6-K 1 a52429654.htm AENZA S.A.A 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 May 2021

 Commission File Number 001-35991

AENZA 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.

May 14, 2021


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: May 14, 2021



AENZA S.A.A AND SUBSIDIARIES




CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT
DECEMBER 31, 2020 AND MARCH 31, 2021 (UNAUDITED)



AENZA S.A.A AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2020 AND MARCH 31, 2021 (UNAUDITED)





CONTENTS
 
Page
Consolidated Statement of Financial Position
1
Consolidated Statement of Income
2
Consolidated Statement of Comprehensive Income
3
Consolidated Statement of Changes in Equity
4
Consolidated Statement of Cash Flows
5
Notes to the Consolidated Financial Statements
6 - 40






S/ = Peruvian Sol
US$        =   United States dollar


AENZA S.A.A. AND SUBSIDIARIES
     
       
       
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(All amounts are expressed in thousands of S/ unless otherwise stated)

 
ASSETS
                 
         
As of
   
As of
 
       
December31,
   
March 31,
 
   
Note
   
2020
   
2021
 
         
(as restated)
       
Current assets
                 
Cash and cash equivalents
   
8
     
900,168
     
799,155
 
Trade accounts receivables, net
   
9
     
703,167
     
768,849
 
Work in progress, net
   
10
     
186,433
     
230,545
 
Accounts receivable from related parties
   
11
     
27,338
     
23,555
 
Other accounts receivable
   
12
     
433,531
     
438,902
 
Inventories, net
           
552,000
     
562,426
 
Prepaid expenses
           
22,972
     
22,880
 
Total current assets
           
2,825,609
     
2,846,312
 
                         
Non-current assets
                       
Trade accounts receivable, net
   
9
     
730,666
     
728,506
 
Accounts receivable from related parties
   
11
     
620,071
     
621,332
 
Prepaid expenses
           
22,264
     
22,247
 
Other accounts receivable
   
12
     
328,223
     
322,758
 
Investments in associates and joint ventures
   
13
     
35,516
     
36,538
 
Investment property
           
26,073
     
25,475
 
Property, plant and equipment, net
   
14
     
405,469
     
389,703
 
Intangible assets, net
   
14
     
791,990
     
770,624
 
Right-of-use assets, net
   
14
     
64,518
     
58,677
 
Deferred income tax asset
           
262,165
     
273,675
 
Total non-current assets
           
3,286,955
     
3,249,535
 
                         
                         
                         
                         
                         
                         
                         
                         
                         
                         
Total assets
           
6,112,564
     
6,095,847
 
 
LIABILITIES AND EQUITY
                 
         
As of
   
As of
 
       
December 31,
   
March 31,
 
   
Note
   
2020
   
2021
 
         
(as restated)
       
Current liabilities
                 
Borrowings
   
15
     
452,884
     
476,025
 
Bonds
   
16
     
58,446
     
58,873
 
Trade accounts payable
   
17
     
1,097,167
     
1,109,345
 
Accounts payable to related parties
   
11
     
43,818
     
42,341
 
Current income tax
           
34,494
     
32,170
 
Other accounts payable
   
18
     
718,406
     
772,896
 
Other provisions
   
19
     
92,757
     
99,317
 
Total current liabilities
           
2,497,972
     
2,590,967
 
                         
Non-current liabilities
                       
Borrowings
   
15
     
445,436
     
396,205
 
Bonds
   
16
     
874,313
     
865,649
 
Trade accounts payable
   
17
     
40,502
     
39,624
 
Other accounts payable
   
18
     
183,232
     
174,325
 
Accounts payable to related parties
   
11
     
36,297
     
36,981
 
Other provisions
   
19
     
336,609
     
340,390
 
Deferred income tax liability
           
102,907
     
104,288
 
Total non-current liabilities
           
2,019,296
     
1,957,462
 
Total liabilities
           
4,517,268
     
4,548,429
 
                         
Equity
   
20
                 
Capital
           
871,918
     
871,918
 
Legal reserve
           
132,011
     
132,011
 
Voluntary reserve
           
29,974
     
29,974
 
Share Premium
           
1,131,574
     
1,131,574
 
Other reserves
           
(169,234
)
   
(173,585
)
Retained earnings
           
(728,637
)
   
(763,334
)
Equity attributable to controlling interest in the Company
     
1,267,606
     
1,228,558
 
Non-controlling interest
           
327,690
     
318,860
 
Total equity
           
1,595,296
     
1,547,418
 
Total liabilities and equity
           
6,112,564
     
6,095,847
 

The accompanying notes on pages 6 to 35 are an integral part of the consolidated financial statements.

As a result of this process, the amounts in the consolidated statement of income are adjusted as follows:
- 1 -

AENZA S.A.A. AND SUBSIDIARIES
                 
                   
                   
CONSOLIDATED STATEMENT OF INCOME
                 
(All amounts are expressed in thousands of S/ unless otherwise stated)
             
                   
         
For the period
 
         
ended March 31,
 
   
Note
   
2020
   
2021
 
                   
                   
Revenues from construction activities
         
552,642
     
516,668
 
Revenues from services provided
         
271,582
     
280,061
 
Revenue from real estate and sale of goods
         
101,031
     
109,065
 
           
925,255
     
905,794
 
                       
Cost of construction activities
         
(547,275
)
   
(477,097
)
Cost of services provided
         
(226,100
)
   
(237,954
)
Cost of real estate and  sale of goods
         
(79,971
)
   
(88,079
)
     
