Investment Property, Property, Plant and Equipment, and Right-of-Use Assets

12 Months Ended

Dec. 31, 2022

Investment Property, Property, Plant and Equipment, and Right-of-Use Assets [Abstract]

Investment Property, Property, Plant and Equipment, and Right-of-Use Assets

15. Investment Property, Property, Plant and Equipment, and Right-of-Use Assets

A. Investment property, net

(i) Investment properties are stated at cost, net of accumulated depreciation and have the following composition:

							Methodology
					Year of		of
					Acquisition or	Level of	Valuation
In thousands of soles	2021		2022		construction	Hierarchy	2021 / 2022
Investment properties built
Centro Comercial “Agustino Plaza” (a)		21,605		19,823	2011	Level 3	Appraisal
Lease office - Surquillo (b)		40,595		40,594	2009	Level 3	Appraisal
Others		811		1,507
		63,011		61,924

(a) The subsidiary Viva Negocio Inmobiliario S.A.C. is owner of “Agustino Plaza” Shopping Center located in the District of El Agustino. The fair value was calculated by an independent appraiser amounted to S/70.8 million equivalent to US$18.4 million as of December 31, 2022 (S/59.9 million equivalent to US$15 million as of December 31, 2021 and US$14.1 million, equivalent to S/51.3 million and, as of December 31, 2020). This investment property has been leased under an operating lease with third parties. The net carrying amount amounts to S/19.8 million (S/ 22.4 million and S/24.6 million at December 31, 2021 and 2020, respectively).

As of December 31, 2021 and 2022 there are liens on the Inter-American Development Bank and Banco de Credito del Peru, respectively.

(b) The Company is owner of the property located at Av. Paseo de la Republica 4675, Surquillo. The fair value was calculated by an independent appraiser and amounted to S/73.7 million, equivalent to US$19 million. As of December 31, 2022, the carrying amounts to S/40.6 million (in December 2021, the Management decided to lease the property transferring it from ‘property, plant, and equipment’ to ‘investment property’. The net carrying amount at the closing of the year was S/42.6 million).

As of December 31, 2020, 2021 and 2022 the assets present liens related to the trust with the syndicated line (Note 17.v).

(ii) The net gain from investment properties as of December 31, 2020, 2021 and 2022 consists of the following:

In thousands of soles	2020		2021		2022
Lease income from investment properties		6,682		6,806		6,537

(iii) The movement of investment properties and their related accumulated depreciation for the years ended December 31, 2020, 2021 and 2022 are as follows:

In thousands of soles	Land			Buildings			Work in progress			Total
Cost, net
Balance at January 1, 2020		2,494			43,302			12			45,808
Additions		-			58			40			98
Reclassifications		-			32			(32	)		-
Translations adjustments		11			51			-			62
At December 31, 2020		2,505			43,443			20			45,968
Balance at January 1, 2021		2,505			43,443			20			45,968
Additions		-			28			124			152
Transfers		10,692			30,458			-			41,150
Reclassifications		-			123			(123	)		-
Translations adjustments		(9	)		(39	)		-			(48	)
At December 31, 2021		13,188			74,013			21			87,222
Balance at January 1, 2022		13,188			74,013			21			87,222
Additions		-			53			-			53
Disposals		-			(1,409	)		-			(1,409	)
Reclassifications		-			13,691			-			13,691
At December 31, 2022		13,188			86,348			21			99,557
Accumulated depreciation
Balance at January 1, 2020		-			(17,482	)		-			(17,482	)
Depreciation charge		-			(2,413	)		-			(2,413	)
At December 31, 2020		-			(19,895	)		-			(19,895	)
Balance at January 1, 2021		-			(19,895	)		-			(19,895	)
Depreciation charge		-			(4,316	)		-			(4,316	)
At December 31, 2021		-			(24,211	)		-			(24,211	)
Balance at January 1, 2022		-			(24,211	)		-			(24,211	)
Depreciation charge		-			(3,971	)		-			(3,971	)
Disposals		-			4,240			-			4,240
Reclassifications		-			(13,691	)		-			(13,691	)
At December 31, 2022		-			(37,633	)		-			(37,633	)
Carrying amounts
At January 1, 2020		2,494			25,820			12			28,326
At December 31, 2020		2,505			23,548			20			26,073
At December 31, 2021		13,188			49,802			21			63,011
At December 31, 2022		13,188			48,715			21			61,924

