Ambev S.A 6-K, filed May 18, 2022
Ambev S.A. (ABEV)
About this 6-K
Ambev S.A filed this 6-K on May 18, 2022.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of May, 2022
Commission File Number 1565025
AMBEV S.A.
(Exact name of registrant as specified in its charter)
AMBEV S.A.
(Translation of Registrant's name into English)
Rua Dr. Renato Paes de Barros, 1017 - 3rd
Floor
04530-000 São Paulo, SP
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
Ambev S.A.
Consolidated
interim financial statements at
March 31, 2022
and report on review
Report on review of consolidated
interim financial statements
To the Board of Directors and Shareholders
Ambev S.A.
Introduction
We have reviewed the accompanying consolidated interim balance sheet of Ambev S.A. and its subsidiaries ("Company") as at March 31, 2022 and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the quarter then ended, and notes, comprising significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these consolidated interim financial statements in accordance with the accounting standard International Accounting Standard (IAS) 34 - Interim Financial Reporting, of the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these interim financial statements based on our review.
Scope of review
We conducted our review in accordance with International Standards on Reviews of Interim Financial Information (ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial statements referred to above do not present fairly, in all material respects, the financial position of Ambev S.A. and its subsidiaries as at March 31, 2022, and the consolidated financial performance and cash flows for the quarter then ended, in accordance with IAS 34.
São Paulo, May 18, 2022
PricewaterhouseCoopers
Auditores Independentes Ltda.
CRC 2SP000160/O-5
Alessandro Marchesino de Oliveira
Contador CRC 1SP265450/O-8
AMBEV S.A. |
CONTENTS
| INTERIM CONSOLIDATED BALANCE SHEET | 2 |
| INTERIM CONSOLIDATED INCOME STATEMENT | 4 |
| INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 5 |
| INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | 6 |
| INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS | 8 |
| 1. CORPORATE INFORMATION | 9 |
| 2. STATEMENT OF COMPLIANCE | 11 |
| 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 |
| 4. USE OF ESTIMATES AND JUDGMENTS | 14 |
| 5. CASH AND CASH EQUIVALENTS | 15 |
| 6. INVESTMENT SECURITIES | 16 |
| 7. INVENTORY | 16 |
| 8. RECOVERABLE TAXES | 17 |
| 9. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION | 17 |
| 10. PROPERTY, PLANT AND EQUIPMENT | 20 |
| 11. GOODWILL | 23 |
| 12. TRADE PAYABLES | 24 |
| 13. INTEREST-BEARING LOANS AND BORROWINGS | 24 |
| 14. PROVISIONS | 25 |
| 15. CHANGES IN EQUITY | 28 |
| 16. SEGMENT REPORTING | 34 |
| 17. NET SALES | 37 |
| 18. OTHER OPERATING INCOME/(EXPENSES) | 37 |
| 19. EXCEPTIONAL ITEMS | 37 |
| 20. FINANCE EXPENSES AND INCOME | 38 |
| 21. INCOME TAX AND SOCIAL CONTRIBUTION | 38 |
| 22. SHARE-BASED PAYMENTS | 40 |
| 23. FINANCIAL INSTRUMENTS AND RISKS | 43 |
| 24. COLLATERAL AND CONTRACTUAL COMMITMENTS WITH SUPPLIERS, ADVANCES FROM CUSTOMERS AND OTHERS | 57 |
| 25. CONTINGENCIES | 58 |
| 26. RELATED PARTIES | 60 |
AMBEV S.A. |
INTERIM CONSOLIDATED BALANCE SHEET
All amounts in thousands of Brazilian Reais unless otherwise stated
| Assets | Note | 03/31/2022 | 12/31/2021 |
| Cash and cash equivalents | 5 | 12,887,922 | 16,627,698 |
| Investment securities | 6 | 1,345,730 | 1,914,607 |
| Derivative financial instruments | 23 | 624,271 | 597,392 |
| Trade receivable | 4,383,951 | 4,791,634 | |
| Inventories | 7 | 11,426,297 | 11,000,346 |
| Income tax and social contributions recoverable | 1,388,737 | 631,524 | |
| Recoverable taxes | 8 | 1,201,139 | 1,981,149 |
| Other assets | 1,221,750 | 1,082,791 | |
| Current assets | 34,479,797 | 38,627,141 | |
| Investment securities | 6 | 206,949 | 192,877 |
| Derivative financial instruments | 23 | 481 | 1,581 |
| Income tax and social contributions recoverable | 5,819,918 | 6,326,908 | |
| Recoverable taxes | 8 | 6,068,835 | 6,005,396 |
| Deferred tax assets | 9 | 4,090,340 | 4,727,749 |
| Other assets | 2,014,472 | 2,063,265 | |
| Employee benefits | 22,983 | 27,850 | |
| Investments in joint ventures | 276,299 | 305,180 | |
| Property, plant and equipment | 10 | 27,494,375 | 29,224,261 |
| Intangible | 7,732,029 | 8,689,015 | |
| Goodwill | 11 | 39,193,442 | 42,411,260 |
| Non-current assets | 92,920,123 | 99,975,342 | |
| Total assets | 127,399,920 | 138,602,483 |
The accompanying notes are an integral part of these interim consolidated financial statements.
AMBEV S.A. |
INTERIM CONSOLIDATED BALANCE SHEET (CONTINUED)
All amounts in thousands of Brazilian Reais unless otherwise stated
| Equity and liabilities | Note | 03/31/2022 | 12/31/2021 |
| Trade payables | 12 | 21,954,834 | 25,077,911 |
| Derivative financial instruments | 23 | 187,310 | 492,546 |
| Interest-bearing loans and borrowings | 13 | 815,861 | 847,118 |
| Bank overdrafts | 5 | 91,463 | 30,514 |
| Wages and salaries | 1,553,475 | 2,439,448 | |
| Dividends and interest on shareholders’ equity payable | 1,293,733 | 1,425,045 | |
| Income tax and social contribution payable | 1,200,766 | 1,491,037 | |
| Taxes and contributions payable | 3,839,341 | 4,585,923 | |
| Other liabilities | 2,059,293 | 2,304,546 | |
| Provisions | 14 | 183,070 | 172,318 |
| Current liabilities | 33,179,146 | 38,866,406 | |
| Trade payables | 12 | 558,414 | 617,056 |
| Interest-bearing loans and borrowings | 13 | 2,170,483 | 2,253,406 |
| Deferred tax liabilities | 9 | 2,940,481 | 3,213,967 |
| Income tax and social contribution payable | 1,659,555 | 1,686,925 | |
| Taxes and contributions payable | 693,750 | 704,160 | |
| Put option granted on subsidiaries and other liabilities | 2,695,807 | 3,445,223 | |
| Provisions | 14 | 581,498 | 603,772 |
| Employee benefits | 2,724,345 | 3,193,951 | |
| Non-current liabilities | 14,024,333 | 15,718,460 | |
| Total liabilities | 47,203,479 | 54,584,866 | |
| Equity | 15 | ||
| Issued capital | 58,130,517 | 58,042,464 | |
| Reserves | 86,345,820 | 86,378,828 | |
| Carrying value adjustments | (69,689,891) | (61,778,261) | |
| Retained earnings/(losses) | 4,136,652 | - | |
| Equity attributable to the equity holders of Ambev | 78,923,098 | 82,643,031 | |
| Non-controlling interests | 1,273,343 | 1,374,586 | |
| Total equity | 80,196,441 | 84,017,617 | |
| Total equity and liabilities | 127,399,920 | 138,602,483 |
The accompanying notes are an integral part of these interim consolidated financial statements.
AMBEV S.A. |
INTERIM CONSOLIDATED INCOME STATEMENT
For the period ended March 31
All amounts in thousands of Brazilian Reais unless otherwise stated
| Note | 2022 | 2021 | |
| Net sales | 17 | 18,439,152 | 16,639,761 |
| Cost of sales | (9,414,486) | (7,945,330) | |
| Gross profit | 9,024,666 | 8,694,431 | |
| Distribution expenses | (2,529,019) | (2,129,593) | |
| Sales and marketing expenses | (1,516,976) | (1,445,040) | |
| Administrative expenses | (1,173,436) | (1,234,059) | |
| Other operating income/(expenses), net | 18 | 386,722 | 177,940 |
| Exceptional items | 19 | (27,226) | (71,425) |
| Income from operations | 4,164,731 | 3,992,254 | |
| Finance expenses | 20 | (1,623,093) | (1,444,395) |
| Finance income | 20 | 1,026,380 | 380,095 |
| Net finance result | (596,713) | (1,064,300) | |
| Share of results of joint ventures | (2,404) | (12,546) | |
| Income before income tax | 3,565,614 | 2,915,408 | |
| Income tax expense | 21 | (36,776) | (182,097) |
| Net income | 3,528,838 | 2,733,311 | |
| Attributable to: | |||
| Equity holders of Ambev | 3,412,772 | 2,625,412 | |
| Non-controlling interest | 116,066 | 107,899 | |
| Basic earnings per share - common - R$ | 0.2168 | 0.1668 | |
| Diluted earnings per share - common - R$ | 0.2153 | 0.1654 |
The accompanying notes are an integral part of these interim consolidated financial statements.
AMBEV S.A. |
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended March 31
All amounts in thousands of Brazilian Reais unless otherwise stated
| 2022 | 2021 | |
| Net income | 3,528,838 | 2,733,311 |
| Items that may be subsequently reclassified to profit or loss: | ||
| Exchange differences on the translation of foreign operations (gains/(losses)) | ||
| Investment hedge - put option granted on subsidiaries | 311,179 | (163,002) |
| Gains/losses on translation of other foreign operations | (7,309,774) | 4,687,468 |
| Gains/losses on translation of foreign operations | (6,998,595) | 4,524,466 |
| Cash flow hedge - gains/(losses) | ||
| Recognized in Equity (Hedge reserve) | (685,748) | 1,048,776 |
| Reclassified from Equity (Hedge reserve) and included in profit or loss | (429,423) | (391,456) |
| Total cash flow hedge | (1,115,171) | 657,320 |
| Items that will not be reclassified to profit or loss: | ||
| Recognition of actuarial gains/(losses) | 1,226 | (56,151) |
| Other comprehensive (loss)/income | (8,112,540) | 5,125,635 |
| Total comprehensive income | (4,583,702) | 7,858,946 |
| Attributable to: | ||
| Equity holders of Ambev | (4,496,599) | 7,565,774 |
| Non-controlling interest | (87,103) | 293,172 |
The accompanying notes are an integral part of these interim consolidated financial statements. The consolidated statement of comprehensive income is presented net of income tax. The income tax effects of these items are disclosed in Note 9 - Deferred income tax and social contribution.
AMBEV S.A. |
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended March 31
All amounts in thousands of Brazilian Reais unless otherwise stated
| Attributable to equity holders of Ambev | |||||||||
| Capital | Capital reserves | Net income reserves | Retained earnings | Carrying value adjustments | Total | Non-controlling interests | Total equity | ||
| At January 1, 2021 | 57,899,073 | 54,985,511 | 25,920,061 | - | (64,989,017) | 73,815,628 | 1,335,496 | 75,151,124 | |
| Net Income | - | - | - | 2,625,412 | - | 2,625,412 | 107,899 | 2,733,311 | |
| Comprehensive income: | |||||||||
| Gains/(losses) on the translation of foreign operations | - | - | - | 4,340,712 | 4,340,712 | 183,754 | 4,524,466 | ||
| Cash flow hedges | - | - | - | 655,880 | 655,880 | 1,440 | 657,320 | ||
| Actuarial gains/(losses) | - | - | - | (56,230) | (56,230) | 79 | (56,151) | ||
| Total comprehensive income | - | - | - | 2,625,412 | 4,940,362 | 7,565,774 | 293,172 | 7,858,946 | |
| Capital increase (Note 15) | 74,801 | (74,333) | - | - | - | 468 | - | 468 | |
| Effect of application of IAS 29 (hyperinflation) | - | - | - | 595,293 | - | 595,293 | (1,236) | 594,057 | |
| Gains/(losses) of controlling interest | - | - | - | - | 382 | 382 | - | 382 | |
| Dividends paid | - | - | - | - | - | - | (41,160) | (41,160) | |
| Purchases of shares and results from treasury shares | - | (32,061) | - | - | - | (32,061) | - | (32,061) | |
| Share-based payments | - | 98,639 | - | - | - | 98,639 | - | 98,639 | |
| At March 31, 2021 | 57,973,874 | 54,977,756 | 25,920,061 | 3,220,705 | (60,048,273) | 82,044,123 | 1,586,272 | 83,630,395 | |
The accompanying notes are an integral part of these interim consolidated financial statements.
AMBEV S.A. |
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended March 31
All amounts in thousands of Brazilian Reais unless otherwise stated
| Attributable to equity holders of Ambev | |||||||||
| Capital | Capital reserves | Net income reserves | Retained earnings | Carrying value adjustments | Total | Non-controlling interests | Total equity | ||
| At January 1, 2022 | 58,042,464 | 55,187,188 | 31,191,640 | - | (61,778,261) | 82,643,031 | 1,374,586 | 84,017,617 | |
| Net Income | - | - | - | 3,412,772 | - | 3,412,772 | 116,066 | 3,528,838 | |
| Comprehensive income: | |||||||||
| Gains/(losses) on the translation of foreign operations | - | - | - | - | (6,793,284) | (6,793,284) | (205,311) | (6,998,595) | |
| Cash flow hedges | - | - | - | - | (1,117,137) | (1,117,137) | 1,966 | (1,115,171) | |
| Actuarial gains/(losses) | - | - | - | - | 1,050 | 1,050 | 176 | 1,226 | |
| Total comprehensive income | - | - | - | 3,412,772 | (7,909,371) | (4,496,599) | (87,103) | (4,583,702) | |
| Capital increase (Note 15) | 88,053 | (64,289) | - | - | - | 23,764 | - | 23,764 | |
| Effect of application of IAS 29 (hyperinflation) | - | - | - | 723,880 | - | 723,880 | 2,081 | 725,961 | |
| Gains/(losses) of controlling interest | - | - | - | - | (2,259) | (2,259) | (110) | (2,369) | |
| Dividends paid | - | - | - | - | - | - | (16,111) | (16,111) | |
| Purchases of shares and results from treasury shares | - | 6,540 | - | - | - | 6,540 | - | 6,540 | |
| Share-based payments | - | 24,741 | - | - | - | 24,741 | - | 24,741 | |
| At March 31, 2022 | 58,130,517 | 55,154,180 | 31,191,640 | 4,136,652 | (69,689,891) | 78,923,098 | 1,273,343 | 80,196,441 | |
The accompanying notes are an integral part of these interim consolidated financial statements.
