FASA / Annual Report / 2005

Transcription

FASA / Annual Report / 2005
TOGETHER, FOR LIFE
FASA ANNUAL REPORT / 2005
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upon your happiest moments
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upon your greatest challenges
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when you celebrate
when in your family life
when in need of most support
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TOGETHER, FOR LIFE
FASA 2005 CORE FIGURES
Revenues in 2005 were Ch$ 630 billion.
We attended 154 million clients during the year 2005 and distributed over 365 million units of diverse products throughout our pharmacies in Chile,
Mexico and Peru.
FASA employed 10,141 persons at the end of 2005, 31% of whom are in Chile, 55% in Mexico and 14% in Peru.
Number of Pharmacies up to December 31st 2005
Chile
250
México
529
Perú
130
TOTAL
909
*Drogamed, Brazil’s subsidiary is not included in these statistics since it dropped out of that market in January 2006.
page
page
Letter from the Chairman
48
Commitments with collaborators and society
14
Company Identification
Training
16
Interest Indicators
Social Responsibility
22
Our stockholders
50
Investments and Financing
Property and Control
Investments
Shares price trends.
Financing
Paid Dividends
Risk Factors
Dividends policies
Company’s Summary of Activitiesa
28
Board of Directors
53
Simplified Company’s Structure
34
Our People
56
Information about Subsidiaries
Organizational Structure
Chile - Farmacias Ahumada
Corporate Administration
México - Farmacias Benavides
Human Resources Distribution
Perú - Boticas Fasa
40
Business
64
Declaration of Responsibilities
Historical Growth
65
Identification of other Affiliated and Related Companies
Our Business Development
71
FASA´s Consolidated Financial State of Accounts
Our Markets´ Profiles
121 FASA´s Individual State of Accounts
Cooperative Relationships with Providers
161 Summarized State of Accounts
Own Trade Mark Strategies and Strategic Brands
165 Relevant Facts
Pharmaceutical Services Excellence
The Importance of our Technologies
8
José Codner Chijner,
Chairman Farmacias Ahumada S.A.
“Based on key decisions taken in the course of 2005 we have directed
our efforts to maximize business, improve our different subsidiaries
competitive positions and increase their profitability
by increasing their efficiency coefficients and in addition by laying the
foundations to improve the company’s worth”.
LETTER FROM THE CHAIRMAN
To Our Shareholders:
I am pleased to submit to you Farmacias Ahumada S.A.-Fasa´s Annual
Report for 2005.
more as the pharmacy to trust and this has helped sales recovery as a
constant trend.
During the past fiscal year we persisted in a strategy defined by the
Company’s Body of Directors which set the foundations for FASA´s
consolidation as the first chain of Pharmacies in Latin America so as to
lead the markets in a sustainable and solid manner where we keep a
presence.
On the other hand, a project directed to improve the pharmacies internal
efficiency was stimulated, which provided needed tools to make sure our
collaborators offered the best services to each and every one of the clients
who call upon our points of sale on a daily basis. The aims of the project,
known as project OMEGA, are to create a new style of work in FASA and
given that this is its most important objective it hopes to make it extensive
throughout all subsidiaries, to optimize merchandise repositioning processes
as an additional benefit in the stores, to improve customers services and
protocols, and to improve visual merchandising aspects as well and the
overall products mix in the pharmacies.
Consistent with this objective and as a result of analysis and reflection by
the Company some key decisions were made in the course of 2005.
1. To evaluate our businesses from the perspective of the arising challenges
at present and to identify all sources possible that serve to maximize
the commercial, operational and financial environment in each of the
countries where we operate
2. To leave the Brazilian market as a concrete option by selling 100% of
Drogamed operations and
3. To take back the Company’s expansion work in Mexico and Chile after
some years of having been in recess, and keep on opening stores in
Peru to lend impetus to growth and increase our market share.
Grounded on our premises we have moved forward in our efforts to
maximize business, improve the different subsidiaries competitive position,
increase profitability by increased efficiency coefficients and in all this lay
the foundations for increasing the Company’s worth.
Improved Efficiency
As part of the efforts to optimize operations and increase efficiency, I
would like to single out the work done in Chile that because of operations
which have been carried out and an in depth restructuring program has
managed to attain a substantial improvement in cost structures, an
improved implementation system in stores and has consolidated a course of
commercial sustainability.
Farmacias Ahumada Chile opted to keep on their in depth strategy for every
day low prices while competing with the discounts applied only for some
days by the competition. This strategy, aimed to maintain long term margins
in equilibrium, provides clients with better permanent prices that do not
change in tune with the state of the economy, facilitates price transparency
and the message to our clients. In spite of costs implied in this strategy for
the short term the outcome has been one where we are already obtaining
results out of this effort. We are being recognized by consumers each day
Undoubtedly all this efforts will be compensated in the course of the next
fiscal year as is clearly demonstrated by the improved results attained in
Chile’s operations during the last quarter of 2005.
In addition, amongst the initiatives stimulated in Chile I want to single out
the incorporation of the new Centre for Distribution to Farmacias Ahumada
which started operations halfway through the year in 2005. Located at
kilometer 16 of the highway to Viña del Mar, it counts with an automated
operation, advanced merchandise repositioning systems and a diversity of
elements that improve efficiency. This system is impacting positively at the
level of services to Pharmacies and at inventory levels within the Company.
This has decreased costs in an important way as well as it has substantially
upgraded effectiveness.
Likewise, in the course of the year, operations at the Distribution Centre in
Mexico were consolidated and the enlargement and modernization of the
Distribution Centre for Boticas Fasa in Peru were carried out, in this way
increasing by over 60% its area’s capacity for distribution.
Furthermore, diverse technological projects were elaborated. Among these
we can single out the stores system for operation unification throughout
all the subsidiaries. This allowed extended and unified incorporation of the
best practices into the systems for each of the countries. This allows each
Pharmacy to provide a better level of service to the customer in addition
to improving operative controls. As a next step, and on the basis of these
improvements, the Company is in a position to be one step further removed
from unifying its back-office systems at a regional level. This will allow
improved controls as well as to keep on improving efficiency coefficients
and achieving an in depth cost reduction.
Taking leave of the Brazilian Market
In spite of after almost five years in which FASA implemented several
efforts to change Drogamed into a money making operation, the Company
never reached the profitability and growth objectives which had originally
projected from the start. Operations in Brazil, which represented less than
5% of the Company’s consolidated sales, never succeeded in recovering
from the meager results it shoed, in spite of permanent restructuring
efforts. These efforts implied distracting resources from other operations
and had a negative impact on the Company’s results.
Dropping out of this market and selling Drogamed, whose sale operation
was completed in January, 2006, was definitely the best option for FASA
and it represented an adequate decision from the financial and strategic
points of view.
Having sold the Brazilian operation, FASA is now in a position to substantially
improve its financial results during fiscal year 2006. This will allow it
to increase its growth and focus on those profitable markets where the
Company operates. Furthermore, it will allow it to concentrate efforts on
developing new business opportunities.
The decision to leave the Brazilian market, a necessary decision although
painful, does not imply in any way that FASA leaves aside analyzing new
opportunities to expand into new markets which might rise up in the future.
Our Company relies on an international vocation and successes in Mexico
and Peru have demonstrated this to be so. The excellent results reached
during 2005 in these two markets are strongly reflected by the sale
increases of over 15% in comparable stores as well as by the increase in
their operative results, which compared to the previous fiscal year come up
to 102.3% and 47, 7% respectively.
Taking Back Growth
The year just finished also showed a substantial change in the Company’s
emphasis towards its operational growth. The year 2005, after over two
years in which Mexico’s Farmacias Benavides as well as Farmacias
Ahumada in Chile did not show practically any growth in its number of
stores was the year in which the Company started to incorporate new
pharmacies , once again.
During 2005 the Company incorporated 87 new pharmacies to the network
among which there were 26 in Chile, 17 in Peru and 44 in Mexico. Amongst
these last ones 26 pharmacies were taken over from Farmacias El Fenix in
10
Mexico. At year end the Company counted on 909 pharmacies which were
distributed in Mexico (529), Chile (250), and Peru (130), in this way stood
as the number one in Latin America by attending 154 million customers in
these three countries in the past fiscal year.
What has been stated before is part of the plan to grow for 2006 which
contemplates opening over 140 new pharmacies with which we anticipate
coming close to 1050 pharmacies at year end. This means a growth of over
15% in the number of stores. This expansion will increase coverage by the
stores in the network, will open new markets in cities where FASA today
has no presence and will deepen the present coverage as well.
To finish, I would like to point out that for the third consecutive year
Farmacias Ahumada was honored with the Pro Quality Award 2005,
granted by the University Adolfo Ibañez, Adimark, Quality Chile and Capital
Journal. This is granted to Companies whose services and attention are
best evaluated by consumers. In this opportunity FASA was third in place
according to ranking. The other recognition was FASA´s incorporation to
the Premium Category- the one best evaluated- according to a Ranking
related to Corporate Reputation which is annually elaborated by Collect
Market Research and Hill & Knowlton Captiva, who provides recognition for
performance to the 25 best evaluated Companies.
In addition I would like to sincerely thank the permanent support all
shareholders have lent to our Company. Their commitment has been
particularly valuable in a difficult year such as 2005, which demonstrates
the level of trust in our Company.
I am sure that with renewed contributions by our collaborators, who are
over 10,000, whose efforts I duly recognize and appreciate, we will be able
to attain the Company’s full potential and regain the trajectory of benefits
which is illustrated by the Company’s history all which adds to providing
greater value as is our shareholders desires. This certainly will allow us
to move ahead in the paths of growth and expansion which has been a
definitive trait of our Company.
Sincerily
José Codner Chijner
Chairman
FASA - Farmacias Ahumada S.A.
LETTER FROM THE CHAIRMAN
For the third consecutive year in 2005 Farmacias Ahumada was
honored with the Pro Quality Award 2005, granted by the
University Adolfo Ibañez, Adimark, Quality Chile and Capital Journal. This award
is granted to Companies whose services and attention are best evaluated by
consumers. In this opportunity FASA was third in place according to ranking.
The other recognition was FASA´s
incorporation to the Premium Category- the one best evaluated- according to a
Ranking related to Corporate Reputation which is annually elaborated by Collect
Market Research and Hill & Knowlton Captiva.
11
When in When
your
happiest moments
in your happiest moments
TOGETHER, FOR LIFE
[ Edgardo Saravia, 31 years old, Administrator.
Silvia Díaz, 27 years old, Chef. | Peru ]
COMPANY INFORMATION
BUSINESS NAME
Farmacias Ahumada S.A.
COMMERCIAL NAME
Farmacias Ahumada, FASA
TAX ROL
93.767.000–1
SOCIETY´S CONSTITUTION DATE
November 28 , 1977, Public Notary in Santiago
Álvaro Bianchi R.
SOCIETY´S REGISTRATION
Numbered 310 N0 167 del Commerce Registry of the
Santiago Landed Property, 1978.
LEGAL ADDRESS
Miraflores 383, floor 6th, Santiago.
TELEPHONEFAX
56-2-222 1122
56-2-661 9410
WEB SITE
www.fasa.cl
DATE OF INSCRPTION VALUABLES REGISTER
15 de octubre de 1997
SVS INSCRIPTION NUMBER
629
NEMOTECNICH STOCK EXCHANGE
FASA
EXTERNAL AUDITORS
PricewaterhouseCoopers
14
FASA´s history throughout 36 years of its past history is a product
of dedicated and committed work oriented to satisfying the needs of our
customers.
HISTORICAL SUMMARY
Fasa is today the Number 1 Chain of Pharmacies in Latin America, with
annual sales for the year 2005 of Ch$630.270 million equivalent to
US$1.260 billion. Its network consists of 909 stores up to December 2005
which are distributed in Chile, Mexico and Peru. During the course of 2005
they attended 154 million customers in these three countries where they
provided a pharmaceutical service of excellence and a great purchase
experience.
FASA´s history throughout its 36 years of past history is the product of
a dedicated and committed work oriented to satisfy the needs of the
customers. This has allowed it to progress, from the classical traditional
Pharmacy on to what it is today, the most modern and extensive Chain of
Pharmacies in Latin America.
2000:
2001:
2002:
1968: Acquisition of the first Pharmacy by José Codner Chijner, Founding
Partner.
1969: The first store of the “Farmacias Ahumada” chain is born.
1992: National expansion is initiated when first Pharmacy opens in the
Fifth Region.
1996: Peruvian market starts development of pharmacies chains, Boticas
FASA S.A. is created.
1997: AIG becomes part owner of FASA – a company not on the stock
market at that time - by acquiring 10% of the Company’s property
through different means.
On December 4th, 1997 Framacias Ahumada opens up to Santiago’s
Stock-Exchange by means of an increase in capital amounting
approximately to US$ 21 million, and increasing the number of
shareholders from 11 to 296.
1998: ABF S.A. Administrador de Beneficios Farmaceuticos is created
as an affiliate which provides medicine’s coverage for Institutions,
Companies and Insurance Companies.
1999: Falabella S.A.C.T. Company becomes incorporated as an owner of
FASA and acquires 20% of the shares- and the North American
Latin Health Care Fund also becomes incorporated with another
7,7% of the property. Both operations were carried out by means
2004:
2005:
of an increase in capital through Santiago’s Stock-Exchange where
FASA increased its capital up to US$49 million.
FASA y AIG Capital adquieren el 77% de Drogamed, en el Estado
de Paraná en Brasil. FASA adquiere el 50% de General Nutrition
Company Chile (GNC) para comercializar los productos GNC.
Jointly with AIG, the remaining 23% of Drogamed shares are
purchased, controlling (100% of the Company); 15% of Boticas
FASA (to gain control of 100% of the Company), and an additional
17% of GNC Chile.
License contracts type “Master” is signed with GNC for the
territories of Peru and Brazil. At the same time, the rest of General
Nutrition Chile’s property was acquired, thus becoming an affiliate
that was 100% owned by FASA.
On December 23, 2002, FASA took over share control of the
Mexican Company Far-Ben S.A. de C.V. (Farmacias Benavides) by
underwriting and paying up an increase in capital in Far Ben in the
amount of US$45 million.
Two dematerialized bond series were offered to the order of the
bearer, for UF 2,2 million. A capital increase was made in Drogamed
for US$ 4 million, thereby controlling 83% of this Company.
Twenty six pharmacies which originated in divesting from C.V.´s
Farmacias El Fénix whose property was controlled 50% by
Farmacias Benavides.
On January 26, 2006, FASA concretely left the Brazilian market when it
sold 100% of Drogamed, its affiliate.
15
INTEREST INDICATORS
CONSOLIDATED SALES
Consolidated sales were in the amount
of Ch$630.270 millions, equivalent
To US $1.260 million.
Cnsolidation in Mexico started 2003.
Deconsolidation in Brazil started
September 2005.
*Average dollar per year.
In billion pesos as of December
Millions Of Us Dollars*
669.6 627.5 630.3
1.085
258.4
147.3
312.8 336.0
537
185.6
358
1998 1999 2000 2001 2002 2003 2004 2005
553
Consolidation in Mexico starting 2003.
Deconsolidation in Brazil starting
September 2005.
408
1998 1999 2000 2001 2002 2003 2004 2005
21.1
16.3
14.6
9.9
6.8
16.9
9.4
7.7
1998 1999 2000 2001 2002 2003 2004 2005
PROFIT AFTER TAXES
2005 Consolidated result reached
Ch$3.349 million loss
representing 0,5% of sales.
7.5
4.7
3.7
Mexico Consolidation started in 2003.
Brazil de-consolidation started
September 2005
*Considers negative impact of selling Brazilian
affiliate
16
1.260
547
During 2005 income on account of sales was Ch$630 billion pesos,
serviced 154 million clients and distributed 365 million units of different
products in Chile, Mexico and Peru.
EBITDA
Operational Results before depreciation and amortization.
-EBITDA- attained Ch$16.886
Millions - 2, 7% of sales-.
1.152
3.9
3.9
1.9
2.2
1998 1999 2000 2001 2002 2003 2004 2005*
-3.3
May 2005 the new Centre for Distribution in Chile started operations at
its location on highway 68.
INVESTMENTS
In the course of 2005 investments took place in the amount of
Ch$18.578 millions.
These were mainly destined to carry
out operational improvements,
pharmacies renovations
and investments in logistics and
systems.
17.3
13.6
11.3
9.3
7,0
6.2
1998 1999 2000 2001 2002 2003 2004 2005*
Consolidation in Mexico started 2003.
*Brazil is not considered given it was sold later in
January 2006.
NUMBER OF PHARMACIES
We ended the year with 909 pharmacies, 28% of which are in Chile, 58%
in Mexico and the rest, 14%, in Peru.
During 2005 growth efforts were
taken back through new stores in
Chile, Mexico and Peru, growth which
will continue in 2006.
18.6
15.2
Chile
Perú
Brasil México
942
936
909
315
167
369
440
195
*Brazil is not considered given it was sold later
in January 2006.
1998 1999 2000 2001 2002 2003 2004 2005*
In thousands square meters
SHOPPING SPACE
We ended the year with 176.220
m2 of shopping space. In Chile the
average size of the shopping areas
was 176 m2, 240 m2 in Mexico and
y 85 m2 in Peru.
*Brazil is not considered given it was sold later
in January 2006.
Chile
187.6 180.1
176.2
1998 1999 2000 2001 2002 2003 2004
2005*
Perú
Brasil México
46.5
56.5 60.8
16.6 22.3
17
NUMBER OF CUSTOMERS SERVICED
During 2005 customers attended
reached 154 million persons, distributed throughout Chile, Mexico and
Peru. The implications for the Company are the challenge to continue to
apply its commitment standards, and
its efficiency and service excellence to
the community.
*Brazil is not considered due that it was sold later
in January 2006
NUMBER OF COLLABORATORS
Up to December 31st, FASA employed
10,141 employees including executives, of these 31% are in Chile, 55%
in Mexico and 14% in Peru.
*Brazil is not considered due that it was sold later
in January 2006
Million Customers served.
Chile
Peru
45.7 59.3
38.0
166.5
Brasil Mexico
70.3
162.7
154.0
74.1
1998 1999 2000 2001 2002 2003 2004 2005*
Millions of people.
Chile
Peru
11.8
Brasil Mexico
5.5
3.1
6.1
10.9
10.1
6.7
3.5
1998 1999 2000 2001 2002 2003 2004 2005*
18
PHARMACEUTICAL MARKET SALES
PARTICIPATION
PER COUNTRY (%)
We participated in an estimated
pharmaceutical market
of US$12,200 billion, in which we
have 5.4% of participation.
According to information from IMS Health hand
FASA´s calculations.
*Brazil is not considered due that it was sold
later in January 2006
Market share up to December 2005
25.9%
Chile
Perú
México 3.3%
13.6%
Pharma market
estimated US$
millions
% Pharma over
total sales
1.210
70,6%
542 77,4%
10.417 53,0%
During 2005 growth plans were taken back which resulted in the
opening of 87 new pharmacies in Chile, Mexico and Peru.
19
Upon your greatest
challenges
Upon your greatest challenges
TOGETHER, FOR LIFE
[ Loreto Cazenave, 31 years, Commercial Engineer and her son Vicente Charlin , 1 year old.| Chile]
OUR SHAREHOLDERS
We direct our actions towards achieving the objectives in the entrepreneurial project and of maximizing profitability for our shareholders, attempting to
surpass their expectations.
OWNERSHIP AND CONTROL
LISTING OF THE TWELVE BIGGEST SHAREHOLDERS OF THE COMPANY
The twelve biggest shareholders represent 75.9% of the Company’s ownership.
Shares holding
December 31 2005
Membership of the
Controlling Group
1
Inversiones Galia S.A
2
S.A.C.I Falabella
3
Inversiones Tomalex S.A.
4
5
6
Inversiones Los Alpes S.A.
7
Inversiones Zermatt Ltd.
8
9
Ownership Percentages
32.606.273
21,7%
30.000.000
20,0%
8.122.476
5,4%
AFP Provida S.A. para Fondos Pensión C
7.307.308
4,9%
Latin Health Care Fund Lp Limitada
7.040.010
4,7%
6.179.018
4,1%
5.295.944
3,5%
AFP Habitat S.A. para Fondos Pensión C
5.229.107
3,5%
inversiones JCC Limitada
3.786.708
2,5%
10 AFP Cuprum S.A. para Fondos Pensión C
3.586.186
2,4%
11 Compass Chile Opportunity Fondo, Inversión
2.443.194
1,6%
12 Moneda S.A. AFI para Piomero FIM
13 Other 266 Shareholders
Total Shares 2.309.000
1,5%
36.094.776
24,1%
150.000.000
100%
CONTROLLING SHAREHOLDERS GROUP
The following table provides details of the comptrollers group:
Members of the Controlling
Group
Taxpayer Identification
Number
% Property Farmacias
Ahumada
Inversiones Galia S.A.
79.799.330-1
21,74
José Codner Ch. *
100
Inversiones Tomalex S.A.
96.947.510-3
5,41
José Codner Ch. *
100
Inversiones JCC Ltda.
76.112.460-9
2,52
José Codner Ch. *
100
Inversiones Los Alpes S.A.
96.508.010-4
4,12
José Codner Ch. *
100
Inversiones Zermatt Ltda.
78.482.780-1
3,53
Jaime Sinay A.*
100
Inversiones Zermatt Dos Ltda.
77.690.510-0
0,47
Jaime Sinay A.*
100
Inv. y Rentas Caburga Ltda.
79.643.600-K
0,02
Alejandro Rosemblatt K.*
100
Inversiones Tulum Ltda.
78.482.810-7
0,65
Bernardo Ben-Dov C.
Latin Health Care Fund LP Ltda.
76.144.590-1
4,69
Investment Fund
Natural Person
Codner Dujovne Karen
7.629.503-4
1,05
Codner Dujovne Denise
6.377.789-7
1,05
Codner Dujovne Ethel
6.377.788-9
1,05
Rosemblatt Kiblisky Alejandro
7.770.224-5
1,00
Sinay Assael Jaime
6.377.768-4
0,08
% of the Controlling
Member
90
100
*José Codner Chijner, Rut 4.255.530-4, includes in addition Mrs.. Perla Dujovne Codriansky, Rut 5.026.216-2, Karen Codner D., Denise Codner D .and Ethel Codner D.
*Jaime Sinay A. includes Mrs. Denise Codner D.
*Alejandro Rosemblatt K. includes Mrs. Karen Codner D.
Investments Societies, Galia S.A., Latin Health Care Fund LP Ltd., Investments Los Alpes S.A., Investments Zermatt Ltd., Investments Zermatt Dos Ltd. e Investments Tulum Ltd. have an agreement to
act jointly which has been duly formalized. The rest of the comptrollers group members have an agreement to act jointly in the terms presumed in article 98 Law number 18.045.
22
OWNERSHIP CHANGES
During 2005 the most important changes in FASA´s ownership were the following:
Shareholder
Accionista
Ugarte y Cía. Corredores de Bolsa Ltda.
NumberRUT
85.544.000-8
PENTA Agente de Valores S.a.
Bice Corredores de Bolsa S.a.
Larraín Vial Fondo Mutuo Acciones Nacionales
Araya Araneda Roberto
Negocios y Valores S.a. C de B.
793,2
1.224,3
70.269
79.532.990-0
71.413
517.161
624,2
96.955.500-k
76.288
427.970
461,0
6.552.719-7
32.770
2.300
(93,0)
9.879.058-6
11.760
480
(95,9)
6.370.326-5
21.000
850
(96,0)
96.586.750-3
46.120
120
(99,7)
Variation%
7.867
Valdivieso Pfingsthorn Mario Gabriel
Number of
Número
de
Shares
2005
Acciones de 2004
82.505
99.555.580-8
González Toledo Luis Emilio
Number of
Número
Shares
2004de
Acciones de 2003
6.230
STOCK MARKET TRANSACTIONS BY DIRECTORS AND EXECUTIVES
FASA shares transactions by Company’s main directors and executives were:
Shareholder
Number
Accionista
Bernardo Ben-Dov C.
6.584.450-8
Average Unitary
Price $
Number Shares
Transacted
130.000
Total Transaction
Amount
1.507,28
Enrique Cibié B.
6.027.149-6
200.000 Cecilia Cobos Z.
6.867.267-8
145.000
Ricardo Palominos R.
6.513.025-4
75.032
1.470,00
Alejandro Rosemblatt K.
7.770.224-5
600.000
1.600,20
RUT
1.250,00
196.033.247
1.600,20
Transaction
Sales
Relationship with the
Company
Executive
250.000.000
Sales
Acting Director
232.029.000
Purchases
Executive
110.297.040
Sales
Executive
960.120.000
Purchases
Executive
23
SHARES PRICE TRENDS (1997-2005)
FASA
dic. 05
sep. 05
jun. 05
mar. 05
dic. 04
sep. 04
jun. 04
mar. 04
dic. 03
sep. 03
jun. 03
mar. 03
dic. 02
sept. 02
jun. 02
mar. 02
dic. 01
sept. 01
jun. 01
mar. 01
dic. 00
sept. 00
jun. 00
mar. 00
dic. 99
sept. 99
jun. 99
mar. 99
dic. 98
dic. 97
IPSA
IPSA (Selective Price Index) includes 40 societies who have a mayor presence in the Stock Exchange in Santiago, Chile.
Base 100: December 1997.
The graph shows the performance by the Company’s shares which for the last seven years accounted for an average annual growth of 16.6 % while IPSA´s
variation came up to an average of 14.0 % annually.
24
SANTIAGO COMMODITIES EXCHANGE, CHILE´S ELECTRONIC EXCHANGE AND Vaparaíso STOCK EXCHANGE
Fasa´s shares transactions carried out at the Stock Exchanges where these are transacted are listed below:
Period
Unities
Amount (Ch$)
Average Price (Ch$)
1er quarter 2001
1.588.870
932.797.168
587,08
2do quarter 2001
4.696.329
3.016.860.236
642,39
3er quarter 2001
5.921.837
5.113.999.405
863,58
4to quarter 2001
3.155.354
2.687.193.737
851,63
1 quarter 2002
3.237.617
3.270.979.064
1.010,30
2do quarter 2002
3.383.897
3.404.018.439
1.005,95
er
3er quarter 2002
4.256.972
4.057.027.940
953,03
4to quarter 2002
3.238.730
3.448.618.535
1.064,81
1er quarter 2003
2.170.568
2.133.684.266
983,01
2do quarter 2003
7.699.082
9.471.528.659
1.230,22
3er quarter 2003
3.252.419
4.791.384.720
1.473,18
4to quarter 2003
1.609.987
2.730.273.642
1.695,84
1er quarter 2004
7.504.406
11.750.546.623
1.565,82
2do quarter 2004
2.456.102
3.791.732.001
1.543,80
3er quarter 2004
10.900.259
18.132.917.814
1.663,53
4to quarter 2004
5.608.323
8.386.090.139
1.495,29
1 quarter 2005
2.973.200
4.425.279.674
1.488,39
2do quarter 2005
4.780.001
7.199.606.713
1.506,19
3er quarter 2005
2.461.098
3.251.918.479
1.321,33
4to quarter 2005
1.801.023
2.083.360.474
1.156,77
er
During 2005, 12.0 Million shares were transacted equivalent to Ch$ 16,960 million. Price per share closed the year at Ch$ $1,170, the average price
was Ch$ $1,368 and the minimum and maximum prices were Ch$ $1,100 and Ch$ $1,610 respectively.
25
PAID DIVIDENDS
A detailed listing of the values paid for the last 19 dividends by the Company follows:
Date of Shares
Fiscal Year
Condition
$/Share (Historical)
Number of shares
11-january-96
1995
Definitive
3,500
58.660.509
3-december-96
1996
Provisional
7,670
58.660.509
28-april-97
1997
Provisional
1,100
58.660.509
23-january-98
1997
Provisional
6,000
97.947.521
29-april-98
1997
Definitive
1,026
97.947.521
12-january-99
1998
Provisional
7,000
97.947.521
10-may-99
1998
Definitive
2,217
97.947.521
20-january-00
1999
Provisional
5,000
148.479.719
11-may-00
1999
Definitive
2,935
150.000.000
20-september-00
2000
Provisional
4,000
150.000.000
10-mayo-01
2000
Definitive
5,928
150.000.000
20-september-01
2001
Provisional
9,000
150.000.000
8-may-02
2001
Definitive
7,000
150.000.000
24-september-02
2002
Provisional
8,000
150.000.000
12-may-03
2002
Definitive
3,840
150.000.000
6-october-03
2003
Provisional
8,000
150.000.000
12-may-04
2003
Definitive
4,024
150.000.000
29-september-04
2004
Provisional
10,000
150.000.000
16-may-05
2005
Definitive
4,400
150.000.000
DIVIDEND POLICIES
The general policy related to apportioning dividends for the fiscal year 2005 is that these are going to be at least 30% of the net profits during the year.
This corresponds to the minimum mandatory dividend established by Law and by the Society’s statutes. The aforementioned is without prejudice to what
the Board might agree at the time in respect to apportioning provisional dividends charged to profits within the fiscal year.
SINTHESYS OF COMMENTS AND PROPOSALS BY SHAREHOLDERS
In respect to the sound management practices which took place between January 1st and December 31st, 2005 no comments were received from the
mayor shareholders or from groups of shareholders who added up to 10% or more of the shares issued and had a right to vote. This, according to the
regulations established by Article 74 of law number 18.046 about Corporations.
26
In Farmacias Ahumada we direct our efforts to be the best alternative as a
Pharmacy, always surpassing the customer’s expectations in the delivery of
an unmatched service by a team of human resources who are committed
and innovative.
27
In Farmacias Ahumada we expect to deliver long term financial returns
to our shareholders, and build a Company that grows and is transformed
into a place where collaborators want to work for.
BOARD OF DIRECTORS
Farmacias Ahumada S.A. is managed by a Board of Directors of nine members in their own right and 9 substitutes who have a three year term in office
and can be reelected.
The Company’s Board of Directors was elected in an Ordinary Stockholders Meeting held on April 28, 2005.
The Board of Directors is composed by the following persons:
Name
Title
Profession
Taxpayer Identification Number
President
Pharmacist
4.255.530-4
Karen Codner Dujovne
Substitute
Journalist
7.629.503-4
Eduardo Bellinghausen Pizarro
Vice-president
Lawyer
3.515.184-2
Denise Codner Dujovne
Substitute
Business Administrator
6.377.789-7
Juan Benavides Feliú
Director
Business Administrador 5.633.221-9
Michel Awad Bahna
Substitute
7.774.580-7
Juan Cúneo Solari Director
Business Administrador 3.066.418-3
Juan Pablo Montero Schepeler
Substitute
Civil Industrial Engineer
9.357.959-3
Raymond Joseph Dunn IV Director
Business Manager
Ethel Codner Dujovne
Substitute
Medical Doctor
6.377.788-9
Foreign
Alexander Fernández Montenegro Director
Business Manager
9.604.686-3
Ricardo García Holtz
Substitute
6.999.716-3
5.319.489-3
Pablo Lamarca Claro Director
Business Administrador
Alvaro Pezoa Bissieref
Substitute
7.824.511-5
Jaime Sinay Assael
Director
Civil Industrial Engineer 6.377.768-4
Perla Dujovne Codriansky
Substitute
Entrepreneur
5.026.216-2
Mario Valdivia Bernstein
Director
Enrique Cibié Bluth
Substitute
6.027.149-6
Sergio Mesías Vidal
28
Secretary Lawyer
6.989.768-1
BOARD OF DIRECTOR´S REMUNERATIONS
Details for remunerations paid in national currency to Farmacias Ahumada Board Members for the years 2005 and 2004 are the following:
2005
Comitee
Part.
Professional
Directors Dividends
Services
Remunerations
ThCh$
ThCh$
ThCh$
ThCh$
Board
ThCh$
José Codner Ch.
16.846
4.841
755
-
Eduardo Bellinghausen P.
9.322
-
755
12.925
Michel Awad B.
1.793
-
-
-
Juan Benavides F.
6.991
-
755
-
Gabriel Berczely A.
1.076
-
-
-
Enrique Cibié B.
2004
2003
2004
Total
Directorio
M$
M$
Total
ThCh$
254.610
277.051
13.984
-
23.002
6.992
-
1.793
-
-
7.745
-
1.076
Professional
Comitee
Part.
Part.
Directors Dividendos
Remunerations
Dividends Services
ThCh$
ThCh$
ThCh$
ThCh$
M$
Board
ThCh$
5.377
2.447
-
259.470
281.278
9.439
-
2.447
-
-
-
-
1.621
-
-
538
-
-
9.257
-
538
6.454
-
2.447
20.948
-
8.901
-
-
-
-
24.313
-
24.313
-
-
-
-
539
-
-
-
-
539
-
-
-
-
-
-
Ethel Codner D.
2.688
-
-
-
-
2.688
-
-
-
-
-
-
Juan Cúneo S.
6.990
-
755
-
-
7.745
6.992
-
2.447
-
-
9.439
-
Denise Codner D.
Perla Dujovne C.
894
-
-
-
-
894
8.245
1.078
755
6.421
-
16.498
Pablo Lamarca C.
7.168
3.222
755
Juan Pablo Montero S.
1.793
-
-
Alexander Fernández M.
Jaime Sinay A.
8.428
-
755
Mario Valdivia B.
9.322
4.841
755
-
-
6.992
Total
ThCh$
-
5.915
-
2.447
-
-
11.144
-
-
-
- -
-
1.793
-
-
-
-
-
21.333
5.915
-
2.447
9.257
-
17.606
6.992
5.915
2.447
12.150
2.688
20.948 1.621
-
-
-
36.302
-
-
-
-
-
17.619
-
16.975
29
BOARD EXPENSES
During 2005 Farmacias Ahumada Board of Directors did not record significant expenses save for stipends and dividends participation.
BOARD COMMITTEE
In agreement with what has been established in article 50 , Law Number 18.046, FASA counts on a Board Committee composed of three members who
are empowered to act and carry out the tasks contemplated by such article. Up to December 31, 2005 , Farmacias Ahumada S.A. Board Committee is composed of: Name
Profession
José Codner Ch.
Pharmacist
Pablo Lamarca C.
Mario Valdivia B.
Civil Industrial Engineer
Taxpayer Identification Number
4.255.530-4
5.319.489-3
6.987.378-2
Mr. Codner is a Board Member linked to the Controller according to Article 50 bis, Law Number 18.046.
Mr. Lamarca and Mr. Valdivia are Board Members who are independent from the Controller according to Article 50 bis, Law 18.046
The present Committee was elected at the Board Meeting on May 16, 2005, having previously met in other dates with the Board Directors Mr. José Codner
C., Mario Valdivia B. and Alexander Fernández M. The expansion and modernization of Boticas Fasa Distribution Centre
were carried out in 2005 and is associated with the consolidation of
Mexico’s Distribution Centre.
