6-K 1 a51594292.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 July 2017
 
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 24, 2017
 

 
 
(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, 2017 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, 2017 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
    
2016
    
2017
      
Note
    
2016
    
2017
  
                                       
Current assets
                  
Current liabilities
                  
Cash and cash equivalents
   8      
606,949
      
572,399
  
Borrowings
    
13
      
1,961,043
      
1,090,156
  
Financial asset at fair value through
profit or loss
      
352
      
278
  
Bonds
    
14
      
46,091
      
43,392
  
Trade accounts receivables
          
1,089,117
      
827,006
  
Trade accounts payable
            
1,271,666
      
1,039,151
  
Unbilled work in progress
          
693,407
      
732,202
  
Accounts payable to related parties
    
9
      
81,845
      
74,627
  
Accounts receivable from related parties
    
9
      
175,175
      
163,202
  
Current income tax
            
50,983
      
62,602
  
Other accounts receivable
            
660,889
      
598,316
  
Other accounts payable
            
1,095,648
      
979,166
  
Inventories
            
1,107,702
      
991,632
  
Provisions
    
15
      
14,531
      
12,944
  
Prepaid expenses
            
48,900
      
42,284
                
4,521,807
      
3,302,038
  
             
4,382,491
      
3,927,319
                            
                         
Non-current assets classified
as held for sale
      
-
      
255,898
  
Non-current assets classified as held for sale
    
10
      
22,385
      
980,953
                            
                         
Total current liabilities
            
4,521,807
      
3,557,936
  
Total current assets
            
4,404,876
      
4,908,272
                            
                         
Non-current liabilities
                        
Non-current assets
                        
Borrowings
    
13
      
419,395
      
728,166
  
Long-term trade accounts receivable
            
667,536
      
701,820
  
Long-term bonds
    
14
      
921,623
      
915,002
  
Long-term unbilled work in progress
            
196,509
      
27,438
  
Other long-term accounts payable
            
500,704
      
489,992
  
Long-term accounts receivable from related parties
    
9
      
608,247
      
594,537
  
Long-term accounts payable to related parties
    
9
      
28,082
      
27,598
  
Prepaid expenses
            
23,526
      
39,644
  
Provisions
    
15
      
31,155
      
30,028
  
Other long-term accounts receivable
            
325,466
      
371,047
  
Derivative financial instruments
            
1,081
      
786
  
Investments in associates and joint ventures
    
11
      
886,855
      
57,415
  
Deferred income tax
liability
            
86,184
      
72,809
  
Investment property
            
49,357
      
46,550
  
Total non-current liabilities
            
1,988,224
      
2,264,381
  
Property, plant and equipment
    
12
      
1,110,042
      
973,498
  
Total liabilities
            
6,510,031
      
5,822,317
  
Intangible assets
    
12
      
1,014,594
      
1,010,406
                            
Deferred income tax asset
            
289,582
      
275,763
  
Equity
                        
Total non-current assets
            
5,171,714
      
4,098,118
  
Capital
    
16
      
660,054
      
660,054
  
                         
Legal reserve
            
132,011
      
132,011
  
                         
Optional reserve
            
29,974
      
29,974
  
                         
Share Premium
            
882,464
      
882,056
  
                         
Other reserves
            
(168,112
)
    
(183,869
)
                         
Retained earnings
            
1,008,084
      
1,156,701
  
                         
Equity attributable to
controlling interest in the
Company
      
2,544,475
      
2,676,927
  
                         
Non-controlling interest
            
522,084
      
507,146
  
                         
Total equity
            
3,066,559
      
3,184,073
  
Total assets
            
9,576,590
      
9,006,390
  
Total liabilities and equity
            
9,576,590
      
9,006,390
  
 
The accompanying notes on pages 8 to 23 are an integral part of the consolidated financial statements.
            
 
 
-2-

 
 
 
 
 
(All amounts are expressed in thousands of S/ unless otherwise stated)                   
UNAUDITED                   
                   
                   
                   
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
                  
                   
                   
CONSOLIDATED INCOME STATEMENT
                  
                   
                   
         
For the period of three months
  
         
ended June 30,
        
   
Note
    
2016
    
2017
  
                   
                   
Revenues from construction activities
          
1,734,941
      
1,435,224
  
Revenues from services provided
          
881,982
      
958,552
  
Revenue from real estate and sale of goods
          
182,187
      
453,571
  
           
2,799,110
      
2,847,347
  
                       
Cost of construction activities
          
(1,603,141
)
    
(1,301,811
)
Cost of services provided
          
(761,904
)
    
(882,378
)
Cost of real estate and goods sold
          
(127,448
)
    
(303,230
)
     
19
      
(2,492,493
)
    
(2,487,419
)
Gross profit
            
306,617
      
359,928
  
                         
Administrative expenses
    
19
      
(187,194
)
    
(192,716
)
Other income and expenses
            
14,739
      
1,322
  
Gain from the sale of investments
            
28,161
      
124,468
  
Operating profit
            
162,323
      
293,002
  
                         
Financial expenses
            
(62,902
)
    
(92,869
)
Financial income
            
30,086
      
25,101
  
Share of the profit or loss in associates and joint
                        
ventures under the equity method of accounting
            
30,987
      
13,112
  
Profit before income tax
            
160,494
      
238,346
  
Income tax
    
18
      
(38,492
)
    
(63,129
)
Profit for the period
            
122,002
      
175,217
  
                         
Profit attributable to:
                        
Owners of the Company
            
104,905
      
148,693
  
Non-controlling interest
            
17,097
      
26,524
  
             
122,002
      
175,217
  
                         
Earnings per share from continuing operations
                        
attributable to owners of the Company during
                        
the period
            
0.159
      
0.225
  
                         
                         
                         
The accompanying notes on pages 8 to 23 are an integral part of the consolidated financial statements.
  
 
-3-
 
 
 
 

 
(All amounts are expressed in thousands of S/ unless otherwise stated)                   
UNAUDITED                   
                   
                   
                   
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
                  
                   
                   
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                  
                   
                   
         
For the period of three months
  
         
ended June 30,
  
 
  
Note 
    
2016
    
2017
  
                   
                   
Profit for the period
          
122,002
      
175,217
  
Other comprehensive income:
                      
Items that will not be reclassified to profit or loss
                      
Remeasurement of actuarial gains and losses, net of tax
          
(930
)
    
(104
)
                       
Items that may be subsequently  reclassified to profit or loss
                      
Cash flow hedge, net of tax
          
(63
)
    
199
  
Foreign currency translation adjustment, net of tax
          
11,531
      
(17,019
)
Transfer to profit or loss of available-for-sale financial assets
          
(43,681
)
    
-
  
Exchange difference from net investment in a foreign operation, net of tax
          
7,176
      
(3,249
)
           
(25,037
)
    
(20,069
)
Other comprenhensive income for the period, net of tax
          
(25,967
)
    
(20,173
)
Total comprehensive income for the period
    
#
      
96,035
      
155,044
  
                         
Comprehensive income attributable to:
                        
Owners of  the Company
            
73,853
      
132,860
  
Non-controlling interest
            
22,182
      
22,184
  
             
96,035
      
155,044
  
                         
                         
                         
The accompanying notes on pages 8 to 23 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, 2016 AND 2017
                                      
                                                             
   
Attributable to the controlling interests of the Company
                          
   
 
                      
 
    
 
