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
 
Long-term accounts receivable from related parties
   
315,393
     
-
     
14,508
     
-
     
11,103
     
-
     
611,498
     
(332,431
)
   
620,071
 
Prepaid expenses
   
-
     
981
     
19,009
     
2,048
     
736
     
-
     
-
     
(510
)
   
22,264
 
Other long-term accounts receivable
   
134,719
     
70,694
     
531
     
-
     
7,346
     
54,237
     
60,696
     
-
     
328,223
 
Investments in associates and joint ventures
   
109,870
     
8,080
     
-
     
-
     
-
     
6,095
     
1,322,865
     
(1,411,394
)
   
35,516
 
Investment property
   
1,467
     
-
     
-
     
-
     
-
     
24,606
     
44,521
     
(44,521
)
   
26,073
 
Property, plant and equipment, net
   
169,091
     
166,382
     
9,186
     
794
     
146
     
9,592
     
16,718
     
33,560
     
405,469
 
Intangible assets, net
   
143,575
     
250,327
     
371,437
     
681
     
-
     
872
     
19,017
     
6,081
     
791,990
 
Right-of-use assets, net
   
8,179
     
9,872
     
4,626
     
99
     
-
     
3,936
     
51,401
     
(13,595
)
   
64,518
 
Deferred income tax asset
   
174,269
     
4,717
     
5,037
     
-
     
779
     
18,704
     
53,536
     
5,123
     
262,165
 
Total non-current assets
   
1,109,599
     
511,053
     
440,074
     
635,836
     
20,110
     
120,223
     
2,207,747
     
(1,757,687
)
   
3,286,955
 
Total assets
   
2,601,851
     
674,747
     
653,461
     
1,003,446
     
28,426
     
661,926
     
2,466,278
     
(1,977,571
)
   
6,112,564
 
                                                                         
Liabilities.-
                                                                       
Borrowings
   
230,682
     
32,550
     
2,405
     
42
     
-
     
95,709
     
102,469
     
(10,973
)
   
452,884
 
Bonds
   
4,546
     
-
     
32,819
     
21,081
     
-
     
-
     
-
     
-
     
58,446
 
Trade accounts payable
   
861,833
     
51,225
     
51,221
     
32,637
     
61
     
42,565
     
57,625
     
-
     
1,097,167
 
Accounts payable to related parties
   
185,104
     
1,083
     
17,738
     
21,531
     
-
     
19,074
     
15,708
     
(216,420
)
   
43,818
 
Current income tax
   
26,922
     
1,351
     
1,638
     
3,606
     
166
     
-
     
811
     
-
     
34,494
 
Other accounts payable
   
525,195
     
12,905
     
35,997
     
6,719
     
766
     
91,976
     
40,252
     
4,596
     
718,406
 
Provisions
   
8,876
     
18,943
     
1,659
     
-
     
-
     
492
     
62,787
     
-
     
92,757
 
Total current liabilities
   
1,843,158
     
118,057
     
143,477
     
85,616
     
993
     
249,816
     
279,652
     
(222,797
)
   
2,497,972
 
                                                                         
Borrowings
   
25,273
     
103,154
     
2,291
     
59
     
-
     
11,021
     
328,753
     
(25,115
)
   
445,436
 
Long-term bonds
   
22,911
     
-
     
248,029
     
603,373
     
-
     
-
     
-
     
-
     
874,313
 
Long-term trade accounts payable
   
-
     
-
     
-
     
-
     
-
     
-
     
40,502
     
-
     
40,502
 
Other long-term accounts payable
   
140,605
     
-
     
11,623
     
231
     
2,762
     
23,357
     
4,654
     
-
     
183,232
 
Long-term accounts payable to related parties
   
104,432
     
-
     
836
     
36,297
     
24,207
     
-
     
186,886
     
(316,361
)
   
36,297
 
Provisions
   
122,503
     
37,599
     
26,034
     
1,925
     
-
     
-
     
148,548
     
-
     
336,609
 
Deferred income tax liability
   
25,576
     
36,793
     
1,518
     
39,020
     
-
     
-
     
-
     
-
     
102,907
 
Total non-current liabilities
   
441,300
     
177,546
     
290,331
     
680,905
     
26,969
     
34,378
     
709,343
     
(341,476
)
   
2,019,296
 
Total liabilities
   
2,284,458
     
295,603
     
433,808
     
766,521
     
27,962
     
284,194
     
988,995
     
(564,273
)
   
4,517,268
 
Equity attributable to controlling interest in the Company
   
261,501
     
354,982
     
161,710
     
177,694
     
464
     
138,933
     
1,474,398
     
(1,302,076
)
   
1,267,606
 
Non-controlling interest
   
55,892
     
24,162
     
57,943
     
59,231
     
-
     
238,799
     
2,885
     
(111,222
)
   
327,690
 
Total liabilities and equity
   
2,601,851
     
674,747
     
653,461
     
1,003,446
     
28,426
     
661,926
     
2,466,278
     
(1,977,571
)
   
6,112,564
 
- 20 -

Operating segments financial position
                                                     
Segment reporting
                                                     
                           
Infrastructure
                         
                                         Parent              
As of March 31, 2021
 
Engineering and construction
   

Energy
   

Toll roads
   

Transportation
   
Water treatment
   

Real estate
   
 Company operations
   

Eliminations
   

Consolidated
 
                                                       
Assets.-
                                                     
Cash and cash equivalent
   
281,776
     
59,201
     
114,097
     
203,694
     
6,573
     
87,281
     
46,533
     
-
     
799,155
 
Trade accounts receivables, net
   
514,931
     
48,701
     
28,940
     
106,019
     
1,743
     
11,925
     
56,590
     
-
     
768,849
 
Work in progress, net
   
230,545
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
230,545
 
Accounts receivable from related parties
   
93,600
     
36
     
37,177
     
3,297
     
30
     
2,139
     
93,914
     
(206,638
)
   
23,555
 
Other accounts receivable
   
323,218
     
27,840
     
32,315
     
10,570
     
264
     
9,697
     
34,996
     
2
     
438,902
 
Inventories, net
   
59,069
     
35,446
     
8,450
     
32,587
     
13
     
427,431
     
1,234
     
(1,804
)
   
562,426
 
Prepaid expenses
   
8,025
     
1,517
     
5,443
     
929
     
68
     
-
     
6,898
     
-
     
22,880
 
Total current assets
   
1,511,164
     
172,741
     
226,422
     
357,096
     
8,691
     
538,473
     
240,165
     
(208,440
)
   
2,846,312
 
                                                                         
Long-term trade accounts receivable, net
   
52,247
     
-
     
15,782
     
633,447
     
-
     
-
     
27,030
     
-
     
728,506
 
Long-term accounts receivable from related parties
   
325,289
     
-
     
14,647
     
-
     
11,211
     
-
     
621,563
     
(351,378
)
   
621,332
 
Prepaid expenses
   
-
     
981
     
19,044
     
2,009
     
723
     
-
     
-
     
(510
)
   
22,247
 
Other long-term accounts receivable
   
141,427
     
75,784
     
-
     
-
     
7,346
     
57,224
     
40,977
     
-
     
322,758
 
Investments in associates and joint ventures
   
109,233
     
8,737
     
-
     
-
     
-
     
6,095
     
1,302,917
     
(1,390,444
)
   
36,538
 
Investment property
   
1,386
     
-
     
-
     
-
     
-
     
24,089
     
44,030
     
(44,030
)
   
25,475
 
Property, plant and equipment, net
   
162,981
     
159,799
     
8,553
     
745
     
140
     
8,827
     
15,589
     
33,069
     
389,703
 
Intangible assets, net
   
142,697
     
243,017
     
358,980
     
653
     
-
     
829
     
18,630
     
5,818
     
770,624
 
Right-of-use assets, net
   
6,958
     
8,086
     
4,834
     
90
     
30
     
3,517
     
49,315
     
(14,153
)
   
58,677
 
Deferred income tax asset
   
175,220
     
4,744
     
4,717
     
-
     
782
     
19,237
     
63,813
     
5,162
     
273,675
 
Total non-current assets
   
1,117,438
     
501,148
     
426,557
     
636,944
     
20,232
     
119,818
     
2,183,864
     
(1,756,466
)
   
3,249,535
 
Total assets
   
2,628,602
     
673,889
     
652,979
     
994,040
     
28,923
     
658,291
     
2,424,029
     
(1,964,906
)
   
