a50795296.htm

UN AUDITED

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 (UNAUDITED) AND 2013

1	GENERAL INFORMATION

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

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

These condensed interim consolidated financial statements as of December 31, 2013 have been prepared and authorized for issuance by the Chief Financial Officer on January 30, 2014.

a) Issuance of new common shares -

At the General Shareholders’ Meeting held on March 30, 2012, the decision was made to capitalize retained earnings and as a result capital increased from S/.390,798,933 to S/.558,284,190. As a consequence of this transaction the nominal value of shares increased from S/.0.7 to S/.1.00 per share.

Subsequently, by resolution of General Meeting of March 26, 2013, as well as agreements adopted at meetings of the Board May 30, July 23 and August 22 of 2013, it was agreed the issuance of common stock through a public offering of "American Depositary Shares" (ADS´s) registered in the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE), increasing the capital sum from S/.558,284.190 to S/.660,053.790.

This capital increase was carried out in two tranches as follows:

(i)	The first tranche in the amount of S/.97,674.420 (representing the issuance of 97,674,420 common shares issued and 19,534,884 ADS´s, therefore, at 5 shares per ADS), and,

(ii)	A second tranche in the amount of S/.4, 095.180 common shares and ADS´s 819.036 (issued at 5 shares per ADS rate).

At December 31, 2013, a total of 265,877,310 shares are represented at ADSs (equivalent to 53,175,462 ADSs at 5 shares per ADS).

The excess of the total proceeds obtained by this transaction in comparison with the nominal value of these shares amounted to S/.1,055,487,451 (net of commissions and other related costs for S/.38,535,749) was recorded in the additional paid-in capital caption of the consolidated statement of changes in equity.

2	BASIS OF PREPARATION

These condensed interim consolidated financial statements for the nine -month period ended December 31, 2013 have been prepared in accordance with (IAS 34) “Interim financial reporting”. The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2012, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

3	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those applied in the preparation of the year-end financial statements at December 31, 2012, except for income taxes, which for the interim period have been recognized applying the tax rate that would be applicable for 2013.

IFRS and amendments to IFRS applicable for the first time for the period covered in these interim financial statements. -

New IFRS or amendments to IFRS mandatory from January 1, 2013 have been considered by the Group in the preparation of these interim consolidated financial statements; however, they have not resulted in changes in the prior-year accounting policies. Major new IFRS or amendments to IFRS relevant to the Group activities are as follows:

●

IFRS 7, ‘Financial instruments: Disclosures’ as amended in October 2010. The IASB modified the disclosures required so that the users of the financial statements may assess the risk exposure related to financial asset transfers and the effect of these risk on the entity’s financial position. This standard did not result in significant changes in the disclosures in the interim consolidated financial statements.

●	IFRS 10, “Consolidated financial statements” – The application of this standard has not resulted in changes in the consolidation criteria applied by the Group.

●

IFRS 11, “Joint arrangements” – The application of this standard has not resulted in changes in the criteria applied by the Group in the recognition of interests in joint arrangements. Until 2012, the Group’s interest in these types of arrangements, mostly joint operations, were recognized as joint operations within the scope of IAS 31. As a result of the assessment of the assets and obligations for the liabilities arising from contracts, the Group has arrived at the conclusion that its interest in those contracts continue to be classified as joint operations. Therefore, the Group recognizes in its financial statements its share in the assets, liabilities, revenues and expenses of this type of contracts.

●	IFRS 12, “Disclosures of interests in other entities”. This standard did not result in significant changes in the disclosures in interim consolidated financial statements.

●

IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. See changes in disclosures in interim consolidated financial statements in note 4.3.

●

Amendment to IAS 1, ‘Presentation of financial statements’ relating to other comprehensive income. The major change resulting from this amendment is the requirement for entities to group the items of “other comprehensive income” (OCI) depending on whether they are reclassifiable or not to the statement of comprehensive income. See changes on disclosures in OCI.

●

IAS 19, ‘Employee benefits’ was amended in December 2011 by the IASB. The amendments eliminate the corridor approach and recognize financial expenses on a net basis. The adoption of this standard did not result in significant changes in the disclosures in interim consolidated financial statements nor have a material impact on the Group's financial position or performance.

●

IAS 28, ‘Investments in Associates and Joint Ventures’. It was amended in May 2011 by the IASB. The new standard includes guidelines to recognize joint ventures and associates under the equity method. The adoption of this standard did not result in significant changes in the disclosures in interim consolidated financial statements nor have a material impact on the Group's financial position or performance.

4	FINANCIAL RISK MANAGEMENT

4.1 Financial risk factors

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

The condensed interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; these should be read in conjunction with the Group’s annual financial statements as of December 31, 2012. There have been no changes since year-end in the risk management department of the Group or in any risk management policies.

4.1.1 Market risk

Compared to year end, no new material market risk hedging arrangements have occurred.

4.1.2 Credit risk

Compared to year end,the Group has no exposure to any new relevant credit risk.

4.1.3 Liquidity risk

Compared to year end, no major changes in undiscounted contractual cash flows have occurred, except for changes in the structure of the Group’s liabilities, resulting from an increase in the long-term debt relating to a syndicated loan which matures in 2018 (Note 11); the proceeds of this debt were used to repay a short-term loan and to finance investment activities of subsidiary GyM Ferrovías.

The following table categorizes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:


	Less than 1		From 1 to 2		From 2 to 5		Over
	year		years		years		5 years		Total
	S/.000		S/.000		S/.000		S/.000		S/.000
As of December 31, 2012
Borrowing (except for finance leases)		343,072		82,980		62,992		25,440		514,484
Finance leases liabilities		124,709		103,373		130,246		22,119		380,447
Trade accounts payable		930,559		-		-		-		930,559
Other accounts payable		181,713		38,135		-		-		219,848
Trading and net settled derivative
financial instruments (interest rate swaps)		14,932		3,764		-		-		18,696
Accounts payable to related parties		42,734		-		-		-		42,734
		1,637,719		228,252		193,238		47,559		2,106,768

As of December 31, 2013
Borrowing (except for finance leases)		365,822		118,347		64,698		-		548,867
Finance leases liabilities		116,688		81,501		87,829		22,913		308,931
Trade accounts payable		985,427		8,130		-		-		993,557
Other accounts payable		215,413		28,745		2,166		2,354		248,678
Trading and net settled derivative
financial instruments (interest rate swaps)		1,773		2,138		-		-		3,911
Accounts payable to related parties		25,585		-		-		-		25,585
		1,710,708		238,861		154,693		25,267		2,129,529

(*) Includes interest.