                          
   
 
          
 
    
 
    
 
    
 
    
 
          
 
        
   
Number
of shares
In
thousands
    
 
Capital
    
Legal
reserve
    
 
 
Optional
reserve
    
 
Premium
for issuance
of shares
      
Other
reserves
    
Retained
earnings
    
Total
    
Non-controlling
interest
    
Total
  
                                                             
                                                             
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 year
    
-
      
-
      
-
      
-
      
-
      
(30,370
)
    
104,223
      
73,853
      
22,182
      
96,035
  
Transactions with shareholders:
                                                                                
- Dividend distribution
    
-
      
-
      
-
      
-
      
-
      
-
      
(30,853
)
    
(30,853
)
    
(6,228
)
    
(37,081
)
- Contributions of non-controlling shareholders
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
756
      
756
  
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
  
                                                                                 
Balances as of January 1, 2017
    
660,054
      
660,054
      
132,011
      
29,974
      
882,464
      
(168,112
)
    
1,008,084
      
2,544,475
      
522,084
      
3,066,559
  
Profit for the period
    
-
      
-
      
-
      
-
      
-
      
-
      
148,693
      
148,693
      
26,524
      
175,217
  
Cash flow hedge
    
-
      
-
      
-
      
-
      
-
      
189
      
-
      
189
      
10
      
199
  
Adjustment for actuarial gains and losses
    
-
      
-
      
-
      
-
      
-
      
-
      
(76
)
    
(76
)
    
(28
)
    
(104
)
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
-
      
(12,746
)
    
-
      
(12,746
)
    
(4,273
)
    
(17,019
)
Change in value of available-for-sale financial assets
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Transfer to profit or loss of available-for-sale financial assets
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Exchange difference from net investment in a foreign operation
    
-
      
-
      
-
      
-
      
-
      
(3,200
)
    
-
      
(3,200
)
    
(49
)
    
(3,249
)
Comprehensive income of the period
    
-
      
-
      
-
      
-
      
-
      
(15,757
)
    
148,617
      
132,860
      
22,184
      
155,044
  
Transactions with shareholders:
                                                                                
- Dividend distribution
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(28,873
)
    
(28,873
)
- Contributions (devolution) of non-controlling shareholders,net
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(295
)
    
(295
)
- Additional acquisition of non-controlling
    
-
      
-
      
-
      
-
      
(408
)
    
-
      
-
      
(408
)
    
(153
)
    
(561
)
- Deconsolidation of former subsidiary
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(7,801
)
    
(7,801
)
Total transactions with shareholders
    
-
      
-
      
-
      
-
      
(408
)
    
-
      
-
      
(408
)
    
(37,122
)
    
(37,530
)
Balances as of June 30, 2017
    
660,054
      
660,054
      
132,011
      
29,974
      
882,056
      
(183,869
)
    
1,156,701
      
2,676,927
      
507,146
      
3,184,073
  
                                                                                 
                                                                                 
The accompanying notes on pages 8 to 23 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
    
2016
    
2017
  
                   
OPERATING ACTIVITIES
                  
Profit before income tax
          
160,494
      
238,346
  
Adjustments to  profit not affecting cash flows from
                      
operating activities:
                      
Depreciation
    
17
      
95,694
      
100,715
  
Amortization of other assets
    
17
      
40,508
      
48,049
  
Impairment of inventories
    
17
      
875
      
497
  
Impairment of accounts receivable and other accounts receivable
    
17
      
6
      
88
  
Impairment of property, plant and equipment
    
17
      
276
      
334
  
Lower of intangible assets
            
317
      
-
  
Profit on fair value of financial asset at fair value through profit or loss
      
330
      
(32
)
Other Provisions
    
15
      
4,008
      
224
  
Financial expense,net
            
67,587
      
91,358
  
Foreign exchange loss (gain) on loans
            
(66,802
)
    
(33,723
)
Share of the profit and loss in associates and joint ventures
                  
under the equity method of accounting
    
11
      
(30,987
)
    
(13,112
)
Reversal of provisions
    
15
      
(1,560
)
    
(940
)
Lower of fixed assets
            
-
      
5,722
  
Lower of investments
            
-
      
46
  
Profit on sale of property, plant and equipment
            
(9,666
)
    
(3,328
)
Profit from sale of investments in associates and subsidiaries
      
-
      
(96,305
)
Gain (loss) on financial asset at fair value through profit or loss
      
(28,001
)
    
-
  
Loss on sale of non-current asset held for sale
            
(22
)
    
(25,724
)
Net variations in assets and liabilities:
                        
Trade accounts receivable
            
286,399
      
86,040
  
Other accounts receivable
            
131,945
      
7,363
  
Other accounts receivable from related parties
            
(656
)
    
(1,318
)
Inventories
            
(21,424
)
    
97,865
  
Pre-paid expenses and other assets
            
(8,072
)
    
(19,814
)
Trade accounts payable
            
(197,587
)
    
46,805
  
Other accounts payable
            
(79,133
)
    
(39,132
)
Other accounts payable to related parties
            
30,807
      
2,270
  
Other provisions
            
(558
)
    
(1,618
)
Interest payment
            
(70,677
)
    
(96,091
)
Payments related to Norvial Concession
            
(49,952
)
    
(7,759
)
Payment of income tax
            
(79,734
)
    
(63,222
)
Net cash applied to operating activities
            
174,415
      
323,604
  
                         
INVESTING ACTIVITIES
                        
Sale of investment in associates and sudsidiaries
            
-
      
249,711
  
Sale of available-for-sale investment
            
1,262
      
-
  
Sale of property, plant and equipment
            
26,365
      
21,057
  
Sale of financial asset at fair value through profit or loss
            
-
      
64
  
Sale of non-current assets held for sale
            
-
      
43,364
  
Return of contributions
            
1,390
      
-
  
Interest received
            
6,920
      
4,161
  
Dividends received
            
13,168
      
1,136
  
Payment for purchase of investments properties
            
(80
)
    
(1,296
)
Payments for intangible purchase
            
(6,881
)
    
(58,729
)
Payments for purchase and contributions on investment
                        
in associate and joint ventures
            
(238,015
)
    
-
  
Payments for property, plant and equipment purchase
            
(84,445
)
    
(63,483
)
Net cash applied to investing activities
            
(280,316
)
    
195,985
  
                         
FINANCING ACTIVITIES
                        
Loans received
            
2,123,698
      
860,313
  
Bonds issued
            
100,013
      
-
  
Amortization of loans received
            
(2,026,194
)
    
(1,338,930
)
Amortization of bonds issued
            
(10,884
)
    
(18,479
)
Payment for transaction costs for debt
            
(13,547
)
    
(30,897
)
Dividends paid to owners of the parent
            
(30,853
)
    
-
  
Dividends paid to non-controlling interest
            
(6,228
)
    
(28,873
)
Cash received from non-controlling shareholders
            
756
      
(295
)
Acquisition or sale of interest in a subsidiary of non-controlling shareholders
      
(21,468
)
    
-
  
Net cash provided by financing activities
            
115,293
      
(557,161
)
Net increase (net decrease) in cash
            
9,392
      
(37,572
)
Cash and cash equivalents at the beginning of the year
            
554,002
      
606,949
  
Cash and cash equivalents at the end of the period
    
8
      
563,394
      
569,377
  
                         
NON-CASH TRANSACTIONS:
                        
Debt capitalization
            
8,308
      
-
  
Acquisition of assets through finance leases
            
22,914
      
27,330
  
Change in fair value of available-for-sale financial assets
            
(43,681
)
    
-
  
                         
                         
The accompanying notes on pages 8 to 23 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, 2016 AND 2017 (UNAUDITED), AND AT DECEMBER 31, 2016 (UNAUDITED)


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, 2017 have been prepared and authorized for issuance by the Chief Financial Officer on July 24, 2017.

