(a)                         Amend to the Main Provision of Article 5 of the Company’s By-Laws, in order to reflect the capital increases approved by the Board of Directors, within the capital limit until the date of the Shareholders’ Meeting;

 

The management proposes that the amendment of the main provision of article 5 of the Company’s by-laws, be approved to reflect the increases of capital approved within the capital limit approved by the Board of Directors of the Company at meetings held on March 26, 2018 and March 25, 2019.

 

If the Proposal is approved, the Company’s capital stock described in the main provision of article 5 of the Company’s By-laws shall become R$57,798,844,242.20, divided in 15,726,842,297 registered common shares, with no par value. Thus, we propose that the main provision of article 5 of the Company’s by-laws, which provides for the Company’s capital stock, be amended, as follows:

 

Current Writing

Proposed Writing

Article 5 – The Capital Stock is R$57,508,839,341.45, divided in 15,699,508,401 registered common shares, with no par value.

Article 5 – The Capital Stock is R$57,798,844,242.20 , divided in 15,726,842,297 registered common shares, with no par value.

 

(b)                      Amend the Main Provision of Article 16 of the Company’s By-Laws, in order to reduce the maximum number of sitting members of the Board of Directors and the respective alternates from fifteen (15) to eleven (11), so that it reflects reflect the reality of the composition of the Company’s Board of Directors in recent years and to ensure that the quality of the discussions within such body is maintained, facilitating the effective and timely decision-making; and

10


 
 

 

The management proposes that the maximum number of sitting members of the Board of Directors and the respective alternates be reduced from fifteen (15) to eleven (11). This proposal aims at reflecting the reality of the composition of the Company’s Board of Directors in recent years, ensuring that the quality of the discussions within such body is maintained, and facilitating the effective and timely decision-making. If this proposal is approved, the article 16, main provision, of the Company’s by-laws shall read as follows:

Current Writing

Proposed Writing

Article 16 – The Board of Directors shall comprise of three (3) to fifteen (15) sitting members, and there may be from two (2) to fifteen (15) alternates, whether or not specifically bound to a sitting Director, who shall be elected by the General Meeting and may be dismissed thereby at any time, with a term of office of three (3) years, reelection being permitted.

Article 16 – The Board of Directors shall comprise of three (3) to eleven (11) sitting members, and there may be from two (2) to eleven (11) alternates, whether or not specifically bound to a sitting Director, who shall be elected by the General Meeting and may be dismissed thereby at any time, with a term of office of three (3) years, reelection being permitted.

 

(c)                      Restatement of the Company’s By-laws.

 

In order to reflect the foregoing amendments, the Company’s management proposes the restatement of the Company’s by-laws, under the terms of the Managements’ Proposal exhibit to this Manual.

 

4.3.                  Documents published to the shareholders

 

The following documents were published on February 28 th , 2019 on the newspapers “Diário Oficial do Estado de São Paulo” and “Valor Econômico”: (i) the annual management report; (ii) the financial statements regarding the fiscal year ended on December 31, 2018; (iii) the report of the independent accountant’s opinion; and (iv) the Fiscal Council’s opinion.

 

The documents and information referred to above and those listed in CVM Ruling No. 481/09 were presented to the Comissão de Valores Mobiliários – CVM by means of its information system Empresas.Net , in accordance with Article 6 th of such Ruling, and are available to the shareholders at the Company’s headquarters, on its Investor Relations website (ri.ambev.com.br), and on the websites of B3 S.A. – Brasil, Bolsa, Balcão ( www.b3.com.br ) and CVM ( www.cvm.gov.br ).

 

 

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5.                        EXHIBIT

 

 

 

 

MANAGEMENT PROPOSAL

 

 

 

 

 

ORDINARY AND EXTRAORDINARY SHAREHOLDERS’ MEETINGS

 

 

 

 

MARCH 26, 2019

 

 

 

 

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TABLE OF CONTENTS

 

A. ANNUAL SHAREHOLDERS' MEETING:

14

 

B. EXTRAORDINARY SHAREHOLDERS' MEETING:

16

 

EXHIBIT A.I - COMMENTS FROM THE OFFICERS

18

 

EXHIBIT A.II – ALLOCATION OF NET PROFIT

75

 

EXHIBIT A.III - INFORMATION OF THE CANDIDATES TO THE POSITION OF MEMBER OF THE COMPANY'S FISCAL COUNCIL

82

 

EXHIBIT A.IV - COMPENSATION OF THE MANAGEMENT

88

 

EXHIBIT B - RESTATED BY-LAWS

136

 

 

 

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AMBEV S.A.

CNPJ/ME [National Corporate Taxpayers Register of the Ministry of Economy] No. 07.526.557/0001-00

NIRE [Corporate Registration Identification Number] 35.300.368.941

 

To the Shareholders,

 

We hereby present the following Management Proposal regarding the matters set forth in the agenda for the Ordinary and Extraordinary Shareholders’ Meetings of Ambev S.A. (“ Company ” and “ AGOE ”, respectively) to be held, cumulatively, on April 26, 2019, at 2:00 p.m. (“ Proposal ”):

 

A. Annual Shareholders’ Meeting:

 

1.         Analysis of the management accounts, with examination, discussion and voting on the financial statements for the fiscal year ended December 31, 2018.

 

We propose the approval of the management accounts and financial statements for the fiscal year ended December 31, 2018, as published on February 28, 2019 on the websites of the Brazilian Securities Commission (“ CVM ”) and the B3 S.A. -Brasil, Bolsa, Balcão through the Periodical Information System, the Company’s website (ri.ambev.com.br) and the Valor Econômico newspaper and the Official Gazette of the State of São Paulo (“ Financial Statements ”).

 

We stress that, pursuant to Article 9, item III, of CVM Instruction Nº 481 on December 17, 2009 (“ CVM Instruction Nº 481/09 ”), the information set forth in Exhibit A.I of this Proposal, reflects our comments on the financial status of the Company.

 

2.         Allocation of the net profits for the year ended December 31, 2018, and ratification of the payments of dividends and interest on own capital for the year ended December 31, 2018, approved by the Board of Directors at meetings held on May 15, 2018 and December 3, 2018.

 

We propose that the net profits for the Fiscal Year ended December 31, 2018 be allocated as indicated below and as defined in detail in Exhibit A.II of this Proposal, drawn up in compliance with Article 9, sole paragraph, Item II, of CVM Instruction No. 481/09. It is further proposed to ratify the payments of dividends and interest on own capital for the year ended December 31, 2018, approved by the Board of Directors at meetings held May 15, 2018 and December 3, 2018.

 

Net Profits

R 11,024,678,005.26

Amount allocated to the Tax Incentives Reserve

R$  1,331,526,295.24

Amount allocated to payment of dividends and / or interest on own capital (gross), declared based on the net profit relating to the fiscal year ended December 31, 2018

R$  7,545,608,313.44

 

 

Amount allocated to the Investments Reserve (1)

R$  5,442,332,002.26

(1) Including values relating to (i) reversion of effects of the revaluation of fixed assets in the amount of R$75,880,674.41; (ii) impact of the adoption of IFRS 15 in the amount of R$ (355,382,291.78); (iii) effect of application of IAS 29/CPC 42 (hyperinflation) in the amount of R$ 3,544,180,000.00; (iv) tax incentive reserve in the amount of R$ (1,331,526,295.24), and (v) expired dividends in the amount of R$30,110,223.05, as detailed in Exhibit A.II .

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3. Election of the members of the Fiscal Council and their respective alternates for a term of office ending at the Annual Shareholders’ Meeting to be held in 2020, pursuant to the Company's bylaws.

