UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
 
FORM 6 - K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 under
the Securities Exchange Act of 1934
 
For the month of August , 2017
 
Commission File Number 001-35575
 
Cencosud S.A.
(Translation of registrant’s name into English)
 
Av. Kennedy 9001, Piso 6
Las Condes, Santiago
Chile
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F	 ☒	Form 40 F ☐ 	
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

This report on Form 6-K is being furnished for the purpose of providing a copy of the registrant’s unaudited condensed consolidated interim financial statements as of and for the six month period ended June 30, 2017 (the “Consolidated Financial Statements”). The Consolidated Financial Statements are presented in Chilean pesos and prepared in accordance with International Financial Reporting Standards.
 
The attachment contains forward-looking statements. The registrant desires to qualify for the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in such forward-looking statements.
 
The registrant’s forward-looking statements are based on the registrant’s current expectations, assumptions, estimates and projections about the registrant and its industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions.
 
The forward-looking statements included in the attached involve various risks and uncertainties, including, among others: (i) changes in general economic, business or political or other conditions in Chile, Argentina, Brazil, Peru, Colombia or elsewhere in Latin America or global markets; (ii) changes in capital markets in general that may affect policies or attitudes towards investing in Chile, Argentina, Brazil, Peru, Colombia or securities issued by companies in such countries; (iii) the monetary and interest rate policies of the Central Banks of Chile, Argentina, Brazil, Peru and Colombia; (iv) high levels of inflation or deflation; (v) unanticipated increases in financing and other costs or our inability to obtain additional debt or equity financing on attractive terms; (vi) movements in interest and/or foreign exchange rates, and movements in equity prices or other rates or prices; (vii) changes in, or failure to comply with, applicable regulations or changes in taxes; (viii) loss of market share or changes in competition and pricing environments in the industries in which the Company operates; (ix) difficulties in successfully integrating recent and future acquisitions into the Company’s operations; (x) the Company’s inability to hedge certain risks economically; (xi) changes in consumer spending and saving habits; (xii) implementation of new technologies; (xiii) limitations on the Company’s ability to open new stores and operate them profitably; (xiv) difficulties in completing proposed store openings, expansions or remodeling; (xv) difficulties in acquiring and developing land in Chile, Argentina, Brazil, Peru or Colombia, and restrictions on opening new large stores in any such countries; and (xvi) the factors discussed under the heading “Risk Factors” as well as risks included in the Company’s other filings and submissions with the United States Securities and Exchange Commission.
 
Although the registrant believes that its expectations expressed in these forward-looking statements are reasonable, its expectations may turn out to be incorrect. The registrant’s actual results could be materially different from its expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in the attached might not occur, and the registrant’s future results and its performance may differ materially from those expressed in these forward-looking statements due to, including, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.
 
The forward-looking statements made in the attached relate only to events or information as of the date on which the statements are made in the attached. The registrant undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 	Cencosud S.A.	 	
 	 	 	 	
Date: August 28, 2017	By:  	/s/ Sebastián Rivera Martínez	 	
 	Name:  	Sebastián Rivera Martínez  	 	
 	Title:  	Legal Manager  	 	

 

 

  Cencosud S.A. and subsidiaries, condensed consolidated interim statements of financial position

 	 

As of
 	
Assets	 
Note
 	 
June 30, 2017
 	 
December 31, 2016

 
 	 
ThCh$
 	 
ThCh$

 
 	 
(unaudited)

 	

 	 

 
 	
Current assets	 

 

 	
Cash and cash equivalents 	 

 
150,726,728

275,219,003
 	
Other financial assets, current 	 
 
5

80,581,582

219,988,622
 	
Other non-financial assets, current 	 

 	 
 
43,217,868

23,628,279
 	
Trade receivables and other receivables 	 
 
6

792,070,905

867,139,677
 	
Receivables due from related entities, current 	 

 	 
 
14,378,482

28,988,176
 	
Inventory 	 
 
8

1,182,666,184

1,149,286,014
 	
Current tax assets 	 

 	 
 
81,130,093

74,135,647

 

 

 

Total current assets other than non-current assets held for sale 	 

 	 
 
2,344,771,842

2,638,385,418

 

 

 

Assets classified as held for sale 	 
 
21

64,077,355

57,123,872

 

 

 

Total current assets 	 

 	 
 
2,408,849,197

2,695,509,290

 

 

 

 	 

 	 

 	 

 	
Non-current assets	 

 	 

 	 

 	
Other financial assets, non-current 	 
 
5

272,092,635

287,360,674
 	
Other non-financial assets, non-current 	 

 	 
 
50,429,428

52,335,275
 	
Trade receivable and other receivables, non-current 	 
 
6

18,214,442

11,893,706
 	
Equity method investment 	 

 	 
 
203,504,519

200,727,534
 	
Intangible assets other than goodwill 	 
 
9

411,389,799

408,168,114
 	
Goodwill	 
 
10

1,429,164,300

1,432,319,489
 	
Property, plant and equipment 	 
 
11

2,521,046,323

2,578,793,573
 	
Investment property 	 
 
12

2,139,876,578

2,081,694,027
 	
Non-current tax assets,	 

 	 
 
77,211,478

83,376,450
 	
Deferred income tax assets 	 

 	 
 
623,002,505

616,579,356

 

 

 

Total non-current assets 	 

 	 
 
7,745,932,007

7,753,248,198

 

 

 

Total assets 	 

 	 
 
10,154,781,204

10,448,757,488

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

Cencosud S.A. and subsidiaries, condensed consolidated interim statements of financial position

 
 	 
As of
 	
Net equity and liabilities	 
Note
 	 
June 30, 2017
 	 
December 31, 2016

 
 	 
ThCh$
 	 
ThCh$

 
 	 
(unaudited)

 	

 	 

 
 	
Current liabilities	 

 

 	
Other financial liabilities, current 	 
 
13

605,630,732

408,009,016
 	
Trade payables and other payables 	 

 	 
 
1,701,950,774

1,926,847,052
 	
Payables to related entities, current 	 

 	 
 
15,683,885

18,722,919
 	
Provisions and other liabilities 	 
 
14

12,497,669

11,779,434
 	
Current income tax liabilities 	 

 	 
 
25,719,723

74,585,510
 	
Current provision for employee benefits 	 

 	 
 
96,485,316

106,496,839
 	
Other non-financial liabilities, current 	 

 	 
 
37,335,980

26,977,677

 

 

 

Total current liabilities other than non-current assets held for sale	 

 	 
 
2,495,304,079

2,573,418,447

 

 

 

Liabilities classified as held for sale 	 
 
21

6,013,134

15,669,233

 

 

 

Total current liabilities 	 

 	 
 
2,501,317,213

2,589,087,680

 

 

 

Non-current liabilities	 

 	 

 	 

 	
Other financial liabilities, 	 
 
13

2,763,487,395

2,903,625,666
 	
Trade accounts payables 	 

 	 
 
3,700,644

4,803,725
 	
Provisions and other liabilities 	 
 
14

66,727,603

68,256,160
 	
Deferred income tax liabilities 	 

 	 
 
729,609,244

719,542,091
 	
Other non–financial liabilities, non–current 	 

 	 
 
77,570,609

79,390,431

 

 

 

Total non-current liabilities 	 

 	 
 
3,641,095,495

3,775,618,073

 

 

 

Total liabilities 	 

 	 
 
6,142,412,708

6,364,705,753

 

 

 

Equity	 

 	 

 	 

 	
Paid-in capital 	 
 
15

2,420,602,349

2,420,564,735
 	
Retained earnings 	 

 	 
 
2,482,702,577

2,489,410,413
 	
Issuance premium 	 

 	 
 
461,289,173

461,302,097
 	
Other reserves 	 

 	 
 
(1,352,671,875
)	 
 
(1,286,017,106
)	

 

 

 
 	
Equity attributable to controlling shareholders 	 

 	 
 
4,011,922,224

4,085,260,139
 	
Non-controlling interest 	 

 	 
 
446,272

(1,208,404
)	

 

 

 
 	
Total equity 	 

 	 
 
4,012,368,496

4,084,051,735

 

 

 

Total equity and liabilities 	 

 	 
 
10,154,781,204

10,448,757,488

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

2

 
Cencosud S.A. and subsidiaries, condensed consolidated interim statement of profit and loss (unaudited)
 
Statements of profit and loss	 
Note
 	 
6/30/2017
 	 
6/30/2016

 
 	 
ThCh$
 	 
ThCh$
 	
Revenues from ordinary activities 	 
 
18

5,109,600,697

4,988,004,371
 	
Cost of Sales 	 
 
16

(3,643,747,192
)	 
 
(3,540,716,396
)	
Gross Profit 	 

 	 
 
1,465,853,505

1,447,287,975
 	
Other income by function 	 
 
16

78,692,289

90,697,286
 	
Distribution cost 	 
 
16

(13,534,175
)	 
 
(12,635,011
)	
Administrative expenses 	 
 
16

(1,188,651,547
)	 
 
(1,131,135,634
)	
Other expenses by function 	 
 
16

(84,606,065
)	 
 
(80,199,820
)	
Other losses, net 	 
 
16

2,300,437

51,714,412
 	
Operating profit 	 

 	 
 
260,054,444

365,729,208

 

 

 

Finance income 	 
 
16

7,762,687

6,876,691
 	
Finance expenses 	 
 
16

(128,924,382
)	 
 
(129,973,397
)	
Participation in profit of equity method associates 	 

 	 
 
7,939,336

5,271,896
 	
Exchange differences 	 
 
16

31,271,545

44,613,633
 	
Losses from indexation 	 
 
16

(7,200,590
)	 
 
(8,251,185
)	
Profit before income tax 	 

 	 
 
170,903,040

284,266,846

 

 

 

Income tax expense 	 
 
17

(78,780,003
)	 
 
(88,871,238
)	

 

 

 
 	
Profit from continuing operations 	 

 	 
 
92,123,037

195,395,608

 

 

 

Profit attributable to controlling shareholders                                                                                           	 

 	 
 
90,412,849

194,033,830
 	
Profit attributable to non–controlling shareholders 	 

 	 
 
1,710,188

1,361,778

 

 

 

Net Profit 	 

 	 
 
92,123,037

195,395,608

 

 

 

Earnings per share	 

 	 

 	 

 	
Basic earnings per share from continued operations 	 

 	 
 
31.6

68.6
 	
Diluted earnings per share from continued operations 	 

 	 
 
31.6

68.1

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3

 
Cencosud S.A. and subsidiaries, condensed consolidated interim statement of comprehensive income (loss) (unaudited)

For the six months ended  
 	
Statements of comprehensive income (loss)	 
6/30/2017
 	 
6/30/2016

ThCh$
 	 
ThCh$
 	
Net Profit 	 
 
92,123,037

195,395,608

 

 

Other comprehensive profit	 

 	 

 	
Items that will not be reclassified to profit and loss	 

 	 

 	
Revaluation surplus 	 
 
-

-
 	
Re-measurements of employee benefit obligations 	 
 
-

-
 	
Total OCI that will not be reclassified to profit and loss	 
 
-

-

 

 

Items that may be reclassified to profit and loss	 

 	 

 	
Foreign currency translation losses 	 
 
(66,325,490
)	 
 
14,261,749
 	
Cash flow hedge 	 
 
(2,948,126
)	 
 
9,802,380

 

 

Total items that may be reclassified to profit and loss	 
 
(69,273,616
)	 
 
24,064,129

 

 

Other comprehensive income, before taxes 	 
 
(69,273,616
)	 
 
24,064,129

 

 

Income tax related to revaluation surplus 	 
 
-

-
 	
Income tax related to re-measurement of employee benefit obligations	 
 
-

-
 	
Total income tax that will not be reclassified to profit and loss	 
 
-

-

 

 

Income tax related to cash flow hedge 	 
 
795,994

(2,637,247
)	
Total income tax that may be reclassified to profit and loss 	 
 
795,994

(2,637,247
)	

 

 
 	
Total other comprehensive loss 	 
 
(68,477,622
)	 
 
21,426,882

 

 

Total comprehensive income (loss) 	 
 
23,645,415

216,822,490

 

 

Income (loss) attributable to	 

 	 

 	
Owners of the Company 	 
 
21,990,739

215,723,561
 	
Non-controlling interest 	 
 
1,654,676

1,098,929

 

 

Total comprehensive income (loss) 	 
 
23,645,415

216,822,490

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

4

 
Cencosud S.A. and subsidiaries,
Condensed consolidated interim statement of changes in net equity
for the six months ended June 30, 2017 (unaudited)
 
Statement of changes innet equity ThCh$	 
Paid-incapital
 	 
Share premium
 	 
Revaluation surplus reserves
 	 
Translation reserves
 	 
Hedge reserves
 	 
Employee benefit reserves
 	 
Share based payments reserves
 	 
Other reserves
 	 
Total reserves
 	 
Retained 
earnings
 	 
Equity attributable to parent company shareholders
 	 
Non-controlling interest
 	 
Total equity
 	
Opening balance as of January 1, 2017	 
 
2,420,564,735

461,302,097

14,252,148

(1,250,381,663
)	 
 
(22,078,872
)	 
 
(1,120,048
)	 
 
26,949,962

(53,638,633
)	 
 
(1,286,017,106
)	 
 
2,489,410,413

4,085,260,139

(1,208,404
)	 
 
4,084,051,735

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in equity	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Net profit 	 
 
-

-

-

-

-

-

-

-

-

90,412,849

90,412,849

1,710,188

92,123,037
 	
Other comprehensive (loss) profit 	 
 
-

-

-

(66,269,978
)	 
 
(2,152,132
)	 
 
-

-

-

(68,422,110
)	 
 
-

(68,422,110
)	 
 
(55,512
)	 
 
(68,477,622
)	

 

 

 

 

 

 

 

 

 

 

 

 

 
 	
Total Comprehensive (loss) profit 	 
 
-

-

-

(66,269,978
)	 
 
(2,152,132
)	 
 
-

-

-

(68,422,110
)	 
 
90,412,849

21,990,739

1,654,676

23,645,415

 

 

 

 

 

 

 

 

 

 

 

 

 

Share issuance 	 
 
37,614

(12,924
)	 
 
-

-

-

-

-

-

-

-

24,690

-

24,690
 	
Dividends 	 
 
-

-

-

-

-

-

-

-

-

(97,120,685
)	 
 
(97,120,685
)	 
 
-

(97,120,685
)	
Stock option (see Note 20) 	 
 
-

-

-

-

-

-

1,767,330

-

1,767,330

-

1,767,330

-

1,767,330
 	
Decrease due to changes in ownership interest without a loss of control	 
 
-

-

-

-

-

-

-

11

11

-

11

-

11

 

 

 

 

 

 

 

 

 

 

 

 

 

Total transactions with owners 	 
 
37,614

(12,924
)	 
 
-

-

-

-

1,767,330

11

1,767,341

(97,120,685
)	 
 
(95,328,654
)	 
 
-

(95,328,654
)	

 

 

 

 

 

 

 

 

 

 

 

 

 
 	
Total Changes in equity 	 
 
37,614

(12,924
)	 
 
-

(66,269,978
)	 
 
(2,152,132
)	 
 
-

1,767,330

11

(66,654,769
)	 
 
(6,707,836
)	 
 
(73,337,915
)	 
 
1,654,676

(71,683,239
)	

 

 

 

 

 

 

 

 

 

 

 

 

 
 	
Ending balance, as of June 30, 2017 	 
 
2,420,602,349

461,289,173

14,252,148

(1,316,651,641
)	 
 
(24,231,004
)	 
 
(1,120,048
)	 
 
28,717,292

(53,638,622
)	 
 
(1,352,671,875
)	 
 
2,482,702,577

4,011,922,224

446,272

4,012,368,496

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

5

 
Cencosud S.A. and subsidiaries,
Condensed consolidated interim statement of changes in net equity
for the six months ended June 30, 2016 (unaudited)
 
Statement of changes innet equity ThCh$	 
Paid-incapital
 	 
Share premium
 	 
Revaluation surplus reserves
 	 
Translation reserves
 	 
Hedge reserves
 	 
Employee benefit reserves
 	 
Share based payments reserves
 	 
Other reserves
 	 
Total reserves
 	 
Retained 
earnings
 	 
Equity attributable to parent company shareholders
 	 
Non-controlling interest
 	 
Total equity
 	
Opening balance as of January 1, 2016	 
 
2,321,380,936

526,633,344

-

(1,187,109,821
)	 
 
14,859,584

(229,427
)	 
 
19,276,599

(52,476,934
)	 
 
(1,205,679,999
)	 
 
2,329,411,478

3,971,745,759

(933,941
)	 
 
3,970,811,818

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in equity	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Net profit 	 
 
-

-

-

-

-

-

-

-

-

194,033,830

194,033,830

1,361,778

195,395,608
 	
Other comprehensive (loss) profit 	 
 
-

-

-

14,524,598

7,165,133

-

-

-

21,689,731

-

21,689,731

(262,849
)	 
 
21,426,882

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Comprehensive (loss) profit 	 
 
-

-

-

14,524,598

7,165,133

-

-

-

21,689,731

194,033,830

215,723,561

1,098,929

216,822,490

 

 

 

 

 

 

 

 

 

 

 

 

 

Share issuance 	 
 
48,991,490

(35,155,012
)	 
 
-

-

-

-

-

-

-

-

13,836,478

-

13,836,478
 	
Dividends 	 
 
-

-

-

-

-

-

-

-

-

(211,227,754
)	 
 
(211,227,754
)	 
 
-

(211,227,754
)	
Stock option (see Note 20) 	 
 
-

-

-

-

-

-

5,059,660

-

5,059,660

-

5,059,660

-

5,059,660
 	
Decrease due to changes in ownership interest without a loss of control	 
 
-

-

-

-

-

-

-

(1,161,699
)	 
 
(1,161,699
)	 
 
-

(1,161,699
)	 
 
(52,597
)	 
 
(1,214,296
)	

 

 

 

 

 

 

 

 

 

 

 

 

 
 	
Total transactions with owners 	 
 
48,991,490

(35,155,012
)	 
 
-

-

-

-

5,059,660

(1,161,699
)	 
 
3,897,961

(211,227,754
)	 
 
(193,493,315
)	 
 
(52,597
)	 
 
(193,545,912
)	

 

 

 

 

 

 

 

 

 

 

 

 

 
 	
Total Changes in equity 	 
 
48,991,490

(35,155,012
)	 
 
-

14,524,598

7,165,133

-

5,059,660

(1,161,699
)	 
 
25,587,692

(17,193,924
)	 
 
22,230,246

1,046,332

23,276,578

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance, as of June 30, 2016 	 
 
2,370,372,426

491,478,332

-

(1,172,585,223
)	 
 
22,024,717

(229,427
)	 
 
24,336,259

(53,638,633
)	 
 
(1,180,092,307
)	 
 
2,312,217,554

3,993,976,005

112,391

3,994,088,396

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

6

 
Cencosud S.A. and subsidiaries,
Condensed consolidated interim statements of cash flows (unaudited)

For the six months ended June 30,

2017
 	 
2016
 	
Cash flows from (used in) operating activities	 
ThCh$
 	 
ThCh$

 

 	
Types of revenues from operating activities	 

 
 	
Revenue from sale of goods and provision of services 	 
 
6,183,765,814

6,021,805,267
 	
Other operating activities revenue 	 
 
10,299,356

9,815,326

 

 

Types of payments	 

 	 

 	
Payments to suppliers for supply of goods and services 	 
 
(5,087,487,752
)	 
 
(5,199,331,870
)	
Payments to and on behalf of personnel 	 
 
(761,429,664
)	 
 
(618,894,541
)	
Other operating payments 	 
 
(262,679,696
)	 
 
(292,107,974
)	
Interest paid                                                                                    	 
 
(35,641
)	 
 
(24,651
)	
Interest received                                                                                    	 
 
1,695,234

1,380,046
 	
Taxes paid 	 
 
(108,052,174
)	 
 
(41,788,113
)	
Other cash inflows (outflows) 	 
 
(980,167
)	 
 
(1,922,817
)	

 

 
 	
Cash flows from (used in) operating activities (continuing operations)	 
 
(24,904,690
)	 
 
(121,069,327
)	

 

 
 	
Net cash flow (used in) from operating activities 	 
 
(24,904,690
)	 
 
(121,069,327
)	

 

 
 	
Cash flows (used in) from investing activities	 

 	 

 	
Disposal of subsidiaries and associates 	 
 
-

119,585,637
 	
Acquisition of non-controlling interest and capital contributions to associate	 
 
-

(1,434,532
)	
Proceeds from sales of property, plant and equipment 	 
 
3,971,438

1,532,857
 	
Purchases of property, plant & equipment 	 
 
(87,354,785
)	 
 
(82,536,824
)	
Purchases of intangible assets 	 
 
(18,566,426
)	 
 
(21,070,474
)	
Dividends received 	 
 
7,440,975

5,174,138
 	
Interest received 	 
 
589,947

794,158
 	
Proceeds from sale of other financial assets—mutual funds 	 
 
4,818,599,159

2,527,341,280
 	
Purchases of other financial assets—mutual funds 	 
 
(4,680,406,672
)	 
 
(2,330,951,712
)	

 

 
 	
Cash flows from (used in) investing activities (continuing operations) 	 
 
44,273,635

218,434,528

 

 

Net cash flow from (used in) investment activities 	 
 
44,273,635

218,434,528

 

 

Cash flows from (used in) financing activities	 

 	 

 	
Proceeds from exercise of stock options 	 
 
24,690

13,836,478

 

 

Proceeds from borrowing at long–term 	 
 
-

-
 	
Proceeds from borrowing at short–term 	 
 
116,463,815

198,316,325
 	
Total loan proceeds from borrowing 	 
 
116,463,815

198,316,325

 

 

Repayments of borrowing 	 
 
(46,390,696
)	 
 
(76,800,786
)	
Dividends paid 	 
 
(85,876,558
)	 
 
(170,547,577
)	
Interest paid 	 
 
(120,758,145
)	 
 
(110,963,263
)	
Other cash outflows 	 
 
(2,782,767
)	 
 
(1,570
)	

 

 
 	
Cash flows used in financing activities (continuing operations)  ..	 
 
(139,319,661
)	 
 
(146,160,393
)	

 

 
 	
Net cash flow used in financing activities 	 
 
(139,319,661
)	 
 
(146,160,393
)	

 

 
 	
Net increase (decrease) in cash and cash equivalents before the effects of exchange rates variations	 
 
(119,950,716
)	 
 
(48,795,192
)	

 

 
 	
Effects of variations in the exchange rate on cash and cash equivalents	 
 
(4,541,559
)	 
 
(15,172,751
)	

 

 
 	
Net decrease in cash and cash equivalents 	 
 
(124,492,275
)	 
 
(63,967,943
)	
Cash and cash equivalents at the beginning of the period 	 
 
275,219,003

268,275,126

 

 

Cash and cash equivalents at the end of the period 	 
 
150,726,728

204,307,183

 

 

Incuded in cash and cash equivalents per the statement of financial situation	 
 
150,726,728

204,307,183
 	
Incuded in the assets of the disposal group	 
 
-

-

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

7

Cencosud S.A. and subsidiaries
Notes to the unaudited condensed consolidated interim financial statements
 
1 	General information	
 
Cencosud S.A. (hereinafter “Cencosud Group,” “the Company,” “the Holding,” “the Group”) taxpayer ID number 93.834.000-5 is a public corporation with an indefinite life, with its legal residence at Avda. Kennedy 9001, 4th floor, Las Condes, Santiago, Chile.
 