2
BASIS OF PREPARATION

These condensed interim consolidated financial statements for the period ended June 30, 2017 have been prepared in accordance with (IAS 34) “Interim financial reporting”.

To date, the audited report for the period 2016 has not been issued by our external auditors. As we are aware, we are carrying out complementary procedures, since some projects involving minority and non-controlling companies are being investigated in Peru.

In this regard, some items of the Financial Statements as of December 2016 have been adjusted to the amounts previously issued through complementary auditing procedures that are still ongoing. By virtue of this, the information for the 2016 period is preliminary and may be subject to subsequent modifications.

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, 2016.

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.

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, no new credit risk has been identified in the Group, considering that the level of lines used has remained the same as in the previous year.
 
 
4.1.3
Liquidity risk –

Compared to year end, no major changes in undiscounted contractual cash flows have occurred. In addition, the company has been working on identifying non-strategic assets for sale and allocating funds to debt amortization.
 
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, 2016
Other financial liabilities (except for finance leases)
    
1,936,825
      
128,508
      
173,145
      
-
       2,238,478  
Finance leases
    
127,496
      
85,989
      
26,780
      
19,506
       259,771  
Bonds
    
113,299
      
180,431
      
365,697
      
1,334,485
       1,993,912  
Trade accounts payables
    
1,271,666
      
-
      
-
      
-
      
1,271,666
  
Accounts payables to related parties
    
81,845
      
28,082
      
-
      
-
       109,927  
Other accounts payables
    
303,826
      
49,064
      
131,557
      
-
       484,447  
Other non-financial liabilities
    
-
      
1,081
      
-
      
-
       1,081  
     
3,834,957
      
473,155
      
697,179
      
1,353,991
       6,359,282  
 
At June 30, 2017
                                        
Other financial liabilities (except for finance leases)
    
1,038,548
      
542,298
      
175,783
      
-
       1,756,629  
Finance leases
    
85,213
      
53,803
      
33,422
      
1,599
       174,037  
Bonds
    
116,699
      
151,701
      
360,735
      
1,296,487
      
1,925,622
  
Trade accounts payables
    
1,039,151
      
-
      
-
      
-
      
1,039,151
  
Accounts payables to related parties
    
74,627
      
27,598
      
-
      
-
       102,225  
Other accounts payables
    
218,132
      
21,231
      
363,939
      
-
      
603,302
  
Other non-financial liabilities
    
-
      
786
      
-
      
-
       786  
     
2,572,370
      
797,417
      
933,879
      
1,298,086
      
5,601,752
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, 2016 and June 30,2017, 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:
-8-
 
 
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
            
UNAUDITED             
             
             
   
December 31,
2016
    
June 30,
2017
  
 
Total borrowing and bonds
    
3,348,152
      
2,776,716
  
Less: Cash and cash equivalents
    
(606,949
)
    
(572,399
)
Net debt
    
2,741,203
      
2,204,317
  
Total equity
    
3,066,559
      
3,184,073
  
Total capital
    
5,807,762
      
5,388,390
  
 
Gearing ratio
    
0.47
      
0.41
  
 
 
 
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).

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 11-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, 2016.
-9-
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

 
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.

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.

Beginning on April 1, 2017, the Company have transferred it´s subsidiary Concar from ‘technical services’ segment to ‘infrastructure segment’. The operating segments for 2016 have been restated for comparative purposes.

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, 2016
                                                            
Assets.-
                                                            
Cash and cash equivalents
    
109,389
      
35,396
      
110,007
      
139,414
      
3,229
      
58,892
      
37,675
      
112,397
      
550
      
606,949
  
Financial asset at fair value through profit or loss
    
352
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
352
  
Trade accounts receivables
    
388,462
      
84,996
      
23,579
      
97,079
      
256
      
83,704
      
411,041
      
-
      
-
      
1,089,117
  
Unbilled work in progress
    
693,407
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
693,407
  
Accounts receivable from related parties
    
357,119
      
3,255
      
19,684
      
392
      
12,379
      
7,284
      
12,468
      
50,582
      
(287,988
)
    
175,175
  
Other accounts receivable
    
432,481
      
58,235
      
6,189
      
25,895
      
4,841
      
20,198
      
70,917
      
42,133
      
-
      
660,889
  
Inventories
    
85,898
      
12,561
      
-
      
16,862
      
-
      
946,657
      
58,839
      
387
      
(13,502
)
    
1,107,702
  
Prepaid expenses
    
7,333
      
2,614
      
1,429
      
17,265
      
167
      
329
      
19,458
      
305
      
-
      
48,900
  
Non-current assets classified as held for sale
    
22,385
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
22,385
  
Total current assets
    
2,096,826
      
197,057
      
160,888
      
296,907
      
20,872
      
1,117,064
      
610,398
      
205,804
      
(300,940
)
    
4,404,876
  
                                                                                 
Long-term trade accounts receivable
    
15,258
      
-
      
-
      
629,310
      
-
      
-
      
22,968
      
-
      
-
      
667,536
  
Long-term unbilled work in progress
    
170,675
      
-
      
24,165
      
-
      
-
      
-
      
-
      
-
      
1,669
      
196,509
  
Long-term accounts receivable from related parties
    
-
      
-
      
408
      
-
      
-
      
-
      
492
      
777,478
      
(170,131
)
    
608,247
  
Prepaid expenses
    
-
      
-
      
20,554
      
2,029
      
943
      
-
      
-
      
-
      
-
      
23,526
  
Other long-term accounts receivable
    
10,027
      
29,533
      
22,924
      
225,565
      
7,347
      
17,887
      
1,075
      
11,108
      
-
      
325,466
  
Investments in associates and joint ventures
    
117,331
      
8,516
      
-
      
-
      
-
      
31,768
      
9,589
      
3,365,628
      
(2,645,977
)
    
886,855
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
49,357
      
-
      
-
      
-
      
49,357
  
Property, plant and equipment
    
610,899
      
176,486
      
1,243
      
193
      
21
      
13,008
      
195,462
      
130,422
      
(17,692
)
    
1,110,042
  
Intangible assets
    
302,186
      
139,353
      
456,000
      
269
      
-
      
950
      
78,687
      
22,793
      
14,356
      
1,014,594
  
Deferred income tax asset
    
195,233
      
4,983
      
1,839
      
-
      
-
      
623
      
50,450
      
29,361
      
7,093
      
289,582
  
Total non-current assets
    
1,421,609
      
358,871
      
527,133
      
857,366
      
8,311
      
113,593
      
358,723
      
4,336,790
      
(2,810,682
)
    
5,171,714
  
Total assets
    
3,518,435
      
555,928
      
688,021
      
1,154,273
      
29,183
      
1,230,657
      
969,121
      
4,542,594
      
(3,111,622
)
    
