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 , 2016
 
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, 2016 (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.	 	
 	 	 	 	
 	By:  	/s/  Sebastián Rivera Martínez	 	
 	 	Name:  Sebastián Rivera Martínez  	 	
 	 	Title:    Legal Manager	 	
Date: August 29, 2016

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

 	 

As of
 	
Assets	 
Note
 	 
June 30, 2016
 	 
December 31, 2015

 
 	 
ThCh$
 	 
ThCh$

 
 	 
(unaudited)

 	

 	 

 
 	
Current assets	 

 

 	
Cash and cash equivalents 	 

 
204,307,183

268,275,126
 	
Other financial assets, current 	 
 
5

58,602,916

254,850,725
 	
Other non-financial assets, current 	 

 	 
 
28,579,812

14,442,030
 	
Trade receivables and other receivables 	 
 
6

764,503,396

819,839,383
 	
Receivables due from related entities, current 	 

 	 
 
18,532,418

14,851,194
 	
Inventory 	 
 
8

1,076,823,302

1,068,309,333
 	
Current tax assets 	 

 	 
 
79,912,430

61,197,049

 

 

 

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

 	 
 
2,231,261,457

2,501,764,840

 

 

 

 	 

 	 

 	 

 	
Assets classified as held for sale 	 
 
21

41,328,187

-

 

 

 

Total current assets 	 

 	 
 
2,272,589,644

2,501,764,840

 

 

 

 	 

 	 

 	 

 	
Non-current assets	 

 	 

 	 

 	
Other financial assets, non-current 	 
 
5

359,039,239

421,532,586
 	
Other non-financial assets, non-current	 

 	 
 
48,940,896

31,907,769
 	
Trade receivable and other receivables, non-current 	 
 
6

18,377,427

30,996,852
 	
Equity method investment 	 

 	 
 
196,872,625

251,527,505
 	
Intangible assets other than goodwill 	 
 
9

409,533,970

401,749,417
 	
Goodwill 	 
 
10

1,459,557,650

1,391,692,072
 	
Property, plant and equipment 	 
 
11

2,634,455,949

2,711,490,630
 	
Investment property 	 
 
12

1,846,089,123

1,807,095,204
 	
Non-current tax assets, 	 

 	 
 
8,647,417

8,854,347
 	
Deferred income tax assets 	 

 	 
 
627,406,538

552,114,088

 

 

 

Total non-current assets 	 

 	 
 
7,608,920,834

7,608,960,470

 

 

 

Total assets 	 

 	 
 
9,881,510,478

10,110,725,310
 	
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
 
1
 
Cencosud S.A. and subsidiaries, condensed consolidated interim statements of financial position

 
 	 
As of
 	
Net equity and liabilities	 
Note
 	 
June 30, 2016
 	 
December 31, 2015

 
 	 
ThCh$
 	 
ThCh$

 
 	 
(unaudited)

 	

 	 

 
 	
Current liabilities	 

 

 	
Other financial liabilities, current 	 
 
13

473,091,073

356,173,111
 	
Trade payables and other payables 	 

 	 
 
1,507,358,586

1,856,524,795
 	
Payables to related entities, current 	 

 	 
 
20,647,293

29,196,949
 	
Provisions and other liabilities 	 
 
14

13,476,798

15,641,961
 	
Current income tax liabilities 	 

 	 
 
86,300,852

49,433,829
 	
Current provision for employee benefits 	 

 	 
 
92,433,794

97,889,042
 	
Other non-financial liabilities, current 	 

 	 
 
64,805,254

21,225,549

 

 

 

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

 	 
 
2,258,113,650

2,426,085,236

 

 

 

 	 

 	 

 	 

 	
Liabilities classified as held for sale 	 
 
21

6,062,311

-

 

 

 

Total current liabilities 	 

 	 
 
2,264,175,961

2,426,085,236

 

 

 

Non-current liabilities	 

 	 

 	 

 	
Other financial liabilities, 	 
 
13

2,789,811,635

2,924,038,308
 	
Trade accounts payables 	 

 	 
 
4,637,941

4,502,991
 	
Provisions and other liabilities 	 
 
14

74,365,326

78,188,586
 	
Deferred income tax liabilities 	 

 	 
 
691,924,942

649,536,334
 	
Other non–financial liabilities, non–current 	 

 	 
 
62,506,277

57,562,037

 

 

 

Total non-current liabilities 	 

 	 
 
3,623,246,121

3,713,828,256

 

 

 

Total liabilities 	 

 	 
 
5,887,422,082

6,139,913,492

 

 

 

Equity	 

 	 

 	 

 	
Paid-in capital 	 
 
15

2,370,372,426

2,321,380,936
 	
Retained earnings 	 

 	 
 
2,312,217,554

2,329,411,478
 	
Issuance premium 	 

 	 
 
498,277,146

526,633,344
 	
Other reserves 	 

 	 
 
(1,186,891,121
)	 
 
(1,205,679,999
)	

 

 

 
 	
Equity attributable to controlling shareholders 	 

 	 
 
3,993,976,005

3,971,745,759
 	
Non-controlling interest 	 

 	 
 
112,391

(933,941
)	

 

 

 
 	
Total equity 	 

 	 
 
3,994,088,396

3,970,811,818

 

 

 

Total equity and liabilities 	 

 	 
 
9,881,510,478

10,110,725,310
 	
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)

 
 	 
For the six months ended
 	
Statements of profit and loss	 
Note
 	 
6/30/2016
 	 
6/30/2015

 
 	 
ThCh$
 	 
ThCh$
 	
Revenues from ordinary activities 	 
 
18

4,991,183,705

5,269,755,834
 	
Cost of Sales 	 
 
16

(3,537,053,636
)	 
 
(3,764,322,032
)	
Gross Profit 	 

 	 
 
1,454,130,069

1,505,433,802

 

 

 

Other income by function 	 
 
16

90,697,286

40,059,849
 	
Distribution cost 	 
 
16

(12,635,011
)	 
 
(13,387,108
)	
Administrative expenses 	 
 
16

(1,137,977,728
)	 
 
(1,207,508,437
)	
Other expenses by function 	 
 
16

(80,199,820
)	 
 
(82,367,697
)	
Other losses, net 	 
 
16

51,714,412

(56,107,098
)	
Operating profit 	 

 	 
 
365,729,208

186,123,311

 

 

 

Finance income 	 
 
16

6,876,691

8,048,232
 	
Finance expenses 	 
 
16

(129,973,397
)	 
 
(118,473,245
)	
Participation in profit of equity method associates 	 

 	 
 
5,271,896

4,540,287
 	
Exchange differences 	 
 
16

44,613,633

(29,516,172
)	
Losses from indexation 	 
 
16

(8,251,185
)	 
 
(8,490,152
)	
Profit before income tax 	 

 	 
 
284,266,846

42,232,261

 

 

 

Income tax expense 	 
 
17

(88,871,238
)	 
 
22,874,595

 

 

 

Profit from continuing operations 	 

 	 
 
195,395,608

65,106,856

 

 

 

Profit from discontinued operations 	 
  
  22

-

9,244,460
 	
Profit attributable to controlling shareholders                                                                                           	 

 	 
 
194,033,830

73,475,043
 	
Profit attributable to non–controlling shareholders 	 

 	 
 
1,361,778

876,273

 

 

 

Net Profit 	 

 	 
 
195,395,608

74,351,316

 

 

 

Earnings per share	 

 	 

 	 

 	
Basic earnings per share from continued operations 	 

 	 
 
68.6

22.7
 	
Basic earnings per share from discontinued operations 	 

 	 
 
-

3.3
 	
Diluted earnings per share from continued operations 	 

 	 
 
68.1

22.7
 	
Diluted earnings per share from discontinued operations	 

 	 
 
-

3.3
 	
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)	 
6/30/2016
 	 
6/30/2015

ThCh$
 	 
ThCh$
 	
Net Profit 	 
 
195,395,608

74,351,316

 

 

 	 

 	 

 	
Items that are or may be reclassified to profit and loss	 

 	 

 	
Foreign currency translation adjustments 	 
 
14,261,749

(98,504,184
)	
Cash flow hedge 	 
 
9,802,380

(1,331,330
)	
Total items that are or may be reclassified to profit and loss 	 
 
24,064,129

(99,835,514
)	
Other comprehensive income, before taxes 	 
 
24,064,129

(99,835,514
)	

 

 
 	
Income tax related to cash flow hedge 	 
 
(2,637,247
)	 
 
304,990
 	
Total income tax that are or may be reclassified to profit and loss	 
 
(2,637,247
)	 
 
304,990

 

 

Total other comprehensive loss 	 
 
21,426,882

(99,530,524
)	

 

 
 	
Total comprehensive income (loss) 	 
 
216,822,490

(25,179,208
)	

 

 
 	
Income attributable to	 

 	 

 	
Owners of the Company 	 
 
215,723,561

(26,032,254
)	
Non-controlling interest 	 
 
1,098,929

853,046

 

 

Total comprehensive income (loss) 	 
 
216,822,490

(25,179,208
)	

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, 2016 (unaudited)
 
Statement of changes inequity ThCh$	 
Paid-incapital
 	 
Issuance premiums
 	 
Translation reserves
 	 
Cash flow Hedge reserves
 	 
Actuarial Gain (loss) reserves
 	 
Share based payments reserves
 	 
Other reserves
 	 
Total reserves
 	 
Changes in retained 
earnings (Accumulated losses)
 	 
Changes in net equity attributable to parent 
company shareholders
 	 
Change innon-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	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Comprehensive income	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Net profit 	 
 
-

-

-

-

-

-

-

-

194,033,830

194,033,830

1,361,778

195,395,608
 	
Other comprehensive loss 	 
 
-

-

14,524,598

7,165,133

-

-

-

21,689,731

-

21,689,731

(262,849
)	 
 
21,426,882
 	
Total Comprehensive (loss) income 	 
 
-

-

14,524,598

7,165,133

-

-

-

21,689,731

194,033,830

215,723,561

1,098,929

216,822,490
 	
Exercise of stock options (see note 20) 	 
 
48,991,490

(28,356,198
)	 
 
-

-

-

(6,798,814
)	 
 
-

(6,798,814
)	 
 
-

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

(28,356,198
)	 
 
-

-

-

(1,739,154
)	 
 
(1,161,699
)	 
 
(2,900,853
)	 
 
(211,227,754
)	 
 
(193,493,315
)	 
 
(52,597
)	 
 
(193,545,912
)	

 

 

 

 

 

 

 

 

 

 

 

 
 	
Total Changes in equity	 
 
48,991,490

(28,356,198
)	 
 
14,524,598

7,165,133

-

(1,739,154
)	 
 
(1,161,699
)	 
 
18,788,878

(17,193,924
)	 
 
22,230,246

1,046,332

23,276,578
 	
Ending balance, as of June 30, 2016 	 
 
2,370,372,426

498,277,146

(1,172,585,223
)	 
 
22,024,717

(229,427
)	 
 
17,537,445

(53,638,633
)	 
 
(1,186,891,121
)	 
 
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.
 
5
 
Cencosud S.A. and subsidiaries,
Condensed consolidated interim statement of changes in net equity
for the six months ended June 30, 2015 (unaudited)
 
Statement of changes inequity ThCh$	 
Paid-incapital
 	 
Issuance premiums
 	 
Translation reserves
 	 
Cash flow Hedge reserves
 	 
Actuarial Gain reserves
 	 
Share based payments reserves
 	 
Other reserves
 	 
Total reserves
 	 
Changes in retained 
earnings (Accumulated losses)
 	 
Changes in net equity attributable to parent 
company shareholders
 	 
Change innon-controlling interest
 	 
Total
equity
 	
Opening balance as of January 1, 2015	 
 
2,321,380,936

526,633,344

(696,546,714
)	 
 
13,202,220

117,926

13,458,245

(52,476,934
)	 
 
(722,245,257
)	 
 
2,166,548,572

4,292,317,595

(831,784
)	 
 
4,291,485,811

 

 

 

 

 

 

 

 

 

 

 

 

Changes in equity	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Comprehensive income	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Net profit 	 
 
-

-

-

-

-

-

-

-

73,475,043

73,475,043

876,273

74,351,316
 	
Other comprehensive loss 	 
 
-

-

(98,480,957
)	 
 
(1,026,340
)	 
 
-

-

-

(99,507,297
)	 
 
-

(99,507,297
)	 
 
(23,227
)	 
 
(99,530,524
)	
Total Comprehensive (loss) income 	 
 
-

-

(98,480,957
)	 
 
(1,026,340
)	 
 
-

-

-

(99,507,297
)	 
 
73,475,043

(26,032,254
)	 
 
853,046

(25,179,208
)	
Dividends 	 
 
-

-

-

-

-

-

-

 

(36,578,436
)	 
 
(36,578,436
)	 

 	 
 
(36,578,436
)	
Stock option (see note 20) 	 
 
-

-

-

-

-

1,612,129

-

1,612,129

-

1,612,129

-

1,612,129
 	
Decrease due to changes in ownership interest without a loss of control	 
 
-

-

-

-

-

-

-

-

(1,782,270
)	 
 
(1,782,270
)	 
 
-

(1,782,270
)	
Total transactions with owners 	 
 
-

-

-

-

-

1,612,129

-

1,612,129

(38,360,706
)	 
 
(36,748,577
)	 
 
-

(36,748,577
)	

 

 

 

 

 

 

 

 

 

 

 

 
 	
Total Changes in equity	 
 
-

-

(98,480,957
)	 
 
(1,026,340
)	 
 
-

1,612,129

-

(97,895,168
)	 
 
35,114,337

(62,780,831
)	 
 
853,046

(61,927,785
)	
Ending balance, as of June 30, 2015 	 
 
2,321,380,936

526,633,344

(795,027,671
)	 
 
12,175,880117,926

 

15,070,374

(52,476,934
)	 
 
(820,140,425
)	 
 
2,201,662,909

4,229,536,764

21,262

4,229,558,026

 
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,

2016
 	 
2015
 	
Cash flows from (used in) operating activities	 
ThCh$
 	 
ThCh$

 

 	
Types of revenues from operating activities	 

 
 	
Revenue from sale of goods and provision of services 	 
 
6,021,805,267

6,554,674,380
 	
Other operating activities revenue 	 
 
9,815,326

1,934,718

 

 

Types of payments	 

 	 	 

 	
Payments to suppliers for supply of goods and services 	 
 
(5,197,976,475
)	 
 
(5,108,369,217
)	
Payments to and on behalf of personnel 	 
 
(618,894,541
)	 
 
(745,900,798
)	
Other operating payments 	 
 
(292,107,974
)	 
 
(297,543,757
)	
Taxes paid 	 
 
(41,788,113
)	 
 
(35,492,255
)	
Other cash inflows (outflows) 	 
 
(1,922,817
)	 
 
3,038,378

 

 

Cash flows from (used in) operating activities (continuing operations)	 
 
(121,069,327
)	 
 
372,341,449
 	
Cash flows used in operating activities (discontinued operations)	 
 
-

(107,449,303
)	

 

 

 

 

Net cash flow (used in) from operating activities 	 
 
(121,069,327
)	 
 
264,892,146

 

 

Cash flows (used in) from investing activities	 

 	 	 

 	
Cash flows from loss of control in subsidiaries classified as investing activities	 
 
-

169,845,372
 	
Cash flows used to adquire non-controlled interest	 
 
(1,434,532
)	 
 
-
 	
Proceeds from sales of property, plant and equipment 	 
 
1,532,857

15,918,841
 	
Purchases of property, plant & equipment 	 
 
(82,536,824
)	 
 
(84,166,349
)	
Purchases of intangible assets 	 
 
(21,070,474
)	 
 
(14,259,085
)	
Collection from related entities 	 
 
-

290,824,586
 	
Dividends received 	 
 
5,174,138

1,331,981
 	
Interest received 	 
 
794,158

335,915
 	
Proceeds from sale of other financial assets—mutual funds 	 
 
2,646,926,917

6,046,000,857
 	
Purchases of other financial assets—mutual funds 	 
 
(2,330,951,712
)	 
 
(6,125,371,355
)	

 

 
 	
Cash flows from (used in) investing activities (continuing operations)	 
 
218,434,528

300,460,763
 	
Cash flows used in investment activities (discontinued operations)	 
 
-

(750,271
)	

 

 

 

 

Net cash flow from (used in) investment activities 	 
 
218,434,528

299,710,492

 

 

Cash flows from (used in) financing activities	 

 	 	 

 	
Proceeds from exercise of stock options 	 
 
13,836,478

-

 

 

Proceeds from borrowing at long–term 	 
 
-

663,922,847
 	
Proceeds from borrowing at short–term 	 
 
198,316,325

1,061,177,819
 	
Total loan proceeds from borrowing 	 
 
198,316,325

1,725,100,666

 

 

Repayments of borrowing 	 
 
(76,800,786
)	 
 
(2,120,150,767
)	
Dividends paid 	 
 
(170,547,577
)	 
 
(35,639,263
)	
Interest paid 	 
 
(110,963,263
)	 
 
(112,199,382
)	
Other cash outflows 	 
 
(1,570
)	 
 
8,860,313

 

 

Cash flows used in financing activities (continuing operations)                                                                                    	 
 
(146,160,393
)	 
 
(534,028,433
)	
Cash flows from financing activities (discontinued operations)                                                                                    	 
 
-

35,258,696

 

 

 	 

 	 	 

 	
Net cash flow used in financing activities 	 
 
(146,160,393
)	 
 
(498,769,737
)	

 

 
 	
Net increase (decrease) in cash and cash equivalents before the effects of exchange rates variations	 
 
(48,795,192
)	 
 
65,832,901

 

 

Effects of variations in the exchange rate on cash and cash equivalents	 
 
(15,172,751
)	 
 
5,079,812

 

 

Net increase (decrease) in cash and cash equivalents 	 
 
(63,967,943
)	 
 
70,912,713
 	
Cash and cash equivalents at the beginning of the period 	 
 
268,275,126

218,871,793

 

 

Cash and cash equivalents at the end of the period 	 
 
204,307,183

289,784,506

 

 

Incuded in cash and cash equivalents per the statement of financial situation	 
 
204,307,183

289,784,506
 	
Incuded in the assets of the disposal group	 
 
-

-

 
The accompanying notes are an integral part of these condensed consoliodated 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 (Valparaíso), 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$ 4,991,183,705 as of June 30, 2016.
 