6,095,847
 
                                                                         
Liabilities.-
                                                                       
Borrowings
   
232,437
     
27,529
     
2,763
     
46
     
18
     
90,724
     
134,387
     
(11,879
)
   
476,025
 
Bonds
   
4,097
     
-
     
33,001
     
21,775
     
-
     
-
     
-
     
-
     
58,873
 
Trade accounts payable
   
909,597
     
36,007
     
42,727
     
24,390
     
219
     
36,747
     
59,658
     
-
     
1,109,345
 
Accounts payable to related parties
   
168,407
     
671
     
30,477
     
23,890
     
61
     
20,057
     
15,426
     
(216,648
)
   
42,341
 
Current income tax
   
29,671
     
682
     
356
     
972
     
58
     
-
     
431
     
-
     
32,170
 
Other accounts payable
   
547,861
     
17,528
     
39,462
     
7,248
     
898
     
112,386
     
42,920
     
4,593
     
772,896
 
Provisions
   
12,292
     
19,509
     
1,559
     
-
     
-
     
503
     
65,454
     
-
     
99,317
 
Total current liabilities
   
1,904,362
     
101,926
     
150,345
     
78,321
     
1,254
     
260,417
     
318,276
     
(223,934
)
   
2,590,967
 
                                                                         
Borrowings
   
22,059
     
103,111
     
2,188
     
46
     
13
     
7,854
     
286,370
     
(25,436
)
   
396,205
 
Long-term bonds
   
21,930
     
-
     
240,820
     
602,899
     
-
     
-
     
-
     
-
     
865,649
 
Long-term trade accounts payable
   
-
     
-
     
-
     
-
     
-
     
-
     
39,624
     
-
     
39,624
 
Other long-term accounts payable
   
131,109
     
-
     
10,977
     
199
     
2,892
     
24,544
     
4,604
     
-
     
174,325
 
Long-term accounts payable to related parties
   
108,365
     
-
     
836
     
36,982
     
24,671
     
-
     
189,871
     
(323,744
)
   
36,981
 
Provisions
   
123,978
     
37,981
     
26,138
     
2,557
     
-
     
-
     
149,736
     
-
     
340,390
 
Deferred income tax liability
   
24,381
     
39,731
     
279
     
39,897
     
-
     
-
     
-
     
-
     
104,288
 
Total non-current liabilities
   
431,822
     
180,823
     
281,238
     
682,580
     
27,576
     
32,398
     
670,205
     
(349,180
)
   
1,957,462
 
Total liabilities
   
2,336,184
     
282,749
     
431,583
     
760,901
     
28,830
     
292,815
     
988,481
     
(573,114
)
   
4,548,429
 
Equity attributable to controlling interest in the Company
   
237,868
     
365,593
     
162,049
     
174,854
     
93
     
137,333
     
1,432,678
     
(1,281,910
)
   
1,228,558
 
Non-controlling interest
   
54,550
     
25,547
     
59,347
     
58,285
     
-
     
228,143
     
2,870
     
(109,882
)
   
318,860
 
Total liabilities and equity
   
2,628,602
     
673,889
     
652,979
     
994,040
     
28,923
     
658,291
     
2,424,029
     
(1,964,906
)
   
6,095,847
 
- 21 -

Operating segment performance
                                                     
Segment Reporting
                                                     
                           
Infrastructure
                         
                                         Parent              
For the period ended March 31, 2020
 
Engineering and construction
   

Energy
   

Toll roads
   

Transportation
   
Water treatment
   
Real estate
   
 Company operations
   

Elimination
   

Consolidated
 
                                                       
Revenue
   
661,706
     
106,024
     
113,773
     
88,473
     
916
     
25,827
     
62,925
     
(134,389
)
   
925,255
 
Gross profit (loss)
   
16,304
     
17,487
     
16,112
     
31,263
     
263
     
4,070
     
791
     
(14,381
)
   
71,909
 
Administrative expenses
   
(28,801
)
   
(5,001
)
   
(4,282
)
   
(3,713
)
   
(107
)
   
(7,831
)
   
(10,059
)
   
15,371
     
(44,423
)
Other income and expenses, net
   
(3,600
)
   
(6,260
)
   
22
     
328
     
-
     
40
     
1,413
     
13
     
(8,044
)
Operating (loss) profit
   
(16,097
)
   
6,226
     
11,852
     
27,878
     
156
     
(3,721
)
   
(7,855
)
   
1,003
     
19,442
 
Financial expenses
   
(22,973
)
   
(5,577
)
   
(8,951
)
   
(2,129
)
   
(2
)
   
(3,791
)
   
(14,934
)
   
6,801
     
(51,556
)
Financial income
   
1,359
     
224
     
2,324
     
2,358
     
144
     
2,228
     
2,395
     
(7,566
)
   
3,466
 
Dividends
   
-
     
-
     
-
     
-
     
-
     
-
     
2,342
     
(2,342
)
   
-
 
Share of profit or loss in associates
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
and joint ventures
   
841
     
549
     
-
     
-
     
-
     
-
     
(11,409
)
   
11,183
     
1,164
 
(Loss) profit before income tax
   
(36,870
)
   
1,422
     
5,225
     
28,107
     
298
     
(5,284
)
   
(29,461
)
   
9,079
     
(27,484
)
Income tax
   
4,822
     
(448
)
   
(1,715
)
   
(8,545
)
   
(159
)
   
749
     
4,414
     
5
     
(877
)
(Loss) profit for the year
   
(32,048
)
   
974
     
3,510
     
19,562
     
139
     
(4,535
)
   
(25,047
)
   
9,084
     
(28,361
)
                                                                         
(Loss) profit from attributable to:
                                                                       
Owners of the Company
   
(32,143
)
   
274
     
3,026
     
14,671
     
139
     
(394
)
   
(25,031
)
   
9,014
     
(30,444
)
Non-controlling interest
   
95
     
700
     
484
     
4,891
     
-
     
(4,141
)
   
(16
)
   
70
     
2,083
 
     
(32,048
)
   
974
     
3,510
     
19,562
     
139
     
(4,535
)
   
(25,047
)
   
9,084
     
(28,361
)
                                                                         



- 22 -

Operating segment performance
                                                     
Segment Reporting
                                                     
                           
Infrastructure
                         
                                         Parent              
For the Period ended March 31, 2021
 
Engineering and construction
   

Energy
   

Toll roads
   

Transportation
   
Water treatment
   
Real estate
   
 Company operations
   

Elimination
   

Consolidated
 
                                                       
Revenue
   
578,572
     
111,477
     
114,349
     
85,824
     
862
     
29,238
     
57,541
     
(72,069
)
   
905,794
 
Gross profit (loss)
   
45,943
     
22,433
     
13,387
     
24,821
     
277
     
3,788
     
3,836
     
(11,821
)
   
102,664
 
Administrative expenses
   
(31,563
)
   
(3,182
)
   
(4,334
)
   
(4,432
)
   
(197
)
   
(3,716
)
   
(14,130
)
   
12,037
     
(49,517
)
Other income and expenses, net
   
(4,512
)
   
109
     
391
     
1,267
     
(9
)
   
741
     
334
     
70
     
(1,609
)
Operating profit (loss)
   
9,868
     
19,360
     
9,444
     
21,656
     
71
     
813
     
(9,960
)
   
286
     
51,538
 
Financial expenses
   
(27,143
)
   
(3,392
)
   
(7,092
)
   
(2,864
)
   
(26
)
   
(3,468
)
   
(33,245
)
   
6,077
     
(71,153
)
Financial income
   
484
     
313
     
1,579
     
258
     
121
     
810
     
3,778
     
(5,615
)
   
1,728
 
Share of profit or loss in associates
                                                                       
and joint ventures
   
(652
)
   
658
     
-
     
-
     
-
     
-
     
(1,744
)
   
2,744
     
1,006
 
(Loss) profit before income tax
   
(17,443
)
   
16,939
     
3,931
     
19,050
     
166
     
(1,845
)
   
(41,171
)
   
3,492
     
(16,881
)
Income tax
   
(1,811
)
   
(4,943
)
   
(2,230
)
   
(5,836
)
   
(73
)
   
349
     
4,039
     
3
     
(10,502
)
(Loss) profit for the year
   
(19,254
)
   
11,996
     
1,701
     
13,214
     
93
     
(1,496
)
   
(37,132
)
   
3,495
     
(27,383
)
                                                                         
(Loss) profit from attributable to:
                                                                       
Owners of the Company
   
(19,506
)
   
10,611
     
340
     
9,910
     
93
     
(1,601
)
   
(37,115
)
   
2,571
     
(34,697
)
Non-controlling interest
   
252
     
1,385
     
1,361
     
3,304
     
-
     
105
     
(15
)
   
922
     
7,314
 
     
(19,254
)
   
11,996
     
1,701
     
13,214
     
93
     
(1,496
)
   
(37,130
)
   
3,493
     
(27,383
)

- 23 -


There are no differences as compared to previous year-end consolidated financial statements based on segmentation or measurement of financial performance by segment.

