6-K 1 a51387261.htm GRANA Y MONTERO S.A.A. 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 July 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

July 25, 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 JUNE 30, 2015 AND 2016 AND FOR THE SIX-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 JUNE 30, 2015 AND 2016 AND FOR THE SIX-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,
    
June 30,
              
December 31,
    
June 30,
  
   
Note
    
2015
    
2016
        
Note
    
2015
    
2016
  
                                         
Current assets
                    
Current liabilities
                  
Cash and cash equivalents
          
554,002
      
563,394
    
Borrowings
  
12
      
1,228,020
      
1,022,030
  
Financial asset at fair value through profit or loss
           
3,153
      
2,787
    
Bonds
  
13
      
37,083
      
38,651
  
Trade accounts receivables
          
1,050,791
      
978,092
    
Trade accounts payable
          
1,635,760
      
1,438,173
  
Unbilled work in progress
          
1,319,187
      
1,092,836
    
Accounts payable to related parties
  
9
      
77,830
      
106,080
  
Accounts receivable from related parties
  
9
      
280,153
      
272,501
    
Current income tax
          
34,116
      
5,894
  
Other accounts receivable
          
824,589
      
761,045
    
Other accounts payable
          
1,066,000
      
1,035,248
  
Inventories
          
1,159,154
      
1,185,075
    
Provisions
  
14
      
13,468
      
16,399
  
Prepaid expenses
          
40,023
      
32,670
    
Total current liabilities
          
4,092,277
      
3,662,475
  
           
5,231,052
      
4,888,400
                            
                                                 
Non-current assets classified as held for sale
          
22,511
      
22,298
    
Non-current liabilities
                      
                         
Borrowings
  
12
      
553,336
      
806,716
  
Total current assets
          
5,253,563
      
4,910,698
    
Long-term bonds
  
13
      
757,008
      
853,831
  
                         
Other long-term accounts payable
          
246,396
      
217,443
  
Non-current assets
                        
Long-term accounts payable to related parties
  
9
      
20,136
      
19,677
  
Long-term trade accounts receivable
          
621,831
      
623,437
    
Provisions
  
14
      
35,618
      
36,027
  
Long-term unbilled work in progress
          
59,754
      
59,871
    
Derivative financial instruments
          
2,331
      
2,337
  
Prepaid expenses
          
22,386
      
37,380
    
Deferred income tax liability
          
101,664
      
84,952
  
Other long-term accounts receivable
          
65,929
      
84,335
    
Total non-current liabilities
          
1,716,489
      
2,020,983
  
Available-for-sale financial assets
  
8
      
120,134
      
-
    
Total liabilities
          
5,808,766
      
5,683,458
  
Investments in associates and joint ventures
  
10
      
646,884
      
931,185
                            
Investment property
          
34,702
      
33,640
    
Equity
                      
Property, plant and equipment
  
11
      
1,111,757
      
1,111,665
    
Capital
  
15
      
660,054
      
660,054
  
Intangible assets
  
11
      
881,020
      
924,728
    
Legal reserve
          
132,011
      
132,011
  
Deferred income tax asset
          
173,851
      
187,806
    
Optional reserve
          
29,974
      
29,974
  
Total non-current assets
          
3,738,248
      
3,994,047
    
Share Premium
          
897,532
      
879,349
  
                         
Other reserves
          
(129,059
)
    
(159,429
)
                         
Retained earnings
          
1,064,044
      
1,137,122
  
                         
Equity attributable to controlling interest in the Company
          
2,654,556
      
2,679,081
  
                         
Non-controlling interest
          
528,489
      
542,206
  
                         
Total equity
          
3,183,045
      
3,221,287
  
Total assets
          
8,991,811
      
8,904,745
    
Total liabilities and equity
          
8,991,811
      
8,904,745
  
 
 
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 six months
  
         
ended June 30,
  
   
Note
    
2015
    
2016
  
                   
                   
Revenues from construction activities
          
2,766,692
      
1,734,941
  
Revenues from services provided
          
865,182
      
881,982
  
Revenue from real estate and sale of goods
          
132,235
      
182,187
  
           
3,764,109
      
2,799,110
  
                       
Cost of construction activities
          
(2,600,492
)
    
(1,603,141
)
Cost of services provided
          
(732,229
)
    
(761,904
)
Cost of real estate and goods sold
          
(79,250
)
    
(127,448
)
   
16
      
(3,411,971
)
    
(2,492,493
)
Gross profit
          
352,138
      
306,617
  
                       
Administrative expenses
  
16
      
(206,217
)
    
(187,194
)
Other income and expenses
          
7,250
      
14,739
  
Gain from the sale of investments
  
8
      
-
      
28,161
  
Operating profit
          
153,171
      
162,323
  
                       
Financial expenses
          
(75,391
)
    
(62,902
)
Financial income
          
9,542
      
30,086
  
Share of the profit or loss in associates and joint
                      
ventures under the equity method of accounting
          
15,607
      
30,987
  
Profit before income tax
          
102,929
      
160,494
  
Income tax
  
17
      
(33,581
)
    
(38,492
)
Profit for the period
          
69,348
      
122,002
  
                       
Profit attributable to:
                      
Owners of the Company
          
39,948
      
104,905
  
Non-controlling interest
          
29,400
      
17,097
  
           
69,348
      
122,002
  
                       
Earnings per share from continuing operations
                      
attributable to owners of the Company during
                      
the period
          
0.061
      
0.159
  
   
 