Depreciation of investment properties is distributed in the consolidated statement profit or loss as follows:

In thousands of soles	Note		2020	2021		2022
Cost of services and goods		25(iv)	2,413		4,316		3,971

Below are the minimum ranges, maximum ranges and the average of the price per square meter:

	Minimum		Maximum
	range		range		Average
	US$ per M2		US$ per M2		US$ por M2
“Agustino Plaza” Shopping Center		900		1,125		1,008
Lease office - Surquillo		2,500		3,700		3,118

Sensitivity analysis

The following is a sensitivity analysis of the evaluation of the investment property in relation to changes in the following factors considered relevant to management:

In thousands of soles	2021			2022
3%		117			130
(3%)		(117	)		(130	)

(iv) The nominal amounts of future fixed minimum rental income are as follows (operating leases) of the Corporation’s investment properties:

In thousands of soles	2021		2022
Within 1 year		4,250		3,728
After 1 year but no more than 5 years		37,731		28,241
More than 5 years		42,301		33,438

The fair value of the assets is determined based on the value assigned by an external appraiser. The external appraiser uses the comparable market method, according to which the fair value of a property is estimated on the basis of comparable transactions. The unit of comparison applied by the Corporation is the price per square meter.

B. Property, plant, and equipment, net

The movement of property, plant, and equipment and related accumulated depreciation for the years ended December 31, 2020, 2021 and 2022 are as follows:

In thousands of soles	Land			Buildings			Machinery			Vehicles			Furniture and Fixtures			Other equipment			Replacement and in-transit units			Work in progress			Total
Cost
Balance at January 1, 2020		19,974			129,911			726,173			75,146			58,236			179,179			10,624			32,269			1,231,512
Additions (i)		-			412			17,941			-			844			1,781			3,549			11,538			36,065
Sale of assets (ii)		-			(192	)		(26,046	)		(11,762	)		(523	)		(448	)		-			-			(38,971	)
Disposals		(9,895	)		757			(6,361	)		(599	)		(5,783	)		(26,664	)		-			-			(48,545	)
Subsidiary desconsolidation		-			-			-			-			-			1,289			-			-			1,289
Reclassifications		-			1,565			28,870			17			(33	)		373			(2,216	)		(23,346	)		5,230
Transfers		-			-			-			-			-			89			-			-			89
Translations adjustments		800			648			15,261			1,881			69			512			-			20			19,191
At December 31, 2020		10,879			133,101			755,838			64,683			52,810			156,111			11,957			20,481			1,205,860
Balance at January 1, 2021		10,879			133,101			755,838			64,683			52,810			156,111			11,957			20,481			1,205,860
Additions (i)		85			131			15,786			519			661			5,175			2,572			13,262			38,191
Sale of assets (ii)		-			(714	)		(126,417	)		(2,775	)		(392	)		(2,266	)		-			-			(132,564	)
Disposals		-			(2,638	)		(15,632	)		(925	)		(1,078	)		(2,781	)		-			-			(23,054	)
Subsidiary desconsolidation		-			(18,926	)		-			(712	)		(2,556	)		(67,930	)		-			-			(90,124	)
Reclassifications		9,925			6,317			235,219			159,546			(15,801	)		(30,238	)		(2,679	)		(32,020	)		330,269
Transfers		(10,692	)		(44,149	)		(219	)		62			-			-			-			(218	)		(55,216	)
Translations adjustments		(479	)		(556	)		(9,526	)		(1,276	)		(63	)		(364	)		-			-			(12,264	)
At December 31, 2021		9,718			72,566			855,049			219,122			33,581			57,707			11,850			1,505			1,261,098
Balance at January 1, 2022		9,718			72,566			855,049			219,122			33,581			57,707			11,850			1,505			1,261,098
Additions (i)		-			2,442			29,465			370			783			6,933			-			23,162			63,155
Sale of assets (ii)		-			(75	)		(32,314	)		(7,179	)		(513	)		(1,249	)		(474	)		-			(41,804	)
Disposals		-			(5,055	)		(12,358	)		(3,299	)		(289	)		(2,084	)		-			-			(23,085	)
Reclassifications		-			-			(845	)		-			-			-			-			-			(845	)
Transfers		-			(2,875	)		(25	)		1,147			3,253			(1,188	)		-			(84	)		228
Translations adjustments		(641	)		(8,288	)		(9,770	)		(2,989	)		(2,473	)		(782	)		404			-			(24,539	)
At December 31, 2022		9,077			58,715			829,202			207,172			34,342			59,337			11,780			24,583			1,234,208

