Compañía Sud Americana de Vapores S.A Annual. Report

Transcription

1 Compañía Sud Americana de Vapores S.A Annual Report

2 Basic Information CORPORATE NAME Compañía Sud Americana de Vapores S.A. TICKER CODE Vapores TAXPAYER ID NUMBER TYPE OF ENTITY Publicly listed corporation SECURITIES REGISTRY NUMBER 76 LEGAL ADDRESS Santiago and Valparaíso, Chile CONTACT Hendaya 60, piso 14, Oficina 1401, Las Condes, CP , Casilla Correo 34, Santiago Telephone (56-2) Fax (56-2) SHAREHOLDER SERVICES DCV Registros S.A., Huérfanos 770, Floor 22, Santiago, Chile Telephone: (56-2) atencionaccionistas@dcv.cl INVESTOR RELATIONS Felipe Rodríguez Investor Relations Telephone: (56-2) investor@csav.com ARTICLES OF INCORPORATION Compañía Sud Americana de Vapores S.A. (hereinafter also CSAV or the Company ) was incorporated by public instrument dated October 4, 1872, signed before Valparaíso Notary Julio César Escala. It was authorized to do business by Supreme Decree 2,347 dated October 14, These documents were registered on page 486 number 147 and page 497 number 148, respectively, of the Valparaíso Chamber of Commerce on October 15, 1872.

3 Contents Compañía Sud Americana de Vapores S.A. Main Figures for Letter from the Chairman 04 Corporate Governance 08 Board of Directors 08 Directors' Committee 10 CSAV s Corporate Governance Structure 11 Senior Executives 11 Activities and Businesses 12 CSAV Profile 12 History 14 Shipping Industry 18 CSAV's Business Areas 24 Regulatory Framework 28 Risk Management 29 CSAV in Income Statement Analysis 36 Other Activities 39 General Information 42 Ownership, Stock Performance and Other Related Matters 42 Material Events 49 Subsidiaries and Associates 52 Corporate Structure 52 Information on Subsidiaries and Associates 54 Consolidated Financial Statements 60 Responsibility Statement 221

4 Main Figures for 2017 Assets CSAV 2,266 MUS$ Ownership Interest in Hapag-Lloyd 25.5% Equity CSAV 2,117 MUS$ Investment in Hapag-Lloyd 85.3% of CSAV s Total Assets Revenue Hapag-Lloyd 11,286 MUS$ EBITDA Hapag-Lloyd 1,198 MUS$ Transported Volume Hapag-Lloyd 9,803 Thousands of TEU Sales Car Carrier Business 110 MUS$ EBITDA CSAV 2.5 MUS$ * Excluding associate Transported Volume CSAV 399 Thousands of tons 2 Annual Report 2017

5 Compañía Sud Americana de Vapores S.A. 3

6 Letter from the Chairman Dear Shareholders: The year 2017 was a period of important changes for both the shipping industry and the Company's businesses. The industry consolidation process that began in late 2014 with the merger of Hapag- Lloyd and CSAV continued in 2015 and 2016 and was furthered yet this year with the announcement of the acquisition of OOCL by COSCO and the closing of the purchase of Hamburg Süd by Maersk. Meanwhile, in May of this year Hapag-Lloyd successfully concluded its merger with UASC, agreed in 2016, making it the fifth largest shipping line globally by hauling capacity and strengthening its position as one of the most important container shipping companies in the world. As a result of the merger, Hapag-Lloyd now has the large vessels necessary to operate efficiently along the main global trades. Incorporating these vessels into the company's fleet means that it will need to invest significantly less in new ships than the competition, which provides relief for Hapag-Lloyd shareholders, including CSAV. In addition, the company now has one of the youngest fleets in the industry with an average age of seven years, an average vessel size of approximately 7,200 TEU and an owned fleet percentage of 68%, all indicators that leave Hapag-Lloyd in a clear leadership position among its competitors. Hapag-Lloyd s management reported that it has concluded integration with UASC as expected, which places the company on good footing to obtain cost synergies from the merger, estimated at US$435 million per year, which will help significantly improve operating performance. These synergies will be obtained mainly from integrating and optimizing Hapag-Lloyd s service network and the more efficient operations of its new combined fleet. In other matters, last year saw a moderate recovery in freight rates in Hapag-Lloyd s main markets, although that was offset by a sharp rise in oil prices and the resulting 4 Annual Report 2017

7 Hapag-Lloyd successfully concluded its merger with UASC, agreed in 2016, making it the fifth largest shipping line globally by hauling capacity and strengthening its position as one of the most important container shipping companies in the world. increase in vessel operating costs. Even so, Hapag-Lloyd, which began the year 2017 with losses, managed to reverse them during the second half of the year and close the period with consolidated profit of US$35 million. With these figures, Hapag-Lloyd s operating performance in 2017 positions it among the top global shipping lines for the second straight year. Years ago when CSAV restructured its business, it put into action a strategy focused on cutting costs and identifying efficiencies, which it has continued to promote as a shareholder of Hapag-Lloyd. This strategy has clearly hit the mark and enabled CSAV to build a highly competitive container shipping business. The global fleet and the balance of supply and demand in the industry also developed positively during the year, with shipbuilding orders at an historic low of 12.7%, vessel scrapping representing 2.1% of the fleet and a net increase in supply during the year of 3.8%. This figure is lower than growth in demand, at around 5%, for the second year in a row. Despite an increase in shipbuilding orders for new vessels of around 3.3% of the fleet in 2017, orders representing around 5.9% of the fleet were delivered, which explains the aforementioned reduction in the order book. Another important development in April 2017 was the start of operations for the new global alliances announced in The former alliances Ocean Three, G6 and CKYHE were dissolved to make way for two new alliances, Ocean Alliance and THE Alliance. Hapag-Lloyd, and now its subsidiary UASC, are members of the latter. The previously existing alliance 2M maintained its current operating structure but has added HMM. The merger between Hapag-Lloyd and UASC will also help strengthen THE Alliance, offering Hapag-Lloyd customers a range of significantly enhanced services along eastwest routes, in partnership with Japanese lines K-Line, NYK and MOL, which are set to merge and operate under the name ONE on April 1, 2018, and the Taiwanese company Yang Ming. Compañía Sud Americana de Vapores S.A. 5

8 As in prior years, we believe that these important changes in the container shipping industry should continue to positively impact our sector in the medium term and be reflected in increasingly more efficient cost structures, more rational investment plans and, lastly, less volatile freight rates, which should lead to improved returns for the industry. For the year 2017, the Company posted a loss of US$188.1 million attributable to the owners of the company. This is explained mainly by the accounting loss of US$167.2 million that CSAV had to record as a result of the dilution of its stake in Hapag-Lloyd after the merger with UASC. Following that business combination, CSAV is still the German company s largest shareholder, but its ownership interest fell from 31.4% to 22.6% after incorporating UASC's former shareholders. The aforementioned accounting loss is a one-time event arising because IFRS does not allow the Company to account for the estimated merger synergies of US$435 million per year, which are a fundamental factor in the financial value of the transaction. The loss for the year 2017 also includes a deferred tax expense of US$45.2 million mainly from the tax effect at CSAV of an appreciating euro on the financing structure of its German subsidiary, CSAV Germany, through which we invested in Hapag-Lloyd. Excluding these effects, CSAV s businesses reported positive results for the year, explained by its share of Hapag-Lloyd s results, including PPA effects for the period, and a positive performance from shipping services operated directly by CSAV. Based on published information, Hapag- Lloyd saw a 1% rise in average freight rates in 2017 and transported volumes increased by 29%, which resulted in sales of US$11,286 million, up US$2,740 million from It is important to note that these figures include UASC starting in May Based on proforma figures for the merged entity for 2016 and 2017, average freight rates rose 9% and volumes were up 5%, well in line with the industry. Average oil prices in 2017 were 41% higher than in 2016, reaching US$318 per ton, which impacted Hapag-Lloyd's cost per container transported in 2017 by approximately 4%. This was fully offset by a 4.3% reduction in other costs such as vessel and equipment charters, terminal expenses and other shipping services, including the mix effect of UASC. These figures enabled Hapag-Lloyd to report EBITDA of US$1,198 million in 2017 (11% of EBITDA margin), EBIT of US$466 million (4.1% of EBIT margin) and, ultimately, consolidated profit of US$35 million, sharp improvements over The businesses operated directly by CSAV, mainly the car carrier business, experienced negative conditions during the year for freight rates, although with significant 6 Annual Report 2017

9 growth in transported volume, maintaining trends that began in This helped the business segment maintain positive figures for all four quarters in 2017 and close the year with profit of US$4.3 million. Revenue from the services operated by the Company in 2017 reached US$109.9 million, representing an increase of US$0.6 million compared to the previous year. This is explained mainly by the combined effect of reduced freight rates in the car carrier business, as mentioned above, net of the increase in volumes of vehicles transported. Cost of sales fell by US$3.3 million, mainly explained by greater efficiency and a reduction in the operating cost structure of the car carrier segment. One important development in financing activities during the year was CSAV's capital increase in October and November. All shares offered (100%) were placed and the Company raised US$294 million, closing its first preferential option period with 98.2% subscribed. The funds raised enabled the Company to participate in the capital increase carried out by Hapag- Lloyd in Germany and to acquire additional shares to bring its interest to 25.5%, from 22.6% after the merger with UASC, in line with CSAV's objectives when it approved the transaction in In closing, the year 2017 was once again a year of major challenges for everyone. However, we moved forward on strategic plans we had defined for our businesses, which kept us competitive and helped us successfully address the industry's challenges. Although we are still far from the returns we expect from our business, this year we have made enormous strides towards that goal. This has been possible thanks to the steadfast commitment and support of both our shareholders and employees, who have put significant effort into developing each of our business activities and efficiently resolving the main issues the Company faces today. At this time, I would like to express my sincere appreciation and gratitude to all the people who form part of the CSAV team, for their valuable dedication and commitment to the Company. I am also grateful for the confidence placed in us by our customers who choose our services, and the committed backing of our shareholders, who continue to support the development plans of Compañía Sud Americana de Vapores. Sincerely, Francisco Pérez Mackenna Chairman of the Board Compañía Sud Americana de Vapores S.A. 7

10 Corporate Governance Board of Directors CSAV s corporate governance is led by its board of directors, which consists of seven members elected by shareholders at the annual general meeting, in accordance with Art. 31 of Law No. 18,046 on Corporations ( LSA ). The most recent elections took place on April 20, 2016, electing members for a three-year term. The Company's bylaws do not call for alternate directors. The Company s General Counsel serves as secretary to the board. On June 12, 2017, Edmundo Eluchans Aninat was appointed to this position to replace Pablo Bauer Novoa. Francisco Pérez Mackenna CHAIRMAN Commercial Engineer Board member since April 2011 Chilean ID Number: José De Gregorio Rebeco DIRECTOR Civil Engineer Board member since April 2012 Chilean ID Number: Annual Report 2017

11 Andrónico Luksic Craig VICE CHAIRMAN Financial Investor Board member since April 2013 Chilean ID Number: K Hernán Büchi Buc DIRECTOR Civil Engineer Board member since April 2012 Chilean ID Number: Arturo Claro Fernández DIRECTOR Agronomist Board member since April 1987 Chilean ID Number: Isabel Marshall Lagarrigue INDEPENDENT DIRECTOR Economist Board member since April 2016 Chilean ID Number: K Gonzalo Menéndez Duque DIRECTOR Commercial Engineer Board member since April 2011 Chilean ID Number: K SECRETARY TO THE BOARD Edmundo Eluchans Aninat Lawyer Chilean ID Number: Compañía Sud Americana de Vapores S.A. 9

12 Directors ' Committee Members COMMITTEE CHAIRWOMAN Isabel Marshall Lagarrigue Independent Director DIRECTOR Arturo Claro Fernández DIRECTOR Gonzalo Menéndez Duque CSAV s Directors Committee was formed in accordance with Art. 50 bis of the LSA and has three members: the independent director and two other directors selected by her at the board meeting held on April 20, The Company s General Counsel, Edmundo Eluchans Aninat, serves as secretary of this committee and also as the Legal Compliance Officer or Crime Prevention Officer (as of June 12, 2017). Until that date, these duties were fulfilled by Pablo Bauer Novoa). The following individuals regularly attend Directors' Committee meetings with a right to speak: Óscar Hasbún Martínez, Chief Executive Officer; Tomás Tafra Rioja, Chief Financial Officer; and Claudio Salgado Martínez, Controller, who is also responsible for risk management. The general information section of this annual report contains the management report for the Directors Committee for Annual Report 2017

13 CSAV s Corporate Governance Structure Board of Directors Directors ' Committee Chief Executive Officer Controller Legal and Compliance Officer Chief Financial Officer Senior Vice President, Automobiles Organizational Dependency Functional Dependency Senior Executives CHIEF EXECUTIVE OFFICER Óscar Eduardo Hasbún Martínez Commercial Engineer Chilean ID Number: Appointment: March 31, 2012 CHIEF FINANCIAL OFFICER Tomás Tafra Rioja Civil Engineer Chilean ID Number: Appointment: December 1, 2016 SENIOR VICE PRESIDENT, AUTOMOBILES Hernán Martínez Fermandois Civil Engineer Chilean ID Number: Appointment: February 27, 2015 GENERAL COUNSEL Edmundo Eluchans Aninat Lawyer Chilean ID Number: Appointment: June 12, 2017 Compañía Sud Americana de Vapores S.A. 11

14 Activities and Businesses CSAV Profile Compañía Sud Americana de Vapores S.A. is a shipping company based in Chile. Its main line of business is container cargo shipping, which it operates since 2014 through its stake in the German company Hapag-Lloyd AG (HLAG), the world s fifth largest shipping line in this segment. CSAV is the largest shareholder with a 25.5% stake in the German company and is party to a shareholder agreement that controls approximately 59% of that entity. Thus, CSAV exercises significant influence and joint control over HLAG, so it is classified in its financial statements as a joint venture. As of December 31, 2017, the investment in HLAG represented 85.3% of the Company s consolidated assets. With a fleet of 219 container ships and total capacity of 1.6 million TEU, HLAG has a highly diversified, balanced service portfolio and logistics network, operating along the most important global shipping routes. In addition, it is the main member of the alliance known as THE Alliance, one of three alliances that represent more than 90% of global shipping capacity on east-west routes. CSAV also has direct vehicle transport services from Asia, Europe, North America and the east coast of South America to the west coast of South America, where it regularly operates around seven vessels. Founded in 1872, CSAV is a publicly traded company listed on the Chilean stock exchange since Annual Report 2017

15 Hapag-Lloyd Figures as of December 2017 Line services 120 Fleet 219 container ships Offices 387 Total shipping capacity 1.6 million TEUs Presence 125 countries Container fleet 2.3 million TEUs Compañía Sud Americana de Vapores S.A. 13

16 History Sud Americana de Vapores S.A. was founded in Valparaíso on October 4, 1872, following the merger of Compañía Chilena de Vapores and Compañía Nacional de Vapores. The Company began its first international experience with service to the port of Callao, Peru, which was later extended to Panama. When the Panama Canal opened, it expanded its services to New York, which then intensified as European ship owners withdrew their services during World War I At the end of World War II, the Company s services experienced vigorous growth in Europe. During this period, the holds in some vessels were converted to refrigerated chambers, enabling the Company to transport fruit on its regular services to the United States and Europe. CSAV entered the airfreight and shipping agency business with the creation of SAAM (Sudamericana Agencias Aereas y Maritimas S.A.). Decree Law 3059 promoting the Chilean Merchant Navy led to great dynamism at the Company After the global economic crisis in 1929, CSAV added three ships to consolidate the service to New York and later extend it to Europe, after incorporating three motorboats The Company established new routes and amended its services to northern Europe, the Far East and Japan, the Mediterranean, Asia, the Pacific and South East Asia. This year saw significant growth 14 Annual Report 2017

17 in specialized services for reefer, vehicle and bulk cargo. South America s east coast, the United States and Europe Since the beginning of the 1990s, CSAV and its subsidiaries increased their business activities in the region, with better services, new routes and the introduction of businesses that complement its shipping services, mainly relating to container transport. CSAV began transporting chemical products within Chile and to other countries on the west coast of South America. CSAV acquired a controlling interest in Brazil s Companhia Libra de Navegaçao S.A. and Uruguay s Montemar Marítima S.A., which operate container shipping services in several markets between The Company extended its operations to include east-west routes (Asia-Europe, Transpacific and Transatlantic) after acquiring the assets of Norasia Container Lines Ltd. and Norasia China Ltd. CSAV extended its network of owned agencies and intensified its operations, through its subsidiary SAAM, by winning concessions for several Chilean ports. It received 13 container ships under a shipbuilding program of 22 vessels ordered in The Company began to experience the effects of the most important worldwide crisis since the Great Depression of Compañía Sud Americana de Vapores S.A. 15

18 CSAV underwent a profound financial restructuring process, which included capital increases, renegotiating shipbuilding programs and additional financing. CSAV received four new 8,000 TEU vessels and one 6,600 TEU vessel. Quiñenco S.A., a Luksic Group holding company, acquired a stake in the Company in April. Toward the end of the second quarter, the Company was jointly controlled by Quiñenco S.A. and the Claro Group s Marítima de Inversiones S.A., each with approximately 20.6%. Faced with the worst crisis experienced until then, CSAV began a major restructuring process. Initiated in 2011, the plan involved recognizing significant losses during 2011 and 2012, but the positive effects became apparent once the operational restructuring was successfully completed. The Company received the three remaining ships from its original order to build seven 8,000 TEU vessels and SAAM was spun off from CSAV, giving rise to SM SAAM. CSAV signed a contract to build seven 9,300 TEU container ships in April, for delivery at the end of This plan aimed to increase ownership within its own fleet to 50%. The first part of a capital increase was concluded in September for US$330 million, partially to finance the 9,300 TEU shipbuilding program and partially to repay the financial debt from prepaying AFLAC in the second quarter. Quiñenco S.A. increased its stake in CSAV to 46.0%. CSAV signed a Business Combination Agreement (BCA) with Hapag-Lloyd AG (HLAG) in April, which contained the terms for merging CSAV s container shipping business with that company. In November, CSAV received the first of the seven 9,300 TEU ships included in its investment plan. All the conditions defined in the BCA were fulfilled in December, and the container shipping business was transferred to HLAG. CSAV became the largest shareholder in this German company with a 30% stake. After the merger, HLAG became a leading global operator of containerized cargo. CSAV s stake increased to 34% during December, after contributing EUR 259 million to an HLAG capital increase of EUR 370 million. Upon transaction close, the shareholder agreement agreed between HLAG s controlling partners CSAV, Kühne Maritime and the city of Hamburg took effect. This agreement formed a long-term partnership to give stability to the new entity's control structure. Through this partnership, the three main shareholders agreed to transfer voting rights for 51% of HLAG's shares in order to discuss and collectively make key future decisions. This joint structure was implemented using the German company "Hamburg Container Lines Holding GmbH & Co. KG. CSAV holds a 50% stake in this company, while the city of Hamburg and Kühne Maritime each have 25% stakes. Therefore, the Company has significant influence over HLAG, and jointly controls it with the other partners in the shareholder agreement. In September, the Company fully prepaid all its bonds issued in UF in order to improve its financial structure. The prepayment was financed with a long-term loan of US$45 million from Banco Itaú Chile. In November 2015, and in accordance with the original transaction conditions, HLAG successfully conducted its initial public offering (IPO) on the stock exchanges in Frankfurt (Prime Standard) and Hamburg. CSAV and Khüne Maritime subscribed 10.33% of the shares issued at the IPO, contributing EUR 27.3 million each. The IPO was primarily intended for the market; accordingly, CSAV reduced its stake from 34.0% to 31.35%. Thus, the voting rights exercised by parties to the shareholder agreement, through Hamburg Container Lines Holding GmbH & Co. KG, were reduced from 51% to 45%. Nevertheless, the parties to the shareholder agreement jointly control 72% of HLAG. In July, HLAG and United Arab Shipping Company (UASC) entered into a Business Combination Agreement, whereby the German company would acquire all the shares of UASC in exchange for 28% of its own shares. This would result in HLAG becoming the fifth largest shipping company in the world, with CSAV remaining the principal shareholder of the combined entity with a 22.6% stake. After a second capital increase, this would increase to at least 25%. CSAV concluded the sale of its shares in the joint venture with Odfjell Tankers in October that operated the liquid bulk business along the west coast of South America. The Company also placed bonds in the local market that month for US$50 million, which were allocated to repay the loan of US$30 million to its parent company, Quiñenco S.A, used to finance its contribution to the HLAG IPO in The merger between HLAG and UASC announced in 2016 was concluded in May and positioned HLAG 16 Annual Report 2017

19 as the fifth largest container shipping line in the world. After the merger process, CSAV s stake in HLAG was diluted from 31.35% to 22.57%, but it remained the largest shareholder of the combined entity and retained control of the company through a shareholder agreement with its partners Kühne Maritime and the city of Hamburg. In October, as part of the agreements contained in the BCA, and in order to strengthen the combined company s financing structure, HLAG increased its capital by EUR 352 million (approx US$414 million), which brought CSAV's interest in that company to 24.7%. However, in accordance with agreements made prior to closing the BCA, towards the end of that month CSAV increased its stake from 24.7% to 25%, by acquiring additional shares of HLAG from Kühne Maritime. The Company financed these transactions with two bridge loans for a total of US$120 million from commercial banks and funds raised from CSAV's majority shareholders in its capital increase in Chile. In November, CSAV successfully concluded the capital increase process in Chile that began in October, issuing 6,100 million new shares through a rights issue at a price of Ch$30.55 per share and raising a total of US$294 million. In December, after attaining 25% of HLAG and repaying its bank commitments, CSAV further increased its holding in the German shipping line to 25.46% as of the close of the 2017 financial statements. CSAV also decided to discontinue its logistics and freight forwarder businesses, selling 100% of its interest (direct and indirect) in Norgistics Chile S.A. It also began the process of closing the Norgistics offices in Peru, Mexico and China. Compañía Sud Americana de Vapores S.A. 17

20 Shipping Industry Container Shipping Context Global Economy Remains Weak There is a direct relationship between global GDP and international trade in goods, which takes place mainly through ocean container shipping. In recent years, global GDP growth rates have been lower than figures seen earlier in the decade and, similarly, container transported volume has also experienced slower growth (see chart). In its January 2018 report, the International Monetary Fund (IMF) reported global economic growth of 3.7% for 2017, the highest figure in the last six years, surpassing the entity's most recent projections from October 2017 by one percentage point and forecasts from early 2017 by two percentage points. This same IMF report predicts growth of 3.9% for 2018, which is two percentage points above its previous publication and three points Evolution of Global Production and Container Trade 15% 13.7% Annual change (%) 12% 9% 6% 3% 0 7.8% 5.1% 5.3% 5.4% 5.0% 4.2% 3.5% 5.4% 3,4% 4.2% 3.4% 3.5% 3.2% 3.7% 3.9% 3.1% 2.1% e World Seaborne Container Trade (Var. %) Global GDP growth (Var. %) Source: International Monetary Fund, Jan-18 Clarkson Research, Mar Annual Report 2017

21 higher than early 2017 forecasts. However, in 2016 global GDP hit its lowest levels seen in the last four years and, therefore, these indicators and their projections are still highly volatile. In line with these projections, demand for container transport in 2017 grew 5.4% and is expected to grow 5.0% in 2018, due to a more vigorous global economy and increased trade. These forecasts improved considerably over the first quarter of the year (4.2% for 2017 and 4.6% for 2018) due to the rise in industry indicators for transported volume starting the second quarter of The positive results for 2017 reported by the IMF are due to an upturn in the growth of several economies, particularly in Europe and Asia, making this the most synchronized recovery observed since During the last few months of 2017, global trade increased sharply backed by rising investment, especially in developed economies, and increased production in Asia, in line with stronger consumer confidence. The recovery seen in 2017 is expected to continue in 2018, mainly because of growth in developed markets, backed by favorable expectations for global financial conditions and accelerating demand. These outlooks are also based on the positive economic effects of the tax reform implemented in the United States, which should strengthen internal demand and imports in the short term. Emerging markets should continue to enjoy the economic vigor and growth seen in Latin America is expected to continue to recover with slight growth over last year and should not be significantly affected by the downgrading of Venezuela and elections in Brazil, Mexico and Colombia. Excess Capacity The container shipping industry's excess installed capacity, which began during the crisis, continues to significantly impact markets and the shipping industry. Since then, most of the major global shipping companies have taken various measures to restore balance between supply and demand. These measures have included closing and restructuring transport services, suspending voyages, increasing idle fleets, reducing cruising speeds and scrapping unused vessels. Shipping companies are increasingly seeking joint operating agreements, operating alliances along the most important routes and greater industry consolidation through mergers and acquisitions. In line with these rationalization efforts, current shipbuilding orders are mostly related to purchases or long-term charters by ship owners, not investors or non-operating ship owners. As a result, these orders are part of an orderly growth plan and are aligned with joint venture agreements or global alliances in which these companies participate. As of December 31, 2017, vessels under construction total 12.7% of the current global operating fleet, according to data from Alphaliner. This figure is within historical minimum levels, just like the estimated orders for It is worth mentioning that 47% of future deliveries fall within the largest ship category, with capacity over 18,000 TEU, which reflects the industry's focus on increased operating efficiency and more coordinated positioning along multiple routes operated by global alliances. Vessel scrapping levels remained fairly high in 2017, representing close to 2.1% of the global fleet existing at the start of the year (the third highest figure). The downward trend in the average age of scrapped vessels also continued. This was due partly to the opening of the Panama Canal expansion in July In fact, that year vessel scrapping levels reached a record high, mainly in the Panamax segment (the largest vessels that could pass through the old canal). This increase in vessel scrapping is explained by the entry of new, larger ships to replace smaller, less fuel-efficient vessels. Although these efforts have led shipping companies to more rationally use their assets, the decreased demand for shipping observed over the last five years, except for 2016, has continued to generate excess supply. One indicator of this phenomenon, in addition to low, volatile freight rates, is the fact that in 2016 idle fleets reached their highest levels since the 2009 crisis. Idle fleet levels fell in 2017 with respect to the prior year due mainly to both high scrapping levels during the period and the industry s re-incorporation of part of its idle fleet for its new configuration based on new operating alliances that began in April Idle Fleet Evolution % Idle capacity in Th. TEU % 8% 4% % of Total Fleet 0 0% Idle Fleet % of Total Fleet Source: Alphaliner - Monthly Report Jan-18 Compañía Sud Americana de Vapores S.A. 19

22 The idle fleet is currently made up of 1,000 to 5,000 TEU vessels (many of them designed to meet the specifications of the old Panama Canal), which are being replaced by more efficient vessels that have been adapted to the canal s new dimensions. Low Returns and Stiff Competition in the Shipping Market Along most routes, freight rates net of fuel costs (ex-bunker rates) are still below historical levels and are much lower than levels that the industry could consider a sustainable equilibrium to obtain a suitable return on its assets. In recent years, the Shanghai Containerized Freight Index (SCFI) has varied significantly, reaching the lowest level in the index s history in early During 2017 the index reported a higher annual average price and greater stability than the last two years, and it behaved more seasonally than the prior year. This index increased towards the peak season (June to September) and then fell during the slack season. However, if we include the effect of fuel prices, which have moderated but still continue to trend upward, with a higher average price than the last two years, ex-bunker freight rates are still below expectations for suitable returns. In addition, rates along other routes have not evolved as favorably in 2017 as those from China, maintaining low average rates along many trades. An Industry Undergoing Consolidation ven though the container shipping industry still boasts a large number of players, especially in the segment of smallersized companies, industry consolidation continues. The merger of the CSAV and HLAG container shipping businesses took place in Since then further business combinations have occurred, including the acquisition of CCNI by Hamburg Süd, the merger of COSCO and China Shipping, the acquisition of APL by CMA CGM, the announcement of the merger of the three largest Japanese shipping companies (K-Line, NYK and MOL) and the purchase of Hamburg Süd by Maersk announced in late 2016 and concluded in November Furthermore, as described above, in May 2017 HLAG announced the closing of its merger with UASC, which positioned it once again among the world's five largest shipping companies in terms of hauling capacity. In addition, at the beginning of the second half of 2017 the Chinese shipping line COSCO, which had previously merged with China Shipping, announced its acquisition of Hong Kong-based Orient Overseas Container Lines (OOCL). During the third quarter of 2016, Hanjin Shipping the seventh largest container shipping company at that time by hauling capacity and the largest Korean shipping line filed for bankruptcy and suspended services. This is the largest bankruptcy case in the history of the container shipping industry. Following all these business combinations and Hanjin's liquidation, estimates calculate that the ten largest global shipping operators will account for over 84% of installed capacity, whereas the five largest will have over 65%. The five largest operators should achieve economies of scale and size significantly larger than the remaining operators, with the resulting effect on their costs and the scope of their service networks, which will place more pressure on smaller operators to form alliances in order to cut costs and expand commercial coverage. In recent years, joint operating agreements and operating alliances between shipping companies have expanded in order to improve customer service levels and broaden geographic coverage to generate significant economies of scale and network economies. These initiatives have had very noteworthy effects and have encouraged the formation of major global operating alliances. The new structure of alliances announced in 2016 began to operate globally in the second quarter of 2017, accounting for almost 90% of total shipping capacity along the industry s main long-haul, east-west routes. The main changes Trends in SCFI-RTM Margin Average Margin 2013 / 480 Average Margin 2014 / 536 Average Margin 2015 / 468 Average Margin 2016 / 436 Average Margin 2017 / jan 13 mar 13 may 13 jul 13 sep 13 nov 13 jan 14 mar 14 may 14 jul 14 sep 14 nov 14 jan 15 mar 15 may 15 jul 15 sep 15 nov 15 jan 16 mar 16 may 16 jul 16 sep 16 nov 16 jan 17 mar 17 may 17 jul 17 sep 17 nov 17 SCFI - RTM Margin Rotterdam Platts (1) SCFI (2) Notas: (1) Average bunker price (IFO 380) at Rotterdam port. (2) Shanghai Containerized Freight Index. 20 Annual Report 2017

23 in this reorganization process are the dissolution of the Ocean Three, G6 and CKYHE alliances to give rise to two new alliances: Ocean Alliance and THE Alliance, the latter of which HLAG is a member, and the incorporation of HMM as a slot buyer in the 2M alliance, which maintained its operating structure. Highly Volatile Fuel Prices Fuel is one of the industry's main consumables. Like other commodities, oil prices remained very high until late 2014, after which they fell drastically and then experienced a moderate recovery. In 2017, fuel prices increased sharply over 2016, although they stabilized late in the second half of the year, recording an average price higher than figures seen in 2015 and Therefore, the shipping industry continues to streamline the use of resources and optimize its operations, focusing on reducing operating costs; improving productivity, asset use and fuel consumption. In recent years, major global operators have prepared container ship investment plans designed to renew their fleets and better adapt to new operating standards, the new Panama canal and the main global routes. Currently, this technological change process appears to be nearing completion, with all major operators and global alliances shipping a very significant portion of their volumes in very large, efficient vessels. This explains, to a large extent, the decrease in new shipbuilding orders and the constant reduction in inventories of vessels under construction. Outlook All container shipping industry players continue to face challenging conditions. However, significant recovery in some key indicators have improved outlooks for the industry. Although freight rates showed recovery trends along multiple routes in 2016 and 2017, mainly on routes from the far east (the highest volume route in the world), they did not reach levels seen in 2013 and In the last few months of 2017, improvement has also been seen in fleet and supply-demand equilibrium indicators, which, together with the greater stability in fuel prices, gives positive signs for ex-bunker rates. These expectations have been confirmed by the greater operating income for the year for many industry operators, mainly those more exposed to routes from Asia. Even so, the industry remains properly focused on the new paradigm associated with optimizing operating costs and collaborative operations through joint operating alliances and agreements, but with a growing, very dynamic trend toward consolidation. This is especially important to deal with the cost pressures that a recovering market can bring, in the markets for both vessel charters and maritime and port services. Compañía Sud Americana de Vapores S.A. 21

24 Vehicle Shipping Context Global Demand Remains Volatile Similarly to other areas of the shipping industry, this segment has experienced extreme volatility since the financial crisis of However, global economic growth and the rise in commodities prices in 2017, among other factors, generated increased demand for this line of business. It is estimated that 21.5 million vehicles were shipped by sea in This figure represents annual growth of 5%, which fortifies the upward trend, after a market contraction of 1% in 2016 when global vehicle shipments totaled 20.4 million units shipped. Likewise, global shipments of trucks and buses are estimated to have grown approximately 7% to 4.4 million units shipped, following three consecutive years of falling volumes. Increased Supply The world's vehicle shipping capacity has grown slightly but consistently in recent years, causing excess supply, with the exception of 2010 and 2011 as a result of the financial crisis in However, given the limited number of new shipbuilding orders and a rise in scrapping rates, supply is estimated to have increased by between 1% and 2% in Due to this lingering excess vessel supply, in 2016 and 2017 CSAV negotiated vessel charter and positioning agreements with global operators at very competitive prices. CSAV's Regional Market During 2017, CSAV continued its focus on the Americas, particularly the west coast of South America, where it leads the segment with 21% of the Chilean and Peruvian markets (source: Chilean and Peruvian customs authorities). New vehicle sales in Chile, CSAV s main market, continued the recovery process initiated in During 2017, 360,900 new light vehicles were sold, up 18.1% Trends in Global Vehicle Shipping by Import Region Trends in the Global PCC Fleet by Vessel Capacity 30,000 20% 4,000 3, ,000 10% 3, Thousands of Vehicles 20,000 15,000 10,000 0% 10% 20% Thousands of Vehicles 2,500 2,000 1,500 1, ,000-30% % South America Asia North America Europe and Intra Europe Others Annual Growth (%) Sourse: Clarkson Research mar > 6,000 Vehicles 4,000-5,999 2,000-3,999 >2,000 Vehicles Annual Growth (%) Sourse: Clarkson Research mar Annual Report 2017

25 from In the truck segment, 13,144 units were sold, representing an increase of 14.1% over the prior year, while the bus segment reported 2,743 units sold, marking an 11.6% rise over 2016 (source: ANAC). Although sales also rose in Peru, CSAV s second largest market, the increase was smaller. Sales of light vehicles grew 3% from 158,876 units in 2016 to 163,668 in The truck segment behaved similarly with an increase of 2.8%, from 16,153 units in 2016 to 16,613 in 2017 (source: SUNARP-AAP). As of December 31, 2017, vehicle shipping companies operate a total of 783 PCTC (Pure Car and Truck Carrier) vessels worldwide, which specialize in shipping rolling stock. CSAV operates approximately 7 vessels, and is dedicated to transporting vehicles from Asia, Europe, the U.S. and the east coast of South America to markets on the west coast of South America, with the largest volume going to Chile and Peru. Vehicle Sales in Chile and Peru Main Vehicle Shipping Companies Thousands of Vehicles Light Vehicles Heavy Vehicles Sourse: ANAC and AAP December 2017 Ranking Operator Capacity (vehicles) 1 NYK 654, % 2 MOL 516, % 3 Eukor 476, % 4 K-Line 453, % 5 WWL 402, % 6 Glovis 346, % 7 Höegh 314, % 8 Grimaldi 265, % 9 SCC 80, % 10 Toyo 51, % 11 ECL 50, % 12 NMCC 50, % 13 CSAV 37, % Source: Hesnes Shipping AS January 2018 and internal information Compañía Sud Americana de Vapores S.A. 23

26 CSAV s Business Areas Container Shipping CSAV is engaged in the container shipping business through its investment in Hapag-Lloyd AG. Although CSAV has significant influence and is party to a shareholder agreement controlling this German company, HLAG is managed independently in accordance with the standards of a publicly listed and regulated company in Germany and, consequently, with regulations applicable in the European Union. Hapag-Lloyd is the fifth largest container shipping company in the world by hauling capacity after its May 2017 merger with the Arabian company United Arab Shipping Company. The merger between HLAG and UASC is expected to generate annual synergies of around US$435 million, which will be fully captured by the company starting in The merger has also significantly reduced the entity's investment needs over the next few years thanks to the complementary nature of the combined assets, which will enable HLAG to remain one of the most competitive companies in the industry. At the close of 2017, HLAG had a fleet of 219 container vessels with a combined capacity of 1.6 million TEU. An average vessel in the fleet held 7,184 TEU, 27% higher than the average for the 10 main global operators. HLAG owns 68% of its fleet. Its containers have a capacity of 2.3 million TEU, of which it owns more than 50%. Therefore, the company has one of the most modern, most ecological and most efficient fleets in the industry. HLAG provides services directly and through joint operating agreements formerly as part of the Grand Alliance and G6, and since April 2017 in the global alliance known as THE Alliance, which includes the original members of G6 plus Yang Ming, K-Line, Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kaisha (NYK). HLAG has become the main player in this alliance, contributing 43% of the group's total operating capacity of 3.6 million TEU, which in turn represents 17% of total global hauling capacity. The alliance operates a significant share in the major east-west shipping routes, such as the transatlantic, transpacific and far east trades, with a 33%, 27% and 25% share, respectively. In 2017, Japanese companies K-Line, MOL and NYK announced the merger and joint operation of their services under the name Ocean Network Express (ONE), which will take effect during the first half of This could generate efficiencies in the alliance's 24 Annual Report 2017

27 logistics network, improved coordination and better positioning. HLAG operates an extensive network of direct services, covering the three major east to west trade routes: Far East (Europe- Asia), Transpacific (Asia-North America) and Atlantic (Europe-North America). After integrating the shipping services offered by UASC, due to the complementary nature of these services, HLAG will offer expanded global coverage, reinforcing its position and diversifying its commercial portfolio along important east-west and north-south routes. HLAG also provides a comprehensive range of other routes, besides the main east-west routes, which includes intra-asia services, services to and within Latin America, intra-europe and intra-america. These also include services originally operated by CSAV. It also provides services to and from Africa, Australia and New Zealand. HLAG is a global leader in shipping refrigerated products. HLAG has a large, modern fleet of refrigerated containers and specialized personnel around the world. It has diversified its products using technologies that enable it to provide specialized handling of commodities, such as controlled atmosphere containers, differentiated food and non-food containers and remote monitoring. Today, HLAG is organized into five regions: Asia, North America, Latin America, Europe and the Middle East, the latter of which was added after the merger with UASC. Each region is subdivided into areas and subareas. It also has units, and these operate between one or more locations. Employees at its regional offices are dedicated to keeping the business running smoothly. HLAG has close to 387 offices around the world in 125 countries and has 12,567 employees, including 2,000 officers and crew. The areas are largely operated by its own agencies. However, it uses outsourced agency services in locations where volumes are lower. Its regional offices are located in Singapore (Asia), Piscataway, NJ (North America), Valparaíso (Latin America), Hamburg (Europe) and Dubai (Middle East). Furthermore, HLAG has shared services centers, located in India and China, which provide support to some operational and administrative processes. Compañía Sud Americana de Vapores S.A. 25

28 Vehicle Shipping The main business operated directly by CSAV is vehicle shipping in specialized vessels known as pure car and truck carriers (PCTC). These ships permit vehicles to be loaded and unloaded by driving them on their own wheels using ramps (Roll on - Roll off or RoRo). CSAV carries a wide range of vehicles, such as passenger vehicles, commercial vehicles, trucks, industrial machinery and rolling stock in general. The main markets served are countries along the west coast of South America that import vehicles from the main global production centers, such as Asia, Europe, North America, and the east coast of South America. The wide geographic scope of these services has led to it becoming a regional market leader. The operational structure implemented during 2017 mainly affected the trades from Europe and North America, and reflects vessel charter agreements with other operators in the industry. This has significantly reduced its operating cost structure. CSAV operates the following services: AUSTRAL Monthly service that serves the main ports with rolling stock production in Brazil and Argentina, destined for markets in Chile and Peru, and connections to Ecuador and Colombia. This service operates vessels with a capacity of 5,000 RT. EUMEXSA Monthly service that connects the main hub port of Zeebrugge in Belgium for vehicles in Europe, with ports on the east coast of the United States and the Gulf of Mexico, to continue via the Panama Canal to the Pacific coast of South America. This service operates vessels with a capacity of 6,500 7,800 RT. NASA Monthly service that serves ports in Germany, Belgium and Spain and transshipment connections from England, Sweden, Italy and Turkey, among others, collecting cargo destined directly for Chile and Peru and via transshipment to Colombia and Ecuador. This service operates vessels with a capacity of 6,500 RT. SHINANSEIKAI Twice monthly service from Japan and China to Peru and Chile. It also connects with Southeast Asia and Korea, which extends its coverage to production centers in that region. This service operates vessels with a capacity of 5,000 6,500 RT. No CSAV customer individually represented over 10% of the Company s revenue during Only two suppliers individually represent more than 10% of the Company s purchases in Discontinued Operations In 2017, CSAV provided freight forwarder and logistics services through its Norgistics subsidiaries, which involves consolidating cargo, transporting it by land then by sea or air, through to delivering it to the consignee at the final destination. It had international coverage through offices located in Chile, Peru, Mexico and China. On December 13, 2017, CSAV sold its interest (100%, direct and indirect) in its subsidiary Norgistics Chile S.A., thus disposing of its logistics and freight forwarder business in Chile. This occurred as part of the process of closing Norgistics operations worldwide and, specifically, the offices in Peru and Mexico, as well as plans to close the operations in China in the near future. This decision was made because the logistics and freight forwarder business, Routes Operated by CSAV AUSTRAL ROUTE EUMEXSA ROUTE 26 Annual Report 2017

29 operated through the Norgistics subsidiaries, had not attained sufficient scale or expected growth in recent years in line with CSAV's strategy. This will enable the Company to concentrate all its efforts on directly operating its car carrier business as well as managing and developing its main asset, namely its interest in the German shipping line HLAG. NASA ROUTE SHINANSEIKAI ROUTE Compañía Sud Americana de Vapores S.A. 27