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 six months
  
         
ended June 30,
  
   
Note
    
2015
    
2016
  
                   
                   
Profit for the period
          
69,348
      
122,002
  
Other comprehensive income:
                      
Items that will not be reclassified to profit or loss
                      
Remeasurement of actuarial gains and losses, net of tax
          
(2,431
)
    
(930
)
                       
Items that may be subsequently  reclassified to profit or loss
                      
Cash flow hedge, net of tax
          
278
      
(63
)
Foreign currency translation adjustment, net of tax
          
(722
)
    
11,531
  
Change in value of available-for-sale financial assets, net of tax
  
8
      
4,341
      
(43,681
)
Exchange difference from net investment in a foreign operation, net of tax
          
866
      
7,176
  
           
4,763
      
(25,037
)
Other comprenhensive income for the period, net of tax
          
2,332
      
(25,967
)
Total comprehensive income for the period
          
71,680
      
96,035
  
                       
Comprehensive income attributable to:
                      
Owners of  the Company
          
43,600
      
73,853
  
Non-controlling interest
          
28,080
      
22,182
  
           
71,680
      
96,035
  
 
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 SIX MONTHS ENDED JUNE 30, 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
  
                                                             
                                                             
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 period
    
-
      
-
      
-
      
-
      
-
      
-
      
39,948
      
39,948
      
29,400
      
69,348
  
Cash flow hedge
    
-
      
-
      
-
      
-
      
-
      
264
      
-
      
264
      
14
      
278
  
Adjustment for actuarial gains and losses
    
-
      
-
      
-
      
-
      
-
      
-
      
(1,703
)
    
(1,703
)
    
(728
)
    
(2,431
)
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
-
      
(103
)
    
-
      
(103
)
    
(619
)
    
(722
)
Change in value of available-for-sale financial assets
    
-
      
-
      
-
      
-
      
-
      
4,341
      
-
      
4,341
      
-
      
4,341
  
Exchange difference from net investment in a foreign operation
    
-
      
-
      
-
      
-
      
-
      
853
      
-
      
853
      
13
      
866
  
Comprehensive income of the year
    
-
      
-
      
-
      
-
      
-
      
5,355
      
38,245
      
43,600
      
28,080
      
71,680
  
Transactions with shareholders:
                                                                                
- Transfer to Optional  reserve
    
-
      
-
      
-
      
29,974
      
-
      
-
      
(29,974
)
    
-
      
-
      
-
  
- Dividend distribution
    
-
      
-
      
-
      
-
      
-
      
-
      
(104,911
)
    
(104,911
)
    
(3,857
)
    
(108,768
)
- Contributions of non-controlling shareholders
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
5,335
      
5,335
  
- Additional acquisition of non-controlling
    
-
      
-
      
-
      
-
      
(894
)
    
-
      
-
      
(894
)
    
(970
)
    
(1,864
)
- Sale to non-controlling interest
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
2,445
      
2,445
  
Total transactions with shareholders
    
-
      
-
      
-
      
29,974
      
(894
)
    
-
      
(134,885
)
    
(105,805
)
    
2,953
      
(102,852
)
Balances as of June 30, 2015
    
660,054
      
660,054
      
132,011
      
29,974
      
898,417
      
(108,540
)
    
1,017,056
      
2,628,972
      
513,563
      
3,142,535
  
                                                                                 
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
    
-
      
-
      
-
      
-
      
-
      
-
      
104,905
      
104,905
      
17,097
      
122,002
  
Cash flow hedge
    
-
      
-
      
-
      
-
      
-
      
(60
)
    
-
      
(60
)
    
(3
)
    
(63
)
Adjustment for actuarial gains and losses
    
-
      
-
      
-
      
-
      
-
      
-
      
(682
)
    
(682
)
    
(248
)
    
(930
)
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
-
      
6,300
      
-
      
6,300
      
5,231
      
11,531
  
Change in value of available-for-sale financial assets
    
-
      
-
      
-
      
-
      
-
      
(43,681
)
    
-
      
(43,681
)
    
-
      
(43,681
)
Exchange difference from net investment in a foreign operation
    
-
      
-
      
-
      
-
      
-
      
7,071
      
-
      
7,071
      
105
      
7,176
  
Comprehensive income of the period
    
-
      
-
      
-
      
-
      
-
      
(30,370
)
    
104,223
      
73,853
      
22,182
      
96,035
  
Transactions with shareholders:
                                                                                
- Transfer to Optional  reserve
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
- Dividend distribution
    
-
      
-
      
-
      
-
      
-
      
-
      
(30,853
)
    
(30,853
)
    
(6,228
)
    
(37,081
)
- Contributions of non-controlling shareholders
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
756
      
756
  
- Additional acquisition of non-controlling
    
-
      
-
      
-
      
-
      
(18,183
)
    
-
      
-
      
(18,183
)
    
(3,487
)
    
(21,670
)
- Sale to non-controlling interest
    
-
      
-
      
-
      
-
      
-
      
-
      
(292
)
    
(292
)
    
494
      
202
  
Total transactions with shareholders
    
-
      
-
      
-
      
-
      
(18,183
)
    
-
      
(31,145
)
    
(49,328
)
    
(8,465
)
    
