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LARRAIN VIAL S.A.
CORREDORA DE BOLSA Separate Financial Statements as of December 31, 2013 and 2012
and for the years then ended
(With Independent Auditor’s Report Thereon)
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LARRAIN VIAL S.A.
CORREDORA DE BOLSA
CONTENTS
Independent Auditor’s Report
Separate Statements of Financial Position
Separate Statements of Comprehensive Income
Separate Statements of Changes in Equity
Separate Statements of Cash Flows
Notes to the Separate Financial Statements
ThCh$ : Amounts expressed in thousands of Chilean pesos
UF : Amounts expressed in Unidades de Fomento
US$ : Amounts expressed in United States dollars
ThUS$ : Amounts expressed in thousands of United States dollars
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
CONTENTS
Page
Independent Auditor’s Report 1
Separate Statements of Financial Position 4
Separate Statements of Comprehensive Income 6
Separate Statements of Changes in Equity 8
Separate Statements of Cash Flows 10
NOTES
1. Reporting Entity 11
2. Basis of preparation 14
3. Significant accounting policies 15
4. Financial risk management 25
5. Use of Estimates and judgments 36
6. Adjustment and foreign currency translation differences 38
7. Cash and cash equivalents 39
8. Financial instruments by Category 39
9. Financial instruments at fair value – securities owned 41
10. Financial instruments at amortized value – securities owned 46
11. Financial instruments at amortized value – financing operations 47
12. Derivatives 49
13. Receivables from brokers and dealers 52
14. Receivables for securities owned 54
15. Balances and transactions with related parties 56
16. Investments in other companies 74
17. Intangible assets 77
18. Property and equipment 77
19. Financial liabilities at fair value 78
20. Financing obligations 78
21. Bank borrowings 80
22. Payables to brokers and dealers 81
23. Payables for securities owned 82
24. Other receivables and payables 82
25. Provisions 83
26. Income (expense) by market line of business 84
27. Income tax and deferred taxes 86
28. Contingencies and commitments 88
29. Equity 97
30. Sanctions 98
31. Significant events 98
32. Subsequent events 99
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Financial Position
as of December 31, 2013 and 2012
See accompanying notes to these financial statements.
4
Assets Note 2013 2012 ThCh$ ThCh$
11.01.00 Cash and cash equivalents 7 33,660,967 28,731,129
11.02.00 Financial instruments 200,281,081 124,535,299
11.02.10 At fair value – available securities owned 23,504,953 17,753,953
11.02.11 Equity securities (IRV) 9 3,563,256 5,715,006
11.02.12 Debt securities and financial brokerage (IRF and IIF) 9 19,941,697 12,038,947
11.02.20 At fair value- committed securities owned 149,242,723 81,035,343
11.02.22 Debt securities and financial brokerage 9 149,242,723 81,035,343
11.02.30 At fair value- derivative financial instruments 12 4,575,673 1,520,239
11.02.60 At amortized cost- financing operations 22,957,732 24,225,764
11.02.61 Securities borrowed and purchased under resale
agreements on IRV 11
9,140,758 19,746,670
11.02.62 Securities borrowed and purchased under resale
agreements on IRF and IIF 11
13,355,501 4,177,309
11.02.63 Other 11 461,473 301,785
11.03.00 Receivables from brokers and dealers 13 115,780,772 63,724,953
11.04.00 Receivables for securities owned 14 494,066 288,816
11.05.00 Trade receivables due from related parties 15 6,749,697 39,661,897
11.06.00 Other receivables 24 7,999,170 18,929,635
11.07.00 Current tax assets 27 2,779,690 4,192,071
11.08.00 Deferred taxes 27 489,437 541,950
11.09.00 Investments in other companies 16 6,048,474 3,883,307
11.10.00 Intangible assets 17 2,748,642 2,179,413
11.11.00 Property and equipment 18 2,783,418 2,984,937
11.12.00 Other assets 2,610,955 2,944,852
10.00.00 Total assets 382,426,369 292,598,259
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Financial Position, continued
as of December 31, 2013 and 2012
See accompanying notes to these separate financial statements.
5
Liabilities and equity Note 2013 2012 ThCh$ ThCh$
21.01.00 Financial liabilities 168,283,338 99,617,691
21.01.20 At fair value- derivative financial instruments 12 4,364,964 1,821,562
21.01.30 Financing obligations 163,423,911 85,711,989
21.01.32 Securities loaned and obligations under repurchase
agreements on IRF and IIF 20
163,118,800 85,511,530
21.01.33 Other 20 305,111 200,459
21.01.40 Bank borrowings 21 494,463 12,084,140
21.02.00 Payables to brokers and dealers 22 95,272,147 54,672,390
21.03.00 Payables for securities owned 23 - -
21.04.00 Trade payables due to related parties 15 1,166,239 17,525,221
21.05.00 Other payables 24 51,371,898 36,890,819
21.06.00 Provisions 25 2,168,933 2,815,520
21.07.00 Tax payables 27 120,503 160,949
21.00.00 Total liabilities 318,383,058 211,682,590
Equity
22.01.00 Capital 29 9,933,857 9,933,857
22.02.00 Reserves 29 1,718,595 1,656,947
22.03.00 Retained earnings 29 45,008,678 62,629,875
22.04.00 Profit for the year 29 7,382,181 6,469,333
Equity attributable to the owners of the Parent 64,043,311 80,690,012
Non-controlling interests - -
22.00.00 Total equity 64,043,311 80,690,012
20.00.00 Total liabilities and equity 382,426,369 292,598,259
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Comprehensive Income
for the years ended as of December 31, 2013 and 2012
See accompanying notes to these separate financial statements.
6
Note 2013 2012
ThCh$ ThCh$ Brokerage income and expense
30.10.01 Trading fee and commission income 11,390,216 11,737,467
30.10.03 Fee and commission expense (2,624,684) (2,163,420)
30.10.04 Other commissions 14,416,271 13,972,019
30.10.00 Total brokerage income 23,181,803 23,546,066
Service revenue
30.20.01 Revenue from portfolio management 1,731,930 1,507,092
30.20.03 Revenue from financial advisory 1,109,783 479,436
30.20.04 Other revenue 1,797,545 1,276,248
30.20.00 Total service revenue 4,639,258 3,262,776
Income from financial instruments
30.30.01 At fair value 11,076,547 10,078,946
30.30.02 At fair value – derivatives (774,355) 375,361
30.30.04 At amortized cost- financing operations 1,020,704 1,307,818
30.30.00 Total income from financial instruments 11,322,896 11,762,125
Expense from financing operations
30.40.01 Financing expenses (5,172,959) (4,082,202)
30.40.02 Other finance expenses (689,543) (559,932)
30.40.00 Total expense from financing operations (5,862,502) (4,642,134)
Administrative and selling expenses
30.50.01 Personnel expenses (7,574,567) (8,710,434)
30.50.02 Selling expenses (28,806,157) (24,879,481)
30.50.03 Other administrative expenses (774,110) (1,153,949)
30.50.00
Total administrative and selling
expenses (37,154,834) (34,743,864)
Other income (expense)
30.60.01
Adjustment and foreign currency translation
differences 6 1,757,431 (1,180,763)
30.60.02 Share of profit of equity-accounted investees 8,557,139 7,604,074
30.60.03 Other income (expense) 254,916 263,330
30.60.00 Total other income 10,568,486 6,686,641
30.70.00 Profit before income tax expense 6,696,107 5,871,610
30.80.00 Income tax expense 27 686,074 597,723
30.00.00 Profit for the year 7,382,181 6,469,333
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Comprehensive Income, continued
for the years ended as of December 31, 2013 and 2012
See accompanying notes to these separate financial statements.
7
B. Statements of other comprehensive income Note 2013 2012 ThCh$ ThCh$
30.00.00 Profit for the year 7,382,181 6,469,333
Income (expense) recognized with a credit (debit) to
equity
31.20.00 Financial assets at fair value through equity 16 b 57,492 111,159
31.30.00
Share of other comprehensive income of equity-accounted
Investees 4,156 -
31.00.00
Total income (expense) recognized with a
credit (debit) to equity 61,648 111,159
32.00.00
Total comprehensive income recognized for
the year 7,443,829 6,580,492
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Changes in Equity
for the years ended December 31, 2013 and 2012
See accompanying notes to these separate financial statements.