30 Regulatory Framework Governmental regulation, international treaties, legal standards and each country s national regulations significantly impact the countries where the Company operates or has established a presence. However, it is difficult to reasonably quantify the cost of continually complying with these regulations or to measure their impact on the Company s revenue or on the value of its assets and investments, including its stake in HLAG. Nevertheless, CSAV expects to obtain the permits and authorizations required to continue operating. Shipping in Chile is mainly governed by the following laws: Law 18,680 dated January 11, 1988, which replaced the latest version of the Third Book of the Chilean Commercial Code, which was first issued in The current version of the Third Book was modified by Law 20,667 of 2013, which regulates insurance contracts, and Law 20,720 of 2014, which replaced the existing bankruptcy regime with a law on reorganization and liquidation. Decree Law 2,222, dated May 31, 1978, which replaced the existing Navigation Law of The DL was amended by Law No. 18,011, dated July 1, 1981; Law No. 18,454, dated November 11, 1985; Law No. 18,680, dated January 11, 1988; Law No. 18,692, dated February 19, 1988; Law No. 19,929, dated February 11, 2004; and Law No. 20,070, dated November 8, These regulations contain standards related to environmental issues, like maritime pollution, among other matters. 28 Annual Report 2017

31 Decree Law 3,059, dated December 22, 1979, containing the new Merchant Navy Law, which includes standards for cargo reservation and special regulatory and tax standards. There are also a number of regulations governing various shipping matters, such as shipbuilding and repairs, collision prevention, registering of vessels and marine craft, pilotage and ships agents. In environmental matters, in addition to the Navigation Law, Chile has ratified the International Convention for the Prevention of Pollution from Ships of 1973 (MARPOL) and the International Convention on Civil Liability for Oil Pollution Damage (1969) and its 1992 Protocol, even though the Company does not operate any bulk oil transportation services. Several international provisions apply to aspects of the shipping business. These include environmental regulations referring to shipbuilding and operation, the carriage of goods by sea, responsibility for collisions, salvage of vessels and marine crafts (such as those mentioned above and below), anti-terrorism and anti-collusion regulations, and immunities and exemptions. Thus, it is important to note the prohibitions set forth in Articles 101 and 102 of the Treaty on the Functioning of the European Union and block exemptions to these joint agreements or consortia in terms of regulations issued by the European Commission, as well as the standards of the US Shipping Act (1984) and Federal Maritime Commission regulations, to which shipping operations to and from Compañía Sud Americana de Vapores S.A. 29

32 those countries are subject, as well as the United Nations treaty, Convention on a Code of Conduct for Liner Conferences. Market Risks Supply-Demand Equilibrium portion of its customers that include freight rates that are either fixed or indexed to variations in fuel prices. Finally, in shipping safety and prevention matters, the safety standards adopted by the UN-dependent International Maritime Organization (IMO) are also relevant, as is the need to submit to inspection and register with classification societies. Ships are required to maintain their class. To do so, they must be maintained according to the rules of the classification society. Risk Management The container business is CSAV's largest asset, through its investment in HLAG. Although CSAV is not directly exposed to the financial risks of the container industry as an operator, it is indirectly exposed because these risks affect the value of Company's investment in that joint venture and the associated dividend flow from HLAG and its capital requirements, which may result in CSAV having to subscribe to capital increases in that joint venture, or seeing its stake diluted and the economic value of its investment and future dividends reduced if it chooses not to subscribe. Although CSAV jointly controls HLAG together with two other main partners, this German company has an independent management team that controls and manages its risks autonomously and in accordance with the standards of a publicly-listed company subject to current regulation in Germany and, therefore, to applicable regulation in the European Union. A more detailed description of these risks and how they are managed by HLAG can be found in its Annual Report 2017, which is available in English at the following link: com/en/ir/publications/financial-report. html. The businesses that CSAV operates directly are vehicle shipping and logistics services. These are exposed to various financial risks, which can be classified into one of two categories: market risks and risks inherent to the shipping business: The demand for maritime transport is highly correlated with growth of global GDP and trade. On the other hand, container shipping supply is a function of the global fleet of vessels, which fluctuates based on the delivery rate for new vessels and the scrapping rate for vessels that are obsolete or no longer profitable to operate. Both the container transport business, operated and managed by HLAG, and the vehicle transport business are directly affected by changes in these variables in their respective industry. The imbalance between supply and demand can affect shipping operators to a greater or lesser extent depending on their operating fleet (vessel age, fuel consumption and versatility, among other characteristics), the proportion of their fleet that is owned and the proportion chartered (operational leverage) in comparison to the industry. Significant exposure to chartered vessels can negatively impact the results and the financial position of operators when charter rates are not correlated with freight rates before fuel costs (ex-bunker rates), either because of market imbalances or the duration of vessel charter agreements at fixed rates. The duration and age of charter agreements can limit shipping companies' capacity to adjust their operated fleets and modify their vessel sailing speed in response to abrupt drops in shipping demand and streamlining and cost-cutting initiatives. Consequently, one of the greatest challenges facing the Company is establishing a fleet strategy (companyowned or chartered) that is consistent with its market position and projections for the next few years, as it operates in a market with variable freight rates. Supply and demand imbalances for the maritime transport services directly operated by CSAV (vehicle transport) can cause volatility in vessel charter and freight rates. In order to mitigate fluctuations in demand for services, the Company has medium and long-term contracts (between one and two years) with a significant Geographical Markets HLAG participates in the container transport business across all major global routes and it distributes its operations across diverse geographical markets. As a result, this business does not expose the Company to a restricted group of geographical markets, allowing possible market contingencies on certain routes to be offset but still leaving it exposed to global variations. Even with a global service network, HLAG's relative exposure is above the industry average on Transatlantic, Latin American and Middle East routes and below average on Asia-Europe and Transpacific routes. After the May 2017 merger of HLAG and UASC, HLAG incorporated UASC's service network and its important cargo volumes along Asia-Europe and Middle East routes and, therefore, its relative exposure to the main global routes became more balanced. The shipping services directly operated by CSAV expose the Company to changes within South American markets, particularly the vehicle and wheeled machinery markets on the west coast of the continent (mainly Chile and Peru). Since 2014 these markets have suffered a marked fall in vehicle imports, which has affected ship operators and forced them to adapt their supply to these reduced volumes. This trend began to reverse itself in 2016, mainly during the second half of the year, with an increase over 2015 in imports of light vehicles to Chile, CSAV's most important market. Although pre yearly levels have still not yet been reached, vehicle import figures have grown significantly in 2017 and are expected to remain high throughout Fuel Prices An important component of the transport industry's cost structure is the cost of energy, or fuel, which is usually called "bunker" within the maritime shipping industry. In the vessels it operates, the Company primarily uses the fuels IFO 380, IFO 580 and MGO/LS. 30 Annual Report 2017

33 Most of CSAV's maritime freight sales are agreed with contracts and generally a percentage of those rates are subject to price adjustments, based on changes in the cost of fuel, known as a Bunker Adjustment Factor ("BAF"). The BAF surcharge normally covers the risk of volatility in fuel prices it may be affected by price movements during the period between its calculation and actual collection. The Company also has fixed-price sales and contracts without a BAF, and sales with a BAF clause that limits its coverage. Therefore, it purchases fuel hedges with terms that match the volumes covered, to reduce the impact of volatility, and ensure that fuel costs (bunkers) are matched to the corresponding maritime freight contracts. For example, for shipping services directly operated by CSAV during 2017, an increase in fuel prices of US$10 per metric ton of fuel would have had a negative impact of around ThUS$ 718 on the Company s results. This value is based on the fuel volumes consumed by the Company during the period and assumes that BAF surcharges cannot be passed on to customers and no fuel hedges exist. Effective BAF surcharges and fuel hedges significantly reduce this exposure. However, the Company cannot ensure that these hedges will completely mitigate the negative impact of a rise in fuel prices or bunker adjustment factor or other price variations that affect performance, such as foreign exchange or interest rates. Changes in Interest Rates Interest rate fluctuations impact floating rate obligations. The Company does not hedge interest rates on loans with variable interest rates based on Libor. The potential effect of unhedged interest rate fluctuations on variable-rate financial instruments (assets and liabilities) held by CSAV as of December 31, 2017, is estimated to be ThUS$(485). This variation considers the combined effect on profit or loss of: (i) an increase of 1% in the variable benchmark rate, which is used for variablerate financial liabilities, and (ii) an increase of 1% in the overnight Libor rate, which is primarily used to invest cash surpluses. Exchange Rate Fluctuations The Company's functional currency is the US dollar, which is the currency in which most of its operating income and expenses are denominated as well as the currency used by most of the global shipping industry and the functional currency of HLAG. However, CSAV also has income and costs in other currencies, such as Chilean pesos, euros, yen and others. Most of CSAV s assets and liabilities are expressed in US dollars. However, the Company has certain assets and liabilities in other currencies, which are detailed in Compañía Sud Americana de Vapores S.A. 31

34 Note 33 to the 2017 Consolidated Financial Statements. The Company does not have any foreign currency hedges as of December 31, 2017, and manages the risk of exchange rate variations by periodically converting any balances in local currency that exceed payment requirements in that currency into US dollars. When necessary, the Company uses accounting hedges. Variations in the market price of these hedges, in accordance with current regulations, are recorded in other comprehensive income. The potential effect of a 10% depreciation in the US dollar (USD) with respect to other important currencies to which the Company is exposed as of December 31, 2017, would have an estimated loss of ThUS$ 186 on results, keeping all other variables constant. Furthermore, CSAV has a financing structure in euros with its subsidiary CSAV Germany Container Holding GmbH, which holds the investment in HLAG. Thus, changes in the euro-dollar exchange rate can affect CSAV s standalone profit, which is used to calculate taxes in Chile and can significantly impact deferred tax expense for the period and the value of deferred tax assets in the balance sheet. Risks Inherent to the Shipping Business Financial Risks CSAV has a strict credit policy for managing its portfolio of accounts receivable. Most of the Company's customers are direct customers. This policy is based on lines of credit and payment terms granted on the basis of an individual analysis of the solvency, payment capacity, and general references of each customer, the customer's shareholders, industry and market where it does business, as well as its payment history with the Company. The Company supports its agreements for vessel and slot charters to third parties using Charter Party and Slot Charter Agreements drafted using industry standard models that appropriately cover its interests. CSAV charters vessels to third parties and slots to other shipping companies, always taking into consideration the counterparty s creditworthiness. However, CSAV often leases slots from the same shipping companies to which it leases its own slots on other voyages and services, which significantly reduces the risk of default. The Company records provisions if it finds evidence of impairment of trade receivables for 100% of the amount owed based on the following criteria: age of the receivable over 180 days, legal collections, checks issued with insufficient funds and other similar concepts, and high-risk customers and agencies, based on a case-by-case analysis. 32 Annual Report 2017

35 The Company has a policy to manage its financial assets, which include time deposits and repurchase agreements, and holds its checking accounts and investments in financial institutions with investment grade credit ratings. As part of its risk management policy, the Company can take out interest rate, exchange rate and oil price hedges. These hedge positions are contracted through financial institutions that are highly regarded in the industry and have investment grade risk ratings. Liquidity risk refers to the Company's exposure to business or market factors that may affect its ability to generate income and cash flows, including the effect of contingencies and regulatory requirements associated with its business. CSAV is not directly exposed to the container business, as explained previously, but is indirectly exposed as a main shareholder of HLAG. This limits the Company's liquidity risk in that business to the expected flow of dividends or any additional capital required by this joint venture. It is important to mention that CSAV has specific long-term borrowing to finance its investment in HLAG. CSAV has sufficient liquidity to cover its direct transport services. However, considering the risks described above, if necessary the Company has an available line of credit for US$10,000,000, which had not been drawn down as of December 31, Operational Risks The risks of operating vessels include the possibility of accidents and maritime disasters with environmental consequences, death, loss or damage to property and cargo, among others. These can be caused by mechanical failure, human error, war, terrorism, piracy, adverse meteorological conditions, strikes or other labor problems at ports, among other reasons. The Company operates in numerous countries and is, therefore, exposed to risks related to strikes, political instability and other events that could lead to business interruptions or owned or chartered asset impairment. Such events could result in partial or total closure of ports or waterways, such as the Panama Canal. Transport operations to and from Chilean and Peruvian markets are also associated with economic conditions in those markets. Future development of the Chilean and Peruvian economies could adversely affect and endanger the Company s ability to continue providing efficient, competitive services. The business is exposed to the impact of governments on many aspects of the public and private sector, such as changes in tax, labor, monetary and other policies, which impact domestic economies. CSAV does not control and can by no means predict how government intervention and policies will affect the economy of the countries where it operates, such as Chile or Peru. CSAV has an insurance plan to protect its own fleet, with policies covering hull and machinery, war, strike and other maritime risks. It includes protection and indemnity insurance to cover potential liability for damage to cargo, bodily injury for crew members, damage to third parties and liability for pollution, among others, such as coverage for the Company s other property, plant and equipment. Changes in Market Regulations As a shipping company, CSAV is subject to a wide variety of laws, regulations as well as national and international agreements related to operating permits and environmental requirements for shipping activities. These laws, regulations and agreements can change substantially, affecting the Company s performance and ability to comply. CSAV is currently under investigation for violations of antitrust regulations (filed in several material events beginning September 14, 2012) and is subject to the impact these proceedings could have in the jurisdictions where its vehicle transport business operates. CSAV s board of directors established a US$40 million provision in 2013 for the amounts the Company may have to pay as a result of these proceedings. As of year-end 2017, the Company has been fined in some jurisdictions in the United States, Brazil, China, South Africa, Mexico and Korea. In Chile, it is exempt from fines due to the provisions in Article 39 bis of DL 211 (for more detail regarding these investigations, see Note 36 (b) of the attached financial statements). The remainder of the provisioned amount continues to be a reasonable estimation of these disbursements, calculated based on current accounting standards. Risk Management Mechanisms CSAV manages its own risks related to internal processes, such as operational, financial and management risks, primarily through a program that includes internal and independent audits, a risk management plan, and management policies and procedures. The 2017 audit plan was based on a detailed review of the Company s process mapping, which was updated in In order to allocate time for each of the areas and processes within the audit plan, a severity analysis was conducted on the updated process map, which evaluated the degree of impact and the likelihood of occurrence for each process and subprocess, thus determining severity for each one. This analysis was also complemented by CSAV's risk profile, which is reviewed each year by the Risk Committee. Any amendments are then approved by the Company s board. Audit results are periodically reviewed by the Directors' Committee. In parallel, the Company's management manages risk at a process level, which includes risk management policies and procedures, a risk profile, an entity risk inventory updated annually and a Risk Committee that meets at least four times a year to review all risk-related matters for the organization and action plans to mitigate the most significant risks. The above is validated by the Directors' Committee and approved by the board when the necessary based on the risk definitions contained in the policy. Risk management is audited by an independent third party every year. Compañía Sud Americana de Vapores S.A. 33

36 CSAV in 2017 Main Ratios Statement of Financial Position (1) / MUS$ Property, plant and equipment , , , ,242.7 Total assets 2, , , , , , , ,218.2 Total liabilities , , , Total equity 2, , , , , ,387.5 Statement of Income (1)(2) /MUS$ Revenue , , , , ,214.6 Cost of sales (102.6) (120.0) (180.2) (2,752.2) (3,210.4) (3,388.4) (5,630.5) (4,742.0) Net operating income (loss) (3) (10.2) (221.2) (196.8) (1,107.3) Non-operating loss (4) (142.9) (3.8) (7.9) (107.9) (27.5) (44.0) (11.2) (3.4) Profit (loss) attributable to the owners of the Company Earnings (loss) per share attributable to the owners of the Company (US$*100) (188.1) (23.3) (14.7) (169.0) (313.6) (1,249.8) (0.6) (0.1) (0.0) 2.3 (1.1) (3.6) (43.8) 8.4 Other Financial Indicators Return on average assets % (8.5) (1.1) (0.7) 17.6 (7.0) (11.1) (39.1) 6.3 Return on average equity % (9.1) (1.1) (0.7) 20.5 (17.9) (42.7) (125.5) 16.8 Current liquidity ratio Leverage ratio Other Operational Indicators (5) Paying cargo, in millions of tons (6) Vessel operating days (7) 1,965 2,560 2,991 19,446 24,369 28,285 54,170 56,464 Vessel annual equivalent (8) (1) The financial statements for have been prepared under International Financial Reporting Standards (IFRS) and instructions from the CMF. (2) The Statement of Income for 2011 has been restated, with SAAM treated as a discontinued operation. (3) Profit (loss) on operating activities under IFRS. (4) Profit (loss) before tax, less operating income under IFRS. (5) The information for 2014 includes the container shipping service for eleven months, and the Company s remaining businesses for twelve months. The information for 2016 includes the liquid bulk service for nine months, and the Company s remaining businesses for twelve months. (6) Paying cargo: a freight payment unit, basically one thousand kilograms, or for volumes, a cubic meter or 40 cubic feet. This calculation includes all of CSAV s services: container shipping, car carrier, reefer cargo and bulk solids and liquids. (7) Vessel operating days: This includes all of CSAV s services: container shipping, car carrier, reefer cargo, and bulk solids and liquids. (8) Vessel annual equivalent: Total vessel operating days divided by the days in a year. 34 Annual Report 2017

37 Compañía Sud Americana de Vapores S.A. 35

38 Income Statement Analysis The loss attributable to the owners of the Company of MUS$ for the year 2017, represents a reduction of MUS$ over the same period in Revenue totaled MUS$ for 2017, which represents an improvement of MUS$ 0.6 over the same period in This improvement is largely explained by the vehicle shipping business, which experienced significant growth in transported volumes in 2017 in comparison to 2016, partially offset by lower average freight rates. The variation in freight rates mentioned above must also take into account the fact that a portion of rates are indexed to fuel price variations. As a result, the rise in average fuel prices during the period in comparison to the same period in 2016 helped mitigate this reduction in rates. Cost of sales amounted to MUS$ for 2017, down MUS$ 3.3 over the same period in This decrease is explained mostly by a drop of MUS$ 5.2 in costs for the vehicle shipping business, primarily a more efficient operating cost structure and a higher vessel usage rate, which has enabled the Company to absorb part of the growth in volume without increasing its fleet s installed capacity. The savings explained above have also allowed it to reverse the increase in costs resulting from the rise in average fuel prices, up 43% over On the other hand, as mentioned above, since a portion of sales have fuel price indexation clauses, some of the negative effect on costs was partially offset by increased revenue. Administrative expenses fell to MUS$ 10.7, down MUS$ 1.0 from 2016, mainly due to cost cutting plans implemented during the year. 36 Annual Report 2017

39 Other operating income and expenses totaled MUS$ 4.7, which represents a decrease of MUS$ 10.8 over the same period in 2016, explained mainly by the 2016 reversal of the provision for the NYSA- ILA case of MUS$ The provision was reversed following a favorable ruling for CSAV on a claim filed by the NYSA- ILA Pension Fund, which covers the longshoremen at the ports of New York and New Jersey (United States). In share of profit (loss) from equityaccounted associates and joint ventures, CSAV recorded a loss of MUS$ for 2017, down MUS$ from the same period last year. This difference is explained mainly by a dilution loss of MUS$ recorded in the second quarter of 2017 on the value of CSAV's investment in HLAG and a decrease in PPA amortization on the investment in HLAG of MUS$ 15.2 with respect to the same period in 2017, partially offset by a MUS$ 35.1 improvement in HLAG's results with respect to 2016, and the gain of MUS$ 14.8 from increasing its interest in HLAG in the last quarter of The following section explains the origin and composition of the effects listed above. The first effect that impacted this account (the dilution loss) was due to the closing of the business combination between HLAG and UASC on May 24, With the closing of the transaction, HLAG acquired 100% of the shares of UASC, and the former shareholders of UASC collectively received 28% of the combined entity. As a result, the shareholdings of HLAG's previous shareholders were reduced. In light of the significant synergies that this merger has generated during 2017 and will continue to generate for HLAG (estimated at MUS$ 435 per year), mainly from greater Compañía Sud Americana de Vapores S.A. 37

40 efficiency and economies of scale in its fleet and service network, coupled with increased globalization and diversification of its routes, the business combination with UASC is considered a highly valuable transaction for the Company. The effect of the fleet contributed by UASC and the synergies on HLAG's cost structure will enable it to visibly improve its cost per container transported and, with that, its performance relative to its main competitors. This is especially important along the main east-west routes (to and from Asia) where the size of HLAG's new fleet will allow it to compete successfully with the world s largest shipping companies in the large-vessel segment a segment in which HLAG did not previously participate with its own pre-merger fleet. Given the above, the dilution loss of MUS$ as of the referred merger closing does not reflect a decrease in the financial value of CSAV's investment in HLAG, but rather is the result of the accounting and valuation methodologies defined in IFRS 3 and IFRS 13. These standards dictate that assets acquired in a business combination must be identified one by one and recorded at fair value, and excludes from the valuation any synergies acquired in a merger, which can only be accounted for as goodwill. IFRS 13 also establishes that a publicly listed company like HLAG must record a stock issuance as of the share s market value on the date of subscription. Therefore, the combined effect of these two accounting rules means that unless the share s pre-merger market value already reflects the present value of the synergies, they cannot be considered part of the accounting value acquired. For the HLAG-UASC merger, since the synergies are the basis and main reason for having agreed upon and executed the transaction, the fact that they cannot be reflected in the acquired value, as explained above, creates a significant difference between the accounting valuation defined by the standard and the financial valuation carried out by the parties to the merger. Regarding the second effect that impacted this account (recognition of its share of HLAG's results), according to the accounting method that should be used for joint ventures under IFRS, each quarter CSAV reflects in profit or loss its direct share of the profit or loss attributable to the owners of HLAG and also the effect on profit or loss of the amortization of PPA, determined as of the closing of each event that increased CSAV s interest in HLAG (in accordance with IFRS 3 and IAS 28). The result recorded for the year 2017 consists of the profit attributable to the owners of the Company reported by HLAG of MUS$ 30.0, which includes a loss of MUS$ 66.9 for the first quarter, profit of MUS$ 71.9 in aggregate for the second and third quarters and profit of MUS$ 25.0 for the fourth quarter, over which the Company applied the equity method using 31.35% for the first quarter, 22.58% for the second and third quarters and 25.46% for the fourth quarter, respectively, giving profit of MUS$ 1.6 for its direct share of HLAG s results. CSAV also recognized the effect of PPA amortization, which gave a gain of MUS$ 17.8 for the first quarter, a total gain of MUS$ 24.5 for the next six months and a gain of MUS$ 4.1 for the last quarter of the year. The Company applied the equity method value (31.35% for the first quarter and 22.58% for the remaining quarters) to these figures. In addition, given the 2.88% increase in its ownership of HLAG, this interest must be considered for the new PPA calculated for the acquisition of the new shares, which resulted in a loss of MUS$ 27.0 for the fourth quarter, of which CSAV recognized a loss of MUS$ 0.8. Adding the two PPAs, CSAV recognized a total gain of MUS$ 11.3 for its share of PPA amortization during the year. Therefore, based on its share of HLAG's results and the respective PPA adjustments, it recorded total profit of MUS$ Lastly, the third effect that impacted this account (the increase in CSAV s interest in HLAG from 22.58% to 25.46%), is due to CSAV's subscribing to HLAG's capital increase and purchasing additional shares as mentioned above. The funds used by CSAV to subscribe its prorated portion of HLAG's capital increase totaled MUS$ 94.0, based on the Company s subscription rights at a price of EUR 30 for each new share. The 2.88% increase in its interest in HLAG was purchased for MUS$ 199.7, which brings the total invested in new HLAG shares during the year to MUS$ The cost of the total investment was recorded as capital movements, including a purchase price allocation (PPA) on the additional 2.88% purchased, as explained in the following paragraph. In accordance with IAS 28, CSAV hired PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC Germany) to prepare a PPA report, which determined the fair value of the new identifiable assets acquired upon purchasing the additional 2.88% to be MUS$ Compared to the cost indicated above of MUS$199.7, this gives badwill of MUS$14.8, which is recorded directly as a gain in CSAV s profit or loss in accordance with IAS 28 and IFRS 3. This gain for badwill is recorded in Share of profit (loss) of associates and joint ventures in the Consolidated Statement of Comprehensive Income and is disclosed separately from the direct interest in HLAG's results in the Consolidated Financial Statements under Gain (loss) on acquisition of interest. More information on the accounting balance of CSAV s investment in HLAG and all movements during the year 2017, as well as the business combination between HLAG and UASC, can be found in Notes 15 and 40 of the Consolidated Financial Statements. For 2017, CSAV recognized an income tax expense of MUS$ 45.2, reflecting an increase of MUS$ 24.6 over the same period in This variation is explained mainly by a larger tax expense in 2017 because of the impact of the appreciating euro on the CSAV Group's financing structure to maintain its investment in HLAG of approximately MUS$ 35.7, net of a charge to profit or loss of MUS$ 17.2 for adjustments to tax loss carryforwards in the second quarter of 2016 related to tax earnings arising from the transaction with HLAG in Therefore, the loss attributable to the owners of the company of MUS$ for 2017 represents a worsening of MUS$ over the same period in Annual Report 2017

41 Other Activities Investments Investment in Property, Plant and Equipment The Company did not acquire any significant investments in operating property, plant and equipment during As of year-end, it has no investment plan underway related to this type of asset. In 2017, CSAV sold a small part of its property, plant and equipment previously classified as investment properties in its financial statements. Investment in Hapag-Lloyd AG On May 24, 2017, HLAG and UASC announced the closing of the merger of the Arabian shipping company's container shipping business with the German line, making it the fifth largest container shipping line in the world. This marked the completion of the merger announced in June 2016, when both companies signed a Business Combination Agreement (BCA). It is estimated that the merger will generate annual synergies of US$435 million, which should be fully attained in It has also significantly reduced the combined entity's investment needs over the next few years thanks to the complementary nature of the combined assets. This will enable HLAG to remain one of the most competitive companies in the industry. Upon transaction close, HLAG acquired all the shares of UASC by issuing new shares of HLAG representing 28% of the combined entity's share capital, which was subscribed by UASC shareholders. At that time, UASC's controlling shareholders Qatar Holding LLC, owned by the State of Qatar, and the Public Investment Fund, on behalf of the Kingdom of Saudi Arabia ("PIF") acquired 14.4% and 10.1%, respectively, of the German company's shares. As a result, the interests held by HLAG's shareholders were reduced. CSAV maintained its status as the largest shareholder, although its stake decreased from 31.4% to 22.6%. However, the Chilean company, along with the city of Hamburg and Kühne, through the shareholder agreement in force, retained control of HLAG with a combined interest of close to 51.5%. On October 2, 2017, as part of the agreements contained in the BCA, and in order to strengthen the combined company s financing structure, HLAG initiated a capital increase of close to US$ 414 million through a preferential subscription period for all shareholders. The new shares were offered through a rights issue on the German stock exchange. Before transaction close, CSAV, the city of Hamburg and Kühne agreed that, through that capitalization, CSAV would have an interest of 25% in HLAG and thus would continue to exercise decisive influence in agreements at shareholder meetings involving essential corporate matters such as capital increases, mergers, spin-offs and bylaw amendments, all of which require 75% approval. Compañía Sud Americana de Vapores S.A. 39

42 On October 10, 2017, in order to give the Company the liquidity it needed to acquire new shares of HLAG and obtain a stake of at least 25% in that entity, CSAV initiated a preferential option period to increase capital in Chile. The new issuance was for 6,100 million shares at a price of Ch$ per share. On October 17, 2017, HLAG finalized its capital increase in Germany for EUR 352 million through which CSAV obtained a stake of 24.7%. HLAG used the funds raised from its recent capital increase (close to US$ 414 million) to reduce and repay its financial debt, which will enable it to improve its leverage ratios and reduce its future finance costs. On October 30, 2017, as agreed as part of the merger between HLAG and UASC, CSAV purchased additional shares of HLAG from Kühne Maritime, thus increasing its interest in the German shipping line to 25% of voting shares and consolidating its position as the main shareholder. On November 22, 2017, with 100% of the new shares subscribed and US$294 million in funds raised, CSAV s capital increase was successfully concluded. 98.2% of the total placement close to US$289 million was subscribed during the first preferential option period. The remaining shares were offered to shareholders during a second round. The funds raised in CSAV s capital increase were used to purchase HLAG shares to give the Company a 25.5% interest in the German shipping company, thus making it the main shareholder. The Company financed this transaction with two bridge loans for a total of US$120 million from commercial banks (US$ 60 million each), fully repaid before year end, and with funds raised from the Company's majority shareholders in its capital increase. Financing During the first half of 2017, financial conditions in Chile were characterized by uncertainty regarding recovery in international markets and local legislative changes. This situation spurred financial institutions to continue the conservative policies they had been applying for a while. However, starting in the second half of the year, several domestic and international economic indicators began to show consistent signs of increased economic activity. In this context, CSAV successfully carried out its capital increase in the local market, which enabled it to finance the purchase of HLAG shares, obtaining a 25.5% interest in the German shipping line and confirming its standing as the main shareholder. This transaction represents the most important financial management efforts in CSAV Milestones in the Financial Market during 2017 a) Capital Increase. With 100% of the new shares subscribed and US$294 million in funds raised, CSAV s capital increase was successfully concluded in The shareholders subscribed and paid 6,100 of the new shares at a price of CH$30.55 per share. 98.2% of the total placement close to US$289 million was subscribed during the first preferential option period between October 10 and November 8, The remaining shares were offered to shareholders during a second round that ended on November 21, The funds raised in Chile were used to take part in HLAG's capital increase, which was part of the financial commitments agreed by the shareholders of the German company, including CSAV, after its merger with UASC. b) Bridge Loan and Foreign Exchange Hedge. As part of the capital increase that CSAV carried out in 2017, the Company activated two lines of credit: one with Banco de Chile and another with Banco de Crédito del Perú, for US$60 million each, which were drawn down in full (US$120 million) on October 10, 2017, and liquidated on October 15, 2017, with funds from the capital increase in Chile. In parallel, CSAV closed a forward operation for US$120 million with Banco BICE, in order to hedge the foreign exchange risk from converting the funds raised in local currency to repay the loan. The main banks that operate with CSAV Chilean Banks Banco Santander Chile Banco BICE Banco Scotiabank Foreign Banks Citibank Koch Risk Rating Banco de Chile Banco BCI Banco BBVA HSBC Banco BCP Banco Itaú Banco Consorcio Goldman Sachs In August 2017, Feller Rate Clasificadora de Riesgo Ltda. confirmed the Company s solvency rating of BBB with a negative outlook and its BBB- rating for the US$50 million line of bonds issued in October It also confirmed its first class level 4 rating for CSAV s shares. Following its annual review, International Credit Rating Clasificadora de Riesgo Ltda. also confirmed its prior ratings for the Company s solvency, bonds and shares, maintaining its ratings at BBBwith negative outlooks, BBB- and first class level 3, respectively. During 2017, CSAV stopped contracting domestic rating services from Fitch Ratings Clasificadora de Riesgo Ltda. In June, Fitch Ratings issued its last rating, confirming the Company's solvency at BBB-; bonds at BBB- and shares as first class level 4. ISO Certifications In 2017, as part of regular recertification audits for the Integrated Quality and Environmental Management System, the Company received a seal from international certifier Lloyd s Register Quality Assurance ( LRQA ) confirming that its management system still complies with the requirements established by all parties involved, both internal and external, as well as the applicable provisions in the 9001:2008 and ISO 14001:2004 standards. As a result, the certifier positively evaluated the Company and expressed full conformity with CSAV s management 40 Annual Report 2017

43 system and its consistent efforts in complying with the commitments undertaken in the policy issued by the Chief Executive Officer. The following section identifies the focal points of the Integrated Quality and Environmental Management System, which have been approved by LRQA. Focus on customers and their satisfaction. Customer satisfaction is monitored annually by the commercial area in order to ensure compliance with commitments established in the quality policy and contractual agreements. Proper management of relations with interested parties. This includes everyone that participates in the service network under a CSR approach, complying with established agreements and applicable laws and regulations. Focus on processes and continuous improvement. Effectiveness is considered in developing all activities. Service improvements are the result of systematically applying the P-D-C-A Continuous Improvement Cycle (Plan- Do-Check-Act). Proper control of environmental aspects in operations. The Company considers the environment an important variable and establishes measures to avoid negatively impacting its surroundings. Effective controls on activities. The Company defines responsibility and accountability so that checking and validation activities are applied to achieve excellence. The Company systematically conducts quality management audits to determine the degree of conformity with certification standards. Ongoing evaluation of management results. As part of the commitments made by senior management with the integrated management system, the Company frequently reviews process results and behavior by measuring, analyzing and monitoring management indicators. Personnel Management CSAV's Global Workforce CSAV and its subsidiaries had 63 employees as of December 31, CSAV Other CSAV Total Managers and Senior Executives Professionals and Technicians Workers (Chile) Domestic Foreign Total Domestic Foreign Total Domestic Foreign Total Organizational Diversity As of December 31, 2017 Total Gender Age Nationality Years with the Company Total M F < 30 to 40 to 50 to 60 to 70 > 70 Chilean Foreign < 3 to 6 to 9 to 12 > 12 Managers Personnel Total Board Diversity As of December 31, 2017 CSAV Board Total Gender Age Nationality M Salary Gap by Gender F < to to to to 70 > 70 Chilean Foreign < 3 Years with the Company The following table shows the proportion of average gross salary for women relative to men for each hierarchical level in the organization. This analysis does not apply to managers and deputy managers as there are no women in these positions. Position Managers Deputy Managers 3 to 6 In Chile 6 to 9 Not applicable Not applicable Department Heads and Senior Specialists 87.5% Supervisors and Specialists 80.6% Coordinators 79.9% Administrative Staff 86.4% Total 83.6% 9 to 12 > 12 Compañía Sud Americana de Vapores S.A. 41

44 General Information Ownership, Stock Performance and Other Related Matters Shareholders The Company had 36,796,876,188 single-series shares with no par value, all fully subscribed, paid, and distributed among 3,708 shareholders, as of December 31, During the year, the Company increased capital by issuing 6,100,000,000 new shares through a rights issue. These were fully subscribed and paid during the preferential option periods and subsequent placement of the remaining shares, which occurred between October 10 and November 8, and from November 15 to 21, respectively. These periods were agreed by shareholders at the extraordinary shareholders meeting held on March 30, 2017, and ratified and extended at the extraordinary shareholders meeting on August 31, The Company s 12 largest shareholders, as of December 31, 2017, were as follows Shareholder Number of Shares Ownership Interest % Inversiones Rio Bravo S.A. 12,460,691, % Quiñenco S.A. 7,512,081, % Marítima de Inversiones S.A. 2,172,284, % Banco de Chile on behalf of non-resident third parties 1,495,539, % Bolsa Electrónica de Chile (Chilean Electronic Stock Exchange) 1,347,347, % BTG Pactual Chile S.A. Corredores de Bolsa 1,182,910, % Banco Itaú Corpbanca on behalf of foreign investors 848,861, % Bolsa de Comercio de Santiago Bolsa de Valores 840,557, % Inmobiliaria Norte Verde S.A. 697,843, % Banchile Corredores de Bolsa S.A. 572,718, % Valores Security S.A. Corredores de Bolsa 524,592, % Banco Santander on behalf of foreign investors 452,607, % 42 Annual Report 2017

45 Control As defined in Chapter XV of Nº18.045, the Luksic Group exercises control over the Company through the companies Quiñenco S.A. and its subsidiaries, Inversiones Río Bravo S.A. and Inmobiliaria Norte Verde S.A. As of December 31, 2017, its ownership interest totaled 56.17%. Shareholder Number of Shares Ownership Interest % Inversiones Rio Bravo S.A. 12,460,691, % Quiñenco S.A. 7,512,081, % Inmobiliaria Norte Verde S.A. 697,843, % Total 20,670,616, % 81.4% of Quiñenco S.A. is owned by Andsberg Inversiones Ltda., Ruana Copper A.G. Agencia Chile, Inversiones Orengo S.A., Inversiones Consolidadas Ltda., Inversiones Salta S.A. Inversiones Alaska Ltda., Inmobiliaria e Inversiones Río Claro S.A. and Inversiones Río Claro Ltda. The Luksburg Foundation indirectly controls 100% of Andsberg Inversiones Ltda., 100% of Ruana Copper A. G. Agencia Chile and 99.76% of Inversiones Orengo S.A. Andronico Mariano Luksic Craig (Chilean ID Number K) and family control 100% of Inversiones Consolidadas Ltda. and Inversiones Alaska Ltda. Andrónico Luksic Craig s family holds 100% of Inversiones Salta S.A. Inmobiliaria e Inversiones Río Claro S.A. and Inversiones Río Claro Ltda. are indirectly controlled by the Emian Foundation, in which the successors of the late Mr. Guillermo Antonio Luksic Craig (Chilean ID Number ) have interests. There is no shareholder agreement between the controllers of the Company. Shareholdings As of December 31, 2017, the Vice Chairman Andrónico Luksic Craig held an interest in CSAV through companies with controlling interests in the Company. The Director Arturo Claro Fernández has 2,773 personal shares, his spouse Cecilia Montes Matte has 2,806,951 shares and together they have 27,205,724 shares, through the companies Inversiones Transart S.A. Inversiones Quimetal S.A. and Sociedad Pesquera Holando Chile Ltda., giving a total of 30,015,448 shares. The Chairman of the Board, Francisco Pérez Mackenna, has 41 personal shares. CSAV s senior executives hold no shares in the Company. Compañía Sud Americana de Vapores S.A. 43

46 Stock Market Statistics The Company s shares are traded on Santiago Exchange, the Chilean Electronic Exchange and the Valparaíso Stock Exchange. Quarterly Market Trading Statistics Year Number of Shares Traded Trading Value (Ch$) 2015 Average Price (Ch$/share) Market Presence (%) First Quarter 2,002,916,699 44,117,226, % Second Quarter 707,796,830 16,164,329, % Third Quarter 1,439,572,869 28,053,377, % Fourth Quarter 1,296,508,127 21,168,624, % 2016 First Quarter 567,944,108 7,790,286, % Second Quarter 834,066,574 11,333,268, % Third Quarter 1,388,404,520 16,195,104, % Fourth Quarter 5,870,252,895 91,092,220, % 2017 First Quarter 7,800,664, ,672,905, % Second Quarter 4,482,449, ,257,522, % Third Quarter 6,808,656, ,858,206, % Fourth Quarter 5,992,548, ,408,366, % Source: DCV Dividend Policy At the ordinary shareholders meeting held on April 16, 2004, the shareholders established a dividend policy of distributing 30% of profit. This policy was also reconfirmed at the shareholders meetings for 2005 to 2016 and ratified on April 26, At these meetings, shareholders also authorized the board to define the timing and value of interim dividends, provided that the Company has earnings and that these have absorbed any accumulated losses. Dividend Payments No dividends have been paid in the last six years. Earnings Distribution The loss attributable to owners of the Company for the year ended December 31, 2017, was MUS$ 188,137. Given the loss recorded for the year, the Company recorded a negative balance of ThUS$ 1,512,145 in distributable net profit for the year ended December 31, Equity CSAV s equity as of December 31, 2017, was as follows: US$ Issued capital 3,493,509,703 Accumulated losses (1,371,660,481) Other reserves (4,391,950) Total 2,117,457,272 According to these figures, the book value of each share was US$ as of December 31, Trademarks, Patents and Licenses The main trademarks used in 2017 by the Company were "CSAV and "Norgistics". The Company does not own any patents, licenses, franchises, royalties or concessions, and only registers these main brands. In December 2014, CSAV gave HLAG an indefinite license, without any associated royalties, to use the CSAV brand, as part of the container business that it transferred. Compensation of the Board, the Directors Committee and Senior Executives At the ordinary shareholders meeting held on April 26, 2017, shareholders agreed to a UF 100 per meeting fee for attendance at board meetings, with a maximum of one meeting per month, except for the Chairman who receives double that of a director. Plus variable compensation, where each director receives 0.25% of the dividends distributed from earnings for 2017, either as additional mandatory or minimum dividend, except for the Chairman who receives double that of a director, being 0.5% of such dividends. 44 Annual Report 2017

47 Main Properties Property, Plant and Equipment Use Address Location Surface Area (m 2 ) Registration Offices Hendaya 60, Offices Santiago 1,519 Property No to 152 Investment Properties Use Address Location Surface Area (m 2 ) Registration Property No. 214 Hendaya 60, Offices Santiago 2, Property No to 149 Offices Plaza Sotomayor 50 Valparaíso 10,010 Property No Blanco 937 Valparaíso 1,582 Property No to 46 Rua Brás Cubas 37, Room 46 Brazil 153 Cep Warehouse Tomas Ramos 22 Valparaíso 1,046 Property No Land Blanco 509 to 529 and 541 to 545 Valparaíso 1,480 Property No. 001 and 002 In the event of a change in the composition of the board, the aforementioned distribution shall be paid in proportion to the number of months (or fraction of a month greater than 15 days) that each director or the Chairman have held that position during for each committee meeting attended and a variable amount of one third of the distributed dividends payable to him as director for the year. This shall result in 0.25% of the dividend, plus one third of that 0.25% (or the corresponding proportion, as the case may be). equal to the sum of its members annual compensation (i.e. 1,200 Unidades de Fomento). The total amount paid by CSAV in fees, profit-sharing and other compensation during 2017 is detailed as follows: Each director on the Directors Committee receives an attendance fee of UF The annual operating budget for the Directors Committee and its advisors, is Compañía Sud Americana de Vapores S.A. 45

