7	SEGMENT REPORTING

Operating segments are reported consistently with the internal reports that are reviewed by the Group’s chief decision-maker; that is, the Executive Committee, which is led by the Corporate General Manager. This Committee acts as the maximum authority in operations decision making and is responsible for allocating resources and evaluating the performance of each operating segment.

The Group’s operating segments are assessed by the activities of the following business units: (i) engineering and construction, (ii) infrastructure, and (iii) real estate.

As set forth under IFRS 8, reportable segments based on the level of revenue is: ‘engineering and construction’. However, the Group has voluntarily decided to report on all its operating segments as detailed in this Note.

The revenues derived from foreign operations (Chile, Colombia, Bolivia, and Guyana) comprise 14.2% of the Group’s total revenue reported in 2018 (10.6% in 2017 and 13.2% in 2016).

Sales between segments are carried out at arm’s length, are not material, and are eliminated on consolidation. The revenue from external parties is measured in a manner consistent with that in the income statement. Sale of goods relate to the real estate segment. Revenue from services relate to all other segments.

Group sales and receivables are not concentrated in a few customers. There is no external customer that represents 10% or more of the Group’s revenue.

The principal activities of the Group in each operating segments are as follows:

Engineering and construction: This segment includes from traditional engineering services such as structural, civil and design engineering, and architectural planning to advanced specialties including process design, simulation, and environmental services at three divisions; i) civil works, such as the construction of hydroelectric power stations and other large infrastructure facilities; (ii) electro-mechanic construction, such as concentrator plants, oil, and natural gas pipelines, and transmission lines; iii) building construction, such as office buildings, residential buildings, hotels, affordable housing projects, shopping centers, and industrial facilities.

Infrastructure: The Group has long-term concessions or similar contractual arrangements in Peru for three toll roads, the Lima Metro, a wastewater treatment plant in Lima, four producing oil fields, a gas processing plant and operation and maintenance services for infrastructure assets.

Real Estate: The Group develops and sells homes targeted to low and middle-income population sectors which are experiencing a significant increase in disposable income, as well as, office and commercial space to a lesser extent.

Parent Company Operation corresponds to the services which the Holding company provides, management, logistics and accounting services, among others.

The Executive Committee uses adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) to assess the performance of operating segments.

Profit before income tax reconciles to EBITDA as follows:


	2016			2017		2018
	(as restated)
(Loss)/profit before income tax		(708,134	)		45,112		133,948
Discontinued operations		104,354			210,431		36,785
Financial cost, net		179,829			137,035		197,057
Depreciation		118,832			109,342		86,335
Amortization		64,572			70,383		103,174

*EBITDA ()**		(240,546	)		572,303		557,299

EBITDA for each segment is as follows:


	2016			2017			2018
Engineering and construction		19,255			119,987			19,242
Infrastructure		237,752			300,935			411,502
Real state		121,420			177,286			240,991
Parent company operations		(1,025,197	)		125,938			(27,802	)
Intercompany eliminations		406,546			(151,843	)		(86,634	)

Total EBITDA		(240,546	)		572,303			557,299

Backlog refers to the expected future revenue under signed contracts and legally binding letters of intent. The breakdown by operating segments as of December 31, 2018, and the dates in which they are estimated to be realized is shown in the following table:


				Annual Backlog
	2018			2019			2020			2021+
Engineering and construction		2,644,386			1,755,890			725,351			163,145
Infrastructure		1,759,849			600,630			570,114			589,108
Real state		195,566			—			177,135			18,431
Intercompany eliminations		(351,865	)		(115,748	)		(119,221	)		(116,897	)

		4,247,936			2,240,772			1,353,379			653,787

The following table shows the Group’s financial statements by operating segments:


			Infrastructure
	Engineering and construction		Energy		Toll roads		Transportation		Water treatment			Real estate		Parent Company Operations		Eliminations			Consolidated
As of December 31, 2017
Assets.-
Cash and cash equivalent		184,401		43,878		121,901		161,073		4,204			85,187		25,536		—			626,180
Financial asset at fair value through profit or loss		181		—		—		—		—			—		—		—			181
Trade accounts receivables		891,252		64,364		128,124		108,706		604			45,897		274,522		2,204			1,515,673
Work in progress		55,774		—		—		—		—			—		6,030		—			61,804
Accounts receivable from related parties		230,607		2,746		62,525		3,072		8,852			69,382		76,006		(352,438	)		100,752
Other accounts receivable		518,123		55,959		66,765		31,381		1,922			40,026		51,269		—			765,445
Inventories		46,499		15,093		8,685		19,457		—			643,882		45,702		(8,607	)		770,711
Prepaid expenses		4,470		1,168		2,354		10,312		164			216		14,794		—			33,478

