UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15b-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2020

 Commission File Number 001-35991

GRAÑA Y MONTERO S.A.A.

(Exact name of registrant as specified in its charter)

 

N/A

(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.

October 29, 2020

Sincerely yours,

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/ LUIS FRANCISCO DIAZ OLIVERO
Name: Luis Francisco Diaz Olivero
Title: Chief Executive Officer
Date: October 29, 2020

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT

DECEMBER 31, 2019 AND SEPTEMBER 30 2020 (UNAUDITED)

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2019 AND SEPTEMBER 30, 2020 (UNAUDITED)

S/	=	Peruvian Sol
US$	=	United States dollar

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(All amounts are expressed in thousands of S/ unless otherwise stated)
ASSETS													LIABILITIES AND EQUITY
					As at				As at									As at				As at
					December 31,				September 30,									December 31,				September 30,
		Note			2019				2020						Note			2019				2020
					(as restated)													(as restated)
Current assets													Current liabilities
Cash and cash equivalents		8				950,701				820,163			Borrowings		15				481,529				404,098
Trade accounts receivables, net		9				914,204				680,913			Bonds		16				44,737				56,701
Work in progress, net		10				49,457				145,102			Trade accounts payable		17				1,159,075				959,738
Accounts receivable from related parties		11				36,658				26,959			Accounts payable to related parties		11				38,916				41,219
Other accounts receivable		12				454,474				412,143			Current income tax						51,169				32,054
Inventories, net						555,401				621,444			Other accounts payable		18				669,674				754,889
Prepaid expenses						16,478				19,317			Provisions		19				113,483				128,329
						2,977,373				2,726,041			Total current liabilities						2,558,583				2,377,028
Non-current assets as held for sale						2,398				-			Non-current liabilities as held for sale						-				-
Total current assets						2,979,771				2,726,041			Total current liabilities						2,558,583				2,377,028
Non-current assets													Non-current liabilities
Trade accounts receivable, net		9				779,609				790,144			Borrowings		15				409,066				454,749
Work in progress, net		10				23,117				37,227			Bonds		16				879,305				881,169
Accounts receivable from related parties		11				574,723				616,858			Trade accounts payable		17				34,814				33,928
Prepaid expenses						27,934				24,020			Other accounts payable		18				296,290				262,616
Other accounts receivable		12				273,432				271,568			Accounts payable to related parties		11				22,583				35,959
Investments in associates and joint ventures		13				37,035				38,296			Provisions		19				214,952				229,433
Investment property						28,326				26,437			Derivative financial instruments						52				-
Property, plant and equipment, net		14				463,990				414,602			Deferred income tax liability						112,734				93,846
Intangible assets, net		14				854,227				795,655			Total non-current liabilities						1,969,796				1,991,700
Right-of-use assets, net		14				90,581				70,394			Total liabilities						4,528,379				4,368,728
Deferred income tax asset						271,719				295,699
Total non-current assets						3,424,693				3,380,900			Equity
													Capital		20				871,918				871,918
													Legal reserve						132,011				132,011
													Voluntary reserve						29,974				29,974
													Share Premium						1,132,179				1,131,574
													Other reserves						(177,506	)			(188,213	)
													Retained earnings						(510,766	)			(565,909	)
													Equity attributable to controlling interest in the Company						1,477,810				1,411,355
													Non-controlling interest						398,275				326,858
													Total equity						1,876,085				1,738,213
Total assets						6,404,464				6,106,941			Total liabilities and equity						6,404,464				6,106,941
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(All amounts are expressed in thousands of S/ unless otherwise stated)
					For the period
					ended September 30,
		Note			2019				2020
					(as restated)
Revenues from construction activities						1,621,429				1,218,445
Revenues from services provided						845,780				747,447