30
COMMITTEE ACTIVITIES
The Committee met 9 times during fiscal year 2005 in the course of which
it examined reports by the External Auditors, the balance and other financial
reports which were submitted by the society’s administrators to the shareholders. They also proposed at this time the appointment of the External
Auditors by the Boards and that of the risk analysts, examined remunerations and compensation plans for managers and principal executives, and
specially reviewed the background to those operations referred to in Articles
44 and 89 of the Law being quoted next:
- Renting commercial premises at San Francisco Supermarket – Talagante (Related to Board Directors Juan Cúneo and Juan Benavides).
- Renting commercial premises at Plaza Vespucio Mall (Related to Board
Directors Juan Cúneo and Carlos Heller).
- Contracting CMR Falabella Credit Card (Related to Board Directors Juan Cúneo and Juan Benavides).
- ABF Credential for life insurance at Falabella Pro (Related to Board
Director Juan Cúneo and Juan Benavides).
- Technical Advise Contract by Farmacias Ahumada S.A. to Boticas Fasa
S.A.
- Rent Contract Modifications for Galia Investments S.A. and Edeka
Commercial S.A. (Related to Board Director Mr. José Codner).
- Rent Contract for the real state property of Fasa Real Sate S.A. to
- Renting commercial Premises at San Francisco Supermarkets. Modifying present existing contracts and new rent contracts. (Related to
Board Directors Juan Cúneo and Juan Benavides).
COMMITTEE EXPENSES
The Committee incurred in a total expense for the period in the amount of
Th.Ch$13,981 and it corresponds to payments on account of stipend for
attendance. There were no relevant expenses.
31
when you celebrate
when you celebrate
TOGETHER, FOR LIFE
[ María del Rosario Olivares, 49 years old, Librarian and her sons
Martín Alberto Contreras, 12 years old, and María Victoria Contreras, 6 years old | Chile]
OUR PEOPLE
ORGANIZATIONAL STRUCTURE
The organizational structure approved in January 2005 has brought about excellent results with which to meet the year’s challenges and take decisions
promptly and properly. In this respect it has been agile and unencumbered due to a strong leadership from the Executive Vice-President, a strong
orientation towards team work with the General Managers from the Business Units and opened and well-timed communications.
FARMACIAS AHUMADA S.A. ADMINISTRATION
BOARD OF DIRECTORS
Alejandro Rosemblatt
Executive Vice-President
34
Marcelo Weisselberger*
Sergio Mesías
Rodrigo Picas*
Cecilia Cobos*
Patricio Lira*
Bernardo Ben–Dov
Corporate Finances
Director
Corporate Fiscal
Systems Corporate
Director
Corporate Human
Resources
Corporate Logistics
Director
Corporate Business
Director**
Sergio Purcell
Ricardo Palominos
Walter Westphal
General ManagerFASA Chile
General Manager FASA Peru
General Manager FASA Mexico
*All corporate functions additionally fulfill a functional role in the operation in Chile, dependent on Sergio Purcell.
** After December 31, 2005, Bernardo Ben- Dov leaves this function.
During 2005 the Company incorporated 87 new pharmacies to its network, 26 of which were in Chile, 17 in Peru and 44 in Mexico. In this
way, upon year’s end the Company counted on 909 pharmacies which
were distributed in Mexico (529), Chile (250) and Peru (130) placing
itself as the number 1 chain in Latin America and attending over 154
million customers in these three countries.
poner foto de local ?
35
EXECUTIVE VICE-PRESIDENCY
Name
Profesión
Office
Profession Profesión
Taxpayer Identification RUT
Alejandro Rosemblatt K.
Executive Vice-President
7.770.224-5
Bernardo Ben - Dov C.
Corporate Business Director
6.584.450-8
Cecilia Cobos Z.
Corporate Director HR
6.867.267-8
Marcelo Weisselberger A.
Corporate Director Finances
10.032.623-K
Patricio Lira K.
Corporate Director Logistics
Civil Ind. Engineer
Rodrigo Picas O.
Systems Corporate Director Civil Ind. Engineer
7.981.229-3
Sergio Mesías V.
Corporate Fiscal
Lawyer
6.989.768-1
8.494.420-3
CORPORATE ADMINISTRATION REMUNERATIONS
Gross remunerations paid to the Company’s principal executives in the year 2005 amounted to Th.Ch$1,132,127.
COMPENSATIONS
During 2005 Th.Ch$4,784 were paid to corporate area Managers who left the Company on account of compensations due to years of services.
INCENTIVES PLAN
A variable annual remuneration system is applied with the purpose of motivating top management. This consists of management bonuses associated to
fulfilling those goals which have been previously agreed to by higher management levels. A part of this as well is the plan to acquire Company shares that
include amounts and opportunities previously established by the administration through reciprocals granted by the Company. This latter is obliged to take
over the least value produced in case that the result of selling shares is less than the respective debt.
HUMAN RESOURCES DISTRIBUTION
Personnel endowment working at Farmacias Ahumada S.A. and in related enterprises up to December 31, 2005 is
the following:
Managers and Principal Executives
Pharmacists
Others
Executive
Vice-Presidency
7
FASA Chile
7
Fasa México
6
Fasa Perú
5
Total
25
-
470
520
291
1.281
17
2.669
5.043
1.106
8.835
24
3.146
5.569
1.402
10.141
FASA has been shaping itself as a high performance organization carrying out a cultural change and making efficient
use of across the board tools among its Business Units such as Performance Administration Systems, 360º Evaluation
and Top Management Feedback to allow talent identification and administration by the Company.
FASA keeps enriching itself and aims to count across the board within the Company in its different levels on an
exceptional human resources team. This will permit growth, attain expected results and pursue professional development
by executives, professionals and technicians.
36
37
When in your family
life
When in your family life
TOGETHER FOR LIFE
[ Guillermo Marroquin, 49 years old, entrepreneur; Gloria Castro, 45 years old, Household mistress and
her sons, : Patricia Marroquin, 21 years old, Student and Luigi Marroquin, 17 years old, Student | Peru ]
BUSINESS
HISTORICAL EXPANSION
Farmacias Ahumada S.A. origins dates back to 1968 when Mr. José Codner
Chijner acquired York Pharmacy located at Compañia street in Santiago.
Later in 1969 a second pharmacy, located at the corner of Ahumada and
Huerfanos, was opened and gave birth to the present Chain’s name.
Benefits S.A. with the purpose of diversifying its sources of income and
improve services to institutional customers by means of a coverage plan for
medication that used electronic administration in enterprises and insurance
companies.
During the ´70s Farmacias Ahumada started a gradual plan to expand,
reaching 10 points of sale. Likewise during that period the Company
showed signs of an innovative style of administration which has been
maintained throughout time.
In 1999 Falabella, S.A.C.I.- the main chain of department stores in Chile
became incorporated as an owner of the Company when it acquired 20% by
means of subscribing an increase in capital. Parallel to this an agreement
was reached with Falabella to use the CMR credit card in those pharmacies
the Chain owns in Chile and Peru.
Beginning the decade of the ´90s the Company started on a plan of growth ,
internationalization and expansion in its business areas. In 1992 Farmacias
Ahumada counted on 44 pharmacies in the Metropolitan Region . In that
same year it started incursions into the regions, opening the first Pharmacy
in the Fifth Region.
In 1996 the Company started its process of international expansion by
means of creating Boticas Fasa S.A. in Peru . That same year the Company
inaugurated a Distribution Centre in Chile
This allowed the incorporation of important logistical operations efficiencies
and to prepare the chains expansion.
In December 1997 the Company became an Open Corporation by means
of listing its securities in the Santiago’s Stock Market and materialized
an increase in capital in the amount of US$21 million (historical value).
Two years later , in 1999, a second increase took place in the amount of
US$ 49 million.
In 1998 , ABF is created as an affiliate and Administrator of Pharmaceutical
40
In the year 2000 an association was established with AIG Capital Partners
Inc. (AIG) by means of constituting Fasini Private Corporation. FASA
participated in it with a 65% and AIG with a 35% . This was for the purpose
of a joint incursion in the Brazilian pharmaceutical markets. In May that
same year it acquired 77% of Drogamed in US$ 25 million (historical value).
This was the principal Chain of Pharmacies in Parana State, Brazil.
Additionally in the year 2000 FASA acquired 50% of the General Nutrition
Company S.A. in Chile (CNG) who represented the principal producer of
nutritional products in the world, GNC. This transaction permitted the
Company to distribute in Chile natural products, nutritional supplements
and vitamins.
Farmacias Ahumada development plans have been oriented mainly
to identify and evaluate markets with a high potential for growth and
controlled levels of risk . With this in mind the Company was restructured
during the year 2000 into three divisions within its Chain of Pharmacies
operating in Chile, Peru and Mexico. Furthermore a Corporate area was
created to coordinate FASA at strategic and global levels. A key factor in
its expansion strategies is to invest in those companies where intervention
in its management and operations is possible and where it is possible to
approve or reject their investment projects and obtain added value by means
of FASA´s business unit’s experience, management skills and operational
capacities.
During 2001´s first half, property participation in CNG was increased
by 67% and Farmacias Ahumada attained 100% control of its business
in Peru and Brazil. In this latter country and in conjunction with AIG it
acquired 15% and 23% left of Fasa and Drogamed Drugstores properties
respectively.
During the first two months of 2002 a “Master” contract type was signed
with GNC in relation to the territory in Peru. In October of that same year a
similar type of contract was signed with Brazil.
On December 23 rd , 2002 Farmacias Ahumada S.A. took control of
shares in Far-Ben S.A. a C.V. Mexican society by subscribing payment of
an increase in capital in Far-Ben for US$ 45 million.
In October, 2003 the Distribution Centre in Mexico starts operations and
starts receiving merchandise from suppliers in a centralized way in order to
supply all the pharmacies. We made use of our high purchase volumes to
establish direct relationships with suppliers, with no middle-men. This was
done by centralizing orders whose destination was the Distribution Centre
and that by process flows and technologies would supply the pharmacies
activities.
In January 2005, Farmacias Ahumada S.A. and AIG Capital Partners
reached an agreement by which Farmacias Ahumada acquired 35% of
what was Drogamed and doing this it succeeded in controlling 100% of
this Company.
In May 2005, 26 pharmacies were incorporated to C.V.´s Benavides Chain
of Pharmacies S.A. as a result of divesting from the C.V society El Fenix
Pharmacies where there was 50% of participation.
In May 2005 the new Distribution Centre in Chile also started operations
and had an actualized picking system and new areas for maneuvers where
suppliers could operate efficiently and make use of the most advanced
repositioning software. In addition, during the first semester of 2005
the Farmacias Ahumada central offices in Chile relocated to Santiago’s
downtown district.
In January 2006 FASA completed 100% of the sale of Drogamed, its
Brazilian affiliate.
In over 36 years of operations Farmacias Ahumada have been able to
establish solid competitive advantages that sustain its present leadership
in the pharmaceutical retail industry as the number one Chain in Latin
America. The Company’s size, its know how about the business, the solid
positioning of its trademarks, the privileged location of its pharmacies , its
strategic alliances and the vast services and products it delivers are an
integral part of its business strategy.
41
DEVELOPMENT OF OUR BUSINESS
Fasa´s main objective is to maximize the economic worth of its patrimony
by means of stable growth founded on pharmaceutical retail business that
are rigorously evaluated and administrated. Fulfilling such an objective is
sustained as an investment strategy focused on increasing the Business
Units value as well as the acquisition of new enterprises.
The factors previously mentioned allow FASA to carry out investments that
contribute to profit growth and conduct an appropriate risk assessment on
account of the business in which it participates in.
A key factor in this strategy considers carrying out investments that require
significant experience, management skills and a capacity to be operated
by FASA and its Business Units. These conditions require investments
in some companies where definitive intervention in their management
and operations is needed as well as the power to approve or reject their
investment projects.
GROWTH STRATEGY FOR DRUGSTORES®
The Business Units management is evaluated periodically by means
of established mechanisms for these purposes and in order to receive
additional information about each one of them, to carry out analysis about
them, to consolidate them and lend support to management in decision
making. Investment projects are required to fulfill corporate profitability
standards which have to be adjusted to the risks involved in each operation
and in each country. This active type of participation works for big projects
as well as for the construction for example of a new distribution centre and
small projects such as stores that are opened.
One of our principal objectives is to widely satisfy the needs of our
customers for whom we seek to provide the best alternatives in solving
their welfare and convenience expectations as well as establishing a long
term relationship. The Drugstore® development as a solution is based on
innovation which serves as one of the pillars in our strategy to be different
in the market.
For this purpose it is important as a development factor to fall back on an
exceptional team of professionals who actively interact with the Business
Units and provide advice in evaluating investment projects and who are
permanently attentive to new business opportunities in their respective
business areas within the Latin American market.
42
Our growth strategy has been based on pharmacies such as the Drugstore®
which is supplied with the widest variety of medicines and products related
to health, hygiene and personal care, adding them as solutions and
convenience goods.
The Drugstore® format uses gondolas for self-service, comfortable parking
and extended hours. All these characteristics are geared to facilitating the
purchase experience for our customers, obtaining that their visits to our
pharmacies be prompt, easy and as effective as possible. The profile of this
type of commercial premises is one of a 200 to 450 m2 area which offers
up to 10.000 different items and counts on two cashier lines so that our
customers obtain a better service and an expedited exit from the store.
US$9.802.4 billion. This market is highly atomized, considering that 70%
of invoicing was carried out by independent pharmacies. This market is
characterized by the fact that Mexico allows OTC medicine sales (American
acronym for prescription free medicines) in gondolas and the commercial
business do not need a Chemical Pharmacist present to be able to operate.
As a consequence of this we also have to compete with supermarkets
and other retail operators. In spite of not being mandatory FASA is
incorporating professional pharmacists on a permanent basis in each one
of its pharmacies in Mexico. This strategy will make the difference with our
competitors. Farmacias Benavides had 3.3% participation in Mexico during
the year 2005. The sale of pharmaceutical products represented 53.0% of
sales by Farmacias Benavides in 2005.
PROFILES OF OUR MARKETS
FASA participates in a pharmaceutical market estimated as being close
to US$12.200 billion. An estimated 9, 9% of this market is in Chile, 85,
6% is in Mexico and 4, 5% is in Peru. These three markets differ in their
characteristics as far as concentration, maturity, capacity and regulations.
The Chilean pharmacies market is consolidated, dynamic, and very
competitive and four main competitors have 93% of its share as a result of
the expansion strategy by the chain of pharmacies.
Farmacias Ahumada show the best productivity per each pharmacy when it
is measured according to the percentage of market share over the number
of commercial business points and its sales per commercial business. We
took back expansion at the end of the year 2005 which meant opening 21
pharmacies and represented close to 10% growth over the previous year.
The highest degree of concentration in the industry has resulted in changing
the competitive focus
and going on to a strategy to compete based on price fundamentally.
Nevertheless, the most significant factors related to differentiation are:
quality of services, convenience, available assorted products, pharmacies
format, strategic alliances, technological development and mechanisms to
attain customer’s loyalties.
The Chains of Pharmacies Peru started developing in Peru during 1996
when FASA internationalized and created the “Boticas Fasa” Chain. The
market there is still extremely atomized even though the industry has been
able to develop. There are five principal actors who approximately own 50%
share of the market. Boticas Fasa are the leader with 13.6 % participation
during 2005. The sales of pharmaceutical products represented 77.4% of
sales by Boticas Fasa
COOPERATIVE RELATIONSHIPS WITH OUR SUPPLIERS
In order to generate innovative solutions for our customers we establish
cooperative relationships with our suppliers.
FASA´s policy is to achieve a close relationship with suppliers, collaborating
with them in generating a proposal that is unique and different and which
will allow us to maximize our customer’s welfare and profit making by
shareholders. It is through this process of collaboration that we seek to
plan activities and projects which lead us to maximize sales as a mutual
benefit.
A tool which facilitates this society with our suppliers is portal B2B by which
they can access internet and be able to communicate directly with the
Company to consult on diverse relevant information items and in relation to
the commercial and financial relationship.
Pharmaceutical products in the Mexican market sold in 2005 approximately
43
OUR OWN STRATEGIC TRADEMARKS AND STRATEGIC
TRADEMARKS
In a continuous process to achieve income diversification and margin
generation the Company has validated the offer that combines
Pharmaceutical products with Convenience products offered under a selfservice format.
The increasing evolution of our Own Trademark in more advanced markets
is a response to better informed customers who value and look for
convenience and who have experienced the Own Trademark positively and
trust supporters of the trademark. All this translates itself in customers
willing to try and grant opportunities to alternative trademarks different to
what they are habitually accustomed.
The offer to the consumer is to deliver convenient alternatives as well as a
guaranteed quality by means of products under our Ones Own Trademark,
FASA®. These become validated for the consumer when they constitute “an
intelligent option” supported by our trademark and our quality/price ratio.
This translates into constituting itself in an innovative program for the
development of a Trademark of its own FASA®, and becoming committed
to clients to deliver the best product alternatives in regards to price and
quality. This includes being part of categories such as: Medicines under
OTC conditions for sale (sale free medicaments), Natural Pharmaceutical
Products, Medical Accessories, Self Control Equipment, Care and Personal
Hygiene Products, Consumer Products and General Merchandise.
Such a development program has become extended to all countries where
Fasa is present having taken advantage and succeeded in materializing
exchange opportunities among the countries and by means of having
suppliers in common who guarantee the products qualities.
44
“Quality of products” is considered to be a critical variable for the Ones Own
Trademark’s success and continuity through time. FASA orients material
and professional resources to sustain strict Quality Control procedures by
which products are tested during the productive process and later on when
routine analysis are performed on finalized products. Likewise there is today
a certification process for new suppliers.
On the other hand, under the model “Controlled Trademarks” the Company
has been incorporating exclusive product lines with international prestige
which focus on customer’s loyalties and image generation. These have
evolved as well as a response to the estimated potential demands. Among
these one can find trademarks such as “Sally Hansen”/La Cross (A leading
trademark in the USA for nails and hand care); “ROC” from Johnson &
Johnson (An internationally recognized cosmetic trademark); “Crest” from
Procter & Gamble (A leading trademark in the USA market for personal
hygiene and dental care); “Rimmel” (A leading cosmetic trademark in the
UK) ; “Heno from Pravia “ a Puig product (Internationally known personal
care and personal hygiene trademark; “John Frieda” from Kao (Recognized
leading trademark in the USA for beauty parlors and hair care) ; “Jobst” from
BSN Medical (Leading world trademark that helps in peripheral circulatory
problems) among others.
At a consolidated level Our Own Sales and Controlled Trademarks in sum
represent 6.1% of total sales by FASA, 11% of its sales in Chile, 2.7% in
Mexico and 7.1% in Peru
GNC AS AN EXAMPLE OF DIFFERENTIATION
GNC, the number 1 North American trademark in nutritional supplements
is 70 years into the world market and counts on a complete line of beauty
products and dieting, vitamins & minerals, energy and antioxidants,
prevention and sports nutrition. Presently it can be found in more than 57
countries worldwide.
In Chile, GNC has been distributing through FASA for 6 years. In 2005,
among other achievements, a strong plan for the expansion of selling points
attended by specialists was implemented as well as the first TV campaign
for the trademark. GNC maintains a strong leadership within its category in
the Chilean market.
During 2005 record sales were attained and over 200 different products
were offered.
In Peru during 2005 GNC completed its fifth year of operations attaining
growth sales levels close to 57% in comparison with the previous year. This
was based on incorporating new products and applying excellent publicity
together with promotional tools. At presently GNC counts on 24 sale points
who offer specialized attention.
EXCELLENCE IN PHARMACEUTICAL SERVICES
Chile
During 2005 a total of 195.000 infirmary attentions were provided at 29
infirmaries distributed throughout the country.
It is important to point out the important support provided by the Nursing
Units during the health campaigns which were developed in our pharmacies
during 2005 as for example the vaccination campaign, the month dedicated
to prevention, the hear and diabetes campaigns.
Farmacias Ahumada Chile counts on 137 subsidiaries that provide
Pharmaceutical Attention and where our pharmacists carried out over
75.000 biochemical tests that included control of glycemia cholesterol,
triglycerides and blood pressure.
The Information Center for Medication and Toxicology attended over
190.000 consultations via the telephone or its web page.
Our Master Prescriptions Book elaborated over 500 recipes for the
different medical specialties, the most important of which are nutrition and
dermatology. The strategic objectives of the Master Prescriptions Book are
efficiency, quality, and safety in carrying out preparations. All this allows the
professional acknowledgement of the prescribing physicians who on a daily
basis forward prescriptions to us.
FASA is committed to the health of all its customers and orients its efforts
to deliver excellence in its pharmaceutical services. A part of this is to carry
out strict controls in pharmacies and distribution centers that will ensure
the best running of the operation and fulfilling the health norms in each of
the countries. Furthermore it goes further as it takes on world tendencies
related to regulatory subjects and as it plans actions that the Company has
to accomplish to anticipate changes by this demanding industry.
45
MEXICO
The line of supporting professionalism in pharmacies service delivery
continues during 2005. For the purpose just mentioned Chemical
Pharmacists continue to become integrated into Farmacias Benavides
Network. During 2005, 127 new pharmacists were hired.
In addition the elaboration of recipes continued in agreement with the medical
prescriptions included in the Master Prescriptions Book implemented in the
course of 2004 and which is located in Monterrey City
PERU
Four pharmaceutical attention units, where counsel is provided as to the
correct use of medication as well as follow up with therapeutic medication
for chronic patients, were implemented successfully.
During December the successful closing of the “Second Pharmaceutical
Attention Diploma Program” took place. This being the only one that took
place in Peru. This program was done jointly with the Chemistry Faculty at
the National Mayor University of San Marcos. The program was conducted
exclusively by Boticas Fasa.
During 2005 our Chemical Pharmacists from Arequipa obtained the first
and second place in the contest “Good Pharmacy Practices” organized by
the School of Chemical Pharmacists in that city.
The Fasa Master Prescriptions Book completed 120 thousand total
preparations which resulted in an increase of sales in comparison with the
previous year. In this way Fasa consolidated its leadership in the market ,
supported by the delivery logistics it applies and the variety and quality of
products and services it has developed
THE IMPORTANCE OF OUR TECHNOLOGY
Our vision in respect to information systems has been always one of lining technology up with the business strategy by creating an informational
architecture which allows working the way up and become actualized in the
course of time. This is achieved by integrating the different information systems which are being developed in more advanced markets and improving
the Company’s productivity.
46
World class technological solutions have been developed and are always
being focused on the efficient and correct attention to the customer. These
have been exported from the Chilean operation to the rest of those countries where FASA participates. The pharmacies and their personnel have
been equipped with a diversity of tools in an attempt to attain faster work
and decrease waiting time to upgrade customer care. The entry door to
this is the POS or the point of sale which during 2005 have been brought
together in Chile and Peru, countries that applied the same type of implementation throughout their stores. The POS solution in addition to the Back
office system in the store not only carries out traditional sale activities but
also includes functional actions that generate added value at the time of
purchase. For example it provides information about complementary products, accepts multiple payment mechanisms, checks registry of Master
Book of Prescriptions, gathers donations to charities, etc. All sales are
registered on line and a control is kept of every sale.
Another important focus of the projects developed by the area is one to
improve the chain of supply , this implies automating the whole logistics
process, attaining efficiency, reducing costs and improvements which relate to availability and carries minimum costs.
In line with the aforesaid, during 2005:
•
A new Distribution Center was built in Chile which was
equipped with automated technology. FASA by means of this
implementation attains similar logistic standards to the ones
existing in the best European pharmaceutical distribution
centers. Needless to say these standards are also over an
above the levels in Chile and the rest of Latin America.
•
Mexico and Chile have consolidated a purchase process by
which purchase order generation, dock assignments, date
and time of reception are automated and communicated via
electronic means so as to make it transparent to those using
the system. The purchase is realized totally by means of expert
computer systems.
• The points of sale have also actively incorporated the use
of Radiofrequency for inventory administration. This tool is
used in reception activities for parcel- trays, in selective or
total control on a product by product basis, merchandise’s
reception from suppliers with or without purchase orders,
selective consultation about inventories, price check-ups,
devolution to suppliers, etc. All these activities take place
automatically using no papers. We have achieved by this
means an inventory in line, error free, avoiding stock outs
at points of sale as much as possible and with a minimum
waste. This functionality was developed 100% at home and
fully integrated to Sap’s inventory units.
•
At a corporate level, Headquarters management also was consolidated
during 2005 the Hyperion System which focuses on financial
and commercial planning systems, automates planning, budget
elaborations and reports. On top of this, this is a consolidation tool
which provides a whole business range of vision to all executives.
•
The system’s area started consolidation as a service area for shared
systems, that is, many of the applications started to become developed centrally providing services to all the countries. In addition this
generated substantial costs reductions, eliminated duplicity in tasks
and created process and applications unity in all the countries.
47
COMMITMENTS WITH OUR COLLABORATORS AND WITH
SOCIETY
We are guided by a tradition of trust and honesty and offer career
opportunities to a diverse group of men and women.
TRAINING
•
During 2005 and at a consolidated level, training activities allowed offering
courses to close to 8,000 collaborators.
Chile
During 2005 within an orientation framework towards sales increase and
improved services Farmacias Ahumada Chile trained 4,000 persons with
a total of over 27,000 training hours. In this context courses were realized
to improve and develop diverse attitudinal and technical skills such as
customer’s services, sale techniques and continuous upgrading in the
workplace. All of these had the purpose of achieving a positive service
attitude by salespeople that reflects on a better customer service and
results in an effective impact on sales.
In 2005 training was also part of Project OMEGA FASA 2010 and this took
the shape of motivational talks carried out throughout the country with the
purpose of moving forward and enabling sales and operations process
changes taking place in the course of the year in pharmacies.
The Traditional Formative School for new sales personnel was maintained
and in addition the Leveling School for present personnel was carried out
as a way to support their optimal work performance. The contents of both
training programs were fully aligned with the strategic objectives for 2005.
mEXICO
At the Photography School 33 were certified as photographic monitors
who are in charge of training in their turn 282 photography collaborators
starting the second half of year 2005.
In addition to Schools Training Attendance at a Distance is maintained by
means of didactic videos that cover the following topics: Induction to the
Company, Induction to the Pharmacy; Photo Lab Management, Check
out Counter Management, Gathering Values and The 7 Golden Rules for
Service.
Emphasizing the pharmacist’s work special inductions are organized on a
periodic basis for them where they are trained in Human Resources, Pharmacy
Administration, Pharmaceutical Legislation and others.
Strategic Alliances with Universities and Educational Institutions that can be
specially pointed out are the 8 alliances that were achieved during 2005
with different institutions such as : The Graduate School for Business
Administration (EGADE) at the ITSM and the Technological University in
Hermosillo, among others.
PERU
Finally Boticas FASA in Peru trained 1.300 collaborators, totaling over 38.000
teaching hours. During 2005 attention and service to customers were a priority
and for these purpose the program contemplated Role Plays for Cashier
salespeople and Chemical Pharmacists. In the same way a commercial
and administrative induction took place for new Chemical Pharmacists and
training started in the new Unified FASAPOS System carrying out meetings
at each sale point.
Farmacias Benavides continued with the Service School attending three
priorities: Pharmacy, Photography , and Generics as the most recent one.
•
48
The Pharmacy School is endorsed by the Secretary of Health, an
institution that has trained 48 pharmacy monitors. On their turn these
have dedicated themselves to train 1,614 collaborators, principally
from amongst the Pharmacy Managers, the Assistant Managers
and salespeople from the subsidiaries. This School is ongoing since
2004.
During 2005 several management, leadership and human development
seminaries took place searching to promote a type of holistic development
in our collaborators.
In addition a Performance evaluation Administration System (SADE) was
established. This system allows examining and measuring attitudes,
strengths and weaknesses in employees and it serves as a tool to improve
task performances.
SOCIAL RESPONSIBILITY
PERU
CHILE
In Peru Boticas Fasa participated during the second half of the year in a
donation campaign called “Hearts in Solidarity ” which concluded with a big
gala dinner attended by numerous artists and celebrities in Peru.
During 2005 Farmacias Ahumada Chile reaffirmed its social responsibility
by having a greater commitment with Las Rosas Foundation and its 2400
granddads and grannies coming from lower incomes that are lodged in 41
homes. In this way FASA has been 6 years involved with this noble work.
The amount gathered, close to $500 million, increased around 75% in
comparison with the previous year and reached its annual goal during the
month of August and it increased its gatherings from the previous year in
the month of July. Our collaborators have also become part of this effort
visiting different homes in the country asides from providing support in a
continuous way to the home which FASA is sponsoring in Santiago.
Similarly, we collaborated in the collection of revenues from sales in the
social campaign “Let us Cure with a Smile” organized by the Patch Adams
foundation.
During December we supported the Clinic San Juan de Dios by placing piggy
banks in all sales points to receive donations towards the benefit of that
institution. In addition in collaboration Johnson & Johnson the laboratory,
we participated in the caravan for health organized by the Telethon 2005.
In addition, during 2005 the Foundation Child and Cancer was supported
by means of gathering mobile phones that are no longer in use at the
Farmacias Ahumada.
MEXICO
In Mexico, throughout its subsidiaries Farmacias Benavides carried out a
program by which people donated their change to the association United
We Will Succeed who assists the social integration of young disabled
people. This campaign attained a result of almost a million Mexican pesos
that will be going towards the program Multiplication.. Farmacias Benavides
contribution increased the operations budget up to 35% allowing the
organization to grow in different Mexican States.
In Fasa we take social responsibility to be an ethical obligation by the
Company.
49
INVESTMENTS AND FINANCING
INVESTMENTS
Ch$400 million in these to take them up to par with Farmacias Benavides
image.
INVESTMENT POLICIES
FASA will continue its investment program in order to fulfill its expansion
plans. For this purpose the Society’s Administration has enough authority
to carry out investments in the business on the basis of the expansion plans
approved by the Board of Directors. These ought to be on profitable projects
which agree with technical and economical criteria.
PRINCIPAL INVESTMENTS CARRIED OUT
(Figures provided are in Chilean pesos)
Finally, in Peru investments were done for close to over $800 million for
opening 17 pharmacies, renovation of existing subsidiaries, modernization
and enlargement of the Distribution Center and in diverse technological
projects. Within the technological projects the implementation of Unified
FASAPOS can be singles out
FINANCING
FINANCING POLICIES
At a consolidated level operational gross investments ( without disinvestments considered) reached a sum over Ch$18,500 million, 55% of which
were destined to Chile , 41% to Mexico and 4% in Peru.
FASA Chile carried out gross investments close to Ch$10,200 million
of which Ch$6,000 million were for the new distribution center while
Ch$1,900 million were was destined for opening 26 new sale points and
Ch$350 million were for enlarging stores. On top Ch$900 million were
for changes at headquarters and Ch$220million were for diverse projects
related to systems.
In Mexico gross investments were carried out for close to Ch$7,600 million
mainly for opening new pharmacies, renovating subsidiaries and diverse
technological projects. During 2005 we can point out to investments in
opening 14 new pharmacies that originated from Farmacias El Fenix and
were the result of 50% of our disinvestments from that chain. We invested
50
Financing policies by FASA has privileged maintaining low indebtedness
levels. For this the Company has generated resources on account of its own
funds that either come from operational flows or from capital increases. It is
the Board intention to maintain this policy in the long term.
DEBT OUTLINE.
Bonds emitted in Chile.
At present the Farmacias Ahumada S. A. maintains two types of bonds in
Chile which were placed November 26th, 2004.
• Series C type Bonds under Number 391 of the 25th of October,
2004 registered in the Registry for Values at the Superintendence
for Values and Insurances for an amount of 1,4 million UF at a
nominal rate of interest of 3.5% annually, on a ten year basis with
six months grace which can be totally or partially prepaid in the
course of any working day starting August 28th, 2006.
• Series D type Bonds under Number 390 of the 25th of October, 2004
registered in the Registry for Values at the Superintendence for
Values and Insurances for an amount of 0.8 million UF at a nominal
rate of interest of 4.75% annual, with two years grace, which can be
totally or partially prepaid in the course of any working day starting
August 28th, 2006.
Our fundamental objectives are: our customers, shareholders and our collaborators satisfaction.
Both series from the present emission were classified as category A- the
Risk Classifier Fitch Chile Ltd. Another Risk Classifier, Humphreys Ltd.
placed them in category A.
FASA ought to maintain a debt level, which measured on the basis of
figures from its consolidated and individual quarter balances, should not
be higher than one. In addition to the financial clauses it is established that
the emitting agent cannot get rid of essential assets such as Farmacias
Ahumada and FASA.
The emission was placed in the Santiago’s Stock Exchange at an average
rate of 4.09% equivalent to 155 base spread points for series C. Meanwhile,
series D was placed at a rate of 5, 09% equivalent to 187 base spread
points compared to equivalent bonds from the Central Bank. Both Series
were amply over demanded, situation which generated historical spreads
for the Company. The market’s broad interest was reflected in the diversity
of investors who were part of the transaction, among which there were
AFPs (Pension Funds), Insurance Companies, Mutual Funds, Banks,
Stockbrokers, Financial Administrators and natural persons.
BONDS IN MEXICO EMMITTED BY FARMACIAS BENAVIDES S.A. DE C.V
On May 27th, 1997 an emission of responsibilities took place. This emission
was called “Emission of Obligations Convertible to an Option by the
Shareholder “B”Series from Farmacias Benavides S.A. de C.V.”(BENAVIDES
97U) and 2,250,000 nominative obligations were emitted under it with a
nominal value of 100 UDIS each, evaluated as a consequence in a total of
225,000,000 UDIS with a total value of approximately Ch$39,441 million
(UDIS: Investment Units, it is a unity account created to name financial
operations whose value is determined on a daily basis according to the
monthly inflation ratio). Even though that was the original emission the
present value of this liability is $15,716 million.
According to Public Deed dated September 3rd, 2002, modifications were
done to the respective certificate of emission in which it was agreed that
the emission’s amortization would take place in three equal installments in
the following dates: June 5th,2007, August 28th, 2008 and September 4th,
2009, and the rate of interest would be 6% measured in UDIS.
These obligations were restructured in 2002 when FASA became Farmacias
Benavides property.
51
RISK FACTORS
The principal sources of risk for the Company are:
Risk by the increase of alternative channels of competition
The incorporation of alternative channels in the distribution of
pharmaceutical products, such as supermarkets for example, could result
in a decrease in the market participation or/and on a greater pressure
over the commercialization margins. Nevertheless, the Drugstore format
mitigates such an impact.
The Institutional Clients increasing importance in the health industry
considered as a risk factor.
The efforts by insurance Companies, Health Insurance Companies (Isapres)
and other Institutional Clients to control health costs could result in these
entities acquiring greater importance in purchasing decisions related to
medicines that stem from their beneficiaries. This would imply that they
exercise greater pressures over the commercialization margins or establishing
direct agreements with laboratories. To anticipate these tendencies FASA
created its subsidiary ABF, Pharmaceutical Benefits Administrator which
is oriented precisely towards attending the requirements of Institutional
Clients.
