6-K 1 a52791638.htm AENZA S.A.A. 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of July 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.

July 26, 2022


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: July 26, 2022





AENZA S.A.A. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2021 (AUDITED) AND JUNE 30, 2022 (UNAUDITED)


AENZA S.A.A. AND SUBSIDIARIES


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2021  (AUDITED) AND JUNE 30, 2022 (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 - 37



S/
=
Peruvian Sol
US$
=
United States dollar

AENZA S.A.A. AND SUBSIDIARIES
                                        
                                         
                                         
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                              
(All amounts are expressed in thousands of S/ unless otherwise stated)
                        
                                         
                                         
ASSETS
        
As of
    
As of
    
LIABILITIES AND EQUITY
        
As of
    
As of
  
         
December 31,
    
June 30,
              
December 31,
    
June 30,
  
   
Note
    
2021
    
2022
        
Note
    
2021
    
2022
  
                                         
Current assets
                    
Current liabilities
                  
Cash and cash equivalents
  
8
      
957,178
      
1,067,445
    
Borrowings
  
15
      
241,340
      
127,722
  
Trade accounts receivables, net
  
9
      
590,280
      
672,380
    
Bonds
  
16
      
69,838
      
72,562
  
Work in progress
  
10
      
309,063
      
180,916
    
Trade accounts payable
  
17
      
980,767
      
860,151
  
Accounts receivable from related parties
  
11
      
20,817
      
33,853
    
Accounts payable to related parties
  
11
      
51,004
      
63,724
  
Other accounts receivable
  
12
      
487,058
      
385,088
    
Current income tax
          
94,958
      
23,594
  
Inventories, net
          
488,326
      
478,842
    
Other accounts payable
  
18
      
754,981
      
784,618
  
Prepaid expenses
          
32,142
      
44,570
    
Other provisions
  
19
      
154,829
      
132,019
  
Derivative financial instruments
          
-
      
163
    
Total current liabilities
          
2,347,717
      
2,064,390
  
Total current assets
          
2,884,864
      
2,863,257
                            
                         
Non-current liabilities
                      
Non-current assets
                        
Borrowings
  
15
      
338,560
      
769,710
  
Trade accounts receivable, net
  
9
      
683,306
      
699,574
    
Bonds
  
16
      
1,191,084
      
814,986
  
Accounts receivable from related parties
  
11
      
643,897
      
579,224
    
Other accounts payable
  
18
      
92,369
      
70,062
  
Prepaid expenses
          
23,607
      
27,565
    
Accounts payable to related parties
  
11
      
50,712
      
29,417
  
Other accounts receivable
  
12
      
201,360
      
334,299
    
Other provisions
  
19
      
329,497
      
347,736
  
Investments in associates and joint ventures
  
13
      
31,173
      
29,242
    
Deferred income tax liability
          
97,367
      
109,839
  
Investment property
  
14
      
63,011
      
60,982
    
Total non-current liabilities
          
2,099,589
      
2,141,750
  
Property, plant and equipment, net
  
14
      
303,170
      
289,346
    
Total liabilities
          
4,447,306
      
4,206,140
  
Intangible assets, net
  
14
      
743,391
      
728,394
                            
Right-of-use assets, net
  
14
      
47,717
      
47,900
    
Equity
  
20
                  
Deferred income tax asset
          
275,076
      
303,510
    
Capital
          
871,918
      
1,196,980
  
Total non-current assets
          
3,015,708
      
3,100,036
    
Legal reserve
          
132,011
      
132,011
  
                         
Voluntary reserve
          
29,974
      
29,974
  
                         
Share Premium
          
1,131,574
      
1,142,092
  
                         
Other reserves
          
(135,947
)
    
(70,598
)
                         
Retained earnings
          
(829,714
)
    
(926,631
)
                         
Equity attributable to controlling interest in the Company
      
1,199,816
      
1,503,828
  
                         
Non-controlling interest
          
253,450
      
253,325
  
                         
Total equity
          
1,453,266
      
1,757,153
  
Total assets
          
5,900,572
      
5,963,293
    
Total liabilities and equity
          
5,900,572
      
5,963,293
  

The accompanying notes on pages 6 to 37 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 June 30,
  
   
Note
    
2021
    
2022
  
         
(as restated)
        
                   
Revenues from construction activities
          
1,070,058
      
1,300,050
  
Revenues from services provided
          
501,406
      
496,492
  
Revenue from real estate and sale of goods
          
232,758
      
302,472
  
           
1,804,222
      
2,099,014
  
                       
Cost of construction activities
          
(1,018,534
)
    
(1,265,910
)
Cost of services provided
          
(411,750
)
    
(388,071
)
Cost of real estate and sale of goods
          
(185,869
)
    
(223,983
)
   
21
      
(1,616,153
)
    
(1,877,964
)
Gross profit
          
188,069
      
221,050
  
                       
Administrative expenses
  
21
      
(84,566
)
    
(69,775
)
Other income and expenses
  
22
      
(2,880
)
    
2,383
  
Operating profit
          
100,623
      
153,658
  
                       
Financial expenses
  
23
      
(111,735
)
    
(147,105
)
Financial income
  
23
      
2,648
      
10,150
  
Share of the profit or loss of associates and joint ventures accounted for using the equity method
  
13
      
1,061
      
1,069
  
(Loss) profit before income tax
          
(7,403
)
    
17,772
  
Income tax expense
          
(22,046
)
    
(17,592
)
(Loss) profit from continuing operations
          
(29,449
)
    
180
  
Loss from discontinued operations
  
3.2
      
(15,361
)
    
-
  
(Loss) profit for the period
          
(44,810
)
    
180
  
                       
(Loss) profit attributable to:
                      
Owners of the Company
          
(61,597
)
    
(24,767
)
Non-controlling interest
          
16,787
      
24,947
  
           
(44,810
)
    
180
  
                       
                       
Loss per share attributable to owners of the Company during the period
  
26
      
(0.071
)
    
(0.023
)
Loss per share from continuing operations attributable to owners of the Company during the period
  
26
      
(0.053
)
    
(0.023
)

The accompanying notes on pages 6 to 37 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 June 30,
  
   
2021
    
2022
  
   
(as restated)
        
             
             
(Loss) profit for the period
    
(44,810
)
    
180
  
Other comprehensive income:
                
Items that may be subsequently  reclassified to profit or loss
                
Cash flow hedge, net of tax
    
-
      
163
  
Foreign currency translation adjustment, net of tax
    
(8,060
)
    
(6,221
)
Exchange difference from net investment in a foreign operation, net of tax
    
132
      
(670
)
Other comprehensive income for the period, net of tax
    
(7,928
)
    
(6,728
)
Total comprehensive income for the period
    
(52,738
)
    
(6,548
)
                 
Comprehensive income attributable to:
                
Owners of  the Company
    
(68,813
)
    
(31,568
)
Non-controlling interest
    
16,075
      
25,020
  
     
(52,738
)
    
(6,548
)
                 
Comprehensive income for the period attributable to owners of the Company:
                
Continuing operations
    
(45,612
)
    
(31,568
)
Discontinued operations
    
(23,201
)
    
-
  
     
(68,813
)
    
(31,568
)

The accompanying notes on pages 6 to 37 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 JUNE 30, 2021 AND 2022
                                                            
(All amounts are expressed in thousands of S/ unless otherwise stated)
                                                        
   
Attributable to the controlling interests of the Company
              
   
Number
of shares
In thousands
    
Capital
    
Legal
reserve
    
Voluntary
reserve
    
Share
premium
    
Other
reserves
    
Retained
earnings
    
Total
    
Non-
controlling
interest
    
Total
  
                                                             
                                                             
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
    
-
      
-
      
-
      
-
      
-
      
-
      
(61,597
)
    
(61,597
)
    
16,787
      
(44,810
)
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
-
      
(7,348
)
    
-
      
(7,348
)
    
(712
)
    
(8,060
)
Exchange difference from net investment in a foreign operation
    
-
      
-
      
-
      
-
      
-
      
132
      
-
      
132
      
-
      
132
  
Comprehensive income of the period
    
-
      
-
      
-
      
-
      
-
      
(7,216
)
    
(61,597
)
    
(68,813
)
    
16,075
      
(52,738
)
Transactions with shareholders:
                                                                                
- Dividend distribution
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(11,210
)
    
(11,210
)
- Contributions (devolution) of non-controlling shareholders, net
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(16,829
)
    
(16,829
)
Total transactions with shareholders
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(28,039
)
    
(28,039
)
Balances as of June 30, 2021
    
871,918
      
871,918
      
132,011
      
29,974
      
1,131,574
      
(176,450
)
    
(790,234
)
    
1,198,793
      
315,726
      
1,514,519
  
                                                                                 
Balances as of January 1, 2022
    
871,918
      
871,918
      
132,011
      
29,974
      
1,131,574
      
(135,947
)
    
(829,714
)
    
1,199,816
      
253,450
      
1,453,266
  
(Loss) profit for the period
    
-
      
-
      
-
      
-
      
-
      
-
      
(24,767
)
    
(24,767
)
    
24,947
      
180
  
Cash flow hedge
    
-
      
-
      
-
      
-
      
-
      
163
      
-
      
163
      
-
      
163
  
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
-
      
(6,298
)
    
-
      
(6,298
)
    
77
      
(6,221
)
Exchange difference from net investment in a foreign operation
    
-
      
-
      
-
      
-
      
-
      
(666
)
    
-
      
(666
)
    
(4
)
    
(670
)
Comprehensive income of the period
    
-
      
-
      
-
      
-
      
-
      
(6,801
)
    
(24,767
)
    
(31,568
)
    
25,020
      
(6,548
)
Transactions with shareholders:
                                                                                
- Dividend distribution
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(2,310
)
    
(2,310
)
- Contributions (devolution) of non-controlling shareholders, net
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(22,835
)
    
(22,835
)
- Reclasification of PUT option Morelco
    
-
      
-
      
-
      
-
      
-
      
72,150
      
(72,150
)
    
-
      
-
      
-
  
- Capital increase
    
325,062
      
325,062
      
-
      
-
      
10,518
      
-
      
-
      
335,580
      
-
      
335,580
  
Total transactions with shareholders
    
325,062
      
325,062
      
-
      
-
      
10,518
      
72,150
      
(72,150
)
    
335,580
      
(25,145
)
    
310,435
  
Balances as of June 30, 2022
    
1,196,980
      
1,196,980
      
132,011
      
29,974
      
1,142,092
      
(70,598
)
    
(926,631
)
    