		1,931,307		183,208		390,354		334,001		15,746			884,590		493,859		(358,841	)		3,874,224
Non-current assets classified as held for sale		17,722		—		—		—		—			—		—		—			17,722

Total current assets		1,949,029		183,208		390,354		334,001		15,746			884,590		493,859		(358,841	)		3,891,946

Long-term trade accounts receivable		58,997		—		14,747		793,991		—			—		39,852		—			907,587
Long-term work in progress		—		—		28,413		—		—			—		—		—			28,413
Long-term accounts receivable from related parties		258,479		—		27,660		—		—			—		637,415		(149,624	)		773,930
Prepaid expenses		—		—		24,585		13,115		892			—		—		(510	)		38,082
Other long-term accounts receivable		75,030		53,917		11,159		255,179		7,348			9,811		58,408		—			470,852
Investments in associates and joint ventures		111,513		7,344		—		—		—			1		2,216,343		(2,066,530	)		268,671
Investment property		—		—		—		—		—			45,687		—		—			45,687
Property, plant and equipment		509,700		171,226		18,572		580		60			11,621		171,563		(17,587	)		865,735
Intangible assets		203,390		160,288		492,424		323		—			1,022		71,363		11,260			940,070
Deferred income tax asset		165,227		5,507		11,057		—		—			10,316		238,560		6,030			436,697

Total non-current assets		1,382,336		398,282		628,617		1,063,188		8,300			78,458		3,433,504		(2,216,961	)		4,775,724

Total assets		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		3,927,363		(2,575,802	)		8,667,670

Liabilities.-
Borrowings		591,987		46,924		2,589		—		—			162,031		253,233		—			1,056,764
Bonds		—		—		24,361		12,294		—			—		—		—			36,655
Trade accounts payable		955,015		62,659		85,329		81,161		132			43,724		225,966		(940	)		1,453,046
Accounts payable to related parties		114,198		3,664		60,857		83,841		14			37,396		102,976		(347,772	)		55,174
Current income tax		29,379		1,282		1,122		—		161			45,299		8,300		—			85,543
Other accounts payable		492,362		12,487		68,994		27,058		49			63,654		183,895		1			848,500
Provisions		6,682		5,204		—		—		—			20		1,597		—			13,503

Total current liabilities		2,189,623		132,220		243,252		204,354		356			352,124		775,967		(348,711	)		3,549,185

Borrowings		127,773		101,549		1,945		—		—			12,010		390,022		—			633,299
Long-term bonds		—		—		319,549		591,363		—			—		—		—			910,912
Other long-term accounts payable		379,043		—		52,349		349,987		158			32,058		38,878		—			852,473
Long-term accounts payable to related parties		4,306		—		836		89,023		23,445			—		62,841		(154,497	)		25,954
Provisions		8,587		16,707		—		—		—			—		8,620		—			33,914
Derivative financial instruments		—		383		—		—		—			—		—		—			383
Deferred income tax liability		26,633		8,957		8,606		20,789		210			—		7,277		—			72,472

Total non-current liabilities		546,342		127,596		383,285		1,051,162		23,813			44,068		507,638		(154,497	)		2,529,407

Total liabilities		2,735,965		259,816		626,537		1,255,516		24,169			396,192		1,283,605		(503,208	)		6,078,592

Equity attributable to controlling interest in the Company		487,923		299,411		323,987		106,256		(123	)		217,290		2,629,428		(1,940,842	)		2,123,330
Non-controlling interest		107,477		22,263		68,447		35,417		—			349,566		14,330		(131,752	)		465,748

Total liabilities and equity		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		3,927,363		(2,575,802	)		8,667,670