In thousands of soles	Land			Buildings			Machinery			Vehicles			Furniture and Fixtures			Other equipment			Replacement and in- transit units			Work in progress			Total
Accumulated depreciation and impairment
Balance at January 1, 2020		(273	)		(42,001	)		(454,817	)		(48,823	)		(49,652	)		(155,808	)		(11	)		(16,137	)		(767,522	)
Depreciation charge		-			(7,636	)		(53,221	)		(4,461	)		(1,344	)		(11,898	)		-			-			(78,560	)
Sale of assets (ii)		-			58			25,293			5,836			495			428			-			-			32,110
Disposals		-			(2,771	)		6,124			505			5,643			26,473			-			-			35,974
Subsidiary deconsolidation		-			-			-			-			-			(1,092	)		-			-			(1,092	)
Reclassifications		-			(161	)		(5,125	)		18			33			6			-			(1	)		(5,230	)
Impairment loss (iii)		-			(161	)		(5,069	)		(17	)		33			-			-			-			(5,214	)
Translations adjustments		-			771			(11,786	)		(1,017	)		(81	)		1,256			-			-			(10,857	)
At December 31, 2020		(273	)		(51,901	)		(498,601	)		(47,959	)		(44,873	)		(140,635	)		(11	)		(16,138	)		(800,391	)
Balance at January 1, 2021		(273	)		(51,901	)		(498,601	)		(47,959	)		(44,873	)		(140,635	)		(11	)		(16,138	)		(800,391	)
Depreciation charge		-			(5,455	)		(49,753	)		(4,561	)		(1,335	)		(9,676	)		-			-			(70,780	)
Sale of assets (ii)		-			704			122,056			1,632			361			2,127			-			-			126,880
Disposals		-			1,991			15,022			814			951			2,759			-			-			21,537
Subsidiary deconsolidation		-			15,508			-			698			2,357			63,626			-			-			82,189
Reclassifications		273			(12,832	)		(221,775	)		(158,628	)		15,799			30,722			34			16,138			(330,269	)
Transfers		-			13,691			339			(48	)		-			-			-			-			13,982
Impairment loss (iii)		-			-			(8,055	)		-			-			-			(33	)		-			(8,088	)
Translations adjustments		-			(99	)		6,468			748			10			(115	)		-			-			7,012
At December 31, 2021		-			(38,393	)		(634,299	)		(207,304	)		(26,730	)		(51,192	)		(10	)		-			(957,928	)
Balance at January 1, 2022		-			(38,393	)		(634,299	)		(207,304	)		(26,730	)		(51,192	)		(10	)		-			(957,928	)
Depreciation charge		-			(4,294	)		(39,837	)		(2,417	)		(1,067	)		(4,693	)		-			-			(52,308	)
Sale of assets (ii)		-			75			26,241			6,013			484			1,222			384			-			34,419
Disposals		-			2,756			12,219			3,268			276			1,780			89			-			20,388
Reclassifications		-			(438	)		845			-			217			221			-			-			845
Transfers		-			(691	)		(1,103	)		(36	)		(1,255	)		633			-			-			(2,452	)
Impairment loss (iii)		-			(6,515	)		(1,916	)		-			(2,357	)		-			(69	)		-			(10,857	)
Translations adjustments		-			6,922			6,521			1,977			2,465			669			(404	)		-			18,150
At December 31, 2022		-			(40,578	)		(631,329	)		(198,499	)		(27,967	)		(51,360	)		(10	)		-			(949,743	)
Carrying amounts
At January 1, 2020		19,701			87,910			271,356			26,323			8,584			23,371			10,613			16,132			463,990
At December 31, 2020		10,606			81,200			257,237			16,724			7,937			15,476			11,946			4,343			405,469
At December 31, 2021		9,718			34,173			220,750			11,818			6,851			6,515			11,840			1,505			303,170
At December 31, 2022		9,077			18,137			197,873			8,673			6,375			7,977			11,770			24,583			284,465