8.   CASH AND CASH EQUIVALENTS

This account comprises:            
   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Cash on hand
   
996
     
1,041
 
Remittances in-transit
)
   
2,340
     
2,666
 
Bank accounts
   
300,552
     
232,690
 
Escrow account (a)
   
471,339
     
406,481
 
Deposits in financial institutions
   
124,941
     
156,277
 
     
900,168
     
799,155
 

 
(a)
 The Corporation maintains trust accounts in local and foreign banks that includes reserve funds for bond payments issued by the subsidiaries Tren Urbano de Lima S.A. and Norvial S.A. amounting to S/122 million and S/24 million, as of March 31, 2021, respectively (S/132 million and S/21 million, as of December 31, 2020, respectively), as shown as follows:

   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Reserve funds issued bonds
   
153,075
     
146,181
 
Real estate projects
   
35,273
     
35,775
 
Engineering and construction projects
   
233,955
     
165,268
 
Infrastructure projects
   
49,036
     
59,257
 
     
471,339
     
406,481
 



9.   TRADE ACCOUNTS RECEIVABLES, NET

This account comprises:

   
Total
   
Current
   
Non-current
 
   
At
   
At
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Receivables (net) (a)
   
753,693
     
701,545
     
254,587
     
214,793
     
499,106
     
486,752
 
Unbilled receivables (net) - Subsidiaries (b)
   
413,364
     
523,405
     
337,244
     
445,038
     
76,120
     
78,367
 
Unbilled receivables (net) - Concessions (c)
   
266,776
     
272,405
     
111,336
     
109,018
     
155,440
     
163,387
 
     
1,433,833
     
1,497,355
     
703,167
     
768,849
     
730,666
     
728,506
 
                                                 

a)
Receivables are presented net of impairment and present value discount for S/47.3 million and S/0.9 million, respectively (S/47.2 million and S/0.9 million as of December 31, 2020). The ageing is detailed as follows:

- 24 -


   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Current
   
718,220
     
651,049
 
Past due up to 30 days
   
5,737
     
23,961
 
Past due from 31 days up to 90 days
   
6,801
     
3,114
 
Past due from 91 days up to 120 days
   
2,279
     
2,944
 
Past due from 121 days up to 360 days
   
4,185
     
5,728
 
Past due over 360 days
   
16,471
     
14,749
 
     
753,693
     
701,545
 

As of March 31, 2021, the amount overdue for more than 360 days mainly includes invoices receivable from subsidiaries: Concar S.A.C. for S/2.6 million and Cumbra Peru S.A. for S/9.9 million (Concar S.A. for S/2.7 million and Cumbra Peru S.A. for S/12.5 million, as of December 31, 2020).

b)
Unbilled receivables from subsidiaries correspond to documents related to the estimates for services rendered that were not billed, valuations in process or pending approval. The balance includes present value discount for S/11.7 million and impairment for S/5.9 million (present value discount for S/12.5 million and impairment for S/5.9 million, as of December 31, 2020), and detailed by subsidiary:

   
At
   
At
 
Unbilled receivables - Subsidiaries
 
December 31,
   
March 31,
 
   
2020
   
2021
 
Cumbra Peru S.A.
   
315,878
     
425,718
 
Concar S.A.C.
   
6,298
     
5,736
 
Cumbra Ingenieria S.A.
   
25,823
     
32,484
 
UNNA ENERGIA S.A.
   
1,512
     
1,812
 
Adexus S.A.
   
63,853
     
57,641
 
AENZA.S.A.A.
   
-
     
14
 
     
413,364
     
523,405
 

c)
Unbilled receivables from concessions correspond to future invoice according to Concession Contract terms. As of December 31, 2020, this amount is presented net of impairment of S/3.5 million and was written off as of March 31, 2021, as detailed below:

   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Tren Urbano de Lima S.A.
   
235,763
     
237,850
 
Survial S.A.
   
10,611
     
11,920
 
Norvial S.A.
   
15,436
     
17,566
 
Concesión Canchaque S.A.C.
   
4,401
     
3,922
 
Concesionaria La Chira S.A.
   
565
     
1,147
 
     
266,776
     
272,405
 

10.  WORK IN PROGRESS, NET

This account comprises:
- 25 -


                                     
         
Total
         
Current
         
Non-current
 
   
As of
   
As of
   
As of
   
As of
   
As of
   
As of
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Work in progress
   
186,433
     
230,545
     
186,433
     
230,545
)
   
-
     
-
 
     
186,433
     
230,545
     
186,433
     
230,545
     
-
     
-
 

Work in progress costs include all those expenses incurred by the Corporation for construction contracts. Includes mainly S/212.3 million corresponding to Cumbra Peru S.A. and its subsidiary Vial y Vives -DSD S.A. (S/171 million, as of December 31, 2020); and S/18.3 million from Cumbra Ingenieria S.A. (S/15.5 million, as of December 31, 2020).

11.  TRANSACTIONS WITH RELATED PARTIES

a) Transactions with related parties

Major transactions for the periods ended March 31, 2020 and 2021 between the Company and its related parties are summarized as follows:

 
2020
 
2021
 
Revenue from sales of goods and services:
       
- Joint operations
   
8,100
     
2,871
 
- Associates
   
911
     
229
 
     
9,011
     
3,100
 

Inter-company services are agreed based on market terms and conditions as if they had been agreed with third parties.

b) Balances of transactions with related parties
- 26 -


   
As of December 31,
   
As of March 31,
 
   
2020
   
2021
 
   
Receivable
   
Payable
   
Receivable
   
Payable
 
Current portion:
                       
Joint operations
                       
Consorcio Rio Urubamba
   
9,357
     
-
     
9,527
     
-
 
Consorcio Peruano de Conservacion
   
3,156
     
-
     
542
     
2,416
 
Consorcio Italo Peruano
   
1,520
     
217
     
1,383
     
216
 
Consorcio Constructor Chavimochic
   
-
     
6,208
     
-
     
6,649
 
Consorcio GyM Conciviles
   
1,341
     
1,472
     
1,390
     
840
 
Consorcio La Gloria
   
69
     
113
     
140
     
-
 
Consorcio Ermitaño
   
890
     
474
     
953
     
489
 
Terminales del Peru
   
501
     
161
     
181
     
161
 
Consorcio TNT Vial y Vives - DSD Chile Ltda
   
-
     
1,015
     
-
     
1,081
 
Consorcio Rio Mantaro
   
-
     
7,655
     
-
     
7,756
 
Consorcio Vial Quinua
   
-
     
2,051
     
-
     
2,048
 
Consorcio Huacho Pativilca
   
4
     
85
     
6
     
94
 
Consorcio CDEM
   
1,111
     
-
     
440
     
-
 
Consorcio GyM-Stracon
   
-
     
644
     
-
     
173
 
Consorcio GyM-OSSA
   
-
     
-
     
-
     
3
 
Consorcio Chicama Ascope
   
2,922
     
-
     
3,173
     
-
 
Consorcio Inti Punku
   
-
     
6,556
     
-
     
-
 
Consorcio Manperan
   
1,057
     
656
     
1,223
     
1,649
 
Consorcio Norte Pachacutec
   
1,077
     
1,192
     
1,100
     
1,188
 
Other minors
   
2,373
     
1,503
     
706
     
1,796
 
     
25,378
     
30,002
     
20,764
     
26,559
 
                                 
Other related parties
                               
Ferrovias S.A.
   
-
     
11,139
     
-
     
13,831
 
Perú Piping Spools S.A.C.
   
