UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 20-F  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR  XANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                             EXCHANGE ACT OF 1934  For the fiscal year endedDecember 31, 2015  OR  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934  Date of event requiring this shell company report _____________  For the transition period from                _____________ to _____________  Commission file number0-20486  COMPAÑIA CERVECERIAS UNIDAS S.A. (Exact name of Registrant as specified in its charter) UNITED BREWERIES COMPANY, INC. (Translation of Registrant's name into English)  Republic of Chile (Jurisdiction of incorporation or organization) Vitacura 2670, Twenty-Third Floor, Santiago, Chile (Address of principal executive offices)  Felipe Dubernet, (562-24273536),fdubern@ccu.clVitacura 2670, Twenty-Third Floor, Santiago, Chile (Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person) _________________________________________   Securities registered or to be registered pursuant to section 12(b) of the Act.  Name of each exchange Title of each classon which registered American Depositary Shares                   New York Stock Exchange Representing Common Stock Common Stock, without par value           New York Stock Exchange* __________


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*    Not for trading, but
only in connection with the registration of American Depositary Shares which
are evidenced by American Depositary Receipts  Securities registered or to be
registered pursuant to Section 12(g) of the Act. Not applicable Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act. Not applicable  Indicate the number of
outstanding shares of each of the issuer's classes of capital or common stock
as of the close of the period covered by the annual report. Common stock, with no par
value:         369,502,872  Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. YESXNO____  If this report is an annual or
transition report, indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.  YESNOX  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by 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 the past 90 days. YESXNO_____  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 Rule 405 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 such files). YESNO__  Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filerXAccelerated filerNon-accelerated
filer____  Indicate by check mark which basis of
accounting the registrant has used to prepare the financial statements included
in this filing:  U.S. GAAPInternational Financial
Reporting Standards as issued               Other____ by the International Accounting
Standards BoardX  If
“Other” has been checked in response to the previous question, indicate by
check mark which financial statement item the registrant has elected to follow. ITEM 17ITEM 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 Exchange Act).  YESNOX


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Table of ContentsPageIntroduction

   iForward Looking Statements

   iiPART I

   3ITEM 1: Identity of Directors, Senior Management and Advisers

   3ITEM 2: Offer Statistics and Expected Timetable

   3ITEM 3: Key Information

   3ITEM 4: Information on the Company

   16ITEM 4A: Unresolved Staff Comments

   61ITEM 5: Operating and Financial Review and Prospects

   61ITEM 6: Directors, Senior Management and Employees

   80ITEM 7: Major Shareholders and Related Party Transactions

   92ITEM 8: Financial Information

   98ITEM 9: The Offer and Listing

   101ITEM 10: Additional Information

   103ITEM 11: Quantitative and Qualitative Disclosures about Market Risk

   117ITEM 12: Description of Securities Other than Equity Securities

   122PART II

   125ITEM 13: Defaults, Dividend Arrearages and Delinquencies

   124ITEM 14: Material Modifications to the Rights of Security Holders and Use of Proceeds

   124ITEM 15: Controls and Procedures

   124ITEM 16A: Audit Committee Financial Expert

   125ITEM 16B: Code of Ethics

   126ITEM 16C: Principal Accountant Fees and Services

   126ITEM 16D: Exemptions from the Listing Standards for Audit Committees

   126ITEM 16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers

   126ITEM 16F: Change in Registrant’s Certifying Accountants

   126ITEM 16G: Corporate Governance

   127ITEM 16H: Mine Safety Disclosure

   130PART III

   130ITEM 17: Financial Statements

   130ITEM 18: Financial Statements

   130ITEM 19: Exhibits

   130


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**Introduction**  In this annual report on Form 20-F, all references to “we,” “us,” “Company” or “CCU” are to Compañía Cervecerías Unidas S.A., an open stock corporation (sociedad anónima abierta) organized under the laws of the Republic of Chile, and its consolidated subsidiaries. Chile is divided into regions, each of which is known by its roman number (e.g. “Region XI”). Our fiscal year ends on December 31st. The expression “last three years’’ means the years ended December 31, 2013, 2014 and 2015. Unless otherwise specified, all references to “U.S. dollars” “dollars” “USD” or “US$” are to United States dollars, and references to “Chilean pesos” “pesos” “Ch$” or “CLP” are to Chilean pesos. We prepare our financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). See the notes to our consolidated financial statements included in pages F-1 through F-104 of this annual report. We use the metric system of weights and measures in calculating our operating and other data. The United States equivalent units of the most common metric units used by us are as shown below:  1 liter = 0.2642 gallons

   1 gallon = 3.7854 liters1 liter = 0.008522 US beer barrels

   1 US beer barrel = 117.34 liters1 liter = 0.1761 soft drink unit cases (8 oz cans)

   1 soft drink unit case (8 oz cans) = 5.6775 liters1 liter = 0.1174 beer unit cases (12 oz cans).

   1 beer unit case (12 oz cans) = 8.5163 liters1 hectoliter = 100 liters

   1 liter = 0.01 hectoliters1 US beer barrel = 31 gallons

   1 gallon = 0.0323 US beer barrels1 hectare = 2.4710 acres

   1 acre = 0.4047 hectares1 mile = 1.6093 kilometers

   1 kilometer = 0.6214 miles
  i


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**Forward Looking Statements**  This annual report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the “Securities Act,” and Section 21E of the Securities and Exchange Act of 1934, which we refer to as the “Exchange Act.” These statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable. They also relate to our future prospects, development and business strategies.  These forward-looking statements are identified by the use of terms and phrases such as “anticipate;” “believes;” “could;” “expects;” “intends;” “may;” “plans;” “predicts;” “projects;” “will” and similar terms and phrases. We caution you that actual results could differ materially from those expected by us, depending on the outcome of certain factors, including, without limitation:  ·our success in implementing our investment and capital expenditure program; ·the nature and extent of future competition in our principal marketing areas; ·the nature and extent of a global financial disruption and its consequences; ·political and economic developments in Chile, Argentina and other countries where we currently conduct business or may conduct business in the future, including other Latin American countries; and ·other factors discussed under “Item 3: Key Information – Risk Factors,” “Item 4: Information on the Company” and “Item 5: Operating and Financial Review and Prospects.”  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report. We undertake no obligation to publically update any of these forward-looking statements to reflect events or circumstances after the date of this annual report, including, without limitation, changes in our business strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events. ii


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PART I  ITEM 1: Identity of Directors, Senior Management and Advisers  Not applicable.  ITEM 2: Offer Statistics and Expected Timetable  Not applicable.  ITEM 3: Key Information  Selected Financial Data  The following table presents selected consolidated financial data as of and for the years ended December 31, 2015, 2014 and 2013 which has been derived from our consolidated financial statements prepared in accordance with IFRS and included elsewhere in this annual report, and as of and for the years ended December 31, 2012 and 2011 which has been derived from our consolidated financial statements prepared in accordance with IFRS and not included in this annual report. The financial data set forth below should be read in conjunction with the consolidated financial statements and related notesand “Item 5: Operating and Financial Review and Prospects” included elsewhere in this annual report.  Year ended December 31,IFRS

   

   2011

   2012

   2013

   2014

   20151. Income Statement Data:

   (million of CLP) (1)Net sales

   

   969,551

   1,075,690

   1,197,227

   1,297,966

   1,498,372Gross margin

   521,689

   582,603

   660,530

   693,429

   813,296Operating Result (2)

   192,818

   181,188

   188,266

   179,920

   204,937Other gains (losses)

   3,010

   -4,478

   959

   4,037

   8,512Net financing expenses

   -7,324

   -9,362

   -15,830

   -10,821

   -15,256Results as per adjustment units

   -6,728

   -5,058

   -1,802

   -4,159

   -3,283Foreign currency exchange differences

   -1,079

   -1,003

   -4,292

   -613

   958Income taxes

   

   -45,196

   -37,133

   -34,705

   -46,674

   -50,115Net income for the year:

   134,802

   123,977

   132,905

   120,792

   140,526Attributable to:Equity holders of the Parent Company

   122,752

   114,433

   123,036

   106,238

   120,808Non-controlling interests

   12,051

   9,544

   9,869

   14,553

   19,717Basic and Diluted Income per share

   385.40

   359.28

   370.81

   287.52

   326.95Basic and Diluted Income per ADS (3)

   770.80

   718.57

   741.61

   575.04

   653.90Dividend per share(4)

   192.7

   179.6

   166.5

   161.8

   163.5Dividend per ADS in US$ (3)(4)

   0.78

   0.76

   0.61

   0.52

   0.47Weighted average shares outstanding (000)

   318,503

   318,503

   331,806

   369,503

   369,503Shares outstanding as of December 31 (000)

   318,503

   318,503

   369,503

   369,503

   369,503


3

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Year ended December 31,IFRS

   

   2011

   2012

   2013

   2014

   20152. Balance Sheet Data:

   (Million of CLP)(1)Total assets

   

   1,298,365

   1,328,710

   1,727,720

   1,768,901

   1,823,357Total non-current liabilities

   251,026

   303,662

   234,347

   242,070

   247,144Total Financial debt(5)

   258,969

   263,997

   263,251

   199,853

   180,901Capital stock

   

   231,020

   231,020

   562,693

   562,693

   562,693Subtotal Equity attributable to equity holders of the parent company

   568,976

   613,220

   988,676

   1,025,588

   1,057,816Total shareholders' equity

   684,786

   710,518

   1,084,244

   1,148,500

   1,187,5223. Other DataSales volume (in millions of liters):Total volume

   1,839.7

   1,990.9

   2,191.6

   2,289.8

   2,391.0Chile Operating segment(6)

   1,260.4

   1,384.4

   1,557.0

   1,621.6

   1,686.5International Business Operating segment(7)

   458.1

   478.9

   507.1

   537.5

   569.7Wine Operating segment(8)

   121.2

   127.6

   127.4

   130.6

   134.8(1)

   Except for the number of shares outstanding, per share and per ADS amounts and sales volume.(2)

   Defined, for management purposes, as earnings before other gains (losses), net financial expenses, equity and income of joint ventures, foreign currency exchange differences, results as per adjustment units and income taxes. Please see “Item 5: Operating and Financial Review and Prospects—OPERATING RESULT” for more details regarding Operating Result and a reconciliation of the most directly applicable IFRS measure to Operating Result.(3)

   Per ADS amounts are determined by multiplying per share amounts by 2. As of December 20, 2012, there was an ADR ratio change from 1 ADR to 5 common shares, to a new ratio of 1 ADR to 2 common shares.(4)

   Dividends per share are expressed in Chilean pesos as of payment dates, with charge to prior year's net income. Dividends per ADS are expressed in U.S. dollars at the conversion rate in effect on the date on which payment is made.(5)

   Includes short-term and long-term financial debt (mainly bank loans, bonds and financial leasing).(6)

   Includes sales of beer, non-alcoholic beverages and spirits in Chile.(7)

   Includes sales of beer, non-alcoholic beverages and spirits in Argentina, Paraguay and Uruguay.(8)

   Includes domestic and export sales to more than 80 countries. Excludes bulk wine sales.
  Exchange Rates.Prior to 1989, Chilean law permitted the purchase and sale of foreign currency only in those cases explicitly authorized by the Central Bank of Chile. The Central Bank Act, which was enacted in 1989, liberalized the rules that govern the ability to buy and sell foreign currency. Currently, pursuant to the Central Bank Act, the Central Bank of Chile has the authority to mandate that certain purchases and sales of foreign currency specified by law are to be carried out in the formal exchange market. The formal exchange market is formed by banks and other entities authorized by the Central Bank of Chile. All payments and distributions made to our holders of ADSs must be transacted in the formal exchange market.  In order to keep fluctuations in the average exchange rate within certain limits, the Central Bank of Chile has in the past intervened by buying or selling foreign currency on the formal exchange market. In September 1999, the Central Bank of Chile decided to limit its formal commitment to intervene and decided to exercise it only under extraordinary circumstances, which are to be announced in advance. The Central Bank of Chile also committed to provide periodic information about the levels of its international reserves.  The observed exchange rate is the average exchange rate at which commercial banks conduct authorized transactions on a given date, as certified by the Central Bank of Chile. The Central Bank of Chile generally carries out its transactions at the spot market rate. Authorized transactions by banks are now generally conducted at the spot market rate.  Purchases and sales of foreign currencies effectuated outside the formal exchange market are carried out in theMercado Cambiario Informal(the informal exchange market). The informal exchange market reflects the supply and demand for foreign currency. There are no limits imposed on the extent to which the rate of exchange in the informal exchange market can fluctuate above or below the observed exchange rate. On April 1, 2016 the U.S. dollar observed exchange rate relating to March 31, 2016 was CLP 669.80 per U.S. dollar.


4

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The following table sets forth the low, high, average and period-end observed exchange rates for U.S. dollars for each of the indicated periods starting in 2011 as reported by the Central Bank of Chile. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos.   Daily Observed Exchange Rate (1)(CLP per USD)Low (2)

   High(2)

   Average (3)

   Period-end(4)2011

   455.91

   533.74

   483.57

   519.202012

   469.65

   519.69

   486.58

   479.962013

   466.50

   533.95

   495.53

   524.612014

   524.61

   621.41

   570.50

   606.752015

   597.10

   715.66

   654.79

   710.16October 2015

   673.91

   695.53

   684.48

   690.32November 2015

   688.94

   715.66

   705.00

   711.20December 2015

   693.72

   711.52

   704.39

   710.16January 2016

   710.16

   730.31

   721.40

   710.37February 2016

   689.18

   715.41

   703.31

   694.17March 2016

   669.80

   694.82

   681.02

   669.80Source: Bloomberg(1) Historical pesos.(2) Rates shown are the actual low and high, on a day-by-day basis for each period.(3) For yearly data, the average of monthly average rates during the period reported, and for monthly data, the average of daily average rates during the period reported.(4) Published on the first day after month(year) end.
  The exchange rate on April 22, 2016, the latest practicable date, was CLP 666.80per U.S. dollar.  Capitalization and Indebtedness  Not applicable.  Reasons for the Offer and Use of Proceeds  Not applicable.


5

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Risk Factors  RISKS RELATING TO
CHILE  We are substantially dependent on
economic conditions in Chile, which may adversely impact the results of our
operations and financial condition.  We are predominantly engaged in
business in Chile.60% of our sales revenues in 2015 was generated from our
Chile Operating segment,27% came from the International Business Operating segment,
which includes Argentina, Paraguay and Uruguay, and13% came from the Wine Operating segment. Thus, the results
of our operations and financial condition are dependent to a large extent on the
overall level of economic activity in Chile. The Chilean economy has experienced
an average annual growth rate of3.8% between 2010 and 2015, and2.1% in 2015. In the past, slower economic growth in Chile
has slowed down the rate of consumption of our products and adversely affected
our profitability. Chile’s economic performance was affected by the disruption
in the global financial markets in 2009 and catastrophic events such as
earthquakes in the years 2010 and 2015. Therefore growth rates of past periods
cannot be extrapolated to future performance.  Furthermore, Chile, as an emerging
market economy, is more exposed to unfavorable conditions in the international
markets which could have a negative impact on the demand for our products as
well as products of third parties with whom we conduct business. Any combination
of lower consumer confidence, disrupted global capital markets and/or reduced
international economic conditions could have a negative impact on the Chilean
economy and consequently on our business.  The relative liquidity and
volatility of Chilean securities markets may increase the price volatility of
our American Depositary Shares (“ADSs”) and adversely impact a holder’s ability
to sell any shares of our common stock withdrawn from our American Depositary
Receipt (“ADR”) facility.  The Chilean securities markets are
substantially smaller, less liquid and more volatile than major securities
markets in the United States. For example, the Santiago Stock Exchange, which is
Chile’s principal stock exchange, had a market capitalization of approximately
US$ 190.6 billion as of December 31, 2015, while The New York Stock Exchange
(“NYSE”) had a market capitalization of approximately US$24.5trillion and the NASDAQ National Market (“NASDAQ”) had a
market capitalization of approximately US$7.90trillion as of the same date. In addition, the Chilean
securities markets can be materially affected by developments in other emerging
markets, particularly other countries in Latin America.  The lower liquidity and greater
volatility of the Chilean markets relative to markets in the United States could
increase the price volatility of the ADSs and may impair a holder’s ability to
sell in the Chilean market shares of our common stock withdrawn from the ADR
facility in the amount and at the price and time the holder wishes to do so. See
“Item 9: The Offer and Listing.”  We are subject to different
corporate disclosure requirements and accounting standards than U.S.
companies.  Although the securities laws of
Chile which govern open stock corporations and publicly listed companies such as
us have as a principal objective promoting disclosure of all material corporate
information to the public, Chilean disclosure requirements differ from those in
the United States in certain important respects. In addition, although Chilean
law imposes restrictions on insider trading and price manipulation, the Chilean
securities market is not as highly regulated and supervised as the U.S.
securities market. We have been subject to the periodic reporting requirements
of the Exchange Act since our initial public offering of ADSs in September
1992.


6

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RISKS RELATING TO
ARGENTINA  We have operations in Argentina,
and economic conditions there have adversely affected the results of our
operations in the past and may do so in the future.  We have significant assets in
Argentina and we have generated significant income from our operations in this
country.  As demand for alcoholic and
non-alcoholic beverages is usually correlated with economic conditions
prevailing in the local market, which in turn is dependent on the macroeconomic
condition of the country, the financial condition and results of our operations
in Argentina are, to a considerable extent, dependent upon political and
economic conditions prevailing in Argentina. From 1999 through 2002, Argentina
suffered a prolonged recession, which culminated in an economic crisis. Although
the economic situation in Argentina has improved since the economic crisis of
2002, we have been observing a slowdown of the economy, and therefore, cannot
assure you that economic conditions in Argentina will continue to improve or
that our business will not be materially affected if Argentine economic
conditions were to deteriorate.  The Argentine peso is subject to
volatility which could adversely affect our results.  A devaluation of the Argentine
peso may adversely affect our operating results. In 2015 Argentina experienced
an average devaluation of the Argentine peso versus the dollar of14% year over year. We cannot assure you that the Argentine
economy will recover or that it will not face a recession, nor can we predict
what effect such a recession would have on our operations in Argentina. In 2009,
the Company first reported its financial statements under IFRS, using the
Argentine peso as the functional currency for our Argentine subsidiaries. The
results are calculated in Argentine pesos and then translated into Chilean pesos
for consolidation purposes.  Argentina’s legal regime and
economy are susceptible to changes that could adversely affect our Argentine
operations.  The measures taken by the previous
Argentine government to address the country’s economic crisis of 2002 severely
affected the Argentine financial system’s stability and have had a materially
negative impact on the country ́s economy. Recently, the Argentine government
lifted restrictions on foreign exchange transactions for obligations entered
into after December 17, 2015. Restrictions on obligations entered into before
December 17, 2015 will remain in effect until May 2016. If Argentina were to
experience a new fiscal and economic crisis, the Argentine government could
implement economic and political measures, which could adversely impact our
business.  Since January 2006, the Argentine
government has adopted different methods to directly and indirectly regulate the
prices of various consumer goods, including bottled beer, in an effort to slow
inflation. Additionally, measures taken by the previous Argentine government to
control the country’s trade balance and to limit the access to foreign
currencies have negatively impacted the free import of goods and royalty
payments by the Company, and also the repatriation of profits. This situation
has recently changed following the installation of the new government in
December 2015. We cannot assure you that the current Argentine government will
not implement this type of measures and that these will not have an adverse
effect on our operations in Argentina.  RISKS RELATING TO OUR
BUSINESS Potential changes to Chilean tax
rules may result in an increase in the prices of our products and a
corresponding decline in sales volumes.


7

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Changes such as the new Chilean
tax reform (the “Tax Reform Act”) that became effective on October 1, 2014, and
implemented a series of changes to the tax rates and tax policies, increasing
among other things the excise tax for alcoholic and sugar-containing beverages
in Chile, forced us to implement price increases for certain categories, leading
to a possible decline in volume.  Furthermore, the Tax Reform Act
establishes two different systems: “The Partially Integrated System” and the
“Attributed Income Regime”. The "Partially Integrated System" provides for a
gradual increase in the First Category Income tax rate, going from 20% to 21%
for the 2014 business year, to 22.5% for the 2015 business year, to 24% for the
2016 business year, to 25.5% for the 2017 business year  and to 27%
starting in the 2018 business year. The Tax Reform Act provides that
corporations will apply by default the "Partially Integrated System", unless a
future Extraordinary Shareholders Meeting agrees to opt for the "Attributed
Income Regime”.  Implementation of these or similar
future reforms that we are not aware of nor foresee, might adversely affect our
business, our operating result and our financial position.  Fluctuations in the cost of our
raw materials may adversely impact our profitability if we are unable to pass
those costs on to our customers.  We purchase malt, rice and hops
for beer, sugar for soft drinks, grapes for wine, pisco and cocktails, and
packaging material from local producers or in the international market. The
prices of those materials are subject to volatility caused by market conditions,
and have experienced significant fluctuations over time and are determined by
the global supply and demand for commodities as well as other factors, such as
fluctuations in exchange rates, over which we have no control.  Although we historically have been
able to implement price increases in response to increases in raw material
costs, we cannot assure you that our ability to recover increases in the cost of
raw materials will continue in the future. In particular, where raw material
price fluctuations do not keep pace with market conditions in the markets in
which we operate, we may have limited capacity to raise prices to offset
increases in costs. If we are unable to increase prices in response to increases
in raw material costs, any future increases in raw material costs may reduce our
margins and profitability if we are not able to offset such cost increases
through efficiency improvements or other measures.  Consolidation in the beer industry may impact our market
share.  In 2005,
SABMiller Plc merged with Grupo Empresarial Bavaria, a Colombian brewer with
operations in Colombia, Peru, Ecuador and Panama, forming the then
second-largest brewer in the world. In 2010SABMiller Plc acquired Cervecería
Argentina S.A. (“CASA Isenbeck”), the third-largest brewer in
Argentina, previously subsidiary of Warsteiner Brauerei Hans Cramer
GmbH & Co. (“Warsteiner”).  In March
2004, Companhia de Bebidas das Américas (“AmBev”) and Interbrew announced an
agreement to merge, creating the world’s largest brewer under the name InBev.
Additionally, in January 2007, AmBev assumed control of Quilmes Industrial S.A.
(“Quilmes”). In Chile, Quilmes sells its beer through Cervecería Chile S.A.
(“Cervecería Chile”). In November 2008 InBev and Anheuser-Busch Companies, Inc.
(“Anheuser-Busch”) merged, creating Anheuser-Busch Inbev (“AB Inbev”), the
worldwide leader in beer. In 2013, AB Inbev finalized the acquisition of Grupo
Modelo.  During
2015 SAB Miller plc accepted an offer from AB Inbev to merge its operations. The
merger has not yet been completed as it is subject to regulatory approvals. With
this we face a major challenge: we are witnessing one of the largest global
mergers in the history of beer and carbonated soft drinks, which will create a
powerful global player, capable of producing and distributing more than 700
million hectoliters per year, with presence in more than 65 countries. We are
monitoring the scope and implications of the possible regulatory restrictions to
this merger in the different countries where SABMiller plc and AB Inbev
currently operate, and possible consequences for our
operations.


8

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Competition in the Chilean beer market may erode our
market share and lower our profitability.  Our largest competitor in the
Chilean beer market by volume is Cervecería Chile. In the past, Cervecería Chile
has engaged in aggressive pricing. If Cervecería Chile were to amplify its
aggressive price discounting practices in the future, we cannot assure, given
the current environment, that any such discounting or other competitive
activities will not have a material adverse impact on our profitability or
market share.  Additionally, if commercial
conditions in the beer market continue to be relatively favorable in Chile, more
enterprises may attempt to enter this market, either by producing beer locally
or through importation. While we expect per capita beer consumption in Chile to
continue to increase, mitigating the effect of competition, the entry into the
market of additional competitors could erode our market share or lead to price
discounting.  Our beer brands in Chile may face
increased competition from other alcoholic beverages such as wine and spirits,
as well as from non-alcoholic beverages, such as carbonated soft
drinks.  Beer consumption in Chile may be
influenced by changes in the relative price of domestic wine, spirits and/or
other non-alcoholic beverages. Increases in domestic wine prices have tended to
lead to increases in beer consumption, while reductions in wine prices have
tended to reduce or slow the growth of beer consumption. As a result of our
lower market share in the Chilean wine, spirits and soft drinks markets as
compared to our market share in the Chilean beer market, we expect that our
consolidated profitability could be adversely affected if beverage consumers
were to shift their consumption from beer to either wine, spirits or
non-alcoholic beverages.  Quilmes dominates the beer market
in Argentina and we may not be able to maintain our current market
share.  In Argentina we face competition
from Quilmes and CASA Isenbeck, which as a result of the merger between AB Inbev
and SAB Miller plc, if consummated, would become one player in the Argentine
beer market. As a result of its dominant position in Argentina, Quilmes’ large
size by itself enables it to benefit from economies of scale in the production
and distribution of beer throughout Argentina, a position that would strengthen
as a result of the merger. Therefore, we cannot assure you that we will be able
to grow or maintain our current market share in the Argentine beer
market.  Restrictions in the gas supply
from Argentina and taxes on carbon dioxide emissions could increase our energy
costs, and higher oil prices could increase our distribution
expenses.  In the past, the Argentine
government restricted gas exports to Chile due to domestic supply problems. This
increased the operating cost of our beer plants in Chile and Argentina, and of
our non-alcoholic plants in Chile. As a consequence, the Chilean government
implemented a strategy to diversify the country’s energy supply. The
construction in Quintero of the first plant to process imported LNG (liquefied
natural gas), which started its operation in August 2009, brought relief to the
energy issue. Taxes on carbon dioxide emissions in Chile will go into effect in
2017, and the cost of these taxes will most likely be passed on to energy
prices. We cannot assure that the supply of energy or the cost thereof will not
experience future fluctuations. Electric power costs have increased
significantly in the past mainly due to hydroelectric plants having lower water
reservoir levels, which was exacerbated by the absence of new installed capacity
at lower costs. Increases in oil prices or unfavorable hydric conditions could
reduce our margins if we are unable to improve efficiencies or increase our
prices to offset them.


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Changes in the labor market in the countries in which we
operate may affect margins in our business.  In
December 2014, the Chilean government presented to the Chilean Congress a bill
for a labor reform which could result in a more rigid labor market. This reform
has been approved by the Chilean Congress but is currently pending resolution by
the Constitutional Court. The main elements of the labor reform are the
following: ·Collective
bargaining coverage is expanded to certain employees who were prevented from
exercising this right, such as apprentices, temporary workers and
others. ·Unions are
recognized as the only party entitled to exercise the right to collectively
bargain on behalf of the workers. ·Benefits
obtained by a union in the course of a negotiation are extended for the benefit
of any worker joining that union after the negotiation has concluded. The
extension of said benefits to employees would be contingent to the assent of
each union. ·Collective
bargaining agreements currently in effect would constitute a floor for the
negotiation of new conditions of employment. The financial situation of the
company or business as of the date of discussions for a new agreement would not
have any bearing on ongoing negotiations. ·The
employer's right to replace those workers participating in a strike with current
or new employees while the strike is taking place is curtailed. ·Modification of the definition of “minimum services”
through “emergency teams” for which unions are obliged to provide the personnel
required. These minimum services should be of a certain minimum level to prevent
accidents and protect the equipment. ·Matters
that may be subject to collective bargaining agreements are expanded, allowing
the negotiation of more flexible workdays, adaptable systems and
others. ·Unions may
annually request from large companies information regarding the remunerations
and duties associated with each category of employees.  In
Argentina, the high levels of inflation could affect our salary expenses.  We depend upon the renewal of
certain license agreements to maintain our current operations.  Most of our license agreements
include certain conditions that must be met during their term, as well as
provisions for their renewal at their expiry date. We cannot assure that such
conditions will be fulfilled, and therefore that the agreements will remain in
place until their expiration or that they will be renewed, or that any of these
contracts will not undergo early termination. Termination of, or failure to
renew our existing license agreements, could have an adverse impact on our
operations.  Consolidation in the supermarket industry may affect our
operations.  The Chilean supermarket industry
has gone through a consolidation process, increasing the importance and
purchasing power of a few supermarket chains. As a result, we may not be able to
negotiate favorable prices, which may adversely affect our sales and
profitability.  Additionally, and despite having
insurance coverage, this supermarket chain consolidation has the effect of
increasing our exposure to counterparty credit risk, given the fact that we have
more exposure in the event one of these large customers fails to honor its
payment obligations to us for any reason.  Dependence on a single supplier for some important raw
materials.  In the case of cans, both in Chile
and Argentina we purchase from a single supplier, Rexam, which has production
plants in both countries. However, cans could also be imported from other Rexam
plants or from alternative suppliers in the region. We have long term contracts
for malt in Chile and in Argentina. We purchase one way polyethylene
terephthalate resins (“PET”) from severalsuppliers located in
China, Mexico and US and in the past we have also purchased in Argentina. While
we have alternatives in procuring our supplies, if we were to experience
disruptions in our supply chain we cannot assure you we will be able to obtain
replacement supplies at favorable pricing or advantageous terms, which may
adversely affect our results.


10

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Water supply is essential to the
development of our businesses.  Water is an essential component
for beer, soft drinks, mineral and purified water. While we have adopted
policies for the responsible and sustainable use of water, a failure in our
water supply or contamination of our wells could negatively affect our sales and
profitability.  The Chilean Congress
is currently discussing a bill that provides, among others, a new regime of
temporary water rights, which apply to future water rights that are granted. The
bill would also introduce a system of revocation of water rights, for those not
in use. This bill could undergo modifications during its discussion in the
Chilean Congress. After its enactment, regulations will be required for the
implementation of the new regime, which is not expected to occur during the year
2016.  The supply, production and
logistics chain is key to the timely supply of our products to consumer
centers.  Our supply, production and
logistics chain is crucial for the delivery of our products to consumer centers.
An interruption or a significant failure in this chain may negatively affect our
results, if the failure is not quickly resolved. An interruption in the chain
could be caused by various factors, such as strikes, riots, complaints by
communities or other factors which are beyond our control.  If we are unable to protect our
information systems against data corruption, cyber-based attacks or network
security breaches, our operations could be disrupted.  We are increasingly dependent on
information technology networks and systems, including the Internet, to process,
transmit and store electronic information. In particular, we depend on our
information technology infrastructure for digital marketing activities and
electronic communications within the Company and with our clients, suppliers and
our subsidiaries. Security breaches of this infrastructure can create system
disruptions, shutdowns or unauthorized disclosure of confidential information.
If we are unable to prevent such breaches, our operations could be disrupted, or
we may suffer financial damage or loss because of lost or misappropriated
information.  Possible regulations for labeling materials and promotion
of alcoholic beverages and other food products in Chile could adversely affect
us.  Currently a bill that modifies law
N° 18,455 is in the third phase of being passed. The bill fixes standards for
production, elaboration and commercialization of ethyl alcohol, alcoholic
beverages and vinegar. The bill aims to establish restrictions on promotion
material, labeling and commercialization of alcoholic beverages including
warnings about the consumption of alcohol on labeling and promotion materials,
restrictions in hours of promotion and prohibition of participation in sports
and cultural events, among others. A regulatory change of this nature will
affect our alcohol beverages portfolio and certain marketing activities.  On June 26, 2015 decree N° 13 of
the Ministry of Health was published which modifies the Sanitary Food Products
Regulations (DC 977 of the Ministry of Health) and enforces Law N° 20,606 of
2012 regarding the nutritional composition of food products and its promotion.
Both regulations establish certain restrictions on promotion material, labeling,
and commercialization of these products that have been classified as being
“high” in calories or any of the defined critical nutrients, such as sodium,
sugar and saturated fats. Additionally on November 13, 2015 Law N° 20,869
regarding the promotion of food products was published, restricting the time of
day promotions for products high in calories or any of the defined critical
nutrient can be aired on television and in the cinema.


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This law will become effective as of June 27, 2016 and will affect a portion of our non-alcoholic portfolio. We are taking measures to mitigate the impact of this new law, though we cannot assure that these measures will be successful.  If further proposed bills are passed, or other regulations restricting the sale of non-alcoholic beverages or sweet snacks are enacted, this could affect consumption of our products and, as a consequence, negatively impact our business.  New environmental regulations, may negatively affect our profitability and reputation. CCU’s operations are subject to environmental regulations at local, national and international levels. These regulations cover, among other things, emissions, noise, disposal of solid and liquid wastes, and other activities inherent to our industry In Chile a bill has been approved by the Chilean Congress that establishes a framework for waste management and extended producer responsibility, also known as the recycling law, with the objective of lowering the generation of waste of proprietary products as determined by the bill and fostering recycling of the waste.  CCU places special care and dedicates constant efforts to the compliance with environmental regulations. Modifications to the existing regulation might involve new costs and investments by the Company.  Our products are taxed with different duties, particularly with respect to excise taxes on the consumption of alcoholic and non-alcoholic beverages.  The Argentine ad valorem excise tax is 8.7% for beer, and the Chilean ad valorem excise tax is 20.5% for beer and wine, 31.5% for spirits, 18% for non-alcoholic beverages containing more than 15 gr./240ml. of sugar and 10% for non-alcoholic beverages containing 15 gr./240ml. or less of sugar. An increase in the rate of these or any other tax could negatively affect our sales and profitability.  Currency fluctuations may affect our profitability.  Because we purchase some of our supplies at prices set in U.S. dollars, and export wine in U.S. dollars, Canadian dollars, euros and pounds, we are exposed to foreign exchange risks that may adversely affect our financial condition and the results of our operations. Therefore, any future changes in the value of the Chilean peso against said currencies would affect the revenues of our wine export business, as well as the cost of several of our raw materials, especially in the beer and soft drink businesses where prices of raw materials are indexed to the U.S dollar. The effect of the exchange rate variation on export revenues would have an opposite effect on the cost of raw materials expressed in Chilean peso terms.  Catastrophic events in the markets in which we operate could have a material adverse effect on our financial condition.  Natural disasters, climate change, terrorism, pandemics, strikes or other catastrophic events could impair our ability to manufacture, distribute or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to manage such events effectively if they occur, could adversely affect our sales volume, cost of raw materials, earnings and could have a material effect on our business, operational results, and financial position.  In 2015 Chile was affected by several natural disasters, including the large floods and mudflows in several towns of the Antofagasta, Atacama and Coquimbo regions during March 2015, and an 8.4 magnitude earthquake in the northern regions of Chile, followed by a tsunami on September 17, 2015. These events did not have a significant effect on our operations.


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A future earthquake, tsunami or
other natural disaster, however, could have a significant effect on our
business, results of operations and financial condition.  If we are unable to maintain the image and quality of our
products our financial results may suffer.  The image and quality of our
products is essential for our success and growth. Problems with product quality
could tarnish the reputation of our products and may adversely affect our
revenues.  If we are unable to finance our
operations we may be adversely affected.  A global liquidity crisis or an
increase in financial interest rates may eventually limit our ability to obtain
the cash needed to fulfill our commitments. Sales could also be affected by a
global disruption if consumption decreases sharply, placing stress on our cash
position.  RISKS RELATING TO OUR
ADSs We are controlled by one majority
shareholder, whose interests may differ from those of holders of our ADSs, and
this shareholder may take actions that adversely affect the value of a holder’s
ADSs or common stock.  As of March 31, 2016, Inversiones
y Rentas S.A. (“IRSA”) a Chilean closed corporation, directly and indirectly
owned 60.0% of our shares of common stock. Accordingly, IRSA has the power to
control the election of most members of our board of directors and its interests
may differ from those of the holders of our ADSs. IRSA also has significant
influence in determining the outcome of any corporate transaction submitted to
our shareholders for approval, including mergers, consolidations, the sale of
all or substantially all of our assets and going-private transactions. In
addition, actions by IRSA with respect to the disposal of the shares of common
stock that it owns, or the perception that such actions may occur, may adversely
affect the trading prices of our ADSs or common stock.  Chilean economic policies,
currency fluctuations, exchange controls and currency devaluations may adversely
affect the price of our ADSs.  The Chilean government’s economic
policies and any future changes in the value of the Chilean peso relative to the
U.S. dollar could adversely affect the dollar value and the return on any
investment in our ADSs. The Chilean peso has been subject to large nominal
devaluations and appreciations in the past and may be subject to significant
fluctuations in the future. For example, in the period from December 31, 2014 to
December 31, 2015, the daily average value of the Chilean peso relative to the
U.S. dollar increased by15%in nominal terms, whereas the year end value increased by
17% based on the observed exchange rate for U.S. dollars on those dates. See
“Item 3: Key Information – Selected Financial Data – Exchange Rates.”  While our ADSs trade in U.S.
dollars, Chilean trading in the shares of our common stock underlying our ADSs
is conducted in Chilean pesos. Cash distributions to be received by the
depositary for the shares of our common stock underlying our ADSs will be
denominated in Chilean pesos. The depositary will translate any Chilean pesos
received by it to U.S. dollars at the then-prevailing exchange rate with the
purpose of making dividend and other distribution payments on the ADSs. If the
value of the Chilean peso declines relative to the U.S. dollar, the value of our
ADSs and any distributions to holders of our ADSs received from the depositary
may be adversely affected. See “Item 8: Financial Information – Dividend Policy
and Dividends.”  For example, since our financial
statements are reported in Chilean pesos, a decline in the value of the Chilean
peso against the dollar would reduce our earnings as reported in U.S. dollars.
Any dividend we may pay in the future would be denominated in Chilean pesos. A
decline in the value of the Chilean peso against the U.S. dollar would reduce
the U.S. dollar equivalent of any such dividend. Additionally, in the event of a
dividend or other distribution, if exchange rates fluctuateduring any period of
time when the ADS depositary cannot convert a foreign currency into dollars, a
holder of our ADSs may lose some of the value of the distribution. Also, since
dividends in Chile are subject to withholding taxes, which we retain until the
following year when the exact amount to be paid is determined, if part of the
retained amount is refunded to the shareholders, the amount received by holders
of our ADSs would be subject to exchange rate fluctuations between the two
dates.


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Holders of our ADSs may be subject
to certain risks due to the fact that holders of our ADSs do not hold shares of
our common stock directly.  In order to vote at shareholders’
meetings, if a holder is not registered on the books of the ADS depositary, the
holder of our ADSs is required to transfer their ADSs for a certain number of
days before a shareholders’ meeting into a blocked account established for that
purpose by the ADS depositary. Any ADSs transferred to this blocked account will
not be available for transfer during that time. If a holder of our ADSs is
registered on the books of the ADS depositary, the holder must give instructions
to the ADS depositary not to transfer such holder’s ADSs during such period
before the shareholders’ meeting. A holder of our ADSs must therefore receive
voting materials from the ADS depositary sufficiently in advance in order to
make these transfers or give these instructions. There can be no guarantee that
a holder of our ADSs will receive voting materials in time to instruct the ADS
depositary on how to vote. It is possible that a holder of our ADSs will not
have the opportunity to exercise a right to vote at all. Additionally, a holder
of our ADSs may not receive copies of all reports from us or the ADS depositary.
A holder of our ADSs may have to arrange with the ADS depositary’s offices to
inspect any reports issued.  In the past, Chile has imposed
controls on foreign investment and repatriation of investments that affected
investments in, and earnings from, our ADSs.  Equity investments in Chile by
persons who are not Chilean residents have historically been subject to various
exchange control regulations that restrict repatriation of investments and
earnings therefrom. In April 2001, the Central Bank eliminated most of the
regulations that affected foreign investors, although foreign investors still
have to provide the Central Bank with information related to equity investments
and must conduct such operations within the formal exchange market. Additional
Chilean restrictions applicable to holders of our ADSs, the disposition of the
shares underlying them, the repatriation of the proceeds from such disposition
or the payment of dividends may be imposed in the future, and we cannot advise
you as to the duration or impact of such restrictions if imposed. See also “Item
10: Additional Information, D. Exchange Controls”.  If for any reason, including
changes in Chilean law, the depositary for our ADSs were unable to convert
Chilean pesos to U.S. dollars, investors would receive dividends and other
distributions, if any, in Chilean pesos.  The right of a holder of our ADSs
to force us to purchase the underlying shares of our common stock pursuant to
Chilean corporate law upon the occurrence of certain events may be
limited.  In accordance with Chilean laws
and regulations, any shareholder that votes against certain corporate actions or
does not attend the meeting at which certain corporate actions are approved and
communicates to the corporation their dissent in writing within the time period
established by law may exercise a withdrawal right, tender their shares to the
company and receive cash compensation for their shares, provided that the
shareholder exercises their rights within the prescribed time periods. See “Item
10: Additional Information–Memorandum and Articles of Association–Rights,
preferences and restrictions regarding shares.” In our case, the actions
triggering a right of withdrawal include the approval of:  ·our
transformation into a different type of legal entity;


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·our merger
with and/or into another company; ·the
transfer of 50% or more of our corporate assets, whether or not liabilities are
also transferred, to be determined according to the balance sheet of the
previous fiscal year, or the proposal or amendment of any business plan that
contemplates the transfer of assets exceeding said percentage; the disposition
of 50% or more of the corporate assets of a subsidiary, which represents at
least 20% of the assets of the corporation, as well as any disposition of shares
which results in the parent company losing its status as controller; ·the
granting of real or personal guarantees to secure third-party obligations
exceeding 50% of the corporate assets except when the third party is a
subsidiary of the company (in which case approval of the board of directors will
suffice); ·the
creation of preferences for a series of shares or the increase, extension or
reduction in the already existing ones. In this case, only dissenting
shareholders of the affected series shall have the right to withdraw; ·curing
certain formal defects in our charter which otherwise would render it null and
void or any modification of our bylaws that grant this right; and ·other
cases provided for by statute or in our bylaws, if any.  In addition, shareholders may
withdraw if a person becomes the owner of two-thirds or more of the outstanding
shares of the corporation as a consequence of a share acquisition and such
person does not make a tender offer for the remaining shares within 30 days from
the date of such acquisition.  Minority shareholders are also
granted the right to withdraw when the controller acquires more than 95% of the
shares of an open stock corporation.  Our bylaws do not provide for
additional circumstances under which shareholders may withdraw.  Because of the absence of legal
precedent as to whether a shareholder that has voted both for and against a
proposal, such as the depositary of our ADSs, may exercise withdrawal rights
with respect to those shares voted against the proposal, there is doubt as to
whether a holder of ADSs will be able to exercise withdrawal rights either
directly or through the depositary for the shares of our common stock
represented by their ADSs. Accordingly, for a holder of our ADSs to exercise its
appraisal rights, it may be required to surrender its ADRs, withdraw the shares
of our common stock represented by its ADSs, and vote the shares against the
proposal.  Preemptive rights to purchase
additional shares of our common stock may be unavailable to holders of our ADSs
in certain circumstances and, as a result, their ownership interest in our
Company may be diluted.  TheLey sobre Sociedades Anónimas N°
18,046 (“Chilean Corporations Act”) and theReglamento de
Sociedades Anónimas, require us, whenever we issue new shares for cash, to
grant preemptive rights to all holders of shares of our common stock, including
shares of our common stock represented by ADSs, giving those holders the right
to purchase a sufficient number of shares to maintain their existing ownership
percentage. We may not be able to offer shares to holders of our ADSs pursuant
to preemptive rights granted to our shareholders in connection with any future
issuance of shares unless a registration statement under the Securities Act is
effective with respect to those rights and shares, or an exemption from the
registration requirements of the Securities Act is available.


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We intend to evaluate at the time of any future offerings of shares of our common stock the costs and potential liabilities associated with any registration statement as well as the indirect benefits to us of enabling U.S. owners of our ADSs to exercise preemptive rights and any other factors that we consider appropriate at the time, before making a decision as to whether to file such a registration statement. We cannot assure you that any such registration statement would be filed.  To the extent that a holder of our ADSs is unable to exercise their preemptive rights because a registration statement has not been filed, the depositary will attempt to sell the holder’s preemptive rights and distribute the net proceeds of the sale, net of the depositary’s fees and expenses, to the holder, provided that a secondary market for those rights exists and a premium can be recognized over the cost of the sale. A secondary market for the sale of preemptive rights can be expected to develop if the subscription price of the shares of our common stock upon exercise of the rights is below the prevailing market price of the shares of our common stock. Nonetheless, we cannot assure you that a secondary market in preemptive rights will develop in connection with any future issuance of shares of our common stock or that if a market develops, a premium can be recognized on their sale. Amounts received in exchange for the sale or assignment of preemptive rights relating to shares of our common stock will be taxable in Chile and the United States. See “Item 10: Additional Information –Taxation– Chilean Tax Considerations –Capital Gains” and “–United States Federal IncomeTax Considerations– Taxation of Capital Gains.” If the rights cannot be sold, they will expire and a holder of our ADSs will not realize any value from the grant of the preemptive rights. In either case, the equity interest of a holder of our ADSs in us will be diluted proportionately.  ITEM 4: Information on the Company  A.History and Development of the Company  Our current legal and commercial name is Compañía Cervecerías Unidas S.A. We were incorporated in the Republic of Chile in 1902 as an open stock corporation, following the merger of two existing breweries, one of which traces its origins back to 1850, when Mr. Joaquín Plagemann founded one of the first breweries in Chile in Valparaíso. By 1916, we owned and operated the largest brewing facilities in Chile. Our operations have also included the production and marketing of soft drinks since the beginning of the last century, the bottling and selling of mineral water products since 1960, the production and marketing of wine since 1994, the production and marketing of beer in Argentina since 1995, the production and marketing of pisco since 2003, the production and marketing of sweet snacks products since 2004 and the production and marketing of rum since 2007.  We are subject to a full range of governmental regulation and supervision generally applicable to companies engaged in business in Chile, Argentina, Bolivia, Colombia, Paraguay and Uruguay. These regulations include labor laws, social security laws, public health, consumer protection and environmental laws, securities laws, and antitrust laws. In addition, regulations exist to ensure healthy and safe conditions in facilities for the production and distribution of beverages and sweet snacks products.  Our principal executive offices are located at Vitacura 2670, 23rd floor, Santiago, Chile. Our telephone number in Santiago is (56-2) 2427-3000, and our website is www.ccu.cl. Our authorized representative in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19715, USA, telephone number (302) 738-6680 and fax number (302) 738-7210. The information on our website is not incorporated by reference into this document.  In 1986, IRSA, our current principal shareholder, acquired its controlling interest in us through purchases of common stock at an auction conducted by a receiver who had assumed control of us following the economic crisis in Chile in the early 80’s, which resulted in our inability to meet our obligations to our creditors. IRSA, at that time, was a joint venture between Quiñenco S.A.

(“Quiñenco”) and the Schörghuber Group from Germany
through its wholly owned subsidiary Finance Holding International B.V. (“FHI”)
of the Netherlands.


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To our
knowledge, none of our common stock is currently owned by governmental entities.
Our common stock is listed and traded on the principal Chilean stock exchanges.
See “Item 7: Major Shareholders and Related Party Transactions.”  In September
1992, we issued 4,520,582 ADSs, each representing five shares of our common
stock, in an international American Depositary Receipt (“ADR”) offering. The
underlying ADSs were listed and traded on the NASDAQ, until March 25, 1999.
Since that date, the ADSs have been listed and traded on the NYSE. After a
capital increase approved by our shareholders in October 1996, we raised
approximately US$196 million between December 1996 and April 1999. Part of this
capital expansion was accomplished between December 1996 and January 1997
through our second ADR offering in the international markets. On December 20,
2012, the ratio of ADSs to shares of common stock was changed from 1 to 5, to a
new ratio of 1 to 2.  On June 18,
2013 the extraordinary shareholders’ meeting approved the issuance of 51,000,000
of ordinary shares which were registered in the Securities Registry of the
Superintendency of Securities and Insurance (“SVS”) under N°980 dated July 23,
2013. On November 8, 2013 CCU successfully concluded this capital increase, the
total number of shares issued pursuant to the capital increase having been
subscribed and paid, raising a total amount of CLP 331,718,929,410. This capital
increase, representing our third ADR offering in the international markets, was
made in order to continue our expansion plan, which includes organic and
inorganic growth in Chile and the surrounding region.  To increase
our presence in the premium beer segment, in November 2000 we acquired a 50%
stake in Cervecería Austral S.A. (“Cervecería Austral”), located in the city of
Punta Arenas, with an annual production capacity of 6.1 million liters. Further,
in May 2002, we acquired a 50% stake in Compañía Cervecera Kunstmann S.A.
(“CCK”), located in the city of Valdivia.  On April 17,
2003, the Schörghuber Group, at the time an indirect owner of 30.8% of our
ownership interest, gave Quiñenco, also at the time an indirect owner of 30.8%
of our ownership interest, formal notice of its intent to sell 100% of its
interest in FHI to Heineken Americas B.V., a subsidiary of Heineken
International B.V. As a result of the sale, Quiñenco and Heineken Americas B.V.,
the latter through FHI, became the only two shareholders of IRSA, the owner of
61.6% of our equity at that time, each with a 50% interest in IRSA. Heineken
International B.V. and FHI subsequently formed Heineken Chile Ltda., to hold the
latter’s 50% interest in IRSA. Therefore, Quiñenco and Heineken Chile Ltda. are
the only two current shareholders of IRSA, with a 50% equity each. On December
30, 2003, FHI merged into Heineken Americas B.V., which together with Heineken
International B.V. remained as the only shareholders of Heineken Chile Ltda. At
present IRSA owns, directly and indirectly, 60.0% of our equity.  Prior to
November 1994, we independently produced, bottled and distributed carbonated and
non-carbonated soft drinks in Chile. We have produced and sold soft drinks in
Chile since 1902 and spirits since 2003. In November 1994, we merged our soft
drink and mineral water businesses with the one owned by Buenos Aires
Embotelladora S.A. (“BAESA”) in Chile (PepsiCo’s bottler in Chile at that time)
creating Embotelladoras Chilenas Unidas S.A. (“ECUSA”) for the production,
bottling, distribution and marketing of soft drink and mineral water products in
Chile. Through ECUSA, we began producing PepsiCo brands under license (currently
Pepsi, Pepsi Light, Seven Up, Seven Up Light, Mirinda, Gatorade and Lipton Ice
Tea). We have had control of ECUSA since January 1998, when the shareholders
agreement was amended. On November 29, 1999 we purchased 45% of ECUSA’s shares
owned by BAESA for approximately CLP 54,118 million. We currently own 99.93% of
ECUSA’s shares. In January 2001, ECUSA and Schweppes Holdings Ltd. signed an
agreement to continue bottling Crush and Canada Dry brands. See “– Production
and Marketing – Chile Operating segment.” In December 2015 CCU started to
distribute Red Bull in Chile.


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In October
2013, CCU, together ECUSA, executed a series of contracts and agreements with
PepsiCo Inc. and affiliates, which allowed them to expand their current
relationship in the non-alcoholic beverages segment with specific focus on
carbonated soft drinks, as well as extending its long term duration. The
performance of ECUSA as PepsiCo Inc.’s bottler has been recognized by the latter
on several occasions including the award granted to ECUSA in Bangkok as Bottler
of the Year for the Latin America Region. In 2014, ECUSA received the
distinction of “PepsiCo Global Bottler of the Year” from over 200 bottlers
worldwide.  In January
2004, we entered the sweet snacks business by means of a joint venture between
our CCU Inversiones S.A. and Industria Nacional de Alimentos S.A, a subsidiary
of Quiñenco, with a 50% interest each in Calaf S.A. (which has been renamed
Foods Compañía de Alimentos CCU S.A., or Foods, a corporation that acquired the
trademarks, assets and know-how, among other things, of Calaf S.A.I.C. and
Francisca Calaf S.A., traditional Chilean candy makers, renowned for more than a
century. In August 2008, Foods bought 50% of Alimentos Nutrabien S.A., a company
specializing in muffins and other high quality home-made products under the
brand Nutrabien. In 2007 we acquired the brand Natur, adding cereal bars to our
portfolio. In 2015 we sold the brands Calaf and Natur to Empresas Carozzi S.A.
(“Carozzi”), leaving Foods with only the Nutrabien brand.  In December
2006, we signed a joint venture agreement with Watt’s S.A. (“Watt’s”), a local
food related company, under which, as of January 30, 2007, we participate in
equal parts in Promarca S.A. (“Promarca”). This new company owns, among others,
the brands “Watt’s,” “Watt’s Ice Frut,” “Yogu Yogu” and “Shake a Shake” in
Chile. Promarca granted both of its shareholders (New Ecusa S.A., a subsidiary
of ECUSA, and Watt ́s Dos S.A, a subsidiary of Watt ́s S.A), for an indefinite
period, the exclusive licenses for the production and sale of the different
product categories.  In December
2007, we entered into an agreement with Nestlé Chile S.A. and Nestlé Waters
Chile S.A., the latter of which acquired a 20% interest in our subsidiary Aguas
CCU-Nestlé Chile S.A. (“Aguas CCU”), the company through which we develop our
bottled water business in Chile. As part of this new association, Aguas CCU
introduced in 2008 the Nestlé Pure Life brand in Chile. Nestlé Waters Chile S.A.
had a call option to increase its ownership in Aguas CCU by an additional 29.9%,
which expired on June 5, 2009. On June 4, 2009 ECUSA received a notification
from Nestlé Waters Chile S.A. exercising its irrevocable option to buy 29.9% of
Aguas CCU equity, within the scope of the association contract. The completion
of the deal represented a profit before taxes for ECUSA of CLP 24,439 million.
On September 30, 2009 in extraordinary shareholders’ meetings, Aguas CCU and
Nestlé Waters Chile S.A. approved the merger of Nestlé Waters Chile S.A. and
Aguas CCU. The current shareholders of Aguas CCU are ECUSA (50.10%) and Nestlé
Chile S.A. (49.90%).  In December 2012, Aguas CCU
completed an acquisition of 51.01% of the company Manantial S.A. (“Manantial”),
a Home and Office Delivery (“HOD”) business of purified water in bottles with
the use of dispensers. The partnership enabled Aguas CCU to participate in a new
business category. The shareholders agreement of Manantial included a call
option to purchase the remaining shares. On January 29, 2016 Aguas CCU and ECUSA
exercised the call option, acquiring 48.07% and 0.92% of the shares of Manantial
respectively. As a consequence, Compañía Cervecerías Unidas S.A. is currently
the indirect owner of 100% of the shares of Manantial, remaining as the only
direct shareholders of Manantial: (i) Aguas CCU with 99.08% of the capital
stock, and (ii) ECUSA with 0.92% of the capital stock.  In February
2003, we began the sale of a new product for our beverage portfolio, pisco,
under the brand Ruta Norte. Pisco is a grape spirit very popular in Chile that
is produced in the northern part of the country. Our pisco, at that time, was
only produced in the Elqui Valley in Region IV of Chile and was sold throughout
the country by our beer division sales force. In March 2005, we entered into an
association with the second-largest pisco producer at that time, Cooperativa
Agrícola Control Pisquero de Elqui y Limarí Ltda. (“Control”). This new joint
venture was named Compañía Pisquera de Chile S.A. (“CPCh”), to which the
companies contributed principally with assets, commercial brands and – in the
case of Control – also some financial liabilities. Currently we own 80% of CPCh
and Control owns the remaining 20%. In May 2007, CPCh entered the rum marketwith our proprietary brand Sierra Morena and later, in
2008, added new rum brand extensions and introduced various pisco based
cocktails. Since 2011, our international strategy has focused on exports to
Argentina, the United States and Asia, including Russia. CPCh signed a licence
agreement for the commercialization and distribution in Chile of the pisco brand
Bauzá. In addition, CPCh acquired 49% of the licensor company Compañía Pisquera
Bauzá S.A. (“Bauza”), owner of the brand in Chile. In January 2016, CPCh sold
its interest in Bauzá to Agroproductos Bauzá S.A. Furthermore, during 2011 CPCh
began the distribution of Pernod Ricard products in Chile.


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In December
1995, we entered into a joint venture agreement pursuant to which Anheuser-Busch
Incorporated acquired a 4.4% interest in Compañía Cervecerías Unidas Argentina
S.A. (“CCU Argentina”). The agreement involved two different contracts: an
investment and a licensing contract. In 2008, the licensing contract was
extended until 2025 and grants CCU Argentina the exclusive right to produce,
package, market, sell and distribute Budweiser beer in Argentina. After
subsequent capital increases, the last one in June 2008, Anheuser-Busch
Incorporated reduced its interest in CCU Argentina to 4.04% and we increased our
participation to 95.96%. In December 2010, our subsidiary Inversiones Invex CCU
Ltda. acquired a 4.04% equity stake in CCU Argentina from Anheuser-Busch
Investment, S.L. After the acquisition, CCU, through its subsidiary Inversiones
Invex CCU Ltda., became the sole equity holder of CCU Argentina. This
transaction had no effect on the Budweiser brand production and distribution
contract which expires in 2025 (in 2015 for the distribution of the brand in
Chile). Currently, CCU ́s subsidiaries Inversiones Invex CCU Ltda. and
Inversiones Invex CCU Dos Ltda. own 80.649% and 19.351%, respectively, of CCU
Argentina ́s share capital.  Through CCU Argentina, we began
our expansion into Argentina by acquiring an interest in two Argentine
breweries: 62.7% of the outstanding shares of Compañía Industrial Cervecera S.A.
(“CICSA”), were acquired during January and February 1995 and 98.8% of the
outstanding shares of Cervecería Santa Fe S.A. (“CSF”), were acquired in
September 1995. In 1997, CCU Argentina increased its interest in CICSA to 97.2%
and in CSF to 99.9% through the purchase of non-controlling interests. In
January 1998, we decided to merge these two breweries into one company operating
under the name of CICSA. Following the merger, CCU Argentina’s interest in CICSA
was 99.2%. In April 1998, CCU Argentina completed the purchase of the brands and
assets of Cervecería Córdoba S.A. for US$8 million. After the resolution of
certain labor issues, we began the production of the Córdoba brand at our Santa
Fe plant from the middle of 1998. In April 2008, we bought the Argentine brewer
Inversora Cervecera S.A. (“ICSA”) after receiving the approval of the Argentine
antitrust authorities. CICSA paid an aggregate amount of US$88 million to
acquire ICSA. ICSA owns, among other assets, the Bieckert, Palermo and Imperial
beer brands, which together represented approximately 5.8% of the Argentine beer
market, and a brewery in Luján, Buenos Aires, with a nominal production capacity
of 270 million liters per year. On December 27, 2010, CICSA acquired equity
interests in Saénz Briones S.A. and Sidra La Victoria S.A. Through this
transaction, CICSA became the controlling shareholder of these companies. These
companies own the assets used in the production, packaging and marketing of
cider and other spirits businesses in Argentina, which are marketed through
several brands, including Sidra Real and Sidra La Victoria. In 2011, we started
to export Schneider beer to Paraguay through Bebidas del Paraguay S.A (“Bebidas
del Paraguay”), and in 2013 to Uruguay through Milotur S.A. (“Milotur”). In 2012
we signed an agreement by virtue of which we have the exclusive right to produce
Heineken beer in Argentina and distribute it in Paraguay. In 2013 we started
exporting Heineken to Uruguay through Milotur and in 2015 to Bolivia through
Bebidas Bolivianas BBO S.A. (“BBO”). Together, both brands represented 2.0% of
the total beer sales volume of CCU Argentina in 2015. Exports to Paraguay,
Uruguay and Bolivia represented 84% of CCU Argentina’s total exports in 2015. As
of June 6, 2014, CICSA reached agreements with Cervecería Modelo S. de R.L. de
CV. and Anheuser-Busch LLC, for the termination of the contract which allows
CICSA to import and distribute on an exclusive basis, Corona and Negra Modelo
beers in Argentina, and the license for the production and distribution of
Budweiser beer in Uruguay. CICSA received compensation in respect of these
agreements in the amount of ARS 277.2 million, equivalent to US$34.2
million.


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In September 2012, CCU acquired
100% of the shares of the Uruguayan companies Milotur S.A., Marzurel S.A. and
Coralina S.A. and, indirectly, of Andrimar S.A., a wholly-owned subsidiary of
Milotur S.A. These companies own the assets of a business developed in Uruguay
that engages in the production and marketing of bottled mineral waters under the
Nativa brand, and carbonated soft drinks under the Nix brand. This acquisition
is in line with the Company’s strategic plan, which seeks to expand its
activities into new markets. Milotur, our afilliate in Uruguay, also
commercializes Schneider and Heineken beer brands, the latter due to an
amendment to the trademark license agreement in force with Heineken Brouwerijen
B.V.  In December 2013, CCU acquired
50.005% of Bebidas del Paraguay, and 49.959% of Distribuidora del Paraguay S.A.,
entering the Paraguayan market with the production, marketing and sale of
non-alcoholic beverages, such as soft drinks, juices and water, and import,
marketing and sale of beer, under various brands, both proprietary and under
licensees and imported.  In 1994 we purchased 48.4% of the
equity of the Chilean wine producer Viña San Pedro S.A. (“VSP”, today “VSPT” as
described below) for approximately CLP 17,470 million. During the first half of
1995, VSPT’s capital was increased by approximately CLP 14,599 million, of which
we contributed approximately CLP 7,953 million. From August through October
1997, VSPT’s capital was increased again by approximately CLP 11,872 million, of
which we contributed approximately CLP 6,617 million, plus approximately CLP 191
million in additional shares bought during October 1997 in the local stock
market. Furthermore, in October 1998 and during 1999, we purchased additional
shares in VSPT through the local stock exchanges for an amount of approximately
CLP 5,526 million. From March through June 1999, VSPT’s capital was increased by
approximately CLP 17,464 million, of which we contributed approximately CLP
10,797 million. During 2000, VSPT, through its subsidiary Finca La Celia S.A.
(“FLC”), acquired the winery Finca La Celia in Mendoza, Argentina, initiating
its international expansion, allowing VSPT to include fine quality Argentine
wines into its export product portfolio. In December 2001, Viña Santa Helena
(“VSH”) created its own commercial and productive winemaking operation, distinct
from its parent, VSPT, under the Viña Santa Helena label in the Colchagua
Valley. Between November 2000 and March 2001, VSPT’s capital was increased by
approximately CLP 22,279 million, of which we contributed approximately CLP
13,402 million. In August 2003, VSPT formed Viña Tabalí S.A., a joint venture in
equal parts with Sociedad Agrícola y Ganadera Río Negro Ltda., for the
production of premium wines. This winery is located in the Limarí Valley,
Chile’s northernmost winemaking region, which is noted for the production of
outstanding wines. In October 2004, VSPT acquired the well-known Manquehuito Pop
Wine brand, a sparkling fruit-flavored wine with low alcohol content, broadening
its range of products. At VSPT’s extraordinary shareholders meeting held on July
7, 2005, the shareholders voted to increase the number of board members from 7
to 9 and approved a capital increase that was to be partially used for stock
option programs. During October and November 2005, VSPT’s capital was increased
by approximately CLP 346 million. We did not participate in this capital
increase. Viña Misiones de Rengo S.A. and Viña Urmeneta S.A. merged into Viña
Valles de Chile S.A., of which the latter is the legal successor, with effect as
of June 2013 and  in May 2014 Vitivinícola del Maipo S.A merged  into
Viñas Orgánicas S.A., the latter being the legal successor. Additionally, in
April 2015 Viña Santa Helena S.A. merged into Viña San Pedro Tarapacá S.A.,
pursuant to the Chilean Corporations Act, due to the fact that Viña San Pedro
Tarapacá S.A. became the sole shareholder of the company for more than 10
days.  In January
2007, Viña Tabalí S.A. bought the assets of Viña Leyda, located in the Leyda
Valley, a new winemaking region south of Casablanca Valley and close to the
Pacific Ocean. Viña Leyda produces excellent wines that have won awards in
different international contests. After this acquisition, Viña Tabalí S.A.
changed its name to Viña Valles de Chile S.A. In September 2007, VSPT bought a
50% interest in Viña Altaïr S.A. which belonged to Château Dassault, in line
with our strategy of focusing on premium wines. As a consequence, VSPT owns 100%
of said company.  Between April
and June 2007, VSPT’s capital was increased by approximately CLP 13,692 million,
of which we contributed approximately CLP 5,311 million. On November 2008, CCU
and its affiliate VSP entered into a Merger Agreement with Compañía Chilena de
Fósforos and its subsidiariesTerciados y Elaboración de Maderas S.A. and Viña Tarapacá
S.A. (“VT”), in order to merge VT into VSP. Under the terms of the Merger
Agreement, and prior to its execution, CCU had to acquire 25% of VT’s equity. On
December 3, 2008, the extraordinary shareholders’ meetings of VSP and VT
approved the merger of both companies. Once all the legal requirements were
fulfilled, the merger by absorption of VT by VSP was completed on December 9,
2008, with an effective date for accounting purposes of October 1, 2008. The
merged company was named “Viña San Pedro Tarapacá S.A.” (VSPT), which began
consolidating its financial statements with ours starting on October 1, 2008,
with operations commencing on December 9, 2008. VSPT’s capital was increased, as
a consequence of the merger, by issuing 15,987,878,653 shares to be exchanged
for the total number of shares issued by Viña Tarapacá at a ratio of 1,480.30828
new VSPT shares per each share of the absorbed company.


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In August
2011, the board of directors of VSPT agreed to spin-off Viña Valles de Chile
S.A. (VDC), a corporation owned, in equal parts, by VSPT and Agrícola y Ganadero
Río Negro Limitada (ARN). VDC had two major vineyards: Viña Tabalí and Viña
Leyda. According to such agreement, VSPT would remain the 100% owner of Viña
Leyda (whose net assets would remain within VDC) and ARN would remain the 100%
owner of Viña Tabalí (whose net assets would be assigned to the spun off
company). This transaction concluded on December 29, 2011, through a stock swap
contract, whereby VDC became a subsidiary of VSPT that is, directly and
indirectly, 100% owned by VSPT. Furthermore, in 2013, CCU, through its
subsidiary CCU Inversiones S.A., increased its stake in VSPT to 64.72% by
acquiring an additional stake of the outstanding shares of VSPT. As of December
2014, our total ownership interest in VSPT was 64.72%.VSPT is
formed by the wineries San Pedro, Tarapacá, Santa Helena, Misiones de Rengo,
Altaïr, Viña Mar, Casa Rivas, FLC, Bodega Tamarí, and Viña Valles de Chile (Viña
Leyda).These are all important and renowned cellars in Chile and
Argentina, each with its own distinctive brands. Since the merger, VSPT has
become the second-largest Chilean wine exporter and one of the leaders in the
domestic market. Furthermore, VSPT’s Viña San Pedro Tarapacá winery was awarded
the “Winery of the Year 2014” distinction by Wines of Chile, as well as “Ethical
Company of the Year” by Drinks Business Magazine. 2015 was a very special year
for VSPT with the celebration of the 150th Anniversary of Viña San
Pedro, the oldest that gave birth to the group.  On April 3, 2013, Andrónico Luksic
assumed the role of Chairman of the Board, after his brother, Guillermo Luksic
passed away.  On June 18,
2013 the extraordinary shareholders’ meeting approved the issuance of 51,000,000
of ordinary shares which were registered in the Securities Registry of the
Superintendency of Securities and Insurance (“SVS”) under N°980 dated July 23,
2013. On November 8, 2013 CCU successfully concluded this capital increase, the
total number of shares issued pursuant to the capital increase having been
subscribed and paid, raising a total amount of CLP 331,718,929,410. This capital
increase, representing our third ADR offering in the international markets, was
made in order to continue our expansion plan, which includes organic and
inorganic growth in Chile and the surrounding region.  In May 2014, CCU entered into a
partnership through which it participates in the business of Bebidas Bolivianas
BBO S.A. (“BBO”), which involves the production, marketing and multi-category
sales of alcoholic beverages and soft drinks in Bolivia. CCU's initial stake in
BBO is 34%, which was obtained by a capital injection, and which contemplates
the right of CCU to acquire additional interests that would enable it to own 51%
of the shares of BBO in a second stage. This transaction also includes contracts
that will allow BBO to operate CCU’s brands in Bolivia. The Company has recorded
this investment as joint venture and associates.  In November 2014, CCU, directly
and through its subsidiary CCU Inversiones II Ltda., signed a series of
contracts and agreements with the Colombian entity Postobón S.A. (“Postobón”),
by which we have agreed to initiate a joint venture for the manufacturing,
commercialization and distribution of beer and malt based non-alcoholic
beverages in Colombia. The joint venture is established through a company named
Central Cervecera de Colombia S.A.S (“Central Cervecera de
Colombia”), in which CCU and Postobón participate as equal shareholders. This transaction included the following contracts and agreements: an Investment Framework Agreement, a Shareholders Agreement, a long-term logistics and distribution contract and a sales contract governing services to be provided by Postobón to the Central Cervecera de Colombia, a trademark license agreements granted to Central Cervecera de Colombia by CCU and Postobón, a shared services agreement governing services to be provided by Postobón to Central Cervecera de Colombia S.A.S, and an exclusive license granted by Heineken to Central Cervecera de Colombia S.A.S for the import, production and distribution of Heineken products in Colombia. Central Cervecera de Colombia is accounted for as a Joint venture and associates.


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In November 2015, ECUSA entered into a joint operation agreement with Carozzi for the production, commercialization, and distribution of instant powder drinks under the brands Sprim, Fructus, Vivo and Caricia. This joint operation will be carried out by Bebidas Carozzi CCU SpA (“Bebidas Carozzi CCU”), of which ECUSA acquired 50% of the share capital. Carozzi will be in charge of the production of the respective products, and ECUSA will be in charge of its distribution.  CCU has launched its Strategic Plan 2016-2018, which is based on two pillars: Growth and Efficiencies, with a focus on our core categories beer and non-alcoholic beverages. We have proposed ourselves to grow profitably in all our categories and businesses, and at the same time we will seek efficiencies with determination, by executing our “ExCCelencia CCU” Program.  CAPITAL EXPENDITURES The capital expenditure figures for the last three years shown below reconcile to the Cash Flow statement as shown in the Consolidated Statements of Cash Flows.  Our capital expenditures for the last three years were CLP 124,559 million, CLP230,080 million andCLP 131,731 million, respectively totaling CLP486,370million of which CLP228,639million was invested in the Chile Operating segment, CLP91,132million in the International Business Operating segment, CLP27,579million in the Wine Operating segment and CLP139,020million in the Others Operating segment.  In recent years, our capital expenditures were made primarily for the expansion of our production capacities and bottling, improving the distribution chain, additional returnable bottles and boxes, marketing assets (mainly refrigerators), environmental improvements and the integration of new operations, among others.  During 2013 we invested 57% of our capital expenditures in our Chile Operating segment. These investments were required to support the increased sales volume experienced during 2012 and 2013. 22% of our capital expenditures were directed to increasing bottling capacity, new packaging, and marketing assets. It was also necessary to invest in the construction of new warehouses and stores throughout Chile in order to optimize the distribution of our products.  During 2014,37% of our capital expenditure was in our Chile Operating segment. These investments were required to increase marketing assets, bottling capacity and new packaging, mostly in our soft drink and beer categories. Furthermore, we acquired an industrial site in the Santiago metropolitan area for future capacity expansions (shown under Others).  During 2015,55% of our capital expenditure was in our Chile Operating segment. These investments were required to support the increased sales volume of our categories experienced in 2014, with investments related to increasing bottling capacity, new packaging, and marketing assets. We also needed to invest in building new warehouses and stores throughout Chile in order to optimize the distribution of our products.


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Our major capital expenditures for the period 2013-2015 are shown in the following table. See “Item 5: Operating and Financial Review and Prospects –Liquidity and Capital Resources – Capital Expenditures” for the 2016-2019 period.  Operating segment

   

   2013

   2014

   2015(CLP Millions)Chile

   

   70,441

   85,905

   72,293As a percentage of Total

   56.6%

   37.3%

   54.9%Machinery and equipment

   48,631

   50,730

   37,694Packaging

   12,611

   15,987

   10,256Marketing assets

   8,317

   11,253

   11,587Software and hardware

   49

   256

   703Others

   833

   7,679

   12,052International Business

   29,779

   33,481

   27,872As a percentage of Total

   23.9%

   14.6%

   21.2%Machinery and equipment

   14,632

   11,476

   10,509Packaging

   11,438

   14,070

   9,114Marketing assets

   2,617

   6,122

   3,987Software and hardware

   441

   512

   950Others

   650

   1,301

   3,312Wine

   

   4,840

   12,686

   10,053As a percentage of Total

   3.9%

   5.5%

   7.6%Machinery and equipment

   1,735

   4,139

   5,331Packaging

   1,360

   1,483

   1,292Marketing assets

   15

   36

   25Software and hardware

   63

   114

   134Others

   1,668

   6,914

   3,271Others

   

   19,498

   98,008

   21,514As a percentage of Total

   15.7%

   42.6%

   16.3%Total

   

   124,559

   230,080

   131,731
   Business Overview  Summary  CCU is a diversified beverage company operating principally in Chile, Argentina, Bolivia, Colombia, Paraguay and Uruguay. CCU is the largest Chilean brewer, the second-largest Chilean soft drinks producer and the largest Chilean water and nectar producer, the second-largest Argentine brewer, the second-largest Chilean wine producer and the largest pisco distributor. It also participates in the HOD, rum and confectionery industries in Chile, in the beer, water and soft drinks industries in Uruguay, and in the soft drinks, water and nectar industries and beer distribution in Paraguay and Bolivia. The Company has licensing and / or distribution agreements with Heineken Brouwerijen B.V., Anheuser-Busch Incorporated, PepsiCo Inc., Schweppes Holdings Limited, Guinness Overseas Limited, Société des Produits Nestlé S.A., Pernod Ricard and Coors Brewing Company.  CCU reports its consolidated results pursuant to the following Operating segments, essentially defined with respect to its revenues in the geographic areas of commercial activity: Chile, International Business and Wine. Corporate revenues and expenses are presented separately within the Other Operating segment. These Operating segments mentioned are consistent with the way the Company


is managed and how results will be reported by CCU. These segments reflect separate operating results which are regularly reviewed by each segment Chief Operating Decision Maker in order to make decisions about the resources to be allocated to the segment and assess its performance.


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In 2015 the Committee of International Business was created, which brought together management of the business activities regarding the geographical areas Argentina, Uruguay and Paraguay. Following this, the Río de la Plata Operating segment (consisting of the business activities referred to) was renamed into the International Business Operating segment. The Committee of International Business also represents and looks after the interests associated with the investments in Bolivia and Colombia, which continue to report their results under Equity and income of JVs and associated on a consolidated basis.  We evaluate the performance of the segments based on several indicators, including OR (Operating Result), ORBDA (Operating Result Before Depreciation and Amortization), ORBDA margin (% of ORBDA of total revenues for the segment), volumes and sales revenues. Sales between segments are conducted using terms and conditions at current market rates.  Overview. Chile Operating segment We estimate that our weighted volume market share for the Chile Operating segment was approximately 40.0%, 40.8% and 41.5% in 2013, 2014 and 2015 respectively. Weighted volume market share includes all categories in which CCU participates excluding wines and HOD, according to Nielsen figures.  We carry a wide portfolio of products which includes premium, mainstream and convenience brands of alcoholic and non-alcoholic beer, which are primarily marketed under ten different proprietary brands and five licensed brands, with Cristal as our flagship brand in Chile. In addition, we are the exclusive producer and distributor of Heineken beer; the exclusive distributor of imported Sol beer and Budweiser beer (the latter until December 2015) and we distribute and produce Kunstmann and Austral beer in Chile via distribution or license agreements. With our four production plants in Santiago, Temuco, Valdivia (Kunstmann) and Punta Arenas (Austral), we are the only brewery in Chile with a nationwide production and distribution network.  We also produce and sell non-alcoholic beverages in Chile, which includes carbonated soft drinks (both cola and non-cola), nectars and juices, sports and energy drinks, ice tea and waters (including mineral, purified bottled water and HOD with proprietary and licensed brands across our categories. Our line of soft drink products includes proprietary brands, in addition to brands produced under license from PepsiCo (for soft drinks, functional drinks and iced teas), Schweppes Holdings (for soft drinks) and Promarca (nectars and fruit beverages), which are produced in three production plants: Santiago, Temuco and Antofagasta. We have been in the bottled mineral water business since 1960, under our two proprietary brand names, Cachantun and Porvenir, which are bottled and distributed nationally from our two natural sources located within the central region of Chile (Casablanca and Coinco). We also produce and distribute purified waters under license from Societé des Produits Nestlé S.A. and others, and distribute the imported brand Perrier. We entered in the ready-to-mix category with instant powder drinks in a joint operation with Carozzi. In the energy drinks business, we are the exclusive distributor of Red Bull energy drinks in Chile.  In 2003, we added a new product to our beverage portfolio: pisco, which is produced by our subsidiary Pisconor S.A. who entered into an association agreement in 2005 with the second-largest pisco producer in Chile, Control, creating a new subsidiary, CPCh. In May 2007, CPCh entered the rum category through our proprietary brand “Sierra Morena.” In June 2010 CPCh purchased Fehrenberg, a small, but well-recognized spirits brand produced in Chile. In July 2011 CPCh began the distribution of Pernod Ricard products (Chivas Regal, Ballantine’s, Havana Club, Beefeater and Absolut among others) through the traditional channel, which excludes supermarkets with centralized distribution. Furthermore, during December 2011, CPCh acquired 49% of Compañía Pisquera Bauzá S.A., and


signed a license agreement for the commercialization and distribution of the Bauzá brand of pisco in Chile.In January 2016 CPCh sold its interest in Bauzá to Agroproductos Bauzá S.A..We operate five productive plants and own 80% of CPCh, while the remaining 20% is owned by Control. 24


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Wholesale and retail prices of all the previously mentioned categories are not regulated in Chile. Wholesale prices are subject to negotiation between the producer and the purchaser; while retailers determine retail prices to the final consumer. We believe that the key factors determining retailers’ prices include: national and/or local price promotions offered by the manufacturer, the nature of product consumption (on-premises or take-out), the type of packaging (returnable or non-returnable), the applicable tax structure and the desired profit margins considering all related costs and expenditures such as sales, distribution, marketing, G&A and production. International Business Operating segment We estimate that our weighted volume market share for the International Business Operating segment was approximately 16.9%, 17.1% and 18.2% in 2013, 2014 and 2015, respectively, including Beer and ciders in Argentina according to Nielsen, and CSD and Mineral water in Uruguay according to IDRetail.  We entered the Argentine beer market in 1995 by acquiring two breweries and their brands, CICSA and CSF. Under a joint venture agreement entered into with Anheuser-Busch in 1995, we began importing, selling and distributing Budweiser beer in Argentina in March 1996. We began production and distribution of locally produced Budweiser beer in Argentina in December 1996. Additionally, in 1998, we bought the brands and assets of Cervecería Córdoba S.A. In April 2008, we bought ICSA and as a result added to our portfolio the brands Palermo, Bieckert and Imperial. In Argentina, we are the exclusive producer and distributor of Heineken, Amstel and Sol beers and the exclusive distributor in Argentina of import Kunstmann and Guinness beer brands. Additionally, we export beer under the Schneider and Heineken brands. We have beer operations located in Salta, Santa Fe and Luján.  In December 2010, CICSA, our subsidiary in Argentina, acquired control of Sáenz Briones y Cía. S.A.I.C and Sidra La Victoria S.A., entering the cider and spirits businesses in that country. These two operations are the largest in a very fragmented market and own traditional, well-recognized brands, with operating plants in Río Negro (Allen) and Buenos Aires (Pilar and Ciudadela). The most important cider and spirits brands are Real, La Victoria, Saenz Briones 1888 and in spirits, El Abuelo. In 2015 the merger by absorption of Sáenz Briones and Sidra la Victoria was executed.  In September 2012, CCU acquired 100% of the shares of the Uruguayan companies Milotur S.A., Marzurel S.A. and Coralina S.A., and indirectly Andrimar S.A., a wholly-owned subsidiary of Milotur S.A. These companies own the assets of a business developed in Uruguay engaged in the production and marketing of bottled mineral and flavored waters under the Nativa brand, and carbonated soft drinks under the Nix brand. We also import and distribute Heineken, Schneider and Kunstmann beers. In 2016 we started to produce and distribute Watt ́s in Uruguay as well. By the end of 2013, CCUacquired 50.005% of Bebidas del Paraguay and 49.959% of Distribuidora del Paraguay S.A. andentered the Paraguayan market with the production, marketing and distribution of alcoholic and non-alcoholic beverages under various brands, both proprietary and under license. Bebidas del Paraguay is the owner of the brands Pulp for carbonated soft drinks, Puro Sol for juices and La Fuente for waters, and has been granted the license to produce and distribute nectars under the Watt’s brand. Additionally, Bebidas del Paraguay S.A. has the license to distribute beer under the Heineken, Coors, Paulaner, Schneider and Kunstmann brands.  On June 6, 2014, CICSA reached agreements with Cervecería Modelo S. de R.L. de CV. and Anheuser-Busch LLC, for the termination of the contract which allows CICSA to import and distribute on an exclusive basis, Corona and Negra Modelo beers in Argentina, and the license for the production and distribution of Budweiser beer in Uruguay.  25


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Wine Operating segment Viña San Pedro Tarapacá S.A. (VSPT) produces and markets a full range of wine products for the domestic and mainly the export market, reaching over 80 countries. The weighted average volume market share was 17.6%, 18.3% and 17.9% in 2013, 2014 and 2015, respectively. In 2015 VSPT’s sales amounted to approximately 28.4% of total measured domestic industry sales by volume in Chile, according to Nielsen, and 13.5% of total Chilean wine export sales by volume, when excluding bulk wine, according to Wines of Chile Association. VSPT’s main vineyards are located in all principal viticulture Chilean valleys, including productive plants in the cities of Lontué, Molina, Isla de Maipo and also in Mendoza, Argentina.  We believe that having entered into the Chilean wine business provided us with the opportunity to further leverage our nationwide distribution system through the expansion of our beverage portfolio. We also believe that the development of our domestic wine business helps to reduce the seasonality of our sales, as wine sales in Chile tend to be stronger during winter months when beer and soft drinks consumption decline.  Others  Comercial CCU S.A. (“Comercial CCU”) is responsible for the sale of all of the Company’s products through a unique sales force in those areas where this synergic sales model is more efficient.  Additionally, product distribution is handled by our subsidiary Transportes CCU Ltda. (“TCCU”). To the south of Coyhaique, sales and distribution are performed by Comercial Patagona S.A. In Argentina, Uruguay and Paraguay these operations are carried out by our own sales force as well as distributors.  Fabrica de Envases Plásticos S.A. (“PLASCO”), a subsidiary of CCU, produces nearly all of the returnable and non-returnable plastic bottles used by the Chile operating segment.  Joint Ventures and Associated companies  In May 2014, CCU entered the Bolivian market by means of a partnership through which it participates in the business of BBO, which is engaged in the production, marketing and multi-category sales of alcoholic beverages and non-alcoholic beverages in Bolivia. Specifically, it produces soft drinks and beer in three plants located in the cities of Santa Cruz de La Sierra and Nuestra Señora de La Paz. Since 2015 BBO has the exclusive license to import, distribute and sell Heineken beer from CICSA.  In November 2014, CCU entered into a series of contracts and agreements with Postobón, by which the parties agreed to initiate a joint agreement for the manufacturing, commercialization and distribution of beer and malt based non-alcoholic beverages in Colombia. Heineken has granted Central Cervecera de Colombia an exclusive contract for the import, production and distribution of Heineken products in Colombia.     26


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The Beverage Market Chile Operating segment We estimate that annual beer consumption in Chile was 764 million liters in 2015 or approximately 43 liters per capita. The following table shows our estimates for total and per capita consumption levels for beer in Chile for the years 2011 - 2015:  Year

   Total Sales Volume (1)

   Per Capita(in millions of liters)

   (liters)2011

   667

   392012

   681

   392013

   723

   412014

   745

   422015

   764

   43(1) Source: Canadean, Global Beverage Forecast of March 2016. Figures have been rounded
  The four major Chilean beer manufacturers are us, Cervecería Chile, CCK and Cervecería Austral, whose principal brands of beer in Chile are Cristal, Becker, Kunstmann and Austral, respectively. In November 2000, we acquired a 50% stake in Cervecería Austral, located in the city of Punta Arenas. In October 2001, Cervecería Austral entered into a license agreement with our subsidiary Cervecera CCU Chile Limitada (“Cervecería CCU”) to produce and sell our brand Cristal, as well as any other brand owned by or licensed to Cervecería CCU in the southern part of Chile. During 2003, Cervecería Austral began the production and sale of our brands Cristal, Escudo and Dorada. In May 2002, we acquired a 50% ownership interest in CCK, a microbrewery located in the southern city of Valdivia, with an annual production capacity of 3 million liters at that time. Since June 2003, our beer division began selling Kunstmann nationwide. In November 2006, we acquired additional shares of CCK that allowed us to consolidate this subsidiary into our financial statements since that month.  The non-alcoholic beverages market in Chile consists of both carbonated and non-carbonated beverages. The principal types of carbonated beverages are colas and non-colas. The principal non-carbonated beverages are fruit nectars and fruit based soft drinks. The table below sets forth our estimates of total and per capita consumption of non-alcoholic beverage in Chile during each of the last five years:  Non-Alcoholic Beverage SalesTotal Sales Volume (1)

   

   liters Per Capita (1)(in millions of liters)Year

   CarbonatedSoft Drinks

   Nectar & Juices (3)

   Waters(2)

   

   CarbonatedSoft Drinks

   Nectar & Juices (3)

   Waters(2)2011

   2,299

   359

   371

   

   134

   21

   222012

   2,390

   426

   416

   

   137

   25

   242013

   2,425

   470

   464

   

   138

   27

   262014

   2,345

   480

   500

   

   132

   27

   282015

   2,317

   471

   550

   

   129

   26

   31(1) Source: Canadean, Global Beverage Forecast of March 2016.(2) Includes HOD, excludes flavored waters.(3) Includes flavored waters.