48 Board Compensation for 2017 and 2016 Chilean National ID Director 2017 US$ Annual Total 2016 US$ Juan Antonio Álvarez Avendaño - 11,069 5,718,666-6 Hernán Büchi Buc 49,336 36,157 4,108,676-9 Arturo Claro Fernández 45,369 42,770 3,712,353-6 Canio Corbo Lioi - 11, José De Gregorio Rebeco 49,537 46,386 6,693,164-1 Juan Francisco Gutiérrez Irarrázaval - 3, K Andrónico Luksic Craig 8,533 15, K Isabel Marshall Lagarrigue 49,496 35, K Gonzalo Menéndez Duque 41,218 42,675 6,525,286-4 Francisco Pérez Mackenna 98,802 92,804 6,371,875-0 Christoph Schiess Schmitz - 11,069 5,899,818-4 Víctor Toledo Sandoval - 11,069 Total 342, ,635 During 2016 and 2017, the Directors Committee did not incur in any expenses for advisory services. The compensation earned by the Company s senior executives for 2017 reached US$ 2,948,479 (US$ 2,635,621 in 2016), of which US$ 1,433,695 was variable pay and includes bonuses accrued during the year (US$ 1,377,944 in 2016). In 2017, senior executives received compensation of US$ 3,018,404 (in 2016 US$ 2,414,160), of which US$ 1,503,620 was variable compensation (in 2016 US$819,159). Advisors to the Board Advisor Board Compensation for 2017 and 2016 Chilean National ID Advisory Service Director 2017 US$ 2017 US$ Amount Paid Annual Total 2016 US$ Alberto Alemán Zubieta Board advisory services 70, ,000 Total 70, , US$ Arturo Claro Fernández 16,568 10, Canio Corbo Lioi - 2, K Isabel Marshall Lagarrigue 17,912 11, K Gonzalo Menéndez Duque 15,177 15, Víctor Toledo Sandoval - 3,688 Total 49,657 43,816 Variable compensation is linked to the fulfillment of commercial, operational or financial targets. It is awarded to those executives that have had a direct effect on these objectives and is defined by the board. CSAV has no special compensation plans or benefits for its senior executives. Activities of the Directors' Committee During 2017, the committee held 12 ordinary meetings (numbers 185 to 192 and 194 to 197) and one extraordinary meeting (number 193), at which it addressed the following matters: 46 Annual Report 2017

49 Ordinary Committee Meetings 1. Meeting 185, held on January 25, The committee approved the annual report on the Committee s performance during It set the dates for quarterly meetings with CSAV s external auditors for the committee meetings in March, June, August and November. Accounts were presented for Controller and Compliance divisions. 2. Meeting No. 186, held on February 27, The Controller gave a progress report on the internal audit plan for the master data management process in the SAP system and the Softcargo system. The General Counsel/Compliance Officer informed the committee that BH Compliance had recertified CSAV s crime prevention model, contained mostly in the Organization, Management and Supervision Manual (MOAS) for a two-year period beginning February The preliminary considerations were discussed for proposals of external auditors and risk rating agencies for the year 2017 to be made at the shareholders meeting. 3. Meeting 187, held on March 29, The committee examined the Consolidated Financial Statements for the year ended December 31, 2016, together with the external auditors' report, which will be presented at the annual general shareholders' meeting for Therefore, representatives of the external audit firm KPMG Chile attended this meeting. KPMG reported that there are no differences in the treatment or accounting balances in the financial statements prepared by CSAV's management and that its report will contain a clean opinion of the financial position of the Company and its subsidiaries in accordance with IFRS. The committee endorsed the report issued by the external auditors, KPMG Chile, and CSAV s Consolidated Financial Statements for the year ended December 31, 2016, submitted by management, including additional information for the 2016 CSAV Annual Report. It examined the proposals received from external audit firms, KPMG Chile and PricewaterhouseCoopers (PwC), to audit the financial year It agreed to recommend to the board KPMG Chile, and subsequently PwC, in order to present their proposal at the annual general shareholders' meeting for It also agreed to propose to the board that Feller-Rate and International Credit Rating (ICR) be appointed as risk rating companies and be proposed by the board at the next annual general shareholders' meeting. It was briefed on related party transactions carried out under CSAV s Customary Transactions Policy as of December 31, Meeting 188, held on April 26, Regarding CSAV s capital increase approved at the extraordinary shareholders meeting on March 30, 2017, the committee examined the following transactions as related party transactions referred to in Section XVI of Law No. 18,046: background information and contractual conditions for financial services from Banchile Asesorías Financieras S.A. and/or Banchile Corredores de Bolsa S.A., and a 90-day line of credit for US$20 million with Banco de Chile, as a bridge loan to be drawn down in the event of a mismatch between the amount raised from CSAV s capital increase and the amount needed to subscribe shares in the capital increase by Hapag- Lloyd AG ( HLAG ). A line with identical conditions was agreed with Banco de Crédito del Perú (unrelated third party). With an abstention from director Gonzalo Menéndez, the committee, based on the requirements of article 147 of the aforementioned law, issued a favorable report on the proposed transactions with Banco de Chile and its subsidiaries, Banchile Asesorías Financieras S.A. and/or Banchile Corredores de Bolsa S.A., stating that these transactions contribute to the Company's corporate interest and adhere to market conditions. The committee received a progress report on the internal auditing plan and the hiring of PwC to review remuneration accounts. Accounts were presented for Controller and Compliance divisions. 5. Meeting 189, held on May 25, The committee examined the Interim Consolidated Financial Statements as of March 31, 2017, and the main changes compared to the previous period. Given the resignation of Pablo Bauer Novoa as CSAV's General Counsel and Compliance Officer, the Company s entering General Counsel, Edmundo Eluchans Aninat, was appointed secretary of the Directors Committee starting June 12, The committee also agreed to propose the naming of Mr. Eluchans as Prevention Officer for the purposes of article 4 No. 1 letter a) of Law No. 20,393 on Criminal Liability for Legal Entities. Accounts were presented for Controller and Compliance divisions. 6. Meeting 190, held on June 28, Óscar Aguilar, partner of KMPG Chile, the company in charge of the external audit of CSAV's financial statements, explained in detail the external audit plan for the year The Controller presented a summary of a report on CSAV's insurance management. Representatives from PwC presented the results of their audit of the Company s remunerations accounts as agreed in committee meeting 188 on April 26, 2017, in compliance with its authority and legal duties. Accounts were presented for the Compliance Division. 7. Meeting 191, held on July 27, The committee received a progress report on the internal audit plan, particularly the audit reports regarding the agencies in Argentina and Colombia. The Controller also gave a presentation on maritime insurance coverage contracted by CSAV. Mr. Eluchans reported to the committee on the start of the first post-recertification monitoring by BH Compliance of the crime prevention model adopted by the Company in conformity with Law No. 20,393. In addition, regarding related party transactions referred to in Section XVI of Law No. 18,046, consistently with the contracting of a 90-day line of credit for US$20 million with Banco de Chile, which was reviewed and reported favorably on by the committee at meeting 188 of April 26, 2017, with director Gonzalo Menéndez abstaining, at its July meeting the committee examined the final conditions of that line of credit. Even though that transaction with Banco de Chile was Compañía Sud Americana de Vapores S.A. 47

50 reported on favorably by the committee and then approved by CSAV's board, the respective credit agreement was not signed with that bank because the Company's financing needs changed. Therefore, the committee, also with Gonzalo Menéndez abstaining, and based on the requirements of article 147 of that law, examined the proposed transaction with Banco de Chile, consisting of a 120-day line of credit for US$60 million, and reported favorably that it contributed to the Company s corporate interest and adhered to market conditions. A line with identical conditions was agreed with Banco de Crédito del Perú (unrelated third party). Finally, the committee, also in meeting 191, based on the requirements in article 147 of Law No. 18,046, examined and reported favorably on the related party transaction referred to in Section XVI of that law, specifically the background information and disposal conditions for furniture owned by CSAV in an auction in which the Company's employees could participate. 8. Meeting 192, held on August 30, Without the CEO in attendance, representatives from the external audit firm KPMG Chile presented the results of their limited review of the interim statement of financial position as of June 30, 2017, with no observations, and a progress report on the external audit plan that was detailed to the committee in meeting 190 in June Once the committee had heard presentations from CSAV's management and its external auditors (KPMG), it examined the Interim Consolidated Financial Statements as of June 30, 2017, the management analysis and the limited review report from the external auditors, with no observations, and agreed to recommend that the board approve these items. Accounts were presented for Controller and Compliance divisions. 9. Meeting 194, held on September 28, The committee received a report on transactions with related parties in accordance with CSAV s Customary Transactions Policy, as of June 30, The Controller presented, among others, a summary of the internal audit report for the agency in Colombia, a summary of the report on operations for 2017 and the main changes to the risk inventory for 2017/2018. Mr. Eluchans reported on the successful first post-recertification monitoring of CSAV s crime prevention model pursuant to Law 20,393 by its certifier, BH Compliance. 10. Meeting 195, held on October 25, The Controller gave an extensive presentation on risk management (RM), which included a new specification that distinguishes between the highlevel risk matrix and the risk matrix for internal audit processes, in addition to RM audit proposals, among others. Accounts were presented for Controller and Compliance divisions. 11. Meeting 196, held on November 23, The committee reviewed the management letter issued by the external auditors, in relation to internal control over the financial statement preparation and presentation process for the audit of the Consolidated Financial Statements as of December 31, The Committee received representatives from KPMG Chile, who concluded that no material weaknesses or significant deficiencies had been detected. The committee examined the Interim Consolidated Financial Statements as of September 30, 2017, with corresponding notes. Also, a presentation from KPMG Chile regarding progress with the audit plan and planning the next review tasks, with no observations. It recommended board approval. The committee examined background information and conditions regarding the sale of the subsidiary Norgistics Chile S.A. to Mr. Gonzalo Baeza, CEO of that subsidiary, as related party transactions pursuant to Section XVI of Law No. 18,046. Based on the requirements of article 147 of that law, the committee examined the proposed transaction with Mr. Gonzalo Baeza, for the sale of Norgistics Chile S.A. and reported favorably that it contributed to the Company s corporate interest and adhered to market conditions. The accounts for the Controller Division were presented. In risk management, it was requested that the item environmental incidents be incorporated into the high-level risk profile, impact matrix. Accounts were presented for the Compliance Division. 12. Meeting 197, held on December 21, The Controller gave a presentation on the most recent audits performed as part of the internal audit plan He also presented on the methodology used to develop the internal audit plan 2018 and the committee approved its budget. Mr. Eluchans reported on a series of updates being made to CSAV's MOAS. The committee was briefed on the transaction to sell the subsidiary Norgistics Chile S.A. to Mr. Gonzalo Baeza and set the calendar of ordinary meetings for the year Extraordinary Committee Meeting 1. Meeting 193, held on September 27, This meeting was called especially by the committee chairwoman. At the meeting, management reported on the final conditions for HLAG's capital increase to begin in October 2017, in relation to the signing of the Back Stop Offer/Irrevocable Take Up Commitment ( BSO ), which was intended to guarantee the commitment of the German shipping company s main shareholders to subscribe the remaining shares left after the preferential option period for HLAG's capital increase along with the subscription of their prorated shares. The committee definitively ratified the agreements made by the committee in meeting 178 on June 29, 2016, regarding the signing of the BSO, which was considered a related party transaction in accordance with Section XVI of Law No. 18,046, because Francisco Pérez Mackenna and Óscar Hasbún Martínez sit on HLAG's Supervisory Board. Summary of Comments and Proposals by Directors Committee The Directors Committee and the shareholders did not have any comments or proposals relating to the Company s business for 2017 that should be included in this Annual Report, in accordance with the provisions of paragraph 3 of article 74 of Law 18, Annual Report 2017

51 Board Training Board training during 2017 covered the following areas, in accordance with the Board Training Procedure: (i) bill of law that creates the Financial Market Commission, (ii) sustainability and director liability in workplace accidents, (iii) anti-corruption practices and (iv) directors duties under tax regulations. Material Events CSAV reported the following matters as Material Events to the Superintendency of Securities and Insurance during 2017: 1. May 24, Closing of merger between Hapag-Lloyd AG and United Arab Shipping Company Limited. Text combined with essential event issued on the same day to correct a date in the prior text. On May 24, 2017, in the City of Hamburg, the merger was closed between the German shipping company Hapag Lloyd AG ( HLAG ), a joint venture of which CSAV is the largest shareholder, and United Arab Shipping Company Limited ( UASC ), a shipping company based in the Persian Gulf that is also primarily engaged in container shipping. The respective merger agreement, known as the Business Combination Agreement ( BCA ), was reported as a material event on July 18, Closing of the merger was subject to regulatory approval from the corresponding antitrust authorities and consent from both shipping companies creditors, as well as fulfillment of other conditions precedent that are customary in this type of agreement, including a corporate restructuring of UASC and its businesses, all of which have been fulfilled to the parties satisfaction on this date. As a result, the combined entity HLAG will become the fifth largest container Compañía Sud Americana de Vapores S.A. 49

52 shipping company in the world with total transport capacity of 1.6 million TEUs and annual volumes of around 10 million TEUs. HLAG expects this merger to generate annual synergies of US$ 435 million, which will be offset by the non-recurring costs from the merger and subsequent integration of both companies during the second half of However, a significant portion of these synergies will be realized in 2018 and the full amount will be reached in HLAG s combined fleet will include 230 container ships. It is considered one of the industry's most modern and most efficient fleets with an average vessel age of only 7.2 years and an average size of around 6,840 TEUs, which has almost 30% more capacity than the average of the industry s 15 largest shipping lines (5,280 TEUs). The combined fleet s new profile is the foundation for a very large portion of its estimated synergies, which are based on optimizing the new configuration of the combined entity's vessels and services, harnessing cost advantages for mobilized space and more efficiently using the new fleet. As a result of closing the merger, HLAG has acquired 100% of the shares of UASC and UASC s former controllers (Qatar Holding LLC, owned by the State of Qatar ("QH"), and the Public Investment Fund, on behalf of the Kingdom of Saudi Arabia ("PIF")), have acquired 14.4% and 10.1%, respectively, of the shares of HLAG, while the remaining minority shareholders of UASC now hold 3.5% of the shares. Thus, as of merger closing and prior to the capital increase described below, HLAG s shareholder structure is as follows: CSAV, through its German subsidiary CSAV Germany Container Holding GmbH ( CSAV Germany ), is the largest shareholder and owner of 22.6% of HLAG; the City of Hamburg, through its holding company HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbh ( HGV ), holds 14.9%; German businessman Klaus Michael Kühne, through Kühne Maritime GmbH ( KM ) and associate owns 14.6%; QH, 14.4%; PIF, 10.1%; TUIHapag Beteiligungs GmbH, 8.9%; and the remaining minority shareholders and stock market investors (free float), represent around 14.5%. Despite having diluted their respective interests, CSAV, HGV and KM have adjusted their shareholder agreement in order to retain common control over HLAG, and have committed to exercise the voting rights of all their shares by mutual agreement, equivalent to approximately 51.5% of the shares issued by HLAG. Notwithstanding, they have eliminated all restrictions on the transfer of shares contained in the original agreement, except for the right of first refusal under certain circumstances. Now that the merger is complete, HLAG will carry out a capital increase for the euro-equivalent of US$400 million in order to strengthen its financial position. This will take place through a rights issue on the German exchange over the next six months where all shareholders will have preferential subscription rights. This capital increase must be approved by HLAG's shareholders at their annual general meeting (AGM), to be held in Hamburg on May 29, Regarding this capital increase, CSAV Germany, HGV and KM had already made the necessary agreements for CSAV Germany to have a total interest in HLAG of at least 25%, which will allow CSAV to maintain decisive influence in certain key matters related to HLAG such as capital increases, mergers, spin-offs and other amendments to HLAG's bylaws, all of which require 75% approval. Looking forward to HLAG's next capital increase, last March 30, 2017, CSAV's shareholders approved a capital increase of US$260 million to be carried out by issuing 9,500 million shares. This figure can be modified slightly to ensure that CSAV raises sufficient funds to subscribe and acquire enough shares to give it a 25% interest in HLAG. Finally, the company reports that, despite the merger s positive economic impact because of the expected US$435 million in annual synergies, the HLAG-UASC merger will generate a dilution loss for CSAV since its shareholding in HLAG will decrease from 31.4% to 25% (after temporarily holding 22.6% and then subscribing additional shares of HLAG). This loss cannot be reasonably quantified at this time since the information needed to perform the calculation will depend on HLAG's accounting records for the transaction, which will be available once HLAG publishes its Interim Consolidated Financial Statements as of June 30, 2017, currently scheduled for August 10, This dilution loss is produced because IFRS 3 requires the terms of exchange of the merger to be reflected at fair value (IFRS 13). In the case of Hapag- Lloyd's shares, since it trades on the Frankfurt exchange, fair value is the market value of Hapag-Lloyd's stock (valuation level 1 according to IFRS 13). For UASC's valuation, the fair value of that company's assets and liabilities must be calculated without considering the effect of any synergies to be obtained from the merger. This fair value must be calculated using a purchase price allocation report (PPA), which is not yet available. Since that value is less than the equity method accounting value at which CSAV carries its investment in HLAG, the aforementioned dilution would generate an accounting loss. The dilution loss will be calculated based on the net dilution for CSAV considering the HLAG shares that CSAV will subscribe in its next capital increase to increase its interest from 22.6% to 25%, since that subscription is also committed to in the merger agreement as part of the same business combination. 2. August 29, Accounting effects on CSAV's financial statements of merger between Hapag-Lloyd AG and United Arab Shipping Company Limited. On May 24, 2017, CSAV informed the Superintendency of Securities and Insurance (or SVS ) of the material event 50 Annual Report 2017

53 of the closing of the merger between the shipping companies Hapag-Lloyd AG ( HLAG ) and United Arab Shipping Company Limited ( UASC ). Upon closing, HLAG acquired 100% of the shares of UASC and the shareholders of UASC became shareholders of HLAG, receiving shares equivalent to 28% of HLAG (combined entity). The shareholders of HLAG existing before the closing diluted their interests, conserving 72% of its share capital. CSAV (through its German subsidiary CSAV Germany Container Holding GmbH - CSAV Germany -) reduced its interest from 31.4% to 22.6%, but remained the largest shareholder of HLAG. Despite the very positive economic impact of this merger, with HLAG's management estimating annual synergies of US$ 435 million, this transaction will generate a dilution loss for CSAV. The amount of this loss could not be reasonably quantified last May without the accounting records that HLAG was to prepare for the transaction, which were to be published in Germany in its Interim Consolidated Financial Statements as of June 30, 2017, originally scheduled for August 10, 2017, but finally published today. Based on these accounting records, the merger of HLAG and UASC will generate for CSAV a net accounting loss of US$155 million, due to the following: 1. Dilution loss: This loss arose because IFRS 3 requires the Company to reflect the effects of the business combination between HLAG and UASC at its fair value in accordance with IFRS 13. In this case, the consideration transferred was a 28% interest in HLAG that was given to the shareholders of UASC), and these shares were valued using Level 1 inputs, in accordance with IFRS 13 (i.e. prices observed in active markets). Since HLAG s shares are quoted on the Frankfurt exchange, the company, as the acquirer, set the fair value of the consideration transferred using its share price on the day the merger with UASC was closed (approximately EUR 28 per share). Since that value is less than the equity method accounting value at which CSAV carried its investment in HLAG, the aforementioned dilution generates an accounting loss for CSAV of US$ 167 million. It is important to mention that the accounting value at which CSAV carried its investment in HLAG is recorded in accordance with IAS 28, and considers: (i) the acquisition cost of this investment in 2014 at fair value based on Level 3 of IFRS 13 (cash flows of the combined entity), considering that the shares of HLAG were not traded on an exchange at that time; (ii) the respective equity method interests in the results and changes in equity of HLAG; and (iii) the corresponding annual impairment testing based on the value in use methodology defined in IAS 36 (the business s cash flows). 2. Share of Badwill: In order to quantify the full effect on CSAV's results of the aforementioned merger, the fair value of the identifiable assets and liabilities that HLAG receives from UASC must be calculated using the corresponding purchase price allocation (PPA) report. This value is available in the respective quarterly financial report published today by HLAG. In accordance with the provisions of IFRS 3, the value of the net assets acquired from UASC is greater than the consideration transferred. Therefore, the business combination generates a bargain purchase for HLAG, commonly known as badwill, of approximately US$ 52 million. CSAV also has a 22.6% share of that badwill, which results in a gain of approximately US$ 12 million that partially offsets the dilution loss referred to in point (1) above. It is important to mention that, in accordance with IFRS 3, the valuation of net assets acquired does not include the estimated synergies for the combined entity arising from the merger. This net dilution loss resulting from the two aforementioned effects is a reflection of the accounting method defined in IFRS for business combinations. In this case, it does not represent the financial value of the merger, since it does not incorporate the estimated US$ 435 million in annual synergies, which was a fundamental factor in the decision to embark on the merger. In calculating the financial effects of this merger, one must also consider the accounting effect of increasing CSAV's interest in HLAG from the current 22.6% to 25%, since this is committed to in the merger agreement for the same business combination. This increase will take place by subscribing shares in HLAG's next capital increase and potentially purchasing additional shares, which is estimated to occur during the fourth quarter of this year. However, this effect cannot be reasonably quantified until the following is known: (i) the placement or purchase price of the HLAG shares, (ii) the euro/ dollar exchange rate applicable and (iii) the respective PPA report on the additional interest acquired (that CSAV must prepare after acquiring the shares). Even so, in accordance with IAS 28, this event will potentially generate a gain for CSAV instead of a loss, calculated using the above mentioned PPA and the acquisition cost. Should the share purchase occur as planned, this effect and its corresponding accounting treatment must be disclosed in the Consolidated Financial Statements as of December 31, Compañía Sud Americana de Vapores S.A. 51

54 Subsidiaries and Associates Corporate Structure CSAV Germany Container Holding GmbH 100% 51.00% CSAV Austral SpA 100% Tollo Shipping Co. S.A % Hapag-Lloyd AG 25.46% % Navibras Comercial Maritima e Afretamentos Ltda %(*) % % Subsidiaries Associates 52 Annual Report 2017

55 99.00% 100% 99.00% 100% Compañía Naviera Río Blanco S.A. 1.00% Corvina Shipping Co. S.A. 1.00% Norgistics Holding S.A. Norgistics (China) Ltd (Shenzhen) 99.00% 100% % 1.00% Norgistics México S.A. Norgistics (China) Limited (HK) Norgistics Perú SAC % Note ( * ) : Modification of ownership committed as of December 31, 2017, realized on January 8, Compañía Sud Americana de Vapores S.A. 53

56 Information on Subsidiaries and Associates Subsidiaries Corvina Shipping Co. S.A. Tollo Shipping Co. S.A. Compañía Naviera Rio Blanco S.A. Corporate Name Corporate Name Corporate Name Corvina Shipping Co. S.A. Type of Entity Corporation Paid-in capital as of December 31, 2017 Tollo Shipping Co. S.A. Type of Entity Corporation Paid-in capital as of December 31, 2017 Compañía Naviera Rio Blanco S.A. Type of Entity Corporation Paid-in capital as of December 31, 2017 US$490,600,000 Corporate Purpose a. Buying, selling, chartering and generally managing vessels and operating shipping lines, in Panama or anywhere in the world. b. Maritime agencies and maritime operations in general, in Panama or abroad. c. Buying, selling, bartering, leasing and trading real estate or personal property, goods and any other related commercial or financial transaction, and investing in other Panamanian or foreign companies. d. Buying and trading company shares and units and, in general, undertaking any other business, maritime, financial or real estate transactions permitted by the laws of the Republic of Panama, or that may be permitted in the future. This is a holding company within the CSAV group. Board of Directors Chairman: Orelys Massiel Cedeño B. Directors: Olga Quintero Pablo Bauer Novoa Óscar Hasbún Martínez (CEO, CSAV) Mirtha C. de Fernández Hernán Martínez Fermandois (Senior Vice President, Automobiles, CSAV) Gonzalo Baeza Solsona Tomás Tafra Rioja (CFO, CSAV) Chief Executive Officer N/A Business relations / Significant acts and contracts Intragroup administrative services US$358,477, Corporate Purpose a. Buying, selling, chartering and generally managing vessels and operating shipping lines, in Panama or anywhere in the world. b. Maritime agencies and maritime operations in general, in Panama or abroad. c. Buying, selling, bartering, leasing and trading real estate or personal property, goods and any other related commercial or financial transaction, and investing in other Panamanian or foreign companies. d. Buying and trading company shares and units and, in general, undertaking any other business, maritime, financial or real estate transactions permitted by the laws of the Republic of Panama, or that may be permitted in the future. This is a holding company within the CSAV group. Board of Directors Chairman: Orelys Massiel Cedeño B. Directors: Olga Quintero Pablo Bauer Novoa Óscar Hasbún Martínez (CEO, CSAV) Mirtha C. de Fernández Hernán Martínez Fermandois (Senior Vice President, Automobiles, CSAV) Gonzalo Baeza Solsona Tomás Tafra Rioja (CFO, CSAV) Chief Executive Officer N/A Business relations / Significant acts and contracts Intragroup administrative services US$3,550,000 Corporate Purpose Maritime transport, as vessel owner or vessel charterer or by any other means, both in Chile and abroad, entering into shipping contracts, chartering and leasing vessels; acquiring any maritime vessel; providing services related to maritime transport and trade. This company was dormant this year. Board of Directors Chairman: Tomás Tafra Rioja (CFO, CSAV) Directors: Edmundo Eluchans Aninat (General Counsel, CSAV) Hernán Martínez Fermandois (Senior Vice President, Automobiles, CSAV) Chief Executive Officer Edmundo Eluchans Aninat (General Counsel, CSAV) Business relations / Significant acts and contracts Intragroup administrative services 54 Annual Report 2017

57 Navibras Comercial Maritima e Afretamentos Ltda. CSAV Germany Container Holding GmbH CSAV Austral SpA Corporate Name Corporate Name Corporate Name Navibras Comercial Maritima e Afretamentos Ltda. Type of Entity Limited liability company Paid-in capital as of December 31, 2017 US$1,259, Corporate Purpose CSAV Germany Container Holding GmbH Type of Entity Limited liability company Paid-in capital as of December 31, 2017 US$84,449.71, excluding share premium reserves from subscribing shares at a price over their par value. Corporate Purpose CSAV Austral SpA Type of Entity Private limited company Paid-in capital as of December 31, 2017 US$100,539, Corporate Purpose Shipping agencying. This company was Ownership and management of investments Maritime, ground and air transport and all dormant this year. in companies, especially those dedicated to types of shipping services. container shipping. Board of Directors Board of Directors Board of Directors Gonzalo Baeza Solsona Chairman: Maria Cristina Cescon Avedissian Óscar Hasbún Martínez (CEO, CSAV) Andrés Kulka Kuperman Pablo Bauer Novoa Chief Executive Officer Directors: N/A Chief Executive Officer Héctor Arancibia Sánchez Business relations / Significant acts and N/A Christian Seydewitz Munizaga contracts Business relations / Significant acts and Sergio Hurtado Olavarría contracts Vivien Swett Brown Intragroup administrative services Rene Scholem Appel Intragroup administrative services. Loan for EUR million plus accrued interest. Chief Executive Officer Héctor Arancibia Sánchez Business relations / Significant acts and contracts N/A Compañía Sud Americana de Vapores S.A. 55

58 Associates Hapag-Lloyd AG ( Hapag Lloyd ) Corporate Name Hapag-Lloyd AG ( Hapag Lloyd ) Type of Entity Publicly listed corporation Subscribed and Paid-in Capital as of December 31, 2017 EUR 175,760,293, divided into 175,760,293 shares with a par value of EUR 1, subscribed and paid in full, without considering share premium reserves from subscribing shares at a price over their par value. Corporate Purpose Participating in maritime trade through liner services, undertaking logistics operations, undertaking shipping, vessel brokering, freight brokering, storage and agency services, and, if applicable, operating terminals, buying, selling, developing, improving and leasing property, providing data-processing services, and all other commercial activities related to the foregoing, unless that requires prior approval. The main business is shipping containers on owned and chartered vessels. Board of Directors Supervisory Council: Executive Council: Michael Behrendt Christine Behle Oscar Hasbún Martínez (CEO, CSAV) H.E. Sheikh Ali Bin Jassim Al-Thani Jutta Diekamp Nicola Gehrt Karl Gernandt Joachim Kramer Chief Executive Officer Rolf Habben Jansen Business Relations Annabell Kröger Sabine Nieswand Dr. Rainer Klemmt-Nissen Arnold Lipinski José Francisco Pérez Mackenna (Chairman, CSAV) Klaus Schroeter Uwe Zimmermann Rolf Habben Jansen Nicolas Burr Thorsten Haeser Anthony J. Firmin Hapag Lloyd leases offices owned by CSAV located in Valparaíso. Significant Acts and Contracts On May 24, 2017, Hapag Lloyd (the German shipping company of which CSAV is one of the main shareholders) and United Arab Shipping Company (UASC), an Arabian shipping company engaged in containerized cargo shipping, announced the close of the merger of their container shipping businesses. Following the transaction, Hapag Lloyd became one of the five largest global integrated container shipping companies in the world with total transport capacity of 1.6 million TEU, an annual transport volume of around 11 million TEU and annual combined sales of approximately US$ 12 billion. Due to incorporating UASC's shareholders, CSAV s interest in Hapag Lloyd was diluted from 31.4% to 22.6%. However, CSAV remained the main shareholder and jointly controls the merged entity along with the city of Hamburg and Kühne Maritime through the shareholder agreement in force. On October 17, 2017, as part of the agreements previously signed for the merger process with Hapag Lloyd and UASC, Hapag Lloyd announced the successful completion of its capital increase for EUR 352 million (approx US$ 414 million), which will be used fully to reduce and repay financial debt in order to improve its leverage ratios and reduce its future finance costs. On October 30, 2017, (i.e. once the aforementioned capital increase had been completed and compliance with the agreements between the controllers of Hapag Lloyd (CSAV, the City of Hamburg and Kühne Maritime) had been verified) and prior to the closing of the merger with UASC, CSAV reported that it had increased its interest in Hapag Lloyd from 24.7% (post capital increase) to 25%, following the acquisition of additional shares owned by Kühne Maritime, and then to 25.5%. This shareholding enables CSAV to exercise significant influence in Hapag Lloyd s important decisions, notwithstanding the joint control agreement that remains in force with the city of Hamburg and Kühne Maritime, with which it could continue to decisively influence essential corporate matters such as capital increases, mergers, spin-offs and changes in business line, all of which require 75% approval. Main Activities International trade, container shipping, maritime transport, as vessel owner or vessel charterer or by any other means, in Germany and globally, entering into shipping contracts, chartering and leasing vessels; acquiring any maritime vessel; providing services related to maritime transport and trade, among other activities. Investment as percentage of total consolidated assets (%) 85.27% 56 Annual Report 2017

59 Norgistics Subsidiaries Norgistics Holding S.A. Norgistics (China) Ltd. (Shenzhen) Norgistics (China) Limited (Hong Kong) Corporate Name Corporate Name Corporate Name Norgistics Holding S.A. Type of Entity Corporation Paid-in capital as of December 31, 2017 Norgistics (China) Ltd. (Shenzhen) Type of Entity Limited liability company Paid-in capital as of December 31, 2017 Norgistics (China) Limited (Hong Kong) Type of Entity Limited liability company Paid-in capital as of December 31, 2017 US$5,000, US$1,000, US$ 1, Corporate Purpose Investing and participating in Chilean or foreign companies involved in logistics services, shipping agencies or sea, air, ground or multimodal transport services. Board of Directors Chairman: Tomás Tafra Rioja (CFO, CSAV) Directors: Edmundo Eluchans Aninat (General Counsel, CSAV) Hernán Martínez Fermandois (Senior Vice President, Automobiles, CSAV) Chief Executive Officer Edmundo Eluchans Aninat (General Counsel, CSAV) Business Relations / Significant Acts and Contracts Intragroup administrative services Corporate Purpose Booking and stuffing containers, repairing and maintaining containers, coordinating operations with terminals and warehouses, receiving cargo and contracting services from transportation companies. Board of Directors Chairman: Tomás Tafra Rioja (CFO, CSAV) Directors: Edmundo Eluchans Aninat (General Counsel, CSAV) Jaime Schirmer Sutter Chief Executive Officer N/A Business Relations / Significant Acts and Contracts Sea freight brokering Corporate Purpose Coordinating sea, air, rail or river transportation services using own or third-party resources; promoting and coordinating with cargo terminals, warehouses, customs warehouses; coordinating and promoting consolidation and deconsolidation of import and export cargo in containers; long-haul and coastal shipping using sea and ground transportation companies and undertaking related activities for itself or on behalf of third parties, such as port operator, stevedoring, logistics operator, cargo transfer agent, freight, warehousing of merchandise and containers; rental, sub-rental and repair of containers; palletization of cargo; stuffing and stripping of containers; road and rail transportation of cargo in general; shipping and customs clearance; importing and exporting; managing and providing intermodal, road, rail and shipping services in terminals. Board of Directors Chairman: Tomás Tafra Rioja (CFO, CSAV) Director: Jaime Schirmer Sutter Chief Executive Officer N/A Business Relations / Significant Acts and Contracts Sea freight brokering Compañía Sud Americana de Vapores S.A. 57

60 Corporate Name Norgistics México S.A Type of Entity Variable capital corporation Paid-in capital as of December 31, 2017 US$ 2,756, Corporate Purpose Non-vessel operating common carrier (NVOCC), freight forwarder and ground transport brokering. Sea and intermodal freight brokering. Board of Directors Administrator: Tomás Tafra Rioja (CFO, CSAV) Chief Executive Officer Jaime Schirmer Sutter Business relations / Significant acts and contracts Sea freight brokering Norgistics México S.A Corporate Name Norgistics Perú SAC Type of Entity Privately held corporation Paid-in capital as of December 31, 2017 US$ 305, Corporate Purpose Foreign trade and customs services, including imports and exports, international transport, international procurement and sales, general agent and representative of maritime, air and ground carriers in Peru, port agent in Peru, vessel and/or air brokerage, third party carrier or representative, stevedoring agent in Peru, international agent for air, ground, sea or multimodal cargo. Board of Directors Legal Representatives: Tomás Tafra Rioja (Representative) Jaime Schirmer Sutter (Representative) * The Company does not have a board of directors since it is governed by shareholders meetings and the indicated representatives. Chief Executive Officer Gloria Judith Figueroa Figueroa Business relations / Significant acts and contracts N/A Norgistics Perú SAC 58 Annual Report 2017

61 Summary of Subsidiary Ownership Investing Company Compañía Sud Americana de Vapores S.A. Tollo Shipping Co. S.A. Corvina Shipping Co. S.A. CSAV Germany Container Holding GmbH Hapag-Lloyd AG Norgistics Holding S.A. Other Total Issuing Company Tollo Shipping Co. S.A. Panama % 100% Corvina Shipping Co. S.A. Panama % 100% Compañía Naviera Rio Blanco S.A. Chile 99.00% 1.00% 100% Navibras Comercial Maritima e Afretamentos Ltda. Brazil % % % % 100% CSAV Austral SpA Chile 51.00% 49.00% 100% CSAV Germany Container Holding GmbH Germany % 100% Hapag-Lloyd AG Germany 25.46% 74.54% 100% Norgistics Holding S.A. Chile 99.00% 1.00% 100% Norgistics (China) Ltd. [Shenzhen] China % 100% Norgistics (China) Limited [Hong Kong] China % 100% Norgistics Mexico S.A. Mexico 1.00% 99.00% 100% Norgistics Peru SAC Peru % % 100% Investment as a Percentage of the Parent Company's Net Assets Investing Company Compañía Sud Americana de Vapores S.A. Tollo Shipping Co. S.A. Corvina Shipping Co. S.A. CSAV Germany Container Holding GmbH Norgistics Holding S.A. Issuing Company Tollo Shipping Co. S.A. Panama % Corvina Shipping Co. S.A. Panama 31.69% Compañía Naviera Rio Blanco S.A. Chile -0.06% 0.00% Navibras Comercial Maritima e Afretamentos Ltda. Brazil 0.00% -0.34% 0.00% -0.17% CSAV Austral SpA Chile 0.00% CSAV Germany Container Holding GmbH Germany 23.10% Hapag-Lloyd AG Germany 99.91% Norgistics Holding S.A. Chile 0.07% 0.00% Norgistics (China) Ltd. [Shenzhen] China 0.06% Norgistics (China) Limited [Hong Kong] China 78.20% Norgistics Mexico S.A. Mexico 0.00% 12.79% Norgistics Peru SAC Peru % Compañía Sud Americana de Vapores S.A. 59

62 Consolidated Financial Statements As of and for the years ended December 31, 2017 and Annual Report 2017

63 Contents Report of Independent Auditors Consolidated Statements of Financial Position Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements. Management Analysis ThUS$: Figures expressed in thousands of US dollars Compañía Sud Americana de Vapores S.A. 61

64 Independent Auditor'`+'s Report 62 Annual Report 2017

65 Compañía Sud Americana de Vapores S.A. 63

66 Consolidates Statements of Financial Position ASSETS As of December 31, 2017 As of December 31, 2016 Note ThUS$ ThUS$ CURRENT ASSETS Cash and cash equivalents 7 42,441 54,608 Other financial assets Other non financial assets 13 1,026 1,344 Trade and other receivables 9 19,888 20,799 Receivables from related parties Inventories 11 3,159 4,250 Current tax assets ,314 Disposal groups classified as held for sale 35 1,850 Total current assets 68,793 84,169 NON CURRENT ASSETS Other financial assets Other non financial assets Equity method investments 15 1,932,258 1,771,737 Intangible assets other than goodwill Goodwill Property, plant and equipment 18 2,730 2,892 Investment property 19 15,294 16,211 Deferred tax assets , ,976 Total non current assets 2,197,171 2,083,990 TOTAL ASSETS 2,265,964 2,168,159 The attached notes 1 41 are an integral part of these Consolidated Financial Statements. 64 Annual Report 2017

67 LIABILITIES AND EQUITY As of December 31, 2017 As of December 31, 2016 Note ThUS$ ThUS$ CURRENT LIABILITIES Other financial liabilities Trade and other payables 23 19,103 17,082 Payables to related parties ,901 Other provisions 24 11,961 31,093 Current tax liabilities Employee benefit provisions 26 1,684 1,693 Other non financial liabilities 25 3,762 2,993 Disposal groups classified as held for sale 35 1,137 Total current liabilities 38,637 55,343 NON CURRENT LIABILITIES Other financial liabilities 22 93,769 93,607 Trade and other payables 23 2,500 Other provisions 24 15,549 9,448 Deferred tax liabilities Other non financial liabilities Total non current liabilities 109, ,352 TOTAL LIABILITIES 148, ,695 EQUITY Issued capital 28 3,493,510 3,199,108 Accumulated losses 28 (1,371,661) (1,183,582) Treasury shares 28 Other reserves 28 (4,392) (9,062) Equity attributable to owners of the company 2,117,457 2,006,464 Non controlling interest 14 TOTAL EQUITY 2,117,457 2,006,464 TOTAL LIABILITIES AND EQUITY 2,265,964 2,168,159 The attached notes 1 41 are an integral part of these Consolidated Financial Statements. Compañía Sud Americana de Vapores S.A. 65

68 Statement of Comprehensive Income For the year ended STATEMENT OF INCOME December 31, Restated Note ThUS$ ThUS$ Profit (loss) for the year Revenue , ,299 Cost of sales 29 (102,603) (105,932) Gross profit 7,274 3,367 Other income 30 1,707 1,932 Administrative expenses 29 (10,672) (11,733) Other gains 30 3,025 14,344 Operating profit 1,334 7,910 Finance income Finance costs 31 (5,420) (4,119) Share of profit (loss) of equity method associates and joint ventures 15 (139,502) (7,011) Exchange differences (94) Loss before tax (141,617) (3,036) Income tax expense from continuing operations 21 (45,213) (20,598) Loss from continuing operations (186,830) (23,634) Profit (loss) from discontinued operations 35 (1,307) 1,339 Loss for the year (188,137) (22,295) Loss attributable to: Owners of the company (188,137) (23,317) Non controlling interest 14 1,022 Loss for the year (188,137) (22,295) Basic earnings (loss) per share Basic loss per share from continuing operations 34 (0.0059) (0.0008) Basic earnings per share from discontinued operations 34 Basic loss per share 34 (0.0059) (0.0008) The attached notes 1 41 are an integral part of these Consolidated Financial Statements. 66 Annual Report 2017

69 STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, ThUS$ ThUS$ Loss for the year (188,137) (22,295) Components of other comprehensive income, before tax: Exchange differences on translation of foreign operations Gain (loss) from exchange differences on translation of foreign operations, before tax Other comprehensive income (loss), before tax, foreign exchange differences on translation of foreign operations Cash flow hedges 12,089 (1,773) 12,089 (1,773) Gain on cash flow hedges, before tax 651 3,177 Other comprehensive income, before tax, cash flow hedges 651 3,177 Actuarial loss for defined benefit plans, before tax (3,930) (13,700) Other comprehensive income (loss), before tax, actuarial gains (losses) Other comprehensive income (loss), before tax 8,810 (12,296) Income tax relating to components of other comprehensive income (loss): Income tax relating to cash flow hedges 205 (444) Total income tax relating to components of other comprehensive income (loss) 205 (444) Other comprehensive income (loss) for the year 9,015 (12,740) Total comprehensive loss for the year (179,122) (35,035) Total comprehensive loss attributable to: Owners of the company (179,122) (36,057) Non controlling interest 1,022 Total comprehensive loss for the year (179,122) (35,035) The attached notes 1 41 are an integral part of these Consolidated Financial Statements. Compañía Sud Americana de Vapores S.A. 67

