EMPRESAS COPEC SA CONSOLIDATED FINANCIAL

Transcription

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EMPRESAS COPEC S.A.
CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2013
INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2014
IFRS or NIIF in Spanish - International Financial Reporting Standards
IAS - International Accounting Standards
IFRIC - International Financial Reporting Interpretations Committee
ThUS$ - Thousands of U.S. dollars
MUS$ - Millions of U.S. dollars
MM CLP – Millions of Chilean pesos
(Free Translation of financial statements originally issued in Spanish, for the convenience of the readers
outside Chile)
Empresas Copec S.A.- Interim Consolidated Financial Statements as of September 2014
Index to the interim consolidated financial statements of Empresas Copec S.A. and affiliates
Notes
Page
CLASSIFIED STATEMENT OF FINANCIAL POSITION ............................................................................... 1
CLASSIFIED STATEMENT OF FINANCIAL POSITION ............................................................................... 2
STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION.................................................................. 3
STATEMENT OF COMPREHENSIVE INCOME ............................................................................................. 4
STATEMENT OF CHANGES IN NET EQUITY ................................................................................................ 6
CONSOLIDATED STATEMENT OF CASH FLOWS, DIRECT METHOD ................................................... 8
NOTE 1. CORPORATE INFORMATION ......................................................................................................... 10
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES..................................................... 12
2.1
BASES OF PRESENTATION ................................................................................................................. 12
2.2
BASES OF CONSOLIDATION ................................................................................................................ 14
2.3
FINANCIAL INFORMATION OF OPERATING SEGMENTS ...................................................................... 16
2.4
TRANSACTIONS IN CURRIENCIES OTHER THAN THE FUNCTIONAL CURRENCY ..................... 17
2.5
PROPERTY, PLANT AND EQUIPMENT .................................................................................................. 19
2.6
BIOLOGICAL ASSETS .......................................................................................................................... 20
2.7
INVESTMENT PROPERTY .................................................................................................................... 20
2.8
INTANGIBLE ASSETS ........................................................................................................................... 21
2.9
INTEREST COSTS................................................................................................................................ 23
2.10
IMPAIRMENT LOSSES FOR NON-FINANCIAL ASSETS .......................................................................... 23
2.11
FINANCIAL ASSETS ............................................................................................................................. 24
2.12
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY ........................................................ 25
2.13
INVENTORY......................................................................................................................................... 26
2.14
TRADE AND OTHER RECEIVABLES...................................................................................................... 27
2.15
CASH AND CASH EQUIVALENTS.......................................................................................................... 27
2.16
PAID-IN CAPITAL ................................................................................................................................. 27
2.17
TRADE AND OTHER PAYABLES ........................................................................................................... 28
2.18
INTEREST-BEARING LOANS ................................................................................................................ 28
2.19
INCOME TAXES AND DEFERRED TAXES .............................................................................................. 28
2.20
EMPLOYEE BENEFITS ......................................................................................................................... 29
2.21
PROVISIONS ....................................................................................................................................... 30
2.22
REVENUE RECOGNITION .................................................................................................................... 30
2.23
LEASES............................................................................................................................................... 31
2.24
NON-CURRENT ASSETS HELD FOR SALE............................................................................................ 32
i
2.25
DIVIDEND DISTRIBUTION .................................................................................................................... 32
2.26
ENVIRONMENT ................................................................................................................................... 32
2.27
BUSINESS COMBINATIONS ................................................................................................................. 33
2.28
IMPAIRMENT ....................................................................................................................................... 33
2.29
CASH FLOWS STATEMENT .................................................................................................................. 34
2.30
EARNINGS PER SHARE ...................................................................................................................... 35
2.31
CLASSIFICATION OF CURRENT AND NON CURRENT BALANCE .......................................................... 35
NOTE 3. FINANCIAL INSTRUMENTS ............................................................................................................ 36
3.1
CASH AND CASH EQUIVALENTS .............................................................................................. 36
3.2
OTHER CURRENT FINANCIAL ASSETS ................................................................................... 37
3.3
TRADE AND OTHER RECEIVABLES ......................................................................................... 38
3.4
OTHER NON FINANCIAL ASSETS.............................................................................................. 40
3.5
OTHER FINANCIAL LIABILITIES ................................................................................................. 41
3.6
OTHER FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS ............. 45
3.7
FAIR VALUE HIERARCHY ............................................................................................................ 45
3.8
HEDGING FINANCIAL INSTRUMENTS ...................................................................................... 46
NOTE 4. FINANCIAL RISK MANAGEMENT ................................................................................................. 48
NOTE 5. ACCOUNTING ESTIMATES AND JUDGMENT ........................................................................... 63
NOTE 6. INVENTORY ........................................................................................................................................ 66
NOTE 7. BIOLOGICAL ASSETS ..................................................................................................................... 66
NOTE 8. CURRENT TAX ASSETS AND LIABILITIES ................................................................................ 69
NOTE 9. NON CURRENT ASSETS AND LIABILITIES HELD FOR SALE .............................................. 70
NOTE 10. INTANGIBLE ASSETS AND GOODWILL ................................................................................... 71
NOTE 11. PROPERTY, PLANT AND EQUIPMENT ..................................................................................... 75
NOTE 12. LEASES ............................................................................................................................................. 77
NOTE 13. INVESTMENT PROPERTY ............................................................................................................ 79
NOTE 14. DEFERRED TAXES ......................................................................................................................... 79
NOTE 15. TRADE AND OTHER PAYABLES ................................................................................................ 83
NOTE 16. BALANCES AND TRANSACTIONS WITH RELATED PARTIES ........................................... 83
16.1
RECEIVABLES FROM RELATED ENTITIES .......................................................................................... 84
16.2
PAYABLES TO RELATED ENTITIES ..................................................................................................... 85
16.3
TRANSACTIONS WITH RELATED ENTITIES ......................................................................................... 86
16.4
BOARD OF DIRECTORS AND KEY MEMBERS OF MANAGEMENT ....................................................... 88
ii
NOTE 17. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES .......................... 88
NOTE 18. OBLIGATIONS FOR EMPLOYEES BENEFITS ....................................................................... 108
NOTE 19. INVESTMENTS IN AFFILIATES AND ASSOCIATES ACCOUNTED FOR USING THE
EQUITY METHOD ........................................................................................................................ 109
NOTE 20. LOCAL AND FOREIGN CURRENCY ......................................................................................... 121
NOTE 21. SHARES .......................................................................................................................................... 124
NOTE 22. NET DISTRIBUTABLE INCOME AND EARNINGS PER SHARE ......................................... 124
NOTE 23. OPERATING REVENUES ............................................................................................................ 126
NOTE 24. FINANCIAL INCOME AND EXPENSES .................................................................................... 127
NOTE 25. EXCHANGE DIFFERENCES ....................................................................................................... 127
NOTE 26. IMPAIRMENT OF ASSETS .......................................................................................................... 128
NOTE 27 RETAINED EARNINGS……………………………………………………………………………129
NOTE 28. ENVIRONMENT.............................................................................................................................. 129
NOTE 29. OPERATING SEGMENTS ............................................................................................................ 135
NOTE 30. BORROWING COSTS .................................................................................................................. 141
NOTE 31. SUBSEQUENT EVENTS .............................................................................................................. 141
iii
Classified Statement of Financial Position
Note
Assets
Current assets
Cash and cash equivalents
Other current financial assets
Other current non-financial assets
Current trade and other receivables
Current receivables from related parties
Inventories
Current biological assets
Current tax assets
3.1
3.2
3.4
3.3
16.1
6
7
8
09.30.2014
ThUS$
12.31.2013
ThUS$
1,954,361
170,515
223,926
1,791,744
330,900
1,726,010
304,884
104,919
1,508,139
160,404
224,343
1,842,747
184,725
1,592,645
263,056
91,985
6,607,259
5,868,044
13,939
15,488
0
0
13,939
15,488
6,621,198
5,883,532
60,707
161,883
53,537
6,267
741,321
929,440
203,199
9,932,324
3,576,232
52,681
253,860
59,052
153,097
58,905
6,174
970,893
1,001,690
209,960
10,082,124
3,635,246
59,026
248,611
Total non-current assets
15,971,451
16,484,778
Total assets
22,592,649
22,368,310
Total current assets other than assets or disposal groups held for sale or
held for distribution to equity holders
Non-current assets or disposal groups held for sale
9
Non-current assets or disposal groups held for distribution to equity holders
Non-current assets or disposal groups held for sale or held for
distribution to equity holders
Total current assets
Non-current assets
Other non-current financial assets
Other non-current non-financial assets
Non-current rights receivable
Non-current receivables from related parties
Equity method investments
Intangible assets other than goodwill
Goodwill
Property, plant and equipment
Non-current biological assets
Investment property
Deferred tax assets
3.4
3.3
16.1
19
10
10
11
7
13
14a
1
Classified Statement of Financial Position
Note
Equity and liabilities
Liabilities
Current liabilities
Other current financial liabilities
Trade and other payables
Current payables to related parties
Other current provisions
Current tax liabilities
Current provisions for employee benefits
Other current non-financial liabilities
3.5
15
16.2
17
8
18
09.30.2014
ThUS$
12.31.2013
ThUS$
1,257,279
1,596,563
34,025
10,545
184,123
5,531
331,985
1,249,933
1,788,930
22,270
13,315
99,731
6,098
217,492
3,420,051
3,397,769
0
0
3,420,051
3,397,769
5,968,190
867
5,466
72,153
2,327,841
76,052
167,025
5,862,497
1,304
5,311
35,207
1,987,683
82,295
176,414
8,617,594
8,150,711
12,037,645
11,548,480
686,114
9,563,609
0
0
0
(342,009)
686,114
9,475,164
0
0
0
(49,264)
9,907,714
10,112,014
647,290
707,816
Total equity
10,555,004
10,819,830
Total equity and liabilities
22,592,649
22,368,310
Total current liabilities other than liabilities included in disposal groups
held for sale
Liabilities included in disposal groups held for sale
9
Total current liabilities
Non-current liabilities
Other non-current financial liabilities
Other payables
Non-current payables to related parties
Other non-current provisions
Deferred tax liabilities
Non-current provisions for employee benefits
Other payables non-financial assets
3.5
16.2
17
14a
18
Total non-current liabilities
Total liabilities
Equity
Issued capital
Accumulated gains (losses)
Share premium
Own shares held in portfolio
Other shares in equity
Other reserves
Equity attributable to equity holders of parent company
Non controlling interests
27
2
Statement of Comprehensive Income by Function
Note
Gain (loss)
Operating revenues
Cost of sales
23
Gross margin
Gain on the derecognition of financial assets measured at amortized cost
Loss on the derecognition of financial assets measured at amortized cost
Other income by function
Distribution costs
Administrative expenses
Other expenses by function
Other gains (losses)
Financial income
Financial costs
Share in profit (loss) of associates and joint ventures from equity method
Exchange differences
Income for adjustments units
Gain (loss) on difference between previous book value and fair value of reclassified financial
assets measured at fair value
24
24
19
25
09.30.2014
Jul - Sep 14
ThUS$
09.30.2013
ThUS$
18,067,859
(15,620,667)
18,466,936
(16,035,133)
6,065,191
(5,277,335)
6,281,887
(5,475,268)
2,447,192
2,431,803
787,856
806,619
0
0
242,595
(690,927)
(839,349)
(138,118)
193,811
37,079
(251,015)
71,419
(29,226)
(10,029)
0
0
335,516
(675,679)
(843,392)
(172,446)
(141)
36,045
(282,068)
106,796
(7,220)
(3,716)
0
0
81,007
(244,166)
(271,364)
(31,889)
(523)
10,225
(87,625)
20,274
(25,773)
(1,804)
0
0
95,437
(232,280)
(273,774)
(48,176)
1,376
10,423
(86,858)
39,545
(2,238)
(3,689)
ThUS$
Jul - Sep 13
ThUS$
0
0
0
0
1,033,432
925,498
236,218
306,385
(264,385)
(191,982)
(71,950)
(61,257)
Income (loss) from continuing operations
769,047
733,516
164,268
245,128
Income (loss) from discontinued operations
0
28,897
0
(109)
769,047
762,413
164,268
245,019
731,065
37,982
702,855
59,558
153,532
10,736
217,169
27,850
769,047
762,413
164,268
245,019
0.5624209
0.0000000
0.5184875
0.0222310
0.1181148
0.0000000
0.1671557
(0.0000839)
0.5624209
0.5407185
0.1181148
0.1670719
0.5624209
0.0000000
0.5184875
0.0222310
0.118115
0.000000
0.167156
(0.000084)
0.5624209
0.5407185
0.1181148
0.1670719
Income (loss) before taxes
Income tax expense
Income (loss)
14b
Income (loss) attributable to
Income (loss) attributable to equity holders of parent
Income (loss) attributable to non controlling interests
Income (loss)
Earnings per share
Basic earnings per share
Basic earnings (loss) per share from continuing operations
Basic earnings (loss) per share from discontinued operations
Basic earnings (loss) per share
Diluted earnings per share
Diluted earnings (loss) per share from continuing operations
Diluted earnings (loss) per share from discontinued operations
Diluted earnings (loss) per share
3
Statement of Comprehensive Income
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 14
ThUS$
Jul - Sep 13
ThUS$
Statement of comprehensive income
Gain (loss)
Components of other comprehensive income that will not be reclassified to profile
Other comprehensive income, before taxes, profits (losses) from revaluation
Other comprehensive income, before taxes and actuarial gains (losses) from definedbenefits plans
Other comprehensive income, before taxes, profits (losses) from new measurements of
defined benefit plans
Share of other comprehensive income of associates and joint ventures accounted for using
equity method that will not be reclassified to profit or loss before tax
769,047
762,413
164,268
245,019
0
0
0
0
0
0
0
0
(3,763)
(3,575)
(558)
(1,533)
0
0
0
0
0
1,357
0
1,747
(3,763)
(2,218)
(558)
214
(277,739)
(234,651)
(307,059)
24,462
0
0
0
0
(277,739)
(234,651)
(307,059)
24,462
Reclassification adjustments for available-for-sale financial assets, before taxes
706
0
(1,138)
0
702
0
(540)
0
Other comprehensive income before taxes, available-for-sale financial assets
706
(1,138)
702
(540)
4,836
0
0
45,594
0
0
(13,885)
0
0
(2,983)
0
0
4,836
45,594
(13,885)
(2,983)
Other comprehensive income that will not be reclassified to profile
Components of other comprehensive income, before taxes
Foreign currency translation differences
Gain (loss) on foreign currency translation differences, before taxes
Reclassification adjustments for foreign currency translation differences, before taxes
Other comprehensive income, before taxes and foreign currency translation
differences
Available-for-sale financial assets
Gain (loss) on new measurements of available-for-sale financial assets, before taxes
Cash flow hedges
Gain (loss) on cash flow hedges, before taxes
Reclassification adjustments for cash flow hedges, before taxes
Adjustments for amounts transferred to the initial book value of hedged items
Other comprehensive income, before taxes, cash flow hedges
Other comprehensive income, before taxes and gains (losses) from investments in equity
instruments
(3)
0
(3)
0
Other comprehensive income before taxes and gains (losses) from revaluation
0
0
0
0
Other comprehensive income, before taxes and actuarial gains (losses) from defined-benefits
plans
0
(148)
0
(1,258)
Share in other comprehensive income of equity method associates and joint ventures
0
(3,735)
0
(1,834)
(272,200)
(194,078)
(320,245)
17,847
Other components of other comprehensive income, before taxes
4
Income tax related to components of other comprehensive income that will not be
classified in net income for the period
Income tax related to defined benefit plans of other comprehensive income
0
0
0
0
0
0
0
0
0
0
0
0
0
(8)
2,727
0
0
(163)
(3,901)
0
(9)
0
12,246
0
(1,453)
0
7,678
0
Income taxes related to components of other comprehensive income
Income taxes related to foreign currency translation differences in other comprehensive
income
Income taxes related to investments in equity instruments in other comprehensive income
Income taxes related to available-for-sale financial assets in other comprehensive income
Income taxes related to cash flow hedges in other comprehensive income
Income taxes related to changes in revaluation surplus in other comprehensive income
Income taxes related to defined-benefit plans in other comprehensive income
Reclassification adjustments from income taxes related to components of other
comprehensive income
911
743
911
557
3,630
(3,321)
13,148
6,782
Other comprehensive income
(272,333)
(199,617)
(307,655)
24,843
Total comprehensive income
496,714
562,796
(143,387)
269,862
458,769
37,945
504,133
58,663
(152,956)
9,569
241,946
27,916
496,714
562,796
(143,387)
269,862
Total income taxes related to components of other comprehensive income
Comprehensive income attributable to
Comprehensive income attributable to equity holders of parent company
Comprehensive income attributable to minority interest
Total comprehensive income
5
Statement of Changes in Net Equity
Ordinary Shares
CURRENT PERIOD - 09/2014 (ThUS$)
Current period opening balance: January 1, 2014
Share Capital
Legal and
Statutory
Reserves
Share
Premium
Available-forSale Reserves
Translation
Adjustment
Reserves
Defined Benefit
Plans
Other
Miscellaneous
Reserves
Hedge
Reserves
Other Reserves
Changes in
Retained
Earnings
(Accumulated
Losses)
Changes in Net Equity
Attributable to Equity
Changes in Non
Holders of Parent,
Controlling Interests
Total
Changes in Net
Equity, Total
686,114
0
0
642
(470,258)
(8,657)
(17,951)
446,960
(49,264)
9,475,164
10,112,014
707,816
10,819,830
Increase (decrease) from changing in accounting policies
0
0
0
0
0
0
0
0
0
0
0
0
0
Increase (decrease) from correction of errors
0
0
0
0
0
0
0
0
0
0
0
0
0
686,114
0
0
642
(470,258)
(8,657)
(17,951)
446,960
(49,264)
9,475,164
10,112,014
707,816
10,819,830
Gain (loss)
0
0
0
0
0
0
0
0
0
731,065
731,065
37,982
769,047
0
0
(3)
698
(277,698)
(2,850)
7,558
0
(272,295)
(1)
(272,296)
(37)
(272,333)
Comprehensive income
0
0
(3)
698
(277,698)
(2,850)
7,558
0
(272,295)
731,064
458,769
37,945
496,714
Issuance of equity
0
0
0
0
0
0
0
0
0
0
0
0
0
Dividends
0
0
0
0
0
0
0
0
0
(288,259)
(288,259)
0
(288,259)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(20,450)
0
(20,450)
0
(354,360)
0
(374,810)
0
(98,471)
0
(473,281)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(3)
698
(277,698)
(2,850)
7,558
(20,450)
(292,745)
88,445
(204,300)
(60,526)
(264,826)
686,114
0
(3)
1,340
(747,956)
(11,507)
(10,393)
426,510
(342,009)
9,563,609
9,907,714
647,290
10,555,004
Adjusted opening balance
Changes in equity
Increase (decrease) from other contributions from equity holders
Decrease (increase) from other distributions to equity holders
Increase (decrease) from transfers and other changes
Increase (decrease) from transactions involving shares in portfolio
Increase (decrease) from changes in shares in subsidiaries that do
not imply loss of control
Total changes in equity
Current period ending balance 09.30.2014
6
Ordinary Shares
PREVIOUS PERIOD - 09/2013 (ThUS$)
Previous period opening balance: January 1, 2013
Share Capital
Legal and
Statutory
Reserves
Share
Premium
Available-forSale Reserves
Translation
Adjustment
Reserves
Defined Benefit
Plans
Other
Miscellaneous
Reserves
Hedge
Reserves
Other Reserves
Changes in
Retained
Earnings
(Accumulated
Losses)
Changes in Net Equity
Attributable to Equity
Changes in Non
Holders of Parent, Controlling Interests
Total
Changes in Net
Equity, Total
686,114
0
0
2,687
(110,812)
0
(60,970)
377,795
208,700
9,021,679
9,916,493
845,899
10,762,392
Increase (decrease) from changing in accounting policies
0
0
0
0
0
0
0
0
0
0
0
0
0
Increase (decrease) from correction of errors
0
0
0
0
0
0
0
0
0
0
0
0
0
686,114
0
0
2,687
(110,812)
0
(60,970)
377,795
208,700
9,021,679
9,916,493
845,899
10,762,392
Gain (loss)
0
0
0
0
0
0
0
0
0
702,855
702,855
59,558
762,413
0
0
0
(1,301)
(233,775)
(2,980)
41,712
(2,378)
(198,722)
0
(198,722)
(895)
(199,617)
0
0
0
(1,301)
(233,775)
(2,980)
41,712
(2,378)
(198,722)
702,855
504,133
58,663
562,796
Issuance of equity
0
0
0
0
0
0
0
0
0
0
0
0
0
Dividends
0
0
0
0
0
0
0
0
0
(270,017)
(270,017)
0
(270,017)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
45,267
0
45,267
0
(8,071)
0
37,196
0
(159,369)
0
(122,173)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(1,301)
(233,775)
(2,980)
41,712
42,889
(153,455)
424,767
271,312
(100,706)
170,606
686,114
0
0
1,386
(344,587)
(2,980)
(19,258)
420,684
55,245
9,446,446
10,187,805
745,193
10,932,998
Adjusted opening balance
Changes in equity
Increase (decrease) from other contributions from equity holders
Decrease (increase) from other distributions to equity holders
Increase (decrease) from transfers and other changes
Increase (decrease) from transactions involving shares in portfolio
Increase (decrease) from changes in shares in subsidiaries that do
not imply loss of control
Total changes in equity
Previous period ending balance 09.30.2013
7
Consolidated Statement of Cash Flows, Direct Method
Note
09.30.2014
ThUS$
09.30.2013
ThUS$
Statement of cash flows
Cash flows provided by (used in) operating activities
Classes of collections from operating activities
Collections from sales of goods and provision of services
Collections from royalties, installments, commissions and other operating revenues
Collections from contracts held for intermediation or negotiation
Collections from premiums and benefits, annuities and other benefits from subscribed policies
Other collections from operating activities
Classes of payments
Payments to providers for the supply of goods and services
Payments from contracts held for intermediation or negotiation
Payments to and on behalf of employees
Payments for premiums and benefits, annuities and other obligations derived from subscribed
policies
Other payments for operating activities
Dividends paid
Dividends received
Interest paid
Interest received
Income taxes refunded (paid)
Other inflows (outflows) of cash
Net cash flows provided by (used in) operating activities
Cash flows provided by (used in) investing activities
Cash flows provided by the loss of control of subsidiaries or other businesses
Cash flows used to obtain control of subsidiaries or other businesses
Cash flows used in the purchase of non-controlling shares
Other collections from the sale of equity or debt instruments of other entities
Other payments to obtain equity or debt instruments of other entities
Other collections from the sale of shares in joint ventures
Other payments to acquire shares in joint ventures
Loans to related parties
Proceeds from the sale of property, plant and equipment
Purchases of property, plant and equipment
Proceeds from sales of intangible assets
Purchases of intangible assets
Proceeds from other long-term assets
Purchases of other long-term assets
Proceeds from government subsidies
Cash prepayments and loans granted to third parties
Collections from the reimbursement of prepayments and loans granted to third parties
Payments derived from futures, term, options and swap contracts
Collections from futures, term, options and swap contracts
Collections from related parties
Dividends received
Interest received
Net cash flows provided by (used in) investing activities
18,723,989
0
0
19,488,817
0
0
214
267,977
30,620
417,708
(17,054,012)
0
(572,470)
(17,652,561)
0
(569,419)
(6,264)
(146,398)
0
11,473
(173,988)
33,528
(169,249)
11,740
(7,186)
(259,204)
0
13,053
(211,354)
28,543
(233,306)
2,454
926,540
1,048,165
0
0
0
369,759
(68)
0
0
(177,672)
17,450
(556,999)
0
(37,132)
(785)
(100,115)
0
(3,996)
0
0
0
857
62,951
91
0
(10,525)
0
0
0
247,663
(32,672)
0
0
(57,387)
103,611
(724,652)
0
(47,473)
20,838
(166,096)
0
(4,232)
5,000
0
0
788
109,050
229
0
16,344
(436,184)
(528,989)
8
Cash flows provided by (used in) financing activities
Proceeds from the issuance of shares
Proceeds from the issuance of other equity instruments
Payments to acquire or redeem shares of the entity
Payments for other shares in equity
Proceeds from long-term loans
Proceeds from short-term loans
0
0
0
0
874,914
247,171
0
0
0
0
999,104
696,761
Total proceeds from loans
1,122,085
1,695,865
Loans from related parties
Payments of loans
Payments of capital lease liabilities
Payments of loans to related parties
Proceeds from government subsidies
Dividends paid
Interest paid
0
(898,820)
0
0
0
(205,315)
(30,235)
0
26,370
0
(1,882,052)
0
0
0
(181,151)
(30,609)
0
(2,232)
14,085
(400,179)
504,441
118,997
Effects of exchange rate variations on cash and cash equivalents
(59,162)
(24,441)
Net increase (decrease) in cash and cash equivalents
445,279
94,556
1,507,591
1,246,132
1,952,870
1,340,688
Net cash flows provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents, before effect of exchange rate
variations
Effects of exchange rate variations on cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
3.1
9
NOTE 1. CORPORATE INFORMATION
Empresas Copec S.A. is a financial holding company that, through its affiliates and associates, operates in a variety of
economic sectors. Since its inception in 1934, the Parent Company was dedicated to the distribution of liquid fuel. This
business line was transferred to a new affiliate in October 2003.
Today, the operations of Empresas Copec S.A. can be divided into two large areas of specialization: natural resources
and energy. Within the area of natural resources, the Company has businesses in the forestry, fishing and mining
industries. Within the energy segment, the Company’s businesses include the distribution of liquid fuel, liquid petroleum
gas and natural gas, as well as electricity generation; all of these sectors are strongly linked to the growth and
development of the country.
The Company’s main affiliates and associates include Celulosa Arauco y Constitución S.A., Compañía de Petróleos de
Chile COPEC S.A., Abastible S.A., Sociedad Nacional de Oleoductos S.A., Metrogas S.A., Corpesca S.A., Orizon S.A.,
Pesquera Iquique-Guanaye S.A., Inmobiliaria Las Salinas Ltda. and Minera Camino Nevado Ltda.
Empresas Copec S.A., the Group’s Parent Company, is a publicly held corporation that is registered in the Securities
Registry under No. 0028. The Company is regulated by the Chilean Superintendency of Securities and Insurance. The
Company’s legal address is Avenida El Golf No. 150, 17th floor, Las Condes, Santiago, Chile, and its taxpayer
identification number is 90.690.000-9.
Empresas Copec S.A. is controlled by AntarChile S.A., which holds 60.82% of the Company’s shares. Antarchile S.A. is a
publicly held corporation that is registered in the Securities Registry under No. 0342 and is regulated by the Chilean
Superintendency of Securities and Insurance.
The Group’s final parent is Inversiones Angelini y Cía. Ltda., which holds 63.4015% of the shares of Antarchile S.A.
The consolidated financial statements correspond to the period ended as of September 30, 2014. Both the consolidated
financial statements and the publication of the same were approved by the Board Directors at its Extraordinary Meeting
No. 2,558, held on November 21, 2014. The financial statements of the affiliates were approved by their respective
Boards of Directors.
The Company’s financial statements for the period ended as of December 31, 2013, as well as the publication of the
same, were approved by its Board of Directors at its Extraordinary Meeting No. 2,546, held on March 19, 2014, and
subsequently presented to and approved by shareholders at the Ordinary Shareholders’ Meeting held on April 23, 2014.
10
Capital Management:
Capital management refers to the management of the Company’s equity. The purpose of the capital management policies
of the Empresas Copec S.A. Group is:

To ensure the Company’s normal operations and the continuity of the business in the long term;

To ensure the financing of new investments in order to maintain sustained growth over time;

To maintain an appropriate capital structure according to economic cycles that affect the business and the
nature of the industry;

To maximize the Company’s value, providing investors with an adequate return on their investment.
Capital requirements are incorporated on the basis of the Company’s financing needs, while at the same time taking care
to maintain appropriate liquidity levels and to comply with the financial covenants established in the debt contracts in
force. The Company manages its capital structure and makes adjustments on the basis of the prevailing economic
conditions, in order to mitigate the risks associated with adverse market conditions and to take advantage of any
opportunities that arise to improve the Company’s liquidity position.
The financial structure of Empresas Copec S.A. and its affiliates as of September 30, 2014 and December 31, 2013 is
detailed as follows:
In thousand of dollars
09.30.2014
ThUS$
12.31.2013
ThUS$
Equity
Interest-bearing loans
Capital leases
Bonds
10,555,004
2,639,258
112,262
4,330,359
10,819,830
3,186,188
115,799
3,771,623
Total
17,636,883
17,893,440
Based on the information currently available, the probability of occurrence of future events that could result in a significant
adjustment to the book value of assets and liabilities within the next financial year is not estimated to be significantly high.
11
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The significant accounting principles adopted for the preparation of these consolidated financial statements are described
below. The accounting principles adopted in the preparation of these consolidated financial statements have been
designed on the basis of the IFRSs in force as of September 30, 2014, and they have been applied uniformly to all of the
periods presented in these consolidated financial statements.
These consolidated financial statements are presented in thousands of US dollars, with no decimals.
2.1 Bases of presentation
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board ("IASB"). These standards have been adopted in
Chile, and they represent the complete, explicit and unreserved adoption of the abovementioned international standards.
In the preparation of the consolidated financial statements, certain critical accounting estimates have been used to
quantify some assets, liabilities, income and expenses. In addition, Management is required to apply its judgment in the
process of applying the accounting policies of the Empresas Copec Group. The areas that involve a greater degree of
judgment or complexity or in which the assumptions and estimates are significant for the consolidated financial
statements are described in Note No. 5.
New accounting pronouncements:
As of the date of issuance of these consolidated financial statements, the following accounting pronouncements had been
issued by the International Accounting Standards Board ("IASB"), which corresponds to new standards, interpretations
and amendments. For the case of which application was not mandatory to date has not been made early adoption of the
same.
12
a)
Recent accounting pronouncements
At the date of issuance of these interim consolidated financial statements, the following accounting pronouncements were
issued by the IASB:
Standards and Amendments
IFRS 9
Title
Financial Instruments
Mandatory application
date for annual periods
January 1, 2018
Amending the classification and measurement of financial assets. - Then this
standard was amended in November 2010 to include the treatment and
classification of financial liabilities. Its earlier adoption is permitted.
IFRIC 21
Liens
January 1, 2014
Guides about when to recognize a liability for a government imposed lien whether
for those recorded in accordance with IAS 37 Provisions, Contingent Liabilities
and Contingent Assets and for those liens whose existence and amount is certain.
IAS 32
Financial Instruments
January 1, 2014
Presentation – Clarification on requirements for financial assets and liabilities net
calculation.
IFRS 12, IFRS 10, IAS 27
Investment Entities Consolidated Financial Statements, Disclosure of Interests in
Other Entities and Separate Financial Statements.
January 1, 2014
IFRS 14
Deferring of statutory accounts
Applicable to entities adopting IFRS for the first time and involved in activities with
regulated rates.
January 1, 2016
IAS 36
Asset impairment – Modification of disclosure requirements
January 1, 2014
IAS 39
Financial Instruments: Continuation of coverage accountancy when a derivative is
substituted by novation.
January 1, 2014
Annual improvements 2010-2012Amendments to IFRS 7
IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 38, IAS 24
July 1, 2014
Annual Improvement 2011-2013
Amendments to IFRS 4
IFRS 1, IFRS 3, IFRS 13, IAS 40
July 1, 2014
IAS 19
Employee benefits
July 1, 2014
This standard clarifies the requirements that are related to the way in which the
employee or third party contributions that are related to the service should be
attributed to the service periods.
IFRS 15
Income from contracts with clients
January 1, 2017
Provides a single model based on principles, to be applied to all contracts with
clients
IFRS 11- Amendments
Recording of purchases from sharing in joint operations
Demanding the purchaser the application of business combinations and its
disclosures.
January 1, 2016
IAS 16 and IAS 38 Amendments
Clarifying the acceptable depreciation and amortization methods
January 1, 2016
Additional guidance on how to calculate property, plant, equipment, and intangible
assets depreciation and amortization.
IAS 16 and IAS 41 Amendments
Agriculture: Production plants
January 1, 2016
Amendments contribute the production plant concept, which is used to grow
produce in the IAS 16 application field.
Management believes that the adoption of the standards listed above will not have a significant impact on the
consolidated financial statements of Empresas Copec S.A. in the initial application period. We are in the process of
assessing the impact on valuation and disclosures associated with these modifications.
13
2.2 Bases of consolidation
(a)
Affiliates
Affiliates are all entities (including special purpose vehicles) over which the Group has the power to direct financial and
operating policies, which is generally the result of a majority holding of the shares with voting rights. In evaluating whether
or not the Group controls another entity, the existence and effect of potential voting rights that are currently exercised or
converted are taken into consideration. Affiliates are consolidated beginning on the date on which control is transferred,
and they are excluded from consolidation beginning on the date on which control ceases.
In order to account for the acquisition of affiliates by the Group, the acquisition method is used. Acquisition cost is the fair
value of the assets delivered, the equity instruments issued and the liabilities incurred or assumed at the date of
exchange, plus the costs directly attributable to the acquisition. The identifiable assets acquired and the identifiable
liabilities and contingencies assumed in a business combination are initially valued at fair value as of the acquisition date,
regardless of the scope of minority interests. The excess of the acquisition cost over the fair value of the Group’s share in
the net identifiable assets acquired is recognized as goodwill. If the acquisition cost is less than the fair value of the net
assets of the acquired affiliate, the difference is recognized directly as a gain in income, as negative goodwill.
Intercompany transactions and balances and unrealized gains on transactions between entities are eliminated.
Unrealized losses are also eliminated, unless the transaction provides evidence of a loss due to the impairment of the
transferred asset. When it is necessary in order to ensure the uniformity of the policies that have been adopted, the
accounting policies of the affiliates are modified.
The consolidated financial statements include the consolidated figures of Abastible S.A. and affiliates, Celulosa Arauco y
Constitución S.A. and affiliates, Compañía de Petróleos de Chile Copec S.A. and affiliates, Minera Camino Nevado Ltda.
and affiliate, Copec International Inc., EC Investrade Inc., Pesquera Iquique Guanaye S.A. and affiliates, Inmobiliaria Las
Salinas Ltda., Sociedad Nacional de Oleoductos S.A. e Inversiones Nueva Sercom Ltda.
Ownership Interest
Taxpayer ID
Company Name
09.30.2014
Direct
Indirect
12.31.2013
Total
Total
91.806.000-6
ABASTIBLE S.A.
99.0481
0.0000
99.0481
93.458.000-1
CELULOSA ARAUCO Y CONSTITUCION S.A.
99.9779
0.0000
99.9779
99.0481
99.9779
99.520.000-7
COMPAÑIA DE PETROLEOS DE CHILE COPEC S.A.
99.9996
0.0004
100.0000
100.0000
76.160.625-5
MINERA CAMINO NEVADO LTDA.
99.9986
0.0014
100.0000
100.0000
91.123.000-3
PESQUERA IQUIQUE-GUANAYE S.A.
50.2180
31.7150
81.9330
81.9330
88.840.700-6
INMOBILIARIA LAS SALINAS LTDA.
99.9740
0.0260
100.0000
0.0000
81.095.400-0
SOCIEDAD NACIONAL DE OLEODUCTOS S.A.
0.0000
52.6857
52.6857
52.6857
76.306.362-3
INVERSIONES NUEVA SERCOM LTDA.
99.9740
0.0260
100.0000
100.0000
0-E
EC INVESTRADE INC.
100.0000
0.0000
100.0000
100.0000
0-E
COPEC INTERNATIONAL INC.
100.0000
0.0000
100.0000
100.0000
14
(b) Transactions and non-controlling
The Group applies the policy of considering transactions with minority interest as transactions with independent third
parties. The acquisition of minority interest generates goodwill or a profit, equal to the difference between the price paid
and the corresponding share in the book value of the net assets of the affiliate. The disposal of minority shares involves
gains and/or losses that are recognized in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to fair
value impact on results. Fair value is the initial value for the subsequent accounting purposes as a partner, joint venture
or financial asset. The amounts previously recognized in other comprehensive income are reclassified to earnings.
(c) Joint ventures
As from January 1, 2013 the fasb issued IFRS 11 “Joint arrangements” that classifies the joint agreements into two types
of agreements, based on the rights and obligations of the parties to the agreement and considering the structure, legal
form of the agreement, the contractual terms and (if relevant) other events and circumstances: 1) joint venture (the parties
have control over the agreement and the rights over the net assets of the jointly controlled entity) that are accounted
pursuant with the method of participation and 2) joint operations (the parties have control of the participations, rights over
assets and obligations for liabilities that are related to the agreement), in which the joint operator must acknowledge its
assets, liabilities and transactions, including its stake in those in which it jointly participates.
As a result of the application of these standards, on September 30, 2014 the investments in Uruguay that are being
controlled by her affiliates Arauco S.A., qualifies as a joint operations, that on December 31, 2012 the company
accounted for the method of participation. From 2013, these will be recognized through the proportional consolidated of
assets, liabilities and transactions of these companies.
(d) Associates
Associates are entities over which the Parent Company exercises significant influence but does not have control; this is
generally the result of an ownership interest between 20% and 50% of the voting rights. Investments in associates are
accounted for using the equity method and they are initially recognized at cost. The book value of these investments is
increased or decreased to recognize the corresponding share in the profit or loss for the period and in the comprehensive
income resulting from the translation adjustments arising from the conversion of the financial statements to other
currencies. Investments in associates include purchased goodwill (net of any accumulated impairment loss).
The share in the losses or gains subsequent to the acquisition of associates is recognized in income, and the share in
movements in reserves subsequent to the acquisition is recognized in comprehensive income. When the Group’s share in
the losses of an associate is greater than or equal to its share in the same, including any unsecured accounts receivable,
additional losses are not recognized, unless the Group has incurred obligations or made payments on behalf of the
associate.
15
Unrealized gains on transactions between the Group and its associates are eliminated as a function of the ownership
interest in such associates. Unrealized losses are also eliminated, unless the transaction provides evidence of a loss due
to the impairment of the transferred asset. When it is necessary in order to ensure the uniformity of the policies that have
been adopted, the accounting policies of the associates are modified.
Investments in associates are detailed in Note No. 19.
e)
Special purpose vehicles
Fondo de Inversión Bío Bío and its associate Forestal Río Grande S.A. are entities that, together, are classified as
Special Purpose Vehicles, due to the fact that they hold exclusive contracts with the affiliate Celulosa Arauco y
Constitución S.A. for the supply of wood and future purchases of land, as well as a forest administration contract.
The consolidated financial statements of the affiliate Celulosa Arauco y Constitución S.A. include the balances of the
company Fondo de Inversión Bío Bío and its subsidiary Forestal Río Grande S.A.
2.3 Financial Information of Operating Segments
IFRS 8 requires companies to adopt the “Management Approach” to disclose information about the results of their
operating segments. In general, this is the information that Management uses internally to evaluate segment performance
and to determine how to assign resources to segments.
A business segment is a group of assets and operations in charge of supplying products or services that are subject to
risks and returns that differ from other business segments. A geographic segment is in charge of providing products or
services in a concrete economic environment that is subject to risks and returns that differ from other segments that
operate in other economic environments.
Empresas Copec Group decided to use operating segments based on its main direct affiliates: Celulosa Arauco y
Constitución S.A., Compañía de Petróleos de Chile Copec S.A., Abastible S.A., Sociedad Nacional de Oleoductos S.A.
and Pesquera Iquique-Guanaye S.A.
Segment financial information is detailed in Note No. 29.
16
2.4 Transactions in currencies other than the functional currency
(a) Functional currency and presentation currency
The entries included in the financial statements of each of the entities belonging to the Group are valued using the
currency of the primary economic environment in which the entity operates (“functional currency”). The functional
currencies of the Parent Company and the main affiliates and associates are presented in the table below:
Company
Functional Currency
Empresas Copec S.A.
U.S. dollar
Celulosa Arauco y Constitución S.A.
U.S. dollar
Compañía de Petróleos de Chile Copec S.A.
Chilean peso
Abastible S.A.
Chilean peso
Pesquera Iquique - Guanaye S.A.
U.S. dollar
Sociedad Nacional de Oleoductos S.A.
Chilean peso
Metrogas S.A.
Chilean peso
Inversiones Laguna Blanca S.A.
U.S. dollar
Minera Camino Nevado Ltda.
U.S. dollar
Inmobiliaria Las Salinas Ldta.
Chilean peso
Consolidated financial statements are presented in U.S. dollars, which is the functional currency defined by Empresas
Copec S.A., the Parent Company, as the affiliates from the forestry and fishing sectors represent, on average,
approximately 69% of the Company’s consolidated assets, demand liabilities, net income and EBITDA. These are
predominantly export sectors, and consequently, the majority of their revenues are denominated in dollars. Likewise, a
significant portion of their costs is indexed to the dollar, and their financial liabilities are also dollar-denominated. Both
sectors carry their accounting in dollars.
With respect to operating costs, although the cost of labor and services is generally invoiced and paid in local currency,
this expense is not as significant as raw materials and equipment depreciation, which are part of global markets and are
predominantly influenced by the dollar.
(b) Transactions and balances
Transactions in currencies other than the functional currency are converted to the functional currency using the exchange
rates prevailing as of the dates of the transactions. Losses and gains in foreign currency that arise from the settlement of
these transactions and the conversion of foreign-currency-denominated monetary assets and liabilities to the period-end
exchange rates are recognized in income, except when they are deferred to net equity, as is the case with cash flow
hedges and net investment hedges.
17
Changes in the fair value of foreign-currency-denominated monetary titles that are classified as available for sale are
categorized as exchange differences resulting from changes in the amortized cost of the title or other changes in the book
value of the title. Exchange differences are recognized in income for the period, and other changes in the carrying amount
are recognized in net equity.
Exchange differences from non-cash items such as equity instruments at fair value through profit and loss are presented
as part of the gain or loss in fair value. Exchange differences from non-cash items such as equity instruments classified
as available-for-sale financial assets are included in net equity, in the revaluation reserve.
(c) Group entities
The income and financial position of all of the entities belonging to Empresas Copec Group (none of which uses the
currency of a hyperinflationary economy) that have a functional currency other than the presentation currency are
converted to the presentation currency as follows:
(i)
Assets and liabilities of each statement presented are converted at the exchange rate as of the reporting date;
(ii)
Income and expenses from each income statement account are converted at the average exchange rate (unless
such average is not a reasonable approximation of the cumulative effect of the exchange rates in force as of the
transaction dates, in which case income and expenses are converted on the dates of the transactions); and
(iii)
All resulting exchange differences are recognized as a separate component of comprehensive income.
In consolidation, exchanges differences arising from the conversion of a net investment in foreign entities, or from foreigncurrency-denominated loans and other instruments designated as hedges for those investments, are recorded in the net
equity of the shareholders. When the investments are sold, the resulting exchange differences are recognized in income
as part of the loss or gain on the sale.
Adjustments to goodwill and fair value that arise from the acquisition of a foreign entity are treated as assets and liabilities
belonging to the foreign entity and are converted at the exchange rate as of the end of the period.
(d) Basis of conversion
Assets and liabilities denominated in Chilean pesos, readjustable Chilean pesos (UF) and other currencies have been
converted in US dollars at the exchange rate as of the closing date of the financial statements, according to the following
detail:
Exchange rate per US dollar
Chilean pesos (CLP)
Argentine pesos (A$)
Real (R$)
Inflation index-linked unit of account (UF)
Euro (€)
Colombian pesos (COP)
09.30.2014
599.22
8.43
2.45
0.025
0.79
2,027.21
12.31.2013
524.61
6.51
2.35
0.023
0.73
1,925.52
18
2.5 Property, plant and equipment
Property, plant and equipment mainly includes forestry lands, production and storage plants, retail sales branches,
service stations, offices and construction works in progress. These items are presented at historical cost less the
corresponding depreciation. Historical cost includes expenses that are directly attributable to the acquisition of the good.
Subsequent costs are included in the initial value of the asset or they are recognized as a separate asset, only when it is
likely that the future economic benefits associated with the elements of the fixed asset will flow to the Company and the
cost of the element can be reliably determined. The value of the component that was substituted is written off for
accounting purposes. The rest of the repairs and maintenance are charged to income for the period in which they are
incurred.
Depreciation is calculated using the straight-line method, including any impairment adjustments. The amount presented in
the statement of financial position represents the cost less accumulated depreciation and any impairment charges.
The following describes the useful lives estimated for the main types of goods.
Minimum
Maximum
Buildings and construction works
Useful life (years)
16
100
Plant and equipment
Useful life (years)
8
80
IT equipment
Useful life (years)
6
18
Fixed facilities and fittings
Useful life (years)
6
20
Motor vehicles
Useful life (years)
6
26
Other property, plant and equipment
Useful life (years)
3
27
The residual value and useful lives of the assets are reviewed, and adjusted if necessary, at the end of each reporting
period.
When the book value of an asset exceeds its estimated recoverable amount, the book value is immediately reduced to
the recoverable amount.
Losses and gains on the sale of property, plant and equipment are calculated by comparing the income obtained with the
book value, and they are recorded in comprehensive income statement.
Costs can also include losses and gains that qualify as foreign currency cash flow hedges) for purchases of property,
plant and equipment.
19
2.6 Biological assets
IAS 41 requires biological assets to be presented in the Statement of Financial Position at fair value. Standing forests are
recorded at fair value less the estimated costs at the point of harvest, considering that the fair value of these assets can
be reliably measured.
The valuation of forest plantations is based on discounted cash flow models, which means that the fair value of the
biological assets is calculated using the cash flows from continuing operations, that is, on the basis of sustainable forestry
management plans considering the growth potential of the forests. This valuation is performed on the basis of each stand
identified and for each type of forest species.
The forest plantations presented in current assets correspond to plantations that will be harvested and sold in the short
term.
Biological growth and changes in fair value are recognized in the income statement under “Other income by function.”
Biological assets are also living animals over which the society manages their biological transformation. This
transformation includes growing, degradation, production and procreation process that cause qualitative and quantitative
changes on biological assets. Society’s living animals are molluscs mussels Mytilus chilensis (“chorito”).
As general valuation rule of these assets, they are initially recognized at cost and subsequent at fair value less estimated
costs at sale point. Notwithstanding the above, the Society has defined that for certain assets, principally those in growing
process, doesn’t exist a fair value that can be reliably measured before the harvest.
Cultures of this species are initially valued at cost and adjusted in the final stage of the cultivation, i.e., before the harvest
occurs the cultures are valued at fair value less costs at sale point. The effect is charged or credited to income at the end
of each period.
Valuation of biological assets is detailed in Note No. 7.
2.7 Investment property
Investment properties are held to earn a return through long-term income, and they are not occupied by the Group.
Investment property is accounted for at historical cost.
Lands held under operating lease contracts are classified as and accounted for as real estate investments when they
meet the rest of the conditions of the definition of a real estate investment. Operating leases are recognized as if they
were capital leases.
Real estate investments also include lands whose future use has not yet been determined as of the date of the financial
statements.
20
2.8 Intangible assets
(a) Goodwill
Goodwill represents the excess of the acquisition cost over the fair value of the share in the net identifiable assets of the
acquired affiliate/associate as of the date of the transaction. Goodwill related to acquisitions of affiliates is included in
intangible assets. Goodwill related to acquisitions of associates is included in investments in associates and is tested for
impairment along with the total balance of the associate. Goodwill that is recognized separately is tested for impairment
on an annual basis and is valued at cost less accumulated impairment losses. Gains and losses on the sale of an entity
include the book value of goodwill related to the entity being sold.
Goodwill is assigned to Cash Generating Units (CGUs) in order to test for impairment losses. The assignment is made to
the CGUs that are expected to benefit from the business combination that gave rise to the goodwill.
Purchased negative goodwill from the acquisition of an investment or a business combination is credited directly to
income statement under “Other income (loss).”
(b) Patents and trademarks
Industrial patents are valued at historical cost. They have a finite useful life and are presented at cost less accumulated
amortization. Amortization is calculated using the straight-line method over the useful life that has been determined.
Useful life of industrial patents is between 10 to 50 years.
The trademarks acquired through business combinations are measured at fair value determined at the date of acquisition.
The fair value of an intangible asset reflects expectations about the likelihood that future economic benefits embodied in
the asset will flow to the entity. The Company has determined that such intangible assets have indefinite useful life and
therefore are not subject to amortization. However, by the nature of these assets with indefinite useful lives, they are
reviewed and tested for impairment annually and at any time when there is an indication that the asset may be impaired.
As a result of the valuation of intangible assets identified in the purchase of Proenergía International S.A. (Colombia),
have been recognized as intangible assets related to the business of the acquired companies, Trade Relations with
Dealers and Customers, to which are assigned a finite useful life according to the duration of contracts. Depreciation is
calculated linearly depending on the particular life.
(c) Concessions and other rights
Concessions and other rights are presented at historical cost. They have a finite useful life and are recorded at cost less
accumulated amortization. Amortization is calculated using the straight-line method over the terms established in the
contracts.
21
(d) Fishing rights
Authorizations for fishing activities are presented at historical cost. There is no finite useful life for the use of such rights,
and therefore they are not subject to amortization. The Company tests for impairment intangible assets with indefinite
useful lives on an annual basis and every time there is an indication that the intangible asset may be impaired.
(e) Water rights
Water rights acquired from third parties are presented at historical cost. There is no finite useful life for the use of these
rights, and therefore they are not subject to amortization. The Company tests for impairment intangible assets with
indefinite useful lives on an annual basis and every time there is an indication that the intangible asset may be impaired.
(f) Easements
Easement rights are presented at historical cost. There is no finite useful life for the use of these rights, and therefore they
are not subject to amortization. The Company tests for impairment intangible assets with indefinite useful lives on an
annual basis and every time there is an indication that the intangible asset may be impaired.
(g) Mining properties
Mining properties are presented at historical cost. There is no finite useful life for the use of these rights, and therefore
they are not subject to amortization. The Company tests for impairment intangible assets with indefinite useful lives on an
annual basis and every time there is an indication that the intangible asset may be impaired.
(h) IT programs
IT program licenses that have been acquired are capitalized on the basis of the costs incurred to acquire them and to
prepare them for use in the specific program. These costs are amortized over their estimated useful lives (3 to 18 years).
Expenses related to the development or maintenance of IT programs are recognized as expenses when they are
incurred. The costs directly related to the production of unique and identifiable controlled IT program, and that are likely to
generate economic benefits in excess of their costs during more than one year, are recognized as intangible assets.
Direct costs include the expenses of the personnel that develop IT programs, as well as an appropriate percentage of
general expenses.
Development costs for IT programs recognized as assets are amortized over their estimated useful lives, which do not
exceed five years.
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(i)
Research and development expenses
Research expenses are recognized as expenses when they are incurred. The costs incurred in development projects
(related to the design and testing of new or improved products) are recognized as intangible assets when the following
requirements are met:

It is technically possible to complete the production of the intangible asset such that it can become
available for
use or sale;

Management intends to complete the intangible asset in question, in order to use it or sell it;

It is possible to use or sell the intangible asset;

It is possible to demonstrate how the intangible asset will generate probable economic benefits in the future;

The technical, financial or other resources necessary to complete the development and to use or sell the intangible
asset are available; and

It is possible to reliably value the disbursement attributable to the intangible asset during its development.
Other development expenses are recognized as expenses when they are incurred. Development costs previously
recognized as expenses are not recognized as assets in a subsequent period. Development costs with a finite useful life
that are capitalized are amortized using the straight-line method, beginning when commercial production commences,
over the period during which they are expected to generate benefits, which does not exceed 10 years.
Development assets are tested for impairment annually, in accordance with IAS 36.
2.9 Interest costs
Interest costs incurred for the construction of any qualified asset are capitalized over the period of time that is necessary
to complete and prepare the asset for its intended use. Other interest costs are recorded in consolidate comprehensive
income (expenses).
2.10
Impairment losses for non-financial assets
Assets with an indefinite useful life are not amortized and they are tested for impairment losses annually. Assets that are
amortized are tested for impairment losses when an event or change in circumstances indicates that the book value may
not be recoverable. An impairment loss is recognized for the excess of the book value of the asset over its recoverable
amount. The recoverable amount is the fair value of an asset less the greater amount between its selling costs or its
value in use. In order to evaluate impairment losses, assets are grouped at the lowest level at which there are separatelyidentifiable cash flows (cash generating units).
23
Non-financial assets other than goodwill that have been affected by impairment losses are reviewed as of each reporting
date to see if the losses have been reversed.
2.11
Financial assets
2.11.1 Classification
Financial assets are classified under the following categories: at fair value through profit and loss, loans and receivables,
held-to-maturity financial assets, and available-for sale financial assets. The classification depends on the purpose for
which the financial assets were acquired. Management determines the classification of financial assets upon initial
recognition.
(a) Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss are financial assets held for investment purposes. A financial asset is
classified in this category if it is acquired primarily in order to be sold in the short term. Derivatives are also classified as
acquired for investment purposes, unless they are designated as hedges. Assets in this category are classified as current
assets, and the liability position of these instruments is presented in the Statement of Financial Position under “Other
financial liabilities.”
Acquisitions and disposals of financial assets are recognized as of the date on which the Company commits to the
acquisition or sale of the asset.
These assets are initially recorded at cost and subsequently their value is updated on the basis of their fair value, with
changes in value being recognized in income.
(b) Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and with a fixed
maturity that Management intends to and is able to hold to maturity. If the Empresas Copec S.A. Group were to sell more
than an insignificant amount of held-to-maturity financial assets, the entire category would be reclassified as available for
sale. These available-for-sale financial assets are included in non-current assets, except those assets maturing in less
than 12 months from the reporting date, which are classified as current assets.
During the period the Company did not hold financial assets in this category.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are classified in this category or that are not
classified in any other category. They are included in non-current assets, unless Management intends to dispose of the
investment in the 12 months following the reporting date.
24
The Group classifies investments in publicly traded securities in this category.
(d) Accounts receivables
See Note No. 2.14
2.11.2 Recognition and measurement:
Acquisitions and disposals of investments are recognized on the date on which the Company commits to the acquisition
or sale of the asset. Investments are initially recognized at fair value plus the transaction costs for all financial assets not
recorded at fair value through profit and loss. Financial assets at fair value through profit and loss are initially recognized
at fair value, and the transaction costs are recorded in income.
Investments are written off for accounting purposes when the rights to receive cash flows from the investments have
expired and/or been transferred and/or all of the risks and rewards of ownership have been substantially transferred.
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently accounted for
at fair value. Loans and receivables are accounted for at their amortized cost, in accordance with the effective interest
method.
The fair value of investments in publicly traded securities are based on current purchase prices. If the market for a
financial asset is not liquid (and for titles that are not publicly traded), fair value is determined using valuation techniques
that include the use of recent arm’s length transactions between knowledgeable, willing parties and that involve other
instruments that are substantially the same; the analysis of discounted cash flows; and options price-setting models. In
these cases market-based inputs are used to the greatest extent possible, whereas inputs specific to the entity are relied
on as little as possible. In the event that none of the abovementioned techniques can be used to determine the fair value,
the investments are recorded at acquisition cost net of any applicable impairment losses.
As of each reporting date, an evaluation is performed to determine whether there is objective evidence that a financial
asset or group of financial assets may have been impaired. For capital securities classified as available for sale, in order
to determine whether the securities are impaired the Company must determine whether there has been a significant or
prolonged decrease in the fair value of the securities, to below the cost of the same. If there is any evidence of this type
for available-for-sale financial assets, the accumulated loss — calculated as the difference between the acquisition cost
and the current fair value, less any previous impairment losses for that financial asset that have already been recognized
in income — is eliminated from net equity and recognized in income. Impairment losses recognized in income for equity
instruments are not reversed through the statement of income.
2.12
Derivative financial instruments and hedging activity
Derivative financial instruments are initially recognized at fair value as of the date on which the derivative contract was
executed, and they are subsequently revalued at fair value. The method used to recognize the resulting loss or gain
depends on whether the derivative has been designated has a hedging instrument, and if so, on the nature of the entry it
is hedging. Certain derivatives are designated as:
25
(a)
Fair value hedges for recognized liabilities (fair value hedge);
(b)
Hedges for a concrete risk associated with a recognized liability or a highly probable forecast transaction (cash flow
hedge); or
(c)
Hedges for a net investment in a foreign operation (net investment hedge).
The relationship between the hedging instruments and the hedged entries are documented at the beginning of the
transaction, along with the risk management objectives and the strategy to manage several hedging transactions. The
evaluation, both initially and on an ongoing basis, of whether the derivatives used in hedging transactions are highly
effective at offsetting changes in fair value or the cash flows of the hedged entries is also documented.
The total fair value of the hedging derivatives is classified as a non-current asset or liability if the remaining term of the
hedged entry is greater than 12 months and as a current asset or liability if the remaining term of the hedged entry is less
than 12 months. Marketable derivatives are classified as current assets or liabilities.
The effective portion of changes in the fair value of the derivatives that are designed and that qualify as cash flow hedges
are recognized in the Statement of Other Comprehensive Income. The gain or loss related to the ineffective portion is
immediately recognized in income under “Other operating income” or “Other miscellaneous operating expenses,”
respectively.
When a hedging instrument expires or is sold, or when it ceases to fulfill the criteria to be recognized using the accounting
treatment for hedges, any accumulated gain or loss in equity as of that date remains in equity and is recognized when the
forecast transaction affects the statement of income. When the forecast transaction is no longer expected to take place,
the accumulated gain or loss in equity is immediately transferred to the statement of income.
2.13
Inventory
Inventory is valued at cost or net realizable value, whichever is less. Cost is determined using the weighted average cost
method, except for fuel at the affiliate Compañía de Petróleos de Chile COPEC S.A., which is recorded using the first in,
first out method (FIFO).
The cost of finished products and of products in progress includes the costs of design, raw materials, direct labor, other
direct costs and general manufacturing expenses (based on a normal operating capacity), but it does not include interest
costs.
Net realizable value is the estimated sales price in the normal course of business, less any applicable variable sales
costs.
As of the date of these consolidated financial statements, there is no inventory pledged as collateral to report.
The initial costs of wood are determined based on fair value less the selling costs at the point of harvest.
26
Biological assets are transferred to inventory as forests are harvested.
When, as a result of market conditions, the manufacturing costs of a product exceed its net realizable value, a provision is
recorded for the difference. Such provision also considers amounts related to obsolescence from low turnover and
technical obsolescence.
2.14
Trade and other receivables
Receivables are initially recognized at fair value (nominal value including implicit interest), and they are subsequently
recognized at their amortized cost according to the effective interest method, less the provision for impairment losses.
When the nominal value of the account receivable does not differ significantly from its fair value, the account is
recognized at its nominal value.
Implicit interest must be disaggregated and recognized as financial income, to the extent that interest is being accrued.
The amount of the provision is the difference between the book value of the asset and the present value of the estimated
future cash flows, discounted at the effective interest rate.
Receivables are presented at their net value, which is net of estimated uncollectible amounts. This provision is
determined when there is evidence that the different companies belonging to the Group will not receive payment in
accordance with the original terms of the sale. Provisions are recorded when the customer resorts to legal measures such
as bankruptcy or cessation of payment, or when the Group has exhausted the means of debt collection over a reasonable
period of time. These include phone calls, e-mails and collections letters. For sales in Chile by our distribution affiliates,
provisions are estimated using a percentage of the accounts receivable that is determined on a case-by-case basis,
depending on the internal risk classification of the customer and the age of the debt (days overdue).
2.15
Cash and cash equivalents include cash on bank accounts, time deposits at credit institutions, and other highly liquid
short-term investments with an original term of three months or less. In the Statement of Financial Position, bank
overdrafts are classified under current liabilities.
2.16
Paid-in capital
Paid-in capital is represented by 1,299,853,848 single-series ordinary shares (See Note N° 21).
Incremental costs directly attributable to the issuance of new shares are presented in net equity as a deduction, net of
taxes, from the proceeds obtained.
The Company’s dividend policy is to distribute 40% of net profits, as defined in Note N° 22, on an annual basis. This
policy is established each year at the Shareholders’ Meeting.
27
Dividends on ordinary shares are recognized as goodwill on the accumulated reserves, to the extent that the benefit for
the shareholders is being accrued.
The item “Other reserves” in equity mainly consists of translation adjustment reserves and hedge reserves. Empresas
Copec S.A. does not have any restrictions associated with the abovementioned reserves.
The translation reserve corresponds to the foreign currency translation differences of the Empresas Copec S.A. Group’s
affiliates that use a functional currency other than the US dollar.
Hedge reserves correspond to the portion of the effective gain or loss on hedge swap contracts in force as of the date of
these financial statements.
2.17
Trade payables are initially recognized at fair value and subsequently at their amortized cost using the effective interest
method. When the nominal value of the account payable does not differ significantly from its fair value, the account is
recognized at its nominal value.
2.18
Interest-bearing loans
Obligations with banks and financial institutions are initially recognized at fair value, net of any costs incurred in the
transaction. Subsequently, third-party resources are valued according to their amortized cost; any difference between the
funds obtained (net of any costs necessary to obtain them) and the reimbursement value is recognized in the statement
of income during the term of the debt, in accordance with the effective interest method. The effective interest method
involves the application of referential market rates for debts with similar characteristics to the amount of the debt (net of
any costs necessary to obtain the debt).
Third-party resources are classified as current liabilities unless the Group has an unconditional right to defer settlement
for at least 12 months after the reporting date.
2.19
a)
Income taxes and deferred taxes
Income Tax
The income tax expense for the year is calculated based on the income before taxes, increased or decreased, as
appropriate, due to permanent and/or temporary differences included in the tax legislation relating to the calculation of the
taxable base of the aforementioned tax.
b)
Deferred taxes
Deferred taxes are calculated, in accordance with the liability method, over temporary differences that arise between the
tax bases of the assets and liabilities and their book value in the annual consolidated accounts. Deferred taxes are
28
determined using tax rates (and laws) in force or that are about to be approved as of the reporting date and that are
expected to apply when the corresponding deferred tax asset is realized or the deferred tax liability is settled.
Deferred tax assets are recognized to the extent that it is likely that there will be future tax benefits that can be used to
offset the temporary differences.
Deferred taxes are recognized over differences that arise in investments in affiliates and associates, except in those
cases where the date on which temporary differences are reversed can be controlled and it is likely that such differences
will not be reversed in the foreseeable future.
2.20
Employee benefits
(a) Personnel vacations
The Group recognizes the expense for personnel vacations using the accrual method, and the expense is recorded at its
nominal value.
Certain affiliates recognize a vacation bonus expense, where there is a contractual obligation with general staff, and such
obligation is equal to a fixed amount according to the employment contracts. This vacation bonus is recorded as an
expense when the employee uses his or her vacation time, and it is recorded at nominal value.
(b) Production bonuses
An expense for production bonuses is recorded when the Board of Directors has made a decision that such bonus will be
effective. The Group recognizes a provision when it is contractually obligated to do so or when past practice has created
an implicit obligation and it is possible to reliably estimate the obligation. This bonus is recorded at its nominal value.
(c) Staff severance indemnities
The liability recognized in the statement of financial position is the present value of the obligation for defined benefits as
of the reporting date. Such value is calculated annually by independent actuaries, and it is determined by discounting the
estimated future outflows of cash at interest rates on instruments denominated in the currency in which such benefits will
be paid and with terms similar to those of the corresponding obligations.
Losses and gains that arise from experience and from changes in the actuarial hypotheses are charged or credited to
income for the period in which they occur.
Costs for past services are immediately recognized in the statement of income.
The concepts indicated in letters a) and b) do not represent significant entries in the Statement of Comprehensive Income
by function.
29
2.21
Provisions
Provisions for environmental restoration, restructuring costs and lawsuits are recognized when:
(i)
The Group has a current liability, whether legal or implicit, as a result of past events;
(ii)
It is likely that an outflow of resources will be necessary to settle the obligation; and
(iii)
The amount has been reliably estimated. This amount is quantified using the best estimate possible as of each
period-end.
Provisions are valued at the present value of the disbursements that are expected to be necessary to settle the obligation
using the best estimate available. The discount rate utilized to determine the present value reflects current market
estimates, as of the reporting date, of the time value of money, as well as the specific risk related to the liability in
question.
2.22
Revenue recognition
Operating revenues include the fair value of the considerations received or receivable for the sale of goods and services
in the ordinary course of business. Operating revenues are presented net of value-added taxes, returns, reductions and
discounts, and after eliminating intra-Group sales.
Revenues are recognized when the amount of the same can be reliably valued, it is likely that the future economic
benefits will flow to the entity, and the specific conditions for each of the activities are met, as described below. It is not
considered possible to reliably value the amount of the revenues until all contingencies related to the sale have been
resolved.
(a) Sales of goods
Sales of goods are recognized when an entity belonging to the Group has delivered the products to the customer, the
channel of distribution and the price at which the products are sold are wholly at the discretion of the customer, and there
are no outstanding obligations that could affect the acceptance of the products by the customer. Delivery is not
considered to have taken place until the products have been sent to a concrete destination, the risks of obsolescence and
loss have been transferred to the customer, and the customer has accepted the products in accordance with the sales
contract, the acceptance period has ended, or there is objective evidence that the necessary criteria for acceptance have
been met.
Sales are recognized based on the price established in the sales contract, net of volume discounts and estimated returns
as of the date of the sale. Volume discounts are evaluated based on forecasted annual purchases. It is assumed that
there is not a significant financing component, as the sales are carried out with a reduced term of payment, which is in
line with market practice.
30
(b) Sales of services
Services are supplied on the basis of a concrete date and material, or as a contract with a fixed price, for periods that
range between one and three years.
Revenues from contracts with concrete dates and materials are recognized at the rates stipulated in the contract, to the
extent that personnel hours are utilized and the direct expenses are incurred.
Revenues from fixed-price contracts for the provision of services are generally recognized during the period in which the
services are provided, on a straight-line basis over the duration of the contract.
(c) Interest income
Interest income is recognized using the effective interest method.
(d) Dividend income
Dividend income is recognized when the right to receive payment is established.
2.23
Leases
(a) When an entity belonging to the Group is the lessee – Capital leases
Leases of fixed assets when the Group holds substantially all of the risks and rewards of ownership are classified as
capital leases. Capital leases are capitalized at the beginning of the lease at the fair value of the leased property or at the
present value of the minimum lease payments, whichever is less.
Each lease payment is distributed between liabilities and financial charges to obtain a constant interest rate over the
remaining balance of the debt. The corresponding lease obligations, net of financial charges, are included under “Other
long-term payables.” The interest element of the financial cost is charged to income during the term of the lease such that
a constant periodic interest rate is obtained over the remaining balance of the liability for each period. Assets acquired
through capital leases are depreciated over their useful lives or the duration of the contract, whichever is less.
(b) When an entity belonging to the Group is the lessee – Operating leases
Leases in which the lessor retains a significant portion of the risks and rewards of ownership are classified as operating
leases. Operating lease payments (net of any incentive received from the lessor) are charged to income on a straight-line
basis over the term of the lease.
31
(c) When an entity belonging to the Group is the lessor
When the assets are leased under a capital lease, the present value of the lease payments is recognized as a financial
account receivable. The difference between the gross amount receivable and the present value of such amount is
recognized as the financial return on the capital.
Lease income is recognized during the term of the lease in accordance with the net investment method, which reflects a
constant periodic rate of return.
Assets leased to third parties under operating lease contracts are included in fixed assets in the Statement of Financial
Position.
Lease income is recognized on a straight-line basis over the term of the lease.
2.24
Non-current assets held for sale
Non-current assets (or disposal groups) are classified as held for sale and recognized as the lower of the book value and
fair value less sales costs if the book value is primarily recovered through a sales transaction instead of continued use.
2.25
Dividend distribution
The distribution of dividends to the Company’s shareholders is recognized as a liability in the consolidated accounts to
the extent that the benefit is accrued, According to the Society dividend policy.
Article 79 of the Corporations Law of Chile establishes that, unless the respective shareholders’ meeting unanimously
agrees otherwise, publicly traded companies must annually distribute cash dividends to their shareholders, on a pro rata
basis considering the number of shares or the proportion established in the by-laws if there were preferential shares,
equivalent to at least 30% of the annual net profits, except when accumulated losses from previous years are being
absorbed.
The dividend policy that the Company currently has in force is to distribute not less than 40% of the annual net profits
subject to dividend distribution, as defined in Note N° 22, to shareholders. During the last quarter of each year the Board
of Director determines whether or not an interim dividend will be distributed. Such interim dividend is paid in December to
the extent that the year-end results are expected to be positive and that the Company’s available cash allows for such
distribution.
2.26
Environment
The disbursements related to the improvement and/or investment production processes that improve the environmental
conditions are recorded as expenses for the year in which they are incurred. When such disbursements are part of capital
projects, they are recorded as negative goodwill of property, plant and equipment.
32
The group has established the following types of disbursements for environmental protection projects:
a)
Disbursements related to the improvement and/or investment of production processes that improve environmental
conditions.
b)
Disbursements related to the improvement and/or investment of production processes that improve environmental
conditions.
c)
Other disbursements that affect the environment.
2.27
Business combinations
Business combinations are accounted for using the acquisition method. This involves the recognition of the identifiable
assets (including intangible assets that have not been recognized previously) and liabilities (including contingent liabilities
and excluding future restructuring) of the acquired business at fair value.
Purchased goodwill acquired in a business combination is initially measured at cost, which is the excess of the cost of the
business combination over the company’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities of the acquisition. After the initial recognition, purchased goodwill is measured at cost less any accumulated
impairment losses. For purposes of impairment tests, purchased goodwill acquired in a business combination is assigned
from the date of acquisition to each cash generating unit or group of cash generating units that are expected to benefit
from the synergies of the combination, regardless of whether other Group assets or liabilities are assigned to those units
or groups of units.
If the acquisition cost is less than the fair value of the net assets of the acquired affiliate, the difference is directly
recognized in income and immediately recognized under “Other gains (losses).”
Transaction costs are treated as expenses at the time they are incurred. For business combinations carried out in stages,
the fair value of the acquired company is measured at each opportunity and the effects of changes in the share in income
are recognized in the period in which they occur.
2.28
Impairment
a) Non-financial assets
Amounts in Property, plant and equipment are tested for impairment any time an event or change in the circumstances of
the business indicates that the book value of the assets may not be recoverable, while purchased goodwill and other nonfinancial assets with indefinite useful lives are tested annually. The recoverable value of an asset is estimated as the
greater of the net sales price and the value in use. Impairment losses are recognized when the book amount exceeds the
recoverable amount.
33
An impairment loss that was recognized previously can be reversed if there has been a change in the estimates used to
determine the recoverable amount. However, the reversal cannot be for an amount greater than the amount that was
determined and recognized in previous periods. In the case of purchased goodwill, impairment losses that have been
recognized are not reversible.
For purposes of evaluating impairment losses, assets are grouped at the lowest level at which there are separately
identifiable cash flows for each cash generating unit. Non-financial assets other than goodwill that have suffered
impairment losses are reviewed as of each reporting date in case the losses have been reversed.
“Cash generating units” are defined as the smallest identifiable groups of assets whose ongoing use generates inflows of
funds that are largely independent of the inflows resulting from the use of other assets or groups of assets.
Purchased goodwill is assigned to cash generating units for purposes of impairment testing. The distribution is carried out
among those cash generating units or groups of cash generating units that are expected to benefit from the business
combination that gave rise to the goodwill.
b) Financial assets
At the end of each period an evaluation is carried out to determine whether there is objective evidence that the financial
assets or groups of financial assets have been impaired. The effects of impairment are recognized in income only if there
is objective evidence that one or more events occurred after the initial recognition of the financial asset and that, in
addition, the impairment will affect the associated future cash flows.
The allowance for bad and doubtful debts for trade receivables is determined when there is evidence that the Group will
not receive payment in accordance with the original terms of the sale. Provisions are recorded when the customer resorts
to legal measures such as bankruptcy or cessation of payment, or when the Group has exhausted the means of debt
collection over a reasonable period of time. For sales in Chile by some affiliates, provisions are estimated using a
percentage of the accounts receivable that is determined on a case-by-case basis, depending on the internal risk
classification of the customer and the age of the debt (days overdue).
2.29
Cash flows statement
Cash flows statement for the purpose of preparing the cash flow statements, the Company and subsidiaries have defined
the following considerations:
Cash and cash equivalents include cash on hand and in banks, time deposits and other highly liquid short-term
investments with a maturity of three months or less from the date of acquisition. Bank overdrafts are classified as current
liabilities section.
Operating activities: they are the main revenue-producing activities of the Company and include other activities that are
not investing or financing activities.
34
Investment activities: they are the acquisition or disposal of long-term assets and other investments not included in cash
equivalents.
Financing activities: they are activities that produce changes in the size and composition of the net equity and in the
financial liabilities.
2.30
Earnings per Share
Basic earnings per share are calculated as the quotient between net profits (losses) for the year attributable to the
company and the weighted average number of the company’s shares outstanding during the period, excluding the
weighted number of the company’s shares in the hands of a subsidiary, if applicable. The company and its subsidiaries
did not perform any potentially dilutive transactions of any kind leading to diluted earnings per share that differ from the
basic earnings per share amount.
2.31
Classification of current and non-current balances
In the accompanying consolidated statement of financial position, balances to be recovered or settled within 12 months
are classified as current items and those to be recovered or settled within more than 12 months as non-current items. If
there are obligations whose maturities are less than twelve months, but whose long-term refinancing is guaranteed at the
discretion of the company through credit agreements unconditionally available with long-term maturities, these obligations
could be classified as long-term liabilities.
35
NOTE 3. FINANCIAL INSTRUMENTS
3.1 CASH AND CASH EQUIVALENTS
The cash and cash equivalents of the Group are detailed as follows:
NOTE 3.1 - CASH AND CASH EQUIVALENTS
09.30.2014
12.31.2013
Classes of cash and cash equivalents
ThUS$
ThUS$
Bank balances
423,252
433,770
1,179,154
689,844
346,516
372,474
Short-term deposits
Mutual funds
Overnight Investments
Other cash and cash equivalents
Total
762
3,400
4,677
8,651
1,954,361
1,508,139
Reconciliation between cash and cash equivalents presented in the statement of
financial position and cash and cash equivalents presented in the statement of
cash flows
Other reconciling items of cash and cash equivalents
0
0
Bank overdrafts used for cash management
(1,491)
(548)
Total reconciling items of cash and cash equivalents
(1,491)
(548)
1,954,361
1,508,139
Cash and cash equivalents, presented in Statement of Cash Flows
1,952,870
1,507,591
The amortized cost of these financial instruments does not differ from their fair value.
Cash and cash equivalents correspond to cash, cash in banks, time deposits and mutual funds. These types of
investments are readily convertible to cash in the short term and are subject to low risk of changes in value. For time
deposits, the valuation is performed through the accrual at the rate of purchase of each one of the papers.
36
3.2 OTHER CURRENT FINANCIAL ASSETS
The following financial assets at fair value through profit or loss are classified in this category:
09.30.2014
ThUS$
12.31.2013
ThUS$
Mutual Funds
Fixed-income instruments
Derivative financial instruments
Forwards
Swaps
Other financial assets
678
143,927
725
148,840
17,860
4,199
3,851
7,553
3,286
Total
170,515
160,404
Financial assets at fair value include shares in mutual funds and fixed-income instruments (corporate bonds, mortgage
bonds, bank bonds, time deposits and other similar items) that are managed on behalf of the company by third parties
(“outsourced portfolios”). These assets are recorded at fair value, changes in value are recognized in income, and the
assets are held for purposes of liquidity and returns. Mutual funds are accounted for at market value through the share
value as of period-end. Outsourced portfolios are valued using market rates as of period-end.
Swaps are valued using the discounted cash flow method at a rate appropriate for the risk of the operation, using
specific tools for the valuation of swaps. As of the reporting date, the financial assets classified in this category are not
hedges, as there is no uncertainty about their underlying liabilities. Consequently, these instruments are part of a
strategy of structural management of the liquidity risk implicit in the Company’s operations.
Forwards are initially recognized at fair value on the date on which the contract is subscribed, and they are
subsequently remeasured at fair value. Forwards are recorded as assets when their fair value is positive and as
liabilities when their fair value is negative.
The fair value of foreign exchange forward contracts is calculated in reference to current foreign exchange rates from
contracts with similar maturity profiles.
The Group does not present held-to-maturity investments for the above mentioned periods.
37
3.3 TRADE AND OTHER RECEIVABLES
The Group presents the following balances for trade and other receivables:
09.30.2014
ThUS$
12.31.2013
ThUS$
Trade receivables
Less: provision for impairment of trade receivables
1,657,552
(50,145)
1,686,870
(45,533)
Net trade receivables
1,607,407
1,641,337
Other receivables
Less: provision for impairment of other receivables
248,210
(10,336)
269,143
(8,828)
Net other receivables
237,874
260,315
1,845,281
53,537
1,901,652
58,905
Total
Less: non-current portion
Current portion
1,791,744
1,842,747
Trade receivables and accounts receivable are included in current assets, except for those assets maturing in more than
12 months. These assets are recorded at amortized cost using the effective interest method and they are tested for
impairment.
Trade receivables represent enforceable rights arising from normal business operations, where normal is defined as the
line of business, activities or corporate purpose of operations.
Other receivables correspond to accounts receivable from sales, services or loans outside of the normal course of
business.
Implicit interest must be disaggregated and recognized as financial income as interest is accrued.
The amount of the provision is the difference between the asset’s book value and the present value of the estimated
future cash flows, discounted at the effective interest rate.
The constitution and reversal of the provision for the impairment of accounts receivable has been included as “expenses
for the allowance for bad debt and doubtful accounts” in the statement of income.
38
Stratification portfolio
Balance
09.30.2014
Trade and other
receivables
Portfolio
not overdue
ThU$
Overdue
1-30 days
ThU$
Overdue
31-60 days
ThU$
Overdue
61-90 days
ThU$
Overdue
91-120 days
ThU$
Overdue
Overdue
Overdue
Overdue
121-150 days 151-180 days 181-210 days 211-250 days
ThU$
ThU$
ThU$
ThU$
Overdue
more than
251 days
ThU$
Total current
ThU$
Total
non-current
ThU$
Gross trade recevaibles
Impairment provision
Other gross receivables
1,445,676
(921)
235,837
(7,441 )
115,725
(164)
6,520
(26 )
24,743
(3,091)
1,324
(15 )
6,278
(2,772)
1,186
(4 )
2,575
(1,530)
191
(3 )
2,056
(1,542)
169
0
2,173
(1,693)
205
0
1,708
(1,501)
73
0
1,367
(982)
91
0
55,187
(35,951)
2,677
(2,844)
1,655,953
(50,147)
195,899
(9,961)
1,535
0
52,374
(372)
Total
1,673,151
122,055
22,961
4,688
1,233
683
685
280
476
19,069
1,791,744
53,537
Balance
12.31.2013
Trade and other
receivables
Portfolio
not overdue
ThU$
Overdue
1-30 days
ThU$
Overdue
31-60 days
ThU$
Overdue
61-90 days
ThU$
Overdue
91-120 days
ThU$
Overdue
Overdue
Overdue
Overdue
121-150 days 151-180 days 181-210 days 211-250 days
ThU$
ThU$
ThU$
ThU$
Overdue
more than
251 days
ThU$
Total current
ThU$
Total
non-current
ThU$
Gross trade recevaibles
Other gross receivables
1,408,493
(5,223)
60,556
0
184,941
(449)
3,074
0
40,476
(1,252)
143
0
9,906
(1,016)
912
0
5,089
(1,816)
60
0
2,082
(820)
405
(532)
1,497
(775)
2,012
0
810
(283)
175
0
1,539
(717)
217
0
38,947
(33,182)
194,679
(8,296)
1,692,702
(45,533)
203,981
(8,403)
1,078
0
58,252
(425)
Total
1,463,826
187,566
39,367
9,802
3,333
1,135
2,734
702
1,039
192,148
1,842,747
58,905
39
3.4 OTHER NON FINANCIAL ASSETS
Other non financial assets, current
Unamortized roads, current
Unamortized insurance
VAT fiscal credit
Dividend receivable
Materials, supplies and parts
Assets for sale
Expenses paid in advanced
Leases
Fishing permits
Contribution to ESSBIO
Others
Total current
Other non financial assets, non current
09.30.2014
ThUS$
12.31.2013
ThUS$
46,028
59,981
74,350
0
12,580
0
8,334
17
941
459
21,236
53,815
28,702
105,275
0
10,858
289
9,497
12
763
481
14,651
223,926
224,343
09.30.2014
ThUS$
12.31.2013
ThUS$
Unamortized roads, non current
Unamortized paid in advanced (freight, insurance, others)
Leases guarantees
Deferred expenses
Others
125,208
6,098
34
3,920
26,623
112,505
7,092
43
6,034
27,423
Total non-current
161,883
153,097
40
3.5 OTHER FINANCIAL LIABILITIES
Financial liabilities valued at amortized cost correspond to non-derivative instruments with contractual payment flows that
can be fixed or subject to a variable interest rate. Financial instruments classified in this category are valued at amortized
cost using the effective interest method.
As of the reporting date, this classification included obligations with banks and financial institutions and obligations with
the public through bonds issued in dollars and UF.
09.30.2014
ThUS$
12.31.2013
ThUS$
768,441
1,491
27,444
409,542
70
31,987
18,304
1,053,314
548
113,456
43,536
2,119
29,644
7,316
1,257,279
1,249,933
Bonds in US dollars
Bonds in UF and COP
Loans with banks
Financial leasing
Other financial liabilities
2,257,995
1,635,378
1,870,817
80,275
123,725
2,140,758
1,473,873
2,132,874
86,155
28,837
Total non-current
5,968,190
5,862,497
Total other financial liabilities
7,225,469
7,112,430
Current
Loans with banks
Accounting overdrafts
Bonds in UF and COP
Bonds in US dollars
Letter of credit
Financial leasing
Total current
Non-current
Capital plus interest of the main financial liabilities of Empresas Copec’s Group that are subject to risk of liquidity are
presented undiscounted and under maturity groups in the following tables:
41
As of September 30, 2014:
Dates of Maturity
Bank loans
Banco Alfa
Banco Safra
Banco BBVA (Estados Unidos)
Less than 1
month
ThUS$
Total
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years
Current
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
0
0
0
0
0
0
0
118
0
0
408
0
118
408
0
0
30,002
30,002
15,154
0
0
3,554
0
0
0
3,554
0
64
7,319
70,857
164,321
0
78,240
164,321
Banco do Brazil
0
0
152
257
0
152
257
Banco Bndes Subcrédito
0
0
132
10,792
29,054
132
39,846
Banco Votorantim
0
0
179
4,033
838
179
4,871
Banco BBVA (Argentina)
Banco del Estado
Banco John Deere
BBVA Chile
Banco Continental
Banco Itaú
Banco Itaú (Brazil)
Fondo de Desenvolvimiento Econom.
Banco HSBC
J.P. Morgan
Banco Banamex MXN
Santander
15,154
0
0
331
546
0
331
546
4,046
36,599
91,215
22,783
0
131,860
22,783
5
11
48
1,131
0
64
1,131
13
10,975
7,928
3,452
0
18,916
3,452
203
0
345
307
0
548
307
0
0
56
79
0
56
79
1,265
130
764
63,290
0
2,159
63,290
11,962
262,752
380
10,270
262,752
0
118
2,907
14,809
0
0
17,834
0
20,242
1,312
107,773
14,015
41,129
0
142,030
41,129
Banco BIF Soles
15
32
151
1,890
401
198
2,291
Banco Chile
31
57,209
40,806
182,343
0
98,046
182,343
0
1,378
0
14,851
0
1,378
14,851
40,913
Banco Security
Banco Bci
Banco Citibank
Banco Bradesco
Banco Heritage
94
347
1,147
40,913
0
1,588
0
2,605
10,085
0
0
12,690
0
5,546
3,100
23,328
380
0
31,974
380
1,356
0
0
0
0
1,356
0
Banco Davivienda
0
82
10,246
0
0
10,328
0
Banco Banistmo
12
24
4,337
0
0
4,373
Bancomer
167
71
267
7,442
0
505
7,442
Banco Bogota
341
73
135,337
16,128
0
135,751
16,128
Banco de Occidente
10,147
8,548
16,534
0
0
35,229
0
Banco Dnb Nor Bank
0
0
48
0
0
48
0
109,551
Banco BTMU
0
171
338
1,300
109,551
0
1,809
Banco Helm Bank
0
110
0
0
0
110
0
Banco Internacional
0
423
0
527
0
423
527
119
1,283
903
376,382
0
2,305
376,382
Banco Scotiabank
Bank ABC
Interamerican Development Bank
Finnissh Export Credit
BBVA Uruguay
Banco Macro Argentina
0
0
35
77
0
35
77
2,065
0
5,831
155,387
94,860
7,896
250,247
459,469
0
0
45,132
264,974
194,495
45,132
3,034
0
9,056
0
0
12,090
0
77
0
0
167
0
77
167
Banco Polpular
0
0
6,300
0
0
6,300
0
Banco Colombia
17
14
90
2,432
0
121
2,432
50,578
245,285
552,036
1,763,878
319,648
847,899
2,083,526
Total
Dates of Maturity
Bonds
Less than 1
month
ThUS$
Total
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years
Current
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Barau - E
6,831
0
0
0
0
6,831
0
Barau - F
4,948
0
0
59,623
320,767
4,948
380,390
Barau - Q
1,201
0
0
49,502
42,325
1,201
91,827
Barau - J
0
0
542
36,262
210,304
542
246,566
BECOP - C
0
5,937
5,937
59,371
407,005
11,874
466,376
BECOP - E
0
0
1,690
8,452
54,122
1,690
62,574
Barau - P
0
2,995
0
31,820
264,617
2,995
296,437
Barau - R
0
0
3,598
28,666
315,206
3,598
343,872
Bond 144 A - Argentina
0
5,307
0
303,038
0
5,307
303,038
Yankee Bond 2019
0
0
6,142
641,236
0
6,142
641,236
Yankee Bond 2º Emission
0
0
391
143,547
0
391
143,547
0
0
378,901
0
0
378,901
0
Yankee 2021
0
0
3,889
80,000
425,087
3,889
505,087
Yankee 2022
0
0
5,278
95,000
549,270
5,278
644,270
Yankee 2024
0
0
4,313
90,000
601,188
4,313
691,188
Bond series 7 years fixed rate
0
2,272
4,918
26,321
121,933
7,190
148,254
Bond series 5 years IPC E.A.
0
1,096
2,444
64,851
0
3,540
64,851
0
2,448
5,457
29,207
147,274
7,905
176,481
12,980
20,055
423,500
1,746,896
3,459,098
456,535
5,205,994
Total
Dates of Maturity
Leases
Banco Santander Chile UF
Banco Santander Chile $
Banco de Chile UF
Less than 1
month
ThUS$
842
Total
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years
Current
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
532
2,536
4,222
0
3,910
4,222
77
144
629
2,386
0
850
2,386
1,006
1,833
8,485
19,380
0
11,324
19,380
Banco de Chile $
22
45
201
268
0
268
268
Banco BBVA UF
741
1,337
6,986
20,584
0
9,064
20,584
8
16
74
237
0
98
237
325
651
2,927
11,809
0
3,903
11,809
Banco Estado UF
Banco Scotiabank UF
Automotive Leases
Banco BBVA US$
Leasing BBVA
Leasing Bancolombia
0
0
0
0
9
0
0
9
0
59
0
119
0
277
10
585
0
455
10
585
0
27,997
337
676
3,038
16,201
11,796
4,051
Leasing Banco Internacional
3
7
31
2
0
41
2
Banco Itau
0
0
37
309
0
37
309
3,420
5,360
25,240
75,983
11,796
34,020
87,779
66,978
270,700
1,000,776
3,586,757
3,790,542
1,338,454
7,377,299
Total
Total interest bearing loans
42
As of December 31, 2013:
Dates of Maturity
Bank loans
Banco Alfa
Less than 1
month
ThUS$
Total
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years
Current
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
59
0
0
0
0
59
0
Banco BBVA
442
0
416
0
0
858
0
Banco del Estado
445
65,974
54,458
194,063
29,941
120,877
224,004
Banco do Brazil
6,843
0
0
0
6,843
Banco Itau Brazil
2,653
0
0
895
0
2,653
895
186
0
0
1,294
3,247
186
4,541
Banco Rep. Oriental Uruguay
0
5,098
20,065
0
0
25,163
0
BBVA Banco Estados Unidos
0
15,186
15,000
45,541
0
30,186
45,541
1,970
279,136
Banco Votorantim
Interamerican Development Bank
417
417
0
4,487
122,626
156,510
6,457
4,893
12,268
0
0
0
17,161
0
Banco Galicia
48
3,067
409
818
0
3,524
818
Banco Itaú
14
0
10,434
3,514
0
10,448
3,514
Fondo de Desenvolvimiento Econom.
58
0
0
121
0
58
121
1,408
373
2,245
265,824
0
4,026
265,824
0
0
0
0
0
0
0
58,494
80,244
110,051
57,341
0
248,789
57,341
BBVA Argentina
J.P. Morgan
Santander Overseas Bank
Santander
Corpbanca
Banco Chile
Banco Security
Banco Bci
Banco Scotiabank
Banco Citibank
0
0
6,690
0
0
6,690
0
9,896
5,591
76,460
192,758
29,941
91,947
222,699
0
0
2,659
16,726
0
2,659
16,726
1,924
510
8,717
40,108
9,658
11,151
49,766
40,256
229
240,477
379,483
0
280,962
379,483
5,021
27,672
45,770
0
0
78,463
0
690
330
1,479
110,850
0
2,499
110,850
Banco GNB Sudameris
0
0
0
0
0
0
0
Banco Av Villas
0
172
368
8,671
0
540
8,671
Banco BTMU
Banco Bancolombia
Banco Davivienda
Banco Bogota
Banco de Occidente
Finnish Export Credit
Banco Itau Uruguay
Banco Helm Bank
Banco Helm Bank Panama
Banco Continental
Banco BBVA Uruguay
Banco Bndes Subcrédito
Banamex MXN
Banco Macro
Banco HSBC (Brazil)
Banco Bradesco
Banco IFC - USD
Otros Bancos
Banco Bice
Total
0
0
0
0
0
0
0
0
0
1,805
0
10,588
0
41,442
0
79,624
0
53,835
0
79,624
0
466
963
22,330
0
1,429
22,330
0
24,906
20,852
266,493
247,756
45,758
514,249
55
0
10,005
0
0
10,060
0
0
15
0
0
0
15
0
0
0
0
0
0
0
0
12
27
158
2,463
0
197
2,463
0
12,047
0
0
12,047
0
62
70
0
12,348
30,562
132
42,910
124
0
3,069
761
19,939
0
3,954
19,939
2
4,757
95
288
0
4,854
288
1,309
11,631
588
64,892
0
13,528
64,892
137
0
9,332
120
0
9,469
120
0
0
0
0
0
0
0
37
1,739
172
10,282
0
1,948
10,282
0
0
0
0
0
0
0
136,873
278,469
694,083
1,919,829
507,615
1,109,425
2,427,444
Dates of Maturity
Bonds
Barau - E
0
Less than 1
month
ThUS$
Total
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years
Current
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
0
0
14,756
0
0
14,756
0
426,698
Barau - F
0
0
2,180
52,330
374,368
2,180
Barau - H
88,717
663
0
0
0
89,380
0
BECOP - C
0
0
13,081
65,405
454,917
13,081
520,322
BECOP - E
931
0
931
9,311
61,486
1,862
70,797
Barau - J
0
2,387
0
40,116
242,063
2,387
282,179
Barau - P
0
0
1,125
35,202
295,925
1,125
331,127
Bono 144A - Argentina
0
0
1,004
311,254
0
1,004
311,254
15,205
0
0
145,000
531,942
15,205
676,942
0
2,734
0
152,872
0
2,734
152,872
0
0
4,047
379,608
0
4,047
379,608
Yankee 2021
8,889
0
0
80,000
444,475
8,889
524,475
Yankee 2022
11,215
0
0
95,000
571,986
11,215
666,986
Bond series 7 years fixed rate
0
2,390
5,178
27,709
133,519
7,568
161,228
0
1,020
2,256
69,446
0
3,276
69,446
0
2,291
5,064
27,100
156,895
7,355
183,995
Yankee Bond 2019
Bonos serie 18 años IPC E.A.
Total
0
945
2,085
11,158
84,195
3,030
95,353
124,957
12,430
51,707
1,501,511
3,351,771
189,094
4,853,282
Dates of Maturity
Leases
Banco Santander Chile
Banco Chile
Less than 1
month
ThUS$
Total
1 to 3 months
3 to 12 months
1 to 5 years
More than 5 years
Current
Non-current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
514
878
3,555
10,331
0
4,947
10,331
1,150
2,300
9,424
27,528
0
12,874
27,528
Banco BBVA
462
925
4,162
12,889
0
5,549
12,889
Banco Scotiabank
284
568
2,557
11,396
0
3,409
11,396
9
18
81
342
0
108
Banco Estado
Automotive Leases
Leasing Bancolombia
Leasing Banco Internacinal
Leasing BBVA
Total
Total interest bearing loans
342
0
0
62
5
0
62
5
356
1,068
2,873
21,274
11,406
4,297
32,680
5
10
45
28
0
60
28
53
106
476
444
0
635
444
2,833
5,873
23,235
84,237
11,406
31,941
95,643
264,663
296,772
769,025
3,505,577
3,870,792
1,330,460
7,376,369
43
The maturities aforementioned include interest to be paid in each period.
The Parent Company Empresas Copec S.A. and the affiliates Celulosa Arauco y Constitución S.A. and Compañía de
Petróleos de Chile Copec S.A. hold 94.9% of the Company’s consolidated financial debt. In terms of currency, financial
debt is detailed as follows:
Amortized Cost
Bonds issued in dollars
Bonds issued in UF
Bonds issued in COP
Bank loans in dollars
Bank loans in other currencies
Capital lease
Government Loans
Creditors and other payables
Fair Value
09.30.2014
12.31.2013
09.30.2014
12.31.2013
ThUS$
ThUS$
ThUS$
ThUS$
2,667,537
1,316,478
346,344
1,716,713
283,937
112,262
4,002
1,559,159
2,184,294
1,223,006
364,323
2,012,800
1,318,662
115,799
4,910
1,775,149
2,860,456
1,223,810
346,344
392,327
191,090
112,262
4,002
1,559,159
2,712,585
1,277,909
364,323
2,136,766
1,305,324
115,799
4,910
1,775,149
The financial covenants to which the Group is subject are detailed in the table below:
Instrument
Amount as of
09.30.2014
ThUS$
Amount as of
12.31.2013
ThUS$
Interest coverage >=
2.0x
Level of
Level of
indebtedness(1)
<= 1.2x
indebtedness(2) <=
0.75x
1,316,478
1,223,006
N/A