21
     
(853,346
)
   
(803,130
)
Gross profit
           
71,909
     
102,664
 
                         
Administrative expenses
   
21
     
(44,423
)
   
(49,517
)
Other income and expenses
   
22
     
(8,044
)
   
(1,609
)
Operating profit (loss)
           
19,442
     
51,538
 
                         
Financial expenses
   
23
     
(51,556
)
   
(71,153
)
Financial income
   
23
     
3,466
     
1,728
 
Share of the profit or loss of associates and joint ventures accounted for using the equity method
   
13
     
1,164
     
1,006
 
Loss before income tax
           
(27,484
)
   
(16,881
)
Income tax expense
           
(877
)
   
(10,502
)
Loss for the period
           
(28,361
)
   
(27,383
)
                         
(Loss) profit attributable to:
                       
Owners of the Company
           
(30,444
)
   
(34,697
)
Non-controlling interest
           
2,083
     
7,314
 
             
(28,361
)
   
(27,383
)
                         
                         
Loss per share attributable to owners of the
                       
Company during the period
   
27
     
(0.035
)
   
(0.040
)
                         
                         
The accompanying notes on pages 6 to 35 are an integral part of the consolidated financial statements.
 


- 2 -


AENZA 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 March 31,
 
 Nota
 
2020
   
2021
 
             
             
Loss for the period
   
(28,361
)
   
(27,383
)
Other comprehensive income:
               
Items that may be subsequently  reclassified to profit or loss
               
Cash flow hedge, net of tax
   
11
     
-
 
Foreign currency translation adjustment, net of tax
   
(35,182
)
   
(5,456
)
Exchange difference from net investment in a foreign operation, net of tax
   
356
     
(29
)
Other comprehensive income for the period, net of tax
   
(34,815
)
   
(5,485
)
Total comprehensive income for the period
   
(63,176
)
   
(32,868
)
                 
Comprehensive income attributable to:
               
Owners of  the Company
   
(57,459
)
   
(39,048
)
Non-controlling interest
   
(5,717
)
   
6,180
 
     
(63,176
)
   
(32,868
)
                 
                 
The accompanying notes on pages 6 to 35 are an integral part of the consolidated financial statements.
         
- 3 -


AENZA S.A.A. AND SUBSIDIARIES
                                                           
                                                             
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                       
FOR THE PERIOD ENDED MARCH 31, 2020 AND 2021
                                                       
(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, 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) profit for the period
   
-
     
-
     
-
     
-
     
-
     
-
     
(30,444
)
   
(30,444
)
   
2,083
     
(28,361
)
Cash flow hedge
   
-
     
-
     
-
     
-
     
-
     
10
     
-
     
10
     
1
     
11
 
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(27,386
)
   
-
     
(27,386
)
   
(7,796
)
   
(35,182
)
Exchange difference from net investment in a foreign operation
   
-
     
-
     
-
     
-
     
-
     
361
     
-
     
361
     
(5
)
   
356
 
Comprehensive income of the period
   
-
     
-
     
-
     
-
     
-
     
(27,015
)
   
(30,444
)
   
(57,459
)
   
(5,717
)
   
(63,176
)
Transactions with shareholders:
                                                                               
- Dividend distribution
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(42,602
)
   
(42,602
)
- Contributions (devolution) of non-controlling shareholders, net
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(6,438
)
   
(6,438
)
Total transactions with shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(49,040
)
   
(49,040
)
Balances as of March 31, 2020
   
871,918
     
871,918
     
132,011
     
29,974
     
1,132,179
     
(204,521
)
   
(541,210
)
   
1,420,351
     
343,518
     
1,763,869
 
                                                                                 
Balances as of January 1, 2021
   
871,918
     
871,918
     
132,011
     
29,974
     
1,131,574
     
(169,234
)
   
(728,637
)
   
1,267,606
     
327,690
     
1,595,296
 
(Loss) profit for the period
   
-
     
-
     
-
     
-
     
-
     
-
     
(34,697
)
   
(34,697
)
   
7,314
     
(27,383
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(4,322
)
   
-
     
(4,322
)
   
(1,134
)
   
(5,456
)
Exchange difference from net investment in a foreign operation
   
-
     
-
     
-
     
-
     
-
     
(29
)
   
-
     
(29
)
   
-
     
(29
)
Comprehensive income of the period
   
-
     
-
     
-
     
-
     
-
     
(4,351
)
   
(34,697
)
   
(39,048
)
   
6,180
     
(32,868
)
Transactions with shareholders:
                                                                               
- Dividend distribution
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(4,249
)
   
(4,249
)
- Contributions (devolution) of non-controlling shareholders, net
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(10,761
)
   
(10,761
)
Total transactions with shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(15,010
)
   
(15,010
)
Balances as of March 31, 2021
   
871,918
     
871,918
     
132,011
     
29,974
     
1,131,574
     
(173,585
)
   
(763,334
)
   
1,228,558
     
318,860
     
1,547,418
 
                                                                                 

The accompanying notes on pages 6 to 35 are an integral part of the consolidated financial statements.