1,503,828
      
253,325
      
1,757,153
  

The accompanying notes on pages 6 to 37 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 June 30,
  
   
Note
    
2021
    
2022
  
                   
OPERATING ACTIVITIES
                  
(Loss) profit before income tax
          
(24,336
)
    
17,772
  
Adjustments to  profit not affecting cash flows from operating activities:
                      
Depreciation
  
14 a)

   
51,114
      
37,183
  
Amortization
  
14 b)

   
48,555
      
47,737
  
Impairment of inventories
          
-
      
210
  
Impairment of accounts receivable and other accounts receivable
          
542
      
46
  
Reversal of impairment of inventories
          
-
      
(111
)
Reversal of impairment of property, plant and equipment
          
(1,323
)
    
(236
)
Impairment of intangible assets
          
-
      
661
  
Decrease due to renegotiation of PUT Morelco
          
-
      
3,706
  
Other provisions
          
18,392
      
21,412
  
Financial expense,net
          
125,432
      
69,471
  
Share of the profit and loss of associates and joint ventures accounted for using the equity method
  
13
      
(1,061
)
    
(1,069
)
Reversal of provisions
          
(3,096
)
    
(3,632
)
Disposal of assets
          
1,024
      
6
  
Profit on sale of property, plant and equipment
          
(60
)
    
(638
)
Loss on remeasurement of accounts receivable
          
21,415
      
70,203
  
Net variations in assets and liabilities:
                      
Trade accounts receivable and working in progress
          
(175,833
)
    
32,688
  
Other accounts receivable
          
(21,116
)
    
(65,438
)
Other accounts receivable from related parties
          
(25,616
)
    
16,476
  
Inventories
          
(2,206
)
    
9,883
  
Pre-paid expenses and other assets
          
(5,684
)
    
(16,385
)
Trade accounts payable
          
26,840
      
(118,798
)
Other accounts payable
          
122,051
      
(26,514
)
Other accounts payable to related parties
          
1,778
      
(2,500
)
Other provisions
          
(2,086
)
    
(34,577
)
Interest payment
          
(66,699
)
    
(62,711
)
Payments for purchases of intangibles - Concessions
          
(1,490
)
    
-
  
Payment of income tax
          
(36,689
)
    
(76,332
)
Net cash (applied to) provided by operating activities
          
49,848
      
(81,487
)
                       
INVESTING ACTIVITIES
                      
Sale of property, plant and equipment
          
4,763
      
4,879
  
Interest received
          
1,081
      
3,934
  
Dividends received
          
753
      
-
  
Payment for purchase of investments properties
          
(93
)
    
(11
)
Payments for intangible purchase
          
(8,368
)
    
(44,289
)
Payments for property, plant and equipment purchase
          
(11,850
)
    
(23,312
)
Net cash applied to investing activities
          
(13,714
)
    
(58,799
)
                       
FINANCING ACTIVITIES
                      
Loans received
          
53,751
      
464,050
  
Amortization of loans received
          
(116,662
)
    
(161,946
)
Amortization of bonds issued
          
(24,078
)
    
(26,837
)
Payment for transaction costs for debt
          
-
      
(1,818
)
Dividends paid to non-controlling interest
          
(11,210
)
    
(9,055
)
Cash received (return of contributions) from non-controlling shareholders
          
(16,829
)
    
(22,835
)
Net cash applied to financing activities
          
(115,028
)
    
241,559
  
Net decrease in cash
          
(78,894
)
    
101,273
  
Exchange difference
          
5,605
      
8,994
  
Cash and cash equivalents at the beginning of the period
          
900,168
      
957,178
  
Cash and cash equivalents at the end of the period
  
8
      
826,879
      
1,067,445
  
                       
NON-CASH TRANSACTIONS:
                      
Capitalization of interests
          
856
      
498
  
Acquisition of assets through finance leases
          
58
      
23
  
Acquisition of right-of-use assets
          
4,060
      
8,618
  
Capitalization of convertible bonds
          
-
      
335,580
  

The accompanying notes on pages 6 to 37 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, 2021 (AUDITED) AND JUNE 30, 2022 (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 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 June 30, 2022 were authorized by Management and Board of Directors on July 26, 2022.

The consolidated financial statements for the year ended December 31, 2021, were prepared and issued with authorization of Management and the Board of Directors on March 4, 2022, and were approved on the General Shareholders’ Meeting held on March 31, 2021.

c)
Acuerdo preparatorio de colaboracion eficaz – “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 June 30, 2022, we registered the present value of the amounts described before, which amount to S/184.1 million and US$19.3 million (totaling S/258.2 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.

2. BASIS OF PREPARATION

The condensed interim consolidated financial statements for the period ended June 30, 2022 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, 2021, 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.
- 6 -
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, 2021.

3.1. Standards, amendments, and interpretation adopted by the Group

Standards, amendments and interpretation that have entered in force as of January 1, 2022, have not had impact on the condensed interim consolidated financial statements as of June 30, 2022, and fo this reason thay have not been disclosed. The Corporation has not adopted in advance any amendment and modification that are not yet effective.

3.2. Account balance reclassified as of June 30, 2021

Information on the subsidiary Adexus S.A. is presented, that at as of December 31, 2021 was sold by the Company; therefore, for comparison purposes, in the income statement, it was reclassified as discontinued operation as of June 30, 2021.

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

   
For the period ended
  
   
June 30, 2021
  
   
Reported
    
Adexus
    
As restated
  
                   
                   
     
1,884,190
      
(79,968
)
    
1,804,222
  
     
(1,696,094
)
    
79,941
      
(1,616,153
)
Gross profit
    
188,096
      
(27
)
    
188,069
  
                         
Administrative expenses
    
(95,456
)
    
10,890
      
(84,566
)
Other income and expenses
    
(2,901
)
    
21
      
(2,880
)
Operating profit
    
89,739
      
10,884
      
100,623
  
                         
Financial (expenses) income, net
    
(115,136
)
    
6,049
      
(109,087
)
Share of the profit or loss of associates and joint ventures accounted for using the equity method
    
1,061
      
-
      
1,061
  
(Loss) profit before income tax
    
(24,336
)
    
16,933
      
(7,403
)
Income tax expense
    
(20,474
)
    
(1,572
)
    
(22,046
)
(Loss) profit from continuing operations
    
(44,810
)
    
15,361
      
(29,449
)
                         
Loss from discontinued operations
    
-
      
(15,361
)
    
(15,361
)
Loss for the period
    
(44,810
)
    
-
      
(44,810
)
                         
                         
(Loss) profit attributable to:
                        
Owners of the Company
    
(61,597
)
    
-
      
(61,597
)
Non-controlling interest
    
16,787
      
-
      
16,787
  
     
(44,810
)
    
-
      
(44,810
)
                         
Loss per share from continuing operations
                        
attributable to owners of the Company during the period
    
(0.071
)
    
0.018
      
(0.053
)

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.

- 7 -

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, 2021 and as of June 30, 2022, 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,
    
June 30,
  
   
2021
    
2022
  
             
Soles (a)
    
3.998
      
3.830
  
Chilean Pesos (b)
    
844.69
      
932.08
  
Colombian Pesos (c)
    
3,981.16
      
4,127.47
  

(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 includes the following:

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
   
USD(000)
    
USD(000)
  
             
Assets
    
519,448
      
606,904
  
Liabilities
    
512,947
      
503,476
  

For the periods ended June 30, 2021 and 2022, the Corporation’s exchange gains and losses for the Peruvian Sol, the Chilean and Colombian Pesos exposure against the U.S. dollar was:

   
2021
    
2022
  
             
Gain
    
183,132
      
292,896
  
Loss
    
(194,719
)
    
(288,593
)

- 8 -

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 management of liquidity risk involves maintaining sufficient cash and cash equivalents, the availability of financing through an adequate number of committed sources of credit facilities and the ability to close market positions. Historically, the Corporation cash flows enabled it to meet its obligations. The Corporation has implemented various measures to reduce its exposure to liquidity risk, and developed a financial plan based in several stages, which were designed with a commitment to compliance within a reasonable time frame. The Financial Plan aims to enable compliance with the various obligations at the corporate and group companies’ levels.

Corporate Finance Management monitors the proyections of cash flows made on the liquidity requirements of the Corporation to ensure there is sufficient cash to cover operational needs so that the Corporation does not breach the limits of indebtedness or guarantees (covenants), if applicable, on any of its borrowing facilities. Minor financing operations 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 over the balance required for working capital management is invested in interest-bearing bank accounts or time deposits, selecting instruments with adequeate maturities and sufficient liquidity.

The table below analyzes the Corporation’s financial liabilities grouped on the basis of the period remaining to the date of the consolidated statement of financial position to the date of its maturity. The amounts disclosed in the table are the contractual undiscounted cash flows, which include interest to be applied according to the established schedule.

- 9 -
   
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 and other provisions
                                        
(except non-financial liabilities)
    
323,070
      
22,941
      
109,383
      
422,666
      
878,060
  
     
1,673,696
      
361,788
      
1,142,995
      
1,347,109
      
4,525,588
  
                                         
   
Less than
      
1-2
      
2-5
    
More than
        
As of June 30, 2022
  
1 year
    
years
    
years
    
5 years
    
Total
  
                                   
Other financial liabilities (except
                                  
  for finance leases and lease
                                  
  liability for right-of-use asset)
    
148,810
      
529,995
      
157,172
      
81,304
      
917,281
  
Finance leases
    
5,048
      
2,539
      
-
      
-
      
7,587
  
Lease liability for right-of-use asset
    
18,035
      
25,976
      
23,380
      
1,718
      
69,109
  
Bonds
    
138,712
      
179,924
      
447,010
      
739,902
      
1,505,548
  
Trade accounts payables (except
                                        
  non-financial liabilities)
    
836,084
      
-
      
-
      
-
      
836,084
  
Accounts payables to related parties
    
63,724
      
27,713
      
698
      
1,006
      
93,141
  
Other accounts payables and other provisions
                                        
   (except non-financial liabilities)
    
264,373
      
30,392
      
129,660
      
483,091
      
907,516
  
     
1,474,786
      
796,539
      
757,920
      
1,307,021
      
4,336,266
  

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.  Since 2017 the situation of the Corporation has lead Management to monitor deviations that may cause non-compliance with covenants and hinder the renegotiation of liabilities (Note 15). In extraordinary events, the Corporation identifies the possible deviations, 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 its capital on the basis of the leverage ratio.  This ratio is calculated by dividing net debt by total capital. Net debt corresponds to total financial obligations (including current and non-current borrowings), less cash and cash equivalents. Total capital corresponds to the ‘equity’ as shown in the consolidated statement of financial position plus net debt.

