6-K 1 a51330124.htm GRANA Y MONTERO S.A.A. 6-K

 
FORM 6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of April 2016

 Commission File Number 001-35591

GRAÑA Y MONTERO S.A.A.
(Exact name of registrant as specified in its charter)
 
GRAÑA Y MONTERO GROUP
(Translation of registrant’s name into English)
 
Republic of Peru
(Jurisdiction of incorporation or organization)
 
Avenida Paseo de la República 4667, Lima 34,
Surquillo, Lima
Peru
(Address of principal executive offices)
 


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
Form 20-F ___X____ Form 40-F _______
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes _______ No ___X____
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.
 

 
___________________________
/s/ Claudia Drago Morante
Stock Market Representative
Graña y Montero S.A.A.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


GRAÑA Y MONTERO S.A.A.





By: /s/ CLAUDIA DRAGO MORANTE

Name: Claudia Drago Morante

Title: Stock Market Representative

April 28, 2016



(All amounts are expressed in thousands of S/ unless otherwise stated)

UNAUDITED




 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2015 AND 2016 AND FOR THE THREE-MONTH PERIOD ENDED IN THIS DATE
 
 
 
 


(All amounts are expressed in thousands of S/ unless otherwise stated)

UNAUDITED





GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2015 AND 2016 AND FOR THE THREE-MONTH PERIOD ENDED IN THIS DATE


CONTENTS





Condensed Interim Consolidated Statement of Financial Position

Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Interim Consolidated Statement of Shareholders’ Equity

Condensed Interim Consolidated Statement of Cash Flows

Notes to the Condensed Interim Consolidated Financial Statements






 

 
 
S/          =    New Peruvian Sol
US$          =    United States dollar
 
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
ASSETS                  
LIABILITIES AND EQUITY
                
        At             At  
        December 31,     March 31,             December 31,     March 31,  
    Note   2015     2016         Note   2015     2016  
Current assets                    Current liabilities                
 
Cash and cash equivalents
        
554,002
      
588,001
    
 
Borrowings
  
12
    
1,228,020
      
1,116,624
  
Financial asset at fair value through profit or loss
        
3,153
      
2,141
    
Bonds
  
13
    
37,083
      
41,632
  
Trade accounts receivables
        
1,050,791
      
886,316
    
Trade accounts payable
        
1,635,760
      
1,460,845
  
Unbilled work in progress
        
1,319,187
      
1,250,554
    
Accounts payable to related parties
  
9
    
77,830
      
144,019
  
Accounts receivable from related parties
  
9
    
280,153
      
285,963
    
Current income tax
        
34,116
      
16,265
  
Other accounts receivable
        
824,589
      
876,228
    
Other accounts payable
        
1,066,000
      
945,143
  
Inventories
        
1,159,154
      
1,184,295
    
Provisions
  
14
    
13,468
      
13,581
  
Prepaid expenses
        
40,023
      
35,601
    
Total current liabilities
        
4,092,277
      
3,738,109
  
         
5,231,052
      
5,109,099
                          
                        Non-current liabilities                    
Non-current assets classified as held for sale
        
22,511
      
22,518
    
 
Borrowings
  
12
    
553,336
      
867,759
  
Total current assets
        
5,253,563
      
5,131,617
    
Long-term bonds
  
13
    
757,008
      
851,761
  
                       
Other long-term accounts payable
        
246,396
      
205,964
  
Non-current assets
                      
Long-term accounts payable to related parties
  
9
    
20,136
      
-
  
Long-term trade accounts receivable
        
621,831
      
620,167
    
Provisions
  
14
    
35,618
      
37,761
  
Long-term unbilled work in progress
        
59,754
      
19,662
    
Derivative financial instruments
        
2,331
      
2,339
  
Prepaid expenses
        
22,386
      
26,477
    
Deferred income tax liability
        
101,664
      
92,713
  
Other long-term accounts receivable
        
65,929
      
81,731
    
Total non-current liabilities
        
1,716,489
      
2,058,297
  
Available-for-sale financial assets
  
8
    
120,134
      
-
    
Total liabilities
        
5,808,766
      
5,796,406
  
Investments in associates and joint ventures
  
10
    
646,884
      
876,197
                          
Investment property
        
34,702
      
34,132
    
Equity
                    
Property, plant and equipment
  
11
    
1,111,757
      
1,111,365
    
Capital
  
15
    
660,054
      
660,054
  
Intangible assets
  
11
    
881,020
      
900,434
    
Legal reserve
        
132,011
      
132,011
  
Deferred income tax asset
        
173,851
      
193,599
    
Optional reserve
        
29,974
      
29,974
  
Total non-current assets
        
3,738,248
      
3,863,764
    
Share Premium
        
897,532
      
897,532
  
                       
Other reserves
        
(129,059
)
    
(161,430
)
                       
Retained earnings
        
1,064,044
      
1,103,493
  
                       
Equity attributable to controlling interest in the Company
        
2,654,556
      
2,661,634
  
                       
Non-controlling interest
        
528,489
      
537,341
  
                       
Total equity
        
3,183,045
      
3,198,975
  
Total assets
        
8,991,811
      
8,995,381
    
Total liabilities and equity
        
8,991,811
      
8,995,381
  
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
 
- 2 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
CONSOLIDATED INCOME STATEMENT
 
       
For the period of three months
  
        ended March 31,     
   
Note
  
2015
    
2016
  
                     
Revenues from construction activities
        
1,241,803
      
952,051
  
Revenues from services provided
        
414,337
      
411,616
  
Revenue from real estate and sale of goods
        
46,830
      
69,382
  
         
1,702,970
      
1,433,049
  
                     
Cost of construction activities
        
(1,163,086
)
    
(889,521
)
Cost of services provided
        
(332,284
)
    
(359,543
)
Cost of real estate and goods sold
        
(34,127
)
    
(40,559
)
   
16
    
(1,529,497
)
    
(1,289,623
)
Gross profit
        
173,473
      
143,426
  
                     
Administrative expenses
  
16
    
(108,908
)
    
(94,135
)
Other income and expenses
        
(4,012
)
    
6,410
  
Gain from the sale of investments
  
8
    
-
      
31,667
  
Operating profit
        
60,553
      
87,368
  
                     
Financial expenses
        
(37,246
)
    
(27,127
)
Financial income         3,738       13,161  
Share of the profit or loss in associates and joint ventures
under the equity method of accounting
        
15,002
      
21,515
  
Profit before income tax
        
42,047
      
94,917
  
Income tax
  
17
    
(14,077
)
    
(13,940
)
Profit for the period
        
27,970
      
80,977
  
                     
Profit attributable to:                    
Owners of the Company
        
17,581
      
70,874
  
Non-controlling interest
        
10,389
      
10,103
  
         
27,970
      
80,977
  
                     
Earnings per share from continuing operations attributable
to owners of the Company during the period
        
0.027
      
0.107
  
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
 
- 3 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 
        For the period of three  
        months ended March 31,  
    Note   2015     2016  
                     
Profit for the period
        
27,970
      
80,977
  
Other comprehensive income:
                    
Items that will not be reclassified to profit or loss
                    
Remeasurement of actuarial gains and losses, net of tax
        
(2,431
)
    
(1,024
)
                     
Items that may be subsequently reclassified to profit or loss                    
Cash flow hedge, net of tax
        
(66
)
    
(48
)
Foreign currency translation adjustment, net of tax
        
(9,511
)
    
8,942
  
Change in value of available-for-sale financial assets, net of tax
  
8
    
2,542
      
(43,681
)
Exchange difference from net investment in a foreign operation, net of tax
        
158
      
5,528
  
         
(6,877
)
    
(29,259
)
Other comprenhensive income for the period, net of tax
        
(9,308
)
    
