##### Table of Contents

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**Form 20-F**

 

**
 
**

 

**OR**

 

**FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2012**

**OR**

 

**FOR THE TRANSITION PERIOD FROM                     TO                    **

**OR**

 

**Date of event requiring this shell company report                    **

**COMMISSION FILE NUMBER: 001-35575**

 

**
 
**

**Cencosud S.A.**

**(Exact name of Registrant as specified in its charter)**

 

**
 
**

**N/A**

**(Translation of Registrant’s name into English)**

**Republic of Chile**

**(Jurisdiction of incorporation or organization)**

**Av. Kennedy 9001, Piso 6**

**Las Condes, Santiago, Chile**

**+56 (2) 959-0000**

**(Address of principal executive offices)**

**Maria Soledad Fernandez / Natalia Nacif**

**Av. Kennedy9001 6th Floor**

**Email: IR@cencosud.cl / Mariasoledad.fernandez@cencosud.cl**

**Tel: +56229590545 / +56229590368**

**(Name, Telephone, E-Mail and/orFacsimile number and Address of Company Contact Person)**

**Securities registered or to be registered pursuant toSection 12(b) of the Act:**

 

**Securities registered or to be registered pursuant to Section 12(g) of the Act:**

**None**

**Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:**

**None**

 

**
 
**

The number of outstandingshares of each of the issuer’s classes of capital stock as of December 31, 2012: 2,806,792,161 Common Shares, no par value 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act    Yes   ̈    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    Yes   ̈    No  x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for thepast 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act. (Check one): 

Large acceleratedfiler   ̈                Acceleratedfiler   ̈                Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

If “Other” has been checked in response to the previous question, indicate by check mark which financialstatement item the Registrant has elected to follow:    Item 17   ̈    Item 18   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct).    Yes   ̈    No  x

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
          Page 
Forward-Looking Statements 
   i  
Presentation of Financial and Other Information 
   ii  
Item 1.
  
 

Identity of Directors, Senior Management and Advisers
   1  
Item 2.
  
 

Offer Statistics and Expected Timetable
   1  
Item 3.
  
 

Key Information
   1     A.    
Selected financial data
   1     B.    
Capitalization and indebtedness
   13     C.    
Reasons for the offer and use of proceeds
   13     D.    
Risk factors
   13  
Item 4.
  
 

Information on the Company 
   43     A.    
History and development of the company
   43     B.    
Business overview
   48     C.    
Organizational structure
   98     D.    
Property, plants and equipment
   100  
Item 4A.
  
 

Unresolved Staff Comments
   100  
Item 5.
  
 

Operating and Financial Review and Prospects
   100     A.    
Operating results
   100     B.    
Liquidity and capital resources
   123     C.    
Research and development, patents and licenses, etc.
   130     D.    
Trend information
   130     E.    
Off-balance sheet arrangements
   130     F.    
Tabular disclosure of contractual obligations
   131     G.    
Safe harbor
   131  
Item 6.
  
 

Directors, Senior Management and Employees 
   132     A.    
Directors and senior management
   132     B.    
Compensation
   134     C.    
Board practices
   135     D.    
Employees
   136     E.    
Share ownership
   138  
Item 7.
  
 

Major Shareholders and Related Party Transactions 
   138     A.    
Major shareholders
   138     B.    
Related party transactions
   140     C.    
Interests of experts and counsel
   141  
Item 8.
  
 

Financial Information 
   141     A.    
Consolidated statements and other financial information
   141     B.    
Significant changes
   142  
Item 9.
  
 

The Offer and Listing 
   142     A.    
Offer and listing details
   142     B.    
Plan of distribution
   143     C.    
Markets
   143     D.    
Selling shareholders
   146     E.    
Dilution
   146  
Table of Contents  F.  
Expenses of the issue 
   146  
Item 10.
  
Additional Information 
   147    A.  
Share capital
   147    B.  
Memorandum and articles of association
   147    C.  
Material contracts
   153    D.  
Exchange controls
   153    E.  
Taxation
   160    F.  
Dividends and paying agents
   166    G.  
Statement by experts
   166    H.  
Documents on display
   166    I.  
Subsidiary information
   166  
Item 11.
  
Quantitative and Qualitative Disclosures About Market Risk
   166  
Item 12.
  