27

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The
following table sets forth Nielsen estimates as to the percentage of total
carbonated soft drinks sales in Chile, represented by each of the two principal
categories of carbonated soft drinks during the last three years:  Type
    
    2013
    
    2014
    
    2015Colas
    
    55%
    
    55%
    
    54%Non-colas
    
    45%
    
    45%
    
    46%Total
    
    100%
    
    100%
    
    100%
   The
bottled water market in Chile is comprised of both carbonated and non-carbonated
mineral water, purified water and flavored water. Approximately 92% of all
bottled water in Chile is processed and marketed by two entities, us and Vital
Aguas S.A., a subsidiary of the two licensed companies of TCCC in Chile. Our
mineral water products have been produced by ECUSA since November 1994.  Traditionally, beer, wine and pisco have been the
principal alcoholic beverages consumed in Chile. Pisco is a distilled wine
spirit, produced exclusively in the III and IV Regions of Chile.  The table
below sets forth our estimates of Spirits consumption in Chile during each of
the last five years:  Year
    Total Spirits Sales Volume
      (1)
    Spirits per Capita(in millions of liters)
    (liters)2011
    54
    32012
    63
    42013
    68
    42014
    70
    42015
    71
    4(1) Source:
      Canadean, Global Beverage Forecast of March
2016.
   On October
1, 2014, the Chilean Tax Reform Act became effective, bringing a series of
changes to tax rates and tax schemes. There has been an increase in excise taxes
for alcoholic and sugar containing beverages in Chile. The new excise taxes are
as shown in the following table:  Category
    Previous
      Tax
    Current
      TaxBeer
    15.0%
    20.5%Wine
    15.0%
    20.5%Spirits
    27.0%
    31.5%Sugar
      containing Softdrink(1)
    13.0%
    18.0%No sugar
      containing Softdrink(2)
    13.0%
    10.0%Flavored
      Water
    13.0%
    10.0%(1) More than
      15 gr./240ml of sugar(2) With 15
      gr./240ml. or less of sugar


28

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International Business Operating segment The Argentine beer market is estimated by us to be almost 2.4 times the size of Chile’s. Traditionally, beer and wine have been the principal alcoholic beverages consumed in the country. We estimate that annual beer consumption in Argentina was 1,822 million liters in 2015 or approximately 42liters per capita, reflecting a 1.2% industry decrease for 2015.  The table below sets forth our estimates of beer consumption in Argentina during each of the last five years:  ArgentinaTotal Sales Volume

   

   liters Per Capita(in millions of liters)

   

   (Liters)Year

   Beer

   Functional Drinks

   Spirits

   Cider

   

   Beer

   Functional Drinks

   Spirits

   Cider2011

   1,871

   96

   124

   85

   

   45

   2

   3

   22012

   1,870

   105

   128

   94

   

   44

   2

   3

   22013

   1,844

   112

   129

   97

   

   43

   3

   3

   22014

   1,826

   117

   130

   94

   

   42

   3

   3

   22015

   1,822

   120

   130

   95

   

   42

   3

   3

   2Source: Canadean, Global Beverage Forecast of March 2016.
  Excise taxes for the beverage industry in Argentina have been subject to variations in the past. The last modification was in 1999 and has been applicable since January 2000. The following table showscurrent Argentine excise beverage taxes:  Product Type

   1999 Excise Taxes

   Current Excise TaxesNon-Alcoholic BeveragesFlavored soft drinks, mineral water and juices

   0% - 4%

   4.17% - 8.7%Alcoholic BeveragesBeer

   4%

   8.7%Whisky

   12%

   25%30% or more alcohol content

   8%

   25%Wine-cider

   6%

   0%
  The integration of the operations of Paraguay and Uruguay are progressing in line with plans, and we are expanding our portfolio of categories of soft drinks and beer. As of 2015, we participate in the production and marketing of bottled mineral and flavored waters, carbonated soft drinks, nectars and juices; and in the distribution of beer. The tables below set forth our estimates of beer and non-alcoholic categories consumption in Uruguay and Paraguay:


29

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UruguayTotal Sales Volume

   

   liters Per Capita(in millions of liters)

   

   (liters)Year

   Beer

   CSD

   Nectar & Juices(2)

   Water(1)

   

   Beer

   CSD

   Nectar & Juices (2)

   Water(1)2011

   101

   389

   38

   219

   

   30

   115

   11

   652012

   100

   392

   47

   240

   

   29

   115

   14

   712013

   99

   404

   52

   273

   

   29

   118

   15

   802014

   101

   404

   60

   290

   

   29

   118

   18

   852015

   102

   394

   65

   300

   

   30

   115

   19

   88Source: Canadean, Global Beverage Forecast of March 2016.(1) Includes HOD, excludes flavored waters.(2) Includes flavored waters.
   ParaguayTotal Sales Volume

   

   liters Per Capita(in millions of liters)

   

   (liters)Year

   Beer

   CSD

   Nectar & Juices (2)

   Water(1)

   

   Beer

   CSD

   Nectar & Juices (2)

   Water(1)2011

   283

   518

   51

   182

   

   43

   79

   8

   282012

   280

   558

   57

   206

   

   42

   83

   9

   312013

   283

   555

   60

   224

   

   42

   82

   9

   332014

   290

   559

   64

   252

   

   42

   81

   9

   362015

   299

   553

   64

   267

   

   42

   79

   9

   38Source: Canadean, Global Beverage Forecast of March 2016.(1) Includes HOD, excludes flavored waters.(2) Includes flavored waters.
  Wine Operating segment We estimate wine consumption in Chile was approximately 13 liters per capita in 2015. Given that the Chilean wine industry is fragmented, no single wine producer accounts for the majority of production and/or sales.The leading wineries include, other than VSPT, Viña Concha y Toro S.A.(“Concha y Toro”), Viña Santa Rita S.A. (“Santa Rita”) and Bodegas y Viñedos Santa Carolina S.A.(“Santa Carolina”).In addition, there are numerous medium-sized wineries, including Viña Undurraga S.A. (“Undurraga”), Cousiño Macul S.A. (“Cousiño Macul”) and Viña Montes. Chile’s formal wine market includes all wineries that sell wine products that comply with industry and tax regulations. VSPT is a member of the formal wine market, as are most other principal wineries in Chile. The informal wine market is composed of many small wine producers. The Agricultural and Livestock Service (Servicio Agrícola Ganadero, or “SAG”) is the entity in charge of wine industry regulation and principally oversees inventory records and product quality. The following chart shows our estimates for the formal wine market and per capita consumption levels for wine in Chile for the last five years:


30

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Year

   Total Volume(1)

   Per Capita(in millions of liters)

   (liters)2011

   232

   132012

   226

   132013

   227

   132014

   225

   132015

   231

   13(1)Source: Canadean, Global Beverage Forecast of March 2016.
  Wines in Chile can be segmented by product type. Chilean wineries produce and sell premium, varietal and popular-priced wines within the domestic market. Premium wines and many of the varietal wines are produced from high-quality grapes, aged and packaged in glass bottles. Popular-priced wines are usually produced using non-varietal grapes and are not aged. These products are generally sold in either cartons or jug packaging.  Production and Marketing. Chile Operating segment  The production, marketing and sales of beverages in Chile generated Net sales of CLP 765,196 million, CLP 830,341million and CLP 902,021 million, or 63.9%, 64.0% and 60.0% of our total Net sales, in 2013, 2014 and 2015, respectively. Our sales by volume in Chile increased 4.0% in 2015.  Under each license agreement, we have the exclusive right to produce, sell and distribute the respective licensed products in Chile. Generally, under our license agreements, we are required to maintain certain standards of quality with respect to the production of licensed products, to achieve certain levels of marketing and, in certain cases, to fulfill minimum sales requirements. We believe that we are in compliance with the quality of all of our license agreements.  On April 28, 2003, through our subsidiaries Cervecería CCU and CCU Argentina, we and Heineken Brouwerijen B.V. signed license and technical assistance agreements providing us with the exclusive rights to produce, sell and distribute Heineken beer in Chile and Argentina commencing June 18, 2003. On October 12, 2011, we signed with Heineken International B.V. the Amended and Restated versions of the Trademark License Agreements, which provide us with the exclusive rights to produce, sell and distribute Heineken beer in Chile and Argentina, as of January 1, 2011. These agreements have an initial term of 10 years, and shall automatically be renewed each January 1 for a new period of ten years, unless either party gives notice of its decision not to renew, in which case the agreements will be in force until the last renewal period expires. Heineken beer is the leading brand in the premium segment, the beer segment with the highest growth in Chile in recent years.  Cristal is our principal and best selling beer brand in Chile, followed by Escudo, the second most popular beer in the country. Other relevant brands are: Royal Guard, our single, proprietary, premium brand; Morenita in the dark beers; Dorada as our convenience brand; and Lemon Stones a lemon flavored sweetened beer, with 2.5% alcohol content. From time to time, we introduce innovations in our most relevant brands. These innovations include Cristal Cer0,0°, Cristal Light, the 1.2 liter returnable bottle, Escudo Negra and Escudo Triple X, amongst others.  In October 2001, we signed a license agreement with Cervecería Austral for the production of the Austral brand by our beer division. This agreement is currently renewable for periods of two years, subject to compliance with the contract conditions. Our investment in Cervecería Austral, the production of the Austral brand by our beer division; the investment in CCK (Kunstmann is a specialty beer produced in a variety of versions); and the production of Heineken beer since June 2003, among other initiatives, are part of our strategy to increase our presence in the premium segment of the Chilean beer market.


31

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On April 30, 2010, FEMSA announced the closing of the transaction pursuant to which FEMSA agreed to exchange 100% of its beer operations for a 20% economic interest in the Heineken Group. Since then, Heineken introduced the Sol brand to its portfolio, and in 2013 we launched the Sol brand in the north of Chile as a successful test plan to compete in the imported Mexican beer segment, and in 2014 we completed the national roll out of the brand. Similar to the Heineken brand, we have an exclusive 10 year, automatically renewable license on the same terms (Rolling Contract), each year for a period of 10 years, unless notice of non-renewal is given for Chile and Argentina.  During January 2015, we launched Coors and Coors Light in Chile. The license agreement with Coors Brewing Company considers after the initial termination date, the automatic renewal under the same conditions (Rolling Contract), each year for a period of 5 years, subject to the compliance with the contract conditions.  The following table shows our proprietary beer brands, brands produced under license and brands imported under license for the Chilean Market:  Premium

   Mainstream

   Conveniencebeer brands

   beer brands

   beer brandsRoyal Guard

   Cristal

   DoradaRoyal Guard Black Label

   Cristal Cer0,0°Heineken(1)

   Cristal LightBudweiser (2) (3)

   EscudoAustral (1)

   Escudo NegraKunstmann

   Escudo XXXD'olbek

   MorenitaSol(1)

   Lemon StonesCoors(2)Tecate(2)Blue Moon(2)Szot(1) Produced under license(2) Imported(3) License in Chile until December 31, 2015
  Our beer products sold in Chile are bottled or packaged in returnable and non-returnable bottles, aluminum cans or stainless steel kegs at our production facilities in the Chilean cities of Santiago, Temuco, Valdivia and Punta Arenas. The Temuco plant commenced production in November 1999, replacing the closed Concepción and Osorno plants.  During the last three years we sold our beer products in Chile in the following containers:


32

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Percentage of Total Beer Products SoldContainer

   2013

   2014

   2015Returnable (1)

   47%

   44%

   42%Non-returnable (2)

   50%

   52%

   55%Returnable kegs (3)

   3%

   3%

   4%Total

   100%

   100%

   100%(1)       Returnable beer containers include glass bottles of various sizes.(2)       Non-returnable beer containers include bottles and aluminum cans, both of assorted sizes.(3)       Returnable kegs are stainless steel containers, which have a capacity of 20, 30 and 50 liters.
  The following table sets forth our beer sales volume breakdown in Chile by category, for each of the last three years:  Category

   2013

   2014

   2015Premium

   16%

   18%

   20%Mainstream

   80%

   78%

   76%Convenience

   4%

   4%

   4%Total

   100%

   100%

   100%
  In 1994, our subsidiary ECUSA and Cadbury Schweppes plc (“Cadbury Schweppes”), the latter through its subsidiaries CS Beverages Ltd. and Canada Dry Corporation Ltd., entered into license agreements for all Cadbury Schweppes products. On December 11, 1998, TCCC announced an agreement with Cadbury Schweppes to acquire certain of the latter's international beverage brands, including those licensed to ECUSA, and in August 1999 the agreement was reported to have been consummated. In September 2000, after more than a year’s litigation, both in Chile (suits at civil courts and antitrust authorities) and England (arbitration under ICC rules), ECUSA and TCCC reached an agreement superseding ECUSA’s previous license contracts with CS Beverages Ltd. and Canada Dry Corporation Ltd. The new agreement, referred to as the “Bottler Contract,” was executed between ECUSA and Schweppes Holdings Ltd., concerning the Crush and Canada Dry brands, and was approved by the Chilean antitrust commission, thus putting an end to the proceeding regarding the Cadbury Schweppes brands issue and dismissing all complaints filed in consideration of the agreement. On January 15, 2009, the parties executed an amendment to the Bottler Contract which, among others, extended its duration until December 31, 2018, renewable for consecutive five-year periods provided that certain conditions are fulfilled.  In August, 2002, we began importing, selling and distributing Gatorade, the world’s number one isotonic drink. In March 2006, a new exclusive bottling agreement was executed between ECUSA and Stokely Van-Camp, Inc., a subsidiary of PepsiCo, Inc., authorizing ECUSA to bottle, sell and distribute Gatorade products in Chile, for an initial term ending on March 31, 2010, automatically renewable for successive two or three-year periods if certain conditions set forth in the contract are met. In 2012, this agreement was renewed until March 31, 2015. At this time the Gatorade license is set to expire in December 2018, renewable for an additional period equal to the duration of the Shareholders Agreement of Bebidas CCU-PepsiCo Spa, subject to the compliance with the contract conditions. Since October 2006, we have been producing Gatorade locally.  In November 2007, ECUSA signed an exclusive bottling agreement with Pepsi Lipton International Limited, authorizing ECUSA to produce, sell and distribute ready to drink tea beverages in Chile. This agreement terminates on March 31, 2020.


33

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The license agreement for nectar products with Watt’s, which granted us exclusive production rights, was first signed in June 1977 and originally had a 33-year term. In February 1999, a new license agreement was signed allowing us to produce new flavors and bottle Watt’s nectars in non-returnable packaging (wide mouth glass and plastic bottles). A new license agreement between us and Watt’s S.A. was signed in July 2004. This new contract provided us with a ten-year license renewable automatically for three consecutive periods of three years if the conditions set forth in the contract are fulfilled at the date of renewal. In December 2006, we signed a joint venture agreement with Watt’s S.A., under which, as of January 30, 2007, we participate in equal parts in Promarca S.A. This new company owns the brands “Watt’s”, “Watt’s Ice Frut”, “Yogu Yogu”, “Shake a Shake” and “Frugo”, among others in Chile. Promarca S.A. granted both of its shareholders(New Ecusa S.A., a subsidiary of ECUSA, and Watt ́s Dos S.A, a subsidiary of Watt ́s S.A),for an indefinite period, the exclusive licenses for the production and sale of the different product categories.  In February 2005, we launched a new Cachantun product, under the trademark Mas, a sugar free product made of mineral water, calcium and citric flavor, creating a new category of flavored water.  In December 2007, we entered into an agreement with Nestlé Chile S.A. and Nestlé Waters Chile S.A., the latter of which acquired a 20% interest in our subsidiary Aguas CCU, the company that owns the assets through which we develop our bottled water business in Chile. As part of this new association, Aguas CCU produces and sells the Nestlé Pure Life brand in Chile under a license contract of the same date, with an initial term of five years, renewable for successive periods of five years if certain conditions are met. Nestlé Waters Chile S.A. had a call option to increase its ownership in Aguas CCU by an additional 29.9%, which expired on June 5, 2009. On June 4, 2009 ECUSA received the notification from Nestlé Waters Chile S.A. exercising its irrevocable option to buy 29.9% of Aguas CCU equity, within the scope of the contract. Since the conclusion of the sale, ECUSA holds 50.10% of the ownership interests of Aguas CCU. CCU owns directly or indirectly 99.93% of ECUSA’s equity.  In December 2012, the subsidiary Aguas CCU-Nestlé Chile S.A. acquired a 51% ownership interest in the company Manantial S.A. which carries out the business of home and office delivery of purified water in bottles with the use of dispensers. Additionally, a shareholder’s agreement with Manantial S.A. was entered into in connection with the acquisition.  On October 2013, CCU together with its subsidiary ECUSA executed a series of contracts and agreements with PepsiCo Inc. and its affiliates that will allow the parties to expand their current relationship in the non-alcoholic beverages segment with specific focus on the carbonated soft drinks, as well as extending the duration of their long-term relationship. Pursuant to these agreements, which take into account the creation of an affiliate, Bebidas CCU-PepsiCo SpA, the licenses to produce, sell and distribute in Chile Pepsi, 7up and Mirinda (Pepsi brands) and Bilz Pap, Kem and Nobis (CCU brands) were granted to ECUSA until December 2043.  Aligned with our innovation process: during 2002 we launched Bilz Light, Pap Light, Agua Tónica Light and Gatorade. In April 2003, we introduced to the market Kem Xtreme, a soft drink with a high level of caffeine. In September 2004, we launched Canada Dry Ginger Ale Light, and in October 2004, we re-launched Nobis, a traditional proprietary soft drink brand, to be used strategically against discount brands. In September 2006, we launched Canada Dry Limón Soda Light. In January 2007, we introduced two new products into the market: (i) Slice by Kem, a tropical fruit flavored soft drink, and (ii) SoBe Adrenaline Rush, an energy drink sold under the PepsiCo license. In November 2007, we entered into a new product category, ice tea, with the brand Lipton Ice Tea, produced by us under the PepsiCo license. During 2008 we introduced Watt’s Soya from Promarca (50% owned by us), and Nestlé Pure Life from Aguas CCU, a well-known purified water brand, in order to place ourselves in a leading position in the healthy foods market. In 2009, the Company introduced Mas Woman by Cachantun, a beverage made from Cachantun mineral water, in a variety of flavors, targeted towards women. In addition, in the same year, the Company began to import the renowned mineral water Perrier. In 2011 we introduced several new product offerings including Pop from Bilz and Pap, Kem Xtreme Girl, the first zero calorie energy soft drink developed specifically for women, Slice by Kem,


Lipton Feel Green in two flavors and powder Gatorade. During 2014 we continued our innovation strategy launching brands like Adrenaline Red, a locally produced energy drink that replaced SoBe Adrenaline Rush, Sobe Waters and Ocean Spray (all licensed by PepsiCo), Kem Rio Guaraná and Kem Xtreme Sugar Free. In December 2015, we signed an exclusive distribution agreement with Red Bull for the sales and distribution of Red Bull energy drink products in Chile. Furthermore, in December 2015 we began a joint operation with Carozzi in order to participate in the Ready-to-mix categories with the brands Vivo, Sprim, Fructus and Caricia.


34

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The following table shows the soft drink and water brands produced and/or sold by us through our non-alcoholic subsidiary ECUSA, during 2015:


35

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Brand

   Product

   Category

   Affiliation(1)Bilz

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryPap

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryBilz Light

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryBilz Zero

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryPap Light

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryPap Zero

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryPop Candy

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryKem

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryKem Xtreme

   Soft Drink

   Functional

   CCU ProprietaryKem Xtreme Sugar Free

   Soft Drink

   Functional

   CCU ProprietaryKem Zero

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryNobis

   Soft Drink

   Non-Cola Proprietary

   CCU ProprietaryCanada Dry Ginger Ale

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Canada Dry Ginger Ale Light

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Canada Dry Agua Tónica

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Canada Dry Agua Tónica Light

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Canada Dry Limón Soda

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Canada Dry Limón Soda Light

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Crush

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Crush Light

   Soft Drink

   Non-Cola Licensed

   Schweppes Holdings Ltd.Pepsi

   Soft Drink

   Cola Licensed

   PepsiCoPepsi Light

   Soft Drink

   Cola Licensed

   PepsiCoSeven-Up

   Soft Drink

   Non-Cola Licensed

   PepsiCoSeven-Up Light

   Soft Drink

   Non-Cola Licensed

   PepsiCoLipton Ice Tea

   Ice Tea

   Non-Cola Licensed

   PepsiCoMirinda

   Soft Drink

   Non-Cola Licensed

   PepsiCoGatorade

   Isotonic

   Functional

   PepsiCoOcean Spray

   Nectars

   Licenced

   PepsicoAdrenaline Red

   Energy

   Licensed

   PepsiCoSOBE LIFE WATER

   Functional Drink

   Licensed

   PepsicoRed Bull

   Energy

   Licensed

   Red BullFrugo

   Soft Drink

   Licensed

   PromarcaWatt’s

   Nectars

   Licensed

   PromarcaWatt’s Light

   Nectars

   Licensed

   PromarcaWatt's Clear

   Nectars

   Licensed

   PromarcaCachantun

   Mineral Water

   Proprietary

   Aguas CCUMas de Cachantun

   Mineral Water based beverage

   Proprietary

   Aguas CCUMas Woman

   Mineral Water based beverage

   Proprietary

   Aguas CCUPorvenir

   Mineral Water

   Proprietary

   Aguas CCUPerrier

   Mineral Water

   Licensed

   Nestlé Waters M&DNestlé Pure Life

   Purified Water

   Licensed

   Société des Produits Nestlé S.A.& othersManantial

   HOD

   Proprietary

   ManantialVivo

   RTM

   Licensed

   Bebidas Carozzi CCUFructus

   RTM

   Propietary

   Bebidas Carozzi CCUSprim

   RTM

   Propietary

   Bebidas Carozzi CCUCaricia

   RTM

   Licensed

   Bebidas Carozzi CCU(1) CCU owns directly or indirectly 50% of Promarca and 50.1% of Aguas CCUAguas CCU and ECUSA own 99.08% and 0.92% of Manantial, respectivelyECUSA owns 50% of Bebidas Carozzi CCU


36

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During the last three years, we sold our non-alcoholic beverageproducts in the following packaging formats:   Carbonated Soft Drinks, Nectars and Juices

   

   Mineral and Purified WaterContainer

   2013

   2014

   2015

   

   2013

   2014

   2015Returnable(1)

   29%

   28%

   27%

   

   28%

   28%

   28%Non-returnable(2)

   69%

   70%

   71%

   

   72%

   72%

   72%“Post-Mix”(3)

   2%

   2%

   2%

   

   -

   -

   -Total

   100%

   100%

   100%

   

   100%

   100%

   100%(1) Returnable soft drink containers include both glass and plastic bottles of assorted sizes. Returnable water containers include glass bottles of assorted sizes and returnable 20-liter jugs and HOD.(2) Non-returnable soft drink containers include glass and plastic bottles, and aluminum cans of assorted sizes. Non-returnable water containers include plastic bottles and certain glass bottles of assorted sizes.(3) Post-mix cylinders are sold specifically to on-premise locations for fountain machines.
  The following table shows the sales mix of our non-alcoholic beverages by category during each of the last three years:  Category

   2013

   2014

   2015ColasLicensed

   16%

   16%

   16%Non-colasProprietary

   36%

   36%

   36%Licensed

   27%

   27%

   25%NectarsLicensed

   21%

   22%

   23%Soft drinks total

   100%

   100%

   100%Mineral waterProprietary

   66%

   64%

   61%Licensed

   0%

   0%

   0%Purified waterProprietary

   0%

   0%

   0%Licensed

   7%

   8%

   11%HOD

   27%

   28%

   28%Total Bottled Water

   100%

   100%

   100%
  The following table shows the sales mix of our non-alcoholic beverages by affiliation during each of the last three years:  Affiliation

   2013

   2014

   2015Soft drinksProprietary

   26%

   25%

   26%Schweppes

   16%

   15%

   9%PepsiCo

   15%

   15%

   13%Promarca(1)

   16%

   15%

   17%WaterProprietary(2)

   25%

   27%

   31%Nestlé Waters

   2%

   2%

   4%Total

   100%

   100%

   100%(1)CCU owns 50% of the rights to the Watt’s brand (nectar), currently held through our affiliate Promarca.(2)CCU owns 50.1% of the rights to all the water brands held through the affiliate Aguas CCU. Includes HOD.


37

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After the completion of the CPCh transaction with Control, we expanded our proprietary brand portfolio considerably, adding brands such as Campanario in the mainstream and cocktail categories, as well as Control C, Mistral Nobel, Mistral Gran Nobel, Horcón Quemado and Tres Erres MOAI in the ultra-premium segment, Mistral, Bauzá and 3RRR in the premium segment and La Serena in the popular-priced category.  In the rum market, our proprietary brands are Cabo Viejo in the popular-priced segment, Sierra Morena Dorado and Sierra Morena Añejo in the medium-priced segment, Sierra Morena 5 Años in the premium segment and Sierra Morena Imperial in the ultra-premium segment. Also, during 2011 CPCh began the distribution of Pernod Ricard products (Chivas Regal, Ballantine’s, Havana Club, Beefeater and Absolut among others) through the traditional channel.  During 2014, our spirits were produced at four plants which are located in Regions III and IV of Chile. The bottling process was done in the Ovalle plant bottling facility. Horcón Quemado is produced and bottled in a third-party plant.  Through CPCh we produce and market ultra-premium, premium, medium-priced and popular-priced pisco brands in Chile, as well as rum. The following table shows our principal pisco brands:  Ultra premium

   Premium

   Medium-priced

   Medium-priced

   Popular-pricedpisco brands

   pisco brands

   pisco brands

   RTD brands

   pisco brandsControl C

   3RRR

   Campanario

   Campanario Sour

   La SerenaMistral Nobel

   Mistral

   Mistral Ice

   Campanario Sour LightMistral Gran Nobel

   Bauzá(1)

   Bauzá Ice(1)

   Campanario PicaMOAI

   

   

   Campanario ChirimoyaHorcón Quemado

   

   

   Campanario Cola de MonoCampanario Dulce de LecheCampanario LúcumaCampanario MangoCampanario Piña ColadaRuta SourRuta Sour LightRuta Sour PicaRuta MangoBauzá Sour(1)Bauzá Mango(1)(1) In January 2016 CPCh divested its interest in Compañía Pisquera Bauzá S.A.
 International Business Operating segment Our operation in International Business generated Net sales of CLP 282,435 million, CLP 299,668 million and CLP 405,714 million, representing 23.6%, 23.1% and 27.1% of our total Net sales in the last three years, respectively.  On April 28, 2003, CCU Argentina and Heineken Brouwerijen B.V., a subsidiary of Heineken International B.V., signed license and technical assistance agreements that provide us with the exclusive rights to produce, sell and distribute Heineken beer in Argentina commencing June 18, 2003. On October 12, 2011, we and Heineken Brouwerijen B.V. signed the Amended and Restated versions of the Trademark License Agreements which provide us with the exclusive rights to produce, sell and distribute Heineken beer in Chile and Argentina, in force as of January 1, 2011. These agreements have an initial term of 10 years, and shall automatically be renewed each year (January1st) for a new period of ten years, unless any party gives notice of its decision not to renew, in which case the agreements will be in force until the last renewal period expires. Heineken beer is the second-largest brand in terms of volume in the premium segment in Argentina.


38

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In October 2006, we signed a long-term contract with ICSA to brew, bottle and package beer in the former AmBev plant in Luján, near Buenos Aires, that was purchased by ICSA. In January 2007, we began brewing our local brands in this plant, obtaining enough production capacity to ensure future growth. In April 2008, we acquired ICSA, including the Luján plant and the brands Imperial, Bieckert and Palermo. ICSA also had a brewing contract agreement with AmBev and, under such contract CICSA brewed beer for AmBev during the peak demand season of 2008-2009.  The license agreement between CCU Argentina and Anheuser-Busch, which provides CCU Argentina with the exclusive right to produce, package, market, sell and distribute Budweiser beer in Argentina and Uruguay, had an initial term of 20 years commencing in December 1995, which in March 2008, was extended to December 2025. Among other things, the license agreement includes provisions for both technical and marketing assistance from Anheuser-Busch. Under the license agreement, CCU Argentina is obligated to purchase certain raw materials from Anheuser-Busch or from suppliers approved by Anheuser-Busch. We began distribution of our locally produced Budweiser in December 1996. See “– Sales, Transportation and Distribution.” In addition, the license agreement is subject to certain specified market share targets and marketing expenditures. In 2010, the license agreement was modified due to regulatory reasons under the context of the merger between Anheuser-Busch and InBev. As a result, certain contractual restrictions were released, and rights granted to Anheuser-Busch waived, both in favor of CCU Argentina. During the third quarter 2000, we and Anheuser-Busch signed an export agreement to supply Budweiser from Argentina to Paraguay and Chile. At the end of 2011, the agreement to supply Budweiser from Argentina to Paraguay was ended.  In November 2011, we signed an addendum to the import and distribution contract with Cervecería Modelo S.A., including a clause that specified the automatic renewal of the contract for a period of four years at the end of 2014 provided that CICSA would meet certain minimum purchases goal. In that case, the agreement would last until December 31, 2018.  In 2012, the Company began the migration process to its new proprietary returnable bottle in place of the generic container currently in the industry. The decision to implement this important project was based primarily on the change introduced by the main market player, who in 2011 started to replace the use of generic packaging by a proprietary container for one liter returnable products. The proprietary container’s use results in significant important changes in logistics processes, including the adaptation of the building structure of plants, the acquisition of specific equipment, the adaptation of production lines and agreements with glass bottles and crates suppliers in order to achieve the timely supply of the new bottling process required inputs. The introduction of these proprietary returnable bottles resulted in significant impacts on the industry’s value chain, with higher operating costs associated with the operation of recovery and classification of packaging that significantly affect the level of profitability and industry ́s return on capital employed (ROCE). This transition process requires significant investments between 2012 and 2017 mainly in packaging, equipment and infrastructure. To partially finance these investments, bank loans were obtained in local currency with long repayment periods, mitigating the risk of exchange rate and interest rate fluctuations thereby minimizing the fluctuation risk.  In September 2012, CCU acquired 100% shares of the Uruguayan companies Milotur S.A., Marzurel S.A. and Coralina S.A. and indirectly Andrimar S.A., a wholly- owned subsidiary of MiloturS.A. On November 29, 2012, CICSA and Heineken Brouwerijen B.V. signed the Trademark License Agreement which provides us with the exclusive rights to produce, sell and distribute Heineken beer in Paraguay, in force as of November 29, 2012. This agreement has an initial term of 10 years, and will be automatically renewed for a five years period unless any party gives notice of its decision not to renew, in which case the agreements will be in force until the last renewal period expires. 39


---



In 2013 the production of Budweiser beer started in Luján, in addition to Heineken which was already being brewed since 2009. Currently Santa Fe and Luján Plants produce both brands. Additionally, the production of Amstel beer was launched under the license of Amstel Brouwerijen BV, an affilliate of Heineken International.  On June 4, 2013, CICSA, Milotur and Heineken Brouwerijen B.V. signed the Trademark License Agreement which provides us with the exclusive rights to produce, sell and distribute Heineken beer in Uruguay, in force as of May 1, 2013. This agreement has an initial term of 10 years, and automatically renew on January 1 of each year for a new period of ten years, unless any party gives notice of its decision not to renew, in which case the agreements will be in force until the last renewal period expires.  By the end of 2013, CCU executed various agreements and contracts with Cartes Group in Paraguay, in virtue of which acquired 50.005% of Bebidas del Paraguay (owner of productive assets and brands through which it develops the business consisting of the production, marketing and sale of non-alcoholic beverages, such as soft drinks, juices and water, and import, marketing and sale of beer, under various brands, both proprietary and under licensees and imported) and 49.959% of Distribuidora del Paraguay S.A., a company which distributes the products of the above-mentioned company.  In June 2014, CICSA reached agreements with Cervecería Modelo S. de R.L. de CV. and Anheuser-Busch LLC, for the termination of the contract which allows CICSA to import and distribute on an exclusive basis,CoronaandNegra Modelobeers in Argentina, and the license for the production and distribution ofBudweiserbeer in Uruguay. CICSA received compensation in respect of these agreements in the amount of ARS 277.2 million, equivalent to USD 34.2 million.  In September 2014, CICSA began with exclusive distribution in Argentina imported Sol brand, owned by Heineken, initiating local production in November 2014. For Sol brand in Argentina, we have the license for 10 years, automatically renewable on the same terms (Rolling Contract), each year for a period of 10 years, unless notice of non-renewal is given.  On July 15, 2015, CICSA, BBO and Heineken Brouwerijen B.V. signed the Ancillary Trademark License Agreement which provide us with the exclusive rights to produce, sell and distribute Heineken beer in Bolivia, in force as of January 1, 2015. This agreement has an initial term of 10 years, and will be automatically renewed for a five years period unless any party gives notice of its decision not to renew, in which case the agreement will be in force until the last renewal period expires.  Aligned with our innovation strategy, during 2015 we launched brand extensions such as Santa Fe Frost and Sol 650 in Argentina, and we pushed the one way packaging in beer in Uruguay with Schneider and Heineken, increasing our volumes in that market.  Escribe texto o la dirección de un sitio web, o bien,traduce un documento. At present we produce and market premium, medium-priced and popular-priced beer brands in the International Business Operating segment, which includes Argentina, Uruguay and Paraguay. The following table shows our principal brands produced and imported under license in Argentina in 2015:  40


---



Premium

   Mainstream

   Conveniencebeer brands

   beer brands

   beer brandsHeineken(1)

   Budweiser (1)

   CórdobaSol (1)

   Salta

   PalermoKunstmann (2)

   Santa Fe

   BieckertImperial

   SchneiderAmstel (1)Guinness(2)(3)Negra Modelo(2)(3)Corona(2)(3)Otro Mundo(4)(1)Produced under license(2)Imported(3)Up to June 2014(4)Up to August 2015
   The following table sets forth our beer sales volume in Argentina by category during each of the last three years, including exports to other countries:   Category

   Argentina2013

   

   2014

   

   2015Premium

   18%

   

   18%

   

   19%Mainstream

   62%

   

   62%

   

   62%Convenience

   20%

   

   20%

   

   19%Total

   100%

   

   100%

   

   100%
    Our beer products are bottled or packaged in returnable and non-returnable glass bottles, aluminum cans, or stainless steel kegs at our production facilities. During the last three years, we sold our beer products in Argentina, Uruguay and Paraguay in the following packaging formats:  Container

   Percentage of Total Beer Sold in Argentina2013

   

   2014

   

   2015Returnable (1)

   79%

   

   81%

   

   76%Non-returnable (2)

   20%

   

   18%

   

   23%Returnable kegs (3)

   1%

   

   1%

   

   1%Total

   100%

   

   100%

   

   100%(1) Returnable beer containers include glass bottles of various sizes.(2) Non-returnable beer containers include glass bottles and aluminum cans, both of assorted sizes.(3) Returnable kegs refer to stainless steel containers in assorted sizes.


41

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Container

   

   Percentage of Total Beer Sold in Uruguay2013

   

   2014

   

   2015Returnable (1)

   

   83%

   

   39%

   

   11%Non-returnable (2)

   

   17%

   

   61%

   

   89%Total

   

   100%

   

   100%

   

   100%(1)Returnable beer containers include glass bottles of various sizes.(2)Non-returnable beer containers include glass bottles and aluminum cans, both of assorted sizes.
    Percentage of Total Beer Sold in ParaguayContainer

   

   2014

   

   2015Returnable (1)

   

   10%

   

   7%Non-returnable (2)

   

   90%

   

   93%Total

   

   100%

   

   100%(1) Returnable beer containers considers only litre bottles(2)Non-returnable beer containers include glass bottles and aluminum cans, both of assorted sizes.
  Wine Operating segment VSPT is one of Chile’s largest producers and distributors of wine in terms of sales volume and Net sales. Our wine Operating segment sales amounted to CLP 152,255 million, CLP 172,349 million and CLP 189,515 million, or 12.7%, 13.3% and 12.6% of our total Net sales in the last three years, respectively. VSPT is composed of seven different wineries in Chile and two in Argentina. Its principal vineyards are located in Molina, approximately 200 kilometers south of Santiago. The VSPT estate in Molina is one of the largest single-site vineyards in Chile with an area of 1,064 hectares. As of December 31, 2015, VSPT’s vineyards covered an aggregate of 4,245 hectares in Chile, distributed among 10 different plantations. The winery also has 333 hectares under long-term leases. In Argentina, we have another 379 planted hectares located in the province of Mendoza.  The following table indicates the breakdown of VSPT’s volume in the domestic and export markets, including sales from FLC and Tamarí in Argentina:  Year

   Domestic Volume

   Export Volume

   Total Volume (1)(in millions of liters)2011

   60

   67

   1272012

   61

   71

   1322013

   62

   70

   1312014

   62

   70

   1332015

   62

   76

   138(1) Includes bulk sales exports in Chile and Argentina
   According to Nielsen, VSPT’s share by volume of Chile’s formal wine market was approximately 27.3% in 2013, 28.8% in 2014 and 28.4% in 2015. According to the Wines of Chile Association, VSPT’s share of Chile’s total wine export sales by volume was 13.1%, 13.6% and 13.5% in the last three years, respectively.


42

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Viña San Pedro, Viña Tarapaca, Viña Leyda, Viña Santa Helena, Viña Misiones de Rengo, Viña Mar, Viña Casa Rivas and Finca La Celia and Tamarí in Argentina, produce and market premium, varietal and popular-priced wines.The principal brands are set forth below:   Brand

   

   Icon

   Premium

   Varietal

   Popular-PricedViña San PedroAltaïr

   XSideral

   XCabo de Hornos

   XKankana del Elqui

   XTierras Moradas

   X1865

   

   XCastillo de Molina

   

   XÉpica

   

   X35 South Reserva

   

   X35 South

   

   

   XUrmeneta

   

   

   XGato Negro

   

   

   XGato

   

   

   

   XManquehuito Pop Wine

   

   

   

   XSan Pedro Exportación

   

   

   

   XViña TarapacáTarapakay

   XGran Reserva Etiqueta Azul

   XGran Reserva Etiqueta Negra

   

   XTarapacá Gran Reserva

   

   XGran Tarapacá

   

   XTarapacá Terroir

   

   XTarapacá Reserva

   

   XTarapacá Varietal

   

   

   XLeón de Tarapacá

   

   

   XViña Santa HelenaParras Viejas

   XVernus

   

   XSelección del Directorio

   

   XSiglo de Oro

   

   

   XSanta Helena Varietal

   

   

   XAlpaca

   

   

   XGran Vino

   

   

   

   XSanta Helena

   

   

   

   XViña Misiones de RengoMisiones de Rengo Cuvée

   

   XMisiones de Rengo Reserva

   

   XMisiones de Rengo Varietal

   

   

   XViña MarViña Mar Reserva Especial

   

   XViña Mar Reserva

   

   XViña Mar Espumanete Unique

   

   XViña Mar Espumante

   

   XCharmat

   

   XCasa RivasCasa Rivas Reserva

   

   XViña LeydaLeyda Lot

   XLeyda Reserva

   

   XLeyda Single Vineyard

   

   XLa Celia Supremo

   XLa Celia

   

   XLa Consulta

   

   XLa Finca

   

   

   XTamariTamarí Zhik

   XTamarí Reserva

   

   X


43

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The following table presents our breakdown of total sales volume in thousands of liters by category of VSPT’s wines during 2015:  Category

   

   Domestic(1)

   

   Export(1)

   

   Total(in thousands of liters)Premium

   

   5,737

   

   8,187

   

   13,924Varietal

   

   7,402

   

   56,968

   

   64,370Popular-Priced

   

   49,162

   

   7,372

   

   56,534Bulk

   

   151

   

   3,024

   

   3,175Total

   

   62,451

   

   75,551

   

   138,003(1) Includes Finca La Celia and Tamarí
  As of December 31, 2015, VSPT’s storage capacity totaled 88.8 million liters and its peak bottling and packaging capacity totaled 72,000 liters per hour.  Domestic Market. Our Chilean domestic wine is packaged in bottles, jugs, cartons, and bag-in-box containers at VSPT’s production facilities in Lontué, Molina and Isla de Maipo. The following chart shows our packaging mix for domestic wine sales for the last three years:  Container

   

   Percentage of Total DomesticWine Sold in Chile2013

   

   2014

   

   2015Carton

   

   56%

   

   54%

   

   51%Glass Bottles

   

   44%

   

   46%

   

   49%Bag-in-Box

   

   0%

   

   0%

   

   0%Total

   

   100%

   

   100%

   

   100%
   Beer is a substitute product for wine in Chile. In addition, our wine products may also compete with other alcoholic beverages, such as spirits (mainly pisco), and with non-alcoholic beverages, such as soft drinks and juices.  The average price for our domestic wine customers was CLP 2,008 and CLP 2,065 per liter in 2014 and 2015, respectively, experiencing a growth of 2.8%. Our wine price policy is mainly determined as a consequence of four factors: a) market prices, b) change in sales mix, c) inflation rate and d) desired profit margin in relation to costs of raw materials.  Chilean Export Market.According to industry sources, exports of Chilean wine increased from approximately 43 million liters in 1990 to 877 million liters in 2015, at a compounded annual growth rate of 13%. During 2014 and 2015, Chilean wine exports reached 801 million liters and 877 million liters, respectively. We believe that Chilean wine exports have grown steadily due to their comparatively low prices and positive international image, as well as due to external factors, such as low wine production in the Northern Hemisphere in certain years.  VSPT exported from Chile 70 million liters in 2013, 70 million liters of wine in 2014, and 73 million liters of wine in 2015. During 2015, VSPT exported wine to more than 80 countries worldwide. Exports accounted for Net sales of CLP 85,730 million, CLP 102,272 million and CLP 117,450 million, in the last three years, respectively. In 2015, VSPT’s primary export markets included the United States, Japan, Brazil, Finland, Paraguay, the Netherlands and China.  Most exported wine is sold in glass bottles, except for a certain quantity of unbranded wine that is occasionally sold in bulk, as well as the amount that is sold in bag-in-box containers. The following chart shows our packaging mix for export Chilean wine volume in the last three years:


44

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Container

   

   Percentage of Total ExportWine Volume from Chile2013

   

   2014

   

   2015Glass Bottles(1)

   

   81%

   

   85%

   

   86%Bulk

   

   5%

   

   3%

   

   4%Bag in box

   

   14%

   

   13%

   

   10%Total

   

   100%

   

   100%

   

   100%(1)Includes jugs.
   Raw Materials and other Supplies.  The main raw materials we use are sugar, malt, rice, grapes, glass bottles, aluminum cans, PET bottles, hops and water. We purchase our sugar requirements both imported and local supply. We obtain our supply of malt through long term contracts with malt suppliers from Chile and Argentina. Rice is sourced from local and international suppliers in spot transactions. We pre-treat rice in order to ensure that it meets our standards of quality.  Water is essential in our production. We obtain all of our water from wells located at our plants and/or from public utilities. The water is treated at facilities located at our plants to remove impurities and to adjust the characteristics of the water before it is used in the production process.  We own two mineral water sources in Chile from which the Cachantun and Porvenir brand mineral water products are obtained. These water sources are located in two areas near Santiago: Coinco and Casablanca, respectively. All of our mineral water products are bottled at their respective sources and distributed throughout the country. Purified water is produced with water pumped from our wells located in the plant.  We generally purchase all of the glass bottles used in our packaging from the main local glass suppliers, Cristalerías Chile S.A. in Chile, and Rigolleau/Cattorini and Owens Illinois Argentina S.A in Argentina. During 2015, all of our requirements for aluminum cans were purchased from global suppliers, Rexam Chile S.A., Rexam Argentina S.A. and Fabricas Monterrey S.A. (“FAMOSA”), subisidiary of Crown Holdings. We obtain the labels for our products mainly from local suppliers. Plastic caps are mainly purchased from three suppliers in Chile (including PLASCO), and crowns are currently imported from Mexico.  We maintain testing facilities at each of our plants and factories where raw materials are analyzed according to our standards. Additionally, the samples are analyzed at various stages of production to ensure product quality. For example, samples of Heineken, Cristal and Budweiser beer are periodically sent to The Netherlands and to Anheuser-Busch facilities in the United States, respectively, to verify the quality of the product, samples of Nestlé Pure Life water are sent to France, and samples of Pepsi and Schweppes are analyzed by PepsiCo either at our plants or at the point of sale.  Prices of our main raw materials used in the production are tied to the U.S. dollar, and have fluctuated in Chilean and Argentine peso terms due to general commodity price fluctuations in the international markets as well as to the variation of the Chilean and Argentine peso against the U.S. dollar. In addition, from time to time, prices of grapes and wine have varied depending on fluctuations in demand and supply factors.  We believe that all of the contracts or other agreements between us and third-party suppliers, with respect to the supply of raw materials, contain standard and customary commercial terms and conditions. We do not believe we are dependent on any one supplier for a significant portion of our raw materials. During the past ten years, we have not experienced any material shortage or difficulties in obtaining adequate supplies of necessary raw materials, nor do we expect to do so in the future.


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VSPT’s main raw materials and packaging materials are purchased and harvested grapes, purchased wine, bottles, carton containers, corks and cardboard boxes. VSPT obtained approximately 48.0% of the grapes used for export wines from its own vineyards during 2015. Of the wine sold in the domestic market, 11.6% are grapes from our vineyards. In 2015, approximately 53.0% of the wine used in domestic and export sales was purchased from ten local producers: Vinicola Patacón SPA, Agricola y Comercial Bodegas de las Mercedes Ltda, Anatolio Segundo Albornoz Vargas, Aguilera y Barrios Ltda, Vitivinicola Melior Ltda, Viñedos Errazuriz Ovalle S.A, Viñedos Gurfinkel Ltda, Juan Manuel Diaz Abasolo, Cooperativa Agrícola y Pisquera Elqui Ltda, Sociedad Agroindustrial Cerrillos Ltda, AMS Family S.A. VSPT has various alternative sources of supply, which can be used when they are attractive. VSPT’s bottles are mainly purchased from Cristalerías Chile and Verallia; however, when prices have been favorable, VSPT has purchased bottles from other local and international suppliers. Carton containers are purchased either from Tetra Pak de Chile Comercial Ltda. or from SIG Combibloc Inc. and are assembled in VSPT’s own automated packing lines.  Sales, Transportation and Distribution. Chile Operating segment We distribute all of our products in Chile directly to retail, supermarket and wholesale customers. This system enables us to maintain a high frequency of contact with our customers, obtain more timely and accurate marketing-related information, and maintain good working relationships with our retail customers.  After production, bottling and packaging, our beverages are either stored at one of our production facilities or transported to a network of 24 owned or leased warehouses that are located throughout Chile. Products are generally shipped from the region of production to the closest warehouse, allowing us to minimize our transportation and delivery costs.  In July 2002, Comercial Patagona Limitada began selling all of our beer products in the Chile’s Region XII. Comercial Patagona Limitada is a subsidiary of Cervecera Austral and is responsible for the sales and distribution of our products and those of Cervecera Austral in Chile’s extreme south.  In October 2005, we launched Comercial CCU, a subsidiary responsible for a single sales force dedicated to selling our beverage and sweet snack products, in order to capture synergies and focus on sales execution. Originally, this plan was piloted in rural areas and small cities in southern Chile. As of 2008, the territory covered by Commercial CCU S.A. has expanded to include the north of Chile from Arica to Copiapó/Vallenar, and the south, from Curicó to Coyhaique except for the city of Concepción.  In 2015, we had a dedicated sales force of approximately 565 salespeople, responsible for sales of our products in the territories not covered by Comercial CCU or Comercial Patagona Limitada. This sales force uses a pre-sell system, like the rest of CCU’s sales platform, and covers approximately 78,185 clients, including 26 supermarket chains, which represent 79,103 points of sales.  As of December 31, 2015, we had more than 134,363 customers in Chile for our products  None of our customers accounted for more than 2.3% of our total sales by volume, with the exception of three large supermarket chains that represented in the aggregate 26.9% of our total sales by volume. During 2015, the Chilean supermarket industry continued to consolidate, increasing the importance and purchasing power of a few supermarket chains.  Our customers make payment for our products either in cash at the time of delivery or in accordance with one of several types of credit arrangement we offer. Payment on credit sales for the Chile Operating segment are generally due 28 days from the date of delivery. Credit sales accounted for 39.2%, 40.0% and 39.8% of our sales in Chile during 2013, 2014 and 2015, respectively. Losses on credit sales in Chile have not been significant.


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Beginning in October 2001, all of the warehouses and transportation companies used to store and deliver all of our products are managed on a consolidated basis by our TCCU.  We distribute our products throughout Chile to: ·off-premises retail: small and medium-sized retail outlets, which in turn sell beer to consumers for take-out consumption; ·on-premises retail: retail establishments such as restaurants, hotels and bars for on-premises consumption; ·wholesalers; and ·supermarket chains. In the last three years, the percentage mix of the above distribution channels for our products in Chile was as follows:  Percentage of Total Products SoldDistribution Channels

   

   2013

   

   2014

   

   2015Off-premise retail

   

   41%

   

   41%

   

   41%On-premise retail

   

   14%

   

   10%

   

   11%Wholesalers

   

   13%

   

   14%

   

   14%Supermarkets

   

   32%

   

   35%

   

   34%Total

   

   100%

   

   100%

   

   100%
   International Business Operating segment After production, bottling and packaging, our beer is either stored at the production facilities or transported to a network of six warehouses leased or owned by us. Beer products are generally shipped to warehouses which are located within the region in which the beer products are sold.  We have the capacity to reach 159,411 points of sale in Argentina with our direct and indirect sales force. Half of our beer in Argentina is sold and distributed through third-party sales and distribution chains. As of December 31, 2015, we had a direct sales force which sold our beer products to approximately 89,500 customers within Salta, San Juan, San Luis, Mendoza, Córdoba, Santa Fé, Rosario, the Federal Capital and its outlying metropolitan area, in addition to 78 regional and national supermarket chains throughout the country. None of our customers individually accounted for more than 3.2% of our total beer sales by volume, with the exception of Coca Cola bottlers that represented in the aggregate 19.1% of our total sales by volume.  In Argentina, though most beer is sold to wholesalers, we also sell our products to retailers and supermarket chains. In the last three years, the percentage mix of the above distribution channels for our beer products in Argentina was as follows:  ArgentinaDistribution Channels

   

   2013

   

   2014

   

   2015Wholesalers

   

   54%

   

   50%

   

   49%Retailers

   

   31%

   

   33%

   

   31%Supermarkets

   

   16%

   

   17%

   

   20%Total

   

   100%

   

   100%

   

   100%
  Our International Business customers either make payments for our products in cash at the time of delivery or through one of our various credit arrangements. In Argentina, payment on credit sales is currently due 15 days from the date of delivery to wholesalers, and an average of 71 days of delivery to supermarkets. Credit sales in Argentina accounted for 88% of total sales during 2015, while in Uruguay and Paraguay they accounted for 95% and 38% of total sales, respectively.


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Wine Operating segment Domestic.After production, bottling, and packaging, wine is either stored at the production facilities or transported to one of our 24 warehouses located throughout Chile. VSPT wines are distributed and sold in Chile through our sales and distribution network, under the same system and payment terms as all our other products.  We distribute our wine products throughout Chile in the territories not covered by Comercial CCU or Comercial Patagona Limitada, with our own sales force, to:  ·off-premises retail: small and medium-sized retail outlets, which in turn sell wine to consumers for take-out consumption; ·on-premises retail: retail establishments such as restaurants, hotels and bars for on-premises consumption; ·wholesalers; and ·supermarket chains.  For the last three years, the percentage mix of the above distribution channels for our wine products in Chile was as follows:  Distribution Channels

   

   2013

   

   2014

   

   2015Off-premise retail

   

   34%

   

   34%

   

   33%On-premise retail

   

   5%

   

   5%

   

   5%Wholesalers

   

   24%

   

   22%

   

   24%Supermarkets

   

   37%

   

   39%

   

   38%Total

   

   100%

   

   100%

   

   100%
   We sell our wine products directly to approximately 7,700 customers, none of which accounted for more than 10% of our total wine sales by volume, with the exception of four supermarket chains that represented in the aggregate 33% of our total wine sales by volume. We do not maintain any long-term contractual arrangements for the sale of wine with any of our customers.  Export.VSPT has a presence in more than 80 countries. In order to increase its presence in the international market, VSPT has distribution agreements with key distributors, such as Pernod Ricard in Sweden, Finland, Norway and Estonia; Shaw Ross International in the U.S. ; Asahi in Japan; Interfood in Brasil; DGS and Baarsma in Holland and Denner in Switzerland. In Canada we have distribution agreements with Phillipe Dandurand wines, in Korea with Keumyang, as well as agreements with other distributors.  Seasonality  Chile Operating segment As a result of the seasonality of our different beverages, our sales and production volumes are normally at their lowest in the second and third calendar quarters and at their highest in the first and fourth calendar quarters (i.e., those months corresponding to the holidays as well as the summer vacation season in Chile).  The following table shows our annual sales volume of beer, non-alcoholic beverages and spirits in Chile, excluding exports, by quarter in the last three years:


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Seasonality Chile Operating segmentYear

   

   Quarter

   

   Sales Volume

   

   % of Annual Sales Volume(millions of liters)2013

   

   1st quarter

   

   427.3

   

   27%2nd quarter

   

   314.1

   

   20%3rd quarter

   

   341.5

   

   22%4th quarter

   

   474.2

   

   30%Total

   

   1557.0

   

   100%2014

   

   1st quarter

   

   455.5

   

   28%2nd quarter

   

   334.7

   

   21%3rd quarter

   

   354.8

   

   22%4th quarter

   

   476.6

   

   29%Total

   

   1621.6

   

   100%2015

   

   1st quarter

   

   473.8

   

   28%2nd quarter

   

   361.9

   

   21%3rd quarter

   

   366.8

   

   22%4th quarter

   

   484.0

   

   29%Total

   

   1686.5

   

   100%
  International Business Operating segment As a result of the seasonality of the beverage industry with respect to the categories in which we participate, our sales and production volumes are normally at their lowest in the second and third calendar quarters and at their highest in the first and fourth quarters (i.e., those months corresponding to the summer and holiday seasons in the region). The following table shows the annual sales volume for the International Business operating segment, including exports, during each quarter in the last three years:  Seasonality International Business Operating segmentYear

   

   Quarter

   

   Sales Volume(*)

   

   % of Annual Sales Volume(millions of liters)2013

   

   1st quarter

   

   142.4

   

   28%2nd quarter

   

   87.3

   

   17%3rd quarter

   

   109.1

   

   22%4th quarter

   

   168.3

   

   33%Total

   

   507.1

   

   100%2014

   

   1st quarter

   

   149.5

   

   28%2nd quarter

   

   96.7

   

   18%3rd quarter

   

   114.9

   

   21%4th quarter

   

   176.5

   

   33%Total

   

   537.5

   

   100%2015

   

   1st quarter

   

   154.6

   

   27%2nd quarter

   

   108.9

   

   19%3rd quarter

   

   127.3

   

   22%4th quarter

   

   179.0

   

   31%Total

   

   569.7

   

   100%(*) Includes Uruguay since September 2012 and Paraguay since January 2014


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Geographical Markets.  Our principal beverages production facilities in Chile are located in Santiago. Santiago and the surrounding areas (referred to as the Metropolitan Region) account for approximately 40% of the population of Chile and accounted for approximately 41% of our sales in Chile by volume in 2015. We also have one additional beer and non-alcoholic production facility in Temuco and two other beer facilities, in Valdivia (Kunstmann) in Punta Arenas (Austral), all of which are located in the southern region of Chile. We also have a non-alcoholic production and bottling facility in Antofagasta. Currently most of our brands are primarily supplied and distributed from these production facilities.  The following table provides the distribution of VSPT’s exports from Chile during 2015 by geographical markets:  Market

   

   Volume (1)

   

   Percentage ofTotal Exports(thousands of liters)Europe

   

   22,973

   

   33%Latin America

   

   17,238

   

   25%USA and Canada

   

   8,302

   

   12%Asia and Oceania

   

   21,163

   

   30%Total

   

   69,676

   

   100%(1) Excludes bulk exports
   The Metropolitan Region represented approximately 41%of total domestic sales of VSPT products by volume in 2015.  Competition.  Chile Operating segment The beer market in Chile is driven by the competitive environment of locally produced and imported beers, promoting among other factors an estimated average industry volume growth rate of 5% over the last ten years.  Our largest competitor in the beer business is Cervecería Chile (a subsidiary of AB InBev), which commenced operations in Chile during the second half of 1991. Cervecería Chile has one production facility located in Santiago and also imports products from various beer operations abroad. They distribute their products throughout Chile using a mix of direct distribution and third party distributors.  Other relevant players in the beer market in Chile include DESA, which, in addition to Cervecería Chile, distributes the Corona beer brand in Chile, and Viña Concha y Toro through its subsidiary Distribuidora Peumo, which imports and distributes the Miller beer brand along with a number of local craft beers. In addition, a number of small direct importers of several international brands compete in the beer market in Chile.  Our principal competitors in the non-alcoholic beverages business are companies which produce, bottle and distribute soft drinks in Chile under licenses from The Coca-Cola Company (“TCCC”) and its affiliates. The two principal soft drinks players in Chile are the licensees of TCCC and us. TCCC operates through Embotelladora Andina S.A. and Coca-Cola Embonor S.A. In October 2012, Embotelladora Andina S.A. merged with Coca-Cola Polar S.A., where Embotelladora Andina S.A. absorbed Coca-Cola Polar S.A.


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Fruit nectars under the trade name “Watt’s” face competition from other soft drinks, which are sold by a number of local companies. Our principal competitor in the mineral water business is Vital S.A. (a subsidiary of Embotelladora Andina S.A., one of TCCC licensees in Chile).  TCCC’s products are produced, bottled and distributed in Chile through two separate licensees which market soft drinks under the Coca-Cola, Coca-Cola Light, Coca-Cola Zero, Fanta, Fanta Light, Sprite, Sprite Zero, Quatro Light, Nordic Mist, Taí, Andina nectars and juices, and Kapo juice brand names.  Our domestic competitors in the soft drinks business have benefited from both internationally recognized brand labels (especially with regard to the Coca-Cola product line) and a large number of local bottling companies distributing their products throughout Chile. As a result of the formation of ECUSA, we also similarly benefited from the internationally recognized Pepsi brand as well as our competitive strengths, which include a portfolio of nationally well-known brands and a nationwide distribution system.  Given the high percentage of soft drink sales volumes in returnable containers coupled with the high cost of transportation to Chile, the market for imported soft drinks in Chile is not significant in 2014. While there are no legal barriers to entry, we believe that the existing returnable bottle system and high transportation costs may continue to deter potential competitors from exporting soft drinks to Chile.  With respect to pisco, our competitor Capel has nine production facilities located in Regions III and IV of Chile and distributes its products throughout the country. Capel uses its own sales force, as well as third-party distributors.  While there are currently no significant legal or regulatory barriers to entering the Chilean beverages market, substantial investment would be required to establish or acquire production and distribution facilities and bottles for use in Chile’s proprietary returnable bottling system, and to establish a critical mass in sales volumes. Nevertheless, if long-term economic conditions in Chile continue to be favorable, other enterprises may be encouraged to attempt to enter the Chilean market. In addition, our brands in Chile may face increased competition from other beverages, produced or marketed by other parties.  The following chart shows estimates of our Chile market share for the last five years based on store audits conducted by Nielsen.  Year

   

   Chile Operating segment Volume market share2011

   

   37.9%2012

   

   38.1%2013

   

   40.0%2014

   

   40.8%2015

   

   41.5%
  International Business Operating segment Since 2003, after the agreement between Quilmes and AmBev, the Argentine beer market consisted of three principal brewing groups: AmBev-Quilmes, us and CASA Isenbeck. The principal proprietary brands of these companies are Quilmes, Schneider and Isenbeck, respectively. In December 2006, ICSA, a new competitor, entered the Argentine beer market. ICSA began its operations at the former AmBev brewery in Luján producing three beer brands: Palermo, Bieckert and Imperial, which had previously belonged to Quilmes. These assets were sold by AmBev-Quilmes in response to requirements of the antitrust authorities in Argentina. In 2008, these assets were bought by CCU Argentina and subsequently merged into CICSA. In November 2010, SABMiller acquired CASA Isenbeck.


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The following table shows estimates of the market share of our International Business Operating segment (including Beer and Cider (since 2011) in Argentina, CSD and Mineral Water in Uruguay) for the last five years based on ID Retail sources for Uruguay and Nielsen source for Argentina.  Year

   

   International Business Operating segment Volume market share2011

   

   16.8%2012

   

   15.7%2013

   

   16.9%2014

   

   17.1%2015

   

   18.2%
  Quilmes, the beer market leader in Argentina and our principal competitor, also has beer operations in Chile, Paraguay, Uruguay and Bolivia. As of December 31, 2015, Quilmes had five breweries in Argentina with an estimated total annual production capacity of 1600 million liters. Quilmes’ large size enables it to benefit from economies of scale in the production and distribution of beer throughout Argentina. In 1994, Companhia Cervejaria Brahma, one of the two largest beer producers in Brazil, commenced production at its new brewery in Luján, near Buenos Aires, which at present belongs to CCU Argentina. In addition, Warsteiner (today SABMiller), a large German brewer, commenced production at its new brewery in Zárate, also near Buenos Aires, with an annual production capacity estimated to be approximately 140 million liters. Prior to commencing production in Argentina, Companhia Cervejaria Brahma and Warsteiner competed in the Argentine market with imported beer. In July 1999, the merger of Companhia Cervejaria Brahma and Companhia Antarctica Paulista was announced, creating AmBev. This merger was finally approved in March 2000, creating one of the largest beverage producers in the world.  In May 2002, AmBev and Quilmes announced that pursuant to an agreement between both parties, AmBev would transfer all of its beer assets in Argentina, Bolivia, Paraguay and Uruguay to Quilmes in exchange for 26.4 million new B shares of Quilmes. Additionally, according to that announcement, AmBev would purchase from the controlling shareholders of Quilmes 230.92 million class A shares for US$346.4 million. The agreement further stipulated that AmBev can purchase at the end of a seven-year period the remaining Quilmes shares owned by the current controlling group, the Bemberg family, with AmBev shares. The Bemberg family had the option to sell to AmBev their remaining class A shares during a period beginning with the end of the first year and ending with the seventh year after the agreement was announced. This option was exercised in April 2006. This transaction was approved by the Argentine antitrust authorities on January 13, 2003, subject to the condition that AmBev and Quilmes divest themselves of certain brands and the AmBev plant in Luján, near Buenos Aires, to a company currently not present in the Argentine beer market. On February 14, 2003, through our subsidiary CICSA, we filed a complaint before the Argentine federal courts in order to be eligible to participate in the acquisition of these assets. In February 2006, the Argentine Supreme Court of Justice ruled against our complaint. In December 2006, the Argentine authorities approved the sale of these assets to ICSA, a company owned by local investors. On March 3, 2004, AmBev and Interbrew announced an agreement to merge the two companies, creating the world’s largest brewer under the name InBev. This merger was closed in August 2004. On November 18, 2008 Anheuser Busch and InBev merged creating the global beer leader. Consolidation in the beer industry has resulted in larger and more competitive participants, which could change the current market conditions under which we operate.  In 2010 SABMiller bought Casa Isenbeck (Isenbeck, Warsteiner and La Diosa brands) and launched Miller Genuine Draft and Miller Lite beer in Argentina.  During 2015 SAB Miller plc accepted an offer from AB Inbev to merge its operations. As a result of the merger between AB Inbev and SAB Miller plc, Quilmes and CASA Isenbeck would become one


player. See “Risk Factors – Risks Relating to Our Business – Consolidation in the beer industry may impact our market share.”


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Our beer brands in Argentina also face competition from other alcoholic beverages, such as wine and spirits, as well as from non-alcoholic beverages, such as soft drinks.  Wine Operating segment The wine industry is highly competitive in both the domestic and the export markets. In Chile, VSPT competes directly against all other Chilean wineries. We believe that VSPT’s primary domestic competitors, Concha y Toro and Santa Rita, derive their relative competitive strengths from their wide portfolio of products, well-recognized brand names and established distribution networks. In 2015, Concha y Toro and Santa Rita had a market share of approximately 28.1% and 31.6%, respectively. VSPT also competes with Santa Carolina and numerous medium-sized wineries, including Undurraga and Cousiño Macul, and many small wine producers that make up Chile’s informal wine market.  Internationally, VSPT competes against Chilean producers as well as with wine producers from other parts of the world. According to information compiled by the Wineries of Chile Association, VSPT is the second-largest exporter of Chilean wines with a market share of approximately 13.5% in 2015, excluding bulk wine. Our other principal Chilean competitors, namely Concha y Toro, Santa Rita and Santa Carolina had market shares of 32.8%, 4.5% and 4.9%, respectively.  The following table shows estimates of the volume market share of our Wine Operating segment (excluding bulk wine sales) for the last five years according to Nielsen figures for domestic wine and Viñas de Chile for export figures.  Year

   Wine Operating segment Volume market share2011

   16.0%2012

   17.3%2013

   17.6%2014

   18.3%2015

   17.9%
   Other  Distribution Network.In Chile, we have an extensive and integrated distribution network for the sale and distribution of beer, soft drinks, mineral water, purified water, functional beverages, nectars, wine, pisco, rum, whiskey, vodka and sweet snacks products with capacity to reach approximately 134,363 points of sale. The network includes a total of 24 owned or leased warehouses and a network of independent transportation companies handled by TCCU. Sales are performed by category-specific sales forces and by Comercial CCU, which has a sales force of approximately 503 people who sell our products to approximately 46,417 customers in the northern area of Chile from Arica to Copiapó/Vallenar and in the mid-south area from Curicó/Talca through Coyhaique, except for Concepción. In the far south of Chile, in Punta Arenas, Comercial Patagona Limitada does the selling for all our products, reaching 538 customers. In the central parts of the country and in the City of Concepción, there are dedicated sales forces that focus on single lines of products. Product distribution is carried out by TCCU throughout the country or by Comercial Patagona Limitada in its territory.  In Argentina we have the capacity to reach 159,411 points of sale. Our network of sales and distribution for our products consists of six owned or leased warehouses, a direct sales force and 10 logistics operators serving approximately 89,500 customers and more than 78 supermarket chains stores. Approximately 19.1% of beer sales volume is served by two independent Coca Cola bottlers (mainly in the north and south of the country).


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Plastic Bottles.Through our subsidiary PLASCO, we own and operate a plastic factory in Renca which supplies most of the pre-forms, returnable and non-returnable bottles and caps, primarily used by us in the packaging of our soft drinks and water products. Additionally, PLASCO has three blowing bottle machines in ECUSA at Santiago facilities and two in Antofagasta.  The manufacturing of both returnable and non-returnable plastic bottles involves a two-step process. The first step consists of an injection molding process, which manufactures pre-forms from PET resin. The second step involves blowing plastic bottles from the molded pre-forms. We purchase resin and complete the two-step process in order to fulfill the majority of our bottling requirements. In some cases, we purchase pre-forms manufactured by third party suppliers and complete only the bottle-blowing step at our own facilities.  The manufacturing of plastic caps for carbonated soft drinks and water also involves a two-step process. The first consists of a compress molding process, which manufactures caps from PP resin. The second step is the decoration of plastic caps with an offset printing process. For juices and Gatorade we produce caps in a one step process with another raw material (HDPE).   Government Regulation  Government Regulation in Chile We are subject to the full range of governmental regulation and supervision generally applicable to companies engaged in business in Chile. These regulations include labor laws, social security laws, public health, consumer protection, environmental laws, securities laws, and antitrust laws. In addition, regulations exist to ensure healthy and safe conditions in facilities for the production, bottling, and distribution of beverages. For a more detailed discussion of environmental laws, see “Item 4.D. Environmental Matters”.  Regulations specifically concerning the production and distribution of “alcoholic beverages” are contained in Chilean Law N°18,455 and its Ordinance, which set the standards for human consumption of such beverages, by minutely describing the different types of alcohol; the minimum requirements that must be met by each class of beverage; raw materials and additives that may be used in their manufacture; their packaging and the information that must be provided by their labels; and the procedure for their importation, among others.  Additional regulations concerning wine origin denominations are contained in Executive Decree N° 464 of the Ministry of Agriculture, dated December 14, 1994, which also laid out the wine-growing regions and set rules regarding grape varieties, vintage year, labeling and selling requirements. Pisco origin denominations, also applicable to us, are regulated in Executive Decree N° 521 dated May 27, 2000 of the Ministry of Agriculture and likewise contains provisions relating to pisco producing regions, raw material standards, manufacturing procedures, packaging and labeling.  The large-scale production of alcoholic beverages does not need any licenses or permits other than those required for the general run of commercial and industrial enterprises engaged in the manufacture of consumer commodities.  On January 19, 2004 Law N°19,925 was published, which amended and restated the Act on Sale and Consumption of Alcoholic Beverages (former Law N°17,105).  All establishments dealing in alcoholic beverages, whether wholesale or retail, require a special municipal license, the cost of which is fixed by the law and varies according to the nature of the outlet or point of sale (i.e. liquor store, tavern, restaurant, hotel, warehouse, etc.). We are in possession of all licenses necessary for our wholesale operations.


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Law N°19,925 set new opening and closing hours; limited geographical areas for the sale of alcohol; reduced the maximum number of licenses to be granted by zones and population; increased criminal liability for selling alcohol to persons under eighteen years of age; and tightened the restrictions, imposing prison sentences and higher fines, for violations formerly deemed lighter. One of its most important innovations is to forbid the sale of alcohol to minors at all outlets, and not just for on-premises drinking (the only exception retained is the case of children who are served meals when accompanied by their parents).  The regulatory agency for alcoholic beverages is the Servicio Agricola y Ganadero (“SAG”).  The production, bottling and marketing of non-alcoholic beverages is subject to applicable sanitary legislation and regulations, particularly the Sanitary Code and the Food Ordinance (the Reglamento Sanitario de los Alimentos).  Non-alcoholic beverages are also subject to the provisions of Law N° 20,606 on Nutritional Composition of Food and Advertising enacted in 2012, Decree No. 13 of Ministry of Health enacted on June 26, 2015, which amended the Food Ordinance referred to above, and Law N° 20.869 on Food Advertising, enacted on November 13, 2015, which set certain restrictions on advertising, labeling and marketing of foods that are qualified as " high" in calories or any of the defined critical nutrients, such as sodium, sugar and saturated fats.  Law N°19,937, which was enacted in February 2004, established a new structure and powers for the Sanitary Authority, and became effective on January 1, 2005 and was fully operative by February 2006. The Servicios de Salud (“Health Services”) was replaced by the Ministry of Health’s Regional Offices, which constitute the new Sanitary Authorities, and inspect plants on a regular basis, taking samples for analysis, directing the adoption of new safety procedures and applying fines and other penalties for infringement of regulations.  The production and distribution of mineral water is also subject to special regulation. Mineral water may only be bottled directly from sources, which have been designated for such purpose by a Supreme Decree signed by the President of Chile. The competent Sanitary Authority provides a certification of the data necessary to achieve such a designation. All of our facilities have received the required designation.  Independently of the products manufactured or services provided in each plant or facility, the premises are also regularly inspected by the Sanitary Authorities, regarding sanitary and environmental conditions, labor safety, and related matters.  There are currently no material legal or administrative proceedings pending against us in Chile with respect to any regulatory matter. We believe that we are in compliance in all material respects with all applicable statutory and administrative regulations with respect to our businesses in Chile. Government Regulation in Argentina We are subject to the full range of governmental regulation and supervision generally applicable to companies engaged in business in Argentina, including social security laws, public health, consumer protection and environmental laws, securities laws and antitrust laws.  National Law N°18,284 (the Argentine Food Code, or the “Food Code”) regulates the manufacturing and packaging of food and beverages. The Food Code provides specific standards with which manufacturing plants must comply and regulates the production of food and beverages mentioned in the Food Code. The Food Code also specifies the different methods in which beer may be bottled as well as the information to be provided on labels. National Law N° 24,788, enacted in March 1997, established the national minimum age requirements for the purchase of alcoholic beverages. Under this law the sale of alcoholic beverages is not permitted to persons under 18 years of age, and the health authorities of each province undertake the enforcement of the Food Code. In the


Federal Capital and many provinces of Argentina, local law restricts the sale of alcoholic beverages, particularly between the hours of 11 p.m. and 8 a.m., and establishes harsh penalties for infringement.


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There are currently no material legal or administrative proceedings pending against us in Argentina with respect to any regulatory matter. We believe that we are in compliance in all material respects with all applicable statutory and administrative regulations with respect to our business in Argentina.  Government Regulation in Uruguay In Uruguay, we are subject to the full range of governmental regulation and supervision generally applicable to companies engaged in business in said country. As a closed corporation, our subsidiary is principally governed by Law N° 16,060, which regulates all commercial companies.  The main applicable laws are Decree 315/94 containing the National Bromatological Regulations, Code of Children and Adolescents regulating aspects related to sale and advertising of alcoholic beverages, Law No. 17,849 and its regulatory decree 260/07 regulating Integrated Packaging Management System, Mercosur Technical Regulations for labeling of packaged food, and Law N° 19,196 governing the criminal liability of employers for breach of occupational safety rules when it threatens or causes damage to the lives of workers.  Government Regulation in Paraguay In Paraguay, Bebidas del Paraguay and Distribuidora del Paraguay S.A. are governed by Articles 1048 to 1159 of Law N° 1183/85 Civil Code and its subsequent amendments: (i) Law N° 388/94 creating detailed rules on the establishment or formation, capital and powers of the assembly of corporations and (ii) Law N° 3228/07 which, in turn, modifies N° 388/94 regarding formalities for the organization of corporations. In addition, for the import, sale and advertising of alcoholic and non-alcoholic beverages, the corporation Bebidas del Paraguay is subject to the provisions of the Health Code Law N° 836/80, Law N° 1,333/98 on advertisement and promotion of tobacco and alcohol, Law N° 1.642/00 prohibiting the sale of alcoholic beverages to minors and its consumption on public roads, Executive Decree N° 1635/99 and Resolution of the Ministry of Public Health and Social Welfare N° 643/12 regulating aspects relating to registration of food products.


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B.Organizational Structure  Ownership Structure as of March 31, 2016     We are controlled by IRSA, which owns directly and indirectly 60.0% of the shares of our common stock. IRSA, since 1986, was a joint venture between Quiñenco and the Schörghuber Group through its wholly owned subsidiary FHI of the Netherlands. On April 2003, the Schörghuber Group sold FHI to Heineken Americas B.V., a subsidiary of Heineken International B.V. FHI and Heineken International B.V. formed Heineken Chile Ltda., through which 50% of IRSA shares are held. On December 30, 2003, FHI merged into Heineken Americas B.V. Currently, Quiñenco and Heineken Chile Ltda., a Chilean limited corporation controlled by Heineken Americas B.V., are the only shareholders of IRSA, each with a 50% equity interest.  Quiñenco is the holding company of one of the largest and most diversified business conglomerates in Chile, with investments in various sectors of the Chilean economy. Apart from CCU, Quiñenco’s principal holdings include Banco de Chile (a leading financial institution in Chile), Invexans S.A. (the largest shareholder of the French cable producer Nexans S.A.), Tech Pack S.A. (1) (a leading manufacturer of flexible packaging in Latin America), Empresa Nacional de Energía Enex S.A. (the second-largest retail fuel distributor in Chile), Compañía Sud Americana de Vapores S.A. (main shareholder of Hapag-Lloyd A.G., one of the largest container ship operators worldwide), and Sudamericana Agencias Aéreas y Marítimas S.A. (one of the largest port operators in South America and the fourth largest tugboat operator worldwide).  Heineken, the Dutch brewer, is one of the largest brewers in the world with over 156 breweries in more than 70 countries and 73,767 employees worldwide. Heineken group’s beer volume was 188.3 million hectoliters during 2015, and its principal brands are Heineken and Amstel.   The following table provides our significant subsidiaries as of December 2015:  Subsidiaries

   Country

   Ownership InterestCervecería CCU

   Chile

   100.00%CCU Argentina

   Argentina

   100.00%ECUSA

   Chile

   99.93%Aguas CCU-Nestlé

   Chile

   50.10%VSPT

   Chile

   64.72%CPCh

   Chile

   80.00%  (1)On April 18, 2016, Tech Pack S.A. (“Techpack”) announced an agreement to sell its subsidiary Alusa S.A. to Amcor, the main flexible packaging manufacturer in the world. The transaction is subject to approval from Techpack’s shareholders and antitrust authorities in certain jurisdictions, among others.


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C.Property,
Plants and Equipment  Set forth below is information
concerning our production facilities as of December 31, 2015, all of which are
owned and operated by us or our subsidiaries.  For the Chile Operating segment,
we had an aggregated Supply Capacity per month1of 334.5 million liters
with a Utilized Capacity during peak month2of 56.01%. The annual Nominal
Installed Capacity for our two main businesses in Chile (beer and soft drinks)
is 27.8 million hectoliters.  Our Chile Operating segment total
facilities size is 587,765 square meters (total built area including warehousing
logistics activities related to the production process).  Set forth below is a list of our
principal production facilities.  Chile Operating
      segmentPlant
    
    
    Type of PlantSantiago
    
    
    BeerSantiago
    
    
    Non-alcoholic
      beveragesTemuco
    
    
    MixedValdivia
    
    
    BeerPunta Arenas(1)
    
    BeerAntofagasta
    
    
    Non-alcoholic
      beveragesCoinco
    
    
    Non-alcoholic
      beveragesCasablanca
    
    
    Non-alcoholic
      beveragesManantial
    
    
    Non-alcoholic
      beveragesPisco
      Elqui
    
    
    SpiritsSotaquí
    
    
    SpiritsMonte
      Patria
    
    
    SpiritsSalamanca
    
    
    SpiritsOvalle
    
    
    Spirits(1) Production in
      the Punta Arenas facility is under licensing agreements and, accordingly,
      we do not consolidate this facility.
   For the International Business
Operating segment, we had an aggregated Supply Capacity per month of 79.1
million liters with a Utilized Capacity during peak month of 79.16%.  Our International Business
Operating segment total facilities size is 232,194 square meters (total built
area including warehousing logistics activities).     1Supply Capacity per month is
defined as nominal installed production capacity for the current
product/packaging mix during 25 days per month and 3 shifts per day.The
calculated slack (spare) capacity does not necessarily indicate real slack
capacity. The real production capacity is less than the nominal installed
production capacity as adjustments are required for real machinery performance,
packaging mix, availability of raw materials and bottles, seasonality within the
months and other factors. As a result, we believe that the peak monthly capacity
utilization rates shown above understate real capacity utilization and that
slack capacity is overstated.
 2Utilized Capacity During
Peak Month is equal to production output as a percentage of Nominal Installed
Production Capacity during our peak month for each respective
plant


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Set forth below is a list of our
principal production facilities.  International Business Operating
      segmentPlant
    
    
    Type of PlantSanta Fe
    
    
    BeerSalta
    
    
    BeerLuján
    
    
    BeerMendoza
    
    
    CiderPilar
    
    
    CiderCiudadela
    
    
    CiderUruguay
    
    
    Non-alcoholic
      beverages
   For the Wine Operating segment, we
had an aggregated Nominal Filing Capacity of 72,000 liters per hour and a
Storage Capacity in Tanks and Barrels of 88.8 million liters. The total
facilities size is 150,946 square meters.  Set forth below is a list of our
principal production and storage facilities. WineOperating
      segmentPlant
    
    
    Type of PlantMolina
    
    
    Wine
      ProductionTotihue
    
    
    Wine
      ProductionTarapacá
    
    
    Wine
      ProductionLa
      Celia
    
    
    Wine
      ProductionLontué
    
    
    Wine
      StorageViña
      Mar
    
    Wine
      Storage
  D.Environmental
Matters  Chile Our
operations are subject to both national and local regulations in Chile relating
to the protection of the environment. Regarding human health, the fundamental
law in Chile is the Health Code, which establishes minimum health standards and
regulates air and water quality, as well as sanitary landfills. The local
Sanitary Authority is the governmental entity in charge of the enforcement of
these rules and has the authority to impose fines.  The environmental framework is governed by Law N°19,300,
enacted in 1994, as amended, which includes not only environmental protection
rules but also rules concerning the preservation of natural resources. Among
other matters, it creates the environmental impact assessment system which
requires any future project or major amendment of an existing activity that may
affect the environment to evaluate its possible environmental impact, in order
to fulfill related regulations and to implement mitigation, compensation and
restoration measures.  Law
N°19,300 also creates a mechanism of point sources emission limits and
environmental quality standards that are developed and detailed by specific
regulations. In this sense, there is a special regulation for wastewater
discharges into sewage systems, and another regulation for wastewater discharges
into superficial water bodies, in both cases pursuant to a schedule of
deadlines. Over the years, CCU implemented specific action plans in each
operation, optimizing those emissions and,
based on the location and wastewater quality, invested in highly efficient treatment plants. Such plants are also designed to generate boiler-suitable biogas. We are in compliance with this law and related regulations in all material respects, having fulfilled at each relevant stage all requirements prescribed by them.