8
As of December 31, 2013
Statements of Changes in Equity
Capital
Reserves
Retained
earnings
Profit for the
year
Equity
attributable to
the owners of
the Parent
Capital
Financial
assets at fair
value through
equity
Financial
assets at fair
value through
equity
Revaluation of
property, plant
and equipment Other
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
40.10.00 Opening balance as of January 1, 2013
9,933,857 1,899,236 - (242,289) 62,629,875 6,469,333 80,690,012 - 80,690,012
40.20.00 Business combination - - - - - - - - - 40.30.00 Comprehensive income for the year - 57,492 - 4,156 - 7,443,829 7,443,829 - 7,443,829
40.30.10
Total income (expense) recognized
with a credit (debit) to equity - 57,492 - 4,156 - 61,618 - 61,618 40.30.20 Profit for the year - - - - - 7,382,181 7,382,181 - 7,382,181 40.40.00 Transfers to retained earnings - - - - 6,469,333 (6,469,333) - - -
40.50.00
Distribution of dividends or profit-
sharing - - - - (24,069,080) - (24,069,080) - (24,069,080) 40.60.00 Other adjustments to equity - - - 4,156 (21,450) - (21,450) - (40,198)
40.00.00 Balance as of December 31, 2013 9,933,857 1,956,728 - (238,133) 45,008,678 7,382,181 64,043,311 - 64,043,311
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Changes in Equity, continued
for the years ended December 31, 2013 and 2012
See accompanying notes to these separate financial statements.
9
As of December 31, 2012
Statements of Changes in Equity
Capital
Reserves
Retained
earnings Profit for the
year
Provisional
dividends or
profit-sharing Total
Retained
earnings Financial
assets at fair
value through
equity
Financial
assets at fair
value through
equity
Revaluation of
property, plant
and equipment Other
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
40.10.00 Opening balance as of January 1, 2012
9,933,857 1,788,077 - (242,289) 45,425,963 17,203,912 74,109,520 - 74,109,520
40.20.00 Business combination - - - - - - - - - 40.30.00 Comprehensive income for the year - 111,159 - - - 6,580,492 6,580,492 - 6,580,492
40.30.10
Total income (expense) recognized
with a credit (debit) to equity - 111,159 - - - 111,159 111,159 - 111,159 40.30.20 Profit for the year - - - - - 6,469,333 6,469,333 - 6,469,333 40.40.00 Transfers to retained earnings - - - - 17,203,912 (17,203,912) - -
40.50.00
Distribution of dividends or profit-
sharing - - - - - - - - 40.60.00 Other adjustments to equity - - - - - - - - -
40.00.00 Balance as of December 31, 2012 9,933,857 1,899,236 - (242,289) 62,629,875 6,469,333 80,690,012 - 80,690,012
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Separate Statements of Cash Flows
for the years ended December 31, 2013 and 2012
See accompanying notes to these separate financial statements.
10
2013 2012
ThCh$ ThCh$
Net cash flows from operating activities
51.11.00 Fees and commissions received (paid) 23,181,803 23,546,066
51.12.00 Net receipts from (payments for) brokerage customers 32,828,541 14,932,247 51.13.00 Net receipts from (payments for)financial instruments at fair value 930,715 10,078,946 51.14.00 Net receipts from (payments for) derivative financial instruments (873,518) 375,361 51.15.00 Net receipts from (payments for) financial instruments at amortized
cost (2,829,833) 1,307,818 51.16.00 Net receipts from (payments for) financial advisory, portfolio
management and custody of securities 4,639,258 1,986,529 51.17.00 Administrative and trading expenses paid (34,988,901) (33,968,362) 51.18.00 Taxes paid (1,700,493) (1,784,439)
51.19.00 Other cash receipts from (payments for) operating activities 349,752 333,572
51.10.00 Net cash generated from operating activities 21,537,324 16,807,738
Net cash from financing activities
52.11.00 Net receipts from (payments for) financial liabilities (11,589,677) 11,464,930 52.12.00 Net receipts from (payments for) related party financing (8,786,120) (28,957,993) 52.13.00 Capital increases - - 52.14.00 Distribution of income and capital - - 52.15.00 Other cash receipts (payments) from financing activities - -
52.10.00 Net cash used in financing activities (20,375,797) (17,493,063)
Net cash from investing activities
53.11.00 Cash receipts from sale of premises and equipment - - 53.12.00 Cash receipts from sale of investments in companies - - 53.13.00 Dividends and other income received from investments in
companies 8,537,965 7,604,075 53.14.00 Acquisition of premises and equipment - - 53.15.00 Investments in other companies (2,165,167) - 53.16.00 Other cash receipts from (payments for) investing activities (569,229) (1,445,427)
53.10.00 Net cash generated from investing activities 5,803,569 6,158,648
50.10.00 Net cash flows for the year
6,965,097 5,473,323
50.20.00 Effect of exchange rate fluctuations on cash and cash equivalents (2,035,258) (1,082,909)
50.30.00 Net (decrease) increase in cash and cash equivalents 6,965,097 5,473,323
50.40.00 Cash and cash equivalents as of January 1 28,731,129 24,340,715
50.00.00 Cash and cash equivalents as of December 31 total net
cash for the year 33,660,967 28,731,129
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
11
Note 1 Reporting Entity
Company name : Larraín Vial S.A. Corredora de Bolsa
Taxpayer ID : 80.537.000-9
Legal address : Av. El Bosque Norte N°0177, Las Condes.
Date of incorporation : 10/08/1954
Registration number : 6
Line of business : Security brokerage
Shareholders : Asesorías Larraín Vial Ltda. 49%
Larraín Vial S.A. 51%
100%
The Company was incorporated on August 10, 1954, is subject to the regulations in the
Securities Market Act, No.18.045 and is under the oversight of the Chilean Superintendence of
Securities and Insurance (SVS).
The Company's line of business is conducting brokerage operations on behalf of third parties
acting as a stock broker, conducting all types of activities performed by stock brokers in
accordance with all the legal and regulatory provisions currently in force or enacted in the future,
as well as the performance of all those supplementary activities that the Chilean Superintendence
of Securities and Insurance authorizes or has authorized for the performance by stock brokers.
Larraín Vial S.A. Corredora de Bolsa’s main line of business is the brokerage of securities and
performs operations on its own or on behalf of third parties. However, its line of business allows
it perform a variety of operations in accordance with legal regulations currently in force. The
Company's main lines of business include shares, simultaneous transactions, agreements, debt
securities, mutual funds, forward operations and portfolio management.
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
12
LV. Sociedad Agente de Bolsa. (Colombia)
Larraín Vial Inversiones Ltda.1%
99,9996%
99%
51%
99.94%
89%
90%
75%
72.48%
0.0001%
100%
Larraín Vial S.A.
0.0004%
49%
98,7%
Larraín VialProyectos e Inv.Ltda.
5% 1%
9%
Larraín VialServicios Profesionales Ltda.
Larraín Vial Activos AGF
Asesorías Larraín Vial Ltda.
Larraín Vial S.A. Corredora de Bolsa
Larraín Vial S.A. C. B. Productos
Larraín VialServicios Financieros Ltda.
LVCC Asset Management
Activa SpA
Activa S.A.
Larrain Vial Securities US LLC
LVA Índices S.A.
Asesorías Larraín Vial y Asociados Ltda.
San SebastiánImobiliária S.A.
Larraín VialGestora de Inversiones S.A.
PE02 Larraín VialS.A.F.I. (Perú)
LV.Soc. Agente de Bolsa. (Perú)
Larrain VialAdm. General de Fondos S.A.
0,00008%
Larraín VialColombia SAS
Larraín VialInvestment Inc. USD
LV Trading Group INC
(LV Brasil Consultoría Ltda.
Pro Fondos
Andes Investment
65%
10%
10%
7,51%
99.9999%0,01%
Activos Reales
50%
100%
90%
50%
100%
57,46%
30%
6%
4%
100%
75%
1%
99%
94,9904%
25%
70%
99.99%
96%
90%
5,00905%
Inversiones Sur S.A
Carlos Neely Barbieri
Mario Ventura Verme
Oscar De Osma B.
Mario AlvaradoPflucker5%
5%
5%
5%
10%
Consorcio
ADN Asesorias y Servicios20%
Ases. Profesionales e Inv. San Valentin
99.99%
0,01%
L013 LV Inversiones Dos Ltda.