Revenue from real estate and sale of goods						564,730				257,145
						3,031,939				2,223,037
Cost of construction activities						(1,537,103	)			(1,149,551	)
Cost of services provided						(669,073	)			(658,657	)
Cost of real estate and  sale of goods						(446,389	)			(202,286	)
		21				(2,652,565	)			(2,010,494	)
Gross profit						379,374				212,543
Administrative expenses		21				(164,313	)			(121,444	)
Other income and expenses		22				42,142				(36,100	)
Operating profit						257,203				54,999
Financial expenses						(157,514	)			(102,205	)
Financial income						53,593				13,961
Share of the profit or loss of associates and joint ventures accounted for using the equity method		13				(1,387	)			1,945
Profit (loss) before income tax						151,895				(31,300	)
Income tax expense						(82,775	)			(14,796	)
Profit (loss) for the period						69,120				(46,096	)
Profit (loss) attributable to:
Owners of the Company						34,944				(55,143	)
Non-controlling interest						34,176				9,047
						69,120				(46,096	)
Earnings (loss) per share attributable to owners of the
Company during the period		26				0.043				(0.063	)
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(All amounts are expressed in thousands of S/ unless otherwise stated)
		For the period
		ended September 30,
		2019				2020
Profit (loss) for the period			69,120				(46,096	)
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Cash flow hedge, net of tax			(13	)			(626	)
Foreign currency translation adjustment, net of tax			(16,624	)			(14,465	)
Exchange difference from net investment in a foreign operation, net of tax			(223	)			144
Other comprehensive income for the period, net of tax			(16,860	)			(14,947	)
Total comprehensive income for the period			52,260				(61,043	)
Comprehensive income attributable to:
Owners of  the Company			21,158				(65,850	)
Non-controlling interest			31,102				4,807
			52,260				(61,043	)
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED SEPTEMBER 30, 2019 AND 2020
(All amounts are expressed in thousands of S/ unless otherwise stated)
		Attributable to the controlling interests of the Company
		Number
		of shares								Legal				Voluntary				Share				Other				Retained								Non-controlling
		In thousands				Capital				reserve				reserve				premium				reserves				earnings				Total				interest				Total
Balances as of January 1, 2019			729,434				729,434				132,011				29,974				992,144				(170,620	)			375,417				2,088,360				401,571				2,489,931
Profit for the period			-				-				-				-				-				-				34,944				34,944				34,176				69,120
Cash flow hedge			-				-				-				-				-				(12	)			-				(12	)			(1	)			(13	)
Foreign currency translation adjustment			-				-				-				-				-				(13,555	)			-				(13,555	)			(3,069	)			(16,624	)
Exchange difference from net investment in a foreign operation			-				-				-				-				-				(219	)			-				(219	)			(4	)			(223	)
Comprehensive income of the period			-				-				-				-				-				(13,786	)			34,944				21,158				31,102				52,260
Transactions with shareholders:
- Dividend distribution			-				-				-				-				-				-				-				-				(7,975	)			(7,975	)
- Contributions (devolution) of non-controlling shareholders, net			-				-				-				-				-				-				-				-				(20,876	)			(20,876	)
- Capital Increase			142,484				142,484				-				-				138,907				-				-				281,391				-				281,391
Total transactions with shareholders			142,484				142,484				-				-				138,907				-				-				281,391				(28,851	)			252,540
Balances as of September 30, 2019			871,918				871,918				132,011				29,974				1,131,051				(184,406	)			410,361				2,390,909				403,822				2,794,731
Balances as of January 1, 2020			871,918				871,918				132,011				29,974				1,132,179				(177,506	)			(510,766	)			1,477,810				398,275				1,876,085
Loss for the period			-				-				-				-				-				-				(55,143	)			(55,143	)			9,047				(46,096	)
Cash flow hedge			-				-				-				-				-				(594	)			-				(594	)			(32	)			(626	)
Foreign currency translation adjustment			-				-				-				-				-				(10,257	)			-				(10,257	)			(4,208	)			(14,465	)
Exchange difference from net investment in a foreign operation			-				-				-				-				-				144				-				144				-				144
Comprehensive income of the period			-				-				-				-				-				(10,707	)			(55,143	)			(65,850	)			4,807				(61,043	)
Transactions with shareholders:
- Dividend distribution			-				-				-				-				-				-				-				-				(64,716	)			(64,716	)
- Contributions (devolution) of non-controlling shareholders, net			-				-				-				-				-				-				-				-				(11,419	)			(11,419	)
- Additional acquisition of non-controlling			-				-				-				-				(605	)			-				-				(605	)			(89	)			(694	)
Total transactions with shareholders			-				-				-				-				(605	)			-				-				(605	)			(76,224	)			(76,829	)
Balances as of September 30, 2020			871,918				871,918				132,011				29,974				1,131,574				(188,213	)			(565,909	)			1,411,355				326,858				1,738,213
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(All amounts are expressed in thousands of S/ unless otherwise stated)
						For the period
						ended September 30,
		Note				2019				2020
OPERATING ACTIVITIES
Profit (loss) before income tax							151,895				(31,300	)
Adjustments to  profit not affecting cash flows from
operating activities:
Depreciation			21				81,043				79,167
Amortization			21				80,482				75,164
Impairment of inventories							-				107
Impairment of accounts receivable and other accounts receivable							(1,519	)			28,886
Reversal of impairment of inventories							(305	)			(1,567	)
Debt condonation							-				(205	)
Impairment (reversal) of property, plant and equipment							15,120				(319	)
Impairment of intangible assets							3,257				8
Change in the fair value of the liability for put option							-				969
Other provisions							6,704				31,093
Financial expense,net							134,748				160,282
Impairment of work in progress							-				13,595
Share of the profit and loss of associates and joint ventures accounted for using the equity method			13				1,387				(1,945	)
Reversal of provisions							(3,107	)			(7,108	)
Disposal (reversal) of assets							1,039				2,322
Profit on sale of property, plant and equipment							(687	)			(9	)
Profit on remeasurement of accounts receivable							(12,963	)			(9,778	)
Net variations in assets and liabilities:
Trade accounts receivable and working in progress							228,184				114,478
Other accounts receivable							69,935				42,885
Other accounts receivable from related parties							(13,720	)			(30,836	)
Inventories							(67,235	)			(50,485	)
Pre-paid expenses and other assets							(5,075	)			1,076
Trade accounts payable							111,626				(169,619	)
Other accounts payable							(133,315	)			68,456
Other accounts payable to related parties							(913	)			15,823
Other provisions							477				(5,347	)
Interest payment							(117,009	)			(99,912	)
Payments for purchases of intangibles - Concessions							(15,871	)			(890	)
Payment of income tax							(79,677	)			(83,799	)
Net cash provided by operating activities							434,501				141,192
INVESTING ACTIVITIES
Sale of property, plant and equipment							6,932				5,563
Interest received							4,108				3,163
Dividends received							332				701
Payment for purchase of investments properties							(57	)			(40	)
Payments for intangible purchase							(79,426	)			(39,498	)
Payments for property, plant and equipment purchase							(50,307	)			(24,746	)
Net cash applied to investing activities							(118,418	)			(54,857	)
FINANCING ACTIVITIES
Loans received							506,591				66,466
Amortization of loans received							(1,034,485	)			(194,079	)
Amortization of bonds issued							(23,088	)			(28,022	)
Payment for transaction costs for debt							(4,007	)			-
Dividends paid to non-controlling interest							(7,975	)			(55,085	)
Cash received (return of contributions) from non-controlling shareholders							260,515				(11,419	)
Net cash applied to financing activities							(302,449	)			(222,139	)
Net increase (net decrease) in cash							13,634				(135,804	)
Exchange difference							(10,451	)			5,182
Cash and cash equivalents at the beginning of the period							801,021				950,701
Cash and cash equivalents at the end of the period			8				804,204				820,079
NON-CASH TRANSACTIONS:
Capitalization of interests							5,088				5,129
Acquisition of assets through finance leases							1,696				55
Dividends declared to non-controlling interest							-				9,631
Acquisition of right-of-use assets							115,668				9,673
Acquisition of supplier bonds							-				25,871
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2019 AND SEPTEMBER 30, 2020 (UNAUDITED)