Cencosud S.A. is a public company registered with the Chilean Superintendence of Securities and Insurance (SVS), under No.743, which shares are quoted in Chile on the Stock Brokers-Stock Exchange (Valpara’so), the Chilean Electronic Stock Exchange and the Santiago Stock Exchange; it is also quoted on the United States of America Stock Exchange (“NYSE”) in New York in the form of American Depositary Receipts (ADRs).
 
Cencosud S.A. is a retail operator in Latin America, which has active operations in Chile, Argentina, Brazil, Colombia and Peru, where it has developed a successful multi-format and multi-brand strategy reaching sales of ThCh$ 5,109,600,697 as of June 30, 2017.
 
During the year ended June 30, 2017, the Company employed an average of 135,470 employees, ending with a total number of 135,605 employees.
 
The Company’s operations include supermarkets, hypermarkets, home improvement stores, department stores, shopping centers, as well as real estate development and financial services, which makes it the most diversified retail company of Latin-American capital in South America with the biggest offering of square meters, it caters to the consumption needs of over 180 million customers.
 
Additionally, it operates other lines of business that complement the main retail operations, such as insurance brokerage, a travel agency, customer loyalty services and family entertainment centers. All of these services have gained recognition and prestige among customers, with brands that excel at quality and service.
 
The Company splits its equity among 2,862,551,947 shares of a single series whose main shareholders are the following:
 
Major shareholders as of June 30, 2017	 
Shares
 	 
Interest

 
 	 
%
 	
Inversiones Quinchamali Limitada	 
 
573,754,802

20.044
%	
Inversiones Latadia Limitada	 
 
550,823,211

19.242
%	
Inversiones Tano Limitada	 
 
287,328,548

10.038
%	
Banco de Chile on behalf of third parties	 
 
183,205,842

6.400
%	
Banco Itau on behalf of investors	 
 
135,881,391

4.747
%	
Horst Paulmann Kemna	 
 
70,336,573

2.457
%	
Provida C Pension Fund	 
 
69,652,035

2.433
%	
Banco Santander - JP Morgan	 
 
59,169,314

2.067
%	
Habitat C Pension Fund	 
 
56,215,913

1.964
%	
Capital C Pension Fund	 
 
50,153,631

1.752
%	
Cuprum C Pension Fund	 
 
46,181,031

1.613
%	
Habitat B Pension Fund	 
 
42,566,644

1.487
%	
Other shareholders	 
 
737,283,012

25.756
%	
Total 	 
 
2,862,551,947

100.000
%	

8

The Cencosud group is controlled by the Paulmann family, as detailed below:
 
Interest of Paulmann family as of June 30, 2017	 
Interest

%
 	
Inversiones Quinchamali Limitada	 
 
20.044
%	
Inversiones Latadia Limitada	 
 
19.243
%	
Inversiones Tano Limitada	 
 
10.038
%	
Horst Paulmann Kemna	 
 
2.457
%	
Manfred Paulmann Koepfer	 
 
0.486
%	
Peter Paulmann Koepfer	 
 
0.492
%	
Heike Paulmann Koepfer	 
 
0.486
%	
Succession of Mrs. Helga Koepfer Schoebitz	 
 
0.113
%	
Inversiones Alpa Limitada	 
 
0.002
%	
Total 	 
 
53.359
%	
 
These condensed consolidated interim financial statements of Cencosud group as of June 30, 2017, were approved by the Board of Directors in a session held on August 24, 2017.

9

2 	Summary of the main accounting policies	
 
2.1 	Presentation basis	
 
The consolidated financial statements of Cencosud S.A. have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
 
These condensed consolidated interim financial statements for the six months ended June 30, 2017 have been prepared in accordance with IAS 34, “Interim financial reporting” and do not include all the information required for a complete set of IFRS annual financial statements. Accordingly, the condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2016, which have been prepared in accordance with IFRS.
 
The presentation of the financial statements in conformity with IFRS requires the use of certain accounting estimates, and also requires Management to exercise its judgment in the process of applying the Company’s accounting policies. Note 4 to these financial statements shows the areas in which a greater level of judgment has been applied, or where there is a higher level of complexity and therefore hypothesis and estimates are material to the financial statements.
 
Figures in the accompanying financial statements are expressed in thousands of Chilean pesos, as the Chilean peso is the functional and presentation currency of the Company. All values have been rounded to the nearest thousands of pesos, except where mentioned.
 
For the purpose of presenting comparative information, certain figures presented on the consolidated financial statements of the Group as of December 31, 2016 have been reallocated based on the presentation shown on the consolidated financial statement as of June 30, 2017.
 
2.2    	New and amended standards adopted by the group	
 
(a) The following standards and interpretations are compulsory for the first adoption for annual periods beginning on or after January 1, 2017.
 
Amendments and improvements
 
Amendment to IAS 7 — Statement of Cash Flows. Issued on February 2016. The amendments are intended to clarify IAS 7 to improve disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities.
 
Amendment to IAS 12 — Income Taxes. Issued on February 2016. The IASB had concluded that the diversity in practice around the recognition of a deferred tax asset that is related to a debt instrument measured at fair value is mainly attributable to uncertainty about the application of some of the principles in IAS 12. Therefore the amendments consist of some clarifying paragraphs and an illustrating example.
 
Amendment to IFRS 12 — Disclosure of Interests in Other Entities. The amendment clarifies the scope of the standard by specifying that some of the disclosure requirements in the standard apply to an entity’s interests listed in paragraph 5 that are classified as held for sale. These modifications must be applied restrospectively to the financial years beginning on or after January 1, 2017.
 
Management has assessed the adoption of these standards, amendments and interpretations, and it has concluded that there are no material impacts on Financial Statements of the Group.
 
(b) New standards, amendments and interpretations not yet adopted.

10

Standards and interpretations	Description	Application for annual periods
beginning on or after:	
IFRS 9 “Financial Instruments”	The complete version of IFRS 9 replaces most of the guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.	01-01-2018	
 
IFRS 15 “Revenue from Contracts with Customers”	 
This standard defines a new model to recognize revenue from contracts with costumers. The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations.	 
01-01-2018	
 
IFRS 16 “Leases”	 
Specifies how an IFRS reporter will recognise, measure, present and disclose leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting however remains largely unchanged and the distinction between operating and finance leases is retained. The standard also provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.	 
01-01-2019	
 
IFRIC 22 — Foreign Currency Transactions and Advance Consideration	 
IFRIC 22 clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency.	 
01-01-2018	

 
11

Amandments and improvements	Description	Application for annual periods
beginning on or after:	
Amendment to IFRS 2 — Share-based Payment	The amendments to IFRS 2 clarify the classification and measurement of share-based payment transactions. The amendments address several requests that the IASB and the IFRS Interpretations Committee received and that the IASB decided to deal with in one combined narrow-scope project.	01-01-2018	
 
Amendment to IFRS 15 — Revenue from Contracts with Customers	 
The amendments in Clarifications to IFRS 15 'Revenue from Contracts with Customers' address three of the five topics identified (identifying performance obligations, principal versus agent considerations, and licensing) and provide some transition relief for modified contracts and completed contracts. The IASB concluded that it was not necessary to amend IFRS 15 with respect to collectability or measuring non-cash consideration. In all its decisions, the IASB considered the need to balance helping entities with implementing IFRS 15 and not disrupting the implementation process.	 
01-01-2018	
 
Amendment to IAS 40 — Investment Property	 
The amendment provides guidance on transfers to, or from, investment properties. More specifically, the question was whether a property under construction or development that was previously classified as inventory could be transferred to investment property when there was an evident change in use.	 
01-01-2018	
 
Amendment to IAS 28 — Investments in Associates and Joint Ventures (2011)	 
The amendment clarifies that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition	 
01-01-2018	
 
Amendment to IFRS 10 — Consolidated Financial Statements	 
The IASB has made limited scope amendments to IFRS 10 Consolidated financial statements and IAS 28 Investments in associates and joint ventures.
The amendments clarify the accounting treatment for sales or contribution of assets between an investor and its associates or joint ventures. They confirm that the accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a ‘business’ (as defined in IFRS 3 Business Combinations).
Where the non-monetary assets constitute a business, the investor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor only to the extent of the other investor’s investors in the associate or joint venture. The amendments apply prospectively.
** In December the IASB decided to defer the application date of this amendment until such time as the IASB has finalised its research project on the equity method.	 
N/A**	

 
12

These standards, amendments and interpretations are not expected to have a material impact on the Group, except for the following:
 
IFRS 9 - Financial Instruments
 
IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.
 
While the Group has not yet undertaken a detailed assessment of the classification and measurement of financial assets, debt instruments currently classified as available-for-sale (AFS) financial assets would appear to satisfy the conditions for classification as at fair value through other comprehensive income (FVOCI) and hence there will be no change to the recognition of such assets.
 
The other financial assets held by the group mainly include:
 
●	Mutual Fund Shares	
●	Derivatives (hedging and economical)	
●	Highly liquid financial instruments, and	
●	Financial investments long term	
 
The Group does not expect the new guidance to have a significant impact on the classification and measurement of these financial assets.
 
There will be no impact on the group's recognition for financial liabilities, as the new requirements only affect the recognition for financial liabilities that are designated at fair value through profit or loss and the group does not have liabilities with such classification. The derecognition rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement and have not been changed.
 
The new hedge accounting rules will align the recognition for hedging instruments more closely with the group's risk management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principles-based approach. While the Group is yet to undertake a detailed assessment, it would appear that the Group's current hedge relationships would qualify as accounting hedges upon the adoption of IFRS 9. Accordingly, the Group does not expect a significant impact on the accounting for its hedging relationships.
 
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classifies at amortized cost, debt instruments measured at FVOCI, contracts under IFRS 15 Revenue from Contracts with Costumers, lease receivables, loan commitments and certain financial guarantee contracts. While the group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses.
 
The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extend of the Group's disclosures about its financial instruments particularly in the year of the adoption of the new standard.
 
IFRS 9 must be applied mandatorily for financial years commencing on or after January 1, 2018.
 
The Group does not intend to adopt IFRS 9 before its mandatory date. At this stage, the Group does not intend to adopt the standard before its effective date.
 
IFRS 15 - Revenue from Contracts with Costumers
 
The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts.
 
The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer.

13

The standard permits a full retrospective or modified retrospective approach for adoption.
 
Management is currently assessing the effects of applying the new standard on the Group’s financial statements and has identified the following areas that are likely to be affected:
 
●	Accounting for the customers loyalty program – IFRS 15 requires that the total consideration received must be allocated to the points and goods based on relative stand-alone selling prices rather than based on the residual value method; this could result in different amounts being allocated to the goods sold and deffera in the recognition of a portion of the revenue, and	
●	GIFT CARD - IFRS 15 allows that when it is adequately established the rate of wastage from clients, over their totalcontractual rights (breakage), the variable consideration treatment is given and a portion of such rightsis recognized as revenue; This could lead to a recognition of revenue in advance.	
 
IFRS 15 must be applied mandatorily for financial years commencing on January 1, 2018. The expected date of adoption by the Group: January 1, 2018. At this stage, the Group is not able to estimate the impact of this new standard on the Group´s financial statements, the Group will make a more detailed assessment of the impact over the next twelve months.
 
IFRS 16 - Leases
 
IFRS 16 was issued in January 2016. It will result in almost all leases being recognized on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases.
 
The accounting for lessors will not significantly change.
 
The standard will affect primarily the recognition of the Group’s operating leases. As at the reporting date, the Group has non-cancellable operating leases commitments of MM $ 1,716,227. The Group is expecting to determine the extend of these commitments and the approximate amounts for the recognition of the asset, liability and retained earnings adjustment at the transition date during the first semester of 2018, based on the restrospective accumulative approach allowed by the standard.
 
Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under the new IFRS 16 definitions.
 
IFRS 16 is mandatory for financial years commencing on or after January 1, 2019. At this stage, the Group does not intend to adopt the standard before its effective date.
 
2.3 	Accounting policies	
 
The accounting policies adopted are consistent with those applied during the previous financial year and corresponding interim reporting period.
 
Income taxes for interim periods are accounted for using the tax rate that would be applicable to expected total annual income before taxes.
 
2.4 	Changes in accounting policies	
 
The Company assess accounting policies frequently, and decide to change any of the adopted standards only if the change: i) is required by a new IFRS ; or ii) results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance, or cash flows.
 
No changes in accounting policies have been adopted by the Company during for the six months ended June 30, 2017 and 2016.

14

2.5 	Income tax.	
 
On September 29, 2014, Law No. 20,780 was enacted and published in the Official Gazette, introducing various amendments to the current income tax law and taxation rules for other taxes in Chile. Under the recently enacted tax law, the income tax rate will increase to 21%, 22.5%, 24%, 25.5% and 27%, for the years 2014, 2015, 2016, 2017 and 2018 and following fiscal years, respectively, such newly enacted rates are applicable based on the Company’s adoption of the partially integrated system.
 
The above implies that the income tax rate in Chile is 25.5% for the 2017 fiscal year. Therefore, for the close of the financial statements as of June 30, 2017, a tax rate of 25.5% has been considered in the determination of the income tax provision in Chile.
 
2.6 	Assets and liabilities held for sale and discontinued operations	
 
Non current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and the sale is considered highly probable. Assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, except forinvestment properties, financials instruments and others that are carried at fair value. An impairment loss is recognized for any initial or subsequent write down of the asset (or disposal group) to fair value less cost to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset ( or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non current asset (or disposal group) is recognized at the date of recognition. Non-current assets (including those that are part of disposal group) are notdepreciated or amortized while they are classified as held for sale.
 
Non current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.
 
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations, net of tax, are presented separately in the statement of profit and loss. Net cash flows attributable to the operating, investing and financing activities of discontinued operations are required to be disclosed either in the notes to the financial statements or on the face of the statements of cash flows. IFRS 5 requires that a company “re-present” its statement of comprehensive income as if the operation had been discontinued for all prior periods presented.
 
Assets held for sale, and associated liabilities, are detailed on note 21 to these condensed interim financial statements.
 
2.7 	Seasonability	
 
The Company experiences distinct seasonal sales patterns at supermarkets due to heightened consumer activity throughout the Christmas and New Year holiday season, as well as during the beginning of each school year in March. During these periods, the Company promotes the sale of non-food items particularly by discounting imported goods, such as toys throughout the Christmas holiday season, and school supplies during the back-to-school period. Conversely, the Company usually experiences a decrease in sales during the summer vacation months of January and February.
 
The Company does not experience significant seasonality in the home improvement sector.
 
Department stores have also experienced historically distinct seasonal sales patterns due to heightened consumer activity throughout the Christmas and New Year holiday season. As a result, the strongest quarter in terms of sales is the fourth quarter.
 
Shopping center revenues generally increase during the Christmas and New Year holiday season, reflecting the seasonal sales peak for shopping centers.

15

3 	Risk management policies	
 
The Company is exposed to a variety of financial risks: market risk (including interest rate risk and foreign exchange rate risk), credit risk and liquidity risk.
 
The condensed interim consolidated financial statements do not include all financial risk management information and disclosure required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as of December 31, 2016.
 
There have been no changes in the risk management policies and procedures between the dates of the annual and these interim consolidated financial statements as of June 30, 2017.
 
3.1. 	Valuation methodology (initially and subsequently).	
 
Financial instruments that have been accounted for at fair value in the statement of financial position as of June 30, 2017 and December 31, 2016 have been measured using the methodologies as set forth in IFRS 13. These methodologies applied for each class of financial instruments are classified using the following hierarchy:
 
Level I: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted marked price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
 
Level II: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
 
Level III: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
 
Specific valuation techniques used to value financial instruments include:
 
●	Quoted market prices or dealer quotes for similar instruments;	
 
●	The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves;	
 
●	The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value;	
 
●	Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.	
 
Group valuation process
 
The Group has established control framework with respect to the measurements of fair value. This includes a valuation team that has an overall responsibility for overseeing all significant fair value measurements, including level 3 fair values, and reports directly to the regional CFO.
 
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence from third parties to support the conclusion that such valuations meet the requirements of IFRS, including the fair value hierarchy in which such valuation should be classified.
 
Taking into account the nature and characteristics of the instruments maintained in its portfolio, the Company classifies its valuation methodologies in the three aforementioned levels. Currently, the valuation process considers internally developed valuation techniques, for which parameters and observable market inputs are used, mainly using the present value methodology.

16

As of June 30, 2017 and December 31, 2016, the Group has no financial instruments that have been valuated using inputs assessed as level III, however, the procedures above are in line with the Group policies regarding the estimation and review of the inputs used in fair-valuing financial asset and recurrent and non-recurrent non-financial assets.
 
The tables below show the total value of each type of the financial instruments valued under each category, and its respective percentage, as of June 30, 2017 and December 31, 2016:
 
Table Valuation methodologies.
 
June 2017
 
 	 	 	 	Valuation method	  Amortized	
	
Classification	Group	Type	 	Value	Level I	Level II	Level III	cost	 	
 	 	 	 	ThCh$	%	%	%	%	 	
At fair value through profit or loss	Mutual funds 	Mutual funds 	 	80,581,582	100%	-	-	-	 	
 	 	Other financial investments	 	250,927	100%	-	-	-	 	
Loans and trade receivables, net	Cash and cash equivalents	Cash balances 	 	37,457,146	-	-	-	100%	 	
 	 	Bank balances 	 	77,071,134	-	-	-	100%	 	
 	 	Short-term deposits 	 	36,198,448	-	-	-	100%	 	
 	Receivables 	Trade receivables, net	 	810,285,347	-	-	-	100%	 	
 	Receivables from related entities	Related entities, current	 	14,378,482	-	-	-	100%	 	
Financial liabilities and payables	Bank loans 	Current 	 	291,207,217	-	-	-	100%	 	
 	 	Non-Current 	 	191,657,809	-	0.1%	-	99.9%	 	
 	Bonds payable 	Current 	 	249,241,058	-	-	-	100%	 	
 	 	Non-Current 	 	2,506,434,669	-	0.3%	-	99.7%	 	
 	Other loans (lease) 	Current 	 	2,495,366	-	-	-	100%	 	
 	 	Non-Current 	 	17,699,326	-	-	-	100%	 	
 	Deposits and saving accounts	Current 	 	58,156,569	-	-	-	100%	 	
 	 	Non-Current 	 	36,020,842	-	-	-	100%	 	
 	Debt purchase affiliates	Non-Current 	 	1,846,979	-	-	-	100%	 	
 	Other financial liabilities	Current 	 	2,482,889	-	-	-	100%	 	
 	Trade payables 	Current 	 	1,530,727,505	-	-	-	100%	 	
 	 	Non-Current 	 	192,911	-	-	-	100%	 	
 	Withholding taxes 	Current 	 	171,223,269	-	-	-	100%	 	
 	 	Non-Current 	 	3,507,733	-	-	-	100%	 	
 	Payables to related entities	Current	 	15,683,885	-	-	-	100%	 	
 	Other financial liabilities	Forward 	 	4,204	-	100%	-	-	 	
Hedges	Hedging derivatives 	Cash flow hedging liability	 	11,472,808	-	100%	-	-	 	
 	 	Fair value hedging liability	 	398,391	-	100%	-	-	 	
 	 	Cash flow hedging asset	 	247,557,467	-	100%	-	-	 	
 	 	Fair value hedging asset	 	24,284,241	-	100%	-	-	 	

17

December 2016
 
 	 	 	 	Valuation method	    Amortized	
	
Classification	Group	Type	 	Value	Level I
	Level II	Level  III
	cost	 	
 	 	 	 	ThCh$	%	%	%	%	 	
At fair value through profit or loss	Mutual funds 	Mutual fund shares 	 	189,960,780	100%	-	-	-	 	
 	Derivatives 	Forward 	 	1,398,557	-	100%	-	-	 	
 	Other financial Instrument	Highly liquid financial instruments	 	28,629,285	100%	-	-	-	 	
 	 	Financial investments – long term	 	240,874	100%	-	-	-	 	
Loans and trade receivables, net	Cash and cash equivalents	Cash balances 	 	52,646,980	-	-	-	100%	 	
 	 	Bank balances 	 	135,282,148	-	-	-	100%	 	
 	 	Short-term deposits 	 	87,289,875	-	-	-	100%	 	
 	 	Trade receivables, net	 	879,033,383	-	-	-	100%	 	
 	Receivables from related parties	Related parties, current	 	28,988,176	-	-	-	100%	 	
Financial liabilities and payables	Bank loans 	Current 	 	215,393,417	-	-	-	100%	 	
 	 	Non-Current 	 	206,299,337	 	0.1%	-	99.9%	 	
 	Bonds payable 	Current 	 	127,530,284	-	-	-	100.0%	 	
 	 	Non-Current 	 	2,618,875,407	 	0.3%	-	99.7%	 	
 	Other loans (lease)  	Current 	 	2,713,893	-	-	-	100%	 	
 	 	Non-Current 	 	19,256,643	-	-	-	100%	 	
 	Deposits and saving accounts	Current 	 	56,128,948	-	-	-	100%	 	
 	 	Non-Current 	 	45,030,033	-	-	-	100%	 	
 	Debt purchase affiliates	Non-Current 	 	1,722,769	-	-	-	100%	 	
 	Other financial liabilities	Current 	 	2,091,081	-	-	-	100%	 	
 	Trade payables 	Current 	 	1,726,983,368	-	-	-	100%	 	
 	 	Non-Current 	 	191,397	-	-	-	100%	 	
 	Withholding taxes 	Current 	 	199,863,684	-	-	-	100%	 	
 	 	Non-Current 	 	4,612,328	-	-	-	100%	 	
 	Payables to related parties
 	Current 	 	18,722,919	-	-	-	100%	 	
Hedges	Hedging derivatives 	Cash flow hedging liabilities	 	13,514,328	-	100%	-	-	 	
 	 	Fair value hedging liabilities	 	3,078,542	-	100%	-	-	 	
 	 	Cash flow hedging assets	 	264,820,710	-	100%	-	-	 	
 	 	Fair value hedging assets	 	22,299,090	-	100%	-	-	 	
 
Instruments classified as Level II correspond mainly to interest rate swaps and cross currency swaps that have been valued by discounting the future cash flows stipulated in the contract for both the asset and liability component of each instrument. The structure of interest rates used to bring the future cash flows to present value is constructed based on the currency of each component and inferred from transactions involving risk-free instruments in the relevant markets.
 