97%
0,1%
0,1%
0,1%
Note 1 Reporting entity, continued
Economic Group to which the Company belongs
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
13
Note 1 Reporting entity, continued
Businesses/services on behalf of third
parties No. of unrelated clients Number of related
clients
57 Bis 36 1
Portfolio management 605 4 APV (Voluntary Pension Savings) 4,450 211 Financial advisory services 2,804 122 Formal exchange rate 1,848 290 Securities borrowed and purchased under
resale agreements and IIF 21 37 Investment fund shares 2,123 167 Custody 22,796 384 Forward derivatives 10 - Mutual funds 4,148 200 Financial brokerage 525 20 Foreign investments 371 24 Debt securities 771 43 Equity securities 17,966 337 Simultaneous transactions 55 2 Securities borrowed and purchased under
resale agreements and IIF 171 83 Short sales 40 -
Description of main businesses: The Company’s main lines of business or products on its own or on behalf of third parties are as
follows:
Equity securities brokerage. Purchase and sale of shares in the domestic market obtaining
revenue from fees and commissions collected from clients.
Debt securities brokerage: Relates to the purchaser and sale of debt and financial brokerage
securities from which the Company obtains income from fees and commissions collected from
clients.
Portfolio management: Relates to the business performed using the resources from a client to
be managed by the broker on behalf of and at the risk of the client.
Security custody: Services provided by the broker to secure absolute assurance on the
custody of its equity, debt or financial brokerage securities.
Securities loaned and obligations under repurchase agreements: Operation in which the
broker sells to its client certain public offering securities by executing simultaneously and with
the client a repurchase agreement for those securities.
Securities borrowed and purchased under resale agreements: Operation in which the
broker acquires from its client certain public offering securities by executing simultaneously
and with the client a repurchase agreement for those securities.
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
14
Note 2 Basis of preparation
(a) Statement of Compliance with IFRS
The separate financial statements of Larraín Vial S.A Corredora de Bolsa have been
prepared in accordance with International Financial Reporting Standards (IFRS), issued
by the International Accounting Standards Board (hereinafter IASB).
As of December 31, 2013 the separate financial statements of Larraín Vial S.A. Corredora
de Bolsa are presented for comparative purposes and in accordance with Circular No.1992
issued by the Superintendence of Securities and Insurance.
The financial statements were authorized for issue by the Board of Directors on
February 27, 2014.
The translation of these financial statements is provided as a free translation from the
Spanish language original, which is the official and binding version. Such translation has
been made solely for the convenience of non-Spanish readers
(b) Period covered by the financial statements
These separate financial statements of Larraín Vial S.A Corredora de Bolsa comprise the
separate statements of financial position and changes in equity as of December 31, 2013
and 2012, the separate statements of comprehensive income and cash flows for the years
ended December 31, 2013 and 2012.
(c) Functional and presentation currency
Items in the Company's financial statements are translated to functional currency; i.e., the
currency of the main economic environment where the entity operates using the exchange
rate in force at the transaction date and/or the closing date of the financial statements.
In accordance with international accounting standards 21 (IAS 21), these separate
financial statements are presented in Chilean pesos, which is the Company’s functional
currency. All amounts have been rounded to the nearest thousand, unless otherwise
indicated.
The balances of assets and liabilities in foreign currency and UF have been translated to
Chilean pesos according to the exchange rates in force at each year-end.
(d) Going concern assumption
In preparing the separate financial statements the Company assessed its ability to continue as
a going concern. The Company’s Management does not believe significant uncertainty exist
relative to events or conditions which may raise significant uncertainty as to the Company’s
ability to continue as a going concern.
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
15
Note 2 Basis of preparation, continued
(e) Significant reclassifications
During 2013, there have been no significant reclassifications in the Company’s financial
statements.
(f) Basis of measurement
The financial statements have been prepared on the historical basis except for the
following material items:
Financial instruments classified at fair value through profit or loss are measured at
fair value and the effects are recognized in profit or loss.
Financial instruments at amortized cost are non-derivative financial assets with
fixed or determinable payments that have the characteristics of a loan and are not
quoted in an active market.
Investments in companies are presented at fair value through equity.
Investments in companies recognized using the equity method of accounting.
Held-to-maturity financial instruments are measured at amortized cost discounted
using the effective interest method less any impairment loss.
Liabilities are measured at amortized cost.
Note 3 Significant accounting policies
The main accounting criteria used in the preparation of these financial statements are as follows:
(a) Application of new standards
a.1 Early adoption of standards
In accordance with Circular No.615 issued by the Superintendence of Securities and
Insurance, the Company has early adopted IFRS 9, Financial Instruments.
a.2 Standards, amendments and interpretations issued that became effective
during 2013
Improvements and amendments to IFRSs, as well as interpretations published during the
period are detailed below. As of the date of issuance of the financial statements these
standards are not yet effective. The Company has early adopted only IFRS 9, in
conformity with Circular No. 615 issued by the Superintendence of Securities and
Insurance dated June 10, 2010.
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
16
Note 3 Significant accounting policies, continued
(a) Application of new standards, continued
a.2 Standards, amendments and interpretations issued that became effective
during 2013, continued
However, the Company’s management has conducted or is conducting an assessment of
possible impacts on these financial statements as of December 31, 2013, detailed as
follows:
New IFRSs Mandatory application date
IFRS 10, Consolidated Financial Statements Annual periods beginning on or after January 1,
2013.
IFRS 11, Joint Arrangements Annual periods beginning on or after January 1,
2013.
NIIF 12, Disclosure of Interests in Other Entities Annual periods beginning on or after January 1,
2013.
IFRS 13, Fair Value Measurement Annual periods beginning on or after January 1,
2013.
IFRIC 20, Stripping Costs in the Production Phase of a Surface
Mine
Annual periods beginning on or after January 1,
2013.
Amendments to IFRSs Mandatory application date
IAS 19, Employee Benefits (2011) Annual periods beginning on or after January 1,
2013.
IAS 27 (2011), Separate Financial Statements Annual periods beginning on or after January 1,
2013.
IAS 28 (2011), Investments in Associates and Joint Ventures Annual periods beginning on or after January 1,
2013.
IFRS 7, Financial Instruments: Disclosures – Amendments to
disclosure requirements for offsetting financial assets and
financial liabilities
Annual periods beginning on or after January 1,
2013.
IFRS 10, IFRS 11 and IFRS 12 – Consolidated Financial
Statements, Joint Arrangements and Disclosure of Interests in
Other Entities – Transition guide.
Annual periods beginning on or after January 1,
2013.
The adoption of these amendments to IFRSs had no significant impact on the Company’s
accounting policies and amounts recorded in these financial statements; however, they could
affect the recognition of future transactions and agreements.
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LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
17
Note 3 Significant accounting policies, continued
(a) Application of new standards, continued
a.3 Standards and interpretations issued but not yet effective
Amendments to IFRSs Mandatory application date
IAS 19, Employee benefits- employee contributions Annual periods beginning on or after January 1,
2014. Early adoption is permitted.
IAS 27, Separate Financial Statements, IFRS 10, Consolidated
Financial Statements and IFRS 12, Disclosure of Interests in
Other Entities. These amendments are applicable to Investment
Entities, provide an exception for the accounting treatment and
eliminate the consolidation requirement.
Annual periods beginning on or after January 1,
2014. Early adoption is permitted
IAS 32, Financial Instruments: Presentation –Clarifying
requirements for offsetting financial assets and financial
liabilities
Annual periods beginning on or after January 1,
2015. Early adoption is permitted
IAS 36, Impairment of Assets – Recoverable Amount
Disclosures for Non-Financial Assets
Annual periods beginning on or after January 1,
2014. Early adoption is permitted
IAS 39, Financial Instruments – Recognition and Measurement –
'Novation of Derivatives and Continuation of Hedge Accounting
Annual periods beginning on or after January 1,
2014. Early adoption is permitted
New Interpretations Mandatory application date
IFRIC 21, Levies. Annual periods beginning on or after January 1,
2014. Early adoption is permitted
The Company believes that future adoption of the Standards, Amendments and Interpretations
mentioned above will not have a significant impact on the financial statements.
(b) Cash and cash equivalents
The Company considers cash in banks and on hand and balances in current accounts, as
well as highly-liquid short-term investments made as part of the regular management of
cash surpluses that are readily convertible into known amounts of cash with original
maturities equal to or less than 90 days from the date of acquisition, which are subject to
insignificant risk of changes in their fair value, to be cash and cash equivalents. These
items are measured at amortized cost or fair value through profit or loss.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
18
Note 3 Significant accounting policies, continued
(c) Financial assets and financial liabilities
The Company classifies its financial assets as follows: At fair value through profit or loss
and financial assets at amortized cost. The classification depends on the purpose with
which financial assets were acquired. Management determines the classification of its
assets at the time of initial recognition.