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Through the enactment of Law N°20,417 in 2010 and Law N°20,600 in 2012 (amending Law N°19,300), the Ministry of Environment and the three governmental bodies (Environmental Superintendency, Environmental Assessment Service and specific Environmental Courts) were established, replacing all former activities of the CONAMA, the National Environmental Commission (or Comision Nacional del Medio Ambiente, or “CONAMA”). Those new governmental bodies are now responsible for the development, implementation and enforcement of various regulations regarding environmental management in relation to environmental standards, protection of natural resources, environmental education and pollution control, among other responsibilities. Due to the high levels of air pollution in the Santiago metropolitan area, the relevant authorities have implemented a decontamination plan, which includes different levels of air quality, and certain measures that can be imposed on industries. In the case of emergency situations, those companies comprising the industries classified as producing the highest levels of particle and gas emissions must suspend their activities. We are in compliance with current regulations applicable to both our beer and soft drink facilities in the Santiago metropolitan area in all material respects. There are currently no material legal or administrative proceedings pending against us in Chile with respect to any environmental matter. We believe that we are in compliance in all material respects with all applicable environmental regulations. Argentina New laws and regulations have been enacted in Argentina as a result of heightened community concerns for environmental issues. Consequently, there are several statutes imposing obligations on companies regarding environmental matters at the municipal, provincial and federal levels in accordance with the General Environmental Protection Framework (Law 25,675), which establishes the Basic Environmental Protection Budgets, forming the fundamentals to develop all legislation and national environmental policy. In many cases, private entities operating public utilities such as water supply and sewage are in charge of controlling and enforcing those regulations. Examples of new laws and regulations recently enacted are: (i) the National Register of Chemical Substances (Decree 900/12), which was implemented in January 2014 and aims to improve the traceability of chemical substances by means of strict control of all chemical substances that enter or leave the industrial plant, (ii) Decree 801/2015 regarding the global system of classification and labeling of chemical products, which based on Decree 3359/2015 was implemented in April 2016 for pure substances, and will be implemented in January 2017 for mixed substances, and (iii) Law No. 26,190 the National Regime for the Use and Promotion of Renewable Sources of Energy, which was modified by Law 27,191 and regulated by Decree 531/2016, with the objective to gradually implement the Use of Renewable Sources of Energy in the plants.  Another important federal environmental legislation in Argentina is the Hazardous Waste Act (Law N°24,051), which is supplemented by additional provincial legislation, to enforce the provisions of the Hazardous Waste Act when specific federal tests indicate the need to do so. The application of the provisions of the Hazardous Waste Act depends upon the magnitude of the public health risk and whether those conditions exist in more than one province. Hazardous waste is defined broadly and includes any residue that may cause harm, directly or indirectly, to human beings that may pollute the soil, water, atmosphere or the environment in general. Generally, claims involving hazardous waste give rise to strict liability in the event of damage to third parties. In addition, each province in which we operate facilities has enacted environmental legislation with broad and generic goals, as well as water codes and related agencies to regulate the use of water and the disposal of effluents in the water.  Over the last several years CCU Argentina has implemented a complete program for the treatment of its industrial waste, which involves the separation, collection, transportation and reusing of the


generated solid waste, in compliance with the Industrial Waste Act (Law N° 25,612), as well as wastewater treatment plants. The waste program is part of our constant effort to improve environmental conditions.


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The main features of our wastewater treatment plants are their production of biogas which is used as boiler fuel, their minimum space requirements and its low electric power consumption. Also, all of CCU’s major operations facilities have been awarded theCertificado de Aptitud Ambiental(Environmental Aptitude Certificate) which is the main document endorsing the company’s environmental management in each provincial state.  Notwithstanding the foregoing, the regulation of matters related to environmental protection is not as well developed in Argentina as in the United States and certain other countries. Accordingly, we anticipate that additional laws and regulations will be enacted over time with respect to environmental matters.  While we believe that we will continue to be in compliance with all applicable environmental regulations, we cannot assure you that future legislative or regulatory developments will not impose restrictions on us, which could result in material adverse effects on our businesses, results of operations and our financial condition. There are currently no material legal or administrative proceedings pending against us in Argentina with respect to any regulatory matter. We believe that we are in compliance in all material respects with all applicable statutory and administrative regulations with respect to our business in Argentina.   ITEM 4A: Unresolved Staff Comments  Not applicable. ITEM 5: Operating and Financial Review and Prospects  Overview  CCU is a diversified beverage company operating principally in Chile, Argentina, Bolivia, Colombia, Paraguay and Uruguay. CCU is the largest Chilean brewer, the second-largest Chilean soft drinks producer and the largest Chilean water and nectar producer, the second-largest Argentine brewer, the second-largest Chilean wine producer and the largest pisco distributor. It also participates in the HOD, rum and confectionery industries in Chile, in the beer, water and soft drinks industries in Uruguay, and in the soft drinks, water and nectar industries and beer distribution in Paraguay and Bolivia. The Company has licensing and/or distribution agreements with Heineken Brouwerijen B.V., Anheuser-Busch Incorporated, PepsiCo Inc., Schweppes Holdings Limited, Guinness Overseas Limited, Société des Produits Nestlé S.A., Pernod Ricard and Coors Brewing Company.  We face certain key challenges and risks associated with our business. These risks include competition within the marketplace, managing operating costs and the integration and expansion of new products. We are the leading brewery in Chile; however, competitors are investing in this market and launching new products, and therefore, we must concentrate on competitive pricing and marketing strategies to maintain our market share. Operating costs are subject to variations depending on plant efficiency, product mix and production cycles, and also on U.S. dollar commodities prices and the rate of exchange from Chilean pesos to U.S. dollars or Euros. Our principal costs include the cost of raw and packaging materials, distribution and marketing costs. We continue to sell and deliver new products to our customers, including products through new licensing agreements and new products through internal development.


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The analysis of our results is based on financial statements prepared in accordance with IFRS as issued by the IASB. The three most recent years are considered in the discussion below.  In 2015, we reached new historical records in sales volumes and Net sales revenues, obtaining consolidated Net sales of CLP 1,498,372 million, of which 60% was accounted for from the Chile Operating segment; 27% from the International Business Operating Segment; 13% from the Wine Operating Segment, and the remainder from sales of other products and/or consolidation eliminations. Our Net sales revenues increased15.4% over the prior year as we increased sales of existing products and had a higher average price per product.  Circular Letter N° 856 On September 29, 2014 Act No. 20,780 was published in Chile, regarding the Tax Reform Act which introduces amendments, among others, to the income tax system. The Tax Reform Act provides that corporations will apply by default the "Partially Integrated System", unless a future extraordinary shareholders ́ meeting agrees to opt for the "Attributed Income Regime”.  The difference between assets and liabilities for deferred taxes that occur as a direct effect of the increase in the First Category Income tax rate introduced by Act No. 20,780 and according to the Circular Letter N°856 (“Oficio Circular” N°856) of the SVS, has been accounted against Equity, under Retained earnings. As of September 30, 2014, the total effect registered against the Company’s Equity amounted to CLP 14,395 million.  Consequently, since December 31, 2014, in addition to the financial statements issued to comply with the rules and instructions of the SVS, the Company issues financial statements in which the adjustment caused by the application of the new tax rates in Chile to the difference in assets and liabilities for deferred taxes, is registered against income in order to comply with IFRS as issued with the IASB, the regulation required by the Securities and Exchange Commission (“SEC”).  OPERATING RESULT  The following discussion should be read in conjunction with our consolidated financial statements and the notes included thereto in this annual report. In the following discussion, Chilean peso amounts have been rounded to the nearest million pesos, unless otherwise indicated. Certain amounts (including percentage amounts) which appear herein have been rounded and may not sum to the totals shown.  Operating Result is a non-IFRS financial measure, as it is a subtotal in our Consolidated Statement of Income. A non-IFRS financial measure does not have a standardized meaning prescribed by either IFRS or U.S. GAAP. For management purposes, Operating Result is defined as earnings before other gains (losses), net financial expense, equity and income of joint ventures, foreign currency exchange differences, result as per adjustment units and income taxes.  Our management believes that disclosure of Operating Result provides useful information to investors and financial analysts in their review of our operating performance and their comparison of our operating performance to the operating performance of other companies in the beverage industry, but it may not be comparable to similarly titled indicators used by other companies. Operating Result is not a substitute for IFRS measures of earnings.


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The following table presents the Net sales and Operating Result, and the relevant percentage as a component of Net sales, for each of our Operating segments:  Year Ended December 31,2013

   2014

   2015(in millions of CLP, except percentages)Net salesChile Operating segment

   765,196

   63.9%

   830,341

   64.0%

   902,021

   60.2%International Business Operating segment

   282,435

   23.6%

   299,668

   23.1%

   405,714

   27.1%Wine Operating segment

   152,255

   12.7%

   172,349

   13.3%

   189,515

   12.6%Other

   -2,660

   -0.2%

   -4,391

   -0.3%

   1,122

   0.1%Total

   1,197,227

   100.0%

   1,297,966

   100.0%

   1,498,372

   100.0%Operating ResultChile Operating segment

   147,367

   78.3%

   129,740

   72.1%

   153,924

   75.1%International Business Operating segment

   26,693

   14.2%

   28,152

   15.6%

   30,266

   14.8%Wine Operating segment

   12,913

   6.9%

   24,780

   13.8%

   32,533

   15.9%Other

   1,292

   0.7%

   -2,752

   -1.5%

   -11,786

   -5.8%Total

   188,266

   100.0%

   179,920

   100.0%

   204,937

   100.0%
  The following is a reconciliation of our income from operational activities, the most directly comparable IFRS measure to Operating Result for the years ended December 31, 2011, 2012, 2013, 2014 and 2015, and by Operating segment for the years ended December 31, 2013, 2014 and 2015.   For the Years Ended December 31,2011

   2012

   2013

   2014

   2015(millions of CLP)Income from operational activities

   195,828

   176,710

   189,225

   183,957

   213,449Add (Subtract):...................................Results Derivative Contracts...........

   -2,459

   4,030

   -2,390

   -4,153

   -9,840Marketable Securities to Fair Value

   227

   -92

   108

   103

   -36Other (1) .....................................................

   -778

   540

   1,324

   12

   1,364Exceptional Items (EI)(2)...............

   -12,905

   -

   2,989

   1,628

   -Operating Result before EI

   179,913

   181,188

   191,255

   181,548

   204,937Exceptional Items (EI)(2)...............

   12,905

   -

   -2,989

   -1,628

   -Operating Result(3)...........................

   192,818

   181,188

   188,266

   179,920

   204,937(1) Other includes items such as expenses related to capital increases, expenses related to acquisitions of new businesses, and results related to divestments of Joint Operations, among others.(2) 2011 EI corresponds to the earthquake insurance compensation in Chile and the restructuring charges of cider business in Argentina; 2013 EI corresponds to a restructuring process of the organization which implied the early retirement of managers replaced internally, promotions and the sole and exceptional paymen of incentives to the leaving and remaining personnel; 2014 EI corresponds to the effect of CLP 1,628 million associated with restructuring processes across Operating segments(3)   After Exceptional Items


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Chile Operating
      Segment
    For the Years Ended December 31,2013
    2014
    2015(millions of CLP)Income from
      operational activities
    147,020
    129,704
    152,466Add
      (Subtract):Results
      Derivative Contracts
    -5
    118
    57Marketable
      Securities to Fair Value
    -
    -
    -Other
      (1)
    352
    -82
    1,401Exceptional Items
      (EI)
    780
    -
    -Operating Result
      before EI
    148,147
    129,740
    153,924Exceptional Items
      (EI)
    -780
    -
    -Operating
      Result(2)
    147,367
    129,740
    153,924(1) Other
      includes items such as expenses related to capital increases, expenses
      related to acquisitions of new businesses, and results related to
      divestments of Joint Operations, among others.(2) After
      Exceptional ItemsInternational
      Business Operating Segment
    For the Years Ended December
31,2013
    2014
    2015(millions of CLP)Income from
      operational activities
    26,693
    27,847
    30,303Add
      (Subtract):Results
      Derivative Contracts
    -
    -
    -Marketable
      Securities to Fair Value
    -
    -
    -Other
      (1)
    -
    305
    -37Exceptional Items
      (EI)
    543
    1,215
    -Operating Result
      before EI
    27,236
    29,367
    30,266Exceptional Items
      (EI)
    -543
    -1,215
    -Operating
      Result(2)
    26,693
    28,152
    30,266(1) Other
      includes items such as expenses related to capital increases, expenses
      related to acquisitions of new businesses, and results related to
      divestments of Joint Operations, among others.(2) After
      Exceptional ItemsWine Operating
      Segment
    For the Years Ended December
31,2013
    2014
    2015(millions of CLP)Income from
      operational activities
    13,246
    24,559
    32,838Add
      (Subtract):Results
      Derivative Contracts
    -333
    221
    -305Marketable
      Securities to Fair Value
    -
    -
    -Other
      (1)
    -
    -
    -Exceptional Items
      (EI)
    276
    -
    -Operating Result
      before EI
    13,189
    24,780
    32,533Exceptional Items
      (EI)
    -276
    -
    -Operating
      Result(2)
    12,913
    24,780
    32,533(1) Other
      includes items such as expenses related to capital increases, expenses
      related to acquisitions of new businesses, and results related to
      divestments of Joint Operations, among others.(2) After
      Exceptional ItemsOther Operating
      Segment
    For the Years Ended December
31,2013
    2014
    2015(millions of CLP)Income from
      operational activities
    2,265
    1,846
    -2,158Add
      (Subtract):Results
      Derivative Contracts
    -2,052
    -4,492
    -9,592Marketable
      Securities to Fair Value
    108
    103
    -36Other
      (1)
    971
    -210
    -Exceptional Items
      (EI)
    1,390
    413
    -Operating Result
      before EI
    2,683
    -2,339
    -11,786Exceptional Items
      (EI)
    -1,390
    -413
    -Operating
      Result(2)
    1,293
    -2,752
    -11,786(1) Other
      includes items such as expenses related to capital increases, expenses
      related to acquisitions of new businesses, and results related to
      divestments of Joint Operations, among others.(2) After
      Exceptional Items


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The following table presents our Income statement in millions of pesos and as a percentage of Net sales:   Year Ended December 31,2013

   

   2014

   

   2015(millions of CLP, except percentages)Net sales

   1,197,227

   100.00%

   

   1,297,966

   100.00%

   

   1,498,372

   100.00%Cost of sales

   -536,697

   44.80%

   

   -604,537

   46.60%

   

   -685,075

   45.72%Gross margin

   660,530

   55.20%

   

   693,429

   53.40%

   

   813,297

   54.28%Other operating income/(expenses)

   4,249

   0.40%

   

   23,721

   1.80%

   

   4,205

   0.28%MSD&A

   -473,524

   39.60%

   

   -535,603

   41.30%

   

   -612,565

   40.88%Operating Result(1)

   188,266

   15.70%

   

   179,920

   13.90%

   

   204,937

   13.68%Net financing expenses

   -15,830

   1.30%

   

   -10,821

   0.80%

   

   -15,256

   1.02%Results as per adjustment units

   -1,802

   0.20%

   

   -4,159

   0.30%

   

   -3,283

   0.22%Exchange rate differences

   -4,292

   0.40%

   

   -613

   0.00%

   

   958

   0.06%Equity and income from joint ventures

   309

   0.00%

   

   -899

   0.10%

   

   -5,228

   0.35%Other gains/(losses)

   959

   0.10%

   

   4,037

   0.30%

   

   8,512

   0.57%Income before taxes

   167,609

   14.00%

   

   167,465

   12.90%

   

   190,640

   12.72%Income taxes

   -34,705

   2.90%

   

   -46,674

   3.60%

   

   -50,115

   3.34%Net income for the year

   132,905

   11.10%

   

   120,792

   9.30%

   

   140,525

   9.38%Attributable to:Equity Holders of Parent Company

   123,036

   10.30%

   

   106,238

   8.20%

   

   120,808

   8.06%Non controlling interest

   9,869

   0.80%

   

   14,553

   1.10%

   

   19,717

   1.32%
   FISCAL YEAR ENDED DECEMBER 31, 2015 COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 2014  The major occurrences of the fiscal year ended 2015 were: (a) the 15% average devaluation of the Chilean peso and the 14% average devaluation of the Argentine peso during 2015; (b) decrease in commodity prices, especially oil, aluminum and sugar; (c) the implementation of the “ExCCelencia CCU” program. Net sales Our Net sales were CLP 1,498,372 million in 2015 compared to CLP 1,297,966 million in 2014, representing an increase of 15.4%, primarily due to higher sales volumes and higher  average prices in all Operating segments. Net sales performance of each of our Operating segments during 2015 is described below:


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Chile:Net sales
increased 8.6% to CLP 902,021 million as a result of 4.0% higher sales volume
coupled with 4.5% higher average prices. Higher sales volumes were fueled
partially by promotional activities performed throughout the year as well as
good execution at the points of sale and effective marketing campaigns, which
allowed us to increase our consolidated market share and higher temperatures
during the year. Average prices increased due to a higher sales mix price,
coupled with price increases throughout the year. International Business:Net sales
increased 35.4% to CLP 405,714 million, due to 6.0% higher sales volumes coupled
with 27.7% higher average prices. Volumes and prices in Argentina, Uruguay and
Paraguay where higher in 2015 than in 2014, compensating inflation and currency
devaluation in those countries. Wine:Our Net
sales of wine increased 10.0% to CLP 189,515 million in 2015, from CLP 172,349
million in 2014. The increase in Net sales was achieved due to a 3.2% higher
sales volume and a 6.5% increase in average prices, mainly due to the export
side of the business, which showed good performance, mainly driven by the
markets in Asia and Oceania. Cost of sales The cost
of sales consists primarily of the cost of raw materials, packaging, labor costs
for production, personnel, depreciation of assets related to production,
depreciation of returnable packaging, licensing fees, bottle breakage and costs
of operating and maintaining plants and equipment. Our Cost of sales in 2015 was
CLP 685,075 million compared to CLP 604,537 million in 2014, a 13.3% increase
compared to 2014. As a percentage of Net sales, Cost of sales decreased to 45.7%
in 2015 from 46.6% in 2014. The Cost of sales for our Operating segments during
2015 is described below: Chile:The Cost
of sales for our Chile Operating segment increased 9.6% to CLP 420,298 million
in 2015, from CLP 383,559 million in 2014. Cost of sales as a percentage of Net
sales increased to 46.6% in 2015 from 46.2% in 2014, primarily due to the 15%
average currency devaluation in Chile during the year compared to last year,
partially offset by lower USD denominated price of raw materials and by the
results of the efficiency program “ExCCelencia CCU”. International Business:The Cost
of sales of our International Business Operating segment increased 19.5% to CLP
162,665 million in 2015, from CLP 136,175 million in 2014. Cost of sales as a
percentage of Net sales decreased to 40.1% in 2015 from 45.4% in 2014. This was
mainly due to the results of the efficiency program “ExCCelencia CCU” and lower
raw material prices denominated in USD, offsetting the average devaluation of
the currencies in the region in 2015 when compared to 2014: 14% in Argentina,
18% in Uruguay and 16% in Paraguay. Wine:The Cost
of sales for our Wine Operating segment increased 8.6% to CLP 105,956 million in
2015, from CLP 97,524 million in 2014. Cost of sales, as a percentage of Net
sales, decreased from 56.6% in 2014 to 55.9% in 2015, mostly due to the
excellent 2015 harvest, and the results of the efficiency program. Gross margin Our Gross
margin increased 17.3% to CLP 813,296 million in 2015, from CLP 693,429 million
in 2014. As a percentage of Net sales, Gross margin increased to 54.3% in 2015
from 53.4% in 2014. Marketing, Selling, Distribution
and Administrative Expenses The
Marketing, Selling, Distribution and Administrative expenses (“MSD&A”)
primarily include advertising and promotional expenses, selling expenses,
distribution costs such as product transportation costs, services provided by
third parties and other administrative expenses. Our MSD&A expenses
increased 14.4% to CLP 612,565 million in 2015, from CLP 535,603 million in
2014. As a percentage of Net sales, our MSD&A decreased to 40.9% in 2015
from 41.3% in 2014. The MSD&A performance of each Operating segment during
2015 is described below: Chile:The
MSD&A expenses of our Chile Operating segment increased 3.4% to CLP 328,489
million in 2015, from CLP 317,765 million in 2014. Nevertheless, as a percentage
of Net sales, MSD&A decreased to 36.4% in 2015 from 38.3% in 2014, mainly
due to the results of the efficiency plan “ExCCelencia CCU”.


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International Business:The
MSD&A of our International Business Operating segment increased 40.1% to CLP
216,099 million in 2015, from CLP 154,300 million in. As a percentage of Net
sales, our MSD&A increased to 53.3% in 2015 from 51.5% in 2014, partially
explained by higher marketing expenses. Wine:The
MSD&A of our Wine Operating segment increased 1.6% to CLP 51,070 million in
2015, from CLP 50,284 million in 2014. Nevertheless, MSD&A as a percentage
of Net sales, decreased to 26.9% in 2015 from 29.2% in 2014. Other Operating Income/(expenses)
and Exceptional items The Other
operating income/(expenses) decreased 82.3% in 2015 to CLP 4,205 million, from
CLP 23,721 million in 2014, mainly due to the CLP 18,882 million compensation
received by our Argentine subsidiary CICSA in 2014, for the termination of the
contract that allowed us to import and distribute on an exclusive basis, Corona
and Negra Modelo beers in Argentina, and the license for the production and
distribution of Budweiser beer in Uruguay. Operating Result Our
Operating Result increased 13.9% to CLP 204,937 million in 2015, as compared to
CLP 179,920 million in 2014 and as a percentage of Net Sales decreased from
13.9% to 13.7% in 2015. Excluding the positive one-time effect compensation of
CLP 18,882 million received by our Argentine subsidiary CICSA in Q2’14 for the
termination of the contract that allowed us to import and distribute on an
exclusive basis, Corona and Negra Modelo beers in Argentina and to produce and
distribute Budweiser beer in Uruguay, Operating Result increased by 27.3%, which
means an EBIT margin expansion of 127 bps. The Operating Result performance of
each of our Operating segments during 2015 is described below: Chile:The
Operating Result for the Chile Operating segment increased 18.6% to CLP 153,924
million due to an 8.6% increase in Net sales, partially offset by an increase of
3.4% in MSD&A expenses and an increase of 9.6% in Cost of sales. The
Operating Result margin increased from 15.6% in 2014 to 17.1% in
2015. International Business:The
Operating Result for the International Business Operating segment increased 7.5%
to CLP 30,266 million. The Operating Result margin decreased from 9.4% in 2014
to 7.5% for in 2015. Excluding the above mentioned one-time effect compensation,
the Operating Result margin expansion was 437 bps. Wine:The
Operating result from our wine Operating segment increased 31.3% to CLP 32,533
million in 2015, from CLP 24,780 million in 2014. The Operating result margin
increased from 14.4% in 2014 to 17.2% in 2015. Net Financing
Expenses Our Net
financing expenses increased 41.0% to CLP 15,256 million in 2015 as compared to
CLP 10,821 million in 2014. This increase was primarily due to a lower level of
Cash and cash equivalents in 2015. Equity and income from joint
ventures and associated CCU has
50% or less participation in Cervecería Austral, Foods, BBO, Central Cervecera,
and in other companies. The share of the gain/loss in the referred companies
decreased to a loss of CLP 5,228 million in 2015, from a loss of CLP 899 million
in 2014 mainly due to lower results in some of these joint ventures, including
the divestments of the brands Calaf and Natur which generated a loss net of
taxes of CLP 1,035 million. Result as per adjustment units and
Foreign currency exchange differences The
adjustment applied to our net liabilities due to Chilean inflation and foreign
exchange fluctuations resulted in a net loss of CLP 2,325 million in 2015, as
compared to a net loss of CLP 4,772 million in 2014. This variation is primarily
due to higher foreign currency exchange differences and higher Result as per
adjustment units, due to a lower inflation during 2015 compared to
2014.


67

---



Other gains (losses) Our Other gains (losses) increased from a net gain of CLP4,037million in 2014 to a net gain of CLP8,512million in 2015. The increase mainly resulted from gains related to hedges covering foreign exchange variations on taxes. Income taxes Our income taxes in 2015 amounted to CLP 50,115 million, translating into an effective consolidated tax rate of 26.3%. Income taxes in 2014 amounted to CLP 46,674 million translating into an effective consolidated tax rate of 27.9%. Income tax increased by CLP 3,441 million. Net income for the year Our Net income in 2015 increased 16.3%, from CLP 120,792 million in 2014 to CLP 140,526 million in 2015, primarily as a result of a 13.9% increase in Operating Result. Net income attributable to equity holders of parent Our Net income attributable to equity holders of our parent company increased 13.7% from CLP 106,238 million in 2014 to CLP 120,808 million in 2015. Non-controlling interests Non-controlling interests increased from CLP 14,553 million in 2014 to CLP 19,717 million in 2015.


68

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FISCAL YEAR ENDED DECEMBER 31, 2014 COMPARED TO FISCAL
YEAR ENDED DECEMBER 31, 2013  The major
occurrences of the fiscal year ended 2014 were: (a) the 15% devaluation of the
Chilean peso and the 48% devaluation of the Argentine peso during 2014; (b)
higher marketing expenses which are consistent with our long-term strategy for
developing strong brands coupled with increased distribution expenses in our
Chilean operation; (c) the compensation received by our Argentine subsidiary
CICSA, for the termination of the contract which allowed us to import and
distribute on an exclusive basis, Corona and Negra Modelo beers in Argentina,
and the license for the production and distribution of Budweiser beer in
Uruguay; and (d) the Chilean Tax Reform Act which became effective on October 1,
2014, bringing a series of changes to tax rates and tax schemes. Net sales Our Net
sales were CLP 1,297,966 million in 2014 compared to CLP 1,197,227 million in
2013, representing an 8.4% increase, primarily due to higher sales volumes and
higher per unit prices in all Operating segments. Net sales performance of each
of our Operating segments during 2014 is described below: Chile:Net sales
increased 8.5% to CLP 830,341 million as a result of 4.1% higher sales volume
coupled with 4.2% higher average prices. Higher sales volumes were fueled
partially by promotional activities performed throughout the year as well as
good execution in the points of sale and effective marketing campaigns, which
allowed us to increase our consolidated market share. Unit prices increased due
to a higher sales mix, coupled with price increases throughout the
year. International Business:Net sales
increased 6.1% to CLP 299,668 million due to 6.0% higher sales volumes,
partially offset by 5.6% lower average prices. Volumes increased due to the
contribution of 456 thousand hectoliters from the Paraguay operation. Wine:Our Net
sales of wine increased 13.2% to CLP 172,349 million in 2014, from CLP 152,255
million in 2013. The increase in sales was due to a 2.5% increase in sales
volume and a 10.4% increase in average prices, mainly due to the export side of
the business, which showed good performance mainly driven by Asia and Latin
America exports, and the domestic business, where good execution allowed us to
consolidate our leading position in value terms. Cost of sales The cost
of sales consists primarily of the cost of raw materials, packaging, labor costs
for production, personnel, depreciation of assets related to production,
depreciation of returnable packaging, licensing fees, bottle breakage and costs
of operating and maintaining plants and equipment. Our Cost of sales in 2014 was
CLP 604,537 million compared to CLP 536,697 million in 2013, 12.6% increase from
2013. As a percentage of Net sales, Cost of sales increased to 46.6% in 2014
from 44.8% in 2013. The Cost of sales for our Operating segments during 2014 is
described below: Chile:The Cost
of sales for our Chile Operating segment increased 11.7% to CLP 383,559 million
in the twelve months ended December 31, 2014, from CLP 343,230 million in the
twelve months ended December 31, 2013, primarily due to an increase in direct
costs of 10.5% due to the 15% currency devaluation in Chile during the year,
partially offset by lower commodity costs; and 14.9% higher manufacturing costs
as energy and salaries rose. Cost of sales as a percentage of Net sales
increased to 46.2% in the twelve months ended December 31, 2014 from 44.9% in
the twelve months ended December 31, 2013. International Business:The Cost
of sales of our International Business Operating segment increased 20.2% to CLP
136,175 million in the twelve months ended December 31, 2014, from CLP 113,265
million in the twelve months ended December 31, 2013 mainly due an increase in
direct costs of 27.6% due to the 48% devaluation of the Argentine peso coupled
with high inflation in Argentina, which was not offset by our cost saving
efforts. Cost of sales as a percentage of Net sales increased to 45.4% in the
twelve months ended December 31, 2014 from 40.1% in the twelve months ended
December 31, 2013.


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Wine:The Cost
of sales for our Wine Operating segment increased 5.0% to CLP 97,524 million in
2014, from CLP 92,864 million in 2013, mainly due to higher manufacturing costs
as energy costs rose. Cost of sales, as a percentage of Net sales, decreased
from 61.0% in 2013 to 56.6% in 2014, mainly due to lower input costs partially
offset by a higher exchange rate. Gross margin Our Gross
margin increased 5.0% to CLP 693,429 million in 2014, from CLP 660,530 million
in 2013. As a percentage of Net sales, Gross margin decreased to 53.4% in 2014
from 55.2% in 2013. Marketing, Selling, Distribution
and Administrative Expenses The
Marketing and Selling, Distribution and Administrative expenses (“MSD&A”)
primarily include advertising and promotional expenses, maintenance,
distribution costs such as product transportation costs, services provided by
third parties and other administrative expenses. Our MSD&A expenses
increased 13.1% to CLP 535,603 million in 2014, from CLP 473,524 million in
2013. As a percentage of Net sales, our MSD&A increased to 41.3% in 2014
from 39.6% in 2013. The MSD&A performance of each Operating segment during
2014 is described below: Chile:The
MSD&A expenses of our Chile Operating segment increased 15.5% to CLP 317,765
million in the twelve months ended December 31, 2014, from CLP 275,203 million
in the twelve months ended December 31, 2013. The increase in MSD&A was
mainly due to higher marketing investments and distribution expenses of CLP
14,681 million and CLP 21,199 million respectively. As a percentage of Net
sales, MSD&A increased to 38.3% in the twelve months ended December 31, 2014
from 36.0% in the twelve months ended December 31, 2013. International Business:The
MSD&A of our International Business Operating segment increased 7.9% to CLP
154,300 million in the twelve months ended December 31, 2014, from CLP 142,972
million in the twelve months ended December 31, 2013 due mainly to the Argentina
operation. Cost saving programs were not enough to offset the increase in
MSD&A due to higher marketing expenses of CLP 3,988 million and higher
administrative expenses of CLP 6,516 million, all related mainly to inflationary
pressures in the Argentinean operation. As a percentage of Net sales, our
MSD&A increased to 51.5% in the twelve months ended December 31, 2014 from
50.6% in the twelve months ended December 31, 2013. Wine:The
MSD&A of our Wine Operating segment increased 9.2% to CLP 50,284 million in
2014, from CLP 46,036 million in 2013. This increase in MSD&A is primarily
related to higher marketing expenses of CLP 2,091 million and higher
distribution costs of CLP 901 million, caused by an increase in marketing to
support our branding strategy. As a percentage of Net sales, our MSD&A for
this segment decreased to 29.2% in the twelve month period ended December 31,
2014 from 30.2% in the twelve month period ended December 31, 2013 as higher Net
sales compensated for the increase in MSD&A. Other Operating Income/(expenses)
and Exceptional items The Other
operating income/(expenses) increased in 2014 reaching CLP 23,721 million,
compared to Other operating income/(expenses) of CLP 4,249 million in 2013,
mainly due to the compensation received by our Argentine subsidiary CICSA, for
the termination of the contract which allowed us to import and distribute on an
exclusive basis, Corona and Negra Modelo beers in Argentina, and the license for
the production and distribution of Budweiser beer in Uruguay. During 2014, we
recognized as an Exceptional item the effect of CLP 1,627 million associated
with restructuring processes across Operating segments. Operating Result Our
Operating Result decreased 4.4% to CLP 179,920 million in 2014, as compared to
CLP 188,266 million in 2013, mainly due to a higher cost of sales and higher
expenses, partially offset by the positive one-time effect of the compensation
received by our Argentine subsidiary CICSA. The Operating Result performance of
each of our Operating segments during 2014 is described below: Chile:The
Operating result for the Chile Operating segment decreased 12.0% to CLP 129,740
million due to an increase of 15.5% in MSD&A expenses and an increase of
11.7% in Cost of sales as thecurrency devaluated and higher marketing expenses were
incurred, partially offset by a 8.5% increase in Net sales. The Operating result
margin decreased from 19.3% to 15.6% for the twelve months ended December 31,
2014.


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International Business:The
Operating result for the International Business Operating segment increased 5.5%
to CLP 28,152 million due to the agreements reached with Cervecería Modelo S. de
R.L. de CV. and Anheuser-Busch LLC, for the termination of the contract which
allows CICSA to import and distribute on an exclusive basis, Corona and Negra
Modelo beers in Argentina, and the license for the production and distribution
of Budweiser beer in Uruguay. CICSA received in compensation for these
agreements the amount of ARS 277.2 million, equivalent to US $34.2 million. The
Operating result margin decreased from 9.5% to 9.4% for the twelve months ended
December 31, 2014. Wine:The
Operating result from our wine Operating segment increased 91.9% to CLP 24,780
million in 2014, from CLP 12,913 million in 2013. The Operating result margin
for this Operating segment increased from 8.5% to 14.4% for the twelve months
ended December 31, 2014. Net Financing
Expenses Our Net
financing expenses decreased 31.6% to CLP 10,821 million in 2014 as compared to
CLP 15,830 million in 2013. This decrease was primarily due to a lower level of
Net financial debt in 2014. Equity and income from joint
ventures CCU has
50% participation in both Cervecería Austral and Foods. The share of the
gain/loss in the referred companies decreased to a loss of CLP 899 million in
2014, from a gain of CLP 309 million in 2013 mainly due to lower results in our
joint ventures. Result as per adjustment units and
Exchange rate differences The
adjustment applied to our net liabilities due to Chilean inflation and foreign
exchange fluctuations resulted in a net loss of CLP 4,772 million in 2014, as
compared to a net loss of CLP 6,094 million in 2013. This variation is primarily
due to higher foreign currency exchange differences partially offset by a lower
Result as per adjustment units due to higher inflation during the
year. Other gains
(losses) Our Other
gains increased from a net gain of CLP 959 million in 2013 to a net gain of CLP
4,037 million in 2014. The increase resulted from gains related to hedges
covering foreign exchange variations on taxes. Income taxes Our income
taxes for the twelve months ended December 31, 2014 amounted to CLP 46,674
million, translating into an effective consolidated tax rate of 27.9%. Income
taxes in 2013 amounted to CLP 34,705 million translating into an effective
consolidated tax rate of 20.7%. Income tax increased by CLP 11,969 million
mainly due to the tax rate increase for 2014 in Chile. The effect of the new tax
rate of 21%, applicable from January 1, 2014, resulted in charges of CLP 1,359
million against Income in 2014. The difference between assets and liabilities
for deferred taxes which occur as a direct effect of the increase in the First
Category Income tax rate introduced by Act No. 20,780, has been accounted
against Net income. As of December 31, 2014, the total effect accounted against
Net income was an amount of CLP 14,520 million. Net income for the
year Our Net
income for the twelve months ended December 31, 2014 decreased 9.1%, from CLP
132,905 million in 2013 to CLP 120,792 million in 2014, primarily as a result of
a 4.4% decrease in Operating Result and higher Income taxes. Net income attributable to equity
holders of parent company Our Net
income attributable to equity holders of our parent company decreased 13.7% from
CLP 123,036 million in 2013 to CLP 106,238 million in 2014 for the reasons
explained in the preceding paragraphs.


71

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Non-controlling
interests Non-controlling interests increased from CLP 9,869 million
in 2013 to CLP 14,553 million in 2014.  Liquidity and Capital
Resources  Our principal source of liquidity
has been cash generated by our operating activities, which amounted to CLP
194,155 million, CLP 173,622 million and CLP 219,511 million during the years
2013, 2014 and 2015, respectively.  Our cash flow from operations and
working capital are our primary sources to meet both our short-term and
long-term obligations. In the opinion of our management, they are sufficient for
those purposes.  The principal component of cash
flows generated by operating activities in 2015 were amounts collected from
clients net of payments to suppliers of CLP 649,767 million compared to CLP
532,878 million in 2014 and CLP 513,398 million in 2013.  In 2015, our cash flows from
financing activities totalled outflows of CLP 82,839 million compared to
outflows of CLP 132,156 million in 2014 and inflows of CLP 251,622 million in
2013. The principal components of cash flows used in financing activities
consisted of dividends paid of CLP 66,147 million in 2015, including dividends
paid relating to minority interests (CLP 65,316 million in 2014 and CLP 63,681
million in 2013), of the repayment of bank borrowings of CLP 54,797 million in
2015 (CLP 20,766 million in 2014 and CLP 22,344 million in 2013), partially
offset by the proceeds from short-term and long-term borrowings of CLP 42,929
million in 2015 (CLP 37,366 million in 2014 and CLP 22,893 million in 2013), and
other cash movement outflows of CLP 2,526 million in 2015 mainly due to the
amortization of the series E bond (outflows of CLP 81,471 million in 2014 mainly
due to the payment of the series I bond and CLP 3,162 million in 2013), and.
Additionally, we received a net amount of CLP 326,664 million from our 2013
capital increase.  In 2015, our cash used in
investment activities totalled CLP 165,810 million compared to CLP 238,970
million in 2014 and CLP 136,918 million in 2013. The principal components of
cash used in investment activities in 2015 consisted of capital expenditures of
CLP 131,731 million (CLP 230,080 million in 2014 and CLP 124,559 million in
2013) and payments made to acquire interests in joint ventures and to obtain
control of subsidiaries or other businesses of CLP 44,084 million (CLP 15,222
million in 2014 and CLP 14,566 million in 2013).  As of December 31, 2015, we had
CLP 75,485 million (CLP 131,558 million in 2014 and CLP 313,647 million in 2013)
in cash, overnight deposits, bank balances, time deposits and investments in
mutual funds, which do not include CLP 117,069 million (CLP 83,217 million in
2014 and CLP 95,206 million in 2013) corresponding to securities purchased under
resale agreements. Indebtedness, including accrued interest, amounted to CLP
168,118 million as of December 31, 2015. Short-term indebtedness
included:  • CLP 27,715 million of short-term
bank borrowings • CLP 3,155 million of bonds
payable • CLP 321 million of financial
lease obligations  As of December 31, 2015, long-term
indebtedness, excluding the current portion, comprised: • CLP 48,335 million of long-term
obligations to banks, • CLP 71,353 million of long-term
obligations to the public represented by bonds, and • CLP 17,238 million of long-term
financial lease obligations.  On April 2, 2009 the Company
issued two series of notes for UF 3 million and UF 2 million for a total of CLP
104,188 million in order to refinance a previous loan of CLP 30,000 million and
a US$ 100 million syndicated loan that matured in November 2009. The conditions
of the bonds are as follows:


72

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“I” Series
    “H” SeriesUF amount
    3
      million
    2
      millionTerm
    5
    years
    21
      yearsAmortization
    Bullet
    Since year
      11Interest Rate
    UF+3.00%
    UF+4.25%
  As mentioned above, during the
last quarter of 2009 we repaid a syndicated loan of US$100 million which had
been converted into a fixed-rate UF loan through a cross-currency swap.
Additionally, during March 2014 we paid all outstanding amounts under the “I”
Series bonds.  As of December 31, 2015, some of
our outstanding debt instruments required that we maintain certain financial
ratios. The most significant covenants required us to maintain a consolidated
interest coverage ratio of Adjusted Operating Result before Depreciation and
Amortization (as calculated by CCU in accordance with particular debt
instruments in order to measure such instruments’ financial covenants) to
interest expenses equal to or higher than 3.00 to 1.00; to maintain a
consolidated leverage ratio (the ratio of adjusted liabilities to adjusted
equity) equal to or lower than 1.50 to 1.00 in CCU, 1.20 to 1.00 in VSPT and
2.00 to 1.00 in CPCh; a minimum consolidated equity of CLP 312,516.75 million,
of CLP 83,337.8 million in VSPT and of UF 770 thousand (CLP 19,734 million as of
December 31, 2015) in CPCh; and a maximum indebtedness ratio of less than 3.00
to 1.00 from financial liabilities (bank loans, notes, and leasing obligations)
to Adjusted Operating Result before Depreciation and Amortization. Furthermore,
we were required to maintain a ratio of our unpledged assets over our unsecured
liabilities of at least 1.2. The definition of, and calculation mechanics for,
all covenants were established when we first entered into these debt
instruments, and were based on Chilean GAAP, which are no longer in use since
the Company adopted IFRS, as issued by the IASB. For that reason, the Company in
2010 adapted, with the consent of its creditors, these requirements to the new
accounting standards and principles.  At December 31, 2015, we met all
our financial debt covenants and had a consolidated interest coverage ratio of
12.40 to 1.00, a consolidated leverage ratio of 0.46 to 1.00. The consolidated
adjusted equity attributable to equity holders of the parent company as of
December 31, 2015 was CLP 1,118,220 million. Our ratio of unpledged assets over
unsecured liabilities was 3.17.  None of our indebtedness, or that
of our subsidiaries, contains any term that restricts our ability to pay
dividends other than the requirement to maintain a minimum consolidated
equity.  The following table summarizes
debt obligations held by us as of December 31, 2015. The table presents
principal payment obligations in millions of Chilean pesos by interest rate
structure, financial instrument and currency, with their respective maturity
dates and related weighted-average interest rates:


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Interest - Bearing Debts as of December 31, 2015 -
      Cash(millions of Ch$, except
  percentages)Contractual Maturity DateFixed
    Rate
    
    Averge Int.Rate
    
    2016
    
    2017
    
    2018
    
    2019
    
    2020
    
    Thereafter
    
    TOTALCh$ (UF)(1)
    Bonds
    4.2%
    
    5,607
    
    7,064
    
    7,064
    
    7,064
    
    7,064
    
    64,743
    
    98,605Ch$ (UF)(1)
    Banks
    6.0%
    
    1,884
    
    1,682
    
    1,646
    
    11,210
    
    1,270
    
    28,871
    
    46,563Ch$
    Banks
    5.4%
    
    6,437
    
    18,135
    
    1,023
    
    1,023
    
    1,023
    
    -
    
    27,640US$
    Banks
    3.2%
    
    690
    
    -
    
    -
    
    -
    
    -
    
    -
    
    690Argentine
pesos
    Banks
    24.8%
    
    12,933
    
    6,855
    
    1,722
    
    530
    
    -
    
    -
    
    22,040Uruguayan
pesos
    Banks
    6.0%
    
    345
    
    851
    
    851
    
    -
    
    -
    
    -
    
    2,047TOTAL
    
    
    
    27,895
    
    34,588
    
    12,305
    
    19,826
    
    9,356
    
    93,614
    
    197,585Variable
      rate
    
    Averge Int.Rate
    
    2016
    
    2017
    
    2018
    
    2019
    
    2020
    
    Thereafter
    
    TOTALUS$
    Banks
    1.6%
    
    10,564
    
    126
    
    5,663
    
    -
    
    -
    
    -
    
    16,354Argentine
pesos
    Banks
    25.2%
    
    1,905
    
    1,661
    
    1,098
    
    805
    
    -
    
    -
    
    5,469TOTAL
    
    
    
    12,469
    
    1,788
    
    6,762
    
    805
    
    -
    
    -
    
    21,823TOTAL
    
    
    
    40,363
    
    36,376
    
    19,067
    
    20,631
    
    9,356
    
    93,614
    
    219,407(1) UF as of Dec 31,
      2015
   To hedge our market risks, we hold
debt obligations in various currencies and enter into derivatives contracts. See
“Item 11: Quantitative and Qualitative Disclosure about Market Risk.”  Our treasury policy is to invest
in highly liquid financial instruments issued by first-class financial
institutions. Investments are made primarily in Chilean pesos and U.S. dollars.
As of December 31, 2015, we had invested CLP 149,708 million in Chilean peso
related instruments.  The following table summarizes
financial instruments, including time deposits and securities purchased under
resale agreements (Repos), held by us as of December 31, 2015:  Short-Term Financial
    Instruments(in millions of CLP)Time deposits
    32,639Repos
    117,069Total
    149,708


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Capital
Expenditures Our plans for capital expenditures
through the period 2016-2019(1) are displayed in the following
table:  Operating
      segment
    2016
    2017
    2018
    2019(CLP Millions)Chile
    
    84,663
    52,244
    130,929
    81,118As a percentage of Total
    43.8%
    38.6%
    55.5%
    57.1%Machinery and
      equipment
    44,696
    24,378
    68,464
    32,056Packaging
    19,010
    14,568
    16,045
    18,407Marketing
      assets
    9,602
    7,092
    7,512
    7,001Software and
      hardware
    685
    310
    218
    173Others
    10,670
    5,895
    38,690
    23,480International
      Business
    57,379
    35,785
    29,026
    21,003As a percentage of Total
    29.7%
    26.5%
    12.3%
    14.8%Machinery and
      equipment
    23,720
    5,348
    7,679
    2,415Packaging
    16,331
    9,594
    9,897
    10,393Marketing
      assets
    10,365
    12,810
    7,560
    7,210Software and
      hardware
    3,258
    1,153
    733
    243Others
    3,706
    6,881
    3,157
    742Wine
    
    12,506
    10,860
    11,904
    9,767As a percentage of Total
    6.5%
    8.0%
    5.0%
    6.9%Machinery and
      equipment
    4,976
    5,955
    3,581
    2,690Packaging
    1,127
    1,459
    1,570
    1,707Marketing
      assets
    15
    23
    25
    28Software and
      hardware
    227
    104
    92
    88Others
    6,161
    3,319
    6,635
    5,255Others
    38,957
    36,399
    63,874
    30,149As a percentage of Total
    20.1%
    26.9%
    27.1%
    21.2%Total
    
    193,505
    135,289
    235,731
    142,037
  (1)Updated April 5, 2016  During the years 2016 through
2019, we plan to make capital expenditures mainly to adapt, update and increase
production capacity, installing new packaging lines, enhancing environmental
protection, optimizing our distribution system and warehouse facilities,
investing in additional returnable bottles and crates to replace obsolete
inventories, adapting to new packaging formats and supporting industry volume
growth. Capital expenditures are also directed to improving management
information systems and making additional investments in marketing
assets.  We review our capital investment
program periodically and changes to the program are made as appropriate.
Accordingly, we cannot assure you that we will make any of these proposed
capital expenditures at the anticipated level or at all. In addition, we are
analyzing the possibility of making acquisitions in the same or related beverage
businesses, either in Chile or in other countries of South America’s southern
cone. Our capital investment program is subject to revision from time to time
due to changes in market conditions for our products, general economic
conditions in Chile, Argentina and elsewhere, interest, inflation and foreign
exchange rates, competitive conditions and other factors.  We expect to fund our capital
expenditures through a combination of internally generated funds, long-term
indebtedness and the 2013 capital increase.


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Contractual Obligations  The following table summarizes our known contractual obligations as of December 31, 2015:  Payments due by period(in million of CLP)Contractual Obligations

   Total

   Less than 1 year

   1 - 3 years

   3 - 5 years

   More than 5 yearsLong-Term Debt Obligations (1)

   183,882

   38,858

   52,733

   27,548

   64,743Capital Lease Obligations (2)

   35,526

   1,506

   2,710

   2,439

   28,871Operating Lease Obligations (3)

   213,064

   82,677

   51,603

   25,204

   53,580Purchase Obligations (4)

   535,576

   144,657

   210,398

   126,396

   54,126Total

   968,048

   267,697

   317,444

   181,587

   201,320(1) Includes interest.(2) Includes our obligations to lease our headquarters building (see Note 27 to the financial statements).(3) includes real state property, vineyards and warehouse leases, as well as marketing contracts.(4) Includes raw material purchase contracts.
  Off Balance Sheet Arrangements  We do not have any off-balance sheet arrangements involving any transactions, agreements or other contractual arrangements involving an unconsolidated entity under which we have:  ·made guarantees; ·a retained or a contingent interest in transferred assets; ·an obligation under derivative instruments classified as equity; or ·any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.  We record payments made under operating leases as expenses, and none of our operating lease obligations are reflected on our balance sheet. We have no other off-balance sheet arrangements. See Note 35 to our audited consolidated financial statements for a more detailed discussion of contingencies, including guarantees.  Research and Development  Innovation is the driver that allows CCU to meet constantly evolving demand. Our research and development efforts to continuously satisfy the market by introducing new products and brands, although significant, do not involve material expenditures, as we have a close relationship with the companies that own the brands subject to license contracts. The relationship with the license owners is a constant resource in these matters as well as in the application of production best practices, providing access to the “state of the art” techniques and knowledge in the industry.  In 2003, we entered into two technical agreements with Heineken Brouwerijen B.V. for assistance regarding all technical issues related to the production and bottling of Heineken Lager, one for Chile and the other for Argentina. On October 12, 2011, we and Heineken Brouwerijen B.V. signed the Amended and Restated versions of the Trademark License Agreements which provide us with the exclusive rights to produce, sell and distribute Heineken beer in Chile and Argentina, in effect as of January 1, 2011. These agreements have an initial term of 10 years, and shall automatically be renewed on January 1 of each year for a new period of ten years, unless any party gives notice of its decision not to renew, in which case the agreements will be in force until the last renewal period expires.


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In May 2005, we entered into a technical assistance agreement withHeineken Technical Services B.V. (currently Heineken Supply Chain B.V.)for certain operational aspects of our breweries, with an initial term of one year, renewable for subsequent periods of one year each. See “Item 6: Directors, Senior Management and Employees” and “Item 7: Major Shareholders and Related Party Transactions.”  The license agreement between CCU Argentina and Anheuser-Busch, signed in 1995, as amended, also provides us with both technical and marketing assistance for the production and marketing of Budweiser beer brand in Argentina. See “Item 4: Information on the Company – Business Overview – Production and Marketing –International Business Operating segment.”  Critical Accounting Policies and Practices  A summary of our significant accounting policies is included in Note 2 to our audited consolidated financial statements, which are included in this annual report. The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and assumptions are based on historical experiences, changes in the business environment and information collected from qualified external sources. However, actual results may differ from estimates under different conditions, sometimes materially. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results and/or require management’s subjective judgments. The most critical accounting policies and estimates are described below.  a) Property, plant, equipment and bottles:The key judgments we must make under the property and equipment policy include the estimation of the useful lives of our various asset types, expected residual values, the election of a method for recording depreciation, management’s judgment regarding appropriate capitalization or expensing of costs related to fixed assets, and the evaluation of potential impairments, if any.  Property and equipment are stated at cost and are depreciated using the straight-line method based on the estimated useful lives of the assets. In estimating the useful lives (residual values are considered) we have primarily relied upon actual experience with the same or similar types of equipment and recommendations from the manufacturers. Useful lives are based on the estimated amount of years an asset will be productive and are revised periodically to recognize potential impacts caused by new technologies, changes to maintenance procedures, changes in utilization of the equipment, and changing market prices of new and used equipment of the same or similar types.  Property and equipment assets are evaluated for possible impairment. Factors that would indicate potential impairment may include, but are not limited to, significant decreases in the market value of the long-lived asset(s), a significant change in the long-lived asset’s physical condition and operating or cash flow losses associated with the use of the long-lived asset. This process requires our estimate of future cash flows generated by each asset or group of assets. For any instance where this evaluation process indicates impairment, the appropriate asset’s carrying values are written down to net realizable value and the amount of the write-down is charged against the results of continuing operations.  Expenditures that substantially improve and/or increase the useful life of facilities and equipment are capitalized. Other maintenance or repair costs are charged income as incurred.  b) Goodwill, impairment of goodwill and intangible assets other than goodwill:Management exercises judgment in assessing goodwill and the useful lives of other intangible assets including commercial trademarks and software programs. Judgments are also exercised for assessing potential impairments for these kinds of assets. Goodwill is recorded as the excess of the purchase


price of companies acquired over the fair value of identifiable net assets acquired and is accounted for at its cost value less accumulated impairment losses, if any. Goodwill in the acquisition of joint ventures is assessed for impairment as part of the investment, provided that there are signs indicating that the investment may be impaired. We annually review the recorded value of our goodwill, or sooner if changes in circumstances indicate that the carrying amount may exceed fair value. Recoverability of the carrying value of the asset is determined by comparing net book value, including goodwill, to fair value based on the estimated future net cash flows of the relevant assets. See Notes 2.15 and 2.16 to our financial statements.


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c) Deposits for returns of bottles and containers:Deposits for returns of bottles and containers corresponds to the liabilities registered by the guarantees of money received from customers for bottles and containers placed at their disposal and represents the value that will be returned to the customer when it returns the bottles to the Company in good condition along with the original document. This value is determined by the estimation of the bottles and containers in circulation that are expected to be returned to the Company in the course of time based on the historic experience, physical counts held by clients and independent studies over the quantities that are in the hands of end consumers, valued at the average weighted guarantees for each type of bottles and containers.  The Company does not intend to make significant repayment of these deposits within the next 12 months. Such amounts are classified within current liabilities, under the line Other financial liabilities, since the Company does not have the legal ability to defer this payment for a period exceeding 12 months. This liability is not discounted, since it is considered a payable on demand, with the original document and the return of the respective bottles and containers and it does not have adjustability or interest clauses of any kind in its origin.  d) Severance Indemnities:As of December 31, 2015, the liabilities for mandatory severance indemnities have been determined at their current actuarial value, based on the accrued cost of the benefit, using an annual discount interest rate of 6.36% in Chile and 39.26% in Argentina. The calculation also considers several assumptions such as the estimated years of service that personnel will have at the date of their retirement, mortality rates and future salary increases.  e) Financial instruments:The Company recognizes a financial asset or liability in its balance sheet when it becomes subject to the contractual stipulations of a financial instrument. As of the date of the initial recognition, Management classifies its financial assets (i) at fair value through profit and loss or collectible credits and accounts (ii) collectible credits and accounts, depending on the purpose for which the financial assets were acquired. For those instruments not classified at fair value through profit and loss, any cost attributable to the transaction is recognized as part of the asset value. The fair value of the instruments that are actively quoted in formal markets is determined by the quoted price as of the financial statement closing date. For those investments without an active market, the fair value is determined using valuation techniques including (i) the use of recent market transactions, (ii) references to the current market value of another financial instrument of similar characteristics, (iii) discounted cash flow, and (iv) other valuation models. These assets are valued at fair value and the gains or losses originated by the change in fair value are recognized in the Consolidated Statement of Income. The financial instruments at fair value through profit and loss include financial assets classified as held for trading by the Company. Financial assets are classified as held for trading when acquired with the purpose of selling them within a short term. Derivative instruments are classified as held for trading unless they are classified as hedge instruments.  The estimated losses from bad debts are determined by applying different percentages, taking into account maturity factors, until reaching 100% of the balance in most of the debts older than 180 days, with the exception of those cases, in accordance with current policies, for which losses are estimated due to partial deterioration based on a case by case analysis.


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Loans and financial obligations accruing interest are initially recognized at the fair value of the resources obtained, less costs incurred directly attributable to the transaction. After initial recognition, loans and obligations accruing interest are valued at their amortized cost. The difference between the net amount received and the value to be paid is recognized in the Consolidated Statement of Income during the term of the loan, using the effective interest rate method. Interest paid and accrued related to debts and obligations used in a financing operations appear under financial cost. Loans and obligations accruing interest with a maturity within a twelve-month period are classified as current liabilities, unless the Company has the unconditional right to defer the payment of the obligation for at least a twelve-month period after the financial statement closing date.  f)Accounting changes:The Company adopted the early application of Amendment to IAS 16 and 41 in 2015. This change in accounting policy implies that Biological assets (vines under formation and under production) are reclassified to Property, plant and equipment from Biological assets. Additionally, the costs associated with agricultural activities are reclassified to Biological current assets from Inventories. Until December 31, 2014 and January 1, 2014 these were presented under Biological assets (vines under formation and under production) and Inventories, respectively. The effects of this accounting policy are explained in Note 2.29 to our audited consolidated financial statements. For comparison purposes these change was applied retroactively to 2014.  During the year ended on December 31, 2015, there have been no other significant changes in the use of accounting principles or relevant changes in any accounting estimates with regard to previous years that have affected these consolidated financial statements.   Trend Information  The Chilean economy grew2.1% in 2015, with an inflation rate of4.4%. The GDP growth for 2016 had been estimated in the range of1.3% to3.4%. Average unemployment was6.3% in 2015. We cannot assure you that the consumption of our products will vary in the same proportion as the overall economic indicators, since there is no perfect correlation. The conditions in particular sectors of the economy may have different impact in our business. Factors such as competition and changes in relative prices among the various types of beverages can affect the consumption of our products.  In December 2014, the Chilean government presented to the Chilean Congress a bill for a labor reform which could result in a more rigid labor market. This reform has been approved by the Chilean Congress but is currently pending resolution by the Constitutional Court.  On June 26, 2015 decree N° 13 of the Ministry of Health was published which modifies the Sanitary Food Products Regulations (DC 977 of the Ministry of Health) and enforces Law N° 20,606 of the year 2012 regarding the nutritional composition of food products and its promotion. Both regulations establish certain restrictions on promotion material, labeling, and commercialization of these products that have been classified as being “high” in calories or any of the defined critical nutrients, such as sodium, sugar and saturated fats. Additionally on November 13, 2015 Law N° 20,869 regarding Promotion of Food Products was published, which restricts the time of day for promotion on television and the cinema of the previously indicated products. This law will become effective as of June 27, 2016 and will affect a proportion of our non-alcoholic portfolio. We are taking measures to mitigate the impact of this new law.  The Chilean Congress is currently discussing a bill that provides, among others, a new regime of temporary water rights, which apply to future water rights that are granted. The bill would also introduce a system of revocation of water rights, for those not in use. This bill could be subject to modifications during its discussion in the Chilean Congress.After its enactment, regulations will be required for the implementation of the new regime, which is not expected to occur during the year 2016.


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Electricity spot prices have increased significantly in the past years due to drought conditions and thepostponement of investments in new capacity, specifically hydroelectricity and coal generation. All CCU plants have electrical power contracts, either regulated or agreed with distributors or generators, with prices tied to spot prices, coal prices and CPI (U.S. consumer price index). A shortage is not foreseen in the coming years as electricity can be generated with fuel, though at a higher cost.  Our main plants in Chile are supplied by Metrogas Quintero, a natural gas company, which imports gas from renewable sources at international prices. Accordingly, we do not foresee shortages as was the case in the past when the natural gas supply depended on Argentina.  The measures taken by the previous Argentine government to address the country’s economic crisis of 2002 severely affected the Argentine financial system’s stability and have had a materially negative impact on the country ́s economy. Recently, the Argentine government has lifted restrictions on foreign exchange transactions for obligations entered into after December 17, 2015. Restrictions on obligations entered into before December 17, 2015 will remain in effect until May 2016. If Argentina were to experience a new fiscal and economic crisis, the Argentine government could implement economic and political measures, which could adversely impact our business.  Since January 2006, the Argentine government has adopted different methods to directly and indirectly regulate the prices of various consumer goods, including bottled beer, in an effort to slow inflation. Additionally, measures taken by the previous Argentine government to control the country’s trade balance and to limit the access to foreign currencies have negatively impacted the free import of goods and royalty payments by the Company, and also the repatriation of profits. This situation has recently changed following the installation of the new government in December 2015. We cannot assure you that the current Argentine government will not implement this type of measures and that these will not have an adverse effect on our operations in Argentina.  Revenues from CCU Argentina, in Chilean pesos, are also subject to the volatility of exchange rates of the Chilean peso and Argentine peso in any given period. This volatility may also affect the level of income reported from our foreign operations under IFRS.  ITEM 6: Directors, Senior Management and Employees A.Directors and Senior Management  The following table sets forth certain information with respect to the members of our board of directors, as of April 13, 2016:


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Andrónico Luksic(62), was appointed Chairman of the board in April 2013 and has served as a Director since November 1986. He is currently a member of the Board of Cervecería CCU, ECUSA, CCU Argentina, CICSA, and Central Cervecera de Colombia. He is also currently Chairman of the Board of Quiñenco S.A. and LQ Inversiones Financieras S.A., Vice Chairman of the Board of Banco de Chile and Compañía Sud Americana de Vapores S.A., as well as a member of the board of directors of several other companies and institutions, including Antofagasta plc, Antofagasta Minerals, Nexans, Tech Pack S.A., and Invexans S.A. Mr. Luksic is a member of the International Business Leaders’ Advisory Council for the Mayor of Shanghai. He is a member of the International Advisory Board of Barrick Gold, the International Advisory Council of the Brookings Institution, the Advisory Board of the Panama Canal Authority, and the Chairman’s International Council of the Council of the Americas. In addition, Mr. Luksic is a Trustee Emeritus at Babson College, and a member of the Harvard Global Advisory Council, the International Advisory Board of the Blavatnik School of Government at Oxford University, the International Advisory Boards of both the Tsinghua University School of Economics and Management and the Fudan University School of Management, the Harvard Business School Latin America Advisory Board, the Dean’s Council at the Harvard Kennedy School, the Advisory Committee of the David Rockefeller Center at Harvard University, and the Latin American Executive Board of the MIT Sloan School of Management.  Marc Busain(48) was appointed as our director and Vice Chairman of the board in April 2016. He is member of the board of Central Cervecera de Colombia. He has been with Heineken since 1995 where he is currently President of Heineken Americas. Prior to that he served within Heineken as Managing Director of different countries including Mexico, France, Egypt and Burundi. He holds a Master ́s degree in Economics from the Vrije Universiteit Brussel.  Francisco Pérez(58), has served as director since July 1998. He is Chief Executive Officer of Quiñenco since 1998. Prior to joining Quiñenco, he was our Chief Executive Officer between 1991 and 1998. He is member of the board of several companies, including Cervecería CCU, CICSA, CCU Argentina, ECUSA, CPCh, Central Cervecera de Colombia, IRSA, Banco de Chile, Banchile Corredores de Seguros S.A., LQ Inversiones Financieras S.A.,VSPT, Sudamericana Agencias Aéreas y Marítimas S.A., Nexans and Hapag Lloyd. Also he is chairman of the board of CSAV (Compañía Sud Americana de Vapores S.A.), ENEX (Empresa Nacional de Energía Enex S.A.) and Invexans S.A., and Vice Chairman of Tech Pack S.A. He received a degree in Business Administration from the Pontificia Universidad Católica de Chile and a Master’s degree in Business Administration from the University of Chicago.  Carlos Alberto Molina(59), has served as our director since April 2012. He is also member of the board of Cervecería CCU, ECUSA, CCU Argentina, CICSA, VSPT, Foods, Central Cervecera de Colombia and CPCh. He has over 30 years of management and strategic consulting experience in multiple industries, especially in beverages and consumer goods across the Americas. In beverages, his roles have included Business Development for Heineken Americas; Planning and Strategy for Femsa Cerveza; and board member of Kaiser in Brazil. Prior to these roles, Mr. Molina was a Partner with Booz, Allen & Hamilton, a global business consulting firm. Mr. Molina is a Mexican citizen and has a BBA from the University of Houston, and an MBA from the University of Texas.  Vittorio Corbo(73),has served as our director since April 2012. He is a Senior Research Associate at the Centro de Estudios Públicos (CEP) in Santiago, Chile. He is also Chairman of the board of Directors of Banco Santander Chile, and Director of Grupo Santander Mexico, and of SURA Insurance-Chile, and economic consultant to several large corporations in Chile and abroad. He served in senior management positions at the World Bank in Washington, DC, was Professor of Economics in Canada, the U.S.A. and Chile, was also President of the Central Bank of Chile (2003-2007) and Director of Banco Santander S.A. (Spain) from 2011-2014 among other jobs. Mr. Corbo holds a Commercial Engineering degree (with maximum distinction) from Universidad de Chile and a Ph.D. in economics from MIT.  81


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Pablo Granifo(57), was appointed as a director in April 2013. He has been the Chairman of Banco de Chile since 2007 and the Chairman of VSPT since 2013. He is member of the board of Cervecería CCU. Additionally, he is Chairman of the boards of Banchile Asesoría Financiera S.A., Socofin S.A., Banchile Securitizadora S.A., and Banchile Administradora General de Fondos S.A., and a member of the executive committee of Banchile Corredores de Seguros Limitada. He is also a member of the board of Enex. He holds a Business Administration degree from the Pontificia Universidad Católica de Chile.  Rodrigo Hinzpeter (50),was appointed as a director in July 2015. He is also member of the board of Cervecería CCU, ECUSA and IRSA. Since 2014 he has been the Manager of the Legal department of Quiñenco. Before that he was Minister of Internal Affairs and later Secretary of Defense for the Government of Chile. He received his Law degree from the Pontificia Universidad Católica de Chile.  Didier Debrosse(59), was appointed as a director in July 2015. He is also member of the board of Cervecería CCU. He has been working for Heineken since 1997, where he is currently President of Heineken Brazil. Additionally he is President of the Dutch Brazilian Chamber of Commerce and is Knight of the Legion of Honor as awarded by France. He received an Advanced Management Programme degree from INSEAD and completed the Board Member course at Harvard Business School.  José Miguel Barros(52), was appointed as a director in April 2016. He is member of the board of VSPT. He is a Senior Managing Director and Partner of Chilean Investment Bank Larrain Vial S.A. He is currently member of the Board of Lipigas S.A., CDF, Stel Chile S.A., Bolsa de Productos S.A. and Cámara Chileno-Holandesa de Comercio. Mr. Barros holds a Commercial Engineering degree from Pontificia Universidad Católica de Chile and is a graduate from PADE, ESE Buisiness School, Universidad de los Andes.  John Nicolson(62), served as our director from October 2008, and Vice Chairman from November 2008, until April 13, 2016. He served as member of the board of Cervecería CCU, ECUSA, CCU Argentina S.A., CICSA and CPCh. He is the Chairman of IRSA and he was President of Heineken Americas and member of Heineken’s Executive Committee until 2013, having joined from Scottish & Newcastle following its acquisition by Heineken N.V. His early career was with ICI Plc, Unilever PLC and Fosters Brewing Group. He also holds a non-executive position as Chairman of AG Barr PLC, NED of Stock Spirits Group PLC, and NED of North American Breweries and is a member of Edinburgh University’s Advisory Board. He received a degree in Marketing and Economics at the University of Strathclyde, Scotland and also completed the Executive Program at Carnegie Mellon University, U.S.A. and the Directors’ Forum at London Business School, United Kingdom.  Jorge Luis Ramos(63), served as our director from May 2011 until April 13, 2016. He was member of the board of directors of Cervecería CCU, VSPT, ECUSA, CPCh and IRSA, among others. Mr. Ramos was appointed Deputy President for Heineken Americas in 2010 until 2013. He currently provides assistance to other boards of Heineken joint ventures in Central America. He also serves as director in other public and private companies in Mexico. He joined FEMSA in 1996 and became CEO of FEMSA Cerveza in 2006, after serving two years as Co-CEO. Mr. Ramos has a bachelor’s degree in Administration and Public Accounting from Tecnológico de Monterrey and an MBA degree from the University of Pennsylvania’s Wharton School of Business.  Manuel José Noguera(66), served as our director from May 1987 until June 30, 2015. He lends assistance to the board of Quiñenco and is a senior partner at the law firm Noguera, Larraín y Dulanto Ltda. He has been the legal advisor for the Luksic Group for over 40 years. He received his Law degree from the Pontificia Universidad Católica de Chile.  Phillipe Pasquet(77), served as our director from June 2003 until June 30, 2015. He has worked for Heineken since 1976. He was member of the board of directors of VSPT, CPCh, Foods and IRSA. He received degrees from theÉcole Supérieure de Commercein Dijon, France, theInstitut International de Commercein Paris, and the *Centre Européen d’Education Permanente* in Fontainebleau, France. 82


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The principal business activities of our current and former 2015 and 2016 directors are summarized in the following table:  Directors

   Business ActivitiesAndrónico Luksic

   Chairman of CCUMarc Busain

   President of Heineken AmericasFrancisco Pérez

   Quiñenco’s CEOCarlos Molina

   Director of CompaniesVittorio Corbo

   Director of CompaniesPablo Granifo

   Chairman of Banco de Chile and VSPTRodrigo Hinzpeter

   Manager Legal Department QuiñencoDidier Debrosse

   President of Heineken BrazilJosé Miguel Barros

   Director of CompaniesJohn Nicolson

   Vice Chairman of CCUJorge Luis Ramos

   Director of CompaniesManuel José Noguera

   Director of CompaniesPhilippe Pasquet

   Director of Companies related to Heineken
 At the shareholder’s meeting held on April 13, 2016 a new board was elected for a term of three years.The current members are Messrs. Andrónico Luksic, Marc Busain, Francisco Pérez, Carlos Molina, Vittorio Corbo, Pablo Granifo, Rodrigo Hinzepeter, Didier Debrosse and José Miguel Barros.  The following table sets forth certain information with respect to our senior management as registered at the SVS, as of April 15, 2016:   Senior Management

   Position

   Position Held Since

   At Company SincePatricio Jottar

   Chief Executive Officer

   July 1998

   July 1998Marisol Bravo

   Corporate Affairs Senior Director

   June 1994

   July 1991Felipe Arancibia

   Chief Human Resources Officer

   February 2014

   April 2002Diego Bacigalupo

   Corporate Development Manager

   January 2014

   August 2013Matías Bebin

   General Manager CPCh

   February 2014

   October 2006Felipe Benavides

   General Counsel

   March 2015

   March 2015Francisco Diharasarri

   General Manager ECUSA

   October 2003

   June 1985Felipe Dubernet

   Chief Financial Officer

   February 2014

   May 2011Pedro Herane

   General Manager VSPT

   April 2013

   May 2010Ronald Lucassen

   Industrial Processes Corporate Manager

   May 2014

   May 2014Hugo Ovando

   General Manager Cervecería CCU

   February 2014

   September 1997Martín Rodriguez

   Head of Project Management Office

   March 2015

   March 2015Fernando Sanchis

   General Manager CCU Argentina

   May 1995

   November 1994Jesús García

   General Controller

   May 2005

   May 2005Ludovic Auvray

   Manager International Business

   June 2015

   June 2015Alvaro Rio

   Manager Comercial CCU

   March 2015

   January 1991Alvaro Román

   Manager TCCU

   March 2015

   March 1999
   Patricio Jottar(53), has served as our Chief Executive Officer since 1998. He is also currently a director of Cervecería CCU, CCU Argentina, CICSA, ECUSA, VSPT, Foods, Aguas CCU, Bebidas CCU-Pepsico SpA, Promarca, CCK, Bebidas del Paraguay and Central Cervecera de Colombia, and is Chairman of the Board of CPCh, Comercial CCU and TCCU among others. Prior to joining us, he was Chief Executive Officer of Santander Chile Holding. He received a degree in Business Administration from the Pontificia Universidad Católica de Chile and a Master’s degree in Economics and Business Administration from the Instituto de Estudios Superiores de la Empresa, in Barcelona, Spain.


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Marisol Bravo(56), is our Corporate Affairs Senior Director and has been with us since 1991. Prior to her current position, she was Head of Special Projects. Before joining us, she was Assistant Manager of Marketing at Citicorp Mutual Funds. She received a degree in Business Administration from the Universidad de Chile.  Felipe Arancibia(41), is our Chief Human Resources Officer and assumed the position in January 2014. He has been with us since 2002, holding several positions in Finance and Business Development. The latest position was as of Corporate Finance and Investor Relations Manager. Prior to this position he was Global Finance Manager for Heineken International in Amsterdam and Business Development Manager for Heineken Brazil in Sao Paulo. Before this position he was the Planning and Finance Manager at ECUSA. He received a degree in Business Administration from Universidad de Los Andes in Chile and holds an Executive Scholar Program in Finance and Alumnus from Kellogg School of Management, Northwestern University and a certificate in Human Resources from the Ross School of Business from the University of Michigan and is also a part-time Professor at Universidad de Los Andes in Chile.  Ludovic Auvray(45) is our Manager International Business, and has held that position since July 2015. He is Chairman of the board of Milotur en Uruguay and, of Bebidas del Paraguay, and member of the board of Central Cervecera de Colombia and BBO among others. He has worked with Heineken since 1995 where he has held various positions in Sales and Marketing, his latest position was Global Marketing Director for Cerveza Sol and Specialty Beers in Heineken International in Amsterdam. He received an MBA from the Babson Graduate School.  Diego Bacigalupo(36), is our Corporate Development Manager, and has held that position since January 2014. He has been with CCU since August 2013. He is currently a member of the board of PLASCO, Aguas CCU, Bebidas Bolivianas BBO, Bebidas del Paraguay, Milotur and Nutrabien, amongst others. Prior to his current position, he was Strategic Planning Manager of CCU between August and December 2013. Before joining us, he worked at Quiñenco within its Business Development area. He received an Industrial Engineering degree from the Pontificia Universidad Católica de Chile and an MBA from MIT Sloan School of Management.  Matias Bebin(33), has been the General Manager of CPCh since January 1, 2014. He is currently a member of the board of Transportes CCU. Prior to this position he was the Planning & Finance Manager for the Company. He has been with us since 2006, working in different companies of the group such as ECUSA and Aguas CCU. He received a degree in Business Administration from the Pontificia Universidad Católica de Chile and a MBA from Berkeley University.  Felipe Benavides(40) is our General Counsel, and has held the position since March 2015. Previous to this position he was the General Counsel at SMU since 2013. He was also a Senior Associate at Cariola, Diez, Pérez Cotapos and an International Associate for Debevoise & Plimpton LLP (New York). He received his Law degree from the Pontifica Universidad Católica de Chile and an LLM from Duke University.  Francisco Diharasarri(55), is the General Manager of ECUSA and has been with us since 1985. Prior to his current position, he was General Manager of Cervecería CCU, General Manager of ECUSA and General Manager of PLASCO. He is also currently Chairman of the Board of Aguas CCU, PLASCO, Foods, Alimentos Nutrabien S.A., Manantial, and Bebidas Carozzi CCU and is also a member of the board of CRECCU, CICSA, Transportes CCU, Bebidas CCU-Pepsico, Bebidas del Paraguay, Promarca, among others. He received a degree in Civil Engineering from the Universidad de Chile.  Felipe Dubernet(46), is our Chief Financial Officer, and has held that position since February 2014. He has been with us since May 2011 as Procurement officer until January 2014. He is currently a member of the board of PLASCO, CRECCU and Transportes CCU, among others. Prior to his current position, he was Chief Procurement Officer CCU between May 2011 and January 2014. Prior to joining us, he worked for 15 years at Unilever holding several positions in Supply Chain and Finance

in Chile, Brazil and United States. He received a degree
in Civil Engineering from the Pontificia Universidad Católica de
Chile.


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Pedro
Herane(46) is
the General Manager of VSPT and assumed the position as of April 2013.
Additionally, he is a member of the board of Viña Valles de Chile S.A., Viña
Ältair S.A., Viña del Mar de Casablanca S.A., Viñas Orgánicas S.P.T. S.A., Finca
La Celia S.A., and Transportes CCU. Prior to his current position, he was in
charge of the Domestic Market as Commercial Manager of VSPT. Prior to joining
us, he was Senior Group Manager at Procter & Gamble for 10 years in multiple
positions in Chile, Latin America and United States. He received a Bachelor’s
degree in Business from University Adolfo Ibáñez in Chile and a Master’s degree
in Marketing from the Paris School of Management (ESCP – EAP) in
France.  Ronald
Lucassen(51), has
been the Industrial Processes Corporate Manager since May 2014. Prior to this
position, Ronald worked for Heineken since January 1990. He worked in The
Netherlands as Production Manager in the Zoeterwoude Brewery and as Quality
Manager in Den Bosch. Subsequently he has completed a number of international
assignments, working as General Manager Brewing for DB Breweries’ in New
Zealand, Technical Manager of GBNC in New Caledonia, Production Manager of the
Hainan Brewery in China for Asia Pacific Breweries, Supply Chain Director Czech
Republic, and Supply Chain Director Russia. He holds a Mechanical Engineering
degree and a Master’s degree from the Technische Universiteit Delft.  Hugo
Ovando(46), is
the General Manager of Cervecería CCU and assumed this position as of January
31, 2014. Prior to this, he has worked with us in several positions: General
Manager of CPCh,Corporate
Development Manager of CCU, General Manager of Transportes CCU, General Manager
of Comercial CCU, Development Manager, Corporate Projects Manager and Investor
Relations Manager. He has been with us since 1997. He is also a director of
Comercial CCU S.A., Transportes CCU Ltda., CICSA, CCK and Cervecería Austral. He
received a degree in Business Administration from the Pontificia Universidad
Católica de Chile and a MBA from Babson College.  Martín Rodriguez(55), is the Head of
our Project Management Office, holding this new position since March 2015. He
was at Quiñenco from 1999 to March 2015, as M&A Manager and Strategic
Development Manager. He was a board member of Cervecería CCU, ECUSA and Foods
until March 2015. He received a degree in Business and Administration from the
Pontificia Universidad Católica de Chile, and holds a Master ́s degree in
Economics from the same University and an MBA from UCLA.  Fernando
Sanchis(55), is
the General Manager of CCU Argentina and has been with us since 1995. Prior to
joining us, he was Chief Financial Officer of Embochile, a former PepsiCo
bottler and held the same position at Uruguay’s PepsiCo’s bottler. He is also
currently a board member of CCU Argentina and Bebidas del Paraguay, amongst
others. He received an accounting degree from the University of Buenos Aires in
Argentina.  Alvaro
Román(43),is our General Manager of Transportes CCU, and has held
that position since May 2010. He has been with us since March 1999, where prior
to his current role he held various positions in sales, marketing and business
development. He received a degree in Civil Engineering from the Pontificia
Universidad Católica de Chile.  Alvaro Río
(55) is our General Manager of Comercial CCU S.A., and has
held that position since May 2010, and as part of the Senior Management since
March 2015. He has been with CCU since 1991 holding various positions
including Operational Manager of Transportes CCU, and Sales Manager of
Cervecería CCU. He received a degree in Business Administration from Universidad
Diego Portales.  Jesús
García(53) is
our General Controller since May 2015. He is currently a member of the board of
PLASCO and Transportes CCU. He has also worked with Heineken since 2000 in
various Finance positions in Spain, the Netherlands and Singapore, and
previously with Diageo and with PWC in Spain. Prior to joining CCU he served as
Senior Regional Tax Manager Asia Pacific for the Heineken
Group. He holds a degree in Business Law from Universidad de Sevilla, in Spain and a Master’s degree in Business Administration from Instituto Internacional San Telmo in Sevilla.


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Our senior managers are full time employees; therefore, they do not perform principal business activities outside us.  On January 13, 2003, the existing shareholders’ agreement was amended in order to allow the Schörghuber Group to sell its interest in IRSA to Heineken Americas B.V., a subsidiary of Heineken International B.V. On April 17, 2003, the Schörghuber Group gave Quiñenco formal notice of the sale of its interest in IRSA to Heineken International B.V. Currently, Heineken Chile Ltda., a Chilean limited corporation controlled by Heineken Americas B.V., owns 50% of IRSA’s shares. As of December 31, 2005, IRSA’s primary shareholders’ agreement gives Quiñenco the right to propose to our board of directors the candidates for Chief Executive Officer, and to Heineken Chile Ltda. our General Comptroller and Cervecería CCU’s General Manager. On the other hand, under the agreement, neither Quiñenco nor Heineken Chile Ltda. can separately, directly or indirectly, buy or sell our shares.  B.Compensation  For the year ended December 31, 2015, the aggregate amount of compensation paid by us to all our Directors was CLP2,982million.  The board of directors’ gross compensation is determined by the shareholders at the annual shareholders’ meeting. As approved at the annual shareholders ́ meeting held on April 15, 2015, the directors’ monthly remuneration, for their attendance to meetings, independent of the number of meetings held in each period, was fixed in UF 100 per director, and UF 200 for the Chairman, plus an amount equivalent to 3% of the distributed dividends, for the whole board, at a rate of one-ninth for each director and in proportion to the time each one served as such during the year 2015. If the distributed dividends exceed 50% of the net profits, the board of directors’ variable remuneration shall be calculated over a maximum 50% of such profits. Those directors that are members of the directors committee (See Item 6.C. Board Practices – directors committee) receive a remuneration of UF 34 for each meeting they attend, plus the amount that, as the percentage of the dividends, is required to complete one third of the total remuneration a director is entitled to, pursuant to article 50 bis of Law No 18,046 and Regulation N° 1956 of the SVS. Directors that are members of the audit committee receive a monthly remuneration of UF 25. The described compensation package was also approved for 2016 at shareholders’ meeting held on April 13, 2016.  In 2015, the total compensation paid by us and our subsidiaries to each of our directors for services rendered was as follows:   Attendance

   DividendDirector

   Meetings fee

   Participation(1)

   Total(in thousands of CLP)Andrónico Luksic Craig

   43,852

   199,262

   243,114John Nicolson

   122,152

   199,262

   321,415Jorge Luis Ramos

   144,784

   218,572

   363,356Manuel José Noguera Eyzaguirre

   14,809

   199,262

   214,071Philippe Pasquet

   99,780

   218,572

   318,352Francisco Pérez Mackenna

   244,612

   199,262

   443,874Carlos Molina Solís

   150,996

   199,262

   350,258Vittorio Corbo

   111,781

   199,262

   311,043Pablo Granifo Lavin

   72,268

   237,882

   310,150Rodrigo Hinzpeter Kirberg

   70,657

   -

   70,657Didier Debrosse

   35,515

   -

   35,515(1)Includes the remuneration for members of the Audit and Directors Committees.