The Group recognizes transfers between levels of the fair value hierarchy at the end the reporting period during the change has occurred. As of June 30, 2017 and December 31, 2016, there have been no transfers between level I and II, and transfers out of level III to another level of fair value.
 
3.2. 	Reclassifications.	
 
As of the end of this reporting period, the Company has not reclassified any entries in the aforementioned financial instrument categories.

18

3.3. 	Liquidity risk.	
 
The concept of liquidity risk is used by the Company to refer to financial uncertainty, at different time horizons, related to its capacity to respond to cash needs to support its operations, under both normal and exceptional circumstances.
 
Compared to year ended, there was no material change in the contractual undiscounted cash out flows for financial liabilities that affect the Company´s liquidity risk.
                     
3.4	Fair value of financial assets and liabilities measured at amortized cost.	

In order to estimate the fair value of debt instruments accounted for at amortized cost, the Company has estimated the cash flows from variable interest obligations using relevant swap curves. The structure of interest rates used to bring the future cash flows to present value is constructed based on the currency of each obligation and corresponds to the risk-free curve in the relevant market plus a credit spread inferred from the initial contractual conditions of each obligation.  
 
The fair value of borrowings (bank loans and bons payables) which are classified within Level II of the fair value hierarchy, are as follows:

As of
 	
Borrowings	 
June 30,2017
 	 
December 31,2016

ThCh$
 	 
ThCh$
 	
Current 	 
 
538,043,792

338,455,386
 	
Non-Current 	 
 
2,755,417,850

2,893,489,541
 	
Total 	 
 
3,293,461,642

3,231,944,927

The fair value of the following financial assets and liabilities approximate their carrying amount:
 
●	Trade and other receivables	
 
●	Other current financial assets	
 
●	Cash and cash equivalents (excluding bank overdrafts)	
 
●	Trade and other payables	
 
●	The following assets and liabilities within the held-for-sale disposal group:	
 
–	Cash and cash equivalents	
 
–	Other current assets	
 
–	Trade and other payables	
 
–	Borrowings	
 
–	Other current liabilities	

19

4 	Estimates, judgment or criteria applied by management	
 
The estimates and criteria used are continuously assessed and are based on prior experience and other factors, including the expectation of occurrence of future events that are considered reasonable according to the circumstances.
 
The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
 
In preparing these condensed interim financial statements, the significant judgments made by management in applying the group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2016, with the exception of changes in estimates that are required in determining the provision for income taxes and changes derived from adoption of new pronouncements as mentioned in Note 2.5.
 
4.1   Investment property
 
a) Fair value measurement for lands
 
The fair value for land was determined by the Company’s finance department, consulting with external and independent property examiners who have the appropriate recognized professional qualification and recent experience in the location and category of the property being valued.
 
The methodology used in determining the fair value of lands was the market approach, which consists of determining the fair value based on recent transactions occurred in the market.
 
This measurement corresponds to level II of the fair value hierarchy.
 
b) Fair value measurements for investment properties other than land.
 
The Company’s finance department is responsible for determining fair value measurements included in the financial statements, including Level 3 fair values of investment properties. The Company’s finance department includes a valuations team that prepares a valuation for each investment property every quarter. The valuation team reports directly to the Chief Financial Officer (CFO) and the Audit Committee (AC).Discussions of valuation processes, key inputs and results are held between the CFO, AC and the valuation team at least once every quarter, in line with the Company’s quarterly reporting dates.
 
The fair value measurement for this type of investment has been categorized as a level III fair value based on the inputs used in the valuation technique. Investment properties are valued on a highest and best use basis. Changes in Level 3 fair values are analyzed at each reporting date during the quarterly valuation discussions between the CFO, AC and the valuation team. As part of this discussion, the team presents a report that explains the reasons for the fair value movements.
 
For all of the Company’s investment properties, the current use is considered to be the highest and best use.
 
The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. There were no transfers in or out of Level 3 fair value measurements for investment properties during the period, nor transfers between Level 1 and Level 2 of the fair value hierarchy.
 
For investment property the methodology of the discounted future cash flows uses a country-specific WACC post- tax rate, measured in real terms and differentiated by country. To this effect, a calculation is performed to obtain the net revenues that correspond to the lease income minus the direct costs and operating expenses. Additionally, the projected cash flows used the historical information of the recent years and the projected macroeconomic variables that will affect each country.

20

The rates used as of June 30, 2017 and December 31, 2016 are as follows:

WACC rate as of
 	
Country	 
6/30/2017
 	 
12/31/2016

 

 	
Chile  	 
 
6.05
%	 
 
6.19
%	
Argentina 	 
 
12.09
%	 
 
12.27
%	
Peru 	 
 
6.60
%	 
 
6.75
%	
Colombia 	 
 
6.96
%	 
 
7.03
%	
 
The cash flows are calculated in a scenario of moderated growth for those investment properties that have reached the expected maturity level and the main variables used are:
 
1.  	Determination of the Discount Rate	
 
The discount rate is reviewed quarterly for each country and consists of the following factors:
 
a)  	BETA: Because the American market presents a greater number of comparable companies within this industry, using betas of companies in that country.	
b)  	Risk-free rate: It draws on the U.S. Treasury rate at 30 years (30yr T-Bond)	
c)  	Risk premium: Estimated on long-term returns of the stock market and the country risk of each transaction, estimated by the Credit Default Swap to 10 years (10yr CDS). In the case of Argentina’s country risk used is the average of the last three years.	
d)  	Leverage Ratio: Estimated as of BETA referring them on 66.4% equity and 33.6% debt.	
e)  	Tax rate: We use the tax rate in effect in each country	
f)  	Spread: The international bond spread of Cencosud is used to estimate the return on debt which is similar to the Industry spread. With all these factors we estimate the discount rate (WACC) nominal and real, the latter being used as the flow is estimated at UF (Unidad de Fomento) in Chile, or adjusted for inflation in Peru and Argentina	
 
2.        	Revenue growth:	
 
The evolution of income depends on the property, but remains between 0.5% and 1.0% annual real growth, except those newly opened malls whose maturation does expect superior performance improved in the first years of operation. The revenue projection is reviewed quarterly so that it is aligned to the budget approved by the board in the short term and that their expectations of long-term trends are in line with the life cycle in which the asset is (Shopping).
 
3.  	Growth in costs and expenses:	
 
As income, change in expenditure depends on the property but always reflects the standard structure resulting from the operation of such properties and operating agreements signed with tenants. These are also reviewed quarterly to be aligned with the budget and expected evolution for each Shopping.
 
4.  	Investment Plan:	
 
For each shopping center, the Company reviews whether the investment plans is in line with the characteristics of each property and the life cycle in which they are placed.
 
Based on the points described above, the estimated available flow projection thirty-year term, after which is estimated a perpetuity. The present value of these flows determines the fair value of the investment property.
 
5.         	Valuation technique and Inter-relationship between key unobservable inputs.	
 
Valuation technique (Discounted cash flows): The valuation model considers the present value of the net cash flows to be generated from the property taking into account expected revenue growth, occupancy rates, other cost and expenses not paid by tenants. The expected net cash flows are discounted using risk-adjusted discount rates (see above on “determination of discount rate”). Among other factors, the discount rate estimation considers the quality of a building and its location, tenant credit and lease terms.

21

Class
	Country (*)	Unobservable input	Range	
 	 	 	 	
Malls 	Chile	Expected revenue growth (real)	0.5% - 1%	
 	 	Occupancy rate	90% - 100%	
 	 	 	 	
 	Argentina	Expected revenue growth (real)	0.5% - 1%	
 	 	Occupancy rate	90% - 100%	
 	 	 	 	
Office 	Chile	Expected revenue growth (real)	0.5% - 1%	
 	 	Occupancy rate (1 st through 5 th year)	50% - 90%%	
 	 	Thereafter	80% - 98%	
 
(*) The group concentrates 89% of the total of the investment properties in Chile and Argentina.
 
The estimated fair value of the investment properties would increase (decrease) if:
●	Risk-adjusted discount rate were lower (higher)	
●	Expected revenue growth were higher (lower)	
●	The occupancy rate were higher (lower)	

22

5 	Other financial assets, current and non-current	
 
The composition of this item as of June 30, 2017 and December 31, 2016 includes the following:  

As of
 	
Other financial assets, current	 
June 30,
2017
 	 
December 31,
2016

ThCh$
 	 
ThCh$
 	
Mutual Funds units (*) 	 
 
80,581,582

189,960,780
 	
Hedging derivatives 	 
 
-

1,398,557
 	
Highly liquid financial instruments 	 
 
-

28,629,285
 	
Total other financial assets, current 	 
 
80,581,582

219,988,622

 	 
As of
 	
Other financial assets, non-current	 
June 30,
2017
 	 
December 31,
2016

ThCh$
 	 
ThCh$
 	
Hedging derivatives 	 
 
271,841,708

287,119,800
 	
Financial investments Long term 	 
 
250,927

240,874
 	
Total other financial assets, non-current 	 
 
272,092,635

287,360,674

(*) 	Mutual Funds units are mainly fixed income investments.	

23

6 	Trade receivables and other receivables	
 
Trade receivables and other receivables as of June 30, 2017 and December 31, 2016 are as follows:

As of
 	
Trade receivables and other receivables net, current	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Trade receivables net, current 	 
 
135,052,777

187,736,950
 	
Credit card receivables net, current 	 
 
447,204,172

409,219,883
 	
Other receivables, net, current 	 
 
209,813,956

270,182,844
 	
Total 	 
 
792,070,905

867,139,677

 
 	 
As of
 	
Trade receivables and other receivables, net, non-current	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Trade receivables net, non-current 	 
 
-

373,386
 	
Credit card receivables net, non-current 	 
 
14,468,103

8,412,427
 	
Other receivables, net, non-current 	 
 
3,746,339

3,107,893
 	
Total 	 
 
18,214,442

11,893,706

 
 	 
As of
 	
Trade receivables and other receivables, gross, current	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Trade receivables gross, current 	 
 
144,457,028

201,676,904
 	
Credit card receivables gross, current 	 
 
471,162,387

428,296,390
 	
Other receivables gross, current 	 
 
225,839,229

280,824,236
 	
Letters of credit loans 	 
 
-

158,572
 	
Total 	 
 
841,458,644

910,956,102

 
 	 
As of
 	
Trade receivables and other receivables, gross, non-current	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Trade receivables gross, non-current 	 
 
-

373,386
 	
Credit card receivables gross, non-current 	 
 
14,468,103

8,412,427
 	
Other receivables gross, non-current 	 
 
3,746,339

3,107,893
 	
Total 	 
 
18,214,442

11,893,706

 
 	 
As of
 	
Trade receivables and other receivables close to maturity	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Less than three months 	 
 
571,909,810

645,374,201
 	
Between three and six months 	 
 
93,810,479

88,253,127
 	
Between six and twelve months 	 
 
72,382,902

73,541,986
 	
In more than twelve months 	 
 
18,214,442

11,893,706
 	
Total 	 
 
756,317,633

819,063,020

 
 
24

The maturity of past due trade receivables as of June 30, 2017 and December 31, 2016 is as follows:

As of
 	
Trade receivables past due but not impaired	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Past due less than three months 	 
 
79,260,141

77,517,208
 	
Past due between three and six months 	 
 
10,094,649

10,223,002
 	
Past due between six and twelve months 	 
 
6,350,678

3,325,672
 	
Past due in more than twelve months 	 
 
7,649,985

12,720,906
 	
Total 	 
 
103,355,453

103,786,788

The movement of the bad debt allowance is as follows:

As of
 	
Change in bad debt allowance	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Initial balance 	 
 
43,816,425

44,636,783
 	
Increase in provision 	 
 
75,610,417

57,105,655
 	
Utilized provision 	 
 
(12,675,964
)	 
 
(26,885,538
)	
Decrease in provision 	 
 
(57,363,139
)	 
 
(31,040,475
)	
Total 	 
 
49,387,739

43,816,425

The maximum exposure to credit risk at the date of the report is the book value in each category of the trade account; Cencosud Group does not request collateral as a guarantee.

25

7 	Transactions with related parties	
 
Transactions with related companies are based on immediate payment or collection or with a term of up to 30 days, and are not subject to special conditions. These operations comply with what is established in articles 44 and 49 of Law N° 18,046 that regulates the Corporations. It is noteworthy that the related party transactions are in accordance with IAS 24 (Revised) “Related Parties”. The Company has a policy to disclose all transactions performed with related parties during the period.
 
7.1 	Trade receivables from related entities	
 
The composition of the item as of June 30, 2017 and December 31, 2016 is as follows:
 
 	 	Receivables from related entities	Balance as of	
Tax ID Number	Company	Transaction
description	Transaction
term	Nature of
relationship	Currency	Current	Non Current	
						6/30/2017	12/31/2016	6/30/2017	12/31/2016	
 	 	 	 	 	 	ThCh$	ThCh$	 	 	
99.500.840-8	CAT Administradora de Tarjetas S.A.	Trade receivable	Current	Associate	Chilean Pesos	9,587,721	20,226,071	-	-	
99.500.840-8	CAT Administradora de Tarjetas S.A.	Dividends receivable	Current	Associate	Chilean Pesos	2,069,975	4,135,701	-	-	
77.218.570-7	CAT Corredores de Seguros y Servicios S.A.	Trade receivable	Current	Associate	Chilean Pesos	371,722	443,446	-	-	
77.218.570-7	CAT Corredores de Seguros y Servicios S.A.	Dividends receivable	Current	Associate	Chilean Pesos	387,532	370,903	-	-	
76.388.146-6	Operadora de Procesos S.A.	Dividends receivable	Current	Associate	Chilean Pesos	180,447	487,097	-	-	
76.388.146-6	Operadora de Procesos S.A.	Trade receivable	Current	Associate	Chilean Pesos	1,242,863	2,624,104	-	-	
76.388.155-5	Servicios Integrales S.A.	Dividends receivable	Current	Associate	Chilean Pesos	512,361	682,020	-	-	
76.388.155-5	Servicios Integrales S.A.	Trade receivable	Current	Associate	Chilean Pesos	25,861	18,834	-	-	
Total	 	 	 	 	 	14,378,482	28,988,176	-	-	
 
7.2 	Trade payables to related entities	
 
The composition of the item as of June 30, 2017 and December 31, 2016 is as follows:
 
 	 	Payables to related entities	Balance as of	
Tax ID number	Company	Transaction
description	Transaction
term	Nature of
relationship	Currency	Current	Non Current	
						6/30/2017	12/31/2016	6/30/2017	12/31/2016	
 	 	 	 	 	 	ThCh$	ThCh$	ThCh$	 	
-	Loyalti Del Perú S.A.C.	Fund transfer	Current	Associate	Peruvian New Sol	967,690	675,399	-	-	
99.500.840-8	CAT Administradora de Tarjetas S.A.	Trade payable	Current	Associate	Chilean Pesos	13,963,527	16,765,170	-	-	
77.218.570-7	CAT Corredores de Seguros y Servicios S.A.	Trade payable	Current	Associate	Chilean Pesos	13,345	243,112	-	-	
76.388.146-6	Operadora de Procesos S.A.	Trade payable	Current	Associate	Chilean Pesos	700,390	989,095	-	-	
76.388.155-5	Servicios Integrales S.A.	Trade payable	Current	Associate	Chilean Pesos	38,933	50,143	-	-	
Total	 	 	 	 	 	15,683,885	18,722,919	-	-	

26

 
7.3	Transactions with related parties and impact on profit and loss	
 
The operations and its impact on profit and loss are presented for the years ended June 30, 2017 and 2016, as follows:

Transactions

Tax ID Number
 	Company	Nature of relationship	Transaction description	Currency	Country	 
6/30/2017
 	 
Impact to profit and loss (charge/credit)
 	 
6/30/2016
 	 
Impact to profit and loss (charge/credit)

 
 	 	 	 	 	 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$

 
3.294.888-k
 	Horst Paulmann Kemna.  	Chairman 	Dividends paid 	Chilean pesos 	Chile	 
 
2,110,097

-

4,220,195

-

 
4.580.001-6
 	Helga Koepfer Schoebitz.      	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
93,014

-

186,029

-

 
76.425.400-7
 	Inversiones Tano Ltda. 	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
8,619,856

-

27,472,788

-

 
86.193.900-6
 	Inversiones Quinchamali Ltda.	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
17,212,644

-

34,425,288

-

 
96.802.510-4
 	Inversiones Latadia Ltda.   	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
16,524,696

-

33,049,393

-

 
7.012.865-9
 	Manfred Paulmann Koepfer	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
375,572

-

751,144

-

 
8.953.509-3
 	Peter Paulmann Koepfer	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
373,397

-

746,794

-

 
8953510-7
 	Heike Paulmann Koepfer  	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
368,708

-

737,417

-

 
96.863.570-0
 	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Leases paid 	Chilean pesos 	Chile	 
 
-

-

1,407,010

(1,407,010
)	

96.863.570-0
 	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Utilities Paid 	Chilean pesos 	Chile	 
 
-

-

955,675

(955,675
)	

96.863.570-0
 	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Sale of goods 	Chilean pesos 	Chile	 
 
-

-

15,791

15,791

 
77.209.070-6
 	Viña Cousiño Macul S.A.  	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
178,450

(178,450
)	 
 
369,462

(369,462
)	

92.147.000-2
 	Wenco S.A.	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
1,502,520

(1,502,520
)	 
 
1,409,848

(1,409,848
)	

92.147.000-2
 	Wenco S.A.	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
-

-

5,536

5,536

 
76.076.630-5
 	Maxi Kioskos Chile S.A. 	Company’s Director 	Leases collected 	Chilean pesos 	Chile	 
 
323,779

323,779

199,211

199,211

 
76.076.630-5
 	Maxi Kioskos Chile S.A. 	Company’s Director 	Utilities collected 	Chilean pesos 	Chile	 
 
158,262

158,262

5,405

5,405

 
78.410.320-K
 	Imp y Comercial Regen Ltda.	Company’s Director 	Merchandise buying 	Chilean pesos 	Chile	 
 
167,893

(167,893
)	 
 
159,258

(159,258
)	

78.410.320-K
 	Imp Y Comercial Regen Ltda.	Company’s Director 	Leases collected 	Chilean pesos 	Chile	 
 
123,903

123,903

118,849

118,849

 
78.410.320-K
 	Imp Y Comercial Regen Ltda.	Company’s Director 	Sale of goods 	Chilean pesos 	Chile	 
 
15,796

15,796

9,740

9,740

 
78.410.320-K
 	Imp Y Comercial Regen Ltda. 	Company’s Director 	Common expenses collected 	Chilean pesos 	Chile	 
 
47,222

47,222

48,347

48,347

 
79.595.200-4
 	Adelco Santiago Ltda.	Company, director relationship 	Goods purchases   	Chilean pesos 	Chile	 
 
13,595

13,595

-

-

 
88.983.600-8
 	Teleductos S.A.	Common director 	Leas collected 	Chilean pesos 	Chile	 
 
21,971

21,971

21,363

21,363

 
88.983.600-8
 	Teleductos S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
338,016

(338,016
)	 
 
460,973

(460,973
)	

92.491.000-3
 	Labsa Inversiones Ltda.	Company, director relationship 	Leases paid 	Chilean pesos 	Chile	 
 
259,250

(259,250
)	 
 
12,855

(12,855
)	

93.737.000-8
 	Manquehue Net S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
10,482

(10,482
)	 
 
28,301

(28,301
)	

96.566.940-K
 	Agencias Universales S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
17,158

(17,158
)	 
 
2,882

(2,882
)	

96.566.940-K
 	Agencias Universales S.A.	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
6,053

6,053

2,659

2,659

 
92.580.000-7
 	Empresa Nacional de Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
229,293

(229,293
)	 
 
517,130

(517,130
)	

92.580.000-7
 	Empresa Nacional de Telecomunicaciones S.A.	Common director 	Leas collected 	Chilean pesos 	Chile	 
 
24,279

24,279

-

-

 
90.193.000-7
 	Empresa El Mercurio.S.A.P.	Common director 	Leases paid 	Chilean pesos 	Chile	 
 
34,187

34,187

67,075

67,075

 
90.193.000-7
 	Empresa El Mercurio.S.A.P.	Common director 	Common expenses collected 	Chilean pesos 	Chile	 
 
6,858

6,858

-

-

 
90.193.000-7
 	Empresa El Mercurio.S.A.P.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
13,953

13,953

43,724

43,724

 
90.193.000-7
 	Empresa El Mercurio.S.A.P.	Common director 	Services received 	Chilean pesos 	Chile	 
 
1,611,506

(1,611,506
)	 
 
1,375,746

(1,375,746
)	

96.628.870-1
 	Entel Telefon’a Local S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
7,524

(7,524
)	 
 
9,495

(9,495
)	

96.806.980-2
 	Entel PCS Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
98,288

(98,288
)	 
 
461,677

(461,677
)	

96.806.980-2
 	Entel PCS Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
2,135,577

(2,135,577
)	 
 
1,183,540

(1,183,540
)	

96.806.980-2
 	Entel PCS Telecomunicaciones S.A.	Common director 	Lease collected 	Chilean pesos 	Chile	 
 
385,082

385,082

451,286

451,286

 
96.806.980-2
 	Entel PCS Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
73,266

73,266

34,220

34,220

 
96.566.940-K
 	Cia Nacional de Telefonos,Telefònica del Sur S.A	Common director 	Services provided 	Chilean pesos 	Chile	 
 
761

(761
)	 
 
822

(822
)	

96.566.940-K
 	Cia Nacional de Telefonos,Telefònica del Sur S.A	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
-

-

4,016

4,016

 
96.628.870-1
 	Industria Productos Alimenticios S.A.	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
581,722

(581,722
)	 
 
330,746

(330,746
)	

79.675.370-5
 	Assets- Chile S.A	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
-

-

3,458

3,458

 
70.649.100-7
 	Centros de Estudios Pùblicos	Company, director relationship 	Services provided 	Chilean pesos 	Chile	 
 
-

-

834

(834
)	

O-E
 	JetAviation Flight Services Inc.	Company, director relationship 	Services provided 	US Dollar 	Chile	 
 
409,920

(409,920
)	 
 
846,375

(846,375
)	

92434000
 	Besalco S.A	Common director 	Services provided 	Chilean pesos 	Chile	 
 
1,611

(1,611
)	 
 
3

(3
)	

88.417.000-1
 	Sky Airline S.A. 	Company, director relationship 	Leases collected 	Chilean pesos 	Chile	 
 
-

-

4,775

4,775

 
99.500.840-8
 	CAT Administradora de Tarjetas S.A.	Associate                              	Cencosud Card sales 	Chilean pesos 	Chile	 
 
374,890,298

10,053,321

339,886,055

9,649,654

 
99.500.840-8
 	CAT Administradora de Tarjetas S.A.	Associate                              	Statements collection 	Chilean pesos 	Chile	 
 
559,952,322

-

494,927,785

-

 
99.500.840-8
 	CAT Administradora de Tarjetas S.A.	Associate                              	Leases collected 	Chilean pesos 	Chile	 
 
9,060

-

58,606

58,606

 
99.500.840-8
 	CAT Administradora de Tarjetas S.A.	Associate                              	Sale of goods 	Chilean pesos 	Chile	 
 
-

-

6,183

6,183

 
99.500.840-8
 	CAT Administradora de Tarjetas S.A.	Associate                              	Gift Cards buying 	Chilean pesos 	Chile	 
 
27,283

-

213,791

-

 
77.218.570-7
 	CAT Corredores de Seguros y Servicios S.A.	Associate                              	Merchandise buying 	Chilean pesos 	Chile	 
 
-

-

182,317

182,317

 
77.218.570-7
 	CAT Corredores de Seguros y Servicios S.A.	Associate                              	Financial retail income 	Chilean pesos 	Chile	 
 
43,721

-

96,252

96,252

 
76.388.155-5
 	Servicios Integrales S.A.  	Associate                              	Merchandise buying 	Chilean pesos 	Chile	 
 
-

-

3,053

3,053

 
76.388.155-5
 	Servicios Integrales S.A. 	Associate                              	Gift Cards buying 	Chilean pesos 	Chile	 
 
18,410

-

28,970

28,970

 
76.388.155-5
 	Servicios Integrales S.A. 	Associate                              	Financial retail income 	Chilean pesos 	Chile	 
 
43,721

-

96,252

96,252

 
76.388.146-6
 	Operadora de Procesos S.A.	Associate                              	Commissions payment 	Chilean pesos 	Chile	 
 
1,958,881

1,958,881

1,660,034

(1,660,034
)	

27

7.4 	Board of Directors and key management of the Company	
 
The Board of Directors as of June 30, 2017 is comprised of the following people:
 
Board of directors	Role	Profession	
Horst Paulmann Kemna	Chairman	Businessman	
Heike Paulmann Koepfer	Director	Commercial Engineer	
Peter Paulmann Koepfer	Director	Commercial Engineer	
Roberto Oscar Phillips	Director	National Public Accountant	
Cristián Eyzaguirre Johnston	Director	Economist	
Richard Büchi Buc	Director	Civil Engineer	
David Gallagher Patrickson	Director	Businessman	
Julio Moura Neto	Director	Engineer	
Mario Valcarce Durán	Director	Commercial Engineer	
 
Company`s Key Management is composed by Corporate Managers and Division Managers, who have the authority and responsibility to plan, direct and control the company's activities, either directly or indirectly.
 