Financial assets and liabilities at amortized cost
(i) Financial assets at amortized cost
Financial instruments at amortized cost are non-derivative assets with fixed or
determinable payments on which Management has the intent of receiving flows of
interests, adjustments and foreign currency differences in accordance with the instrument's
contractual terms. This caption mainly includes those financial assets listed below.
(ii) Securities borrowed and purchased under resale agreements in equity instruments (simultaneous transactions)
Share simultaneous transactions for investment purposes are included in assets as rights
and measured and accrued on a daily basis at cost plus the amount equivalent from the
straight-line application of the embedded increase percentage between the disposal value
at the date of subscription and the amount receivable agreed.
(iii) Securities borrowed and purchased under resale agreements in debt and financial brokerage securities (agreements)
Repurchase agreements are performed as a financing method, investments are sold subject
to a repurchase obligation that is used as guarantee for the loan. The repurchase obligation
is classified under financing obligations within liabilities, which are measured at
amortized cost at the interest rate agreed.
(iv) Financial liabilities at amortized cost in the securities market
The amortized cost of a financial liability is the initial measure of such liability less
principal reimbursements plus or minus accumulated amortization calculated using the
effective interest rate method of any difference between the initial amount and the
reimbursement amount on the maturity date.
After initial recognition, the Company will measure all its financial liabilities at amortized
cost using the effective interest rate method, except for those that had been designated as
measured at fair value through profit or loss (application of the fair value option).
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
19
Note 3 Significant accounting policies, continued
(c) Financial assets and financial liabilities
Financial assets and liabilities at fair value
These are measured at fair value according to the market prices at the reporting date.
These investments are initially recognized at cost and subsequently their value is adjusted
on the basis of the market value with daily recognition of the effect on profit or loss.
The fair value of investments held for trading is measured on the basis of trading in active
markets.
The main financial assets that the Company holds as trading portfolio are as follows:
Domestic and foreign shares traded in a stock exchange (ADR`s).
Shares of mutual funds.
Debt securities
Investment fund shares
In conformity with IFRS, the Management of Larraín Vial has decided that the fair value
of these instruments will be their transaction amount to the extent that these are acquired
in an active market, recording in profit or loss the related transaction costs and the
difference resulting from the adjustment of the acquisition cost to market value
The fair value of shares of mutual funds and investment funds will be the surrender value
at year-end.
Debt securities agreements
Rights on securities related to unmatched purchase agreements are recorded at market
value according to the Internal Rate of Return (IRR) at year-end. The difference in regard
to the embedded IRR at the date of acquisition of the commitment is recorded in profit or
loss.
Forwards
Forwards are recorded at market value. Effects from comparing the market value to the
value agreed at the date in which the contract was entered into will be recorded in profit or
loss.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
20
Note 3 Significant accounting policies, continued
(d) Receivables from brokers and dealers
Trade receivables are initially recognized at fair value and subsequently at amortized cost
according to the effective interest rate method, less the allowance for impairment losses.
Receivables are recognized at nominal amount when the nominal amount of the receivable
does not significantly differ from its fair value. An allowance for impairment losses is
accrued 30 days after the right expires and therefore, not all amounts receivable will be
collected under the original terms of receivables.
Embedded interest is disaggregated and recognized as finance income when accrued.
Financial difficulty of the borrower, the probability that the borrower will enter
bankruptcy or financial reorganization and the lack of or delinquency in payments are
considered indications that the receivables are impaired.
(e) Investments in other companies
Investments in other companies correspond to one share of the Company at the Chilean
Electronic Stock Exchange, the Santiago Stock Exchange and two shares of CCLV
Contraparte Central S.A., which are measured at market value through equity and equity
value, recognizing the equity gains or losses on the investment on an accrual basis,
respectively.
The Company has ownership interest of 5% in Larraín Vial Servicios Profesionales Ltda.,
which is measured using the equity method of accounting and equity in the income or loss
from this investment is recognized as and when generated. Profits distributed by Larraín
Vial Servicios Profesionales Ltda. have been established on the basis of revenue actually
received and the amount for distribution to each partner is determined and paid as
mutually agreed on an annual basis. Revenue of Larraín Vial Servicios Profesionales Ltda.
is mainly generated by services rendered directly or through other companies both in
Chile and abroad, associated with the advisory and restructuring of investment products
for domestic and foreign customers.
In accordance with IAS 27 – Separate Financial Statements, investments in the associates
L.V. Comisionista de Bolsa and L.V. SAB Peru are recorded at the historical cost of the
investment.
(f) Property and equipment
In accordance with IFRS 1, Larraín Vial S.A Corredora de Bolsa will opt to measure
property and equipment at the date of transition to IFRS at their cost, maintaining the
carrying amount.
For the new acquisitions of property and equipment Larraín Vial S.A. Corredora de Bolsa
will be recorded using the deemed cost model, at cost less subsequent accumulated
depreciation and less accumulated impairment losses.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
21
Note 3 Significant accounting policies, continued
(f) Property and equipment, continued
Maintenance, preservation and repair costs will be expensed under the accrual method as
cost of the year in which they are incurred.
Depreciation will be determined using the straight-line method on the cost of assets less
its residual value.
Depreciation for each period will be expensed and calculated considering the estimated
useful lives of the different assets.
The gain or loss resulting from the disposal or withdrawal of assets will be calculated as
the difference between the sales price and the carrying amount of the asset and recognized
in profit or loss.
(g) Foreign currency and UF (inflation-adjusted units) transactions
Transactions in foreign currencies and inflation-adjusted units are recorded at the exchange
rate of the related currency or inflation-adjusted unit at the date in which the transaction
meets the requirements for its initial recognition. At the reporting date, monetary assets
and liabilities denominated in foreign currencies and inflation-adjusted units are translated
using the exchange rates in force for the related currency or inflation-adjusted unit.
Foreign currency differences generated both in the settlement of foreign currency
transactions and in the measurement of monetary assets and liabilities in foreign currency,
are included in the Statement of income under foreign currency difference whereas
differences generated by changes in inflation-¿adjusted units are recorded under foreign
currency differences.
The exchange rates for the main foreign currencies and inflation-adjusted units used in
preparing the financial statements are as follows:
Exchange rate Dec-13 Dec-12
Ch$ Ch$ U.S. dollar observed rate (US$) 524.61 479.96
Euro observed rate (€) 724.30 634.45
UF (inflation-adjusted unit) 22,315.57 22,833.37
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
22
Note 3 Significant accounting policies, continued
(h) Impairment of assets, continued
Financial assets, continued
A financial asset is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset or group of financial assets is impaired (and
the corresponding loss is recognized) if objective evidence indicates that one or more loss
events have occurred after the initial recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of that asset that can be estimated
reliably.
A financial asset is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired if there is objective evidence that
one or more events have had an impact on the estimated future cash flows of that asset.
The impairment estimate is determined for accounts maturing in periods exceeding 30
days.
An impairment loss in respect of a financial asset measured at amortized cost is calculated
as the difference between its carrying amount and the present value of the estimated future
cash flows discounted at the asset’s original effective interest rate.
The impairment estimate is determined on all accounts maturing in periods exceeding 30
days.
All individually significant financial assets are assessed for specific impairment. All other
financial assets are collectively assessed with similar credit risk characteristics.
All impairment losses are recognized in profit or loss. Any accumulated loss related to a
financial asset previously recognized in equity is transferred to profit or loss.
The reversal of an impairment loss occurs only when it can be related objectively to an
event occurring after the impairment loss was recognized in profit or loss. For financial
assets at amortized cost, the reversal is recognized in profit or loss. For financial assets
which are equity securities, the reversal is directly recognized in equity.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
23
Note 3 Significant accounting policies, continued
(i) Payables to brokers and dealers
Payables to brokers and dealers include brokerage payables on behalf of clients, fees and
commissions receivable and stock exchange rights generated by purchase and sale
transactions associated with financial instruments on behalf of clients. Furthermore, this
caption includes accounts receivables arising from forward operations generated by
simultaneous transactions on behalf of clients. Balances are recorded on a daily basis.
(j) Income tax and deferred taxes
Income tax expense includes taxes of Larraín Vial S.A. Corredora de Bolsa on the basis of
net taxable income for the period together with tax adjustments from prior years and
changes in deferred taxes.