Internationalization and Growth being considered a risk
The Company has developed an international expansion program covering
Mexico and Peru, as well as in the future it might consider other Latin
American countries. The result of this process depends to great degree on
the Company’s capacity to administer and to be able to adapt its business
models to the specific business conditions in those markets it decides to
enter.
Political, regulatory and economic country risks.
An adverse change in the political, regulatory and economic conditions in
the countries could negatively impact the Company’s results even though it
is present in those countries qualified as Investment Grade.
52
RISK CLASSIFICATION
Farmacias Ahumada Corporation risk classifications as of December 31st,
2005 are:
Shares Bonds
Humphreys
First class, level 2
A
Fitch
First class, level 3
ASUMMARY OF ACTIVITIES BY THE COMPANY
Clients
Farmacias Ahumada clients added 154 million persons who sought service
at the pharmacies in Chile, Mexico and Peru on a daily basis. Additionally,
its portfolio of clients is made up of Institutional Clients such as Insurance
Companies and enterprises that through ABF in Chile provide medication
benefits to its employees and affiliated members.
Contracts
The majority of the contracts presently maintained effective by the Company
are those that relate to leases for points of sale to install pharmacies.
Suppliers
The Company maintains relationships with all the laboratories who produce
medicines in those countries where it operates and also with other national
and international suppliers to acquire products to sell.
Insurances
The Insurance program established by Farmacias Ahumada and its
affiliates contemplates the most varied type of risk coverage, including
among those, insurance to cover stocks on hand, fire, value remittances,
civil responsibilities, equipment and damage owed to stoppage.
SIMPLIFIED SOCIETAL STRUCTURE
100,00%
LAB. FASA S.A.
100%
FASA CHILE
(FASA Corp. S.A.)
100,00%
DLI S.A.
100,00%
CNG S.A.
100,00%
ABF S.A.
100,00%
INMOBILIARIA FASA S.A.
FARMACIAS AHUMADA S.A.
100,00%
FASA INVESTMENT LTDA.
68,17%
FARMACIAS BENAVIDES
100,00%
BOTICAS FASA
Note 1:The structure presented is a simplified scheme of the societal network. Exposed participation percentages are the totals for Fasa in each one of the societies, not the direct one among them.
53
When in need
of most support
When in need of most support
TOGETHER, FOR LIFE
[Gerardo González Rodríguez, 65 years old, Patrimonial Advisor.
Maricela Villareal de González, 60 years old, Interior Designer | Mexico]
INFORMATION ABOUT SUBSIDIARIES
CHILE/ FARMACIAS AHUMADA
All figures are in nominal Chilean pesos and according to local accounting principles.
Farmacias Ahumada who is established from Arica to Punta Arenas, reached sales during 2005 for a total of Ch$ 227,457 million pesos with 25.9%
participation in the pharmaceutical private market according to figures by the IMS (Medical Institute of Health).
The principal figures for the year 2005 about operations in Chile, including subsidiaries, are shown in the next table:
2005
Sales (Ch$ million)
Growth in sales
Number of Pharmacies
New openings in the period
Closings in the period
Salesrooms (square meters)
Number of cities covered
Customers serviced (millions) Farmacias Ahumada S.A. principal business is the commercialization
of pharmaceutical products by means of its network of pharmacies. In
addition it commercializes natural products, nutritional supplements, beauty
products, hygiene and personal care and articles of convenience.
Up to December 2005 FASA Chile operated 250 points of sale in 50 cities
with a national coverage the length of Chile and totaling 41,539 square
meters of sale space. In this way it managed to provide services to over
43 million customers while concentrating itself in the central regions of the
country. During 2005, 26 new pharmacies were opened, the majority of
them during the last quarter, and during that time 5 stores were closed.
56
227,457
-5,7%
250
26
5
41,539
52
43,6
Sales generated amounted to Ch$227,457 million pesos, which showed
a decrease of 5.7% in respect to 2004. Nevertheless, as a result of the
restructuring efforts over the last months there was a tendency for an
increase in prices in comparable stores. EBITDA –results, previous to
interests, taxes, depreciation and amortization – came up to 1,3% of
sales.
ACTIVITIES AND PROJECTS
As a part of the expansion plan by the Company, investments were done for
close to Ch$10,200 million pesos which were principally directed towards
opening and renovating pharmacies, and to the implementation of the new
Distribution Center and diverse technological projects. In respect to opening
new pharmacies in the course of the year, 2005 set a change in strategy
when opening 26 new pharmacies.
In April Farmacias Ahumada central offices moved to new accommodations
at the modern Centenary Tower, located at the corner of Miraflores and
Merced, in downtown Santiago, Chile. The new building accommodates
FASA´s administration department throughout four floors, helping to improve
the installations in a substantial way as well as team work.
related to efficient replacing at the Distribution Center and strongly impacts
on service levels to pharmacies and inventory levels at the Distribution
Center.
During 2005 Farmacias Ahumada lent impulse to the OMEGA project. Its
objective is to improve efficiency in all operations inside the pharmacies and
to provide the tools needed so that our collaborators offer the best service
to each of our customers who go to our pharmacies on a daily basis.
Omega’s most important objective is to create a new style of work which
optimizes the Merchandise Replacement process, the Customer attention
Protocols, and improves the Visual and Products mix within the stores.
The new Distribution Center started operations in May, 2005, and is located
at kilometer 16 of Route 68. The Center counts on an automated picking
system and very efficient maneuver areas for our suppliers which include
up to date systems to replace inventories. The system resolves the problem
57
A transcendental change in Farmacias Ahumada Chile communication and
marketing took place during 2005 attending to the existing competitive
environment. Upon complete innovation of the types of communication in
the industry a face was incorporated to the communication which generated
closer proximity and credibility for the public at large.
The communicational strategy’s changes generated a positive impact on
sales starting the last quarter and also contributed to higher brands ratios.
Upon year end the Company employed 3,146 persons, 2,710 of which work
in Pharmacies.
Andrea Molina who is Farmacias Ahumada´s face for the year 2005, is a
distinguished Television conductor in Chile who has enormous empathy,
credibility and closeness with the public. These are key values for Farmacias
Ahumada strategy.
SENIOR MANAGEMENT
Name
Position
Number
Nationality
Sergio Purcell R.
General Manager Business Administrator
7.033.767-3
Marcelo Weisselberger A.
*Finance Director Business Administrator 10.032.623-K
Chilean
Rodrigo San Martín S.
Pharma Division Manager Business Administrator 10.273.278-2
Chilean
Cristián Troncoso J.
Convenience Products Division Manager Execution Engineer
Pablo Ayala M.
Marketing Manager Civil Industrial Engineer
Chilean
Marcelo Salinas P.
Development Real Estate Manager Williams Muñoz V.
Operation Manager Rodrigo Picas O.
6.974.142-8
Chilean
12.160.004-8
Chilean
Chilean
Pharmacist
8.967.866-8 Chilean
* Systems Director Civil Industrial Engineer
7.981.229-3
Chilean
Patricio Lira K.
*Logistics Director Civil Industrial Engineer 8.494.420-3
Chilean
Cecilia Cobos Z.
*Human Resources Manager Business Administrator 6.867.267-8
Chilean
Inger Dahl B.
Lawyer Lawyer 10.354.886- 1
Chilean
*Additionally they fulfill regional (corporate) responsibilities over Mexico and Peru.
58
Profession
Omega Project’s fundamental objective is to attain efficiency in all our operations
Inside the pharmacies and in this way provide the best service to each of our
customers.
59
MEXICO /FARMACIAS BENAVIDES
All figures are in Mexican nominal pesos and according to local accounting principles.
Farmacias Benavides, present in 17 states and 110 cities in the north and in the west of Mexico, it is the number one chain of pharmacies in Mexico as
far as the number of stores. In 2005 it has total sales for Mx$6,223.6 million pesos and has 3.3% share in the pharmaceutical private market according
to figures for 2005 by the IMS.
The principal figures for 2005 are shown in the next table:
2005
Ventas (miles $)
6,223,620
Growth in sales
11,6%
Number of Pharmacies
529
Openings in the period
44
21
124,187
110
Customers attended (millions) The pharmaceutical market in Mexico showed a growth of 11.9%, in
comparison to 2004, with respect to sale prices for the public. This generated
sales for US$9,802.4 million, yet in terms of units the pharmaceutical
market only grew by 2.1%.
Up to December 2005, Farmacias Benavides operated 529 points of sale
in 110 cities and in 124.2 thousand square meters of sale rooms. Thus
93.7 million customers were attended. The Regions where Benavides’
Pharmacies operate are in the north and western part of Mexico and
represent 38.8% of the pharmaceutical market in the country. During
2005, 44 new pharmacies were opened (this included the acquisition of 26
pharmacies from Farmacias El Fenix) and 21 pharmacies closed.
Sales which were generated summed up to $6,223.6 million Mexican pesos
and showed 14.1% growth in comparable stores compared to 2004. This
originated in logistics improvements as well as in the product mix and the
country’s internal consumption climate. EBITDA-´s results before interests,
taxes, depreciation and amortization reached $275.5 million pesos (4.1% of
sales) that compared to $189.8 million in 2004 represent 35.7% growth.
60
93.7
As part of the expansion plan by the company investments was done
amounting to Mx$ 158.1 million directed to mainly opening new pharmacies,
for renovations to the existing ones, and to diverse technological and
commercial projects in the pharmacies.
The principal activity for the year was opening 14 pharmacies in Monterrey,
Tampico, Torreon, Ryenosa and Guadalajara cities which marked the
beginnings of the expansion program by the Company after over 4 years
without opening new branches. Towards this effort Mx$94.6 million pesos
were spent. In addition 26 new pharmacies were incorporated as a result
of disinvesting 50% from Farmacias El Fenix that with an investment of
Mx$7.9 million were upgraded up to par with Farmacias Benavides image.
Their layout was corrected and equipments were modernized for the points
of sale which would allow greater efficiency and precision in sale controls.
In addition, 24 hour services offer was expanded to include 71 subsidiaries
in 2005, out of 38 in 2004. By these means we continue to work for the
improvement of the purchasing experience and of our customer’s loyalty.
The commercial efforts by Farmacias Benavides during 2005 was directed
principally towards positioning the Pharmacies category, by implementing
a strategy to reposition price images focused on the most important
chronic characteristics in the market. Own Brand products continued to be
developed and new products were incorporated to these in the pharmacy’s
areas (first aid and free sale medicines), care and personal hygiene,
consumption and photography.
In respect to the Distribution Centre opened at the end of 2003, over 100
suppliers managed to become incorporated in 2005 which pointed to an
even greater challenge related to control and optimization at the time of
reception and of shipping as well. Regardless, the improvement in quality
of service at the Distribution Center allowed pharmacies to reduce
inventory days in the Company substantially and at the same time a greater
availability of products in the pharmacies was guaranteed. This succeeded
in increasing 27% to 38%. the level of participation by the Distribution
Center in supplying pharmacies.
Likewise the logistics System JDA-E3 was consolidated during 2005 for
assisting the replacement process by suppliers. This allowed increasing
services level by suppliers in over 9 points without increasing the Distribution
Center’s inventories. As a result the productivity of the inventory replacement
processes was increased while that which was not needed was reduced
and optimum stock levels were secured to face expected demand.
Upon the year end the Company employed 5,569 persons, 4,973 of which
work at the pharmacies.
SENIOR MANAGEMENT
Name
Position
Profession
Number
Foreigner
Nationality
Nationality
Walter Westphal Urrieta
General Director Industrial Engineer Jaime Poblete Stambuk
Finance Director Civil Indistrial Engineer 8.285.435-5
Mexican
Chilean
Alberto Herane Herane
Commercial Director Business Administrator 6.374.695-9
Chilean
José Ramiro Garza Elizondo
Director Operations Industrial Administrator Engineer Foreigner Mexican
Mario Perales Juárez
Legal Director Doctor in Law Foreigner Mexican
Fernando Benavides Sauceda
Real State Director Agricultural Engineer MBA Foreigner Mexican
61
PERU / BOTICAS FASA
All the figures are in new Peruvian nominal soles and according to local accounting principles.
Boticas Fasa is the leading chain of Pharmacies in Peru whose sales amount to S/. 281 million, it shows 28.0% growth compared to the previous year
and has attained a market share at national level of 13.6%. Up to December 2005 it counts with 130 pharmacies and with 10,494 square meters of sale
room space. It attended over 16,7 million customers.
The principal figures for the year 2005 are shown in the following table:
2005
Total sales
Growth in sales
28.0%
Number of pharmacies
130
Openings in the period
17
Customers serviced (millions)
The pharmaceutical market in Peru at sale prices to the public showed an
increase in respect to the year 2004 and generated sales for S/1,345.2
millions. In terms of units the pharmaceutical market grew 7.3% with
approximately 72,4 million units annually.
Up to December, FASA Peru operated 130 points of sale in 18 cities with a
total sale room space of 10,494 square meters. FASA managed to attend
16,7 million customers while it concentrated in Lima where 65.0% of the
pharmaceutical market is found. During 2005 17 new pharmacies were
opened and 4 were closed.
62
281,443,715
4
10,494
18
16.7
With the objective in mind of increasing coverage Boticas Fasamaintains
some strategic alliances with leading companies in the retail market such as
the Chain of Peruvian Supermarkets
where 8 drugstores operate at the Santa Isabel stores and 10 at Plaza Vea.
In addition, it operates with 9 drugstores at the Shell gas service stations,
4 at Blockbuster videos and last at the Falabella group where it operates 4
drugstores, one of them in Arequipa city and the others at Tottus Hypermarkets in Independencia, San Isidro and San Miguel.
Total sales by Boticas FASA amounted to S/ 281 million showing 16.2%
increase compared to 2004, increase which originated in sales growth at
provincial stores and also due to a maturity process achieved by the Lima
stores.
The Operational Utility was 1.92% of sales which compared to 1.68% in
2004 represent a growth close to 47%.
Boticas FASA principal business is commercializing pharmaceutical products through its drugstores network. In addition, it commercializes natural products, nutritional supplements, beauty products, hygiene, personal
care and convenience items. During 2005, 77.4% of sales corresponded
to medicines, reaching S/214.8 million which represented 22.6% growth
compared to the previous year.
ments and card reconciliations asides from permitting better controls at
the points of sale and provide our personnel with greater facilities for our
customer’s attention.
With the objective of increasing the number of clients, publicity campaigns
were carried out in 2005 by means of the media, television and radio as
well. In the same way a series of promotions
were implemented in provincial stores by participating in parades and publicity campaigns.
With the objective of providing a better service to its customers during
2005, Boticas FASA started the project to enlarge its stores asides from
offering a wider variety of products and providing an integral solution to the
customer in the area of health and beauty.
Upon year end the Company employs 1,402 persons, 1,140 of which works
in the Pharmacies.
As part of the expansion plan by the company, investments were done close
to S/5,3 million, principally directed towards opening and renovating pharmacies, enlarging and modernizing the Distribution Center by increasing
its area to 2,800 square meters. In the same way diverse technological
projects were elaborated among which Unified FASAPOS can be singled
out and which will permit a better control for gathering valuables, docu-
SENIOR MANAGEMENT
Name
Position
Profession
Number
Nationality
Ricardo Palominos R.
General Manager Medical Technologist 6.513.025-4
Chilean
Maryse Verano R.
Operations Manager Business Administrator Foreigner
Peruvian
Luis Díaz U.
Consumer Manager Business Administrator 8.518.061-4
Chilena
Administration and Finance Manager Magister in Finances
Foreigner
Peruvian
Pharma Manager Business Administrator Foreigner
Peruvian
Daniel Romero S.
Nombre
Nicola Riva M.
BRASIL / DROGAMED
On march 26th of January, 2006 FASA materialized 100% of Drogamed´s sale. This generated a negative impact amounting to $4,477 million in Non
Operational Results, and it has been reflected in its entirety at the close of the Financial States on December 31st, 2005.
63
DECLARATION OF RESPONSIBILITIES
Farmacias Ahumada S.A. Directors and its Executive Vice-President, signers of this declaration take responsibility under oath of the veracity of all the
information provided in the present Annual Report, in this way fulfilling the norm Number 30 in its general character which has been emitted by the Values
and Insurances Superintendent’s Office.
64
Number
Position
Name
President
4.255.530-4
Eduardo Bellinghausen Pizarro
Vice-president
3.515.184-2
Juan Benavides Feliú
Director
5.633.221-9
Ethel Codner Dujovne
Substitute Director 6.377.788-9
Juan Cúneo Solari Director
3.066.418-3
Alexander Fernández Montenegro Director
9.604.686-3
Pablo Lamarca Claro
Director
5.319.489-3
Jaime Sinay Assael
Director
6.377.768-4
Mario Valdivia Bernstein
Director
6.987.378-2
Alejandro Rosemblatt Kiblisky
Executive Vice-president
7.770.224-5
Signature
Firma
IDENTIFICATION OF OTHER AFFILIATED AND RELATED COMPANIES
Name: ABF, Administradora de Beneficios Farmacéuticos
Type of Entity: Closed Limited Liability Company (Chilean).
Tax Role (RUT): 96.863.980-3
Address: Miraflores 383, 6 Floor, Santiago, Chile.
Telephone - Fax: 631.30.40 - 222.22.58
Subscribed and Paid Up Capital up to 31.12.05: ThCh$$1,644,829
% of Direct and Indirect Participation up to 31.12.05: 100%
% represented by Direct and indirect Investment over the Matrix’s Assets (FASA S.A.): 1.18%
Social Objective: The organization, administration and development of health systems, particularly systems related to intermediation, commercialization, distribution and consumption of medicines.
Board President: Alejandro Rosemblatt Kiblisky
Board of Directors: Alejandro Rosemblatt Kiblisky, Marcelo Weisselberger Araujo, Bernardo Ben-Dov Codner, Sergio Purcell Robinson y Sergio Mesías Vidal.
General Manager: Sergio Purcell Robinson.
Name: Laboratorios FASA S.A.
Tax Role (RUT): 79.663.290-9
Address: Miraflores 383, 6 Floor, Santiago, Chile.
Telephone - Fax: 631.36.37 - 665.32.24
Subscribed and Paid Up Capital up to 31.12.05:ThCh$569,765
Social Objective: The manufacturing, purchase, sale, distribution, and in general the commercialization of pharmaceutical products, cosmetics and dressing table products, on
one’s one or through third parties.
Board of Directors: Alejandro Rosemblatt Kiblisky, Marcelo Weisselberger Araujo y Sergio Purcell Robinson.
General Manager: Cristián Troncoso Jorquiera.
Name: Compañía de Nutrición General
Tax Role (RUT): 96.792.260-9
Address: Miraflores 383, 6th Floor, Santiago, Chile.
Telephone - Fax: 631.34.00
Subscribed and Paid Up Capital up to 31.12.05:ThCh$1,009,757
% represented by Direct and indirect Investment over the Matrix’s Assets (FASA S.A): 0.35%
Social Objective: The manufacturing, elaboration, imports, exports, purchases, sale, distribution, and in general commercialization in any form of all kinds of pharmaceutical
products, dietetic products, nutrition, homeopathic and organic products.
Board of Directors: Alejandro Rosemblatt Kiblisky, Marcelo Weisselberger Araujo, Bernardo Ben-Dov Codner, Sergio Purcell Robinson y Cristián Troncoso Jorquiera.
General Manager: Cristián Troncoso Jorquiera.
65
Name: Distribuidora y Logística Integral S.A.
Tax Role (RUT): 96.860.090-7
Address:
Avenida Los Vientos 19.867, Ciudad de Los Valles, Pudahuel, Santiago, Chile.
Telephone - Fax: 631.33.78 – 631.33.52
Subscribed and Paid Up Capital up to 31.12.05: ThCh$288,435
Social Objective: Manufacture, purchase, distribution in general, commercialization of pharmaceutical products,
and cosmetics of our own or from third parties.
Board of Directors: Alejandro Rosemblatt Kiblisky, Marcelo Weisselberger Araujo y Sergio Purcell Robinson.
General Manager: Patricio Lira Kappes.
Name: Inmobiliaria Fasa S.A.
Tax Role (RUT: 99.562.480-K.
Telephone - Fax: 631-3040 / 631-3410
Subscribed and Paid Up Capital up to 31.12.05:THCh$1,067
% represented by Direct and indirect Investment over the Matrix’s Assets (FASA S.A: 0.36%
Social Objective: Acquisition, purchase, sale, exchange, real state construction and in general development of all class of real state projects. In addition, administration,
commercialization, exploitation and leasing or not of furnished real state and providing all class of services in real state architectural matters, design, interior designing, and
other matters related to construction including real state brokerage.
Board of Directors: Alejandro Rosemblatt Kiblisky, Marcelo Weisselberger Araujo y Bernardo Ben-Dov Codner
General Manager: Sergio Purcell Robinson.
Name: FasaCorp S.A.
Tax Role (RUT): 96.809.530-7
Telephone - Fax: 631.30.40 - 222.22.58
Subscribed and Paid Up Capital up to 31.12.05: ThCh$1,851,451
Social Objective: To Buy and sell all types of furniture; carry out all types of investments, local and foreign.
Board of Directors: Alejandro Rosemblatt Kiblisky, Bernardo Ben-Dov Codner y Marcelo Weisselberger Araujo.
General Manager: Marcelo Weisselberger Araujo.
66
Name: Fasa Investments Limitada.
Type of Entity: Private Corporation (Chilean).
Tax Role (RUT: 96.969.830-7
Address: Miraflores 383, 6th Floor, Santiago, Chile
Telephone - Fax: 631.30.40 - 222.22.58
Subscribed and Paid Up Capital up to 31.12.05: ThCh$ 4,232,088
Social Objective: To carry out all kinds of investments in real estate, tangible or intangible goods at national and international levels.
Board of Directors: Alejandro Rosemblatt Kiblisky, Bernardo Ben-Dov Codner y Marcelo Weisselberger Araujo
General Manager: Alejandro Rosemblatt Kiblisky.
Name: Inversiones Internacionales Inverfar S.A
Type of Entity: Closed Corporation (Chilean).
Tax Role (RUT): 99.506.180-5
Address: Miraflores 383, 6th Floor, Santiago, Chile
Telephone - Fax: 631.36.50 – 661.94.10
Subscribed and Paid Up Capital up to 31.12.05:THCh$ 5,031,009
Social Objective: To carry out all kinds of investments in real estate, tangible or intangible goods at national and international levels.
Board of Directors: Alejandro Rosemblatt Kiblisky, Bernardo Ben-Dov Codner, Marcelo Weisselberger Araujo y Sergio Mesías Vidal.
General Manager: Marcelo Weisselberger Araujo..
Name :Farmacias Benavides S.A. de C.V.
Type of Entity: Limited Liability Company with Variable Capital (Mexican).
Address: Avenida Fundadores 935, Colonia Valle del Mirador, Monterrey, Nuevo León, Mexico C.P. 64750
Subscribed and Paid Up Capital up to 31.12.05:ThCh$698,370,490 Mexican pesos
% of Direct and Indirect Participation up to 31.12.05: 67.93%
% represented by Direct and indirect Investment over the Matrix’s Assets (FASA S.A): 47. 37%
Social Objective: The acquisition and commercial exploitation of medicines and pharmacies.
Board President: Jaime Benavides Pompa.
Board of Directors: Jaime Benavides Pompa, José Codner Chijner, Juan Cuneo Solari, Alexander Fernández Montenegro, Alejandro Rosemblatt Kiblisky,
Jaime Sinay Assael, Hector Benavides Sauceda, Sergio Autrey Maza, Enrique Meyer Guzmán, Jorge A. Fernández Guajardo.
General Manager: Walter Westphal Urrieta
Name: Benavides de Reynosa S.A de C.V.
Type of Entity: Limited Liability Company with Variable Capital (Mexican).
Subscribed and Paid Up Capital up to 31.12.05:Th Ch$ 21,026,402
% de Participación Directa e Indirecta al 31.12.05: 67.93%
Social Objective: Importing and exporting all types of products, foreign and national.
Board of Directors: Alejandro Rosemblatt Kiblisky, Walter Westphal Urrieta.
Nombre: Servicios Operacionales Benavides, S.A. de C.V.
67
Name:Servicios Operacionales Benavides, S.A. de C.V.
Type of Entity: Limited Liability Company with Variable Capital (Mexican)
Telephone: (52) 8150-7700
Subscribed and Paid Up Capital up to 31.12.05: ThCh$ 50,000
Social Objective: The acquisition, sale, use, production, storage, exploitation, distribution, commission, consignment and representation of all class of commercial items,
especially those related to medicines, pharmacy , perfumes, etc
Name: Servicios Logisticos Benavides S.A.de C.V.
Type of Entity: Limited Liability Company with Variable Capital (Mexican)
Telephone: (52) 8150-7700
Subscribed and Paid Up Capital up to 31.12.05:ThCh$ 50,000
Social Objective: The acquisition, sale, use, production, storage, exploitation, distribution, commission, consignment and representation of all class of commercial items,
especially those related to medicines, pharmacy , perfumes, etc.
Name: Boticas Fasa S.A.
Type of Entity: Corporation (Peruvian).
Address: Av. Canadá 1125, La Victoria, Lima, Peru.
Subscribed and Paid Up Capital up to 31.12.05: ThCh$ 6,712,008
% represented by Direct and indirect Investment over the Matrix’s Assets (FASA S.A..): 3.75%
Social Objective: Commercialization, distribution, importing, exporting, purchase and sale of all kinds of products, among these pharmaceuticals, medicinal, veterinarian,
hygienic, perfumes, and/or beauty.
Borrad Directors: Emilio Rodríguez Larrain, Alexander Fernández Montenegro, Alejandro Rosemblatt Kiblisky, Sergio Mesías Vidal.
General Manager: Ricardo Palominos Ramos.
Name: Droguería La Victoria S.A.C.
Type of Entity: Corporation (Peruvian).
Address: Av. Canadá 1125, La Victoria, Lima, Peru.
Subscribed and Paid Up Capital up to 31.12.05: Th Ch$$ 135,813
Direct and Indirect Participation up to 31.12.05: 100%
Social Objective: Importing, distribution of medicine, cosmetics, and in general pharmaceutical , medicinal, veterinarian, hygienic,
perfumes and/or beauty products.
General Manager: Ruth Patricia Medina Aguilar.
68
Name: Farmacias Ahumada Internacional S.A.
Type of Entity: Closed Corporation.(Uruguayan)
Subscribed and Paid Up Capital up to 31.12.05:TH Ch$ 12,813
Social Objective: investment in deeds, bonds, shares, schedules,, debentures, bills of exchange, analogous documents; imports, exports, commissions, representations,
financial operations.
Board of Directors: Alejandro Rosemblatt Kiblisky, Bernardo Ben-Dov Codner y Marcelo Weisselberger Araujo.
Name: Nutritional Labs. Inc.
Type of Entity: Corporation. (Florida, United States of America)
Address: 7976 NW 14 Street Miami, Florida.
Telephone - Fax: 1-786-2654817
Subscribed and Paid Up Capital up to 31.12.05: ThCh$513
Social Objective: Wholesale commercializing and distributing of all kinas of goods.
Note: .Following Gentleman: José Codner Ch., Juan Cúneo S. Eduardo Bellinghausen O., Jaime Sinay A. y Mario Valdivia B., exercize their responsibilities as Directors at Farmacias Ahumada
S.A. headquarters . On the other hand Alejandro Rosemblatt K., Marcelo Weisselberger A., Bernardo Ben-Dov C., Sergio Purcell Robinson y Sergio Mesías Vidal,work at Farmacias Ahumada S.A.
headquarters in their respective positions as Executive Vice-President, Finances Corporate Director, Business Corporate Director, General Manager and Corporate and Corporate Counsel.
69
........
........
........
........
........
........
........
70
CONSOLIDATED FINANCIAL STATEMENTS
98.547.6
9547.620.00000008131.482.7926.41
47.620.029
1.317.9547.620.02911.336.8131.
++++ -----82.7926.419
.........................
......................... ................................
................................
......................... ................................
..............
.....................
.........................
................................
.........................
......................... ................................
................................
..............
.....................
................................
................................
................................
.....................
................................
................................
................................
.....................
1.317.9547.620.02911.336.8131.482.7
CONSOLIDATED FINANCIAL STATEMENTS FASA ANNUAL REPORT / 2005
71
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31ST , 2005 AND 2004.
(In thousands Chilean pesos )
2005
Th.Ch$
2004
Th.Ch$
ASSETS
CURRENT:
Cash
Time deposits
Marketable securities (net)
Accounts receivables (net) Notes receivables (net)
Sundry debtors (net)
Notes and accounts receivable from related companies
Inventories (net)
Recoverable taxes
Prepaid expenses
Deferred taxes
Other current assets
Total Current Assets
8.199.449
15.063.942
1.940.099
15.678.240
140.452
1.435.790
1.713.442
85.569.116
7.645.815
915.097
746.120
1.121.461
140.169.023
8.356.966
12.597.272
3.319.278
15.796.021
175.665
1.649.667
3.904.549
85.381.598
7.362.370
894.892
970.981
140.409.259
FIXED:
Land
Buildings and infrastructure
Machinery and equipments
Other fixed assets
Accumulated depreciation
Total Fixed Assets
6.268.048
14.753.889
82.302.737
111.225.461
(112.864.386)
6.633.807
10.774.011
68.238.126
134.371.570
(120.368.042)
101.685.749
99.649.472
OTHER ASSETS:
Investments in related companies
-
Investments in other societies
673.974
Goodwill
1.063.249
Negative goodwill
(1.896.121)
Long term debtors
9.029.372
Notes and accounts receivable from related companies in the long-term
-
Long term deferred taxes
8.264.695
Intangibles
4.970.312
Amortization
(1.696.890)
Other assets
13.669.513
2.309.343
698.234
16.050.888
(8.712.120)
9.447.946
197.491
16.174.678
3.542.309
(1.473.439)
15.506.162
34.078.104
53.741.492
275.932.876
293.800.223
Total Other Assets TOTAL ASSETS
Accompanying notes 1 to 30 are an integral part of these financial statements of Farmacias Ahumada and Affiliate.
72
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31ST , 2005 AND 2004.
2005
Th.Ch$
2004
Th.Ch$
LIABILITIES
CURRENT:
Short term debts with banks and financial institutions
Long term debts banks / financial institutions-short term portion Obligation to the public- short term portion Long Term obligations with a year’s maturity
Dividends payable
Accounts payable
Notes payable
Sundry creditors
Notes and accounts payable related companies
Provisions
Withholdings
Income tax
Prepaid income
Deffered taxes
Other current liabilities
219.961
81.345
3.254.852
80.147
35.106
109.505.035
6.544.225
5.935.824
725.977
8.667.900
3.254.371
436.415
2.932
-
190.717
3.037.967
98.041
1.867.509
344.924
36.554
105.254.635
6.140.156
4.045.288
495.368
6.768.949
3.610.588
-
477
11.496.424
223.014
Total Current Liabilities
138.934.807
143.419.894
LONG TERM:
Debts with banks and financial institutions
Obligations with the public (bonds)
Long term payable notes
Long term sundry creditors
Long term provisions
Other long term liabilities
40.264
51.287.284
-
3.340.015
-
1.093.582
147.509
54.564.881
108.848
1.882.061
1.786.547
2.794.973
Long Term Total Liabilities
55.761.145
61.284.819
Minority Interest
24.129.142
26.569.289
SHAREHOLDER´S EQUITY:
Paid-in capital
49.637.240
49.637.240
Other reserves
1.002.786
2.322.231
Retained earnings
10.523.552
8.908.844
Net income (loss) for the year
(3.349.373)
3.863.388
Interim dividends
-
(1.569.540)
Accumulated deficit for development period
(706.423)
(635.942)
Total Shareholder´s Equity
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY
57.107.782
62.526.221
275.932.876
293.800.223
73
CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED AS OF DECEMBER 31ST, 2005 AND 2004
Sales
2005
Th.Ch$
630.269.716
627.477.993
Cost of sales
(477.263.032)
(470.135.445)
Operating Margin
Administration and sales expenses
153.006.684
(150.673.002)
157.342.548
(151.047.768)
Operating Income
2.333.682
6.294.780
Financial income
2.106.046 1.042.210
11.864 60.237
Other non-operating incomes 1.731.375
4.650.887
Investment losses from related compannies
(411.423)
-
Investment income from related companies
Amortization of goodwill
(995.988)
(1.122.053)
Financial expenses
(4.040.426)
(4.369.641)
Other non non-operating expenses
(8.586.714) (4.592.332)
Price level restatement
70.242
(309.390)
Exchange differences
242.713
(1.537.003)
Non Operating Income (Loss)
(9.872.311)
(6.177.085)
Income (loss) before Income Tax and Minor Interests
(7.538.629)
2.996.361 117.695
2.062.897
Income (losses) before Minority Interest
(4.542.268)
2.180.592
Minority Interest
(2.052.223)
(29.962)
(Loss) Net Income
(6.594.491)
2.150.630
3.245.118 1.712.758
(3.349.373)
3.863.388
Income Tax
Amortization of Negative Goodwill
NET INCOME (LOSS) FOR THE YEAR
Accompanying notes 1 to 30 are an integral part of these financial statements of Farmacias Ahumada and Affiliate.