1,960
     
2,677
     
2,791
     
1,951
 
     
1,960
     
13,816
     
2,791
     
15,782
 
Current portion
   
27,338
     
43,818
     
23,555
     
42,341
 
                                 
                                 
                                 
Non-current portion
                               
Gasoducto Sur Peruano S.A.
   
620,071
     
-
     
621,332
     
-
 
Ferrovias S.A.
   
-
     
12,862
     
-
     
13,337
 
Ferrovias Participaciones S.A.
   
-
     
23,435
     
-
     
23,644
 
Non-current
   
620,071
     
36,297
     
621,332
     
36,981
 


Receivables and payables are mainly current and do not have specific guarantees.

Accounts receivable from related parties are mainly to sales of goods and services. These balances do not bear interest and as of March 31, 2021 do not require a provision for impairment. The account receivable from Gasoducto Sur Peruano S.A. is presented net of impairment and present value discount .

Accounts payable to related parties mainly related to services of engineering, construction, maintenance and others. Such accounts are not interest bearing because they are short-term.

12.  OTHER ACCOUNTS RECEIVABLE

This account comprises:
- 27 -

 
         
Total
         
Current
         
Non-current
 
   
At
   
At
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Advances to suppliers
   
76,200
     
80,722
     
76,200
     
80,722
     
-
     
-
 
Income tax on-account payments
   
48,054
     
49,842
     
48,052
     
49,842
     
2
     
-
 
VAT credit
   
54,076
     
57,209
     
43,498
     
46,189
     
10,578
     
11,020
 
Guarantee deposits
   
217,441
     
206,369
     
156,123
     
148,193
     
61,318
     
58,176
 
Claims to third parties
   
212,565
     
217,717
     
108,748
     
108,603
     
103,817
     
109,114
 
Petroleos del Peru S.A.- Petroperu S.A.
   
87,826
     
93,809
     
17,132
     
18,025
     
70,694
     
75,784
 
ITAN and other tax receivable
   
63,003
     
71,093
     
30,468
     
33,459
     
32,535
     
37,634
 
Restricted funds
   
29,121
     
9,483
     
2,092
     
2,137
     
27,029
     
7,346
 
Rental and sale of equipment - GyM S.A. projects
   
29,149
     
29,708
     
29,149
     
29,708
     
-
     
-
 
Accounts receivable from personneel
   
10,957
     
15,769
     
10,957
     
15,769
     
-
     
-
 
Consorcio Panorama
   
25,026
     
26,075
     
-
     
-
     
25,026
     
26,075
 
Other minors
   
10,386
     
6,519
     
9,738
     
5,649
     
648
     
870
 
     
863,804
     
864,315
     
532,157
     
538,296
     
331,647
     
326,019
 
Impairment
   
(102,050
)
   
(102,655
)
   
(98,626
)
   
(99,394
)
   
(3,424
)
   
(3,261
)
     
761,754
     
761,660
     
433,531
     
438,902
     
328,223
     
322,758
 
                                                 

The fair value of the other short-term accounts receivable is similar to their book value due to their short-term maturity. The non-current portion corresponds mainly to non-financial assets such as advances to suppliers and tax credits. Other non-current accounts receivable have maturities that vary between 2 and 5 years.

The maximum exposure to credit risk as of the reporting date is the carrying amount of each class of other accounts receivable mentioned.

13.  INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

This account comprises:

   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Associates
   
27,246
     
27,608
 
Joint ventures
   
8,270
     
8,930
 
     
35,516
     
36,538
 

The movement of our investments in associates for the periods ended March 31, 2020 and 2021 is as follows:

   
2020
   
2021
 
Opening balance
   
37,035
     
35,516
 
Equity interest in results
   
1,164
     
1,007
 
Conversion adjustment
   
(36
)
   
15
 
Final balance
   
38,163
     
36,538
 

Concesionaria Chavimochic S.A.C.

The entity was awarded the concesion of the Chavimochic irrigation project, including a) design and construction of the work required for the third-phase of the Chavimochic irrigation project in the province of La Libertad; b) operation and maintenance of works; and c) water supply to the Project users. Construction activities started in 2015; the effective concession period is 25 years, and the total investment amounts was estimated in US$647 million.

The civil works of the third stage of the Chavimochic Irrigation Project were structured in two phases. To date, the works of the first phase (Palo Redondo Dam) are 70% completed. However, at the beginning of 2017, the procedure for early termination of the Concession Contract was initiated due to the breach of contract by the Grantor, and all activities were suspended in December 2017. Due to the fact that no agreement was reached, the Concessionaire initiated an arbitration process at the UNCID. The arbitration proceedings are suspended, as a consequence of the of the National Emergency.
- 28 -


Moreover, from 2018 to date, the Peruvian Government (“the Grantor”) has been evaluating the modification of the Concession Contract, to determine a mechanism that allow the completion of the project, without resolution as of to date.

Finally, the Grantor and the Ministry of Agriculture and Irrigation (MINAGRI), and the Chavimochic Special Project, have signed an Agreement in order to allow MINAGRI to subrogate the ownership of the Project, within the framework of the provisions of the Emergency Decree N ° 021-2020.

14.  PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS

The movement in property, plant and equipment, intangible assets and right-of-use assets accounts for the periods ended March 31, 2020 and 2021, is as follows:

   
Property,
             
   
plant and
   
Intangibles
   
Right-of-use
 
   
equipment
   
assets
   
assets
 
                   
Net cost at January 1, 2020
   
463,990
     
854,227
     
90,581
 
                         
Additions
   
12,525
     
33,922
     
1,600
 
Reclassifications, disposals and adjustments (*)
   
(9,897
)
   
(14,131
)
   
(1,121
)
Deductions for sale of assets
   
(5,205
)
   
-
     
-
 
Depreciation, amortization
   
(21,419
)
   
(24,207
)
   
(7,258
)
                         
Net cost at March 31, 2020
   
439,994
     
849,811
     
83,802
 
                         
                         
Net cost at January 1, 2021
   
405,469
     
791,990
     
64,518
 
                         
Additions
   
5,011
     
4,295
     
42
 
Reclassifications, disposals and adjustments (*)
   
1,568
     
(1,167
)
   
(60
)
Deductions for sale of assets
   
(3,452
)
   
-
     
-
 
Depreciation, amortization
   
(18,893
)
   
(24,494
)
   
(5,823
)
                         
Net cost at March 31, 2021
   
389,703
     
770,624
     
58,677
 

(*) As of March 31, 2021, includes translation adjustments in the subsidiary Cumbra Peru S.A. and Adexus S.A. in property plant and equipment, intangibles, and right-of-use assets amounted to S/0.7 million, S/1.7 million and S/0.2 million, respectively (as of December 31, 2020, S/9.8 million, S/14.5 million and S/0.3 million, respectively).

a) Property, plant and equipment and right-of-use assets

As of March 31, 2021, additions to property, plant and equipment mainly corresponds to S/3 million in machinery of the engineering and construction segment; and S/0.8 million in equipment of the engineering and construction segment (as of March 31, 2020, S/5.1 million in machinery of the engineering and construction segment; and S/4.2 million in works in progress of the infrastructure segment).
- 29 -


As of March 31, 2021, additions to right-of-use assets comprise lease agreements signed by the Corporation.

For the periods ended March 31, 2020 and 2021, the depreciation of property, plant and equipment, investment property and right-of-use assets is presented in the Statement of Income as follows:

   
2020
   
2021
 
             
Cost of services and goods (Note 21)
   
27,615
     
22,005
 
Administrative expenses (Note 21)
   
1,663
     
3,314
 
Total depreciation
   
29,278
     
25,319
 
(-) Depreciation related to investment property
   
(601
)
   
(603
)
(-) Depreciation related to right-of-use assets (Note 14)
   
(7,258
)
   
(5,823
)
Total depreciation of property, plant
    and equipment
   
21,419
     
18,893
 

b) Intangible assets

As of March 31, 2021, the additions to intangibles correspond mainly to software development for S/1.4 million to the engineering and construction segment; and S/2.8 million for investments in the preparation of wells, concessions and licenses, and other assets corresponding to the infrastructure segment (as of March 31, 2020, for S/33.8 million for investments in the preparation of wells, concessions and licenses, and other assets corresponding to the infrastructure segment).