 

The controlling shareholders appoint as members of the Fiscal Council the individuals qualified below, who will compose the “Controlling Company Slate”:

 

(i) election of Elidie Palma Bifano , Brazilian, married, lawyer, bearer of Identity Card RG No. 3.076.167SSP/SP, enrolled with the CPF/ME under No. 395.907.558-87, resident and domiciled in the City of São Paulo, State of São Paulo, to take office as a regular member of the Fiscal Council of the Company; (ii) by reelection, José Ronaldo Vilela Rezende , Brazilian, married, accountant, bearer of Identity Card RG No. M-2.399.128 SSP/MG, enrolled with the CPF/ME under No. 501.889.846-15, resident and domiciled in the City of São Paulo, State of São Paulo, to take office as a regular member of the Fiscal Council of the Company; (iii) by reelection, Emanuel Sotelino Schifferle , Brazilian, married, engineer, bearer of Identity Card RG No. 01.433.665-5 IFP/RJ, enrolled with the CPF/ME under No. 009.251.367-00, resident and domiciled in the City of Rio de Janeiro, State of Rio de Janeiro, to take office as an alternate member of the Fiscal Council of the Company; and (iv) by reelection, Ary Waddington , Brazilian, married, economist, bearer of Identity Card No. 01.139.7777-5 IFP/RJ, enrolled with the CPF/ME under No. 004.469.397-49, resident and domiciled in the City of Armação dos Búzios, State of Rio de Janeiro, to take office as an alternate member of the Fiscal Council of the Company;

 

Additionally, Caixa de Previdência dos Funcionários do Banco do Brasil – PREVI, pursuant to article 161, paragraph 4, item “a”, of Law No. 6404/76 informed the Company's management that it will appoint for the position of members of the Fiscal Council, (i) by reelection, Mr. Aldo Luiz Mendes , Brazilian citizen, divorced, bank employee and economist, bearer of Identity Card RG No. 468.756 SSP/DF, enrolled with the CPF/ME under No. 210.530.301-34, resident and domiciled in the City of Brasília, in the Federal District, to take office as a regular member of the Company's Fiscal Council; and (ii) by reelection, Mr. Vinicius Balbino Bouhid , Brazilian citizen, single, bank employee and economist, bearer of Identity Card No. 029.562.824 - DETRAN/RJ, enrolled with the CPF/ME under No. 667.460.867/04, resident and domiciled in the City of Rio de Janeiro, State of Rio de Janeiro, to take office as an alternate member of the Company's Fiscal Council.

 

We explain that, pursuant to Article 10 of CVM Instruction No. 481/09, the information on the candidates nominated as Members of the Fiscal Council Member of the Company listed above is presented in detail in Exhibit A.III of this Proposal.

 

4.         Establishment of the overall Compensation of the Management and the members of the Fiscal Council for year 2019.

 

We propose that the overall compensation for the year 2019 (that is, between January 1, 2019 and December 31, 2019) be established in the global amount of up to R$ 101,728,287.00.

 

15


 
 

Pursuant to CVM’s instruction (item 3.4.5 of Directive Release/CVM/SEP/No. 03/2019 – “Release”), the global compensation amount of the management to be approved in an Annual Shareholders’ Meeting pursuant to Article 152 of Law No. 6404/76 must include, in addition to the short term fixed and variable compensation of the management, the expenses associated to the recognition of the fair value of the stock options that the Company intends to grant in the year. Therefore, we clarify that the global compensation amount of the management includes (i) the expenses associated to the recognition of the fair value of the stock options that the Company intends to grant this year, based on the Company’s Stock Option Plan, dated June 30, 2013, and (ii) the expenses associated to recognition of the fair value of the compensation based on shares that the Company intends to conduct this year, based on the Share-Based Compensation Plan, dated April 29, 2016, both cases with the accounting and non-financial effects provided for in CPC 10.

 

As far as the overall compensation of the Fiscal Council is concerned, for the year 2019 (that is, between January 1, 2019 and December 31, 2019), we propose the fixation of the global amount of up to R$ 2,146,762.00, with the compensation of the alternate members corresponding to half of the amount received by the effective members, which is in compliance with Law No. 6404/76.

 

We inform that the amounts paid out as overall compensation for the Management and members of the Fiscal Council of the Company for Fiscal Year 2018 were R$ 54,874,293.00 and R$ 1,789,560.00, respectively. Such amounts are lower than the limits approved by the Annual Shareholders’ Meeting held on April 27, 2018, of R$ 83,292,928.00 for the management and of R$ 2,041,187.00 for the members of the Fiscal Council. The difference between the limits approved by the Annual Shareholders’ Meeting held on April 27, 2018 and the amounts actually paid as global compensation attributed to management is justified, mainly, by the variable component of the compensation, which is connected to management and Company specific performance targets, which were not fully achieved. On the other hand, the difference related to the overall compensation attributed to the members of the Fiscal Council is justified, mainly, by the decrease of the number of members, due to the death of an effective member on July 9, 2018.

 

We explain that the information required for the necessary analysis of the Proposal presented on the compensation of the Management and the Fiscal Council, as set forth in Article 12 of CVM Instruction Nº 481/09, is set forth in Exhibit A.IV of this Proposal, particularly items 13.1 to 13.4.

 

B. Extraordinary Shareholders’ Meeting:

 

5. Amendment to the heading of Article 5 of the Company’s By-Laws

 

We propose that the amendment of the heading of article 5 of the Company’s by-laws, under the form of this Proposal, be approved to reflect the increases of capital approved within the capital limit approved by the Board of Directors of the Company at meetings held on March 26, 2018 and March 25, 2019.

 

If the Proposal is approved, the Company’s capital stock described on the heading of article 5 of the Company’s by-laws will be R$57,798,844,242.20, divided in 15,726,842,297 registered common shares, with no par value. Thus, we propose that the heading of article 5 of the Company’s by-laws, which provides for the Company’s capital stock, be amended, as follows:

16


 
 

 

Current Writing

Proposed Writing

Article 5 – The Capital Stock is R$57,508,839,341.45, divided in 15,699,508,401 registered common shares, with no par value.

Article 5 – The Capital Stock is R$57,798,844,242.20, divided in 15,726,842,297 registered common shares, with no par value.

 

6. Amendment to the heading of Article 16 of the Company’s By-Laws

 

In order to reflect the reality of the composition of the Company’s Board of Directors in recent years, ensure that the quality of the discussions within such body is maintained, and facilitate the effective and timely decision-making, it is proposed that the maximum number of effective members of the Board of Directors and the respective alternates be reduced from 15 to 11, so that the heading of article 16 of the Company’s by-laws shall read as follows:

 

Current Writing

Proposed Writing

Article 16 – The Board of Directors shall be composed of three (3) to fifteen (15) effective members, with two (2) to fifteen (15) alternates, bounded or not to a specific effective Director, and shall be elected by the Shareholder’s Meeting and be dismissed thereby at any time, with a term of office of three (3) years, reelection being permitted.

Article 16 – The Board of Directors shall be composed of three (3) to eleven (11) effective members, with two (2) to eleven (11) alternates, bounded or not to a specific effective Director, and shall be elected by the Shareholder’s Meeting and be dismissed thereby at any time, with a term of office of three (3) years, reelection being permitted.

 

7. Restatement of the Company’s By-laws

 

In order to reflect the foregoing amendments, we propose that the restatement of the Company’s By-Laws, under the terms of Exhibit B hereof, be approved.

 

São Paulo, March 26, 2019.

 

 

The Management

Ambev S.A.

 

17


 
 

Exhibit A.I – Comments from the Officers

(Exhibit 10 to Annex 24 to CVM Instruction 480/09)

 

 

10.1– General financial and asset conditions

 

The financial information included in this section, except if otherwise expressly set forth, refer to our consolidated financial statements related to the fiscal years that ended on December 31, 2018, 2017 and 2016. Our audited financial statements were prepared in accordance with the International Financial Reporting Standards (“IFRSs”), issued by the International Accounting Standards Board - IASB, and in accordance with the accounting practices adopted in Brazil, that comprehend the accounting practices set forth in the Brazilian corporate legislation and the pronouncements, guidance and interpretations issued by the Accounting Pronouncement Committee ( Comitê de Pronunciamentos Contábeis – CPC) and approved by CVM. Our audited interim consolidated financial statements were prepared in accordance with the IAS 34 Interim Financial Reporting issued by IASB and with the accounting practices adopted in Brazil for the interim statements (Technical Pronouncement – CPC 21 – “Interim Financial Information”).