(57,793
)
Balances as of June 30, 2016
    
660,054
      
660,054
      
132,011
      
29,974
      
879,349
      
(159,429
)
    
1,137,122
      
2,679,081
      
542,206
      
3,221,287
  
 
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 six months
  
         
ended June 30,
  
   
Note
    
2015
    
2016
  
                   
OPERATING ACTIVITIES
                  
Profit before income tax
          
102,929
      
160,494
  
Adjustments to  profit not affecting cash flows from
                      
operating activities:
                      
Depreciation
    
11
      
103,537
      
95,694
  
Amortization of other assets
    
11
      
40,436
      
40,508
  
Impairment of inventories
    
16
      
-
      
875
  
Impairment of accounts receivable
    
16
      
-
      
6
  
Impairment of property, plant and equipment
    
16
      
738
      
276
  
Reversal of impairment of inventories
            
(445
)
    
-
  
Profit on fair value of financial asset at fair value through profit or loss
            
(987
)
    
330
  
Other Provisions
    
14
      
145
      
4,008
  
Interest income,net
            
47,564
      
67,587
  
Foreign exchange loss (gain) on loans
            
21,664
      
(66,802
)
Share of the profit and loss in associates
                        
under the equity method of accounting
    
10
      
(15,607
)
    
(30,987
)
Reversal of provisions
    
14
      
(4,036
)
    
(1,560
)
Lower of fixed and intangible assets
            
3,563
      
317
  
Profit on sale of property, plant and equipment
            
(3,616
)
    
(9,666
)
Gain on financial asset at fair value through profit or loss
            
420
      
(28,001
)
Loss on sale of investments
            
-
      
(22
)
Net variations in assets and liabilities:
                        
Trade accounts receivable
            
(247,835
)
    
286,399
  
Other accounts receivable
            
(169,836
)
    
131,945
  
Other accounts receivable from related parties
            
(6,840
)
    
(656
)
Inventories
            
(39,909
)
    
(21,424
)
Pre-paid expenses and other assets
            
(32,489
)
    
(8,072
)
Trade accounts payable
            
43,423
      
(197,587
)
Other accounts payable
            
(104,560
)
    
(79,133
)
Other accounts payable to related parties
            
19,105
      
30,807
  
Other provisions
            
(818
)
    
(558
)
Interest payment
            
(48,367
)
    
(70,677
)
Payments related to Norvial Concession
            
(65,330
)
    
(49,952
)
Payment of income tax
            
(117,437
)
    
(79,734
)
Net cash provided by (applied to) operating activities
            
(474,588
)
    
174,415
  
                         
INVESTING ACTIVITIES
                        
Sale of available-for-sale investment
            
-
      
1,262
  
Sale of property, plant and equipment
            
12,783
      
26,365
  
Sale of financial asset at fair value through profit or loss
            
4,604
      
-
  
Return of contributions
            
-
      
1,390
  
Interest received
            
5,983
      
6,920
  
Dividends received
    
10
      
9,937
      
13,168
  
Payment for purchase of investments properties
            
(379
)
    
(80
)
Payments for intangible purchase
            
(14,120
)
    
(6,881
)
Payments for purchase and contributions on investment in associate and joint ventures
      
-
      
(238,015
)
Payments for property, plant and equipment purchase
            
(128,257
)
    
(84,445
)
Net cash applied to investing activities
            
(109,449
)
    
(280,316
)
                         
FINANCING ACTIVITIES
                        
Loans received
            
1,904,834
      
2,123,698
  
Bonds issued
            
628,994
      
100,013
  
Amortization of loans received
            
(1,923,612
)
    
(2,026,194
)
Amortization of bonds issued
            
(5,358
)
    
(10,884
)
Payment for transaction costs for debt
            
(16,017
)
    
(13,547
)
Dividends paid to owners of the parent
            
(104,911
)
    
(30,853
)
Dividends paid to non-controlling interest
            
(3,857
)
    
(6,228
)
Cash received from non-controlling shareholders
            
5,335
      
756
  
Acquisition or sale of interest in a subsidiary of non-controlling shareholders
            
581
      
(21,468
)
Net cash (applied to) provided by financing activities
            
485,989
      
115,293
  
Net increase (net decrease) in cash
            
(98,048
)
    
9,392
  
Cash and cash equivalents at the beginning of the year
            
818,402
      
554,002
  
Cash and cash equivalents at the end of the period
            
720,354
      
563,394
  
                         
NON-CASH TRANSACTIONS:
                        
Debt capitalization
            
-
      
8,308
  
Acquisition of assets through finance leases
            
49,751
      
22,914
  
Change in fair vaue of available-for-sale financial asset
            
-
      
(43,681
)
                         
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 JUNE 30, 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 June 30, 2016 have been prepared and authorized for issuance by the Chief Financial Officer on July 25, 2016.