N/A
Syndicated loan
298,900
297,723


N/A
Flakeboard Loan
150,206
149,286


45,002
274,584

Other loans
1,780,992
2,066,292

No covenants are required
Foreign bonds
3,013,881
2,548,617
No covenants are required
Local bonds
Bilateral Credit

N/A
N/A: Does not apply for the instrument
(1) Level of indebtedness (financial debt divided by equity plus minority interest)
(2) Level of indebtedness (financial debt divided by total assets)
(3) Financial covenants for loan taken by Forestal Río Grande S.A. only apply to the financial statements of that company
At present time, the risk ratings of the debt instruments are the following:
Instrument
Empresas Copec
Local bonds
Arauco
Local bonds
Foreign bonds
Standard & Poor's
Fitch Ratings
Moody's
Feller Rate
-
AA-
-
AA-
BBB-
AABBB
Baa3
AA-
-
AAA
-
-
Organizacion Terpel
Local bonds
44
Consolidated Net Tangibles Assets
In accordance with the provisions of Title VIII, Clause Twenty Five of the Contracts for the issuance of bond lines
executed between Empresas Copec S.A. and Banco Santander Chile, on November 2, 2009, Registries No. 21.122-2009
and No. 21.123-2009, including their modifications, we report that as of September 30, 2014, the concepts identified in
subsections /a/ and /b/ of the definition of consolidated net intangible assets amount to ThUS$ 138,025 and
ThUS$ 28,778, respectively (ThUS$ 292,879 and ThUS$ 152,922 as of December 31, 2013).
In addition, according to the provisions of Title III, Tenth Clause, we would like to state that as of December 31, 2013 and
as of September 30, 2014 Empresas Copec S.A. has complied with the obligations derived from the previously mentioned
contract, in particular as regards the financial indicator defined in section /C/ of the above tenth clause.
•
Indebtedness level
:
0.49
•
Upper limit allowed
:
1.20
3.6 OTHER FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group has the following financial liabilities at fair value through profit or loss:
09.30.2014
ThUS$
12.31.2013
ThUS$
Swaps
Forward
Other
135,125
2,738
0
25,444
5,816
902
Total
137,863
32,162
Financial liabilities at fair value through profit or loss include both liabilities designated as such upon initial recognition and
liabilities classified as held as investments. Liabilities held as investments and derivatives that are financial liabilities are
valued at fair value. Gains and losses are recorded in income.
This liability is included under “Current and non-current other financial liabilities”.
3.7 FAIR VALUE HIERARCHY
The financial assets and liabilities that have been accounted for at fair value in the Statement of Financial Position as of
September 30, 2014 have been measured on the basis of the methodologies outlined in IAS 39. Such methodologies
applied for each class of financial instruments are classified according to their hierarchy as follows:

Level I: Values or prices in active markets for identical assets and liabilities.

Level II: Information inputs from sources other than the market prices in Level I but observable in the market for the
assets and liabilities, whether directly (prices) or indirectly (obtained on the basis of prices).

Level III: Inputs for assets or liabilities that are not based on observable market data.
45
Fair Value
September 2014
ThUS$
Measurement Methodology
Level II
Level III
ThUS$
ThUS$
Level I
ThUS$
Financial assets at fair value
Swap of Investment (asset)
Forwards
Mutual funds
Guarantee Contribution
4,199
17,860
143,927
346,516
-
143,927
346,516
-
4,199
17,860
-
-
135,125
2,738
-
135,125
2,738
-
Financial liabilities at fair value
Swap of Investment (liability)
Forward (liability)
Fair Value
December 2013
ThUS$
Measurement Methodology
Level II
Level III
ThUS$
ThUS$
Level I
ThUS$
Financial assets at fair value
Swap of Investment (asset)
Forwards
Mutual funds
7,553
148,840
372,474
148,840
372,474
7,553
-
-
Financial liabilities at fair value
Swap Investment (liability)
Forward (liability)
25,444
5,816
-
25,444
5,816
-
3.8 HEDGING FINANCIAL INSTRUMENTS
Hedging financial instruments correspond to cash flow hedges, and are recorded in Other non-current financial assets
and other non- current liability depending on whether they are in an assets or liability position.
Empresas Copec, parent company, receives dividends from its fuel subsidiaries in Chilean pesos; however, it pays its
shareholders dividends denominated in US dollars (which are translated into Chilean pesos at the exchange rate
prevailing 5 working days before the payment date). To mitigate this potential mismatching, the company enters into
hedges through forward contracts with different financial institutions. At September 30, 2014, 100% of the amounts
receivable from its fuel subsidiaries in regard to dividends payable in December 2014 are hedged.
As September 30, 2014 the market value of all the forwards expressed in US dollars at the exchange rate prevailing on
the date of closing, including those related to dividends due in May 2015, is US$ 3,849,523.
The affiliate Arauco is exposed to the risk of changes in the exchange rate of the dollar in order to meet its obligations
with the public denominated in other currencies, such as bonds issued in indexed Chilean pesos (UF).
46
Cross currency and swap contracts owned by Arauco to September 30, 2014, are detailed in the following table:
Bond
Institution
Amount US$
Amount UF
Rate US$
Rate UF
Date of start
Date of end
Market value
Effectiveness
F
Barclays 1
38,378,440
1,000,000
5.86%
4.25%
04-30-09
10-30-14
1,780,580
102%
F
Deutsche 1
37,977,065
1,000,000
5.80%
4.25%
10-30-09
10-30-14
2,205,182
102%
F
Deutsche 2
37,621,562
1,000,000
5.79%
4.25%
10-30-09
10-30-14
2,572,809
102%
F
Barclays 2
38,426,435
1,000,000
5.62%
4.25%
10-30-09
10-30-14
1,778,038
102%
F
Deutsche 4
43,618,307
1,000,000
5.29%
4.25%
10-30-11
10-30-21
5,056,253
102%
F
JP Morgan 2
43,618,307
1,000,000
5.23%
4.25%
10-30-11
10-30-21
(4,877,783)
102%
J
Corpbanca
42,864,859
1,000,000
5.20%
3.25%
09-01-10
09-01-20
(6,074,090)
100%
J
BBVA 1
42,864,859
1,000,000
5.20%
3.25%
09-01-10
09-01-20
(6,074,090)
100%
J
Deutsche 3
42,864,859
1,000,000
5.25%
3.25%
09-01-10
09-01-20
(6,191,797)
100%
J
Santander
42,873,112
1,000,000
5.17%
3.25%
09-01-10
09-01-20
(6,009,666)
100%
J
BBVA 2
42,864,257
1,000,000
5.19%
3.25%
09-01-10
09-01-20
(5,801,431)
100%
E
Corpbanca 2
43,284,746
1,000,000
3.36%
4.00%
10-30-11
10-30-14
(461,335)
100%
P
Corpbanca 3
46,474,122
1,000,000
4.39%
3.96%
11-15-11
11-15-21
(6,311,116)
100%
P
JP Morgan 3
47,163,640
1,000,000
3.97%
3.96%
11-15-12
11-15-21
(5,691,699)
100%
F
Deutsche*
37,977,065
1,000,000
4.69%
4.25%
04-30-14
04-30-19
3,420,363
102%
F
BBVA*
38,426,435
1,000,000
5.75%
4.25%
10-30-14
04-30-23
(1,730,625)
102%
F
BBVA*
38,378,440
1,000,000
5.61%
4.25%
10-30-14
04-30-23
(1,334,617)
102%
F
Santander*
37,977,065
1,000,000
5.59%
4.25%
10-30-14
04-30-23
(1,188,553)
102%
F
BCI*
37,621,562
1,000,000
5.54%
4.25%
10-30-14
04-30-23
(973,206)
102%
P
BBVA
42,412,852
1,000,000
5,00%
3.96%
11-15-13
11-15-23
(2,984,457)
100%
P
Santander
41,752,718
1,000,000
4.93%
3.96%
11-15-13
11-15-23
(1,932,972)
100%
P
Deutsche
41,752,718
1,000,000
4.92%
3.96%
11-15-13
11-15-23
(1,897,404)
100%
R
Santander
128,611,183
3,000,000
5.17%
3.60%
10-01-14
04-01-24
(16,649,790)
100%
R
JP Morgan
43,185,224
1,000,000
4.84%
3.60%
10-01-14
04-01-24
(4,718,042)
100%
R
Corpbanca
43,227,070
1,000,000
4.80%
3.60%
10-01-14
04-01-24
(4,672,775)
100%
Q
BCI
43,185,224
1,000,000
3.48%
3.00%
10-01-14
04-01-21
(2,570,607)
100%
Q
BCI
43,196,695
1,000,000
3.40%
3.00%
10-01-14
04-01-21
(2,408,578)
100%
By means of a hedge effectiveness test, we could validate that hedge instruments detailed above are highly effective
within an acceptable range for Arauco in order to leave out exchange rate uncertainty in commitments related to hedges.
Hedging strategy:
Given that Arauco has a high percentage of its assets in dollars and obligations in indexed Chilean pesos, it needs to
minimize the exchange rate risk. The purpose of this swap position is to eliminate uncertainty related to the exchange rate
by exchanging flows from obligations in indexed Chilean pesos from the bonds described above for flows in dollars
(Arauco’s functional currency) at a fixed exchange rate determined as of the contract’s date of execution.
47
Summarizing to September 30, 2014, foreign exchange hedging instruments are the following:
Sociedad
Celulosa Arauco y Constitución S.A
Type of hedging
Cash flow
Risk
Exchange rate
Financial asset
Classification/Type/Instrument
Bonds issued in UF
Swap BARAU F
Fair value (US$ million)
Type
1,781
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F
2,205
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F
2,573
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F
1,778
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F
(5,056)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F
(4,878)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU j
(6,074)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU j
(6,074)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU j
(6,192)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU j
(6,010)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU j
(5,801)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU E
(461)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU P
(6,311)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU P
(5,692)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F*
3,420
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F*
(1,731)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F*
(1,335)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F*
(1,198)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU F*
(973)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU P
(2,984)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU P
(1,933)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU P
(1,897)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU R
(16,650)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU R
(4,718)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU R
(4,673)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU Q
(2,571)
Cross Currency Swap
Cash flow
Exchange rate
Financial asset
Bonds issued in UF
Swap BARAU Q
(2,409)
Cross Currency Swap
Arauco Colombia S.A
Cash flow
Exchange rate
Financial asset
Forward
Forward Colombian peso
636
Forward
Arauco Colombia S.A
Cash flow
Exchange rate
Financial asset
Forward
Forward Colombian peso
285
Forward
(*) These swaps correspond to "Forward Starting Swap", whose start period is during 2014 (check date in each contract description)
NOTE 4. FINANCIAL RISK MANAGEMENT

