UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2019 Commission file number: 001-36165 AMBEV S.A. (Exact name of Registrant as specified in its charter) Federative Republic of Brazil (Jurisdiction of incorporation or organization) Rua Dr. Renato Paes de Barros, 1017, 3rd floor 04530-001 São Paulo, SP, Brazil (Address of principal executive offices) Fe ...

PART I [ITEM 3. KEY INFORMATION](index=9&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company presents five-year financial data, exchange control details, and key operational and market risks [A. Selected Financial Data](index=9&type=section&id=A.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial statements and discusses Brazilian exchange control regulations Selected Consolidated Income Statement Data | | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **(in R$ million)** | | | | | | | Net sales | 50,231.3 | 47,899.3 | 45,602.6 | 46,720.2 | 38,079.8 | | Gross profit | 30,961.7 | 29,857.5 | 28,924.6 | 30,658.8 | 25,265.2 | | Income from operations | 16,989.4 | 16,426.8 | 17,105.4 | 18,778.5 | 15,826.6 | | Net Income | 11,377.4 | 7,850.5 | 13,083.4 | 12,879.2 | 12,362.0 | | Attributable to Equity holders of Ambev | 11,024.7 | 7,332.0 | 12,546.6 | 12,423.8 | 12,065.5 | | **(in R$)** | | | | | | | Basic Earnings per common share and per ADS | 0.70 | 0.47 | 0.80 | 0.79 | 0.77 | Selected Consolidated Balance Sheet Data | | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **(in R$ million)** | | | | | | | Total assets | 94,126.1 | 86,851.9 | 83,841.4 | 90,176.3 | 72,143.3 | | Total current assets | 25,329.6 | 24,718.0 | 23,886.8 | 28,314.5 | 20,728.5 | | Total current liabilities | 24,828.4 | 28,688.5 | 28,773.6 | 30,141.9 | 21,824.8 | | Total shareholders' equity | 57,547.4 | 47,982.8 | 46,651.3 | 50,333.7 | 43,644.7 | - The right to convert dividend payments and proceeds from the sale of shares into foreign currency and remit them outside Brazil is subject to **exchange control restrictions** and requires investment registration with the Central Bank of Brazil and the CVM[25](index=25&type=chunk) [D. Risk Factors](index=14&type=section&id=D.%20Risk%20Factors) The company outlines risks related to its operating countries, operational activities, and its securities - Key risks related to operating countries include **economic and political instability in Brazil**, fluctuations in the Brazilian real, high taxes on beverages, and substantial risks in Argentina, such as **hyperinflation and political instability**[27](index=27&type=chunk)[28](index=28&type=chunk)[31](index=31&type=chunk) - Operational risks include **antitrust monitoring** in Brazil and Argentina, regulations on alcoholic and CSD beverages, potential for corruption, volatility in commodity prices, and **intense competition** which could reduce margins[34](index=34&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk) - Risks related to the company's shares and ADSs include the inherent **volatility and illiquidity** of Brazilian securities, the **significant influence of controlling shareholders (ABI)** who can determine most corporate actions, and the fact that dividend payments are not guaranteed[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=32&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This item details the company's history, business segments, strategy, production, organizational structure, and assets [A. History and Development of the Company](index=32&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) This section traces Ambev's corporate history, key mergers, international expansion, and recent strategic transactions - A pivotal event was the **2004 business combination with Interbrew (now ABI)**, which resulted in ABI becoming the majority shareholder and Ambev acquiring Labatt, a leading Canadian brewer[70](index=70&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) - In 2013, a **stock swap merger simplified the company's capital structure** from a dual-class system to a single class of voting common shares, aiming to improve corporate governance and liquidity[77](index=77&type=chunk)[79](index=79&type=chunk) - A significant recent strategic move was the **2016 agreement with parent company ABI** to swap its businesses in Colombia, Peru, and Ecuador for SABMiller's Panamanian business[81](index=81&type=chunk) [B. Business Overview](index=35&type=section&id=B.