For the periods ended March 31, 2020 and 2021, the amortization of intangibles is broken down in the statement of income as follows:

   
2020
   
2021
 
Cost of sales and services (Note 21)
   
23,114
     
23,520
 
Administrative expenses (Note 21)
   
1,093
     
974
 
     
24,207
     
24,494
 
Goodwill

Management reviews businesses results based on the type of economic activity carried out.
Goodwill allocated to cash-generating units are:


   
At
   
At
 
   
December 31,
   
March 31,
 
   
2020
   
2021
 
Engineering and construction
   
38,211
     
36,396
 
Electromechanical
   
20,735
     
20,735
 
     
58,946
     
57,131
 

(*) The variation reported in engineering and construction segment is due to translation adjustment of foreign business of the subsidiary Cumbra Peru S.A.

As a result of the impairment testing on goodwill performed by Management on an annual basis the recoverable amount of the related cash-generating unit (CGU) is determined based on the higher of its value in use and fair value less cost of disposal.  Value in use is determined based on the future cash flows expected to be generated by the assessed CGU.
- 30 -


15.  BORROWINGS

This item comprises:

         
Total
         
Current
         
Non-current
 
   
At
   
At
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Bank loans (a)
   
571,659
     
546,434
     
409,272
     
429,331
     
162,387
     
117,103
 
Finance leases (b)
   
52,391
     
52,404
     
13,635
     
8,532
     
38,756
     
43,872
 
Lease liability for right-of-use asset (c)
   
72,726
     
69,220
     
19,950
     
18,639
     
52,776
     
50,581
 
Other financial entities (d)
   
201,544
     
204,172
     
10,027
     
19,523
     
191,517
     
184,649
 
     
898,320
     
872,230
     
452,884
     
476,025
     
445,436
     
396,205
 

a)
 Bank loans

As of December 31, 2020 and March 31, 2021, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations accrue fixed interest rates that fluctuate between 0.5% and 11.0% in 2020 and between 0.5% and 13.5% in 2021.

                     
Current
         
Non-current
 
               
At
   
At
   
At
   
At
 
   
Interest
   
Date of
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
rate
   
maturity
   
2020
   
2021
   
2020
   
2021
 
                                     
Cumbra Peru S.A. (i)
   
0.92% / 13.54
%
   
2022
     
222,924
     
225,526
     
19,977
     
16,588
 
UNNA ENERGIA S.A. (ii)
   
3.06% / 6.04
%
   
2027
     
24,950
     
20,818
     
99,474
     
100,184
 
AENZA S.A.A. (iii)
   
9.10% / 10.10
%
   
2022
     
51,977
     
81,629
     
39,618
     
-
 
Adexus S.A.
   
0.50% / 1.15
%
   
2021
     
19,224
     
15,409
     
-
     
-
 
Viva Negocio Inmobiliario S.A.
   
6.85% / 11.00
%
   
2023
     
90,197
     
85,949
     
3,318
     
331
 
                     
409,272
     
429,331
     
162,387
     
117,103
 

i)
Financial Stability Framework Agreement

In July 2017, the Company and its subsidiaries (Cumbra Peru S.A., Construyendo Pais S.A., Vial y Vives-DSD S.A. and Concesionaria Via Expresa Sur S.A.) entered into a Financial Stability Framework Agreement with the following financial entities: Scotiabank Peru S.A., Banco Internacional del Peru S.A.A., BBVA Banco Continental, Banco de Credito del Peru, Citibank del Peru SA and Citibank N.A. The Framework Agreement aims to: (i) grant Cumbra Peru S.A. a syndicated revolving line of credit for working capital for up to US$1.6 million and S/143.9 million, which may be increased by an additional US$14 million subject to certain conditions; (ii) grant Cumbra Peru S.A. a line of credit of up to US$51.6 million and S/33.6 million; (iii) grant the Company, Cumbra Peru S.A., Construyendo Pais S.A., Vial y Vives - DSD S.A. and Concesionaria Via Expresa Sur S.A. a non-revolving line of credit to finance repayment commitments subject to performance bonds; (iv) grant a syndicated line of credit in favor of the Company and Cumbra Peru S.A. for the issuance of performance bonds up to an amount of US$100 million (which may be increased by an additional US$50 million subject to compliance with certain conditions); and (v) commit to maintain existing standby letters of credit issued at the request of Cumbra Peru S.A. and the Company, as well as the request of Construyendo Pais S.A., Vial y Vives – DSD S.A. and Concesionaria Via Expresa Sur S.A. The loan matured in July 2020, which maturity was extended, most recently, until April 30, 2021. We are currently negotiating an additional extension.

In accordance with the Financial Stability Framework Agreement, the Company must comply quarterly with two ratios, related to its invoices and sales provisions: (i) the calculated value of 90% of its bills receivable, and (ii) the calculated value of 80% of its income provisions must be greater than 50% of the amount of Tranche A pending payment.

As of March 31, 2021, the account receivable rate and unbilled receivable rate reached 34% and 172%, respectively.  As of December 31, 2020 due to the stoppage of activities generated by the COVID-19 pandemic, the account receivable rate and unbilled receivable rate reached 56% and 142%, respectively. In relation to account receivable rate, the Company does not comply with the requirement of the Financial Stability Framework Agreement.
- 31 -


As of March 31, 2021, the Company's balance payable under the Financial Stability Framework Agreement amounts to US$29.4 million, equivalent to S/110.5 million (US$30.7 million, equivalent to S/111 million, as of December 31, 2020)

ii)
Terminales del Peru Loan

Terminales del Peru (hereinafter “TP”), a joint operation of the subsidiary UNNA ENERGIA S.A., has a medium-term loan agreement with Banco de Credito del Peru (hereinafter BCP) up to US$30 million to finance the investments committed and up to US$70 million to finance the additional investments from the operation contract of the North and Center terminals for the period 2015 to 2019 with a maximum exposure limit of US$80 million. These facilities are repaid within 8 years. As of March 31, 2021, these loans amount to US$22.1 million (equivalent to S/83.1 million) and due in 2027, this amount corresponds to the 50% interest held by the subsidiary UNNA ENERGIA S.A. (As of December 31, 2020, these loans amount to US$23.2 million, equivalent to S/84.1 million)

In addition, in November 2019, TP signed a loan agreement to finance the additional investments from 2019 to 2023, for a credit line amount to US$46 million with BCP. The contract confirmed the participation of an assignee, so BD Capital (BDC) acquired 50% of the BCP contractual position through the subscription of the accession contract and in November 2019 disbursed to TP US$23 million. As of March 31, 2021, the loan amounts to US$10 million (equivalent to S/37.6 million), this amount corresponds to the 50% interest held by the subsidiary UNNA ENERGIA S.A. and is due in 2026 (US$11 million, equivalent to S/40 million, as of December 31, 2020).

As of December 31, 2020 and the date of this report, TP is in compliance with the ratios established in the contract loan.

iii)
CS Peru Infrastructure Holdings LLC Loan

In July 2019, the Company entered into a medium-term loan credit agreement for up to US$35 million with CS Peru Infrastructure Holdings LLC. The term of the loan is three years, with quarterly installments of principal starting on the 18th month. The loan accrued interest at the following rates per annum: (i) for the period from and including the July 31, 2019 (“Closing Date”) to but excluding the date that is 6 months after the Closing Date, 9.10%; (ii) for the period from and including the date that is 6 months after the Closing Date to but excluding the date that is 1 year after the Closing Date, 9.35%; (iii) for the period between the first annual anniversary of the Closing Date and the day before the thirtieth month of the Closing Date, 9.60%, and (iv) for the period from the thirtieth month of the Closing Date to the third annual anniversary of the Closing Date, 10.10%. The loan was used for working capital in the Company, Cumbra Peru S.A. and Adexus S.A.

On November 21, 2019, as a result of the initiation of a preventive insolvency process by the Chilean subsidiary, Adexus S.A., the Company received a communication from CS Peru Infrastructure Holdings LLC reporting the occurrence of a default event under the loan contract, in accordance with the provisions of Section 7.02 (e) and 9.09 of the same contract. As a consequence, as of December 31, 2019, the loan was classified as current liabilities. In February 2020, US$10 million was partially paid. On February 28, 2020, the waiver was obtained by the Company, so it was reclassified to non-current liabilities. As of December 31, 2020, the Company complied with the covenants established in the loan contract.