AMBEV S.A. |
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended March 31
All amounts in thousands of Brazilian Reais unless otherwise stated
| Note | 2022 | 2021 | |
| Net income | 3,528,838 | 2,733,311 | |
| Depreciation, amortization and impairment | 1,330,963 | 1,263,530 | |
| Impairment losses on receivables and inventory | 72,104 | 27,251 | |
| Additions/(reversals) in provisions and employee benefits | 10,438 | 26,237 | |
| Net finance costs | 20 | 596,713 | 1,064,300 |
| Losses/(gains) on sale of property, plant and equipment and intangible assets | (33,423) | (27,848) | |
| Equity-settled share-based payment expenses | 22 | 77,929 | 105,142 |
| Income tax expense | 21 | 36,776 | 182,097 |
| Share of result of joint ventures | 2,404 | 12,546 | |
| Other non-cash items included in profit | (370,609) | (427,211) | |
| Cash flow from operating activities before changes in working capital and use of provisions | 5,252,133 | 4,959,355 | |
| (Increase)/decrease in trade and other receivables | 857,142 | 1,464,781 | |
| (Increase)/decrease in inventories | (1,252,106) | (1,722,216) | |
| Increase/(decrease) in trade and other payables | (2,637,607) | (523,867) | |
| Cash generated from operations | 2,219,562 | 4,178,053 | |
| Interest paid | (76,241) | (56,234) | |
| Interest received | 119,532 | 54,250 | |
| Dividends received | 2,098 | 2,740 | |
| Income tax paid | (1,745,195) | (1,341,951) | |
| Cash flow from operating activities | 519,756 | 2,836,858 | |
| Proceeds from sales of property, plant and equipment and intangible assets | 37,271 | 39,744 | |
| Proceeds from sales of subsidiaries' operations | - | 382 | |
| Acquisitions of property, plant and equipment and intangible assets | (888,537) | (1,327,335) | |
| Acquisitions of subsidiaries, net of cash acquired | (2,376) | (89,036) | |
| Acquisitions of other investments | - | (2,645) | |
| Investments in short-term debt securities and net proceeds/(acquisitions) of debt securities | 546,444 | (349,075) | |
| Net proceeds/(acquisitions) of other assets | - | 5,044 | |
| Cash flow from investing activities | (307,198) | (1,722,921) | |
| Capital increase | 23,764 | 468 | |
| Proceeds/(repurchases) of treasury shares | (7,791) | (38,426) | |
| Proceeds from borrowings | 58,976 | 107,120 | |
| Repayment of borrowings | (46,359) | (434,663) | |
| Cash net of finance costs other than interests | (2,560,803) | 54,697 | |
| Payment of lease liabilities | (165,401) | (225,837) | |
| Dividends and interest on shareholders' equity paid | (22,006) | (1,241,110) | |
| Cash flow from financing activities | (2,719,620) | (1,777,751) | |
| Net increase/(decrease) in cash and cash equivalents | (2,507,062) | (663,814) | |
| Cash and cash equivalents less bank overdrafts at the beginning of the year | 16,597,184 | 17,090,335 | |
| Effect of exchange rate fluctuations on cash and cash equivalents | (1,293,663) | 859,547 | |
| Cash and cash equivalents less bank overdrafts at the end of the year | 12,796,459 | 17,286,068 |
The accompanying notes are an integral part of these interim consolidated financial statements.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 1. | CORPORATE INFORMATION |
| (a) | Description of business |
Ambev S.A. (referred to as the “Company” or “Ambev”) together with its subsidiaries (the “Group” or “Consolidated”), headquartered in São Paulo - SP, Brazil, has as its purpose, either directly or through participation in other companies, the production and sale of beer, draft beer, soft drinks, other non-alcoholic beverages, malt and food in general, as well as the advertising of its own and of third-party products; the sale of promotional and advertising materials; and the direct or indirect exploitation of bars, restaurants, snack bars and similar establishments, among others.
The Company’s shares and American Depositary Receipts (“ADRs”) are listed on the Brasil, Bolsa, Balcão S.A. (“B3”) under the ticker “ABEV3” and on the New York Stock Exchange (“NYSE”) under the ticker “ABEV”, respectively.
The Company’s direct controlling shareholders are Interbrew International B.V. (“ITW International”), AmBrew S.à.r.l (“Ambrew”), both of which are subsidiaries of Anheuser-Busch InBev N.V. (“AB InBev”), and Fundação Antonio e Helena Zerrenner Instituição Nacional de Beneficência (“Fundação Zerrenner”).
The interim financial statements were approved, in their final form, by the Board of Directors on May 04, 2022.
| (b) | Risks of climate change and the sustainability strategy |
Considering the nature of the Company’s operations, there is an inherent exposure to certain risks related to climate change.
There was no significant change in the main risks considered by management related to those stated in the annual financial statements as of December 31, 2021.
| (c) | Major corporate events in 2022 and 2021 |
COVID-19 impacts
The outbreak of the novel coronavirus (SARS-CoV-2 or “COVID-19”) on a global scale has increased the volatility of the national and international markets, affecting the economies of the countries in which we operate and, consequently, the results of our operations. The response to the COVID-19 pandemic has evolved rapidly across the globe in a fluid and uncertain manner, including voluntary and, in some cases, mandatory quarantines, restrictions on travel, commercial and social activities, and ban on the distribution, sale and consumption of alcoholic beverages in some countries where we operate. Many of these measures have directly affected our sales, distribution and final consumer demand for our products.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The impact of the pandemic on our operations and the restrictions imposed in response by national governments, especially since March 2020, have generated significant changes in market dynamics both in the off-trade sales channel, composed of supermarkets, and in the on-trade channel, which is composed of bars and restaurants. In countries with higher levels of income, more mature beer markets and a greater weighting towards the off-trade sales channel, such as Canada, the negative impact on the sales volume has been smaller. On the other hand, in countries with lower income levels and less mature beer markets, volume has been impacted according to the market segmentation between the on-trade and off-trade channels. In those cases, the reduction in volume is higher depending on the weighting of the on-trade channel. In all the cases, the more severe the restrictions on the sale and consumption of our products, the greater the reduction in volume, which is why Bolivia and Panama were among the worst-affected countries. On the other hand, we observed an increase in sales related to e-commerce in all countries, although this channel represents a small portion of the Company’s total volume.
In the beginning of the first quarter, our operations, especially in Brazil, were impacted by the wave of the COVID-19 variant Omicron which added to factors such as unfavorable climate, negatively impacted our sales. Through the remaining period, the consistency in the implementation of the Company’s strategy and the relaxation of restrictions in some regions, we observed a gradual increase in volumes across most of our operations, especially in Brazil, where there was a volume and net revenue increase related to the same period in 2021, mainly in March. However, there is still some uncertainty regarding the likelihood of new variants and likelihood of further government interventions or increase in restrictions, as well as the economic effects on financial markets and exchange rates. Those impacts may result in material adverse impacts on our business, liquidity, financial condition, and the outcome of operations. However, we are continuing to manage our liquidity and capital resources in a disciplined manner. Management have concluded that there are no substantial doubts regarding the Company’s ability to continue as a going concern.
As required by International Accounting Standard (“IAS”) 1 - Presentation of Financial Statements, the Company updated the analysis of the impact of COVID-19, as at March 31, 2022, which mainly involved, (i) a review of the assumptions of the annual impairment test, as described in Note 11 - Goodwill, (ii) an analysis of possible credit losses and inventory obsolescence, (iii) an analysis of the recoverability of deferred taxes, and (iv) the evaluation of the relevant estimates used for the preparation of the interim financial statements, among other analyses.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Any impacts arising from these analyses are reflected in the interim financial statements and disclosed in explanatory notes. In addition, due to the protective actions taken for our staff and the donations made by our community, the Company incurred exceptional expenses of R$10,668, at March 31, 2022, as reported in Note 19 - Exceptional items.
Share buyback program
The Board of Directors, in a meeting held on March 18, 2021, approved, pursuant to article 30, Paragraph 1st, “b”, of Law 6,404/76 and Brazilian Securities and Exchange Commission (“CVM”) Instruction 567/15, a share buyback program of shares issued by the Company (“Program”) up to the limit of 5,700,000 common shares, with the primary purpose of covering any share delivery requirements contemplated in the Company’s share-based compensation plans or to be held in treasury, canceled and/or subsequently transferred. The Program will be in effect until September 18, 2022, as detailed in the Notice Regarding the Negotiation of Shares Issued by the Company, together with other information, in the form of Exhibit 30-XXXVI of CVM Instruction No. 480/09 as disclosed at March 18, 2021. The Company has 4,357,308,131 outstanding shares as defined in CVM Instruction 567/15. The acquisition was carried out in 2021, within the scope of the Program, as per a deduction of the capital reserve account recorded in the balance sheet dated as at December 31, 2020. The transaction was carried out, in 2021, through the following financial institutions: UBS Brasil Corretora de Câmbio, Títulos e Valores Mobiliários S.A. and Itaú Corretora de Valores S.A.
| 2. | STATEMENT OF COMPLIANCE |
The consolidated interim financial statements have been prepared using the going-concern accounting basis and are being presented in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).
The information does not meet all disclosure requirements for the presentation of full annual financial statements and thus should be read in conjunction with the consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) for the year ended December 31, 2021. To avoid duplication of disclosures which are included in the annual financial statements, the following notes were not subject to full filling:
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| (a) | Summary of significant accounting policies (Note 3); |
| (b) | Trade receivables (Note 20); |
| (c) | Investment securities (Note 16); |
| (d) | Intangibles (Note 15); |
| (e) | Goodwill (Note 14); |
| (f) | Interest-bearing loans and borrowings (Note 23); |
| (g) | Employee benefits (Note 24); |
| (h) | Changes in equity (Note 22); |
| (i) | Additional information on operating expenses by nature (Note 10); |
| (j) | Payroll and related benefits (Note 09); |
| (k) | Contingencies (Note 30); |
| (l) | Group companies (Note 33); and |
| (m) | Insurance (Note 34). |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There were no significant changes in the accounting policies and calculation methods used for the interim financial statements as at March 31, 2022 compared to those presented in the financial statements for the years ended December 31, 2021.
| (a) | Basis of preparation and measurement |
The interim financial statements are presented in thousands of Brazilian Reais (“R$”), unless otherwise indicated, rounded to the nearest thousand. The measurement basis used in preparing the interim financial statements is the historical cost, net realizable value, fair value or recoverable amount.
| (b) | Recently issued IFRS |
There were no new standards for the period ended March 31, 2022 for the preparation of these interim financial statements.
Other Standards, Interpretations and Amendments to Standards
There are no other Standards, Interpretations and/or Amendments to Standards that are not in force and that the Company expects to have a material impact resulting from their application in the interim consolidated financial statements on the entity in the current or future reporting periods, or on foreseeable future transactions.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| (c) | Foreign currency conversion |
Exchange rates
The main exchange rates used in the preparation of the Company’s interim financial statements are as follows:
| Closing rate | Average rate | ||||||
| Currency | Name | Country | 03/31/2022 | 12/31/2021 | 03/31/2022 | 03/31/2021 | |
| CAD | Canadian Dollar | Canada | 3.7848 | 4.3914 | 4.2043 | 4.2960 | |
| DOP | Dominican Peso | Dominican Republic | 0.0859 | 0.0970 | 0.0944 | 0.0938 | |
| USD | US Dollar | Panamá and Cuba (i) | 4.7378 | 5.5805 | 5.3549 | 5.3687 | |
| GTQ | Quetzal | Guatemala | 0.6182 | 0.7201 | 0.6915 | 0.6954 | |
| ARS | Argentinean Peso | Argentina | 0.0427 | 0.0543 | 0.0511 | 0.0568 | |
| BOB | Bolivian Peso | Bolivia | 0.6807 | 0.8018 | 0.7694 | 0.7714 | |
| PYG | Guarani | Paraguay | 0.0007 | 0.0008 | 0.0008 | 0.0008 | |
| UYU | Uruguayan Peso | Uruguay | 0.1152 | 0.1249 | 0.1224 | 0.1236 | |
| CLP | Chilean Peso | Chile | 0.0060 | 0.0066 | 0.0065 | 0.0071 | |
| BBD | Barbadian Dollar | Barbados | 2.3355 | 2.7510 | 2.6397 | 2.6465 | |
(i) The functional currency of Cuba has parity with the US dollar (“USD”) on the financial statement date.
| 4. | USE OF ESTIMATES AND JUDGMENTS |
The preparation of interim financial statements in compliance with IFRS requires Management to make use of judgments, estimates and assumptions that affect the application of accounting practices and the reported amounts of assets and liabilities, income and expenses. The estimates and assumptions are based on past experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for decision-making regarding judgments regarding the carrying amounts of assets and liabilities that are not readily evident from other sources. The actual results may differ from these estimates.
The estimates and assumptions are reviewed on a regular basis. Changes in accounting estimates may affect the period during which they are realized, or future periods.
Although each significant accounting policy reflects judgments, assessments or estimates, the Company believes that the following accounting practices reflect the most critical judgments, estimates and assumptions that are important to its business operations and the understanding of its results:
(i) Predecessor basis of accounting;
(ii) Business combinations;
(iii) Impairment;
(iv) Provisions, including tax contingencies;
(v) Share-based payments;
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
(vi) Employee benefits;
(vii) Current and deferred tax;
(viii) Joint arrangements;
(ix) Measurement of financial instruments, including derivatives;
(x) Assets and liabilities recognition related to extemporaneous tax credits and debits;
(xi) Accounting and financial reporting in hyperinflationary economies; and
(xii) Leases.
The fair values of acquired identifiable intangibles with indefinite useful lives are based on an assessment of future cash flow. Impairment analyses of goodwill and intangible assets with indefinite useful lives are performed at least annually, or whenever a triggering event occurs, to determine whether the carrying value exceeds the recoverable amount.
The Company uses its judgment to choose between a variety of methods including the net fair value of expenses approach and option valuation models and makes assumptions about the fair value of financial instruments mainly based on the market conditions at each balance sheet date.
Actuarial assumptions regarding future events are used for the calculation of projected pension and other long-term employee benefit expenses and liabilities. These factors include assumptions regarding interest rates, rates of increase in healthcare costs, rates of future compensation increases, turnover rates, and life expectancy. Such estimates are reviewed annually by independent actuaries.
The Company is subject to income tax in numerous jurisdictions. Significant judgment is required to determine the Company’s worldwide provision for income tax. There are some transactions and calculations for which the ultimate tax determination is uncertain. Some of the subsidiaries of the Company are involved in tax audits, usually in relation to prior years. These audits are ongoing in various jurisdictions as at the balance sheet date, and by their nature, can take a considerable time to complete.
To measure the amounts of extemporaneous tax
credits arising from lawsuits, the Company evaluates the documents for the period covered by the lawsuit, and applies the guidelines for
the final decision, applicable legislation or other elements that enable the amount to be estimated with sufficient reliability.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
5. CASH AND CASH EQUIVALENTS
| 03/31/2022 | 12/31/2021 | |
| Cash | 259,819 | 651,160 |
| Current bank accounts | 4,818,822 | 4,582,937 |
| Short-term bank deposits (i) | 7,809,281 | 11,393,601 |
| Cash and cash equivalents | 12,887,922 | 16,627,698 |
| Bank overdrafts | (91,463) | (30,514) |
| Cash and cash equivalents less bank overdraft | 12,796,459 | 16,597,184 |
(i) The balance refers mostly to Bank Deposit Certificates (“CDBs”), of high liquidity, which are readily convertible into known amounts of cash and which are subject to an insignificant risk of change in value.
The cash and cash equivalents balance include the amount of R$1,022 million as at March 31, 2022 (R$975 million in 2021) held in Cuba and Argentina, which is not freely transferable to the parent company due to remittance restrictions.
6. INVESTMENT SECURITIES
| 03/31/2022 | 12/31/2021 | |
| Financial assets at fair value through profit or loss | 1,345,730 | 1,914,607 |
| Current investment securities | 1,345,730 | 1,914,607 |
| Investment on debt securities (i) | 206,949 | 192,877 |
| Non-current investment securities | 206,949 | 192,877 |
| Total | 1,552,679 | 2,107,484 |
(i) The balance refers substantially to Bank Deposit Certificates (“CDBs”) which are linked to tax incentives and do not have immediate convertibility into a known amount of cash.
7. INVENTORY
| 03/31/2022 | 12/31/2021 | |
| Finished goods | 3,921,562 | 3,626,651 |
| Work in progress | 796,218 | 672,542 |
| Raw materials and consumables | 5,429,155 | 5,306,223 |
| Spare parts and others | 865,139 | 906,805 |
| Prepayments | 533,432 | 645,899 |
| Impairment losses | (119,209) | (157,774) |
| 11,426,297 | 11,000,346 |
The changes in impairment losses on inventory are as follows:
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| At December 31, 2020 | (141,148) |
| Effects of movements in foreign exchange in the balance sheet | (2,015) |
| Provisions | (191,575) |
| Write-off | 176,964 |
| At December 31, 2021 | (157,774) |
| Effects of movements in foreign exchange in the balance sheet | 16,553 |
| Provisions | (53,740) |
| Write-off | 75,752 |
| At March 31, 2022 | (119,209) |
8.