As of December 31, 2021 and as of June 30, 2022, the leverage ratio is presented below.

- 10 -

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
Total financial liabilities and bonds (Note 15 and Note 16)
    
1,840,822
      
1,784,980
  
Less: Cash and cash equivalents (Note 8)
    
(957,178
)
    
(1,067,445
)
Net debt
    
883,644
      
717,535
  
Total equity
    
1,453,266
      
1,757,153
  
Total capital
    
2,336,910
      
2,474,688
  
                 
Gearing ratio
    
0.38
      
0.29
  

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, 2021
    
     
Financial liabilities
    
Other financial entities (Note 15-b)
  
     165,878
     
As of June 30, 2022
    
     
Financial liabilities
    
Other financial entities (Note 15-b)
  
     170,202

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, 2021.

6. SEASONALITY OF OPERATIONS

The Corporation does not present seasonality in the operations of any of its subsidiaries; and develop its business normally during the period.

- 11 -

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 (iv) real estate.

As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’, ‘energy’ 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 Corporation’s revenue.

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

- 12 -
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
    
309,063
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
309,063
  
Accounts receivable from related parties
    
95,390
      
121
      
48,012
      
4,309
      
-
      
3,166
      
52,644
      
(182,825
)
    
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
    
1,528,840
      
259,812
      
244,780
      
344,799
      
9,527
      
493,385
      
188,173
      
(184,452
)
    
2,884,864
  
                                                                         
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
    
108,038
      
8,951
      
-
      
-
      
-
      
5,443
      
1,559,672
      
(1,650,931
)
    
31,173
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
22,416
      
42,558
      
(1,963
)
    
63,011
  
Property, plant and equipment, net
    
142,228
      
153,456
      
7,056
      
749
      
181
      
6,845
      
1,653
      
(8,998
)
    
303,170
  
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
    
179,319
      
4,717
      
21,304
      
-
      
644
      
16,960
      
47,038
      
5,094
      
275,076
  
Total non-current assets
    
922,358
      
516,390
      
412,205
      
669,898
      
20,408
      
111,528
      
2,330,389
      
(1,967,468
)
    
3,015,708
  
Total assets
    
2,451,198
      
776,202
      
656,985
      
1,014,697
      
29,935
      
604,913
      
2,518,562
      
(2,151,920
)
    
5,900,572
  
                                                                         
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
    
767,792
      
67,686
      
44,210
      
30,637
      
464
      
30,401
      
38,894
      
683
      
980,767
  
Accounts payable to related parties
    
130,848
      
1,079
      
47,340
      
42,185
      
19
      
19,155
      
13,623
      
(203,245
)
    
51,004
  
Current income tax
    
59,407
      
15,748
      
17,920
      
-
      
347
      
1,058
      
478
      
-
      
94,958
  
Other accounts payable
    
560,920
      
23,116
      
38,198
      
9,104
      
791
      
91,342
      
31,510
      
-
      
754,981
  
Provisions
    
70,585
      
25,498
      
4,158
      
-
      
-
      
560
      
54,028
      
-
      
154,829
  
Total current liabilities
    
1,730,960
      
160,173
      
192,150
      
106,467
      
1,639
      
211,581
      
155,915
      
(211,168
)
    
2,347,717
  
                                                                         
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
  
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
    
18,665
      
31,187
      
-
      
47,515
      
-
      
-
      
-
      
-
      
97,367
  
Total non-current liabilities
    
181,778
      
208,159
      
259,374
      
741,202
      
27,533
      
29,742
      
939,590
      
(287,789
)
    
2,099,589
  
Total liabilities
    
1,912,738
      
368,332
      
451,524
      
847,669
      
29,172
      
241,323
      
1,095,505
      
(498,957
)
    
4,447,306
  
Equity attributable to controlling interest in the Company
    
524,807
      
378,653
      
149,904
      
125,271
      
763
      
139,728
      
1,420,221
      
(1,539,531
)
    
1,199,816
  
Non-controlling interest
    
13,653
      
29,217
      
55,557
      
41,757
      
-
      
223,862
      
2,836
      
(113,432
)
    
253,450
  
Total liabilities and equity
    
2,451,198
      
776,202
      
656,985
      
1,014,697
      
29,935
      
604,913
      
2,518,562
      
(2,151,920
)
    
5,900,572
  

- 13 -
Operating segments financial position
                                                      
Segment reporting
                                                      
               
Infrastructure
                          
As of June 30, 2022
  
Engineering
and
construction
    
Energy
    
Toll roads
    
Transportation
    
Water
treatment
    
Real estate
    
Parent
Company
operations
    
Eliminations
    
Consolidated
  
                                                       
Assets.-
                                                      
Cash and cash equivalent
    
265,479
      
168,709
      
112,901
      
170,196
      
8,035
      
103,375
      
238,750
      
-
      
1,067,445
  
Trade accounts receivables, net
    
425,696
      
80,949
      
35,338
      
112,649
      
1,402
      
16,028
      
318
      
-
      
672,380
  
Work in progress, net
    
180,916
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
180,916
  
Accounts receivable from related parties
    
96,374
      
38
      
34,772
      
4,697
      
7,765
      
2,556
      
101,565
      
(213,914
)
    
33,853
  
Other accounts receivable
    
296,452
      
31,044
      
36,876
      
16,636
      
283
      
5,810
      
11,493
      
(13,506
)
    
385,088
  
Inventories, net
    
42,104
      
32,220
      
7,399
      
36,199
      
-
      
362,489
      
-
      
(1,569
)
    
478,842
  
Prepaid expenses
    
24,735
      
2,629
      
7,140
      
3,368
      
68
      
-
      
6,630
      
-
      
44,570
  
Derivative financial instruments
    
-
      
-
      
-
      
-
      
-
      
-
      
163
      
-
      
163
  
Total current assets
    
1,331,756
      
315,589
      
234,426
      
343,745
      
17,553
      
490,258
      
358,919
      
(228,989
)
    
2,863,257
  
                                                                         
Long-term trade accounts receivable, net
    
10,604
      
-
      
16,309
      
672,661
      
-
      
-
      
-
      
-
      
699,574
  
Long-term accounts receivable from related parties
    
314,049
      
-
      
24,227
      
42
      
3,771
      
-
      
751,315
      
(514,180
)
    
579,224
  
Prepaid expenses
    
-
      
981
      
24,615
      
1,821
      
658
      
-
      
-
      
(510
)
    
27,565
  
Other long-term accounts receivable
    
145,543
      
84,690
      
-
      
-
      
7,346
      
59,352
      
37,368
      
-
      
334,299
  
Investments in associates and joint ventures
    
109,197
      
10,473
      
-
      
-
      
-
      
3,218
      
1,586,270
      
(1,679,916
)
    
29,242
  
Investment property
    
-
      
-
      
-
      
-
      
-
      
21,369
      
41,576
      
(1,963
)
    
60,982
  
Property, plant and equipment, net
    
124,763
      
157,942
      
6,234
      
678
      
165
      
7,240
      
1,322
      
(8,998
)
    
289,346
  
Intangible assets, net
    
134,891
      
275,668
      
298,230
      
294
      
-
      
632
      
14,177
      
4,502
      
728,394
  
Right-of-use assets, net
    
2,237
      
9,339
      
3,570
      
42
      
9
      
391
      
36,054
      
(3,742
)
    
47,900
  
Deferred income tax asset
    
188,274
      
4,802
      
23,805
      
-
      
663
      
17,304
      
63,598
      
5,064
      
303,510
  
Total non-current assets
    
1,029,558
      
543,895
      
396,990
      
675,538
      
12,612
      
109,506
      
2,531,680
      
(2,199,743
)
    
3,100,036
  
Total assets
    
2,361,314
      
859,484
      
631,416
      
1,019,283
      
30,165
      
599,764
      
2,890,599
      
(2,428,732
)
    
5,963,293
  
                                                                         
Liabilities.-
                                                                        
Borrowings
    
17,032
      
33,199
      
2,730
      
36
      
9
      
50,835
      
27,832
      
(3,951
)
    
127,722
  
Bonds
    
4,621
      
-
      
40,249
      
27,692
      
-
      
-
      
-
      
-
      
72,562
  
Trade accounts payable
    
671,755
      
70,102
      
45,035
      
29,263
      
278
      
32,223
      
19,212
      
(7,717
)
    
860,151
  
Accounts payable to related parties
    
356,968
      
2,508
      
33,807
      
48,018
      
14
      
19,421
      
17,586
      
(414,598
)
    
63,724
  
Current income tax
    
14,610
      
1,334
      
4,011
      
-
      
302
      
2,838
      
499
      
-
      
23,594
  
Other accounts payable
    
559,980
      
23,749
      
44,349
      
8,989
      
791
      
115,140
      
31,620
      
-
      
784,618
  
Provisions
    
74,201
      
34,154
      
4,128
      
-
      
-
      
544
      
18,992
      
-
      
132,019
  
Total current liabilities
    
1,699,167
      
165,046
      
174,309
      
113,998
      
1,394
      
221,001
      
115,741
      
(426,266
)
    
2,064,390
  
                                                                         
Borrowings
    
2,336
      
109,011
      
805
      
3
      
-
      
13,331
      
644,224
      
-
      
769,710
  
Long-term bonds
    
18,625
      
-
      
196,321
      
600,040
      
-
      
-
      
-
      
-
      
814,986
  
Other long-term accounts payable
    
43,098
      
-
      
5,970
      
170
      
2,832
      
15,320
      
2,672
      
-
      
70,062
  
Long-term accounts payable to related parties
    
23,855
      
57,450
      
1,006
      
38,642
      
25,434
      
-
      
201,763
      
(318,733
)
    
29,417
  
Provisions
    
53,903
      
52,861
      
38,301
      
3,371
      
-
      
-
      
199,300
      
-
      
347,736
  
Deferred income tax liability
    
18,441
      
38,542
      
-
      
52,856
      
-
      
-
      
-
      
-
      
109,839
  
Total non-current liabilities
    
160,258
      
257,864
      
242,403
      
695,082
      
28,266
      
28,651
      
1,047,959
      
(318,733
)
    
2,141,750
  
Total liabilities
    
1,859,425
      
422,910
      
416,712
      
809,080
      
29,660
      
249,652
      
1,163,700
      
(744,999
)
    