(30,283
)
Total comprehensive income for the period
        
18,662
      
50,694
  
                     
Comprehensive income attributable to:                     
Owners of the Company
        
12,457
      
37,932
  
Non-controlling interest
        
6,205
      
12,762
  
         
18,662
      
50,694
  
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
- 4 -
 
(All amounts are expressed in thousands of  S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD OF THE THREE MONTHS ENDED MARCH 31, 2015 AND 2016
 
   
Attributable to the controlling interests of the Company
                                
   
Number
                      
Premium
    
Other
                          
   
of shares
          
Legal
    
Optional
    
for issuance
    
reserves
    
Retained
          
Non-controlling
  
   
In thousands
    
Capital
    
reserve
    
reserve
    
of shares
          
earnings
    
Total
    
interest
    
Total
  
   
In thousands
                                                  
                                                             
Balances as of January 1, 2015
     660,054       660,054       132,011       -       899,311       (113,895 )      1,113,696     2,691,177       482,530       3,173,707  
Profit for the year
     -       -       -       -       -       -       17,581       17,581       10,389       27,970  
Cash flow hedge
     -       -       -       -       -       (63 )     -       (63 )     (3 )     (66 )
Adjustment for actuarial gains and losses
     -       -       -       -       -       -       (1,703 )     (1,703 )     (728 )     (2,431 )
Foreign currency translation adjustment
     -       -       -       -       -       (6,057 )     -       (6,057 )     (3,454 )     (9,511 )
Change in value of available-for-sale financial assets
     -       -       -       -       -       2,542       -       2,542       -       2,542  
Exchange difference from net investment in a foreign operation
     -       -       -       -       -          157     -       157     1     158
Comprehensive income of the year
     -       -       -       -       -       (3,421 )     15,878       12,457       6,205       18,662  
Transactions with shareholders:
                                                                                
- Transfer to Optional reserve
     -       -       -       29,974       -       -       (29,974 )     -       -       -  
- Dividend distribution
     -       -       -       -       -       -       (104,911 )     (104,911 )     (2,000 )     (106,911 )
- Contributions of non-controlling shareholders
     -       -       -       -       -       -       -       -       (4,517 )     (4,517 )
- Additional acquisition of non-controlling
     -       -       -       -           (894 )     -       -       (894 )     (970 )     (1,864 )
Total transactions with shareholders
     -       -       -       29,974       (894 )     -     (134,885 )     (105,805 )     (7,487 )     (113,292 )
Balances as of  March 31, 2015
     660,054       660,054       132,011       29,974       898,417       (117,316 )     994,689       2,597,829       481,248       3,079,077  
                                                                                 
Balances as of January 1, 2016
     660,054       660,054       132,011       29,974       897,532       (129,059 )     1,064,044       2,654,556       528,489       3,183,045  
Profit for the period
     -       -       -       -       -       -       70,874       70,874       10,103       80,977  
Cash flow hedge
     -       -       -       -       -       (46 )     -       (46 )     (2 )     (48 )
Adjustment for actuarial gains and losses
     -       -       -       -       -       -       (571 )     (571 )     (453 )     (1,024 )
Foreign currency translation adjustment
     -       -       -       -       -       5,925     -       5,925     3,017     8,942
Change in value of available-for-sale financial assets
     -       -       -       -       -       (43,681 )     -       (43,681 )     -       (43,681 )
Exchange difference from net investment in a foreign operation
     -       -       -       -       -       5,431     -       5,431     97     5,528
Comprehensive income of the period
     -       -       -       -       -       (32,371 )     70,303       37,932       12,762       50,694  
Transactions with shareholders:
                                                                                
- Dividend distribution
     -       -       -       -       -       -       (30,854 )     (30,854 )     (2,311 )     (33,165 )
- Contributions of non-controlling shareholders
     -       -       -       -       -       -       -       -       (1,599 )     (1,599 )
Total transactions with shareholders
     -       -       -       -       -     -       (30,854 )     (30,854 )     (3,910 )     (34,764 )
Balances as of  March 31, 2016
     660,054       660,054       132,011       29,974       897,532       (161,430 )     1,103,493       2,661,634       537,341       3,198,975  
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
 
- 5 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
        
For the period of three months
  
 
        
ended March 31,
        
 
  
Note
    
2015
    
2016
  
 
                  
OPERATING ACTIVITIES
                  
Profit before income tax
          
42,047
      
94,917
  
Adjustments to  profit not affecting cash flows from
                      
operating activities:
                      
Depreciation
    
11
      
48,279
      
45,286
  
Amortization of other assets
    
11
      
19,892
      
19,668
  
Impairment of inventories
    
16
      
-
      
117
  
Impairment of accounts receivable
    
16
      
194
      
15
  
Impairment of property, plant and equipment
    
16
      
2,902
      
269
  
Reversal of impairment of inventories
            
(269
)
    
-
  
Profit on fair value of financial asset at fair value through profit or loss
            
-
      
(163
)
Other Provisions
    
14
      
330
      
2,209
  
Interest income,net
            
21,149
      
30,227
  
Foreign exchange loss (gain) on loans
            
3,082
      
(32,209
)
Share of the profit and loss in associates
                        
under the equity method of accounting
    
10
      
(15,002
)
    
(21,515
)
Reversal of provisions
    
14
      
(1,987
)
    
(660
)
Profit on sale of property, plant and equipment
            
(740
)
    
(828
)
Gain on financial asset at fair value through profit or loss
            
-
      
(31,606
)
Loss on sale of investments
            
-
      
(22
)
Net variations in assets and liabilities:
                        
Trade accounts receivable
            
47,494
      
274,849
  
Other accounts receivable
            
(92,846
)
    
39,839
  
Other accounts receivable from related parties
            
(1,355
)
    
(14,118
)
Inventories
            
(13,185
)
    
(23,358
)
Pre-paid expenses and other assets
            
(7,167
)
    
(331
)
Trade accounts payable
            
(88,744
)
    
(174,915
)
Other accounts payable
            
19,164
      
(189,508
)
Other accounts payable to related parties
            
4,856
      
51,581
  
Other provisions
            
(1,542
)
    
(202
)
Interest payment
            
(22,764
)
    
(31,710
)
Payments related to Norvial Concession
            
(27,742
)
    
(26,732
)
Payment of income tax
            
(60,708
)
    
(59,711
)
Net cash provided by (applied to) operating activities
            
(124,662
)
    
(48,611
)
 
                        
INVESTING ACTIVITIES
                        
Sale of available-for-sale investment
            
-
      
1,262
  
Sale of property, plant and equipment
            
2,473
      
4,917
  
Interest received
            
1,004
      
1,722
  
Dividends received
    
10
      
99
      
-
  
Payment for purchase of investments properties
            
(179
)
    
-
  
Payments for intangible purchase
            
(5,903
)
    
(2,402
)
Payments for purchase and contributions on investment in associate and joint ventures
            
-
      
(199,001
)
Payments for property, plant and equipment purchase
            
(57,793
)
    
(32,433
)
Net cash applied to investing activities
            
(60,299
)
    
(225,935
)
                         
FINANCING ACTIVITIES
                        
Loans received
            
790,226
      
1,270,564
  
Bonds issued
            
628,994
      
100,013
  
Amortization of loans received
            
(1,012,176
)
    
(1,038,836
)
Amortization of bonds issued
            
-
      
(5,411
)
Payment for transaction costs for debt
            
(16,017
)
    
(13,876
)
Dividends paid to non-controlling interest
            
(2,000
)
    
(2,311
)
Cash received from non-controlling shareholders
            
(4,518
)
    
(1,599
)
Acquisition or sale of interest in a subsidiary of non-controlling shareholders
            
(1,865
)
    
-
  
Net cash (applied to) provided by financing activities
            
382,644
      
308,545
  
Net increase (net decrease) in cash
            
197,683
      
33,999
  
Cash and cash equivalents at the beginning of the year
            
818,402
      
554,002
  
Cash and cash equivalents at the end of the period
            
1,016,085
      
588,001
  
 
                        
NON-CASH TRANSACTIONS:
                        
Dividends declared
            
104,911
      
30,853
  
Debt capitalization
            
-
      
8,308
  
Acquisition of assets through finance leases
            
16,069
      
12,047
  
Change in fair vaue of available-for-sale financial asset
            
3,531
      
(43,681
)
Investment available for sale
            
-
      
120,134
  
                         
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
                  
 
- 6 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2015 AND 2016 (UNAUDITED), AND AT DECEMBER 31, 2015 (AUDITED)
 
1
GENERAL INFORMATION
 
The Company is the parent company of the Graña y Montero Group (hereinafter the Group) and it is mainly engaged in holding the investments in the different companies of the Group. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory and human resources management to the Group´s companies; it is also engaged in the leasing of offices to the Group’s companies.
 