RECOVERABLE TAXES
| 03/31/2022 | 12/31/2021 | |
| PIS/COFINS exclusion of ICMS (i) | 28,627 | 516,982 |
| PIS/COFINS | 367,969 | 648,587 |
| ICMS | 585,466 | 565,551 |
| IPI | 168,128 | 168,584 |
| Other | 50,949 | 81,445 |
| Current | 1,201,139 | 1,981,149 |
| PIS/COFINS exclusion of ICMS (i) | 5,438,874 | 5,360,021 |
| ICMS | 377,030 | 383,617 |
| Other | 252,931 | 261,758 |
| Non-current | 6,068,835 | 6,005,396 |
| Total | 7,269,974 | 7,986,545 |
(i) As detailed in Note 25 - Contingencies, the Company recognized PIS and COFINS credits arising from the exclusion of ICMS from the calculation basis. The corresponding entry for recognition is recorded in the item Recoverable PIS/COFINS - exclusion of ICMS, according to the table above.
| 9. | DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION |
Deferred taxes for income tax and social contribution taxes are calculated on temporary differences between the tax bases of these taxes and the accounting calculations of the Company, which include tax losses. The tax rates in Brazil, which are expected to be applicable upon the realization of the deferred taxes, are 25% for income tax and 9% for social contribution. For other regions in which the Company operates, the expected nominal rates are as follow:
| Central America and the Caribbean | from 15% to 27% |
| Latin America - South (i) | from 10% to 35% |
| Canada | 26.5% |
(i) Amendments to Argentine tax legislation enacted in June, 2021 and applicable from January, 2021 increased the income tax rate from 30% to 35%.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Deferred tax assets are recognized to the extent that it is probable that future taxable profits are probable, which may be offset against recorded temporary differences at March 31, 2022.
The amount of deferred income tax and social contribution by type of temporary difference is detailed as follows:
| 03/31/2022 | 12/31/2021 | ||||||
| Assets | Liabilities | Net | Assets | Liabilities | Net | ||
| Investment securities | 11,958 | (3,404) | 8,554 | 12,535 | (2,451) | 10,084 | |
| Intangible | - | (1,448,244) | (1,448,244) | - | (1,634,450) | (1,634,450) | |
| Employee benefits | 907,412 | (606) | 906,806 | 1,278,221 | (1,953) | 1,276,268 | |
| Trade payables | 3,056,758 | (2,052) | 3,054,706 | 4,113,285 | (1,104) | 4,112,181 | |
| Trade receivable | 53,047 | - | 53,047 | 50,583 | - | 50,583 | |
| Derivatives | 177,087 | (111,538) | 65,549 | 232,159 | (72,381) | 159,778 | |
| Interest-bearing loans and borrowings | - | (1,294) | (1,294) | - | (1,646) | (1,646) | |
| Inventories | 273,478 | (78,691) | 194,787 | 328,187 | (49,136) | 279,051 | |
| Property, plant and equipment | 586,559 | (1,869,208) | (1,282,649) | 645,372 | (2,026,973) | (1,381,601) | |
| Withholding tax on undistributed profits and royalties | 87,625 | (1,514,132) | (1,426,507) | - | (2,079,452) | (2,079,452) | |
| Investments in joint ventures | - | (421,589) | (421,589) | - | (421,589) | (421,589) | |
| Interest on shareholders' equity | 746,607 | - | 746,607 | - | - | - | |
| Losses carried forward | 1,302,966 | - | 1,302,966 | 1,298,807 | - | 1,298,807 | |
| Provisions | 645,565 | (3,726) | 641,839 | 696,879 | (217) | 696,662 | |
| Complement of income tax of foreign subsidiaries due in Brazil | - | (7,090) | (7,090) | - | - | - | |
| Impact of the adoption of IFRS 16 (Leases) | 70,760 | (391) | 70,369 | 78,610 | (343) | 78,267 | |
| ICMS on the assessment bases of PIS/COFINS | - | (1,019,595) | (1,019,595) | - | (1,019,608) | (1,019,608) | |
| Other items | 100,833 | (389,236) | (288,403) | 110,417 | (19,970) | 90,447 | |
| Gross deferred tax assets/(liabilities) | 8,020,655 | (6,870,796) | 1,149,859 | 8,845,055 | (7,331,273) | 1,513,782 | |
| Netting by taxable entity | (3,930,315) | 3,930,315 | - | (4,117,306) | 4,117,306 | - | |
| Net deferred tax assets/(liabilities) | 4,090,340 | (2,940,481) | 1,149,859 | 4,727,749 | (3,213,967) | 1,513,782 | |
The Company only reclassifies the balances of deferred income tax and social contribution assets against liabilities to a net presentation basis when the applicable compensation criteria are met.
The critical estimates of Ambev’s Management, as well the main contingencies related to uncertainty about the tax treatment of income, are disclosed in Notes 4 (i) and 25, respectively.
As at March 31, 2022 the deferred tax assets
and liabilities related to combined tax losses which are expected to be utilized or settled using temporary differences, as follows:
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 03/31/2022 | |||
| Deferred taxes not related to tax losses | to be realized until 12 months | to be realized after 12 months | Total |
| Investment securities | - | 8,554 | 8,554 |
| Intangible | (1,281) | (1,446,963) | (1,448,244) |
| Employee benefits | 83,922 | 822,884 | 906,806 |
| Trade payables | (208,888) | 3,263,594 | 3,054,706 |
| Trade receivable | 42,112 | 10,935 | 53,047 |
| Derivatives | (178,555) | 244,104 | 65,549 |
| Interest-bearing loans and borrowings | (1,294) | - | (1,294) |
| Inventories | 230,842 | (36,055) | 194,787 |
| Property, plant and equipment | 9,063 | (1,291,712) | (1,282,649) |
| Withholding tax on undistributed profits and royalties | (91,403) | (1,335,104) | (1,426,507) |
| Investments in joint ventures | - | (421,589) | (421,589) |
| Interest on shareholders' equity | 746,607 | - | 746,607 |
| Provisions | 327,281 | 314,558 | 641,839 |
| Complement of income tax of foreign subsidiaries due in Brazil | (7,090) | - | (7,090) |
| Impact of the adoption of IFRS 16 (Leases) | 45 | 70,324 | 70,369 |
| ICMS on the assessment bases of PIS/COFINS | - | (1,019,595) | (1,019,595) |
| Other items | 90,221 | (378,624) | (288,403) |
| Total | 1,041,582 | (1,194,689) | (153,107) |
The majority of tax losses and negative social contribution bases on which deferred income tax and social contribution were calculated do not have a statute of limitations. The use of credits related to tax losses is based on the projected future existence of taxable profits, limited to 30% of taxable income for the year, according to the actual figures for prior years, and the projections of the Company’s business in the economies in which it is located, and thus is in compliance with the applicable fiscal and accounting rules.
| Deferred tax related to tax losses | 03/31/2022 |
| 2022 | 178,700 |
| 2023 | 223,234 |
| 2024 | 111,433 |
| 2025 | 230,320 |
| 2026 to 2028 | 119,613 |
| 2029 to 2030 | 383,719 |
| 2030 to 2031 (i) | 55,947 |
| Total | 1,302,966 |
(i) There is no expectation of realization beyond a term of ten years.
As at March 31, 2022, the tax credits related to tax losses in the amount of R$898,482 (R$1,055,557 in 2021) were not recorded, as realization is not probable.
A significant portion of the deferred tax assets related to the tax losses amount do not have any limits on carrying forward or utilization, and the tax losses carried forward in relation to credit are equivalent to R$3,488,396 at March 31, 2022 (R$4,122,454 in December 31, 2021).
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The net change in deferred income tax and social contribution is detailed as follows:
| At December 31, 2021 | 1,513,782 |
| Recognition of actuarial gains/(losses) | 23 |
| Investment hedge - put option granted on subsidiaries | (160,304) |
| Cash flow hedge - gains/(losses) | 359,257 |
| Gains/(losses) on translation of other foreign operations | (652,776) |
| Recognized in other comprehensive income | (453,800) |
| Recognized in the income statement | 225,600 |
| Changes directly in the balance sheet | (135,723) |
| Recognized in deferred tax | (136,741) |
| Effect of application of IAS 29 (hyperinflation) | (136,741) |
| Recognized in other balance sheet group | 1,018 |
| At March 31, 2022 | 1,149,859 |
10. PROPERTY, PLANT AND EQUIPMENT
| 03/31/2022 | 12/31/2021 | |
| Property, plant and equipment | 25,003,039 | 26,664,070 |
| Right of use assets | 2,491,336 | 2,560,191 |
| 27,494,375 | 29,224,261 |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| Land and buildings | Plant and equipment | Fixtures and fittings | Under construction | Total | |
| Acquisition cost | |||||
| At December 31, 2020 | 12,385,108 | 34,037,311 | 7,219,152 | 2,830,543 | 56,472,114 |
| Effects of movements in foreign exchange in the balance sheet | 54,109 | 128,963 | 4,295 | 6,031 | 193,398 |
| Effects of application of IAS 29 (hyperinflation) | 544,167 | 1,170,073 | 216,392 | 148,722 | 2,079,354 |
| Acquisition through business combinations | 859 | 8,558 | 549 | 1,134 | 11,100 |
| Acquisitions | 11,291 | 960,138 | 45,213 | 6,294,391 | 7,311,033 |
| Disposals and write-offs | (117,681) | (1,238,356) | (360,415) | (3,382) | (1,719,834) |
| Transfers to other asset categories | 662,036 | 2,402,864 | 401,544 | (3,872,918) | (406,474) |
| At December 31, 2021 | 13,539,889 | 37,469,551 | 7,526,730 | 5,404,521 | 63,940,691 |
| Effects of movements in foreign exchange in the balance sheet | (900,575) | (2,685,177) | (657,301) | (277,280) | (4,520,333) |
| Effects of application of IAS 29 (hyperinflation) | 204,084 | 655,859 | 171,261 | 49,850 | 1,081,054 |
| Acquisitions | 113 | 200,146 | 7,619 | 661,713 | 869,591 |
| Disposals and write-offs | (27) | (204,784) | (139,967) | - | (344,778) |
| Transfers to other asset categories | 230,780 | 742,389 | 112,038 | (1,130,560) | (45,353) |
| At March 31, 2022 | 13,074,264 | 36,177,984 | 7,020,380 | 4,708,244 | 60,980,872 |
| Land and buildings | Plant and equipment | Fixtures and fittings | Under construction | Total | |
| Depreciation | |||||
| At December 31, 2020 | (3,993,438) | (23,830,425) | (5,795,390) | - | (33,619,253) |
| Effects of movements in foreign exchange in the balance sheet | (39,654) | (52,366) | 10,586 | - | (81,434) |
| Effects of application of IAS 29 (hyperinflation) | (94,101) | (557,581) | (146,594) | - | (798,276) |
| Acquisition through business combinations | (258) | (1,065) | (196) | - | (1,519) |
| Depreciation | (398,116) | (3,098,465) | (634,431) | - | (4,131,012) |
| Disposals and write-offs | 46,584 | 1,222,553 | 320,579 | - | 1,589,716 |
| Transfers to other asset categories | 36,617 | 1,303 | 5,398 | - | 43,318 |
| Others | (7,115) | (268,996) | (2,050) | - | (278,161) |
| At December 31, 2021 | (4,449,481) | (26,585,042) | (6,242,098) | - | (37,276,621) |
| Effects of movements in foreign exchange in the balance sheet | 221,891 | 1,842,155 | 561,842 | - | 2,625,888 |
| Effects of application of IAS 29 (hyperinflation) | (37,874) | (430,529) | (154,127) | - | (622,530) |
| Depreciation | (102,701) | (760,228) | (145,553) | - | (1,008,482) |
| Disposals and write-offs | - | 207,921 | 132,389 | - | 340,310 |
| Transfers to other asset categories | 9,350 | 11,975 | 1,175 | - | 22,500 |
| Others | 223 | (59,121) | - | - | (58,898) |
| At March 31, 2022 | (4,358,592) | (25,772,869) | (5,846,372) | - | (35,977,833) |
| Carrying amount: | |||||
| At December 31, 2021 | 9,090,408 | 10,884,509 | 1,284,632 | 5,404,521 | 26,664,070 |
| At March 31, 2022 | 8,715,672 | 10,405,115 | 1,174,008 | 4,708,244 | 25,003,039 |
The balances of fixed assets provided as security are not material.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Right-of-use assets:
| Buildings | Machinery, equipment and vehicles | Others | Total | |
| Acquisition cost | ||||
| At December 31, 2020 | 1,791,518 | 1,905,890 | 175,541 | 3,872,949 |
| Effects of movements in foreign exchange in the balance sheet | 51,838 | 6,659 | 3,556 | 62,053 |
| Additions | 803,868 | 1,419,365 | 61,411 | 2,284,644 |
| Write-offs | (312,351) | (1,327,771) | (122,748) | (1,762,870) |
| Transfers from (to) other asset categories | (27,692) | 19,747 | (6,055) | (14,000) |
| At December 31, 2021 | 2,307,181 | 2,023,890 | 111,705 | 4,442,776 |
| Effects of movements in foreign exchange in the balance sheet | (135,053) | (16,728) | (7,119) | (158,900) |
| Additions | 83,690 | 170,656 | 5,290 | 259,636 |
| Write-offs | (392) | (82,670) | - | (83,062) |
| Transfers from (to) other asset categories | (25,384) | 17,152 | (336) | (8,568) |
| At March 31, 2022 | 2,230,042 | 2,112,300 | 109,540 | 4,451,882 |
| Buildings | Machinery, equipment and vehicles | Others | Total | |
| Depreciation | ||||
| At December 31, 2020 | (812,874) | (1,017,907) | (126,674) | (1,957,455) |
| Effects of movements in foreign exchange in the balance sheet | (19,328) | (2,840) | (2,265) | (24,433) |
| Depreciation | (476,324) | (497,286) | (50,782) | (1,024,392) |
| Write-offs | 205,790 | 794,893 | 109,604 | 1,110,287 |
| Transfers (from) to other asset categories | 1,537 | (1,043) | 12,914 | 13,408 |
| At December 31, 2021 | (1,101,199) | (724,183) | (57,203) | (1,882,585) |
| Effects of movements in foreign exchange in the balance sheet | 59,537 | 7,095 | 3,650 | 70,282 |
| Depreciation | (72,970) | (89,383) | (8,888) | (171,241) |
| Write-offs | 129 | 6,520 | - | 6,649 |
| Transfers (from) to other asset categories | 2,721 | 10,270 | 3,358 | 16,349 |
| At March 31, 2022 | (1,111,782) | (789,681) | (59,083) | (1,960,546) |
| Carrying amount: | ||||
| At December 31, 2021 | 1,205,982 | 1,299,707 | 54,502 | 2,560,191 |
| At March 31, 2022 | 1,118,260 | 1,322,619 | 50,457 | 2,491,336 |
Term contracts and discount rate
The Company estimated discount rates, based on
risk-free interest rates observed in the Brazilian market, for the terms of its contracts, adjusted to their reality (credit spread).
Spreads were obtained with financial institutions. The following table shows the rates applied:
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| Rate % | ||
| Lease Term | 03/31/2022 | 12/31/2021 |
| 2021-2025 | 7.46% | 7.29% |
| 2026-2030 | 9.47% | 9.78% |
| 2031-2035 | 13.22% | 14.47% |
| 11. | GOODWILL |
| 03/31/2022 | 12/31/2021 | |
| Balance at the end of the previous year | 42,411,260 | 40,023,457 |
| Effects of movements in foreign exchange in the balance sheet | (3,609,412) | 1,255,314 |
| Effect of application of IAS 29 (hyperinflation) | 391,594 | 1,092,437 |
| Acquisitions, (write-offs) and disposal through business combinations | - | 40,052 |
| Balance at the end of the year | 39,193,442 | 42,411,260 |
The carrying amount of goodwill was allocated to the different cash-generating units as follows:
| Functional currency | 03/31/2022 | 12/31/2021 | |
| Brazil | BRL | 17,702,415 | 17,702,415 |
| Goodwill | 102,945,048 | 102,945,048 | |
| Non-controlling transactions (i) | (85,242,633) | (85,242,633) | |
| CAC: | |||
| Dominican Republic | DOP | 3,928,809 | 4,439,344 |
| Panama | PAB | 1,646,931 | 1,939,896 |
| Latin America - South: | |||
| Argentina | ARS | 2,778,297 | 3,232,649 |
| Bolivia | BOB | 1,675,858 | 1,973,945 |
| Chile | CLP | 52,613 | 57,371 |
| Paraguay | PYG | 1,069,702 | 1,083,196 |
| Uruguay | UYU | 170,897 | 185,166 |
| Canada | CAD | 10,167,920 | 11,797,278 |
| 39,193,442 | 42,411,260 |
(i) This refers to the shareholding exchange transaction in 2013 as a result of the adoption of the predecessor basis of accounting.
