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 April 2017

  Commission File Number 001-35591

GRAÑA Y MONTERO S.A.A.
(Exact name of registrant as specified in its charter)
 
GRAÑA Y MONTERO GROUP
(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.












_______________________
/s/ Claudia Drago Morante
Stock Market Representative
Graña y Montero S.A.A.


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/ CLAUDIA DRAGO MORANTE

Name: Claudia Drago Morante

Title: Stock Market Representative

April 27, 2017
 
(All amounts are expressed in thousands of S/ unless otherwise stated)

UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2017 AND 2016 AND FOR THE THREE-MONTH PERIOD
ENDED IN THIS DATE
 
(All amounts are expressed in thousands of S/ unless otherwise stated)

UNAUDITED


GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2017 AND 2016 AND FOR THE THREE-MONTH PERIOD ENDED IN THIS DATE
 


CONTENTS





Condensed Interim Consolidated Statement of Financial Position

Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Interim Consolidated Statement of Shareholders’ Equity

Condensed Interim Consolidated Statement of Cash Flows

Notes to the Condensed Interim Consolidated Financial Statements





 
S/            =      New Peruvian Sol
US$            =      United States dollar
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
ASSETS
                 
LIABILITIES AND EQUITY
                 
         
At
                 
At
       
         
December 31,
   
March 31,
           
December 31,
   
March 31,
 
   
Note
   
2016
   
2017
     
Note
   
2016
   
2017
 
                                       
Current assets
                 
Current liabilities
                 
Cash and cash equivalents
         
606,949
     
521,430
 
Borrowings
   
12
     
1,294,945
     
1,133,539
 
Financial asset at fair value through profit or loss
         
352
     
327
 
Bonds
   
13
     
46,091
     
46,656
 
Trade accounts receivables
         
1,113,293
     
1,153,804
 
Trade accounts payable
           
1,238,093
     
1,000,193
 
Unbilled work in progress
         
920,092
     
664,321
 
Accounts payable to related parties
   
8
     
81,422
     
67,925
 
Accounts receivable from related parties
   
8
     
121,276
     
170,904
 
Current income tax
           
33,016
     
36,320
 
Other accounts receivable
           
656,407
     
672,994
 
Other accounts payable
           
1,128,882
     
1,115,321
 
Inventories
           
1,107,361
     
1,015,745
 
Provisions
   
14
     
16,198
     
13,447
 
Prepaid expenses
           
48,341
     
49,240
 
 
           
3,838,647
     
3,413,401
 
 
           
4,574,071
     
4,248,765
 
 
                       
 
                       
Non-current assets classified as held for sale
           
-
     
236,882
 
Non-current assets classified as held for sale
   
9
     
22,385
     
986,406
 
 
                       
 
                       
Total current liabilities
           
3,838,647
     
3,650,283
 
Total current assets
           
4,596,456
     
5,235,171
                           
                         
Non-current liabilities
                       
Non-current assets
                       
Borrowings
   
12
     
1,085,515
     
1,083,157
 
Long-term trade accounts receivable
           
667,370
     
662,242
 
Long-term bonds
   
13
     
921,623
     
917,305
 
Long-term unbilled work in progress
           
24,165
     
24,619
 
Other long-term accounts payable
           
502,184
     
507,305
 
Long-term accounts receivable from related parties
   
8
     
608,247
     
591,451
 
Long-term accounts payable to related parties
   
8
     
23,648
     
22,222
 
Prepaid expenses
           
23,526
     
29,992
 
Provisions
   
14
     
30,670
     
31,727
 
Other long-term accounts receivable
           
325,797
     
327,761
 
Derivative financial instruments
           
1,081
     
788
 
Investments in associates and joint ventures
   
10
     
901,832
     
181,037
 
Deferred income tax liability
           
90,176
     
89,118
 
Investment property
           
49,357
     
49,622
 
Total non-current liabilities
           
2,654,897
     
2,651,622
 
Property, plant and equipment
   
11
     
1,128,111
     
1,104,289
 
Total liabilities
           
6,493,544
     
6,301,905
 
Intangible assets
   
11
     
1,004,982
     
1,017,833
 
 
                       
Deferred income tax asset
           
262,240
     
251,348
 
Equity
                       
Total non-current assets
           
4,995,627
     
4,240,194
 
Capital
   
15
     
660,054
     
660,054
 
                         
Legal reserve
           
132,011
     
132,011
 
                         
Optional reserve
           
29,974
     
29,974
 
                         
Share Premium
           
882,464
     
882,464
 
                         
Other reserves
           
(166,650
)
   
(173,930
)
                         
Retained earnings
           
1,037,633
     
1,116,756
 
                         
Equity attributable to controlling interest in the Company
           
2,575,486
     
2,647,329
 
                         
Non-controlling interest
           
523,053
     
526,131
 
                         
Total equity
           
3,098,539
     
3,173,460
 
Total assets
           
9,592,083
     
9,475,365
 
Total liabilities and equity
           
9,592,083
     
9,475,365
 
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
- 2 -
(All amounts are expressed in thousands of S/. unless otherwise stated)
         
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
       
         
         
CONSOLIDATED INCOME STATEMENT
       
       
For the period of three months
 
       
ended March 31,
       
 
Note
   
2016
   
2017
 
                 
                 
Revenues from construction activities
       
952,051
     
568,221
 
Revenues from services provided
       
411,616
     
559,762
 
Revenue from real estate and sale of goods
       
69,382
     
290,382
 
         
1,433,049
     
1,418,365
 
                     
Cost of construction activities
       
(889,521
)
   
(601,941
)
Cost of services provided
       
(359,543
)
   
(421,261
)
Cost of real estate and goods sold
       
(40,559
)
   
(183,989
)
     
16
     
(1,289,623
)
   
(1,207,191
)
Gross profit
           
143,426
     
211,174
 
                         
Administrative expenses
   
16
     
(94,135
)
   
(96,916
)
Other income and expenses
           
6,410
     
749
 
Gain from the sale of investments
           
31,667
     
25,768
 
Operating profit
           
87,368
     
140,775
 
                         
Financial expenses
           
(27,127
)
   
(45,895
)
Financial income
           
13,161
     
27,416
 
Share of the profit or loss in associates and joint
                       
ventures under the equity method of accounting
           
21,515
     
5,482
 
Profit before income tax
           
94,917
     
127,778
 
Income tax
   
17
     
(13,940
)
   
(39,684
)
Profit for the period
           
80,977
     
88,094
 
                         
Profit attributable to:
                       
Owners of the Company
           
70,874
     
79,123
 
Non-controlling interest
           
10,103
     
8,971
 
             
80,977
     
88,094
 
                         
Earnings per share from continuing operations
                       
attributable to owners of the Company during
                       
the period
           
0.107
     
0.120
 
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
- 3 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 
         
For the period of three months
 
         
ended March 31,
 
   
Note
   
2016
   
2017
 
                   
                   
Profit for the period
           
80,977
     
88,094
 
Other comprehensive income:
                       
Items that will not be reclassified to profit or loss
                       
Remeasurement of actuarial gains and losses, net of tax
           
(1,025
)
   
-
 
                         
Items that may be subsequently  reclassified to profit or loss
                       
Cash flow hedge, net of tax
           
(48
)
   
198
 
Foreign currency translation adjustment, net of tax
           
8,942
     
(5,031
)
Transfer to profit or loss of available-for-sale financial assets
           
(43,681
)
   
-
 
Exchange difference from net investment in a foreign operation, net of tax
     
5,528
     
(3,616
)
             
(29,259
)
   
(8,449
)
Other comprenhensive income for the period, net of tax
           
(30,284
)
   
(8,449
)
Total comprehensive income for the period
           
50,693
     
79,645
 
                         
Comprehensive income attributable to:
                       
Owners of  the Company
           
37,931
     
71,843
 
Non-controlling interest
           
12,762
     
7,802
 
             
50,693
     
79,645
 
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
- 4 -
(All amounts are expressed in thousands of S/. unless otherwise stated)
   