- 4 -


AENZA 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 March 31,
 
   
Note
   
2020
   
2021
 
                   
OPERATING ACTIVITIES
                 
Loss before income tax
         
(27,484
)
   
(16,881
)
Adjustments to  profit not affecting cash flows from
                     
operating activities:
                     
Depreciation
   
21
     
25,498
     
25,319
 
Amortization
   
21
     
23,950
     
24,494
 
Impairment of inventories
           
-
     
190
 
Impairment of accounts receivable and other accounts receivable
     
210
     
255
 
Reversal of impairment of inventories
           
(644
)
   
(40
)
Debt condonation
           
(183
)
   
-
 
Reversal of property, plant and equipment
           
(102
)
   
(1,023
)
Reversal of impairment of intangible assets
           
-
     
(350
)
Change in the fair value of the liability for put option
           
309
     
-
 
Other provisions
           
8,623
     
4,350
 
Financial expense,net
           
57,924
     
68,643
 
Share of the profit and loss of associates and joint ventures accounted for using the equity method
   
13
     
(1,164
)
   
(1,006
)
Reversal of provisions
           
(3,713
)
   
(1,593
)
Disposal (reversal) of assets
           
(2,323
)
   
(138
)
Loss (Profit) on sale of property, plant and equipment
           
1,682
     
(10
)
Loss (Profit) on remeasurement of accounts receivable
           
(2,474
)
   
22,054
 
Net variations in assets and liabilities:
                       
Trade accounts receivable and working in progress
           
76,852
     
(106,203
)
Other accounts receivable
           
49,999
     
(4,325
)
Other accounts receivable from related parties
           
(27,260
)
   
3,288
 
Inventories
           
(32,639
)
   
(9,657
)
Pre-paid expenses and other assets
           
(11,830
)
   
109
 
Trade accounts payable
           
(7,887
)
   
11,145
 
Other accounts payable
           
146,012
     
31,140
 
Other accounts payable to related parties
           
(32,441
)
   
(24,080
)
Other provisions
           
(1,212
)
   
(940
)
Interest payment
           
(34,288
)
   
(35,633
)
Payments for purchases of intangibles - Concessions
           
(655
)
   
(673
)
Payment of income tax
           
(17,302
)
   
(15,443
)
Net cash provided by (applied to) operating activities
           
187,458
     
(27,008
)
                         
INVESTING ACTIVITIES
                       
Sale of property, plant and equipment
           
3,523
     
3,462
 
Interest received
           
1,390
     
656
 
Payment for purchase of investments properties
           
(20
)
   
(75
)
Payments for intangible purchase
           
(26,882
)
   
(2,954
)
Payments for property, plant and equipment purchase
           
(12,482
)
   
(4,987
)
Net cash applied to investing activities
           
(34,471
)
   
(3,898
)
                         
FINANCING ACTIVITIES
                       
Loans received
           
43,271
     
21,380
 
Amortization of loans received
           
(109,116
)
   
(69,581
)
Amortization of bonds issued
           
(8,257
)
   
(12,712
)
Payment for transaction costs for debt
           
20
     
-
 
Dividends paid to non-controlling interest
           
(42,602
)
   
(4,249
)
Cash received (return of contributions) from non-controlling shareholders
     
(6,438
)
   
(10,761
)
Net cash applied to financing activities
           
(123,122
)
   
(75,923
)
Net increase (net decrease) in cash
           
29,865
     
(106,829
)
Exchange difference
           
(5,888
)
   
5,816
 
Cash and cash equivalents at the beginning of the period
           
950,701
     
900,168
 
Cash and cash equivalents at the end of the period
   
8
     
974,678
     
799,155
 
                         
NON-CASH TRANSACTIONS:
                       
Capitalization of interests
           
1,623
     
1,120
 
Acquisition of assets through finance leases
           
-
     
24
 
Acquisition of subsidiary debt
           
17,440
     
-
 
Acquisition of right-of-use assets
           
1,600
     
42
 
                         
The accompanying notes on pages 6 to 35 are an integral part of the consolidated financial statements.
 


- 5 -

AENZA S.A.A (FORMERLY GRAÑA Y MONTERO S.A.A.) AND SUBSIDIARIES
 

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2020 AND MARCH 31, 2021 (UNAUDITED)

1.
GENERAL INFORMATION

a)
Incorporation and operations

AENZA S.A.A., (hereinafter the “Company”) is the parent Company of the AENZA S.A.A. Corporation that includes the Company and its subsidiaries (hereinafter, the “Corporation”) and is mainly engaged in holding investments in Corporation companies. Additionally, the Company provides services of strategic and functional advice and office leases space to the Corporation companies.

The General Shareholder’s Meeting on November 2, 2020 approved the modification of the Company’s corporate name from Graña y Montero S.A.A. to AENZA S.A.A. which is effective as of February 4, 2021.

The Corporation 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 March 31, 2021 were authorized preliminary by Management and Board of Directors on May 17, 2021.

The consolidated financial statements for the year ended December 31, 2020 were approved on the Annual General Mandatory Shareholder’s Meeting on March 31, 2021.

c)
Current situation of the Company

The Company is involved in a series of criminal investigations conducted by the Public Ministry and administrative proceedings conducted by INDECOPI based on events that occurred between years 2003 and 2015. Such situations led to significant changes at Company´s corporate governance structure, the opening of independent investigations and the adoption of measures to address and clarify these situations, as explained below:

On January 9, 2017, the Board of Directors approved the opening of an independent investigation related to six projects developed in association with companies of the Odebrecht Group.

On March 2, 2017, a new Chief Executive Officer was appointed and on March 31, 2017, the shareholders appointed a new Board of Directors with an independent majority, all non-executive directors, introducing fundamental changes in the corporate governance and culture of the Corporation.

- 6 -


On March 30, 2017, the Board of Directors created the Risk and Compliance Committee, who was in charge of the oversight of the investigation independently from Management. The investigation was conducted by an external law firm, with the assistance of forensic accountants, who reported exclusively to the Risk and Compliance Committee.

