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 January 2022

 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.


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.


AENZA S.A.A.

By: /s/ DANIEL URBINA PEREZ
Name: Daniel Urbina Perez
Title: Chief Legal Officer
Date: January 31, 2022










AENZA S.A.A. AND SUBSIDIARIES



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



AENZA S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2020  AND DECEMBER 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 - 39



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
             
LIABILITIES AND EQUITY
           
       
As of December 31,
         
As of December 31,
   
Note
 
2020
 
2021
     
Note
 
2020
 
2021
                             
Current assets
             
Current liabilities
           
Cash and cash equivalents
 
8
 
              900,168
 
              957,178
 
Borrowings
 
15
 
              452,884
 
              241,340
Trade accounts receivables, net
 
9
 
              703,167
 
              590,280
 
Bonds
 
16
 
                58,446
 
                69,838
Work in progress
 
10
 
              186,433
 
              316,191
 
Trade accounts payable
 
17
 
           1,097,167
 
              967,069
Accounts receivable from related parties
 
11
 
                27,338
 
                20,817
 
Accounts payable to related parties
 
11
 
                43,818
 
                51,004
Other accounts receivable
 
12
 
              433,531
 
              487,058
 
Current income tax
     
                34,494
 
                95,249
Inventories, net
     
              552,000
 
              488,326
 
Other accounts payable
 
18
 
              718,406
 
              753,864
Prepaid expenses
     
                22,972
 
                32,142
 
Other provisions
 
19
 
                92,757
 
              148,921
Total current assets
     
           2,825,609
 
           2,891,992
 
Total current liabilities
     
           2,497,972
 
           2,327,285
                             
Non-current assets
             
Non-current liabilities
           
Trade accounts receivable, net
 
9
 
              730,666
 
              683,306
 
Borrowings
 
15
 
              445,436
 
              338,560
Accounts receivable from related parties
 
11
 
              620,071
 
              643,897
 
Bonds
 
16
 
              874,313
 
           1,191,084
Prepaid expenses
     
                22,264
 
                23,607
 
Trade accounts payable
 
17
 
                40,502
 
                       -
Other accounts receivable
 
12
 
              328,223
 
              201,360
 
Other accounts payable
 
18
 
              183,232
 
                92,369
Investments in associates and joint ventures
 
13
 
                35,516
 
                31,393
 
Accounts payable to related parties
 
11
 
                36,297
 
                50,712
Investment property
     
                26,073
 
                64,974
 
Other provisions
 
19
 
              336,609
 
              329,497
Property, plant and equipment, net
 
14
 
              405,469
 
              301,207
 
Deferred income tax liability
     
              102,907
 
                97,365
Intangible assets, net
 
14
 
              791,990
 
              743,391
 
Total non-current liabilities
     
           2,019,296
 
           2,099,587
Right-of-use assets, net
 
14
 
                64,518
 
                47,717
 
Total liabilities
     
           4,517,268
 
           4,426,872
Deferred income tax asset
     
              262,165
 
              268,962
               
Total non-current assets
     
           3,286,955
 
           3,009,814
 
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)
 
(135,947)
               
Retained earnings
     
(728,637)
 
(808,354)
               
Equity attributable to controlling interest in the Company
           1,267,606
 
           1,221,176
               
Non-controlling interest
     
              327,690
 
              253,758
               
Total equity
     
           1,595,296
 
           1,474,934
Total assets
     
           6,112,564
 
           5,901,806
 
Total liabilities and equity
     
           6,112,564
 
           5,901,806
                             
                             
The accompanying notes on pages 6 to 39 are an integral part of the consolidated financial statements.
           






- 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 December 31,
 
   
Note
   
2020
   
2021
 
         
(as restated)
       
                   
Revenues from construction activities
         
1,815,671
     
2,272,561
 
Revenues from services provided
         
936,485
     
1,095,506
 
Revenue from real estate and sale of goods
         
394,249
     
579,482
 
           
3,146,405
     
3,947,549
 
                       
Cost of construction activities
         
(1,716,309
)
   
(2,157,822
)
Cost of services provided
         
(811,505
)
   
(918,263
)
Cost of real estate and sale of goods
         
(308,339
)
   
(454,484
)
   
21
     
(2,836,153
)
   
(3,530,569
)
Gross profit
         
310,252
     
416,980
 
                       
Administrative expenses
 
21
     
(134,013
)
   
(180,230
)
Other income and expenses
 
22
     
(181,182
)
   
1,306
 
Operating (loss) profit
         
(4,943
)
   
238,056
 
                       
Financial expenses
 
23
     
(146,355
)
   
(262,061
)
Financial income
 
23
     
39,316
     
5,773
 
Share of the profit or loss of associates and joint ventures accounted for using the equity method
 
13
     
770
     
(641
)
Loss before income tax
         
(111,212
)
   
(18,873
)
Income tax expense
         
(62,208
)
   
(49,774
)
Loss from continuing operations
         
(173,420
)
   
(68,647
)
                       
Loss from discontinued operations
         
(16,924
)
   
(26,774
)
Loss for the period
         
(190,344
)
   
(95,421
)
                       
(Loss) profit attributable to:
                     
Owners of the Company
         
(217,871
)
   
(131,850
)
Non-controlling interest
         
27,527
     
36,429
 
           
(190,344
)
   
(95,421
)
                       
                       
Loss per share attributable to owners of the Company during the period
 
27
     
(0.250
)
   
(0.151
)
Loss per share from continuing operations attributable to owners of the Company during the period
 
27
     
(0.230
)
   
(0.121
)
                       
                       
The accompanying notes on pages 6 to 39 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 December 31,
 
   
Note
   
2020
   
2021
 
                   
                   
Loss for the period
         
(190,344
)
   
(95,421
)
Other comprehensive income:
                     
Items that may be subsequently  reclassified to profit or loss
                     
Cash flow hedge, net of tax
   
     
(626
)
   
-
 
Foreign currency translation adjustment, net of tax
           
8,304
     
(5,987
)
Exchange difference from net investment in a foreign operation, net of tax
           
708
     
(428
)
Other comprehensive income for the period, net of tax
           
8,386
     
(6,415
)
Total comprehensive income for the period
           
(181,958
)
   
(101,836
)
                         
Comprehensive income attributable to:
                       
Owners of  the Company
           
(209,599
)
   
(138,232
)
Non-controlling interest
           
27,641
     
36,396
 
             
(181,958
)
   
(101,836
)
                         
Comprehensive income for the period attributable to owners of the Company:
                       
Continuing operations
           
(192,020
)
   
(111,458
)
Discontinued operations
           
(17,579
)
   
(26,774
)
             
(209,599
)
   
(138,232
)
                         
                         
The accompanying notes on pages 6 to 39 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 DECEMBER 31, 2020 AND 2021
                                           
(All amounts are expressed in thousands of S/ unless otherwise stated)
                                           
   
Attributable to the controlling interests of the Company
             
   
Number
                                               Non-        
   
of shares
         
Legal
   
Voluntary
   
Share
   
Other
   
Retained
         
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
   
-
     
-
     
-
     
-
     
-
     
-
     
(217,871
)
   
(217,871
)
   
27,527
     
(190,344
)
Cash flow hedge
   
-
     
-
     
-
     
-
     
-
     
(594
)
   
-
     
(594
)
   
(32
)
   
(626
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
8,158
     
-
     
8,158
     
146
     
8,304
 
Exchange difference from net investment in a foreign operation
   
-
     
-
     
-
     
-
     
-
     
708
     
-
     
708
     
-
     
708
 
Comprehensive income of the period
   
-
     
-
     
-
     
-
     
-
     
8,272
     
(217,871
)
   
(209,599
)
   
27,641
     
(181,958
)
Transactions with shareholders:
                                                                               
- Dividend distribution
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(82,412
)
   
(82,412
)
- Contributions (devolution) of non-controlling shareholders, net
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(15,725
)
   
(15,725
)
- Additional acquisition of non-controlling
   
-
     
-
     
-
     
-
     
(605
)
   
-
     
-
     
(605
)
   
(89
)
   
(694
)
Total transactions with shareholders
   
-
     
-
     
-
     
-
     
(605
)
   
-
     
-
     
(605
)
   
(98,226
)
   
(98,831
)
Balances as of December 31, 2020
   
871,918
     
871,918
     
132,011
     
29,974
     
1,131,574
     
(169,234
)
   
(728,637
)
   
1,267,606
     
327,690
     
1,595,296
 
                                                                                 
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
   
-
     
-
     
-
     
-
     
-
     
-
     
(131,850
)
   
(131,850
)
   
36,429
     
(95,421
)
Foreign currency translation adjustment
   
-
     
-
     
-
     
-
     
-
     
(5,957
)
   
-
     
(5,957
)
   
(30
)
   
(5,987
)
Exchange difference from net investment in a foreign operation
   
-
     
-
     
-
     
-
     
-
     
(425
)
   
-
     
(425
)
   
(3
)
   
(428
)
Comprehensive income of the period
   
-
     
-
     
-
     
-
     
-
     
(6,382
)
   
(131,850
)
   
(138,232
)
   
36,396
     
(101,836
)
Transactions with shareholders:
                                                                               
- Dividend distribution
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(42,974
)
   
(42,974
)
- Contributions (devolution) of non-controlling shareholders, net
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(27,104
)
   
(27,104
)
- Additional acquisition of non-controlling
   
-
     
-
     
-
     
-
     
-
     
39,669
     
-
     
39,669
     
(39,669
)
   
-
 
- Deconsolidation Adexus S.A.
   