Impairment testing
The impairment test is updated annually considering the most accurate estimates calculated by management. For the second year of the model, we used the assumptions that were already considered for the projection of the other years, considering that they are still valid. There are no indications of impairment until March 31, 2022.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 12. | TRADE PAYABLES |
| 03/31/2022 | 12/31/2021 | |
| Trade payables (i) | 20,847,248 | 23,867,688 |
| Related parties (Note 26) | 1,107,586 | 1,210,223 |
| Current | 21,954,834 | 25,077,911 |
| Trade payables (i) | 215,238 | 209,140 |
| Related parties (Note 26) | 343,176 | 407,916 |
| Non-current | 558,414 | 617,056 |
| Total | 22,513,248 | 25,694,967 |
(i) The nominal contractual amounts, including interest, amount to R$23,527 million at March 31, 2022 (R$29,103 million at December 31, 2021).
13. INTEREST-BEARING LOANS AND BORROWINGS
| 03/31/2022 | 12/31/2021 | |
| Secured bank loans | 66,513 | 72,760 |
| Unsecured bank loans | 85,782 | 84,070 |
| Other unsecured loans | 36,338 | 37,250 |
| Lease liabilities | 627,228 | 653,038 |
| Current liabilities | 815,861 | 847,118 |
| Secured bank loans | 152,341 | 174,279 |
| Other unsecured loans | 94,491 | 92,858 |
| Lease liabilities | 1,923,651 | 1,986,269 |
| Non-current liabilities | 2,170,483 | 2,253,406 |
Additional information regarding the exposure of the Company to interest rate risk, foreign currency risk and debt repayment schedule risk are disclosed in Note 23 - Financial instruments and risks.
Contractual clauses (Covenants)
As at March 31, 2022, the Company’s loans had equal rights to payment without subordination clauses. For the credit lines due to FINAME contracted by the Company with Banco Nacional de Desenvolvimento Econômico e Social (“BNDES”), the assets acquired using the credit granted were placed as collateral. Other loans and financing contracted by the Company require only personal guarantees as collateral, or are unsecured. Most loan contracts contain contractual covenants, including: financial covenants, including limitations on new indebtedness; going-concern basis; maintenance, in use or in good condition for the business, of the Company’s assets; restrictions on acquisitions, mergers, sales or disposals of its assets; disclosure of financial statements and the balance sheet; no prohibitions related to new guarantees for loans contracted, except if: (i) expressly authorized under the agreement; (ii) new loans contracted from financial institutions linked to the Brazilian government including BNDES or foreign governments; or foreign governments, multilateral financial institutions (e.g. the World Bank) or in jurisdictions in which the Company operates.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Additionally, all agreements with BNDES are subject to certain “provisions applicable to agreements entered into with BNDES” (“Provisions”). Such Provisions require the borrower to obtain prior consent from BNDES if they, for instance, wish to: (i) raise new loans (except for the loans described in the Provisions); (ii) give preference and/or priority to other debts; and/or (iii) dispose of or encumber any items of their fixed assets (except as provided for within the Provisions).
These clauses are applicable from the date of execution and effectiveness of each contract, to the extent that the events mentioned in the contract occur. Depending on the materiality of each event and its potential adverse effects on the Company and /or its subsidiaries or the rights of its creditors, contractual penalties may be applied, including the early maturity of the respective contract. In certain contracts, in the event of occurrence of any of the events set out in the restrictive clauses, the Company may be granted a grace period to resolve any contractual defaults, in order to avoid any penalties resulting from the breach of its obligations.
As at March 31, 2022, the Company was in compliance
with all of its contractual obligations for its loans and financing.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
14. PROVISIONS
(a) Provision changes
| Balance as at December 31, 2020 | Effect of changes in foreign exchange rates | Additions | Provisions used | Provisions reversed | Balance as at December 31, 2021 | |
| Provision for disputes and litigation | ||||||
| Taxes on sales | 184,196 | - | 198,519 | (57,308) | (106,854) | 218,553 |
| Labor | 129,842 | (820) | 163,142 | (147,167) | (20,809) | 124,188 |
| Civil | 86,856 | (2,207) | 273,888 | (71,838) | (33,745) | 252,954 |
| Other taxes | 156,612 | 2,000 | 14,562 | (5,159) | (5,026) | 162,989 |
| Total provision for disputes and litigation | 557,506 | (1,027) | 650,111 | (281,472) | (166,434) | 758,684 |
| Restructuring | 14,492 | 1,153 | 6,796 | (5,035) | - | 17,406 |
| Total provisions | 571,998 | 126 | 656,907 | (286,507) | (166,434) | 776,090 |
| Balance as at December 31, 2021 | Effect of changes in foreign exchange rates | Additions | Provisions used | Provisions reversed | Balance as at March 31, 2022 | |
| Provision for disputes and litigation | ||||||
| Taxes on sales | 218,553 | - | 24,985 | (12,944) | (834) | 229,760 |
| Labor | 124,188 | (2,726) | 35,743 | (28,108) | (3,478) | 125,619 |
| Civil | 252,954 | (8,250) | 13,265 | (1,826) | (11,811) | 244,332 |
| Other taxes | 162,989 | (10,110) | 494 | (457) | (273) | 152,643 |
| Total provision for disputes and litigation | 758,684 | (21,086) | 74,487 | (43,335) | (16,396) | 752,354 |
| Restructuring | 17,406 | (2,093) | - | (3,099) | - | 12,214 |
| Total provisions | 776,090 | (23,179) | 74,487 | (46,434) | (16,396) | 764,568 |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| (b) | Expected settlement |
| 03/31/2022 | 12/31/2021 | ||||
| Current | Non-current | Current | Non-current | ||
| Provision for disputes and litigation | |||||
| Taxes on sales | 62,355 | 167,405 | 55,390 | 163,163 | |
| Labor | 30,370 | 95,249 | 27,967 | 96,221 | |
| Civil | 62,699 | 181,633 | 58,835 | 194,119 | |
| Other taxes | 22,502 | 130,141 | 20,922 | 142,067 | |
| Total provision for disputes and litigation | 177,926 | 574,428 | 163,114 | 595,570 | |
| Restructuring | 5,144 | 7,070 | 9,204 | 8,202 | |
| Total provisions | 183,070 | 581,498 | 172,318 | 603,772 |
The expected settlement of provisions was based on management’s best estimate at the balance sheet date.
(c) Main lawsuits with a probable likelihood of loss:
(c.1) Sales taxes
In Brazil, the Company and its subsidiaries are parties to various administrative and judicial proceedings related to ICMS, IPI, PIS and COFINS taxes. Such proceedings include, among others, tax offsetting, appropriation of tax credits and alleged insufficient payment of the respective taxes.
(c.2) Labor
The Company and its subsidiaries are parties to labor proceedings with former employees or former employees of service providers. The main issues involve overtime and related effects and respective charges.
(c.3) Civil
The Company is involved in civil lawsuits considered as representing a probable likelihood of loss. The most relevant portion of these lawsuits refers to former distributors, mainly in Brazil, mostly claiming damages resulting from the termination of their contracts.
The processes representing possible probabilities are disclosed in Note
25 - Contingencies.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
15. CHANGES IN EQUITY
(a) Capital stock
| 03/31/2022 | 03/31/2021 | ||||
| Thousands of common shares | Thousands of Real | Thousands of common shares | Thousands of Real | ||
| Beginning balance | 15,744,452 | 58,042,464 | 15,735,118 | 57,899,073 | |
| Capital increase (i) | 5,765 | 88,053 | 4,125 | 74,801 | |
| Final balance (ii) | 15,750,217 | 58,130,517 | 15,739,243 | 57,973,874 |
(i) Capital increase related to the issue of shares.
(ii) The capital stock is fully subscribed and paid up.
(b) Capital reserves
| Capital Reserves | |||||
| Treasury shares | Share Premium | Other capital reserves | Share-based Payments | Total | |
| At January 1, 2021 | (941,637) | 53,662,811 | 700,898 | 1,563,439 | 54,985,511 |
| Capital increase | - | - | - | (74,333) | (74,333) |
| Purchases of shares and results from treasury shares | (32,061) | - | - | - | (32,061) |
| Share-based payments | - | - | - | 98,639 | 98,639 |
| At March 31, 2021 | (973,698) | 53,662,811 | 700,898 | 1,587,745 | 54,977,756 |
| Capital Reserves | |||||
| Treasury shares | Share Premium | Other capital reserves | Share-based Payments | Total | |
| At January 1, 2022 | (1,037,711) | 53,662,811 | 700,898 | 1,861,190 | 55,187,188 |
| Capital increase | - | - | - | (64,289) | (64,289) |
| Purchases of shares and results from treasury shares | 6,540 | - | - | - | 6,540 |
| Share-based payments | - | - | - | 24,741 | 24,741 |
| At March 31, 2022 | (1,031,171) | 53,662,811 | 700,898 | 1,821,642 | 55,154,180 |
(b.1) Purchase of shares and result of treasury shares
Treasury shares represent the Company’s own issued shares reacquired by the Company, and the results of treasury shares related to gains and losses on share-based payment transactions and others.
The changes in treasury shares are as follow:
| Acquisition/realization of shares | Result on Treasury Shares | Total Treasury Shares | |||||
| Thousands of shares | Thousands of Brazilian Reais | Thousands of shares | Thousands of Brazilian Reais | ||||
| At January 1, 2021 | 203 | (3,045) | (938,592) | (941,637) | |||
| Changes during the year | 2,027 | (31,372) | (689) | (32,061) | |||
| At March 31, 2021 | 2,230 | (34,417) | (939,281) | (973,698) | |||
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| Acquisition/realization of shares | Result on Treasury Shares | Total Treasury Shares | |||||
| Thousands of shares | Thousands of Brazilian Reais | Thousands of shares | Thousands of Brazilian Reais | ||||
| At January 1, 2022 | 5,783 | (98,140) | (939,571) | (1,037,711) | |||
| Changes during the year | (452) | 8,606 | (2,066) | 6,540 | |||
| At March 31, 2022 | 5,331 | (89,534) | (941,637) | (1,031,171) | |||
(b.2) Share premium
The share premium refers to the difference between the subscription price that the shareholders paid for the shares and their nominal value. Since this is a capital reserve, it can only be used to increase capital, offset losses, or redeem, reimburse or repurchase shares.
(b.3) Share-based payment
Different share-based payment programs and stock purchase option plans allow the senior management from Ambev’s economic group to acquire shares in the Company.
The share-based payment reserve recorded a charge of R$77,929 on March 31, 2022 (R$105,142 at March 31, 2021) (Note 22 - Share-based payments).
(c) Net income reserves
| Net income reserves | ||||
| Investments reserve | Legal reserve | Fiscal incentive | Total | |
| At January 1, 2021 | 14,511,147 | 4,456 | 11,404,458 | 25,920,061 |
| At March 31, 2021 | 14,511,147 | 4,456 | 11,404,458 | 25,920,061 |
| Net income reserves | ||||
| Investments reserve | Legal reserve | Fiscal incentive | Total | |
| At January 1, 2022 | 18,359,259 | 4,456 | 12,827,925 | 31,191,640 |
| At March 31, 2022 | 18,359,259 | 4,456 | 12,827,925 | 31,191,640 |
There was no change in net income reserves in the first quarter of 2021 and 2022.
(c.1) Investments reserve
From the net income after applicable deductions, there will be a target allocation of no more than 60% of the adjusted net profit to the investment reserve, to be used to support future investments.
(c.2) Legal reserve
From the net income, 5% will be applied before any other allocation to the legal reserve, which cannot exceed 20% of the capital stock. The Company is not required to supplement the legal reserve for the year when the balance of this reserve, plus the amount of the capital reserves, exceeds 30% of the capital stock.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
(c.3) Tax incentives
The Company has tax incentives under certain state and federal industrial development programs in the form of financing, the deferred payment of taxes or partial reductions in the amount due. These programs aim to generate employment, promote regional decentralization, complement and diversify the industrial base of the states. In these states, the grace periods, use and reductions are set out under the tax law.
The portion of income for the period related to tax incentives, which will be allocated to the profit reserve at the end of the fiscal year and therefore was not being used as a basis for dividend distribution, was composed of the following:
| 03/31/2022 | 03/31/2021 | |
| ICMS (Brazilian state value-added tax) | 486,336 | 398,479 |
| Income tax | 21,379 | 43,188 |
| 507,715 | 441,667 |
(c.4) Interest on shareholders’ equity/Dividends
Brazilian companies are permitted to distribute the interest attributed to shareholders’ equity calculated based on the long-term interest rate (“TJLP”), with such interest being tax-deductible, in accordance with the applicable law and, when distributed, may be considered part of the minimum mandatory dividends.
As determined by its by-laws, the Company is required to distribute to its shareholders, as a minimum mandatory dividend in respect of each fiscal year ending December 31, an amount of not less than 40% of its net income determined under Brazilian law, adjusted in accordance with the applicable law, unless the payment of such amount would be incompatible with Ambev’s financial situation. The minimum mandatory dividend includes amounts paid as interest on shareholders’ equity.
There was no payment of dividends or interest on shareholders’ equity in the three-month periods ended March 31, 2021 and March 31, 2022.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
(d) Carrying value adjustments
| Carrying value adjustments | ||||||||
| Translation reserves | Cash flow hedge | Actuarial gains/ (losses) | Put option granted on subsidiary | Gains/(losses) of non-controlling interest´s share | Business combination | Accounting adjustments for transactions between shareholders | Total | |
| At January 1, 2021 | 11,076,439 | 744,441 | (1,473,230) | (4,783) | (73,777) | 156,091 | (75,414,198) | (64,989,017) |
| Comprehensive income: | ||||||||
| Gains/(losses) on the translation of foreign operations | 4,340,712 | - | - | - | - | - | - | 4,340,712 |
| Cash flow hedges | - | 655,880 | - | - | - | - | - | 655,880 |
| Actuarial gains/(losses) | - | - | (56,230) | - | - | - | - | (56,230) |
| Total Comprehensive income | 4,340,712 | 655,880 | (56,230) | - | - | - | - | 4,940,362 |
| Gains/(losses) of controlling interest | - | - | - | - | 382 | - | - | 382 |
| At March 31, 2021 | 15,417,151 | 1,400,321 | (1,529,460) | (4,783) | (73,395) | 156,091 | (75,414,198) | (60,048,273) |
| Carrying value adjustments | ||||||||
| Translation reserves | Cash flow hedge | Actuarial gains/ (losses) | Put option granted on subsidiary | Gains/(losses) of non-controlling interest´s share | Business combination | Accounting adjustments for transactions between shareholders | Total | |
| At January 1, 2022 | 13,526,157 | 1,225,253 | (1,131,476) | (6,666) | (121,599) | 156,091 | (75,426,021) | (61,778,261) |
| Comprehensive income: | ||||||||
| Gains/(losses) on the translation of foreign operations | (6,793,284) | - | - | - | - | - | - | (6,793,284) |
| Cash flow hedges | - | (1,117,137) | - | - | - | - | - | (1,117,137) |
| Actuarial gains/(losses) | - | - | 1,050 | - | - | - | - | 1,050 |
| Total Comprehensive income | (6,793,284) | (1,117,137) | 1,050 | - | - | - | - | (7,909,371) |
| Gains/(losses) of controlling interest | - | - | - | - | (2,259) | - | - | (2,259) |
| At March 31, 2022 | 6,732,873 | 108,116 | (1,130,426) | (6,666) | (123,858) | 156,091 | (75,426,021) | (69,689,891) |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
(d.1) Translation reserves
The translation reserves comprise all foreign currency exchange differences arising from the translation of the financial statements with a functional currency different to the Real.
The translation reserves also comprise the portion of the gain or loss on the foreign currency liabilities and on the derivative financial instruments determined to be effective net investment hedges.
(d.2) Cash flow hedge reserves
The hedging reserves represent the effective portion of the cumulative net change in the fair value of cash flow hedges to the extent that the hedged risk has not yet impacted profit or loss (for additional information, see Note 23 - Financial instruments and risks).