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For the year ended December 31, 2015, the aggregate amount of compensation paid to our senior managers registered at the SVS during 2015, was CLP5,497million. We do not and are not required under Chilean law to disclose to our shareholders or otherwise make public information as to the compensation of our individual senior managers.  We do not maintain any stock option, pension or retirement programs for our directors or senior managers.  C.Board Practices  We are managed by our board of directors which, in accordance with our bylaws (Estatutos), is formed by nine directors who are elected at the annual shareholders’ meeting. The entire board of directors is elected for three years. The board of directors may appoint replacements to fill any vacancies that occur during periods between annual shareholders’ meetings. If such vacancy occurs, the entire board of directors must be renewed at the next following shareholders’ meeting. On April 10, 2013, at the annual shareholders’ meeting, the entire board of directors was renewed for a term of three years and the board members elected were Messrs. Andrónico Luksic, John Nicolson, Vittorio Corbo, Manuel José Noguera, Carlos Molina, Philippe Pasquet, Francisco Pérez, Jorge Luis Ramos and Pablo Granifo. None of our directors is party to a service contract with us or any of our subsidiaries that provides for benefits upon termination.  Due to the resignation of Messrs. Manuel José Noguera Eyzaguirre and Philippe Pasquet of their positions as directors of the Company, both effective as of June 30, 2015, at the board of directors ́ meeting held on July 7, 2015, Messrs. Didier Debrosse and Rodrigo Hinzpeter Kirberg were appointed as directors, until the next annual shareholders ́ meeting, as permitted by Article 32 of the Chilean Corporations Act.  At the shareholder’s meeting held on April 13, 2016, a new board was elected for a term of three years. The current members of the board of directors are Messrs. Andrónico Luksic, Marc Busain, Francisco Pérez, Carlos Molina, Vittorio Corbo, Pablo Granifo, Rodrigo Hinzepeter, Didier Debrosse and José Miguel Barros.  Our senior managers are appointed by the board of directors and hold office at the discretion of the board of directors. There are regularly scheduled meetings of the board of directors once a month; extraordinary meetings are specially summoned by the Chairman, at the request of one or more board members where prior qualification of the necessity of such meeting has been met and, in any case, if requested by the absolute majority of the directors. The board of directors does not have an executive committee.  Directors Committee  The directors committee discussions, agreements, and organization are regulated, in every applicable matter, by the Chilean Corporations Act provisions relating to board of directors’ meetings. The directors committee shall inform the board of directors about the manner in which it will request information and about its resolutions.  In addition to the general liabilities imputable to any director, the directors that compose the directors committee shall, in the exercise of their duties, be jointly and severally liable for any damage caused to the corporation or the shareholders.  According to the Chilean Securities Market Law and the Chilean Corporations Act, corporations whose market capitalization reaches or exceeds 1.5 million Unidades de Fomento (as of March 31, 2016 approximately CLP 38,718 million) and at least 12.5% of its outstanding shares with voting rights are in the possession of shareholders that individually control or possess less than 10% of such shares, shall designate a “comité de directores” or “directors committee” and appoint at least one independent director. The directors committee shall be composed of three members and at least one member shall be independent. If the market capitalization or stock percentage falls below this threshold, the obligation to designate a directors committee no longer applies. However, corporations which do not meet these requirements may voluntarily assume the obligations concerning the directors committee, in which case they shall strictly follow the provisions of the Chilean Corporations Act.


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Pursuant to the Chilean Corporations Act, the powers and duties of the directors committee are as follows:  to examine the independent accountants’ reports, the balance sheets, and other financial statements submitted by the corporation’s managers or liquidators to the shareholders, and issue an opinion about them prior to their submission for shareholder approval;to propose to the board of directors the independent accountants and the risk rating agencies, which the board must then propose to the shareholders. Should the board of directors disagree with the directors committee’s proposal, the board shall be entitled to make its own proposal, submitting both to the shareholders for their consideration;to examine the documentation concerning related-party transactions of the company and its subsidiaries, and to produce a written report on such transactions. A copy of the report shall be delivered to the board, and shall be read at the board meeting in which the transaction is presented for approval or rejection;to examine the managers’, principal executive officers’ and employees ́ remuneration policies and compensation plans;to prepare an annual report of the performance of its duties, including the principal recommendations to shareholders;to advise the board of directors as to the suitability of retaining the independent accounting firm to provide non-audit services, which are not prohibited by the Chilean Securities Market Law, if the nature of such services could impair the accountants independence from the Company; andall other matters contemplated in our bylaws or entrusted to the directors committee by a shareholders’ meeting or the board of directors.  Regarding related party transactions mentioned in the third bullet point above, Chapter XVI of the Chilean Corporations Act applies to open stock corporations and its subsidiaries, while dispositions of Articles 44, 89 and 93 of the Chilean Corporations Act, are applicable only to closed corporations, which are not subsidiaries of an open stock corporation. See “Item 7: Major Shareholders and Related Party Transactions.”  Pursuant to the Chilean Corporations Act, no person shall be considered independent who, at any time during the previous eighteen months:  1.  Maintained any relationship, interest or economic, professional, credit or commercial dependence, of a nature and relevant volume, with the company, other companies of the financial conglomerate to which the company belongs, its comptroller, or principal executive officer of any one of them, or was a director, manager, administrator, principal executive officer or advisor of such companies;  2.   Was a close relative (i.e., parents, father/mother in law, sisters, brothers, sisters/brothers in law), to any one of the persons referred to in 1 above;  3.   Was a director, manager, administrator or principal executive officer of non-profit organizations that received contributions or large donations from any individual referred to in clause 1 above;  4.   Was a partner or shareholder that possessed or controlled, directly or indirectly, 10% or more of the company’s capital; a director; manager; administrator or principal executive officer of entities who had provided consulting or legal services, for relevant amounts, or of external audit, to the persons referred to in 1 above; or 88


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5.   Was a partner or shareholder who possessed or controlled, directly or indirectly, 10% or more of the company’s capital; a director; manager; administrator or principal executive officer of principal competitors, suppliers or clients of the company.  Should there be more than three directors entitled to participate in the directors committee, the board of directors shall elect the members of the directors committee by unanimous vote. Should the board of directors fail to reach an agreement, preference to be appointed to the committee shall be given to directors elected with the highest percentage of votes cast by shareholders that individually control or possess less than 10% of the company’s shares. If there is only one independent director, such director shall appoint the other members of the committee among non-independent directors. Such directors shall be entitled to exercise full powers as members of the committee. The chairman of the board of directors shall not be entitled to be appointed as a member of the committee nor any of its subcommittees, unless he is an independent director.  To be elected as independent director, the candidates must be proposed by shareholders that represent 1% or more of the shares of the company, at least 10 days prior to the date of the shareholders' meeting called to that end.  The candidate who obtains the highest number of votes shall be elected as independent director.  At the shareholders meeting held on April 10, 2013, a new board of directors was appointed for a three year term. Mr. Vittorio Corbo was elected as independent director in accordance with Article 50 bis of the Chilean Corporations Act.  In the board meeting held on April 10, 2013, the independent director Mr. Vittorio Corbo, in accordance with the above-referenced law, appointed Messrs. Philippe Pasquet and Francisco Pérez as members of our directors committee, which is composed of the three directors above mentioned.  Due to the resignation of Mr. Philippe Pasquet of his position as director of the Company, effective as of June 30, 2015, at the board of directors meeting held on July 7, 2015, the independent director Mr. Vittorio Corbo appointed director Mr. Jorge Luis Ramos as a member of the directors committee, to replace Mr. Philippe Pasquet, as required by article 50 bis of the Chilean Corporations Act.  Finally, at the shareholders ́ meeting held on April 13, 2016, a new board of directors was elected for a three year term. Mr. Vittorio Corbo was elected as independent director in accordance with Article 50 bis of the Chilean Corporations Act.  At the board meeting held on April 13, 2016, following the shareholders ́ meeting, the independent director Mr. Vittorio Corbo, in accordance with the above-referenced law, appointed Messrs. Francisco Pérez and Carlos Molina as members of our directors’ committee. Therefore the directors committee is currently composed by Messrs. Vittorio Corbo, Francisco Pérez and Carlos Molina.  The members of the directors committee receive a remuneration the amount of which is established annually by the shareholders, taking into consideration the duties that the directors committee members shall perform, which shall not be less than a third of the remuneration of a director. The remuneration of our directors committee members, as approved at the shareholders’ meeting of the Company held on April 10, 2013, is 34 Unidades de Fomento (as of March 31, 2016, approximately CLP 877.2 thousand) per attendance at a directors committee meeting plus the amount required to complete the remaining third of the remuneration of a director. The same remuneration package was approved for 2014, 2015 and 2016, at the shareholders’ meetings of the Company held on April 9, 2014, April 15, 2015, and April 13, 2016, respectively.  The shareholders shall determine the budget of the directors committee and those of its advisors, which, pursuant to Chilean Corporations Act, shall not be less than the aggregate amount of the annual remuneration of the committee members. The directors committee shall be allowed to request


the recruitment of professionals to fulfill its duties within the limits imposed by the budget. The activities of the directors committee, the annual report of the performance of its duties and its expenses, including its advisors’ expenses, shall be included in the annual report and conveyed to the shareholders. The budget of the directors’ committee and its advisors, approved at the shareholders’ meeting of the Company held on April 13, 2016, shall be equal to the aggregate amount of the annual remuneration of the committee members. 89


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Audit Committee.  In accordance with provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the corporate governance rules of the New York Stock Exchange (the “NYSE Rules”) applicable to us as a foreign private issuer with securities listed on a U.S. national exchange, we have an audit committee.  At the board of directors meeting held on April 10, 2013, following the election of a new board at the shareholders ́ meeting, the board of directors appointed the following directors to our audit committee: Vittorio Corbo and Philippe Pasquet. Mr. Pasquet and Mr. Corbo meet the independence criteria under the Exchange Act and under the NYSE Rules. The board of directors also resolved that directors Mr. Jorge Luis Ramos and Mr. Francisco Pérez shall participate in the audit committee ́s meetings as observers.  Due to the resignation of Mr. Philippe Pasquet of his position as director of the Company, effective as of June 30, 2015, at the board of directors ́ meeting held on June 7, 2015, Mr. Jorge Luis Ramos Santos was appointed as a member of the audit committee, to replace Mr. Pasquet. Additionally, at the board of directors ́ meeting held on July 7, 2015, director Carlos Molina was appointed to the audit committee on an observer status.  Finally, at the board of directors meeting held on April 13, 2016, following the election of a new board at the shareholders ́ meeting held the same day, the board of directors appointed directors Vittorio Corbo and Carlos Molina to our audit committee. Mr. Corbo and Mr. Molina meet the independence criteria under the Exchange Act and under the NYSE Rules. The board of directors also resolved that directors Mr. José Miguel Barros and Mr. Francisco Pérez shall participate in the audit committee ́s meetings as observers.  The duties of the audit committee are:  To be responsible for the hiring, remuneration and supervision of the work of public accounting firms hired to prepare or issue audit reports or review or certify such reports. The external auditors shall report directly to the audit committee regarding such matters.Resolve disputes that arise between our administration and the external auditors with regard to financial reports.Grant approval prior to the contracting of non-audit services provided by the external auditors.Establish a procedure for receiving and responding to complaints received with regard to accounting, accounting controls or other auditing matters whereby employees may anonymously and confidentially report their concerns related to these matters.Establish an annual budget for expenses and hiring of external consultants.  The audit committee meets regularly and also holds meetings with our managers, our comptroller, and our internal and external auditors in order to discuss a variety of topics related to its duties.     90


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D.Employees  The following table shows the breakdown of our employees by operating segments as of December 31 for each of the years listed below:  2013

   

   2014

   

   2015Chile

   2,083

   

   2,514

   

   2,594International Business

   1,442

   

   1,857

   

   1,938Wine

   1,180

   

   1,206

   

   1,250Others (1)

   2,184

   

   2,265

   

   2,318Total

   6,889

   

   7,842

   

   8,100(1) Includes our corporate office, PLASCO, TCCU, CRECCU and Comercial CCU.
   All employees who are terminated for reasons other than misconduct are entitled by law to receive a severance payment. In the last three years, we made severance payments in the amounts of CLP million 3,244, CLP 9,258 million and CLP 6,078 million, respectively.  In Chile, permanent employees are entitled to the basic payment, as required by law, of one month’s salary for each year, or six-month portion thereof, worked. This condition is subject to a limitation of a total payment of no more than 11 months’ pay for employees hired after August 14, 1981. Severance payments to employees hired before August 14, 1981 are not subject to this limitation. Our employees who are subject to collective bargaining agreements have a contractual benefit to receive a payment in case of resignation, consisting of a payment of one monthly base salary for each full year worked, not subject to a limitation on the total amount payable but subject to a limitation on the total number of employees who can claim the severance benefit during any one year. In 2015, we laid off 689 employees.  Chile Operating segment, Wine Operating segment and Other  In the Chile, Wine and Other Operating segments, as of December 31 of the last three years, we had a total of 5,447, 5,985 and 6,162 permanent employees, respectively. As of December 2015, 3,495 were represented by 45 labor unions. The average tenure of our permanent employees was approximately eight years.  Unionized employees represent approximately 57% of our total permanent workforce. Our management believes it generally has a good relationship with the labor unions representing our employees.  During 2015, 1,125 employees renewed their collective contracts, most of them for a period of two years.  We do not maintain any pension fund or retirement program for our employees. Workers in Chile are subject to a national pension fund law which establishes a system of independent pension plans, administered byAdministradoras de Fondos de Pensiones(“AFPs”). We have no liability for the performance of the pension plans or any pension payments to be made to our employees.  In addition to our permanent work force, as of December 31, 2015, we had 325 temporary employees, who were hired for specific time periods to satisfy short-term needs.  International Business Operating segment Collective bargaining in Argentina is done on an industry-wide basis, rather than, as in Chile, on a company-by-company basis. In Argentina, as in Chile, all employees who are terminated for reasons


other than misconduct are entitled by law to receive a severance payment. According to the Argentine Labor Law, employees who joined us before October 1998 are entitled to the basic payment as required by law of one month’s salary for each year or fraction thereof worked. This monthly amount cannot exceed three times the average monthly salary established under the applicable collective bargaining agreement and cannot be less than the equivalent of two monthly salaries of the employee.


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In Argentina, unionized employees represent approximately74% of our total permanent workforce, moreover in Uruguay this number represent71% of our total permanent workforce.  In addition to our permanent work force, as of December 31, 2015, we had386temporary employees, who were hired for specific time periods to satisfy short-term needs.  E.Share Ownership  Except as disclosed in “Item 7: Major Shareholders and Related Party Transactions – Major Shareholders,” as of March 31, 2016, our senior management and our board members in the aggregate owned less than one percent of our shares.  We do not maintain stock option or other programs involving our employees in the capital of the Company.  ITEM 7: Major Shareholders and Related Party Transactions  A.Major Shareholders  Our only outstanding voting securities are our shares of our common stock. The following table sets forth information concerning the ownership of our common stock as of March 31, 2016, presenting the twelve largest shareholders and all of our directors and senior management as a group:   Shareholder

   Number of shares owned

   % OwnershipINVERSIONES Y RENTAS S A (1)

   196,421,725

   53.16%J P MORGAN CHASE BANK SEGUN CIRCULAR

   63,614,029

   17.22%BANCO ITAU POR CUENTA DE INVERSIONISTAS EXTRANJEROS

   30,567,227

   8.27%BANCO DE CHILE POR CUENTA DE TERCEROS NO RESIDENTES

   26,191,534

   7.09%INVERSIONES IRSA LTDA(1)

   25,279,991

   6.84%BANCO SANTANDER POR CUENTA DE INV EXTRANJEROS

   8,705,816

   2.36%BANCO SANTANDER-HSBC BANK PLC LONDON CLIENT ACCOUN

   2,601,580

   0.70%BANCHILE C DE B S A

   2,085,073

   0.56%BOLSA ELECTRONICA DE CHILE BOLSA DE VALORES

   1,095,203

   0.30%BOLSA DE COMERCIO DE SANTIAGO BOLSA DE VALORES

   987,409

   0.27%BTG PACTUAL CHILE S A C DE B

   561,336

   0.15%VALORES SECURITY S A C DE B

   526,756

   0.14%Our directors and senior management as a group(2)

   14,897

   0.004%(1) Inversiones y Rentas S.A. owns 99.9999% of Inversiones IRSA Ltda.’s equity.(2) Does not include the 221,701,716 shares of our common stock owned, directly and indirectly, by Inversiones y Rentas S.A., which is 50% beneficially owned by Quiñenco, holding company of the Luksic Group, as discussed below, which is controlled by the Luksic family. Andrónico Luksic, our Director, is a member of the Luksic family.


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To the best of our knowledge our beneficial shareholders who own more than 5% of the outstanding shares of our common stock are IRSA with 60.00% and Commonwealth Bank of Australia with 7.85% (according to the Schedule 13G filed on February 12, 2016, stating a holding of 29,000,801 shares, as of December 31, 2015).  As of March 31, 2016, JPMorgan Chase Bank N.A. (“JPMorgan”), the Depositary for our ADR facility, was the record owner of 63,614,029 shares of our common stock (17.22% of the outstanding common stock) deposited in our ADR facility.  As of March 31, 2016, we had4,328shareholders of record. To the best of our knowledge 12 shareholders are not Chilean, excluding ADR holders, and of those 12 non-Chilean shareholders, to the best of our knowledge 2 are U.S. corporations with a total of 78,343 (0.02%) shares of common stock. Non-Chileans can also hold shares in custody of private banks. However, as that information is not publicly available, we have included four custodians as part of the 12 non-Chilean shareholders although we have no citizenship information relating thereto. All shareholders have equal voting rights.  IRSA is a Chilean corporation owned 50% by Quiñenco, which is a holding company of the Luksic Group, and 50% by Heineken Chile Ltda., a subsidiary of Heineken International. IRSA directly owns 196,421,725 shares of our common stock and indirectly, through Inversiones IRSA Ltda., 25,279,991 additional shares of our common stock. Inversiones IRSA Ltda. is a subsidiary of IRSA.   B.Related Party Transactions  Regarding related party transactions, Chapter XVI of the Chilean Corporations Act is applicable to open-stock corporations and their subsidiaries, while Articles 44, 89 and 93 are only applicable to closed corporations which are not subsidiaries of an open-stock corporation.  Pursuant to Chapter XVI of the Chilean Corporations Act referenced above, a related-party transaction shall be any and all negotiation, agreement or operation between the open-stock corporation and any one of the following:  ·one or more related persons pursuant to the Chilean Securities Market Law;  ·a director, manager, administrator, principal executive officer or liquidator of the company, personally or acting on behalf of a person other than the company, or their respective spouses or close relatives (e.g. parents, father/mother in law, sisters, brothers, sisters/brothers in law);  ·company or concern in which the persons referred to in the above clause are the owners, directly or indirectly through any other individual or corporation, of 10% or more of its capital; or of which any of the persons referred to in the above clause are a director, manager, administrator, principal executive officer thereof;  ·those contemplated by the bylaws of the company or upon sufficient grounds determined by the directors committee, as the case may be, which can include subsidiaries in which the company owns, directly or indirectly, at least 95% of the equity or capital stock;  ·those in which the office of director, manager, administrator, principal executive officer or liquidator has been held by a director, manager, administrator, principal executive officer or liquidator of the company within the prior 18 months.  The following persons are considered under the Chilean Securities Market Law to be related persons:  any entities within the financial conglomerate to which the company belongs;


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corporate entities that have, with respect to us, the
  character of parent company, affiliated companies or subsidiary. Parent
  companies are those that control directly or indirectly more than 50% of the
  subsidiary’s voting stock (or participation, in the case of business
  organizations other than stock companies), or that may otherwise elect or
  appoint, or cause the election or appointment, of the majority of the
  directors or officers. A limited partnership (sociedades en comandita) may
  likewise be a subsidiary of a corporation, whenever the latter has the power
  to direct or guide the administration of the general partner (gestor) thereof.
  For these purposes, affiliated companies are those where one of them, without
  actually controlling the other, owns directly or indirectly 10% or more of the
  latter’s voting stock (or equity, in the case of business organizations other
  than stock companies), or that may otherwise elect or appoint, or cause the
  election or appointment of, at least one board member or manager;  persons
  who are directors, managers, administrators, principal executive officers or
  liquidators of us, and their spouses or their close relatives (i.e. parents,
  father/mother in law, sisters, brothers, sisters/brothers in law); as well as
  any other entity controlled by, directly or indirectly, any one of the above;
  and  any
  person who, whether acting alone or in agreement with others, may appoint at
  least one member of our management or controls 10% or more of our voting
  capital.  The SVS
may presume that any individual or corporate entity is related to a company if,
because of relationships of equity, administration, kinship, responsibility or
subordination, the person:  ·whether acting alone or in agreement with others, has
sufficient voting power to influence the company’s management ·creates conflicts of interest in doing business with the
company; ·in the case of a corporate entity, is influenced in its
management by the company; or ·holds employment or a position which affords the person
access to non-public information about the company and its business, which
renders the person capable of influencing the value of the company’s
securities.  However, a
person shall not be considered to be related to a company by the mere fact of
owning up to 5% of the company, or if the person is only an employee of the
company without managerial responsibilities.  Additionally, pursuant to Article 147 of Chapter XVI of
the Chilean Corporations Act, an open-stock corporation shall only be entitled
to enter into a related-party transaction when it is in the interest of the
company, the price, terms and conditions are similar to those prevailing in the
market at the time of its approval and the transaction complies with the
requirements and procedures stated below:  1.  The directors, managers, administrators,
principal executive officers or liquidators that have an interest or that take
part in negotiations conducive to the execution of an arrangement with a related
party of the open-stock corporation, shall report it immediately to the board of
directors or whomever the board designates. Those who breach this obligation
will be jointly liable for damages caused to the company and its
shareholders.  2.   Prior to the company’s consent to a related
party transaction, it must be approved by the absolute majority of the members
of the board of directors, with exclusion of the interested directors or
liquidators, who nevertheless shall make public his/her/their opinion with
respect to the transaction if it is so requested by the board of directors,
which opinion shall be set forth in the minutes of the meeting. Likewise, the
grounds of the decision and the reasons for excluding such directors from its
adoption must also be recorded in the minutes.  3.  The resolutions of the board of directors
approving a related party transaction shall be reported at the next following
shareholders' meeting, including a reference to the directors who approved suchtransaction. A reference to the transaction is to be
included in the notice of the respective shareholders' meeting.


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4.  In the event that an absolute majority of the
members of the board of directors should abstain from voting, the related-party
transaction shall only be executed if it is approved by the unanimous vote of
the members of the board of directors not involved in such transaction, or if it
is approved in a shareholders' extraordinary meeting by two-thirds of the voting
shares of the company.  5.  If a shareholders' extraordinary meeting is
called to approve the transaction, the board of directors shall appoint at least
one independent advisor who shall report to the shareholders the terms of the
transaction, its effects and the potential impact for the company. In the
report, the independent advisor shall include all the matters or issues the
directors committee may have expressly requested to be evaluated. The directors
committee of the company or, in the absence of such committee, directors not
involved in the transaction, shall be entitled to appoint an additional
independent advisor, in the event they disagree with the appointment made by the
board.  The
reports of the independent advisors shall be made available to the shareholders
by the board on the business day immediately following their receipt by the
company, at the company’s business offices and on its internet site, for a
period of at least 15 business days from the date the last report was received
from the independent advisor, and such arrangement shall be communicated to the
shareholders by means of a “Relevant Fact” (Communication sent to the SVS and
the stock markets in Chile).  The
directors shall decide whether the transaction is in the best interest of the
corporation, within five business days from the date the last report was
received from the independent advisors.  6.  When the directors of the company must decide on
a related party-transaction, they must expressly state the relationship with the
transaction counterparty or the interest involved. They shall also express their
opinion on whether the transaction is in the best interest of the corporation,
their objection or objections that the directors committee may have expressed,
as well as the conclusions of the reports of the advisors. The opinions of the
directors shall be made available to the shareholders the day after they were
received by the company, at the business offices of the company as well as on
its internet site, and such arrangement shall be reported by the company as a
“Relevant Fact.”  7.   Notwithstanding the applicable sanctions, any
infringement of the above provisions will not affect the validity of the
transaction, but it will grant the company or the shareholders the right to sue
the related party involved in the transaction for reimbursement to the company
of a sum equivalent to the benefits that the operation reported to the
counterpart involved in the transaction, as well as indemnity for damages
incurred. In this case, the defendant bears the burden of proof that the
transaction complies with the requirements and procedures referred to
above.  Notwithstanding the above, the following related party
transactions may be executed, pursuant to letters a), b) and c) of Article 147
of the Chilean Corporations Act, without complying with the requirements and
procedures stated above, with prior authorization by the board:  1.   Transactions that do not involve a “material
amount.” For this purpose, any transaction that is both greater than 2,000
Unidades de Fomento (as of March, 31, 2016, approximately CLP 51.6 million) and
in excess 1% of the corporation’s equity, or involving an amount in excess of
20,000 Unidades de Fomento (as of March 31, 2016, approximately CLP 516.2
million) shall be deemed to involve a material amount. All transactions executed
within a 12 month period that are similar or complementary to each other, with
identical parties, including related parties, or objects, shall be deemed to be
a single transaction.  2.   Transactions that pursuant to the company’s
policy of usual practice as determined by its board of directors, are in the
ordinary course of business of the company. Any agreement or resolutionestablishing or amending such policies shall be
communicated as a “Relevant Fact” and made available to shareholders at the
company’s business offices and on its internet site, and the transaction shall
be reported as a “Relevant Fact,” if applicable.


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3.   Transactions between legal entities in which the
company possesses, directly or indirectly, at least 95% of the equity of the
counterpart.  The usual
practice policy adopted by the board of directors in the meeting held on January
13, 2010, as amended on July 6, 2011, remains available to shareholders at the
Company’s offices in Avda. Vitacura 2670, 26th Floor, Santiago,
Chile, and on the web site www.ccu.cl.  In the
ordinary course of business, we engage in a variety of transactions with some of
our affiliates and related parties. Financial information concerning these
transactions is set forth in Note 16 to our consolidated financial
statements.  Our
corporate support units and strategic service units provide shared services to
all the organization through service level-agreements. Shared services are
provided in a centralized manner to capture the synergies between the different
units. Service-level agreements are annual contracts specifying the services to
be provided as well as the variables used to measure the levels of service and
their prices. Service levels are evaluated directly by users three times a
year.  Additionally, our logistic subsidiaries Transportes CCU
and Comercial CCU provide logistic, warehousing and sales services on a
consolidated basis to all of our strategic business units. These services are
regulated by annual contracts specifying the services to be provided as well as
the variables used to measure the levels of service and their prices. Service
levels are evaluated directly by users three times a year.  We engage
in a variety of transactions with affiliates of the Luksic Group and Heineken,
the beneficial owners of IRSA, as well as with other shareholders of ours.
Currently, Quiñenco and Heineken Chile Ltda., a Chilean limited corporation
controlled by Heineken Americas B.V., are the only shareholders of IRSA, each
with a 50% equity interest See “Item 4: Information on the Company –
Organizational Structure.”  On
November 30, 2005, we and Heineken Brouwerijen B.V. amended the license and
technical assistance agreements which provide us with the exclusive rights to
produce, sell and distribute Heineken beer in Chile and Argentina commencing
June 18, 2003. These agreements have an initial term of 10 years beginning in
June 2003, renewable for subsequent periods of five years. See “Item 4:
Information on the Company – Business Overview – Our Beer Chile business– Beer
Production and Marketing in Chile” and “Item 4: Information on the Company –
Business Overview – Our Beer Argentina business– Production and Marketing in
Argentina.”  On October
12, 2011, we and Heineken Brouwerijen B.V. signed the Amended and Restated
versions of the Trademark License Agreements which provide us with the exclusive
rights to produce, sell and distribute Heineken beer in Chile and Argentina, in
force as of January 1, 2011. These agreements have an initial term of 10 years,
and automatically renew on January 1 of each year for a new period of ten years,
unless any party gives notice of its decision not to renew, in which case the
agreements will be in force until the last renewal period expires.  On
November 29, 2012, CICSA and Heineken Brouwerijen B.V. signed the Trademark
License Agreement which provides us with the exclusive rights to produce, sell
and distribute Heineken beer in Paraguay. This agreement has an initial term of
10 years, and will be automatically renewed for a five years period unless any
party gives notice of its decision not to renew, in which case the agreements
will be in force until the last renewal period expires.  On June 4,
2013, CICSA, Milotur and Heineken Brouwerijen B.V. signed the Trademark License
Agreement, which provides us with the exclusive rights to produce, sell and
distribute Heineken beerin Uruguay, in force as of May 1, 2013. This agreement has
an initial term of 10 years, and automatically renews on January 1 of each year
for a new period of ten years, unless any party gives notice of its decision not
to renew, in which case the agreements will be in force until the last renewal
period expires.


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On July
15, 2015, CICSA, BBO and Heineken Brouwerijen B.V. signed the Ancillary
Trademark License Agreement, which provide us with the exclusive rights to
produce, sell and distribute Heineken beer in Bolivia, in force as of January 1,
2015. This agreement has an initial term of 10 years, and will be automatically
renewed for a five-year period unless any party gives notice of its decision not
to renew, in which case the agreement will be in force until the last renewal
period expires.  Additionally, a Technical Assistance Agreement was
executed with Heineken Technical Services B.V. (currently Heineken Supply Chain
B.V.) on May 4, 2005, whereby the latter was appointed, on a non-exclusive
basis, as our technical advisor in respect of operational aspects of our
breweries, including also special services regarding project engineering for
extensions of the breweries’ capacity and construction of new plants, assistance
in development of new products, production methods and distribution systems as
well as advice on purchasing systems, among others. This agreement has an
initial term of one year as from May 4, 2005, renewable for subsequent periods
of one year each, unless either party gives at least three months’ prior written
notice to the other of its intention to terminate this agreement. This agreement
has been renewed automatically each year.  On January
28, 2015, a Trade Mark License Agreement (TMLA) was executed between our
subsidiary Cervecería CCU and Heineken Brouwerijen B.V. to produce, sell and
distribute beer under the brand name SOL in Chile. The TMLA contemplates a
10-year term as of July 1, 2014 and shall each year (as of July 1st)
automatically be renewed for a new period of 10 years, unless any party has
given notice in writing of its decision not to renew.  Finally,
in 2015, we revised and amended the 2014 amended and restated Framework
Agreement entered with Banco de Chile, a Quiñenco subsidiary, which was in
effect as of May 1, 2003, for the rendering of banking services to us and
certain of our subsidiaries and affiliates, including, among others, payment to
suppliers and shareholders, cashier service, transportation of valuables and
payment of salaries.  Since the
establishment of our directors’ committee in 2001, as required by the Chilean
Corporations Act, it has reviewed all related-party contracts, before being sent
to our board of directors for approval, which was standard practice prior to the
creation of the directors’ committee. The above does not include related-party
transactions executed according to the usual practice policy adopted on January
13, 2010 as amended on July 6, 2011 by the board of directors in respect of
transactions mentioned in letters a), b) and c) of Article 147 of the Chilean
Corporations Act. Our principal related-party contracts include rental of
properties, the rendering of services and product sales.  Our
principal transactions with related parties for the twelve-month period ended
December 31, 2015, are detailed below:


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Company

   Relationship

   Transaction

   Amount (in millions of CLP)Heineken Brouwerijen B.V.

   Related to the controlling shareholder

   Products sale/ license/ technical assistance/ billed services

   9,430Inversiones y Rentas S.A.

   Shareholder

   Dividends paid/Office rental

   31,788Inversiones Irsa LTDA.

   Shareholder

   Billing services

   4,090Inversiones PFI Chile Ltda.

   Shareholders of subsidiary

   Purchase of products

   3,161Nestlé Waters S.A.

   Shareholder of subsidiary

   Royalty

   309Nestlé Chile S.A.

   Shareholder of subsidiary

   Dividends paid

   2,704Cervecería Kunstmann Ltda.

   Shareholder of subsidiary

   Product sales/billed services

   483Cervecería Valdivia S.A.

   Shareholder of subsidiary

   Dividends paid

   490Comercial Patagona Ltda.

   Subsidiary joint venture

   Marketing services/products sale

   2,959Cooperativa Agrícola Control Pisquero Ltda.

   Shareholder of subsidiary

   Loan/supply contract/ purchase grape/Dividends paid

   7,311Compañía Chilena de Fósforos S.A.

   Shareholder of subsidiary

   Dividends paid

   4,055Cervecería Austral S.A.

   Joint venture

   Sales of Products/ royalty paid/royalty collected/purchased of products

   5,663Banco de Chile

   Related to the controlling shareholder

   Transport of securities/Sales of products/Derivatives/Investments/Interest/ Remittance

   530,455Foods Compañía de Alimentos CCU S.A.

   Joint venture

   Services/ product sales/ consignment sales/ interests/ remittance paid and recieved

   92,520Alusa S.A.

   Subsidiary related

   Purchase of products

   2,665Canal 13 S.P.A.

   Parent company related

   Advertising

   1,554Banchile Corredores de Bolsa S.A.

   Parent company related

   Financial investments

   944,550
   See Note 16 to our Consolidated Financial Statements for detailed information.   C.Interests of Experts and Counsel  Not applicable.  ITEM 8: Financial Information  A.Consolidated Statements and Other Financial Information  See “Item 18: Financial Statements” and “Item 19: Exhibits” for the Company's Financial Statements and notes, audited by PricewaterhouseCoopers.    Wine Exports  We, through our subsidiary VSPT, exported wine to more than80countries in 2015. VSPT is the second-largest wine exporter in Chile. See “Item 4: Information on the Company–Business Overview– Operating Segments Information– Our Wine Operating Segment.”  The following table presents our total wine exports by volume and sales, as of December of the last three years as percentage of consolidated volume and sales for the last three years:


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2013

   2014

   2015Exports (thousands of liters)

   69,649

   66,936

   69,676% of total consolidated sales volume

   3.18%

   2.92%

   2.91%Exports (CLP million)

   91,579

   102,279

   117,450% of total consolidated sales

   7.65%

   7.88%

   7.84%
   Legal Proceedings  Nothing to report.  Dividend Policy and Dividends  Our dividend policy is reviewed and established from time to time by our board of directors and reported during our annual shareholders’ meeting, which is generally held in April of each year. Each year our board of directors must submit its proposal for a final dividend for the preceding year for shareholder approval at the annual shareholders’ meeting. As required by the Chilean Corporations Act, we must distribute a cash dividend in an amount equal to at least 30% of our net income for that year, after deducting any accumulated losses from previous years, unless otherwise decided by unanimous vote of the issued shares of our common stock. Our board of directors has the authority to pay interim dividends during any one fiscal year, to be charged to the earnings for that year.  Our board of directors announced at our annual shareholders’ meeting held on April 15, 2015, its dividend policy for future periods, authorizing the distribution of cash dividends in an amount at least equal to 50% of our Net income of the Year Attributable to Equity Holders of the Parent Company under IFRS for the previous year. Our dividend policy is subject to change in the future due to changes in Chilean law, capital requirements, economic results and/or other factors. During our annual shareholders’ meeting held on April 15, 2015, a dividend of CLP 98.78138 per share of common stock (CLP 197.56276 per ADR using the new ratio as of December 20, 2012 of 1 ADR to 2 common shares) was approved, in addition to the interim dividend of CLP 63 per share of common stock (CLP 126 per ADR) distributed in January 9, 2015. Together, these dividend payments amounted to CLP 59,779 million, representing 50.0% of the “Net income of the Year Attributable to Equity Holders of the Parent Company” for 2014.  The board of directors, in its meeting held on December 1, 2015, approved the distribution, with a charge to 2015’s profits, of an interim dividend of CLP 66 per share of common stock (CLP 132 per ADR), totaling CLP 24,387,189,552, which was paid on January 8, 2016. Additionally, the board of directors, in its meeting held on March 1, 2016, resolved to propose to the next annual shareholders meeting, the distribution, with a charge to 2015’s profits, of a final dividend of CLP 97.47388 per share of common stock (CLP 194.94776 per ADR). The proposal, representing a total payment of CLP 36,016,878,605, was approved at our last annual shareholders’ meeting held on April 13, 2016 and the final dividend was paid beginning April 22, 2016 to the shareholders of record as of midnight of April 16, 2016.  Dividends are paid to shareholders of record on midnight of the fifth business day, including Saturdays, preceding the date set for payment of the dividend. The holders of ADRs on the applicable record dates are entitled to dividends declared for each corresponding period.  The following table sets forth the amounts of interim and final dividends and the aggregate amounts of such dividends per share of common stock and per ADR in respect of each of the years indicated:


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Year ended

   CLP Per share (1)

   US$ Per ADR (2)December 31

   Interim

   Final (3)

   Total

   Interim

   Final (3)

   Total2011

   61.00

   131.70

   192.70

   0.24

   0.54

   0.782012

   63.00

   116.64

   179.64

   0.27

   0.49

   0.762013

   63.00

   103.49

   166.49

   0.24

   0.37

   0.612014

   63.00

   98.78

   161.78

   0.21

   0.32

   0.522015

   66.00

   97.47

   163.47

   0.18

   0.29

   0.47(1) Interim and final dividend amounts are expressed in historical pesos(2) U.S. dollars per ADR dividend information serves reference pupouses only we pay all dividends in Chilean pesos. On December 20, 2012, there was an ADR ratio change from 1 ADR to 2 common shares. The ammounts shown above have been adjusted to reflect this change. The Chilean peso ammounts as shown here have been converted into U.S. dollars at the respective observed exchange rate in effect at each payment date. Note: The Federal Reserve bank of New York does not report a noon buying rate for Chilean pesos.(3) The final dividend with respect to each year is declared and paid within the first five months of the subsequent year.
   Pursuant to current Chilean foreign exchange regulations, a shareholder who is not a resident of Chile does not need to be authorized as a foreign investor in order to receive dividends, sale proceeds or other amounts with respect to its shares remitted outside Chile, but the investor must inform the Central Bank about any such transactions and must remit foreign currency through the Formal Exchange Market. See “Item 10. Additional Information – Exchange Controls” for additional information on how ADR holders may remit currency outside Chile. Dividends received in respect of shares of Common Stock by holders, including holders of ADRs who are not Chilean residents, are subject to Chilean withholding taxes. See “Item 10: Additional Information – Taxation.”  B.Significant Changes  Nothing to report.


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ITEM 9: The Offer and Listing  A.Offer and Listing Details  For the periods indicated, the table below sets forth the reported high and low closing sales prices for the Common Stock on the Santiago Stock Exchange as well as the high and low sales prices of the ADSs as reported by the NYSE:  Santiago Stock Exchange

   NYSE(1)(per share of common stock)

   (per ADS)High

   Low

   High

   Low(CLP)

   (CLP)

   (US$)

   (US$)Years2011

   6,704

   4,653

   25.45

   19.182012

   7,788

   5,930

   32.73

   24.072013

   8,094

   5,900

   34.91

   22.892014

   6,900

   5,600

   24.22

   17.892015

   8,784

   5,479

   25.27

   17.732016 (through Mar. 31)

   7,875

   6,502

   22.87

   18.7820131st quarter

   7,884

   7,270

   34.03

   31.022nd quarter

   8,094

   6,309

   34.91

   24.923rd quarter

   7,850

   6,408

   30.21

   25.974th quarter

   6,985

   5,900

   27.95

   22.8920141st quarter

   6,400

   5,670

   24.22

   20.462nd quarter

   6,900

   5,804

   23.94

   21.023rd quarter

   6,750

   6,200

   23.79

   21.024th quarter

   6,594

   5,600

   22.13

   17.8920151st quarter

   6,500

   5,479

   20.90

   17.732nd quarter

   7,146

   6,409

   23.91

   20.733rd quarter

   7,935

   6,550

   23.80

   20.234th quarter

   8,784

   7,300

   25.27

   20.58Last six monthsOctober 2015

   8,750

   7,573

   25.15

   22.11November 2015

   8,784

   7,851

   25.27

   22.29December 2015

   8,600

   7,300

   23.09

   20.58January 2016

   7,805

   6,800

   21.76

   18.82February 2016

   7,875

   6,502

   22.07

   18.78March 2016

   7,700

   6,838

   22.87

   19.49
   (1)On December 20, 2012, there was an ADR ratio change from 1 ADR to 5 common shares, to a new ratio of 1 ADR to 2 common shares. Prices shown above take into account this change.  Significant trading suspensions of the Company's stock have not occurred in the last three years.


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B.Plan of distribution  Not applicable.  C.Markets  Our common stock is currently traded on the Santiago Stock Exchange, the Chile Electronic Stock Exchange and the Valparaíso Stock Exchange under the symbol “CCU.” The Santiago Stock Exchange accounted for approximately 90.1%, 87.7% and 88.3% of the trading volume of our common stock in Chile in the last three years, respectively. The remaining 9.9%, 12.3% and 11.7% respectively, was traded mainly on the Chile Electronic Stock Exchange. Shares of our common stock were traded in the United States on the NASDAQ Stock Market between September 24, 1992 and March 25, 1999 and on the NYSE since March 26, 1999, in the form of ADSs, under the symbol “CCU”, with such ADSs being evidenced by ADRs, which until December 20, 2012, had each represented five shares of our common stock. Starting on December 20, 2012, the ratio was changed so that each ADS represented two shares of our common stock. The ADSs are issued under the terms of a deposit agreement dated September 1, 1992, as amended and restated on July 31, 2013, among us, JPMorgan, as depositary, and the holders from time to time of the ADSs.  The trading volume of our ADSs in the NYSE in the last three years is as follows:  Year

   Quarter

   Traded Volume(1)(thousands of ADS)2013

   1st quarter

   6,0372nd quarter

   9,6743rd quarter

   12,4424th quarter

   11,706Total

   39,8592014

   1st quarter

   12,0522nd quarter

   10,0943rd quarter

   9,6424th quarter

   10,771Total

   42,5592015

   1st quarter

   8,4642nd quarter

   8,1333rd quarter

   8,7304th quarter

   9,338Total

   34,666
  (1)On December 20, 2012, there was an ADR ratio change from 1 ADR to 5 common shares, to a new ratio of 1 ADR to 2 common shares. Volumes shown above take into account this change.  D.Selling Shareholders  Not applicable.  E.Dilution  Not applicable.


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F.Expenses of the Issue  Not applicable.  ITEM 10: Additional Information  A.Share Capital  Not applicable.  B.Memorandum and Articles of Association  Provided below is a summary of certain material information found in our bylaws and provisions of Chilean law. This summary is not exhaustive. For more information relating to the items discussed in this summary, the reader is encouraged to read our updated bylaws, available in our website atwww.ccu.cl. The information on our website is not incorporated by reference into this document.  Registration and corporate purposes. We are a public corporation (sociedad anónima abierta) organized by means of a public deed dated January 8, 1902, executed before the notary public of Valparaíso, Mr. Pedro Flores, and our existence was approved by Supreme Decree N° 889 of the Treasury Department, dated March 19, 1902, both of which were recorded on the reverse of folio 49, N° 45 of Valparaíso’s Registry of Commerce for 1902, and published in Chile’s Official Gazette on March 24, 1902. We were recorded on March 8, 1982, at Chile’s Securities Registry of the SVS under N° 0007.  The last amendment to our articles of association, which incorporates the resolutions of the extraordinary shareholders’ meeting held on June 18, 2013, that approved to increase the capital of the Company, by the issuance of 51,000,000 shares, were set forth in a public deed dated June 18, 2013, executed before the notary public of Santiago, Eduardo Diez Morello, an extract of which was recorded on the folio 48,216 N° 32,190 of the Santiago Registry of Commerce for 2013, published in the Official Gazette on June 25, 2013.  Under Article 4 of our bylaws, the corporation’s principal purpose is to produce, manufacture and market alcoholic and non-alcoholic beverages, to manufacture containers and packaging, and to provide transportation services, among other businesses.  Directors.Under the Chilean Corporations Act, a corporation may not enter into a contract or agreement in which a director has a direct or indirect interest without prior approval by the board of directors, and then only if it is in the interest of the company, the price, terms and conditions are similar to those prevailing in the market at the time of its approval and the transaction complies with the requirements and procedures stated in Chapter XVI of the Chilean Corporations Act regarding Related Party Transactions. See “Item 7: Major Shareholders and Related Party Transactions.”  The amount of any director’s remuneration is established each year by the annual shareholders’ meeting. Directors are forbidden, unless previously and duly authorized thereto by the board of directors, to borrow or otherwise make use of corporate money or assets for their own benefit or that of their spouses, certain relatives or related persons. These rules can only be modified by law.  It is not necessary to hold shares to be elected director, and there is no age limit established for the retirement of directors.  Rights, preferences and restrictions regarding shares. At least 30% of our net profits for each fiscal year are required to be distributed as dividends in cash to our shareholders, unless our


shareholders unanimously decide otherwise. Any remaining profits may be used to establish a reserve fund (that may be capitalized at any time, amending the corporate bylaws by the vote of a majority of the voting stock issued), or to pay future dividends.


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Compulsory minimum dividends, i.e., at least thirty percent of our net profits for each fiscal year, become due thirty days after the date on which the annual shareholders' meeting has approved the distribution of profits in the fiscal year. Any additional dividends approved by our shareholders become due on the date set by our shareholders or our board of directors.  Accrued dividends that corporations fail to pay or make available to their shareholders within certain periods are to be adjusted from the date on which those dividends became due and that of actual payment. Overdue dividends will accrue yearly interest at established rates over the same period.  Dividends and other cash benefits unclaimed by shareholders after five years from the date on which they became due will become the property of the Chilean Fire Department.  We have only one class of shares and there are therefore no preferences or limitations on the voting rights of shareholders. Each of our shareholders is entitled to one vote per share. In annual shareholders’ meetings, resolutions are made by a simple majority of those present, provided legal quorums are met. A special or extraordinary meeting generally requires an absolute majority, in other words, 50% plus one of the shares entitled to vote; however, the Chilean Corporations Act provides that in order to carry certain motions, a two-thirds majority of the outstanding voting stock is necessary.  Our directors are elected every three years and their terms are not staggered. Our shareholders may accumulate their votes in favor of just one person or distribute their votes to more than one person. In addition, by unanimous agreement of our shareholders present and entitled to vote, the vote may be omitted and the election made by acclamation.  In the event of liquidation, the Chilean Corporations Act provides that corporations may carry out distributions to shareholders on account of a reimbursement of capital only after the payment of corporate indebtedness.  There are no redemption or sinking fund provisions applicable to us, nor are there any liabilities to our shareholders relating to future capital calls by us.  Under Chilean law, certain provisions affect any existing or prospective holder of securities as a result of the shareholder owning a substantial number of shares. The Chilean Securities Market Law, establishes that (a) any person who, directly or indirectly, owns 10% or more of the subscribed capital of an open-stock corporation (the “majority shareholders”) or that, as a consequence of an acquisition of shares, attains such percentage, and (b) all directors, liquidators, principal executive officers, administrators and managers of such corporations, regardless of the number of shares they possess, either directly or indirectly, must report any purchase or sale of shares to the SVS and to each of the stock exchanges in Chile where such corporation has securities listed, the day immediately following the execution of the transaction, through the technological means authorized by the SVS. This obligation shall also apply to the acquisition or sale of contracts or securities, the price or result of which is dependent upon or is conditioned on, in whole or in a relevant part, the fluctuation or evolution of the price of such shares. In addition, majority shareholders must inform the SVS and the stock exchanges with respect to whether the purchase is aimed at acquiring control of the corporation or just as a financial investment.  The Chilean Securities Market Law also provides that when one or more persons intend to take over a corporation subject to oversight by the SVS, they must give prior public notice. This notice must include the price to be offered per share and the conditions of the proposed transaction, including the expected manner of acquiring the shares.


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Finally, Chapter XXV of the Chilean Securities Market Law was enacted on December 20, 2000, to ensure that controlling shareholders share with minority shareholders the benefits of a change of control, by requiring that certain share acquisitions be made pursuant to a tender offer.  Article 199 bis of the Chilean Securities Market Law extends the obligation to make a tender offer for the remaining outstanding shares to any person, or group of persons with a joint performance agreement, that, as a consequence of the acquisition of shares, becomes the owner of two-thirds or more of the issued shares with voting rights of a corporation. Such tender offer must be effected within 30 days from the date of such acquisition.  The Chilean Corporations Act provides shareholders with preemptive rights. The Act requires that options to purchase stock representing capital increases in corporations and debentures duly convertible into stock of the issuing corporation, or any other securities extending future rights over such stock, must be offered preferably, at least once, to existing shareholders, in proportion to the number of shares owned by them. A corporation must distribute any bonus stock in the same manner.  The Chilean Corporations Act also provides shareholders with the right to withdraw from a corporation in certain situations. Unless there is an ongoing bankruptcy proceeding, if a shareholders’ meeting approves any of the following matters, dissenting shareholders will be automatically entitled to withdraw from the corporation upon payment by the corporation of the market value of their shares:  ·our transformation into a different type of legal entity; ·our merger with and/or into another company; ·the disposition of 50% or more of the corporate assets, whether or not liabilities are also transferred, to be determined according to the balance sheet of the previous fiscal year, or the proposal or amendment of any business plan that contemplates the transfer of assets exceeding said percentage; the disposition of 50% or more of the corporate assets of a subsidiary, which represents at least 20% of the assets of the corporation, as well as any disposition of shares which results in the parent company losing its status as controller; ·the granting of real or personal guarantees to secure third-party obligations exceeding 50% of the corporate assets, except when the third party is a subsidiary of the company (in which case approval of the board of directors will suffice); ·the creation of preferences for a series of shares or the increase, extension or reduction in the already existing ones. In this case, only dissenting shareholders of the affected series shall have the right to withdraw; ·curing certain formal defects in the corporate charter which otherwise would render it null and void or any modification of its bylaws that should grant this right; and ·other cases provided for by statute or in our bylaws, if any.  In addition, shareholders may withdraw if a person becomes the owner of two-thirds or more of the outstanding shares of the corporation as a consequence of a share acquisition and such person does not make a tender offer for the remaining shares within 30 days from the date of such acquisition.  Minority shareholders are also granted the right to withdraw when the controlling shareholder acquires more than 95% of the shares of an open-stock corporation.  Our bylaws do not provide for additional circumstances under which shareholders may withdraw.  Action necessary to change the rights of holders of stock. The rights of stockholders are established by law and pursuant to the bylaws of a corporation. For certain modifications of shareholders’ rights, the law requires a special majority, such as the creation, increase, extension, reduction or suppression of preferred stock, which may be adopted only with the consent of at least two-thirds of the affected series. Consequently any other impairment of rights not specifically regulated needs only an absolute majority (more than 50%) of the stock entitled to vote. However, the waiver of the shareholders’ right to receive no less than 30% of the net profits accrued in any fiscal year (the “minimum dividend”) requires the unanimous vote of all stockholders. The above


notwithstanding, no decision of the shareholders’ meeting can deprive a shareholder of any part of the stock that he/she owns.


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Our bylaws do not contemplate additional conditions in connection with matters described in this subsection.  Shareholders’ meetings. Our annual shareholders' meetings are to be held during the first four months of each year. During the meetings, determinations are made relating to particular matters, which matters may or may not be specifically indicated in the summons for such meeting.  The quorum for a shareholders' meeting is established by the presence, in person or by proxy, of shareholders representing at least an absolute majority of our issued voting stock; if a quorum is not present at the first meeting, the meeting can be reconvened and upon the meeting being reconvened, shareholders present at the reconvened meeting are deemed to constitute a quorum regardless of the percentage of the voting stock represented. In that case, decisions will be made by the absolute majority of stock with voting rights present or otherwise represented. The following matters are specifically reserved for annual meetings:  ·review of our state of affairs and of the reports of external auditors, and the approval or rejection of the annual report, balance sheet, financial statements and records submitted by our officers or liquidators; ·distribution of profits of the respective fiscal year, including the distribution of dividends; ·election or revocation of regular and alternate board members, liquidators and external auditors; and ·determination of the remuneration of the board members, directors committee remuneration and budget, designation of the newspaper where summons for meetings shall be published and, in general, any other matter to be dealt with by the annual meeting being of corporate interest and not specifically reserved to extraordinary shareholders' meetings.  Extraordinary shareholders' meetings may be held at any time, when required by corporate necessity. During extraordinary meetings, determinations are made relating to any matter which the law or the Company's bylaws reserve for consideration by such extraordinary meetings, which matters shall be expressly set forth in the relevant summons. When in an extraordinary shareholders' meeting determinations relating to matters specifically reserved to annual meetings must be made, the operation and decisions of such extraordinary meeting will follow the requirements applicable to annual meetings. The following matters, are specifically reserved for extraordinary meetings:  ·dissolution of the corporation; ·transformation, merger or spin-off of the corporation and amendments to its bylaws; ·issuance of bonds or debentures convertible into stock; ·the disposition of 50% or more of the corporate assets, whether or not liabilities are also transferred, to be determined according to the balance sheet of the previous fiscal year, or the proposal or amendment of any business plan that contemplates the transfer of assets exceeding said percentage, the disposition of 50% or more of the corporate assets of a subsidiary, which represent at least 20% of the assets of the corporation, as well as any disposition of shares which results in the parent company losing its status of controlling shareholder; and ·guarantees of third parties' obligations, except when these third parties are subsidiary companies (in which case approval of the board of directors will suffice).  In addition to the above, annual and extraordinary shareholders' meetings must be called by the board of directors in the following circumstances:  ·when requested by shareholders representing at least 10% of issued stock with voting rights regarding closed corporations; and ·when required by the SVS, notwithstanding its right to call such meeting directly.


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Only holders of stock recorded in the Register of Shareholders of open-stock corporations at midnight of the fifth business day, including Saturdays, before the date of the pertinent meeting may participate with the right to be heard and vote in shareholders' meetings. Directors and officers other than shareholders may participate in shareholders' meetings with the right to be heard.  Shareholders may be represented at meetings by other individuals, regardless of whether or not those persons are shareholders themselves. A proxy must be conferred in writing, and for the total number of shares held by the shareholder and entitled to vote in accordance with the previous paragraph.  Limitations on the right to own securities. The right to own any kind of property is guaranteed by the Chilean Constitution, and the Chilean Corporations Act does not contain any general limitation regarding the right to own securities. There are, however, certain limitations on the right of foreigners to own securities of Chilean corporations, but only for certain special types of companies. We are not affected by these limitations, and our bylaws do not contain limitations or restrictions in this regard.  Article 14 of the Chilean Corporations Act forbids open stock corporations from including in their bylaws any provisions restricting the free transferability of stock. However, shareholders may enter into a private agreement on this matter, but, in order for these agreements to be effective against the company and third parties, they must be recorded by the corporation and thus made available to any interested third parties. See “Item 6: Directors, Senior Management and Employees – Directors and Senior Management.”  Takeover defenses.Our bylaws do not contain any provisions that would have the effect of delaying, deferring or preventing a change in control of us and that would operate only with respect to a merger, acquisition or corporate restructuring involving us (or any of our subsidiaries).  Ownership threshold. Our bylaws do not contain any ownership threshold above which shareholder ownership must be disclosed. For a description of the ownership thresholds mandated by Chilean law, see “– Rights, preferences and restrictions regarding shares” above.  Our bylaws do not impose any conditions that are more stringent than those required by law for effecting changes in our capital.  C.Material Contracts  Not applicable.  D.Exchange Controls  General Legislation and Regulations. The Central Bank of Chile is responsible for, among other things, monetary policies and exchange controls in Chile. See “Item 3. Key Information – Selected Financial Data – Exchange Rates.” Foreign investments can be registered with the Central Bank of Chile under Chapter XIV of the Central Bank Foreign Exchange Regulations, which regulates foreign exchange transactions, including access to the Formal Exchange Market. Pursuant to Law N° 20,780, on June 25, 2015 Law N° 20,848 was enacted, replacing Decree Law N° 600 of 1974 and establishing a new statute for direct foreign investments (henceforth, the "New Statute for Foreign Investment"). The New Statute for Foreign Direct Investments went into effect as of January 1, 2016. Foreign investors in companies that maintain a valid foreign investment agreement with the Government of Chile pursuant to the regulations of Decree Law N° 600 will fully retain the rights and obligations set forth in said agreements, provided that the agreements were executed prior to January 1, 2016. The New Statute for Foreign Investment does not grant investors eligibility for a tax invariability regime, which was granted to them by Decree Law N° 600. However, a transitory 4 four-year system has been established, under which foreign investors may request foreign investment


authorizations via the execution of agreements with the Government of Chile, albeit subject to a total income tax rate of 44.5%.


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Effective April 19, 2001, the Central Bank of Chile abrogated the then existing Chapter XXVI of the Central Bank Foreign Exchange Regulations (“Chapter XXVI”), which addressed issuance of ADSs by a Chilean company, and issued an entirely new set of Foreign Exchange Regulations (the “April 19th Regulations”), virtually eliminating all the restrictions and limitations that had been in force up to that date. The April 19th Regulations were based upon the general principle that foreign exchange transactions can be made freely in Chile by any person, notwithstanding the power conferred by law to the Central Bank of Chile of imposing certain restrictions and limitations to such transactions.  With the issuance of the April 19th Regulations, the approval by the Central Bank of Chile required for access to the Formal Exchange Market was replaced with the requirement of reporting of the relevant transactions to the Central Bank of Chile. However, some foreign exchange transactions, notably foreign loans, capital investment or deposits, continued to be subject to the requirement of being effected through the Formal Exchange Market. The April 19th Regulations reduced the time needed to effect foreign exchange transactions by foreign investors in Chile.  According to the April 19th Regulations, foreign exchange transactions performed before April 19, 2001, remained subject to the regulations in effect at the time of the transactions (i.e. Chapter XXVI), unless the interested parties elected the applicability of the April 19th Regulations, thereby expressly waiving the applicability of the regulations in force at the time of the execution of the respective transaction.  On January 23, 2002, the Central Bank of Chile issued an entirely new set of Foreign Exchange Regulations, effective March 1, 2002, replacing the April 19th Regulations (the “New Rules”). The New Rules preserve the general principle established in the April 19th Regulations of freedom in foreign exchange transactions, simplified procedures to reduce the time needed to materialize foreign exchange transactions by foreign investors in Chile, and introduced several new provisions.  Pursuant to the New Rules, Chilean entities are allowed, under Chapter XIV, which governs credits, deposits, investments and capital contribution from abroad, to: (i) dispose of such foreign currency allocated abroad, executing any of the transactions contemplated in Chapter XIV, without the need of delivering it into Chile, subject to the obligation of reporting said transaction to the Central Bank of Chile; and (ii) capitalize any liability expressed in foreign currency and acquired abroad.  According to the New Rules, foreign exchange transactions made pursuant to Chapter XIV, executed before April 19, 2001, were to continue to be subject to the regulations in effect at the time of the transactions, unless the interested parties elect the applicability of the New Rules, expressly waiving the applicability of the provisions which would otherwise govern them.  In connection with our initial public offering of ADSs, we entered into a foreign investment contract (the “Foreign Investment Contract”) with the Chilean Central Bank and the Depositary, pursuant to Article 47 of the Central Bank Act and former Chapter XXVI. Absent the Foreign Investment Contract, under Chilean exchange controls in force until April 19, 2001, investors would not have been granted access to the Formal Exchange Market for the purpose of converting Chilean pesos to U.S. dollars and repatriating from Chile amounts received in respect of, among other things, deposited Shares or Shares withdrawn from deposit on surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying Shares and any rights with respect thereto).  Notwithstanding the April 19th Regulations and the New Rules, Chapter XXVI remained in effect with respect to our ADR facility. On March 3, 2014, we, the Central Bank of Chile and the Depositary executed an agreement that terminated the Foreign Investment Contract. Consequently, the special exchange regime established under Chapter XXVI is no longer applicable. The Deposit Agreement, therefore, and the Company’s ADR program became subject to the exchange regulations of general applicability of Chapter XIV or such new regulations that may be issued in the future.


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The ADS facility is currently governed by Chapter XIV on “Regulations applicable to Credits, Deposits, Investments and Capital Contributions from Abroad”. According to Chapter XIV, the establishment of an ADS facility is regarded as an ordinary foreign investment, subject to the above mentioned limitations, and it is not necessary to seek the Central Bank’s prior approval in order to establish an ADS facility. The establishment of an ADS facility only requires that the Central Bank be informed of the transaction, and that the transactions thereunder be conducted through the Formal Exchange Market.  Investment in Our Shares and ADSs  Investments made in shares of our common stock are subject to the following requirements:  Any foreign investor acquiring shares of our common stock who brought funds into Chile for that purpose must bring those funds through an entity participating in the Formal Exchange Market; any foreign investor acquiring shares of our common stock to be deposited and converted into ADSs who brought funds into Chile for that purpose must bring those funds through an entity participating in the Formal Exchange Market; in both cases, the entity of the Formal Exchange Market through which the funds are brought into Chile must report such investment to the Central Bank; all remittances of funds from Chile to the foreign investor upon the sale of the acquired shares of our common stock or from dividends or other distributions made in connection therewith must be made through the Formal Exchange Market; all remittances of funds from Chile to the foreign investor upon the sale of shares underlying ADSs (after conversion is implemented through the depositary) or from dividends or other distributions made in connection therewith must be made through the Formal Exchange Market; and all remittances of funds made to the foreign investor must be reported to the Central Bank by the intervening entity of the Formal Exchange Market.  When funds are brought into Chile for a purpose other than to acquire shares for subsequent deposit and eventual conversion into ADSs and subsequently such funds are used to acquire shares to be deposited and converted into ADSs, such investment must be reported to the Central Bank by the foreign investor (or its custodian in Chile) within ten days following the end of each month.  When funds to acquire shares of our common stock or to acquire shares for subsequent deposit and eventual conversion into ADSs are received by us abroad (i.e., outside of Chile), such investment must be reported to the Central Bank directly by the foreign investor within ten days following the end of the month in which the investment was made.  When funds to acquire shares of our common stock or to acquire shares for subsequent deposit and eventual conversion into ADSs are received by us in Chile, such investment must be reported to the Central Bank directly by an entity participating in the Formal Exchange Market on the day the investment is made.  All payments in foreign currency in connection with our shares of common stock or ADSs made from Chile through the Formal Exchange Market must be reported to the Central Bank by the entity participating in the transaction. In the event there are payments made with foreign currency originating outside of Chile, the foreign investor must provide the relevant information to the Central Bank directly within the first ten calendar days of the month following the date on which the payment was made.  There can be no assurance that additional Chilean restrictions applicable to the holders of shares of our common stock or ADSs, the disposition of shares of our common stock underlying ADSs or the conversion or repatriation of the proceeds from such disposition will not be imposed in the future, nor can we assess the duration or impact of such restrictions if imposed.  This summary does not purport to be complete and is qualified by reference to Chapter XIV of the Central Bank Foreign Exchange Regulations, a copy of which is available in Spanish and English versions at the Central Bank’s website atwww.bcentral.cl.


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E.Taxation  Chilean Tax Considerations  The following discussion is based on certain Chilean income tax laws presently in effect, including Rulings N°324 of January 29, 1990, and N°3,708 of October 1, 1999 of the Chilean Internal Revenue Service and other applicable regulations and rulings. The discussion summarizes the principal Chilean income tax consequences of an investment in the ADSs or shares of common stock by an individual who is not domiciled in or a resident of Chile or a legal entity that is not organized under the laws of Chile and does not have a permanent establishment located in Chile which we refer to as a foreign holder. For purposes of Chilean law, an individual holder is a resident of Chile if he or she has resided in Chile for more than six consecutive months in one calendar year or for a total of more than six months, whether consecutive or not, in two consecutive tax years. An individual holder is domiciled in Chile if he or she resides in Chile with the purpose of staying in Chile (such purpose to be evidenced by circumstances such as the acceptance of employment within Chile or the relocation of his or her family to Chile). This discussion is not intended as tax advice to any particular investor, which can be rendered only in light of that investor’s particular tax situation. Neither is it intended to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of shares or ADSs and does address all of the tax consequences that may be relevant to specific holders in light of their particular circumstances. Holders of shares and ADSs are advised to consult their own tax advisors concerning the Chilean or other tax consequences relating to the ownership of shares or ADSs.  Under Chilean law, provisions contained in statutes such as tax rates applicable to foreign holders, the computation of taxable income for Chilean purposes and the manner in which Chilean taxes are imposed and collected may be amended only by another statute. In addition, the Chilean tax authorities issue rulings and regulations of either general or specific application interpreting the provisions of Chilean tax law. Chilean taxes may not be assessed retroactively against taxpayers who act in good faith relying on such rulings and regulations, but Chilean tax authorities may change said rulings and regulations prospectively. There is a general income tax treaty signed by Chile and the United States, but it is not in force (Congress approval is required).  Cash dividends and Other Distributions.Cash dividends paid by us with respect to the ADSs or shares of common stock held by a foreign holder will be subject to a 35.0% withholding tax, which is withheld and paid by us (the “Chilean Withholding Tax”). A credit against the Chilean Withholding Tax is available based on the level of corporate income tax, or first category tax, actually paid by us on the taxable income to which the dividend is imputed; however, this credit does not reduce the Chilean Withholding Tax on a one-for-one basis because it also increases the base on which the Chilean Withholding Tax is imposed. In addition, distribution of book income in excess of retained taxable income is subject to the Chilean Withholding Tax, but such distribution does not have a related credit. Under Chilean income tax law, for purposes of determining the level of the first category tax that has been paid by us, dividends generally are assumed to have been paid out of our oldest retained taxable profits. Enacted onSeptember 29, 2014, Act No. 20,780 provides for the "Partially Integrated System" for corporate tax, implementing a gradual increase in the First Category Income tax rate, going from 20% to 21% for the 2014 business year, to 22.5% for the 2015 business year, to 24% for the 2016 business year, to 25.5% for the 2017 business year and to 27% starting the 2018 business year. Whether the first category tax is imposed or not, the effective overall combined rate of Chilean taxes imposed with respect to our distributed profits would be 35.0%. Nevertheless, in the case that the retained taxable profits or exempted profits as of December 31 of the year preceding a dividend are not sufficient to attribute to such dividend, we will make a withholding of 35.0% of the


amount that exceeds those retained taxable or exempted profits. In case such withholding is determined to be excessive before the end of the year, there will be rights to file for the reimbursement of the excess withholding.


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The foregoing tax consequences apply to cash dividends paid by us. Dividend distributions made in property (other than shares of common stock) will be subject to the same Chilean tax rules as cash dividends.  Capital Gains.Gain realized on the sale, exchange or other disposition by a foreign holder of ADSs (or ADRs evidencing ADSs) will not be subject to Chilean taxation, provided that such disposition occurs outside Chile or that it is performed under the rules of Title XXIV of the Chilean Securities Market Law, as amended by Law N° 19,601, dated January 18, 1999. The deposit and withdrawal of shares of common stock in exchange for ADRs will not be subject to any Chilean taxes. Gain recognized on a sale or exchange of shares of common stock (as distinguished from sales or exchanges of ADSs representing such shares of common stock) by a foreign holder will be subject to both the first category tax and the Chilean Withholding Tax (the former being creditable against the latter) if (1) the foreign holder has held such shares of common stock for less than one year since exchanging ADSs for the shares of Common Stock, (2) the foreign holder acquired and disposed of the shares of common stock in the ordinary course of its business or as a regular trader of stock or (3) the sale is made to a company in which the foreign holder holds an interest (10.0% or more of the shares in the case of open stock corporations). In all other cases, gain on the disposition of shares of common stock will be subject only to the first category tax levied as a sole tax. However, if it is impossible to determine the taxable capital gain, a 5.0% withholding will be imposed on the total amount to be remitted abroad without any deductions as a provisional payment of the total tax due. The tax basis of shares of common stock received in exchange for ADSs will be the acquisition value of such shares. The valuation procedure set forth in the deposit agreement, which has been analyzed by the Chilean Internal Revenue Service pursuant to Ruling No 324 of 1990, values shares of common stock that are being exchanged at the highest price at which they trade on the Santiago Stock Exchange on the date of the exchange, generally will determine the acquisition value for this purpose. Consequently, the conversion of ADSs into shares of common stock and sale of such shares of common stock for the value established under the deposit agreement will not generate a capital gain subject to taxation in Chile. In the case where the sale of the shares is made on a day that is different from the date in which the exchange is recorded, capital gains subject to taxation in Chile may be generated. However, following Ruling N° 3708 of 1999 of the Chilean Internal Revenue Service, we will include in the deposit agreement a provision whereby the capital gain that may be generated if the exchange date is different from the date in which the shares received in exchange for ADSs are sold, will not be subject to taxation. Such provision states that in the event that the exchanged shares are sold by the ADS holders in a Chilean stock exchange on the same day in which the exchange is recorded in the shareholders’ registry of the issuer or within two business days prior to the date on which the sale is recorded in the shareholders’ registry, the acquisition price of such exchanged shares shall be the price registered in the invoice issued by the stock broker that participated in the sale transaction. The exercise of preemptive rights relating to the shares of common stock will not be subject to Chilean taxation. Amounts received for the assignment of preemptive rights relating to the shares will be subject to both the first category tax and the Chilean Withholding Tax (the former being creditable against the latter to the extent described above). The Chilean Internal Revenue Service has not enacted any rule nor issued any ruling about the applicability of the norms explained below (referred to as Laws No 19,738 and No 19,768) to the foreign holders of ADRs.


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To the extent that our shares are actively traded on a Chilean stock exchange, foreign institutional investors who acquire our shares may benefit from a tax exemption included in an amendment to the Chilean Income Tax Law, Law No 19,738 published on June 19, 2001, as amended by Law No 20,448 published on August 13, 2010. The amendment established an exemption for the payment of income tax by foreign institutional investors, such as mutual funds, pension funds and others, that obtain capital gains in the sales through a Chilean stock exchange, a tender offer or any other system authorized by the SVS, of shares of publicly traded corporations that are significantly traded in stock exchanges. A foreign institutional investor is an entity that is either: a fund that makes public offers of its shares in a country which public debt has been rated investment grade by an international risk classification agency qualified by the SVS;a fund that is registered with a regulatory entity of a country which public debt has been rated investment grade by an international risk classification agency qualified by the SVS, provided that the investments in Chile, including securities issued abroad that represent Chilean securities, held by the fund represent less than 30.0% of its share value;a fund that holds investments in Chile that represent less than 30.0% of its share value, provided that it proves that no more that 10.0% of its share value is directly or indirectly owned by Chilean residents;a pension fund that is exclusively formed by individuals that receive their pension on account of capital accumulated in the fund;a fund regulated by Law No 18,657, or the Foreign Capital Investment Funds Law, in which case all holders of its shares must reside abroad or be qualified as local institutional investors; orany other institutional foreign investor that complies with the characteristics defined by a regulation with the prior report of the SVS and the Chilean Internal Revenue Service. In order to be entitled to the exemption, foreign institutional investors, during the time in which they operate in Chile must: be organized abroad and not be domiciled in Chile;not participate, directly or indirectly, in the control of the issuers of the securities in which they invest and not hold, directly or indirectly, 10.0% or more of such companies’ capital or profits;execute an agreement in writing with a Chilean bank or securities broker in which the intermediary is responsible for the execution of purchase and sale orders and for the verification, at the time of the respective remittance, that such remittances relate to capital gains that are exempt from income tax in Chile or, if they are subject to income tax, that the applicable withholdings have been made; andregister in a special registry with the Chilean Internal Revenue Service. Pursuant to the enacted amendment to the Chilean Income Tax Law published on November 7, 2001 (Law N° 19,768) as amended by Law No 19,801 published on April 25, 2002, as amended by Law No 20,448 published on August 13, 2010,  the sale and disposition of shares of Chilean public corporations which are actively traded on a Chilean stock exchange is not levied by any Chilean tax on capital gains if the sale or disposition was made: on a local stock exchange or any other stock exchange authorized by the SVS or in a tender offer process according to Title XXV of the Chilean Securities Market Law, so long as the shares (a) were purchased on a public stock exchange or in a tender offer process pursuant to Title XXV of the Chilean Securities Market Law, (b) are newly issued shares issued in a capital increase of the corporation, or (c) were the result of the exchange of convertible bonds (in which case the option price is considered to be the price of the shares). In this case, gains exempted from Chilean taxes shall be calculated using the criteria set forth in the Chilean Income Tax Law; orwithin 90 days after the shares would have ceased to be significantly traded on stock exchange. In such case, the gains exempted from Chilean taxes on capital gains will be up to the average price per share of the last 90 days. Any gains above the average price will be subject to the first category tax.


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Other Chilean Taxes.No Chilean inheritance, gift or succession taxes apply to the transfer or disposition of the ADSs by a foreign holder but such taxes generally will apply to the transfer at death or by a gift of shares of common stock by a foreign holder. No Chilean stamp, issue, registration or similar taxes or duties apply to foreign holders of ADSs or shares of common stock. Withholding Tax Certificates.Upon request, we will provide to foreign holders appropriate documentation evidencing the payment of the Chilean Withholding Tax. We will also inform when the withholding was excessive in order to allow the filing for the reimbursement of taxes.  United States Federal Income Tax Considerations  The following discussion summarizes the principal U.S. federal income tax considerations relating to the acquisition, ownership and disposition of Common Stock or ADSs by a U.S. holder (as defined below) holding such Common Stock or ADSs as capital assets for U.S. federal income tax purposes (generally, property held for investment). This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”) and judicial decisions, all as in effect on the date hereof, and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This summary does not describe any implications under state, local or non-U.S. tax law, or any aspect of U.S. federal tax law (such as the estate tax, gift tax, the alternative minimum tax or the Medicare tax on net investment income) other than U.S. federal income taxation. This summary does not purport to address all the material U.S. federal income tax consequences that may be relevant to the holders of the Common Stock or ADSs, and does not take into account the specific circumstances of any particular investors, some of which (such as tax-exempt entities, banks or other financial institutions, insurance companies, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real-estate investment trusts, partnerships and other pass-through entities, U.S. expatriates, investors that own or are treated as owning 10% or more of our voting stock, investors that hold the Common Stock or ADSs as part of a straddle, hedge, conversion or constructive sale transaction or other integrated transaction and persons whose functional currency is not the U.S. dollar) may be subject to special tax rules. As used below, a “U.S. holder” is a beneficial owner of Common Stock or ADSs that is, for U.S. federal income tax purposes:  ·an individual citizen or resident of the United States; ·a corporation (or an entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;


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·an estate, the income of which is subject to U.S. federal income tax regardless of its source; or ·a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (B) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. If a partnership or other entity taxable as a partnership holds Common Stock or ADSs, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partners of partnerships holding Common Stock or ADSs should consult their tax advisors. In general, for U.S. federal income tax purposes, holders of ADRs evidencing ADSs will be treated as the beneficial owners of the Common Stock represented by those ADSs. Taxation of Distributions In general, distributions with respect to the Common Stock or ADSs will, to the extent made from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, constitute dividends for U.S. federal income tax purposes. If a distribution exceeds the amount of our current and accumulated earnings and profits, as so determined under U.S. federal income tax principles, the excess will be treated first as a non-taxable return of capital to the extent of the U.S. holder’s tax basis in the Common Stock or ADSs, and thereafter as capital gain. We do not intend to maintain calculations of our earnings and profits under U.S. federal income tax principles and, unless and until such calculations are made, U.S. holders should assume all distributions are made out of earnings and profits and constitute dividend income. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes. The gross amount of any dividends (including amounts withheld in respect of Chilean taxes) paid with respect to the Common Stock or ADSs generally will be subject to U.S. federal income taxation as ordinary income and will not be eligible for the dividends received deduction allowed to corporations. Dividends paid in Chilean currency will be included in the gross income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date the dividends are actually or constructively received by the U.S. holder, or in the case of dividends received in respect of ADSs, on the date the dividends are actually or constructively received by the depositary or its agent, whether or not converted into U.S. dollars. A U.S. holder will have a tax basis in any distributed Chilean currency equal to its U.S. dollar amount on the date of receipt by the U.S. holder or disposition, as the case may be, and any gain or loss recognized upon a subsequent disposition of such Chilean currency generally will be foreign currency gain or loss that is treated as U.S. source ordinary income or loss. If dividends paid in Chilean currency are converted into U.S. dollars on the day they are received by the U.S. holder, the depositary or its agent, as the case may be, U.S. holders generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. U.S. holders should consult their own tax advisors regarding the treatment of any foreign currency gain or loss if any Chilean currency received by the U.S. holder or the depositary or its agent is not converted into U.S. dollars on the date of receipt. Under current law, the U.S. dollar amount of dividends by an individual with respect to the ADSs will be subject to taxation at a maximum rate of 20% if the dividends represent “qualified dividend income.” Dividends paid on the ADSs will be treated as qualified dividend income if (i) the ADSs are readily tradable on an established securities market in the United States, (ii) the U.S. holder meets the holding period requirement for the ADSs (generally more than 60 days during the 121-day period that begins 60 days before the ex-dividend date), and (iii) we were not in the year prior to the year in which the dividend was paid, and are not in the year in which the dividend is paid, a passive


foreign investment company (“PFIC”). The ADSs are listed on the New York Stock Exchange, and should qualify as readily tradable on an established securities market in the United States so long as they are so listed. However, no assurances can be given that the ADSs will be or remain readily tradable. Based on our audited financial statements as well as relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2015 taxable year. In addition, based on our audited financial statements and current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2016 taxable year. Because these determinations are based on the nature of our income and assets from time to time, and involve the application of complex tax rules, no assurances can be provided that we will not be considered a PFIC for the current (or any past or future) tax year.


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Based on existing guidance, it is not entirely clear whether dividends received with respect to the Common Stock (to the extent not represented by ADSs) will be treated as qualified dividend income, because the Common Stock are not themselves listed on a U.S. exchange. In addition, the U.S. Treasury Department has announced its intention to promulgate rules pursuant to which holders of ADSs or preferred stock and intermediaries through whom such securities are held will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividends. Because such procedures have not yet been issued, we are not certain that we will be able to comply with them. U.S. Holders of ADSs and Common Stock should consult their own tax advisors regarding the availability of the reduced dividend tax rate in the light of their own particular circumstances. Dividends paid by us generally will constitute foreign source “passive category” income and will be subject to various other limitations for U.S. foreign tax credit purposes. Subject to generally applicable limitations under U.S. federal income tax law, Chilean income tax imposed or withheld on such dividends, if any, will be treated as a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability (or at a U.S. holder’s election if it does not elect to claim a foreign tax credit for any foreign income taxes paid during the taxable year, all foreign income taxes paid may instead be deducted in computing such U.S. holder’s taxable income). In general, special rules will apply to the calculation of foreign tax credits in respect of dividend income that is subject to preferential rates of U.S. federal income tax. U.S. holders should be aware that the IRS has expressed concern that parties to whom ADSs are released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. holders of ADSs. Accordingly, the discussion above regarding the creditability of Chilean income tax on dividends could be affected by future actions that may be taken by the IRS. The rules with respect to the U.S. foreign tax credit are complex, and U.S. holders of Common Stock or ADSs are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances. Taxation of Capital Gains Deposits and withdrawals of Common Stock by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes. In general, gain or loss, if any, realized by a U.S. holder upon a sale, exchange or other taxable disposition of Common Stock or ADSs will be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized on the sale, exchange or other taxable disposition and such U.S. holder’s adjusted tax basis in the Common Stock or ADSs. Such capital gain or loss will be long-term capital gain or loss if at the time of sale, exchange or other taxable disposition the Common Stock or ADSs have been held for more than one year. Under current U.S. federal income tax law, net long-term capital gain of certain U.S. holders (including individuals) is eligible for taxation at preferential rates. The deductibility of capital losses is subject to certain limitations under the Code.


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Gain, if any, realized by a U.S. holder on the sale, exchange or other taxable disposition of Common Stock or ADSs generally will be treated as U.S. source gain for U.S. foreign tax credit purposes. Consequently, if a Chilean income tax is imposed on the sale or disposition of Common Stock, a U.S. holder that does not receive sufficient foreign source income from other sources may not be able to derive effective U.S. foreign tax credit benefits in respect of such Chilean income tax. Alternatively, a U.S. holder may take a deduction for all foreign income taxes paid during the taxable year if it does not elect to claim a foreign tax credit for any foreign taxes paid or accrued during the taxable year. U.S. holders should consult their own tax advisors regarding the application of the foreign tax credit rules to their investment in, and disposition of, Common Stock or ADSs. Passive Foreign Investment Company Rules In general, a foreign corporation is a PFIC with respect to a U.S. holder if, for any taxable year in which the U.S. holder holds stock in the foreign corporation, at least 75% of the foreign corporation’s gross income is passive income or at least 50% of the value of its assets (determined on the basis of a quarterly average) produce passive income or are held for the production of passive income. For this purpose, passive income generally includes, among other things, dividends, interest, rents, royalties and gains from the disposition of investment assets (subject to various exceptions). Based upon our current and projected income, assets and activities, we do not expect the Common Stock or ADSs to be considered shares of a PFIC for our current fiscal year or for future fiscal years. However, because the determination of whether the Common Stock or ADSs constitute shares of a PFIC will be based upon the composition of our income, assets and the nature of our business, as well as the income, assets and business of entities in which we hold at least a 25% interest, from time to time, and because there are uncertainties in the application of the relevant rules, there can be no assurance that the Common Stock or ADSs will not be considered shares of a PFIC for any fiscal year. If the Common Stock or ADSs were shares of a PFIC for any fiscal year, U.S. holders (including certain indirect U.S. holders) may be subject to adverse tax consequences, including the possible imposition of an interest charge on gains or “excess distributions” allocable to prior years in the U.S. holder’s holding period during which we were determined to be a PFIC, unless such U.S. holder makes an election to be taxed currently on its pro rata portion of our income, whether or not such income is distributed in the form of dividends, or otherwise makes a “mark-to-market” election with respect to the Common Stock or ADSs as permitted by the Code. If we are deemed to be a PFIC for a taxable year, dividends on our Common Stock or ADSs would not be “qualified dividend income” eligible for preferential rates of U.S. federal income taxation. A U.S. Holder who owns Common Stock or ADSs during any taxable year that we are a PFIC in excess of certainde minimisamounts and fails to qualify for certain other exemptions would be required to file IRS Form 8621. In addition, under certain circumstances, the temporary regulations also require a “United States person” (as such term is defined under the Code) that owns an interest in a PFIC as an indirect shareholder through one or more United States persons to file Form 8621 for any taxable year during which such indirect shareholder is treated as receiving an excess distribution in connection with the ownership or disposition of such interest, or reports income pursuant to mark-to-market election. U.S. holders should consult their own tax advisors regarding the application of the PFIC rules to the Common Stock or ADSs. U.S. Information Reporting and Backup Withholding A U.S. holder of Common Stock or ADSs may, under certain circumstances, be subject to information reporting and backup withholding with respect to certain payments to such U.S. holder, such as dividends paid by our company or the proceeds of a sale, exchange or other taxable disposition of Common Stock or ADSs, unless such U.S. holder (i) is an exempt recipient and demonstrates this fact when so required, or (ii) in the case of backup withholding, provides a correct taxpayer identification number, certifies that it is a U.S. person and that it is not subject to backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amount withheld under these rules will be


creditable against a U.S. holder’s U.S. federal income tax liability, provided the requisite information is timely furnished to the IRS.


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“Specified Foreign Financial Asset” Reporting Owners of “specified foreign financial assets” with an aggregate value in excess of US$50,000 (and in some circumstances, a higher threshold), may be required to file an information report with respect to such assets with their U.S. federal income tax returns. “Specified foreign financial assets” generally include any financial accounts maintained by foreign financial institutions as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. Prospective purchasers should consult their own tax advisors regarding the application of the U.S. federal income tax laws to their particular situations as well as any additional tax consequences resulting from purchasing, holding or disposing of Common Stock or ADSs, including the applicability and effect of the tax laws of any state, local or foreign jurisdiction, including estate, gift, and inheritance laws.  F.Dividends and Paying Agents  Not applicable.  G.Statement by Experts  Not applicable.  H.Documents on Display  We are subject to the informational requirements of the Exchange Act. In accordance with these requirements, we file annual reports and submit other information to the United States Securities and Exchange Commission (the “SEC”). These materials, including this Form 20-F and the exhibits thereto, may be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC in the United States at 1-800-SEC-0330. The SEC also maintains a website at http://www.sec.gov/ that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. Form 20-F reports and the other information submitted by us to the SEC may be accessed through this website. Additionally, the documents concerning us, which are referred to in this annual report, may be inspected at our principal offices at Vitacura 2670, Twenty Third Floor, Santiago, Chile.  I.Subsidiary Information  Not applicable.  ITEM 11: Quantitative and Qualitative Disclosures about Market Risk  The following discussion about our risk management activities includes “forward-looking statements” that involve risk and uncertainties. Actual results could differ materially from those projected in the forward-looking statements.