-
     
-
     
-
     
-
     
-
     
-
     
52,133
     
52,133
     
-
     
52,133
 
- Dilution of non-controlling shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(581
)
   
(581
)
Total transactions with shareholders
   
-
     
-
     
-
     
-
     
-
     
39,669
     
52,133
     
91,802
     
(110,328
)
   
(18,526
)
Balances as of December 31, 2021
   
871,918
     
871,918
     
132,011
     
29,974
     
1,131,574
     
(135,947
)
   
(808,354
)
   
1,221,176
     
253,758
     
1,474,934
 
                                                                                 
                                                                                 
The accompanying notes on pages 6 to 39 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 December 31,
 
 
 
Note
   
2020
   
2021
 
 
                 
OPERATING ACTIVITIES
                 
Loss before income tax
         
(131,900
)
   
(50,609
)
Adjustments to  profit not affecting cash flows from operating activities:
                     
Depreciation
 
14 a)

   
98,504
     
98,795
 
Amortization
 
14 b)

   
98,621
     
107,386
 
Impairment of inventories
         
791
     
2,984
 
Impairment of accounts receivable and other accounts receivable
         
134,964
     
29,389
 
Reversal of impairment of inventories
         
(821
)
   
-
 
Debt condonation
         
(9,451
)
   
-
 
Change in the fair value of the liability for put option
         
245
     
-
 
Other provisions
         
126,896
     
56,338
 
Renegotiation of liability for acquisition of non-controlling Morelco
         
-
     
(70,322
)
Financial expense,net
         
225,212
     
221,940
 
Impairment of investment
         
38
     
-
 
Incremental cost accrued
         
8,875
     
-
 
Share of the profit and loss of associates and joint ventures accounted for using the equity method
 
13
     
(770
)
   
641
 
Reversal of provisions
         
(33,264
)
   
(13,027
)
Disposal of assets
         
8,895
     
13,941
 
Profit on sale of property, plant and equipment
         
(2,322
)
   
(3,937
)
(Profit) loss on remeasurement of accounts receivable
         
(25,888
)
   
106,613
 
Net variations in assets and liabilities:
                     
Trade accounts receivable and working in progress
         
131,674
     
(32,629
)
Other accounts receivable
         
(46,117
)
   
25,585
 
Other accounts receivable from related parties
         
(20,641
)
   
(57,258
)
Inventories
         
22,578
     
59,201
 
Pre-paid expenses and other assets
         
(823
)
   
(11,681
)
Trade accounts payable
         
(42,062
)
   
(102,037
)
Other accounts payable
         
(58,011
)
   
61,022
 
Other accounts payable to related parties
         
3,591
     
7,703
 
Other provisions
         
(9,051
)
   
(27,964
)
Interest payment
         
(137,369
)
   
(146,369
)
Payments for purchases of intangibles - Concessions
         
(3,519
)
   
(5,157
)
Payment of income tax
         
(112,851
)
   
(83,539
)
Net cash provided by operating activities
         
226,024
     
187,009
 
 
                     
INVESTING ACTIVITIES
                     
Sale of property, plant and equipment
         
9,118
     
9,621
 
Interest received
         
4,292
     
2,474
 
Dividends received
         
2,318
     
3,445
 
Payment for purchase of investments properties
         
(98
)
   
(152
)
Payments for intangible purchase
         
(46,767
)
   
(53,808
)
Payments for property, plant and equipment purchase
         
(33,596
)
   
(42,270
)
Net cash applied to investing activities
         
(64,733
)
   
(80,690
)
 
                     
FINANCING ACTIVITIES
                     
Loans received
         
185,644
     
281,079
 
Bonds issued
         
-
     
357,424
 
Amortization of loans received
         
(275,163
)
   
(548,360
)
Amortization of bonds issued
         
(37,981
)
   
(48,858
)
Payment for transaction costs for debt
         
-
     
(5,681
)
Dividends paid to non-controlling interest
         
(82,412
)
   
(25,693
)
Cash received (return of contributions) from non-controlling shareholders
         
(15,725
)
   
(27,104
)
Acquisition or sale of interest in a subsidiary of non-controlling shareholders
         
-
     
(33,232
)
Net cash applied to financing activities
         
(225,637
)
   
(50,425
)
(Net decrease) net increase in cash
         
(64,346
)
   
55,894
 
Exchange difference
         
13,813
     
1,116
 
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
     
900,168
     
957,178
 
 
                     
NON-CASH TRANSACTIONS:
                     
Capitalization of interests
         
5,129
     
1,244
 
Acquisition of assets through finance leases
         
55
     
104
 
Dividends declared to non-controlling interest
         
9,631
     
17,281
 
Acquisition of right-of-use assets
         
9,673
     
7,988
 
Acquisition of supplier bonds
         
25,871
     
-
 
 
                     
The accompanying notes on pages 6 to 39 are an integral part of the consolidated financial statements.
         

- 5 -

AENZA S.A.A. AND SUBSIDIARIES

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2020 AND DECEMBER 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 December 31, 2021 were authorized by Management and Board of Directors on January 31, 2022.

The consolidated financial statements for the year ended December 31, 2020, were prepared and issued with authorization of Management and the Board of Directors on March 5, 2021, and were approved on the General Shareholders’ Meeting held on March 31, 2021.

Since the date the financial statements were submitted to our shareholders for their approval, until the date of presentation to the Securities and Exchange Commission of the financial information attached to the annual report 20F, subsequent events with material impact on our results occurred and as a result, and in compliance with International Financial Reporting Standards (IFRS), we have recorded such impacts herein, this was revealed through a relevant information communication on May 17, 2021. The events referred to previously, are related mainly to the considerable progress in the negotiations of the Company’s plea bargain agreement, which allowed us to reassess our estimate of our exposure to the contingencies including within its scope. As a result, the amounts included in our financial statements were restructured.

After the filing of the Form 20-F, the Company signed an “Acta de Acuerdo Preparatorio de Colaboracion y Beneficios” (the “Agreement”), with the “Procuraduria Publica ad Hoc”. who dedicate themselves exclusively to the knowledge of investigations related to Crimes of Corruption of Officials and related incurred by the company Odebrecht and others (the “Prosecutor's Office” and with the ad hoc Public Prosecutor's Office for investigations and processes related to crimes of corruption of officials, money laundering and related assets incurred by the company Odebrecht and others (the "Office of the Attorney General"). Pursuant to the Agreement, the Company assumed an obligation to pay a civil penalty, which is within the estimates included in such financial information. The effects of the Effective Collaboration Agreement will enter into force as of their judicial approval.

The consolidated restructured financial statements for the year ended December 31, 2020 have been prepared and issued with authorization of Management and the Board of Directors on June 9, 2021 to ensure consistency between the information presented to the markets in which the Company’s securities are traded, and were approved on the General Mandatory Shareholder’s Meeting held on July 6, 2021.

- 6 -

c) Acta de Acuerdo Preparatorio de Colaboración y Beneficios – “The Agreement”

Pursuant to the Agreement executed on May 21, 2021, AENZA S.A.A. accepts it was utilized by certain former executives to commit illicit acts until 2016, and commits to pay a civil penalty to the Peruvian State of S/321.9 million and US$41.1 million.  The civil penalty is subject to (i) a repayment tenor of 12 years, (ii) the legal interest rate in domestic and foreign currency, (iii) a total collateral of S/197 million through a trust that includes shares issued by a subsidiary of AENZA, a mortgage on a real estate asset and debt service guaranty account. Among other conditions, the Agreement includes a restriction to participate in public construction and road maintenance contracts for 2 years.  As of December 31, 2021, we registered the present value of the amounts described before, which amount to S/164.6 million and US$18.9 million (totaling S/240.1 million).

The civil penalty covers the total contingency to which the Company was exposed because of the investigations revealed in the notes to the financial statements since 2017.  Nevertheless, the Agreement enforceability is subject to court approval and its terms and conditions are subject to confidentiality provisions in such agreement.

d) Changes in Shareholders and Board of Directors

On June 15, 2021, the Company was informed that IG4 Capital Infrastructure Investments LP (“IG4”) announced an “Oferta Publica de Adquisición” (“OPA”), or tender offer, for a total of 107,198,601 common shares with voting rights equivalent to 12.29% of the total stock issued by AENZA S.A.A.  Furthermore, the Company was informed by other shareholders representing collectively 12.72% of the common shares that 8.82% executed a vote sindication agreement with IG4 and that 3.9% transferred their shares to a trust in which IG4 holds the decision on voting rights (“derechos politicos”).

On August 10, 2021, the Company was informed that IG4 purchased a significant shareholding participation in AENZA S.A.A., amounting to 25.13% of the company’s capital stock, from which 12.29% was purchased within the OPA and 12.84% was purchased through the “Transaction Documents”, as such documents were denominated in the Offering Information Prospectus updated on July 12, 2021.  Furthermore, on August 12, 2021, certain shareholders of AENZA S.A.A. executed an Amendment to the Contrato de Fideicomiso with IG4 as “fideicomisario” and La Fiduciaria S.A. as “Fiduciaria”, in which, among other aspects, IG4 purchased the voting rights of AENZA’s common shares representing approximately 8.74% of the company’s capital stock, subject to a tenor of 8 years, which could be automatically renewed for an additional period of 8 years.

On August 26, 2021, the Company’s Board of Directors agreed to appoint Mr. André Mastrobuono as new Chief Executive Officer, effective on October 1, 2021. Mr. Luis Díaz Olivero would execute its duties as CEO until such date.

On September 20, 2021, a General Shareholders Meeting was held, in which a renewed Board of Directors was elected for the 2021-2024 period. On the same day, in a Board Meeting, Mr. Juan Vicente Revilla Vergara was appointed as Chairman of the Board and Mr. Gustavo Nickel Buffara de Freitas was appointed as Vice Chairman.  In addition, the Board approved the following changes in the Board Committees:

1. Change of denomination of the Strategy and Investments Committee to the Finance, Risks and Investments Committee;
2. Merge the Audit Committee and the Risks and Compliance Committee into a new Audit and Compliance Committee, and transfer the supervision of risks to the Finance, Risks and Investments Committee;
3. Create the Environmental, Social and Governance (ESG) Committee;
4. Designate the members of the Board Committees:
(a) Audit and Compliance Committee: Carlos Rojas Perla (Chairman), Santiago Hernando Pérez y Antonio Carlos Valente Da Silva.
(b) Environmental, Social and Governance (ESG) Committee: Gema Esteban Garrido (Chairman), Antonio Carlos Valente Da Silva y Esteban Viton Ramírez.

- 7 -

(c) Talent Committee: Juan Vicente Revilla Vergara (Chairman), Gustavo Nickel Buffara de Freitas, Santiago Hernando Pérez y Esteban Viton Ramirez.
(d) Finance, Risks and Investments Committee: Pablo Ignacio Kühlenthal Becker (Chairman), Nicolás Bañados Lyon, Carlos Rojas Perla y Gustavo Nickel Buffara de Freitas

e) New State of emergency due to COVID

On December 23, 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 January 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.

The Company’s Management continues to monitor the evolution of the situation and the guidance of the national and international authorities, since events beyond the control of Management may arise that require modifying the established business plan. 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, however, until the date of approval of the financial statements, it is not expected that operations and going concern will be affected.

2. BASIS OF PREPARATION

The condensed interim consolidated financial statements for the period ended December 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.

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. Standards, amendments, and interpretation adopted by the Group

Standards, amendments and interpretation that have entered in force as of January 1, 2021, have not had impact on the condensed interim consolidated financial statements as of December 31, 2021, and fo this reason thay have not been disclosed.  The Group has not adopted in advance any amendment and modification that are not yet effective

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.

- 8 -

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.

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 2021, this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos.