%20Business%20Overview) This section describes Ambev's operational segments, business strategy, production, and key licensing agreements Net Sales by Business Segment (in R$ million) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Latin America North | 32,628.1 | 31,086.0 | 28,927.8 | | - Brazil | 26,814.2 | 26,353.0 | 24,954.6 | | - CAC | 5,813.9 | 4,733.0 | 3,973.2 | | Latin America South | 10,753.9 | 10,769.7 | 10,212.9 | | Canada | 6,849.3 | 6,043.5 | 6,461.9 | | **Total** | **50,231.3** | **47,899.3** | **45,602.6** | Sales Volume by Business Segment ('000 hl) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Latin America North | 114,802.7 | 118,631.8 | 116,632.7 | | - Brazil | 101,642.9 | 106,360.0 | 106,961.4 | | - CAC | 13,159.8 | 12,271.8 | 9,671.3 | | Latin America South | 33,971.2 | 34,062.0 | 32,934.5 | | Canada | 9,942.9 | 10,135.7 | 10,254.5 | | **Total** | **158,716.9** | **162,829.4** | **159,821.6** | - The company's business strategy is built on several growth platforms, including: **elevating core brands, accelerating the premium segment, driving smart affordability**, and enhancing consumption experiences[88](index=88&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - Ambev holds long-term agreements for the **exclusive right to bottle, sell, and distribute PepsiCo products** in Brazil and other Latin American countries, alongside licensing agreements with ABI for major brands[134](index=134&type=chunk)[135](index=135&type=chunk) [C. Organizational Structure](index=50&type=section&id=C.%20Organizational%20Structure) This section explains Ambev's control structure, where Anheuser-Busch InBev holds a majority of the voting stock - As of December 31, 2018, **Anheuser-Busch InBev SA/NV (ABI) indirectly controlled 61.9%** of Ambev's total and voting capital stock, excluding treasury shares[141](index=141&type=chunk) [D. Property, Plant and Equipment](index=51&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment) This section lists the company's principal production facilities and total production capacity across its operating regions - As of December 31, 2018, the company's aggregate production capacity for beer and CSD was **270.1 million hectoliters per year**, with total production for 2018 at 154.4 million hectoliters[145](index=145&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=54&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Management discusses financial results, liquidity, capital resources, R&D, and contractual obligations for the past three years [A. Operating Results](index=54&type=section&id=A.%20Operating%20Results) This section provides a comparative analysis of financial performance for 2018 vs 2017 and 2017 vs 2016 by segment Consolidated Financial Highlights (in R$ million) | | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | Net sales | 50,231.3 | 47,899.3 | 4.9% | | Gross profit | 30,961.7 | 29,857.5 | 3.7% | | Income from operations | 16,989.4 | 16,426.8 | 3.4% | | Net income | 11,377.4 | 7,850.5 | 44.9% | - In 2018, **net sales grew 4.9% to R$50.2 billion**, driven by revenue management initiatives, while **net income rose 44.9% to R$11.4 billion**, largely due to a lower effective tax rate[171](index=171&type=chunk)[191](index=191&type=chunk) - In 2017, **net sales grew 5.0% to R$47.9 billion**, but **net income fell 40.0% to R$7.9 billion**, mainly due to a significant increase in income tax expense from a tax regularization program[196](index=196&type=chunk)[210](index=210&type=chunk) [B. Liquidity and Capital Resources](index=72&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) This section details the company's liquidity sources, cash flow analysis, and debt profile - The company's primary sources of liquidity are cash flows from operating activities, with **cash and equivalents plus current investments totaling R$11.5 billion** at the end of 2018[211](index=211&type=chunk)[212](index=212&type=chunk) Net Cash Position (in R$ million) | | As of Dec 31, 2018 | As of Dec 31, 2017 | | :--- | :--- | :--- | | Cash and cash equivalents | 11,463.5 | 10,352.7 | | Investment securities | 13.4 | 11.9 | | Total Debt | (2,422.8) | (2,553.0) | | **Net cash position** | **9,054.1** | **7,811.6** | - Consolidated **capital expenditures totaled R$3.6 billion in 2018**, primarily for capacity expansion, quality controls, automation, and modernization of packaging lines[222](index=222&type=chunk) [C. Research and Development](index=76&type=section&id=C.