On November 13, 2020, as a consequence of the health crisis caused by COVID-19, the Company notified CS Peru Infrastructure Holdings LLC of the breach of the leverage ratio in accordance with Section 8.10 (b) for the period ended September 30, 2020. On December 23, 2020, the Company obtained a waiver from CS Peru Infrastructure Holdings LLC for the non-applicability of the leverage ratio for the period ended September 30, 2020 and December 31, 2020.
- 32 -


For the period ended March 31, 2021, the Company defaulted on the leverage ratio in accordance with Section 8.10 (b). As a consequence, as of March 31, 2021, the loan was classified as current liabilities.

As of March 31, 2021, the principal amount of the loan is US$22 million, equivalent to S/82.8 million (US$25.7 million, equivalent to S/93.2 million, as of December 31, 2020).

iv)
Banco Santander Loan

On December 30, 2020, Técnicas Reunidas enforced two letters of credit in the aggregate amount of US$23.7 million, which letters of credit had been issued by Santander on behalf of our subsidiary Cumbra Peru S.A. as security pursuant to a construction contract. As a result, Cumbra Peru S.A. subscribed to a short term loan with Banco Santander in the aggregate principal amount of US$23.7 million (equivalent to S/85.9 million). The loan accrues interest at an annual rate of Libor + 8%. The term of the loan was 30 days, which maturity was extended until March 30, 2021. We subsequently negotiated payment in installments starting on May 2021 ending on September 2021. As of March 31, 2021, the principal amount of the loan is US$23.7 million, equivalent to S/89.1 million (US$23.7 million, equivalent to S/85.9 million, as of December 31, 2020).

b)
Other financial entities

The balance is mainly composed of the monetization of Norvial dividends, as described below.

At May 29, 2018 the Company subscribes an agreement between the Company and Inversiones Concesiones Vial S.A.C. ("BCI Peru") -whith the intervention of Fondo de Inversiones BCI NV (“Fondo BCI”) and BCI Management Administradora General de Fondos S.A. (“BCI” Asset Management”) - to monetize future dividends from Norvial S.A. to the Company. With the signing of this agreement, the Company obligated itself to indirectly transfer its economic rights over 48.8% of the share capital of Norvial S.A. by transferring its class B shares (equivalent to 48.8% of the capital of Norvial S.A.) to a vehicle specially constituted for such purposes named Inversiones en Autopistas S.A. The amount of the transaction was US$42.3 million (equivalent to S/138 million) and was completed on June 11, 2018.

Likewise, it has been agreed that the Company will have purchase options on 48.8% of Norvial's economic rights that BCI Peru will maintain through its participation in Inversiones en Autopistas S.A. These options will be subject to certain conditions such as the expiration of different terms, recovery of the investment made with the funds of the BCI Fund (according to different economic calculations) and/or that a change of control occurs.

During the 2020 period, the Company reviewed the projected cash flows and effective interest rate of the financial liability with BCI Peru based on new information available on Norvial's projected traffic and determined that there was a material quantitative change that exceeds the +/-10%. For this reason, the liability with BCI Peru measured at amortized cost was derecognized during 2020 in the amount of US$46 million; the difference between this amount and the new liability amounted to US$3.9 million, which was recorded in other income and expenses (net) in the income statement. Simultaneously, the Company recorded the same liability amounting to US$42.1 million which is measured at fair value from the date of initial recognition.

As of March 31, 2021, the loan balance payable amounted to US$41.4 million (equivalent to S/155.5 million (as of December 31, 2020, the balance was US$42.1 million, equivalent to S/152.5 million).

c)
Fair value of borrowings

The carrying amount and fair value of borrowings are broken down as follows:

 
Carrying amount
   

Fair value
 
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
 
                         
Bank loans
   
571,659
     
546,434
     
589,737
     
561,004
 
Finance leases
   
52,391
     
52,404
     
54,343
     
53,946
 
Lease liability for right-of-use asset
   
72,726
     
69,220
     
88,779
     
79,321
 
Other financial entities
   
201,544
     
204,172
     
247,857
     
252,992
 
     
898,320
     
872,230
     
980,716
     
947,263
 

As of March 31, 2021, the fair value is based on cash flows discounted using a rate based on the borrowing rate of 1.2% and 11% (0.7% and 11%  as of December 31, 2020) and are included as Level 2 in the level of measurement.
- 33 -


16.  BONDS

This item includes:

         
Total
         
Current
         
Non-current
 
   
At
   
At
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Tren Urbano de Lima S.A. (a)
   
624,454
     
624,674
     
21,081
     
21,775
     
603,373
     
602,899
 
Norvial S.A. (b)
   
280,848
     
273,821
     
32,819
     
33,001
     
248,029
     
240,820
 
Cumbra Peru S.A. (c)
   
27,457
     
26,027
     
4,546
     
4,097
     
22,911
     
21,930
 
     
932,759
     
924,522
     
58,446
     
58,873
     
874,313
     
865,649
 

a)
Tren Urbano de Lima S.A.


In February 2015, the subsidiary Tren Urbano de Lima S.A. issue corporate bonds under Regulation S of the United States of America. The issuance was made in VAC soles (adjusted for the Constant Update Value) for an amount of S/629 million. The bonds expire in November 2039 and accrue interest at a rate of 4.75% (plus the VAC adjustment), present a risk rating of AA + (local scale) granted by Support & International Associates Risk Classifier. As of March 31, 2021, an accumulated amortization amounting to S/94.6 million (S/90.6 million as of December 31, 2020) has been made.

As of March 31, 2021, the balance includes accrued interest payable and VAC adjustments for S/107.4 million (S/103.4 million as of December 31, 2020).

The account movement for the periods ended March 31, 2020 and 2021 is as follows:

   
2020
   
2021
 
             
Balance at January, 1
   
618,497
     
624,454
 
Amortization
   
(2,873
)
   
(4,014
)
Accrued interest
   
11,946
     
11,757
 
Interest paid
   
(7,512
)
   
(7,523
)
Balance at March, 31
   
620,058
     
624,674
 

As part of the bond structuring process, Tren Urbano de Lima S.A. pledged to report and verify compliance with the following, measured according to their individual financial statements (covenants):

-
Debt service coverage ratio not less than 1.2 times;
-
Maintain a constant balance in the minimum trust equal to one month of operation and maintenance costs (including VAT).
-
Maintain a constant balance in the minimum trust equal to the following two coupons according to the bond schedule.

As of December 31, 2020 and as of March 31, 2021, Tren Urbano de Lima S.A. has complied with the corresponding covenants.

As of March 31, 2021, the fair value amounts to S/624 million (S/623 million, as of December 31, 2020), this is based on discounted cash flows using the rate of 4.3% (3.6% as of December 31, 2020) and corresponds to level 2 of the fair value hierarchy.
- 34 -


b) Norvial S.A.

Between 2015 and 2016, the subsidiary Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA.

The capital raised was used to finance the construction of the second phase of Red Vial No.5 and the financing of VAT arising from a project-related expenses.

The account movement for the periods ended March 31, 2020 and 2021 is as follows:

   
2020
   
2021
 
             
Balance at January, 1
   
305,545
     
280,848
 
Amortization
   
(5,384
)
   
(6,940
)
Accrued interest
   
6,193
     
5,735
 
Capitalized interest
   
91
     
-
 
Interest paid
   
(6,283
)
   
(5,822
)
Balance at March, 31
   
300,162
     
273,821
 

As part of the process of bond structuring, Norvial S.A. engaged to adhere to the following covenants: 

-
Debt service coverage ratio of not less than 1.3 times.
-
Proforma gearing ratio lower than 4 times.

As of December 31, 2020 and March 31, 2021, Norvial S.A. has complied with the covenants.

As of March 31, 2021, the fair value amounts to S/279.3 million (S/304.7 million as of December 31, 2020), is based on discounted cash flows using rate  8.4% (between 6.7% and 8.1% as of December 31, 2020) and is within level 2 of the fair value hierarchy.

c)
Cumbra Peru S.A.

At the beginning of  2020, the subsidiary Cumbra Peru S.A. prepared the First Private Bond Program, up to a maximum amount of US$8 million.

In the first quarter of the year 2020,  bonds issued amounts to US$7.8 million (equivalent to S/25.9 million) under the debt swap modality, related to its outstanding trade accounts.

The bonds mature in December 2027 and bear interest at a rate of 8.5%, payment is semi-annual and have a risk rating of B-, granted by the rating company Moody’s Peru. As of March 31, 2021, the balance includes accrued interest payable for US$0.1 million, equivalent to S/0.4 million (US$0.6 million, equivalent to S/2.2 million, as of December 31, 2020).