2 BASIS OF PREPARATION

These condensed interim consolidated financial statements for the period ended June 30, 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
year
   
From 1 to
2 years
   
From 2 to
5 years
   
Over
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 June 30, 2016
                                        
Other financial liabilities (except for finance leases)
    
923,993
      
207,424
      
501,409
      
-
      
1,632,826
  
Finance leases
    
136,313
      
81,001
      
21,778
      
22,194
      
261,286
  
Bonds
    
111,265
      
133,516
      
323,289
      
1,317,512
      
1,885,582
  
Trade accounts payables
    
1,438,173
      
-
      
-
      
-
      
1,438,173
  
Accounts payables to related parties
    
106,080
      
19,677
      
-
      
-
      
125,757
  
Other accounts payables
    
282,944
      
29,591
      
116,477
      
-
      
429,012
  
Other non-financial liabilities
    
-
      
2,337
      
-
      
-
      
2,337
  
     
2,998,768
      
473,546
      
962,953
      
1,339,706
      
5,774,973
  
 
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 June 30, 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,
     June 30,  
 
  
2015
    
2016
  
             
Total borrowing and bonds
    
2,575,447
      
2,721,228
  
Less: Cash and cash equivalents     (554,002 )     (563,394 )
Net debt
    
2,021,445
      
2,157,834
  
Total equity
    
3,183,045
      
3,221,287
  
Total capital
    
5,204,490
      
5,379,121
  
                 
Gearing ratio
    
0.39
      
0.40
  
 
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 June 30, 2016
                                                            
Assets.-
                                                            
Cash and cash equivalents
    
115,389
      
17,015
      
69,702
      
115,262
      
901
      
60,360
      
38,890
      
145,875
      
-
      
563,394
  
Financial asset at fair value through profit or loss
    
2,787
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
2,787
  
Trade accounts receivables
    
489,640
      
51,101
      
9,485
      
79,707
      
-
      
40,067
      
308,092
      
-
      
-
      
978,092
  
Unbilled work in progress
    
1,065,891
      
-
      
-
      
-
      
26,945
      
-
      
-
      
-
      
-
      
1,092,836
  
Accounts receivable from related parties
    
332,194
      
2,502
      
11,740
      
353
      
388
      
23,751
      
41,559
      
130,650
      
(270,636
)
    
272,501
  
Other accounts receivable
    
525,379
      
43,989
      
7,397
      
8,142
      
12,009
      
22,813
      
107,560
      
33,756
      
-
      
761,045
  
Inventories
    
110,245
      
11,636
      
-
      
15,040
      
-
      
981,758
      
66,761
      
389
      
(754
)
    
1,185,075
  
Prepaid expenses
    
6,807
      
1,617
      
1,854
      
6,701
      
461
      
-
      
14,665
      
565
      
-
      
32,670
  
Non-current assets classified as held for sale
    
22,298
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
22,298
  
Total current assets
    
2,670,630
      
127,860
      
100,178
      
225,205
      
40,704
      
1,128,749
      
577,527
      
311,235
      
(271,390
)
    
4,910,698
  
                                                                                 
Long-term trade accounts receivable
    
-
      
-
      
-
      
623,437
      
-
      
-
      
-
      
-
      
-
      
623,437
  
Long-term unbilled work in progress
    
-
      
39,269
      
20,602
      
-
      
-
      
-
      
-
      
-
      
-
      
59,871
  
Long-term accounts receivable from related parties
    
-
      
-
      
408
      
-
      
-
      
-
      
482
      
166,995
      
(167,885
)
    
-
  
Prepaid expenses
    
-
      
3,524
      
30,624
      
2,263
      
969
      
-
      
-
      
-
      
-
      
37,380
  
Other long-term accounts receivable
    
10,486
      
24,093
      
32,914
      
3,032
      
1,589
      
11,996
      
-
      
225
      
-
      
84,335
  
Investments in associates and joint ventures
    
117,592
      
9,463
      
-
      
-
      
-
      
28,362
      
9,830
      
3,248,817
      
(2,482,879
)
    
931,185
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
33,640
      
-
      
-
      
-
      
33,640
  
Property, plant and equipment
    
606,505
      
186,913
      
1,473
      
201
      
7
      
12,275
      
181,951
      
129,308
      
(6,968
)
    
1,111,665
  
Intangible assets
    
305,252
      
116,707
      
419,361
      
290
      
-
      
1,000
      
45,914
      
23,130
      
13,074
      
924,728
  
Deferred income tax asset
    
136,936
      
3,181
      
3,378
      
-
      
-
      
608
      
43,583
      
661
      
(541
)
    
187,806
  
Total non-current assets
    
1,176,771
      
383,150
      
508,760
      
629,223
      
2,565
      
87,881
      
281,760
      
3,569,136
      
(2,645,199
)
    
3,994,047
  
Total assets
    
3,847,401
      
511,010
      
608,938
      
854,428
      
43,269
      
1,216,630
      
859,287
      
3,880,371
      
(2,916,589
)
    
8,904,745
  
                                                                                 
Liabilities.-
                                                                                
Borrowings
    
621,122
      
70,512
      
11,901
      
-
      
6,576
      
202,919
      
107,563
      
1,437
      
-
      
1,022,030
  
Bonds
    
-
      
-
      
16,061
      
22,590
      
-
      
-
      
-
      
-
      
-
      
38,651
  
Trade accounts payable
    
1,161,359
      
38,503
      
3,689
      
13,034
      
206
      
21,593
      
192,940
      
6,849
      
-
      
1,438,173
  
Accounts payable to related parties
    
113,737
      
3,442
      
21,471
      
9,680
      
6,639
      
76,174
      
37,670
      
103,908
      
(266,641
)
    