4.2 Capital management

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings), less cash and cash equivalents. Total capital is calculated as total ‘equity’ as shown in the consolidated statement of financial position plus net debt.

As of December 31, 2013 the presentation of an indebtedness analysis was not required considering that the cash and cash equivalents were higher than the financial obligations. On the contrary, as of December 31, 2012, given that the company financial obligations were significant, the indebtedness analysis is show as follows:

As of December 31, 2012 and December 31, 2013 the gearing ratio was as follows:

	December 31,			December 31,
	2012			2013
	S/.000			S/.000

Total borrowing		845,474			795,822
Less: Cash and cash equivalents		(780,114	)		(959,415	)
Net debt		65,360			163,593
Total equity		1,776,890			3,197,018
Total capital		1,842,250			3,033,425

Gearing ratio		0.04			0.00

4.3 Fair value estimation

For the classification of the type of valuation used by the Group for its financial instruments at fair value, the following levels of measurement have been established:

-	Level 1: Measurement based on quoted prices in active markets for identical assets or liabilities.

-	Level 2: Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability (level 1), either directly (that is, as prices) or indirectly (that is, derived from prices).

-	Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs, generally based on internal estimates and assumptions of the Group).

The only financial instruments measured at fair value by the Group are interest rate swaps (variable to fixed), forward foreign exchange contracts (mostly euros and U.S. dollars) and available-for-sale investments. The measurement at fair value of these instruments corresponds to the characteristics of Level 2 and has been determined based on the present value of discounted future cash flows. During the twelve-month period ended December 31, 2013 there were no changes in the levels of measurement of financial instruments at fair value.

The carrying amount of cash and cash equivalents corresponds to its fair value. The Group considers that the carrying amount of short-term accounts receivable and payable approximates fair value. The fair value of financial liabilities has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in the market and which is available to the Group for similar financial instruments.

Fair value hierarchy -

The following table presents the Group’s financial assets and liabilities that are measured at fair value as of December 31, 2013.

	Level 1		Level 2		Level 3		Total
	S/.000		S/.000		S/.000		S/.000

Liabilities:
Derivative financial instruments - Cash flow hedging		-		3,911		-		3,911
Total liabilities		-		3,911		-		3,911

There were no transfers between Levels 1, 2 and 3 during the period.

Valuation techniques used to derive Level 2 fair values -

Level 2 hedging derivatives comprise forward foreign exchange contracts and interest rate swaps. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair valued using forward interest rates extracted from observable yield curves. The effects of discounting are generally insignificant for Level 2 derivatives.

Group’s valuation processes -

The Corporate General Manager reviews the fair value of derivatives instruments by using the information provided by local financial institutions. Management performs this review at each reporting date. This information is reviewed at first by subsidiaries’ management, and subsequently by the Corporate General Manager.

The Group has its financial instruments only in Level 2.

5	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

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

In preparing these condensed interim consolidated financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2012.

6	SEASONALITY OF OPERATIONS

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

7	SEGMENT REPORTING

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

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

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

Inter-segmental sales transactions are entered into at prices that are similar to those that would have been agreed to with unrelated third parties. Revenues from external customers reported to the Corporate General Manager are measured in a manner consistent with the basis of preparation of the financial statements.

Group sales and receivables are not concentrated on a few customers.

Assets and liabilities by operating segments

	Engineering		Infrastructure												Parent
As of December 31, 2012	and construction		Energy		Toll roads		Mass transit		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
Assets -	S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000			S/. 000
Current assets
Cash and cash equivalents		423,332		30,650		90,644		28,312		68		73,004		85,287		48,491		326			780,114
Available-for-sale financial asset		-		-		-		-		-		-		-		5,005		-			5,005
Trade accounts receivable		181,107		26,922		6,560		20		43,692		19,336		166,895		61		-			444,593
Outstanding work in progress		417,073				11,722		15,029						81,427							525,251
Accounts receivable from related parties		67,913		-		300		159		134		4,867		52,243		304,812		(380,667	)		49,761
Other accounts receivable		306,744		16,783		17,970		6,326		-		13,479		40,444		34,705		-			436,451
Inventories		145,301		8,287		-		6,419		-		523,722		64,048		1,392		(1,753	)		747,416
Prepaid expenses		5,882		1,309		583		7,220		-		1,589		5,149		1,107		-			22,839
Total current assets		1,547,352		83,951		127,779		63,485		43,894		635,997		495,493		395,573		(382,094	)		3,011,430

Long-term trade accounts receivable		-		-		-		305,887		-		-		-		-		-			305,887
Other long-term accounts receivable		11,256		14,696		13,833		11,206		3,720		6,803		24,274		1,696		-			87,484
Investments in associates		113,601		-		-		-		-		17,151		2		801,824		(895,132	)		37,446
Property investment		-		-		-		-		-		35,972		-		-		-			35,972
Property, plant and equipment		539,018		205,853		2,034		3,365		-		4,470		109,259		76,317		(2,223	)		938,093
Intangible assets		197,205		95,283		146,186		7,830		2,406		772		24,461		14,855		16,110			505,108
Derivative financial instruments		-		-		-		-		-		128		-		-		-			128
Deferred income tax asset		14,751		-		6,184		8,287		-		6,110		34,190		-		1,556			71,078
Total non-current assets		875,831		315,832		168,237		336,575		6,126		71,406		192,186		894,692		(879,689	)		1,981,196
Total Assets		2,423,183		399,783		296,016		400,060		50,020		707,403		687,679		1,290,265		(1,261,783	)		4,992,626