Operating segments financial position

Segment reporting


			Infrastructure
	Engineering and construction		Energy		Toll roads		Transportation		Water treatment		Real estate		Parent Company Operations		Eliminations			Consolidated
As of December 31, 2018
Assets.-
Cash and cash equivalent		177,455		34,816		168,460		191,178		6,700		93,262		129,269		—			801,140
Financial asset at fair value through profit or loss		—		—		—		—		—		—		—		—			—
Trade accounts receivables		583,842		54,350		78,013		226,919		598		63,038		1,068		—			1,007,828
Work in progress		24,962		—		—		—		—		—		3,576		—			28,538
Accounts receivable from related parties		203,583		492		40,820		758		9,930		60,759		98,308		(379,747	)		34,903
Other accounts receivable		386,467		37,611		28,492		31,012		199		55,508		49,160		2			588,451
Inventories		27,852		18,823		9,206		25,282		—		448,328		—		(15,444	)		514,047
Prepaid expenses		3,825		1,345		3,068		874		135		81		1,221		—			10,549

		1,407,986		147,437		328,059		476,023		17,562		720,976		282,602		(395,189	)		2,985,456
Non-current assets classified as held for sale		—		—		—		—		—		—		247,798		—			247,798

Total current assets		1,407,986		147,437		328,059		476,023		17,562		720,976		530,400		(395,189	)		3,233,254

Long-term trade accounts receivable		14,455		—		33,380		966,202		—		6,030		—		—			1,020,067
Long-term work in progress		—		—		32,212		—		—		—		—		—			32,212
Long-term accounts receivable from related parties		254,660		—		39,341		—		—		—		744,655		(260,430	)		778,226
Prepaid expenses		—		—		28,214		5,152		840		—		—		(509	)		33,697
Other long-term accounts receivable		77,028		63,797		7,058		64,817		7,346		30,268		52,645		(2	)		302,957
Investments in associates and joint ventures		114,676		7,230		—		—		—		5,604		2,213,023		(2,082,768	)		257,765
Investment property		—		—		—		—		—		29,133		—		—			29,133
Property, plant and equipment		205,678		171,430		14,585		1,586		109		9,237		69,088		(1,159	)		470,554
Intangible assets		160,088		183,614		466,153		749		—		1,105		23,514		11,872			847,095
Deferred income tax asset		166,624		5,025		11,876		—		620		17,127		218,201		5,963			425,436

Total non-current assets		993,209		431,096		632,819		1,038,506		8,915		98,504		3,321,126		(2,327,033	)		4,197,142

Total assets		2,401,195		578,533		960,878		1,514,529		26,477		819,480		3,851,526		(2,722,222	)		7,430,396

Liabilities.-
Borrowings		232,409		26,621		15,384		209,463		—		133,105		209,492		—			826,474
Bonds		—		—		25,745		13,422		—		—		—		—			39,167
Trade accounts payable		777,130		49,254		61,233		104,652		121		31,173		55,968		—			1,079,531
Accounts payable to related parties		179,351		1,933		46,099		65,256		58		35,085		91,754		(363,595	)		55,941
Current income tax		5,898		2,797		1,398		9,888		226		4,219		1,381		—			25,807
Other accounts payable		389,896		13,147		72,823		11,677		631		106,286		38,209		—			632,669
Provisions		521		5,412		—		—		—		264		—		—			6,197
Non-current liabilities classified as held for sale		—		—		—		—		—		—		225,828		—			225,828

Total current liabilities		1,585,205		99,164		222,682		414,358		1,036		310,132		622,632		(363,595	)		2,891,614

Borrowings		9,314		87,166		556		—		—		10,684		268,478		—			376,198
Long-term bonds		—		—		299,637		598,238		—		—		—		—			897,875
Other long-term accounts payable		357,146		—		31,477		154,756		1,656		26,470		2,605		—			574,110
Long-term accounts payable to related parties		8,880		—		1,167		81,207		23,445		—		183,826		(276,676	)		21,849
Provisions		32,122		20,234		—		—		—		—		51,055		—			103,411
Derivative financial instruments		—		61		—		—		—		—		—		—			61
Deferred income tax liability		5,564		24,541		7,010		37,178		—		—		1,054		—			75,347

Total non-current liabilities		413,026		132,002		339,847		871,379		25,101		37,154		507,018		(276,676	)		2,048,851

Total liabilities		1,998,231		231,166		562,529		1,285,737		26,137		347,286		1,129,650		(640,271	)		4,940,465