Financial risk factors:
Through its affiliates and associates, the Group has operations in different sectors related to natural resources and
energy. The relevant risk factors vary depending on the type of business. Accordingly, the Management of each of the
affiliates carries out its own risk management in collaboration with their respective operating units.
The most relevant affiliates are Arauco, with activities in the forestry sector, and Copec, with activities in the fuel sector.
Together these two companies represent approximately 86% of the Group’s consolidated assets, 90% of EBITDA and
70% of net income. Additionally, they represent around 95% of receivables and 91% of bond issuances. Together with
the Parent Company, they represent 98% of consolidated placements.
Therefore, a significant portion of the risks faced by the Group lie within these three units. The specific risks that affect
each unit are analyzed below.
a)
Risks associated with Empresas Copec S.A., the Parent Company
The risks of the Parent Company are fundamentally associated with its financial placements, which are exposed to
several risks, including interest rate risk, exchange rate risk and credit risk. Management provides written policies for
the management of investments that establish the objectives of obtaining the maximum return for acceptable levels of
risk, maintaining sufficient liquidity, and limiting the levels of the different types of risk. These policies identify the
instruments that are allowed, and they establish limits per type of instrument, issuer and risk rating. In addition, they
determine the control and operating mechanisms for investing activities.
48
Risk management is administered by the treasury department, which complies with the policies approved by
Management.
The financial instruments held by the Company have been categorized as cash or financial assets at fair value through
profit and loss, given the feasibility that the instruments will be sold in the short term.
(i)
Interest rate risk
The assets affected by this risk are the financial placements held by the Parent Company, which, in accordance with the
investment policy, primarily consist of fixed-income instruments in the form of deposits, bonds, mortgage bonds and other
similar items, as well as fixed-income mutual funds. The duration is used as a measurement of the sensitivity of the
portfolio’s value in the face of changes in market interest rates. Given that the market value of such instruments varies
according to changes in interest rates, a maximum limit on the aggregate duration of the portfolio has been set at three
years. Currently, the aggregate portfolio has duration of 0.6 years.
The table below shows the possible effects on pre-tax income of changes in the value of the Company’s investment
portfolio as a result of changes in interest rates:
Aggregate term (years)
0.6
Total portfolio value (US$)
823,002,575
Interest rate sensitivity analysis
Change in Rate
Change in Value
Total Portfolio Value
%
US$
US$
2.0%
1.0%
0.5%
-0.5%
-1.0%
-2.0%
(9,546,830)
(4,773,415)
(2,386,707)
2,386,707
4,773,415
9,546,830
813,455,745
818,229,160
820,615,868
825,389,282
827,775,990
832,549,405
(ii) Exchange rate risk
As part of its investment policy, the Parent Company is authorized to have placements in U.S. dollars in order to handle
possible uses of cash in that currency, which would result from the needs of certain affiliates and associates, as well as
new potential businesses in which the Parent Company may participate. Such resources can be invested in local or
international mutual funds, time deposits and third-party management, through a specific mandate.
Variations in the exchange rate affect the value of peso-denominated instruments when expressing them in dollars. A
depreciation of the Chilean peso would have a negative effect when expressing the peso-denominated investments in
dollars, whereas an appreciation of the peso would have a positive effect.
49
To date, approximately 84.8% of the aggregate portfolio is denominated in dollars and 15.2% in pesos and UF. The
Company’s objective is to achieve a portfolio with approximately 50-80% in dollars in the medium term, in accordance
with the forecasted uses for the placements. During the second quarter, US$374 million were received from Guacolda
share percentage sale, which increased proportion in the portfolio of dollar denomination.
A table showing the possible effects on pre-tax income of changes in the value of the investment portfolio (measured in
dollars), as a result of fluctuations in the exchange rate, is presented below:
Percentage of portfolio in Chilean pesos
15.2%
Total portfolio value (US$)
823,002,575
Depreciation Ch$
Appreciation Ch$
Exchange rate sensitivity analysis
Change in Exchange Rate
Change in Value
Total Portfolio Value
%
US$
US$
10.0%
12,532,700
835,535,275
5.0%
6,266,350
829,268,925
-5.0%
(6,266,350)
816,736,225
-10.0%
(12,532,700)
810,469,875
Additionally, in its financial statements, the Company consolidates affiliates that carry their accounting in Chilean pesos,
which is the case of Compañía de Petróleos de Chile Copec S.A., Abastible S.A., Inmobiliaria Las Salinas Limitada and
Sociedad Nacional de Oleoductos S.A., which record their financial information as described in Note 2.4 (c). The
consolidated net income of Empresas Copec S.A. can be affected by movements in the exchange rate when the pesodenominated results of these affiliates are converted to dollars. Likewise, affiliates such as Arauco and the affiliates in the
fishing sector are also affected by movements in the exchange rate, as a portion of their operating costs are denominated
in pesos.
On December 22, 2009, the Parent Company placed a UF-denominated bond in the Chilean market (BECOP-C) for a
total amount of UF 7,000,000. The placement rate was 4.30%, for a nominal rate of 4.25%. Interest is paid semiannually,
and the principal is amortized in a single payment in 2030. This liability is denominated in a currency (UF) other than the
Parent Company’s functional currency (U.S. dollars). However, these bonds have been transferred to the affiliates
belonging to the fuel sector, whose functional currency is the peso, such that the consolidated exposure to the exchange
rate for this concept is eliminated. This transfer also eliminates all liquidity risk at the Parent level. Similar situation occurs
with the new placement of a UF-denominated bond (BECOP-E) in the Chilean market on September 15, 2011, for a total
amount of UF 1,300,000. The placement rate was 3.40%, for a nominal rate of 3.25%. Interest is paid semiannually, and
the principal is amortized in a single payment in July 31, 2021.
50
Also, Empresas Copec, parent company, receives dividends from its fuel subsidiaries in Chilean pesos; however, it pays
its shareholders dividends denominated in US dollars (which are translated into Chilean pesos at the exchange rate
prevailing 5 working days before the payment date). To mitigate this potential mismatching, the company enters into
hedges through forward contracts with different financial institutions. At September 30, 2014 all the amounts receivable
from its fuel subsidiaries in regard to the dividend payable in December are covered.
(iii) Credit risk
The financial placements held by the Parent Company consist predominantly of fixed-income instruments. In accordance
with the investment policy, limits per issuer and limits on the categories of instrument have been established, depending
on the risk rating of such issuers. In this regard, risk ratings must be issued by recognized local or international rating
agencies.
A table showing the main counterparties are detailed at 30 September 2014 and 31 December 2013:
09.30.2014
Main counterparties
Banco Chile
Banco BCI
Banco Santander
Santander Fondos Mutuos
BCI Fondos Mutuos
Banchile Fondos Mutuos
Banco Estado
Fondos Mutuos BTG
Banco Security
Banco Itaú
Banco BBVA
Banco Central y Tesorería
Banco HSBC
Otros
Total
%
18.10%
17.60%
13.40%
7.00%
6.30%
6.00%
5.60%
4.40%
4.10%
0.00%
0.00%
0.00%
0.00%
17.45%
100.0%
12.31.2013
Value US$
149,182,257
144,856,915
110,359,562
57,440,178
51,890,383
49,277,741
45,703,944
36,605,018
34,066,614
0
0
0
0
143,619,963
823,002,575
%
13.55%
15.00%
12.22%
2.31%
6.66%
0.00%
4.60%
4.76%
6.52%
6.13%
4.43%
1.58%
3.34%
18.90%
100.0%
Value US$
66,297,624
73,483,989
59,786,603
11,360,533
32,567,412
0
22,433,168
23,217,900
31,890,346
30,000,627
21,684,082
7,762,057
16,382,827
92,496,972
489,364,140
b) Risks associated with Celulosa Arauco y Constitución S.A. (forestry sector)
The affiliate’s financial assets are exposed to a number of financial risks: credit risk, liquidity risk and market risk
(including exchange rate risk, interest rate risk and price risk).
The global risk management program considers uncertainty in the financial markets and tries to minimize the potential
adverse effects on financial yields.
Financial risk management is administered by the Finance department. This department identifies, evaluates and hedges
financial risks in close collaboration with the operating units. The company does not actively participate in the trading of
its financial assets for speculative purposes.
51
(i)
Credit risk
Credit risk refers to financial uncertainty, over different periods of time, in relation to the fulfillment of obligations
subscribed by counterparties at the point in time when contractual rights to receive cash or other financial assets are
exercised.
The exposure of the affiliate Arauco to credit risk is directly related to the individual ability of its customers to fulfill their
contractual commitments and is reflected in trade receivables. Credit risk also arises for assets that are held by third
parties such as deposits, agreements and mutual funds.
In accordance with company policies, the subsidiary has insurance policies for open account sales. In order to cover the
export sales of the companies Celulosa Arauco y Constitución S.A., Aserraderos Arauco S.A., Paneles Arauco S.A.,
Forestal Arauco S.A. and Alto Panama S.A., as well as the local sales of Arauco Distribución S.A., Arauco México S.A.
de C.V., Arauco Wood Inc., Arauco Colombia S.A., Arauco Perú S.A., Arauco Panels USA LLC, Flakeboard CO Ltd.,
Flakeboard America Ltd., and Alto Paraná S.A. (and affiliates). Arauco contracts its insurance policies with Continental
Credit Insurance Company (rated AA- by credit agencies as Humphreys and Fitch Ratings). Until November 30, 2012,
Arauco do Brasil (and subsidiaries) insured its domestic credit sales with Euler Hermes Insurance Company. Beginning
on December 1, 2012, all insurance policies for credit sales in the Arauco Group were insured with the Continental Credit
Insurance Company. The insurance policies cover 90% of the amount invoiced with no deductible.
In order to back a line of credit or an advance payment to a provider that has been approved by the credit committee, the
company has guarantees such as mortgages, pledges, stand-by letters of credit, bank guarantees, checks, promissory
notes, loans and other similar items that could be enforced in accordance with the legislation of each country. The debt
covered by these types of guarantees amounts to US$ 149 million as of September 30, 2014. The guarantee procedure is
regulated by the guarantee policy, the purpose of which is to control the accounting, expiration and valuation of
guarantees.
The department of Credit and Collections, which reports to the department of Finance, is the area charged with
minimizing the credit risk of accounts receivable. This area supervises overdue accounts and approves or denies the
credit limits for all term sales. The standards and procedures for the proper control and management of the risk of open
account sales are governed by the Credit Policy.
A procedure for the approval and/or modification of customer lines of credit has been established and must be followed
by all companies belonging to the Arauco group. Requests for lines of credit are entered into a Credit Evaluation model,
where all available information is analyzed, including the amount of the line granted by the credit insurance company.
Subsequently, these requests are approved or denied by the internal committees of each of the companies belonging to
the Arauco group, according to the maximum amount authorized by the Credit Policy. If the line of credit exceeds that
amount, it is analyzed by the Corporate Committee. Credit lines are renewed annually through this internal process.
As of September 30, 2014, consolidated sales totaled ThUS$ 3,930,051, of which 63.15% were open account sales,
27.53% were sales with credit letters, and 9.32% were other types of sales.
52
As of September 30, 2014, accounts receivable totaled ThUS$ 639,208, of which 67.46% corresponded to open account
sales, 29.73% to sales with letters of credit, and 2.81% to other types of sales. These receivables correspond to 2.138
customers. The customer with the greatest open account debt represented 3.85% of total accounts receivable as of that
date.
Arauco has not entered into any refinancing or renegotiations with its customers which involve amendments to the invoice
due, and if necessary, any renegotiation of debt with a customer will be analyzed on a case by case basis and approved
by the Corporate Finance Department.
The debt open account covered by the different insurance policies and guarantees amounts to 98.2% of the total, and
consequently Arauco’s portfolio exposure amounts to 1.8%.
Sales with letters of credit mainly correspond to the Asian and Middle East markets. Periodically a credit evaluation of the
banks that issue credit letters is performed, in order to obtain their rating by the main risk rating agencies, their ranking at
the country and worldwide levels, and their financial situation for the past five years. In accordance with this evaluation,
the issuing bank is approved or a confirmation of the letter of credit is requested.
All sales are controlled using a credit verification system, the parameters of which have been defined to block orders from
customers that have a certain percentage of overdue payments or whose line of credit has been exceeded or expired as
of the time the product would be shipped.
Of total trade receivables as of September 30, 2014, 93.86% are current (i.e. non-past due), 1.83% are between 1 and 30
days past due, 0.57% are between 30 and 60 days past due, 0.22% are between 61 and 90 days past due, 0.09% are
between 91 and 120 days past due, 0.04% are between 121 and 150 days past due, 0.02% are between 151 and 180
days past due, 0.01% are between 180 and 210 days past due, 0.03% are between 211 and 250 days past due, 3.33%
are more than 250 days past due.
The table below shows the percentages of overdue payments from net trade receivables at September 2014 and
December 31, 2014, respectively:
2014
Days
Not Overdue
1-30
ThUS$
%
599,946
93.8600%
11,716
1.8300%
31-60
3,621
0.5700%
61-90
1,411
0.2200%
91-120
121-150
567
0.0900%
248
0.0400%
91-120
121-150
392
0.0700%
0
0.0000%
151 -180
106
0.0200%
181 - 210
82
0.0100%
211 - 250
165
0.0300%
more than 250
21,346
3.3300%
Total
639,208
100.00%
2013
Days
Not Overdue
1-30
ThUS$
%
513,393
87.5300%
63,458
10.8200%
31-60
630
0.1100%
61-90
1,278
0.2200%
151 -180
257
0.0400%
181 - 210
0
0.0000%
211 - 250
90
0.0200%
more than 250
7,008
1.1900%
Total
586,506
100.00%
The Arauco has recognized provisions for doubtful accounts on trade receivables for a total of MUS$ 7,58 over the last
five years which represents 0.38% of total revenues from sales during that five-year period.
53
Impairment of Trade Payables as percentage of total sales
Years
Impairment of Trade Payables
2014
-0.002%
2013
2012
2011
2010
0.009%
0.010%
0.150%
0.010%
last 5 years
0.038%
The amount recovered through possession of collateral, credit insurance reimbursements or any other credit
enhancement during the year 2014 was ThUS$ 767, which represents 45.71% of the total provisioned assets.
In March 2009, Arauco implemented a Guarantee Policy in order to control accounting, valuation and expiration dates of
collaterals received.
In May 2013, Arauco updated its Corporate Credit Policy.
Regarding the credit risk of time deposits, repurchase agreements and mutual funds, Arauco has in place a policy that
minimizes the risk through guidelines for management of cash flow surpluses in low-risk institutions.
Currently there is a policy for provisions for doubtful accounts receivable under IFRS for all the Arauco group companies.
Placement policy:
The affiliate Arauco has a placement policy that identifies and limits the financial instruments and the entities in which the
companies, in particular Celulosa Arauco y Constitución S.A., are authorized to invest.
It should be mentioned that treasury management is handled centrally for operations in Chile. Thus, the parent company
for the forestry sector acts as an internal bank for the Chilean affiliates, granting intercompany loans at a fixed rate
determined by central management. The parent carries out investment operations, cash excess placement and short- and
long-term debt subscriptions with banks, financial institutions and the public. The exception to this rule occurs in specific
operations that must be carried out through other companies, in which case the express authorization of the Chief
Financial Officer of Arauco is required.
Only investment in fixed-income instruments and instruments with sufficient liquidity is permitted. Each type of instrument
has a specific classification and limit, depending on its term and on the issuer.
With respect to intermediaries (banks, securities and mutual funds agencies, must be these two latter affiliates of bank
institutions) a methodology is used in order to determine the relative degree of risk of each bank or financial institution in
terms of its financial statements and debt or equity titles. Each institution is assigned a score, which ultimately determines
a relative risk ranking that Arauco uses to define the investment limits for each institution.
The background information that is necessary to evaluate the different criteria is obtained from the official financial
statements of the banks being evaluated and from the rating of the short- and long-term debt titles in force, as defined by
the supervisory organization (Superintendency of Banks and Financial Institutions) and assigned by the risk rating
agencies authorized by this organization, which in this case are Fitch Ratings Chile, Humphreys and Feller Rate.
54
The following criteria are evaluated: Capital and reserves, current ratio, share in total financial system placements, return
on capital, profit margin, debt-to-capital ratio and risk ratings of each entity.
Any exceptions that become necessary, mainly in relation to the investment limits in a particular instrument or entity, must
be expressly authorized by the Chief Financial Officer of Arauco.
(ii) Liquidity risk
Liquidity risk corresponds to the ability to meet debt obligations upon maturity.
The exposure to liquidity risk affects obligations with the public, banks and financial institutions, creditors and other
accounts payable, and it is related to the ability to respond to the net cash requirements that sustain operations under
both normal and exceptional conditions.
The Finance department constantly monitors the company’s cash projections on the basis of short- and long-term
forecasts, as well as forecasts of alternative financing options available. In order to control the level of risk of the financial
assets available, the company has a placement policy.
The capital committed under each of the main financial liabilities subject to liquidity risk is detailed in the table below and
grouped by date of maturity:
September 2014
In thousands of dollars
0 - 1 month
1 - 3 months
3 months - 1 year
Dates of maturity
Accounts payable and capital lease
Bank loans
Bonds issued in UF and dollars
Other Loans
3,021
45,076
12,980
0
4,558
124,698
8,302
0
21,857
168,579
403,054
3,991
Total
61,077
137,558
597,481
1 - 5 years
58,886
948,483
1,558,693
11
2,566,073
More than 5 years
Total
0
319,247
2,728,766
0
88,322
1,606,083
4,711,795
4,002
3,048,013
6,410,202
December 2013
In thousands of dollars
0 - 1 month
1 - 3 months
3 months - 1 year
Dates of maturity
Accounts payable and capital lease
Bank loans
Bonds issued in UF and dollars
Other Loans
2,419
99,664
124,026
0
4,689
162,346
5,784
0
19,841
451,282
23,112
334
Total
226,109
172,819
494,569
1 - 5 years
62,491
970,738
1,291,382
4,074
2,328,685
More than 5 years
Total
0
438,075
2,460,759
0
89,440
2,122,105
3,905,063
4,408
2,898,834
6,121,016
(iii) Market risk- exchange rate
This risk arises from the likelihood of losses from changes in the exchange rates of the currencies in which the assets and
liabilities of Arauco are denominated.
55
The affiliate Arauco is exposed to the risk of changes in the exchange rate of the dollar (functional currency) with respect
to sales, purchases and obligations that are denominated in other currencies, such as the Chilean peso, euro, real or
others. The Chilean peso is the currency with the greatest risk in the event of a significant exchange rate fluctuation.
Sensitivity analyses are performed to determine the effect of this variable on equity and net income for the business.
Sensitivity analysis considers a variation of +/- 10% of the exchange rate over the Chilean Peso. This fluctuation range is
considered possible given current market conditions at the closing date. With all other variables at a constant rate, a US.
Dollar exchange rate variation of +/- 10% in relation to the Chilean Peso would mean a change in the net income after tax
+/- 2.1% (equivalent to ThUS.$ 9,282), and +/- 0.08% of assets (equivalent to ThUS.$ 5,569).
The main financial instrument affected by exchange rate risk are the UF-denominated bonds issued in Chile and that are
not hedged by the swaps described in the section on hedges.
Additionally, for a sensitivity analysis, a variation of + / - 10% in the period-end exchange rate of the Brazilian real is
assumed; this is considered a possible range of fluctuation given market conditions as of the reporting date. If all other
variables remain constant, a change of + / - 10% in the exchange rate between the dollar and the Brazilian real would
result in a change in net income for the period after taxes of + / -0.08% (equivalent to ThUS$ 354); and a change in equity
of + / -0.01% (equivalent to ThUS$ 354).
(iv) Market risk – interest rate risk
Interest rate risk refers to the sensitivity of the value of financial assets and liabilities to changes in interest rates.
The affiliate Arauco is also exposed to the risk of changes in the interest rate of obligations with the public, banks and
financial institutions and variable-rate interest-bearing financial instruments.
The affiliate Arauco performs a risk analysis by reviewing the exposure to changes in the interest rate. As of September
30, 2014, 16.2% of bonds and loans with banks accrue interest at a variable rate. Therefore, a change of + / - 10% in the
interest rate, which is considered a possible range of fluctuation given market conditions, would have an effect of + / 0.02% on net income for the period (equivalent to ThUS$ 79) and a change in equity of
+ / -0.001% (equivalent to +/-
ThUS$ 47).
(v) Market risk – Price of wood pulp
The price of wood pulp is determined by the world market and by the conditions in the regional market. Prices fluctuate as
a function of demand, production capacity, business strategies adopted by large forestry companies and pulp and paper
producers, and the availability of substitutes.
The prices of wood pulp are reflected in the operating revenues in the statement of income and directly affect net income
for the period.
56
As of September 30, 2014, operating revenues from the sale of wood pulp represented about 40% of total revenues.
Forward contracts and other financial instruments are not used for wood pulp sales; instead, the price is set on a monthly
basis according to the market.
This risk is handled in a number of ways. The affiliate Arauco has a specialized team that performs periodic analyses of
the market and the competition, providing tools to evaluate trends and adjust forecasts accordingly. Similarly, financial
sensitivity analyses for the price variable enable the company to take the necessary precautions to better face different
situations. Additionally, Arauco mitigates the risk of pulp prices maintaining a strategy of low-cost production, allowing us
to deal with possible price fluctuations in economic cycles.
For the sensitivity analysis, a variation of + / - 10% in the average price of wood pulp is assumed; this is considered a
possible range of fluctuation given market conditions as of the reporting date. If all other variables remain constant, a
change of + / - 10% in the average price of wood pulp would result in a change of + / - 3.8% in EBITDA (equivalent to
ThUS$ 49); + / - 8.2% in net income for the period (equivalent to ThUS$ 39) and + / - 0.4% in equity (equivalent to ThUS$
27).
c)
Risks associated with Compañía de Petróleos de Chile Copec S.A. (fuel sector)
The operations of the Company (Copec S.A.) and its affiliates are exposed to a number of financial risks, specifically
market risk, credit risk, interest rate risk, liquidity risk and investment in foreign assets risk, especially Copec S.A. and its
Colombian associated Organización Terpel. This company’s risk management is based on the diversification of the
business and of customers, financial evaluations of customers, and the utilization of derivative instruments to the extent
that they are required.
Risk management of Copec S.A. is administered by the Finance and Administration department, in accordance with the
guidelines of the Chief Executive Officer and the Board of Directors of the Company, and of Organización Terpel is
administered by the Vice Finance department, in accordance with the guidelines of its presidency. This department
identifies, evaluates and hedges the financial risks, working jointly with the operating and sales areas of the companies.
Risk management considers an individual assessment of each exposure situation identified. This assessment determines
whether financial hedge instruments are taken out or not, whether there are natural hedging mechanisms in place, or
whether the associated risk is simply assumed, because it is not considered to be critical for the business and the
operation.
An analysis of each risk is presented separately.
(i)
Exchange rate risk
Copec S.A.
The primary market risk facing the company is the exchange rate risk (Chilean peso/U.S. dollar) resulting from fuel import
operations for the Chilean market and export operations, both of which are very-short-term operations.
57
Management has established a policy of managing the risk of exchange rates between foreign and local currency, in
order to minimize the net exposure in foreign currency. To do so, the company’s Finance and Administration department
uses forward contracts with local financial entities. These contracts have very short terms: less than 30 days for fuel
import hedges and around 30 days for export operations.
The exchange rate risk of financial investments in foreign currency is not managed, as these are operating positions of
one or two days.
Moreover, during the fourth quarter of 2011, the Company took an international loan of US$ 340 million, which have
been received in full. At September 30, 2014 the company has covered by forward contract 100% of the notional of
credit.
A sensitivity analysis to changes in the exchange rate of the total accounts payable in US$, including credit of US$ 340
million mentioned in the preceding paragraph, to September 30, 2014, from exchange rate of the exchange rate effective
the first day of the following month.
ThUS$
556,710
556,710
556,710
556,710
556,710
556,710
556,710
Change %
5%
10%
15%
-5%
-10%
-15%
$/US$
599.22
629.18
659.14
689.10
569.26
539.30
509.34
Th$
(Loss) Gain MM$
333,592
350,271
366,951
383,631
316,912
300,233
283,553
(16,680)
(33,359)
(50,039)
16,680
33,359
50,039
Organización Terpel and affilliates
The Group has no currency exposure to risk in commercial debtors and other receivables, commercial creditors and other
payables and in financial obligations, considering that operations in foreign currency account for less than 1%. Each
subsidiary operates with the locally accepted currency in its country, and financial indebtedness is also taken in this local
currency in order not to generate foreign exchange exposure. Treasury departments in different countries cover 100% of
their operations locally, without generating surplus to this date. Currently, exchange rate hedging is being taken, as
exposure is minimal.
(ii) Fuel Prices Risks:
Copec S.A.
The cost of most of the products commercialized is regulated and the inventory value is impacted by fluctuations in
international prices. Because of the pricing methodology, only product price hedges and exchange rate hedges can be
performed for Jet Fuel inventory, in order to mitigate monthly result volatility. Currently such hedge is not maintained.
58
The cost of most of the products commercialized is regulated and the inventory value is impacted by fluctuations in
international prices. Because of the pricing methodology, only product price hedges and exchange rate hedges can be
performed for Jet Fuel inventory, in order to mitigate monthly result volatility. Currently such hedge is not maintained.
At September 30, 2014 Copec S.A. and its subsidiary Proenergía Internacional have no hedges of this kind.
(iii) Interest Rate Risk
Copec S.A.
The Company has no significant paid assets, other than those related to the cash variations as a result of the operation,
which are invested in a period from 1 to 3 days. Income and expenses of the operation are independent from the changes
in interest rates. Therefore it is understood that there exists no significant financial risk.
Management understands that there is no significant interest rate risk for remunerated financial liabilities, as these
liabilities correspond to the financing of operating cash flows, with terms mainly between 1 and 90 days, and are highly
variable over the course of the year.
Additionally, credit recently signed by the Company is subject to interest rate risk locally and internationally. The local
credit funds operating cash flow with a term to 7 years, with a nominal rate TAB 90 days, while the international credit
finances the acquisition of the Company in its subsidiaries in Colombia, being a credit to 5 years with a 30-day LIBOR.
The Company policy is to individually assess the use of interest rate swaps in order to mitigate the risk associated to
variable rates. Currently, credit with LIBOR rate to 30 days is fully hedged by contracts that fix the rate. This hedging
started in February 2012, with 3 year length, expiring in February 2015.
There is a long-term loan of UF 5,344,133 of the Parent Company, which expires in November 2030. It is a bullet at
maturity and pay interest semiannually UF 114,364.
At September 30, 2014 are equivalent to MUF 2,700 contracts, which fix peso interest payable to banks. These contracts
have duration of three years. Maturing in May 2015.
Avoiding changes in rates, cash surpluses are invested primarily in savings and / or fixed rate instruments.
Currently, there are short and long-term credits in the best market condition with fixed or floating rates. Credits are taken
out with advance payment option without any penalty. This allows us to restructure the debt at any time, if the market
conditions change.
Given the market conditions, all the credits have been renewed at a floating rate.
59
(iv) Credit Risk
Copec S.A.
The company faces credit risk resulting from the composition of its portfolio of trade receivables and its portfolio of
financial investments.
In order to manage the credit risk of accounts receivable in Chile, the company assigns a credit line to each customer,
after performing an individual analysis of their financial and market positions. The Finance and Administration department
is in charge of performing this analysis for customers with lines exceeding UF 1,000 (1 UF = $ 24,168.02 as of September
30, 2014), and the administrative units of the sales department are in charge of with performing this analysis for
customers with lines of less than UF 1,000.
As of September 30, 2014, customers under UF 1,000 make up 6.52% of the portfolio, and customers over UF 1,000
make up 93.48% of the portfolio. The company has reports for each customer indicating the daily status of its portfolio,
which is divided according to accounts that are not yet due, late and overdue. In the latter case, collections action may be
taken. The Finance and Administration department issues monthly reports on the status of the portfolio, and the Chief
Executive Officer holds periodic meetings with the sales and finance and administration departments to analyze the
status of the overall portfolio, as well as the portfolios of individual customers, in order to take corrective action if
necessary. The Company has systems to block customers that have not fulfilled their payment commitments and
customers that have used up their credit lines.
The Company has a portfolio of financial investments to manage excess cash; the terms of investment for this portfolio
are mostly around one to three days. In order to manage this credit risk, Management has established an investment
policy for fixed-income instruments and low-risk financial entities. The Finance and Administration department is in charge
of with managing these investments through the Finance department, which establishes a group of financial entities in
which investment is authorized and assigns a maximum credit line and portfolio composition to each entity. The credit
lines per institution are granted on the basis of an analysis of equity and solvency risk for banks and equity, composition
and term for mutual funds.
The Group extends credit to individuals engaged in commercial or economic activities that require products released for
execution, a legal entity incorporated in a corporate form accepted by local regulations or individuals who meet the
requirements locally.
Loans are working capital or revolving credit, designed specifically for the purchase of inventories of products marketed
by the Company.
60
All credit granted by the Company must comply with the reporting requirements for the type of customer and the surety.
The documentation submitted must ensure that the Company has all necessary information for understanding your
customers, your general identification, commercial and tax also guarantees a general knowledge of the client's financial
situation.
To Organización Terpel and subsidiaries levels the amount of credit approval are determined by the internal rating of the
customer and credit exposure coverage of this, assessing their security, and approval according to these criteria ranges
from Portfolio Manager to the President, as appropriate.
Customers with no external credit rating (*)
Group A
Group B
Group C
Group D
Others
09.30.2014
ThUS$
12.31.2013
ThUS$
897,531
38,211
10,832
55,717
26,257
919,054
94,349
21,091
88,689
5,172
0
0
184,522
16,807
0
0
170,635
41
Short-term bank deposits
AAA
Bank Balances
Mutual funds
AA
Overnight investment
*Customer classification criteria
% Debt Currently Due
Group A (1)
Group B
Group C
Group D
Others
or
% Overdue Debt
< 30%
< 1%
between 30% and 60%
between 1% and 20%
between 60% and 90%
between 20% and 75%
> 90%
> 75%
Unclassified groups of accounts
(1) Group A also includes customers with no debt that is currently due, related companies and fiscal entities
None of the financial assets in force has been renegotiated during the period.
(v) Liquidity Risk
Copec S.A.
The purpose of the Company’s liquidity risk management is to provide significant cash to cover demand liabilities. As of
period-end, 52.51% of sales were made to concessionaires, with an average payment term of less than 3 days, and
45.84% of sales were made to low-risk industrial customers (with A and B ratings), with an average credit term of less
than 40 days. Therefore, for purposes of liquidity risk management, the Finance and Administration department uses a
61
period of 60 days for its daily cash flow forecasts, and it has access to immediately-available lines of credit with the main
financial entities in the local market, which are solvent and have good risk ratings.
At September 30, 2014, the Company has liquidity of ThU$ 256,490 in cash and cash equivalents and ThUS$ 1,125,043
in credit lines available long term unconditionally. Also at December 31, 2013, the Group had liquidity of ThUS$ 439,620
in cash and cash equivalents and ThUS$ 1,211,981 in credit lines available long term unconditionally.
The Group monitors its risk through the day and forecast Treasury position, from which we obtain the bonds and cash
surpluses, to determine the source and destination of resources.
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, bank loans and / or lease contracts, among others.
The current debt profile allows keeping cash position in order to service the debt according to its due dates.
To
September 2014, the debt average life was 9 years.
To September 30, 2014, the Group has approved and available credit lines for US$1,122,898 billion that can be used for
over-drafting, treasury credits, or short and long term financing. Financing rates are agreed when acquiring the obligation
according to each country market conditions.
(vi) Investment in foreign assets risk
At September 30, 2014 Copec S.A. maintains an investment abroad that allows it to control 58.51% of its subsidiary
Organización Terpel S.A. in Colombia, a company that operates in the business of distribution of fuels and whose
functional currency is the Colombian peso. This control materializes through Copec’s direct investment, giving it a
12.70% interest, and, indirectly, through its subsidiaries Copec Investment LTD and Canal Inc., which give it a 43.48%
and a 2.33% interest, respectively. As a result, at September 30, 2014, Copec S.A. has an exposure in its consolidated
statement of financial position equivalent to 1,482,589 million Colombian pesos.
Below is a table showing the possible effects:
Investment MCOP$
1,482,589
1,482,589
1,482,589
1,482,589
1,482,589
1,482,589
1,482,589
Change %
5%
10%
15%
-5%
-10%
-15%
CLP for 1 COP$
0.2964
0.3112
0.3260
0.3408
0.2815
0.2667
0.2519
Investment MM
CLP
(Loss) Gain MM$
439,366
461,334
483,302
505,270
417,397
395,429
373,461
21,968
43,937
65,905
(21,968)
(43,937)
(65,905)
62
Management finished the analysis regarding currency hedge over the net foreign investments. The analysis concluded
that exists long-term correlation between the Chilean and Colombian pesos. Therefore, having a hedge instrument to
mitigate the risk exposure on foreign currency as long as there is hedging through any instrument would be redundant
correlation between both currencies and their interest rate structure. This analysis also indicated that when using hedges
on a long-term asset, changes in the investment does not imply cash flow.
As a result, on February 1, 2013, the Company discontinued the recognition of hedge accounting over the foreign
investment. Which originated the cancellation of contratcts COP-CLP.
Management recommended to maintain the hedge instruments over the related debt in US dollars.
NOTE 5. ACCOUNTING ESTIMATES AND JUDGMENT
The preparation of financial statements in accordance with IFRS requires management to make subjective estimates and
assumptions affect the reported amounts. The estimates are based on historical experience and various other
assumptions that are believed to be reasonable, but actual results may differ from those estimates. Management believes
that the accounting policies presented below represent issues that require judgment that can lead to major changes in the
reported results.
Significant accounting estimates and judgments:
The Group makes estimates and judgments in relation to the future. The resulting accounting estimates, by definition, will
rarely be equal to the corresponding actual results. The estimates with a significant risk of giving rise to a material
adjustment in the book values of assets and liabilities during the next financial period are explained below:
a)
Staff severance indemnities
The present value of obligations for staff severance indemnities depends on a number of factors that are determined on
the basis of actuarial methods using a series of assumptions, including a rate of interest and a rate of inflation. Any
changes in these assumptions will affect the book value of these obligations. Additional information about the
assumptions used is provided in Note N° 18.
b)
Environmental restoration
Certain criteria and estimates are applied when recording costs and establishing provisions for environmental remediation
and cleanup, which are based on current information about costs and expected remediation plans. With respect to
environmental provisions, the costs may differ from the estimates as a result of changes in laws and regulations, the
discovery and analysis of the conditions of the site, variations in remediation technologies, and the date on which the
remediations are expected to be complete. Therefore, any modification in the factors or circumstances related to this type
of provision, or in the standards and regulations, could have as a consequence a significant effect on the provisions
recorded for these costs.
63
c)
Biological assets
The valuation of forest plantations is based on discounted cash flow models, which means the fair value of the biological
assets is calculated using the cash flows from continuing operations; that is, on the basis of sustainable forest
management plans considering the growth potential of the forests. This valuation is performed on the basis of each stand
identified and for each type of forest species.
These discounted cash flows require estimates about the growth, harvest, sales price and costs. Therefore, the quality of
the estimates of the future price levels and sales and cost trends is important, as is the performance of periodic studies of
the forests to establish the volumes of wood available for harvest and the current growth rates. The main considerations
used for the calculation of the valuation of forest plantations are presented in Note N° 7.
The Group has defined that molluscs mussels, principally in growing process, are recognized at cost because there
doesn’t exist a fair value that can be reliably measured before the harvest.
As consequences, they are initially recognized at cost and subsequently, in the final stage of the cultivation, they are
recognized at fair value less estimated costs at sales point. The effect is charged or credited to income at the end of each
period.
d)
Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined through the use of valuation
techniques. The Group applies its judgment to select a variety of methods and to apply assumptions that are primarily
based on current market conditions as of each reporting date.
e)
In a business acquisition, a technical adviser is used to make a fair valuation of assets acquired and to help determine its
remaining life.
The amounts of property, plant and equipment are reviewed when events or changes in circumstances indicate that the
carrying amount of an asset may be impaired. The recoverable amount of an asset is estimated as the higher of fair value
less costs to sell and value in use, an impairment charge to be recognized if the amount exceeds the recoverable
amount. Use value is calculated using a model of discounted cash flow is more sensitive to the discount rate and the
expected future cash flows.
f)
Taxes
Tax assets and liabilities are reviewed periodically, and the balances are adjusted accordingly. The Group considers that
it has recorded a sufficient provision for future tax effects on the basis of current facts, circumstances and tax laws.
However, the tax position could change, giving rise to different results and having a significant impact on the amounts
reported in the consolidated financial statements.
64
g)
Lawsuits and contingencies
Empresas Copec S.A. and its affiliates have lawsuits that have not yet been resolved, the future effects of which must be
estimated by the Company’s Management, in collaboration with its legal advisors. The Company applies judgment in the
interpretation of the reports of its legal advisors, who make an estimate as of each period-end and/or after each
substantial modification of the lawsuits or the origins of the same.
Changes in Estimates and Accounting Policies Treatment
The accounting policies have been developed in accordance with the effective IFRS as of September 30, 2014 and have
been consistently applied to all periods presented in these consolidated financial statements.
i) Group has applied IFRS11 Joint Agreements, with regards to the definition of joint operations that imply acknowledging
the assets, liabilities, income and expenses in connection to their participation, that is, proportionate consolidation. The
investments held by Arauco in Uruguay qualify as such and have implied changes ranging from the method of
participation up to the application of the referenced methodology.
Considering that the application of IFRS 11 is retrospective in nature, these consolidated financial statements include
modifications to the statements of financial position ended as of December 31, 2013 and the statements of income per
function and the statement of cash flows as of for the year ended June 30, 2013 and the related explanatory notes, all
previously issued and approved by the governing bodies of Empresas Copec S.A. These changes do not affect the
determination of equity or the results of the Company.
ii) As of September 30, 2014, and with the retrospective application to December 31, 2013, pursuant with the
amendments to IAS 19, Arauco has acknowledged the actuarial gains and losses for defined benefit obligations as a
component of other comprehensive income.
This is a summary of the main changes made in terms of variations in regard to the consolidated financial statements
originally issued:
Total current assets
Equity
12.31.2013
ThUS$
84,003
622,429
706,432
119,445
586,987
706,432
65
Results
Operational flow
Investment flow
Financing flow
09.30.2014
ThUS$
2,790
(56,429)
(143,330)
134,635
NOTE 6. INVENTORY
Raw materials
Merchandise
Production supplies
Work in progress
Finished goods
Other inventory
Total
09.30.2014
ThUS$
12.31.2013
ThUS$
149,491
606,246
131,026
84,617
592,591
162,039
139,145
512,359
127,759
110,591
545,555
157,236
1,726,010
1,592,645
Changes in inventory charged to income are detailed in the following table:
09.30.2014
ThUS$
09.30.2013
ThUS$
Cost of sales
Provision for obsolescence
Write-downs
15,538,522
14,154
1,359
15,954,434
17,600
1,724
Total
15,554,035
15,973,758
As of the date of these Financial Statements, there are no inventories pledged in guarantee to report.
In relation to the provision of obsolescence, it is calculated by considering the conditions of sale of products and inventory
age (rotation).
NOTE 7. BIOLOGICAL ASSETS
As of the reporting date of these financial statements, biological assets are presented as current and non-current as
follows:
09.30.2014
ThUS$
12.31.2013
ThUS$
Current
Non-current
304,884
3,576,232
263,056
3,635,246
Total
3,881,116
3,898,302
66
As of September 30, 2014 and December 31, 2013, the composition of current and non-current biological assets is
detailed in the following table:
Current
ThUS$
Forestry
Mussels
Total
300,820
4,064
304,884
09.30.2014
Non-Current
ThUS$
Total
ThUS$
3,576,232
0
3,877,052
4,064
3,576,232
3,881,116
Current
ThUS$
256,957
6,099
263,056
12.31.2013
Non-Current
ThUS$
Total
ThUS$
3,635,246
0
3,892,203
6,099
3,635,246
3,898,302
The biological assets of the affiliate Arauco correspond to forest plantations, which mainly include Monterey pines (pinus
radiata) and Loblolly pines (pinus taeda). These plantations are located in Chile, Argentina, Brazil and Uruguay, and they
make up 1.6 million hectares of land, of which 998 million hectares are used for plantations, 396 thousand hectares are
for native forests, 185 thousand hectares are for other uses and 68 thousand hectares main to be planted.
As of September 30, 2014, the volume produced was 14.8 million cubic meters (15.2 million cubic meters as of
September 30, 2013).
Measurements of fair value of Arauco’s biological assets are classified as Level 3, due to the fact that inputs are not
observable. However, this information reflects the assumptions that market participants would use in pricing the asset,
including assumptions about risk.
These unobservable inputs were developed using the best information available and includes own information of Arauco.
These unobservable inputs can be adjusted if the available information indicates that other market participants would use
different information or there is something specific in Arauco that is not available to other market participants.
The purpose of the harvest of forest plantations is to supply raw materials to the rest of the products produced and sold
by the affiliate Arauco. By directly controlling the development of the forests to be processed, Arauco is assured of the
quality of the wood to be used in each of its products.
The affiliate Arauco uses discounted future cash flows to value its forest plantations, and therefore the company has a
forecast over time of the harvests to be carried out at the plantations in existence as of the current date.
Current forestry plantations are projected based on a not decrease total volume, with a minimum growth equivalent to the
current supply demand.
Forest plantations are classified as current assets are those that will be harvested and sold in the short term.
67
Flows are determined on the basis of the harvest and expected sales of forest products, which are associated with the
demand of the company’s own industrial centers and sales to third parties. In addition, this valuation takes into
consideration the sales margins of the different products that are harvested from the forest. Changes that arise in the
value of plantations, in accordance with the criteria defined above, are accounted for in income for the period, in
accordance with the provisions of IAS 41.
These are presented in the Statement of Income under “Other income by function”, which as of September 30, 2014
amounted to ThUS$ 200,478 (ThUS$ 200.604 as of September 30, 2013). For purposes of the appraisal of biological
assets, this produces a cost of the wood that is greater than the real cost incurred, which effect is presented under “Cost
of sales” and amounts to ThUS$ 164,670 as of September 30, 2014 (ThUS$ 169,656 as of September 30, 2013).
Forests are harvested in accordance with the demand requirements of Arauco’s production plants.
The discount rates used are: Chile 8%, Argentina 12% and Brazil 8%.
The prices of harvested wood are considered to be constant in real terms, based on the prices in markets.
Likewise, costs are assumed to be constant over the life of the forests, based on estimated costs included in the forecasts
determined by the affiliate Arauco.
The average harvest age, in years, of the forests by country and species is the following:
Chile
Argentina
Brazil
Pine
24
15
15
Eucalyptus
12
10
7
Uruguay
10
The predominant species of pine in Chile is pinus radiata; in Argentina and Brazil it is pinus taeda.
Differences in valuation of biological assets in the discount rate and the margins are recorded in the income statement in
the line Other Income or Other expenditure by function depending on whether it is profit or loss.
The company holds fire insurance for the forest plantation, which together with the company’s own resources and an
efficient system of protection over the forest assets enable it to minimize the risks of damage to these assets.
(a) Biological assets pledged in guarantee:
As of September 30, 2014, there are no forestry plantations pledged as security.
(b) Biological assets with restricted ownership:
68
As of the date of these financial statements, there are no biological assets with restricted ownership.
(c) Government subsidies related to agricultural operations:
No significant subsidies have been received.
(d) Biological assets movements
Reconciliation of carrying amount of biological assets
Opening balance
Changes in biological assets
Additions through acquisition
Decreases through sales, biological assets
Decreases through harvest, biological assets
Gain (loss) on changes in fair value less estimated costs at point of sale
Discontinuation of consolidation due to constitution of joint venture recorded under
the equity method
Increase (decrease) in foreign currency translation, biological assets
Other increases (decreases), biological assets
Total changes
Ending balance
09.30.2014
ThUS$
12.31.2013
ThUS$
3,898,302
3,879,240
89,508
(1,331)
(253,643)
200,478
161,459
(10,688)
(348,837)
269,671
0
0
(17,118)
(35,080)
(51,750)
(793)
(17,186)
19,062
3,881,116
3,898,302
As of the date of these financial statements no disbursements have been committed for the acquisition of biological
assets.
NOTE 8. CURRENT TAX ASSETS AND LIABILITIES
Accounts receivable for taxes are detailed below:
09.30.2014
ThUS$
12.31.2013
ThUS$
Monthly provisional tax prepayments
Recoverable income taxes from previous period
SENCE credits
Credits for fixed assets
Income tax provision
Credits for dividends received
Other current tax assets
68,653
38,178
641
64
(27,381)
22
24,742
82,363
87,826
2,082
55
(111,286)
1,310
29,635
Total
104,919
91,985
Current tax assets
69
09.30.2014
ThUS$
12.31.2013
ThUS$
First category tax provision
Taxes from fuel sales
Tax from Art. 21
Equity tax
Other taxes
188,150
(17,501)
9
(7,617)
21,082
49,811
35,220
58
1,908
12,734
Total
184,123
99,731
Current tax liabilities
NOTE 9. NON CURRENT ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities held for sale
09.30.2014
ThUS$
12.31.2013
ThUS$
0
2,976
3,798
842
2,216
1,940
2,167
0
4,244
3,934
2,236
0
2,873
2,201
13,939
15,488
09.30.2014
ThUS$
12.31.2013
ThUS$
Organización Terpel Chile Ltda.
0
0
Total
0
0
Assets held for sale
Organización Terpel Chile Ltda.
Lands
Buildings
Plant and equipment
Forests
Fleet assets
Others
Total
Liabilities held for sale
70
NOTE 10. INTANGIBLE ASSETS AND GOODWILL
As of September 30, 2014 and December 31, 2013 the main classes of intangibles assets, patents, trademarks, IT programs, water and fishing rights, easements,
mining properties and other acquired rights, are recorded at historic cost.
Patents, trademarks, water and fishing rights, mining properties, easements and other acquired rights have indefinite useful life, as it is not clear when the period
during which the rights are expected to generate cash flows began and/or will end.
These rights are not amortized, but they are tested periodically for impairment.
a)
Classes of intangible assets different from goodwill:
Gross value
ThUS$
Patents, trademarks and other rights
IT programs
Other identifiable intangible assets
Fishing authorizations
Water rights
Mining projects
Portfolio of Clients
920.878
104.366
34.185
18.152
5.498
119.982
75.263
09.30.14
Accumulated
amortization
Net value
ThUS$
ThUS$
(249.563)
671.315
(69.492)
34.874
(10.316)
23.869
18.152
(2)
5.496
(9.371)
110.611
(10.140)
65.123
939.172
101.284
38.129
17.828
5.449
107.185
78.800
12.31.13
Accumulated
amortization
ThUS$
(196.191)
(66.803)
(11.952)
(2.465)
(8.746)
Gross value
ThUS$
Net value
ThUS$
742.981
34.481
26.177
17.828
5.449
104.720
70.054
Total intangible assets
1.278.324
(348.884)
929.440
1.287.847
(286.157)
1.001.690
Finite life
Indefinite life
258.533
1.019.791
(89.179)
(259.705)
169.354
760.086
246.598
1.041.249
(81.220)
(204.937)
165.378
836.312
Total
1.278.324
(348.884)
929.440
1.287.847
(286.157)
1.001.690
71
b)
The detail and movement of the main classes of intangible assets is provided
below:
Patents,
trademarks and
other rights
IT programs
Fishing
authorizations
Water rights
Other intangible
Mining projects
assets
Portfolio of
Clients
Total
Opening balance as of January 1, 2014
742,981
34,481
17,828
5,449
26,177
104,720
70,054
1,001,690
Movements in identificable intangible assets:
Disposals
Additions
Purchases due to business combination
Retirements
Amortization
Increases (decreases) from revaluation and from impairment of the amount
recognized in net equity
Increase (decrease) from revaluation recognized in income
Increase (decrease) in foreign currency translation
Other increases (decreases)
0
19,381
0
(1,132)
(65,760)
0
0
0
(29,055)
4,900
0
11,925
0
(361)
(10,130)
0
0
0
(3,301)
2,260
0
0
0
0
0
0
0
0
0
324
0
29
0
0
(2)
0
0
0
20
0
0
1,200
0
0
(1,439)
0
0
0
(2,074)
5
0
9,208
0
0
(1,382)
0
0
0
0
(1,935)
0
0
0
0
(3,792)
0
0
0
(1,139)
0
0
41,743
0
(1,493)
(82,505)
0
0
0
(35,549)
5,554
Total movements in identificable intangible assets
(71,666)
393
324
47
(2,308)
5,891
(4,931)
(72,250)
Ending balance as of 09.30.14, identificable intangible assets
671,315
34,874
18,152
5,496
23,869
110,611
65,123
929,440
Patents,
trademarks and
other rights
IT programs
Fishing
authorizations
Water rights
Other intangible
Mining projects
assets
Portfolio of
Clients
Total
771,214
39,048
17,676
5,141
30,560
92,944
77,454
1,034,037
Movements in identificable intangible assets:
Disposals
Additions
Purchases due to business combination
Retirements
Amortization
Increases (decreases) from revaluation and from impairment of the amount
recognized in net equity
Increase (decrease) from revaluation recognized in income
0
56,942
0
0
(79,975)
0
0
0
(54,122)
48,922
(335)
7,892
0
(2)
(13,337)
0
124
0
(622)
1,713
0
152
0
0
0
0
0
0
0
0
0
19
0
0
0
0
0
0
0
289
(4)
1,876
0
0
(3,694)
0
0
0
(2,780)
219
0
8,828
0
0
0
0
0
0
1,013
1,935
0
0
0
0
(5,158)
0
0
0
(2,242)
0
(339)
75,709
0
(2)
(102,164)
0
124
0
(58,753)
53,078
Total movements in identificable intangible assets
(28,233)
(4,567)
152
308
(4,383)
11,776
(7,400)
(32,347)
Ending balance as of 12.31.13, identificable intangible assets
742,981
34,481
17,828
5,449
26,177
104,720
70,054
1,001,690
72
c)
The useful lives applied to intangibles as of September 30, 2014 and December 31, 2013 are detailed as follows:
Finite Life
Minimum
Maximum
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Useful life (years)
Commercial relations with dealers and customers
Patents, trademarks and other rights
Trademarks of Accel Panama
Industrial patents
IT programs
Other identifiable intangible assets
Fishing authorizations
Water rights
Capitalized mining projects
Mining properties
10
3
3
3
-
Indefinite Life
7
2
50
16
25
10
-
X
X
X
X
The charge to income for the amortization of intangibles is recorded under “Administrative expenses” in the Statement of
Comprehensive Income.
d)
Other intangible assets – Goodwill
Purchased goodwill represents the excess of the acquisition cost over the fair value of the Group’s share in the net
identifiable assets of the subsidiary/associate acquired on the acquisition date. Purchased goodwill is not amortized, but it
is tested annually for impairment.
The goodwill acquired is allocated to the groups of cash generating units identified in the operating segments in which it
originates. The operations that generated goodwill correspond to the investments in Arauco do Brasil (formerly, Tafisa), a
merger in Chile of the indirect affiliate Orizon S.A., and the successive purchases of Organización Terpel, as follows:
09.30.2014
ThUS$
Company
Arauco Do Brazil and others
Proenergia International S.A.
Orizon S.A.
Total
12.31.2013
ThUS$
85,985
117,214
0
203,199
88,141
121,819
0
209,960
As of September 30, 2014, this purchased goodwill totals ThUS$ 215,065 (As of December 31, 2013 totals
ThUS$ 209,960).
09.30.14
Gross value
ThUS$
Amortization
ThUS$
12.31.13
Net value
ThUS$
Gross value
ThUS$
Amortization
ThUS$
Net value
ThUS$
Opening balance
Additions
Disposals
Impairment
209,960
0
0
0
(6,761)
0
0
0
0
0
209,960
0
0
0
(6,761)
229,222
0
0
0
(19,262)
0
0
0
0
0
229,222
0
0
0
(19,262)
Total goodwill
203,199
0
203,199
209,960
0
209,960
73
e) Intangibles – Brands
As a result of the valuation of intangible assets identified in the purchase of Proenergía International S.A. (Colombia),
have registered the brands Accel, Terpel Oiltec, Maxter, Celerity, Tergas and Gazel, which have an indefinite useful life,
except Accel. Have also been recognized as intangible assets related to the business of the acquired companies Trade
Relations with Dealers and Customers, to which have been assigned a finite useful life depending on the length of
contracts. Amortization is calculated linearly in function of a determinate useful life. The ranges of estimated useful life of
these assets are a range of 3-60 years.
74
NOTE 11. PROPERTY, PLANT AND EQUIPMENT
a)
Classes of net property, plant and equipment
Figures in ThUS$ as of 09.30.14
Gross value
Construction in progress
Land
Buildings
Plant and equipment
IT equipment
Fixed facilities and fittings
Motor vehicles
Improvements to leased goods
Other property, plant and equipment
Total property, plant and equipment
Depreciation for the period
Operating costs
Other miscellaneous operating expenses
Total
Depreciation
Figures in ThUS$ as of 12.31.13
Net value
Gross value
Depreciation
Net value
411,048
1,591,991
4,481,897
7,058,695
95,674
450,361
164,792
15,549
658,748
0
0
(1,638,908)
(2,778,674)
(59,402)
(134,013)
(82,335)
(6,517)
(296,582)
411,048
1,591,991
2,842,989
4,280,021
36,272
316,348
82,457
9,032
362,166
1,635,517
1,652,264
3,988,994
6,122,917
87,129
488,131
161,322
12,024
683,890
0
0
(1,550,047)
(2,615,315)
(55,261)
(131,546)
(78,826)
(5,400)
(313,669)
1,635,517
1,652,264
2,438,947
3,507,602
31,868
356,585
82,496
6,624
370,221
14,928,755
(4,996,431)
9,932,324
14,832,188
(4,750,064)
10,082,124
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
289,726
40,941
3,783
284,296
42,119
5,265
103,117
12,708
1,719
93,021
16,740
1,492
334,450
331,680
117,544
111,253
75
b) The detail of and movements in different categories of fixed assets are presented below:
As of September 30, 2014
Construction in
progress
Land
Buildings
Plant and equipment
IT equipment
Fixed facilities
and fittings
Motor vehicles
Improvements to
leased goods
Other property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Property, plant
and equipment
ThUS$
ThUS$
ThUS$
1,635,517
1,652,264
2,438,947
3,507,602
31,868
356,585
82,496
6,624
370,221
10,082,124
Changes:
Additions
Acquisitions through business combinations
Disposals
Transfers to (from) investment properties
Transfers to (from) Assets available for sale
Retirements
Depreciation expenses
Increase (decrease) from revaluation and from impairment losses
Reversals of impairment recognized in income
356,980
0
(2,695)
(40,225)
(4,944)
(5,035)
0
(393)
0
0
(5,397)
(1,522,760)
12,495
0
(500)
35
0
(33)
0
0
0
14,197
(86,472)
5
63,777
0
(475)
(12,913)
162
(17,889)
(100,650)
(845)
0
16,931
(104,905)
560,849
89,648
(5)
(8,044)
9,394
3,660
(19,274)
(209,898)
0
0
14,035
(56,719)
949,622
2,978
32
(18)
2,981
54
(114)
(6,053)
0
0
351
(686)
4,879
2,541
(33)
(88)
1,780
814
0
(11,615)
0
0
565
(38,077)
3,876
7,379
(18)
(173)
6,183
70
(1,731)
(11,899)
(8)
0
1,601
(6,454)
5,011
812
0
0
2,133
0
(24)
(751)
0
0
688
(450)
0
24,780
43
(5,402)
25,256
184
(1,062)
(22,934)
1,045
0
0
(31,135)
1,170
561,390
19
(17,395)
(5,376)
0
(45,162)
(363,800)
(201)
0
48,368
(330,295)
2,652
Total changes
(1,224,469)
(60,273)
404,042
772,419
4,404
(40,237)
(39)
2,408
(8,055)
(149,800)
411,048
1,591,991
2,842,989
4,280,021
36,272
316,348
82,457
9,032
362,166
9,932,324
Opening balance
Ending balance
Construction in
progress
Land
Buildings
Plant and equipment
IT equipment
Fixed facilities
and fittings
Motor vehicles
Improvements to
leased goods
Other property,
plant and
equipment
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Property, plant
and equipment
ThUS$
ThUS$
ThUS$
Opening balance
1,367,221
1,672,145
2,476,849
3,519,227
32,364
399,376
86,014
5,323
376,093
9,934,612
Changes:
Additions
Disposals
Transfers to (from) investment properties
Transfers to (from) assets held for sale
Retirements
Depreciation expenses
Increase (decrease) from revaluation and from impairment losses
Reversals of impairment recognized in income
718,230
0
0
(14,565)
(10,005)
(4,548)
0
0
0
0
(16,434)
(404,382)
160,571
0
(1,259)
6,476
0
(601)
0
(4,751)
0
(49)
(73,201)
(107,067)
125,432
0
(1,749)
(87,716)
132
(3,012)
(123,574)
(583)
0
(771)
(86,818)
140,757
129,768
(12)
(2,687)
18,460
7,124
(20,943)
(277,172)
(874)
0
(7,190)
(124,079)
265,980
2,427
0
(14)
1,827
26
(33)
(6,172)
(2)
0
(1)
(466)
1,912
3,182
0
(4,339)
3,056
1,793
(221)
(12,672)
0
0
(579)
(33,019)
8
17,813
0
(616)
5,575
106
(7,876)
(12,325)
(17)
0
(47)
(6,088)
(43)
786
0
0
273
0
0
(1,191)
0
0
0
(89)
1,522
30,673
0
2,494
21,384
824
(1,206)
(28,473)
(31)
0
(37)
(33,052)
1,552
1,188,882
(12)
(8,170)
(45,230)
0
(38,440)
(461,579)
(6,258)
0
(8,674)
(373,246)
(99,761)
268,296
(19,881)
(37,902)
(11,625)
(496)
(42,791)
(3,518)
1,301
(5,872)
147,512
1,635,517
1,652,264
2,438,947
3,507,602
31,868
356,585
82,496
6,624
370,221
10,082,124
Total changes
Ending balance
ThUS$
76
Property, plant and equipment pledged in guarantee:
-
To date there are no assets pledged as collateral in these interim consolidated financial statements.
09.30.2014
ThUS$
12.31.2013
ThUS$
0
0
Amount of property, plant and equipment pledged in guarantee
Commitment for disbursements for projects or to acquire property, plant and equipment
09.30.2014
ThUS$
12.31.2013
ThUS$
403,821
838,343
09.30.2014
ThUS$
12.31.2013
ThUS$
158,747
333,457
Amount of disbursements for property, plant and equipment in construction
Amount of commitments to acquire property, plant and equipment
NOTE 12. LEASES
Information to disclose about capital leases by class of assets, Lessee:
Total property, plant and equipment under capital lease, net
Plant and equipment
Land under finance lease, net
Buildings under finance lease, net
09.30.2014
ThUS$
12.31.2013
ThUS$
126,962
131,303
99,801
12,160
15,001
131,303
0
0
Reconciliation of minimum capital lease payments, Lessee:
Minimum lease payments, capital leases
Not more than one year
More than one year but less than five years
More than five years
Total
Gross
ThUS$
09.30.2014
Interest
ThUS$
Value
ThUS$
31,950
69,735
10,231
0
0
0
31,950
69,735
10,231
111,916
0
111,916
77
Minimum lease payments, capital leases
Total
Gross
ThUS$
12.31.2013
Interest
ThUS$
Value
ThUS$
29,644
76,159
9,996
0
0
0
29,644
76,159
9,996
115,799
0
115,799
These obligations are presented in the statement of financial position under “Current and non-current interest-bearing
loans,” depending on the expiration dates detailed above.
Reconciliation of minimum capital lease payments, lessor:
Minimum lease payments receivable, capital leases
Gross
ThUS$
09.30.2014
Interest
ThUS$
Value
ThUS$
317
21
0
(24)
(1)
0
293
20
0
Total
338
(25)
313
Minimum lease payments receivable, capital leases
Total
Gross
ThUS$
12.31.2013
Interest
ThUS$
Value
ThUS$
980
131
0
(11)
(1)
0
969
130
0
1,111
(12)
1,099
These receivables are presented in the Statement of Financial Position under “Current and non-current trade and other
receivables,” depending on the expiration dates detailed above.
Arauco held leases under capital leases. These contracts incorporate forestry machinery and equipment, covering periods
not exceeding five years and interest rate market. They also include early termination option of giving them, according to
general and special conditions established in each contract.
There are no contingent payments or restrictions to report for capital leases as lessee and as lessor presented in the
tables above.
78
NOTE 13. INVESTMENT PROPERTY
09.30.2014
ThUS$
12.31.2013
ThUS$
Opening balance
59,026
62,218
Additions
Disposals
Disposals through divestitures of businesses
Transfers (to) from properties occupied by the owner
Transfers (to) from non-current assets and disposal groups held for sale
Held for Sale
Removals
Impairment losses recognized in income
Reversals of impairment losses recognized in income
Depreciation expense
Increases (decreases) in foreign currency exchange
62
0
0
0
18
0
0
(175)
0
0
(50)
(6,200)
1,001
0
(3,352)
0
4,751
0
0
(680)
0
0
(51)
(4,861)
Total changes in investment properties
(6,345)
(3,192)
Ending balance
52,681
59,026
There are no significant rental income or operating expenses for investment properties.