The Group is a conglomerate of companies with operations including different business activities, of which the most significant are engineering and construction, infrastructure (public concession ownership and operation), real estate businesses and services.
 
These condensed interim consolidated financial statements as of March 31, 2016 have been prepared and authorized for issuance by the Chief Financial Officer on April 28, 2016.

2
BASIS OF PREPARATION
 
These condensed interim consolidated financial statements for the period ended March 31, 2016 have been prepared in accordance with (IAS 34) “Interim financial reporting”. The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those applied in the preparation of the year-end financial statements at December 31, 2015.

4
FINANCIAL RISK MANAGEMENT
 
  4.1
Financial risk factors
 
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk.
 
The condensed interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; these should be read in conjunction with the Group’s annual financial statements as of December 31, 2015. There have been no changes since year-end in the risk management department of the Group or in any risk management policies.

  4.1.1
Market risk –
 
Compared to year end, no new material market risk hedging arrangements have occurred.
 
- 7 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
  4.1.2
Credit risk –
 
Compared to year end, the Group has no exposure to any new relevant credit risk.
 
  4.1.3
Liquidity risk -
 
Compared to year end, no major changes in undiscounted contractual cash flows have occurred.
 
The following table categorizes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:

   
Less than 1
    
From 1 to
    
From 2 to
    
Over
        
    year     2 years     5 years     5 years     Total  
                               
At December 31, 2015
                              
Other financial liabilities (except
                              
for finance leases)
    
1,102,855
      
181,729
      
223,713
       -      
1,508,297
  
Finance leases
    
157,957
      
118,311
      
42,513
      
10,431
      
329,212
  
Bonds
    
69,823
      
82,916
      
217,418
      
1,445,187
      
1,815,344
  
Trade accounts payables
    
1,635,760
       -       -       -      
1,635,760
  
Accounts payables to related parties
    
77,830
      
19,728
       -      
408
      
97,966
  
Other accounts payables
    
181,113
      
36,456
      
121,678
       -      
339,247
  
Other non-financial liabilities
     -      
2,331
       -       -      
2,331
  
     
3,225,338
      
441,471
      
605,322
      
1,456,026
      
5,728,157
  
                                         
At March 31, 2016
                                        
Other financial liabilities (except
                                        
for finance leases)
    
1,012,939
      
235,116
      
520,927
       -      
1,768,982
  
Finance leases
    
147,851
      
95,745
      
25,772
      
23,432
      
292,800
  
Bonds
    
110,414
      
145,157
      
369,858
      
1,276,369
      
1,901,798
  
Trade accounts payables
     1,460,845      
-
      
-
      
 
        1,460,845  
Accounts payables to related parties
    
144,019
       -       -       -      
144,019
  
Other accounts payables
    
231,181
      
12,085
      
8,339
       -      
251,605
  
Other non-financial liabilities
     -      
2,339
       -       -      
2,339
  
     
3,107,249
      
490,442
      
924,896
      
1,299,801
      
5,822,388
  
 
  4.2
Capital management -
 
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings), less cash and cash equivalents. Total capital is calculated as total ‘equity’ as shown in the consolidated statement of financial position plus net debt.
 
As of December 31, 2015 and March 31, 2016, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 0.70. The gearing ratio was as follows:

   
December 31,
    
March 31,
  
   
2015
    
2016
  
             
Total borrowing and bonds
    
2,575,447
)
    
2,877,776
)
Less: Cash and cash equivalents
    
(554,002
)
    
(588,001
)
Net debt
    
2,021,445
)
    
2,289,775
)
Total equity
    
3,183,045
 
    
3,198,975
)
Total capital
    
5,204,490
 
    
5,488,750
 
                 
Gearing ratio
    
0.39
 
    
0.42
 
 
- 8 -

(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
  4.3
Fair value estimation -
 
For the classification of the type of valuation used by the Group for its financial instruments at fair value, the following levels of measurement have been established.

  -
Level 1: Measurement based on quoted prices in active markets for identical assets or liabilities.
  -
Level 2: Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
  -
Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs, generally based on internal estimates and assumptions of the Group).
 
The fair value of the investment held in Transportadora de Gas del Perú S.A. (TGP) classified as available-for-sale financial asset was based on unobservable inputs in the market; the Group calculated its fair value based on its discounted cash flows as of the financial statement date. The information used to determine the fair value of this investment corresponds to Level 3 (Note 8).
 
Financial assets classified as at fair value through profit or loss corresponds to investments in mutual funds and bonds. Their fair value has been determined with observable information of Level 2.
 
Other financial instruments measured at fair value correspond to the interest rate swaps signed by subsidiary GMP S.A., by which a variable-interest instrument is changed to a fixed interest rate (cash flow hedge). The information used for determining the fair value of these instruments are Level 2 and has been determined based on the present value of discounted future cash flows applied to the interest-rate change projections of Citibank N.A.
 
The carrying amounts of cash and cash equivalents correspond to their fair values. The Company considers that the carrying amount of trade accounts receivable and payable is similar to their fair values. The fair value of financial liabilities, disclosed in Note 12-b), has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in the market and which is available to the Company for similar financial instruments (Level 2).

5
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
 
Preparation of the condensed interim consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
 
In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2015.

6
SEASONALITY OF OPERATIONS
 
The Group shows no material seasonality in the operations of any of its subsidiaries; operations are carried out regularly during the course of the period.
 
- 9 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
7
SEGMENT REPORTING
 
Operating segments are reported consistent with the internal reports that are reviewed by the Corporate General Manager, who is the chief operating decision maker, responsible for allocating resources and evaluating the performance of each operating segment.
 
The Group's operating segments are assessed by the activity of the following business units: (i) engineering and construction, (ii) infrastructure, (iii) real estate, (iv) technical services and (v) the operation of the Parent Company (Holding).
 
As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘technical services’. However, the Group has voluntarily decided to report on all its operating segments as detailed in this Note.
 
Inter-segmental sales transactions are entered into at prices that are similar to those that would have been agreed to with unrelated third parties. Revenues from external customers reported to the Corporate General Manager are measured in a manner consistent with the basis of preparation of the financial statements.
 
Group sales and receivables are not concentrated on a few customers.
 