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
   
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD OF THE THREE MONTHS ENDED MARCH 31, 2016 AND 2017
 
   
Attributable to the controlling interests of the Company
                               
   
Number
of shares
In thousands
   
Capital
   
Legal
reserve
   
Optional
reserve
   
Premium
for issuance
of shares
     
Other
reserves
   
Retained
earnings
   
Total
   
Non-controlling
interest
   
Total
 
                                                             
                                                             
Balances as of January 1, 2016
   
660,054
     
660,054
     
132,011
     
29,974
     
897,532
     
(129,059
)
   
1,064,044
     
2,654,556
     
528,489
     
3,183,045
 
Profit for the period
   
-
     
-
     
-
     
-
     
-
     
-
     
70,874
     
70,874
     
10,103
     
80,977
 
Cash flow hedge
   
-
     
-
     
-
     
-
     
-
     
(46
)
   
-
     
(46
)
   
(2
)
   
(48
)
Adjustment for actuarial gains and losses
   
-
     
-
     
-
     
-
     
-
     
-
     
(572
)
   
(572
)
   
(453
)
   
(1,025
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
5,925
     
-
     
5,925
     
3,017
     
8,942
 
Change in value of available-for-sale financial assets
   
-
     
-
     
-
     
-
     
-
     
(43,681
)
   
-
     
(43,681
)
   
-
     
(43,681
)
Exchange difference from net investment in a foreign operation
   
-
     
-
     
-
     
-
     
-
     
5,431
     
-
     
5,431
     
97
     
5,528
 
Comprehensive income of the year
   
-
     
-
     
-
     
-
     
-
     
(32,371
)
   
70,302
     
37,931
     
12,762
     
50,693
 
Transactions with shareholders:
                                                                               
- Dividend distribution
   
-
     
-
     
-
     
-
     
-
     
-
     
(30,853
)
   
(30,853
)
   
(2,311
)
   
(33,164
)
- Contributions of non-controlling shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(1,599
)
   
(1,599
)
Total transactions with shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
(30,853
)
   
(30,853
)
   
(3,910
)
   
(34,763
)
Balances as of March 31, 2016
   
660,054
     
660,054
     
132,011
     
29,974
     
897,532
     
(161,430
)
   
1,103,493
     
2,661,634
     
537,341
     
3,198,975
 
                                                                                 
Balances as of January 1, 2017
   
660,054
     
660,054
     
132,011
     
29,974
     
882,464
     
(166,650
)
   
1,037,633
     
2,575,486
     
523,053
     
3,098,539
 
Profit for the period
   
-
     
-
     
-
     
-
     
-
     
-
     
79,123
     
79,123
     
8,971
     
88,094
 
Cash flow hedge
   
-
     
-
     
-
     
-
     
-
     
188
     
-
     
188
     
10
     
198
 
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(4,274
)
   
-
     
(4,274
)
   
(757
)
   
(5,031
)
Exchange difference from net investment in a foreign operation
   
-
     
-
     
-
     
-
     
-
     
(3,194
)
   
-
     
(3,194
)
   
(422
)
   
(3,616
)
Comprehensive income of the period
   
-
     
-
     
-
     
-
     
-
     
(7,280
)
   
79,123
     
71,843
     
7,802
     
79,645
 
Transactions with shareholders:
                                                                               
- Dividend distribution
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(4,558
)
   
(4,558
)
- Contributions (devolution) of non-controlling shareholders,net
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(166
)
   
(166
)
Total transactions with shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(4,724
)
   
(4,724
)
Balances as of March 31, 2017
   
660,054
     
660,054
     
132,011
     
29,974
     
882,464
     
(173,930
)
   
1,116,756
     
2,647,329
     
526,131
     
3,173,460
 
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
- 5 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
         
For the period of three months
 
         
ended March 31,
 
   
Note
   
2016
   
2017
 
                   
OPERATING ACTIVITIES
                 
Profit before income tax
         
94,917
     
127,778
 
Adjustments to  profit not affecting cash flows from
                     
operating activities:
                     
Depreciation
   
11
     
45,286
     
50,249
 
Amortization of other assets
   
11
     
19,668
     
23,622
 
Impairment of inventories
   
16
     
117
     
301
 
Impairment of accounts receivable and other accounts receivable
   
16
     
15
     
85
 
Impairment of property, plant and equipment
   
16
     
269
     
333
 
Profit on fair value of financial asset at fair value through profit or loss
     
(163
)
   
(37
)
Other Provisions
   
14
     
2,209
     
962
 
Financial expense,net
           
30,227
     
47,157
 
Foreign exchange loss (gain) on loans
           
(32,209
)
   
(47,766
)
Share of the profit and loss in associates and joint ventures
                       
under the equity method of accounting
   
10
     
(21,515
)
   
(5,482
)
Reversal of provisions
   
14
     
(660
)
   
(20
)
Lower of fixed assets
           
-
     
3,410
 
Lower of investments
           
-
     
64
 
Profit on sale of property, plant and equipment
           
(828
)
   
(2,511
)
Gain (loss) on financial asset at fair value through profit or loss
           
(31,606
)
   
-
 
Loss on sale of non-current asset held for sale
           
(22
)
   
(25,724
) 
Net variations in assets and liabilities:
                       
Trade accounts receivable
           
274,849
     
(2,177
)
Other accounts receivable
           
39,839
     
(35,142
)
Other accounts receivable from related parties
           
(14,118
)
   
11,393
 
Inventories
           
(23,358
)
   
77,353
 
Pre-paid expenses and other assets
           
(331
)
   
(7,086
)
Trade accounts payable
           
(174,915
)
   
(64,374
)
Other accounts payable
           
(189,508
)
   
21,018
 
Other accounts payable to related parties
           
51,581
     
(22,383
)
Other provisions
           
(202
)
   
(2,501
)
Interest payment
           
(31,710
)
   
(46,882
)
Payments related to Norvial Concession
           
(26,732
)
   
(3,178
)
Payment of income tax
           
(59,711
)
   
(26,545
)
Net cash applied to operating activities
           
(48,611
)
   
71,917
 
                         
INVESTING ACTIVITIES
                       
Sale of available-for-sale investment
           
1,262
     
-
 
Sale of property, plant and equipment
           
4,917
     
15,860
 
Sale of non-current assets held for sale
           
-
     
43,364
 
Interest received
           
1,722
     
1,700
 
Payment for purchase of investments properties
           
-
     
(840
)
Payments for intangible purchase
           
(2,402
)
   
(21,768
)
Payments for purchase and contributions on investment
                       
in associate and joint ventures
           
(199,001
)
   
-
 
Payments for property, plant and equipment purchase
           
(32,433
)
   
(47,304
)
Net cash applied to investing activities
           
(225,935
)
   
(8,988
)
                         
FINANCING ACTIVITIES
                       
Loans received
           
1,270,564
     
453,988
 
Bonds issued
           
100,013
     
-
 
Amortization of loans received
           
(1,038,836
)
   
(588,705
)
Amortization of bonds issued
           
(5,411
)
   
(8,134
)
Payment for transaction costs for debt
           
(13,876
)
   
(873
)
Dividends paid to non-controlling interest
           
(2,311
)
   
(4,558
)
Cash received from non-controlling shareholders
           
(1,598
)
   
(166
)
Net cash provided by financing activities
           
308,545
     
(148,448
)
Net increase (net decrease) in cash
           
33,999
     
(85,445
)
Cash and cash equivalents at the beginning of the year
           
554,002
     
606,949
 
Cash and cash equivalents at the end of the period
           
588,001
     
521,430
 
                         
NON-CASH TRANSACTIONS:
                       
Dividends declared
           
30,853
     
-
 
Debt capitalization
           
8,308
     
-
 
Acquisition of assets through finance leases
           
12,047
     
22,193
 
Change in fair value of available-for-sale financial assets
           
(43,681
)
   
-
 
Investment available for sale
           
120,134
     
-
 
 
The accompanying notes on pages 8 to 22 are an integral part of the consolidated financial statements.
- 6 -

(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2016 AND 2017 (UNAUDITED), AND AT DECEMBER 31, 2016 (UNAUDITED)


1
GENERAL INFORMATION

The Company is the parent company of the Graña y Montero Group (hereinafter the Group) and it is mainly engaged in holding the investments in the different companies of the Group. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory and human resources management to the Group´s companies; it is also engaged in the leasing of offices to the Group’s companies.