There are no contractual obligations for the acquisition, construction or development of investment properties, or for the
repair, maintenance or improvement of the same.
NOTE 14. DEFERRED TAXES
Deferred tax assets and liabilities can be offset only if the right has been legally recognized and the assets and liabilities
are in reference to the same tax authority.
-
The tax rate applicable to the parent company's main subsidiaries is 21% in Chile, 35% in Argentina, 34% in Brazil,
25% in Uruguay and 34% in the United States (federal rate).
On September 29, 2014, Act No. 20,780 was published in the Official Gazette. This Act made several revisions to the
current system of income tax and other taxes. One of the major revisions is the progressive increase in the rate of the
First Category (the Corporate) Income Tax, reaching 27%, as from the year 2018, in the event that the partially integrated
system is applied. If the attributed income system is chosen, the maximum rate would be 25%, as from the year 2017.
According to said Act, since Empresas Copec is a stock corporation, as a rule it falls under the partially integrated system,
unless a future Meeting of Shareholders agrees to choose the attributed income system.
79
In this regard, in accordance with the International Financial Reporting Standards (IFRS), the Company must recognize
immediately in the income statement the impact of such increase in the rate of the First Category Income Tax on the
Company’s net liabilities related to deferred taxes.
However, in Circular No. 856 dated October 17, 2014, the Superintendency of Securities and Insurance stated that
differences in net liabilities related to deferred taxes resulting from the increase in the rate of the First Category Income
Tax should be booked against equity.
Therefore, at the closing date of these consolidated interim financial statements, the effect on deferred taxes resulting
from the increase in the rate of the First Category Income Tax did not impact the income or the calculation of the
Company’s net distributable income, but rather it resulted in a direct charge of US $ 354.079 million to equity.
a)
Deferred tax assets and liabilities are detailed as follows:
Deferred tax assets relating to:
Depreciation
Inventory
Allowance for bad and doubtful debts
Provision for vacations
Prepaid income
Obligations for post-employment benefits
Revaluations of financial instruments
Revaluations of property, plant and equipment
Tax losses
Differences for deferred liabilities
Differences for revaluations of intangibles
Differences for revaluations of biological assets
Differences for revaluations of trade and other receivables
Provisions
Other items
Total deferred tax assets
Deferred tax liabilities relating to:
Depreciation
Provisions
Obligations for post-employment benefits
Revaluations of property, plant and equipment
Revaluations of biological assets
Revaluations of expenses in advanced
Revaluations of income in advanced
Intangible assets
Revaluations of financial instruments
Inventory
Other items
Revaluations of assets at fair value
Total deferred tax liabilities
09.30.2014
ThUS$
12.31.2013
ThUS$
261
6,388
9,426
2,203
3,886
20,425
8,619
31,337
81,147
6,959
0
9
3,844
31,110
48,246
339
7,088
7,759
2,208
3,468
16,868
343
8,842
97,353
7,367
291
73
3,104
26,105
67,403
253,860
248,611
09.30.2014
ThUS$
12.31.2013
ThUS$
203,304
192
553
1,049,452
689,391
253,905
0
42,817
5,938
34,992
47,297
0
166,047
100
676
893,915
534,161
278,245
0
30,575
10,081
17,316
56,567
0
2,327,841
1,987,683
80
b)
Income (expenses) from current and deferred income taxes
09.30.2014
ThUS$
Current income tax expense
Current tax expense
Tax benefit arising from tax assets not recognized previously used to
reduce the current tax expense
Adjustment to current taxes from previous period
Other current tax expenses
(235.068)
5.643
2.456
Total current tax expense, net
(226.969)
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
(175.117)
(65.578)
(61.035)
16.755
3.977
5.912
1.030
(3.691)
15.303
2.241
6.259
(148.473)
(68.239)
(37.232)
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
Deferred income tax expense
Deferred expense (income) from taxes relating to the creation and
reversal of temporary differences
(43.949)
Deferred expense (income) from taxes relating to changes in the tax rate
or new rates
(455)
Tax benefit arising from tax assets not recognized previously used to
reduce the deferred tax expense
Other deferred tax expenses
Total deferred tax expenses, net
Total income (expense) from income taxes
c)
(11.419)
(7.448)
(1.834)
-
545
1.915
4.060
2.928
(36.508)
4.418
3.639
(447)
(25.404)
1.298
(37.416)
(43.509)
(3.711)
(24.025)
(264.385)
(191.982)
(71.950)
(61.257)
Income (expenses) from foreign and Chilean income taxes
09.30.2014
ThUS$
Tax expense using the legal rate
Tax effect of rates from other jurisdictions
Tax effect of non-taxable operating revenues
Tax effect of non-tax-deductible expenses
Tax effect of the use of tax losses not recognized
Tax effect of tax benefit not previously recognized in income
Tax effect of a new evaluation of unrecognized deferred tax assets
Tax effect of change in tax rates
Tax effect of over or under provided tax in prior periods
Taxation calculated at applicable rate
Other increases (decreases) in charges for legal taxes
Total adjustments to tax expense using the legal rate
Tax expense using the effective rate
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
(217.021)
(238.615)
(17.231)
(18.652)
152
(11.380)
13.116
100.021
887
40.284
(30.041)
(25.701)
(4.294)
9.798
3.485
(1.867)
15.830
(1.867)
(10.041)
(2.445)
(5.474)
779
(36)
5.235
(299)
(57.579)
Jul - Sep 2013
ThUS$
(36)
1.937
330
(82.415)
(4.634)
709
15.830
(638)
746
(4.067)
1.969
6.923
(9.247)
(38.842)
(9.491)
(24.314)
8.622
(47.364)
46.633
(14.371)
21.158
(264.385)
(191.982)
(71.950)
(61.257)
81
d)
Reconciliation of tax expense using the legal rate to tax expense using the effective rate
Tax expense using the legal rate
Tax effect of rates from other jurisdictions
Tax effect of non-taxable operating revenues
Tax effect of non-tax-deductible expenses
Tax effect of the use of tax losses not recognized
Tax effect of tax benefit not previously recognized in income
Tax effect of a new evaluation of unrecognized deferred tax assets
Tax effect of change in tax rates
Tax effect of over or under provided tax in prior periods
Taxation calculated at applicable rate
Other increases (decreases) in charges for legal taxes
Total adjustments to tax expense using the legal rate
Tax expense using the effective rate
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
(217,021)
(238,615)
(57,579)
(82,415)
(17,231)
(18,652)
152
(11,380)
13,116
100,021
887
40,284
(30,041)
(25,701)
(4,294)
(4,634)
779
9,798
3,485
709
(1,867)
15,830
(1,867)
15,830
(10,041)
(2,445)
(5,474)
(638)
(36)
0
(36)
746
5,235
(299)
1,937
(4,067)
1,969
6,923
330
8,622
(9,247)
(38,842)
(9,491)
(24,314)
(47,364)
46,633
(14,371)
21,158
(264,385)
(191,982)
(71,950)
(61,257)
Deferred tax assets from negative tax bases that have not yet been offset are recognized to the extent that it is likely that
the corresponding tax benefit will be realized through future tax benefits. In this regard, there are no unrecognized
deferred tax assets.
09.30.2014
Deductible
Taxable
Difference
Difference
ThUS$
ThUS$
12.31.2013
Deductible
Taxable
Difference
Difference
ThUS$
ThUS$
Deferred tax assets
Tax losses
177,096
76,764
0
0
0
2,327,841
156,186
92,425
0
0
0
1,987,683
Total
253,860
2,327,841
248,611
1,987,683
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
Deferred tax assets
Tax losses
Decreases in foreign currency translation
(22,889)
8,974
(23,396)
(105)
13,017
(33,316)
(22,532)
(678)
(2,008)
3,782
(5,364)
(121)
21,223
(23,459)
(19,108)
(2,681)
Total
(37,416)
Amount recognized in income
(43,509)
(3,711)
(24,025)
82
NOTE 15. TRADE AND OTHER PAYABLES
Trade and other payables are detailed as follows:
09.30.2014
ThUS$
12.31.2013
ThUS$
Trade payables
Anticipated revenue
Other payables
1,503,917
86,725
5,921
1,717,127
53,314
18,489
Total
1,596,563
1,788,930
Current
NOTE 16. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Transactions with related parties are carried out under market conditions.
Related companies are considered to be the entities defined according to the provisions of IAS 24, the standards of
the Chilean Superintendency of Securities and Insurance, and the Corporations Law.
Balances receivable from and payable to related parties as of each period-end primarily arise from transactions within
the consolidated line of business, are agreed in Chilean pesos and U.S. dollars, have terms of payment that do not
exceed 60 days, and in general do not have indexation or interest clauses.
As of the date of these consolidated financial statements, no guarantees have been granted in relation to balances
between related companies, and no provisions for doubtful accounts have been constituted.
The table “Transactions” includes all transactions with related entities with which the accumulated amounts in one or
more periods exceed ThUS$ 200 (which amount represents 0.0083% of operating revenues and 0.0096% of the cost
of sales).
83
16.1
Receivables from related entities
Current receivables from related companies
0-E
70.037.855-0
76.456.800-1
96.942.120-8
96.893.820-7
96.505.760-9
0-E
76.307.309-2
96.636.520-K
99.500.140-3
71.625.000-8
96.532.330-9
76.384.550-8
0-E
76.349.706-2
93.628.000-5
79.895.330-3
91.440.000-7
95.304.000-K
96.925.430-1
0-E
96.731.890-6
96.529.310-8
96.853.150-6
82.777.100-7
89.201.400-0
96.641.810-9
87.635.000-9
92.580.000-7
82.040.600-1
0-E
94.283.000-9
79.943.600-0
96.635.700-2
0-E
Novo Oeste Gestao de de Activo Florestais S.A.
Laguna Blanca S.A.
Mina Invierno
AIR BP COPEC S.A.
Corpesca S.A.
Colbún S.A.
Unillin Arauco Pisos Ltda
Naviera Los Inmigrantes S.A.
Gases y Graneles Líquidos S.A.
Eka Chile S.A.
Fundación Educacional Arauco
CMPC Celulosa S.A.
Sociedad Nacional Marítima S.A.
Stora Enso Arapoti Industria de Papel S.A.
Hualpén Gas S.A.
Molibdenos y Metales S.A.
Compañía Puerto Coronel S.A.
Forestal Mininco S.A.
CMPC Maderas S.A.
Servicios Corporativos Sercor S.A.
Montagas E.S.P.
Cartulinas CMPC S.A.
CMPC Tissué S.A.
Papeles Cordillera S.A.
Puertos y Logística S.A.
Envases Impresos S.A.
Gas Natural Producción S.A.
Sociedad Edificio Don Crescente Ltda.
Entel S.A.
Sociedad de Inversiones de Aviación Ltda.
Unillin Flooring Ltda.
Astilleros Arica
Propa S.A.
Empresa Eléctrica Guacolda S.A.
Florestal Vale Do Corisco
Country
Brazil
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Chile
Chile
Chile
Chile
Chile
Colombia
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Chile
Chile
Brazil
Current receivables from related companies
76.040.469-1
96.641.810-9
Logística Ados Ltda.
Gas Natural Producción S.A.
Country
Chile
Chile
Nature of relationship
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Director in Common
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Director in Common
Indirect associate
Indirect associate
Indirect associate
Director in Common
Indirect associate
Director in Common
Director in Common
Indirect associate
Indirect associate
Director in Common
Director in Common
Director in Common
Associate
Indirect associate
Associate
Associate
Director in Common
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Associate
Indirect associate
Director in Common
Associate
09.30.2014
ThUS$
12.31.2013
ThUS$
139,304
76,519
56,553
29,471
4,221
3,980
3,921
3,900
3,181
3,075
1,431
1,403
1,138
861
586
534
336
138
100
83
41
38
33
28
10
8
4
2
1
0
0
0
0
0
0
3
41,027
56,553
45,840
12,590
1,693
3,006
5,900
5,600
3,008
0
884
618
629
0
148
284
87
157
101
96
115
38
31
79
7
0
2
12
1
135
12
1
6,052
16
330,900
184,725
09.30.2014
ThUS$
12.31.2013
ThUS$
5,882
385
5,734
440
6,267
6,174
84
16.2
Payables to related entities
Current payables to related companies
Country
96.636.520-K
96.942.870-9
96.893.820-7
82.040.600-1
76.384.550-8
82.777.100-7
79.895.330-3
96.942.120-8
96.722.460-K
86.370.800-1
92.580.000-7
96.925.430-1
76.218.856-2
92.545.000-6
96.529.310-8
78.096.080-9
0-E
76.107.649-3
96.635.700-2
89.696.400-3
0-E
0-E
71.625.800-8
79.825.060-4
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Colombia
Brazil
Chile
Chile
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Associate
Indirect associate
Indirect associate
Associate
Shareholders in common
Director in Common
Indirect associate
Director in Common
Indirect associate
Director in Common
Partner as Society´s Director
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Kabsa S.A.
Corpesca S.A.
Compañía Puerto de Coronel S.A.
AIR BP COPEC S.A.
Metrogas S.A.
Sigma Servicios Informáticos S.A.
Entel S.A.
Colbún Transmisión S.A.
Serv. de Refinerias del Norte S.A.
CMPC Tissué S.A.
Portalippi, Guzman y Bezanilla Abogados
Resiter Uruguay S.A.
Sociedad de Inversiones Coloso S.A.
Empresa de Residuos Resiter Ltda.
Energas S.A. S.P.E.
Stora Enso Portugal AB
Fundación Educacional Arauco
Forestal del Sur S.A.
Non-current payables to related companies
96.893.820-7
Corpesca S.A.
Chile
Indirect associate
09.30.2014
ThUS$
12.31.2013
ThUS$
15.213
8.520
2.479
2.238
2.202
969
833
683
324
227
93
55
43
27
10
3
44
25
0
37
0
0
0
0
15.094
0
381
517
1.671
2.041
845
51
392
234
80
74
0
0
32
121
0
3
3
0
26
3
661
37
34.025
22.266
09.30.2014
ThUS$
12.31.2013
ThUS$
5.466
5.311
5.466
5.311
85
16.3
Transactions with related entities
As of September 30, 2014
Related Party
AIR BP COPEC S.A.
AIR BP COPEC S.A.
AIR BP COPEC S.A.
AIR BP COPEC S.A.
Boat Parking
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Maderas S.A.
CMPC Maderas S.A.
CMPC Maderas S.A.
CMPC Maderas S.A.
CMPC Tissue S.A.
CMPC Tissue S.A.
CMPC Tissue S.A.
Colbún S.A.
Colbún S.A.
Colbún S.A.
Corpesca S.A.
Colbún transmisión S.A.
Corpesca S.A.
Corpesca S.A.
Corpesca S.A.
Eka Chile S.A.
Corpesca S.A.
Eka Chile S.A.
Empresa de Residuos Resiter Ltda.
Entel PCS Telecomunicaciones S.A.
Entel S.A.
Entel S.A.
GasMar S.A.
Hualpén Gas S.A.
Metrogas S.A.
Kabsa S.A.
Metrogas S.A.
Portaluppi, Guzmán y Bezanilla Abogados
Puerto Lirquén S.A. (ex Portuaria Sur de Chile S.A.)
Unillin Arauco Pisos Ltda.
Taxpayer ID
96.942.120-8
96.942.120-8
96.942.120-8
96.942.120-8
96.952.090-2
96.731.890-6
96.731.890-6
96.731.890-6
96.532.330-9
96.532.330-9
96.532.330-9
96.532.330-9
96.532.330-9
95.304.000-K
95.304.000-K
95.304.000-K
95.304.000-K
96.529.310-8
96.529.310-8
96.529.310-8
96.505.760-9
96.505.760-9
96.505.760-9
79.895.330-3
79.895.330-3
79.895.330-3
96.893.820-7
76.218.856-2
96.893.820-7
96.893.820-7
96.893.820-7
99.500.140-3
96.893.820-7
99.500.140-3
89.696.400-3
96.806.980-2
92.580.000-7
92.580.000-7
79.825.060-4
91.440.000-7
91.440.000-7
96.636.520-K
76.349.706-2
96.722.460-K
96.942.870-9
96.722.460-K
78.096.080-9
96.959.030-1
96.925.430-1
96.925.430-1
96.925.430-1
86.370.800-1
82.040.600-1
82.040.600-1
76.384.550-8
76.384.550-8
76.384.550-8
76.384.550-8
0-E
0-E
Country
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Brazil
Nature of Relationship
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Director in common
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Parent company director
Director in common
Director in common
Director in common
Indirect associate
Director in common
Director in common
Associate
Associate
Associate
Indirect associate
Associate
Parent company director
Associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Good or Service Purchased
Sale of fuel
Rec. Expenses and other charges
Other purchases
Miscellaneous purchases
Rental of vessel parking sites
Sale of lubricants
Sale of fuel
Sale of fuel
Sale of lubricants
Sale of wood
Other purchases
Logs
Sale of fuel
Sale of lubricants
Sale of lubricants
Sale of fuel
Other purchases
Sale of fuel
Sale of lubricants
Electric power
Sale of fuel
Mobilization and stowage
Sale of lubricants
Sale of fuel
Electric power
Sale of lubricants
Administrative services
Sale of electricity
Purchase of fish oil
Sodium chlorate
Industrial residues services
Telephony services
Communications
Sale of fuel
Sale of wood
Sale of wood
Purchase of logs and others
Purchase of fuel
Sale of gas
Purchase of natural gas
purchase of raw materials
Other purchases
Legal advisory
Port services
Operating advisory
Reimbursement of expenses
Computer services
Storage services
Oil pipeline transportation and others
Sale of fuel
Sale of lubricants
Maritime transport
Sale of wood
Wood
Amount of
Purchases Net of
VAT ThUS$
355.211
980
651
4
173
198
90
7
6.000
536
237
1.016
42
416
98
434
42
142
31
47
92.135
26
2.151
2.402
7.238
11
26.828
262
946
61
3.709
19.941
0
37.168
2.981
84
56
693
12.865
116
101
236.389
4.548
2.627
10.914
821
2.023
6.848
240
305
11
731
3.784
2.012
435
2.147
287
9.636
6.595
9.925
Effect on Income
ThUS$
355.211
980
(651)
4
(173)
198
90
7
6.000
536
237
(1.016)
42
(416)
98
434
42
142
31
(47)
92.135
26
2.103
2.402
(7.238)
11
26.828
(262)
946
61
(3.709)
19.941
0
(37.168)
(2.981)
(84)
56
(693)
12.865
116
(101)
(236.389)
4.548
(2.627)
(10.914)
(821)
(2.023)
(6.848)
(240)
(305)
(11)
(731)
(3.784)
(2.012)
435
2.147
287
(9.636)
6.595
9.925
86
As of Septiembre 30, 2013
Related Party
AIR BP COPEC S.A.
AIR BP COPEC S.A.
AIR BP COPEC S.A.
AIR BP COPEC S.A.
Celulosa y Energía Punta Pereira S.A.
Compañía de Seguros de Vida Cruz del Sur S.A.
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Celulosa S.A.
CMPC Maderas S.A.
CMPC Maderas S.A.
CMPC Maderas S.A.
Colbún S.A.
Colbún S.A.
Colbún S.A.
Colbún S.A.
Colbún S.A.
Corpesca S.A.
Corpesca S.A.
Corpesca S.A.
Corpesca S.A.
Corpesca S.A.
Eka Chile S.A.
Eka Chile S.A.
Eurofores S.A.
Entel S.A.
Entel S.A.
Forestal Cono Sur S.A.
GasMar S.A.
GasMar S.A.
Metrogas S.A.
Ongar S.A.
Portaluppi, Guzmán y Bezanilla Abogados
Puerto Lirquén S.A. (ex Portuaria Sur de Chile S.A.)
Transcom Ltda.
Zona Franca Punta Pereira
Taxpayer ID
96.942.120-8
96.942.120-8
96.942.120-8
96.942.120-8
96.731.890-6
96.731.890-6
0-E
96.628.780-2
79.895.330-3
79.895.330-3
79.895.330-3
96.532.330-9
96.532.330-9
96.532.330-9
96.532.330-9
95.304.000-K
95.304.000-K
95.304.000-K
96.505.760-9
96.505.760-9
96.505.760-9
96.505.760-9
96.505.760-9
96.893.820-7
96.893.820-7
96.893.820-7
96.893.820-7
96.893.820-7
99.500.140-3
99.500.140-3
0-E
96.635.700-2
96.635.700-2
96.635.700-2
96.635.700-2
96.635.700-2
92.580.000-7
92.580.000-7
0-E
79.825.060-4
79.825.060-4
91.440.000-7
91.440.000-7
91.440.000-7
96.636.520-K
96.636.520-K
96.722.460-K
0-E
78.096.080-9
96.959.030-1
82.777.100-7
96.925.430-1
96.925.430-1
96.925.430-1
86.370.800-1
82.040.600-1
82.040.600-1
76.384.550-8
0-E
79.904.920-1
0-E
0-E
Country
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Brazil
Chile
Brazil
Uruguay
Nature of Relationship
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Director in common
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Associate
Associate
Associate
Associate
Associate
Director in common
Director in common
Indirect associate
Indirect associate
Indirect associate
Director in common
Director in common
Director in common
Associate
Associate
Associate
Indirect associate
Partner as Society's Director
Associate
Associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Indirect associate
Good or Service Purchased
Sale of fuel
Other purchases
Sale of lubricants
Other sales
Insurance policies
Sale of fuel
Sale of lubricants
Mobilization and stowage
Sale of fuel
Sale of lubricants
Sale of wood
Other purchases
Logs
Sale of fuel
Sale of lubricants
Sale of fuel
Sale of fuel
Sale of lubricants
Electric power
Sale of fuel
Sale of lubricants
Purchase of fish oil
Sale of electricity
Sodium chlorate
Loan and interests
Sale of fuel
Electric power
Electric power
Other purchases
Communications
Sale of fuel
Loan and interests
Sale of wood
Sale of wood
Sale of fuel
Rental and download services
Purchase of fuel
Purchase of natural gas
Loan and interests
Legal advisory
Port services
Port services
Operating advisory
Reimbursement of expenses
Computer services
Storage services
Sale of lubricants
Sale of wood
Purchase service
Sale of wood
Loan and interests
Amount of
Purchases Net of
VAT ThUS$
418,868
227
261
2
226
100
1,287
772
1,955
29
6,265
6,014
642
167
1,644
303
108
390
114,581
35,135
37
4
1
26,517
1,034
48
219
6,362
17,980
46,951
1,758
192
3,279
878
1
4
910
73
309
9,768
318
63
683
258
1,866
238,885
1,184
3,606
1,349
5,995
240
234
267
16
1,066
1,871
1,331
485
6,636
259
8,165
30,333
Effect on Income
ThUS$
418,868
(227)
(261)
2
226
100
1,287
(772)
1,955
29
(6,265)
6,014
642
167
(1,548)
(303)
108
390
114,581
35,132
37
(4)
1
26,517
1,034
48
(219)
0
17,980
(46,951)
1,758
192
3,279
(878)
(1)
4
(910)
73
309
9,768
(318)
63
683
(258)
1,866
(238,885)
(1,184)
3,606
(1,349)
(5,995)
(240)
(234)
(267)
(16)
(1,066)
(1,871)
(1,331)
485
6,636
(259)
8,165
30,333
87
16.4
Board of Directors and key members of Management
Remunerations of key personnel include directors, officers and senior managers and comprise a fixed monthly
amount, as well as a potential discretionary annual bonus.
Compensation of directors and key members of Management.
09.30.2014
ThUS$
09.30.2013
ThUS$
Remunerations and benefits
Board expenses
Severance benefits
73,088
2,522
3,856
66,785
4,458
4,076
18,598
794
696
19,019
1,412
571
Total remunerations received by key members of Management
79,466
75,319
20,088
21,002
Remunerations received by key members of Management and Board
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
NOTE 17. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
I. Lawsuits and other legal actions, affiliate Celulosa Arauco y Constitución S.A. and its affiliates:
1. Alto Paraná S.A.:
1.1 (i) On October 8, 2007, the Federal Public Income Administration (“AFIP”) initiated, acting by virtue of its own
mandate, tax determination proceedings against the Argentine affiliate Alto Paraná S.A. (referred to herein as
“APSA”), questioning deductions from its income tax liability for certain expenses, interest and exchange rate
differences generated by Private Negotiable Obligations that were issued by APSA in the year 2001 and paid in 2007.
On November 20, 2007, APSA presented its response to the notice served by the AFIP, completely rejecting the
position of the Government, with the understanding that there are solid legal foundations proving the legitimacy of its
actions in the determination of its tax liability, and consequently the AFIP’s claim is unfounded.
On December 14, 2007, the AFIP notified APSA that the defense it presented was not sustained and proceeded to
demand, acting by virtue of its own mandate, payment, within 15 business days, of the differences calculated for the
income taxes for the tax periods 2002, 2003 and 2004 in the amount of $ 417,908,207 Argent ine pesos (equivalent to
ThUS$ 49,574 as of September 30, 2014) and other items as compensatory interest and fines for failure to pay.
On February 11, 2008, APSA appealed the resolution before the National Tax Court (“TFN”).
On February 8, 2010, APSA was notified of the sentence of the TFN, confirming the resolution of AFIP including costs,
although the reasons for the decision differed from the reasons invoked by the AFIP in its original claim. This sentence
exhausts the administrative appeals process, but the judicial process is still available (Federal Appeals Chamber for
Judicial Review and, subsequently, the National Supreme Court of Justice).
88
On February 15, 2010, APSA appealed the sentence before the Federal Appeals Chamber for Judicial Review and
presented the necessary information in order to have the sentence revoked and to terminate the effects of the same.
APSA paid litigation fees in the amount of $ 5,886,053 Argentine Pesos (ThUS$ 698 at September 30, 2014).
On March 18, 2010, the same Federal Chamber issued a measure to better resolve the dispute, in which it ordered the
AFIP to abstain from requiring the impediment of injunctive measures, demanding payment through administrative
means, issuing debt warrant or initiating judicial collections proceedings, including the impediment of embargos and
other executive injunctive measures against APSA until such Court has come to a decision about the cautionary
measure filed by APSA for the same purpose.
On May 13, 2010 the Federal Appeal Court decided to accept the precautionary ruling requested by APSA, ordering to
suspend the enforcement of the AFIP resolution until the final decision on this matter. This precautionary ruling was
granted by the Federal Appeal Court subject to the granting of a corresponding bond. On May 19, 2010, APSA filed
with the Appeal Court a surety policy issued by Zurich Argentina Cía. de Seguros S.A. On May 20, 2010, the Federal
Appeal Court request APSA some precisions about the items covered by the insurance surety. On May 28, 2010 APSA
compliance and accompanied the Endorsement N° 1 of the policy of caution in favor of the Court of Appeals in
Administrative Federal-Room I for $ 633,616,741 argentine pesos (equivalent to ThUS$ 75,162 at September 30, 2014),
this amount includes the initial capital, plus adjustments and interest to the date of the caution. On June 2, 2010, the
Federal Appeal Court accepted this surety filed by APSA and ordered to notify the precautionary ruling granted to the
AFIP. On June 4, 2010 the AFIP was notified on this precautionary ruling at May 13, 2010, which is final since June
22, 2010.
On February 1, 2013 APSA was notified of the decision dated December 28, 2012, by the Court of Appeals that
rejected the appeal deducted by the Company, confirmed the officio ass essment made by the AFIP, and imposed the
costs of both instances in the order established by virtue of conflicting jurisprudence exist. The Company has appealed
this ruling to the Supreme Court of Justice of the Nation through various procedural remedies provided by law. On
February 4, 2013 the Company filed an ordinary appeal against the judgment of the Court and on February 19, 2013
also concluded against this ruling an extraordinary remedy, both before the Supreme Court of Justice of the Nation.
On May 6, 2013 APSA was notified of the resolution of the Court of Appeals that on April 23, 2013 accepted the
appeal at the Supreme Court and considered the extraordinary remedy filed. On May 27, 2013 the file was taken to the
Supreme Court. On June 3, 2013 APSA was notified of the resolution issued by the Supreme Court on May 29, 2013,
through which the appeal was received. On June 17, 2013 APSA filed a petition based on the appeal, through which
the Supreme Court ordered the transfer to AFIP. This was notified on June 28, 2013. On August 5, 2013 the file was
awarded to Court No. 7 (specialized in tax matters).
The fundamentals of the judgment of the Court of Appeals did not change the opinion of our external advisors as to
which the Company was acting in accordance with law to deduct interest, expenses and exchange differences of the
debt questioned by the Treasury so they continue arguing that there are good possibilities for the decision of the Court
is revoked and the determination of the AFIP is rescinded. Therefore, no provision has been made for any of the years
in which such notes were valid.
89
(ii) During the course of this proceeding and with respect to the payment of the court tax to the Tax Court, on July 18,
2008, the judge in charge of the case requested that the Company pay $ 10,447,705 (Argentine pesos) (equivalent to
ThUS$ 1,239 as of September 30, 2014) for the court tax to the National Tax Court. On August 14, 2008, APSA filed a
motion to appeal this charge, on the grounds that the amount was unreasonable. In this same motion, APSA made a
payment for $ 1,634,914 (Argentine pesos) (equivalent to ThUS$ 194 as of September 30, 2014), considering that this
was the amount that the Company was legally required to pay for the court tax. On April 13, 2010 , Room I of the
Federal Appeals Chamber for Judicial Review denied the motion for appeal filed by APSA. On April 26, 2010, APSA
filed an ordinary motion for appeal before the National Supreme Court of Justice; this appeal was granted by the
Chamber on February 3, 2011. On June 23, 2011, was presented to the Court on memorial with the fundamentals of
ordinary appeal. On July 14, 2011 the AFIP said the transfer of the memorial.
On May 8, 2012 the Supreme Court decided to declare bad granted ordinary appeal on the grounds that the decision
appealed against was not of the character of final judgment. The case was returned to the Court of National Appeals,
Room I, in Federal Administrative Litigation. On June 15, 2012, APSA requested a stay of the case pending resolution
of the substantive issue, request that the Court rejected on June 25, 2012. Against this decision, on July 2, 2012,
APSA appealed replacement for it to be rescinded and providing for suspension of proceedings pending extraordinary
sentence on the merits. On August 21, 2012, APSA made a presentation in which they are interested in maintaining
the extraordinary appeal. The analysis of the fundamentals of the challenge leads, in the opinion of legal advisors
APSA, an optimistic view of the case.
1.2. Within the scope of Law No.25,080, the former Department of Agriculture, Livestock, Fisheries and Food approved
through Resolutions No. 952/2000 and No.83/03 the projects presented by Alto Paraná S.A. involving the construction
of a MDF plant and a sawmill, including the forestation of several hectares to supply those plants.
In March 2005 Note No.145/05 issued by the Department of Agriculture, Livestock and Forestation discontinued the
benefit of non-payment of export duties that Alto Paraná S.A. and other companies which were benefitted by this
regime had in accordance with Law No.25,080, as a preventive measure and based on the need to review the
respective files. Once administrative remedies have been exhausted, that measure is being discussed at a j udicial
instance by the company. On November 8, 2006 the Fifth Room of the Court of Appeal for Actions under
Administrative Federal Law (Cámara Nacional de Apelaciones en lo Contencioso Administrativo y Federal) issued a
resolution through which Alto Paraná S.A. should continue having the exemption from export duties, but it should
guarantee them by establishing surety bond insurance. The legal step was enforced from March 2007. At the date of
these financial statements, ThUS$ 25,322 on account of export duties have been guaranteed. Notwithstanding this
judgment, the aforementioned merits of the case are still decision pending. The company has a provision for ThUS$
20,762 in regard to the aforementioned export duties. The provision is shown in the item trade and other payables and
other payables, current.
Export duties paid by APSA while the benefit was suspended were charged to results of each year. To date APSA has
sued the State requesting the refund of ThUS$ 6,555 plus interest since the date that the lawsuit was served to the
defendant, as a result of the suspension of the benefit. This amount corresponds to export duties paid between March
2005 and March 2007.
90
Also, in April 2005 the Department of Agriculture, Livestock, Fisheries and Food issued resolution 260/2005 requiring
the holders of undertakings that had received certain fiscal benefits in accordance with Law No.25,080 to pledge
collaterals to cover the total amount of the benefits, considering the benefits that had been used until the date of t heir
constitution. APSA pledged the requested collaterals, which amount to CLP$ 136,406,620 (equivalent to ThUS$
16,181 at September 30, 2014) at the date of issue of these financial statements.
APSA considers that it has met all the obligations in accordance with the regime stated in Law No.25,080.
1.3 On November 28, 2008 Alto Paraná S.A. was notified of resolution 212 issued by the Argentinean Central Bank
(ACB) on November 19, 2008. By means of that resolution the ACB instructed proceeding No.3991, wh ich claims that
foreign currencies from collection of exports were not timely converted.
Alto Paraná S.A. presented the corresponding defense before the BCRA within the required period of time and in the
required format.
Currently, the file is in the Economic Criminal Court N° 8, Secretariat 16.
On October 2, 2014, judgment was rendered, declaring the trial extinguished by statute of limitations, and, therefore,
acquitting Alto Paraná S.A. from guilt.
1.4 On December 6, 2013 Alto Paraná S.A. was notified of resolution 803 issued by the Central Bank of the Republic
of Argentina (“BCRA”) on November 22, 2013. By means of that resolution the BCRA instructed proceeding No.5581,
which challenged the absence of entry and conversion and late entry of foreign currencies from exports.
On March 6, 2014 the decision of the BCRA regarding the answer to the charge and the opening of the proceeding
was notified, the case testimonial evidence was submitted. On June 18, 2014, the test period closing was notified. On
June 26, 2014 APSA filed allegations.
In the opinion of the company's legal counsels, at the date of issue of these financial statements , it is highly probable
to have a favorable result (that is, that the fine is not imposed) based on the solid grounds stated by APSA and the
legal information related to similar infringements.
2. Aserraderos Arauco S.A.:
2.1 On January 30, 2014, Aserraderos Arauco S.A. was served in Santiago with a damages claim based on alleged
tort liability on grounds of shared or combined negligence, lodged by Messrs. Marilyn Jane Medina Fuentes, Griselott
Yazmin Villegas Medina, José Manuel Villegas Medina and Yerman Leandro Villegas Medina, surviving spouse and
sons, respectively, of the late subcontracted worker Mr. Roberto Villegas Medina, employee of the subcontractor
Company Recursos Humanos Sergall Ltda., who passed away on his way to the hospital of Curanilahue as a
consequence of an accident that had occurred at the Station located at the Horcones complex (borough of Arauco) in
the early morning on February 27, 2010, day of the earthquake that struck the central -southern area of Chile. The
lawsuit was brought against Productora de Maderas Paranal Ltda. and Aserraderos Arauco S.A., and seeks the
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compensation of physical or pecuniary damages (loss of profits), as well as of moral (non-punitive) damages. As a
result, in the event that the lawsuit is dismissed, the same is brought against the Asociación Chilena de Seguridad
(ACHS). (Case number C-506-2013 of the Court of First Instance of Arauco). Currently the trial is suspended until a
motion seeking the annulment of the judgment is decided. Then the court should decide on the dilatory exceptions
submitted. Pending.
3. Celulosa Arauco y Constitución S.A.:
3.1 On August 25, 2005, the Chilean Servicio de Impuestos Internos (the “Chilean IRS”) issued tax calculations No.
184 and No. 185 of 2005 objecting to certain capital reduction transactions effected by Arauco on April 16, 2001 and
October 31, 2001, and furthermore, requested reimbursement from the Company for amounts returned to it in respect
of certain claimed tax losses. On November 7, 2005, the Company requested a Review of the Supervision Action
(Revisión de la Actuación Fiscalizadora, or “RAF”), which is an administrative review of the tax action brought by the
Chilean IRS, and subsidiarily, a claim was filed against the abovementioned tax calculations No. 184 and 185 of 2005.
The RAF was resolved on January 9, 2009 by the Chilean IRS, which resolution, however, only p artially sustained the
Arauco’s request. In response, the Company filed an additional complaint with regard to the portion of the RAF that
was not granted by the administrative review. On February 19, 2010, the Court took note of the Company’s request
subsequently, the tax authority issued a report and the Company commented on such report; therefore the IRS should
inform to the Court on this request. As of the date of issuance of these financial statements, the investigation in
respect of this complaint is pending.
Plants:
- Licancel Plant:
3.2 With respect to the Licancel Plant, on June 22, 2011, Arauco was notified by warrant of civil claim for
compensation for damages for alleged torts brought by 12 fishermen Mataquito River at court of first instance,
Warranty and Family Licantén, 73-2011 auto role, on the occasion of the fish kill occurred in the River Mataquito on 5
June 2007. The plaintiffs seek to be compensated for alleged damages as a result of the event indicated above, for
actual damages, lost profits and moral damage, and contractual liability assumed. The probationary period was
finished, and only letters addressed to several authorities need to be answered.
- Valdivia Plant:
3.3 With respect to the Valdivia Plant, on April 27, 2005, the Government Board of Defense filed a civil lawsuit against
the Company for the repair and indemnification of environmental damages, before the First Civil Court of Valdivia (File
746-2005).
The Company filed its response, arguing that it is not responsible for the environmental damages and therefore that
the indemnification payments as well as the alleged reparation, are inadmissible. Currently, expert reports have been
submitted, most of which were against the Company’s position. On September 5, 2011, observatio ns regarding the
experts’ reports were presented. The inspection by the Court was held on the 13, 14 and 15 of March 2012. On March
13, 2013 the Court ordered the parties to hear judgment.
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Subsequently, on March 26, 2013, the Court summoned the parties to two settlement hearings, which were conducted
without favorable results. Subsequently, Celulosa Arauco y Constitución S.A. noted the Court a proposal of settlement
that had evaluated.
On July 27, 2013, the first definitive ruling was issued in favor of the claim, with court expenses, condemning the
Company the following measures to be taken:
1.
To perform a study of the current status of the Wetland, through an interdisciplinary team comprised of various
experts in the fields of biology, chemistry and physics, for which it must create an independent committee in
which the parties participate, for a term that shall not exceed one year. The studies shall include the status of
water and the Wetland’s flora and fauna.
2.
The creation of an artificial wetland, as a sentinel controlled environment, with representative species of the Río
Cruces wetland, which receive the first impact of the discharge of riles, which shall be located immediately after
the tertiary treatment and before their discharge into the Río Cruces.
3.
The performance of a continuous environmental monitoring program by the Company, for a period that shall not
be less than 5 years, and shall be conducted pursuant with the environmental assessment conditions set forth in
RCA 279/98 and its subsequent amendments by the competent authorities, without prejudice of what they order
or have ordered.
4.
The creation of a Wetlands Investigation Center, pursuant with what was proposed by the Company.
5.
Community development programs related to the Wetland in the manner that was proposed by the Company.
With regard to monetary damages, the ruling ordered the Company to pay in the compliance stage however the form
and amount of the payments were not determined.
The ruling was communicated to the Company on August 9, 2013.
After a thorough analysis of the ruling, Celulosa Arauco y Constitución S.A. decided not to appeal.
This decision was
made as it would allow the creation of the conditions for commencing the implementation of the measures in favor of
the Wetland, without waiting for further judicial terms.
Currently, the decision is binding and conclusive, and all personal and court expenses have been paid.
The State Defense Council and the company reached, in respect of the section of the judgment referred to damages,
an indemnification agreement for CLP$ 2,600 million, which were paid to the Chilean State in April 2014.
The referred amount would be in addition to the $2,600 million Chilean pesos that the Company has committed to and
will spend to finance the implementation of the community development programs ordered by the decision, which shall
be to the benefit of the community.
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The parties reported this agreement to the court on April 7, 2014. This agreement was approved by the court on April
8, 2014.
The amount of $5,200 million Chilean pesos (ThUS$ 9,408 as of September 30, 2014) corresponding to the sum
indicated in the last two preceding paragraphs, is recognized in the financial statements of Arauco at end of this
period.
Arauco, the State Defense Council and an interdisciplinary committee are working on the measures to preserve the
Nature Sanctuary listed in points 1) to 4). Once the form to carry out the measures is finalized, the associated costs
will be determined and will be disbursed gradually beginning in 2014. For example, the measure stated in 1) above
was commissioned to Universidad Austral de Chile.
The State Defense Council requested that the court enforce its judgment. On September 11, 2014, Arauco informed
the court about the current status of enforcement of the judgment as regards the first 5 measures decided in the
resolutions part of the final judgment.
On September 12, 2014, the court accepted the report submitted by Arauco. Therefore, Arauco will have to report
progress to the court every three months.
- Nueva Aldea Plant:
3.4 In regard to Nueva Aldea Plant, on December 20, 2012, the Company was notified of damages in civil suit summary
judgment, filed by a group of residents of the area La Concepción, near the Nueva Aldea Plant, who demand
compensation damages for alleged environmental damage that affected their quality of life. The claim is for damages and
moral damages. The alleged damages consist of fumes into the atmosphere, pollution of streams, truck traffic risks and
risks of forest fires. The Company, on December 27, 2012, sought and obtained that the Court shall be processed this
judgment under the normal procedure. Currently is pending the deadline to answer the complaint.
4. Forestal Arauco S.A. (formely Forestal Celco S.A.):
4.1 On April 14, 2009, Forestal Celco S.A. was notified of a civil lawsuit filed by Mario Felipe Rojas Sepúlveda on
behalf of Adrián Gavilán Villarroel against Cooperativa Eléctrica de Chillán Limitada and against Forestal Celco S.A.
The lawsuit aims to make both companies jointly and severally liable for compensation of alleged material damages
suffered as a result of a fire that occurred on January 12, 2007 on the El Tablón county property, which belongs to
Forestal Celco S.A.
On April 30, 2009 Forestal Celco S.A. (now Forestal Arauco S.A.) filed dilatory exceptions, which pointed to some defects
in the demand. The plaintiff rectified the defects, and the Company replied to the demand. On March 8, 2011 the Court
issued the legal judgment of first instance rejecting the claim. On March 21, 2011, the plaintiff filed a motion for annulment
of, based on errors in the proceedings, and an appeal against, the first instance judgment. The Court of Appeals of
Chillán rejected both the motion and the appeal. Against the latter judgment, the plaintiff filed a motion for annulment
based on errors in the proceedings and a motion for annulment based on wrong application of the law. The case was
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forwarded to the Supreme Court. The Company appeared before the Court on October 11, 2012, under case file No.
7610-2012. The case was heard. The Supreme Court urged the parties to settle, but the parties did not reach an
agreement. -On March 19, 2014 the plaintiff and the defendant Forestal Celco S.A. reached an agreement that
terminated the lawsuit only involving these two parties. The lawsuit is still against Cooperativa Eléctrica de Chillán
Limitada. On May 7, 2014 the Supreme Court accepted the motion for annulment based on errors in the proceedings,
annulled the judgment, partially accepted the claim and ordered the defendant Cooperativa Eléctrica de Chillán Limitada
to pay the plaintiff CLP$ 1,289,362,828 plus indexation and interest as stated in the judgment. The amount already paid
by Forestal Celco S.A. should be deducted from this amount. Case ended.
4.2 On January 26, 2011, Forestal Celco S.A. (now Forestal Arauco S.A.) was notified of a civil claim submitted by Mr.
Hans Fritz Muller Knoop against Cooperativa Eléctrica de Chillán Limitada and Forestal Cel co S.A., which seeks that
both companies be condemned to pay (jointly and severally) an indemnity for the alleged material damages caused as
a result of the spreading of a fire on January 12, 2007, in the estate named “El Tablon”, owned by Forestal Celco S .A.
The case was filed as Case N°4.860-2010 in the Second Civil Court of Chillán.
On January 10, 2012, the court issued a ruling condemning both defendants to pay the plaintiff jointly the sum of
$288,479,831. Both defendants contested the ruling. On June 4, 2013, the Court of Appeals of Chillán revoked the
sentence, deciding to reject the claim in all its parts. On June 21, 2013, the plaintiff submitted a Casation Appeal for
annulment, based on the noncompliance with both procedural and legal provisions. The case was forwarded to its
Excellence the Supreme Court. Forestal Celco appeared before the Court on July 10, 2013, under case file No. 4,5532013. The case was heard. The Supreme Court urged the parties to settle, but the parties did not reach an ag reement.
On March 19, 2014 the plaintiff and the defendant Forestal Celco S.A. reached an agreement that terminated the
lawsuit only involving these two parties. The lawsuit is still against Cooperativa Eléctrica de Chillán Limitada. On May
7, 2014 the Supreme Court accepted the motion for annulment based on errors in the proceedings, annulled the
judgment, partially accepted the claim and ordered the defendant Cooperativa Eléctrica de Chillán Limitada to pay the
plaintiff CLP$ 205,148,111 plus indexation and interest as stated in the judgment. The amount already paid by
Forestal Celco S.A. should be deducted from this amount. Case ended.
4.3 On September 26, 2005, in proceedings numbered 48,679-2006 of the Civil Court of Constitución, Forestal Celco
S.A. (now Forestal Arauco S.A) submitted a claim against Forestal Constitución Ltda. and Ms Vitelia Morán Sepúlveda
and seven other inddivials, with the goal of obtaining a ruling that acknowledges its sole ownership over the Lierecillo
estate (1,126 hectares), formed by various property registrations. In addition, the plaintiffs are also seeking that the
defendants be sentenced to jointly and severally pay $20,000,000 as well as compensation for damages for having
harvested a portion of the aforementioned estate. On April 23, 2006, Mr. Adolfo Numi Velasco, acting on behalf of all
the aforementioned individuals, answered the claim requesting its rejection, arguing that his clients are the sole
owners of the estate named “Lierencillo” which they call “El Macaco”, also submitting a counterclaim with the purpose
of demanding that Forestal Celco S.A. return such estate, of 162.7 hectares, plus compensation for the resulting
damages, loss of profit and moral damage. On June 29, 2009, a first instance ruling was issued in favor of Forestal
Celco S.A’s claim, only with regards to the declaration of ownership, rejecting all other aspects of that claim as well as
the corresponding counterclaim. -
The case is being reviewed by the Court of Appeals of Talca, under court
registration number 267-2012, for a ruling regarding the appeal submitted by the defendant, who is also a
counterclaiming plaintiff.
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On March 17, 2014 the Court of Appeals revoked the first instance sentence, accepted the claim for recovery of sold
property and declared that the counterclaiming parties are the sole owners of the 61.32 hectare lot known as Macaco.
On April 3, 2014 Forestal Celco S.A. objected to the judgment by filing a motion for annulment based on errors in the
proceedings and a motion for annulment based on wrong application of the law. Currently, the case is pending for ruling
on the application admissibility at the Supreme Court (Supreme Court Case N° 10.840-2014).
On June 2, 2014, the Supreme Court ruled the decree “case being reported”. Pending.
4.4 On September 11, 2012, Forestal Celco S.A. (now Forestal Arauco S.A.) was served with a voidance claim regarding
the partition award and the purchase and sale agreement dated November 28, 1994, regarding the property called “Loma
Angosta”, which occupies an area of 281,89 hectares. As part of the claim, Forestal Celco S.A. was also sued for
damages. The lawsuit was filed by Julián Eduardo Rivas Alarcón, on behalf of Nimia del Carmen Álvarez Delgado,
against Patricia del Carmen Muñoz Zamorano and Forestal Celco S.A. The lawsuit was filed before the Civil and Criminal
Court of Quirihue, under docket number C-108-2012. On October 4, 2012, Forestal Celco S.A. submitted before the court
a relative incompetence defense. On October 10, 2012 the other defendant also filed a dilatory exception due to lack of
jurisdiction of the court. On August 1, 2013, the Court decided to dismiss the motions to correct the proceedings on formal
grounds submitted by both defendants - additionally sentencing them to pay court costs - a ruling that was appealed by
Forestal Celco S.A. In parallel, on August 7, 2013, Forestal Celco S.A. filed a motion to declare the proceedings
abandoned, a request that was rejected by the Court on August 8, 2013, by way of a resolution that was appealed by
Forestal Celco S.A. The Court of Appeals confirmed the dismissal of the dilatory pleas and the motion to adjudge
procedural abandonment. On August 13, 2013, Forestal Celco S.A. answered the claim, requesting that it be rejected. On
June 17, 2014, transfer for reply was granted. On May 12, 2014, the plaintiff requested and caused the Court to rule a
precautionary action forbidding acts and the entering into contracts regarding the forest or forest cover of the real
estate registered in page 770 N° 993 of Quirihue Registrar of Lands, Mines, and Industrial Property corresponding to
1994. The plaintiff was granted a 20 business day deadline to notify the parties on the said action. To this date, the
action has not been notified, and it would be non-applicable due to revocation. Pending in first instance.
4.5 On January 4, 2013, Forestal Celco S.A. (now Forestal Arauco S.A) was served with a civil claim by Sociedad de
Transportes Juan y Joel Cea Cares y Compañía Limitada which seeks to terminate the document known as “General
Framework Agreement” including damages allegedly brought by Forestal Celco S.A. A conciliation hearing was held
without any resolution. On January 24, 2014, the order to produce evidence was issued. Reconsideration appeal was
brought against such order. Such appeal has not been decided upon. Case number 180 – 2012 of the Court of First
Instance of Constitución.
4.6 On December 21, 2013, Forestal Celco S.A. (now Forestal Arauco S.A.) was served upon an ordinary damages claim
based on tort liability, brought by Mr. Eduardo Alberto Contreras Lagos on behalf of Mrs. Olga Albina Gajardo Ortéga, her
spouse Mr. Jorge Leonidas Machuca Vilugrón and their sons, Johnatan David Machuca Gajardo, Walter Eduardo
Machuca Gajardo and Brian Esteban Machuca Gajardo, in case docket No. C-7008-2013 before the First Civil Court of
Chillán. The plaintiffs demand compensation for the physical and moral damages arising from the fall of a 20 meter tall
tree, which allegedly was located on a property of the defendant, on their vehicle when they were travelling through Route
160 towards Laraquete in the Eighth Region. This event occurred on January 3, 2010. Currently, the case is in the
parties summoning stage for a conciliation hearing, as the discussion period is over.
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4.7 On October 26, 2012, Forestal Valdivia S.A., now Forestal Arauco S.A., was notified of a restitution suit filed by Mr.
Nelson Vera Moraga, Attorney representing the estate of Mrs. Julia Figueroa Oliveiro, which occurred over 60 years ago.
That application was lodged with the Civil Court of Loncoche, Docket Number C-79-2012, and the lawsuit demanded the
recovery and restitution of two estates, with their products and improvements, arguing that the aforementioned estate is
the sole and exclusive owner of two real estate properties whose total surface amounts to 1,210 hectares and are
allegedly occupied by Forestal Valdivia S.A. without legal title. On January 14, 2013, the Company filed a response
requesting the rejection of this claim. The court ordered the submittal of an expert’s report at plaintiff’s expense prior to
issuing its judgment, but since that such expert’s report was never submitted within the established deadline, the court
revoked such order. On March 13, 2014 the court delivered an appealable judgment rejecting the claim. On March 31,
2014 the plaintiff objected to the appealable judgment by filing a a motion for annulment based on errors in the
proceedings together with an appeal at the Court of Appeals of Temuco (case number 295-2014). On May 5, 2014 the
motion for annulment based on errors in the proceedings and the appeal were both declared admissible. Currently, the
case is at Temuco Court of Appeal, case 295-2014. Executive order “case being reported” was ruled on May 6, 2014.
4.8 On November 17, 2003, Bosques Arauco S.A., now Forestal Arauco S.A., was notified of a property restitution claim
brought by Ms. Celmira Maria Curin Tromo, who requested the restitution of certain real estate property, profits and
damages in a Special Indigenous Lawsuit, claiming that she is the sole and exclusive owner of the 5.5 hectares of land,
which are allegedly occupied by Bosques Arauco S.A. in blatant disregard of her property interest. On June 6, 2008, the
first decision was issued, rejecting the claim. The decision was appealed and the Corte de Apelaciones de Temuco (High
Court of Appeals of Temuco) overturned the decision on January 6, 2009, ruling in favor of the plaintiff with regard to
every portion of the claim and ordering the restitution of the land, along with all profits and damages caused by Bosques
Arauco S.A. to the land, the assessment of which was deferred to the ruling’s execution phase.
On October 28, 2009, the plaintiff requested the execution of the ruling with notice to the defendant, in addition to
compensation for the alleged moral harm personally experienced by her. After being notified of the request, Bosques
Arauco S.A., in turn, requested that this request be nullified on the grounds that the alleged harm and suffering was not
part of the judicial proceedings and that therefore was not part of the final judgment. This application has not yet been
resolved by the court. On July 10, 2013 Bosques Arauco S.A. appropriated amount sued for in property damages and on
July 15, 2013, the Court recorded that appropriation.
4.9 In 1999, Bosques Arauco S.A., now Forestal Arauco S.A., was notified of a property recovery claim filed by Ms. Silvia
Aurora Escalona Fernández, Mr. Nazario Israel Escalona Fernández and Mr. Carlos Alfonso Escalona Fernández, who
demanded the restitution of a portion of land equal to 426.93 hectares located within a larger rural property named Cerro
Alto y Las Ánimas, located in the borough of Los Álamos, with a total surface of 505.27 hectares. The claimants have
reserved their right to discuss damages for deterioration and products for a later stage in the trial. The claim ultimately
requested the court to declare that the claimants are the exclusive and lawful owners of the land named Cerro Alto y Las
Ánimas in its entire surface, and, in lieu thereof, in the area determined by the court. The claim was filed before the Civil
Court of Lebu, under Case File Number C-16,073-1999. The defendant responded to the claim noting that the facts
presented in said claim were untrue and that the claimant only had rights and actions over a lot of forty blocks, Bosques
Arauco S.A. being the exclusive owner of the land known as Cuyinco Alto, which comprises the sectors denominated
Cerro Alto and Cuyinco, with an aggregate surface of 4,800 hectares. On April 29, 2013, the Court issued its decision
wholly dismissing the claim. On June 21, 2013, the claimant appealed the judgment by way of an ordinary appeal and a
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cassation appeal on formal grounds. On January 8, 2014, the Court resolved to send the case back to first instance so
that the ruling regarding documental objections should be completed, suspending that meanwhile executive order
“case being reported” would be ruled.
On January 9, 2014, the case re-entered the Court of Appeal.
On April 8, 2014, the Court of Appeal ruled the executive order “case being reported”.
On August 18, 2014, the Court of Appeals rejected the motion for annulment of the lower court judgment and the
appeal, both of them submitted by the plaintiff. The plaintiff did not challenge the judgment of the Court of Appeals;
therefore the lower court judgment that fully rejected the lawsuit became final and enforceable. Case finished.
4.10 On September 4, 2013, Forestal Celco S.A., now Forestal Arauco S.A. was notified of a civil damages claim for
alleged non-compliance with contractual obligations, filed by Mr. José René Campos Castillo, Ms. Guadalupe del Carmen
Gallardo Rivas, Mr. Iván Patricio Campos Gallardo, Ms. Elizabeth del Carmen Campos Gallardo, Mr. Remigio Pedreros
Catril, Ms. Rosa Eudolia García Díaz, Mr. Edgardo Remigios Pedreros García, Ms. Marianela Judelina Pedreros García,
Mr. Jorge Antonio Petit-Laurent Pries, Ms. Ida Haydeé Sáez Arriagada, Mr. Jaime Antonio Petit-Laurent Sáez and Mr.
Víctor Mauricio Petit-Lauren Sáez against Empresa de Transportes y Servicios Forestales Trayenko Ltda. and Forestal
Arauco S.A. The claim sought for the defendant companies to be held jointly and severally liable or jointly liable in equal
proportions, or in the proportion established by the Court, or in lieu thereof, to hold only the latter company liable for the
payment of non-monetary damages suffered by the relatives identified in the claim. Based on the claim, a mechanical
failure, among other reasons, resulted in the death of Mr. Víctor Campos Gallardo, Mr. Danilo Pedreros García and Mr.
Emilio Joaquín Petit-Laurent Sáez (the driver and occupants of a truck that overturned) due to a traffic accident that
occurred on September 10, 2009, in the Curaquilla Intersection, borough of Arauco.
The claim was filed before the Civil Court of Arauco (Case File No. C-371-2013). Forestal Arauco appeared in the trial
presenting a motion to annul all proceedings, as well as a motion to amend the proceedings as per N°6 of Article 303 of
the Civil Procedures Code. The Court admitted both motions and suspended the main proceedings while the motions
were addressed, opening a term for evidence for the first of said motions. Forestal Arauco filed a reconsideration appeal
with respect to this ruling. Concurrently, the main defendant answered the claim directly. The resolution of the motions is
still pending.
4.11 On October 8, 2013, Bosques Arauco S.A., now Forestal Celco S.A. was notified of a civil claim filed by Mr. Manuel
Antonio Fren Casanova, requesting the court to declare the properties known as Cuyinco and Cuyinco Alto as two
different properties and, therefore, to order the cancellation of the ownership registration in the name of Bosques Arauco
S.A. found on N°290 of page 266 of the Registry of Property kept by the Real Estate Registrar of Lebu, year 1998, on the
grounds that, Bosques Arauco S.A. erroneously understood that its property, Cuyinco Alto of 4,600 hectares, would also
encompass the land known as Cuyinco, which allegedly belongs to the claimant. The claim was filed before the Civil
Court of Lebu (Case File No. C-269-2013). On November 21, 2013, the claim was answered. The plaintiff did not submit
a rejoinder. The Company has submitted the respective rejoinder. On March 18, 2014 a hearing for the settlement of the
dispute was held, but the parties have not come to an agreement. The court is yet to issue the resolution that starts the
period when the parties must submit evidence.
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4.12 On December 21, 2013, Forestal Celco S.A. now Forestal Arauco S.A. was served upon an ordinary damages claim
based on tort liability, brought by Mr. Eduardo Alberto Contreras Lagos on behalf of Mrs. Olga Albina Gajardo Ortéga, her
spouse Mr. Jorge Leonidas Machuca Vilugrón and their sons, Johnatan David Machuca Gajardo, Walter Eduardo
Machuca Gajardo and Brian Esteban Machuca Gajardo, before the First Civil Court of Arauco (Case Docket No. C-5002013). The plaintiffs demand physical and moral damages arising from the fall of a 20 meters height tree, which allegedly
was placed in a property of the defendant, over their vehicle, when they were travelling through Route 160 towards
Larquete in the Eighth Region, which event took place on January 3, 2010. These are the same facts that gave rise to the
lawsuit referred to in paragraph 4.6 above. The defendant has filed dilatory exceptions, which were accepted. Therefore,
the plaintiff must remedy or correct the flaws found in the lawsuit.
4.13 On March 25, 2014 Forestal Celco S.A. (now Forestal Arauco S.A.) was notified of a civil claim for compensation for
damages due to alleged tort liability filed by Mr. Mauricio Chacón Gómez on behalf of Ms. Edita del Carmen Cisterna
Fernández, Mr. José Luis Salas Cisterna and Mr. Sergio Hernán Vásquez Muñoz (case number C 38-2014 of the Court
of First Instance of Arauco). The plaintiffs are asking for compensation for alleged property damages and moral prejudice
due to a fire on December 21, 2013 in the areas of El Piure, Llico, Rumena and Lavapie in the district of Arauco. The fire
allegedly started in the lot known as Quinoguen owned by Forestal Arauco S.A. when the company's employees were
working there. On April 14, 2014 the defendant filed dilatory exceptions. On June 27, 2014, the Court accepted the
opposition dilatory exceptions. The plaintiff did not challenge the decision, for which reason it must solve the legal
action faults.
5. Inversiones Arauco Internacional Ltda.
5.1 On May 5, 2011, the Chilean Internal Revenue Service (”Chilean IRS”) issued liquidations N° 7 and 8 to Inversiones
Arauco Internacional Ltda., objecting the reasonableness and necessity that a compensation payment made by the
Company under the framework of partnership and participation in Forestal Cono Sur S.A. of Uruguay, is regarded as a
deductible expense.
On May 4, 2012, the Company presented a claim to the Tax Court against liquidations No. 7 and 8. Currently, the
Complaint was forwarded to the Inspector for that report.
The Inspector issued a report. The Company submitted
observations to the report of the Inspector. On April 30, 2014 the resolution that starts the period when the parties must
submit evidence was notified. On May 7, 2014 the company filed an appeal for reconsideration against the evidence. This
has not been resolved yet.
6. Arauco do Brasil S.A.
6.1 On November 8, 2012, Brazilian Tax Authorities issued an Infraction Notice against one of our Brazilian subsidiaries,
Arauco do Brasil S.A., for alleged unpaid taxes purportedly due by such company for the years 2006 to 2010. In
particular, the Tax Authorities (i) objected to the deductibility of certain payments made and expenses incurred (including
premium amortization, interest and legal expenses) by Arauco do Brasil between 2005 and 2010 and (ii) alleged that
Arauco do Brasil made certain underpayments in respect of the Brazilian Corporate Income Tax (“IRPJ”) and the Brazilian
Social Contribution on Net Profits (“CSL”) during 2010.
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On December 11, 2012, Arauco do Brasil filed an objection to cancel the Infraction Notice before the Judgment Office of
the Brazilian Revenue Service, first administrative level. As of the date of this annual report, judgment in respect of this
objection remains pending. The Company believes that its objection to the Infraction Notice is supported by solid legal
arguments and that there is a reasonable likelihood that this matter will result in a favorable outcome for the Company.
However, if this result does not occur, it is possible that an obligation will arise for the amount specified, plus any accrued
interest and penalties as of the payment date.
7. Celulosa y Energía Punta Pereira S.A. (joint operation)
In May 2014, Celulosa y Energía Punta Pereira (CEEP), a company of the Montes del Plata Group, joint arrangement of
Celulosa Arauco S.A. and Stora Enso, was notified on the start of a series of arbitration procedures against it, all of them
filed before the International Chamber of Commerce (ICC) by Andritz Pulp Technologies Punta Pereira S.A., a subsidiary
of Andritz AG, for an approximate total of 200 million euros.
These arbitration procedures are related to the contracts for the delivery, construction, installation, commissioning, and
completion by Andritz of the main components in the Planta de Celulosa de Montes del Plata Project, located at Punta
Pereira, Uruguay.
Celulosa y Energía Punta Pereira S.A. has solid arguments to reject the said actions and, on the other hand, it has
filed a counter-action against Andritz on non-compliance of its contractual obligations for an approximate amount of
110 million dollars (87 million euros). These arbitration proceedings are at the stage where the parties must agree to
the terms of reference which will govern the arbitration.
To the date of issuance of these financial statements, in the opinion of Montes del Plata legal counsels, the probability
of Celulosa y Energía Punta Pereira S.A. having to made disbursements is low. Therefore, Celulosa y Energía Punta
Pereira S.A. and Celulosa Arauco S.A. have made no provisions regarding these procedures.
II. Lawsuits and other legal actions, affiliate Compañía de Petróleos de Chile Copec S.A. and its affiliates:
At the close of the financial statements are the following trials for Compañía de Petróleos de Chile Copec S.A. and its
affiliates:
1. Charges made by the Customs of Valparaiso
1.1 Thecase (TLCCH USA) consists of seven positions (No. 920757-920763, both inclusive). The reasons thereof can be
summarized as follows:
a) That when the Certificate of Origin - issued and signed by the importer – indicates that the product is "unknown", it
should be on the basis of two pieces of information that should have been provided jointly: (i) a certificate of origin signed
by the producer "with the information to be contained in an official document" and also (ii) the importer's knowledge that
the good qualifies as an originating good of the other party (USA in this case);
100
b) That person signing the certificate of origin by the importer would have no legal authority to do so, and
c) That the foreign vendor invoice is extended in a third State.
The total sum estimated that Customs failed to receive, for taxes (VAT and duties) is US$ 6,889,716.57.
These charges were duly claimed before the Regional Customs Directorate Valparaíso, dated 15.12.2009, and continued
its passage to the issuance of the respective judgments of first instance. These statements confirmed the charges,
without assuming all claims and defenses asserted.
Such rulings were appealed timely to the National Director of Customs, pending its resolution thereon.
It is important to note that the first instance judgment overlooked the fact that, previously, the National Director of
Customs had issued judgments that confirmed the resolutions issued by the Customs of San Antonio, which granted the
claims filed, and revoked the respective charges. These charges and claims were essentially identical to those made by
the Customs of Valparaiso and there was no reason to not continue with the jurisprudence already established by the
National Director.
In the opinion of the lawyers of the affiliated Compañía de Petróleos de Chile Copec S.A., it would be reasonable to
expect that judgments of second instance take in the appeals deducted.
2. Compensation for damages:
2.1 Sociedad Molinera del Sur S.A. and Sociedad Induservcom Ltda., both of the city of Puerto Montt, sued Compañía de