74
2004
Th.Ch$
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE YEARS ENDING AS OF DECEMBER 31ST, 2005 AND 2004
2005
Th.Ch$
2004
Th.Ch$
CASH FLOW FROM OPERATING ACTIVITIES:
Collection from sales debtors
Financial Income received
Other income received
Payments to personnel and suppliers Interests paid
Income tax paid
Other expenses paid
Value added tax and others similar taxes paid
Net Cash Flow originated from operating activities
721.684.661
1.791.456
1.870.074
(675.163.615)
(3.023.546)
(260.847))
(18.361.653)
(8.365.786))
740.779.289
583.313
3.844.741
(697.363.927)
(3.575.549)
(1.192.348)
(26.648.355)
(10.801.736)
20.170.744
5.625.428
CASH FLOW ORIGINATED FROM FINANCIAL ACTIVITIES:
Loans obtained
Debts with the public
Other financing sources
Paid dividends
Loans paid
Debts paid with the public
Expenses due to bond and debt issue paid to the public
Other expenses due to financing
15.026.034
-
2.392
(3.034.778)
(13.478.170)
(1.323.408)
-
(224.610) 11.041.676
38.648.777
21.411
(2.812.122)
(9.403.279)
(35.668.879)
(1.003.722)
(550.492)
(3.032.540) 273.370
Sale of fixed assets
Sale of permanent investments
Other investment income
Fixed assets incorporation
Other investment disbursements
1.689.252 -
-
(17.062.060)
(923.574) 880.077
1.764.502
5.114.580
(15.144.654)
(493.916)
Net cash flow originated from investment activities
(16.296.382)
(7.879.411)
841.822 (1.980.613)
Net Cash Flow originated(utilized) from financial activities
CASH FLOW ORIGINATED FROM INVESTMENT ACTIVITIES:
Net cash flow for the year
Inflation impact on cash and cash equivalent
88.152 (141.973)
929.974 (2.122.586)
Initial balance from cash and cash equivalent
24.273.516 26.396.102
ENDING BALANCE OF CASH AND CASH EQUIVALENTS 25.203.490
24.273.516
Net cash and cash equivalent variation
75
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS
ENDED AS OF DECEMBER 31ST, 2005 AND 2004
2005
Th.Ch$
2004
Th.Ch$
CONCILIATION BETWEEN THE NET FLOW GENERATED
BY OPERATING ACTIVITIES AND THE YEAR´S RESULTS
Net Income (Losses) for the year
(3.349.373)
3.863.388
Profits from sale of assets:
20.320 (288.420)
4.476.517
(523.895)
(1.649.137)
-
13.791.021
761.538
437.367
(11.864)
411.423
995.988 (3.245.118) (70.242)
(242.713) (1.840.204)
1.432.523 14.258.185
582.447
1.248.216
(60.237)
1.122.053
(1.712.758)
309.390
1.537.003
(5.578.895)
506.145
194.259
(5.317.766)
6.051.501
975.301
(1.781.514)
1.214.152
Accounts payable related to years operating results
Interests payable
Payable income tax (net)
Other amounts payable resulting from outside operational results
Value Added Tax ( I.V.A) and other similar taxes (net)
Minority interest gain (loss) 6.669.812
32.939 (1.877.881)
(2.548.490) 1.635.384
2.052.223
(10.372.030)
(242.210)
(369.929)
758.156
1.511.633
29.964
NET CASH FLOW GENERATED BY OPERATIONAL ACTIVITIES
20.170.744
5.625.428
(Profits) Losses from sale of fixed assets
Profits investment sales
Loss investment sale
Charges(DEBITS) to income that do not represent cash flows:
Depreciation for the year
Amortization of intangibles
Write-offs and accrued expenses
Profits from investments in related companies
Losses from investments in related companies
Amortization of goodwill
Amortization of negative Goodwill Net monetary adjustments
Net exchange differences
Other credits to income that not represent cah flows
Other charges to income that not represent cash flows
Variations in assets that affect cash flows (increases) decreases:
Debtors on account of sales
Stock on hand
Other assets
Variation in liabilities that affect cash flows increases (decreases):
76
REPORT OF INDEPENDENT ACCOUNTANTS
Santiago, February 20th, 2006
Señores Accionistas y Directores
To the Shareholders and Directors
We have audited Farmacias Ahumada S.A. and subsidiaries general consolidated balance sheets as of December 31st, 2005 and 2004 and the
related state of consolidated returns and cash flows for the years closing on those dates. The preparation of such financial statements (including
their corresponding notes) is Farmacias Ahumada S.A. management’s responsibility. Our responsibility consists in expressing an opinion on those
financial statements supported on our audits.
We conducted our audits according to auditing norms generally accepted in Chile. Such norms required that we planned and carried out our work
in order to attain a reasonable degree of certainty that the financial statements are free from significant errors. An audit requires an examination,
on a test basis, of the evidences supporting the amounts and about the information provided in the financial statements. An audit also includes the
assessment of the accounting principles utilized and of the significant estimates made by the Society’s management .Furthermore an audit evaluates the overall financial statements presentation. We believe our audits provide a reasonable basis of support for our opinions.
In our opinion the consolidated financial statements which have been mentioned above make a fair presentation of all significant aspects of Farmacias Ahumada S.A. financial situation and that of its subsidiaries up to December, 2005 and 2004, and of the results of its operations and cash
flows for the years closing on those dates and in conformity with accounting principles generally accepted in Chile.
Renzo Corona Spedaliere
TPN: 6.373.028-9
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMeNTS
(In thousand of Chilean pesos)
NOTE 1. COMPANY REGISTRATION
On October 15, 1997 the Company was registered under Nº 0629 in the Securities Registry kept by the Superintendence of Securities and Insurance
Companies (SVS) and therefore is subject to supervision by this entity.
The affiliate Farmacias Benavides S.A. de C.V. (Mexico) is a Public Company that lists its shares at the Stock Exchange in Mexico. For this reason it is
subject to supervision by the Comision Nacional Bancaria y de Valores de Mexico (CNBV).
NOTE 2. ACCOUNTING CRITERIA APPLIED
A) Accounting period
The present individual financial statements cover the fiscal years from January 1 to December 31st, 2005 and 2004.
B) Preparation bases
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles which have been issued by the
Chilean Accountants Association (Colegio de Contadores de Chile A.G.) and those specific norms and instructions issued by the Superintendence of
Securities and Insurance. Where and when discrepancies arise, the norms issued by the Superintendence prevail.
C) Consolidation bases
In accordance with norms issued by the Superintendence of Securities and Insurances (Superintendence de Seguros y Valores) in its Note Number
1697 and in its Technical Bulletin Number 72 by the Chilean Accountants Association (Colegio Contadores y Auditores de Chile) , the company has
prepared these consolidated financial states which include assets, liabilities, results and cash flows in Headquarters as in the affiliates and which are
detailed in the next chart.
Companies included in the consolidation:
78
RUT Name of Society Direct
Participation Percentage
2005
Indirect
Total
79.663.290-9 96.809.530-7 96.863.980-3 96.860.090-7 96.969.830-7 96.792.260-9 99.506.180-5 99.562.480-K 0-E 0-E 0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
O-E
100,00 0,0007 100,00 100,00 0,0112 100,00 100,00 99,90 0,00 0,00 100,00
100,00
0,00
0,00
100,00
68,17
0,00
0,00
68,17
68,17
68,17
100,00
0,00
Laboratorios Fasa S.A. Fasa Corp S.A. ABF, Adm. Beneficios Farmacéuticos S.A.
Distribuidora y Logística Integral S.A. Fasa Investment Ltda. Compañía de Nutrición General S.A. Inversiones Internacionales Inverfar S.A. Inmobiliaria Fasa S.A.
Fasint Ltda. (Brasil) Adm. Beneficios Farmacéuticos (Brasil) Droguería La Victoria S.A.C. (Perú)
Boticas Fasa S.A. (Perú)
Fasa do Brasil Ltda. (Brasil)
Fasamed Comercio Farmacéutico S.A. (Brasil)
Farmacias Ahumada Internacional S.A. (Uruguay)
Farmacias Benavides S.A. de C.V. (México)
Droguería Benavides S.A. de C.V. (México)
Benavides de Monterrey S.A. de C.V. (México)
Benavides de Reynosa S.A. de C.V. (México)
Servicios Operacionales Benavides S.A. de C.V. (México)
Servicios Logísticos Benavides S.A. de C.V. (México)
Nutritional Labs Inc (EE.UU)
Fasa Internacional Corp (Islas Vírgenes Británicas)
0,00 99,9993 0,00 0,00 99,9888 0,00 0,00 0,10 0,00 0,00 0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 0,00 0,00 100,00
100,00
0,00
0,00
100,00
68,17
0,00
0,00
68,17
68,17
68,17
100,00
0,00
2004
Total
100,00
100,00
100,00
100,00
100,00
100,00
100,00
100,00
64,9999
64,9810
100,00
100,00
99,9999
64,9870
100,00
67,95
67,95
67,95
67,95
67,95
67,95
100,00
100,00
In the consolidated financial states balances and significant transactions are eliminated and which have been realized among the consolidated societies and
recognition has been made of the participation by minority investors under the minority Interest Account.
Up to December 31st, 2005 the Company has not considered into the consolidation the affiliate Fasa do Brazil-Participacoes S.A. and its affiliates Fasint
Ltda, ABF, Fasamed Comercio Farmaceutico S.A. and CNG do Brazil due to the fact that in the last quarter of the fiscal year 2005, operations by these
affiliates took place in a restricted way since it was highly probable incurring in the loss of control by Headquarters over the assets, liabilities and of their
operations. Given that during the whole time indicated a sale process was initiated of these investments a process which was finalized January 26, 2006
(Note 9). Presenting the investment in Fasa do Brazil- ParticipacoesS.A. as a net from provisions in the item Investments in related companies and consolidating the line by line results and cash flows up to September 30th, 2005.
This procedure has been used by the Superintendence of Securities and Insurances companies (SVS).
d) Presentation bases
For the purpose of comparing, the financial statements presented up to December 31, 2004 have been updated beyond an accounting way up in 3,6%
and some figures in the financial statements have been reclassified.
e) Price level restatement
The financial statements have been restated for inflation, with the purpose of reflecting the effects of variation on the currency’s purchasing power during
the course of both respective financial periods. The Consumer Price Index (CPI) variations in the years ended December 31, 2005 and 2004 (3,6% and
2.5% up to December 31st, 2005 and 2004 respectively) is used as the frame of reference.
In addition, revenue, cost and expense accounts have been updated on the basis of the monthly CPI variation with the purpose of expressing all financial
statement balances at their closing values.
f) Conversion bases
Assets and liabilities at the end of each financial period have been expressed in Chilean pesos in accordance with the following parities:
DETAILS
United States Dollar
Brazilian Real
New Peruvian Sol
Mexican Peso
Unidad de Fomento (Chile)
Unidad de Inversion (Mexico)
2005
Ch$
2004
Ch$
512,50
-
149,37
48,19
17.974,81
140,89 557,40
210,02
169,78
49,99
17.317,51
157,69
The pertinent exchange differences are accounted for in the results for the fiscal year.
On December 31, 2005 and 2004, the financial statements of the foreign affiliates have been converted in accordance with the instructions issued by the
Chilean Accounting Association in its Technical Bulletin No 64.
g) Term deposits
The term deposits are presented in their investment values plus accrued adjustments and interests upon each fiscal year close.
h) Marketable securities
Marketable securities correspond to investments in mutual fund shares, shown at their respective share value at the end of each fiscal year.
i) Inventories
Inventories are shown at their acquisition cost adjusted for inflation and not to exceed their net market value. The provision for obsolescence is estimated
considering the merchandise with low sales turnover.
79
j) Bad debts estimate
At the close of each fiscal year, the bad debts provision has been determined according to criteria based on the unpaid balances’ and their maturity
deadline. The parameters used to determine the bad debts provision and protested documents are as follows:
Days
Trade Receivables % 31-60
2
61-90
91-120
121-150
151-180
10
15
20 40 181-240
60 241-300 301 AND MORE
80 100
k) Fixed assets
Fixed assets are shown valued at purchase cost adjusted to reflect inflation.
The fixed assets destined to be sold are presented at their estimated value upon realization and are submitted under the item Other long term assets.
l) Fixed assets depreciation
Fixed assets depreciation is determined following the straight-line method, in accordance with their estimated life utility .
m) Leased Assets
Fixed assets acquired through financial leasing are included in the Other Fixed Assets item and are booked at the current value of the contract, that is
to say, subtracting the value of the installments and the purchase option at the interest rate expressed in the contract.
These assets are not the legal property of the Company so that it cannot freely dispose of them until exercising the purchase option
n) Intangibles
In accordance with the norms in Technical Bulletin Nº 55 issued by the Chilean Accountants Association, they are valued at their acquisition cost plus all
the expenses related to their purchase; they are amortized in a maximum 40 year period.
Rental Premiums are presented at their cost corrected for inflation and are amortized within terms of the respective lease agreements.
ñ) Investments in related companies
Investments in related companies are shown valued according to the Equity Value method, as stipulated in Form Letters Nº 368 and Nº 1697 issued
by the Superintendence of Securities and Insurance.
For Equity Values application abroad keep their accounting records in the currency of their respective country and they have been translated into
Chilean pesos.
o) Goodwill and Negative Goodwill
This balance is determined by the differences arising from comparing the total value paid for the investment with it’s respective Equity value.
The term for amortization is determined principally by means of calculations realized by the Company in respect to expected time frames for returns
for each investment, and such will not exceed 20 years.
80
p) Income tax and deferred taxes
Income taxes are determined on an accrued basis in accordance with current tax laws.
Deferred taxes are recorded in accordance with the terms in Form Letter Nº 1466 of January 27, 2000 issued by the Superintendence of Securities and
Insurance, based on the temporary difference between the tax basis of assets and liabilities and their accounting basis, according to Technical Bulletins
60, 69 , 71 and 73 issued by the School of Chartered Accountants of Chile A.G..
q) Obligations with the public (Bonds)
These obligations are shown at their par value plus interests and inflation adjustment accrued at the end of the fiscal year. The lower value in the
placement of bonds with respect to their par value at the date of placement is shown in the Other Short and Long Term Assets item and it is deferred and
amortized in the same term of the obligation.
Costs directly associated with the bonds issued are shown in the Other Short and Long Term Assets item and are amortized in the period of the
obligation.
r) Year services compensations
The companies do not have contractual obligations with their personnel under this item.
s) Labor responsibilities upon retirement
The affiliate Farmacias Benavides S.A. de C.V. (Mexico) ha s a retirement plan for its personnel which includes complementary pensions on top of the
services by the Seguro Social who makes retirement payments and benefits upon death. Corresponding costs and obligations attached to that plan are
recognized on the bases of calculations that are legal and are presented under the item Other long term liabilities.
t) Operating revenues
Recognition of Operating Revenues is made when products are physically delivered.
u) Computer software
Computer systems developed through the use of our own human resources and materials are charged to results in the fiscal year in which they were
incurred.
Likewise, in accordance with Form Letter Nº 981 of December 28, 1990 issued by the Superintendence of Securities and Insurance, computer information systems acquired from third parties are posted to assets at their acquisition cost plus all related costs.
v) Research and development expenses
These expenses are charged to results when incurred and they have not been significant in the last five years.
81
w) Cash flow statement
Company policy is to consider as cash equivalents all time deposits, investments in fixed income mutual funds and purchases of instruments with
repurchase agreements for terms not greater than 90 days.
Cash flows from operating activities include all cash flows related to the Company’s line of business, including interest paid, financial income and, in
general, all flows not defined as investment or financing activities. It must be underlined that the operating concept used in the Cash Flow Statement
is broader than the concept considered in the Income Statement.
x) Personnel vacations
The Company calculates and records the annual cost of personnel vacations on an accrued basis.
y) Derivative Contracts
The Company maintains contracts considered to be investment contracts that are registered upon a just value according to what is established in the
Technical Bulletin Number 57 issued by the School of Chartered Accountants of Chile A.G.
Note 3. Accounting changes
During the fiscal year ended on December 31, 2005, accounting for the profitability of Farmacias Benavides S.A. de C.V. Mexico) changed the
amortization deadline on the investment with greater value from 5 to 4 years. This change meant a larger credit towards results for the amount of
approximately Ch$ 1,300 million pesos.
During the fiscal year ended on December 31, 2005, no other changes were made in the application of generally accepted accounting principles with
relation to the preceding fiscal year.
Note 4. Short-term and Long-term Debtors
The detail of short term and long term debtors is as follows:
ITEM Hasta 90 días
2005
2004
Th.Ch$
Th.Ch$
Debtors on account of sales 15.918.691 15.720.807
Est.uncollectable debts -
-
Receivable documents 192.055
175.665
Est.uncollectable debts -
-
Sundry debtors 1.247.986 1.634.238
Currents
Over 90 up 1 year
2005
2004
Th.Ch$
Th.Ch$
Long Term Subtotal 2005
Th.Ch$
Total Current Assets(net) 2005
2004
Th.Ch$
Th.Ch$
2005
Th.Ch$
2004
Th.Ch$
1.218.221 75.214 17.136.912 15.678.240 15.796.021 - - - - 1.458.672 - - -
-
- - 192.055 140.452 175.665 - - - - 51.603 - - -
-
187.804 15.429 1.435.790 1.435.790 1.649.667 9.029.372 9.447.946 Long term total debtors 9.029.372 9.447.946
The balance submitted under the item several long term Debtors, correspond to mutuals granted to the Society´s executives for the purchase of shares
(Note 24 II b).
In order to establish guarantees over the noted mutuals, securities were constituted on the shares which were pledged in favor of the Parent Company.
82
Long and short term debtors classified according to geographic segment:
Items
Chile
2005
2004
Th.Ch$
Th.Ch$
Mexico
2005
2004
Th.Ch$
Th.Ch$
Brasil
2005
2004
Th.Ch$
Th.Ch$
Peru
2005
Th.Ch$
2004
Th.Ch$
Totals
2005
2004
Th.Ch$
Th.Ch$
Short and Long term debtors (net)
Amount to date
19.911.619 19.099.824 5.387.736 4.591.042 - 1.884.377 984.499 1.494.056 26.283.854 27.069.299
Participation percentage in segment
75,76%
70,56%
20,50% 16,96% 0,00% 6,96% 3,75% 5,52%
100% 100%
Short term debtors (net)
Amount to date
10.882.247 9.651.878 5.387.736 4.591.042 - 1.884.377 984.499 1.494.056 17.254.482 17.621.353
63,07%
54,77%
31,23%
26,05%
0,00%
10,69%
5,71%
8,48%
100% 100%
Sales Debtors s/t (net)
Amount to date Participation percentage in segment 9.883.086 8.992.754 5.060.239 4.229.334 63,04% 56,93%
32,28% 26,77%
-
0,00% 1.223.677 7,75% 734.915 1.350.256 15.678.240 15.796.021
4,69% 8,55%
100% 100%
Receivable Documents s/t (net)
Amount to date
132.846 94,58%
89.212
50,79%
-
0,00%
-
0,00%
-
0,00%
86.407 49,19%
7.606 5,42%
866.315
60,34%
569.912
34,55%
327.497
22,81%
361.708
21,93%
-
0,00%
574.293
34,81%
241.978
16,85%
9.029.372
100,00%
9.447.946 100,00%
-
0,00%
-
0,00%
-
0,00%
-
0,00%
-
0,00%
46 0,03%
140.452 175.665
100% 100%
Sundry Debtors s/t (net)
Amount to date
143.754
8,71%
1.435.790 1.649.667
100% 100%
Long term debtors (net)
Amount to date
Participation percentage in segmento
- 9.029.372 9.447.946
0,00%
100% 100%
83
NOTE 5. BALANCES AND TRANSACTIONS WITH RELATED ENTITIES
a) Accounts receivables with related companies
The short and long term receivables with related companies are generated on account of operations in line with business, an in normal market conditions.
These are expressed in pesos, reales, and non adjustable mexican pesos which do not accrue inetersts. The receivables are maintained in a current commercial account.
Taxpayer
Identification Number Society 90.743.000-6
0-E Promotora C.M.R. Falabella S.A. CNG do Brasil
Totals
Short Term
2005
2004
Th.Ch$
Th.Ch$
Long Term
2005
2004
Th.Ch$
Th.Ch$
1.713.442
3.904.549 - -
-
-
197.491
1.713.442
-
197.491
3.904.549
b. Accounts payable to related companies.
The short term payables are generated principally in operations of a commercial type due to inventory purchases and received services in normal market
conditions. These are expressed in pesos, soles, and non adjustable mexican pesos and do not accrue interests. The payable balance is manintained in a
current commercial account.
Short Term
2005
Taxpayer
Society Th.Ch$
Identification
Number
79.598.260-4 90.749.000-9 0-E 0-E Administradora CMR Falabella Ltda. 108.445 74.410
Falabella S.A.C.I. - 1.431
C.M.R. Falabella (Perú) 617.532
418.305
Droguerías y Farmacias El Fénix S.A. de C.V.(México)
-1.222
Totals 84
2004
Th.Ch$
725.977
495.368
c. Transactions with related companies.
Transactions with related companies are carried out in similar conditions to those that are offered to third parties and the results of
such operations are charged into a current commercial account.
Nature
Taxpayer
Company Description of transaction IdentificationNumber of Relationship
Inversiones Galia S.A. 79.799.330-1 Shareholder Paid Leases Administradora CMR Falabella Ltda. 79.598.260-4 Common Shareholder Paid Commissions Banco Falabella S.A. 90.509.660-4 Common Shareholder Space Rental Promotora CMR Falabella S.A. 90.743.000-6 Common Shareholder CMR Card Sales Promotora CMR Falabella S.A.
90.743.000-6 Common Shareholder Collection On Its Own La Interamericana S.A. Cía de Seguros de Vida 99.289.000-2 Common Director Life Insurances La Interamericana S.A. Cía de Seguros de Vida 99.289.000-2 Common Director Leasing Rent Contracts La Interamericana S.A. Cía de Seguros Generales 99.288.000-7 Common Director General Insurances Alexander Fernández 9.604.686-3 Director Paid Advise Distribuidora y Comercial Edeka S.A CMR Falabella Perú Mario Valdivia B. Jaime Sinay A. Bellmar S.A. Administradora CMR Falabella Ltda. Supermercados San Francisco S.A. Supermercados San Francisco S.A. Supermercados San Francisco S.A. Supermercados San Francisco Buin S.A. Supermercados San Francisco Buin S.A.
Supermercados San Francisco Buin S.A. Peluquerías Palumbo S.A.
Peluquerías Palumbo S.A.
Lavacinco S.A. Inmobiliaria El Arrayán Ltda. Inversiones Sinergía Ltda.
Plaza Vespucio S.A. Inmobiliaria Valle Oriente Ltda.
Inmobiliaria Valle Oriente Ltda. Inmobiliaria Valle Oriente Ltda. 85.703.300-0 0-E 6.987.378-2 6.377.768-4 96.712.590-3 79.598.260-4 84.409.000-5 84.409.000-5 84.409.000-5 78.627.210-6 78.627.210-6 78.627.210-6 96.995.100-2 96.995.100-2 96.929.910-0 77.914.760-6 77.873.610-1 96.538.230-5 77.867.070-4 77.867.070-4 77.867.070-4 Common Shareholder Common Shareholder Director Director Common Director
Common Shareholder Common Shareholder Common Shareholder Common Shareholder Common Shareholder Common Shareholder Common Shareholder Director Director Director
Director Director Director Director Director Director
Paid Leases Collection On Its Own Paid Advise Paid Advise Paid Advise Paid Advertising Paid Leases Paid Advertising Paid Guarantees Paid Leases Paid Publicity Utility Bills Leases Received Recovery Of Expenses Leases Received Leases Paid Leases Paid Leases Paid Leases Paid Paid Advertising Utility Bills 2005
2004
Amount Th.Ch$
307.074
405.368
44.233
35.605.189
1.755.866
71.660
180.620
25.136
7.063
Effect on
results
(charge/credit)
Amount
Th.Ch$
Th.Ch$
(284.737)
469.477
(340.646)
427.350
44.233 43.192
- 42.808.906
- 3.195.504
(62.321) 42.872
(90.248) 188.657
(22.955) 260.809
( 7.063) 20.201
Effect on
results
(charge/credit)
Th.Ch$
(447.016)
(359.118)
43.192
(42.872)
(96.877)
(237.663)
(20.201)
538.018
33.147.002
2.690
10.976
12.924
10.535
19.143
1.408
451
66.801
957
85
13.914
1.581
13.132
17.062
166.474
126.676
78.682
3.145
8.890
(538.018) 574.258
- 24.147.146
(2.690) 6.480
(10.976) 10.450
(12.924) 12.910
8.853
108.060
(19.143)
34.370
(1.184)
1.762
-
-
(66.801)
79.921
(816)
3.412
( 71) -
13.914 14.007
1.329
-
13.132 -
(17.062) -
(163.548)
170.481
(122.951)
101.275
(66.119)
-
(3.145)
-
(8.890) -
(574.258)
(6.480)
(10.450)
(12.910)
90.806
(34.370)
(1.480)
(79.921)
(2.867)
14.007
(143.262)
(101.275)
-
85
Note 6. Inventories
The Inventories detail is as follows:
Concepts
Merchandise for sale
In transit merchandise
Raw materials for prescriptions
Other minor inventories
Obsolescence provision
2005
Th.Ch$
Totals
2004
Th.Ch$
84.726.224 604.430 439.462 40.904
(241.904) 85.044.296
355.782
605.220
170.289
(793.989)
85.569.116 85.381.598
Note 7. Deferred Taxes and Income Taxes
a. Income tax:
As of December 2005 and 2004 the Parent Company and its affiliates have registered the following balances due to retained tax contributions,
unearned income, accumulated tax losses and shareholders credits:
Concept
2005
2004
Th.Ch$
Th.Ch$
Tax earnings with credit
Tax earnings without credit
Tax losses
Shareholders credits
45.692.971
-
576.812
216.521
98.508.129
113.981
Details of the tax losses per country are the following:
2005
Concept
Peru
Chile
Brasil
Mexico
Totals
86
Th.Ch$
9.490.756
-
36.202.215
45.692.971
2004
Th.Ch$
18.071
2.988.401
8.361.567
87.140.090
98.508.129
Deferred Taxes details up to the fiscal year close are the following:
Concepts 2005
Deferred Tax Assets Short term Long term Th.Ch$ Th.Ch$ 2004
Deferred Tax Liabilities Short term Long term Th.Ch$ Th.Ch$ Deferred Tax Assets Short term Long term Th.Ch$ Th.Ch$ Deferred Tax Liabilities Short term Long term
Th.Ch$ Th.Ch$
TEMPORARY DIFFERENCES
Bad debt provision Vacation provision Amortization intangibles
Leasing assets Depreciation of fixed assets
Other events
Tax losses Obsolescence provision Provision for unrealized profits
Leasing obligations
Improvements to leased Real State Other provisions
Inventories Obligations to the Public 108.220 - 239.640 -
- 298.574 - - - - 578.648 2.687.322 18.163 12.029.986 37.966 - 25.803 - -
10.753 294.849 - 2.372.314 -
5.525 483.336 -
-
- -
-
- 50.715
Others
7.920
-
- 501.566 111.819 - 259.476 -
-
- 229.392 492.638 - 32.524 2.291.207 - - - 273.018
- - - 19.724.286 -
36.985 156.372 -
14.045 786.640 -
- 54.841 305.018 1.547.601 -
662.520 -
- 19.837 485.280 -
- -
- 12.369.707
448.561
-
-
45.094
-
-
-
-
581.697
1.934.423
1.435.318
493.227
-
- OTHERS
Complementary Accounts-net of Amortization Provision for valuation
Totals - (204.340) ( 235.803) (4.920.264) 796.835 13.041.777 - -
50.715
(2.925) - (227.012) - (241.391) (1.657.827) 4.777.082 - -
(10.331)
-
918.377 20.609.012 12.414.801 4.434.334
The income tax item composition is the following:
Item
Current tax expenses (tax provisions) Tax expense restatement (previous fiscal year) Impacts on assets or liabilities due to deferred taxes on fiscal year Tax benefits for tax losses Impact for amortization of complementary assets accounts and deferred liabilities Impacts on assets or liabilities for taxes deferred because of changes in the eveluation provision Other charges or credits on the account Totals 2005
2004
Th.Ch$
Th.Ch$
(1.175.288)
(8.174) 13.062.025 (10.702.081)
15.266
5.588
1.799.025
2.996.361
(44.639)
5.508.333
(5.301.942)
1.500.874
10.844
389.427
2.062.897
87
Note 8. Fixed Assets
The following is the detail of fixed assets:
2005
Gross fixed
Assets
Th.Ch$
Depreciation
Fiscal Year
Th.Ch$
Accumulated
Depreciation
Th.Ch$
2004
Gross fixed
Assets
Th.Ch$
Land
6.268.048
-
-
6.633.807
Facilities
14.753.889
(856.406) (3.526.030) 10.774.011
Machinery & equipments:
27.347.218
(884.339) (22.451.180) 23.223.212
Computer equipments
52.948.686 (3.686.076) (38.969.636) 42.363.567
Vehicles
2.006.833
(277.816)
(1.783.722)
2.651.347
Other fixed assets:
Furniture & supplies
64.899.927 (3.049.864) (32.197.473) 60.262.825
Leased assets
3.601.504
(214.844)
(586.499) 4.798.867
Facilities on leased real state
33.164.494 (4.052.548) (10.545.595) 53.593.671
DLI project
23.155
(2.620)
(7.564)
3.200.087
Others 9.536.381
(766.508) (2.796.687) 12.516.120
TOTALS 214.550.135
Depreciation
Fiscal Year
Th.Ch$
Accumulated
Depreciation
Th.Ch$
-
(782.289)
(4.404.039)
(741.754) (16.778.887)
(3.155.360) (31.700.570)
(330.247) (2.124.485)
(3.019.979) (35.110.891)
(362.652) (1.148.210)
(5.112.195) (26.898.957)
-
(753.709) (2.202.003)
(13.791.021) (112.864.386) 220.017.514 (14.258.185) (120.368.042)
Leased fixed assets are principally made up of commercial stores, computer equipment and facilities in commercial stores.
Depreciation is charged to Administration and Sales expenses.
The affiliate Farmacias Benavides S.A. de C.V. has decided to withdraw from the operation and subsequently to sell certain fixed assets so in agreement with Technical Bulletin Number 33 has gone on to suspend depreciation and to make necessary proviisons to value those asetts on an estimated
sale value bases.
For presentation purposes, Assets Available for Sale are shown net of the provisions in the item Other Current Assets (Note 12)
Item
Land
Facilities
Totals
88
2005
Fixed net Assets
Th.Ch$
2004
Fixed net
Assets
Th.Ch$
7.495.407
-
6.579.547
1.498.905
7.495.407
8.078.452
LEASING CONTRACTS GENERAL CONDITIONS
The ongoing leasing contracts general conditions up to December 31st. 2005 and 2004 are the following:
Entity
Real State
Contract
Value
UF
2005
Cía de Seguros de Vida C.N. de Seguros S.A.
La Interamericana Cía. de Seguros de Vida S.A.
Commercial Store
Commercial Store
Commercial Store
Commercial Store
Commercial Store
Commercial Store
20.661,69
16.521,98
18.116,83
21.666,48
25.611,52
38.800,00
Banco de Crédito del Perú (Perú)
Peruvian Soles
Commercial Store
691.000
2004
Santiago Leasing S.A.
Hewlett Packard
UF
Commercial Store
Commercial Store
Commercial Store
Commercial Store
Commercial Store
Commercial Store
Store facilities and computer equipments
Computer Equipments
Facilities for the stores
HSBC Leasing S.A (Brasil)
HSBC Leasing S.A (Brasil)
BCN Leasing S.A. (Brasil)
Banco de Crédito del Perú (Perú)
Brasilian Reales
Computer Equipments
Vehicles
Computer Equipments
Commercial Store
20.661,69
16.521,98
18.116,83
21.666,48
25.611,52
38.800,00
10.098,13
23.513,00
65.716,56
204.641
58.903
744.403
Peruvian Soles
691.000
89
Note 9. Investments in Related Companies
I Information on investments abroad
The Parent Company and its domestic subsidiaries keep investments in foreign companies. At the close of both fiscal years there were no potentially
remittable profits.
The exception to the above is subsidiary Farmacias Benavides S.A. de C.V. that on December 31, 2005 had potentially remittable profits of approximately
Th.Ch$2,000,000 (Th.Ch$3,000,000 in 2004).
II Additional information
a) Operations performed in 2005:
On December 31st, 2005 Fasa Investment Ltda liquidated its participation in Fasa International Corp (British Virgin Islands). This operation generated a
charge towards results in the amount of Th.Ch$51.
On May 20th, 2005 the Society Farmacias Benavides S.A. de C.V. sold its 50% participation in Droguerias y Farmacias el Fenix S.A. de C.V. This operation
generated a net credit towards results in the amount of Th.Ch$ 288,420 (note 196).
On May 4th, 2005 the direct affiliates to Farmacias Benavides S.A. de C.V. (Mexico) were liquidated, these were called Drogueria Benavides de Monterrey
S.A. de C.V. (Mexico).
On March 31st, 2005 Fasa Investment Ltda acquired 919,800 shares from Farmacias Benavides S.A. de C.V. at a value of $Mx 3 each in this way increasing its participation by 0.22% and its total participation remained at 68,71% from that date on. This operation generated a greater value in the amount of
Th.Ch$17,182 which was amortized completely.
On the 2nd, 3rd, 4th, 9th, 10th, 11th, 12th and 19th of February Fasa de Brasil-Participacoes S.A. integrated capital contributions in the amount
of Th.Ch$ 2,294,189 (MR$10,299) to the affiliate Fasamed Comercio Farmaceutico S.A.
On January 27th Farmacias Ahumadas S.A. signed a contract of sale for the total participation, 35% which it maintained in AIG Brazil Special Situations
Fund, L.P. and AIG Brazil special Situations Parallel Fund, C.V., in Fasamed through Fasint Ltda. its Brazilian Investment Society. The price of such contract
of sale comes up to MR$$21,000 (Th.Ch$4,410,420) to be paid interest free and with no adjustments on December 15th, 2009 (Note 24). In this was
Fasa do Brazil increases its participation in Fasamed Comercio Farmaceutico S.A. up to 99,999%.
On January 2nd, 2005 Fasa do Brazil-Participacoes S.A.contributed capital in the amount of ThCh$27,508 (original price) to the affiliate Fasamed Comercio
Farmaceutico S.A.
As a result of the investment process and of the acquisition of the affiliates Fasint Ltda and Fasamed S.A, a process initiated on July 2004 and finalized
on February, 2005, the Company impacted on greater and lesser investment values resulting in a net effect of ThCh$754,000 greater investment value
calculated on the bases of equity or just values.
90
b) Operations performed in 2004:
On 1st, 5th,8th, 11th, and 20th of October, 2004 capital increases were made in the direct affiliate Fasa do Brasil-Participacoes S.A. amounting to
Th.Ch$3,376,868 (MR$ 15,896 original price); later on November 22nd, 2004 a new contribution was made for Th.Ch$ 28,3333 (MR$132 original price)
with a remaining balance to capitalize on December 31st, 2004 for Th.Ch$230,392 (MR$ 1,097). Such operations did not generate a greater o lesser
investment value.
On October 1st, 2004 Fasa do Brazil- Participacoes contributed capital in the amount of Th.Ch$3,372,242 (MR$15,836 original value) in the affiliate
Fasamed Comercio Farmaceutico S.A., such operation generated an ascending value of Th.Ch$ 2,996,360 (original value). As a result of this, Fasa do Brazil
increased its total participation in Fasamed Comercio Farmaceutico S.A. from 64.9870% up to 83.1199%.
On September 20th, 2004 the direct affiliate Farmacias Benavides S.A. de C.V.(Mexico) called Plasmix S.A. de C.V. (Mexico) was sold. This operation impacted on results in the amount of Th.Ch$ 282,694 which is reported under Other income outside of operations.
On July 1st, 2004 an increase on capital was greed in Fasamed Comercial Farmaceutico S.A., a direct affiliate of Fasa do Brazil-Participacoes S.A. in the
amount of MR$26,600 (original value).
On June 30th, 2004 the direct affiliate of Farmacias Benavides S.A. de C.V. (Mexico) called Sociedad de Administracion, Operacion y Comercialiazacion S.A.
de C.V. (Mexico) was sold. This operation generated an effect on results in the amount of ThCh$ 1,327,192.
On March 29 th, 2004 Inmobiliaria Fasa S.A. was constituted as a direct affiliate of Fasa Corp S.A (Chile) with 99.9% and Farmacias Ahumada S.A. (Chile)
with 0.1%. Its social objective was the acquisition , purchase, sale, transfer, exchange, construction and renovation of property and in general of the development of all class of real state projects.