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We face primary market risk exposures in three categories: interest rate fluctuations, exchange rate fluctuations and commodity price fluctuations. We periodically review our exposure to the three principal sources of risk described above and determine at our senior-management level how to minimize the impact on our operations of commodity price, foreign exchange and interest rate changes. As part of this review process, we periodically evaluate opportunities to enter into hedging mechanisms to mitigate such risks.  The market risk sensitive instruments referred to below are entered into only for purposes of hedging our risks and are not used for trading purposes.  Qualitative Information About Market Risk  Interest Rate Risk  As of December 31, 2015, we had a total of CLP 15,940 and CLP 4,266 million in debt indexed to London InterBank Offered Rate (“LIBOR”) and Buenos Aires Deposits of Large Amount Rate (“BADLAR”), respectively (CLP 13,691 million indexed to LIBOR as of December 31, 2014). Consequently, as of December 31, 2015, our financing structure consisted (without taking into account the cross currency interest rate swaps and cross interest rate swaps effects) of 12% (7% as of December 31, 2014) of debt with variable interest rates, and 88% (93% as of December 31, 2014) of debt with fixed interest rates.  To manage the interest rate risk, we have an interest rate administration policy that intends to reduce the volatility of our financial expenses, and to maintain an ideal percentage of our debt in fixed rate instruments. The financial position is mainly set by the use of short-term and long-term debt, as well as derivative instruments such as cross currency interest rate swaps and cross interest rate swaps.  As of December 31, 2015, after considering the effect of cross currency interest rate swaps and cross interest rate swaps, 97% (100% in 2014) of our debt had fixed interest rates.  The terms and conditions of the Company’s obligations as of December 31, 2015, including exchange rates, interest rates, maturities and effective interest rates are detailed in Note 27 to our audited financial statements included elsewhere in this Form 20-F.  Commodity and Raw Material Price Sensitivity  The principal commodity price sensitivity faced by us relate to fluctuations in: 1) prices and supply of barley, malt and cans, which we use for the production of beer, 2) prices of concentrates, sugar and plastic resin, which we use for the production and packaging of soft drinks, and 3) prices of bulk wine and grapes, which we use for the manufacturing of wine and spirits.  Barley, malt and cans. In Chile, we obtain our supply of barley and malt from local producers and in the international market. Long-term supply agreements are entered into with local producers, where the barley price is set annually according to the market price, which is used to determine the malt price as per the agreements’ algorithms. The purchases and commitments expose the Company to risk regarding the fluctuation of commodity prices.  During 2015, we purchased 53,890 tons of malt (37,315 tons in 2014) and 46,620 tons of barley (52,720 tons in 2014). In Argentina we acquire malt only from local sources. Such raw materials represent approximately 9% (12% in 2014 and 2013) of the direct cost for the Chile Operating segment.  Of the cost of Chile Operating segment, the cost of cans represents approximately 12% of the direct cost (12% in 2014 and 16% in 2013). Meanwhile in International Business Operating segment the cans cost represent approximately 30% of the direct cost of raw materials in 2015 (20% in 2014 and 22% in 2013). See “Item 4: Information on the Company – Business Overview – Raw Materials and other Supplies”. We do not hedge these transactions. Rather, we negotiate yearly contracts with malt suppliers.


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Concentrates, sugar and plastic resin. The principal raw material used in the production of non-alcoholic beverages are concentrates, which are mainly acquired from licensees, sugar and plastic resin for the manufacturing of plastic bottles and containers. The Company is exposed to price fluctuation risks with regards to these raw materials, which jointly represent 29% (29% in 2014 and 27% in 2013) of the direct cost for the Chile Operating segment. See “Item 4: Information on the Company – Business Overview – Raw Materials and other Supplies”. We do not hedge these transactions.  Grapes and wine. The principal raw materials used by our wine subsidiary VSPT in the production of wine are its own harvested grape as well as purchased grapes and wine. VSPT obtains approximately 49% of the grapes used for export wines from its own vineyards, thereby reducing grape price volatility and ensuring quality consistency. Approximately 12% of the grape supply for the production of the wine sold in the domestic market is purchased from third parties. During 2015, VSPT purchased 55% of the necessary grapes and wine on the basis of yearly contracts at fixed prices from third parties. Spot transactions for wine are executed from time to time depending on additional wine needs. “Item 4: Information on the Company – Business Overview – Raw Materials and other Supplies.”  Exchange Rate Sensitivity  We are exposed to exchange rate risks resulting from: a) our net exposure of foreign currency assets and liabilities, b) exports sales, c) the purchase of raw material, products and capital investments effected in foreign currencies, or indexed to such currencies, and d) the net investment of subsidiaries in Argentina, Uruguay and Paraguay, of associated in Bolivia and of joint venture in Colombia. Our greatest exchange rate risk exposure is the variation of the Chilean peso as compared to the U.S. dollar, euro, argentine peso, uruguayan peso, paraguayan guaraní, bolivians and colombian peso.  As of December 31, 2015, we maintained in Chile foreign currency liabilities amounting to CLP 49,786 million (CLP 46,780 million as of December 31, 2014), mostly denominated in U.S. dollars. Obligations with financial institutions and bonds in foreign currency (CLP 16,626 million as of December 31, 2015 and CLP 19,839 million as of December 31, 2014) represent 10% (11% as of December 31, 2014) of the total of such liabilities. The remaining 90% (89% as of December 31, 2014) is denominated mainly in inflation-indexed Chilean pesos. In addition, the Company maintains current foreign currency assets for CLP 72,888 million (CLP 57,087 million as of December 31, 2014) that mainly correspond to exports in accounts receivable.  Regarding the foreign subsidiaries operations, the net exposure liability in U.S. dollars and other currencies amounted to CLP 1,368 million as of December 31, 2015 (CLP 1,932 million as of December 31, 2014).  To protect the value of the foreign currency assets and liabilities net position of our Chilean operations, we enter into derivative agreements (currency forwards) to hedge against any variation in the Chilean peso as compared to other currencies.  As of December 31, 2015, net exposure in foreign currencies of our Chilean operations, after the use of derivative instruments, amounted to a liability of CLP 757 million (CLP 2,588 million as of December 31, 2014).  In 2015, of our total sales, 8% (8% in 2014 and 2013) corresponded to export sales made in foreign currencies, mainly U.S. dollars, euros and pounds sterling, and of the total costs, 54% (55% in 2014 and 57% in 2013) correspond to raw material and product purchases in foreign currencies, or indexed to such currencies. We do not actively hedge the variations in the expected cash flows from such transactions.


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On the other hand, we are exposed to exchange rate movements related to the conversion from argentine pesos, uruguayan pesos, paraguayan guaranis, bolivians and colombian pesos to chilean pesos in the income, assets and liabilities of our subsidiaries in Argentina, Uruguay and Paraguay, associated in Bolivia and joint venture in Colombia. We do not actively hedge the risks related to this conversion at our subsidiaries, the effects of which are recorded in Equity.  As of December 31, 2015, the net investment in foreign subsidiaries, associated and joint ventures amounted to CLP 133,555 million, CLP 14,277 million and CLP 18,719 million, respectively (CLP 127,753 million, CLP 12,758 million and CLP 1,445 million as of December 31, 2014).  Quantitative Information About Market Risk  Interest Rate Sensitivity  Most of our debt is at a fixed interest rate, so it is not mainly exposed to fluctuations in interest rates. As of December 31, 2015, our interest-bearing debt amounted to CLP 168,118 million (see note 27 to the consolidated financial statements), 88% of which was fixed debt and 12% of which was variable-rate debt.  The following table summarizes debt obligations with interest rates by maturity date, the related weighted-average interest rates and fair values:   Interest - Bearing Debts as of December 31, 2015(millions of Ch$, except percentages)Contractual Maturity Date2016

   

   2017

   

   2018

   

   2019

   

   2020

   

   Thereafter

   

   Total

   Fair ValueInterest bearing liabilitiesFixed rateCh$ (UF)(1)

   Bonds and Banks

   

   7,491

   

   8,746

   

   8,710

   

   18,274

   

   8,334

   

   93,614

   

   145,169

   119,742Average interest rate

   

   4.5%

   

   4.5%

   

   4.5%

   

   4.6%

   

   4.8%

   

   4.8%Ch$

   

   

   

   6,437

   

   18,135

   

   1,023

   

   1.023

   

   1,023

   

   -

   

   27,640

   26,608Average interest rate

   

   6.1%

   

   6.5%

   

   5.2%

   

   5.2%

   

   5.1%US$

   

   

   

   690

   

   -

   

   -

   

   -

   

   -

   

   -

   

   690

   689Average interest rate

   

   3.2%Argentine pesos

   

   

   

   12,933

   

   6,855

   

   1,722

   

   530

   

   -

   

   -

   

   22,040

   17,274Average interest rate

   

   24.8%

   

   23.8%

   

   21.3%

   

   15,0%Uruguayan pesos

   

   

   345

   

   851

   

   851

   

   -

   

   -

   

   -

   

   2,047

   2,047Average interest rate

   

   6.0%

   

   6.0%

   

   6.0%Variable rateUS$

   

   

   

   10,564

   

   126

   

   5,663

   

   -

   

   -

   

   -

   

   16,354

   15,946Average interest rate

   Libor +

   1.6%

   

   1.1%

   

   1.1%Argentine pesos

   

   

   

   1,905

   

   1,661

   

   1,098

   

   805

   

   -

   

   -

   

   5,469

   4,266Average interest rate

   Badlar +

   25.2%

   

   25.19%

   

   25.2%

   

   25.2%Non interest bearing liabilitiesDerivate ContractCross Interest Rate Swap:Receive US$ at Libor + 1.46

   

   7,254

   

   -

   

   -

   

   -

   

   -

   

   -

   

   7,254

   7,227Pay US$ at 3.6%

   

   

   7,362

   

   -

   

   -

   

   -

   

   -

   

   -

   

   7,362

   7,335Forwards

   

   

   

   171

   

   -

   

   -

   

   -

   

   -

   

   -

   

   171

   171(1) UF as of Dec 31, 2015
   Commodity Price Sensitivity  The major commodity price sensitivity faced by us relate to fluctuations in malt prices.


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The following table summarizes information about our malt (includes barley), sugar and bulk wine inventories and futures contracts that are sensitive to changes in commodity prices, mainly malt prices. For inventories, the table presents the carrying amount and fair value of the inventories and contracts as of December 31, 2015. For these contracts the table presents the notional amount in tons, the weighted average contract price, and the total dollar contract amount by expected maturity date.   Commodity Price Sensitivity as of December 31, 2015Carrying Amount

   

   

   

   

   Fair ValueOn Balance Sheet PositionMalt inventory (millions of CLP)

   

   16,421

   

   

   

   

   

   16,421Bulk wine inventory - raw material (millions of CLP)

   30,337

   

   

   

   

   

   30,337Expected Maturity

   

   

   

   Fair Value2016

   2017

   2018

   2019

   2020

   ThereafterPurchase ContractsMalt:Fixed Purchase Volume (tons)

   

   129,556

   131,782

   135,033

   136,683

   22,817

   -Weighted Average Price (US$ per ton)(*)

   

   575

   575

   575

   575

   575

   -Contract Amount (thousands of US$)

   

   74,495

   75,775

   77,644

   78,593

   13,120

   -

   308,143Sugar:Fixed Purchase Volume (tons)

   

   75,000

   -

   -

   -

   -

   -Weighted Average Price (US$ per ton)(*)

   

   550

   -

   -

   -

   -

   -Contract Amount (thousands of US$)

   

   41,250

   -

   -

   -

   -

   -

   40,900Grapes:Fixed Purchase Volume (tons)

   

   30,044

   16,781

   13,806

   2,772

   1,477

   252Weighted Average Price (CLP per kg.)(*)

   

   218

   226

   216

   398

   529

   990Contract Amount (millions of CLP)

   

   6,543

   3,790

   2,982

   1,103

   781

   250

   15,732Wine:Fixed Purchase Volume (tons)

   

   16,750

   -

   -

   -

   -

   -Weighted Average Price (CLP per liter)(*)

   

   219

   -

   -

   -

   -

   -Contract Amount (millions of CLP)

   

   3,666

   -

   -

   -

   -

   -

   3,666(*) Weighted average price estimation is calculated based on expected market prices. Prices to be paid by us are adjusted based on current market conditions.
   As of December 31, 2015 we had malt and barley purchase contracts for US$54.8 million in Chile, compared with US$46.6 million as of December 31, 2014. Exchange Rate Sensitivity The major exchange rate risk faced by us is the variation of the Chilean peso against the U.S. dollar.  A portion of our subsidiaries operating results, assets and liabilities are in currencies that differ from our functional currencies. However, since some of their operating revenues, costs and expenses are in the same currency, this can create a partial natural hedge. For the portion that is not naturally hedged of operations in Chile we enter into derivative agreements (currency forwards) to mitigate any variation in the Chilean peso as compared to other currencies.  The following table summarizes our debt obligations, cash and cash equivalents, accounts receivable, accounts payable and derivative contracts in foreign currencies as of December 31, 2015 in millions of Chilean pesos, according to their maturity date, weighted-average interest rates and fair values:


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Exchange Rate Sensitivity as of December 31, 2015(millions of Ch$, except percentages and exchange rate)Contractual Maturity Date2016

   

   2017

   

   2018

   

   2019

   

   2020

   

   Thereafter

   

   Total

   Fair ValueDebt ObligationsVariable rate (US$)Short and medium term

   

   

   10,564

   

   126

   

   5,663

   

   -

   

   -

   

   -

   

   16,354

   15,946Average int.rate Libor +

   1.64%

   

   1.1%

   

   1.1%Fixed rate (US$)Short term

   

   

   

   690

   

   -

   

   -

   

   -

   

   -

   

   -

   

   690

   689Interest rate

   3.2%Cash and CashEquivalents(1)US$

   

   

   

   5,386

   

   

   

   

   

   

   

   

   

   

   

   5,386

   5,386Others

   

   

   

   1,315

   

   

   

   

   

   

   

   

   

   

   

   1,315

   1,315TOTAL

   

   

   

   6,701

   

   

   

   

   

   

   

   

   

   

   

   6,701

   6,701Accounts Receivable(1)US$

   

   

   

   25,499

   

   

   

   

   

   

   

   

   

   

   

   25,499

   25,499EUR

   

   

   

   7,463

   

   

   

   

   

   

   

   

   

   

   

   7,463

   7,463Others

   

   

   

   1,777

   

   

   

   

   

   

   

   

   

   

   

   1,777

   1,777TOTAL

   

   

   

   34,739

   

   

   

   

   

   

   

   

   

   

   

   34,739

   34,739Accounts Payable(1)US$

   

   

   

   18,669

   

   

   

   

   

   

   

   

   

   

   

   18,669

   18,669EUR

   

   

   

   6,403

   

   

   

   

   

   

   

   

   

   

   

   6,403

   6,403Others

   

   

   

   424

   

   

   

   

   

   

   

   

   

   

   

   424

   424TOTAL

   

   

   

   25,496

   

   

   

   

   

   

   

   

   

   

   

   25,496

   25,496(1)Figures as of December 31, 2015.Contractual Maturity DateNotional

   2016

   

   2017

   

   2018

   

   2019

   

   2020

   

   Thereafter

   

   Total

   Fair ValueamountDerivate Contracts (inmillions of Ch$)Receive US$

   

   

   

   19,840

   

   126

   

   5,663

   

   -

   

   -

   

   -

   

   25,630

   25,410Pay US$

   

   

   

   7,479

   

   -

   

   -

   

   -

   

   -

   

   -

   

   7,479

   7,452Receive EUR

   

   

   

   58

   

   -

   

   -

   

   -

   

   -

   

   -

   

   58

   58Pay EUR

   

   

   

   2,612

   

   60

   

   5,452

   

   -

   

   -

   

   -

   

   8,124

   8,142Receive Others

   

   

   

   32

   

   -

   

   -

   

   -

   

   -

   

   -

   

   32

   32Pay Others

   

   

   

   2

   

   -

   

   -

   

   -

   

   -

   

   -

   

   2

   2
    ITEM 12: Description of Securities Other than Equity Securities  12.D.3. Depositary Fees and Charges  JPMorgan is the depositary of CCU shares in accordance with the amended and restated Deposit Agreement, dated July 31, 2013, entered into by and among CCU, JPMorgan, as depositary, and all owners from time to time of ADSs issued by CCU (“Deposit Agreement”).  Pursuant to the Deposit Agreement, holders of our ADSs may have to pay to JPMorgan, either directly or indirectly, fees or charges up to the amounts set forth in the table below.


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Service

   FeeIssuance of ADSs

   US$5 per each 100 ADSs issuedCancellation of ADSs

   US$5 per each 100 ADSs canceledCash distributions

   US$0.05 or less per ADS
  During each year, the depositary will collect fees of US$0.05 or less per ADS per calendar year for administering the ADSs.  ADS holders will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges such as: stock transfer or other taxes and other governmental charges; cable, telex and facsimile transmission and delivery charges incurred upon the transfer of securities; transfer or registration fees for the registration of transfers charged by the registrar and transfer agent; and expenses incurred for converting foreign currency into U.S. dollars.  12.D.4. Depositary Payments  In 2015, the following reimbursements were made by JPMorgan, pursuant to the corresponding tax retention, in connection with our ADR program:   Expenses

   amount in thousands US$ (*)Documents Edgard and filing

   4.8FASB fee

   0.7PCAOB fee

   5.5Teleconferencing

   5.5Legal advise related to 20-F preparation & filing

   86.0Software and licenses subscription Fee

   15.3Representative Fees

   2.1Total

   120.0(*) includes 30% tax retention


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PART II ITEM 13: Defaults, Dividend Arrearages and Delinquencies  Not applicable.  ITEM 14: Material Modifications to the Rights of Security Holders and Use of Proceeds  Not applicable.  ITEM 15: Controls and Procedures  (a) Controls and Procedures. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2015. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, 2015.  Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods required and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.  (b) Management’s Annual Report on Internal Control over Financial Reporting. Our management, including our CEO and CFO, are responsible for establishing and maintaining adequate internal controls over financial reporting and has assessed the effectiveness of our internal control over financial reporting as of December 31, 2015 based on the criteria established in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and, based on such criteria, our management has concluded that, as of December 31, 2015 our internal control over financial reporting is effective.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate.


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The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by PricewaterhouseCoopers, an independent registered public accounting firm, as stated in their report which appears herein.  (c) Attestation Report of the Registered Public Accounting Firm. See page F-2 of our audited consolidated financial statements.  (d) Changes in Internal Control over Financial Reporting. There has been no change in our internal control over financial reporting during 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  (e) Whistle-blowing procedure. We have a whistle-blowing procedure which allows any employee of CCU, of its associates or any person, to communicate to a designated person questionable practices or activities that constitute a breach of accounting procedures, internal controls, audit matters and the Code of Business Conduct.  ITEM 16A: Audit Committee Financial Expert  In the board of directors meeting held on April 10, 2013, after the election of a new board of directors at the Shareholders’ meeting, the board of directors appointed the following members to our audit committee: Messrs. Vittorio Corbo and Philippe Pasquet. Mr. Pasquet and Mr. Corbo meet the independence criteria contained in the Exchange Act and the NYSE Rules.  Due to the resignation of Mr. Philippe Pasquet of his position as director of the Company, effective as of June 30, 2015, at the board of directors ́ meeting held on June 7, 2015, Mr. Jorge Luis Ramos Santos was appointed as a member of the audit committee, to replace Mr. Pasquet. Additionally, at the board of directors ́ meeting held on July 7, 2015, director Mr. Carlos Molina was appointed to the audit committee on an observer status.  Finally, at the board of directors ́ meeting held on April 13, 2016, following the election of a new board at the shareholders ́ meeting held the same day, the board of directors appointed directors Messrs. Vittorio Corbo and Carlos Molina to our audit committee. Mr. Corbo and Mr. Molina meet the independence criteria under the Exchange Act and under the NYSE Rules. The board of directors also resolved that directors Messrs. José Miguel Barros and Francisco Pérez shall participate in the audit committee ́s meetings as observers.  We do not have an audit committee financial expert serving on our audit committee, as such term is defined under Item 407 of Regulation S-K. We do not have an audit committee financial expert because we are not required to appoint one under Chilean law.   ITEM 16B: Code of Ethics  We have adopted a Code of Business Conduct that applies to all of our executive officers and employees. Our Code of Business Conduct is available on our website atwww.ccu.clorwww.ccuinvestor.com. Our code of ethics was updated on March 4, 2014 and no waivers, either explicit or implicit, of provisions of the code of ethics have been granted to the Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer. The information on our website is not incorporated by reference into this document.  In December 2013, we adopted a Code of Conduct of the board of directors that applies to all of the members of our board of directors, which was updated in July and December 2015. This Code of


Conduct is available on our website atwww.ccu.clorwww.ccuinvestor.com. The Code of Conduct sets forth certain basic principles intended to guide the actions of our directors, as well as certain procedures, policies and corporate governance best practices. The Code of Conduct covers matters of confidentiality, access to independent experts, orientation of newly elected directors and review of information regarding candidates for election to the board of directors. The Code of Conduct also establishes rules and procedures regarding conflicts of interest. The information on our website is not incorporated by reference into this document.


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ITEM 16C: Principal Accountant Fees and Services  The following table sets forth the fees billed to us by our independent auditors, PricewaterhouseCoopers, during the fiscal years ended December 31, 2014 and 2015:   2014

   2015Audit Fees

   462

   487Audit-Related Fees

   0

   0Tax Fees

   0

   8All Other Fees

   2

   11Total Fees

   464

   506
   “Audit fees” in the above table are the aggregate fees billed by PricewaterhouseCoopers in connection with the review and audit of our semi-annual and annual consolidated financial statements, as well as the review of other fillings. “All Other Fees” are fees billed by PricewaterhouseCoopers associated to expenses related to Due Diligence during 2015.  Audit Committee Pre-Approval Policies and Procedures  Since July 2005, our audit committee pre-approves all audit and non-audit services provided by our independent auditor pursuant to Sarbanes-Oxley Act of 2002.   ITEM 16D: Exemptions from the Listing Standards for Audit Committees  Not applicable.  ITEM 16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers  Not applicable.  ITEM 16F: Change in Registrant’s Certifying Accountants  i) Pursuant to the Chilean Corporations Act the Company is obliged to elect on an annual basis its principal accountant. The election takes place at the annual shareholders ́ meeting. The audit committee and the directors committee independently submitted to the board of directors their proposal for the election of the principal accountant for fiscal year 2016. The board of directors ́ at its meeting held on January 5, 2016 agreed to propose to the annual shareholders ́ meeting of April 13, 2016 two candidates: KPMG Auditores Consultores Ltda (“KPMG”) was proposed in first place, and Pricewaterhouse Coopers Consultores Auditores y Compañía Limitada (“PwC Chile”), in second place. At the referred annual shareholders ́ meeting held April 13, 2016, KPMG was elected as principal accountant for the fiscal year 2016. As a consequence, PwC Chile was dismissed as our independent registered public accounting firm on April 13, 2016. Such dismissal becomes effective upon completion by PwC Chile of its procedures on the filing of Form 20-F for the year ended December 31, 2015. PwC Chile served as the company ́s independent registered public accounting firm for the fiscal years 2015 and 2014.  (ii) The reports of PwC Chile on the financial statements for the fiscal years ended December 31, 2015 and 2014 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.  (iii) During the fiscal years ended December 31, 2015 and 2014 and the subsequent interim period through April 13, 2016, there have been no disagreements with PwC Chile on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PwC Chile would have caused them to make reference thereto in their reports on the financial statements for such years.  (iv) During the fiscal years ended December 31, 2015 and 2014 and the subsequent interim period through April 13, 2016, there have been no reportable events (as defined in Item 16F(a)(1)(v) of Form 20-F).  (v) The Registrant has requested that PwC Chile furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated April 26, 2016, is filed as Exhibit 15.2 to this Form 20-F.  During the fiscal years ended December 31, 2015 and 2014 and the subsequent interim period through April 13, 2016,  the registrant has not consulted with KPMG regarding any matters described in Item 16F(a)(2)(i) and Item 16F(a)(2)(ii) of Form 20-F.


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ITEM 16G: Corporate Governance  General summary of significant differences with regard to corporate government standards  The following paragraphs provide a brief, general summary of significant differences between corporate government practices followed by us pursuant to our home-country rules and those applicable to U.S. domestic issuers under NYSE listing standards.  Composition of the board of directors; independence.The NYSE listing standards provide that listed companies must have a majority of independent directors and that certain board committees must consist solely of independent directors. Under NYSE rule 303A.02, a director qualifies as independent only if the board affirmatively determines that such director has no material relationship with the company, either directly or indirectly. In addition, the NYSE listing standards enumerate a number of relationships that preclude independence.  Under the Chilean Corporations Act an open-stock corporation must have at least one independent director (out of a minimum of seven directors) when its market capitalization reaches or exceeds 1.5 million Unidades de Fomento (as of March 31, 2016 approximately CLP 38,718 million) and at least 12.5% of its outstanding shares with voting rights are in the possession of shareholders that individually control or possess less than 10% of such shares. In addition, the Chilean Corporations Act enumerates a number of relationships that preclude independence. Chilean law also establishes a number of principles of general applicability designed to avoid conflicts of interests and to establish standards for related party transactions. Specifically, directors elected by a group or class of shareholders have the same duties to the company and to the other shareholders as the rest of the directors, and all transactions with the company in which a director has an interest must be in the interest of and for the benefit of the company, relative in price, terms and conditions to those prevailing in the market at the time of its approval and comply with the requirements and procedures set forth in Chapter XVI of the Chilean Corporations Act. See “Item 7: Major Shareholders and Related Party Transactions.”


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Furthermore, such transactions must be reviewed by the directors’ committee (as defined below); they require prior approval by the board of directors and must be disclosed at the next meeting of shareholders, unless such transactions fall within one the exemptions contemplated by the Chilean Corporations Act and, if applicable, included in the usual practice policy approved by the board of directors. See “Item 7: Major Shareholders and Related Party Transactions.” Pursuant to NYSE rule 303A.00, we may follow Chilean practices and are not required to have a majority of independent directors.  Committees.The NYSE listing standards require that listed companies have a Nominating/Corporate Governance Committee, a Compensation Committee and an Audit Committee. Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified by the listing standards.  Under Chilean law, the only board committee that is required is the directors’ committee (comité de directores), composed of three members, such committee having a direct responsibility to (a) review the company’s financial statements and the independent auditors’ report and issue an opinion on such financial statements and report prior to their submission for shareholders’ approval, (b) make recommendations to the board of directors with respect to the appointment of independent auditors and risk rating agencies, (c) review related party transactions, and issue a report on such transactions, (d) review the managers, principal executive officers’ and employees’ compensation policies and plans and (e) to prepare an annual report of the performance of its duties, including the principal recommendations to shareholders; (f) advise the board of directors as to the suitability of retaining non-audit services from its external auditors, if the nature of such services could impair their independence; and (g) perform other duties as defined by the company’s bylaws, by a shareholders’ meeting or by the board. Requirements to be deemed an independent director are set forth in “Item 6: Directors, Senior Management and Employees–Board Practices–Directors Committee.”  Pursuant to NYSE Rule 303A.06, we must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act by July 31, 2005. At the board of directors ́ meeting of April 10, 2013, following the election of a new board at the shareholders ́ meeting, the board of directors appointed the following directors to our audit committee: Vittorio Corbo and Philippe Pasquet. Mr. Pasquet and Mr. Corbo meet the independence criteria under the Exchange Act and under the NYSE Rules. The board of directors also resolved that directors Messrs. Jorge Luis Ramos and Francisco Pérez shall participate in our audit committee ́s meetings as observers.  Due to the resignation of Mr. Philippe Pasquet of his position as director of the Company, effective as of June 30, 2015, at the board of directors ́ meeting held on June 7, 2015, Mr. Jorge Luis Ramos Santos was appointed as a member of the audit committee, to replace Mr. Pasquet. Additionally, at the board of directors ́ meeting held on July 7, 2015, director Mr. Carlos Molina was appointed to the audit committee on an observer status.  Finally,at the board of directors ́ meeting held on April 13, 2016, following the election of a new board at the shareholders ́ meeting, the board of directors appointed directors Messrs. Vittorio Corbo and Carlos Molina to our audit committee. Mr. Corbo and Mr. Molina meet the independence criteria under the Exchange Act and under the NYSE Rules. The board of directors also resolved that directors Messrs. José Miguel Barros and Francisco Pérez shall participate in the audit committee ́s meetings as observers.  Shareholder approval of equity-compensation plans.Under NYSE listing standards, shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exemptions. An “equity-compensation plan” is a plan or other arrangement that provides for the delivery of equity securities of the listed company to any employee, director or otherservice provider as compensation for services.


128

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Under Chilean law, if previously approved by shareholders at an extraordinary shareholders’ meeting, up to ten percent of a capital increase in a publicly traded company may be set aside to fund equity-compensation plans for the company’s employees and/or for the employees of the company’s subsidiaries. Pursuant to NYSE rule 303A.00, as a foreign private issuer, we may follow Chilean practices and are not required to comply with the NYSE listing standards with respect to shareholder approval of equity-compensation plans.  Corporate Governance Guidelines.The NYSE listing standards provide that listed companies must adopt and disclose corporate governance guidelines with regard to (a) director qualifications standards; (b) director responsibilities; (c) director access to management and independent advisors; (d) director compensation; (e) director orientation and continuing education; (f) management succession; and (g) annual performance evaluations of the board.  Chilean law does not require that such corporate governance guidelines be adopted. Director responsibilities and access to management and independent advisors are directly provided for by applicable law. Director compensation is determined by the annual meeting of shareholders pursuant to applicable law. As a foreign private issuer, we may follow Chilean practices and are not required to adopt corporate governance guidelines. Pursuant to SVS rules, the company is only required to disclose whether or not it has adopted corporate governance guidelines regarding, among others, the matters referred to above.  Code of Business Conduct.The NYSE listing standards require that listed companies adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.  We have adopted a code of business conduct that applies generally to all of our executive officers and employees. A copy of the code of business conduct, as amended, is available on our website atwww.ccu.clorwww.ccuinvestor.com. The information on our website is not incorporated by reference into this document.  We have also adopted a code of conduct that applies to all members of our board of directors. A copy of this code is available on our website atwww.ccu.clorwww.ccuinvestor.com. The information on our website is not incorporated by reference into this document.  Manual of Information of Interest to the Market. In 2008, the SVS promulgated new rules which require public companies to adopt a manual regarding disclosure of information of interest to the market, board members and executives shares transactions and blackout periods for such transactions. This manual applies to our directors, the directors of our subsidiaries, our executive officers, some of our employees which may be in possession of confidential, reserved or privileged information of interest, and to our advisors. The manual took effect on June 1, 2008.A copy of themanual regarding disclosure of information of interest to the market,as amended on March 18, 2010, is available in our website atwww.ccu.clorwww.ccuinvestor.com. The information on our website is not incorporated by reference into this document.  Executive Sessions. To empower non-management directors to serve as a more effective check on management, NYSE listing standards provide that non-management directors of each company must meet at regularly scheduled executive sessions without management.  Under Chilean law, the office of director is not legally compatible with that of general manager in publicly traded companies. The board of directors exercises its functions as a collective body and may partially delegate its powers to executive officers, attorneys, a director or a board commission of the company, and for specific purposes to other persons. As a foreign private issuer, we may follow Chilean practices and are not required to comply with the NYSE listing standard for executive sessions.


129

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Certification Requirements. Under NYSE listing standards, Section 303A.12(a) provides that each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards, and Section 303A.12(b) provides that each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any material non-compliance with any applicable provisions of Section 303A.  As a foreign private issuer, we must comply with Section 303A.12(b) of the NYSE listing standards, but we are not required to comply with 303A.12(a). ITEM 16H: Mine Safety Disclosure  Not applicable. PART III ITEM 17: Financial Statements  The Company has responded to Item 18 in lieu of responding to this item. ITEM 18: Financial Statements  See Annex for the Financial Statements. ITEM 19: Exhibits  Index to Exhibits  1.1Unofficial English translation of the By-laws of the Company (incorporated by reference to Exhibit 3.1 of the Company’s registration statement on Form F-3 (File No. 333-190641) filed on August 8, 2013).  8.1Compañía Cervecerías Unidas S.A. significant subsidiaries (incorporated by reference to Exhibit 8.1 of Compañía Cervecerías Unidas S.A. Annual Report on Form 20-F for the year ended December 31, 2003, filed on June 24, 2004).  12.1Certification of Chief Executive Officer of Compañía Cervecerías Unidas S.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  12.2Certification of Chief Financial Officer of Compañía Cervecerías Unidas S.A. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  13.1Certification of Chief Executive Officer of Compañía Cervecerías Unidas S.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  13.2Certification of Chief Financial Officer of Compañía Cervecerías Unidas S.A. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  15.1   
Consent of PricewaterhouseCoopers.  15.2    
Letter of PricewaterhouseCoopers regarding disclosure in Item 16.F. Change in Registrant ́s Certifying Accountant


130

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SIGNATURES The Registrant certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.  Compañía Cervecerías Unidas S.A.By:     /s/ Patricio JottarName: Patricio JottarTitle: Chief Executive Officer   Date: April 29, 2016


131

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CCU - Management’s Report on Internal Controls over Financial Reporting   Our management, including our Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal controls over financial reporting and has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 based on the criteria established in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and, based on such criteria, our management has concluded that, as of December 31, 2015, our internal control over financial reporting is effective. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate. The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by PwC Chile, an independent registered public accounting firm, as stated in their report which appears herein. There has been no change in our internal control over financial reporting during 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  By:/s/__________________ Chief Executive Officer    /s/  _________________ Chief Financial Officer    Dated:  February 29, 2016   Distribution: Investor Relation Manager PwC Chile Chief Financial Officer Legal Affairs Manager_


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INDEXCONSOLIDATED STATEMENT OF FINANCIAL POSITION

   4CONSOLIDATED STATEMENT OF FINANCIAL POSITION

   5CONSOLIDATED STATEMENT OF INCOME

   6CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

   7CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

   8CONSOLIDATED STATEMENT OF CASH FLOW

   9NOTE 1 GENERAL INFORMATION

   10NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   152.1

   Basis of preparation

   152.2

   Basis of consolidation

   162.3

   Financial information as per operating segments

   172.4

   Foreign currency and unidad de fomento (Adjustment unit)

   172.5

   Cash and cash equivalents

   182.6

   Other finantial assets

   182.7

   Financial instruments

   192.8

   Financial asset impairment

   212.9

   Inventories

   212.10

   Biological current assets

   212.11

   Other non-financial assets

   212.12

   Property, plant and equipment

   212.13

   Leases

   222.14

   Investment property

   232.15

   Intangible assets other than goodwill

   232.16

   Goodwill

   232.17

   Impairment of non-financial assets other than goodwill

   242.18

   Assets of a disposal group held for sale

   242.19

   Income taxes

   242.20

   Employees benefits

   252.21

   Provisions

   252.22

   Revenue recognition

   252.23

   Commercial agreements with distributors and supermarket chains

   262.24

   Cost of sales of products

   262.25

   Other expenses by function

   262.26

   Distribution expenses

   262.27

   Administration expenses

   272.28

   Environment liabilities

   272.29

   Reclassification to the Consolidated Financial Statements of previous years

   27NOTE 3 ESTIMATES AND APPLICATION OF PROFESSIONAL JUDGMENT

   29NOTE 4 ACCOUNTING CHANGES

   29NOTE 5 RISK ADMINISTRATION

   30NOTE 6 FINANCIAL INSTRUMENTS

   36NOTE 7 FINANCIAL INFORMATION AS PER OPERATING SEGMENTS

   42NOTE 8 BUSINESS COMBINATIONS

   49NOTE 9 NET SALES

   49NOTE 10 NATURE OF COST AND EXPENSE

   50NOTE 11 FINANCIAL RESULTS

   50


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NOTE 12 OTHER INCOME BY FUNCTION

   50NOTE 13 OTHER GAINS (LOSSES)

   51NOTE 14 CASH AND CASH EQUIVALENTS

   51NOTE 15 ACCOUNTS RECEIVABLES – TRADE AND OTHER RECEIVABLES

   52NOTE 16 ACCOUNTS AND TRANSACTIONS WITH RELATED COMPANIES

   55NOTE 17 INVENTORIES

   60NOTE 18 BIOLOGICAL CURRENT ASSETS

   61NOTE 19 OTHER NON-FINANCIAL ASSETS

   62NOTE 20 INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

   62NOTE 21 INTANGIBLE ASSETS OTHER TAN GOODWILL

   65NOTE 22 GOODWILL

   67NOTE 23 PROPERTY, PLANT AND EQUIPMENT

   69NOTE 24 INVESTMENT PROPERTY

   71NOTE 25 ASSETS OF DISPOSAL GROUP HELD FOR SALE

   72NOTE 26 INCOME TAXES

   73NOTE 27 OTHER FINANCIAL LIABILITIES

   76NOTE 28 ACCOUNTS PAYABLE – TRADE AND OTHER PAYABLES

   91NOTE 29 PROVISIONS

   91NOTE 30 OTHER NON-FINANCIAL LIABILITIES

   92NOTE 31 EMPLOYEE BENEFITS

   92NOTE 32 NON-CONTROLLING INTERESTS

   95NOTE 33 COMMON SHAREHOLDERS’ EQUITY

   96NOTE 34 EFFECTS OF CHANGES IN CURRENCY EXCHANGE RATE

   100NOTE 35 CONTINGENCIES AND COMMITMENTS

   104NOTE 36 ENVIRONMENT

   107NOTE 37 SUBSEQUENT EVENTS

   109


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Consolidated Statement of Financial Position (Assets)

   (Figures expressed in thousands of Chilean pesos)
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION  ASSETS

   Notes

   As of December 31, 2015

   As of December 31, 2014 (Restated)

   (*)

   As of January 1, 2014 (Restated)

   

   (*)ThCh$

   ThCh$

   ThCh$Current assetsCash and cash equivalent

   14

   192,554,239

   214,774,876

   408,853,267Other financial assets

   6

   13,644,105

   6,483,652

   4,468,846Other non-financial assets

   19

   17,654,373

   18,558,445

   21,495,398Accounts receivable-trade and other receivables

   15

   252,225,937

   238,602,893

   211,504,047Accounts receivable from related companies

   16

   4,788,930

   11,619,118

   9,610,305Inventories

   17

   174,227,415

   167,545,598

   146,955,193Biological current assets

   18

   7,633,340

   7,633,591

   6,130,652Taxes receivables

   26

   15,264,220

   19,413,414

   9,139,406Total current assets different from assets of disposal group held for sale

   

   677,992,559

   684,631,587

   818,157,114Assets of disposal group held for sale

   25

   6,319,316

   758,760

   339,901Total assets of disposal group held for sale

   

   6,319,316

   758,760

   339,901Total current assets

   

   684,311,875

   685,390,347

   818,497,015Non-current assetsOther financial assets

   6

   80,217

   343,184

   38,899Other non-financial assets

   19

   27,067,454

   5,828,897

   15,281,111Accounts receivable from related companies

   16

   445,938

   522,953

   350,173Investments accounted by equity method

   20

   49,995,263

   31,998,620

   17,563,028Intangible assets other than goodwill

   21

   64,120,426

   68,656,895

   64,033,931Goodwill

   22

   83,300,573

   86,779,903

   81,872,847Property, plant and equipment (net)

   23

   872,667,210

   851,255,642

   698,656,429Investment property

   24

   6,838,002

   7,917,613

   6,901,461Deferred tax assets

   26

   34,529,593

   30,207,019

   24,525,361Total non-current assets

   

   1,139,044,676

   1,083,510,726

   909,223,240Total Assets

   1,823,356,551

   1,768,901,073

   1,727,720,255
  (*)SeeNote 2,29 and 4.  F-4   The accompanying notes 1 to 37 are an integral part of these consolidated financial statements.


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Consolidated Statement of Financial Position (Liabilities and Equity)

   (Figures expressed in thousands of Chilean pesos)
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION   LIABILITIES AND EQUITY

   Notes

   As of December 31, 2015

   As of December 31, 2014 (Restated)

   (*)

   As of January 1, 2014 (Restated)

   

   (*)LIABILITIES

   ThCh$

   ThCh$

   ThCh$Current liabilitiesOther financial liabilities

   27

   43,973,991

   65,318,293

   120,488,188Accounts payable-trade and other payables

   28

   227,736,803

   203,782,805

   183,508,115Accounts payable- to related companies

   16

   11,624,218

   10,282,312

   7,286,064Other short-term provisions

   29

   503,440

   410,259

   833,358Tax liabilities

   26

   12,198,024

   11,697,135

   10,916,865Employee benefits provisions

   31

   21,712,059

   17,943,771

   20,217,733Other non-financial liabilities

   30

   70,942,144

   68,896,763

   65,878,578Total current liabilities

   

   388,690,679

   378,331,338

   409,128,901Non-current liabilitiesOther financial liabilities

   27

   136,926,545

   134,534,557

   142,763,030Others accounts payable

   28

   1,645,098

   369,506

   841,870Accounts payable to related companies

   16

   -

   -

   377,020Other long-term provisions

   29

   1,476,518

   2,209,832

   2,135,122Deferred tax liabilities

   26

   88,146,963

   87,518,700

   73,033,414Employee benefits provisions

   31

   18,948,603

   17,437,222

   15,196,620Total non-current liabilities

   

   247,143,727

   242,069,817

   234,347,076Total liabilities

   

   635,834,406

   620,401,155

   643,475,977EQUITYEquity attributable to equity holders of the parent

   33Paid-in capital

   

   562,693,346

   562,693,346

   562,693,346Other reserves

   

   (103,226,416)

   (75,050,544)

   (65,881,809)Retained earnings

   

   598,349,442

   537,945,375

   491,864,319Subtotal equity attributable to equity holders of the parent

   

   1,057,816,372

   1,025,588,177

   988,675,856Non-controlling interests

   32

   129,705,773

   122,911,741

   95,568,422Total Shareholders' Equity

   1,187,522,145

   1,148,499,918

   1,084,244,278Total Liabilities and Shareholders' Equity

   1,823,356,551

   1,768,901,073

   1,727,720,255
  (*)SeeNote 2,29 and 4.  F-5   The accompanying notes 1 to 37 are an integral part of these consolidated financial statements.


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Consolidated Statement of Income

   (Figures expressed in thousands of Chilean pesos)
 CONSOLIDATED STATEMENT OF INCOME   CONSOLIDATED STATEMENT OF INCOME

   Notes

   For the years ended December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Net sales

   9

   1,498,371,715

   1,297,966,299

   1,197,226,510Cost of sales

   10

   (685,075,251)

   (604,536,815)

   (536,696,634)Gross margin

   

   813,296,464

   693,429,484

   660,529,876Other income by function

   12

   6,577,244

   25,463,716

   5,508,863Distribution costs

   10

   (277,599,722)

   (240,848,630)

   (221,701,175)Administrative expenses

   10

   (128,135,799)

   (110,014,716)

   (93,289,698)Other expenses by function

   10

   (209,201,189)

   (188,109,562)

   (162,782,032)Other gains (losses)

   13

   8,512,000

   4,036,939

   958,802Income from operational activities

   

   213,448,998

   183,957,231

   189,224,636Financial Income

   11

   7,845,743

   12,136,591

   8,254,170Financial costs

   11

   (23,101,329)

   (22,957,482)

   (24,084,226)Equity and income of joint ventures and associated

   20

   (5,228,135)

   (898,607)

   308,762Foreign currency exchange differences

   11

   957,565

   (613,181)

   (4,292,119)Result as per adjustment units

   11

   (3,282,736)

   (4,159,131)

   (1,801,765)Income before taxes

   

   190,640,106

   167,465,421

   167,609,458Income taxes

   26

   (50,114,516)

   (46,673,500)

   (34,704,907)Net income of year

   

   140,525,590

   120,791,921

   132,904,551Net income attibutable to:Equity holders of the parent

   

   120,808,135

   106,238,450

   123,036,008Non-controlling interests

   32

   19,717,455

   14,553,471

   9,868,543Net income of year

   

   140,525,590

   120,791,921

   132,904,551Net income per share (Chilean pesos) from:Continuing operations

   

   326.95

   287.52

   370.81Diluted earnings per share (Chilean pesos) from:Continuing operations

   

   326.95

   287.52

   355.57
    F-6   The accompanying notes 1 to 37 are an integral part of these consolidated financial statements.


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Consolidated Statement of Comprehensive Income

   (Figures expressed in thousands of Chilean pesos)
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

   Notes

   For the years ended December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Net income of year

   

   140,525,590

   120,791,921

   132,904,551Other income and expenses charged or credited againts equityCash flow hedges (1)

   33

   80,693

   (155,258)

   256,592Exchange differences of foreign subsidiaries (1)

   33

   (29,678,944)

   (4,629,683)

   (17,054,187)Gains (losses) from defined plans

   33

   (939,433)

   (1,884,054)

   (469,987)Income tax related with cash flow hedge (1)

   33

   (17,563)

   39,470

   (51,304)Income tax relating to defined benefit plans

   33

   314,541

   501,689

   105,151Total other comprehensive income and expense

   

   (30,240,706)

   (6,127,836)

   (17,213,735)Comprehensive income and expense

   

   110,284,884

   114,664,085

   115,690,816Comprehensive income originated by:Equity holders of the parent (2)

   

   92,606,720

   97,067,296

   107,443,199Non-controlling interests

   

   17,678,164

   17,596,789

   8,247,617Comprehensive income and expense

   

   110,284,884

   114,664,085

   115,690,816
  (1)These items will be reclassified to Consolidated Statement of Income when they are settled. (2)Corresponds to the income for the year where no income or expenses have been recorded directly against shareholder ́s equity.  .  F-7   The accompanying notes 1 to 37 are an integral part of these consolidated financial statements.


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Consolidated Statement of Changes in Equity

   (Figures expressed in thousands of Chilean pesos)
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY   STATEMENT OF CHANGES IN EQUITY

   Paid in capital

   Other reserves

   Retained earnings

   Equity attributable to equity holders of the parent

   Non-controlling interests

   Total Shareholders' EquityCommon Stock

   Shares premium

   Currency translation difference

   Hedge reserves

   Actuarial gains and losses on defined benefit plans reserves

   Other reservesThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Balanced as of January 1, 2013

   215,540,419

   15,479,173

   (44,675,962)

   (98,990)

   -

   (3,371,276)

   430,346,315

   613,219,679

   97,298,607

   710,518,286ChangesInterim dividends (1)

   -

   -

   -

   -

   -

   -

   (23,278,681)

   (23,278,681)

   -

   (23,278,681)Interim dividends according to policy (2)

   -

   -

   -

   -

   -

   -

   (38,239,323)

   (38,239,323)

   -

   (38,239,323)Other increase (decrease) in Equity (5)

   -

   -

   -

   -

   -

   -

   -

   -

   (4,961,354)

   (4,961,354)Effects business combination

   -

   -

   -

   -

   -

   -

   -

   -

   3,138,195

   3,138,195Other increase (decrease) in Equity (4)

   15,479,173

   (15,479,173)

   -

   -

   -

   -

   -

   -

   -

   -Increase (decrease) through changes in ownership interests in subsidaries that do not result in loss of control (3)

   -

   -

   -

   -

   -

   2,867,444

   -

   2,867,444

   (8,154,643)

   (5,287,199)Issuance Equity (4)

   331,673,754

   -

   -

   -

   -

   (5,010,216)

   -

   326,663,538

   -

   326,663,538Comprehensive income and expense

   -

   -

   (15,408,235)

   164,099

   (348,673)

   -

   123,036,008

   107,443,199

   8,247,617

   115,690,816Total changes in equity

   347,152,927

   (15,479,173)

   (15,408,235)

   164,099

   (348,673)

   (2,142,772)

   61,518,004

   375,456,177

   (1,730,185)

   373,725,992AS OF DECEMBER 31, 2013

   562,693,346

   -

   (60,084,197)

   65,109

   (348,673)

   (5,514,048)

   491,864,319

   988,675,856

   95,568,422

   1,084,244,278Balanced as of January 1, 2014

   562,693,346

   -

   (60,084,197)

   65,109

   (348,673)

   (5,514,048)

   491,864,319

   988,675,856

   95,568,422

   1,084,244,278ChangesInterim dividends (1)

   -

   -

   -

   -

   -

   -

   (23,278,681)

   (23,278,681)

   -

   (23,278,681)Interim dividends according to policy (2)

   -

   -

   -

   -

   -

   -

   (36,500,001)

   (36,500,001)

   -

   (36,500,001)Other increase (decrease) in Equity (3)

   -

   -

   -

   -

   -

   2,419

   (378,712)

   (376,293)

   (8,594,222)

   (8,970,515)Effects business combination

   -

   -

   -

   -

   -

   -

   -

   -

   18,340,752

   18,340,752Comprehensive income and expense

   -

   -

   (7,698,661)

   (108,479)

   (1,364,014)

   -

   106,238,450

   97,067,296

   17,596,789

   114,664,085Total changes in equity

   -

   -

   (7,698,661)

   (108,479)

   (1,364,014)

   2,419

   46,081,056

   36,912,321

   27,343,319

   64,255,640AS OF DECEMBER 31, 2014

   562,693,346

   -

   (67,782,858)

   (43,370)

   (1,712,687)

   (5,511,629)

   537,945,375

   1,025,588,177

   122,911,741

   1,148,499,918Balanced as of January 1, 2015

   562,693,346

   -

   (67,782,858)

   (43,370)

   (1,712,687)

   (5,511,629)

   537,945,375

   1,025,588,177

   122,911,741

   1,148,499,918ChangesInterim dividends (1)

   -

   -

   -

   -

   -

   -

   (24,387,190)

   (24,387,190)

   -

   (24,387,190)Interim dividends according to policy (2)

   -

   -

   -

   -

   -

   -

   (36,016,878)

   (36,016,878)

   -

   (36,016,878)Other increase (decrease) in Equity (5)

   -

   -

   -

   -

   -

   25,543

   -

   25,543

   (10,884,132)

   (10,858,589)Comprehensive income and expense

   -

   -

   (27,652,528)

   40,844

   (589,731)

   -

   120,808,135

   92,606,720

   17,678,164

   110,284,884Total changes in equity

   -

   -

   (27,652,528)

   40,844

   (589,731)

   25,543

   60,404,067

   32,228,195

   6,794,032

   39,022,227AS OF DECEMBER 31, 2015

   562,693,346

   -

   (95,435,386)

   (2,526)

   (2,302,418)

   (5,486,086)

   598,349,442

   1,057,816,372

   129,705,773

   1,187,522,145
  (1)Related to declared dividends at December 31 of each year and paid during January of the following year, as agreed by the Board of Directors. (2)Corresponds to the differences between CCU’s policy to distribute a minimum dividend of at least 50% of the income (Note 33) based on the local statutory reported to SVS and the interim dividends declared at December 31 of each year. (3)In 2013, the Company acquired additional interests in Viña San Pedro Tarapacá S.A. with a carrying value to ThCh$ 8,153,946 resulting in an increase to Other reserves of ThCh$ 2,526,520Note 1 (1).Additionally, as a part of the balance of 2013 recorded ThCh$ 341,169 related to an increase in additional interest in Saenz Briones & Cía S.A.I.C. (4)SeeNote 33, paid in capital. (5)Mainly related to dividends to Non-controlling interest.   F-8


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Consolidated Statement of Cash Flow

   (Figures expressed in thousands of Chilean pesos)
 CONSOLIDATED STATEMENT OF CASH FLOW  CONSOLIDATED STATEMENT OF CASH FLOW

   Notes

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Net cash flows from (used in) operational activitiesCollection classes:Proceeds from goods sold and services rendered

   

   1,770,338,769

   1,584,494,230

   1,464,286,085Other proceeds from operating activities

   

   20,467,143

   30,247,374

   19,057,966Types of payments:Payments of operating activities

   

   (1,120,571,275)

   (1,051,616,618)

   (950,888,252)Payments of salaries

   

   (178,915,580)

   (171,898,347)

   (145,277,349)Other payments for operating activities

   

   (220,365,087)

   (162,644,788)

   (154,495,134)Dividends received

   

   45,492

   75,169

   95,463Interest paid

   

   (19,813,502)

   (20,757,207)

   (21,112,371)Interest received

   

   6,476,628

   10,763,936

   8,244,764Income tax reimbursed (paid)

   

   (44,584,176)

   (44,208,661)

   (26,390,153)Other cash movements

   13

   6,432,460

   (833,425)

   634,480Net cash flows from (used in) operational activities

   

   219,510,872

   173,621,663

   194,155,499Cash flows from (used in) investing activitiesCash flows used for control of subsidaries or other businesses

   14

   -

   (8,369)

   (14,566,278)Cash flows used in the purchase of non-controlling interests

   14

   (1,921,245)

   (13,776,885)

   -Proceeds from payments of Associates

   

   6,709,845

   -

   -Other payments to acquire interests in joint ventures

   14

   (42,163,032)

   (1,445,478)

   -Proceeds from sale of property, plan and equipment

   

   2,776,474

   2,587,448

   1,740,687Acquisition of property, plant and equipment

   

   (129,668,910)

   (227,863,039)

   (122,451,045)Purchases of intangibles assets

   

   (2,062,012)

   (2,217,113)

   (2,107,984)Other cash movements

   

   518,711

   3,753,297

   466,710Net cash flows from (used in) investing activities

   

   (165,810,169)

   (238,970,139)

   (136,917,910)Cash flows from (used in) financing activitiesPayments for changes in ownership interests in subsidaries

   14

   -

   -

   (5,627,425)Proceeds from long-term loans

   

   19,570,689

   15,482,763

   10,852,892Porceeds from short-term loans

   

   23,358,700

   21,882,842

   12,040,310Total amount from loans

   

   42,929,389

   37,365,605

   22,893,202Loan payments

   

   (54,797,023)

   (20,766,024)

   (22,343,703)Proceeds from issuing shares

   

   -

   -

   326,663,538Payments of finance lease liabilities

   

   (1,697,649)

   (1,745,210)

   (1,641,370)Payments of loan from related entities

   

   (601,494)

   (223,225)

   (1,479,201)Dividends paid

   

   (66,147,145)

   (65,315,914)

   (63,680,979)Other cash movements

   

   (2,525,569)

   (81,470,807)

   (3,162,277)Net cash flows from (used in) financing activities

   

   (82,839,491)

   (132,155,575)

   251,621,785Net increase (decrease) in cash equivalents, before the effect of changes in exchange rate

   (29,138,788)

   (197,504,051)

   308,859,374Effects of changes in exchange rates on cash and cash equivalents

   

   6,918,151

   3,425,660

   (2,343,382)Cash and cash equivalents, initial balance

   

   214,774,876

   408,853,267

   102,337,275Cash and cash equivalents, final balance

   14

   192,554,239

   214,774,876

   408,853,267
   F-9


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 1General Information  Compañía Cervecerías Unidas S.A. (CCU, or the Company or the Parent Company) was incorporated in Chile as an open stock company, and it is registered in the Securities Record of the Superintendencia de Valores y Seguros de Chile (Local Superintendence of Equity Securities, SVS) under No 0007, consequently, the Company is subject to Regulation by the SVS. The Company’s shares are quoted in Chile on the Santiago Stock Exchange, Electronic Stock Exchange and Valparaíso Stock Exchange. The Company is also registered with the United States of America Securities and Exchange Commission (SEC) and it quotes its American Depositary Shares (ADS) on the New York Stock Exchange (NYSE). There was an amendment to the Deposit Agreement dated December 3, 2012, between the Company, JP Morgan Chase Bank, NA and all holders of ADRs. According to this Amendment, there was an ADS ratio change from 1 ADS to 5 common shares to a new ratio of 1 ADS to 2 common shares. There was no change to CCU's underlying ordinary shares. This action was effective on December 20, 2012.  CCU is a diversified beverage company, with operations mainly in Chile, Argentina, Uruguay, Paraguay, Colombia and Bolivia. CCU is the largest Chilean brewery, the second largest brewery in Argentina, the second largest producer of soft drinks in Chile, the second-largest wine producer in Chile, the largest bottler of mineral water and nectar in Chile and one of the largest pisco producer in Chile. It also participates in the business of Home and Office Delivery (“HOD”), in a business of home delivery of purified water in bottles through the use of dispensers, and in the rum and candy in Chile. It participates in the industry of the ciders, spirits and wines in Argentina and also participates in the industry of mineral water and soft drinks and beer distribution in Uruguay, Paraguay, Colombia and Bolivia.  In Chile and abroad, CCU and its subsidiaries are the owners of a wide range of brands, under which market our products. In the domestic market, its portfolio of brands in the beer category consists among others of Cristal, Cristal Light, Cristal Cero, 0°, Escudo, Kunstmann, Austral, Dolbeck, Royal Guard, Morenita, Dorada and Lemon Stones. It holds exclusive license to produce and market Heineken, Sol and Coors. In Chile, the Company is the exclusive distributor of Tecate and Blue Moon beer.  In Argentina, CCU produces beers in its plants located in the cities of Salta, Santa Fé and Luján. Its main brands are Schneider, Imperial, Palermo, Santa Fé, Salta, Córdoba and are the holders of exclusive license for the production and marketing of Budweiser, Heineken, Amstel and Sol. CCU also imports Guiness and Kunstmann. Additionally, exports beer to different countries in the region mainly under the Schneider, Heineken and Budweiser brands. In Argentina, CCU is the exclusive distributor of the energy drink Red Bull. Besides, participates in the cider business, controlling of Saenz Briones. In these categories, its portfolio brands are Sidra Real and “1888”. Also participates in the spirits business, which is marketed under the brand El Abuelo, as well as import other liquors from Chile.  In Uruguay, the Company participates in the mineral waters and soft drinks business with Native and Nix brand, respectively. In addition, it sells beers imported under Heineken, Schneider and Kuntsmann brand and cider Sidra Real.  In Paraguay, the Company participates in the non-alcoholic beverages and beer business since December 2013. Its portfolio of non-alcoholic brands consists of Pulp, Watt's and La Fuente. These brands include own, licensed and imported. In the beer business, the Company imports Heineken, Coors Light, Coors 1873, Schneider, Paulaner and Kunstmann, brands.  In Colombia, CCU participates in the business of beers and malts since November 2014. Its portfolio of beers include licensed and imported Heineken, Amstel, Murphys and Buckler brands. Its has of exclusive license for the importation, distribution and production of Heineken. It holds exclusive license to produce and market Coors and Coors Light.  In Bolivia, the Company participates in the non-alcoholic and alcoholic business since May 2014. Its portfolio of non-alcoholic brands consist of Mendocina, Free cola, Sinalco, Cordillera and Real. These brands include own and licensed. The alcoholic brands consist of Real and Capital. It has of exclusive license for the importation and distribution of Heineken and the energy drink Monster.  Within the non-alcoholic, in Chile Operating segment, CCU has the Bilz,Pap, Kem, Kem Xtreme, Nobis, Cachantun, Cachantun Más, Mas Woman and Porvenir brands. Regarding the HOD category, CCU has the Manantial brand. The Company, directly or through its subsidiaries, has license agreements with Pepsi, 7up, Mirinda, Gatorade, Adrenaline Red, Sobe LifeWater, Lipton Ice Tea, Ocean Spray, Crush, Canada Dry Limón Soda, Canada Dry Ginger Ale, Canada Dry Agua Tónica, Nestlé Pure Life, Perrier,  Watt ́s and Frugo. In Chile,CCU is the exclusive distributor of the energy drink Red Bull.  Besides, throught of joint operation also owns the Sprim and Fructus and the licencse Vivo and Caricia brands.  In the spirits, in Chile Operating segment, in the category of pisco, CCU owns the brand Mistral, Campanario, Horcón Quemado,  Control C, Tres Erres, La Serena and Ruta cocktail, and their respective extensions. In rum category Company owns thebrands Sierra Morena and their extensions and Cabo Viejo. The Company has the Fehrenberg brand and is exclusive distributor in Chile of Pernod Ricard’s products.


F-10

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  In the Wine Operating segment, through its subsidiary Viña San Pedro Tarapacá S.A. (“VSPT”), produces wines and sparkling, which are sold in the domestic and overseas markets exporting to more than 80 countries.Its main brands are Altaïr, Sideral,  Cabo de Hornos, Kankana del Elqui, Tierras Moradas, 1865, Castillo de Molina, Épica, 35 Sur Reserva, 35 Sur, Urmeneta, GatoNegro, Gato, Manquehuito Pop Wine, San Pedro Exportación. The brands ́s portfolio of Viña Tarapacá includes: TaraPakay, Gran Reserva, Gran Tarapacá, León de Tarapacá and Tarapacá Varietal. The brands ́s portfolio of Viña Santa Helena includes: Parras Viejas, Vernus, Selección del Directorio, Siglo de Oro, Santa Helena Varietal, Alpaca, Gran Vino and Santa Helena. VSPT also participates in Chile and international market with vines Misiones de Rengo, Viña Mar, Casa Rivas, Leyda and Finca La Celia and Tamari in Argentina.  The joint venture in Foods Compañía de Alimentos CCU S.A. ("Foods"), who participates in the business of snacks and food in Chile, sold Calaf and Natur brands to Empresas Carozzi S.A. Foods maintains its share of the brand Nutra Bien.  The detail of the described licenses appears below:  Main brands under licenseLicenses

   Validity DateAmstel in Argentina (1)

   July 2022Austral (2)

   July 2016Blue Moon in Chile (3)

   December 2021Budweiser in Argentina

   December 2025Coors in Chile (4)

   December 2025Coors in Argentina (5)

   December 2019Crush, Canada Dry (Ginger Ale, Agua Tónica and Limón Soda) in Chile (6)

   December 2018Gatorade in Chile (7)

   December 2018Heineken in Bolivia (8)

   December 2024Heineken in Chile and Argentina (9)

   10 years renewablesHeineken in Colombia (10)

   March 2028Heineken in Paraguay (8)

   November 2022Heineken in Uruguay (9)

   10 years renewablesNestlé Pure Life (6)

   December 2017Pepsi, Seven Up and Mirinda

   December 2043Red Bull in Argentina

   December 2017Red Bull in Chile (11)

   IndefinitelySol in Chile and Argentina (9)

   10 years renewablesTé Lipton in Chile

   March 2020Watt's (nectars, fruit-based drinks and other) rigid packaging, except carton (12)

   indefinitely
  (1)   After the initial termination date, license is automatically renewed under the same conditions (Rolling Contract), each year for a period of 10 years, unless notice of non-renewal is given. (2)   Renewable for periods of two years, subject to the compliance of the contract conditions           . (3)   If Renewal criteria have been satisfied, renewable through December, 2025, thereafter shall automatically renew every year for a new term of 5 years (Rolling Contract). (4)   After the initial termination date, license is automatically renewed under the same conditions (Rolling Contract), each year for a period of 5 years, subject to the compliance of the contract conditions. (5)   License renewable for one period of 5 years, subject to the compliance of the contract conditions. (6)   License renewable for periods of 5 years, subject to the compliance of the contract conditions. (7)   Renewable for an additional period equal to the duration of the Shareholders Agreement of Bebidas CCU-PepsiCo SpA., subject to the compliance of the contract conditions. (8)   License for 10 years, automatically renewable for periods of 5 years, unless notice of non-renewal. (9)   License for 10 years, automatically renewable on the same terms (Rolling Contract), each year for a period of 10 years, unless notice of non-renewal is given. (10) After the initial termination date, License is automatically renewable each year for a period of 5 years (Rolling Contract), unless notice of non-renewal is given. (11) Indefinite contract, notice of termination 6 months in advance. The earliest possible effective date of termination is October 31, 2018. (12) Indefinite contract, subject to the compliance of the contract conditions  The Company’s address and main office is located in Santiago, Chile, at Avenida Vitacura No 2670, Las Condes district and its tax identification number (Rut) is 90,413,000-1. 
 F-11


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  As of December 31, 2015 the Company had a total of  8,100 employees according to the following detail:  Number of employesParent company

   ConsolidatedMain Executives

   86

   400Professionals and techniciens

   252

   2,138Workers

   27

   5,562Total

   365

   8,100
  Compañía Cervecerías Unidas S.A. is under the control of Inversiones y Rentas S.A. (IRSA), which is the direct and indirect owner of 60% of the Company shares. IRSA is currently a joint venture between Quiñenco S.A. and Heineken Chile Limitada, a company controlled by Heineken Americas B.V, each with a 50% equity participation.  The consolidated financial statements include the following direct and indirect significant subsidiaries where the percentage of participation represents the economic interests at the consolidated level:  Subsidiary

   Tax ID

   Country of origin

   Functional currency

   Share percentage direct and indirectAs of December 31, 2015

   As of December 31, 2014Direct

   Indirect

   Total

   TotalCervecera CCU Chile Limitada

   96,989,120-4

   Chile

   Chilean pesos

   99.7500

   0.2499

   99.9999

   99.9999Embotelladora Chilenas Unidas S.A. (4)

   99,501,760-1

   Chile

   Chilean pesos

   97.7746

   2.1592

   99.9338

   99.9433Cía. Cervecerías Unidas Argentina S.A.

   0-E

   Argentina

   Argentine pesos

   -

   99.9923

   99.9923

   99.9923Viña San Pedro Tarapacá S.A.

   91,041,000-8

   Chile

   Chilean pesos

   -

   64.6980

   64.6980

   64.6980Compañía Pisquera de Chile S.A.

   99,586,280-8

   Chile

   Chilean pesos

   46.0000

   34.0000

   80.0000

   80.0000Transportes CCU Limitada

   79,862,750-3

   Chile

   Chilean pesos

   98.0000

   2.0000

   100.0000

   100.0000CCU Investments Limited

   0-E

   Islas Cayman

   Chilean pesos

   99.9999

   0.0001

   100.0000

   100.0000Inversiones INVEX DOS CCU Limitada

   76,126,311-0

   Chile

   Chilean pesos

   99.6451

   0.3548

   99.9999

   99.9997CRECCU S.A.

   76,041,227-9

   Chile

   Chilean pesos

   99.9602

   0.0398

   100.0000

   100.0000Fábrica de Envases Plásticos S.A.

   86,150,200-7

   Chile

   Chilean pesos

   90.9100

   9.0866

   99.9966

   99.9966Southern Breweries Establishment

   0-E

   Vaduz-Liechtenstein

   Chilean pesos

   50.0000

   49.9553

   99.9553

   99.9553Comercial CCU S.A.

   99,554,560-8

   Chile

   Chilean pesos

   50.0000

   49.9866

   99.9866

   99.9866CCU Inversiones S.A. (1)

   76,593,550-4

   Chile

   Chilean pesos

   98.8398

   1.1334

   99.9732

   99.9732Millahue S.A.

   91,022,000-4

   Chile

   Chilean pesos

   99.9621

   -

   99.9621

   99.9621Aguas CCU-Nestlé Chile S.A. (2)

   76,007,212-5

   Chile

   Chilean pesos

   -

   50.0716

   50.0716

   50.0716CCU Inversiones II Limitada (3)

   76,349,531-0

   Chile

   Chilean pesos

   80.0000

   19.9946

   99.9946

   99.9946Compañía Cervecera Kunstmann S.A.

   96,981,310-6

   Chile

   Chilean pesos

   50.0007

   -

   50.0007

   50.0007Inversiones INVEX TRES Limitada

   76,248,389-0

   Chile

   Chilean pesos

   99.0000

   0.9884

   99.9884

   99.9884Milotur S.A.

   0-E

   Uruguay

   Uruguayan pesos

   100.0000

   -

   100.0000

   100.0000Coralina S.A.

   0-E

   Uruguay

   Uruguayan pesos

   100.0000

   -

   100.0000

   100.0000Marzurel S.A.

   0-E

   Uruguay

   Uruguayan pesos

   100.0000

   -

   100.0000

   100.0000Bebidas del Paraguay S.A. (3)

   0-E

   Paraguay

   Paraguayan guarani

   50.0050

   -

   50.0050

   50.0050Distribuidora del Paraguay S.A. (3)

   0-E

   Paraguay

   Paraguayan guarani

   49.9590

   -

   49.9590

   49.9590Bebidas Ecusa SpA. (4)

   76,517,798-7

   Chile

   Chilean pesos

   -

   99.9338

   99.9338

   -
  
 F-12


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 In addition to the table presented above, below are the percentages of participation with voting rights, in each of the subsidiaries as of December 31, 2015 and 2014, respectively. Each shareholder has one vote per share which he owns or represents. The percentage of participation with voting rights represents the sum of the direct participation and indirect participation via subsidiary.  Subsidiary

   Tax ID

   Country of origin

   Functional currency

   Share percentage with voting rightsAs of December 31, 2015

   As of December 31, 2014%

   %Cervecera CCU Chile Limitada

   96,989,120-4

   Chile

   Chilean pesos

   100.0000

   100.0000Embotelladora Chilenas Unidas S.A. (4)

   99,501,760-1

   Chile

   Chilean pesos

   99.9338

   99.9444Cía. Cervecerías Unidas Argentina S.A.

   0-E

   Argentina

   Argentine pesos

   100.0000

   100.0000Viña San Pedro Tarapacá S.A.

   91,041,000-8

   Chile

   Chilean pesos

   64.6980

   64.6980Compañía Pisquera de Chile S.A.

   99,586,280-8

   Chile

   Chilean pesos

   80.0000

   80.0000Transportes CCU Limitada

   79,862,750-3

   Chile

   Chilean pesos

   100.0000

   100.0000CCU Investments Limited

   0-E

   Islas Cayman

   Chilean pesos

   100.0000

   100.0000Inversiones INVEX DOS CCU Limitada

   76,126,311-0

   Chile

   Chilean pesos

   100.0000

   100.0000CRECCU S.A.

   76,041,227-9

   Chile

   Chilean pesos

   100.0000

   100.0000Fábrica de Envases Plásticos S.A.

   86,150,200-7

   Chile

   Chilean pesos

   100.0000

   100.0000Southern Breweries Establishment

   0-E

   Vaduz-Liechtenstein

   Chilean pesos

   100.0000

   100.0000Comercial CCU S.A.

   99,554,560-8

   Chile

   Chilean pesos

   100.0000

   100.0000CCU Inversiones S.A. (1)

   76,593,550-4

   Chile

   Chilean pesos

   99.9737

   99.9737Millahue S.A.

   91,022,000-4

   Chile

   Chilean pesos

   99.9621

   99.9621Aguas CCU-Nestlé Chile S.A. (2)

   76,007,212-5

   Chile

   Chilean pesos

   50.1000

   50.1000CCU Inversiones II Limitada (3)

   76,349,531-0

   Chile

   Chilean pesos

   100.0000

   100.0000Compañía Cervecera Kunstmann S.A.

   96,981,310-6

   Chile

   Chilean pesos

   50.0007

   50.0007Inversiones INVEX TRES Limitada

   76,248,389-0

   Chile

   Chilean pesos

   100.0000

   100.0000Milotur S.A.

   0-E

   Uruguay

   Uruguayan pesos

   100.0000

   100.0000Coralina S.A.

   0-E

   Uruguay

   Uruguayan pesos

   100.0000

   100.0000Marzurel S.A.