70 Consolidated Statements of Changes in Equity For the year ended December 31, 2017 Other Reserves Issued Capital Translation Reserve Cash Flow Hedge Reserve Reserve for Gains and Losses on Defined Benefit Plans Other Miscellaneous Reserves Total Other Reserves Accumulated Losses Equity Attributable to Owners of the Company Non Controlling Interest Total Equity ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Opening balance as of January 1, ,199,108 (18,714) 2,393 1,510 5,749 (9,062) (1,183,582) 2,006,464 2,006,464 Changes in equity Comprehensive income (loss) Loss for the year (188,137) (188,137) (188,137) Other comprehensive income (loss) 12, (3,930) 9,015 9,015 9,015 Total comprehensive income (loss) 12, (3,930) 9,015 (188,137) (179,122) (179,122) Equity issuance 294, , ,402 Dividends Decrease for transfer of treasury shares Increase (decrease) due to transfers and other changes (89) (4,256) (4,345) 58 (4,287) (4,287) Total changes in equity 294,402 12, (3,930) (4,256) 4,670 (188,079) 110, ,993 Closing balance as of December 31, ,493,510 (6,714) 3,249 (2,420) 1,493 (4,392) (1,371,661) 2,117,457 2,117,457 The attached notes 1 41 are an integral part of these Consolidated Financial Statements. 68 Annual Report 2017

71 For the year ended December 31, 2016 Other Reserves Issued Capital Translation Reserve Cash Flow Hedge Reserve Reserve for Gains and Losses on Defined Benefit Plans Other Miscellaneous Reserves Total Other Reserves Accumulated Losses Equity Attributable to Owners of the Company Non Controlling Interest Total Equity ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Opening balance as of January 1, ,201,792 (16,941) (340) 15,210 2, (1,160,265) 2,042,430 8,509 2,050,939 Changes in equity Total comprehensive income (loss) Profit (loss) for the year (23,317) (23,317) 1,022 (22,295) Other comprehensive income (loss) (1,773) 2,733 (13,700) (12,740) (12,740) (12,740) Total comprehensive income (loss) (1,773) 2,733 (13,700) (12,740) (23,317) (36,057) 1,022 (35,035) Equity issuance Dividends (6,594) (6,594) Decrease for transfer of treasury shares Increase (decrease) due to transfers and other changes (2,684) 2,775 2, (2,937) (2,846) Total changes in equity (2,684) (1,773) 2,733 (13,700) 2,775 (9,965) (23,317) (35,966) (8,509) (44,475) Closing balance as of December 31, ,199,108 (18,714) 2,393 1,510 5,749 (9,062) (1,183,582) 2,006,464 2,006,464 The attached notes 1 41 are an integral part of these Consolidated Financial Statements. Compañía Sud Americana de Vapores S.A. 69

72 Consolidated Statements of Cash Flow Statement of Cash Flows For the year ended December 31, Note ThUS$ ThUS$ Cash flows provided by (used in) operating activities Classes of revenue from operating activities Proceeds from sales of goods and services 126, ,063 Other income from operating activities 1,662 5,203 Classes of payments from operating activities Payments to suppliers for goods and services (129,196) (145,380) Payments to and on behalf of employees (7,458) (6,194) Other payments for operating activities (5,594) (5,336) Net cash flows used in operations (13,801) (16,644) Income taxes paid Other cash inflows 68 1 Net cash flows used in operating activities (12,876) (16,629) Cash flows provided by (used in) investing activities Cash flows arising from the loss of control of subsidiaries 108 1,116 Other payments to acquire interest in joint ventures 15 (293,653) Other payments to acquire equity in other entities (5) Proceeds from sale of property, plant and equipment 3, Purchases of property, plant and equipment (6) (22) Interest received Dividends received 1 54 Cash flows from sale of non controlling interest 101 2,332 Other cash inflows 4 Net cash flows provided by (used in) investing activities (288,566) 3,674 Cash flows provided by (used in) financing activities Proceeds from share issuance (1) 293,548 Proceeds from long term loans 49,904 Proceeds from short term loans 119,584 Loan repayments (715) Loan payments to related parties (30,000) Loan repayments (120,000) Interest paid (4,665) (3,478) Other cash outflows (216) (498) Net cash flows provided by financing activities 288,251 15,213 Increase (decrease) in cash and cash equivalents before effect of exchange rate changes (13,191) 2,258 Effect of exchange rate changes on cash and cash equivalents 1,024 (38) Increase (decrease) in cash and cash equivalents (12,167) 2,220 Cash and cash equivalents at beginning of year 7 54,608 52,388 Increase (decrease) in cash and cash equivalents (12,167) 2,220 Cash and cash equivalents at end of year 7 42,441 54,608 (1) Includes cash flows during the year related to share issuance costs. The attached notes 1 41 are an integral part of these Consolidated Financial Statements. 70 Annual Report 2017

73 Notes to the Consolidated Financial Statements Note 1 General Information Compañía Sud Americana de Vapores S.A. (hereinafter CSAV or the Company ) is a publiclyheld corporation registered in the Securities Registry of the Chilean Financial Market Commission (CMF), which was formerly the Superintendency of Securities and Insurance, under number 76 and, therefore, is supervised by that entity. The Company's Chilean taxpayer ID is and its domicile is Hendaya 60, piso 14, Las Condes, Santiago, Chile. Its stock has been listed since 1893 on Santiago Exchange, the Valparaíso Stock Exchange and the Chilean Electronic Exchange. The Company was founded in Valparaíso in Its main business is maritime cargo transport, mainly containers, although it also transports automobiles and other wheeled cargo. The car carrier business and transportation and logistics services are developed directly by the Company and its subsidiaries, while the container shipping business is operated entirely by Hapag Lloyd AG (hereinafter HLAG ), which is headquartered in Hamburg, Germany. As of December 31, 2017, CSAV is the largest shareholder of this entity, with a 25.46% stake. In addition, the Company has signed an agreement to jointly control HLAG with the two other major shareholders, which together hold approximately 59.9% of the German company. Hapag Lloyd AG is one of the largest container shipping companies in the world, covering all major global routes, with annual sales of over US$ 11 billion in For CSAV, its investment in HLAG is a joint venture that is presented in the Consolidated Financial Statements using the equity method. CSAV is controlled by the Quiñenco group, through the following companies: Company Ownership Interest No. of Shares Quiñenco S.A % 7,512,081,524 Inversiones Rio Bravo S.A % 12,460,691,856 Inmobiliaria Norte Verde S.A. 1.90% 697,843,064 Total Quiñenco Group 56.18% 20,670,616,444 As of December 31, 2017 and December 31, 2016, the Company and its subsidiaries had a total of 63 and 147 employees, respectively. For the year ended 2017, the CSAV Group had an average of 129 employees, based mainly at its offices and subsidiaries in Chile. Compañía Sud Americana de Vapores S.A. 71

74 Note 2 Presentation Basis of the Consolidated Financial Statements The significant accounting policies adopted for the preparation of these Consolidated Financial Statements are described below. (a) Statement of Compliance The Consolidated Financial Statements as of December 31, 2017 and 2016, have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS), issued by the International Accounting Standards Board (IASB). The Consolidated Financial Statements as of December 31, 2017, presented in this report were approved by the Company's board of directors on March 29, In the preparation of these Consolidated Financial Statements as of December 31, 2017, management has utilized to the best of its knowledge its information and understanding of the standards and interpretations applied and the current facts and circumstances. (b) Preparation Basis of the Consolidated Financial Statements These Consolidated Financial Statements have been prepared on a historical cost basis, except for items recognized at fair value such as derivative instruments. The carrying amounts of assets and liabilities hedged with transactions that qualify for hedge accounting are adjusted to reflect changes in the fair value in relation to the hedged risks. These Consolidated Financial Statements are expressed in United States dollars, which is the functional currency of the CSAV Group and the HLAG joint venture. The figures in these statements have been rounded to thousands of United States dollars (ThUS$). 72 Annual Report 2017

75 Note 2 Presentation Basis of the Consolidated Financial Statements (continued) (b) Preparation Basis of the Consolidated Financial Statements (continued) The accounting policies defined by CSAV and adopted by all consolidated subsidiaries, including certain critical accounting estimates for quantifying some assets, liabilities, income, expenses and commitments, have been used in the preparation of these Consolidated Financial Statements. The areas that involve a greater degree of judgment or complexity, or the areas in which the assumptions and estimates are significant for the Consolidated Financial Statements are detailed as follows: 1. The evaluation of possible impairment losses on certain assets. 2. The hypotheses used in the actuarial calculation of employee benefits liabilities. 3. The useful life of material and intangible assets. 4. The criteria used in the valuation of certain assets (such as derivative instruments, deferred tax assets, etc.). 5. The probability that certain liabilities and contingencies (provisions) will materialize and their valuations. These estimates are made on the basis of the best available information about the matters being analyzed. In any event, it is possible that future events may make it necessary to modify such estimates in future periods. If necessary, such modifications would be made prospectively, such that the effects of the change would be recognized in future financial statements. As part of the restructuring of the Company's businesses following the merger of its container shipping business with HLAG in late 2014, CSAV's board and management decided to sell its liquid bulk cargo unit in On October 19, 2016, CSAV sold all directly and indirectly held shares of Odfjell y Vapores S.A., OV Bermuda Ltd. and Odfjell & Vapores Ltd. (Bermuda). As a result of that transaction, those companies are now wholly owned subsidiaries of Odfjell Tankers. This information was disclosed in Note 40 on events after the reporting period in the Interim Consolidated Financial Statements as of September 30, 2016, and in the Consolidated Financial Statements as of December 31, Compañía Sud Americana de Vapores S.A. 73

76 Note 2 Presentation Basis of the Consolidated Financial Statements (continued) (b) Preparation Basis of the Consolidated Financial Statements (continued) During the fourth quarter of 2017, CSAV s board and management decided to discontinue operations of its freight forwarder and logistics services unit, operated by the Norgistics subsidiaries (hereinafter Norgistics), given the unit s inability to sustain enough business volume to make its operations profitable and to develop it within CSAV's business context. This decision was made in order to maintain the proper strategic focus on its main businesses and secure the greatest value possible for CSAV and its shareholders. Given that, as of December 31, 2017, the Company's plan for disposing of this business unit has been defined, has been approved by CSAV s senior management and is currently being implemented, the Company decided to present all assets and liabilities related to the freight forwarder and logistics services unit as "held for sale" in the Interim Consolidated Statement of Financial Position ( Disposal groups classified as held for sale ), in accordance with IFRS 5. The Consolidated Statement of Income and the respective notes in these Consolidated Financial Statements have been expressed consistently with these modified classifications of assets and liabilities and other provisions of IFRS 5. On December 13, 2017, as indicated in Note 14 of this report, CSAV sold its subsidiary Norgistics Chile S.A., the main operating company in the Norgistics business unit, to third parties. However, because it still maintains control over other subsidiaries from the same business unit, Note 35 of this report (Discontinued Operations) separately discloses the assets and liabilities of the Norgistics business unit as well as the discontinued unit s results and cash flows, separated into operating, investing and financing cash flows. This presentation provides more clarity for analyzing the performance and financial position of CSAV's continued operations and a better comparison with financial information from prior periods. 74 Annual Report 2017

77 Note 2 Presentation Basis of the Consolidated Financial Statements (continued) (c) New Accounting Pronouncements (c.1) There are standards, amendments and interpretations that are mandatory for the first time for periods beginning on or after January 1, 2017: New Standards Amendments to IFRS IAS 7 Disclosure Initiative (Amendments to IAS 7). IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses (Amendments to IAS 12). Annual Improvements to IFRS Standards Cycle. Amendment to IFRS 12. Mandatory Effective Date Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. (c.2) The following new standards, amendments and interpretations have been issued but application is not yet mandatory: IFRS 9 Financial Instruments New IFRS IFRS 15 Revenue from Contracts with Customers IFRS 16: Leases. IFRS 17: Insurance Contracts New Interpretations IFRIC 22: Foreign Currency Transactions and Advance Consideration IFRIC 23: Uncertainty over Income Tax Treatments Amendments to IFRS IAS 28 Long term Interests in Associates and Joint Ventures IAS 40 Transfers of Investment Property (amendments to IAS 40, Investment Properties). IFRS 2 Share based Payments: Clarification on accounting for certain types of share based payment transactions. IFRS 9: Prepayment Features with Negative Compensation IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 15 Revenue from Contracts with Customers Amendment clarifying some requirements and providing additional transitional relief for companies that are implementing the new standard. Annual Improvements to IFRS Standards Cycle. Amendments to IFRS 1 and IAS 28. Mandatory Effective Date Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted for entities applying IFRS 15 on or before that date. Annual periods beginning on or after January 1, Early adoption is permitted for entities applying IFRS 9 and IFRS 15 on or before that date. Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. Effective date deferred indefinitely. Annual periods beginning on or after January 1, Early adoption is permitted. Annual periods beginning on or after January 1, Early adoption is permitted. Compañía Sud Americana de Vapores S.A. 75

78 Note 2 Presentation Basis of the Consolidated Financial Statements (continued) (c) New Accounting Pronouncements (continued) IFRS 9 Financial Instruments IFRS 9 introduces new requirements for the classification and measurement of financial assets. Financial assets are classified and measured on the basis of the business model in which they are held and contractual cash flow characteristics. One of the first updates to IFRS 9 introduces additional guidance for financial liabilities. Currently, the IASB has an active project to make limited amendments to classification and measurement requirements in IFRS 9 and to add new requirements for treating impairment of financial assets and hedge accounting. The last update to IFRS 9 includes guidance on the classification and measurement of financial assets, including impairment, and supplements the new hedge accounting principles. IFRS 15 Revenue from Contracts with Customers This new standard applies to contracts with customers. It establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, which has two approaches for recognizing revenue: at one moment in time and throughout the period. The model includes a five step analysis of transactions to determine whether revenue is recognized, when it is recognized and in what amount: 1. Identify the contract with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The date of application is for financial statements issued for periods beginning on or after January 1, Early adoption is permitted. CSAV s management evaluated the adoption of these standards starting January 1, 2018, and found no significant differences with respect to the information as of December 31, 2017, that require disclosure in these financial statements. 76 Annual Report 2017

79 Note 3 Summary of Significant Accounting Policies 3.1 Consolidation Basis (a) Subsidiaries Subsidiaries include all of the entities over which CSAV has control. Control is achieved when the Company has exposure, or rights, to variable returns from the investor s involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor s returns. Specifically, the Company controls an investee if and only if it has all of the following elements: (i) (ii) (iii) power over the investee (i.e. existing rights that give it the ability to direct the relevant activities of the investee); exposure, or rights, to variable returns from its involvement with the investee the ability to use its power over the investee to affect the amount of the investor s returns. When the Company has less than the majority of the voting rights in an investee, it still has power over the investee when these voting rights are sufficient to give it the practical ability to unilaterally direct the investee s relevant activities. The Company considers all of the facts and circumstances in evaluating whether the voting rights in an investee are sufficient to give it power, including: (a) the size of its holding of voting rights relative to the size and dispersion of holdings of other vote holders; (b) potential voting rights held by the investor, other vote holders or other parties; (c) rights from other contractual agreements; and (d) any additional facts and circumstances that indicate that the investor has, or does not have, the current ability to unilaterally direct the relevant activities when decisions need to be made. The Company will reevaluate whether or not it has control in an investee if the facts and circumstances indicate that there have been changes in one or more of the three elements of control mentioned above. A subsidiary will be consolidated from the date on which the investor obtains control of the investee and consolidation shall cease when control over the investee is lost. Compañía Sud Americana de Vapores S.A. 77

80 Note 3 Summary of Significant Accounting Policies (continued) 3.1 Consolidation Basis (continued) (a) Subsidiaries (continued) The acquisition method is used to account for the acquisition of subsidiaries by the CSAV Group. Based on this method, the acquisition cost is the fair value of the assets delivered, equity instruments issued and liabilities incurred or assumed at the date of exchange. The excess of the acquisition cost over the fair value of the Group s share in the net identifiable assets acquired is recognized as purchased goodwill. If the acquisition cost is lower than the fair value of the net assets of the acquired subsidiary, the identification and measurement of the acquiring company s identifiable assets, liabilities and contingent liabilities, as well as the measurement of the acquisition cost, shall be reconsidered. Any remaining difference will be recognized directly in profit or loss. Subsidiaries are consolidated using the line by line method for all of their assets, liabilities, income, expenses and cash flows. Non controlling interest in subsidiaries is included in the total equity of the CSAV group. Intercompany transactions, balances and unrealized gains on transactions between entities of the CSAV Group are eliminated during the consolidation process. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. When necessary in order to ensure consistency with the policies adopted by the CSAV Group, the accounting policies of its subsidiaries are modified. (b) Associates Associates are defined as all entities over which the CSAV Group exercises significant influence but over which it has no control, generally with an ownership interest between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at their acquisition cost, which requires assigning a value to these assets, commonly known as Purchase Price Allocation (PPA). The CSAV Group s investments in associates include purchased goodwill identified in the acquisition, net of any accumulated impairment loss identified in that investment. The CSAV Group s share in the losses or profits subsequent to the acquisition of its associates is recognized in profit or loss, and its share in movements of equity reserves, including other comprehensive income, subsequent to the acquisition is recorded as reserves. Accumulated movements subsequent to the acquisition are recorded against the carrying amount of the investment. When the CSAV Group s share of the losses of an associate is equal to or greater than its ownership interest in that associate, including any other uninsured receivable, the Company does not recognize additional losses, unless it has incurred obligations that exceed the invested capital. 78 Annual Report 2017

81 Note 3 Summary of Significant Accounting Policies (continued) 3.1 Consolidation Basis (continued) (c) Joint Arrangements Joint ventures are entities in which the Group exercises control over its activities through contractual agreements with other shareholders and that require mainly the unanimous consent of the parties sharing control. Investments in joint ventures are accounted for using the equity method and are initially recorded at their acquisition cost, which requires assigning a value to these assets, commonly known as Purchase Price Allocation (PPA). This methodology must be applied equally for any acquisition of additional interest in a joint venture, preparing a separate PPA report as of the date of the respective transaction and a separate record of the effects on profit or loss of amortizing its fair value adjustments. The cost of investments in joint ventures includes any directly related transaction costs. The Company s share in the losses or profits subsequent to the acquisition of its joint ventures is recognized in profit or loss, and its share in movements of equity reserves, including other comprehensive income, subsequent to the acquisition is recorded as reserves. Accumulated movements subsequent to the acquisition are recorded against the carrying amount of the investment. When the CSAV Group s share of the losses of a joint venture is equal to or greater than its ownership interest in that associate, including any other uninsured receivable, the Company does not recognize additional losses, unless it has incurred obligations that exceed the invested capital. Compañía Sud Americana de Vapores S.A. 79

82 Note 3 Summary of Significant Accounting Policies (continued) 3.2 Entities Included in Consolidation These Consolidated Financial Statements include the assets, liabilities, results and cash flows of CSAV and all subsidiaries, which are listed in the table below. Significant transactions and related balances between group companies have been eliminated during the consolidation process. Chilean Taxpayer ID Company Ownership Interest as of December 31, Currency Country (UM) Direct Indirect Total Direct Indirect Total Foreign CSAV Germany Container Holding GmbH Germany US$ % % % % Foreign Tollo Shipping Co. S.A. and Subsidiaries Panama US$ % % % % Foreign Navibras Comercial Maritima e Afretamentos Ltda. Brazil US$ % % % % Foreign Corvina Shipping Co. S.A Panama US$ % % % % Compañía Naviera Rio Blanco S.A. Chile US$ 99.00% 1.00% % 99.00% 1.00% % Norgistics Holding S.A. and Subsidiaries Chile US$ 99.00% 1.00% % 99.00% 1.00% % K Norgistics Chile S.A. (2) Chile US$ % % Foreign Norgistics México S.A. de C.V. Mexico US$ % % % % Foreign Norgistics (China) Ltd. [Hong Kong] China HKD % % % % Foreign Norgistics Peru S.A.C. Peru US$ % % % % Foreign Norgistics Brasil Transportes Ltda. (1) Brazil US$ % % Foreign Norgistics (China) Ltd. [Shenzhen] China RMB % % % % (1) In February 2017, this subsidiary merged with Navibras Comercial Maritima e Afretamentos Ltda., as explained in Note 14 c). (2) This subsidiary was sold in December 2017, as described in Note 2 b) and Note 35 of this report. 80 Annual Report 2017

83 Note 3 Summary of Significant Accounting Policies (continued) 3.3 Operating Segment Reporting An operating segment is defined as a component of an entity s business for which separate financial information is available and is reviewed regularly by the Company's senior management. Segment information is presented according to CSAV's main business lines, which have been identified as: (i) container shipping and (ii) other transport services. 3.4 Foreign Currency Transactions (a) Presentation and Functional Currency The items included in the financial statements of each of the entities of the CSAV Group are valued using the currency of the primary economic environment in which the entity operates ( functional currency ). The Consolidated Financial Statements are expressed in US dollars, which is both the functional and presentation currency of the CSAV Group. (b) Transactions and Balances Transactions in foreign currency are converted to the Company's functional currency using the exchange rate in force as of the date of the transaction. Losses and gains in foreign currency arising from settling these transactions and from converting monetary assets and liabilities denominated in foreign currencies using period end exchange rates are recorded in profit or loss. Exchange differences for non monetary items such as equity instruments at fair value through profit and loss are presented as part of the gain or loss in fair value. Exchange differences for non monetary items such as equity instruments at fair value through profit and loss are presented as part of the gain or loss in fair value. (c) Conversion of CSAV Group Entities to Presentation Currency The results and the financial situation of all CSAV Group entities (none of which uses the currency of a hyperinflationary economy) that use a functional currency other than the presentation currency are converted to the presentation currency as follows: (i) The assets and liabilities of each Statement of Financial Position presented are converted at the closing exchange rate as of the reporting date. Compañía Sud Americana de Vapores S.A. 81

84 Note 3 Summary of Significant Accounting Policies (continued) 3.4 Foreign Currency Transactions (continued) (c) Conversion of CSAV Group Entities to Presentation Currency (continued) (ii) The income and expenses of each income statement account are converted at the average exchange rate, unless the average is not a reasonable approximation of the cumulative effect of the exchange rates in force on the transaction dates, in which case income and expenses are converted on the dates of the transactions. (iii) Cash flows are translated in accordance with the provisions of point (ii) above. (iv) All resulting translation differences are recognized as a separate component of net equity, within "translation reserve" in other equity reserves. In consolidation, exchange differences arising from the conversion of a net investment in foreign entities or Chilean entities with a functional currency other than the functional currency of the Group, and of other instruments in foreign currency that are designated as hedges for those investments, are recorded in other comprehensive income. When an investment is sold or disposed of, these exchange differences are recognized in profit or loss as part of the loss or gain on the sale or disposal. Adjustments to purchased goodwill and to fair value arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and converted at the year or period end exchange rate, as appropriate. 3.5 Property, Plant and Equipment Property, plant and equipment are measured at acquisition cost, less accumulated depreciation and impairment losses. In addition, the acquisition cost must include financial expenses that are attributable to the acquisition, and they shall be recorded until the asset in question is operating. Subsequent costs are included in the value of the asset or recognized as a separate asset, only when it is likely that its future economic benefits will flow to the Company and the cost of the component can be determined reliably. The value of the replaced component is derecognized while other repairs and maintenance are charged to profit or loss for the year in which they are incurred. When significant parts of an item of property, plant and equipment have different useful lives among themselves, these parts shall be recorded as separate components. 82 Annual Report 2017

85 Note 3 Summary of Significant Accounting Policies (continued) 3.5 Property, Plant and Equipment (continued) Depreciation is recognized in profit or loss, using the straight line method based on the estimated useful life of each component of an item of property, plant and equipment, starting from the date on which the asset becomes available for use. The estimated useful lives for assets are as follows: Buildings Machinery and operating equipment Leasehold facilities and improvements Furniture and supplies Computer equipment 40 to 100 years 5 to 14 years Term of lease 3 to 10 years 2 to 3 years At each consolidated financial statement period end, the residual value and useful life of the assets are reviewed, and adjusted where necessary. When the value of an asset is greater than its estimated recoverable amount, its value is immediately lowered to its recoverable amount. Losses and gains on the sale of property, plant and equipment are calculated by comparing the income obtained with the carrying amount and are recorded net in the income statement. Property (land or buildings) used to earn rentals and/or for capital appreciation, rather than for use in the production of services or for administrative purposes, is presented within "investment property" (in section 3.6 below). 3.6 Investment Property Investment property is property (land or buildings or parts of buildings) held by the Company as owner or lessee under a finance lease to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business. Investment property is recognized as an asset only when: (i) it is probable that the future economic benefits that are associated with the property will flow to the Company; and (ii) the cost of the property can be reliably measured. Compañía Sud Americana de Vapores S.A. 83

86 Note 3 Summary of Significant Accounting Policies (continued) 3.6 Investment Property (continued) The CSAV Group records investment property at acquisition cost, less accumulated depreciation and impairment losses. In addition, the acquisition cost must include financial expenses that are directly attributable to the acquisition, and they shall be recorded as such until the asset in question is operating. The simple reclassification of land or buildings from property, plant and equipment to investment property will not generate any gains or losses for the Company since both items are valued at historical cost and, therefore, will be recorded at the same amount for which they were recorded originally. Losses and gains on the sale of investment property are calculated by comparing the income obtained with the carrying amount and are recorded net in the consolidated income statement. 3.7 Intangible Assets Only those intangible assets whose costs can be reasonably objectively estimated and those assets from which it is likely that economic benefits will be obtained in the future are recognized for accounting purposes. Such intangible assets shall be initially recognized at acquisition or development cost, and they shall be valued at cost less the corresponding accumulated amortization and any impairment losses incurred, for those intangible assets with a finite useful life. For intangible assets with a finite useful life, amortization is recognized in profit or loss, using the straight line method based on the estimated useful life, starting from the date on which the asset is available for use or another method that better represents its usage or wear. Intangible assets with an indefinite useful life and goodwill are not amortized but impairment testing is performed on an annual basis. The classes of intangible assets held by the CSAV Group and the corresponding periods of amortization are summarized as follows: Class Minimum Maximum Acquired goodwill Indefinite Development costs 2 years 4 years Computer software 2 years 4 years 84 Annual Report 2017

87 Note 3 Summary of Significant Accounting Policies (continued) 3.7 Intangible Assets (continued) (a) Software Acquired software licenses are capitalized on the basis of costs incurred to acquire them and prepare them for use. These intangible assets are amortized over their estimated useful lives. (b) Patents, Trademarks and Other Rights These assets are presented at historical cost. These rights have no defined useful life and, therefore, are not amortized. However, the indefinite useful life is subject to periodic review in order to determine whether the indefinite useful life is still applicable. 3.8 Goodwill Goodwill represents the difference between the acquisition cost and the value of the CSAV Group s share of the net acquired assets and liabilities of the subsidiary, associate or joint venture, measured as of the acquisition date. Acquired goodwill is presented separately in the Statement of Financial Position and is tested for impairment on an annual basis and valued at cost less accumulated impairment losses. Goodwill related to acquisitions of associates and joint ventures is included in the investment value and tested for impairment as a whole. Gains and losses related to the sale of an investment include in the cost the carrying amount of acquired goodwill related to the investment that was sold. Purchased goodwill is allocated to cash generating units for impairment testing purposes. The allocation is made for those cash generating units that are expected to benefit from the business combination or acquisition in which such acquired goodwill was generated. Negative goodwill arising from the acquisition of an investment or business combination is recorded in accordance with Note 3.1 section a). Compañía Sud Americana de Vapores S.A. 85

88 Note 3 Summary of Significant Accounting Policies (continued) 3.9 Borrowing Costs Borrowing costs incurred for the construction of any qualified asset (an asset that necessarily takes a substantial period of time to get ready for use) are capitalized over the period of time needed to complete and prepare the asset for its intended use. Other borrowing costs are recorded in profit or loss as finance costs Asset Impairment Losses (a) Non Financial Assets Assets that have an indefinite useful life (e.g. goodwill and intangible assets with indefinite useful lives) are not amortized and are tested for impairment on an annual basis. Assets that are amortized are tested for impairment whenever an event or change in circumstances indicates that the carrying amount may not be recoverable. If this is the case, an impairment loss is recognized for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the greater of: (i) the fair value of an asset or cash generating unit (CGU) less costs to sell; and (ii) the value in use. To determine its value in use, future cash flows estimated for the asset or CGU are discounted to their present value using a before tax discount rate that reflects the current market valuations over the cost of money and the specific risks that apply to the asset or business. To conduct impairment testing, assets or CGUs are grouped by operating segment, as indicated in Note 6 to these Consolidated Financial Statements. Non financial assets other than purchased goodwill for which an impairment loss has been recorded are reviewed at each year end in case the loss has been reversed, in which case the reversal may never be greater than the original impairment amount. Impairment of purchased goodwill is not reversed. 86 Annual Report 2017

89 Note 3 Summary of Significant Accounting Policies (continued) 3.10 Asset Impairment Losses (continued) (b) Financial Assets A financial asset that is not recorded at fair value through profit and loss is evaluated at each year end in order to determine whether there is objective evidence of impairment. A financial asset is impaired if there is objective evidence that a loss event has occurred after the initial recognition of the asset, and that this loss event has had a negative effect on the asset s future cash flows that can be reliably estimated. Objective evidence that financial assets are impaired may include delay or default by a debtor or issuer, restructuring of an amount owed to CSAV in terms that would not be considered in other circumstances, indications that a debtor or issuer will declare bankruptcy, or the disappearance of an active market for an instrument, among other evidence. In addition, for an investment in an equity instrument, a significant or prolonged decrease in the fair value of the asset, below its cost, may be considered objective evidence of impairment. Impairment losses related to trade and other receivables, which are valued at amortized cost, are calculated as the difference between the assets carrying amounts and their estimated recoverable amounts. This estimate is determined based on the age of the receivables as indicated in Note 9. Losses are recognized in profit or loss and are reflected in a provision within trade receivables. When a subsequent event causes the amount of the impairment loss to decrease, such decrease is reversed in profit or loss Financial Instruments Financial instruments are classified and valued according to the following categories: (a) Non derivative Financial Assets The CSAV Group classifies its non derivative financial assets into the categories listed below, according to the purpose for which such assets were acquired. Management determines the classification of financial assets upon initial recognition. Compañía Sud Americana de Vapores S.A. 87

90 Note 3 Summary of Significant Accounting Policies (continued) 3.11 Financial Instruments (continued) (i) Financial assets at fair value through profit and loss Financial assets at fair value through profit and loss are financial assets held for trading purposes or designated as such upon initial recognition. A financial asset is classified in this category if acquired principally to sell in the short term. Assets in this category are classified as current assets. This category also includes investments in shares, debt instruments, time deposits, derivatives not designated as hedges and other financial investments. (ii) Trade and other receivables Trade accounts receivable are initially recognized at fair value and subsequently at amortized cost, less impairment losses. Impairment of trade receivables is recorded using provisions when there is objective evidence that the CSAV Group will not be able to collect all of the amounts owed to it in accordance with the original terms of the accounts receivable, as described in Note 3.10 b). In the income statement, the subsequent recovery of previously provisioned amounts is credited to cost of sales. (iii) Held to maturity financial assets Held to maturity financial assets are non derivative financial assets with fixed or determinable payments and a fixed maturity date that the Group s management intends to and is capable of holding to maturity. If the CSAV Group were to sell more than an insignificant amount of held to maturity financial assets, the entire category would be reclassified as available for sale. These available for sale financial assets are included in noncurrent assets, except those assets maturing in less than 12 months from the reporting date, which are classified as current assets. (iv) Available for sale financial assets Available for sale financial assets are non derivative financial assets that are designated in this category or not classified in any other category. They are included in non current assets unless management intends to dispose of the investment in the 12 months following the reporting date, and they are recorded at fair value through profit and loss. 88 Annual Report 2017

91 Note 3 Summary of Significant Accounting Policies (continued) 3.11 Financial Instruments (continued) (a) Non derivative Financial Assets (continued) (v) Cash and cash equivalents Cash and cash equivalents include cash held internally and in banks; time deposits in credit entities; other highly liquid, short term investments with an original term of three months or less; and bank overdrafts. In the Statement of Financial Position, bank overdrafts are classified as external resources in current liabilities. (b) Non derivative Financial Liabilities (i) Trade and other payables Accounts payable to suppliers are initially recognized at fair value and subsequently, if applicable, at amortized cost using the effective interest method. (ii) Interest bearing loans and other financial liabilities Loans, bonds payable and other financial liabilities of a similar nature are initially recognized at fair value, net of the costs incurred in the transaction. Subsequently, they are valued at amortized cost and any difference between the funds obtained (net of costs to obtain them) and repayment value are recognized in the income statement over the life of the debt using the effective interest rate method. (c) Issued Capital The Company's subscribed and paid shares are classified within equity under issued capital. Incremental costs directly attributable to the issuance of new shares are presented in net equity as a deduction, net of taxes, from the income obtained in the placement. Until the Company's shareholders approve the deduction of these costs against issued capital, they are recorded within other equity reserves. Compañía Sud Americana de Vapores S.A. 89

92 Note 3 Summary of Significant Accounting Policies (continued) 3.11 Financial Instruments (continued) (d) Derivative Financial Instruments and Hedging Activities Derivative financial instruments used to hedge risk exposure in foreign currency purchases, fuel purchases and interest rates are initially recognized at fair value. After initial recognition, derivative financial instruments are periodically measured at fair value, and any changes are recorded as described below: (i) Accounting hedges The CSAV Group documents the relationship between hedge instruments and the hedged items at the beginning of the transaction, as well as its risk management objectives and strategy for carrying out diverse hedge transactions. The Company also documents its evaluation, both initially and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective at offsetting changes in fair value or in the cash flows from the hedged items. Derivative financial instruments that satisfy hedge accounting criteria are initially recognized at fair value plus (less) the transaction costs that are directly attributable to contracting or issuing the instrument, as appropriate. Changes in the fair value of these instruments shall be recognized directly in equity, to the extent that the hedge is effective. When it is not effective, changes in fair value shall be recognized in profit or loss. If the instrument no longer satisfies hedge accounting criteria, the hedge shall be discontinued prospectively. Any accumulated gains or losses that were previously recognized in equity will remain until the forecasted transactions occur. (ii) Economic hedges Derivative financial instruments that do not satisfy hedge accounting criteria are classified and valued as financial assets or liabilities at fair value through profit and loss. 90 Annual Report 2017

93 Note 3 Summary of Significant Accounting Policies (continued) 3.11 Financial Instruments (continued) (d) Derivative Financial Instruments and Hedging Activities (continued) (ii) Economic hedges (continued) The fair values of derivative instruments used for hedging purposes are shown in Note 12. Movements in the hedge reserve within equity are shown in Note 28. The total fair value of the hedge derivative is classified as a non current asset or liability if the remaining maturity of the hedged item is greater than 12 months and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months Inventories Inventories are valued at cost or net realizable value, whichever is lower. The cost is determined by the first in first out, or FIFO, method and includes the acquisition cost and other costs incurred in bringing it to its place and conditions of use. The net realizable value is the estimated sales value in the normal course of business, less estimated selling costs Current and Deferred Income Taxes Income taxes for the year include current income taxes and deferred income taxes. Taxes are recognized directly in profit or loss except for certain items recognized directly in equity. Current income taxes are calculated based on each country's tax laws in force as of the reporting date. Deferred taxes are calculated in accordance with the liability method over the differences that arise between the tax basis of assets and liabilities and their carrying amount in the financial statements. However, if the deferred taxes arise from the initial recognition of a liability or an asset in a transaction other than a business combination, which at the time of the transaction neither affected the accounting result nor the tax gain or loss, it is not accounted for. Deferred taxes are determined using tax rates (and laws) that have been enacted or approved as of the date of the Statement of Financial Position and that are expected to be applied when the corresponding deferred tax asset or liability is realized. Compañía Sud Americana de Vapores S.A. 91

94 Note 3 Summary of Significant Accounting Policies (continued) 3.13 Income and Deferred Taxes (continued) Deferred tax assets are recognized to the extent that it is likely that future tax benefits are available with which to effectively offset these differences. According to Law 20,899 published on February 8, 2016, the semi integrated tax system applies to CSAV. The valuation of the Company's deferred taxes, including the reversal of temporary differences, has been carried out using this tax system. Therefore, the enactment of this law has no impact on these Consolidated Financial Statements. Deferred taxes are measured at tax rates expected to be applied when temporary differences are reversed, using rates that apply by default as of the balance sheet date, as indicated below: Year Tax Rate % % 92 Annual Report 2017

95 Note 3 Summary of Significant Accounting Policies (continued) 3.14 Employee Benefits (a) Post Employment and Other Long Term Benefits In order to determine the present value of post employment and other long term benefits, a risk free interest rate is used. This actuarial calculation is performed by a qualified mathematician using the projected unit credit method. Actuarial gains and losses arising from defined benefit plans are recognized directly in equity, as other comprehensive income (losses). (b) Contract Termination Indemnity Commitments undertaken in a formal detailed plan, either in order to terminate the contract of an employee before normal retirement age or to provide termination benefits, are recognized directly in profit or loss. (c) Short Term Benefits and Incentives The CSAV Group recognizes a provision for short term benefits and incentives when it is contractually obligated to do so or when past practice has created an implicit obligation Provisions The CSAV Group recognizes provisions when the following requirements are satisfied: (a) (b) (c) there is a current obligation, whether legal or implicit, as a result of past events; it is likely that an outflow of resources will be needed to settle the obligation; and the amount can be reliably estimated. In the case of a service contract that is considered onerous, a provision will be recognized and charged to profit or loss for the year, for the lesser of the cost of settling the contract and the net cost of continuing it. Provisions for restructuring purposes are recognized to the extent that the CSAV Group has approved a formal detailed plan for restructuring an operation, and that such restructuring has been internally reported or has already begun. Provisions are not recorded for future operating losses except for the onerous contracts mentioned above. Compañía Sud Americana de Vapores S.A. 93

96 Note 3 Summary of Significant Accounting Policies (continued) 3.15 Provisions (continued) These provisions are valued at the present value of the disbursements that are expected to be necessary to settle the obligation using, if applicable, a discount rate that reflects the current market assessments of the time value of money and the specific risks of the obligation Other Non Financial Liabilities This item includes liabilities that are not of a financial nature and do not qualify as any other specific type of liability. For the Company, the most relevant liabilities recorded within this account are those related to income from voyages in transit (i.e. those that have not yet reached their destination as of the reporting date) Revenue and Cost of Sales Revenue and cost of sales derived from the provision of maritime transport services are recognized in profit or loss considering the percentage of completion of the service as of the reporting date, as long as the result can be reliably estimated. The provision of services can be reliably measured as long as the following conditions are met: (a) The amount of the revenues can be reliably measured; (b) It is likely that the economic benefits from the transaction will flow to the entity; (c) The percentage of completion of the transaction as of the reporting date can be reliably measured; (d) The costs incurred by the transaction and the costs to complete it can be reliably measured. When the results of services provided cannot be sufficiently and reliably estimated, in accordance with the requirements stated above, the revenue is recognized only to the extent that the expenses incurred can be recovered. Revenue and costs related to subletting vessels are recognized in profit or loss on an accrual basis. Revenue and cost of sales from other services related to the maritime business are recognized in profit or loss on an accrual basis. Revenue is recognized net of standard discounts and bonuses Discontinued Operations The preparation criteria for discontinued operations is described in Note 2 b). 94 Annual Report 2017

97 Note 3 Summary of Significant Accounting Policies (continued) 3.19 Finance Income and Costs Finance income is accounted for based on its effective rate. Finance costs are recognized in profit or loss when accrued, except for costs incurred to finance the construction or development of qualified assets that are capitalized. Finance costs are capitalized starting from the date on which knowledge about the asset to be constructed is obtained. The amount of the capitalized finance costs (before taxes) for the year is determined by applying the effective interest rate of the loans in force during the year in which financial expenses were capitalized to the qualified assets Leases Lease contracts in which substantially all risks and rewards of ownership of the leased assets are transferred to the companies of the CSAV Group are classified as finance leases. All other leases are classified as operating leases. For finance leases, at the start of the contract an asset is recognized in property, plant and equipment, and a financial liability is recognized for the lesser between the fair value of the leased asset and the present value of the minimum lease payments. For operating leases, installments are recognized on a straight line basis as expenses during the term of the lease Determination of Fair Value Some of the CSAV Group s accounting policies and disclosures require that the fair value of certain financial assets be determined as follows: (a) Financial Assets The fair value of financial assets at fair value through profit and loss and available for sale financial assets is determined at market value. (b) Trade and Other Receivables Considering that almost all trade receivables have a term of less than 90 days, their fair value is not estimated to differ significantly from their carrying amount. (c) Derivatives The fair value of derivative contracts is based on their quoted price. Compañía Sud Americana de Vapores S.A. 95

98 Note 3 Summary of Significant Accounting Policies (continued) 3.22 Earnings (Loss) per Share Basic earnings (loss) per share are calculated as the ratio between net profit (loss) for the year divided by the daily weighted average number of common shares outstanding during the year Dividend Distributions The distribution of dividends to the Company s shareholders is recognized as a liability in CSAV s annual consolidated accounts in the year in which they become payable. The Company s policy is to distribute 30% of distributable net profits. Until there is a positive balance of distributable net profits as of period end (i.e. the initial balance plus the results for the period), the Company will not distribute dividends to its shareholders. This calculation is shown in Note 28 g) to these Consolidated Financial Statements Environmental Issues Disbursements related to environmental protection are recorded in income when incurred. Note 4 Changes in Accounting Policies and Estimates The Consolidated Financial Statements as of December 31, 2017, do not present any changes in policies or accounting estimates that may affect their comparability with the prior year. 96 Annual Report 2017