106,080
  
Current income tax
    
916
      
1,407
      
1,468
      
-
      
96
      
-
      
1,494
      
513
      
-
      
5,894
  
Other accounts payable
    
578,735
      
13,902
      
10,656
      
1,609
      
81
      
282,426
      
133,560
      
14,279
      
-
      
1,035,248
  
Provisions
    
-
      
6,045
      
-
      
-
      
-
      
155
      
10,199
      
-
      
-
      
16,399
  
Total current liabilities
    
2,475,869
      
133,811
      
65,246
      
46,913
      
13,598
      
583,267
      
483,426
      
126,986
      
(266,641
)
    
3,662,475
  
                                                                                 
Borrowings
    
274,702
      
82,842
      
-
      
-
      
-
      
17,597
      
49,632
      
381,943
      
-
      
806,716
  
Long-term bonds
    
-
      
-
      
270,446
      
583,385
      
-
      
-
      
-
      
-
      
-
      
853,831
  
Other long-term accounts payable
    
139,875
      
-
      
493
      
427
      
-
      
-
      
74,938
      
1,710
      
-
      
217,443
  
Long-term accounts payable to related parties
    
-
      
-
      
-
      
85,295
      
28,923
      
39,284
      
37,659
      
395
      
(171,879
)
    
19,677
  
Provisions
    
25,833
      
7,236
      
-
      
-
      
-
      
-
      
2,958
      
-
      
-
      
36,027
  
Derivative financial instruments
    
-
      
2,337
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
2,337
  
Deferred income tax liability
    
41,021
      
4,149
      
-
      
13,346
      
265
      
10,832
      
2,795
      
12,544
      
-
      
84,952
  
Total non-current liabilities
    
481,431
      
96,564
      
270,939
      
682,453
      
29,188
      
67,713
      
167,982
      
396,592
      
(171,879
)
    
2,020,983
  
Total liabilities
    
2,957,300
      
230,375
      
336,185
      
729,366
      
42,786
      
650,980
      
651,408
      
523,578
      
(438,520
)
    
5,683,458
  
Equity attributable to controlling interest in the Company
    
729,048
      
259,531
      
212,443
      
93,798
      
483
      
215,548
      
170,990
      
3,342,959
      
(2,345,719
)
    
2,679,081
  
Non-controlling interest
    
161,053
      
21,104
      
60,310
      
31,264
      
-
      
350,102
      
36,889
      
13,834
      
(132,350
)
    
542,206
  
Total liabilities and equity
    
3,847,401
      
511,010
      
608,938
      
854,428
      
43,269
      
1,216,630
      
859,287
      
3,880,371
      
(2,916,589
)
    
8,904,745
  
 
 
 
 
 
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 six-month period
                                                            
ended June 30, 2015
                                                            
                                                             
Revenue
    
2,890,918
      
182,535
      
171,692
      
101,785
      
17,166
      
47,766
      
537,801
      
35,927
      
(221,481
)
    
3,764,109
  
Gross profit (loss)
    
205,509
      
33,180
      
33,082
      
21,902
      
1,319
      
13,309
      
81,808
      
(4,482
)
    
(33,489
)
    
352,138
  
Administrative expenses
    
(136,587
)
    
(8,602
)
    
(4,603
)
    
(5,502
)
    
(149
)
    
(10,157
)
    
(64,512
)
    
(12,694
)
    
36,589
      
(206,217
)
Other income and expenses
    
(1,901
)
    
115
      
-
      
-
      
-
      
655
      
5,069
      
3,835
      
(523
)
    
7,250
  
                                                                                 
Operating profit (loss)
    
67,021
      
24,693
      
28,479
      
16,400
      
1,170
      
3,807
      
22,365
      
(13,341
)
    
2,577
      
153,171
  
Financial expenses
    
(53,862
)
    
(10,452
)
    
(2,433
)
    
(2,380
)
    
(22
)
    
(6,246
)
    
(13,788
)
    
(1,204
)
    
14,996
      
(75,391
)
Financial income
    
5,046
      
90
      
4,814
      
540
      
35
      
232
      
990
      
20,210
      
(22,415
)
    
9,542
  
Share of the profit or loss in
associates and joint ventures under
the equity method of accounting
    
8,037
      
483
      
-
      
-
      
-
      
4,742
      
466
      
34,003
      
(32,124
)
    
15,607
  
Profit (loss) before income tax
    
26,242
      
14,814
      
30,860
      
14,560
      
1,183
      
2,535
      
10,033
      
39,668
      
(36,966
)
    
102,929
  
Income tax
    
(9,985
)
    
(4,106
)
    
(8,421
)
    
(4,457
)
    
(356
)
    
(668
)
    
(5,557
)
    
(837
)
    
806
      
(33,581
)
Profit (loss) for the period
    
16,257
      
10,708
      
22,439
      
10,103
      
827
      
1,867
      
4,476
      
38,831
      
(36,160
)
    
69,348
  
                                                                                 
Profit (loss) attributable to:
                                                                                
                                                                                 
Owners of the Company
    
(2,042
)
    
9,529
      
16,367
      
7,577
      
827
      
1,072
      
3,390
      
39,002
      
(35,774
)
    
39,948
  
Non-controlling interest
    
18,299
      
1,179
      
6,072
      
2,526
      
-
      
795
      
1,086
      
(171
)
    
(386
)
    