   0-E

   Uruguay

   Uruguayan pesos

   100.0000

   100.0000Bebidas del Paraguay S.A. (3)

   0-E

   Paraguay

   Paraguayan guarani

   50.0050

   50.0050Distribuidora del Paraguay S.A. (3)

   0-E

   Paraguay

   Paraguayan guarani

   49.9590

   49.9590Bebidas Ecusa SpA. (4)

   76,517,798-7

   Chile

   Chilean pesos

   99.9338

   -
  The main movements in the ownership of the subsidiaries included in these consolidated financial statements are the following:  (1)  CCU Inversiones S.A.  In September and November, 2012, the Company, through its subsidiary CCU Inversiones S.A., acquired an additional 10.4430% interest in Viña San Pedro Tarapacá S.A. for ThCh$ 12,521,899 increasing its ownership interest to 60.4488%. Subsequently, during 2013, acquired an additional 4.2664% interest for ThCh$ 5,627,425 increasing its ownership interest to 64.7153%. As the Company has control of this subsidiary, the difference of ThCH$ 7,254,957 and ThCh$ 2,527,217 generated between purchase price and the equity method value was recorded under the item Other reserves in Equity in 2012 and 2013, respectively.  (2) Aguas CCU-Nestlé S.A.  On December 24, 2012, the Company, through the subsidiary Aguas CCU-Nestlé S.A., acquired 51.01% of shares of Manantial S.A. for ThCh$ 9,416,524. Manantial S.A. isa Chilean company that specializes in purified water in bottlesforhome and office, use through dispensers referred to internationally as HOD (Home and Office Delivery). Subsequently, on June 7, 2013, the Company paid the outstanding balance of ThCh$ 1,781,909.   
 F-13


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 (3) CCU Inversiones II Limitada  As explained inNote 20, the Company participates of 50% of shares of Central Cervecera de Colombia S.A.S.  As explained inNote 8, duringDecember 2013, the Company acquired 50.005% and 49.959% of the stock of Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A., respectively. This transaction allows the Company, participates in the beer distribution business, and production and marketing of non-alcoholic drinks, waters and nectars. The total amount of this transaction was ThCh$ 11,254,656. Subsequently, on June 9, 2015, the Company paid a committed capital of ThCh$ 7,414,290.  (4) Embotelladoras Chilenas Unidas S.A.  On November 16, 2015,formed a new company calledBebidas ECUSA SpA.,where the subsidiary Embotelladoras Chilenas Unidas S.A. has the 99.9338% of participation. The purpose of this companyis the distribution, transport, import, export and marketing in general, on all types of soft drinks.  Below we briefly describe the companies that qualify as joint operations:  (a)Promarca S.A.  Promarca S.A. is a closed stock company with its main activity being the acquisition, development and administration of trademarks and their corresponding licenses to their operators.  OnDecember 31, 2015, Promarca S.A. recorded a profit of ThCh$ 4,708,318 (ThCh$ 4,646,620 in 2014 and ThCh$ 4,540,335 in 2013), which in accordance with the Company ́s policies is 100% distributable.  (b) Compañía Pisquera Bauzá S.A.  On December 2, 2011, the subsidiary Compañía Pisquera de Chile S.A. (CPCh) signed a license agreement for the commercialization and distribution of the pisco brand Bauzá in Chile. In addition, this transaction included the acquisition by CPCh of 49% of Compañía Pisquera Bauzá S.A. (CPB), owner of the brand Bauzá in Chile. The family Bauzá owns 51% of that company and all of its productive assets, thereby continuing the link to the production of pisco Bauzá maintaining its quality, origin and premium character.  OnDecember 31, 2015, CPB recorded a profit of ThCh$ 82,663 (ThCh$ 109,207 in 2014 and ThCh$ 133,635 in 2013), which in accordance with the Company ́s policies is 100% distributable.  At the end of December 31, 2015 this joint operation was classified to Assets of disposal group held for sale (seeNote 25).  (c) Bebidas CCU-Pepsico SpA.  On October 23, 2013, a new company called Bebidas CCU-PepsiCo SpA (BCP) was incorporated, which is defined as an joint operation, where the subsidiary Embotelladoras Chilenas Unidas S.A. has the 50% of participation. The capital of this entity amounts to ThCh$ 1,000. The purpose of this company is the manufacture, production, processing, transformation, transport, import, export, purchase, sale and in general comercialization of all type of concentrates. Its operations commenced onJanuary 1, 2014.  OnDecember 31, 2015, BCP recorded a profit of ThCh$ 802,418 (ThCh$ 789,648 in 2014), which in accordance with the Company ́s policies is 100% distributable.  (d) Bebidas Carozzi CCU SpA.  On November 26, 2015, the Company, through its subsidiary ECCUSA, entered into a joint arrangement that qualifies as a joint operation, in the company called Bebidas Carozzi CCU SpA. (BCCCU). CCU and Empresas Carozzi S.A. participate as only shareholders in equal parts. The purpose of this company is the production, marketing and distribution of instant beverage powder in the national territory. The total disbursement by ECCUSA in this transaction was an amount of ThCh$ 21,846,500 (seeNote 19). Its operations commenced on December 1, 2015.  
 F-14


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 OnDecember 31, 2015, BCCCU recorded a profit of ThCh$ 402,228, which in accordance with the Company ́s policies is 100% distributable.  The companies mentioned above (letter a) to d)) meet the conditions stipulated in IFRS 11 to be considered "joint operations", as the primary assets in both entities are trademarks, the contractual arrangements establishes that the parties to the joint arrangement share all interests in the assets relating to the arrangement in a specified proportion and their income is 100% royalty charged to the joint operators from the sale of products using these trademarks.   Note 2Summary of significant accounting policies  Significant accounting policies adopted for the preparation of these consolidated financial statements are described below: 2.1Basis of preparation  The accompanying consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standard Board (IASB), which have been applied uniformly to the periods presented.  The consolidated financial statements cover the following periods: Statement of Financial Position as ofDecember 31, 2015, 2014 and January 1, 2014, Statement of changes in Equity, Statement of Income, Statement of Comprehensive Income and Statement of Cash Flow for the years ended December 31, 2015, 2014 and 2013.  The amounts shown in the attached financial statements are expressed in thousands of Chilean pesos, which is the Company’s functional currency. All amounts have been rounded to thousand pesos, except when otherwise indicated.  The consolidated financial statements have been prepared on the historical basis, as modified by the subsequent valuation of financial assets and financial liabilities (including derivative instruments) at fair value through profit and loss.  The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires that management uses its professional judgment in the process of applying the Company’s accounting policies. SeeNote 3for disclosure of significant accounting estimates and judgments.  At the date of issuance of these consolidated financial statements the following Amendments, Improvements and Interpretations to existing IFRS standards have been published. These standard are required to be applied as following: 
 F-15


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  New Standard Improvements and Amendments

   Mandatory for years beginning in:IFRS 14

   Regulatory deferral accounts

   January 1, 2016Amendment IFRS 11

   Accounting for acquisitions of interests in joint operations

   January 1, 2016Amendments to IAS 16 and IAS 38

   Clarification of Acceptable Methods of Depreciation and Amortisation

   January 1, 2016Amendments to IAS 16 and IAS 41 (1)

   Agriculture: bearer plants

   January 1, 2016Amendment IAS 27

   Equity method in separate financial statements

   January 1, 2016IFRS 5 Improvement

   Changes in methods of disposal

   January 1, 2016IFRS 7 Improvement

   Servicing contracts - applicability of the amendments to IFRS 7 to condensed interim financial statements

   January 1, 2016IAS 19 Improvement

   Discount rate: regional market issue

   January 1, 2016IAS 34 Improvement

   Disclosure of information elsewhere in the interim financial report

   January 1, 2016Amendment IFRS 10 , IFRS 12 and IAS 28

   Investment Entities: Applying the Consolidated Exception

   January 1, 2016Amendment IAS 1

   Disclosure initiative

   January 1, 2016Amendment IAS 12

   Recognition of deferred tax assets for unrealized losses

   January 1, 2017IFRS 9

   IAS 39 replacement

   January 1, 2018IFRS 15

   Revenue from contracts with customers

   January 1, 2018IFRS 16

   Leases

   January 1, 2019
  (1)  As explained inNote 4, the Company has early adopted the amendment IAS 16 and IAS 41.  The Company estimates that the adoption of these Standards, Amendments and Interpretations as described above will not have a material impact on the consolidated financial statements upon initial application, except for the IFRS 15, IFRS 16 and the Amendment of IAS 12, because the Company is in the process of analysis of the possible impact.  2.2Basis of consolidation  Subsidiaries  Subsidiaries are the entities over which the Company is empowered to direct financial and operational policies, which is generally the result of ownership of over half the voting rights. Subsidiaries are consolidated as from the date on which control was obtained by the Company, and they are excluded from consolidation as of the date the Company loses such control.  The acquisition method is used for the accounting of acquisition of subsidiaries. The acquisition cost is the fair value of the assets delivered, of the equity instruments issued and of the liabilities incurred or assumed as of the exchange date. The identifiable assets acquired, as well as the identifiable liabilities and contingencies assumed in a business combination are initially valued at their fair value on the acquisition date, independently from the scope of minority interests.Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized as income.  Joint operations  As explained inNote 1, in those joint arrangements that qualify as joint operations, the Company recognises theassets, liabilities, gains (losses) from operational activities respect of its interest in the joint operations in accordance with IFRS 11.  Intercompany transaction  Intercompany transactions, balances and unrealized gains from transactions between the Group’s entities are eliminated during consolidation. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Whenever necessary, the subsidiaries accounting policies are amended to ensure uniformity with the policies adopted by the Company.  
 F-16


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Non-controlling Interest  The non-controlling interest is presented in the Equity section of the Statement of Financial Position. The net income attributable to equity holder of the parent and the non-controlling interest are each disclosed separately in the Consolidated Statement of Income after net income.  Investments accounted by the equity method  Joint ventures and associates  The Company maintains investments in joint arrangements that qualify as joint ventures, which correspond to a contractual agreement by which two or more parties carry out an economic activity that is subject to joint control, and normally involves the establishment of a separate entity in which each party has a share based on a shareholders’ agreement. In addition the Company maintains investments in associates which are defined as those entities that investor has significant influence and is not a subsidiary or is a joint venture.  The Company accounts for its participation in joint arrangement that qualify as joint ventures and associates using the equity method. The financial statements of the joint ventures are prepared for the same year, under accounting policies consistent with those of the Company. Adjustments are made to conform any difference in accounting policies that may exist to the Company ́s accounting policies.  Whenever the Company contributes or sells assets to the companies under joint control or associate, any part of the income or loss originated by the transaction is recognized based on how the asset is realized. Whenever the Company purchases assets of such companies, it does not recognize its share in the income or loss of the joint venture as regards to such transaction until the asset is sold or realized by the joint venture. 2.3Financial information as per operating segments  The Company has defined three operating segments which are essentially defined with respect to its revenues in the geographic areas of commercial activity: 1.- Chile, 2.- International business and 3.- Wine.  These operating segments mentioned are consistent with the way the Company is managed and how results will be reported by CCU. These segments reflect separate operating results which are regularly reviewed by each segment chief operating decision maker in order to make decisions about the resources to be allocated to the segment and assess its performance(See Note 7).  The segments performance is measured according to several indicators, of which OR (Operating Result), ORBDA (Operating Result Before Depreciation and Amortization), ORBDA margin (ORBDA’s % of total revenues for the operating segment), the volumes and Net sales. Sales between segments are conducted using terms and conditions at current market rates.  The Company defined the Operating Result as the Incomes (losses) before Other gains (losses), Net financial cost, Equity  and income from joint ventures and associates, Foreign currency exchange differences, Results as per adjustment units and Income tax, and the ROADA, for the Company purposes, is defined as Operating Result before Depreciation and Amortization.  Corporate revenues and expenses are presented separately within the Other segment. 2.4Foreign currency and unidad de fomento (Adjustment unit)  Presentation and functional currency  The Company uses the Chilean peso ($ or CLP) as its functional currency and for the presentation of its financial statements. The functional currency has been determined considering the economic environment in which the Company carries out its operations and the currency in which the main cash flows are generated. The functional currency of the Argentine, Uruguayan and Paraguayan subsidiaries is the Argentine peso, Uruguayan peso and Paraguayan guarani, respectively. The functional currency of the joint venture an associates in Colombia and Bolivia are Colombian peso and Boliviano, respectively.  
 F-17


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Transactions and balances  Transactions in foreign currencies and adjustment units (“Unidad de Fomento” or “UF”) are initially recorded at the exchange rate of the corresponding currency or adjustment unit as of the date on which the transaction occurs. The Unidad de Fomento (UF) is a Chilean inflation-indexed peso-denominated monetary unit. The UF rate is set daily in advance based on changes in the previous month’s inflation rate. At the close of each Consolidated Statement of Financial Position, the monetary assets and liabilities denominated in foreign currencies and adjustment units are translated into Chilean pesos at the exchange rate of the corresponding currency or adjustment unit. The exchange difference arising, both from the liquidation of foreign currency transactions, as well as from the valuation of foreign currency monetary assets and liabilities, is included in statement of income, in Foreign currency exchange differences, while the difference arising from the changes in adjustment units are recorded in the statement of income as Result as per adjustment units.  For consolidation purposes, the assets and liabilities of the subsidiaries whose functional currency is different from the Chilean peso are translated into Chilean pesos by using the exchange rates valid as of the date of the consolidated financial statements, and the exchange differences originated by the translation of the assets and liabilities are recorded in Equity Reserve, under the Currency Translation Reserves item. The income and expense are translated at the monthly average exchange rate for the corresponding terms as differences since there have not been significant fluctuations in the exchange rates during each month.  The exchange rates of the primary foreign currencies and adjustment units used in the preparation of the consolidated financial statements as ofDecember 31, 2015, 2014 and 2013are as follows:  Chilan Pesos as per unit of foreign currency or adjustable unit

   As of December 31, 2015

   As of December 31, 2014

   As of December 31, 2013Ch$

   Ch$

   Ch$Foreign currenciesUS Dollar

   USD

   

   710.16

   606.75

   524.61Euro

   EUR

   

   774.61

   738.05

   724.30Argentine Peso

   ARG

   

   54.46

   70.96

   80.45Uruguayan Peso

   UYU

   

   23.71

   24.90

   24.49Sterling Pound

   GBP

   

   1,053.02

   944.21

   866.41Paraguayan guarani

   PYG

   

   0.12

   0.13

   0.11Bolivians

   BS

   

   103.67

   88.45

   76.47Colombian peso

   COP

   

   0.22

   0.25

   0.27Adjustment UnitsUnidad de fomento*

   UF

   

   25,629.09

   24,627.10

   23,309.56
  * The Unidad de Fomento (UF) is a Chilean inflation-indexed, peso-denominated monetary unit. The UF rate is set daily in advance based on changes in the previous month ́s inflation rate. 2.5Cash and cash equivalents  Cash and cash equivalents includes cash available, bank balances, time deposits at financial entities, investments in mutual funds and financial instruments acquired under re-sale agreements, as well as short-term investments with a high liquidity, normally with an original maturity of up to three months.  2.6Other finantial assets  Other financial assets include market securities, derivatives contracts and time deposits at financial entities with a maturity over 90 days.  
 F-18


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 2.7Financial instruments  Financial assets  The Company recognizes a financial asset in its Consolidated Statement of Financial Position according to the following:  As of the date of the initial recognition, Management classifies its financial assets (i) at fair value through profit and loss and (ii) collectible credits and accounts, depending on the purpose for which the financial assets were acquired. For those instruments not classified at fair value through income, any cost attributable to the transaction is recognized as part of the asset value.  The fair value of the instruments that are actively quoted in formal markets is determined by the quoted price as of the financial statement closing date. For those investments without an active market, the fair value is determined using valuation technique including (i) the use of recent market transactions, (ii) references to the current market value of another financial instrument of similar characteristics, (iii) discounted cash flow and (iv) other valuation models.  After the initial recognition the Company values the financial assets as described below:  Accounts receivable  Trade receivable credits or accounts are recognized according to their invoice value.  Estimated losses from bad debts are determined by applying differentiated percentages, taking into account maturity factors, until reaching 100% of the balance in most of the debts older than 180 days, with the exception of those cases that in accordance with current policies, losses are estimated due to partial deterioration based on a case by case analysis.  Current trade receivable credits and accounts are initially recognized at their nominal value and are not discounted because they do not differ significantly from their fair value. The Company has determined that the calculation of the amortized cost is not materially different from the invoiced amount because the transactions do not have significant associated costs.  Financial liabilities  The Company recognizes a financial liability in its Consolidated Statement of Financial Position according to the following:  Debts and financial liabilities that accrue interests  Loans and financial obligations accruing interest are initially recognized at the fair value of the resources obtained, less costs incurred directly attributable to the transaction. After initial recognition, loans and obligations accruing interest are measured at their amortized cost. The difference between the net amount received and the value to be paid is recognized in the Consolidated Statement of Income during the term of the loan, using the effective interest rate method.  Interest paid and accrued related to debts and obligations used in a financing operations appear under financial cost.  Loans and obligations accruing interest with a maturity within twelve month period are classified as current liabilities, unless the Company has the unconditional right to defer the payment of the obligation for at least a twelve month period after the financial statement closing date.  
 F-19


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Trade accounts payable and other payables  Accounts payable and other accounts payable are initially recognized at their nominal value because they do not differ significantly from fair value. The Company has determined that no significant differences exist between the carrying value and amortized cost using the effective interest method.  Derivative Instruments  All derivative financial instruments are initially recognized as of the date of the agreement and subsequently measured at their fair value as of the date of the financial statements. Gains and losses resulting from fair value measurement are recorded in the Statement of Income as gains or losses due to fair value of financial instruments, unless the derivative instrument qualifies is designated, and is effective as a hedging instrument.  The Financial Instruments at fair value through profit and loss include financial assets classified as held for trading by the Company. Financial assets are classified as held for trading when acquired with the purpose of selling them within a short term. Derivative instruments are classified as held for trading unless they are classified as hedge instruments.  Derivative instruments classified as hedges are accounted for as cash flow hedges.  In order to classify a derivative as a hedging instrument for accounting purposes, the Company documents (i) as of the transaction date or at designation time, the relationship or correlation between the hedging instrument and the hedged item, as well as the risk management purposes and strategies, (ii) the assessment, both at designation date as well as on a continuing basis, whether the instrument used is effective to offset changes in fair value or in the cash flows of the hedged item. A hedge is considered effective when changes in the fair value or in the cash flows of the underlying directly attributable to the risk hedged are offset with the changes in fair value, or in the cash flows of the hedging instrument with effectiveness between 80% to 125%.  The total fair value of hedging derivatives are classified as assets or financial liabilities in Other non-current if the maturity of the hedged item is more than 12 months and as other assets or current liabilities if the remaining maturity of the hedged item is less than 12 months. The effect on results of these instruments can be viewed in Other gains (losses) of the Consolidated Statements of Income. The effective portion of the change in the fair value of derivative instruments that are designated and qualified as cash flow hedges are initially recognized in Cash Flow Hedge Reserve in a separate component of Equity. The income or loss related to the ineffective portion is immediately recognized in the Statement of Income. The amounts accumulated in Equity are reclassified in Income during the same period in which the corresponding hedged item is reflected in the Statement of Income. When a cash flow hedge ceases to comply with the hedge accounting criteria, any accumulated income or loss existing in Equity remains in Equity and is recognized when the expected transaction is finally recognized in the Statement of Income. When it is estimated that an expected transaction will not occur, the accumulated gain or loss recorded in Equity is immediately recognized in the Statement of Income.  Deposits for returns of bottles and containers  Deposits for returns of bottles and containers corresponds to the liabilities registered by the guarantees of money received from customers for bottles and containers placed at their disposal and represents the value that will be returned to the customer when it returns the bottles to the Company in good condition along with the original document. This value is determined by the estimation of the bottles and containers in circulation that are expected to be returned to the Company in the course of time based on the historic experience, physical counts held by clients and independent studies over the quantities that are in the hands of end consumers, valued at the average weighted guarantees for each type of bottles and containers.  The Company does not intend to make significant repayment of these deposits within the next 12 months. Such amounts are classified within current liabilities, under the line Other financial liabilities, since the Company does not have the legal ability to defer this payment for a period exceeding 12 months. This liability is not discounted, since it is considered a payable on demand, with the original document and the return of the respective bottles and containers and it does not have adjustability or interest clauses of any kind in its origin.   
 F-20


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 2.8Financial asset impairment  At each financial statement date the Company assesses if a financial asset or financial group of assets is impaired.  The Company assesses impairment of accounts receivable collectively by grouping the financial assets according to similar risk characteristics, which indicate the debtor’s capacity to comply with their obligations under the agreed upon conditions. When there is objective evidence that a loss due to impairment has been incurred in the accounts receivable, the loss amount is recognized in the Consolidated Statement of Income, as Administrative expenses.  In the event that during subsequent periods the impairment loss amount decreases and such decrease may be objectively related to an event occurring after impairment recognition, the impairment loss previously recognized is reversed.  Any subsequent impairment reversal is recognized in Income provided that the book value of the asset does not exceed its value as of the date the impairment was recognized. 2.9Inventories  Inventories are stated at the lower of cost acquisition or production cost and net realizable value. The production cost of finished products and of products under processing includes raw material, direct labor, indirect manufacturing expenses based on a normal operational capacity and other costs incurred to place the products at the locations and in the conditions necessary for sale, net of discounts attributable to inventories.  The net realizable value is the estimated sale price in the normal course of business, less marketing and distribution expenses. When market conditions cause the production cost to be higher than its net realizable value, an allowance for assets deterioration is registered for the difference in value. This allowance for inventory deterioration also includes amounts related to obsolete items due to low turnover, technical obsolescence and products withdrawn from the market.  The inventories and cost of products sold, is determined using the Weighted Average Cost (WAC). The Company estimates that most of the inventories have a high turnover.  The materials and raw materials purchased from third parties are valued at their acquisition cost; once used, they are incorporated in finished products using the WAC methodology.  2.10Biological current assets Under the Biological current assets, the Company includes the costs associated with agricultural activities (grapes), which are capitalized up to the harvest date, at which time they become part of inventory cost for subsequents processes. The Company considers that the costs associated with agricultural activities represent a reasonable approximation to fair value. According toNote 4until December 31, 2014 and January 1, 2014, the Biological current assets are recorded under Inventories. The above mentioned implies only a reclassification andhas no impact on its value, Net income or Equity. 2.11Other non-financial assets  Other non-financial assetsmainly includes disbursements related to commercial advertising preparation that is in process but has not yet been shown, advances to property, plant and equipment to suppliers and current and non-current advertising agreements. 2.12Property, plant and equipment  Property, plant and equipment are recorded at their historic cost, less accumulated depreciation and impairment losses. The cost includes both the disbursements directly attributable to the asset acquisition or construction, as well as the financing interest directly related to certain qualified assets, which are capitalized during the construction or acquisition period, as long as these assets qualify for these purposes considering the period necessary to complete and prepare the assets to be operative. Disbursements after the purchase or acquisition are only capitalized when it is likely that the futureeconomic benefits associated to the investment flow towards the Company, and costs may be reasonably measured. Subsequent disbursements related to repairs and maintenance are recorded as expense when incurred. 
 F-21


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Property, plant and equipment depreciation, including the assets under financial lease, is calculated on a straight line basis over the estimated useful life of the fixed assets, taking into account their estimated residual value. When an asset is formed by significant components with different useful lives, each part is separately depreciated. Property, plant and equipment useful lives and residual values estimates are reviewed and adjusted at each financial statement closing date, if necessary.  Property, plant and equipment estimated useful lives are as follows:  Type of Assets

   Number of yearsLand

   IndefiniteBuildings and Constructions

   20 to 60Machinery and equipment

   10 to 25Furniture and accesories

   5 to 10Other equipment (coolers and mayolicas)

   5 to 8Glass containers, and plastic containers

   3 to 12Vines in production

   30
  Gainsand losses resulting from the sale of properties, plants and equipment are calculated comparing their book values against the related sales proceeds and are included in the Consolidated Statement of Income.  Biological assets held by Viña San Pedro Tarapacá S.A. (VSPT) and its subsidiaries consist of vines under formation and under production. The harvested grapes are used for the later production of wines.  Vines under production are valued at the historic cost, less depreciation and any impairment loss.  Depreciation of under production vines is recorded on a straight-line basis based on the 30-years average estimated production useful life, which is periodically assessed. Vines under formation are not depreciated until they start production.  Costs incurred in acquiring and planting new vines are capitalized.  When the book value of an asset of property, plant and equipment exceeds its recoverable amount, this is reduced immediately to its recoverable amount(See Note 2.17).  As described inNote 4, during year 2015, the Company has early adopted the amendment of IAS 16 and 41, therefore vines under formation and under production are recorded in Properties, plant and equipment. Until December 31, 2014 and January 1, 2014, these were recorded under the Biological non-current assets. This early application implies only a reclassification and has not impact on its value, Net income or Equity.  2.13Leases  Lease agreements are classified as financial leases when the agreement transfers to the Company substantially all the risks and rewards inherent to the asset ownership, according to International Accounting Standard No. 17 “Leases”. For those agreements that qualify as financial leases, at the initial date an asset and a liability are recognized at a value equivalent to the lower of the fair value of the asset and the present value of future lease payments. Subsequently, lease payments are allocated between the financial expense and the obligation reduction, so that a constant interest rate on the obligation balance is obtained.  Lease agreements that do not qualify as financial leases are classified as operating leases. Lease payments of operating leases are charged to income on a straight line basis over the life of the lease.   
 F-22


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 2.14Investment property  Investment property consists of land and building held by the Company with the purpose of generating appreciation and are not used in the normal course of business, and are recorded at historic cost less impairment loss, if any. Investment property depreciation is calculated on a straight line basis over the estimated useful life of such property, taking into account the estimated residual value of such property. 2.15Intangible assets other than goodwill  Commercial Trademarks  The Company’s commercial trademarks correspond to intangible assets with an indefinite useful life that are presented at their historic cost, less any impairment loss. The Company believes that through marketing investments trademarks maintain their value, consequently they are considered as having an indefinite useful life and they are not amortizable. Such assets are subject to impairment tests on a yearly basis, or when factors exist indicating a likely loss of value(Note 2.17).  Software Program  Software Program licenses acquired are capitalized at the value of the costs incurred for their acquisition and preparation for the use of the specific programs. Such costs are amortized over their estimated useful lives (4 to 7 years). The maintenance costs of the software programs are recognized as expense in the year during which they are incurred.  Research and development  Research and development expenses are recognized in the period incurred.  Water Rights  Water Rights acquired by the Company correspond to the existing exploitation rights of water from natural sources, and they are recorded at their attributed cost as of the transition date to IFRS. Given that such rights are perpetual they are not amortizable, nevertheless they are annually subject to impairment assessment, or when factors exist that indicate a likely loss of value(See Note 2.17). 2.16Goodwill  Goodwill represents the excess of cost of a business combination over the Company’s share in the fair value of identifiable assets, liabilities and contingent liabilities as of the acquisition date, and is accounted for at its cost value less accumulated impairment losses. Goodwill related to joint venture acquisitions is included in the investment accounting value.  For the purposes of impairment tests, goodwill is assigned Cash Generating Units (CGU) that are expected to benefit from the synergies of a business combination. Each unit or group of units (CGU -See Note 22)represents the lowest level inside the Company at which goodwill is monitored for internal administration purposes, which is not larger than a business segment. The cash generating units to which the goodwill is assigned are tested for impairment annually or with a higher frequency, when there are signs indicating that a cash generating unit could experience impairment or some of the significant market conditions have changed.  Goodwill in the acquisition of joint ventures is assessed for impairment as part of the investment, provided that there are signs indicating that the investment may be impaired.  An impairment loss is recognized for the amount that the book value of the cash generating unit exceeds its recoverable value, the recoverable value being the higher of the fair value of the cash generating unit, less costs to sell and its value in use.  An impairment loss is first assigned in goodwill to reduce its book value, and then to other assets in the cash generating unit. A recognized impairment loss is not reversed in the following years.   
 F-23


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 2.17Impairment of non-financial assets other than goodwill  The Company annually assesses the existence of impairment indicators on non-financial assets. When indicators exist, the Company estimates the recoverable amount of the impaired asset. In case it is not possible to estimate the recoverable amount of the impaired asset at an individual level, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.  For indefinite useful life intangible assets, which are not amortized, the Company performs all required test to ensure that the carrying amount does not exceed recoverable value.  The recoverable amount is defined as the higher of the fair value, less cost to sell and the value in use. The value in use is determined by estimating future cash flows associated with the asset or with the cash generating unit, discounted from its current value by using interest rates before taxes, which reflect the time value of money and the specific risks of the asset. In the event the asset book value exceeds its recoverable amount, the Company records an impairment loss in the Statement of Income.  For other non-financial assets different than goodwill and intangibles with indefinite useful life, the Company assesses the existence of impairment indicators when some event or change in business circumstances indicate that the book value of the asset may not be recoverable and impairment is recognised when the book value is higher than its recoverable value.  The Company annually assesses if impairment indicators of non-financial assets for which impairment losses were recorded during prior years have disappeared or decreased. In the event of such situation, the recoverable amount of the specific asset is recalculated and its book value increased, if necessary. Such increase is recognized in the Statement of Income as reversal of impairment losses. The increase in the value of the previously impaired asset is recognized only when it is originated by changes in the assumptions used to calculate the recoverable amount. The asset amount increase resulting from the reversal of the impairment loss is limited to the amount that would have been recorded had impairment not occurred.  2.18Assets of a disposal group held for sale  Property, plant and equipment expected to be recovered primarily through sale rather than through continuing use, for which active sale negotiations have begun and it is estimated that they will be sold within twelve months following the closing date are classified as assets of a disposal group held for sale.  These assets are measured at the lower of their book value and the estimated fair value, less costs to sell. From the moment in which the assets are classified as assets of a disposal group held for sale they are no longer depreciated.  2.19Income taxes  Income taxes are composed by the legal obligations and the deferred taxes recognized according to International Accounting Standard No 12 – Income Taxes. Income tax is recognized in the Statement of Income, except when it is related to entries directly recorded in Equity, in which case the tax effect is also recognized in Equity.  Income Tax Obligation  Income tax obligations are recognized in the financial statements on the basis of the best estimates of the taxable profits as of the financial statement closing date, and the income tax rate valid as of that date in the countries where the Company operates.  Deferred Tax  Deferred taxes are those the Company expects to pay or to recover in the future, due to temporary differences between the book value of assets and liabilities (carrying amount for financial reporting purposes) and the corresponding tax basis of such assets and liabilities used to determine the profits subject to taxes. Deferred tax assets and liabilities are generally recognized for all temporary differences, and they are calculated at the rates that will be valid on the date the liabilities are paid or the assets realized.  
 F-24


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Deferred tax is recognized for temporary differences arising from investments in subsidiaries and associates, except in those cases where the Company is able to control the date on which temporary differences will be reversed, and it is likely that they will not be reverted in the foreseeable future. Deferred tax assets, including those originated by tax losses are recognized provided it is likely that in the future there are taxable profits against which deductible temporary differences may be charged.  Deferred tax assets and liabilities are offset when there is a legal right to offset tax assets against tax liabilities, and the deferred tax is related to the same taxable entity and the same taxing authority. 2.20Employees benefits  Employees Vacation  The Company accrues the expense associated with staff vacation when the employee earns the benefit.  Employees Bonuses  The Company recognizes a liability and an expense for bonuses when it’s contractually obligated, it is estimated that, depending on the income requirement at a given date, bonuses will be paid out at the end of the year.  Severance Indemnity  The Company recognizes a liability for the payment of irrevocable severance indemnities, originated from the collective and individual agreements entered into with employees. Such obligation is determined based on the actuarial value of the accrued cost of the benefit, a method which considers several factors in the calculation, such as estimates of future continuance, mortality rates, future salary increases and discount rates. The determined value is shown at its present value by using the accrued benefits for years of service method. The discount rates are determined by reference to market interest rates curves. The current losses and gains are directly recorded in Income.  According to the amendment of IAS 19, the actuarial gains and losses are recognized directly in Other Comprehensive Income, under Equity and, according to the accounting policies of the Company, financial costs related to the severance indemnity are directly recorded under Financial cost in the Consolidated Statement of Income.  2.21Provisions  Provisions are recognized when: (i) the Company has a current obligation, legal or implicit, as a result of past events, (ii) it is probable that monetary resources will be required to settle the obligation and (iii) the amounts can be reasonably established. The amounts recognized as provisions as of financial statements closing date, are Management ́s best estimates, and consider the necessary disbursements to liquidate the obligation.  The concepts by which the Company establishes provisions against Income correspond to civil, labour and taxation proceedings that could affect the Company(See Note 29). 2.22Revenue recognition  Revenues are recognized when it is likely that economic benefits flow to the Company and can be measured reliably. Income is measured at the fair value of the economic benefits received or to be received, and they are presented net of valued added taxes, specific taxes, returns, discounts and rebates.  Sales of goods are recognized after the Company has transferred to buyer all the risks and benefits inherent in the ownership of such goods, and it does not hold the right to dispose of them; in general, this means that sales are recorded at the transfer of risks and benefits to clients, pursuant to the terms agreed in the commercial agreements.       F-25


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Sale of products in the domestic market  The Company obtains its revenues, both in Chile and Argentina, mainly from the sales of beers, soft drinks, mineral waters, purified water, juices, wines, cider and spirits, products that are distributed through retail establishments, wholesale distributors and supermarket chains. None of which act as commercial agents of the Company. Such revenues in the domestic markets, net of the value added tax, specific taxes, returns, discounts and rebates to clients, are recognized when products are delivered, together with the transfer of all risks and benefits related to them.  Exports  In general, the Company ́s delivery conditions for sale are the basis for revenue recognition related to exports.  The structure of revenue recognition is based on the grouping of Incoterms, mainly in the following groups:  •              "FOB (Free on Board) shipping point", by which buyer organizes and pays for transportation, consequently the sales occur and revenue is recognized upon the delivery of merchandise to the transporter hired by buyer.  •              “CIF (Cost, Insurance & Freight) and similar", by which the Company organizes and pays for external transportation and some other expenses, although CCU ceases being responsible for the merchandise after delivering it to the maritime or air company in accordance with the relevant terms. The sales occur and revenue is recognized upon the delivery of the merchandise at the port of destination.  In the case of discrepancies between the commercial agreements and Incoterms, the first one will prevail. 2.23Commercial agreements with distributors and supermarket chains  The Company enters into commercial agreements with its clients, distributors and supermarkets through which they establish: (i) volume discounts and other client variables, (ii) promotional discounts that correspond to an additional rebate on the price of the products sold by reason of commercial initiatives development (temporary promotions), (iii) services payment and rendering of counter-services (advertising and promotion agreements, use of preferential spaces and others) and (iv) shared advertising, which corresponds to the Company’s participation in advertising campaigns, promotion magazines and opening of new sales locations.  Volume discounts and promotional discounts are recognized as a reduction in the sales price of the products sold. Shared advertising contributions are recognized when the advertising activities agreed upon with the distributor have been carried out, and they are recorded as marketing expenses incurred, under Other expenses by function.  The commitments with distributors or importers in the exports area are recognized on the basis of existing trade agreements. 2.24Cost of sales of products  The costs of sales include the production cost of the products sold and other costs incurred to place inventories in the locations and under the conditions necessary for the sale. Such costs mainly include raw material costs, packing costs, production staff labour costs, production-related assets depreciation, returnable bottles depreciation, license payments, operational costs and plant and equipment maintenance costs.  2.25Other expenses by function  Other expenses by function include, mainly advertising and promotion expenses, depreciation of assets sold, selling expenses, marketing costs (sets, signs, neon signs at client’s facilities) and marketing and sales staff remuneration and compensations. 2.26Distribution expenses  Distribution costs include all the necessary costs to deliver products to clients.  
 F-26


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 2.27Administration expenses  Administration expenses include the support units staff remuneration and compensation, depreciation of offices, equipment, facilities and furniture used for these functions, non-current assets amortization and other general and administration expenses.  2.28Environment liabilities  Environmental liabilities are recorded based on the current interpretation of environmental laws and regulations, or when an obligation is likely to occur and the amount of such liability can be calculated reliably.  Disbursements related to environmental protection are charged to the Consolidated Statements of Income as incurred, except, investments in infrastructure designed to comply with environmental requirements, are recorded following the accounting policies for property, plant and equipment.  2.29Reclassification to the Consolidated Financial Statements of previous years  The Company has early adopted the amendment of IAS 16 and IAS 41. For comparison purposes of this Consolidated Financial Statements, the Company, had restated the originally figures reported at December 31, 2014 and January 1, 2014.This early application implies only a reclassification and has not impact on its value, Net income or Equity.  Below are the reclassifications that only affecting the Consolidated Statement of Financial Position:  a) OnDecember 31, 2014:   Current assets

   Previously Reported at December 31, 2014

   Reclassification

   Total at December 31, 2014 (Restated)ThCh$

   ThCh$

   ThCh$Inventories

   

   

   175,179,189

   (7,633,591)

   167,545,598Biological current assets

   

   

   -

   7,633,591

   7,633,591Non-current assets

   Previously Reported at December 31, 2014

   Reclassification

   Total at December 31, 2014 (Restated)ThCh$

   ThCh$

   ThCh$Property, plant and equipment (net)

   

   

   833,171,234

   18,084,408

   851,255,642Biological assets

   

   

   18,084,408

   (18,084,408)

   -
  
 F-27


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 b) January 1, 2014:  Current assets

   At January 1, 2014

   Reclassification

   Total at January 1, 2014 (Restated)ThCh$

   ThCh$

   ThCh$Inventories

   

   

   153,085,845

   (6,130,652)

   146,955,193Biological current assets

   

   

   -

   6,130,652

   6,130,652Non-current assets

   At January 1, 2014

   Reclassification

   Total at January 1, 2014 (Restated)ThCh$

   ThCh$

   ThCh$Property, plant and equipment (net)

   

   

   680,994,421

   17,662,008

   698,656,429Biological assets

   

   

   17,662,008

   (17,662,008)

   -
  The costs associated with agricultural activities (grapes) for an amount of ThCh$ 7,633,591 and ThCh$ 6,130,652 as of December 31, 2014 and January 1, 2014, respectively, were presented under the Inventories. Beginning the year 2015, according to IAS 41, these are presented under the Biological current assets.  The vines under formation and under production for an amount of ThCh$ 18,084,408 and ThCh$ 17,662,008 as of December 31, 2014 and January 1, 2014, respectively, were presented under the Biological assets. Beginning the year 2015, according to Amendment of IAS 16 and IAS 41, these are presented under Property, plant and equipment.   
 F-28


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 3Estimates and application of professional judgment  Financial statement preparation requires estimates and assumptions from Management affecting the amounts included in the consolidated financial statements and their related notes. The estimates made and the assumptions used by the Company are based on the historical experience, changes in the industry and the information supplied by external qualified sources. Nevertheless, final results could differ from the estimates under certain conditions.  Significant estimates and accounting policies are defined as those that are important to correctly reflect the Company’s financial position and income, and/or those that require a high level of judgment by Management.  The primary estimates and professional judgments relate to the following concepts:  •              The valuation of goodwill acquired to determine the existence of losses due to potential impairment(Note 2.16 and Note 22). •              The valuation of commercial trademarks to determine the existence of potential losses due to potential impairment(Note 2.17 and Note 21). •              The assumptions used in the current calculation of liabilities and obligations to employees(Note 2.20 and Note 31). •              Useful life of property, plant and equipment(Note 2.12 and Note 23)and intangibles(Note 2.15 and Note 21). •              The assumptions used for the calculation of fair value financial instruments(Note 2.7 and Note 6). •              The occurrence likelihood and the estimates amount in an uncertain or contingent manner(Note 2.21 and Note 29). •              The valuation of Biological current assets(Note 2.10 and Note 18).  Such estimates are based on the best available information of the events analysed to date in these consolidated financial statements. However, it is possible that events that may occur in the future that result in adjustments to such estimates, which would be recorded prospectively.  Note 4Accounting changes  a)The Company adopted the early application of Amendment to IAS 16 and 41 in 2015. This change in accounting policy implies that Biological assets (vines under formation and under production) are reclassified to Property, plant and equipment from Biological assets. Additionally, the costs associated with agricultural activities are reclassified to Biological current assets from Inventories.  Until December 31, 2014 and January 1, 2014 these were presented under Biological assets (vines under formation and under production) and Inventories, respectively. The effects of this accounting policy are explained inNote 2.29. For comparison purposes these change was applied retroactively to 2014.  b)During the year ended on December 31, 2015, there have been no other changes in the use of accounting principles or relevant changes in any accounting estimates with regard to previous years that have affected these consolidated financial statements. 
 F-29


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Note 5Risk Administration Risk administration  In those companies without a significant non-controlling interest, the Company’s Administration and Finance Officer provides a centralized service for the group’s companies to obtain financing and administration of exchange rate, interest rate, liquidity, inflation, raw material and loan risks. Such activity operates according to a policies and procedures framework, which is regularly reviewed to comply with the purpose of administrating the risk originated by the business needs.  In those companies with a significant non-controlling interest (VSPT, CPCh, Aguas CCU-Nestlé, Bebidas del Paraguay S.A. and Cervecera Kunstmann) each Administration and Finance Officer exercises such responsibility. When necessary, the Board of Directors has the final responsibility for establishing and reviewing the risk administration structure, as well as for the review of significant changes made to the risk administration policies.  According to the financial risk policies, the Company uses derivative instruments only for the purpose of covering exposures to the interest rate and exchange rate risks originated by the Company’s operations and its financing sources. The Company does not acquire derivative facilities with speculative or investment purposes nevertheless, some derivatives are not treated as hedges for accounting purposes because they do not qualify as such. Transactions with derivative instruments are exclusively carried out by staff under the Finance Management and Internal Audit Management regularly reviews the control environment of this function. The relationship with Credit Rating Agencies and the monitoring of financial restrictions (covenants) are also administered by Finance Management.  The Company’s main risk exposure is related to the exchange rates, interest rates, inflation and raw material prices (commodities), taxes, client’s accounts receivable and liquidity. For the purpose of managing the risk originated by such exposures, several financial instruments are used.  For each of the following, where applicable, sensitivity analysis developed are for illustrative purposes, since in practice the sensitized variables rarely change without affecting each other and without affecting other factors that were considered as constants. Exchange rate risk  The Company is exposed to exchange rate risks originated by: a) its net exposure to foreign currency assets and liabilities, b) exports sales, c) the purchase of raw material, products and capital investments effected in foreign currencies, or indexed in such currencies, and d) the net investment of subsidiaries in Argentina, Uruguay and Paraguay. The Company’s greatest exchange rate exposure is the variation of the Chilean peso as compared to the US Dollar, Euro, Argentine Peso, Uruguayan Peso, Paraguayan Guarani, Colombian peso and Boliviano.  As of December 31, 2015, the Company maintained foreign currency obligations amounting to ThCh$ 49,785,548 (ThCh$ 46,780,406 in 2014), mostly denominated in US Dollars. Foreign currency obligations (ThCh$ 16,626,496 in 2015 and ThCh$ 19,838,965 in 2014) represent 10% (11% in 2014) of the total of Other financial liabilities. The remaining 90% (89% in 2014) is mainly denominated in inflation-indexed Chilean pesos (see inflation risk section). In addition, the Company maintains foreign currency assets for ThCh$72,887,721 (ThCh$ 57,086,683 in 2014) that mainly correspond to exports accounts receivable.  Regarding the foreign subsidiaries operations, the net exposure liability in US Dollars and other currencies amounts to ThCh$ 1,368,068 (ThCh$ 1,932,014 in 2014).  To protect the value of the net foreign currency assets and liabilities position of its Chilean operations, the Company enters into derivative agreements (currency forwards) to ease any variation in the Chilean peso as compared to other currencies.  As of December 31, 2015, the Company’s mitigate net asset exposure in foreign currencies in Chile, after the use of derivative instruments, is a liability amounting to ThCh$ 757,256 (ThCh$ 2,588,053 in 2014).   
 F-30


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
   Of the Company’s total sales, both in Chile and abroad, 8% (8% in 2014 and 8% in 2013) corresponds to export sales made in foreign currencies, mainly US Dollars and Euro and of the total costs 54% (55% in 2014 and 57% in 2013) corresponds to raw materials and products purchased in foreign currencies, or indexed to such currencies. The Company does not hedge the eventual variations in the expected cash flows from such transactions.  The Company is also exposed to movements in exchange rates relating to the conversion from Argentine Pesos, Uruguayan Pesos, Paraguayan Guaranis, Bolivians and Colombian Pesos to Chilean Pesos with respect to assets, liabilities, income and expenses of its subsidiaries in Argentina, Uruguay and Paraguay, associated in Bolivia and joint ventures in Colombia. The Company does not cover the risks associated with the conversion of its subsidiaries, which effects are recorded in Equity.  As of December 31, 2015, the net investment in foreign subsidiaries, associated and joint ventures amounted to ThCh$ 133,554,918, ThCh$ 14,276,937 and ThCh$ 18,718,832 respectively (ThCh$ 127,753,473, ThCh$ 12,757,874 and ThCh$ 1,445,478 in 2014).  Exchange rate sensitivity analysis  The exchange rate differences effect recognized in the Consolidated Statement of Income for the year ended as of December 31, 2015, related to the foreign currency denominated assets and liabilities, was an income of ThCh$ 957,565 (and a loss of ThCh$ 613,181 in 2014 and ThCh$ 4,292,119  in 2013). Considering the exposure as of December 31, 2015, and assuming a 10% increase (or decrease) in the exchange rate, and maintaining constant all other variables, such as interest rates, it is estimated that the effect over the Company’s income would be loss after taxes of ThCh$ 58,687 (a loss of ThCh$ 204,456 in 2014 and a loss of ThCh$ 85,506 in 2013).  Considering that approximately 8% of the Company’ sales relates to export sales carried out in Chile (8% in 2014 and 2013), in currencies different from the Chilean Peso, and in approximately 54% (55% in 2014 and 57% in 2013) of the Company’s direct costs are indexed to the US Dollar and assuming that the functional currencies will be appreciated or (depreciated) by 10% as compared to the set of foreign currencies, when maintaining constant the rest of the variables the hypothetical effect on the Company’s income would be income (loss) after taxes of ThCh$ 10,380,193 income (loss) fromThCh$ 10,004,379 in 2014 and ThCh$ 9,320,804 in 2013).  The Company can also be affected by the variation of the exchange rate of where the foreign subsidiaries operate, since the result is converted to Chilean Pesos at the average rate of each month. The result of the operations in the foreign subsidiaries during the year 2015 were ThCh$ 32,141,475 (ThCh $ 29,235,462 in 2014 and ThCh $ 26,738,414 in 2013). Therefore, a depreciation (or appreciation) of 10% in the exchange rate of the Argentine Peso, the Uruguayan Peso and the Paraguayan Guarani against the Chilean Peso, would be a loss (income) before tax of ThCh$ 3,214,147 (ThCh$ 2,923,546 in 2014 and ThCh$ 2,673,841 in 2013).  The net investment in foreign subsidiaries, associated and joint ventures amounted to ThCh$ 133,554,918, ThCh$ 14,276,937 and ThCh$ 18,718,832, respectively (ThCh$ 127,753,473, ThCh$ 12,757,874 and ThCh$ 1,445,4788 in 2014). Assuming a 10% increase or decrease in the Argentine Peso, Uruguayan Peso, Paraguayan Guarani, Bolivians and Colombian Peso against the Chilean Peso, and maintaining constant all the rest of the variables, the increase (decrease) would hypothetically result in income (loss) of ThCh$ 16,655,069 (ThCh$ 14,195,683 in 2014) recorded as a credit (charge) against Equity.  The company does not cover the risks associated with the currency conversion of the financial statements of its subsidiaries that have other functional currency, whose effects are reported in Equity.  Interest rates risk  The interest rate risk mainly originated from the Company’s financing sources. The main exposure is related to LIBOR and BADLAR variable interest rate indexed obligations.  As of December 31, 2015, the Company had a total ThCh$ 20,206,608 in debt indexed to LIBOR (ThCh$ 13,690,987 in 2014). Consequently, as of December 31, 2015, the company’s financing structure is comprised by (without considering the effects of cross currency swaps effect) in approximately 12% (7% in 2014) in debt with variable interest rates, and 88% (93% in 2014) in debt with fixed interest rates. 
 F-31


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  To administer the interest rate risk, the Company has a policy that intends to reduce the volatility of its financial expense, and to maintain an ideal percentage of its debt in fixed rate instruments. The financial position is mainly set by the use of short-term and long-term debt, as well as derivative instruments such as cross currency interest rate swaps.  As of December 31, 2015, after considering the effect of interest rates and currency swaps, approximately 97% (100% in 2014) of the Company’s long-term debt has fixed interest rates.  The terms and conditions of the Company’s obligations as of December 31, 2015, including exchange rates, interest rates, maturities and effective interest rates, are detailed in Note 27.  Interest rates sensitivity analysis  The total financial expense recognized in the Consolidated Statement of Income for the twelve month ended December 31, 2015, related to short-term and long-term debts amounted to ThCh$ 23,101,329 (ThCh$ 22,957,482 in  2014 and ThCh$ 24,084,226 in 2013).  Assuming a 100 base point increase (or decrease) in the Interest rate, and maintaining constant all other variables, it is estimated that the effect over the Company’s income would be loss before taxes of ThCh$ 41,872. Inflation risk  The Company maintains a series of Unidad de Fomento* (UF) indexed agreements with third parties, as well as UF indexed financial debt, which means that the Company is exposed to the UF fluctuations, generating increases in the value of the agreements and inflation adjustable liabilities, in the event it experiences growth. This risk is mitigated by the Company’s policy of keeping the unitary net sales in UF constant, as long as the market conditions allow it.  * The Unidad de Fomento (UF) is a Chilean inflation-indexed, peso-denominated monetary unit. The UF rate is set daily based on changes in the previous month ́s inflation rate.  Inflation sensitivity analysis  The income for total adjustment unit recognized in the Consolidated Statement of Comprehensive Income for the twelve month ended December 31, 2015, related to UF indexed short-term and long-term debt, and resulted in a loss of ThCh$ 3,282,736 (ThCh$  4,159,131 in 2014 and ThCh$ 1,801,765 in 2013). Assuming a reasonably possible increase (decrease) of the Unidad de Fomento by approximately 3% and maintaining constant all the rest of the variables, such as interest rates, the aforementioned increase (decrease) would hypothetically result in a loss (income) of ThCh$ 3,065,747 (ThCh$ 3,035,371 in 2014 and ThCh$ 2,999,467 in 2013) in the Consolidated Statement of Income. Raw material price risk  The main exposure to the raw material price variation is related to barley and malt used in the production of beer, concentrates, sugar and plastic containers used in the production of soft drinks and bulk wine and grapes for the manufacturing of wine and spirits.  Barley, malt and cans  In Chile, the Company obtains its barley and malt supply both from local producers and the international market. Long-term supply agreements are entered into with local producers where the barley price is set annually according to market prices, which are used to determine the malt price according to the agreements. The purchases commitments made expose the Company to a raw material price fluctuation risk. During 2015, the Company purchased 46,620 tons (52,720 tons in 2014) of barley and 53,890 tons (37,315 tons in 2014) of malt. CCU Argentina acquires mainly malt from local producers. Such raw materials represent approximately 9 % (12% in 2014) of the direct cost of Chile Operating segment.  Of the cost of Chile Operating segment, the cost of cans represents approximately 12% of the direct cost in 2015 (12% in 2014). Meanwhile in International business Operating segment the cans cost represent approximately 30% of the direct cost of raw materials in 2015 (20% in 2014).      
 F-32


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Concentrates, Sugar and plastic containers  The main raw materials used in the production of non-alcoholic beverages are concentrates, which are mainly acquired from licensees, sugar and plastic resin for the manufacturing of plastic bottles and containers. The Company is exposed to price fluctuation risks of these raw materials, which jointly represent approximately 29% in 2015 (29% in 2014 and 27% in 2013) of the direct cost of Chile Operating segment. The company does not engage in hedging the purchases of raw materials.   Grapes and wine  The main raw material used by the subsidiary VSPT for wine production are harvested grapes from own production and grapes and wines acquired from third parties through long term and spot contracts. For the last 12 months, approximately 31% of the total wine of VSPT supply comes from its own vineyards. In the export business the own supply for 2015 was 48% (37% for 2014).  The remaining 69% (77% in 2014) supply is purchased from third parties through long term and spot contracts. During 2015, the subsidiary VSPT acquired 55% (69% in 2014) of the necessary grapes and wine from third parties through spot contracts. It also acquired 14% of its grape needs in 2015 from long term agreements (8% in 2014).  We must consider that as of December 31, 2015, the wine represents 57% (59% in 2014) of the total direct cost of the Wine Operating Segment, meaning that the supply purchased to third parties represents 31% of the direct cost.  Raw material price sensitivity Analysis  The total direct cost in the Consolidated Statement of Income for 2015 amounts to ThCh$ 485,391,583 (ThCh$ 433,749,832 in 2014 and ThCh$ 382,645,778 in 2013). Assuming a reasonably possible increase (decrease) in the direct cost of each Operating segment of 8% and maintaining constant all the rest of the variables, such as exchange rates, the aforesaid increase (decrease) would hypothetically result into a loss (income) before taxes of ThCh$ 24,078,370 (ThCh$ 21,875,405 in 2014 and ThCh$ 20,363,653 in 2013) for Chile Operating segment, ThCh$ 8,444,331 (ThCh$ 5,925,786 in 2014 and ThCh$ 5,421,437 in 2013) for International Business Operating segment, ThCh$ 6,736,734  (ThCh$ 6,414,035 in 2014 and ThCh$ 6,180,951 in2013) for Wine Operating segment. Credit risk  The credit risk to which the Company is exposed originates from: a) the commercial accounts receivable maintained with retail clients, wholesale distributors and supermarket chains of domestic markets; b) accounts receivable from exports; and c) financial facilities maintained with Banks and financial institutions, such as demand deposits, mutual funds investments, facilities acquired under resale commitments and derivatives.  Domestic market  The credit risk related to commercial collectible accounts of domestic markets is administered by the Loan and Collection Administration Officer, and it is monitored by the Loan Committee of each business unit. The Company has a wide client base that is subject to the policies, procedures and controls established by the Company. The loan limits are established for all clients on the basis of an internal qualification and payment performance. Outstanding commercial accounts receivable are regularly monitored. In addition, the Company acquires loan insurances covering 90% of the individually significant accounts receivable balances, a coverage that as of December 31, 2015, amounts to 88% (87% in 2014) of the total accounts receivable.  Overdue but not impaired commercial accounts receivable corresponds to clients that show delays of less than 21.4 days (18.2 days in 2014).  As of December 31, 2015, the Company had approximately 998 clients (904 clients in 2014) indebted in over Ch$ 10 million each that together represent approximately 85% (86% in 2014) of the total commercial accounts receivable. There were 217 clients (195 clients in 2014) with balances over Ch$ 50 million each, representing approximately 74% (76% in 2014) of the total accounts receivable. The 93% (94% in 2014) of such accounts receivable are covered by the loan insurance.  The Company believes that no additional credit risk provisions are needed to the individual and collective provisions determined at December 31, 2015, as a large percentage of these are covered by insurance. 
 F-33


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
    Exports market  The loan risk related to accounts receivable for exports is administered by VSPT Head of Loan and Collection, and it is monitored by VSPT Administration and Finance Officer. The Company has a large client base, in over eighty countries, which are subject to the policies, procedures and controls established by the Company. In addition, the Company acquires loan insurance covering 99% (98% in 2014) of the total accounts receivable. Pending payment of commercial accounts receivable is regularly monitored. Apart from the loan insurance, having diversified sales in different countries decreases the loan risk.  As of December 31, 2015, there were 69 clients (72 clients in 2014) indebted for over ThCh$ 65,000 each, which represent 88% (87% in 2014) of the total accounts receivable of the export market.  Overdue but not impaired commercial accounts receivable corresponds to clients that show delays of less than 19 days (32 days in 2014).  The Company estimates that no loan risk provisions are necessary in addition to the individual and collective provisions determined as of December 31, 2015. See analysis of accounts receivables maturities and losses due to impairment of accounts receivables (Note 15).  The Company has policies limiting the counterparty loan risk exposure with respect to financial institutions, and such exposures are frequently monitored. Consequently, the Company does not have significant risk concentration with any specific financial institutions as of December 31, 2015. Tax risk  Our businesses are taxed with different duties, particularly with excise taxes on the consumption of alcoholic and non-alcoholic beverages.  The Argentine excise tax is 8.7% for beer, and the Chilean excise tax is 20.5% for beer and wine (15% in 2014), 31.5% for spirits (27% in 2014), 18% for sugar content non alcoholic beverages and 10% for no sugar content non alcoholic beverages (13% in 2014). In Uruguay the excise tax is 22% for beer, 19% for sugar content non alcoholic beverages, 12% for no sugar content non alcoholic beverages and 8% for bottled water. As for Paraguay, the excise tax is 9% for beer and 5% for sugar content non alcoholic beverages and bottled water.  An increase in the rate of these or any other tax could negatively affect our sales and profitability. Liquidity risk  The Company administers liquidity risk at a consolidated level. The cash flows originated from operational activities being the main liquidity source. Additionally, the Company has the ability to issue debt and equity instruments in the capital market according to our needs.  To manage short-term liquidity, the Company considers projected cash flows for a twelve months moving period and maintains cash and cash equivalents available to meet its obligations.  Based on the current operational performance and its liquidity position, the Company estimates that cash flows originated by operating activities and the cash available shall be sufficient to finance working capital, capital investments, interest payments, dividend payments and debt payment requirements for the next 12-month period and the foreseeable future. 
 F-34


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 A summary of the Company’s financial liabilities with their maturities as of December 31, 2015 and 2014, based on the non-discounted contractual cash flows appears below:  As of December 31, 2015

   Book value

   Contractual flows maturitiesLess than 1 year

   Between 1 and 5 years

   More than 5 years

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Other financial liabilities no derivativeBank borrowings

   76,050,091

   33,250,667

   52,025,633

   -

   85,276,300Bond payable

   74,508,233

   5,606,949

   28,255,440

   64,742,891

   98,605,280Financial leases obligations

   17,559,874

   1,505,697

   5,148,941

   28,871,228

   35,525,866Deposits for return of bottles and containers

   12,503,170

   12,503,170

   -

   -

   12,503,170Sub-Total

   180,621,368

   52,866,483

   85,430,014

   93,614,119

   231,910,616Derivative financial liabilitiesDerivative hedge liabilities

   107,698

   107,876

   -

   -

   107,876Derivative financial instruments

   171,470

   171,471

   -

   -

   171,471Sub-Total

   279,168

   279,347

   -

   -

   279,347Total

   180,900,536

   53,145,830

   85,430,014

   93,614,119

   232,189,963
   As of December 31, 2014

   Book value

   Contractual flows maturitiesLess than 1 year

   Between 1 and 5 years

   More than 5 years

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Other financial liabilities no derivativeBank borrowings

   95,822,149

   51,813,214

   52,789,648

   -

   104,602,862Bond payable

   73,937,639

   5,485,283

   23,204,531

   71,545,695

   100,235,509Financial leases obligations

   17,392,945

   1,681,160

   5,228,658

   28,911,336

   35,821,154Deposits for return of bottles and containers

   11,787,424

   11,787,424

   -

   -

   11,787,424Sub-Total

   198,940,157

   70,767,081

   81,222,837

   100,457,031

   252,446,949Derivative financial liabilitiesDerivative hedge liabilities

   228,376

   161,879

   (307,947)

   -

   (146,068)Derivative financial instruments

   684,317

   684,317

   -

   -

   684,317Sub-Total

   912,693

   846,196

   (307,947)

   -

   538,249Total

   199,852,850

   71,613,277

   80,914,890

   100,457,031

   252,985,198
  View current and non-current book value inNote 6.   
 F-35


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 6Financial Instruments Financial instruments categories  The following are the book values of each financial instrument category at the closing of each year:  As of December 31, 2015

   As of December 31, 2014Current

   Non current

   Current

   Non currentThCh$

   ThCh$

   ThCh$

   ThCh$Cash and cash equivalents

   192,554,239

   -

   214,774,876

   -Other financial assets

   13,644,105

   80,217

   6,483,652

   343,184Accounts receivable - trade and other receivable

   252,225,937

   -

   238,602,893

   -Acoounts receivable from related companies

   4,788,930

   445,938

   11,619,118

   522,953Total financial assets

   463,213,211

   526,155

   471,480,539

   866,137Bank borrowings

   27,714,998

   48,335,093

   49,137,896

   46,684,253Bonds payable

   3,155,239

   71,352,994

   3,029,425

   70,908,214Financial leases obligations

   321,416

   17,238,458

   518,139

   16,874,806Derivative financial instruments

   171,470

   -

   684,317

   -Derivative hedge liabilities

   107,698

   -

   161,092

   67,284Deposits for return of bottles and containers

   12,503,170

   -

   11,787,424

   -Total other non-financial liabililities (*)

   43,973,991

   136,926,545

   65,318,293

   134,534,557Account payable- trade and other payable

   227,736,803

   1,645,098

   203,782,805

   369,506Accounts payable to related entities

   11,624,218

   -

   10,282,312

   -Total financial liabilities

   283,335,012

   138,571,643

   279,383,410

   134,904,063
  (*) SeeNote 27 - Other financial liabilities.  
 F-36


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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Financial instruments fair value  a)Composition of financial assets and liabilities:  The following tables show the fair values, based on the financial instrument categories, as compared to the book value included in the Consolidated Statements of Financial Position:  As of December 31, 2015

   As of December 31, 2014Book Value

   Fair Value

   Book Value

   Fair ValueThCh$

   ThCh$

   ThCh$

   ThCh$Cash and cash equivalents

   192,554,239

   192,554,239

   214,774,876

   214,774,876Other financial assets

   13,724,322

   13,724,322

   6,826,836

   6,826,836Accounts receivable - trade and other receivable

   252,225,937

   252,225,937

   238,602,893

   238,602,893Acoounts receivable from related companies

   5,234,868

   5,234,868

   12,142,071

   12,142,071Total financial assets

   463,739,366

   463,739,366

   472,346,676

   472,346,676Bank borrowings

   76,050,091

   77,380,452

   95,822,149

   98,167,470Bonds payable

   74,508,233

   80,087,449

   73,937,639

   80,134,117Financial leases obligations

   17,559,874

   29,104,078

   17,392,945

   28,975,321Derivative financial instruments

   171,470

   171,470

   684,317

   684,317Derivative hedge liabilities

   107,698

   107,698

   228,376

   228,376Deposits for return of bottles and containers

   12,503,170

   12,503,170

   11,787,424

   11,787,424Total other non-financial liabililities (*)

   180,900,536

   199,354,317

   199,852,850

   219,977,025Account payable- trade and other payable

   229,381,901

   229,381,901

   204,152,311

   204,152,311Accounts payable to related entities

   11,624,218

   11,624,218

   10,282,312

   10,282,312Total financial liabilities

   421,906,655

   440,360,436

   414,287,473

   434,411,648
  The book value of current accounts receivables, cash and cash equivalents and other financial assets and liabilities approximate fair value due to the short-term nature of such facilities, and in the case of accounts receivable, due to the fact that any collection loss is already reflected in the impairment loss provision.  The fair value of non-derivative financial assets and liabilities that are not quoted in active markets are estimated through the use of discounted cash flows calculated on market variables observed as of the date of the financial statements. The fair value of derivative instruments is estimated through the discount of future cash flows, determined according to information observed in the market     or to variables and prices obtained from third parties.  The fair value of bank borrowings and Bonds payable have hierarchy level 2 of fair value.  b)Financial instruments as per category:  As of December 31, 2015

   Fair value with changes in income

   Cash and cash equivalents and loans and accounts receivables

   Hedge derivatives

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$Financial assetsDerivative financial instruments

   9,365,572

   -

   816,622

   10,182,194Marketable securities and investments in other companies

   3,542,128

   -

   -

   3,542,128Total other financial assets

   12,907,700

   -

   816,622

   13,724,322Cash and cash equivalents

   -

   192,554,239

   -

   192,554,239Accounts receivable-trade and other receivables

   -

   252,225,937

   -

   252,225,937Account receivable from to related companies

   -

   5,234,868

   -

   5,234,868Total

   12,907,700

   450,015,044

   816,622

   463,739,366
  
 F-37


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  As of December 31, 2015

   Fair value with changes in income

   Hedge derivatives

   Financial libilities measured at amortized cost

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$Financial liabilitiesBank borrowings

   -

   -

   76,050,091

   76,050,091Bonds payable

   -

   -

   74,508,233

   74,508,233Financial leases obligations

   -

   -

   17,559,874

   17,559,874Deposits for return of bottles and containers

   -

   -

   12,503,170

   12,503,170Derivative financial instruments

   171,470

   107,698

   -

   279,168Total others financial liabililities

   171,470

   107,698

   180,621,368

   180,900,536Account payable- trade and other payable

   -

   -

   229,381,901

   229,381,901Accounts payable to related entities

   -

   -

   11,624,218

   11,624,218Total

   171,470

   107,698

   421,627,487

   421,906,655
  As of December 31, 2014

   Fair value with changes in income

   Cash and cash equivalents and loans and accounts receivables

   Hedge derivatives

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$Financial assetsDerivative financial instruments

   5,467,620

   -

   343,184

   5,810,804Marketable securities and investments in other companies

   1,016,032

   -

   -

   1,016,032Total other financial assets

   6,483,652

   -

   343,184

   6,826,836Cash and cash equivalents

   -

   214,774,876

   -

   214,774,876Accounts receivable-trade and other receivables

   -

   238,602,893

   -

   238,602,893Account receivable from to related companies

   -

   12,142,071

   -

   12,142,071Total

   6,483,652

   465,519,840

   343,184

   472,346,676
  As of December 31, 2014

   Fair value with changes in income

   Hedge derivatives

   Financial libilities measured at amortized cost

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$Financial liabilitiesBank borrowings

   -

   -

   95,822,149

   95,822,149Bonds payable

   -

   -

   73,937,639

   73,937,639Financial leases obligations

   -

   -

   17,392,945

   17,392,945Deposits for return of bottles and containers

   -

   -

   11,787,424

   11,787,424Derivative financial instruments

   684,317

   228,376

   -

   912,693Total others financial liabililities

   684,317

   228,376

   198,940,157

   199,852,850Account payable- trade and other payable

   -

   -

   204,152,311

   204,152,311Accounts payable to related entities

   -

   -

   10,282,312

   10,282,312Total

   684,317

   228,376

   413,374,780

   414,287,473
  
 F-38


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Derivative Instruments  The detail of maturities, number of derivative agreements, contracted nominal amounts, fair values and the classification of such derivative instruments as per type of agreement at the closing of each year is as follows:  As of December 31, 2015

   As of December 31, 2014Number agreements

   Notional amounts thousand

   Asset

   Liability

   Number agreements

   Notional amounts thousand

   Asset

   LiabilityThCh$

   ThCh$

   ThCh$

   ThCh$Cross interest rate swaps USD/USD

   1

   10,094

   -

   107,698

   2

   18,185

   -

   184,999Less than a year

   1

   10,094

   -

   107,698

   1

   8,185

   -

   117,713Between 1 and 5 years

   -

   -

   -

   -

   1

   10,000

   -

   67,286Cross currency interest rate swaps USD/EURO

   2

   12,353

   816,622

   -

   1

   4,499

   343,184

   43,377Less than a year

   1

   4,477

   736,405

   -

   -

   63

   -

   43,377Between 1 and 5 years

   1

   7,877

   80,217

   -

   1

   4,436

   343,184

   -Forwards USD

   27

   148,404

   9,276,156

   117,151

   30

   93,709

   5,467,620

   570,413Less than a year

   27

   148,404

   9,276,156

   117,151

   30

   93,709

   5,467,620

   570,413Forwards Euro

   7

   11,981

   57,834

   52,368

   8

   11,975

   -

   98,507Less than a year

   7

   11,981

   57,834

   52,368

   8

   11,975

   -

   98,507Forwards CAD

   4

   1,500

   18,192

   1,951

   1

   870

   -

   1,622Less than a year

   4

   1,500

   18,192

   1,951

   1

   870

   -

   1,622Forwards GBP

   3

   865

   13,390

   -

   2

   1,060

   -

   13,775Less than a year

   3

   865

   13,390

   -

   2

   1,060

   -

   13,775Total derivative instruments

   44

   

   10,182,194

   279,168

   44

   

   5,810,804

   912,693
   These derivative agreements have been entered into as a hedge of exchange rate risk exposure. In the case of forwards, the Company does not comply with the formal requirements for hedging classified; consequently their effects are recorded in Income, in Other gains (losses), separately from the hedged item.  
 F-39


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 In the case of Cross Currency Interest Rate Swaps and the Cross Interest Rate Swaps, these qualify as cash flow hedges of the flows related to loans from Banco de Chile and Banco Scotiabank. See additional disclosures inNote 27.  As of December 31, 2015Entity

   Nature of risks covered

   Rights

   Obligations

   Fair value of net asset (liabilities)

   MaturityCurrency

   Amount

   Currency

   Amount

   AmountThCh$

   ThCh$

   ThCh$Scotiabank

   Interest rate and exchange rate in bank obligations

   USD

   5,700,299

   EUR

   5,589,172

   111,127

   18-06-2018Banco de Chile

   Interest rate and exchange rate in bank obligations

   USD

   3,205,865

   EUR

   2,500,370

   705,495

   11-07-2016Banco de Chile

   Interest rate on bank loans

   USD

   7,227,245

   USD

   7,334,943

   (107,698)

   07-07-2016
   As of December 31, 2014Entity

   Nature of risks covered

   Rights

   Obligations

   Fair value of net asset (liabilities)

   MaturityCurrency

   Amount

   Currency

   Amount

   AmountThCh$

   ThCh$

   ThCh$Scotiabank

   Interest rate on bank loans

   USD

   4,862,197

   USD

   4,870,405

   (8,208)

   22-06-2015Banco de Chile

   Interest rate and exchange rate on bank loans

   USD

   2,718,035

   EUR

   2,418,228

   299,807

   11-07-2016Banco de Chile

   Interest rate on bank loans

   USD

   6,128,184

   USD

   6,304,976

   (176,792)

   07-07-2016
 The Consolidated Statement of Other Comprehensive Income includes under the caption cash flow hedge, for the years ended December 31, 2015, a debit before income taxes of ThCh$ 80,693 (a credit before incomes taxes of ThCh$ 155,258 and a debit of ThCh$ 256,592, in 2014 and 2013, respectively), relating to the fair value of the Cross Currency Interest Swap and Cross Interest Rate Swap derivatives instruments. Fair value hierarchies  The financial instruments recorded at fair value in the Statement of Financial Position are classified as follows, depending on the method used to obtain their fair values:  Level 1                  Fair values obtained through direct reference to quoted market prices, without any adjustment.  Level 2                  Fair values obtained through the use of valuation models accepted in the market and based on prices different from those of Level 1, which may be directly or indirectly observed as of the measurement date (adjusted prices).  Level 3                   Fair values obtained through internally developed models or methodologies that use information which may not be observed or which is illiquid.        
 F-40


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The fair value of financial instruments recorded at fair value in the Consolidated Financial Statements, are as follows:  As of December 31, 2015

   Recorded fair value

   Fair value hierarchyLevel 1

   Level 2

   Level 3ThCh$

   ThCh$

   ThCh$

   ThCh$Derivative financial instruments

   9,365,572

   -

   9,365,572

   -Market securities and investments in other companies

   3,542,128

   3,542,128

   -

   -Derivative hedge assets

   816,622

   -

   816,622

   -Fair value financial assets

   13,724,322

   3,542,128

   10,182,194

   -Derivative hedge liabilities

   107,698

   -

   107,698

   -Derivative financial instruments

   171,470

   -

   171,470

   -Fair value financial liabilities

   279,168

   -

   279,168

   -
  As of December 31, 2014

   Recorded fair value

   Fair value hierarchyLevel 1

   Level 2

   Level 3ThCh$

   ThCh$

   ThCh$

   ThCh$Derivative financial instruments

   5,467,620

   -

   5,467,620

   -Market securities and investments in other companies

   1,016,032

   1,016,032

   -

   -Derivative hedge assets

   343,184

   -

   343,184

   -Fair value financial assets

   6,826,836

   1,016,032

   5,810,804

   -Derivative hedge liabilities

   228,376

   -

   228,376

   -Derivative financial instruments

   684,317

   -

   684,317

   -Fair value financial liabilities

   912,693

   -

   912,693

   -
  During year ended as ofDecember 31, 2015, the Company has not made any significant instrument transfer between levels 1 and 2. Credit Quality of financial assets  The Company uses two credit assessment systems for its clients: a) Clients with loan insurance are assessed according to the external risk criteria (trade reports, non-compliance and protested documents that are available in the local market), payment capability and equity situation required by the insurance company to grant a loan coverage; b) All other the clients are assessed through an ABC risk model, which considers internal risk (non-compliance and protested documents), external risk (trade reports, non-compliance and protested documents that  are available in the local market) and payment capacity and equity situation. The uncollectible rate during the last two years has not been significant.  
 F-41


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 7Financial Information as per operating segments  The Company has defined three Operating segments, essentially defined with respect to its revenues in the geographic areas of commercial activity: 1. Chile, 2. International business and 3. Wine. From the fourth quarter of 2015 onwards, was created the Committee of International Business, which brings together management of the business activities regarding the geographical areas Argentina, Uruguay and Paraguay. Following this change, the Río de la Plata Operating segment (consisting of the business activities referred to) will be renamed into the International Business Operating Segment. The Committee of International Business will at the same time represent and look after the interests associated with the investments in Bolivia and Colombia, which will continue to report its results under Equity and income of JVs and associated on a consolidated basis. These Operating segments mentioned are consistent with the way the Company is managed and how results are reported by CCU. These segments reflect separate operating results which are regularly reviewed by each segment chief operating decision maker in order to make decisions about the resources to be allocated to the segment and assess its performance. Operating segment

   ProductsChile

   Beers, non-alcoholic beverages and spirits.International business

   Beers, cider, non-alcoholic beverages and spirits in Argentina, Uruguay and Paraguay.Wines

   Wines, mainly in export markets to more 80 countries.
  Corporate revenues and expenses are presented separately within the Other segment. In addition this segment presents the elimination of transactions between segments. The Company does not have any customers representing more than 10% of consolidated revenues. The detail of the segments is presented in the following tables.  
 F-42


---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  a)Information as per operating segments for the years ended as ofDecember 31, 2015 and 2014:   Chile Operating segment

   International business segment operation

   Wines operating segment

   Others

   Total2015

   2014

   2015

   2014

   2015

   2014

   2015

   2014

   2015

   2014ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Sales revenue external customers

   885,769,609

   813,639,952

   400,051,022

   292,152,707

   184,169,165

   168,139,809

   -

   -

   1,469,989,796

   1,273,932,468Other income

   10,238,408

   9,100,957

   4,708,728

   3,992,902

   5,214,674

   3,918,028

   8,220,109

   7,021,944

   28,381,919

   24,033,831Sales revenue between segments

   6,013,177

   7,600,483

   953,967

   3,522,074

   131,209

   290,716

   (7,098,353)

   (11,413,273)

   -

   -Net sales

   902,021,194

   830,341,392

   405,713,717

   299,667,683

   189,515,048

   172,348,553

   1,121,756

   (4,391,329)

   1,498,371,715

   1,297,966,299Change %

   8.6

   -

   35.4

   -

   10.0

   -

   -

   -

   15.4

   -Cost of sales

   (420,297,983)

   (383,558,625)

   (162,665,341)

   (136,174,602)

   (105,956,281)

   (97,523,601)

   3,844,354

   12,720,013

   (685,075,251)

   (604,536,815)% of Net sales

   46.6

   46.2

   40.1

   45.4

   55.9

   56.6

   -

   -

   45.7

   46.6Gross margin

   481,723,211

   446,782,767

   243,048,376

   163,493,081

   83,558,767

   74,824,952

   4,966,110

   8,328,684

   813,296,464

   693,429,484% of Net sales

   53.4

   53.8

   59.9

   54.6

   44.1

   43.4

   -

   -

   54.3

   53.4MSD&A (1)

   (328,488,527)

   (317,765,236)

   (216,098,525)

   (154,299,739)

   (51,070,291)

   (50,284,130)

   (16,907,433)

   (13,253,897)

   (612,564,776)

   (535,603,002)% of Net sales

   36.4

   38.3

   53.3

   51.5

   26.9

   29.2

   -

   -

   40.9

   41.3Other operating income (expenses)

   688,920

   722,478

   3,315,892

   20,173,967

   44,823

   238,952

   155,675

   2,585,913

   4,205,310

   23,721,310Operating result before Exceptional Items (EI)

   153,923,604

   129,740,009

   30,265,743

   29,367,309

   32,533,299

   24,779,774

   (11,785,648)

   (2,339,300)

   204,936,998

   181,547,792Change %

   18.6

   -

   3.1

   -

   31.3

   -

   -

   -

   12.9

   -% of Net sales

   17.1

   15.6

   7.5

   9.8

   17.2

   14.4

   -

   -

   13.7

   14.0Exceptional Items (EI) (2)

   -

   -

   -

   (1,214,505)

   -

   -

   -

   (412,995)

   -

   (1,627,500)Operating result (3)

   153,923,604

   129,740,009

   30,265,743

   28,152,804

   32,533,299

   24,779,774

   (11,785,648)

   (2,752,295)

   204,936,998

   179,920,292Change %

   18.6

   -

   7.5

   -

   31.3

   -

   -

   -

   13.9

   -% of Net sales

   17.1

   15.6

   7.5

   9.4

   17.2

   14.4

   -

   -

   13.7

   13.9Net financial expense

   -

   -

   -

   -

   -

   -

   -

   -

   (15,255,586)

   (10,820,891)Equity and income of associates and joint ventures

   -

   -

   -

   -

   -

   -

   -

   -

   (5,228,135)

   (898,607)Foreign currency exchange differences

   -

   -

   -

   -

   -

   -

   -

   -

   957,565

   (613,181)Results as per adjustment units

   -

   -

   -

   -

   -

   -

   -

   -

   (3,282,736)

   (4,159,131)Other gains (losses)

   -

   -

   -

   -

   -

   -

   -

   -

   8,512,000

   4,036,939Income before taxes

   

   

   

   

   

   

   

   

   190,640,106

   167,465,421Income taxes

   

   

   

   

   

   

   

   

   (50,114,516)

   (46,673,500)Net income for year

   

   

   

   

   

   

   

   

   140,525,590

   120,791,921Non-controlling interests

   

   

   

   

   

   

   

   

   19,717,455

   14,553,471Net income attributable to equity holders of the parent

   

   

   

   

   

   

   

   

   120,808,135

   106,238,450Depreciation and amortization

   45,766,393

   38,832,969

   14,334,415

   11,194,117

   7,568,991

   7,115,790

   13,897,003

   11,464,690

   81,566,802

   68,607,566ORBDA before EI

   199,689,997

   168,572,978

   44,600,158

   40,561,426

   40,102,290

   31,895,564

   2,111,355

   9,125,390

   286,503,800

   250,155,358Change %

   18.5

   -

   10.0

   -

   25.7

   -

   -

   -

   14.5

   -% of Net sales

   22.1

   20.3

   11.0

   13.5

   21.2

   18.5

   -

   -

   19.1

   19.3ORBDA (4)

   199,689,997

   168,572,978

   44,600,158

   39,346,921

   40,102,290

   31,895,564

   2,111,355

   8,712,395

   286,503,800

   248,527,858Change %

   18.5

   -

   13.4

   -

   25.7

   -

   -

   -

   15.3

   -% of Net sales

   22.1

   20.3

   11.0

   13.1

   21.2

   18.5

   -

   -

   19.1

   19.1
  (1)MSD&A, included Marketing, Selling, Distribution and Administrative expenses. (2)Exceptional Items are income or expenses that do not occur regularly as part of the normal activities of the Company. It’s presented separately because its important items for the understanding the normal operations of the Company due to importance or nature.During the year 2014, the Company has considered this result as an Exceptional Items related to different restructuring process of operating segments. (3)Operating result (For management purposes we have defined as earnings before other gains (losses), net financial expense, equity and income of joint venture, foreign currency exchange differences, result as per adjustment units and income taxes). (4)ORBDA (For management purpose we have defined as Operating Result before Depreciation and Amortization).


F-43

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 b)Information as per operating segments for the years ended as ofDecember 31, 2014 and 2013:  Chile Operating segment

   International business segment operation

   Wines operating segment

   Others

   Total2014

   2013

   2014

   2013

   2014

   2013

   2014

   2013

   2014

   2013ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Sales revenue external customers

   813,639,952

   751,079,523

   292,152,707

   274,029,865

   168,139,809

   146,938,005

   -

   -

   1,273,932,468

   1,172,047,393Other income

   9,100,957

   8,560,450

   3,992,902

   7,405,658

   3,918,028

   4,524,947

   7,021,944

   4,688,062

   24,033,831

   25,179,117Sales revenue between segments

   7,600,483

   5,555,707

   3,522,074

   999,777

   290,716

   792,495

   (11,413,273)

   (7,347,979)

   -

   -Net sales

   830,341,392

   765,195,680

   299,667,683

   282,435,300

   172,348,553

   152,255,447

   (4,391,329)

   (2,659,917)

   1,297,966,299

   1,197,226,510Change %

   8.5

   -

   6.1

   -

   13.2

   -

   -

   -

   8.4

   -Cost of sales

   (383,558,625)

   (343,230,330)

   (136,174,602)

   (113,264,790)

   (97,523,601)

   (92,864,092)

   12,720,013

   12,662,578

   (604,536,815)

   (536,696,634)% of Net sales

   46.2

   44.9

   45.4

   40.1

   56.6

   61.0

   -

   -

   46.6

   44.8Gross margin

   446,782,767

   421,965,350

   163,493,081

   169,170,510

   74,824,952

   59,391,355

   8,328,684

   10,002,661

   693,429,484

   660,529,876% of Net sales

   53.8

   55.1

   54.6

   59.9

   43.4

   39.0

   -

   -

   53.4

   55.2MSD&A (1)

   (317,765,235)

   (275,202,656)

   (154,299,739)

   (142,972,002)

   (50,284,131)

   (46,036,147)

   (13,253,897)

   (9,312,740)

   (535,603,002)

   (473,523,545)% of Net sales

   38.3

   36.0

   51.5

   50.6

   29.2

   30.2

   -

   -

   41.3

   39.6Other operating income (expenses)

   722,478

   1,385,111

   20,173,967

   1,038,067

   238,952

   (166,311)

   2,585,913

   1,991,965

   23,721,310

   4,248,832Operating result before Exceptional Items (EI)

   129,740,010

   148,147,805

   29,367,309

   27,236,575

   24,779,773

   13,188,897

   (2,339,300)

   2,681,886

   181,547,792

   191,255,163Change %

   (12.4)

   -

   7.8

   -

   87.9

   -

   -

   -

   (5.1)

   -% of Net sales

   15.6

   19.4

   9.8

   9.6

   14.4

   8.7

   -

   -

   14.0

   16.0Exceptional Items (EI) (2)

   -

   (780,458)

   (1,214,505)

   (543,111)

   -

   (275,700)

   (412,995)

   (1,390,060)

   (1,627,500)

   (2,989,329)Operating result (3)

   129,740,010

   147,367,347

   28,152,804

   26,693,464

   24,779,773

   12,913,197

   (2,752,295)

   1,291,826

   179,920,292

   188,265,834Change %

   (12.0)

   -

   5.5

   -

   91.9

   -

   -

   -

   (4.4)

   -% of Net sales

   15.6

   19.3

   9.4

   9.5

   14.4

   8.5

   -

   -

   13.9

   16Net financial expense

   -

   -

   -

   -

   -

   -

   -

   -

   (10,820,891)

   (15,830,056)Equity and income of associates and joint ventures

   -

   -

   -

   -

   -

   -

   -

   -

   (898,607)

   308,762Foreign currency exchange differences

   -

   -

   -

   -

   -

   -

   -

   -

   (613,181)

   (4,292,119)Results as per adjustment units

   -

   -

   -

   -

   -

   -

   -

   -

   (4,159,131)

   (1,801,765)Other gains (losses)

   -

   -

   -

   -

   -

   -

   -

   -

   4,036,939

   958,802Income before taxes

   

   

   

   

   

   

   

   

   167,465,421

   167,609,458Income taxes

   

   

   

   

   

   

   

   

   (46,673,500)

   (34,704,907)Net income for year

   

   

   

   

   

   

   

   

   120,791,921

   132,904,551Non-controlling interests

   

   

   

   

   

   

   

   

   14,553,471

   9,868,543Net income attributable to equity holders of the parent

   

   

   

   

   

   

   

   

   106,238,450

   123,036,008Depreciation and amortization

   38,832,969

   37,534,253

   11,194,117

   9,957,053

   7,115,790

   7,238,886

   11,464,690

   9,516,304

   68,607,566

   64,246,496ORBDA before EI

   168,572,979

   185,682,058

   40,561,426

   37,193,628

   31,895,563

   20,427,783

   9,125,390

   12,198,190

   250,155,358

   255,501,659Change %

   (9.2)

   -

   9.1

   -

   56.1

   -

   -

   -

   (2.1)

   -% of Net sales

   20.3

   24.3

   13.5

   13.2

   18.5

   13.4

   -

   -

   19.3

   21.3ORBDA (4)

   168,572,979

   184,901,600

   39,346,921

   36,650,517

   31,895,563

   20,152,083

   8,712,395

   10,808,130

   248,527,858

   252,512,330Change %

   (8.8)

   -

   7.4

   -

   58.3

   -

   -

   -

   (1.6)

   -% of Net sales

   20.3

   24.2

   13.1

   13.0

   18.5

   13.2

   -

   -

   19.1

   21.1
  (1)MSD&A, included Marketing, Selling, Distribution and Administrative expenses. (2)Exceptional Items are income or expenses that do not occur regularly as part of the normal activities of the Company. It’s presented separately because its important items for the understanding the normal operations of the Company due to importance or nature.For the year 2013, the Companyhas considered this result as an Exceptional items (EI) related to restructuring process which implied the early retirement of managers replaced internally, promotions and the sole and exceptional payments of incentives to the leaving and remaining personnel. (3)Operating result (For management purposes we have defined as earnings before other gains (losses), net financial expense, equity and income of joint venture, foreign currency exchange differences, result as per adjustment units and income taxes). (4)ORBDA (For management purpose we have defined as Operating Result before Depreciation and Amortization).


F-44

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Sales information by geographic location  Net sales per geographical location

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Chile

   1,081,835,420

   991,938,043

   907,947,965Argentina

   366,886,701

   264,631,403

   279,342,525Uruguay

   14,432,950

   11,204,806

   9,936,020Paraguay

   35,216,644

   30,192,047

   -Total

   1,498,371,715

   1,297,966,299

   1,197,226,510
  See distribution of domestic and exports revenues inNote 9.  Depreciation and amortization as per operating segments  Property, plant and equipment depreciation and amortization of software

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Chile Operating segment

   45,766,393

   38,832,969

   37,534,253International business segment operation

   14,334,415

   11,194,117

   9,957,053Wines operating segment

   7,568,991

   7,115,790

   7,238,886Others (1)

   13,897,003

   11,464,690

   9,516,304Total

   81,566,802

   68,607,566

   64,246,496
  (1)Others includes depreciation and amortization corresponding to the Corporate Support Units and Strategic Service Units.


F-45

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Capital expenditures as per operating segments  Capital expenditures (property, plant and equipment and software additions)

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Chile Operating segment

   72,292,561

   85,904,965

   70,441,360International business segment operation

   27,871,662

   33,481,407

   29,779,226Wines operating segment

   10,052,863

   12,686,080

   4,839,881Others (1)

   21,513,836

   98,007,700

   19,498,562Total

   131,730,922

   230,080,152

   124,559,029
 (1)Others includes the capital investments corresponding to the Corporate Support Units and Strategic Service Units.  Assets as per operating segments  Assets per segment

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Chile Operating segment

   685,295,557

   653,728,891International business segment operation

   256,319,478

   275,037,618Wines operating segment

   308,288,465

   297,145,081Others (1)

   573,453,051

   542,989,483Total

   1,823,356,551

   1,768,901,073
 (1)Others includes goodwill and the assets corresponding to the Corporate Support Units and Strategic Service Units.   Assets per geographic location  Assets per geographical location

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Chile

   1,555,550,811

   1,480,587,584Argentina

   188,897,724

   211,886,432Uruguay

   25,703,157

   23,971,219Paraguay

   53,204,859

   52,455,838Total

   1,823,356,551

   1,768,901,073
  Liabilites as per operating segments  Liabilites per segments

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Chile Operating segment

   328,182,912

   370,380,118International business segment operation

   97,680,139

   125,647,902Wines operating segment

   102,780,420

   99,164,051Others (1)

   107,190,935

   25,209,084Total

   635,834,406

   620,401,155
  (1)Others includes liabilites corresponding to the Corporate Support Units and Strategic Service Units.


F-46

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Operating Segment’s additional information  The Consolidated Statement of Income classified according to the Company’s operations management is as follows:  CONSOLIDATED STATEMENT OF INCOME

   Notes

   For the years ended December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Sales revenue external customers

   

   1,469,989,796

   1,273,932,468

   1,172,047,393Other income

   

   28,381,919

   24,033,831

   25,179,117Net sales

   9

   1,498,371,715

   1,297,966,299

   1,197,226,510Change %

   

   15.4

   8.4

   -Cost of sales

   

   (685,075,251)

   (604,536,815)

   (536,696,634)% of Net sales

   

   45.7

   46.6

   44.8Gross margin

   

   813,296,464

   693,429,484

   660,529,876% of Net sales

   

   54.3

   53.4

   55.2MSD&A (1)

   

   (612,564,776)

   (535,603,002)

   (473,523,545)% of Net sales

   

   40.9

   41.3

   39.6Other operating income (expenses)

   

   4,205,310

   23,721,310

   4,248,832Operating result before Exceptional Items (EI)

   

   204,936,998

   181,547,792

   191,255,163Change %

   

   12.9

   (5.1)

   -% of Net sales

   

   13.7

   14.0

   16.0Exceptional Items (EI) (2)

   

   -

   (1,627,500)

   (2,989,329)Operating result (3)

   

   204,936,998

   179,920,292

   188,265,834Change %

   

   13.9

   (4.4)

   -% of Net sales

   

   13.7

   13.9

   15.7Net financial expense

   11

   (15,255,586)

   (10,820,891)

   (15,830,056)Equity and income of associates and joint ventures

   20

   (5,228,135)

   (898,607)

   308,762Foreign currency exchange differences

   11

   957,565

   (613,181)

   (4,292,119)Results as per adjustment units

   11

   (3,282,736)

   (4,159,131)

   (1,801,765)Other gains (losses)

   13

   8,512,000

   4,036,939

   958,802Income before taxes

   

   190,640,106

   167,465,421

   167,609,458Income taxes

   26

   (50,114,516)

   (46,673,500)

   (34,704,907)Net income for year

   

   140,525,590

   120,791,921

   132,904,551Non-controlling interests

   32

   19,717,455

   14,553,471

   9,868,543Net income attributable to equity holders of the parent

   

   120,808,135

   106,238,450

   123,036,008Depreciation and amortization

   

   81,566,802

   68,607,566

   64,246,496ORBDA before EI

   

   286,503,800

   250,155,358

   255,501,659Change %

   

   14.5

   (2.1)

   -% of Net sales

   

   19.1

   19.3

   21.3ORBDA (4)

   

   286,503,800

   248,527,858

   252,512,330Change %

   

   15.3

   (1.6)

   -% of Net sales

   

   19.1

   19.1

   21.1
 See definition of (1), (2), (3) and (4) in information as per Operating segment.


F-47

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 (4) The following is a reconciliation of our income operational activities, the most directly comparable IFRS measure to Operating Result for the years ended on December 31, 2015, 2014 and 2013:  For the years ended December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Income from operational activities

   213,448,998

   183,957,231

   189,224,636Add (Subtract):Results derivative contracts

   (9,839,675)

   (4,152,548)

   (2,390,493)Marketable securities to fair value

   (36,280)

   103,306

   107,914Other

   1,363,955

   12,303

   1,323,777Exceptional Items (EI) (2)

   -

   1,627,500

   2,989,329Operating result before EI

   204,936,998

   181,547,792

   191,255,163Exceptional Items (EI) (2)

   -

   (1,627,500)

   (2,989,329)Operating result (1)

   204,936,998

   179,920,292

   188,265,834
 See definition of (1) and (2) in information as per Operating segment.


F-48

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 8Business Combinations  a) Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A.  Year 2013 Acquisitions  DuringDecember 2013, the Company acquired 50.005% and 49.96% of the stock of Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A., respectively. This transaction allows the Company, to participate in the beer distribution business, and production and marketing of non-alcoholic drinks, waters and nectars. The total amount of this transaction was ThCh$ 11,254,656.  On June 9, 2015 the committed equity of ThCh$7,414,290 was paid.  For the acquisition of the Paraguayan companies, the Company have been determined the fair values of the assets, liabilities and contingent liabilities, generating goodwill and trademarks for an amount of ThCh$ 5,566,003 and ThCh$ 3,658,167, respectively, among others (Note 21 and 22).  On December 23, 2014, the Company signed a contract with its subsidiary CCU Inversiones II Limited, in which the last acquired all of stock of Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A.  Bebidas del Paraguay S.A. (BdP) and Distribuidora del Paraguay S.A. (DdP) are considered as an economic group that share operational and financial strategy. BdP manufactures products with different brands of its property. DdP is sole and exclusive customer, which is responsible for the distribution and marketing of its products, reason why BdP is it consolidates DdP.  It is expected that the acquisition of these companies increases their productive capacities, through the expansion of their productive assets, growth in market share through the various brands market and participation in local and foreign markets, as well as operational improvements as a result of synergies obtained in the operational and administrative functions.  b) Manantial S.A.   Year 2013 Acquisitions  On June 7, 2013, the Company proceeded to pay outstanding balance of ThCh$ 1,781,909 related to the acquisition of Manantial S.A.  c)As of December 31, 2015, the Company has not made business combinations.   Note 9Net Sales  Net sales distributed between domestic and export, are as follows:  For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Domestic sales

   1,374,282,584

   1,188,231,333

   1,102,834,492Exports sales

   124,089,131

   109,734,966

   94,392,018Total

   1,498,371,715

   1,297,966,299

   1,197,226,510


F-49

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 10Nature of cost andexpense  Operational cost and expense grouped by natural classification are as follows:  For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Raw material cost

   485,391,583

   433,749,832

   382,645,778Materials and maintenance expense

   43,093,939

   38,678,842

   32,596,344Personnel expense (1)

   197,915,151

   169,331,464

   155,010,442Transportation and distribution

   234,431,464

   201,371,151

   184,417,248Advertising and promotion expense

   117,921,841

   105,649,991

   85,063,591Lease expense

   13,641,122

   13,347,091

   12,201,288Energy expense

   25,178,032

   29,566,627

   25,398,656Depreciation and amortization

   81,566,802

   68,607,566

   64,246,496Other expenses

   100,872,027

   83,207,159

   72,889,696Total

   1,300,011,961

   1,143,509,723

   1,014,469,539
  (1)SeeNote 31 Employee benefits.   Note 11Financial results  The financial income composition for the year ended as of December 31, 2015, 2014 and 2013, is as follows:  For the years ended as of December 31,Financial Results

   2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Financial income

   7,845,743

   12,136,591

   8,254,170Financial cost

   (23,101,329)

   (22,957,482)

   (24,084,226)Foreign currency exchange differences

   957,565

   (613,181)

   (4,292,119)Result as per adjustment units

   (3,282,736)

   (4,159,131)

   (1,801,765)Total

   (17,580,757)

   (15,593,203)

   (21,923,940)
   Note 12Other income by function  The detail of other income by function is as follows:  Other income by function

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Sales of fixed assets

   3,644,435

   

   3,146,816

   2,381,160Lease expense

   245,285

   

   364,388

   318,830Others

   2,687,524

   (1)

   21,952,512

   2,808,873Total

   6,577,244

   25,463,716

   5,508,863
 (1)Under this amount includes, the positive one-time effect compensations received by our Argentine subsidiary CICSA for an amount 227,245 thousands of Argentine pesos (equivalent to MUS$ 34,200), for the termination of the contract which allowed us to import and distribute on an exclusive basis, Corona and Negra Modelo beers in Argentina and the license for the production and distribution of Budweiser beer in Uruguay.