The balances of financial assets and liabilities denominated in foreign currencies correspond to balances in U.S. dollars, which are expressed at the published bid and ask exchange rate in effect at that date, according to the currency exchange rate:

   
At
   
At
 
   
December 31,
   
December 31,
 
   
2020
   
2021
 
             
Soles (a)
   
3.624
     
3.998
 
Chilean Pesos (b)
   
711.24
     
844.69
 
Colombian Pesos (c)
   
3,432.50
     
3,981.16
 

(a) Soles published by the Superintendency of Banking, Insurance and Pension Fund Administrators (SBS).
(b) Chilean pesos published by the Banco Central de  Chile.
(c) Colombian pesos published by Banco de la Republica de Colombia.

The consolidated statement of financial position as of December 31, includes the following:

   
2020
   
2021
 
   
USD(000)
   
USD(000)
 
             
Assets
   
586,479
     
360,834
 
Liabilities
   
321,599
     
431,556
 

For the periods ended December 31, 2020 and 2021, the Corporation’s exchange gains and losses for the Peruvian Sol, the Chilean and Colombian Pesos exposure against the U.S. dollar was:

   
2020
   
2021
 
             
Gain
   
426,164
     
383,199
 
Loss
   
(429,930
)
   
(430,410
)

- 9 -

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. Under COVID-19 pandemic (Note 1-e), 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.

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.

- 10 -

   
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)
   
356,101
     
62,943
     
230,352
     
322,123
     
971,519
 
     
2,012,798
     
538,300
     
854,754
     
1,338,101
     
4,743,953
 
                                         
                                         
                                         
   
Less than
     
1-2
     
2-5
   
More than
         
As of December 31, 2021
 
1 year
   
years
   
years
   
5 years
   
Total
 
                                         
Other financial liabilities (except
                                       
for finance leases and lease
                                       
liability for right-of-use asset)
   
224,503
     
52,751
     
173,392
     
124,320
     
574,966
 
Finance leases
   
5,624
     
4,613
     
296
     
-
     
10,533
 
Lease liability for right-of-use asset
   
18,817
     
24,295
     
21,993
     
8,086
     
73,191
 
Bonds
   
137,852
     
206,476
     
837,931
     
792,037
     
1,974,296
 
Trade accounts payables (except
                                       
non-financial liabilities)
   
912,826
     
-
     
-
     
-
     
912,826
 
Accounts payables to related parties
   
51,004
     
50,712
     
-
     
-
     
101,716
 
Other accounts payables (except
                                       
non-financial liabilities)
   
349,459
     
22,941
     
109,383
     
422,666
     
904,449
 
     
1,700,085
     
361,788
     
1,142,995
     
1,347,109
     
4,551,977
 

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 (Note 15). 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 2021, the gearing ratio is presented below indicating the Corporation’s strategy to keep it in a range from 0.08 to 0.70.

- 11 -

   
2020
   
2021
 
Total financial liabilities and bonds (Note 15 and Note 16)
   
1,831,079
     
1,840,822
 
Less: Cash and cash equivalents (Note 8)
   
(900,168
)
   
(957,178
)
Net debt
   
930,911
     
883,644
 
Total equity
   
1,595,296
     
1,474,934
 
Total capital
   
2,526,207
     
2,358,578
 
                 
Gearing ratio
   
0.37
     
0.37
 

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).

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 December 31, 2021
       
         
Financial liabilities
       
Other financial entities (Note 15-b)
   
165,878
 

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.

- 12 -

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.e).

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) energy, (iii) infrastructure, and (ivi) 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 Estate 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:

- 13 -

Operating segments financial position
                                     
Segment reporting
                                     
         
Infrastructure
                         
As of December 31, 2020
 
Engineering and construction
   
Energy
   
Toll roads
   
Transportation
   
Water
treatment
   
Real estate
   
Parent
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
 

- 14 -

Operating segments financial position
                                     
Segment reporting
                                     
         
Infrastructure
                         
As of December 31, 2021
 
Engineering and construction
   
Energy
   
Toll roads
   
Transportation
   
Water
treatment
   
Real estate
   
Parent
Company
operations
   
Eliminations
   
Consolidated
 
                                                       
Assets.-
                                                     
Cash and cash equivalent
   
303,925
     
121,873
     
114,100
     
182,607
     
7,499
     
109,828
     
117,346
     
-
     
957,178
 
Trade accounts receivables, net
   
366,299
     
67,662
     
38,418
     
106,856
     
1,003
     
9,958
     
84
     
-
     
590,280
 
Work in progress, net
   
316,191
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
316,191
 
Accounts receivable from related parties
   
96,073
     
121
     
48,012
     
4,309
     
-
     
3,166
     
52,644
     
(183,508
)
   
20,817
 
Other accounts receivable
   
390,133
     
31,092
     
30,057
     
18,734
     
960
     
3,783
     
12,297
     
2
     
487,058
 
Inventories, net
   
48,192
     
35,489
     
7,662
     
31,949
     
13
     
366,650
     
-
     
(1,629
)
   
488,326
 
Prepaid expenses
   
15,838
     
3,575
     
6,531
     
344
     
52
     
-
     
5,802
     
-
     
32,142
 
Total current assets
   
1,536,651
     
259,812
     
244,780
     
344,799
     
9,527
     
493,385
     
188,173
     
(185,135
)
   
2,891,992
 
Investments available for sale
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Total current assets
   
1,536,651
     
259,812
     
244,780
     
344,799
     
9,527
     
493,385
     
188,173
     
(185,135
)
   
2,891,992
 
                                                                         
Long-term trade accounts receivable, net
   
851
     
-
     
15,654
     
666,801
     
-
     
-
     
-
     
-
     
683,306
 
Long-term accounts receivable from related parties
   
335,150
     
-
     
19,700
     
42
     
11,536
     
-
     
584,596
     
(307,127
)
   
643,897
 
Prepaid expenses
   
-
     
981
     
20,558
     
1,894
     
684
     
-
     
-
     
(510
)
   
23,607
 
Other long-term accounts receivable
   
10,448
     
86,815
     
-
     
-
     
7,346
     
57,243
     
39,508
     
-
     
201,360
 
Investments in associates and joint ventures
   
108,258
     
8,951
     
-
     
-
     
-
     
5,443
     
1,581,030
     
(1,672,289
)
   
31,393
 
Investment property
   
-
     
-
     
-
     
-
     
-
     
22,416
     
42,558
     
-
     
64,974
 
Property, plant and equipment, net
   
142,228
     
153,456
     
7,056
     
749
     
181
     
6,845
     
1,653
     
(10,961
)
   
301,207
 
Intangible assets, net
   
142,499
     
257,580
     
322,625
     
351
     
-
     
733
     
14,575
     
5,028
     
743,391
 
Right-of-use assets, net
   
3,825
     
3,890
     
5,308
     
61
     
17
     
1,888
     
40,789
     
(8,061
)
   
47,717
 
Deferred income tax asset
   
173,205
     
4,717
     
21,304
     
-
     
644
     
16,960
     
47,038
     
5,094
     
268,962
 
Total non-current assets
   
916,464
     
516,390
     
412,205
     
669,898
     
20,408
     
111,528
     
2,351,747
     
(1,988,826
)
   
3,009,814
 
Total assets
   
2,453,115
     
776,202
     
656,985
     
1,014,697
     
29,935
     
604,913
     
2,539,920
     
(2,173,961
)
   
5,901,806
 
                                                                         
Liabilities.-
                                                                       
Borrowings
   
136,512
     
27,046
     
3,687
     
45
     
18
     
69,065
     
13,573
     
(8,606
)
   
241,340
 
Bonds
   
4,896
     
-
     
36,637
     
24,496
     
-
     
-
     
3,809
     
-
     
69,838
 
Trade accounts payable
   
754,094
     
67,686
     
44,210
     
30,637
     
464
     
30,401
     
38,894
     
683
     
967,069
 
Accounts payable to related parties
   
131,531
     
1,079
     
47,340
     
42,185
     
19
     
19,155
     
13,623
     
(203,928
)
   
51,004
 
Current income tax
   
59,698
     
15,748
     
17,920
     
-
     
347
     
1,058
     
478
     
-
     
95,249
 
Other accounts payable
   
559,803
     
23,116
     
38,198
     
9,104
     
791
     
91,342
     
31,510
     
-
     
753,864
 
Provisions
   
67,076
     
25,498
     
1,759
     
-
     
-
     
560
     
54,028
     
-
     
148,921
 
Total current liabilities
   
1,713,610
     
160,173
     
189,751
     
106,467
     
1,639
     
211,581
     
155,915
     
(211,851
)
   
2,327,285
 
                                                                         
Borrowings
   
5,382
     
121,693
     
1,721
     
15
     
-
     
5,315
     
205,244
     
(810
)
   
338,560
 
Long-term bonds
   
21,386
     
-
     
215,296
     
602,201
     
-
     
-
     
352,201
     
-
     
1,191,084
 
Long-term trade accounts payable
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Other long-term accounts payable
   
54,026
     
-
     
8,163
     
219
     
2,862
     
24,427
     
2,672
     
-
     
92,369
 
Long-term accounts payable to related parties
   
25,957
     
-
     
1,006
     
88,213
     
24,671
     
-
     
197,844
     
(286,979
)
   
50,712
 
Provisions
   
56,362
     
55,279
     
33,188
     
3,039
     
-
     
-
     
181,629
     
-
     
329,497
 
Deferred income tax liability
   
18,663
     
31,187
     
-
     
47,515
     
-
     
-
     
-
     
-
     
97,365
 
Total non-current liabilities
   
181,776
     
208,159
     
259,374
     
741,202
     
27,533
     
29,742
     
939,590
     
(287,789
)
   
2,099,587
 
Total liabilities
   
1,895,386
     
368,332
     
449,125
     
847,669
     
29,172
     
241,323
     
1,095,505
     
(499,640
)
   
4,426,872
 
Equity attributable to controlling interest in the Company
   
543,768
     
378,653
     
152,303
     
125,271
     
763
     
139,728
     
1,441,579
     
(1,560,889
)
   
1,221,176
 
Non-controlling interest
   
13,961
     
29,217
     
55,557
     
41,757
     
-
     
223,862
     
2,836
     
(113,432
)
   
253,758
 
Total liabilities and equity
   
2,453,115
     
776,202
     
656,985
     
1,014,697
     
29,935
     
604,913
     
2,539,920
     
(2,173,961
)
   
5,901,806
 

- 15 -

Operating segment performance
                               
Segment Reporting
                               
         
Infrastructure
                         
For the period ended December 31, 2020
 
Engineering and construction
   
Energy
   
Toll roads
   
Transportation
   
Water
treatment
   
Real estate
   
Parent
Company
operations
   
Elimination
   
Consolidated
 
                                                       
Revenue
   
2,092,592
     
369,798
     
466,824
     
345,258
     
3,359
     
182,439
     
71,197
     
(385,062
)
   