4,206,140
  
Equity attributable to controlling interest in the Company
    
489,916
      
403,950
      
155,559
      
157,652
      
505
      
141,283
      
1,724,041
      
(1,569,078
)
    
1,503,828
  
Non-controlling interest
    
11,973
      
32,624
      
59,145
      
52,551
      
-
      
208,829
      
2,858
      
(114,655
)
    
253,325
  
Total liabilities and equity
    
2,361,314
      
859,484
      
631,416
      
1,019,283
      
30,165
      
599,764
      
2,890,599
      
(2,428,732
)
    
5,963,293
  

- 14 -
Operating segment performance
                                                      
Segment Reporting
                                                      
               
Infrastructure
                          
For the period ended June 30, 2021
  
Engineering
and
construction
    
Energy
    
Toll roads
    
Transportation
    
Water
treatment
    
Real estate
    
Parent
Company
operations
    
Elimination
    
Consolidated
  
                                                       
Revenue
    
1,185,048
      
234,508
      
242,925
      
173,058
      
1,774
      
92,783
      
33,907
      
(159,781
)
    
1,804,222
  
Gross profit (loss)
    
65,341
      
49,177
      
28,764
      
49,450
      
517
      
13,673
      
4,218
      
(23,071
)
    
188,069
  
Administrative expenses
    
(62,993
)
    
(6,467
)
    
(7,876
)
    
(7,625
)
    
(243
)
    
(6,949
)
    
(16,177
)
    
23,764
      
(84,566
)
Other income and expenses, net
    
(3,407
)
    
(405
)
    
(1,836
)
    
1,317
      
(7
)
    
957
      
157
      
344
      
(2,880
)
Operating (loss) profit
    
(1,059
)
    
42,305
      
19,052
      
43,142
      
267
      
7,681
      
(11,802
)
    
1,037
      
100,623
  
Financial expenses
    
(50,228
)
    
(6,703
)
    
(14,081
)
    
(5,291
)
    
(58
)
    
(6,266
)
    
(40,574
)
    
11,466
      
(111,735
)
Financial income
    
928
      
368
      
1,269
      
308
      
276
      
1,365
      
9,721
      
(11,587
)
    
2,648
  
Dividends
    
-
      
-
      
-
      
-
      
-
      
-
      
5,856
      
(5,856
)
    
-
  
Share of profit or loss in associates
                                                                        
and joint ventures
    
(1,469
)
    
1,244
      
-
      
-
      
-
      
-
      
(1,941
)
    
3,227
      
1,061
  
(Loss) profit before income tax
    
(51,828
)
    
37,214
      
6,240
      
38,159
      
485
      
2,780
      
(38,740
)
    
(1,713
)
    
(7,403
)
Income tax
    
1,372
      
(10,952
)
    
(2,369
)
    
(11,901
)
    
(208
)
    
(345
)
    
2,354
      
3
      
(22,046
)
(Loss) profit from continuing operations
    
(50,456
)
    
26,262
      
3,871
      
26,258
      
277
      
2,435
      
(36,386
)
    
(1,710
)
    
(29,449
)
Loss from discontinuing operations
    
-
      
-
      
-
      
-
      
-
      
-
      
(15,546
)
    
185
      
(15,361
)
(Loss) profit for the year
    
(50,456
)
    
26,262
      
3,871
      
26,258
      
277
      
2,435
      
(51,932
)
    
(1,525
)
    
(44,810
)
                                                                         
(Loss) profit from attributable to:
                                                                        
Owners of the Company
    
(49,189
)
    
23,370
      
839
      
19,693
      
277
      
(1,933
)
    
(51,903
)
    
(2,751
)
    
(61,597
)
Non-controlling interest
    
(1,267
)
    
2,892
      
3,032
      
6,565
      
-
      
4,368
      
(29
)
    
1,226
      
16,787
  
     
(50,456
)
    
26,262
      
3,871
      
26,258
      
277
      
2,435
      
(51,932
)
    
(1,525
)
    
(44,810
)

- 15 -
Operating segment performance
                                                      
Segment Reporting
                                                      
               
Infrastructure
                          
For the Period ended June 30, 2022
  
Engineering
and
construction
    
Energy
    
Toll roads
    
Transportation
    
Water
treatment
    
Real estate
    
Parent
Company
operations
    
Elimination
    
Consolidated
  
                                                       
Revenue
    
1,388,989
      
292,889
      
245,463
      
197,189
      
2,138
      
84,415
      
34,063
      
(146,132
)
    
2,099,014
  
Gross profit (loss)
    
47,504
      
53,153
      
44,522
      
70,329
      
1,162
      
22,642
      
7,930
      
(26,192
)
    
221,050
  
Administrative expenses
    
(53,426
)
    
(6,867
)
    
(7,697
)
    
(5,141
)
    
(371
)
    
(6,481
)
    
(18,167
)
    
28,375
      
(69,775
)
Other income and expenses, net
    
(2,047
)
    
2,906
      
(3,002
)
    
(305
)
    
-
      
1,069
      
2,987
      
775
      
2,383
  
Operating (loss) profit
    
(7,969
)
    
49,192
      
33,823
      
64,883
      
791
      
17,230
      
(7,250
)
    
2,958
      
153,658
  
Financial expenses
    
(35,214
)
    
(9,899
)
    
(13,518
)
    
(3,406
)
    
(50
)
    
(5,962
)
    
(100,214
)
    
21,158
      
(147,105
)
Financial income
    
1,938
      
647
      
1,173
      
1,130
      
59
      
1,499
      
29,442
      
(25,738
)
    
10,150
  
Dividends
    
-
      
-
      
-
      
-
      
-
      
-
      
3,416
      
(3,416
)
    
-
  
Share of profit or loss in associates
                                                                        
and joint ventures
    
1,222
      
1,522
      
-
      
-
      
-
      
712
      
34,479
      
(36,866
)
    
1,069
  
(Loss) profit before income tax
    
(40,023
)
    
41,462
      
21,478
      
62,607
      
800
      
13,479
      
(40,127
)
    
(41,904
)
    
17,772
  
Income tax
    
8,329
      
(12,758
)
    
(5,369
)
    
(19,432
)
    
(295
)
    
(4,123
)
    
16,087
      
(31
)
    
(17,592
)
(Loss) profit from continuing operations
    
(31,694
)
    
28,704
      
16,109
      
43,175
      
505
      
9,356
      
(24,040
)
    
(41,935
)
    
180
  
(Loss) profit for the year
    
(31,694
)
    
28,704
      
16,109
      
43,175
      
505
      
9,356
      
(24,040
)
    
(41,935
)
    
180
  
                                                                         
(Loss) profit from attributable to:
                                                                        
Owners of the Company
    
(29,941
)
    
25,297
      
10,346
      
32,381
      
505
      
1,554
      
(24,060
)
    
(40,849
)
    
(24,767
)
Non-controlling interest
    
(1,753
)
    
3,407
      
5,763
      
10,794
      
-
      
7,802
      
20
      
(1,086
)
    
24,947
  
     
(31,694
)
    
28,704
      
16,109
      
43,175
      
505
      
9,356
      
(24,040
)
    
(41,935
)
    
180
  

- 16 -
There are no differences as compared to previous year-end consolidated financial statements based on segmentation or measurement of financial performance by segment.

8. CASH AND CASH EQUIVALENTS

This account comprises:

   
At December 31,
    
At June 30,
  
   
2021
    
2022
  
             
Cash on hand
    
936
      
1,038
  
Remittances in-transit

2,222


1,872
  
Bank accounts
                
Current accounts
    
142,029
      
349,753
  
Banco de la Nacion
    
19,847
      
18,999
  
Savings deposits and mutual funds
    
62
      
160
  
Time deposits (less than 3 months) (a)
    
205,302
      
185,351
  
     
367,240
      
554,263
  
Escrow account (b)
                
Operational funds
    
292,754
      
252,235
  
Reserve funds
    
132,186
      
98,388
  
Consortium funds
    
78,589
      
85,487
  
Guarantee funds
    
83,251
      
74,162
  
     
586,780
      
510,272
  
Total Cash and Cash equivalents
    
957,178
      
1,067,445
  

(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 0.14% and 5.73%.

(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 Red Vial 5 S.A. amounting to S/76 million and S/22 million, respectively, as of June 30, 2022 (S/110 million and S/22 million, respectively, as of December 31, 2021).

9. TRADE ACCOUNTS RECEIVABLES, NET

This account comprises:

   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Receivables (net) (a)
    
773,575
      
763,786
      
269,427
      
256,091
      
504,148
      
507,695
  
Unbilled receivables (net) - Subsidiaries (b)
    
209,258
      
303,884
      
209,258
      
295,741
      
-
      
8,143
  
Unbilled receivables (net) - Concessions (c)
    
290,753
      
304,284
      
111,595
      
120,548
      
179,158
      
183,736
  
     
1,273,586
      
1,371,954
      
590,280
      
672,380
      
683,306
      
699,574
  

a)
Receivables are presented net of impairment and present value discount. The balance of the account includes an impairment and present value discount amounts to S/45 million (S/45.3 million as of December 31, 2021). The ageing is detailed as follows:

- 17 -
   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
Current
    
683,921
      
716,637
  
Past due up to 30 days
    
41,222
      
6,387
  
Past due from 31 days up to 90 days
    
11,668
      
5,735
  
Past due from 91 days up to 120 days
    
15,814
      
1,528
  
Past due from 121 days up to 360 days
    
7,070
      
13,500
  
Past due over 360 days
    
13,880
      
19,999
  
     
773,575
      
763,786
  


As of June 30, 2022, the amount overdue for more than 360 days mainly includes invoices receivable from subsidiaries: Cumbra Peru S.A. for S/15 million, Unna Transporte S.A.C. for S/3.5 million, Cumbra Ingenieria S.A. for S/1.5 million (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 millones and others for S/0.1 millones, as of December 31, 2021).

b)
The rights to be billed of subsidiaries, in the Engineering and Construction segment, are documents related to the estimates of the degree of progress for services rendered not billed, and services pending billing for the rest of the Subsidiaries, they are presented net of impairment for S/5.5 million, and discounted to present value for S/6 million (S/5.2 million for impairment, and S/5.9 million for present value, as of December 31, 2021), and detailed by subsidiary:

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
Cumbra Peru S.A.
    
170,063
      
254,733
  
Cumbra Ingenieria S.A.
    
24,177
      
35,788
  
Unna Transporte S.A.C.
    
10,291
      
9,114
  
Unna Energía S.A.
    
