Embotelladora Andina S.A.(AKO_A) - 2018 Q4 - Annual Report

Cash Flow and Financial Activities - Cash flows from operating activities in 2018 amounted to Ch $235,279 million, a decrease of 4.5% compared to Ch$ 247,960 million in 2017, primarily due to higher payments to suppliers[482]. - Cash flows from investing activities in 2018 were Ch $118,086 million, down 30.1% from Ch$ 168,831 million in 2017, with lower investments in property, plant, and equipment amounting to Ch $47,794 million[483]. - Cash flows from financing activities in 2018 totaled Ch$ 87,536 million, an increase of 16.7% compared to Ch $74,968 million in 2017, reflecting higher dividend distributions[485]. Liabilities and Obligations - Total liabilities as of December 31, 2018, were Ch$ 1,350,790 million, representing a 3.8% increase from Ch $1,299,000 million in 2017, mainly due to the restatement of bonds payable in U.S. dollars[491]. - Non-current liabilities increased to Ch$ 930,928 million in 2018 from Ch $873,339 million in 2017, driven by higher financial liabilities[491]. - Current liabilities decreased slightly to Ch$ 419,862 million in 2018 from Ch $428,287 million in 2017[492]. - The total contractual obligations as of December 31, 2018, amounted to Ch$ 1,174,789 million, with Ch $136,284 million due within one year[526]. Financing and Capital Structure - The company is required by Corporate Law to distribute at least 30% of any profits generated each year as dividends[477]. - The financing policy emphasizes that each subsidiary must finance its own operations, focusing on cash generation and establishing clear targets for operating income and capital expenditures[479]. - The company issued UF 1.0 million of Series C Bonds due 2020 with an annual interest rate of 3.5%[507]. - The company maintains a net financial coverage level greater than 3.0 times, calculated as EBITDA over net financial expenses[506]. - The company is required to maintain consolidated financial liabilities not exceeding consolidated equity by 1.20 times[507]. - The company must maintain consolidated assets free of any pledge or lien at least equal to 1.3 times its unsecured consolidated current liabilities[508]. Compensation and Governance - For the year ended December 31, 2018, fixed compensations paid to Coca-Cola Andina's executive officers amounted to Ch$ 3,782 million, down from Ch $4,020 million in 2017[559]. - Performance bonuses for the same period totaled Ch$ 2,517 million, compared to Ch $2,769 million in 2017, indicating a decrease of approximately 9.1%[559]. - Total compensation paid to directors in 2018 was Ch$ 1,518,000, which included Ch $360,000 for the Executive Committee and Ch$ 72,000 for the Audit Committee[561]. - The highest individual director compensation was Ch $144,000 for Juan Claro, the Chairman of the Board[561]. - The total compensation paid to all directors and executive officers for the year ended December 31, 2018, was Ch$ 7,869 million, with Ch$6,403 million allocated to executive officers[562]. - The board of directors includes members with extensive experience in various sectors, enhancing corporate governance[535][536][537]. - The Chief Executive Officer, Miguel Ángel Peirano, has been with the company since 2011, bringing significant industry experience[548]. - The Chief Financial Officer, Andrés Wainer, has been with the company since 1996, indicating strong internal continuity in financial leadership[549]. - The company has a diverse board with members holding degrees in business administration, law, and engineering, contributing to a well-rounded decision-making process[539][540][541]. Employee and Labor Relations - As of December 31, 2018, the company employed 17,386 individuals across various countries, including 4,174 in Chile, 7,895 in Brazil, 3,176 in Argentina, and 1,600 in Paraguay[574]. - In Chile, 64.29% of employees with indefinite work contracts are members of labor unions, reflecting strong union representation[580]. - The company continues to make provisions for severance indemnities in accordance with collective bargaining agreements, amounting to one month's salary for every year of employment[579]. - The company has established collective bargaining agreements with various labor unions, with terms extending into 2021 and 2019[580]. - As of December 31, 2018, 66.9% of EDASA's employees in Argentina are covered by collective bargaining agreements[587]. - In Brazil, 12.2% of employees are members of labor unions, with 25 collective bargaining agreements in force as of December 31, 2018[584]. - In Paraguay, 36.0% of PARESA's employees are union members, with collective bargaining agreements generally lasting two years[590]. Shareholder Structure and Related Party Transactions - The controlling shareholders hold 263,718,512 shares, representing 55.72% of the total class[594]. - Approximately 86.65% of Series A shares and 78.48% of Series B shares are held in Chile as of December 31, 2018[595]. - The Coca-Cola Company holds 69,348,241 shares, representing 14.65% of the total class[594]. - The controlling shareholders exercise joint control to ensure a majority vote at shareholders' meetings[596]. - The Coca-Cola Company has the right to elect two members of the board of directors as long as it holds a certain percentage of Series A shares[599]. - Related party transactions were approved by the Company's Board of Directors and were consistent with prevailing market prices[600]. - The management believes it has complied with Chilean Public Company law regarding related party transactions as of December 31, 2018[601].