Petróleos de Chile Copec S.A., in May 2009, citing potential environmental damage to both property located in the
coastal city of Puerto Montt and that come from leaks of fuel from the former plant Copec held in that city. The amount is
not defined, concluded the discussion and test periods, leaving only a report by experts to be the first instance
sentencing. The legal advisors estimate that Copec can defend with a good chance to exclude its liability.
2.2 Lawsuit for damages filed with the 3rd Court of Santiago Local Police for alleged violation of consumer rights,
presented by Mrs. Miriam Ross Pinto, who suffered an assault at the service station located in San Pablo, Cueto corner,
where was stolen from his vehicle and was run over by criminals. Demand the sum of Th$ 800,000, for direct economic
damages and pain and suffering. We carried out the defense, settlement and trial. There are insurances involved.
2.3 Lawsuit for damages: a group of mussel farmers sued the Company in Puerto Montt seeking compensation for
damages that, according to them, were caused by the fuel spill that would have occurred at the fuel plant Pureo in
Calbuco. The total amount of the claim amounts to Th$ 830,200.
Subsequently, a second lawsuit was filed by Th$ 1,501,701, for consequential damages, lost profits and moral damage,
called "Martinez with Copec". This latter was accumulated to the former. Currently the case is on appeal partially hosted
dilatory exceptions. There are insurances involved.
101
The contingency is probable but the amounts involved are much lower than the amounts claimed.
2.4 Víctor de la Cruz Pérez León, a former contractor, filed a lawsuit with the 3rd Civil Court of Antofagasta, alleging
breach of contract, and seeking payment of damages which, including consequential damages, lost profits and moral
damage, total ThCLP$ 400,000. The Company filed a motion stating that the court lacked jurisdiction to try the case,
which was accepted by the trial court, and then overturned by the Court of Appeals of Antofagasta. The possibility of
contingency is remote.
3. Labor Proceedings
3.1 Labor lawsuits have been filed against the Company for its alleged joint and several and/or secondary liability
under the terms of the law on subcontracting (Art.183 and following of the Labor Code).
The amount of the lawsuit is hard to quantify, but it would be about ThCLP$ 10,000.
The Company has presented its defense, arguing that it has requested Certificates in good time from the Labor
Inspection department with regard to fulfillment of labor and social security laws by its contractors, which are normally
up to date in that regard.
In light of previous rulings by the courts on this matter, the probability of a contingency is remote.
Furthermore, a worker from the affiliate, ArcoPrime Ltda., sued Copec and ArcoPrime jointly in the Second Labor
Court of Santiago for ThCLP$ 100,000 for moral prejudice as a result of an occupational accident that occurred on
April 16, 2011.There is insurance in place. The contingency is reasonably possible, but for amounts lower than those
sued for.
4. Pureo Plant: Administrative investigations:
On September 6, 2011, there was a spill of diesel fuel in the Fuel Storage Plant located in Pureo, Calbuco, which gave
rise to several administrative processes:
The Regional Secretariat for the Environment of the Los Lagos Region, in coordination with the public services,
decided to undertake an environmental assessment to establish the potential risks associated with the spill.
As part of the assessment, a sampling program of all of the various environmental components (surface water, ground
water, sediments, soil and mollusks) was carried out in March of this year, under a protocol defined by the authorities.
The results were compared with international standards of reference, or values stipulated especially for this case.
The Canadian and European Union standards were used as a reference.
The results of the samples of soil, ground water, sediments and surface water, analyzed and compared to the
102
reference values, show that all of the concentrations are below the detection limit and below the reference value.
Therefore, one can assert that there is NO evidence of any hydrocarbon compounds above the reference values.
That, as far as the mollusk samples are concerned, none of the samples exceeds the value stipulated in the European
Union regulations, which set the maximum concentration of this compound at 6[ug/kg], with the maximum
concentration detected in the zone being 2.1ug/kg.
On the other hand, the lab results show the presence of organics in the Diesel range (DRO) in the tissues of the
mollusks (baby mussels), analyzed both in the Pureo basin area and an area far away from it. The report specifies that
these organic compounds are not oil by-products, according to the chromatograms, so the result is a false positive due
to the interference of the mollusks’ own lipids, which generate a chromatographic response.
In order to understand the behavior of a spill of 3000 liters of diesel fuel directly into the water, a tidal prism analysis
was performed. It showed that, after one week, the water of the Basin had been completely renewed due to the tidal
cycle, showing that the diesel content had been reduced by 98%. The estimated value of 0.02mg/L of diesel fuel is
lower than the standard of reference (British Columbia), whose benchmark value is 5mg/L.
In short, according to the results obtained in the risk assessment, the estimated risk of effects being caused to human
health does not exceed levels considered to be acceptable.
This spill gave rise to investigations by various public services; these are specified in detail below, with an indic ation of
each one’s current status:
4.1 Superintendency of Electricity and Fuels ”SEC“.
By Resolution of November 2, 2011, the Company was fined 600 UTA. An appeal for reconsideration of judgment was
filed against this fine with the SEC, which partially endorsed it by reducing the fine to 500 UTA. An appeal has been
filed with the Santiago Court of Appeal, which is pending.
4.2 Agriculture and Livestock Bureau ”SAG“.
By Resolution of January 5, 2012, the Company was fined 75 UTM, equivalent at such time to ThCLP$ 2,977. An
appeal for review was filed with the National Director of the SAG, but it has still not been resolved.
4.3 National Health Service.
There is an administrative investigation, which resolved to prohibit the extraction of hydrologi cal resources from the
Pureo Basin, and the information was remitted to the Environmental Assessment Committee. The appeal for
reconsideration of judgment filed by COPEC is pending. Meanwhile, the prohibition to which the Pureo Basin was
subject was declared null and void.
103
4.4 Environmental Assessment Committee (COEVA).
By means of Exempt Resolutions 469, 470 and 471, the COEVA fined COPEC 500 UTM for the penalties imposed by
the Superintendency of Sanitary Services, 500 UTM for DIRECTEMAR of Puerto Montt and 125 UTM for the General
Water Board. Appeals for reconsideration of administrative judgment were filed, but were not accepted by the COEVA
on April 3, 2013. Copec filed three legal claims in summary proceedings against the above resolutions of the COEVA.
5. SEC fines
There are several fines imposed by the Superintendency of Electricity and Fuels for approximately ThCLP$ 8, 461. The
contingency is probable.
6. Guarantees
The Guarantees Received from third parties in favor of the Company corresponded to mortgages, pledges and
withholdings originated by concession and consignment agreements, fuel supply contracts, lines of credit and
construction contracts. At year end, the main existing guarantees are:
OPERATION
THAT GENDER
AMOUNT
ThUS$
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
CONCESSION CONTRACT
343
332
322
316
272
270
268
259
212
206
179
175
167
166
157
143
140
130
128
128
125
125
122
118
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
CONSIGMENT CONTRACT-CONCESSION
CONSIGMENT CONTRACT
CONSIGMENT CONTRACT
CONSIGMENT CONTRACT
1,033
1,013
633
633
540
503
473
436
425
422
422
401
400
400
376
365
362
352
345
343
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
MORTGAGE
FUEL SUPPLY CONTRACT
601
544
541
420
133
97
83
DISTRIBUIDORA DE COMBUSTIBLES LTDA.
LEPE Y ALAMO LTDA.
SOTALCO II LTDA.
TRANSPORTES MARITIMOS KOCHIFAS S.A.
TRANSPORTES CAMINO SAN LUIS
ÑANDU TUR S.A.
ASOC. GREM BUSES INTERCOMUNAL
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
CUSTOMER
PLEDGE
PLEDGE
106
106
JULIA SALAZAR CRANE
SANDRA FUENTES SALAZAR
CUSTOMER
CUSTOMER
GUARANTEE
GRANTOR NAME
ANDRES CARLOS APEY VALENZUELA E/S E.I.R.L
COMERCIAL BASCUR MORENO LTDA.
KLEINSTEUBER ORMEÑO Y CÍA LTDA.
COMERCIAL VARELA Y CIA. LIMITADA
COMERCIAL CAUTIN LIMITADA
DANIEL VILLAR Y CIA. LTDA.
MUÑOZ Y DIMTER LTDA.
HENRIQUEZ MAGGIOLO ANGELA MARIA A.
COMBUSTIBLES LOS HORCONES LTDA.
COMERCIAL NAVEA Y SALINAS LTDA.
COMERICIAL BELDUE LTDA.
HARAMBOUR Y CIA. LTDA.
ALFONSO NEUMANN E HIJOS LTDA.
RIQUELME HERRERA MARIA DELFINA
DE LA PAZ MERINO LIMITADA
EDO. ESPINOZA ORELLANA DIST. DE COMB. E.R.I.L.
SUSANA STEINBRECHER FLORES
COMERCIAL ANACONDA LIMITADA
COMERCIAL DORAL LTDA.
JORGE VILLAGRA CARDENAS
PEDRO MANQUILEF
CARMEN LIA VILLALOBOS
DAVCOM E.I.R.L.
COMERCIAL MILIALT LTDA.
SOCIEDAD COMERCIAL LEPE Y ALAMO LTDA.
E/S VEGA ARTUS LTDA.
PATRICIO GHIARDO JEREZ
COMERCIAL SANTA MARTA LTDA.
DINO PEIRANO Y CIA LTDA.
DISTRIBUIDORA DE COMBUSTIBLES COKE LTDA.
COMERCIAL DE PABLO Y MARIN LTDA.
RAMIS Y RAMIS LTDA.
COMBUSTIBLES LEPE Y ALAMO LIMITADA
COMERCIALIZADORA LONCOMILLA LTDA.
AUTOMOTRIZ Y COM. LONCOMILLA LTDA.
MARTINEZ RASSE Y CIA LTDA.
COMERCIAL Y DIST. LOS LIRIOS LTDA.
INVERSIONES Y COMERCIAL LIRAY LTDA.
JAIME SOTOMAYOR SAMITH Y CIA LTDA.
ROSENBERG Y SEPULVEDA LTDA.
ADMINISTRADORA DE E/S AUTONOMA LTDA.
DELAC S.A
COMERCIAL F Y H LTDA.
COMERCIAL Y DIST. DEL NORTE LTDA.
RELATIONSHIP
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONCESSIONAIRE
CONSIGNEE
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONSIGNEE
CONSIGNEE
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONSIGNEE
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
CONC - CONSIG
104
Guarantees Granted:
At the date of these financial statements and as shown below, the subsidiary Arauco maintains approximately MMUS$ 80
as financial assets passed to third parties (beneficiaries), as a direct guarantee. If the obligation is not satisfied by Arauco,
the beneficiary may enforce this warranty.
As indirect guarantee as of March 31, 2014 there are assets pledged amounting to ThUS$ 1,073. Unlike direct
guarantees, indirect guarantees are provided to secure the obligation assumed by a third party.
On September 29, 2011, Arauco signed Security Agreement under which it granted a bond of solidarity and not limited to
guarantee 50% of the obligations Uruguayan companies (joint ventures) called Celulosa y Energía Punta Pereira S.A.
and Zona Franca Punta Pereira S.A., under the IDB took Facility Agreement in the amount of US$ 454,000,000 and the
Guaranteed Finnvera Facility Agreement in the amount of MUS$ 900,000.
Below is a breakdown of the main direct and indirect guarantees given by Arauco:
DIRECT
Affiliate that informs
Asset committed
Type of Guarantee
Currency
Arauco Forest Brasil S.A.
Arauco do Brasil S.A.
Arauco Florestal Arapoti S.A.
Arauco Bioenergía
Arauco Bioenergía
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Endorsement of ADB + Guaantee Letter AISA
Mortgage of ADB's Jaguariaiva Industrial Plant
Endorsement of ADB
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Equipment
Guarantee ticket
Guarantee ticket
Guarantee ticket
-
Chilean pesos
Warranty policy
Warranty policy
-
Chilean pesos
Chilean pesos
Property, Plant and Equipment
-
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Chilean pesos
Chilean pesos
Total
ThUS$
Creditor of the guarantee
Banco Itaú BBA S.A.
Banco Bradesco S.A.
Banco Bradesco S.A.
Banco John Deere S.A.
Banco Votorantim S.A.
BNDES
Banco Bradesco S.A.
Banco HSBC Bank Brasil S.A.
Banco do Brasil S.A.
Banco ABC Brasil S.A.
Banco Safra S.A.
Minera Escondida Ltda.
Minera Spence S.A.
Dirección Gral. Del Territorio Marítimo y
124
de marina mercante
211 Banco Estado de Chile
317 Banco Estado de Chile
77,152
357
139
392
181
131
983
3,674
62,551
1,224
217
523
180
232
126
1,359
604
268
521
272
525
1,224
660
157
INDIRECT
Affiliate that informs
Asset committed
Type of Guarantee
Accumulated non solidarity suretyship
Full guarantee
Full guarantee
Total
Currency
-
Dollars
Dollars
-
Dollars
ThUS$
Creditor of the guarantee
624,368 Acuerdos conjuntos - Uruguay
150,000 Flakeboard (Canadá)
Alto Paraná (bonds lenders placed in
270,000
USA)
1,044,368
Compañía de Petróleos de Chile COPEC S.A.
The Company has furnished performance bonds to guarantee delivery of fuels to clients and to guarantee works on public
thoroughfares and other similar ones for a total of ThUS$ 45,574.
105
Pesquera Iquique – Guanaye S.A.
The affiliate Orizon S.A. pledge 124,150 shares that belong to the associated Boat Parking S.A. in favor of that company,
in order to ensure compliance with all obligations Orizon S.A. have current or future contract with Boat Parking S.A.
Minera Camino Nevado Limitada
On October, 2012, the affiliate Minera Camino Nevado Limitada, completed the process of creation of security Financing
contract concluded by the associated Mina Invierno S.A. (former Sociedad Minera Isla Riesco S.A.) with Banco Itaú Chile
as Agent Bank and Banco BICE and BCI as creditors and shareholders. In so doing, delivered in pledge the following
assets:
1. - Credits subordinate Mina Invierno S.A. and Forestal y Ganadera Estancia Invierno S.A. in favour of Minera Camino
Nevado Limitada (active amount committed, ThUS$ 45,065).
2. - Shares of Mina Invierno S.A. and Forestal y Ganadera Estancia Invierno S.A. owned by Minera Camino Nevado
Limitada (active amount committed, ThUS$ 73).
3. - Shares of Inversiones Laguna Blanca S.A. owned by Minera Camino Nevado Limitada (active amount committed,
ThUS$ 47,306).
4. - Social rights of service limited company (Equipos Mineros Rio Grande Limitada, Portuaria Otway Limitada, Eléctrica
Río Pérez Limitada, Rentas y Construcciones Fitz Roy Limitada and Transportes Río Verde Limitada) in relation to the
percentage that has Minera Camino Nevado in each (active amount committed, US$ 100 in each).
A closing date, there are no other contingencies which could significantly affect its financial condition, financial or
operational.
Information to disclose about provisions
Provisions are recognized when there is a current legal or constructive obligation as a consequence of past events, it
is likely that a payment will be necessary to settle the obligation, and the amount of such payment can be reliably
estimated.
Current
Classes of provisions
Provision for guarantees
Provision for legal claims
Provision for onerous contracts
Dismantling, costs of restoration and rehabilitation
Share in profits and bonds
Other provisions
Total
09.30.2014
ThUS$
12.31.2013
ThUS$
09.30.2014
ThUS$
Non-current
12.31.2013
ThUS$
0
7.151
0
0
1.249
2.145
0
10.340
0
0
1.125
1.850
0
16.000
0
9.285
0
46.868
0
8.710
0
9.975
0
16.522
10.545
13.315
72.153
35.207
106
Movements in provisions ThUS$
Provision for
guarantees
Provision for
legal claims
Provision for
onerous
contracts
Dismantling, costs of
restoration and
rehabilitation
Share in profits
and bonds
Other provisions
Total
0
19,050
0
9,975
1,125
18,372
48,522
Movements in provisions:
Increase (decrease) in existing provisions
Current provision for onerous contracts
Provision used
Reversal of unused provision
Increase for adjustment of the time value of money
Increase (decrease) from changes in discount rate
Exchange rate differences
Increase (decrease) in foreign currency exchange
Additional provisions
0
0
0
0
0
0
0
0
0
0
0
0
13
0
0
0
(2,237)
0
0
0
0
(2,158)
8,949
(466)
0
0
0
0
0
0
0
0
0
0
0
0
557
0
0
0
0
0
0
0
0
(1,209)
0
(38)
264
0
0
0
0
0
0
0
0
0
0
(140)
(1,209)
0
0
0
0
0
0
0
0
(1,478)
11,066
22,262
(375)
0
0
0
(2,237)
0
0
0
0
(4,845)
20,015
21,618
Total changes in provisions
0
4,101
0
(690)
124
30,641
34,176
Total provision, ending balance as of September 30, 2014
0
23,151
0
9,285
1,249
49,013
82,698
Movements in provisions ThUS$
Provision for
guarantees
Provision for
legal claims
Provision for
onerous
contracts
Dismantling, costs of
restoration and
rehabilitation
Share in profits
and bonds
Other provisions
Total
0
14,478
0
11,707
1,558
13,189
40,932
Movements in provisions:
Increase (decrease) in existing provisions
Current provision for onerous contracts
Provision used
Reversal of unused provision
Increase for adjustment of the time value of money
Increase (decrease) from changes in discount rate
Increase (decrease) in foreign currency exchange
Additional provisions
0
0
0
0
0
0
0
0
0
0
0
0
66
12,903
0
0
(5,183)
0
0
0
0
(3,062)
0
(152)
0
0
0
0
0
0
0
0
0
0
0
0
(1,272)
0
0
0
492
0
0
0
0
(925)
0
(27)
(301)
0
0
0
0
0
0
0
0
0
0
(132)
(597)
8,575
0
0
0
0
0
0
0
(1,888)
0
(907)
(2,104)
21,478
0
0
(4,691)
0
0
0
0
(5,875)
0
(1,218)
Total changes in provisions
0
4,572
0
(1,732)
(433)
5,183
7,590
Total provision, ending balance as of December 31, 2013
0
19,050
0
9,975
1,125
18,372
48,522
The provision for legal claims primarily corresponds to labor- and tax-related lawsuits, and the term of payment is undetermined.
With respect to the entry for provisions for dismantling, restoration and rehabilitation costs, the Group recognizes a provision for the present value of the costs that will
be incurred in the restoration of the locations of certain plants and service stations on property belonging to third parties. The term of payment is undetermined.
107
NOTE 18. OBLIGATIONS FOR EMPLOYEES BENEFITS
Termination Benefits
Current amount of liability recognized for termination benefits
Non-current amount of liability recognized for termination benefits
Total amount of liability recognized for termination benefits
The amounts recognized in the statement of financial position have been
determined as follows:
Present value of financial obligations
Unrecognized actuarial losses
Unrecognized cost of past services
Total obligations for post-employment benefits
Movements in the obligation for defined benefits have been the following:
Opening balance
Cost of current services
Interest cost
Contributions from plan participants
Actuarial gains (losses)
Benefits paid
Reductions
Settlements
Increase (decrease) for changes in foreign currency
Closing balance
The amounts recognized in the statement of income have been the following:
Cost of current service
Interest cost
Cost of past services
Losses from plan reductions
Total (included in personnel expenses)
09.30.2014
ThUS$
12.31.2013
ThUS$
5,531
76,052
6,098
82,295
81,583
88,393
09.30.2014
ThUS$
12.31.2013
ThUS$
81,583
0
0
88,393
0
0
81,583
88,393
09.30.2014
ThUS$
12.31.2013
ThUS$
88,393
4,051
3,170
0
3,760
(7,136)
0
0
(10,655)
92,480
7,053
3,013
0
4,914
(10,006)
(886)
0
(8,175)
81,583
88,393
09.30.2014
ThUS$
12.31.2013
ThUS$
4,051
3,170
0
0
7,053
3,013
0
0
7,221
10,066
These amounts correspond to obligations for personnel service termination indemnities for certain workers, based on the
provisions of collective and individual employment contracts.
The liability recognized in the statement of financial position is the present value of the obligation for defined benefits as
of the reporting date. This amount is calculated annually by independent actuaries, and it is determined by discounting
estimated future outflows of cash at interest rates of instruments denominated in the currency in which the benefits will be
paid and with terms similar to the corresponding obligations. Personnel turnover rates are determined by the actuaries on
the basis of the actual situation in each business.
Losses and gains arising from experience and from changes in actuarial hypotheses are charged or credited to income in
the period in which they occur.
Costs for past services are recognized immediately in income.
108
NOTE 19. INVESTMENTS IN AFFILIATES AND ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
a)
The complete list of companies included in consolidation in presented below:
Ownership Interest %
Taxpayer ID
Company Name
09.30.2014
Direct
Indirect
12.31.2013
Total
Total
91.806.000-6
ABASTIBLE S.A.
99.0481
0.0000
99.0481
99.0481
79.927.130-3
ADM. CENTRAL DE ESTACIONES DE SERVICIOS LTDA.
0.0000
100.0000
100.0000
100.0000
79.689.550-0
ADM. DE ESTACIONES DE SERVICIOS SERCO LTDA.
0.0000
100.0000
100.0000
100.0000
77.614.700-1
ADM. DE SERVICIOS DE RETAIL LTDA.
0.0000
59.9400
59.9400
59.9400
79.927.140-0
ADM. DE SERVICIOS GENERALES LTDA.
0.0000
100.0000
100.0000
100.0000
77.215.640-5
ADM. DE VENTAS AL DETALLE ARCO PRIME LTDA.
0.0000
60.0000
60.0000
60.0000
96.942.120-8
AIR BP COPEC S.A.
0.0000
50.0000
50.0000
50.0000
96.547.510-9
ARAUCO BIOENERGIA S.A.
0.0000
99.9779
99.9779
99.9779
96.765.270-9
ARAUCO DISTRIBUCION S.A.
0.0000
99.9779
99.9779
99.9779
76.000.605-K
ARCO ALIMENTOS LTDA.
0.0000
59.9999
59.9999
59.9999
96.565.750-9
ASERRADEROS ARAUCO S.A.
0.0000
99.9779
99.9779
93.458.000-1
CELULOSA ARAUCO Y CONSTITUCION S.A.
99.9779
0.0000
99.9779
99.9779
99.520.000-7
COMPAÑIA DE PETROLEOS DE CHILE COPEC S.A.
99.9996
0.0004
100.0000
100.0000
85.840.100-3
COMPAÑIA DE SERVICIOS INDUSTRIALES LTDA.
0.0000
100.0000
100.0000
100.0000
96.668.110-1
COMPAÑIA LATINOAMERICANA PETROLERA S.A.
0.0000
60.0000
60.0000
60.0000
96.623.630-2
COMPAÑÍA MINERA CAN CAN S.A
0.0000
100.0000
100.0000
100.0000
76.188.354-2
COMPAÑÍA MINERA LA MERCED LTDA.
0.0000
100.0000
100.0000
100.0000
76.188.363-1
COMPAÑÍA MINERA LA SAN FRANCISCO S.A.
0.0000
100.0000
100.0000
100.0000
76.188.378-K
COMPAÑÍA MINERA SIERRA NORTE S.A.
0.0000
100.0000
100.0000
100.0000
96.657.900-5
CONTROLADORA DE PLAGAS FORESTALES S.A.
0.0000
57.8731
57.8731
57.8731
76.037.857-7
ELECTRICA RIO PEREZ LIMITADA.
0.0000
50.0000
50.0000
50.0000
76.037869-0
EQUIPOS MINEROS RIO GRANDE LTDA
0.0000
50.0000
50.0000
50.0000
76.068.320-5
ESTUDIOS Y DESARROLLOS DE GAS LTDA.
0.0000
99.0575
99.0575
99.0575
85.805.200-9
FORESTAL CELCO S.A.
0.0000
99.9779
99.9779
99.9779
93.838.000-7
FORESTAL CHOLGUAN S.A.
0.0000
98.2086
98.2086
98.2086
78.049.140-K
FORESTAL LOS LAGOS S.A.
0.0000
79.9823
79.9823
79.9823
76.242.018-K
FORESTAL Y GANADERA ESTANCIA INVIERNO S.A.
0.0000
50.0000
50.0000
76.107.630-2
GAS LICUADO MOTOR LTDA.
0.0000
99.0575
99.0575
99.0575
77.660.290-6
INMOBILIARIA CONO SUR CHILE LTDA.
0.0000
100.0000
100.0000
100.0000
85.759.000-7
INMOBILIARIA LAS SALINAS LTDA.
0.0000
100.0000
100.0000
100.0000
76.266.718-5
INVERSIONES ADES LIMITADA.
0.0000
100.0000
100.0000
100.0000
76.271.536-8
INVERSIONES ADG LIMITADA
0.0000
100.0000
100.0000
100.0000
96.563.550-5
INVERSIONES ARAUCO INTERNACIONAL
0.0000
99.9779
99.9779
99.9779
76.320.907-5
INVERSIONES CAN CAN S.A.
100.0000
0.0000
100.0000
100.0000
76.264.416-9
INVERSIONES CIMOL LIMITADA
0.0000
100.0000
100.0000
100.0000
70.037.855-0
INVERSIONES LAGUNA BLANCA S.A.
0.0000
76.306.362-3
INVERSIONES NUEVA SERCOM LIMITADA.
79.990.550-7
INVESTIGACIONES FORESTALES BIOFOREST S.A.
76.456.800-1
MINA INVIERNO S.A.
76.160.625-5
MINERA CAMINO NEVADO LTDA.
76.425.390-6
99.9779
50.0000
50.0000
50.0000
50.0000
99.9740
0.0260
100.0000
100.0000
0.0000
99.9779
99.9779
99.9779
0.0000
50.0000
50.0000
50.0000
99.9986
0.0014
100.0000
100.0000
MINERA GELEEN S.A.
0.0000
50.0000
50.0000
50.0000
96.919.150-4
MINERA INVIERNO S.A.
0.0000
50.0000
50.0000
50.0000
96.929.960-7
ORIZON S.A.
0.0000
66.8000
66.8000
66.8000
96.768.760-K
PANELES ARAUCO S.A.
0.0000
99.9779
99.9779
99.9779
91.123.000-3
PESQUERA IQUIQUE-GUANAYE S.A.
50.2180
31.7150
81.9330
81.9330
76.037.864-K
PORTUARIA OTWAY LIMITADA.
0.0000
50.0000
50.0000
50.0000
76.038.858-5
PRODUCCIÓN Y SERVICIOS MINEROS LTDA.
0.0000
50.0000
50.0000
50.0000
76.037.872-0
RENTAS Y CONSTRUCCIONES FITZ ROY LIMITADA.
0.0000
50.0000
50.0000
50.0000
96.637.330-K
SERVICIOS LOGISTICOS ARAUCO S.A.
0.0000
99.9779
99.9779
78.953.900-6
SERVICIOS Y TRANSPORTES SETRACOM LTDA.
1.0000
98.0576
99.0576
99.0576
77.090.440-4
SOCIEDAD CONTRACTUAL MINERA VILACOLLO
0.0000
100.0000
100.0000
100.0000
87.635.000-9
SOCIEDAD EDIFICIO DON CRESCENTE LIMITADA.
0.0000
50.0000
50.0000
81.095.400-0
SOCIEDAD NACIONAL DE OLEODUCTOS S.A.
0.0000
52.6857
52.6857
52.6857
79.904.920-1
TRANSPORTES DE COMBUSTIBLES CHILE LTDA.
0.0000
100.0000
100.0000
100.0000
79.874.200-0
VIA LIMPIA S.P.A.
0.0000
100.0000
100.0000
100.0000
0-E
AGENCIAMIENTO Y SERV. PROFESIONALES S.A.
0.0000
99.9779
99.9779
99.9779
0-E
ALTO PARANA S.A. (ARGENTINA)
0.0000
99.9589
99.9554
99.9554
0-E
ARAUCO AUSTRALIA S.A.
0.0000
99.9779
99.9779
99.9779
0-E
ARAUCO COLOMBIA
0.0000
99.9779
99.9779
99.9779
0-E
ARAUCO DO BRASIL
0.0000
99.9779
99.9779
99.9779
0-E
ARAUCO FLORESTAL ARAPOTI S.A.
0.0000
79.9823
79.9823
79.9823
0-E
ARAUCO PERU S.A.
0.0000
99.9779
99.9779
99.9779
0-E
ARAUCO WOOD PRODUCTS INC (USA)
0.0000
99.9779
99.9779
99.9779
0-E
ARAUCOMEX S.A. DE C.V.
0.0000
99.9779
99.9779
99.9779
0-E
CAMPAÑIA DE TRASPORTES DE COLOMBIA S.A.
0.0000
50.5145
50.5145
50.5145
0-E
CATAN EMPRENDIMENTOS E PARTICIPACOES S.A.
0.0000
99.9712
99.9712
99.9712
0-E
CENTRO NACIONAL DE REPARACIÓN COLGAS S.A.
0.0000
50.5145
50.5145
50.5145
0-E
COLGAS DE OCCIDENTE S.A. ESP.
0.0000
50.5145
50.5145
50.5145
0-E
COMERCIAL INDUSTRIAL NACIONAL S.A.
0.0000
50.5145
50.5145
0-E
COMPAÑIAS ASOCIADAS DE GAS S.A. ESP ASOGAS
0.0000
50.5145
50.5145
50.5145
0-E
COPEC CANAL INC.
0.0000
100.0000
100.0000
100.0000
0-E
COPEC INTERNATIONAL INC.
100.0000
0.0000
100.0000
100.0000
0-E
COPEC INVESTMENTS LTD.
0.0000
100.0000
100.0000
100.0000
0-E
EC INVESTRADE INC. (PANAMA)
100.0000
0.0000
100.0000
100.0000
0-E
EMPRENDIMENTOS FLORESTAIS SANTA CRUZ Ltda.
0.0000
99.9577
99.9577
99.9577
0-E
FLAKEBOARD AMERICA LTD.
0.0000
99.9775
99.9775
99.9775
0-E
FLAKEBOARD COMPANY LTD.
0.0000
99.9775
99.9775
99.9775
0-E
FORESTAL NUESTRA SEÑORA DEL CARMEN S.A.
0.0000
99.9592
99.9592
99.9592
0-E
FORESTAL TALAVERA S.A.
0.0000
99.9730
99.9730
99.9730
0-E
GASAN DE COLOMBIA S.A. ESP.
0.0000
50.5145
50.5145
50.5145
0-E
GASES DE ANTIOQUIA S.A. ESP.
0.0000
50.5145
50.5145
50.5145
0-E
GASES DE SANTANDER S.A. ESP.
0.0000
50.5145
50.5145
50.5145
0-E
GREENAGRO S.A
0.0000
99.9597
99.9597
99.9597
0-E
INVERSIONES DEL NORDESTE S.A.S.
0.0000
50.5145
50.5145
50.5145
0-E
LEASING FORESTAL S.A.
0.0000
99.9589
99.9589
99.9589
0-E
LODGE BUSINESS INC.
0.0000
99.0481
99.0481
99.0481
0-E
MAHAL EMPRENDIMENTOS E PARTICIPACOES S.A.
0.0000
99.9710
99.9710
99.9710
0-E
NORTESANTANDEREANA DE GAS S.A. ESP
0.0000
50.4749
50.4749
50.4749
0-E
ORGANIZACIÓN TERPEL S.A.
0.0000
58.8895
58.8895
58.8895
0-E
PROENERGIA
0.0000
98.2400
98.2400
98.2400
0-E
SAVITAR S.A.
0.0000
99.9629
99.9629
99.9629
0-E
SOCIEDAD DE INVERSIONES EN ENERGÍA S.A.
0.0000
66.2499
66.2499
66.2499
99.9779
50.0000
50.5145
109
The financial information of the main affiliates is presented in Note N° 29 (Segments).
Included in the consolidation process are the affiliates informed in table before and the fund investment company Bio Bio
and her affiliate Forestal Rio Grande S.A.
The main operations of purchase and sale of shares, capital increases mergers and related divisions are related with the
following affiliates.
Merger and acquisitions of forestry companies
For the purpose of continuing to optimize processes and adopt the best practices within the Forestry Business'
operations, the companies mentioned above have been integrated through a gradual process of mergers. Said task
began with the integration of companies Bosques Arauco S.A. and Forestal Valdivia S.A. which, with the prior approval of
their respective shareholders, merged as of July 1, 2013, operating under the name Forestal Valdivia S.A.
On that same date, Forestal Arauco S.A. was split-off, creating a new entity called Forestal Viñales S.A., to which shares
in Forestal Celco S.A. were contributed.
As of September 1, 2013, Forestal Arauco S.A. merged and absorbed Forestal Valdivia S.A., a transaction which
generated a tax gain (Income Tax Act, Article 31, No. 9), of ThUS.$99,437, and resulted in a deferred tax asset of ThUS.$
19,887.
On November 1, 2013, Celulosa Arauco y Constitución S.A. absorbed Forestal Viñales S.A., generating, as a result of the
transaction, a capital increase of MUS$442 equal to 7,209 shares, corresponding to Empresas Copec S.A.’s participation.
On December 1 of 2013, the new Forestal Arauco S.A. was merged with Forestal Celco S.A., thus resulting in most of
Arauco’s foresty assets to be grouped under a single entity. With this merger the unification process for Chile’s main
forestry companies was concluded.
This restructuration was registered as transaction common under control.
The group initially recognized the acquisition of Flakeboard Company Limited in 2012 based on the information available
to date, and made a preliminary calculation of the allocation of fair values in the acquisition of that company. At December
2013 year-end the company completed the calculation of fair values of the assets acquired and liabilities assumed. This
involved a restatement of the financial statements at December 31, 2012 in accordance with IFRS 3. This restatement
involved a reallocation of assets acquired and liabilities assumed.
110
We present below the fair values at the date of acquisition of the assets and liabilities acquired in the year 2012 whose
final fair value was calculated in the year 2013:
Arauco Panels Canada ULC. (Actual Arauco Company Ltd.)
09.24.2012
ThUS$
Cash
Trade receivables
Inventory
Intangible assets
Goodwill
Other assets
52,427
38,089
44,444
222,083
84,300
40,477
8,527
Total assets
490,347
Current and non-current liabilities
Trade payables
Deferred taxes
Other liabilities
189,129
47,434
11,282
0
Total liabilities
247,845
The purchase of net assets made by Arauco, generated a negative goodwill that is presented in the Income Statement by
function under Other gains (losses) and is exposed in the next table:
Arauco Panels Canada ULC
Income ordinary activities
Results
09.24.2012 on 12.31.2012
ThUS$
131,094
(5,558)
The following are the revenue from ordinary activities and the results recognized as if the acquisition date had been the
beginning of the annual period of investment in Arauco Panels Canada ULC (currently, Flakeboard Company Ltd.):
Arauco Panels Canada ULC
Income ordinary activities
Results
January - December 2012
ThUS$
518,071
4,711
111
The detail of recorded valuacion is the following:
ThUS$
Fair value of net assets acquired calculating the acquisition date.
Value of consideration provided at the beginning
242,502
242,502
Proportionate goodwill calculated at December 31, 2012
Adjustment of fair values of net acquired assets
Goodwill at the end of the valuation period
40,477
40,477
On March 27, 2014, Servicios Aéreos Forestales Ltda. was formed with the contributions to be paid by Inversiones
Arauco Internacional Ltda. for MUS$25.997.4 and from Celulosa Arauco y Constitución S.A. for MUS$2.6. This society
main purpose is to provide passenger and cargo air transportation, forest patrolling, photography, publicity, and magnetic
prospection services with their own or third parties’ aircraft, and carrying out aircraft maintenance.
On January 1, 2013, the society Arauco Panels Canada ULC merged with its subsidiary Flakeboard Company Ltd. with
no effects on income resulting from this operation.
To September 30, 2014 and December 31, 2013 there are no associated investments to report.
Disposal of companies - fuel sector
On June 27, 2013, the operating investments of Grupo Terpel Chile, Petróleos Trasandinos S.A. (Petrans) and
Operaciones y Servicios Terpel Ltda. (Opese), companies whose assets and liabilities at December 31, 2012 were
classified as held for sale, were sold. The operation meant transferring 100% of the ownership of those Companies to the
Quiñenco Group, which acted as buyer, for ThUS$ 239,439, with Organización Terpel Chile S.A. retaining an equity of
ThUS$ 2, so as to be able to continue as a going concern. As a result of this transaction, a gain of ThUS$ 25,932 was
recorded in profit or loss, under gains from discontinued operations in the consolidated statement of comprehensive
income.
Terpel restructuring in Colombia
As a result of the merger process through absorption where Organización Terpel S.A absorbed the societies Terpel del
Centro S.A., Sociedad de Inversiones de Energía S.A., and Proenergía Internacional S.A., ordinary shares were
registered in the Colombia Stock Exchange under the mnemonic Terpel.
The issuance was authorized by Colombia Financial Superintendence through Decision N° 1418.
112
Splits and mergers of companies - real estate sector
On April 1, 2013, Management agreed to split Servicios de Combustibles Limitada. This split meant creating Sociedad
Inversiones Nueva Sercom Limitada, a company to which were allocated mainly the investments in companies owned by
Servicios de Combustibles Limitada.
On November 30, 2013, Sercom took over Inmobiliaria Viña Norte Ltda. and its affiliates, with the latter being
extinguished and dissolved. The takeover implied a capital increase and change of the firm name to Inmobiliaria Las
Salinas Ltda.
Inmobiliaria Las Salinas Ltda. (formerly Sercom) will be the company in charge of designing and drawing up the Master
Plan for the 17 hectare plot of land where the fuel storage plants will be located opposite Las Salinas beach.
Acquisitions of companies - fishing sector
Under the Shareholders’ Agreement of Orizon S.A., on June 25, 2013, Sociedad Pesquera Coloso S.A. exercised the
option to sell 20% of its interest, 16.7% of which was sold to Pesquera Iquique-Guanaye S.A. and 3.3% to Empresa
Pesquera Eperva S.A.
Coloso set the price of sale at US$ 53.9 million, while Igemar and Eperva calculated it at US$ 39.1 million. This difference
has given rise to an arbitration process between the parties.
On September 24, 2013, the transfer of shares was entered into for US$ 39.1 million, which is the undisputed part of the
price of the option exercised, with Igemar receiving US$ 32.7 million for 16.7%.
The effect of this transaction meant an increase of US$ 28.7 million in the equity reserve accounts.
113
b)
The ownership interest of Grupo Empresas Copec S.A. in its main associates is the following:
As of Septiembre 30, 2014
Name
Taxpayer ID
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
70.037.855-0
76.037.858-5
76.037.869-0
76.037.872-0
76.077.468-5
76.122.974-5
76.242.018-K
76.307.309-2
76.349.706-2
76.384.550-8
76.456.800-1
76.659.730-0
76.743.130-9
0-E
82.040.600-1
82.777.100-7
87.635.000-9
89.696.400-3
92.387.000-8
96.635.700-2
96.636.520-K
96.722.460-K
96.785.680-0
96.893.820-7
96.925.430-1
96.942.120-8
96.953.090-2
Vale do Corisco S.A.(ex Centaurus Holding Brasil)
Vale do Corisco
Novo Oeste Gestao de Ativos Florestais S.A.
Montagas S.A. ESP
Energas S.A. ESP
PGN Gasnorte S.A.C
PGN Gasur S.A.C
Inversiones Laguna Blanca S.A
Producción y servicios Mineros Ltda.
Equipos Mineros Río Grande Ltda.
Rentas y Construcciones Fritz Roy Ltda
Consorcio Tecnológico Bionercel S.A.
Algae Fuels S.A.
Forestal y Ganadera Estancia Invierno S.A.
Hualpén Gas S.A.
Mina Invierno S.A.
Elemental S.A.
Genómica Forestal S.A.
Peruana de Gas S.A.
Eka Chile S.A.
Pesquera Landes S.A.
Metrogas S.A.
Inversiones Puerto Coronel S.A.
Corpesca S.A.
AIR BP Copec S.A.
Boat Parking S.A.
Country of
Constitution
Brazil
Brazil
Brazil
Colombia
Colombia
Colombia
Colombia
Brasil
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Perú
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Functional Currency
Cost of
Investment in Associates
ThUS$
Brazilian real
Dollar
Brazilian real
Colombian peso
Colombian peso
Colombian peso
Colombian peso
Brazilian real
Dollar
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Dollar
Dollar
Dollar
Chilean peso
Chilean peso
Peruvian peso
Chilean peso
Dollar
Chilean peso
Chilean peso
Chilean peso
Dollar
Chilean peso
Chilean peso
Dollar
Dollar
Chilean peso
Chilean peso
Chilean peso
TOTAL
Income
ThUS$
185.854
28.300
0
3.302
894
1.095
900
4.339
23.425
3
-13
-5
143
1.034
9
5.490
1.275
5.428
53
281
52
0
2.668
69.516
0
22.279
0
0
25.379
181.404
39.218
132.775
0
5.140
1.083
14.488
650
(9.607)
14
653
155
199
63
(14.604)
3
(7)
(3)
(87)
(121)
0
721
599
(5.879)
(10)
(46)
(7)
0
1.085
40
0
861
0
11.250
11.407
56.426
647
2.616
(450)
361
2
741.321
71.419
Ownership
Interest
%
43,0500
20,0000
48,9999
33,3330
27,7000
25,0000
25,0000
49,9890
50,0000
0,0100
0,0100
0,0100
20,0000
25,0000
14,3890
50,0000
50,0000
30,0000
0,1000
40,0000
25,0000
50,0000
33,3333
23,1588
50,0000
50,0000
66,6300
25,0000
29,0000
39,8297
50,0000
30,6400
20,0000
50,0000
21,3600
Taxpayer ID
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
70.037.855-0
76.037.858-5
76.037.864-K
76.037.869-0
76.037.872-0
76.077.468-5
76.122.974-5
76.242.018-K
76.307.309-2
76.384.550-8
76.456.800-1
76.659.730-0
76.743.130-9
82.040.600-1
82.777.100-7
92.387.000-8
96.519.150-4
96.635.700-2
96.635.700-2
96.636.520-K
96.722.460-K
96.785.680-0
96.893.820-7
96.925.430-1
96.942.120-8
96.953.090-2
87.635.000-9
Name
Vale do Corisco S.A.(ex Centaurus Holding Brasil)
Vale do Corisco
Novo Oeste Gestao de Ativos Florestais S.A.
Montagas S.A. ESP
Energas S.A. ESP
Gas Mocoa S.A. ESP
PGN Gasnorte S.A.C
PGN Gasur S.A.C
Inversiones Laguna Blanca S.A
Producción y servicios Mineros Ltda.
Inversión Portuaria Otway Ltda.
Equipos Mineros Río Grande Ltda.
Rentas y Construcciones Fritz Roy Ltda
Consorcio Tecnológico Bionercel S.A.
Algae Fuels S.A.
Forestal y Ganadera Estancia Invierno S.A.
Mina Invierno S.A.
Elemental S.A.
Genómica Forestal S.A.
Pesquera Landes S.A.
Minera Invierno S.A.
Eka Chile S.A.
Metrogas S.A.
Inversiones Puerto Coronel S.A.
Corpesca S.A.
AIR BP Copec S.A.
Boat Parking S.A.
TOTAL
Country of
Constitution
Brazil
Brazil
Brazil
Colombia
Colombia
Colombia
Colombia
Colombia
Brazil
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Functional Currency
Brazilian real
Dollar
Brazilian real
Colombian peso
Colombian peso
Colombian peso
Colombian peso
Colombian peso
Brazilian real
Dollar
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Dollar
Dollar
Chilean peso
Chilean peso
Chilean peso
Dollar
Chilean peso
Dollar
Dollar
Chilean peso
Chilean peso
Chilean peso
Dollar
Dollar
Chilean peso
Chilean peso
Chilean peso
Chilean peso
Cost of
Investment in Associates
ThUS$
186.628
31.753
0
757
3.595
993
803
0
4.467
26.225
(1)
0
(11)
(2)
345
1.060
10
4.769
11.553
50
370
113
2.208
73.928
325
0
160.497
22.976
24.705
232.458
38.522
134.742
324
5.578
1.153
0
970.893
Income
ThUS$
7.648
731
(6.171)
896
17
0
123
43
(536)
(3.570)
7
0
(3)
0
(20)
1.283
(1)
84
(3.569)
(14)
(32)
(5)
(229)
1.632
0
(15)
13.088
979
13.676
76.431
155
3.637
(59)
602
(12)
0
Ownership
Interest
%
43,05000
20,00000
48,99990
33,33300
27,70000
33,33300
25,00000
25,00000
49,98900
50,00000
0,01000
0,01000
0,01000
0,01000
20,00000
25,00000
14,38900
50,00000
30,00000
0,10000
40,00000
25,00000
33,33330
23,15879
66,63000
23,46000
25,00000
50,00000
29,00000
39,82970
50,00000
30,64000
20,00000
50,00000
21,36000
50,00000
106.796
114
Summarized financial information of associates:
Assets
ThUS$
c)
09.30.2014
Liabilities
ThUS$
Assets
ThUS$
12.31.2013
Liabilities
ThUS$
Current of associates
Non-current of associates
1,077,337
4,235,129
891,239
1,985,506
1,153,742
4,635,393
671,967
1,813,201
Total of associates
5,312,466
2,876,745
5,789,135
2,485,168
09.30.2014
ThUS$
09.30.2013
ThUS$
Operating revenues of associates
Operating expenses of associates
2,721,564
(2,446,034)
2,861,987
(2,594,061)
Net income (loss) of associates
275,530
267,926
Movements in investments in associates
09.30.2014
ThUS$
Investment in associates accounted for using the equity method - opening
balance
12.31.2013
ThUS$
970,893
1,034,040
Additions, investments in associates and joint ventures
Disposals, investments in associates
Immediately recognized purchased negative goodwill
Profits from the incorporation of joint ventures
Share in operating income (loss)
Share in entries from previous periods
Dividends received
Impairment
Reversal of impairment
Increase (decreases) in foreign currency exchange
219
(170,117)
0
0
71,419
0
(74,424)
0
0
(33,580)
(23,677)
588
10,896
(5)
0
0
122,394
0
(135,612)
0
0
(83,213)
24,107
(1,714)
Total changes in investments in associates
Ending balance
(229,572)
741,321
(63,147)
970,893
Sale of investment in Guacolda
On March 28, 2014 the company informed the Superintendency of Securities and Insurance the acceptance by AES
Gener S.A. ("AES") of the sales bid jointly remitted by Empresas Copec and Ultraterra for 50% of total shares issued by
Guacolda.
The total selling price was US$ 728,000,000 distributed 50% for Empresas Copec and 50% for Ultraterra. That price was
paid on April 11, 2014.
115
d)
Interest in joint ventures
- The Group has a 50% interest in the joint venture, Eka Chile S.A., which sells sodium chlorate to pulp mills in Chile. The
Group holds a contractual agreement with this company in which the affiliate Celulosa Arauco y Constitución S.A. has
undertaken economic activity subject to joint control.
As of the closing of these financial statements, Arauco has committed to "Montes del Plata" in capital contributions 8.9
million Euros (equivalent to US $11.2 millions) and US $24 millions in loans.
- As of September 30, 2014, Arauco, through its subsidiary Arauco Holanda Cooperatief U.A, made capital contributions
for a total of ThUS$ 16,427 (ThUS$ 103,196 as of December 31, 2013) to two Uruguay joint arrangements, Celulosa y
Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A., with Arauco holding 50% ownership interest in the joint
arrangement. This transaction had no effect on the consolidated statement of income.
The above contributions are both involved in the project known as “Montes del Plata”, the purpose of which is to build a
cutting edge cellulose production plant, with a capacity of 1.3 million tons per year, a port and an energy generation unit
utilizing renewable resources, which is located at the town of Punta Pereira, Province of Colonia, Uruguay.
- Investments in Uruguay are joint operations because of existing contracts that stipulate that both Arauco and Stora Enso
maintain joint control of such investments, and since there is a contractual commitment of the sale of the entire pulp
production to be generated from the future plant to Arauco and Stora Enso in the proportion each entity’s 50% ownership
interest. Arauco has recognized the assets, liabilities, income and expenses relating to its ownership percentage from
January 1, 2012, in accordance with IFRS11.
- In addition, the Group holds an interest in Air BP Copec S.A. This company is the result of a joint venture established in
2001 between Copec and BP Global Investments Ltd., in which each partner holds a 50% interest. The company sells
fuel for commercial and civil aviation. Currently, Air BP Copec operates in eight airports throughout the country and holds
the leading market share in Chile, supplying the fuel needs of LAN Chile and international airlines arriving in Santiago,
such as American Airlines, Aerolíneas Argentinas, Delta, Varig, Avianca and Pluna, among others. The company also
serves important consumers in the cargo air industry such as Polar Cargo and Cielos Airlines and numerous civil aviation
customers.
- Through the new affiliate Camino Nevado Limitada, the Company has a 50% interest in Inversiones Laguna Blanca S.A.
This company is the result of a strategic alliance initiated in 2007 split equally between Empresas Copec and Inversiones
Ultraterra. The company’s purpose is to develop a coal exploration and production project in Isla Riesco, located north of
Punta Arenas, in Chile’s Magallanes Region. In 2007 Minera Invierno S.A. was awarded tender by CORFO to explore
with the option to purchase two coalfields located on the island, where the largest known proven sub-bituminous coal
reserves are found.
The operations started in 2013. The production was about 2 million tons. The main destinations of Mina Invierno's
production include the power plant industry in Chile.
There are no contingent liabilities corresponding to the Group’s interest in joint ventures.
116
The most significant joint ventures are outlined below:
a) Eka Chile S.A.
09.30.2014
ThUS$
12.31.2013
ThUS$
25,267
28,930
26,596
29,853
54,197
56,449
4,811
4,827
44,559
6,541
3,957
45,951
54,197
56,449
09.30.2014
ThUS$
09.30.2013
ThUS$
38,083
(36,362)
44,675
(42,717)
1,721
1,958
09.30.2014
ThUS$
12.31.2013
ThUS$
35,388
13,728
52,052
16,281
49,116
68,333
30,403
4,443
14,270
47,851
5,779
14,703
49,116
68,333
09.30.2014
ThUS$
09.30.2013
ThUS$
364,766
(363,332)
547,994
(545,915)
1,434
2,079
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
Net income (loss) from joint ventures
b) Air BP Copec S.A.
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
117
c) Inversiones Laguna Blanca S.A.
09.30.2014
ThUS$
12.31.2013
ThUS$
149,405
613,654
134,136
621,626
763,059
755,762
96,572
619,026
47,461
122,246
580,971
52,545
763,059
755,762
09.30.2014
ThUS$
09.30.2013
ThUS$
102,712
(125,390)
26,232
0
(22,678)
26,232
09.30.2014
ThUS$
12.31.2013
ThUS$
143,189
647,549
131,068
682,695
790,738
813,763
387,622
31,315
371,801
383,978
35,852
393,933
790,738
813,763
09.30.2014
ThUS$
09.30.2013
ThUS$
92,841
(110,202)
38,497
(39,382)
(17,361)
(885)
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
d) Eufores S.A.
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
118
e) Forestal Cono Sur S.A.
09.30.2014
ThUS$
12.31.2013
ThUS$
24,027
169,301
14,180
172,540
193,328
186,720
23,135
2,813
167,380
14,127
2,076
170,817
193,328
187,020
09.30.2014
ThUS$
09.30.2013
ThUS$
1,080
(1,958)
39,040
(2,042)
(878)
36,998
09.30.2014
ThUS$
12.31.2013
ThUS$
95,743
2,209,441
63,009
2,003,894
2,305,184
2,066,903
579,058
1,059,181
666,945
292,869
1,109,329
665,705
2,305,184
2,067,903
09.30.2014
ThUS$
09.30.2013
ThUS$
4,672
(32,868)
3,386
(16,919)
(28,196)
(13,533)
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
f) Celulosa y Energía Punta Pereira S.A.
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
119
g) Zona Franca Punta Pereira S.A.
09.30.2014
ThUS$
12.31.2013
ThUS$
7,413
436,837
20,179
382,859
444,250
403,038
167,844
85,801
190,605
129,029
87,451
186,558
444,250
403,038
09.30.2014
ThUS$
09.30.2013
ThUS$
10,291
(6,244)
3,203
(3,327)
4,047
(124)
09.30.2014
ThUS$
12.31.2013
ThUS$
11,381
5,447
8,548
5,173
16,828
13,721
8,144
71
8,613
4,753
33
8,935
16,828
13,721
09.30.2014
ThUS$
09.30.2013
ThUS$
6,243
(6,115)
5,241
(6,313)
128
(1,072)
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
h) Unillin Arauco Pisos Ltda.
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Equity
Total liabilities
Income
Expenses
120
NOTE 20. LOCAL AND FOREIGN CURRENCY
Foreign Currency: Assets
09.30.2014
ThUS$
Liquid assets
12.31.2013
ThUS$
2,124,876
1,668,543
U.S. dollar
Euro
Other currency
Non-indexed Chilean peso
U.F.
1,594,937
7,814
187,524
334,593
8
927,131
4,688
222,833
513,883
8
1,954,361
1,508,139
U.S. dollar
Euro
Other currency
U.F.
1,529,242
7,814
185,994
231,303
8
923,836
4,688
222,833
356,774
8
170,515
160,404
65,695
0
1,530
103,290
0
3,295
0
0
157,109
0
2,128,911
2,033,646
790,669
38,574
402,133
886,803
10,732
580,083
33,078
348,340
1,064,582
7,563
1,791,744
1,842,747
594,086
38,574
374,238
774,114
10,732
547,248
33,078
344,681
912,210
5,530
330,900
184,725
195,764
0
27,895
107,241
0
32,002
0
3,659
147,031
2,033
6,267
6,174
819
0
0
5,448
0
833
0
0
5,341
0
18,338,862
18,666,121
12,563,148
11,268
3,055,981
2,708,040
425
12,828,742
9,440
3,034,965
2,787,112
5,862
22,592,649
22,368,310
14,948,754
57,656
3,645,638
3,929,436
11,165
14,335,956
47,206
3,606,138
4,365,577
13,433
Other current financial assets
U.S. dollar
Euro
Other currency
U.F.
Short- and long-term receivables
U.S. dollar
Euro
Other currency
U.F.
Current trade and other receivables
U.S. dollar
Euro
Other currency
U.F.
Current receivables from related parties
U.S. dollar
Euro
Other currency
U.F.
Non-current receivables from related parties
U.S. dollar
Euro
Other currency
U.F.
Other assets
U.S. dollar
Euro
Other currency
U.F.
Total assets
U.S. dollar
Euro
Other currency
U.F.
121
Foreign Currency: Liabilities
09.30.2014
ThUS$
Up to 90 days
91 days to 1 year
12.31.2013
ThUS$
Up to 90 days
91 days to 1 year
Current liabilities
Other current financial liabilities
U.S. dollar
Euro
Other currency
U.F.
Bank loans
U.S. dollar
Euro
Other currency
U.F.
Capital leases
U.S. dollar
Euro
Other currency
U.F.
Bank overdrafts
U.S. dollar
Euro
Other currency
U.F.
Other loans
U.S. dollar
Euro
Other currency
U.F.
Other current liabilities
U.S. dollar
Euro
Other currency
U.F.
U.S. dollar
Euro
Other currency
U.F.
266,563
990,716
550,582
699,351
192,798
0
15,512
3,231
55,022
677,385
0
212,090
70,628
30,613
365,109
0
83,475
3,231
98,767
465,369
0
95,493
65,041
73,448
234,098
534,343
401,085
652,229
186,043
0
14,847
1,452
31,756
254,429
0
210,282
69,632
0
315,835
0
82,675
2,515
60
459,819
0
93,658
64,155
34,597
8,291
23,696
7,923
21,721
47
0
665
288
7,291
50
0
1,808
830
21,008
15
0
800
168
6,940
107
0
1,835
886
18,893
1,491
0
548
0
0
0
0
1,491
0
0
0
0
0
0
0
0
0
548
0
0
0
0
0
0
22,683
432,677
141,026
25,401
6,708
0
0
0
15,975
422,906
0
0
166
9,605
49,259
0
0
0
91,767
5,443
0
0
0
19,958
1,754,202
408,570
1,838,364
309,472
505,818
55,644
417,813
763,361
11,566
329,750
0
0
75,811
3,009
491,107
12,342
419,964
875,342
39,609
119,780
0
205
184,124
5,363
2,020,765
1,399,286
2,388,946
1,008,823
698,616
55,644
433,325
766,592
66,588
1,007,135
0
212,090
146,439
33,622
856,216
12,342
503,439
878,573
138,376
585,149
0
95,698
249,165
78,811
122
09.30.2014
ThUS$
13 months to 5
More than 5 years
years
12.31.2013
ThUS$
13 months to 5
More than 5 years
years
2,499,591
3,468,599
2,399,281
3,463,216
U.S. dollar
Euro
Other currency
U.F.
2,058,483
0
127,158
204,146
109,804
1,625,201
0
485,691
119,711
1,237,996
2,033,000
0
58,792
248,071
59,418
1,714,487
0
500,101
136,432
1,112,196
Bank loans
1,391,440
479,377
1,546,104
586,770
U.S. dollar
Euro
Other currency
U.F.
1,073,214
0
116,311
201,492
423
251,222
0
108,197
119,711
247
1,242,753
0
58,348
244,771
232
335,431
0
114,318
136,432
589
Capital leases
69,735
10,540
62,934
23,221
U.S. dollar
Euro
Other currency
U.F.
2
0
10,847
2,654
56,232
309
0
10,231
0
0
4
0
444
3,300
59,186
29
0
23,192
0
0
Bank overdrafts
0
0
0
0
U.S. dollar
Euro
Other currency
U.F.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,038,416
2,978,682
790,243
2,853,225
U.S. dollar
Euro
Other currency
U.F.
985,267
0
0
0
53,149
1,373,670
0
367,263
0
1,237,749
790,243
0
0
0
0
1,379,027
0
362,591
0
1,111,607
Other non-current liabilities
2,107,235
542,169
1,671,056
617,158
U.S. dollar
Euro
Other currency
U.F.
1,571,783
0
303,809
230,443
1,201
193,756
0
0
14,568
333,845
1,196,385
0
294,982
178,367
1,322
216,692
0
21,135
11,930
367,401
4,606,826
4,010,768
4,070,337
4,080,374
3,630,266
0
430,967
434,589
111,005
1,818,957
0
485,691
134,279
1,571,841
3,229,385
0
353,774
426,438
60,740
1,931,179
0
521,236
148,362
1,479,597
Other non-current financial liabilities
Other loans
U.S. dollar
Euro
Other currency
U.F.
123
NOTE 21. SHARES
The following is a the movement of share in cash period:
No. Shares
Ordinary Shares
Own Shares
Total
As of January 1, 2014
Capital expansion
Acquisition of dependent
Purchase of own shares
1,299,853,848
-
1,299,853,848
-
-
1,299,853,848
-
Balance as of September 30, 2014
1,299,853,848
1,299,853,848
-
1,299,853,848
No. Shares
Ordinary Shares
Own Shares
Total
As of January 1, 2013
Capital expansion
Acquisition of dependent
Purchase of own shares
1,299,853,848
-
1,299,853,848
-
-
1,299,853,848
-
Balance as of September 30, 2013
1,299,853,848
1,299,853,848
-
1,299,853,848
NOTE 22. NET DISTRIBUTABLE INCOME AND EARNINGS PER SHARE
The Board of Directors of Empresas Copec S.A. agreed to establish as a general policy that net income to be distributed
for the payment of dividends shall be determined on the basis of earned income, subtracting any significant variations in
the value of unrealized assets and liabilities, which are reintegrated into the calculation of net income for the period in
which these variations are realized.
As a result, for the purposes of determining the Company’s net distributable income, that is, the net income to consider in
the calculation of the mandatory minimum and additional dividends, the following categories of unearned income are not
included in income for the period:
1.
Income related to the recording at fair value of forestry assets regulated by IAS 41; such income is reintegrated into
net income upon realization. For this purpose, the portion of such increases in fair value corresponding to sold or
disposed of assets is considered realized.
2.
Income generated in the acquisition of entities. These results will be reintegrated into net income upon realization.
For this purpose, income generated by the entities following their acquisition, or when these entities are divested, is
considered realized.
124
The effects of deferred taxes associated with the items mentioned in points 1) and 2) will follow the same procedure as
the item that gave rise to them.
Distributable earnings
ThUS$
Concept
Income attributable to equity holders as of 09.30.2014
Adjustments
Biological assets
Unrealized
Realized
Deferred taxes
Deferred taxes, effect of the change in the rate of the initial balance of biological assets
Biological assets (net)
Income for incorporation of joint venture
Purchased negative goodwill and others
Total adjustments
Distributable earnings as of 09.30.2014
Concept
731,065
(197,347)
186,258
675
0
(10,414)
0
0
(10,414)
720,651
Distributable earnings
Income attributable to equity holders as of 09.30.2013
ThUS$
702,855
Adjustments
Biological assets
Unrealized
Realized
Deferred taxes
Deferred taxes, effect of the change in the rate of the initial balance of biological assets
Biological assets (net)
Income for incorporation of joint venture
Purchased negative goodwill and others
(200,653)
169,619
6,191
0
(24,843)
0
0
Total adjustments
(24,843)
Distributable earnings as of 09.30.2013
678,012
The general dividend policy that the Company expects to carry out in future periods consists of distributing 40% of
distributable net income for each period, including the possibility of an interim dividend at the end of the year.
As of September 30, 2014, in the classified Statement of Financial Position the amount of ThUS$ 288,924 under “Other
current liabilities” corresponded to the minimum dividend provision of 2014 first semester (MUS$270,017 to September
30, 2013).
In Ordinary Session No.79 held on April 23, 2014, the Board agreed to distribute a final dividend of US$ 0.126130 per
share, which was paid beginning on May 8, 2014.
In Ordinary Session No. 78 held on April 24, 2013, the Board agreed to distribute a final dividend of US$ 0.090779 per
share, which was paid beginning on May 8, 2013.
125
Earnings per share are calculated by dividing income attributable to the Company’s shareholders by the weighted
average of common shares in circulation; the Company does not record diluted shares.
Earnings (loss) per share
09.30.2014
ThUS$
Earnings (loss) attributable to net equity holders of parent company
Weighted average number of shares
09.30.2013
ThUS$
731,065
702,855
1,299,853,848
1,299,853,848
0.06
0.05
Earnings (loss) per share (US$ per share)
Rights, Privileges and Restrictions for Ordinary Share Capital Class:
For liabilities recorded under “Interest-bearing loans, the Parent Company must maintain a consolidated indebtedness
ratio no greater than 1.2; otherwise the debt under these contracts could become current. As of the reporting date, the
Group is in compliance with this restriction.
NOTE 23. OPERATING REVENUES
Operating Revenues are detailed as follows:
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
Sale of goods
Provision of services
Interest income
Royalty income
Dividend income
17,569,065
498,964
(170)
0
0
18,137,159
329,777
0
0
0
5,792,983
272,378
(170)
0
0
6,175,284
106,603
0
0
0
Total
18,067,859
18,466,936
6,065,191
6,281,887
126
NOTE 24. FINANCIAL INCOME AND EXPENSES
Financial expenses are detailed as follows:
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
Interest and readjustments for bank loans
Financial cost of post-employment obligations
Other financial costs
Interest expenses, others
Amortization of additional cost
Exchange losses from foreign currency loans
Financial cost of remediation provision
Difference conversion
(176,177)
(641)
(48,009)
(26,180)
0
0
0
(8)
(201,765)
(767)
(74,100)
(5,430)
0
0
0
(6)
(39,357)
(201)
(37,132)
(10,933)
0
0
0
(2)
(63,818)
(256)
(19,739)
(3,045)
0
0
0
0
Total financial costs
(251,015)
(282,068)
(87,625)
(86,858)
09.30.2014
ThUS$
09.30.2013
ThUS$
Income from interest on financial instruments
Income from financial assets at fair value through profit and loss
Interest on loans and receivables
Other income
5,028
0
25,981
6,070
17,284
0
14,375
4,386
(721)
0
7,265
3,681
4,389
0
5,071
963
Total financial income
37,079
36,045
10,225
10,423
Financial income is detailed as follows:
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
NOTE 25. EXCHANGE DIFFERENCES
The effect of Exchange differences is a follows:
09.30.2014
ThUS$
09.30.2013
ThUS$
Jul - Sep 2014
ThUS$
Jul - Sep 2013
ThUS$
(724)
(18,394)
(14,764)
(28,952)
(8,101)
(50,974)
(15,617)
2,757
(3,267)
(6,922)
(5,650)
(19,427)
9,833
(4,873)
2,647
(11,928)
(7,862)
(15,095)
(3,845)
(28,115)
(218)
705
(1,365)
1,257
2,621
2,691
1,023
(1,496)
(137,526)
(27,549)
(64,416)
5,436
32,966
(52)
45,864
1,794
2
27,726
5,652
(1,209)
9,822
(299)
34,896
(28,533)
9,644
(6,553)
19,705
1,389
4,353
10,105
(1,709)
(246)
1,411
(9)
(12,226)
5,105
Total
108,300
20,329
38,643
(7,674)
Total
(29,226)
(7,220)
(25,773)
(2,238)
Exchange differences generated by assets
Cash equivalent
Investments in mutual funds, short term deposits and pacts
Trade and other receivables
Tax receivables
Receivables from related parties
Other financial assets
Other assets
Total
Exchange differences generated by liabilities
Payables to related parties
Loans with financial institutions (include bonds)
Dividends to be paid
Other liabilities
127
NOTE 26. IMPAIRMENT OF ASSETS
1.
Affiliate Celulosa Arauco y Constitución S.A.
To September 30, 2014 and December 31, 2013 there is still a balance of impairment provision of machinery and
equipment of ThUS$ 688 due to the closure of the Plant Board lines Curitiba (Brazil) at the end of 2011.
In the period 2014, there are no new provisions for impairment associated cash generating units to inform.
Detail of asset impairment:
At September 30, 2014 and December 31, 2013, respectively under the following provisions of impairment asociateds to
cash generating units.
Disclosure of asset impairment
Principal classes of assets affected by impairment and reversion losses, for wich no individual
information is revealed
Principal facts and circumstances that lead to recongnizing impairment and reversion losses, for wich
no individual information is revealed
Machinery and equipment
Technical Obsolescense
09.30.2014
ThUS$
12.31.2013
ThUS$
4,793
5,386
Information relevant to the sum of all impairment
2.
Affiliate Pesquera Iquique – Guanaye S.A.
At December 2013 year-end the affiliate Orizon S.A. has a loss of ThUS$56,087, where ThUS$52,323 are the impairment
of certain assets related to Coquimbo, Coronel and San Vicente plants, within the scope of a restructuring in the the
human consumption area in such facilities, and ThUS$3,764 are the impairment of the goodwill related to the excess of
the purchase cost on the fair value of the interest of identifiable net assets of Pesquera San José.
The affiliate Orizon S.A. made an evaluation to identify any possible indication of impairment in its assets grouped in cash
generating units and also evaluated the intangible assets with indefinite useful life.
The company uses the future cash flow model. That methodology is based on reasonable and supportable assumptions
that represent the management's best estimates on the set of financial conditions that will be reflected during the
remaining useful life of assets and cash generating units evaluated.
At year-end September 2014 the company has not identified new impairment indications in its assets.
128
NOTE 27. RETAINED EARNINGS
09.30.2014
ThUS$
09.30.2013
ThUS$
Opening balance
Income (loss) for the period
Dividends paid
Interim dividends
Actuarial losses and gains
Other items
Exchange differences
9,475,164
731,065
0
(288,259)
0
(354,361)
0
9,021,679
702,855
0
(270,017)
0
(8,071)
0
Ending balance
9,563,609
9,446,446
NOTE 28. ENVIRONMENT
For Empresas Copec S.A., sustainability translates into a management strategy that incorporates values, commitments
and standards, together with adoption of the best practices and technologies available in the industry, seeking ongoing
improvement in the company’s environmental management. The Environment department, with its specialists in each
business area, ensures that these guidelines are put into practice in day-to-day operations.
All of the affiliate Arauco’s production units have certified environmental management systems that reinforce the
Company’s commitment to environmental performance and ensure the traceability of raw materials.
In its production processes, the affiliate Arauco uses various inputs, such as wood, chemicals, water, etc., which in turn
generate liquid and gaseous emissions. In an effort to improve the company’s operating efficiency, significant advances
have been made in reducing consumption and emissions.
Environmental investments were made related to atmospheric emission control, processes improvements, water
management, waste management and tributary treatments in order to improve environmental performance in business
units.
Expenditures incurred and committed during the period related to environmental protection are detailed below:
129
Forestry Sector
09.30.2014
Company
Project Name
Disbursements Made in 2014
Project
Status
Amount
ThUS$
Asset
Expense
Asset/Expense Entry
for Classification
Committed Future
Disbursements
Amount
Estimated
ThUS$
Date
Investment projects for the control and handling of gases in industrial plants
In progress
5,226 Asset
588
2014
Investment projects for the control and handling of liquids and energy
optimization of water in industrial plants
In progress
6,208 Asset
4,575
2014
Management for the implementation of environmental improvements
In progress
8,144 Expense
Operating costs
14,266
2014
In progress
29,007 Asset
1,719
2014
Expansion of dumping sites for solid industrial waste for the handling of the
same in the future
In progress
64 Asset
14,200
2015
Alto Paraná S.A.
Construction of outlets
In progress
13 Asset
718
2014
Alto Paraná S.A.
same in the future
In progress
553 Asset
4,883
2014
Alto Paraná S.A.
In progress
2,572 Asset
8,746
2014
Paneles Arauco S.A.
In progress
570 Asset
1,923
2014
Paneles Arauco S.A.
same in the future
In progress
331 Expense
83
2014
Paneles Arauco S.A.
In progress
1,069 Expense
Operating costs
356
2014
Paneles Arauco S.A.
In progress
73 Expense
316
2014
Celulosa Punta Pereira S.A.
In progress
925 Asset
1,200
2014
In progress
20 Asset
140
2014
In progress
125 Asset
40
2014
Forestal Celco S.A.
In progress
697 Expense
344
2014
Forestal Los Lagos S.A.
In progress
170 Expense
Operating costs
70
2014
Arauco do Brazil S.A.
In progress
1,685 Asset
4,088
2014
In progress
1,159 Expense
5,987
2014
Aserraderos Arauco S.A.
In progress
578 Asset
316
2014
Total
59,189
64,558
130
12.31.2013
Company
Project Name
Project
Status
Amount
ThUS$
Asset
Expense
Asset/Expense Entry
for Classification
Committed Future
Disbursements
Amount
Estimated
ThUS$
Date
Investment projects for the control and handling of gases in industrial plants
In progress
6,524 Asset
7,620
2014
In progress
1,945 Asset
33
2014
same in the future
In progress
0
0
In progress
2,293 Asset
2,024
2014
Alto Paraná S.A.
Construction of outlets
In progress
8 Asset
758
2014
Alto Paraná S.A.
same in the future
In progress
213 Asset
1,723
2014
Alto Paraná S.A.
Proyectos de inversión para el control y manejo de líquidos peligrosos y la
optimización energética de las aguas de las plantas industriales
In progress
2,326 Asset
0
0
Paneles Arauco S.A.
In progress
69 Asset
0
0
Paneles Arauco S.A.
same in the future
In progress
317 Expense
15
2014
Paneles Arauco S.A.
In progress
1,480 Expense
Operating costs
108
2014
Paneles Arauco S.A.
In progress
218 Expense
153
2014
In progress
925 Asset
1,200
2014
Forestal Celco S.A.
In progress
855 Expense
793
2014
Forestal Los Lagos S.A.
In progress
217 Expense
Operating costs
209
2014
In progress
243 Asset
925
2014
Aserraderos Arauco S.A.
In progress
196 Asset
5,330
2014
Total
21,838 Expense
39,667
Operating costs
20,891
131
Fuel Sector
09.30.2014
Company
Project Name
Project
Status
Amount
ThUS$
Asset
Expense
Asset/Expense Entry
for Classification
Committed Future
Disbursements
Amount
Estimated
ThUS$
Date
Plant repair
In force
9
Asset
Works in progress
0
2014
Fire protection system
In force
61
Asset
Works in progress
60
2014
Sewage treatment
In progress
2
Expense
Environmental evaluation
In progress
19
Expense
0
0
Oils, filters and other waste removal
In progress
24
Expense
0
0
Abastible S.A.
Dangerous waste removal
In progress
3
Expense
0
0
Abastible S.A.
Transport and collection of garbage
In progress
72
Expense
0
0
Abastible S.A.
Liquid waste treatment
In progress
24
Expense
0
0
Abastible S.A.
Sewage treatment plants Lenga Plant
In progress
99
Investment
Works in progress
107
2014
Abastible S.A.
Environmental Impact Evaluation
In progress
109
Expense
0
0
Total
422
-
2014
167
132
12.31.2013
Company
Project Name
Project
Status
Amount
ThUS$
Asset
Expense
Asset/Expense Entry
for Classification
Committed Future
Disbursements
Amount
Estimated
ThUS$
Date
Sewage treatment plants
In force
223
Asset
Works in progress
29
2013
Winery of waste
In force
3
Asset
Works in progress
(3)
2013
Fire protection system
In force
519
Asset
Works in progress
201
2013
Foam proportioning
In progress
329
Asset
Works in progress
62
2013
Outlets of water
In force
74
Asset
Works in progress
1
2013
Environmental evaluation
In progress
25
Expense
0
-
Waste removal
In progress
97
Expense
0
-
Sewage treatment
In progress
14
Expense
0
-
Plant repair
In progress
22
Expense
0
-
Transportes de Combustibles Chile Ltda.
Oils, filters and other waste removal
In progress
0
Expense
Operating costs
0
-
Abstecedora de Combustibles S.A.
Dangerous waste removal
In progress
14
Expense
0
-
Abastible S.A.
Transport and collection of garbage
In progress
105
Expense
0
-
Abastible S.A.
Liquid waste treatment
In progress
30
Expense
0
-
Abastible S.A.
Plant cleaning and maintenance
In progress
4
Expense
0
-
Abastible S.A.
Clean system for cylinders Arica Plant
In progress
10
Investment
Works in progress
20
2014
Abastible S.A.
Sewage treatment plants Lenga Plant
In progress
119
Investment
Works in progress
67
2014
Abastible S.A.
Clean system for cylinders Coyhaique Plant
In progress
0
Investment
Works in progress
0
-
Abastible S.A.
Sewage treatment plants and washing El Peñón Plant
Ready to begin
0
Investment
Works in progress
76
2014
Abastible S.A.
Environmental Impact Evaluation
In progress
Expense
0
-
Total
131
1,719
453
133
09.30.2014
Company
Project Name
Project
Status
Amount
ThUS$
Asset
Expense
Asset/Expense Entry
for Classification
Committed Future
Disbursements
Amount
Estimated
ThUS$
Date
Pesquera Iquique y Guanaye S.A.
Adjustment of systems in plants
Active
0
Asset
0
-
Improvements to unloading system of non professional fishing
In progress
0
Asset
0
-
Environmental impact study
In progress
0
Asset
Works in progress
0
-
Total
0
12.31.2013
Company
Project Name
0
Project
Status
Amount
ThUS$
Asset
Expense
Asset/Expense Entry
for Classification
Committed Future
Disbursements
Amount
Estimated
ThUS$
Date
Adjustment of systems in plants
Active
0
Asset
0
-
Improvements to unloading system of non professional fishing
In progress
360
Asset
0
-
Environmental impact study
In progress
27
Asset
Works in progress
0
-
Total
387
0
134
NOTE 29. OPERATING SEGMENTS
Operating segments have been defined according to the manner in which senior management reports on their segments
internally in order to make operating decisions and to allocate resources. In addition, the availability of relevant financial
information has also been considered in the defining of operating segments.
The segments were divided according to the main direct affiliates: Celulosa Arauco y Constitución S.A., Compañía de
Petróleos de Chile Copec S.A., Abastible S.A. and Pesquera Iquique-Guanaye S.A. These Companies together represent
more than 90% of the sales, EBITDA, net income, and consolidated assets and liabilities.