Liabilities -
Current liabilities
Borrowings		119,960		16,216		14,226		-		8,271		43,216		96,015		154,915		-			452,819
Trade accounts payable		663,454		21,996		744		15,111		27		70,571		163,495		1,889		-			937,287
Accounts payable to related parties		42,973		1,610		13,970		290,601		15,763		9,231		46,376		14,189		(391,979	)		42,734
Current taxes		110,515		4,506		1,977		873		167		8,614		28,187		3,995		-			158,834
Other accounts payable		650,079		10,640		68,658		223		-		131,967		144,373		9,189		-			1,015,129
Other provisions				401										10,911				-			11,312
Total current liabilities		1,586,981		55,369		99,575		306,808		24,228		263,599		489,357		184,177		(391,979	)		2,618,115
Borrowings		180,857		97,777		48,513		-		-		49,657		12,427		3,424		-			392,655
Other payables accounts		-		14,640		-		-		-		12,858		24,681		597		-			52,776
Other provisions		16,133		7,558		-		-		-		-		27,624		-		-			51,315
Derivative financial instruments		-		5,999		-		12,697		-		-		-		-		-			18,696
Deferred income tax liability		63,858		2,563		24		-		722		68		9,634		5,310		-			82,179
Total non-current liabilities		260,848		128,537		48,537		12,697		722		62,583		74,366		9,331		-			597,621
Total liabilities		1,847,829		183,906		148,112		319,505		24,950		326,182		563,723		193,508		(391,979	)		3,215,736
Equity attributable to controlling interest in the Company		472,097		192,411		90,124		60,416		12,535		147,054		103,015		1,086,774		(772,219	)		1,392,207
Non-controlling interest		103,257		23,466		57,780		20,139		12,535		234,167		20,941		9,983		(97,585	)		384,683
Total liabilities and Equity		2,423,183		399,783		296,016		400,060		50,020		707,403		687,679		1,290,265		(1,261,783	)		4,992,626

Assets and liabilities by operating segments

	Engineering		Infrastructure												Parent
As of December 31, 2013	and construction		Energy		Toll roads		Mass transit		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
Assets -	S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000		S/. 000			S/. 000
Current assets
Cash and cash equivalents		265,788		17,764		80,785		23,318		445		43,026		46,470		481,820		-			959,415
Available-for-sale financial asset		-		1,058		-		-		-		-		2		88,333		(1,060	)		88,333
Trade accounts receivable		265,544		29,527		-		4,090		-		17,938		192,382		44		-			509,525
Outstanding work in progress		734,976		6,966		14,780		31,187		37,490		-		158,691		-		-			984,090
Accounts receivable from related parties		107,732		4,083		18,660		163		-		561		53,845		733,645		(834,839	)		83,850
Other accounts receivable		354,933		26,840		11,180		34,263		4,557		17,939		65,794		33,469		(1,763	)		547,212
Inventories		90,671		7,741		-		11,927		-		590,567		63,912		486		(2,508	)		762,797
Prepaid expenses		7,440		1,318		5,442		4,394		3		2,596		4,130		363		-			25,686
Assets classified as held for sale		21,474		-		-		-		-		-		-		-		-			21,474
Total current assets		1,848,558		95,297		130,847		109,342		42,494		672,627		585,226		1,338,161		(840,170	)		3,982,381

Long-term trade accounts receivable		-		-		-		591,917		-		-		-		-		-			591,917
Long-term trade accounts receivable from related parties		-		-		-		-		-		-		-		57,501		(57,501	)		-
Other long-term accounts receivable		-		-		10,081		-		1,858		11,811		12,301		2,100		-			38,151
Available-for-sale financial asset		-		-		-		-		-		-		-		-		-
Investments in associates		153,564		7,287		-		-		-		16,298		10,454		837,889		(937,516	)		87,976
Property investment		-		-		-		-		-		36,945		-		-		-			36,945
Property, plant and equipment		521,821		190,844		3,919		6,724		-		5,635		114,081		103,840		(3,395	)		943,470
Deferred income tax asset		68,699		644		4,258		8,765		-		4,860		42,119		1,264		4,912			135,522
Intangible assets		190,410		101,978		145,711		6,450		1,151		957		18,883		15,282		15,705			496,527
Derivative financial instruments		-		-		-		-		-		-		-		-		-			-
Total non-current assets		934,494		300,753		163,969		613,856		3,009		76,507		197,838		1,017,876		(977,795	)		2,330,507
Total Assets		2,783,052		396,050		294,816		723,198		45,503		749,134		783,064		2,356,037		(1,817,964	)		6,312,888

Liabilities -
Current liabilities
Borrowings		195,083		33,847		16,784		-		5,869		77,854		126,872		587		-			456,896
Trade accounts payable		751,099		19,950		7,199		9,912		281		42,484		160,104		4,217		(3,846	)		991,400
Accounts payable to related parties		43,373		877		25,572		642,510		24,058		21,493		77,613		24,928		(834,839	)		25,585
Current taxes		117,088		3,477		2,515		81		366		3,161		30,498		2,049		-			159,235
Other accounts payable		526,995		10,882		42,891		879		-		72,617		79,049		11,781		-			745,094
Other provisions		-		4,207		-		-		-		-		842		-		3,846			8,895
Total current liabilities		1,633,638		73,240		94,961		653,382		30,573		217,609		474,978		43,562		(834,839	)		2,387,105

Borrowings		127,067		86,334		39,003		-		-		52,318		31,367		2,837		-			338,926
Long-term commercial accounts payables		-		-		-		2,157		-		-		-		-		-			2,157
Long-term accounts payables to related parties		-		-		-		-		-		28,500		29,001		-		(57,501	)		-0
Other payables accounts		124,344		-		462		-		-		9,723		69,958		910		-			205,397
Other provisions		16,922		4,668		-		-		-		-		23,919		-		-			45,508
Derivative financial instruments		-		3,563		-		201		-		147		-		-		-			3,911
Deferred income tax liability		113,679		453		166		-		340		7,074		5,864		3,599		1,691			132,866
Total non-current liabilities		382,012		95,018		39,631		2,358		340		97,762		160,109		7,346		(55,810	)		728,764
Total liabilities		2,015,650		168,258		134,592		655,740		30,913		315,371		635,087		50,908		(890,649	)		3,115,870
Equity attributable to controlling interest in the Company		622,594		211,430		120,407		50,594		14,590		152,713		125,735		2,295,245		(826,132	)		2,767,177
Non-controlling interest		144,808		16,362		39,817		16,865		-		281,048		22,243		9,884		(101,184	)		429,842
Total liabilities and Equity		2,783,052		396,050		294,816		723,198		45,503		749,133		783,065		2,356,037		(1,817,965	)		6,312,888