III Other information
On January 26th, 2006 the sale of Fasa do Brazil-Participacoes S.A. was finalized constituting a known and true fact before the financial states were issued
for fiscal year 2005 and in accordance with what has been established in the Technical Bulletin Number 6 the effects by such operation are acknowledged
in the financial states which were finalized on December 31st, 2005. This operation generated a loss in the amount of Th.Ch$4,476,517 (Note 19) which
includes all costs associated with the operation.
The details of the consolidated Balance by Fasa do Brazil-Participacoes S.A up to December 31st, 2005 is the following:
ThCh$
Current Assets 5.430.003 Current Liabilities
Fixed Assets
3.428.536
Long-term Liabilities
Other Assets
28.294.203
Minority Interests
Capital and Reserves
Fiscal Year results Totals
37.152.742
ThCh$
10.398.780
7.184.910
2
31.019.257
(11.450.207)
37.152.742
91
The detail of the investments in related companies is as follows:
Taxpayer
Company Country of Investment Number of Participation percentage origin
control
shares
Identification
currency
2005
2004
Number
Th.Ch$ Th.Ch$ Th.Ch$ 0-E 0-E 0-E
0-E
Droguería y
México
Farmacias El Fénix
S.A. de C.V. Compañía de Brasil
Nutrición General
do Brasil
Fasa do Brasil Brasil Provisión Venta
Brasil
Fasa do Brasil
Pesos
200
-
Pesos
97.994
-
99.9998
Pesos
Pesos
36.767.942 -
-
-
-
-
Societys Equity 2005
Th.Ch$ 50
-
Fiscal year Results Accrued Results VP / VPP
2004
2005
2004
2005
2004
2005
Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ 2004
Th.Ch$ 4.618.687
2.309.343
11.864
60.237
-
(237.109)
(162.610)
-
-
-
-
-
-
-
Accounting value Investment
23.728
- (411.423)
-
-
120.474
-
-
(411.423)
-
- 6.426.792
- (6.426.792)
Totales 2005
Th.Ch$ -
2.309.343
-
2004
Th.Ch$
-
-
- 6.426.792
- (6.426.792)
-
2.309.343 2.309.343
NOTE 10. GOODWILL AND NEGATIVE GOODWILL
The Goodwill was generated by the purchase of shares in affiliates Boticas Fasa S.A. (Peru) in 1998 and 2001, of shares in Compañia de Nutricion General
S.A, in 2002,2001 and 2000; in Fasamed Comercio Farmaceutico S.A. (brazil) and Fasint Ltda. (Brazil) in 2000, 2004, and 2005.
The lesser investment values were amortized in 15 years for Boticas Fasa S.A. (Peru) 10 years for the Compañia de Nutricion General S.A. and 20 years for
Fasamed Comercio Farmaceutico S.A. (Brazil) , Fasint Ltda. (Brazil. The amortization period has been determined taking into account the estimated timelimits for the investment returns for each investment.
The details of Goodwill is the following:
2005
2004
Taxpayer
Amount amortized in Goodwill
Amount amortized in Identification
fiscal year
balance
fiscal year
Number
Company Th.Ch$ Th.Ch$ Th.Ch$
0-E
96.792.260-9
0-E
0-E 0-E 0-E Totals
92
Boticas Fasa S.A. (Perú) Compañía de Nutrición General S.A. Fasamed Comercio Farmacéutico S.A.(Brasil)
Fasint Ltda.(Brasil) Droguería y Farmacias El Fénix S.A. de C.V. (México) Fasamed Comercio Farmacéutico S.A. (Brasil) 104.023 168.318 487.323 85.893 - 150.431 995.988 737.027 326.222 - - - - 1.063.249 Goodwill
balance
Th.Ch$ 104.023 168.452 657.378 115.866 55.429 20.905 841.051
494.542
10.189.366
1.853.857
665.154
2.006.918
1.122.053 16.050.888
The greater investment values were generated in the purchase of shares in the affiliate Fasamed Comercio Farmaceutico S.A. during 2000 and
2004, of Farmacias Benavides S.A. de C.V. (Mexico) during 2002, investments amortized in 20 and 4 years respectively.
The details of Negative Goodwill is the following:
2005
2004
Amount amortized in Negative
Amount amortized in Negative
Taxpayer
fiscal year
Goodwill balance fiscal year Goodwill balamce
Identification
Company
Th.Ch$ Th.Ch$ Th.Ch$
Th.Ch$ Number
0-E 0-E 0-E Fasamed Comercio Farmacéutico S.A.(Brasil) Farmacias Benavides S.A. de C.V. (México) Fasamed Comercio Farmacéutico S.A. (Brasil) Totals 32.000 3.016.168 196.960 - 1.896.121 - 43.166 1.637.430 32.162 3.799.830
4.912.290
-
3.245.128 1.896.121
1.712.758 8.712.120
Note 11. Intangibles
The following is included in this item:
Concept
2005
Th.Ch$
2004
Th.Ch$
Rental Premiums
Trademarks Public Health Institute Register 3.368.040 1.430.495 171.777 2.088.292
1.343.548
110.469
Totals
4.970.312
3.542.309
Amortization of Rental Premium and Trademarks was made in accordance with the criterion described in Note 2n) and amounts to Th.Ch$761,538
(Th.Ch$582,447 in 2004) and is shown under Administration and Selling Expenses. Accumulated amortization is Th.Ch$1,696,890 (Th.Ch$1,473,439
in 2004).
Note 12. Other Assets
Details are the following:
Concept
2005
Th.Ch$
Fixed Assets for sale ( Note 8)
Leased Establishments Guaranties
Judicial Deposits
Sundry Guarantees Bond Issue Expenses
Bond Placement Discount (Note 15)
Recoverable Taxes
Other Assets
Totals
7.495.407
2.772.859
108.623
1.314.468
1.324.155
610.784
43.217
13.669.513
2004
Th.Ch$
8.078.452
2.534.869
1.258.332
2.504
1.448.085
1.453.248
616.023
114.649
15.506.162
93
Note 13. SHORT TERM LOANS WITH BANKS AND FINANCIAL INSTITUTIONS
Bank or Financial Institution Taxpayer
Identification
Short term Number
Currency And Indexation Rates Other foreign currencies UF
$ non indexed 2005
20042005200420052004
Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ O-E
O-E
O-E
O-E
97.032.000-8
O-E
97.008.000-7
Banco de Crédito Banco Santander Banco HSBC S/A Capital de Giro Banco Safra S/A Banco BBVA Banco Unibanco
Banco Citibank
-
337 - 495.741 -
944.193
-
1.540.814
-
- 219.961
-
33.876
-
-
-
-
Totals -
3.014.961
Amount capital owed Average annual interest rate -
-
2.998.055
19,90%
Taxpayer
Bank or Financial Institution Identification
Number
Long term - short term TOTALS 2005
2004
Th.Ch$ Th.Ch$
-
- - - 22.670
-
-
-
- -
-
-
-
-
-
-
-
-
-
336
- 337
- 495.741
- 944.193
- 1.540.814
219.961 22.670
- 33.876
- 336
219.961
22.670
-
336
219.961
3.037.967
219.355
1,00%
22.362
1,50%
-
-
336
2,00%
219.355
-
3.020.753
-
Currency And Indexation Rates Other foreign currencies
UF
$ non indexed 2005
20042005200420052004
Th.Ch$ Th.Ch$Th.Ch$Th.Ch$Th.Ch$Th.Ch$
TOTALS 2005
2004
Th.Ch$
Th.Ch$
97.023.000-9
O-E
Corpbanca
Banco Alfa Finame -
- -
17.020 81.345 - 81.021
- --
--
81.345
-
81.021
17.020
Totals
-
17.020
81.345
81.021
-
-
81.345
98.041
Amount capital owed Average annual interest rate -
16.424
19,98%
80.097
3,28%
77.715
2,19%
--
80.097
-
94.139
-
Percentage of obligations in foreign currency (%) 0,00
Percentage of obligations in national currency (%) 100,00
Note 14. LONG TERM LIABILITIES WITH BANKS AND FINANCIAL INSTITUTIONS
Closing Date present period Closing Date previous period
Currency More than 1
Taxpayer
Bank or Financial Institution readjustment index
up to 2
Identification
Tc.Ch$
Number
97.023.000-9 Corpbanca UF O-E
Banco Alfa Finame
Other Currencies Totals Percentage of liabilities in foreign currency (%) Percentage of liabilities in national currency (%) 94
40.264
-
40.264
Total long term upon Annual average
closing financial states interest rate Tc.Ch$
40.264
-
40.264
3,28%
-
- Total long term upon
closing financial states
Tc.Ch$
120.560
26.949
147.509
0,00
100,00
Note 15. BONDS PAYABLE
a) Farmacias Ahumada S.A.
a.1 On December 5, 2002 the Parent Company made a UF2,000,000 Series A-1 and A-2 bond issue in the local market. Its placement generated
resources of Th.Ch$33,010,801 (historical).
a.2 In a Board Meeting held on August 25, 2004 the Company approved the issue of two bond series for a maximum total amount of UF2,200,000.
The purpose of this issue was to pay and/or prepay bond series A 1 and A 2 and to finance Company investments.
On September 13, 2004 the Company advised the bondholders of the 2002 bond issue of its total prepayment, to be paid on October 15, 2004, as
stipulated in the pertinent bond issue contract. Said prepayment of capital and interest totaled UF2,051,828.
On November 26, 2004 the Company placed UF2,200,000 in Series C and D Bonds in the local market. Said placement generated resources for
Th.Ch$37,305,769 (historical).
On December 31, 2005, the unamortized balance of the bond placement discount was Th.Ch$1,489,999 and is presented under the Other Current
Assets item as Th.Ch$164,844 (Th.Ch$131,623 in 2004) and under the Other Long-Term Assets item as Th.Ch$1,324,155 (Th.Ch$1,453,248 in
2004) (Note 12).
The short term balance of Th.Ch$3,158,037corresponds to interest accrued on December 31, 2005 of Th.Ch$523,690 due on February 28, 2006
and the first Series C capital payment for Th.Ch$2,648,921 due on February 28th and August 28, 2006.
b) Farmacias Benavides S.A. de C.V.
On May 22nd, 1997 an emission of obligations took place that were called ¨”Emisión de Obligaciones Convertibles del Tenedor en Acciones Series “B” de
Farmacias Benavides S.A. de C.V.”, (BEVIDES 97U) by which there were 2,250,000 nominative obligations with the nominal amount of 100UDIS each,
this represented as a result a total value of 225,000,000UDIS.
Such obligations are accreditable save for some limitations in the financial and corporative structure of the Company (Note 24) . The funds obtained from
such emission were used to restructure some liabilities.
According to a Public Deed from November 3rd, 2002 changes were realized to the respective emission act by which it was agreed that the amortization
would take place in three equal installments in the course of the following dates; July 5th, 2007, August 28th, 2008 and September 4th, 2009 and that
the interests rate would be 6% in UDIS.
95
The detail of Short Term and Long Term is the following:
Current
Indexation
Periodicity
Nominal Value Nominal Value Placement in
Number of Registration or Insturment
Nominal
Unit of the
Interest
Maturity
payments Amortization
2005
2004
Chile or
Identification
Series
Account
bond
Rate
of intersts Payments
Ch$ Ch$ adroad
Long term bonds-short term portion
309 309 C
147.368 U.F. 3,50% 28/08/2014 semester D
- U.F. 4,75% 28/08/2025 semester Benavides 97U
-
UDIS
6,00% 04/09/2009 quarter Total - short term portion semester 2.929.251 1.617.270
semester 228.786 228.349
-
96.815
21.890
3.254.852 1.867.509
Chile
Chile
Mexico
semester 21.191.353
semester 14.379.849
- 15.716.082
51.287.284
Chile
Chile
Mexico
LONG TERM BONDS
309 309 C
1.252.632 U.F. 3,50% 28/08/2014 semester D
800.000 U.F. 4,75% 28/08/2025 semester Benavides 97U 95.086.000
UDIS
6,00% 04/09/2009 quarter
Total long term 23.794.721
14.352.371
16.417.789
54.564.881
Note 16 Provisions and Write-offs
The detail of provisions and write-offs is as follows:
a. Short-Term Provisions
Vacations
Administration expenses provision Capital contribution provision (Brazil) Remunerations. fees. gratuities
Provision fees and counsel
Compensations and gratifications
Establishments leases provision
Advertising provision
Restructuring provision
Other provisions
Totals 96
2005
Concepts Th.Ch$
1.687.969
1.187.929
1.185.405
1.139.454
1.105.064
737.768
415.336
255.428
100.000
853.547
8.667.900
2004
Th.Ch$
2.186.138
939.748
315.788
1.081.248
357.932
462.236
235.843
635.602
554.414
6.768.949
b. Long Term Provisions
2005
Concept
Final negative Equity Provision
Th.Ch$
-
Contingencies Provision -
Totals
-
2004
Th.Ch$
162.599
1.623.948
1.786.547
c. Write-offs
On December 31, 2005 and 2004 the Company carried out penalizations to trade debtors, payable documents and
sundry debtors for the amount of ThCh$ 58,206 and ThCh$83,762 respectively.
Note 17 Minority Interests
Details are the following:
Company
Liabilities
Result
2005 2004
2005 2004
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
ABF, Adm. de Beneficios Farmacéuticos S.A. (Brasil)
Fasamed Comércio Farmacéuticos S.A. (Brasil)
Fasint Ltda. (Brasil)
Fasa do Brasil Ltda.
Farmacias Benavides S.A. de C.V. (México)
- - - -
24.129.142
5 12 2.012.202 8
24.557.062
1 4 118.468 4
(2.170.700)
(2)
9
2.346.542
3
(2.376.514)
Totals 24.129.142 26.569.289 (2.052.223) (29.962)
97
NOTE 18.Changes in Stockholders’ Equity
a. Dividends paid
Dividends
Decision Date Final Interim Final 28/04/2005
26/08/2004
29/04/2004
Dividend available to shareholders on
12/05/2005
29/09/2004
10/05/2004
Amount (historical)
Th.Ch.$
660.000
1.500.000
603.600
b. Other Reserves
Balance of
2004 Th.Ch$
Fasa Investment S.A. (1) Compañía de Nutrición
General S.A. (1)
Farmacia Ahumada
Internacional S.A.(1)
Laboratorios Fasa S.A.(1)
ABF, Administradora de
Beneficios Farmacéuticos S.A.(1) Fasa Corp S.A.(1)
Servicios Operacionales Benavides
S.A. de C.V.(México) (2) 2.514.641
Totals
2.322.231
Investment
Convertion
Th.Ch$
(419)
44
-
-
5
44
(424)
Balances of
2005
Th.Ch$
(1.319.450)
(672)
(190.983)
1.195.191
(1.319.445)
(672)
(419)
44
44
(419)
(190.983)
1.002.786
This reserve originated in the variation of stockholder equity in investments made in related companies abroad.
(1) On January 1, 2003 the Company changed the control currency for its main investments abroad, from United States dollars to Chilean pesos, as a result
of considering them as an extension of Chilean Parent Company operations.
The reserves made by Fasa Investment, Ltda, Laboratorios Fasa S.A. and ABF, Administradora de Beneficios Farmacéuticos S.A. originated mostly in their
investment in their subsidiaries, Fasa do Brasil Ltda., Boticas Fasa S.A (Peru) and Compañía de Nutrición General S.A. for its subsidiary Nutrilab (USA).
(2) It corresponds to valuation differences originated in the pension plan of affiliate Farmacias Benavides S.A. de C.V. (Mexico).
98
Changes in Shareholders’ Equity accounts during 2005 and 2004 were:
2005
2004
Deficit
Paid Other
Accumulated
Interim
Development Income
Paid Other
Accumulated
Interim
Capital Reserves
Income
Dividends Period
Fiscal Year
Capital Reserves
Income
Dividends Item
Th.Ch$
Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Initial balance 8.599.270
(1.515.000)
Income Distribution previous year 47.912.394
- - 2.214.139
1.515.000
Final Dividends previous Fiscal Year - - (660.000)
Accumulated deficit development period - - valuation of Foreign Investments - Accumulated indexation due conversion differences Brasil Own Capital reevaluation (1.196.400)
- - 835.794
1.196.400
- - - - (603.600)
- - - - - - - - (1.319.598)
- - - - - 80.695
370.143
- - 1.002.786
- - - (22.097)
- - -
- - 1.168.595
- (3.349.373)
- 10.523.552
- (70.482)
46.743.799
- 49.637.240
Updated Balances 3.729.139
153
- Final Balance - 8.157.927
- (3.729.139)
- - Dividendos provisorios (613.844)
- 1.724.846
Fiscal Year Income 2.241.536
- (706.423)
- - (147)
- 54.675
- - (3.349.373)
2.187.008
- - - - Deficit
Development
Period Th.Ch$ (498.838)
Income
Fiscal Year
Th.Ch$
2.032.194
- (2.032.194)
- -
- - - - - -
- - - -
209.149
(15.000)
- - - (1.500.000)
(102.535)
-
(12.471)
- 3.729.139
- -
47.912.394
2.241.536
8.599.270
(1.515.000)
(613.844)
3.729.139
- 49.637.240
2.322.231
8.908.844
(1.569.540)
(635.942)
3.863.388
Number of Shares:
Serie Number of subscribed shares Single Number of paid shares 150.000.000 Number of shares with right to vote
150.000.000 150.000.000
Capital (amount Th. Ch$)
Serie subscribed Capital Paid Capital
Th.Ch$ Th.Ch$
Single 49.637.240 49.637.240
Accumulated deficit period affiliate´s developemnt:
Taxpayer
Identification
Number
Company
96.863.980-3 ABF, Administradora de Beneficios Farmacéuticos S.A. 0-E Administradora de Beneficios Farmacéuticos do Brasil S.A.
0-E Compañía de Nutrición General do Brasil S.A. Fiscal Year Th.Ch$ Amount
Accumulated
Th.Ch$ -
(70.482) Observations
(139.865) Final Balance and generated previous year
(331.233) Final Balance and generated previous year
(235.325)
Final Balance and generated previous year
99
Note 19. Other Non-Operating Revenues and Expenses
Other Non-Operating Revenues.
The details are as follows:
2005
Concept
Recovered expenses
Taxes returned
Reverse inventory provision (Mexico)
Fixed assets leases
Profits on sale of Mexican affiliate
Shares allocation
Fixed assets sales Taxes recovered
Other revenues
Totals
60.456
101.743
205.328
274.479
288.420
427.264 -
-
373.685
1.731.375
2004
Th.Ch$ Th.Ch$
108.817
1.002.212
185.440
1.649.137
340.749
523.895
754.230
86.407
4.650.887
Other Non-Operating Expenses
The detail is as follows:
Concept Losses in fixed assets sales
Non tax deductible expenses
Penalties
Losses for sales of discontinued lines
Paid fines (Brasil)
Indemnifications paid to third parties
Surveys
Financial transactions taxes
Non-recurrent expenses in establishments
Bank charges
Unpayables out of line business(Mexico)
Administrative restructuring
Losses due to sale of affiliate (Note 9)
Loss due to non concurrence AIG
Capital increase
Other incomes
Totals
100
2005
20.320
36.754
65.654
57.204
107.021
144.862
111.662
238.832
268.223
348.550
790.497
979.614
4.476.517
Th.Ch$ Th.Ch$
-
941.004
8.586.714
2004
57.793
284.376
104.928
26.989
14.494
298.196
204.809
312.823
76.387
1.309.140
1.104..834
797.563
4.592.332
Note 20. Price Level Restatement
The detail of the Price Level Restatement is as follows:
ASSETS (DEBITS) / CREDITS
Inventories Fixed asset Investments in related companies Long term debtors
Intangibles Other non monetary assets Goodwill Negative Goodwill
Payable Accounts to related compones
Other non monetary assets
Expense and cost account
Adjustment index IPC IPC IPC UF
IPC UF IPC IPC IPC
IPC
IPC 2005
Th.Ch$
2004
Th.Ch$
422.195
3.687.755
42.475
266.249
68.466
218.223
315.339
(170.698)
-
76.807
5.203.579
632.565
2.395.856
33.341
148.208
15.695
92.187
23.050
(159.750)
474.191
3.744.725
Total (debits) credits
10.130.390
7.400.068
LIABILITIES (DEBITS) CREDITS Shareholders equity Bank obligations
Leasing obligations Non monetary liabilities Other non monetary liabilities Accounts payable to related companies
Sundry creditors
Non monetary liabilities
Income accounts
IPC UF
UF IPC UDIS UF UF
UF
IPC
Total (debits) credits INCOME (LOSS) FROM PRICE LEVEL RESTATEMENT (2.153.587)
(5.138)
(68.402)
(663.584)
(463.958)
- (1.208)
(1.352.819)
(5.351.452)
(10.060.148)
70.242
(1.455.526)
(6.160)
(86.328)
(769.769)
(903.297)
(931)
(3.055)
(753.039)
(3.731.353)
(7.709.458)
(309.390)
101
Note 21. Exchange Differences
Exchange differences details are the following:
Currency
2005
Th.Ch$ 2004
Th.Ch$
ASSETS (DEBITS) / CREDITS
Cash Term deposits Sundry debtors In transit inventories Other current assets Cash Trade accounts receivables Sundry debtors Inventories Prepaid expenses Cash Trade accounts receivables Sundry debtors Inventories Prepaid expenses
Cash Term deposits
Trade account receivables Sundry debtors
Accounts payable related companies Inventories Recoverable taxes
Prepaid expenses Other current assets Deferred taxes
Other assets
Deferred taxes Other assets Other assets Deferred taxes Notes receivables
Recoverable taxes Other current assets Other assets Negotiable values Investments US$ US$ US$ US$ US$ Soles Soles Soles Soles Soles Reales Reales
Reales Reales
Reales
Mexican Pesos Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Mexican Pesos
Reales
Reales
Soles
US$
Soles
Soles
Soles
US$
US$
US$
Totals (debits) Credits
102
176.468
(152.623)
(1.139) (20.621)
596.265
(294.985)
(156.531)
(30.513) (700.679) (6.342)
62.552
130.369
14.301
642.950
81.358
(105.837)
(225.605)
(186.724)
(98.778)
-
(1.279.640)
(265.128)
(9.086)
(528.753)
(129.387)
(31.129)
95.180
169.387
(26.054)
(21.240)
(763)
(43.799)
(22.949)
-
(6.819)
13.438
297.894
49.880
(1.527)
(16.592)
(109.107)
(22.283)
(11.825)
(2.305)
(52.930)
(479)
10.215
21.361
2.435
105.321
13.336
(173.530)
(369.931)
(306.200)
(161.979)
(27.366)
(2.098.327)
(434.752)
(14.889)
(877.411)
(212.168)
(51.046)
15.625
27.769
(1.968)
(23.881)
(58)
(450)
10.895
-
(2.362.856)
(4.416.273)
Currency 2005
Th.Ch$ 2004
Th.Ch$
LIABILITIES (CHARGES) / CREDITS
Import payables US$ Foreign suppliers US$ Sundry payables us$ Related companies payables US$ Account payables US$
Bank obligations Soles Notes payable Soles Sundry payables Soles Accounts payables Soles Provisions Soles Witholdings Soles Bank obligations Reales
Provisions Reales
Witholdings Reales
Other current liabilities Reales Payable dividends Mexican pesos Accounts payables Mexican pesos Sundry payables Mexican pesos
Provisions Mexican pesos Witholdings Mexican pesos Long term payable notes Mexican pesos Other long term liabilities Mexican pesos Accounts payable related companies l/t reales
Long term provisions Reales
Bank obligations l/t Soles
Bank obligations l/t Reales
Obligations with the public Mexican pesos Advanced received income Soles
Payables with related companies Mexican pesos Long term provisions Mexican pesos Translation effects Otras monedas
Other liabilities US$
Sundry creditors l/t Soles
Notes payables Reales
Total (Charges) Credits (LOSS) EXCHANGE DIFFERENCE PROFITS 332.324
64.142
- 167.624
- 1.263
408.900
3.437 666.891 30.973
29.073
(293.732)
(72.434)
(62.215)
(96.897)
41
1.405.740
82.295
114.227 182.395
3.963
130.107
(171.386)
(74.432)
12.318
(5.518)
546.744 713
5.536
61.830
199.116
(60.080)
13.072 (1.020.461)
2.605.569
6.184
70.757
9.494
166.574
50.379
95
30.889
260
2.339
2.196
(48.149)
(11.927)
(10.154)
(15.793)
80
2.305.125
134.959
187.312
299.065
6.476
213.340
(27.999)
(12.221)
930
(810 )
896.556
54
12.385
101.385
(1.322.694)
(597)
(167.220)
2.879.270
242.713
(1.537.003)
103
Note 22. Cash Flow Statement
a) Cash and Cash-equivalents flows are defined by the following concepts:
Concept
2005
Th.Ch$
Cash on hand
Time deposits Marketable securities
Totals
8.199.449
15.063.942
1.940.099
25.203.490
2004
Th.Ch$
8.356.966
12.597.272
3.319.278
24.273.516
b) Otros desembolsos de inversión:
Los otros desembolsos de inversión corresponden principalmente a derechos de llaves, garantías por arriendos, marcas comerciales y otros activos.
Note 23. CONTRACT FOR DERIVATIVES
The Society maintains two contracts for derivatives whose effects are to obtain R$21,000,000 while paying for these Th.Ch$2,537,769.
Type of
derivative
Type of contract Forward Forward Contract´s value
Th.Ch$ Investment 2.434.955
Investment 2.537.769
Contract descriptions Expiry Item deadline Specífic
Position Purchase / Sale
Assets / Liabilities Name IV quarter 2009 IV quarter 2006 T/C T/C S
S
Accounting accounts impacted Impact on results Realized Unrealized
Th.Ch$ Th.Ch$ Th.Ch$
Other current assets Other current liabilities 9.772
55.614
626.750
(55.614)
Note 24. Contingencies and Restrictions
I Contingencies
Lawsuits and other relevant legal actions where FASA is involved.
1. Name:
Court: Case Nº: Origin: Pony Chile S.A. with Farmacias Ahumada S.A.
18th Civil Court of Santiago.
5741-2002.
Pre-trial measure to submit evidence on an alleged contractual breach in which Farmacias Ahumada S.A. had incurred. A demand of forced
fulfillment of contract and indemnification for damages was filed, the amount of which is reserved until such time as the sentence is
executed.
Amount: Undetermined.
Status: The parties rendered proof. On December 31, 2005, the lawsuit is pending motion.
According to the Legal Counsel to the Company there is no probability that this lawsuit may cause significant losses for the Company.
2. Name: Sociedad de Seguridad Integral Raffo y Tonelli Limitada with Farmacias Ahumada S.A.
Court: 16th Civil Court of Santiago.
Case Nº: 5134-2002.
Origin: An alleged contract breach incurred by Farmacias Ahumada S.A.
Amount: UF3,630.92.
Status: On November 25, 2004, the parties were summoned to hear the verdict. On December 31, 2005, definitive sentence was pending on first
ruling.
104
-
3. Name: Court: Case Nº: Origin: Pessoa Vasquez and other with Farmacias Ahumada S.A.
2nd First Instance Court of Los Angeles.
47,891
Extra contractual Civil Liability Lawsuit on account of moral damages sustained by Iván Pessoa Vásquez and his spouse, originated
in the allegedly unfounded dismissal of Mr. Pessoa.
Amount: Th.Ch$100,000.
Status: On December 9, 2004 the first instance ruling was handed down, which entirely rejected the claim. On December 31, 2005 the final
proceeding for the claimant was pending.
4. Name: Court: Case Nº: Origin: Felipe de Jesus Benavides Pompa and others with Banca Afirme S.A and others
4th District Civil Court in Mexico City, D:F. Mexico.
184/205
Annulment of several actions incurred on his representation by own family members acting on his behalf and that are beyond the faculties
conferred, and is directed against several persons, including Farmacias Benavides S.A. de C.V. and of actions by this.
Status: As of December 19 th, 2005 the Court declared that it lacked competence and stated that these matters belong to an arbitration board.
This resolution is being appealed and the proceeding has been suspended while the appeal takes place.
According to the Legal Counsel to the Company as well as advise from external sources this legal action will have no material impact on the Company
for it has no plausible foundations on account of which it ought to be dismissed.
Farmacias Ahumadas S.A. and affiliates have not been legally served of any other legal proceedings filed against them and are different from those
indicated in the preceding paragraph I above and that would seek payment of certain sums that these would supposedly owe on account
of exercising inherent activities and which exceed a nominal individual proximate amount of ThCh$ 35,000.
b) Other contingencies
1. On December 31st, 2005 Farmacias Ahumada S.A. maintains a claim against settlement of accounts issues by the Internal Revenue Services due to
differences of interpretation related to criteria as to how to determine the taxable base for the fiscal years 2002 and 2003.
2. On December 31st, 2005 Boticas Fasa S.A. maintains a claim in Peru against settlement of account issued by the Superintendence of Tax Administra-
tion (Sunat) due to differences of interpretation of the criteria to determine the taxable base for the fiscal year 2001.
II OBLIGATIONS
a) a.On December 31, 2005 the Company had subscribed real estate lease agreements.
Obligations for the next 5 years are the following:
Leases
2006
Th.Ch$
23.322.200
2007
Th.Ch$
23.331.800 2008
Th.Ch$
23.108.800
2009
Th.Ch$
2010
Th.Ch$
23.283.800
23.439.400
b) The Company incentive policy includes a stock options plan for its executive officers. By virtue of this plan, its beneficiaries subscribe a loan contract
where the Company binds itself to absorb the lower values that may occur in case the proceeds from share sales are lower than the respective debt of
the executive.
105
III RESTRICTIONS
FASA Bonds C y D:
By virtue of a public deed dated August 31, 2004 and executed at the Santiago Notary Public Office of Mr.Iván Torrealba Acevedo, the Parent Company subscribed
a bonds issue contract, where the Company commits itself to maintain certain financial indicators (covenants) calculated on the basis of its individual and consolidated financial statements. These financial indicators correspond principally to:
• Level of indebtedness, measured on individual financial statements.
• Level of indebtedness, measured on consolidated financial statements.
The Company fulfills these restrictions.
BENAVIDES Bonds 97U:
As a result of the bonds emission realized in May 21997, Farmacias Benavides is subject to complying with certain financial indicators and restrictions.
These correspond principally to:
• Limits to obtaining and guaranteeing additional debts.
• Level of working capital.
• Level of indebtedness.
• Financial expenses coverage.
The Company complies with these restrictions.
IV Direct Guarantees
The direct guaranties detail is the following:
Debtor
Creditor of guarantee
Commitled assets
Book
Type
Value
Outstanding balances up to
financial ststes closing dates
2005
2004
Th.Ch$
Th.Ch$
Relationship
Type of guarantee
Central Health Services Farmacias Ahumada S.A. Supplier Guarantee Receipt None - 17.777 Chile Post Office Farmacias Ahumada S.A. Supplier Guarantee Receipt None - 107 106
Real State Olba S.A. Farmacias Ahumada S.A. Supplier Guarantee Receipt None - 70.395 69.696
Name 17.601
Areste S.a. Restaurants Administrator Farmacias Ahumada S.A. Supplier Guarantee Receipt None - 27.034 26.400
Real State And Investments Chinquihue Limitada Farmacias Ahumada S.A. Supplier Guarantee Receipt None - 18.240 18.059
V Indirect guarantees
The indirect guaranties detail is the following:
Debtor
Guarantee Creditor
AIG de Brasil Name Relationship Type of Guarantee
Inka Farma Participacoes S.A. Former Affiliate
Fianza Note 25. Guaranties Received From Third Parties
On December 31, 2005 and 2004, the Company has not received any guarantees from third parties.