Celulosa Arauco y Constitución S.A.:
Arauco has established itself as one of the leading forestry companies in Latin America, in terms of area and yield of its
plantations, market kraft pulp manufacturing, and sawn timber and panel production.
Arauco’s plantations and forest lands span 1.6 million hectares in Chile, Argentina, Brazil and Uruguay*. In the first three
countries and United States the Company also has modern industrial facilities, which include six pulp mills, with a
production capacity of 3.9 million tons per year; 9 operating sawmills that produce 2.9 million m3 of timber per year and
17 panel plants whose production capacity reaches 6.6 million m3 per year.
On September 2014, Arauco’s production totaled 2,417 thousand tons of pulp, 2,194 thousand m3 of sawn timber and
3,864 thousand m3 of panels. Sales totaled US$ 3,947.9 million, of which 40.4% corresponded to pulp, 18.0% to sawn
timber, 34.9% to panels and 6.8% to other products.
Of the total sales, 39.6% was sold in the Chilean market and the rest overseas, primarily to Asia and the Americas.
* Operations in Uruguay in Montes del Plata through a joint operations with Stora Enso Oyj.

Compañía de Petróleos de Chile Copec S.A.:
Compañía de Petróleos de Chile Copec S.A. is one of the country’s most important sellers and distributors of fuel for
domestic and industrial use. It was established in 2003, when received a contribution of the Parent Company Empresas
Copec S.A., of all the assets related to the distribution fuel business in which the Parent Company had participated since
1934. Copec has 621 service stations throughout the country, forming the most extensive network in Chile, which
includes 79 Pronto convenience stores and 232 Punto stores. The company also manages an industrial channel that
supplies nearly 4,000 customers, belonging to the most important segments of the national economy. The company
manages the Mobil and Esso brand lubricants for vehicles and machinery and has 15 fuel storage plants between Arica
and the Chacabuco Port, with a total capacity of 384 thousand m3.
Organización Terpel has a service station network with 2,252 sales points, of which 1,941 are in Colombia and market
liquid fuels where it has a market share of 44.3%. The company also has 289 natural gas sales points through Gazel,
135
which represents 44.9% of participation of these segments. It is also the main wholesale distributor in Colombia with more
than 800 clients in industry, transport and aviation, segments where it reaches 44.9% market share.
Total market share reaches 44.8% in the fuel business in the country.