7.5 	Board of Directors compensation	
 
In accordance with Article 33 of Law N° 18,046 in regards to Corporations, the Ordinary Shareholders’ Meeting held on April 28, 2017, set the following amounts for the 2017 period:
 
● 	Fees paid for attending Board sessions: payment of UF 330 each month for those holding the position of Director of the Board and twice this amount for the President of the Board, if and only if they attend a minimum of 10 ordinary sessions each year,	
 
● 	Fees paid for attending the Directors’ Committee: payment to each Director of UF 110 each month,	
 
The details of the amount paid to Directors for the six months ended June 30, 2017 and 2016 are as follows:
 
Name	 	Role	 
June 30,
2017
 	 
June 30,
2016

ThCh$
 	 
ThCh$
 	
Horst Paulmann Kemna 	 	Chairman	 
 
104,965

102,371
 	
Heike Paulmann Koepfer 	 	Director	 
 
52,483

51,186
 	
Peter Paulmann Koepfer 	 	Director	 
 
52,483

51,186
 	
Cristián Eyzaguirre Johnston 	 	Director	 
 
52,483

51,186
 	
Roberto Oscar Philipps 	 	Director	 
 
69,977

68,247
 	
David Gallagher Patrickson 	 	Director	 
 
69,977

68,247
 	
Julio Moura 	 	Director	 
 
52,483

51,186
 	
Richard Bûchi Buc 	 	Director	 
 
69,977

68,247
 	
Mario Valcarce Durán 	 	Director	 
 
69,977

22,899
 	
Total 	 	 	 
 
594,805

534,755

7.6 	Compensation paid to senior management	
 
Key management compensation	 
June 30,
 2017
 	 
June 30,
 2016

ThCh$
 	 
ThCh$
 	
Salary and other short term employee benefits 	 
 
3,839,391

3,575,408
 	
Share based payments 	 
 
896,597

867,643
 	
Total 	 
 
4,735,988

4,443,051

The Group has established an incentive plan, which rewards management for the achievement of individual objectives in the achievement of the company’s results. These incentives are structured as a minimum and a maximum of gross compensation and are paid once a year.

28

8                 	Inventory	
 
The composition of this item as of June 30, 2017 and December 31, 2016 is as follows:

As of
 	
Inventory category	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Raw materials 	 
 
4,582,185

4,740,484
 	
Goods 	 
 
1,319,303,766

1,293,309,256
 	
Provisions 	 
 
(141,219,767
)	 
 
(148,763,726
)	
Total 	 
 
1,182,666,184

1,149,286,014

The composition of inventories by business line as of June 30, 2017 and December 31, 2016 is as follows:

As of June 30, 2017
 	
Inventory category	 
Department
stores
 	 
Supermarkets
 	 
Home
improvement
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Raw material 	 
 
672,515

3,909,670

-

4,582,185
 	
Goods 	 
 
208,950,466

721,825,259

247,308,274

1,178,083,999
 	
Total 	 
 
209,622,981

725,734,929

247,308,274

1,182,666,184

 
 	 
As of December 31, 2016
 	
Inventory category	 
Department
stores
 	 
Supermarkets
 	 
Home
improvement
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Raw material 	 
 
1,164,458

3,576,026

-

4,740,484
 	
Goods 	 
 
192,143,210

697,409,780

254,992,540

1,144,545,530
 	
Total 	 
 
193,307,668

700,985,806

254,992,540

1,149,286,014

The Company periodically assesses its inventories at their net realizable value, by separating the inventory for each line of business and verifying the age, inventory turnover, sales prices and seasonality. Any adjustments are carried against income of the period.
 
The goods included in inventory are valued at the lower between their purchase price or production cost, net of allowance for obsolescence, and their net realizable value.
 
The carrying amount of inventories carried at June 30, 2017 and December 31, 2016 to its net realizable value less selling costs, provides for:
 
Current Inventories:
 	 
Inventories at net realizableas of
 	
Net realizable value movements	 
6/30/2017
 	 
12/31/2016

ThCh$
 	 
ThCh$
 	
Beginning Balance 	 
 
49,219,377

66,062,640
 	
Increase of Inventory to NRV (Net Realizable Value) 	 
 
8,536,087

8,671,880
 	
Decrease of Inventory to NRV (Net Realizable Value) 	 
 
(4,403,635
)	 
 
(25,515,143
)	
Total 	 
 
53,351,829

49,219,377

 
29

Other information relevant to inventory:

For the six months ended
June 30,
 	
Additional information inventory	 
2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Cost of inventories recognized as expenses during the year 	 
 
3,372,529,717

3,303,681,799

Provision movements:

Balance as of
 	
Provisions	 
6/30/2017
 	 
12/31/2016

ThCh$
 	 
ThCh$
 	
Beginning Balance 	 
 
148,763,726

133,510,682
 	
Amount of inventory reductions 	 
 
93,232

16,568,409
 	
Amount of reversals of inventory reductions 	 
 
(7,637,191
)	 
 
(1,315,365
)	
Total 	 
 
141,219,767

148,763,726

The circumstances or events that led to the reversal of any write-down of inventories as of June 30, 2017 and December 31, 2016 relate mainly to settlements and auctions recovering amounts higher than the estimated net realizable value for inventories.
 
The Company has not given inventories as collaterals at the end of the periods reported.

30

9.                 	Intangible assets other than goodwill	
 
Intangible assets are mainly composed of software and brands acquired in business combinations. The detail as of June 30, 2017 and December 31, 2016 is as follows:

As of
 	
Intangibles assets other than goodwill net	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Finite life intangible assets, net 	 
 
142,150,573

140,640,088
 	
Indefinite life intangible assets, net 	 
 
269,239,226

267,528,026
 	
Intangible assets, net 	 
 
411,389,799

408,168,114
 	
Patents, Trade Marks and Other Rights, Net 	 
 
269,239,226

267,528,026
 	
Software (IT) 	 
 
111,938,826

109,301,075
 	
Other Identifiable Intangible Assets, net (*) 	 
 
30,211,747

31,339,013
 	
Identifiable Intangible Assets, Net 	 
 
411,389,799

408,168,114

 
	 
As of
 	
Intangibles assets other than goodwill gross	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Finite life intangible assets, Gross 	 
 
309,192,570

291,475,386
 	
Indefinite life intangible assets, Gross 	 
 
269,239,226

267,528,026
 	
Intangible Assets, Gross 	 
 
578,431,796

559,003,412
 	
Patents, Trade Marks and Other Rights, Gross 	 
 
269,239,226

267,528,026
 	
Software (IT) 	 
 
257,484,931

239,383,522
 	
Other Identifiable Intangible Assets, Gross (*) 	 
 
51,707,639

52,091,864
 	
Identifiable Intangible Assets, Gross 	 
 
578,431,796

559,003,412

 
	 
As of
 	
Accumulated amortization and value impairment	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Finite life intangible assets 	 
 
(167,041,997
)	 
 
(150,835,298
)	
Indefinite life intangible assets 	 
 
-

-
 	
Intangible Assets, Gross 	 
 
(167,041,997
)	 
 
(150,835,298
)	
Software (IT) 	 
 
(145,546,105
)	 
 
(130,082,447
)	
Other Identifiable Intangible Assets (*) 	 
 
(21,495,892
)	 
 
(20,752,851
)	
Accumulated amortization and value impairment 	 
 
(167,041,997
)	 
 
(150,835,298
)	
 
(*) Other identifiable intangible assets mainly correspond to customer’s data base.
 
The Group performs an annual recoverability analysis, according to the described criteria in note 2.11 “under Impairment loss of non-financial assets IAS 36 “impairment of assets.”.

31

The detail of the useful lives applied to intangible assets as of June 30, 2017 and December 31, 2016 is as follows:
 
Estimated useful lives or amortization rates used	Minimum life	Maximum life	
Development costs 	1	7	
Patents, Trade Marks and Other Rights 	Indefinite	Indefinite	
Software (IT) 	1	7	
Other identifiable Intangible Assets 	1	5	
 
The movement of intangible assets for the six months ended June 30, 2017 is the following:
 
Intangible movements	 
Patents, trademarks and other rights
 	 
Applications (IT)
 	 
Other identifiable intangible assets
 	 
Intangible assets, net

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Initial balance as of January 1, 2017 	 
 
267,528,026

109,301,075

31,339,013

408,168,114
 	
Additions 	 
 
-

19,766,816

-

19,766,816
 	
Retirements 	 
 
-

(887,106
)	 
 
-

(887,106
)	
Amortization 	 
 
-

(15,463,658
)	 
 
(743,041
)	 
 
(16,206,699
)	
Decrease in foreign exchange 	 
 
1,711,200

(778,301
)	 
 
(384,225
)	 
 
548,674
 	
Balance at June 30, 2017 	 
 
269,239,226

111,938,826

30,211,747

411,389,799

The movement of intangible assets as of and for the year ended December 31, 2016 is the following:
 
Intangible movements	 
Patents, trademarks and other rights
 	 
Applications (IT)
 	 
Other identifiable intangible assets
 	 
Intangible assets, net

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Initial balance as of January 1, 2016 	 
 
267,839,511

103,417,708

30,492,198

401,749,417
 	
Additions 	 
 
-

37,671,772

-

37,671,772
 	
Retirements 	 
 
-

(1,517,096
)	 
 
-

(1,517,096
)	
Amortization 	 
 
-

(29,772,784
)	 
 
(1,335,738
)	 
 
(31,108,522
)	
Decrease in foreign exchange 	 
 
(311,485
)	 
 
(498,525
)	 
 
2,182,553

1,372,543
 	
Balance at December 31, 2016 	 
 
267,528,026

109,301,075

31,339,013

408,168,114

The detail of the amounts of identifiable intangible assets that are individually significant as of June 30, 2017 and December 31, 2016 is as follows:

Individually significant identifiable Intangible assets	 
Book Value
June 2017
 	 
Book Value
December 2016
 	Remaining amortization
period	Country of
origin	Segment	
 	 
ThCh$
 	 
ThCh$
 	 	 	 	
Paris Brand 	 
 
120,754,313

120,754,313
 	Indefinite	Chile	Department stores	
Johnson’s Brand 	 
 
15,501,628

15,501,628
 	Indefinite	Chile	Department stores	
Pierre Cardin License 	 
 
171,584

171,584
 	Defined	Chile	Department stores	
Wong Brand 	 
 
32,600,204

31,840,410
 	Indefinite	Peru	Supermarkets	
Metro Brand 	 
 
71,127,717

69,469,986
 	Indefinite	Peru	Supermarkets	
Bretas Brand 	 
 
16,846,608

17,255,743
 	Indefinite	Brazil	Supermarkets	
Perini Brand 	 
 
754,329

772,648
 	Indefinite	Brazil	Supermarkets	
Prezunic Brand 	 
 
11,482,843

11,761,714
 	Indefinite	Brazil	Supermarkets	
Total	 
 
269,239,226

267,528,026

 
32

The charge to the profit and loss statement for amortization of intangibles for the six months ended June 30, 2017 and 2016 are detailed below:

For the six months ended
June 30,
 	
Item line in statement of profit and loss which includes amortization of identifiable Intangible assets	 
2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Administrative expenses 	 
 
16,206,699

13,088,964
 	
Total 	 
 
16,206,699

13,088,964

As of June 30, 2017 and December 31, 2016, there are no relevant intangible assets encumbered. There are also no restrictions on ownership of them.
 
As of June 30, 2017 and December 31, 2016, there are no commitments to acquire intangible assets.
 
No significant intangible assets that have been fully amortized are in use as of As of June 30, 2017 and December 31, 2016.

33

10 	 	Goodwill	
 
The goodwill represents the excess of the acquisition cost, over the fair value of the Group’s interest in the identifiable net assets of the subsidiary/associate as of the date of acquisition. Goodwill is allocated to each store or group of stores, as appropriate, in each country and operating segment (CGUs cash generating units).
 
10.1                 	Measuring recoverable value of the Goodwill,	
 
Goodwill is assessed at least annually. Valuations at interim periods could be done, if there are any signs that the carrying value of our goodwill may not be recoverable. These signs may include a significant change in the economic environment affecting business, new laws, operating performance indicators, competition movements, or the transfer of an important part of a cash-generating unit (CGU).
 
To check whether goodwill has suffered an impairment loss of value, the company compares the carrying amount of the assets, against their recoverable value. We may recognize an impairment loss if the carrying amount of the asset excess its recoverable amount. The Group believes that value in use approach using the discounted cash flow method, is the most reliable way to determine the recoverable value of the CGU method.
 
Reversal of an impairment loss for goodwill is prohibited.
 
10.2                 	Goodwill by segment and country,	
 
The following table details goodwill balances and movements by operating segment and country as of June 30, 2017 and December 31, 2016:
 
Goodwill per operating segment and country	 
As of
December 31, 2016
 	 
Impairment
 	 
Increase (decrease) foreign exchange
 	 
As of
June 30, 2017

ThCh$

 	 
ThCh$
 	 
ThCh$
 	
Real Estate & Shopping—Argentina 	 
 
89,569

-

(4,915
)	 
 
84,654
 	
Supermarkets—Chile 	 
 
106,991,957

-

-

106,991,957
 	
Supermarkets—Brazil 	 
 
397,062,475

-

(9,309,906
)	 
 
387,752,569
 	
Supermarkets—Peru 	 
 
264,355,612

-

6,235,239

270,590,851
 	
Supermarkets— Colombia 	 
 
439,366,277

-

-

439,366,277
 	
Financial services – Colombia 	 
 
52,305,509

-

-

52,305,509
 	
Shopping Centers – Colombia 	 
 
31,383,305

-

-

31,383,305
 	
Home Improvement—Argentina 	 
 
1,377,864

-

(75,607
)	 
 
1,302,257
 	
Home Improvement—Chile 	 
 
1,227,458

-

-

1,227,458
 	
Department stores—Chile 	 
 
138,159,463

-

-

138,159,463
 	
Total 	 
 
1,432,319,489

-

(3,155,189
)	 
 
1,429,164,300

The following table details goodwill balances and movements by operating segment and country as of December 31, 2015 and December 31, 2016:
 
Goodwill per operating segment and country	 
As of
December 31, 2015
 	 
Impairment
 	 
Increase (decrease) foreign exchange
 	 
As of
December 31, 2016

ThCh$

 	 
ThCh$
 	 
ThCh$
 	
Real Estate & Shopping—Argentina 	 
 
115,986

-

(26,417
)	 
 
89,569
 	
Supermarkets—Chile 	 
 
106,991,957

-

-

106,991,957
 	
Supermarkets—Brazil 	 
 
343,976,582

-

53,085,893

397,062,475
 	
Supermarkets—Peru 	 
 
275,687,596

-

(11,331,984
)	 
 
264,355,612
 	
Supermarkets— Colombia 	 
 
439,366,277

-

-

439,366,277
 	
Financial services – Colombia 	 
 
52,305,509

-

-

52,305,509
 	
Shopping Centers – Colombia 	 
 
31,383,305

-

-

31,383,305
 	
Home Improvement—Argentina 	 
 
2,477,939

-

(1,100,075
)	 
 
1,377,864
 	
Home Improvement—Chile 	 
 
1,227,458

-

-

1,227,458
 	
Department stores—Chile 	 
 
138,159,463

-

-

138,159,463
 	
Total 	 
 
1,391,692,072

-

40,627,417

1,432,319,489

 
34

10.3 Key assumptions for the 2016 test
 
a)	Discount rate	
 
The real discount rate applied to annual test conducted in September 2016, was estimated based on an average cost of capital rate historical data, with a leverage of 31% and considering as reference the major competitors in the industry. Different discount rates are used in each of the countries where the Company operates depending on the associated risk. See table below:

2016

 

 	 

 

 	
Segment and Country	 
Chile
 	 
Argentina
 	 
Peru
 	 
Colombia
 	 
Brazil

%
 	 
%
 	 
%
 	 
%
 	 
%
 	
Supermarkets 	 
 
9.01

-

10.08

9.44

9.97
 	
Home Improvement 	 
 
8.41

-

-

-

-
 	
Department stores 	 
 
8.84

24.84

-

-

-

b)	Other assumptions	
 
The Group has defined a financial model which considers the revenues, expenditures, cash flow balances, net tax payments and capital expenditures on a five years period (2017-2021), and perpetuity beyond this tranche. As an exception, the Supermarkets – Colombia segment has been forecasted in an eight years horizon, as a result of the recent inclusion of the Jumbo and Metro brands. These brands are on a pathway to maturity and they have extended room for increase their sales by square meter, getting close to regional and local averages.
 
The financial projections to determine the net present value of future cash flows are modeled considering the principal variables that determine the historic flows of each group of CGU and the budgets approved by the Board. Conservative growth rates are used for this purpose, which fluctuate from 0% to 5% annual average for the first five year of the projections and the terminal growth rates are between 0.5% and 1%, beyond fifth year, taking into account the maturity of each segment. Higher growth rates may be assigned depending on the business performance in each country, and their periods of stabilization and maturity.
 
The most sensitive variables in these projections are the discount rates applied in determining the net present value of projected cash flows, operating costs, and market prices of the goods and services traded.
 
Sensitizations tests were applied for the group of CGUs, (considering the following reasonable scenarios:
 
●	EBITDA margin would have been 5% lower, than management´s estimates, or	
●	Perpetuity growth rate would have been 10% lower, than management´s estimates, or	
●	the estimated cost of capital used in determining the discount rate, would have been 5% higher, than management´s estimates,	
 
After considering the mentioned scenarios in isolation, there were no reasonably possible changes in any of the key assumptions that would have resulted in an impairment write-down.
 
As of June 30, 2017 the Company has not identified any signs that could indicate that the carrying amount of the goodwill may not be recoverable.

35

11	Property, plant and equipment	
 
11.1 	The composition of this item as of June 30, 2017 and December 31, 2016 is as follows:	

As of
 	
Property, plant and equipment categories, net	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Construction in progress 	 
 
73,670,710

66,402,237
 	
Land 	 
 
639,569,718

659,605,782
 	
Buildings 	 
 
1,044,260,294

1,048,864,332
 	
Plant and equipment 	 
 
223,576,329

219,967,327
 	
Information technology equipment 	 
 
38,341,676

36,328,354
 	
Fixed installations and accessories 	 
 
293,166,767

304,243,709
 	
Motor vehicles 	 
 
596,438

670,349
 	
Leasehold improvements 	 
 
199,459,942

234,231,790
 	
Other property plant and equipment 	 
 
8,404,449

8,479,693
 	
Totals  	 
 
2,521,046,323

2,578,793,573

 	 
As of
 	
Property, plant and equipment categories, gross	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Construction in progress 	 
 
73,670,710

66,402,237
 	
Land 	 
 
639,569,718

659,605,782
 	
Buildings 	 
 
1,310,182,022

1,299,194,334
 	
Plant and equipment 	 
 
612,521,244

595,558,141
 	
Information technology equipment 	 
 
162,538,263

152,482,771
 	
Fixed installations and accessories 	 
 
780,038,051

751,739,889
 	
Motor vehicles 	 
 
4,991,630

5,099,000
 	
Leasehold improvements 	 
 
302,921,130

329,887,733
 	
Other property plant and equipment 	 
 
13,722,258

13,779,119
 	
Totals  	 
 
3,900,155,026

3,873,749,006

 	 
As of
 	
Accumulated depreciation and impairment of property, plant and equipment	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Buildings 	 
 
(265,921,728
)	 
 
(250,330,002
)	
Plant and equipment 	 
 
(388,944,915
)	 
 
(375,590,814
)	
Information technology equipment 	 
 
(124,196,587
)	 
 
(116,154,417
)	
Fixed installations and accessories 	 
 
(486,871,284
)	 
 
(447,496,180
)	
Motor vehicles 	 
 
(4,395,192
)	 
 
(4,428,651
)	
Leasehold improvements 	 
 
(103,461,188
)	 
 
(95,655,943
)	
Other property plant and equipment 	 
 
(5,317,809
)	 
 
(5,299,426
)	
Totals  	 
 
(1,379,108,703
)	 
 
(1,294,955,433
)	

36

11.2                 	The following table shows the technical useful lives for the assets.	
 
Method used for the depreciation of property, plant and equipment (life)	 	Rate explanation	 
Minimum life
 	 
Maximum life
 	
Buildings 	 	Useful Life (years)	 
 
25

60
 	
Plant and equipment 	 	Useful Life (years)	 
 
7

20
 	
Information technology equipment 	 	Useful Life (years)	 
 
3

7
 	
Fixed installations and accessories 	 	Useful Life (years)	 
 
7

15
 	
Motor vehicles 	 	Useful Life (years)	 
 
1

5
 	
Leasehold improvements 	 	Useful Life (years)	 
According to contract length
 	
Other property plant and equipment 	 	Useful Life (years)	 
 
3

15

The Group reviews the estimated useful lives of property, plant and equipment at the end of each annual period. The Company has determined that there are no significant changes in the estimated useful lives for the reported periods.