During the year ended June 30, 2016, the Company employed an average of 139,693 employees, ending with a total number of 138,537 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 2,842,520,872 shares of a single series whose main shareholders are the following:

Major shareholders as of June 30, 2016	 
Shares
 	 
Interest

 
 	 
%
 	
Inversiones Quinchamali Limitada	 
 
573,754,802

20.185
%	
Inversiones Latadia Limitada	 
 
550,823,211

19.378
%	
Inversiones Tano Limitada	 
 
457,879,800

16.108
%	
Banco de Chile on behalf of third parties	 
 
189,280,653

6.659
%	
Banco Itau on behalf of investors	 
 
144,142,315

5.071
%	
Horst Paulmann Kemna	 
 
70,336,573

2.474
%	
Fondo de Pensiones Habitat C	 
 
60,083,943

2.114
%	
Banco Santander - JP Morgan	 
 
59,752,229

2.102
%	
Provida C Pension Fund	 
 
56,826,301

1.999
%	
Habitat B Pension Fund	 
 
40,980,298

1.442
%	
Capital C Pension Fund	 
 
37,802,208

1.330
%	
Provida B Pension Fund	 
 
36,999,974

1.302
%	
Other shareholders	 
 
563,858,565

19.837
%	

 

 
 	
Total	 
 
2,842,520,872

100.000
%	

8
 
The Cencosud group is controlled by the Paulmann family, as detailed below:
 
Interest of Paulmann family as of June 30, 2016	 
Interest

%
 	
Inversiones Quinchamali Limitada	 
 
20.185
%	
Inversiones Latadia Limitada	 
 
19.378
%	
Inversiones Tano Limitada	 
 
16.108
%	
Horst Paulmann Kemna	 
 
2.474
%	
Manfred Paulmann Koepfer	 
 
0.489
%	
Peter Paulmann Koepfer	 
 
0.495
%	
Heike Paulmann Koepfer	 
 
0.490
%	
Succession of Mrs. Helga Koepfer Schoebitz	 
 
0.114
%	
Inversiones Alpa Limitada	 
 
0.026
%	

 
 	
Total 	 
 
59.760
%	

These condensed consolidated interim financial statements of Cencosud group as of June 30, 2016, were approved by the Board of Directors in a session held on August 25, 2016.
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, 2016 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, 2015, which have been prepared in accordance with IFRS.
 
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, 2016.
 
Standards and interpretations
 
IFRS 14 Regulatory Deferral Accounts. Originally issued in January 2014. The objective of IFRS 14 is to specify the financial reporting requirements for 'regulatory deferral account balances' that arise when an entity provides good or services to customers at a price or rate that is subject to rate regulation.
 
Amendments and improvements
 
IFRS 11 Joint Arrangements. Publicated May 2014. The amendments clarify the accounting for acquisitions of an interest in a joint operation when the operation constitutes a business. They require an investor to apply the principles of Business Combinations accounting when it acquires an interest in a joint operation that constitutes a business.
 
Amendment to IAS 16 "Property, Plant and Equipment", and IAS 38, "Intangible Assets". Publicated May 2014. This amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropiate. It also clarifies that revenue is generally presumed to be an inappropiate basis for measuring the consumption of the economic benefits embodied in an intangible asset.
 
9

Amendment to IAS 16 "Property, Plant and Equipment", and IAS 41 “Agriculture”. Publicated June 2014. These amendments change the reporting for bearer plants, which should be accounted for in the same way as property, plant and equipment. The amendments include them in the scope of IAS 16 rather tan IAS 41.
 
Amendment to IAS 27 "Consolidated and Separate Financial Statements". Publicated August 2014. The amendment allows entities to use the equity method to account for investments in subsidiaries, join ventures and associates in their separate financial statements.
 
Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”. Publicated September 2014. The amendments address a conflict between the requirements of IAS 28 'Investments in Associates and Joint Ventures' and IFRS 10 'Consolidated Financial Statements' and clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business.
 
Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”. Publicated December 2014. These Amendments address issues that have arisen in the context of applying the consolidation exception for investment entities. The amendment defines that when applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries.
 
Amendment to IAS 1 “Presentation of Financial Statements”. Publicated December 2014. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports. The amendment to ensure that entities are able to use judgement when presenting their financial reports as the wording of some of the requirements in IAS 1 had in some cases been read to prevent the use of judgement.
 
Annual Improvements to IFRSs 2012–2014 Cycle. Publicated on September 25, 2014
 
Amendment to IFRS 5 " Non-current Assets Held for Sale and Discontinued Operations". The amendment adds specific guidance in IFRS 5 changes in methods of disposal, for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued.
 
Improvements to IFRS 7 "   Financial Instruments: Disclosures". It adds additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of determining the disclosures required. This also clarifies the applicability of the amendments to IFRS 7 on offsetting disclosures to condensed interim financial statements.
 
Improvements to IAS 19, "Employee Benefits". It clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.
 
Improvements to IAS 34, " Interim Financial Reporting". This clarifies the meaning of 'elsewhere in the interim report' and requires a cross-reference.
 
Managenment has assessed the adoption of these standards, amendments and interpretations, and it has concluded that there are not a material impact on Financial Satements 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	

Amendments and improvements	Description	Application for annual periods beginning on or after:	
Amendment to IAS 7 “Statement of Cash Flows”	The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity's financing activities. The amendments in Disclosure Initiative (Amendments to IAS 7) come with the objective that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities.	01-01-2017	
 
Amendment to IAS 12 “Income Taxes”	 
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.	 
01-01-2017	
These standards, amendments and interpretations are not expected to have a material impact on the Group, except for IFRS 15, IFRS 16 and IFRS 9, whose potential impacts are still being assessed by the Group. In particular regarding IFRS 16 the Company is analyzing the impacts that the new standard would have over the Financial Statements, Covenants and other financial indicators.”
 
11

2.3 	Accounting policies	
 
The accounting policies adopted are consistent with those applied during the previous financial year and corresponding interim reporting period, except for the estimation of income tax and adoption of new and amended standards disclosed in Note 2.2.
 
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.
 
Except for the change in the accounting policy related to the allocation in the statement of profit and loss of the effects of measurement at fair value of the ineffective portion of designated hedges, and economic hedges, described in note 23, no other changes in accounting policies have been adopted by the Company during for the six months ended June 30, 2016 and 2015, except for the adoption of new and amended standards disclosed in note 2.2. , no other changes in accounting policies have been adopted by the Company for the six months periods ended June 30, 2016 and 2015.
 
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 24% for the 2016 fiscal year. Therefore, for the close of the financial statements as of June 30, 2016, a tax rate of 24% has been considered in the determination of the income tax provision.
 
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.
 
12

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.
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, 2015.
 
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, 2016.
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, 2016 and December 31, 2015 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.
 
13

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.
 
As of June 30, 2016 and December 31, 2015, 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, 2016 and December 31, 2015:
 
Table Valuation methodologies.
 
June 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 funds 	 	26,197,515	100%	-	-	-	
 	Other financial Instruments	Highly liquid financial instruments	 	32,405,401	100%	-	-	-	
 	 	Other financial investments	 	229,048	100%	-	-	-	
Credit cards and trade Receivables, net	Cash and cash equivalents	Cash balances 	 	29,829,299	-	-	-	100%	
 	 	Bank balances 	 	103,286,340	-	-	-	100%	
 	 	Short-term deposits 	 	71,191,544	-	-	-	100%	
 	Receivables 	Receivables due from Bretas	 	3,050,612	-	-	-	100%	
 	 	Credit card and trade receivables, net	 	782,880,823	-	-	-	100%	
 	Receivables from related entities	Related entities, current	 	18,532,418	-	-	-	100%	
Financial liabilities and payables	Bank loans 	Current 	 	334,122,443	-	-	-	100%	
 	 	Non-Current 	 	236,674,989	0.1%	-	-	99.9%	
 	Bonds payable 	Current 	 	73,814,637	-	-	-	100%	
 	 	Non-Current 	 	2,474,397,488	0.3%	-	-	99.7%	
 	Other loans (lease) 	Current 	 	2,904,270	-	-	-	100%	
 	 	Non-Current 	 	21,016,922	-	-	-	100%	
 	Deposits and saving accounts	Current 	 	55,875,579	-	-	-	100%	
 	 	Non-Current 	 	47,702,371	-	-	-	100%	
 	Letters of credit 	Non-Current 	 	7,954,305	-	-	-	100%	
 	Other financial liabilities	Current 	 	2,717,128	-	-	-	100%	
 	Trade payables 	Current 	 	1,354,595,862	-	-	-	100%	
 	 	Non-Current 	 	370,339	-	-	-	100%	
 	Withholding taxes 	Current 	 	152,762,724	-	-	-	100%	
 	 	Non-Current 	 	4,267,602	-	-	-	100%	
 	Payables to related entities	Current 	 	20,647,293	-	-	-	100%	
 	Other financial liabilities	Cross currency swaps - forward	 	2,136,343	-	100%	-	-	
Hedges	Hedging derivatives 	Cash flow hedging liability	 	3,586,233	-	100%	-	-	
 	 	Cash flow hedging asset	 	294,981,326	-	100%	-	-	
 	 	Fair value hedging asset	 	60,778,253	-	100%	-	-	

 
14

December 2015
 	 	 	 	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 	 	181,562,472	100%	-	-	-	
 	Derivatives 	Forward 	 	1,873,528	-	100%	-	-	
 	Other financial Instrument	Highly liquid financial instruments	 	71,414,725	100%	-	-	-	
 	 	Other financial investments	 	185,549	100%	-	-	-	
Trade Receivables, net	Cash and cash equivalents	Cash balances 	 	41,943,295	-	-	-	100%	
 	 	Bank balances 	 	189,062,850	-	-	-	100%	
 	 	Short-term deposits 	 	37,268,981	-	-	-	100%	
 	Receivables 	Receivables due from Bretas	 	2,625,340	-	-	-	100%	
 	 	Trade receivables, net	 	850,836,235	-	-	-	100%	
 	Receivables from related entities	Related entities, current	 	14,851,194	-	-	-	100%	
Financial liabilities and payables	Bank loans 	Current 	 	193,821,962	-	-	-	100%	
 	 	Non-Current 	 	269,733,099	-	-	-	100%	
 	Bonds payable 	Current 	 	61,488,514	-	-	-	100%	
 	 	Non-Current 	 	2,586,966,437	-	-	-	100%	
 	Other loans (lease) 	Current 	 	3,025,088	-	-	-	100%	
 	 	Non-Current 	 	29,524,500	-	-	-	100%	
 	Deposits and saving accounts	Current 	 	94,067,332	-	-	-	100%	
 	 	Non-Current 	 	 23,601,397	-	-	-	100%	
 	Debt purchase affiliates	Current 	 	1,388,767	-	-	-	100%	
 	 	Non-Current 	 	4,889,206	-	-	-	100%	
 	Letters of credit 	Non-Current 	 	8,235,348	-	-	-	100%	
 	Other financial liabilities	Current 	 	2,323,419	-	-	-	100%	
 	Trade payables 	Current 	 	1,622,571,864	-	-	-	100%	
 	 	Non-Current 	 	571,936	-	-	-	100%	
 	Withholding taxes 	Current 	 	233,952,931	-	-	-	100%	
 	 	Non-Current 	 	3,931,055	-	-	-	100%	
 	Payables to related entities	Current 	 	29,196,949	-	-	-	100%	
Hedges	Hedging derivatives 	Cash flow hedging liability	 	1,146,350	-	100%	-	-	
 	 	Cash flow hedging asset	 	382,046,136	-	100%	-	-	
 	 	Fair value hedging asset	 	36,675,561	-	100%	-	-	
 
Instruments classified as Level II correspond mainly to interest rate 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 market.
 
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, 2016 and December 31, 2015, 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.
 
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 30,2016
 	 
December 31,2015

ThCh$
 	 
ThCh$
 	
Current 	 
 
408,108,385

251,026,066
 	
Non-Current 	 
 
2,742,424,813

2,904,902,482
 	
Total 	 
 
3,150,533,198

3,155,928,548

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	
 
15
 
●	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	
 
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, 2015, 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 valuers 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.
 
16

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.
 
The rates used as of June 30, 2016 and December 31, 2015 are as follows:

WACC rate as of
 	
Country	 
6/30/2016
 	 
12/31/2015

 

 	
Chile 	 
 
6.43
%	 
 
6.73
%	
Argentina 	 
 
16.38
%	 
 
22.50
%	
Peru 	 
 
7.16
%	 
 
7.50
%	
Colombia 	 
 
7.25
%	 
 
7.66
%	
 
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 66.9% equity and 33.1% 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.

17

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.
 
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)	
5 	Other financial assets, current and non-current	
The composition of this item as of June 30, 2016 and December 31, 2015 includes the following:  

As of
 	
Other financial assets, current	 
June 30,
2016
 	 
December 31,
2015

ThCh$
 	 
ThCh$
 	
Mutual Funds units (*) 	 
 
26,197,515

181,562,472
 	
Hedging derivatives 	 
 
-

1,873,528
 	
Highly liquid financial instruments 	 
 
32,405,401

71,414,725

 

 

Total other financial assets, current 	 
 
58,602,916

254,850,725

 	 
As of
 	
Other financial assets, non-current	 
June 30,
2016
 	 
December 31,
2015

ThCh$
 	 
ThCh$
 	
Hedging derivatives 	 
 
355,759,579

418,721,697
 	
Financial investments Long term 	 
 
229,048

185,549
 	
Account receivable due from Bretas	 
 
3,050,612

2,625,340

 

 

Total other financial assets, non-current 	 
 
359,039,239

421,532,586
 	
(*) Mutual Funds units are mainly fixed rate investments.

18
 
  6  	Trade receivables and other receivables	
 
Trade receivables and other receivables as of June 30, 2016 and December 31, 2015 are as follows:

As of
 	
Trade receivables and other receivables net, current	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Trade receivables net, current 	 
 
152,105,842

174,446,809
 	
Credit card receivables net, current 	 
 
345,705,703

342,372,436
 	
Other receivables, net, current 	 
 
266,053,903

302,409,953
 	
Letters of credit loans 	 
 
637,948

610,185

 

 

Total 	 
 
764,503,396

819,839,383

 

         As of  
 	
Trade receivables and other receivables, net, non-current	 
June 30, 2016
 	 
December 31, 2015

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

415,973
 	
Credit card receivables net, non-current 	 
 
2,232,760

4,610,379
 	
Other receivables, net, non-current 	 
 
6,770,234

16,312,688
 	
Letters of credit loans 	 
 
9,374,433

9,657,812

 

 

Total 	 
 
18,377,427

30,996,852

 	 
As of
 	
Trade receivables and other receivables, gross, current	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Trade receivables gross, current 	 
 
166,367,805

192,176,807
 	
Credit card receivables gross, current 	 
 
364,147,592

358,131,672
 	
Other receivables gross, current 	 
 
280,567,915

313,390,901
 	
Letters of credit loans 	 
 
796,430

776,786

 

 

Total 	 
 
811,879,742

864,476,166

 	 
As of
 	
Trade receivables and other receivables, gross, non-current	 
June 30, 2016
 	 
December 31, 2015

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

415,973
 	
Credit card receivables gross, non-current 	 
 
2,232,760

4,610,379
 	
Other receivables gross, non-current 	 
 
6,770,234

16,312,688
 	
Letters of credit loans, non-current 	 
 
9,374,433

9,657,812

 

 

Total 	 
 
18,377,427

30,996,852

 	 
As of
 	
Trade receivables and other receivables close to maturity	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Less than three months 	 
 
565,716,797

622,399,661
 	
Between three and six months 	 
 
72,263,435

65,106,283
 	
Between six and twelve months 	 
 
68,165,158

60,918,226
 	
In more than twelve months 	 
 
18,377,427

30,996,852

 

 

Total 	 
 
724,522,817

779,421,022

 
19
 
The maturity of past due trade receivables as of June 30, 2016 and December 31, 2015 is as follows:

As of
 	
Trade receivables past due but not impaired	 
  June 30, 2016        
 	 
December 31, 2015

  ThCh$        
 	 
ThCh$
 	
Past due less than three months 	 
 
72,542,766

81,294,828
 	
Past due between three and six months 	 
 
16,213,283

10,635,980
 	
Past due between six and twelve months 	 
 
4,794,431

10,809,004
 	
Past due in more than twelve months 	 
 
12,183,872

13,312,184

 

 

Total 	 
 
105,734,352

116,051,996
 	
The movement of the bad debt allowance is as follows:

As of
 	
Change in bad debt allowance	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Initial balance 	 
 
44,636,783

45,643,245
 	
Increase in provision 	 
 
23,884,467

27,855,602
 	
Utilized provision 	 
 
(10,466,230
)	 
 
(23,427,920
)	
Decrease in provision 	 
 
(10,678,674
)	 
 
(60,904,525
)	
Reclassified to assets held for sale	 
 
-

55,470,381

 

 

Total 	 
 
47,376,346

44,636,783
 	
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.
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, 2016 and December 31, 2015 is as follows:

 	 	Receivables from related entities	 
Balance as of

 
 	 	  Transaction	Transaction 	Nature of 	 	 
Current
 	 
Non-current

Tax ID Number
 	Company	
description	
term	
relationship	Currency	 
6/30/2016
 	 
12/31/2015
 	 
6/30/2016
 	 
12/31/2015

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
96.863.570-0  	Inmobiliaria Mall Viña del Mar S.A.	Dividends receivable	Current	Associate	Chilean Pesos	 
 
-

1,516,720

-

-
 	
99.500.840-8  	CAT Administradora de Tarjetas S.A.	Trade receivable	Current	Associate	Chilean Pesos	 
 
13,162,081

7,552,703

-

-
 	
99.500.840-8  	CAT Administradora de Tarjetas S.A.	Dividends receivable	Current	Associate	Chilean Pesos	 
 
2,670,729

3,707,894

-

-
 	
77.218.570-7  	CAT Corredores de Seguros y Servicios S.A.	Trade receivable	Current	Associate	Chilean Pesos	 
 
1,573,447

1,383,949

-

-
 	
77.218.570-7  	CAT Corredores de Seguros y Servicios S.A.	Dividends receivable	Current	Associate	Chilean Pesos	 
 
33,114

265,914

-

-
 	
76.388.146-6  	Operadora de Procesos S.A.	Dividends receivable	Current	Associate	Chilean Pesos	 
 
228,066

-

-

-
 	
76.388.146-6  	Operadora de Procesos S.A.	Trade receivable	Current	Associate	Chilean Pesos	 
 
412,259

413,421

-

-
 	
76.388.155-5  	Servicios Integrales S.A.	Dividends receivable	Current	Associate	Chilean Pesos	 
 
61,137

-

-

-
 	
76.388.155-5  	Servicios Integrales S.A.	Trade receivable	Current	Associate	Chilean Pesos	 
 
391,585

10,593

-

-

 

 

 

 

 

Total

18,532,418

14,851,194

-

-

 
20

7.2 Trade payables to related entities
 
The composition of the item as of June 30, 2016 and December 31, 2015 is as follows:

 
 	 	Payables to related entities	 
Balance as of

 	 	Transaction 	Transaction 	  Nature of	 	 
Current
 	 
Non-current

Tax ID number
 	Company	
description	
term	
relationship	Currency	 
6/30/2016
 	 
12/31/2015
 	 
6/30/2016
 	 
12/31/2015

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
-  	Loyalti Del Perú S.A.C.	Fund transfer	Current	Associate	Peruvian
New Sol	 
 
291,582

444,619

-

-
 	
99.500.840-8  	CAT Administradora de Tarjetas S.A.	Trade payable	Current	Associate	Chilean Pesos	 
 
17,086,960

24,723,846

-

-
 	
77.218.570-7  	CAT Corredores de Seguros y Servicios S.A.	Trade payable	Current	Associate	Chilean Pesos	 
 
2,843,790

1,640,310

-

-
 	
76.388.146-6  	Operadora de Procesos S.A.	Trade payable	Current	Associate	Chilean Pesos	 
 
386,028

2,388,174

-

-
 	
76.388.155-5  	Servicios Integrales S.A.	Trade payable	Current	Associate	Chilean Pesos	 
 
38,933

-

-

-

 

 

 

 

 
Total

20,647,293

29,196,949

-

-

 
21
 
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, 2016 and 2015, as follows:
 
Transactions	
 
Tax ID Number	Name	Nature ofrelationship	Transactiondescription	Currency	Country	6/30/2016	Impact toprofit and loss(charge/credit)	6/30/2015	Impact toprofit and loss(charge/credit)	 	
 	 	 	 	 	 	ThCh$	ThCh$	ThCh$	ThCh$	
 
    3.294.888-K  	Horst Paulmann Kemna 	Board of Directors President 	Dividends paid 	Chilean pesos 	Chile	 
 
4,220,194

-

886,173

-
 	
    4.580.001-6  	Helga Koepfer Schoebitz 	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
186,029

-

39,063

-
 	
    76.425.400-7  	Inversiones Tano Ltda. 	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
27,472,788

-

5,768,855

-
 	
    86.193.900-6  	Inversiones Quinchamali Ltda. 	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
34,425,288

-

7,228,772

-
 	
    96.802.510-4  	Inversiones Latadia Ltda. 	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
33,049,393

-

6,939,854

-
 	
    7.012.865-9  	Manfred Paulmann Koepfer 	Shareholder 	Dividends paid 	Chilean pesos 	Chile	 
 
751,144

-

157,728

-
 	
    8.953.509-3  	Peter Paulmann Koepfer 	Director 	Dividends paid 	Chilean pesos 	Chile	 
 
746,793

-

156,815

-
 	
    8.953.510-7  	Heike Paulmann Koepfer 	Director 	Dividends paid 	Chilean pesos 	Chile	 
 
737,417

-

154,846

-

    0-E  	Plaza Lima Norte                                           	Company director relationship 	Leases paid 	Peruvian New Sol 	Peru	 
 
-

-

426,657

(426,657
)	
    0-E  	Plaza Lima Norte                                           	Company director relationship 	Utilities  paid 	Peruvian New Sol 	Peru	 
 
-

-

176,462

(176,462
)	
    96.863.570-0  	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Leases paid 	Chilean pesos 	Chile	 
 
1,407,010

(1,407,010
)	 
 
1,881,599

(1,881,599
)	
    96.863.570-0  	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Utilities Paid 	Chilean pesos 	Chile	 
 
955,675

(955,675
)	 
 
1,134,104

(1,134,104
)	
    96.863.570-0  	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Dividends paid 	Chilean pesos 	Chile	 
 
-

-

1,331,980

-
 	
    96.863.570-0  	Inmobiliaria Mall Viña Del Mar S.A.	Associate 	Sale of goods 	Chilean pesos 	Chile	 
 
15,791

15,791

3,957

3,957
 	
    77.209.070-6  	Viña Cousiño Macul S.A.                                           	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
369,462

(369,462
)	 
 
594,811

(594,811
)	
    92.147.000-2  	Wenco S.A.                                           	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
1,409,848

(1,409,848
)	 
 
837,856

(837,856
)	
    92.147.000-2  	Wenco S.A.                                           	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
5,536

5,536

30,676

30,676
 	
    76.076.630-5  	Maxi Kioskos Chile S.A.                                           	Company’s Director 	Leases collected 	Chilean pesos 	Chile	 
 
101,117

101,117

90,430

90,430
 	
    76.076.630-5  	Maxi Kioskos Chile S.A.                                           	Company’s Director 	Utilities collected 	Chilean pesos 	Chile	 
 
135,419

135,419

113,797

113,797
 	
    78.410.320-K  	Imp y Comercial Regen Ltda.                                            	Company’s Director 	Merchandise buying 	Chilean pesos 	Chile	 
 
159,258

(159,258
)	 
 
194,781

(194,781
)	
    78.410.320-K  	Imp Y Comercial Regen Ltda.                                            	Company’s Director 	Leases collected 	Chilean pesos 	Chile	 
 
135,529

135,529

113,890

113,890
 	
    78.410.320-K  	Imp Y Comercial Regen Ltda.                                            	Company’s Director 	Sale of goods 	Chilean pesos 	Chile	 
 
9,740

9,740

14,444

14,444
 	
    78.410.320-K  	Imp Y Comercial Regen Ltda.                                            	Company’s Director 	Common expenses collected 	Chilean pesos 	Chile	 
 
48,347

48,347

40,628

40,628
 	
    88.983.600-8  	Teleductos S.A.                                            	Common director 	Leas collected 	Chilean pesos 	Chile	 
 
688,106

688,106

587,161

587,161
 	
    88.983.600-8  	Teleductos S.A.                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
628,182

(628,182
)	 
 
320,006

(320,006
)	
    92.491.000-3  	Labsa Inversiones Ltda. 	Company, director relationship 	Leases paid 	Chilean pesos 	Chile	 
 
338,442

(338,442
)	 
 
284,405

(284,405
)	
    93.737.000-8  	Manquehue Net S.A.                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
28,313

(28,313
)	 
 
10,046

(10,046
)	

22

    96.566.940-K  	Agencias Universales S.A.                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
2,882

(2,882
)	 
 
84,045

(84,045
)	
    96.566.940-K  	Agencias Universales S.A.                                            	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
2,659

2,659

9,855

9,855
 	
    92.580.000-7  	Empresa Nacional de Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
517,130

(517,130
)	 
 
815,304

(815,304
)	
    90.193.000-7  	Empresa El Mercurio.S.A.P.                                            	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
-

-

8,787

8,787
 	
    90.193.000-7  	Empresa El Mercurio.S.A.P.                                            	Common director 	Leases paid 	Chilean pesos 	Chile	 
 
113,255

113,255

95,172

95,172
 	
    90.193.000-7  	Empresa El Mercurio.S.A.P.                                            	Common director 	Common expenses collected 	Chilean pesos 	Chile	 
 
22,656

22,656

19,039

19,039
 	
    90.193.000-7  	Empresa El Mercurio.S.A.P.                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
43,724

43,724

-

-
 	
    90.193.000-7  	Empresa El Mercurio.S.A.P.                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
1,385,283

(1,385,283
)	 
 
1,508,300

(1,508,300
)	
    96.628.870-1  	Entel Telefonía Local S.A.                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
9,495

(9,495
)	 
 
17,898

(17,898
)	
    96.806.980-2  	Entel PCS Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
461,677

(461,677
)	 
 
550

(550
)	
    96.806.980-2  	Entel PCS Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
1,183,540

(1,183,540
)	 
 
3,081,054

(3,081,054
)	
    96.806.980-2  	Entel PCS Telecomunicaciones S.A.	Common director 	Lease collected 	Chilean pesos 	Chile	 
 
403,357

403,357

80,711

80,711
 	
    96.806.980-2  	Entel PCS Telecomunicaciones S.A.	Common director 	Services provided 	Chilean pesos 	Chile	 
 
96,046

96,046

-

-
 	
    96.566.940-K  	Cia Nacional de Telefonos,Telefònica del Sur S.A	Common director 	Leases collected 	Chilean pesos 	Chile	 
 
-

-

338,955

338,955
 	
    96.566.940-K  	Cia Nacional de Telefonos,Telefònica del Sur S.A	Common director 	Services provided 	Chilean pesos 	Chile	 
 
1,787

(1,787
)	 
 
1,579

(1,579
)	
    96.566.940-K  	Cia Nacional de Telefonos,Telefònica del Sur S.A	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
4,016

4,016

3,567

3,567
 	
    4773765-6  	Cristian Eyzaguirre Johnston	Common director 	Services provided 	Chilean pesos	 Chile	 
 
-

-

39,376

(39,376
)	
    96.628.870-1  	Industria Productos Alimenticios S.A.	Common director 	Merchandise buying 	Chilean pesos 	Chile	 
 
330,746

(330,746
)	 
 
579,779

(579,779
)	
    79.675.370-5  	Assets- Chile S.A                                            	Common director 	Sale of goods 	Chilean pesos 	Chile	 
 
3,458

3,458

3,594

3,594
 	
    70.649.100-7  	Centros de Estudios Pùblicos                                            	Company, director relationship 	Services provided 	Chilean pesos 	Chile	 
 
834

(834
)	 
 
19,064

(19,064
)	
    O-E  	JetAviation Flight Services Inc.                                            	Company, director relationship 	Services provided 	US Dollar 	Chile	 
 
846,375

(846,375
)	 
 
434,294

(434,294
)	
    92434000  	Besalco S.A                                            	Common director 	Services provided 	Chilean pesos 	Chile	 
 
3

(3
)	 
 
1,296

(1,296
)	
    88.417.000-1  	Sky Airline S.A.                                            	Company, director relationship 	Leases collected 	Chilean pesos 	Chile	 
 
9,535

9,535

8,013

8,013
 	
    88.417.000-1  	Sky Airline S.A.                                            	Company, director relationship 	Other expenses collected 	Chilean pesos 	Chile	 
 
3,251

3,251

2,732

2,732
 	
    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Associate                              	Financial retail income 	Chilean pesos 	Chile	 
 
9,649,654

9,649,654

4,388,780

4,388,780
 	
    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Associate                              	Cencosud Card sales 	Chilean pesos 	Chile	 
 
330,236,401

-

129,797,514

-
 	
    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Associate                              	Leases collected 	Chilean pesos 	Chile	 
 
494,927,785

-

194,552,016

-
 	
    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Associate                              	Statements collection 	Chilean pesos 	Chile	 
 
591

591

-

-

 
23

    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Associate                              	Merchandise buying 	Chilean pesos 	Chile	 
 
6,183

6,183

-

-
 	
    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Associate                              	Gift Cards buying 	Chilean pesos 	Chile	 
 
213,791

213,791

18,969

18,969
 	
    77.218.570-7  	CAT Corredores de Seguros y Servicios S.A.	Associate                              	Gift Cards buying 	Chilean pesos 	Chile	 
 
182,317

182,317

224,452

224,452
 	
    77.218.570-7  	CAT Corredores de Seguros y Servicios S.A.	Associate                              	Leases collected 	Chilean pesos 	Chile	 
 
-

-

497

497
 	
    77.218.570-7  	CAT Corredores de Seguros y Servicios S.A.	Associate                              	Financial retail income 	Chilean pesos 	Chile	 
 
96,252

96,252

51,625

51,625
 	
    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	 
 
28,970

28,970

25,924

25,924
 	
    76.388.155-5  	Servicios Integrales S.A.	Associate                              	Financial retail income 	Chilean pesos 	Chile	 
 
96,252

96,252

30,938

30,938
 	
    76.388.146-6  	Operadora de Procesos S.A.	Associate                              	Gift Cards buying 	Chilean pesos 	Chile	 
 
-

-

746,135

746,135
 	
    76.388.146-6  	Operadora de Procesos S.A.	Associate                              	Commissions payment 	Chilean pesos 	Chile	 
 
3,241,202

(3,241,202
)	 
 
926,619

(926,619
)	
    76.388.146-6  	Operadora de Procesos S.A.	Associate                              	Financial retail income 	Chilean pesos 	Chile	 
 
3,972,458

3,972,458

505,541

505,541

 
 
24

Addition information required by SVS (Superintendencia de Valores y Seguros) as per communication N°3592 dated January 31, 2014.
 
a)	Transactions between the holding company Cencosud S.A and its direct and indirect subsidiaries (eliminated in the consolidation process).	

Tax ID Number
 
 	Company
 	Nature of relationship
 	Transaction description
 	Currency
 	Country
 	 
6/30/2016

Impact to profit or loss (charge/credit)

6/30/2015

Impact to profit or loss (charge/credit)

 

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
    93.834.000-5  	Cencosud Chile S.A.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
41,547,610

(41,547,610
)	 
 
42,578,329

(42,578,329
)	
    93.834.000-5  	Cencosud Chile S.A.	Common control	Push partner income	Chilean peso	Chile	 
 
1,925,045

(1,925,045
)	 
 
-

-
 	
    94.226.000-8  	Cencosud Shopping Centers S.A.	Common control	Leases	Chilean peso	Chile	 
 
32,090,941

(32,090,941
)	 
 
30,876,906

(30,876,906
)	
    94.226.000-8  	Cencosud Shopping Centers S.A.	Common control	Utilities	Chilean peso	Chile	 
 
8,467,654

(8,467,654
)	 
 
9,895,702

(9,895,702
)	
    84.671.700-5  	Cencosud Retail S.A.	Common control	Leases	Chilean peso	Chile	 
 
-

-

751,225

(751,225
)	
    84.671.700-5  	Cencosud Retail S.A.	Common control	Sales of inventory	Chilean peso	Chile	 
 
594,688

(594,688
)	 
 
472,850

(472,850
)	
    78.410.990-8  	Adm. del Centro Comercial Alto las Condes Ltda.	Common control	Utilities	Chilean peso	Chile	 
 
13,636,396

(13,636,396
)	 
 
12,839,139

(12,839,139
)	
    96.671.750-5  	Easy S.A.	Common control	Sale of inventory	Chilean peso	Chile	 
 
98,520

(98,520
)	 
 
523,160

(523,160
)	
    99.500.840-8  	CAT Administradora de Tarjetas S.A.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
-

-

117,896

(117,896
)	
    96.732.790-5  	Inmobiliaria Santa Isabel S.A.	Common control	Leases	Chilean peso	Chile	 
 
256,053

(256,053
)	 
 
244,908

(244,908
)	
    88.235.500-4  	Sociedad Comercial de Tiendas S.A.	Common control	Leases	Chilean peso	Chile	 
 
1,622,092

(1,622,092
)	 
 
2,157,059

(2,157,059
)	
    76.433.310-1  	Costanera Center S.A.	Common control	Easement	Chilean peso	Chile	 
 
12,169,743

(12,169,743
)	 
 
11,513,745

(11,513,745
)	
    77.312.480-9  	Administradora de Servicios Paris Ltda.	Common control	Commissions	Chilean peso	Chile	 
 
-

-

880

(880
)	
    76.476.830-2  	Cencosud Fidelidad S.A.	Common control	Services rendered	Chilean peso	Chile	 
 
12,643,470

(12,643,470
)	 
 
14,150,566

(14,150,566
)	
    76.568.660-1  	Cencosud Administradora de Procesos S.A.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
-

-

588,239

(588,239
)	
    77.302.910-k  	Logística y Distribución Paris Ltda.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
2,902,800

(2,902,800
)	 
 
2,500,173

(2,500,173
)	
    77.251.760-2  	Jumbo Supermercados Administradora Ltda.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
85,950,845

(85,950,845
)	 
 
82,365,093

(82,365,093
)	
    79.829.500-4  	Eurofashion Ltda.	Common control	Sale of inventory	Chilean peso	Chile	 
 
10,387,227

(10,387,227
)	 
 
8,317,364

(8,317,364
)	
    76.062.794-1  	Santa Isabel Administradora S.A.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
61,244,677

(61,244,677
)	 
 
58,213,115

(58,213,115
)	
    O-E  	Cencosud (Shanghai) Trading Co., Ltd	Common control	Admin and operational fees	Chilean peso	Chile	 
 
1,441,003

(1,441,003
)	 
 
1,260,329

(1,260,329
)	
    96.988.680-4  	Paris Administradora Ltda.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
45,226,270

(45,226,270
)	 
 
42,729,770

(24,134,614
)	
    96.988.700-2  	MegaJohnson's Administradora S.A.	Common control	Admin and operational fees	Chilean peso	Chile	 
 
9,522,426

(9,522,426
)	 
 
10,034,059

(10,034,059
)	
    76.203.299-6  	Comercializadora Costanera Center S.P.A.	Common control	Leases	Chilean peso	Chile	 
 
3,118,949

(3,118,949
)	 
 
4,328,565

(4,328,565
)	
    76.203.299-6  	Comercializadora Costanera Center S.P.A.	Common control	Utilities	Chilean peso	Chile	 
 
1,682,490

(1,682,490
)	 
 
2,543,100

(2,543,100
)	
    O-E  	Cencosud Argentina S.A.	Common control	Leases	Argentine peso	Argentina	 
 
5,859,303

(5,859,303
)	 
 
6,501,283

(6,501,283
)	
    O-E  	Cencosud Argentina S.A.	Common control	Utilities	Argentine peso	Argentina	 
 
4,528,929

(4,528,929
)	 
 
4,830,361

(4,830,361
)	
    O-E  	Cencosud Argentina S.A.	Common control	Sales of inventory	Argentine peso	Argentina	 
 
-

-

133,513

(133,513
)	
    O-E  	Cencosud Argentina S.A.	Common control	Services rendered	Argentine peso	Argentina	 
 
3,813,666

(3,813,666
)	 
 
5,002,222

(5,002,222
)	
    O-E  	Jumbo Retail Argentina S.A.	Common control	Leases	Argentine peso	Argentina	 
 
241,975

(241,975
)	 
 
3,309,579

(3,309,579
)	
    O-E  	Jumbo Retail Argentina S.A.	Common control	Financial income	Argentine peso	Argentina	 
 
3,067,967

(3,067,967
)	 
 
-

-
 	
    O-E  	Jumbo Retail Argentina S.A.	Common control	Sale of inventory	Argentine peso	Argentina	 
 
340,466

(340,466
)	 
 
2,817,847

(2,817,847
)	
    O-E  	Invor S.A.	Common control	Leases	Argentine peso	Argentina	 
 
36,088

(36,088
)	 
 
210,327

(210,327
)	