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Mass transit			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
	S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000
Year 2012 -
Revenues		3,524,585			287,040			123,345			73,067			41,007			240,110			1,083,323			44,654			(185,246	)		5,231,885

Gross profit		408,021			110,847			53,341			(2,712	)		11,155			86,706			103,935			(26	)		(59,201	)		712,066
Administrative expenses		(159,845	)		(14,739	)		(6,361	)		(7,926	)		(1,485	)		(17,409	)		(105,363	)		(3,971	)		59,919			(257,180	)
Other income (expenses)		(1,928	)		(927	)		61			21						(1,711	)		73,585			8,426			(1,583	)		75,944
Other (losses) gains, net		1,326			(1,603	)		-			-			-			-			-			-			-			(277	)
Profit before interests
and taxes (EBIT)		247,574			93,578			47,041			(10,617	)		9,670			67,586			72,157			4,429			(865	)		530,553
Financial expenses		(179,089	)		(25,041	)		(16,517	)		(15,278	)		(6,560	)		(14,469	)		(29,093	)		(17,009	)		5,081			(297,975	)
Financial income		198,755			23,277			11,354			11,287			129			12,165			24,028			15,909			(9,260	)		287,644
Share of profit of investments
accounted for using the equity method		9,178			-			-			-			-			-			-			252,288			(260,862	)		604
Profit before income tax (EBT)		276,418			91,814			41,878			(14,608	)		3,239			65,282			67,092			255,617			(265,906	)		520,826
Income tax		(87,918	)		(28,457	)		(12,526	)		3,584			(972	)		(19,967	)		(5,638	)		(4,235	)		1,554			(154,575	)
Net Profit for the year		188,500			63,357			29,352			(11,024	)		2,267			45,315			61,454			251,382			(264,352	)		366,251

Profit attributable to:
Controlling interest in the Company		165,116			58,029			15,800			(8,268	)		1,134			12,375			50,623			250,923			(255,778	)		289,954
Non-controlling interest		23,384			5,328			13,552			(2,756	)		1,133			32,940			10,831			459			(8,574	)		76,297
Net Profit for the year		188,500			63,357			29,352			(11,024	)		2,267			45,315			61,454			251,382			(264,352	)		366,251

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Mass transit			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
	S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000
Year 2013 -
Revenues		4,075,070			321,097			195,861			118,541			45,489			313,731			1,169,115			51,525			(323,113	)		5,967,316

Gross profit		560,082			97,495			66,455			19,670			3,179			113,732			179,175			(4,031	)		(31,097	)		1,004,660
Administrative expenses		(217,927	)		(16,170	)		(6,600	)		(8,025	)		(212	)		(20,993	)		(132,486	)		(8,616	)		49,237			(361,792	)
Other income (expenses)		10,062			(3,851	)		(35	)		758			(2	)		2,470			24,669			(164	)		(2,851	)		31,056
Other (losses) gains, net		-			290			-			157			-			(1,023	)		-			-			-			(576	)
Profit before interests
and taxes (EBIT)		352,217			77,764			59,820			12,560			2,965			94,186			71,358			(12,811	)		15,288			673,347
Financial expenses		(318,447	)		(28,534	)		(22,392	)		(46,477	)		(47	)		(27,010	)		(35,235	)		(95,722	)		4,226			(569,637	)
Financial income		291,812			14,303			17,982			20,343			17			13,227			19,382			228,408			(148,442	)		457,031
Share of profit of investments
accounted for using the equity method		41,971			1,587			-			-			-			64			1,070			-			(11,130	)		33,562
Profit before income tax (EBT)		367,553			65,120			55,410			(13,574	)		2,935			80,468			56,575			119,875			(140,057	)		594,304
Income tax		(111,348	)		(20,066	)		(14,971	)		477			(881	)		(21,427	)		(16,655	)		(781	)		3,221			(182,430	)
Net Profit for the year		256,205			45,054			40,439			(13,097	)		2,054			59,041			39,920			119,094			(136,836	)		411,873

Profit attributable to:
Controlling interest in the Company		211,259			41,635			26,077			(9,823	)		2,054			19,154			34,296			119,192			(124,163	)		319,680
Non-controlling interest		44,946			3,419			14,362			(3,274	)		-			39,887			5,624			(98	)		(12,673	)		92,193
Net Profit for the year		256,205			45,054			40,439			(13,097	)		2,054			59,041			39,920			119,094			(136,836	)		411,873

No major changes occurred in total assets as compared to the amount stated in the year-ended financial statements.

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

8	FINANCIAL ASSETS AVAILABLE FOR SALE

This account comprises the investment maintained by the Company direct and indirectly on Transportadora de Gas del Perú S.A. (TGP), a local entity that operates gas transportation systems. At December 31, 2012 the investment corresponded to shares representing the 0.6% of interest of the TGP’s capital which were recognized at cost.

In December 2013, the Group acquired from one of the TGP’s shareholders, Pluspetrol Resources Corporation (hereinafter Pluspetrol), an additional 1.04% interest on TGP paying a consideration of US$20 million (equivalent to S/.56.1 million). Based on the fact that this transaction provided a proper reference of the fair value of the investment, the Group remeasured its previously held interest affecting other comprehensive income for S/.27.2 million, net of the income tax of S/.8.2 million.

Together with the acquisition of the 1.04% interest, the Company acquired from Pluspetrol an indirect interest of 11.34% on TGP paying US$217 million, using a financial facility obtained from the Canada Pension Plan Investment Board (CPPIB). This facility does not bear interest and it was expected to be settled with the funds arisen from the future sale of the shares. Additionally, the parties have obtained symmetrical put and call options to sell and buy the shares and there have been imposed certain restriction to the Company for the sale of the investments and for taking its benefits (i.e. dividends) during the exercise period of the put and call options which approximates to one year. This acquisition is part of an investment agreement entered into with CPPIB, whereby both parties commit themselves to initiate and develop infrastructure projects.

Given the features of the transaction, this has been treated as an off-balance transaction since, in substance; the Company is acting as an agent because most of the risks and economic rewards of the underlying asset are owned by CPPIB. Therefore, the Company has not recognized neither the investment in TGP nor any obligation before CPPIB for the funds received.