37

11.3	Reconciliation of changes in property, plant and equipment	
 
The following chart shows a detailed roll-forward of changes in property, plant and equipment, by class between January 1, 2017 and June 30, 2017:
 
Movement for the six months ended June 30, 2017	 
Construction In progress
 	 
Land
 	 
Building, net
 	 
Plant and equipment net
 	 
Information technology equipment, net
 	 
Fixed installations and accessories, net
 	 
Motor vehicles, net
 	 
Lease improvements, net
 	 
Other property, plant and equipment, net
 	 
Property, plant and equipment, net

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Opening balance January 1, 2017 	 
 
66,402,237

659,605,782

1,048,864,332

219,967,327

36,328,354

304,243,709

670,349

234,231,790

8,479,693

2,578,793,573
 	
Changes	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Additions 	 
 
28,144,985

1,128,940

5,573,652

16,948,228

4,199,340

9,038,750

78,257

9,964,776

1,239,577

76,316,505
 	
Removal 	 
 
(9,923
)	 
 
-

(200,511
)	 
 
(211,395
)	 
 
(4,989
)	 
 
(350,834
)	 
 
-

(38,935
)	 
 
-

(816,587
)	
Depreciation expenses 	 
 
-

-

(16,432,817
)	 
 
(25,029,483
)	 
 
(8,549,144
)	 
 
(34,237,838
)	 
 
(128,690
)	 
 
(18,293,258
)	 
 
(18,383
)	 
 
(102,689,613
)	
Increase (decrease) for revaluation charged to equity 	 
 
-

-

-

-

-

-

-

-

-

-
 	
Increase (decrease) in foreign exchange 	 
 
(2,346,413
)	 
 
(2,207,670
)	 
 
960,517

(931,129
)	 
 
(570,326
)	 
 
(2,192,063
)	 
 
(23,478
)	 
 
(5,135,634
)	 
 
1,856,695

(10,589,501
)	
Transfer to (from) non—current assets and disposal groups held for sale 	 
 
-

(18,957,334
)	 
 
(1,010,720
)	 
 
-

-

-

-

-

-

(19,968,054
)	
Other increase (decrease) 	 
 
(18,520,176
)	 
 
-

6,505,841

12,832,781

6,938,441

16,665,043

-

(21,268,797
)	 
 
(3,153,133
)	 
 
-
 	
Total changes 	 
 
7,268,473

(20,036,064
)	 
 
(4,604,038
)	 
 
3,609,002

2,013,322

(11,076,942
)	 
 
(73,911
)	 
 
(34,771,848
)	 
 
(75,244
)	 
 
(57,747,250
)	
Final balance as of June 30, 2017 	 
 
73,670,710

639,569,718

1,044,260,294

223,576,329

38,341,676

293,166,767

596,438

199,459,942

8,404,449

2,521,046,323

The following chart shows a detailed roll-forward of changes in property, plant and equipment, by class between January 1, 2016 and December 31, 2016:
 
Movement for the year ended December 31, 2016	 
Construction In progress
 	 
Land
 	 
Building, net
 	 
Plant and equipment net
 	 
Information technology equipment, net
 	 
Fixed installations and accessories, net
 	 
Motor vehicles, net
 	 
Lease improvements, net
 	 
Other property, plant and equipment, net
 	 
Property, plant and equipment, net

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Opening balance January 1, 2016 	 
 
63,017,895

725,437,554

1,075,995,255

246,716,665

32,046,485

343,696,782

577,489

202,460,078

21,542,427

2,711,490,630
 	
Changes	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Additions 	 
 
112,960,591

2,637,687

14,673,368

27,951,919

4,281,236

19,393,558

64,748

9,534,011

894,142

192,391,260
 	
Decrease derived from loss of control in subsidiaries 	 
 
(26,452
)	 
 
-

(294,862
)	 
 
(36,007
)	 
 
(34,940
)	 
 
-

-

-

-

(392,261
)	
Transfers to (from) investment properties 	 
 
(6,299,632
)	 
 
(41,143,628
)	 
 
(1,890,902
)	 
 
(733,140
)	 
 
224,296

(756,374
)	 
 
-

-

(3,306,574
)	 
 
(53,905,954
)	
Retirements 	 
 
(227,085
)	 
 
(992,318
)	 
 
(5,922,284
)	 
 
(5,606,035
)	 
 
(567,568
)	 
 
(298,660
)	 
 
-

(212,866
)	 
 
(2,259,506
)	 
 
(16,086,322
)	
Depreciation expenses 	 
 
-

-

(31,219,656
)	 
 
(52,165,648
)	 
 
(14,005,719
)	 
 
(67,906,543
)	 
 
(221,744
)	 
 
(30,452,796
)	 
 
(632,791
)	 
 
(196,604,897
)	
Increase (decrease) for revaluation charged to equity 	 
 
-

18,435,465

-

-

-

-

-

-

-

18,435,465
 	
Impairment losses recognized in results 	 
 
-

(2,639,637
)	 
 
-

-

-

-

-

-

-

(2,639,637
)	
Decrease (increase) in foreign exchange 	 
 
(2,225,068
)	 
 
(14,638,273
)	 
 
(21,515,463
)	 
 
(718,868
)	 
 
(919,762
)	 
 
(2,617,885
)	 
 
(25,217
)	 
 
14,468,605

(2,343,689
)	 
 
(30,535,620
)	
Transfer to non—current assets and disposal groups held for sale 	 
 
-

(27,520,057
)	 
 
(9,440,631
)	 
 
(537,066
)	 
 
(1,684
)	 
 
(445,337
)	 
 
-

-

(5,414,316
)	 
 
(43,359,091
)	
Other increase (decrease) [1] 	 
 
(100,798,012
)	 
 
28,989

28,479,507

5,095,507

15,306,010

13,178,168

275,073

38,434,758

-

-
 	
Total changes 	 
 
3,384,342

(65,831,772
)	 
 
(27,130,923
)	 
 
(26,749,338
)	 
 
4,281,869

(39,453,073
)	 
 
92,860

31,771,712

(13,062,734
)	 
 
(132,697,057
)	
Final balance as of December 31, 2016 	 
 
66,402,237

659,605,782

1,048,864,332

219,967,327

36,328,354

304,243,709

670,349

234,231,790

8,479,693

2,578,793,573

[1] It corresponds to in-process assets that are being transferred to definitive assets. As a result of that, asset classes are offset. Il also includes reclassifications from lease improvements group to fixed installations and accessories, and plant and equipment groups.

38

11.4             	The Company has traditionally maintained the policy to carry out all the necessary work in response to the opportunities and changes experienced in domestic and regional markets where the Company operates, to capture the best opportunities and results for each of its business units.	
 
The cost includes disbursements directly attributable to the acquisition or construction of an asset, as well as interests from related financing in the case of qualifying assets.
 
11.5 	Borrowing costs:	
 
The company incorporates borrowing costs that are directly attributable to the acquisition, construction or production of a qualified asset during the period to complete and prepare the asset for its intended use.
 
As of June 30, 2017, and December 31, 2016, there is no capitalization of borrowing costs.
 
11.6 	Assets granted	
 
As of June 30, 2017 and December 31, 2016, properties, plant and equipment granted as security amounted ThCh$ 4,092,234 and ThCh$ 3,867,501, respectively. Nevertheless, there are no restrictions on ownership of assets. Nevertheless, there are no restrictions on transfer of assets.
 
11.7 	Commitments to acquire assets	
 
As of June 30, 2017 and December 31, 2016, there are commitments to acquire property, plant and equipment of ThCh$ 98,244,569, and of ThCh$ 86,104,812, respectively.
 
11.8 	Assets out of service	
 
As of June 30, 2017 and December 31, 2016, there are no essential elements or assets that are temporarily out of service. The property, plant and equipment mainly relate to stores and operating fixed assets to enable the performance of the retail business every day of the year, except when there are restrictions for public holidays established in each country.
 
11.9 	Assets fully depreciated	
 
In view of the nature of the retail business, the Company has no significant assets that are fully depreciated and that are in use as of June 30, 2017 and December 31, 2016. These assets relate mainly to minor equipment such as scales, furniture, computers, cameras, lighting and others. The retail business assets are depreciated based on the term of the lease agreement.
 
11.10 	Impairment losses	
 
Assets subject to amortization are tested for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be recovered. It recognizes an impairment loss when the carrying amount is greater than its recoverable amount. The recoverable amount of an asset is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which identifiable cash flows exist separately. As discussed below, the Company has recognized an impairment loss, related to property, plant and equipment, in the amount of ThCH$ 2,639,637 for the period ended December 31, 2016. No impairment related to property, plant and equipment was recorded for the periods ended December 31, 2015 and 2014.
 
During 2016, the Company has initiated a detailed plan for a non-strategic sale of assets in Chile. These assets were previously classified within the property, plant and equipment category.
 
International Financial Reporting Standard IFRS 5 "Assets Held for Sale" indicates that the assets of a company must be classified according to the use or destination that the company decides to give them. Accordingly, these assets must be reclassified as a consequence of a change of plans by management, since the intention of the company is to realize the sale of such assets within a period not exceeding one year.
 
In order to comply with IFRS5, the market value obtained by management was compared with the book value of the assets included in the sales plan. From this comparison, it was verified that in eight of the locations in the process of commercialization, the book value exceeds its recoverable value amounted to ThCh $ 2,639,637, proceeding to record the impairment prior to reclassification to assets held for sale. Assets held for sale at December 31, 2016 amounts to carrying value of ThCh $ 10,883,992, recoverable amount of ThCh $ 8,244,355 and related impairment of ThCh $ 2,639,637.

39

Management has determined the fair value of each asset held for sale, based on market information. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available management consider information from a variety of source including current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences. The key input under this approach is the price per square meter from recent sales. These values were determined using level II inputs in accordance with the definitions of IFRS 13.
 
11.11 	Property Plant and Equipment components:	
 
The main items that compose each asset class are:
Plant and equipment: presented in this asset class are primarily properties used in the operation of retail business such as mixers, sausages portioning machines, system ready meals, frozen island, cold containers, and refrigerated display cases, forming bread ovens, blender, among others.
 
Equipment for information technology: correspond to items such as computers, printers, notebook, labeling, scanner, clock control, price inquiries and servers, among others.
 
Fixed installations and accessories: presented in this asset class are expenditures to enable operations of stores, such, ceilings, floors, wall finishes, lighting the sky, smoke detectors, sprinklers, air ducts and heating, communications networks , escalators, elevators, hoists, electrical substation and central air conditioning among others.
 
Leasehold improvements: presented in this asset class are disbursements associated with enabling or leased store improvements such as remodeling of facades, finishes, floors, ceilings and walls among others.
Other property, plant and equipment: mainly corresponds to fixed assets in transit and assets acquired under finance lease.
 
11.12 	Property Plant and Equipment valuation	
 
During 2016, several pieces of land, included within the Property, plant and equipment item amounting a historical cost of ThCh $ 16,636,913 were revalued. Such revaluation was made as required by IAS 40 prior to the transfer of such assets from property, plant and equipment to investment property. In order to determine the amount of the revaluation, the fair value of the mentioned land pieces was determined by management, with experience in the localities and category of the appraised properties.
 
The revaluation implied a net increase in the value of land group amounted to ThCh $ 18,435,465. A net of tax amount of $ 14,253,013 was credited to equity through other comprehensive income in 2016.
 
As of June 30, 2017 Cencosud maintains a total of 1,169 (1,171 as of December 31, 2016) stores located in Chile, Argentina, Peru, Brazil and Colombia. A total of 461 (444 as of December 31, 2016) of those locations are stores operated on their own land, classified under the item "Properties, plants and equipment".
 
As of December 31, 2016, of a sample of 103 own land locations were tested to compare their book values against their market values, in order to know the reasonableness of the book values measured by the accounting policy under the cost method. In this comparison, it was verified that the market value, in an average, is 45% higher than the book value of such assets, with the exception of Argentina, where this percentage is significantly increased by the effects of local inflation presented during recent years.
 
The methodology used in determining the market value assumes that the values ​​assigned are representative of the most likely transaction values ​​that an independent buyer is willing to pay at the valuation date.
 
11.13 	Property Plant and Equipment components:	
 
The main items that compose each asset class are:
Plant and equipment: presented in this asset class are primarily properties used in the operation of retail business such as mixers, sausages portioning machines, system ready meals, frozen island, cold containers, and refrigerated display cases, forming bread ovens, blender, among others.
 
Equipment for information technology: correspond to items such as computers, printers, notebook, labeling, scanner, clock control, price inquiries and servers, among others.
 
Fixtures and fittings: presented in this asset class are expenditures to enable operations of stores, such, ceilings, floors, wall finishes, lighting the sky, smoke detectors, sprinklers, air ducts and heating, communications networks , escalators, elevators, hoists, electrical substation and central air conditioning among others.
 
Leasehold improvements: presented in this asset class are disbursements associated with enabling or leased store improvements such as remodeling of facades, finishes, floors, ceilings and walls among others. Other property, plant and equipment: mainly corresponds to fixed assets in transit and assets acquired under finance lease.

40

12	Investment properties	
 
12.1 	The roll-forward of investment properties as of June 30, 2017 and December 31, 2016 is the following:	

As of
 	
Roll-forward of investment properties, net, fair value method	 
June 30, 2017
 	 
December 31, 2016

ThCh$
 	 
ThCh$
 	
Investment properties, net, initial value 	 
 
2,081,694,027

1,807,095,204
 	
Effect of fair value in profit or loss 	 
 
71,878,591

287,519,826
 	
Additions 	 
 
3,314,808

1,225,878
 	
Transfer from owner-occupied property, investment property, cost model	 
 
-

53,905,954
 	
Transfer to assets classified as “held for sale” 	 
 
-

(2,939,242
)	
Retirements, Fair Value Method 	 
 
(3,563,885
)	 
 
(3,579,094
)	
Increase (decrease) in foreign exchange rate 	 
 
(13,446,963
)	 
 
(61,534,499
)	
Changes in Investment Properties, Total 	 
 
58,182,551

274,598,823
 	
Investment Properties Final Balance 	 
 
2,139,876,578

2,081,694,027

12.2 	Income and expense from investment properties	

For the six months ended
 	
Roll-forward of investment properties, net fair value method	 
June 30,
2017
 	 
June 30,
2016

ThCh$
 	 
ThCh$
 	
Revenue from Investment Property Leases 	 
 
121,359,185

111,824,133
 	
Direct operating expenses of Investment Properties which generate lease revenue	 
 
25,479,833

25,015,628

12.3  	As of June 30, 2017 and December 31, 2016, investment properties are not encumbered,	
 
12.4	As of June 30, 2017 there are commitments to acquire investment properties by ThCh$ 4,139,596 (ThCh$ 4,331,676 as of December 31, 2016),	
 
12.5  	There are no restrictions on ownership of assets,	
 
12.6  	Investment Properties	
 
As of June 30, 2017 and December 31, 2016, these assets are valued using the fair value model. The methodology used in the valuation of these assets and significant assumptions used are described in note 4.1. The Costanera Center project corresponds to assets that have been classified as investment property. The shopping mall is in operation since June, 2012. First 15,000 square meters of towers 2 and 4 were allowed to be leased as commercial offices by the municipality authority from August 2015.

41

13 	Other financial liabilities, current and non-current	
 
The composition of this item as of June 30, 2017 and December 31, 2016 is the following:
 
13.1	Types of interest bearing (accruing) loans	

Balance as of 6/30/2017
 	 
Balance as of 12/31/2016
 	
Loans	 
Current
 	 
Non-current
 	 
Current
 	 
Non-current

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Bank loans (1) 	 
 
291,207,217

191,657,809

215,393,417

206,299,337
 	
Bond debt (2) 	 
 
249,241,058

2,506,434,669

127,530,284

2,618,875,407
 	
Other loans—leases 	 
 
2,495,366

17,699,326

2,713,893

19,256,643
 	
Other financial liabilities (forward)	 
 
4,204

-

-

-
 	
Other financial liabilities (hedge derivatives) (3)	 
 
2,043,429

9,827,770

4,151,393

12,441,477
 	
Time deposits (4) 	 
 
58,147,316

36,020,842

56,113,724

45,030,033
 	
Deposits and other demand deposits	 
 
9,253

-

15,224

-
 	
Debt purchase Bretas 	 
 
-

1,846,979

-

1,722,769
 	
Other Financial liabilities—other 	 
 
2,482,889

-

2,091,081

-
 	
Totals Loans 	 
 
605,630,732

2,763,487,395

408,009,016

2,903,625,666

(1) 	Bank loans correspond to loans taken out with banks and financial institutions,	
(2) 	Bond debt corresponds to bonds placed in public securities markets or issued to the public in general,	
(3) 	Other financial liabilities (hedge derivatives) includes cross currency swaps, interest rate swaps and forward contracts.	
(4) 	Time deposits are the main funding source of the subsidiary Banco Cencosud Peru.	

42

13.2 	Movement of other financial liabilities current, and non-current	
 
The movement of other financial liabilities current, and non-current for the six months ended June 30, 2017 is the following:
 
Movement of other financial liabilities, current and non-current	 
Balance as of
1/1/2017
 	 
Additions
 	 
Accrued
interests
 	 
Payments
includes capital
and interests
 	 
Currency
translation and
indexation
 	 
Other
 	 
Balance as of
6/30/2017

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Bank loans 	 
 
(421,692,754
)	 
 
(108,688,733
)	 
 
(33,116,415
)	 
 
74,567,394

1,351,964

4,713,518

(482,865,026
)	
Bond debt 	 
 
(2,746,405,691
)	 
 
(7,775,082
)	 
 
(72,982,005
)	 
 
80,176,839

8,233,415

(16,923,203
)	 
 
(2,755,675,727
)	
Other loans—leases 	 
 
(21,970,536
)	 
 
-

(442,924
)	 
 
949,744

-

1,269,024

(20,194,692
)	
Other financial liabilities (forward) 	 
 
-

-

-

-

-

(4,204
)	 
 
(4,204
)	
Other financial liabilities (hedge activities) 	 
 
(16,592,870
)	 
 
-

540,042

2,402,769

(976,691
)	 
 
2,755,551

(11,871,199
)	
Time deposits 	 
 
(101,143,757
)	 
 
-

(2,904,345
)	 
 
12,265,577

-

(2,385,633
)	 
 
(94,168,158
)	
Deposits and other demand deposits 	 
 
(15,224
)	 
 
-

-

5,971

-

-

(9,253
)	
Debt purchase Bretas 	 
 
(1,722,769
)	 
 
-

(165,057
)	 
 
-

-

40,847

(1,846,979
)	
Other Financial liabilities—other 	 
 
(2,091,081
)	 
 
-

(342,487
)	 
 
-

-

(49,321
)	 
 
(2,482,889
)	
Total other financial liabilities, current and non-current	 
 
(3,311,634,682
)	 
 
(116,463,815
)	 
 
(109,413,191
)	 
 
170,368,294

8,608,688

(10,583,421
)	 
 
(3,369,118,127
)	
Other financial assets (hedging derivatives) 	 
 
287,119,800

-

(2,160,167
)	 
 
(3,219,453
)	 
 
(9,791,326
)	 
 
(107,146
)	 
 
271,841,708
 	
Total other financial assets, current and non-current (hedging derivatives)	 
 
287,119,800

-

(2,160,167
)	 
 
(3,219,453
)	 
 
(9,791,326
)	 
 
(107,146
)	 
 
271,841,708

13.2 	Restrictions	
 
Loan agreements and outstanding bonds of the Company contain a number of covenants requiring compliance with certain financial ratios and other tests, As of June 30, 2017 and December 31, 2016 the Company was in compliance with all financial debt covenants subscribed.
 
43

14	Provisions and other liabilities	
 
14.1 	Provisions	
 
The composition of this item as of June 30, 2017 and December 31, 2016 is as follows:

As of
 	
Accruals and provision	 
June 30,
2017
 	 
December 31,
2016
 	 
June 30,
2017
 	 
December 31,
2016

Current
 	 
Non-current

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Legal claims provision (1) 	 
 
11,064,303

10,340,136

57,174,041

58,005,001
 	
Onerous contracts provision (2) 	 
 
1,433,366

1,439,298

9,553,562

10,251,159
 	
Total 	 
 
12,497,669

11,779,434

66,727,603

68,256,160

(1) The nature of these obligations is as follows:
 
Civil provision: This primarily corresponds to civil and commercial trials that mainly deal with claims from customers, defects in products, accidents of customers in the stores and law suits related with customer service.
 
Labor provision: This primarily corresponds to staff severance indemnities and salary disputes from former employees.
 
Tax provision: This primarily corresponds to tax claims in the countries in which the Company operates.
 
The following table shows the civil, labor and tax proceedings faced by the Company and its subsidiaries (by country). The proceedings comprising each category are those that present probable occurrence likelihood and the amount of loss can be quantified or estimated.

Provision Legal Claims (2)
 	 
Exposure

Civil
 	 
Labor
 	 
Tax
 	 
Total
 	 
Current
 	 
Non-current

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Total as of June 30,2017 	 
 
28,669,030

18,606,090

20,963,224

68,238,344

11,064,303

57,174,041
 	
Total as of December 31,2016 	 
 
28,708,673

21,405,740

18,230,724

68,345,137

10,340,136

58,005,001

Provision By Country	 
June 30, 2017
ThCh$
 	 
December 31, 2016
ThCh$
 	
Chile 	 
 
16,413,301

15,351,464
 	
Argentina 	 
 
17,267,349

19,260,544
 	
Brazil 	 
 
29,713,169

29,078,658
 	
Peru 	 
 
634,516

673,291
 	
Colombia 	 
 
4,210,009

3,981,180
 	
Total Provision 	 
 
68,238,344

68,345,137

(2)	Provisions for onerous contracts	
 
The provisions recorded under this concept correspond mainly to the excess over the fair value payable related to onerous lease contracts recorded in business combinations of the previous periods.