Equity attributable to controlling interest in the Company		331,178		323,943		332,406		171,594		340		193,483		2,708,803		(1,973,387	)		2,088,360
Non-controlling interest		71,786		23,424		65,943		57,198		—		278,711		13,073		(108,564	)		401,571

Total liabilities and equity		2,401,195		578,533		960,878		1,514,529		26,477		819,480		3,851,526		(2,722,222	)		7,430,396

Operating segment performance

Segment Reporting


				Infrastructure
	Engineering																		Parent
	and												Water			Real			Company
	construction			Energy			Toll roads			Electric Train			treatment			estate			operations			Eliminations			Consolidated
Year 2016 -
Revenue		2,936,831			382,211			527,104			247,040			18,459			411,518			62,070			(447,924	)		4,137,309
Gross profit (loss)		60,191			42,129			121,114			42,474			5,698			136,539			(171	)		(91,885	)		316,089
Administrative expenses		(212,048	)		(17,260	)		(35,084	)		(12,951	)		(787	)		(28,429	)		(35,967	)		64,223			(278,303	)
Other income and expenses		(14,246	)		542			262			9			—			835			(5,842	)		(3,920	)		(22,360	)
Gain from the sale of investments		—			—			—			—			—			—			46,336			—			46,336

Operating (loss) profit		(166,103	)		25,411			86,292			29,532			4,911			108,945			4,356			(31,582	)		61,762
Financial expenses		(60,806	)		(10,801	)		(7,390	)		(2,810	)		(37	)		(14,388	)		(116,554	)		14,731			(198,055	)
Financial income		9,987			1,040			2,225			8,037			86			2,817			20,924			(26,891	)		18,225
Share of the profit or loss in associates and joint ventures		16,505			1,615			—			—			—			6,850			(1,036,888	)		421,852			(590,066	)

(Loss) profit before income tax		(200,417	)		17,265			81,127			34,759			4,960			104,224			(1,128,162	)		378,110			(708,134	)
Income tax		19,731			(5,308	)		(22,213	)		(10,904	)		(1,433	)		(27,054	)		192,131			7,232			152,182

(Loss) profit from continuing operations		(180,686	)		11,957			58,914			23,855			3,527			77,170			(936,031	)		385,342			(555,952	)
Profit from discontinued operations		87,239			—			—			—			—			—			1,423			15,692			104,354

(Loss) profit for the year		(93,447	)		11,957			58,914			23,855			3,527			77,170			(934,608	)		401,034			(451,598	)

(Loss) profit attributable to:
Owners of the Company		(87,710	)		9,369			43,656			17,892			3,527			22,105			(932,961	)		414,423			(509,699	)
Non-controlling interest		(5,737	)		2,588			15,258			5,963			—			55,065			(1,647	)		(13,389	)		58,101

		(93,447	)		11,957			58,914			23,855			3,527			77,170			(934,608	)		401,034			(451,598	)

Operating segment performance

Segment Reporting


				Infrastructure
	Engineering																		Parent
	and												Water			Real			Company
	construction			Energy			Toll roads			Transportation			treatment			estate			operations			Eliminations			Consolidated (as restated)
Year 2017 -
Revenue		2,331,907			436,876			642,127			365,771			3,152			647,535			70,050			(483,405	)		4,014,013
Gross profit (loss)		176,473			71,825			139,196			48,696			445			147,383			(37,771	)		(43,795	)		502,452
Administrative expenses		(188,162	)		(15,854	)		(32,453	)		(15,279	)		(317	)		(21,189	)		(100,968	)		51,768			(322,454	)
Other income and expenses		(46,445	)		5,138			1,061			5			—			(3,700	)		10,512			560			(32,869	)
Gain from the sale of investments		—			—			—			—			—			49,002			(18,672	)		4,215			34,545

Operating (loss) profit		(58,134	)		61,109			107,804			33,422			128			171,496			(146,899	)		12,748			181,674
Financial expenses		(46,655	)		(13,423	)		(6,892	)		(8,000	)		(50	)		(21,918	)		(81,310	)		27,471			(150,777	)
Financial income		8,491			1,965			3,257			3,606			26			3,569			35,431			(42,603	)		13,742
Share of the profit or loss in associates and joint ventures		30,982			1,584			—			—			—			456			142,595			(175,144	)		473