Deferred taxes are calculated using the liability method on temporary differences arising
from the tax bases of assets and liabilities and their carrying amounts in the annual
accounts. However, should deferred taxes arise from the initial recognition of an asset or
liability in a transaction other than a business combination, which at the date of the
transaction does not affect profit for financial or tax purposes, such deferred taxes are not
recognized. Deferred taxes are determined using the tax rates (and laws) enacted or
substantially enacted at the reporting date that are expected to be applied when the
deferred tax asset is realized or the deferred tax liability is settled.
A deferred tax asset is recognized to the extent that it is probable that future tax benefits
will arise to offset temporary differences.
(k) Provisions
Provisions correspond to balances payable covering present obligations at the reporting
date, arising as a result of past events which result in legal or constructive obligations
that are specific in nature and whose amount can be estimated.
The Company records all significant provisions in respect to which it is estimated that the
possibility of paying the obligation is more than probable.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
24
Note 3 Significant accounting policies, continued
(l) Provisions, continued
Accrued vacations
The annual cost of vacations is recognized on an accrual basis.
Short-term benefits
The Company contemplates an annual incentive plan for its employees that is based on
individual goal compliance and such benefits comprise a given number or portion of
monthly salaries and are accrued for on the basis of the estimated amount for distribution.
(m) Revenue recognition
Sale of securities:
Revenue is recognized in profit or loss as and when accrued, which relates to the
transaction date.
The entity has transferred to the buyer the significant risks and rewards of
ownership of the securities regardless of whether title is transferred or not.
The entity retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold.
The amount of revenue can be measured reliably.
It is probable that the economic benefits associated with the transaction will flow
to the entity.
The costs incurred or to be incurred in respect of the transaction can be measured
reliably.
Rendering of services:
The amount of revenue can be measured reliably.
It is probable that the economic benefits associated with the transaction will flow
to the entity.
The stage of completion of the transaction at the end of the reporting period can be
measured reliably.
The costs incurred for the transaction and the costs to complete the transaction can
be measured reliably.
Revenue is recognized in profit or loss as and when accrued, which relates to the
transaction date.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
25
Note 3 Significant accounting policies, continued
(m) Revenue recognition, continued
Recognition of revenue from fees and commissions
Fees and commissions for brokerage services for the purchase and sale of
securities in the stock market are recognized as revenue as they occur.
Revenue recognition for interests and dividends
Interests are recognized using the effective interest rate method.
Dividends are recognized on the date in which the right by the shareholder to
receive payment is established.
(n) Borrowing Costs
Obligations with Banks and financial institutions are initially recognized at their fair value
net of costs incurred in the transaction.
Subsequently, external resources are measured at amortized cost, any difference between
the funds obtained (net of costs required for obtaining them) and the reimbursement value,
is recognized in the statement of comprehensive income over the life of the debt using the
effective interest rate method. The effective interest method consists of applying the
benchmark market rate to debt with similar characteristics at the debt value (net of costs
required for obtaining them). Note that face value will be used in the event that the
difference between face and fair value is not significant.
(o) Reclassifications
During the 2013, no significant reclassifications have been made to the Company’s
financial statements.
Note 4 Financial risk management
Risk management policies
The business in which Larraín Vial S.A. Corredora de Bolsa operates is exposed to several risks:
Credit Risk, Liquidity Risk and Market Risk. The detail of the exposure to such risks, as well as
their management, is detailed as follows:
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
26
Note 4 Financial risk management, continued
(i) Credit risk
Credit risk to which the Company is exposed directly relates to the probability of default
of the counterparties and the operation settlement process. The Company's counterparties
are preferably institutions and operations which are settled on a delivery versus payment
basis
Brokerage receivables
Larraín Vial S.A. Corredora de Bolsa’s collection policy is detailed as follows:
Business executives have vast knowledge of the client and maintain a daily control
of amounts owed and guarantees.
Daily collection controls are distributed to Supervisors, Managers and Control
Areas who report in regard on defaulting clients.
Domestic and international institutional counterparties that hold securities in custody with
third parties operate on the basis of delivery versus payment and therefore, there is only
one marginal credit risk resulting from the variation during the collection period of this
transaction.
Provisions
Changes in the allowance for impairment loss or doubtful accounts
Provisions ThCh$
Opening balance 391,827
Increases for the year 394,850
Application of provisions
Reversal of provisions (391,827)
TOTAL 394,850
Derivatives and revolving operational credit facilities
Simultaneous term transactions and short sales
Larraín Vial S.A. Corredora de Bolsa operates under the matched transactions and takes
no underlying positions in derivatives.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
27
Note 4 Financial risk management, continued
(i) Credit risk, continued
Derivatives and revolving operational credit facilities, continued
Simultaneous transactions, continued
Simultaneous transactions and short sales in shares required approved lines for each client,
which are granted, controlled and thoroughly analyzed on the basis of the following ratios:
Indebtedness ratios;
Interest coverage ratio;
Current ratio;
Acid test;
Return ratio
Inventory turnover, among other ratios
Note that these types of transactions are framed within the standards contained in the
Operations manual of the Chilean Stock Exchange and Electronic Stock Exchange, and
that ongoing follow-up of the positions and status of guarantees is performed.
Simultaneous transactions
The revolving operational credit facilities granted have a life of one year, are renewable
and amount to Ch$141,394 million. These lines operate in accordance with standards
currently in force in the stock exchanges and are covered through guarantees in
accordance with regulations in force.
0
1.000
2.000
3.000
4.000
5.000
6.000
Ene Feb Mar Abr Jun
Mil
lon
Distribution of maturity dates of simultaneous transactions by type
of shares (as of December 31, 2013)
Total general
A+
A
B
C
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
28
,00%
1,00%
2,00%
3,00%
4,00%
5,00%
Ene Feb Mar Abr Jun
Accumulated % of revolving credit facilities used (as of December
31, 2013)
Note 4 Financial risk management, continued
(i) Credit risk, continued
Derivatives and revolving operational credit facilities, continued
Simultaneous transactions, continued
As of December 31, 2013, outstanding simultaneous transactions by classification of their
shares are distributed as follows.
Share
Amount in
Million
Ch$
% of
total
A+ 8.166.152 88,79%
A 775.893 8,44%
B 172.237 1,87%
C 83.124 0,90%
Overall total 9.197.406 100,00%
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
29
Note 4 Financial risk management, continued
(i) Credit risk, continued
Derivatives and revolving operational credit facilities, continued
Simultaneous term transactions and short sales
In regards short sale only those lines with operations currently in force are considered.
The revolving operational credit facilities granted have a life of one year, are renewable
and amount to Ch$232,820 million. These lines operate in accordance with standards
currently in force in the stock exchanges and are covered through guarantees in
accordance with regulations in force.
As of December 31, 2013, outstanding short sales by classification of their shares are distributed
as follows:
Share
Amount
million
Ch$
% of
total
A+ 33,931,506 93.99%
A 2,126,236 5.89
B 45,269 0.12%
Overall total 36,103,011 100.00%
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
Ene Feb Mar Abr May Jun Jul Ago Sep Oct Nov
Mill
on
Distribution of short sale maturity dates by type of shares (as of
December 31, 2012)
Total general
A+
A
B
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
30
Note 4 Financial risk management, continued
(i) Credit risk, continued
Derivatives and revolving operational credit facilities, continued
Simultaneous term transactions and short sales, continued
,00%
,500%
1,00%
1,500%
2,00%
2,500%
3,00%
3,500%
Ene Feb Mar Abr May Jun Jul Ago Sep Oct Nov
Accumulated % of revolving credit facilities used (as of December 31,
2013)
0
10
20
30
40
50
60
70
80
Ene Feb Mar Abr May Jun Jul Ago Sep Oct Nov
2014
Mill
on
Distribution of pending accruals (as of December 31, 2013)
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
31
Note 4 Financial risk management, continued
(i) Credit risk, continued
Derivatives and revolving operational credit facilities, continued
U.S. dollar - Chilean peso forward transactions
The Company has no exposition in forward transactions as it has a strategy of taking
matched positions, which minimizes the exposure of transactions. In the event of taking a
position the maximum short-term amount authorized is US$3 million.
Days Portfolio
percentage
Exposure
(Purchase-Sale) 1-10 17.70% -
11-20 24.02% -
21-40 30.78% -
41-80 14.71% -
81 o + 12.78% -
As of December 31, 2013, the summary of outstanding forward transactions is as follows:
No. of lines
used
Total revolving
credit facility
Revolving credit
facility used
Long position:
Amounts
Short position:
Amounts
Short position:
Amounts
MCh$ MCh$ MCh$ MCh$ MCh$
76 21,943 10,828 2,297 3,619 4,913
Financial assets
The Company’s investment portfolio is composed of debt securities, term deposits and a
controlled equity security position, which are exposed to credit risks
The risk level allowed for these instruments portfolio is determined by the Debt Securities
Committee and measured on a regular basis and reported to the relevant areas for follow-
up on the basis of the defined investment policies and guidelines.