The Group is a conglomerate of companies with operations including different business activities, of which the most significant are engineering and construction, infrastructure (public concession ownership and operation), real estate businesses and services.

These condensed interim consolidated financial statements as of March 31, 2017 have been prepared and authorized for issuance by the Chief Financial Officer on April 27, 2017.

2
BASIS OF PREPARATION

These condensed interim consolidated financial statements for the period ended March 31, 2017 have been prepared in accordance with (IAS 34) “Interim financial reporting”.
 
To date, the audited report for the period 2016 has not been issued by our external auditors. As we are aware, we are carrying out complementary procedures, since some projects involving minority and non-controlling companies are being investigated in Peru.

In this regard, some items of the Financial Statements as of December 2016 have been adjusted to the amounts previously issued through complementary auditing procedures that are still ongoing. By virtue of this, the information for the 2016 period is preliminary and may be subject to subsequent modifications.
 
3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those applied in the preparation of the year-end financial statements at December 31, 2016.

4
FINANCIAL RISK MANAGEMENT

4.1
Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk.

4.1.1
Market risk –

Compared to year end, no new material market risk hedging arrangements have occurred.
- 7 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

 
4.1.2
Credit risk –

Compared to year end, no new credit risk has been identified in the Group, considering that the level of lines used has remained the same as in the previous year.

4.1.3
Liquidity risk -
Compared to year end, no major changes in undiscounted contractual cash flows have occurred. In addition, the company has been working on identifying non-strategic assets for sale and allocating funds to debt amortization.

The following table categorizes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:
 
 
Less than
1 year
   
From 1 to
2 years
   
From 2 to
5 years
   
Over
5 years
    Total  
At December 31, 2016
Other financial liabilities (except for finance leases)
   
1,226,484
     
400,329
     
611,664
     
-
      2,238,477  
Finance leases
   
127,492
     
86,016
     
26,780
     
19,506
      259,794  
Bonds
   
113,299
     
180,431
     
365,697
     
1,334,485
      1,993,912  
Trade accounts payables
   
1,238,093
     
-
     
-
     
-
      1,238,093  
Accounts payables to related parties
   
81,422
     
23,648
     
-
     
-
      105,070  
Other accounts payables
   
304,270
     
46,525
     
133,169
     
-
      483,964  
Other non-financial liabilities
   
-
     
1,081
     
-
     
-
      1,081  
     
3,091,060
     
738,030
     
1,137,310
     
1,353,991
      6,320,391  
At March 31, 2017
                                       
Other financial liabilities (except for finance leases)
   
1,061,453
     
578,352
     
432,723
     
-
      2,072,528  
Finance leases
   
111,953
     
76,999
     
26,967
     
18,081
      234,000  
Bonds
   
113,470
     
177,712
     
364,223
     
1,322,157
      1,977,562  
Trade accounts payables
   
1,000,193
     
-
     
-
     
-
      1,000,193  
Accounts payables to related parties
   
67,925
     
22,222
     
-
     
-
      90,147  
Other accounts payables
   
210,797
     
30,937
     
110,743
     
-
      352,477  
Other non-financial liabilities
   
-
     
788
     
-
     
-
      788  
     
2,565,791
     
887,010
     
934,656
     
1,340,238
      5,727,695  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.2
Capital management -
The Group monitors capital on the basis of 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 total ‘equity’ as shown in the consolidated statement of financial position plus net debt.

As of December 31, 2016 and March 31,2017, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 0.70. The gearing ratio was as follows:
 
- 8 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
   
December 31,
2016
   
March 31,
2017
 
                 
Total borrowing and bonds
   
3,348,174
     
3,180,657
 
Less: Cash and cash equivalents
   
(606,949
)
   
(521,430
)
Net debt
   
2,741,225
     
2,659,227
 
Total equity
   
3,098,539
     
3,173,460
 
Total capital
   
5,839,764
     
5,832,687
 
Gearing ratio     0.47       0.46  
 
4.3
Fair value estimation -
 
For the classification of the type of valuation used by the Group 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 Group).

Financial assets classified as at fair value through profit or loss corresponds to investments in mutual funds and bonds. Their fair value has been determined with observable information of Level 2.

Other financial instruments measured at fair value correspond to the interest rate swaps signed by subsidiary GMP S.A., by which a variable-interest instrument is changed to a fixed interest rate (cash flow hedge). The information used for determining the fair value of these instruments are Level 2 and has been determined based on the present value of discounted future cash flows applied to the interest-rate change projections of Citibank N.A.

The carrying amounts of cash and cash equivalents correspond to their fair values. The Company considers that the carrying amount of trade accounts receivable and payable is similar to their fair values. The fair value of financial liabilities, disclosed in Note 11-b), has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in the market and which is available to the Company for similar financial instruments (Level 2).

5
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Preparation of the condensed interim consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Group’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, 2016.
 
- 9 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED


6
SEASONALITY OF OPERATIONS

The Group shows no material seasonality in the operations of any of its subsidiaries; operations are carried out regularly during the course of the period.

7
SEGMENT REPORTING

Operating segments are reported consistent with the internal reports that are reviewed by the Corporate General Manager, who is the chief operating decision maker, responsible for allocating resources and evaluating the performance of each operating segment.

The Group's operating segments are assessed by the activity of the following business units: (i) engineering and construction, (ii) infrastructure, (iii) real estate, (iv) technical services and (v) the operation of the Parent Company (Holding).

As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘technical services’. However, the Group has voluntarily decided to report on all its operating segments as detailed in this Note.

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 to the Corporate General Manager are measured in a manner consistent with the basis of preparation of the financial statements.

Group sales and receivables are not concentrated on a few customers.
 
- 10 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segments financial position
 
                                                             
Segment reporting
                                                       
                                                             
   
Engineering
   
Infrastructure
                                 
Parent
             
   
and construction
   
 
Energy
   
Toll roads
   
Mass transit
   
Water treatment
   
 
Real estate
   
Technical services
   
Company Operations
   
 
Eliminations
   
 
Consolidated
 
As of December 31, 2016
                                                           
Assets.-
                                                           
Cash and cash equivalents
   
93,543
     
35,396
     
110,007
     
139,414
     
3,229
     
58,892
     
53,521
     
112,397
     
550
     
606,949
 
Financial asset at fair value through profit or loss
   
352
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
352
 
Trade accounts receivables
   
357,298
     
84,996
     
23,579
     
97,079
     
256
     
83,704
     
466,381
     
-
     
-
     
1,113,293
 
Unbilled work in progress
   
920,092
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
920,092
 
Accounts receivable from related parties
   
259,966
     
3,255
     
19,684
     
392
     
12,379
     
7,284
     
48,538
     
50,582
     
(280,804
)
   
121,276
 
Other accounts receivable
   
398,495
     
58,235
     
6,189
     
25,895
     
4,841
     
20,198
     
100,420
     
42,134
     
-
     
656,407
 
Inventories
   
76,059
     
12,561
     
-
     
16,862
     
-
     
946,657
     
68,336
     
388
     
(13,502
)
   
1,107,361
 
Prepaid expenses
   
6,757
     
2,614
     
1,429
     
17,265
     
167
     
329
     
19,475
     
305
     
-
     
48,341
 
Non-current assets classified as held for sale
   
22,385
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
22,385
 
Total current assets
   
2,134,947
     
197,057
     
160,888
     
296,907
     
20,872
     
1,117,064
     
756,671
     
205,806
     
(293,756
)
   