 
 
- 10 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segments financial position
 
Segment reporting
 
   
Engineering
    
Infrastructure  
              
Parent
              
   
and construction
    
Energy
    
Toll roads
    
Mass transit
    
Water treatment
    
Real estate
    
Technical services
    
Company Operations
    
Eliminations
    
Consolidated
  
As of December 31, 2015
                                                            
Assets.-
                                                            
Cash and cash equivalents
    
172,116
      
42,638
      
58,640
      
111,454
      
9,094
      
74,459
      
60,193
      
25,408
      
-
      
554,002
  
Financial asset at fair value through profit or loss
    
3,153
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
3,153
  
Trade accounts receivables
    
614,917
      
43,260
      
22,045
      
63,516
      
-
      
59,108
      
247,945
      
-
      
-
      
1,050,791
  
Unbilled work in progress
    
1,301,501
      
-
      
-
      
-
      
17,686
      
-
      
-
      
-
      
-
      
1,319,187
  
Accounts receivable from related parties
    
316,188
      
12,145
      
18,820
      
301
      
-
      
34,724
      
48,520
      
132,735
      
(283,280
)
    
280,153
  
Other accounts receivable
    
599,127
      
25,857
      
5,699
      
25,668
      
10,250
      
20,535
      
102,204
      
35,249
      
-
      
824,589
  
Inventories
    
159,557
      
10,025
      
-
      
13,678
      
-
      
920,092
      
61,734
      
389
      
(6,321
)
    
1,159,154
  
Prepaid expenses
    
12,899
      
2,207
      
1,401
      
10,787
      
458
      
349
      
11,402
      
520
      
-
      
40,023
  
Non-current assets classified as held for sale
    
22,511
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
22,511
  
Total current assets
    
3,201,969
      
136,132
      
106,605
      
225,404
      
37,488
      
1,109,267
      
531,998
      
194,301
      
(289,601
)
    
5,253,563
  
                                                                                 
Long-term trade accounts receivable
    
-
      
-
      
-
      
621,831
      
-
      
-
      
-
      
-
      
-
      
621,831
  
Long-term unbilled work in progress
    
-
      
40,727
      
19,027
      
-
      
-
      
-
      
-
      
-
      
-
      
59,754
  
Long-term accounts receivable from related parties
    
-
      
-
      
408
      
-
      
-
      
-
      
500
      
256,022
      
(256,930
)
    
-
  
Prepaid expenses
    
-
      
3,692
      
15,584
      
2,112
      
998
      
-
      
-
      
-
      
-
      
22,386
  
Other long-term accounts receivable
    
534
      
14,214
      
30,473
      
2,198
      
1,589
      
14,726
      
-
      
2,195
      
-
      
65,929
  
Available-for-sale financial assets
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
120,134
      
-
      
120,134
  
Investments in associates and joint ventures
    
122,717
      
8,265
      
-
      
-
      
-
      
28,732
      
9,228
      
2,582,913
      
(2,104,971
)
    
646,884
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
34,702
      
-
      
-
      
-
      
34,702
  
Property, plant and equipment
    
606,158
      
198,774
      
1,624
      
217
      
-
      
11,303
      
170,660
      
130,113
      
(7,092
)
    
1,111,757
  
Intangible assets
    
302,992
      
137,130
      
364,819
      
311
      
-
      
1,043
      
37,564
      
23,561
      
13,600
      
881,020
  
Deferred income tax asset
    
126,550
      
1,325
      
3,003
      
-
      
-
      
1,171
      
39,825
      
656
      
1,321
      
173,851
  
Total non-current assets
    
1,158,951
      
404,127
      
434,938
      
626,669
      
2,587
      
91,677
      
257,777
      
3,115,594
      
(2,354,072
)
    
3,738,248
  
Total assets
    
4,360,920
      
540,259
      
541,543
      
852,073
      
40,075
      
1,200,944
      
789,775
      
3,309,895
      
(2,643,673
)
    
8,991,811
  
                                                                                 
Liabilities.-
                                                                                
Borrowings
    
652,974
      
101,096
      
55,428
      
-
      
-
      
224,380
      
91,366
      
102,776
      
-
      
1,228,020
  
Bonds
    
-
      
-
      
5,537
      
31,546
      
-
      
-
      
-
      
-
      
-
      
37,083
  
Trade accounts payable
    
1,409,982
      
35,428
      
3,768
      
24,498
      
154
      
14,334
      
134,973
      
12,623
      
-
      
1,635,760
  
Accounts payable to related parties
    
118,381
      
3,990
      
40,578
      
9,962
      
10,560
      
58,790
      
39,476
      
79,709
      
(283,616
)
    
77,830
  
Current income tax
    
19,337
      
-
      
753
      
-
      
166
      
26
      
13,750
      
84
      
-
      
34,116
  
Other accounts payable
    
645,648
      
20,340
      
2,841
      
1,682
      
-
      
257,616
      
125,020
      
12,853
      
-
      
1,066,000
  
Provisions
    
-
      
6,341
      
-
      
-
      
-
      
-
      
7,127
      
-
      
-
      
13,468
  
Total current liabilities
    
2,846,322
      
167,195
      
108,905
      
67,688
      
10,880
      
555,146
      
411,712
      
208,045
      
(283,616
)
    
4,092,277
  
                                                                                 
Borrowings
    
375,952
      
83,307
      
-
      
-
      
-
      
27,562
      
66,515
      
-
      
-
      
553,336
  
Long-term bonds
    
-
      
-
      
180,686
      
576,322
      
-
      
-
      
-
      
-
      
-
      
757,008
  
Other long-term accounts payable
    
176,644
      
-
      
493
      
-
      
-
      
-
      
68,045
      
1,214
      
-
      
246,396
  
Long-term accounts payable to related parties
    
-
      
-
      
-
      
94,172
      
24,035
      
120,083
      
38,332
      
-
      
(256,486
)
    
20,136
  
Provisions
    
24,624
      
7,034
      
-
      
-
      
-
      
-
      
3,960
      
-
      
-
      
35,618
  
Derivative financial instruments
    
-
      
2,331
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
2,331
  
Deferred income tax liability
    
52,016
      
4,250
      
107
      
9,723
      
270
      
11,937
      
3,164
      
20,197
      
-
      
101,664
  
Total non-current liabilities
    
629,236
      
96,922
      
181,286
      
680,217
      
24,305
      
159,582
      
180,016
      
21,411
      
(256,486
)
    
1,716,489
  
Total liabilities
    
3,475,558
      
264,117
      
290,191
      
747,905
      
35,185
      
714,728
      
591,728
      
229,456
      
(540,102
)
    
5,808,766
  
Equity attributable to controlling interest in the Company
    
720,722
      
255,032
      
198,345
      
78,127
      
4,890
      
158,605
      
162,550
      
3,067,987
      
(1,991,702
)
    
2,654,556
  
Non-controlling interest
    
164,640
      
21,110
      
53,007
      
26,041
      
-
      
327,611
      
35,497
      
12,452
      
(111,869
)
    
528,489
  
Total liabilities and equity
    
4,360,920
      
540,259
      
541,543
      
852,073
      
40,075
      
1,200,944
      
789,775
      
3,309,895
      
(2,643,673
)
    
8,991,811
  
 
- 11 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segments financial position
 
Segment reporting
 
   
Engineering
    
Infrastructure
              
Parent
              
   
and construction
    
Energy
    
Toll roads
    
Mass transit
    
Water treatment
    
Real estate
    
Technical services
    
Company Operations
    
Eliminations
    
Consolidated
  
As of March 31, 2016
                                                            
Assets.-
                                                            
Cash and cash equivalents
    
103,794
      
34,840
      
65,994
      
110,477
      
1,298
      
81,552
      
65,878
      
124,168
      
-
      
588,001
  
Financial asset at fair value through profit or loss
    
2,141
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
2,141
  
Trade accounts receivables
    
445,276
      
40,269
      
23,787
      
63,943
      
-
      
56,529
      
256,512
      
-
      
-
      
886,316
  
Unbilled work in progress
    
1,189,423
      
39,711
      
-
      
-
      
21,420
      
-
      
-
      
-
      
-
      
1,250,554
  
Accounts receivable from related parties
    
316,731
      
12,433
      
11,805
      
390
      
-
      
34,299
      
39,643
      
124,542
      
(253,880
)
    
285,963
  
Other accounts receivable
    
528,608
      
30,849
      
7,255
      
19,877
      
12,042
      
21,789
      
118,598
      
137,210
      
-
      
876,228
  
Inventories
    
139,183
      
11,500
      
-
      
13,632
      
-
      
957,723
      
64,327
      
389
      
(2,459
)
    