99 Note 5 Financial Risk Management The container business is CSAV's largest asset, through its investment in HLAG. Although CSAV is not directly exposed to the financial risks of the container industry as an operator, it is indirectly exposed because these risks directly affect the value of CSAV's investment in that joint venture and the associated dividend flow from HLAG and its capital requirements, which may result in CSAV having to subscribe to capital increases in that joint venture, or seeing its stake diluted and the economic value of its investment and future dividends reduced if it chooses not to subscribe. CSAV's investment in HLAG represents 85% of its total consolidated assets, as of December 31, HLAG is a German public company (Aktiengesellschaft) listed on the Frankfurt and Hamburg stock exchanges that is engaged in transporting container cargo on all main global routes. Although CSAV jointly controls HLAG together with two other main partners, this German company has an independent management team that controls and manages its risks autonomously and in accordance with the standards of a publicly listed company subject to current regulation in Germany and, therefore, to applicable regulation in the European Union. The businesses that CSAV operates directly are vehicle transport and logistics services. These are exposed to various financial risks that include: (a) Business Risk, (b) Credit Risk, (c) Liquidity Risk and (d) Market Risk. The Company seeks to minimize the potential effects of these risks by establishing internal financial risk management policies and using hedges and financial derivatives. (a) Business Risk The main business risks for CSAV are those related to the balance of supply and demand for maritime transport, as well as risks associated with its main geographical markets and fuel prices. The container transport business is exclusively operated by HLAG, and its management autonomously manages the financial risks associated with this business, using the instruments and tools offered by the industry and the financial market in accordance with the standards of a publicly listed company in Germany. Additional information on these risks and how they are managed by HLAG can be found in its Annual Report 2017, which includes its audited consolidated financial statements prepared under IFRS, which are published on its website at the following link (in English): lloyd.com/en/ir/publications/financialreport.html Compañía Sud Americana de Vapores S.A. 97

100 Note 5 Financial Risk Management (continued) (i) Supply Demand Equilibrium The demand for maritime transport is highly correlated with growth of global GDP and trade. On the other hand, container shipping supply is a function of the global fleet of vessels, which fluctuates based on the delivery rate for new vessels and the scrapping rate for vessels that are obsolete or no longer profitable to operate. Both the container transport business, operated and managed by HLAG, and the vehicle transport business are directly affected by changes in these variables in their respective industry. The imbalance between supply and demand can affect shipping operators to a greater or lesser extent depending on their operating fleet (vessel age, fuel consumption and versatility, among other characteristics), the proportion of their fleet that is owned and the proportion chartered (operational leverage) in comparison to the industry. Significant exposure to chartered vessels can negatively impact the results and the financial position of operators when charter rates are not correlated with freight rates before fuel costs (ex bunker rates), either because of market imbalances or the duration of vessel charter agreements at fixed rates. The duration and age of charter agreements can limit shipping companies' capacity to adjust their operated fleets and modify their vessel sailing speed in response to abrupt drops in shipping demand and streamlining and cost cutting initiatives. Supply and demand imbalances for the maritime transport services directly operated by CSAV (vehicle transport) can cause volatility in vehicle transport charter and freight rates for rollon/roll off vessels. (ii) Geographical Markets The HLAG joint venture participates in the container transport business across all major global routes, and it distributes its operations across diverse geographical markets. As a result, this business does not expose the Company to a restricted group of geographical markets, allowing possible market contingencies on certain routes to be offset but still leaving it exposed to global variations. Even with a global service network, HLAG's relative exposure is above the industry average on Transatlantic, Latin American and Middle East routes and below average on Asia Europe and Transpacific routes. After the May 2017 merger of HLAG and UASC (see Note 40 of these Consolidated Financial Statements for more information), HLAG incorporated UASC's service network and its important cargo volumes along Asia Europe and Middle East routes and, therefore, its relative exposure to the main global routes became more balanced. 98 Annual Report 2017

101 Note 5 Financial Risk Management (continued) (a) Business Risk (continued) (ii) Geographical Markets (continued) The transport services directly operated by CSAV expose the Company to changes within South American markets, particularly the vehicle and wheeled machinery markets on the west coast of the continent (mainly Chile and Peru). Since 2014 these markets suffered a marked fall in vehicle imports, which has affected ship operators and forced them to adapt their supply to these reduced volumes. This trend began to reverse itself in 2016, mainly during the second half of the year, with an increase over 2015 in imports of light vehicles to Chile, CSAV's most important market. Vehicle import volumes rose significantly in 2017 over the prior year. Given this expansion and current market projections, we expect to see another period of sustained growth in vehicle imports in (iii) Fuel Prices An important component of the transport industry's cost structure is the cost of energy, or fuel, which is usually called "bunker" within the maritime shipping industry. In the vessels it operates, the Company primarily uses the fuels IFO 380, IFO 580 and MGO/LS. Most of CSAV's maritime freight sales are agreed with contracts and generally a percentage of those rates are subject to price adjustments, based on changes in the cost of fuel, known as a Bunker Adjustment Factor ("BAF"). The BAF surcharge normally covers the risk of volatility in fuel prices. However, it may be affected by price movements during the period between its calculation and actual collection. Compañía Sud Americana de Vapores S.A. 99

102 Note 5 Financial Risk Management (continued) (a) Business Risk (continued) (iii) Fuel Prices (continued) The Company also has fixed price sales and contracts without a BAF, and sales with a BAF clause that limits its coverage. Therefore, it purchases fuel hedges with terms that match the volumes covered, to reduce the impact of volatility, and ensure that fuel costs (bunkers) are matched to the corresponding maritime freight contracts. For example, for transport services directly operated by the Company during the first nine months of 2017, an increase in fuel prices of US$10 per metric ton of fuel would have had a negative impact of around ThUS$ 718 on the Company s results. This value is based on the fuel volumes consumed by the Company during the year and assumes that BAF surcharges cannot be passed on to customers and no fuel hedges exist. Effective BAF surcharges and fuel hedges significantly reduce this exposure. (b) Credit Risk Credit risk is derived from the CSAV Group s exposure to (i) potential losses resulting mainly from non fulfillment of obligations by customers, third party agencies and carriers with which the Company has signed vessel charter and/or slot sale agreements, (ii) counterparty risk in the case of financial assets maintained with banks and (iii) counterparty risk in the case of financial hedges with banks or other institutions. (i) Accounts Receivable The Company has a strict credit policy for managing its portfolio of accounts receivable. Most of the Company's customers are direct customers. This policy is based on lines of credit and payment terms granted on the basis of an individual analysis of the solvency, payment capacity, and general references of each customer, the customer's shareholders, industry and market where it does business, as well as its payment history with the Company. These lines of credit are reviewed at least yearly, and special care is taken so that the conditions offered, with respect to both amounts and terms, are appropriate given market conditions and expected volumes. Payment behavior and the percentage of use of these lines are regularly monitored and updated to reflect changes in volume and sales estimates. 100 Annual Report 2017

103 Note 5 Financial Risk Management (continued) (b) Credit Risk (continued) (i) Accounts Receivable (continued) Agencies that represent CSAV are constantly monitored to ensure that the administrative, commercial, operational and collection processes, and their relationship with customers and suppliers complies with agreed contract terms. Furthermore, there is a rigorous policy to record an allowance for doubtful accounts for any debt carrying a material credit risk or which is over 180 days overdue, even when the debt may be recoverable based on historical behavior. Regarding vessel and slot charters to third parties, the Company supports its agreements using Charter Party and Slot Charter Agreements drafted using industry standard models that appropriately cover its interests. CSAV charters vessels to third parties and slots to other shipping companies, always taking into consideration the counterparty s creditworthiness. However, CSAV often leases slots from the same shipping companies to which it leases its own slots on other voyages and services, which significantly reduces the risk of default. The Company's maximum credit risk exposure from trade and other receivables corresponds to the total of these accounts net of impairment, as detailed below: As of December 31, 2017 As of December 31, 2016 Note ThUS$ ThUS$ Trade receivables 9 16,326 18,922 Impairment of trade receivables 9 (280) (1,124) Trade receivables, net 16,046 17,798 Other receivables 9 3,842 3,001 Other receivables, net 9 3,842 3,001 Total receivables, net 19,888 20,799 Compañía Sud Americana de Vapores S.A. 101

104 Note 5 Financial Risk Management (continued) (b) Credit Risk (i) Accounts Receivable (continued) The Company records provisions when there is evidence of impairment of trade receivables, based on the following criteria: Provisioning Criteria for Receivables Factor Receivables over 180 days 100% Legal collections, checks issued with insufficient funds and other similar concepts 100% High risk customers and agencies, based on a case by case analysis 100% During the year, the provision for impairment of accounts receivable has reported the following movements: For the year ended December 31, 2017 For the year ended December 31, 2016 ThUS$ ThUS$ Opening balance 1,124 1,761 Decrease in impairment for the year (844) (637) Impairment of accounts receivable, closing balance (Note 9) 280 1,124 (i) Financial Assets The Company has a policy for managing its financial assets, which includes time deposits and repurchase agreements. It has its current accounts and investments in financial institutions with risk classification of "investment grade." The carrying amount of these financial assets represents the maximum exposure to counterparty risk, as detailed as follows: As of December 31, 2017 As of December 31, 2016 Note ThUS$ ThUS$ Banks 7 7,075 3,756 Time deposits 7 35,356 50,845 Total 42,431 54, Annual Report 2017

105 Note 5 Financial Risk Management (continued) (b) Credit Risk (continued) (i) Hedging Positions As part of its risk management policy, the Company can take out interest rate, exchange rate and oil price hedges. These hedge positions are contracted through financial institutions that are highly regarded in the industry and have investment grade risk ratings. Its hedge positions as of December 31, 2017 and December 31, 2016, are detailed as follows: Valuation As of December 31, 2017 As of December 31, 2016 Note ThUS$ ThUS$ Goldman Sachs Fuel Oil Swaps 12 Koch Supply & Trading Fuel Oil Swaps Total 804 (b) Liquidity Risk Liquidity risk refers to the Company's exposure to business or market factors that may affect its ability to generate income and cash flows, including the effect of contingencies and regulatory requirements associated with its business. CSAV is not directly exposed to the container business, as explained in this note, but indirectly as a main shareholder of HLAG. This limits the Company's liquidity risk in that business to the expected flow of dividends or any additional capital required by this joint venture. It is important to mention that CSAV has specific long term borrowing to finance its investment in HLAG. CSAV has sufficient liquidity to cover its direct transport services. However, and in light of the risks described above, the Company maintains the following line of credit to be used if needed: Working capital line of up to US$ 10,000,000 with HSBC Chile, valid until July As of December 31, 2017, this credit line has not been drawn down. Compañía Sud Americana de Vapores S.A. 103

106 Note 5 Financial Risk Management (continued) (c) Liquidity Risk (continued) As of December 31, 2017, the contractual maturities of its financial liabilities, including estimated interest payments, are detailed below: As of December 31, 2017 Note Carrying Amount Contractual Cash Flows 6 Months or Less 6 to 12 Months 1 2 Years 2 5 Years More than 5 Years ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Non derivative financial liabilities Bonds payable 22 (49,424) (58,985) (1,284) (1,284) (2,567) (53,850) Unsecured bank instruments 22 (45,052) (51,730) (909) (909) (11,595) (33,183) 5, Trade and other payables and and payables to related parties 23 (19,359) (19,359) (19,359) Total (113,835) (130,074) (21,552) (2,193) (14,162) (87,033) 5,134 Note: The cash flows included in the maturity analysis are not expected to occur significantly before or after the maturity date. As of December 31, 2016, the contractual maturities of its financial liabilities, including estimated interest payments, are detailed below: As of December 31, 2016 Note Carrying Amount Contractual Cash Flows 6 Months or Less 6 to 12 Months 1 2 Years 2 5 Years More than 5 Years ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Non derivative financial liabilities Bonds payable 22 (49,262) (61,552) (1,284) (1,284) (2,567) (56,417) Unsecured bank instruments 22 (44,875) (54,591) (848) (868) (1,730) (46,029) (5,116) 10 Trade and other payables and and payables to related parties 23 (21,483) (21,483) (18,983) (2,500) Derivative financial liabilities Total (115,620) (137,626) (21,115) (2,152) (6,797) (102,446) (5,116) Note: The cash flows included in the maturity analysis are not expected to occur significantly before or after the maturity date. (d) Market Risk Market risk, as analyzed in this section, is the risk that the value of the Company s assets or liabilities continuously and permanently fluctuates over time as the result of a change in key economic variables such as: (i) interest rates, (ii) exchange rates, and (iii) fuel prices. 104 Annual Report 2017

107 Note 5 Financial Risk Management (continued) (d) Market Risk (continued) When necessary, the Company uses accounting hedges to mitigate changes in these variables. Variations in the market price of these hedges, in accordance with current regulations, are recorded in other comprehensive income. Details of the derivatives held by the Company, including their fair value, are presented in Note 12 to these Consolidated Financial Statements. (i) Interest rate fluctuations Interest rate fluctuations impact the Company s floating rate obligations. As of December 31, 2017 and December 31, 2016, the Company s net asset and liability position in interest bearing financial instruments, by type of interest, is detailed as follows: As of December 31, 2017 As of December 31, 2016 Note ThUS$ ThUS$ Financial assets at fixed rates: Time deposits 7 35,356 50,845 Total financial assets at fixed rates 35,356 50,845 Financial assets at variable rates: Cash on hand and bank balances 7 7,085 3,763 Hedging assets Total financial assets at variable rates 7,085 4,567 Total financial assets 42,441 55,412 Financial liabilities at fixed rates: Bonds payable 22 (49,424) (49,262) Bonds payable 22 Total financial liabilities at fixed rates (49,424) (49,262) Financial liabilities at variable rates: Bank loans 22 (45,052) (44,875) Total financial liabilities at variable rates (45,052) (44,875) Total financial liabilities (94,476) (94,137) Net fixed rate position (14,068) 1,583 Net variable rate position (37,967) (40,308) Compañía Sud Americana de Vapores S.A. 105

108 Note 5 Financial Risk Management (continued) (d) Market Risk (continued) (i) Interest rate fluctuations (continued) The Company does not hedge interest rates on loans with variable interest rates based on Libor. The potential effect of interest rate fluctuations on variable rate financial instruments (assets and liabilities) held by CSAV as of December 31, 2017, that are not hedged is shown in the following table. The variation considers: (i) an increase of 1% in the variable benchmark rate, which is used for variable rate financial liabilities, and (ii) an increase of 1% in the overnight Libor rate, which is primarily used to invest cash surpluses. The combined effect on the Company's results for each year would be the following: For the year ended December 31, Effect on profit or loss of increase of 100 basis points in 180 day LIBOR and overnight LIBOR ThUS$ ThUS$ (485) (437) (ii) Exchange rate fluctuations The Company's functional currency is the US dollar, which is the currency in which most of its operating income and expenses are denominated as well as the currency used by most of the global shipping industry and the functional currency of HLAG. However, the Company also has income and costs in other currencies, such as Chilean pesos, euros, yen and others. Most of CSAV s assets and liabilities are expressed in US dollars. However, the Company has certain assets and liabilities in other currencies, which are detailed in Note 33 to these Consolidated Financial Statements. The Company does not have any foreign currency hedges as of December 31, 2017, and manages the risk of exchange rate variations by periodically converting any balances in local currency that exceed payment requirements in that currency into US dollars. 106 Annual Report 2017

109 Note 5 Financial Risk Management (continued) (d) Market Risk (continued) (ii) Exchange rate fluctuations (continued) The following table shows the maximum exposure to fluctuations in foreign currency of the Company's non U.S. dollar denominated financial assets and liabilities as of December 31, 2017 and December 31, 2016: As of December 31, 2017 Euro Real Peso / UF Other Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Cash and cash equivalents 2, ,212 Trade and other receivables (current and noncurrent) 31 2, ,339 Tax assets Trade payables and tax liabilities (current and non current) (735) (87) (3,325) (45) (4,192) Payables to related parties (current and noncurrent) Net exposure 1,443 (55) (371) 661 1,678 As of December 31, 2016 Euro Real Peso / UF Other Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Cash and cash equivalents ,074 Trade and other receivables (current and noncurrent) , ,269 Tax assets Trade payables and tax liabilities (current and non current) Payables to related parties (current and noncurrent) (2,048) (1,729) (2,609) (343) (6,729) (912) (179) (1,091) Net exposure (1,672) (1,473) (1,495) 888 (3,752) The potential effect of a 10% depreciation in the US dollar (USD) with respect to other important currencies to which the Company is exposed as of December 31, 2017, would have an estimated loss of ThUS$ 186 on the Company's results for the year 2016, keeping all other variables constant. Compañía Sud Americana de Vapores S.A. 107

110 Note 6 Segment Reporting The Company's operating segments have been determined in accordance with IFRS 8, based on the main business lines developed by the CSAV Group. The performance of these businesses is reviewed routinely by the Company's senior management using regularly available information in order to: (i) measure each business's performance; (ii) evaluate its risks; and (iii) allocate the resources that each business requires. In determining the operating segments to report, certain segments have been grouped together because they share similar economic characteristics, services and processes, as well as a common regulatory environment, as stipulated in IFRS 8. The information routinely examined by CSAV's senior management consists of the results and management information for each of the operating segments, whether operated directly by CSAV or its domestic or foreign subsidiaries, associates and joint ventures. Although the Company's management and accounting reports may have different classifications and viewpoints, they are both determined using the policies described in Note 3 to these Consolidated Financial Statements. As a result, there are no differences in the totals in measurements of results, assets and liabilities for each segment and the accounting criteria applied in preparing the Consolidated Financial Statements. In accordance with the preceding paragraphs, the CSAV Group has identified the following two operating segments as of December 31, 2017: (i) Container Shipping: These are the container shipping services operated by HLAG, represented by the investment in that joint venture, plus certain assets and liabilities related to the container shipping business that are controlled by CSAV (deferred tax assets, financial liabilities to finance the investment and others). (ii) Other Transport Services: These are the car and vehicle transport services operated directly by CSAV and its subsidiaries. Liquid bulk cargo services and freight forwarded and logistics operations (Norgistics) were part of this segment until they were sold in October 2016 and discontinued in December 2017, respectively. Therefore, their results are presented in discontinued operations (see Note 35). 108 Annual Report 2017

111 Note 6 Segment Reporting (continued) During 2017, no single customer represented more than 10% of CSAV's consolidated revenue. Similarly, no customers met this criteria in Results by operating segment for the years ended December 31, 2017 and 2016, are presented as follows: Statement of Income by Operating Segment For the year ended December 31, 2017 For the year ended December 31, 2016 Container Shipping Other Transport Services Total Container Shipping Other Transport Services ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Revenue 109, , , ,299 Cost of sales (102,603) (102,603) (105,932) (105,932) Gross profit 7,274 7,274 3,367 3,367 Other income 1,707 1,707 1,932 1,932 Administrative expenses (4,449) (6,223) (10,672) (4,098) (7,635) (11,733) Other gains (losses) (16) 3,041 3,025 12,498 1,846 14,344 Operating profit (loss) (4,465) 5,799 1,334 8,400 (490) 7,910 Finance income Finance costs (5,420) (5,420) (4,118) (1) (4,119) Share of loss of associates (139,502) (139,502) (7,011) (7,011) Exchange differences (109) (94) Profit (loss) before tax (148,167) 6,550 (141,617) (2,714) (322) (3,036) Income tax expense from continuing operations (44,298) (915) (45,213) (20,500) (98) (20,598) Profit (loss) from continuing operations (192,465) 5,635 (186,830) (23,214) (420) (23,634) Profit (loss) from discontinued operations (1,307) (1,307) 1,339 1,339 Profit (loss) for the year (192,465) 4,328 (188,137) (23,214) 919 (22,295) Profit (loss) attributable to: Owners of the company (192,465) 4,328 (188,137) (23,214) (103) (23,317) Non controlling interest 1,022 1,022 Profit (loss) for the year (192,465) 4,328 (188,137) (23,214) 919 (22,295) Total Compañía Sud Americana de Vapores S.A. 109

112 Note 6 Segment Reporting (continued) Assets and liabilities by segment as of December 31, 2017 and December 31, 2016, are summarized as follows: Container Shipping As of December 31, 2017 As of December 31, 2016 Other Transport Services Total Container Shipping Other Transport Services Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Assets per segment 181, , , , , ,422 Associates and joint ventures 1,932,258 1,932,258 1,771,737 1,771,737 Liabilities per segment 95,601 52, , ,958 59, ,695 Net assets 2,018,510 98,947 2,117,457 1,911,843 94,621 2,006,464 Cash flows by segment for the years ended December 31, 2017 and 2016, are presented as follows: For the year ended Statement of Cash Flows December 31, 2017 by Operating Segments Other Container Transport Shipping Services ThUS$ ThUS$ ThUS$ Net cash flows used in operating activities (4,449) (8,427) (12,876) Net cash flows provided by (used in) investing activities (293,557) 4,991 (288,566) Net cash flows provided by financing activities 288, ,251 Effect of exchange rate changes on cash and cash equivalents ,024 Decrease in cash and cash equivalents (8,949) (3,218) (12,167) Total For the year ended Statement of Cash Flows December 31, 2016 by Operating Segments Other Container Transport Shipping Services ThUS$ ThUS$ ThUS$ Net cash flows used in operating activities (4,098) (12,531) (16,629) Net cash flows provided by investing activities 3,674 3,674 Net cash flows provided by (used in) financing activities (3,478) 18,691 15,213 Effect of exchange rate changes on cash and cash equivalents (38) (38) Increase (decrease) in cash and cash equivalents (7,576) 9,796 2,220 Total 110 Annual Report 2017

113 Note 6 Segment Reporting (continued) Revenue detailed by geographic area is as follows: Other Transport Services For the year ended December 31, Restated ThUS$ ThUS$ Asia 26,357 28,658 Europe 47,072 39,933 North and South America 36,448 40,708 Chile 1,400 6,456 Other Americas (excluding Chile) 35,048 34,252 Total 109, ,299 The Company uses the following criteria to measure income, assets and liabilities within each reported segment: (i) (ii) (iii) Income for the segment is composed of revenues and expenses related to operations that are directly attributable to the reporting segment. Income was recorded by measuring operating revenues and expenses using the same criteria defined in Note 3 of these Consolidated Financial Statements (Note 3.17); and The assets and liabilities reported for the operating segment consist of all those that are directly involved in the provision of a certain service or operation and those directly or indirectly attributable to each segment. In accordance with IFRS 8, paragraph 33, non current assets detailed by geographic segment are as follows: Non Current Assets (*) For the year ended December 31, 2017 For the year ended December 31, 2016 ThUS$ ThUS$ Asia 12 Europe 1,932,258 1,771,737 North and South America 18,024 19,176 Chile 18,024 18,989 Other Americas (excluding Chile) 187 Total 1,950,282 1,790,925 (*) Includes balances of property, plant and equipment, investment property, intangible assets other than goodwill and equity method investments. Compañía Sud Americana de Vapores S.A. 111

114 Note 7 Cash and Cash Equivalents Cash and cash equivalents are detailed in the following table: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Cash on hand 10 7 Bank balances 7,075 3,756 Time deposits 35,356 50,845 Total 42,441 54,608 As of both December 31, 2017, and December 31, 2016, the Company does not have any funds classified as cash and cash equivalents that are not freely available. As of December 31, 2017 and December 31, 2016, cash and cash equivalents are detailed as follows: As of December 31, 2017 As of December 31, 2016 Currency ThUS$ ThUS$ US dollar 39,229 53,534 Chilean peso Euro 2, Real 1 33 Other currencies Total 42,441 54, Annual Report 2017

115 Note 8 Other Financial Assets Other financial assets are detailed as follows: As of December 31, 2017 Current As of December 31, 2016 As of December 31, 2017 Non Current As of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ Hedging derivative contracts (Note 12) 804 Other financial instruments Total other current financial assets Note 9 Trade and Other Receivables Trade and other receivables are detailed as follows: As of December 31, 2017 Current As of December 31, 2016 ThUS$ ThUS$ Trade receivables 16,326 18,922 Impairment of trade receivables (280) (1,124) Trade receivables, net 16,046 17,798 Other receivables 3,842 3,001 Impairment of other receivables Other receivables, net 3,842 3,001 Total receivables, net 19,888 20,799 Trade receivables are derived mainly from operations linked to the provision of services for the maritime transport business in 2017 and for the maritime transport business plus logistics operations and other similar activities for the year Most current trade receivables are due within three months from the reporting date of these Consolidated Financial Statements. There are no debtors classified as non current for the years ended December 31, 2017 and Compañía Sud Americana de Vapores S.A. 113

116 Note 9 Trade and Other Receivables (continued) Other receivables primarily include freight payable from agencies, advances to suppliers, receivables from shipowners and receivables from personnel, among others. The fair value of trade and other accounts receivable does not differ significantly from their carrying amount. The CSAV Group records provisions when there is evidence of impairment of trade receivables, based on the principles described in Note 10 of these Consolidated Financial Statements that are summarized below: Impairment of Receivables Factor Over 180 days 100% Legal collections, checks issued with insufficient funds and other similar concepts 100% High risk customers and agencies, according to each case and market conditions 100% Trade and other receivables are detailed by maturity in the following table: As of December 31, 2017 As of December 31, 2016 No. of No. of ThUS$ ThUS$ Customers Customers Current 83 11, ,099 Due between 1 and 30 days 62 6, ,316 Due between 31 and 60 days 30 1, ,395 Due between 61 and 90 days ,733 Due between 91 and 120 days 41 1,269 Due between 121 and 150 days Due between 151 and 180 days Closing balance 19,888 20, Annual Report 2017

117 Note 9 Trade and Other Receivables (continued) Changes in impairment losses on trade and other receivables are detailed as follows: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Opening balance 1,124 1,761 Decrease in impairment for the year (844) (637) Closing balance 280 1,124 Once out of court and legal collections have been exhausted, the respective receivables are written off against the provision that was recorded. The CSAV Group only uses the allowance method and not the direct write off method in order to better control and visualize these accounts. Note 10 Balances and Transactions with Related Parties The net balance of accounts receivable from and payable to non consolidated related parties is detailed in the following table: As of December 31, 2017 Current As of December 31, 2016 ThUS$ ThUS$ Receivables from related parties Payables to related parties (256) (1,901) Total (148) (1,851) Receivables from and Payables to Related Parties: Receivables from and payables to related parties arise from routine business transactions carried out under market conditions, with respect to price and payment. No write offs or provisions have been recorded during the year for accounts receivable from related parties. As of December 31, 2017 and December 31, 2016, the Company has no receivables from related parties classified as non current. Compañía Sud Americana de Vapores S.A. 115

118 Note 10 Balances and Transactions with Related Parties (continued) Receivables from related parties are detailed as follows: Chilean Taxpayer ID Country Company Transaction Relationship Currency ThUS$ Current ThUS$ Foreign Brazil Companhia Libra de Navegacao S.A. (1) Current account Common shareholder and/or director US$ Chile CSAV Austral SpA (1) Current account Common shareholder and/or director US$ 2 Foreign Germany Hapag Lloyd AG Current account Common shareholder and/or director US$ Chile Hapag Lloyd Chile SpA (1) Current account Common shareholder and/or director US$ 92 Foreign Brazil Norgistics Brasil Operador Multimodal Ltda. (1) Current account Common shareholder and/or director US$ 27 Total Payables to related parties are detailed as follows: Chilean Taxpayer ID Country Company Transaction Relationship Currency ThUS$ Current ThUS$ Foreign Mexico Agencias Grupo CSAV (México) S.A de C.V. (1) Current account Common shareholder and/or director US$ 1 Foreign Peru Consorcio Naviero Peruano S.A. Current account Common shareholder and/or director US$ 2 Foreign Argentina CSAV Argentina S.A. (1) Current account Common shareholder and/or director US$ Foreign Ecuador Ecuaestibas S.A. Current account Common shareholder and/or director US$ 27 Foreign United States Florida International Terminal, LLC Current account Common shareholder and/or director US$ Chile Iquique Terminal Internacional S.A. Current account Common shareholder and/or director US$ Chile SAAM S.A. Current account Common shareholder and/or director US$ 111 1,629 Foreign Brazil SAAM Smit Towage Brasil S.A. Current account Common shareholder and/or director US$ Chile Terminal Puerto Arica S.A. Current account Common shareholder and/or director US$ 19 Foreign Peru Trabajos Marítimos S.A. Current account Common shareholder and/or director US$ 65 Foreign Brazil Tugbrasil Apoio Portuario SA Current account Common shareholder and/or director US$ 11 Total 256 1,901 (1 ) After the merger with HLAG in 2014, these parties are no longer subsidiaries of CSAV, but of HLAG, and through it CSAV affiliates. Therefore, their balances are presented as unconsolidated related parties. 116 Annual Report 2017

119 Note 10 Balances and Transactions with Related Parties (continued) Transactions with related parties: The Company classifies as transactions with related parties those that represent more than 0.1% of Group consolidated costs, which include cost of sales and administrative expenses. The following table details transactions with related parties: Company Chilean Taxpayer ID Country Relationship Transaction For the year ended ThUS$ ThUS$ Banco Consorcio Chile Common shareholder and/or director Loans received 45,000 Banco Consorcio Chile Common shareholder and/or director Interest on loans (590) Banco Itau K Chile Common shareholder and/or director Interest on loans (1,764) CSAV Austral SPA (1) Chile Common shareholder and/or director Services rendered 289 Ecuaestibas S.A. Foreign Ecuador Common shareholder and/or director Services received (123) Florida International Terminal, LLC Foreign United States Common shareholder and/or director Port services received (175) (213) Hapag Lloyd Chile SPA (1) Chile Common shareholder and/or director Real estate lease 1,083 1,269 Hapag Lloyd Chile SPA (1) Chile Common shareholder and/or director Services received (287) Iquique Terminal Internacional S.A Chile Common shareholder and/or director Port services received (275) (729) Quiñenco S.A Chile Parent company Loan payments (30,000) Quiñenco S.A Chile Parent company Interest paid (480) SAAM S.A Chile Common shareholder and/or director Real estate lease SAAM S.A Chile Common shareholder and/or director Services received (1,483) (1,572) SAAM Logistics S.A K Chile Common shareholder and/or director Services received (57) SAAM Logistics S.A K Chile Common shareholder and/or director Services rendered 21 SAAM Smit Towage Brasil S.A. Foreign Brazil Common shareholder and/or director Services received (297) (253) Southern Shipmanagement (Chile) Ltda Chile Common shareholder and/or director Administrative services received (2,125) Southern Shipmanagement CO. S.A. (1) Foreign Panama Common shareholder and/or director Administrative services received (2,270) Terminal Portuario de Arica S.A Chile Common shareholder and/or director Port services received (297) Trabajos Marítimos S.A. Foreign Peru Common shareholder and/or director Agencying services (224) (490) Transbordadora Austral Broom S.A Chile Common shareholder and/or director Port services received (135) (1) After the merger with HLAG in 2014, these parties are no longer subsidiaries of CSAV, but of HLAG, and through it CSAV affiliates. Therefore, their balances are presented as unconsolidated related parties. Compañía Sud Americana de Vapores S.A. 117

120 Note 10 Balances and Transactions with Related Parties (continued) Compensation of Board of Directors and Key Personnel (a) Board Compensation During the year ended December 31, 2017, the Company's directors have received ThUS$ 392 (ThUS$ 413 as of December 31, 2016) for attending board and committee meetings. (b) Compensation of Key Personnel Key personnel include executives who define the CSAV Group s strategic policies and have a direct impact on the results of the business. Compensation of the CSAV Group s key management personnel amounts to ThUS$ 1,515 for the year ended December 31, 2017 (ThUS$ 1,619 for the year ended December 31, 2016). For the year ended December 31, ThUS$ ThUS$ Short term employee benefits 1,469 1,543 Other benefits Total 1,515 1,619 On average, five CSAV executives were classified as key personnel during the year ended December 31, On average, five CSAV executives were classified as key personnel during the same period in The Company has not given any guarantees on behalf of key management personnel. The Company does not have any compensation plans for key management personnel based on share price. 118 Annual Report 2017

121 Note 11 Inventories The Company's inventories as of December 31, 2017 and 2016, are detailed as follows: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Fuel 3,148 4,235 Lubricant Other inventories Total 3,159 4,250 The items included under fuel correspond to fuel found on vessels in operation that will be consumed in the normal course of services provided. These items are valued in accordance with Note Fuel consumed and recorded in profit or loss under continuing operations amounts to ThUS$ 19,275 for the year ended December 31, 2017 and ThUS$ 14,841 for the year ended December 31, Compañía Sud Americana de Vapores S.A. 119

122 Note 12 Hedge Assets and Liabilities Hedge assets and liabilities are presented under other current financial assets and other current financial liabilities, respectively, detailed as follows: Current As of December 31, As of December 31, Assets Liabilities Assets Liabilities Note ThUS$ ThUS$ ThUS$ ThUS$ Current portion Fuel swaps (a) Total 804 Explanatory notes for the table above: (a) Fuel price hedging contracts Details of CSAV's fuel price hedging contracts for the year ended December 31, 2017, were as follows: Derivative Institution Date of Agreement Date of Maturity Currency For the year ended December 31, 2017 Recognized Recognized in Profit or Total in Equity Loss Swap Goldman Sachs Aug 2017 IV 2017 US$ Swap Koch Supply & Trading Aug 2016 IV 2017 US$ Total 1,083 1, Annual Report 2017

123 Note 12 Hedge Assets and Liabilities (continued) (a) Fuel price hedging contracts (continued) Details of CSAV's fuel price hedging contracts for the year ended December 31, 2016, were as follows: Derivative Institution Date of Agreement Date of Maturity Currency For the year ended December 31, 2016 Recognized Recognized in Profit or Total in Equity Loss Swap Goldman Sachs (JANY) Oct 2015 II 2016 US$ (84) (84) Swap Goldman Sachs (JANY) Dec 2015 IV 2016 US$ Swap Goldman Sachs (JANY) Feb 2016 IV 2016 US$ 1,067 1,067 Swap Koch Supply & Trading Oct 2015 II 2016 US$ (692) (692) Swap Koch Supply & Trading Aug 2016 IV 2017 US$ Total ,564 (b) Interest rate hedges. As of December 31, 2017, the CSAV Group has not contracted any interest rate swaps to hedge its exposure to variable interest rates. (c) Exchange rate hedges As of December 31, 2017, the CSAV Group does not have any exchange rate hedge contracts. Compañía Sud Americana de Vapores S.A. 121

124 Note 13 Other Non Financial Assets Other non financial assets are detailed below: Other Non Financial Assets As of December 31, 2017 Current As of December 31, 2016 As of December 31, 2017 Non Current As of December 31, 2016 Current ThUS$ ThUS$ ThUS$ ThUS$ Insurance Prepaid charters 908 1,048 Other Total Current 1,026 1, Prepaid insurance is insurance premiums for shipping operations and certain real estate that remain in effect after the date these Consolidated Financial Statements were closed. Prepaid charters is for vessels operated by the CSAV group, according to the contractual terms and conditions with shipowners, and are normally used within the following 30 days. The item other includes payments of other customary duties and guarantees for maritime transport operations. 122 Annual Report 2017

125 Note 14 Investments in Subsidiaries (a) Consolidated Subsidiaries The Company has consolidated investments in subsidiaries, as described in Note 3 of these Consolidated Financial Statements, which are detailed as follows: Chilean Taxpayer ID Company Ownership Interest as of December 31, Currency Country (UM) Direct Indirect Total Direct Indirect Total Foreign CSAV Germany Container Holding GmbH Germany US$ % % % % Foreign Tollo Shipping Co. S.A. and Subsidiaries Panama US$ % % % % Foreign Navibras Comercial Maritima e Afretamentos Ltda. Brazil US$ % % % % Foreign Corvina Shipping Co. S.A Panama US$ % % % % Compañía Naviera Rio Blanco S.A. Chile US$ 99.00% 1.00% % 99.00% 1.00% % Norgistics Holding S.A. and Subsidiaries Chile US$ 99.00% 1.00% % 99.00% 1.00% % K Norgistics Chile S.A. (2) Chile US$ % % Foreign Norgistics México S.A. de C.V. Mexico US$ % % % % Foreign Norgistics (China) Ltd. [Hong Kong] China HKD % % % % Foreign Norgistics Peru S.A.C. Peru US$ % % % % Foreign Norgistics Brasil Transportes Ltda. (1) Brazil US$ % % Foreign Norgistics (China) Ltd. [Shenzhen] China RMB % % % % (1) In February 2017, this subsidiary merged with Navibras Comercial Maritima e Afretamentos Ltda., as explained in Note 14 c). (2) This subsidiary was sold in December 2017, as described in Note 2 b) and Note 35 of this report. Compañía Sud Americana de Vapores S.A. 123

126 Note 14 Investments in Subsidiaries (continued) (b) Summarized financial information: The summarized financial information of the Company's subsidiaries as of December 31, 2017 and December 31, 2016, is as follows: As of December 31, 2017: Company Name Current Assets Non Current Assets Current Liabilities Non Current Liabilities Revenue Profit (Loss) for the Year ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Tollo Shipping Co. S.A. and Subsidiary 110, ,349 (53) Corvina Shipping Co. S.A. 755, , Norgistics (China) Ltd. 1, ,083 (374) Norgistics Holding S.A. and Subsidiaries 2, ,104 13,271 (895) Compañía Naviera Rio Blanco S.A ,400 (20) CSAV Germany Container Holding GmbH 1,704 1,932,259 1,385,361 (313,058) As of December 31, 2016: Company Name Current Assets Non Current Assets Current Liabilities Non Current Liabilities Revenue Profit (Loss) for the Year ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Tollo Shipping Co. S.A. and Subsidiary 110, , Corvina Shipping Co. S.A. 755, , ,319 Odfjell y Vapores S.A. 1,242 Norgistics (China) Ltd. 1, , Norgistics Holding S.A. and Subsidiaries 5,526 1,016 3,761 15,772 (512) Compañía Naviera Rio Blanco S.A ,380 (16) CSAV Germany Container Holding GmbH 132 1,771, ,691 (16,321) As of December 31, 2017 and 2016, there are no subsidiaries with non controlling interests. Compañía Sud Americana de Vapores S.A. (also known as CSAV), the parent company of the CSAV Group, granted loans equivalent to ThUS$794,116 to its consolidated subsidiary CSAV Germany Container Holding GmbH as part of the merger process with HLAG in These loans, granted in euros, 10 years s maturity and accrue annual interest of 4.7%. As a result, CSAV recognizes the interest accrued on a monthly basis and eliminates the transaction upon consolidation. Any exchange differences generated and interest on this loan accrued by CSAV are not eliminated to determine taxable income in Chile, in accordance with current tax law. 124 Annual Report 2017

127 Note 14 Investments in Subsidiaries (continued) (b) Summarized financial information (continued): Summarized information regarding subsidiaries with non controlling interests: For the year ended December 31, 2016 Discontinued Operations Maritime Shipping OV Bermuda & Trading Limited International Inc. Odfjell y Vapores S.A. Maritime Shipping Trading Inc. Non Controlling Interest (%) 49% 50% 50% 50% ThUS$ Revenue 7,434 6,449 13,883 Profit (loss) for the year 1, (2) 2,070 Total comprehensive income (loss) 1, (2) 2,070 Profit (loss) attributable to non controlling interest (1) 1,022 Total Net cash flows provided by (used in) operating activities 2, (15) 3,677 Net cash flows provided by (used in) investing activities Net cash flows used in financing activities (1,068) (1,068) Compañía Sud Americana de Vapores S.A. 125

128 Note 14 Investments in Subsidiaries (continued) (c) Movements in investments: c.1) During the year ended December 31, 2017, the CSAV Group has recorded the following movements in investments in subsidiaries. c.1.1) On January 31, 2017, Tollo Shipping Co. S.A. ( Tollo ), Corvina Shipping Co S.A., Norgistics Holding S.A. and Norgistics Chile S.A., agreed to merge their subsidiaries Navibras Comercial Maritima e Afretamentos Ltda. and Norgistics Brasil Transporte LTDA, whereby the latter would be absorbed by the former, which would become the legal successor and be controlled and consolidated by Tollo. c.1.2) On December 13, 2017, CSAV sold its subsidiary Norgistics Chile S.A., to third parties, as explained in notes 2 b) and 35 of this report. On that date, CSAV ceased consolidating the subsidiary and recorded the disposal of its assets and liabilities and the result from the sale in both cash and credit. It is important to note that the sale of this subsidiary had no effect on profit or loss because the transaction was at book value. c.2) During 2016, the CSAV Group has recorded the following movements in investments in subsidiaries. c.2.1) On October 19, 2016, the subsidiary Odfjell y Vapores S.A. declared a dividend payable to its shareholders of ThUS$ 13,155, of which ThUS$ 6,709 was due to CSAV and ThUS$ 6,446 to its partner Odfjell Tankers. CSAV's portion was paid on the same date, while the portion payable to Odfjell Tankers was left pending. c.2.2) On October 19, 2016, after paying the dividend mentioned above, CSAV sold its subsidiaries Odfjell y Vapores S.A. and OV Bermuda Ltd. to its partner Odfjell Tankers. From that date, both companies became wholly owned subsidiaries of the buyer, as explained in Note 2 b) and Note 35 of this report. c.2.3) On December 7, 2016, the companies Maritime Shipping & Trading International Inc. and Maritime Shipping Trading Inc., were dissolved after paying the respective dividends and returns of capital to their shareholders, Tollo Shipping Co. S.A. (subsidiary of CSAV) and Tikal Business & Investment S.A. (minority partner). The amount paid by both subsidiaries to noncontrolling interests was ThUS$ 148 in dividends and ThUS$ 10 in returns of capital. 126 Annual Report 2017

129 Note 14 Investments in Subsidiaries (continued) (c) Movements in investments: c.2.4) On December 20, 2016, Compañía Sud Americana de Vapores S.A. acquired one share of Euroatlantic Container Line S.A (ECLA), representative of 0.1% of its share capital, from Global Shipping Co. S.A., making CSAV the only shareholder of ECLA. In conformity with article 108 of Law 18,046, ECLA was fully absorbed and dissolved on December 31, 2016, and its assets, liabilities, rights and obligations were transferred to CSAV. c.2.5) On December 31, 2016, the CSAV Group's corporate structure was simplified to reflect its current business circumstances and, as a result, the company Lennox Ocean Shipping Co. S.A. was merged with its parent company, Tollo Shipping Co. S.A., and the companies CSAV Sudamericana de Vapores S.A and Global Commodity Investments Inc. were merged with their parent company, Corvina Shipping Co. S.A. Compañía Sud Americana de Vapores S.A. 127