44

14.2                 	Movement of provisions:	
 
Provision type	 
Legal claims
 	 
Onerous contracts
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Initial Balance January 1, 2017 	 
 
68,345,137

11,690,457

80,035,594
 	
Movements in Provisions:	 

 	 

 	 

 	
Creation of additional provisions 	 
 
4,318,409

-

4,318,409
 	
Increase (decrease) in existing provisions 	 
 
1,670,000

(703,529
)	 
 
966,471
 	
Application of provision 	 
 
(2,547,481
)	 
 
-

(2,547,481
)	
Reversal of non-used provisions 	 
 
(1,817,275
)	 
 
-

(1,817,275
)	
Increase (decrease) in foreign exchange rate	 
 
(1,730,446
)	 
 
-

(1,730,446
)	
Changes in provisions, total 	 
 
(106,793
)	 
 
(703,529
)	 
 
(810,322
)	
Total provision, closing balance as of June 30, 2017	 
 
68,238,344

10,986,928

79,225,272

Provision type	 
Legal claims
 	 
Onerous contracts
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Initial Balance January 1, 2016 	 
 
77,816,222

16,014,325

93,830,547
 	
Movements in Provisions:	 

 	 

 	 

 	
Creation of additional provisions 	 
 
8,075,575

-

8,075,575
 	
Increase and decrease in existing provisions	 
 
578,142

(4,323,868
)	 
 
(3,745,726
)	
Application of provision 	 
 
(12,127,645
)	 
 
-

(12,127,645
)	
Reversal of unused provision 	 
 
(2,504,731
)	 
 
-

(2,504,731
)	
Increase (decrease) in foreign exchange rate	 
 
(3,492,426
)	 
 
-

(3,492,426
)	
Changes in provisions, total 	 
 
(9,471,085
)	 
 
(4,323,868
)	 
 
(13,794,953
)	
Total provision, closing balance as of December 31, 2016	 
 
68,345,137

11,690,457

80,035,594

 
45

15 	Net equity	
 
The objectives of the Cencosud Group regarding capital management are to safeguard its capacity to continue as a going concern, ensuring appropriate returns for its shareholders and benefits for other stakeholders, and maintaining an optimum capital structure while reducing capital costs.
 
Capital management
 
The Group’s objective regarding capital management is to safeguard the capacity to continue ensuring appropriate returns for the shareholders and benefits for other stakeholders, and maintaining an optimum capital structure while reducing capital costs.
 
In line with the industry, we monitor our capital using a leverage ratio calculation. This ratio is calculated by dividing net financial debt by total equity. We define net financial debt as total financial liabilities (a) less (i) total cash and cash equivalents, (ii) total other financial assets, current and non-current, and (iii) other financial liabilities, current and non-current, from Banco Paris and Banco Peru, (b) plus (i) cash and cash equivalents from Banco Paris and Banco Peru and (ii) total other financial assets, current and non-current, from Banco Paris and Banco Peru. Total financial liabilities is defined as Other financial liabilities, current, plus Other financial liabilities, non-current.
 
In accordance with the above, we combine different financing sources, such as: capital increases, operating cash flows, bank loans and bonds.
 
15.1  	Paid-in capital	
 
As of June 22, 2012, the Company proceeded to increase the authorized Capital through the issuance of 270,000,000 of shares, without a par value and in a unique series, as agreed at the shareholders meeting held on April 29, 2011 which complemented and modified preliminary agreements made at extraordinary shareholders meetings on March 1, 2012 and May 15, 2012. 27,000,000 shares out of the capital increase were set aside to offer them in a stock option plan for the Company’s upper management.
 
The referential share price reported to the SVS (Superintendencia de Valores y Seguros) was ThCh$ 3,555.56. The final issue share price was ThCh$2,600 per share.
 
In connection with share issuance, 59,493,000 shares were issued in the United States of America in the form of American Depositary Shares (ADSs) and the remaining 210,507,000 shares were issued in the local market in Chile.
 
At the extraordinary shareholders meeting held on November 20, 2012, the shareholders agreed to increase capital by ThCh$835,000,000 through the issuance of 332,987,717 of shares in one series and without a par value. 10% of the total issuance was set aside to offer them in a stock option plan for employees, the remaining of the shares was offered to the Company’s shareholders.
 
On April 28, 2017, the Board of Directors has defined to apply for a voluntary delisting of its ADRs from the NYSE, in connection with the intention to terminate the ADR facility, and deregister with the Securities and Exchange Commission.
 
ADR holders will be entitled to surrender their ADRs to Bank of New York Mellon for cancellation, and upon payment of the applicable fees, taxes and charges as provided in the deposit agreement, receive the underlying shares of common stock of Cencosud. Cencosud will maintain its listings on the Santiago Stock Exchange, the Chile Electronic Stock Exchange, and the Valpara’so Stock Exchange.
 
The following table shows the movement of the fully paid shares described above between January 1, 2016 and June 30, 2017:

Movement of paid shares	 
No of
shares
 	 
Shares
Issuances
(Th$)
 	 
Shares
premium
(Th$)
 	
Paid shares as of January 1, 2016	 
 
2,828,723,963

2,321,380,936

526,633,344
 	
Stock options issuance 2016	 
 
33,812,984

99,183,799

(65,331,247
)	
Paid shares as of December 31, 2016	 
 
2,862,536,947

2,420,564,735

461,302,097
 	
Paid shares as of January 1, 2017	 
 
2,862,536,947

2,420,564,735

461,302,097
 	
Paid in capital under stock option plans	 
 
15,000

37,614

(12,924
)	
Paid shares as of June 30, 2017	 
 
2,862,551,947

2,420,602,349

461,289,173

 
46

15.2 	Authorized shares	
 
The following table shows the movement of the fully authorized shares between January 1, 2016 and June 30, 2017:
 
Movement of authorized shares	No of
Shares	
Authorized shares as of January 1, 2016	2,889,022,734	
Expired shares as of April 29, 2016	(13,264,341)	
Authorized shares as of December 31, 2016	2,875,758,393	
Authorized shares as of January 1, 2017	2,875,758,393	
Authorized shares as of June 30, 2017	2,875,758,393	
 
As of June 30, 2017 and December 31, 2016, 13,206,446 issued shares were pending of subscription and payment, of which expiration will be on November 20, 2017.
 
15.3 	Dividends	
 
The dividend distribution policy adopted by Cencosud S,A., establishes the payment of dividends of 30% of the distributable net profits.
 
In relation to SVS Ruling No. 1945, on October 29, 2010, the Company’s Board of Directors agreed that the net distributable profits for the year 2010 and following years will be the figure reflected in the financial statements as “profit for the year attributable controlling shareholders”, excluding the unrealized result for fair value appraisal of investment properties, net of deferred taxes.
 
On April 29, 2016, the Ordinary Shareholders Meeting agreed on distributing a definitive dividend in relation to the profits of 2015 amounted to Ch$ 73,684,179,628, which represents about to 80.55% of the distributable profit. This also represents a dividend of Ch$ 25.92268 per share. The aforementioned distribution of profits shall be made by: (i) the distribution of an additional dividend in the amount of $ 10 per share; plus (ii) the distribution of an interim dividend of $ 16 per share already paid from December 4, 2015.
 
In addition, the Shareholders Meeting approved an extraordinary dividend in the amount of $ 50 per share, chargeable to retained earnings from previous years, reducing the reserve fund for future dividends amounted to Ch$ 142,122,981,100. The payment of the above dividend will be made from May 17, 2016.
 
On November 2, 2016, the Board of Directors agreed on distributing an interim dividend of Ch$20 per share in relation to the profits of 2016. This dividend was given to the shareholders order from December 7, 2016.
 
The Ordinary Shareholders Meeting held on April 28, 2017, defined a final dividend of $30 per share in relation to the 2016 net distributable profits. The payment of the mentioned dividend will be made from May 17, 2017.
 
The company recorded a minimum dividend by Th$Ch$ 11,602,067 as of June 30, 2017 (Th$Ch$ 357,939 as of December 31, 2016). The total charge to equity as of June 30, 2017 amounted to ThCh$ 97,120,685, (ThCh$ 227,755,932 as of December 31, 2016).
 
15.4 	Reserves	
 
Reserves are described as follows:
 
a) 	Revaluation surplus: It corresponds to revaluation of property, plant and equipment items transferred to investment properties during the year as a result of a change in their usage.	
 
b)	Currency translation reserve: This item includes the exchange rate differences resulted from the conversion of the financial statement of all subsidiaries from their functional currency into the presentation currency of the Group.	
 
c)	Hedging reserves: This reserve includes the effect of the changes in the fair value of certain financial instruments used as cash flow hedges and deemed as effective. These reserves are transferred to income of the period at the end of the life of the instruments’ contracts when the hedged cash flow is realized.	
 
d)	Actuarial gain (loss) reserve: This reserve is composed of the actuarial gains (losses) and the effect from the return on the pension plan asset that have been recognized over the past two year in relation to the Company’s pension plan Brazil.	

47

e)	Shared based payments reserves: This reserve is originated from the share-based compensation options plan for executives of Cencosud S.A. and subsidiaries maintained by the company.	
 
f)	Other reserves: The initial balance shows the effect of the elimination of price-level restatement of book-basis capital under IFRS for the transition year. As of June 30, 2017 and 2016 no significant changes were observed.	
 
Movements of reserves between January 1, 2017 and June 30, 2017 are as follows:
 
Reserve movement	 
Revaluation surplus
 	 
Translation
 	 
Hedging reserves
 	 
Actuarial gain (loss) reserves
 	 
Shared based payments reserves
 	 
Other reserves
 	 
Total reserves
 	
Initial balance current period January 1, 2017	 
 
14,252,148

(1,250,381,663
)	 
 
(22,078,872
)	 
 
(1,120,048
)	 
 
26,949,962

(53,638,633
)	 
 
(1,286,017,106
)	
Change in equity    	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Increase (decrease) in reserves	 
 
-

(66,269,978
)	 
 
(9,203,996
)	 
 
-

-

-

(75,473,974
)	
Deferred taxes	 
 
-

-

2,391,241

-

-

-

2,391,241
 	
Reclassification to profit or loss of reserves	 
 
-

-

6,255,870

-

-

-

6,255,870
 	
Reclassification of deferred taxes related to reserves	 
 
-

-

(1,595,247
)	 
 
-

-

-

(1,595,247
)	
Other comprehensive (loss) profit	 
 
-

(66,269,978
)	 
 
(2,152,132
)	 
 
-

-

-

(68,422,110
)	
Transfer from retained earnings	 
 
-

-

-

-

1,767,330

-

1,767,330
 	
Decrease) from changes in ownership interest in subsidiaries that do not result in loss of control	 
 
-

-

-

-

-

11

11
 	
Non-controlling interest	 
 
-

-

-

-

-

-

-
 	
Total changes in equity	 
 
-

(66,269,978
)	 
 
(2,152,132
)	 
 
-

1,767,330

11

(66,654,769
)	
Closing balance as of June 30, 2017	 
 
14,252,148

(1,316,651,641
)	 
 
(24,231,004
)	 
 
(1,120,048
)	 
 
28,717,292

(53,638,622
)	 
 
(1,352,671,875
)	
 
Movements of reserves between January 1, 2016 and June 30, 2016 are as follows:
 
Reserve movement	 
Revaluation surplus
 	 
Translation
 	 
Hedging reserves
 	 
Actuarial gain (loss) reserves
 	 
Shared based payments reserves
 	 
Other reserves
 	 
Total reserves
 	
Initial balance current period January 1, 2016	 
 
-

(1,187,109,821
)	 
 
14,859,584

(229,427
)	 
 
19,276,599

(52,476,934
)	 
 
(1,205,679,999
)	
Change in equity    	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Increase (decrease) in reserves	 
 
-

14,524,598

(2,107,464
)	 
 
-

-

-

12,417,134
 	
Deferred taxes	 
 
-

-

221,115

-

-

-

221,115
 	
Reclassification to profit or loss of reserves	 
 
-

-

11,909,844

-

-

-

11,909,844
 	
Reclassification of deferred taxes related to reserves	 
 
-

-

(2,858,362
)	 
 
-

-

-

(2,858,362
)	
Other comprehensive (loss) profit	 
 
-

14,524,598

7,165,133

-

-

-

21,689,731
 	
Transfer from retained earnings	 
 
-

-

-

-

5,059,660

-

5,059,660
 	
Decrease) from changes in ownership interest in subsidiaries that do not result in loss of control	 
 
-

-

-

-

-

(1,161,699
)	 
 
(1,161,699
)	
Non-controlling interest	 
 
-

-

-

-

-

-

-
 	
Total changes in equity	 
 
-

14,524,598

7,165,133

-

5,059,660

(1,161,699
)	 
 
25,587,692
 	
Closing balance as of June 30, 2016	 
 
-

(1,172,585,223
)	 
 
22,024,717

(229,427
)	 
 
24,336,259

(53,638,633
)	 
 
(1,180,092,307
)	

 
48

15.5	Non-controlling interest	
 
Details of the non-controlling interest as of June 30, 2017 and December 31, 2016 are as follows:
 
Equity:

Non-controlling
Interest
Jun 30,
 	 
Non-controlling
Interest
Dec 31,

Balances
as of,

2017
 	 
2016
 	 
Jun 30, 2017
 	 
Dec 31, 2016
 	
Company	 
%
 	 
%
 	 
ThCh$
 	 
ThCh$
 	
Cencosud Shoppings Centers S.A. 	 
 
0.00004

0.00004

504

479
 	
Mercado Mayorista P y P Ltda. 	 
 
10.00000

10.00000

93,871

93,871
 	
Easy Retail S.A. 	 
 
0.07361

0.07361

15,206

18,795
 	
Comercial Food and Fantasy Ltda. 	 
 
10.00000

10.00000

(10,591
)	 
 
-
 	
Administradora del Centro Comercial Alto Las Condes Ltda.	 
 
55.00000

55.00000

81,584

(1,608,229
)	
Cencosud Retail S.A. 	 
 
0.03900

0.03900

219,456

231,864
 	
Jumbo Retail Argentina S.A. 	 
 
0.07600

0.07600

46,242

54,816
 	
Total 	 

 	 

 	 
 
446,272

(1,208,404
)	
 
Results:

Non-controlling
Interest
Jun 30,
 	 
Non-controlling
Interest
Jun 30,

Results for the six months
ended June 30,

2017
 	 
2016
 	 
2017
 	 
2016
 	
Company	 
%
 	 
%
 	 
ThCh$
 	 
ThCh$
 	
Cencosud Shoppings Centers S.A. 	 
 
0.00004

0.00004

25

30
 	
Easy Retail S.A. 	 
 
0.07361

0.07361

(3,590
)	 
 
463
 	
Comercial Food and Fantasy Ltda. 	 
 
10.00000

10.00000

13,410

-
 	
Administradora del Centro Comercial Alto Las Condes Ltda.	 
 
55.00000

55.00000

1,689,813

1,340,606
 	
Cencosud Retail S.A. 	 
 
0.03900

0.03906

16,622

20,005
 	
Jumbo Retail Argentina S.A. 	 
 
0.07600

0.07600

(6,092
)	 
 
674
 	
Total 	 

 	 

 	 
 
1,710,188

1,361,778

 
49

16   	Breakdown of significant results	
 
The items by function from the Statements of Income are described as follows in 16,1, 16,2 y 16,3,
 
 	  6-30-2017	6-30-2016  	
 	ThCh$	ThCh$	
Cost of sales 	3,643,747,192	3,540,716,396	
Distribution cost 	13,534,175	12,635,011	
Administrative expenses 	1,188,651,547	1,131,135,634	
Other expenses by function 	84,606,065	80,199,820	
Total 	4,930,538,979	4,764,686,861	
 
16.1 	Expenses by nature	
 
The following is a breakdown of the main operating and management costs and expenses of the Cencosud Group for the following periods:  
 
Expenses by nature	 
 
For the six months ended June 30

2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Cost of goods sold 	 
 
3,372,529,717

3,303,681,799
 	
Other cost of sales 	 
 
271,217,475

237,034,597
 	
Personnel expenses 	 
 
737,061,782

686,983,576
 	
Depreciation and amortization 	 
 
118,896,312

105,318,572
 	
Distribution cost 	 
 
13,534,175

12,635,011
 	
Other expenses by function 	 
 
84,606,065

80,199,820
 	
Cleaning 	 
 
37,436,385

36,175,730
 	
Safety and security 	 
 
31,960,719

29,814,601
 	
Maintenance 	 
 
40,712,856

40,451,121
 	
Professional fees 	 
 
36,995,743

36,397,655
 	
Bags for Customers 	 
 
8,041,649

9,857,408
 	
Credit card commission 	 
 
49,776,723

48,798,498
 	
Lease 	 
 
98,996,663

94,481,171
 	
Other 	 
 
28,772,715

42,857,302
 	
Total 	 
 
4,930,538,979

4,764,686,861

16.2 	Personnel expenses	
 
The following is a breakdown of personnel expenses for the following periods:
 
Personnel expenses	 
For the six months ended June 30

2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Salaries 	 
 
585,257,536

550,634,550
 	
Short-term employee benefits 	 
 
130,312,790

120,289,160
 	
Termination benefits 	 
 
21,491,456

16,059,866
 	
Total 	 
 
737,061,782

686,983,576

 
50

16.3 	Depreciation and amortization	
 
The following is a breakdown of depreciation and amortization for the following periods:
 
Depreciation and amortization	 
For the six months ended June 30

2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Depreciation 	 
 
102,689,613

92,229,608
 	
Amortization 	 
 
16,206,699

13,088,964
 	
Total 	 
 
118,896,312

105,318,572

16.4 	Other gains (losses)	
 
Other gain (losses)	 
For the six months ended June 30

2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Gain in the sale of subsidiary and associates 	 
 
-

53,484,358
 	
Complementary remittance tax 	 
 
(2,263,895
)	 
 
(2,274,218
)	
Wealth tax Colombia 	 
 
(2,222,000
)	 
 
(5,566,905
)	
Long lived assets impairment  	 
 
-

(3,053,000
)	
Insurance claims gains (losses)  	 
 
(1,938,551
)	 
 
2,966,100
 	
Sales of businesses and properties 	 
 
7,825,748

11,368,556
 	
Other net losses 	 
 
899,135

(5,210,479
)	
Total 	 
 
2,300,437

51,714,412

16.5 	Other operating income	
 
Other operating income	 
For the six months ended June 30

2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Sell Carton and Wraps 	 
 
1,573,698

2,039,947
 	
Recovery of fees 	 
 
788,023

1,045,289
 	
Increase on revaluation of Investment properties (see note 12.1)	 
 
71,878,591

84,095,984
 	
Other Income 	 
 
4,451,977

3,516,066
 	
Total 	 
 
78,692,289

90,697,286

 
51

16.6                 	Financial results	
 
The following is the financial income detailed for the periods ended:
 
Financial results	 
For the six months ended June 30

2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Other finance income from investments 	 
 
7,762,687

6,876,691

 

 

Financial Income 	 
 
7,762,687

6,876,691

 

 

Bank loan expenses 	 
 
(51,960,366
)	 
 
(56,550,277
)	
Bond debt expenses 	 
 
(69,762,552
)	 
 
(69,774,856
)	
Interest on bank deposits 	 
 
-

(680,806
)	
Valuation of financial derivatives 	 
 
(7,201,464
)	 
 
(2,967,458
)	

 

 
 	
Financial Expenses 	 
 
(128,924,382
)	 
 
(129,973,397
)	

 

 
 	
Results from UF indexed bonds in Chile 	 
 
(7,308,942
)	 
 
(7,682,096
)	
Results from UF indexed Brazil 	 
 
(257,683
)	 
 
(569,089
)	
Results from UF indexed Other 	 
 
366,035

-

 

 

(Losses) gains from indexation 	 
 
(7,200,590
)	 
 
(8,251,185
)	

 

 
 	
Financial debt IFC-ABN Argentina 	 
 
277,132

(609,777
)	
Debt to the public Bonds and Banks (Chile)	 
 
30,818,454

45,369,286
 	
Financial debt Peru 	 
 
(80,570
)	 
 
(309,642
)	
Financials Assets and Debts (Colombia) 	 
 
256,529

163,766

 

 

Exchange difference 	 
 
31,271,545

44,613,633

 

 

Financial results total 	 
 
(97,090,740
)	 
 
(86,734,258
)	

 
52

17 	Corporate income tax	
 
The charge (credit) to periodic results within the Interim consolidated statement of profit and loss by function related to the income tax amounts were M$ 78,780,003 as of June 30, 2017; and M$ 88,871,238, as of June 30, 2016, as the table below:

June 30, 2017
 	 
June 30, 2016
 	
Current and deferred income tax	 
ThCh$
 	 
ThCh$
 	
Net current income tax expense 	 
 
72,773,561

90,094,219
 	
Income tax expense 	 
 
72,773,561

90,094,219
 	
Deferred tax expense (income) due to taxes arising from the creation and reversal of temporary differences	 
 
6,430,404

(2,196,396
)	
Deferred expenses (income) due to taxes arising from the changes in tax rates or new rates	 
 
(423,962
)	 
 
973,415
 	
Deferred income tax expense 	 
 
6,006,442

(1,222,981
)	
Net tax expense (income) 	 
 
78,780,003

88,871,238

The following chart shows the reconciliation between the corporate income tax calculations resulting from the application of the legal and effective rates for the periods:

For the six months ended, June 30
 	
Reconciliation of income tax expense using the statutory rate to income taxexpense using the effective rate	 
2017
 	 
2016

ThCh$
 	 
ThCh$
 	
Income tax expense using the legal rate                                                                             	 
 
43,580,275

68,630,153
 	
Tax effect of rates in other territories                                                                             	 
 
271,690

11,793,623
 	
Tax effect on non-deductible expenses                                                                             	 
 
5,876,489

7,027,739
 	
Chile - Taxable effects from investment and equity                                                                             	 
 
(386,585
)	 
 
(1,649,837
)	
Colombia - Wealth tax (non-deductible)                                                                             	 
 
933,592

2,226,844
 	
Chile – Taxable fair value adjustments related to derivatives and stock options	 
 
665,647

2,042,953
 	
Chile –not recognized provisional payment on absorbed profits (PPUA)	 
 
-

(6,192,522
)	
Chile – Mall Viña sale                                                                             	 
 
-

11,093,933
 	
Colombia - Reversal of tax credits (presumptive system) [ii]	 
 
3,657,249

-
 	
Colombia - Goodwill write off (Mercadefam 2014)                                                                             	 
 
205,930

205,930
 	
Colombia –Presumptive Income rate adjustment 9% (rate 34% and credit 25%)	 
 
432,511

(3,775,283
)	
Tax effect of changes in tax rates                                                                             	 
 
423,962

(973,415
)	
Nontaxable profits from investments accounted for using the equity method.	 
 
(2,036,414
)	 
 
(1,640,828
)	
Brazil – Tax losses valuation [i]                                                                             	 
 
22,906,649

-
 	
Other (decrease) increase for legal tax                                                                             	 
 
2,249,008

81,948

 

 

 Adjustments to tax expenses using the legal rate, total….	 
 
35,199,728

20,241,085

 

 

Income tax expense using the effective rate                                                                             	 
 
78,780,003

88,871,238

Main components of effective tax rate reconciliation include:
 
i.	Brazil ceased the recognition of deferred tax asset over carry forward losses.	
ii.	Colombia has reverted tax credits recognized during the first quarter 2017 related to excesses of the alternative presumptive system over the ordinary system. Colombian society has also suspended recognition during second quarter 2017 of those mentioned credits, which expire during 2017 financial year.	