1,184,295
  
Prepaid expenses
    
8,725
      
1,636
      
871
      
9,275
      
457
      
126
      
13,801
      
710
      
-
      
35,601
  
Non-current assets classified as held for sale
    
22,518
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
22,518
  
Total current assets
    
2,756,399
      
171,238
      
109,712
      
217,594
      
35,217
      
1,152,018
      
558,759
      
387,019
      
(256,339
)
    
5,131,617
  
                                                                                 
Long-term trade accounts receivable
    
-
      
-
      
-
      
620,167
      
-
      
-
      
-
      
-
      
-
      
620,167
  
Long-term unbilled work in progress
    
-
      
-
      
19,662
      
-
      
-
      
-
      
-
      
-
      
-
      
19,662
  
Long-term accounts receivable from related parties
    
-
      
-
      
408
      
-
      
-
      
-
      
915
      
251,889
      
(253,212
)
    
-
  
Prepaid expenses
    
-
      
3,608
      
19,587
      
2,299
      
983
      
-
      
-
      
-
      
-
      
26,477
  
Other long-term accounts receivable
    
15,631
      
17,646
      
34,603
      
1,954
      
1,589
      
8,286
      
-
      
2,022
      
-
      
81,731
  
Investments in associates and joint ventures
    
125,833
      
8,911
      
-
      
-
      
-
      
28,733
      
9,673
      
3,029,023
      
(2,325,976
)
    
876,197
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
34,132
      
-
      
-
      
-
      
34,132
  
Property, plant and equipment
    
608,431
      
193,664
      
1,540
      
209
      
-
      
11,999
      
171,722
      
129,163
      
(5,363
)
    
1,111,365
  
Intangible assets
    
305,797
      
126,423
      
393,833
      
302
      
-
      
996
      
36,374
      
23,372
      
13,337
      
900,434
  
Deferred income tax asset
    
143,343
      
3,195
      
2,927
      
-
      
-
      
1,164
      
42,415
      
659
      
(104
)
    
193,599
  
Total non-current assets
    
1,199,035
      
353,447
      
472,560
      
624,931
      
2,572
      
85,310
      
261,099
      
3,436,128
      
(2,571,318
)
    
3,863,764
  
Total assets
    
3,955,434
      
524,685
      
582,272
      
842,525
      
37,789
      
1,237,328
      
819,858
      
3,823,147
      
(2,827,657
)
    
8,995,381
  
                                                                                 
Liabilities.-
                                                                                
Borrowings
    
685,683
      
84,257
      
2,480
      
-
      
-
      
240,253
      
103,874
      
77
      
-
      
1,116,624
  
Bonds
    
-
      
-
      
11,210
      
30,422
      
-
      
-
      
-
      
-
      
-
      
41,632
  
Trade accounts payable
    
1,232,313
      
29,340
      
3,177
      
11,006
      
402
      
17,111
      
161,783
      
5,713
      
-
      
1,460,845
  
Accounts payable to related parties
    
132,945
      
2,667
      
21,596
      
9,409
      
7,847
      
71,561
      
33,314
      
92,553
      
(227,873
)
    
144,019
  
Current income tax
    
13,514
      
625
      
625
      
-
      
89
      
-
      
892
      
520
      
-
      
16,265
  
Other accounts payable
    
485,415
      
20,613
      
3,219
      
1,495
      
40
      
263,811
      
127,250
      
43,300
      
-
      
945,143
  
Provisions
    
-
      
6,140
      
-
      
-
      
-
      
-
      
7,441
      
-
      
-
      
13,581
  
Total current liabilities
    
2,549,870
      
143,642
      
42,307
      
52,332
      
8,378
      
592,736
      
434,554
      
142,163
      
(227,873
 )     
3,738,109
  
                                                                                 
Borrowings
    
298,973
      
89,257
      
-
      
-
      
-
      
33,452
      
60,220
      
385,857
      
-
      
867,759
  
Long-term bonds
    
-
      
-
      
275,216
      
576,545
      
-
      
-
      
-
      
-
      
-
      
851,761
  
Other long-term accounts payable
    
120,760
      
-
      
493
      
438
      
-
      
-
      
82,905
      
1,368
      
-
      
205,964
  
Long-term accounts payable to related parties
    
-
      
-
      
-
      
90,878
      
28,924
      
121,692
      
37,724
      
-
      
(279,218
)
    
-
  
Provisions
    
26,919
      
7,272
      
-
      
-
      
-
      
-
      
3,570
      
-
      
-
      
37,761
  
Derivative financial instruments
    
-
      
2,339
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
2,339
  
Deferred income tax liability
    
49,102
      
4,288
      
-
      
11,754
      
269
      
10,301
      
2,819
      
14,180
      
-
      
92,713
  
Total non-current liabilities
    
495,754
      
103,156
      
275,709
      
679,615
      
29,193
      
165,445
      
187,238
      
401,405
      
(279,218
)
    
2,058,297
  
Total liabilities
    
3,045,624
      
246,798
      
318,016
      
731,947
      
37,571
      
758,181
      
621,792
      
543,568
      
(507,091
)
    
5,796,406
  
Equity attributable to controlling interest in the Company
    
744,530
      
256,064
      
207,381
      
82,935
      
218
      
154,167
      
162,432
      
3,267,191
      
(2,213,284
)
    
2,661,634
  
Non-controlling interest
    
165,280
      
21,823
      
56,875
      
27,643
      
-
      
324,980
      
35,634
      
12,388
      
(107,282
)
    
537,341
  
Total liabilities and equity
    
3,955,434
      
524,685
      
582,272
      
842,525
      
37,789
      
1,237,328
      
819,858
      
3,823,147
      
(2,827,657
)
    
8,995,381
  
 
- 12 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segment performance
 
Segment Reporting
 
   
Engineering
    
Infrastructure 
              
Parent
              
   
and
construction
    
Energy
    
Toll roads
    
Mass
transit
    
Water
treatment
    
Real
estate
    
Technical
services
    
Company
operations
    
Eliminations
    
Consolidated
  
For the three-month period
                                                            
ended Mar 31, 2015
                                                            
                                                             
Revenue
    
1,310,454
      
72,437
      
67,812
      
50,677
      
12,402
      
23,773
      
243,000
      
17,031
      
(94,616
)
    
1,702,970
  
Gross profit (loss)
    
106,443
      
10,890
      
14,671
      
12,187
      
908
      
4,625
      
39,939
      
(1,696
)
    
(14,494
)
    
173,473
  
Administrative expenses
    
(69,127
)
    
(3,989
)
    
(2,370
)
    
(3,056
)
    
(69
)
    
(4,726
)
    
(36,014
)
    
(6,798
)
    
17,241
      
(108,908
)
Other income and expenses
    
(7,635
)
    
(986
)
    
-
      
-
      
-
      
(591
)
    
3,719
      
1,614
      
(133
)
    
(4,012
)
                                                                                 
Operating profit (loss)
    
29,681
      
5,915
      
12,301
      
9,131
      
839
      
(692
)
    
7,644
      
(6,880
)
    
2,614
      
60,553
  
Financial expenses
    
(25,521
)
    
(4,936
)
    
(1,276
)
    
(1,240
)
    
(9
)
    
(4,606
)
    
(7,864
)
    
(568
)
    
8,774
      
(37,246
)
Financial income
    
3,049
      
58
      
3,128
      
10
      
15
      
52
      
639
      
9,122
      
(12,335
)
    
3,738
  
Share of the profit or loss
                                                                                
in associates and joint ventures
under the equity
                                                                                
method of accounting
    
8,457
      
267
      
-
      
-
      
-
      
4,663
      
332
      
15,581
      
(14,298
)
    
15,002
  
Profit (loss) before income tax
    
15,666
      
1,304
      
14,153
      
7,901
      
845
      
(583
)
    
751
      
17,255
      
(15,245
)
    
42,047
  
Income tax
    
(5,708
)
    
(564
)
    
(3,820
)
    