4,596,456
 
                                                                                 
Long-term trade accounts receivable
   
-
     
-
     
-
     
629,310
     
-
     
-
     
38,060
     
-
     
-
     
667,370
 
Long-term unbilled work in progress
   
-
     
-
     
24,165
     
-
     
-
     
-
     
-
     
-
     
-
     
24,165
 
Long-term accounts receivable from related parties
   
-
     
-
     
408
     
-
     
-
     
-
     
492
     
777,478
     
(170,131
)
   
608,247
 
Prepaid expenses
   
-
     
-
     
20,554
     
2,029
     
943
     
-
     
-
     
-
     
-
     
23,526
 
Other long-term accounts receivable
   
10,024
     
29,533
     
22,924
     
225,565
     
7,347
     
17,887
     
1,408
     
11,109
     
-
     
325,797
 
Investments in associates and joint ventures
   
115,812
     
8,516
     
-
     
-
     
-
     
31,768
     
9,590
     
3,407,874
     
(2,671,728
)
   
901,832
 
Investment property
   
-
     
-
     
-
     
-
     
-
     
49,357
     
-
     
-
     
-
     
49,357
 
Property, plant and equipment
   
591,019
     
192,167
     
1,243
     
193
     
21
     
13,008
     
217,730
     
130,422
     
(17,692
)
   
1,128,111
 
Intangible assets
   
301,023
     
123,672
     
456,000
     
269
     
-
     
950
     
94,597
     
22,794
     
5,677
     
1,004,982
 
Deferred income tax asset
   
159,784
     
4,983
     
1,839
     
-
     
-
     
623
     
61,862
     
26,055
     
7,094
     
262,240
 
Total non-current assets
   
1,177,662
     
358,871
     
527,133
     
857,366
     
8,311
     
113,593
     
423,739
     
4,375,732
     
(2,846,780
)
   
4,995,627
 
Total assets
   
3,312,609
     
555,928
     
688,021
     
1,154,273
     
29,183
     
1,230,657
     
1,180,410
     
4,581,538
     
(3,140,536
)
   
9,592,083
 
                                                                                 
Liabilities.-
                                                                               
Borrowings
   
582,260
     
82,063
     
-
     
-
     
-
     
206,456
     
158,146
     
266,020
     
-
     
1,294,945
 
Bonds
   
-
     
-
     
25,540
     
20,551
     
-
     
-
     
-
     
-
     
-
     
46,091
 
Trade accounts payable
   
829,865
     
59,830
     
2,310
     
23,882
     
599
     
30,617
     
284,287
     
6,703
     
-
     
1,238,093
 
Accounts payable to related parties
   
118,665
     
3,902
     
27,757
     
33,009
     
237
     
66,190
     
44,152
     
67,685
     
(280,175
)
   
81,422
 
Current income tax
   
1,098
     
3,631
     
44
     
-
     
1,064
     
17,944
     
9,235
     
-
     
-
     
33,016
 
Other accounts payable
   
525,163
     
11,711
     
10,512
     
14,622
     
27
     
194,441
     
182,963
     
189,443
     
-
     
1,128,882
 
Provisions
   
115
     
6,441
     
-
     
-
     
-
     
131
     
9,511
     
-
     
-
     
16,198
 
Total current liabilities
   
2,057,166
     
167,578
     
66,163
     
92,064
     
1,927
     
515,779
     
688,294
     
529,851
     
(280,175
)
   
3,838,647
 
                                                                                 
Borrowings
   
246,315
     
80,488
     
-
     
-
     
-
     
16,541
     
76,077
     
666,094
     
-
     
1,085,515
 
Long-term bonds
   
-
     
-
     
338,143
     
583,480
     
-
     
-
     
-
     
-
     
-
     
921,623
 
Other long-term accounts payable
   
135,740
     
-
     
493
     
246,522
     
-
     
32,000
     
84,996
     
2,433
     
-
     
502,184
 
Long-term accounts payable to related parties
   
-
     
-
     
-
     
87,200
     
23,445
     
40,074
     
42,573
     
395
     
(170,039
)
   
23,648
 
Provisions
   
12,283
     
17,115
     
-
     
-
     
-
     
-
     
1,272
     
-
     
-
     
30,670
 
Derivative financial instruments
   
-
     
1,081
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
1,081
 
Deferred income tax liability
   
32,524
     
3,546
     
1,518
     
16,983
     
283
     
15,564
     
13,463
     
6,295
     
-
     
90,176
 
Total non-current liabilities
   
426,862
     
102,230
     
340,154
     
934,185
     
23,728
     
104,179
     
218,381
     
675,217
     
(170,039
)
   
2,654,897
 
Total liabilities
   
2,484,028
     
269,808
     
406,317
     
1,026,249
     
25,655
     
619,958
     
906,675
     
1,205,068
     
(450,214
)
   
6,493,544
 
Equity attributable to controlling interest in the Company
   
707,450
     
265,241
     
220,337
     
96,019
     
3,528
     
234,449
     
230,793
     
3,362,889
     
(2,545,220
)
   
2,575,486
 
Non-controlling interest
   
121,131
     
20,879
     
61,367
     
32,005
     
-
     
376,250
     
42,942
     
13,581
     
(145,102
)
   
523,053
 
Total liabilities and equity
   
3,312,609
     
555,928
     
688,021
     
1,154,273
     
29,183
     
1,230,657
     
1,180,410
     
4,581,538
     
(3,140,536
)
   
9,592,083
 
                                                                                 
- 11 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segments financial position
                                                 
                                                             
Segment reporting
                                                       
                                                             
   
Engineering
   
Infrastructure
                                 
Parent
             
   
and construction
   
 
Energy
   
Toll roads
   
Mass transit
   
Water treatment
   
 
Real estate
   
Technical services
   
Company Operations
   
 
Eliminations
   
 
Consolidated
 
As of March 31, 2017
                                                           
Assets.-
                                                           
Cash and cash equivalents
   
130,051
     
30,467
     
109,495
     
129,956
     
2,520
     
46,929
     
59,908
     
12,638
     
(534
)
   
521,430
 
Financial asset at fair value through profit or loss
   
327
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
327
 
Trade accounts receivables
   
320,972
     
81,631
     
23,396
     
105,995
     
246
     
230,445
     
391,119
     
-
     
-
     
1,153,804
 
Unbilled work in progress
   
664,321
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
664,321
 
Accounts receivable from related parties
   
270,076
     
2,745
     
31,244
     
343
     
12,379
     
13,607
     
45,112
     
53,963
     
(258,565
)
   
170,904
 
Other accounts receivable
   
395,036
     
64,697
     
4,725
     
29,005
     
4,255
     
17,597
     
110,794
     
46,885
     
-
     
672,994
 
Inventories
   
64,353
     
13,831
     
-
     
17,809
     
-
     
863,690
     
69,580
     
388
     
(13,906
)
   
1,015,745
 
Prepaid expenses
   
6,739
     
2,218
     
1,010
     
14,038
     
95
     
296
     
24,500
     
344
     
-
     
49,240
 
Non-current assets classified as held for sale
   
260,645
     
-
     
-
     
-
     
-
     
-
     
-
     
725,761
     
-
     
986,406
 
Total current assets
   
2,112,520
     
195,589
     
169,870
     
297,146
     
19,495
     
1,172,564
     
701,013
     
839,979
     
(273,005
)
   
5,235,171
 
                                                                                 
Long-term trade accounts receivable
   
-
     
-
     
-
     
627,485
     
-
     
-
     
34,757
     
-
     
-
     
662,242
 
Long-term unbilled work in progress
   
-
     
-
     
24,619
     
-
     
-
     
-
     
-
     
-
     
-
     
24,619
 
Long-term accounts receivable from related parties
   
-
     
-
     
408
     
-
     
-
     
-
     
475
     
761,164
     
(170,596
)
   