%20Research%20and%20Development) This section describes the company's innovation center, ZITEC, which focuses on product and packaging development - The company maintains the **ZITEC innovation center** in Rio de Janeiro to accelerate product innovation, with investment over the last three years totaling approximately **R$182 million**[222](index=222&type=chunk) [E. Off-balance Sheet Arrangements](index=76&type=section&id=E.%20Off-balance%20Sheet%20Arrangements) This section discloses future purchase commitments for raw materials, packaging, and property, plant, and equipment Purchase Commitments (in R$ million) | | As of Dec 31, 2018 | | :--- | :--- | | Property, plant and equipment | 142.9 | | Raw materials | 1,319.6 | | Packaging materials | 9,696.8 | | Other commitments | 919.4 | | **Total** | **12,078.6** | [F. Commitments and Contingencies (Tabular Disclosure of Contractual Obligations)](index=77&type=section&id=F.%20Commitments%20and%20Contingencies%20(Tabular%20Disclosure%20of%20Contractual%20Obligations)) This section provides a disclosure of material contractual obligations and significant unrecorded contingent liabilities - As of December 31, 2018, the company estimated total exposures of **possible (but not probable) losses from tax, labor, and other claims to be R$72.1 billion**, which are not recorded as liabilities[225](index=225&type=chunk)[300](index=300&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=78&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides information on directors, management, compensation practices, board structure, and employee data [A. Directors and Senior Management](index=78&type=section&id=A.%20Directors%20and%20Senior%20Management) This section lists the members of the Board of Directors and executive officers, along with their biographies - The Board of Directors is co-chaired by Victorio Carlos De Marchi (appointed by FAHZ) and **Carlos Alves de Brito (appointed by ABI, and also CEO of ABI)**[228](index=228&type=chunk)[229](index=229&type=chunk)[231](index=231&type=chunk) - The company's executive team is led by **Chief Executive Officer Bernardo Pinto Paiva**[234](index=234&type=chunk)[235](index=235&type=chunk) [B. Compensation](index=82&type=section&id=B.%20Compensation) This section details management remuneration, stock ownership plans, and other long-term incentive programs Management Remuneration (2018) | | Fixed (R$ million) | Variable (R$ million) | Share-based (R$ million) | Total (R$ million) | | :--- | :--- | :--- | :--- | :--- | | Board of Directors | 6.3 | 0.5 | 7.6 | 14.4 | | Executive Officers | 14.4 | 2.3 | 23.2 | 40.5 | | **Total** | **22.2** | **2.8** | **30.8** | **56.7** | - The company utilizes several **share-based compensation programs**, including a Stock Option Plan and a Restricted Shares Plan, to provide long-term incentives for senior employees and management[240](index=240&type=chunk)[242](index=242&type=chunk) [C. Board Practices](index=86&type=section&id=C.%20Board%20Practices) This section describes the functions of the Fiscal Council, Board of Directors, and its supporting committees - Ambev has a permanent **Fiscal Council** that, under a Sarbanes-Oxley Act exemption, performs the duties of an audit committee[251](index=251&type=chunk)[252](index=252&type=chunk) - The Board of Directors is supported by key committees, including the **Operations, Finance and Compensation Committee** and the **Antitrust Compliance and Related Parties Committee**[255](index=255&type=chunk)[257](index=257&type=chunk) [D. Employees](index=90&type=section&id=D.%20Employees) This section reports on the company's total number of employees with a geographical and functional breakdown Number of Employees | | As of Dec 31, 2018 | As of Dec 31, 2017 | As of Dec 31, 2016 | | :--- | :--- | :--- | :--- | | Total | 49,617 | 51,432 | 53,250 | - As of December 31, 2018, the company had **49,617 employees**, with the largest concentration in the Latin America North segment (36,643 employees), primarily in Brazil (29,873 employees)[264](index=264&type=chunk)[265](index=265&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=92&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This item identifies major shareholders, details the controlling shareholder agreement, and discloses related party transactions [A. Major Shareholders](index=92&type=section&id=A.