 
25

b)	Financing activities between related parties and their conditions	
 
As of June 30, 2016
 
Grantor	Tax ID	Country	Receiving entity	Instrument	Currency	Rate	Loans granted in local currency	Settlements made in local currency	Grant date	Maturity date	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Retail S.A.	Fund transfer	Chilean peso	-	896,216,057	854,758,050	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Shopping Centers S.A.	Fund transfer	Chilean peso	-	51,624,986	105,593,060	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Administradora Centro Comercial Alto Las Condes Ltda.	Fund transfer	Chilean peso	-	39,332,583	34,260,634	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Easy S.A.	Fund transfer	Chilean peso	-	436,714,154	456,050,292	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Comercial Food And Fantasy Ltda.	Fund transfer	Chilean peso	-	448,458	667,896	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Internacional Ltda.	Future Capitalization	Chilean peso	-	83,226,177	28,155,572	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Jumbo Administradora Temuco S.A.	Fund transfer	Chilean peso	-	1,587	-	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Hotel Costanera S.A.	Fund transfer	Chilean peso	-	2,451,456	671	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Sociedad Comercial de Tiendas S.A.	Fund transfer	Chilean peso	-	3,046,946	115,070,293	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Jumbo Administradora Norte Ltda.	Fund transfer	Chilean peso	-	83,464	41,419	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Costanera Centers S.A.	Fund transfer	Chilean peso	-	2,000,905	28,331,697	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Fidelidad S.A.	Fund transfer	Chilean peso	-	7,579,676	9,394,140	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Servicios Integrales S.A.	Fund transfer	Chilean peso	-	45,355,169	33,826,081	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Administradora de Procesos S.A.	Fund transfer	Chilean peso	-	4,372,275	-	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Logistica y Distribución Paris Ltda.	Fund transfer	Chilean peso	-	3,882,479	3,855,302	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Eurofashion Ltda.	Fund transfer	Chilean peso	-	24,575,170	31,930,955	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Santa Isabel Administradora S.A.	Fund transfer	Chilean peso	-	92,041,931	100,040,070	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Administradora TMO S.A.	Fund transfer	Chilean peso	-	20,308	14,746	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	MegaJohnson's Maipú S.A.	Fund transfer	Chilean peso	-	43,899,619	66,086,194	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	MegaJohnson's Puente S.A.	Fund transfer	Chilean peso	-	70,784,960	101,159,860	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	MegaJohnson's Viña del Mar S.A.	Fund transfer	Chilean peso	-	13,832,296	13,830,929	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	MegaJohnson's Administradora S.A.	Fund transfer	Chilean peso	-	34,413,987	9,598,380	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Johnson's Mega San Bernardo S.A.	Fund transfer	Chilean peso	-	827,293	282,792	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Retail Administradora S.A.	Fund transfer	Chilean peso	-	312,778	734,608	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Comercializadora Contanera Center SPA	Fund transfer	Chilean peso	-	37,380,329	25,438,789	Throughout 2016	-	
Cencosud S.A.	93.834.000-5	Chile	Cencosud Internacional Argentina S.P.A.	Fund transfer	Chilean peso	-	23,826	1,005,540	Throughout 2016	-	
Cencosud Internacional Ltda.	96.978.180-8	Chile	Cencosud Brasil Comercial S.A.	Fund transfer	US Dollar	-	75,000	-	Throughout 2016	-	
Cencosud Peru S.A.	O-E	Peru	Cencosud S.A.	Loan	US Dollar	-	31,279	-	Throughout 2016	-	
Cencosud Colombia S.A.	O-E	Chile	Cencosud S.A.	Loan	US Dollar	-	5,449	-	Throughout 2016	-	
Unicenter S.A.	O-E	Argentina	Agrojumbo S.A.	Loan	Argentine Peso	18.50%	14,555	-	29-02-2016	27-08-2016	
Unicenter S.A.	O-E	Argentina	Agrojumbo S.A.	Loan	Argentine Peso	18.50%	5,956	-	07-03-2016	03-09-2016	
 
26
 
7.4 	Board of Directors and key management of the Company	
 
The Board of Directors as of June 30, 2016 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	
Key management of the Company as of June 30, 2016 is composed of the following people:
 
Senior management	Position	Profession	
Jaime Soler	Chief Executive Officer	Commercial Engineer	
Carlos Mechetti	General Counsel	Attorney at law	
Bronislao Jandzio	Audit Managing Director	Business Administrator	
Renato Fernández	Corporate Affairs Manager	Journalist	
Antonio Ureta Vial	Home Improvement Managing Director	Commercial Engineer	
Patricio Rivas	Financial Retail Managing Director	Commercial Engineer	
Rodrigo Hetz	Human Resources Director	Industrial Engineer	
Andres Artigas	Chief Information Officer	Industrial Engineer	
Rodrigo Larrain	Chief Financial Officer	Industrial Engineer	
Ricardo Bennett	Department Store Managing Director	Industrial Engineer	
Tomás Zavala	Corporate Strategy Manager	Industrial Engineer	
Carlos Madina	Shopping Centers Managing Director	Business Administrator	
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 29, 2016, set the following amounts for its annual 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 for each session they attend,
 
The details of the amount paid to Directors for the six months ended June 30, 2016 and 2015 are as follows:
 
Name	Role	 
June 30,
2016
 	 
June 30,
2015

ThCh$
 	 
ThCh$
 	
Horst Paulmann Kemna 	Chairman	 
 
102,371

88,237
 	
Heike Paulmann Koepfer 	Director	 
 
51,186

44,119
 	
Peter Paulmann Koepfer 	Director	 
 
51,186

44,119
 	
Cristián Eyzaguirre Johnston 	Director	 
 
51,186

44,119
 	
Roberto Oscar Philipps 	Director	 
 
68,247

58,825
 	
Erasmo Wong Lu Vega (*) 	Director	 
 
-

44,119
 	
David Gallagher Patrickson 	Director	 
 
68,247

58,825
 	
Julio Moura 	Director	 
 
51,186

44,119
 	
Richard Bûchi Buc 	Director	 
 
68,247

58,825
 	
Mario Valcarce Durán 	Director	 
 
22,899

-

 

 

Total 	 	 
 
534,755

485,307

(*) Mr. Erasmo Wong Lu resigned to his designation as Director, with effective date as from August 26, 2015.
 
27
 
7.6 	Compensation paid to senior management	
 
Key management compensation	 
June 30,
 2016
 	 
June 30,
 2015

ThCh$
 	 
ThCh$
 	
Salary and other short term employee benefits 	 
 
3,575,408

2,798,413
 	
Share based payments 	 
 
867,643

220,505

 

 

Total 	 
 
4,443,051

3,018,918
 	
The Cencosud 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.
8                 Inventory
The composition of this item as of June 30, 2016 and December 31, 2015 is as follows:

As of
 	
Inventory category	 
June 30, 2016
 	 
June 30, 2015

ThCh$
 	 
ThCh$
 	
Raw materials at cost 	 
 
4,515,058

5,687,964
 	
Goods at cost 	 
 
1,198,212,181

1,196,132,051
 	
Acummulated impairment 	 
 
(125,903,937
)	 
 
(133,510,682
)	

 

 

 

 

Net Inventories 	 
 
1,076,823,302

1,068,309,333
 	
The composition of inventories by business line as of June 30, 2016 and December 31, 2015 is as follows:

As of June 30, 2016
 	
Inventory category	 
Departmentstores
 	 
Supermarkets
 	 
Homeimprovement
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Raw material at cost 	 
 
1,077,417

3,437,641

-

4,515,058
 	
Goods at cost 	 
 
169,417,947

656,799,258

246,091,039

1,072,308,244

 

 

 

 

 	 

 	 

 	 

 	 

 	
Total 	 
 
170,495,364

660,236,899

246,091,039

1,076,823,302

 	 
As of December 31, 2015
 	
Inventory category	 
Departmentstores
 	 
Supermarkets
 	 
Homeimprovement
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Raw material at cost 	 
 
1,466,349

4,221,615

-

5,687,964
 	
Goods at cost 	 
 
186,513,106

658,932,859

217,175,404

1,062,621,369

 

 

 

 

 	 

 	 

 	 

 	 

 	
Total 	 
 
187,979,455

663,154,474

217,175,404

1,068,309,333
 	
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.

28
 
The carrying amount of those inventory groups carried at June 30, 2016 and December 31, 2015 to its net realizable value less selling costs, provides for:
Current Inventories:

Inventories at net realizable valueas of
 	
Net realizable value movements	 
6/30/2016
 	 
12/31/2015

ThCh$
 	 
ThCh$
 	
Beginning Balance 	 
 
66,062,640

59,318,631
 	
Increase of Inventory to NRV (Net Realizable Value) 	 
 
8,132,316

20,881,321
 	
Decrease of Inventory to NRV (Net Realizable Value) 	 
 
(12,285,447
)	 
 
(14,137,312
)	

 

 

 

 

Total 	 
 
61,909,509

66,062,640
 	
Other information relevant to inventory:

For the six months ended
June 30,
 	
Additional information inventory	 
2016
 	 
2015

ThCh$
 	 
ThCh$
 	
Cost of inventories recognized as expenses during the year 	 
 
3,303,681,799

3,539,911,987

Impairment movements:

Balance as of
 	
Acummulated impairment	 
6/30/2016
 	 
12/31/2015

ThCh$
 	 
ThCh$
 	
Beginning Balance 	 
 
133,510,682

131,827,604
 	
Amount of inventory reductions 	 
 
648,823

7,019,718
 	
Amount of reversals of inventory reductions 	 
 
(8,255,568
)	 
 
(5,336,640
)	

 

 

 

 

Total 	 
 
125,903,937

133,510,682
 	
The circumstances or events that led to the reversal of any write-down of inventories as of June 30, 2016 and December 31, 2015 relate mainly to liquidations and auctions to recover more value from the estimated net realizable value for inventories.
The Company has not given inventories as collaterals at the end of the periods reported.

29

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, 2016 and December 31, 2015 is as follows:

As of
 	
Intangibles assets other than goodwill net	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Finite life intangible assets, net 	 
 
141,166,155

133,909,906
 	
Indefinite life intangible assets, net 	 
 
268,367,815

267,839,511

 

 

 	 

 	 

 	
Intangible assets, net 	 
 
409,533,970

401,749,417

 

 

 	 

 	 

 	
Patents, Trade Marks and Other Rights, Net 	 
 
268,367,815

267,839,511
 	
Software (IT) 	 
 
108,830,565

103,417,708
 	
Other Identifiable Intangible Assets, net (*) 	 
 
32,335,590

30,492,198

 

 

 	 

 	 

 	
Identifiable Intangible Assets, Net 	 
 
409,533,970

401,749,417

	 
As of
 	
Intangibles assets other than goodwill gross	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Finite life intangible assets, Gross 	 
 
273,981,895

253,636,682
 	
Indefinite life intangible assets, Gross 	 
 
268,367,815

267,839,511

 

 

 	 

 	 

 	
Intangible Assets, Gross 	 
 
542,349,710

521,476,193

 

 

 	 

 	 

 	
Patents, Trade Marks and Other Rights, Gross 	 
 
268,367,815

267,839,511
 	
Software (IT) 	 
 
221,620,105

203,727,371
 	
Other Identifiable Intangible Assets, Gross (*) 	 
 
52,361,790

49,909,311

 

 

 	 

 	 

 	
Identifiable Intangible Assets, Gross 	 
 
542,349,710

521,476,193

	 
As of
 	
Accumulated amortization and value impairment	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Finite life intangible assets 	 
 
(132,815,740
)	 
 
(119,726,776
)	
Indefinite life intangible assets 	 
 
-

-

 

 

 	 

 	 

 	
Intangible Assets, Gross 	 
 
(132,815,740
)	 
 
(119,726,776
)	

 

 

 

 

Software (IT) 	 
 
(112,789,540
)	 
 
(100,309,663
)	
Other Identifiable Intangible Assets (*) 	 
 
(20,026,200
)	 
 
(19,417,113
)	

 

 

 

 

Accumulated amortization and value impairment 	 
 
(132,815,740
)	 
 
(119,726,776
)	
(*) Other identifiable intangible assets mainly correspond to customer’s data base.

30
 
The detail of the useful lives applied to intangible assets as of June 30, 2016 and December 31, 2015 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, 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 	 
 
-

20,853,993

-

20,853,993
 	
Retirements 	 
 
-

(615,160
)	 
 
-

(615,160
)	
Amortization 	 
 
-

(12,479,877
)	 
 
(609,087
)	 
 
(13,088,964
)	
Increase (decrease) in foreign exchange 	 
 
528,304

(206,709
)	 
 
2,452,479

2,774,074
 	
Other decrease (see note 11.3) 	 
 
-

(2,139,390
)	 
 
-

(2,139,390
)	

 

 

 

 
 	
Balance at June 30, 2016 	 
 
268,367,815

108,830,565

32,335,590

409,533,970

The movement of intangible assets as of and for the year ended December 31, 2015 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, 2015 	 
 
275,070,653

88,441,290

37,030,237

400,542,180
 	
Additions 	 
 
-

35,364,898

-

35,364,898
 	
Retirements 	 
 
-

(369,699
)	 
 
-

(369,699
)	
Amortization 	 
 
-

(27,993,517
)	 
 
(677,511
)	 
 
(28,671,028
)	
Decrease in foreign exchange 	 
 
(7,231,142
)	 
 
(5,139,705
)	 
 
(5,102,800
)	 
 
(17,473,647
)	
Other Increase (decrease)	 
 
-

13,114,441

(757,728
)	 
 
12,356,713

 

 

 

 

Balance at December 31, 2015 	 
 
267,839,511

103,417,708

30,492,198

401,749,417
 	
The detail of the amounts of identifiable intangible assets that are individually significant as of June 30, 2016 and December 31, 2015 is as follows:
 
Individually significant identifiable Intangible assets	 
Book Value June 2016
 	 
Book Value December 2015
 	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 	 
 
32,072,502

33,189,716
 	Indefinite	Peru	Supermarkets	
Metro Brand 	 
 
69,976,366

72,413,925
 	Indefinite	Peru	Supermarkets	
Bretas Brand 	 
 
17,314,430

14,949,332
 	Indefinite	Brazil	Supermarkets	
Perini Brand 	 
 
775,276

669,376
 	Indefinite	Brazil	Supermarkets	
Prezunic Brand 	 
 
11,801,716

10,189,637
 	Indefinite	Brazil	Supermarkets	

 

 
 	 	 	 	
Total 	 
 
268,367,815

267,839,511

 
31
 
The charge to the profit and loss statement for amortization of intangibles for the six months ended June 30, 2016 and 2015 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	 
2016
 	 
2015

ThCh$
 	 
ThCh$
 	
Administrative expenses 	 
 
13,088,964

13,015,011

 

 

Total 	 
 
13,088,964

13,015,011
 	
As of June 30, 2016 and December 31, 2015, there are no relevant intangible assets encumbered. There are also no restrictions on ownership of them.
As of June 30, 2016 and December 31, 2015, there are no commitments to acquire intangible assets.
No significant intangible assets that have been fully depreciated are in use as of as of June 30, 2016 and December 31, 2015.

32

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.
10.2                 Goodwill by segment and country,
The following table details goodwill balances and movements by operating segment and country as of January 1, 2016 and June 30, 2016:
 
Goodwill per operating segment and country	 
As of
January 1, 2015
 	 
Impairment
 	 
Increase(decrease) foreign exchange
 	 
As of
June 30, 2016

ThCh$

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

-

(21,286
)	 
 
94,700
 	
Supermarkets—Chile 	 
 
106,991,957

-

-

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

-

54,436,681

398,413,263
 	
Supermarkets—Peru 	 
 
275,687,596

-

(9,280,049
)	 
 
266,407,547
 	
Supermarkets— Colombia 	 
 
439,366,277

-

19,971,195

459,337,472
 	
Financial services – Colombia 	 
 
52,305,509

-

2,377,523

54,683,032
 	
Shopping Centers – Colombia 	 
 
31,383,305

-

1,426,514

32,809,819
 	
Home Improvement—Argentina 	 
 
2,477,939

-

(1,045,000
)	 
 
1,432,939
 	
Home Improvement—Chile 	 
 
1,227,458

-

-

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

-

-

138,159,463

 

 

 

 

Total 	 
 
1,391,692,072

-

67,865,578

1,459,557,650
 	
The following table details goodwill balances and movements by operating segment and country as of January 1, 2015 and December 31, 2015:
Goodwill per operating segment and country	 
As of
January 1, 2015
 	 
Impairment
 	 
Increase(decrease) foreign exchange
 	 
As of
December 31, 2015

 

 	 

 

ThCh$

 	 
ThCh$
 	 
ThCh$
 	
Real Estate & Shopping—Argentina 	 
 
150,347

-

(34,361
)	 
 
115,986
 	
Supermarkets—Chile 	 
 
106,991,957

-

-

106,991,957
 	
Supermarkets—Brazil 	 
 
569,584,936

(116,771,460
)	 
 
(108,836,894
)	 
 
343,976,582
 	
Supermarkets—Peru 	 
 
268,644,820

-

7,042,776

275,687,596
 	
Supermarkets— Colombia 	 
 
499,279,860

-

(59,913,583
)	 
 
439,366,277
 	
Financial services – Colombia 	 
 
59,438,079

-

(7,132,570
)	 
 
52,305,509
 	
Shopping Centers – Colombia 	 
 
35,662,847

-

(4,279,542
)	 
 
31,383,305
 	
Home Improvement—Argentina 	 
 
3,208,796

-

(730,857
)	 
 
2,477,939
 	
Home Improvement—Chile 	 
 
1,227,458

-

-

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

-

-

138,159,463

 

 

 

 

Total 	 
 
1,682,348,563

(116,771,460
)	 
 
(173,885,031
)	 
 
1,391,692,072

 
33

11                      Property, plant and equipment
 
11.1 	The composition of this item as of June 30, 2016 and December 31, 2015 is as follows:	

As of
 	
Property, plant and equipment categories, net	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Construction in progress 	 
 
58,522,824

63,017,895
 	
Land 	 
 
693,510,408

725,437,554
 	
Buildings 	 
 
1,053,958,441

1,075,995,255
 	
Plant and equipment 	 
 
233,314,124

246,716,665
 	
Information technology equipment 	 
 
32,171,299

32,046,485
 	
Fixed installations and accessories 	 
 
317,242,075

343,696,782
 	
Motor vehicles 	 
 
743,182

577,489
 	
Leasehold improvements 	 
 
228,729,424

202,460,078
 	
Other property plant and equipment 	 
 
16,264,172

21,542,427

 

 

Totals	 
 
2,634,455,949

2,711,490,630

 	 
As of
 	
Property, plant and equipment categories, gross	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Construction in progress 	 
 
58,522,824

63,017,895
 	
Land 	 
 
693,510,408

725,437,554
 	
Buildings 	 
 
1,290,624,267

1,310,237,782
 	
Plant and equipment 	 
 
582,862,230

608,586,845
 	
Information technology equipment 	 
 
142,237,500

142,496,186
 	
Fixed installations and accessories 	 
 
725,656,632

732,584,234
 	
Motor vehicles 	 
 
5,154,390

4,640,629
 	
Leasehold improvements 	 
 
302,927,367

274,904,826
 	
Other property plant and equipment 	 
 
19,770,173

27,627,230

 

 

Totals	 
 
3,821,265,791

3,889,533,181

 
 	 
As of
 	
Accumulated depreciation and impairment of property, plant and equipment	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Buildings 	 
 
(236,665,826
)	 
 
(234,242,527
)	
Plant and equipment 	 
 
(349,548,106
)	 
 
(361,870,180
)	
Information technology equipment 	 
 
(110,066,201
)	 
 
(110,449,701
)	
Fixed installations and accessories 	 
 
(408,414,557
)	 
 
(388,887,452
)	
Motor vehicles 	 
 
(4,411,208
)	 
 
(4,063,140
)	
Leasehold improvements 	 
 
(74,197,943
)	 
 
(72,444,748
)	
Other property plant and equipment 	 
 
(3,506,001
)	 
 
(6,084,803
)	

 

 
 	
Totals	 
 
(1,186,809,842
)	 
 
(1,178,042,551
)	

 
 
34
 
  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	Minimumlife	Maximumlife	
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)	5	35	
Other property plant and equipment 	Useful Life (years)	3	15	
 
(*) Leasehold improvement will be depreciated using the shorter useful life between of the length of the lease contract and the useful life per the table above.
 