591,451
 
Prepaid expenses
   
-
     
-
     
23,572
     
5,489
     
931
     
-
     
-
     
-
     
-
     
29,992
 
Other long-term accounts receivable
   
9,793
     
31,979
     
21,337
     
225,565
     
7,347
     
18,994
     
1,638
     
11,108
     
-
     
327,761
 
Investments in associates and joint ventures
   
136,385
     
9,045
     
-
     
-
     
-
     
31,769
     
9,474
     
2,741,314
     
(2,746,950
)
   
181,037
 
Investment property
   
-
     
-
     
-
     
-
     
-
     
49,622
     
-
     
-
     
-
     
49,622
 
Property, plant and equipment
   
566,213
     
187,839
     
1,153
     
497
     
20
     
12,335
     
224,084
     
129,871
     
(17,723
)
   
1,104,289
 
Intangible assets
   
298,133
     
136,152
     
462,972
     
258
     
-
     
944
     
90,981
     
22,904
     
5,489
     
1,017,833
 
Deferred income tax asset
   
152,441
     
4,323
     
2,520
     
-
     
-
     
1,292
     
59,631
     
26,080
     
5,061
     
251,348
 
Total non-current assets
   
1,162,965
     
369,338
     
536,581
     
859,294
     
8,298
     
114,956
     
421,040
     
3,692,441
     
(2,924,719
)
   
4,240,194
 
Total assets
   
3,275,485
     
564,927
     
706,451
     
1,156,440
     
27,793
     
1,287,520
     
1,122,053
     
4,532,420
     
(3,197,724
)
   
9,475,365
 
                                                                                 
Liabilities.-
                                                                               
Borrowings
   
599,876
     
73,424
     
-
     
-
     
-
     
205,702
     
168,754
     
85,783
     
-
     
1,133,539
 
Bonds
   
-
     
-
     
27,600
     
19,056
     
-
     
-
     
-
     
-
     
-
     
46,656
 
Trade accounts payable
   
627,744
     
50,584
     
1,650
     
18,901
     
251
     
32,903
     
248,544
     
19,616
     
-
     
1,000,193
 
Accounts payable to related parties
   
99,192
     
3,124
     
35,537
     
32,151
     
39
     
62,631
     
35,140
     
58,968
     
(258,857
)
   
67,925
 
Current income tax
   
1,191
     
4,847
     
-
     
-
     
101
     
21,619
     
8,558
     
4
     
-
     
36,320
 
Other accounts payable
   
489,132
     
11,556
     
10,773
     
27,979
     
49
     
198,042
     
180,603
     
197,187
     
-
     
1,115,321
 
Provisions
   
115
     
6,442
     
-
     
-
     
-
     
111
     
6,779
     
-
     
-
     
13,447
 
Non-current assets classified as held for sale
   
236,882
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
236,882
 
Total current liabilities
   
2,054,132
     
149,977
     
75,560
     
98,087
     
440
     
521,008
     
648,378
     
361,558
     
(258,857
)
   
3,650,283
 
                                                                                 
Borrowings
   
184,610
     
95,139
     
-
     
-
     
-
     
15,524
     
70,047
     
717,837
     
-
     
1,083,157
 
Long-term bonds
   
-
     
-
     
332,660
     
584,645
     
-
     
-
     
-
     
-
     
-
     
917,305
 
Other long-term accounts payable
   
157,617
     
-
     
493
     
233,559
     
51
     
32,057
     
81,059
     
2,469
     
-
     
507,305
 
Long-term accounts payable to related parties
   
-
     
-
     
-
     
86,716
     
23,445
     
40,461
     
41,623
     
394
     
(170,417
)
   
22,222
 
Provisions
   
12,388
     
17,993
     
-
     
-
     
-
     
-
     
1,346
     
-
     
-
     
31,727
 
Derivative financial instruments
   
-
     
788
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
788
 
Deferred income tax liability
   
32,784
     
4,728
     
3,467
     
19,025
     
290
     
13,831
     
13,052
     
1,941
     
-
     
89,118
 
Total non-current liabilities
   
387,399
     
118,648
     
336,620
     
923,945
     
23,786
     
101,873
     
207,127
     
722,641
     
(170,417
)
   
2,651,622
 
Total liabilities
   
2,441,531
     
268,625
     
412,180
     
1,022,032
     
24,226
     
622,881
     
855,505
     
1,084,199
     
(429,274
)
   
6,301,905
 
Equity attributable to controlling interest in the Company
   
714,070
     
274,375
     
228,978
     
100,807
     
3,567
     
268,810
     
224,997
     
3,434,663
     
(2,602,938
)
   
2,647,329
 
Non-controlling interest
   
119,884
     
21,927
     
65,293
     
33,601
     
-
     
395,829
     
41,551
     
13,558
     
(165,512
)
   
526,131
 
Total liabilities and equity
   
3,275,485
     
564,927
     
706,451
     
1,156,440
     
27,793
     
1,287,520
     
1,122,053
     
4,532,420
     
(3,197,724
)
   
9,475,365
 
- 12 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segment performance
                                                 
                                                           
Segment Reporting
                                                       
                                                             
   
Engineering
   
Infrastructure
                                 
Parent
             
   
and
construction
   
 
Energy
   
Toll roads
   
Mass
transit
   
Water
treatment
   
Real
estate
   
Technical
services
   
Company
operations
   
 
Eliminations
   
 
Consolidated
 
For the three-month period
                                                           
ended March 31, 2016
                                                           
                                                             
Revenue
   
1,002,627
     
86,383
     
70,992
     
53,181
     
4,331
     
32,299
     
262,846
     
14,488
     
(94,098
)
   
1,433,049
 
Gross profit (loss)
   
70,128
     
6,964
     
19,724
     
11,594
     
420
     
18,582
     
31,081
     
(1,539
)
   
(13,528
)
   
143,426
 
Administrative expenses
   
(64,794
)
   
(3,870
)
   
(2,338
)
   
(2,760
)
   
(132
)
   
(4,100
)
   
(23,340
)
   
(9,548
)
   
16,747
     
(94,135
)
Other income and expenses
   
7,390
     
(504
)
   
9
     
-
     
-
     
727
     
1,158
     
718
     
(3,088
)
   
6,410
 
Gain from the sale of investments
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
31,667
     
-
     
31,667
 
Operating profit (loss)
   
12,724
     
2,590
     
17,395
     
8,834
     
288
     
15,209
     
8,899
     
21,298
     
131
     
87,368
 
Financial expenses
   
(13,193
)
   
(2,378
)
   
(3,297
)
   
(699
)
   
(9
)
   
(5,058
)
   
(6,118
)
   
(3,160
)
   
6,785
     
(27,127
)
Financial income
   
7,257
     
1,748
     
339
     
1,053
     
23
     
72
     
3,543
     
9,630
     
(10,504
)
   
13,161
 
Share of the profit or loss
                                                                               
in associates and joint ventures under the equity
                                                                               
method of accounting
   
6,856
     
646
     
-
     
-
     
-
     
-
     
144
     
57,092
     
(43,223
)
   
21,515
 
Profit before income tax
   
13,644
     
2,606
     
14,437
     
9,188
     
302
     
10,223
     
6,468
     
84,860
     
(46,811
)
   
94,917
 
Income tax
   
(4,149
)
   
(805
)
   
(3,763
)
   
(2,778
)
   
(85
)
   
(2,690
)
   
(2,808
)
   
2,332
     
806
     
(13,940
)
Profit for the period
   
9,495
     
1,801
     
10,674
     
6,410
     
217
     
7,533
     
3,660
     
87,192
     
(46,005
)
   
80,977
 
                                                                                 
Profit attributable to:
                                                                               
                                                                                 
Owners of the Company
   
11,505
     
1,086
     
6,807
     
4,807
     
217
     
1,697
     
3,542
     
87,255
     
(46,042
)
   
70,874
 
Non-controlling interest
   
(2,010
)
   
715
     
3,867
     
1,603
     
-
     
5,836
     
118
     
(63
)
   
37
     
10,103
 
     
9,495
     
1,801
     
10,674
     
6,410
     
217
     
7,533
     
3,660
     
87,192
     
(46,005
)
   
80,977
 
                                                                                 
- 13 -
 
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Operating segment performance
                                                       