 

The information under this item 10 of the Reference Form must be read and analyzed together with our consolidated financial statements, available at our website ( ri.ambev.com.br ) and at the CVM’s website ( cvm.gov.br ).

 

a) General financial and asset conditions.

 

The Executive Board understands that the Company presents sufficient equity and financial conditions to implement its business plan and perform its obligations of short and medium term.

 

2018

As of December 31, 2018, the Company had, in its current assets, a total of R$ 25,329.6 million, with R$ 11,463.5 in cash and cash equivalents of the Company. The current liabilities as of December 31, 2018 amounted to R$ 24,828.3 million. The liquidity ratio, used to assess the Company’s capacity of payment of the short-term obligations was 0.9x. Its positions of cash net of bank overdrafts and cash net of debt 1 were BR 11,463.5 million and R$ 9,054.1 million, respectively. The indebtedness indicator of net debt/EBITDA 2 was -0.43.

 

2017

As of December 31, 2017, the Company had total current assets in the amount of R$ 24,718.0 million, of which R$ 10,354.5 million were cash and cash equivalents. As of December 31, 2017, its current liabilities totaled R$ 28,688.5 million. The current liquidity ratio, used to assess the capacity of the Company to meet its short-term commitments, was 0.9x. Its positions of cash net of bank overdrafts and cash net of debt 3 were R$ 10,352.7 million and R$ 7,801.5 million, respectively. The indebtedness indicator of net debt/EBITDA 4 was -0.39.


1  The cash net of bank overdrafts position is represented by the balances of cash and cash equivalents being deducted the balance of bank overdrafts. The cash net of debt position is represented by the cash net of bank overdrafts position added by balances of current financial investments and being deducted the balances of loans and financings. Both the cash net of bank overdrafts position and the cash net of debt position are performance indicators used by the Company, and they are not measures according to the Accounting Practices Adopted in Brazil or according to IFRS.

2  The Company calculates the net debt as the balances of loans and financings being deducted the balances of current financial investments and cash net of bank overdrafts. The net debt/EBITDA is a performance indicator used by the Company, and it is not a measure according to the Accounting Practices Adopted in Brazil or according to IFRS.

3  The cash net of bank overdrafts position is represented by the balances of cash and cash equivalent being deducted the balance of net cash of bank overdrafts. The cash net of debt position is represented by the cash net of bank overdrafts position added by the balances of current financial investments. Both the cash net of bank overdrafts position and the cash net of debt position are performance indicators used by the Company, and they are not measures according to the Accounting Practices Adopted in Brazil or according to IFRS.

18


 
 

 

 

2016

As of December 31, 2016, the Company had total current assets in the amount of R$23,886.8 million, of which R$7,876.8 million were cash and cash equivalents, while current liabilities amounted to R$28,773.6 million on December 31, 2016. The current liquidity ratio, used to assess the Company’s capacity to meet its short-term commitments, was 0.8x. Its positions of cash net of bank overdrafts and cash net of debt 1 were R$ 7,876.8 million and R$ 2,480.5 million, respectively. The indebtedness indicator of net debt/EBITDA 2 was -0.14.

 

As seen above, the Company’s current liquidity ratio remained stable year on year, at around 1, thus confirming its ability to meet its short-term obligations. In other words, its short-term assets are very close to its short-term obligations. The net debt/EBITDA indicator has been kept negative, since the balances of cash and cash equivalents have exceeded the balances of loans and financings. We consider that the net debt level kept over the last years is appropriate to implement our business plan and comply with our short-term and medium-term obligation.

 

 

( in million of Reais )

12/31/2018

12/31/2017

12/31/2016

Total Current Assets

25,329.6

24,718.0

23,886.8

Total Current Liabilities

24,828.3

28,688.5

28,773.6

Net Working Capital Ratio (CA-CL)

501.2

(3,970.5)

(4,886.8)

Net Cash of Bank Overdrafts

11,463.5

10,352.7

7,876.8

Cash net of debt

9,054.1

7,801.5

2,480.5

 

 

12/31/2018

12/31/2017

12/31/2016

Current Liquidity

1.0

0.9

0.8

Net Debt/EBITDA

-0.43

-0.39

-0.14

 

 

b) Capital structure.

 

Capital Structure

On December 31

2018

2017

2016

R$ million

%

R$ million

%

R$ million

%

Third-party financing (1)

36,578.7

39

38,869.1

45

37,190.1

44

Equity (2)

57,547.4

61

47,982.9

55

46,651.3

56

 (1) The Company’s third-party financing is represented by the totality of the current and non-current liabilities.

(2) The Company’s equity is represented by the consolidated owner’s equity.

 

The Company’s capital structure was the following: (i) as of December 31, 2016, 56% of equity and 44% of third-party financing; (ii) as of December 31, 2017, 55% of equity and 45% of third-party financing; and (iii) as of December 31, 2018, 61% of equity and 39% of third-party financing.


4  The Company calculates the net debt as the balances of loans and financings being deducted the balances of current financial investments and cash net of bank overdrafts. The net debt/EBITDA is a performance indicator used by the Company, and it is not a measure according to the Accounting Practices Adopted in Brazil or according to IFRS.

 

19


 
 

 

c) payment capacity in relation to financial commitments undertaken.

 

( in million of Reais )

12/31/2018

12/31/2017

12/31/2016

Total debt

2,422.8

2,533.0

5,396.3

Short-term debt

1,560.6

1,321.1

3,630.6

Total current assets

25,329.6

24,718.0

23,886.8

Cash and cash equivalents

11,463.5

10,354.5

7,876.8

Current liquidity ratio

1.0x

0.9x

0.8x

Cash net of debt

9,054.1

7,801.5

2,480.5

 

 

2018

Considering the Company’s debt profile, as described in 10.1(f) below (total debt of R$2,422.8 million as of December 31, 2018, of which R$ 1,560.6 million is short-term debt), its cash flow and liquidity position evidenced by total current assets (R$25,329.6 million), cash and cash equivalents (R$11,463.5 million), current liquidity ratio (1.0x) and cash net of debt (R$9,054.1 million), all as of December 31, 2018, indicated in 10.1 (a) above, the officers believe that the Company has sufficient liquidity and capital resources to cover the investments, costs, expenses, debts and other amounts payable over the next few years, although they cannot guarantee that this situation will remain unchanged. In case it may be necessary to take out new loans to finance its investments and acquisitions, the officers believe that the Company has capacity to do so.

 

2017

Considering the Company’s debt profile, as described in 10.1(f) below (total debt of R$ 2,553.0 million as of December 31, 2017, of which R$ 1,321.1 million is short-term debt), its cash flow and liquidity position evidenced by total current assets (R$ 24,718.0 million), cash and cash equivalents (R$ 10,354.5 million), current liquidity ratio (0.9x) and cash net of debt (R$ 7,801.5 million), all as of December 31, 2017, indicated in 10.1 (a) above, the directors believe that the Company has sufficient liquidity and capital resources to cover the investments, costs, expenses, debts and other amounts payable over the next few years, although they cannot guarantee that this situation will remain unchanged. In case it may be necessary to take out new loans to finance its investments and acquisitions, the directors believe that the Company has capacity to do so.