(d.3) Actuarial gains and losses
Actuarial gains and losses include expectations regarding future pension plan obligations. Consequently, the results of actuarial gains and losses are recognized on a timely basis considering the best estimates available to Management. Accordingly, the Company recognizes the results of these estimated actuarial gains and losses, on a monthly basis, based on the expectations presented in the independent actuarial report.
In March, 2021, an actuarial loss of R$56,940 arising from the deficit on the defined benefits plan was fully recorded under actuarial gains and losses as a counterpart to the balance receivable originally recorded. There were no actuarial gains or losses arising from surplus or deficit in 2022.
(d.4) Accounting adjustments for transactions between shareholders
As determined by IFRS 10, any difference between the amount paid (fair value) for the acquisition of a non-controlling interest and the carrying amount of such non-controlling interest shall be recognized directly in the controlling shareholders’ equity. The acquisition of the non-controlling interest related to Companhia de Bebidas das Américas (“Former Ambev”), and the abovementioned adjustment was recognized in carrying value adjustments when applicable.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
16. SEGMENT REPORTING
| (a) | Reportable segments – three-month period ended in: |
| Brazil | CAC (i) | Latin America - South (ii) | Canada | Consolidated | ||||||
| 03/31/2022 | 03/31/2021 | 03/31/2022 | 03/31/2021 | 03/31/2022 | 03/31/2021 | 03/31/2022 | 03/31/2021 | 03/31/2022 | 03/31/2021 | |
| Net sales | 9,598,205 | 8,225,294 | 2,282,858 | 2,159,507 | 4,602,596 | 4,192,524 | 1,955,493 | 2,062,436 | 18,439,152 | 16,639,761 |
| Cost of sales | (5,098,063) | (3,981,483) | (1,165,775) | (1,015,443) | (2,336,126) | (2,103,728) | (814,522) | (844,676) | (9,414,486) | (7,945,330) |
| Gross profit | 4,500,142 | 4,243,811 | 1,117,083 | 1,144,064 | 2,266,470 | 2,088,796 | 1,140,971 | 1,217,760 | 9,024,666 | 8,694,431 |
| Distribution expenses | (1,384,892) | (1,069,112) | (193,618) | (209,541) | (525,671) | (469,921) | (424,838) | (381,019) | (2,529,019) | (2,129,593) |
| Sales and marketing expenses | (766,879) | (709,406) | (143,061) | (160,677) | (343,880) | (325,764) | (263,156) | (249,193) | (1,516,976) | (1,445,040) |
| Administrative expenses | (754,896) | (789,386) | (57,525) | (110,359) | (198,632) | (201,554) | (162,383) | (132,760) | (1,173,436) | (1,234,059) |
| Other operating income/(expenses) | 336,793 | 191,580 | 24,125 | 35 | 22,928 | (4,673) | 2,876 | (9,002) | 386,722 | 177,940 |
| Exceptional items | (13,209) | (18,761) | (4,364) | (16,867) | (9,653) | (35,302) | - | (495) | (27,226) | (71,425) |
| Income from operations | 1,917,059 | 1,848,726 | 742,640 | 646,655 | 1,211,562 | 1,051,582 | 293,470 | 445,291 | 4,164,731 | 3,992,254 |
| Net finance costs | (300,644) | (390,122) | (12,743) | (49,693) | (266,813) | (587,733) | (16,513) | (36,752) | (596,713) | (1,064,300) |
| Share of results of joint ventures | (2,392) | (1,600) | (163) | (3,282) | - | - | 151 | (7,664) | (2,404) | (12,546) |
| Income before income tax | 1,614,023 | 1,457,004 | 729,734 | 593,680 | 944,749 | 463,849 | 277,108 | 400,875 | 3,565,614 | 2,915,408 |
| Income tax expense | 637,668 | 262,623 | (234,645) | (190,120) | (323,612) | (94,865) | (116,187) | (159,735) | (36,776) | (182,097) |
| Net income | 2,251,691 | 1,719,627 | 495,089 | 403,560 | 621,137 | 368,984 | 160,921 | 241,140 | 3,528,838 | 2,733,311 |
| EBITDA (iii) | 2,694,120 | 2,538,626 | 888,006 | 819,155 | 1,494,052 | 1,335,489 | 417,112 | 549,968 | 5,493,290 | 5,243,238 |
| Depreciation. amortization and impairment | (779,453) | (691,500) | (145,529) | (175,782) | (282,490) | (283,907) | (123,491) | (112,341) | (1,330,963) | (1,263,530) |
| Net finance costs | (300,644) | (390,122) | (12,743) | (49,693) | (266,813) | (587,733) | (16,513) | (36,752) | (596,713) | (1,064,300) |
| Income tax expense | 637,668 | 262,623 | (234,645) | (190,120) | (323,612) | (94,865) | (116,187) | (159,735) | (36,776) | (182,097) |
| Net income | 2,251,691 | 1,719,627 | 495,089 | 403,560 | 621,137 | 368,984 | 160,921 | 241,140 | 3,528,838 | 2,733,311 |
| EBITDA margin as a % (iii) | 28.1% | 30.9% | 38.9% | 37.9% | 32.5% | 31.9% | 21.3% | 26.7% | 29.8% | 31.5% |
| Acquisition of property, plant and equipment | 539,833 | 963,353 | 176,408 | 109,053 | 134,899 | 182,311 | 37,397 | 72,618 | 888,537 | 1,327,335 |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
(continued)
| Brazil | CAC (i) | Latin America - South (ii) | Canada | Consolidated | ||||||
| 03/31/2022 | 12/31/2021 | 03/31/2022 | 12/31/2021 | 03/31/2022 | 12/31/2021 | 03/31/2022 | 12/31/2021 | 03/31/2022 | 12/31/2021 | |
| Segment assets | 54,237,671 | 54,609,401 | 13,504,759 | 15,351,934 | 19,017,807 | 21,582,950 | 15,800,085 | 18,016,562 | 102,560,322 | 109,560,847 |
| Intersegment elimination | (2,314,387) | (2,868,475) | ||||||||
| Non-segmented assets | 27,153,985 | 31,910,111 | ||||||||
| Total assets | 127,399,920 | 138,602,483 | ||||||||
| Segment liabilities | 24,187,339 | 27,611,116 | 4,418,501 | 5,414,414 | 6,475,469 | 7,843,612 | 5,023,048 | 6,156,510 | 40,104,357 | 47,025,652 |
| Intersegment elimination | (2,314,527) | (2,869,056) | ||||||||
| Non-segmented liabilities | 89,610,090 | 94,445,887 | ||||||||
| Total liabilities | 127,399,920 | 138,602,483 | ||||||||
(i) CAC: includes the Dominican Republic, Panama, Guatemala, Cuba, Barbados, Saint Vincent, Dominica, Nicaragua, Honduras and Antigua.
(ii) Latin America - South: includes operations in Argentina, Bolivia, Chile, Paraguay and Uruguay.
(iii) From 2021 onwards, the Adjusted EBITDA metric was changed to EBITDA, for presentation purposes, including for comparative purposes.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
(b) Additional information - by business unit:
| Brazil | ||||||
| Beer | Soft drinks and Non-alcoholic and non-carbonated |
Total | ||||
| 03/31/2022 | 03/31/2021 | 03/31/2022 | 03/31/2021 | 03/31/2022 | 03/31/2021 | |
| Net sales | 8,100,187 | 7,124,812 | 1,498,018 | 1,100,482 | 9,598,205 | 8,225,294 |
| Cost of sales | (4,192,167) | (3,401,491) | (905,896) | (579,992) | (5,098,063) | (3,981,483) |
| Gross profit | 3,908,020 | 3,723,321 | 592,122 | 520,490 | 4,500,142 | 4,243,811 |
| Distribution expenses | (1,142,543) | (891,668) | (242,349) | (177,444) | (1,384,892) | (1,069,112) |
| Sales and marketing expenses | (708,630) | (641,327) | (58,249) | (68,079) | (766,879) | (709,406) |
| Administrative expenses | (660,146) | (679,847) | (94,750) | (109,539) | (754,896) | (789,386) |
| Other operating income/(expenses) | 282,053 | 152,251 | 54,740 | 39,329 | 336,793 | 191,580 |
| Exceptional items | (12,641) | (18,716) | (568) | (45) | (13,209) | (18,761) |
| Income from operations | 1,666,113 | 1,644,014 | 250,946 | 204,712 | 1,917,059 | 1,848,726 |
| Net finance costs | (300,644) | (390,122) | - | - | (300,644) | (390,122) |
| Share of results of joint ventures | (2,392) | (1,600) | - | - | (2,392) | (1,600) |
| Income before income tax | 1,363,077 | 1,252,292 | 250,946 | 204,712 | 1,614,023 | 1,457,004 |
| Income tax expense | 637,668 | 262,623 | - | - | 637,668 | 262,623 |
| Net income | 2,000,745 | 1,514,915 | 250,946 | 204,712 | 2,251,691 | 1,719,627 |
| EBITDA (i) | 2,349,714 | 2,243,592 | 344,406 | 295,034 | 2,694,120 | 2,538,626 |
| Depreciation. amortization and impairment | (685,993) | (601,178) | (93,460) | (90,322) | (779,453) | (691,500) |
| Net finance costs | (300,644) | (390,122) | - | - | (300,644) | (390,122) |
| Income tax expense | 637,668 | 262,623 | - | - | 637,668 | 262,623 |
| Net income | 2,000,745 | 1,514,915 | 250,946 | 204,712 | 2,251,691 | 1,719,627 |
| EBITDA margin as a % (i) | 29.0% | 31.5% | 23.0% | 26.8% | 28.1% | 30.9% |
(i) From 2021 onwards, the Adjusted EBITDA metric was changed to EBITDA, for presentation purposes, including for comparative purposes.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
17. NET SALES
Reconciliation between gross sales and net sales:
| 03/31/2022 | 03/31/2021 | |
| Gross sales and/or services | 29,307,546 | 24,544,855 |
| Excise duty | (5,612,468) | (5,036,196) |
| Discounts | (5,255,926) | (2,868,898) |
| 18,439,152 | 16,639,761 |
| 18. | OTHER OPERATING INCOME/(EXPENSES) |
| 03/31/2022 | 03/31/2021 | |
| Government grants/net present value of long-term fiscal incentives | 232,355 | 171,638 |
| Extemporaneous credits/(debits) (i) | 91,456 | - |
| (Additions)/reversals of provisions | (12,594) | (8,980) |
| Gains/(losses) on disposals of property, plant and equipment, intangible assets and the operations of associates | 33,423 | 12,667 |
| Other operating income/(expenses), net | 42,082 | 2,615 |
| 386,722 | 177,940 |
(i) As detailed in Note 25 – Contingencies, the Company has recognized PIS and COFINS credits arising from the exclusion of ICMS from its calculation basis, in the item Other operating income/(expenses).
Government grants are not recognized until there is reasonable assurance that the Company will meet the respective conditions and that the grants will be received. Government grants are systematically recognized in income during the periods when the Company recognizes as expenses the related costs that the grants are intended to offset.
| 19. | EXCEPTIONAL ITEMS |
| 03/31/2022 | 03/31/2021 | |
| COVID-19 impacts (ii) | (10,668) | (31,051) |
| Restructuring (i) | (16,558) | (39,185) |
| Effect of application of IAS 29 (hyperinflation) | - | (1,189) |
| (27,226) | (71,425) |
(i) The restructuring expenses primarily related to centralized projects and resizing in the Latin America CAC and Brazil.
(ii) COVID-19 expenses refer to (a) additional administrative expenses to ensure the safety of our people (increased frequency of cleaning at the Company’s facilities, providing alcohol gel and masks for our employees); (b) donations; (c) Company initiatives providing support for some customer ecosystems, which were necessary due to the COVID-19 pandemic.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 20. | FINANCE EXPENSES AND INCOME |
| (a) | Finance expenses |
| 03/31/2022 | 03/31/2021 | |
| Interest expense | (397,762) | (334,589) |
| Net interest on pension plans | (27,943) | (27,827) |
| Losses on hedging instruments | (707,748) | (770,864) |
| Interest on provision for disputes and litigation | (39,023) | (17,730) |
| Exchange variations | (125,463) | (178,421) |
| Tax on financial transactions | (60,688) | (11,369) |
| Bank guarantee expenses | (39,155) | (30,914) |
| Other financial results | (225,311) | (72,681) |
| (1,623,093) | (1,444,395) |
Interest expenses are presented net of the effects of interest rate derivative financial instruments which mitigate Ambev’s interest rate risk (Note 23 - Financial instruments and risks). The interest expenses are as follow:
| 03/31/2022 | 03/31/2021 | |
| Financial instruments measured at amortized cost | (110,554) | (190,744) |
| Financial instruments at fair value through profit or loss | (287,208) | (143,845) |
| (397,762) | (334,589) |
| (b) | Finance income |
| 03/31/2022 | 03/31/2021 | |
| Interest income | 397,268 | 107,353 |
| Interest and foreign exchange rate on loans to/from related parties | 3,322 | 12,992 |
| Financial instruments at fair value through profit or loss | - | - |
| Other financial results | 294,664 | 7,957 |
| 695,254 | 128,302 | |
| Effect of application of IAS 29 (hyperinflation) | 331,126 | 251,793 |
| 1,026,380 | 380,095 |
Interest income arises from the following financial assets:
| 03/31/2022 | 03/31/2021 | |
| Cash and cash equivalents | 77,507 | 52,008 |
| Investment securities held for trading | 46,390 | 9,697 |
| Other receivables | 273,371 | 45,648 |
| 397,268 | 107,353 |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 21. | INCOME TAX AND SOCIAL CONTRIBUTION |
Income taxes reported in the income statement are analyzed as follow:
| 03/31/2022 | 03/31/2021 | |
| Income tax expense - current | (262,376) | (515,992) |
| Deferred tax expense on temporary differences | 221,441 | 343,539 |
| Deferred tax on taxes losses carryforwards movements in the current period | 4,159 | (9,644) |
| Total deferred tax (expense)/income | 225,600 | 333,895 |
| Total income tax expenses | (36,776) | (182,097) |
The reconciliation between the weighted nominal tax rate and the effective tax rate is summarized as follows:
| 03/31/2022 | 03/31/2021 | |
| Profit before tax | 3,565,614 | 2,915,408 |
| Adjustment on a taxable basis | ||
| Others non-taxable income | (81,135) | - |
| Government grants related to sales taxes | (486,336) | (398,479) |
| Share of results of joint ventures | 2,404 | 12,546 |
| Non-deductible expenses | 7,404 | 15,522 |
| Worldwide Taxation | 145,900 | (80,802) |
| 3,153,851 | 2,464,195 | |
| Aggregated weighted nominal tax rate | 28.95% | 28.31% |
| Taxes payable – nominal rate | (913,040) | (697,582) |
| Adjustment on tax expense | ||
| Income tax incentives | 21,379 | 43,188 |
| Deductible interest on shareholders’ equity | 746,607 | 592,679 |
| Tax savings from goodwill amortization | 14,340 | 19,366 |
| Withholding income tax | 170,625 | (288,996) |
| Recognition/(write-off) of deferred charges on tax losses | (4,416) | (52,361) |
| Effect of application of IAS 29 (hyperinflation) | (37,501) | (14,404) |
| Others with reduced taxation | (34,770) | 216,013 |
| Income tax and social contribution expense | (36,776) | (182,097) |
| Effective tax rate | 1.03% | 6.25% |
The main events that impacted the effective tax rate for the period were:
| · | Government subsidy for sales taxes: for regional incentives, these are related primarily to local production and, when reinvested, are not subject to income tax and social contribution, which explains the impact on the effective tax rate. The amount above is impacted by fluctuations in the volume, price and any eventual increases in ICMS. |
| · | Complement of income tax on foreign subsidiaries due in Brazil: shows the result of the calculation of universal taxation of profits, according to the regulations of Law 12,973/14. |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| · | Withholding income tax: the amount is mainly related to dividends already distributed and to be distributed by subsidiaries located outside of Brazil, applicable according to local tax legislation. The amount recognized in 2022 is mainly due to the exchange rate variation of the deferred income tax balances. |
| · | Deductible interest on shareholders’ equity: under Brazilian law, companies have an option to remunerate their shareholders through the payment of Interest on Capital (“IOC”), which is deductible for income tax purposes. |
22. SHARE-BASED PAYMENTS
Currently the Company has two plans of share-based payment programs: (i) Stock Option Plan, approved in the Extraordinary General Meeting of July 30, 2013 (“Stock Option Plan”) and (ii) Share-based Payment Plan approved in the Extraordinary General Meeting of April 29, 2016, as amended in the Extraordinary General Meeting of July 30, 2013 (“Share-Based Plan”). The programs are issued for each plan and there are different stock option and share-based payment programs which allow the employees and senior management of the Company and its subsidiaries to acquire, through the exercise of stock options, or receive shares of the Company.