The Group reviewes 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.

35
 
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, 2016 and June 30, 2016:
 
Movement for the six months ended June 30, 2016	 
Construction Inprogress
 	 
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 	 
 
47,733,581

752,207

3,041,419

4,647,260

6,941,787

4,712,144

23,138

4,161,519

176,655

72,189,710
 	
Disposals 	 
 
-

(42,972
)	 
 
-

-

-

-

-

-

-

(42,972
)	
Transfers to (from) investment properties 	 
 
(1,270,458
)	 
 
(5,372,406
)	 
 
(34,770
)	 
 
(510,896
)	 
 
6,122

110,572

-

-

(2,953,918
)	 
 
(10,025,754
)	
Increase (decrease) for other changes 	 
 
2,029,742

-

-

-

109,648

-

-

-

-

2,139,390
 	
Removal 	 
 
-

(889,794
)	 
 
(5,717,819
)	 
 
(2,547,175
)	 
 
(67,360
)	 
 
(222,430
)	 
 
-

(211,899
)	 
 
-

(9,656,477
)	
Depreciation expenses 	 
 
-

-

(15,264,555
)	 
 
(22,768,423
)	 
 
(6,932,275
)	 
 
(30,851,858
)	 
 
(132,699
)	 
 
(16,024,850
)	 
 
(254,948
)	 
 
(92,229,608
)	
Increase (decrease) in foreign exchange 	 
 
7,935,902

(4,010,913
)	 
 
(2,534,876
)	 
 
(2,550,326
)	 
 
(6,205,300
)	 
 
596,506

(32,865
)	 
 
10,266,995

(2,338,668
)	 
 
1,126,455
 	
Transfer to (from) non—current assets and disposal groups held for sale 	 
 
-

(19,310,268
)	 
 
(19,331,629
)	 
 
(956,638
)	 
 
(1,761
)	 
 
(234,259
)	 
 
-

-

2,352,130

(37,482,425
)	
Other increase (decrease) 	 
 
(60,923,838
)	 
 
-

17,805,416

11,283,657

6,273,953

(565,382
)	 
 
308,119

28,077,581

(2,259,506
)	 
 
-
 	
Total changes 	 
 
(4,495,071
)	 
 
(31,927,146
)	 
 
(22,036,814
)	 
 
(13,402,541
)	 
 
124,814

(26,454,707
)	 
 
165,693

26,269,346

(5,278,255
)	 
 
(77,034,681
)	
Final balance as of June 30, 2016 	 
 
58,522,824

693,510,408

1,053,958,441

233,314,124

32,171,299

317,242,075

743,182

228,729,424

16,264,172

2,634,455,949

The following chart shows a detailed roll-forward of changes in property, plant and equipment, by class between January 1, 2015 and December 31, 2015:
 
Movement for the year ended December 31, 2015	 
Construction Inprogress
 	 
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, 2015 	 
 
108,039,312

771,941,960

1,138,386,080

271,557,150

41,570,626

383,530,334

3,256,956

260,036,836

31,409,202

3,009,728,456
 	
Changes	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Additions 	 
 
39,267,282

13,256,435

12,810,066

25,541,163

3,304,532

19,284,001

310,638

13,851,190

2,831,930

130,457,237
 	
Disposals 	 
 
-

-

(2,845,401
)	 
 
-

(271,851
)	 
 
-

(12,525
)	 
 
-

-

(3,129,777
)	
Transfers to (from) investment properties 	 
 
8,913,555

-

2,988,070

-

-

3,686,245

-

-

-

15,587,870
 	
Increase (decrease) for other changes 	 
 
(10,292,730
)	 
 
-

-

-

(2,063,983
)	 
 
-

-

-

-

(12,356,713
)	
Removal 	 
 
(419
)	 
 
(688,384
)	 
 
(26,926
)	 
 
(7,869,437
)	 
 
(403,731
)	 
 
(1,352,637
)	 
 
-

-

(17,000
)	 
 
(10,358,534
)	
Depreciation expenses 	 

 	 

 	 
 
(33,329,879
)	 
 
(52,615,043
)	 
 
(14,591,325
)	 
 
(66,642,810
)	 
 
(498,560
)	 
 
(21,336,782
)	 
 
(804,885
)	 
 
(189,819,284
)	
Increase (decrease) in foreign exchange 	 
 
(5,274,847
)	 
 
(59,116,214
)	 
 
(55,509,268
)	 
 
(19,513,608
)	 
 
(954,739
)	 
 
(27,690,495
)	 
 
(770,493
)	 
 
(51,211,220
)	 
 
(8,577,741
)	 
 
(228,618,625
)	
Other increase (decrease) 	 
 
(77,634,258
)	 
 
43,757

13,522,513

29,616,440

5,456,956

32,882,144

(1,708,527
)	 
 
1,120,054

(3,299,079
)	 
 
-
 	
Total changes 	 
 
(45,021,417
)	 
 
(46,504,406
)	 
 
(62,390,825
)	 
 
(24,840,485
)	 
 
(9,524,141
)	 
 
(39,833,552
)	 
 
(2,679,467
)	 
 
(57,576,758
)	 
 
(9,866,775
)	 
 
(298,237,826
)	
Final balance as of December 31, 2015 	 
 
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

 
36

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, 2016, and December 31, 2015, there is no capitalization of borrowing costs.
 
11.6 Assets granted
 
As of June 30, 2016 and December 31, 2015, properties, plant and equipment granted as security amounted ThCh$ 3,584,083 and ThCh$ 3,630,138, respectively. Nevertheless, there are no restrictions on ownership of assets.
 
11.7 Commitments to acquire assets
 
As of June 30, 2016 and December 31, 2015, there are commitments to acquire property, plant and equipment of ThCh$ 77,253,147. and of ThCh$ 59,290,755, respectively.
 
11.8 Assets out of service
 
As of June 30, 2016 and December 31, 2015, 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, 2016 and December 31, 2015. 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. The Company has not recognized impairment losses or reversals of impairment of June 30, 2016 and December 31, 2015.
 
37

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 accesories: 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.
 
12                 Investment properties
 
12.1 	The roll-forward of investment properties as of June 30, 2016 and December 31, 2015 is the following:	

As of
 	
Roll-forward of investment properties, net, fair value method	 
June 30, 2016
 	 
December 31, 2015

ThCh$
 	 
ThCh$
 	
Investment properties, net, initial value 	 
 
1,807,095,204

1,663,592,396
 	
Effect of fair value in profit or loss 	 
 
84,095,984

198,154,988
 	
Additions 	 
 
203,404

6,404,431
 	
Transfer from owner-occupied property, investment property, cost model	 
 
10,025,754

(15,587,870
)	
Decrease in foreign exchange rate 	 
 
(51,077,986
)	 
 
(45,468,741
)	
Reclassifications to assets “held for sale” 	 
 
(2,939,242
)	 
 
-

 

 

Changes in Investment Properties, Total 	 
 
40,307,914

143,502,808

 

 

Investment Properties Final Balance 	 
 
1,847,403,118

1,807,095,204

12.2 	Income and expense from investment properties	

For the six months ended
 	
Roll-forward of investment properties, net fair value method	 
June 30,
2016
 	 
June 30,
2015

ThCh$
 	 
ThCh$
 	
Revenue from Investment Property Leases 	 
 
115,003,467

112,958,849
 	
Direct operating expenses of Investment Properties which generate lease revenue	 
 
29,347,095

30,174,237

12.3  	As of June 30, 2016 and December 31, 2015, investment properties are not encumbered,	
12.4  As of June 30, 2016 there are commitments to acquire investment properties by ThCh$ 4,939,515 (ThCh$ 10,859,113 as of December 31, 2015),
12.5  	There are no restrictions on ownership of assets,	

 
38
 
13 	Other financial liabilities, current and non-current	
 
The composition of this item as of June 30, 2016 and December 31, 2015 is the following:
13.1                 Types of interest bearing (accruing) loans

Balance as of 6/30/2016
 	 
Balance as of 12/31/2015
 	
Loans	 
Current
 	 
Non-current
 	 
Current
 	 
Non-current

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Bank loans (1) 	 
 
334,122,443

236,674,989

193,821,962

269,733,099
 	
Bond debt (2) 	 
 
73,814,637

2,474,397,488

61,488,514

2,586,966,437
 	
Other loans—leases 	 
 
2,904,270

21,016,922

3,025,088

29,524,500
 	
Other financial liabilities 	 
 
2,136,343

 

 

 
 	
Other financial liabilities (hedge activities)	 
 
1,520,673

2,065,560

58,029

1,088,321
 	
Time deposits (3) 	 
 
54,368,995

47,702,371

89,791,028

23,601,397
 	
Term savings accounts 	 
 
-

-

451,312

-
 	
Letters of credit 	 
 
-

7,954,305

-

8,235,348
 	
Deposits and other demand deposits	 
 
1,506,584

-

3,824,992

-
 	
Debt purchase Bretas 	 
 
-

-

-

1,636,153
 	
Debt purchase of M. Rodrigue z	 
 
-

-

-

1,864,286
 	
Debt purchase Johnson 	 
 
-

-

1,388,767

1,388,767
 	
Other Financial liabilities—other 	 
 
2,717,128

-

2,323,419

-

 

 

 

 

 	 

 	 

 	 

 	 

 	
Totals Loans 	 
 
473,091,073

2,789,811,635

356,173,111

2,924,038,308

(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) Time deposits are the main funding source of the subsidiary, Banco Paris in Chile. Deposits taken by Chilean clients of Banco Paris are mainly money market deposits, which belong to 22 persons. The average maturity of these deposits is 106 days as of June 30, 2016, and 196 days as of December 31, 2015.
 
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, 2016 and December 31, 2015 the Company was in compliance with all financial debt covenants suscribed.

39
 
14                      Provisions and other liabilities
 
14.1 	Provisions	
 
The composition of this item as of June 30, 2016 and December 31, 2015 is as follows:

 
As of
 	
Accruals and provision	 
June 30,
2016
 	 
December 31,
2015
 	 
June 30,
2016
 	 
December 31,
2015

Current
 	 
Non-current

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Legal claims provision (2) 	 
 
11,405,040

12,301,212

63,410,033

65,515,010
 	
Onerous contracts provision (1) 	 
 
2,071,758

3,340,749

10,955,293

12,673,576

 

 

 

 

 	 

 	 

 	 

 	 

 	
Total	 
 
13,476,798

15,641,961

74,365,326

78,188,586

(1)	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.
 
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 30,2016 	 
 
28,060,041

46,744,970

10,062

74,815,073

11,405,040

63,410,033
 	
Total as of December 31,2015 	 
 
40,771,526

21,779,689

15,265,007

77,816,222

12,301,212

65,515,010

 
(2)	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.
 
Provision By Country	 
June 30, 2016
 	 
December 31,2015

  
  ThCh$

ThCh$ 
 	
Chile 	 
 
11,178,709

11,910,013
 	
Argentina 	 
 
20,348,989

32,492,814
 	
Brazil 	 
 
37,266,310

26,230,753
 	
Peru 	 
 
907,534

1,180,867
 	
Colombia 	 
 
5,113,531

6,001,775

 

 

Total Provision 	 
 
74,815,073

77,816,222

 
40

14.2                 Movement of provisions:
 
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:	 

 	 

 	 

 	
Additional provisions 	 
 
4,534,377

-

4,534,377
 	
Increase (decrease) in existing provisions 	 
 
4,735,073

(3,086,539
)	 
 
1,648,534
 	
Provision used during the period 	 
 
(1,727,302
)	 
 
-

(1,727,302
)	
Reversal of non-used provisions 	 
 
(8,090,700
)	 
 
-

(8,090,700
)	
Increase (decrease) in foreign exchange rate	 
 
(2,370,321
)	 
 
99,265

(2,271,056
)	
Changes in provisions, total 	 
 
(3,001,149
)	 
 
(2,987,274
)	 
 
(5,988,423
)	
Total provision, closing balance as of June 30, 2016	 
 
74,815,073

13,027,051

87,842,124

Provision type	 
Legal claims
 	 
Onerous contracts
 	 
Total

ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Initial Balance January 1, 2015 	 
 
99,340,184

20,623,153

119,963,337
 	
Movements in Provisions:	 

 	 

 	 

 	
Additional provisions	 
 
14,695,645

-

14,695,645
 	
Decrease in existing provisions	 
 
(13,713,948
)	 
 
(4,148,990
)	 
 
(17,862,938
)	
Provision used during the year	 
 
(4,780,907
)	 
 
-

(4,780,907
)	
Reversal of used provision	 
 
(3,034
)	 
 
-

(3,034
)	
Decrease in foreign exchange rate	 
 
(17,721,718
)	 
 
(459,838
)	 
 
(18,181,556
)	
Changes in provisions, total 	 
 
(21,523,962
)	 
 
(4,608,828
)	 
 
(26,132,790
)	

 

 

 
 	
Total provision, closing balance as of December 31, 2015	 
 
77,816,222

16,014,325

93,830,547

 
41
 
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.
15.1 	Authorized shares	
 
There are no movements of authorized shares during the six months periods ended June 30, 2016 .
15.2       Subscribed and paid shares
 
The roll-forward of paid shares from January 1, 2016 to June 30, 2016 is the following:
 
Movement in issued and fully paid shares	 
Number of
Shares
 	 
Total
ThCh$

 

 	
Paid shares as of January 1, 2016	 
 
2,828,723,963

2,321,380,936
 	
Exercise of options issued under the current plans (see note 20) [*]	 
 
13,796,909

48,991,490
 	
Paid shares as of june 30, 2016	 
 
2,842,520,872

2,370,372,426

[*] The exercised share price reported to the SVS (Superintendencia de Valores y Seguros) for the authorized shares is Ch$ 3,555.56.
As of June 30, 2016 there are 33,237,521 issued shares pending of subscription and payment, of which will expire on November 27,2016. As of December 31, 2015 there were 60,298,771 issued shares pending of subscription and payment, of which 27,000,000 and 33,298,771 will expire on April 29, 2016 and November 20, 2017 respectively.
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.
 
The Board of Directors ordinary session held on March 27, 2015 agreed to propose to the Ordinary Shareholders Meeting, to be held on April 24, 2015, to distribute a dividend of Ch$ 20.59906 per share, chargeable to the 2014 net profits. The shareholders’ meeting approved the proposed dividend, and made clear that the final dividend considers the former payment of an interim dividend of Ch$8 per share paid in December 3, 2014. This final dividend was paid to shareholders from May 13, 2015.
 
On October 30, 2015, the Board of Directors agreed on distributing an interim dividend of Ch$16 per share in relation to the profits of 2015. This dividend was paid from December 4, 2015.
 
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 88.55% 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.
 
As of June 30, 2016, the Group has recognized a minimum dividend payment for the interim results up to that date of ThCh$ 40,680,176. No recognition was done as of December 31, 2015, being that the interim dividend paid during 2015 excessed the distributable minimum dividend calculated on the 2015 liquid profits. The total charge to equity as of June 30, 2016 was ThCh$ 211,227,754 (ThCh$ 67,295,731 as of December 31, 2015).
 
15.4 	Non-controlling interest	
 
Details of the non-controlling interest as of June 30, 2016 and December 31, 2015 are as follows:

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

Balances
as of,

 	 
2016
 	 
2015
 	 
Jun 30, 2016
 	 
Dec 31, 2015
 	
Company	 
%
 	 
%
 	 
ThCh$
 	 
ThCh$
 	
Cencosud Shoppings Centers S.A. 	 
 
0.00004
%	 
 
0.00004
%	 
 
424

415
 	
Mercado Mayorista P y P Ltda. 	 
 
10.00000
%	 
 
10.00000
%	 
 
93,871

93,871
 	
Easy S.A. 	 
 
0.073600
%	 
 
0.42500
%	 
 
11,817

324,244
 	
Comercial Food and Fantasy Ltda. 	 
 
10.00000
%	 
 
10.00000
%	 
 
-

(24,643
)	
Administradora del Centro Comercial Alto Las Condes Ltda.	 
 
55.00000
%	 
 
55.00000
%	 
 
(282,220
)	 
 
(1,613,621
)	
Cencosud Retail S.A. 	 
 
0.03906
%	 
 
0.03906
%	 
 
205,426

194,291
 	
Jumbo Retail Argentina S.A. 	 
 