106
Outstanding balances up to financial states closing dates 2005
2004
2.434.955 -
Note 26. Local and Foreign Currencies
The detail of currencies included in the assets and liabilities is as follows:
2005
Item Currency
Th.Ch$
CURRENT ASSETS Cash Cash Cash Term deposits Term deposits Marketable securities Marketable securities Trade accounts receivables Trade accounts receivables Sundry debtors Sundry debtors Notes payables Notes payables Inventories Inventories Pre-paid expenses Pre-paid expenses Pre-paid expenses Recoverable taxes Recoverable taxes Related companies receivables Other current assets Other current assets Sundry debtors Pre-paid expenses Otros activos circulantes Recoverable taxes Recoverable taxes Deferred taxes Deferred taxes Pesos
Dollars
Other currencies
Dollars
Other currencies
Dollars
Pesos
Pesos
Other currencies
Pesos
Other currencies
Pesos
Other currencies
Pesos
Other currencies
UF
Pesos
Other currencies
Pesos
Other currencies
Pesos
Pesos
Other currencies
Dollars
Dollars
UF
UF
Dollars
Pesos
Other currencies
3.041.177
4.309.133
849.139
- 15.063.942
939.539
1.000.560
9.883.087
5.795.153
863.910
569.475
132.846
7.606
33.656.746
51.912.370
54.302
208.994
644.946
706.637
4.660.929
1.713.442
339.035
617.532
2.405
6.855
164.844
1.657.648
620.601
727.957
18.163
2004
Th.Ch$
3.811.823
485.810
4.059.333
1.030.419
11.566.853
418.478
2.900.800
8.992.754
6.803.267
566.116
1.079.755
89.213
86.452
32.554.207
52.827.391
292.706
64.132
538.054
2.531.756
4.830.614
3.904.549
421.053
418.305
3.796
131.623
-
FIXED ASSETS
NET FIXED ASSET Pesos
101.685.749
99.649.472
OTROS ACTIVOS Intangibles Intangibles Others Others
Others
Others
Long term debtors Amortization Lesser investment values Investments in related companies Investments in other societies Investments in other societies Receivables Ee.rr. Deferred taxes Deferred taxes Pesos
UF
Dollars
Pesos
UF
Other Currencies
UF
Pesos
Pesos
Pesos
Pesos
Other Currencies
Other Currencies
Other Currencies
Dollars
3.813.257
1.157.055
177.271
1.973.460
3.056.702
966.673
9.029.372
(1.696.890)
1.063.249
(1.896.121)
- 673.974
- 5.577.373
2.687.322
2.352.464
1.189.845
137.170
3.663.129
1.422.981
2.204.430
9.447.946
(1.473.439)
16.050.888
(8.712.120)
2.309.343
698.234
197.491
16.174.678
TOTAL ASSETS Pesos
157.217.095
169.676.140
Dollars
8.743.126
2.075.673
Other currencies
87.357.275
101.484.857
UF
15.119.923
12.485.101
-
107
Up to 90 days
90 days to 1 year 2005
2004
2005
2004
Item Amount Annual average Amount Annual average Amount Annual average Amount Annual average
Currency rate Th.Ch$ interest rate
Th.Ch$
interest rate Th.Ch$ interest rate
Th.Ch$ interest
CURRENT LIABILITIES
Accounts payables Accounts payables Accounts payables Short term obligations with banks and fin. Institutions Short term obligations with banks and fin. Institutions Notes payable Notes payable Sundry creditors Sundry creditors Sundry creditors Sundry creditors Provisions Provisions Provisions Witholdings Witholdings Dividends payable Dividends payable Long term obligations due in 1 year Long term obligations due in 1 year Oblig. with the public-short term portion (bonds) Oblig. with the public-short term portion (bonds) Deferred taxes Income taxes Obligations with banks and fin. Institutions. Lt portion St Obligations with banks and fin. Institutions. Lt portion St Payables to related companies Payables to related companies Advanced perceived income Others current liabilities Short term obligations with banks and fin. Institutions Others current liabilities Income tax pesos Provisions Payables to related companies Dollars
Pesos
Other currencies
Other currencies
UF
Pesos
Other currencies
Dollars
Pesos
Other currencies
UF
UF
Pesos
Other currencies
Pesos
Other currency
Other currency
Pesos
UF
Otras monedas
UF
Other currency
Other currency
Other currency
Other currency
UF
Pesos
Other currencies
Other currencies
Pesos
Pesos
Other currencies
Pesos
Dollars
Dollars
2.048.956
52.430.395
55.025.684
219.961
400.826
6.143.399
580.693
5.338.576
16.555
75.400
6.758.122
1.834.378
1.245.322
2.009.049
261
34.845
15.343
16.896
1.833.577
96.815
389.668
81.345
108.445
617.532
2.932
190.717
46.747
-
TOTAL CURRENT LIABILITIES Dollars
Pesos
Other currencies 71.475.190 82.931.081
UF
8,30%
-
- - - - 22.671
145.040
- - - - - - - - - - - - 172.613
- 1.321.928
- - - - 60.280
- - - - - - - - - 2.048.956 1.948.333
- - 61.796.112 55.810.125
- 145.040
1,00%
8,30%
10,00%
3,28%
-
1.322.450
49.402.829
54.529.356
3.014.960
378.217
5.616.899
111.911
205.521
3.510.406
217.450
94.248
4.185.503
2.393.530
1.525.521
2.085.067
36.554
151.694
20.617
523.690
21.891
11.496.424
17.020
20.741
75.644
1.420
477
336
223.014
95.668
418.304
8,30%
10,00%
2,19%
-
47.908
1.324.460
-
- 2.242.181 1.007.823 1.372.368 1.577.492
108
- 1,50%
8,30%
3,47%
-
Item Currency 1 to 3 years 3 to 5 years 5 to 10 years over 10 years Amount Annual average Amount
Annual average Amount
Annual average Amount Annual average
Th.Ch$ rate Th.Ch$ interest rate Th.Ch$ interest
interest rate Th.Ch$ interest rate
Long term liabilities 2005
Obligations with banks and fin. Institutions UF Obligations with the publc (bonds) UF Obligations with the publc (bonds) Other currencies Sundry creditors Other currencies
Sundry creditors UF
Other long term liabilities Other currencies
Sundry creditors Dolares TOTAL LONG TERM LIABILITIES UF 40.264
6.811.510
15.716.082
68.104
149.223
1.093.580
1.537.500
3,28%
- - - - - 3,50% 6.811.510 3,50% 14.379.844 4,75% 7.568.338 3,50%
6,00%
- - - - - 10,0%
- - - - - 8,30%
167.846 8,30%
562.950 8,30%
854.392 8,30%
- - - - - - - - - - - - -
7.000.997
6.979.356 14.942.794
8.422.730
Other Currencies 16.877.766
- - - Dollars - - - Item Currency 1.537.500
1 to 3 years 3 to 5 years 5 to 10 years over 10 years Amount annual average Amount
annual average Amount
annual average Amount
annual average
Th.Ch$
interest rate
Th.Ch$
interest rate
Th.Ch$
interest rate Th.Ch$
interest rate
Long Term Liabilities 2004
Obligations with banks and fin. Institutions UF Notes payable Other currencies Other liabilities Other currencies Provisions Other currencies Sundry creditors Other currencies Sundry creditors UF Obligations with the public (bonds) UF Obligations with the public (bonds) Other currencies
Obligations with banks and fin. Institutions Other currencies TOTAL LONG TERM LIABILITIES UF
120.560 2,19%
- 108.848
-
- 2.794.973
-
- 1.786.547
-
- 87.835 10,00%
- 138.159 8,30%
154.064 8,30%
38.147.092 5,25%
- - - 16.417.789 6,00%
17.020
- 9.929 19,98%
38.405.811
154.064
Other Currencies 4.795.223 16.427.718
517.433
517.433
8,30%
- 984.570
-
8,30%
-
984.570
- CONSOLIDATED FINANCIAL STATEMENTS FASA ANNUAL REPORT / 2005
109
27. Penalties
Up to December 31st, 2005 the Company or its Directors have not been subject to penalties by the Superintendence of Securities and Insurance (Superintendencia de Seguros y Valores).
28. Subsequent Events
During the month of January 2006 the affiliate Fasa Investment S.A. committed capital contributions in Fasa do Brazil-Participacoes in the amount of
approximately $1,185 million pesos.
On January 26th, 2006 Farmacias Ahumada S.A. finalized the sale of 100% of its participation in Fasa do Brazil-Participacoes S.A. and its affiliates
to the society Farmapartners Participacoes SocietariasAs Ltda. Whose major shareholder is the present general manager of Drogamed, Mr. Hugo
Rodriguez Barba.
This sale meant recognizing a charge towards results for the fiscal year 2005 for approximately $4,500 million pesos , amount provisioned in its entirety
up to December 31st, 2005.
The re is no knowledge of other events after December 31st, 2005 and up to the date of issuing these Financial States (February 20th, 2006) which
may significantly affect the interpretation of these.
110
29. Environment
Due to the nature of its activities, Farmacias Ahumada S.A. does not cause damage or alteration to the environment.
30. Long Term and Short Term Portion of Sundry Creditors
Currency or
Adjustement
Index
Portion
short
term
Th.Ch$
Maturities
2006
Th.Ch$
2007
Th.Ch$
2007
Th.Ch$
2009
2010 and beyond
Th.Ch$
Th.Ch$
annual
average
Total
2005
interest
%
Th.Ch$
2004
Owed Capital
total
Short Term Long Term
2005
Portion
Portion
Th.Ch$
Th.Ch$
Th.Ch$
Creditors
Various (1) UF
63.251 68.508 80.715 80.468 87.379 1.417.339 1.734.409 8,30 1.797.660 324.306 1.794.226
$R
- -
-
-
-
-
- - 1.229 Soles 16.896 22.332 45.774 - -
-
68.106 10,00 85.002 19.389 87.835
Other
US$ - -
- - - 1.537.500 1.537.500 -
1.537.500 - TOTALS
80.147 90.840 126.489 80.468 87.379 2.954.839 3.340.015 3.420.162 344.924 1.882.061
Th.Ch$ % Total Amount Foreign currency:
1.622.502 47,44%
Total amount national currrency:
1.797.660 52,56%
3.420.162 100,00%
(1) This liability corresponds to installments for leasing agreements to buy commercial establishments, computer equipments and installations
of commercial establishments.
The short term portion is presented in the item long term obligations due in one year.
111
ANALYSIS OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDED ON DECEMBER 31st, 2005 AND 2004
(In thousand Chilean pesos)
I. FINANCIAL STATEMENTS ANALYSIS
1. INCOME STATEMENTS ANALYSIS
Accumulated results for Farmacias Ahumadas S.A, up to December 31st, 2005, reached a loss of Ch$ 3,349 million pesos. Earnings for the fourth
quarter of 2005 registered a loss of Ch$ 1,239 million pesos compared to profits of Ch. $21 million pesos during the same period in the previous fiscal
year. The quarter’s loss is due to a negative impact by the amount of Ch$ 4,477 million pesos in non operational results due to the sale of the affiliate
Fasa do Brazil- Participacoes S.A. which was finalized January 26th, 2006. If the negative impact of the sale of the affiliate in Brazil is eliminated, the
final net result of the quarter would turn out a profit in the amount of Ch$ 3,238 million pesos.
Results for the fiscal year ended December 31st 2005 and 2004 show the following variations:
2005
Th.Ch$
Operational income
Cost of sales
Operating margin
Administration and selling expenses
Income before income Taxes
Income tax
Minority interest
Amortization goodwill
Earn (Loss) fiscal year
112
627.477.993
(470.135.445)
153.006.684
157.342.548
(150.673.002) (151.047.768)
(9.872.311)
Non-Operating Income
(6.177.085)
117.695
2.996.361
2.062.897
3.245.118
6.294.780
(7.538.629)
(2.052.223)
2004
Th.Ch$
630.269.716
(477.263.032)
2.333.682
Operating Income
(3.349.373)
(29.962)
1.712.758
3.863.388
a. Operational Results:
The Operating Margin achieved during the last quarter of 2005 reached Ch$ 39,424 million pesos which compares positively with the Ch$ 38,587 million
pesos for the third quarter of 2005. The Operating Margin for the fourth quarter of 2004 was Th.Ch$ 40,623.
The Operating Margin obtained the fourth quarter of 2005 was a profit of Ch$ 2,334 million pesos, reflecting an operational profit during the fourth quarter
of 2005 in the amount of Ch$3,436 million pesos greater than the Ch$3,099 million pesos for the same period of the previous year which represents an
increase of Ch$ 3,381 million pesos compared to the third quarter of the year 2005. The consolidated income during 2005 amounted to Ch$ 630,270
million pesos, over 4.4% higher to Ch$627,478 million pesos attained during the previous year. These figures are the consequence of increases in sales at
comparable stores (over a year), and of the investments realized for the establishments, distribution centers and for the systems that have increased income
around Ch$ 1,058 million pesos and an increase in operating margins of 2,2% in respect to the third quarter of the present year.
The Administration expenses and for sales reached Ch$ 150,673 million pesos (23,9% of sales) and positively compare to Ch$ 151,048 million pesos
(24,1% of sales) during 2004. During the fourth quarter of 2005 the administration and sales Expenses reached Ch$ 35,988 million pesos, a lesser amount
to the Ch$ 38,532 million pesos for the third quarter of 2005 and to the Ch$37,524 million pesos for the same period of the previous year. This decrease
is explained principally by the lesser operational expenses as a result of the restructuring implemented during the course of 2005.
Income and expenses for each business unit are as follows:
Chile
Revenues (in millions of Chilean pesos) Ch$
2005
2004
Peru
Ch$
Brasil
Ch$
227.457 249.777
48.811
40.984
21.600
37.176
Chile
Ch$
Perú
Ch$
Brasil
Ch$
Expenses(in millions of Chilean pesos)
2005
2004
174.867 190.333 37.490 30.957 Mexico
Ch$
Total
Ch$
332.402 299.541 México
Ch$
15.515 26.705 249.391
222.140
630.270
627.478
Total
Ch$
477.263
470.135
b. Non-Operational Results:
The non-operational results up to December 31st, 2005 reached a loss of Ch$9,872 million pesos compared to the losses in the amount of Ch$ 3,527
million pesos accumulated during the third quarter of 2005. This variation is principally explained by the negative effect of the sale of the affiliate Fasa do
Brasil-Participacoes S.A. for Ch$ 4,477 million pesos.
2. BALANCE SHEET ANALYSIS
The principal components of the assets and liabilities up to December 31st, 2005 and 2004 are the following:
ASSETS
Current assets
Fixed assets
Other assets
Total Assets
2005
Th.Ch$
2004
Th.Ch$
140.169.023
101.685.749
34.078.104
140.409.259
99.649.472
53.741.492
275.932.876
293.800.223
113
Current Assets:
Current Assets up to December 31st, 2005 experienced a decrease in the amount of Th.Ch$240,236 in respect to the closing period of the previous
year. This is principally explained by the following:
a) Increase of financial assets (cash and equivalents) for Th.Ch$929,974.
b) Decrease in receivables from related companies for Th.Ch $2,191,107.
c) Increase in short term deferred taxes for Th.Ch$ 746,120.
Fixed Assets (net):
Up to December 31st, 2005 this item showed an increase of Th.Ch $ 2,036,277 with respect to the same date as the previous year. This change is
explained principally by the construction project of the new distribution centre in Chile for Th.Ch$3,000,000 approximately and because of the openings
of new establishments in Chile, Mexico and Peru.
Other Assets:
Other Assets up to December 31st, 2005 presented a negative variation in the amount of Th.Ch$19,663,388 when compared to the previous year.
This variation is principally explained by:
a) Investment decreases in related companies for Th.Ch$ 2.309,473 corresponding to the sale of Soc. Drogueria y Farmacias El Fenix S.A. de C.V.
(Mexico).
b) Decrease in investment values in the amount of Th.Ch$ 14,987,639, amount which was maintained by the affiliate Fasa do Brasil- Participacoes S.A.
and which was unconsolidated up to December 31st, 2005.
c) Decrease in the greater investment values in the amount of Th.Ch$ 6,815,999 explained by the non-consolidation of the affiliate
Fasa do Brasil- Participacoes S.A. in the amount of Th.Ch$3,799,830 and due to larger amortizations in the amount of Th.Ch$1,378,738 due to
changes in the amortization deadlines of the greater value by the affiliate Farmacias Benavides S.A. de C.V.
d) Decrease of long term deferred taxes in the amount of Th.Ch$7,909,983 which is principally explained by changes in Mexico’s Tax Laws.
e) Decrease in Other assets for the amount of Th.Ch$1,836,649 which is explained mostly by lesser judicial deposits in the amount of Th.Ch$1,258,332
which belong to the former affiliate Fasa do Brasil- Participacoes S.A. not consolidated up to December 31st, 2005.
LIABILITIES
114
2005
Th.Ch$
2004
Th.Ch$
Current liabilities
Long term liabilities Minority iInterest
Equity
138.934.807
55.761.145
24.129.142
57.107.782
143.419.894
61.284.819
26.569.289
62.526.221
Total Liabilities
275.932.876
293.800.223
Current Liabilities:
This item experienced a decrease in the amount of Th.Ch$4,485,087 in respect to the previous year. This net variation is explained principally by:
a) Decrease in Obligations with banks on a short term bases in the amount of Th.Ch$2,818,006 mainly explained by the non consolidation of the affiliate
Fasa do Brasil-Participacoes S.A. up to the ·1st of December, 2005.
b) Increase in the following bookkeeping entries: Short Term Obligations with the Public (bonds) in the amount of Th.Ch$1,387,343, Accounts receivables
for Th.Ch$4,250,400, Sundry Creditors for Th.Ch$1,890,536 and Provisions for Th.Ch$1,898,951.
c) Decrease in short term deferred taxes for Th.Ch$11,496,424 explained by legal changes in Mexico.
Long Term Liabilities:
This item presents a decrease of Th.Ch$5,523,674 in respect to the previous year. This variation is explained principally by the following:
a) Decrease in the following bookkeeping entries: Long term Obligations with the Public (bonds) for Th.Ch$3,277,597 that were represented as for the
short term, Long Term Provisions for Th.Ch$1,786,547 and Other long term liabilities for Th.Ch$1,701,391.
b) Increase in long term sundry Creditors for Th.Ch$1,457,954 which is generated principally by receivable debt to AIG Brasil Special Situations Fund.
Equity:
Equity presented a decrease for Th.Ch$ 5,418 million pesos compared to the previous year. The variation is explained by a decrease in Other reserves in the
amount of Th.Ch$1,319 million pesos corresponding to the elimination of the adjustment due to conversion differences at the affiliate Fasa do Brasil- Participacoes and the decrease in withheld earnings for the amount of Th.Ch$ 4,099 million caused by decreases in profitsfor the fiscal year and lesser transitory
Dividends in fiscal year 2005.
3. FINANCIAL INDICATORS
INDICATOR
UNIT
2005 2004
LIQUIDITY
Current liquidity
Acid test
Times
Times
1,01
0,39
0,98
0,38
3,41
71,36% 28,64% (1,39) 3,27
70,06%
29,94%
0,79
INDEBTEDNESS
Level of indebtedness
Short term liabilities
Long term liabilities
Payment financial expenses
Times
%
%
Times
RESULTS
Financial expenses
R.A.I.I.D.A.I.E.
ThCh$
ThCh$
(4.040.426)
16.886.241 (4.369.641)
21.135.412
PROFITABILITY
Return on equity
Return on assets
Return operating assets Return per share
Return on dividends
%
%
%
$
Times
(5,6%)
(1,2%)
1,0%
(22,33)
564
6,3%
1,3%
2,5%
25,76
1.431
ACTIVITY
Inventory turnover
Fixed assets turnover Total assets turnover Inventory permanence Times
Times
Times
Days
5,6
6,2
2,3
64
5,6
6,3
2,1
65
115
RESTRICTIONS ASSOCIATED TO BOND EMMISSIONS
The indicators for the fiscal year ended December 31st, 2005 are the following:
Calculated
Consolidated indebtedness level
Individual level of indebtedness
0,72
0,68
Required
Not greater than 1,0
II.ACCOUNTING VALUE AND ECONOMIC VALUE OF ASSETS
The Company is not aware of any significant differences related to neither the book values, nor the economic and/or market values of its principal
assets. Exception of the aforementioned are related to certain fixed assets of the Mexican Affiliate Farmacias Benavides S.A. de C.V. for which
provisions have been made.
III. SIGNIFICANT VARIATIONS
The company directly operates in the Chilean market and indirectly through its affiliates
in the Peruvian and Mexican markets reaching a total participation in the market of 7.53%.
Up to December 31st, 2005 FASA operated a total of 909 pharmacies which were distributed in Mexico (529), Chile (250) and Peru (130), placing
itself as the number one chain in the field in Latin America. Through its operations in Chile, Peru and Mexico, FASA provided services to 154 million
clients during the fiscal year.
IV. ANALYSIS OF CASH FLOW STATEMENT
During the fiscal year ended December 31st, 2005 the Company organized the following flows: positive net flow for operational activities in the
amount of Th.Ch$ 20,170,744 (positive net flow for Th.Ch$5,625,428 in 2004); negative net flow generated in financial activities for the amount
of Th.Ch$ 3,032,540 (positive net flow for Th.Ch$273,370 in 2004) and negative net flow generated by investment activities in the amount of
Th.Ch$16,296,382 (negative net flow of Th.Ch$7,879,411 million in 2004), this originate from the following:
116
2005
Th.Ch$
Profits (loss) inn fiscal year
Results trade assets
Depreciation and amortization
Other credits / results (minus)
Other charges towards results
Assets variation
Liabilities variation
Profits minority interest Net flow generated from
operational activities
Loans obtained
Obligations with the public
Paid dividends
Paid loans
Paid obligations to public Other finance Expenses
Net flow financing
activities
Fixed assets sale
Sale from other investments
Incorporation fixed assets
Other investment income
Net flow generated by
investment activities
(3.349.373)
4.208.417
14.522.559
(5.410.141)
3.277.301
927.994
3.911.764
2.052.223
2004
Th.Ch$
3.863.388
(2.173.032)
14.840.632
(7.351.890)
4.722.807
407.939
(8.714.380)
29.964
20.170.744
15.026.034
(3.034.778)
(13.478.170)
(1.323.408)
(222.218)
11.041.676
38.648.777
(2.812.122)
(9.403.279)
(35.668.879)
(1.532.803)
(3.032.540)
273.370
1.689.252
-
(17.062.060) (923.574)
(16.296.382)
5.625.428
880.077
1.764.502
(15.144.654)
5.114.580
(493.916)
(7.879.411)
117
V. MARKET RISK ANALYSIS
1. Interest Rate Risk:
Most of the obligations are the result s of obligations with the public (bonds) these have fixed rates of interest.
The Company administers the risk of interest rates oriented towards its debt structure in the long term and towards a proper combination associated with
cash flows generated by operations.
2. Exchange rate type of risk:
The Company maintains term deposits operations in US dollars and in other Current assets in US dollar operations for short term obligations. There are
short term operations in liabilities in American dollars that are not significant in respect total liabilities.
The Company who as an enterprise operates in different markets faces risks in terms of rates of exchange that respond to the fluctuations in the Mexican
pesos and in the new Peruvian soles with respect to the Chilean peso. For this reason monetary assets and liabilities are maintained in equilibrium in these
currencies implying a non significant exposition to exchange fluctuations.
118
3. Risk hedging policies:
Company policy matches the currency in which it carries out financial operations (for assets and liabilities) with the operative flows generated by its operations.
For this reason the Company has not found it necessary to incorporate additional hedging operations except for contracts maintained with FASA with the
objective of mitigating the risks associated with a debt for R$21 million which it serves as a guarantor.
4. Revenues and Expenses in foreign currency.
2005
Revenues
Expenses
Local Currency
Foreign Currency
36,09 %
36,64 %
2004
Revenues
Expenses
Local Currency
39,81 %
40,48 %
63,91%
63,36%
Foreign Currency
60,19%
59,52%
119
........
........
........
........
........
........
........
120
INDIVIDUAL FINANCIAL STATEMENTS
98.547.6
9547.620.00000008131.482.7926.41
47.620.029
1.317.9547.620.02911.336.8131.
++++ -----82.7926.419
.........................
......................... ................................
................................
......................... ................................
..............
.....................
.........................
................................
.........................
......................... ................................
................................
..............
.....................
................................
................................
................................
.....................
1.317.9547.620.02911.336.8131.482.7
INDIVIDUAL FINANCIAL STATEMENTS / FASA ANNUAL REPORT / 2005
121
INDIVIDUAL BALANCE SHEETS AS OF DECEMBER 31ST, 2005 AND 2004
2005
Th.Ch$
2004
Th.Ch$
ASSETS
CURRENT:
Cash
2.860.161
3.661.715
Marketable securities (net)
1.000.560
2.900.800
Accounts receivables (net)
9.321.721
8.569.550
132.144
87.466
Notes receivables (net)
Sundry debtors (net)
Notes and Accounts receivable from related companies
Inventories (net)
852.757
409.382
2.936.398
4.438.936
33.363.489
32.123.404
Recoverable taxes
706.637
1.750.282
Prepaid expenses
240.975
346.909
Deferred taxes
697.313
835.095
504.393
552.675
Total Current Assets
52.616.548
55.676.214
FIXED:
Land
Buildings and infrastructure
Other fixed assets
Accumulated depreciation
Total Fixed Assets
1.376.651
4.913.555
14.896.301
24.544.713
(18.828.305)
2.304.345
5.438.818
12.225.831
32.581.484
(25.587.727)
26.902.915
26.962.751
OTHER ASSETS:
Investments in related companies
Long term debtors
Notes and accounts receivable from related companies in the long-term
Intangibles
Amortization
Other assets
17.997.711
9.029.372
47.285.778
2.716.866
(1.439.873)
4.906.704 15.303.337
9.447.946
50.368.598
2.835.046
(1.286.845)
4.960.467
Total Other Assets 80.496.558
81.628.549
160.016.021
164.267.514
TOTAL ASSETS
Accompanying notes 1 to 28 are an integral part of these financial statements.
122
INDIVIDUAL BALANCE SHEETS AS OF DECEMBER 31ST, 2005 AND 2004
2005
Th.Ch$
2004
Th.Ch$
Short term debts with banks and financial institutions
Long term debts banks / financial institutions-short term portion
Obligation to the public- short term portion (bonds) Long term obligations with a year’s maturity
Dividends payable
Accounts payable
Notes payable
Sundry creditors
Notes and accounts payable related companies
Provisions
Withholdings
Other current liabilities
219.961
81.345
3.158.037
63.251
34.845
48.219.388
400.826
595.946
5.164.128
3.794.414
1.183.164
188.919
22.670
81.021
1.845.618
322.591
36.924
45.032.058
523.257
533.572
4.369.227
3.494.520
1.433.974
-
Total Current Liabilities
63.104.224
57.695.432
LIABILITIES
CURRENT:
LONG TERM:
Debts with banks and financial institutions
Obligations with the public (bonds)
Long term sundry creditors
Long term provisions
Long term defferred taxes
40.264
35.571.202
1.734.409
618.186
1.839.954
120.560
38.147.092
1.794.226
526.791
3.457.192
Total Long-Term Liabilities
39.804.015
44.045.861
SHAREHOLDER´S EQUITY:
Paid-in capital
49.637.240
49.637.240
Other reserves
1.002.786
2.322.231
Retained earnings
10.523.552
8.908.844
Net income (loss) for the year
(3.349.373)
3.863.388
Interim dividends
-
(1.569.540)
Accumulated deficit for development period
(706.423)
(635.942)
TOTAL SHAREHOLDER´S EQUITY
TOTAL LIABILITIES AND SHAREHOLDER´S EQUITY
57.107.782
62.526.221
160.016.021
164.267.514
123
INDIVIDUAL INCOME STATEMENT FOR THE YEARS ENDED AS OF DECEMBER 31ST, 2005 AND 2004
2004
Th.Ch$
Sales
226.280.842
248.697.978
Cost of sales
(170.111.603)
(185.071.367)
56.169.239
63.626.611
(58.882.628)
(61.522.469)
(2.713.389)
2.104.142
Operating Margin
Administration and sales expenses
Operating Income
Financial income
373.753 377.791
4.084.298 8.023.928
Other non-operating incomes 447.359
1.148.956
Investment losses from related companies
(93.761)
-
Investment income from related companies
Financial Expenses
(2.035.461)
(2.116.713)
Other non-operating expenses
(1.247.518)
(1.874.569)
Price level restatement
(1.165.923)
(835.036)
Exchange differences
(2.454.967)
(2.853.291)
Non Operating Income (Loss)
(2.092.220)
1.871.066
Income Before Income Tax
(4.805.609)
3.975.208
1.456.236
(111.820)
(3.349.373)
3.863.388
Income Tax
Accompanying notes 1 to 28 are an integral part of these financial statements.
124
2005
Th.Ch$
INDIVIDUAL CASH FLOW STATEMENTS
FOR THE YEARS ENDING AS OF DECEMBER 31ST, 2005 AND 2004
2005
Th.Ch$
2004
Th.Ch$
CASH FLOW FROM OPERATING ACTIVITIES:
Collection from sales debtors
Financial income received
Other income received
Payments to personnel and suppliers Interests paid
Income tax paid
Other expenses paid
Value Added Tax and others similar taxes paid
Net Cash Flow originated from operating activities
269.281.223
43.836
15.769
(253.019.020)
(1.897.679)
(164.802)
(1.170.242)
(6.697.432)
299.347.270
53.546
55.600
(285.032.064)
(1.882.455)
(783.400)
(1.371.267)
(7.590.458)
6.391.653
2.796.772
CASH FLOW ORIGINATED FROM FINANCIAL ACTIVITIES:
Loans obtained
Debts with the public
Other loans obtained from related companies
Paid dividends
Loans paid
Debts paid with the public
Other loans paid from related companies
Expenses due to bond and debt issue paid to the public
Net Cash Flow originated (utilized) from financial activities
3.468.129
-
6.951.188
(671.880)
(3.343.057)
(1.323.408)
-
-
21.650
38.648.777
(2.202.463)
(79.920)
(35.668.879)
(1.077.210)
(1.003.722)
5.080.972 (1.361.767)
1.096.520 6.553 -
(7.002.684)
-
(7.656.866)
(262.331)
363
10.876
221.079
(4.788.977)
(1)
(87.098)
(13.818.808)
(4.643.758)
(2.346.183)
(3.208.753)
CASH FLOW ORIGINATED FROM INVESTMENT ACTIVITIES:
Sale of fixed assets
Documentary credit recovery from related companies
other investment income
Fixed assets incorporation
Permanent investments
Other lLoans to related companies
Net cash flow originated from investment activities
Net Cash flow for the year
Inflation impact on cash and cash equivalent
(355.611)
(309.705)
(2.701.794)
(3.518.458)
Initial balance from cash and cash equivalent
6.562.515 10.080.973
ENDING BALANCE OF CASH AND CASH EQUIVALENT 3.860.721
6.562.515
Net cash and cash equivalent variation
125
INDIVIDUAL CASH FLOW STATEMENTS FOR THE YEARS ENDED AS OF
DECEMBER 31ST, 2005 AND 2004
2005
Th.Ch$
2004
Th.Ch$
CONCILIATION BETWEEN THE NET FLOW GENERATED
BY OPERATING ACTIVITIES AND THE YEAR´S RESULTS
Net Income (Losses) for the year
(3.349.373)
Profits from sale of assets:
Losses from sale of fixed assets
3.863.388
9.677
4.950
4.799.232
505.209
184.084
(4.084.298)
93.761
1.165.923 2.454.967 -
1.426.993 5.792.969
398.519
382.763
(8.023.928)
835.036
2.853.291
(1.235.208)
-
(1.190.572)
(1.962.257)
2.809.869
825.194
101.679
(560.466)
Accounts payable related to years operating results
Interests payable
Payable income tax (net)
Other amounts payable resulting from outside operational results
Value Added Tax ( I.V.A.) and other similar taxes (net)
3.561.299
(18.792)
(1.479.457)
192.320 1.273.068
(2.517.368)
(242.210)
(185.012)
503.175
NET CASH FLOW GENERATED BY OPERATIONAL ACTIVITIES
6.391.653
2.796.772
Charges (debits) to income Not representing cash flows:
Depreciation for the year
Amortization of intangibles
Write-offs and provisions
Profits from investments in related companies
Losses from investments in related companies
Net price-level restatement
Net exchange differences
Other credits to income not representing cash flows
Other debits to income not representing cash flows
Variations in assets that affect cash flows (increases) decreases:
Debtors on account of sales
Inventories
Other assets
Variation in liabilities that affect cash flows increases (decreases):
126
REPORT OF INDEPENDENT ACCOUNTANTS
Santiago, February 20th, 2006
Señores Accionistas y Directores
To the Shareholders and Directors Farmacias Ahumada S.A.
1. We have audited Farmacias Ahumada S.A. balance sheets as of December 31st, 2005 and 2004 and the corresponding income statements and cash
flows for the years closing on those dates. The preparation of such financial statements (including their corresponding notes) is Farmacias Ahumada
S.A. management’s responsibility. Our responsibility consists in expressing an opinion on those financial statements supported on our audits.
2. We conducted our audits according to auditing norms generally accepted in Chile. Such norms require that we plan and carry out our work in order to
attain a reasonable degree of certainty that the financial statements are free from significant errors. An audit requires an examination, on a test basis, of
the evidences supporting the amounts and the information provided in the financial statements. An audit also includes the assessment of the accounting
principles utilized and of the significant estimates made by the Society’s management .Furthermore an audit evaluates the overall financial statements
presentation. We believe our audits provide a reasonable basis of support for our opinions.
3. The financial statements already mentioned have been prepared to reflect Farmacias Ahumada S.A. individual financial situation as per the criteria
described in Note 2, and before consolidating the subsidiaries financial states on a line by line basis as detailed in Note 9. As a result, these individual
financial states ought to be read and analyzed jointly with the consolidated financial states of Farmacias Ahumada S.A. and its subsidiaries, states
which are required by the generally accepted accounting principles.
4. In our opinion the individual financial statements which have been mentioned above make a fair presentation of all significant aspects of Farmacias
Ahumada S.A. financial situation up to December, 2005 and 2004 and of the results of its operations and cash flows as well for the years closing
on those dates, in conformity with the principles described on Note 2.
Renzo Corona Spedalieri
TPN 6.373.028-9
127
NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS
(In thousands of Chilean Pesos)
Note 1. Company Registration
On October 15, 1997 the Company was registered under Nº 0629 in the Securities Registry kept by the Superintendence of Securities and Insurance
and therefore is subject to supervision by this entity.
Note 2. Accounting Criteria Applied
a) Accounting period
The present individual financial statements cover the fiscal years from January 1 to December 31st, 2005 and 2004.
b) Preparation bases
The individual financial statements have been prepared in accordance with generally accepted accounting principles which have been issued by the
Colegio de Contadores de Chile (A.G. Chilean Accountants Association) and those specific norms and instructions issued by the Superintendence of
Securities and Insurance. Where and when discrepancies may arise, the norms issued by the Superintendence prevail.
These financial statements have been issued only for the purpose of carrying out an individual analysis of the Company since its investments and
results in subsidiaries are recorded within their Equity Value (V.P.) and therefore have not been consolidated on a line by line base. This treatment
does not change the net income for the year nor the shareholders’ equity.
Taking this into account, these statements must be read jointly with the consolidated financial statements which are required by generally accepted
accounting principles.
c) Presentation bases
For the purpose of comparing, the financial statements presented up to December 31, 2004 have been updated beyond an accounting way up in
3,6% and some figures in the financial statements have been reclassified.
d) Price level restatement
The financial statements have been restated for inflation, with the purpose of reflecting the effects of variation on the currency’s purchasing power
during the course of both respective financial periods. The Consumer Price Index (CPI) variations in the years ended December 31, 2005 and 2004
(3,6 and 2.5% up to December 31st, 2005 and 2004 respectively) is used as the frame of reference.
In addition, revenue, cost and expense accounts have been updated on the basis of the monthly CPI variation with the purpose of expressing all
financial statement balances at their closing values.
e) Conversion bases
Assets and liabilities at the end of each financial period have been expressed in Chilean pesos in accordance with the following parities:
2005
Ch$
Details
United States Dollar
Unidad de Fomento (Chile)
512,50
17.974,81
The pertinent exchange differences are accounted for in the results for the fiscal year.
128
2004
Ch$
557,40
17.317,05
f) Marketable securities
Marketable securities correspond to investments in mutual fund shares, shown at their respective share value at the end of each fiscal year.
g) Inventories
Inventories are shown at their acquisition cost adjusted for inflation and not to exceed their net market value. The provision for obsolescence is
estimated considering the merchandise with low sales turnover.
h) Bad debts estimate
At the close of each fiscal year, the bad debts provision has been determined according to criteria based on the unpaid balances’ age.
The parameters used to determine the bad debts provision and protested documents are as follows:
Days
Trade Receivables %
31-60
61-90
91-120
121-150
151-180
181-240
241-300
301 and over
2
10
15
20
40
60
80
100
i) Fixed assets
Fixed assets are shown valued at purchase cost adjusted to reflect inflation.
j) Fixed assets depreciation
Fixed assets depreciation is determined following the straight-line method, in accordance with their estimated service life.
k) Leased Assets
Fixed assets acquired through financial leasing are included in the Other Fixed Assets item and are booked at the current value of the contract, that
is to say, subtracting the value of the installments and the purchase option at the interest rate expressed in the contract.
These assets are not the legal property of the Company so that it cannot freely dispose of them until exercising the purchase option.
l) Intangibles
In accordance with the norms in Technical Bulletin Nº 55 issued by the Chilean Accountants Association, they are valued at their acquisition cost plus
all the expenses related to their purchase; they are amortized in a maximum 40 year period.
Rental Premiums are presented at their cost corrected for inflation and are amortized within terms of the respective lease agreements.
m) Investments in related companies
Investments in related companies are shown valued according to the Equity Value method, as stipulated in Form Letters 368 and 1697 issued by the
Superintendence of Securities and Insurance.