3,146,405
 
Gross profit (loss)
   
115,995
     
53,251
     
40,858
     
107,918
     
366
     
40,345
     
(2,344
)
   
(46,137
)
   
310,252
 
Administrative expenses
   
(102,985
)
   
(16,119
)
   
(16,584
)
   
(12,738
)
   
(289
)
   
(16,462
)
   
(23,647
)
   
54,811
     
(134,013
)
Other income and expenses, net
   
(43,573
)
   
(4,185
)
   
(79,576
)
   
72
     
42
     
1,962
     
(55,984
)
   
60
     
(181,182
)
Operating (loss) profit
   
(30,563
)
   
32,947
     
(55,302
)
   
95,252
     
119
     
25,845
     
(81,975
)
   
8,734
     
(4,943
)
Financial expenses
   
(54,173
)
   
(17,525
)
   
(32,376
)
   
(9,316
)
   
(275
)
   
(12,647
)
   
(48,371
)
   
28,328
     
(146,355
)
Financial income
   
8,792
     
2,239
     
4,326
     
1,586
     
897
     
4,584
     
47,402
     
(30,510
)
   
39,316
 
Dividends
   
-
     
-
     
-
     
-
     
-
     
-
     
7,222
     
(7,222
)
   
-
 
Share of profit or loss in associates and joint ventures
   
-
     
2,391
     
-
     
-
     
-
     
34
     
(105,888
)
   
104,233
     
770
 
(Loss) profit before income tax
   
(75,944
)
   
20,052
     
(83,352
)
   
87,522
     
741
     
17,816
     
(181,610
)
   
103,563
     
(111,212
)
Income tax
   
(3,614
)
   
(7,500
)
   
(13,477
)
   
(26,681
)
   
(277
)
   
(2,854
)
   
(7,768
)
   
(37
)
   
(62,208
)
(Loss) profit from continuing operations
   
(79,558
)
   
12,552
     
(96,829
)
   
60,841
     
464
     
14,962
     
(189,378
)
   
103,526
     
(173,420
)
Loss from discontinuing operations
   
-
     
-
     
-
     
-
     
-
     
-
     
(16,919
)
   
(5
)
   
(16,924
)
(Loss) profit for the year
   
(79,558
)
   
12,552
     
(96,829
)
   
60,841
     
464
     
14,962
     
(206,297
)
   
103,521
     
(190,344
)
                                                                         
(Loss) profit from attributable to:
                                                                       
Owners of the Company
   
(76,580
)
   
9,176
     
(88,865
)
   
45,631
     
464
     
1,391
     
(206,257
)
   
97,169
     
(217,871
)
Non-controlling interest
   
(2,978
)
   
3,376
     
(7,964
)
   
15,210
     
-
     
13,571
     
(40
)
   
6,352
     
27,527
 
     
(79,558
)
   
12,552
     
(96,829
)
   
60,841
     
464
     
14,962
     
(206,297
)
   
103,521
     
(190,344
)

- 16 -

Operating segment performance
                         
Segment Reporting
                         
         
Infrastructure
                         
For the Period ended December 31, 2021
 
Engineering and construction
   
Energy
   
Toll roads
   
Transportation
   
Water
treatment
   
Real estate
   
Parent
Company
operations
   
Elimination
   
Consolidated
 
                                                       
Revenue
   
2,560,138
     
541,859
     
515,382
     
348,915
     
3,650
     
239,391
     
67,202
     
(328,988
)
   
3,947,549
 
Gross profit (loss)
   
142,900
     
110,078
     
81,964
     
81,993
     
1,322
     
42,025
     
3,372
     
(46,674
)
   
416,980
 
Administrative expenses
   
(125,711
)
   
(14,575
)
   
(14,460
)
   
(14,267
)
   
(449
)
   
(14,911
)
   
(46,193
)
   
50,336
     
(180,230
)
Other income and expenses, net
   
43,685
     
(4,400
)
   
(1,284
)
   
1,537
     
4
     
1,337
     
(38,705
)
   
(868
)
   
1,306
 
Operating profit (loss)
   
60,874
     
91,103
     
66,220
     
69,263
     
877
     
28,451
     
(81,526
)
   
2,794
     
238,056
 
Financial expenses
   
(121,199
)
   
(14,705
)
   
(29,442
)
   
(8,298
)
   
(124
)
   
(11,947
)
   
(118,676
)
   
42,330
     
(262,061
)
Financial income
   
1,870
     
1,034
     
2,544
     
520
     
510
     
2,269
     
40,740
     
(43,714
)
   
5,773
 
Dividends
   
-
     
-
     
-
     
-
     
-
     
-
     
20,008
     
(20,008
)
   
-
 
Share of profit or loss in associates and joint ventures
   
(1,574
)
   
2,833
     
-
     
-
     
-
     
831
     
32,638
     
(35,369
)
   
(641
)
(Loss) profit before income tax
   
(60,029
)
   
80,265
     
39,322
     
61,485
     
1,263
     
19,604
     
(106,816
)
   
(53,967
)
   
(18,873
)
Income tax
   
(17,509
)
   
(22,469
)
   
(10,012
)
   
(19,382
)
   
(500
)
   
(6,644
)
   
26,808
     
(66
)
   
(49,774
)
(Loss) profit from continuing operations
   
(77,538
)
   
57,796
     
29,310
     
42,103
     
763
     
12,960
     
(80,008
)
   
(54,033
)
   
(68,647
)
Loss from discontinuing operations
   
-
     
-
     
-
     
-
     
-
     
-
     
(26,716
)
   
(58
)
   
(26,774
)
(Loss) profit for the year
   
(77,538
)
   
57,796
     
29,310
     
42,103
     
763
     
12,960
     
(106,724
)
   
(54,091
)
   
(95,421
)
                                                                         
(Loss) profit from attributable to:
                                                                       
Owners of the Company
   
(74,639
)
   
51,294
     
18,345
     
31,577
     
763
     
794
     
(106,677
)
   
(53,307
)
   
(131,850
)
Non-controlling interest
   
(2,899
)
   
6,502
     
10,965
     
10,526
     
-
     
12,166
     
(47
)
   
(784
)
   
36,429
 
     
(77,538
)
   
57,796
     
29,310
     
42,103
     
763
     
12,960
     
(106,724
)
   
(54,091
)
   
(95,421
)

- 17 -

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

As of December 31, this account comprises:

   
2020
   
2021
 
             
Cash on hand
   
996
     
936
 
Remittances in-transit
   
2,340
     
2,222
 
Bank accounts (a)
   
274,582
     
367,240
 
Current accounts
   
161,227
     
142,029
 
Banco de la Nacion
   
20,862
     
19,847
 
Savings deposits and mutual funds
   
9,038
     
62
 
Time deposits (less than 3 months)
   
83,455
     
205,302
 
Escrow account (b)
   
622,250
     
586,780
 
Operational funds
   
298,435
     
261,001
 
Reserve funds
   
144,737
     
163,939
 
Consortium funds
   
122,088
     
78,589
 
Guarantee funds
   
56,990
     
83,251
 
     
900,168
     
957,178
 

(a) The Corporation maintains current accounts with local and foreign banks that include time deposits have maturities less than 90 days and may be renewed upon maturity. These deposits earn interest that fluctuates between 0.18% and 0.9%. Additionally, it includes current accounts in the Banco de la Nacion for the exclusive use of paying tax obligations.

(b) The Corporation maintains trust accounts in local and foreign banks for the exclusive use of operations in projects and join operations. It also includes reserve funds for the payments of bonds issued by the subsidiaries Tren Urbano de Lima S.A. and Norvial S.A. amounting to S/110 million and S/22 million, respectively, as of December 31, 2021 (S/125 million and S/28 million, respectively, as of December 31, 2020).

9.   TRADE ACCOUNTS RECEIVABLES, NET

As of December 31, this account comprises:

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Receivables (net) (a)
   
759,795
     
773,575
     
260,689
     
269,427
     
499,106
     
504,148
 
Unbilled receivables (net) - Subsidiaries (b)
   
407,262
     
209,258
     
331,142
     
209,258
     
76,120
     
-
 
Unbilled receivables (net) - Concessions (c)
   
266,776
     
290,753
     
111,336
     
111,595
     
155,440
     
179,158
 
     
1,433,833
     
1,273,586
     
703,167
     
590,280
     
730,666
     
683,306
 

a) Receivables are presented net of impairment and present value discount. The value of the impairment amounts to S/45.3 million (S/48.1 million as of December 31, 2020). The ageing is detailed as follows:

- 18 -

   
2020
   
2021
 
Current
   
724,322
     
683,921
 
Past due up to 30 days
   
5,737
     
41,222
 
Past due from 31 days up to 90 days
   
6,801
     
11,668
 
Past due from 91 days up to 120 days
   
2,279
     
15,814
 
Past due from 121 days up to 360 days
   
4,185
     
7,070
 
Past due over 360 days
   
16,471
     
13,880
 
     
759,795
     
773,575
 

As of December 31, 2021, the amount overdue for more than 360 days mainly includes invoices receivable from subsidiaries: Cumbra Peru S.A. for S/9.5 million, UNNA Transporte S.A.C. for S/2.7 million, Cumbra Ingenieria S.A. for S/1.6 million, and others for S/0.1 million (Cumbra Peru S.A. for S/12.5 million, UNNA Transporte S.A.C. for S/2.7 million, Cumbra Ingenieria S,A. for S/0.8 millones and others for S/0.5 millones, as of December 31, 2020).

b)   Unbilled receivables from subsidiaries correspond to the estimates for services rendered that were not billed, valuations in process or pending approval. The balance includes impairment for S/5.2 million and present value discount for S/5.9 million (impairment for S/5.9 million and present value discount for S/12.5 million, as of December 31, 2020), and detailed by subsidiary:

Unbilled receivables - Subsidiaries
           
   
2020
   
2021
 
Cumbra Peru S.A.
   
315,878
     
170,063
 
Cumbra Ingenieria S.A.
   
25,823
     
24,177
 
UNNA Transporte S.A.C.
   
6,298
     
10,291
 
UNNA Energia S.A.
   
1,512
     
4,718
 
Qualys S.A.
   
-
     
5
 
Aenza S.A.A
   
-
     
4
 
Adexus S.A.
   
57,751
     
-
 
     
407,262
     
209,258
 

c)   Unbilled receivables from concessions correspond to future invoice according to Concession Contract terms, as detailed below:

   
2020
   
2021
 
Tren Urbano de Lima S.A.
   
235,763
     
256,526
 
Carretera Andina del  Sur S.A.C.
   
10,611
     
12,667
 
Red Vial 5 S.A.
   
15,436
     
16,451
 
Carretera Sierra Piura S.A.C.
   
4,401
     
4,489
 
Concesionaria La Chira S.A.
   