On December 27, 2013 the Company announced the selling of 10.43 % of its interest in TGP to CPPIB and 0.91% to Corporación Financiera de Inversiones (CFI). If none of the existing TGP’s shareholders exercise their share acquisition rights, the Company will transfer 10.43% of its interest to CPPIB, 0.91% to CFI and will retained a 1.04 % of interest.

9	TRANSACTIONS WITH RELATED PARTIES

a) Transactions with related parties -

Major transactions between the Company and its related parties are summarized as follows:

	2012		2013
	S/.000		S/.000

Revenue from sale of goods and services:
- Associates		49,252		4,915
- Joint operations		51,385		67,601
		100,637		72,516

Inter-company services were agreed upon under market terms as if they had been agreed to with third parties.

b) Balances of transactions with related parties -

	December 31,
	2012				2013
	Receivable		Payable		Receivable		Payable
	S/.000		S/.000			S/.000		S/.000

Related:
Proyectos Inmobiliarios Consultores (PICSA)		223		-		-		-
Sierra Morena		-		243		-		-
		223		243		-		-

Joint operations:
Consorcio Peruano de Conservación						15,080
Consorcio Rio Mantaro		8,974		-		3,822		-
Consorcio Grupo 12		8,699		-		-		-
Consorcio Brocal Pasco		4,711		-		1,913		41
Consorcio La Gloria		3,430		3,443		3,696		3,398
Consorcio GyM Conciviles		2,197		2,426		33,405		-
Consorcio Toromocho		1,819		3,432		62		34
Consorcio Rio Urubamba		1,790		-		2,798		-
Consorcio Tren Electrico		1,622		-		2,499		-
Consorcio Atocongo		1,650		-		712		-
Consorcio Marcona		1,600		2,168				-
Consorcio Constructor Alto Cayma		1,533		-		566		4,881
Consorcio Lima		1,232		-		312		-
Consorcio - Sermesa Zhejian		1,013		-		-		-
Consorcio Rios Pallca		975		-		3,903		-
Consorcio Norte Pachacutec		971		800		556		952
Consorcio Tiwu		963		1,716		-		-
Consorcio Vial Ipacal		694		700		283		-
Consorcio Terminales		628		-		4,294		-

Consorcio Vial Quinua		561		4,422		37		1,315
Consorcio CAM Lima		458		231		-		-
Consorcio Sermesa		405		-		-		-
Consorcio Pacifico		280		-		-		-
Consorcio Vial Sullana		348		341		470		-
Consorcio La Zanja		309		349		-		-
Consorcio Ancon Pativilca
(consolidada con CONCAR)		303		1,054		-		-
Consorcio Ferrovias Argentina		-		7,118				8,771
Consorcio La Chira		-		7,868				51
Consorcio Alto Cayma		-		942		5,557		666
Constructores Transmantaro		-		677		142		-
Consorcio GyM Cosapi		-		321		-		-
Comerciales Sur		-		-		206		-
Consorcio Proyecto Chiquintirca		-		-		134		-
Consorcio GyM - Stracon		-		-				135
Consorcio Ingenieria y Construcción Bechtel		-		-		-		3,924
Consorcio Vial Sur		-		-		737		-
Consorcio JV PAnamá		-		-		1,323		-
Other		2,065		962		1,343		830
		49,230		38,970		83,850		24,998

Other related parties:
Besco		-		2,155		-		587
El Condor Combustibles		-		1,366		-		-
Other minor		308		-		-		-
		308		3,521		-		587
		49,761		42,734		83,850		25,585

Accounts receivable and payable are of current maturity and have no specific guarantees.

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

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

10	INVESTMENTS IN ASSOCIATES

As of December 31, 2013, associates in which the Group has significant influence are substantially the same as those existing as of December 31, 2012.

In 2013, Logística de Químicos del Sur S.A.C. (hereinafter LQS) and Sistemas SEC SA (hereinafter SEC) was de-consolidated from the Group and is recorded as an equity method investment as of December 31, 2013. The effect of this transaction on total assets and total shareholders ‘equity is not material to the financial statements for any periods presented.

The movement of our investments in associates for the year ended December 31, 2013 and the year ended December 31, 2012 is as follows:

	At December			At December
	31, 2012			31, 2013
	S/.000			S/.000

Beginning balance		25,953			37,446
Acquisition and/or contributions received		15,128			10,598
Share of the profit and loss in associates under the equity method of accounting		604			33,562
Sale of investment		-			(6,683	)
Dividends received		(2,057	)		(4,687	)
LQS Investment		-			7,408
SEC Investment		-			9,379
Other		(2,182	)		2,302
		37,446			87,976

11	PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

The movement in property, plant and equipment and intangible assets accounts was as follows:

	Property,
	plant and			Intangible
	equipment			assets
	S/.000			S/.000

At January 1, 2012		686,913			317,797
Additions		405,973			39,257
Acquisition of subsidiary - net		95,514			175,865
Transfers, disposals and adjustments		(55,853	)		43,674
Deductions for sale of assets		(22,259	)		-
Depreciation, amortization and impairment charges		(172,195	)		(71,485	)
Net cost at December 31, 2012		938,093			505,108

At January 1, 2013		938,093			505,108
Additions		245,251			26,061
Acquisition of subsidiary - net		52,504			13,609
Transfers, disposals and adjustments		(54,007	)		29,724
Deductions for sale of assets		(15,127	)		-
Depreciation, amortization and impairment charges		(185,436	)		(77,974	)
Net cost at December 31, 2013		943,470	)		496,527	)

Additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.

The property, plant and equipment and Intangible assets related to the acquisition of subsidiary net relates acquisition made by GyM of DSD Construcciones y Montajes S.A. (Stracon GyM S.A. for the year ended December 31, 2012)

Goodwill -

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

Goodwill by cash-generating units as of December 31, 2013 is broken down as follows:

	S/.000

Construction - Engineering		53,654
Construction - Mining services		13,366
Construction - Electromechanical		20,737
Information goods and services		4,172
		92,129

Management has tested impairment of its cash-generating units to which goodwill is allocated at December 31, 2013 applying criteria similar to those performed as of December 31, 2012. As a result of this evaluation, no impairment adjustments were considered necessary.