 
53

a)            Tax losses:
The Company has deferred assets for tax losses arising from the different countries where it has investments. These arise mainly in the retail and real estate areas, both in Chile and abroad. There is no temporal limit for the usage of carry losses in Chile.
Law 1,819 issued on December 2016 in Colombia, limits losses carry forward up to a maximum of 12 years, however, former losses are not limited to an specific period. Realization of tax losses is estimated based on the Group future projections. For the tax losses carry-forward obtained before January 1, 2017, there are no limits regarding their usage.
 
b)            Reversal of asset and liability timing differences:
The reversal of asset and liability timing differences is directly related to the nature of the asset and liability accounts generating these differences. There is no set term for the reversal of timing differences, due to the reversal of some and the origin of others.
 
c)            Rate of income tax.
 
Chile
The current income tax rate in Chile that affects the Company is 25.5% (Dec 2016: 24%). Under the 2014 enacted tax law, the income tax rate will increase to 21%, 22.5%, 24%, 25.5% and 27%, for the years 2014, 2015, 2016, 2017, 2018 and following fiscal years, respectively, based on the adoption of the partially integrated system.
 
According to regulations applicable to open listed societies, the income tax system applicable by Cencosud is the partially integrated system.
 
Any other later effects have been recognized within the income statement.
 
Foreign subsidiaries
 
The rates that affect its foreign subsidiaries are: 35% in Argentina
 
Peru 29.5%. Peru enacted in law Nº 30.296 which pretended to envisage gradual reduction in taxes from 30% to 28% in 2015-2016, 27% in 2017-2018, and 26% from 2019 onwards. However, the mentioned reduction will not have any effect; being that Legislative Decree No. 1261 published on December 10, 2016 contemplates a rate of 29.5% effective from the 2016 financial year.
 
Colombia 40%. Law 1,819 issued on December 2016 eliminated the income tax for equity “CREE” tax [1] (lately 6%), but simultaneously created a complementary income tax rate (6% 2017; 4% 2018), defining a total 40% rate being that nominal income tax rate was already 34%. Law 1,819 also eliminated wealth tax [2], defining a unique income tax rated to 33% since 2019. Income tax rate will be 37% for 2018 financial year, split on a basis rate of 33%, and an over rate of 4%.
 
Brazil remains with a 34% income tax rate.
 
[1] The CREE used to be a Colombian National tax which applies over profits and gains obtained by companies which are likely to enrich them. This tax replaced certain wage-based social contributions.
[2] Wealth tax in Colombia was designed for all individuals and legal entities who are deemed income taxpayers. This tax might be calculated based on their tax net equity (gross assets minus debts), with an scalable rate from 0.05% to 0.40% in 2017.

54

18   	Information by segment	
 
The Company reports the information by segment according to what is set forth in IFRS 8 “Operating Segments,” An operating segment is defined as a component of an entity over which separated financial information is available and is regularly reviewed.
 
In the information by segments, all transactions between the different operating segments have been eliminated.
 
18.1 	Segmentation criteria	
 
For management purposes, the Company is organized in five operative divisions: Supermarkets, Shopping Centers, Home Improvement stores, Department stores and Financial Services. These segments are the basic on which the Company makes decisions with respect to its operations and resource allocation.
 
The operative segments are disclosed in a similar way with the presentation of the internal reports used by Management in the control and decision making process, considering the segments from a point of view according to the type of business and geographical area.
 
The operating segments that are reported derive their revenues mainly from the sale of products and rendering of services to final consumers of retail. There are no customers whose purchases represent more than 10% of the consolidated revenue, nor a specific business segment.
 
The rest of the minor activities, mainly including the travel agency and family-entertainment centers businesses, plus certain consolidation adjustments and corporate expenses administered centrally, are included in the segment “Support services, financing, adjustments and other”.
 
55

18.2	Regional information by segment	
 
The segment information which is delivered to the chief operating decision maker (“Board of Directors”) of the reportable segments for the six months ended June 30, 2017 and June 30, 2016 in thousands of Chilean pesos is the following:
 
Regional information by segment
 
Consolidated statement of  income	 
Supermarkets
 	 
Shopping Centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
  Supportservices, financing, adjustments and other
 	 
  Consolidated total
 	
For the six months ended June 30, 2017	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Revenues from ordinary activities 	 
 
3,677,980,291

121,359,185

649,449,730

545,438,361

108,787,942

6,585,188

5,109,600,697
 	
Cost of sales 	 
 
(2,749,284,039
)	 
 
(13,989,453
)	 
 
(443,268,212
)	 
 
(390,411,941
)	 
 
(44,192,168
)	 
 
(2,601,379
)	 
 
(3,643,747,192
)	
Gross Margin 	 
 
928,696,252

107,369,732

206,181,518

155,026,420

64,595,774

3,983,809

1,465,853,505

 

 

 

 

 

 

 

Other revenues by function 	 
 
5,367,938

72,079,960

559,252

358,481

1,280

325,378

78,692,289
 	
Sales, general and administrative expenses 	 
 
(840,604,385
)	 
 
(11,490,380
)	 
 
(165,745,903
)	 
 
(143,732,388
)	 
 
(23,889,309
)	 
 
(101,329,422
)	 
 
(1,286,791,787
)	
Financial expenses, net 	 
 
-

-

-

-

-

(121,161,695
)	 
 
(121,161,695
)	
Participation in profit of equity method associates 	 
 
(51,309
)	 
 
-

-

-

7,990,645

-

7,939,336
 	
Exchange differences 	 
 
-

-

-

-

-

31,271,545

31,271,545
 	
Losses from indexation 	 
 
-

-

-

-

-

(7,200,590
)	 
 
(7,200,590
)	
Other losses, net 	 
 
(277,289
)	 
 
-

(1,635,602
)	 
 
-

-

4,213,328

2,300,437
 	
Income tax expense 	 
 
-

-

-

-

-

(78,780,003
)	 
 
(78,780,003
)	
Net profit (loss)  	 
 
93,131,207

167,959,312

39,359,265

11,652,513

48,698,390

(268,677,650
)	 
 
92,123,037
 	
Net profit (loss) from continued operations 	 
 
93,131,207

167,959,312

39,359,265

11,652,513

48,698,390

(268,677,650
)	 
 
92,123,037
 	
Net profit (loss) from discontinued operations 	 
 
-

-

-

-

-

-

-
 	
Net profit (loss) of attributable to non-controlling interest 	 
 
-

-

-

-

-

(1,710,188
)	 
 
(1,710,188
)	
Net profit for the year attributable to controlling shareholders, Total	 
 
93,131,207

167,959,312

39,359,265

11,652,513

48,698,390

(270,387,838
)	 
 
90,412,849
 	
Depreciation and amortization 	 
 
79,286,312

3,036,251

11,925,866

15,236,009

892,004

8,519,870

118,896,312

 
56

Consolidated statement of  income	 
Supermarkets
 	 
Shopping Centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
  Support services, financing, adjustments and other
 	 
  Consolidated total
 	
For the six months ended June 30, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Revenues from ordinary activities 	 
 
3,642,399,472

111,824,133

628,802,497

515,952,805

82,880,085

6,145,379

4,988,004,371
 	
Cost of sales 	 
 
(2,708,844,463
)	 
 
(13,553,959
)	 
 
(413,604,314
)	 
 
(373,932,179
)	 
 
(28,151,112
)	 
 
(2,630,369
)	 
 
(3,540,716,396
)	
Gross Margin 	 
 
933,555,009

98,270,174

215,198,183

142,020,626

54,728,973

3,515,010

1,447,287,975

 

 

 

 

 

 

 

Other income by function 	 
 
5,409,563

83,997,905

289,256

415,383

1,610

583,569

90,697,286
 	
Sales, general and administrative expenses 	 
 
(790,914,172
)	 
 
(11,461,669
)	 
 
(156,943,171
)	 
 
(138,407,759
)	 
 
(25,994,170
)	 
 
(100,249,524
)	 
 
(1,223,970,465
)	
Financial expenses, net 	 
 
-

-

-

-

-

(123,096,706
)	 
 
(123,096,706
)	
Participation in profit of equity method associates 	 
 
127,143

-

-

-

5,144,753

-

5,271,896
 	
Exchange differences 	 
 
-

-

-

-

-

44,613,633

44,613,633
 	
Losses from indexation 	 
 
-

-

-

-

-

(8,251,185
)	 
 
(8,251,185
)	
Other gains (losses), net 	 
 
1,607,520

1,358,580

-

-

-

48,748,312

51,714,412
 	
Income tax expense 	 
 
-

-

-

-

-

(88,871,238
)	 
 
(88,871,238
)	
Net profit (loss)  	 
 
149,785,063

172,164,990

58,544,268

4,028,250

33,881,166

(223,008,129
)	 
 
195,395,608
 	
Net profit (loss) from continued operations 	 
 
149,785,063

172,164,990

58,544,268

4,028,250

33,881,166

(223,008,129
)	 
 
195,395,608
 	
Net profit (loss) from discontinued operations 	 
 
-

-

-

-

-

-

-
 	
Net profit (loss) of attributable to non-controlling interest 	 
 
-

-

-

-

-

(1,361,778
)	 
 
(1,361,778
)	
Net profit for the year attributable to controlling shareholders, Total	 
 
149,785,063

172,164,990

58,544,268

4,028,250

33,881,166

(224,369,907
)	 
 
194,033,830
 	
Depreciation and amortization 	 
 
65,968,013

2,998,905

11,994,366

14,747,376

1,598,628

8,011,284

105,318,572

The Company controls the results of each of the operating segments, at the level of revenues, costs and management expenses. The support services, exchange rates, readjustments, taxes and non-recurring income and expense, or financial income, are not allocated, as they are centrally managed.
 
The financing policy of the Group has been historically getting financed and managing these resources through the Company Holding Cencosud S,A., the funds are subsequently transferred to other countries as required to finance the local investments. This policy aims to reduce the financial cost of the Group.
 
57

18.3 	Gross margin by country and segment, in thousands of Chilean pesos:	
 
Gross margin by country and segment  
 
For the six months ended June 30, 2017	 
Supermarkets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$

 

 	 

 

 	 

 
 	
Chile	 

 

 	 

 

 	 

Ordinary income, total 	 
 
1,292,400,669

72,418,834

258,972,305

511,581,252

-

3,342,247

2,138,715,307
 	
Cost of sales 	 
 
(961,191,510
)	 
 
(4,827,052
)	 
 
(192,729,770
)	 
 
(362,580,492
)	 
 
19,272

(442,906
)	 
 
(1,521,752,458
)	
Gross margin 	 
 
331,209,159

67,591,782

66,242,535

149,000,760

19,272

2,899,341

616,962,849

 

 

 

 

 

 

 

Argentina	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
813,317,362

34,389,642

359,954,826

-

75,026,609

4,438,139

1,287,126,578
 	
Cost of sales 	 
 
(547,184,573
)	 
 
(7,706,730
)	 
 
(227,226,278
)	 
 
-

(29,687,664
)	 
 
(2,162,275
)	 
 
(813,967,520
)	
Gross margin 	 
 
266,132,789

26,682,912

132,728,548

-

45,338,945

2,275,864

473,159,058

 

 

 

 

 

 

 

Brazil	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
793,244,356

-

-

-

1,363,230

-

794,607,586
 	
Cost of sales 	 
 
(634,264,677
)	 
 
-

-

-

-

-

(634,264,677
)	
Gross margin 	 
 
158,979,679

-

-

-

1,363,230

-

160,342,909

 

 

 

 

 

 

 

Peru	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
401,958,870

9,994,590

-

33,857,109

29,274,897

549,885

475,635,351
 	
Cost of sales 	 
 
(307,188,985
)	 
 
(1,331,982
)	 
 
-

(27,831,449
)	 
 
(14,523,850
)	 
 
(7,544
)	 
 
(350,883,810
)	
Gross margin 	 
 
94,769,885

8,662,608

-

6,025,660

14,751,047

542,341

124,751,541

 

 

 

 

 

 

 

Colombia	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
377,059,034

4,556,119

30,522,599

-

3,123,206

(1,745,083
)	 
 
413,515,875
 	
Cost of sales 	 
 
(299,454,294
)	 
 
(123,689
)	 
 
(23,312,164
)	 
 
-

74

11,346

(322,878,727
)	
Gross margin 	 
 
77,604,740

4,432,430

7,210,435

-

3,123,280

(1,733,737
)	 
 
90,637,148

 
58

Gross margin by country and segment
 
For the six months ended June 30, 2016	 
Supermarkets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$

 

 	 

 

 	 

 
 	
Chile	 

 

 	 

 

 	 

Ordinary income, total 	 
 
1,263,803,367

64,447,101

259,792,522

485,033,894

708,870

4,234,642

2,078,020,396
 	
Cost of sales 	 
 
(942,607,349
)	 
 
(4,884,981
)	 
 
(190,367,189
)	 
 
(349,032,896
)	 
 
45,645

(370,265
)	 
 
(1,487,217,035
)	
Gross margin 	 
 
321,196,018

59,562,120

69,425,333

136,000,998

754,515

3,864,377

590,803,361

 

 

 

 

 

 

 

Argentina	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
806,898,146

33,336,929

337,983,020

-

49,607,610

2,701,958

1,230,527,663
 	
Cost of sales 	 
 
(541,776,235
)	 
 
(7,157,411
)	 
 
(199,952,838
)	 
 
-

(14,429,904
)	 
 
(1,480,954
)	 
 
(764,797,342
)	
Gross margin 	 
 
265,121,911

26,179,518

138,030,182

-

35,177,706

1,221,004

465,730,321

 

 

 

 

 

 

 

Brazil	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
763,509,155

-

-

-

1,716,196

-

765,225,351
 	
Cost of sales 	 
 
(591,235,638
)	 
 
-

-

-

-

-

(591,235,638
)	
Gross margin 	 
 
172,273,517

-

-

-

1,716,196

-

173,989,713

 

 

 

 

 

 

 

Peru	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
418,998,044

9,698,043

-

30,918,911

28,630,269

1,016,650

489,261,917
 	
Cost of sales 	 
 
(321,952,147
)	 
 
(1,380,291
)	 
 
-

(24,899,283
)	 
 
(13,766,876
)	 
 
(781,526
)	 
 
(362,780,123
)	
Gross margin 	 
 
97,045,897

8,317,752

-

6,019,628

14,863,393

235,124

126,481,794

 

 

 

 

 

 

 

Colombia	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
389,190,760

4,342,060

31,026,955

-

2,217,140

(1,807,871
)	 
 
424,969,044
 	
Cost of sales 	 
 
(311,273,094
)	 
 
(131,276
)	 
 
(23,284,287
)	 
 
-

23

2,376

(334,686,258
)	
Gross margin 	 
 
77,917,666

4,210,784

7,742,668

-

2,217,163

(1,805,495
)	 
 
90,282,786

 
59

18.4	Regional information by segment: Total assets  	

Supermarkets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total
 	
At June 30, 2017	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Current Assets	 

 

 	 

 

 	 

Cash and cash equivalents 	 
 
108,123,209

4,457,739

7,507,895

2,189,650

21,533

28,426,702

150,726,728
 	
Other financial assets, current 	 
 
-

-

-

-

-

80,581,582

80,581,582
 	
Other non-financial assets, current 	 
 
15,377,022

1,921,593

2,871,060

1,686,085

18,678,263

2,683,845

43,217,868
 	
Trade receivables and other receivables 	 
 
214,245,383

23,801,200

49,352,757

28,253,268

455,434,912

20,983,385

792,070,905
 	
Receivables due from related entities, current 	 
 
-

-

-

-

14,378,482

-

14,378,482
 	
Inventory 	 
 
725,734,929

-

247,308,274

209,622,981

-

-

1,182,666,184
 	
Current tax assets 	 
 
21,959,603

4,926,974

14,107,520

10,685,474

484,940

28,965,582

81,130,093
 	
Assets classified as held for sale, current 	 
 
23,894,518

8,954,832

-

-

-

31,228,005

64,077,355
 	
Total current assets 	 
 
1,109,334,664

44,062,338

321,147,506

252,437,458

488,998,130

192,869,101

2,408,849,197

 

 

 

 

 

 

 

Non-Current Assets	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Other financial assets, non-current 	 
 
-

-

-

-

-

272,092,635

272,092,635
 	
Other non-financial assets, non-current 	 
 
38,936,978

7,197,060

2,598,502

1,688,248

8,640

-

50,429,428
 	
Trade receivables and other receivables, non-current 	 
 
3,409,631

-

14,804,811

-

-

-

18,214,442
 	
Equity method investments 	 
 
620,034

-

-

-

202,884,485

-

203,504,519
 	
Intangible assets other than goodwill 	 
 
197,591,520

374,958

10,751,259

159,719,269

153,105

42,799,688

411,389,799
 	
Goodwill 	 
 
1,204,701,654

31,467,959

2,529,715

138,159,463

52,305,509

-

1,429,164,300
 	
Property, plant and equipment 	 
 
1,526,390,508

437,119,425

275,110,637

245,681,402

1,368,309

35,376,042

2,521,046,323
 	
Investment property 	 
 
-

2,139,876,578

-

-

-

-

2,139,876,578
 	
Income tax assets, non-current 	 
 
71,682,040

194,325

815,549

4,509,476

-

10,088

77,211,478
 	
Deferred income tax assets 	 
 
-

-

-

-

-

623,002,505

623,002,505
 	
Total non-current assets 	 
 
3,043,332,365

2,616,230,305

306,610,473

549,757,858

256,720,048

973,280,958

7,745,932,007
 	
Total Assets	 
 
4,152,667,029

2,660,292,643

627,757,979

802,195,316

745,718,178

1,166,150,059

10,154,781,204

 
 
60

 	 
Supermarkets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustment sand other
 	 
Consolidated total
 	
At December 31, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Current Assets	 

 

 	 

 

 	 

Cash and cash equivalents 	 
 
181,727,680

4,377,803

13,760,047

2,246,159

1,008,517

72,098,797

275,219,003
 	
Other financial assets, current 	 
 
-

-

-

-

-

219,988,622

219,988,622
 	
Other non-financial assets, current 	 
 
7,618,030

758,065

1,541,496

1,014,364

11,070,047

1,626,277

23,628,279
 	
Trade receivables and other receivables 	 
 
291,088,879

30,693,990

68,693,890

30,059,294

420,662,271

25,941,353

867,139,677
 	
Receivables due from related entities, current 	 
 
37,222

-

-

-

28,950,954

-

28,988,176
 	
Inventory 	 
 
700,985,806

-

254,992,540

193,307,668

-

-

1,149,286,014
 	
Current tax assets 	 
 
16,633,102

2,090,444

3,647,748

13,803,843

3,722,153

34,238,357

74,135,647
 	
Assets classified as held for sale, current 	 
 
17,886,465

-

-

-

-

39,237,407

57,123,872
 	
Total current assets 	 
 
1,215,977,184

37,920,302

342,635,721

240,431,328

465,413,942

393,130,813

2,695,509,290

 

 

 

 

 

 

 

Non-Current Assets	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Other financial assets, non-current 	 
 
-

-

-

-

-

287,360,674

287,360,674
 	
Other non-financial assets, non-current 	 
 
40,549,624

7,677,318

2,390,633

1,707,428

10,083

189

52,335,275
 	
Trade receivables and other receivables, non-current 	 
 
3,100,863

-

8,792,843

-

-

-

11,893,706
 	
Equity method investments 	 
 
989,721

-

-

-

199,737,813

-

200,727,534
 	
Intangible assets other than goodwill 	 
 
195,476,999

418,055

11,146,455

160,203,723

159,887

40,762,995

408,168,114
 	
Goodwill 	 
 
1,207,776,321

31,472,874

2,605,322

138,159,463

52,305,509

-

1,432,319,489
 	
Property, plant and equipment 	 
 
1,546,905,547

470,346,933

284,046,215

248,862,284

2,827,945

25,804,649

2,578,793,573
 	
Investment property 	 
 
-

2,081,694,027

-

-

-

-

2,081,694,027
 	
Income tax assets, non-current 	 
 
77,993,287

194,325

669,273

4,509,476

-

10,089

83,376,450
 	
Deferred income tax assets 	 
 
-

-

-

-

-

616,579,356

616,579,356
 	
Total non-current assets 	 
 
3,072,792,362

2,591,803,532

309,650,741

553,442,374

255,041,237

970,517,952

7,753,248,198
 	
Total Assets	 
 
4,288,769,546

2,629,723,834

652,286,462

793,873,702

720,455,179

1,363,648,765

10,448,757,488

 
61

18.5 	Current Asset and liabilities by segment	

Supermarkets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance +cards + bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	
Regional information by segment Current assets and liabilities at June 30, 2017	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Trade accounts payable and other payables	 
 
1,146,659,924

34,431,670

254,504,340

181,214,294

43,059,820

42,080,726

1,701,950,774

	 
Supermarkets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance +cards + bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	
Regional information by segment Current assets and liabilities at December 31, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Trade accounts payable and other payables	 
 
1,294,692,757

35,089,329

273,630,631

246,827,811

39,764,889

36,841,635

1,926,847,052

18.6 	Information by country, assets and liabilities	
 
In thousands of Chilean pesos:
 
Assets and liabilities by country

Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidated total
 	
At June 30, 2017	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Total assets 	 
 
4,583,344,007

1,425,568,394

1,333,362,177

1,238,464,368

1,574,042,258

10,154,781,204
 	
Total liabilities 	 
 
4,052,570,495

778,650,171

523,502,185

368,815,381

418,874,476

6,142,412,708
 	
Total Net equity 	 
 
811,133,818

733,912,928

696,031,599

758,946,058

1,012,344,093

4,012,368,496
 	
Adjustments to net investment	 
 
(280,360,306
)	 
 
(86,994,705
)	 
 
113,828,393

110,702,929

142,823,689

-
 	
Net investment 	 
 
530,773,512

646,918,223

809,859,992

869,648,987

1,155,167,782

4,012,368,496
 	
Percentage of Net equity	 
 
20.2
%	 
 
18.3
%	 
 
17.3
%	 
 
18.9
%	 
 
25.2
%	 
 
100.0
%	
Percentage of equity	 
 
13.2
%	 
 
16.1
%	 
 
20.2
%	 
 
21.7
%	 
 
28.8
%	 
 
100.0
%	

Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidated total
 	
At December 31, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Total assets 	 
 
4,779,856,500

1,411,985,049

1,431,919,219

1,240,938,778

1,584,057,942

10,448,757,488
 	
Total liabilities 	 
 
4,202,937,399

813,235,515

530,551,320

403,728,564

414,252,955

6,364,705,753
 	
Total Net equity 	 
 
885,649,473

655,906,732

781,437,358

693,076,414

1,067,981,758

4,084,051,735
 	
Adjustments to net investment	 
 
(308,730,372
)	 
 
(57,157,198
)	 
 