565
     
620
 
     
266,776
     
290,753
 

10. WORK IN PROGRESS

As of December 31, this account comprises:

   
2020
   
2021
 
             
Cumbra Peru S.A.
   
170,965
     
312,068
 
Cumbra Ingenieria S.A.
   
15,468
     
4,123
 
     
186,433
     
316,191
 

Work in progress costs include all those expenses incurred for construction contracts. The Corporation estimates that all costs incurred will be billed and collected.

- 19 -

The main projects of work in progress, grouped by subsidiary, are presented below:

   
2020
   
2021
 
             
Vial y Vives - DSD S.A. - Modernization and expansion of Arauco Plant
   
24,224
     
139,025
 
Vial y Vives - DSD S.A. - Quebrada Blanca Project
   
73,337
     
64,777
 
Cumbra Peru S.A. - Concentrator Plant and tunnel of Quellaveco
   
68,701
     
82,253
 
Cumbra Peru S.A. -  Jorge Chavez Airport
   
-
     
16,602
 
Cumbra Peru S.A. - Talara Refinery
   
15,468
     
7,128
 
Others
   
4,703
     
6,406
 
     
186,433
     
316,191
 

11. TRANSACTIONS WITH RELATED PARTIES

a)   Transactions with related parties

Major transactions for the periods ended December 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
   
15,903
     
22,374
 
- Associates
   
5
     
-
 
     
15,907
     
22,374
 

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

- 20 -

b)   Balances of transactions with related parties

   
As of December 31,
   
As of December 31,
 
   
2020
   
2021
 
   
Receivable
   
Payable
   
Receivable
   
Payable
 
Current portion:
                       
Joint operations
                       
Consorcio Rio Urubamba
   
9,357
     
-
     
9,792
     
-
 
Consorcio Rio Mantaro
   
-
     
7,655
     
-
     
7,043
 
Consorcio Constructor Chavimochic
   
-
     
6,208
     
-
     
9,301
 
Consorcio Peruano de Conservacion
   
3,156
     
-
     
654
     
2,392
 
Consorcio Vial Quinua
   
-
     
2,051
     
-
     
1,947
 
Consorcio Chicama Ascope
   
2,922
     
-
     
-
     
-
 
Consorcio Inti Punku
   
-
     
6,556
     
1,865
     
1,733
 
Consorcio GyM Conciviles
   
1,341
     
1,472
     
1,479
     
1,074
 
Consorcio Manperan
   
1,057
     
656
     
1,389
     
4,968
 
Consorcio Italo Peruano
   
1,520
     
217
     
1,394
     
106
 
Consorcio Norte Pachacutec
   
1,077
     
1,192
     
125
     
282
 
Consorcio Ermitaño
   
890
     
474
     
1,028
     
515
 
Terminales del Peru
   
501
     
161
     
92
     
399
 
Consorcio CDEM
   
1,111
     
-
     
-
     
1,545
 
Consorcio GyM-Stracon
   
-
     
644
     
-
     
143
 
Consorcio TNT Vial y Vives - DSD Chile Ltda
   
-
     
1,015
     
-
     
633
 
Otros menores
   
2,446
     
1,701
     
288
     
1,803
 
     
25,378
     
30,002
     
18,106
     
33,884
 
                                 
Other related parties
                               
Ferrovias S.A.
   
-
     
11,139
     
-
     
15,513
 
Peru Piping Spools S.A.C.
   
1,960
     
2,677
     
2,711
     
1,607
 
     
1,960
     
13,816
     
2,711
     
17,120
 
Current portion
   
27,338
     
43,818
     
20,817
     
51,004
 
                                 
                                 
                                 
Non-current portion
                               
Gasoducto Sur Peruano S.A.
   
620,071
     
-
     
643,897
     
-
 
Ferrovias S.A.
   
-
     
12,862
     
-
     
14,690
 
Ferrovias Participaciones S.A.
   
-
     
23,435
     
-
     
36,022
 
Non-current
   
620,071
     
36,297
     
643,897
     
50,712
 

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 December 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; the variation between December 2020 and December 2021, is mainly due to the effect of the exchange difference, generating an income of S/56.4 million; and the impact of the discount rate applied to the calculation of the present value, that generated an expense of S/32.6 million (Note 23).

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.

- 21 -

12. OTHER ACCOUNTS RECEIVABLE

As of December 31, this account comprises:

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Advances to suppliers
   
76,200
     
33,769
     
76,200
     
33,769
     
-
     
-
 
Income tax on-account payments
   
48,054
     
44,074
     
48,052
     
44,072
     
2
     
2
 
VAT credit
   
54,076
     
47,295
     
43,498
     
38,924
     
10,578
     
8,371
 
Guarantee deposits
   
217,441
     
199,132
     
156,123
     
185,334
     
61,318
     
13,798
 
Claims to third parties
   
212,565
     
215,943
     
108,748
     
186,065
     
103,817
     
29,878
 
Petroleos del Peru S.A.- Petroperu S.A.
   
87,826
     
106,077
     
17,132
     
19,262
     
70,694
     
86,815
 
ITAN and other tax receivable
   
63,003
     
48,378
     
30,468
     
17,302
     
32,535
     
31,076
 
Restricted funds
   
29,121
     
7,346
     
2,092
     
-
     
27,029
     
7,346
 
Rental and sale of equipment - Cumbra Peru S.A. projects
   
29,149
     
32,827
     
29,149
     
32,827
     
-
     
-
 
Accounts receivable from personneel
   
10,957
     
16,963
     
10,957
     
16,963
     
-
     
-
 
Consorcio Panorama
   
25,026
     
27,193
     
-
     
-
     
25,026
     
27,193
 
Other minors
   
10,386
     
38,991
     
9,738
     
38,854
     
648
     
137
 
     
863,804
     
817,987
     
532,157
     
613,371
     
331,647
     
204,616
 
Impairment
   
(102,050
)
   
(129,569
)
   
(98,626
)
   
(126,313
)
   
(3,424
)
   
(3,256
)
     
761,754
     
688,418
     
433,531
     
487,058
     
328,223
     
201,360
 

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

As of December 31, this account comprises:

   
2020
   
2021
 
Associates
   
27,246
     
22,267
 
Joint ventures
   
8,270
     
9,127
 
     
35,516
     
31,393
 

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

   
2020
   
2021
 
Balance at January 1,
   
37,035
     
35,516
 
Dividends received
   
(2,318
)
   
(3,445
)
Equity interest in results
   
770
     
(641
)
Impairment of investment
   
(38
)
   
-
 
Conversion adjustment
   
67
     
(37
)
Balance at December 31,
   
35,516
     
31,393
 

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, which is currently in process and close to the stage that corresponds to the arbitral decision.

- 22 -

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 December 30, 2020 and 2021, is as follows:

         
Property,
             
   
Investment
   
plant and
   
Intangibles
   
Right-of-use
 
   
property
   
equipment
   
assets
   
assets
 
         
(a)
   
(b)
   
(a)
 
                         
Net cost at January 1, 2020
   
28,326
     
463,990
     
854,227
     
90,581
 
                                 
Additions
   
98
     
36,065
     
50,405
     
12,075
 
Reclassifications and disposals
   
-
     
(17,564
)
   
(23,625
)
   
(21,541
)
Conversion adjustments
   
-
     
8,334
     
9,612
     
934
 
Deductions for sale of assets
   
62
     
(6,796
)
   
(8
)
   
-
 
Depreciation, amortization
   
(2,413
)
   
(78,560
)
   
(98,621
)
   
(17,531
)
                                 
Net cost at December 31, 2020
   
26,073
     
405,469
     
791,990
     
64,518
 
                                 
                                 
Net cost at January 1, 2021
   
26,073
     
405,469
     
791,990
     
64,518
 
                                 
Additions
   
152
     
42,374
     
68,350
     
7,988
 
Reclassifications and disposals
   
43,113
     
(56,985
)
   
(1,815
)
   
5,943
 
Desconsolidation of subsidiary
   
-
     
(7,935
)
   
(751
)
   
(6,632
)
Conversion adjustments
   
(48
)
   
(5,252
)
   
(6,997
)
   
(401
)
Deductions for sale of assets
   
-
     
(5,684
)
   
-
     
-
 
Depreciation, amortization
   
(4,316
)
   
(70,780
)
   
(107,386
)
   
(23,699
)
                                 
Net cost at December 31, 2021
   
64,974
     
301,207
     
743,391
     
47,717
 

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

As of December 31, 2021, additions to property, plant and equipment mainly corresponds to machinery of the engineering and construction segment for S/19.6 million; works in progress and units to be received corresponding to the drilling stage of the infrastructure segment for S/15.7 million; and equipment of the engineering and construction segment for S/3.8 million (as of December 31, 2020, machinery of the engineering and construction segment for S/17.1 million, works in progress and units to be received of the infrastructure segment for S/12 million and of the engineering and construction segment for S/2.8 million ; and equipment of the engineering and construction segment for S/1 million).

- 23 -

During 2021, the net value corresponding to the building located in Surquillo has been reclassified to Investment Properties due to management's decision to lease the property located at Av Paseo de la Republica 4675.

As of December 31, 2021, additions to right-of-use assets correspond mainly to lease agreements for the acquisition of equipment.

For the periods ended December 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)
   
79,732
     
82,063
 
Administrative expenses (Note 21)
   
6,393
     
5,425
 
Depreciation discontinued operations
   
12,379
     
5,940
 
Total depreciation
   
98,504
     
93,428
 
(-) Depreciation related to investment property
   
(2,413
)
   
(4,316
)
(-) Depreciation related to right-of-use assets (Note 14)
   
(17,531
)
   
(18,332
)
Total depreciation of property, plant and equipment
   
78,560
     
70,780
 

(b)  Intangible assets

As of December 31 2021, the additions to intangibles correspond mainly to investments in the preparation of wells and other assets of the infrastructure segment for S/51.2 million; software development of the engineering and construction segment for S/8.5 million; and concessions, licenses and other assets corresponding to the infrastructure segment for S/6.2 million (as of December 31 2020, investments in the preparation of wells for S/44.5 million, concessions and licenses corresponding to the infrastructure segment for S/4.4 million).