(i) Stock Option Plan
There are three models of stock options that may be granted under the Stock Option Plan.
1. Under the first model, beneficiaries, in accordance with their internal category, may choose between allocating (a) 30% or 100%, (b) 40% or 100%, and (c) 60% or 100% of the amounts received by them as profit sharing regarding the immediate year to the exercise of stock options, thereby allowing them to acquire the corresponding amount of Ambev shares. Under this model, a substantial part of the shares acquired is to be delivered only within five years from the corresponding stock option grant date. During such five-year period, the beneficiary must remain employed at Ambev or any other company of its group.
2. Under the second model, the beneficiary may exercise the stock options granted only after a period of up to five years from the corresponding grant date. Vesting of the stock options granted under the second model is not subject to the Company’s performance measures; however, the right to exercise such options may be forfeited in certain circumstances, including the beneficiary’s resignation or dismissal prior to the stock options’ vesting.
3. Under the third model, the beneficiaries, in accordance with their internal category, may choose between allocating (a) 20% or 100%, (b) 30% or 100%, and (c) 50% or 100%, of the amounts received by them as profit sharing regarding the immediate year to the exercise of stock options, thereby allowing them to acquire the corresponding amount of Ambev shares. The totality of the shares acquired is to be delivered to the beneficiary within forty-five days from the corresponding exercising date (which shall not be later than forty-five days from the stock option grant date). The beneficiaries are under a five-year lock-up period.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
For all stock option programs, the fair value of the shares is estimated as at the option grant date, using the “Hull Binomial” pricing model, adjusted to reflect the IFRS 2 requirement that assumptions regarding forfeiture before the end of the vesting period cannot impact the fair value of the option. The fair value of the share options is estimated at the grant date, using an option pricing model. Based on the expected number of options that will be exercised, the fair value of the options granted is recognized as an expense over the vesting period with a corresponding credit to equity. When the options are exercised, the equity is increased by the amount of the proceeds received.
(ii) Share-Based Plan
In this plan, certain employees and members of the management of the Company or its subsidiaries are eligible to receive shares of the Company, including in the form of ADRs. The shares that are subject to the Share-Based Plan are designated as “restricted shares”.
The delivery of restricted shares is made free, and the waiting period may vary between three and five years from the corresponding share-based plan grant date, during which the beneficiary must remain employed at Ambev or any other company of its group.
The restricted shares give to participants the right to receive additional shares with the same conditions, such as compensation dividends and Interest on shareholder’s equity paid by the Company during the waiting period. The right to receive restricted and additional shares can be fully or partially lost depending on circumstances, including resignation or resignation during the grace period.
Under the Share-Based Plan, the reference price per restricted share is defined on the grant date based on the share price of the trading session on B3 S.A. immediately prior to the granting of the shares and based on the number of grant shares. During the grace period the amount is recorded as expense against equity. The shares are transferred to attendees according to terms and periods by the respective programs.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The total number of outstanding options developed was as follows:
| Thousand options | 03/31/2022 | 12/31/2021 | |
| Options outstanding at January | 113,760 | 127,265 | |
| Options exercised during the period | - | (5,247) | |
| Options forfeited during the period | (2,003) | (8,258) | |
| Options outstanding at the end of the period | 111,757 | 113,760 |
The range of exercise prices of the outstanding options is from R$15.95 (R$15.95 in 2021) to R$45.85 (R$45.97 in 2021) and the weighted average remaining contractual life is approximately 6.68 years (6.70 years in 2021).
Of the 111,757 thousand outstanding options (113,760 thousand in 2021), 62,164 thousand options were vested in 2022 (59,250 thousand in 2021).
The weighted average exercise price of the options is as follows:
| In R$ per share | 03/31/2022 | 12/31/2021 | |
| Options outstanding at January 1 | 19.92 | 19.81 | |
| Options forfeited during the period | 19.44 | 25.27 | |
| Options exercised during the period | - | 13.16 | |
| Options outstanding at the end of the period | 19.92 | 19.92 | |
| Options exercisable at the end of the period | 20.89 | 21.14 |
For the period ended in March 31, 2022 there were no options exercised (in December 31, 2021 the weighted average share price as at the exercise date was R$17.87).
To settle the exercised stock options, the Company may use treasury shares. The current limit on the authorized capital is considered sufficient to meet the Company’s obligations under all stock option plans if the issue of new shares is required to meet the grants awarded under the Programs.
During the period, the Company did not grant deferred shares under the Stock Option Plan (in 2021 110 thousand deferred shares have been granted, which are valued based on the share price for the trading session immediately prior to the grant, which represented a fair value of R$1,690). Such deferred shares are subject to a grace period of five years from the grant date.
During the period, the Company granted 19,481 thousand restricted shares under the Share-Based Plan (20,629 thousand in 2021), which are valued based on the share price of the trading session immediately prior to the granting of the shares, representing a fair value of approximately R$296,111 in 2022 (R$325,735 in 2021). Such restricted share units are subject to a grace period which can vary from three to five years counted from the grant date.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Stated below is the total number of shares purchased by or granted to employees, as the case may be, under the Stock Option Plan and Share-Based Plan which will be delivered in the future based on the fulfilment of certain conditions (deferred stock and restricted shares):
Deferred shares
| Thousand deferred shares | 03/31/2022 | 12/31/2021 | |
| Deferred shares outstanding at January 1 | 1,168 | 6,065 | |
| New deferred shares during the period | - | 110 | |
| Deferred shares granted during the period | (214) | (4,964) | |
| Deferred shares forfeited during the period | (4) | (43) | |
| Deferred shares outstanding at the end of the period | 950 | 1,168 |
Restricted shares
| Thousand restricted shares | 03/31/2022 | 12/31/2021 | |
| Restricted shares outstanding at January | 62,545 | 43,458 | |
| New restricted shares during the period | 19,481 | 20,629 | |
| Restricted shares granted during the period | - | (22) | |
| Restricted shares forfeited during the period | (509) | (1,520) | |
| Restricted shares outstanding at the end of the period | 81,517 | 62,545 |
Additionally, certain employees and managers of the Company received options to acquire AB InBev shares, the compensation costs of which are recognized in the income statement against equity.
The transactions with share-based payments described above generated an expense of R$78,796 on March 31, 2022 (R$105,960 on March 31, 2021), recorded as administrative expenses.
| 23. | FINANCIAL INSTRUMENTS AND RISKS |
Risk factors
The Company is exposed to foreign currency, interest rate, commodity price, liquidity and credit risk in the ordinary course of its business. The Company analyzes each of these risks both individually and on a consolidated basis, to define strategies to manage the economic impact on risk’s performance consistent with its Financial Risk Management Policy (the “Policy”).
The Company’s use of derivatives strictly follows the Financial Risk Management Policy approved by the Board of Directors. The Policy is intended to provide guidelines for the management of the financial risks inherent to the capital markets in which Ambev operates. The Policy includes four main aspects: (i) capital structure; financing and liquidity; (ii) transactional risks related to the business; (iii) financial statement translation risk; and (iv) credit risks of financial counterparties.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The Policy establishes that all the financial assets and liabilities in each country in which Ambev operates must be denominated in their respective local currencies. The Policy also sets out the procedures and controls required to identify, measure and minimize market risks, such as variations in foreign exchange rates, interest rates and commodities (mainly aluminum, wheat, corn and sugar) that may affect Ambev’s revenue, costs and/or investment amounts. The Policy states that all of the known risks (e.g. foreign currency and interest) shall be hedged by contracting derivative financial instruments. Existing risks which are not yet recorded (e.g. future contracts for the purchase of raw materials or property, plant and equipment) shall be mitigated using projections for the period required for the Company to adapt to the new costs scenario, which may vary from ten to fourteen months, also through the use of derivative financial instruments. Most translation risks are not hedged. The exceptions to the policy must be approved by the Operations, Finance and Compensation Committee (COF).
Derivative financial instruments
The derivative financial instruments authorized under the Financial Risk Management Policy include futures contracts traded on exchanges, full deliverable forwards, non-deliverable forwards, swaps and options. At March 31, 2022, the Company and its subsidiaries had no target forwards, swaps with currency verification, or any other derivative transactions representing a risk level above the nominal value of the contracts. The derivative operations are managed on a consolidated basis and classified based on the strategy according to their purposes, as follows:
i) Cash flow hedge derivative instruments - Highly probable forecast transactions contracted to minimize the Company’s exposure to fluctuations in exchange rates and the prices of raw materials, investments, equipment and services to be procured, protected by cash flow hedges that shall occur at various different dates over the next fourteen months. Gains and losses classified as hedging reserves in equity are recognized in the income statement in the period or periods during which the forecast and hedged transaction affects the income statement.
ii) Fair value hedge derivative instruments - operations contracted for the purpose of mitigating the Company’s net indebtedness against foreign exchange and interest rate risk. Net cash positions and foreign currency debts are continually assessed to identify new indications of exposure.
The results of these operations, measured according to their fair value, are recognized in financial results.
iii) Net investment hedge derivative instruments - transactions entered into to minimize the exposure to exchange differences arising from the conversion of net investments in the Company's subsidiaries located abroad for the purpose of translating the account balance.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
In accordance with the hedge accounting, the effective hedge amount is recorded in equity and, in the event of an ineffective portion this result is recorded immediately in finance result during the period ineffectiveness was identified, for cash flow hedge and net investment hedge.
The following tables summarize the exposure identified and protected in accordance with the Company’s Risk Policy.
Non-derivative financial instruments
Put options granted on subsidiaries: the Company constituted a liability related to the acquisition of a non-controlling interest of the operations in the Dominican Republic. This financial instrument is denominated in US Dollars (Tranche A) and Dominican Pesos (Tranche B) and is recorded by an entity, whose functional currency is the Real. The Company assigned this financial instrument as a hedging instrument for a portion of its net assets located in subsidiaries whose functional currency is the US Dollar and the Dominican Peso, in such a manner that the hedge result can be recorded in other comprehensive income of the Group, following the result of the hedged item.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Transactions protected by derivative financial instruments in accordance with the Financial Risk Management Policy
| 03/31/2022 | ||||||||||||
| Fair Value | Gain / (Losses) | |||||||||||
| Exposure | Risk | Notional | Assets | Liabilities | Finance Result | Operational Result | Equity | |||||
| Cost | (20,047,668) | 20,047,668 | 623,045 | (162,592) | (564,476) | 339,502 | (1,329,314) | |||||
| Commodities | (2,781,277) | 2,781,277 | 591,322 | (9,523) | (25,586) | 291,817 | 331,487 | |||||
| US Dollars | (17,080,116) | 17,080,116 | 28,865 | (151,045) | (536,355) | 39,007 | (1,730,526) | |||||
| Euros | (30,032) | 30,032 | - | (1,444) | (350) | 274 | (1,740) | |||||
| Mexican Pesos | (156,243) | 156,243 | 2,858 | (580) | (2,185) | 8,404 | 71,465 | |||||
| Fixed Assets | (421,672) | 421,672 | 1,329 | (16,251) | (33,373) | 8,989 | 10,748 | |||||
| US Dollars | (421,672) | 421,672 | 1,329 | (16,251) | (33,373) | 8,989 | 10,748 | |||||
| Expenses | (316,311) | 316,311 | 378 | (8,467) | (34,411) | 7,244 | 199,874 | |||||
| US Dollars | (316,311) | 316,311 | 378 | (8,467) | (34,411) | 7,244 | 199,874 | |||||
| March 31, 2022 | (20,785,651) | 20,785,651 | 624,752 | (187,310) | (632,260) | 355,735 | (1,118,692) | |||||
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 12/31/2021 | 03/31/2021 | |||||||||||
| Fair Value | Gain / (Losses) | |||||||||||
| Exposure | Risk | Notional | Assets | Liabilities | Finance Result | Operational Result | Equity | |||||
| Cost | (18,911,847) | 18,911,847 | 597,455 | (421,087) | (565,405) | 380,447 | 1,180,937 | |||||
| Commodities | (3,179,859) | 3,179,859 | 455,294 | (41,244) | (40,204) | 149,074 | 157,425 | |||||
| US Dollars | (15,516,386) | 15,516,386 | 136,243 | (378,396) | (524,149) | 248,358 | 1,049,036 | |||||
| Euros | (31,839) | 31,839 | - | (787) | (72) | 1,120 | (2,170) | |||||
| Mexican Pesos | (183,763) | 183,763 | 5,918 | (660) | (980) | (18,105) | (23,354) | |||||
| Fixed Assets | (1,111,350) | 1,111,350 | 1,065 | (53,327) | (136,798) | 33,714 | 37,404 | |||||
| US Dollars | (1,111,350) | 1,111,350 | 1,065 | (53,327) | (136,798) | 33,714 | 37,404 | |||||
| Expenses | (365,752) | 365,752 | 453 | (18,132) | (44,404) | 13,049 | 65,247 | |||||
| US Dollars | (365,752) | 365,752 | 453 | (18,132) | (44,404) | 13,049 | 65,247 | |||||
| Equity Instrument | - | - | - | - | (55,339) | - | - | |||||
| Stock Exchange Prices | - | - | - | - | (55,339) | - | - | |||||
| Total | (20,388,949) | 20,388,949 | 598,973 | (492,546) | (801,946) | 427,210 | 1,283,588 | |||||
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| I. | Market risk |
a.1) Foreign currency risk
The Company is exposed to foreign currency risk on borrowings, investments, purchases, dividends and/or interest expenses or income where these are denominated in a currency other than the functional currency of the subsidiary. The main derivative financial instruments used to manage foreign currency risk are futures contracts, swaps, options, non-deliverable forwards and full deliverable forwards.
a.2) Commodity Risk
A significant portion of the Company’s inputs is made up of commodities, which have historically experienced substantial price fluctuations. The Company therefore uses both fixed price purchasing contracts and derivative financial instruments to minimize its exposure to volatility in the commodity prices of aluminum, sugar, wheat and corn. These derivative financial instruments have been designated as cash flow hedges.
a.3) Interest rate risk
The Company applies a dynamic interest rate hedging approach, whereby the target mix between fixed- and floating-rate debt is reviewed periodically. The purpose of the Company’s policy is to achieve an optimal balance between the cost of funding and the volatility of financial results, considering market conditions, as well as the Company’s overall business strategy, which is reviewed periodically.
The table below demonstrates the Company’s exposure related to debts, before and after the application of the interest rate hedging strategy, within the limits established by the risk policy. As at March 31, 2022, the Company was not applying hedges to the exposure described below:
| 03/31/2022 | ||
| Risk | ||
| Interest rate | Amount in Brazilian Real | |
| Brazilian Reais | 7.5% | 2,301,351 |
| Working capital in Argentinean Peso | 36.7% | 91,463 |
| Other | 10.9% | 222,367 |
| US Dollars | 14.0% | 11,631 |
| Canadian Dollars | 2.5% | 365,213 |
| Pre-fixed interest rate | 2,992,025 | |
| Brazilian Reais | 14.0% | 85,782 |
| Post fixed interest rate | 85,782 | |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 12/31/2021 | ||
| Risk | ||
| Interest rate | Amount in Brazilian Real | |
| Brazilian Reais | 7.2% | 2,343,257 |
| Working capital in Argentinean Peso | 34.7% | 30,514 |
| Other | 11.3% | 226,037 |
| US Dollars | 13.1% | 17,450 |
| Canadian Dollars | 2.5% | 430,781 |
| Pre-fixed interest rate | 3,048,039 | |
| Brazilian Reais | 11.6% | 82,999 |
| Post fixed interest rate | 82,999 | |
Sensitivity analysis
The Company substantially mitigates the risks arising from non-derivative financial assets and liabilities, through the use of derivative financial instruments. In this context, the Company has identified the main risk factors that could generate losses from these derivative financial instruments, and has developed a sensitivity analysis based on three scenarios, which may impact the Company’s future results and/or cash flow, as described below:
1 - Probable scenario: Management’s expectations regarding the deterioration of each transaction’s main risk factor. To measure the possible effects on the results of derivative transactions, the Company uses the parametric Value at Risk (“VaR”), a statistical measure developed based on estimates of standard deviation and correlation between the returns of several risk factors. This model provides the loss limit expected for an asset over a certain time period and confidence interval. Under this methodology, we used the potential exposure of each financial instrument, a range of 95% and a horizon of 21 days after March 31, 2022 for the calculation, which are presented in the model.
