UNITED BREWERIES CO INC | CIK:0000888746 |

Note 19 Property, plant and equipment

 

Property, plant and equipment movements are detailed as follows:

 

		Land, buildings  and contruction			Machinery and  equipment			Bottles and  containers			Other Equipment			Assets under  contruction			Furniture,  accesories and  vehicles			Assets under  finance lease			Under production  vines			Total
		ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
As of January 1, 2016
Historic cost			569,642,008			428,398,944			185,024,437			117,920,217			102,094,511			60,844,400			16,447,490			29,639,562			1,510,011,569
Accumulated depreciation			(149,128,169)			(248,562,463)			(102,580,240)			(77,349,328)			-			(42,694,930)			(3,014,569)			(14,014,660)			(637,344,359)
Book Value			420,513,839			179,836,481			82,444,197			40,570,889			102,094,511			18,149,470			13,432,921			15,624,902			872,667,210
As of December 31, 2016
Additions			-			-			-			-			128,712,863			-			-			-			128,712,863
Additions for business combination			-			79,126			-			-			-			-			-			-			79,126
Transfers			22,834,409			40,559,020			26,734,419			11,477,889			(115,555,005)			12,571,079			-			1,378,189			-
Conversion effect historic cost			(5,161,938)			(9,794,457)			(10,440,956)			(3,309,017)			(716,066)			(63,653)			(1,927)			(100,704)			(29,588,718)
Write off (cost)			(421,820)			(1,114,726)			(963,296)			(602,003)			164,887			(1,425,485)			-			-			(4,362,443)
Write off (depreciation)			16,882			1,045,213			1,211,494			557,191			-			809,775			-			-			3,640,555
Capitalized interests			-			-			-			-			853,832			-			-			-			853,832
Depreciation			(16,446,343)			(22,298,558)			(20,154,538)			(9,709,915)			-			(9,495,693)			(235,007)			(1,025,552)			(79,365,606)
Conversion effect depreciation			1,743,342			4,080,872			3,082,501			4,139,993			-			252,389			578			66,872			13,366,547
Others increase (decreased)			(40,372)			1,960,728			(1,217,118)			(313,368)			(779,982)			792,760			(620,991)			-			(218,343)
Divestitures (depreciation)			(1,973,792)			(4,671,503)			(919,611)			(105,417)			-			(479,526)			-			(1,480,301)			(9,630,150)
Divestitures (depreciation)			1,366,357			4,474,718			699,573			23,026			-			375,766			-			1,010,409			7,949,849
Book Value			422,430,564			194,156,914			80,476,665			42,729,268			114,775,040			21,486,882			12,575,574			15,473,815			904,104,722
As of December 31, 2016
Historic cost			584,830,357			453,735,402			196,174,306			129,190,151			114,775,040			70,251,593			13,926,785			29,436,746			1,592,320,380
Accumulated depreciation			(162,399,793)			(259,578,488)			(115,697,641)			(86,460,883)			-			(48,764,711)			(1,351,211)			(13,962,931)			(688,215,658)
Book Value			422,430,564			194,156,914			80,476,665			42,729,268			114,775,040			21,486,882			12,575,574			15,473,815			904,104,722
As of December 31, 2017
Additions			-			-			-			-			118,850,131			-			-			-			118,850,131
Transfers			29,368,004			43,963,753			20,642,995			18,784,331			(124,150,216)			10,802,816			-			588,317			-
Conversion effect historic cost			(4,642,067)			(10,260,723)			(10,182,025)			(3,613,420)			(720,676)			(379,481)			(1,605)			(100,852)			(29,900,849)
Write off (cost)			(144,577)			(681,120)			(2,192,467)			(2,301,087)			-			(778,317)			-			-			(6,097,568)
Write off (depreciation)			122,890			609,546			1,942,571			2,241,388			-			613,585			-			-			5,529,980
Capitalized interests			-			-			-			-			1,042,045			-			-			-			1,042,045
Depreciation			(16,782,519)			(26,444,714)			(20,351,615)			(12,375,545)			-			(6,262,416)			(43,108)			(1,002,696)			(83,262,613)
Conversion effect depreciation			609,002			3,137,711			3,801,023			2,188,068			-			92,238			519			54,154			9,882,715
Others increase (decreased)			(101,686)			1,048,528			18,981			7,257			(1,189,435)			(35,064)			(138,391)			59,875			(329,935)
Divestitures (cost)			(434,512)			(322,483)			(45,081,934)			(27,295)			-			(614,206)			-			(521,685)			(47,002,115)
Divestitures (depreciation)			326,742			322,483			43,718,122			26,267			-			363,484			-			339,817			45,096,915
Book Value			430,751,841			205,529,895			72,792,316			47,659,232			108,606,889			25,289,521			12,392,989			14,890,745			917,913,428
As of December 31, 2017
Historic cost			608,854,028			485,770,049			159,541,057			142,280,575			108,606,889			79,120,713			13,816,109			29,367,600			1,627,357,020
Accumulated depreciation			(178,102,187)			(280,240,154)			(86,748,741)			(94,621,343)			-			(53,831,192)			(1,423,120)			(14,476,855)			(709,443,592)
Book Value			430,751,841			205,529,895			72,792,316			47,659,232			108,606,889			25,289,521			12,392,989			14,890,745			917,913,428

 

The balance of the land at the end of each year is as follows:

 

		As of December  31, 2017			As of December  31, 2016
		ThCh$			ThCh$
Land			225,840,815			226,136,602
Total			225,840,815			226,136,602

 

Capitalized interest as of December 31, 2017, amounted 1,042,045 (ThCh$  853,832 in 2016), using an annually capitalization rate of 4.25% (4.17% in 2016).

 

The Company, through its subsidiary Viña San Pedro Tarapacá S.A., has biological assets corresponding to vines that produce grapes. The vines are segmented into those under formation and those under production, and they are grown both on leased and owned land. The grapes harvested from these vines are used in the manufacturing of wine, which is marketed both in the domestic market and abroad.

 

As of December 31, 2017, the Company maintained approximately 4,219 hectares of which 3,765 are for vines in production stage. Of the total hectares mentioned above, 3,427 correspond to own land and 338 to leased land.

 

The vines under formation are recorded at historic cost, and only start being depreciated when they are transferred to the production phase, which occurs in the majority of cases in the third year after plantation, when they start producing grapes commercially (in volumes that justify their production-oriented handling and later harvest).

 

During 2017, the production plant vines yield approximately 43.9 million kilos of grapes (49.8 million kilos of grapes in 2016).

 

By the nature of business of the Company, in the value of the assets it is not considered to start an allowance for cost of dismantling, removal or restoration.

 

In relation to the impairment losses of property, plant and equipment, the Managment has not perceived evidence of impairment with respect to these at December 31, 2017.

 

 

The carrying amount of land and buildings relates to finance lease agreements for the Company and its subsidiaries. Such assets will not be owned by the Company until the corresponding purchase options are exercised.

 

		As of December  31, 2017			As of December  31, 2016
		ThCh$			ThCh$
Land			3,215,075			3,130,181
Buildings			9,101,182			9,217,312
Machinery and equipment			76,732			228,081
Total			12,392,989			12,575,574

In Note 21, letter B) includes the detail of the lease agreements, and it also reconciles the total amount of the future minimum lease payments and their current value as regards such assets, the purchase options originated at CCU S.A. and Cervecería Kunstmann S.A.