1.   GENERAL INFORMATION

a)	Incorporation and operations

The Group is a conglomerate of companies with operations including different business activities, the most significant are engineering and construction, infrastructure (public concession ownership and operation) and real estate businesses. See details of operating segments in Note 7.

b)	Authorization for the issue of the financial statements

The condensed interim consolidated financial statements for the period ended September 30, 2020 were authorized preliminary by Management and Board of Directors on October 29, 2020.

The consolidated financial statements for the year ended December 31, 2019 were approved on the Annual General Mandatory Shareholder’s Meeting on July 13, 2020.

c)	The Impact of the Ongoing Novel Coronavirus (COVID-19)

The ongoing COVID-19 pandemic and government measures to contain the spread of the virus are disrupting economic activity, and consequently adversely affecting our business, results of operations and financial condition, mainly during second quarter.

Countries around the world—including Peru as well as Chile and Colombia—have adopted extraordinary measures to contain the spread of COVID-19, including imposing travel restrictions, requiring closures of non-essential businesses, establishing restrictions on public gatherings, instructing residents to practice social distancing, issuing stay-at-home orders, implementing quarantines and similar actions.

The COVID-19 pandemic and the related government measures have significantly increased economic uncertainty and caused a global recession. According to recent projections from the International Monetary Fund, during 2020, the global economy is expected to contract by 4.4%, with Latin America expected to contract 8.1% and Peru, Chile and Colombia, in particular, expected to contract 13.9%, 6% and 8.2%, respectively. Moreover, the impact of the pandemic on economic activity has been sudden and severe, and we cannot predict the extent to which the economies in the countries where we operate will ultimately be impacted.

Since mid-March, substantially all of our engineering and construction and real estate projects were mandatorily shut down.  However, since July projects have resumed their operations to normal with COVID-19 protocols Our infrastructure operations, which have for the most part been declared essential businesses, have continued to operate; however, certain of our infrastructure businesses have been adversely affected, in particular, by the sharp decline in traffic volumes and oil and gas prices between March and May.

Regarding the extent of the COVID-19 pandemic and its impact on the industries in which we operate, the full extent to which COVID-19 impact our business, results of operations and financial condition is currently under evaluation. We believe that the severity of the impact on the Company will depend, to a large extent, on how long the crisis continues.

The Company has been taking significant measures to mitigate the impact of the crisis on the Group. Among other measures, we are prioritizing the health and safety of our employees, as well as the medium-term sustainability of their employment. Certain actions we are taking include: the design and implementation of protocols to return to project sites, the creation of new office layouts to be compliant with social distancing guidelines, the development of telecommuting schemes, and other major cost-saving initiatives in operation and in support offices.

d)	Current situation of the Company

●

As a result of decisions of a previous administration, the Group is involved in a series of criminal investigations and administrative procedures conducted by the Public Ministry that are based on events that occurred between 2004 and 2015. Such situations led to organizational changes at Group´s corporate governance structure, the initiation of independent investigations and the adoption of measures to address and clarify such situations, as explained below:

At the same time, over the last three years, the new administration together with the new board initiated a transformation process based on the principles of Truth, Transparency and Integrity, making profound changes in the organization of the Company, such as the reconfiguration of the Board of Directors with an independent majority, new shareholding composition, as well as the creation of new governance practices, such as the Corporate Risk Management and autonomous Compliance function, with direct report to the Board of Directors, among other actions.