130 Note 15 Equity Method Investments As described in Note 1 to these Consolidated Financial Statements, as of December 31, 2017, CSAV has a 25.46% interest in and is the largest shareholder of Hapag Lloyd AG (HLAG), which is headquartered in Hamburg, Germany. In addition, with respect to its investment in HLAG, the Company is party to a joint control agreement with two other major shareholders of this German company: the City of Hamburg, through its holding company HGV Hamburger Gesellschaft für Vermögens und Beteiligungsmanagement mbh (HGV), which holds 13.9% of the share capital; and German businessman Klaus Michael Kühne, through Kühne Maritime GmbH (KM), who owns 20.5%; together, they hold approximately 59.9% of HLAG. By virtue of the above, based on CSAV s shareholding in HLAG and the existence and characteristics of the aforementioned joint control agreement, in accordance with IFRS 11, CSAV s investment in HLAG has been defined as a joint venture that must be accounted for using the equity method in accordance with IAS 28. This definition has remained unchanged since the date on which CSAV acquired its original interest in HLAG during the business combination of its container shipping business and HLAG in CSAV had a minor investment in the German company Hamburg Container Lines Holding GmbH & Co. KG, which it controlled jointly with the two partners mentioned above. That investment was presented as a joint venture. The Company, in coordination with its partners, sold this investment in August 2017 since it had reported practically no profit up to that point. Movements in investments in associates and joint ventures as of December 31, 2017, are detailed as follows: Name of Associate or Joint Venture Country Local Currency Direct and Indirect Ownership Interest Opening Balance Capital Movements and Dividends Result due to Dilution of Interest Gain (Loss) on Acquisition of Interest Share of Profit (Loss) Share of Other Comprehensive Income Share of Other Equity Reserves Investment Sold Balance as of December 31, 2017 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Hamburg Container Lines Germany Euro 50.00% 106 (2) (10) (94) Holding Hapag Lloyd A.G. Germany Euro 25.46% 1,771, ,653 (167,194) 14,819 12,875 9,530 (3,056) 1,932,258 Total 1,771, ,653 (167,194) 14,819 12,873 9,520 (3,056) (94) 1,932,258 Movements in CSAV's investment in the Hapag Lloyd AG (HLAG) joint venture during the year ended December 31, 2017, are detailed as follows: 128 Annual Report 2017

131 Note 15 Equity Method Investments (continued) Movements in CSAV's investment in the Hapag Lloyd AG (HLAG) joint venture during the year ended December 31, 2017, are detailed as follows: (a) Result due to Dilution of Interest: The merger of HLAG and United Arab Shipping Company Limited ( UASC ), was completed on May 24, 2017, resulting in a dilution of CSAV s interest in HLAG from 31.35% to 22.58% and a dilution loss of ThUS$ 167,194, which reduced the carrying amount of its investment in HLAG. More information on the transaction and the dilution loss is available in Note 40 of this report. (b) Gain (Loss) on Acquisition of Interest: On October 17, 2017, HLAG concluded a capital increase of ThUS$414,000, whereby CSAV subscribed 54.3%, which is above its prorated share of 22.58%. This gave it a 24.7% interest in the German company. Over the following weeks, it continued to acquire additional interests in HLAG, attaining 25% in late October and 25.5% in December The total investment made during the period was ThUS$293,653, of which ThUS$93,946 was allocated to subscribing its prorated share of 22.58% in HLAG's capital increase and ThUS$199,707 was used to purchase the additional 2.89% of HLAG. In accordance with IAS 28, CSAV hired PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC Germany) to prepare a purchase price allocation (PPA) report, which determined the fair value of the new assets acquired upon purchasing the additional 2.89% to be ThUS$214,526. Compared to the cost indicated above, this gives badwill of ThUS$14,819, which was recorded in profit or loss as a gain for CSAV in accordance with IFRS. (c) Share of Profit (Loss): Profit attributable to owners of HLAG for the year ended December 31, 2017, was ThUS$30,000, which gives profit for the year of ThUS$1,622 based on CSAV s ownership interest at the end of each quarter in This is explained mainly by the fact that CSAV had a greater interest in HLAG in the first quarter of the year (31.35%), when the German company had losses of ThUS$66,900, which were reversed in subsequent quarters. To that amount, CSAV must add the fair value adjustment of HLAG s assets and liabilities, based on the Purchase Price Allocation (PPA) reports prepared for each acquisition. That adjustment for the year ended December 31, 2017, based on the percentage ownership each quarter, gives an improved result of ThUS$11,253 in addition to its direct share of HLAG's results. With that, the result from CSAV s interest in that joint venture for 2017 was was a profit of ThUS$12,875. Compañía Sud Americana de Vapores S.A. 129

132 Note 15 Equity Method Investments (continued) (d) Share of Other Comprehensive Income (Loss) and Other Equity Reserves: HLAG recorded other comprehensive income (in U.S. dollars) for the year ended December 31, 2017, consisting of a loss of ThUS$ 16,900 from revaluing its defined benefit plans (CSAV's stake is ThUS$ 3,930), a gain of ThUS$ 50,600 for exchange differences (CSAV's stake is ThUS$ 12,005), and a gain of ThUS$ 7,500 on cash flow hedges (CSAV's stake is ThUS$ 1,455), giving a total gain of ThUS$ 41,200 and a gain of ThUS$ 9,530 for CSAV's stake in the other comprehensive income of the joint venture. During the year, the Company also recognized its share of HLAG s other equity movements, namely a reduction of ThUS$ 3,056 in equity presented in other reserves. Since HLAG is a publicly listed corporation in Germany that trades its shares on the Frankfurt and other exchanges, the market (exchange) value of CSAV's investment in the joint venture, totaled ThUS$ 1,802,535 as of December 31, In accordance with IFRS 13, the market value of CSAV's investment in HLAG could be its fair value using Level 1 valuation criteria. However, the Company has chosen to use Level 3 valuation criteria, consisting mainly of the business's discounted cash flows, to value its interest in that joint venture. That methodology is fairly similar to the value in use analysis used to test the investment for impairment. Considering the indications of impairment present as of December 31, 2017, CSAV conducted impairment testing on its investment in HLAG as of the end of the year and concluded that the recoverable amount of its investment in HLAG is greater than its carrying amount, using value in use methodology in IAS Annual Report 2017

133 Note 15 Equity Method Investments (continued) In addition, movements in investments in associates and joint ventures for the year ended December 31, 2016, are detailed as follows: Name of Associate or Joint Venture Country Local Currency Direct and Indirect Ownership Interest Opening Balance Capital Movements and Dividends Result due to Dilution of Interest Share of Profit (Loss) Share of Other Comprehensive Income Share of Other Equity Reserves Balance as of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Odfjell & Vapores Ltd. (*) Bermuda US dollars 50.00% 11 (11) Hamburg Container Lines Holding Germany Euro 50.00% 102 (2) Hapag Lloyd AG Germany Euro 31.35% 1,792,425 (7,009) (13,826) 41 1,771,631 Total 1,792,538 (7,022) (13,820) 41 1,771,737 (*) This associate was sold in October 2016, along with the liquid bulk business unit, and its results have been classified as discontinued operations as described in Note 35 of this report, in accordance with IFRS 5. Movements in CSAV's investment in the Hapag Lloyd AG (HLAG) joint venture during the year ended December 31, 2016, are detailed as follows: (a) Share of Profit (Loss): For the year ended December 31, 2016, the loss attributable to the owners of the controller of HLAG was ThUS$ 106,700. To this amount, CSAV must add the fair value adjustment of the assets and liabilities of HLAG, based on the Purchase Price Allocation (PPA) report performed upon acquisition. That adjustment for the year ended December 31, 2016, amounts to a gain of ThUS$ 84,343 on the figure reported by HLAG. Thus, the joint venture reported a total loss of ThUS$ 22,357 for the purpose of calculating CSAV's equity method value. The Company's stake in this loss (31.35% for the full year 2016) is ThUS$ 7,009. (b) Share of Other Comprehensive Income: HLAG recorded other comprehensive income (in U.S. dollars) for the year ended December 31, 2016, consisting of a loss of ThUS$ 43,700 from revaluing its defined benefit plans (CSAV's stake is ThUS$ 13,700), a loss of ThUS$ 4,800 for exchange differences (CSAV's stake is ThUS$ 1,505), and a gain of ThUS$ 4,400 on cash flow hedges (CSAV's stake is ThUS$ 1,379), giving a total loss of ThUS$ 44,100 and a loss of ThUS$ 13,826 for CSAV's stake (31.35% with no variations) in the other comprehensive loss of the joint venture. Compañía Sud Americana de Vapores S.A. 131

134 Note 15 Equity Method Investments (continued) Summarized financial information regarding associates and joint ventures as of December 31, 2017: Name of Associate or Joint Venture Ownership Interest Current Assets Non Current Assets Current Liabilities Non Current Liabilities Revenue Cost of Sales Profit (Loss) for the Period (2) ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Hapag Lloyd AG. (1) 25.46% 2,630,800 15,146,100 3,315,800 7,197,800 11,436,100 9,771,100 30,000 (1) This information comes directly from the consolidated financial statements of HLAG in US$ and, therefore, does not include the effects of the PPAs presented by CSAV. (2) Profit (loss) attributable to the owners of the Company. Summarized financial information regarding associates and joint ventures as of December 31, 2016: Name of Associate or Joint Venture Ownership Interest Current Assets Non Current Assets Current Liabilities Non Current Liabilities Revenue Cost of Sales Profit (Loss) for the Period (2) ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Hamburg Container Lines Holding GmbH & Co. KG 50.00% (3) Hapag Lloyd AG. (1) 31.35% 1,698,000 10,267,400 2,787,000 3,836,700 8,652,800 7,898,800 (106,700) (1) This information comes directly from the consolidated financial statements of HLAG in US$ and, therefore, does not include the effects of the PPAs presented by CSAV. (2) Profit (loss) attributable to the owners of the Company. 132 Annual Report 2017

135 Note 16 Intangible Assets Other than Goodwill The following table details intangible assets other than goodwill as of December 31, 2017 and December 31, 2016: As of December 31, 2017 As of December 31, 2016 Gross Value Accumulated Amortization Net Value Gross Value Accumulated Amortization Net Value ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Patents, trademarks and other rights, net 123 (41) 82 Computer software 29 (26) 3 Total intangible assets 152 (67) 85 The movements in intangible assets other than goodwill, for the years ended December 31, 2017 and 2016, are as follows: Movement as of December 31, 2017 Patents, Trademarks and Other Rights Computer Software Total Intangible Assets ThUS$ ThUS$ ThUS$ Net balance as of January 1, Reclassified to assets held for sale (discontinued operations) (82) (3) (85) Net balance Movement as of December 31, 2016 Patents, Trademarks and Other Rights Computer Software Total Intangible Assets ThUS$ ThUS$ ThUS$ Net balance as of January 1, Amortization for the year (10) (10) Net balance Compañía Sud Americana de Vapores S.A. 133

136 Note 17 Goodwill Goodwill is detailed as follows: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Norgistics Holding S.A Total There have been no movements in goodwill for the years ended December 31, 2017 and Goodwill has been generated in the acquisition of subsidiaries and businesses that have enabled the Company to operate its business segments. As explained in Note 3.8, each year the Company performs an evaluation that allows it to validate the value of acquired goodwill by estimating and sensitizing the future cash flows of each business segment discounted to a cost of capital rate. 134 Annual Report 2017

137 Note 18 Property, Plant and Equipment Property, plant and equipment (PPE) are summarized as follows: Gross PP&E As of December 31, 2017 As of December 31, 2016 Accumulated Depreciation Net PP&E Gross PP&E Accumulated Depreciation Net PP&E ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Buildings 2,027 (435) 1,592 2,047 (415) 1,632 Office equipment 79 (69) (193) 114 Other 1,128 1,128 1,405 (259) 1,146 Total 3,234 (504) 2,730 3,759 (867) 2,892 The item Buildings includes buildings and facilities belonging to the CSAV Group that are used for its normal operations. As of the date these Consolidated Financial Statements were closed, the Company and its subsidiaries had not detected any signs of impairment in its property, plant and equipment. The details and movements of the different categories of property, plant and equipment as of December 31, 2017, are provided in the following table: As of December 31, 2017 Buildings, Net Office Equipment, Net Other Property, Plant and Equipment, Net Property, Plant and Equipment, Net ThUS$ ThUS$ ThUS$ ThUS$ Opening balance 1, ,146 2,892 Additions Disposals (sale of assets) (59) (16) (75) Transfers to (from) investment property (18) (18) Depreciation expense (20) (17) (37) Depreciation expense (discontinued operations) (2) (34) (3) (39) Reclassified to assets held for sale (discontinued operations) (4) (1) (5) Total changes in PPE (40) (104) (18) (162) Closing balance 1, ,128 2,730 Compañía Sud Americana de Vapores S.A. 135

138 Note 18 Property, Plant and Equipment (continued) The details and movements of the different categories of property, plant and equipment as of December 31, 2016, are provided in the following table: As of December 31, 2016 Land Buildings, Net Office Equipment, Net Vessels, Net Other Property, Plant and Equipment, Net Total Property, Plant and Equipment, Net ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Opening balance 2,142 3, ,266 1,165 24,727 Additions Disposals (sale of assets) (13) (13) Depreciation expense (19) (95) (6) (120) Depreciation expense for discontinued operations (1,516) (1,516) Reclassified to/from investment property (2,142) (1,394) (3,536) Reclassified to assets held for sale (discontinued operations) (16,750) (16,750) Total changes in PPE (2,142) (1,413) 5 (18,266) (19) (21,835) Closing balance 1, ,146 2,892 As of December 31, 2016, the Company classified part of its property, plant and equipment that is no longer used directly in its operations but is leased to third parties or kept for investment purposes as investment property, as detailed in Note 19. As of December 31, 2017 and 2016, as described in notes 2 and 35 of this report, the Company presents expenses related to the PPE of its liquid bulk and logistics business units, such as depreciation, in profit (loss) from discontinued operations. 136 Annual Report 2017

139 Note 19 Investment Property The details and movements of the different categories of investment property as of December 31, 2017 and December 31, 2016, are provided in the following table: As of December 31, 2017 Land Buildings, Net Office Equipment, Net Investment Property ThUS$ ThUS$ ThUS$ ThUS$ Opening balance 2,142 14,069 16,211 Reclassified to assets held for sale (discontinued operations) (18) (18) Transfers to (from) investment property Depreciation expense (175) (175) Disposals (sale of assets) (179) (563) (742) Total changes (179) (738) (917) Closing balance 1,963 13,331 15,294 As of December 31, 2016 Land Buildings, Net Investment Property ThUS$ ThUS$ ThUS$ Opening balance 12,853 12,853 Transfers from (to) PPE 2,142 1,394 3,536 Depreciation expense (178) (178) Total changes 2,142 1,216 3,358 Closing balance 2,142 14,069 16,211 As of December 31, 2017, the Company has classified part of its property, plant and equipment that is not directly used in its operations but is leased to third parties or kept for investment purposes as investment property (see Note 18) in accordance with the accounting policy described in Note 3 section 3.6 to these Consolidated Financial Statements. From April to December 2017, the Company sold part of its investment property and recorded a gain on the sale presented as other gains in the Statement of Income (See Note 30). During the years ended December 31, 2017 and 2016, the Company has disclosed rental income on its investment property of ThUS$ 1,665 and ThUS$ 1,877, respectively, in other income. The estimated fair value of the Company s investment property as of December 31, 2017, amounts to ThUS$ 28,108, which is greater than its carrying amount. Compañía Sud Americana de Vapores S.A. 137

140 Note 20 Tax Assets and Liabilities The balances of current and non current tax assets and liabilities are detailed as follows: Current Tax Assets: Current Tax Assets As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Recoverable income taxes Monthly provisional tax payments 89 Other recoverable taxes 1 1,585 Total current tax assets 321 2,314 Current tax liabilities: Current tax liabilities As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Income taxes payable Property taxes payable 1 Other taxes payable 2 Total current tax liabilities Annual Report 2017

141 Note 21 Current and Deferred Income Taxes (a) CSAV has calculated an estimated tax loss of ThUS$ 902,318 according to tax laws and regulations in effect as of December 31, Therefore, it has not made a standalone income tax provision. As of December 31, 2016, the Company had a standalone tax loss of ThUS$ 1,077,076, calculated in estimating deferred taxes in its financial statements. Taxable income for the year ended December 31, 2017, was calculated using a rate of 25.5% for 2017, on the basis of Law 20,780 (2014 Tax Reform), published in the Official Gazette on September 29, Among the main amendments is a progressive increase in corporate income tax rates, set to reach 27% in 2018 for entities applying the semi integrated system. Law No. 20,899 was published on February 8, This law simplifies the taxation system established in the aforementioned tax reform, improves other legal provisions and makes the semi integrated system mandatory for all corporations starting January 1, Therefore, because CSAV is a publicly held corporation, deferred tax assets and liabilities have been valued and accounted for using the semi integrated taxation system, in accordance with laws and regulations in effect on the date these Consolidated Financial Statements were issued. (b) (c) As of December 31, 2017, CSAV has recorded a provision for single tax under Article 21 of the Income Tax Law of ThUS$ 27. The Company had a provision for this tax of ThUS$ 24 as of December 31, As of December 31, 2017 and 2016, the Company has not recorded any accumulated earnings and profits or any retained non taxable earnings. (d) Deferred taxes Deferred tax assets and liabilities are offset if the right to set off has been legally recognized and if the deferred taxes are associated with the same tax authority, and if the type of temporary differences is equivalent. Compañía Sud Americana de Vapores S.A. 139

142 Note 21 Current and Deferred Income Taxes (continued) (d) Deferred taxes (continued) The detail of deferred tax assets as of December 31, 2017 and December 31, 2016, is as follows: Types of Temporary Differences Deferred Tax Assets As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Tax losses 244, ,300 Provisions 2,208 3,676 Total 246, ,976 The Company has recorded the aforementioned amount for the balance of tax losses as of year end as deferred tax assets, since it is likely that its future tax earnings will enable it to use that asset, in accordance with IAS 12. As of December 31, 2017, the Company estimates that these future tax earnings will come mainly from the container shipping segment and, specifically, from dividends expected from CSAV's investment in the HLAG joint venture through its subsidiary in Germany, CSAV Germany Container Holding GmbH. The detail of deferred tax liabilities as of December 31, 2017 and December 31, 2016, is as follows: Types of Temporary Differences Deferred Tax Liabilities As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Revaluation of financial instruments (205) Other (332) (411) Total (332) (616) 140 Annual Report 2017

143 Note 21 Current and Deferred Income Taxes (continued) (d) Deferred taxes (continued) The following table shows movements of deferred tax assets and liabilities recorded during the year ended December 31, 2017: Types of Temporary Differences Balance as of January 1, 2017 Recognized in Profit (Loss) Recognized in Equity Other Variations Balance as of December 31, 2017 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Tax losses 289,300 (44,700) 244,600 Provisions 3,676 (629) (839) 2,208 Total deferred tax assets 292,976 (45,329) (839) 246,808 Types of Temporary Differences Balance as of January 1, 2017 Recognized in Profit (Loss) Recognized in Equity Other Variations Balance as of December 31, 2017 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Revaluation of financial instruments 205 (205) Other deferred taxes 411 (79) 332 Total deferred tax liabilities 616 (79) (205) 332 Compañía Sud Americana de Vapores S.A. 141

144 Note 21 Current and Deferred Income Taxes (continued) (d) Deferred taxes (continued) The following table shows movements of deferred tax assets and liabilities recorded during the year ended December 31, 2016: Types of Temporary Differences Balance as of January 1, 2016 Recognized in Profit (Loss) Recognized in Equity Other Variations Balance as of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Tax losses 307,051 (17,751) 289,300 Provisions 6,359 (2,679) (4) 3,676 Revaluation of financial instruments 238 (238) Total deferred tax assets 313,648 (20,430) (238) (4) 292,976 Types of Temporary Differences Balance as of January 1, 2016 Recognized in Profit (Loss) Recognized in Equity Other Variations Balance as of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Revaluation of financial instruments Depreciation 1,604 (1,604) Other deferred taxes Total deferred tax liabilities 1, (1,604) 616 Other variations in 2017 and 2016 include the deconsolidation of deferred tax assets and liabilities related to the liquid bulk cargo and logistics operations as described in Note 2 b) and Note 35 of this report. The effects on profit and loss related to deferred taxes have been classified as profit (loss) from discontinued operations. Additional information on the financial position of discontinued operations is contained in Note 35 of this report. 142 Annual Report 2017

145 Note 21 Current and Deferred Income Taxes (continued) (e) Effect of current and deferred income taxes on profit or loss For the year ended December 31, Restated ThUS$ ThUS$ Current income tax expense Current tax expense (23) (221) Expense for ITL Art. 21 tax (*) (27) (24) Other tax benefits Total current tax benefit (expense), net 37 (71) Deferred tax expense Origin and reversal of temporary differences (45,250) (20,527) Reversal of deferred tax assets Other deferred tax expenses Total deferred tax expense, net (45,250) (20,527) Income tax expense (45,213) (20,598) Income tax (expense) benefit, continuing operations (45,213) (20,598) Income tax expense, discontinued operations 86 (415) (*) ITL: Income tax law (Chile). (f) Taxes recognized in profit or loss by foreign and Chilean entities: For the year ended December 31, Restated ThUS$ ThUS$ Current tax benefit (expense): Current tax expense, net, foreign (664) Current tax benefit, net, Chilean Current tax benefit (expense), net 37 (71) Deferred tax expense: Deferred tax expense, foreign Deferred tax expense, Chilean (45,250) (20,527) Deferred tax expense, net (45,250) (20,527) Income tax expense, net (45,213) (20,598) Income tax expense, continuing operations (45,213) (20,598) Income tax benefit (expense), discontinued operations 86 (415) Compañía Sud Americana de Vapores S.A. 143

146 Note 21 Current and Deferred Income Taxes (continued) (g) Reconciliation of Effective Tax Rate An analysis and reconciliation of the income tax rate calculated in accordance with Chilean tax legislation and of the effective tax rate are detailed below: Reconciliation of Effective Tax Rate For the year ended December 31, Restated ThUS$ ThUS$ Loss for the year (188,137) (22,295) Total income tax expense (45,213) (20,598) Loss before tax (142,924) (1,697) Reconciliation of effective tax rate 25.50% 36, % 407 Tax effect of rates in other jurisdictions (0.03%) (43) (239.13%) (4,058) Tax effect of non taxable revenue (55.84%) (79,813) (62.40%) (1,059) Tax calculated with applicable rate (1.26%) (1,803) 99.76% 1,693 Other increases (decreases) in statutory taxes 0.00% ( %) (17,581) Total adjustments to tax expense using statutory rate (57.13%) (81,659) ( %) (21,005) Income tax expense using effective rate (31.63%) (45,213) ( %) (20,598) Income tax expense, continuing operations (45,213) (20,598) Income tax benefit (expense), discontinued operations 86 (415) Law No. 20,780, published on September 29, 2014, modified the corporate tax rate applicable to profits obtained in 2014 and subsequent years. The calculation of current and deferred income taxes takes into account these new tax rates (25.5% in 2017 and 27% from 2018 forward) as detailed in Note 3.13 to these Consolidated Financial Statements. As mentioned in Note 14 to these Consolidated Financial Statements, as a result of the loans that CSAV (as a standalone entity) granted to its consolidated German subsidiary, CSAV Germany Container Holding GmbH, and since the euro appreciated with respect to the dollar during the year ended December 31, 2017, a positive exchange difference has arisen on the accrued interest and principal owed on those loans, thus generating a financial gain for the Company that is eliminated for consolidation purposes but reduces the parent company s tax loss for tax purposes and, consequently, reduces the deferred tax assets recognized for that tax loss carry forward as of December 31, Annual Report 2017

147 Note 22 Other Financial Liabilities Other financial liabilities are detailed as follows: Other Financial Liabilities As of December 31, 2017 Current As of December 31, 2016 Current ThUS$ ThUS$ Bank loans (a) Bonds payable (b) Total Current Other Financial Liabilities As of December 31, 2017 Non Current As of December 31, 2016 Non Current ThUS$ ThUS$ Bank loans (a) 44,345 44,345 Bonds payable (b) 49,424 49,262 Total non current 93,769 93,607 Balances of other financial liabilities are reconciled as follows: As of December 31, 2016 Cash Flow Changes that Do Not Affect Cash Flows Amortization Balance Accrued of Capitalized Transfer Interest Expenses As of December 31, 2017 Current ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Bank loans 530 (2,514) 129 2, Bonds payable (2,567) 2,567 Non Current Bank loans 44,345 (129) ,345 Bonds payable 49, ,424 Total 94,137 (5,081) 4, , Compañía Sud Americana de Vapores S.A. 145

148 Note 22 Other Financial Liabilities (continued) (a) Current bank loans: As of December 31, 2017 Taxpayer ID of Debtor Name of Debtor Country of Debtor Taxpayer ID of Creditor Creditor Entity (Bank) Country of Creditor Currency Type of Amortization Up to 90 Days Current Portion Compañía Sud Americana de Vapores S.A. Chile K Banco Itau Chile ThUS$ ThUS$ Chile US$ Semi annual Total As of December 31, 2016 Taxpayer ID of Debtor Name of Debtor Country of Debtor Taxpayer ID of Creditor Creditor Entity (Bank) Country of Creditor Currency Type of Amortization Up to 90 Days Current Portion ThUS$ ThUS$ Compañía Sud Americana de Vapores S.A. Chile K Banco Itau Chile Chile US$ Semi annual Total Annual Report 2017

149 Note 22 Other Financial Liabilities (continued) (b) Non current bank loans: As of December 31, 2017 Taxpayer ID of Debtor Name of Debtor Country of Debtor Taxpayer ID of Creditor Creditor Entity (Bank) Country of Creditor Currency Type of Amortization 1 to 2 Years 2 to 3 Years 3 to 5 Years 5 to 10 Years Non Current Portion Total Debt Average Annual Interest Rate Compañía Sud Americana de Vapores S.A. Chile K Banco Itaú Chile (1) ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Nominal Effective Chile US$ Semi annual 10,642 10,199 19,068 4,436 44,345 45,052 LB 6M+2.5% LB 6M+2.5% Total 10,642 10,199 19,068 4,436 44,345 45,052 (1) The loan from Banco Itaú Chile is presented net of origination and underwriting fees. Face value of the loan is ThUS$ 45,000. As of December 31, 2016 Taxpayer ID of Debtor Name of Debtor Country of Debtor Taxpayer ID of Creditor Creditor Entity (Bank) Country of Creditor Currency Type of Amortization 1 to 2 Years 2 to 3 Years 3 to 5 Years 5 to 10 Years Non Current Portion Total Debt Average Annual Interest Rate Compañía Sud Americana de Vapores S.A. Chile K Banco Itaú Chile ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Nominal Effective Chile US$ Semi annual 9,854 19,709 14,782 44,345 44,875 LB 6M+2.5% LB 6M+2.5% Total 9,854 19,709 14,782 44,345 44,875 Compañía Sud Americana de Vapores S.A. 147

150 Note 22 Other Financial Liabilities (continued) (c) Bonds payable: As of December 31, 2017 Non Current Registry Number Series Currency Nominal Amount Placed Contractual Interest Rate Type of Interest Rate Type of Amortization 839 B US$ 50, Annual At maturity Issuing Company Country of Issuer More than 5 up to 10 Total Non Current ThUS$ ThUS$ Compañía Sud Americana de Vapores S.A. Chile 49,424 49,424 Total 49,424 49,424 As of December 31, 2016 Non Current Portion Registry Number Series Currency Nominal Amount Placed Contractual Interest Rate Type of Interest Rate Type of Amortization Issuing Company Country of Issuer More than 5 up to 10 Total Non Current ThUS$ ThUS$ ThUS$ 839 B US$ 50, % Annual At maturity Compañía Sud Americana de Vapores S.A. Chile 49,262 49,262 Total 49,262 49, Annual Report 2017

151 Note 22 Other Financial Liabilities (continued) Bank loans (continued): Certain financial obligations place restrictions on management and require fulfillment of certain financial indicators, as described in Note 36 to these Consolidated Financial Statements. CSAV's total financial debt and liquidity lines subject to restrictions or covenants as of December 31, 2017, include: 1. Bank loan with Banco Itaú Chile for US$ 45,000,000, fully drawn down. 2. Bond for US$ 50,000,000, line fully placed. As of December 31, 2017, the Company has complied with all applicable covenants set forth in its financial obligations, detailed in the table below. Financial Entity Covenant Condition As of December 31, 2017 As of December 31, 2016 Bank loan Banco Itaú Chile (Consolidated) Leverage Ratio Ratio of (Consolidated) Unencumbered Assets No greater than Greater than (US$ 45,000,000) Total Assets Minimum of ThUS$ 1,577,950 (1) ThUS$ 2,265,964 ThUS$ 2,168,159 (Consolidated) Leverage Ratio No greater than N/A Bank loans Bond issuance (US$ 50,000,000) Ratio of (Consolidated) Unencumbered Assets Greater than N/A Total Assets Minimum of ThUS$ 1,577,625 (1) ThUS$ 2,265,964 N/A (1) This limit may be adjusted proportionally if the Company is required to decrease its total assets, due to the application of IFRS accounting standards, but not due to the disposal, transfer or assignment of assets. Compañía Sud Americana de Vapores S.A. 149

152 Note 23 Trade and Other Payables Trade payables are summarized as follows: Trade payables primarily represent amounts owed to regular service providers in the Group s normal course of business, which are detailed as follows: As of December 31, 2017 Current As of December 31, 2016 As of December 31, 2017 Non Current As of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ Operating costs 17,069 16,146 Consortia and other 1,109 Administrative Dividends Other ,500 Total 19,103 17,082 2,500 Up to date and past due trade payables as of December 31, 2017, are as follows: Up to date trade payables: Type of Supplier Up to 30 Days Amount by Payment Terms Over 366 Days Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Products 3,513 3,513 Services 14, ,339 Total 17, ,852 Past due trade payables: Type of Supplier Up to 30 Days Amounts by Days Past Due Over 181 Days Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Services Total Annual Report 2017

153 Note 23 Trade and Other Payables (continued) Up to date and past due trade payables as of December 31, 2016, are as follows: Up to date trade payables: Type of Supplier Amount by Payment Terms Up to 30 Days Over 366 Days Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Products 1, ,668 Services 13, ,795 Total 15, ,463 Past due trade payables: Type of Supplier Amounts by Days Past Due Up to 30 Days Over 181 Days Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Products Services ,619 Total ,619 As of December 31, 2017, the estimated average payment period for past due receivables is 34 days. As of the date of issuance of this report, none of the accounts disclosed above include interest payments for the Company. Compañía Sud Americana de Vapores S.A. 151

154 Note 24 Provisions Current provisions as of December 31, 2017, are detailed as follows: Current Legal Claims Onerous Contracts Other Provisions Total ThUS$ ThUS$ ThUS$ ThUS$ Balance as of January 1, ,231 4,044 4,818 31,093 Additions during the year 1,424 1,395 2,819 Decreases during the year (7,487) (4,045) (3,468) (15,000) Transfer from (to) non current provisions (6,101) (6,101) Reclassified to liabilities held for sale (discontinued operations) (850) (850) Closing balance of current provisions 10,067 1, ,961 Current provisions as of December 31, 2016, are detailed as follows: Current Legal Claims Onerous Contracts Other Provisions Total ThUS$ ThUS$ ThUS$ ThUS$ Balance as of January 1, , ,018 22,355 Provisions during the year 358 4,045 4,403 Provisions used (10,609) (491) (2,326) (13,426) Transfer from (to) non current provisions 15,174 3,126 18,300 Disposal for transaction (539) (539) Closing balance of current provisions 22,231 4,044 4,818 31, Annual Report 2017

155 Note 24 Provisions (continued) Non current provisions as of December 31, 2017, are detailed as follows: Non Current Legal Claims Onerous Contracts Other Provisions Total ThUS$ ThUS$ ThUS$ ThUS$ Balance as of January 1, ,448 9,448 Initial transfer from (to) current provisions 6,101 6,101 Decreases during the year Transfer from (to) current provisions Closing balance of non current provisions 15,549 15,549 Non current provisions as of December 31, 2016, are detailed as follows: Non Current Legal Claims Onerous Contracts Other Provisions Total ThUS$ ThUS$ ThUS$ ThUS$ Balance as of January 1, ,622 3,126 33,748 Decreases during the year (6,000) (6,000) Transfer from (to) current provisions (15,174) (3,126) (18,300) Closing balance of non current provisions 9,448 9,448 Provisions for legal claims correspond mainly to estimated disbursements for claims and lawsuits related to transported cargo and lawsuits and other legal proceedings to which the Company is exposed, mainly including those related to investigations carried out by antimonopoly authorities in the car carrier business, as indicated in Note 36 to the Consolidated Financial Statements. Within onerous contracts, the Company provisions estimates of services to which it has committed (in transit voyages or contracts) for which there is reasonable certainty that the revenue obtained will not cover the costs incurred at the end of the voyage and, therefore, the voyages or contracts are expected to end with operating losses. These provisions are expected to be used within the current period, based on the Company's business cycle. Nevertheless, new provisions may be made in future periods. Compañía Sud Americana de Vapores S.A. 153

156 Note 24 Provisions (continued) All legal claims and contingencies related to the direct operations of the container shipping business are presently, following the merger with HLAG in 2014, the legal and financial responsibility of HLAG and its subsidiaries, including legal expenses and possible disbursements, even when CSAV is party to the claim. The Company has established provisions in the accounts legal claims and other provisions for other contingencies not related to the direct operation of this business where it believes disbursements to be reasonably likely. During the second half of 2016, the Company successfully resolved its dispute with the NYSA ILA Pension Fund covering the longshoremen at the ports of New York and New Jersey (USA) brought against CSAV for an alleged withdrawal liability of approximately ThUS$12,000, related to the business combination with HLAG. The Company promptly challenged the claim and ultimately resolved the issue. After resolving the claim, during the first half of 2016 the Company reversed total provisions of ThUS$ 12,515 recorded in legal claims. These provisions were for the amount of the claim plus certain legal expenses, divided into a current portion (ThUS$ 6,515) and a non current portion (ThUS$ 6,000). These movements are presented within this note in the item "decreases during the year" for the year ended December 31, 2016, separated into their current and non current portions. As of the reporting date of these Consolidated Financial Statements, all amounts provisioned by the Company and its subsidiaries have been classified as either current or non current based on the best estimate of the timing of their use or consumption. 154 Annual Report 2017

157 Note 25 Other Non Financial Liabilities Other non financial liabilities are detailed as follows: Current As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Revenue from voyages in transit 3,762 2,993 Total current 3,762 2,993 Non current As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Other non financial liabilities Total non current Revenue from voyages in transit corresponds to income documented as of the reporting date for vessels in transit towards their destinations at that date (i.e. that have not yet completed the service). These amounts are presented net of the respective expenses for each voyage in transit and transferred to profit or loss once the voyage has been completed, normally within the following 30 days. Other non financial liabilities include guarantees received for real estate leases and the provision of other services that involve third party use of the Company's assets or equipment. Compañía Sud Americana de Vapores S.A. 155

158 Note 26 Employee Benefit Obligations a) Employee benefit expenses For the year ended December 31, ThUS$ ThUS$ Salaries and wages 4,440 4,816 Short term employee benefits Total employee benefits expense 4,681 5,180 b) Employee benefit provisions As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Vacations payable Other benefits 1,500 1,420 Total employee benefit provisions 1,684 1,693 The Company had not made any employee benefit provisions classified as non current as of December 31, 2017 and December 31, Annual Report 2017

159 Note 27 Classes of Financial Assets and Liabilities The following table details the carrying amount and fair value of consolidated financial assets and liabilities: Description of Financial Assets Note As of December 31, 2017 Current Non Current Fair Value As of As of As of As of December December December December 31, , , , 2017 As of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Cash and cash equivalents 7 42,441 54,608 42,441 54,608 Other financial assets Trade and other receivables 9 19,888 20,799 19,888 20,799 Receivables from related parties Total 62,437 76, ,500 76,324 Description of Financial Liabilities Note As of December 31, 2017 Current Non Current Fair Value As of December 31, 2016 As of December 31, 2017 As of December 31, 2016 As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Bank loans ,345 44,345 45,706 44,875 Bonds payable 22 49,424 49,262 50,000 49,262 Trade and other payables 23 19,103 17,082 2,500 19,103 19,582 Payables to related parties , ,901 Total 20,066 19,513 93,769 96, , ,620 Compañía Sud Americana de Vapores S.A. 157

160 Note 27 Classes of Financial Assets and Liabilities (continued) The average interest rates used to determine the fair value of financial liabilities as of December 31, 2017 and 2016, are summarized below: As of December 31, 2017 As of December 31, 2016 Variable rate financial liabilities Libor + 2.5% Libor + 2.5% Fixed rate financial liabilities 5.20% 5.20% Other financial assets and liabilities are recorded at fair value or their carrying amount is a reasonable approximation of their fair value. Bank loans have been valued in accordance with IFRS 13 using level 2 of the valuation ranking (i.e. market interest rates for similar transactions). All other financial assets and liabilities have been valued in accordance with IFRS 13 using level 1 of the valuation ranking (i.e. market value). 158 Annual Report 2017

161 Note 28 Equity and Reserves (a) Changes in Capital 2017 (i) Issued Capital Subscribed and paid in capital as of December 31, 2017 amounts to US$ 3,493,509,703.09, equivalent to 36,796,876,188 shares. (ii) Capital Increase Agreements An extraordinary meeting of the shareholders of CSAV was held on March 30, 2017, at which the shareholders agreed to increase the Company's capital by US$ 260 million through the issuance of 9,500 million shares. The Board will issue these shares in a single transaction, as decided by the Board, for which the shareholders granted it broad powers. The shores must be issued, subscribed and paid by March 30, On September 21, 2017, as agreed by the Company s Board, the SVS registered the issuance under Securities Registry No. 1,060 consisting of 6,100 million single series shares with no par value charged to the aforementioned capital increase. The placement was scheduled to begin on October 10, 2017, with a placement price defined using a formula based on the weighted average of the previous three trading days with a 10% discount. The price resulting from this formula was Ch$30.55 per new share. The capital increase process was carried out successfully between October 10 and November 22, 2017, with 100% of the new shares issued being subscribed and ThUS$ 294,402 in funds raised. 98.2% of the placement was subscribed during the first preferential option period. (b) Changes in Capital 2016 (i) Issued Capital In 2016, based on agreements adopted by shareholders at the extraordinary meeting held on April 20, 2016, share issuance and placement costs of US$2,683,131.91, recorded until that date in other miscellaneous reserves within equity, were deducted from share capital. Compañía Sud Americana de Vapores S.A. 159

162 Note 28 Equity and Reserves (continued) (b) Changes in Capital 2016 (continued) After this change, the Company's capital as of December 31, 2016, amounts to US$3,199,108,383.17, equivalent to 30,696,876,188 subscribed and paid shares. (ii) Capital Increase Agreements During 2016, the Company did no agree to carry out any capital increases, reductions or other adjustments. (c) Movements in shares for 2017 and 2016 As of December 31, 2017, the Company's shares are detailed as follows: Series Number of Subscribed Shares Number of Paidin Shares Number of Voting Shares Single 36,796,876,188 36,796,876,188 36,796,876,188 As of December 31, 2017 As of December 31, 2016 Number of Shares Common Stock Common Stock Issued as of January 1 30,696,876,188 30,696,876,188 From capital increase 6,100,000,000 Shares canceled Total at end of year 36,796,876,188 30,696,876, Annual Report 2017

163 Note 28 Equity and Reserves (continued) (d) Treasury Shares The Company had no treasury stock as of December 31, 2017 and December 31, (e) Share Issuance Costs As of December 31, 2017, the share issuance costs from the capital increase mentioned in point (a) above total ThUS$ 1,199, and are presented in the equity account other miscellaneous reserves. (f) Other Reserves Other reserves are detailed as follows: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Translation adjustment reserve (6,714) (18,714) Cash flow hedge reserve 3,249 2,393 Reserve for gains and losses on defined benefit plans (2,420) 1,510 Other miscellaneous reserves 1,493 5,749 Total reserves (4,392) (9,062) Explanation of movements: Translation adjustment reserve The translation reserve includes all foreign exchange differences that arise from translating to the Group's functional currency the financial statements of Group companies with a different functional currency, based on the currency translation methodology defined in IAS 21. This applies to both the CSAV Group and the consolidated entities of its associates and joint ventures. Compañía Sud Americana de Vapores S.A. 161

164 Note 28 Equity and Reserves (continued) (f) Other Reserves (continued) The balance and movement of the translation adjustment reserve are explained as follows: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Balance as of January 1 (18,714) (16,941) Subsidiaries and other investments (15) (271) Share of equity method associates and joint ventures (Note 15) 12,015 (1,502) Closing balance (6,714) (18,714) Cash Flow Hedge Reserve The hedge reserve includes the effective portion of the net accumulated effect on fair value of cash flow hedging instruments related to hedged transactions that have not yet taken place. Movements during the year are explained by accounting hedges realized during the year and new hedges entered into. The balance and movement of this reserve are explained below: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Balance as of January 1 2,393 (340) Deferred taxes on hedges 205 (444) Increase (decrease) from hedge derivatives (804) 1,798 Share of equity method associates and joint ventures (Note 15) 1,455 1,379 Closing balance 3,249 2, Annual Report 2017