 

2016

Considering the Company’s debt profile, as described in 10.1(f) below (total debt of R$5,396.3 million as of December 31, 2016, of which R$3,630.6 million is short-term debt), its cash flow and liquidity position evidenced by total current assets (R$23,886.8 million), cash and cash equivalents (R$7,876.8 million), current liquidity ratio (0.8x) and cash net of debt (R$2,480.5 million), all as of December 31, 2016, indicated in 10.1 (a) above, the directors believe that the Company has sufficient liquidity and capital resources to cover the investments, costs, expenses, debts and other amounts payable over the next few years, although they cannot guarantee that this situation will remain unchanged. In case it may be necessary to take out new loans to finance its investments and acquisitions, the directors believe that the Company has capacity to do so.

 

d) sources of financing for working capital and investments in non-current assets used.

 

The Company’s working capital cycle has substantially evolved every year since 2014, and as of December 31, 2018, 2017 and 2016, it reported a negative working capital, meaning that there is no need to raise new loans to finance working capital.

 

20


 
 

With regard to investments in non-current assets, the Company’s current cash position and the expected cash flow generation are sufficient to cover these investments. In any case, the Company has wide access to funding sources should there be an occasional need for supplemental cash funding for such investments.

 

e) sources of financing for working capital and for investments in non-current assets that it intends to use to cover liquidity shortfalls.

 

The Company has access to credit facilities extended by leading Brazilian and foreign banks, and has already raised funds in domestic and international capital markets. The Company’s current investment grade rating issued by key international rating agencies facilitates its access to additional financing arrangements that could be used to compensate any potential liquidity shortcomings. The Company has a Baa3 risk credit by Moody`s and BBB by S&P.

 

f) levels of indebtedness and characteristics of debts.

 

i. relevant financing and loan agreements

 

Please, find below additional information related to each one of the fiscal years that ended on December 31, 2018, 2017 and 2016:

 

2018

The Company's debt was structured in a manner to avoid significant concentration of maturities in each year and is tied to different interest rates. The most significant rates are: (i) fixed rate for the Bond 2021 and BNDES/FINEP; (ii) Long-Term Interest Rate (TJLP) for loans from Brazilian Bank of Economic and Social Development (“ BNDES ”); (iii) reference interest rate (TR) for the CRI 2030 operation; and (iv) floating rate (Libor and CAD BA) for international loans.

 

As of December 31, 2018, the Company was in compliance with its contractual obligations for its loans and financings and with any applicable borrowing limits.

 

Debt Profile – December 31, 2018

Debt Instruments

2019

2020

2021

2022

2023

After

Total

TJLP BNDES debt or TR floating rate

 

 

 

 

 

 

 

Par Value

75.3

9.7

10.1

10.8

11.8

120.0

237.7

TJLP or TR  + Average Pay Rate

9.1%

9.3%

9.3%

9.3%

9.3%

9.3%

9.1%

International Debt

 

 

 

 

 

 

 

Other Latin-American currencies fixed rate

11.5

-

212.1

-

-

-

223.5

Average pay rate

7.6%

-

10.1%

-

-

-

10.0%

US Dollar fixed rate

32.4

2.2

-

7.8

-

-

42.4

Average pay rate

4.6%

2.2%

-

4.3%

-

-

4.4%

US Dollar floating rate

538.8

91.2

-

-

-

-

630.0

Average pay rate

3.3%

5.1%

-

-

-

-

3.6%

Canadian Dollar floating rate

743.9

2.8

2.9

1.8

1.8

-

753.2

Average pay rate

2.4%

2.8%

2.8%

2.8%

2.8%

-

2.4%

Debt in Reais – ICMS fixed rate

 

 

 

 

 

 

 

Par value

37.2

38.0

22.7

5.4

2.8

22.4

128.5

Average pay rate

5.8%

5.8%

5.8%

5.8%

5.8%

5.8%

5.8%

Debt in Reais – fixed rate

 

 

 

 

 

 

 

Par value

121.5

56.1

149.6

43.5

35.7

1.2

407.6

Average pay rate

7.0%

7.5%

8.6%

4.0%

4.0%

5.6%

7.0%

Total debt

1,560.6

199.9

397.3

69.3

52.0

143.6

2,422.8

21


 
 

 

2017

The Company's debt was structured in a manner to avoid significant concentration of maturities in each year and is tied to different interest rates. The most significant rates are: (i) fixed rate for the Bond 2021 and BNDES/FINEP; (ii) Long-Term Interest Rate (TJLP) to loans from Brazilian Bank of Economic and Social Development (“ BNDES ”); (iii) reference interest rate (TR) for the CRI 2030 operation; and (iv) floating rate (Libor and CAD BA) for international loans.

 

As of December 31, 2017, the Company was in compliance with its contractual obligations for its loans and financings and with any applicable borrowing limits.

 

Debt Profile – December 31, 2017

 

Debt Instruments

2018

2019

2020

2021

2022

After

Total

TJLP BNDES debt or TR floating rate

             

Par Value

164.7

74.3

9.6

10.0

10.8

133.0

402.3

TJLP or TR  + Average Pay Rate

9.1%

9.1%

9.4%

9.4%

9.4%

9.4%

9.2%

International Debt

             

Other Latin-American currencies floating rate

-

-

5.0

-

-

-

5.0

Average Pay Rate

0.0%

0.0%

2.3%

0.0%

0.0%

0.0%

2.3%

Other Latin-American currencies fixed rate

199.1

-

-

-

-

-

199.1

Average Pay Rate

9.3%

0.0%

0.0%

0.0%

0.0%

0.0%

9.3%

US dollar – fixed rate

6.5

16.4

-

-

-

-

22.9

Average Pay Rate

2.2%

4.5%

0.0%

0.0%

0.0%

0.0%

3.8%

US dollar – floating rate

78.2

477.0

-

-

-

-

555.3

Average Pay Rate

4.0%

2.5%

0.00%

0.00%

0.00%

0.00%

2.7%

Canadian dollar – floating rate

685,9

-

-

-

-

-

685,9

Average Pay Rate

2.1%

0.00%

0.00%

0.00%

0.00%

0.00%

2.1%

Debt in Reais - ICMS fixed rate

             

Par Value

38.4

27.0

19.7

7.8

3.8

33.2

129.9

Average Pay Rate

5.6%

5.6%

5.6%

5.6%

5.6%

5.6%

5.6%

Debt in Reais - fixed rate

             

Par Value

148.3

129.4

48.2

147.7

43.5

35.7

552.7

Average Pay Rate

5.6%

5.5%

4.0%

11.2%

3.5%

3.6%

6.6%

Total indebtedness

1,321.1

724.1

82.4

165.5

58.0

201.9

2,553.0

22


 
 

 

2016

The Company's debt was structured in a manner to avoid significant concentration of maturities in each year and is tied to different interest rates. The most significant rates are: (i) fixed rate for the Bond 2017, Bond 2021 and BNDES/FINEP; (ii) basket of currencies (UMBNDES) and Long-Term Interest Rate (TJLP) to loans from BNDES; and (iii) reference interest rate (TR) for the CRI 2030 operation

 

As of December 31, 2016, the Company was in compliance with its contractual obligations for its loans and financings and with any applicable borrowing limits.

