| LITIGATION AND CONTINGENCIES |
23 – LITIGATION AND CONTINGENCIES 23.1 Lawsuits or other legal actions: In the opinion of the Company’s legal counsel, the Parent Company and its subsidiaries do not face legal or extrajudicial contingencies that might result in material or significant losses or gains, except for the following: | 1) | Embotelladora del Atlántico S.A. and Andina Empaques Argentina S.A. face labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling ThCh$ 699,235 (ThCh$ 722,249 as of December 31, 2024). Management considers it unlikely that non-provisioned contingencies will affect the Company’s income and equity, based on the opinion of its legal counsel. Additionally, Embotelladora del Atlántico S.A. maintains time deposits for an amount of ThCh$ 21,331 (ThCh$61,269 as of December 31, 2024) in time deposits to guarantee judicial liabilities. |
| 2) | Rio de Janeiro Refrescos Ltda. faces labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling ThCh$ 54,678,827 (ThCh$ 53,001,124 as of December 31, 2024). Management considers it unlikely that non-provisioned contingencies will affect the Company’s income and equity, based on the opinion of its legal counsel. As it is customary in Brazil, Rio de Janeiro Refrescos Ltda. maintains Deposit in courts and assets given in pledge to secure the compliance of certain processes, irrespective of whether these have been classified as a possible, probable or remote. The amounts deposited or pledged as legal guarantees amounted to ThCh$ 25,362,998 (ThCh$ 24,406,565 as of December 31, 2024). |
Part of the assets held under warranty by Rio de Janeiro Refrescos Ltda. are in the process of being released and others have already been released in exchange for guarantee insurance and bond letters for BRL 2,749,783,313 with different Financial Institutions and Insurance Companies in Brazil, these entities receive an annual commission fee of 0.13%, and become responsible of fulfilling obligations with the Brazilian tax authorities should any trial result against Rio de Janeiro Refrescos Ltda. Additionally, if the warranty and bond letters are executed, Rio de Janeiro Refrescos Ltda. promises to reimburse to the financial institutions and Insurance Companies any amounts disbursed by them to the Brazilian government. Main contingencies faced by Rio de Janeiro Refrescos are as follows: | a) | Tax contingencies resulting from credits on tax on industrialized products (IPI). |
Rio de Janeiro Refrescos is a party to a series of proceedings under way, in which the Brazilian federal tax authorities demand payment of value-added tax on industrialized products (Imposto sobre Produtos Industrializados, or IPI) totaling BRL 3,625,647,115 as of the date of these financial statements. The Company does not share the position of the Brazilian tax authority in these procedures and considers that it was entitled to claim IPI tax credits in connection with purchases of certain exempt raw materials from suppliers located in the Manaus free trade zone. Based on the opinion of its advisers, and legal outcomes to date, Management estimates that these procedures do not represent probable losses and has not recorded a provision on these matters. Notwithstanding the above, the IFRS related to business combination in terms of distribution of the purchase price establish that contingencies must be measured one by one according to their probability of occurrence and discounted at fair value from the date on which it is deemed the loss can be generated. As a result of the acquisition of Companhia de Bebidas Ipiranga in 2013 and pursuant to this criterion and although there are contingencies listed only as possible for BRL 665,173,794 (amount includes adjustments for current lawsuits) a start provision has been generated in the accounting of the business combination for BRL 124,862,349. | b) | Other tax contingencies. |
They refer to ICMS-SP tax administrative processes that challenge the credits derived from the acquisition of tax-exempt products acquired by the Company from a supplier located in the Manaus Free Zone. The total amount is BRL 613,868,342, being assessed by external attorneys as a remote loss, so it has no accounting provision. The company was challenged by the federal tax authority for tax deductibility of a portion of goodwill in the 2014-2016 period arising from the acquisition of Companhia de Bebidas Ipiranga. The tax authority understands that the entity that acquired Companhia de Bebidas Ipiranga is Embotelladora Andina and not Rio de Janeiro Refrescos Ltda. In the view of external lawyers, such a statement is erroneous, classifying it as a possible loss. The value of this process is BRL 1,190,254,577 as of the date of these financial statements. | 3) | Embotelladora Andina S.A. and its Chilean subsidiaries face labor, tax, civil and trade lawsuits. Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling ThCh$ 2,379,469 (ThCh$ 1,472,915 as of December 31, 2024). Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors. |
| 4) | Paraguay Refrescos S.A. faces tax, trade, labor and other lawsuits. Accounting provisions have been made for the contingency of any loss because of these lawsuits amounting to ThCh$ 53,678 (ThCh$ 49,511 as of December 31, 2024). Management considers it is unlikely that non-provisioned contingencies will affect income and equity of the Company, in the opinion of its legal advisors. |