The external investigation concluded on November 2, 2017 and identified no evidence to conclude that any company personnel engaged in bribery in connection with any of our company’s public projects in Peru with Odebrecht or its subsidiaries, or that any company personnel was aware of, or knowingly participated in, any corrupt payments made in relation to such projects.

As new information emerged, the Company's Board of Directors continued to investigate the facts that were the subject of the criminal investigations, including matters relating to the “Construction Club”, which scope was outside of the prior investigation. After an extensive and detailed review process, it was decided to share all the findings with the Peruvian authorities within the framework of a plea bargain process, in line with the Company’s commitment to transparency and integrity.

Subsequently, in August 2019, Jose Graña Miro Quesada, a shareholder and former chairman of our Company’s Board of Directors, publicly announced that he and Hernando Graña Acuña, a shareholder and former member of the Company’s Board of Director’s, had initiated a process of plea bargaining to cooperate with Peruvian prosecutors in relation to the investigations of “Lava Jato” case and others in progress. Due to the reserved nature of the plea bargain process, it is impossible for us to know or verify the statements made by the aforementioned persons within the scope of those processes. Any admission or other evidence provided that corroborate wrongdoing could be inconsistent with the investigations carried out and could have a significant impact on the conclusions.

As a result of its contribution to the investigations, on December 27, 2019, the Company signed a preliminary agreement whereby the Anti-Corruption Prosecutor Office and the Ad Hoc Prosecutor's Office promise to execute a final plea bargain agreement with the Company that would provide the Company with certainty regarding the contingencies it faces as a result of the above-mentioned processes. Additionally, in the aforementioned preliminary agreement, the Anti-Corruption Prosecutor Office and the Ad Hoc Attorney General's Office authorize the Company to disclose the existence of the agreement but to maintain its content confidential.

The outbreak of the Covid-19 pandemic in Peru suspended the negotiations of the plea bargain agreement in March 2020 and such negotiations discussions resumed in July 2020. The Company has made substantial progress in the negotiations and expects to execute an agreements soon which will then be submitted to judicial approval.

At the same time, since the beginning of year 2017, the new administration together with the new Board of Directors began a transformation process based on the principles of Truth, Transparency and Integrity, making profound changes in the organization supported by a Board of Directors with an independent majority, 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.

Criminal investigations derived from projects developed in partnership with companies of the Odebrecht Group

In connection with the Lava Jato case, the Company participated as a minority partner of Odebrecht Group companies, directly or through its subsidiaries, in entities or consortiums that developed six infrastructure projects.
- 7 -


In 2016, Odebrecht entered into an Agreement with the United States Department of Justice and the Office of the District Attorney for the Eastern District of New York by which it admitted corruption acts in connection with some of these projects in which the Company participate as minority partner, which are mentioned below:

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, AENZA S.A.A. and Cumbra Peru S.A. (formerly GyM S.A.) were included as civilly liable third-party responsible in the process, which means that it will be assessed whether the obligation to indemnify Government 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 Cumbra Peru S.A. as civilly liable third-party responsible in the process related to the construction of the Electric train construction Project, tranches 1 and 2. In this investigation a former Chairman of the Board of Directors, a former Director and a former Manager have been charged.

Gasoducto Sur Peruano (GSP)

In year 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). As of the date hereof, the Company has not been indicted or incorporated as a civilly liable third-party or as an investigated legal person.

IIRSA Norte

Subsequently, in 2020, the Company and its legal advisors concluded that there is exposure to the preliminary investigation process conducted in relation to the IIRSA Norte project. To date, the Company has not been incorporated either as a responsible civil third party or as an investigated legal person.

Criminal investigations in relation to the Construction Club case

Cumbra Peru S.A. has been incorporated, along with other construction companies, as a legal entity investigated 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 Cumbra Peru S.A., a 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 into these events.

Anticorruption Law - effects on the Company

Law 30737 and its regulation issued by Supreme Decree 096-2018-EF have mitigated the Company and subsidiaries exposure on the corruption cases. These standards set guidelines for the calculation of potential indemnification, reducing uncertainty about the imposition of seizures on assets that could hinder the operation of the Company's business.
- 8 -


In the case of the Company and its subsidiary Cumbra Peru S.A., the benefits of the mentioned rules are subject to the fulfillment of the following obligations as a consequence of the association with Odebrecht in the IRSA Sur and construction of the Electric train construction Project, tranches 1 and 2:

-
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;
-
The obligation not to transfer funds abroad without the prior consent of the Ministry of Justice;
-
The implementation of a compliance program; and
-
The obligation to disclose information to the authorities and to collaborate in the investigation.

The Corporation 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/72 million (equivalent to US$20 million).

In 2020, the Company was included in the framework of Law 30737 for the IIRSA Norte and Chavimochic. However, the Company has been in contact with the Ministry of Justice in order to clarify this information, given that the incorporation of the Company in the Category 2 is not in accordance with the provisions set forth in the law. Based on the standards indicated and their guidelines, it is estimated that the value of the contingencies related to Odebrecht and the Construction Club described above is S/476.2 million (US$126.7 million) (S/469.7 million equivalent to US$129.6 million on December 31, 2020) and recorded on March 31, 2021 the equivalent to the corresponding present value that results in S/218.6 (US$58.2 million) (S/216 million equivalent to US$59.6 million as of December 31, 2020).

