6-K 1 a51445327.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 October 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
 
October 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 SEPTEMBER 30, 2015 AND 2016 AND FOR THE NINE-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 SEPTEMBER 30, 2015 AND 2016 AND FOR THE NINE-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,
    
September 30,
              
December 31,
    
September 30,
  
   
Note
    
2015
    
2016
        
Note
    
2015
    
2016
  
                                         
Current assets
                    
Current liabilities
                  
Cash and cash equivalents
        
554,002
    
696,269
    
Borrowings
  
12
    
1,228,020
    
1,084,732
  
Financial asset at fair value through profit or loss
        
3,153
    
743
    
Bonds
  
13
    
37,083
    
44,554
  
Trade accounts receivables
        
1,050,791
    
981,053
    
Trade accounts payable
        
1,635,760
    
1,577,505
  
Unbilled work in progress
        
1,319,187
    
1,176,140
    
Accounts payable to related parties
  
9
    
77,830
    
135,426
  
Accounts receivable from related parties
  
9
    
280,153
    
236,163
    
Current income tax
        
34,116
    
13,932
  
Other accounts receivable
        
824,589
    
763,699
    
Other accounts payable
        
1,066,000
    
1,064,438
  
Inventories
        
1,159,154
    
1,234,343
    
Provisions
  
14
    
13,468
    
16,912
  
Prepaid expenses
        
40,023
    
45,049
    
Total current liabilities
        
4,092,277
    
3,937,499
  
         
5,231,052
    
5,133,459
                        
                                         
Non-current assets classified as held for sale
        
22,511
    
22,527
    
Non-current liabilities
                  
                     
Borrowings
  
12
    
553,336
    
940,488
  
Total current assets
        
5,253,563
    
5,155,986
    
Long-term bonds
  
13
    
757,008
    
927,430
  
                     
Other long-term accounts payable
        
246,396
    
503,411
  
Non-current assets
                    
Long-term accounts payable to related parties
  
9
    
20,136
    
22,153
  
Long-term trade accounts receivable
        
621,831
    
667,614
    
Provisions
  
14
    
35,618
    
23,548
  
Long-term unbilled work in progress
        
59,754
    
63,242
    
Derivative financial instruments
        
2,331
    
2,023
  
Prepaid expenses
        
22,386
    
32,516
    
Deferred income tax liability
        
101,664
    
92,137
  
Other long-term accounts receivable
        
65,929
    
321,576
    
Total non-current liabilities
        
1,716,489
    
2,511,190
  
Available-for-sale financial assets
  
8
    
120,134
    
-
    
Total liabilities
        
5,808,766
    
6,448,689
  
Investments in associates and joint ventures
  
10
    
646,884
    
1,065,419
                        
Investment property
        
34,702
    
33,192
    
Equity
                  
Property, plant and equipment
  
11
    
1,111,757
    
1,135,611
    
Capital
  
15
    
660,054
    
660,054
  
Intangible assets
  
11
    
881,020
    
1,045,642
    
Legal reserve
        
132,011
    
132,011
  
Deferred income tax asset
        
173,851
    
198,286
    
Optional reserve
        
29,974
    
29,974
  
Total non-current assets
        
3,738,248
    
4,563,099
    
Share Premium
        
897,532
    
879,349
  
                     
Other reserves
        
(129,059
)
  
(138,907
)
                     
Retained earnings
        
1,064,044
    
1,173,179
  
                     
Equity attributable to controlling interest in the Company
        
2,654,556
    
2,735,660
  
                     
Non-controlling interest
        
528,489
    
534,736
  
                     
Total equity
        
3,183,045
    
3,270,396
  
Total assets
        
8,991,811
    
9,719,085
    
Total liabilities and equity
        
8,991,811
    
9,719,085
  
                                         
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 nine months
  
         
ended September 30,
  
   
Note
    
2015
    
2016
  
                   
                   
Revenues from construction activities
          
4,064,096
      
2,534,546
  
Revenues from services provided
          
1,342,132
      
1,418,346
  
Revenue from real estate and sale of goods
          
211,677
      
285,436
  
           
5,617,905
      
4,238,328
  
                       
Cost of construction activities
          
(3,876,589
)
    
(2,363,914
)
Cost of services provided
          
(1,156,472
)
    
(1,209,854
)
Cost of real estate and goods sold
          
(117,164
)
    
(214,502
)
   
16
      
(5,150,225
)
    
(3,788,270
)
Gross profit
          
467,680
      
450,058
  
                       
Administrative expenses
  
16
      
(296,611
)
    
(289,000
)
Other income and expenses
          
10,510
      
46,289
  
Gain from the sale of investments
  
8
      
-
      
31,768
  
Operating profit
          
181,579
      
239,115
  
                       
Financial expenses
          
(124,162
)
    
(103,189
)
Financial income
          
34,985
      
21,324
  
Share of the profit or loss in associates and joint
                      
ventures under the equity method of accounting
          
21,236
      
51,741
  
Profit before income tax
          
113,638
      
208,991
  
Income tax
  
17
      
(75,928
)
    
(46,905
)
Profit for the period
          
37,710
      
162,086
  
                       
Profit attributable to:
                      
Owners of the Company
          
6,709
      
138,642
  
Non-controlling interest
          
31,001
      
23,444
  
           
37,710
      
162,086
  
                       
Earnings per share from continuing operations
                      
attributable to owners of the Company during
                      
the period
          
0.010
      
0.210
  
                       
                       