The account movement for the periods ended March 31, 2020 and 2021 is as follows:

   
2020
   
2021
 
             
Balance at January, 1
   
-
     
27,457
 
Additions
   
26,781
     
-
 
Amortization
   
-
     
(1,758
)
Exchange difference
   
-
     
912
 
Accrued interest
   
431
     
536
 
Interest paid
   
-
     
(1,120
)
Balance at March, 31
   
27,212
     
26,027
 
 

- 35 -

As of March 31, 2021, the fair value amounts to S/26.8 million (S/28.6 million as of December 31, 2020), is based on discounted cash flows using rate 7.7% (7.1% as of December 31, 2020) and is within level 3 of the fair value hierarchy.

17.  TRADE ACCOUNTS PAYABLE

This item includes:

         
Total
         
Current
         
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Invoices payable (a)
   
470,118
     
519,323
     
470,118
     
519,323
     
-
     
-
 
Provision of contract costs (b)
   
659,299
     
622,468
     
618,797
     
582,844
     
40,502
     
39,624
 
Notes payable
   
8,252
     
7,178
     
8,252
     
7,178
     
-
     
-
 
     
1,137,669
     
1,148,969
     
1,097,167
     
1,109,345
     
40,502
     
39,624
 

As of March 31, 2021, the contract cost provisions include: i) estimate costs to come according to the the completion porcentage of projects amounting to S/29.3 million, for Cumbra Peru S.A. and Cumbra Ingenieria  S.A. (S/95.7 million as of December 31, 2020 for Cumbra Peru S.A. and Cumbra Ingenieria S.A); and ii) services received not invoiced S/593.2 million (S/563.6 million as of December 31, 2020).

18. OTHER ACCOUNTS PAYABLE

This item includes:

   
Total
   
Current
   
Non-current
 
   
At
   
At
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Advances received from customers (a)
   
309,590
     
311,824
     
278,490
     
297,281
     
31,100
     
14,543
 
Consorcio Ductos del Sur - payable (b)
   
88,206
     
91,768
     
28,836
     
28,023
     
59,370
     
63,745
 
Salaries and other payable
   
77,386
     
109,092
     
77,386
     
109,092
     
-
     
-
 
Put option liability on Morelco acquisition
   
118,622
     
123,009
     
79,096
     
82,021
     
39,526
     
40,988
 
Third-party loans
   
11,608
     
11,617
     
9,533
     
9,542
     
2,075
     
2,075
 
Other taxes payable
   
115,862
     
120,920
     
102,240
     
107,250
     
13,622
     
13,670
 
Acquisition of additional non-controlling interest
   
27,596
     
29,304
     
27,596
     
29,304
     
-
     
-
 
Guarantee deposits
   
23,744
     
23,974
     
23,744
     
23,974
     
-
     
-
 
Consorcio Rio Mantaro - payables
   
58,129
     
60,279
     
58,129
     
60,279
     
-
     
-
 
Provision of interest for debt with suppliers
   
16,425
     
17,728
     
-
     
230
     
16,425
     
17,498
 
Other accounts payables
   
54,470
     
47,706
     
33,356
     
25,900
     
21,114
     
21,806
 
     
901,638
     
947,221
     
718,406
     
772,896
     
183,232
     
174,325
 

(a)
Advances received from customers relate mainly from construction projects, and are applied to progress billings, in accordance with contract terms.

         
Total
         
Current
         
Non-current
 
   
At
   
At
   
At
   
At
   
At
   
At
 
   
December 31,
   
March 31,
   
December 31,
   
March 31,
   
December 31,
   
March 31,
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Advances Customers Consortiums
   
83,640
     
105,844
     
83,640
     
105,844
     
-
     
-
 
Customer advances for real estate projects
   
78,286
     
100,876
     
78,286
     
100,876
     
-
     
-
 
Concentradora Norte - Quellaveco
   
86,415
     
70,168
     
71,571
     
65,448
     
14,844
     
4,720
 
Special National Transportation Infrastructure Project
   
24,050
     
21,463
     
13,781
     
11,839
     
10,269
     
9,624
 
Others
   
37,199
     
13,473
     
31,212
     
13,274
     
5,987
     
199
 
     
309,590
     
311,824
     
278,490
     
297,281
     
31,100
     
14,543
 

(b)
The balance of other accounts payable from Consorcio Constructor Ductos del Sur corresponds to payment obligations to vendors and main subcontractors for S/91.7 million (S/88.2 million as of December 31, 2020), assumed by the subsidiary Cumbra Peru S.A. as a result of the termination of Gasoducto Sur Peruano S.A. operations.

The fair value of short-term accounts approximates their book value due to their short-term maturities. The non-current part mainly includes non-financial liabilities such as advances received from customers; the remaining balance is not significant in the financial statements for the periods shown.
- 36 -


19.  PROVISIONS

The account movement for the periods ended March 31, 2020 and 2021 is as follows:

   
Legal
   
Provision
       
   
and tax
   
for well
       
   
claims
   
closure
   
Total
 
                   
At January 1, 2020
   
278,319
     
50,116
     
328,435
 
Additions
   
8,623
     
6,315
     
14,938
 
Reversals of provisions
   
(3,713
)
   
-
     
(3,713
)
Payments
   
(395
)
   
(817
)
   
(1,212
)
Translation adjustments
   
1,716
     
-
     
1,716
 
At March 31, 2020
   
284,550
     
55,614
     
340,164
 
                         
At January 1, 2021
   
376,417
     
52,949
     
429,366
 
Additions
   
5,697
     
772
     
6,469
 
Reversals of provisions
   
(1,593
)
   
-
     
(1,593
)
Reclasification
   
157
     
-
     
157
 
Payments
   
(913
)
   
(27
)
   
(940
)
Translation adjustments
   
6,140
     
108
     
6,248
 
At March 31, 2021
   
385,905
     
53,802
     
439,707
 

Legal contingencies

a)
Civil compensation

Corresponding to the legal contingency estimated by management for exposure of the Company and its subsidiaries to a probable compensation in relation to their participation as minority partners in certain entities that developed infrastructure projects in Peru with companies belonging to the Odebrecht group and projects related to “Club de la Construcción”. As of March 31, 2021, the present value of the estimated provision totals S/218.6 million (S/216.3 million as of December 31, 2020).

b)
Proceso administrative Indecopi

On March 9, 2021, Cumbra Peru S.A. was notified with the Final Instruction Report prepared by the Technical Secretariat, which is subject to review by the Commission for the Defense of Free Competition of INDECOPI, related to the sanctioning administrative procedure mentioned in Note 1.c). In this regard, Company and its legal advisors estimate that, based on the findings of the Final Investigation Report, the fine to be imposed on Cumbra Peru S.A. in this case should not exceed S/39 million and was recorded on March 31, 2021 the equivalent to the corresponding present value that results in S/24.5 million.

c)
Securities Class actions NY SEC

During the first quarter of 2017 two securities class actions have been filed against the Company, and certain former employees in the Eastern District of New York.  Both complaints allege false and misleading statements during the class period.  In particular, they allege that the Company failed to disclose, among other things, that a) the Company knew that its partner Odebrecht was engaged in illegal activities, and b) the Company profited from such activities in violation of its own corporate governance standards.
- 37 -

As of the date of this report, the Company has signed the definitive settlement agreement with the plaintiffs' attorneys, by which the parties agree to terminate the class action, subject to the court approval and the payment of the transaction amount by the Company. The amount agreed for the termination of the class action is equivalent to US$20 million. In 2020, a payment of US$0.3 million (equivalent to S/1.1 million) and US$5 million was made and covered by the Company and by the professional liability policy in accordance with the agreement signed with the insurer, respectively. The settlement terms stipulate that the remaining $14,650,000, plus interest of 5% per annum running from September 17, 2020, must be paid by the company by June 30, 2021. As of March 31, 2021, the Company maintains a provision of US$14.7 million plus interest of US$0.4 million (equivalent to S/55.1 million and S/1.5 million, respectively).We have initiated discussions with the plaintiffs regarding a deferral of this payment.

20.  CAPITAL

As of March 31, 2021 and as of December 31, 2020, the capital of the Company is represented by 871,917,855 shares of a nominal value of S/1.00 each, all registered in the Public Registries.