The chart below reflects the portfolio percentage according to the risk rating and sector.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
32
Note 4 Financial risk management, continued
(i) Credit risk, continued
Derivatives and revolving operational credit facilities, continued
U.S. dollar - Chilean peso forward transactions, continued
A A- A+ AA AA- AA+ AAA
Banks 1.78% 0.00% 0.00% 12.58% 6.70% 0.69% 8.17% Banco Central (Central
Bank) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Corporations 8.08% 5.00% 8.60% 3.40% 0.04% 0.00% 0.02%
Banks 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Overall total 9.86% 5.00% 8.60% 15.98% 6.74% 0.69% 8.19%
B BB BB+ BBB BBB- BBB+ Gob
Banks 0.00% 0.08% 0.00% 0.00% 0.00% 0.30% 0.00% Banco Central (Central
Bank) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 7.19%
Corporations 3.75% 0.00% 2.25% 5.40% 4.80% 0.00% 0.00%
Banks 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 21.19%
Overall total 3.75% 0.08% 2.25% 5.40% 4.80% 0.30% 28.38%
(ii) Liquidity risk
The liquidity risk is related to needs for funds to deal with payment obligations. Where the
Company’s objective is maintaining a balance between the continuity of funds and
financial flexibility through normal operating flows, short-term borrowings, short-term
investments and revolving credit facilities. The financing policy of transactions does not
contemplate long-term debt and therefore, solely requires short-term financing. On an
ongoing and regular basis, the Company assesses risk concentration, the portfolio and
sources of financing
As of December 31, 2013, the Company records no balances used in revolving credit
facilities.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
33
Note 4 Financial risk management, continued
(ii) Liquidity risk, continued
The liquidity sources of Larraín Vial S.A. Corredora de Bolsa are mainly originated from
three instruments: lines of credit with local banks, paid-in capital and repurchase
agreements.
General liquidity
Available and realizable assets up to 7 days
Enforceable liabilities up to 7 days ThCh$
343,040,079
327,845,926 = 1.05 times
Brokerage liquidity
Available assets + receivables from brokers and
dealers
Payables to brokers and dealers
ThCh$ 144,806,835
94,511,491 = 1.53 times
Debt ratio
Total enforceable liabilities
Net equity ThCh$
203,409,843
41,418,209 = 4.91 times
Equity hedge index
Equity hedge amount
Net equity ThCh$
12,630,889
41,418,209 = 30.50 %
Cleared equity ThCh$ 29,353,915
(iii) Market risk
Market risk is the risk of potential losses resulting from adverse changes in market prices
of different assets or financial instruments. This applies to borrowings and bank
obligations, term deposits and mutual fund shares, trade payables, trade receivables,
financial instruments and derivatives.
This risk is managed considering the following:
Interest rate risk
Interest rate risk is managed by the Debt securities desk under the guidelines of the Debt
securities Committee. This Committee determines the composition of the portfolios
between interest rate positions in local currency, nominal and inflation-adjusted units, as
well as by exposures in rates related to transactions denominated in other currencies
(mainly in U.S. dollars).
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
34
Note 4 Financial risk management, continued
(iii) Market risk, continued
Interest rate risk, continued
Sector
Adjustment Overall total CLP UF IVP USD
Banking 12.72% 32.03% 0.01% 0.41% 45.17%
Central Bank 2.84% 1.89% 0.95% 0.00% 5.68% Corporate 1.48% 30.61% 0.00% 1.46% 33.55% Government 15.11% 0.49% 0.00% 0.00% 15.60%
Overall total 32.15% 65.02% 0.96% 1.87% 100.00%
Given that the financial assets of the company are invested in fixed income instruments,
the main variable that has an impact on the value of the portfolio is the interest rate; this
variable has a major or minor impact depending on its duration. This variable is managed
by keeping high liquidity instruments in the portfolio.
The term of the portfolio is actively managed in accordance with the guidelines provided
by the Fixed Income Committee.
Fixed income portfolio term = 1.67 years
%% of maturity by period
%
2014 46.0
2015 9.4
2016 10.0
2017 7.4
If the fixed income instruments increase by 20%, the effect would not be greater than
4.14% of the value of the portfolio.
Portfolio sensitivity
Rate variation
Adverse impact on the
RF portfolio
%
10% increase 2.07
20% increase 4.14
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
35
Note 4 Financial risk management, continued
(iii) Market risk, continued
Exchange risk
Larraín Vial S.A. Corredora de Bolsa has a limited exchange rate exposure, which is
related to instruments in U.S. dollars; this portfolio is hedged by means of forward
contracts, therefore, the exchange risk is limited.
The total exchange risk exposure as of December 31, 2013 amounts to USD$7,530.6
million, with a maximum limit of a USD$20 million.
Asset price risk
The exposure to asset price risk is significantly related to financial instruments (shares and
funds) that are exposed to market fluctuations. However, the position held in these equity
securities is relatively small, as shown below.
Additionally, a weekly report is released on the behavior and composition of the
portfolios, which independently controls that the limits in instruments and portfolios are
consistent with the policies established by the appropriate Committee, reviewing the
efficiency of the controls and the valuation of the instruments.
1%
49% 50%
Portfolio Distribution
Acciones
Renta Fija
Derivados
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
36
Note 4 Financial risk management, continued
(iii) Market risk, continued
Implementation Circular SVS No.2054
In accordance with Circular No.2.054 issued by the Superintendence of Securities and Insurance,
security dealers & brokers are required to apply a risk-based management model. Accordingly,
the Company’s Senior Management gradually developed a plan to perfect the Risk Management
model.
During this process, improvements to Risk Management and Internal Control tools were
implemented, especially with respect to risk identification matters, expanding the scope of those
improvements. Progress in the implementation of this standard was timely reported to the
Superintendence of Securities and Insurance.
Senior Management certified the sufficiency and appropriateness of the implementation of this
standard, verifying the existence of an internal control and risk management system in line with
the nature, size and complexity of businesses conducted by Larraín Vial in accordance with
Circular No.2.054.
Note 5 Use of estimates and judgments
The information contained in the financial statements is the responsibility of the Management
and all accounting principles and criteria included in IFRS have been applied accordingly.
The estimates and accounting criteria are reviewed on an ongoing basis and are based on the
historical experience and other factors, including the expectations of future events considered to
be reasonable under the circumstances.
Significant estimates and accounting criteria
The Company makes estimates and assumptions with respect to the future. The resulting
accounting estimates may differ from the actual results. There are no accounting criteria that
represent a significant risk to give rise to a material adjustment in the financial statements. The
following is an explanation of the estimates that have a significant risk of giving rise to a
material adjustment in the carrying amounts of the assets and liabilities within the following
financial year:
(a) Deferred taxes
The Company accounts for deferred tax assets based on their possibility to be recovered
on the basis of the existence of deferred tax liabilities with similar reversal terms and the
possibility to generate future taxable earnings.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
37
Note 5 Use of estimates and judgments, continued
Significant estimates and accounting criteria, continued
(b) Accrued vacations
The Company recognizes accrued vacations considering its accrued basis which will be
evaluated by Management on an annual basis.
(c) Provision for bonuses
The Company recognizes a provision when it is contractually bound or when past
practices have created an implicit obligation, and when the obligation can be estimated
reliably. This bonus is recognized for accounting purposes on a monthly basis and affects
all the financial statements of the company.
Fair value hierarchy
The Company has classified the measurement of the fair value by using a hierarchy that
reflects the level of information used in the valuation. The hierarchy is comprised of 3
levels and detailed as follows:
Level 1: Quoted prices in active markets.
Level 2: Inputs other than quoted prices included within Level 1
Level 3: Inputs that are not based on observable market data.
12-2012 12-2013
Domestic shares Level 1 0.09% 0.09% Share of the Santiago Stock Exchange Level 1 2.21% 0.78% Domestic debt instruments Level 2 4.21% 48.76% Foreign shares Level 2 1.09% 0.14% Derivatives (*) Level 2 92.40% 50.23%
(*) It is considered the absolute value of the position at market value.
The sources of valuation used by the Fund correspond to prices reported directly from the
Santiago Stock Exchange or by means of public access prices (“Level 1”); prices from a
financial instrument data supplier are classified as “Level 2”.