                                                             
Segment Reporting
                                                       
                                                             
   
Engineering
   
Infrastructure
                                 
Parent
             
   
and
construction
   
 
Energy
   
Toll roads
   
Mass
transit
   
Water
treatment
   
Real
estate
   
Technical
services
   
Company
operations
   
 
Eliminations
   
 
Consolidated
 
For the three-month period
                                                           
ended March 31, 2017
                                                           
                                                             
Revenue
   
684,495
     
103,882
     
44,570
     
62,108
     
755
     
219,925
     
378,179
     
16,515
     
(92,064
)
   
1,418,365
 
Gross profit (loss)
   
52,614
     
19,286
     
18,739
     
12,765
     
174
     
86,477
     
40,880
     
(5,395
)
   
(14,366
)
   
211,174
 
Administrative expenses
   
(51,843
)
   
(4,205
)
   
(2,283
)
   
(3,346
)
   
(62
)
   
(4,851
)
   
(36,386
)
   
(10,902
)
   
16,962
     
(96,916
)
Other income and expenses
   
1,619
     
(708
)
   
11
     
6
     
-
     
(145
)
   
219
     
406
     
(659
)
   
749
 
Gain from the sale of investments
   
25,768
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
25,768
 
Operating profit (loss)
   
28,158
     
14,373
     
16,467
     
9,425
     
112
     
81,481
     
4,713
     
(15,891
)
   
1,937
     
140,775
 
Financial expenses
   
(11,143
)
   
(2,986
)
   
(2,718
)
   
(1,070
)
   
(1
)
   
(7,971
)
   
(8,615
)
   
(20,359
)
   
8,968
     
(45,895
)
Financial income
   
14,771
     
2,552
     
371
     
947
     
3
     
58
     
1,801
     
18,401
     
(11,488
)
   
27,416
 
Share of the profit or loss
                                                                               
in associates and joint ventures under the equity
                                                                               
method of accounting
   
20,845
     
529
     
-
     
-
     
-
     
-
     
124
     
92,510
     
(108,526
)
   
5,482
 
Profit before income tax
   
52,631
     
14,468
     
14,120
     
9,302
     
114
     
73,568
     
(1,977
)
   
74,661
     
(109,109
)
   
127,778
 
Income tax
   
(13,183
)
   
(4,484
)
   
(3,491
)
   
(2,920
)
   
(75
)
   
(19,460
)
   
(401
)
   
4,373
     
(43
)
   
(39,684
)
Profit (loss) for the year
   
39,448
     
9,984
     
10,629
     
6,382
     
39
     
54,108
     
(2,378
)
   
79,034
     
(109,152
)
   
88,094
 
                                                                                 
Profit (loss) attributable to:
                                                                               
                                                                                 
Owners of the Company
   
36,200
     
8,947
     
6,704
     
4,787
     
39
     
34,362
     
(1,760
)
   
79,057
     
(89,213
)
   
79,123
 
Non-controlling interest
   
3,248
     
1,037
     
3,925
     
1,595
     
-
     
19,746
     
(618
)
   
(23
)
   
(19,939
)
   
8,971
 
     
39,448
     
9,984
     
10,629
     
6,382
     
39
     
54,108
     
(2,378
)
   
79,034
     
(109,152
)
   
88,094
 
                                                                                 
 
- 14 -
 
  (All amounts are expressed in thousands of S/ unless otherwise stated)
  UNAUDITED
No major changes occurred in total assets as compared to the amount stated in the year-end financial statements.

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

8
TRANSACTIONS WITH RELATED PARTIES

a)
Transactions with related parties -

Major transactions between the Company and its related parties are summarized as follows:
   
From the period
ended March 31,
       
   
2016
   
2017
 
Revenue from sale of goods and services:
- Associates
   
163
     
554
 
- Joint operations
   
8,730
     
3,388
 
     
8,893
     
3,942
 

Inter-company services were agreed upon under market terms as if they had been agreed to with third parties.
b) Balances of transactions with related parties
 

 
 
At December 31,
    At March 31,      
2016 2017
Joint operations:
 
Receivable
    Payable     Receivable     Payable  
Consorcio Constructor Ductos del Sur
   
2,513
      -       46,754       -  
 Consorcio GyM Conciviles     61,006       -       61,299       -  
 Consorcio Rio Urubamba     9,072       -       9,000       -  
 Consorcio Peruano de Conservación     8,784       -       7,006       -  
 Consorcio Vial Quinua     4,198       738       4,189       638  
 Consorcio Italo Peruano     4,174       17,325       18,590       17,238  
 Consorcio La Gloria     3,521       3,080       1,696       1,358  
 Consorcio Terminales del Perú     3,215       259       971       -  
 Consorcio para la atención y mantenimiento de ductos     -       21,791       -       21,148  
 Consorcio Rio Mantaro     3,191       6,886       2,680       5,149  
 Consorcio Ermitaño     83       6,372       503       -  
 Consorcio Vial Sierra     940       5,400       1,083       5,532  
 Consorcio Menegua     30       3,803       -       1,364  
 Consorcio Huacho Pativilca     -       3,434       1,424       3,761  
 Consorcio Energía y Vapor     491       3,203       -       74  
 Consorcio Constructor Chavimochic     915       2,471       889       3,116  
 Consorcio Manperan     -       -       3,062       2,779  
 Terminales del Perú     -       -       2,782       165  
 Other minor     10,066       2,226       5,180       1,136  
      112,199       76,988       167,108       63,458  
Other related parties:
                               
Gaseoducto Sur Peruano S.A
   
608,247
     
-
     
593,215
      -  
Perú Piping Spools S.A.C.
   
9,077
     
-
     
2,033
      -  
Ferrovias Participaciones
   
-
     
20,813
     
-
     
21,008
 
Ferrovias Argentina
   
-
     
2,835
     
-
     
1,214
 
Arturo Serna
   
-
     
4,434
     
-
     
4,467
 
     
617,324
     
28,082
     
595,248
     
26,689
 
 
   
729,523
     
105,070
     
762,355
     
90,147
 
Less non-current portion: 
                               
Gaseoducto Sur Peruano S.A 
   
( 608,247
)
   
-
     
( 591,451
)
   
-
 
Ferrovias Participaciones    
-
     
( 20,813
)
   
-
     
( 21,008
)
Ferrovias Argentina
   
-
     
( 2,835
)
   
-
     
( 1,214
)
Current portion
   
121,276
     
81,422
     
170,904
     
67,925
 

 
- 15 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Accounts receivable and payable have no specific guarantees.

Accounts receivable from related parties mainly arise from sales transactions for goods and services with a maturity period of 60 days. These balances are non-interest-bearing because they have short- term maturities and do not require a provision for impairment.

Accounts payable to related parties mainly arise from transactions to provide services of engineering, construction, maintenance and others and have a maturity period of 60 days. Such accounts are not interest bearing because they are short-term.

9
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

As of March 31, 2017, this item includes the balances of the Consorcio Constructor Ductos del Sur for S/255 million, and the reclassification of the investment in the associate Gasoducto Sur Peruano S.A. for S/725.7 million.

In February 2017, the Company sold 23,000,000 shares of Red Eagle Mining Corporation through a stockbroker operation, for a total amount of US$11.5 million and representing 8.69% of the share capital, resulting in a gain In the sale of investments of S/25.8 million. As of March 31, 2017, a 3.98% holding is maintained.

10
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

As of March 31, 2017, associates in which the Group has significant influence are similar to those existing as of December 31, 2016, except for the reclassification mentioned.