Description of Securities Other than Equity Securities
   167    A.  
Debt Securities
   167    B.  
Warrants and Rights
   167    C.  
Other Securities
   167    D.  
American Depositary Shares
   167  
Item 13.
  
Defaults, Dividend Arrearages and Delinquencies
   175  
Item 14.
  
Material Modifications to the Rights of Security Holders and Use ofProceeds
   175  
Item 15.
  
Controls and Procedures
   175    A.  
Disclosure Controls and Procedures
   175    B.  
Management’s Annual Report on Internal Control Over Financial Reporting
   176    C.  
Attestation Report of the Registered Public Accounting Firm
   176    D.  
Changes in Internal Control Over Financial Reporting
   176  
Item 16A.
  
Audit Committee Financial Expert
   176  
Item 16B.
  
Code of Ethics
   176  
Item 16C.
  
Principal Accountant Fees and Services
   176  
Item 16D.
  
Exemptions from the Listing Standards for Audit Committees
   177  
Item 16E.
  
Purchases of Equity Securities by the Issuer and AffiliatedPurchasers
   177  
Item 16F.
  
Change in Registrant’s Certifying Accountant
   177  
Item 16G.
  
Corporate Governance
   177  
Item 16H.
  
Mine Safety Disclosure
   179  
Item 17.
  
Financial Statements
   180  
Item 18.
  
Financial Statements.
   180  
Item 19.
  
Exhibits
   180  
Table of Contents
**FORWARD-LOOKING STATEMENTS**

This annual report contains forward-looking statements that are based on our current expectations, assumptions, estimates and projectionsabout us and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/arelikely to,” “may,” “plan,” “should,” “would,” or other similar expressions. The forward-looking statements included in this annual report relate to, among others: 

 
 • 
changes in general economic, business or political or other conditions in Chile, Argentina, Brazil, Peru, Colombia or elsewhere in Latin America or theglobal markets; 

 
 • 
changes in capital markets in general that may affect policies or attitudes towards investing in Chile, Argentina, Brazil, Peru, Colombia or securitiesissued by companies in such countries; 

 
 • 
the monetary and interest rate policies of the Central Banks of Chile, Argentina, Brazil, Peru and Colombia; or elsewhere in Latin American or globalmarkets. 

 
 • 
high levels of inflation or deflation; 

 
 • 
unanticipated increases in financing and other costs or our inability to obtain additional debt or equity financing on attractive terms;

 
 • 
movements in interest and/or foreign exchange rates, and movements in equity prices or other rates or prices; 

 
 • 
changes in, or failure to comply with, applicable regulations, or changes in taxes; 

 
 • 
loss of market share or changes in competition and pricing environments in the industries in which the company operates; 

 
 • 
difficulties in successfully integrating recent and future acquisitions into the company’s operations; 

 
 • 
the Company’s inability to hedge certain risks economically; 

 
 • 
changes in consumer spending and saving habits; 

 
 • 
implementation of new technologies; 

 
 • 
limitations on our ability to open new stores and operate them profitably; 

 
 • 
difficulties in completing proposed store openings, expansions or remodelings; 

 
 • 
difficulties in acquiring and developing land in Chile, Argentina, Brazil, Peru or Colombia, and restrictions on opening new large stores in any suchcountries; and 

 
 • 
the factors discussed under the section entitled “Risk Factors” in this annual report as well as risks included in the Company’s otherfilings and submissions with the United States Securities and Exchange Commission. 

These forward-lookingstatements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materiallydifferent from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this annual report might not occur, and our future results and our performance may differ materiallyfrom those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-lookingstatements. 

 
i 

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The forward-looking statements made in this annual report relate only to events orinformation as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence ofunanticipated events. 

**PRESENTATION OF FINANCIAL AND OTHER INFORMATION**

**Certain Defined Terms**

In this annual report, unless otherwise specified or if the context so requires: 

 
 • 
References to the terms “Cencosud S.A.,” “we,” “us,” “our” and “our company” refer to the registrant,Cencosud S.A., a corporation organized under the form of a *sociedad anónima* under the laws of Chile, and its consolidated subsidiaries, unless otherwise indicated. 

 
 • 
References to “$,” “U.S.$,” “U.S. dollars,” “dollars” and “USD” are to U.S. dollars.