9,576,590
  
                                                                                 
Liabilities.-
                                                                                
Borrowings
    
585,274
      
82,063
      
-
      
-
      
-
      
206,456
      
155,137
      
932,113
      
-
      
1,961,043
  
Bonds
    
-
      
-
      
25,540
      
20,551
      
-
      
-
      
-
      
-
      
-
      
46,091
  
Trade accounts payable
    
899,673
      
59,830
      
2,310
      
23,882
      
599
      
30,617
      
248,991
      
6,703
      
(939
)
    
1,271,666
  
Accounts payable to related parties
    
132,127
      
3,902
      
27,757
      
33,009
      
237
      
66,190
      
33,749
      
67,685
      
(282,811
)
    
81,845
  
Current income tax
    
22,756
      
3,631
      
44
      
-
      
1,064
      
17,944
      
5,544
      
-
      
-
      
50,983
  
Other accounts payable
    
517,690
      
11,711
      
10,512
      
14,622
      
27
      
194,441
      
157,201
      
189,444
      
-
      
1,095,648
  
Provisions
    
6,615
      
6,441
      
-
      
-
      
-
      
131
      
1,344
      
-
      
-
      
14,531
  
Total current liabilities
    
2,164,135
      
167,578
      
66,163
      
92,064
      
1,927
      
515,779
      
601,966
      
1,195,945
      
(283,750
)
    
4,521,807
  
                                                                                 
Borrowings
    
248,825
      
80,488
      
-
      
-
      
-
      
16,541
      
73,541
      
-
      
-
      
419,395
  
Long-term bonds
    
-
      
-
      
338,143
      
583,480
      
-
      
-
      
-
      
-
      
-
      
921,623
  
Other long-term accounts payable
    
179,698
      
-
      
493
      
246,522
      
-
      
32,000
      
39,558
      
2,433
      
-
      
500,704
  
Long-term accounts payable to related parties
    
4,842
      
-
      
-
      
87,200
      
23,445
      
40,074
      
42,259
      
394
      
(170,132
)
    
28,082
  
Provisions
    
12,283
      
17,115
      
-
      
-
      
-
      
-
      
1,757
      
-
      
-
      
31,155
  
Derivative financial instruments
    
-
      
1,081
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
1,081
  
Deferred income tax liability
    
32,505
      
3,546
      
1,518
      
16,983
      
283
      
15,564
      
9,491
      
6,294
      
-
      
86,184
  
Total non-current liabilities
    
478,153
      
102,230
      
340,154
      
934,185
      
23,728
      
104,179
      
166,606
      
9,121
      
(170,132
)
    
1,988,224
  
Total liabilities
    
2,642,288
      
269,808
      
406,317
      
1,026,249
      
25,655
      
619,958
      
768,572
      
1,205,066
      
(453,882
)
    
6,510,031
  
Equity attributable to controlling interest in the Company
    
755,124
      
265,241
      
220,337
      
96,019
      
3,528
      
234,449
      
158,641
      
3,323,951
      
(2,512,815
)
    
2,544,475
  
Non-controlling interest
    
121,023
      
20,879
      
61,367
      
32,005
      
-
      
376,250
      
41,908
      
13,577
      
(144,925
)
    
522,084
  
Total liabilities and equity
    
3,518,435
      
555,928
      
688,021
      
1,154,273
      
29,183
      
1,230,657
      
969,121
      
4,542,594
      
(3,111,622
)
    
9,576,590
  
 
-11-
 
(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 June 30, 2017
                                                            
Assets.-
                                                            
Cash and cash equivalents
    
214,612
      
12,077
      
102,088
      
123,067
      
2,561
      
71,804
      
31,560
      
14,250
      
380
      
572,399
  
Financial asset at fair value through profit or loss
    
278
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
278
  
Trade accounts receivables
    
336,765
      
60,973
      
23,816
      
65,961
      
552
      
41,542
      
292,382
      
5,015
      
-
      
827,006
  
Unbilled work in progress
    
726,115
      
-
      
-
      
-
      
-
      
-
      
-
      
6,087
      
-
      
732,202
  
Accounts receivable from related parties
    
272,356
      
2,615
      
39,921
      
343
      
8,852
      
71,772
      
4,882
      
45,096
      
(282,635
)
    
163,202
  
Other accounts receivable
    
400,757
      
64,745
      
5,386
      
29,908
      
1,545
      
19,355
      
48,407
      
28,213
      
-
      
598,316
  
Inventories
    
70,121
      
14,244
      
-
      
17,645
      
-
      
850,784
      
56,355
      
568
      
(18,085
)
    
991,632
  
Prepaid expenses
    
6,366
      
1,906
      
2,215
      
15,448
      
53
      
265
      
15,815
      
216
      
-
      
42,284
  
Non-current assets classified as held for sale
    
260,634
      
-
      
-
      
-
      
-
      
-
      
-
      
720,319
      
-
      
980,953
  
Total current assets
    
2,288,004
      
156,560
      
173,426
      
252,372
      
13,563
      
1,055,522
      
449,401
      
819,764
      
(300,340
)
    
4,908,272
  
                                                                                 
Long-term trade accounts receivable
    
15,092
      
-
      
-
      
669,638
      
-
      
-
      
17,090
      
-
      
-
      
701,820
  
Long-term unbilled work in progress
    
-
      
-
      
27,438
      
-
      
-
      
-
      
-
      
-
      
-
      
27,438
  
Long-term accounts receivable from related parties
    
-
      
-
      
408
      
-
      
-
      
-
      
476
      
725,298
      
(131,645
)
    
594,537
  
Prepaid expenses
    
-
      
-
      
33,930
      
4,796
      
918
      
-
      
-
      
-
      
-
      
39,644
  
Other long-term accounts receivable
    
24,488
      
35,974
      
15,381
      
225,565
      
9,583
      
17,504
      
1,539
      
41,013
      
-
      
371,047
  
Investments in associates and joint ventures
    
113,490
      
8,257
      
-
      
-
      
-
      
1
      
9,610
      
2,505,494
      
(2,579,437
)
    
57,415
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
46,550
      
-
      
-
      
-
      
46,550
  
Property, plant and equipment
    
558,125
      
173,250
      
1,064
      
706
      
42
      
11,789
      
116,976
      
129,143
      
(17,597
)
    
973,498
  
Intangible assets
    
290,575
      
165,194
      
471,398
      
247
      
-
      
948
      
48,552
      
21,785
      
11,707
      
1,010,406
  
Deferred income tax asset
    
180,475
      
4,596
      
2,533
      
-
      
-
      
12,661
      
39,371
      
27,893
      
8,234
      
275,763
  
Total non-current assets
    
1,182,245
      
387,271
      
552,152
      
900,952
      
10,543
      
89,453
      
233,614
      
3,450,626
      
(2,708,738
)
    
4,098,118
  
Total assets
    
3,470,249
      
543,831
      
725,578
      
1,153,324
      
24,106
      
1,144,975
      
683,015
      
4,270,390
      
(3,009,078
)
    
9,006,390
  
                                                                                 
Liabilities.-
                                                                                
Borrowings
    
583,572
      
43,507
      
-
      
-
      
-
      
179,503
      
142,333
      
141,241
      
-
      
1,090,156
  
Bonds
    
-
      
-
      
26,477
      
16,915
      
-
      
-
      
-
      
-
      
-
      
43,392
  
Trade accounts payable
    
727,113
      
65,857
      
1,896
      
15,403
      
205
      
34,172
      
169,635
      
25,809
      
(939
)
    