29,400
  
     
16,257
      
10,708
      
22,439
      
10,103
      
827
      
1,867
      
4,476
      
38,831
      
(36,160
)
    
69,348
  
 
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 six-month period
                                                            
ended June 30, 2016
                                                            
                                                             
Revenue
    
1,851,245
      
180,301
      
135,867
      
119,528
      
10,069
      
100,643
      
591,741
      
29,925
      
(220,209
)
    
2,799,110
  
Gross profit (loss)
    
142,529
      
17,812
      
34,377
      
35,114
      
925
      
30,535
      
76,403
      
(2,884
)
    
(28,194
)
    
306,617
  
Administrative expenses
    
(124,506
)
    
(7,384
)
    
(4,754
)
    
(5,807
)
    
(252
)
    
(10,041
)
    
(49,751
)
    
(17,819
)
    
33,120
      
(187,194
)
Other income and expenses
    
13,134
      
(677
)
    
56
      
-
      
-
      
351
      
2,236
      
2,461
      
(2,822
)
    
14,739
  
Gain from the sale of investments
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
28,161
      
-
      
28,161
  
Operating profit (loss)
    
31,157
      
9,751
      
29,679
      
29,307
      
673
      
20,845
      
28,888
      
9,919
      
2,104
      
162,323
  
Financial expenses
    
(28,145
)
    
(4,566
)
    
(4,440
)
    
(1,335
)
    
(30
)
    
(7,417
)
    
(12,006
)
    
(11,238
)
    
6,275
      
(62,902
)
Financial income
    
12,443
      
2,690
      
598
      
2,031
      
27
      
1,736
      
4,387
      
18,734
      
(12,560
)
    
30,086
  
Share of the profit or loss in
associates and joint ventures under
the equity method of accounting
    
8,814
      
1,196
      
-
      
-
      
-
      
(372
)
    
269
      
111,188
      
(90,108
)
    
30,987
  
Profit before income tax
    
24,269
      
9,071
      
25,837
      
30,003
      
670
      
14,792
      
21,538
      
128,603
      
(94,289
)
    
160,494
  
Income tax
    
(9,585
)
    
(3,025
)
    
(6,719
)
    
(9,110
)
    
(188
)
    
(3,639
)
    
(8,513
)
    
1,842
      
445
      
(38,492
)
Profit for the period
    
14,684
      
6,046
      
19,118
      
20,893
      
482
      
11,153
      
13,025
      
130,445
      
(93,844
)
    
122,002
  
                                                                                 
Profit attributable to:
                                                                                
                                                                                 
Owners of the Company
    
18,099
      
4,552
      
11,817
      
15,670
      
482
      
3,203
      
11,877
      
130,756
      
(91,551
)
    
104,905
  
Non-controlling interest
    
(3,415
)
    
1,494
      
7,301
      
5,223
      
-
      
7,950
      
1,148
      
(311
)
    
(2,293
)
    
17,097
  
     
14,684
      
6,046
      
19,118
      
20,893
      
482
      
11,153
      
13,025
      
130,445
      
(93,844
)
    
122,002
  
 
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).
 
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 June 30,  
    2015     2016  
Revenue from sale of goods and services:           -  
- Associates
    
1,114
      
454
  
- Joint operations
    
21,649
      
18,070
  
     
22,763
      
18,524
  

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 June 30        
    2015           2016        
    Receivable     Payable     Receivable     Payable  
Joint operations:                        
Consorcio Constructor Ductos del Sur
    
154,383
      
-
      
145,573
       -  
Consorcio GyM Conciviles
    
57,679
      
-
      
59,642
       -  
Consorcio Rio Urubamba
    
10,856
      
2,819
      
8,885
      
80
)
Consorcio Terminales del Perú
    
9,459
      
-
      
2,823
       -  
Adexus S.A.
    
8,521
      
-
      
25,484
       -  
Consorcio Peruano de Conservación
    
6,270
      
-
      
8,474
       -  
Consorcio Rio Mantaro
    
6,021
      
15,941
      
1,357
      
14,403
)
Energía y Vapor
    
3,328
      
-
      
495
      
286
)
Consorcio Terminales
    
3,235
      
-
      
1,010
       -  
Consorcio La Gloria
    
3,116
      
3,077
      
3,125
       3,083  
Ingeniería y Construcción Sigdo Koppers-Vial
    
2,659
      
3,900
      
-
      
3,283
)
Consorcio Constructor Chavimochic
    
2,558
      
6,422
      
2,698
      
13,450
)
Consorcio Menegua
    
1,910
      
-
       -       -  
Constructora Incolur DSD Ltda.
    
1,681
      
-
      
515
      
247
)
Consorcio Lima
    
1,430
      
-
      
1,285
      
157
)
Consorcio Norte Pachacutec
    
1,026
       669      
994
      
657
)
Consorcio Italo Peruano
    
465
      
21,907
      
3,506
      
19,243
)
Consorcio Constructor Alto Cayma
    
387
      
-
      
505
       -  
Consorcio Construcciones y Montajes
    
112
      
2,533
      
-
      
1,896
)
Bechtel Vial y Vives Servicios
                                
Complementarios Ltda.
    