4,718
      
4,198
  
Others
    
9
      
51
  
     
209,258
      
303,884
  

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

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
Tren Urbano de Lima S.A.
    
256,526
      
265,678
  
Carretera Andina del  Sur S.A.C.
    
12,667
      
12,212
  
Red Vial 5 S.A.
    
16,451
      
22,321
  
Carretera Sierra Piura S.A.C.
    
4,489
      
3,382
  
Concesionaria La Chira S.A.
    
620
      
691
  
     
290,753
      
304,284
  

- 18 -
10. WORK IN PROGRESS, NET

This account comprises:

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
             
Cumbra Peru S.A.
    
304,940
      
173,221
  
Cumbra Ingenieria S.A.
    
4,123
      
7,695
  
     
309,063
      
180,916
  

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

The main projects of work in progress are presented below:

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
             
Vial y Vives - DSD S.A. - Modernizacion y ampliacion de la Planta Arauco (i)
    
139,025
      
-
  
Vial y Vives - DSD S.A. - Proyecto Quebrada Blanca
    
64,777
      
78,848
  
Cumbra Peru S.A. - Planta Concentradora y tunel Quellaveco
    
82,253
      
56,238
  
Cumbra Peru S.A. - Aeropuerto Jorge Chavez
    
16,602
      
14,136
  
Cumbra Peru S.A. - EPC Captacion agua de mar y afuentes
    
-
      
8,524
  
Cumbra Peru S.A. - Taller de mantenimiento refineria Toquepala
    
-
      
4,643
  
Cumbra Ingenieria S.A. - Captacion agua de mar
    
4,123
      
3,956
  
Cumbra Ingenieria S.A. - Planta de Hidrogeno
    
-
      
3,179
  
Cumbra Peru S.A. - Planta de Hidrogeno
    
-
      
2,722
  
Cumbra Peru S.A. - Sietema de bombeo agua recuperada
    
1,369
      
2,637
  
Otros
    
914
      
6,033
  
     
309,063
      
180,916
  

i) The decrease is due to the completion of the project during the second quarter of the year and the recognition of additional works for US$36 million.

11. TRANSACTIONS WITH RELATED PARTIES

a) Transactions with related parties

Major transactions for the periods ended June 30, 2021 and 2022 between the Company and its related parties are summarized as follows:

   
2021
    
2022
  
Revenue from sales of goods and services:
            
- Joint operations
    
38
      
-
  
- Associates

6,459
  

22,613
  
     
6,497
      
22,613
  

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

- 19 -
b) Balances of transactions with related parties

   
As of December 31,
    
As of June 30,
  
   
2021
    
2022
  
   
Receivable
    
Payable
    
Receivable
    
Payable
  
Current portion:
                        
Joint operations
                        
Consorcio Rio Urubamba
    
9,792
      
-
      
9,580
      
-
  
Consorcio Rio Mantaro
    
-
      
7,043
      
-
      
5,963
  
Consorcio Constructor Chavimochic
    
-
      
9,301
      
-
      
9,517
  
Consorcio Peruano de Conservacion
    
654
      
2,392
      
681
      
2,628
  
Consorcio Vial Quinua
    
-
      
1,947
      
-
      
1,946
  
Consorcio Chicama Ascope
    
-
      
-
      
506
      
6
  
Consorcio Inti Punku
    
1,865
      
1,733
      
4,505
      
17,070
  
Consorcio GyM Conciviles
    
1,479
      
1,074
      
1,417
      
1,454
  
Consorcio Manperan
    
1,389
      
4,968
      
3,245
      
1,772
  
Consorcio Italo Peruano
    
1,394
      
106
      
1,391
      
109
  
Consorcio Norte Pachacutec
    
125
      
282
      
125
      
295
  
Consorcio Ermitaño
    
1,028
      
515
      
954
      
497
  
Terminales del Peru
    
92
      
399
      
70
      
399
  
Consorcio CDEM
    
-
      
1,545
      
-
      
67
  
Consorcio GyM-Stracon
    
-
      
143
      
-
      
145
  
Consorcio TNT Vial y Vives - DSD Chile Ltda
    
-
      
633
      
7,976
      
131
  
Otros menores
    
288
      
1,803
      
1,589
      
2,148
  
     
18,106
      
33,884
      
32,039
      
44,147
  
                                 
Other related parties
                                
Ferrovias S.A.
    
-
      
15,513
      
-
      
18,298
  
Peru Piping Spools S.A.C.
    
2,711
      
1,607
      
1,814
      
1,279
  
     
2,711
      
17,120
      
1,814
      
19,577
  
Current portion
    
20,817
      
51,004
      
33,853
      
63,724
  
                                 
                                 
                                 
Non-current portion
                                
Gasoducto Sur Peruano S.A.
    
643,897
      
-
      
579,224
      
-
  
Ferrovias S.A.
    
-
      
14,690
      
-
      
14,815
  
Ferrovias Participaciones S.A.
    
-
      
36,022
      
-
      
14,602
  
Non-current
    
643,897
      
50,712
      
579,224
      
29,417
  

Accounts receivable and payable are mainly of current maturity, except for accounts receivable from Gasoducto Sur Peruano S.A. (GSP) and Ferrovias Participaciones S.A.; which have no specific guarantees. These balances do not generate interest considering their maturity in the short term.

The non-current account receivable corresponds to the obligations arising from the early termination of the GSP project. As of June 30, 2022, the net book value of impairment of the account receivable was recorded by the parent Company is S/385 million, its present value using the discounted cash flow method, at a rate of 5.42% (2.73% in 2021), caused a discount of S/107 million (S/400 million and S/77 million, as of December 31, 2021, respectively). Additionally, as of June 30, 2022, the subsidiary Cumbra Peru S.A. has balances from the Consorcio Constructor Ductos del Sur (CCDS) of accounts receivable and collection rights to GSP for S/301 million, which includes S/276 million receivables from CCDS and S/25 million for lost profits (as of December 31, 2021, S/321 million which includes S/289 million and S/32 million, respectively).


- 20 -

12. OTHER ACCOUNTS RECEIVABLE

This account comprises:

   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Claims to third parties
    
248,770
      
250,233
      
218,892
      
129,852
      
29,878
      
120,381
  
Guarantee deposits
    
199,132
      
220,800
      
185,334
      
161,050
      
13,798
      
59,750
  
Credit from public institutions and Recoverable Taxes
    
139,745
      
130,667
      
100,298
      
91,778
      
39,447
      
38,889
  
Petroleos del Peru S.A.- Petroperu S.A.
    
106,077
      
102,742
      
19,262
      
18,052
      
86,815
      
84,690
  
Advances to suppliers
    
33,769
      
73,206
      
33,769
      
73,206
      
-
      
-
  
Consorcio Panorama
    
27,193
      
26,132
      
-
      
-
      
27,193
      
26,132
  
Restricted funds
    
7,346
      
7,346
      
-
      
-
      
7,346
      
7,346
  
Accounts receivable from personneel
    
16,963
      
5,830
      
16,963
      
5,830
      
-
      
-
  
Other minors
    
38,993
      
28,275
      
38,854
      
28,137
      
139
      
138
  
     
817,987
      
845,230
      
613,371
      
507,904
      
204,616
      
337,326
  
Impairment
    
(129,569
)
    
(125,843
)
    
(126,313
)
    
(122,816
)
    
(3,256
)
    
(3,027
)
     
688,418
      
719,387
      
487,058
      
385,088
      
201,360
      
334,299
  

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 claims to third parties suppliers and tax credits. Other non-current accounts receivable have maturities that vary between 2 and 5 years.

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

13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

This account comprises:

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
Associates
    
22,047
      
18,613
  
Joint ventures

9,126


10,629
  
     
31,173
      
29,242
  

The movement of our investments in associates for the periods ended June 30, 2021 and 2022 is as follows:

   
2021
    
2022
  
Balance at January 1
    
35,516
      
31,173
  
Equity interest in results
    
1,061
      
1,069
  
Dividends received
    
(753
)
    
-
  
Reduction of capital
    
-
      
(2,937
)
Conversion adjustment
    
20
      
(63
)
Balance at June 30
    
35,844
      
29,242
  

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.

- 21 -
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.

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.

Finally, as of the date of this report, the Grantor and Chavimochic concessionaire have signed an act of mutual agreement for the suspension of the issuance of the arbitration resolution, in order to negotiate the restart of the Project works. On May 26, 2022, Concesionaria Chavimochic S.A.C have completed submitting the proposal to modify the concession contract, being evaluated by the Government, in compliance with the regulations of public-private associations (APP law and its regulations) and the concession  contract.

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 June 30, 2021 and 2022, is as follows:

         
Property,
              
         
plant and
    
Intangibles
    
Right-of-use
  
   
Investment
    
equipment
    
assets
    
assets
  
   
property
    
(a)
    
(b)
    
(a)
  
                         
Net cost at January 1, 2021
    
26,073
      
405,469
      
791,990
      
64,518
  
                                 
Additions
    
93
      
11,908
      
11,156
      
4,060
  
Desconsolidation, net
    
(1,408
)
    
-
      
-
      
-
  
Reclassifications and disposals
    
-
      
858
      
478
      
(267
)
Conversion adjustments
    
(48
)
    
2,234
      
486
      
275
  
Deductions for sale of assets
    
-
      
(4,703
)
    
-
      
-
  
Depreciation, amortization
    
(1,196
)
    
(38,115
)
    
(48,555
)
    
(11,803
)
                                 
Net cost at June 30, 2021
    
23,514
      
377,651
      
755,555
      
56,783
  
                                 
                                 
Net cost at January 1, 2022
    
63,011
      
303,170
      
743,391
      
47,717
  
                                 
Additions
    
11
      
23,335
      
44,289
      
8,618
  
Reclassifications and disposals
    
-
      
(505
)
    
(553
)
    
296
  
Conversion adjustments
    
-
      
(6,580
)
    
(10,996
)
    
(9
)
Deductions for sale of assets
    
-
      
(3,653
)
    
-
      
-
  
Depreciation, amortization
    
(2,040
)
    
(26,421
)
    
(47,737
)
    
(8,722
)
                                 
Net cost at June 30, 2022
    
60,982
      
289,346
      
728,394
      
47,900
  

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

As of June 30, 2022, additions mainly correspond to energy segment, due to work in progress, machinery, replacement units and buildings in S/6.9 million, S/5.7 million, S/2 million and S/1.4 million, respectively. Likewise, additions in the engineering and construction segment of machinery and other equipment in S/2.7 million and S/1.2 million, respectively. (as of June 30, 2021, additions mainly correspond to engineering and construction segment, due to machinery and other equipment in S/7 million and S/1.5 million, respectively).