1,039,151
  
Accounts payable to related parties
    
112,435
      
2,307
      
32,091
      
24,187
      
129
      
50,485
      
23,100
      
112,433
      
(282,540
)
    
74,627
  
Current income tax
    
3,918
      
1,249
      
-
      
-
      
66
      
52,818
      
4,537
      
14
      
-
      
62,602
  
Other accounts payable
    
517,335
      
12,431
      
34,683
      
27,655
      
57
      
192,394
      
103,023
      
91,588
      
-
      
979,166
  
Provisions
    
6,615
      
4,865
      
-
      
-
      
-
      
111
      
1,353
      
-
      
-
      
12,944
  
Non-current assets classified as held for sale
    
255,898
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
255,898
  
Total current liabilities
    
2,206,886
      
130,216
      
95,147
      
84,160
      
457
      
509,483
      
443,981
      
371,085
      
(283,479
)
    
3,557,936
  
                                                                                 
Borrowings
    
163,955
      
89,873
      
-
      
-
      
-
      
16,018
      
34,515
      
423,805
      
-
      
728,166
  
Long-term bonds
    
-
      
-
      
328,283
      
586,719
      
-
      
-
      
-
      
-
      
-
      
915,002
  
Other long-term accounts payable
    
195,461
      
-
      
493
      
233,548
      
103
      
32,057
      
25,822
      
2,508
      
-
      
489,992
  
Long-term accounts payable to related parties
    
4,650
      
-
      
-
      
88,804
      
23,445
      
-
      
41,920
      
-
      
(131,221
)
    
27,598
  
Provisions
    
11,515
      
16,799
      
-
      
-
      
-
      
-
      
1,714
      
-
      
-
      
30,028
  
Derivative financial instruments
    
-
      
786
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
786
  
Deferred income tax liability
    
33,912
      
5,177
      
3,589
      
20,563
      
286
      
-
      
9,236
      
46
      
-
      
72,809
  
Total non-current liabilities
    
409,493
      
112,635
      
332,365
      
929,634
      
23,834
      
48,075
      
113,207
      
426,359
      
(131,221
)
    
2,264,381
  
Total liabilities
    
2,616,379
      
242,851
      
427,512
      
1,013,794
      
24,291
      
557,558
      
557,188
      
797,444
      
(414,700
)
    
5,822,317
  
Equity attributable to controlling interest in the Company
    
738,300
      
278,797
      
231,931
      
104,649
      
(185
)
    
224,085
      
94,313
      
3,459,424
      
(2,454,387
)
    
2,676,927
  
Non-controlling interest
    
115,570
      
22,183
      
66,135
      
34,881
      
-
      
363,332
      
31,514
      
13,522
      
(139,991
)
    
507,146
  
Total liabilities and equity
    
3,470,249
      
543,831
      
725,578
      
1,153,324
      
24,106
      
1,144,975
      
683,015
      
4,270,390
      
(3,009,078
)
    
9,006,390
  
 
-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, 2016
                                                            
                                                             
Revenue
    
1,984,837
      
180,301
      
135,867
      
119,528
      
10,069
      
100,643
      
458,149
      
29,925
      
(220,209
)
    
2,799,110
  
Gross profit (loss)
    
163,115
      
17,812
      
34,377
      
35,114
      
925
      
30,535
      
55,817
      
(2,884
)
    
(28,194
)
    
306,617
  
Administrative expenses
    
(136,224
)
    
(7,384
)
    
(4,754
)
    
(5,807
)
    
(252
)
    
(10,041
)
    
(38,033
)
    
(17,819
)
    
33,120
      
(187,194
)
Other income and expenses
    
13,222
      
(677
)
    
56
      
-
      
-
      
351
      
2,148
      
2,461
      
(2,822
)
    
14,739
  
Gain from the sale of investments
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
28,161
      
-
      
28,161
  
Operating profit (loss)
    
40,113
      
9,751
      
29,679
      
29,307
      
673
      
20,845
      
19,932
      
9,919
      
2,104
      
162,323
  
Financial expenses
    
(28,486
)
    
(4,566
)
    
(4,440
)
    
(1,335
)
    
(30
)
    
(7,417
)
    
(11,665
)
    
(11,238
)
    
6,275
      
(62,902
)
Financial income
    
13,520
      
2,690
      
598
      
2,031
      
27
      
1,736
      
3,310
      
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
    
33,961
      
9,071
      
25,837
      
30,003
      
670
      
14,792
      
11,846
      
128,603
      
(94,289
)
    
160,494
  
Income tax
    
(12,937
)
    
(3,025
)
    
(6,719
)
    
(9,110
)
    
(188
)
    
(3,639
)
    
(5,161
)
    
1,842
      
445
      
(38,492
)
Profit for the period
    
21,024
      
6,046
      
19,118
      
20,893
      
482
      
11,153
      
6,685
      
130,445
      
(93,844
)
    
122,002
  
                                                                                 
Profit attributable to:
                                                                                
                                                                                 
Owners of the Company
    
24,601
      
4,552
      
11,817
      
15,670
      
482
      
3,203
      
5,375
      
130,756
      
(91,551
)
    
104,905
  
Non-controlling interest
    
(3,577
)
    
1,494
      
7,301
      
5,223
      
-
      
7,950
      
1,310
      
(311
)
    
(2,293
)
    
17,097
  
     
21,024
      
6,046
      
19,118
      
20,893
      
482
      
11,153
      
6,685
      
130,445
      
(93,844
)
    
122,002
  
 
-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, 2017
                                                            
                                                             
Revenue
    
1,635,171
      
207,272
      
96,082
      
119,187
      
1,509
      
317,227
      
624,326
      
31,383
      
(184,810
)
    
2,847,347
  
Gross profit (loss)
    
145,292
      
32,879
      
38,879
      
23,376
      
95
      
112,108
      
64,417
      
(23,053
)
    
(34,065
)
    
359,928
  
Administrative expenses
    
(114,509
)
    
(8,206
)
    
(4,688
)
    
(6,360
)
    
(205
)
    
(8,003
)
    
(57,945
)
    
(29,272
)
    
36,472
      
(192,716
)
Other income and expenses
    
3,576
      
291
      
207
      
5
      
-
      
(2,586
)
    
7
      
1,072
      
(1,250
)
    
1,322
  
Gain from the sale of investments
    
25,768
      
-
      
-
      
-
      
-
      
47,115
      
-
      
47,370
      
4,215
      
124,468
  
Operating profit (loss)
    
60,127
      
24,964
      
34,398
      
17,021
      
(110
)
    
148,634
      
6,479
      
(3,883
)
    
5,372
      
293,002
  
Financial expenses
    
(22,921
)
    
(6,194
)
    
(3,906
)
    
(2,268
)
    
(1
)
    
(12,089
)
    
(17,742
)
    
(36,801
)
    
9,053
      
(92,869
)
Financial income
    
10,077
      
2,143
      
830
      
1,866
      
1
      
1,023
      
1,007
      
21,745
      
(13,591
)
    
25,101
  
Share of the profit or loss
                                                                                
in associates and joint ventures under the equity
                                                                                
method of accounting
    
33,686
      
877
      
-
      
-
      
-
      
455
      
248
      
163,143
      
(185,297
)
    
13,112
  
Profit before income tax
    
80,969
      
21,790
      
31,322
      
16,619
      
(110
)
    