The movement of our investments in associates for the period ended March 31, 2016 and 2017 is as follows:

 
2016
   
2017
 
Beginning balance
   
646,884
     
901,832
 
Acquisition and/or contributions received
   
199,001
     
-
 
Debt capitalization
   
8,308
     
-
 
Share of the profit and loss in associates
               
under the equity method of accounting
   
21,515
     
5,482
 
Dividends received
   
-
     
( 240
)
Reclassification discontinuous operation
   
-
     
( 725,761
)
Other
   
489
     
( 277
)
Ending balance
   
876,197
     
181,036
 

In January and August 2016, the Company capitalized debt with Adexus by S/8.3 million and S/14 million respectively, increasing its participation in the first case from 44% to 52% and in the second capitalization from 52% to 91.03 % control is adquired. To date, the Company has incorporated in the Consolidated Financial Statements assets and liabilities of Adexus, the process of measuring the fair value of net asset is concluded by the end of December 2016.

On November 2015, subsidiary Negocios del Gas SA. adquired an interest of 20% of concessionaire Gasoducto Sur Peruano, which represents an investment of approximately US$248 million, at December 2015 the contribution was S/391 million and at December 2016 its contribution was increased in S/374 million.

Gasoducto del Sur Peruano S.A. (“GSP”), company owner of the concession "Improvements to the Energy Security  of the Country and Development of the Peruvian Southern Gas Pipeline" (the "Concession") and of which our subsidiary Negocios de Gas S.A is a shareholder with 20%, received a notification on January 24, 2017, from the Ministry of Energy and Mines, as Grantor of the Concession, by which it terminated the concession agreement signed on July 23, 2014 (the “Concession Contract”).
- 16 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

In case of the termination of the Concession, the Concession Contract states that the Net Book Value of the Concession’s assets (“VCN”) must be determined, and then call a public auction for the transfer of the Concession’s assets to a new concessionaire. From this amount, GSP is entitled to receive, within a maximum term of 12 months as of the termination of the Concession, a payment that can range from the guaranteed minimum of 72.25% of the VCN to the 100% of the VCN that is a function of the result of the auction.

According to the analysis made by the Company with the information available to date, and under the agreements entered into with the other shareholders of GSP, in the event that the payment reaches 72.25% of the VCN we would recover more than 95% of the total commitments which include the equity invested in GSP amounting to US$220 million, the amount honored by the corporate guarantee granted to the bridge loan conferred to GSP by a syndicate of five banks amounting to US$129 million, as well as the percentage honored in relation to the Guarantee of Fulfillment of the Concession Contract that amounts to US$52.5 million.

The Company has registered the impacts of such termination in the Financial Statement to fiscal year 2016, which is a result that considers receiving the minimum payment of 72.25% of the aforementioned VCN.

As of March 31, 2017, the investment was reclassified to Non-current assets classified as held for sale.

11
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

For the period ended March 31, 2016 and 2017, the movement in property, plant and equipment and intangible assets accounts was as follows:

   
Property,
plant and
equipment
   
Intangible
assets
 
             
At January 1, 2016 
   
1,111,757
     
881,020
 
                 
Additions
   
44,480
     
34,085
 
Transfers, disposals and adjustments
   
3,933
     
4,997
 
Deductions for sale of assets
   
(4,089
)
   
-
 
Depreciation, amortization
   
(44,716
)
   
(19,668
)
Net cost at March 31, 2015
   
1,111,365
     
900,434
 
 

At January 1, 2017    
1,128,111
     
1,004,982
 
                 
Additions
   
69,497
     
31,413
 
Transfers, disposals and adjustments
   
(30,296
)
   
5,060
 
Deductions for sale of assets
   
(13,349
)
   
-
 
Depreciation, amortization
   
(49,674
)
   
(23,622
)
Net cost at March 31, 2017
   
1 , 104 , 289
     
1 , 017 , 833
 


As of March 31, 2016 and 2017, additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.

As of March 31, 2016 and 2017, the amounts registered in Intangible assets comprise of investments in building the second Ancón-Huacho-Pativilca road section of the Panamericana Norte highway (concession under intangible model) and in preparation of wells located in Lots I, III, IV and V to provide oil and hydrocarbon exploitation services.
- 17 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

Goodwill -

Management reviews the results of its business operations based on the type of economic activity carried out. The economic activities that have given rise to goodwill for the Group were engineering and construction, electro-mechanical works, mining services, IT services and telecommunications services.

Goodwill by cash-generating units is broken down as follows:
   
At December 31,
2016
   
At March 31,
2017
 
             
Engineering and construction
   
137,267
     
137,064
 
Electromechanical
   
20,737
     
20,737
 
Mining and construction services
   
13,366
     
13,366
 
Telecommunications services
   
6,728
     
6,560
 
IT equipment and services
   
4,172
     
4,172
 
     
182,270
     
181,899
 

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 its value in use. Value in use is determined based on the future cash flows expected to be generated by the assessed CGU. As a result of these assessments no provisions for impairment were required. As of March 31, 2017 same criteria were applied as those in test impairment at December 31, 2016.

12
BORROWINGS

This item comprises:
    Total           Current           Non-current        
   
At
December
31, 2016
   
At
March
31, 2017
   
At
December
31, 2016
   
At
March
31, 2017
   
At
December
31, 2016
   
At
March
31, 2017
 
                                     
Bank loans
   
2,140,296
     
2,001,666
     
1,177,642
     
1,032,526
     
962,654
     
969,140
 
Leases
   
240,164
     
215,030
     
117,303
     
101,013
     
122,861
     
114,017
 
     
2,380,460
     
2,216,696
     
1,294,945
     
1,133,539
     
1,085,515
     
1,083,157
 

a)
Bank loans -

As of March 31, 2017 and December 31, 2016, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations bear interest at fixed rates which fluctuated between 1.5% and 14.4% in 2017 and between 1.0% and 14.4% in 2016.
- 18 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

   
Current
   
Non-current
 
     
At
    At    
At
    At  
 
Interest
   
Date of
   
December
    March    
December
    March  
 
rate
   
maturity
    31, 2016     31, 2017     31, 2016     31,2017  
GyM S.A.
1.55% / 8.00%
 
   
2017 / 2020
     
501,306
     
535,900
     
187,029
     
134,597
 
Graña y Montero S.A.A.
Libor USD 3M +4.9%
     
2017 / 2020
     
266,020
     
85,783
     
666,093
     
717,837
 
Viva GyM S.A.
7.00% / 8.98%
 
   
2017
     
201,609
     
200,819
     
-
     
-
 
GMP S.A.
3.65% / 6.04%
 
   
2017 / 2020
     
77,857
     
69,247
     
71,453
     
87,164
 
CAM Holding S.A.
2.59% / 14.43%
 
   
2017 / 2020
     
69,702
     
80,025
     
24,889
     
17,740
 
Adexus S.A.
5.90%
 
   
2019
     
42,782
     
38,767
     
13,190
     
11,802
 
GMD S.A.
5.69% / 9.00%
 
   
2017
     
14,746
     
19,826
     
-
     
-
 
CAM Servicios Perú S.A.
7.15% / 8.86%
 
   
2017
     
3,620
     
2,159
     
-
     
-
 
                     
1,177,642
     
1,032,526
     
962,654
     
969,140
 

As of March 31, 2017, the Company maintained unused credit limits for S/1,297 million, which expire within one year (S/3,922 million as of December 31, 2016).

b)
Fair value of borrowings -

The carrying amount and fair value of borrowings are broken down as follows:
 
 
 
Carrying amounts
   
Fair value
       
 
 
At December
31, 2016
   
At March
31, 2017
   
At December
31, 2016
   
At March
31, 2017
 
 
                       
Total loans
   
2,380,460
     
2,216,696
     
2,391,398
      2,301,932  

The fair value is based on cash flows discounted using a rate based on the borrowing rate of 1.6% and 14.1% (1.3% and 14.3% in 2016). It should be noted that the interest rate used are those applicable and negotiated by each Company.