For the periods ended December 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)
   
93,135
     
102,452
 
Administrative expenses (Note 21)
   
4,138
     
3,642
 
Amortization discontinued operations
   
1,348
     
1,292
 
     
98,621
     
107,386
 

Goodwill

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

   
2020
   
2021
 
Engineering and construction
   
38,211
     
36,345
 
Electromechanical
   
20,735
     
20,735
 
     
58,946
     
57,080
 

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

- 24 -

15. BORROWINGS

As of December 31, this item comprises:

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Bank loans (a)
   
571,659
     
343,679
     
409,272
     
217,935
     
162,387
     
125,744
 
Finance leases
   
52,391
     
9,836
     
13,635
     
5,118
     
38,756
     
4,718
 
Lease liability for right-of-use asset
   
72,726
     
60,507
     
19,950
     
14,541
     
52,776
     
45,966
 
Other financial entities (b)
   
201,544
     
165,878
     
10,027
     
3,746
     
191,517
     
162,132
 
     
898,320
     
579,900
     
452,884
     
241,340
     
445,436
     
338,560
 

(a)   Bank loans

As of December 31, 2020 and 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% in 2020 and between 0.9% and 11% in 2021.

                                     
               
Current
   
Non-current
 
   
Interest
   
Date of
   
At December 31,
   
At December 31,
 
   
rate
   
maturity
   
2020
   
2021
   
2020
   
2021
 
                                     
Cumbra Peru S.A. (i)
   
0.90% / 8.50
%
   
2025
     
222,924
     
129,905
     
19,977
     
4,526
 
UNNA Energia S.A. (ii)
   
6.04% / 7.68
%
   
2027
     
24,950
     
23,351
     
99,474
     
120,635
 
Viva Negocio Inmobiliario S.A.
   
7.00% / 11.00
%
   
2023
     
90,197
     
64,679
     
3,318
     
583
 
AENZA S.A.A. (iii)
   
9.10% / 10.10
%
   
2021
     
51,977
     
-
     
39,618
     
-
 
Adexus S.A.
   
0.50% / 1.15
%
   
2021
     
19,224
     
-
     
-
     
-
 
                     
409,272
     
217,935
     
162,387
     
125,744
 

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.) signed 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 May 31, 2021. On August 12, 2021, the lenders agreed to extend the maturity date of the Framework Agreement, the Financing Agreement and the Syndicated Letter of Guarantee Facility to July 31, 2022.

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 pending payment.

In August 2021, US$20 million was paid, equivalent to S/81.3 million. As of December 31 2021, the Company's balance payable under the Financial Stability Framework Agreement amounts to US$7.4  million, equivalent to S/29.5 million (US$30.7 million, equivalent to S/111 million, as of December 31, 2020).

- 25 -

As of December 31 2021, the account receivable rate and unbilled receivable rate reached 212% and 284%, 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. The Company complied with the requirement of the Financial Stability Framework Agreement.

ii)   UNNA Energía S.A. 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. In April and December 2021, an additional cash transfer of US$7.3 million (equivalent to US$28.2 million) and US$4.3 million (equivalent to US$16.9 million), respectively, was requested for the additional investments. As of December 31, 2021, TP has a total amount of financing of US$54.3 million (equivalent to S/217.4 million) and due in 2027 (US$46.4 million, equivalent to S/168.2 million, as of December 31, 2020). As of December 31, 2021, the amount of financing equivalent to the 50% interest held by the subsidiary UNNA Energia S.A. amounts to US$27.2 million, equivalent to S/108.7 million ( US$23.2 million, equivalent to S/84.1 million, as of December 31, 2020).

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 December 31, 2021, TP has a total amount of financing of US$18.4 million (equivalent to S/73.6 million) and due in 2026 (US$22 million, equivalent to S/80 million, as of December 31, 2020). As of December 31, 2021, the amount of financing equivalent to the 50% interest held by the subsidiary UNNA Energia S.A. amounts to US$9.2 million, equivalent to S/36.8 million (US$11 million, equivalent to S/40 million, as of December 31, 2020).

As of December 31, 2021 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.

In August 2021, the loan was paid in full. (US$25.7 million, equivalent to S/93.2 million, as of December 31, 2020).

iv)   Banco Santander Loan

On December 28, 2020, Técnicas Reunidas enforced two letters of credit for a total  amount of US$23.7 million, which had been issued by Santander on behalf of our subsidiary Cumbra Perú S.A. as security pursuant to a construction contract. As a result, Cumbra Perú S.A. subscribed a loan with Banco Santander for principal amount of US$23.7 million (equivalent to S/85.9 million). The loan accrues interest at an annual rate of Libor + 8% and due on September 30, 2022. In October and December 2021, the debt was paid for US$2.5 million and US$1 million, respectively. As of December 31, 2021, the principal amount of the loan is US$20.2 million, equivalent to S/80.8 million (US$23.7 million, equivalent to S/85.9 million, as of December 31, 2020).

Pursuant to the Loan Agreement executed with Banco Santander S.A., Cumbra Peru was obliged to amortize US$1.5 mm on December 31, 2021.  However, such agreement stipulates that to the extent other payment obligations have not been fulfilled (Amortization of Direct Debt to the banks of the Syndicated Line), AENZA could request to Banco Santander S.A. the same payment waivers granted by these creditors (banks of the Syndicated Line).  Therefore, on December 30, 2021, Cumbra Peru requested Banco Santander S.A. a waiver with respect to the amortization date in the following main terms: (i) waiver of the US$1.5 mm amortization on the Payment Date and (ii) schedule the amortization to February 15, 2022, to the extent that the amortization of the Syndicated Line Amortization is fulfilled on the same date.
 
Banco Santander S.A. approved a payment waiver with effective date December 31, 2021.
 
As of December 31, 2021, Cumbra Perú S.A. is in compliance with the covenants under the Loan Agreement with Banco Santander S.A.

- 26 -

(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 December 31, 2021, the loan balance payable amounted to US$41.5 million, equivalent to S/165.8 million (as of December 31, 2020, the balance was US$42.1 million, equivalent to S/152.5 million).

- 27 -

(c)   Fair value of borrowings

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

   
Carrying amount
         
Fair value
 
   
2020
   
2021
   
2020
   
2021
 
                         
Bank loans
   
571,659
     
343,679
     
589,737
     
372,270
 
Finance leases
   
52,391
     
9,836
     
54,343
     
9,097
 
Lease liability for right-of-use asset
   
72,726
     
60,507
     
88,779
     
66,943
 
Other financial entities
   
201,544
     
165,878
     
247,857
     
165,878
 
     
898,320
     
579,900
     
980,716
     
614,188
 

As of December 31, 2021, the fair value is based on cash flows discounted using debt rates between 3.9% and 10% ((between 0.7% and 11% as of December 31, 2020) and are included as Level 2 in the level of measurement.

16. BONDS

As of December 31, this item includes:

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Tren Urbano de Lima S.A. (a)
   
624,454
     
626,697
     
21,081
     
24,496
     
603,373
     
602,201
 
Red Vial 5 S.A. (b)
   
280,848
     
251,933
     
32,819
     
36,637
     
248,029
     
215,296
 
AENZA S.A.A. (c)
   
-
     
356,010
     
-
     
3,809
     
-
     
352,201
 
Cumbra Perú S.A. (d)
   
27,457
     
26,282
     
4,546
     
4,896
     
22,911
     
21,386
 
     
932,759
     
1,260,922
     
58,446
     
69,838
     
874,313
     
1,191,084
 

(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 December 31, 2021, an accumulated amortization amounting to S/106.9 million (S/90.6 million as of December 31, 2020) has been made.

As of December 31, 2021, the balance includes VAC adjustments and interest payable for S/121.1 million (S/103.4 million as of December 31, 2020).

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

   
2020
   
2021
 
             
Balance at January, 1
   
618,497
     
624,454
 
Amortization
   
(11,582
)
   
(16,376
)
Accrued interest
   
47,615
     
49,013
 
Interest paid
   
(30,076
)
   
(30,394
)
Balance at December, 31
   
624,454
     
626,697
 

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

- 28 -

As of December 31, 2021, the fair value amounts to S/626.8 million (S/710 million, as of December 31, 2020), this is based on discounted cash flows using the rate of 4.9% (3.6% as of December 31, 2020) and corresponds to level 2 of the fair value hierarchy.

(b)  Red Vial 5 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 December 31, 2020 and 2021 is as follows:

   
2020
   
2021
 
             
Balance at January, 1
   
305,545
     
280,848
 
Amortization
   
(24,820
)
   
(28,836
)
Accrued interest
   
24,619
     
22,315
 
Interest paid
   
(24,496
)
   
(22,394
)
Balance at December, 31
   
280,848
     
251,933
 

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

As of December 31, 2021, the fair value amounts to S/260 million (S/304.7 million as of December 31, 2020), is based on discounted cash flows using rate 8.1% as of December 31, 2020 and 2021, and is within level 2 of the fair value hierarchy.

(c)   AENZA S.A.A.

In August 2021, AENZA S.A.A. issued bonds convertible (hereinafter, the "Bonds") into common shares with voting rights. The total amount of the issue was US$89.9 million, issuing 89,970 bonds, each with a nominal value of US$ 1,000.

The placement of these bonds was executed locally and is the result of the exercise of the preemptive subscription right provided by the applicable legislation, as well as their subsequent private offering. The Bonds have been made available to investors only in Peru pursuant to the provisions of the applicable Peruvian legislation

As of December 31, 2021, the principal balance amounts to US$89.9 million equivalent to S/359.7 million. The debt balance net of costs incurred amounts to S/356 million.

As of December 31, 2021, the fair value amounts to S/ million, is based on discounted cash flows using rate % and is within level 3 of the fair value hierarchy.

(d)  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 December 31, 2021, the balance includes accrued interest payable for US$0.3 million, equivalent to S/1 million (US$0.6 million, equivalent to S/2.2 million, as of December 31, 2020).

- 29 -

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

   
2020
   
2021
 
             
Balance at January, 1
   
-
     
27,457
 
Additions
   
25,871
     
-
 
Amortization
   
(1,579
)
   
(3,687
)
Exchange difference
   
2,153
     
2,561
 
Accrued interest
   
2,152
     
2,219
 
Interest paid
   
(1,140
)
   
(2,268
)
Balance at December, 31
   
27,457
     
26,282
 

As of December 31, 2021, the fair value amounts to S/27.1 million (S/28.6 million as of December 31, 2020), is based on discounted cash flows using a rate of 7.4% (7.1% as of December 31, 2020) and is within level 3 of the fair value hierarchy.

17. TRADE ACCOUNTS PAYABLE

As of December 31, this item includes:

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Invoices payable
   
470,118
     
506,798
     
470,118
     
506,798
     
-
     
-
 
Provision of contract costs (a)
   
618,797
     
454,662
     
618,797
     
454,662
     
-
     
-
 
Notes payable
   
48,754
     
5,609
     
8,252
     
5,609
     
40,502
     
-
 
     
1,137,669
     
967,069
     
1,097,167
     
967,069
     
40,502
     
-
 

(a)   The contract cost provisions include:

i)    Goods and services received and not invoiced for S/296.6 million on engineering and construction segment, S/66 million on infrastructure segment, S/20.6 million on real estate segment and S/16.5 million on parent company operations segment (S/429.2 million, S/62.8 million, S/24.6 million and S/6.5 million, respectively, as of December 31, 2020).

ii)   Estimate costs to come according to the the completion porcentage of projects on engineerina and construction segment amounting to S/54.9 million (S/95.7 million, as of December 31, 2020).