- 22 -
During 2021, the net value corresponding to the property located at Av Paseo de la Republica 4675 has been reclassified to Investment Properties due to management’s decision to lease the building.

As of June 30, 2022, additions to right-of-use assets correspond mainly to lease agreements for the acquisition of equipment.

For the periods ended June 30 2021 and 2022, the depreciation of property, plant and equipment, investment property and right-of-use assets is presented in the Statement of Income as follows:

   
2021
    
2022
  
             
Cost of sale of services and goods (Note 21)
    
41,664
      
35,862
  
Administrative expenses (Note 21)
    
3,256
      
1,321
  
Depreciation discontinued operations
    
6,194
      
-
  
Total depreciation
    
51,114
      
37,183
  
(-) Depreciation related to investment property
    
(1,196
)
    
(2,040
)
(-) Depreciation related to right-of-use assets (Note 14)
    
(11,803
)
    
(8,722
)
Total depreciation of property, plant and equipment
    
38,115
      
26,421
  

(b) Intangible assets

As of June 30, 2022, additions mainly correspond to investments in the preparation of wells in energy segment for S/34.2 million, software development of engineering and construction segment for S/5 million; and, concessions and licenses corresponding to the infrastructure segment for S/2.5 million (as of June 30, 2021, additions mainly correspond to investments in the preparation of wells in infrastructure segment for S/3.6 million; software development in engineering and construction segment for S/3.1 million).

For the periods ended June 30, 2021 and 2022, the amortization of intangibles is broken down in the statement of income as follows:

   
2021
    
2022
  
Cost of sale of services and goods (Note 21)
    
46,337
      
46,854
  
Administrative expenses (Note 21)
    
1,548
      
883
  
Amortization discontinued operations
    
670
      
-
  
Total amortization for the period
    
48,555
      
47,737
  

- 23 -
15. BORROWINGS

This item comprises:

   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Bank loans (a)
    
343,679
      
662,546
      
217,935
      
95,965
      
125,744
      
566,581
  
Finance leases
    
9,836
      
7,185
      
5,118
      
4,709
      
4,718
      
2,476
  
Lease liability for right-of-use asset
    
60,507
      
57,499
      
14,541
      
13,947
      
45,966
      
43,552
  
Other financial entities (b)
    
165,878
      
170,202
      
3,746
      
13,101
      
162,132
      
157,101
  
     
579,900
      
897,432
      
241,340
      
127,722
      
338,560
      
769,710
  

(a) Bank loans

As of December 31, 2021 and as of June 30, 2022, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations accrue fixed interest rates that fluctuate between 0.9% and 11% in 2021 and between 0.9% and 9% in 2022.

               
Current
    
Non-current
  
               
At
    
At
    
At
    
At
  
   
Interest
    
Date of
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
rate
    
maturity
    
2021
    
2022
    
2021
    
2022
  
                                     
AENZA S.A.A. (i)
  
Term SOFR 3M +
from 6.26% to 8.51%
    
2023
      
-
      
7,538
      
-
      
449,434
  
Unna Energía S.A. (ii)
    
6.04% / 7.68%

   
2027
      
23,351
      
28,227
      
120,635
      
103,956
  
Viva Negocio Inmobiliario S.A. (iii)
    
7.00% / 8.97%

   
2024
      
64,679
      
47,542
      
583
      
10,855
  
Cumbra Peru S.A. (iv - v)
    
0.92% / 7.49%

   
2025
      
129,905
      
12,658
      
4,526
      
2,336
  
                     
217,935
      
95,965
      
125,744
      
566,581
  

i) Bridge Loan Agreement
On March 17, 2022, the company entered into a bridge loan credit agreement for up to US$120 million, with a group of financial entities comprised by Banco BTG Pactual S.A. - Cayman Branch, Banco Santander Peru S.A., HSBC Mexico, S.A., Institución de Banca Multiple, Grupo Financiero HSBC, and Natixis, New York Branch. The financing will be repaid over a period of 18 months, in quarterly payments, and will be secured, subject to the fulfillment of certain precedent conditions, by a flow trust (first lien), a pledge on our shares in Unna Energía S.A. (first lien), and trust over the shares of Viva Negocio Inmobiliario S.A. (second lien). On April 5, 2022, the Company received the full amount of the financing for US$120 million equivalent to S/436.1 million. The loan bears interest at the following interest rates: (i) for the first and second payment, Term SOFR + 6.26%; (ii) for the third and fourth payment, Term SOFR + 6.76%; (iii) for the fifth payment, Term SOFR + 7.51%; and (iv) for the sixth payment, Term SOFR + 7.51%.  As of June 30, 2022, principal outstanding amounts to US$120 million, equivalent to S/459.6 million. The total amount payable of S/457 million includes accrued interest of S/7.5 million, net of deferred charges of S/10.2 million. As of June 30, 2022, the Company has complied with the corresponding covenants established in the contract loan.

- 24 -
ii)
Unna Energia 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 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, its period of availability is until December 31, 2022, 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 S/28.2 million) and US$4.3 million (equivalent to S/16.9 million), respectively, was requested for the additional investments. As of June 30, 2022, the amount of financing equivalent to the 50% interest held by the subsidiary Unna Energia S.A. amounts to US$26.6 million, equivalent to S/102.1 million (US$27.2 million, equivalent to S/108.7 million, as of December 31, 2021).

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 June 30, 2022, the amount of financing equivalent to the 50% interest held by the subsidiary Unna Energia S.A. amounts to US$8.3 million, equivalent to S/31.8 million (US$9.2 million, equivalent to S/36.8 million, as of December 31, 2021).

As of June 30, 2022, TP is in compliance with the ratios established in the contract loan.

iii)
Viva Negocio Inmobiliario S.A. Loan

The balance consists mainly of the financing of the following projects:

-
Los Parques de Comas: As of June 30, 2022, promissory notes for a total of S/6.6 million with BBVA Continental, with an interest rate between 7.94% and 8.97%, maturing between November 2022 and January 2023 (S/9.7 million, at December 31, 2021).

-
El Nuevo Rancho: As of June 30, 2022, a promissory note with the Inter-American Finance Bank for S/15.2 million, with an interest rate of 11.35%, due in December 2024 (S/18.4 million, as of December 31, 2021).

-
Los Parques del Mar: As of June 30, 2022, promissory notes with the Banco de Credito del Peru for a total of S/28.4 million, with an interest rate of 7%, due in July 2022 (S/35.7 million, as of December 31). December 2021).

-
Los Parques de Callao: As of June 30, 2022, promissory notes with the Banco de Credito del Peru for a total of S/8 million, with an interest rate of 7%, maturing in November 2022.

iv)
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 (hereinafter BCP), Citibank del Peru S.A. and Citibank N.A. The objectives of the Financial Stability Framework Agreement were: to guarantee Cumbra Peru S.A. a syndicated revolving line for working capital, a non-revolving line of credit to finance repayment commitments subject to performance bonds; guarantee lines of credit for the issuance of the performance bond and undertake to maintain the existing letters of credit issued at the request of Cumbra Peru S.A. As of December 31, 2021, the Company complied with the obligations and covenants established in the Financial Stability Framework Agreement.

- 25 -

On March 29, 2022, S/28.2 million and US$0.3 million corresponding to the total balance of the Financial Stability Framework Agreement were paid.

v)
Banco Santander Peru S.A. Loan

On December 28, 2020, Tecnicas Reunidas enforced two letters of credit for a total  amount of US$23.7 million, which had been issued by Banco Santander Peru S.A. on behalf of our subsidiary Cumbra Peru S.A. as security pursuant to a construction contract. As a result, Cumbra Peru S.A. subscribed a loan with Banco Santander for principal amount of US$23.7 million (equivalent to S/85.9 million). The loan accrued interest at an annual rate of Libor + 8%. As of December 31, 2021, the debt balance was US$20.2 million, equivalent to S/80.8 million,Cumbra Peru S.A. complied with the covenants under the Loan Agreement with Banco Santander Peru S.A.

On April 6 and 26, 2022, Cumbra Perú S.A. paid Banco Santander Peru S.A. US$1.5 million and US$18.7 million, respectively; consequently, the entire debt was cancelled.

(b)
Other financial entities

The balance is composed of the monetization of Red Vial 5 S.A. 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 Red Vial 5 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 Red Vial 5 S.A. by transferring its class B shares (equivalent to 48.8% of the capital of Red Vial 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 Red Vial 5 S.A.'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 Red Vial 5'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 June 30, 2022, the loan balance payable amounted to US$44.4 million, equivalent to S/170.2 million (as of December 31, 2021, the balance was US$41.5 million, equivalent to S/165.8 million). Accrued interest amounted to S/4.6 million (for the period ended in June 30, 2021, S/4.9 million).

- 26 -

Fair value of borrowings

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

   
Carrying amount
    
Fair value
  
   
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
  
                         
Bank loans
    
343,679
      
662,546
      
372,270
      
672,908
  
Finance leases
    
9,836
      
7,185
      
9,097
      
6,939
  
Lease liability for right-of-use asset
    
60,507
      
57,499
      
66,943
      
28,193
  
Other financial entities
    
165,878
      
170,202
      
165,878
      
170,202
  
     
579,900
      
897,432
      
614,188
      
878,242
  

As of June 30, 2022, the fair value is based on cash flows discounted using debt rates between 4.7% and 8.5% (between 3.9% and 10% as of December 31, 2021) and are included as Level 2 in the level of measurement.

16. BONDS

This item includes:

   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Tren Urbano de Lima S.A. (a)
    
626,697
      
627,732
      
24,496
      
27,692
      
602,201
      
600,040
  
Red Vial 5 S.A. (b)
    
251,933
      
236,570
      
36,637
      
40,249
      
215,296
      
196,321
  
Cumbra Perú S.A. (c)
    
26,282
      
23,246
      
4,896
      
4,621
      
21,386
      
18,625
  
AENZA S.A.A. (d)
    
356,010
      
-
      
3,809
      
-
      
352,201
      
-
  
     
1,260,922
      
887,548
      
69,838
      
72,562
      
1,191,084
      
814,986
  

(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 June 30, 2022, an accumulated amortization amounting to S/116.7 million (S/106.9 million as of December 31, 2021) has been made.

As of June 30, 2022, the balance includes VAC adjustments and interest payable for S/131.4 million (S/121.1 million as of December 31, 2021).