F-50

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 13Other Gains (Losses)  The detail of other gains (losses) items is as follows:  Other gains (losses)

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Results derivative contracts (1)

   9,839,675

   4,152,548

   2,390,493Marketable securities to fair value

   36,280

   (103,306)

   (107,914)Other

   (1,363,955)

   (12,303)

   (1,323,777)Total

   8,512,000

   4,036,939

   958,802
 (1)Under this concept the Company received cash flows amounting ThCh$ 5,419,700, ThCh$ 927,149 and ThCh$ 358,195 corresponding to 2015, 2014 and 2013, respectevily and these were recorded in the Consolidated Cash Flow Statement, under Operational activities, in line item Other cash movements.  Note 14Cash and cash equivalents  Cash and cash equivalent balances were as follows:  As of December 31, 2015

   As of December 31, 2014

   As of December 31, 2013ThCh$

   ThCh$

   ThCh$Cash

   12,712

   12,708

   16,242Overnight deposits

   462,873

   1,319,399

   883,299Bank balances

   42,370,367

   30,853,126

   29,614,669Time deposits

   32,639,373

   99,373,117

   282,628,752Investments in mutual funds

   -

   -

   503,838Securities purchased under resale agreements

   117,068,914

   83,216,526

   95,206,467Total

   192,554,239

   214,774,876

   408,853,267
  The currency composition of cash and cash equivalents atDecember 31, 2015, is as follows:  Chilean Peso

   US Dollar

   Euro

   Argentine Peso

   Uruguayan Peso

   Paraguayan guarani

   Others

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Cash

   10,675

   39

   -

   1,998

   -

   -

   -

   12,712Overnight deposits

   -

   462,873

   -

   -

   -

   -

   -

   462,873Bank balances

   21,964,295

   4,922,732

   955,840

   5,699,756

   948,816

   7,519,619

   359,309

   42,370,367Time deposits

   32,639,373

   -

   -

   -

   -

   -

   -

   32,639,373Securities purchased under resale agreements

   117,068,914

   -

   -

   -

   -

   -

   -

   117,068,914Total

   171,683,257

   5,385,644

   955,840

   5,701,754

   948,816

   7,519,619

   359,309

   192,554,239
  The currency composition of cash and cash equivalents at December 31, 2014, is as follows:  Chilean Peso

   Unidad de Fomento

   US Dollar

   Euro

   Argentine Peso

   Uruguayan Peso

   Paraguayan guarani

   Others

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Cash

   9,939

   -

   420

   -

   2,349

   -

   -

   -

   12,708Overnight deposits

   -

   -

   1,319,399

   -

   -

   -

   -

   -

   1,319,399Bank balances

   8,790,934

   -

   4,738,935

   974,179

   11,726,073

   536,097

   3,753,420

   333,488

   30,853,126Time deposits

   90,962,579

   8,410,538

   -

   -

   -

   -

   -

   -

   99,373,117Securities purchased under resale agreements

   83,216,526

   -

   -

   -

   -

   -

   -

   -

   83,216,526Total

   182,979,978

   8,410,538

   6,058,754

   974,179

   11,728,422

   536,097

   3,753,420

   333,488

   214,774,876


F-51

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The currency composition of cash and cash equivalents at December 31, 2013, is as follows:  Chilean Peso

   Unidad de Fomento

   US Dollar

   Euro

   Argentine Peso

   Uruguayan Peso

   Paraguayan guarani

   Others

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Cash

   6,446

   -

   42

   -

   1,217

   8,537

   -

   -

   16,242Overnight deposits

   -

   -

   883,299

   -

   -

   -

   -

   -

   883,299Bank balances

   24,559,899

   -

   695,292

   1,718,676

   1,730,671

   545,378

   -

   364,753

   29,614,669Time deposits

   282,628,752

   -

   -

   -

   -

   -

   -

   -

   282,628,752Investments in mutual funds

   503,838

   -

   -

   -

   -

   -

   -

   -

   503,838Securities purchased under resale agreements

   95,206,467

   -

   -

   -

   -

   -

   -

   -

   95,206,467Total

   402,905,402

   -

   1,578,633

   1,718,676

   1,731,888

   553,915

   -

   364,753

   408,853,267
  The total accumulated cash flows paid in business combinations and acquisitions of associates are as follows:  For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Total disbursements for business acquisitionCash flows used in the purchase of non-controlling interests

   (1)

   1,921,245

   13,776,885

   

   -Other payments to acquire interests in joint ventures

   (2)

   42,163,032

   1,445,478

   

   -Cash flows used for control of subsidaries or other businesses

   

   -

   8,369

   (3)

   14,566,278Payments for changes in ownership interests in subsidaries

   

   -

   -

   (4)

   5,627,425Total

   

   44,084,277

   15,230,732

   20,193,703
  (1)Corresponds to an increased of capital made in 2015 and the acquisitions made during 2014 of 34% of Bebidas Bolivianas S.A. (2)Corresponds to pay of 50% of the acquisitions of Bebidas Carozzi CCU SpA. and to an increased of capital made in 2015 and 2014 of Central Cervecera de Colombia S.A.S. (3)Corresponds to the purchase of Bebidas del Paraguay S.A., Distribuidora del Paraguay S.A. and a pay of outstanding balance related to the acquisition in Manantial S.A. and Compañía Pisquera Bauzá S.A. in 2013. (4)Corresponds to additionally percentage of acquisition in VSPT (Note 1) in 2013.   Note 15Accounts receivables – Trade and other receivables  The accounts receivables – trade and other receivables were as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Accounts receivables:Chile reportable segment

   88,332,401

   87,979,118International business segment operation

   52,591,935

   50,498,496Wines reportable segment

   43,333,189

   38,575,440Total Others reportable segment(1)

   47,871,339

   43,083,819Others accounts receivables

   24,033,944

   21,619,152Impairment loss estimate

   (3,936,871)

   (3,153,132)Total

   252,225,937

   238,602,893
  (1)Primarlly includes Comercial CCU S.A. which makes sales multiclass on behalf of Cervecera CCU Chile, ECUSA, CPCh, VSPT and FOODs.


F-52

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The Company’s accounts receivable are denominated in the following currencies:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Chilean Peso

   158,757,937

   151,677,364Argentine Peso

   48,535,814

   46,140,278US Dollar

   25,498,590

   19,030,421Euro

   7,463,166

   10,038,934Unidad de Fomento

   7,102

   2,021Uruguayan Pesos

   4,074,908

   4,519,676Paraguayan guarani

   6,111,636

   5,477,622Others currencies

   1,776,784

   1,716,577Total

   252,225,937

   238,602,893
   The detail of the accounts receivable maturities as ofDecember 31, 2015, is as follows:  Total

   Current balance

   Overdue balances0 to 3 months

   3 to 6 months

   6 to 12 months

   More than 12 monthsThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Accounts receivables:Chile reportable segment

   88,332,401

   80,543,609

   6,601,090

   421,928

   298,999

   466,775International business segment operation

   52,591,935

   45,600,898

   5,839,178

   226,648

   321,512

   603,699Wines reportable segment

   43,333,189

   40,022,791

   2,715,939

   193,781

   299,921

   100,757Total Others reportable segment(1)

   47,871,339

   43,481,018

   3,507,731

   237,742

   212,994

   431,854Others accounts receivables

   24,033,944

   22,204,897

   370,715

   982,963

   475,369

   -Sub-Total

   256,162,808

   231,853,213

   19,034,653

   2,063,062

   1,608,795

   1,603,085Impairment loss estimate

   (3,936,871)

   -

   (888,274)

   (280,839)

   (1,168,592)

   (1,599,166)Total

   252,225,937

   231,853,213

   18,146,379

   1,782,223

   440,203

   3,919
  (1)Primarlly includes Comercial CCU S.A. which makes sales multiclass on behalf of Cervecera CCU Chile, ECUSA, CPCh, VSPT and FOODs.  The detail of the accounts receivable maturities as of December 31, 2014, is as follows:  Total

   Current balance

   Overdue balances0 to 3 months

   3 to 6 months

   6 to 12 months

   More than 12 monthsThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Accounts receivables:Chile reportable segment

   87,979,118

   81,335,105

   5,453,180

   485,827

   325,316

   379,690International business segment operation

   50,498,496

   41,505,514

   7,058,969

   791,980

   289,994

   852,039Wines reportable segment

   38,575,440

   33,384,725

   4,696,632

   187,721

   150,061

   156,301Total Others reportable segment (1)

   43,083,819

   38,808,700

   3,218,244

   212,767

   230,855

   613,253Others accounts receivables

   21,619,152

   19,689,147

   663,317

   1,266,688

   -

   -Sub-Total

   241,756,025

   214,723,191

   21,090,342

   2,944,983

   996,226

   2,001,283Impairment loss estimate

   (3,153,132)

   -

   (608,126)

   (285,728)

   (505,187)

   (1,754,091)Total

   238,602,893

   214,723,191

   20,482,216

   2,659,255

   491,039

   247,192
  (1)Primarlly includes Comercial CCU S.A. which makes sales multiclass on behalf of Cervecera CCU Chile, ECUSA, CPCh, VSPT and FOODs.  The Company markets its products through retail, wholesale clients, chains and supermarkets. As ofDecember 31, 2015, the accounts receivable from the three most important supermarket chains in Chile and Argentina represent 29.1% (29.2% in 2014) of the total accounts receivable.


F-53

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 As indicated in the Risk management note(Note 5), for Credit Risk purposes, the Company acquires credit insurance policies to cover approximately 90% of the accounts receivable balances. For this reason, management estimates that it does not require establishing allowances for further deterioration, in addition to those already constituted based on an aging analysis of these balances.  Regarding amounts aged more than 6 months and for which no allowances have been constituted, they correspond mainly to amounts already covered by the credit insurance policies. In addition, there are amounts overdue within ranges for which, in accordance with current policies are only partially impaired for, based on a case by case analysis.  The movement of the impairment losses provision for accounts receivable is as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Balance at the beginning of year

   3,153,132

   4,506,069Impairment estimate for accounts receivable

   1,883,258

   346,606Uncollectible accounts

   (264,618)

   (914,016)Release of unused provisions

   (557,106)

   (680,950)Effect of translation into presentation currency

   (277,795)

   (104,577)Total

   3,936,871

   3,153,132


F-54

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Note 16Accounts and transactions with related companies  Transactions between the Company and its subsidiaries occur in the normal course of operations and have been eliminated during the consolidation process.  The amounts indicated as transactions in the following table relate to trade operations with related companies, which are under similar terms than what a third party would get respect to price and payment conditions. There are no uncollectible estimates decreasing accounts receivable or guarantees provided to related companies.  Balances and transactions with related companies consist of the following:  (1)  Business operations agreed upon in Chilean Pesos. Companies not under a current trade account agreement not accrue interest and have payment terms of 30 days.  (2)  Business operations agreed upon in Chilean Pesos. The remaining balance accrues interest at 90-days active bank rate (TAB) plus an annual spread. Interests is paid or charged against the trade current account.  (3)  Business operations in foreign currencies, not covered by a current trade account, that do not accrue interest and have payment terms of 30 days. Balances are presented at the closing exchange rate.  (4)  An agreement between the subsidiary Compañía Pisquera de Chile S.A. with Cooperativa Agrícola Control Pisquero de Elqui and Limarí Ltda. due to differences resulting from the contributions made by the latter. It establishes a 3% annual interest over capital, with annual payments to be made in eight instalments of UF 1,124 each. Beginning February 28, 2007 and UF 9,995 bullet payment at the last contribution date. In accordance with the contract,Cooperativa Agrícola Control Pisquero de Elqui and Limari Ltda.renew the contract for a period of ten years. Consequently, the UF 9,995 will pay in ten instalments of UF 1,162 each one, beginning February 28, 2015.  (5)   An agreement of grape supply between the subsidiary Compañía Pisquera de Chile S.A. with Cooperativa Agrícola Control Pisquero de Elqui y Limarí Ltda. These contracts stipulate a 3% annual interest on the capital, with a term of eight years, and annual payments due on May 31, 2018.  The transaction schedule includes all the transactions made with related parties.  The detail of the accounts receivable and payable from related companies as of December 31, 2015 and 2014, is as follows:


F-55

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Accounts receivable from related companies  Current:  Tax ID

   Company

   Country of origin

   Ref.

   Relationship

   Transaction

   Currency

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$0-E

   Bebidas Bolivianas SA

   Bolivia

   (1)

   Associated

   Sales of products

   USD

   78,810

   -0-E

   Heineken Brouwerijen B.V.

   Holanda

   (3)

   Related to the controller

   Sales of products

   USD

   -

   43,4280-E

   Pepsi Cola Panamericana S.R.L

   Perú

   (1)

   Related to the joint venture

   Sales of products

   USD

   1,149

   -97.004.000-5

   Banco de Chile

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   126,435

   179,28496.571.220-8

   Banchile Corredores de Bolsa S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   1,073

   -96.819.020-2

   Agrícola El Cerrito S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   30

   -87.938.700-0

   Agroproductos Bauza y Cía Ltda.

   Chile

   (1)

   Related joint operating

   Sales of products

   CLP

   10,297

   -93.920.000-2

   Antofagasta Minerals S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   4,198

   -96.919.980-7

   Cervecería Austral S.A.

   Chile

   (1)

   Joint venture

   Sales of products

   CLP

   29,502

   235,68396.919.980-7

   Cervecería Austral S.A.

   Chile

   (1)

   Joint venture

   Billed services

   CLP

   -

   15,39177.051.330-8

   Cervecería Kunstmann Ltda.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   142,789

   142,95790.160.000-7

   Cia. Sud Americana de Vapores S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   522

   -77.755.610-K

   Comercial Patagona Ltda.

   Chile

   (1)

   Joint venture subsidiary

   Sales of products

   CLP

   738,270

   1,573,30677.755.610-K

   Comercial Patagona Ltda.

   Chile

   (1)

   Joint venture subsidiary

   Rental of cranes

   CLP

   2,875

   2,19190.081.000-8

   Compañía Chilena de Fósforos S.A.

   Chile

   (1)

   Shareholders of subsidiary

   Sales of products

   CLP

   5,651

   2,97881.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   (1)

   Shareholders of subsidiary

   Advance purchase

   CLP

   1,054,917

   1,055,71481.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   (1)

   Shareholders of subsidiary

   Sales of products

   CLP

   24,027

   60,67381.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   (4)

   Shareholders of subsidiary

   Loan

   U.F.

   29,589

   29,60281.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   (5)

   Shareholders of subsidiary

   Supply contract

   U.F.

   74,529

   71,61696.591.040-9

   Empresas Carozzi S.A.

   Chile

   (1)

   Related joint venture

   Sales of products

   CLP

   301,882

   -92.011.000-2

   Empresa Nacional de Energia ENEX S.A.

   Chile

   (1)

   Related to the controller

   Supply contract

   CLP

   2,136

   -99.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Sales of products

   CLP

   358,428

   841,64799.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Transport service

   CLP

   881,499

   433,64799.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (2)

   Joint venture

   Remittance send

   CLP

   -

   6,108,35199.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (2)

   Joint venture

   Interests

   CLP

   219,647

   362,79099.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Sales Service

   CLP

   118,292

   128,43099.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Shared service

   CLP

   182,822

   238,98099.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Collection service

   CLP

   49,646

   -96.847.140-6

   Inmobiliaria Norte Verde S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   40

   -96.427.000-7

   Inversiones y Rentas S.A.

   Chile

   (1)

   Controller

   Sales of products

   CLP

   12,664

   9,33096.536.010-7

   Inversiones Consolidadas Limitadas

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   1,409

   -76.029.109-9

   Inversiones Chile Chico Ltda.

   Chile

   (1)

   Related to the controller

   Billing services

   CLP

   5,353

   -94.625.000-7

   Inversiones Enex S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   203,349

   -99.525.700-9

   Las Margaritas S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   47

   -91.021.000-9

   Madeco S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   3,723

   3,68378.780.780-1

   Operaciones y servicios Enex Ltda.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   90,323

   -76.028.758-K

   Norgistics Chile S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   110

   -91.705.000-7

   Quiñenco S.A.

   Chile

   (1)

   Shareholder Controller

   Sales of products

   CLP

   3,070

   -96.645.790-2

   Socofin S.A.

   Chile

   (1)

   Related to the controller

   Sales of products

   CLP

   10

   -76.178.803-5

   Viña Tabalí S.A.

   Chile

   (1)

   Related to the controller

   Billing services

   CLP

   29,817

   79,437Total

   

   

   

   

   

   

   4,788,930

   11,619,118
  Non Current:  Tax ID

   Company

   Country of origin

   Ref.

   Relationship

   Transaction

   Currency

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$81.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   (4)

   Shareholders of subsidiary

   Loan

   U.F.

   209,330

   223,98081.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   (5)

   Shareholders of subsidiary

   Supply contract

   U.F.

   236,608

   298,973Total

   

   

   

   

   

   

   445,938

   522,953


F-56

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Accounts payable to related companies  Current:  Tax ID

   Company

   Country of origin

   Ref.

   Relationship

   Transaction

   Currency

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$0-E

   Heineken Brouwerijen B.V.

   Holanda

   (3)

   Related to the controller

   License and technical asssintance

   Euros

   6,568,594

   3,354,4480-E

   Heineken Brouwerijen B.V.

   Holanda

   (3)

   Related to the controller

   Purchase of products

   Euros

   307,118

   1,009,8560-E

   Heineken Nederland Supply

   Holanda

   (3)

   Related to the controller

   License and technical asssintance

   Euros

   37,772

   -0-E

   Heineken supply chain B.V.

   Holanda

   (3)

   Related to the controller

   Purchase of products

   Euros

   11,647

   -0-E

   Amstel Brouwerijen B.V.

   Holanda

   (3)

   Related to the controller

   License and technical asssintance

   Euros

   246,334

   121,8540-E

   Tabacos del Paraguay S.A.

   Paraguay

   (3)

   Related to the controller

   Marketing services

   PYG

   -

   13,0510-E

   Nestle Waters Marketing & Distribution

   Francia

   (3)

   Related to the controller

   Purchase of products

   Euros

   21,861

   -0-E

   Nestle Waters Management & Tecnology

   Francia

   (3)

   Related to the controller

   Purchase of products

   Euros

   12,191

   -0-E

   Pespsi-cola manufacturi co.of uruguay SRL

   Uruguay

   (3)

   Related to the controller

   Purchase of products

   USD

   151,578

   -87.938.700-0

   Agroproductos Bauza y Cía. Ltda.

   Chile

   (1)

   Related joint venture

   Purchase of products

   CLP

   -

   31,19999.540.870-8

   Aguas de Antofagasta S.A.

   Chile

   (1)

   Related to the controller

   Water service

   CLP

   36,879

   -89.010.400-2

   Alusa Chile S.A.

   Chile

   (1)

   Related to the controller

   Purchase of products

   CLP

   437,884

   -84.898.000-5

   Alusa S.A.

   Chile

   (1)

   Related to the controller

   Purchase of products

   CLP

   -

   73,23378.105.460-7

   Alimentos Nutrabien S.A.

   Chile

   (1)

   Joint venture

   Purchase of products

   CLP

   212

   31497.004.000-5

   Banco de Chile

   Chile

   (1)

   Related to the controller

   Billing services

   CLP

   2,431

   4,50476.115.132-0

   Canal 13 S.P.A.

   Chile

   (1)

   Related to the controller

   Marketing services

   CLP

   21,100

   170,09196.919.980-7

   Cervecería Austral S.A.

   Chile

   (1)

   Joint venture

   Purchase of products

   CLP

   414,400

   1,232,60996.919.980-7

   Cervecería Austral S.A.

   Chile

   (1)

   Joint venture

   Royalty paid

   CLP

   -

   45,68777.051.330-8

   Cervecería Kunstmann Ltda.

   Chile

   (1)

   Shareholders of subsidiary

   Purchase of products

   CLP

   15,707

   6,40077.755.610-K

   Comercial Patagona Ltda.

   Chile

   (1)

   Joint venture subsidiary

   Marketing services

   CLP

   24,694

   22,81090.160.000-7

   Compañía Sud Americana de Vapores S.A.

   Chile

   (1)

   Related to the controller

   Transport service

   CLP

   -

   2,92899.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Purchase of products

   CLP

   63,212

   158,74499.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Discount of transport

   CLP

   -

   11,88399.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   (1)

   Joint venture

   Consignation sales

   CLP

   2,015,613

   2,801,54478.259.420-6

   Inversiones PFI Chile Ltda.

   Chile

   (1)

   Shareholders of subsidiary

   Purchase of products

   CLP

   1,195,665

   1,116,37296.798.520-1

   Saam Extraportuarios S.A.

   Chile

   (1)

   Related to the controller

   Transport service

   CLP

   17

   -94.058.000-5

   Servicios Aeroportuarios Aerosan S.A.

   Chile

   (1)

   Related to the controller

   Transport service

   CLP

   193

   -92.048.000-4

   Sudamericana Agencias Aéreas y Maritimas S.A.

   Chile

   (1)

   Related to the controller

   Transport service

   CLP

   -

   23196.689.310-9

   Transbank S.A.

   Chile

   (1)

   Related to the controller

   Commission

   CLP

   25,911

   5476.178.803-5

   Viña Tabalí S.A.

   Chile

   (1)

   Related to the controller

   Collect of customers

   CLP

   -

   37,18592.236.000-6

   Watt ́s S.A.

   Chile

   (1)

   Related joint venture

   Purchase of products

   CLP

   13,205

   67,315Total

   

   

   

   

   

   

   11,624,218

   10,282,312


F-57

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Most significant transactions and effects on results: The following are the most significant transactions with related entities that are not subsidiaries of the Company and their effect on the Consolidated Statement of Income:  Tax ID

   Company

   Country of origin

   Relationship

   Transaction

   For the years ended as of December 31,2015

   2014

   2013Amounts

   (Charges)/Credits (Effect on Income)

   Amounts

   (Charges)/Credits (Effect on Income)

   Amounts

   (Charges)/Credits (Effect on Income)ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$0-E

   Bebidas Bolivianas S.A.

   Bolivia

   Associated

   Sales of products

   209,292

   79,531

   -

   -

   -

   -0-E

   Heineken Brouwerijen B.V.

   Holanda

   Related to the controller

   Billing services

   27,904

   (27,904)

   95,533

   (95,533)

   58,343

   (58,343)0-E

   Heineken Brouwerijen B.V.

   Holanda

   Related to the controller

   Purchase of products

   71,107

   -

   295,899

   -

   225,145

   -0-E

   Heineken Brouwerijen B.V.

   Holanda

   Related to the controller

   Sales of products

   -

   -

   208,932

   79,394

   244,804

   93,0260-E

   Heineken Brouwerijen B.V.

   Holanda

   Related to the controller

   License and technical asssintance

   9,331,241

   (9,331,241)

   6,338,435

   (6,338,435)

   6,990,715

   (6,990,715)0-E

   Heineken Italia Spa

   Italia

   Related to the controller

   Purchase of products

   -

   -

   -

   -

   40,025

   -0-E

   Nestle Waters Argentina S.A.

   Argentina

   Shareholders of subsidiary

   License and technical asssintance

   -

   -

   -

   -

   1,350

   (1,350)0-E

   Nestle Waters S.A.

   Italia

   Shareholders of subsidiary

   Royalty paid

   308,527

   (308,527)

   204,010

   (204,010)

   155,839

   (155,839)96.956.680-K

   Alusa S.A.

   Chile

   Related to the controller

   Purchase of products

   2,665,007

   -

   1,562,351

   -

   1,427,550

   -97.004.000-5

   Banco de Chile

   Chile

   Related to the controller

   Transport service

   452,384

   (452,384)

   356,432

   (356,432)

   72,005

   (72,005)97.004.000-5

   Banco de Chile

   Chile

   Related to the controller

   Sales of products

   39,148

   25,446

   60,472

   21,165

   30,865

   10,80397.004.000-5

   Banco de Chile

   Chile

   Related to the controller

   Derivatives

   105,973,453

   1,708,487

   2,595,060

   (1,637)

   9,358,500

   3,15897.004.000-5

   Banco de Chile

   Chile

   Related to the controller

   Investments

   423,550,000

   770,364

   181,200,794

   1,427,444

   111,695,000

   366,19897.004.000-5

   Banco de Chile

   Chile

   Related to the controller

   Interests

   316,411

   (316,411)

   387,547

   (387,547)

   258,196

   (258,196)97.004.000-5

   Banco de Chile

   Chile

   Related to the controller

   Leasing paid

   123,316

   (23,901)

   224,872

   (24,155)

   140,033

   (24,680)96.571.220-8

   Banchile Corredores de Bolsa S.A.

   Chile

   Related to the controller

   Investments

   944,450,000

   583,333

   315,790,000

   797,953

   205,902,500

   368,68496.571.220-9

   Banchile Corredores de Bolsa S.A.

   Chile

   Related to the controller

   Commissions

   -

   -

   -

   -

   577,994

   (577,994)76.115.132-0

   Canal 13 S.P.A.

   Chile

   Related to the controller

   Marketing services

   1,554,332

   (405,349)

   3,318,107

   (1,196,948)

   4,397,642

   (2,078,401)96.919.980-7

   Cervecería Austral S.A.

   Chile

   Joint venture

   Sales of products

   36,560

   23,764

   315,650

   126,260

   293,194

   117,27896.919.980-7

   Cervecería Austral S.A.

   Chile

   Joint venture

   Royalty paid

   425,164

   (425,164)

   389,655

   (389,655)

   340,706

   (340,706)96.919.980-7

   Cervecería Austral S.A.

   Chile

   Joint venture

   Royalty charged

   -

   -

   30,694

   30,694

   47,265

   47,26596.919.980-7

   Cervecería Austral S.A.

   Chile

   Joint venture

   Purchase of products

   4,776,140

   -

   3,525,715

   -

   2,703,252

   -96.919.980-7

   Cervecería Austral S.A.

   Chile

   Joint venture

   Billing services

   425,165

   425,165

   231,038

   231,038

   205,076

   205,07677.051.330-8

   Cervecería Kunstmann Ltda.

   Chile

   Shareholders of subsidiary

   Sales of products

   405,652

   324,522

   317,990

   254,392

   265,054

   212,04377.051.330-8

   Cervecería Kunstmann Ltda.

   Chile

   Shareholders of subsidiary

   Billing services

   77,166

   77,166

   23,335

   23,335

   174,871

   174,87177.755.610-K

   Comercial Patagona Ltda.

   Chile

   Joint venture subsidiary

   Marketing services

   279,401

   (279,401)

   225,128

   (225,128)

   208,191

   (208,191)77.755.610-K

   Comercial Patagona Ltda.

   Chile

   Joint venture subsidiary

   Sales of products

   2,679,985

   1,098,794

   1,410,939

   578,485

   1,998,700

   819,46879.985.340-K

   Cervecera Valdivia S.A.

   Chile

   Shareholders of subsidiary

   Dividends paid

   489,942

   -

   511,172

   -

   523,063

   -76.029.691-0

   Comarca S.A.

   Chile

   Related subsidiary

   Access fee

   -

   -

   -

   -

   1,313,475

   -90.081.000-8

   Compañía Chilena de Fósforo S.A.

   Chile

   Shareholders of subsidiary

   Dividends paid

   4,055,034

   -

   1,637,775

   -

   1,134,431

   -81.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   Shareholders of subsidiary

   Loan

   29,589

   5,827

   27,681

   7,975

   26,200

   8,09281.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   Shareholders of subsidiary

   Supply contract

   74,529

   8,487

   71,616

   11,411

   67,784

   12,45681.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   Shareholders of subsidiary

   Purchase of grape

   6,226,156

   -

   5,027,758

   -

   8,251,401

   -81.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   Shareholders of subsidiary

   Dividends paid

   791,836

   -

   617,964

   -

   774,087

   -81.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   Shareholders of subsidiary

   Billing services

   181,437

   181,437

   -

   -

   -

   -81.805.700-8

   Cooperativa Agrícola Control Pisquero de Elqui y Limari Ltda.

   Chile

   Shareholders of subsidiary

   Sales of products

   8,071

   6,457

   -

   -

   -

   -89.602.300-4

   Csav Austral Spa

   Chile

   Related to the controller

   Transport service

   122,991

   (122,991)

   81,743

   (81,743)

   -

   -76.173.468-7

   Fondo de Inversión Privado Mallorca

   Chile

   Related subsidiary

   Remaining amount of shares

   -

   -

   -

   -

   1,529,715

   -99.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Interests

   287,243

   287,243

   363,945

   363,945

   334,899

   334,89999.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Remittance send

   27,189,651

   -

   31,144,541

   -

   22,938,115

   -99.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Remittances received

   33,298,001

   -

   31,367,766

   -

   24,353,351

   -99.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Billing services

   7,633,582

   7,633,582

   6,990,442

   6,990,442

   4,901,800

   4,901,80099.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Purchase of products

   30,209

   -

   430,381

   (430,381)

   345,267

   (345,267)99.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Consignation sales

   24,067,498

   -

   23,303,360

   -

   13,523,940

   -99.542.980-2

   Foods Compañía de Alimentos CCU S.A.

   Chile

   Joint venture

   Sales of products

   13,540

   6,223

   15,097

   9,511

   16,926

   12,98176.173.468-7

   Fondo de Inversión Privado Mallorca

   Chile

   Shareholders of subsidiary

   Billing services

   -

   -

   17,172

   -

   60,053

   -92.011.000-2

   Empresa Nacional de Energia Enex S.A.

   Chile

   Related to the controller

   Billing services

   170,878

   (170,878)

   -

   -

   -

   -76.313.970-0

   Inversiones Irsa LTDA.

   Chile

   Controller

   Billing services

   4,089,832

   -

   -

   -

   -

   -78.259.420-6

   Inversiones PFI Chile Ltda.

   Chile

   Shareholders of subsidiary

   Purchase of products

   3,161,063

   -

   7,147,674

   -

   -

   -96.657.690-7

   Inversiones Punta Brava S.A.

   Chile

   Related to the controller

   Sales of products

   1,587

   1,270

   -

   -

   -

   -96.427.000-7

   Inversiones y Rentas S.A.

   Chile

   Controller

   Billing services

   31,777,378

   -

   32,701,972

   -

   35,285,513

   -96.427.000-7

   Inversiones y Rentas S.A.

   Chile

   Controller

   Office rental

   11,006

   11,006

   10,539

   10,539

   10,174

   10,17490.703.000-8

   Nestle Chile S.A.

   Chile

   Shareholders of subsidiary

   Billing services

   2,704,376

   -

   2,581,736

   -

   2,442,310

   -78.780.780-1

   Operaciones y Servicios Enex LTDA.

   Chile

   Related to the controller

   Sales of products

   328,256

   262,605

   -

   -

   -

   -91.705.000-7

   Quiñenco S.A.

   Chile

   Shareholder controller

   Sales of products

   14,509

   11,607

   -

   -

   -

   -79.903.790-4

   Soc. Agrícola y Ganadera Río Negro Ltda.

   Chile

   Related to the controller

   Purchase of products

   -

   -

   -

   -

   162,772

   -96.689.310-9

   Transbank S.A.

   Chile

   Related to the controller

   Commission

   45,756

   (45,756)

   26,585

   (26,585)

   -

   -76.178.803-5

   Viña Tabalí S.A.

   Chile

   Related to the controller

   Billing services

   50,787

   50,787

   64,321

   64,321

   47,440

   47,44076.178.803-5

   Viña Tabalí S.A.

   Chile

   Related to the controller

   Sales of fixed assets

   -

   -

   15,306

   15,306

   -

   -


F-58

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Remuneration of the Management key employees  The Company is managed by a Board of Directors comprised of 9 members, each of whom is in office for a 3-year term and may be re-elected.  The Board was appointed at the Ordinary Shareholders ́ Meeting held on April 10, 2013, being elected Messrs. Andrónico Luksic Craig, Pablo Granifo Lavín, Carlos Molina Solís, John Nicolson, Manuel José Noguera Eyzaguirre, Philippe Pasquet, Francisco Pérez Mackenna, Jorge Luis Ramos Santos and Vittorio Corbo Lioi, who is independent, according to article 50 bis of Law No18,046. The Chairman and the Vice Chairman, as well as the members of the Audit Committee were appointed at the Board of Directors ́ meeting held on April 10, 2013. At the same meeting, and according to article 50 bis of Law N° 18,046, the independent Director Mr. Vittorio Corbo Lioi appointed the other members of the Directors Committee, which is composed of Directors Messrs. Pérez, Pasquet and Corbo. Additionally, Messrs. Corbo and Pasquet were appointed as members of the Audit Committee, both meeting the independence criteria under the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange Rules (the “SoX Regulation”). The Board of Directors also resolved that Directors Messrs. Pérez and Ramos shall participate in the Audit Committee ́s meetings as observers.  Due to the resignation of Mr. Manuel José Noguera Eyzaguirre and Philippe Pasquet to their position as director of the Company, both effective as of June 30, 2015, at the Board of Directors Meeting held on July 7, 2015, Messrs. Didier Debrosse and Rodrigo Hinzpeter Kirberg were appointed as Directors, until the next Ordinary Shareholders ́ Meeting, as permitted by Article 32 of Law N°18,046.  Furthermore, at that same Board meeting, the independent Director Mr. Vittorio Corbo Lioi appointed Director Mr. Jorge Luis Ramos Santos as a member of the Directors Committee, in place of Mr. Philippe Pasquet, as required by art. 50 bis of Law N°18,046 and Regulation N°1956 of 2009 of the Superintendencia de Valores y Seguros (“SVS”). Therefore the Directors Committee is currently composed by Messrs. Vittorio Corbo Lioi, Francisco Pérez and Jorge Luis Ramos Santos.  Director Jorge Luis Ramos Santos was appointed at the June 7, 2015 Board of Directors ́ meeting, as a member of the Audit Committee, in place of  Mr. Pasquet. Also at the same meeting, Director Carlos Molina Solis was appointed as an observer of the Audit Committee. Therefore, the Audit Committee is currently composed by the Directors. Vittorio Corbo Lioi and Jorge Luis Ramos Santos, who met the independence requirements as set out in the SOX Regulation, and Directors. Francisco Pérez Mackenna and Carlos Molina Solis participate in the Audit Committee’s meetings on an observer status.  As agreed to at the Ordinary Shareholders ́ Meeting held on April 15, 2015, the Directors’ remuneration for their attendance at each meeting was fixed in UF 100 per Director, and UF 200 for the Chairman, plus an amount equivalent to 3% of the distributed dividends, for the whole Board, at a rate of one-ninth for each Director and in proportion to the time each one served as such during the year 2015. If the distributed dividends exceed 50% of the net profits, the Board of Directors’ variable remuneration shall be calculated over a maximum 50% of such profits.  Those Directors that are members of the Directors Committee receive a remuneration of UF 34 for each meeting they attend, plus the amount that, as the percentage of the dividends, is required to complete one third of the total remuneration a Director is entitled to, pursuant to article 50 bis of Law No 18,046 and Regulation N° 1956 of the SVS. Directors that are members of the Audit Committee receive a monthly remuneration of UF 25.  According to the above, as ofDecember 31, 2015, the Directors received ThCh$ 2,657,132 (ThCh$ 2,746,921 in 2014 and ThCh$ 2,461,403 in 2013) in per diems and shares. In addition, ThCh$ 141,283 (ThCh$ 117,342 in 2014 and ThCh$ 109,981 in 2013) were paid in compensation for gains sharing to the main executives of the Parent Company.


F-59

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The following is the total remuneration received by the top officers of the Parent Company during the years ended as ofDecember 31, 2015 and 2014:   For the years ended as of December 31,2015

   2014ThCh$

   ThCh$Salaries

   6,441,196

   5,212,395Employees’ short-term benefits

   1,897,823

   2,620,769Employments termination benefits

   331,022

   3,107,575Total

   8,670,041

   10,940,739
  The Company grants annual discretionary and variable bonuses to the top officers, which are not subject to an agreement and are decided on the basis of the compliance with individual and corporate goals and depending on the year results.   Note 17Inventories  The inventory balances were as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Finished products

   50,873,881

   56,873,874In process products

   1,828,386

   1,568,879Raw material

   113,716,967

   103,535,487In transit raw material

   3,707,440

   553,972Materials and products

   5,926,122

   7,602,904Realizable net value estimate and obsolescence

   (1,825,381)

   (2,589,518)Total

   174,227,415

   167,545,598
  The Company wrote off a total of ThCh$ 2,057,246, ThCh$ 1,033,337 and ThCh$ 1,495,381 relating to inventory shrinkage and obsolescence for the year endedDecember 31, 2015, 2014 and 2013, respectively.  Additionally, an estimate for obsolescence inventories include amounts related to low turnover, technical obsolescence and product recalls from the market.  Movement of Realizable net value and obsolescence estimate is as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Initial balance

   (2,589,518)

   (1,286,695)Inventories write-down estimation

   (1,469,233)

   (2,682,310)Inventories recognised as an expense

   2,057,704

   1,369,096Business combination effect

   175,666

   10,391Total

   (1,825,381)

   (2,589,518)
  As ofDecember 31, 2015 and 2014, the Company does not have any inventory pledged as guarantee against financial obligations.


F-60

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 18Biological current assets  The Company recorded under Biological current assets the agricultural activities (grapes) derived from production of plantations that will be destined to be an input to the following process of the wine production.  The costs associated to the agricultural activities (grapes) are accumulated to the harvest date.  The valuation of Biological current assets is described inNote 2.10.  The movement of Biological current assets were as follows:  TotalThCh$As of January 1, 2014Historic cost

   6,130,652Book Value

   6,130,652As of December 31, 2014Additions

   16,886,294Decreases due to the harvest

   (15,383,355)Book Value

   7,633,591As of December 31, 2014Historic cost

   7,633,591Book Value

   7,633,591As of December 31, 2015Additions

   18,192,939Decreases due to the harvest

   (18,193,190)Book Value

   7,633,340As of December 31, 2015Historic cost

   7,633,340Book Value

   7,633,340


F-61

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 19Other non-financial assets  The Company maintained the following other non-financial assets:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Insurance paid

   3,512,317

   2,841,121Advertising

   7,474,579

   7,885,301Advances to suppliers

   7,438,102

   9,098,153Guarantees paid

   328,242

   318,105Consumables

   526,645

   453,548Dividends receivable

   150,343

   36,044Recoverable taxes (1)

   1,303,925

   1,610,979Stock rights (2)

   21,846,500

   -Other

   2,141,174

   2,144,091Total

   44,721,827

   24,387,342Current

   17,654,373

   18,558,445Non current

   27,067,454

   5,828,897Total

   44,721,827

   24,387,342
  (1) Correspond to a minimum presumed income tax and an exporter credit of the subsidiaries in Argentine. (2)SeeNote 1.   Note 20Investments accounted for by the equity method  Joint ventures and Associates  As ofDecember 31, 2015 and 2014, the Company recorded investments qualifying as joint venture and associates.  The share value of the investments in joint ventures and associates is as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Cervecería Austral S.A. (1)

   5,043,071

   4,957,494Foods Compañía de Alimentos CCU S.A. (2)

   11,582,085

   12,837,774Bebidas Bolivianas S.A. (3)

   14,276,937

   12,757,874Central Cervecera de Colombia S.A.S. (4)

   18,718,832

   1,445,478Other companies

   374,338

   -Total

   49,995,263

   31,998,620


F-62

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The above mentioned values include the goodwill generated through the acquisition of the following joint ventures, which are presented net of any impairment loss:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Cervecería Austral S.A.

   1,894,770

   1,894,770Bebidas Bolivianas S.A.

   9,581,614

   8,186,271Total

   11,476,384

   10,081,041
  The results accrued in joint ventures and associates are as follows:  For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Cervecería Austral S.A.

   247,180

   157,836

   221,662Foods Compañía de Alimentos CCU S.A.

   (1,251,392)

   (16,476)

   87,100Bebidas Bolivianas S.A.

   (1,557,886)

   (1,039,967)

   -Central Cervecera de Colombia S.A.S.

   (2,668,179)

   -

   -Other companies

   2,142

   -

   -Total

   (5,228,135)

   (898,607)

   308,762
  Changes in investments in joint ventures and associates during such periods are as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Balance at the beginning of year

   31,998,620

   17,563,028Business combination effect

   23,387,006

   15,222,363Participation in the joint ventures and associates (losses)

   (5,228,135)

   (898,607)Dividends received

   (150,343)

   (39,096)Other changes

   (11,885)

   150,932Total

   49,995,263

   31,998,620
  Following are the significant matters regarding the investments accounted by the equity method:  (1) Cervecería Austral S.A.  A closed stock company that operates a beer manufacturing facility in the southern end of Chile, being the southernmost brewery in the world.  (2)Foods Compañía de Alimentos CCU S.A.  A closed stock company devoted to the production and marketing of food products such as like cookies and other baked goods, caramels, candy and cereal, among others.  On November 26, 2015, Foods signed an agreement of sale with Empresas Carozzi S.A., under which the first sold to the second machinery, equipment and brands related to products marketed under the brands Natur and Calaf. The amount of this transaction was ThCh$ 14,931,000 and CCU recognized a net loss after taxes for an amount of ThCh$ 1,034,638, corresponding to their participation.


F-63

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 (3) Bebidas Bolivianas S.A.  On May 7, 2014,the Company acquired 34% of the stock rights of Bebidas Bolivianas S.A. a Bolivian and a closed stock company that produces soft drinks and beers in three plants located in Santa Cruz de la Sierra and Nuestra Señora de la Paz cities.The amount of this transaction was ThCh$ 13,776,885. On December 9, 2015, the Company paid an increased of capital for an amount of USD 2,720,000 (equivalents to ThCh$ 1,921,244).   (4) Central Cervecera de Colombia S.A.S.  On November 10, 2014, CCU, directly and through its subsidiaries CCU Inversiones II Limitada, and Postobón have established a joint arrangements through a company named Central Cervecera de Colombia S.A.S. (the "Company"), in which CCU and Postobón participate as equal shareholders. The purpose of this Company is the beer and non-alcoholic drinks production, marketing and distribution based on malt. The Parties will invest in the Company an approximate amount of US$ 400,000,000, following a gradual investment plan conditioned to the fulfillment of certain milestones. At the date of issuance of these consolidated financial statements CCU Inversiones II Limitada paid US$ 33,901,562.11 (US$ 2,411,019.21 in 2014). The partnership involves the construction of a beer production plant, with an annual total capacity of 3,000,000 hectoliters.  The summarized financial information of these companies as ofDecember 31, 2015 and 2014, appears in detail inNote 7.  The Company does not have any contingent liabilities related to joint ventures and associates as ofDecember 31, 2015.  The figures for each entity 100% of each in summary form are as follows:  As of December 31, 2015

   As of December 31, 2014

   As of December 31, 2013Joint Ventures

   Associated

   Joint Ventures

   Associated

   Joint VenturesThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Net sales

   59,187,508

   18,310,272

   46,399,652

   8,470,716

   31,261,730Operating result

   (6,796,020)

   (4,039,249)

   212,503

   (2,882,721)

   238,819Net income for year

   (6,803,143)

   (4,573,734)

   (392,427)

   (2,920,431)

   620,549Depreciation and amortization

   (1,998,935)

   (534,485)

   (1,936,455)

   1,091,414

   (1,416,740)Current assets

   57,908,034

   9,326,003

   15,625,609

   6,987,602

   13,610,219Non-current assets

   29,453,402

   31,393,842

   39,076,178

   17,664,655

   32,411,942Current liabilities

   6,233,586

   6,086,146

   17,550,702

   4,467,768

   13,385,478Non-current liabilities

   3,720,129

   9,494,421

   2,725,097

   5,244,421

   1,285,096


F-64

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 21Intangible assetsother than goodwill  The intangible assets movement during the years ended as of December 31, 2014 and 2015 was as follows:  Trademarks

   Software programs

   Water rights

   Distribution rights

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$As of January 1, 2014Historic cost

   56,088,048

   19,199,598

   925,356

   1,024,457

   77,237,459Accumulated amortization

   -

   (12,639,953)

   -

   (563,575)

   (13,203,528)Book Value

   56,088,048

   6,559,645

   925,356

   460,882

   64,033,931As of December 31, 2014Additions

   -

   2,292,555

   988,783

   21,933

   3,303,271Additions by business combination (1)

   3,658,167

   -

   -

   568,666

   4,226,833Amortization of the year

   -

   (1,718,514)

   -

   (45,718)

   (1,764,232)Effect of conversion amortization

   -

   79,405

   -

   7,512

   86,917Conversion effect

   (1,025,947)

   (141,556)

   -

   (62,322)

   (1,229,825)Book Value

   58,720,268

   7,071,535

   1,914,139

   950,953

   68,656,895As of December 31, 2014Historic cost

   58,720,268

   21,353,252

   1,914,139

   1,046,487

   83,034,146Accumulated amortization

   -

   (14,281,717)

   -

   (95,534)

   (14,377,251)Book Value

   58,720,268

   7,071,535

   1,914,139

   950,953

   68,656,895As of December 31, 2015Additions

   -

   3,160,435

   -

   104,739

   3,265,174Transfers (2)

   (3,266,332)

   -

   -

   -

   (3,266,332)Divestitures (amortization)

   -

   3,748

   -

   -

   3,748Divestitures (cost)

   -

   (3,748)

   -

   -

   (3,748)Amortization of the year

   -

   (1,814,784)

   -

   (126,877)

   (1,941,661)Effect of conversion amortization

   -

   164,652

   -

   22,210

   186,862Conversion effect

   (2,235,479)

   (297,814)

   -

   (247,219)

   (2,780,512)Book Value

   53,218,457

   8,284,024

   1,914,139

   703,806

   64,120,426As of December 31, 2015Historic cost

   53,218,457

   24,212,125

   1,914,139

   904,006

   80,248,727Accumulated amortization

   -

   (15,928,101)

   -

   (200,200)

   (16,128,301)Book Value

   53,218,457

   8,284,024

   1,914,139

   703,806

   64,120,426
  (1) SeeNote 8 –Business Combinations (2) SeeNote 25 – Assets of disposal group held for sale  There are no restriction or any pledge against on intangible assets.


F-65

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The detail of the Trademarks appears below:  Segment

   Cash Generating Unit

   As of December 31, 2015

   As of December 31, 2014(CGU)

   ThCh$

   ThCh$Chile

   Embotelladoras Chilenas Unidas S.A.

   19,280,007

   19,280,007Compañía Pisquera de Chile S.A.

   1,363,782

   4,630,114Compañía Cerveceria Kunstmann S.A.

   286,518

   286,518Sub-Total

   20,930,307

   24,196,639International Business

   CCU Argentina S.A. and subsidiaries

   6,171,061

   8,040,335Marzurel S.A., Coralina S.A. and Milotur S.A.

   2,932,762

   3,079,360Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A.

   3,440,608

   3,658,167Sub-Total

   12,544,431

   14,777,862Wines

   Viña San Pedro Tarapacá S.A.

   19,743,719

   19,745,767Sub-Total

   19,743,719

   19,745,767Total

   

   53,218,457

   58,720,268
  Management has not identified any evidence of impairment of intangible assets. Respect to trademarks with indefinite useful life, used the same methodology which is designated inNote 22.


F-66

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 22Goodwill  The goodwill movements during the years ended as of December 31, 2015 and 2014 was as follows:  GoodwillThCh$As of January 1, 2014Historic cost

   81,872,847Book Value

   81,872,847As of December 31, 2014Additions through business combination (1)

   5,566,003Conversion effect

   (658,947)Book Value

   86,779,903As of December 31, 2014Historic cost

   86,779,903Book Value

   86,779,903As of December 31, 2015Transfers (2)

   (2,856,245)Conversion effect

   (623,085)Book Value

   83,300,573As of December 31, 2015Historic cost

   83,300,573Book Value

   83,300,573
  (1) SeeNote 8 –Business Combinations (2) SeeNote 25 – Assets of disposal group held for sale  There are no restrictions or pledges against on goodwill.  Goodwill from investments acquired in business combinations is assigned as of the acquisition date to the Cash Generating Units (CGU), or group of CGUs that it is expected will benefit from the business combination synergies. The book value of the goodwill of the investments assigned to the CGUs inside the Company segments are:  Segment

   Cash Generating Unit

   As of December 31, 2015

   As of December 31, 2014(CGU)

   ThCh$

   ThCh$Chile

   Embotelladoras Chilenas Unidas S.A.

   9,083,766

   9,083,766Manantial S.A.

   8,879,245

   8,879,245Compañía Pisquera de Chile S.A.

   9,808,550

   12,664,795Los Huemules S.R.L.

   47,443

   47,443Sub-Total

   27,819,004

   30,675,249International Business

   CCU Argentina S.A. and subsidiaries

   8,864,697

   11,557,934Marzurel S.A., Coralina S.A. and Milotur S.A.

   7,701,975

   6,580,451Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A.

   6,514,631

   5,566,003Sub-Total

   23,081,303

   23,704,388Wines

   Viña San Pedro Tarapacá S.A.

   32,400,266

   32,400,266Sub-Total

   32,400,266

   32,400,266Total

   

   83,300,573

   86,779,903


F-67

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Goodwill assigned to the CGU is submitted to impairment tests annually or with a higher frequency in case there are indications that any of the CGU could experience impairment. The recoverable amount of each CGU is determined as the higher of value in use or fair value less costs to sell. To determine the value in use, the Company has used cash flow projections over a 5-year span, based on the budgets and projections reviewed by the Management for the same term and with an average grown-rate of 3%. The rates used to discount the projected cash flows reflect the market assessment of the specific risks related to the corresponding CGU. The pre-tax discount rates used range from a 9.6% to 13.3%. Given the materiality of the amounts involved, it was not considered relevant to describe additional information in this Note. A reasonable change in assumptions would not result in an impairment to goodwill.  As December 31, 2015, the Company has not identified any evidence of impairment of goodwill.


F-68

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 23Property, plant and equipment  The movement of Property, plant and equipment is as follows:  Land, buildings and contruction

   Machinery and equipment

   Bottles and containers

   Other Equipment

   Assets under contruction and vines under formation

   Furniture, accesories and vehicles

   Assets under finance lease

   Under production vines

   TotalThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$As of January 1, 2014Historic cost

   453,487,502

   349,828,341

   161,171,871

   97,514,125

   89,374,472

   46,791,929

   16,605,170

   28,664,297

   1,243,437,707Accumulated depreciation

   (123,108,099)

   (218,430,772)

   (85,972,361)

   (68,502,303)

   -

   (33,715,569)

   (2,240,127)

   (12,812,047)

   (544,781,278)Book Value

   330,379,403

   131,397,569

   75,199,510

   29,011,822

   89,374,472

   13,076,360

   14,365,043

   15,852,250

   698,656,429As of December 31, 2014Additions

   -

   -

   -

   -

   212,498,423

   -

   -

   -

   212,498,423Additions of historic cost by business combintation

   10,427,012

   12,835,099

   -

   3,418,895

   36,673

   1,183,127

   -

   -

   27,900,806Additions of acumulated depreciation by business combination

   (1,389,726)

   (7,479,822)

   -

   (1,432,178)

   -

   (976,481)

   -

   -

   (11,278,207)Transfers

   100,881,784

   36,903,635

   31,891,992

   16,780,869

   (198,536,632)

   10,054,122

   214,720

   1,809,510

   -Conversion effect historic cost

   (3,282,317)

   (4,921,609)

   (4,702,605)

   (1,528,664)

   (318,097)

   (230,044)

   -

   (20,437)

   (15,003,773)Write off (cost)

   (1,209,647)

   (1,572,892)

   (806,633)

   (869,736)

   -

   (1,107,114)

   (4,543)

   (415,903)

   (5,986,468)Write off (depreciation)

   1,662

   1,413,756

   788,331

   868,292

   -

   880,419

   2,310

   231,641

   4,186,411Capitalized interests

   189,738

   888,636

   -

   -

   (68,078)

   -

   -

   -

   1,010,296Depreciation

   (13,108,407)

   (17,346,363)

   (18,438,461)

   (7,772,824)

   -

   (5,888,407)

   (435,795)

   (1,179,010)

   (64,169,267)Conversion effect depreciation

   360,239

   1,784,979

   1,700,078

   850,194

   -

   184,539

   -

   42,677

   4,922,706Others increase (decreased)

   (1,577,324)

   1,465,411

   2,208,005

   (643,234)

   (567,720)

   28,620

   (392,983)

   -

   520,775Transfers to Investment Property (cost)

   (534,384)

   -

   -

   -

   (559,440)

   -

   -

   -

   (1,093,824)Transfers to Investment Property (depreciation)

   12,590

   -

   -

   -

   -

   -

   -

   -

   12,590Divestitures (cost)

   (912,917)

   (8,793,380)

   (751,727)

   (2,887,307)

   -

   (525,145)

   (7,538)

   -

   (13,878,014)Divestitures (depreciation)

   424,428

   8,619,785

   694,205

   2,761,160

   -

   451,775

   5,406

   -

   12,956,759Book Value

   420,662,134

   155,194,804

   87,782,695

   38,557,289

   101,859,601

   17,131,771

   13,746,620

   16,320,728

   851,255,642As of December 31, 2014Historic cost

   557,500,819

   388,454,274

   189,538,674

   111,860,840

   101,859,601

   56,290,001

   16,367,167

   30,037,467

   1,451,908,843Accumulated depreciation

   (136,838,685)

   (233,259,470)

   (101,755,979)

   (73,303,551)

   -

   (39,158,230)

   (2,620,547)

   (13,716,739)

   (600,653,201)Book Value

   420,662,134

   155,194,804

   87,782,695

   38,557,289

   101,859,601

   17,131,771

   13,746,620

   16,320,728

   851,255,642As of December 31, 2015Additions

   -

   -

   -

   -

   123,581,249

   -

   -

   -

   123,581,249Transfers

   24,332,658

   53,855,456

   21,539,178

   12,777,031

   (121,954,867)

   8,596,245

   8,750

   845,549

   -Conversion effect historic cost

   (6,736,100)

   (10,797,668)

   (11,546,968)

   (4,002,063)

   (460,019)

   (511,782)

   (2,578)

   (180,003)

   (34,237,181)Write off (cost)

   (747,359)

   (289,708)

   (3,742,613)

   (1,918,945)

   -

   (1,156,594)

   (18,734)

   -

   (7,873,953)Write off (depreciation)

   394,898

   184,171

   3,456,971

   1,909,228

   -

   636,696

   12,858

   -

   6,594,822Capitalized interests

   579,382

   1,434,338

   -

   -

   (926,744)

   -

   -

   -

   1,086,976Depreciation

   (16,319,675)

   (23,241,987)

   (20,568,254)

   (9,738,483)

   -

   (6,504,278)

   (290,871)

   (1,009,087)

   (77,672,635)Conversion effect depreciation

   828,924

   4,905,696

   5,480,844

   2,894,015

   -

   353,900

   256

   81,519

   14,545,154Others increase (decreased)

   (314,605)

   (1,065,596)

   783,920

   226,420

   (4,709)

   150,953

   (23,262)

   -

   (246,879)Divestitures (cost)

   (416,892)

   (1,536,631)

   (11,721,918)

   (1,758,026)

   -

   (1,512,864)

   (283)

   (1,063,451)

   (18,010,065)Divestitures (depreciation)

   489,274

   1,193,606

   10,980,342

   1,624,423

   -

   965,423

   165

   629,647

   15,882,880Transfers to assets held for sale (cost)

   (2,682,692)

   -

   -

   -

   -

   -

   -

   -

   (2,682,692)Transfers to assets held for sale (depreciation)

   443,892

   -

   -

   -

   -

   -

   -

   -

   443,892Book 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

   872,667,210As of December 31, 2015Historic 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

   1,510,011,569Accumulated 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


F-69

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The balance of the land at the end of each year is as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Land

   227,849,584

   228,846,045Total

   227,849,584

   228,846,045
  Capitalized interest as of December 31, 2015, amounted to ThCh$ 1,086,976 (ThCh$ 1,010,296 in 2014), using an annually capitalization rate of 4.17% for both years.  The Company, through its subsidiaries 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 ofDecember 31, 2015, the Company maintained approximately 4,245, of which 3,967 hectares are for vines in production stage. Of the total hectares mentioned above, 3,648 correspond to own land and 319 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 2015, the production plant vines yield approximately 60.1 million kilos of grapes (42.5 million kilos of grapes in 2014).  As part of the risk administration activities, the subsidiaries use insurance agreements for the damage caused by nature or other to their biological assets. In addition, either productive or under formation vines are not affected by title restrictions of any kind, nor have they been pledged as a guarantee for financial liabilities.  For production vines depreciation is carried out on a linear basis and it is based on the 30-years average estimated production useful life, which is periodically assessed. Vines under formation are not depreciated until they start production.  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 administration has not perceived evidence of impairment with respect to these at December 31, 2015.  Assets under finance lease:  The book value of land and buildings relates to finance lease agreements for the Parent Company and its subsidiaries. Such assets will not be owned by the Company until the corresponding purchase options are exercised.  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Land

   4,511,623

   4,511,623Buildings

   9,333,443

   9,449,575Machinery and equipment

   1,061,907

   1,352,085Total

   14,906,973

   15,313,283
  InNote 27, 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., Compañía Cervecera Kunstmann S.A. and Manantial S.A.


F-70

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 24Investment Property  Changes in the movement of the investment property during the years ended asof December 31, 2014 and 2015 is as follows:   Lands

   Buildings

   TotalThCh$

   ThCh$

   ThCh$As of January 1, 2014Historic cost

   5,590,369

   1,964,783

   7,555,152Depreciation

   -

   (653,691)

   (653,691)Book Value

   5,590,369

   1,311,092

   6,901,461As of December 31, 2014Additions

   275,001

   -

   275,001Transfers from PPE (Cost)

   243,505

   850,319

   1,093,824Transfers from PPE (acumulated depreciation)

   -

   (12,590)

   (12,590)Depreciation

   -

   (65,208)

   (65,208)Convertion effect (Cost)

   (248,418)

   (39,897)

   (288,315)Conversion effect (depreciation)

   -

   13,440

   13,440Book Value

   5,860,457

   2,057,156

   7,917,613As of December 31, 2014Historic cost

   5,860,457

   2,775,205

   8,635,662Depreciation

   -

   (718,049)

   (718,049)Book Value

   5,860,457

   2,057,156

   7,917,613As of December 31, 2015Additions

   -

   4,148

   4,148Transfers from PPE (cost)

   (275,000)

   -

   (275,000)Depreciation

   -

   (60,450)

   (60,450)Convertion effect (Cost)

   (488,315)

   (291,926)

   (780,241)Conversion effect (depreciation)

   -

   31,932

   31,932Book Value

   5,097,142

   1,740,860

   6,838,002As of December 31, 2015Historic cost

   5,097,142

   2,487,425

   7,584,567Depreciation

   -

   (746,565)

   (746,565)Book Value

   5,097,142

   1,740,860

   6,838,002
  Investment property includes twenty land properties, two offices and one apartment, situated in Chile, which are maintained for appreciation purposes, with one land property, two offices and one apartment of them being leased and generating ThCh$ 172,243 revenue during year 2015 (ThCh$ 153,283 in 2014 and ThCh$110,333 in 2013). Additionally, there are three land properties in Argentina, which are leased and generated an income for ThCh$ 127,093 for year 2015 (ThCh$ 117,661 in 2014 and ThCh$ 134,103 in 2013). In addition, the expenses associated with such investment properties amounted to ThCh$ 120,340 for the year ended as of December 31, 2015 (ThCh$ 190,670 in 2014 and ThCh$ 161,915 in 2013).  The fair value, of investment property that represent 90% of the book value, is ThCh$ 18,365,934.  Management has not detected any evidence of impairment of Investment property.  The Company does not maintain any pledge or restriction over investment property items.


F-71

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 25Assets of disposal group held for sale  During the last quarter of 2009, the Board of Tamarí S.A. (merged with Finca la Celia S.A. as of April 1, 2011)authorized the sale of fixed assets which includes the winery with facilities for processing and storage of wines as well as of acres that surround it and the guest house. This decision is based primarily on the advantage of consolidating the operations of processing and packaging of wines from the Wine Group subsidiaries VSPT facilities in Finca La Celia, generating significant synergies for the Group.  During 2010, the Company hired a specialist broker for such assets. Subsequently, on December 13, 2011, a sales reservation contract was signed for all of the assets.  During December 2014, the subsidiary Sidra La Victoria S.A. authorized the sale of property located in Cipolletti city, Provincia de Río Negro, Argentina. During November 2015 this property was sold and a gain before tax of ThCh$ 1,977,432 was recognize.  During September 2015, the subsidiary Saenz Briones S.A. authorized the sale of property located in Luján de Cuyo city, Provincia de Mendoza, Argentina.  Besides, during 2015, the subsidiary Viña Valles de Chile S.A. (legal and continuing successor of Viña Misiones de Rengo S.A.) authorized the sale of certanis fixed asstes located in Rengo city, Provincia de Cachapoal, Sexta Región.  On January 7, 2016, the shareholders of Compañía Pisquera Bauzá S.A. came to an agreement in which Compañía Pisquera de Chile S.A. (subsidiary of Compañía Cervecerías Unidas S.A.) has sold its interest of 49% to Agroproductos Bauzá S.A. The price of the transaction amounted to UF 150,000 (equivalent to ThCh$ 3,844,364 on December 31, 2015).  Previously, in October 2015, the Board Director of CPCh agreed to order the Administration to obtain an agreement with Agroproductos Bauzá in terms which were reflected in the before mentioned transaction. The consequence the aforementioned was CPCh recorded a provision before taxes for an amount of ThCh$ 1,401,253, charged to the result for the year 2015. This amount is presented under Other gains/losses in the Consolidated Statement of Income.  As described inNote 2.18, non-current assets held for sale have been recorded at the lower of book value and estimated sale valueDecember 31, 2015.  AtDecember 31, 2015 and 2014, the items of assets held for sale are the following:  Assets of disposal group held for sale

   As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Land

   1,855,980

   196,818Contructions

   544,863

   467,833Machinery

   74,109

   94,109Joint agreement (Trade surplus , net of deferred taxes)

   3,844,364

   -Total

   6,319,316

   758,760


F-72

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 26Income taxes  Tax accounts receivable  The detail of the taxes receivables is the following:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Refundable tax previous year

   1,773,573

   658,744Taxes under claim

   3,661,253

   2,808,110Argentinean tax credits

   3,756,333

   3,910,500Monthly provisions

   4,592,593

   9,394,028Payment of absorbed profit provision

   33,276

   975,477Other credits

   1,447,192

   1,666,555Total

   15,264,220

   19,413,414
  Taxes accounts payable  The detail of taxes payable taxes is as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Chilean income taxes

   7,689,139

   6,718,638Monthly provisional payments

   3,488,085

   4,113,611Chilean unique taxes

   224,045

   48,810Estimated Argentine minimum gain subsidiaries taxes

   796,755

   816,076Total

   12,198,024

   11,697,135


F-73

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Tax expense  The detail of the income tax and deferred tax expense for the years ended as ofDecember 31, 2015, 2014 and 2013, is as follows:  For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Income as per deferred tax related to the origin and reversal of temporary differences

   (454,933)

   

   992,342

   101,216Prior year adjustments

   3,204,656

   

   4,763,242

   7,857,107Effect of change in tax rates

   (1,066,964)

   (1)

   (14,520,287)

   -Tax benefits (loss)

   248,559

   

   527,447

   (2,225,971)Total deferred tax expense (1)

   1,931,318

   (8,237,256)

   5,732,352Current tax expense

   (48,168,474)

   

   (34,522,795)

   (35,137,106)Prior period adjustments

   (3,877,360)

   

   (3,913,449)

   (5,300,153)(Loss) Income from income tax

   (50,114,516)

   (46,673,500)

   (34,704,907)
  (1)   On September 29, 2014 Act No. 20,780 was published in Chile, regarding the so called “Tax reform” which introduces amendments, among others, to the Income tax system.  The said Act provides that corporations will apply by default the "Partially Integrated System", unless a future Extraordinary Shareholders Meeting agrees to opt for the "Attributed Income Regime”. The Act provides for the "Partially Integrated System" a gradual increase in the First Category Income tax rate, going from 20% to 21% for the business year 2014, to 22.5% for the business year 2015, to 24% for the business year 2016, to 25.5% for the business year 2017 and to 27% starting 2018 business year.  The effect of the new tax rate of 21%, applicable from January 1, 2014, resulted in charges of ThCh$ 1,359,437 against income in 2014.  The difference between assets and liabilities for deferred taxes which occur as a direct effect of the increase in the First Category Income tax rate introduced by Act No. 20,780, has been accounted against to Net income. As of December 31, 2014, the total effect registered against the Net income was an amount of ThCh$ 14,520,287.  The deferred taxes related to items charged or credited directly to Consolidated Statement of Comprehensive Income are as follows:  For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Net income from cash flow hedge

   (17,563)

   

   39,470

   (51,304)Actuarial gains and losses deriving from defined benefit plans

   314,541

   

   501,689

   105,151Charge to equity

   296,978

   541,159

   53,847
  Effective Rate  The Company’s income tax expense as ofDecember 31, 2015, 2014 and 2013represents 26.4%, 27.9% and 20.7%, respectively of income before taxes. The following is reconciliation between such effective tax rate and the statutory tax rate valid in Chile.  For the years ended as of December 31,2015

   2014

   2013ThCh$

   Tax rate %

   ThCh$

   Tax rate %

   ThCh$

   Tax rate %Income before taxes

   190,640,106

   -

   167,465,421

   -

   167,609,458

   -Income tax using the statutory rate

   (42,894,024)

   22.5

   (35,167,738)

   21.0

   (33,521,892)

   20.0Adjustments to reach the effective rateTax effect of permanent differences and non-taxable items, net

   (3,202,337)

   1.7

   (70,944)

   0.1

   (1,307,033)

   0.7Effect of change in tax rate

   (1,066,964)

   0.6

   (14,520,287)

   8.6

   -

   -Effect of tax rates abroad

   (2,278,489)

   1.2

   2,235,676

   (1.3)

   (2,432,936)

   1.5Prior year adjustments

   (672,702)

   0.4

   849,793

   (0.5)

   2,556,954

   (1.5)Income tax, as reported

   (50,114,516)

   26.4

   (46,673,500)

   27.9

   (34,704,907)

   20.7


F-74

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Deferred taxes  Deferred tax assets and liabilities included in the Balance Sheet were as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Deferred tax assetsAccounts receivable impairment provision

   712,135

   721,772Employee benefits and other non taxable expenses

   10,402,580

   7,984,756Inventory impairment provision

   894,231

   886,694Severance indemnity

   5,044,560

   4,592,647Inventory valuation

   1,060,489

   1,143,039Amortization of intangibles

   1,785,174

   1,021,992Other assets

   8,927,120

   8,401,374Tax loss carryforwards

   5,703,304

   5,454,745Total assets from deferred taxes

   34,529,593

   30,207,019Deferred taxes liabilitiesFixed assets depreciation

   39,673,300

   36,618,758Capitalized software expense

   1,852,161

   1,694,859Agricultural operation expense

   4,348,021

   3,493,499Manufacturing indirect activation costs

   3,867,574

   3,777,813Intangibles

   8,654,342

   10,524,509Land

   28,756,600

   30,479,610Other liabilities

   994,965

   929,652Total liabilities from deferred taxes

   88,146,963

   87,518,700Total

   (53,617,370)

   (57,311,681)
  No deferred taxes have been recorded for the temporary differences between the taxes and accounting value generated by investments in subsidiaries; consequently deferred tax is not recognized for the Translation Adjustments or investments in Joint Ventures and Associates.  In accordance with current tax laws in Chile, taxable losses do not expire and can be applied indefinitely. Regarding Argentina, taxable losses expire after 5 years.  Movement of deferred taxes

   Deferred Taxes ThCh$As of January 1, 2014

   (48,508,053)Deferred taxes for business combination

   (461,566)Deferred Tax Losses Tax absorption

   (968,195)Charge to income tax deferred

   (8,237,257)Conversion effect

   84,862Deferred taxes against equity

   541,159Other deferred movements taxes

   237,369Charge

   (8,803,628)As of December 31, 2014

   (57,311,681)As of January 1, 2015Deferred taxes for joint operation

   881,910Deferred taxes from tax loss carry forwards absortion

   (33,276)Credit to income tax deferred

   1,931,318Conversion effect

   503,187Deferred taxes against equity

   296,978Other deferred movements taxes

   114,194Credit

   3,694,311As of December 31, 2015

   (53,617,370)


F-75

---







Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 27Other financial liabilities  Debts and financial liabilities classified based on the type of obligation and their classifications in the consolidated balance sheet are as follows:  As of December 31, 2015

   As of December 31, 2014ThCh$

   ThCh$Bank borrowings (*)

   76,050,091

   95,822,149Bonds payable (*)

   74,508,233

   73,937,639Financial leases obligations (*)

   17,559,874

   17,392,945Deposits for return of bottles and containers

   12,503,170

   11,787,424Derivatives (**)

   171,470

   684,317Liability coverage (**)

   107,698

   228,376Total

   180,900,536

   199,852,850Current

   43,973,991

   65,318,293Non current

   136,926,545

   134,534,557Total

   180,900,536

   199,852,850
  (*)  SeeNote 5. (**) SeeNote 6.


F-76

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The maturities and interest rates of such obligations are as follows: As ofDecember 31, 2015: Undiscounting amounts according to maturityDebtor Tax ID

   Company

   Debtor country

   Lending party Tax ID

   Creditor name

   Creditor country

   Currency

   0 to 3 months

   3 months to 1 year

   Over 1 year to 3 years

   Over 3 years to 5 years

   Over 5 years

   Total

   Amortization rate

   Interest RateThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   

   %Bank borrowings0-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Supervielle

   Argentina

   USD

   -

   128,459

   -

   -

   -

   128,459

   At maturity

   6.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   272,706

   -

   -

   -

   -

   272,706

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   106,222

   -

   -

   -

   -

   106,222

   At maturity

   28.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   420,665

   -

   -

   -

   -

   420,665

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   1,857

   7,389

   3,095

   -

   -

   12,341

   Quarter

   15.250-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   506,450

   -

   -

   -

   -

   506,450

   At maturity

   27.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   151,260

   -

   -

   -

   -

   151,260

   At maturity

   29.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   -

   486,804

   -

   -

   -

   486,804

   At maturity

   29.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   405,927

   -

   -

   -

   -

   405,927

   At maturity

   25.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco BBVA

   Argentina

   $ARG

   535,283

   -

   -

   -

   -

   535,283

   At maturity

   29.5091.041.000-8

   Viña San Pedro Tarapaca S.A. (1)

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   USD

   28,782

   3,150,341

   -

   -

   -

   3,179,123

   At maturity

   1.9291.041.000-8

   Viña San Pedro Tarapaca S.A. (2)

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   USD

   66,496

   7,101,600

   -

   -

   -

   7,168,096

   At maturity

   1.9091.041.000-8

   Viña San Pedro Tarapaca S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   UF

   -

   56,243

   -

   9,739,054

   -

   9,795,297

   At maturity

   2.7091.041.000-8

   Viña San Pedro Tarapaca S.A. (1)

   Chile

   97.018.000-1

   Scotiabank

   Chile

   USD

   -

   2,977

   5,590,024

   -

   -

   5,593,001

   At maturity

   1.1599.586.280-8

   Compañía Pisquera de Chile S.A

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   449,879

   -

   15,978,778

   -

   -

   16,428,657

   At maturity

   6.8696.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   15,123

   46,470

   109,544

   -

   -

   171,137

   Monthly

   4.8096.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   8,529

   26,304

   75,692

   16,855

   -

   127,380

   Monthly

   5.4896.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   7,004

   21,588

   12,375

   -

   -

   40,967

   Monthly

   5.3696.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   13,500

   40,500

   108,000

   72,000

   -

   234,000

   Monthly

   6.0096.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   19,000

   57,000

   88,668

   -

   -

   164,668

   Monthly

   7.5996.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   14,000

   42,000

   112,000

   32,667

   -

   200,667

   Monthly

   5.8896.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   22,500

   67,500

   180,000

   112,500

   -

   382,500

   Monthly

   5.7696.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   23,690

   56,839

   -

   -

   -

   80,529

   Monthly

   6.6696.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   7,704

   23,532

   68,516

   50,621

   -

   150,373

   Monthly

   6.1296.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   200,000

   -

   -

   -

   -

   200,000

   At maturity

   5.2696.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   254,313

   -

   -

   -

   -

   254,313

   At maturity

   4.3896.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   35,843

   36,436

   -

   -

   -

   72,279

   Monthly

   7.5696.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   150,000

   -

   -

   -

   150,000

   Monthly

   5.4096.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   255,510

   -

   -

   -

   255,510

   At maturity

   4.2296.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   18,029

   55,418

   158,974

   138,117

   -

   370,538

   Monthly

   5.020-E

   Milotur S.A.

   Uruguay

   O-E

   Nuevo Banco Comercial

   Uruguay

   USD

   25,991

   71,036

   -

   -

   -

   97,027

   Monthly

   5.500-E

   Milotur S.A.

   Uruguay

   O-E

   Banco Itaú

   Uruguay

   UYI

   -

   344,850

   1,701,800

   -

   -

   2,046,650

   Monthly

   6.0096.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   515,083

   -

   -

   -

   515,083

   At maturity

   4.3496.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   618,100

   -

   -

   -

   618,100

   At maturity

   4.3496.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   -

   1,030,538

   -

   -

   -

   1,030,538

   At maturity

   4.3896.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.018.000-1

   Scotiabank

   Chile

   USD

   7,229

   453,561

   -

   -

   -

   460,790

   At maturity

   1.9096.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   180,724

   555,208

   1,589,858

   1,378,183

   -

   3,703,973

   Monthly

   5.0296.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.018.000-1

   Scotiabank

   Chile

   CLP

   -

   1,028,447

   -

   -

   -

   1,028,447

   At maturity

   4.080-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco BNA

   Argentina

   $ARG

   345,777

   927,294

   2,472,784

   1,236,392

   -

   4,982,247

   Monthly

   15.000-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco BNA

   Argentina

   $ARG

   173,166

   392,114

   697,088

   -

   -

   1,262,368

   Monthly

   25.190-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco BBVA

   Argentina

   $ARG

   560,011

   1,633,640

   1,089,584

   -

   -

   3,283,235

   Quarter

   26.000-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco Galicia

   Argentina

   $ARG

   1,272,502

   1,815,157

   5,446,285

   -

   -

   8,533,944

   Quarter

   29.400-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco Macro

   Argentina

   $ARG

   44,130

   136,150

   75,639

   -

   -

   255,919

   Monthly

   15.250-E

   Saenz Briones & Cía SAIC

   Argentina

   0-E

   Banco Citibank

   Argentina

   $ARG

   65,596

   121,022

   -

   -

   -

   186,618

   Monthly

   15.25Sub-Total

   

   

   

   

   

   

   6,259,888

   21,455,110

   35,558,704

   12,776,389

   -

   76,050,091


F-77

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Undiscounting amounts according to maturityDebtor Tax ID

   Company

   Debtor country

   Registration or ID No. Instrument

   Creditor country

   Currency

   0 to 3 months

   3 months to 1 year

   Over 1 year to 3 years

   Over 3 years to 5 years

   Over 5 years

   Total

   Amortization rate

   Interest RateThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   

   %Bonds payable90.413.000-1

   Compañía Cervecerías Unidas S.A.

   Chile

   388 18/10/2004 BONO SERIE E

   Chile

   UF

   -

   2,539,921

   4,953,915

   5,095,419

   10,251,636

   22,840,891

   Semiannual

   4.0090.413.000-1

   Compañía Cervecerías Unidas S.A.

   Chile

   573 23/03/2009 BONO SERIE H

   Chile

   UF

   615,318

   -

   -

   2,252,581

   48,799,443

   51,667,342

   Semiannual

   4.25Sub-Total

   

   

   

   

   

   

   615,318

   2,539,921

   4,953,915

   7,348,000

   59,051,079

   74,508,233
  Undiscounting amounts according to maturityDebtor Tax ID

   Company

   Debtor country

   Lending party Tax ID

   Creditor name

   Creditor country

   Currency

   0 to 3 months

   3 months to 1 year

   Over 1 year to 3 years

   Over 3 years to 5 years

   Over 5 years

   Total

   Amortization rate

   Interest RateThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   

   %Financial leases obligations0-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Supervielle

   Argentina

   $ARG

   1,267

   3,900

   6,147

   -

   -

   11,314

   Monthly

   17.5096.711.590-8

   Manantial S.A.

   Chile

   97.000.600-6

   Banco de Creditos e Inversiones

   Chile

   UF

   5,371

   16,386

   9,292

   -

   -

   31,049

   Monthly

   5.0696.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   10,764

   16,845

   13,524

   -

   -

   41,133

   Monthly

   9.3196.711.590-8

   Manantial S.A.

   Chile

   97.053.000-2

   Banco Security

   Chile

   UF

   21,598

   25,628

   12,867

   -

   -

   60,093

   Monthly

   6.8190.413.000-1

   Compañía Cervecerías Unidas S.A.

   Chile

   99.012.000-5

   Consorcio Nacional de Seguros S.A

   Chile

   UF

   12,499

   38,806

   113,757

   225,991

   16,628,473

   17,019,526

   Monthly

   7.0796.981.310-6

   Compañía Cervecera Kunstmann S.A

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   42,822

   23,183

   12,799

   -

   -

   78,804

   Monthly

   5.5896.981.310-6

   Compañía Cervecera Kunstmann S.A

   Chile

   97.030.000-7

   Banco Estado

   Chile

   UF

   23,716

   72,672

   196,552

   -

   -

   292,940

   Monthly

   4.3376.077.848-6

   Cervecera Belga de la Patagonia

   Chile

   97.015.000-5

   Banco Santander de Chile

   Chile

   UF

   1,455

   4,504

   13,097

   5,959

   -

   25,015

   Monthly

   6.27Sub-Total

   

   

   

   

   

   119,492

   201,924

   378,035

   231,950

   16,628,473

   17,559,874Total

   

   

   

   

   

   

   6,994,698

   24,196,955

   40,890,654

   20,356,339

   75,679,552

   168,118,198
  (1) This obligation is hedged by a Cross Currency Interest Rate Swap agreement(Note 6). (2) This obligation is hedged by a Cross Interest Rate Swap agreement(Note 6).


F-78

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 As of December 31, 2014:  Undiscounting amounts according to maturityDebtor Tax ID

   Company

   Debtor country

   Lending party Tax ID

   Creditor name

   Creditor country

   Currency

   0 to 3 months

   3 months to 1 year

   Over 1 year to 3 years

   Over 3 years to 5 years

   Over 5 years

   Total

   Amortization rate

   Interest RateThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   

   %Bank borrowings0-E

   Finca La Celia S.A

   Argentina

   O-E

   Santader RIO

   Argentina

   USD

   338,173

   -

   -

   -

   -

   338,173

   At maturity

   4.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Santader RIO

   Argentina

   USD

   338,173

   -

   -

   -

   -

   338,173

   At maturity

   4.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Supervielle

   Argentina

   USD

   -

   73,057

   -

   -

   -

   73,057

   At maturity

   4.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Supervielle

   Argentina

   USD

   -

   79,145

   -

   -

   -

   79,145

   At maturity

   4.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Supervielle

   Argentina

   USD

   -

   76,101

   -

   -

   -

   76,101

   At maturity

   4.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Supervielle

   Argentina

   USD

   -

   75,844

   -

   -

   -

   75,844

   At maturity

   4.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Fondo para la Transformación y Crec.

   Argentina

   $ARG

   -

   2,114

   -

   -

   -

   2,114

   Semiannual

   6.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   581,393

   -

   -

   -

   -

   581,393

   At maturity

   28.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   569,746

   -

   -

   -

   -

   569,746

   At maturity

   30.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   327,034

   -

   -

   -

   -

   327,034

   At maturity

   28.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   174,129

   -

   -

   -

   -

   174,129

   At maturity

   26.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   3,725

   13,226

   13,708

   -

   -

   30,659

   Quarter

   15.250-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   131,476

   -

   -

   -

   -

   131,476

   At maturity

   26.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,640

   -

   -

   -

   -

   29,640

   At maturity

   26.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,640

   -

   -

   -

   -

   29,640

   At maturity

   26.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   177,838

   -

   -

   -

   -

   177,838

   At maturity

   26.500-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco San Juan

   Argentina

   $ARG

   29,711

   -

   -

   -

   -

   29,711

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   BBVA

   Argentina

   $ARG

   402,311

   -

   -

   -

   -

   402,311

   At maturity

   28.000-E

   Finca La Celia S.A

   Argentina

   O-E

   Banco Patagonia

   Argentina

   $ARG

   43,659

   -

   -

   -

   -

   43,659

   At maturity

   24.0091.041.000-8

   Viña San Pedro Tarapaca S.A. (1)

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   USD

   23,097

   -

   2,691,604

   -

   -

   2,714,701

   At maturity

   1.7991.041.000-8

   Viña San Pedro Tarapaca S.A. (2)

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   USD

   53,348

   -

   6,067,500

   -

   -

   6,120,848

   At maturity

   1.7991.041.000-8

   Viña San Pedro Tarapaca S.A. (2)

   Chile

   97.018.000-1

   Scotiabank

   Chile

   USD

   1,438

   4,854,000

   -

   -

   -

   4,855,438

   At maturity

   1.1991.041.000-8

   Viña San Pedro Tarapaca S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   EUR

   -

   4,590,673

   -

   -

   -

   4,590,673

   At maturity

   0.5991.041.000-8

   Viña San Pedro Tarapaca S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   UF

   -

   54,044

   -

   9,358,298

   -

   9,412,342

   At maturity

   2.7099.586.280-8

   Compañía Pisquera de Chile S.A

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   448,895

   -

   15,949,982

   -

   -

   16,398,877

   At maturity

   6.8696.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   14,752

   42,394

   120,811

   48,426

   -

   226,383

   Monthly

   4.8096.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   7,798

   23,813

   68,838

   53,562

   -

   154,011

   Monthly

   5.4896.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   6,392

   19,613

   39,365

   -

   -

   65,370

   Monthly

   5.3696.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   1,654

   2,266

   -

   -

   -

   3,920

   Monthly

   9.1296.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   19,000

   57,000

   152,000

   12,667

   -

   240,667

   Monthly

   7.5996.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   14,000

   42,000

   112,000

   88,667

   -

   256,667

   Monthly

   5.8896.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   9,214

   3,107

   -

   -

   -

   12,321

   Monthly

   7.3296.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   7,426

   17,873

   -

   -

   -

   25,299

   Monthly

   7.5696.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   22,178

   68,690

   80,528

   -

   -

   171,396

   Monthly

   6.6696.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   62,759

   192,305

   -

   -

   -

   255,064

   At maturity

   4.3896.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   251,734

   -

   -

   -

   251,734

   Monthly

   0.3796.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   5,834

   14,043

   -

   -

   -

   19,877

   Monthly

   0.6396.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   33,596

   104,022

   72,279

   -

   -

   209,897

   Monthly

   0.6396.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   200,852

   -

   -

   -

   200,852

   Monthly

   0.6396.711.590-8

   Manantial S.A.