%20Major%20Shareholders) This section details the ownership structure, with ABI and FAHZ as controlling shareholders, and outlines their agreement - As of March 8, 2019, Ambev's controlling shareholders were **ABI subsidiaries and Fundação Antonio e Helena Zerrenner (FAHZ)**, who together held **72.1%** of the total voting capital stock[269](index=269&type=chunk) Major Shareholders (as of March 8, 2019) | | % of Common Shares | | :--- | :--- | | Interbrew International B.V | 53.7% | | AmBrew S.A | 8.2% | | FAHZ | 10.2% | | The Bank of New York Mellon (ADSs) | 7.9% | - The **Ambev Shareholders' Agreement** governs the relationship between the controlling shareholders, detailing procedures for electing the Board of Directors, exercising voting rights, and transferring shares[273](index=273&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) [B. Related Party Transactions](index=99&type=section&id=B.%20Related%20Party%20Transactions) This section discloses material transactions with parent company ABI, FAHZ, and other significant shareholders - Ambev engages in various transactions with its parent company, ABI, including **licensing agreements for key brands** and strategic operational swaps[293](index=293&type=chunk)[295](index=295&type=chunk) - In January 2018, Ambev completed a transaction with fellow shareholder E. León Jimenes, S.A. (ELJ), paying **US$926.5 million to increase its ownership stake in Tenedora CND** (Dominican Republic) to approximately 85%[297](index=297&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=101&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section contains information on significant legal proceedings and the company's dividend policy [A. Consolidated Financial Statements and Other Financial Information](index=101&type=section&id=A.%20Consolidated%20Financial%20Statements%20and%20Other%20Financial%20Information) This section details significant legal proceedings, primarily tax matters, and outlines the company's dividend policy - As of December 31, 2018, the company faced tax proceedings with a total estimated possible risk of loss of **R$67.3 billion**, primarily related to ICMS, IPI, and income tax disputes in Brazil[301](index=301&type=chunk) - Significant tax disputes include challenges to the use of IPI credits from the Manaus Free Trade Zone (**R$3.8B possible loss**) and the amortization of goodwill from the Inbev Brasil merger (**R$9.3B possible loss**)[304](index=304&type=chunk)[311](index=311&type=chunk) - The company's dividend policy requires a **minimum mandatory dividend of 40%** of its adjusted annual net income, which can be paid as dividends or as interest on shareholders' equity[323](index=323&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=111&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides details on share capital, bylaws, material contracts, exchange controls, and tax considerations [B. Memorandum and Articles of Association](index=111&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) This section summarizes key provisions of Ambev's bylaws, covering shareholder rights, board composition, and dividend rules - Each common share entitles the holder to one vote, and the company's bylaws require a **minimum mandatory dividend of no less than 40%** of the distributable adjusted net income[334](index=334&type=chunk)[349](index=349&type=chunk) - The Brazilian Corporation Law provides **appraisal rights for dissenting shareholders** in specific corporate actions, allowing them to withdraw from the company and be reimbursed for their shares' value[365](index=365&type=chunk) [E. Taxation](index=123&type=section&id=E.