0.07600
%	 
 
0.07600
%	 
 
79,221

91,502

 

 

 

 

Total	 

 	 

 	 
 
112,391

(933,941
)	

 
42
 
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,

 
6-30-2016

6-30-2015
 	
Expenses by nature of integral income by function	 
 
ThCh$ 

ThCh$ 
 	
Cost of sales 	 
 
3,537,053,636

3,764,322,032
 	
Distribution cost 	 
 
12,635,011

13,387,108
 	
Administrative expenses 	 
 
1,137,977,728

1,207,508,437
 	
Other expenses by function (*) 	 
 
80,199,820

82,367,697

 

 

 	 

 	 

 	
Total 	 
 
4,767,866,195

5,067,585,274
 	
(*) Mainly includes marketing expenses.
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 6/30/2016
 	 
For the six months ended 6/30/2015

Total
 	 
Discontinued operation
 	 
Continued operation
 	 
Total
 	 
Discontinued operation
 	 
Continued operation

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Cost of goods sold	 
 
3,303,681,799

-

3,303,681,799

3,539,911,987

-

3,539,911,987
 	
Other cost of sales 	 
 
233,371,837

-

233,371,837

225,203,566

20,028,278

205,175,288
 	
Personnel expenses 	 
 
686,983,576

-

686,983,576

759,883,174

8,613,724

751,269,450
 	
Depreciation and amortization 	 
 
105,318,572

-

105,318,572

105,950,180

715,030

105,235,150
 	
Distribution cost 	 
 
12,635,011

-

12,635,011

13,387,108

-

13,387,108
 	
Other expenses by function 	 
 
80,199,820

-

80,199,820

82,367,697

-

82,367,697
 	
Cleaning 	 
 
36,175,730

-

36,175,730

40,351,043

24,100

40,326,943
 	
Safety and security 	 
 
29,814,601

-

29,814,601

33,951,330

25,803

33,925,527
 	
Maintenance 	 
 
40,451,121

-

40,451,121

43,675,273

481,686

43,193,587
 	
Professional fees 	 
 
36,397,655

-

36,397,655

36,036,319

687,238

35,349,081
 	
Bags for Customers 	 
 
9,857,408

-

9,857,408

11,807,405

-

11,807,405
 	
Credit card commission 	 
 
48,798,498

-

48,798,498

48,443,232

11,352

48,431,880
 	
Lease 	 
 
94,481,171

-

94,481,171

95,407,079

548,826

94,858,253
 	
Other 	 
 
49,699,396

-

49,699,396

31,209,881

6,025,055

25,184,826

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Total 	 
 
4,767,866,195

-

4,767,866,195

5,067,585,274

37,161,092

5,030,424,182
 	
16.2 	Personnel expenses	
 
The following is a breakdown of personnel expenses for the following periods:
 
Personnel expenses	 
For the six months ended 6/30/2016
 	 
For the six months ended 6/30/2015

Total
 	 
Discontinued operation
 	 
Continued operation
 	 
Total
 	 
Discontinued operation
 	 
Continued operation

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Salaries 	 
 
550,634,550

-

550,634,550

600,956,473

7,756,559

593,199,914
 	
Short-term employee benefits 	 
 
120,289,160

-

120,289,160

130,163,272

440,128

129,723,144
 	
Termination benefits 	 
 
16,059,866

-

16,059,866

28,763,429

417,037

28,346,392

 

 

 

 

 

 

Total	 
 
686,983,576

-

686,983,576

759,883,174

8,613,724

751,269,450

43

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 6/30/2016        
 	 
        For the six months ended 6/30/2015        

Total
 	 
Discontinued operation
 	 
Continued operation
 	 
Total
 	 
Discontinued operation
 	 
Continued operation

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Depreciation 	 
 
92,229,608

-

92,229,608

92,935,169

239,603

92,695,566
 	
Amortization 	 
 
13,088,964

-

13,088,964

13,015,011

475,427

12,539,584

 

 

 

 

 

 

Total	 
 
105,318,572

-

105,318,572

105,950,180

715,030

105,235,150
 	
16.4 	Other gains (losses)	
 
Other gain (losses)	 
For the six months ended 6/30/2016
 	 
For the six months ended 6/30/2015

Total
 	 
Discontinued operation
 	 
Continued operation
 	 
Total
 	 
Discontinued operation
 	 
Continued operation

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Gains obtained from sales of subsidiaries 	 
 
53,484,358

-

53,484,358

61,372,533

-

61,372,533
 	
Assets impairment 	 
 
(3,680,433
)	 
 
-

(3,680,433
)	 
 
(116,771,460
)	 
 
-

(116,771,460
)	
Complementary remittance tax 	 
 
(2,274,218
)	 
 
-

(2,274,218
)	 
 
(1,427,731
)	 
 
-

(1,427,731
)	
Insurance claims  	 
 
(5,566,905
)	 
 
-

(5,566,905
)	 
 
(6,519,527
)	 
 
-

(6,519,527
)	
Wealth tax Colombia 	 
 
2,966,100

-

2,966,100

-

-

-
 	
Sales of businesses and properties 	 
 
11,368,556

-

11,368,556

10,747,177

-

10,747,177
 	
Other net losses 	 
 
(4,583,046
)	 
 
-

(4,583,046
)	 
 
(3,508,090
)	 
 
(3,060,684
)	 
 
(447,406
)	

 

 

 

 

 

 
 	
Total	 
 
51,714,412

-

51,714,412

(56,107,098
)	 
 
(3,060,684
)	 
 
(53,046,414
)	
 
44
 
16.5 	Other operating income	

Other operating income	 
For the six months ended 6/30/2016
 	 
For the six months ended 6/30/2015

Total
 	 
Discontinued operation
 	 
Continued operation
 	 
Total
 	 
Discontinued operation
 	 
Continued operation

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Sell Carton and Wraps 	 
 
2,039,947

-

2,039,947

1,505,515

-

1,505,515
 	
Recovery of fees 	 
 
1,045,289

-

1,045,289

1,539,561

-

1,539,561
 	
Increase on revaluation of Investment properties (see note 12.1)	 
 
84,095,984

-

84,095,984

34,096,083

-

34,096,083
 	
Other Income 	 
 
3,516,066

-

3,516,066

2,918,690

472,674

2,446,016

 

 

 

 

 

 

Total	 
 
90,697,286

-

90,697,286

40,059,849

472,674

39,587,175

16.6                 Financial results
 
The following is the financial income detailed for the periods ended:
 
Financial results	 
For the six months ended 6/30/2016
 	 
For the six months ended 6/30/2015

Total
 	 
Discontinued operation
 	 
Continued operation
 	 
Total
 	 
Discontinued operation
 	 
Continued operation

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

 

 	 

 

 	 

Other finance income 	 
 
6,876,691

-

6,876,691

8,048,232

175,491

7,872,741

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Financial income 	 
 
6,876,691

-

6,876,691

8,048,232

175,491

7,872,741

 

 

 

 

 

 

Bank loan expenses 	 
 
(56,550,277
)	 
 
-

(56,550,277
)	 
 
(56,784,031
)	 
 
(2,717,131
)	 
 
(54,066,900
)	
Bond debt expenses 	 
 
(69,774,856
)	 
 
-

(69,774,856
)	 
 
(57,549,849
)	 
 
(2,873,781
)	 
 
(54,676,068
)	
Interest paid on bank deposits 	 
 
(680,806
)	 
 
-

(680,806
)	 
 
(1,215,784
)	 
 
(2,717,131
)	 
 
1,501,347
 	
Valuation of financial derivatives 	 
 
(2,967,458
)	 
 
-

(2,967,458
)	 
 
(2,923,581
)	 
 
-

(2,923,581
)	

 

 

 

 

 

 

 

 

 

 

 

 

Financial Expenses 	 
 
(129,973,397
)	 
 
-

(129,973,397
)	 
 
(118,473,245
)	 
 
(8,308,043
)	 
 
(110,165,202
)	

 

 

 

 

 

 
 	
Results from UF indexed bonds in Chile 	 
 
(7,682,096
)	 
 
-

(7,682,096
)	 
 
(6,556,620
)	 
 
(1,281,445
)	 
 
(5,275,175
)	
Results from UF indexed Brazil 	 
 
(569,089
)	 
 
-

(569,089
)	 
 
(1,598,674
)	 
 
-

(1,598,674
)	
Results from UF indexed Other 	 
 
-

-

-

(334,858
)	 
 
-

(334,858
)	

 

 

 

 

 

 

 

 

 

 

 

 

(Losses) gains from indexation 	 
 
(8,251,185
)	 
 
-

(8,251,185
)	 
 
(8,490,152
)	 
 
(1,281,445
)	 
 
(7,208,707
)	

 

 

 

 

 

 
 	
Financial debt IFC-ABN Argentina 	 
 
(609,777
)	 
 
-

(609,777
)	 
 
(475,507
)	 
 
-

(475,507
)	
Debt to the public Bonds and Banks (Chile)	 
 
45,369,286

-

45,369,286

(23,016,813
)	 
 
(5,539,807
)	 
 
(17,477,006
)	
Financial debt Peru 	 
 
(309,642
)	 
 
-

(309,642
)	 
 
(2,902,481
)	 
 
-

(2,902,481
)	
Financial assets and Financial debt—Colombia	 
 
163,766

-

163,766

(3,121,371
)	 
 
-

(3,121,371
)	

 

 

 

 

 

 

 

 

 

 

 

 

Exchange difference 	 
 
44,613,633

-

44,613,633

(29,516,172
)	 
 
(5,539,807
)	 
 
(23,976,365
)	

 

 

 

 

 

 

 

 

 

 

 

 

Financial results total 	 
 
(86,734,258
)	 
 
-

(86,734,258
)	 
 
(148,431,337
)	 
 
(14,953,804
)	 
 
(133,477,533
)	
 
45
 
17 	Income tax expense	
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$ 88,871,238 as of June 30, 2016; and (M$ 22,874,595), as of June 30, 2015, as the table bellow:

June 30, 2016
 	 
June 30, 2015
 	
Current and deferred income tax	 
ThCh$
 	 
ThCh$

 

 	
Net current income tax expense 	 
 
90,094,219

65,587,603
 	
Deferred tax (benefit) related to creation or reversal of temporary differences	 
 
(2,196,396
)	 
 
(82,991,542
)	
Deferred tax related (benefit) to changes in tax rates 	 
 
973,415

(5,470,656
)	

 

 

 

 

Income tax expense 	 
 
88,871,238

(22,874,595
)	
 
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”.

46

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, 2016 and June 30, 2015 in thousands of Chilean pesos is the following:
Regional information by segment
Consolidated statement of  income	 
Super markets
 	 
Shopping Centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
  Support services, financing, adjustments and other
 	 
  Consolidated total
 	 
Discontinued operation financial services
 	
For the six months ended June 30, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Revenues from ordinary activities 	 
 
3,642,399,472

115,003,467

628,802,497

515,952,805

82,880,085

6,145,379

4,991,183,705

-
 	
Cost of sales 	 
 
(2,708,844,463
)	 
 
(9,891,199
)	 
 
(413,604,314
)	 
 
(373,932,179
)	 
 
(28,151,112
)	 
 
(2,630,369
)	 
 
(3,537,053,636
)	 
 
-

 

 

 

 

 

 

 

 

Gross Margin 	 
 
933,555,009

105,112,268

215,198,183

142,020,626

54,728,973

3,515,010

1,454,130,069

-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
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 	 
 
(790,107,338
)	 
 
(19,455,896
)	 
 
(156,773,375
)	 
 
(138,280,023
)	 
 
(25,994,170
)	 
 
(100,201,757
)	 
 
(1,230,812,559
)	 
 
-
 	
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)  	 
 
150,591,897

171,012,857

58,714,064

4,155,986

33,881,166

(222,960,362
)	 
 
195,395,608

-
 	
Net profit (loss) from continued operations 	 
 
150,591,897

171,012,857

58,714,064

4,155,986

33,881,166

(222,960,362
)	 
 
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	 
 
90,280,014

79,608,081

34,374,569

458,981

16,947,259

(113,987,096
)	 
 
107,681,808

-
 	
Depreciation and amortization 	 
 
31,806,859

1,568,010

6,002,721

7,275,658

788,576

3,838,193

51,280,017

-

 
47

Consolidated statement of  income	 
Super markets
 	 
Shopping Centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
  Supportservices, financing, adjustments and other
 	 
  Consolidated total
 	 
Discontinued operation financial services
 	
For the quarter ended June 30, 2015	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Revenues from ordinary activities 	 
 
3,918,013,373

112,958,849

686,424,898

475,525,047

73,238,794

3,594,873

5,269,755,834

60,759,616
 	
Cost of sales 	 
 
(2,937,266,155
)	 
 
(12,949,765
)	 
 
(453,828,562
)	 
 
(335,504,621
)	 
 
(22,780,776
)	 
 
(1,992,153
)	 
 
(3,764,322,032
)	 
 
(20,400,024
)	

 

 

 

 

 

 

 

 
 	
Gross Margin 	 
 
980,747,218

100,009,084

232,596,336

140,020,426

50,458,018

1,602,720

1,505,433,802

40,359,592

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Other revenues by function 	 
 
4,359,170

34,101,735

236,431

605,680

36,228

720,605

40,059,849

436,450
 	
Sales, general and administrative expenses 	 
 
(845,797,792
)	 
 
(17,224,472
)	 
 
(165,317,575
)	 
 
(136,159,510
)	 
 
(27,717,216
)	 
 
(111,046,677
)	 
 
(1,303,263,242
)	 
 
(17,371,214
)	
Financial expenses, net 	 
 
-

-

-

-

-

(110,425,013
)	 
 
(110,425,013
)	 
 
(14,223,102
)	
Participation in profit of equity method associates 	 
 
109,276

2,715,089

-

-

1,715,922

-

4,540,287

-
 	
Exchange differences 	 
 
-

-

-

-

-

(29,516,172
)	 
 
(29,516,172
)	 
 
2,760,915
 	
Losses from indexation 	 
 
-

-

-

-

-

(8,490,152
)	 
 
(8,490,152
)	 
 
(38,046
)	
Other losses, net 	 
 
-

-

-

-

-

(56,107,098
)	 
 
(56,107,098
)	 
 
3,741
 	
Income tax expense 	 
 
-

-

-

-

-

22,874,595

22,874,595

(2,683,876
)	
Profit attributable to discontinued operations 	 
 
-

-

-

-

-

9,244,460

9,244,460

-

 

 

 

 

 

 

 

 

Net profit (loss)  	 
 
139,417,872

119,601,436

67,515,192

4,466,596

24,492,952

(281,142,732
)	 
 
74,351,316

9,244,460
 	
Net profit (loss) from continued operations 	 
 
139,417,872

119,601,436

67,515,192

4,466,596

24,492,952

(290,387,192
)	 
 
65,106,856

-
 	
Net profit (loss) from discontinued operations 	 
 
-

-

-

-

9,244,460

-

9,244,460

9,244,460
 	
Net profit (loss) of atribuible to non-controlling interest 	 
 
-

-

-

-

-

(876,273
)	 
 
(876,273
)	 
 
-

 

 

 

 

 

 

 

 

Net profit for the year attributable to controlling shareholders, Total	 
 
139,417,872

119,601,436

67,515,192

4,466,596

33,737,412

(291,263,465
)	 
 
73,475,043

9,244,460
 	
Depreciation and amortization 	 
 
66,315,272

4,210,013

10,849,110

15,688,010

1,127,483

7,760,292

105,950,180

(715,030
)	

 

 

 

 

 

 

 

 

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.
 
48

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, 2016	 
Super markets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total
 	 
Discontinued operation financial services

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

 

 	 

 

 	 

 

 	
Chile	 

 

 	 

 

 	 

 
 	
Ordinary income, total 	 
 
1,263,803,367

67,626,435

259,792,522

485,033,894

708,871

4,234,642

2,081,199,731

-
 	
Cost of sales 	 
 
(942,607,349
)	 
 
(1,222,221
)	 
 
(190,367,189
)	 
 
(349,032,896
)	 
 
45,647

(370,265
)	 
 
(1,483,554,273
)	 
 
-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Gross margin 	 
 
321,196,018

66,404,214

69,425,333

136,000,998

754,518

3,864,377

597,645,458

-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Argentina	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
806,898,146

33,336,929

337,983,020

-

49,607,609

2,701,958

1,230,527,662

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

(14,429,906
)	 
 
(1,480,954
)	 
 
(764,797,344
)	 
 
-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Gross margin 	 
 
265,121,911

26,179,518

138,030,182

-

35,177,703

1,221,004

465,730,318

-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
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

-

 
 
49
 
Gross margin by country and segment
 
For the six months ended  June 30, 2015	 
Super markets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total
 	 
Discontinued operation financial services

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

 

 	 

 

 	 

 

 	
Chile	 

 

 	 

 

 	 

 
 	
Ordinary income, total 	 
 
1,203,371,384

61,501,039

250,557,659

451,046,115

849,713

829,168

1,968,155,078

60,759,616
 	
Cost of sales 	 
 
(905,210,022
)	 
 
(3,418,156
)	 
 
(180,266,558
)	 
 
(315,525,356
)	 
 
371,745

(84,782
)	 
 
(1,404,133,129
)	 
 
(20,400,024
)	

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin 	 
 
298,161,362

58,082,883

70,291,101

135,520,759

1,221,458

744,386

564,021,949

40,359,592

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Argentina	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
1,005,697,415

38,020,129

404,298,708

-

45,867,545

3,847,818

1,497,731,615

-
 	
Cost of sales 	 
 
(686,787,390
)	 
 
(7,484,494
)	 
 
(249,767,498
)	 
 
-

(11,923,216
)	 
 
(1,509,543
)	 
 
(957,472,141
)	 
 
-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Gross margin 	 
 
318,910,025

30,535,635

154,531,210

-

33,944,329

2,338,275

540,259,474

-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Brazil	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
883,723,577

-

-

-

2,568,925

-

886,292,502

-
 	
Cost of sales 	 
 
(695,304,853
)	 
 
-

-

-

-

-

(695,304,853
)	 
 
-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Gross margin 	 
 
188,418,724

-

-

-

2,568,925

-

190,987,649

-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Peru	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
406,963,704

8,738,055

-

24,478,932

21,698,953

656,871

462,536,515

-
 	
Cost of sales 	 
 
(315,184,905
)	 
 
(1,887,552
)	 
 
-

(19,979,265
)	 
 
(11,229,351
)	 
 
(597,379
)	 
 
(348,878,452
)	 
 
-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Gross margin 	 
 
91,778,799

6,850,503

-

4,499,667

10,469,602

59,492

113,658,063

-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Colombia	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Ordinary income, total 	 
 
418,257,293

4,699,626

31,568,531

-

2,253,658

(1,738,984
)	 
 
455,040,124

-
 	
Cost of sales 	 
 
(334,778,985
)	 
 
(159,563
)	 
 
(23,794,506
)	 
 
-

-

199,551

(358,533,457
)	 
 
-

 

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Gross margin 	 
 
83,478,308

4,540,063

7,774,025

-

2,253,704

(1,539,433
)	 
 
96,506,667

-

 
 
50

18.4  	Regional information by segment: Total assets  	

Super markets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total
 	
At June 30, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Current Assets	 

 

 	 

 

 	 