84
      
6,956
      
-
      
6,300
)
Consorcio Huacho Pativilca
    
80
      
5,041
      
-
       2,951  
Consorcio para la atención y mantenimiento de ductos
    
-
       -      
582
       -  
Consorcio Revamps
    
-
       -      
-
      
338
  
Consorcio Ermitaño
    
-
       -      
-
      
8,439
  
Consorcio Vial Sierra
    
-
       -      
-
      
6,199
  
Gasoducto Sur Peruano
    
-
       -      
421
      
19,857
  
Perú Piping Spools S.A.C.
    
-
       -      
3,544
       -  
Other
    
4,893
      
4,275
      
1,583
      
741
  
     
280,153
      
73,540
      
272,501
      
101,610
  
                                 
Other related parties:
                                
Ferrovias Argentina
    
-
      
20,136
       -      
19,677
 
Arturo Serna
    
-
      
4,290
       -      
4,470
 
     
-
      
24,426
       -      
24,147
 
     
280,153
      
97,966
      
272,501
      
125,757
 
Less non-current portion:
                                
Ferrovias Argentina
    
-
      
(20,136
)
    
-
      
(19,677
)
Porción corriente
    
280,153
      
77,830
      
272,501
      
106,080
 
 
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 June 30, 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 June 30, 2015 and June 30, 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
    
-
)
    
569
  
Increase in capital
            
258,000
)
Debt capitalization
    
-
      
8,308
)
Share of the profit and loss in associates
                
under the equity method of accounting
    
15,607
)
    
30,987
)
Dividends received
    
(9,937
)
    
( 13,168
)
Other
    
(575
      
(395
)
Ending balance
    
235,808
      
931,185
  
 
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 June 30,2015 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
    
178,008
      
79,450
  
Transfers, disposals and adjustment
    
(28,353
)
    
24,605
  
 Deductions for sale of assets    
(8,431
)
    
-
  
Depreciation, amortization
    
(102,422
)
    
(40,436
)
Net cost at June 30, 2015
    
1,185,820
      
842,362
  
                 
                 
At January 1, 2016
    
1,111,757
      
881,020
  
                 
                 
Additions
    
107,360
      
66,822
  
Transfers, disposals and adjustme
    
3,800
      
17,394
  
Deductions for sale of assets
    
(16,699
)
    
-
  
Depreciation, amortization
    
(94,553
)
    
(40,508
)
Net cost at June 30, 2016
    
1,111,665
      
924,728
  
 
As of June 30, 2015 and 2016, additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.
 
As of June 30, 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 ).
17
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
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.
 

Goodwill by cash-generating units is broken down as follows:
  
At December 31,
    
At June 30,
  
   
2015
   
2016
 
Engineering and construction
    
140,090
      
141,415
  
Electromechanical
    
20,737
      
20,737
  
Mining and construction services
    
13,366
      
13,366
  
Telecommunications services
    
6,443
      
6,673
  
IT equipment and services
    
4,172
      
4,172
  
     
184,808
      
186,363
  
 
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 June 30, 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
    
June
    
December
    
June
    
December
    
June
  
   
31, 2015
     30, 2016     31, 2015     30, 2016     31, 2015      30, 2016  
                                                 
Bank loans
    
1,480,071
      
1,588,474
      
1,082,860
      
897,041
      
397,211
      
691,433
  
Leases
    
301,285
      
240,272
      
145,160
      
124,989
      
156,125
      
115,283
  
     
1,781,356
      
1,828,746
      
1,228,020
      
1,022,030
      
553,336
      
806,716
  
 
a)
Bank loans -
 
As of June 30, 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 1.0% and 13.1% in 2016 and 2015.
 
                    Current           Non-current        
 
Interest
          
Date of
    
At December 31,
    
At June 30,
    
At December 31,
    
At June 30,
  
 
rate
          
maturity
    
2015
    
2016
    
2015
    
2016
  
                                         
GyM S.A.
    
1.00
 % /    7.80
%
    
2016 / 2020
      
535,776
      
522,616
      
286,671
      
217,737
  
Graña y Montero S.A.A.
LiborUSD
     3M+49 %    
2016 / 2020
       102,776      
1,437
      
-
      
381,943
  
Viva GyM S.A.
    
7.80
 % /    9.46
%
    
2016 / 2017
      
220,423
      
198,609
      
8,372
      
-
  
GMP S.A.
    
3.50
 % /    6.04
%
    
2016 / 2020
      
95,824
      
66,148
      
70,220
      
71,826
  
CAM Holding S.A.
    
4.55
 % /    13.07
%
    
2016 / 2020
      
42,534
      
62,082
      
31,948
      
19,927
  
GMD S.A.
    
5.00
 % /    6.30
%
    
2016
      
30,107
      
26,273
      
-
       -  
Norvial S.A.
            
8.37
%
    
2016
      
54,706
      
11,580
      
-
       -  
Concesionaria La Chira S.A.
        
 
    
6.80
%
    
2016
      
-
      
6,576
      
-
      
-
  
GMI S.A.
    