119,930,541

144,133,800

101,823,229

-
 	
Net investment 	 
 
576,919,101

598,749,534

901,367,899

837,210,214

1,169,804,987

4,084,051,735
 	
Percentage of Net equity	 
 
21.7
%	 
 
16.1
%	 
 
19.1
%	 
 
17.0
%	 
 
26.2
%	 
 
100.0
%	
Percentage of equity	 
 
14.1
%	 
 
14.7
%	 
 
22.1
%	 
 
20.5
%	 
 
28.6
%	 
 
100.0
%	

 
62

18.7 	Regional information, including intersegments is as follows:	

For the six months ended June 30, 2017
 	
Regional information, by segment	 
Total revenue by segment
 	 
Total revenue intra-segment
 	 
Total segment revenue

ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Supermarkets 	 
 
3,677,980,291

-

3,677,980,291
 	
Shopping 	 
 
183,883,954

62,524,769

121,359,185
 	
Home Improvement 	 
 
650,047,411

597,681

649,449,730
 	
Department stores 	 
 
545,438,361

-

545,438,361
 	
Financial Services 	 
 
108,787,942

-

108,787,942
 	
Others 	 
 
6,585,188

-

6,585,188
 	
TOTAL 	 
 
5,172,723,147

63,122,450

5,109,600,697

 	 
For the six months ended June 30, 2016
 	
Regional information, by segment	 
Total segment revenue
 	 
Total segment revenue
 	 
Total segment revenue

ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Supermarkets 	 
 
3,642,399,472

-

3,642,399,472
 	
Shopping 	 
 
166,845,335

55,021,202

111,824,133
 	
Home Improvement 	 
 
628,881,524

79,027

628,802,497
 	
Department stores 	 
 
515,952,805

-

515,952,805
 	
Financial Services 	 
 
82,880,085

-

82,880,085
 	
Others 	 
 
6,145,379

-

6,145,379
 	
TOTAL 	 
 
5,043,104,600

55,100,229

4,988,004,371

63

18.8  	Non-current assets by country	
 
At June 30, 2017	 
Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidated total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Other non-financial assets	 
 
22,344,746

7,825,807

18,462,479

1,790,236

6,160

50,429,428
 	
Trade receivables and other receivables	 
 
-

15,042,786

3,171,656

-

-

18,214,442
 	
Equity Method investments	 
 
202,884,485

-

-

620,034

-

203,504,519
 	
Intangible assets other than goodwill	 
 
220,722,520

10,426,185

61,545,155

111,460,058

7,235,881

411,389,799
 	
Goodwill 	 
 
246,378,878

1,386,911

387,752,569

270,590,851

523,055,091

1,429,164,300
 	
Property Plant and Equipment	 
 
1,095,582,661

203,829,340

311,630,550

359,854,587

550,149,185

2,521,046,323
 	
Investment Property 	 
 
1,592,801,198

314,725,105

-

203,062,005

29,288,270

2,139,876,578
 	
Income tax assets, non-current	 
 
4,852,773

851,530

71,507,175

-

-

77,211,478
 	
Non -current assets—Total	 
 
3,385,567,261

554,087,664

854,069,584

947,377,771

1,109,734,587

6,850,836,867

At December 31, 2016	 
Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidated total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Other non-financial assets	 
 
23,356,132

7,663,639

19,431,481

1,877,863

6,160

52,335,275
 	
Trade receivables and other receivables	 
 
-

8,815,714

3,077,992

-

-

11,893,706
 	
Equity Method investments	 
 
199,737,813

-

-

989,721

-

200,727,534
 	
Intangible assets other than goodwill	 
 
219,352,035

9,823,814

64,145,345

106,901,729

7,945,191

408,168,114
 	
Goodwill 	 
 
246,378,878

1,467,433

397,062,475

264,355,612

523,055,091

1,432,319,489
 	
Property Plant and Equipment	 
 
1,107,174,199

212,741,017

340,287,996

355,639,693

562,950,668

2,578,793,573
 	
Investment Property 	 
 
1,531,658,588

323,482,594

-

197,264,575

29,288,270

2,081,694,027
 	
Income tax assets, non-current	 
 
4,852,774

5,409,578

73,114,098

-

-

83,376,450
 	
Non -current assets—Total	 
 
3,332,510,419

569,403,789

897,119,387

927,029,193

1,123,245,380

6,849,308,168

The amounts for non-current assets by country shown in this note exclude other non-current financial assets, deferred tax assets as per IFRS 8.
 
64

18.9	Additions to non-current assets:	

Supermarkets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance
+cards
+bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	
As of June 30, 2017	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Property plant and equipment	 
 
46,336,135

11,475,695

8,461,373

8,040,446

52,821

1,950,035

76,316,505
 	
Intangible asset, other that goodwill	 
 
8,171,423

93,453

1,354,545

2,303,823

53,872

7,789,700

19,766,816
 	
Investment property	 
 
-

3,314,808

-

-

-

-

3,314,808
 	
Total additions	 
 
54,507,558

14,883,956

9,815,918

10,344,269

106,693

9,739,735

99,398,129

	 
Supermarkets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance
+cards
+bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	
As of December 31, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Property plant and equipment	 
 
113,455,353

33,906,164

11,131,370

27,836,982

1,258,327

4,803,064

192,391,260
 	
Intangible asset, other that goodwill	 
 
8,638,903

138,107

2,964,884

9,083,317

584,489

16,262,072

37,671,772
 	
Investment properties	 
 
-

1,225,878

-

-

-

-

1,225,878
 	
Total additions	 
 
122,094,256

35,270,149

14,096,254

36,920,299

1,842,816

21,065,136

231,288,910

 
65

19 	Restrictions, contingencies, legal proceedings and other matters	
 
19.1 	Civil legal proceedings	

● 	The subsidiaries Cencosud Retail S.A. , Easy S.A., Cencosud Shopping Centers S.A., and Administradora del Centro Comercial Alto Las Condes Ltda., are involved in lawsuits and litigation that are pending as of June 30, 2017. The amounts of these claims are covered by a civil liability insurance policy.	
 
● 	On May 22, 2015 the municipality constructions authority of Vitacura ordered the stagnation of the project developed by Cencosud Shopping Centers S.A., on the piece of land located at the 8950 of Kennedy Avenue in Santiago. This Municipality based its decision on the fact that the construction does not have the required permission. The Company filed an appeal on June 19, 2015 to the metropolitan administrative authority (Secretaria Regional Ministerial – “SEREMI”), who issued a ruling accepting the Company`s pretentions and ordering the Municipality to adjust its decision.	
 
On November 13, 2015, SEREMI resolved the Appeal brought by Cencosud Shopping Centers S.A., welcoming and ordering the authority of Vitacura, among other considerations, to adjust its action in accordance with the regulations applicable to the date of granting the respective permit. On November 25, 2015, “SEREMI” issued an extended ruling, which reverted its previous position base on the Public Ministry’s opinion.
 
On December 23, 2015 Cencosud filed a “protection claim” to the Appellate Court, alleging to revoke the SEREMI`s new position redefined on November 25, 2015. On April 2016 the Appellate Court accepted the Cencosud’s protection claim, being appealed that decision by SEREMI against the Supreme Court. On May 30, 2016 the Supreme Court rejected the SEREMI`s pretentions, which means that the ruling originally issued on June 19, 2015 is fully valid, and it confirms the Company`s allegations. On August 17, 2016 SEREMI resolved to invalid its ruling according to the Supreme Court decision.
 
On August 17, 2016, the SEREMI resolved to invalidate the exempted resolution questioned in compliance with the Supreme Court's ruling. On January 19, 2017, the municipality constructions authority of Vitacura proceeded to invalidate the aforementioned resolution by which it paralyzed the works. On that same date, the authority issued a new resolution in which it established the expiration of the building permit, which was rendered invalid by virtue of a decision issued by the Court of Appeals of Santiago on February 2, 2017.
 
● 	During January 2016, the authority National Economic Prosecutor (Fiscalia Nacional Económica FNE) filed a claim to the Free Competition Court (Tribunal de Defensa de la Libre Competencia) against Cencosud, Walmart Chile and SMU supermarkets’ chains, for alleged collusion between the mentioned chains for a price-fixing scheme involving poultry products. On April 6, 2016, a new court´s order was issued, by which the probationary stage began since October 20, 2016.	
 
The Group answered the aforementioned request to the Court on March 22, 2016, and categorically rejected the allegations raised by the FNE in such claim. The company will keep defending itself in the process to prove its innocence.
 
To Cencosud collusion and anti-competitive practice is unacceptable and totally condemnable.
 
Potential fines in this case could be up to 30.000 UTA (approximately U.S. $25 million at the time of the suit filing).
 
● 	An indirectly controlled subsidiary of Cencosud S,A in Colombia is involved in litigations regarding extra contractual civil responsibility. The amounts of these claims are covered by a civil liability insurance policy.	
 
● 	The indirect controlled Cencosud Colombia S.A. was legally requested by the social welfare government authority (UGPP), about omissions, arrears and inaccuracies incurred respect the lawful contributions of several employees. The process is being driven by a local Labour Court and it suits pretentions amounted to USD $798 thousand. The Company, in consultation with its legal advisors, considers that the chances of getting a favorable ruling to the position of the company are reasonably higher than obtain an unfavorable ruling.	
 
● 	A civil lawsuit was filed against the indirectly controlled affiliate Cencosud Brasil Comercial Ltda., by the Public Employees Union in supermarkets in the State of Sergipe, which is awaiting the first instance ruling. The union is seeking compensation for overtime hours for all employees of the subsidiary for the period after May 2007. The petition was filed and supported by the ruling, albeit still not judicial, that was issued through another public civil claim, which annulled a bank of hours from May 2007 to April 2009. Estimated amount of the Union’s pretention is amounted to U.S. $14.4 million at the time of the suit filing.	
 
Cencosud Brazil does not have any knowledge of other civil proceedings that must be disclosed as of June 30, 2017.
 
● 	Cencosud Retail Peru S.A, an indirectly controlled subsidiary of Cencosud S,A. has several outstanding cases at the close of the financial statements for liability claims causes. Total amounts claimed raise to MUSD 14. The Company, in consultation with its legal advisors, considers that the chances of getting a favorable ruling to the position of the company are reasonably higher than obtain an unfavorable ruling.	
 
● 	The indirect subsidiary Cencosud S.A. Argentina and Jumbo Retail S.A. Argentina, present several cases pending at the close of the financial statements for claims of civil liability, the amounts claimed amount to MUSD 3,423. The Company, in consultation with its legal advisors, estimates that the chances of obtaining a judgment favorable to the company's position are reasonably superior to those of obtaining an unfavorable ruling.	

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● 	The indirect subsidiary Cencosud S.A. Argentina and Jumbo Retail S.A. Argentina, present several pending cases at the close of the financial statements for claims of labor type with their workers, whose amounts claimed amount to MUSD 29,449. The Company, in consultation with its legal advisors, estimates that the chances of obtaining a judgment favorable to the company's position are reasonably superior to those of obtaining an unfavorable ruling.	
 
19.2 	Taxation legal proceedings	
 
As of June 30, 2017, the Group’s Companies maintain several taxation legal controversies, which the most relevant are shown as follows:

Country	Society	Grounds	Amount [1]	Stage of
the process	Expected
outcome [2]	
 	 	 	ThCh$	 	 	
Chile 	Cencosud S.A. 	Shares transference cost 	7,500,000	Trial	Positive	
 	Cencosud Internacional Limitada 	Shares transference cost 	27,219,675	Trial	Positive	
 	Cencosud Retail S.A. 	Deductible expenses income tax 	1,915,647	Trial	Positive	
 	Cencosud Retail S.A. 	First category income tax 	8,186,021	Trial	Positive	
 	Paris Administradora Sur Limitada	First category income tax 	3,768,171	Trial	Positive	
 	Paris Administradora Centro Limitada 	Deductible expenses, offsetting losses 	2,388,090	Trial	Positive	
 	Cencosud Retail S.A. 	Deductible expenses income tax 	3,305,773	Trial	Positive	
 	Sociedad Comercial de Tiendas S.A. 	Income tax 	332,015	Trial	Positive	
 	Paris Administradora Limitada [A]. 	Income tax (PPUA) 	2,958,859	Trial	Positive	
 	Jumbo Supermercados Administradora Limitada.[B] 	Income tax (PPUA) 	1,078,379	Trial	Positive	
Peru 	Cencosud Perú 	VAT or G&S tax 	2,972,705	Trial	Positive	
Brazil 	Cencosud Comercial Ltda 	Income tax 	52,660,489	Trial	Positive	
 	Cencosud Comercial Ltda 	PIS & CONFIS [3] 	22,730,566	Trial	Positive	
 	Cencosud Comercial Ltda 	Different causes – Activities Tax 	13,154,414	Trial	Positive	
 
[1] Amount refers to tax payable or tax (rebate). Amounts may vary depending on the time of the suit filing. Fines, interest, translations and adjustments shall be also updated up to payment date, if necessary
[2] Potential outcomes are provided for the legal advisors who carry the processes
[3] The PIS and COFINS are federal social contributions designed for funding the social security system in Brazil, which are based on company's gross revenues
[A] Formerly corresponding to the society Megajohnson´s Maipú S.A.
[B] Formerly corresponding to the society Megajohnson´s Puente S.A.
 
The tax contingencies and taxation legal proceedings disclosed above are deemed to be of a positive outcome.

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20    	Stock options	
 
As of June 30, 2017 the Company has shared-based compensation plans for executives of Cencosud S,A, and affiliates which had no changes compared with December 31, 2016.
 
As at September 28, 2015 the Company launched the 2016 options plan. All the Executives have accepted this plan, and they have waived in respect to any previous existing plans as at September 28, 2015, which have not been exercised by them, including those not exercised because the respective terms have been met. The change in the plan was given a treatment for following the guidance of IFRS 2 “Share based payments”.

Numbers of shares

As of
 	
Stock options granted to key executives	 
6/30/2017
 	 
12/31/2016
 	
1) Outstanding as of the beginning of the period 	 
 
675,000

35,676,984
 	
2) Granted during the period 	 
 
-

-
 	
3) Forfeited during the period 	 
 
(10,000
)	 
 
(1,080,000
)	
4) Exercised during the period (see note 15.1) 	 
 
(15,000
)	 
 
(33,812,984
)	
5) Expired at the end of the period 	 
 
-

(109,000
)	
6) Outstanding at the end of the period 	 
 
650,000

675,000
 	
7) Vested and expected to vest at the end of the period	 
 
650,000

675,000
 	
8) Eligible for exercise at the end of the period 	 
 
35

40

Stock options—Impact in P&L	 
As of
June 30, 2017
 	 
As of
June 30, 2016

ThCh$
 	 
ThCh$
 	
Impact in the income statement 	 
 
1,767,330

5,059,660

In relation to the 2016, 2015 and 2014 Retention Plans, the outstanding options as of June 30, 2017 had a weighted-average contractual life of 0.10 years, 0.04 years and 0.04 years respectively. As of December 31, 2016 those options had a weighted-average contractual life of 0.25 years, 0.25 years and 0.10 years respectively.
 
The Company utilizes a valuation model that is based in a constant volatility assumption to value its employee share options. The fair value of each option grant has been estimated, as of the grant date, using the Black Scholes option pricing model.
 
The expected volatility is based on market data information. The calculation consisted of the determination of the standard deviation from the Company’s historical closing stock prices during a time horizon approximated to the relevant maturity.

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21  	Assets and liabilities classified as held for sale, and discontinued operations	
 
IFRS requires assets that meet the criteria to be classified as held for sale (a) to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; (b) an asset classified as held for sale and the assets and liabilities included within a disposal group classified as held for sale to be presented separately in the statement of financial position; and (c) the results of discontinued operations to be presented separately in the statement of comprehensive income.
 
As of June 30, 2017 and December 31, 2016 assets and liabilities are presented as non-current for disposal classified as “held for sale”. According to the disclosures required by IFRS 5, the balance is the following:
 
1) Balance of the assets and liabilities classified as non-current assets for disposal - “held for sale”, as of June 30, 2017 and December 31, 2016 are presented as follows:
 
Assets	 
6/30/2017
Unaudited
 	 
12/31/2016

ThCh$
 	 
ThCh$
 	
Other financial assets, current 	 
 
-

5,011
 	
Other non-financial assets, current 	 
 
193,341

134,502
 	
Trade receivables and other receivables, current 	 
 
449,245

929,937
 	
Inventories, current 	 
 
945,550

877,016
 	
Total current assets 	 
 
1,588,136

1,946,466
 	
Non-current assets	 

 	 

 	
Trade receivables and other receivables, non-current	 
 
-

8,879,073
 	
Property, plant and equipment 	 
 
59,549,977

43,359,091
 	
Investment property 	 
 
2,939,242

2,939,242
 	
Total non-current assets 	 
 
62,489,219

55,177,406
 	
Total non-current assets classified as held for sale	 
 
64,077,355

57,123,872

Liabilities	 
6/30/2017
Unaudited
 	 
12/31/2016

ThCh$
 	 
ThCh$
 	
Current liabilities	 

 
 	
Other financial liabilities, current 	 
 
351,481

1,842,529
 	
Trade payables and other payables, current 	 
 
2,199,434

2,802,909
 	
Other provisions, current 	 
 
111,699

78,699
 	
Current provision for employee benefits 	 
 
57,549

75,319
 	
Total current liabilities 	 
 
2,720,163

4,799,456
 	
Non-current liabilities	 

 	 

 	
Other financial liabilities, non-current 	 
 
3,292,971

10,869,777
 	
Total non-current liabilities 	 
 
3,292,971

10,869,777
 	
Total non-current liabilities classified as held for sale	 
 
6,013,134

15,669,233

 
 
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Detail of the assets and liabilities classified as non-current assets for disposal as “held for sale” as of June 30, 2017, and December 31, 2016 are presented below:
 
a)	Sale of non-strategic assets: Pieces of land Chile	
 
As of June 30, 2017, date of close of these financial statements, the Company remains committed to the plan of sale of undeveloped land in Chile. The process has been planned, defined and structured in conjunction with the Property and Shopping Divisions Management.
 
The assets included in this plan correspond to assets classified among Properties Plant and Equipment and Investment Property items, whose book value is expected to be recovered through the future sale, rather than continuing using them within business units that the company operates. The sale of these assets is considered highly probable, and is expected to be materialized during the next twelve months. Key management has initiated an active program with the necessary actions to conclude agreements of significant conditions, such as the price and timing of the transactions with unrelated third parties, and finally sell them within the defined term.
 
The Company has taken a number of administrative and operational plans to finalize the sale, therefore it has commissioned exclusively to the brokerage society “Colliers” to market these assets so. This company has extensive expertise in real estate and finance sectors.
 
Non-current assets and liabilities classified as held for sale as of June 30, 2017, and December 31, 2016 are presented as follows:
 
Property, plant and equipment; and Investment property held for sale	 
6/30/2017
Unaudited
 	 
12/31/2016

ThCh$
 	 
ThCh$
 	
Land 	 
 
34,259,403

16,570,947
 	
Facilities 	 
 
341,139

348,921
 	
Furnishings 	 
 
-

5,511
 	
Leased assets 	 
 
4,955,151

5,414,316
 	
Buildings 	 
 
3,431,750

4,456,863
 	
Total property, plant and equipment 	 
 
42,987,443

26,796,558
 	
Other financial liabilities, current and non-current - Leasing	 
 
(3,644,452
)	 
 
(3,860,774
)	
Investment property 	 
 
2,939,242

2,939,242

Detailed assets, classified as held for sale, have been recognized at the lower of carrying amount and fair value less costs to sell, from the moment of the reclassification.
 
b)	Gas stations - Colombia	
 
Colombian gas stations, previously reported under the “supermarkets” segment in our financial statements, has been included within the assets and liabilities held for sale as of June 30, 2017 and December 31, 2016, are presented as follows:
 
Gas stations - Colombia	 
6/30/2017
Unaudited
 	 
12/31/2016

ThCh$
 	 
ThCh$
 	
Other non financial assets, current 	 
 
193,341

134,502
 	
Trade receivables and other receivables, current 	 
 
449,245

312,416
 	
Inventories, current 	 
 
945,550

877,016
 	
Property, plant and equipment 	 
 
16,562,534

16,562,533
 	
Trade payables and other payables, non-current 	 
 
(2,199,434
)	 
 
(2,802,909
)	
Other provisions, current 	 
 
(111,699
)	 
 
(78,699
)	
Current provision for employee benefits 	 
 
(57,549
)	 
 
(75,319
)	
Total gas stations classified as held for sale 	 
 
15,781,988

14,929,540

The Company determined a plan for the sale of these assets, for which is expected to be completed in one year.

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 2) Sale of the Banco Paris business
 
On December 15, 2016, a contract was signed for the sale and transfer of assets and for the transfer and assumption of liabilities between Banco Paris and Banco Scotiabank Chile, where Banco Paris sells, and transfers to Scotiabank a set of mortgage loans granted By Banco Paris to different debtors, a set of assets originated in the acquisition of mortgage bonds issued by Banco Paris under the terms of Chapter 9-1 of the updated SBIF and II. A.1 of the Compendium of Financial Regulations of the Central Bank of Chile and other financial investments made by Banco Paris, all of them net of the corresponding provisions. The sale, assignment and transfer of the assets object of this instrument will be perfected on the closing date, as this term will be defined later by the parties. The sale, assignment and transfer of the assets object of this instrument were formally completed on January 1, 2017.
 
Assets and liabilities held for sale allocated within the Banco Paris business as of December 31, 2016 are presented according to the following detail:
 
Banco Paris	 
12/31/2016
ThCh$

 
 	
Other financial assets, current 	 
 
5,011
 	
Trade receivables and other receivables, current 	 
 
617,521
 	
Trade receivables, non-current 	 
 
8,879,073
 	
Other financial liabilities, current 	 
 
(1,495,228
)	
Other financial liabilities, non-current 	 
 
(7,356,304
)	
Net value of Banco Paris classified as held for sale	 
 
650,073

 
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22                      	Subsequent events	
 
●	On June 27, 2017 the Company initiated an offer for the acquisition of Bonds issued by the Company in international markets for a total amount of up to ThUS $ 750,000, for the purchase of bonds issued on January 20, 2011, with a maturity date of 2021 ( "Bonds 2021 " ), and bonds issued on December 6, 2012, with a maturity date of 2023 (" Bonds 2023 " ). The repurchase values offered were 109.875% of the PAR value for the 2021 Bond and 108.25% of the PAR value for the 2021 Bond.	
 
Besides, dated July 17, 2017, Cencosud S.A. issued and placed in international markets a new series of bonds for a total amount of ThUS $ 1,000,000, with a 10-year maturity, with a placement interest rate of 4.419% and a coupon rate of 4.375% "Bonds 2027" ), in accordance with regulation 144 A of the Securities Act of 1933 of the United States of America and its corresponding Regulation S. All in accordance with the terms and conditions contained in the document governed by the laws of the State of New York, United States of America, called “Offer to Purchase” , issued by the Company. The resources generated by this issue were intended to pay for the repurchase of Bonds 2021 and 2023 in the securities offered, the refinancing of other liabilities and other corporate uses.
 
As a result of these operations and in particular, as a result of the repurchase of “Bonds 2021” and “Bonds 2023” over their book values, a negative effect has been generated on the current results estimated amount of CLP $ 28,000 million, which will be recognized under financial expenses during the third quarter of 2017.
 
Between the date of issuance of these condensed consolidated financial statements and the filing date of this report, management is not aware of any other subsequent events that could significantly affect the consolidated financial statements.
 
72