                       
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 nine months
  
       
ended September 30,
  
   
Note 
   2015     2016   
                       
                       
Profit for the period
          
37,710
      
162,086
  
Other comprehensive income:
                      
Items that will not be reclassified to profit or loss
                      
Remeasurement of actuarial gains and losses, net of tax
          
(3,617
)
    
(575
)
                       
Items that may be subsequently  reclassified to profit or loss
                      
Cash flow hedge, net of tax
          
109
      
217
  
Foreign currency translation adjustment, net of tax
          
(60,686
)
    
32,213
  
Change in value of available-for-sale financial assets, net of tax
  
8
      
5,377
      
(43,681
)
Exchange difference from net investment in a foreign operation, net of tax
          
(11,680
)
    
11,712
  
           
(66,880
)
    
461
  
Other comprenhensive income for the period, net of tax
          
(70,497
)
    
(114
)
Total comprehensive income for the period
          
(32,787
)
    
161,972
  
                       
Comprehensive income attributable to:
                      
Owners of  the Company
          
(43,120
)
    
128,372
  
Non-controlling interest
          
10,333
      
33,600
  
           
(32,787
)
    
161,972
  
                       
                       
                       
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 NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2016     
                                            
                                                             
   
Attributable to the controlling interests of the Company      
                                
   
Number
of shares
        
Legal
    
Optional
    
Premium
for issuance 
Other
  
Retained
          
Non-controlling
    
   
In thousands
  
Capital 
  
reserve
  
reserve
  
of shares
   reserves    
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
  
-
    
-
    
-
    
-
    
-
    
-
    
6,709
    
6,709
    
31,001
    
37,710
  
Cash flow hedge
  
-
    
-
    
-
    
-
    
-
    
104
    
-
    
104
    
5
    
109
  
Adjustment for actuarial gains and losses
  
-
    
-
    
-
    
-
    
-
    
-
    
(2,496
)
  
(2,496
)
  
(1,121
)
  
(3,617
)
Foreign currency translation adjustment
  
-
    
-
    
-
    
-
    
-
    
(41,314
)
  
-
    
(41,314
)
  
(19,372
)
  
(60,686
)
Change in value of available-for-sale financial assets
  
-
    
-
    
-
    
-
    
-
    
5,377
    
-
    
5,377
    
-
    
5,377
  
Exchange difference from net investment in a foreign operation
  
-
    
-
    
-
    
-
    
-
    
(11,500
)
  
-
    
(11,500
)
  
(180
)
  
(11,680
)
Comprehensive income of the year
  
-
    
-
    
-
    
-
    
-
    
(47,333
)
  
4,213
    
(43,120
)
  
10,333
    
(32,787
)
Transactions with shareholders:
                                                            
- Transfer to Optional  reserve
  
-
    
-
    
-
    
29,974
    
-
    
-
    
(29,974
)
  
-
    
-
    
-
  
- Dividend distribution
  
-
    
-
    
-
    
-
    
-
    
-
    
(104,911
)
  
(104,911
)
  
(4,316
)
  
(109,227
)
- Contributions of non-controlling shareholders
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
12,556
    
12,556
  
- Additional acquisition of non-controlling
  
-
    
-
    
-
    
-
    
(894
)
  
-
    
-
    
(894
)
  
(971
)
  
(1,865
)
- Sale to non-controlling interest
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
2,445
    
2,445
  
Total transactions with shareholders
  
-
    
-
    
-
    
29,974
    
(894
)
  
-
    
(134,885
)
  
(105,805
)
  
9,714
    
(96,091
)
Balances as of September 30, 2015
  
660,054
    
660,054
    
132,011
    
29,974
    
898,417
    
(161,228
)
  
983,024
    
2,542,252
    
502,577
    
3,044,829
  
                                                             
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
  
-
    
-
    
-
    
-
    
-
    
-
    
138,642
    
138,642
    
23,444
    
162,086
  
Cash flow hedge
  
-
    
-
    
-
    
-
    
-
    
206
    
-
    
206
    
11
    
217
  
Adjustment for actuarial gains and losses
  
-
    
-
    
-
    
-
    
-
    
-
    
(422
)
  
(422
)
  
(153
)
  
(575
)
Foreign currency translation adjustment
  
-
    
-
    
-
    
-
    
-
    
22,122
    
-
    
22,122
    
10,091
    
32,213
  
Change in value of available-for-sale financial assets
  
-
    
-
    
-
    
-
    
-
    
(43,681
)
  
-
    
(43,681
)
  
-
    
(43,681
)
Exchange difference from net investment in a foreign operation
  
-
    
-
    
-
    
-
    
-
    
11,505
    
-
    
11,505
    
207
    
11,712
  
Comprehensive income of the period
  
-
    
-
    
-
    
-
    
-
    
(9,848
)
  
138,220
    
128,372
    
33,600
    
161,972
  
Transactions with shareholders:
                                                            
- Dividend distribution
  
-
    
-
    
-
    
-
    
-
    
-
    
(30,853
)
  
(30,853
)
  
(20,965
)
  
(51,818
)
- Contributions of non-controlling shareholders
  
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
(3,432
)
  
(3,432
)
- Additional acquisition of non-controlling
  
-
    
-
    
-
    
-
    
(18,183
)
  
-
    
-
    
(18,183
)
  