(2,392
)
    
(254
)
    
154
      
(1,226
)
    
(656
)
    
389
      
(14,077
)
Net profit (loss) for the period
    
9,958
      
740
      
10,333
      
5,509
      
591
      
(429
)
    
(475
)
    
16,599
      
(14,856
)
    
27,970
  
                                                                                 
Profit (loss) attributable to:
                                                                                
                                                                                 
Owners of the Company
    
3,944
      
416
      
7,364
      
4,132
      
591
      
(131
)
    
(388
)
    
16,693
      
(15,040
)
    
17,581
  
Non-controlling interest
    
6,014
      
324
      
2,969
      
1,377
      
-
      
(298
)
    
(87
)
    
(94
)
    
184
      
10,389
  
     
9,958
      
740
      
10,333
      
5,509
      
591
      
(429
)
    
(475
)
    
16,599
      
(14,856
)
    
27,970
  
 
- 13 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segment performance
 
Segment Reporting
 
   
Engineering
    
Infrastructure
              
Parent
              
   
and
construction
    
Energy
    
Toll roads
    
Mass
transit
    
Water
treatment
    
Real
estate
    
Technical
services
    
Company
operations
    
Eliminations
    
Consolidated
  
For the three-month period
                                                            
ended Mar 31, 2016
                                                            
                                                             
Revenue
    
1,002,627
      
86,383
      
70,992
      
53,181
      
4,331
      
32,299
      
262,846
      
14,488
      
(94,098
)
    
1,433,049
  
Gross profit (loss)
    
70,128
      
6,964
      
19,724
      
11,594
      
420
      
18,582
      
31,081
      
(1,539
)
    
(13,528
)
    
143,426
  
Administrative expenses
    
(64,794
)
    
(3,870
)
    
(2,338
)
    
(2,760
)
    
(132
)
    
(4,100
)
    
(23,340
)
    
(9,548
)
    
16,747
      
(94,135
)
Other income and expenses
    
7,390
      
(504
)
    
9
      
-
      
-
      
727
      
1,158
      
718
      
(3,088
)
    
6,410
  
Gain from the sale of investments
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
31,667
      
-
      
31,667
  
Operating profit (loss)
    
12,724
      
2,590
      
17,395
      
8,834
      
288
      
15,209
      
8,899
      
21,298
      
131
      
87,368
  
Financial expenses
    
(13,193
)
    
(2,378
)
    
(3,297
)
    
(699
)
    
(9
)
    
(5,058
)
    
(6,118
)
    
(3,160
)
    
6,785
      
(27,127
)
Financial income
    
7,257
      
1,748
      
339
      
1,053
      
23
      
72
      
3,543
      
9,630
      
(10,504
)
    
13,161
  
Share of the profit or loss
                                                                                
in associates and joint ventures
under the equity
                                                                                
method of accounting
    
6,856
      
646
      
-
      
-
      
-
      
-
      
144
      
57,092
      
(43,223
)
    
21,515
  
Profit before income tax
    
13,644
      
2,606
      
14,437
      
9,188
      
302
      
10,223
      
6,468
      
84,860
      
(46,811
)
    
94,917
  
Income tax
    
(4,149
)
    
(805
)
    
(3,763
)
    
(2,778
)
    
(85
)
    
(2,690
)
    
(2,808
)
    
2,332
      
806
      
(13,940
)
Profit for the period
    
9,495
      
1,801
      
10,674
      
6,410
      
217
      
7,533
      
3,660
      
87,192
      
(46,005
)
    
80,977
  
                                                                                 
Profit attributable to:
                                                                                
                                                                                 
Owners of the Company
    
11,505
      
1,086
      
6,807
      
4,807
      
217
      
1,697
      
3,542
      
87,255
      
(46,042
)
    
70,874
  
Non-controlling interest
    
(2,010
)
    
715
      
3,867
      
1,603
      
-
      
5,836
      
118
      
(63
)
    
37
      
10,103
  
     
9,495
      
1,801
      
10,674
      
6,410
      
217
      
7,533
      
3,660
      
87,192
      
(46,005
)
    
80,977
  
 
- 14 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
No major changes occurred in total assets as compared to the amount stated in the year-end financial statements.
 
There are no differences as compared to the year-end financial statements based on segmentation or measurement of financial performance by segment.
 
8
AVAILABLE-FOR-SALE FINANCIAL ASSETS

This account comprised the investment held by the Company, directly and indirectly, in Transportadora de Gas del Perú S.A. (TGP), a Peruvian entity engaged in providing gas transportation services.
 
At December 31, 2015, the fair value of the Group’s interest in TGP amounted to S/120.1 million; on March 31,2016 the Company  decided to transfer its total interest of 1.64% to the company Enagás International S.L.U.; the amount of the transfer was for US$31.9 million (S/107.28 million),resulting in a profit of S/31.6 million.
 
9
TRANSACTIONS WITH RELATED PARTIES
 
a)    Transactions with related parties -
 
Major transactions between the Company and its related parties are summarized as follows:

   
From the period
  
   
ended March 31,
  
   
2015
    
2016
  
             
Revenue from sale of goods and services:
            
- Associates
    
1,128
      
163
  
- Joint operations
    
10,536
      
8,730
  
     
11,664
      
8,893
  
 
 
Inter-company services were agreed upon under market terms as if they had been agreed to with third parties.
 
b)    Balances of transactions with related parties


- 15 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
    At December 31        At March 31     
    2015        2016     
    Receivable     Payable     Receivable     Payable  
Joint operations:
                        
Consorcio Constructor Ductos del Sur
    
154,383
       -      
152,423
       -  
Consorcio GyM Conciviles
    
57,679
       -      
58,707
       -  
Consorcio Rio Urubamba
    
10,856
      
2,819
      
10,892
      
1,609
)
Consorcio Terminales del Perú
    
9,459
       -      
9,426
       -  
Adexus S.A.
    
8,521
       -      
20,125
       -  
Consorcio Peruano de Conservación
    
6,270
       -      
8,080
       -  
Consorcio Rio Mantaro
    
6,021
      
15,941
      
-
      
13,165
)
Energía y Vapor
    
3,328
       -      
358
      
1,208
)
Consorcio Terminales
    
3,235
       -      
3,623
       -  
Consorcio La Gloria
    
3,116
      
3,077
      
3,120
      
3,081
)
Ingeniería y Construcción Sigdo Koppers-Vial
    
2,659
      
3,900
      
-
      
3,824
)
Consorcio Constructor Chavimochic
    
2,558
      
6,422
      
918
      
9,218
)
Consorcio Menegua
    
1,910
       -      
-
      
1,650
)
Constructora incolur DSD Ltda.
    
1,681
       -      
1,370
       -  
Consorcio Lima
    
1,430
       -      
1,285
       -  
Consorcio Norte Pachacutec
    
1,026
      
669
      
1,001
      
681
)
Consorcio Italo Peruano
    
465
      
21,907
      
4,513
      
23,655
)
Consorcio Constructor Alto Cayma
    
387
       -      
785
       -  
Consorcio Construcciones y Montajes
    
112
      
2,533
      
-
      
1,916
)
Bechtel Vial y Vives Servicios
                                
Complementarios Ltda.
    