Abastible S.A.:
Abastible S.A. was incorporated in 1956 to market liquefied petroleum gas for domestic, commercial and industrial use.
Today this company has become a major player in the Chilean energy sector, basing its strategy on delivering a quality,
safe and timely service to all customers. In 2011, Abastible S.A. started its process of internationalization through the
purchase of a 51 % interest in Inversiones del Nordeste, a Colombian company.
The Company is present all over the Chilean territory from the northernmost city (Arica) to the southernmost (Magallanes)
with a complete and modern infrastructure for the performance of the liquefied gas business. The Company has 9 storage
and filling up facilities, plus 6 million cylinders and 50 thousand tanks, supported by a network of approximately 1500
sales points and 16 sales offices in all the major cities of the country. Additionally, in the Bio Bio region it has a port
terminal for the loading and unloading of liquefied gas and liquid fuels and a plant with a capacity for storing 40,000 m3.
During 2013 Abastible expanded its gas pump network to face the significant growth of the car business.
Its main investments were made on its extension program in the very north of Chile and the new company incorporated
together with Gasmar, Hualpén Gas, which will provide services involving the receipt, storage and dispatch of liquefied
gas. This is a significant contribution for the reliable supply in the south area.

Pesquera Iquique - Guanaye S.A.:
Empresas Copec S.A. has been present in the Chilean commercial fishing sector since 1980 through Pesquera Guanaye
Ltda., which many years later merged with Pesquera Iquique S.A. producing Pesquera Iquique-Guanaye Igemar as a
result.
Through its partner Corpesca S.A., Igemar operates in the north of Chile, and with its affiliate Orizon S.A. in the country’s
central-south region.
These companies’ products include fishmeal, which is mainly used as a raw material in food production for aquaculture
and livestock, due to its high level of protein, Omega 3 fatty acids and favorable digestibility. Fish oil, another of its
products, is used extensively in aquaculture. However, in recent years, it has been gaining importance as a nutritional
supplement in human nutrition and the pharmaceutical industry. Canned and frozen products, using mackerel as the main
raw material, are produced for human consumption. Mussel are produced canned and frozen. In an effort to expand the
portfolio of products, the company chose grocery market with lines of beans, rice and lentils under the brand San Jose,
for the domestic market. Also included the elaboration of the Omega 3 product which is under development, designed to
enrich functional foods and dietary supplement markets such as North America and Europe.
136
The primary destinations of these products are the domestic market and Asian, African and European market.

Sociedad Nacional de Oleoductos S.A.:
Copec, Enap and Esso Chile established Sociedad Nacional de Oleoductos S.A., Sonacol, in 1957 to create an oil
pipeline network to transport fuels and other oil byproducts. In 1979, the company added a maritime division to deliver
fuels to the most distant parts of the country.
Sonacol became an affiliate of Empresas Copec in 2004 and the following year it split the ocean and land shipping
businesses, thereby giving rise to Sociedad Nacional Marítima S.A. (Sonamar). Copec reduced its stake in Sonamar in
2006 when Sociedad de Inversiones Monterrey (currently Naviera Ultragas Limitada) joined the company.
The company carries out all its operations as one single business unit, but having information about income from
transportation of clean products (gasolines, kerosene and diesels) and transportation of liquefied petroleum gas (LPG).
Sonacol currently has a 465-kilometer oil pipeline network that runs from Quintero to San Fernando, which transports
98% of the fuels for the Metropolitan Region. The company also has 9 pumping stations, a product delivery terminal and
a central dispatch facility strategically located in the corporate building.
Sonamar has a fleet of five oil tankers with a total capacity to ship 236.69 thousand m3 of oil and its byproducts to the
centers of greater demand at Chile.
The main performance figures associated with these segments, as of September 30, 2014 and 2013, respectively, are
outlined below:
137
Segments 2014
Arauco
ThUS$
Copec
ThUS$
Abastible
ThUS$
Sonacol
ThUS$
Igemar
ThUS$
Others
ThUS$
Subtotal
ThUS$
Elimination
ThUS$
Total
ThUS$
Operating revenues from external customers
Inter-segment operating revenues
3.947.887
0
13.289.812
91.858
613.785
7.261
37.990
19.956
168.995
0
9.390
2.053
18.067.859
121.128
0
(121.128)
18.067.859
0
Interest income
Interest expense
16.059
(177.484)
8.153
(55.445)
845
(9.411)
125
(5.560)
897
(5.020)
11.000
1.905
37.079
(251.015)
0
0
37.079
(251.015)
Interest expense, net
(161.425)
(47.292)
(8.566)
(5.435)
(4.123)
12.905
(213.936)
0
(213.936)
Depreciation and amortization and stumpage
467.959
949.689
481.730
344.407
467.690
123.283
56.011
85.953
29.942
40.248
47.099
6.851
22.901
43.156
20.255
(14.610)
(11.828)
2.782
916.916
1.581.759
664.843
0
0
0
916.916
1.581.759
664.843
Income (loss) from the reporting segment
323.097
208.398
41.678
27.526
5.977
162.371
769.047
0
769.047
6.593
10.114
12.847
0
2.618
39.247
71.419
0
71.419
(115.451)
(76.097)
(14.116)
(7.223)
3.520
(55.018)
(264.385)
0
(264.385)
Investments by segment
Incorporations of property, plant and equipment
Payments to achieve biological assets
Payments to acquire affiliates and associates
Payments to acquire other investments
368.706
100.115
0
9.253
0
123.395
0
0
18.539
0
53.925
0
0
62
0
4.767
0
0
0
0
5.551
0
0
0
0
655
0
68
0
0
556.999
100.115
68
27.854
0
0
0
0
0
0
556.999
100.115
68
27.854
0
Total investments
478.074
141.934
53.987
4.767
5.551
723
685.036
0
685.036
Country of origin of operating revenues
Operating revenues - local (Chilean companies)
Operating revenues - foreign (foreign companies)
2.651.176
1.296.711
7.669.418
5.620.394
518.967
94.818
37.990
0
168.995
0
9.390
0
11.055.936
7.011.923
0
0
11.055.936
7.011.923
Total operating revenues
3.947.887
13.289.812
613.785
37.990
168.995
9.390
18.067.859
0
18.067.859
14.962.689
4.394.476
821.154
311.760
751.795
1.350.775
22.592.649
0
22.592.649
340.634
62.452
48.154
0
133.858
156.223
741.321
0
741.321
Liabilities by segment
8.089.056
2.936.613
454.164
192.044
334.160
31.608
12.037.645
0
12.037.645
Country of origin of non-current assets
Chile
Foreign
7.185.897
4.433.953
2.346.351
0
472.454
229.578
300.483
0
599.493
0
403.242
0
11.307.920
4.663.531
0
0
11.307.920
4.663.531
11.619.850
2.346.351
702.032
300.483
599.493
403.242
15.971.451
0
15.971.451
Operating income
EBITDA
Share in income (loss) of associates
Income (expense) from income taxes
Assets by segment
138
Segments 2013
Arauco
ThUS$
Copec
ThUS$
Abastible
ThUS$
Sonacol
ThUS$
Igemar
ThUS$
Operating revenues from external customers
Inter-segment operating revenues
3.885.161
0
13.738.160
78.826
639.708
6.319
40.517
19.717
156.079
0
Interest income
Interest expense
14.829
(176.730)
12.671
(88.779)
1.494
(6.976)
214
(6.996)
Interest expense, net
(161.901)
(76.108)
(5.482)
Depreciation and amortization and stumpage
408.001
889.099
238.530
381.960
508.457
126.497
Income (loss) from the reporting segment
375.906
Share in income (loss) of associates
Income (expense) from income taxes
Others
ThUS$
Subtotal
ThUS$
Elimination
ThUS$
Total
ThUS$
18.466.936
107.160
0
(107.160)
18.466.936
0
955
(2.820)
7.311
2.298
0
5.882
233
36.045
(282.068)
0
0
36.045
(282.068)
(6.782)
(1.865)
6.115
(246.023)
0
(246.023)
84.151
114.763
30.612
43.171
48.792
5.621
3.152
28.185
25.033
(7.703)
(5.835)
1.868
912.732
1.583.461
428.161
0
0
0
912.732
1.583.461
428.161
260.520
71.333
30.058
(44.274)
68.870
762.413
0
762.413
4.140
(85.014)
12.588
(91.908)
16.344
(19.797)
0
(7.525)
3.625
10.711
70.099
1.551
106.796
(191.982)
0
0
106.796
(191.982)
Investments by segment
Incorporations of property, plant and equipment
Purchases of other long-term assets
Payments to acquire affiliates and associates
Payments to acquire other investments
485.653
166.096
0
3.231
0
155.716
0
0
36.643
0
61.117
0
0
12
0
5.032
0
0
0
0
15.797
0
32.653
0
0
1.337
0
19
7.587
0
724.652
166.096
32.672
47.473
0
0
0
0
0
0
724.652
166.096
32.672
47.473
0
Total investments
654.980
192.359
61.129
5.032
48.450
8.943
970.893
0
970.893
Country of origin of operating revenues
Operating revenues - local (Chilean companies)
Operating revenues - foreign (foreign companies)
2.562.620
1.322.541
8.169.372
5.568.788
639.708
0
40.517
0
156.079
0
7.311
0
11.575.607
6.891.329
0
0
11.575.607
6.891.329
Total operating revenues
3.885.161
13.738.160
639.708
40.517
156.079
7.311
18.466.936
0
18.466.936
14.493.395
4.688.631
869.320
355.651
768.235
1.193.078
22.368.310
0
22.368.310
349.412
78.277
54.315
0
136.220
352.669
970.893
0
970.893
Liabilities by segment
7.448.855
3.117.206
445.694
204.136
346.984
(14.395)
11.548.480
0
11.548.480
Country of origin of non-current assets
Chile
Foreign
7.463.823
4.221.251
1.491.992
992.099
757.400
0
345.144
0
608.966
0
604.103
0
11.271.428
5.213.350
0
0
11.271.428
5.213.350
11.685.074
2.484.091
757.400
345.144
608.966
604.103
16.484.778
0
16.484.778
Operating income
EBITDA
Assets by segment
139
Chile
ThUS$
Operating revenues
Non-current assets
sep-14
sep-14
11.055.936
10.117.050
Chile
ThUS$
Operating revenues
Non-current assets
sep-13
dic-13
11.575.607
10.990.604
Geographical areas
Latin America and
the caribbean
Europe
North America
ThUS$
ThUS$
ThUS$
6.415.424
5.471.479
0
0
596.499
382.922
Geographical areas
Latin America and
the caribbean
Europe
North America
ThUS$
ThUS$
ThUS$
6.311.575
5.082.897
0
0
Asia and
others
ThUS$
579.754
411.277
Total
ThUS$
0
0
Asia and
others
ThUS$
18.067.859
15.971.451
Total
ThUS$
0
0
18.466.936
16.484.778
Note: Latin America includes Mexico.
140
NOTE 30. BORROWING COSTS
The Group capitalizes interest on current investment projects by calculating the average rate of loans dedicated to
financing these investment projects.
January - September
Costs of capitalized interest for property, plant and equipment
July - September
2014
ThUS$
2013
ThUS$
2014
ThUS$
2013
ThUS$
4.53%
4.39%
5.18%
4.35%
19,161
24,433
1,271
2,249
Capitalization rate for costs of capitalized interest for property, plant and equipment
Amount of costs of capitalized interest for property, plant and equipment
NOTE 31. SUBSEQUENT EVENTS
After the closing date of the consolidated financial statements have been reported the following essential facts to
the Superintendency of Securities and Insurance (SVS):
1.
From Empresas Copec S.A.:
1.1
On October 3, 2014, the following was informed:
"The undersigned, acting on behalf of the stock corporation Empresas Copec S.A., hereinafter the “Company”,
both residing in Chile’s Metropolitan Region, at “Avenida El Golf No. 150, piso 17, comuna de Las Condes”, a
company registered in the Securities Register under No. 0028, and identified by taxpayer No. 90690000-9, with
the undersigned being duly authorized, communicates to you the following essential information regarding the
Company, its business, its shares or about the offer of them, in accordance with the provisions of Article 9 and
paragraph 2 of article 10, both of Act No. 18,045, and the General Rule No. 30 of the Superintendency of
Securities and Insurance:
1.
On September 29, 2014, Act No. 20,780 was published in the Official Gazette. This Act made several
revisions to the current system of income tax and other taxes. One of the major revisions is the progressive
increase in the rate of the First Category (the Corporate) Income Tax, reaching 27%, as from the year 2018, in the
event that the partially integrated system is applied. If the attributed income system is chosen, the maximum rate
would be 25%, as from the year 2017.
2.
According to said Act, since Empresas Copec is a stock corporation, as a rule it falls under the partially
integrated system, unless a future Meeting of Shareholders agrees to choose the attributed income system.
3.
In this regard, in accordance with the International Financial Reporting Standards (IFRS), the Company must
recognize immediately in the income statement the impact of such increase in the rate of the First Category
Income Tax on the Company’s net liabilities related to deferred taxes.
141
4.
With the documentation gathered as of this date, and assuming that the partially integrated system will be
applied, since no meeting of shareholders has been held that had chosen the attributed income system, it is
reported that the increase in net liabilities related to deferred taxes will result in a charge to income of Empresas
Copec of approximately US$360 million, only once, which will be included in the financial statements at September
30, 2014.
5.
With respect to dividends, the charge to income due to the increase in net liabilities related to deferred taxes
will decrease the Company’s net Distributable Income for the year 2014 by approximately US$228 million,
because to the previously mentioned US$360 million adjustments must be made in accordance with the policy for
calculating the Company’s net distributable income approved by its Board, pursuant to Circular No. 1945 dated
2009 issued by Superintendency of Securities and Insurance.
6.
We reiterate that the above calculations have been made on the assumption that the partially integrated
system will be applied. If, in the end, a future Meeting of Shareholders of our Company agrees to choose the
attributed income system, the relevant adjustments will be made in due course.”
1.2
The undersigned, acting on behalf of the stock corporation Empresas Copec S.A., hereinafter the “Company”, both
residing in Chile’s Metropolitan Region, at “Avenida El Golf No. 150, piso 17, comuna de Las Condes”, a company
registered in the Securities Register under No. 0028, and identified by taxpayer No. 90690000-9, with the
undersigned being duly authorized, communicates to you the following essential information regarding the
Company, its business, its shares or about the offer of them, in accordance with the provisions of Article 9 and
paragraph 2 of article 10, both of Act No. 18,045, and the General Rule No. 30 of the Superintendency of
Securities and Insurance:
Through an “Essential Event” sent last October 3, Empresas Copec informed the impacts, on its income, caused
by the effect of the increase in the rate of the First Category (the Corporate) Income Tax established in Act No.
20,780 on the Company’s net liabilities related to deferred taxes, in accordance with the provisions of the
International Financial Reporting Standards.
differences in net liabilities related to deferred taxes resulting from the increase in the rate of the First Category
Income Tax should be booked against equity.
Therefore, we hereby inform you that, in accordance with the above Circular, the effect on deferred taxes resulting
from the increase in the rate of the First Category Income Tax will not impact the income or the calculation of the
Company’s net distributable income, but rather it will result in a direct charge of approximately US$ 360 million to
equity, which will be included in the financial statements at September 30, 2014.
As indicated in our communication of an Essential Event dated last October 3, the above indicated impact on
equity has been calculated on the assumption that the partially integrated system will be applied. If in the end a
142
future Meeting of Shareholders of the Company agrees to choose the attributed income system, the relevant
adjustments will be made in due course.”
2.
From the affiliate Celulosa Arauco y Constitución S.A.:
2.1
"The undersigned, acting on behalf of the stock corporation Celulosa Arauco y Constitución S.A., hereinafter either
the “Company” or “Arauco”, both residing in Chile’s Metropolitan Region, at “Avenida El Golf No. 150, piso 14,
comuna de Las Condes”, a company registered in the Securities Register under No. 42, and identified by taxpayer
No. 93458000-1, with the undersigned being duly authorized, communicates to you the following essential
information regarding the Company and its business, in accordance with the provisions of Article 9 and paragraph
2 of article 10, both of Act No. 18,045, and the General Rule No. 30 of the Superintendency of Securities and
Insurance:
On January 14, 2014, the Company informed as Essential Event the assets purchase agreement that Flakeboard
America Limited, a subsidiary of Arauco, had entered into with the US company SierraPine in order to acquire
three industrial plants for boards located in the United States of America (in the states of California and Oregon)
for a price of US$ 107 million, plus a variable amount of up to US$ 13 million in inventories.
The above Essential Event also indicated that the performance of the asset purchase agreement was subject to
certain conditions precedent. Such conditions included the fact that the United States Department of Justice
(DOJ) had to grant permission to said transaction.
On October 1, 2014, the Company, together with Sierra Pine, have decided to withdraw the request submitted to
the DOJ, because the DOJ has objected to the transaction. As a result, the parties have voluntarily agreed to
rescind the above indicated agreement.
Arauco believes that this situation will have no significant effects on either the financial position or the operating
results of the Company”.
2.2
information regarding the Company, its business, its shares or about the offer of them, in accordance with the
provisions of Article 9 and paragraph 2 of article 10, both of Act No. 18,045, and the General Rule No. 30 of the
Superintendency of Securities and Insurance:
1. On September 29, 2014, Act No. 20,780 was published in the Official Gazette. This Act made several revisions
to the current system of income tax and other taxes. One of the major revisions is the progressive increase in the
143
rate of the First Category (the Corporate) Income Tax for business years 2014, 2015, 2016, 2017, 2018 and
onwards, with the rate increasing to 21%, 22.5%, 24%, 25.5% and 27%, respectively, if the partially integrated
system is applied, Or, for the business years 2014, 2015, 2016, 2017 and onwards, with the rate increasing to
21%, 22.5%, 24%, and 25.5%, respectively, in the event that the attributed income system is chosen.
2. According to said Act, in the case of Arauco, as a rule it falls under the partially integrated system, unless a
future Meeting of Shareholders agrees to choose the attributed income system.
3. On the other hand, in accordance with the International Financial Reporting Standards (IFRS), the Company
must recognize immediately in the income statement the impact of the progressive increase in the rate of the First
Category (the corporate) Income Tax for business years 2014 to 2018. Therefore, Arauco must record at
September 30, 2014 the effect of the increase in the rate of the First Category (the corporate) Income Tax on the
deferred taxes of the Company.
4. With respect to the preceding paragraphs, and based on the fact that the partially integrated system must be
applied since no meeting of shareholders has been held that has chosen the attributed income system, it is
informed that, to date, the estimated effect on Arauco and its Chilean subsidiaries associated with deferred taxes
is a charge to income of approximately US$ 292 million.
5. In addition, assuming that the partially integrated system will be applied, the charge to income due to the
increase in net liabilities related to deferred taxes will decrease the Company’s net Distributable Income for the
year 2014 by approximately US$160 million, because to the previously mentioned US$292 million adjustments
must be made in accordance with the policy for calculating the Company’s net distributable income approved by
its Board, pursuant to Circular No. 1945 dated 2009 issued by Superintendency of Securities and Insurance.
6. “We reiterate that the above calculations have been made on the assumption that the partially integrated
system will be applied. If, in the end, a future Meeting of Shareholders of our Company agrees to choose the
attributed income system, the relevant adjustments will be made in due course.”
2.3
information regarding the Company, its business, its shares or about the offer of them, in accordance with the
provisions of Article 9 and paragraph 2 of article 10, both of Act No. 18,045, and the General Rule No. 30 of the
Superintendency of Securities and Insurance:
In a communication of an “Essential Event” sent last October 3, Arauco informed the estimated impacts, on its
income, caused by the effect of the increase in the rate of the First Category (the Corporate) Income Tax
established in Act No. 20,780 on the Company’s net liabilities related to deferred taxes, in accordance with the
provisions of the International Financial Reporting Standards.
144
differences between assets and liabilities related to deferred taxes resulting from the increase in the rate of the
First Category Income Tax should be booked against equity.
Therefore, we hereby inform you that, in accordance with the above Circular, the effect on deferred taxes resulting
from the increase in the rate of the First Category Income Tax will not impact the income or the calculation of the
Company’s net distributable income, but rather it will result in a direct charge of approximately US$ 292 million to
equity, which will be included in the financial statements at September 30, 2014.
As indicated in our Essential Event dated last October 3, the above indicated impact on equity has been calculated
on the assumption that the partially integrated system will be applied. If a future Meeting of Shareholders of the
Company agrees to choose the attributed income system, the relevant adjustments will be made in due course.”
Finally, it should be noted that the basis ordered in the above Circular applies only to the financial statements to
be filed with the Chilean Superintendency of Securities and Insurance. For those financial statements to be filed
with the Securities and Exchange Commission (SEC) of the United States of America, the basis ordered by
Circular No. 856 does not apply".
Subsequent to September 30, 2014 and until the date of issuance of these financial statements, there have been
no other financial or other events to report.
145

EMPRESAS COPEC SA CONSOLIDATED FINANCIAL

Transcription

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