(3,487
)
  
(21,670
)
- Sale to non-controlling interest
  
-
    
-
    
-
    
-
    
-
    
-
    
(292
)
  
(292
)
  
494
    
202
  
- Deconsolidation of former subsidiary
  
-
    
-
    
-
    
-
    
-
    
-
    
2,060
    
2,060
    
37
    
2,097
  
Total transactions with shareholders
  
-
    
-
    
-
    
-
    
(18,183
)
  
-
    
(29,085
)
  
(47,268
)
  
(27,353
)
  
(74,621
)
Balances as of September 30, 2016
  
660,054
    
660,054
    
132,011
    
29,974
    
879,349
    
(138,907
)
  
1,173,179
    
2,735,660
    
534,736
    
3,270,396
  
                                                             
                                                             
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)
        
                   
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
                  
                   
                   
CONSOLIDATED STATEMENT OF CASH FLOWS
                  
                   
                   
         
For the period of nine months
  
         
ended September 30,
  
   
Note
    
2015
    
2016
  
                   
OPERATING ACTIVITIES
                  
Profit before income tax
          
113,638
      
208,991
  
Adjustments to  profit not affecting cash flows from
                      
operating activities:
                      
Depreciation
  
11
      
158,205
      
148,090
  
Amortization of other assets
  
11
      
61,457
      
62,274
  
Impairment of inventories
  
16
      
1,086
      
1,329
  
Impairment of accounts receivable
  
16
      
4,832
      
-
  
Impairment of property, plant and equipment
  
16
      
14
      
279
  
Lower of intangible assets
          
-
      
1,621
  
Reversal of impairment of inventories
          
(630
)
    
-
  
Profit on fair value of financial asset at fair value through profit or loss
          
(1,420
)
    
34
  
Other Provisions
  
14
      
2,701
      
5,470
  
Interest income,net
          
77,142
      
105,449
  
Adjustments to PPA of loans
          
(58
)
    
-
  
Foreign exchange loss (gain) on loans
          
15,728
      
(38,635
)
Share of the profit and loss in associates
                      
under the equity method of accounting
  
10
      
(21,236
)
    
(51,741
)
Reversal of provisions
  
14
      
(5,613
)
    
(16,180
)
Lower of fixed assets
          
4,892
      
3,376
  
Lower of investments
          
-
      
1,295
  
Profit on sale of property, plant and equipment
          
(4,203
)
    
(15,223
)
Gain on financial asset at fair value through profit or loss
          
420
      
(31,667
)
Loss on sale of investments
          
-
      
(24
)
Net variations in assets and liabilities:
                      
Trade accounts receivable
          
(202,298
)
    
331,500
  
Other accounts receivable
          
(161,592
)
    
(203,123
)
Other accounts receivable from related parties
          
11,333
      
43,990
  
Inventories
          
(236,972
)
    
(66,308
)
Pre-paid expenses and other assets
          
(28,364
)
    
(2,886
)
Trade accounts payable
          
35,036
      
(143,365
)
Other accounts payable
          
(142,381
)
    
188,602
  
Other accounts payable to related parties
          
(20,205
)
    
46,971
  
Other provisions
          
(1,076
)
    
(570
)
Interest payment
          
(80,085
)
    
(120,419
)
Payments related to Norvial Concession
          
(103,824
)
    
(57,765
)
Payment of income tax
          
(148,159
)
    
(95,663
)
Net cash provided by (applied to) operating activities
          
(671,633
)
    
305,702
  
                       
INVESTING ACTIVITIES
                      
Sale of available-for-sale investment
          
-
      
1,384
  
Sale of property, plant and equipment
          
14,664
      
50,407
  
Sale of financial asset at fair value through profit or loss
          
4,604
      
-
  
Return of contributions
          
-
      
1,390
  
Interest received
          
14,548
      
10,734
  
Dividends received
  
10
      
50,303
      
18,347
  
Payment for purchase of investments properties
          
(600
)
    
(228
)
Payments for intangible purchase
          
(21,282
)
    
(28,693
)
Payments for purchase and contributions on investment in associate and joint ventures
          
(66,391
)
    
(404,776
)
Payments for property, plant and equipment purchase
          
(157,536
)
    
(119,771
)
Net cash applied to investing activities
          
(161,690
)
    
(363,865
)
                       
FINANCING ACTIVITIES
                      
Loans received
          
3,251,060
      
2,905,500
  
Bonds issued
          
825,016
      
178,375
  
Amortization of loans received
          
(3,201,138
)
    
(2,769,831
)
Amortization of bonds issued
          
(10,719
)
    
(16,380
)
Payment for transaction costs for debt
          
(18,518
)
    
(13,747
)
Dividends paid to owners of the parent
          
(104,911
)
    
(30,853
)
Dividends paid to non-controlling interest
          
(4,316
)
    
(19,600
)
Cash received from non-controlling shareholders
          
8,384
      
(11,566
)
Acquisition or sale of interest in a subsidiary of non-controlling shareholders
          
581
      
(21,468
)
Net cash (applied to) provided by financing activities
          
745,439
      
200,430
  
Net increase (net decrease) in cash
          
(87,883
)
    
142,267
  
Cash and cash equivalents at the beginning of the year
          
818,402
      
554,002
  
Cash and cash equivalents at the end of the period
          
730,519
      
696,269
  
                       
NON-CASH TRANSACTIONS:
                      
Debt capitalization
          
-
      
22,308
  
Acquisition of assets through finance leases
          
79,819
      
29,089
  
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 SEPTEMBER 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 September 30, 2016 have been prepared and authorized for issuance by the Chief Financial Officer on October 25, 2016.