18. OTHER ACCOUNTS PAYABLE

As of December 31, this item includes:

- 30 -

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Advances received from customers (a)
   
309,590
     
321,613
     
278,490
     
314,577
     
31,100
     
7,036
 
Consorcio Ductos del Sur - payable (b)
   
88,206
     
77,665
     
28,836
     
29,242
     
59,370
     
48,423
 
Salaries and other payable
   
77,386
     
126,381
     
77,386
     
126,381
     
-
     
-
 
Put option liability on Morelco acquisition
   
118,622
     
27,986
     
79,096
     
27,986
     
39,526
     
-
 
Third-party loans
   
11,608
     
2,076
     
9,533
     
-
     
2,075
     
2,076
 
Other taxes payable
   
115,862
     
124,423
     
102,240
     
112,663
     
13,622
     
11,760
 
Acquisition of additional non-controlling interest
   
27,596
     
25,253
     
27,596
     
25,253
     
-
     
-
 
Guarantee deposits
   
23,744
     
26,017
     
23,744
     
26,017
     
-
     
-
 
Consorcio Rio Mantaro - payables
   
58,129
     
58,502
     
58,129
     
58,502
     
-
     
-
 
Provision of interest for debt with suppliers
   
16,425
     
3,056
     
-
     
285
     
16,425
     
2,771
 
Share purchase agreement - Inversiones Sur
   
14,496
     
15,992
     
-
     
-
     
14,496
     
15,992
 
Other accounts payables
   
39,974
     
37,269
     
33,356
     
32,958
     
6,618
     
4,311
 
     
901,638
     
846,233
     
718,406
     
753,864
     
183,232
     
92,369
 

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

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Customer advances from Consortiums
   
83,640
     
27,568
     
83,640
     
27,568
     
-
     
-
 
Customer advances for real estate projects
   
78,286
     
80,188
     
78,286
     
80,188
     
-
     
-
 
Quellaveco Project
   
86,415
     
10,841
     
71,571
     
10,841
     
14,844
     
-
 
Special National Transportation Infrastructure Project
   
24,050
     
19,582
     
13,781
     
12,765
     
10,269
     
6,817
 
Gasoducto Piura Construction
   
31,048
     
5,745
     
25,292
     
5,745
     
5,756
     
-
 
Pebbles Quebrada Blanca Phase 2 Project
   
-
     
120,642
     
-
     
120,642
     
-
     
-
 
Evaporadores Modernización y ampliación de la Planta Arauco Project
   
-
     
52,063
     
-
     
52,063
     
-
     
-
 
Others
   
6,151
     
4,984
     
5,920
     
4,765
     
231
     
219
 
     
309,590
     
321,613
     
278,490
     
314,577
     
31,100
     
7,036
 

(b) The balance of other accounts payable from Consorcio Constructor Ductos del Sur corresponds to payment obligations to vendors and main subcontractors for S/77.6 million (S/88.2 million as of December 31, 2020), the subsidiary Cumbra Peru S.A. as a result of the termination  of Gasoducto Sur Peruano S.A. operations.

The fair value of current 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.

19. PROVISIONS

As of December 31, this item includes:

   
Total
   
Current
   
Non-current
 
   
2020
   
2021
   
2020
   
2021
   
2020
   
2021
 
                                     
Legal claims (a)
   
368,241
     
359,587
     
78,627
     
112,722
     
289,614
     
246,865
 
Tax claims
   
8,176
     
36,356
     
3,293
     
15,666
     
4,883
     
20,690
 
Provision for well closure (b)
   
52,949
     
82,475
     
10,837
     
20,533
     
42,112
     
61,942
 
     
429,366
     
478,418
     
92,757
     
148,921
     
336,609
     
329,497
 

(a)  Legal contingencies correspond mainly to:

Civil compensation

Corresponds 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 indicated in Note 1 c) through the Agreement signed on May 21, 2021, the entry into force of which is subject to judicial approval, the Company acknowledges that it was used by some of its former directors for the commission of illegal acts up to in 2016 and agrees, consequently, to pay a civil compensation to the State for a total amount of S/321.9 million and US$40.7 million. As of December 31, 2021, the amount equivalent to the present value resulting from the amounts descrived above is recorded as one provision total S/164.6 million and US$18.9 million, equivalent to a total S/240.1 million.

- 31 -

Administrative process Indecopi

On March 9, 2021, Cumbra Peru S.A. was notified with an “Informe Final de Instrucción” prepared by INDECOPI's Technical Secretary, in relation with the administrative sanction process against 33 construction companies and other 26 of their executives for allegedly arranging a coordination a coordination system through which they illegally distributed several contract tenders conducted by Provias Nacional and other governmental entities. Such report was subject to approval by INDECOPI's “Comision de Defensa de la Libre Competencia”, which on November 15, 2021, through Resolution Nº080-021-CLC-INDECOPI, ruled in favor to sanction the companies and their executives, included Cumbra Perú S.A. On December 9, 2021, Cumbra Perú filed an appeal against such ruling, suspending its application. As of December 31, 2021, the Company and its legal advisors estimated, based on the aforementioned, a provision of S/50.2 million.

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.

As of July 2, 2020, the Company signed the 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. The Company registered a provision of US$15 million (equivalent of S/49.8 million), the difference of US$5 million was covered by the professional liability insurance policy in accordance with the agreement signed with the insurance company. In september 2020 , the Company paid US$0.3 millones (equivalent to S/1.1 million). On September 14, 2021, the settlement agreement was approved by the Eastern District Court of New York.

On June 30, 2021, a first amendment to the agreement was signed, which stipulates a payment of US$0.6 million (equivalent to S/2.2 million), amortization of the oustanding balance on September 30, 2021, and annual interest of 8%.

On October 1, 2021, the second amendment to the agreement was signed, whereby US$5.5 million (equivalent to S/22.7 million) was paid plus accrued interest of US$0.9 million (equivalent to S/3.6 million), established as a new expiration date June 30, 2022, plus accrued interest at an interest rate of 9% per year was set.

As of December 31, 2021, the Company maintains a provision of US$8.6 million, equivalent to S/34.4 million, plus interest (as of December 31, 2020, US$14.7 million, equivalent to S/53.1 million, plus interest).

(b) Other legal provisions

As of December 31, 2021, corresponds to civil, labor, administrative and contentious administrative contingencies estimated at S/34.2 million (S/76 million as of December 31, 2020).

The provision for closure as of December 31, 2021 mainly corresponds to: i) provisions for the closure of wells of UNNA Energia S.A. for S/71.1 million and contractual compliance with Petroperu for S/3.4 million (as of December 31, 2020, S/48.4 million and S/3.2 million, respectively); ii) provision of costs associated with the closing of the concession contract of Red Vial 5 S.A. for S/5.1 million (as of December 31, 2020, S/4.5 million); and iii) provisions for net liabilities assumed by the partner in the Chicama Ascope Consortium and other minors for S/2.8 million in Cumbra Perú S.A.

- 32 -

The account movement for the periods ended December 31, 2020 and 2021 are as follows:

               
Provision
       
   
Legal
   
Tax
   
for well
       
   
claims
   
claims
   
closure
   
Total
 
                         
At January 1, 2020
   
267,532
     
10,787
     
50,116
     
328,435
 
Additions
   
121,404
     
3,161
     
2,450
     
127,015
 
Present value
   
3,604
     
-
     
2,182
     
5,786
 
Reversals of provisions
   
(30,806
)
   
(2,458
)
   
-
     
(33,264
)
Reclasification
   
1,079
     
-
     
-
     
1,079
 
Payments
   
(3,938
)
   
(3,314
)
   
(1,799
)
   
(9,051
)
Translation adjustments / Exchange difference
   
9,366
     
-
     
-
     
9,366
 
At December 31, 2020
   
368,241
     
8,176
     
52,949
     
429,366
 
                                 
At January 1, 2021
   
368,241
     
8,176
     
52,949
     
429,366
 
Additions
   
52,654
     
29,395
     
10,815
     
92,864
 
Present value
   
19,627
     
-
     
9,780
     
29,407
 
Reversals of provisions
   
(13,027
)
   
-
     
(2,957
)
   
(15,984
)
Reclasification
   
(52,783
)
   
(299
)
   
4,051
     
(49,031
)
Payments
   
(26,863
)
   
(916
)
   
(185
)
   
(27,964
)
Translation adjustments / Exchange difference
   
11,738
     
-
     
8,022
     
19,760
 
At December 31, 2021
   
359,587
     
36,356
     
82,475
     
478,418
 

20. CAPITAL

As of December 31, 2021 and 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 December 31, 2021, a total of 136,637,740 shares were represented in ADS, equivalent to 27,327,548 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 December 31, 2020 and 2021, this item comprises:

- 33 -

   
Cost
             
   
of goods
   
Administrative
       
   
and services
   
expenses
   
Total
 
2020
                 
Salaries, wages and fringe benefits
   
946,631
     
75,677
     
1,022,308
 
Services provided by third-parties
   
949,545
     
33,411
     
982,956
 
Purchase of goods
   
565,052
     
-
     
565,052
 
Other management charges
   
158,929
     
14,322
     
173,251
 
Depreciation  (Note 14)
   
79,732
     
6,393
     
86,125
 
Amortization (Note 14)
   
93,135
     
4,138
     
97,273
 
Impairment of accounts receivable
   
32,215
     
4
     
32,219
 
Taxes
   
5,956
     
68
     
6,024
 
Recovery of property, plant and equipment
   
4,950
     
-
     
4,950
 
Impairment of investments
   
38
     
-
     
38
 
Inventory recovery
   
(30
)
   
-
     
(30
)
     
2,836,153
     
134,013
     
2,970,166
 
                         
2021
                       
Salaries, wages and fringe benefits
   
1,297,403
     
97,683
     
1,395,086
 
Services provided by third-parties
   
1,097,230
     
56,093
     
1,153,323
 
Purchase of goods
   
705,000
     
43
     
705,043
 
Other management charges
   
222,647
     
17,188
     
239,835
 
Depreciation  (Note 14)
   
82,063
     
5,425
     
87,488
 
Amortization (Note 14)
   
102,452
     
3,642
     
106,094
 
Impairment of accounts receivable
   
9,420
     
2
     
9,422
 
Taxes
   
5,691
     
154
     
5,845
 
Impairment of property, plant and equipment
   
5,679
     
-
     
5,679
 
Impairment of inventory
   
2,984
     
-
     
2,984
 
     
3,530,569
     
180,230
     
3,710,799
 
 
22. OTHER INCOME AND EXPENSES

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

- 34 -

   
2020
   
2021
 
Other income:
           