 
 • 
References to “Chilean pesos” or “Ch$” are to Chilean pesos, the official currency of Chile. 

 
 • 
References to “Argentine pesos” or “Ar$” are to Argentine Pesos, the official currency of Argentina. 

 
 • 
References to “Brazilian Real,” “Real,” “Reais” or “R$” are to the Brazilian real, the official currency ofBrazil. 

 
 • 
References to “Nuevo Sol,” “Nuevos Soles” or “S/.” are to Peruvian nuevos soles, the official currency of Peru.

 
 • 
References to “Colombian pesos” or “Col$” are to Colombian pesos, the official currency of Colombia. 

 
 • 
References to “Carrefour” refer to Carrefour Société Anonyme 

 
 • 
References to “Acquired Companies” refer to the companies we acquired on November 30, 2012 from Carrefour in connection with ourpurchase of Carrefour’s operations in Colombia. 

References to “UF” are to *Unidades deFomento*. The UF is an inflation-indexed Chilean monetary unit with a value in Chilean pesos that is adjusted daily to reflect changes in the official Consumer Price Index (“CPI”) of the *Instituto Nacional de Estadísticas*(the Chilean National Institute of Statistics). The UF is adjusted in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexedup (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean consumer price index during the prior calendar month. As of December 31, 2012, UF1.00 was equivalent to U.S.$47.59 and Ch$22,840.75,in each case based on the observed exchange rates reported by the Central Bank of Chile. 

This annual report containstranslations of certain Chilean peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the Chilean peso amounts actually represent such U.S.dollar amounts or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all. Unless otherwise indicated, the exchange rate used in converting Chilean pesos into U.S. dollars for amounts presented is based on theobserved exchange rate (*dólar observado*) reported by the Central Bank of Chile (the “Chilean Central Bank”) for December 31, 2012 , which was Ch$479.96 per U.S.$1.00. The rates reported by the Chilean Central Bankfor December 30, 2011 (the latest available date for the month of December 2011 as December 31, 2011 was not a business days in Chile) and December 31st 2010 are based upon the observed exchange rate published by the Chilean CentralBank on the first business day following the respective period. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. 

 
ii 

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**Financial Statements**

The financial information contained in this annual report includes our audited consolidated financial statements as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011and 2010, together with the notes thereto, prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (the “IASB”), which we refer to in this annualreport as our “Audited Consolidated Financial Statements.” Our date of adoption of IFRS was January 1, 2010. 

Our Audited Consolidated Financial Statements have been audited by PricewaterhouseCoopers *Consultores, Auditores y CompañiaLimitada*, an independent registered public accounting firm, whose report on our Audited Consolidated Financial Statements appears elsewhere in this annual report. We maintain our books and records in Chilean pesos and prepare consolidatedfinancial statements in accordance with IFRS. 

Unless otherwise noted, the financial data presented herein as of and for theyears ended December 31, 2012, 2011, and 2010 is stated in Chilean pesos, our functional and reporting currency. 

OurAudited Consolidated Financial Statements have been prepared on the accrual basis of accounting, except for those items accounted for at fair value (for example, investment properties and certain financial assets, such as options and derivativefinancial instruments), and include the accounts of the Company and its subsidiaries, including Banco Paris. Our historical consolidated financial statements previously available do not consolidate the operations of Banco Paris. All significantinter-company balances and transactions have been eliminated in consolidation. 

The financial statements as of and for theyear ended December 31, 2012 presented in this Form 20-F differ from the local financial statements as of and for the year ended December 31, 2012 published in Chile on March 1, 2013, and furnished to the SEC on Form 6K on March 5, 2013, due to theinclusion in this report of a Ch$ 20,000 million lawsuit provision related to the April 24, 2013 ruling from the Chilean Supreme Court on the class action suit filed by the *Servicio Nacional del Consumidor*(the National Consumer Service)against Cencosud Administradora de Tarjetas S.A. (“CAT”). For further information on this matter, please see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and AdministrativeProceedings” in this report. 

**Special Note Regarding Non-IFRS Financial Measures**

This annual report makes reference to certain non-IFRS measures, namely EBIT, EBITDA and Adjusted EBITDA. These non-IFRS measures are notrecognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information tocomplement IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financialinformation reported under IFRS. 