(i) As of December 31, 2022, additions to property, plant, and equipment correspond mainly to additions to equipment and work in progress related to well operations for S/ 49.9 million, in the Energy sector; additions to various machinery and equipment for S/ 8 million, in the Engineer and Construction sector; and additions to various equipment and machinery for S/ 3.4 million, in the real estate segment (as of December 31, 2021, it mainly corresponds to additions to machinery, equipment, vehicles, furniture and fixtures and buildings totaling S/ 20.2 million, in the Engineering and Construction segment; as well as additions in work in progress, replacement units, machinery, furniture and fixtures, land and buildings in S/ 16.8 million, in the Energy segment).

(ii) During 2022, asset sales were recorded with a disposal cost mainly in machinery, vehicles, furniture and fixtures and various equipment for S/ 6.6 million in the Engineering and Construction segment, and sales of machinery and vehicles for S/ 0.6 million in the Infrastructure segment (in 2021, S/ 4.7 million in machinery and vehicle sales in the Engineering and Construction segment and S/ 0.8 million in machinery in the Energy segment).

(iii) In 2022, it mainly corresponds to assets of projects belonging to the Engineering and Construction segment, which reached their end and were recognized as impairment; these include improvements and installations for S/6.5 million, furniture and fixtures for S/2.4 million and machinery for S/1.9 million, (in 2021, it corresponds to the impairment in machinery for S/7.7 million and S/0.4 million, in the Engineering and Construction and Energy segments, respectively). This was recorded in the consolidated statement of income under “Other Income and Expenses” and “Cost of Sales and Services”.

Depreciation of fixed assets is distributed in the consolidated statement of profit or loss as follows:

In thousands of soles	Note	2020		2021		2022
Cost of services and goods	25(iv)		66,479		60,230		50,981
Administrative expenses	25(iv)		5,432		4,610		1,327
Depreciation discontinued operations			6,649		5,940		-
			78,560		70,780		52,308

The net carrying amount of machinery and equipment, vehicles, and furniture and fixtures acquired under finance lease agreements is broken down as follows:

In thousands of soles	2020			2021			2022
Cost		64,623			64,640			64,710
Accumulated depreciation		(52,165	)		(53,321	)		(54,097	)
Net carrying amount		12,458			11,319			10,613

In 2022 payments for amortization and interest on finance lease amounting to S/ 9.1 million were made (S/ 8.8 million in 2021 and S/ 15.9 million in 2020).

The Corporation maintains insurance in force on its major assets in accordance with policies established by the Corporation’s management. In the opinion of Corporate Management, the Corporation’s insurance policies are consistent with industry practice.

As of December 31, 2020, 2021 and 2022, the Corporation’s management evaluated its long-lived assets for impairment and found no indications of impairment except for the effect of S/10.8 million recognized in 2022 (see paragraph iii). Therefore, it is not necessary to establish a provision for impairment in addition to that recognized at those dates.