%20Taxation) This section describes the material Brazilian and U.S. federal income tax consequences for non-resident shareholders - For non-Brazilian holders, dividends are not subject to Brazilian withholding tax, but distributions of **interest on shareholders' equity are subject to a 15% withholding tax**[379](index=379&type=chunk)[386](index=386&type=chunk) - For U.S. Holders, distributions are generally treated as dividend income, and the company does not believe it is a **Passive Foreign Investment Company (PFIC)**, which would trigger adverse tax rules[395](index=395&type=chunk)[398](index=398&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=132&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's exposure to commodity, interest rate, and foreign exchange risks and its hedging strategies - The company is exposed to market risks from changes in **foreign currency exchange rates, interest rates, and prices of key commodities**, and uses derivative financial instruments to manage these risks[402](index=402&type=chunk)[403](index=403&type=chunk) - The company uses **equity swap transactions** to neutralize the potential impact of its own stock price fluctuations on the costs associated with its share-based payment programs[415](index=415&type=chunk) PART II [ITEM 15. CONTROLS AND PROCEDURES](index=143&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section contains management's conclusions on the effectiveness of disclosure controls and internal financial reporting controls - Management concluded that as of December 31, 2018, the company's **disclosure controls and procedures were effective** at a reasonable assurance level[424](index=424&type=chunk) - Based on the COSO framework, management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2018, an assessment audited by Deloitte[425](index=425&type=chunk)[426](index=426&type=chunk) [Other Information (Items 16A-16H)](index=144&type=section&id=ITEM%2016.%20Other%20Information) This section covers governance topics including audit committee expertise, code of conduct, and accountant fees [ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=148&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section discloses fees billed by the independent auditor for audit, audit-related, tax, and other services Auditor Fees (in R$ thousand) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Audit fees | 4,621 | 4,306 | 4,532 | | Audit-related fees | 3,864 | 3,382 | 3,512 | | Tax fees | 1,312 | - | 1,103 | | All other fees | 29 | 113 | 20 | | **Total** | **9,826** | **7,801** | **9,167** | [ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS](index=150&type=section&id=ITEM%2016E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASERS) This section provides a disclosure of the company's share repurchases, including volume and average price paid - In 2018, the company acquired **3,791,412 of its own shares at a total cost of R$84.3 million**, primarily in connection with its stock ownership plans[270](index=270&type=chunk)[432](index=432&type=chunk) PART III [ITEM 17. FINANCIAL STATEMENTS](index=154&type=section&id=ITEM%2017.%20FINANCIAL%20STATEMENTS) This section contains the company's audited consolidated financial statements and accompanying notes for the past three years Consolidated Income Statement (in R$ million) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Net sales | 50,231.3 | 47,899.3 | 45,602.6 | | Gross profit | 30,961.7 | 29,857.5 | 28,924.6 | | Income from operations | 16,989.4 | 16,426.8 | 17,105.4 | | Net finance cost | (3,823.4) | (3,493.9) | (3,702.0) | | Income tax expense | (1,789.6) | (5,079.3) | (315.0) | | **Net income** | **11,377.4** | **7,850.5** | **13,083.4** | Consolidated Balance Sheet (in R$ million) | | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Total Assets | 94,126.1 | 86,851.9 | | Total Liabilities | 36,578.7 | 38,869.1 | | Total Equity | 57,547.4 | 47,982.8 | Consolidated Cash Flow Statement (in R$ million) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Cash flow from operating activities | 17,911.2 | 17,874.1 | 12,344.4 | | Cash flow from investing activities | (3,675.7) | (3,073.0) | (5,898.0) | | Cash flow from financing activities | (13,221.6) | (12,864.2) | (11,645.1) | - Effective January 1, 2018, the company began applying **IAS 29 hyperinflation accounting** for its Argentinean subsidiaries, triggered by Argentina's three-year cumulative inflation rate exceeding 100%[468](index=468&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk) - The company adopted **IFRS 15 (Revenue from Contracts with Customers)** on January 1, 2018, which resulted in a **R$355.4 million decrease** to the opening balance of retained earnings[493](index=493&type=chunk)[494](index=494&type=chunk)