●

IIRSA Sur

In relation to investigations on IIRSA Sur, the former Chairman of the Board of Directors was included as a subject of an investigation for collusion, and a former director and a former executive was included as a subject of an investigation for money laundering. Subsequently, Graña y Montero S.A.A. and GyM S.A.  have been included as third-party civilians responsible in the process, which means that it will be assessed whether the obligation to indemnify Governement for damages resulting from the facts under investigation will be imposed on these entities.

●	Electric Train construction project

The first Preparatory Investigation Court of the Judiciary decided to incorporate GyM S.A. as civil third-party responsible in the process related to the construction of the Electric train construction Project, tranches 1 and 2. In this investigation the former Chairman of the Board, a former director and a former manager have been charged.

In 2019, the Company concluded that it may have exposure with respect to the preliminary investigation process conducted in relation to GSP (the South Peruvian Gas Pipeline project), even though as of the date hereof, it has not been indicted or incorporated as a civilly liable third-party, although the former Chairman of the Board of Directors and a former director are seeking plea bargain agreements in relation to this process, among others.

Criminal investigations in conection to the Construction Club case

GyM S.A. has been incorporated, along with other construction companies, in the criminal investigation that the Public Ministry has been carrying out for the alleged crime of corruption of officials in relation to the so-called Construction Club. Similarly, at the end of February 2020, the Public Ministry has requested the incorporation of Concar S.A., the latter is pending judicial decision. Like officials of other construction companies, a former commercial manager of GyM S.A., the former president of the Board of Directors, a former director and the former Corporate General Manager of the Company have been included in the criminal investigation.

Anticorruption Law - effects on the Group

Law 30737 and its regulation issued by Supreme Decree 096-2018-EF have mitigated the Company and subsidiaries exposure to the corruption cases. These rules set clear guidelines to estimate the potential compensation reducing the uncertainty derived from the legal proceedings, by among other things, preventing the imposition of liens or attachments of assets that would impair its ability to operate.

The benefits of the mentioned rules are subject to the fulfillment of the following obligations:

a.	The obligation to set up a trust that will guarantee any eventual payment obligation of an eventual civil compensation in favor of the Peruvian Government;

b.	The obligation not to transfer funds abroad without the prior consent of the Ministry of Justice;

c.	The implementation of a compliance program; and

d.	The obligation to disclose information to the authorities and to collaborate in the investigation.

The Group has designed a compliance program which is currently under implementation, it fully cooperates with the authorities in its investigations and has executed a trust agreement with the Ministry of Justice, under which the Company has established for an approximate amount of S/80 million (equivalent to US$24 million).

On the other hand, based on the standards indicated and their guidelines, Management has estimated that the value of the civil damages for the cases described above is S/280 million (US$83.6 million)  and has registered as of September 30, 2020 S/165.3 million (equivalent to US$45.9 million) as net present value.

On the other hand, in cases where a provision for civil reparation has been registered, there are two projects carried out in partnership with Odebrecht that to date are not under investigation. If this is started and some evidence is found, the maximum possible exposure for civil reparation estimated according to Law 30737 for both projects would be S/52.7 million (approximately US$15.7 million).

However, the Company, through its external legal advisors, continues to conduct an ongoing evaluation of the information related to the criminal investigations described in this note in order to keep its defense prepared in the event any new charges may arise during those investigations. In conducting the aforementioned evaluation, the Company does not rule out the possibility of finding new incriminating evidence that is not known to date.

c.

The sanitary emergency situation caused an impact on Norvial S.A. revenues and on the results of 2020 as a result of traffic reduction. However, the level of traffic carried has been gradually recovered.  In addition, in May the Republic Congress approved a law in order suspending the collection of toll, a measure that was in effect from May 9 to June 30, 2020. The Concession Contract clause 9.9, about operator contract guarantee, establishes Grantor’s obligation to recognize and pay the Concessionaire the corresponding rate difference in the event that any public entity does not allow the Concessionaire to collect the rate in accordance to the Concession Contract.  The estimate compensation in application of the aforementioned clause will be claimed to the Government.

d.	In the case of the other two road concessions, Survial S.A. and Concesion Canchaque S.A., the suspension in the collection of tolls will not impact the results of the year because the revenues do not depend on traffic.