12	BORROWINGS

This item comprises:

	Total				Current				Non- current
	As of December 31,				As of December 31,				As of December 31,
	2012		2013		2012		2013		2012		2013
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000

Bank loans		501,692		514,228		337,196		351,782		164,496		162,446
Finance leases		343,782		281,594		115,623		105,114		228,159		176,480
Total debt		845,474		795,822		452,819		456,896		392,655		338,926

a) Bank loans obtained in 2013 -

On February 27, 2013, the Company entered into a syndicated loan agreement which will be paid in seventeen quarterly installments from May 2014 to February 2018 with an annual interest of LIBOR (3 months) + 4.25%, up to a maximum of U.S. $ 150 million (S /. 417.0 million), with a set of twelve financial local and foreign institutions.

As of April 26, 2013, the company has received US $ 150 million (S /. 417.0 million) funds, which were intended to repay a short-term loan to BBVA Continental of US $ 60 million (equivalent to S/.155.3 million) and financing activities of the subsidiary GyM Ferrovías S.A.

On September 27, 2013, the Financial Management agreed to pay the entire syndicated loan.

b) Fair value of borrowings -

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

	Carrying amount current and
	non-current portion				Fair value
	As of December 31,				As of December 31,
	2012		2013		2012		2013
	S/.000		S/.000		S/.000		S/.000

Loans from multilateral organizations		47,815		42,599		50,567		44,384
Other loans		797,659		753,223		828,208		642,842
		845,474		795,822		878,775		687,226

Fair values are based on the cash flows discounted by using borrowing rates ranging from 4.1% to 8.05%. It should be noted that the interest rate used are those applicable and negotiated by each Company.

13	OTHER PROVISIONS

This item is broken down based on the expectation of liquidation as follows:

	At December		At December
	31, 2012		31, 2013
	S/.000		S/.000

Current portion		11,312		8,895
Non-current portion		51,315		45,508
		62,627		54,403

The movement of this item for the twelve-month period ended December 31, 2012 and 2013 is as follows:

				Contingent			Provisions for the			Provision			Provision
	Legal			liabilities from			acquisition			for well			for periodic
Other provisions	claims			acquisitions			of CAM			closure			maintenance			Total
	S/.000			S/.000			S/.000			S/.000						S/.000

At January 1, 2012		6,700			24,466			102,776			-			-			133,942
Additions		4,680			-			-			4,897			-			9,577
Additions from business combinations		-			11,130			-			-			-			11,130
Reclassifications		-			(24,466	)		-			-			-			(24,466	)
Write-offs		-			-			(67,556	)		-			-			(67,556	)
At December 31, 2012		11,380			11,130			35,220			4,897			-			62,627

Additions		2,036			-			-			154			12,868			15,058
Transfer from intangibles		-			-			-			-			6,728			6,728
Additions from business combinations		-			815			-			-			-			815
Write-offs		(882	)		-			(13,674	)		-			-			(14,556	)
Payments		(320	)		-			-			(199	)		(15,750	)		(16,269	)
At December 31, 2013		12,214			11,945			21,546			4,852			3,846			54,403

As of January 1, 2012, contingent liabilities were maintained with CAM Chile and affiliates for services to be billed of S/.12.9 million and statutory bonuses and other worker benefits amounting to S/.11.5 million, which as of December 31, 2012 became executable, and therefore, they were reclassified to other accounts payable.

Write-offs for the year ended December 31, 2013 mainly consists of write-offs of provisions recognized in conjunction with the purchase price allocation related to the 2011 acquisition of CAM Chile and affiliates of S/. 13.6 million (S/. 67.5 million in 2012).

EQUITY

As of December 30, 2013 and December 31, 2012, the authorized, subscribed and paid-in capital, according to the Company’s bylaws as amended, is represented by 660,053,790 common shares (558,284,190 common shares at December 31,12) at S/.1.00 par value each.

Subsequently, by resolution of General Meeting of March 26, 2013, as well as agreements adopted at meetings of the Board May 30, July 23 and August 22 of 2013, it was agreed the issuance of common stock through a public offering of "American Depositary Shares" (ADS´s) registered in the Securities and Exchange Commission (SEC) and NYSE, increasing the capital sum from S/.558,284.190 to S/.660,053.790.

This capital increase was carried out in two tranches as follows:

(i)	The first tranche in the amount of S/.97,674.420 (representing the issuance of 97,674,420 common shares issued and 19,534,884 ADS’s, therefore, at 5 shares per ADS), and,

(ii)	A second tranche in the amount of S/.4, 095.180 common shares and ADS’s 819.036 (issued at 5 shares per ADS rate).

At December 31, 2013, a total of 265,877,310 shares are represented at ADSs (equivalent to 53,175,462 ADSs at 5 shares per ADS).

15	EXPENSES BY NATURE

For the years ending December 31 this item comprises the following:

	Cost of services		Administrative
	and goods		expenses			Total
	S/.000		S/.000			S/.000

2012:
Purchase of goods		252,186		-			252,186
Personnel charges		1,458,715		125,558	)		1,584,273
Services provided by third-parties		1,389,371		51,378	)		1,440,749
Taxes		7,238		863	)		8,101
Other management charges		292,740		52,425	)		345,165
Depreciation		159,526		13,492	)		173,018
Amortization		60,517		10,968	)		71,485
Impairment (inventories and accounts receivable)		11,192		2,496	)		13,688
Variation of inventories		888,334		-			888,334
		4,519,819		257,180	)		4,776,999
2013:
Purchase of goods		212,819		-			212,819
Personnel charges		1,527,148		169,469			1,696,617
Services provided by third-parties		1,513,131		94,528			1,607,659
Taxes		8,932		1,377			9,545
Other management charges		533,544		72,413			605,958
Depreciation		174,900		12,528			187,428
Amortization		66,841		11,133			77,974
Impairment of inventories and accounts receivables		2,349		-			3,113
Variation of inventories		922,992		344			923,336
		4,962,656		361,792			5,324,448

16	CONTINGENCIES, COMMITMENTS AND GUARANTEES

As of December 31, 2013, total contingencies amounted S/.29.8 million, the commitments and guarantees as of December 31, 2013 amounted US$84.3 million and US$743.8 million.

DIVIDENDS

Dividends from the year ended December 31, 2012, of S/.0.156 per share totaling S/. 86,986,244 were approved at the General Shareholders’ meeting held on March 26, 2013. The interim financial statements reflect dividends paid as of December 31, 2013.