   Chile

   76.645.030-K

   Banco Itaú

   Chile

   CLP

   18,792

   -

   -

   -

   -

   18,792

   Monthly

   0.500-E

   Milotur S.A.

   Uruguay

   O-E

   Nuevo Banco Comercial

   Uruguay

   USD

   23,418

   69,795

   93,672

   -

   -

   186,885

   Monthly

   5.500-E

   Milotur S.A.

   Uruguay

   O-E

   Nuevo Banco Comercial

   Uruguay

   UYU

   601,212

   -

   -

   -

   -

   601,212

   At maturity

   17.000-E

   Milotur S.A.

   Uruguay

   O-E

   Nuevo Banco Comercial

   Uruguay

   UYU

   357,814

   -

   -

   -

   -

   357,814

   At maturity

   1.120-E

   Milotur S.A.

   Uruguay

   O-E

   Nuevo Banco Comercial

   Uruguay

   UYU

   138,532

   -

   -

   -

   -

   138,532

   At maturity

   17.000-E

   Milotur S.A.

   Uruguay

   O-E

   Nuevo Banco Comercial

   Uruguay

   UYU

   643,409

   -

   -

   -

   -

   643,409

   At maturity

   16.8096.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   515,411

   -

   -

   -

   515,411

   At maturity

   4.5096.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   -

   618,493

   -

   -

   -

   618,493

   At maturity

   4.5096.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   CLP

   -

   1,034,167

   -

   -

   -

   1,034,167

   At maturity

   4.9296.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.018.000-1

   Scotiabank

   Chile

   USD

   2,413

   -

   387,514

   -

   -

   389,927

   At maturity

   1.9096.981.310-6

   Compañia Cervecera Kunstmann S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   CLP

   1,303,864

   -

   -

   -

   -

   1,303,864

   At maturity

   3.220-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco BBVA

   Argentina

   $ARG

   1,541,623

   4,401,173

   -

   -

   -

   5,942,796

   Quarter

   15.000-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco BNA

   Argentina

   $ARG

   445,789

   1,208,180

   3,221,814

   3,221,813

   -

   8,097,596

   Monthly

   15.000-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco Macro

   Argentina

   $ARG

   54,865

   177,392

   335,073

   -

   -

   567,330

   Monthly

   15.250-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco BBVA

   Argentina

   $ARG

   690,557

   1,418,990

   4,257,610

   -

   -

   6,367,157

   Quarter

   26.000-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco Citibank

   Argentina

   $ARG

   14,494,421

   -

   -

   -

   -

   14,494,421

   At maturity

   26.000-E

   Compañía Industrial Cervecera S.A.

   Argentina

   0-E

   Banco Santander Río

   Argentina

   $ARG

   3,063,385

   -

   -

   -

   -

   3,063,385

   At maturity

   29.000-E

   Saenz Briones SA

   Argentina

   0-E

   HSBC

   Argentina

   $ARG

   2,724

   -

   -

   -

   -

   2,724

   At maturity

   20.000-E

   Saenz Briones SA

   Argentina

   0-E

   Banco Citibank

   Argentina

   $ARG

   93,631

   236,522

   236,522

   -

   -

   566,675

   Monthly

   15.250-E

   Saenz Briones SA

   Argentina

   0-E

   Banco Patagonia

   Argentina

   $ARG

   829,136

   -

   -

   -

   -

   829,136

   At maturity

   30.00Sub-Total

   

   

   

   

   

   

   28,599,857

   20,538,039

   33,900,820

   12,783,433

   -

   95,822,149


F-79

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Registration or ID No. Instrument

   

   

   Undiscounting amounts according to maturityDebtor Tax ID

   Company

   Debtor country

   Creditor country

   Currency

   0 to 3 months

   3 months to

   1 year

   Over 1 year to 3

   years

   Over 3 years to 5

   years

   Over 5 years

   Total

   Amortization

   rate

   Interest

   RateThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   

   %Bonds payable90.413.000-1

   CCU S.A

   Chile

   388 18/10/2014 BONO SERIE E

   Chile

   UF

   -

   2,437,294

   4,741,076

   4,818,518

   12,313,550

   24,310,438

   Semiannual

   4.0090.413.000-1

   CCU S.A

   Chile

   573 23/03/2009 BONO SERIE H

   Chile

   UF

   592,131

   -

   -

   2,149,320

   46,885,750

   49,627,201

   Semiannual

   4.25Sub-Total

   

   

   

   

   

   

   592,131

   2,437,294

   4,741,076

   6,967,838

   59,199,300

   73,937,639
   Undiscounting amounts according to maturityDebtor Tax ID

   Company

   Debtor country

   Lending party

   Tax ID

   Creditor name

   Creditor country

   Currency

   0 to 3 months

   3 months to 1 year

   Over 1 year to 3

   years

   Over 3 years to 5 years

   Over 5 years

   Total

   Amortization rate

   Interest

   RateThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   

   %Financial leases obligations0-E

   Finca La Celia S.A

   Argentina

   O-E

   Supervielle

   Argentina

   $ARG

   1,475

   4,620

   11,088

   2,466

   -

   19,649

   At maturity

   17.5096.711.590-8

   Manantial S.A.

   Chile

   97.000.600-6

   Banco de Creditos e Inversiones

   Chile

   UF

   7,058

   15,218

   29,841

   -

   -

   52,117

   Monthly

   0.4296.711.590-8

   Manantial S.A.

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   20,250

   42,944

   37,825

   -

   -

   101,019

   Monthly

   0.5096.711.590-8

   Manantial S.A.

   Chile

   97.030.000-7

   Banco Estado

   Chile

   UF

   12,160

   6,585

   -

   -

   -

   18,745

   Monthly

   1.1796.711.590-8

   Manantial S.A.

   Chile

   97.053.000-2

   Banco Security

   Chile

   UF

   31,538

   79,780

   57,744

   -

   -

   169,062

   Monthly

   0.5590.413.000-1

   CCU S.A

   Chile

   99.012.000-5

   Consorcio Nacional de Seguros S.A

   Chile

   UF

   22,926

   38,773

   102,087

   117,043

   16,135,005

   16,415,834

   Monthly

   7.0796.981.310-6

   Compañía Cervecera Kunstmann S.A

   Chile

   97.004.000-5

   Banco de Chile

   Chile

   UF

   38,866

   101,818

   75,724

   -

   -

   216,408

   Monthly

   6.4396.981.310-6

   Compañía Cervecera Kunstmann S.A

   Chile

   97.030.000-7

   Banco Estado

   Chile

   UF

   21,843

   66,935

   189,245

   92,241

   -

   370,264

   Monthly

   4.3376.077.848-6

   Cervecera Belga de la Patagonia

   Chile

   97.015.000-5

   Banco Santander de Chile

   Chile

   UF

   1,306

   4,044

   11,760

   12,737

   -

   29,847

   Monthly

   6.27Sub-Total

   

   

   

   

   

   157,422

   360,717

   515,314

   224,487

   16,135,005

   17,392,945Total

   

   

   

   

   

   

   29,349,410

   23,336,050

   39,157,210

   19,975,758

   75,334,305

   187,152,733
 (1) This obligation is hedged by a Cross Currency Interest Rate Swap agreement(Note 6). (2) This obligation is hedged by a Cross Currency Rate Swap agreement(Note 6).


F-80

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Details of the fair value of bank borrowings, financial leases obligations and bonds payable are described inNote 6.  The effective interest rates of bond obligations are as follows:  Bonds Serie A                                     3.96% Bonds Serie E                                     4.52% Bonds Serie H                                    4.26% Bonds Serie I                                      3.18%  The debts and financial liabilities are stated in several currencies and they accrue fixed and variable interest rates. The details of such obligations classified as per currency and interest type (excluding the effect of cross currency interest rate swap agreements) are as follows:  As of December 31, 2015

   As of December 31, 2014Fixed Interest

   Rate

   Variable Interest

   Rate

   Fixed Interest

   Rate

   Variable Interest

   RateThCh$

   ThCh$

   ThCh$

   ThCh$US Dollar

   686,276

   15,940,220

   1,557,305

   13,690,987Chilean Pesos

   25,840,175

   -

   21,537,298

   -Argentine Pesos

   17,146,915

   4,266,388

   42,866,462

   -Unidades de Fomento

   102,191,574

   -

   101,169,041

   -Euros

   -

   -

   4,590,673

   -Uruguayan Pesos

   -

   -

   1,740,967

   -UYI

   2,046,650

   -

   -

   -Total

   147,911,590

   20,206,608

   173,461,746

   13,690,987
  The terms and conditions of the main interest accruing obligations as of December 31, 2015, were as follows:  A)Bank Borrowings  Banco Estado – Bank Loans  a) OnJuly 27, 2012, the subsidiary Compañía Pisquera Chile S.A. (CPCh) signed a bank loan with the Banco Estado for a total of ThCh$ 16,000,000, for a period of 5 years, with maturity on July 27, 2017.  This loan accrues interest at an annual fixed rate of 6.86% and an effective rate of 7.17%. The Company amortizes interest semi-annually, and the capital amortization consists of a single payment at the end of the established term. This obligation is subject to certain reporting obligations in addition to complying with the following financial ratios,which will be measured on the half-yearly financial statements of CPCh:  (a)Maintain a Financial Expense Coverage not less than 3, calculated as the relationship between Gross Margin less Marketing costs, Distribution and Administration expenses, plus Other income by function, less Other expenses by function, plus Depreciation and Amortization, divided by Financial costs.  (b)Maintain a debt ratio of no more than 2.5, measured as Total liabilities divided by Equity.  (c)Maintain an Equity higher than UF 770,000.  In addition, this loan obliges CPCh to comply with certain restrictions of affirmative nature, including maintaining insurance, maintaining the ownership of essential assets, and also to comply with certain restrictions, such as not to pledge, mortgage or grant any kind of encumbrance or real right over any fixed asset with an individual accounting value higher than UF 10,000, except under the terms established by the agreement, among other.  As of December 31, 2015, the Company was in compliance with the financial covenants and specific requirements of this loan.


F-81

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  b)   On April 25, 2012, the subsidiary Compañía Cervecera Kunstmann S.A. signed a bank loan with Banco Estado for a total of ThCh$ 500,000, maturing on April 25, 2013. Subsequently this loan was renewed for one year, maturing on April 25, 2014. It was renewed for one year, maturing on April 25, 2015. Subsequently this loan was renewed for one year, maturing on April 27, 2016.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization consists of a single payment at the end of the established term.  On April 25, 2014 it was renewed for one year, maturing on April 25, 2015.  On April 24, 2015 it was renewed for one year, maturing on April 27, 2016.  c)   On April 25, 2013, the subsidiary Compañía Cervecera Kunstmann S.A. signed a bank loan with Banco Estado for a total of ThCh$ 600,000, maturing on April 25, 2014. It was renewed for one year, maturing on April 25, 2015. Subsequently this loan was renewed for one year, maturing on April 27, 2016.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization consists of a single payment at the end of the established term.  On April 25, 2014 it was renewed for one year, maturing on April 25, 2015.  On April 24, 2015 it was renewed for one year, maturing on April 27, 2016.  d)On April 23, 2012, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Estado for a total of ThCh$ 3,000,000, maturing on July 19, 2012.  On July 19, 2012 the previous loan was renewed for a period of 71 days, maturing on September 28, 2012. Subsequently, on the same time this loan was renewed for a period of 84 days, maturing on December 21, 2012. On December 21, 2012, this loan was renewed for 60 days, maturing on February 19, 2013, renewed again for 94 days, maturing on May 24, 2013.  This loan accrued interest at an annual rate. The subsidiary amortized interest and capital amortization consists of a single payment at the end of the established term.  On May 24, 2013, this loan was paid.  e)   On July 19, 2012, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Estado for a total of ThCh$ 1,000,000, maturing on September 28, 2012. Subsequently this loan was renewed for a period of 84 days, maturing on December 21, 2012. It was renewed for 60 days, maturing in February 19, 2013, renewed again for 94 days, maturing on May 24, 2013.  This loan accrued a fixed interest at an annual rate. The subsidiary amortized interest and capital amortization consists of a single payment at the end of the established term.  On May 24, 2013, this loan was paid.  f)    On June 16, 2014, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Estado for a total of 6,200,000 euros, maturing on June 16, 2015.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization consists of a single payment at the end of the established term.  On June 17, 2015, payment of the loan was made.   g)On October 15, 2014, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Estado for a total of UF 380,000, maturing on October 15, 2019.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest semi-annually and capital amortization consists of a single payment at the end of the established term. h)On December 3, 2014, the subsidiary Compañía Cervecera Kunstmann S.A. signed a bank loan with Banco Estado for a total of ThCh$ 1,300,000, maturing on March 31, 2015.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization consists of a single payment at the end of the established term.  On May 29, 2015 the loan was renewed for a term of 3 months, maturing on July 28, 2015.  On July 17, 2015, payment of the loan was made.   Banco de Chile – Bank Loans  a) On July 11, 2011, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco de Chile for a total of US$ 4,436,100, maturing on July 11, 2016.  This loan accrues interest at a compound floating rate Libor plus 180 days plus a fixed margin. The subsidiary amortizes interest semi-annually, and capital amortization consists of a single payment at the end of the established term.  This debt was changed to Euros and a fixed interest rate through a currency US$-Euro and interest rate swap agreements (Cross Currency Interest Rate Swap). For details of the Company`s hedge strategies seeNote 5 and 6.  b) On July 7, 2011, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco de Chile for a total of US$ 10,000,000, maturing on July 7, 2016.  This loan accrues interest at a compound floating rate Libor plus 180 days plus a fixed margin. The subsidiary amortizes interest semi-annually, and capital amortization consists of a single payment at the end of the established term.  The interest rate risk to which the subsidiary is exposed as result of this loan is mitigated by the use of cross interest rate swap agreements (interest rate fixed). For details of the Company`s hedge strategies seeNote 5 and6.


F-82

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  The aforementioned loans oblige the Company to comply with the same covenants as the Series A Bond as indicated in letter D)Restrictions in this Note.  c) On April 24, 2014, the subsidiary Compañía Cervecera Kunstmann S.A. signed a bank loan with Banco de Chile for a total of ThCh$ 1,000,000, maturing on April 24, 2015.  This loan accrued interest at an annual rate. The subsidiary amortizes interest and capital consists of a single payment at the end of the established term.  On April 24, 2015 the loan was renewed for a term of 1 year, maturing on April 21, 2016.  d)On April 24, 2015, the subsidiary Compañía Cervecera Kunstmann SA He signed a bank loan with Banco de Chile for a total of ThCh$ 600,000 for a period of three months expiring on July 24, 2015.  This loan bears interest at a fixed interest rate. The subsidiary pays the interest and principal in a single payment at the end of the deadline.  On July 24, 2015, payment of the loan was made.   Banco Scotiabank – Bank Loans  a)   On June 21, 2012, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Scotiabank for a total of US$ 3,897,940, maturing on June 20, 2013.  This loan accrued interest at a compound floating rate Libor plus 180 days plus a fixed margin. The subsidiary amortized interest quarterly and capital amortization consists of a single payment at the end of the established term.  This debt was changed to Euros and a fixed interest rate through a currency US$-Euro and interest rate swap agreements (Cross Currency Interest Rate Swap). For details of the Company`s hedge strategies seeNote 5 and 6.  On June 20, 2013, this loan was paid.  b)   On June 21, 2012, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Scotiabank for a total of US$ 11,000,000, maturing on June 21, 2013.  This loan accrued interest at a compound floating rate Libor plus 180 days plus a fixed margin. The subsidiary amortized interest semi-annually and capital amortization consists of a single payment at the end of the established term.  On June 21, 2013, this loan was paid.  c)  On June 21, 2013, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Scotiabank for a total of US$ 8,000,000, maturing on June 22, 2015.  This loan accrues interest at a compound floating rate Libor plus 90 days plus a fixed margin. The subsidiary amortizes interest quarterly and capital amortization consists of a single payment at the end of the established term.  The interest rate risk to which the subsidiary is exposed as result of this loan is mitigated by the use of cross interest rate swap agreements (interest rate fixed). For details of the Company`s hedge strategies see*Note 5 and6*.  On June 22, 2015, payment of the loan was made.  d)   On September 4, 2014, the subsidiary Compañía Cervecera Kunstmann S.A. signed a bank loan with Banco Scotiabank for a total of US$ 638,674, maturing on September 4, 2016.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest semi-annually and capital amortization consists of a single payment at the end of the established term.


F-83

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 e)  On June 17, 2015, the subsidiary Viña San Pedro Tarapacá S.A. it signed a bank loan with Scotiabank for a total of US$ 7,871,500, with a term of three years maturing on June 18, 2018.  This loan bears interest at a floating interest rate composed dollar Libor at 90 days plus a fixed margin. The company pays quarterly interest and amortization of capital consists of a single payment at the end of the deadline.  The interest rate risk to which the subsidiary is exposed as result of this loan is mitigated by the use of cross interest rate swap agreements (interest rate fixed). For details of the Company`s hedge strategies see*Note 5 and*6.  The aforementioned loans oblige the Company to comply with the covenants indicated in letter D) Restriction in this Note.  f)   On April 24, 2015, the subsidiary Compañía Cervecera Kunstmann SA He signed a bank loan with Scotiabank for a total of US $ 1,000,000, with a term of one year expiring at April 22, 2016.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest semi-annually and capital amortization consists of a single payment at the end of the established term.   Banco Santander Chile – Bank Loans  a)   On June 17, 2013, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Santander Chile for a total of US$ 8,000,000, maturing on June 17, 2014.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization consists of a single payment at the end of the established term.  On June 17, 2014, this loan was paid.  b)   On June 17, 2013, the subsidiary Viña San Pedro Tarapacá S.A. signed a bank loan with Banco Santander Chile for a total of 6,200,000 Euros, maturing on June 17, 2014.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization consists of a single payment at the end of the established term.  On June 17, 2014, this loan was paid.   BBVA Banco Francés S.A.; HSBC Bank Argentina S.A.; Banco de Galicia y Buenos Aires S.A.; La Sucursal de Citibank NA established in Argentinian Republic; Banco de La Provincia de Buenos Aires – Syndicated Bank Loan with Compañía Industrial Cervecera S.A. (CICSA)  On October 5, 2012, the subsidiary CICSA signed a syndicated bank loan for a total of 187.5 million Argentine Pesos, maturing on October 5, 2015.  The proportional participation of banks lenders is as follows:  a)BBVA Bank French S.A., with 55 million Argentine Pesos of pro rata participation.  b)Banco de la Provincia de Buenos Aires, with 54 million Argentine Pesos.  c)HSBC Bank Argentina S.A., with 43.5 million Argentine Pesos of pro rata participation.  d)Banco de Galicia y Buenos Aires S.A., with 20 million Argentine Pesos of pro rata participation.  e)Citibank NA established in Argentinian Republic, with 15 million Argentine Pesos of pro rata participation.  This loan accrues interest at an annual rate of 15.01% whose payment is made monthly. The subsidiary amortizes capital in 9 consecutive and equal quarterly quotes, once the grace period of 12 months from the date of disbursement.


F-84

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  This loan obliges the subsidiary to meet specific requirements and financial covenants related to their Consolidated Financial Statements, which according to agreement of the parties are as follows:  a)Maintain a capability of repayment measure at the end of each quarter less than or equal to 3, calculated as the financial debt over Adjusted EBITDA1.Adjusted EBITDA means EBITDA as calculated by the Company in accordance with particular debt instruments in order to measure such instruments’ financial covenants and is defined as: Operating result before Interest, Income taxes, Depreciation and Amortization for the period of 12 months immediately prior to the date of calculation.  b)Maintain a Financial Expense Coverage measured at the end of each quarter and retroactively for periods of 12 months, not less than 2.5, calculated as the ratio of Adjusted EBITDA (as defined in paragraph (a)) and Financial Costs account.  c)Maintain at the end of each quarter an indebtedness ratio not higher than 1.5, defined as the ratio Financial Liabilities over the Equity  meaning the Equity at the time of calculation, as it arises from their Financial Statements and in accordance with generally accepted accounting principles in the Argentinian Republic.  d)Maintain at the end of each quarter a minimum Equity of 600 million of Argentine Pesos.  As of December 31, 2015, the Company was in compliance with the financial covenants and specific requirements of this loan.   ** Banco de la Nación Argentina – Bank Loan with Compañía Industrial Cervecera S.A. (CICSA) ** a)On December 28, 2012, CICSA signed a bank loan for a total of 140 million of Argentine pesos for a period of 7 years, maturing on November 26, 2019, and whose loan is delivered in two stages, where the first was carried out on December 28, 2012, for a total of 56 million argentine pesos and the second on June 28, 2013, for a total of 84 million of Argentine pesos.  This loan accrues interest at an annual rate of 15% fixed by first 36 months.Having completed that term, accrues interest at a compound floating rate BADLAR in pesos plus a fixed spread of 400 basis points and to this effect will be taken BADLAR rate published by the Central Bank of the Argentina Republic, corresponding to five working days prior to the start of the period, subject to the condition that does not exceed the lending rate of portfolio general of Banco de la Nación Argentina, in whose case shall apply this.  The subsidiary amortizes capital in 74 consecutive and equal, once the grace period of 10 months from the date of disbursement.  This loan is guaranteed by CCU S.A., through a Stand By issued by the Banco Estado de Chile in favor of Banco de la Nación Argentina (seeNote 35).  b)   On April 20, 2015, the subsidiary CICSA signed a bank loan for a total of 24 million of argentine pesos, maturing on April 4, 2018.  This loan accrues interestat a compound floating rate BADLAR in pesos plus a fixed spread of 500 basis points and subject to the condition that does not exceed the lending rate of portfolio general of Banco de la Nación Argentina, in whose case shall apply this.  The subsidiary amortizes capital in 30 monthly, once the grace period of 6 months from de date of disbursement.  This loan is guaranteed by CCU S.A., through a Stand By issued by the Banco Estado de Chile (seeNote 35).  c)   On June 26, 2015, the subsidiary CICSA signed a bank loan for a total of 30 million of argentine pesos, maturing on December 26, 2015.  This loan accrues a fixed interest at an annual rate of 23%. The subsidiary amortizes monthly interest and the capital amortization in 6 monthly.   1EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization).


F-85

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Banco BBVA Francés S.A. – Bank Loan with Compañía Industrial Cervecera S.A. (CICSA)  On June 18, 2014, the subsidiary CICSA signed a bank loan with BBVA Bank for a total of 90 million argentine pesos, maturing on June 19, 2017.  This loan accrues a fixed interest at an annual rate. The subsidiary amortizes interest and capital amortization quarterly.   Banco de Galicia y Buenos Aires S.A.; Banco Santander Río S.A.; – Syndicated Bank Loan with Compañía Industrial Cervecera S.A. (CICSA)  On April 20, 2015, the subsidiary CICSA signed a syndicated bank loan for a total of 150 million argentine pesos, maturing on April 20, 2018.  The proportional participation of banks lenders is as follows:  (a) Banco de Galicia y Buenos Aires S.A., with 75 million argentine pesos of pro rata participation.  (b)Banco Santander Río, with 75 million argentine pesos of pro rata participation.  This loan accrues interest at an annual rate of 29.4% fixed by first 12 months and thereafteraccrues interest at a compound floating rate BADLAR in pesos plus a fixed spread of 360 basis points and the payments will be quarterly. The capital amortization will payment in 9 quarterly,once the grace period of 12 months from de date of disbursement.  This loan obliges the subsidiary to meet specific requirements and financial covenants related to their Consolidated Financial Statements, which according to agreement of the parties are as follows:  a)Maintain a capability of repayment measure at the end of each quarter less than or equal to 3, calculated as the financial debt over Adjusted EBITDA2.Adjusted EBITDA means EBITDA as calculated by the Company in accordance with particular debt instruments in order to measure such instruments’ financial covenants and is defined as: Operating result before Interest, Income taxes, Depreciation and Amortization for the period of 12 months immediately prior to the date of calculation.  b)Maintain a Financial Expense Coverage measured at the end of each quarter and retroactively for periods of 12 months, not less than 2.5, calculated as the ratio of Adjusted EBITDA (as defined in paragraph (a)) and Financial Costs account.  c)Maintain at the end of each quarter an indebtedness ratio not higher than 1.5, defined as the ratio Financial Liabilities over the Equity  meaning the Equity at the time of calculation, as it arises from their Financial Statements and in accordance with generally accepted accounting principles in the Argentinian Republic.  d)Maintain at the end of each quarter a minimum Equity of 600 million of Argentine Pesos.  As of December 31, 2015, the Company was in compliance with the financial covenants and specific requirements of this loan.    2EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization).


F-86

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 B)Financial Lease Obligations  The most significant financial lease agreements are as follows:  CCU S.A.  In December, 2004, the Company sold a piece of land previously classified as investment property. As part of the transaction, the Company leased eleven floors of a building under construction on the mentioned piece of land.  The building was completed during 2007, and on June 28, 2007, the Company entered into a 25-years lease agreement with Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., for a total amount of UF 688,635.63, with an annual interest rate of 7.07%. The current value of the agreement amounted to ThCh$ 10,403,632 as of December 31, 2007. The agreement also grants CCU the right or option to acquire the assets contained in the agreement (real estate, furniture and facilities) as from month 68 of the lease. The lease rentals committed are according to the conditions prevailing in the market. For Chilean GAAP purposes, in 2004 the Company recognized a ThCh$ 3,108,950 gain for the building portion not leased by the Company, and a ThCh$ 2,276,677 liability deferred through completion of the building, when the Company recorded the transaction as financial lease.  Compañía Cervecera Kunstmann S.A., Manantial S.A. and Finca La Celia S.A.:  Other lease agreements are as follows:  Type

   Institution

   Contract Date

   Currency

   ThCh$

   Number of quotas

   Anual Interest

   %

   Purchase option (UF)Compañía Cervecera Kunstmann S.A.Production Plant

   Banco de Chile

   19-04-05

   UF

   20,489

   168

   8.30%

   302Land Lote 2 C

   Banco de Chile

   26-06-07

   UF

   7,716

   121

   5.80%

   85Land Lote 2 D

   Banco de Chile

   25-03-08

   UF

   15,000

   97

   4.30%

   183Land Lote 13F1

   Banco Estado

   10-10-12

   UF

   22,341

   72

   4.33%

   348Manantial S.A.Dispensers

   Banco de Crédito e Inversiones

   04-01-12

   UF

   4,275

   37

   5.06%

   116Dispensers

   Banco de Chile

   05-12-11

   UF

   1,073

   37

   5.98%

   311Vehicles

   Banco de Chile

   27-08-12

   UF

   1,265

   25

   12.63%

   51Vehicles

   Banco Estado

   15-09-11

   UF

   5,342

   25

   14.01%

   208Computers

   Banco Security

   23-08-11

   UF

   2,387

   37

   6.99%

   65Dispensers

   Banco Security

   09-08-11

   UF

   20,845

   37

   6.62%

   563Finca La Celia S.A.Automotor

   Banco Supervielle

   10-06-14

   $ARG

   10,814

   45

   17.50%

   6,250
  The following is a detail of future payments and the current value of the financial lease obligations as ofDecember 31, 2015:  Lease Minimum Future Payments

   As of December 31, 2015Gross Amount

   Interest

   Current ValueThCh$

   ThCh$

   ThCh$Less than one years

   1,505,697

   1,184,281

   321,416Between one and five year

   5,148,941

   4,538,956

   609,985Over five years

   28,871,228

   12,242,755

   16,628,473Total

   35,525,866

   17,965,992

   17,559,874


F-87

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 C)Bonds Payable  Series A Bonds – Subsidiary Viña San Pedro Tarapacá S.A.  On June 13, 2005, the subsidiary Viña San Pedro Tarapacá S.A. recorded in the Securities Record a bond issue for a total UF 1,500,000 at a 20-years term maturing on July 15, 2025. Such issue was placed in the local market on July 20, 2005, with a premium amounting to ThCh$ 227,378. This obligation accrues interest at a fixed annual rate of 3.8% and amortizes interest and capital semi-annually.  On December 17, 2010, took place the Board of Bondholders Serie A, which decided to modify the issued Contract of such bonds in order to update certain references and adapt it to the new IFRS accounting standards. The amendment of the issued Contract is dated December 21, 2010 and has the repertory No. 35739-2010 in the Notary of Ricardo San Martín Urrejola. Because of these changes, the commitment of this subsidiary is to comply with certain financial ratios that will be calculated only on the Consolidated Financial Statements. These financial ratios and other conditions are describe in letter D).  On July 21, 2011 the subsidiary made a partial prepayment for 750 Series A Bonds (of the 1,500 issued) equivalent to UF 513,750, according to Section Twelve of Clause Four for the Issue Contract Bond issued by public deed dated April 28, 2005. Additionally, the subsidiary recognized in the Consolidated Income Statement of that date an expenditure of ThCh$ 103,735, for expenses associated with the issuance of this debt.  On November 7, 2014, the subsidiary made a total prepayment for Series A Bonus for an amount of ThCh$ 9,778,759 and recognized in the Consolidated Income Statement of that date an expenditure of ThCh$ 117,200.  At the time of this total prepayment, the subsidiary was in compliance with the financial covenants required for this public issue detailed in letter D).   Series E Bonds – CCU S.A.  On October 18, 2004, under number 388 the Company recorded in the Securities Record the issue of 20-year term public bonds for a total UF 2,000,000 maturing on December 1, 2024. This issue was placed in the local market on December 1, 2004, with a discount amounting to ThCh$ 897,857. This obligation accrues interests at a fixed annual rate of 4.0%, and it amortizes interest and capital semi-annually.  On December 17, 2010, took place the Board of Bondholders Serie E, which decided to modify the issued Contract of those bonds in order to update certain references and adapt it to the new IFRS accounting standards. The amendment of the issued Contract is dated December 21, 2010 and has the repertory No. 35738-2010 in the Notary of Ricardo San Martín Urrejola. Because of these changes, the commitment of the Company is to comply with certain financial ratios that will be calculated only on the Consolidated Financial Statements. These financial ratios and other conditions are as follows:  (a)Maintain at the end of each quarter an indebtedness ratio measured over the consolidated financial statements not higher than 1.5, defined as the ratio of Total Adjusted Liabilities and Total Adjusted Equity. Total Adjusted Liabilities is defined as Total Liabilities less Dividends provisioned, according to policy included in the Statement of Changes in Equity, plus the amount of all guarantees granted by the Issuer or its subsidiaries that are cautioned by real guarantees, except as noted in the contract.  Total Adjusted Equity is defined as Total Equity plus Dividends provisioned, according to policy included in the Statement of Changes in Equity.  (b)Maintain a Financial Expense Coverage measured at the end of each quarter and retroactively for periods of 12 months, not less than 3, calculated as the ratio of Adjusted EBITDA and Financial Costs account. Adjusted EBITDA means EBITDA as calculated by the Company in accordance with particular debt instruments in order to measure such instruments’ financial covenants and is defined as: (i) the sum of Gross Margin and Other income by function accounts; (ii) less (absolute numbers) Distribution costs, Administrative expenses and Other expenses by function accounts; and (iii) plus (absolute numbers) Depreciation and Amortization recorded on the Note Nature of the costs and expenses.  (c)Maintain at the end of each quarter, assets free of liens for an amount equal to at least 1.2, defined as the ratio of Total Assets free of lien and Total Adjusted Liabilities free of lien. Is defined as Total Assets free of lien are defined as Total Assets less assets pledged as collateral for cautioned obligations of third parties. Total Adjusted Liabilities free of lien are defined as Total Liabilities less Dividends provisioned according to policy contained in the Statement of Changes in Equity.


F-88

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  (d)Maintain at the end of each quarter a minimum equity of ThCh$ 312,516,750, meaning Equity Attributable to Equity Holders of the Parent plus the Dividends provisioned account, according to policy contained in the Statement of Changes in Equity. This requirement will increase in the amount resulting from each revaluation of property, plant and equipment to be performed by the Issuer.  (e)To maintain, either directly or indirectly, ownership over more than 50% of the subscribed and paid-up shares and over the voting rights of the following companies: Cervecera CCU Chile Limitada, Embotelladoras Chilenas Unidas S.A. and Viña San Pedro Tarapacá S.A., except in the cases and under the terms established in the agreement.  (f)To maintain, either directly or through a subsidiary, ownership of the trademark "CRISTAL", denominative for beer class 32 of the international classifier, and not to transfer its use, except to its subsidiaries.  (g)Not to make investments in facilities issued by related parties, except in the cases and under the terms established in the agreement.  (h)Neither sells nor transfer assets from the issuer and its subsidiaries representing over 25% of the assets total of the consolidated financial statements.  As ofDecember 31, 2015 and December 31, 2014, the Company was in compliance with the financial covenants required for this public issue.   Series H and I Bonds – CCU S.A.  On March 23, 2009, the Company recorded in the Securities Record the issue of bonds Series H and I for a combined total of UF 5 million, with 5 and 21 years terms, respectively. Emissions of both series were placed in the local market on April 2, 2009.  The issuance of the Bond I was UF 3 million  with maturity on March 15, 2014, with a discount amounting to ThCh$ 413,181, and accrues interest at an annual fixed rate of 3.0%, with amortize interest semi-annually and excluding the capital (bullet).  The issuance of the Bond H was UF 2 million  with maturity on March 15, 2030, with a discount amounting to ThCh$ 156,952, and accrues interest at an annual fixed rate of 4.25%, with amortizes interest and capital semi-annually.  By deed dated December 27, 2010 issued in the Notary of Ricardo San Martín Urrejola, under repertoires No. 36446-2010 and 36447-2010, were amended Issue Contract Series H and I, respectively, in order to update certain references and to adapt to the new IFRS accounting rules.  The current issue was subscribed with Banco Santander Chile as representative of the bond holders and as paying bank, and it requires that the Company complies with the following financial covenants on its Consolidated Financial Statements and other specific requirements:  (a)Maintain at the end of each quarter an indebtedness ratio measured over the consolidated financial statements not higher than 1.5, defined as the ratio of Total Adjusted Liabilities and Total Adjusted Equity. The Total Adjusted Liabilities are defined as Total Liabilities less Dividends provisioned, according to policy included in the Statement of Changes in Equity, plus the amount of all guarantees, debts or obligations of third parties not within the liability and outside the Issuer or its subsidiaries that are cautioned by real guarantees granted by the Issuer or its subsidiaries. Total Adjusted Equity is defined as Total Equity plus Dividends provisioned account, according to policy included in the Statement of Changes in Equity.  (b)Maintain a Financial Expense Coverage measured at the end of each quarter and retroactively for periods of 12 months, not less than 3, calculated as the ratio of Adjusted EBITDA and Financial Costs account. Adjusted EBITDA means EBITDA as calculated by the Company in accordance with particular debt instruments in order to measure such instruments’ financial covenants and is defined as: (i) the sum of Gross Margin and Other income by function accounts; (ii) less (absolute numbers) Distribution costs, Administrative expenses and Other expenses by function accounts; and (iii) plus (absolute numbers) Depreciation and Amortization recorded on the Note Nature of the cost and expenses.  (c)Maintain at the end of each quarter, assets free of liens for an amount equal to, at least, 1.2, defined as the ratio of Total Assets free of lien and Financial Debt free of lien. Total Assets free of lien are defined as Total Assets less assets pledged as collateral for cautioned obligations of third parties. Financial Debt free of lien is defined as the sum of lines Bank Loans, Bonds payable and Finance lease obligations contained in Note Other financial liabilities of the Consolidated Financial Statements.


F-89

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  (d)Maintain at the end of each quarter a minimum equity of ThCh$ 312,516,750, meaning Equity Attributable to Equity Holders of the Parent plus the Dividends provisioned account, according to policy included in the Statement of Changes in Equity. This requirement will increase in the amount resulting from each revaluation of property, plant and equipment to be performed by the Issuer.  (e)To maintain, either directly or indirectly, ownership over more than 50% of the subscribed and paid-up shares and over the voting rights of the following companies: Cervecera CCU Chile Limitada and Embotelladoras Chilenas Unidas S.A.  (f)Maintain a nominal installed capacity for the production manufacturing of beer and soft drinks, equal or higher altogether than 15.9 million hectolitres a year, except in the cases and under the terms of the contract.  (g)To maintain, either directly or through a subsidiary, ownership of the trademark "CRISTAL", denominative for beer class 32 of the international classifier, and not to transfer its use, except to its subsidiaries.  (h)Not to make investments in facilities issued by related parties, except in the cases and under the terms established in the agreement.  On March 17, 2014, the Company paid the total Serie I Bonds, equivalent UF 3,000,000.  As ofDecember 31, 2015and December 31, 2014, the Company was in compliance with the financial covenants required for this public issue.   D) Restriction of subsidiary Viña San Pedro Tarapacá S.A.  The subsidiary Viña San Pedro Tarapacá S.A. mustcomply with certain financial ratios that will be calculated only on its Consolidated Financial Statements. These financial ratios and other conditions are as follows:  (a)Control over subsidiaries representing at least 30% of the consolidated Adjusted EBITDA of the issuer. Adjusted EBITDA. Adjusted EBITDA means EBITDA as calculated by the Company in accordance with particular debt instruments in order to measure such instruments’ financial covenants and is defined as: (i) the sum of Gross Margin and Other income by function accounts; (ii) less (absolute numbers) Distribution costs, Administrative expenses and Other expenses by function accounts; and (iii) plus (absolute numbers) Depreciation and Amortization recorded in the Note Nature of the costs and expenses.  (b)Not to enter into investments in instruments issued by related parties different from its subsidiaries.  (c)Neither sells nor transfers essential assets that jeopardize the continuance of its current purpose.  (d)Maintain at the end of each quarter an indebtedness ratio measured over the consolidated financial statements not higher than 1.2, defined as the ratio of Total Adjusted Liabilities and Total Adjusted Equity. The Total Adjusted Liabilities is defined as Total Liabilities less Dividends provisioned, according to policy contained in the Statement of Changes in Equity, plus the amount of all guarantees, debts or obligations of third parties not within the liabilities and outside the Issuer or its subsidiaries that are cautioned by real guarantees granted by the Issuer or its subsidiaries. Total Adjusted Equity is defined as Total Equity plus Dividends provisioned, according to policy contained in the Statement of Changes in Equity.  (e)Maintain a Financial Expense Coverage measured at the end of each quarter and retroactively for periods of 12 months, not less than 3, calculated as the ratio of Adjusted EBITDA (as defined in paragraph (a)) and Financial Costs account.  (f)Maintain at the end of each quarter a minimum equity of ThCh$ 83,337,800, meaning Equity Attributable to Equity Holders of the Parent plus the Dividends provisioned account, according to policy included in the Statement of Changes in Equity. This requirement will increase in the amount resulting from each revaluation of property, plant and equipment to be performed by the Issuer.


F-90

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Note 28Accounts payable – trade and other payables  As ofDecember 31, 2015 and 2014, the total Accounts payable-trade and other payables are as follows:  As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Suppliers

   179,926,026

   159,782,385Notes payable

   5,575,754

   3,940,353Withholdings payable

   43,880,121

   40,429,573Total

   229,381,901

   204,152,311Current

   227,736,803

   203,782,805Non-current

   1,645,098

   369,506Total

   229,381,901

   204,152,311
   Note 29Provisions  As ofDecember 31, 2015 and 2014, the total provisions recorded in the consolidated statement of financial position are as follows:  As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Litigation

   1,343,374

   1,023,895Others

   636,584

   1,596,196Total

   1,979,958

   2,620,091Current

   503,440

   410,259Non-current

   1,476,518

   2,209,832Total

   1,979,958

   2,620,091
  The following was the change in provisions during the years ended as of  December 31, 2014 and 2015:  Litigation

   Others

   TotalThCh$

   ThCh$

   ThCh$As of January 1, 2014

   

   1,294,570

   

   1,673,910

   2,968,480As of December 31, 2014Incorporated

   

   622,320

   

   151,966

   774,286Used

   

   (751,636)

   

   (1,668)

   (753,304)Released

   

   (71,667)

   

   (175,968)

   (247,635)Conversion effect

   

   (69,692)

   

   (52,044)

   (121,736)As of December 31, 2014

   

   1,023,895

   

   1,596,196

   2,620,091As of December 31, 2015Incorporated

   

   792,724

   

   888

   793,612Used

   

   (222,139)

   

   -

   (222,139)Released

   

   (31,005)

   

   (801,778)

   (832,783)Conversion effect

   

   (220,101)

   

   (158,722)

   (378,823)As of December 31, 2015

   (1)

   1,343,374

   

   636,584

   1,979,958
 (1)SeeNote 35.


F-91

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  The maturities of provisions at December 31, 2015, were as follows:  Litigation

   Others

   TotalThCh$

   ThCh$

   ThCh$Less than one year

   503,441

   -

   503,441Between two and five years

   486,294

   636,584

   1,122,878Over five years

   353,639

   -

   353,639Total

   1,343,374

   636,584

   1,979,958
  Litigation  The detail of significant litigation proceedings to which the Company is exposed at a consolidated level is described inNote 35.  Management believes based on the development of such proceedings to date, the provisions established on a case by basis are adequate to cover the eventual adverse effects that could arise from these proceedings.   Note 30Other non-financial liabilities  As ofDecember 31, 2015 and 2014, the total Other non-financial liabilities are as follows:  As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Parent dividend provisioned by the board

   24,387,190

   23,278,681Parent dividend provisioned according to policy

   36,016,878

   36,500,001Outstanding parent dividends

   723,259

   520,145Subsidiaries dividends according to policy

   9,725,015

   7,764,386Others

   89,802

   833,550Total

   70,942,144

   68,896,763Current

   70,942,144

   68,896,763Total

   70,942,144

   68,896,763
   Note 31Employee Benefits  The Company grants short term and employment termination benefits as part of its compensation policies.  The Parent Company and its subsidiaries maintain collective agreements with their employees, which establish the compensation and/or short–term and long-term benefits for their staff, the main features of which are described below:  i. Short-term benefits are generally based on combined plans or agreements, designed to compensate benefits received, such as paid vacation, annual performance bonuses and compensation through annuities.  ii. Long-term benefits are plans or agreements mainly intended to cover the post-employment benefits generated at the end of the labour relationship, be it by voluntary resignation or death of personnel hired.  The cost of such benefits is charged against income, in the “Personnel Expense” item.  As ofDecember 31, 2015 and 2014, the total staff benefits recorded in the Consolidated Statement of Financial Position is as follows:


F-92

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Employees’ Benefits

   As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Short term benefits

   21,617,103

   17,943,771Employment termination benefits

   19,043,559

   17,437,222Total

   40,660,662

   35,380,993Current

   21,712,059

   17,943,771Non-current

   18,948,603

   17,437,222Total

   40,660,662

   35,380,993
  Employees’ Bonuses  Short-term benefits are mainly comprised of recorded vacation (on accruals basis), bonuses and share compensation. Such benefits are recorded when the obligation is accrued and are usually paid within a 12-month periods, consequently, they are not discounted.  As ofDecember 31, 2015 and 2014, the total short-term benefits recorded in the Consolidated Statement of Financial Position are as follows:  Short-Term Employees’ Benefits

   As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Vacation

   8,442,610

   7,856,572Bonus and compensation

   13,174,493

   10,087,199Total

   21,617,103

   17,943,771
  The Company records the staff vacation cost on an accrual basis.  Severance Indemnity  The Company records a liability for the payment of an irrevocable severance indemnity, originated by collective and individual agreements entered into with certain groups of employees. Such obligation is determined by means of the current value of the benefit accrued cost, a method that considers several factors for the calculation such as estimates of future continuance, mortality rates, future salary increases and discount rates. The Company periodically evaluates the above-mentioned factors based on historical data and future projections, making adjustments that apply when checking changes sustained trend. The so-determined value is presented at the current value by using the severance benefits accrued method. The discount rate is determined by reference to market interest rates curves for high quality entrepreneurial bonds. The discount rate in Chile was 6.36% (6.00% in 2014) and in Argentina 39.26% (42.43% in 2014).  As ofDecember 31, 2015, the obligation recorded for severance indemnity is as follows:  Severance Indemnity

   As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Current

   94,956

   -Non-current

   18,948,603

   17,437,222Total

   19,043,559

   17,437,222


F-93

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The change in the severance indemnity during the year ended as of December 31, 2014 and 2015 was as follows:  Severance Indemnity

   Severance

   IndemnityThCh$Balance as of January 1, 2014

   16,574,806Current cost of service

   601,053Interest cost

   1,187,731Actuarial loss

   1,884,054Paid-up benefits

   (3,341,434)Past service cost

   1,090,429From business combinations

   893,608Others

   (1,453,025)Movements of the year

   862,416As of December 31, 2014

   17,437,222Current cost of service

   1,023,969Interest cost

   1,703,107Actuarial loss

   947,153Paid-up benefits

   (1,700,491)Past service cost

   131,204Others

   (498,605)Movements of the year

   1,606,337As of December 31, 2015

   19,043,559
  The figures recorded in the Consolidated Statement of Income as ofDecember 31, 2015, 2014 and 2013, are as follows:  Expense recognized for severance indemnity

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Current cost of service

   1,023,969

   601,053

   607,443Past service cost

   131,204

   1,090,429

   430,120Non-provided paid benefits

   4,377,570

   5,916,192

   2,860,262Other

   646,501

   335,808

   1,333,466Total expense recognized in Consolidated Statement of Income

   6,179,244

   7,943,482

   5,231,291
   Actuarial Assumptions  As mentioned inNote 2.20– Employees’ Benefits, the severance payment obligation is recorded at its actuarial value. The main actuarial assumptions used for the calculation of the severance indemnity obligation as ofDecember 31, 2015 and 2014, are as follows:  Actuarial Assumptions

   Chile

   ArgentinaAs of December

   31,

   As of December

   31,

   As of December

   31,

   As of December

   31,2015

   2014

   2015

   2014Mortality table

   RV-2004

   RV-2004

   Gam'83

   Gam'83Annual interest rate

   6.36%

   6.00%

   39.26%

   42.43%Voluntary employee turnover rate

   1.9%

   1.9%

   n/a

   n/aCompany’s needs rotation rate

   5.3%

   5.3%

   n/a

   n/aSalary increase

   3.7%

   3.7%

   36.35%

   36.35%Officers

   

   60

   60

   60

   60Estimated retirement age for

   Other

   Male

   65

   65

   65

   65Female

   60

   60

   60

   60


F-94

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Sensitivity Analysis  The Following is a sensitivity analysis based on increased (decreased) of 1 percent on the discount rate:  Sensitivity Analysis

   As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$1% increase in the Discount Rate (Gain)

   1,164,165

   1,073,2721% decrease in the Discount Rate (Loss)

   (1,344,213)

   (1,245,219)
  Personnel expense  The amounts recorded in the Consolidated Statement of Income for the years ended as ofDecember 31, 2015, 2014 and 2013, are as follows:  Personal expense

   For the years ended as of December 31,2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Salaries

   138,359,074

   119,623,310

   108,611,206Employees’ short-term benefits

   24,693,325

   18,128,043

   19,887,127Employments termination benefits

   6,179,245

   7,943,482

   5,231,291Other staff expense

   28,683,507

   23,636,629

   21,280,818Total (1)

   197,915,151

   169,331,464

   155,010,442
 (1)SeeNote 10.   Note 32
Non-controlling Interests  The detail of Non-controlling Interests is the following:  a.Equity  Equity

   As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Viña San Pedro Tarapacá S.A.

   72,512,897

   69,856,322Bebidas del Paraguay S.A.

   20,403,140

   21,903,962Aguas CCU-Nestlé Chile S.A.

   19,891,176

   16,389,004Compañía Cervecera Kunstmann S.A.

   4,979,490

   4,424,495Compañía Pisquera de Chile S.A.

   4,699,612

   4,653,894Manantial S.A.

   3,767,028

   3,353,256Saenz Briones & Cía. S.A.

   962,286

   1,145,657Distribuidora del Paraguay S.A.

   1,949,490

   701,002Los Huemules S.R.L.

   395,469

   116,892Sidra La Victoria S.A.

   -

   1,166Others

   145,185

   366,091Total

   129,705,773

   122,911,741


F-95

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 b.Result  For the years ended as of December 31,Result

   2015

   2014

   2013ThCh$

   ThCh$

   ThCh$Aguas CCU-Nestlé Chile S.A.

   7,052,867

   5,408,750

   4,870,501Viña San Pedro Tarapacá S.A.

   9,182,843

   6,003,439

   3,319,366Compañía Cervecera Kunstmann S.A.

   1,267,335

   966,212

   1,022,346Manantial S.A.

   861,072

   684,427

   587,119Compañía Pisquera de Chile S.A.

   592,506

   889,482

   765,624Saenz Briones & Cía. S.A.

   128,407

   (58,433)

   (733,068)Distribuidora del Paraguay S.A.

   1,144,911

   429,527

   -Bebidas del Paraguay S.A.

   (486,790)

   253,516

   -Los Huemules S.R.L.

   (45,370)

   (48,171)

   (12,624)Sidra La Victoria S.A.

   -

   175

   123Others

   19,674

   24,547

   49,156Total

   19,717,455

   14,553,471

   9,868,543
   Note 33Common Shareholders’ Equity  Subscribed and paid-up Capital  The Extraordinary Shareholders ́Meeting held on June 18, 2013, resolved to increase the capital of the Company in the amount of ThCh$ 340,000,000, through the issuance of 51,000,000 shares of common stock. Such shares are to be issued and paid within a period of 3 years as from June 18, 2013. Also, the Board of Directors, in accordance with the powers granted by the Extraordinary Shareholders ́ Meeting, determined the price at which these shares were to be offered. Additionally, the above Extraordinary Shareholders ́ Meeting agreed to recognize as part of the Paid-in Capital (Common Stock) the share premium for an amount of ThCh$ 15,479,173. Therefore, the Company ́s capital, including the referred capital increase, amounts to ThCh$ 571,019,592, divided into 369,502,872 shares of common stock, without face value, which has been subscribed and paid and  shall be subscribe and paid as follows:  -ThCh$ 231,019,592, divided into 318,502,872 shares, fully subscribed and paid prior to the date of the Extraordinary Shareholders ́ Meeting.  -ThCh$ 340,000,000, divided into 51,000,000 shares, to be subscribed and paid.  On July 23, 2013 the Superintendencia de Valores y Seguros authorized the registration of such shares.  Subsequently, the Board of Director at the meeting held on September 12, 2013, set in $ 6,500 per share the price of the 51,000,000 shares to be placed during the preemptive-rights period, which extended from September 13 to October 12, 2013.  As of December 31, 2013, the referred capital increase has been fully subscribed and paid, amounting to ThCh$ 331,673,754 and generated share premium and issuance and placement costs for ThCh$ 45,176 and ThCh$ 5,055,392, respectively, which are net recorded under item "Other reserves", in Equity. Any difference between the issuance and placement costs of shares must be recognized as a less paid-in capital in the next Extraordinary Shareholders ́ Meeting that modifies the capital of the company.  As of December 31, 2015 and December 31, 2014, the Company’s capital shows a balance of ThCh$ 562,693,346, divided into 369,502,872 shares of common stock without face value, entirely subscribed and paid-up. The Company has issued only one series of common shares. Such common shares are registered for trading at the Santiago Stock Exchange, the Chilean Electronic Stock Exchange and the Valparaíso Stock Exchange, and at the New York Stock Exchange /NYSE), evidenced by ADS (American Depositary Shares), with an equivalence of two shares per ADS (See Note 1).


F-96

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The Company has not issued any others shares or convertible instruments during the period, thus changing the number of outstanding shares as of December 31, 2015 and 2014.  Capital Management  The main purpose, when managing shareholder’s capital, is to maintain an adequate credit risk profile and a healthy capital ratio, allowing the access of the Company to the capitals market for the development of its medium and long term purposes and, at the same time, to maximize shareholder’s return.  Consolidated Statement of Comprehensive Income  As of December 31, 2015, 2014 and 2013, the detail of the comprehensive income and expense of the term is as follows:  Other Income and expense charged or credited against net equity

   Gross Balance

   Tax

   Net BalanceThCh$

   ThCh$

   ThCh$Cash flow hedge (1)

   80,693

   (17,563)

   63,130Conversion differences of international subsidiaries (1)

   (29,678,944)

   -

   (29,678,944)Actuarial gains and losses on defined benefit plans reserves

   (939,433)

   314,541

   (624,892)Total comprehensive income as of december 31, 2015

   (30,537,684)

   296,978

   (30,240,706)Other Income and expense charged or credited against net equity

   Gross Balance

   Tax

   Net BalanceThCh$

   ThCh$

   ThCh$Cash flow hedge (1)

   (155,258)

   39,470

   (115,788)Conversion differences of international subsidiaries (1)

   (4,629,683)

   -

   (4,629,683)Actuarial gains and losses on defined benefit plans reserves

   (1,884,054)

   501,689

   (1,382,365)Total comprehensive income as of december 31, 2014

   (6,668,995)

   541,159

   (6,127,836)Other Income and expense charged or credited against net equity

   Gross Balance

   Tax

   Net BalanceThCh$

   ThCh$

   ThCh$Cash flow hedge (1)

   256,592

   (51,304)

   205,288Conversion differences of international subsidiaries (1)

   (17,054,187)

   -

   (17,054,187)Actuarial gains and losses on defined benefit plans reserves

   (469,987)

   105,151

   (364,836)Total comprehensive income As of December 31, 2013

   (17,267,582)

   53,847

   (17,213,735)
 (1)These concepts will be reclassified to the Statement of Income when its settled.  Income per share  The basic income per share is calculated as the ratio between the net income (loss) of the term corresponding to shares holders and the weighted average number of valid outstanding shares during such term.  The diluted earnings per share is calculated as the ratio between the net income (loss) for the period attributable to shares holders and the weighted average additional common shares that would have been outstanding if it had become all ordinary potential dilutive shares.


F-97

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  As of December 31, 2015, 2014 and 2013, the information used for the calculation of the income as per each basic and diluted share is as follows:  Income per share

   For the years ended as of December 31,2015

   2014

   2013Equity holders of the controlling company (ThCh$)

   120,808,135

   

   106,238,450

   

   123,036,008Weighted average number of shares

   369,502,872

   (1)

   369,502,872

   (2)

   331,806,416Basic and diluted income per share (in Chilean pesos)

   326.95

   287.52

   370.81Equity holders of the controlling company (ThCh$)

   120,808,135

   

   106,238,450

   

   123,036,008Weighted average number of shares

   369,502,872

   

   369,502,872

   (3)

   346,028,899Basic and diluted income per share (in Chilean pesos)

   326.95

   287.52

   355.57
 (1)Determined considering 369,502,872 shares outstanding on December 31, 2015 and 2014. (2)Determined considering 331,806,416 shares, equivalents to 318,502,872 shares outstanding on December 31, 2012, plus the weighted average of permanence of shares paid due to increase of capital described in this Note. (3)Determined considering 346,028,899 shares, equivalents to 318,502,872 shares outstanding on December 31, 2012, plus the weighted average of permanence of shares issued due to increase of capital described in this Note.  As of December 31, 2015, 2014 and 2013, the Company has not issued any convertible or other kind of instruments creating diluting effects.  Distributable net Income  In accordance with Circular No 1945 from the SVS on November 4, 2009, the Board of Directors agreed that the net distributable profit for the year 2009 will be that reflected in the financial statements attributable to equity holders of the parents,without adjustment it. The above agreement remains in effect for the year ended December 31, 2015.  Dividends  The Company’s dividend policy consists of annually distributing at least 50% of the net distributable profit of the year.  As of December 31, 2015, 2014 and 2013, the Company has distributed the following dividends, either or final:  Dividend No

   Payment Date

   Type of Dividend

   Dividends per Share

   Related to FY245

   19-04-2013

   Final

   116.64610

   2012246

   10-01-2014

   Interim

   63.00000

   2013247

   17-04-2014

   Final

   103.48857

   2013248

   09-01-2015

   Interim

   63.00000

   2014249

   23-04-2015

   Final

   98.78138

   2014250

   08-01-2016

   Interim

   66.00000

   2015
  On April 9, 2013, at the General Shareholders Meeting it was agreed to pay the final Dividend No. 245, amounting to  ThCh$ 37,150,685 corresponding to $ 116.64610 per share. This dividend was paid on April 19, 2013.  On April 9, 2014, at the General Shareholders Meeting it was agreed to pay the final Dividend No. 247, amounting to ThCh$ 38,239,323 corresponding to $ 103.48857 per share. This dividend was paid on April 17, 2014.  On April 15, 2015, at the General Shareholders Meeting it was agreed to pay the final Dividend No. 249, amounting to ThCh$ 36,500,004 corresponding to $ 98.78138 per share. This dividend was paid on April 23, 2015.


F-98

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Other Reserves  The reserves that are a part of the Company’s equity are as follows:  Currency Translation Reserves: This reserve originated mainly from the translation of foreign subsidiaries’ financial statements which functional currency is different from the presentation currency of the Consolidated Financial Statements. As of December 31, 2015, it amounts to a negative reserve of ThCh$ 95,435,386 (ThCh$ 67,782,858 in 2014 and ThCh$60,084,197 in 2013).  Hedge reserve: This reserve originated from the hedge accounting application of financial liabilities for. The reserve is reversed at the end of the hedge agreement, or when the transaction ceases qualifying hedge accounting, whichever is first. The reserve effects are transferred to income. As of December 31, 2015, it amounts to a negative reserve of ThCh$ 2,526 (ThCh$ 43,370 in 2014 and positive reserve of ThCh$ 65,109 in 2013), net of deferred taxes.  Actuarial gains and losses on defined benefit plans reserves:This reserve originates from January 1, 2013, due application of the amendment to IAS 19. The amount recorded is a negative reserve of ThCh$ 2,302,418 (ThCh$ 1,712,687 in 2014 and ThCh$ 348,673 in 2013), net of deferred taxes.  Other reserves: As of December 31, 2015, 2014 and 2013 the amount is a negative reserve of ThCh$ 5,486,086, ThCh$ 5,511,629 and ThCh$5,514,048, respectively. Such reserves relate mainly to the following concepts:  -              Adjustment due to re-assessment of fixed assets carried out in 1979. -              Price level restatement of paid-up capital registered as of December 31, 2008, according to SVS Circular Letter Na456. -              Difference in purchase of shares of the subsidiary Viña San Pedro Tarapacá S.A. made during year 2012 and 2013 (Note 1).


F-99

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Note 34Effects of changes in currency exchange rate  Current assets are denominated in the following currencies:  CURRENT ASSETS

   As of December 31,

   2015

   As of December 31,

   2014ThCh$

   ThCh$Current assetsCash and cash equivalents

   192,554,239

   214,774,876CLP

   171,683,257

   182,979,978U.F.

   -

   8,410,538USD

   5,385,644

   6,058,754Euros

   955,840

   974,179$ARG

   5,701,754

   11,728,422UYU

   948,816

   536,097PYG

   7,519,619

   3,753,420Others currencies

   359,309

   333,488Other financial assets

   13,644,105

   6,483,652CLP

   1,052,312

   1,016,032USD

   12,495,117

   5,467,620Euros

   57,833

   -PYG

   7,261

   -Others currencies

   31,582

   -Other non-financial assets

   17,654,373

   18,558,445CLP

   12,083,128

   11,576,191U.F.

   29,882

   28,826USD

   972,718

   -Euros

   723,216

   -$ARG

   3,780,430

   4,759,154UYU

   7,789

   1,457,234PYG

   57,210

   737,040Accounts receivable - trade and other receivables

   252,225,937

   238,602,893CLP

   158,757,937

   151,677,364U.F.

   7,102

   2,021USD

   25,498,590

   19,030,421Euros

   7,463,166

   10,038,934$ARG

   48,535,814

   46,140,278UYU

   4,074,908

   4,519,676PYG

   6,111,636

   5,477,622Others currencies

   1,776,784

   1,716,577Accounts receivable from related companies

   4,788,930

   11,619,118CLP

   4,606,002

   11,474,472U.F.

   104,118

   101,218USD

   78,810

   43,428Inventories

   174,227,415

   167,545,598CLP

   147,189,195

   136,336,787USD

   2,474,304

   744,544Euros

   237,848

   189,100$ARG

   18,850,888

   22,684,784UYU

   1,645,888

   1,508,208PYG

   3,829,292

   6,082,175Biological assets

   7,633,340

   7,633,591CLP

   7,130,962

   7,209,981$ARG

   502,378

   423,610Tax receivables

   15,264,220

   19,413,414CLP

   11,080,218

   14,443,142$ARG

   4,184,002

   4,970,272Non-current assets held for sale

   6,319,316

   758,760CLP

   5,890,543

   -$ARG

   428,773

   758,760Total current assets

   684,311,875

   685,390,347CLP

   519,473,554

   516,713,947U.F.

   141,102

   8,542,603USD

   46,905,183

   31,344,767Euros

   9,437,903

   11,202,213$ARG

   81,984,039

   91,465,280UYU

   6,677,401

   8,021,215PYG

   17,525,018

   16,050,257Others currencies

   2,167,675

   2,050,065Total current assets by currencies

   684,311,875

   685,390,347


F-100

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Non-Current assets are denominated in the following currencies:  NON-CURRENT ASSETS

   As of December

   31, 2015

   As of December

   31, 2014ThCh$

   ThCh$Non-current assetsOther financial assets

   80,217

   343,184Euros

   80,217

   343,184Other non-financial assets

   27,067,454

   5,828,897CLP

   24,880,950

   3,303,040USD

   80,137

   -$ARG

   1,839,876

   1,762,652PYG

   266,491

   763,205Accounts receivable from related companies

   445,938

   522,953U.F.

   445,938

   522,953Investments accounted for using the equity method

   49,995,263

   31,998,620CLP

   49,884,870

   31,897,043$ARG

   110,393

   101,577Intangible assets different than goodwill

   64,120,426

   68,656,895CLP

   49,960,476

   51,881,835U.F.

   41,558

   41,558$ARG

   7,039,283

   9,169,249UYU

   3,296,510

   3,332,682PYG

   3,782,599

   4,231,571Goodwill

   83,300,573

   86,779,903CLP

   60,192,744

   63,075,515USD

   14,216,606

   12,146,454$ARG

   8,891,223

   11,557,934Property, plant and equipment (net)

   872,667,210

   851,255,642CLP

   763,339,926

   733,238,733$ARG

   76,412,324

   91,003,978UYU

   13,747,872

   10,390,332PYG

   19,167,088

   16,622,599Investment property

   6,838,002

   7,917,613CLP

   4,401,400

   5,783,933$ARG

   2,436,602

   2,133,680Deferred tax assets

   34,529,593

   30,207,019CLP

   29,392,503

   23,496,860$ARG

   5,032,803

   6,622,426UYU

   10,801

   10,206PYG

   93,486

   77,527Total non-current assets

   1,139,044,676

   1,083,510,726CLP

   982,052,869

   912,676,959U.F.

   487,496

   564,511USD

   14,296,743

   12,146,454Euros

   80,217

   343,184$ARG

   101,762,504

   122,351,496UYU

   17,055,183

   13,733,220PYG

   23,309,664

   21,694,902Total non-current assets by currencies

   1,139,044,676

   1,083,510,726


F-101

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Current liabilities are denominated in the following currencies:  CURRENT LIABILITIES

   As of December 31, 2015

   As of December 31, 2014Until 90 days

   More than 91 days

   until 1 year

   Until 90 days

   More than 91 days

   until 1 yearThCh$

   ThCh$

   ThCh$

   ThCh$Current liabilitiesOther financial liabilities

   7,223,935

   36,750,056

   30,097,822

   35,220,471CLP

   1,239,182

   17,035,281

   1,947,212

   14,909,387U.F.

   764,199

   2,888,550

   777,020

   2,933,255USD

   303,416

   10,957,905

   1,392,180

   5,303,949Euros

   52,368

   -

   120,894

   4,611,662$ARG

   4,862,819

   5,523,470

   24,104,151

   7,462,218UYU

   -

   -

   1,740,967

   -UYI

   -

   344,850

   -

   -Others currencies

   1,951

   -

   15,398

   -Account payable - trade and other payables

   226,844,826

   891,977

   200,673,786

   3,109,019CLP

   148,162,838

   303,060

   133,274,464

   3,109,019U.F.

   9,933

   -

   3,995

   -USD

   17,676,381

   566,572

   14,012,905

   -Euros

   6,402,517

   -

   7,166,674

   -$ARG

   47,686,146

   -

   40,867,375

   -UYU

   2,607,826

   -

   4,371,988

   -PYG

   3,874,709

   22,345

   976,385

   -Others currencies

   424,476

   -

   -

   -Accounts payable to related companies

   11,624,218

   -

   10,282,312

   -CLP

   4,267,123

   -

   5,783,103

   -USD

   151,578

   -

   -

   -Euros

   7,205,517

   -

   4,486,158

   -PYG

   -

   -

   13,051

   -Other short-term provisons

   382,152

   121,288

   380,912

   29,347CLP

   -

   121,288

   -

   29,347$ARG

   382,152

   -

   380,912

   -Tax liabilities

   3,664,162

   8,533,862

   3,986,966

   7,710,169CLP

   3,487,812

   5,802,277

   3,803,137

   3,872,219USD

   -

   26,747

   -

   -$ARG

   -

   2,704,838

   -

   3,837,950UYU

   176,350

   -

   183,829

   -Employee benefits provisions

   21,388,736

   323,323

   17,702,626

   241,145CLP

   16,558,870

   323,323

   13,490,145

   241,145$ARG

   4,437,159

   -

   3,909,627

   -UYU

   392,707

   -

   302,854

   -Other non-financial liabilities

   28,440,259

   42,501,885

   24,104,387

   44,792,376CLP

   28,350,457

   42,501,885

   23,278,681

   44,789,042$ARG

   89,802

   -

   825,706

   -PYG

   -

   -

   -

   3,334Total current liabilities

   299,568,288

   89,122,391

   287,228,811

   91,102,527CLP

   202,066,282

   66,087,114

   181,576,742

   66,950,159U.F.

   774,132

   2,888,550

   781,015

   2,933,255USD

   18,131,375

   11,551,224

   15,405,085

   5,303,949Euros

   13,660,402

   -

   11,773,726

   4,611,662$ARG

   57,458,078

   8,228,308

   70,087,771

   11,300,168UYU

   3,176,883

   -

   6,599,638

   -PYG

   3,874,709

   22,345

   989,436

   3,334UYI

   -

   344,850

   -

   -Others currencies

   426,427

   -

   15,398

   -Total current liabilities by currency

   299,568,288

   89,122,391

   287,228,811

   91,102,527


F-102

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Non-Current liabilities are denominated in the following currencies:  NON-CURRENT LIABILITIES

   As of December 31, 2015

   As of December 31, 2014More than 1 year

   until 3 years

   More than 3 year

   untl 5 years

   More than 5

   years

   More than 1 year

   until 3 years

   More than 3 year

   untl 5 years

   More than 5

   yearsThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$

   ThCh$Non-current liabilitiesOther financial liabilities

   40,890,654

   20,356,339

   75,679,552

   39,224,496

   19,975,758

   75,334,303CLP

   18,284,794

   1,784,088

   -

   16,366,789

   101,334

   -U.F.

   5,523,414

   17,335,859

   75,679,552

   5,474,316

   16,650,145

   75,334,303USD

   5,590,024

   -

   -

   9,307,576

   -

   -$ARG

   9,790,622

   1,236,392

   -

   8,075,815

   3,224,279

   -UYI

   1,701,800

   -

   -

   -

   -

   -Other accounys payable

   1,098,985

   546,113

   -

   369,506

   -

   -CLP

   808,161

   404,081

   -

   -

   -

   -U.F.

   6,760

   -

   -

   6,496

   -

   -USD

   284,064

   142,032

   -

   363,010

   -

   -Other long term provisions

   712,806

   410,073

   353,639

   1,484,317

   489,969

   235,546CLP

   -

   49,996

   15,000

   -

   -

   15,000$ARG

   396,987

   360,077

   338,639

   336,813

   489,969

   220,546UYU

   314,991

   -

   -

   1,147,504

   -

   -PYG

   828

   -

   -

   -

   -

   -Deferred tax liabilities

   21,787,421

   8,622,777

   57,736,765

   20,617,913

   7,491,363

   59,409,424CLP

   21,175,080

   8,219,255

   51,820,864

   19,850,278

   6,979,606

   51,690,008$ARG

   601,313

   400,875

   4,288,716

   767,635

   511,757

   5,713,866UYU

   -

   -

   1,154,787

   -

   -

   1,466,456PYG

   11,028

   2,647

   472,398

   -

   -

   539,094Employee benefits provisons

   643,905

   -

   18,304,698

   798,428

   -

   16,638,794CLP

   -

   -

   15,369,150

   -

   -

   14,202,830$ARG

   -

   -

   2,935,548

   -

   -

   2,435,964PYG

   643,905

   -

   -

   798,428

   -

   -Total non-current liabilities

   65,133,771

   29,935,302

   152,074,654

   62,494,660

   27,957,090

   151,618,067CLP

   40,268,035

   10,457,420

   67,205,014

   36,217,067

   7,080,940

   65,907,838U.F.

   5,530,174

   17,335,859

   75,679,552

   5,480,812

   16,650,145

   75,334,303USD

   5,874,088

   142,032

   -

   9,670,586

   -

   -$ARG

   10,788,922

   1,997,344

   7,562,903

   9,180,263

   4,226,005

   8,370,376UYU

   314,991

   -

   1,154,787

   1,147,504

   -

   1,466,456PYG

   655,761

   2,647

   472,398

   798,428

   -

   539,094UYI

   1,701,800

   -

   -

   -

   -

   -Total non-current liabilities by currency

   65,133,771

   29,935,302

   152,074,654

   62,494,660

   27,957,090

   151,618,067


F-103

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 35Contingencies and Commitments  Operating lease agreements  The total amount of the Company’s obligations to third parties relating to lease agreements that may not be terminated is as follows:  Lease Agreements not to be terminated

   As of December

   31, 2015ThCh$Within 1 year

   82,677,035Between 1 and 5 years

   76,807,297Over 5 years

   53,580,133Total

   213,064,465
  Purchase and supply agreements  The total amount of the Company’s obligations to third parties relating to purchase and supply agreements as of December 31, 2015 is as follows:  Purchase and supply agreements

   Purchase and supply

   agreements

   Purchase and

   contract related to

   wine and grapeThCh$

   ThCh$Within 1 year

   134,430,322

   10,226,466Between 1 and 5 years

   328,110,170

   8,683,488Over 5 years

   53,875,436

   250,544Total

   516,415,928

   19,160,498
  Capital investment commitments  As of December 31, 2015, the Company had capital investment commitments related to Property, plant and equipment and intangibles (software) for approximately ThCh$ 81,696,975.  Litigation  The following are the most significant proceedings faced by the Company and its subsidiaries, including all thosepresent a possible risk of occurrence and causes whose committed amounts, individually, are more than ThCh$ 25,000.Those losses contingencies for which an estimate cannot be made have been also considered.


F-104

---





Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Proceedings and claim  Subsidiary

   Court

   Number

   Description

   Status

   Estimated

   accrued loss

   contingencyViña San Pedro Tarapacá S.A.

   Labour Court of Collection.

   C-3292-2010

   Interpretation of collective bargaining agreement.

   Pending practice of award liquidation by court.

   ThCh$ 15,000Viña Tarapaca Ex Zavala, Viña Misiones de Rengo

   14th Civil Court of Santiago.

   28869-2007

   Breach of contract.

   Appeal of first instance verdict.

   ThCh$ 50,000Transportes CCU Ltda.

   Labour Court of Collection.

   C-3287-2015

   Collection of employee benefits.

   On execution phase.

   ThCh$ 40,000Transportes CCU Ltda.

   9th Labor Court of Santiago.

   L-3601-2004

   Collection of employee benefits.

   On execution phase.

   ThCh$ 11,932Compañía Industrial Cervecera S.A. (CICSA)

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 24,000Compañía Industrial Cervecera S.A. (CICSA)

   Supreme Court of Tucuman.

   

   Intempestive breach of distribution contract.

   Supreme Court review.

   USD 71,000Compañía Industrial Cervecera S.A. (CICSA)

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 29,000Compañía Industrial Cervecera S.A. (CICSA)

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 30,000Compañía Industrial Cervecera S.A. (CICSA)

   Court of first instance in Argentina.

   

   Intempestive breach of distribution contract.

   On execution phase.

   USD 30,000Compañía Industrial Cervecera S.A. (CICSA)

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 55,000Compañía Industrial Cervecera S.A. (CICSA)

   

   

   City Council ́s Administrative Claim related to advertising and publicity fees.

   The process is in pre-trial administrative phase.

   USD 538,000


F-105

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
  Subsidiary

   Court

   Number

   Description

   Status

   Estimated

   accrued loss

   contingencySaenz Briones S.A.

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 59,000Saenz Briones S.A.

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 54,000Saenz Briones S.A.

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 108,000Saenz Briones S.A.

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 42,000Saenz Briones S.A.

   Court of first instance in Argentina.

   

   Labor trial for layoff.

   On evidentiary phase.

   USD 135,000
  The Company and its subsidiaries have established provisions to allow for such contingencies for ThCh$ 1,343,374 and ThCh$ 1,023,895, as of December 31, 2015 and 2014, respectively (See Note 29).  Tax processes  At the date of issue of these consolidated financial statements, there are no material tax litigations.  Guarantees  As of December 31, 2015, the subsidiary Viña San Pedro Tarapacá S.A. (VSPT) has not granted direct guarantees as part of its common financing operations. Nevertheless, its VSPT has entered into indirect guarantees as joint guarantors of financing operations by Finca La Celia S.A.subsidiary, in the Republic of Argentina.  A summary of the main terms of the guarantees granted appears below:  The subsidiary Finca La Celia S.A.maintains financial debt with local banks in Argentina, guaranteed by VSPT through stand-by letters issued by Banco Estado de Chile, according to the following detail:  Institution

   Amount

   Due dateBanco Santander Río

   USD 1,100,000

   March 31, 2016Banco Patagonia

   USD 1,600,000

   March 31, 2016Banco Patagonia

   USD 1,600,000

   May 11, 2016Banco San Juan

   USD 1,200,000

   October 30, 2016Banco BBVA Frances

   USD 1,500,000

   October 30, 2016
  The mentioned stand-by letters were issued by VSPT according to the maturity of the financial debts negotiated with the Argentine banks, and they are within the financing policy framework approved by VSPT Board of Directors.


F-106

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 The loan obtained by the subsidiary CICSA in Argentina, as described inNote 27, is guaranteed by CCU S.A. through a stand- by unrestricted, 1 year term, renewable for equal period during the term of the loan.  Institution

   Amount

   Due dateBanco de la Nación Argentina S.A.

   USD 16,500,000

   December 31, 2016
  On July 11, 2013, the subsidiary in Argentina Saenz Briones & Cía. S.A. (SB) has signed a loan agreement with the Citibank Bank of Argentina, which restricted its ability to distribute profits in each year. The loan was by 10,000,000 argentine pesos and whose return was agreed in 9 (nine) quotes with different maturities. Until SB not pay this loan, plus interest or commissions, fees and expenses, may not make any payment to its shareholders (including, without limitation, distribution of profits or dividends, advances, withdrawals from account or similar, as well as any payment made in connection with rebuy it, rescue or redemption of all or part of its shares) for an amount that exceeds the 50% of the profits that the SB is legally empowered to distribute as dividends with regard to each of its years. It should be noted, for the purposes of the above restriction, that the last date of maturity of the loan is July 11, 2016.  Note 36Environment  Major Environmental costs accrued as of December 31, 2015, in the Industrial Units of CCU S.A. are distributed as follows:  -Industrial Waste Water Treatment (IWWT):58.0%  These expenses are mainly related to the maintenance and control of the respective Industrial Waste Water Treatment Plants (IWWT).  -Solid Industrial Residues (SIR):29.6%  These expenses are related to the handling and disposal of Solid Industrial Residues (SIR), including hazardous Waste (ResPel) and valorization of recyclable residues.  -Gas Emission Expenses:0.9%  These expenses are related to the calibration and verification of monitoring and operational instrumentation of stationary sources (mainly industrial boilers and electric generators) and their respective emissions, in order to provide compliance to rules and central and local government regulations.  -Other Environmental Expenses: 11.5%  These expenses are related to the verification and compliance of Food Safety, Environmental Management and Operational Health & Safety Management Standards (ISO 22000, ISO 14000 and ISO 18000 OHSAS respectively) in CCU ́s industrial sites and distribution centers, which are in different stages of implementation and certification. The implementation and certification of those three standards is a corporate goal of CCU SA.  The most relevant investments during the year 2015, are listed below:  -Compañía Cervecera Kunstmann S.A.,construction of an industrial wastewater treatment plant in Valdivia which includes an anaerobic reactor with IC technology (UF 115,930).  -Aguas CCU-Nestlé, IWWT plant project in Coinco (UF 19,915), hazardous material storage improvement (UF 4,709), CO2, water and energy control equipment (UF 3,014), sanitary installation improvements (UF 141), two tanks for IWWT plant (UF 110).  -Cervecera CCU Chile Ltda.,Industrial Waste Water Treatment (IWWT) plant in Temuco stage 1 (UF 10,136), normalizing decree N° 78 (UF 7,704), fire detection system in Santiago (UF 3,695), IWWT plant improvement (UF 3,564), CO2 and NH3 sensors in Elaboration area (UF 2,571), improvement fire detection system in Temuco (UF 1,393), pavement improvement (UF 1,262), steam and biogas gauges (UF 818), sanitary installation improvements (UF 678), hot water flowmeters (UF 553), glass and solid waste containers (UF 478), boiler N° 2 economizer (UF 412), storage tank insulation (UF 301), and finally rain water piping (UF 217).


F-107

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 -Viña San Pedro Tarapacá S.A., FES project (second payment 2/3) (UF 3,614), Industrial Waste Water Treatment (IWWT) plant improvement  (UF 2,653), IWWT plant Isla de Maipo (UF 1,564), IWW collecting chamber expansion (UF 96), vintage courtyard improvement  (UF 96), floor and drain (UF 87), rain water channel (UF 53), and pH correction in IWWT plant (UF 50).  -Compañía Cervecerías Unidas Argentina S.A.,IWWT plant Salta (UF 7,280), IWWT plant Salta second stage (UF 9,617) and warehouse SV fire network (UF 4,122).  -Embotelladora Chilenas Unidas S.A., boiler insulation (UF 1,314), CIP solutions recovery (UF 886), smoke detection system for offices (UF 789), plant emergency lighting (UF 400), emergency lighting (UF 164), emergency showers (UF 74), fire networks second stage (UF 70).  -Compañía Pisquera de Chile S.A., overhaul IWWT sludge equipment (UF 734), electrical network improvement in Salamanca (UF 392), IWWT plant in Salamanca (UF 281), IWWT plant in site Sotaquí (UF 255), solid waste extractor in site Elqui  (UF 76) and a technological improvement project in sludge load system (UF 47).  -Transportes CCU Ltda.,water improvement project in San Antonio (UF 365).  -Fabrica de Envases Plásticos S.A.,hazardous material storage (UF 2,396), electricity consumption meters by lines (UF 1,168) and replacement of lighting plant (UF 739).  -Cervecera Austral S.A., they have not carried out significant environmental investments to December 2015.  The main disbursements of the year, detailed by projects, are the following:  Company that

   made the

   disbursement

   Project

   Disbursment incurred during the years endedAs of December 31, 2015

   As of December 31, 2014Expenditure

   Investment

   Committed

   amount in

   future periods

   Estimated date

   completion of disbursements

   Expenses

   InvestmentThCh$

   ThCh$

   ThCh$

   

   ThCh$

   ThCh$CCU Chile Ltda.

   Disposal of liquid , solid industrial waste and other

   1,966,752

   535,842

   329,941

   December 2016

   1,924,508

   4,224,403CCU Argentina S.A.

   Disposal of liquid , solid industrial waste and other

   1,862,559

   116,134

   422,561

   December 2016

   1,847,522

   85,013Cía. Cervecera Kunstmann S.A.

   Disposal of liquid , solid industrial waste and other

   143,482

   2,958,767

   12,416

   December 2016

   132,350

   62,898Cía. Pisquera de Chile S.A.

   Disposal of liquid , solid industrial waste and other

   318,419

   9,712

   36,035

   December 2016

   295,382

   137,593Transportes CCU Ltda.

   Disposal of liquid , solid industrial waste and other

   362,142

   -

   9,355

   December 2016

   297,734

   12,954VSPT S.A.

   Disposal of liquid , solid industrial waste and other

   559,209

   136,181

   74,293

   December 2016

   491,104

   508,254Others

   Disposal of liquid , solid industrial waste and other

   1,084,700

   197,504

   722,305

   December 2016

   943,663

   1,244,437


F-108

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Compañía Cervecerías Unidas S.A. and subsidiaries

   Notes to the Consolidated Financial Statements

   December 31, 2015
 Note 37Subsequent Events   a)The Consolidated Financial Statements of CCU S.A. have been approved by the Board Directors on February 2, 2016.  b)On January 7, 2016, the shareholders of Compañía Pisquera Bauzá S.A. came to an agreement in which Compañía Pisquera de Chile S.A. (subsidiary of Compañía Cervecerías Unidas S.A.) has sold its interest of 49% to Agroproductos Bauzá S.A. The price of the transaction amounted to UF 150,000 (equivalent to ThCh$ 3,844,364 on December 31, 2015). This investment at December 31, 2015, was recorded under Assets of disposal group held for sale (SeeNote 25).  c)On January 29, the subsidiaries AguasCCU-Nestlé Chile S.A. (“Aguas”) and Embotelladoras Chilenas Unidas S.A.(“ECUSA”) have acquired 48.07% and 0.92% of the shares of Manantial S.A. (“Manantial”) respectively, exercising the call option granted in the Shareholders’ Agreement of Manantial. As a consequence, Compañía Cervecerías Unidas S.A. is currently the indirect owner of 100% of the shares of Manantial, remaining as the only direct shareholders of Manantial: (i) Aguas with 99.08% of the capital stock, and (ii) ECUSA with 0.92% of the capital stock.  d)There are no others subsequent events between the closing date and the filing date of these Financial Statements (February 26, 2016) that could significantly affect their interpretation.  F-109


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