165 Note 28 Equity and Reserves (continued) (f) Other Reserves (continued) Reserve for Profits and Losses on Defined Employee Benefit Plans The reserve for actuarial gains on post employment benefits consists of the variation in the actuarial values of provisions for defined benefit plans. The balance and movement of this reserve are explained below: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Balance as of January 1 1,510 15,210 Share of equity method associates and joint ventures (Note 15) (3,930) (13,700) Closing balance (2,420) 1,510 Other miscellaneous reserves The balance and movement of other miscellaneous reserves are explained as follows: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Balance as of January 1 5,749 2,974 Share issuance costs (1,199) 2,683 Share of equity method associates and joint ventures (Note 15) (3,056) 41 Other movements in reserves (1) 51 Closing balance 1,493 5,749 (g) Dividends and Retained Earnings (Accumulated Losses) CSAV's dividend policy, which is summarized in Note 3.23 to these Consolidated Financial Statements, establishes that profits are to be distributed in accordance with instructions in SVS Ruling 1945, which is detailed as follows: As of December 31, 2017 and December 31, 2016, the Company has not recorded provisions for the minimum mandatory dividend because it has accumulated financial losses. Compañía Sud Americana de Vapores S.A. 163

166 Note 28 Equity and Reserves (continued) (g) Dividends and Retained Earnings (Accumulated Losses) (continued) Distributable net profits are determined on the basis of profit attributable to owners of the Company presented in the consolidated income statement for each reporting period. This profit shall be adjusted, if necessary, to reflect all gains resulting from variations in the fair value of certain assets and liabilities that have not been realized as of year end. Thus, these gains will be incorporated into the determination of distributable net profits in the year in which they are realized or accrued. The Company has decided to maintain adjustments from first time adoption of IFRS, included in retained earnings as of December 31, 2009, as non distributable profits. For the purpose of determining the balance of distributable retained earnings or accumulated losses, separate records are kept for these first time adoption adjustments and they are not considered in determining that balance. The following table details how distributable net profits as of December 31, 2017 and December 31, 2016, are determined: As of December 31, 2017 As of December 31, 2016 ThUS$ ThUS$ Initial distributable profit (1,324,066) (1,300,749) Dividends distributed Profit attributable to owners of the parent (188,137) (23,317) Adjustments to profit (loss) for the year for unrealized assets and liabilities at fair value Adjustments made for first time adoption of IFRS Other adjustments to accumulated losses for the year 58 Distributable net profit (1,512,145) (1,324,066) Accumulated losses (1,371,661) (1,183,582) 164 Annual Report 2017

167 Note 29 Revenue, Cost of Sales and Administrative Expenses Revenue and cost of sales are detailed in the following table: For the year ended December 31, Restated Revenue ThUS$ ThUS$ Revenue from transport services 109, ,840 Other income 773 7,459 Total operating income 109, ,299 For the year ended December 31, Restated Cost of sales ThUS$ ThUS$ Cargo, intermodal and other related costs (15,488) (12,363) Vessel charter, port, canal and other related expenses (66,767) (80,377) Fuel expenses (19,275) (14,841) Other costs (1,073) 1,649 Total cost of sales (102,603) (105,932) As indicated in Note 3.17, since the implementation of IFRS, revenue and cost of sales for maritime services in transit are recognized in the income statement based on the degree of completion. For voyages in transit not included in the provision for onerous contracts, income is recognized only to the extent that the related costs (incurred) can be recovered, and as a result the Company recognizes income and expenses for the same amount, taking a position with a neutral effect on its margin until the voyage is completed. These changes implied recognizing income and expenses of ThUS$ 2,846 for the year ended December 31, 2017, and income and expenses of ThUS$ 2,834 for the year ended December 31, 2016, which form part of revenue and cost of sales, as indicated above. Should the Company determine that a voyage or committed contract will produce a loss, it shall be provisioned in cost of sales (onerous contract as described in Note 24) without recording its income and expenses separately. Compañía Sud Americana de Vapores S.A. 165

168 Note 29 Revenues, Cost of Sales and Administrative Expenses (continued) Administrative expenses are detailed in the following table: For the year ended December 31, Restated ThUS$ ThUS$ Personnel payroll expenses (4,681) (5,180) Advisory and other services (2,774) (2,503) Communications and reporting expenses (418) (374) Depreciation and amortization (212) (244) Other (2,587) (3,432) Total administrative expenses (10,672) (11,733) As described in Note 6 (Segment Reporting) to this report, consolidated administrative expenses have been separated for the purposes of controlling and measuring the performance of each CSAV business segment. During the year ended December 31, 2017, total administrative expenses were ThUS$ 10,672 the container shipping business segment represents ThUS$ 4,449 and the other transport services business segment (vehicle transport and others) represents expenses of ThUS$ 6,223 accounting for 42% and 58% of total administrative expenses, respectively. 166 Annual Report 2017

169 Note 30 Other Income and Other Gains (Losses) (a) Other Income For the year ended December 31, 2017, this account includes: (i) Income related to leasing real estate of ThUS$ 1,665. (ii) Other income of ThUS$ 42. For the year ended December 31, 2016, this account includes: (i) Income related to leasing real estate of ThUS$ 1,877. (ii) Other income equivalent to ThUS$ 55. (b) Other gains For the year ended December 31, 2017, this account includes: (i) (ii) Gain on the sale of part of CSAV s investment property for a net amount of ThUS$ 3,055. Other gains or losses from operating the retained businesses resulting in a net loss of ThUS$ 30. For the year ended December 31, 2016, this account includes: (i) (ii) Gain of ThUS$ 1,355, net of costs and equity reserves, on the sale of CSAV's minority interests in other companies, maintained as financial investments in other noncurrent financial assets in the Consolidated Statements of Financial Position. Reversal of provision (net effect of ThUS$ 12,498) that CSAV recorded for the legal contingency in the NYSA ILA Pension Fund case, which was resolved in the Company's favor (see Notes 24 and 36). (iii) Gain on the sale of the liquid bulk business unit of ThUS$ 392. (iv) Other gains or losses from operating the other transport services segment resulting in a gain of ThUS$ 99. Compañía Sud Americana de Vapores S.A. 167

170 Note 31 Finance Income and Costs Finance income and costs are detailed as follows: For the year ended December 31, Finance income ThUS$ ThUS$ Interest income from time deposits Other finance income Total finance income For the year ended December 31, Finance costs ThUS$ ThUS$ Interest expense on financial liabilities (4,713) (2,878) Interest expense on other financial instruments (480) Other finance expenses (707) (761) Total finance costs (5,420) (4,119) 168 Annual Report 2017

171 Note 32 Exchange Differences Exchange differences generated by items in foreign currency, other than differences generated by financial investments at fair value through profit and loss, were credited (charged) to profit or loss for the year according to the following table: For the year ended December 31, ThUS$ ThUS$ Cash and cash equivalents 1,146 (12) Trade and other receivables, net Receivables from related parties Current tax receivables 32 5 Total assets 1, Provisions (2) (30) Trade and other payables (458) (101) Payables to related parties (7) (185) Total liabilities (467) (316) Total exchange differences 983 (94) Compañía Sud Americana de Vapores S.A. 169

172 Note 33 Foreign Currency Current assets As of December 31, 2017 As of December 31, 2016 Currency ThUS$ ThUS$ Cash and cash equivalents CH$ USD 39,229 53,534 EUR 2, BRL 1 33 OTHER Other financial assets US$ 804 Other non financial assets CH$ 76 USD 1,026 1,143 OTHER 125 Trade and other receivables CH$ 2,286 1,297 USD 17,549 18,530 EUR 292 BRL OTHER Receivables from related parties USD Inventories CH$ 72 USD 3,159 4,178 Current tax assets CH$ USD 2 1,589 OTHER 409 Disposal groups classified as held for sale USD 1,850 Total current assets CH$ 2,954 2,174 USD 62,923 79,828 EUR 2, BRL OTHER 706 1,535 Total 68,793 84, Annual Report 2017

173 Note 33 Foreign Currency (continued) Non Current Assets As of December 31, 2017 As of December 31, 2016 Currency ThUS$ ThUS$ Other financial assets US$ Other non financial assets US$ 1 EUR 1 OTHER 8 Equity method investments USD 1,932,258 1,771,634 EUR 103 Intangible assets other than goodwill BRL 82 OTHER 3 Goodwill US$ Property, plant and equipment USD 2,730 2,810 BRL 21 OTHER 61 Investment property US$ 15,294 16,211 Deferred tax assets US$ 246, ,976 Total non current assets USD 2,197,171 2,083,711 EUR 104 BRL 103 OTHER 72 Total 2,197,171 2,083,990 TOTAL ASSETS CH$ 2,954 2,174 USD 2,260,094 2,163,539 EUR 2, BRL OTHER 706 1,607 Total 2,265,964 2,168,159 Compañía Sud Americana de Vapores S.A. 171

174 Note 33 Foreign Currency (continued) Current Liabilities As of December 31, 2017 As of December 31, Days 90 Days to 1 Year Total 90 Days 90 Days to 1 Year Total Currency ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Other financial liabilities US$ Trade and other payables CH$ 3,325 3,325 2,609 2,609 USD 14,911 14,911 10,403 10,403 EUR ,048 2,048 BRL ,729 1,729 OTHER Payables to related parties CH$ USD OTHER Other provisions CH$ USD 11,961 11,961 30,833 30,833 OTHER Current tax liabilities US$ OTHER Employee benefit provisions CH$ 1,684 1,684 1,631 1,631 USD OTHER Other non financial liabilities US$ 3,762 3,762 2,993 2,993 Disposal groups classified as held for sale USD 1,137 1,137 Total current liabilities CH$ 5,009 5,009 5,336 5,336 USD 32,761 32,761 45,621 45,621 EUR ,048 2,048 BRL ,729 1,729 OTHER Total 38,637 38,637 55,343 55, Annual Report 2017

175 Note 33 Foreign Currency (continued) Non Current Liabilities 1 to 3 Years As of December 31, 2017 As of December 31, to 5 Years 5 to 10 Years Total 1 to 3 Years 3 to 5 Years 5 to 10 Years Total Currency ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Other financial liabilities USD 10,642 78,691 4,436 93,769 9,854 68,971 14,782 93,607 Trade and other payables US$ 2,500 2,500 Other provisions US$ 15,549 15,549 9,448 9,448 Deferred tax liabilities US$ Other non financial liabilities US$ Total non current liabilities US$ 26,743 78,691 4, ,870 22,599 68,971 14, ,352 Total 26,743 78,691 4, ,870 22,599 68,971 14, ,352 TOTAL LIABILITIES CH$ 5,009 5,336 USD 142, ,973 EUR 735 2,048 BRL 87 1,729 OTHER Total 148, ,695 Compañía Sud Americana de Vapores S.A. 173

176 Note 34 Earnings (Loss) per Share Earnings (loss) per share as of December 31, 2017 and 2016, are determined as follows: For the year ended December 31, For the year ended December 31, Loss from continuing operations attributable to owners of the parent (186,830) (23,634) Profit (loss) from discontinued operations attributable to owners of the company (1,307) 317 Loss attributable to owners of the company (188,137) (23,317) Weighted average number of shares 31,887,796,778 30,696,876,188 Loss per share for continuing operations US$ (0.0059) (0.0008) Loss per share for discontinued operations US$ (0.0000) Loss per share US$ (0.0059) (0.0008) Number of Subscribed and Paid Shares For the year ended December 31, For the year ended December 31, Issued as of January 1 30,696,876,188 30,696,876,188 From capital increase 6,100,000,000 Shares canceled Issued as of year end 36,796,876,188 30,696,876,188 Weighted average number of shares 31,887,796,778 30,696,876, Annual Report 2017

177 Note 35 Discontinued Operations (i) Freight Forward and Logistics Operations Business Unit (Norgistics) As described in Note 2 b) of this report, since the Company has a disposal plan for its freight forwarder and logistics operations business unit operated by the Norgistics subsidiaries (hereinafter Norgistics ) as of December 31, 2017, which was part of the other transport services segment defined in Note 6, and because: (i) the plan has been approved by the Board and Management, (ii) the plan is currently underway and (iii) the activities proposed in the plan have been partially executed and the remaining have a high likelihood of success, the Company has decided to classify that business unit in the Consolidated Financial Statements as of December 31, 2017, as held for sale and discontinued operations. This was done in accordance with IFRS 5. As described before, in accordance with the other provisions of IFRS 5, from now on the activities and transactions of the Norgistics business unit must be considered discontinued operations and be presented separately in the Consolidated Statement of Income. The discontinued unit's results and net cash flows from operating, investing and financing activities must also be detailed separately in this note. Section a) of this note details each of Norgistics s asset and liability accounts to be disposed of or discontinued in the sale, which have been classified as held for sale, as explained in the preceding paragraph. Sections b) and c) of this note detail the results of Norgistics s discontinued operations and a breakdown of its net cash flows, respectively, in comparison to the prior year. In accordance with IFRS 5, and for comparison purposes, certain restatements have been made to the consolidated statement of income for the year ended December 31, On December 13, 2017, as indicated in Note 14 of this report, CSAV sold its subsidiary Norgistics Chile S.A., the main operating company in the Norgistics business unit, to third parties. The rest of the subsidiaries in this unit are controlled by CSAV as of December 31, 2017, and, therefore, their assets and liabilities are presented in the Consolidated Statement of Financial Position as held for sale, as indicated in the preceding paragraphs. Compañía Sud Americana de Vapores S.A. 175

178 Note 35 Discontinued Operations (continued) (ii) Liquid Bulk Cargo Business Unit (OyV) Also as described in Note 2 b) of this report, since the Company had a disposal plan for its liquid bulk cargo business unit (hereinafter OyV) as of September 30, 2016, which was part of the other transport services segment defined in Note 6, and because that plan: (i) had been approved by the board and management, (ii) was underway at that time, and (iii) had a high likelihood of success; the Company decided to classify that business unit in the Consolidated Financial Statements as of December 31, 2016, as held for sale and discontinued operations. This was done in accordance with IFRS 5. As described before, the activities and transactions of the liquid bulk cargo business unit are considered discontinued operations from that date and are presented separately in the Consolidated Statement of Income. The discontinued unit's results and net cash flows are detailed separately in this note. On October 19, 2016, CSAV disposed of that business unit by selling all shares of Odfjell y Vapores S.A., OV Bermuda Ltd. and Odfjell & Vapores Ltd. (Bermuda) directly and indirectly held by CSAV to its partner, Odfjell Tankers. As a result of that transaction, those companies are now wholly owned subsidiaries of the buyer. This information was disclosed in the Consolidated Financial Statements as of September 30, 2016, in Note 40 on events after the reporting period. As a result, as of December 31, 2017, CSAV does not have any assets or liabilities related to the liquid bulk business unit and the current Consolidated Statement of Financial Position does not contain any assets or liabilities classified as held for sale. Section b) of this note details the results of OyV s discontinued operations while section b) details net cash flows. 176 Annual Report 2017

179 Note 35 (a) Discontinued Operations (continued) Statement of Financial Position from Discontinued Operations ASSETS AND LIABILITIES As of December 31, 2017 Norgistics ThUS$ CURRENT ASSETS Other non financial assets 33 Trade and other receivables 518 Current tax assets 543 Total current assets 1,094 NON CURRENT ASSETS Other non financial assets 1 Intangible assets other than goodwill 82 Property, plant and equipment 5 Investment property 18 Non current tax assets 650 Total non current assets 756 TOTAL ASSETS (Disposal groups classified as held for sale) 1,850 CURRENT LIABILITIES Trade and other payables 267 Other provisions 851 Current tax liabilities 19 Total current liabilities 1,137 TOTAL LIABILITIES (Disposal groups classified as held for sale) 1,137 NET ASSETS Net assets attributable to owners of the company 713 Non controlling interest TOTAL NET ASSETS 713 Compañía Sud Americana de Vapores S.A. 177

180 Note 35 (b) Discontinued Operations (continued) Statement of Income from Discontinued Operations For the year ended December 31, Norgistics Norgistics OyV Total Profit (loss) for the year ThUS$ ThUS$ ThUS$ ThUS$ Revenue 15,098 17,946 13,883 31,829 Cost of sales (12,230) (14,111) (10,975) (25,086) Gross profit 2,868 3,835 2,908 6,743 Other income Administrative expenses (4,194) (4,583) (236) (4,819) Other expenses (10) Other losses (136) (94) (94) Operating profit (loss) (1,454) (797) 2,673 1,876 Finance income Finance costs (154) (154) Share of loss of equity method associates and joint ventures (11) (11) Exchange differences (13) 26 Gain (loss) on indexed assets and liabilities Profit (loss) before tax (1,393) (742) 2,496 1,754 Income tax expense (435) (415) Profit (loss) for the year (1,307) (722) 2,061 1, Annual Report 2017

181 Note 35 (c) Discontinued Operations (continued) Statement of Cash Flows For the year ended December 31, 2017 Norgistics ThUS$ Net cash flows provided by operating activities 53 Net cash flows provided by investing activities 81 Net cash flows used in financing activities Increase in cash and cash equivalents before effect of exchange rate changes 134 Effect of exchange rate changes on cash and cash equivalents (18) Increase in cash and cash equivalents 116 For the year ended December 31, 2016 Norgistics OyV ThUS$ ThUS$ Net cash flows provided by (used in) operating activities (780) 3,692 Net cash flows used in investing activities (20) Net cash flows used in financing activities (1,068) Increase (decrease) in cash and cash equivalents before effect of exchange rate changes (800) 2,624 Effect of exchange rate changes on cash and cash equivalents (32) 7 Increase (decrease) in cash and cash equivalents (832) 2,631 Compañía Sud Americana de Vapores S.A. 179

182 Note 36 (a) Contingencies and Commitments Guarantees Granted (i) (b) (ii) Bank guarantees: The Company and its subsidiaries have not granted any bank guarantees as of December 31, Guarantee notes: There are minor guarantees, mainly associated with rental of premises in subsidiaries, whose disclosure is not necessary for the interpretation of these Consolidated Financial Statements. Other Legal Contingencies The Company is a defendant in certain lawsuits and arbitration claims relating to cargo transport, mainly seeking compensation for damages and losses. Most of these potential losses are covered by insurance policies. For the portion not covered by insurance, including the cost of the respective deductibles, the Company has recorded sufficient provisions to cover the estimated amount of likely contingencies. The amount of the respective provisions is presented in Note 24 of this report within legal claims. In connection with investigation proceedings carried out as a result of infringements to free competition regulations within the car carrier business referenced in a material event filing dated September 14, 2012, as well as those currently in progress in other jurisdictions, in the first quarter of 2013 the board of directors decided to provision ThUS$ 40,000 to cover any amounts that the Company may eventually have to pay in the future as a result of these proceedings, based on car carrier business volumes covering multiple routes that it has operated worldwide. The amount provisioned is a reasonable estimate of these disbursements that has been used as payments have been recorded based on the procedures and agreements detailed in numbers 1 to 6 of the following paragraphs. To date, the original provision is considered a reasonable estimate of the overall cost of these proceedings. The Company does not currently have sufficient background information to predict the termination date of these proceedings, with the exception of the investigations conducted by the following authorities, whose status is explained below: 1. On February 27, 2014, the Company signed a plea agreement with the United States Department of Justice ("DOJ ) as part of the aforementioned investigation, by virtue of which the Company agreed to pay a fine of ThUS$ 8,900, which is covered by the aforementioned provision. The fine was paid in four installments, the first three of ThUS$ 2,250 and the last of ThUS$ 2,150 in May 2014, 2015, 2016 and 2017, not including legal expenses. A fine imposed by the United States Federal Maritime Commission ( FMC ) of ThUS$ 625 was paid during These amounts have been properly deducted from the provision recorded in In addition, based on investigations by the DOJ, some end buyers, car distributors and freight forwarders or direct contract holders have filed a class action suit "on their own behalf and on behalf of those in a similar situation" against a group of companies engaged in 180 Annual Report 2017

183 Note 36 (b) Contingencies and Restrictions (continued) Other Legal Contingencies (continued) the car carrier business, including the Company and its former agency in New Jersey, for damages and losses suffered directly by contracting freight services or indirectly by buying imported cars in the United States. These class action suits were consolidated in the District Court of New Jersey. However, in late August 2015 the court ruled that they should be decided by the FMC, based on a motion filed by the Company. The U.S. Supreme Court dismissed the motions that were pending against this ruling. Fiat Chrysler Automobiles NV, FCA US LLC, and FCA Italy S.p.A. filed a suit with the FMC against a group of vehicle shipping companies, including the Company. The US Shipping Act of 1984 and the FMC's regulations do not provide for resolving class action suits and it is debatable whether the FMC can admit this type of action for processing. Therefore, and given the fact that these lawsuits are in their initial stages, it is not yet possible to estimate whether it will have any economic impact on the Company beyond the provisions recorded. 2. On November 25, 2015, Brazil's Court of the Administrative Council for Economic Defense (CADE) approved a suspension agreement (compromisso de cessação) previously agreed between the Company and the General Superintendent of CADE, which bound the Company to pay a fine of approximately ThUS$ 1,822, which was covered by the provision referred to above. 3. On December 9, 2015, the South African Competition Tribunal approved a consent agreement between the Company and the South African Competition Commission, which commits the Company to pay a fine equivalent to approximately ThUS$ 566, which was also covered by the provision referred to above. 4. The Company actively collaborated with an investigation initiated in China in June As a result, on December 15, 2015, the Prices and Antimonopoly Supervising Office of the National Commission for Development and Reforms of the Republic of China (NDRC) fined the Company approximately ThUS$ 475, out of total fines of approximately ThUS$ 62,860 applied to eight international shipping companies. This fine of ThUS$ 475 is also covered by the provision referenced above. 5. On August 30, 2016, the Mexican Federal Commission on Economic Competition (COFECE), initiated administrative proceedings against the Company and four other shipping companies for their involvement in collusive agreements to pre assign shipping routes to and from Mexican ports. The Company then applied to a leniency program and, as a result, has committed to collaborate with authorities in exchange for a 50% fine reduction. On June 8, 2017, the Company was notified of COFECE s ruling to levy a nominal fine of ThUS$5,132, Compañía Sud Americana de Vapores S.A. 181

184 Note 36 Contingencies and Restrictions (continued) (b) Other Legal Contingencies (continued) which was reduced by 50% as a result of the immunity benefit, leaving an actual fine of ThUS$2,634. This fine has been fully paid and was covered by the provision referenced above. 6. On September 1, 2017, the Korea Fair Trade Commission (KFTC) decided to fine nine international shipping companies, including the Company, for having engaged in practices that violated its antitrust law between 2002 and The total fine was almost ThUS$38,000. Since the Company has collaborated with the investigation from the start, the Company had to pay approximately ThUS$630, or 1.6% of the total fine. This disbursement had no impact on the Company's profit and loss since a provision was established for such purposes in the 1Q13 financial statements, which was disclosed to the market in May of that year On January 27, 2015, the Chilean National Economic Prosecutor's Office (FNE) issued a summons against several shipping companies, including CSAV, for violating letter a) of article 3 of Decree Law 211 of 1973, regarding the Defense of Free Competition ( DL 211 ), in the car carrier business (the Summons ). As indicated in the Summons and set forth in article 39 bis of DL 211, because the Company is cooperating with the FNE's investigation, it is exempt from fines relating to the practices referred to in the Summons and, therefore, these proceedings have no financial impact on the Company's results. The Summons is being processed by Chile's Antitrust Court. Additionally, on March 13, 2017, the Peruvian National Institute in Defense of Competition and Protection of Intellectual Property (INDECOPI) initiated an administrative procedure against several shipping companies, including the Company, for alleged collusive practices in the maritime vehicle transport business. Subject to confirmation by the authority, the Company is exempt from fines in relation to conduct described in the administrative procedure as a result of its cooperation in the INDECOPI investigation, so this process should not have any financial effect on the results of the Company. The administrative procedure is being processed before INDECOPI. The fines referenced in 1 to 6 above have been paid in full and were consequently deducted from the respective provision recorded in As a result, to date they are not part of the current provisions for legal claims. As of December 31, 2017, claims have been filed against the Company related to its container shipping business prior to the merger with HLAG. In accordance with the merger agreement between the Company and HLAG, all legal contingencies related to the operations of the container 182 Annual Report 2017

185 Note 36 Contingencies and Restrictions (continued) (b) Other Legal Contingencies (continued) shipping business are presently the legal and financial responsibility of HLAG, including legal expenses and possible disbursements, even when the Company is party to the claim. This was the case with the administrative proceedings initiated by INDECOPI against several shipping companies, including the Company, for participating in liner conferences, particularly the Asia West Coast South America Agreement (AWCSA) even though Peru ratified the United Nations' Convention of a Code of Conduct for Liner Conferences. On May 8, 2017, the INDECOPI Free Competition Commission issued a ruling to conclude the proceedings and impose no penalties given a commitment made by the companies under investigation to cease such practices. The Company has established provisions for other contingencies not related to this business where it believes disbursements to be reasonably likely. As reported in prior reports, the case against the NYSA ILA Pension Fund (hereinafter the "Fund"), was successfully resolved in the Company's favor during the first half of As a result, the Fund refunded provisional payments made by the Company up to the date of the agreement. The Fund, which covers the longshoremen at the ports of New York and New Jersey (USA), and to which the Company contributed because of its container shipping business that is currently operated by HLAG, filed a claim against the Company for an alleged withdrawal liability of approximately ThUS$12,000. The Company promptly challenged and successfully resolved the claim. The financial effects of the resolution are detailed in Note 24 to these Consolidated Financial Statements. (c) Operating Restrictions The financing agreements and bond issuances signed by Compañía Sud Americana de Vapores S.A. and its subsidiaries include the following restrictions: (i) Loan from Banco Itaú Chile for ThUS$45,000: a) Maintain a level of consolidated indebtedness in which total liabilities divided by total equity is less than b) Maintain unencumbered assets for 130% of consolidated financial liabilities. c) Quiñenco S.A. shall be the controller of the Company or shall hold at least 37.4% of its subscribed and paid capital. d) Maintain total minimum consolidated assets of ThUS$ 1,577,750. (ii) Bearer bonds for ThUS$ 50,000, series B, CMF SVS securities registration No. 839: a) Maintain consolidated leverage with a ratio of total liabilities to total equity no greater than 1.30; b) Maintain unencumbered assets for 130% of consolidated financial liabilities. C) Maintain total minimum consolidated assets of ThUS$ 1,577,625. Compañía Sud Americana de Vapores S.A. 183

186 Note 36 Contingencies and Restrictions (continued) (c) Operational Restrictions (continued) Additionally, the loan and bond agreements oblige the Company to comply with certain positive restrictions, such as complying with the law, duly paying taxes, maintaining insurance, and other similar matters, and also to obey certain negative restrictions, such as not furnishing chattel mortgages, except those authorized by the respective instrument, not undergoing corporate mergers, except those authorized, or not selling PPE, among other similar (d) Mortgages for Financial Commitments. As of December 31, 2017, the Company has not mortgaged any of its assets to guarantee its financial obligations. 184 Annual Report 2017

187 Note 37 Operating Lease Commitments As of December 31, 2017, the Company charters, under an operating lease system, 6 vessels (7 as of December 2016) and has no lease commitments for containers or other maritime shipping equipment. CSAV's charter term for vessels normally varies between one month and two years. The majority of the charter rates are fixed. The cost of staffing and operating a vessel, known as its running cost, varies between US$ 7,000 and US$ 9,000 per day and can be contracted in conjunction with the chartered vessel ( time charter ) or separately from the chartered vessel ( bareboat charter ). This note contains the total cost of commitments regarding chartered vessels. Therefore, time charter commitments include their running costs, as these are an integral part of the Company's obligations. The following table presents the future minimum non cancelable payments at nominal value for vessel charters as of December 31, 2017: As of December 31, 2017 Total Commitments Total Revenue Total Net ThUS$ ThUS$ ThUS$ Less than one year 24,304 24,304 One to three years 2,676 2,676 Total 26,980 26,980 As of December 31, 2016 Total Commitments Total Revenue Total Net ThUS$ ThUS$ ThUS$ Less than one year 23,671 23,671 One to three years 3,116 3,116 Total 26,787 26,787 In the table above, vessel costs exclude all charter expenses that have already been provisioned as of the date of these financial statements as onerous contracts. If vessels have been chartered or subchartered to third parties, these future minimum non cancelable receipts are offset against charter commitments. Compañía Sud Americana de Vapores S.A. 185

188 Note 38 Environmental Issues Due to the nature of its services, the Company has not incurred any material expenses related to improving and/or investing in production processes, verification and compliance with regulations on industrial processes and facilities or any other matter that could directly or indirectly impact environmental protection efforts. Note 39 Sanctions During 2017 and 2016, the Company, its subsidiaries, its directors and managers have not been sanctioned by the CMF (formerly SVS). The Company and its subsidiaries have also not received any significant sanctions from any other regulatory bodies or jurisdictions, other than those included in Note 36 to these Consolidated Financial Statements. 186 Annual Report 2017

189 Note 40 Business Combination between Hapag Lloyd AG and UASC (a) The Shipping Industry and CSAV/HLAG's Plan The global shipping industry has faced significant changes and challenges since the subprime crisis at the end of the last decade. This financial crisis had a strong effect on global trade, which intensified in late The largest impact was on ex bunker freight rates (excluding fuel costs), which have remained well below historical levels. This led to several years of very significant losses for many shipping companies. To date, many industry players still report low profitability or operating losses. In light of these adverse conditions and enormous operating losses, CSAV designed and implemented a profound restructuring and financial strengthening plan in early 2011 in order to streamline operations and ensure it has the right assets to operate routes where it has competitive advantages. Thanks to strong support from its shareholders, the plan was implemented and began to show results in subsequent years such as significant improvements in operating costs. These improvements helped offset adverse market conditions, which continued to be very unfavorable. This process also called for identifying a strategic partner for CSAV's container shipping operations, which ultimately culminated in the signing of the Business Combination Agreement ( BCA ) between CSAV and Hapag Lloyd AG (hereinafter HLAG ) in April 2014 to merge their container shipping businesses. After executing and confirming the respective obligations and precedent conditions, the business combination was completed in December 2014 and CSAV received a 30% stake in HLAG (combined entity). That same month, the Company increased its interest to 34% by subscribing shares of HLAG with cash contributions as part of a capital increase, as agreed in the BCA. From that date, CSAV signed a Shareholder Agreement with Kühne Maritime and the City of Hamburg, making them the three controlling partners of HLAG (combined entity resulting from the merger). From its position as HLAG's main shareholder, CSAV has continued to strengthen and develop its container shipping business, maintaining its strategy of facing the adverse market conditions prevailing in the industry with increased operational efficiencies and cost reductions. The merger not only gave CSAV important exposure to global shipping routes and greater diversification than it had before the transaction, but in 2015 the effective integration of its container shipping business by HLAG also resulted in very significant cost synergies, mainly economies of scale and network efficiencies, of which the Company partakes through its investment. These synergies were estimated at US$ 300 million when the merger was agreed and a significant portion was obtained that same year. An additional US$ 100 million beyond original estimates were identified a few months later. In addition to these significant cost savings from the merger with CSAV, a series of operational efficiency plans was implemented in 2015 by HLAG's management (Octave, Close the Cost Gap, Compete to Win, among others) that saved an additional US$ 200 million. Investments were also made in new vessels and containers, the results of which began to be seen in the second half of 2015 and more fully in Compañía Sud Americana de Vapores S.A. 187

190 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (a) The Shipping Industry and CSAV/HLAG's Plan (continued) This enabled HLAG, and CSAV s container shipping business integrated by HLAG, to significantly improve its financial performance in comparison to the industry, managing to position itself in 2015 as the third largest global shipping company in terms of profitability, behind the larger lines (Maersk and CMA CGM), generating net profit of US$ 126 million, even with lower freight rates than prior years. In 2016, after having confirmed the additional estimated synergies and the results of the aforementioned savings plans, HLAG reported the best operating margin for the industry (+5.1%, EBIT margin), surpassing even its larger competitors. Despite this exceptional performance, the German associate reported a loss of US$ 103 million in 2016, which quite clearly demonstrates the negative market conditions prevailing last year. However, in recent years, and with greater clarity in 2017, there have been important signs of improvement in the industry's key indicators, such as: (i) less than expected growth of the global fleet for the next few years, (ii) a recovery in transport volumes and (iii) a resulting reduction in excess supply. These results confirm that the Company's strategy since the beginning of the crisis (i.e. focusing on operational efficiency and reducing costs) has been correct and also fundamental in remaining competitive in the global industry. With that said, after years with no important consolidations, several business combinations cropped up in 2015, stimulated by the inevitable need of industry competitors to obtain assets and synergies to improve their cost and earnings structures. In addition to the aforementioned merger between HLAG (Germany) and CSAV (Chile), announcements followed of the purchase of CCNI (Chile) by Hamburg Süd (Germany), the purchase of APL (Singapore) by CMA CGM (France) and the merger of COSCO (China) and China Shipping (China). Amidst these circumstances, after having grown in scale, obtained important synergies from its integration with CSAV and achieved a highly efficient cost structure for operating North South routes (mainly to and from Latin America), CSAV needed to look for alternatives to improve its efficiency and position along the main East West routes (to and from Asia). Since the most relevant component of a route s cost structure is represented by the size and relative efficiency of the vessels operated, HLAG needed to add larger vessels to continue being competitive along these routes and reduce its cost per container. Seeing it had no such vessels in its fleet, HLAG had to either invest in larger vessels or look for partnerships that would give it access to such assets. 188 Annual Report 2017

191 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (a) The Shipping Industry and CSAV/HLAG's Plan (continued) In this context, HLAG initiated negotiations with United Arab Shipping Company (hereinafter UASC ). These talks led to a merger plan that not only resolved the problem of the fleet of larger vessels but would also allow the combined entity to increase its business scale, access new markets and increase its geographic coverage and diversification, while generating new significant synergies mainly from economies of scale and network efficiencies for the fleet. Thanks to investments made by UASC in larger vessels in recent years, the combined entity would not need to make any additional major investments over the next few years. Without the merger, HLAG would need to make such investments on its own with backing from shareholders. As a result of the merger, HLAG as a combined entity would boast one of the largest and most modern shipping fleets in the industry along all major routes and, therefore, it would benefit from a very competitive cost per slot. (b) Closing of Merger between HLAG and UASC On July 18, 2016, and as reported to the SVS by CSAV as a material event, HLAG and UASC agreed upon a BCA to merge UASC's entire container shipping business with HLAG, subject to the corresponding regulatory and contractual approvals, and compliance with a series of conditions precedent that are common for such contracts. After several months of executing and confirming the respective obligations and conditions precedent contained in the BCA, as well as concluding the remaining negotiations, HLAG announced the closing of its merger with UASC on May 24, 2017, the same date on which the Company communicated this material event to the SVS. As a result, the combined entity HLAG became the fifth largest container shipping company in the world with total transport capacity of 1.6 million TEUs and annual volumes of around 10 million TEUs. HLAG also announced that it expected this merger to generate cost synergies of US$435 million per year, which would be offset by the non recurring costs from the merger and subsequent integration of both companies during the second half of However, a significant portion of these synergies will be realized in 2018 and the full amount will be reached in 2019 (i.e. less than a year and a half after closing). Upon closing, HLAG s combined fleet included 230 container ships. It is considered one of the industry's most modern and most efficient fleets with an average vessel age of only 7.2 years and an average size of 6,840 TEUs, which has almost 30% more capacity than the average of the industry s 15 largest shipping lines (5,280 TEUs). The combined fleet s new profile is the foundation for a very large portion of its estimated synergies, which are based on optimizing the new configuration of the combined entity's vessels and services, harnessing cost advantages for mobilized space and more efficiently using the new fleet, mainly along East West routes to and from Asia (Far East). Compañía Sud Americana de Vapores S.A. 189

192 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (b) Closing of Merger between HLAG and UASC (continued) As a result of closing the merger, HLAG acquired 100% of the shares of UASC and UASC s former controllers (Qatar Holding LLC, owned by the State of Qatar ("QH"), and the Public Investment Fund, on behalf of the Kingdom of Saudi Arabia ("PIF")), acquired 14.4% and 10.1%, respectively, of the shares of HLAG, while the remaining minority shareholders of UASC now hold 3.5% of the shares. Thus, as of merger closing and prior to the capital increase described below, HLAG s shareholder structure was as follows: CSAV, through its German subsidiary CSAV Germany Container Holding GmbH ( CSAV Germany ), was the largest shareholder with 22.6% of HLAG; the City of Hamburg, through its holding company HGV Hamburger Gesellschaft für Vermögens und Beteiligungsmanagement mbh ( HGV ), held 14.9%; German businessman Klaus Michael Kühne, through Kühne Maritime GmbH ( KM ) and associate owned 14.6%; QH, 14.4%; PIF, 10.1%; TUI Hapag Beteiligungs GmbH, 8.9%; and the remaining minority shareholders (free float), represented around 14.5%. Despite having diluted their respective interests after the merger, CSAV, HGV and KM adjusted their Shareholder Agreement in order to retain common control over HLAG, and have committed to exercising the voting rights of all their shares by mutual agreement, equivalent to approximately 51.5% of the shares issued by HLAG as of that date. Notwithstanding, they eliminated all restrictions on the transfer of shares contained in the original agreement, except for the right of first refusal under certain circumstances. Now that the merger is complete, HLAG would carry out a capital increase for the euro equivalent of US$400 million in order to strengthen its financial position. This would take place through a rights issue on the German exchange over the next six months where all shareholders would have preferential subscription rights, in accordance with commitments made in the merger agreement. At the Annual General Meeting (AGM) of HLAG's shareholders held in Hamburg on May 29, 2017, this capital increase was voted on and approved with favorable votes from its controlling partners, including CSAV. Regarding this capital increase, CSAV Germany, HGV and KM had already made the necessary agreements for CSAV Germany to have a total interest in HLAG of at least 25%, which will allow CSAV to maintain decisive influence in certain key matters related to HLAG such as capital increases, mergers, spin offs and other amendments to HLAG's bylaws, all of which require 75% approval. Looking to finance HLAG's capital increase, at an Extraordinary Shareholders Meeting on March 30, 2017, CSAV's shareholders approved a capital increase of US$260 million to be carried out by issuing 9,500 million shares. This figure could be modified slightly to ensure that CSAV raised sufficient funds to subscribe and acquire enough shares to give it a 25% interest in HLAG. 190 Annual Report 2017

193 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (b) Closing of Merger between HLAG and UASC (continued) This capital increase was ultimately carried out in October 2017 and successfully concluded on October 17, 2017, raising a total of US$414 million for HLAG, of which CSAV subscribed 54.3% and increased its interest in the company from 22.6% to 24.7%. In the weeks following the end of HLAG's capital increase, CSAV acquired from Kühne Maritime the remaining shares necessary to hold a 25% interest in HLAG, in conformity with the agreements in effect with the two controlling partners, which was disclosed to the market on October 30, Lastly, CSAV completed its own capital increase in November, raising around US$294 million. This figure exceeded the amount invested in HLAG to date by approximately US$31 million, which was allocated to CSAV's unrestricted working capital. CSAV's board decided to use these remaining resources to acquire new shares of HLAG and, on December 6, 2017, the Company came to hold a 25.46% interest in HLAG, which it maintained as of the close of these Consolidated Financial Statements. As a result, a total of US$294 million was invested during the period to acquire new shares of HLAG. (c) Results of Closing of Merger between HLAG and UASC In the same material event filed May 24, 2017, the Company finally reported that, despite the merger s very positive economic impact from the US$435 million in annual synergies expected for HLAG, the merger would generate a dilution loss for CSAV since its shareholding in HLAG will decrease from 31.4% to 22.6%, at the equity method value of the new reduced capital at the original carrying amount of CSAV's investment in HLAG. This loss could not be reasonably quantified at that time since the information for the calculation was contained in HLAG's accounting records for the transaction, which were not available until HLAG published its Interim Consolidated Financial Statements as of June 30, 2017, in Germany. As of the date of this report, HLAG has already published its own financial statements and the necessary disclosures to perform the calculation. Therefore, this information has been considered in preparing these Consolidated Financial Statements, both the effect on profit or loss and the balance of the investment in the Consolidated Statement of Financial Position. This effect is explained below in greater detail. The characteristics and implementation methodology of the business combination between HLAG and the Arabian shipping line UASC have resulted in an accounting loss for CSAV of ThUS$140,568, of which a loss of ThUS$ 152,375 was recorded only by CSAV and not HLAG (points (i) and (iii)), due to the following: Compañía Sud Americana de Vapores S.A. 191

194 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (c) Results of Closing of Merger between HLAG and UASC (continued) (i) Dilution loss: This loss arose because IFRS 3 requires the Company to reflect the effects of the business combination between HLAG and UASC at its fair value in accordance with IFRS 13. In this case the consideration transferred was a 28% interest in HLAG that was given to the shareholders of UASC, and these shares were valued using Level 1 inputs, in accordance with IFRS 13 (i.e. prices observed in active markets). Since HLAG s shares are quoted on the Frankfurt exchange, the company, as the acquirer, set the fair value of the consideration transferred using its share price on the day the merger with UASC was closed (May 24, 2017). Since that value is less than the equity method accounting value at which CSAV carried its investment in HLAG, the aforementioned dilution generates an accounting loss for CSAV of ThUS$ 167,194, which is comprised of the difference between: (a) a dilution cost of 8.78% (31.35% original interest less 22.58% representing its new interest in HLAG; all percentages are approximated to two decimal places) multiplied by the carrying amount of CSAV s investment in HLAG at 100%, which in turn is calculated using the accounting balance of the investment in HLAG from the prior quarter (ThUS$ 1,756,831; see Note 15 of the respective Interim Consolidated Financial Statements) and then divided by the 31.35% stake owned by CSAV, which gives a total of ThUS$ 491,913; and (b) an interest in the new share issuance as consideration given to the shareholders of UASC of 22.58% of the value registered by HLAG as a capital increase for this transaction in its Consolidated Statement of Changes in Equity (ThUS$ 1,438,400), resulting in ThUS$ 324,719. It is important to mention that the accounting value at which CSAV carried its investment in HLAG is recorded in accordance with IAS 28, and considers as of June 30, 2017: (i) the acquisition cost of this investment in 2014 at fair value based on Level 3 of IFRS 13 (cash flow model for the combined entity), considering that the shares of HLAG as of that date were not traded on an exchange; (ii) the respective equity method interests in the results and changes in equity of HLAG; and (iii) the corresponding annual impairment testing based on the value in use methodology defined in IAS 36 (cash flow model for a going concern business). The dilution loss described in this section is recorded in Share of profit (loss) of associates and joint ventures in the Interim Consolidated Statement of Comprehensive Income and is disclosed separately from the direct interest in HLAG's results in Note 15 of this report under Result due to dilution of interest. 192 Annual Report 2017