2 - Adverse scenario: 25% deterioration in each transaction’s main risk factor compared to the level observed as at March 31, 2022.
3 - Remote scenario: 50% deterioration in each transaction’s main risk factor compared to the level observed as at March 31, 2022.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| Transaction | Risk | Fair Value | Probable scenario | Adverse scenario | Remote scenario |
| Commodities hedge | Decrease in commodities price | 581,799 | 479,964 | (113,520) | (808,839) |
| Input purchases | (581,799) | (479,964) | 113,520 | 808,839 | |
| Foreign exchange hedge | Foreign currency decrease | (121,346) | (329,072) | (4,437,944) | (8,754,542) |
| Input purchases | 121,346 | 329,072 | 4,437,944 | 8,754,542 | |
| Cost effects | - | - | - | - | |
| Foreign exchange hedge | Foreign currency decrease | (14,922) | (16,394) | (120,340) | (225,758) |
| Capex Purchases | 14,922 | 16,394 | 120,340 | 225,758 | |
| Fixed asset effects | - | - | - | - | |
| Foreign exchange hedge | Foreign currency decrease | (8,089) | (8,811) | (87,167) | (166,244) |
| Expenses | 8,089 | 8,811 | 87,167 | 166,244 | |
| Expense effects | - | - | - | - | |
| - | - | - | - |
As at March 31, 2022 the Notional and Fair Value amounts per instrument and maturity were as follow:
| Notional Value | |||||||
| Exposure | Risk | 2022 | 2023 | 2024 | 2025 | >2025 | Total |
| Cost | 19,065,964 | 981,704 | - | - | - | 20,047,668 | |
| Commodities | 2,553,251 | 228,026 | - | - | - | 2,781,277 | |
| US Dollars | 16,371,277 | 708,839 | - | - | - | 17,080,116 | |
| Euros | 27,346 | 2,686 | - | - | - | 30,032 | |
| Mexican Pesos | 114,090 | 42,153 | - | - | - | 156,243 | |
| Fixed assets | 379,824 | 41,848 | - | - | - | 421,672 | |
| US Dollars | 379,824 | 41,848 | - | - | - | 421,672 | |
| Expenses | 296,673 | 19,638 | - | - | - | 316,311 | |
| US Dollars | 296,673 | 19,638 | - | - | - | 316,311 | |
| 19,742,461 | 1,043,190 | - | - | - | 20,785,651 | ||
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| Fair Value | |||||||
| Exposure | Risk | 2022 | 2023 | 2024 | 2025 | >2025 | Total |
| Costs | 459,545 | 908 | - | - | - | 460,453 | |
| Commodities | 566,577 | 15,222 | - | - | - | 581,799 | |
| US Dollars | (107,613) | (14,567) | - | - | - | (122,180) | |
| Euros | (1,434) | (10) | - | - | - | (1,444) | |
| Mexican Pesos | 2,015 | 263 | - | - | - | 2,278 | |
| Fixed assets | (13,730) | (1,192) | - | - | - | (14,922) | |
| US Dollars | (13,730) | (1,192) | - | - | - | (14,922) | |
| Expenses | (7,356) | (733) | - | - | - | (8,089) | |
| US Dollars | (7,356) | (733) | - | - | - | (8,089) | |
| 438,459 | (1,017) | - | - | - | 437,442 | ||
| II. | Credit Risk |
Concentration of trade receivables credit risk
A substantial portion of the Company’s sales is made to distributors, supermarkets and retailers, through a broad distribution network. Credit risk is reduced due to the widespread number of customers and control procedures used to monitor risk. Historically, the Company has not incurred significant losses on receivables from customers.
Concentration of counterparty credit risk
In order to minimize the credit risk of its investments, the Company has adopted procedures for the allocation of cash and investments, taking into consideration the credit limits and credit analysis of financial institutions, avoiding credit concentration, i.e. the credit risk is monitored and minimized by restricting negotiations to a select group of highly rated counterparties.
The selection process for financial institutions authorized to operate as counterparties of the Company is set forth in the Credit Risk Policy, which also establishes exposure limits for each counterparty based on each counterparty's risk rating and capitalization.
In order to minimize the credit risk on significant derivative transactions with its counterparties, the Company has adopted bilateral “trigger” clauses. According to these clauses, where the fair value of an operation exceeds a certain percentage of its notional value (generally between 10% and 15%), the debtor must settle the difference in favor of the creditor.
Any deposits or cash available must be kept in accounts with top tier banks, or banks with a high credit rating in the respective country. Any position of a short-term nature (less than six months) should be considered as a deposit or cash.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Counterparty risk must be managed by the Company globally, with product limits established by the treasury area, considering: (i) the counterparty’s credit rating; (ii) the transaction term; (iii) the amount; and (iv) the split between assets and liabilities, in the absence of a clearing clause in derivative contracts.
The counterparty risk is reassessed.
The carrying amounts of cash and cash equivalents, investment securities, trade receivables excluding prepaid expenses, recoverable taxes and derivative financial instruments are disclosed net of provisions for impairment, and represent the maximum exposure to credit risk as at March 31, 2022. As at March 31, 2022, there was no concentration of credit risk on any counterparties in excess of the limits established by the Company’s risk policy.
| III. | Liquidity Risk |
Historically, the Company’s primary sources of cash flow have been cash flow from operating activities, the issuance of debt, bank borrowings and equity securities. Ambev’s material cash requirements have included the following:
· Debt servicing;
· Capital expenditure;
· Investments in companies;
| · | Increases in the ownership of Ambev’s subsidiaries or companies in which it holds equity investments; |
· Share buyback programs; and
· Payments of dividends and interest on shareholders’ equity.
The Company believes that cash flows from operating activities, cash and cash equivalents and short-term investments, together with derivatives and access to loan facilities are sufficient to finance capital expenditures, financial liabilities and dividend payments in the future.
| 03/31/2022 | |||||||
| Carrying amount | Contractual cash flows | Less than 1 year | 1-2 years | 2-3 years | 3-5 years | More than 5 years | |
| Trade and other payables (i) | 33,193,331 | 34,492,492 | 29,765,587 | 392,844 | 2,017,951 | 924,556 | 1,391,554 |
| Secured bank loans | 247,039 | 285,213 | 81,226 | 52,409 | 25,670 | 50,363 | 75,545 |
| Unsecured bank loans | 84,070 | 85,782 | 85,782 | - | - | - | - |
| Debentures and bonds | - | (116,554) | - | - | - | (116,554) | - |
| Other unsecured loans | 130,108 | 286,473 | 47,638 | 42,140 | 32,544 | 21,459 | 142,692 |
| Lease liabilities | 2,639,307 | 2,969,700 | 760,861 | 767,069 | 506,699 | 611,773 | 323,298 |
| 36,293,855 | 38,003,106 | 30,741,094 | 1,254,462 | 2,582,864 | 1,491,597 | 1,933,089 |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 12/31/2021 | |||||||
| Carrying amount | Contractual cash flows | Less than 1 year | 1-2 years | 2-3 years | 3-5 years | More than 5 years | |
| Trade and other payables (i) | 38,976,332 | 40,186,347 | 34,690,647 | 1,279,731 | 2,248,841 | 327,195 | 1,639,933 |
| Secured bank loans | 247,039 | 328,023 | 88,883 | 61,671 | 26,380 | 50,363 | 100,726 |
| Unsecured bank loans | 84,070 | 84,079 | 84,079 | - | - | - | - |
| Other unsecured loans | 130,108 | 234,594 | 46,448 | 48,104 | 29,095 | 20,719 | 90,228 |
| Lease liabilities | 2,639,307 | 3,070,913 | 788,514 | 756,146 | 550,688 | 422,406 | 553,159 |
| 42,076,856 | 43,903,956 | 35,698,571 | 2,145,652 | 2,855,004 | 820,683 | 2,384,046 |
(i) Mainly includes amounts related to suppliers, taxes, fees and contributions payables, dividends and interest on equity payable, salaries and charges, put options related to our participation in subsidiaries and other liabilities, except for related parties, with payment term of less than one year.
| IV. | Equity price risk |
Through the equity swap transactions approved on May 13, 2020 and December 9, 2020 by the Board of Directors of Ambev, the Company, or its subsidiaries, will receive price variations related to its shares traded on the stock exchange, or on its ADRs, thus neutralizing the possible effects of the stock price fluctuations on the share-based payments made by the Company. As these derivative instruments are not eligible for hedge accounting, they were not therefore allocated to any hedging arrangements.
On March 31, 2022, the Company does not have equity swap positions (on March 31, 2021 equity swap operations resulted in a loss of R$55,339).
| V. | Capital management |
The Company is continuously optimizing its capital structure in order to maximize shareholder value while maintaining the desired financial flexibility to execute its strategic projects. Besides the statutory minimum equity funding requirements applicable to the Company’s subsidiaries in different countries, the Company is not subject to any externally imposed capital requirements. When analyzing the capital structure, the Company uses the same debt ratings and capital classifications applied to the interim financial statements.
Financial instruments
(a) Financial instrument categories
The financial instruments held by the Company are managed through operational strategies and internal controls to assure liquidity, profitability, and transaction security. Transactions involving financial instruments are regularly reviewed to assess the effectiveness of the risk exposure that management intends to cover (foreign exchange, and interest rate, among others).
The table below shows all the financial instruments recognized in the financial statements, segregated by category:
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
| 03/31/2022 | |||
| Amortized cost | Fair value through profit or loss | Total | |
| Financial assets | |||
| Cash and cash equivalents less bank overdrafts | 12,796,459 | - | 12,796,459 |
| Trade receivables excluding prepaid expenses | 6,703,375 | - | 6,703,375 |
| Investment securities | 206,949 | 1,345,730 | 1,552,679 |
| Derivatives hedges | - | 624,752 | 624,752 |
| Total | 19,706,783 | 1,970,482 | 21,677,265 |
| Financial liabilities | |||
| Trade payables | 22,513,248 | - | 22,513,248 |
| Put options granted on subsidiaries | - | 2,860,907 | 2,860,907 |
| Derivatives hedges | - | 187,310 | 187,310 |
| Interest-bearing loans and borrowing | 2,986,344 | - | 2,986,344 |
| Other liabilities | 1,894,193 | - | 1,894,193 |
| Total | 27,393,785 | 3,048,217 | 30,442,002 |
| 12/31/2021 | |||
| Amortized cost | Fair value through profit or loss | Total | |
| Financial assets | |||
| Cash and cash equivalents less bank overdrafts | 16,597,184 | - | 16,597,184 |
| Trade receivables excluding prepaid expenses | 7,084,660 | - | 7,084,660 |
| Investment securities | 192,877 | 1,914,607 | 2,107,484 |
| Derivatives hedges | - | 598,973 | 598,973 |
| Total | 23,874,721 | 2,513,580 | 26,388,301 |
| Financial liabilities | |||
| Trade payables | 25,694,967 | - | 25,694,967 |
| Put options granted on subsidiaries | - | 3,291,388 | 3,291,388 |
| Derivatives hedges | - | 492,546 | 492,546 |
| Interest-bearing loans and borrowing | 3,100,524 | - | 3,100,524 |
| Other liabilities | 2,458,381 | - | 2,458,381 |
| Total | 31,253,872 | 3,783,934 | 35,037,806 |
(b) Classification of financial instruments by type of fair value measurement
IFRS 13 defines the fair value as the price that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Also pursuant to IFRS 13, financial instruments measured at fair value shall be classified within the following categories:
Level 1 - quoted prices (unadjusted) in active markets available to the entity for identical assets or liabilities as at the valuation date;
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3 -inputs which are not observable for the asset or liability.
| 03/31/2022 | 12/31/2021 | ||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||
| Financial assets | |||||||||
| Financial asset at fair value through profit and loss | 1,345,730 | - | - | 1,345,730 | 1,914,607 | - | - | 1,914,607 | |
| Derivatives - operational hedge | 166,494 | 458,258 | - | 624,752 | 159,081 | 439,892 | - | 598,973 | |
| 1,512,224 | 458,258 | - | 1,970,482 | 2,073,688 | 439,892 | - | 2,513,580 | ||
| Financial liabilities | |||||||||
| Financial liabilities at fair value through profit and loss | - | - | 2,860,907 | 2,860,907 | - | - | 3,291,388 | 3,291,388 | |
| Derivatives - operational hedge | 33,327 | 153,983 | - | 187,310 | 193,386 | 299,160 | - | 492,546 | |
| 33,327 | 153,983 | 2,860,907 | 3,048,217 | 193,386 | 299,160 | 3,291,388 | 3,783,934 | ||
Reconciliation of changes in the assets categorized at Level 3
| Financial liabilities at December 31, 2021 | 3,291,388 |
| Total gains and losses during the period | (430,481) |
| Losses/(gains) recognized in net income | 29,461 |
| Losses/(gains) recognized in equity | (459,942) |
| Financial liabilities at March 31, 2022 | 2,860,907 |
(c) Fair value of financial liabilities measured at amortized cost
The Company’s liabilities, interest-bearing loans and borrowing, trade payables excluding tax payables, are recorded at amortized cost based on the effective rate method, plus indexation and foreign exchange gains/losses, based on the closing indices for each exercise.
The financial instruments recorded at amortized cost are similar to the fair value and are not sufficiently material to require disclosure.
(d) Fair value of liabilities measured through profit or loss
As part of the negotiations regarding the acquisition of the shares of Tenedora, the Company signed the second amendment to the Shareholders’ Agreement extending the partnership between the Company and ELJ. ELJ is currently the owner of 15% of the shares of Tenedora, and its put options are now divided into two tranches: (i) Tranche A, corresponding to 12.11% of the shares, exercisable in 2023 and 2024; and (ii) Tranche B, corresponding to 2.89% of the shares, exercisable from 2026. The Company, on the other hand, has a call option over the Tranche A shares, exercisable from 2021, and Tranche B shares, exercisable from 2029, whereas until March 31, 2022, no options were exercised. On March 31, 2022, the sum of the two ELJ tranches is R$2,854,324 (R$3,284,805 on December 31, 2021).
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The fair value of Tranche A is calculated considering the interest under the contract, plus foreign exchange variations, less the dividends paid between the date of signature of the amendment and the exercise of the option.
The fair value of Tranche B is calculated based on the EBITDA multiple defined in the contract, less the net debt, brought to its present value, calculated using standard valuation techniques (the present value of the principal amount and future interest, discounted by the local currency’s weighted average cost of capital rate as at the date of the calculation). The criteria used are based on market information from reliable sources and are categorized as “Level 3”.
Calculation of the fair value of derivatives
The Company measures derivative financial instruments by calculating their fair value, using market curves that impact the value of the instrument as at the computation date. In the case of swaps, the asset and the liability positions are estimated independently and brought to their fair value, equivalent to the difference between the results of the asset and liability amounts, which generates the swap’s market value. For traded derivative financial instruments, the fair value is calculated based on the exchange-listed price.
Margins pledged as guarantees
In order to comply with the guarantee requirements regarding derivative exchanges and/or counterparties to certain operations with derivative financial instruments, as at March 31, 2022 the Company held R$1,052,972 in highly liquid financial investments or in cash, classified as cash and cash equivalents and investment securities (R$1,152,769 as at December 31, 2021).