2
BASIS OF PREPARATION

These condensed interim consolidated financial statements for the period ended September 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 September 30, 2016
                                        
Other financial liabilities (except for finance leases)
    
992,712
      
258,113
      
587,735
      
-
      
1,838,560
  
Finance leases
    
137,475
      
80,006
      
23,807
      
20,631
      
261,919
  
Bonds
    
108,346
      
164,059
      
327,428
      
1,413,434
      
2,013,267
  
Trade accounts payables
    
1,576,843
      
-
      
-
       -       1,576,843  
Accounts payables to related parties
    
135,426
      
22,153
      
-
       -       157,579  
Other accounts payables
    
139,445
      
11,293
      
141,586
      
-
      
292,324
  
Other non-financial liabilities
    
-
      
2,023
      
-
      
-
      
2,023
  
     
3,090,247
      
537,647
      
1,080,556
      
1,434,065
      
6,142,515
  
 
                    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 September 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,     September 30,  
  2015     2016  
           
Total borrowing and bonds     2,575,447       2,997,204  
Less: Cash and cash equivalents     (554,002 )     (696,269 )
Net debt     2,021,445       2,300,935  
Total equity     3,183,045       3,270,396  
Total capital     5,204,490       5,571,331  
               
               
Gearing ratio     0.39       0.41  
- 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 the amounts are expressed in thousand 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 the amounts are expressed in thousand of S/. unless otherwise stated)
                                            
NOT AUDITED
                                                            
                                                             
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 September 30, 2016
                                                            
Assets.-
                                                            
Cash and cash equivalents
  
159,715
    
24,291
    
109,344
    
147,743
    
10,483
    
83,570
    
35,495
    
125,628
    
-
    
696,269
  
Financial asset at fair value through profit or loss
  
743
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
743
  
Trade accounts receivables
  
319,749
    
52,516
    
22,171
    
64,279
    
214
    
12,483
    
509,641
    
-
    
-
    
981,053
  
Unbilled work in progress
  
1,175,908
    
-
    
-
    
-
    
232
    
-
    
-
    
-
    
-
    
1,176,140
  
Accounts receivable from related parties
  
340,560
    
2,794
    
19,674
    
404
    
4,903
    
12,232
    
42,995
    
125,834
    
(313,233
)
  
236,163
  
Other accounts receivable
  
489,867
    
56,009
    
5,930
    
21,154
    
5,155
    
21,027
    
126,479
    
38,078
    
-
    
763,699
  
Inventories
  
122,693
    
12,303
    
-
    
16,174
    
-
    
1,019,945
    
73,841
    
389
    
(11,002
)
  
1,234,343
  
Prepaid expenses
  
11,620
    
3,847
    
1,669
    
5,192
    
245
    
80
    
21,226
    
1,170
    
-
    
45,049
  
Non-current assets classified as held for sale
  
22,527
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
22,527
  
Total current assets
  
2,643,382
    
151,760
    
158,788
    
254,946
    
21,232
    
1,149,337
    
809,677
    
291,099
    
(324,235
)
  
5,155,986
  
                                                             
Long-term trade accounts receivable
  
-
    
-
    
-
    
640,240
    
-
    
-
    
27,374
    
-
    
-
    
667,614
  
Long-term unbilled work in progress
  
-
    
40,596
    
22,646
    
-
    
-
    
-
    
-
    
-
    
-
    
63,242
  
Long-term accounts receivable from related parties
  
-
    
-
    
408
    
-
    
-
    
-
    
498
    
158,525
    
(159,431
)
  
-
  
Prepaid expenses
  
-
    
3,440
    
25,879
    
2,241
    
956
    
-
    
-
    
-
    
-
    
32,516
  
Other long-term accounts receivable
  
5,675
    
30,865
    
32,791
    
225,565
    
8,934
    
15,463
    
2,056
    
227
    
-
    
321,576
  
Investments in associates and joint ventures
  
122,551
    
8,183
    
-
    
-
    
-
    
26,942
    
10,409
    
3,647,886
    
(2,750,551
)
  
1,065,420
  
Investment property
  
-
    
-
    
-
    
-
    
-
    
33,192
    
-
    
-
    
-
    
33,192
  
Property, plant and equipment
  
587,782
    
185,024
    
1,362
    
298
    
17
    
11,794
    
227,905
    
130,599
    
(9,170
)
  
1,135,611
  
Intangible assets
  
310,388
    
107,051
    
443,155
    
280
    
-
    
984
    
147,637
    
22,998
    
13,149
    
1,045,642
  
Deferred income tax asset
  
131,909
    
4,155
    
2,775
    
-
    
-
    
608
    
55,203
    
625
    
3,011
    
198,286
  
Total non-current assets
  
1,158,305
    
379,314
    
529,016
    
868,624
    
9,907
    
88,983
    
471,082
    
3,960,860
    
(2,902,992
)
  
4,563,099
  
Total assets
  
3,801,687
    
531,074
    
687,804
    
1,123,570
    
31,139
    
1,238,320
    
1,280,759
    
4,251,959
    
(3,227,227
)
  