On the other hand, in addition to the cases where a provision for civil reparation has been recorded, there is a project carried out in partnership with Odebrecht that to date is 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 the project would be S/9.6 million (approximately US$2.6 million).

As of the date hereof, the negotiations of the agreement are advanced and the Company expects the agreement to impose an obligation to pay damages in an amount that should not deviate materially from the amount estimated in the financial statements and, in addition, a temporary prohibition from contracting with the government.

Although we expect to execute a final settlement and cooperation agreement soon, we cannot assure you that an agreement will be reached in a timely manner or at all, and in case an agreement is reached, we can not assure you that it will not contain terms and conditions that are substantially more onerous to the Company that we have foreseen. In addition, any agreement would be subject to further approval by the Peruvian court.

Investigations and administrative process initiated by INDECOPI in relation to the Construction Club case

On July 11, 2017, the Peruvian National Institute for the Defense of Free Competition and the Protection of Intellectual Property (“INDECOPI”) initiated an investigation against several construction companies (including Cumbra Peru S.A.), about the existence of an alleged cartel called the Construction Club. Cumbra Peru S.A. has provided to INDECOPI with all the information requested and continues collaborating with the investigation.

On February 11, 2020, the subsidiary Cumbra Peru S.A. was notified by the Technical Secretariat (the “TS”) of the Commission for the Defense of Free Competition of INDECOPI (the “Commission”) with the resolution that begins a sanctioning administrative procedure involving a total of 35 companies and 28 natural persons, for alleged anticompetitive conduct in the market of Public Works. The resolution does not include the assignment of responsibilities or the result of the administrative sanctioning procedure, which will be determined at the end of said procedure. The proceeding has concluded its evidentiary stage and the TS has recommended the Commission the imposition of a fine of approximately S/103.4 million. Cumbra Peru S.A. has objected this recommendation and its advisors estimate its exposure in approximately S/39 million without considering present value deductions and additional deductions to which Cumbra Peru S.A. may be entitled under applicable law, and was recorded at December 31, 2020 the equivalent present value in S/24.5 million.

- 9 -


d)
Impact of the COVID-19 Pandemic

The outbreak of the Novel Coronavirus 2019 (COVID-19) pandemic, which has been declared by the World Health Organization to be a “public health emergency of international concern,” has spread across the world since the end of 2019. The virus has spread significantly in Latin America, and the countries where we operate have fewer resources to address the continued health care effects of the pandemic. In response, 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. Depending on how the spread of the virus continues to evolve, governments may continue to extend these measures.
 
The COVID-19 pandemic and these government measures caused a global recession which has resulted in a severe economic impact on the countries in which we operate. We cannot predict the full extent to which economies in the countries where we operate will ultimately be impacted. Even as initial outbreaks of COVID-19 subsided, subsequent outbreaks occurred, including reports of mutations of the virus. We cannot predict whether subsequent outbreaks of the virus or its mutations will not continue to reoccur, or whether governments will not implement longer-term measures that continue to affect economic activity and capital investment levels. As a result, the negative impact of COVID-19 may continue well beyond the containment of the virus. In response to the sudden decline in economic activity, governments around the world, including in Latin America, have announced large stimulus programs to assist families and businesses. However, we cannot assure you that these programs will be sufficient to reactivate economy activity; moreover, the governments in the countries where we operate have fewer resources to stimulate their local economies.

The COVID-19 pandemic is significantly and adversely affecting our business, results of operations and financial condition. Infections have caused halts and delays in our engineering and construction projects, which have caused us to renegotiate performance targets with certain clients. These interruptions and negotiations add costs with respect to our projects, and caused us to include additional allowances for certain accounts receivable and impairments to the group’s long-term assets. We cannot assure you that we will be able to transfer any of these additional costs to our clients. Moreover, from mid-March through the end of May 2020, substantially all of our engineering and construction and real estate projects were mandatorily shut down. Although since July 2020, these projects have resumed operations with COVID-19 protocols in place, we cannot assure you that work will not be halted again or that these projects will be completed on time or at all. Our infrastructure operations, which have for the most part been declared essential businesses, have continued to operate during the pandemic; however, certain of our infrastructure businesses have been adversely affected, in particular, by the sharp decline in traffic volumes and fluctuations in oil and gas prices. Our results and operations for the 2020 year were adversely impacted by the pandemic, and we expect that our results of operations for the 2021 year will continue to be impacted as the pandemic persists.  A further spread of Covid-19 and the consequent measures taken to limit the spread of the disease could affect the ability to conduct business in the normal way and, therefore, affect the financial position and results of operations. Citizen immobilization, the restriction of activities of strategic companies as well as the paralysis of public entities have affected the execution of investment projects as well as the performance of exploration activities, and until the date of approval of the financial statements, it is not expected that operations and going concern will be affected.
 
On April 17, 2021, the Peruvian Government extended the State of National Emergency for a period of 30 days as a result of COVID-19.  Likewise, certain economic activities are restricted, according to the alert level in each department of Peru, until May 31, 2021. Management considers that the measures taken by the national authorities have no impact on the continuity and development of the operations of the Company because the activities carried out by the Company are within the group of permitted activities and have not been significantly impacted by the pandemic.

2.
BASIS OF PREPARATION

The condensed interim consolidated financial statements for the year ended March 31, 2021 have been prepared in accordance with IAS 34 "Interim Financial Reporting". The condensed interim consolidated financial statements provide comparative information regarding prior periods; however, they do not include all the information and disclosures required in the annual consolidated financial statements, so they must be read together with the audited consolidated financial statements for the year ended December 31, 2020, which have been prepared in accordance with International Standards. of Financial Information (hereinafter "IFRS").