Indirect subsidiaries abroad keep their accounting records in the currency of their respective country and they have been translated into Chilean
pesos in accordance with the instructions in Technical Bulletin Nº 64 issued by the School of Chartered Accountant. Foreign subsidiaries have been
classified as Parent Company extensions or as investment vehicles.
n) Income tax and deferred taxes
Income taxes are determined on an accrued basis in accordance with current tax law.
Deferred taxes are recorded in accordance with the terms in Form Letter Nº 1,466 of January 27, 2000 issued by the Superintendence of Securities
and Insurance, based on the temporary difference between the tax basis of assets and liabilities and their accounting basis, according to Technical
Bulletins 60, 69 and 71 issued by the School of Chartered Accountants.
129
o) Obligations with the public (Bonds)
These obligations are shown at their par value plus interests and inflation adjustment accrued at the end of the fiscal year. The lower value in the placement of bonds with respect to their par value at the date of placement is shown in the Other Short and Long Term Assets item and it is deferred and
amortized in the same term of the obligation.
Costs directly associated with the bonds issued are shown in the Other Short and Long Term Assets item and are amortized in the period
of the obligation.
p) Operating revenues
Recognition of Operating Revenues is made when products are physically delivered.
q) Computer software
Computer systems developed through the use of our own human resources and materials are charged to results in the fiscal year in which they were
incurred.
Likewise, in accordance with Form Letter Nº 981 of December 28, 1990 issued by the Superintendence of Securities and Insurance, computer
information systems acquired from third parties are posted to assets at their acquisition cost plus all related costs.
r) Research and development expenses
These expenses are charged to results when incurred and they have not been significant in the last five years.
s) Cash flow statement
Company policy is to consider as cash equivalents all time deposits, investments in fixed income mutual funds and purchases of instruments with
repurchase agreements for terms not greater than 90 days.
Cash flows from operating activities include all cash flows related to the Company’s line of business, including interest paid, financial income and, in
general, all flows not defined as investment or financing activities. It must be underlined that the operating concept used in the Cash Flow Statement
is broader than the concept considered in the Income Statement.
t) Personnel vacations
The Company calculates and records the annual cost of personnel vacations on an accrued basis.
u) Personnel severance indemnities
The Company has no contractual obligation with its personnel for this concept.
v) Derivative Contracts
The Company maintains contracts considered to be investment contracts that are registered upon a just value according to what is established in the
Technical Bulletin Number 57 issued by the School of Chartered Accountants of Chile A.G.
130
Note 3. Accounting changes
During the fiscal year ended on December 31, 2005, accounting for the profitability of Farmacias Benavides S.A. de C.V. Mexico) changed the
amortization deadline on the investment with greater value from 5 to 4 years. This change meant a larger credit towards results for the amount of
approximately ThCh$ 1,300 million pesos.
During the fiscal year ended on December 31, 2005, no other changes were made in the application of generally accepted accounting principles with
relation to the preceding fiscal year.
Note 4. Short-term and Long-term Debtors
The detail of short term and long term debtors is as follows:
Current
ITEM Sales debtors State unpayable debts Bills payable State unpayable debts Sundry debtors Up to 90 days 2005
2004
Th.Ch$
Th.Ch$
9.874.016 8.569.550
-
-
183.297
87.466 -
-
852.757 409.382 Over 90 up to 1 year 2005
2004
Th.Ch$
Th.Ch$
-
-
- -
- Subtotal 2005
Th.Ch$
Long Term
Total Current (net) 2005
2004
Th.Ch$
Th.Ch$
2005
Th.Ch$
2004
Th.Ch$
-
9.874.016 9.321.721 8.569.550
-
-
552.295 -
-
-
- 183.297 132.144 87.466 -
-
51.153 -
-
-
- 852.757 852.757 409.382 9.029.372 9.447.946
9.029.372 9.447.946
Total Long Term Debtors The balance submitted under the item Sundry LongTerm Debtors correspond to mutual claims for executives to purchase shares (Note 22IIb).
With the purpose of counting on security for the noted mutuals, shares were provided as a security to the Company.
131
Note 5. Balances and Transactions with Related Parties
a) Accounts Receivable from related companies:
Short and long-term receivables from related companies originate mainly in Company business operations, in normal market conditions, and they are expressed in United States of America dollars and non-indexed Chilean pesos, and do not accrue interest. The receivable balance is posted to the Mercantile
Current Account.
Transactions with related companies in which Farmacias Ahumada S.A. have direct or indirect ownership participation have no net effect on the income
of the year. This is because non-realized incomes are eliminated and realized incomes from related companies are directly or indirectly fully recognized
through the Equity Value (V.P.).
Tax Payer ID Company 0-E 0-E 96.860.090-7 90.743.000-6 96.792.260-9 96.969.830-7 96.809.530-7 0-E 0-E
99.562.480-K Totals 132
Fasamed Comercio Farmacéutico S.A. (Brasil) Farmacias Ahumada Internacional S.A. (Uruguay) Distribuidora y Logística Integral S.A. Promotora C.M.R. Falabella S.A. Compañia de Nutrición General S.A. Fasa Investment Ltda. Fasa Corp S.A. Farmacias Benavides S.A. de C.V. Benavides de Reynosa S.A. de C.V. Inmobiliaria Fasa S.A. Short Term 2005
2004
Th.Ch$
Th.Ch$
Long Term
2005
Th.Ch$
2004
Th.Ch$
- - 803.167 1.713.442 - - 165.151 254.638 - - 4.711 11.073 104.227 3.904.549 - - 164.975 234.830 14.571 - - - - - - 38.574.935 3.877.387 - - 4.833.456 9.463
45.496.954
4.016.973
845.208
2.936.398 4.438.936 47.285.778 50.368.598
b) Notes Payable to related companies:
Short-term Accounts Payable balances are generated mainly from commercial operations for purchases of inventories and services received in normal
market conditions. They are expressed in United States of America dollars and non indexed Chilean pesos. The unpaid balance is posted to the Mercantile Current Account.
Short Term
Tax Payer ID Company 79.663.290-9 96.863.980-3 96.792.260-9 79.598.260-4 90.749.000-9 99.506.180-5 0-E 0-E Totals
2005
Th.Ch$
Laboratorios Fasa S.A. ABF, Administradora de Beneficios Farmacéuticos S.A. Compañia de Nutrición General S.A. Administradora C.M.R. Falabella Ltda. Falabella S.A.C.I. Inversiones Internacionales Inverfar S.A. Boticas Fasa S.A. (Perú) Farmacias Ahumada Internacional S.A. 936.441 1.583.364 884.294 108.445 - - 250.186 1.401.398 5.164.128 2004
Th.Ch$
1.397.120
1.365.031
938.875
74.410
1.431
129.105
463.255
4.369.227
133
c) Transactions:
Transactions with related companies are made in conditions similar to those offered to third parties and the proceeds of such operations are posted to a
Mercantile Current Account.
Company Tax Payer ID Inversiones Galia S.A. 79.799.330-1 Distribuidora y Comercial Edeka S.A. 85.703.300-0 Laboratorios Fasa S.A. 79.663.290-9 Laboratorios Fasa S.A. 79.663.290-9 Laboratorios Fasa S.A. 79.663.290-9 ABF, Administradora de Beneficios Farmacéuticos S.A. 96.863.980-3 ABF, Administradora de Beneficios Farmacéuticos S.A. 96.863.980-3 Compañía de Nutrición General S.A. 96.792.260-9 Compañía de Nutrición General S.A. 96.792.260-9 Fasa Investment Ltda. 96.969.830-7 Distribuidora y Logística Integral S.A. 96.860.090-7 Distribuidora y Logística Integral S.A. 96.860.090-7 Distribuidora y Logística Integral S.A. 96.860.090-7 Boticas Fasa S.A. (Perú) 0-E Administradora CMR Falabella Ltda. 79.598.260-4 Administradora CMR Falabella Ltda. 79.598.260-4 La Interamericana S.A. Cía. de Seguros de Vida 99.289.000-2 La Interamericana S.A. Cía. de Seguros de Vida 99.289.000-2 La Interamericana S.A. Cía. de Seguros Generales 99.288.000-7 Banco Falabella 96.509.660-4 Promotora CMR Falabella S.A. 90.743.000-6 Promotora CMR Falabella S.A. 90.743.000-6 Alexander Fernández 9.604.686-3 Inversiones Internacionales Inverfar S.A. 99.506.180-5 Droguerías Benavides S.A. de C.V. 0-E Farmacias Benavides S.A. de C.V. 0-E Mario Valdivia B. 6.987.378-2 Jaime Sinay A. 6.377.768-4 Bellmar S.A. 96.712.590-3 Farmacias Benavides S.A. de CV 0-E Inmobiliaria Fasa S.A. 99.562.480-K Inmobiliaria Fasa S.A. 99.562.480-K Inmobiliaria Fasa S.A. 99.562.480-K Boticas Fasa S.A. (Perú) 0-E Boticas Fasa S.A. (Perú) 0-E Compañía de Nutrición General S.A. 96.792.260-9 Supermercados San Francisco S.A. 84.409.000-5 Supermercados San Francisco S.A. 84.409.000-5 Supermercados San Francisco S.A. 84.409.000-5 Supermercados San Francisco Buin S.A. 78.627.210-6 Supermercados San Francisco Buin S.A. 78.627.210-6 Supermercados San Francisco Buin S.A. 78.627.210-6 Peluquerías Palumbo S.A. 96.995.100-2 Peluquerías Palumbo S.A. 96.995.100-2 Lavacinco S.A. 96.929.910-0 Inmobiliaria El Arrayán Ltda. 77.914.760-6 Inversiones Sinergía Ltda. 77.873.610-1 Plaza Vespucio S.A. 96.538.230-5 Inmobiliaria Valle Oriente Ltda. 77.867.070-4 Inmobiliaria Valle Oriente Ltda. 77.867.070-4 Inmobiliaria Valle Oriente Ltda. 77.867.070-4 134
2005
Kind of relationship Description of the transaction Shareholder Leases paid Common shareholder Leases paid Affiliate Stock on hand purchases Affiliate Other services received Affiliate Other revenues Affiliate
Paid commissions Affiliate
Other services provided Affiliate Stock on hand purchases Affiliate
Paid commissions Affiliate
Other services provided Affiliate
Warehouse services Affiliate
Logistic services logistic services
Affiliate
Other services Affiliate
Stock on hand sales Common stockholder Paid commissions Common stockholder Charged publicity Common director Life insurance Common director
Lease contract leasing Common director
General insurance Common shareholder Floor space leasing Common shareholder
CMR card sales Common shareholder
Collections on its own Director Paid counseling Affiliate
Fund transfers Affiliate
Charged counseling Affiliate
Charged counseling Director Paid counseling Director Paid counselling Common directors Paid counselling Affiliate
Sale fixed assets Affiliate
Other services provided Affiliate
Paid leases Affiliate
Sale fixed assets Affiliate
Paid interests Affiliate
Charged counseling Affiliate
Recovery of expenses Common stockholder Paid leases Common stockholder Paid publicity Common stockholder Paid guarantees Common stockholder Paid leases Common stockholder Paid publicity Common stockholder Common expenses Director Leases collected Director Expense recovery Director Paid leases Director Paid leases Director Paid leases Director Paid leases Director Paid leases Director Paid publicity Director Running expenses Amount
Tc.Ch$ 307.074
538.018
6.349.898
69.560
121.220
427.755
59.177
3.588.616
1.455.950
4.059
4.145.788
356.546
229.687
160.898
405.368
10.535
71.660
180.620
25.136
44.233
35.605.189
1.755.866
7.063
50.139
- 955.081
2.690
10.976
12.924
12.954
3.192.367
640.137
1.419.873
21.247
30.452
146.657
19.143
1.408
451
66.801
957
85
13.914
1.581
13.132
17.062
166.474
126.676
78.682
3.145
8.890
Effects
on results (debit)/credit) Tc.Ch$ (284.737)
(538.018)
- - - - - - - - - - - - (340.646)
8.853
(62.321)
(90.248)
(22.955)
44.233
- - (7.063)
- - 310.401
(2.690)
(10.976)
(12.924)
- - - - - - - (19.143)
(1.184)
- (66.801)
(816)
(71)
13.914
1.329
13.132
(17.062)
(163.548)
(122.951)
(66.119)
(3.145)
(8.890)
2004
Amount
Tc.Ch$
469.477
574.258
8.478.756
68.323
72.265
623.984
78.288
3.284.260
1.955.094
123.206
5.117.090
375.784
230.263
29.184
427.350
108.060
42.872
188.657
260.809
43.192
42.808.906
3.195.504
20.201
169.848
196.026
517.623
6.480
10.450
12.910
76.638
853.226
51.597
194.081
34.370
1.762
79.921
3.412
14.007
170.481
101.275
-
Effects
on results
(debit)/credit)
Tc.Ch$
(447.016)
(574.258)
(359.118)
90.806
(42.872)
(96.877)
(237.663)
43.192
(20.201)
63.709
168.228
(6.480)
(10.450)
(12.910)
(34.370)
(1.480)
(79.921)
(2.867)
14.007
(143.262)
(101.275)
- Note 6. Inventories
The Inventories detail is as follows:
Concepts Merchandise for sale
In transit merchandise
Raw materials for prescriptions
Obsolescence provision
Totals
2005
Th.Ch$
32.927.508
226.495
417.561
(208.075)
2004
Th.Ch$
31.721.756
511.432
107.776
(217.560)
33.363.489 32.123.404
Note 7. Deferred Taxes and Income Taxes
a. Income Tax:
On December 31, 2005 and 2004 the Company has recorded the following balances for Withheld Profits Taxes, Non operational Revenues,
Accumulated Tax losses and Shareholders’ Credit:
2005
2004
Taxable earnings with credit
Taxable earnings with no credit
Shareholders credit
Th.Ch$
-
Th.Ch$
576.812
216.521
113.981
Up to December 31st the Society has not made up provision of income tax due to presenting tributary losses´ in the amount of Th.Ch$7,945,082.
Deferred Taxes details up to the fiscal year close are the following:
2005
Concepts 2004
Deferred Tax Assets Deferred Tax Liabilities Short Term Long Term Short Term Long Term Th.Ch$ Th.Ch$ Th.Ch$ Th.Ch$ Deferred Tax Assets
Short Term Long Term Th.Ch$ Th.Ch$ Deferred Tax Liabilities
Short Term
Long Term
Th.Ch$ Th.Ch$
TEMPORARY DIFFERENCES
Bad debt provision Vacation provision Amortization of intangibles Leased assets Depreciation of fixed assets Other events Tributary losses Obsolescence provision Unrealized profit provision Leasing obligations Improvements in leased real state Indebtedness with the public Invention bonus provision 102.586
217.272
578.648
35.373
25.803
10.753
7.920
298.574
1.350.664
294.849
-
50.715
-
- 495.406
- - 230.232
- - - 229.392
490.292
- - 1.297.587
- - - 273.020
- - - - - 36.985
- - 14.045
- - 54.841
305.018
1.547.601
- - 448.561
- - - 5.988
- 45.094
-
580.305
1.513.243
1.404.827
493.227
-
OTHERS Valuation provision Totals (230.327)
- 748.028 1.944.087
-
50.715
- (230.328)
3.784.041
880.189
- 534.410
-
-
45.094
3.991.602
135
The Income Tax item composition is as follows:
Item 2005
2004
Th.Ch$
Th.Ch$
Tax expense restatement (previous fiscal year)
Impacts on assets or liabilities due to deferred taxes on fiscal year Impacts on assets or liabilities for taxes deferred because of changes in the eveluation provision (23.219)
1.479.455 - (117.578)
5.758
Totals
1.456.236
(111.820)
Note 8. Fixed Assets
The following is the detail of fixed assets:
136
2005
Net Fixed
Assets
Th.Ch$
Depreciation
Fiscal Year
Th.Ch$
Accumulated
Depreciation
Th.Ch$
Net Fixed
Assets
Th.Ch$
Land
Facilities
Machinery and equipments:
Computer equipments
Vehicles
Other fixed assets:
Furniture & office supplies
Leased assets
Facilities on leased assets
Other 1.376.651
4.913.555
(378.476) (2.348.824)
14.782.052
114.249
(1.581.956) (8.453)
5.544.113
3.444.576
10.961.963
4.594.061
(546.899) (165.676) (1.504.220) (613.552) Total Fixed Assets 45.731.220
(4.799.232) (18.828.305) 52.550.478
2004
Depreciation
Fiscal Year
Th.Ch$
Accumulated
Depreciation
Th.Ch$
2.304.345
5.438.818
(361.448)
(2.484.268)
(9.410.038) (75.857)
12.111.666
114.165
(1.365.400)
(8.577)
(7.894.350)
(67.344)
(3.124.705) (560.507) (856.360) (2.452.014) 6.435.505
4.389.880
17.510.582
4.245.517
(578.285) (300.086) (2.551.646) (627.527) (3.512.595)
(976.320)
(8.772.858)
(1.879.992)
(5.792.969) (25.587.727)
GENERAL CONDITIONS OF LEASING AGREEMENTS
The general conditions of leasing contracts effective on December 31, 2005 and 2004 are as follows:
Entity Property
Contract
Amount
UF
2005
Commercial site
Commercial site
Commercial site
Commercial site
Commercial site
Commercial site
20.661,69
16.521,98
18.116,83
21.666,48
25.611,52
38.800,00
Commercial site
Commercial site
Commercial site
Commercial site
Commercial site
Commercial site
Store equipping and computer equipments
Computer equipment
Equipments for stores
20.661,69
16.521,98
18.116,83
21.666,48
25.611,52
38.800,00
10.098,13
23.513,00
65.716,56
2004
Hewlett Packard
nota 9. Investments in Related Companies
I. Information on investments abroad
The Parent Company and its domestic subsidiaries keep investments in foreign companies. At the close of both fiscal years there were no potentially
remittable profits.
The exception to the above is subsidiary Farmacias Benavides S.A. de C.V. that on December 31, 2005 had potentially remittable profits of approximately Th.Ch$2,000,000 (Th.Ch$3,000,000 in 2004).
137
II Additional information
a) Operations performed in 2005:
On December 31st, 2005 Fasa Investement Ltda liquidated its participation in Fasa International Corp (British Virgin Islands). This operation generated a
charge towards results in the amount of Th.Ch$51.
On May 20th, 2005 the Society Farmacias Benavides S.A. de C.V. sold its 50% participation in Droguerias y Farmacias el Fenix S.A. de C.V. This operation
generated a net credit towards results in the amount of Th.Ch$ 288,420.
On May 4th, 2005 the direct affiliates to Farmacias Benavides S.A. de C.V. (Mexico) were liquidated, these were called Drogueria Benavides de Monterrey
S.A. de C.V. (Mexico).
On March 31st, 2005 Fasa Investment Ltda acquired 919,800 shares from Farmacias Benavides S.A. de C.V. at a value of Mx$ 3 each in this way increasing its participation by 0.22% and its total participation remained at 68,71% from that date on. This operation generated a greater value in the amount of
Th.Ch$ 17,182 which was amortized completely.
On the 2nd, 3rd, 4th, 9th, 10th, 11th, 12th and 19th of February Fasa de Brasil-Participacoes S.A. integrated capital contributions in the amount of Th.Ch$
2,294,189 (MR$10,299) to the affiliate Fasamed Comercio Farmaceutico S.A.
On January 27th Farmacias Ahumadas S.A. signed a contract of sale for the total participation, 35% which it maintained in AIG Brazil Special Situations
Fund, L.P. and AIG Brazil special Situations Parallel Fund, C.V., in Fasamed through Fasint Ltda. its Brazilian Investment Society. The price of such contract
of sale comes up to MR$$21,000 (ThCh$4,410,420) to be paid interest free and with no adjustments on December 15th, 2009 (Note 22). In this was
Fasa do Brazil increases its participation in Fasamed Comercio Farmaceutico S.A. up to 99,999%.
On January 2nd, 2005 Fasa do Brazil-Participacoes S.A.contributed capital in the amount of ThCh$ 27,508 (original price) to the affiliate Fasamed Comercio Farmaceutico S.A.
As a result of the investment process and of the acquisition of the affiliates Fasint Ltda and Fasamed S.A, a process initiated on July 2004 and finalized
on February, 2005, the Company impacted on greater and lesser investment values resulting in a net effect of ThCh$ 754,000 greater investment value
calculated on the bases of equity or just values.
b) Operations performed in 2004:
On 1st, 5th,8th, 11th, and 20th of October, 2004 capital increases were made in the direct affiliate Fasa do Brasil-Participacoes S.A. amounting to
ThCh$ 3,376,868 (MR$ 15,896 original price); later on November 22nd, 2004 a new contribution was made for ThCh$ 28,3333 (MR $ 132 original price)
with a remaining balance to capitalize on December 31st, 2004 for ThCh$ 230,392 (MR$ 1,097). Such operations did not generate a greater o lesser
investment value.
On October 1st, 2004 Fasa do Brazil- Participacoes contributed capital in the amount of ThCh$ 3,372,242 (MR$15,836 original value) in the affiliate
Fasamed Comerci0o Farmaceutico S.A., such operation generated an ascending value of ThCh$ 2,996,360 (original value). As a result of this, Fasa do
Brazil increased its total participation in Fasamed Comercio Farmaceutico S.A. from 64.9870% up to 83.1199%.
On September 20th, 2004 the direct affiliate Farmacias Benavides S.A. de C.V.(Mexico) called Plasmix S.A. de C.V. (Mexico) was sold. This operation
impacted on results in the amount of ThCh$ 282,694 which is reported under Other income outside of operations.
On July 1st, 2004 an increase on capital was greed in Fasamed Comercial Farmaceutico S.A., a direct affiliate of Fasa do Brazil-Participacoes S.A. in the
amount of MR$26,600 (original value).
138
On June 30th, 2004 the direct affiliate of Farmacias Benavides S.A. de C.V. (Mexico) called Sociedad de Administracion, Operacion y Comercialiazacion S.A.
de C.V. (Mexico) was sold. This operation generated an effect on results in the amount of ThCh$ 21,327,192.
On March 29 th, 2004 Inmobiliaria Fasa S.A. was constituted as a direct affiliate of Fasa Corp S.A (Chile) with 99.9% and Farmacias Ahumada S.A. (Chile)
with 0.1%. Its social objective was the acquisition , purchase, sale, transfer, exchange, construction and renovation of property and in general of the
development of all class of real state projects.
III Other information
The unrealized results correspond to sales of inventories by indirect affiliates Laboratorios Fasa S.A. and Compañia de Nutricion General S.A. to the
Company during the fiscal year. These profits are going to be realized when the inventories acquired to those affiliates are sold by the Company to third
parties (Note 15B).
On January 26th, 2006 the sale of Fasa do Brazil-Participacoes S.A.was finalized constituting a known and true fact before the financial states were issued
for fiscal year 2005 and in accordance with what has been established in the Technical Bulletin Number 6 the effects by such operation are acknowledged
in the financial states which were finalized on December 31st, 2005. This operation generated a loss in the amount of ThCh$4,476,517 which includes all
costs associated with the operation.
The details of the consolidated Balance by Fasa do Brazil-Participacoes S.A up to December 31st, 2005 is the following:
ThCh$
Current assets 5.430.003 Fixed assets
3.428.536
Other assets
28.294.203
Totals
Current liabilities
Long-term liabilities
Minority interests
Capital and reserves
Fiscal year results
37.152.742
ThCh$
10.398.780
7.184.910
2
31.019.257
(11.450.207)
37.152.742
139
The detail of the investments in related companies is as follows:
Tax Payer ID Society Country of Control Amount Participation percentage Societies´Equity Fiscal Year earnings Attributable earnings VP / VPP
Investments Accounting Value
origin currency for of shares
investment 2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
Th.Ch
Th.Ch
Th.Ch
Th.Ch
Th.Ch
Th.Ch
Th.Ch
Th.Ch
Th.Ch
Th.Ch
96.809.530-7 Fasa Corp S.A. (Ex Fasa - card S.A.) Chile Pesos 146.300 99,9993 99,9993
(466.408) (455.680) (10.629) (103.997) (93.761)
77.177 - - - 96.969.830-7 Fasa Investment Ltda. Chile Pesos 73.033.815 99,9888 99,9888 17.999.152 15.305.033 4.084.198 7.947.622 4.083.741 7.946.733 17.997.136 15.303.319 17.997.136 15.303.319
99.562.480-K INMOBILIARIA FASA S.A. Chile Pesos 1
0,1000 0,1000
575.405
18.393
557.012
17.326
557
18 575
18 575
18
Totals 17.997.711 15.303.337 17.997.711 15.303.337
Note 10. Intangibles
The following is included in this item:
2005
Th.Ch$
Rental premiums
Trademarks
Totals
1.561.429
1.155.437
2.716.866
2004
Th.Ch$
1.596.908
1.238.138
2.835.046
Amortization of Rental Premium and Trademarks was made in accordance with the criterion described in Note 2 I) and amounts to Th.Ch$505,209
(Th.Ch$398,519 in 2004) and is shown under Administration and Selling Expenses. Accumulated amortization is Th.Ch$1,439,873 (Th.Ch$871,286,845
in 2004).
Note 11. Other Assets
This item includes the following:
Commercial establishments’ rentals guaranties
Other guaranties
Bond issue expenses
Bond placement discount (Note 14)
Recoverable taxes
Other assets
Totals
140
2005
Th.Ch$
1.539.701
108.623
1.314.468
1.324.155
610.784
8.973
4.906.704
2004
Th.Ch$
1.431.652
2.504
1.448.085
1.453.248
616.023
8.955
4.960.467
Note 12. SHORT TERM DEBT WITH BANKS AND FINANCIAL INSTITUTIONS
Bank or Financial Institution Taxpayer ID Short term 97.032.000-8
BVA Bank 219.961 22.670
219.961 22.670
219.96122.670
219.961 22.670
219.355
22.604
219.355 22.604
1,00%
1,00%
-
Totals Amount capital owed Average annual interest rate Bank or Financial Institution Taxpayer ID Long term - Short term 97.023.000-9
Types of Currency and readjustment ratio UF
TOTALS 2005
2004
2005
2004
Tc.Ch$
Tc.Ch$
Tc.Ch$
Tc.Ch$
Types of Currency and readjustment ratio
UF
2005
2004
Tc.Ch$
Tc.Ch$
CORPBANCA Totals Amount capital owed Average annual interest rate 81.345
81.345
80.097
3,28%
81.021
81.021
77.715
2,19%
TOTALS
2005
Tc.Ch$
81.345
81.345
80.097
-
2004
Tc.Ch$
81.021
81.021
77.715
-
Percentage of liabilities in foreign currency (%) 0,00
Percentage of liabilities in national currency (%) 100,00
Note 13. LONG TERM LIABILITIES WITH BANKS AND FINANCIAL INSTITUTIONS
Closing Date present period More than 1 Currency
up to 2 Tax Payer ID Bank or Financial Institution readjustment index Tc.Ch$
97.023.000-9 CORPBANCA UF Totals Percentage of liabilities in foreign currency (%) Percentage of liabilities in national currency (%) 40.264
40.264
Closing Date previous period Total long term
upon closing Annual average
financial states
interest rate Tc.Ch$
40.264
40.264
3,28%
- Previous period
Total long term
upon closing
financial states
Tc.Ch$
120.560
120.560
0,00
100,00
141
Note 14. BONDS PAYABLE
a) On December 5, 2002 the Parent Company made a UF2,000,000 Series A-1 and A-2 bond issue in the local market. Its placement generated resources
of Th.Ch$33,010,801 (historical).
b) In a Board Meeting held on August 25, 2004 the Company approved the issue of two bond series for a maximum total amount of UF2,200,000. The
purpose of this issue was to pay and/or prepay bond series A 1 and A 2 and to finance Company investments.
On September 13, 2004 the Company advised the bondholders of the 2002 bond issue of its total prepayment, to be paid on October 15, 2004, as stipulated in the pertinent bond issue contract. Said prepayment of capital and interest totaled UF2,051,828.
On November 26, 2004 the Company placed UF2,200,000 in Series C and D Bonds in the local market. Said placement generated resources for
Th.Ch$37,305,769 (historical).
On December 31, 2005, the unamortized balance of the bond placement discount was Th.Ch$1,489,999 and is presented under the Other Current Assets
item as Th.Ch$164,844 (Th.Ch$131,623 in 2004) and under the Other Long-Term Assets item as Th.Ch$1,324,155 (Th.Ch$1,453,248 in 2004)
(Note 12).
The short term balance of Th.Ch$3,158,037corresponds to interest accrued on December 31, 2005 of Th.Ch$523,690 due on February 28, 2006 and
the first Series C capital payment for Th.Ch$2,648,921 due on February 28th and August 28, 2006.
Number of Registration
or Insturment Identification Serie
Periodicity Nominal Value Current
nominal
Indexation
Periodicity
account Unit of Interest
payment Amortization
2005
2004
placed
the Bond Rate Maturity of interest Payments M$
M$
Placement in
Chile or in
foreign country
LONG TERM BONDS-SHORT TERM PORTION
391 392 Serie C 147.368 U.F. 3,50% 28/08/2014 Semester Semester Serie D - U.F. 4,75% 28/08/2025 Semester Semester Total - short term portion 2.929.251
228.786
3.158.037
1.617.269
228.349
1.845.618
National
National
Serie C 1.178.948 U.F. 3,50% 28/08/2014 Semester Semester 21.191.353 23.794.721
Serie D 800.000 U.F. 4,75% 28/08/2025 Semester Semester 14.379.849 14.352.371
Total long term 35.571.202 38.147.092
National
National
LONG TERM BONDS
391 392 142
Note 15. Provisions and Write-offs
The detail of provisions and write-offs is as follows:
a. Short-Term Provisions
2005
Th.Ch$
Concepts Vacations
Remunerations. fees. gratuities Administration expenses provision Provision establishments rentals
Sales and establishments provision
Restructuring provision
Advertising provision
Technical assistance provision
Other provisions
1.278.071
326.942
990.273
737.768
119.873
100.000
87.269
74.875
79.343
3.794.414
Totals 2004
Th.Ch$
1.354.308
279.364
647.086
357.932
89.668
593.007
116.176
13.054
43.925
3.494.520
b. Long Term Provisions
On December 31, 2005 and 2004 the account balance corresponds to the provision for negative shareholders’ equity in the Fasa Corp S.A. subsidiary
(Note 9), in accordance with the following detail:
2005
Th.Ch$
Fasa Corp. S.A. (Note 9)
Totals
618.186
618.186
2004
Th.Ch$
526.791
526.791
On December 31, 2005 and 2004 the Negative Shareholders’ Equity provision includes unrealized income from Laboratorios Fasa S.A. and Compañía
de Nutricion General S.A. for Th.Ch$151,781 y Th.Ch$71,115 respectively.
c. Write-offs
On December 31, 2005 and 2004 the Company has written off Trade Accounts Receivable and Notes Receivable for Th.Ch$58,206 and
Th.Ch$80,851, respectively.
Note 16. Changes in Stockholders’ Equity
a.Dividends payment
Dividens
Definitive Interim Definitive Date of agreement 28/04/2005
26/08/2004
29/04/2004
Due date for investors 12/05/2005
29/09/2004
10/05/2004
Amount (original costs)
Th.Ch$
660.000
1.500.000
603.600
143
b.Other reserves
Balances 2004
ThCh$
Fasa Investment Ltda. (1) Compañía de Nutrición
General S.A. (1)
Farmacia Ahumada
Internacional S.A. (1)
Laboratorios Fasa S.A. (1)
ABF, Administradora de
Beneficios Farmacéuticos S.A. (1) Fasa Corp S.A. (1)
Servicios Operacionales Benavides
S.A. de C.V.(México) (2) Totals
2.514.641
Investment
convertion
ThCh$ (1.319.450)
(672)
(419)
44
(190.983)
2.322.231
-
-
5
44
(424)
Balance
2005
ThCh$
1.195.191
(1.319.445)
(419)
44
44
(419)
-
(672)
(190.983)
1.002.786
This reserve generated from patrimonial changes in investments on companies related to the outside in foreign places.
(1) Starting January 1, 2003 the Society changed the control currency for the principal investment in foreign countries moving over from controlling such investments in Us dollars to Chilean pesos. This resulted from considering them to be an extension of the operations by Headquarters in Chile.
Reserves by Fasa Investment Ltda., Laboratiros Fasa S.A., and ABF Administradors de Beneficios Farmaceuticos S.A., generated principally from investments in
their affiliates., Fasa do Brasil Ltds., Boticas Fasa S.A. (Peru)., and Compañía de Nutricion General S A. for uts affiliate Nutrilab (USA).
(2) Corresponds to valuation differences generated in the pension plans at the Farmacias Benavides S.A. de C.V. affiliate (Mexico).
Fluctuations in patrimonial accounts during 2005 and 2004 are the following:
2005
2004
Déficit
Déficit
Item Paid Other Accumulated
Interim
Development Fiscal Year Paid
Oher Accumulated
interim Development Fiscal Year capital reserves Earnings Dividends Period Earnings Capital reserves Earnings Dividends Period Earnings
Th.Ch$ Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Th.Ch$
Initial balance 8.599.270
(1.515.000)
Earnings distribution previous year - - 2.214.139
1.515.000
Definitive Dividends previous year - - (660.000)
Accumulated deficit in development period - - Investment valuation in foreign countries 2.241.536
- - - - (613.844)
3.729.139
- (3.729.139)
- (70.482)
46.743.799
- - - - - - - - Interim Dividends Final Balance Updated balances 370.143
- - - - - 49.637.240 1.002.786 10.523.552
- - - - - - -
- (22.097)
(603.600)
- - - 80.695
1.196.400
- - - (1.196.400)
835.794
- - 1.724.846
8.157.927
- - 153
Year en results 2.187.008
- Accumulated adjustment due conversion differences Brasil - (1.319.598)
Own capital reevaluation 144
47.912.394
- 1.168.595
(147)
- 54.675
- (3.349.373)
- - - - - - - - (498.838)
2.032.194
- (2.032.194)
- - (102.535)
-
- - - -
- - - -
209.149
- (15.000)
- - (1.500.000)
(12.471)
- - 3.729.139
-
(706.423) (3.349.373) 47.912.394 2.241.536
8.599.270 (1.515.000)
(613.844)
3.729.139
- 49.637.240 2.322.231
8.908.844 (1.569.540)
(635.942)
3.863.388
- Number of shares:
Serie Number shares subscribed Number paid shares Number shares with voting rights
Unica
150.000.000 150.000.000 150.000.000
Capital
Serie Subscribed Capital Th.Ch$ Paid Capital Th.Ch$
Unica 49.637.240 49.637.240
Accumulated Deficit Affiliates Period of Development:
RUT Company Amount Fiscal Year Acumulado
Th.Ch$ Th.Ch$ 96.863.980-3 O-E O-E ABF, Administradora de Beneficios Farmacéuticos S.A. Administradora de Beneficios Farmacéuticos do Brasil S.A. Compañía de Nutrición General do Brasil S.A. - - (70.482) (139.865)
(331.233)
(235.325)
Observations
Balance From Previous Year
Balance From Previous Year
Current Year Balance Note 17. Other Non-Operating Revenues and Expenses
Other Non-Operating Revenues.