5.56
 % /    6.55
%
    
2016
      
714
      
720
      
-
      
-
  
                             
1,082,860
      
897,041
      
397,211
      
691,433
  
 
 
As of June 30, 2016, the Company maintained unused credit limits for S/4,765 million, which expire within one year (S/4,666 million as of December 31, 2015).
18

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

b)
Fair value of borrowings -
 

The carrying amount and fair value of borrowings are broken down as follows:
 
   
Carrying amounts
     Fair value        
   
At December
    
At June
    
At December
    
At June
  
    31, 2015     30, 2016     31, 2015      30, 2016  
                                 
Total loans
    
1,781,356
      
1,828,746
      
1,802,183
      
1,948,642
  

The fair value is based on cash flows discounted using a rate based on the borrowing rate of 1.5% 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 
      
June 
      
December 
      
June 
      
December 
      
June 
  
     
31, 2015
      
30, 2016
      
31, 2015
      
30, 2016
      
31, 2015
      
30, 2016
  
                                                 
GyM Ferrovías (a)
    
607,868
      
605,975
      
31,546
      
22,590
      
576,322
      
583,385
  
Norvial (b)
    
186,223
      
286,507
      
5,537
      
16,061
      
180,686
      
270,446
  
     
794,091
      
892,482
      
37,083
      
38,651
      
757,008
      
853,831
  
 
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 June 30, 2016 the Group made a payment of S/27.4 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 June 30, 2016 the balance includes accrued interest payable for S/25.9 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/3.7 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 June 30, 2016 the balance included interest payables for S/4.5 million (S/2.7 million at December 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 June 31,2016 and December 31,2015 both Companies have complied with their covenants.
 
Fair value of the bonds of both Companies at June 30, 2016 amounted to S/1,030 million (at December 31,2015 amounted to S/769.5 million), which has been calculated based on the discounted cash flows, using rates between 3.87% and 8.06% (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 June  
     31, 2015      30, 2016  
                 
Current portion
    
13,468
      
16,399
  
Non-current portion
    
35,618
      
36,027
  
     
49,086
      
52,426
  
 
The movement of this item for the period ended June 30, 2015 and 2016 is as follows:
 
 
           Contingent      Provisions      Provision        
   Legal     liabilities from     for the acquisition      or well      
     claims      acquisitions      of CAM      closure      Total  
                               
At January 1, 2015
    
13,056
 
    
25,927
      
12,152
      
7,210
      
58,345
 
Additions
    
435
 
    
-
 
    
-
      
405
      
840
 
Translation adjustment
    
( 157
)
    
(734
)
    
-
      
-
      
(891
)
Reversals
    
( 695
)
    
-
      
(4,036
)
    
-
      
(4,731
)
Payments
    
( 814
)
    
-
      
 -
      
(4
 )    
(818
)
At June 30, 2015
    
11,825
      
25,193
 
    
8,116
)
    
7,611
      
52,745
 
                                         
At January 1, 2016
    
15,000
 
    
22,960
 
    
3,819
       7,307      
49,086
 
Additions
    
3,128
 
    
677
 
    
-
      
) 203
      
4,008
 
Translation adjustment
    
336
 
    
1,114
 
    
-
      
-
      
1,450
 
Reversals
    
( 237
)
    
-
      
(1,323
)
    
-
      
(1,560
)
Payments
    
( 297
)
    
( 261
)
    
(-
 
    
-
      
(558
)
At June 30, 2016
    
17,930
 
    
24,490
 
    
)2,496
 
    
7,510
      
52,426
 

20

(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Reversals for the period ended June 30, 2016 mainly consists of write-offs of provisions recognized in conjunction with the purchase price allocation related to acquisition of CAM Chile in S/1.3 million. (S/4.0 million as of June 30, 2015).
 
15
CAPITAL

As of December 31, 2015 and June 30, 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 June 30, 2016, the amount of 257,238,045 common shares is represented by 51,447,609 ADSs, at 5 shares per ADS.
16
EXPENSES BY NATURE
 
For the period ended June 30, 2015 and 2016, this item comprises:

    Cost of     Adminis-  
    services     trative-  
    and goods     expenses  
             
 2015            
 Inventories, materials and consumables used
    
520,154
      
-
  
Personnel charges
    
1,095,268
      
109,854
  
Services provided by third-parties
    
1,312,644
      
56,725
  
Taxes
    
8,236
      
1,642
  
Other management charges
    
342,674
      
26,725
  
Depreciation
    
95,446
      
8,091
  
Amortization
    
37,256
      
3,180
  
Impairment
    
293
      
-
  
     
3,411,971
      
206,217
  
 
2016
                
Inventories, materials and consumables used
    
414,234
      
-
  
Personnel charges
    
685,070
      
110,560
  
Services provided by third-parties
    
1,084,208
      
63,192
  
Taxes
    
7,770
      
2,218
  
Other management charges
    
173,636
      
1,440
  
Depreciation
    
89,375
      
6,319
  
Amortization
    
37,059
      
3,449
  
Impairment
    
1,141
      
16
  
     
2,492,493
      
187,194
  
 
17
INCOME TAX
 
These condensed interim consolidated financial statements for the period ended June 30, 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 December 31,2016 is 23.98% (32.63% for the period ended June 30, 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.
21
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
18
CONTINGENCIES, COMMITTMENTS AND GUARANTEES
 
As of June 30, 2016, contingencies held by the Group are substantially the same as those existing as of December 31, 2015.
 
In addition the Group had guarantee commitments with different financial institutions securing transactions in the amount of US$342.5 million and S/6.6 million.
 
19
DIVIDENDS
 
For the period ended June 30, 2016 , the Group has paid dividends to its non-controlling subsidiaries participate by S/6.2 million (S/3.8 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 and was paid on April 27, 2016.
 
20
EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
 
Between June 30, 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.
 
 
 
22