For currency forward investments, the valuation of these is made using as a price source
the spot value informed everyday by the Central Bank of Chile; this is adjusted under the
definition of “Level 2” for this type of instrument.
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
38
Note 6 Adjustment and foreign currency translation differences
As of December 31 2013 and 2012, this balance is composed of the following:
Accounts
Credit (debit) to profit or loss 2013 Credit (debit) to profit or loss 2012
US $ EURO US $ EURO US $ EURO
Cash and cash equivalents (2,071,667) (63,662) - (2,135,329) 394,131 (18,189) - 375,942
Receivables from brokers and dealers (151,853) 1,268,779 - 1,116,926 35,830 809,354 - 845,184
Other accounts receivable 119,848,590 - - 119,848,590 69,803,578 - - 69,803,578
Trade receivables due from related parties (9,492) (1,766) - (11,258) 23,318 (3,437) - 19,881
Other assets (935,605) 120,945 - (814,660) (6,018,178) (92,449) - (6,110,627)
Obligations with banks and financial
institutions - - (6,164) (6,164) (32,092) - (14,792) (46,884)
Payables to brokers and dealers (99,678) (7) - (99,685) 681 (22) - 659
Other trade payables due to related parties 26 110,009 - 110,035 15,201 (453) - 14,748
Other trade payables (115,304,190) (946,834) - (116,251,024) (65,692,343) (390,902) - (66,083,245)
Total readjustment and foreign currency
exchange difference 1,276,131 487,464 (6,164) 1,757,431 (1,469,874) 303,902 (14,792) (1,180,763)
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
39
Note 7 Cash and cash equivalents
Cash and cash equivalents
2013 2012
ThCh$ ThCh$
Cash in Chilean pesos 6,713 6,203
Cash in foreign currency 501,776 3,225,754 Banks in Chilean pesos 7,728,844 6,267,553 Banks in foreign currency 25,423,634 19,231,619
Total 33,660,967 28,731,129
Note 8 Financial instruments by category
Financial assets as of December 31, 2013
Financial assets as per the statement of financial position
Financial assets
at fair value
from P/L
Financial assets
at fair value
from equity
Financial
assets at
amortized
value Total
ThCh$ ThCh$ ThCh$ ThCh$
Cash and cash equivalents - - 33,660,967 33,660,967
Financial instruments in available securities owned 23,504,953 - - 23,504,953
Financial instruments in committed securities owned 149,242,723 - - 149,242,723
Derivative financial instruments 4,575,673 - - 4,575,673
Financing operations - - 22,957,732 22,957,732
Receivables from brokers and dealers - - 115,780,772 115,780,772
Receivables for securities owned - - 494,066 494,066
Trade receivables due from related parties - - 6,749,697 6,749,697
Other receivables - - 7,999,170 7,999,170
Investments in companies - 2,478,411 - 2,478,411
Total 177,323,349 2,478,411 187,642,404 367,444,164
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
40
Note 8 Financial instruments by category, continued
Financial assets as of December 31, 2012
Financial assets as per the statement of financial
position
Financial
assets at fair
value from
P/L
Financial
assets at fair
value from
equity
Financial
assets at
amortized
value Total
ThCh$ ThCh$ ThCh$ ThCh$
Cash and cash equivalents - - 28,731,129 28,731,129
Financial instruments in available securities owned 17,753,953 - - 17,753,953
Financial instruments in committed securities owned 81,035,343 - - 81,035,343
Derivative financial instruments 1,520,239 - - 1,520,239
Financing operations - - 24,225,764 24,225,764
Receivables from brokers and dealers - - 63,724,953 63,724,953
Receivables for securities owned - - 288,816 288,816
Trade receivables due from related parties - - 39,661,897 39,661,897
Other receivables - - 18,929,635 18,929,635
Investments in companies - 3,863,047 20,260 3,883,307
Total 100,309,535 3,863,047 175,582,454 279,755,036
Financial liabilities as of December 31, 2013
Financial liabilities as per the statement of financial
position
Financial
liabilities at fair
value
Financial
liabilities at
amortized value Total
ThCh$ ThCh$ ThCh$
Financial liabilities at fair value - - -
Derivative financial instruments 4,364,964 - 4,364,964
Financing obligations - 163,423,911 163,423,911
Obligations with banks and financial institutions - 494,463 494,463
Payables to brokers and dealers - 95,272,147 95,272,147
Payables for securities owned - - -
Trade payables due to related parties - 1,166,239 1,166,239
Other payables - 51,371,898 51,371,898
Other liabilities - - -
Total 4,364,964 311,728,658 316,093,622
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
41
Note 8 Financial instruments by category, continued
Financial liabilities as of December 31, 2012
Financial liabilities as per the statement of financial
position
Financial
liabilities at fair
value
Financial
liabilities at
amortized value Total
ThCh$ ThCh$ ThCh$
Financial liabilities at fair value - - -
Derivative financial instruments 1,821,562 - 1,821,562
Financing obligations - 85,711,989 85,711,989
Obligations with banks and financial institutions - 12,084,140 12,084,140
Payables to brokers and dealers - 54,672,390 54,672,390
Payables for securities owned - - -
Trade payables due to related parties - 17,525,221 17,525,221
Other payables - 36,890,819 36,890,819
Other liabilities - - -
Total 1,821,562 206,884,559 208,706,121
Note 9 Financial instruments at fair value – securities owned
As of December 31, 2013
Financial instruments at fair value
Available
securities
owned
Committed securities owned
Total
Term
operations
Term
operations In loans
Pledged as
collateral in
other
operations Subtotal
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Variable income instruments
Shares
Domestic 277,611 - - - - 277,611
Foreign 629,419 - - - - 629,419
Mutual funds
Domestic 9,450 - - - - 9,450
Foreign 128,765 - - - - 128,765
Investment funds
Domestic 117,853 - - - - 117,853
Foreign 2,400,158 - - - - 2,400,158
Total IRV 3,563,256 - - - - 3,563,256
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
42
Note 9 Financial instruments at fair value – securities owned, continued
As of December 31, 2012
Financial instruments at fair value
Available
securities
owned
Committed securities owned
Total
Term
operations
Term
operations In loans
Pledged as
collateral in
other
operations
Subtotal
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Variable income instruments
Shares
Domestic 195,078 - - - - 195,078
Foreign 1,195,488 - - - - 1,195,488
Mutual funds
Domestic 370,431 - - - - 370,431
Foreign - - - - - -
Investment funds
Domestic 3,954,009 - - - - 3,954,009
Foreign - - - - - -
Total IRV 5,715,006 - - - - 5,715,006
Domestic shares by issuer
As of December 31, 2013
Financial instruments at fair
value
Available
securities
owned
Committed securities owned
Total Units In forward
operations In loans
Pledged as
collateral in
other
operations Subtotal ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Variable income instruments
ANTARCHILE 43 - - - - 43 6
AUSTRALIS 5,533 - - - - 5,533 212,795
BANVIDA 28,011 - - - - 28,011 155,619
BCI 1,050 - - - - 1,050 36
BLUMAR 2,151 - - - - 2,151 20,193
CFMITNIPSA 197,014 - - - - 197,014 63,186
CHILE 166 - - - - 166 2,177
CIC 18,570 - - - - 18,570 1,093,022
INDIGO - - - - - - 1
INVEXANS 1,676 - - - - 1,676 170,317
LAN 4,614 - - - - 4,614 559
MOLLER 21 - - - - 21 62
PIZARREÑO 113 - - - - 113 143
PUCOBRE 7,769 - - - - 7,769 2,486
SARLAT - - - - - - 1
SIEMEL - - - - - - 2
SMSAAM 44 - - - - 44 923
SOQUICOM 797 - - - - 797 8,431
WATTS 439 - - - - 439 499
ZOFRI 9,600 - - - - 9,600 15,000
Total 277,611 - - - - 277,611 1,745,458
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
43
Note 9 Financial instruments at fair value – securities owned, continued
Domestic shares by issuer, continued
As of December 31, 2012
Financial instruments at fair
value
Available
securities
owned
Committed securities owned
Total Units In forward
operations In loans