138,023
      
(10,008
)
    
144,204
      
(184,463
)
    
238,346
  
Income tax
    
(11,502
)
    
(6,879
)
    
(8,163
)
    
(5,114
)
    
(75
)
    
(38,069
)
    
1,383
      
4,323
      
967
      
(63,129
)
Profit (loss) for the period
    
69,467
      
14,911
      
23,159
      
11,505
      
(185
)
    
99,954
      
(8,625
)
    
148,527
      
(183,496
)
    
175,217
  
                                                                                 
Profit (loss) attributable to:
                                                                                
                                                                                 
Owners of the Company
    
67,120
      
13,066
      
15,093
      
8,629
      
(185
)
    
55,444
      
(7,123
)
    
148,574
      
(151,925
)
    
148,693
  
Non-controlling interest
    
2,347
      
1,845
      
8,066
      
2,876
      
-
      
44,510
      
(1,502
)
    
(47
)
    
(31,571
)
    
26,524
  
     
69,467
      
14,911
      
23,159
      
11,505
      
(185
)
    
99,954
      
(8,625
)
    
148,527
      
(183,496
)
    
175,217
  
 
-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
CASH AND CASH EQUIVALENTS

This account comprises:
 
   
At December,31
     At June,30  
   
2016
    
2017
  
             
Cash on hand
    
5,943
      
6,233
  
In-transit remittances
    
7,931
      
2,144
  
Checking accounts
    
475,025
      
441,266
  
Time deposits
    
112,023
      
122,756
  
Mutual funds
    
6,027
      
-
  
     
606,949
      
572,399
  
 
Reconciliation to cash flow statement
The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of:
 
 
 
 At December,31     At June,30   
 
 
  2016   
 
  2017   
         
Balances as above
    
606,949
)
    
572,399
)
Bank overdrafts (note 13)
    
(8,396
)
    
(3,022
)
Balances per statement of cash flows
    
598,553
)
    
569,377
)
                 
 
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, 
  
    2016       2017   
                 
Revenue from sale of goods and services: 
                
- Associates
    
454
      
1,639
  
- Joint operations
    
18,070
      
18,738
  
     
18,524
      
20,377
  
 
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
 
       

   
 
At December 31,
         
 
At June 30,
     
    2016           2017        
    Receivable     Payable     Receivable     Payable  
                         
Joint operations:                         
Consorcio Constructor Ductos del Sur      56,345       1676      
37,733
      
-
  
Consorcio GyM Conciviles 
     61,006      
-
      
61,795
      
-
  
Consorcio Rio Urubamba 
     9,072      
-
      
8,977
      
-
  
Consorcio Peruano de Conservación 
     8,784      
-
      
7,042
      
-
  
Consorcio Vial Quinua 
     4,198      
738
      
4,138
      
566
  
Consorcio Italo Peruano 
     4,174      
17,325
      
17,840
      
17,029
  
Consorcio La Gloria 
     3,521      
3,080
      
1,702
      
1,357
  
Consorcio Terminales del Perú 
     3,215      
259
      
2,965
      
-
  
Consorcio Rio Mantaro 
     3,191      
6,886
      
-
      
23,357
  
Consorcio Vial Sierra
    940      
5,400
      
4,068
      
10,136
  
Consorcio Constructor Chavimochic
    915      
2,471
      
893
      
5,097
  
Consorcio Energía y Vapor
    491      
3,203
      
-
      
70
  
Consorcio Ermitaño
    83      
6,372
      
834
      
-
  
Consorcio Menegua
    30      
3,803
      
-
      
610
  
Consorcio para la Atención y Mantenimiento de Ductos 
     -      
21,790
      
-
      
8,619
  
Consorcio Huacho Pativilca 
     -      
3,434
      
-
      
229
  
Other minors  
     10,133      
2,455
      
12,307
      
7,556
  
      166,098       78,892       160,294       74,626  
                                 
Other related parties:                                
Gaseoducto Sur Peruano S.A      608,247       -      
596,889
       -  
Perú Piping Spools S.A.C. 
     9,077      
-
      
556
      
1
  
Ferrovias Participaciones 
     -      
20,813
      
-
      
21,220
  
Ferrovias Argentina 
     -      
2,835
      
-
      
2,136
  
Arturo Serna  
     -      
7,387
      
-
      
4,242
  
 
    
617,324
      
31,035
      
597,445
      
27,599
  
 
     783,422      
109,927
      
757,739
      
102,225
  
 
 
-15-

 
(All amounts are expressed in thousands of S/ unless otherwise stated)                       
UNAUDITED                       
                       
                       
                       
 
At December 31,
         
At June 30,
     
  2016           2017        
  Receivable     Payable     Receivable     Payable  
                       
Less non-current portion:
                      
Gaseoducto Sur Peruano S.A 
   (608,247 )     
-
       (594,537  )    
-
 
Ferrovias Participaciones
    
-
         (20,813 )      
-
        
(21,220
 ) 
Ferrovias Argentina
    
-
        
(2,835
 )       
-
        
(2,136
 ) 
Arturo Serna
    
-
        
(4,434
 )       
-
        
(4,242
 ) 
Portion current
     175,175        
81,845
        
163,202
        
74,627
  
 

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
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

As of March 31, 2017, this item includes the balances of the Consorcio Constructor Ductos del Sur for S/255 million, and the reclassification of the investment in the associate Gasoducto Sur Peruano S.A. for S/714.6 million.

In February 2017, the Company sold 23,000,000 shares of Red Eagle Mining Corporation through a stockbroker operation, for a total amount of US$11.5 million and representing 8.69% of the share capital, resulting in a gain In the sale of investments of S/25.8 million. As of June 30, 2017, a 3.98% holding is maintained.

11
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

As of June 30, 2017, associates in which the Group has significant influence are similar to those existing as of December 31, 2016, except for the reclassification mentioned.

The movement of our investments in associates for the period ended March 31, 2016 and 2017 is as follows:

   
2016
   
2017
 
Beginning balance
    
646,884
      
886,855
  
Acquisition and/or contributions received
    
569
      
169
  
Increase in capital
    
258,000
      
-
  
Debt capitalization
    
8,308
      
-
  
Share of the profit and loss in associates
                
under the equity method of accounting
    
30,987
      
7,346
  
Sale of investments
    
-
      
(120,779
)
Dividends received
    
(13,168
)
    
(1,376
)
Reclassification discontinuous operation
    
-
      
(714,554
)
Other
    
(395
)
    
(246
)
Ending balance
    
931,185
      
57,415
  
 
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 concluded by the end of December 2016.
-16-
 
    (All amounts are expressed in thousands of S/ unless otherwise stated)
    UNAUDITED
 
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$248 million, at December 2015 the contribution was S/391 million and at December 2016 its contribution was increased in S/374 million.

Gasoducto del Sur Peruano S.A. (“GSP”), company owner of the concession "Improvements to the Energy Security of the  Country and  Development of  the Peruvian Southern Gas Pipeline" (the "Concession") and of which our subsidiary Negocios de Gas S.A is a shareholder with 20%, received a notification on January 24, 2017, from the Ministry of Energy and Mines, as Grantor of the Concession, by which it terminated the concession agreement signed on July 23, 2014 (the “Concession Contract”).