195 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (c) Results of Closing of Merger between HLAG and UASC (continued) (i) Share of Badwill: In order to measure the full effect on CSAV's results of the aforementioned business combination, the fair value of the identifiable assets and liabilities that HLAG receives from UASC must be calculated using the corresponding purchase price allocation (PPA) report. This value is already available in the respective quarterly financial report published by HLAG that contains its Interim Consolidated Financial Statements as of June 30, In accordance with the provisions of IFRS 3, the value of the net assets acquired from UASC is greater than the consideration transferred, as explained in point (i) above. Therefore, the business combination generates a bargain purchase for HLAG, commonly known as badwill, of approximately ThUS$ 52,300. CSAV also has a 22.6% share of that badwill, which results in a gain of approximately ThUS$ 11,807 that partially offsets the dilution loss referred to in point (1) above. It is important to mention that, in accordance with IFRS 3, the valuation of identifiable assets acquired in the PPA does not include the estimated synergies for the combined entity arising from the business combination. This effect combined with the badwill results in a significant difference between the valuation of the acquired business as defined in the aforementioned accounting standard and the financial valuation carried out by the parties to this transaction. The expected synergies of US$ 435 million per year, as announced by HLAG's management, provide significant financial value to the business combination for both the acquirer (HLAG) and the acquiree (UASC), which was a fundamental factor in the decision to embark on the merger. For example, if the present value of the expected synergies of US$ 435 million per year is calculated using a valuation horizon of 10 years with no residual value and a discount rate (estimated WACC) of 8.5%, that value is US$ 3,097 million. Considering CSAV s interest of 22.6% in post merger HLAG, that is equivalent to US$ 699 million of expected financial value for CSAV. However, it is not reflected in any way in the accounting value of the merger, because of the aforementioned restrictions in IFRS 13. It is important to mention that if that value, or only a fraction of it (e.g. the portion that can be considered paid to UASC through the 28%) were included in the accounting records for the merger, the result of the dilution would be materially different than the current figure. Finally, it is important to point out that the aforementioned synergies could only be reflected in the accounting for the business combination if goodwill arose, when comparing the consideration transferred with the value of the net identifiable assets acquired, which did not occur and badwill arose, as indicated earlier. The share of badwill (gain) described in this section is recorded in Share of profit (loss) of associates and joint ventures in the Interim Consolidated Statement of Comprehensive Income and is disclosed in the direct interest in HLAG's results in Note 15 of this report under Share of profit (loss), since it is an effect that is already recorded in the joint venture s Statement of Income. Compañía Sud Americana de Vapores S.A. 193

196 Note 40 Business Combination between Hapag Lloyd AG and UASC (continued) (c) Results of Closing of Merger between HLAG and UASC (continued) (ii) HLAG s Capital Increase: CSAV's subscription of shares in HLAG's capital increase in October 2017 and the subsequent purchase of additional shares, as a result of which CSAV increased its holding from 22.58% following the merger between HLAG and UASC, to the 25.46% it currently holds, were commitments undertaken in the merger agreement as part of the same business combination so that CSAV's interest would not be diluted below 25% of HLAG. Therefore, its financial effect is also considered in the total accounting result of the merger between HLAG and UASC. As disclosed in preceding sections of this note, on October 17, 2017, HLAG concluded a capital increase of ThUS$414,000, whereby CSAV subscribed 54.3%, which is above its prorated share of 22.58%. This gave it a 24.7% interest in HLAG. Over the following weeks, it continued to acquire additional interests in HLAG, attaining 25% in late October and 25.46% in December A total of ThUS$293,653 was invested during the period, as explained in Note 15 of this report in Capital movements and dividends and in the Statement of Cash Flows as Other payments to acquire interest in joint ventures. Of this amount, ThUS$93,946 was allocated to subscribe the prorated share of CSAV 22.58% of the capital increase in HLAG and ThUS$199,707 was used to purchase the additional 2.89% of HLAG, thus raising CSAV's interest from 22.58% to 25.46% of that company. In accordance with IAS 28, CSAV hired PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC Germany) to prepare a PPA report, which determined the fair value of the new identifiable assets acquired upon purchasing the additional 2.89% to be ThUS$214,526. Compared to the cost indicated above of ThUS$199,707, this gives badwill of ThUS$14,819, which is recorded directly as a gain in CSAV s profit or loss in accordance with IAS 28 and IFRS 3. The gain for badwill described in this section is recorded in Share of profit (loss) of associates and joint ventures in the Consolidated Statement of Comprehensive Income and is disclosed separately from the direct interest in HLAG's results in Note 15 of this report under Result due to acquisition of interest. 194 Annual Report 2017

197 Note 41 Events after the Reporting Date Between the closing date and issuance of these Consolidated Financial Statements, the following relevant events occurred and the Company has decided to present them as subsequent events: (a) Agreement with European Commission in Car Carrier Case On February 21, 2018, the Company reported to the market that, as part of the international investigation into collusion in the car carrier business being conducted since September 2012 in the United States, Chile, Europe and other jurisdictions, the European Commission decided to penalize four international ocean shipping companies, including CSAV, for having engaged in practices that infringed anti monopoly laws and regulations between October 2006 and September As a result of CSAV s collaboration since the start of the investigation and its limited involvement in those practices, the Company was fined approximately EUR 7 million based on an agreement reached with that commission. This is merely 1.8% of the total fines imposed by the European regulatory (EUR 395 million). That fine will have no impact on the Company's profit and loss since a provision was established for such purposes in the 1Q13 financial statements, which was disclosed to the market in May of that year. The amount is part of the current portion of the legal claims provisions detailed in Note 24 of this report. The fine is expected to be paid in May (b) HLAG to Propose Dividend Payment of EUR 100 Million at Shareholders Meeting On February 28, 2018, HLAG disclosed to the German market its intention to propose a dividend distribution for the year 2017 of EUR 0.57 per share at its Annual General Meeting (AGM) set to take place on July 10, This would involve a total distribution of EUR million. That decision was made by HLAG s executive and supervisory boards, but must first be approved by shareholders at the next AGM. CSAV will participate in this vote through its German subsidiary, CSAV Germany Container Holding GmbH. The amount payable to CSAV is estimated at EUR 25.5 million, which is equivalent to approximately US$31.5 million at the Euro/dollar exchange rate in effect on the date of the announcement. The estimated date of payment for the dividend is still unknown but will be announced after the aforementioned AGM. The dividend payment from HLAG to CSAV will have no effect on the Company's results and, once received, will be deducted from the investment s carrying amount. Compañía Sud Americana de Vapores S.A. 195

198 Analysis of Financial Position 1. Analysis of Financial Position a) Statement of Financial Position The following table details the Company s main asset and liability accounts as of each period end: Assets As of December 31, 2017 As of December 31, 2016 Change MMUS$ MMUS$ MMUS$ Current assets (15.4) Non current assets 2, , Total assets 2, , Liabilities and Equity As of December 31, 2017 As of December 31, 2016 Change MMUS$ MMUS$ MMUS$ Total current liabilities (16.7) Non current liabilities Equity attributable to owners of the company 2, , Total liabilities and equity 2, , As of December 31, 2017, total assets increased by MMUS$ 97.8 compared to December 31, This change is explained by an increase of MMUS$ in non current assets, partially offset by a decrease of MMUS$ 15.4 in current assets, explained as follows. For a better understanding of the figures in this report, bear in mind that during the fourth quarter of 2017 the Company decided to stop operating its logistics and freight forwarder business, as explained in Note 2 b) and Note 35 of these Consolidated Financial Statements. As a result, in the financial statements as of December 31, 2017, the assets and liabilities of the subsidiaries engaged in this business have been reclassified as assets and liabilities held for sale. In addition, on December 13, 2017, the Company sold its interest (100%, direct and indirect) in its subsidiary Norgistics Chile S.A. to a third party, thus disposing of its logistics and freight forwarder business in Chile. This involved deconsolidating, due to loss of control, the assets and liabilities related to this subsidiary in these Consolidated Financial Statements as of December 31, Results from the logistics and freight forwarder business for the year ended December 31, 2017, are presented as discontinued operations and results for the year ended December 31, 2016, have been restated in accordance with IFRS Annual Report 2017

199 On October 19, 2016, CSAV sold its liquid bulk business unit (hereinafter OyV ) to its partner Odfjell Tankers, disposing of all shares held directly and indirectly by CSAV in its subsidiaries and associates that operated that business unit. As a result, as of December 31, 2016, the Company no longer has assets or liabilities related to the liquid bulk business unit and its results for the 2016 period have been presented as discontinued operations, together with the logistics and freight forwarder business, as mentioned above. The decrease of MMUS$ 15.4 in current assets is explained mainly by a reduction in cash and cash equivalents and, to a lesser extent, to deconsolidating the subsidiary Norgistics Chile S.A., which primarily affected deferred tax assets and trade and other receivables. Other contributing factors include decreases in inventory and other financial assets as a result of vessels considered to be operating as of December 31, 2016, that were actually being repositioned for redelivery, as well as reduced fuel hedges, respectively. This decrease was partially offset by the reclassification of noncurrent assets to assets held for sale. The increase of MMUS$ in non current assets is explained mainly by an increase of MMUS$ in equity method investments, which was partially offset by a decrease of MMUS$ 46.2 in deferred tax assets, as explained in detail below. The variation in equity method investments during 2017 is related mainly to CSAV s investment in the German shipping line Hapag Lloyd AG (hereinafter HLAG), and can be explained by the following factors: (i) an increase in capital movements of MMUS$ due to the additional investment in HLAG made during the year, (ii) a larger loss recorded in share of loss of equity method associates and joint ventures of MMUS$139.5, which was comprised of: the dilution loss in the value of the investment in HLAG of MMUS$ recorded in the second quarter of 2017; a gain of MMUS$14.8 related to badwill arising from the acquisition of the additional 2.89% of HLAG in the fourth quarter of the year; a gain of MMUS$11.3 from PPA amortization of HLAG's profit; and a gain of MMUS$1.6 from CSAV s direct interest in HLAG s profit, based on its interest in that entity as of the end of each quarter; (iii) an increase of MMUS$ 9.5 in CSAV s share of HLAG s other comprehensive income (OCI) during the year; and (iv) a decrease of MMUS$ 3.0 for CSAV s share of other changes in HLAG s equity. The table below summarizes these movements. Compañía Sud Americana de Vapores S.A. 197

200 Detail of Movements in CSAV's Investment in HLAG As of December 31, 2017 MMUS$ Balance as of December 31, ,771.6 Share of HLAG's Profit 1.6 Effect of PPA on Profit 11.3 Gain (Loss) on Acquisition of Interest 14.8 Dilution Loss (167.2) Total Share of Associate Profit (Loss) (139.5) Share of Other Comprehensive Income 9.5 Other Changes in Equity (3.0) Capital Movements Closing balance 1,932.3 The following section details each of the main effects on the carrying amount of CSAV s investment in HLAG during The dilution loss and the reduction in CSAV s interest in HLAG during the second quarter of 2017 are due to the closing of the business combination between HLAG and United Arab Shipping Company (UASC) on May 24, This transaction makes HLAG the fifth largest container shipping company in the world. HLAG's management estimates that this merger will generate annual synergies of MMUS$ 435, which will be reflected partly in 2017 and fully in With the closing of the transaction, Hapag Lloyd acquired 100% of the shares of UASC, and the former shareholders of UASC collectively received 28% of the combined entity. As a result, the shareholdings of Hapag Lloyd's previous shareholders were reduced. CSAV remained HLAG's main shareholder, conserving the shareholder agreement in force with the City of Hamburg and Kühne Maritime and, therefore, maintaining joint control of HLAG with a post merger stake of 51.5%. In light of the significant synergies that this merger has generated and will continue to generate for Hapag Lloyd, estimated at MMUS$ 435 per year, mainly from greater efficiency and economies of scale in its fleet and service network, coupled with increased globalization and diversification of its routes, the business combination with UASC is considered a highly valuable transaction for the Company. The effect of the fleet contributed by UASC and the synergies on HLAG's cost structure will enable it to visibly improve its cost per container transported and, with that, its performance relative to its main competitors. This is especially important along the main East West routes (to and from Asia) where the size of HLAG's new fleet will allow it to compete successfully with the world s largest shipping companies in the large vessel segment a segment in which HLAG did not previously participate with its own pre merger fleet. Given the above, the dilution loss of MMUS$ as of the merger closing does not reflect a decrease in the financial value of CSAV's investment in HLAG, but rather is the result of the 198 Annual Report 2017

201 accounting and valuation methodologies defined in IFRS 3 and IFRS 13. These standards dictate that assets acquired in a business combination must be identified one by one and recorded at fair value and excludes from the valuation any synergies acquired in a merger, which can only be accounted for as goodwill. IFRS 13 also establishes that a publicly listed company like HLAG must record a stock issuance as of the share s market value on the date of subscription. Therefore, the combined effect of these two accounting rules means that unless the share s pre merger market value already reflects the present value of the synergies, they cannot be considered part of the accounting value acquired. For the HLAG UASC merger, since the synergies are the basis and main reason for having agreed upon and executed the transaction, the fact that they cannot be reflected in the acquired value, as explained above, creates a significant difference between the accounting valuation defined by the standard and the financial valuation carried out by the parties to the merger. For example, a simple calculation of the present value of the synergies using a multiple of seven times the annual estimated value gives around US$ 3 billion for HLAG. The potential financial value of the synergies from this merger for CSAV would be 22.6% of this figure. For more information regarding the business combination and its accounting effects, see Note 40 to these consolidated financial statements. During the fourth quarter of 2017, and as part of the agreements previously stipulated in the BCA intended to strengthen the financial structure of the combined entity, Hapag Lloyd carried out a capital increase with preferential subscription rights for all shareholders, whereby 11,717,353 new shares were placed at a subscription price of EUR 30 per share, raising a total of MMUS$ 414. The new shares were offered on the German stock exchange between October 2 and October 17, Hapag Lloyd used all funds raised to reduce and repay its financial debt, thus improving its leverage ratios and reducing its future finance costs. Before transaction close, CSAV, the City of Hamburg and Kühne agreed that, through that capitalization, CSAV would have an interest of 25% in Hapag Lloyd and thus would continue to exercise decisive influence in agreements at shareholder meetings involving essential corporate matters such as capital increases, mergers, spin offs and bylaw amendments, all of which require 75% approval. As of the closing of HLAG's capital increase, CSAV had subscribed 54.3% of the shares to give it a 24.7% interest in the company. However, on October 30, 2017, the Company purchased additional shares of Hapag Lloyd from Kühne Maritime, thus increasing its interest in the German shipping line to 25% of voting shares and consolidating its position as the main shareholder. In parallel to HLAG's capital increase described above, the Company initiated a capital increase process in Chile in order to provide it with sufficient liquidity to participate in that capital increase and obtain a 25% interest. This new capital increase entailed issuing 6,100 million new shares at a Compañía Sud Americana de Vapores S.A. 199

202 price of Ch$ per share. This process was carried out successfully between October 10 and November 22, 2017, with 100% of the new shares issued being subscribed and MMUS$ in funds raised. 98.2% of the placement (about MMUS$ 289) was subscribed during the first preferential option period. In order to accurately calculate how much capital was needed and minimize the effects of EUR, USD and CLP exchange rates, the Company decided to begin its capital increase once HLAG had determined the share price and total amount it expected to raise. However, since Chilean regulations provide longer time frames for a capital increase than German regulations, CSAV's capital increase process lasted longer than HLAG s capital increase plus the purchase of the additional shares from Kühne Maritime. Therefore, CSAV financed these transactions with funds raised from the shares subscribed by the Company s controlling shareholders at the beginning of the first preferential option period plus two bridge loans totaling MMUS$ 120 from commercial banks. These loans were later repaid with the remaining funds raised from the capital increase. As mentioned, after attaining 25% of the German shipping line, CSAV concluded its capital increase in November, raising MMUS$294.4 and leaving a surplus of approximately MMUS$31 over the amount invested in HLAG to date, which was added to CSAV s unrestricted working capital. As a result, CSAV s board decided to use these remaining resources to purchase new shares of HLAG. On December 6, 2017, the Company acquired an additional 0.46%, bringing its total interest in HLAG to 25.46% as of the reporting date of these Consolidated Financial Statements. Overall, a total of MMUS$293.7 was disbursed to purchase new HLAG shares during the year. As indicated above, during the fourth quarter of 2017 CSAV increased its interest in HLAG from 22.58% to 25.46%, by subscribing to HLAG's capital increase and purchasing additional shares. The funds used by CSAV to subscribe its prorated portion of HLAG's capital increase totaled MMUS$ 94.0, based on the Company s subscription rights at a price of EUR 30 for each new share. The 2.88% increase in its interest in HLAG was purchased for MMUS$ 199.7, which brings the total invested in new HLAG shares during the year to MMUS$ The cost of the total investment was recorded as capital movements, including a purchase price allocation (PPA) on the additional 2.88% purchased, as explained in the following paragraph. In accordance with IAS 28, CSAV hired PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC Germany) to prepare a PPA report, which determined the fair value of the new identifiable assets acquired upon purchasing the additional 2.88% to be MMUS$ Compared to the cost indicated above of MUS$199.7, this gives badwill of MUS$14.8, which is recorded directly as a gain in CSAV s profit or loss in accordance with IAS 28 and IFRS 3. This gain for badwill is recorded in Share of profit (loss) of associates and joint ventures in the Consolidated Statement of Comprehensive Income and is disclosed separately 200 Annual Report 2017

203 from the direct interest in HLAG's results in Note 15 of these Consolidated Financial Statements under Gain (loss) on acquisition of interest. More information on the accounting balance of CSAV s investment in HLAG and all movements during the year 2017, as well as the business combination between HLAG and UASC, can be found in Notes 15 and 40 of these Consolidated Financial Statements. Resuming the description of the main variations in non current assets, the MMUS$ 46.2 decrease in deferred tax assets can be attributed mainly to the appreciation of the euro given the financing structure (in euros) within the CSAV Group to finance the investment in HLAG. During 2017, the net effect of the variation in the euro/dollar exchange rate and interest on that financing generated tax profits for CSAV in Chile, thus resulting in an income tax expense and a decrease in deferred tax assets for the period. In addition, although to a much smaller degree, this account was negatively affected by the deconsolidation of the subsidiary Norgistics Chile S.A and the reclassification of certain assets to assets held for sale, as indicated above. As of December 31, 2017, total liabilities decreased by MMUS$ 13.2 compared to December 31, This variation is explained by a decrease of MMUS$ 16.7 in current liabilities, partially offset by an increase of MMUS$ 3.5 in non current liabilities. The decrease of MMUS$ 16.7 in current liabilities is explained mainly by a variation of MMUS$ 19.1 in other current provisions, which can be attributed mostly to the use of a provision for closing costs for investigations into the car carrier business by antitrust authorities in different jurisdictions and to reclassifying part of the existing balance as non current due to greater uncertainty regarding short term needs, a decrease in onerous contracts and the use of other provisions for operating and administrative expenses. In addition, payables to related parties as of December 31, 2017, fell MMUS$ 1.7 as compared to 2016, explained mainly by a change in certain suppliers of maritime services in the vehicle transport business and the deconsolidation of the subsidiary Norgistics Chile S.A. in the Consolidated Financial Statements as of December 31, This was partially offset by a net increase in trade and other payables and other current nonfinancial liabilities of MMUS$ 2.8, which includes the effect of deconsolidating the subsidiary Norgistics Chile S.A. and reclassifying liabilities as held for sale, as explained above. Excluding these effects, this small increase is explained mainly by greater slot purchases and leases from other shipping companies and more income accrued on voyages in transit. The increase of MMUS$ 3.5 in non current liabilities is explained mainly by the reclassification of some provisions from current to non current, as indicated above, partially offset by a decrease in trade and other payables (non current) of MMUS$ 2.5, because those obligations were paid as they became due. Compañía Sud Americana de Vapores S.A. 201

204 As of December 31, 2017, equity increased by MMUS$ compared to December 31, This change is explained by the capital increase of MMUS$ in the fourth quarter of 2017, as explained above, and an increase in other reserves of MMUS$ 4.6, explained mainly by an increase of MMUS$ 6.2 in CSAV's share of HLAG's other comprehensive income and other equity reserves, and a decrease of MMUS$ 0.4 related to the loss in value of hedge derivatives and share issuance costs of MMUS$ 1.2 during the period. This was partially offset by the loss of MMUS$ recorded for the year More information on these changes in equity can be found in Note 28 f) of these Consolidated Financial Statements. b) Statement of Income For the year ended December 31, 2017 For the year ended December 31, 2016 Change MMUS$ MMUS$ MMUS$ Revenue Cost of sales (102.6) (105.9) 3.3 Gross profit Administrative expenses (10.7) (11.7) 1.0 Other operating income and expenses (11.5) Net operating income (6.6) EBITDA (EBITDA without associates) (5.5) Finance costs, net (4.4) (3.8) (0.6) Share of loss of equity method associates and joint ventures (139.5) (7.0) (132.5) Exchange differences and other non operating expenses 1.0 (0.1) 1.1 Income tax expense (45.2) (20.6) (24.6) Loss after tax from continuing operations (186.8) (23.6) (163.2) Profit (loss) after tax from discontinued operations (1.3) 1.3 (2.6) Reversal of non controlling interest (1.0) 1.0 Loss attributable to owners of the company (188.1) (23.3) (164.8) The loss attributable to the owners of the Company of MMUS$ for the year 2017, represents a reduction of MMUS$ over the same period in The Company recorded net operating income of MMUS$ 1.3 for the year 2017, down MMUS$ 6.6 over the same period in 2016, explained mainly by the reversal of the provision for the NYSA ILA case of MMUS$ 12.5 during 2016, net of the improved operating income for 2017 as compared to the prior year. The provision was reversed following a favorable ruling for CSAV on a claim filed by 202 Annual Report 2017

205 the NYSA ILA Pension Fund, which covers the longshoremen at the ports of New York and New Jersey (United States). CSAV's income statement reflects revenue of MMUS$ for 2017, which represents an improvement of MMUS$ 0.6 over the same period in This improvement is largely explained by the vehicle transport business, due to significant growth in transport volumes in 2017 in comparison to 2016, partially offset by lower average freight rates. The variation in freight rates mentioned above must also take into account the fact that a portion of rates are indexed to fuel price variations. As a result, the rise in average fuel prices during 2017 in comparison to 2016 helped mitigate this reduction in rates. Cost of sales amounted to MMUS$ for 2017, down MMUS$ 3.3 over the same period in This decrease is explained mostly by a drop of MMUS$ 5.2 in costs for the vehicle transport business, primarily a more efficient operating cost structure and a higher vessel usage rate, which has enabled the Company to absorb part of the growth in volume without increasing its fleet s installed capacity. The savings explained above have also allowed it to reverse the increase in costs resulting from the rise in average fuel prices, up 43% over On the other hand, as mentioned above, since a portion of sales have fuel price indexation clauses, some of the negative effect on costs was partially offset by increased revenue. Administrative expenses fell to MMUS$ 10.7, down MMUS$ 1.0 from 2016, mainly due to cost cutting plans implemented during the year. Other operating income and expenses totaled MMUS$ 4.7, which represents a decrease of MMUS$ 11.5 over the same period in 2016, explained by the 2016 reversal of the provision for the NYSA ILA case of MMUS$ 12.5, as explained above. In share of profit (loss) from equity accounted associates and joint ventures, CSAV recorded a loss of MMUS$ for 2017, down MMUS$ from the same period last year. This difference is explained mainly by a dilution loss of MMUS$ recorded in the second quarter of 2017 on the value of CSAV's investment in HLAG, as explained in detail in the preceding section, and a decrease in PPA amortization on the investment in HLAG of MMUS$ 15.2 with respect to the same period in 2017, partially offset by a MMUS$ 35.1 improvement in HLAG's results with respect to 2016, and the gain of MMUS$ 14.8 from increasing its interest in HLAG in the last quarter of 2017, as explained above. Note that the above figures consider an interest of 31.35% for 2016 and the first quarter of 2017, 22.58% for the second and third quarters of 2017 and 25.46% for the fourth quarter. As a result, CSAV s share cannot be calculated directly on HLAG s accumulated profit for the year. According to the accounting method that should be used for joint ventures under IFRS, each quarter CSAV reflects in profit or loss its direct share of the profit or loss attributable to the owners Compañía Sud Americana de Vapores S.A. 203

206 of HLAG and also the effect on profit or loss of the amortization of PPA, determined as of the closing of the business combination in December 2014 (in accordance with IFRS 3 and IAS 28). The result recorded for the year 2017 consists of the profit attributable to the owners of the Company reported by HLAG of MMUS$ 30.0, which includes a loss of MMUS$ 66.9 for the first quarter, profit of MMUS$ 71.9 in aggregate for the second and third quarters and profit of MMUS$ 25.0 for the fourth quarter, over which the Company applied the equity method using 31.35% for the first quarter, 22.58% for the second and third quarters and 25.46% for the fourth quarter, respectively, giving profit of MMUS$ 1.6 for its direct share of HLAG s results. CSAV also recognized the effect of PPA amortization, which gave a gain of MMUS$ 17.8 for the first quarter, a total gain of MMUS$ 24.5 for the next six months and a gain of MMUS$ 4.1 for the last quarter of the year. The Company applied the equity method value (31.35% for the first quarter and 22.58% for the remaining quarters) to these figures. In addition, given the 2.88% increase in its ownership of HLAG, this interest must be considered for the new PPA calculated for the acquisition of the new shares, which resulted in a loss of MMUS$ 27.0 for the fourth quarter, of which CSAV recognized a loss of MMUS$ 0.8. Adding the two PPAs, CSAV recognized a total gain of MMUS$ 11.3 for its share of PPA amortization during the year. Therefore, based on its share of HLAG's results and the respective PPA adjustments, it recorded total profit of MMUS$ During 2017, CSAV recognized an income tax expense of MMUS$ 45.2, reflecting an increase of MMUS$ 24.6 over the same period in This variation is explained mainly by a larger tax expense in 2017 because of the impact of the appreciating euro on the CSAV Group's financing structure to maintain its investment in HLAG of approximately MMUS$ 35.7, as detailed in section a) above, net of a charge to profit or loss of MMUS$ 17.2 for adjustments to tax loss carryforwards in the first quarter of 2016 related to tax earnings arising from the business combination with HLAG in Therefore, the loss attributable to the owners of the company of MMUS$ for 2017 represents a worsening of MMUS$ over the same period in c) Operating Results by Segment CSAV reports two business segments as of December 31, 2017: Container Shipping and Other Transport Services. Each segment is described briefly below: Container Shipping: These are the container shipping services operated by HLAG, represented by the investment in that joint venture, plus certain assets and liabilities related to the container shipping business that are controlled by CSAV (deferred tax assets, financial liabilities to finance the investment and others). 204 Annual Report 2017

207 Other Transport Services: These are the vehicle transport (car carrier) services operated directly by CSAV. As a result of the Company s decision to stop operating its logistics and freight forwarder business during the fourth quarter of 2017, from that point on the results of that business unit are presented as discontinued operations and comparative information from prior periods is restated in accordance with IFRS 5. After selling the liquid bulk business unit to its partner Odfjell Tankers on October 19, 2016, results recorded until the date of sale are also presented as discontinued operations. The following chart shows the income statement by segment for the year 2017 (more details in Note 6 to the Consolidated Financial Statements): Container Shipping For the year ended December 31, 2017 For the year ended December 31, 2016 Change MMUS$ MMUS$ MMUS$ Administrative expenses (4.5) (4.1) (0.4) Other operating income and expenses 12.5 (12.5) Net operating income (loss) (4.5) 8.4 (12.9) Finance costs, net (5.0) (4.1) (0.9) Share of loss of equity method associates and joint ventures (139.5) (7.0) (132.5) Exchange differences and other non operating expenses Income tax expense (44.3) (20.5) (23.8) Loss after tax (192.4) (23.2) (169.2) Loss attributable to owners of the company (192.4) (23.2) (169.2) For the year 2017, the container shipping segment reported a loss of MMUS$ 192.4, which reflects a reduction of MMUS$ over the same period in This is due to the dilution loss of MMUS$ explained in section 1a) above; an improvement in its share of HLAG's result of MMUS$ 19.9; a gain from the acquisition of its additional capital of MMUS$ 14.8, as explained above, the 2016 reversal of the provision for the NYSA ILA case of MMUS$ 12.5, explained in the previous section; increased administrative expenses of MMUS$ 0.4, and increased finance costs of MMUS$ 0.9, related to financial liabilities for the HLAG investment (corporate bonds, loan from Banco Itaú and bridge loan for capital increase), and a larger tax expense of MMUS$ 23.8, related largely to the financing structure for the investment in HLAG, as explained in preceding sections. Other factors include a gain on exchange differences and other non operating income for the year 2017 in comparison to 2016, for a total of MMUS$ 0.9. Compañía Sud Americana de Vapores S.A. 205

208 Other Transport Services For the year ended December 31, 2017 For the year ended December 31, 2016 Change MMUS$ MMUS$ MMUS$ Revenue Cost of sales (102.6) (105.9) 3.3 Gross profit Administrative expenses (6.2) (7.6) 1.4 Other operating income and expenses Net operating income (loss) 5.8 (0.5) 6.3 Finance costs, net Share of loss of equity method associates and joint ventures Exchange differences and other non operating expenses 0.1 (0.1) 0.2 Income tax expense (0.9) (0.1) (0.8) Profit (loss) after tax from continuing operations 5.6 (0.4) 6.0 Profit (loss) after tax from discontinued operations (1.3) 1.3 (2.6) Reversal of non controlling interest (1.0) 1.0 Profit (loss) attributable to owners of the company 4.3 (0.1) 4.4 For the year 2017, the other transport services segment reported profit of MMUS$ 4.3, which represents an improvement of MMUS$ 4.4 over the same period in 2016, due mainly to a larger gross profit of MMUS$ 3.9, explained by a MMUS$ 0.6 increase in revenue and a MMUS$ 3.3 decrease in cost of sales, both explained in section b) above. Improvements were also seen in administrative expenses (MMUS$1.4) due to cost cutting plans implemented during the year, and other operating income and expenses (MMUS$1.0) because of the sale of certain investment properties beyond those sold in The Company recorded a larger income tax expense, up MMUS$ 0.8, mainly because of the effect on taxable income of the improved margin described above. 206 Annual Report 2017

209 2. Market Analysis a) Container Shipping Segment The Company participates in the container shipping business through its 24.46% stake in HLAG (accounted for as a joint venture using the equity method). Although CSAV jointly controls HLAG together with two other major partners, that joint venture has an independent management team that controls and manages its risks autonomously and in accordance with the standards of a publicly listed and regulated company in Germany. With that said, although the container shipping industry s main indicators seem to be evolving favorably, it continues to face a volatile, highly competitive market characterized by: Volatile global trade. There is a direct relationship between global GDP growth and international trade in goods, which takes place mainly through ocean container shipping. Global GDP growth has diminished in recent years as compared to earlier in the same decade, and growth in the volume of container transport has also fallen, as shown in the figure below. However, in January 2018 the International Monetary Fund (IMF) predicted global economic growth of 3.7% for 2017, the highest figure in the last six years, surpassing the entity's most recent projections from October 2017 by one percentage point and forecasts from early 2017 by two percentage points. This most recent IMF report estimates global GDP growth for 2018 of 3.9%, which represents an increase of two points over the October report and three points since the beginning of In 2016, global GDP hit its lowest levels seen in recent years. Therefore, these indicators and their projections are still highly volatility. Annual change (%) 15,0% 10,0% 5,0% 0,0% Evolution of Global Production and Container Trade 13,7% 7,8% 5,4% 4,2% 5,1% 5,3% 5,4% 4,2% 3,5% 3,4% 5,0% 3,1% 3,4% 3,5% 2,1% 3,2% 3,7% 3,9% e World Seaborne Container Trade (%) Global GDP growth (%) Source: International Monetary Fund Global Economic Prospects Oct 17, Clarkson Research Nov 17. Compañía Sud Americana de Vapores S.A. 207

210 In line with these projections, demand for container transport in 2017 grew 5.4% and is expected to grow 5.0% in 2018, due to a more vigorous global economy and increased trade. These forecasts improved considerably over the first quarter of the year (4.2% for 2017 and 4.6% for 2018) due to the rise in industry indicators for transport volume starting the second quarter of The positive results for 2017 reported by the IMF are due to recovering growth in several economies, considered the most synchronized recovery seen since 2010, with economies in Europe and Asia performing particularly well. During the last few months of 2017, global trade increased sharply backed by recovering investment, especially in developed economies, and increased production in Asia, in line with stronger consumer confidence. The recovery seen in 2017 is expected to continue in 2018, mainly because of growth in developed economies, backed by favorable expectations for global financial conditions and more quickly accelerating demand. These outlooks also include the positive economic effects of the tax reform implemented in the United States, which should strengthen internal demand and imports in the short term. Emerging markets should continue to enjoy the economic vigor and growth seen in Latin America is expected to continue to recover with slight growth over 2017 and should not be significantly affected by the downgrading of Venezuela and upcoming elections in Brazil, Mexico and Colombia. Excess capacity. The container shipping industry's excess installed capacity, which began during the crisis, continues to significantly impact shipping lines and markets. Since then, most of the major global shipping companies have taken various significant measures to improve the balance between supply and demand. These measures have included suspending and restructuring transport services, suspending voyages, increasing idle fleets, reducing vessel speeds and scrapping unused vessels. Shipping companies are increasingly seeking joint operating agreements, operating alliances along the most important routes and greater industry consolidation through mergers and acquisitions. In this same spirit, today shipbuilding orders usually relate to vessel operators or very long term charter contracts with those operators, and not to investors or non operating ship owners, as was the case until recently. As a result, orders are presently part of an orderly growth plan and are aligned with joint venture agreements or global alliances in which these companies participate. According to data from Alphaliner, vessels under construction total 12.7% of the current global operating fleet as of December 31, 2017, which remains within historically low levels. This is a reflection of the industry's efforts to contain growth, which have resulted in a drastic reduction in new construction orders estimated for 2018 in comparison to prior years, falling to record lows. It is 208 Annual Report 2017

211 worth mentioning that 47% of these future deliveries fall within the largest ship category, with capacity over 18,000 TEU, which reflects the industry's focus towards increased operating efficiency and more coordinated positioning along multiple routes operated by global alliances. During 2017, the industry continued to see considerable vessel scrapping, posting the third highest figure in history of close to 2.1% of the global fleet existing at the beginning of the year, and maintaining a downward trend in the average age of scrapped vessels. Another important effect that partially explains this trend is the opening of the Panama Canal expansion in July This development strongly impacted vessel scrapping, which peaked in 2016, mainly in the Panamax segment (i.e. the largest vessels able to circulate through the old canal). This increase in vessel scrapping is explained by the entry of new, larger ships to replace smaller, less fuel efficient vessels. Although these initiatives have led shipping companies to rationalize asset use, with shipbuilding orders currently stabilized at lower levels, and excess capacity began to shrink in 2016 for the first time in the past five years as demand outgrew supply, weaker demand for shipping in recent years continues to generate excess capacity. In contrast, demand and supply growth remained in equilibrium in One indicator of this phenomenon, in addition to low, volatile freight rates, is the fact that in 2016 idle fleets reached their highest levels since the 2009 crisis. Idle fleet levels fell in 2017 with respect to the prior year due mainly to both high scrapping levels during the period and the industry s re incorporation of part of its idle fleet for the industry s new configuration as a result of new operating alliances that began in April Evolution of Idle Fleet Idle Capacity in Th. TEU % 14% 12% 10% 8% 6% 4% 2% 0% % of Total Fleet Idle Fleet % of Total Fleet Source: Alphaliner Monthly Report Oct 17 The idle fleet is currently made up of 1,000 to 5,000 TEU vessels (many of them designed to meet the specifications of the old Panama Canal), which are being replaced by more efficient vessels that have been designed for the recently inaugurated new canal. Compañía Sud Americana de Vapores S.A. 209

212 Low returns and stiff competition in the shipping market. Freight rates net of fuel costs (ex bunker rates) are still below historical levels along most routes and are lower than levels that the industry could presently consider a sustainable equilibrium to obtain a suitable return on its assets. In recent years, the SCFI index has varied significantly, reaching the lowest level in the index s history in early However, during 2017, this index reported a higher annual average price and considerably more stability in comparison to the last two years. It is also displaying a more seasonal nature than prior years, with the index increasing as the industry enters its peak season (June to September) and falling during the slack season. However, if we include the effect of fuel prices, which trended upwards during 2017 and had a higher average price than the last two years, exbunker freight rates are still below expectations for suitable returns. In addition, rates along other routes have not evolved as favorably in 2017 as those from China, maintaining low average rates on many routes. An industry undergoing consolidation. Currently, even though the container shipping industry still boasts a large number of players, especially in the segment of smaller sized companies, industry consolidation is growing. The merger of the CSAV and HLAG container shipping businesses took place at the end of Since then further business combinations have occurred, including the acquisition of CCNI by Hamburg Süd, the merger of COSCO and China Shipping, the acquisition of APL by CMA CGM as well as the announcement of the merger of the three largest Japanese shipping companies (K Line, NYK and MOL) into one single entity and the purchase of Hamburg Süd by Maersk announced in late 2016 and concluded in November Furthermore, as described above in this report, in late May 2017 HLAG announced the closing of its merger with UASC, which positioned it once again among the world's five largest shipping companies in terms of hauling capacity. In addition, at the beginning of the second half of 2017 the Chinese shipping line COSCO, which had previously merged with China Shipping, announced its acquisition of Hong Kong based Orient Overseas Container Lines (OOCL). During the third quarter of 2016, Hanjin Shipping the seventh largest container shipping company at that time by hauling capacity and the largest Korean shipping line filed for bankruptcy and suspended services. This is the largest bankruptcy case in the history of the container shipping industry. Following all these business combinations and Hanjin's liquidation, estimates calculate that the ten largest global shipping operators will account for over 84% of installed capacity, whereas the five largest will have over 65%. The five largest operators should achieve economies of scale and size 210 Annual Report 2017

213 significantly larger than the remaining operators, with the resulting effect on their costs and the scope of their service networks, which will place more pressure on smaller operators to form alliances in order to cut costs and expand commercial coverage to a global scale. Likewise, in recent years shipping companies have expanded joint operating agreements and operating alliances in order to improve customer service levels and broaden the geographic coverage of their shipping services, while generating very significant economies of scale and network economies. These initiatives have been immensely important and have led to the formation of major global operating alliances. The new structure of alliances announced in 2016 began to operate along different routes around the world in the second quarter of 2017, accounting for almost 90% of total transport capacity along the industry s main long haul, East West routes. The main changes included the dissolution of the Ocean Three, G6 and CKYHE alliances in order to form two new alliances: Ocean Alliance and THE Alliance. HLAG is a member of the latter alliance. The 2M alliance maintained its present structure, but HMM was incorporated as a slot buyer. Highly volatile fuel prices. Fuel is one of the industry's main consumables. Like other commodities, oil prices remained very high until late 2014, after which they fell drastically and then experienced a moderate recovery. In 2017, fuel prices increased sharply, although they stabilized during the second half of the year, recording an average price higher than figures seen in 2015 and Therefore, the industry continues to streamline the use of resources and optimize its operations, focusing on reducing operating costs; improving productivity and asset use; and improving fuel consumption. In recent years, major global operators have prepared container ship investment plans designed to renew their fleets and better adapt to the new operating paradigms. They are focusing on enhancing efficiency, achieving economies of scale, reducing fuel consumption and adapting fleets to the new Panama Canal and the main global routes. Compañía Sud Americana de Vapores S.A. 211

214 Source: Shanghai Shipping Exchange, Index of average fuel price (IFO 380) at the Port of Rotterdam. Currently, it could be said that the aforementioned technological change process is almost complete, with all major operators and global alliances shipping a very significant portion of their volumes in very large, efficient vessels. This explains, to a large extent, the decrease in new shipbuilding orders and the constant reduction in inventories of vessels under construction, as explained in preceding sections. In summary, all container shipping industry players continue to face challenging conditions, albeit with significant improvements in some key indicators that lead to estimates of better outlooks for the future. Although a quick, consistent recovery has not been observed, upward trends have been seen in rates along several routes mainly from the Far East, which boasts the largest shipping volumes in the world. However, the industry has still not yet reached recovery levels seen in 2013 and In recent months, improvement has also been seen in fleet and supply demand equilibrium indicators, which, together with the greater stability in fuel prices, gives signs of improved outlooks for stability and ex bunker rates. These enhanced outlooks have led to greater operating income for the year for many industry operators more exposed to routes from Asia. Even so, the industry remains properly focused on the new paradigm associated with optimizing operating costs and collaborative operations through joint operating alliances and agreements, but with a growing, very dynamic trend toward consolidation. This is especially important to deal with the cost pressures that a recovering market can bring, in the markets for both vessel charters and maritime and port services. 212 Annual Report 2017