Offsetting of financial assets and liabilities
For financial assets and liabilities subject
to settlement agreements on a net basis or similar agreements, each agreement between the Company and the counterparty allows this type
of settlement when both parties opt for this. In the absence of such a decision, the assets and liabilities will be settled at their gross
amounts, but each party shall have the option to settle on a net basis, in case of a default by the counterparty.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
24. COLLATERAL AND CONTRACTUAL COMMITMENTS WITH SUPPLIERS, ADVANCES FROM CUSTOMERS AND OTHERS
| 03/31/2022 | 12/31/2021 | |
| Collateral given for the Company’s own liabilities | 739,788 | 788,709 |
| Other commitments | 1,435,415 | 1,718,968 |
| 2,175,203 | 2,507,677 | |
| Commitments to suppliers | 45,866,280 | 51,561,982 |
| 45,866,280 | 51,561,982 |
The collateral provided for liabilities totaled approximately R$2,175,203 as at March 31, 2022 (R$2,507,677 as at December 31, 2021), including R$688,752 (R$682,636 as at December 31, 2021) of cash guarantees. The deposits in cash used as guarantees are presented as part of other assets. To provide the guarantees required for derivatives exchanges and/or counterparties contracted in certain derivative financial instrument transactions, as at March 31, 2022, Ambev maintained R$1,052,972 (R$1,152,769 as at December 31, 2021) in highly liquid financial investments or in cash, classified as cash and cash equivalents and investment securities (Note 23 - Financial instruments and risks).
Most of the balance relates to commitments to suppliers of packaging.
Future contractual commitments as at March 31, 2022 and December 31, 2021 are as follow:
| 03/31/2022 | 12/31/2021 | |
| Less than 1 year | 10,500,213 | 11,559,858 |
| Between 1 and 2 years | 9,494,831 | 9,982,233 |
| More than 2 years | 25,871,236 | 30,019,891 |
| 45,866,280 | 51,561,982 |
| 25. | CONTINGENCIES |
The Company has contingent liabilities related to lawsuits arising in the normal course of its business. Due to their nature, such legal proceedings involve certain uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions, and therefore the Company’s management cannot estimate the likely timing of the resolution of these matters at this stage.
Contingent liabilities with a probable outcome are fully recorded as liabilities (Note 14 - Provisions).
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The Company and its subsidiaries have lawsuits related mainly to tax for which the likelihood of loss is classified as possible by management, and for which there are no provisions, as the composition and estimates of these amounts are as follow:
| 03/31/2022 | 12/31/2021 | |
| Income tax and social contribution | 55,034,341 | 54,258,733 |
| Value-added and excise taxes | 24,537,488 | 23,912,359 |
| PIS and COFINS | 3,014,826 | 2,667,560 |
| Others | 1,667,963 | 1,606,253 |
| 84,254,618 | 82,444,905 |
Principal lawsuits with a likelihood of possible loss
Except for monetary inflation, there were no relevant changes in the main cases with possible chances of loss when compared to the period ended December 31, 2021.
Contingent assets
In 2017, the STF decided for, in the judgment of RE No. 574,706/PR, with binding effects, the unconstitutionality of the inclusion of ICMS in the taxable basis of PIS and COFINS. Such decision was ratified by the STF in May 2021, within the judgement of the amendment presented by the General Attorney's Office (PGFN), when the Court confirmed that the ICMS to be excluded from the PIS and COFINS taxable basis is that declared in the invoice and determined that the decision should produce effects only as of March 15, 2017 (date on which RE 574,706/PR was ruled), except for taxpayers who had judicial and administrative claims filed until that date (which is the case for the Company and its subsidiaries).
The Company and its subsidiaries have several lawsuits related to this matter, some with final and unappealable favorable decisions. As the federal tax regime applicable to the soft drinks and beer sector has changed over time, the Company and its subsidiaries have lawsuits which refer to three different periods: (i) 1990 to 2009, (ii) 2009 to 2015 (period in which the “REFRI Taxation Model” was in force - special soft drinks and beer regime, provided for Article 58-J of Law No. 10,833 of 2003) and (iii) from 2015 onwards (also known as “New Model Taxation”).
From 2018 to 2022, the Company and its subsidiaries recognized, in accordance with IAS 37, recoverable tax credits related to this matter in the total amount of R$7.6 billion, of which (i) R$0.7 billion is related to the period from 1990 to 2009 and R$2.4 billion refers to New Model Taxation, being R$1.7 billion related to the period from 05/2015 to 02/2017 and R$0.7 related to the period from 03/2017 to 12/2018 when the Company and its subsidiaries implemented the judicial decisions authorizing the exclusion of the ICMS from the PIS and COFINS taxable basis in its regular transactions and which right of recovery is protected considering the decision rendered by the STF in the context of the judgment of RE 574.706/PR and (ii) R$4.45 billion is related to periods from 2009 to 2015, during which the REFRI Taxation Model was in effect. Part of these amounts has already been offset by the Company and its subsidiaries, according to the final and unappealable decision of the respective judicial lawsuit and the necessary administrative procedures. Amounts yet to be offset remain registered in the asset account (see Note 8 – Recoverable Taxes).
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The accounting recognition of the amounts mentioned above occurred as a result of (i) the realization of the gain being virtually certain according to the decision provided by the STF in RE 574,706/PR and the specific circumstances of each case; and (ii) the fact that the amount could be estimated with sufficient reliability, by collecting the respective documents and quantifying the related amount. As to the tax credit related to the period in which the REFRI was in force, the amount could be estimated with sufficient reliability after several analyses made (with the assistance of our external consultants) that allowed (i) the identification of the total ICMS included per liter in the retail selling prices that were verified by the Federal Government at the time and that had an impact on the reference prices used as the basis for determination of the PIS and COFINS; and (ii) the calculation of the exclusion of such total ICMS from the taxable basis of PIS and COFINS in the transactions carried out by the Company and its subsidiaries.
In addition, with respect to transactions realized after the implementation of the individual judicial decisions authorizing the exclusion of the ICMS from the PIS and COFINS taxable basis, the Company and its subsidiaries had a positive impact of R$4.1 billion, net of the amounts mentioned above, which represented a reduction in the PIS and COFINS expense.
For additional matters related to the New Model Taxation, the Company estimates that the contingent asset corresponds to R$0.2 billion, which will be recognized once the realization of the gain is virtually certain given the specific circumstances of the case and upon confirmation of the estimated values with sufficient reliability.
26. RELATED PARTIES
Policy and practices regarding the realization of transactions with related parties
The Company adopts the corporate governance practices recommended and/or required by the applicable laws.
Under the Company’s by-laws, the Board of Directors is responsible for approving any transactions or agreements between the Company and/or any of its subsidiaries (except for full subsidiaries), its directors and/or shareholders (including direct or indirect shareholders of the Company). The Antitrust Compliance and Related Parties Committee of the Company is required to advise the Board of Directors of the Company on all transactions with related parties.
Management is prohibited from interfering in any transaction in which a conflict of interest exists, even in theory, with the Company’s interests. Management also are not permitted to interfere in decisions of any other members of management, and the Minutes of Meeting of the Board are required to document any decision to abstain from the respective deliberations.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The Company’s guidelines on related parties require it to follow reasonable or commutative terms, similar to those prevailing in the market, or under which the Company would contract similar transactions with third parties. These related parties transactions are clearly disclosed in the interim financial statements as formalized in the written contracts.
Transactions with management members
In addition to short-term benefits (primarily salaries), management members are entitled to participate in the Stock Option Plan and Share-Based Payments Plan (Note 22 - Share-based payments).
Total expenses related to the Company’s management members are as follow:
| 03/31/2022 | 03/31/2021 | |
| Short-term benefits (i) | 16,086 | 28,828 |
| Share-based payments (ii) | 11,708 | 10,765 |
| Total key Management remuneration | 27,794 | 39,593 |
(i) These mainly correspond to management’s salaries and profit sharing (including performance bonuses).
(ii) These correspond to the compensation cost of share options and restricted stocks granted to management. These amounts exclude remuneration paid to members of the Fiscal Council.
Excluding the abovementioned plan (Note 22 - Share-based payments), the Company no longer has any types of transaction with the Management members or pending balances receivable or payable in its balance sheet.
Transactions with the Company's shareholders:
a) Medical, dental and other benefits
Fundação Zerrenner is one of Ambev’s shareholders, and at March 31, 2022 held 10.2% of its total share capital. Fundação Zerrenner is also an independent legal entity whose main goal is to provide Ambev’s employees, both active and retired, with health care and dental assistance, technical and higher education courses, and facilities for assisting elderly people, either directly or through financial assistance agreements with other entities. As at March 31, 2022 and December 31, 2021, actuarial obligations related to the benefits provided directly by Fundação Zerrenner were fully funded by plan assets, held for that purpose, which significantly exceeded the liabilities at these dates. Ambev recognizes the assets (prepaid expenses) of this plan to the extent of the economic benefits available to the Company, arising from reimbursements or from reductions in future contributions.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The expenses incurred by Fundação Zerrenner with third parties, for providing these benefits totaled R$73,726 (R$69,777 as at March 31, 2021), of which R$64,646 and R$9,080 were related to active employees and retirees respectively (R$62,224 and R$7,553 as at March 31, 2021 related to active employees and retirees respectively).
b) Leasing
Ambev, through its subsidiary BSA (labeling), has an asset leasing agreement with Fundação Zerrenner, for R$23,964, for four years and with monthly payments until December 31, 2022.
c) Leasing - Ambev head office
Ambev has a leasing agreement for two sets of commercial premises with Fundação Zerrenner, for R$5,277, for five years and with monthly payments until December 31, 2025.
d) Licensing agreement
The Company has a licensing agreement with Anheuser-Busch, Inc. to produce, bottle, sell and distribute Budweiser products in Brazil, Canada and Argentina, and sales and distribution agreements for Budweiser products in Guatemala, the Dominican Republic, Paraguay, El Salvador, Nicaragua, Uruguay, Chile, Panama, Costa Rica and Puerto Rico. In addition, the Company produces and distributes Stella Artois products under a license to AB InBev in Brazil and Canada and, through a license granted to AB InBev, also distributes Brahma products in the United States and several other countries such as the United Kingdom, Spain, Sweden, Finland and Greece. The amount recorded in relation to this agreement was R$3,195 as at March 31, 2022 (R$326 as at March 31, 2021) and R$164,041 (R$163,248 as at March 31, 2022) as licensing income and expenses, respectively.
Ambev has licensing agreements with the Group
Modelo, subsidiaries of AB InBev, to import, promote and sell Corona products (Corona Extra, Corona Light, Coronita, Pacifico and Modelo)
in Latin America and Canada.
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
Transactions with related parties
| 03/31/2022 | ||||
| Current | Trade receivables (i) | Other trade receivables (i) | Trade payables (i) | Dividends receivables |
| AB Africa | 4,087 | - | - | - |
| AB InBev | 118,172 | - | (197,352) | - |
| AB Package | - | - | (110,269) | - |
| AB Services | 22,803 | - | (3,113) | - |
| AB USA | 45,801 | 6,355 | (280,060) | - |
| Bavaria | 9,006 | - | (13,962) | - |
| Cervecería Modelo | 13,279 | - | (403,305) | - |
| Cervecerías Peruanas | 316 | - | (7,838) | - |
| Inbev | 656 | 21,968 | (52,526) | - |
| Panama Holding | 3,473 | - | - | 1,364 |
| Other | 10,825 | 907 | (39,161) | - |
| 228,418 | 29,230 | (1,107,586) | 1,364 | |
(i) The amount represents trading operations (purchase and sale) and reimbursements between the companies of the group.
| 12/31/2021 | ||||
| Current | Trade receivables (i) | Other trade receivables (i) | Trade payables (i) | Dividends receivables |
| AB Africa | 5,282 | - | - | - |
| AB InBev | 45,423 | - | (167,018) | - |
| AB Package | - | - | (63,117) | - |
| AB Services | 32,698 | - | (3,024) | - |
| AB USA | 34,498 | 11,454 | (330,678) | - |
| Bavaria | 3,604 | - | (11,046) | - |
| Cervecería Modelo | 6,133 | - | (548,431) | - |
| Cervecerías Peruanas | 3,362 | - | (16,594) | - |
| Inbev | 813 | 26,412 | (26,448) | - |
| Panama Holding | 4,643 | - | - | 1,512 |
| Other | 16,627 | 1,093 | (43,867) | - |
| 153,083 | 38,959 | (1,210,223) | 1,512 | |
(i) The amount represents trading operations (purchase and sale) and reimbursements between the companies of the group.
| 03/31/2022 | 12/31/2021 | |
| Non-current | Trade payables | Trade payables |
| ITW International | (343,176) | (407,916) |
| (343,176) | (407,916) |
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
The tables below represent transactions with related parties, recognized in the income statement:
| 03/31/2022 | ||||||
| Company | Sales and other | Service fees / Reimbursement of expenses and other receivables | Product purchases and other | Service fees / reimbursement of expenses and other payables | Net finance cost | |
| AB InBev | - | - | (42,554) | - | - | |
| AB Package | - | - | (86,608) | - | - | |
| AB USA | 6,453 | - | (257,936) | (816) | - | |
| Ambev Peru | 331 | - | - | - | - | |
| Bavaria | 50,109 | - | (14,790) | - | - | |
| Cervecería Modelo | 630 | - | (398,328) | - | - | |
| Cervecerías Peruanas | - | - | (7,607) | - | - | |
| GCC India | - | - | - | (1,990) | - | |
| Inbev | - | - | (68,066) | - | - | |
| ITW International | - | - | - | - | 3,322 | |
| Other | 849 | 3,259 | (37,326) | - | - | |
| 58,372 | 3,259 | (913,215) | (2,806) | 3,322 | ||
| 03/31/2021 | ||||||
| Company | Sales and other | Service fees / Reimbursement of expenses and other receivables | Product purchases and other | Service fees / reimbursement of expenses and other payables | Net finance cost | |
| AB InBev | - | - | (32,193) | - | - | |
| AB Package | - | - | (72,608) | - | - | |
| AB Procurement | - | - | - | (16,104) | - | |
| AB USA | 5,205 | - | (294,923) | (825) | - | |
| Ambev Peru | 1,368 | - | - | - | - | |
| Bavaria | 1,894 | - | (19,558) | - | - | |
| Cervecería Modelo | - | - | (436,422) | - | - | |
| Cervecerías Peruanas | 3,539 | - | (9,605) | - | - | |
| GCC India | - | - | - | (1,896) | - | |
| Inbev | - | - | (32,903) | - | - | |
| ITW International | - | - | - | - | 12,992 | |
| Other | 4,344 | 38 | (28,302) | - | - | |
| 16,350 | 38 | (926,514) | (18,825) | 12,992 | ||
AMBEV S.A. |
Notes to the interim consolidated financial statements For the period ended March 31, 2022 All amounts in thousands of Brazilian Reais unless otherwise stated |
List of companies included in the tables above:
| AB InBev Procurement GmbH (“AB Procurement”) |
| Ambrew S.A.R.L. (“Ambrew”) |
| Anheuser-Busch Inbev Africa (Pty) Ltd. (“AB Africa”) |
| Anheuser-Busch InBev N.V. (“AB InBev”) |
| Anheuser-Busch Inbev Services LLC (“AB Services”) |
| Anheuser-Busch Inbev USA LLC (“AB USA”) |
| Anheuser-Busch Packaging Group Inc. (“AB Package”) |
| Bavaria S.A. (“Bavaria”) |
| Cervecería Modelo de Mexico S. de R.L. de C.V. (“Cervecería Modelo”) |
| Cerveceria Nacional S de RL (“Panamá Holding”) |
| Compañia Cervecera Ambev Peru S.A.C. (“Ambev Peru”) |
| GCC Services India Private Ltd. (“GCC India”) |
| Inbev Belgium N.V. (“Inbev”) |
| Interbrew International B.V. (“ITW International”) |
| Oriental Brewery Co. Ltd. (“Oriental Brewery”) |
| Unión de Cervecerias Peruanas Backus Y Johnston S.A.A. (“Cervecerías Peruanas”) |
SIGNATURE
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.
Date: May 17, 2022
| AMBEV S.A. | ||
| By: | /s/ Lucas Machado Lira | |
|
Lucas Machado Lira Chief Financial and Investor Relations Officer | ||