9,719,085
  
                                                             
Liabilities.-
                                                            
Borrowings
  
590,068
    
84,452
    
67
    
-
    
-
    
214,089
    
194,436
    
1,620
    
-
    
1,084,732
  
Bonds
  
-
    
-
    
22,795
    
21,759
    
-
    
-
    
-
    
-
    
-
    
44,554
  
Trade accounts payable
  
1,211,634
    
32,146
    
1,330
    
10,927
    
250
    
20,368
    
291,574
    
9,276
    
-
    
1,577,505
  
Accounts payable to related parties
  
136,298
    
3,331
    
26,722
    
13,069
    
1,868
    
72,397
    
63,042
    
131,977
    
(313,278
)
  
135,426
  
Current income tax
  
1,398
    
2,600
    
1,370
    
-
    
1,193
    
-
    
7,369
    
2
    
-
    
13,932
  
Other accounts payable
  
521,244
    
14,255
    
10,918
    
16,059
    
321
    
308,490
    
172,461
    
20,690
    
-
    
1,064,438
  
Provisions
  
-
    
6,411
    
-
    
-
    
-
    
155
    
10,346
    
-
    
-
    
16,912
  
Total current liabilities
  
2,460,642
    
143,195
    
63,202
    
61,814
    
3,632
    
615,499
    
739,228
    
163,565
    
(313,278
)
  
3,937,499
  
                                                             
Borrowings
  
250,116
    
91,120
    
-
    
-
    
-
    
16,509
    
85,390
    
497,353
    
-
    
940,488
  
Long-term bonds
  
-
    
-
    
344,149
    
583,281
    
-
    
-
    
-
    
-
    
-
    
927,430
  
Other long-term accounts payable
  
150,925
    
-
    
493
    
246,533
    
-
    
-
    
81,464
    
2,067
    
21,929
    
503,411
  
Long-term accounts payable to related parties
  
-
    
-
    
-
    
84,741
    
23,445
    
39,679
    
33,278
    
395
    
(159,385
)
  
22,153
  
Provisions
  
13,746
    
7,433
    
-
    
-
    
-
    
-
    
2,369
    
-
    
-
    
23,548
  
Derivative financial instruments
  
-
    
2,023
    
-
    
-
    
-
    
-
    
-
    
-
    
-
    
2,023
  
Deferred income tax liability
  
23,696
    
3,954
    
-
    
16,833
    
254
    
10,962
    
27,604
    
8,834
    
-
    
92,137
  
Total non-current liabilities
  
438,483
    
104,530
    
344,642
    
931,388
    
23,699
    
67,150
    
230,105
    
508,649
    
(137,456
)
  
2,511,190
  
Total liabilities
  
2,899,125
    
247,725
    
407,844
    
993,202
    
27,331
    
682,649
    
969,333
    
672,214
    
(450,734
)
  
6,448,689
  
Equity attributable to controlling interest in the Company
  
746,504
    
262,305
    
218,749
    
97,777
    
3,808
    
216,080
    
263,981
    
3,566,150
    
(2,639,694
)
  
2,735,660
  
Non-controlling interest
  
156,058
    
21,044
    
61,211
    
32,591
    
-
    
339,591
    
47,445
    
13,595
    
(136,799
)
  
534,736
  
Total liabilities and equity
  
3,801,687
    
531,074
    
687,804
    
1,123,570
    
31,139
    
1,238,320
    
1,280,759
    
4,251,959
    
(3,227,227
)
  
9,719,085
  
 
- 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 nine-month period
                                        
ended September 30, 2015
                                        
                                         
Revenue
  
4,241,095
      
289,044
      
301,579
      
151,983
      
21,470
      
75,121
      
844,588
      
53,203
      
(360,178
)
    
5,617,905
  
Gross profit (loss)
  
239,495
      
52,979
      
56,803
      
30,460
      
1,720
      
26,621
      
117,504
      
(5,037
)
    
(52,865
)
    
467,680
  
Administrative expenses
  
(208,831
)
    
(13,562
)
    
(7,183
)
    
(8,003
)
    
(252
)
    
(15,024
)
    
(78,984
)
    
(22,375
)
    
57,603
      
(296,611
)
Other income and expenses
  
(1,039
)
    
306
      
-
      
-
      
-
      
1,038
      
7,391
      
3,835
      
(1,021
)
    
10,510
  
                                                                               
Operating profit (loss)
  
29,625
      
39,723
      
49,620
      
22,457
      
1,468
      
12,635
      
45,911
      
(23,577
)
    
3,717
      
181,579
  
Financial expenses
  
(88,656
)
    
(13,935
)
    
(3,564
)
    
(3,716
)
    
(33
)
    
(8,413
)
    
(24,754
)
    
(1,877
)
    
20,786
      
(124,162
)
Financial income
  
8,343
      
116
      
5,351
      
1,347
      
109
      
433
      
1,261
      
47,684
      
(29,659
)
    
34,985
  
Share of the profit or loss
                                                                              
in associates and joint ventures under the equity
                                                                              
method of accounting
  
10,304
      
686
      
-
      
-
      
-
      
9,826
      
(17
)
    
(12,144
)
    
12,581
      
21,236
  
Profit (loss) before income tax
  
(40,384
)
    
26,590
      
51,407
      
20,088
      
1,544
      
14,481
      
22,401
      
10,086
      
7,425
      
113,638
  
Income tax
  
(29,124
)
    