The condensed interim consolidated financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.
- 10 -

3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, 2020.

3.1
Account balance restated as of December 31, 2020

Since the date of approval of the financial statements by our shareholders until the date hereof, subsequent events with material impact on our results have occurred and as a result, we have recorded such impacts herein. As explained in Note 1 c) we have made considerable progress in the negotiations of the Company’s plea bargain agreement that has allowed us to reassess our estimate of our exposure to the contingencies including within its scope.

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

   
As of
         
As of
 
   
December 31,
         
December 31,
 
   
2020
   
Adjustment
   
2020
 
ASSETS
 
Audited
         
As restated
 
Current assets
                 
Cash and cash equivalents
   
900,168
     
-
     
900,168
 
Trade accounts receivables, net
   
703,167
     
-
     
703,167
 
Work in progress, net
   
186,433
     
-
     
186,433
 
Accounts receivable from related parties
   
27,338
     
-
     
27,338
 
Other accounts receivable
   
477,165
     
(43,634
)
   
433,531
 
Inventories, net
   
552,000
     
-
     
552,000
 
Prepaid expenses
   
22,972
     
-
     
22,972
 
Total current assets
   
2,869,243
     
(43,634
)
   
2,825,609
 
                         
Non-current assets
                       
Trade accounts receivable, net
   
730,666
     
-
     
730,666
 
Accounts receivable from related parties
   
620,071
     
-
     
620,071
 
Prepaid expenses
   
22,264
     
-
     
22,264
 
Other accounts receivable
   
328,223
     
-
     
328,223
 
Investments in associates and joint ventures
   
35,516
     
-
     
35,516
 
Investment property
   
26,073
     
-
     
26,073
 
Property, plant and equipment, net
   
405,469
     
-
     
405,469
 
Intangible assets, net
   
791,990
     
-
     
791,990
 
Right-of-use assets, net
   
64,518
     
-
     
64,518
 
Deferred income tax asset
   
262,623
     
(458
)
   
262,165
 
Total non-current assets
   
3,287,413
     
(458
)
   
3,286,955
 
                         
Total assets
   
6,156,656
     
(44,092
)
   
6,112,564
 

- 11 -

   
As of
         
As of
 
   
December 31,
         
December 31,
 
   
2020
   
Adjustment
   
2020
 
   
Audited
         
As restated
 
LIABILITIES AND EQUITY
                 
Current liabilities
                 
Borrowings
   
452,884
     
-
     
452,884
 
Bonds
   
58,446
     
-
     
58,446
 
Trade accounts payable
   
1,097,167
     
-
     
1,097,167
 
Accounts payable to related parties
   
43,818
     
-
     
43,818
 
Current income tax
   
34,494
     
-
     
34,494
 
Other accounts payable
   
718,406
     
-
     
718,406
 
Provisions
   
141,744
     
(48,987
)
   
92,757
 
Total current liabilities
   
2,546,959
     
(48,987
)
   
2,497,972
 
                         
Non-current liabilities
                       
Borrowings
   
445,436
     
-
     
445,436
 
Bonds
   
874,313
     
-
     
874,313
 
Trade accounts payable
   
40,502
     
-
     
40,502
 
Other accounts payable
   
183,230
     
2
     
183,232
 
Accounts payable to related parties
   
36,297
     
-
     
36,297
 
Provisions
   
237,836
     
98,773
     
336,609
 
Deferred income tax liability
   
102,907
     
-
     
102,907
 
Total non-current liabilities
   
1,920,521
     
98,775
     
2,019,296
 
Total liabilities
   
4,467,480
     
49,788
     
4,517,268
 
                         
Equity
                       
Capital
   
871,918
     
-
     
871,918
 
Legal reserve
   
132,011
     
-
     
132,011
 
Voluntary reserve
   
29,974
     
-
     
29,974
 
Share Premium
   
1,131,574
     
-
     
1,131,574
 
Other reserves
   
(169,234
)
   
-
     
(169,234
)
Retained earnings
   
(635,101
)
   
(93,536
)
   
(728,637
)
Equity attributable to controlling interest in the Company
   
1,361,142
     
(93,536
)
   
1,267,606
 
Non-controlling interest
   
328,034
     
(344
)
   
327,690
 
Total equity
   
1,689,176
     
(93,880
)
   
1,595,296
 
Total liabilities and equity
   
6,156,656
     
(44,092
)
   
6,112,564
 

As a result of this process, the amounts in the consolidated statement of income are adjusted as follows:
- 12 -

   
For the year ended
       
   
December 31, 2020
       
   
Audited
   
Adjustment
   
As restated
 
                   
                   
Revenues from construction activities
   
1,815,671
     
-
     
1,815,671
 
Revenues from services provided
   
1,055,423
     
-
     
1,055,423
 
Revenue from real estate and sale of goods
   
442,935
     
-
     
442,935
 
     
3,314,029
     
-
     
3,314,029
 
                         
Cost of construction activities
   
(1,716,309
)
   
-
     
(1,716,309
)
Cost of services provided
   
(929,206
)
   
-
     
(929,206
)
Cost of real estate and  sale of goods
   
(347,906
)
   
-
     
(347,906
)
     
(2,993,421
)
   
-
     
(2,993,421
)
Gross profit
   
320,608
     
-
     
320,608
 
                         
Administrative expenses
   
(152,909
)
   
-
     
(152,909
)
Other income and expenses
   
(87,232
)
   