23.2 Direct guarantees and restricted assets: Guarantees and restricted assets are detailed as follows: Guarantees that commit assets recognized in the financial statements: | | | | | | | | | | | | | | | | | | | Committed assets | | Carrying amount | Creditor of the guarantee | | Name of debtor | | Relationship | | Collateral | | Type | | 12.31.2025 | | 12.31.2024 | | | | | | | | | | | ThCh$ | | ThCh$ | Administradora Plaza Vespucio S.A. | | Embotelladora Andina S.A. | | Parent | | Guarantee receipt | | Trade Debtors and Other Accounts Receivable | | 154,080 | | 141,900 | Elqui Limited Agricultural Cooperative | | Embotelladora Andina S.A. | | Parent | | Guarantee receipt | | Other non-current financial assets | | 1,361,892 | | 1,212,500 | Mall Plaza | | Embotelladora Andina S.A. | | Parent | | Guarantee receipt | | Trade Payables and Other Accounts Receivable | | 881,130 | | 628,381 | Metro S.A. | | Embotelladora Andina S.A. | | Parent | | Guarantee receipt | | Trade receivables and other accounts receivable | | 23,996 | | 23,204 | Parque Arauco S.A. | | Andina Bottling Company | | Parent | | Guarantee receipt | | Trade Payables and Other Accounts Receivable | | 323,386 | | 312,712 | Lease agreement | | Embotelladora Andina S.A. | | Parent | | Guarantee receipt | | Trade Debtors and Other Accounts Receivable | | 96,046 | | 92,875 | Miscellaneous | | Embotelladora Andina S.A. | | Parent | | Guarantee receipt | | Trade Debtors and Other Accounts Receivable | | 82,919 | | 98,879 | Various Retail | | Polar Transportation | | Subsidiary | | Guarantee receipt | | Trade Payables and Other Accounts Receivable | | 56,951 | | 22,235 | Employee Claims | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 8,863,041 | | 8,045,861 | Civil and tax claims | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 6,265,150 | | 6,370,534 | Government institutions | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Plant and equipment | | Property, Plant, and Equipment | | 10,234,807 | | 9,990,170 | Distribuidora Baraldo S.H. | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | — | | 19 | Acuña Gómez | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 19 | | 29 | Nicanor López | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 13 | | 21 | Municipality of Bariloche | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 655 | | — | Municipality of San Antonio Oeste | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 1,376 | | 2,131 | Municipality of Carlos Casares | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 56 | | 86 | Municipality of Chivilcoy | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 8,607 | | 13,331 | Granada Maximiliano | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 112 | | 174 | Municipality of Junin | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 55 | | — | Almada Jorge | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 152 | | 236 | Other | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 42 | | 55 | Temas Industriales SA - General seizure of funds | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 7,817 | | 12,107 | DBC SA C CERVECERIA ARGENTINA SA ISEMBECK | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 1,652 | | 2,559 | Coto Cicsa | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | — | | 1,014 | Cencosud | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 156 | | 241 | José Luis Kreitzer, Alexis Beade, and Cesar Bechetti | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | 617 | | — | Vicentin | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | — | | 956 | Province of Entre Ríos | | Embotelladora del Atlántico S.A. | | Subsidiary | | Judicial deposit | | Other non-current non-financial assets | | — | | 6,981 | Marcus A. Peña | | Paraguay Refrescos | | Subsidiary | | Real Estate | | Property, Plant, and Equipment | | 5,515 | | 5,252 | Ana Maria Mazó | | Paraguay Refrescos | | Subsidiary | | Real Estate | | Property, Plant, and Equipment | | — | | 1,137 | Stefano Szwao Giacomelli | | Paraguay Refrescos | | Subsidiary | | Real estate | | Property, plant, and equipment | | 3,311 | | 3,054 | Rental guarantee | | Paraguay Refrescos | | Subsidiary | | Real Estate | | Property, Plant, and Equipment | | 1,361 | | — | Sofía Cartes | | Paraguay Refrescos | | Subsidiary | | Real Estate | | Property, Plant, and Equipment | | 3,220 | | 2,637 |
Guarantees that do not commit assets recognized in the Financial Statements: | | | | | | | | | | | | | | | | | Committed assets | | Amounts involved | Creditor of the guarantee | | Debtor name | | Relationship | | Guarantee | | Type | | 12.31.2025 | | 12.31.2024 | | | | | | | | | | | ThCh$ | | ThCh$ | Labor proceedings | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Guarantee receipt | | Legal proceeding | | 5,980,781 | | 6,648,889 | Administrative proceedings | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Guarantee receipt | | Legal proceeding | | 88,143,399 | | 80,036,491 | Federal Government | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Guarantee receipt | | Legal proceeding | | 219,466,178 | | 188,083,737 | State Government | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Guarantee receipt | | Legal proceeding | | 138,003,496 | | 116,943,181 | Other | | Rio de Janeiro Refrescos Ltda. | | Subsidiary | | Guarantee receipt | | Legal proceeding | | 1,737,590 | | 1,407,340 | EZEIZA Customs | | Embotelladora del Atlántico S.A. | | Subsidiary | | Surety bond | | Faithful compliance of contract | | 346,823 | | 576,829 | EZEIZA Customs | | Andina Empaques Argentina S.A. | | Subsidiary | | Surety bond | | Faithful compliance of contract | | — | | 4,414 |
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