In case of the termination of the Concession, the Concession Contract states that the Net Book Value of the Concession’s assets (“VCN”) must be determined, and then call a public auction for the transfer of the Concession’s assets to a new concessionaire. From this amount, GSP is entitled to receive, within a maximum term of 12 months as of the termination of the Concession, a payment that can range from the guaranteed minimum of 72.25% of the VCN to the 100% of the VCN that is a function of the result of the auction.

According to the analysis made by the Company with the information available to date, and under the agreements entered into with the other shareholders of GSP, in the event that the payment reaches 72.25% of the VCN we would recover more than 95% of the total commitments which include the equity invested in GSP amounting to US$220 million, the amount honored by the corporate guarantee granted to the bridge loan conferred to GSP by a syndicate of five banks amounting to US$129 million, as well as the percentage honored in relation to the Guarantee of Fulfillment of the Concession Contract that amounts to US$52.5 million.

The Company has registered the impacts of such termination in the Financial Statement to fiscal year 2016, which is a result that considers receiving the minimum payment of 72.25% of the aforementioned VCN.

In March 2017, the investment was reclassified to Non-current assets classified as held for sale.

In February 2017 subsidiary Viva GyM S.A. signed a purchase-sales agreement comprising its equity interest (representing 22.5%) held in associate Promoción Inmobiliaria del Sur S.A. The agreed selling price was US$25 million (equivalent to S/81 million), which was fully paid.

In April 2017 the Company signed a purchase-sale agreement for their total share (representing 51%) at their joint venture with Compañía Operadora de Gas del Amazonas S.A.C. (COGA). The selling price was agreed at US$21.5 million (equivalent to S/69.8 million), which was fully paid.

In June 2017, the Company sold all of GMD's shares, which represent 89.19% of the company's shareholding, in favor of AI Inversiones Palo Alto II S.A.C., an affiliate of Advent International. The value agreed for the total participation was US$84.7 million, with an initial payment of US$37.3 million and subsequent payments subject to milestones agreed between the parties.
 
 
-17-
 
    (All amounts are expressed in thousands of S/ unless otherwise stated)
    UNAUDITED
 

 
12
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

For the period ended June 30, 2016 and 2017, the movement in property, plant and equipment and intangible assets accounts was as follows:
 
 
    Property,        
    plant and     Intangible  
    equipment     assets  
             
At January 1, 2016 
    
1,111,757
      
881,020
  
                 
                 
Additions
    
107,360
      
66,822
  
Transfers, disposals and adjustments
    
3,800
      
17,394
  
Deductions for sale of assets
    
(16,699
)
    
-
  
Depreciation, amortization
    
(94,553
)
    
(40,508
)
Net cost at June 30, 2017
    
1,111,665
      
924,728
  
             
             
At January 1, 2016  
    
1,110,042
      
1,014,594
  
                 
                 
Additions
    
90,811
      
79,456
  
Subsidiary deconsolidation
    
(83,441
)
    
(23,666
)
Transfers, disposals and adjustments
    
(26,623
)
    
(11,929
)
Deductions for sale of assets
    
(17,729
)
    
-
  
Depreciation, amortization
    
(99,562
)
    
(48,049
)
Net cost at June 30, 2017
    
973,498
      
1,010,406
  

As of June 30, 2016 and 2017, additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.

As of June 30, 2016 and 2017, 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) and in preparation of wells located in Lots I, III, IV and V to provide oil and hydrocarbon exploitation services.

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,
  
   
2016
    
2017
  
Engineering and construction
    
137,267
      
131,327
  
Electromechanical
    
20,737
      
20,737
  
Mining and construction services
    
13,366
      
13,366
  
Telecommunications services
    
6,728
      
6,569
  
IT equipment and services
    
5,102
      
930
  
     
183,200
      
172,929
  
 
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, 2017 same criteria were applied as those in test impairment at December 31, 2016.
-18-
 
    (All amounts are expressed in thousands of S/ unless otherwise stated)
    UNAUDITED
 

13
BORROWINGS

For the period ended June 30, 2016 and 2017, the movement in property, plant and equipment and intangible assets accounts was as follows:
 
 

 
   
Total
         
Current
          
Non-current 
        
   
At
December 31, 2016
    
At
June
30, 2017
   
At
December 31, 2016
   
At
June
30, 2017
    
At
December 31, 2016
    
At
June
30, 2017
 
Bank overdrafts
     8,396      
3,022
       8,396      
3,022
       -      
-
  
Bank loans
     2,131,901      
1,655,107
       1,835,340      
1,007,956
       296,561      
647,151
  
Leases
     240,141      
160,193
       117,307      
79,178
       122,834      
81,015
  
      2,380,438      
1,818,322
       1,961,043      
1,090,156
       419,395      
728,166
  
 
a)
Bank loans -

As of June 30, 2017 and December 31, 2016, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations bear interest at fixed rates which fluctuated between 1.1% and 14.4% in 2017 and between 1.0% and 14.4% in 2016.
 
 

         
 
          
 
  
     
Current
    
 
        
Non-current
  
   
 
 
Interest
rate
    
 
 
Date of
maturity
      
At
December 
31,  2016
      
 
At
June
30, 2017
      
At
December
31, 2016
      
At
June
30, 2017
  
GyM S.A.
    2.25% / 8.92%
 
    
2017 / 2020
      
492,910
      
527,309
      
187,029
      
117,034
  
Graña y Montero S.A.A. 
    Libor USD 3M + 4.9%       
2017 / 2020
        932,114      
141,241
      
-
        423,805  
Viva GyM S.A.
    11.22%
 
    
2018
       201,609      
174,483
      
-
      
2,196
  
GMP S.A.
    3.65% / 6.04%
 
    
2017 / 2020
       77,857      
39,370
      
71,453
      
82,899
  
CAM Holding S.A.
    1.10% / 14.43%
 
    
2017 / 2020
       69,702      
79,606
      
24,889
      
12,597
  
Adexus S.A.
    3.63% / 5.90%
 
    
2017 / 2019
       42,782      
45,947
      
13,190
      
8,620
  
CAM Servicios Perú S.A.
    7.15% / 8.86%
 
    
2017
      
3,620
      
-
      
-
      
-
  
GMD S.A.
    5.69% / 9.00%
 
    
2017
       14,746      
-
      
-
      
-
  
                     
1,835,340
      
1,007,956
      
296,561
      
647,151
  

i)
Credit Suisse Syndicated Loan -

As a result of the termination of the GSP gas pipeline concession, our syndicated loan used to finance our equity investment in GSP became due. The principal amount outstanding under our syndicated loan was US$150 million as of December 31, 2016, and is US$104.3 million (S/349.4 million) as of the date of this report. On June 27, 2017, we entered into an amendment to the credit agreement.
According to the terms of the amendment our syndicated loan matures on 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the amendment. The syndicated loan continues to accrue interest at LIBOR plus 4.90% per year. In addition, we are prohibited from paying dividends until the loan is repaid in full. Also, we have provided additional security interests, including: i) a first priority lien on our shares of GyM and Concar; (ii) a second priority lien on our shares of Almonte; (iii) a first priority lien on certain real estate properties in Miraflores and Surquillo; (iv) liens on certain related amounts; (v) a second priority lien on our shares of CAM and CAM Servicios del Perú S.A.; and (vi) a first priority lien on cash flows from the sale of certain assets.