(95,614
)
   
(182,846
)
Operating profit (loss)
   
80,467
     
(95,614
)
   
(15,147
)
                         
Financial expenses
   
(156,943
)
   
-
     
(156,943
)
Financial income
   
37,231
     
2,189
     
39,420
 
Share of the profit or loss of associates and joint ventures accounted for using the equity method
   
770
     
-
     
770
 
Loss before income tax
   
(38,475
)
   
(93,425
)
   
(131,900
)
Income tax expense
   
(57,989
)
   
(455
)
   
(58,444
)
Loss from continuing operations
   
(96,464
)
   
(93,880
)
   
(190,344
)
                         
(Loss) profit attributable to:
                       
Owners of the Company
   
(124,335
)
   
(93,536
)
   
(217,871
)
Non-controlling interest
   
27,871
     
(344
)
   
27,527
 
     
(96,464
)
   
(93,880
)
   
(190,344
)
                         
Loss per share attributable to owners of the
                       
Company during the year
   
(0.143
)
   
(0.107
)
   
(0.250
)

3.2
Account balance reclassified as of March 31, 2020

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 March 31, 2020 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 28.

As a result of this process, the amounts in the consolidated statement of income are reclassified as follows:
- 13 -


   
For the period ended
 
   
March 31, 2020
 
   
Reported
   
Adexus
   
As restated
 
                   
                   
Revenues from construction activities
   
552,642
     
-
     
552,642
 
Revenues from services provided
   
240,487
     
31,095
     
271,582
 
Revenue from real estate and sale of goods
   
89,621
     
11,410
     
101,031
 
     
882,750
     
42,505
     
925,255
 
                         
Cost of construction activities
   
(547,275
)
   
-
     
(547,275
)
Cost of services provided
   
(195,869
)
   
(30,231
)
   
(226,100
)
Cost of real estate and  sale of goods
   
(70,778
)
   
(9,193
)
   
(79,971
)
     
(813,922
)
   
(39,424
)
   
(853,346
)
Gross profit
   
68,828
     
3,081
     
71,909
 
                         
Administrative expenses
   
(39,413
)
   
(5,010
)
   
(44,423
)
Other income and expenses
   
(8,044
)
   
-
     
(8,044
)
Operating loss
   
21,371
     
(1,929
)
   
19,442
 
                         
Financial expenses
   
(48,565
)
   
(2,991
)
   
(51,556
)
Financial income
   
3,438
     
28
     
3,466
 
Share of the profit or loss of associates and joint ventures accounted for using the equity method
   
1,164
     
-
     
1,164
 
Loss before income tax
   
(22,592
)
   
(4,892
)
   
(27,484
)
Income tax expense
   
(2,290
)
   
1,413
     
(877
)
Loss from continuing operations
   
(24,882
)
   
(3,479
)
   
(28,361
)
                         
(Loss) profit from discontinued operations
   
(3,479
)
   
3,479
     
-
 
Loss for the year
   
(28,361
)
   
-
     
(28,361
)
                         
(Loss) profit attributable to:
                       
Owners of the Company
   
(30,444
)
   
-
     
(30,444
)
Non-controlling interest
   
2,083
     
-
     
2,083
 
     
(28,361
)
   
-
     
(28,361
)

4.
FINANCIAL RISK MANAGEMENT

Financial risk management is carried out by the Corporation’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.
- 14 -


4.1
Financial risk factors

The Corporation’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 Corporation’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Corporation’s financial performance. The Corporation 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 Corporation in the short and medium-term.

a)
Market risks

i)
Foreign exchange risk

The Corporation 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, 2020 and March 31, 2021, 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 Corporation 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 Corporation’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed rates expose the Corporation to fair value interest rate risk.

b)
Credit 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.

Concerning to loans to related parties, the Corporation 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 Corporation 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 Corporation cash flows enabled it to meet its obligations. Due to the COVID-19 pandemic (Note 1-d), the Corporation has implemented various actions to reduce its exposure to liquidity risk, and has developed a Financial Plan based on several steps, which were designed assuming attaining a plea bargain agreement within a reasonable time frame. The Financial Plan aims to enable compliance with the various obligations at the corporate and group companies’ levels.

- 15 -


The Corporation’s Corporate Finance Office monitors rolling forecasts of the Corporation’s liquidity requirements to ensure it exists sufficient cash to meet operational needs so that the Corporation 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 Corporation’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 Corporation’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
       
As of December 31, 2020
 
1 year
   
years
   
years
   
5 years
   
Total
 
                                   
Other financial liabilities (except
                                 
  for finance leases and lease
                                 
  liability for right-of-use asset)
   
433,318
     
183,796
     
197,785
     
23,953
     
838,852
 
Finance leases
   
16,287
     
14,919
     
20,851
     
8,515
     
60,572
 
Lease liability for right-of-use asset
   
24,714
     
32,006
     
19,847
     
11,131
     
87,698
 
Bonds
   
137,090
     
168,673
     
385,919
     
971,543
     
1,663,225
 
Trade accounts payables (except
                                       
  non-financial liabilities)
   
1,001,470
     
40,502
     
-
     
-
     
1,041,972
 
Accounts payables to related parties
   
43,818
     
35,461
     
-
     
836
     
80,115
 
Other accounts payables (except
                                       
  non-financial liabilities)
   
288,037
     
2,185
     
115,321
     
-
     
405,543
 
     
1,944,734
     
477,542
     
739,723
     
1,015,978
     
4,177,977
 
                                         
                                         