The account movement for the periods ended June 30, 2021 and 2022 is as follows:

   
2021
    
2022
  
             
Balance at January, 1
    
624,454
      
626,697
  
Amortization
    
(8,082
)
    
(9,699
)
Accrued interest
    
23,768
      
26,397
  
Interest paid
    
(15,098
)
    
(15,663
)
Balance at June, 30
    
625,042
      
627,732
  

- 27 -
As of December 31, 2021 and as of June 30, 2022, Tren Urbano de Lima S.A. has complied with the corresponding covenants.

As of June 30, 2022, the fair value amounts to S/628.5 million (S/626.8 million, as of December 31, 2021), this is based on discounted cash flows using the rate of 6.2% (4.9% as of December 31, 2021) and corresponds to level 3 of the fair value hierarchy.

(b) Red Vial 5 S.A.

Between 2015 and 2016, the subsidiary Red Vial 5 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 June 30, 2021 and 2022 is as follows:

   
2021
    
2022
  
             
Balance at January, 1
    
280,848
      
251,933
  
Amortization
    
(14,238
)
    
(15,225
)
Accrued interest
    
11,374
      
10,145
  
Interest paid
    
(11,499
)
    
(10,283
)
Balance at June, 30
    
266,485
      
236,570
  

As of December 31, 2021 and as of June 30, 2022, Red Vial 5 S.A. has complied with the covenants.

As of June 30, 2022, the fair value amounts to S/247.9 million (S/260 million as of December 31, 2021), is based on discounted cash flows using rate 7.7% (8.1% as of December 31, 2021) and is within level 2 of the fair value hierarchy.

(c) Cumbra Peru S.A.

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

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

The bonds mature in December 2027 and bear interest at a rate of 8.5%, payment is semi-annual and have a risk rating of B-, granted by the rating company Moody’s Peru. As of June 30, 2022, the balance includes accrued interest payable for US$0.2 million, equivalent to S/0.9 million (US$0.3 million, equivalent to S/1 million, as of December 31, 2021).

- 28 -
The account movement for the periods ended June 30, 2021 and 2022 is as follows:

   
2021
    
2022
  
             
Balance at January, 1
    
27,457
      
26,282
  
Amortization
    
(1,758
)
    
(1,913
)
Exchange difference
    
1,663
      
(1,014
)
Accrued interest
    
1,102
      
948
  
Interest paid
    
(1,120
)
    
(1,057
)
Balance at June, 30
    
27,344
      
23,246
  

As of June 30, 2022, the fair value amounts to S/23 million (S/27.1 million as of December 31, 2021), is based on discounted cash flows using a rate of 9.3% (7.4% as of December 31, 2021) and is within level 3 of the fair value hierarchy.

(d) AENZA S.A.A.

On August 2021 13, 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 were available to investors only in Peru pursuant to the provisions of the applicable Peruvian legislation. The bonds maturity date was at February 2024, bear interest at a rate of 8%, and were payable quarterly.

Pursuant to the terms and conditions of the convertible bond, they may be converted into shares as of the sixth month from the date of issuance, according to the following procedure: 1) the conversion day was the last business day of each month; 2) the conversion may be total or partial; 3) the conversion notice must be sent to the Bondholders' Representative no later than 5 business days prior to the conversion date; and 4) the conversion price would be the minimum between (i) US$0.33 (Zero and 33/100 Dollars) per Share, and (ii) 80% of the average price of the transactions occurring thirty (30) days prior to the Conversion Date, weighted by the volume of each transaction. The conversion will be made by dividing the current nominal value of each bond by the conversion price.

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

The Company converted all of the bonds into common shares (on February 28, 2022, 11,000 bonds and on March 31, 2022, 78,970 bonds). On March 31, 2022, the balance of the debt was fully canceled (Note 20).

- 29 -
17. TRADE ACCOUNTS PAYABLE

This item includes:

   
At
    
At
  
   
December 31,
    
June 30,
  
   
2021
    
2022
  
             
Invoices payable
    
506,798
      
424,660
  
Provision of contract costs (a)
    
468,360
      
430,170
  
Notes payable
    
5,609
      
5,321
  
     
980,767
      
860,151
  

(a) The contract cost provisions include:

i)
Goods and services received not invoiced amounting to S/305.1 million for the engineering and construction segment, S/36.3 million for the infrastructure segment, S/24.3 million for the energy segment, S/20.4 million for the real estate and S/14.2 million for operations of the parent company (S/296.6 million, S/42.3 million, S/24.2 million, S/20.6 million and S/16 million, respectively, as of December 31, 2021).

ii)
Estimate costs to come according to the the completion porcentage of projects on engineering and construction segment amounting to S/29.9 million (S/68.6 million, as of December 31, 2021).

18. OTHER ACCOUNTS PAYABLE

This item includes:

   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Advances received from customers (a)
    
322,680
      
352,142
      
315,644
      
347,383
      
7,036
      
4,759
  
Consorcio Ductos del Sur - payable (b)
    
77,665
      
46,943
      
29,242
      
5,485
      
48,423
      
41,458
  
Salaries and other payable
    
126,466
      
161,678
      
126,466
      
161,678
      
-
      
-
  
Put option liability on Morelco acquisition
    
27,986
      
-
      
27,986
      
-
      
-
      
-
  
Third-party loans
    
2,076
      
2,076
      
-
      
-
      
2,076
      
2,076
  
Other taxes payable
    
124,004
      
157,123
      
112,737
      
155,483
      
11,267
      
1,640
  
Acquisition of additional non-controlling interest
    
25,253
      
12,049
      
25,253
      
12,049
      
-
      
-
  
Guarantee deposits
    
26,017
      
22,678
      
26,017
      
22,678
      
-
      
-
  
Consorcio Rio Mantaro - payables
    
58,502
      
46,075
      
58,502
      
46,075
      
-
      
-
  
Provision of interest for debt with suppliers
    
3,056
      
-
      
285
      
-
      
2,771
      
-
  
Share purchase agreement - Inversiones Sur
    
15,992
      
15,320
      
-
      
-
      
15,992
      
15,320
  
Other accounts payables
    
37,653
      
38,596
      
32,849
      
33,787
      
4,804
      
4,809
  
     
847,350
      
854,680
      
754,981
      
784,618
      
92,369
      
70,062
  

(a)
Advances received from customers mainly corresponds to construction projects, and are applied to progress billings, in accordance with contract terms. The increase is mainly due to advances received from the client Lima Airport Partners S.R.L. for the Intipunku consortium in S/59 million and advances received from real estate projects in the Parques de Comas 2 and Parques del Callao projects in S/10 million and S/14 million, respectively.

- 30 -
   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Customer advances from Consortiums
    
27,568
      
86,699
      
27,568
      
86,699
      
-
      
-
  
Customer advances for real estate projects
    
80,188
      
104,803
      
80,188
      
104,803
      
-
      
-
  
Quellaveco Project
    
10,841
      
-
      
10,841
      
-
      
-
      
-
  
Special National Transportation Infrastructure Project
    
19,582
      
18,731
      
12,765
      
14,142
      
6,817
      
4,589
  
Gasoducto Piura Construction
    
5,745
      
64
      
5,745
      
64
      
-
      
-
  
Pebbles Quebrada Blanca Phase 2 Project
    
120,642
      
105,683
      
120,642
      
105,683
      
-
      
-
  
Evaporadores Modernización y ampliación de la Planta Arauco Project
    
52,063
      
-
      
52,063
      
-
      
-
      
-
  
Others
    
6,051
      
36,162
      
5,832
      
35,992
      
219
      
170
  
     
322,680
      
352,142
      
315,644
      
347,383
      
7,036
      
4,759
  

(b)
The balance of other accounts payable from Consorcio Constructor Ductos del Sur corresponds to payment obligations to vendors and main subcontractors for S/46.9 million (S/77.6 million as of December 31, 2021), 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

This item includes:

   
Total
    
Current
    
Non-current
  
   
At
    
At
    
At
    
At
    
At
    
At
  
   
December 31,
    
June 30,
    
December 31,
    
June 30,
    
December 31,
    
June 30,
  
   
2021
    
2022
    
2021
    
2022
    
2021
    
2022
  
                                     
Legal claims (a)
    
364,385
      
356,966
      
117,520
      
94,814
      
246,865
      
262,152
  
Tax claims
    
37,466
      
39,984
      
16,776
      
17,102
      
20,690
      
22,882
  
Provision for well closure (b)
    
82,475
      
82,805
      
20,533
      
20,103
      
61,942
      
62,702
  
     
484,326
      
479,755
      
154,829
      
132,019
      
329,497
      
347,736
  

(a)
Legal contingencies correspond mainly to:

Civil compensation to Peruvian Government

Corresponds to the legal contingency estimated by management for exposure of the Company and two of 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 Construccion”. 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$41.1 million. As of June 30, 2022, the amount equivalent to the present value resulting from the amounts descrived above is recorded as a provision of S/184.1 million and US$19.3 million, equivalent to a total S/258.2 million (As of December 31, 2021 was S/164.6 million and US$18.9 million equivalent to S/240.1 million).

Administrative process INDECOPI

i)
On March 9, 2021, Cumbra Peru S.A. was notified with an “Informe Final de Instruccion” 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 system through with they illegaly distributed several contract tenders conducted by Provias Nacional and other govenmental entities. Such report was subject to approval by INDECOPI’s “Comision de Defensa de la Libre Competencia”, which on November 15, 2021, through Resolution N°080-021-CLC-INDECOPI, ruled in favor to sanction the companies and their executives, included Cumbra Peru S.A. On December 9, 2021, Cumbra Peru filed an appeal against such ruling, suspending its application.  The Company and its legal advisors estimated a provision amounting to S/54.7 million that was recorded at June 30, 2022 (S/52.6 million as of December 31, 2021).

- 31 -

ii)
On February 7, 2022, Cumbra Peru S.A. and Unna Transporte S.A.C. were notified by the National Directorate for the Investigation and Promotion of Free Competition under File 003-2020/CLC-IP, issuing Resolution 038-2021/DLC-INDECOPI of December 28, 2021, through which an administrative procedure is initiated penalty for the alleged execution of a horizontal collusive practice in the form of concerted distribution of suppliers in the contracting market for workers in the construction sector at the national level, during the period between the years 2011 to 2017. As of June 30, 2022, the Company and its legal advisors estimate a provision amounting to S/5 million (S/4.8 million as of December 31, 2021).

Shareholder class action lawsuits in the Eastern District Court of New York

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.

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 September 14, 2021, the settlement agreement was approved by the Eastern District Court of New York.