Cash and cash equivalents 	 
 
111,223,961

4,005,904

9,232,643

2,231,470

2,267,311

75,345,894

204,307,183
 	
Other financial assets, current 	 
 
-

-

-

-

-

58,602,916

58,602,916
 	
Other non-financial assets, current 	 
 
13,981,758

1,506,614

8,369,522

2,296,530

791,270

1,634,118

28,579,812
 	
Trade receivables and other receivables 	 
 
278,394,045

29,702,052

67,463,427

27,040,702

338,354,908

23,548,262

764,503,396
 	
Receivables due from related entities, current 	 
 
-

-

-

-

18,532,418

-

18,532,418
 	
Inventory 	 
 
688,079,068

-

218,248,870

170,495,364

-

-

1,076,823,302
 	
Current tax assets 	 
 
37,095,394

14,500,260

3,789,646

7,468,303

3,710,609

13,348,218

79,912,430
 	
Assets classified as held for sale, current 	 
 
-

-

-

-

-

41,328,187

41,328,187

 

 

 

 

 

 

 

Total current assets 	 
 
1,128,774,226

49,714,830

307,104,108

209,532,369

363,656,516

213,807,595

2,272,589,644

 

 

 

 

 

 

 

Non-Current Assets	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Other financial assets, non-current 	 
 
-

-

-

-

-

359,039,239

359,039,239
 	
Other non-financial assets, non-current 	 
 
37,434,537

7,552,764

2,214,633

1,728,878

10,084

-

48,940,896
 	
Trade receivables and other receivables, non-current 	 
 
6,512,244

-

2,490,750

-

9,374,433

-

18,377,427
 	
Equity method investments 	 
 
1,000,657

-

-

-

195,871,968

-

196,872,625
 	
Intangible assets other than goodwill 	 
 
199,099,615

403,115

10,807,349

155,925,473

3,956,252

39,342,166

409,533,970
 	
Goodwill 	 
 
1,231,150,239

32,904,519

2,660,397

138,159,463

54,683,032

-

1,459,557,650
 	
Property, plant and equipment 	 
 
1,570,550,518

496,462,488

294,408,042

242,855,652

3,487,913

26,691,336

2,634,455,949
 	
Investment property 	 
 
-

1,846,089,123

-

-

-

-

1,846,089,123
 	
Income tax assets, non-current 	 
 
3,547,489

194,325

610,722

4,284,793

-

10,088

8,647,417
 	
Deferred income tax assets 	 
 
-

-

-

-

-

627,406,538

627,406,538

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Total non-current assets 	 
 
3,049,295,299

2,383,606,334

313,191,893

542,954,259

267,383,682

1,052,489,367

7,608,920,834

 

 

 

 

 

 

 

Total Assets	 
 
4,178,069,525

2,433,321,164

620,296,001

752,486,628

631,040,198

1,266,296,962

9,881,510,478

 
51

 
 	 
Super markets
 	 
Shopping centers
 	 
Home improvement
 	 
Department stores
 	 
Financial services
 	 
Support services, financing, adjustments and other
 	 
Consolidated total
 	
At December 31, 2015	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Current Assets	 

 

 	 

 

 	 

Cash and cash equivalent	 
 
189,911,013

10,655,476

10,099,524

27,667,723

2,260,803

27,680,587

268,275,126
 	
Other financial assets, current	 
 
-

-

-

-

-

254,850,725

254,850,725
 	
Other non-financial assets, current	 
 
7,383,625

1,727,010

2,162,422

1,105,427

137,474

1,926,072

14,442,030
 	
Trade receivables and other receivables, current 	 
 
297,479,644

46,051,513

64,122,155

41,321,666

361,279,198

9,585,207

819,839,383
 	
Trade receivables due from related parties, current	 
 
-

-

-

-

-

14,851,194

14,851,194
 	
Inventory, current	 
 
663,154,474

-

217,175,404

187,979,455

-

-

1,068,309,333
 	
Income tax receivable, current	 
 
4,040,401

2,203,113

2,864,949

9,445,277

1,173,773

41,469,536

61,197,049
 	
Assets classified as held for sale, current	 
 
-

-

-

-

-

-

-

 

 

 

 

 

 

 

          Total current assets	 
 
1,161,969,157

60,637,112

296,424,454

267,519,548

379,702,442

335,512,127

2,501,764,840

 

 

 

 

 

 

 

Non-Current Assets	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Other financial assets, non-current 	 
 
-

-

-

-

-

421,532,586

421,532,586
 	
Other non-financial assets, non-current 	 
 
-

-

-

-

-

31,907,769

31,907,769
 	
Trade receivables and other receivables, non-current 	 
 
16,450,570

7,218

79,248

-

14,268,191

191,625

30,996,852
 	
Equity method investments 	 
 
907,728

55,575,262

-

-

195,044,515

-

251,527,505
 	
Intangible assets other than goodwill 	 
 
200,638,822

163,082

10,290,743

156,587,317

4,022,963

30,046,490

401,749,417
 	
Goodwill 	 
 
1,166,022,412

31,499,291

3,705,397

138,159,463

52,305,509

-

1,391,692,072
 	
Property, plant and equipment 	 
 
1,706,820,173

389,750,103

317,911,465

263,934,396

3,315,863

29,758,630

2,711,490,630
 	
Investment property 	 
 
-

1,807,095,204

-

-

-

-

1,807,095,204
 	
Income tax assets, non-current 	 
 
-

-

-

-

-

8,854,347

8,854,347
 	
Deferred income tax assets 	 
 
-

-

-

-

-

552,114,088

552,114,088

 

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Total non-current assets 	 
 
3,090,839,705

2,284,090,160

331,986,853

558,681,176

268,957,041

1,074,405,535

7,608,960,470

 

 

 

 

 

 

 

Total Assets	 
 
4,252,808,862

2,344,727,272

628,411,307

826,200,724

648,659,483

1,409,917,662

10,110,725,310

 
52
 
18.5 	Current Asset and liabilities by segment	

Regional information by segment
Current assets and liabilities
at June 30, 201	Supermarkets	ShoppingCenter	HomeImprovement	DepartmentStores	FinancialServices(Insurance +cards + bank)	SupportServices,Financing, andOther Settings	TotalConsolidated	
	ThCh$	ThCh$	ThCh$	ThCh$	ThCh$	ThCh$	ThCh$	
Trade accounts payable and other payables	1,043,361,680	33,519,968	212,564,005	150,430,890	34,111,504	33,370,539	1,507,358,586	

Regional information by segment
Current assets and liabilities
at December 31, 201	Supermarkets	ShoppingCenter	HomeImprovement	DepartmentStores	FinancialServices(Insurance +cards + bank)	SupportServices,Financing, andOther Settings	TotalConsolidated	
	ThCh$	ThCh$	ThCh$	ThCh$	ThCh$	ThCh$	ThCh$	
Trade accounts payable and other payables	1,265,917,987	38,229,357	251,243,590	214,586,635	37,795,722	48,751,504	1,856,524,795	
18.6 	Information by country, assets and liabilities	
In thousands of Chilean pesos:
Assets and liabilities by country

Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidatedtotal
 	
At June 30, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Total assets 	 
 
4,601,708,092

1,107,555,904

1,329,423,552

1,222,737,195

1,620,085,735

9,881,510,478
 	
Total liabilities 	 
 
4,011,799,893

600,573,188

506,228,579

377,370,143

391,450,279

5,887,422,082
 	
Total Net equity 	 
 
749,118,651

645,931,964

820,534,362

709,410,587

1,069,092,832

3,994,088,396
 	
Adjustments to net investment	 
 
(159,210,452
)	 
 
(138,949,248
)	 
 
2,660,611

135,956,465

159,542,624

-
 	
Net investment	 
 
589,908,199

506,982,716

823,194,973

845,367,052

1,228,635,456

3,994,088,396
 	
     Percentage of Net equity	 
 
18.8
%	 
 
16.2
%	 
 
20.5
%	 
 
17.8
%	 
 
26.8
%	 
 
100.0
%	
     Percentage of equity	 
 
14.8
%	 
 
12.7
%	 
 
20.6
%	 
 
21.2
%	 
 
30.8
%	 
 
100.0
%	

Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidatedtotal
 	
At December 31, 2015	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Total assets 	 
 
4,848,797,914

1,242,359,909

1,165,419,318

1,277,031,996

1,577,116,173

10,110,725,310
 	
Total liabilities 	 
 
4,182,284,401

693,797,284

472,091,927

397,106,480

394,633,400

6,139,913,492
 	
Total Net equity 	 
 
855,443,631

690,663,761

690,694,802

717,680,431

1,016,329,193

3,970,811,818
 	
Adjustments to net investment	 
 
(188,930,118
)	 
 
(142,101,136
)	 
 
2,632,589

162,245,085

166,153,580

-
 	
Net investment	 
 
666,513,513

548,562,625

693,327,391

879,925,516

1,182,482,773

3,970,811,818
 	
     Percentage of Net equity	 
 
21.5
%	 
 
17.4
%	 
 
17.4
%	 
 
18.1
%	 
 
25.6
%	 
 
100.0
%	
     Percentage of equity	 
 
16.8
%	 
 
13.8
%	 
 
17.5
%	 
 
22.2
%	 
 
29.8
%	 
 
100.0
%	

53
 
18.7 	Regional information, including intersegments is as follows:	

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

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

-

3,642,399,472
 	
Shopping 	 
 
170,024,669

55,021,202

115,003,467
 	
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 	 
 
5,046,283,934

55,100,229

4,991,183,705

 	 
For the six months ended June 30, 2015
 	
Regional information, by segment	 
Total segment revenue
 	 
Total segmentr evenue
 	 
Total segment revenue

ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Supermarkets 	 
 
3,918,013,373

-

3,918,013,373
 	
Shopping 	 
 
169,958,088

56,999,239

112,958,849
 	
Home Improvement 	 
 
687,530,112

1,105,214

686,424,898
 	
Department stores 	 
 
475,525,047

-

475,525,047
 	
Financial Services 	 
 
73,238,794

-

73,238,794
 	
Others 	 
 
3,594,873

-

3,594,873

 

 

 

 	 

 	 

 	 

 	
TOTAL 	 
 
5,327,860,287

58,104,453

5,269,755,834

 
 
54
 
18.8  	Non-current assets by country	
 
At June 30, 2016	 
Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidatedtotal

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Other non-financial assets	 
 
23,838,670

7,676,617

17,099,740

319,429

6,440

48,940,896
 	
Trade receivables and other receivables	 
 
9,374,433

2,529,107

6,473,887

-

-

18,377,427
 	
Equity Method investments	 
 
195,871,968

-

-

1,000,657

-

196,872,625
 	
Intangible assets other than goodwill	 
 
218,989,577

10,024,616

64,445,756

107,477,012

8,597,009

409,533,970
 	
Goodwill 	 
 
246,378,878

1,527,639

398,413,263

266,407,547

546,830,323

1,459,557,650
 	
Property Plant and Equipment	 
 
1,124,165,928

216,190,613

351,531,800

350,767,499

591,800,109

2,634,455,949
 	
Investment Property 	 
 
1,411,963,149

207,830,450

-

197,898,012

28,397,512

1,846,089,123
 	
Income tax assets, non-current	 
 
7,997,052

650,365

-

-

-

8,647,417

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Non -current assets—Total	 
 
3,238,579,655

446,429,407

837,964,446

923,870,156

1,175,631,393

6,622,475,057

 
At December 31, 2015	 
Chile
 	 
Argentina
 	 
Brazil
 	 
Peru
 	 
Colombia
 	 
Consolidatedtotal

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Other non-financial assets	 
 
25,390,011

4,464,185

-

2,047,413

6,160

31,907,769
 	
Trade receivables and other receivables	 
 
9,657,812

5,026,352

16,312,688

-

-

30,996,852
 	
Equity Method investments	 
 
250,619,777

-

-

907,728

-

251,527,505
 	
Intangible assets other than goodwill	 
 
211,149,130

14,676,994

55,464,964

111,421,733

9,036,596

401,749,417
 	
Goodwill 	 
 
246,378,878

2,593,925

343,976,582

275,687,596

523,055,091

1,391,692,072
 	
Property Plant and Equipment	 
 
1,165,259,184

261,376,733

315,071,707

372,374,780

597,408,226

2,711,490,630
 	
Investment Property 	 
 
1,367,201,015

216,225,818

-

196,505,533

27,162,838

1,807,095,204
 	
Income tax assets, non-current	 
 
7,997,053

857,294

-

-

-

8,854,347

 

 

 

 

 

 

 	 

 	 

 	 

 	 

 	 

 	 

 	
Non -current assets—Total	 
 
3,283,652,860

505,221,301

730,825,941

958,944,783

1,156,668,911

6,635,313,796

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.
 
55

18.9  Consolidated Cash Flow by segment:

Super markets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance + cards +bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	 
Discontinued operation financial services
 	
Regional information by segment ConsolidatedSegment Flows at June 30, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Net cash flows from (used in) operating activities	 
 
(47,623,535
)	 
 
64,267,132

(44,014,610
)	 
 
(13,487,328
)	 
 
14,217,497

(94,428,483
)	 
 
(121,069,327
)	 
 
-
 	
Net cash flows from (used in) investing activities	 
 
(37,520,290
)	 
 
105,415,711

(12,140,627
)	 
 
(12,612,475
)	 
 
39,313,923

135,978,286

218,434,528

-
 	
Net cash flows from (used in) financing activities	 
 
8,406,667

(175,514,612
)	 
 
54,602,171

663,550

(53,376,552
)	 
 
19,058,383

(146,160,393
)	 
 
-

 

 

 

 

 

 

 

 

 
	 
Super markets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance + cards +bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	 
Discontinued operation financial services
 	
Regional information by segment ConsolidatedSegment Flows at June 30, 2015	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Net cash flows from (used in) operating activities	 
 
173,573,478

52,679,431

10,167,539

6,010,048

93,252,750

(70,791,100
)	 
 
264,892,146

(107,449,303
)	
Net cash flows from (used in) investing activities	 
 
(45,155,131
)	 
 
(5,052,608
)	 
 
(345,128
)	 
 
(11,625,266
)	 
 
349,835,590

12,053,035

299,710,492

(750,271
)	
Net cash flows from (used in) financing activities	 
 
(161,256,374
)	 
 
(44,085,310
)	 
 
(1,439,737
)	 
 
7,911,865

(400,748,517
)	 
 
100,848,336

(498,769,737
)	 
 
35,258,696

18.10  Additions to non-current assets:

Super markets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance +cards +bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	
As of June 30, 2016	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Property plant and equipment	 
 
42,634,928

13,846,185

5,381,804

8,753,546

134,919

1,438,328

72,189,710
 	
Intangible asset, other that goodwill	 
 
6,848,895

43,960

1,604,714

3,858,929

302,191

8,195,304

20,853,993
 	
Investment properties	 
 
-

203,404

-

-

-

-

203,404

 

 

 

 

 

 

 

Total additions	 
 
49,483,823

14,093,549

6,986,518

12,612,475

437,110

9,633,632

93,247,107

	 
Super markets
 	 
Shopping Center
 	 
Home Improvement
 	 
Department Stores
 	 
Financial Services (Insurance +cards +bank)
 	 
Support Services, Financing, and Other Settings
 	 
Total Consolidated
 	
As of December 31, 2015	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Property plant and equipment	 
 
71,673,841

20,199,831

16,678,579

19,406,886

793,948

1,704,152

130,457,237
 	
Intangible asset, other that goodwill	 
 
15,347,604

81,582

3,705,156

5,490,784

455,074

10,284,698

35,364,898
 	
Investment properties	 
 
-

6,404,431

-

-

-

-

6,404,431
 	
Total additions	 
 
87,021,445

26,685,844

20,383,735

24,897,670

1,249,022

11,988,850

172,226,566

 
56

18.11 	Banco Paris statements:	
 
Below is the classified financial information of Banco Paris used in the consolidation of Cencosud S.A., as of June 30, 2016 and December 31, 2015
 
Statement of Financial Position	 
As of
 	
Assets	 
6/30/2016
 	 
12/31/2015

ThCh$
 	 
ThCh$
 	
Current assets	 

 
 	
Cash and cash equivalents 	 
 
2,267,311

2,112,443
 	
Other financial assets, current 	 
 
32,405,400

71,414,725
 	
Trade receivables and other receivables 	 
 
1,952,931

2,329,044
 	
Current tax assets 	 
 
3,365,411

879,480

 

 

 	 

 	 

 	
Total current assets 	 
 
39,991,053

76,735,692

 

 

Non-current assets	 

 	 

 	
Other non-financial assets, non-current 	 
 
10,083

11,658
 	
Trade receivable and other receivables, non-current	 
 
9,374,432

9,657,812
 	
Receivables from related entities, non-current 	 
 
(34,828
)	 
 
286,971
 	
Intangible assets other than goodwill 	 
 
3,783,579

4,007,116
 	
Property, plant and equipment 	 
 
594,051

694,961
 	
Deferred income tax assets 	 
 
3,747,384

7,369,856

 

 

 	 

 	 

 	
Total non-current assets 	 
 
17,474,701

22,028,374

 

 

 	 

 	 

 	
Total assets 	 
 
57,465,754

98,764,066

 

 

 
 	 
As of
 	
Net equity and liabilities	 
6/30/2016
 	 
12/31/2015

ThCh$
 	 
ThCh$
 	
Current liabilities	 

 
 	
Other financial liabilities, current 	 
 
2,444,772

39,573,017
 	
Trade payables and other payables 	 
 
2,383,395

2,214,908
 	
Current income tax liabilities 	 
 
2,157

120,617
 	
Current provision for employee benefits 	 
 
110,679

122,004

 

 

 	 

 	 

 	
Total current liabilities 	 
 
4,941,003

42,030,546

 

 

Non-current liabilities	 

 	 

 	
Other financial liabilities, 	 
 
7,954,305

8,235,347
 	
Trade accounts payables 	 
 
158,805

1,845,689
 	
Deferred income tax liabilities 	 
 
1,029,538

1,136,117

 

 

 	 

 	 

 	
Total non-current liabilities 	 
 
9,142,648

11,217,153

 

 

 	 

 	 

 	
Total liabilities 	 
 
14,083,651

53,247,699

 

 

Net equity	 

 	 

 	
Paid-in capital 	 
 
39,579,421

39,579,421
 	
Retained earnings (accumulated losses) 	 
 
(2,296,111
)	 
 
762,673
 	
Other reserves 	 
 
6,098,793

5,174,273

 

 

Net equity attributable to controlling shareholders 	 
 
43,382,103

45,516,367
 	
Non-controlling interest 	 
 
-

-

 

 

 	 

 	 

 	
Total net equity 	 
 
43,382,103

45,516,367

 

 

 	 

 	 

 	
Total net equity and liabilities 	 
 
57,465,754

98,764,066

 

 

 
57

Below is the classified financial information of Banco Paris used in the consolidation of Cencosud S.A., as of June 30, 2016 and 2015,

For the six months ended
June 30,

2016
 	 
2015
 	
Statement of profit and losses	 
ThCh$
 	 
ThCh$

 

 	
Revenues from ordinary activities 	 
 
708,871

16,749,517
 	
Cost of Sales 	 
 
(942
)	 
 
(3,021,962
)	

 

 
 	
Gross Margin 	 
 
707,929

13,727,555
 	
Administrative expenses 	 
 
(3,934,649
)	 
 
(11,071,838
)	
Financial income 	 
 
794,158

379,528
 	
Financial expenses 	 
 
(680,806
)	 
 
(4,011,949
)	
Other losses	 
 
857

3,519,483
 	
Exchange differences 	 
 
(62,390
)	 
 
33,756

 

 

Profit before tax 	 
 
(3,174,901
)	 
 
2,576,535
 	
Income tax charge 	 
 
878,790

368,923

 

 

Profit from ongoing operations 	 
 
(2,296,111
)	 
 
2,945,458

 

 

Net (loss) profit 	 
 
(2,296,111
)	 
 
2,945,458

 

 

 
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, 2016. 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 administrative position. 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 possition redefined on November 25, 2015. On May 30, 2016 The Supreme Court confirmed the acceptance of the “protection claim”, after this entitlement was appealed by SEREMI. The acceptance of the “protection claim” means that the ruling originally issued on June 19, 2015 is fully valid, and it confirms the Company`s pretentions, requesting the Vitacura`s authority to adjust its administrative position about the stagnation of the developing works.
● 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 Brasil Comercial Ltda is part of several civil lawsuits filed against it by some of the Employees Unions which have relation with the supermarkets segment. The forbiddance to employees for working during the public hollidays without an explicit agreement signed by the union is the most relevant argument that affects the Company´s activities.
Based on the opinion of a legal advisor, we cannot estimate the value of the case given the complexity of the calculations related to the process, as well as the absence of sufficient evidence in the file in order to quantify.
Cencosud Brasil Comercial Ltda has reported no other civil proceedings to reveal as of June 30, 2016.
● 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 USD 148 thousand. Our legal advisors consider that the chances of getting a favorable ruling to the position of the company are reasonably higher than obtain an unfavorable ruling.
● 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.
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. $23 million at the time of the suit filing).
 