                                         
   
Less than
     
1-2
     
2-5
   
More than
         
As of March 31, 2021
 
1 year
   
years
   
years
   
5 years
   
Total
 
                                         
Other financial liabilities (except
                                       
  for finance leases and lease
                                       
  liability for right-of-use asset)
   
466,854
     
53,344
     
245,980
     
47,784
     
813,962
 
Finance leases
   
11,624
     
10,357
     
29,449
     
10,953
     
62,383
 
Lease liability for right-of-use asset
   
22,883
     
24,599
     
22,082
     
12,791
     
82,355
 
Bonds
   
129,034
     
170,870
     
384,867
     
944,851
     
1,629,622
 
Trade accounts payables (except
                                       
  non-financial liabilities)
   
1,080,285
     
6,943
     
19,927
     
16,500
     
1,123,655
 
Accounts payables to related parties
   
42,341
     
36,145
     
-
     
836
     
79,322
 
Other accounts payables (except
                                       
  non-financial liabilities)
   
280,210
     
2,107
     
122,231
     
-
     
404,548
 
     
2,033,231
     
304,365
     
824,536
     
1,033,715
     
4,195,847
 

- 16 -

4.2
Capital management risk

The Corporation’s objectives when managing capital are to safeguard the Corporation’s ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to minimize the cost of capital.  In 2017 the situation of the Corporation had lead Management to monitor deviations that might cause the non-compliance of covenants and may hinder the renegotiation of liabilities (Note15). In extraordinary events as explained in Note 1, the Corporation identifies the possible deviations and requirements and establishes a plan.

In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Corporation monitors capital based on 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 ‘equity’ as shown in the consolidated statement of financial position plus net debt.

As of December 31, 2020 and March 31, 2021, the gearing ratio is presented below indicating the Corporation’s strategy to keep it in a range from 0.07 to 0.70.

   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Total financial liabilities and bonds (Note 15 and Note 16)
   
1,831,079
     
1,796,752
 
Less: Cash and cash equivalents (Note 8)
   
(900,168
)
   
(799,155
)
Net debt
   
930,911
     
997,597
 
Total equity
   
1,595,296
     
1,547,418
 
Total capital
   
2,526,207
     
2,545,015
 
                 
Gearing ratio
   
0.37
     
0.39
 

4.3
Fair value estimation

For the classification of the type of valuation used by the Corporation 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 Corporation).

- 17 -

The table below shows the Corporation’s liabilities measured at fair value:
   
Level 3
 
As of December 31, 2020
     
       
Financial liabilities
     
Other financial entities (Note 15-b)
   
152,523
 
         
As of March 31, 2021
       
         
Financial liabilities
       
Other financial entities (Note 15-b)
   
155,536
 

- 18 -

5.   CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments used are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Corporation’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, 2020.

6.   SEASONALITY OF OPERATIONS

The Corporation does not present seasonality in the operations of any of its subsidiaries; however, economic activities temporarily restricted due to COVID-19 pandemic and government measures implemented to contain the spread of the virus. As a result,  this situation affected negatively Corporation's revenues and financial position (Note 1.d).

7.   OPERATING SEGMENTS

Operating segments are reported consistently with the internal reports that are reviewed by the Corporation’ chief decision-maker; that is, the Executive Committee, which is led by the Chief Executive Officer. This Committee acts as the highest authority in making operational decisions, responsible for allocating resources and evaluating the performance of each operating segment.

The Corporation'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 by significance of income are: ‘engineering and construction’ and ‘infraestructure’. However, the Corporation has voluntarily decided to report on all its operating segments.

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 are measured in a manner consistent with the basis of preparation of the financial statements. Sales of goods are related to Real State segment. Revenues from services are related to other segments.

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

The table below shows the Corporation’s financial statements by operating segments:
- 19 -

Operating segments financial position
                                                     
Segment reporting
                                                     
                           
Infrastructure
                         
                                         Parent              
As of December 31, 2020
 
Engineering and construction
   

Energy
   

Toll roads
   

Transportation
   
Water treatment
   

Real estate
   
 Company operations
   

Eliminations
   

Consolidated
 
                                                       
Assets.-
                                                     
Cash and cash equivalent
   
382,850
     
60,165
     
117,893
     
207,975
     
7,408
     
73,531
     
50,346
     
-
     
900,168
 
Trade accounts receivables, net
   
425,939
     
37,614
     
25,014
     
111,602
     
565
     
38,043
     
64,390
     
-
     
703,167
 
Work in progress, net
   
186,433
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
186,433
 
Accounts receivable from related parties
   
107,495
     
35
     
31,868
     
2,624
     
30
     
1,342
     
102,103
     
(218,159
)
   
27,338
 
Other accounts receivable
   
323,084
     
27,900
     
23,631
     
13,220
     
197
     
10,446
     
35,051
     
2
     
433,531
 
Inventories, net
   
58,653
     
36,016
     
8,496
     
31,861
     
-
     
418,341
     
360
     
(1,727
)
   
552,000
 
Prepaid expenses
   
7,798
     
1,964
     
6,485
     
328
     
116
     
-
     
6,281
     
-
     
22,972
 
Total current assets
   
1,492,252
     
163,694
     
213,387
     
367,610
     
8,316
     
541,703
     
258,531
     
(219,884
)
   
2,825,609
 
                                                                         
Long-term trade accounts receivable, net
   
53,036
     
-
     
15,740
     
632,214
     
-
     
2,181
     
27,495
     
-
     
730,666