 

Debt Profile – December 31, 2016

 

Debt Instruments

2017

2018

2019

2020

2021

After

Total

BNDES Basket Debt floating rate

             

BNDES Basket Debt floating rate

22.7

-

-

-

-

-

22.7

UMBNDES + Average Pay Rate

1.7%

0.0%

0.0%

0.0%

0.0%

0.0%

1.7%

TJLP BNDES Debt floating rate

             

Par Value

216.2

163.2

73.7

9.0

9.9

142.8

614.8

TJLP + Average Pay Rate

9.8%

9.8%

9.7%

9.4%

9.4%

9.4%

9.7%

International Debt

             

Other Latin-American currencies floating rate

-

-

-

4.9

-

-

4.9

Average Pay Rate

0.0%

0.0%

0.0%

2.7%

0.0%

0.0%

2.7%

Other Latin-American currencies fixed rate

114.0

193.7

-

-

-

39.3

347.0

Average Pay Rate

9.4%

9.5%

0.0%

0.0%

0.0%

4.3%

8.9%

US dollar – fixed rate

-

-

11.5

-

-

-

11.5

Average Pay Rate

0.0%

0.0%

6.0%

0.0%

0.0%

0.0%

6.0%

US dollar – floating rate

1,508.7

329.3

22.1

-

-

-

1,860.1

Average Pay Rate

1.3%

2.2%

1.5%

0.0%

0.0%

0.0%

1.5%

Canadian dollar – floating rate

1,259.1

-

-

-

-

-

1,259.1

Average Pay Rate

1.6%

0.0%

0.0%

0.0%

0.0%

0.0%

1.6%

Debt in Reais - ICMS fixed rate

             

Par Value

33.6

112.1

35.0

32.1

35.5

129.8

378.2

Average Pay Rate

6.4%

2.6%

6.19%

4.2%

3.5%

4.5%

4.1%

Debt in Reais - fixed rate

             

Par Value

476.3

134.3

97.6

27.0

124.2

38.8

898.1

Average Pay Rate

9.0%

5.9%

6.0%

4.5%

12.5%

3.7%

8.3%

Total indebtedness

3,630.6

932.5

239.9

73.0

169.6

350.7

5,396.3

23


 
 

 

ii. other long-term relations with financial institutions

 

The Company has other long-term relations with financial institutions, such as payroll agreements, derivative operations and guarantee agreements.

 

iii. subordination degree among the debts

 

In the years ended on December 31, 2018, 2017 and 2016, 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 BNDES, where collateral is provided on assets acquired with the credit granted which serve as collateral; other loans and financing contracted by the Company provide only personal guarantees as collateral, or are unsecured.

 

iv. any restrictions imposed to the issuer, especially concerning the limit of indebtedness and contracting of new debts, the distribution of dividends, the sale of assets, the issue of new securities and the sale of the corporate control, as well as if those restrictions are being complied with by the issuer

 

In the years ended on December 31, 2018, 2017 and 2016, 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 BNDES, where collateral is provided on assets acquired with the credit granted which serve as collateral; other loans and financing contracted by the Company provide only personal guarantees as collateral, or are unsecured. Most of the loan contracts contain financial covenants including:

 

• Financial covenants, including restrictions on new borrowing;

24


 
 

• Going-concern;

• Maintenance, in use or in good condition for the business, of the Company's properties and assets;

• Restrictions on acquisitions, mergers, sale or disposal of its assets;

• Disclosure of accounting statements and balance sheets; and/or

• Prohibition related to new real guarantees for loans contracted, except if: (i) expressly authorized under the loan agreement in question; (ii) new loans contracted from financial institutions linked to the Brazilian government - including the BNDES or foreign governments; - or foreign governments, multilateral financial institutions (e.g. World Bank) or located in jurisdictions in which the Company operates.

 

These clauses apply to the extent that the events mentioned produce material adverse effects on the Company and / or its subsidiaries or the rights of its creditors, and, in the event of occurrence of any of the events set forth in the referred to clauses, the Company may be granted a grace period to cure such default.

 

Additionally, all agreements entered into with the BNDES are subject to certain “provisions applicable to agreements entered into with the BNDES” (“ Provisions ”). Such Provisions require the borrower, to obtain prior consent of BNDES if they, for instance, wish to: (i) raise new loans (except for loans described in the Provisions); (ii) give preference and/or priority to other debts; and/or (iii) dispose of or encumber any item of their fixed assets (except as provided for in the Provisions).

 

As of December 31, 2018, the Company was in compliance with its contractual obligations for its loans and financings.

 

g) borrowing limits contracted and percentages utilized

 

As of December 31, 2018, the Company had loans with BNDES, FINEP and FINAME credit facilities and other lines of credit with private banks, in the amount of R$3,165.5 million. Of this total, R$2,422.8 million (76.5%) are being used, with R$ 742.7 million (23.5%) still available.

 

h) significant changes to each item of the Financial Statements

 

The following table shows the amounts outstanding on the Company balance sheet for the periods indicated.

 

BALANCE SHEET

( in million of Reais )

 

 

 

 

December 31

Assets

2018

2017

2016

 

 

 

 

 

 

Cash and cash equivalents

11,463.5

   10,354.5

      7,876.8

 

Short-term investments

13.4

          11.9

           282.8

          

Derivative financial instruments

220.0

        350.0

        196.6

       

Trade receivables

4,879.3

     4,944.8

        4,368.1

 

Inventories

5,401.8

     4,319.0

        4,347.1

 

Taxes and social contribution receivable

2,148.7

     2,770.4

        5,423.3

       

Other assets

1,202.9

     1,367.2

        1,392.1

 

Current Assets

25,329.6

   24,718.0

23,886.8

 

 

 

 

 

 

 

 

 

 

 

Financial Investments

147.3

        122.0

           104.3

 

Derivative financial instruments

34.9

          35.2

             16.3

            

Taxes and social contribution receivable

4,374.2

2,537.7

           347.7

          

Deferred income tax and social contribution

2,017.5

2,279.3

        2,268.2

 

Other assets

1,687.4

     1,964.4

        1,973.6

 

Employee Benefits

64.3

          58.4

               33.5

 

Investments

257.1

        238.0

           300.1

          

Property, plant and equipment

20,097.0

   18,822.3

      19,153.8

 

Intangible assets

5,840.6

     4,674.7

        5,245.9

 

Goodwill

34,276.2

   31,401.9

      30,511.2

     

Non-current assets

68,796.5

   62,133.9

      59,954.6

 

 

 

 

 

 

Total assets

94,126.1

   86,851.9

83,841.4

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

Accounts payable

14,050.0

   11,854.0

      10,868.8

 

Derivative financial instruments

679.3

        215.1

        686.4

 

Loans and financing

1,560.6

     1,321.1

        3,630.6

 

Bank overdrafts

-

            1.8

               -

 

Salaries and charges

851.6

     1,047.2

           686.6

 

Dividends and interest on shareholders’ equity payable

807.0

     1,778.6

           1,714.4

 

Income tax and social contribution payable

1,588.6

     1,668.4

        904.2

 

Taxes, charges and contributions payable

3,781.6

     3,825.4

        3,378.2

 

Put option granted on interest in controlled company and other liabilities

1,366.6

     6,807.9

        6,735.8

 

Provisions

173.0

        169.0

           168.6

 

Current liabilities

24,828.3

   28,688.5

      28,773.6

 

 

 

 

 

 

Accounts payable

126.1

        175.1

           237.8

 

Derivative financial instruments

2.5

            2.4

           27.0

 

Loans and financing

862.1

     1,231.9

        1,765.7

 

Deferred income tax and social contribution

2,424.6

     2,329.2

        2,329.7

 

Income tax and social contribution payable (i)

2,227.8

     2,418.0

-

 

Taxes, charges and contributions payable

675.6

        771.6

           681.4

 

Put option granted on interest in controlled company and other liabilities

2,661.8

        429.1

        471.8

 

Provisions

426.2

        512.6

           765.4

 

Employee benefits

2,343.7

2,310.7

        2,137.7

 

Non-current liabilities

11,750.4

   10,180.6

        8,416.5

 

 

 

 

 

 

Total liabilities

36,578.7

   38,869.1

37,190.1

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

Capital Stock

57,710.2

   57,614.1

      57,614.1

 

Reserves

70,215.3

   63,361.2

      64,230.0

 

Equity Valuation Adjustment

(71,584.9)

  (74,966.5)

    (77,019.1)

 

Controlling shareholders’ interest

56,340.6

   46,008.8

44,825.0

 

Non-controlling interest

1,206.8

     1,974.0

1,826.3

 

Total shareholders’ equity

57,547.4

   47,982.8

46,651.3

 

 

 

 

 

 

Total liabilities and shareholders’ equity

94,126.1

86,851.9

83,841.4

 

(i) During the third quarter of 2017, the Company adhered to the Tax Regularization Special Program ( Programa Especial de Regularização Tributária ) (“PERT 2017”).