84
      
6,956
      
-
      
7,163
)
Consorcio Huacho Pativilca
    
80
      
5,041
      
-
      
2,572
)
Consorcio Turbogenerador
     -       -      
1,566
      
-
  
Consorcio Vial Quinua
     -       -      
1,413
      
-
  
Consorcio Revamps
     -       -      
1,143
      
1,860
  
Consorcio Manperan
     -       -      
984
      
948
  
Consorcio Ermitaño
    
-
       -        350      
12,507
  
Consorcio Vial Sierra
    
-
       -       -      
6,138
  
Consorcio Monterrey
    
-
       -       -      
1,575
  
Gasoducto Sur Peruano
    
-
       -       -      
20,074
  
Consorcio Ingenieria y Construcción Bechtel
     -       -      
2,803
       -  
Other
    
4,893
      
4,275
      
1,078
      
4,832
)
     
280,153
      
73,540
      
285,963
      
117,676
  
                                 
Other related parties:
                                
Ferrovias Argentina
     -      
20,136
       -      
21,983
)
Arturo Serna
     -      
4,290
       -      
4,360
)
      -      
24,426
       -      
26,343
)
     
280,153
      
97,966
      
285,963(
      
144,019
 
Less non-current portion:
                                
Ferrovias Argentina
     -      
(20,136
)
     -       -  
Porción corriente
    
280,153
      
77,830
      
285,963
      
144,019
 
 
 
Accounts receivable and payable have no specific guarantees.
 
Accounts receivable from related parties mainly arise from sales transactions for goods and services with a maturity period of 60 days. These balances are non-interest-bearing because they have short-term maturities and do not require a provision for impairment.
 
Accounts payable to related parties mainly arise from transactions to provide services of engineering, construction, maintenance and others and have a maturity period of 60 days. Such accounts are not interest bearing because they are short-term.
 
10
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
 
As of March 31, 2016, associates in which the Group has significant influence are similar to those existing as of December 31, 2015, except for the acquisitions mentioned.
 
The movement of our investments in associates for the period ended March 31, 2015 and December 31, 2016 is as follows:
 
- 16 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
 
  
2015
    
2016
  
             
Beginning balance
    
229,563
      
646,884
  
Acquisition and/or contributions received
    
-
)
     199,001  
Debt capitalization
     -       8,308  
Share of the profit and loss in associates
                
under the equity method of accounting
    
15,002
 
    
21,515
)
Dividends received
    
(99
)
     -  
Other
    
480
      
489
  
Ending balance
    
244,946
      
876,197
  
 
 
On January 04, 2016 the Company increased its interest in ADEXUS S.A. in 8% as a consequence of debt capitalization for S/8.3 million, resulting in a increase of its interest to 52% in this joint venture.
 
On November 2015, subsidiary Negocios del Gas SA. adquired an interest of 20% of concessionaire Gasoducto Sur Peruano, which represents an investment of approximately US$215 million, at December 2015 the contribution was S/391 million and at March 2016 its contribution was increased in S/198.3 million.
 
11
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
 
For the period ended March 31,2015 and 2016, the movement in property, plant and equipment and intangible assets accounts was as follows:
 
    Property,      
    plant and     Intangible  
    equipment     assets  
             
At January 1, 2015     1,147,018       778,743  
                 
Additions     73,862       33,645  
Transfers, disposals and adjustmer     (16,023 )     10,206  
Deductions for sale of assets     (1,594 )     -  
Depreciation, amortization     (47,717 )     (19,892 )
Net cost at March 31, 2015     1,155,546       802,702  
                 
                 
At January 1, 2016     1,111,757       881,020  
                 
Additions
    
44,480
      
34,085
  
Transfers, disposals and adjustments
    
3,933
      
4,997
  
Deductions for sale of assets
    
(4,089
)
    
-
  
Depreciation, amortization
    
(44,716
)
    
(19,668
)
Net cost at March 31, 2016
    
1,111,365
      
900,434
  
 
As of March 31, 2015 and 2016, additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.
 
As of March 31, 2015 and 2016, the amounts registered in Intangible assets comprise of investments in building  the second Ancón-Huacho-Pativilca road section of the Panamericana Norte highway (concession under intangible model ).
 
Goodwill -
 
Management reviews the results of its business operations based on the type of economic activity carried out. The economic activities that have given rise to goodwill for the Group were engineering and construction, electro-mechanical works, mining services, IT services and telecommunications services.
 
- 17 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Goodwill by cash-generating units is broken down as follows:

   
At December 31,
    
At March 31,
  
    2015    
2016
  
               
Engineering and construction
    
140,090
      
141,344
  
Electromechanical
    
20,737
      
20,737
  
Mining and construction services
    
13,366
      
13,366
  
Telecommunications services
    
6,443
      
6,661
  
IT equipment and services
    
4,172
      
4,172
  
     
184,808
      
186,280
  
 
 
As a result of the impairment testing on goodwill performed by Management on an annual basis the recoverable amount of the related cash-generating unit (CGU) is determined based on its value in use. Value in use is determined based on the future cash flows expected to be generated by the assessed CGU. As a result of these assessments no provisions for impairment were required. As of march 31, 2016 same criteria were applied as those in test impairment at December 31, 2015.
 
12
BORROWINGS
 
This item comprises:
 
   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December
    
March
    
December
    
March
    
December
    
March
  
    31, 2015     31, 2016     31, 2015     31, 2016     31, 2015     31, 2016  
                                                 
Bank loans
    
1,480,071
      
1,714,856
      
1,082,860
      
980,655
      
397,211
      
734,201
  
Leases
    
301,285
      
269,527
      
145,160
      
135,969
      
156,125
      
133,558
  
     
1,781,356
      
1,984,383
      
1,228,020
      
1,116,624
      
553,336
      
867,759
  
 
 
a)  Bank loans -

As of March 31, 2016 and December 31, 2015, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations bear interest at fixed rates which fluctuated between 1% and 13.1% in 2016 and 2015.
 
               
Current
    
Non-current
  
   
Interest
    
Date of
    
At December 31,
    
At March 31,
     At December 31,    
At March 31,
  
   
rate
    
maturity
    
2015
    
2016
     2015     2016  
                                     
GyM S.A.
    
1.00% / 7.80
%
    
2016 / 2020
      
535,776
      
577,805
      
286,671
      
226,266
  
Graña y Montero S.A.A.
  
Libor USD 3M
+ 3.9%
    
2016 / 2020
      
102,776
       77      
-
      
385,857
  
GMP S.A.
    
3.50% / 6.04
%
    
2016 / 2020
      
95,824
      
79,450
      
70,220
      
77,207
  
Viva GyM S.A.
    
7.80% / 9.46
%
    
2016 / 2017
      
220,423
      
236,224
      
8,372
      
14,987
  
CAM Holding S.A.
    
1.70% / 13.07
%
    
2016 / 2020
      
42,534
      
56,114
      
31,948
      
29,884
  
GMD S.A.
    
5.00% / 6.30
%
    
2016
      
30,107
      
29,020
       -       -  
Norvial S.A.
    
8.37
%
    
2016
      
54,706
      
1,965
       -       -  
GMI
    
5.56
%
    
2016
      
714
       -       -       -  
                     
1,082,860
      
980,655
      
397,211
      
734,201
  
 
As of March 31, 2016, the Company maintained unused credit limits for S/XXXX million, which expire within one year (S/4,666 million as of December 31, 2015).

b)  Fair value of borrowings -
 
- 18 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
The carrying amount and fair value of borrowings are broken down as follows:
 
   
Carrying amounts
    
Fair value
  
   
At December
    
At March
    
At December
    
At March
  
    31, 2015     31, 2016     31, 2015     31, 2016  
                                 
Total loans
    
1,781,356
      
1,984,383
      
1,802,183
      
2,091,805
  
 
 
The fair value is based on cash flows discounted using a rate based on the borrowing rate of 4.7% and 13.1% (4.8% and 13.1% in 2015). It should be noted that the interest rate used are those applicable and negotiated by each Company.
 