Pledged as
collateral in
other
operations Subtotal
M$ M$ M$ M$ M$ M$ Variable income instruments
ANTARCHILE 44 - - - - 44 6
AUSTRALIS 49,007 - - - - 49,007 798,811
BANVIDA 19,226 - - - - 19,226 99,719
BCI 593 - - - - 593 18
BLUMAR 21,651 - - - - 21,651 160,210
CHILE 103 - - - - 103 1,328
CHILET-OSA 1,205 - - - - 1,205 199,168
INDIGO - - - - - - 1
LAN-OSA 674 - - - - 674 2,495
MADECO 12,033 - - - - 12,033 693,162
PIZARREÑO 113 - - - - 113 143
POTASIOS-A 56,934 - - - - 56,934 570,369
SARLAT 1 - - - - 1 3
SCHWAGER 6,694 - - - - 6,694 7,463,044
SIEMEL - - - - - - 2
SMSAAM 53 - - - - 53 923
SONDA-OSA 47 - - - - 47 496
SOQUICOM 13,664 - - - - 13,664 107,590
WATTS 11,998 - - - - 11,998 23,073
ZOFRI 1,038 - - - - 1,038 1,915
Total 195,078 - - - - 195,078 10,122,476
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
44
Note 9 Financial instruments at fair value – securities owned, continued
Foreign shares by issuer
As of December 31, 2013
Financial instruments at fair
value
Available
securities
owned
Committed securities owned
Total Units In forward
operations In loans
Pledged as
collateral in
other operations Subtotal ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Variable income instruments
ARGOS 1,117 - - - - 1,117 211 BANCOLOMBI 3,368 - - - - 3,368 519 BANCOLOMBIAPRE 3,544 - - - - 3,544 555 BAP 69 - - - - 69 1 CASA GRANDE 530,201 - - - - 530,201 346,972 CEMARGOS 5,618 - - - - 5,618 2,104 CEMEXLATAMH 1,218 - - - - 1,218 302 CONCONCRET 12,472 - - - - 12,472 34,289 CONTINC1 35,774 - - - - 35,774 36,000 CORFICOLLSD 10 - - - - 10 1 DAVIVIPREF 251 - - - - 251 39 EDEGEL 1,195 - - - - 1,195 2,500 GRAMONC1 112 - - - - 112 50 IFS 3,740 - - - - 3,740 230 INTRETC1 25 25 3 ISAGEN 1,937 - - - - 1,937 2,187 PFAVAL 7,353 - - - - 7,353 21,168 PFSURA 2,383 - - - - 2,383 250 PREFINVER 12,804 - - - - 12,804 2,410 SURA 6,216 - - - - 6,216 677 TABLEMAC 12 - - - - 12 5,352
Total 629,419 - - - - 629,419 455,820
As of December, 2012
Financial instruments at fair
value
Available
securities
owned
Committed securities owned
Total Units In forward
operations In loans
Pledged as
collateral in
other operation Subtotal ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Variable income instruments
CASA GRANDE 182,145 - - - - 182,145 365,892
CONCONCRET 11,975 - - - - 11,975 40,648
EDEGEL S.A. 5,466 - - - - 5,466 2,500
ALICOR 994,753 - - - - 994,753 3,500
GRAMON 91 - - - - 91 50
MPLE 1,058 - - - - 1,058 345,000
Total 1,195,488 - - - - 1,195,488 757,590
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
45
Note 9 Financial instruments at fair value – securities owned, continued
As of December 31, 2013
Financial instruments at fair
value
Available
securities
owned
Committed securities owned
Total
In forward
operations In loans
Pledged as
collateral in
other
operations Subtotal
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Fixed income and financial
brokerage instruments
From Government
Domestic 16 4,630,898 - - 4,630,898 4,630,914
Foreign - - - - - -
From financial institutions
Domestic 1,204,761 85,636,153 - - 85,636,153 86,840,914
Foreign - - - - - -
From companies
Domestic 5,587,415 47,316,668 47,316,668 52,904,083
Foreign - 11,659,004 - - 11,659,004 11,659,004
Foreign market fixed income 13,149,505 - - - - 13,149,505
Total IRF and IIF 19,941,697 149,242,723 - - 149,242,723 169,184,420
As of December 31, 2012
Financial instruments at fair
value
Available
securities
owned
Committed securities owned
Total
In forward
operations In loans
Pledged as
collateral in
other
operations Subtotal
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Fixed income and financial
brokerage instruments
From Government
Domestic 18 4,779,065 - - 4,779,065 4,779,083
Foreign - - - - - -
From financial institutions
Domestic 572,770 59,256,287 - - 59,256,287 59,829,057
Foreign - - - - - -
From companies
Domestic 4,028,371 16,999,991 16,999,991 21,028,362
Foreign - - - - - -
Foreign market fixed income 7,437,788 - - - - 7,437,788
Total IRF and IIF 12,038,947 81,035,343 - - 81,035,343 93,074,290
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
46
Note 10 Financial instruments at amortized value – securities owned
As of December 31, 2013 and 2012, the company has not valued its securities owned in financial
instruments at amortized value.
Financial instruments at
amortized value
Available
securities
owned
Committed securities owned
Total
In forward
operations In loans
Pledged as
collateral in
other
operations Subtotal
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Fixed income and financial
brokerage instruments
From Government
Domestic - - - - - -
Foreign - - - - - -
From financial institutions
Domestic - - - - - -
Foreign - - - - - -
From companies
Domestic - - - - - -
Foreign - - - - - -
Other (define) - - - - - -
Total IRF and IIF - - - - - -
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
47
Note 11 Financial instruments at amortized value – financing operations
(a) Purchase operations under agreements to resale involving variable income
instruments (Simultaneous)
As of December 31, 2013
Counterparties Average rate
Maturity
Total
Fair value of the
underlying asset Up to 7 days
More than 7
days
% ThCh$ ThCh$ ThCh$ ThCh$
Natural person 0.53 7,605 1,402,350 1,409,955 1,409,955
Legal person 0.53 17,280 3,115,822 3,133,102 3,133,102
Security brokers 0.52 1,816,425 2,781,276 4,597,701 4,597,701
Institutional investors - - - - -
Related parties - - - - -
Total 1,841,310 7,299,448 9,140,758 9,140,758
As of December 31, 2012
Counterparties Average rate
Maturity
Total
Fair value of the
underlying asset Up to 7 days
More than 7
days
% ThCh$ ThCh$ ThCh$ M$
Natural person 0.60 16,435 2,384,338 2,400,773 2,400,773
Legal person 0.58 2,524,267 14,454,750 16,979,017 16,979,017
Security brokers 0.60 - 366,880 366,880 366,880
Institutional investors - - - - -
Related parties - - - - -
Total 2,540,702 17,205,968 19,746,670 19,746,670
(b) Purchase operations under agreements to resale involving fixed income and financial
brokerage instruments (Repurchase agreements)
As of December 31, 2013
Counterparties
Average rate
%
Maturity
Total
Fair value of the
underlying asset Up to 7 days
More than 7
days
ThCh$ ThCh$ ThCh$ M$
Natural person - - - - -
Legal person 0,45 13,355,501 - 13,355,501 13,355,501
Security brokers - - - - -
Institutional investors - - - - -
Related parties - - - - -
Total 13,355,501 - 13,355,501 13,355,501
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
48
Note 11 Financial instruments at amortized value – financing operations
(b) Purchase operations under agreements to resale involving fixed income and financial
brokerage instruments (Repurchase agreements), continued
As of December 31, 2012
Counterparties
Average rate
%
Maturity
Total
Fair value of the
underlying asset Up to 7 days
More than 7
days
ThCh$ ThCh$ ThCh$ ThCh$
Natural person - - - - -
Legal person 0.50 - 4,177,309 4,177,309 4,177,309
Security brokers - - - - -
Institutional investors - - - - -
Related parties - - - - -
Total - 4,177,309 4,177,309 4,177,309
(c) Premium receivable from share loans
As of December 31, 2013
Counterparties
Average rate
%
Maturity
Total Up to 7 days
More than 7
days
ThCh$ ThCh$ ThCh$
Natural person 0.35 - 2,416 2,416
Legal person 0.40 - 458,328 458,328
Security brokers - - - -
Institutional investors - - - -
Related parties 0.32 - 729 729
Total - 461,473 461,473
As of December 31, 2012
Counterparties
Average rate
%
Maturity
Total Up to 7 days
More than 7
days
ThCh$ ThCh$ ThCh$
Natural person 0.38 - 765 765
Legal person 0.39 - 300,954 300,954
Security brokers - - - -
Institutional investors - - - -
Related parties 0.30 - 66 66
Total - 301,785 301,785
-
LARRAIN VIAL S.A. CORREDORA DE BOLSA
Notes to the Separate Financial Statements
December 31, 2013 and 2012
49
Note 12 Derivatives