25


 
 

 

 

For additional information on the accounting practices adopted by the Company, see section 10.5.

 

Comparative analysis of Balance Sheets - As of December 31, 2018 and December 31, 2017

 

( in million of Reais , except percentages)

 

 

 

 

December 31

 

2018

Vertical Analysis

2017

Vertical Analysis

Variation

2018/2017

 

Assets

 

 

 

 

 

Cash and cash equivalents

11,463.5

12.2%

10,354.5

11.9%

10.7%

Financial investments

13.4

0.0%

11.9

0.0%

12.6%

Derivative financial instruments

220.0

0.2%

350.0

0.4%

-37.1%

Accounts receivable

4,879.3

5.2%

4,944.8

5.7%

-1.3%

Inventories

5,401.8

5.7%

4,319.0

5.0%

25.1%

Tax and social contribution receivable

2,148.7

2.3%

3,370.5

3.9%

-36.3%

Other assets

1,202.9

1.3%

1,367.2

1.6%

-12.0%

Current assets

25,329.6

26.9%

24,718.0

28.5%

2.5%

 

 

 

 

 

 

Financial investments

147.3

0.2%

122.0

0.1%

20.7%

Derivative financial instruments

34.9

0.0%

35.2

0.0%

-0.9%

Tax and contributions receivable

4,374.2

4.6%

2,537.7

2.7%

72.4%

Deferred income tax and social contribution

2,017.5

2.1%

2,279.3

0.3%

-11.5%

Other assets

1,687.4

1.8%

1,964.4

2.3%

-14.1%

Employee benefits

64.3

0.1%

58.4

0.1%

10.1%

Investments

257.1

0.3%

238.0

0.3%

8.0%

Property, plant and equipment

20,097.0

21.4%

18,822.3

21.7%

6.8%

Intangible assets

5,840.6

6.2%

4,674.7

5.4%

24.9%

Goodwill

34,276.2

36.4%

31,140.19

36.2%

9.2%

Non-current assets

68,796.5

73.1%

62,133.9

71.5%

10.7%

 

 

 

 

 

 

Total assets

94,126.1

100.0%

86,851.9

100.0%

8.4%

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

14,050.0

38.4%

11,854.0

30.5%

18.5%

Derivative financial instruments

679.3

1.9%

215.1

0.6%

215.8%

Loans and financing

1,560.6

4.3%

1,321.1

3.4%

18.1%

Overdraft account

-

0.0%

1.8

0.0%

0.0%

Salaries and charges

851.6

2.3%

1,047.2

2.7%

-18.7%

Dividends and interest on shareholders’ equity payable

807.0

2.2%

1,778.6

4.6%

-54.6%

 Income and social contribution taxes payable

1,588.6

4.3%

1,668.4

4.3%

-6.6%

Taxes, charges and contributions payable

3,781.6

10.3%

3,825.4

9.8%

-1.1%

Put option granted on interest in controlled company and other liabilities

1,366.6

3.7%

6,807.9

17.5%

-79.9%

Provisions

173.0

0.5%

169.0

0.4%

2.4%

Current liabilities

24,828.3

67.9%

28,688.5

73.8%

-13.5%

 

               

 

 

 

 

Accounts payable

126.1

0.3%

175.1

0.5%

-28.0%

Derivative financial instruments

2.5

0.0%

2.4

0.0%

4.2%

Loans and financing

862.1

2.4%

1,231.9

3.2%

-30.0%

Deferred income tax and social contribution

2,424.6

6.6%

2,329.2

6.0%

4.1%

Income tax and social contribution payable (i)

2,227.8

6.1%

2,418.0

6.2%

-7.9%

Taxes, charges and contributions payable

675.6

1.8%

771.6

2.0%

-12.4%

Put option granted on interest in controlled company and other liabilities

2,661.8

7.3%

429.1

1.1%

520.3%

Provisions

462.2

1.2%

512.6

1.3%

-16.9%

Employee benefits

2,343.7

6.4%

2,310.7

5.9%

1.4%

Non-current liabilities

11,750.4

32.1%

10,180.6

26.2%

15.4%

 

                 

 

 

 

 

Total liabilities

36,578.7

100.0%

38,869.1

 

100.0%

-5.9%

 

 

 

 

 

 

Equity

 

 

 

 

 

Capital stock

57,710.2

61.3%

57,614.1

66.3%

0.2%

Reserves

70,215.3

74.6%

63,361.2

73.0%

10.8%

Adjustment to equity valuation

(71,584.9)

-76.1%

(74,966.5)

-86.3%

-4.5%

Controlling shareholders’ equity

56,340.6

59.9%

46,008.8

53.0%

22.5%

Minority interests

1,206.8

1.3%

1,974.0

2.3%

-38.9%

Total equity

57,547.4

61.1%

47,982.8

55.2%

19.9%

 

 

 

 

 

 

Total liabilities and equity

94,126.1

100.0%

86,851.9

100.0%

8.4%

(i) During the third quarter of 2017, the Company adhered to PERT 2017.

26


 
 

 

 

Assets

 

Cash and cash equivalents

 

As of December 31, 2018, the balance of cash and cash equivalents and short-term financial investments amounted to R$ 11,476.9 million, compared to R$10,366.4 million as of December 31, 2017. The increase of R$ 1,110.5 million, or 10.7%, is a result particularly from (i) a stronger operational performance; (ii) a significant increase in the accounts payable; (iii) a reduction in the income tax and social contribution paid in 2018; and (iv) lower outflows related to the repayment of borrowings.

 

Accounts receivable

 

As of December 31, 2018, the balance of receivables amounted to R$ 4,879.3 million, compared to R$ 4,944.8 million as of December 31, 2017, a reduction of R$ 65.5 million, or -1.3%.

27


 
 

 

Inventories

 

As of December 31, 2018, the balance of inventories amounted to R$ 5,401.8 million, compared to R$ 4,319.0 million as of December 31, 2017. The increase of R$ 1,082.8 million, or 25.1%, is demonstrated in the chart below:

 

(in million Reais)

2018

2017

Finished products

1,688.0

1,528.4

Products under processing

339.5

309.6

Raw materials

2,517.3

1,816.3

Production materials

107.0

77.3

Stockroom and others

597.0

476.9

Early payments

304.4

210.9

Provision for losses

(151.4)

(100.4)

 

5,401.8

4,319.0

 

Income tax and social-contribution receivable

 

As of December 31, 2018, the balance of taxes and contributions receivable, current and noncurrent, amounted to R$ 6,522.9 million, compared to R$5,908.2 million as of December 31, 2017. The increase was due mainly to the accumulation of credits from abroad to be offset in subsequent years.