Concept
Shares allocation
Taxes Recovered
Other revenues
Totals
2005
Th.Ch$ 427.264
20.095
447.359
2004
Th.Ch$
340.749
754.230
53.977
1.148.956
Other Non-Operating Expenses
2005
Th.Ch$ Concept Losses in fixed assets sales
Indemnifications paid to third parties
Losses in fixed assets write offs
Bank charges
Surveys
Non-recurrent expenses in establishments
Administrative restructuring
Bad Debts
Other expenses
Totals
9.677
22.305
57.204
72.015
111.662
268.223
651.501
54.931
1.247.518
2004
Th.Ch$
4.950
26.989
41.879
53.419
14.494
204.809
1.291.553
76.387
160.089
1.874.569
145
Note 18. Price Level Restatement
The detail of the Price Level Restatement is as follows:
ASSETS (CHARGES) / CREDITS Inventories Fixed assets Investments in related companies Long term debtors Other non monetary assets Intangibles Other non monetary assets Expenses and costs accounts Re-adjustability index IPC IPC IPC UF UF IPC IPC IPC 2005
Th.Ch$
2004
Th.Ch$
428.782
1.036.306
515.942
266.249
120.815
37.271
90.592
4.893.012
371.565
768.007
173.446
148.208
92.187
27.935
78.730
3.766.396
Total credits 7.388.969
5.426.474
LIABILITIES (DEBITS) / CREDITS Patrimony Leasing liabilities Banking liabilities Non monetary liabilities Non monetary liabilities Income accounts IPC UF UF UF IPC IPC Total (debits) (LOSS) PRICE LEVEL RESTATEMENT (2.153.587)
(68.402)
(5.138)
(1.352.819)
(130.781)
(4.844.165)
(1.455.526)
(86.328)
(6.160)
(753.039)
(81.760)
(3.878.697)
(8.554.892)
(6.261.510)
(1.165.923)
(835.036)
Note 19. Currency Exchange Differences
The foreign currency exchange differences detail is as follows:
ASSETS (DEBITS) / CREDITS Currency Payables by related companies Term deposits Other assets Cash and bank Negotiable assets Dollars Dollars Dollars Dollars
Dollars 2005
Th.Ch$ 2004
Th.Ch$
(3.177.807)
(152.623)
641.213 (32.372)
(6.819)
(2.874.587)
49.880
(61.712)
-
Total (debits) Credits (2.728.408)
LIABILITIES (DEBITS) / CREDITS Creditors due to imports Dollars 332.324
Sundry creditors Dollars
- Payables by related companies Dollars - Other liabilities Dollars (58.883)
146
(2.886.419)
6.184
9.494
17.450
-
Total (debits) Credits 273.441
33.128
CURRENCY EXCHANGE DIFFERENCE LOSS (2.454.967)
(2.853.291)
Note 20. Cash Flow Statement
Cash and Cash-equivalents flows are defined by the following concepts:
2005
Th.Ch$
Cash on hand
Marketable securities 2.860.161
1.000.560
Totals
3.860.721
2004
Th.Ch$
3.661.715
2.900.800
6.562.515
Note 21. CONTRACT FOR DERIVATIVES
The Society maintains two contracts for derivatives whose effects are to obtain R$21,000,000 while paying for these Th.Ch$2,537,769.
Contract Descriptions
Taxpayer
Item
Type of Contract´s
Specific Position
Identification contract Value
Due or expiry
Purchase /
Number
dates
Sale
Forward Investment
2.434.955
IV quarter 2009
T/C
S
Forward Investment
2.537.769
IV quarter 2006
T/C
S
Accounting accounts affected
Assets/Liabilities
Name
Amount Th.Ch$
Effects on results
Realized
Un- realized
Th.Ch$
Th.Ch$
9.772
626.750
-
Oher current liabilities
55.614
(55.614)
-
Note 22. Contingencies and Restrictions
I CONTINGENCIAS
LAWSUITS AND OTHER RELEVANT LEGAL ACTIONS WHERE FASA IS INVOLVED.
1. Name:
Pony Chile S.A. with Farmacias Ahumada S.A.
Court:
Case Nº: 5741-2002.
Origin: Pre-trial measure to submit evidence on an alleged contractual breach in which Farmacias Ahumada S.A. had incurred. A demand of
forced fulfillment of contract and indemnification for damages was filed, the amount of which is reserved until such time as the sentence is
executed.
Status: The parties rendered proof. On December 31, 2005, the lawsuit is pending motion.
2. Name: Court: Case Nº: Origin: Amount: Status: Sociedad de Seguridad Integral Raffo y Tonelli Limitada with Farmacias Ahumada S.A.
5134-2002.
An alleged contract breach incurred by Farmacias Ahumada S.A.
UF3,630.92.
On November 25, 2004, the parties were summoned to hear the verdict. On December 31, 2005, definitive sentence was pending on first
ruling.
147
3. Name: Pessoa Vasquez and other with Farmacias Ahumada S.A.
Court: 2nd First Instance Court of Los Angeles.
Case Nº: 47,891
Origin: Extra contractual Civil Liability Lawsuit on account of moral damages sustained by Iván Pessoa Vásquez and his spouse, originated in the
Amount: Status: allegedly unfounded dismissal of Mr. Pessoa.
Th.Ch$100,000.
On December 9, 2004 the first instance ruling was handed down, which entirely rejected the claim. On December 31, 2005 the final
proceeding for the claimant was pending.
4. Name: Court: Felipe de Jesus Benavides Pompa and others with Banca Afirme S.A and others
4th District Civil Court in Mexico City, D:F. Mexico.
Case Nº: 184/205
Origin: Annulment of several actions incurred on his representation by own family members acting on his behalf and that are beyond the faculties
conferred, and is directed against several persons, including Farmacias Benavides S.A. de C.V. and of actions by this.
Status: As of December 19th, 2005 the Court declared that it lacked competence and stated that these matters belong to an arbitration board. This
resolution is being appealed and the proceeding has been suspended while the appeal takes place.
According to the Legal Counsel to the Company as well as advise from external sources this legal action will have no material impact on the Company for it
has no plausible foundations on account of which it ought to be dismissed.
Farmacias Ahumadas S.A. and affiliates have not been legally served of any other legal proceedings filed against them and are different from those indicated
in the preceding paragraph I above and that would seek payment of certain sums that these would supposedly owe on account of exercising inherent
activities and which exceed a nominal individual proximate amount of ThCh$ 35,000.
b) Other contingencies
1. On December 31st, 2005 Farmacias Ahumada S.A. maintains a claim against settlement of accounts issues by the Internal Revenue Services due to dif-
ferences of interpretation related to criteria as to how to determine the taxable base for the fiscal years 2002 and 2003.
2. On December 31st, 2005 Boticas Fasa S.A. maintains a claim in Peru against settlement of account issued by the Superintendence of Tax Administration
(Sunat) due to differences of interpretation of the criteria to determine the taxable base for the fiscal year 2001.
148
II Obligations
a) On December 31, 2005 the Company had subscribed real estate lease agreements. Obligations for the next 5 years are the following:
Leases
2006
Th.Ch$
23.322.200
2007
Th.Ch$
23.331.800 2008
Th.Ch$
23.108.800 2009
Th.Ch$
23.283.800 2010
Th.Ch$
23.439.400
b) The Company incentive policy includes a stock options plan for its executive officers. By virtue of this plan, its beneficiaries subscribe a loan contract
where the Company binds itself to absorb the lower values that may occur in case the proceeds from share sales are lower than the respective debt of the
executive.
III Restrictions
FASA BONDS C and D:
By virtue of a public deed dated August 31, 2004 and executed at the Santiago Notary Public Office of Mr. Iván Torrealba Acevedo, the Parent Company
subscribed a bonds issue contract, where the Company commits itself to maintain certain financial indicators (covenants) calculated on the basis of its
individual and consolidated financial statements. These financial indicators correspond principally to:
• Level of indebtedness, measured on individual financial statements.
• Level of indebtedness, measured on consolidated financial statements.
The Company fulfills these restrictions.
BENAVIDES Bonds 97U:
As a result of the bonds emission realized in May 1997, Farmacias Benavides is subject to complying with certain financial indicators and restrictions.
These correspond principally to :
• Limits to obtaining and guaranteeing additional debts.
• Level of working capital.
• Level of indebtedness.
• Financial expenses coverage.
The Company complies with these restrictions.
149
IV Direct Guarantees:
Debtor
Name
Servicio de Salud Central Relation
Type of guarantee
Committed Assets
Type Recorded Value Outstanding Balances to closing date
of financial states
2005
2004
Th.Ch$
Th.Ch$
Farmacias Ahumada S.A. Supplier Indorse. Bill None - 17.777
Acreedor
la garantía
Empresa dedeCorreos
de Chile Farmacias Ahumada S.A. Supplier Indorse. Bill None - 107
17.601
106
Inmobiliaria Olba S.A. Farmacias Ahumada S.A. Supplier Indorse. Bill None - 70.395
69.696
Administradora Restaurantes Areste S.A. Farmacias Ahumada S.A. Supplier Indorse. Bill None - 27.034
26.400
Sociedad Inmobiliaria e Inversiones Chinquihue Limitada Farmacias Ahumada S.A. Supplier Indorse. Bill None - 18.240
18.059
V INDIRECT GUARANTEES:
Name
Acreedor
de la garantía
AIG de Brasil
Debtor
Relation
Inka Farma Participaoes S.A. Ex - Filial Type of guarantee
Fianza
Committed Assets
Type
Recorded Value -
- Outstanding Balances to closing date
of financial states
2005
2004
Th.Ch$
Th.Ch$
2.434.955
NOTE 23 Third Party Securities
Up to December 31st, 2005 and 2004 the Company has not received Securities from third parties.
Note 24. Local and Foreign Currencies
The detail of currencies included in the assets and liabilities is as follows:
Item Currency
2005
Th.Ch$
2004
Th.Ch$
CURRENT ASSETS Available Available Negotiable values Debtors on account of sales Sundry debtors Collect notes Collect notes and accounts EE.RR. Collect notes and accounts EE.RR. Inventories Tax claims Pre paid expenses Pre paid expenses Deferred taxes Other current assets Other current assets Pre paid expenses Sundry debtors Pesos
Dollars
Pesos
Pesos
Pesos
Pesos
Pesos
Dollars
Pesos
Pesos
UF
Pesos
Pesos
Pesos
UF
Dollars
Dollars
2.850.497
9.664
1.000.560
9.321.721
846.328
132.144
2.681.760
254.638
33.363.489
706.637
54.302
179.817
697.313
339.549
164.844
6.856
6.429
3.655.439
6.276
2.900.800
8.569.550
405.586
87.466
4.173.751
265.185
32.123.404
1.750.282
54.198
292.711
835.095
552.675
3.796
Pesos
26.902.915
26.962.751
FIXED ASSETS
Net Fixed Asset
OTHERS ASSETS 150
Investments in EE.RR. Long term debtors Payable notes and bills EE.RR. Payable notes and bills EE.RR. Payable notes and bills EE.RR. Intangibles Intangibles Amortization Others Others Pesos
UF
Dollars
Pesos
UF
Pesos
UF
Pesos
Pesos
UF
TOTAL ASSETS Pesos
17.997.711
9.029.372
37.613.362
9.672.416
- 1.559.811
1.157.055
(1.439.873)
1.973.460
2.933.244
15.303.337
9.447.946
44.522.471
5.836.665
9.462
1.645.201
1.189.846
(1.286.846)
3.537.486
1.422.981
108.786.255
107.345.353
DOLLARS
37.890.949
44.797.728
UF
13.338.817
12.124.433
-
Up to 90 days 2005
2004
2005
2004
Monto Annual
Monto Annual average
Amount
Tasaaverage
int. Amount
Item Currency Th.Ch$ prom.
av int. Rate
anual Th.Ch$ av int. Rate
90 days to 1 year
2005
2004
Amount Annual average Amount Annual average
Th.Ch$ av int. Rate
Th.Ch$ av int. Rate
CURRENT LIABILITIES
Short term liabilities with banks and financial institutions UF
71.915 1,00%
- - 148.046
Long term liabilities with banks and fin.Institutions -short term portion UF
20.131 3,28%
20.742 2,19%
61.214
Liabilities with the public (bonds) UF
1.833.577
- 523.690
- 1.324.460
Long term liabilities due in a year UF
15.343 8,30% 149.977 8,30%
47.908
Payable dividends Pesos
34.845
- 36.924
- - Accounts payable Pesos 47.250.328
- 44.773.458
- - Accounts payable Dollars
969.060
- 258.600
- - Payable notes Pesos
340.826
- 378.217
- 60.000
Sundry creditors Pesos
579.390
- 204.211
- - Sundry creditors UF
16.556
- 217.450
- - Sundry creditors Dollars
- - 111.911
- - Payable notes and bills EE.RR. Pesos 3.440.879
- 3.736.125
- - Notes and accounts payable related companies
Dollars 1.713.768
- 633.102
- - Provisions Pesos
3.794.414
- 3.494.520
- - Retentions Pesos
1.183.164
- 1.433.974
- - Other current assets Pesos
188.919
- - - - Payable notes and accounts EE.RR. UF
9.481
- - - - TOTAL CURRENT LIABILITIES UF
1.967.003
911.859
1,00%
1,98%
3,50%
8,30%
-
1.581.628
Pesos
56.812.765
54.057.429
Dollars
2.682.828
1.003.613
22.670
60.279
1.321.928
172.614
145.040
-
1,00%
1,68%
8,30%
-
1.577.491
60.000
- 145.040
- 1 to 3 years
3 to 5 years
5 to 10 years
Over 10 years Amount Annual av. Amount Annual av. Amount Annual av. Amount Annual av.
Item Currency ThCh$ Int. Rate ThCh$ Int. Rate
ThCh$
Int. Rate
ThCh$ Int. Rate
Long term liabilities 2005
Liabilities with banks and financial institutions Liabilities with the public (bonds) Sundry creditors Provisions Long term deferred taxes UF
UF
UF
Pesos
Pesos
40.264
6.811.510
149.223
618.186
735.982
1,98%
- - - - - 3,50% 6.811.510 3,50% 14.379.844 4,75% 7.568.338 3,50%
8,30%
167.846 8,30%
562.950 8,30% 854.390 8,30%
- - - - - - - 1.103.972
- - - - -
TOTAL LONG TERM LIABILITIES UF
7.000.997
6.979.356
1 4.942.794
Pesos
1.354.168
1.103.972
- 8.422.728
- INDIVIDUAL FINANCIAL STATEMENTS / FASA ANNUAL REPORT / 2005
151
1 to 3 years
3 to 5 years
Amount Annual av. Amount Annual av. Item Currency
ThCh$ Int. Rate ThCh$
Int. Rate
Long Term Liabilities 2004
Liabilities with banks and financial institutions Liabilities with the public (bonds) Subdry creditors Deferred taxes Long term provisions TOTAL LONG TERM LIABILITIES UF
UF
UF
Pesos
Pesos
120.560
6.043.106
138.159
1.382.877
526.791
2,19% - 8.30% - - - 10.197.742
154.064
2.074.315
- UF
6.301.825
- 10.351.806
Pesos
1.909.668
- 2.074.315
5 to 10 years Amount Annual av.
ThCh$
Int. Rate
Over 10 years
Amount Annual av.
ThCh$ Int. Rate
- - - - 5.25% 14.352.366
- 7.553.878
8.30% 517.433
8.30% 984.570
8.30%
- - - - - - - - - 14.869.799
- 8.538.448
-
- - -
- - Note 25. Penalties
Up to December 31st, 2005 the Company or its Directors have not been subject to penalties by the Superintendence of Securities and Insurance
Companies.
Note 26. Subsequent Events
During the month of January 2006 the affiliate Fasa Investment S.A. committed capital contributions in Fasa do Brazil-Participacoes in the amount of approximately $1,185 million pesos.
On January 26th, 2006 Farmacias Ahumada S.A. finalized the sale of 100% of its participation in Fasa do Brazil-Participacoes S.A. and its affiliates to
the society Farmapartners Participacoes SocietariasAs Ltda. Whose major shareholder is the present general manager of Drogamed, Mr. Hugo Rodriguez
Barba.
This sale meant recognizing a charge towards results for the fiscal year 2005 for approximately $4,500 million pesos , amount provisioned in its entirety
up to December 31st, 2005.
The re is no knowledge of other events after December 31st, 2005 and up to the date of issuing these Financial States (February 20th, 2006) which may
significantly affect the interpretation of these.
Note 27. Environment
Due to the nature of its activities, Farmacias Ahumada S.A. does not cause damage or alteration to the environment.
152
Note 28. Long Term and Short Term Portion of Sundry Creditors
Adjustment
currency
index
Short
term
portion
ThCh$
2006
ThCh$
2007
ThCh$
MATURITIES 2008
ThCh$
2009
ThCh$
2010 and beyond
ThCh$
2004
average Owed Capital
Total up
annual
total up to short term Long term
2005
2005
portion
portion
interest
ThCh$
%
ThCh$
ThCh$
ThCh$
Creditors
Various (1) UF 63.251 68.508 80.715 80.468 87.379 1.417.339 1.734.409 8,30 1.797.660 322.591 1.794.226
63.251 68.508 80.715 80.468 87.379 1.417.339 1.734.409 TOTALS
Total amount foreign currency:
Th.Ch$
-
-
1.797.660 322.591 1.794.226 %
0,00%
Total Amount national currency:1.797.660 100,00%
(1) This liability corresponds to installments on account of contracts for leases upon purchasing commercial stores, computer equipments and installing due
the stores.
The short term portion is under the item Long Term Liabilities due within one year.
153
ANALYSIS OF INDIVIDUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDED ON DECEMBER 31st, 2005 AND 2004
(In thousand Chilean pesos)
I. FINANCIAL STATEMENTS ANALYSIS
1. INCOME STATEMENTS ANALYSIS
Accumulated results for Farmacias Ahumadas S.A, up to December 31st, 2005, reached a loss of Ch$ 3,349 million pesos. Earnings for the fourth
quarter of 2005 registered a loss of Ch$ 1.239 million pesos compared to the profits of Ch.$21 million pesos from the previous fiscal year. The quarter’s
loss is due to a negative impact by the amount of Ch$ 4,477 million pesos in non operational results due to the sale of the affiliate Fasa do BrazilParticipacoes S.A. which was finalized January 26th, 2006. If the negative impact of the sale of the affiliate in Brazil is eliminated, the final net result of
the quarter would turn out a profit in the amount of Ch$ 3,238 million pesos.
Results for the fiscal year ended December 31st 2005 and 2004 show the following variations:
Sales
Cost of sales
2005
Th.Ch$
226.280.842
(170.111.603)
Administration and selling expenses
(58.882.628)
Net Income (Loss) for the year
154
(61.522.469)
(3.349.373)
2.104.142
1.871.066
3.975.208
1.456.236
63.626.611
(4.805.609)
2004
Th.Ch$
248.697.978
(185.071.367)
(2.092.220)
Non-Operating Income
Income tax
(2.713.389)
Operating Income
Income before
Income Taxes
56.169.239
Operating Margin
(111.820)
3.863.388
a. Operational Results:
The Operating Margin achieved during the last quarter of 2005 reached Ch$15,573 million pesos which compares positively with the Ch$13,804 million
pesos for the third quarter of 2005. The Operating Margin for the fourth quarter of 2004 was Ch$ 15,153 million pesos.
The Operating Margin obtained the fourth quarter of 2005 was a profit of Ch$1,252 million pesos, greater than Ch$9 million pesos during the same period
of the previous year which represents an increase of Ch$ 2,396 million pesos compared to the third quarter of the year 2005. These amounts are the consequence of increases in sales at comparable stores (over a year), of the investments realized for the establishments, distribution centers and for the systems
that have meant increases in income of around Ch$ 2,942 million pesos and an increase in operating margins of 12,8% in respect to the third quarter of
the present year.
The expenses on Administration and sales for the fourth quarter of 2005 reached Ch$14,321 million pesos, a lesser amount than the Ch$ 14,947 million
pesos for the third quarter of 2005 and than the Ch$ 15,144 million pesos for the same period of the previous year. This decrease is explained principally by
the lesser operational expenses as a result of the restructuring implemented during the course of 2005.
The non-operational results up to December 31st, 2005 reached a loss of Ch$2,092 million pesos when compared to the profits in the amount of Ch$ 878
million pesos accumulated during the third quarter of 2005. This variation is principally explained by the negative effect of the sale of the affiliate Fasa do
Brasil-Participacoes S.A. for Ch$ 4,477 million pesos which is recognized as an earning from Investments in related companies.
b. Non-Operational Results:
2. BALANCE SHEET ANALYSIS
The principal components of the assets and liabilities up to December 31st, 2005 and 2004 are the following:
ASSETS
Current assets
Fixed assets
Other assets
Total Assets
2005
Th.Ch$
52.616.548
55.676.214
26.902.915
80.496.558
160.016.021
2004
Th.Ch$
26.962.751
81.628.549
164.267.514
155
Current Assets:
Current Assets up to December 31st, 2005 experienced a decrease in the amount of Th.Ch$ 3,059,666 in respect to the closing period of the previous
year. This is principally explained by the following:
a) Decrease in financial assets (cash and equivalents) for Th.Ch $2,701,794.
b) Decrease in receivables from related companies for Th.Ch $1,502,538.
c) Increase in inventories for Th.Ch$ 1,240,085.
Fixed Assets (net):
Up to December 31st, 2005 this item did not undergo significant changes compared to the previous year.
Other Assets:
Other Assets up to December 31st, 2005 presented a negative variation in the amount of Th.Ch$ 1,131,991 when compared to the previous year.
This variation is principally explained by:
a) Investment Increases in related companies for Th.Ch$ 2,694,374
b) Long Term Debtors Decreases for Th.Ch$ 418,574.
c) Decrease in long term receivable notes and documents and of accounts receivable from related companies for Th.Ch$3.082.820.
LIABILITIES
2005
Th.Ch$
Current liabilities
Equity
Total Liabilities
Current Liabilities:
63.104.224
39.804.015
57.107.782
160.016.021
2004
Th.Ch$
57.695.432
44.045.861
62.526.221
164.267.514
This item experienced an increase for Th.Ch$ 5,408,792 in respect to the previous year. This net variation is explained principally for:
a) Increase in short term Obligations with the Public (bonds) for Th.Ch$1,312,419.
b) Increase in Accounts receivables for Th.Ch $3,187,330.
c) Increase in receivables, notes and documents with related companies for Th.Ch$ 794,901.
156
Long Term Liabilities:
This item presents a decrease of Th.Ch $4,241,846 in respect to the previous year. This variation is explained principally by the following:
a) Decrease in Long term Obligations with the Public (bonds) for Th.Ch$2,575,890 that were represented as for the short term.
b) Decrease in the deferred long term taxes for Th.Ch $1,617,238.
Equity:
Equity presented a decrease for Ch$ 5,418 million pesos compared to the previous year. The variation is explained by a decrease in Other reserves in the
amount of Ch$ 1,319 million pesos corresponding to the elimination of the adjustment due to conversion differences at the affiliate Fasa do Brasil- Participacoes and the decrease in withheld earnings for the amount of Ch$4,099 million caused by decreases in profits for the fiscal year and lesser transitory
Dividends in fiscal year 2005.
3. Financial Indicators
INDICATOR
UNIT
2005 2004
LIQUIDITY
Current liquidity
Acid test
Times
Times
0,83
0,31
0,97
0,41
1,63
56,71%
43,29%
2,70
INDEBTEDNESS
Level of indebtedness
Short term liabilities
Payment financial expenses
Times
%
%
Times
1,80
61,32%
38,68%
(1,54)
RESULTS
Financial expenses
R.A.I.I.D.A.I.E.
Th.Ch$
Th.Ch$
(2.035.461) 2.591.052 (2.116.713)
8.295.630
PROFITABILITY
Return on equity
Return on assets
Return operating assets Return per share
Return on dividends
%
%
%
$
Times
(5,6%)
(2,1%)
(3,3%)
(22,33)
564
6,3%
2,4%
2,4%
25,76
1.431
ACTIVITY
Inventory turnover
Fixed assets turnover
Total assets turnover
Inventory permanence
Times
Times
Times
Days
5,2
8,4
1,4
69
5,7
9,2
1,5
63
RESTRICTIONS ASSOCIATED TO BOND EMMISSIONS
The indicators for the fiscal year ended December 31st, 2005 are the following:
Consolidated indebtedness level
Individual level of indebtedness
Calculated
0,72
0,68
Required
157
II. ACCOUNTING VALUE AND ECONOMIC VALUE OF ASSETS
The Company is not aware of any significant differences related to neither the book values, nor the economic and/or market values of its principal
assets. Exception of the aforementioned are related to certain fixed assets of the Mexican Affiliate Farmacias Benavides S.A. de C.V. for which provisions
have been made.
III. SIGNIFICANT VARIATIONS
The company directly operates in the Chilean market and indirectly through its affiliates
in the Peruvian and Mexican markets reaching a total participation in the market of 7.53%.
Up to December 31st, 2005 FASA operated a total of 909 pharmacies which were distributed in Mexico (529), Chile (250) and Peru (130), placing itself
as the number one chain in the field in Latin America. Through its operations in Chile, Peru and Mexico, FASA provided services to 154 million clients
during the fiscal year.
IV. ANALYSIS OF CASH FLOW STATEMENT
During the fiscal year ended December 31st, 2005 the Company organized the following flows: positive net flow for operational activities in the amount
of Th.Ch$ 6,391,653 (positive net flow for Th.Ch$2,796,772 in 2004); positive net flow generated in financial activities for the amount of Th.Ch$
5,080,972 ( negative net flow for Th.Ch$1,361,767 in 2004) and negative net flow generated by investment activities in the amount of Th.Ch$13,818,808
(negative net flow of Th.Ch$ 4,643,758 in 2004), this originate from the following:
2005
Th.Ch$
Profits (loss) in fiscal year
Results trade assets
Depreciation and amortization
Other credits / results (minus) Other charges towards results
Assets variation
Liabilities variation
Net flow generated from
Operational activities
158
(3.349.373)
9.677
5.304.441
(4.084.298)
5.325.728
(342.960)
3.528.438
6.391.653
Loans obtained
Obligations with the public
Paid Dividends
Paid Loans
Paid obligations to public Paid expenses emissions
and placement obligations
with public
Net flow
Financing activities
2004
Th.Ch$
10.419.317
(671.880)
(3.343.057)
(1.323.408)
21.650
38.648.777
(2.202.463)
(1.157.130)
(35.668.879)
(1.003.722)
5.080.972
2.796.772
-
3.863.388
4.950
6.191.488
(9.259.136)
4.071.090
366.407
(2.441.415)
(1.361.767)
Fixed Assets sale
1.096.520
Loan collection docs.
To related companies
6.553
Incorporation fixed assets
(7.002.684) Other investment income
Other loans related companies (7.656.866)
(262.331)
10.876
(4.788.977)
221.079
(87.099)
Net Flow generated by
Investment activities
(4.643.758)
(13.818.808)
363
V. MARKET RISK ANALYSIS
1. Interest rate risk:
Most of the obligations are the result s of Leasing operations and of obligations with the public (bonds) which have fixed rates of interest.
The Company administers the risk of interest rates oriented towards its debt structure in the long term and towards a proper combination associated with
cash flows generated by operations.
2. Exchange rate type of risk:
The Company does not maintain current assets in US dollar operations for short term obligations. There are short term operations in liabilities in American
dollars that are not significant in respect total liabilities.
The Company who as an enterprise operates in different markets faces risks in terms of rates of exchange that respond to the fluctuations in the Mexican
pesos and in the new Peruvian soles with respect to the Chilean peso. For this reason monetary assets and liabilities are maintained in equilibrium in these
currencies implying a non significant exposition to exchange fluctuations.
3. Risk hedging policies:
Company policy matches the currency in which it carries out financial operations (for assets and liabilities) with the operative flows generated by its operations.
For this reason the Company has not found it necessary to incorporate additional hedging operations except for contracts maintained with FASA with the
objective of mitigating the risks associated with a debt for R$21 million which it serves as a guarantor.
4. Revenues and expenses
Revenues and operational expenses by the Company are principally made up of Chilean pesos.
159
........
........
........
........
........
........
........
160
SUMMARIZED FINANCIAL STATEMENTS
++++ -----82.7926.419
9547.620.00000008131.482.7926.41
47.620.029
1.317.9547.620.02911.336.8131.
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1.317.9547.620.02911.336.8131.482.7
SUMMARIZED FINANCIAL STATEMENTS | MEMORIA ANUAL FASA | 2005
161
SUMMARIZED BALANCE SHEET ON DECEMBER 2005 AND 2004
(In Thousand Chilean Pesos)
Fasa Investment Ltda. and Affiliates
2005
2004
Th.Ch$
Th.Ch$
Fasa Corp S.A and Affiliates
2005
2004
Th.Ch$
Th.Ch$
ASSETS Total Current Assets
87.649.647 84.725.145 5.809.072 5.836.207
Total Fixed Assets
66.047.451 68.598.721 8.735.383 4.088.001
Total Other Assets
19.898.284 40.260.411 809.892 984.419
TOTAL ASSETS
173.595.382 193.584.277 15.354.347 10.908.627
2005
2004
Th.Ch$
Th.Ch$
2005
2004
Th.Ch$
Th.Ch$
LIABILITIES
Total Current Liabilities 74.484.003 84.991.150 7.101.050 6.490.475
Total Long Term Liabilities
56.990.205 66.718.806 8.719.130 4.873.809
Minority Interest.
24.122.024 26.569.289 575 23
Total Shareh.´s Equity
17.999.150
15.305.032
(466.408)
(455.680)
TOTAL LIABILITIES
173.595.382 193.584.277 15.354.347 10.908.627
Note: Affiliates’ complete financial statements are available to the public in the offices of Farmacias Ahumada S.A. and the Superintendence for Securities and Insurance Companies.
162
SUMMARIZED INCOME STATEMENTS ON DECEMBER 31, 2005 AND 2004
Operating Income
Non Operating Income
Income before Income Tax and Minority Int. Income Tax
Minority Interest
Amortization Negative Goodwill
2005
2004
Th.Ch$
Th.Ch$
2005
2004
Th.Ch$
Th.Ch$
5.221.879 4.057.776 (62.757)
(48.313)
(3.920.122)
67.210 95.862 (90.403)
1.301.757 4.124.986 33.105 (138.716)
1.583.301 (2.045.978)
3.245.118 2.139.979 (30.102)
1.712.759 (43.179)
(555)
-
34.737
(18)
-
4.084.198 7.947.622 (10.629)
(103.997)
SUMMARIZED CASH FLOW STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005 AND 2004
2005
2004
Th.Ch$
Th.Ch$
2005
2004
Th.Ch$
Th.Ch$
Net cash flow (utilized) from operations
13.484.486 2.523.348 (708.259)
309.317
Net cash flow (utilized) from financial activities
(4.149.466)
941.555 4.689.132 853.588
Net cash flow from Investment activities
(6.174.110)
(2.338.850) (3.953.777)
(1.056.808)
3.160.910 1.126.053 27.096 106.097
440.861 165.304 2.902 (1.375)
3.601.771 1.291.357 29.998 104.722
Initial balance of cash and cash equivalent
17.549.977 16.258.620 161.023 56.301
FINAL BALANCE CASH AND/CASH EQUIVALENT 21.151.748 17.549.977 191.021 161.023
Net cash flow for the year
Effect of inflation on cash And cash equivalent
Net change of cash and cash equivalent
163
SUMMARIZED CASH FLOW STATEMENTS FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2005 AND 2004
2005
2004
ThCh$
ThCh$
Fasa Corp S.A. and Affiliates
2005
2004
ThCh$
ThCh$
Fiscal Year Income (Loss)
4.084.198 7.947.622 (10.629)
(103.997)
Income on assets sale
4.187.027
(2.179.461)
11.902 1.479
Charges (debits) to income Not representing cash flow
(148.220)
2.725.455
962.959
558.688
Changes in assets affecting Cash flow. decrease (increase) 2.185.953
1.100.876
(926.900)
(691.377)
Changes in liabilities affecting Cash flow. increases (decreases)
1.129.550
(7.101.246)
(746.225)
Results (Loss) of minority Interest
2.045.978 30.102 634 18
13.484.486 2.523.348 (708.259)
309.317
NET OPERATIONAL FLOW
544.506
NOTE 1 COMPANY REGISTRATION
On October 15, 1997, the Company was registered under the No 0629 in the registry of Securities kept by the Superintendence for Securities and
Insurance Companies and is subject to supervision by this entity.
The affiliate Farmacias Benavides S.A. de C.V. (Mexico) is a corporation that lists its shares in the Mexican Stock Exchange. Therefore it is subject to
supervision by the National Commission for Banks and Securities of Mexico, (Comisión Nacional Bancaria y de Valores de México (CNBV)
NOTE 2. ACCOUNTING CRITERIA APPLIED
The accounting criteria applied by all the Companies of the Group are found in note 2 “Accounting Criteria Applied”.
NOTE 3. ACCOUNTING CHANGES
During the year ended December 31, 2005, the affiliate Fasa Investment Ltda. on account of the results attained by Farmacias Benavides S.A. de
C.V. (Mexico) modified the deadline for amortizing its greater investment value from 5 to 4 years. This change meant a larger credit on results in the
amount of approximately Ch.$1,300 million pesos.
During the fiscal year ended on December 31, 2005 no accounting changes were made in the application of generally accepted accounting principles
in respect to the previous year.
164
RELEVANT EVENTS
1. On the 10th of March, 2005, the board of Farmacias Ahumadas S.A. agreed to propose to the Regular Shareholders Meeting, to meet on the next 28th
of April, 2005, the distribution of a Definite Dividend in the amount of $2,175,000,000 which amounts to $14, 50 pesos per share, charging this with the
Temporary Dividend of $10 pesos distributed on September 29 th, 2004.
2. On October 27th, 2005 the Board learned of an existing demand initiated in Mexico by the brothers Domingo and Felipe Benavides Pompa who against
the rest of the Benavides’ family and of the Banco Fiduciario, principally, and in addition of Farmacias Ahumada and Farmacias Benavides among others,
requested the nullity of certain actions and contracts that had taken place in the course of 2002. This related to the 12% ownership of the company which
in no way affects the control Farmacias Ahumada has over Farmacias Benavides. The Company’s lawyers informed that this demand stands on no grounds
and that it should be rejected on all counts.
165
166
FASA | Annual Report / 2005
TOGETHER, FOR LIFE
Miraflores 383 | Floor 6th | Santiago | Chile
Telephone: [56 2] 222 11 22 | Fax: [56 2] 661 94 10
www.fasa.cl
[email protected]

FASA / Annual Report / 2005

Transcription

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