C. Right-of-use assets, net

As of December 31, 2020, 2021 and 2022, the Corporation recognized right-of-use assets and liabilities as shown in the following table:

In thousands of soles	Buildings			Machinery and equipments			Vehicles			Total
Cost
Balance at January 1, 2020		80,550			18,597			20,830			119,977
Additions		6,681			876			4,518			12,075
Disposals		(12,441	)		(129	)		(11,078	)		(23,648	)
Translations adjustments		1,059			-			54			1,113
At December 31, 2020		75,849			19,344			14,324			109,517
Balance at January 1, 2021		75,849			19,344			14,324			109,517
Additions		8,260			317			5,354			13,931
Deconsolidation		(21,117	)		-			(3,050	)		(24,167	)
Disposals		(364	)		-			-			(364	)
Reclassifications		(589	)		10			546			(33	)
Translations adjustments		(443	)		-			(50	)		(493	)
At December 31, 2021		61,596			19,671			17,124			98,391
Balance at January 1, 2022		61,596			19,671			17,124			98,391
Additions		6,295			6,344			8,928			21,567
Reclassifications		-			443			(443	)		-
Translations adjustments		(240	)		-			-			(240	)
Others adjustments		(188	)		-			(35	)		(223	)
At December 31, 2022		67,463			26,458			25,574			119,495
Accumulated depreciation and impairment
Balance at January 1, 2020		(13,568	)		(6,899	)		(8,929	)		(29,396	)
Depreciation charge		(13,211	)		(5,834	)		1,514			(17,531	)
Disposals		1,978			129			-			2,107
Translations adjustments		(179	)		-			-			(179	)
At December 31, 2020		(24,980	)		(12,604	)		(7,415	)		(44,999	)
Balance at January 1, 2021		(24,980	)		(12,604	)		(7,415	)		(44,999	)
Depreciation charge		(12,589	)		(5,355	)		(5,755	)		(23,699	)
Deconsolidation		14,701			-			2,834			17,535
Disposals		364			-			-			364
Reclassifications		588			1,346			(1,901	)		33
Translations adjustments		92			-			-			92
At December 31, 2021		(21,824	)		(16,613	)		(12,237	)		(50,674	)
Balance at January 1, 2022		(21,824	)		(16,613	)		(12,237	)		(50,674	)
Depreciation charge		(9,672	)		(4,169	)		(4,868	)		(18,709	)
Reclassifications		-			(59	)		59			-
Translations adjustments		128			-			-			128
Others adjustments		(68	)		-			35			(33	)
At December 31, 2022		(31,436	)		(20,841	)		(17,011	)		(69,288	)
Carrying amounts
At January 1, 2020		66,982			11,698			11,901			90,581
At December 31, 2020		50,869			6,740			6,909			64,518
At December 31, 2021		39,772			3,058			4,887			47,717
At December 31, 2022		36,027			5,617			8,563			50,207

Depreciation expenses for right-of-use assets have been distributed in the following items of the consolidated statement of profit or loss:

In thousands of soles	Note	2020		2021		2022
Cost of sales and services	25(iv)		10,840		17,517		17,469
Administrative expenses	25(iv)		961		815		1,240
Depreciation discontinued operations			5,730		5,367		-
			17,531		23,699		18,709

Costs related to the machinery and equipment lease for which the Corporation applied the exceptions described in IFRS 16 are the following:

Leases under twelve (12) months: S/ 187.3 million (S/ 252.4 million in 2021 and S/ 351.7 million in 2020). Low value asset leases: S/ 1.5 million (S/ 44.4 million in 2021 and S/ 5.1 million in 2020).

In addition, leases, whose payments are entirely variable and depend on their future performance or use, were excluded, in 2022. Expenses amounted to S/45.9 million (S/ 85.8 million in 2021 and S/ 48.7 million in 2020).

For the years ended December 31, total depreciation is composed as follows:

In thousands of soles	Note	2020			2021			2022
Depreciation of property, plant and equipment	15.B		78,560			70,780			52,308
Depreciation related to right-of-use assets	15.C		17,531			23,699			18,709
Depreciation related to investment property	15.A		2,413			4,316			3,971
Sub total Continuous operations			98,504			98,795			74,988
(-) Depreciation discontinued operations			(12,379	)		(11,307	)		-
	25		86,125			87,488			74,988