(7,777
)
    
(13,400
)
    
(6,132
)
    
(407
)
    
(3,986
)
    
(10,361
)
    
(5,889
)
    
1,148
      
(75,928
)
Profit (loss) for the period
  
(69,508
)
    
18,813
      
38,007
      
13,956
      
1,137
      
10,495
      
12,040
      
4,197
      
8,573
      
37,710
  
                                                                               
Profit (loss) attributable to:
                                                                              
                                                                               
Owners of the Company
  
(79,765
)
    
16,594
      
28,214
      
10,467
      
1,137
      
4,372
      
11,714
      
4,425
      
9,551
      
6,709
  
Non-controlling interest
  
10,257
      
2,219
      
9,793
      
3,489
      
-
      
6,123
      
326
      
(228
)
    
(978
)
    
31,001
  
   
(69,508
)
    
18,813
      
38,007
      
13,956
      
1,137
      
10,495
      
12,040
      
4,197
      
8,573
      
37,710
  
 
- 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 nine-month period
                                                          
ended September 30, 2016
                                                          
                                                           
Revenue
  
2,714,934
      
277,452
      
210,923
      
174,750
      
17,629
      
138,863
      
993,087
      
45,355
      
(334,665
)
    
4,238,328
  
Gross profit (loss)
  
190,584
      
31,120
      
54,470
      
43,480
      
5,764
      
38,638
      
139,699
      
(4,079
)
    
(49,618
)
    
450,058
  
Administrative expenses
  
(189,779
)
    
(10,749
)
    
(7,331
)
    
(8,373
)
    
(545
)
    
(14,779
)
    
(85,953
)
    
(26,269
)
    
54,778
      
(289,000
)
Other income and expenses
  
47,036
      
(1,943
)
    
110
      
(2
)
    
-
      
707
      
3,158
      
1,847
      
(4,624
)
    
46,289
  
Gain from the sale of investments
  
-
      
-
      
-
      
-
      
-
      
-
      
-
      
31,768
      
-
      
31,768
  
Operating profit
  
47,841
      
18,428
      
47,249
      
35,105
      
5,219
      
24,566
      
56,904
      
3,267
      
536
      
239,115
  
Financial expenses
  
(43,900
)
    
(6,897
)
    
(3,881
)
    
(2,120
)
    
(36
)
    
(10,141
)
    
(21,589
)
    
(24,451
)
    
9,826
      
(103,189
)
Financial income
  
15,710
      
1,679
      
849
      
4,538
      
104
      
1,687
      
4,196
      
12,360
      
(19,799
)
    
21,324
  
Share of the profit or loss
                                                                              
in associates and joint ventures under the equity
                                                                              
method of accounting
  
12,409
      
1,282
      
-
      
-
      
-
      
2,022
      
459
      
176,269
      
(140,700
)
    
51,741
  
Profit before income tax
  
32,060
      
14,492
      
44,217
      
37,523
      
5,287
      
18,134
      
39,970
      
167,445
      
(150,137
)
    
208,991
  
Income tax
  
(13,238
)
    
(3,962
)
    
(11,591
)
    
(11,325
)
    
(1,481
)
    
(4,610
)
    
(13,799
)
    
10,556
      
2,545
      
(46,905
)
Profit for the period
  
18,822
      
10,530
      
32,626
      
26,198
      
3,806
      
13,524
      
26,171
      
178,001
      
(147,592
)
    
162,086
  
                                                                               
Profit attributable to:
                                                                              
                                                                               
Owners of the Company
  
22,406
      
7,711
      
21,126
      
19,649
      
3,806
      
3,736
      
24,014
      
178,912
      
(142,718
)
    
138,642
  
Non-controlling interest
  
(3,584
)
    
2,819
      
11,500
      
6,549
      
-
      
9,788
      
2,157
      
(911
)
    
(4,874
)
    
23,444
  
   
18,822
      
10,530
      
32,626
      
26,198
      
3,806
      
13,524
      
26,171
      
178,001
      
(147,592
)
    