13
BONDS

This item is broken down as follows:
    Total           Current           Non-current        
   
At
December
31, 2016
   
At
March
31, 2017
   
At
December
31, 2016
   
At
March
31, 2017
   
At
December
31, 2016
   
At
March
31, 2017
 
                                     
GyM Ferrovías (a)
   
604,031
     
603,701
     
20,551
     
19,056
     
583,480
     
584,645
 
Norvial (b)
   
363,683
     
360,260
     
25,540
     
27,600
     
338,143
     
332,660
 
     
967,714
     
963,961
     
46,091
     
46,656
     
921,623
     
917,305
 
 
a)
GyM Ferrovías S.A. -

In February 2015 subsidiary GyM Ferrovías issued corporate bonds under the U.S. Regulation S. This issue was carried out in Peruvian Soles VAC (the Spanish acronym for constant value update) for a total amount of S/629 million. The issues costs for this transactions were for S/22 million. Maturity of these bonds is November 2039 and bear interest at a rate of 4.75% (plus VAC adjustment), they have a risk rating of AA+ (local grading) granted by Apoyo & Asociados Internacionales Clasificadora de Riesgo and a collateral structure that includes a mortgage on the concession to which GyM Ferrovías is a concessionaire, security on the shares of GyM Ferrovías, Assignment of the collection rights     arising from the Management Trust, a Cash Flow and Reserve Trust for the Service of the Debt, Operation and Maintenance and in-progress Capex. At March 31, 2017 the Group made a payment of S/43.1 million.

Capital raised from bond issue were used in amortizing a short-term loan with Banco de Crédito del Perú – BCP for S/400 million, funding the reserve accounts, payment of costs of bond issue and partial repayment of the subordinated loan obtained from parent Company by GyM Ferrovías.
- 19 -

(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

At March 31, 2017 the balance includes accrued interest payable for S/3 million.

As part of the process of bond structuring, GyM Ferrovías engaged to adhere to the following covenants:

-
Debt service coverage ratio of not less than 1.2 times.
-
Keeping a constant minimum balance of trust equal to a quarter of operating and maintenance costs (including VAT)
-
Keeping a constant minimum balance of trust equal to two coupons as per schedule.


b)
Norvial S.A. -

In July 2015, Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. The first issue was for S/80 million at 5 years, bearing an interest rate of 6.75% and funds were drawn on July 23, 2015. The second issue was for S/285 million at 11.5 years, bearing an interest rate of 8.375%, structured in 3 disbursements: the first disbursement of S/105 million was on July 23,2015; the second disbursement of S/100 million was on January 25, 2016; the third disbursement of S / 80 million was received in July 25, 2016. The issues costs corresponding to the first issue and to the first and second disbursements of the second issue were for S/3.9 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA. This financing transaction has been secured by (i) a cash flow trust, related to the consideration and the regulatory rate; (ii) a mortgage on the concession in which Norvial S.A. is a concessionaire; (iii) a security on shares: (iv) collection rights and (v) in general, all those additional collaterals given to the secured creditors. The capital raised is intended to finance the construction of the Second Phase of Red Vial No.5 and the financing of VAT arising from a project-related expenses.

At March 31, 2017 the balance included interest payables for S/4.7 million (S/4.8 million at December 31, 2016)

As part of the process of bond structuring, Norvial 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 March 31,2017 and December 31,2016 both Companies have complied with their covenants.

Fair value of the bonds of both Companies at March 31, 2017 amounted to S/1,101 million (at December 31,2016 amounted to S/1,055 million), which has been calculated based on the discounted cash flows, using rates between 3.87% y 7.91% (rates between 4.20% y 7.99% at December 31,2016) which are within level 2 of the fair value hierarchy.

14
PROVISIONS

This item is broken down based on the expectation of liquidation as follows:
   
At December
31, 2016
   
At March
31, 2017
 
             
Current portion
   
16,198
     
13,447
 
Non-current portion
   
30,670
     
31,727
 
     
46,868
     
45,174
 
The movement of this item for the period ended March 31, 2016 and 2017 is as follows:
- 20 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED
 
Other provisions
 
Legal
claims
   
Contingent
liabilities
resulting from
acquisitions
   
Provisions
for the acquisition
of CAM
   
Provision
for well
closure
   
Total 		 
 
                             
At January 1, 2016
   
15,000
     
22,960
     
3,819
     
7,307
     
49,086
 
Additions
   
67
     
1,903
     
-
     
239
     
2,209
 
Reversals of provisions
   
-
     
-
     
(660
)
   
-
     
(660
)
Payments
   
(202
)
   
-
     
-
     
-
     
(202
)
Translation adjustments
   
247
     
662
     
-
     
-
     
909
 
At March 31, 2016
   
15,112
     
25,525
     
3,159
     
7,546
     
51,342
 
 
                                       
At January 1, 2017
   
19,350
     
10,302
     
-
     
17,216
     
46,868
 
Additions
   
83
     
-
     
-
     
879
     
962
 
Reversals of provisions
   
(20
)
   
-
     
-
     
-
     
(20
)
Payments
   
(2,501
)
   
-
     
-
     
-
     
(2,501
)
Translation adjustments
   
(2
)
   
(133
)
   
-
     
-
     
(135
)
At March 31, 2017
   
16,910
     
10,169
     
-
     
18,095
     
45,174
 

15
CAPITAL                                                                                                                

As of December 31 , 2016 and March 31,2017, the authorized, subscribed and paid-in capital, according to the Company’s bylaws as amended, is represented by 660,053,790 common shares   at S/1.00 par value each .

As of December 31, 2016, the amount of 264,809,545 common shares is represented by 52,961,909   ADSs, at 5 shares per ADS.

As of March 31, 2017, the amount of 264,691,440 common shares is represented by 52,938,288  ADSs, at 5 shares per ADS.

16
EXPENSES BY NATURE                                                                                   

For the period ended March 31, 2016 and 2017, this item comprises:
   
Cost of
services
and goods
   
Adminis- trative- expenses
 
 
2016
           
Inventories, materials and consumables used
   
243,106
     
-
 
Personnel charges
   
328,001
     
54,117
 
Services provided by third-parties
   
555,275
     
30,585
 
Taxes
   
4,032
     
1,735
 
Other management charges
   
98,881
     
2,670
 
Depreciation
   
42,021
     
3,266
 
Amortization
   
17,922
     
1,746
 
Impairment of inventories
   
117
     
-
 
Impairment of accounts receivable
   
15
     
-
 
Impairment of property, plant and equipment
   
253
     
16
 
     
1 , 289 , 623
     
94,135
 
 
2017
               
Inventorie s , materials and consumables used
   
260,411
     
-
 
Personnel charges
   
374,273
     
55,833
 
Services provided by third-parties
   
361,757
     
15,529
 
Taxes
   
3,708
     
562
 
Other management charges
   
141,012
     
16,432
 
Depreciation
   
45,637
     
4,612
 
Amortization
   
19,693
     
3,929
 
Impairment of inventories
   
301
     
-
 
Impairment of accounts receivable
   
85
     
-
 
Impairment of property, plant and equipment
   
314
     
19
 
     
1 , 207 , 191
     
96,916
 

- 21 -
(All amounts are expressed in thousands of S/ unless otherwise stated)
UNAUDITED

17
INCOME TAX

These condensed interim consolidated financial statements for the period ended March 31, 2017, income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to December 31,2017 is 31.06% (14.69% for the period ended March 31, 2016). The variation of the effective rate as compared to the previous year is due to the effect of the permanent differences in the income tax calculation.

18
CONTINGENCIES, COMMITTMENTS AND GUARANTEES

As of March 31, 2017, contingencies held by the Group are substantially the same as those existing as of December 31, 2016.

In addition the Group had guarantee commitments with different financial institutions securing transactions in the amount of US$207.4 million.

19
DIVIDENDS

As of March 31, 2017, the Company has not declared any dividends due to the fact that the financial statements have not been approved at the Annual General Shareholders' Meeting.
 
For the period ended March 31, 2017 , the Group has paid dividends to its non-controlling subsidiaries participate by S/4.5 million (S/2.3 million for the same period in 2016).

20
EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

On April 24, 2017, the Company entered into the sale purchase agreement for the entire stake in the Compañía Operadora de Gas del Amazonas S.A.C. (COGA) in favor of its partners Enagás and Carmen Corporation. The sale price for US$21.5 million.

 
 
- 22 -
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