As of March 31, 2021, a total of 158,459,130 shares were represented in ADS, equivalent to 31,691,826 ADSs at a rate of 5 shares per ADS.

As of December 31, 2020, a total of 190,863,050 shares were represented by ADS, equivalent to 38,172,610 ADSs at a rate of 5 shares per ADS.

21.  EXPENSES BY NATURE

For the periods ended March 31, 2020 and 2021, this item comprises:

   
Cost
             
   
of goods
   
Administrative
       
   
and services
   
expenses
   
Total
 
2020
                 
Services provided by third-parties
   
250,779
     
9,670
     
260,449
 
Salaries, wages and fringe benefits
   
309,920
     
27,224
     
337,144
 
Purchase of goods
   
171,193
     
-
     
171,193
 
Other management charges
   
69,362
     
4,481
     
73,843
 
Depreciation  (Note 14)
   
27,615
     
1,663
     
29,278
 
Amortization (Note 14)
   
23,114
     
1,093
     
24,207
 
Impairment of accounts receivable
   
205
     
5
     
210
 
Taxes
   
1,904
     
287
     
2,191
 
Recovery of property, plant and equipment
   
(102
)
   
-
     
(102
)
Inventory recovery
   
(644
)
   
-
     
(644
)
     
853,346
     
44,423
     
897,769
 
                         
                         
   
Cost
                 
   
of goods
   
Administrative
         
   
and services
   
expenses
   
Total
 
2021
                       
Services provided by third-parties
   
224,133
     
9,768
     
233,901
 
Salaries, wages and fringe benefits
   
301,827
     
31,083
     
332,910
 
Purchase of goods
   
183,398
     
-
     
183,398
 
Other management charges
   
47,971
     
4,364
     
52,335
 
Depreciation  (Note 14)
   
22,005
     
3,314
     
25,319
 
Amortization (Note 14)
   
23,520
     
974
     
24,494
 
Impairment of accounts receivable
   
202
     
-
     
202
 
Taxes
   
947
     
14
     
961
 
Recovery of property, plant and equipment
   
(1,023
)
   
-
     
(1,023
)
Impairment of inventory
   
150
     
-
     
150
 
     
803,130
     
49,517
     
852,647
 
                         
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22.  OTHER INCOME AND EXPENSES

For the periods ended March 31, 2020 and 2021, this item comprises:

   
2020
   
2021
 
Other income:
           
Sale of assets
   
3,523
     
3,462
 
Penalty income
   
-
     
465
 
Supplier debt forgiveness
   
183
     
-
 
Recovery of provisions and impairments
   
1,571
     
1,491
 
Others
   
979
     
1,772
 
     
6,256
     
7,190
 
                 
Other expenditures:
               
Asset impairment
   
-
     
53
 
Net cost of fixed assets disposal
   
4,884
     
3,718
 
Legal and tax litigation
   
239
     
-
 
Provision for well closure
   
6,325
     
71
 
Administrative fine
   
2,403
     
4,790
 
Others
   
449
     
167
 
     
14,300
     
8,799
 
     
(8,044
)
   
(1,609
)

23.  FINANCIAL INCOME AND EXPENSES

For the periods ended March 31, 2020 and 2021, this item comprises:
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2020
   
2021
 
             
Financial income:
           
Interest on loans to third parties
   
397
     
54
 
Profit for present value of financial asset or financial liability
   
1,402
     
897
 
Interest on short-term bank deposits
   
963
     
203
 
Others
   
704
     
574
 
     
3,466
     
1,728
 
                 
                 
Financial expenses:
               
Interest expense:
               
- Bank loans
   
22,022
     
17,553
 
- Bonds
   
6,715
     
6,271
 
- Loans from third parties
   
2,543
     
1,833
 
- Right-of-use
   
1,442
     
1,058
 
- Financial lease
   
355
     
810
 
Commissions and collaterals
   
2,580
     
6,351
 
Interests of the Tax Administration
   
1,291
     
8,778
 
Loss for present value of financial asset or financial liability
   
577
     
25,769
 
Exchange difference loss, net
   
7,961
     
2,844
 
Derivative financial instruments
   
25
     
-
 
Other financial expenses
   
7,668
     
1,006
 
Less capitalized interest
   
(1,623
)
   
(1,120
)
     
51,556
     
71,153
 

a)
The increase of S/25.8 million is generated by the effect of the discount rate applied to calculate the present value of the account receivable from Gasoducto Sur Peruano S.A. (financial asset), which increased from 1.65% to 2.47%.

24.  INCOME TAX

The condensed interim consolidated financial statements for the period ended March 31, 2021, income tax expense is recognized based on management’s estimate of the annual income tax rate expected for the full financial year. The estimated annual tax rate as of March 31, 2021 is 62.21% (3.19% for the period ended in March 31, 2020).

25.  CONTINGENCIES, COMMITTMENTS AND GUARANTEES

As of March 31, 2021, contingencies held by the Corporation are substantially the same as those existing as of December 31, 2020.

The Corporation maintains guarantees and letters of credit in force in various financial entities guaranteeing operations for US$396.1 million (US$427.5 million, as of December 31, 2020).

26.  DIVIDENDS

In compliance with certain covenants, the company will not pay dividends for the years 2019 and 2020, except for transactions with non-controlling interests. Certain of our debt or other contractual obligations may restrict our ability to pay dividends in the future.

For the period ended March 31, 2021, the Corporation’s subsidiaries have paid dividends to its non-controlling interests in the amount of S/4.3 million (S/42.6 million for period  ended in March 31, 2020).

27.  LOSS PER SHARE

The basic loss per common share has been calculated by dividing the loss of the period attributable to the Corporation’s common shareholders by the weighted average of the number of common shares outstanding during that period. No diluted loss per common share has been calculated because there is no potential diluent common or investment shares (ie, financial instruments or agreements that entitle to obtain common or investment shares); therefore, it is the same as the loss per basic share.
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The basic loss per common share is as follows:

     
2020
   
2021
 
               
Loss attributable to owners of the Company
             
during the period
     
(30,444
)
   
(34,697
)
Weighted average number of shares in issue
                 
at S/1.00 each, at March 31,
     
871,917,855
     
871,917,855
 
                   
Basic loss per share (in S/)
(*)
   
(0.035
)
   
(0.040
)

(*) The Corporation does not have common shares with dilutive effects at March 31, 2020 and 2021.

28.  OPERATIONS OF SUBSIDIARY ADEXUS S.A. RECLASSIFIED AS CONTINUING OPERATIONS

As of September 30, 2020, the financial information of the subsidiary Adexus S.A. (hereinafter Adexus) was reclassified as continuous operation. The subsidiary that have been reclassified as a non-current assets held for sale at December 31, 2018, has as main activity to provide information technology solutions mainly in Chile and Peru. Despite the fact that the Company has been committed to a pan to carry out the sale, the circumstances that arose in the subsidiary during this period, which are explained below, have forced us to change initial plan, focusing in negotiating with vendors liabilities terms sale resulting in a viable plan again.

On November 19, 2019, Adexus filed an application for reorganization under law 20720 with the Chilean courts of justice. The Company impaired the total investment value as of December 31, 2019.

On January 9, 2020, the Company communicated that the creditors committee of Adexus approved with the favorable vote of more than 80% of the pledge creditors and 85% of the unsecured creditors, respectively, the judicial reorganization agreement proposed by Adexus in the framework of the reorganization procedure. According to the terms of the judicial reorganization agreement, Adexus will restructure and pay the total of its reorganized liabilities within a maximum period of six years, according to the new agreed conditions, being authorized to continue with its commercial activities normally. As a result of the financial protection provided by the Chilean law and with the support of its creditors, Adexus has achieved the restructuring of its liabilities while continuing to serve all its customers.  In 2020, Adexus S.A. has complied with the payment schedule agreed with the creditors. On December 28, the creditor’s committee signed a debt reorganization agreement whithe pledge creditors and unsecured creditors.

The Corporation decided that Adexus will be subject to the patrimonial protection law; after achieving this restructuring, the Corporation will focus on honoring it in the terms agreed while finding the right shareholder for the future development of the subsidiary.

29.  EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

Between March 31, 2021 and the date of approval of the condensed interim consolidated financial statements, there have been no subsequent events that may affect the reasonableness of the financial statements issued.


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