162,086
  
 
- 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 September 30,      
   
2015
    
2016
  
Revenue from sale of goods and services:
- Associates
    
1,032
      
-
  
- Joint operations
    
37,243
      
22,304
  
     
38,275
      
22,304
  

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 September 30    
 
   2015       2016    
  Receivable     Payable     Receivable     Payable  
                       
Joint operations:                    
Consorcio Constructor Ductos del Sur     154,383       -       120,279       -  
Consorcio GyM Conciviles     57,679       -       60,753       -  
Consorcio Rio Urubamba     10,856       2,819       9,036       -  
Terminales del Peru     9,459       -       3,241       -  
Adexus S.A.     8,521       -       -       -  
Consorcio Peruano de Conservacion     6,270       -       8,525       -  
Consorcio Rio Mantaro     6,021       15,941       4,633       12,137  
Energia y Vapor     3,328       -       -       662  
Consorcio Terminales     3,235       -       1,200       -  
Consorcio La Gloria     3,116       3,077       3,131       3,077  
Ingenieria y Construccion Sigdo Koppers-Vial     2,659       3,900       -       3,411  
Consorcio Constructor Chavimochic     2,558       6,422       4,316       15,837  
Consorcio Menegua     1,910       -       -       1,918  
Constructora Incolur DSD Ltda.     1,681       -                  
Consorcio Lima     1,430       -                  
Consorcio Norte Pachacutec     1,026       669       1,017          
Consorcio Italo Peruano     465       21,907       3,070       17,920  
Consorcio Constructor Alto Cayma     387       -       -          
Consorcio Construcciones y Montajes     112       2,533       -          
Bechtel Vial y Vives Servicios     -       -       -       6,527  
Complementarios Ltda.     84       6,956       -          
Consorcio Huacho Pativilca     80       5,041       -       4,151  
Consorcio para la atencion y mantenimiento de ductos     -       -       -        26,192  
Consorcio Ermitano     -       -       519       9,092  
Consorcio Vial Sierra     -       -       647       5,749  
Gasoducto Sur Peruano     -       -       -       20,527  
Consorcio Vial Quinua     -       -       3,662       -  
Consorcio Lima Actividades Comerciales     -       -       1,285       -  
Other     4,893       4,275       4,047       3,548  
    280,153       73,540       229,361       130,747  
Other related parties:                                
Peru Piping Spools SAC     -       -       6,802       -  
Ferrovias Argentina     -       20,136       -       22,153  
Arturo Serna     -       4,290       -       4,679  
    -       24,426       6,802       26,832  
Less non-current portion:     280,153       97,966       236,163       157,579  
Ferrovias Argentina     -       (20,136 )     -       (22,153 )
Non-current portion     280,153       77,830       236,163       135,426  

                  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 September 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 September 30, 2015 and September 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
    
66,391
      
850
  
Increase in capital
    
-
      
389,662
  
Share of the profit and loss in associates under the equity method of accounting
    
21,236
      
51,741
  
Dividends received
    
(50,303
)
    
(18,347
)
Acquisition of control - Adexus
    
-
      
(26,432
)
Contract adjustment - Gasoducto Sur Peruano
    
-
      
20,554
  
Other
    
(4,249
)
    
507
  
Ending balance
    
262,638
      
1,065,419
  

In January and August 2016, the Company capitalized debt with Adexus by S / 8.3 million and S / 14 million respectively, increasing its participation in the first case from 44% to 52% and in the second capitalization from 52% to 91.03 % control is adquired. To date, the company has incorporated in the Consolidated Financial Statements assets and liabilities of Adexus, the process of measuring the fair value of net asset is still in process, management estimates this process will be concluded by the end of December 2016 .

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 September 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     238,650       129,910  
Transfers, disposals and adjustme     (54,213 )     7,825  
Deductions for sale of assets     (9,725 )     -  
Depreciation, amortization     (156,549 )     (61,457 )
Net cost at September 30, 2015     1,165,181       855,021  
               
               
At January 1, 2016     1,111,757       881,020  
 
Additions  
148,861 
      102,367  
Acquisition of subsidiary - net
    
47,165
      
101,534
  
Transfers, disposals and adjustme
    
9,364
      
22,995
  
Deductions for sale of assets
    
(35,184
)
    
-
  
Depreciation, amortization
    
(146,352
)
    
(62,274
)
Net cost at September 30, 2016
    
1,135,611
      
1,045,642
  
 
                  As of September 30, 2015 and 2016, additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.
- 17 -
(All amounts are expressed in thousands of S/. unless otherwise stated)
UNAUDITED
 
As of September 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 ).

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 September 30,
  
   
2015
   
2016
 
Engineering and construction
    
140,090
      
142,910
  
Electromechanical
    
20,737
      
20,737
  
Mining and construction services
    
13,366
      
13,366
  
Telecommunications services
    
6,443
      
6,933
  
IT equipment and services
    
4,172
      
4,172
  
     
184,808
      
188,118
  

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 September 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
December
31, 2015

    

At
September
30, 2016

    

At
December
31, 2015

    

At
September
30, 2016

    

At
December
31, 2015

    

At
September
30, 2016

  
                                   

Bank Loans

    

1,480,071

      

1,784,363

      

1,082,860

      

958,952

      

397,211

      

825,411

  

Leases

    

301,285

      

240,857

      

145,160

      

125,780

      

156,125

      

115,077

  

 

    

1,781,356

      

2,025,220

      

1,228,020

      

1,084,732

      

553,336

      

940,488

  

 

a) Bank loans -
 
As of September 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 14.2% in 2016 and between 1.0% and 13.1% in 2015.
- 18 -
(All amounts are expressed in thousands of S/. unless otherwise stated)
UNAUDITED 

           

Current  

    

Non-current  

  
                At     At      At     At  
 

Interest
rate

    

Date of
maturity

    
December
31, 2015
    

September
30, 2016

    
December
31, 2015
    

September
30, 2016

  
GyM S.A.   1.00% / 7.80%     2016 / 2020       535,776       500,242       286,671       204,442  
Graña y Montero S.A.A.   Libor USD 3M +4.9       2016 / 2020       102,776       1,620       -       497,353  
Viva GyM S.A.   7.80% / 9.46%     2016 / 2017       220,423       209,701       8,372       -  
GMP S.A.   3.50% / 6.04%     2016 / 2020       95,824       80,267       70,220       81,015  
CAM Holding S.A.   4.55% / 14.16%     2016 / 2020       42,534       65,747       31,948       24,905  
Adexus S.A.   3.63% / 5.90%     2016 / 2019       -       56,693       -       17,696  
GMD S.A.   5.56% / 6.60%     2016 / 2017       30,107       25,319       -       -  
CONCAR S.A.   6.00%     2017       -       11,152       -       -  
CAM Servicios Perú S.A.   6.05% / 7.27%       2016       -       5,779       -       -  
GMI S.A.   5.56% / 6.55%     2016       714       2,432       -       -  
Norvial S.A.   8.37%     2016       54,706       -       -       -  
                  1,082,860       958,952       397,211       825,411  

                    As of September 30, 2016, the Company maintained unused credit limits for S/3,952 million, which expire within one year (S/4,666 million as of December 31, 2015).