 

Property, plant and equipment

 

As of December 31, 2018, the balance of property, plant and equipment amounted to R$ 20,097.0 million, compared to R$ 18,822.3 million as of December 31, 2017. The movement that resulted in a net increase of R$ 1,274.7 million or 6.8% is demonstrated in the chart below:

 

(in million Reais)

2018

2017

 

Land and buildings

Facilities and equipment

Fixtures and fittings

Under construction

Total

Total

Acquisition Cost

 

 

 

 

 

 

Initial balance

8,961.9

24,538.8

5,076.5

1,257.9

39,835.1

37,419.4

Effect of foreign-exchange variation

118.6

(52.7)

(110.8)

17.2

(27.7)

18.7

Effect of application of IAS 29/CPC 42 (hyperinflation)

630.0

2,301.5

566.6

91.0

3,589.1

-

Acquisition through share exchange

99.7

97.9

0.1

0.2

197.9

204.2

Acquisitions

18.8

574.6

141.0

2,786.1

3,520.5

3,175.5

Disposals and write-offs

(39.2)

(1,007.8)

(369.6)

-

(1,416.6)

(706.8)

Transfers from (to) other asset categories

585.0

1,595.7

386.8

(2,730.3)

(162.8)

(310.9)

Others

-

8.0

-

-

8.0

35.0

Final balance

10,374.8

28,056.0

5,690.6

1,422.1

45,543.5

39,835.1

 

 

 

 

 

 

 

Depreciation and Impairment

 

 

 

 

 

 

Initial balance

(2,585.9)

(14,973.7)

(3,453.2)

-

(21,012.8)

(18,265.6)

Effect of foreign-exchange variation

(39.7)

(141.0)

51.1

-

(129.6)

(116.7)

Effect of application of IAS 29/CPC 42 (hyperinflation)

(110.7)

(1,366.7)

(431.4)

-

(1,908.8)

-

Depreciation

(327.9)

(2,504.3)

(708.1)

-

(3,540.3)

(3,200.4)

Loss due to reduction of the recovery amount

(36.4)

(160.8)

17.2

-

(180.0)

(125.2)

Disposals and write-offs

68.8

945.3

337.6

-

1,351.7

654.3

Transfers (from) to other asset categories

1.1

(33.5)

1.7

-

(30.7)

33.0

Others

-

4.0

-

-

4.0

7.8

Final balance

(3,030.7)

(18,230.7)

(4,185.1)

-

(25,446.5)

(21,012.8)

Book value:

 

 

 

 

 

 

December 31, 2017

6,376.0

9,565.1

1,623.3

1,257.9

18,822.3

18,822.3

December 31, 2018

7,344.1

9,825.3

1,505.5

1,422.1

20,097.0

 

28


 
 

 

Intangible Assets

 

As of December 31, 2018, the balance of the intangible assets amounted to R$ 5,840.6 million, compared to R$ 4,674.7 million, as of December 31, 2017. The net increase of R$1,165.9 million, or 24.9%, is a result mainly of the application of the Accounting and Disclosure Rule in Highly Inflationary Economy (IAS 29/CPC 42) in Argentina, as described in item 10.5 – Critical accounting policies – “(i) Application of the Financial Reporting in Hyperinflationary Economies rule”, in addition to the impact of currency conversion.

 

Goodwill

 

As of December 31, 2018, the balance of goodwill amounted to R$ 34,276.2 million, compared to R$ 31,401.9 million as of December 31, 2017. The movement that resulted in a net increase of R$ 2,874.3 million is demonstrated in the chart below:

 

 

2018

2017

Initial Balance

31,401.9

30,511.2

Effect of foreign-exchange variation

1,222.8

489.7

Effect of application of IAS 29/CPC 42 (hyperinflation)

1,686.5

-

Acquisition, (write-off) and exchange of subsidiaries

(37.0)

401.0

Final balance

34,276.2

31,401.9

 

Liabilities

 

Accounts payable

 

As of December 31, 2018, the balance of the current accounts payable amounted to R$ 14,050.0 million, compared to R$ 11,854.0 million as of December 31, 2017, an increase of R$ 2,196.0 million or 18.5%. The balance of non-current accounts payable amounted to R$126.1 million as of December 31, 2018, compared to R$ 175.1 million in the same period in 2017, a reduction of R$ 49.0 million, or -28.0%.

 

 

29


 
 

Loans and financing

 

The current and non-current loans and financing amounted to R$ 2,422.8 million as of December 31, 2018, compared to R$ 2,553.0 million as of December 31, 2017, a reduction of R$ 130.3 million, or -5.1% in the gross indebtedness in the year ended on December 31, 2018.

 

Income tax and social contribution

 

As of December 31, 2018, the balance of current and non-current income tax and social contribution amounted to R$3,786.4 million, compared to R$ 4,086.4 million as of December 31, 2017, a reduction of R$ 300.1 million, explained mainly by the payment of the installments to be paid in 2018 regarding adhesion to PERT 2017. As announced on September 29, 2017, the Company adhered to a special tax regularization program, involving tax contingencies under dispute, including contingencies related to the income tax and social contribution on profits. The total amount to be paid is approximately R$ 3.5 billion, of which approximately R$1.0 billion was paid in 2017, and the remaining shall be paid in 145 monthly installments as from January 2018, added by interests.

 

In addition, the balance of the income tax and social contribution is also a result of a lower effective tax rate, which, in 2018, was 13.6%, compared to an effective tax rate of 39.3% in 2017, much impacted by the adhesion to PERT, mentioned above. The main events that took place in the period and that impacted the effective tax rate were:

 

- Government grants related to taxes on sales: the reduction of the tax expenses reflects the deductibility of the subsidies for investment arising out of deferred or presumed credits on ICMS.

 

- Benefit of deductibility of interest on capital (“ IOC ”): according to the Brazilian legislation, the companies can opt for distributing IOC calculated based on the Long-Term Interest Rate (“ TJLP ”), which is deductible for income tax purposes under the applicable legislation, whose amount distributed until the date hereof was of R$5,030,507, and the tax impact was  of R$1,710,372.

 

Equity

 

As of December 31, 2018, the balance of equity amounted to R$ 57,547.4 million, compared to R$ 47,982.8 million as of December 31, 2017. The main reasons for the variation in equity accounts were: (i) profit in the year of R$11,377.4 million; (ii) the effect of the application of the accounting and disclosure rule in highly-inflationary economy (IAS 29/CPC 42) in Argentina, as described in item 10.5 – Critical accounting policies – “(i) Application of the accounting and disclosure rule of highly-inflationary economy”; (iii) gains on the conversion of operations abroad amounting to R$ 1,766.4 million; and (iv) distribution of dividends and IOC of R$ 7,793.0 million.

 

Deferred income tax and social contribution (Assets and Liabilities)

 

As of December 31, 2018, the balance of the deferred income tax and social contribution (assets and liabilities) amounted to R$ 407.1 million liable, compared to R$ 49.9 million liable as of December 31, 2017. The variation of R$ 357.2 million is described in the charts below, which demonstrates the composition of the deferred tax per origin of the temporary difference.

 

 

30


 
 

(in million Reais)

2018

 

Assets

Liabilities

Net

Financial Investments

10.0

-

10.0

Intangible assets

-

(1,031.1)

(1,031.1)

Employee Benefits

614.8

-

614.8

Accounts payable

1,807.8

(271.9)

1,535.9

Accounts receivable

41.3

(2.3)

39.0

Derivatives

18.7

(304.2)

(285.5)

Loans and financing

2.5

(78.5)

(76.0)

Inventories

266.7

(44.8)

221.9

Property, plant and equipment

109.6

(1,386.4)

(1,276.8)

Withholding tax on non-distributed dividends and royalties

-

(863.8)

(863.8)

Investments

-

(421.6)

(421.6)

Tax losses to be used

791.0

-

791.0

Provisions

363.1

(24.0)

339.1

Other items

50.6

(54.6)

(4.0)

Gross deferred tax assets/(liabilities)

4,076.1

(4,483.2)

(407.1)

Setoff

(2,058.6)

2,058.6

-

Net deferred tax assets/(liabilities)

2,017.5

(2,424.6)

(407.1)

 

(in million Reais)

2017

 

Assets

Liabilities

Net

Financial Investments

39.0

-

39.0

Intangible assets

-

(719.5)

(719.5)

Employee Benefits

631.1

-

631.1

Accounts payable

1,382.4

(314.2)

1,068.2

Accounts receivable

52.3

-

52.3

Derivatives

6.8

(5.8)

1.0

Loans and financing

-

-

-

Inventories

248.7

(18.1)

230.6

Property, plant and equipment

-

(920.5)

(920.5)

Withholding tax on non-distributed dividends and royalties

-

(788.6)

(788.6)

Investments

-

(421.6)

(421.6)