Profit (loss) before income tax		(65,316	)		51,235			104,169			29,028			104			153,603			(50,183	)		(177,528	)		45,112
Income tax		877			(13,151	)		(32,290	)		(9,544	)		(228	)		(35,900	)		44,032			(101	)		(46,305	)

Profit (loss) from continuing operations		(64,439	)		38,084			71,879			19,484			(124	)		117,703			(6,151	)		(177,629	)		(1,193	)
Profit from discontinued operations		76,837			—			—			—			—			—			123,603			9,991			210,431

Profit (loss) for the period		12,398			38,084			71,879			19,484			(124	)		117,703			117,452			(167,638	)		209,238

Profit (loss) attributable to:
Owners of the Company		12,078			33,714			55,620			14,613			(124	)		48,647			125,182			(140,992	)		148,738
Non-controlling interest		320			4,370			16,259			4,871			—			69,056			(7,730	)		(26,646	)		60,500

		12,398			38,084			71,879			19,484			(124	)		117,703			117,452			(167,638	)		209,238

Operating segment performance

Segment Reporting


				Infrastructure
	Engineering and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Parent Company operations			Eliminations			Consolidated
Year 2018 -
Revenue		1,960,863			560,506			733,148			586,329			3,270			630,130			62,098			(636,882	)		3,899,462
Gross profit (loss)		62,095			120,360			107,092			122,567			592			287,959			(10,564	)		(15,612	)		674,489
Administrative expenses		(136,066	)		(20,898	)		(35,626	)		(12,007	)		(295	)		(50,730	)		(62,891	)		40,080			(278,433	)
Other income and expenses		(13,509	)		1,243			(11	)		31			—			(1,971	)		(47,778	)		660			(61,335	)
Gain from the sale of investments		(7	)		—			—			—			—			—			—			—			(7	)

Operating profit (loss)		(87,487	)		100,705			71,455			110,591			297			235,258			(121,233	)		25,128			334,714
Financial expenses		(82,861	)		(15,631	)		(28,762	)		(20,604	)		—			(14,700	)		(121,938	)		36,514			(247,982	)
Financial income		15,122			4,593			4,631			35,147			559			6,397			38,614			(54,138	)		50,925
Dividends		—			—			—			—			—			—			8,344			(8,344	)		—
Share of the profit or loss in associates and joint ventures		11,366			1,608			—			—			—			(10	)		84,138			(100,811	)		(3,709	)

(Loss)/profit before income tax		(143,860	)		91,275			47,324			125,134			856			226,945			(112,075	)		(101,651	)		133,948
Income tax		14,361			(26,275	)		(15,737	)		(38,018	)		(517	)		(69,166	)		22,866			(832	)		(113,318	)

(Loss) profit from continuing operations		(129,499	)		65,000			31,587			87,116			339			157,779			(89,209	)		(102,483	)		20,630
Profit from discontinued operations		44,096			—			—			—			—			—			(3,708	)		(3,603	)		36,785

(Loss) profit for the period		(85,403	)		65,000			31,587			87,116			339			157,779			(92,917	)		(106,086	)		57,415

Profit (loss) attributable to:
Owners of the Company		(86,857	)		59,866			26,731			65,337			339			28,921			(85,715	)		(91,810	)		(83,188	)
Non-controlling interest		1,454			5,134			4,856			21,779			—			128,858			(7,202	)		(14,276	)		140,603

		(85,403	)		65,000			31,587			87,116			339			157,779			(92,917	)		(106,086	)		57,415

Segments by geographical area


	2016		2017		2018
Revenues:
- Peru		3,590,772		3,589,048		3,347,540
- Chile		163,990		371,986		226,891
- Colombia		363,311		50,829		325,031
- Guyana		717		—		—
- Ecuador		3,682		—		—
- Bolivia		14,837		2,150		—

		4,137,309		4,014,013		3,899,462

Non-current assets:
- Peru		3,995,453		4,164,342		3,896,920
- Chile		446,998		407,152		142,383
- Colombia		260,732		203,203		157,839
- Bolivia		13,043		149		—
- Ecuador		888		—		—
- Guyana		862		878		—

		4,717,976		4,775,724		4,197,142