13
BONDS
 
This item is broken down as follows:
 
   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December
    
March
    
December
    
March
    
December
    
March
  
    31, 2015     31, 2016     31, 2015     31, 2016     31, 2015     31, 2016  
                                                 
GyM Ferrovías (a)
    
607,868
      
606,967
      
31,546
      
30,422
      
576,322
      
576,545
  
Norvial (b)
    
186,223
      
286,426
       5,537      
11,210
      
180,686
       275,216  
     
794,091
      
893,393
      
37,083
      
41,632
      
757,008
      
851,761
  
 
 
a)     GyM Ferrovías S.A. -

In February 2015 subsidiary GyM Ferrovías issued corporate bonds under the U.S. Regulation S. This issue was carried out in Peruvian Soles VAC (the Spanish acronym for constant value update) for a total amount of S/629 million. The issues costs for this transactions were for S/22 million. Maturity of these bonds is November 2039 and bear interest at a rate of 4.75% (plus VAC adjustment), they have a risk rating of AA+ (local grading) granted by  Apoyo & Asociados Internacionales Clasificadora de Riesgo and a collateral structure that includes a mortgage on the concession to which GyM Ferrovías is a concessionaire, security on the shares of GyM Ferrovías, Assignment of the collection rights arising from the Management  Trust, a Cash Flow and Reserve Trust  for the Service of the Debt, Operation and Maintenance and in-progress Capex.  At March 31, 2016 the Group made a payment of S/21.3 million.

Capital raised from bond issue were used in amortizing a short-term loan with Banco de Crédito del Perú – BCP for S/400 million,  funding the reserve accounts,  payment of costs of bond issue and partial repayment of the subordinated loan obtained from parent Company by GyM Ferrovías.

At March 31, 2016 the balance includes accrued interest payable for S/21.6 million.

As part of the process of bond structuring, GyM Ferrovías engaged to adhere to the following covenants: 
 
  -
Debt service coverage ratio of not less than 1.2 times.
  -
Keeping a constant minimum balance of trust equal to a quarter of operating and maintenance costs (including VAT)
  -
Keeping a constant minimum balance of trust equal to two coupons as per schedule.
 
- 19 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
b)     Norvial S.A. -
 
In July 2015, Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. The first issue was for S/80 million at 5 years, bearing an interest rate of 6.75% and funds were drawn on July 23, 2015. The second issue was for S/285 million at 11.5 years, bearing an interest rate of 8.375%, structured in 3 disbursements: the first disbursement of S/105 million was on July 23; the second disbursement of S/100 million was on January 25, 2016; and the third disbursement of S/80 million will be made effective in July 2016.  The issues costs corresponding to the first issue and to the first and second disbursements of the second issue were for S/3 million.  Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA. This financing transaction has been secured by (i) a cash flow trust, related to the consideration and the regulatory rate; (ii) a mortgage on the concession in which Norvial S.A. is a concessionaire; (iii) a security on shares: (iv) collection rights and (v) in general, all those additional collaterals given to the secured creditors. The capital raised is intended to finance the construction of the Second Phase of Red Vial No.5 and the financing of VAT arising from a project-related expenses.

At March 31, 2016 the balance included interest payables for S/4.4 million (S/2.7 million at March 31,2015)

As part of the process of bond structuring, Norvial engaged to adhere to the following covenants:
 
  -
Debt service coverage ratio of not less than 1.3 times.
  -
Proforma gearing ratio lower than 4 times.
 
As of March 31,2016 and December 31,2015 both Companies have complied with their covenants.

Fair value of the bonds of both Companies at March 31, 2016 amounted to S/946.9 million (at December 31, 2015 amounted to S/769.5 million), which has been calculated based on the discounted cash flows, using rates between 4.42% and 8.09% (rates between 4.88% and 8.89% at December 31,2015 ) which are within level 2 of the fair value hierarchy.
 
14
PROVISIONS
 
This item is broken down based on the expectation of liquidation as follows:

   
At December
    
At March
  
    31, 2015     31, 2016  
                 
Current portion
    
13,468
)
    
13,581
  
Non-current portion
    
35,618
      
37,761
  
     
49,086
      
51,342
  
 
 
The movement of this item for the period ended March 31, 2015 and 2016 is as follows:
 
         
Contingent
    
Provisions for
    
Provision
        
   
Legal
    
liabilities from
    
the acquisition
     for well        
Other provisions
  
claims
    
acquisitions
    
of CAM
    
closure
    
Total
  
                               
At January 1, 2015
    
13,056
      
25,927
      
12,152
      
7,210
      
58,345
  
Additions
     -               -      
330
      
330
  
Reversals
     -       -      
(1,987
)
     -      
(1,987
)
Payments
    
(1,538
)
            
-
      
(4
)
    
(1,542
)
At March 31, 2015
    
11,518
      
25,927
      
10,165
      
7,536
      
55,146
  
                                         
                                         
At January 1, 2016
    
15,000
 
    
22,960
)
     3,819      
7,307
)
     49,086  
Additions
    
67
 
    
1,903
)
     -      
239
)
    
2,209
)
Translation adjustment
    
247
 
    
662
)
     -       -      
909
)
Reversals
     -       -      
(660
)
     -      
(660
)
Payments
    
(202
)
    
-
      
-
      
-
      
(202
)
At March 31, 2016
    
15,112
      
25,525
      
3,159
      
7,546
      
51,342
  
 
 
Reversals for the period ended March 31, 2016 mainly consists of write-offs of provisions recognized in conjunction with the purchase price allocation related to acquisition of CAM Chile in S/0.7 million. (S/1.9 million as of March 31, 2015).
 
- 20 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
15
CAPITAL
 
As of December 31, 2015 and March 31, 2016, the authorized, subscribed and paid-in capital, according to the Company’s bylaws as amended, is represented by 660,053,790 common shares at S/1.00 par value each.

As of December 31, 2015, the amount of 250,860,370 common shares is represented by 50,172,074 ADSs, at 5 shares per ADS.

As of March 31, 2016, the amount of 252,923,750 common shares is represented by 50,584,750 ADSs, at 5 shares per ADS.
 
16
EXPENSES BY NATURE

For the period ended March 31, 2015 and 2016, this item comprises:
 
   
Cost of
services
and goods
    
Adminis-
trative
expenses
  
 
2015
            
Inventories, materials and consumables used
    
209,541
      
-
  
Personnel charges
    
454,167
      
59,162
  
Services provided by third-parties
    
634,225
      
29,079
  
Taxes
    
4,259
      
735
  
Other management charges
    
165,830
      
13,311
  
Depreciation
    
44,247
      
4,032
  
Amortization
    
17,303
      
2,589
  
Impairment
    
194
      
-
  
Reversal of impairment
    
(269
)
    
-
  
     
1,529,497
      
108,908
  
 
2016
                
Inventories, materials and consumables used
    
243,106
      
-
  
Personnel charges
    
328,001
      
54,117
  
Services provided by third-parties
    
555,275
      
30,585
  
Taxes
    
4,032
      
1,735
  
Other management charges
    
98,882
      
2,670
  
Depreciation
    
42,020
      
3,266
  
Amortization
    
17,922
      
1,746
  
Impairment
    
385
      
16
  
      1,289,623       94,135  
 
 
17
INCOME TAX
 
These condensed interim consolidated financial statements for the period ended March 31, 2016, income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 December 2016 is 14.69% (33.48% for the period ended March 31, 2015). The variation of the effective rate as compared to the previous year is due to the effect of the permanent differences in the income tax calculation.
 
18
CONTINGENCIES, COMMITTMENTS AND GUARANTEES
 
As of March 31, 2016, contingencies held by the Group are substantially the same as those existing as of December 31, 2015.
 
- 21 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
In addition the Group had guarantee commitments with different financial institutions securing transactions in the amount of US$XX million.
 
19
DIVIDENDS
 
For the period ended March 31, 2016 , the Group has paid dividends to its non-controlling subsidiaries participate by S/2.3 million (S/2 million for the same period in 2015).

Dividends from the year ended December 31, 2015, of S/0.0467 per share totaling S/ 30,853,485 were approved at the General Shareholders’ meeting held on March 29, 2016, and will be paid on April 2016.
 
20
EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
 
Between March 31, 2016 and the date of approval of the condensed interim consolidated financial statements, there have been no subsequent events that may affect the fairness of the financial statements issued.
 

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