In general terms, we have not been affected by interruptions in the supply chain of personnel, services or materials, and despite the shut down of some of our projects, we do not estimate penalties or breach of our agreements.

The most important goodwill of the Group are the result of acquisitions in Colombia and Chile. Considering that in both countries the impacts of the pandemic did not lead to major projects shut downs, our estimates of the value of the goodwill have not been affected. Based on our impairment assessment as of September 30, 2020, we have determined that our goodwill is not impaired.

On the liquidity side, the Group has implemented a plan that includes several measures to reduce expenses and preserve cash in response to the ongoing COVID-19 pandemic, including the following: (i) developing a twelve-week cash plan, project-by-project, to ensure that Group subsidiaries will continue to meet its critical obligations during that period, which plan is monitored and updated weekly; (ii) preparing a cash plan for the remainder of the 2020 fiscal year, to identify in advance key liquidity issues that may arise; (iii) renegotiating certain of the Group’s subsidiaries obligations with respect to suppliers, banks and other third parties; (iv) identifying and reducing non-essential general expenses across the Group; (v) reducing headcount, and temporarily reducing salaries of senior management and Directors’ allowances, across the Group’s three segments; and (vi) reducing capital expenditures across the Group’s subsidiaries. In addition, the Group is evaluating the selling of non-strategic assets to finance any cash flow deficit during the year. This plan was approved by the Board of Directors on April and May 2020. The Group will continue to closely monitor the impacts of COVID-19 through the course of the year 2020. Therefore, the accompanying financial statements have been prepared assuming that the Group and subsidiaries will continue as a going concern.

The condensed interim consolidated financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.

3.1.1.

Account balance reclassified as of December 31, 2019

a)	The receivable balance to Consorcio Constructor Ductos del Sur amounting to S/27.8 million as of December 31, 2019 was reclassified from “other accounts receivable” to “accounts receivable from related parties”. See reclassification performed:

b)

Information on the subsidiary Adexus S.A. is presented. (hereinafter “Adexus”), whose main activity is to provide information technology solutions mainly in Chile and Peru, as of December 31, 2019 the subsidiary was recognized as a non-current asset held for sale; However, as of September 30, 2020, it was reclassified as a continuing operation for the reasons set forth in note 27.

As a result of this process, the balances in the consolidated statement of financial position are reclassified as follows:

		As at						As at
		December 31,						December 31,
		2019		Reclassified (a)		Adexus (b)		2019
ASSETS		Audited						As restated
Current assets
Cash and cash equivalents		948,978		-		1,723		950,701
Trade accounts receivables, net		821,737		-		92,467		914,204
Work in progress, net		49,457		-		-		49,457
Accounts receivable from related parties		36,658		-		-		36,658
Other accounts receivable		444,500		-		9,974		454,474
Inventories, net		552,573		-		2,828		555,401
Prepaid expenses		11,348		-		5,130		16,478
		2,865,251		-		112,122		2,977,373
Non-current assets as held for sale		205,418		-		(203,020)		2,398
Total current assets		3,070,669		-		(90,898)		2,979,771
Non-current assets
Trade accounts receivable, net		753,202		-		26,407		779,609
Work in progress, net		23,117		-		-		23,117
Accounts receivable from related parties		546,941		27,782		-		574,723
Prepaid expenses		27,934		-		-		27,934
Other accounts receivable		300,323		(27,782)		891		273,432
Investments in associates and joint ventures		37,035		-		-		37,035
Investment property		28,326		-		-		28,326
Property, plant and equipment, net		443,870		-		20,120		463,990
Intangible assets, net		853,315		-		912		854,227
Right-of-use assets, net		78,813		-		11,768		90,581
Deferred income tax asset		240,919		-		30,800		271,719
Total non-current assets		3,333,795		-		90,898		3,424,693
Total assets		6,404,464		-		-		6,404,464