Change in contract of the call option (a)
   
-
     
70,322
 
Sale of assets
   
9,118
     
9,618
 
Recovery of provisions and impairments
   
6,501
     
6,070
 
Insurance compensation
   
156
     
3,728
 
Penalty income
   
1,168
     
1,883
 
Supplier debt forgiveness
   
14,545
     
-
 
Others
   
4,072
     
5,593
 
     
35,560
     
97,214
 
                 
Other expenditures:
               
Asset impairment (b)
   
103,074
     
20,285
 
Civil repair to the Peruvian Government
   
64,571
     
25,745
 
Legal and tax litigation
   
32,186
     
27,742
 
Net cost of fixed assets disposal
   
6,478
     
7,794
 
Provision for well closure
   
112
     
7,211
 
Disposal of property, plant and equipment
   
501
     
3,764
 
Present value of the call option
   
2,326
     
-
 
Administrative fine
   
2,056
     
2,068
 
Renegotiation of contract with suppliers
   
4,889
     
176
 
Others
   
549
     
1,123
 
     
216,742
     
95,908
 
     
(181,182
)
   
1,306
 

(a)  As of December 31, 2021, the subsidiary Cumbra Perú S.A. renegotiated the payment for the purchase of shares from the minority of the subsidiary Morelco S.A.S., such renegotiation ended with the signing of a new acquisition agreement for an amount of US$15.4 million, disregarding the original put option agreement. Consequently, the Company recorded "Other income - results from valuation of financial instruments" for an amount of S/70.3 million in the statement of income in 2021 (Note 18c).

(b)  As of December 31, 2021 corresponds to the impairment of other accounts receivable of S/20 million, as a consequence of the financial obligation assumed in favor of Adexus S.A.. As of December 31, 2020 corresponds to: i) impairment of other accounts receivable generated by the subsidiary Concesionaria Vía Expresa Sur S.A. for S/55.8 million, as a consequence of the new estimates of the Company on the recovery of the investment it maintains in the project, this project concession contract has been suspended by mutual agreement with the Municipality of Lima since June 2017; ii) impairment of other accounts receivable of CAM Holding S. P.A. for S/12.5 million for claims accepted against the guarantee account; iii) impairment of trade receivables generated by the subsidiary Concar S.A. for S/33.7 million to the Regional Government of Cusco iv) other minor for S/0.5 million of other receivables and S/0.5 million of trade receivables.

23. FINANCIAL INCOME AND EXPENSES

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

- 35 -

   
2020
   
2021
 
             
Financial income:
           
Interest on loans to third parties
   
863
     
442
 
Profit for present value of financial asset or financial liability
   
32,734
     
3,127
 
Interest on short-term bank deposits
   
2,353
     
959
 
Commissions and collaterals
   
601
     
55
 
Interest on mutual funds
   
537
     
287
 
Others
   
2,228
     
903
 
     
39,316
     
5,773
 
                 
                 
Financial expenses:
               
Interest expense on:
               
- Bank loans (a)
   
63,435
     
56,534
 
- Bonds
   
26,771
     
36,830
 
- Loans from third parties
   
12,612
     
12,642
 
- Right-of-use
   
4,259
     
3,982
 
- Financial lease
   
1,187
     
862
 
Commissions and collaterals
   
28,083
     
24,263
 
Interests from Tax Administration
   
4,827
     
13,723
 
Loss for present value of financial asset or financial liability (b)
   
4,552
     
53,757
 
Update of fair value of financial asset or financial liability (c)
   
-
     
12,402
 
Exchange difference loss, net
   
3,766
     
47,211
 
Derivative financial instruments
   
64
     
-
 
Other financial expenses
   
1,686
     
1,099
 
Less capitalized interest
   
(4,887
)
   
(1,244
)
     
146,355
     
262,061
 

(a) The variation in interest corresponds mainly to Inversiones en Autopistas S.A. which increased by S/7.4 million due to the loan with BCI Peru (Nota 15 b)

(b) The increase is mainly generated by the effect of the present value of the account receivable from Gasoducto Sur Peruano S.A. for S/31.6 million (Note 11), due to the variation of the discount rate applied, which increased from 1.65% to 2.66%. Additionally, increase by the effect of the present value of the account payable according to the Acta de Acuerdo Preparatorio de Colaboración y Beneficios – “The Agreement” for S/11.1 million (Note 1 c).

(c) The increase corresponds entirely to Inversiones en Autopistas S.A. for the recognition of the fair value of the loan with BCI Peru (Note 15 b).

24. INCOME TAX

The condensed interim consolidated financial statements for the period ended September 30, 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 December 31, 2021 is 263.7% (55.9% for the period ended in December 31, 2020).

- 36 -

25. CONTINGENCIES, COMMITTMENTS AND GUARANTEES

In the opinion of Management and its legal advisors, the provisions registered mainly for civil lawsuits, labor dispute processes, contentious and administrative processes and tax claims are sufficient to cover the results of these probable contingencies (Note 19).

a) Tax contingencies

The Company considers that the maximum exposure for tax contingencies of the Corporate amounts to S/289.9 million according to the following detail:

The appeal at SUNAT for S/212.7 million which includes S/91.7 million for 2014 Income Tax (Cumbra Peru S.A. for S/83.2 million and Cumbra Ingenieria S.A. for S/8.5 million), 2015 Income Tax and VAT for S/120.3 million (Aenza S.A.A. for S/109.2 millon, Cumbra Ingenieria S.A. for S/9.8 millon, UNNA Transporte S.A.C for S/0.9 millones, and Cumbra Peru S.A. for S/0.4 millones), and 2016 Income Tax in Constructor Chavimochic Consortium for S/0.7 millones.

Appeal at the Tax Court for S/77.2 million (Aenza S.A.A., Income Tax 2013 and 2014 for S/46.1 million; Cumbra Perú S.A., Income Tax 2012 for S/22.5 million; Cumbra Ingeniería S.A., Income Tax 2012 for S/5.1 million; and Viva Negocio Inmobiliario S.A., Income Tax 2009 and 2013 for S/3.5 million).

Management estimates that all the afore mentioned processes will be favorable considering their characteristics and the evaluation of their legal advisors.

b) Other contingencies

The Company considers that the maximum exposure for other contingencies of the Corporate amounts to S/88.5 million according to the following detail:

Administrative processes amounting to S/12.6 million (Cumbra Perú S.A. for S/5.4 millon,Tren Urbano de Lima S.A. for S/4.9 million, Aenza S.A.A for S/2 million and UNNA Energía S.A. for S/0.3 million).

Civil lawsuits, mainly related to indemnities for damages, contract terminations and obligations to pay a sum of money amounting to S/63.7 million (Cumbra Perú S.A. for S/52.6 million, Red Vial 5 S.A.for S/5.7 million, Cumbra Ingeniería S.A. for S/3.8 million, UNNA Transporte S.A.C for S/1.1 million and Viva Negocio Inmobiliario S.A. for S/0.5 million).

Contentious administrative process, corresponding mainly to non-compliance amounting to S/3.7 million (UNNA Energía S.A. for S/1.9 million, Morelco SAS for S/1.1 million and Cumbra Perú S.A. for S/0.7 million)

Labor dispute processes amounting to S/8.5 million (Morelco SAS for S/5.9 million, UNNA Energía S.A. and subsidiaries for S/1.9 million and UNNA Transporte S.A.C for S/0.7 million).

c) Letters bonds and guarantees

The Corporation maintains guarantees and letters of credit in force in various financial entities guaranteeing operations for US$388.3 million (US$427.5 million, as of December 31, 2020).

26. DIVIDENDS

In compliance with certain covenants, the company will not pay, 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. Additionally, “the Agreement” does not allow the distribution of dividends until 40% of the total amount of the committed civil penalty described in Note 1 c) has been amortized.

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For the period ended December 31, 2021, the Corporation’s subsidiaries have paid dividends to its non-controlling interests in the amount of S/43 million (S/84.2 million for period  ended in December 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.

For the periods ended December 31, 2020 and 2021, the basic loss per common share is as follows:

   
2020
   
2021
 
             
Loss attributable to owners of the Company
           
during the period
   
(217,871
)
   
(131,850
)
Weighted average number of shares in issue
               
at S/1.00 each, at December 31,
   
871,917,855
     
871,917,855
 
                 
Basic loss per share (in S/)
(*)
 
(0.250
)
   
(0.151
)
                 
                 
                 
     
2020
     
2021
 
                 
Loss from continuing operations attributable to owners
               
of the Company during the period
   
(200,947
)
   
(105,076
)
Weighted average number of shares in issue
               
at S/1.00 each, at December 31,
   
871,917,855
     
871,917,855
 
                 
Basic loss per share (in S/)
(*)
 
(0.230
)
   
(0.121
)
                 
                 
(*) The Corporation does not have common shares with dilutive effects at December 31, 2020 and 2021.
 

28. DISCONTINUED OPERATIONS

On November 19, 2019, Adexus filed an application for reorganization under law 20720 with the Chilean courts of justice.  As a consequence, the Company impaired the total investment value as of December 31, 2019.  On January 9th, 2020, the Company informed 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 its reorganization procedure.

On December 27, 2021 the Company signed a purchase-sale agreement for their total share (representing 100%) of Adexus S.A.  Purchase price was US$1.  Such agreement was approved on December 28, 2020 by the creditor’s committee within the request for amendment to the restructuring agreement presented by Adexus on October 13th, 2021.  On January 5th, 2022, the Judicial Court for this case approved the amendment, which allowed the transfer of shares.

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Below is the information on the financial result and cash flow from discontinued operations related to Adexus S.A.

   
Discontinued operations
 
   
2020
   
2021
 
             
Revenues
   
167,624
     
162,967
 
Operating costs
   
(157,268
)
   
(157,299
)
Gross profit
   
10,356
     
5,668
 
                 
Administrative expenses
   
(18,896
)
   
(21,698
)
Other (expenses) income, net
   
(1,664
)
   
20
 
Operating loss
   
(10,204
)
   
(16,010
)
                 
Financial expenses
   
(10,588
)
   
121
 
Financial income
   
104
     
(15,847
)
Loss before income tax
   
(20,688
)
   
(31,736
)
Income tax
   
3,764
     
4,962
 
Loss from discontinued operations
   
(16,924
)
   
(26,774
)
                 
                 
                 
Net effect in consolidated
   
(16,924
)
   
(26,774
)
                 
                 
Cash flows relating to the discontinued operations are as follows:
               
                 
Net increase generated in subsidiary
   
3,577
     
5,662
 

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

Between December 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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