ii)
GSP Bridge Loan -

As a result of the termination of the GSP gas pipeline concession, our proportional guarantee of the GSP bridge loan became due. As of December 31, 2016, there was US$129 million of principal amount outstanding under our corporate guarantee. As of the date of this report the principal amount outstanding under the GSP bridge loan has been entirely paid. On June 27, 2017 we entered in a new, US$78.7 million term loan with Natixis, BBVA, SMBC and MUFJ, the proceeds of which were used to repay the GSP bridge loan. The new term loan matures on 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the closing date. The term loan accrues interest at LIBOR plus 4.50% per year, which will increase to 5.00% during the second year and to 5.50% during the third year. In addition, we will be prohibited from paying dividends until the loan is repaid in full. Also, we have provided the following security interests to secure repayment of the term loan: (i) a first priority lien on our rights to receive the termination payment derived from the GSP termination (the “VCN”), (ii) a second priority lien on our shares of GyM and Concar; (iii) a second priority lien on our shares of Almonte; (iv) a second priority lien on certain real estate properties in Miraflores and Surquillo; (v) a second priority lien on our shares of CAM and CAM Servicios del Perú S.A.; and (vi) a first priority lien on cash flows from the sale of certain assets.
-19-
 
    (All amounts are expressed in thousands of S/ unless otherwise stated)
    UNAUDITED
 
As of June 30, 2017, the Company maintained unused credit limits for S/1,165 million, which expire within one year (S/3,922 million as of December 31, 2016).

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, 2016     30, 2017     31, 2016     30, 2017  
 
                                
Total loans
    
2,380,438
      
1,818,322
      
2,391,375
      
1,905,525
  
 
The carrying amount and fair value of borrowings are broken down as follows:
 
The fair value is based on cash flows discounted using a rate based on the borrowing rate of 1.1% and 13.4% (1.3% and 14.3% in 2016). It should be noted that the interest rate used are those applicable and negotiated by each Company.

14
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, 2016     30, 2017     31, 2016     30, 2017     31, 2016     30, 2017  
                                                 
GyM Ferrovías (a)
    
604,031
      
603,634
      
20,551
      
16,915
      
583,480
      
586,719
  
Norvial (b)
    
363,683
      
354,760
      
25,540
      
26,477
      
338,143
      
328,283
  
     
967,714
      
958,394
      
46,091
      
43,392
      
921,623
      
915,002
  
 
 
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. On June 30, 2017 the Group made a payment of S/47.9 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.

On June 30, 2017 the balance includes accrued interest payable for S/3 million.
-20-

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

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 23,2015; the second disbursement of S/100 million was on January 25, 2016; the third disbursement of S / 80 million was received in July 25, 2016. The issues costs corresponding to the first issue and to the first and second disbursements of the second issue were for S/3.9 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.

As of June 30, 2017 the balance included interest payables for S/4.5 million (S/4.9 million at December 31, 2016)

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 30,2017 and December 31,2016 both Companies have complied with their covenants.

Fair value of the bonds of both Companies at June 30, 2017 amounted to S/1,020 million (at December 31,2016 amounted to S/1,055 million), which has been calculated based on the discounted cash flows, using rates between 3.62% y 7.28% (rates between 4.20% y 7.99% at December 31,2016) which are within level 2 of the fair value hierarchy.
 
15
PROVISIONS

This item is broken down based on the expectation of liquidation as follows:
 

    At December     At June  
    31, 2016     30, 2017  
                 
Current portion
    
14,531
      
12,944
  
Non-current portion
    
31,155
      
30,028
  
     
45,686
      
42,972
  
 
The movement of this item for the period ended June 30, 2016 and 2017 is as follows:
-21-
 
       (All amounts are expressed in thousands of S/ unless otherwise stated)
        UNAUDITED

          Contingent                    
         
liabilities
    
Provisions
    
Provision
        
    Legal    
resulting from
    
for the acquisition
    
for well
        
   
claim
    
acquisitions
    
of CAM
    
closure
    
Total
  
At January 1, 2016
    
15,000
      
22,960
      
3,819
      
7,307
      
49,086
  
Additions
    
3,128
      
677
      
203
      
4,008
          
Reversals of provisions
    
(237
)
    
-
      
(1,323
)
    
-
      
(1,560
)
Payments
    
(297
)
    
(261
)
    
-
      
-
      
(558
)
Translation adjustments
    
336
      
1,114
      
-
      
-
      
1,450
  
At June 30, 2016
    
17,930
      
24,490
      
2,496
      
7,510
      
52,426
  
 
 
At January 1, 2017
    
20,345
      
8,125
      
-
       17,216      
45,686
  
Additions
    
543
      
-
      
-
       (319 )    
224
  
Reversals of provisions
    
(143
)
    
(797
)
    
-
       -      
(940
)
Payments
    
(1,618
)
    
-
      
-
       -      
(1,618
)
Translation adjustments
    
(48
)
    
(332
)
    
-
       -      
(380
)
At June 30, 2017
    
19,079
      
6,996
      
-
       16,897      
42,972
  
 
 

16
CAPITAL

 
As of December 31, 2016 and June 30,2017, 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, 2016, the amount of 264,809,545 common shares is represented by 52,961,909   ADSs, at 5 shares per ADS.

As of June 30, 2017, the amount of 260,353,810 common shares is represented by 52,070,762 ADSs, at 5 shares per ADS.
 
17
EXPENSES BY NATURE

For the period ended June 30, 2016 and 2017, this item comprises:
 
    Cost of     Adminis-  
    services     trative-  
    and goods     expenses  
             
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 of inventories
    
875
      
-
  
Impairment of accounts receivable
    
6
      
-
  
Impairment of property, plant and equipment
    
260
      
16
  
     
2,492,493
      
187,194
  
 
2017
                
Inventories, materials and consumables used
    
444,223
      
27
  
Personnel charges
    
830,972
      
114,222
  
Services provided by third-parties
    
737,878
      
30,033
  
Taxes
    
8,080
      
1,708
  
Other management charges
    
329,191
      
34,117
  
Depreciation
    
93,998
      
6,717
  
Amortization
    
42,177
      
5,872
  
Impairment of inventories
    
497
      
-
  
Impairment of accounts receivable
    
88
      
-
  
Impairment of property, plant and equipment
    
314
      
20
  
     
2,487,419
      
192,716
  
 
 
-22-
 
    (All amounts are expressed in thousands of S/ unless otherwise stated)
    UNAUDITED

18
INCOME TAX

These condensed interim consolidated financial statements for the period ended June 30, 2017, 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 31,2017 is 26.5% (23.98% for the period ended June 30, 2016). 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.

19
CONTINGENCIES, COMMITTMENTS AND GUARANTEES

As of June 30, 2017, contingencies held by the Group are substantially the same as those existing as of December 31, 2016.

In addition the Group had guarantee commitments with different financial institutions securing transactions in the amount of US$208.2 million.

20
DIVIDENDS

As of June 30, 2017, the Company has not declared any dividends due to the fact that the financial statements have not been approved at the Annual General Shareholders' Meeting.

For the period ended June 30, 2017 , the Group has paid dividends to its non-controlling subsidiaries participate by S/28.9 million (S/6.2 million for the same period in 2016).

21
EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

The Company is in the process of negotiating a committed credit line, syndicated with the main local banks of the Group, BCP, BBVA, Scotiabank and Interbank, which includes a working capital line for GyM of US$160 million as well as an additional line For the issuance of surety bonds for US$100 million.
 
 
 
-23-