		As at						As at
		December 31,						December 31,
		2019		Reclassified (a)		Adexus (b)		2019
		Audited						As restated
LIABILITIES AND EQUITY
Current liabilities
Borrowings		454,260		-		27,269		481,529
Bonds		44,737		-		-		44,737
Trade accounts payable		1,136,121		-		22,954		1,159,075
Accounts payable to related parties		38,916		-		-		38,916
Current income tax		47,999		-		3,170		51,169
Other accounts payable		635,305		-		34,369		669,674
Provisions		113,483		-		-		113,483
Total current liabilities		2,470,821		-		87,762		2,558,583
Non-current liabilities as held for sale		210,025		-		(210,025)		-
Total current liabilities		2,680,846		-		(122,263)		2,558,583
Non-current liabilities
Borrowings		344,806		-		64,260		409,066
Bonds		879,305		-		-		879,305
Trade accounts payable		-		-		34,814		34,814
Other accounts payable		273,101		-		23,189		296,290
Accounts payable to related parties		22,583		-		-		22,583
Provisions		214,952		-		-		214,952
Derivative financial instruments		52		-		-		52
Deferred income tax liability		112,734		-		-		112,734
Total non-current liabilities		1,847,533		-		122,263		1,969,796
Total liabilities		4,528,379		-		-		4,528,379
Equity
Capital		871,918		-		-		871,918
Legal reserve		132,011		-		-		132,011
Voluntary reserve		29,974		-		-		29,974
Share Premium		1,132,179		-		-		1,132,179
Other reserves		(177,506)		-		-		(177,506)
Retained earnings		(510,766)		-		-		(510,766)
Equity attributable to controlling interest in the Company		1,477,810		-		-		1,477,810
Non-controlling interest		398,275		-		-		398,275
Total equity		1,876,085		-		-		1,876,085
Total liabilities and equity		6,404,464		-		-		6,404,464

As a result of this process, the amounts in the consolidated statement of income are reclassified as follows:

		For the period ended
		September 30, 2019
		Reported		Adexus		As restated
Revenues from construction activities		1,621,429		-		1,621,429
Revenues from services provided		803,999		41,781		845,780
Revenue from real estate and sale of goods		407,691		157,039		564,730
		2,833,119		198,820		3,031,939
Cost of construction activities		(1,537,103)		-		(1,537,103)
Cost of services provided		(632,162)		(36,911)		(669,073)
Cost of real estate and  sale of goods		(295,986)		(150,403)		(446,389)
		(2,465,251)		(187,314)		(2,652,565)
Gross profit		367,868		11,506		379,374
Administrative expenses		(143,735)		(20,578)		(164,313)
Other income and expenses		40,866		1,276		42,142
Operating profit (loss)		264,999		(7,796)		257,203
Financial expenses		(144,182)		(13,332)		(157,514)
Financial income		52,903		690		53,593
Share of the profit or loss of associates and joint ventures accounted for using the equity method		(1,387)		-		(1,387)
Profit (loss) before income tax		172,333		(20,438)		151,895
Income tax expense		(88,170)		5,395		(82,775)
Profit (loss) from continuing operations		84,163		(15,043)		69,120
(Loss) profit from discontinued operations		(15,043)		15,043		-
Profit for the period		69,120		-		69,120
Profit attributable to:
Owners of the Company		34,944		-		34,944
Non-controlling interest		34,176		-		34,176
		69,120		-		69,120

The accounting policies used in the preparation of these condensed interim consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements at December 31, 2019.

Financial risk management is carried out by the Group’s Management. Management oversees the general management of risks in specific areas, such as foreign exchange rate risk, price risk, cash flow and fair value interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investment of excess liquidity, which are supervised and monitored periodically.