Dividends from the year ended December 31, 2011, of S/.0.155 per share totaling S/ .86,722,434 were approved at the General Shareholders’ meeting held on March 30, 2012. The interim financial statements reflect dividends paid as of December 31, 2012.

For the year ended December 31, 2013, the Group paid dividends on its subsidiaries to its non-controlling entities for S/.27.0 million (S/.14.9 million for the same period of 2012).

18	BUSINESS COMBINATION

Acquisition of DSD Construcciones y Montajes S.A. (DSD)

In August 2013, through the subsidiaries GyM Minería S.A., Ingeniería y Construcción Vial y Vives S.A. and GyM Chile S.p.A., the Group acquired the control of DSD with the purchase of 85.95% of its equity shares. DSD is an entity domiciled in Chile whose main economic activity is the execution of electromechanical works and assemblies in construction projects of oil refineries, pulp and paper, power plants and mining plants.

This acquisition is part of the Group’s plan to increase its presence in markets that present high growth potential, as in Chile, and in attractive industries, such as mining and energy.

The following tables summarize the consideration paid for DSD, the fair value of assets acquired, liabilities assumed and the non-controlling interest at the acquisition date:

Recognized amounts of identifiable assets

acquired and liabilities assumed

	S/.000			US$000

Cash and cash equivalents		15,530			5,562
Trade accounts receivable		74,502			26,684
Accounts receivable from related entities		6,605			2,366
Prepaid expenses		1,031			369
Investments		2,608			935
Property, plant and equipment		52,504			18,805
Intangibles		5,741			2,056
Deferred income tax		2,192			785
Trade accounts payable		(5,328	)		(1,908	)
Other accounts payable		(38,679	)		(13,854	)
Contingent liability		(815	)		(292	)
Deferred income tax		(4,187	)		(1,500	)
Fair value of net assets		111,704			40,008

Non-controlling interest (14.05%)		(15,701	)		(5,624	)
Goodwill		7,868	)		2,802
Total paid for acquisition		103,872	)		37,186

Cash payment for the acquisition		103,872			37,186
Cash and cash equivalent of the acquired subsidiary		(15,530	)		(5,562	)
Direct cash outflow from acquisition		88,342			31,624

Acquisition related costs of S/.0.65 million have been charged to administrative expenses in the consolidated income statement for the year ended 31 December 2013.

Revenue and results generated for the period between the date of acquisition to December 31, 2013 were S/.82.97 million and S/.8.3 million, respectively.

If DSD Construcciones y Montajes S.A. would have been consolidated since January 1, 2013, the revenue and profit generated would have been S/.182.68 million and S/.10.15 million, respectively.

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
UNAUDITED


	For the year ended
	2012			2013
	S/.000			S/.000

Profit for the year		366,251			411,873

Comprehensive income:
Cash flow hedge, net of taxes		(2,369	)		3,733
Actuarial losses, net of taxes		(3,678	)		(6,121	)
Changes in the active value available for sale		-			19,060
Translation adjustment		(2,019	)		3,486
Total comprehensive income		(8,066	)		20,158
Comprehensive income for the year		358,185			432,031

Comprehensive income attributable to:
Company controlling shareholders		282,870			340,736
Non-controlling interest		75,315			91,295
		358,185			432,031


The accompanying notes on pages 6 to 24 are an integral part of the condensed interim consolidated financial statements.

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN NET SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2013 AND DECEMBER 31, 2012
UNAUDITED			Attributable to the Company's controlling shareholders
							Premium			Other
	Número				Legal		for issue			comprehensive			Retained						Non-controlling
	de acciones		Capital		reserve		of shares			income			earnings			Total			interest			Total
	En miles		S/.000		S/.000		S/.000			S/.000			S/.000			S/.000			S/.000			S/.000

Balances at January 1 , 2012		558,284		390,488		78,104		4,880			(310	)		715,860			1,189,022			264,064			1,453,086
Profit for the year		-		-		-		-			-			289,954			289,954			76,297			366,251
Cash flow hedge		-		-		-		-			(2,251	)		-			(2,251	)		(118	)		(2,369	)
Actuarial losses, net of taxes				-		-		-						(3,678	)		(3,678	)		-			(3,678	)
Translation adjustment		-		-		-		-			(1,155	)		-			(1,155	)		(864	)		(2,019	)
Comprehensive income for the year		-		-		-		-			(3,406	)		286,276			282,870			75,315			358,185
Transactions with shareholders:
- Dividend distribution		-		-		-		-			-			(86,722	)		(86,722	)					(86,722	)
- Dividend distribution of subsidiaries																	-			(37,512	)		(37,512	)
- Legal Reserve						28,907								(28,907	)		-						-
- Contribuitions of non-controlling interest		-		-		-		-			-						-			26,096			26,096
- Subsidiaries constitucion		-		-		-		-			-			-			-			5,750			5,750
- Acquisition of Survial								364									364			(4,757	)		(4,393	)
- Acquisition of Subsidiaries		-		-		-		-			-			-			-			41,704			41,704
- Debt capitalization																	-			12,232			12,232
- Sale of non-controlling interest								291									291			902			1,193
- Capitalization		-		167,485		-		-			-			(167,485	)		-			-			-
- Sale and purchase of treasury shares		-		140		-		1,292			-			-			1,432			-			1,432
- Consolidation of subsidiary - LQS		-		-		-		-			-			-			-			-			-
- Other		-		171		-		(171	)		-			4,951			4,951			889			5,840
Total transactions with shareholders		-		167,796		28,907		1,776			-			(278,163	)		(79,684	)		45,303			(34,381	)
Balances at December 31, 2012		558,284		558,284		107,011		6,656			(3,716	)		723,973			1,392,208			384,682			1,776,890