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 plus interest.  On March 31, 2022, this provision of S/33.3 million was full paid on April 8, 2022.

(b)
Provision for closure corresponds mainly to:

i)
Provisions for closure of wells of Unna Energia S.A. for S/68.3 million and contractual compliance with Petroperu for S/68.3 million (as of December 31, 2021, S/71.1 million and S/3.4 million, respectively);

ii)
In Red Vial 5 S.A. provision for costs associated with the closing of the concession contract and the process of claiming the tariff guarantee for toll suspension for S/8.4 million (as of December 31, 2021, S/5.1 million).

- 32 -
The account movement for the periods ended June 30, 2021 and 2022 are as follows:

               
Provision
        
   
Legal
    
Tax
    
for well
        
   
claims
    
claims
    
closure
    
Total
  
                         
At January 1, 2021
    
368,241
      
8,176
      
52,949
      
429,366
  
Additions
    
15,685
      
2,707
      
1,299
      
19,691
  
Present value
    
2,251
      
-
      
291
      
2,542
  
Reversals of provisions
    
(3,096
)
    
-
      
-
      
(3,096
)
Reclasification
    
(3,164
)
    
(45
)
    
3,209
      
-
  
Payments
    
(2,027
)
    
-
      
(59
)
    
(2,086
)
Translation adjustments / Exchange difference
    
10,911
      
-
      
324
      
11,235
  
At June 30, 2021
    
388,801
      
10,838
      
58,013
      
457,652
  
                                 
At January 1, 2022
    
364,385
      
37,466
      
82,475
      
484,326
  
Additions
    
15,783
      
2,731
      
2,950
      
21,464
  
Present value
    
19,727
      
-
      
(1,330
)
    
18,397
  
Reversals of provisions
    
(3,471
)
    
(213
)
    
-
      
(3,684
)
Reclasification
    
2,701
      
-
      
-
      
2,701
  
Payments
    
(34,362
)
    
-
      
(215
)
    
(34,577
)
Translation adjustments / Exchange difference
    
(7,797
)
    
-
      
(1,075
)
    
(8,872
)
At June 30, 2022
    
356,966
      
39,984
      
82,805
      
479,755
  

20. CAPITAL

On February 28, 2022, in accordance with the terms and conditions of the convertible bond, holders of 11,000 Convertible Bonds, each with a par value of US$1,000 and for a principal amount equivalent to US$11 million, communicated the exercise of their conversion rights.

The Company issued provisional certificates for 37,801,073 new common shares, with a nominal value of S/1.00 each, with voting rights, and they are fully subscribed and paid. Therefore, the Company increased its capital stock from S/871,917,855 to S/ 909,718,928; and with respect to the convertible bonds, as of February 28, 2022, the balance amounted to US$78.9 million.

Additionally, on March 31, 2022, holders of 78,970 convertible bonds, each for a par value of US$1,000 and for a principal amount equivalent to US$78.9 million, have communicated the exercise of their conversion right. The company converted the bonds, as well as paid the accrued interest to the bondholders who have exercised their conversion rights. As a consequence, the Company issued provisional certificates for 287,261,051 new common shares. Therefore, the capital stock of the Company has increased from S/909,718,928 to S/1,196,979,979. After this last operation, the convertible bonds have been fully cancelled.

As of June 30, 2022, a total of 132,949,000 shares were represented in ADS, equivalent to 26,589,800 ADSs at a rate of 5 shares per ADS.

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.

- 33 -
21. EXPENSES BY NATURE

For the periods ended June 30, 2021 and 2022, this item comprises:

   
Cost
              
   
of goods
    
Administrative
        
   
and services
    
expenses
    
Total
  
2021
                  
Salaries, wages and fringe benefits
    
613,438
      
48,709
      
662,147
  
Services provided by third-parties
    
468,489
      
22,994
      
491,483
  
Purchase of goods
    
332,761
      
-
      
332,761
  
Other management charges
    
112,594
      
7,723
      
120,317
  
Depreciation  (Note 14.a)
    
41,664
      
3,256
      
44,920
  
Amortization (Note 14.b)
    
46,337
      
1,548
      
47,885
  
Impairment of accounts receivable
    
542
      
-
      
542
  
Taxes
    
1,649
      
336
      
1,985
  
Recovery of property, plant and equipment
    
(1,323
)
    
-
      
(1,323
)
Impairment of Inventory
    
2
      
-
      
2
  
     
1,616,153
      
84,566
      
1,700,719
  
                         
2022
                        
Salaries, wages and fringe benefits
    
689,232
      
46,437
      
735,669
  
Services provided by third-parties
    
660,671
      
16,481
      
677,152
  
Purchase of goods
    
277,654
      
-
      
277,654
  
Other management charges
    
162,843
      
4,433
      
167,276
  
Depreciation  (Note 14.a)
    
35,862
      
1,321
      
37,183
  
Amortization (Note 14.b)
    
46,854
      
883
      
47,737
  
Impairment of accounts receivable
    
180
      
24
      
204
  
Taxes
    
5,124
      
196
      
5,320
  
Recovery of property, plant and equipment
    
(545
)
    
-
      
(545
)
Impairment of inventory
    
89
      
-
      
89
  
     
1,877,964
      
69,775
      
1,947,739
  

22. OTHER INCOME AND EXPENSES

For the periods ended June 30, 2021 and 2022, this item comprises:

   
2021
    
2022
  
Other income:
            
Supplier debt forgiveness
    
-
      
5,053
  
Sale of assets
    
4,763
      
4,879
  
Change in contract of the call option
    
-
      
3,706
  
Valuation of well abandonment
    
-
      
1,547
  
Recovery of provisions and impairments
    
3,283
      
1,473
  
Penalty income
    
717
      
750
  
Insurance compensation
    
2,491
      
46
  
Others
    
1,063
      
2,708
  
     
12,317
      
20,162
  

- 34 -
   
2021
    
2022
  
Other expenditures:
            
Net cost of fixed assets disposal
    
4,749
      
4,197
  
Administrative fine
    
8,079
      
3,888
  
Legal and tax litigation
    
-
      
2,977
  
Civil penalty cover to the Peruvian Government
    
-
      
2,256
  
Renegotiation of contract with suppliers
    
-
      
1,841
  
Disposal of property, plant and equipment
    
1,426
      
934
  
Asset impairment
    
65
      
661
  
Valuation of well abandonment
    
702
      
-
  
Others
    
176
      
1,025
  
     
15,197
      
17,779
  
     
(2,880
)
    
2,383
  

  Other (expenses) income, net

23. FINANCIAL INCOME AND EXPENSES

For the periods ended June 30, 2021 and 2022, this item comprises:

   
2021
    
2022
  
             
Financial income:
            
Interest on loans to third parties
    
121
      
63
  
Profit for present value of financial asset or financial liability
    
1,524
      
1,538
  
Interest on short-term bank deposits
    
282
      
3,334
  
Business interests
    
156
      
408
  
Exchange difference gain, net
    
-
      
4,303
  
Interest on mutual funds
    
-
      
13
  
Others
    
565
      
491
  
     
2,648
      
10,150
  
                 
                 
     
2021
      
2022
  
                 
Financial expenses:
                
Interest expense on:
                
- Bank loans (a)
    
31,700
      
25,562
  
- Bonds (b)
    
12,476
      
24,335
  
- Loans from third parties
    
4,269
      
5,321
  
- Right-of-use
    
1,958
      
1,944
  
- Financial lease
    
430
      
287
  
Commissions and collaterals
    
12,445
      
10,265
  
Interests from Tax Administration
    
10,964
      
6,187
  
Loss for present value of financial asset or financial liability (c)
    
25,493
      
71,350
  
Exchange difference loss, net
    
11,587
      
-
  
Other financial expenses
    
1,269
      
2,352
  
Less capitalized interest
    
(856
)
    
(498
)
     
111,735
      
147,105
  

- 35 -
  
(a)
The variation mainly corresponds to Cumbra Peru S.A.C. which decreased by S/8.8 million, due to the cancellation of the loans with the Financial Stability Framework Agreement and Banco Santander Peru S.A. made in March and April 2022, respectively. Additionally, the Company increased by S/3.5 million, corresponding to the interest related to the Bridge Loan agreement.

(b)
The increase corresponds mainly to the recording of interest and structuring costs by the Company for S/13.2 million due to the capitalization of the convertible bonds.

(c)
The increase corresponds to the present value of the Civil Reparation to the Peruvian State, due to the change in the discount rate applied from 0.86% to 1.41%, impacting the Company for S/18.5 million, Unna Transporte S.A.C. for S/1.4 million and Cumbra Peru S.A.C. for S/1.4 million. Additionally, it increased due to the effect of the present value of the account receivable from Gasoducto Sur Peruano S.A. for S/12.6 million, due to the variation of the discount rate applied, which increased from 3.73% to 5.42%. Finally, in the subsidiary Unna Energia S.A. there was an increase of S/2.5 million, due to the update of the account receivable from PetroPeru.

24. 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/308.1 million (S/303.1 million as of December 2021).

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

b) Other contingencies

As of June 30, 2022, contingencies held by the Corporation are substantially the same as those existing as of December 31, 2021.

c) Letters bonds and guarantees

The Corporation maintains guarantees and letters of credit in force in various financial entities guaranteeing operations for US$504.7 million (US$471.9 million, as of December 31, 2021).

25. 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.

For the period ended June 30, 2022, the Corporation’s subsidiaries have paid dividends to its non-controlling interests of S/2.3 million (for period ended in June 30, 2021, the subsidiaries paid S/11.2 million).

- 36 -
26. 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 June 30, 2021 and 2022, the basic loss per common share is as follows:

         
2021
    
2022
  
                   
Loss attributable to owners of the Company
                  
during the period
          
(61,597
)
    
(24,767
)
Weighted average number of shares in issue
                      
at S/1.00 each, at June 30
          
871,917,855
      
1,090,431,838
  
                       
Basic loss per share (in S/)
    
(*)

   
(0.071
)
    
(0.023
)
                         
                         
             
2021
      
2022
  
                         
Loss from continuing operations attributable to owners
                        
of the Company during the period
            
(46,236
)
    
(24,767
)
Weighted average number of shares in issue
                        
at S/1.00 each, at June 30
            
871,917,855
      
1,090,431,838
  
                         
Basic loss per share (in S/)
    
(*)

   
(0.053
)
    
(0.023
)

(*) The Corporation does not have common shares with dilutive effects at June 30, 2021 and 2022.

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

Between June 30, 2022 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.


- 37 -