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 September
    
At December
    
At September
  
    31, 2015     30, 2016     31, 2015     30, 2016  
   
Total loans
    
1,781,356
      
2,025,220
      
1,802,183
      
2,117,226
  
 
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     September     December     September     December     September  
    31, 2015     30, 2016     31, 2015     30, 2016     31, 2015     30, 2016  
                                                 
GyM Ferrovías (a)
    
607,868
      
605,040
      
31,546
      
21,759
      
576,322
      
583,281
  
Norvial (b)
    
186,223
      
366,944
      
5,537
      
22,795
      
180,686
      
344,149
  
     
794,091
      
971,984
      
37,083
      
44,554
      
757,008
      
927,430
  
 
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 September 30, 2016 the Group made a payment of S/32.9 million.
 

- 19 -
 
(All amounts are expressed in thousands of S/. unless otherwise stated)
UNAUDITED
 
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 September 30, 2016 the balance includes accrued interest payable for S/30.2 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.

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; the third disbursement of S / 80 million was received 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 September 30, 2016 the balance included interest payables for S/5.1 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 September 30, 2016 amounted to S/1,145 million (at December 31,2015 amounted to S/769.5 million), which has been calculated based on the discounted cash flows, using rates between 3.72% and 7.69% (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
31, 2015
   
At September
30, 2016
 
Current portion
    
13,468
      
16,912
  
Non-current portion
    
35,618
      
23,548
  
     
49,086
      
40,460
  

 
- 20 -
 
(All amounts are expressed in thousands of S/. unless otherwise stated)
UNAUDITED
 
The movement of this item for the period ended September 30, 2015 and 2016 is as follows:         

          Contingent     Provisions     Provision        
    Legal     liabilities from     for the acquisition     for well        
    claims     acquisitions     of CAM     closure     Total  
                               
 At January 1, 2015    
13,056
      
25,927
      
12,152
      
7,210
      
58,345
  
Additions
    
2,110
      
-
      
-
       591       2,701  
Translation adjustment
    
(46
)
     (5,723 )     914       -      
(4,855
)
Reversals
    
-
       -       (5,613 )     -      
(5,613
)
Payments
    
(1,072
)
     -       -       (4 )    
(1,076
)
At September 30, 2015
    
14,048
      
20,204
       7,453       7,797      
49,502
  
                                         
At January 1, 2016
    
15,000
      
22,960
      
3,819
      
7,307
      
49,086
  
Additions
    
3,508
       1,562      
-
      
400
      
5,470
  
Translation adjustment
    
471
      
1,888
      
295
      
-
      
2,654
  
Reversals
    
(237
)
    
(13,882
)
    
(2,061
)
    
-
      
(16,180
)
Payments
    
(299
)
    
(271
)
    
-
      
-
      
(570
)
At September 30, 2016
    
18,443
       21,012      
2,053
      
7,707
      
40,460
  
 
Reversals for the period ended September 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/2.1 million. (S/5.6 million as of September 30, 2015).

15
CAPITAL

As of December 31, 2015 and September 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 September 30, 2016, the amount of 265,369,155 common shares is represented by 53,073,831 ADSs, at 5 shares per ADS.

16
EXPENSES BY NATURE

For the period ended September 30, 2015 and 2016, this item comprises:
 

 
- 21 -
 
(All amounts are expressed in thousands of S/. unless otherwise stated)
UNAUDITED

    Cost of        
    services     Administrative  
    and goods     expenses  
             
2015             
Inventories, materials and consumables used
    
639,824
      
-
  
Personnel charges
    
1,664,353
      
158,721
  
Services provided by third-parties
    
2,237,150
      
102,203
  
Taxes
    
15,960
      
825
  
Other management charges
    
386,138
      
16,697
  
Depreciation
    
145,846
      
12,360
  
Amortization
    
55,652
      
5,805
  
Impairment
    
5,302
      
-
  
     
5,150,225
      
296,611
  
                 
 
                
2016
                
Inventories, materials and consumables used
    
566,846
      
-
  
Personnel charges
    
1,060,428
      
168,522
  
Services provided by third-parties
    
1,693,085
      
82,134
  
Taxes
    
14,078
      
6,512
  
Other management charges
    
262,978
      
13,088
  
Depreciation
    
136,323
      
11,767
  
Amortization
    
55,682
      
6,592
  
Impairment
    
1,592
      
16
  
     
3,791,012
      
288,631
  

17
INCOME TAX

These condensed interim consolidated financial statements for the period ended September 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 20.91% (66.82% for the period ended September 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.

18
CONTINGENCIES, COMMITTMENTS AND GUARANTEES

As of September 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$344.7 million.

19
DIVIDENDS

For the period ended September 30, 2016 , the Group has paid dividends to its non-controlling subsidiaries participate by S/19.6 million (S/4.3 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 September 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.
 
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