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures in one of its subsidiaries and considers the use of other derivatives in the event that it identifies risks that may generate an adverse effect for the Group in the short and medium-term.

i)	Foreign exchange risk

The Group is exposed to exchange rate risk as a result of the transactions carried out locally in foreign currency and due to its operations abroad.  As of December 31, 2019 and September 30, 2020, this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos.

ii)	Price risk

Management considers that the exposure of the Group to the price risk of its investments in mutual funds, bonds, and equity securities is low since the invested amounts are not significant. Any fluctuation in their fair value will not have any significant impact on the balances reported in the consolidated financial statements.

iii)	Cash flow and fair value interest rate risk

The Group’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as customer credit counterparties, including the outstanding balance of accounts receivable and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.

Concerning to loans to related parties, the Group has measures in place to ensure the recovery of these loans through the controls maintained by the Corporate Finance Management and the performance evaluation conducted by the Board of Directors.

Management does not expect the Group to incur any losses from the performance by these counterparties, except for the ones already recorded at the financial statements.

c)	Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit facilities and the capacity to close out positions in the market. Historically, the Group cash flows enabled it to meet its obligations. However, since 2017, the Group experienced liquidity problems due to the early termination of the GSP concession agreement and the obligations assumed. As a consequence, the Group started a disinvestment plan to be able to meet the obligations resulting from this scenario. This plan was met and the GSP debt was terminated. Due to the COVID-19 pandemic (Note 2), the Group has considered diverse measures to reduce its liquidity risk exposure and has developed a financial plan with the objective to be able to meet its obligations at the corporate as well as the subsidiary level.

The Group’s Corporate Finance Officemonitors rolling forecasts of the Group’s liquidity requirements to ensure it exists sufficient cash to meet operational needs so that the Group does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities.  Less significant financing transactions are controlled by the Finance Management of each subsidiary.

Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal ratio targets in the statement of financial position and, if applicable, external regulatory or legal requirements, for example, foreign currency restrictions.

Surplus cash held by the operating entities over the balance required for working capital management is invested in interest-bearing checking accounts or time deposits, selecting instruments with appropriate maturities and sufficient liquidity.

The table below analyzes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, which include interest to be applied according to the established schedule.

		Less than		1-2		2-5		More than
At December 31, 2019		1 year		years		years		5 years		Total
Other financial liabilities (except
for finance leases and lease
liability for right-of-use asset)		501,864		147,473		235,222		-		884,559
Finance leases		11,438		3,531		13,346		-		28,315
Lease liability for right-of-use asset		31,036		40,808		32,562		11,551		115,957
Bonds		115,690		157,516		358,461		1,077,960		1,709,627
Trade accounts payables (except
non-financial liabilities)		989,574		-		34,814		-		1,024,388
Accounts payables to related parties		38,916		21,747		-		836		61,499
Other accounts payables (except
non-financial liabilities)		200,098		2,505		194,908		-		397,511
Other non-financial liabilities		-		52		-		-		52
		1,888,616		373,632		869,313		1,090,347		4,221,908

		Less than		1-2		2-5		More than
At September 30, 2020		1 year		years		years		5 years		Total
Other financial liabilities (except
for finance leases and lease
liability for right-of-use asset)		392,198		207,684		193,906		20,447		814,235
Finance leases		15,743		10,132		26,098		9,347		61,320
Lease liability for right-of-use asset		28,838		34,829		18,568		12,729		94,964
Bonds		127,715		166,431		382,737		1,001,773		1,678,656
Trade accounts payables (except
non-financial liabilities)		868,892		33,928		-		-		902,820
Accounts payables to related parties		41,219		35,123		-		836		77,178
Other accounts payables (except
non-financial liabilities)		273,714		3,924		182,869		-		460,507
		1,748,319		492,051		804,178		1,045,132		4,089,680