58

19.2 Taxation legal proceedings
 
As of June 30, 2016, 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 	9,346,562	Trial	Positive	
 	Cencosud Internacional Limitada 	Shares transference cost 	27,100,027	Trial	Positive	
 	Cencosud Retail S.A. 	Offsetting losses 	1,915,647	Appeal	Positive	
 	Paris Administradora Centro Limitada 	Deductible expenses, offsetting losses 	3,470,289	Trial	Positive	
 	Eurofashion Limitada 	Assets transference, deductible expenses 	643,791	Appeal	Positive	
 	Paris Administradora Limitada 	Deductible expenses, offsetting losses 	1,669,445	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 	First category income tax 	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 	737,875	Trial	Positive	
Peru 	Cencosud Perú 	VAT or G&S tax 	1,020,589	Trial	Positive	
Brazil 	Cencosud Comercial Ltda 	Income tax 	13,032,604	Trial	Positive	
 	Cencosud Comercial Ltda 	PIS & CONFIS [3] 	10,892,320	Trial	Positive	
 	Cencosud Comercial Ltda 	Different causes – Activities Tax 	17,301,158	Trial	Positive	
 
[1] Amount refers to tax payable or tax rebate. Amounts may vary. Fines, interest, translations, discounts and adjustments shall be also updated up to payment date, if necessary
[2] Potential outcomes are provided by 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
 
The tax contingencies and taxation legal proceedings disclosed above are deemed to be of a positive outcome.

59

20                      Stock options
As of June 30, 2016 the Company has shared-based compensation plans for executives of Cencosud S,A, and affiliates which had no changes compared with December 31, 2015.

Numbers of shares

As of
 	
Stock options granted to key executives	 
6/30/2016
 	 
12/31/2015
 	
1) Outstanding as of the beginning of the period 	 
 
35,676,984

25,191,698
 	
2) Granted during the period 	 
 
-

35,526,934
 	
3) Forfeited during the period 	 
 
(497,500
)	 
 
(18,596,806
)	
4) Exercised during the period (see note 15.2) 	 
 
(13,796,909
)	 
 
-
 	
5) Expired at the end of the period 	 
 
-

(6,444,842
)	
6) Outstanding at the end of the period 	 
 
21,382,575

35,676,984
 	
7) Vested and expected to vest at the end of the period	 
 
21,382,575

35,676,984
 	
8) Eligible for exercise at the end of the period 	 
 
386

412

Stock options—Impact in P&L	 
As of June 30, 2016
 	 
As of June 30, 2015

ThCh$
 	 
ThCh$
 	
Impact in the income statement 	 
 
5,059,660

1,612,129

In relation to the 2016, 2015 and 2014 Retention Plans, the outstanding options as of June 30, 2016 had a weighted-average contractual life of 0.46 years, 0.34 years and 0.24 years respectively. As of December 31, 2015 those options had a weighted-average contractual life of 0.96 , 0.73 years and 0.42 years respectively.
 
21       Aseets and liabilies classified as held for sale, and discontinued operations
 
As of June 30, 2016 and December 31, 2015 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, 2016 are presented as follows:
 
Assets	 
6/30/2016
Unaudited

ThCh$

 
 	
Current assets	 

Inventories, current 	 
 
906,520

 

Total current assets 	 
 
906,520

 

Non-current assets	 

 	
Property, plant and equipment 	 
 
37,482,425
 	
Investment property 	 
 
2,939,242

 

Total non-current assets 	 
 
40,421,667

 

Total non-current assets classified as held for sale	 
 
41,328,187

 
60

Liabilities	 
6/30/2016
Unaudited

ThCh$

 
 	
Current liabilities	 

Other financial liabilities, current 	 
 
612,359
 	
Trade payables and other payables, current 	 
 
2,109,934
 	
Other provisions, current 	 
 
82,276
 	
Current provision for employee benefits 	 
 
59,927

 

 	 

 	
Total current liabilities 	 
 
2,864,496

 

 	 

 	
Non-current liabilities	 

 	
Other financial liabilities, non current 	 
 
3,197,815

 

 	 

 	
Total non-current liabilities 	 
 
3,197,815

 

 	 

 	
Total non-current liabilities classified as held for sale	 
 
6,062,311

 
Detail of the assets and liabilities classified as non-current assets for disposal as “held for sale” as of June 30, 2016 are presented below:
 
a)	Sale of non-strategic assets: Pieces of land Chile	
 
A s of June 30, 2016, 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, 2016 are presented as follows:
 
Property, plant and equipment; and investment property held for sale	 
6/30/2016
ThCh$

 
 	
Land 	 
 
11,614,943
 	
Fixed assets under leasing agreements 	 
 
8,146,481
 	
Facilities 	 
 
156,061
 	
Furnishings 	 
 
963
 	
Buildings 	 
 
2,924,158
 	
Machinery and equipments 	 
 
399,958
 	
Adjustments to fair value of the properties, plant and equipment	 
 
(3,052,914
)	

 

 

Total property, plant and equipments 	 
 
20,189,650

 

Other financial liabilities, current and non-current - Leasing	 
 
(3,810,174
)	

 
 	
Investment property 	 
 
2,939,242

Detailed assets, classified as held for sale, has been recognized at the lower of carrying amount and fair value less costs to sell, from the moment of the reclassification.

61
 
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, 2016, are presented as follows:
 
Gas stations - Colombia	 
6/30/2016
ThCh$

 
 	
Property, plant and equipment 	 
 
17,292,775
 	
Inventories 	 
 
906,520
 	
Trade payables and other payables, non-current 	 
 
(2,109,934
)	
Other provisions, current 	 
 
(82,276
)	
Current provision for employee benefits 	 
 
(59,927
)	

 

 

Total gas stations classified as held for sale 	 
 
15,947,158
 	
The Company determined a plan for the sale of these assets, for which is expected to be completed in one year.
2) Discontinued operations as of June 30, 2015
Sale of the financial retail services division - Chile
 
From June 2014 the Company, together with its subsidiaries Cencosud Retail S.A. and Easy S.A., entered into a framework agreement for which Bank of Nova Scotia (BNS) Chile acquired 51% interest and took control of the division of retail financial services of the Company in Chile. This transaction was formally completed on May 1, 2015.
a)	Results of discontinued operations for the six months ended June 30, 2015:	
 
Statement of profit and loss by function – Discontinued operations	 
6/30/2015
ThCh$
(Unaudited)
 	
Revenues from ordinary activities 	 
 
60,759,616
 	
Cost of sales 	 
 
(20,400,024
)	

 
 	
Gross Margin 	 
 
40,359,592

 

 	 

 	
Other revenues by function 	 
 
436,450
 	
Sales, general and administrative expenses 	 
 
(12,971,018
)	
Other expenses by function 	 
 
(4,400,196
)	
Other gains 	 
 
3,741

 

Results from operating activities	 
 
23,428,569

 

Finance income 	 
 
131,448
 	
Finance expenses 	 
 
(14,354,550
)	
Exchange differences 	 
 
2,760,915
 	
Gain from indexation 	 
 
(38,046
)	

 

 

Results from operating activities before income tax	 
 
11,928,336
 	
Income Tax 	 
 
(2,683,876
)	

 
 	
Net profit for the period 	 
 
9,244,460

 
 
62
 
b)	Cash flows from (used in) discontinued operations for the six months ended June 30, 2015 are presented as follows:	
 
Statement of cash flows – Discontinued operations	 
6/30/2015
ThCh$

ThCh$
 	
Net cash used in operating activities 	 
 
(107,449,303
)	
Net cash used in investing activities 	 
 
(750,271
)	
Net cash from (used in) financing activities 	 
 
35,258,696

22 Corporate income tax
 
The corporate income tax expense on continuing operations amounts to ThCh$ 32,805,216 and ThCh$ 33,357,900, for the periods according to the following detail:

Expenses (benefit) due to income tax, current and	 
For the six months ended June 30,
 	
deferred tax portions (presentation)	 
2016  
 	 
2015  

ThCh$
 	 
ThCh$
 	
Current tax expense                                                                          	 
 
90,094,219

65,587,603

 

 

Deferred tax (benefit) expense due to taxes arising from the creation and reversal of temporary differences(income	 
 
(2,196,396
)	 
 
(82,991,542
)	
Deferred tax benefit (expenses) ) due to taxes arising from the changes in tax rates or new rates	 
 
973,415

(5,470,656
)	

 

 

 

 

Total deferred tax benefits, net                                                                          	 
 
(1,222,981
)	 
 
(88,462,198
)	

 

 

 

 

Income tax Expense, net                                                                          	 
 
88,871,238

(22,874,595
)	
 
Expenses (benefit) due to income tax, by source
(national, foreign) (presentation)	 
For the six months ended June 30,

2016  
 	 
2015  

ThCh$
 	 
ThCh$
 	
Current income tax expense, Net, Foreign                                                                          	 
 
44,700,327

51,643,744
 	
Current income tax expense, Net, Local                                                                          	 
 
45,393,892

13,943,859

 

 

 	 

 	 

 	
Current income tax expense, Net, Total                                                                          	 
 
90,094,219

65,587,603

 

 

 	 

 	 

 	
Deferred income tax benefit, Net, Foreign                                                                          	 
 
(1,633,632
)	 
 
(92,397,485
)	
Deferred income tax expense, Net, Local                                                                          	 
 
410,651

3,935,287

 

 

 	 

 	 

 	
Deferred income tax benefit, Net, Total                                                                          	 
 
(1,222,981
)	 
 
(88,462,198
)	

 

 

 

 

Income tax Expense on continuing operations	 
 
88,871,238

(22,874,595
)	

 

 

 
63
 
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	 
2016
 	 
2015

ThCh$
 	 
ThCh$
 	
Income tax expense using the legal rate                                                                             	 
 
68,224,065

17,170,132

 

 

 	 

 	 

 	
Tax effect of rates in other territories                                                                             	 
 
11,793,623

(6,319,379
)	
Tax effect on non-deductible expenses                                                                             	 
 
7,233,669

2,708,881
 	
Chile – Tax effect on translation reserves (Investments and Equity)	 
 
(1,649,837
)	 
 
(1,031,492
)	
Tax rate effect of adjustments for current tax of prior periods	 
 
(2,932,202
)	 
 
-
 	
Colombia –Wealth tax (non-deductible)                                                                             	 
 
2,226,844

-
 	
Colombia –Effect on tax credits (adjustments)                                                                             	 
 
(5,200,599
)	 
 
-
 	
Chile – Tax effect on translation reserves (derivatives)                                                                             	 
 
2,042,953

-
 	
Chile –not recognized provisional payment on absorbed profits - Merges	 
 
(6,192,522
)	 
 
-
 	
Chile – Mall Viña investment sale                                                                             	 
 
11,093,933

-
 	
Gains on finance ratail segment – Chile – non-taxable component	 
 
-

(13,050,928
)	
CREE tax rate adjustment recognition - Colombia                                                                             	 
 
-

(43,696,915
)	
Colombia – Presuntive income tax rate adjustment for reform	 
 
1,425,316

392,920
 	
Effects resulting from tax rate changes                                                                             	 
 
(973,415
)	 
 
(5,470,656
)	
Effect of share of profit of equity-accounted investee.                                                                             	 
 
(1,640,828
)	 
 
(996,977
)	
Brazil – Tax losses valuation                                                                             	 
 
-

6,590,388
 	
Chile –not recognized provisional payment on absorbed profits	 
 
-

6,384,966
 	
Other (decrease) increase for legal tax                                                                             	 
 
3,014,150

14,444,465

 

 

 	 

 	 

 	
 Adjustments to tax expenses using the legal rate, total….	 
 
20,241,085

(40,044,727
)	

 

 

 

 

Income tax expense using the effective rate                                                                             	 
 
88,871,238

(22,874,595
)	
 
Main components of effective tax rate reconciliation include:
 
i.	During 2015, taxable losses benefit was not recognized over parent company ThCh$ 28,377,627 (taxable income ThCh$ 6,384,966 at 22.5% rate)	
ii.	A provision related to taxable losses is recognized on Mercantil Rodriguez acquisition and bargain purchase effect related to a merge was recorded in Brazil during the second quarter of 2015 (ThCh$ 6,590,388)	
 
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. For the tax losses carry-forward, there are no limits regarding their usage in all jurisdictions where the Group operates, the realization of tax losses is estimated based on the Group future projections.
 
These losses have been produced in countries where there is no limited period for their use, and reversal is estimated as projected future revenues as increasing.
 
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 22.5% (Dec 2014: 21%; Dec 2013: 20%). 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, 39% in Colombia, 28% in Peru and 34% in Brazil. Peru enacted in law Nº 30.296 which envisages gradual reduction in taxes from the current 30% to 28% in 2015-2016, 27% in 2017-2018, and 26% from 2019 onwards.
 
64

In addition, law 1,739 modified the income tax for equity “CREE” tax [1] from a rate of 8% to 9%, beginning since 2016 financial year. Additional 5%, 6%, 8% y 9% rates were established in a temporary way for the 2015, 2016, 2017 y 2018 financial years respectively.
 
[1] The CREE is 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.
 
d) Deferred taxes not recognized.
The Company has no unrecognized deferred taxes as of the date of these financial statements.
 
23 	Changes in accounting policies	
From September 2015, Company’s Management has decided to reassess its accounting policy regarding the classification in the income statement of the gains and losses related to the ineffective portion of the hedges. Consequently, given the nature and purpose of the derivative financial instruments designated as hedges (economical and those complying with IAS 39 guidance), as well as the nature of hedged items and the activities for which such financial instruments were contracted, the Company has concluded that the ineffective portion of the effects of measurement at fair value such derivative financial instruments should be recognized in the same line item of the income statement that those accounting effects of the related hedge items. Furthermore, the Company believes that the new classification of gains and losses derived from the ineffective portion of hedging derivatives and non-hedging derivatives will improve the financial information for its users as these will not affect operating profit and will provide more relevant and reliable information. The voluntary change in this accounting policy will be applied retrospectively for the whole periods that need to be revealed comparatively.
 
Accordingly, changes in the fair value of derivatives financial instruments arising from the ineffective portion of hedging interest rate risk should be recognized in the line item "finance expense" in accordance with the new accounting policy, and those effects arising from the change in fair value related to the ineffective portion of hedging the exchange rate risk are recognized in the line item "exchange differences". By applying this change, the effects are recognized separately and according to the hedged risk (exchange rates difference or interest expense), thus preventing these impacts are mixed with various other operational transactions that are presented in the caption "Other gains (losses)"
Previously, measurement effects at fair value related to the ineffective portion of designated hedges and other economic hedges, over financial instruments and derivative contracts were recognized under the caption "other gains and losses", including components with an evident financial nature and origin, within the operating profit..Except for the change in the accounting policy formerly mentioned, no other changes in accounting policies have been applied by the Company during 2015 and 2016.
 
23.1  Impacts of the change in the accounting policy
The voluntary change in this accounting policy was applied retrospectively for the whole periods that need to be revealed comparatively.
In detail, the change in accounting policy for the six months ended as of June 30, 2016, and 2015 is shown as follows:
 
Effects of the Change	 
For the six months ended 6/30/2016
 	 
For the six months ended 6/30/2015

Before
 change
 	 
Change
 effects
 	 
After
change
 	 
Before
 change
 	 
Change
 effects
 	 
After
change

ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	 
ThCh$
 	
Other losses 	 
 
51,714,412

-

51,714,412

(61,091,677
)	 
 
(4,984,579
)	 
 
(56,107,098
)	

 

 

 

 

 

 
 	
Operating profits	 
 
365,729,208

-

365,729,208

181,138,732

(4,984,579
)	 
 
186,123,311
 	
Finance expenses 	 
 
(129,973,397
)	 
 
-

(129,973,397
)	 
 
(116,460,409
)	 
 
2,012,836

(118,473,245
)	
Exchange differences 	 
 
44,613,633

-

44,613,633

(26,544,429
)	 
 
2,971,743

(29,516,172
)	

 

 

 

 

 

 
 	
Profit before tax	 
 
284,266,846

-

284,266,846

42,232,261

-

42,232,261
 	
Profit from continuing operations 	 
 
195,395,608

-

195,395,608

65,106,856

-

65,106,856
 	
Profit from discontinued operations	 
 
-

-

-

9,244,460

-

9,244,460
 	
Profit 	 
 
195,395,608

-

195,395,608

74,351,316

-

74,351,316

65
 
24                      Subsequent events
 
●	On July 11, 2016, the Board of Cencosud S.A. agreed that the Company will collaborate in the process of public sale of secondary shares to be made by the controlling shareholder, through Santiago Stock Exchange, and addressed to the national and international market, which was approved according to the regulations applicable to related party transactions.	
 
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.

 

66