Tax losses to be used

501.0

-

501.0

Provisions

347.3

(39.7)

307.6

Other items

-

(30.5)

(30.5)

Gross deferred tax assets/(liabilities)

3,208.6

(3,258.5)

(49.9)

Setoff

(929.3)

929.3

-

Net deferred tax assets/(liabilities)

2,279.3

(2,329.2)

(49.9)

31


 
 

Comparative analysis of Balance Sheets as of December 31, 2017 and December 31, 2016

 

( in million of Reais , except percentages)

 

 

 

 

 

December 31

 

 

 

 

Vertical

Variation

 

2017

Vertical Analysis

2016

Analysis

2017/2016

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

    10,354.5

11.9%

7,876.8

9.4%

31.5%

Financial investments

           11.9

0.0%

282.8

0.3%

-95.8%

Derivative financial instruments

         350.0

0.4%

196.6

0.2%

78.0%

Accounts receivable

      4,944.8

5.7%

4,368.1

5.2%

13.2%

Inventories

      4,319.0

5.0%

4,347.1

5.2%

-0.6%

Tax and social contribution receivable

      3,370.5

3.9%

5,423.3

6.5%

-37.9%

Other assets

      1,367.2

1.6%

1,392.1

1.7%

-1.8%

Current assets

   24,718.0

28.5%

23,886.8

28.5%

3.5%

 

 

 

 

 

 

Financial investments

         122.0

0.1%

104.3

0.1%

17.0%

Derivative financial instruments

           35.2

0.0%

16.3

0.0%

116.0%

Tax and contributions receivable

      2,537.7

2.7%

347.7

0.4%

565.1%

Deferred income and social contribution taxes

        2,279.3

0.3%

2,268.2

2.7%

-90.1%

Other assets

      1,964.4

2.3%

1,973.6

2.4%

-0.5%

Employee benefits

           58.4

0.1%

33.5

0.0%

74.3%

Investments

         238.0

0.3%

300.1

0.4%

-20.7%

Property, plant and equipment

    18,822.3

21.7%

19,153.8

22.8%

-1.7%

Intangible assets

      4,674.7

5.4%

5,245.9

6.3%

-10.9%

Goodwill

    31,401.9

36.2%

30,511.2

36.4%

2.9%

Non-current assets

   62,133.9

71.5%

59,954.6

71.5%

3.6%

 

 

 

 

 

 

Total assets

   86,851.9

100.0%

83,841.4

100.0%

3.6%

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

   11,854.0

30.5%

10,868.8

29.2%

9.1%

Derivative financial instruments

         215.1

0.6%

686.4

1.8%

-68.7%

Loans and financing

      1,321.1

3.4%

3,630.6

9.8%

-63.6%

Overdraft account

             1.8

0.0%

-

-

0.0%

Salaries and charges

      1,047.2

2.7%

686.6

1.8%

52.5%

Dividends and interest on shareholders’ equity payable

      1,778.6

4.6%

1,714.4

4.6%

3.7%

 Income and social contribution taxes payable

      1,668.4

4.3%

904.2

2.4%

84.5%

Taxes, charges and contributions payable

      3,825.4

9.8%

3,378.2

9.1%

13.2%

Put option granted on interest in controlled company and o ther liabilities

      6,807.9

17.5%

6,735.8

18.1%

1.1%

Provisions

         169.0

0.4%

168.6

0.5%

0.2%

Current liabilities

   28,688.5

73.8%

28,773.6

77.4%

-0.3%

 

               

 

 

 

 

Accounts payable

         175.1

0.5%

237.8

0.6%

-26.4%

Derivative financial instruments

             2.4

0.0%

27.0

0.1%

-91.1%

Loans and financing

      1,231.9

3.2%

1,765.7

4.7%

-30.2%

Deferred income and social contribution taxes

      2,329.2

6.0%

2,329.7

6.3%

0.0%

Income tax and social contribution payable (i)

      2,418.0

6.2%

 

 

100.0%

Taxes, charges and contributions payable

         771.6

2.0%

681.4

1.8%

13.2%

Put option granted on interest in controlled company and o ther liabilities

         429.1

1.1%

471.8

1.3%

-9.0%

Provisions

         512.6

1.3%

765.4

2.1%

-33.0%

Employee benefits

     2,310.7

5.9%

2,137.7

5.7%

8.1%

Non-current liabilities

   10,180.6

26.2%

8,416.5

22.6%

21.0%

 

                 

 

 

 

 

Total liabilities

   38,869.1

100.0%

   37,190.1

 

100.0%

4.5%

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Capital stock

    57,614.1

66.3%

57,614.1

68.7%

0.0%

Reserves

    63,361.2

73.0%

64,230.0

76.6%

-1.4%

Adjustment to equity valuation

(74,966.5)

-86.3%

(77,019.1)

-91.9%

-2.7%

Controlling shareholders’ equity

   46,008.8

53.0%

44,825.0

53.5%

2.6%

Minority interests

     1,974.0

2.3%

1,826.3

2.2%

8.1%

Total shareholders’ equity

   47,982.8

55.2%

46,651.3

55.6%

2.9%

 

 

 

 

 

 

Total liabilities and shareholders’ equity

   86,851.9

100.0%

83,841.4

100.0%

3.6%

32


 
 

 

Assets

 

Cash and cash equivalents

 

As of December 31, 2017, the balance of cash and cash equivalents and short-term investments totaled R$ 10,366.4 million compared to R$ 8,159.6 million as of December 31, 2016. The increase of R$ 2,206.8 million or 27.0% is primarily due to (i) a stronger operating performance; (ii) improvement of working capital, mainly due to a significant increase in accounts payable and other accounts payable; (iii) a relevant decrease in income tax and social contribution paid in 2017; and (iv) lower amounts in acquisition of property, plant and equipment and intangible assets and of subsidiaries, net of acquired cash.

 

Accounts receivable

 

As of December 31, 2017, the balance of receivables totaled R$4,944.8 million, compared to R$4,368.1 million on December 31, 2016, an increase of R$576.8 million, or 13.2%, mainly as a result of the increase of our net revenue by hectoliter of 8.5% in 2017, together with an increase of 0.9% of the sale consolidated volume in the year.

 

Inventories

 

As of December 31, 2017, the inventories balance totaled R$4,319.0 million compared to R$4,347.1 on December 31, 2016. The decrease of R$ 28.1 million or 0.6% is demonstrated below:

 

 

( in million of Reais )

2017

2016

Finished goods

                 1,528.4

1,445.5

Work in progress

                    309.6

328.5

Raw material

                 1,816.3

1,962.7

Consumables

                      77.3

50.0

Storeroom and other

                    476.9

447.2

Prepayments

                    210.9

234.5

Impairment losses

                  (100.4)

(121.3)

 

                 4,319.0

4,347.1

33


 
 

 

Income tax and social contribution receivable

 

As of December 31, 2017, the balance of current and non-current taxes and contributions receivable totaled R$ 5,908.2 million compared to R$5,771.0 million, as of December 31, 2016. The increase was due mainly to the accumulation of tax credits from overseas to be offset in future years.

 

Property, plant and equipment

 

As of December 31, 2017, the balance of property, plant and equipment totaled R$ 18,822.3 million compared to R$19,153.8 million on December 31, 2016. The change that resulted in a net decrease of R$331.5 million, or -1.7%, is demonstrated in the table below:

 

( in million of Reais )

2017

2016

Acquisition cost

Land and buildings

Plant and

equipment

Fixtures and fittings

Under construction

Total

Total

Initial balance

8,330.2

22,764.3

4,584.2

1,740.7

37,419.4

36,685.6

Effect of movements in foreign exchange

3.1

34.6

(27.3)

8.3

18.7

(2,652.7)

Business combinations

228.9

(24.7)

-

-

204.2

700.4

Acquisitions through share exchange

-

-

-

-

-

433.9

Write-off through share exchange