Balance at January 1, 2013		558,284		558,284		107,011		6,656			(3,716	)		723,972			1,392,207			384,683			1,776,890
Net profit for the year														319,680			319,680			92,193			411,873
Cash flow hedge				-		-		-			3,546			-			3,546			187			3,733
Actuarial losses, net of taxes				-		-		-						(4,591	)		(4,591	)		(1,530	)		(6,121	)
Translation adjustment				-		-		-			3,041			-			3,041			445			3,486
Change in value of available-for-sale financial assets											19,060						19,060						19,060
Comprehensive income for the year				-		-		-			25,647			315,089			340,736			91,295			432,031
Transactions with shareholders:
Transfer to legal reserve				-		4,646		-			-			(4,646	)		-			-			-
- Dividend distribution				-		-		-			-			(86,986	)		(86,986	)					(86,986	)
- Dividend distribution of subsidiaries																	-			(51,794	)		(51,794	)
- Contribuitions of non-controlling interest				-		-		-			-			-			-			34,774			34,774
- Acquisition of non-controlling interest of DSD																	-			15,701			15,701
- Acquisition of non-controlling interest				-		-		(35,923	)		-						(35,923	)		(27,916	)		(63,839	)
Adjustment of non-controlling interest by Goodwill change											-			(117	)		(117	)		2,475			2,358
- Deconsolidation of subsidiary				-		-		-			-			-			-			(19,377	)		(19,377	)
- Capital Increase		101,770		101,770				1,103,863									1,205,633			-			1,205,633
- Costs related to the issuance of shares				-		-		(48,374	)		-			-			(48,374	)		-			(48,374	)
Total transactions with shareholders				101,770		4,646		1,019,566			-			(91,749	)		1,034,233			(46,137	)		988,097
Balances at December 31, 2013		660,054		660,054		111,657		1,026,222			21,931			947,312			2,767,176			429,841			3,197,018

The accompanying notes on pages 6 to 24 are an integral part of the condensed interim consolidated financial statements.

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
	For the year ended
	2012			2013
	S/.000			S/.000

CASH FLOWS OPERATING ACTIVITIES
Profit before taxes		520,826			594,303
Adjustment to net results not affecting cash flows
from operating activities
Depreciation		173,018			187,428
Amortization of other assets		71,485			77,974
Impairment for obsolescence		9,822			2,239
Impairment of accounts receivables		2,719			110
Impairment of other provisions					774
Write-off of other provisions		(67,556	)		(14,556	)
Provision expenses		-			15,084
Share of the profit in associates		-
under the equity method		(604	)		(33,563	)
Gains from sales of property, plant and equipment		(1,261	)		(734	)
Profit in associates investment sales		-			(5,722	)
Foreign exchange losses on operating activities		-
Net changes in assets and liabilities:
Increase (decrease) in trade accounts receivable		(49,909	)		(766,303	)
Decrease in other accounts receivable		(346,429	)		(47,622	)
Increase (decrease) in accounts receivable from related parties		(24,451	)		(34,089	)
Decrease in inventories		(196,643	)		(21,071	)
(Decrease) increase in prepaid expenses and other assets		21,644			693
(Decrease) increase in trade accounts payable		224,935			57,970
(Decrease) increase in other accounts payable		373,637			(143,208	)
(Decrease) increase in other payables to related parties		23,069			(14,677	)
Decrease in current income tax		(159,408	)		(197,378	)
Decrease in other provisions		(3,759	)		(16,269	)
Payment for purchase of intangibles - Concessions		(28,406	)		(2,329	)
Net cash applied to operating activities		542,729			(360,945	)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment sales in associates		-			6,800
Sale of property, plant and equipment		23,471			15,861
Dividends received		2,057			4,688
Payment for purchase of properties investment		(956	)		(2,974	)
Assets available for sale		342			(56,100	)
Payment for purchase of intangibles		(10,851	)		(23,731	)
Payment for purchase of investments (Note 18)		(133,648	)		(88,343	)
Payment for purchase of fixed assets		(280,402	)		(201,439	)
Net cash applied to investing activities		(399,987	)		(345,238	)

CASH FLOWS FROM FINANCING ACTIVITIES
Loans received		610,399			1,351,130
Amortization of loans received		(490,398	)		(1,378,359	)
Payment of interest		(46,659	)		(61,013	)
Dividends paid to non-controlling interest		(86,723	)		(86,986	)
Dividends paid to controlling interest		(37,512	)		(51,793	)
Acquisition of interest in subsidiary in non-controlling interest Vial y Vives		-			-
Acquisition of interest in subsidiary in non-controlling interest		(4,393	)		(63,838	)
Capital contribution in La Chira		5,750			-
Capital contribution of non-controlling shareholders		26,096			34,774
Sale and purchase of treasury shares		1,193			-
Capital Increase		-			1,147,418
Costs related to the issuance of shares		1,432			-
Net cash provided to financing activities		(20,815	)		891,334
Net decrease in cash		121,927			185,151
Cash (outflows) inflows from consolidation		-			(5,850	)
Exchange losses on cash and cash equivalents		-			-
Cash and cash equivalents at the beginning of the year		658,187			780,114
Cash and cash equivalents at the end of the year		780,114			959,415

Non-cash transactions:

Acquisition of assets under finance lease		56,035			43,812
Capitalization		167,485
Debt capitalization		12,232			7,989
Effect of Stracon GyM consolidation		24,994
Desconsolidation SEC -LQS and La Chira					(19,943	)

The accompanying notes on pages 6 to 24 are an integral part of the condensed interim consolidated financial statements.

LIABILITIES AND STOCKHOLDERS' EQUITY
			At			At
			December			December
	Note		31, 2012			31, 2013
			S/.000			S/.000
Current liabilities
Borrowings		11		452,819			456,896
Trade accounts payable				937,287			991,400
Accounts payable to related parties		8		42,734			25,585
Current taxes				158,834			159,235
Other accounts payable				1,015,129			745,094
Other provisions		12		11,312			8,895
Total current liabilities				2,618,115			2,387,105

Non-current liabilities
Borrowings		11		392,655			338,926
Long-term commercial accounts payables				-			2,157
Other payables accounts				52,776			205,397
Other provisions		12		51,315			45,508
Derivative financial instruments				18,696			3,911
Deferred income tax liability				82,179			132,866
Total non-current liabilities				597,621			728,765
Total liabilities				3,215,736			3,115,870

Equity		13
Capital				558,284			660,054
Legal reserve				107,011			111,657
Premium in stock issuance				6,656			1,026,222
Unrealized result				(3,716	)		21,931
Retained earnings				723,972			947,312
Equity attributable to controlling interest in the Company				1,392,207			2,767,176
Non-controlling interest				384,683			429,842
Total equity				1,776,890			3,197,018


				4,992,626			6,312,888

The accompanying notes on pages 6 to 24 are an integral part of the condensed interim consolidated financial statements.