EBIT represents profit attributable to controlling shareholders before net interest expenseand income taxes. EBITDA represents EBIT plus depreciation and amortization expense. Adjusted EBITDA represents EBITDA as further adjusted to reflect items set forth in the table below. We have included EBIT, EBITDA and Adjusted EBITDA to provideinvestors with a supplemental measure of our operating performance. 

We believe EBIT, EBITDA and Adjusted EBITDA are animportant supplemental measure of operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRSfinancial measures. We also believe that securities analysts, investors and other interested parties frequently use EBITDA in the evaluation of issuers, many of which present EBITDA when reporting their results. 

Our management also uses EBITDA and Adjusted EBITDA in order to facilitate operating performance comparisons from period to period,prepare annual operating budgets, assess our ability to meet our future debt service, capital expenditure and working capital requirements and assess our ability to pay dividends on our capital stock. 

EBIT, EBITDA and Adjusted EBITDA have important limitations as analytical tools. For example, neither EBIT, EBITDA nor Adjusted EBITDAreflect (a) our cash expenditures, or future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expense, or the cashrequirements necessary to service interest or principal payments, on our debt; and (d) tax payments or distributions to our parent to make payments with respect to taxes attributable to us that represent a reduction in cash available to us.Although we consider the items excluded in the calculation of non-IFRS measures to be less relevant to evaluate our performance, some of these items may continue to take place and accordingly may reduce the cash available to us. 

 
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We believe that the presentation of the non-IFRS measures described above is appropriate.However, these non-IFRS measures have important limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under IFRS. Because of these limitations, we primarily rely onour results as reported in accordance with IFRS and use EBIT, EBITDA and Adjusted EBITDA only supplementally. In addition, because other companies may calculate EBITDA and Adjusted EBITDA differently than we do, EBITDA may not be, and AdjustedEBITDA as presented in this report is not, comparable to similarly titled measures reported by other companies. 

 
iv 

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A reconciliation of our profit (loss) attributable to controlling shareholders, the mostdirectly comparable IFRS financial measure, to EBITDA and to Adjusted EBITDA is set forth below: 

 
   **Year ended December 31,**    **2012**  **2012**  **2011**  **2010**    **(in millions of U.S.$)**  **(in millions of Ch$)** 
Profit attributable to controlling shareholders
   521    249,959    274,333    296,261  
Profit attributable to non-controlling shareholders
   6    2,850    10,559    10,220  
**Net Income**
   527    252,809    284,892    306,481  
Financial expense (net)
   (423)   (202,912)   (133,152)   (69,807) 
Income tax charge
   (227)   (109,190)   (119,556)   (76,830) 
**EBIT**
   1,177    564,911    537,599    453,119  
Depreciation and amortization
   (295)   (141,450)   (120,174)   (102,310) 
**EBITDA**
   1,472    706,361    657,774    555,429  
Exchange differences
   (6)   (2,680)   (9,876)   (2,053) 
Increase on revaluation of investment properties(1)
   206    98,633    72,798    37,573  
Losses from indexation
   (54)   (25,915)   (31,289)   (15,657) 
**Adjusted EBITDA**
   1,326    636,323    626,141    535,565  
As a % of revenues
     
**Profit (loss)**
   2.76%   2.76%   3.7%   4.9% 
Financial income (expenses)
   (2.2%)   (2.2%)   (1.8%)   (1.1%) 
Income tax charge
   (1.2%)   (1.2%)   (1.6%)   (1.2%) 
**EBIT**
   6.2%   6.2%   7.1%   7.3% 
Depreciation and amortization
   (1.5%)   (1.5%)   (1.6%)   (1.6%) 
**EBITDA**
   7.7%   7.7%   8.6%   8.9% 
Exchange differences
   0.0%   0.0%   (0.1%)   0.0% 
Increase on revaluation of investment properties(1)
   1.1%   1.1%   1.0%   0.6% 
Losses from indexation
   (0.3%)   (0.3%)   (0.4%)   (0.3%) 
**Adjusted EBITDA**
   7.0%   7.0%   8.2%   8.6% 
 
(1)Represents a fair value adjustment of investment properties, through the application of discounted cash flows. 
 
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A reconciliation of our profit (loss) attributable to controllingshareholders, the most directly comparable IFRS financial measure, to EBITDA and to Adjusted EBITDA per business segment is included below: 

 

**Information by segment**
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